Senate Study Bill 3159 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON STATE GOVERNMENT BILL BY CHAIRPERSON DANIELSON) 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, the statewide fire and police retirement system, 4 the judicial retirement system, making appropriations, and 5 including effective date and retroactive applicability 6 provisions. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 8 TLSB 5818XC (3) 85 ec/sc

S.F. _____ DIVISION I 1 PUBLIC SAFETY PEACE OFFICERS’ RETIREMENT, ACCIDENT, AND 2 DISABILITY SYSTEM 3 Section 1. Section 97A.1, Code 2014, is amended by adding 4 the following new subsections: 5 NEW SUBSECTION . 5A. “Cancer” means prostate cancer, primary 6 brain cancer, breast cancer, ovarian cancer, cervical cancer, 7 uterine cancer, malignant melanoma, leukemia, non-Hodgkin’s 8 lymphoma, bladder cancer, colorectal cancer, multiple myeloma, 9 testicular cancer, and kidney cancer. 10 NEW SUBSECTION . 9A. “Infectious disease” means HIV or 11 AIDS as defined in section 141A.1, all strains of hepatitis, 12 meningococcal meningitis, and mycobacterium tuberculosis. 13 Sec. 2. Section 97A.6, subsection 5, paragraph b, Code 2014, 14 is amended to read as follows: 15 b. (1) Disease under this section subsection shall mean 16 heart disease or any disease of the lungs or respiratory tract 17 and shall be presumed to have been contracted while on active 18 duty as a result of strain, exposure, or the inhalation of 19 noxious fumes, poison, or gases. 20 (2) Disease under this subsection shall also mean cancer 21 or infectious disease and shall be presumed to have been 22 contracted while on active duty as a result of that duty. 23 (3) However, if a person’s membership in the system first 24 commenced on or after July 1, 1992, and the heart disease 25 or disease of the lungs or respiratory tract , cancer, or 26 infectious disease would not exist, but for a medical condition 27 that was known to exist on the date that membership commenced, 28 the presumption established in this paragraph “b” shall not 29 apply. 30 Sec. 3. Section 97A.8, subsection 1, paragraph e, 31 subparagraph (8), subparagraph division (a), subparagraph 32 subdivision (v), Code 2014, is amended to read as follows: 33 (v) For the fiscal year beginning July 1, 2014, and each 34 fiscal year thereafter, eleven and thirty-five hundredths 35 -1- LSB 5818XC (3) 85 ec/sc 1/ 14

S.F. _____ four-tenths percent. 1 Sec. 4. PUBLIC SAFETY PEACE OFFICERS’ RETIREMENT, ACCIDENT, 2 AND DISABILITY SYSTEM —— REPORT. The public safety peace 3 officers’ retirement, accident, and disability system, as 4 established pursuant to chapter 97A, shall collect data related 5 to the implementation, utilization, and costs associated with 6 the requirements of this division of this Act providing that 7 cancer and infectious disease are presumed to be a disease 8 contracted while a member of the retirement system is on active 9 duty as provided in section 97A.6, subsection 5. In collecting 10 and reporting data, the system shall provide information as 11 to the actuarial cost to the system of the requirements of 12 this division of this Act and shall collect data relative to 13 any associated medical, insurance, or other costs incurred 14 as a result of this division of this Act. The retirement 15 system shall submit a written report to the general assembly by 16 October 1, 2019, concerning the data collected and including 17 the system’s findings and recommendations. 18 DIVISION II 19 IOWA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM 20 Sec. 5. Section 97B.1A, subsection 5, Code 2014, is amended 21 to read as follows: 22 5. “Beneficiary” means the person or persons who are 23 entitled to receive any benefits payable under this chapter 24 at the death of a member, if the person or persons have been 25 designated on a form provided by the system and filed with the 26 system or designated pursuant to a qualified domestic relations 27 order on file with the system . If no such designation is in 28 effect at the time of death of the member or if no person so 29 designated is living at that time, then the beneficiary is the 30 estate of the member. 31 Sec. 6. Section 97B.1A, subsection 8, paragraph b, 32 subparagraph (7), Code 2014, is amended to read as follows: 33 (7) Employees of an area agency on aging , if as of July 34 1, 1994, the agency provides for participation by all of its 35 -2- LSB 5818XC (3) 85 ec/sc 2/ 14

