House Study Bill 566 - Introduced SENATE/HOUSE FILE _____ BY (RECOMMENDED BY PUBLIC RETIREMENT SYSTEMS STUDY COMMITTEE) A BILL FOR An Act concerning public retirement systems, including the 1 public safety peace officers’ retirement, accident, and 2 disability system, the Iowa public employees’ retirement 3 system, and the statewide fire and police retirement system, 4 making appropriations, and including effective date and 5 retroactive applicability provisions. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 7 TLSB 5346IC (12) 83 ec/sc

S.F. _____ H.F. _____ DIVISION I 1 PUBLIC SAFETY PEACE OFFICERS’ RETIREMENT, 2 ACCIDENT, AND DISABILITY SYSTEM 3 Section 1. Section 80.8, Code 2009, is amended by adding the 4 following new subsection: 5 NEW SUBSECTION . 4. Should a peace officer become 6 incapacitated for duty as a natural and proximate result 7 of an injury, disease, or exposure incurred or aggravated 8 while in the actual performance of duty at some definite 9 time or place, the peace officer shall, upon being found to 10 be temporarily incapacitated following an examination by a 11 workers’ compensation physician or other approved physician 12 be entitled to receive the peace officer’s fixed pay and 13 allowances, without using the peace officer’s sick leave, 14 until reexamined by a workers’ compensation physician or other 15 approved physician or examined by the medical board provided 16 for in section 97A.5, and found to be fully recovered or 17 permanently disabled. In addition, a peace officer found to 18 be temporarily incapacitated under this subsection shall be 19 credited with any sick leave used prior to the determination 20 that the peace officer was temporarily incapacitated under this 21 subsection for the period of time sick leave was used. For 22 purposes of this subsection, disease shall mean as described 23 in section 97A.6, subsection 5. 24 Sec. 2. Section 97A.1, subsection 6, Code 2009, is amended 25 to read as follows: 26 6. “Child” means only the surviving issue of a deceased 27 active or retired member, or a child legally adopted by a 28 deceased member prior to the member’s retirement. “Child” 29 includes only an individual who is under the age of eighteen 30 years, an individual who is under the age of twenty-two and is 31 a full-time student, or an individual who is disabled under the 32 definitions used in section 402 202 of the Social Security Act 33 as amended if the disability occurred to the individual during 34 the time the individual was under the age of eighteen years 35 -1- LSB 5346IC (12) 83 ec/sc 1/ 32

S.F. _____ H.F. _____ and the parent of the individual was an active member of the 1 system. 2 Sec. 3. Section 97A.1, subsection 9, Code 2009, is amended 3 to read as follows: 4 9. “Earnable compensation” or “compensation earnable” 5 shall mean the regular compensation which a member would earn 6 during one year on the basis of the stated compensation for 7 the member’s rank or position , including any amount received 8 for overtime compensation, compensation for longevity , and 9 the daily amount received for meals under section 80.8 and 10 excluding any amount received for overtime compensation or . 11 However, the term “earnable compensation” or “compensation 12 earnable” shall not include other special additional 13 compensation, other payments for meal expenses, uniform 14 cleaning allowances, travel expenses, and uniform allowances 15 and excluding , or any amount received upon termination or 16 retirement in payment for accumulated sick leave or vacation. 17 Sec. 4. Section 97A.6, subsection 2, paragraph e, 18 subparagraph (6), Code 2009, is amended to read as follows: 19 (6) For a member who terminates service, other than by 20 death or disability , on or after July 1, 2000, and who does 21 not withdraw the member’s contributions pursuant to section 22 97A.16, upon the member’s retirement there shall be added 23 two and three-fourths percent of the member’s average final 24 compensation for each year of service over twenty-two years. 25 However, this subparagraph does not apply to more than ten 26 additional years of service. 27 Sec. 5. Section 97A.6, subsection 5, paragraph b, Code 2009, 28 is amended by striking the paragraph. 29 Sec. 6. Section 97A.6, subsection 7, paragraph a, 30 subparagraph (2), Code 2009, is amended to read as follows: 31 (2) A beneficiary retired under the provisions of this 32 paragraph in order to be eligible for continued receipt of 33 retirement benefits shall no later than May 15 of each year 34 submit to the board of trustees a copy of the beneficiary’s 35 -2- LSB 5346IC (12) 83 ec/sc 2/ 32

