HOUSE BILL No. 6208


     September 24, 1998, Introduced by Rep. Rhead and referred to the Committee on Public Retirement.


        A bill to amend 1957 PA 261, entitled

   "Michigan legislative retirement system act,"

   by amending sections 21, 22, 22c, 26, and 50a (MCL 38.1021,

   38.1022, 38.1022c, 38.1026, and 38.1050a), sections 21, 22, and

   26 as amended by 1994 PA 359, section 22c as amended by 1996

   PA 486, and section 50a as amended by 1998 PA 80, and by adding

   section 36a.

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 1         Sec. 21.  (1) The members' savings fund is created in the

 2    retirement system.  The retirement system shall accumulate in the

 3    members' savings fund the contributions made by members toward

 4    the financing of their retirement allowances, shall make trans-

 5    fers of those contributions from the members' savings fund to the

 6    members' retirement fund, and shall make refunds of contributions

 7    from the members' savings fund as provided in this act.  A 


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 1    EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION, A member who

 2    first becomes a member on or before December 1, 1994, shall make

 3    contributions to the members' savings fund of 7% of each payment

 4    of salary received by the member for service as a member, but not

 5    for a period exceeding 20 years.  A  EXCEPT AS OTHERWISE PRO-

 6    VIDED IN THIS SUBSECTION, A member who first becomes a member

 7    after December 1, 1994, shall make contributions to the members'

 8    savings fund of 5% of each payment of salary received by the

 9    member for services as a member.  BEGINNING ON THE EFFECTIVE DATE

10    OF SECTION 36A, MEMBER CONTRIBUTIONS REQUIRED UNDER THIS SUBSEC-

11    TION ARE SUSPENDED UNLESS REINSTATED BY THE BOARD UNDER SECTION

12    36A.

13         (2) The member contributions required by this section shall

14    be made by payroll deductions.  Each member is considered to con-

15    sent and agree to the payroll deductions as a condition of mem-

16    bership in the retirement system.

17         (3) Upon the retirement of a member, his or her accumulated

18    contributions shall be transferred to the members' retirement

19    fund.  Upon the death of a member, if a survivor's retirement

20    allowance becomes payable on account of the member's death, his

21    or her accumulated contributions shall be transferred to the

22    survivors' retirement fund.

23         Sec. 22.  (1) The survivors' retirement fund is created in

24    the retirement system.  The retirement system shall accumulate in

25    the survivors' retirement fund reserves for the payment of

26    retirement allowances to survivors.  The retirement system shall

27    pay the survivor retirement allowances from the survivors'



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 1    retirement fund.  Each  EXCEPT AS OTHERWISE PROVIDED IN THIS

 2    SUBSECTION, EACH member shall make contributions to the

 3    survivors' retirement fund of 0.5% of each payment of salary

 4    received that is attributable to service performed on and after

 5    January 1, 1995.  A member shall not make contributions to the

 6    survivors' retirement fund for more than 20 years.  The contribu-

 7    tions shall be made by payroll deductions and each member is con-

 8    sidered to consent and agree to the deductions as a condition of

 9    membership in the retirement system.  BEGINNING ON THE EFFECTIVE

10    DATE OF SECTION 36A, MEMBER CONTRIBUTIONS REQUIRED UNDER THIS

11    SUBSECTION ARE SUSPENDED UNLESS REINSTATED BY THE BOARD UNDER

12    SECTION 36A.

13         (2) The board shall adopt mortality and other experience

14    tables and the prescribed rate of interest.  Upon the basis of

15    those tables and the interest rate, the actuary shall compute

16    annually the retirement reserves for retirement allowances being

17    paid survivors, and to be paid survivors upon the deaths of mem-

18    bers, deferred vested members, and retirants, as provided in this

19    act.  It is the intention of this act that the retirement

20    reserves shall be financed by appropriations made by this state,

21    determined pursuant to subsections (3), (4), and (5).

