House File 2518 - Reprinted HOUSE FILE 2518 BY COMMITTEE ON APPROPRIATIONS (SUCCESSOR TO HF 2502) (SUCCESSOR TO HSB 566) (As Amended and Passed by the House March 17, 2010 ) 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 HF 2518 (7) 83 ec/sc/mb

H.F. 2518 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- HF 2518 (7) 83 ec/sc/mb 1/ 25

H.F. 2518 and the parent of the individual was an active member of the 1 system. 2 Sec. 3. Section 97A.6, subsection 2, paragraph e, 3 subparagraph (6), Code 2009, is amended to read as follows: 4 (6) For a member who terminates service, other than by 5 death or disability , on or after July 1, 2000, and who does 6 not withdraw the member’s contributions pursuant to section 7 97A.16, upon the member’s retirement there shall be added 8 two and three-fourths percent of the member’s average final 9 compensation for each year of service over twenty-two years. 10 However, this subparagraph does not apply to more than ten 11 additional years of service. 12 Sec. 4. Section 97A.6, subsection 5, paragraph b, Code 2009, 13 is amended by striking the paragraph. 14 Sec. 5. Section 97A.6, subsection 7, paragraph a, 15 subparagraph (2), Code 2009, is amended to read as follows: 16 (2) A beneficiary retired under the provisions of this 17 paragraph in order to be eligible for continued receipt of 18 retirement benefits shall no later than May 15 of each year 19 submit to the board of trustees a copy of the beneficiary’s 20 state federal individual income tax return for the preceding 21 year. The beneficiary shall also submit, within sixty days, 22 any documentation requested by the system that is determined to 23 be necessary by the system to determine the beneficiary’s gross 24 wages. 25 Sec. 6. Section 97A.6, subsection 7, paragraph b, Code 2009, 26 is amended to read as follows: 27 b. Should a disability beneficiary under age fifty-five 28 be restored to active service at a compensation not less than 29 the disability beneficiary’s average final compensation, the 30 disability beneficiary’s retirement allowance shall cease, the 31 disability beneficiary shall again become a member and shall 32 contribute thereafter at the same rate payable by other members 33 of comparable rank, seniority, and age, and former service on 34 the basis of which the disability beneficiary’s service was 35 -2- HF 2518 (7) 83 ec/sc/mb 2/ 25

H.F. 2518 computed at the time of retirement shall be restored to full 1 force and effect. Upon subsequent retirement the disability 2 beneficiary shall be credited with all service as a member, and 3 also with no more than two years of the period of disability 4 retirement. 5 Sec. 7. Section 97A.8, subsection 1, paragraph b, 6 subparagraph (2), subparagraph division (e), Code 2009, is 7 amended by striking the subparagraph division and inserting in 8 lieu thereof the following: 9 (e) For the fiscal year beginning July 1, 2012, twenty-seven 10 percent. 11 (f) For the fiscal year beginning July 1, 2013, twenty-nine 12 percent. 13 (g) For the fiscal year beginning July 1, 2014, thirty-one 14 percent. 15 (h) For the fiscal year beginning July 1, 2015, thirty-three 16 percent. 17 (i) For the fiscal year beginning July 1, 2016, thirty-five 18 percent. 19 (j) For each fiscal year beginning on or after July 1, 2017, 20 the lesser of thirty-seven percent or the normal contribution 21 rate as calculated pursuant to subparagraph (1). 22 Sec. 8. Section 97A.8, subsection 1, paragraph e, 23 subparagraph (8), Code 2009, is amended to read as follows: 24 (8) (a) For purposes of this subparagraph, the “applicable 25 employee percentage” shall be as follows: 26 (i) For the fiscal period beginning July 1, 2006, and ending 27 June 30, 2011, nine and thirty-five hundredths percent. 28 (ii) For the fiscal year beginning July 1, 2011, nine and 29 eighty-five hundredths percent. 30 (iii) For the fiscal year beginning July 1, 2012, ten and 31 thirty-five hundredths percent. 32 (iv) For the fiscal year beginning July 1, 2013, ten and 33 eighty-five hundredths percent. 34 (v) For the fiscal year beginning July 1, 2014, and each 35 -3- HF 2518 (7) 83 ec/sc/mb 3/ 25

