Chapter 874 Oregon Laws 2001

AN ACT

HB 2459

Relating to public employee retirement; amending ORS 238.005, 238.082 and 238.225; and declaring an emergency.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 238.005 is amended to read:

238.005. For purposes of this chapter:

(1) The term “annuity” means payments for life derived from contributions made by a member as provided in this chapter.

(2) The term “calendar year” means 12 calendar months commencing on January 1 and ending on December 31 following.

(3) The term “continuous service” means service not interrupted for more than five years, except that such continuous service shall be computed without regard to interruptions in the case of:

(a) An employee who had returned to the service of the employer as of January 1, 1945, and who remained in that employment until having established membership in the Public Employees Retirement System.

(b) An employee who was in the armed services on January 1, 1945, and returned to the service of the employer within one year of the date of being otherwise than dishonorably discharged and remained in that employment until having established membership in the Public Employees Retirement System.

(4) The term “creditable service” means any period of time during which an active member is being paid a salary by a participating public employer and contributions are being made to the system either by or on behalf of the member. For purposes of computing years of “creditable service,” full months and major fractions of a month shall be considered to be one-twelfth of a year and shall be added to all full years. “Creditable service” includes all retirement credit received by a member.

(5) The term “employee” includes, in addition to employees, public officers, but does not include:

(a) Persons engaged as independent contractors.

(b) Seasonal, emergency or casual workers whose periods of employment with any public employer or public employers do not total 600 hours in any calendar year.

(c) Persons, other than workers in the Oregon Industries for the Blind under ORS 346.190, provided sheltered employment or made-work by a public employer in an employment or industries program maintained for the benefit of such persons.

(d) Persons employed and paid from federal funds received under the Emergency Job and Unemployment Assistance Act of 1974 (Public Law 93-567) or any other federal program intended primarily to alleviate unemployment. However, any such person shall be considered an “employee” if not otherwise excluded by paragraphs (a) to (c) of this subsection and the public employer elects to have the person so considered by an irrevocable written notice to the board.

(e) Persons who are employees of a railroad, as defined in ORS 824.020, and who, as such employees, are included in a retirement plan under federal railroad retirement statutes. This paragraph shall be deemed to have been in effect since the inception of the system.

(6) The term “fiscal year” means 12 calendar months commencing on July 1 and ending on June 30 following.

(7)(a) The term “member” means a person who has established membership in the system and whose membership has not been terminated as described in ORS 238.095. “Member” includes active, inactive and retired members.

(b) “Active member” means a member who is presently employed by a participating public employer in a position that meets the requirements of ORS 238.015 (4), and who has completed the six-month period of service required by ORS 238.015.

(c) “Inactive member” means a member who is absent from the service of all employers participating in the system, whose membership has not been terminated in the manner described by ORS 238.095, and who is not retired for service or disability. “Inactive member” includes a member who would be an active member except that the person’s only employment with a participating public employer is in a position that does not meet the requirements of ORS 238.015 (4).

(d) “Retired member” means a member who is retired for service or disability.

(8) The term “pension” means annual payments for life derived from contributions by one or more public employers.

(9) The term “public employer” means the state, one of its agencies, any city, county, or municipal or public corporation, any political subdivision of the state or any instrumentality thereof, or an agency created by [two] one or more such [political subdivisions] governmental organizations to provide [themselves] governmental services. For purposes of this chapter, such agency created by [two] one or more [political subdivisions] governmental organizations is a governmental instrumentality and a legal entity with power to enter into contracts, hold property and sue and be sued.

(10) The term “retirement credit” means a period of time that is treated as creditable service for the purposes of this chapter.

(11)(a) The term “salary” means the remuneration paid an employee in cash out of the funds of a public employer in return for services to the employer, plus the monetary value, as determined by the Public Employees Retirement Board, of whatever living quarters, board, lodging, fuel, laundry and other advantages the employer furnishes the employee in return for services.

(b) “Salary” includes but is not limited to:

(A) Payments of employee and employer money into a deferred compensation plan, which are deemed salary paid in each month of deferral;

(B) The amount of participation in a tax-sheltered or deferred annuity, which is deemed salary paid in each month of participation; and

(C) Retroactive payments made to an employee to correct a clerical error or pursuant to an award by a court or by order of or a conciliation agreement with an administration agency charged with enforcing federal or state law protecting the employee’s rights to employment or wages, which shall be allocated to and deemed paid in the periods in which the work was done or in which it would have been done.

