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NO. 158. AN ACT RELATING TO STATE EMPLOYEES’ AND TEACHERS’ RETIREMENT SYSTEMS.

(H.688)

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1. DECLARATION AND PURPOSE

(a) The general assembly declares that:

(1) Financial security in retirement should be based on three components: retirement benefits, Social Security income, and personal savings.

(2) Vermont’s retirement system should provide a defined benefit plan or include a defined benefit component.

(3) Employees should be allowed an option to exercise control of at least some of their retirement contributions.

(4) Employees should be educated and encouraged to accumulate additional retirement savings.

(5) A sufficient level of flexibility should be built into the systems to ensure that they are responsive to the needs of employees and the employer.

(6) Benefits should be equitably allocated among beneficiaries.

(7) Benefits should be based on formulas designed to prevent manipulation of compensation just before retirement in order to qualify for a higher benefit (“spiking”).

(8) Plan designs should encourage portability of public employment service credits, both within this state and across state lines.

(9) Benefits should increase with length of service.

(10) Early retirement should not be unduly penalized.

(11) Pension funding is a contemporary obligation.

(12) The general assembly and the administration should exercise the discipline needed to meet a goal of 100 percent funding.

(13) Pension funds should be invested prudently, but not so conservatively that investment performance is severely limited.

(14) Pension investments should be governed by the Prudent Investor Rule, as described in chapter 147 of Title 9 (Uniform Prudent Investor Act).

(b) The general assembly intends to:

(1) Provide levels of income for retirees which are comparable to other public retirement systems at a cost that is affordable for employers, employees, and taxpayers.

(2) Attract and retain talented employees.

(3) Encourage long-term employment while recognizing the benefits of early retirement options.

(4) Recognize, and fairly address, the needs of a mobile workforce.

(5) Promote consistency in the terms and benefits of the state employees’ and teachers’ systems, unless there are well-defined reasons for treating the systems differently.

* * * “Air Time” Option * * *

Sec. 2. 3 V.S.A. § 477a(h) is added to read:

(h) When a member has a minimum of 25 years of creditable service, he or she may elect to purchase up to five years of additional service credit. A member who makes an election under this subsection shall deposit in the annuity savings fund by a single contribution, an amount computed at regular interest to be sufficient to provide at normal retirement an annuity equal to 1-2/3 percent of the member’s average final compensation multiplied by the number of years purchased.

Sec. 3. 16 V.S.A. § 1937(i) is added to read:

(i) When a member has a minimum of 25 years of creditable service, he or she may elect to purchase up to five years of additional service credit. A member who makes an election under this subsection shall deposit in the annuity savings fund by a single contribution, an amount computed at regular interest to be sufficient to provide at normal retirement an annuity equal to 1-2/3 percent of the member’s average final compensation multiplied by the number of years purchased. If through a negotiated agreement or binding contract, a school district or supervisory union is required to purchase the whole or part of the additional years of service credit necessary to enable the member to take normal retirement, the school district or supervisory union may deposit a single contribution into the annuity savings fund or make the contribution in four equal annual payments on dates established by the state treasurer. If a school district or supervisory union elects to make the contribution in four equal annual payments it shall, in addition, pay interest at the actuarially assumed interest rate at the time of each annual payment. Any payment not received within 30 days of the date it is due shall be considered delinquent and the delinquent payment and interest may be recovered by action in a court of competent jurisdiction against the school district or supervisory union liable therefor or may be deducted by the state treasurer from any other monies payable to such school district or supervisory union by the state or any department or agency thereof.

* * * Military Service Credit * * *

Sec. 4. 3 V.S.A. § 477a(a) is amended to read:

(a) Any member who has rendered 15 years of creditable service and who has, prior to becoming a member of the system, served a minimum of one full year of full-time service in the military or one full year of full-time service as a member of the Cadet Nurse Corps in World War II, the Peace Corps or VISTA for which the member has derived no military pension benefits, may elect to have included in the member's creditable service all or any part of the member's military, Cadet Nurse Corps, Peace Corps or VISTA service not exceeding *[three]* five years. Any member who so elects shall deposit in the annuity savings fund by a single contribution the amount or amounts determined by the system’s actuary to be cost neutral to the system. Notwithstanding the provisions of this subsection, any member shall, upon application, be granted up to three years of credit for military service during the periods June 25, 1950 through January 31, 1955 and August 5, 1964 through May 7, 1975 and shall not be required to make a contribution, provided the member has rendered 15 years of creditable service and, prior to becoming a member, served a minimum of one full year of full-time service in the military for which he or she has derived no military pension benefits. The provisions of this subsection shall also be available to state employees who are not members of the classified system and who elect to participate in the defined contribution retirement plan under chapter 16A of this title.

Sec. 5. 16 V.S.A. § 1944(b)(8) is amended to read:

(8) Any group A or group C member who has rendered fifteen years of creditable teaching service and who has, prior to becoming a member of the system, served a minimum of one full year of full-time service in the military, one full year of full-time service as a member of the Cadet Nurse Corps in World War II, the Peace Corps or VISTA for which the member has derived no military or other pension benefits, may elect to have included in the member's creditable service all or any part of the member's military or Cadet Nurse Corps or Peace Corps or VISTA service not exceeding *[three]* five years. Any group A member who elects credit under this subdivision shall deposit in the annuity savings fund by a single contribution an amount computed at regular interest to be sufficient to provide at age sixty an annuity equal to one-one hundred and twentieth of the member's average final compensation multiplied by the number of years of the service rendered for which the member elects to receive credit. Any group A member who elects credit for service in the Cadet Nurse Corps under this subdivision and any group C member who elects credit under this subdivision shall deposit in the annuity savings fund by a single contribution an amount computed at regular interest to be sufficient to provide at normal retirement an annuity equal to 1-2/3 percent of the member's average final compensation multiplied by the number of years of the service for which the member elects to receive credit. Notwithstanding the provisions of this subdivision, any group C member who was a group B member and any group A member shall, upon application, be granted up to three years of credit for military service during the periods June 25, 1950 through January 31, 1955 and August 5, 1964 through May 7, 1975 and shall not be required to make a contribution, provided the member has rendered 15 years of creditable teaching service and prior to becoming a member served a minimum of one full year of full-time service in the military for which he or she has derived no military pension benefits.