H.F. 2518 fiscal year thereafter, eleven and thirty-five hundredths 1 percent. 2 (b) Notwithstanding any other provision of this chapter, 3 beginning July 1, 1996, and each fiscal year thereafter, an 4 amount equal to the member’s contribution rate times each 5 member’s compensation shall be paid to the retirement fund from 6 the earnable compensation of the member. For the purposes 7 of this subparagraph, the member’s contribution rate shall 8 be nine and thirty-five hundredths percent the applicable 9 employee percentage . However, the system shall increase the 10 member’s contribution rate as necessary to cover any increase 11 in cost to the system resulting from statutory changes which 12 are enacted by any session of the general assembly meeting 13 after January 1, 1995, if the increase cannot be absorbed 14 within the contribution rates otherwise established pursuant to 15 this paragraph, but subject to a maximum employee contribution 16 rate of eleven and three-tenths percent. After the employee 17 contribution reaches eleven and three-tenths percent, sixty 18 percent of the additional cost of such statutory changes shall 19 be paid by the employer under paragraph “c” and forty percent 20 of the additional cost shall be paid by employees under this 21 subparagraph (8). 22 Sec. 9. Section 97A.8, subsection 1, Code 2009, is amended 23 by adding the following new paragraph: 24 NEW PARAGRAPH . i. Notwithstanding any provision of this 25 subsection to the contrary, if any statutory changes are 26 enacted by any session of the general assembly meeting after 27 January 1, 2011, which increases the cost to the system, 28 the system shall, if the increased cost cannot be absorbed 29 within the contribution rates otherwise established pursuant 30 to this subsection at the time the statutory changes are 31 enacted, increase the normal contribution rate and the member’s 32 contribution rate as necessary to cover any increase in cost 33 by providing that sixty percent of the additional cost of such 34 statutory changes shall be paid by the employer under paragraph 35 -4- HF 2518 (7) 83 ec/sc/mb 4/ 25

H.F. 2518 “c” and forty percent of the additional cost shall be paid by 1 employees under paragraph “e” , subparagraph (8). 2 Sec. 10. Section 97A.10, subsection 1, paragraph a, 3 subparagraph (1), Code 2009, is amended to read as follows: 4 (1) “Eligible qualified service” means as follows: 5 (a) Service with the department prior to July 1, 1994, in 6 a position as a gaming enforcement officer, fire prevention 7 inspector peace officer, or as an employee of the division of 8 capitol police except clerical workers. 9 (b) Service service as a member of a city fire retirement 10 system or police retirement system operating under chapter 411 11 prior to January 1, 1992, for which service was not eligible to 12 be transferred to this system pursuant to section 97A.17. 13 Sec. 11. Section 97A.10, subsections 2 and 3, Code 2009, are 14 amended to read as follows: 15 2. An active member of the system may make contributions to 16 the system to purchase up to the maximum amount of permissive 17 service credit for eligible qualified service as determined by 18 the system, pursuant to Internal Revenue Code section 415(n) 19 and the requirements of this section. A member seeking to 20 purchase permissive service credit pursuant to this section 21 shall file a written application along with appropriate 22 documentation with the department by July 1, 2007 2011 . 23 3. A member making contributions for a purchase of 24 permissive service credit for eligible qualified service under 25 this section shall make contributions in an amount equal to the 26 actuarial cost of the permissive service credit purchase , less 27 an amount equal to the member’s contributions under chapter 28 411 for the period of eligible qualified service together 29 with interest at a rate determined by the board of trustees . 30 For purposes of this subsection, the actuarial cost of the 31 permissive service credit purchase is an amount determined by 32 the system in accordance with actuarial tables, as reported 33 to the system by the system’s actuary, which reflects the 34 actuarial cost necessary to fund an increased retirement 35 -5- HF 2518 (7) 83 ec/sc/mb 5/ 25