22         (3) The state's appropriation for survivors' retirement

23    allowances to be paid upon the death of members, deferred vested

24    members, and retirants shall be an amount that will provide the

25    net reserves, after allowing for members' contributions to the

26    survivors' retirement fund and transfers to be made to the fund

27    from the members' savings fund, or other available funds for



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 1    retirement allowances to be paid to survivors of members,

 2    deferred vested members, and retirants who will probably die

 3    during the next ensuing fiscal year.

 4         (4) The state's appropriation for survivors' retirement

 5    allowances to be paid upon the death of retirants shall be an

 6    amount determined pursuant to the financing methods provided for

 7    in section 20(2) and (3).

 8         (5) The state's appropriation for survivors' retirement

 9    allowances being paid from the survivors' retirement fund shall

10    be an amount that if paid annually over a period of years to be

11    determined by the board, but not to exceed 50 years, will amor-

12    tize at the prescribed rate of interest the unfunded reserves for

13    the retirement allowances.

14         Sec. 22c.  (1) The health insurance fund is created in the

15    retirement system.  The retirement system shall deposit into the

16    health insurance fund the member contributions for health bene-

17    fits required by this section, subscriber co-payments, payments

18    under section 79, and state appropriations.  The retirement

19    system shall disburse from the health insurance fund the premiums

20    or portion of the premiums for dental, hospital, and medical cov-

21    erage insurance as required by sections 50b and 79.

22         (2)  A  EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION, A

23    member shall make contributions to the health insurance fund of

24    1% of each payment of salary received that is attributable to

25    service performed on and after January 1, 1995.  BEGINNING ON THE

26    EFFECTIVE DATE OF SECTION 36A, A MEMBER WHO FIRST BECAME A MEMBER

27    OF TIER 1 ON OR BEFORE DECEMBER 1, 1994 SHALL MAKE CONTRIBUTIONS



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 1    TO THE HEALTH INSURANCE FUND OF 9% OF EACH PAYMENT OF SALARY

 2    RECEIVED BY THE MEMBER FOR SERVICE AS A MEMBER.  BEGINNING ON THE

 3    EFFECTIVE DATE OF SECTION 36A, A MEMBER WHO FIRST BECAME A MEMBER

 4    OF TIER 1 AFTER DECEMBER 1, 1994 SHALL MAKE CONTRIBUTIONS TO THE

 5    HEALTH INSURANCE FUND OF 7% OF EACH PAYMENT OF SALARY RECEIVED BY

 6    THE MEMBER FOR SERVICE AS A MEMBER.  THE INCREASED CONTRIBUTIONS

 7    REQUIRED UNDER THIS SUBSECTION BY THE AMENDATORY ACT THAT ADDED

 8    SECTION 36A WILL CONTINUE UNLESS SUSPENDED BY THE BOARD UNDER

 9    SECTION 36A. The contributions shall be made by payroll deduc-

10    tions and each member is considered to consent to the deductions

11    as a condition of membership in the retirement system.

12         Sec. 26.  (1)  The  BEGINNING JANUARY 1, 1999, THE retire-

13    ment system shall be administered by a board of trustees, con-

14    sisting of  11  10 persons as follows:

15         (a)  Three  TWO members of the house of representatives

16    appointed by the speaker.

17         (b)  Three  TWO members of the senate, appointed in the same

18    manner as members of standing committees of the senate are

19    appointed.

20         (c)  Two  THREE retirants appointed by the board.

21         (d)  One  TWO deferred vested  member  MEMBERS appointed by

22    the board.