S.F. _____ employees who were participating in an alternative qualified 1 plan pursuant to the requirements of the federal Internal 2 Revenue Code on June 30, 2012, and who by September 1, 2013, 3 filed with the system a valid decision to elect out of coverage 4 under this chapter . 5 Sec. 7. Section 97B.1A, subsection 14A, Code 2014, is 6 amended to read as follows: 7 14A. “Member account” means the account established for each 8 member and includes the member’s accumulated contributions and 9 the member’s share of the accumulated employer contributions as 10 provided in section 97B.53 . “Member account” does not mean the 11 supplemental account for active members. 12 Sec. 8. Section 97B.1A, subsection 22A, Code 2014, is 13 amended by striking the subsection. 14 Sec. 9. Section 97B.7A, subsection 5, Code 2014, is amended 15 to read as follows: 16 5. Travel. In the administration of the investment of 17 moneys in the retirement fund, employees of the system and 18 members of the board may travel outside the state for the 19 purpose of meeting with investment firms and consultants and 20 attending conferences and meetings to fulfill their fiduciary 21 responsibilities. This travel is not subject to section 22 8A.512, subsection 2 . 23 Sec. 10. Section 97B.40, subsection 2, Code 2014, is amended 24 to read as follows: 25 2. If the system determines that a person may have engaged 26 in a fraudulent practice as described under this section , the 27 system may, in addition to any statutory or equitable remedies 28 provided by law, refuse to approve an application for benefits, 29 suspend or reduce benefits to the person, and refer the matter 30 to the auditor of state and to the appropriate law enforcement 31 authorities for possible investigation and prosecution. 32 Sec. 11. Section 97B.44, Code 2014, is amended to read as 33 follows: 34 97B.44 Beneficiary. 35 -3- LSB 5818XC (3) 85 ec/sc 3/ 14

S.F. _____ 1. Each member shall designate , on a form to be furnished 1 by the system or through a qualified domestic relations order 2 on file with the system, designate a beneficiary for death 3 benefits payable under this chapter on the death of the member. 4 The designation may be changed from time to time by the member 5 by filing a new designation with the system. A designation 6 or change in designation made by a member on or after July 7 1, 2000, shall contain the written consent of the member’s 8 spouse, if applicable. The designation of a beneficiary is not 9 applicable if the member receives a refund of all contributions 10 of the member. If a member who has received a refund of 11 contributions returns to employment, the member shall file a 12 new designation with the system. 13 2. If a member has not designated a beneficiary on a form 14 furnished by the system as provided by this section , or if 15 there are no surviving designated beneficiaries of a member, 16 death benefits payable under this chapter shall be paid to the 17 member’s estate. 18 3. However, the The system may accept a married member’s 19 designation or change in designation under this section without 20 the written consent of the member’s spouse if the member 21 submits a notarized statement indicating that the member has 22 been unable to locate the member’s spouse to obtain the written 23 consent of the spouse after reasonable diligent efforts. The 24 member’s designation or change in designation shall become 25 effective upon filing the necessary forms, including the 26 notarized statement, or orders, with the system. The system 27 shall not be liable to the member, the member’s spouse, or 28 to any other person affected by the member’s designation or 29 change of designation, based upon a designation or change of 30 designation accomplished without the written consent of the 31 member’s spouse. 32 Sec. 12. Section 97B.46, subsection 2, Code 2014, is amended 33 to read as follows: 34 2. A member remaining in service after attaining the age 35 -4- LSB 5818XC (3) 85 ec/sc 4/ 14