H.F. 2518 allowance resulting from the purchase of permissive service 1 credit. 2 Sec. 12. Section 97A.11, Code 2009, is amended to read as 3 follows: 4 97A.11 Contributions by the state. 5 On or before the first day of November January in each year, 6 the board of trustees shall certify to the director of the 7 department of administrative services the amounts which will 8 become due and payable during the fiscal year next following to 9 the retirement fund. The amounts so certified shall be paid 10 by the director of the department of administrative services 11 out of the funds appropriated for the Iowa department of public 12 safety, to the treasurer of state, the same to be credited to 13 the system for the ensuing fiscal year. 14 Sec. 13. NEW SECTION . 97A.11A Supplemental state 15 appropriation. 16 1. Beginning with the fiscal year commencing July 1, 17 2012, and ending June 30 of the fiscal year during which the 18 board determines that the system’s funded ratio of assets 19 to liabilities is at least eighty-five percent, there is 20 appropriated from the general fund of the state for each fiscal 21 year to the retirement fund described in section 97A.8, an 22 amount equal to five million dollars. 23 2. Moneys appropriated by the state pursuant to this section 24 shall not be used to reduce the normal rate of contribution by 25 the state below seventeen percent. 26 Sec. 14. Section 97A.14, Code 2009, is amended to read as 27 follows: 28 97A.14 Hospitalization and medical attention. 29 1. The board of trustees shall provide hospital, nursing, 30 and medical attention for the members in service when injured 31 while in the performance of their duties and shall continue 32 to provide hospital, nursing, long-term care, and medical 33 attention for injuries or diseases incurred while in the 34 performance of their duties for the members but only while 35 -6- HF 2518 (7) 83 ec/sc/mb 6/ 25

H.F. 2518 the members are still receiving a retirement allowance under 1 section 97A.6, subsection 6. The cost of hospital, nursing, 2 and medical attention shall be paid out of the retirement fund. 3 However, any amounts received by the injured person under the 4 workers’ compensation law of the state, or from any other 5 source for such specific purposes, shall be deducted from the 6 amount paid by the board of trustees provisions of under this 7 section. 8 2. For purposes of this section, medical attention shall 9 include but not be limited to services provided by licensed 10 medical personnel to include office, hospital, nursing home 11 care, long-term care, and prescriptions for medicine or 12 equipment. Within twelve months of receiving treatment or 13 incurring a cost with direct correlation to the disabling 14 condition, the beneficiary of an accidental disability benefit 15 shall submit a written request for reimbursement to the board. 16 A denial of reimbursement by the board shall be subject to 17 judicial review in the same manner as any other action by the 18 board in accordance with section 97A.6, subsection 13. 19 Sec. 15. PUBLIC SAFETY PEACE OFFICERS’ RETIREMENT, 20 ACCIDENT, AND DISABILITY SYSTEM —— ADDITIONAL APPROPRIATION 21 FOR PURCHASE OF SERVICE. If section 97A.10 is amended by this 22 Act to provide for the purchase of eligible service credit on 23 and after July 1, 2010, there shall be appropriated from the 24 general fund of the state to the retirement fund described in 25 section 97A.8 an amount equal to that portion of the actuarial 26 cost of the permissive service credit purchase for eligible 27 service credit pursuant to section 97A.10 that is not required 28 to be contributed by a member making contributions to the 29 system for that purchase. 30 Sec. 16. PUBLIC SAFETY PEACE OFFICERS’ RETIREMENT, 31 ACCIDENT, AND DISABILITY SYSTEM —— EMPLOYERS CONTRIBUTION RATE 32 CALCULATION STUDY. 33 1. The board of trustees of the Iowa department of public 34 safety peace officers’ retirement, accident, and disability 35 -7- HF 2518 (7) 83 ec/sc/mb 7/ 25

