72nd OREGON LEGISLATIVE ASSEMBLY--2003 Regular Session
 
NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .
 
LC 1662
 
                           A-Engrossed
 
                         House Bill 2005
                 Ordered by the House February 3
           Including House Amendments dated February 3
 
Sponsored by COMMITTEE ON PUBLIC EMPLOYEES RETIREMENT SYSTEM
 
 
                             SUMMARY
 
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.
 
  Reduces membership of Public Employees Retirement Board from 12
to five members. Requires that  { + one member is public
employer, one member is public employee and three + } members
have experience in business management, pension management or
investing.   { - Provides that members of board may not have
interest in benefits provided by system and may not be members of
system or beneficiaries of members of system. - }
  Declares emergency, effective on passage.
 
                        A BILL FOR AN ACT
Relating to membership of Public Employees Retirement Board;
  creating new provisions; amending ORS 238.630, 238.640, 293.706
  and 293.711; and declaring an emergency.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. ORS 238.630 is amended to read:
  238.630. (1) The governing authority of the system shall be a
board known as the Public Employees Retirement Board and
consisting of   { - 12 - }  { +  five + } members appointed by
the Governor subject to confirmation by the Senate in the manner
provided in ORS 171.562 and 171.565. Except as otherwise provided
in ORS 238.640, the term of each member shall be three years.
  (2) The board shall have:
  (a) The powers and privileges of a corporation, including the
right to sue and be sued in its own name as such board; and
  (b) The power and duty, subject to the limitations of this
chapter, of managing the system.
  (3) The board:
  (a) Shall, at its first meeting each year, designate one of its
members to serve as chair of the board for the remainder of the
year and until a successor is designated and takes that office;
  (b) Shall arrange for actuarial service for the system;
  (c) Shall employ a director;
  (d) Shall create such other positions as it deems necessary to
sound and economical administration of the system, which
positions the director shall fill by appointment;
  (e) Shall, with the approval of the Director of the Oregon
Department of Administrative Services, and as otherwise provided
 
by law, fix the salaries of all persons employed for purposes of
administering the system;
  (f) Shall publish and distribute to all employer and employee
members of the system an annual report including a summary of
investments of moneys in the fund, investment earnings,
significant legislative or administrative changes in the system
and other pertinent information on the operation of the system
for the preceding year;
  (g) Shall determine the actuarial equivalency of optional forms
of retirement allowances and establish from time to time for that
purpose the necessary actuarial factors, which shall constitute a
part of the system; and
  (h) Shall adopt rules and take all actions necessary to
maintain qualification of the Public Employees Retirement System
and the Public Employees Retirement Fund as a qualified
governmental retirement plan and trust under the Internal Revenue
Code and under regulations adopted pursuant to the Internal
Revenue Code. Rules under this paragraph may impose limits on
contributions to the system, limits on benefits payable from the
system and other limitations or procedures required or imposed
under federal law or regulation for the purpose of qualification
of the Public Employees Retirement System and Public Employees
Retirement Fund under the Internal Revenue Code as a governmental
retirement plan and trust.
  (4) The board established by this section shall succeed to all
the duties and prerogatives of the Public Employees Retirement
Board created by chapter 401, Oregon Laws 1945, in relation to
the Public Employees Retirement Fund, and in addition shall
perform all duties required of it by ORS 237.950 to 237.980, in
regard to moneys payable to or from such fund.
  (5) The board shall identify by rule those records that must be
maintained by participating public employers for the purposes of
subsection (3)(h) of this section. A participating public
employer shall maintain records for all employees who are members
of the system as required by board rules, and shall provide that
information to the board upon request.
  SECTION 2. ORS 238.640 is amended to read:
  238.640.   { - (1) Members of the Public Employees Retirement
Board shall have the following qualifications: - }
    { - (a) Each member shall be a citizen of the United States
and a resident of this state for at least two years immediately
preceding appointment to the board. - }
    { - (b) Six members shall be public members who are not
members of the Public Employees Retirement System. At least three
of the public members must have experience in investing or
pension management. - }
    { - (c) One member shall be an employee of the state in a
management position at the time of appointment and throughout the
term of appointment. - }
    { - (d) At the time of appointment and throughout the term of
the appointment, one member shall hold an elective office, by
election or appointment, in the governing body of a participating
public employer, other than the state. - }
    { - (e) Four members shall be public employees, as defined in
ORS 243.650, of a participating public employer and be in an
appropriate bargaining unit, as defined in ORS 243.650, having an
exclusive representative at the time of appointment and
throughout the term of appointment; but membership on the board
shall not itself affect the status of such a member as a public
employee as defined in ORS 243.650. At the time of appointment
and throughout the term of appointment, one of those four members
shall be engaged in teaching or other school activity, one shall
be a police officer or firefighter, one shall be an employee of
the state in a category other than teaching or other school
activity or police officer or firefighter, and one shall be an
employee of a political subdivision of the state in a category
other than teaching or other school activity or police officer or
firefighter. - }
    { - (f) In lieu of one member appointed with the
qualifications specified in paragraph (c), (d) or (e) of this
subsection, one member shall be a retired member of the system at
the time of appointment and throughout the term of the
appointment. - }
    { - (g) The successor of a board member in any category shall
have the qualifications prescribed for that category. - }
   { +  (1) All members of the Public Employees Retirement Board
must be at least 21 years of age, be citizens of the United
States and have been residents of the state for at least two
years immediately preceding appointment to the board.
  (2) One member of the board must be:
  (a) An employee of the state in a management position at the
time of appointment and throughout the term of appointment; or
  (b) A person who holds an elective office, by election or
appointment, in the governing body of a participating public
employer, other than the state.
  (3) One member must be a public employee, as defined in ORS
243.650, who is in an appropriate bargaining unit, as defined in
ORS 243.650, and who has an exclusive representative at the time
of the member's appointment and throughout the term of the
member. Membership on the board does not affect the status of the
person as a public employee, as defined in ORS 243.650.
  (4) Three members of the board must have experience in business
management, pension management or investing. A member appointed
under this subsection may not be a member of the Public Employees
Retirement System or a beneficiary of a member of the system, and
may not have any interest in benefits provided by the system.
  (5) Notwithstanding the qualifications established for members
of the board under this section, all members of the board have
the same fiduciary duties and must exercise the same degree of
independent judgment. + }
    { - (2) - }   { + (6) + } Any vacancy on the board shall be
filled by appointment for the unexpired term of the member
replaced. { +  Members of the board may be reappointed. + }
    { - (3) - }   { + (7) + } Except as provided in subsection
 { - (4) - }   { + (8) + } of this section, a member of the board
is entitled to compensation and expenses as provided in ORS
292.495 from the Public Employees Retirement Fund.
    { - (4) - }   { + (8) + } Any member of the board who is an
active member of the system shall be released by the
participating public employer who employs the member for the
purpose of conducting the official business of the board. The
wages or salary of the member shall not be reduced during periods
that the member is released from duty for the purpose of
conducting the official business of the board.  The board shall
reimburse a public employer for the cost of continuing the wages
or salary of the member while the member is released from duty
under this subsection. A member who continues to receive wages or
salary under the provisions of this subsection shall not receive
compensation under ORS 292.495, but shall receive travel and
other expenses provided for under ORS 292.495.  The provisions of
this subsection do not apply to any person who is a member of the
board and who holds another office that is subject to the
provisions of section 10, Article II of the Oregon Constitution,
prohibiting the holding of more than one lucrative office.
  SECTION 3. ORS 293.706 is amended to read:
  293.706. (1) There is created the Oregon Investment Council,
consisting of five members, subject to Senate confirmation in the
manner provided in ORS 171.562 and 171.565.
  (2) One member of the council shall be a person who
 { - serves - }  { + is appointed to serve + } on the Public
Employees Retirement Board  { +  under ORS 238.640 (4) + }.
 
