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PA Bulletin, Doc. No. 05-701

RULES AND REGULATIONS

Title 22--EDUCATION

PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD

[22 PA. CODE CH. 215]

Optional Alternate Retirement Plans

[35 Pa.B. 2276]

   The Public School Employees' Retirement Board (Board) amends Chapter 215 (relating to general administration) to read as set forth in Annex A. The final-form rulemaking deletes the transitional provisions for electing to participate in an optional alternate retirement plan in § 215.36 (relating to optional alternate retirement programs). The transitional provisions are no longer needed, read broadly and may conflict with 24 Pa.C.S. Part IV (relating to Public School Employees' Retirement Code) (Retirement Code), because the Retirement Code does not allow current members to opt out of the system.

A.  Effective Date

   The final-form rulemaking will go into effect upon publication in the Pennsylvania Bulletin.

B.  Contact Person

   For further information, contact Frank Ryder, Director of Government Relations, Public School Employees' Retirement System, 5 North Fifth Street, P. O. Box 125, Harrisburg, PA 17108, (717) 720-4733; or Charles K. Serine, Deputy Chief Counsel, Public School Employees' Retirement System, 5 North Fifth Street, P. O. Box 125, Harrisburg, PA 17108, (717) 720-4679.

C.  Statutory Authority

   This final-form rulemaking is being made under the authority of 24 Pa.C.S. § 8502(h) (relating to administrative duties of board).

D.  Background and Purpose

   When amended in 1975, the Retirement Code, for the first time, permitted certain school employees to choose an alternate retirement plan. The Retirement Code applies to new employees. The Board promulgated § 215.36 to implement this Retirement Code provision. Section 215.36, among other things, contained a transitional provision granting to existing employees an opportunity to elect an alternate retirement plan. This transitional provision was added because the existing employees never had the opportunity to select an alternate plan. At the time of enactment of § 215.36, the only alternate plan allowed was the Teachers Insurance and Annuity Association--College Retirement Equities Fund.

   The act of June 22, 2001 (P. L. 530, No. 35) allowed the State System of Higher Education (SSHE) to add insurance companies or mutual funds as additional alternate plans for its employees. Section 215.36, as written, could be interpreted to allow existing employees, who already had a choice under the Retirement Code to elect an alternate retirement plan, to make an additional election and to opt out of the Public School Employees' Retirement System (PSERS) each time a new alternate plan is approved by SSHE. The Board, however, has always interpreted § 215.36 as providing a one-time opportunity for these employees, not a continual choice each time a new alternate plan is approved by the employer. Deleting the language clarifies the intent of the Board and eliminates a potential conflict between § 215.36 and the Retirement Code, because the Retirement Code does not allow current members to opt out of the system.

   The State Employees' Retirement System (SERS) is proposing a similar revision of its regulation that parallels § 215.36. This repeal will harmonize the regulations of PSERS and SERS with regard to election of alternate retirement plans. SSHE supports the amendment of these sections.

E.  Benefits, Costs and Compliance

Benefits

   This final-form rulemaking removes an expired transitional provision, clarifies the Board's intent regarding the election of alternate retirement plans and eliminates a potential conflict between the Retirement Code and § 215.36.

Costs

   The final-form rulemaking will formalize the Board's long-standing interpretation that the transitional provisions of § 215.36 have expired. The final-form rulemaking, therefore, maintains the status quo and has no associated cost to the Commonwealth, its citizens, school employers, school employees or PSERS.

Compliance Costs

   The final-form rulemaking will not impose any additional compliance costs on school employees or employers.

F.  Sunset Review

   No sunset date has been set.

G.  Regulatory Review

   Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on January 31, 2003, the Board submitted a copy of the notice of proposed rulemaking, published at 33 Pa.B. 882 (February 15, 2003), to the Independent Regulatory Review Commission (IRRC) and the Chairpersons of the House Education Committee and the Senate Finance Committee for review and comment.

   Under section 5(c) of the Regulatory Review Act, IRRC and the Committees were provided with copies of the comments received during the public comment period, as well as other documents when requested. In preparing the final-form rulemaking, the Department has considered all comments from IRRC, the House and Senate Committees and the public.

   On April 17, 2003, IRRC identified several sentences or phrases that could be deleted or reformatted to improve clarity. The Board has complied with the comments identified by IRRC.

   Under section 5.1(j.2) of the Regulatory Review Act (71 P. S. § 745.5a(j.2)), on February 8, 2005, the final-form rulemaking was deemed approved by the House and Senate Committees. Under section 5.1(e) of the Regulatory Review Act, the final-form rulemaking was approved by IRRC on February 10, 2005.

H.  Public Comments

   There have been no public comments.

I.  Findings

   The Board finds that:

   (1)  Public notice of the proposed rulemaking was given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations promulgated thereunder, 1 Pa. Code §§ 7.1 and 7.2.

   (2)  The amendment to the rules and procedures are necessary and appropriate for the administration of the code.

J.  Order

   The Board, acting under The Administrative Code of 1929 and the act of July 31, 1968 (P. L. 769, No. 240) known as the Commonwealth Documents Law, including particularly those sections specified in the several authority sections herein specified with respect to each provision of the rules and procedures of PSERS deleted by this order, orders that:

   (a)  The regulations of the Board, 22 Pa. Code Chapter 215, are amended by amending § 215.36 to read as set forth in Annex A.

   (b)  The amendment shall be submitted to the Office of Attorney General for approval as to legality as required by law.

   (c)  The Secretary of the Board shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.

   (d)  This order shall take effect immediately upon publication in the Pennsylvania Bulletin.

JEFFREY B. CLAY,   
Secretary

   (Editor's Note: For the text of the order of the Independent Regulatory Review Commission, relating to this document, see 35 Pa.B. 1487 (February 26, 2005).)

   Fiscal Note: Fiscal Note 43-9 remains valid for the final adoption of the subject regulation.

Annex A

TITLE 22. EDUCATION

PART XIII. PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD

CHAPTER 215. GENERAL ADMINISTRATION

MISCELLANEOUS PROVISIONS

§ 215.36. Optional alternate retirement programs.

   (a)  Under section 8301(a)(1) of the Retirement Code (relating to mandatory and optional membership), certain school employees may elect not to join the System in favor of an optional alternate retirement program approved by the employer.

   (1)  Every employee who is eligible for membership in the optional alternate retirement program shall make the election within 30 days of the first date of active employment. Employees not exercising the option to join the optional alternate retirement program shall be deemed to have chosen to commence active membership in this System, unless they have elected membership in the State Employees' Retirement System.

   (2)  When an eligible employee elected to participate in the optional alternate retirement program in accordance with the provisions of paragraph (2) as it existed on April 15, 2005, or paragraph (4) as it existed on April 15, 2005, or elects to participate in the optional alternate retirement program in accordance with paragraph (1), the election is final and binding so long as the employee remains eligible to remain in the optional alternate retirement program. When an employee later is employed in a capacity which does not qualify for membership in the optional alternate retirement program, the employee shall, upon meeting the qualifications for membership in the System, either make contributions to the fund or reinstate the former credited service for which contributions had been withdrawn. Remittance of contributions or reinstatement of former credited service shall be made in accordance with the applicable provisions of the Retirement Code. Service, salary or other compensation paid to an employee while a member of the optional alternate retirement program will not be credited toward membership in, or retirement benefit from, this System.

   (b)  Retirement Code reference: Section 8326 of the Retirement Code.

[Pa.B. Doc. No. 05-701. Filed for public inspection April 15, 2005, 9:00 a.m.]


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