Indicates Matter Stricken

Indicates New Matter

 

Committee Report

May 4, 2023

H. 3425

Introduced by Reps. Pope, Thayer, Gilliam, S. Jones, Wooten, B. Newton, McCravy, Lawson, Leber, Atkinson, Forrest, Robbins, Caskey, Crawford and Guest

 

S. Printed 05/04/23--H.

Read the first time January 10, 2023

 

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The committee on House Ways and Means

To who was referred a Bill (H. 3425) to amend the South Carolina Code of Laws by amending Section 9-11-90, relating to the earnings limitation upon return to covered employment in the South Carolina, etc., respectfully

Report:

That they have duly and carefully considered the same, and recommend that the same do pass with amendment:

 

    Amend the bill, as and if amended, SECTION 1, by striking Section 9-11-90(ii)(B) and (C) and inserting:

               (B) the member has attained the age of fifty-seven years at retirement; or

               (C) compensation received by the retired member from the covered employer is for service in a public office filled by the appointment of the Governor and with confirmation by the Senate, by appointment or election by the General Assembly, or by election of the qualified electors of the applicable jurisdiction.;

Amend the bill further, SECTION 2, by striking Section 9-1-1790(2)(b) and (c) and inserting:

           (b) the member has attained the age of sixty-two years at retirement; or

           (c) compensation received by the retired member from the covered employer is for service in a public office filled by the appointment of the Governor and with confirmation by the Senate, by appointment or election by the General Assembly, or by election of the qualified electors of the applicable jurisdiction.; or

Renumber sections to conform.

Amend title to conform.

 

BRUCE BANNISTER for Committee.

 

statement of estimated fiscal impact

Explanation of Fiscal Impact

 

State Expenditure

This bill removes the earnings limitation for a retiree of PORS if the employee is separated from covered employment for at least twelve months before returning to covered employment, or if the retiree returns to employment in a critical needs law enforcement position. The Law Enforcement Training Council (council) is required to determine if a position is a critical needs position by reviewing and approving documentation provided by a covered employer. By January 1, 2024, and each year thereafter, the council is required to submit a report to the chairman of the Senate Finance Committee and the chairman of the House Ways and Means Committee of the positions requested for inclusion in the earnings limitation exception for the following fiscal year. The General Assembly must approve positions in the report submitted by the council. Furthermore, the council is required to develop guidelines and curriculum for these officers to be recertified and may not require recertification through basic training for those that have been inactive for a year or more.

 

Additionally, the bill removes the earnings limitation for a retiree of SCRS if the employee is separated from covered employment for at least twelve months before returning to covered employment.

 

Currently, a member of PORS who retires prior to age fifty-seven, returns to employment that is covered by PORS, and earns more than $10,000 in a calendar year is subject to an earnings limitation which discontinues the member's retirement benefits in that year. Members of SCRS are similarly subject to the earnings limitation when retiring prior to age sixty-two. PEBA indicates that a change to the earning limitation may increase the number of reemployed retirees and lead to more workers electing to retire at an earlier age. This will result in a higher actuarial accrued liability and increase normal cost or cost of service earned towards an active member's benefit in a given year, since a member's retirement benefit is funded over a shorter career. For the retirement systems to attain a 100 percent funded ratio at the same projected date, the amortization cost will need to increase.

 

PEBA reports that the provisions allowing SCRS and PORS members to return to covered employment after a twelve-month separation and be exempt from the earnings limitation will have no fiscal impact on SCRS or PORS. PEBA views the twelve-month period as sufficiently long enough such that there will be no measurable change in retirement behavior.

 

PEBA reports that the critical needs provision for PORS retirees will have an expenditure impact on PORS. There are approximately 2,095 PORS members that are younger than age 57 and eligible to retire. Assuming that some members will retire earlier than they otherwise would to take advantage of the critical needs provision, PEBA estimates that the unfunded actuarial accrued liability will increase by $73,000,000. PEBA indicates the necessary one-time appropriation to maintain the current funding period is $88,000,000. If the General Assembly chooses to fund this increase, this bill will result in a one-time increase of $88,000,000 in General Fund, Other Funds, and Federal Funds expenditures in FY 2023-34.