S.F. _____ H.F. _____ state federal individual income tax return for the preceding 1 year. The beneficiary shall also submit, within sixty days, 2 any documentation requested by the system that is determined to 3 be necessary by the system to determine the beneficiary’s gross 4 wages. 5 Sec. 7. Section 97A.6, subsection 7, paragraph b, Code 2009, 6 is amended to read as follows: 7 b. Should a disability beneficiary under age fifty-five 8 be restored to active service at a compensation not less than 9 the disability beneficiary’s average final compensation, the 10 disability beneficiary’s retirement allowance shall cease, the 11 disability beneficiary shall again become a member and shall 12 contribute thereafter at the same rate payable by other members 13 of comparable rank, seniority, and age, and former service on 14 the basis of which the disability beneficiary’s service was 15 computed at the time of retirement shall be restored to full 16 force and effect. Upon subsequent retirement the disability 17 beneficiary shall be credited with all service as a member, and 18 also with no more than two years of the period of disability 19 retirement. 20 Sec. 8. Section 97A.8, subsection 1, paragraph e, 21 subparagraph (8), Code 2009, is amended to read as follows: 22 (8) (a) For purposes of this subparagraph, the “applicable 23 employee percentage” shall be as follows: 24 (i) For the fiscal period beginning July 1, 2006, and ending 25 June 30, 2010, nine and thirty-five hundredths percent. 26 (ii) For the fiscal year beginning July 1, 2010, nine and 27 eighty-five hundredths percent. 28 (iii) For the fiscal year beginning July 1, 2011, ten and 29 thirty-five hundredths percent. 30 (iv) For the fiscal year beginning July 1, 2012, ten and 31 eighty-five hundredths percent. 32 (v) For the fiscal year beginning July 1, 2013, and each 33 fiscal year thereafter, eleven and thirty-five hundredths 34 percent. 35 -3- LSB 5346IC (12) 83 ec/sc 3/ 32

S.F. _____ H.F. _____ (b) Notwithstanding any other provision of this chapter, 1 beginning July 1, 1996, and each fiscal year thereafter, an 2 amount equal to the member’s contribution rate times each 3 member’s compensation shall be paid to the retirement fund from 4 the earnable compensation of the member. For the purposes 5 of this subparagraph, the member’s contribution rate shall 6 be nine and thirty-five hundredths percent the applicable 7 employee percentage . However, the system shall increase the 8 member’s contribution rate as necessary to cover any increase 9 in cost to the system resulting from statutory changes which 10 are enacted by any session of the general assembly meeting 11 after January 1, 1995, if the increase cannot be absorbed 12 within the contribution rates otherwise established pursuant to 13 this paragraph, but subject to a maximum employee contribution 14 rate of eleven and three-tenths percent. After the employee 15 contribution reaches eleven and three-tenths percent, sixty 16 percent of the additional cost of such statutory changes shall 17 be paid by the employer under paragraph “c” and forty percent 18 of the additional cost shall be paid by employees under this 19 subparagraph (8). 20 Sec. 9. Section 97A.8, subsection 1, Code 2009, is amended 21 by adding the following new paragraph: 22 NEW PARAGRAPH . i. Notwithstanding any provision of this 23 subsection to the contrary, if any statutory changes are 24 enacted by any session of the general assembly meeting after 25 January 1, 2011, which increases the cost to the system, 26 the system shall, if the increased cost cannot be absorbed 27 within the contribution rates otherwise established pursuant 28 to this subsection at the time the statutory changes are 29 enacted, increase the normal contribution rate and the member’s 30 contribution rate as necessary to cover any increase in cost 31 by providing that sixty percent of the additional cost of such 32 statutory changes shall be paid by the employer under paragraph 33 “c” and forty percent of the additional cost shall be paid by 34 employees under paragraph “e”, subparagraph (8). 35 -4- LSB 5346IC (12) 83 ec/sc 4/ 32