H.F. 2518 system, as defined in section 97A.2, shall, in consultation 1 with the system’s actuary, conduct a study concerning the 2 calculation of the employers contribution rate beginning on and 3 after July 1, 2017, with the goal of establishing a mechanism 4 for ensuring that the system’s funded ratio of assets to 5 liabilities is at least eighty-five percent. 6 2. On or before October 15, 2015, the board of trustees 7 shall file a report with the legislative services agency, for 8 distribution to the public retirement systems committee, which 9 contains the results of the study and any recommendations for 10 statutory changes to implement the recommendations of the 11 study. 12 Sec. 17. PUBLIC SAFETY PEACE OFFICERS’ RETIREMENT, 13 ACCIDENT, AND DISABILITY SYSTEM —— ADJUSTMENT OF PENSIONS 14 PAYABLE. It is the intent of the general assembly that the 15 applicable amount for each adjustment occurring on July 1 16 as provided in section 97A.6, subsection 14, paragraph “a” , 17 subparagraph (2), subparagraph division (a), shall be the 18 exact dollar amount listed in each subparagraph subdivision 19 of subparagraph division (a) for each July 1 in which that 20 particular subparagraph subdivision applies and shall not 21 be increased above the amount listed in that subparagraph 22 subdivision for each year that the subparagraph subdivision 23 applies. However, the applicable amount for each adjustment 24 occurring on or after July 1, 2010, as provided by this 25 section, shall not be less than the applicable amount for the 26 adjustment for the previous July 1. 27 Sec. 18. PUBLIC SAFETY PEACE OFFICERS’ RETIREMENT, 28 ACCIDENT, AND DISABILITY SYSTEM —— BOARD REPORT. 29 1. The board of trustees of the Iowa department of 30 public safety peace officers’ retirement, accident, and 31 disability system, as defined in section 97A.2, shall 32 conduct a comprehensive examination of the plan design 33 of the Iowa department of public safety peace officers’ 34 retirement, accident, and disability system, pursuant to the 35 -8- HF 2518 (7) 83 ec/sc/mb 8/ 25

H.F. 2518 principles established in chapter 97D, with the goal of making 1 recommendations for benefit and other statutory changes to the 2 system that will maintain an adequate retirement for members at 3 a reasonable cost to members and employers. 4 2. On or before October 15, 2011, the board of trustees 5 shall file a report with the legislative services agency, for 6 distribution to the public retirement systems committee, which 7 contains the results of the comprehensive examination and any 8 recommendations for benefit or other statutory changes to the 9 system. 10 DIVISION II 11 IOWA PUBLIC EMPLOYEES’ 12 RETIREMENT SYSTEM 13 Sec. 19. Section 97B.1A, Code Supplement 2009, is amended by 14 adding the following new subsection: 15 NEW SUBSECTION . 10A. “Final average covered wage” means the 16 greater of the following: 17 a. (1) The member’s covered wages averaged for the 18 highest five years of the member’s regular service, except 19 as otherwise provided in this paragraph. The highest five 20 years of a member’s covered wages shall be determined using 21 calendar years. However, if a member’s final quarter of a 22 year of employment does not occur at the end of a calendar 23 year, the system may determine the wages for the fifth year by 24 computing the average quarter of all quarters from the member’s 25 highest calendar year of covered wages not being used in the 26 selection of the four highest years and using the computed 27 average quarter for each quarter in the fifth year in which 28 no wages have been reported in combination with the final 29 quarter or quarters of the member’s service to create a full 30 calendar year. However, the system shall not use the member’s 31 final quarter of wages if using that quarter would reduce 32 the member’s final average covered wage. If the five-year 33 average covered wage of a member exceeds the highest maximum 34 covered wages in effect for a calendar year during the member’s 35 -9- HF 2518 (7) 83 ec/sc/mb 9/ 25