S.F. _____ of seventy years is entitled to receive a retirement allowance 1 under sections 97B.49A through 97B.49H 97B.49G , as applicable, 2 without terminating employment. 3 Sec. 13. Section 97B.48, subsection 4, Code 2014, is amended 4 to read as follows: 5 4. Payment of a member’s retirement allowance pursuant to 6 sections 97B.49A through 97B.49H 97B.49G shall commence no 7 later than the required beginning date specified under section 8 401(a)(9) of the federal Internal Revenue Code regardless of 9 whether the member has submitted the appropriate notice to 10 receive an allowance. If the lump sum actuarial equivalent 11 under subsection 1 could have been selected by the member, 12 payments shall be made in a lump sum rather than as a monthly 13 allowance. 14 Sec. 14. Section 97B.49B, subsection 1, paragraph e, Code 15 2014, is amended by adding the following new subparagraph: 16 NEW SUBPARAGRAPH . (13) An employee of a judicial district 17 department of correctional services whose condition of 18 employment requires the employee to be certified by the Iowa 19 law enforcement academy and who is required to perform the 20 duties of a parole officer as provided in section 906.2. 21 Sec. 15. Section 97B.49F, subsection 2, Code 2014, is 22 amended by striking the subsection. 23 Sec. 16. Section 97B.50A, subsection 1, paragraph b, Code 24 2014, is amended to read as follows: 25 b. “Net disability retirement allowance” means the amount 26 determined by subtracting the amount paid during the previous 27 calendar year by the member for health insurance or similar 28 health care coverage for the member and the member’s dependents 29 from the amount of the member’s disability retirement 30 allowance, including any dividends and distributions from 31 supplemental accounts, paid for that year pursuant to this 32 section . 33 Sec. 17. Section 97B.50A, subsection 9, Code 2014, is 34 amended to read as follows: 35 -5- LSB 5818XC (3) 85 ec/sc 5/ 14

S.F. _____ 9. Medical board. The system shall designate a medical 1 board to be composed of three a physician or physicians from 2 the university of Iowa hospitals and clinics who shall arrange 3 for and pass upon the medical examinations required under 4 this section and shall report in writing to the system the 5 conclusions and recommendations upon all matters duly referred 6 to the medical board. Each report of a medical examination 7 under this section shall include the medical board’s findings 8 as to the extent of the member’s physical or mental impairment. 9 Except as required by this section , each report shall be 10 confidential and shall be maintained in accordance with the 11 federal Americans With Disabilities Act, and any other state 12 or federal law containing requirements for confidentiality of 13 medical records. 14 Sec. 18. Section 97B.53, Code 2014, is amended by adding the 15 following new subsection: 16 NEW SUBSECTION . 11. A request for a refund under this 17 section made by a member who is married requires the written 18 acknowledgment of the member’s spouse. However, the system 19 may accept a married member’s request for a refund under this 20 section without the written acknowledgment of the member’s 21 spouse if the member submits a statement affirming that after 22 reasonable diligent efforts the member has been unable to 23 locate the member’s spouse to obtain the written acknowledgment 24 of the spouse. A married member’s request for a refund under 25 this section shall become effective upon filing the necessary 26 forms, or including the affirmation if applicable, with the 27 system. The system shall not be liable to the member, the 28 member’s spouse, nor to any other person affected by the 29 member’s request for a refund based upon a request for a refund 30 accomplished without the written acknowledgment of the member’s 31 spouse. 32 Sec. 19. Section 97B.53A, Code 2014, is amended to read as 33 follows: 34 97B.53A Duty of system. 35 -6- LSB 5818XC (3) 85 ec/sc 6/ 14

S.F. _____ Upon a member’s termination of covered employment prior to 1 the member’s retirement, the system shall send the member by 2 first class mail, to the member’s last known mailing address, 3 a notice setting forth the balance and status of the member’s 4 account and supplemental account and an explanation of the 5 courses of action available to the member under this chapter . 6 Sec. 20. Section 97B.53B, subsection 1, paragraph d, 7 subparagraph (1), subparagraph division (a), Code 2014, is 8 amended to read as follows: 9 (a) All or any portion of a member’s account and 10 supplemental account . 11 Sec. 21. Section 97B.70, subsection 3, Code 2014, is amended 12 to read as follows: 13 3. Interest shall be credited to the accumulated 14 contributions and accumulated employer contributions accounts , 15 and supplemental accounts of active members, inactive vested 16 members, and, effective January 1, 1999, to inactive nonvested 17 members, until the quarter prior to the quarter in which the 18 member’s first retirement allowance is paid or in which the 19 member is issued a refund under section 97B.53 , or in which a 20 death benefit is issued. 21 Sec. 22. Section 97B.80, subsection 1, Code 2014, is amended 22 to read as follows: 23 1. a. For purposes of this subsection, “eligible member” 24 means as follows: 25 (1) For the period beginning July 1, 1992, and ending June 26 30, 2014, a vested or retired member who has one or more full 27 calendar years of covered wages. 28 (2) Beginning on or after July 1, 2014, a member vested by 29 service or a retired member who is vested by service and who 30 is within six months of the retired member’s first month of 31 entitlement. 32 b. Effective July 1, 1992, a vested or retired An eligible 33 member who has one or more full calendar years of covered wages 34 and who at any time served on active duty in the armed forces of 35 -7- LSB 5818XC (3) 85 ec/sc 7/ 14