S.F. _____ H.F. _____ Sec. 10. Section 97A.11, Code 2009, is amended to read as 1 follows: 2 97A.11 Contributions by the state. 3 On or before the first day of November January in each year, 4 the board of trustees shall certify to the director of the 5 department of administrative services the amounts which will 6 become due and payable during the fiscal year next following to 7 the retirement fund. The amounts so certified shall be paid 8 by the director of the department of administrative services 9 out of the funds appropriated for the Iowa department of public 10 safety, to the treasurer of state, the same to be credited to 11 the system for the ensuing fiscal year. 12 Sec. 11. Section 97A.14, Code 2009, is amended to read as 13 follows: 14 97A.14 Hospitalization and medical attention. 15 1. The board of trustees shall provide hospital, nursing, 16 and medical attention for the members in service when injured 17 while in the performance of their duties and shall continue 18 to provide hospital, nursing, long-term care, and medical 19 attention for injuries or diseases incurred while in the 20 performance of their duties for the members but only while 21 the members are still receiving a retirement allowance under 22 section 97A.6, subsection 6. The cost of hospital, nursing, 23 and medical attention shall be paid out of the retirement fund. 24 However, any amounts received by the injured person under the 25 workers’ compensation law of the state, or from any other 26 source for such specific purposes, shall be deducted from the 27 amount paid by the board of trustees provisions of under this 28 section. 29 2. For purposes of this section, medical attention shall 30 include but not be limited to services provided by licensed 31 medical personnel to include office, hospital, nursing home 32 care, long-term care, and prescriptions for medicine or 33 equipment. Within twelve months of receiving treatment or 34 incurring a cost with direct correlation to the disabling 35 -5- LSB 5346IC (12) 83 ec/sc 5/ 32

S.F. _____ H.F. _____ condition, the beneficiary of an accidental disability benefit 1 shall submit a written request for reimbursement to the board. 2 A denial of reimbursement by the board shall be subject to 3 judicial review in the same manner as any other action by the 4 board in accordance with section 97A.6, subsection 13. 5 Sec. 12. REPEAL. Section 97A.10, Code 2009, is repealed. 6 Sec. 13. PUBLIC SAFETY PEACE OFFICERS’ RETIREMENT, 7 ACCIDENT, AND DISABILITY SYSTEM —— MEMBERS CONTRIBUTION 8 RATE. Notwithstanding any provision of section 97A.8 to the 9 contrary, the Iowa department of public safety peace officers’ 10 retirement, accident, and disability system, as defined in 11 section 97A.2, shall not increase the contribution rate of 12 members of the system to cover any increase in cost to the 13 system resulting from this division of this Act. 14 Sec. 14. PUBLIC SAFETY PEACE OFFICERS’ RETIREMENT, 15 ACCIDENT, AND DISABILITY SYSTEM —— BOARD REPORT. 16 1. The board of trustees of the Iowa department of 17 public safety peace officers’ retirement, accident, and 18 disability system, as defined in section 97A.2, shall 19 conduct a comprehensive examination of the plan design 20 of the Iowa department of public safety peace officers’ 21 retirement, accident, and disability system, pursuant to the 22 principles established in chapter 97D, with the goal of making 23 recommendations for benefit and other statutory changes to the 24 system that will maintain an adequate retirement for members at 25 a reasonable cost to members and employers. 26 2. On or before October 15, 2011, the board of trustees 27 shall file a report with the legislative services agency, for 28 distribution to the public retirement systems committee, which 29 contains the results of the comprehensive examination and any 30 recommendations for benefit or other statutory changes to the 31 system. 32 DIVISION II 33 IOWA PUBLIC EMPLOYEES’ 34 RETIREMENT SYSTEM 35 -6- LSB 5346IC (12) 83 ec/sc 6/ 32

S.F. _____ H.F. _____ Sec. 15. Section 97B.1A, Code Supplement 2009, is amended by 1 adding the following new subsection: 2 NEW SUBSECTION . 10A. “Final average covered wage” means the 3 greater of the following: 4 a. (1) The member’s covered wages averaged for the 5 highest five years of the member’s regular service, except 6 as otherwise provided in this paragraph. The highest five 7 years of a member’s covered wages shall be determined using 8 calendar years. However, if a member’s final quarter of a 9 year of employment does not occur at the end of a calendar 10 year, the system may determine the wages for the fifth year by 11 computing the average quarter of all quarters from the member’s 12 highest calendar year of covered wages not being used in the 13 selection of the four highest years and using the computed 14 average quarter for each quarter in the fifth year in which 15 no wages have been reported in combination with the final 16 quarter or quarters of the member’s service to create a full 17 calendar year. However, the system shall not use the member’s 18 final quarter of wages if using that quarter would reduce 19 the member’s final average covered wage. If the five–year 20 average covered wage of a member exceeds the highest maximum 21 covered wages in effect for a calendar year during the member’s 22 period of service, the five–year average covered wage of the 23 member shall be reduced to the highest maximum covered wages in 24 effect during the member’s period of service. Notwithstanding 25 any other provision of this subparagraph to the contrary, 26 a member’s wages for the fifth year as computed under this 27 subparagraph shall not exceed, by more than three percent, the 28 member’s highest actual calendar year of covered wages. 29 (2) Notwithstanding any other provisions of this paragraph 30 “a” to the contrary, the member’s five-year average covered 31 wage shall be the lesser of the five-year average covered wage 32 as calculated pursuant to subparagraph (1) and the adjusted 33 covered wage amount. For purposes of this subparagraph (2), 34 the covered wage amount shall be an amount equal to one hundred 35 -7- LSB 5346IC (12) 83 ec/sc 7/ 32

