AB498A - Revises provisions relating to public employees' retirement. (BDR 23-1200)

EXEMPT (Reprinted with amendments adopted on May 26, 2023) FIRST REPRINT A.B. 498 - *AB498_R1* ASSEMBLY BILL NO. 498–COMMITTEE ON WAYS AND MEANS MAY 11, 2023 ____________ Referred to Committee on Ways and Means SUMMARY—Revises provisions relating to public employees’ retirement. (BDR 23-1200) FISCAL NOTE: Effect on Local Government: No. Effect on the State: Yes. ~ EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. AN ACT relating to public employees’ retirement; revising the calculation of contribution rates to the Public Employees’ Retirement System from state employees and employers; revising the contribution rates for the separate retirement program provided by the Board of Regents of the University of Nevada; making appropriations; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law provides that certain public employees receive retirement 1 allowances through membership in and contributions to the Public Employees’ 2 Retirement System. (Chapter 286 of NRS) Existing law requires that: (1) the 3 contribution rates of employees and employers to the System be adjusted every 2 4 years based on the actuarially determined contribution rate indicated in the biennial 5 actuarial valuation and report of the immediately preceding year, unless the existing 6 rate is higher or lower than the actuarially determined rate by a specified 7 percentage; and (2) the employee and employer are responsible for an equal portion 8 of any increase or decrease in the contribution rate. (NRS 286.410, 286.421, 9 286.450) Section 5 of this bill revises the contribution rate for an employee of a 10 participating state agency from a rate equal to that paid by the employer to one-half 11 of the normal cost that is actuarially determined for police officers and firefighters 12 and for regular members, depending on the retirement fund in which the member is 13 participating. Section 7 of this bill revises the employer contribution rate for a 14 participating state agency to be the total contribution rate actuarially determined for 15 police officers and firefighters and for regular members, depending on the 16 retirement fund in which the member is participating, less the employee 17 contribution rate of one-half of the normal costs determined pursuant to section 5. 18 Sections 5 and 7 also provide for the rounding of any adjusted contribution rate to 19 the nearest one-quarter of 1 percent. 20 Section 6 of this bill makes conforming changes to the Public Employees’ 21 Retirement System to require, for purposes of the adjustment of salary increases 22 – 2 – - *AB498_R1* and cost-of-living increases or of salary reductions, that the division of total 23 contributions be determined in the same manner as provided for determining the 24 employee and employer contribution rates. 25 Section 3 of this bill defines the term “normal costs” as that portion of the 26 present value of projected benefits that is attributable to the current year of service, 27 as determined by an actuary of the System. Section 4 of this bill defines the term 28 “participating state agency” to mean the following public employers that participate 29 in the System: (1) an agency, bureau, board, commission, department, division, 30 officer or other unit of the Executive Branch of the State Government, the Nevada 31 System of Higher Education and the Public Employees’ Retirement System; (2) the 32 Legislative Branch of the State Government; and (3) the Judicial Branch of the 33 State Government. 34 Existing law requires the Board of Regents of the University of Nevada to 35 provide a retirement program separate from the Public Employees’ Retirement 36 System which provides retirement benefits for members of the professional staff. 37 (NRS 286.802) Existing law further requires the Board of Regents and a participant 38 in the retirement program to each contribute an amount equal to 10 percent of the 39 participant’s gross compensation, but those contributions must not be less than the 40 contributions made for the Public Employees’ Retirement System. (NRS 286.808) 41 Section 8 of this bill eliminates that threshold and increases to 17.5 percent of a 42 participant’s gross compensation the amount that the Board of Regents and each 43 participant is required to contribute to the retirement program. 