(c) “Salary” or “other advantages” does not include:

(A) Travel or any other expenses incidental to employer’s business which is reimbursed by the employer;

(B) Payments for insurance coverage by an employer on behalf of employee or employee and dependents, for which the employee has no cash option;

(C) Payments made on account of an employee’s death;

(D) Any lump sum payment for accumulated unused sick leave;

(E) Any accelerated payment of an employment contract for a future period or an advance against future wages;

(F) Any retirement incentive, retirement severance pay, retirement bonus or retirement gratuitous payment;

(G) Payments for periods of leave of absence after the date the employer and employee have agreed that no future services qualifying pursuant to ORS 238.015 (3) will be performed, except for sick leave and vacation;

(H) Payments for instructional services rendered to institutions of the Department of Higher Education or the Oregon Health Sciences University when such services are in excess of full-time employment subject to this chapter. A person employed under a contract for less than 12 months is subject to this subparagraph only for the months to which the contract pertains; or

(I) Payments made by an employer for insurance coverage provided to a domestic partner of an employee.

(12) The term “volunteer firefighter” means a firefighter whose position normally requires less than 600 hours of service per year.

(13) The term “school year” means the period beginning July 1 and ending June 30 next following.

(14) The term “police officer” includes:

(a) Employees of institutions defined in ORS 421.005 as Department of Corrections institutions, whose duties, as assigned by the director, include the custody of persons committed to the custody of or transferred to the Department of Corrections and any other employee of the Department of Corrections who was classified as a police officer on or before July 27, 1989, whether or not such classification was authorized by law.

(b) Employees of the Department of State Police who are classified as police officers by the Superintendent of State Police.

(c) Employees of the Oregon Liquor Control Commission who are classified as enforcement officers by the administrator of the commission.

(d) Sheriffs and those deputy sheriffs or other employees of a sheriff whose duties, as classified by the sheriff, are the regular duties of police officers or corrections officers.

(e) Police chiefs and police personnel of a city who are classified as police officers by the council or other governing body of the city.

(f) Parole and probation officers employed by the Department of Corrections and parole and probation officers who are transferred to county employment under ORS 423.549.

(g) Police officers appointed under ORS 276.021 or 276.023.

(h) Employees of the Port of Portland who are classified as airport police by the Board of Commissioners of the Port of Portland.

(i) Employees of the State Department of Agriculture who are classified as livestock police officers by the Director of Agriculture.

(j) Employees of the Department of Public Safety Standards and Training who are classified by the department as other than secretarial or clerical personnel.

(k) Investigators of the Criminal Justice Division of the Department of Justice.

(L) Corrections officers as defined in ORS 181.610.

(m) Employees of the Oregon State Lottery Commission who are classified by the Director of the Oregon State Lottery as enforcement agents pursuant to ORS 461.110.

(n) The Director of the Department of Corrections.

(o) An employee who for seven consecutive years has been classified as a police officer as defined by this section, and who is employed or transferred by the Department of Corrections to fill a position designated by the director as being eligible for police officer status.

(p) An employee of the Department of Corrections classified as a police officer on or prior to July 27, 1989, whether or not that classification was authorized by law, so long as the employee remains in the position held on July 27, 1989. The initial classification of an employee under a system implemented pursuant to ORS 240.190 will not affect police officer status.

(q) Employees of a school district who are appointed and duly sworn members of a law enforcement agency of the district as provided in ORS 332.531 or otherwise employed full-time as police officers commissioned by the district.

(r) Employees at the MacLaren School, Hillcrest School of Oregon and other youth correction facilities and juvenile detention facilities under ORS 419A.050, 419A.052 and 420.005 to 420.915, who are required to hold valid Oregon teaching licenses and who have supervisory, control or teaching responsibilities over juveniles committed to the custody of the Department of Corrections or the Oregon Youth Authority.

(s) Employees at youth correction facilities as defined in ORS 420.005 whose primary job description involves the custody, control, treatment, investigation or supervision of juveniles placed in such facilities.

(t) Employees of the Oregon Youth Authority who are classified as juvenile parole and probation officers.