S.F. _____ H.F. _____ thirty-four percent of the member’s applicable calendar year 1 wages. The member’s applicable calendar year wages shall be 2 the member’s highest calendar year of covered wages not used in 3 the calculation of the member’s five-year average covered wage 4 pursuant to subparagraph (1), or such other calendar year of 5 covered wages selected by the system pursuant to rules adopted 6 by the system. 7 b. If the member was vested as of June 30, 2012, the 8 member’s three-year average covered wage as of June 30, 2012. 9 Sec. 16. Section 97B.1A, subsection 24, paragraph c, Code 10 Supplement 2009, is amended to read as follows: 11 c. Notwithstanding any other provisions of this subsection 12 to the contrary, for a member who retires on or after July 1, 13 2007, the member’s three-year average covered wage shall be the 14 lesser of the three-year average covered wage as calculated 15 pursuant to paragraph “a” and the adjusted covered wage 16 amount. For purposes of this paragraph, the adjusted covered 17 wage amount shall be the greater of the member’s three-year 18 average covered wage calculated pursuant to paragraph “a” as 19 of July 1, 2007, and an amount equal to one hundred twenty-one 20 percent of the member’s applicable calendar year wages. The 21 member’s applicable calendar year wages shall be the member’s 22 highest full calendar year of covered wages not used in the 23 calculation of the member’s three-year average covered wage 24 pursuant to paragraph “a” , or , if the member does not have 25 another full calendar year of covered wages that was not used 26 in the calculation of the three-year average covered wage under 27 paragraph “a” , the lowest full calendar year of covered wages 28 that was used in the calculation of the member’s three-year 29 average covered wage pursuant to paragraph “a” such other 30 calendar year of covered wages selected by the system pursuant 31 to rules adopted by the system . 32 Sec. 17. Section 97B.1A, subsection 25, paragraph a, 33 subparagraphs (1) through (5), Code Supplement 2009, are 34 amended by striking the subparagraphs and inserting in lieu 1 -8- LSB 5346IC (12) 83 ec/sc 8/ 32

S.F. _____ H.F. _____ thereof the following: 2 (1) Is vested by service. 3 (2) Prior to July 1, 2005, has attained the age of 4 fifty-five. 5 (3) Between July 1, 2005, and June 30, 2012, has attained 6 the age of fifty-five or greater while in covered employment. 7 (4) On and after July 1, 2012, meets one of the following 8 requirements: 9 (a) For a member in special service, has attained the age of 10 fifty-five or greater while in covered employment. 11 (b) For a member in regular service, has attained the age of 12 sixty-five or greater while in covered employment. 13 Sec. 18. Section 97B.1A, subsection 25, Code Supplement 14 2009, is amended by adding the following new paragraph: 15 NEW PARAGRAPH . d. “Vested by service” means a member who 16 meets one of the following requirements: 17 (1) Prior to July 1, 1965, had attained the age of 18 forty–eight and completed at least eight years of service. 19 (2) Between July 1, 1965, and June 30, 1973, had completed 20 at least eight years of service. 21 (3) Between July 1, 1973, and June 30, 2012, had completed 22 at least four years of service. 23 (4) On and after July 1, 2012, meets one of the following 24 requirements: 25 (a) For a member in special service, has completed at least 26 four years of special service. 27 (b) For a member in regular service, has completed at least 28 seven years of service. 29 (5) On or after July 1, 1988, an inactive member who had 30 accumulated, as of the date of the member’s last termination of 31 employment, years of membership service equal to or exceeding 32 the years of membership service specified in this paragraph 33 “d” for qualifying as vested by service on that date of 34 termination. 35 Sec. 19. Section 97B.4, subsection 2, paragraph c, Code 1 -9- LSB 5346IC (12) 83 ec/sc 9/ 32