  (3) Three members, who shall be qualified by training and
experience in the field of investment or finance and who may not
hold any other public office or employment, shall be appointed by
the Governor. One member shall be the State Treasurer. In
addition, the Director of the Public Employees Retirement System
appointed by the board shall be an ex officio member of the
council with no voting power.
  (4) The term of office of each appointed non ex officio member
of the council is four years, but each appointed member serves at
the pleasure of the appointing authority. A vacancy in the
appointed membership occurring other than by expiration of term
shall be filled in the same manner as the original appointment,
but for the unexpired term only.
  SECTION 4. ORS 293.711 is amended to read:
  293.711. (1) A member of the Oregon Investment Council is
entitled to compensation and expenses as provided in ORS 292.495
except that the member of the council who is also a member of the
Public Employees Retirement Board shall be compensated in the
manner provided in ORS 238.640   { - (3) - }  { +  (7) + }.
 { - If the member from the board is also an active member of the
Public Employees Retirement System, conducting official business
of the Oregon Investment Council shall be considered conducting
official business of the board for purposes of ORS 238.640
(4). - }
  (2) The council shall select one of its members as chairperson,
for a term and with powers and duties necessary for the
performance of the functions of the office as the council shall
determine.
  SECTION 5.  { + (1) Except as provided in subsection (2) of
this section, the amendments to ORS 238.630, 238.640, 293.706 and
293.711 by sections 1 to 4 of this 2003 Act become operative on
January 1, 2004.
  (2) The term of office of the members of the Public Employees
Retirement Board serving on December 31, 2003, terminates on that
date. Before January 1, 2004, the Governor shall appoint five
persons with the qualifications prescribed by ORS 238.640 to
begin terms as the members of the board on January 1, 2004. A
member of the board serving on December 31, 2003, may be
reappointed if the member meets the qualifications prescribed by
ORS 238.640.
  (3) Notwithstanding ORS 238.630, the term of office of one of
the members appointed by the Governor under subsection (2) of
this section shall end on January 1, 2005, and the term of office
of two of the members appointed by the Governor under subsection
(2) of this section shall end on January 1, 2006. The Governor
shall designate the members with terms subject to this
subsection.  Members appointed under this section are eligible
for reappointment. + }
  SECTION 6.  { + This 2003 Act being necessary for the immediate
preservation of the public peace, health and safety, an emergency
is declared to exist, and this 2003 Act takes effect on its
passage. + }
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