H.F. 2518 period of service, the five-year average covered wage of the 1 member shall be reduced to the highest maximum covered wages in 2 effect during the member’s period of service. Notwithstanding 3 any other provision of this subparagraph to the contrary, 4 a member’s wages for the fifth year as computed under this 5 subparagraph shall not exceed, by more than three percent, the 6 member’s highest actual calendar year of covered wages. 7 (2) Notwithstanding any other provisions of this paragraph 8 “a” to the contrary, the member’s five-year average covered 9 wage shall be the lesser of the five-year average covered wage 10 as calculated pursuant to subparagraph (1) and the adjusted 11 covered wage amount. For purposes of this subparagraph (2), 12 the covered wage amount shall be an amount equal to one hundred 13 thirty-four percent of the member’s applicable calendar year 14 wages. The member’s applicable calendar year wages shall be 15 the member’s highest calendar year of covered wages not used in 16 the calculation of the member’s five-year average covered wage 17 pursuant to subparagraph (1), or such other calendar year of 18 covered wages selected by the system pursuant to rules adopted 19 by the system. 20 b. If the member was vested as of June 30, 2012, the 21 member’s three-year average covered wage as of June 30, 2012. 22 Sec. 20. Section 97B.1A, subsection 24, paragraph c, Code 23 Supplement 2009, is amended to read as follows: 24 c. Notwithstanding any other provisions of this subsection 25 to the contrary, for a member who retires on or after July 1, 26 2007, the member’s three-year average covered wage shall be the 27 lesser of the three-year average covered wage as calculated 28 pursuant to paragraph “a” and the adjusted covered wage 29 amount. For purposes of this paragraph, the adjusted covered 30 wage amount shall be the greater of the member’s three-year 31 average covered wage calculated pursuant to paragraph “a” as 32 of July 1, 2007, and an amount equal to one hundred twenty-one 33 percent of the member’s applicable calendar year wages. The 34 member’s applicable calendar year wages shall be the member’s 35 -10- HF 2518 (7) 83 ec/sc/mb 10/ 25

H.F. 2518 highest full calendar year of covered wages not used in the 1 calculation of the member’s three-year average covered wage 2 pursuant to paragraph “a” , or , if the member does not have 3 another full calendar year of covered wages that was not used 4 in the calculation of the three-year average covered wage under 5 paragraph “a” , the lowest full calendar year of covered wages 6 that was used in the calculation of the member’s three-year 7 average covered wage pursuant to paragraph “a” such other 8 calendar year of covered wages selected by the system pursuant 9 to rules adopted by the system . 10 Sec. 21. Section 97B.1A, subsection 25, paragraph a, 11 subparagraphs (1) through (5), Code Supplement 2009, are 12 amended by striking the subparagraphs and inserting in lieu 13 thereof the following: 14 (1) Is vested by service. 15 (2) Prior to July 1, 2005, has attained the age of 16 fifty-five. 17 (3) Between July 1, 2005, and June 30, 2012, has attained 18 the age of fifty-five or greater while in covered employment. 19 (4) On and after July 1, 2012, meets one of the following 20 requirements: 21 (a) For a member in special service, has attained the age of 22 fifty-five or greater while in covered employment. 23 (b) For a member in regular service, has attained the age of 24 sixty-five or greater while in covered employment. 25 Sec. 22. Section 97B.1A, subsection 25, Code Supplement 26 2009, is amended by adding the following new paragraph: 27 NEW PARAGRAPH . d. “Vested by service” means a member who 28 meets one of the following requirements: 29 (1) Prior to July 1, 1965, had attained the age of 30 forty-eight and completed at least eight years of service. 31 (2) Between July 1, 1965, and June 30, 1973, had completed 32 at least eight years of service. 33 (3) Between July 1, 1973, and June 30, 2012, had completed 34 at least four years of service. 35 -11- HF 2518 (7) 83 ec/sc/mb 11/ 25