S.F. _____ H.F. _____ 2009, is amended to read as follows: 2 c. In administering this chapter , the system may enter into 3 a biennial agreement with the department of administrative 4 services concerning the sharing of resources between the 5 system and department which are of benefit to each and 6 which are consistent with the mission of the system and 7 the department. The budget program for the system shall be 8 established by the chief executive officer in consultation with 9 the board and other staff of the system and shall be compiled 10 and submitted by the system pursuant to section 8.23. 11 Sec. 20. Section 97B.4, subsection 4, paragraph a, Code 12 2009, is amended to read as follows: 13 a. Annual report to governor. Not later than the 14 thirty-first day of December of each year, the system shall 15 submit to the governor a report covering the administration 16 and operation of this chapter during the preceding fiscal 17 year and shall make recommendations for amendments to this 18 chapter. The report shall include a balance sheet of the 19 moneys in the retirement fund. The report shall also include 20 information concerning the investment management expenses 21 for the retirement fund for each fiscal year expressed as a 22 percent of the market value of the retirement fund investment 23 assets , including the information described in section 97B.7, 24 subsection 3 , paragraph “d” . The information provided under 25 this paragraph shall also include information on the investment 26 policies and investment performance of the retirement fund. 27 In providing this information, to the extent possible, the 28 system shall include the total investment return for the entire 29 fund, for portions of the fund managed by investment managers, 30 and for internally managed portions of the fund, and the cost 31 of managing the fund per thousand dollars of assets. The 32 performance shall be based upon market value, and shall be 33 contrasted with relevant market indices and with performances 34 of pension funds of similar asset size. 35 Sec. 21. Section 97B.11, subsection 3, paragraph d, Code 1 -10- LSB 5346IC (12) 83 ec/sc 10/ 32

S.F. _____ H.F. _____ 2009, is amended to read as follows: 2 d. “Required contribution rate” means that percentage of the 3 covered wages of members in regular service, members described 4 in section 97B.49B, and members described in section 97B.49C, 5 that the system shall, for each fiscal year, separately set 6 for members in each membership category as provided in this 7 paragraph. The required contribution rate that is set by the 8 system for a membership category shall be the contribution 9 rate the system actuarially determines, based upon the 10 most recent actuarial valuation of the system and using the 11 actuarial methods, assumptions, and funding policy approved by 12 the investment board, is the rate required by the system to 13 discharge its liabilities as a percentage of the covered wages 14 of members in that membership category. However, the required 15 contribution rate set by the system for a fiscal year shall 16 not vary by more than one-half one percentage point from the 17 required contribution rate for the prior fiscal year. 18 Sec. 22. Section 97B.49A, subsection 3, Code 2009, is 19 amended to read as follows: 20 3. Calculation of monthly allowance. For each active or 21 inactive vested member retiring on or after July 1, 1994, with 22 four or more complete years of service, a monthly benefit shall 23 be computed which is equal to one-twelfth of an amount equal 24 to the applicable percentage of the three-year final average 25 covered wage multiplied by a fraction of years of service. 26 However, if benefits under this section commence on an early 27 retirement date, the amount of the benefit shall be reduced in 28 accordance with section 97B.50. 29 Sec. 23. Section 97B.49A, subsection 4, paragraph c, Code 30 2009, is amended to read as follows: 31 c. For each active and vested member retiring with less than 32 four complete years of service and who therefore cannot have a 33 benefit determined under the formula benefit of paragraph “a” 34 or “b” of this subsection, subsection 3, or section 97B.49G, 35 subsection 1, a monthly annuity for membership service shall be 1 -11- LSB 5346IC (12) 83 ec/sc 11/ 32