 

RFA anticipates this bill will have no expenditure impact on the Law Enforcement Training Council for reviewing and approving critical needs position documentation, preparing annual reports, and developing guidelines and curriculums.

 

 

Frank A. Rainwater, Executive Director

Revenue and Fiscal Affairs Office

 

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A bill

 

to amend the South Carolina Code of Laws by amending Section 9-11-90, relating to THE EARNINGS LIMITATION UPON RETURN TO COVERED EMPLOYMENT IN THE SOUTH CAROLINA POLICE OFFICERS RETIREMENT SYSTEM, so as to provide that the earnings limitation does not apply in certain circumstances; and by amending Section 9-1-1790, relating to the earnings limitation upon return to covered employment in the South Carolina Retirement System, so as to provide that the earnings limitation does not apply in certain circumstances.

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  Section 9-11-90(4)(a)(ii) of the S.C. Code is amended to read:

 

           (ii) The earnings limitation imposed pursuant to this item does not apply if the member meets at least one of the following qualifications:

               (A) the member retired before January 2, 2013;

               (B) the member has attained the age of fifty-seven years at retirement; or

               (C) compensation received by the retired member from the covered employer is for service in a public office filled by the appointment of the Governor and with confirmation by the Senate, by appointment or election by the General Assembly, or by election of the qualified electors of the applicable jurisdiction.

               (D)  the member has not been engaged to perform services for a participating employer in the system or any other system provided in this title for compensation in any capacity, whether as an employee, independent contractor, leased employee, joint employee, or other classification of worker, for a period of at least twelve consecutive months subsequent to retirement. The exemption provided under this subitem does not apply unless the member first certifies to the system that he satisfies the requirements for the exemption. If a member inaccurately certifies that he satisfies the requirements for the exemption provided in this subitem, the member is responsible for reimbursing the system for any benefits wrongly paid to the member; or

               (E)  compensation received by the retired member from the covered employer is for employment in a critical needs law enforcement position as determined by the Law Enforcement Training Council.  For the provisions of this subitem to apply, the Law Enforcement Training Council must review and approve, from the documentation provided by the covered employer, that no qualified, nonretired member is available for employment in the position, and that the member selected for employment meets the requirements of this subitem.  No later than January 1, 2024, and each January first thereafter, the Law Enforcement Training Council must submit a report to the Chairman of the Senate Finance Committee and the Chairman of the House Ways and Means Committee of the positions requested for inclusion in the earnings limitation exception under this subitem for the following fiscal year.  Effective July 1, 2024, and each July first thereafter, the earnings limitation exception provided in this subitem only applies to those positions approved by action of the General Assembly for the fiscal year in response to the report submitted by the Law Enforcement Training Council. The Law Enforcement Training Council shall develop guidelines and curriculum for these officers to be recertified and may not require recertification through basic training for those that have been inactive for a year or more.

 

SECTION 2.  Section 9-1-1790(A)(2) of the S.C. Code is amended to read:

 

       (2) The earnings limitation imposed pursuant to this item does not apply if the member meets at least one of the following qualifications:

           (a) the member retired before January 2, 2013;

           (b) the member has attained the age of sixty-two years at retirement; or

           (c) compensation received by the retired member from the covered employer is for service in a public office filled by the appointment of the Governor and with confirmation by the Senate, by appointment or election by the General Assembly, or by election of the qualified electors of the applicable jurisdiction.

           (d)   the member has not been engaged to perform services for a participating employer in the system or any other system provided in this title for compensation in any capacity, whether as an employee, independent contractor, leased employee, joint employee, or other classification of worker, for a period of at least twelve consecutive months subsequent to retirement. The exemption provided under this subitem does not apply unless the member first certifies to the system that he satisfies the requirements for the exemption. If a member inaccurately certifies that he satisfies the requirements for the exemption provided in this subitem, the member is responsible for reimbursing the system for any benefits wrongly paid to the member.

 

SECTION 3.  This act takes effect upon approval by the Governor.

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