44 Sections 9-13 of this bill make appropriations for the purpose of meeting any 45 deficiencies between the money appropriated to the departments, commissions and 46 agencies of the State of Nevada for the 2023-2025 biennium and the increase in 47 employer contributions to the Public Employees’ Retirement System pursuant to 48 this bill. 49 THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. Chapter 286 of NRS is hereby amended by adding 1 thereto the provisions set forth as sections 2, 3 and 4 of this act. 2 Sec. 2. As used in NRS 286.410 to 286.462, inclusive, and 3 sections 2, 3 and 4 of this act, unless the context otherwise 4 requires, the words and terms defined in sections 3 and 4 of this 5 act have the meanings ascribed to them in those sections. 6 Sec. 3. “Normal cost” means that portion of the present 7 value of projected benefits that is attributable to the current year 8 of service, as determined by an actuary of the System. 9 Sec. 4. “Participating state agency” means the following 10 public employers that participate in the System: 11 1. An agency, bureau, board, commission, department, 12 division, officer or other unit of the Executive Branch of the State 13 Government. The term includes the Nevada System of Higher 14 Education and the Public Employees’ Retirement System. 15 2. The Legislative Branch of the State Government. 16 3. The Judicial Branch of the State Government. 17 – 3 – - *AB498_R1* Sec. 5. NRS 286.410 is hereby amended to read as follows: 1 286.410 1. [The] Except as otherwise provided in subsection 2 3, the employee contribution rate must be: 3 (a) The matching contribution rate for employees and employers 4 that is actuarially determined for police officers and firefighters and 5 for regular members, depending upon the retirement fund in which 6 the member is participating. 7 (b) Except as otherwise provided in subsection 2, adjusted on 8 the first monthly retirement reporting period commencing on or 9 after July 1 of each odd-numbered year based on the actuarially 10 determined contribution rate indicated in the biennial actuarial 11 valuation and report of the immediately preceding year. The 12 adjusted rate must be rounded to the nearest one-quarter of 1 13 percent. 14 2. [The] Except as provided in subsection 4, the employee’s 15 portion of the matching contribution rate for employees and 16 employers must not be adjusted in accordance with the provisions of 17 paragraph (b) of subsection 1 if: 18 (a) The existing rate is lower than the actuarially determined rate 19 but within one-quarter of 1 percent of the actuarially determined 20 rate. 21 (b) The existing rate is higher than the actuarially determined 22 rate but is within 1 percent of the actuarially determined rate. If the 23 existing rate is more than 1 percent higher than the actuarially 24 determined rate, the existing rate must be reduced by the amount by 25 which it exceeds 1 percent above the actuarially determined rate. 26 3. The employee contribution rate for a member who is an 27 employee of a participating state agency must be: 28 (a) One-half of the normal cost that is actuarially determined 29 for police officers and firefighters and for regular members, 30 depending on the retirement fund in which the member is 31 participating. 32 (b) Except as otherwise provided in subsection 4, adjusted on 33 the first monthly retirement reporting period commencing on or 34 after July 1 of each odd-numbered year based on the actuarially 35 determined contribution rate of one-half the normal cost as 36 indicated in the biennial actuarial valuation and report of the 37 immediately preceding year. The adjusted rate must be rounded to 38 the nearest one-quarter of 1 percent. 39 4. The employee’s portion of the contribution rate for 40 employees of a participating state agency and employers must not 41 be adjusted in accordance with the provisions of paragraph (b) of 42 subsection 3 if: 43 – 4 – - *AB498_R1* (a) The existing rate is lower than the actuarially determined 1 rate but within one-quarter of 1 percent of the actuarially 2 determined rate. 3 (b) The existing rate is higher than the actuarially determined 4 rate but is within 1 percent of the actuarially determined rate. If 5 the existing rate is more than 1 percent higher than the actuarially 6 determined rate, the existing rate must be reduced by the amount 7 by which it exceeds 1 percent above the actuarially determined 8 rate. 9 5. From each payroll during the period of the employee’s 10 membership, the employer shall deduct the amount of the member’s 11 contributions and transmit the deduction to the Board at intervals 12 designated and upon forms prescribed by the Board. The 13 contributions must be paid on compensation earned by a member 14 from the member’s first day of service. 15 [4.] 6. Any employee whose position is determined after 16 July 1, 1971, to be eligible under the early retirement provisions for 17 police officers and firefighters shall contribute the additional 18 contributions required of police officers and firefighters from July 1, 19 1971, to the date of the employee’s enrollment under the Police and 20 Firefighters’ Retirement Fund, if employment in this position 21 occurred before July 1, 1971, or from date of employment in this 22 position to the date of the employee’s enrollment under the Police 23 and Firefighters’ Retirement Fund, if employment occurs later. 