S.F. _____ H.F. _____ determined by applying the member’s accumulated contributions 2 and the employer’s matching accumulated contributions as of the 3 effective retirement date and any retirement dividends standing 4 to the member’s credit on or before December 31, 1966, to the 5 annuity tables in use by the system according to the member’s 6 age and contingent annuitant’s age, if applicable. 7 Sec. 24. Section 97B.49D, subsection 1, unnumbered 8 paragraph 1, Code 2009, is amended to read as follows: 9 An active or inactive vested member, who is or has been 10 employed in both special service and regular service, who 11 retires on or after July 1, 1996, with four or more completed 12 years of who is vested by service , and who at the time of 13 retirement is at least fifty-five years of age, may elect 14 to receive, in lieu of the receipt of a monthly retirement 15 allowance as calculated pursuant to sections 97B.49A through 16 97B.49C, a combined monthly retirement allowance equal to the 17 sum of the following: 18 Sec. 25. Section 97B.49D, subsection 1, paragraph a, Code 19 2009, is amended to read as follows: 20 a. One-twelfth of an amount equal to the applicable 21 percentage of the member’s three-year final average covered 22 wage multiplied by a fraction of years of service. The 23 fraction of years of service for purposes of this paragraph 24 shall be the actual years of service, not to exceed thirty, 25 for which regular service contributions were made, divided by 26 thirty. However, any otherwise applicable age reduction for 27 early retirement shall apply to the calculation under this 28 paragraph. 29 Sec. 26. Section 97B.50, subsection 1, paragraphs a and b, 30 Code 2009, are amended to read as follows: 31 a. For a member who is less than sixty-two years of age not 32 vested on June 30, 2012 , by twenty-five hundredths one-half of 33 one percent per month for each month that the early retirement 34 date precedes the normal retirement date the member attains age 35 sixty-five . 1 -12- LSB 5346IC (12) 83 ec/sc 12/ 32

S.F. _____ H.F. _____ b. For a member who is at least sixty-two years of age and 2 who has not completed twenty years of membership service and 3 prior service vested on June 30, 2012 , the member’s retirement 4 allowance shall be reduced as follows: 5 (1) For that portion of the member’s retirement allowance 6 based on years of service through June 30, 2012, by twenty-five 7 hundredths of one percent per month for each month that the 8 early retirement date precedes the member’s earliest normal 9 retirement date using the member’s age on the early retirement 10 date and years of service as of June 30, 2012 . 11 (2) For that portion of the member’s retirement allowance 12 based on years of service after June 30, 2012, by one-half of 13 one percent per month for each month that the early retirement 14 date precedes the date the member attains age sixty-five. 15 Sec. 27. Section 97B.52, subsection 1, unnumbered paragraph 16 1, Code 2009, is amended to read as follows: 17 If an inactive member, with at least sixteen calendar 18 quarters of service credit who is vested by service , or 19 any active member dies prior to the member’s first month of 20 entitlement, the member’s beneficiary shall be entitled to 21 receive a death benefit equal to the greater of the amount 22 provided in paragraph “a” or “b” . If an inactive member with 23 less than sixteen calendar quarters of service credit who is 24 not vested by service dies prior to the member’s first month of 25 entitlement, the member’s beneficiary shall only be entitled 26 to receive a death benefit, as a lump sum, equal to the amount 27 provided in paragraph “a” . 28 Sec. 28. Section 97B.52A, subsection 1, paragraph c, Code 29 2009, is amended to read as follows: 30 c. (1) For a member whose first month of entitlement 31 is July 2000 or later, the member does not return to any 32 employment with a covered employer until the member has 33 qualified for at least one calendar month of retirement 34 benefits, and the member does not return to covered employment 35 until the member has qualified for no fewer than four calendar 1 -13- LSB 5346IC (12) 83 ec/sc 13/ 32

S.F. _____ H.F. _____ months of retirement benefits. 2 (2) For purposes of determining a bona fide retirement 3 under this paragraph “c” , effective the following provisions 4 apply: 5 (a) Effective July 1, 2000, any employment with a covered 6 employer does not include employment as an elective official 7 or member of the general assembly if the member is not covered 8 under this chapter for that employment. 9 (b) For purposes of determining a bona fide retirement 10 under this paragraph and for a member whose first month of 11 entitlement is July 2004 or later, but before July 2010 2012 , 12 covered employment does not include employment as a licensed 13 health care professional by a public hospital as defined in 14 section 249J.3, with the exception of public hospitals governed 15 pursuant to chapter 226. 16 (c) Effective May 25, 2008, any employment with a covered 17 employer does not include noncovered employment as a member of 18 the national guard called to state active duty as defined in 19 section 29A.1. 20 Sec. 29. Section 97B.58, Code 2009, is amended to read as 21 follows: 22 97B.58 Information furnished by employer. 23 To enable the system to administer this chapter and perform 24 its functions, the employer shall, upon the request of and 25 in the manner provided by the system, supply full provide 26 accurate, complete, and timely information to the system of 27 all matters relating to the pay of all members, date of birth, 28 their retirement, death, or other cause for termination of 29 employment, and other pertinent facts the system may require 30 in the manner provided by the system. The system shall not be 31 liable to any member, retiree, or beneficiary for any monetary 32 or other relief due to the failure of the employer to comply 33 with this section. 34 Sec. 30. 2008 Iowa Acts, chapter 1171, section 47, is 1 amended to read as follows: 2 -14- LSB 5346IC (12) 83 ec/sc 14/ 32