(15) The term “final average salary” means whichever of the following is greater:

(a) The average salary per calendar year paid by one or more participating public employers to an employee who is an active member of the system in three of the calendar years of membership before the effective date of retirement of the employee, in which three years the employee was paid the highest salary. The three calendar years in which the employee was paid the largest total salary may include calendar years in which the employee was employed for less than a full calendar year. If the number of calendar years of active membership before the effective date of retirement of the employee is three or less, the final average salary for the employee is the average salary per calendar year paid by one or more participating public employers to the employee in all of those years, without regard to whether the employee was employed for the full calendar year.

(b) One-third of the total salary paid by a participating public employer to an employee who is an active member of the system in the last 36 calendar months of active membership before the effective date of retirement of the employee.

(16) The term “firefighter” does not include a volunteer firefighter as defined in subsection (12) of this section, but does include:

(a) The State Fire Marshal, the chief deputy fire marshal and deputy state fire marshals; and

(b) An employee of the State Forestry Department who is certified by the State Forester as a professional wildland firefighter and whose primary duties include the abatement of uncontrolled fires as described in ORS 477.064.

(17) “Earliest service retirement age” means the age attained by a member when the member could first make application for retirement under the provisions of ORS 238.280.

(18) The term “normal retirement age” means:

(a) For a person who establishes membership in the system before January 1, 1996, as described in ORS 238.430, 55 years of age if the employee retires at that age as a police officer or firefighter or 58 years of age if the employee retires at that age as other than a police officer or firefighter.

(b) For a person who establishes membership in the system on or after January 1, 1996, as described in ORS 238.430, 55 years of age if the employee retires at that age as a police officer or firefighter or 60 years of age if the employee retires at that age as other than a police officer or firefighter.

SECTION 2. ORS 238.082 is amended to read:

238.082. (1) Subject to the limitations in subsection (2) of this section, any public employer may employ any person receiving a service retirement allowance if the administrative head of such employer is satisfied that such employment is in the public interest.

(2) The period or periods of employment by one or more public employers of any person receiving a service retirement allowance shall not total 1,040 hours or more in any calendar year; but if the person is receiving old-age, survivors or disability insurance benefits under the federal Social Security Act, the person may be employed for the number of hours for which the salary equals the maximum allowed for receipt of the full amount of those benefits to which the person is entitled.

(3) The limitations on employment imposed by subsection (2) of this section do not apply to a retired member who has attained normal retirement age and who is employed as a teacher or as an administrator, as those terms are defined in ORS 342.120, if the retired member is employed by a school district or education service district that has its administrative office located within a county with a population of not more than 35,000 inhabitants according to the latest federal decennial census. A retired member who is employed as a teacher, as defined in ORS 342.120, by the same public employer that employed the member at the time of retirement remains in the same collective bargaining unit that included the member before retirement.

[(3)] (4) Employment under this section [shall] does not affect the status of a person as a retired member of the system and a recipient of retirement benefits under this chapter.

SECTION 3. ORS 238.225 is amended to read:

238.225. (1) A public employer that is participating in the system shall, at intervals designated by the board, transmit to it such amounts as are actuarially computed to be necessary, as determined by the board, to adequately provide the benefits to be provided by the contributions of the employer under this chapter, including such amounts as are actuarially determined to be necessary to amortize within not less than 30 years after December 31, 1968, all liabilities estimated by the actuary to accrue to the system on account of the pensions to be provided by the contributions of the employer, except as otherwise provided in this section. For the purpose of such actuarial computation only, the school districts of the state shall be regarded as constituting one employer.

(2) In addition each such employer shall transmit to the board, at intervals which it designates, such amounts as are actuarially determined, on the basis of an amount per month equal to $6 for each year of prior service or major fraction thereof for a period not exceeding 20 years for employees who last retired prior to April 8, 1953, and prior to becoming eligible for participation in the Old Age, Survivors and Disability Insurance program and on the basis of an amount per month equal to $4 for each year of prior service or major fraction thereof for a period not exceeding 20 years for all other employees, except as provided in subsection (4) of this section, to be necessary to amortize within not less than 30 years after the employer commences participating in the system or after December 31, 1968, whichever occurs last, all liabilities estimated by the actuary to accrue to the system on account of service by the employer’s employees prior to the time it commences participating in the system, and all prior service pension included in retirement allowances shall be computed on the basis hereby established; provided, however, that a political subdivision other than a school district may elect not to alter the basis of $2.50 or $4 per month established by its agreement made when it began to participate in the system established by chapter 401, Oregon Laws 1945, as amended. The 1961 amendment to this subsection does not apply with respect to employees receiving prior service pension on the basis of $6 per month for each year of prior service credit allowed under the amendment to this subsection by section 3, chapter 623, Oregon Laws 1959.