H.F. 2518 (4) On and after July 1, 2012, meets one of the following 1 requirements: 2 (a) For a member in special service, has completed at least 3 four years of special service. 4 (b) For a member in regular service, has completed at least 5 seven years of service. 6 (5) On or after July 1, 1988, an inactive member who had 7 accumulated, as of the date of the member’s last termination of 8 employment, years of membership service equal to or exceeding 9 the years of membership service specified in this paragraph 10 “d” for qualifying as vested by service on that date of 11 termination. 12 Sec. 23. Section 97B.4, subsection 2, paragraph c, Code 13 2009, is amended to read as follows: 14 c. In administering this chapter , the system may enter into 15 a biennial agreement with the department of administrative 16 services concerning the sharing of resources between the 17 system and department which are of benefit to each and 18 which are consistent with the mission of the system and 19 the department. The budget program for the system shall be 20 established by the chief executive officer in consultation with 21 the board and other staff of the system and shall be compiled 22 and submitted by the system pursuant to section 8.23. 23 Sec. 24. Section 97B.4, subsection 4, paragraph a, Code 24 2009, is amended to read as follows: 25 a. Annual report to governor. Not later than the 26 thirty-first day of December of each year, the system shall 27 submit to the governor a report covering the administration 28 and operation of this chapter during the preceding fiscal 29 year and shall make recommendations for amendments to this 30 chapter. The report shall include a balance sheet of the 31 moneys in the retirement fund. The report shall also include 32 information concerning the investment management expenses 33 for the retirement fund for each fiscal year expressed as a 34 percent of the market value of the retirement fund investment 35 -12- HF 2518 (7) 83 ec/sc/mb 12/ 25

H.F. 2518 assets , including the information described in section 97B.7, 1 subsection 3 , paragraph “d” . The information provided under 2 this paragraph shall also include information on the investment 3 policies and investment performance of the retirement fund. 4 In providing this information, to the extent possible, the 5 system shall include the total investment return for the entire 6 fund, for portions of the fund managed by investment managers, 7 and for internally managed portions of the fund, and the cost 8 of managing the fund per thousand dollars of assets. The 9 performance shall be based upon market value, and shall be 10 contrasted with relevant market indices and with performances 11 of pension funds of similar asset size. 12 Sec. 25. Section 97B.11, subsection 3, paragraph d, Code 13 2009, is amended to read as follows: 14 d. “Required contribution rate” means that percentage of the 15 covered wages of members in regular service, members described 16 in section 97B.49B, and members described in section 97B.49C, 17 that the system shall, for each fiscal year, separately set 18 for members in each membership category as provided in this 19 paragraph. The required contribution rate that is set by the 20 system for a membership category shall be the contribution 21 rate the system actuarially determines, based upon the 22 most recent actuarial valuation of the system and using the 23 actuarial methods, assumptions, and funding policy approved 24 by the investment board, is the rate required by the system 25 to discharge its liabilities as a percentage of the covered 26 wages of members in that membership category. However, the 27 required contribution rate set by the system for members in 28 regular service for a fiscal year shall not vary by more than 29 one-half one percentage point from the required contribution 30 rate for the prior fiscal year. 31 Sec. 26. Section 97B.49A, subsection 3, Code 2009, is 32 amended to read as follows: 33 3. Calculation of monthly allowance. For each active or 34 inactive vested member retiring on or after July 1, 1994, with 35 -13- HF 2518 (7) 83 ec/sc/mb 13/ 25

H.F. 2518 four or more complete years of service, a monthly benefit shall 1 be computed which is equal to one-twelfth of an amount equal 2 to the applicable percentage of the three-year final average 3 covered wage multiplied by a fraction of years of service. 4 However, if benefits under this section commence on an early 5 retirement date, the amount of the benefit shall be reduced in 6 accordance with section 97B.50. 7 Sec. 27. Section 97B.49A, subsection 4, paragraph c, Code 8 2009, is amended to read as follows: 9 c. For each active and vested member retiring with less than 10 four complete years of service and who therefore cannot have a 11 benefit determined under the formula benefit of paragraph “a” 12 or “b” of this subsection, subsection 3, or section 97B.49G, 13 subsection 1, a monthly annuity for membership service shall be 14 determined by applying the member’s accumulated contributions 15 and the employer’s matching accumulated contributions as of the 16 effective retirement date and any retirement dividends standing 17 to the member’s credit on or before December 31, 1966, to the 18 annuity tables in use by the system according to the member’s 19 age and contingent annuitant’s age, if applicable. 20 Sec. 28. Section 97B.49D, subsection 1, unnumbered 21 paragraph 1, Code 2009, is amended to read as follows: 22 An active or inactive vested member, who is or has been 23 employed in both special service and regular service, who 24 retires on or after July 1, 1996, with four or more completed 25 years of who is vested by service , and who at the time of 26 retirement is at least fifty-five years of age, may elect 27 to receive, in lieu of the receipt of a monthly retirement 28 allowance as calculated pursuant to sections 97B.49A through 29 97B.49C, a combined monthly retirement allowance equal to the 30 sum of the following: 31 Sec. 29. Section 97B.49D, subsection 1, paragraph a, Code 32 2009, is amended to read as follows: 33 a. One-twelfth of an amount equal to the applicable 34 percentage of the member’s three-year final average covered 35 -14- HF 2518 (7) 83 ec/sc/mb 14/ 25