S.F. _____ H.F. _____ SEC. 47. TRANSITION PROVISION —— REQUIRED CONTRIBUTION RATE 3 FOR FISCAL YEAR 2010-2011. For purposes of establishing the 4 required contribution rate for the fiscal year beginning July 5 1, 2011, as provided in section 97B.11, as amended in this Act, 6 the required contribution rate for the fiscal year beginning 7 July 1, 2010, shall be, for members in regular service, members 8 described in section 97B.49B, and members described in section 9 97B.49C, the total contribution percentage rate paid by members 10 and employers of that membership group for the fiscal year 11 beginning July 1, 2010. 12 Sec. 31. 2009 Iowa Acts, chapter 170, section 51, 13 subsections 1 and 3, are amended to read as follows: 14 1. a. Notwithstanding any provision of chapter 97B to the 15 contrary, a member of the Iowa public employees’ retirement 16 system who has an employer-mandated reduction in hours or 17 an employee-exercised reduction in pay but remains on the 18 employer’s payroll, and who would receive a reduction in the 19 member’s three-year average covered wage as a result of the 20 reduction in hours, may have the member’s retirement allowance 21 calculated based on the three-year average covered wage the 22 member would have received, based on reasonable assumptions, 23 if the member had not been subject to the employer-mandated 24 reduction in hours or employee-exercised reduction in pay , upon 25 payment by the member of the applicable contribution amount. 26 b. For purposes of this section, the applicable contribution 27 amount unless the context otherwise requires: 28 (1) “Applicable contribution amount” is an amount equal to 29 the employee and employer contributions that would have been 30 paid to the system based on the wages that the member would 31 have received but for the employer-mandated reduction in hours 32 or employee-exercised reduction in pay and would have been 33 included in the member’s three-year average covered wage. 34 (2) “Employee-exercised reduction in pay” means a reduction 35 in pay of a member who has exercised bumping rights by 1 accepting a lower-paid position in order to avoid being laid 2 -15- LSB 5346IC (12) 83 ec/sc 15/ 32

S.F. _____ H.F. _____ off by the employer. 3 3. This section shall apply to employer-mandated reductions 4 in hours or employee-exercised reductions in pay during 5 the period of time beginning on or after January 1, 2009, 6 and ending no later than June 30, 2010 2011 . The system is 7 authorized to adopt such rules, including emergency rules, as 8 it deems necessary or prudent to implement this section. 9 Sec. 32. IPERS REGULAR MEMBERS —— FINAL AVERAGE COVERED WAGE 10 —— JULY 1, 2010 THROUGH JUNE 30, 2012. Notwithstanding any 11 provision of section 97B.1A, subsection 10A, as enacted by this 12 division of this Act, to the contrary, for the period beginning 13 July 1, 2010, and ending June 30, 2012, “final average covered 14 wage” means the member’s three-year average covered wage. 15 Sec. 33. IPERS REGULAR MEMBERS —— REQUIRED CONTRIBUTION 16 RATE FOR FISCAL YEAR 2011-2012. Notwithstanding any provision 17 of section 97B.11 to the contrary, for members in regular 18 service as defined in section 97B.1A, the required contribution 19 rate for the fiscal year beginning July 1, 2011, as provided 20 in section 97B.11, shall be thirteen and forty–five hundredths 21 percent. 22 Sec. 34. EFFECTIVE DATE. The section of this division of 23 this Act amending section 97B.50 takes effect June 30, 2012. 24 Sec. 35. EFFECTIVE UPON ENACTMENT AND RETROACTIVE 25 APPLICABILITY. The section of this division of this Act 26 enacting section 97B.52A, subsection 1, paragraph “c” , 27 subparagraph (2), subparagraph division (c), being deemed of 28 immediate importance, takes effect upon enactment and applies 29 retroactively to May 25, 2008. 30 Sec. 36. EFFECTIVE UPON ENACTMENT AND RETROACTIVE 31 APPLICABILITY. The section of this division of this Act 32 amending 2009 Iowa Acts, chapter 170, section 51, being deemed 33 of immediate importance, takes effect upon enactment and 34 applies retroactively to January 1, 2009. 35 DIVISION III 1 STATEWIDE FIRE AND POLICE 2 -16- LSB 5346IC (12) 83 ec/sc 16/ 32