24 [5.] 7. Except as otherwise provided in NRS 286.430, the 25 System shall guarantee to each member the return of at least the 26 total employee contributions which the member has made and which 27 were credited to the member’s individual account. These 28 contributions may be returned to the member, the member’s estate 29 or beneficiary or a combination thereof in monthly benefits, a lump- 30 sum refund or both. 31 [6.] 8. Members with disabilities who are injured on the job 32 and receive industrial insurance benefits for temporary total 33 disability remain contributing members of the System for the 34 duration of the benefits if and while the public employer continues 35 to pay the difference between these benefits and the member’s 36 regular compensation. The public employer shall pay the employer 37 contributions on these benefits. 38 Sec. 6. NRS 286.421 is hereby amended to read as follows: 39 286.421 1. A public employer that elected to pay on behalf of 40 its employees the contributions required by subsection 1 of NRS 41 286.410 before July 1, 1983, shall continue to do so, but a public 42 employer may not elect to pay those contributions on behalf of its 43 employees on or after July 1, 1983. 44 – 5 – - *AB498_R1* 2. An employee of a public employer that did not elect to pay 1 on behalf of its employees the contributions required by subsection 2 1 of NRS 286.410 before July 1, 1983, may elect to: 3 (a) Pay the contribution required by subsection 1 or 3 of NRS 4 286.410 , as applicable, on the employee’s own behalf; or 5 (b) Have the employee’s portion of the contribution paid by the 6 employee’s employer pursuant to the provisions of NRS 286.425. 7 3. Except for any person chosen by election or appointment to 8 serve in an elective office of a political subdivision or as a district 9 judge, a judge of the Court of Appeals or a justice of the Supreme 10 Court of this State: 11 (a) Payment of the employee’s portion of the contributions 12 pursuant to subsection 1 or paragraph (b) of subsection 2 must be: 13 (1) Made in lieu of equivalent basic salary increases or cost- 14 of-living increases, or both; or 15 (2) Counterbalanced by equivalent reductions in employees’ 16 salaries. 17 (b) The average compensation from which the amount of 18 benefits payable pursuant to this chapter is determined must be 19 increased with respect to each month beginning after June 30, 1975, 20 by 50 percent of the contribution made by the public employer, and 21 must not be less than it would have been if contributions had been 22 made by the member and the public employer separately. In the case 23 of any officer or judge described in this subsection, any contribution 24 made by the public employer on the officer’s or judge’s behalf does 25 not affect the officer’s or judge’s compensation but is an added 26 special payment. 27 4. Employee contributions made by a public employer must be 28 deposited in either the Public Employees’ Retirement Fund or the 29 Police and Firefighters’ Retirement Fund as is appropriate. These 30 contributions must not be credited to the individual account of the 31 member and may not be withdrawn by the member upon the 32 member’s termination. 33 5. The membership of an employee who became a member on 34 or after July 1, 1975, and all contributions on whose behalf were 35 made by the member’s public employer must not be cancelled upon 36 the termination of the member’s service. 37 6. If an employer is paying the basic contribution on behalf of 38 an employee, the total contribution rate, in lieu of the amounts 39 required by subsection 1 or 3 of NRS 286.410 , as applicable, and 40 NRS 286.450, must be: 41 (a) The total contribution rate for employers that is actuarially 42 determined for police officers and firefighters and for regular 43 members, depending upon the retirement fund in which the member 44 is participating. 45 – 6 – - *AB498_R1* (b) Except as otherwise provided in subsection 7, adjusted on 1 the first monthly retirement reporting period commencing on or 2 after July 1 of each odd-numbered year based on the actuarially 3 determined contribution rate indicated in the biennial actuarial 4 valuation and report of the immediately preceding year. The 5 adjusted rate must be rounded to the nearest one-quarter of 1 6 percent. 7 7. The total contribution rate for employers must not be 8 adjusted in accordance with the provisions of par [Text truncated for display. Full text available on LegiScan.]