H.F. 2518 wage multiplied by a fraction of years of service. The 1 fraction of years of service for purposes of this paragraph 2 shall be the actual years of service, not to exceed thirty, 3 for which regular service contributions were made, divided by 4 thirty. However, any otherwise applicable age reduction for 5 early retirement shall apply to the calculation under this 6 paragraph. 7 Sec. 30. Section 97B.50, subsection 1, paragraphs a and b, 8 Code 2009, are amended to read as follows: 9 a. For a member who is less than sixty-two years of age not 10 vested on June 30, 2012 , by twenty-five hundredths one-half of 11 one percent per month for each month that the early retirement 12 date precedes the normal retirement date the member attains age 13 sixty-five . 14 b. For a member who is at least sixty-two years of age and 15 who has not completed twenty years of membership service and 16 prior service vested on June 30, 2012 , the member’s retirement 17 allowance shall be reduced as follows: 18 (1) For that portion of the member’s retirement allowance 19 based on years of service through June 30, 2012, by twenty-five 20 hundredths of one percent per month for each month that the 21 early retirement date precedes the member’s earliest normal 22 retirement date using the member’s age on the early retirement 23 date and years of service as of June 30, 2012 . 24 (2) For that portion of the member’s retirement allowance 25 based on years of service after June 30, 2012, by one-half of 26 one percent per month for each month that the early retirement 27 date precedes the date the member attains age sixty-five. 28 Sec. 31. Section 97B.50A, subsection 2, paragraph c, Code 29 2009, is amended to read as follows: 30 c. (1) Disease under this subsection shall mean heart 31 disease or any disease of the lungs or respiratory tract and 32 shall be presumed to have been contracted while on active duty 33 as a result of strain, exposure, or the inhalation of noxious 34 fumes, poison, or gases. 35 -15- HF 2518 (7) 83 ec/sc/mb 15/ 25

H.F. 2518 (2) Disease under this subsection shall also mean cancer 1 or infectious disease, as defined in section 411.1, and shall 2 be presumed to have been contracted while on active duty as a 3 result of that duty. 4 (3) However, if a person’s special service membership in 5 the retirement system first commenced on or after July 1, 2000, 6 and the heart disease , or disease of the lungs or respiratory 7 tract , cancer, or infectious disease would not exist, but 8 for a medical condition that was known to exist on the date 9 that special service membership commenced, the presumption 10 established in this paragraph “c” shall not apply. 11 Sec. 32. Section 97B.52, subsection 1, unnumbered paragraph 12 1, Code 2009, is amended to read as follows: 13 If an inactive member, with at least sixteen calendar 14 quarters of service credit who is vested by service , or 15 any active member dies prior to the member’s first month of 16 entitlement, the member’s beneficiary shall be entitled to 17 receive a death benefit equal to the greater of the amount 18 provided in paragraph “a” or “b” . If an inactive member with 19 less than sixteen calendar quarters of service credit who is 20 not vested by service dies prior to the member’s first month of 21 entitlement, the member’s beneficiary shall only be entitled 22 to receive a death benefit, as a lump sum, equal to the amount 23 provided in paragraph “a” . 24 Sec. 33. Section 97B.52A, subsection 1, paragraph c, Code 25 2009, is amended to read as follows: 26 c. (1) For a member whose first month of entitlement 27 is July 2000 or later, the member does not return to any 28 employment with a covered employer until the member has 29 qualified for at least one calendar month of retirement 30 benefits, and the member does not return to covered employment 31 until the member has qualified for no fewer than four calendar 32 months of retirement benefits. 33 (2) For purposes of determining a bona fide retirement 34 under this paragraph “c” , effective the following provisions 35 -16- HF 2518 (7) 83 ec/sc/mb 16/ 25