S.F. _____ H.F. _____ RETIREMENT SYSTEM 3 Sec. 37. Section 8.59, Code 2009, is amended to read as 4 follows: 5 8.59 Appropriations freeze. 6 Notwithstanding contrary provisions of the Code, the amounts 7 appropriated under the applicable sections of the Code for 8 fiscal years commencing on or after July 1, 1993, are limited 9 to those amounts expended under those sections for the fiscal 10 year commencing July 1, 1992. If an applicable section 11 appropriates moneys to be distributed to different recipients 12 and the operation of this section reduces the total amount to 13 be distributed under the applicable section, the moneys shall 14 be prorated among the recipients. As used in this section, 15 “applicable sections” means sections 53.50, 229.35, 230.8, 16 230.11, 411.20 , and 663.44. 17 Sec. 38. Section 411.1, subsection 9, Code Supplement 2009, 18 is amended to read as follows: 19 9. “Earnable compensation” or “compensation earnable” shall 20 mean the annual compensation which a member receives for 21 services rendered as a police officer or fire fighter in the 22 course of employment with a participating city , including any 23 amounts received for overtime compensation . However, the term 24 “earnable compensation” or “compensation earnable” shall not 25 include amounts received for overtime compensation, meal or 26 travel expenses, uniform allowances, fringe benefits, severance 27 pay, or any amount received upon termination or retirement in 28 payment for accumulated sick leave or vacation. Contributions 29 made by a member from the member’s earnable compensation to a 30 plan of deferred compensation shall be included in earnable 31 compensation. Other contributions made to a plan of deferred 32 compensation shall not be included except to the extent 33 provided in rules adopted by the board of trustees pursuant to 34 section 411.5, subsection 3. 35 Sec. 39. Section 411.1, subsection 22, Code Supplement 1 2009, is amended to read as follows: 2 -17- LSB 5346IC (12) 83 ec/sc 17/ 32

S.F. _____ H.F. _____ 22. “Surviving spouse” shall mean the surviving spouse of a 3 deceased member from active service . Surviving spouse shall 4 include a former spouse only if the division of assets in the 5 dissolution of marriage decree pursuant to section 598.17 6 grants the former spouse rights of a spouse under this chapter. 7 Sec. 40. Section 411.6, subsection 3, Code Supplement 2009, 8 is amended to read as follows: 9 3. Ordinary disability retirement benefit. Upon application 10 to the system, of a member in good standing or of the chief 11 of the police or fire departments, respectively, any member 12 in good standing shall be retired by the system, not less 13 than thirty and not more than ninety days next following the 14 date of filing the application, on an ordinary disability 15 retirement allowance, if the medical board after a medical 16 examination of the member certifies that the member is mentally 17 or physically incapacitated for further performance of duty, 18 that the incapacity is likely to be permanent, and that the 19 member should be retired. However, if a person’s membership 20 in the system first commenced on or after July 1, 1992, the 21 member shall not be eligible for benefits with respect to a 22 disability which would not exist, but for a medical condition 23 that was known to exist on the date that membership commenced. 24 A medical condition shall be deemed to have been known to exist 25 on the date that membership commenced if the medical condition 26 is reflected in any record or document completed or obtained 27 in accordance with the system’s medical protocols pursuant to 28 section 400.8, or in any other record or document obtained 29 pursuant to an application for disability benefits from the 30 system, if such record or document existed prior to the date 31 membership commenced. A member who is denied a benefit under 32 this subsection, by reason of a finding by the medical board 33 that the member is not mentally or physically incapacitated 34 for the further performance of duty, shall be entitled to 35 be restored to active service in the same position held 1 immediately prior to the application for disability benefits. 2 -18- LSB 5346IC (12) 83 ec/sc 18/ 32