S.F. _____ the United States, upon submitting verification of the dates 1 of the active duty service, may make contributions to the 2 retirement system for all or a portion of the period of time of 3 the active duty service, in increments of one or more calendar 4 quarters, and receive credit for membership service and prior 5 service for the period of time for which the contributions are 6 made. 7 Sec. 23. Section 97B.80C, subsection 1, Code 2014, is 8 amended by adding the following new paragraph: 9 NEW PARAGRAPH . 0a. “Eligible member” means as follows: 10 (1) Prior to July 1, 2014, a vested or retired member. 11 (2) Beginning on or after July 1, 2014, a member vested by 12 service or a retired member who is vested by service and who 13 is within six months of the retired member’s first month of 14 entitlement. 15 Sec. 24. Section 97B.80C, subsection 2, paragraphs a, b, and 16 c, Code 2014, are amended to read as follows: 17 a. A vested or retired An eligible member may make 18 contributions to the retirement system to purchase up to the 19 maximum amount of permissive service credit for qualified 20 service as determined by the system, pursuant to Internal 21 Revenue Code section 415(n), the requirements of this section , 22 and the system’s administrative rules. 23 b. A vested or retired An eligible member of the retirement 24 system may make contributions to the retirement system to 25 purchase up to a maximum of twenty quarters of permissive 26 service credit for nonqualified service as determined by the 27 system, pursuant to Internal Revenue Code section 415(n), the 28 requirements of this section , and the system’s administrative 29 rules. A vested or retired An eligible member must have at 30 least twenty quarters of covered wages in order to purchase 31 permissive service credit for nonqualified service. 32 c. A vested or retired An eligible member may convert 33 regular member service credit to special service credit by 34 payment of the amount actuarially determined as necessary to 35 -8- LSB 5818XC (3) 85 ec/sc 8/ 14

S.F. _____ fund the resulting increase in the member’s accrued benefit. 1 The conversion shall be treated as a purchase of qualified 2 service credit subject to the requirements of paragraph “a” 3 if the service credit to be converted was or would have been 4 for qualified service. The conversion shall be treated as 5 a purchase of nonqualified service credit subject to the 6 requirements of paragraph “b” if the service credit to be 7 converted was purchased as nonqualified service credit. 8 Sec. 25. Section 231.33, subsection 21, Code 2014, is 9 amended to read as follows: 10 21. Comply with all applicable requirements of the Iowa 11 public employees’ retirement system established pursuant to 12 chapter 97B . Notwithstanding any provision to the contrary, 13 an employee of an area agency on aging that was enrolled in 14 an alternative qualified plan prior to July 1, 2012, may 15 continue participation in that alternative qualified plan in 16 lieu of mandatory participation in the Iowa public employees’ 17 retirement system. 18 Sec. 26. Section 602.11115, subsection 2, Code 2014, is 19 amended to read as follows: 20 2. To commence coverage under the judicial retirement 21 system pursuant to article 9 , part 1, effective July 1, 1984, 22 but to become an inactive member of the Iowa public employees’ 23 retirement system pursuant to chapter 97B and remain eligible 24 for benefits under sections 97B.49A through 97B.49H 97B.49G for 25 the period of membership service under chapter 97B . 26 Sec. 27. Section 602.11116, subsection 2, Code 2014, is 27 amended to read as follows: 28 2. To commence membership under the judicial retirement 29 system pursuant to article 9 , part 1, effective July 1, 1998, 30 but to become an inactive member of the Iowa public employees’ 31 retirement system pursuant to chapter 97B and remain eligible 32 for benefits under sections 97B.49A through 97B.49H 97B.49G , as 33 applicable, for the period of membership service under chapter 34 97B . 35 -9- LSB 5818XC (3) 85 ec/sc 9/ 14