H.F. 2518 apply: 1 (a) Effective July 1, 2000, any employment with a covered 2 employer does not include employment as an elective official 3 or member of the general assembly if the member is not covered 4 under this chapter for that employment. 5 (b) For purposes of determining a bona fide retirement 6 under this paragraph and for a member whose first month of 7 entitlement is July 2004 or later, but before July 2010 2012 , 8 covered employment does not include employment as a licensed 9 health care professional by a public hospital as defined in 10 section 249J.3, with the exception of public hospitals governed 11 pursuant to chapter 226. 12 (c) Effective May 25, 2008, any employment with a covered 13 employer does not include noncovered employment as a member of 14 the national guard called to state active duty as defined in 15 section 29A.1. 16 Sec. 34. Section 97B.58, Code 2009, is amended to read as 17 follows: 18 97B.58 Information furnished by employer. 19 To enable the system to administer this chapter and perform 20 its functions, the employer shall, upon the request of and 21 in the manner provided by the system, supply full provide 22 accurate, complete, and timely information to the system of 23 all matters relating to the pay of all members, date of birth, 24 their retirement, death, or other cause for termination of 25 employment, and other pertinent facts the system may require 26 in the manner provided by the system. The system shall not be 27 liable to any member, retiree, or beneficiary for any monetary 28 or other relief due to the failure of the employer to comply 29 with this section. 30 Sec. 35. 2008 Iowa Acts, chapter 1171, section 47, is 31 amended to read as follows: 32 SEC. 47. TRANSITION PROVISION —— REQUIRED CONTRIBUTION RATE 33 FOR FISCAL YEAR 2010-2011. For purposes of establishing the 34 required contribution rate for the fiscal year beginning July 35 -17- HF 2518 (7) 83 ec/sc/mb 17/ 25

H.F. 2518 1, 2011, as provided in section 97B.11, as amended in this Act, 1 the required contribution rate for the fiscal year beginning 2 July 1, 2010, shall be, for members in regular service, members 3 described in section 97B.49B, and members described in section 4 97B.49C, the total contribution percentage rate paid by members 5 and employers of that membership group for the fiscal year 6 beginning July 1, 2010. 7 Sec. 36. 2009 Iowa Acts, chapter 170, section 51, 8 subsections 1 and 3, are amended to read as follows: 9 1. a. Notwithstanding any provision of chapter 97B to the 10 contrary, a member of the Iowa public employees’ retirement 11 system who has an employer-mandated reduction in hours or 12 an employee-exercised reduction in pay but remains on the 13 employer’s payroll, and who would receive a reduction in the 14 member’s three-year average covered wage as a result of the 15 reduction in hours, may have the member’s retirement allowance 16 calculated based on the three-year average covered wage the 17 member would have received, based on reasonable assumptions, 18 if the member had not been subject to the employer-mandated 19 reduction in hours or employee-exercised reduction in pay , upon 20 payment by the member of the applicable contribution amount. 21 b. For purposes of this section, the applicable contribution 22 amount unless the context otherwise requires: 23 (1) “Applicable contribution amount” is an amount equal to 24 the employee and employer contributions that would have been 25 paid to the system based on the wages that the member would 26 have received but for the employer-mandated reduction in hours 27 or employee-exercised reduction in pay and would have been 28 included in the member’s three-year average covered wage. 29 (2) “Employee-exercised reduction in pay” means a reduction 30 in pay of a member who has exercised bumping rights by 31 accepting a lower-paid position in order to avoid being laid 32 off by the employer. 33 3. This section shall apply to employer-mandated reductions 34 in hours or employee-exercised reductions in pay during 35 -18- HF 2518 (7) 83 ec/sc/mb 18/ 25