(3) A political subdivision which had withdrawn prior to January 1, 1956, from the Public Employees Retirement System may elect to increase the benefits payable for prior service to it from $2.50 to $4 per month for each year of prior service allowed; provided, that the administrative head of the withdrawn employer enters into an agreement with the Public Employees Retirement Board, binding such political subdivision to (a) transmit to the board, as hereinabove provided, payments including the cost of increased benefits, (b) pay for such increase of benefits for all its current employees with prior service credit who have maintained membership in the Public Employees Retirement System and for all its past employees who have maintained such membership and who have prior service credit for service to such withdrawn public employer, and (c) pay for such increase of benefits for all annuitants who on the effective date of the agreement are receiving payment for prior service to such employer, the increase to be effective from and after the date of executing the agreement. An agreement so executed shall be irrevocable by the political subdivision, which shall be liable thereon and subject to legal action therefor by the board until all obligations of such agreement are fully discharged.

(4) Subject to the rules of the board and except as this chapter otherwise provides, credit shall be granted:

(a) An employee of the state who is a member of the system for continuous service, for a period not exceeding 20 years, to the state prior to July 1, 1946.

(b) A school district employee who is a member of the system for continuous service to all school districts of the state as provided in subsection (6) of this section.

(c) An employee of a public employer other than the state or a school district who is a member of the system for continuous service, on the basis of the formula agreed upon as provided in this subsection, to that public employer prior to the time it commences to participate in the system.

Within 60 days after an employer becomes a participant in the system the board shall issue the member entitled to such credit a certificate of the aggregate of such credit to which the member is entitled. The certificate shall be final unless the board, for cause upon the motion of the member or board, modifies the certificate. The board may arrange with a political subdivision other than a school district, or with an agency created by two or more such political subdivisions to provide themselves governmental services, for determining, on the basis of a formula agreed upon by the board and the governing body of the subdivision or agency, the years of credit which an employee of the subdivision or agency is to receive for service to it prior to the time that it commences to participate in the system, without limitation as to the number of years of such prior service, and any such employee may be given credit for accumulated seasonal employment for such subdivision or agency if the employee has become a regular employee thereof. The amendments to this subsection and to subsection (5) of this section by section 5, chapter 640, Oregon Laws 1969, shall be deemed to have been in effect since the inception of the system.

(5) When the formula referred to in subsection (4) of this section has been agreed upon and the years of prior service credit have been determined, a political subdivision or agency created by two or more political subdivisions to provide themselves governmental services which desires to increase such credit to its employees may apply to the retirement board for a revision of the formula within the limitations of this chapter. If the board agrees to such revision, the cost incurred in reviewing the records of such employer’s employees and making any actuarial computation required to effect an increase of prior service credit shall be borne by the political subdivision or agency.

(6) Each school district employee who is a member of the system shall be granted full credit, for a period not exceeding 20 years, for continuous service to all school districts of the state prior to July 1, 1946. Each school district shall transmit to the board, at intervals which it designates, such amounts as are actuarially determined, on the basis stated in subsection (2) of this section, to be necessary to amortize, within not less than 30 years after December 31, 1968, all liabilities estimated by the actuary to accrue to the system on account of service by school district employees prior to July 1, 1946.

(7) A public employer who agrees to provide prior service credit under this section may elect to treat any year, or part of a year, for which prior service credit is granted as a year in which the employee has made contributions to the Public Employees Retirement Fund for the purposes of ORS 238.265 (3) and 238.425. An election under this subsection must be made at the time the public employer enters into the agreement providing for prior service credit.

SECTION 4. This 2001 Act being necessary for the immediate preservation of the public peace, health and safety, an emergency is declared to exist, and this 2001 Act takes effect on its passage.

Approved by the Governor July 31, 2001

Filed in the office of Secretary of State July 31, 2001

Effective date July 31, 2001

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