S.F. _____ Sec. 28. REPEAL. Sections 97B.49H and 97B.49I, Code 2014, 1 are repealed. 2 Sec. 29. EFFECTIVE UPON ENACTMENT. The following provision 3 or provisions of this division of this Act, being deemed of 4 immediate importance, take effect upon enactment: 5 1. The section of this division of this Act amending section 6 97B.1A, subsection 8, paragraph b, subparagraph (7). 7 Sec. 30. RETROACTIVE APPLICABILITY. The following 8 provision or provisions of this division of this Act apply 9 retroactively to June 30, 2012: 10 1. The section of this division of this Act amending section 11 97B.1A, subsection 8, paragraph b, subparagraph (7). 12 2. The section of this division of this Act amending section 13 231.33, subsection 21. 14 DIVISION III 15 STATEWIDE FIRE AND POLICE RETIREMENT SYSTEM 16 Sec. 31. NEW SECTION . 411.19 State appropriation. 17 1. There is appropriated from the general fund of the state 18 for each fiscal year an amount equal to three and seventy-nine 19 hundredths percent of the covered earnable compensation to be 20 distributed to the statewide fire and police retirement system, 21 or to the cities participating in the system, to finance the 22 cost of benefits provided in this chapter by amendments of the 23 Acts of the Sixty-sixth General Assembly, chapter 1089. The 24 method of distribution shall be determined by the board of 25 trustees based on information provided by the actuary of the 26 statewide retirement system. 27 2. Moneys appropriated by the state shall not be used 28 to reduce the normal rate of contribution of any city below 29 seventeen percent. 30 DIVISION IV 31 JUDICIAL RETIREMENT SYSTEM 32 Sec. 32. JUDICIAL RETIREMENT FUND. There is transferred 33 from the general fund of the state to the judicial retirement 34 fund described in section 602.9104, for the fiscal year 35 -10- LSB 5818XC (3) 85 ec/sc 10/ 14

S.F. _____ beginning July 1, 2013, and ending June 30, 2014, an amount 1 equal to $18,900,000. 2 Sec. 33. EFFECTIVE UPON ENACTMENT. This division of this 3 Act, being deemed of immediate importance, takes effect upon 4 enactment. 5 EXPLANATION 6 The inclusion of this explanation does not constitute agreement with 7 the explanation’s substance by the members of the general assembly. 8 This bill makes numerous changes to public retirement 9 systems, including the public safety peace officers’ 10 retirement, accident, and disability system, the Iowa public 11 employees’ retirement system, the statewide fire and police 12 retirement system, and the judicial retirement system. The 13 changes to each applicable public retirement system are as 14 follows: 15 PEACE OFFICERS’ RETIREMENT, ACCIDENT, AND DISABILITY SYSTEM 16 (PORS). 17 This division of the bill provides that certain cancers and 18 infectious diseases contracted by peace officer members of 19 PORS are presumed to be a disease contracted while on active 20 duty due to the job for purposes of establishing an accidental 21 disability pension. “Cancer” and “infectious disease” are 22 defined the same as those terms are defined for the statewide 23 fire and police retirement system established in Code chapter 24 411. The bill also provides that the presumption will not 25 apply to peace officer members who joined the retirement system 26 after July 1, 1992, in which the cancer or infectious disease 27 would not have existed but for a medical condition that was 28 known on the date the member joined. The bill also increases 29 the minimum contribution rate for peace officer members of the 30 pension system beginning July 1, 2014, from 11.35 percent to 31 11.4 percent of earnable compensation. The PORS is directed to 32 conduct a study and collect data related to the implementation, 33 utilization, and costs associated with the requirements related 34 to cancers and infectious diseases and to submit a written 35 -11- LSB 5818XC (3) 85 ec/sc 11/ 14