23         (e)  The senate majority leader or a member of the senate

24     designated by the senate majority leader.  ONE PARTICIPANT OF

25    TIER 2 WHO WAS A FORMER MEMBER OF TIER 1 APPOINTED BY THE BOARD.

26    HOWEVER, IF THERE IS NO PARTICIPANT OF TIER 2 WHO MEETS THE





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 1    FORMER MEMBER REQUIREMENT OF THIS SUBDIVISION, THEN 1 ADDITIONAL

 2    DEFERRED VESTED MEMBER APPOINTED BY THE BOARD.

 3          (f) The speaker of the house or a member of the house of

 4     representatives designated by the speaker of the house. 

 5         (2) Only members of the retirement system are eligible to

 6    serve as members on the board of trustees except for the retir-

 7    ants AND TIER 2 PARTICIPANT AUTHORIZED UNDER SUBSECTION (1).

 8    Board members shall be appointed for 2-year terms.  Two or more 

 9    AT LEAST 1 of the members appointed to the board under subsection

10    (1)(a) and  2 or more  1 of the members appointed to the board

11    under subsection (1)(b) shall be vested members of the retirement

12    system on the date of appointment or, for house members, shall

13    have been elected, qualified, and seated in the house of repre-

14    sentatives not less than 3 times for full or partial terms on the

15    date of appointment or, for senate members, shall have been

16    elected, qualified, and seated in the senate not less than 2

17    times for full or partial terms on the date of the appointment.

18         (3) Each person, whether appointed as a trustee or becoming

19    a trustee ex officio, shall take an oath of office before the

20    secretary of state and, upon taking the oath, qualifies as a

21    trustee.  The oath of office shall be as prescribed under section

22    1 of article XI of the state constitution of 1963.

23         SEC. 36A.  IF THE ACTUARY DETERMINES IN HIS OR HER ANNUAL

24    VALUATION OF THE SYSTEM THAT THE SYSTEM IS LESS THAN 100% FUNDED,

25    THE RETIREMENT BOARD MAY REINSTATE THE MEMBER CONTRIBUTIONS THAT

26    WERE SUSPENDED IN SECTIONS 21, 22, AND 50A AND REDUCE THE MEMBER

27    CONTRIBUTIONS THAT WERE INCREASED IN SECTION 22C.



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 1         Sec. 50a.  (1) The grants and insurance revolving fund is

 2    created in the state treasury as a separate fund, into which

 3    shall be paid legislative grants, earnings from the fund, pay-

 4    ments by or on behalf of members, and revenue from other sources

 5    accepted by the board.  Money appropriated to the grants and

 6    insurance revolving fund shall not revert to the general fund at

 7    the close of the fiscal year but shall remain in the grants and

 8    insurance revolving fund.  The legislative grants in the grants

 9    and insurance revolving fund shall not be expended except upon

10    express direction of the legislature; but all other money in the

11    grants and insurance revolving fund may be expended for the pur-

12    poses and in the manner provided in this section.

13         (2)  Beginning  EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSEC-

14    TION, BEGINNING with salary received that is attributable to

15    service performed on and after January 1, 1995, each legislator

16    or member shall pay a sum equal to 0.5% of salary common to all

17    members to the grants and insurance revolving fund to be eligible

18    for the benefits provided in this section.  The sum shall be col-

19    lected by payroll deductions in the manner prescribed in this

20    act.  BEGINNING ON THE EFFECTIVE DATE OF SECTION 36A, MEMBER CON-

21    TRIBUTIONS REQUIRED UNDER THIS SUBSECTION ARE SUSPENDED UNLESS

22    REINSTATED BY THE BOARD UNDER SECTION 36A.

23         (3) The board shall self-insure or shall purchase and pay

24    the premiums on a life insurance policy or policies to provide

25    life insurance death or other benefits for retirants, deferred

26    vested members, and the spouses, eligible children, or eligible

27    beneficiaries of retirants and deferred vested members from the



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 1    amounts paid pursuant to subsection (2) for this purpose to the

 2    grants and insurance revolving fund.  Life insurance benefits

 3    provided on June 23, 1987 shall not be diminished due to the

 4    amendments to this section by 1987 PA 58.
















































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