OFA Bill Analysis

sHB 5723

AN ACT AUTHORIZING TEACHERS WHO ARE MEMBERS OF THE TEACHERS' RETIREMENT SYSTEM TO CONTRIBUTE UP TO ONE-HALF THE COST OF RETIREMENT INCENTIVE PLANS ESTABLISHED BY BOARDS OF EDUCATION.

SUMMARY:

The bill amends the teachers' retirement system statutes governing the retirement incentive plan for teachers that may be established by a local Board of Education (BOE). Under the bill, a teacher who chooses to participate in a retirement incentive plan may contribute up to fifty percent of the cost of the additional credited service. The bill also adds service in VISTA to the existing purchase of service provisions under the teachers' retirement system.

EFFECTIVE DATE: July 1, 2006

Local Retirement Incentive Plan

The bill allows teachers who choose to participate to contribute up to one-half the cost of a retirement incentive plan established by a local BOE. The establishment of such a plan is strictly voluntary on the part of the local BOE. Under current law, a municipality must pay to the Teachers' Retirement Board (TRB) the full cost of the additional credited service provided by the retirement incentive plan. Any plan can specify a maximum number of years, not to exceed five, of additional credited service which may be purchased under the plan. The bill requires that the payment by the teacher be made in one lump sum, prior to retirement.

Purchase of Additional Credited Service

The bill adds an additional credited service purchase provision for service in the United States VISTA (Volunteers in Service to America) program. There are currently fourteen additional credited service purchase provisions that allow members to purchase additional credit in the teachers' retirement system. Any purchase of service requires the member to pay the TRB an amount determined on an actuarial basis to reflect the present value one-half the full actuarial cost of the benefit increase that will be derived by the purchase of such service.

COMMITTEE ACTION

Appropriations Committee

Joint Favorable Substitute