S.F. _____ report to the general assembly by October 1, 2019, concerning 1 the data collected and including the system’s findings and 2 recommendations. 3 IOWA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM (IPERS). 4 Code sections 97B.1A(5) and 97B.44, concerning beneficiaries 5 under IPERS, are amended to provide that beneficiaries can be 6 designated through a qualified domestic relations order. 7 Code section 97B.1A(8)(b), defining employees who are not 8 covered under IPERS, is amended to provide that employees of an 9 area agency on aging who were participating in an alternative 10 retirement plan on June 30, 2012, and who elected out of IPERS 11 coverage by September 1, 2013, are excluded from coverage under 12 IPERS. A corresponding amendment is made to Code section 13 231.33, concerning area agencies on aging. These provisions 14 take effect upon enactment and apply retroactively to June 30, 15 2012. 16 Code section 97B.40, concerning fraudulent practices under 17 IPERS, is amended. The bill authorizes IPERS to refuse to 18 approve an application for benefits or to suspend or reduce 19 benefits to a person if the IPERS system determines the person 20 may have engaged in a fraudulent practice. 21 Code section 97B.49B, concerning members in a protection 22 occupation, is amended to provide that parole officers employed 23 by a judicial district department of correctional services who 24 are certified by the Iowa law enforcement academy are included 25 within the protection occupation category of IPERS. 26 Code section 97B.49F(2), establishing the favorable 27 experience dividend program for IPERS members who retired on or 28 after July 1, 1990, is stricken. 29 Code section 97B.49H, establishing active member 30 supplemental accounts, is repealed. The bill includes 31 corresponding amendments related to the repeal. 32 Code section 97B.49I, providing for a qualified benefits 33 arrangement, is repealed. 34 Code section 97B.50A(9), concerning the medical board 35 -12- LSB 5818XC (3) 85 ec/sc 12/ 14

S.F. _____ used for purposes of disability benefits for special service 1 IPERS members, is amended to allow IPERS to use one or more 2 physicians from the University of Iowa as the medical board. 3 Current law requires that the medical board consist of three 4 physicians from the University of Iowa. 5 Code section 97B.53, concerning refunds, is amended to 6 require a married IPERS member seeking a refund to submit 7 a written acknowledgment of the member’s spouse to IPERS. 8 The bill provides that a married member may still receive 9 a refund if the member is unable to locate the spouse and 10 IPERS shall not be liable based upon a refund made without the 11 acknowledgment of the member’s spouse. 12 Code section 97B.80, concerning the purchase of IPERS 13 service for military service, is amended to provide that only a 14 member vested by service or a retired member who is vested by 15 service and is within six months of the member’s first month 16 of entitlement may make a service purchase under this Code 17 section. Currently, any vested or retired member, regardless 18 of how the member became vested, who has at least one year of 19 IPERS wages may make a service purchase at any time. 20 Code section 97B.80C, concerning purchases of permissive 21 service credit, is amended to provide that only a member 22 vested by service or a retired member who is vested by 23 service and is within six months of the member’s first month 24 of entitlement may make a service purchase under this Code 25 section. Currently, any vested or retired member, regardless 26 of how the member became vested, may make a service purchase 27 under this Code section at any time. 28 STATEWIDE FIRE AND POLICE RETIREMENT SYSTEM 29 New Code section 411.19 provides for a state appropriation 30 to the statewide fire and police retirement system established 31 in Code chapter 411 equal to 3.79 percent of the covered 32 earnable compensation of the members. The percentage 33 represents the cost of benefits provided by Acts of the 34 66th General Assembly. The bill restores the standing state 35 -13- LSB 5818XC (3) 85 ec/sc 13/ 14

S.F. _____ appropriation to the retirement system that was repealed by 1 2010 Acts, chapter 1167. The repealed language had set the 2 state appropriation based upon the cost of benefits provided 3 by the Acts of the 66th General Assembly but did not specify a 4 percentage. 5 JUDICIAL RETIREMENT SYSTEM 6 The bill transfers moneys from the general fund of the state 7 to the judicial retirement fund for FY 2013-2014. The division 8 takes effect upon enactment. 9 -14- LSB 5818XC (3) 85 ec/sc 14/ 14