* * * Leaves of Absence * * *

Sec. 6. 3 V.S.A. § 458(h) is added to read:

(h) Credit shall also be granted for any period of absence from service in connection with a leave of absence, approved by the commissioner of the member’s department, for professional study. If the office of the member is not overseen by a commissioner, then the head of the member’s department shall have the authority to approve a leave of absence for professional study. In the case of an approved leave of absence for purposes other than for professional study, service credit shall be granted upon a contribution by the member which equals the member's current contribution rate multiplied by the member's earnable compensation for the year preceding the leave of absence.

* * * Death in Service Benefits/Vesting * * *

Sec. 7. 3 V.S.A. § 465 is amended to read:

§ 465. TERMINATION OF SERVICE; ORDINARY DEATH BENEFIT

* * *

(b) Upon the death of a member in service who has not reached his or her normal retirement date and who has not completed *[twenty]* 20 years of creditable service, as a result of causes other than those specified in section 464 of this title, *[his]* the member’s accumulated contributions shall be paid to such person as he or she shall have designated for such purpose in a writing duly acknowledged and filed with the board, otherwise to *[his]* the member’s estate. In addition, if any member was in service at the date of the member's death or on approved leave of absence for professional study and had completed one or more years of creditable service, or if the member's death was the result of an accident while in service or on leave of absence, a pension equal to ten percent of the member's average final compensation, but not less than $50.00 per month, will be payable on account of each of the member's dependent children under the age of 18, or, if a dependent student, under the age of 23, not exceeding a total of three. However, if a surviving child of any age was mentally or physically incapacitated to the extent that the child is impeded from substantial gainful employment before attaining age 18, the pension will be payable for the duration of the child's incapacity.

(c) If a group A, group D or group F member dies in service after becoming eligible for early retirement or after *[completion of twenty]* completing 20 years of creditable service, a retirement allowance will be payable to *[his]* the member’s dependent beneficiary during his or her life. If *[his]* the dependent beneficiary so elects, however, the return of *[his]* the member’s accumulated contributions shall be made in lieu thereof.

(d) If a group D member dies in service after *[he reaches]* reaching his or her normal retirement date or after *[he has completed twelve]* completing 12 years of creditable service, a retirement allowance will be payable to *[his]* the member’s dependent beneficiary during his or her life. If *[his]* the dependent beneficiary so elects, however, the return of *[his]* the member’s accumulated contributions shall be made in lieu thereof.

(e) If a group C member dies in service after *[he or she reaches]* reaching his or her normal retirement date or after *[he or she has completed twenty]* completing 20 years of creditable service, a retirement allowance will be payable to *[his or her]* the member’s dependent spouse during her or his life, or if there be no dependent spouse, or if the dependent spouse dies before the youngest child of the deceased member has attained age *[eighteen]* 18, age *[twenty-three]* 23 in the case of a dependent student, then to *[his or her]* the member’s child or children under said age until the youngest of such children attains such age, divided in such manner as the retirement board in its discretion shall determine provided that the total annual payments to all such children shall not exceed the retirement allowance which would have been payable to the dependent spouse. If a member leaves no dependent spouse or child under such age upon his or her death, then a retirement allowance may be payable at the discretion of the retirement board to his or her dependent parent or parents provided that the total allowance payable shall not exceed the retirement allowance which would have been payable to the dependent spouse. In the case of the payment of a retirement allowance under this section to a child of a deceased group C member who is a dependent student, the retirement allowance shall continue while such child remains a dependent student until he or she attains age *[twenty-three]* 23.

* * *

Sec. 8. 16 V.S.A. § 1937 is amended to read:

§ 1937. SERVICE RETIREMENT

* * *

(b) Upon service retirement, a group A member shall receive a service retirement allowance which shall consist of:

* * *

(4) Beginning July 1, 1989, the service retirement allowance shall be not less than the larger of $4,550.00 a year or *[fifty]* 50 percent of the member's average final compensation for any member or beneficiary who has completed *[thirty]* 30 years or more of creditable service, nor less than a proportionate amount thereof for any member or beneficiary who has completed less than *[thirty]* 30 years of creditable service. Beginning March 1, 1998, the service retirement allowance shall be not less than the larger of $6,600.00 a year or *[fifty]* 50 percent of the member's average final compensation for any member or beneficiary who has completed *[thirty]* 30 years or more of creditable service, nor less than a proportionate amount thereof for any member or beneficiary who has completed at least *[ten]* five years, but less than *[thirty]* 30 years, of creditable service. For this purpose any annuity derived from the member's contributions transferred from the existing system under section 1934(c) of this title and from additional contributions made under section 1944(b)(5) and (6) of this title shall not be included as part of the retirement allowance.

* * *

(f) Upon written application to the board, any group C member who has not attained age 62 but who has attained age 55 and has completed *[ten]* five years, but less than 30 years, of membership service may retire on an early retirement allowance on the first day of the calendar month next following the filing of the application or the member's separation from service, whichever date is later, provided that the applicant has notified the superintendent of schools in writing 30 calendar days prior to the effective date of the application.

* * *

Sec. 9. 16 V.S.A. § 1938(a) is amended to read:

(a) Upon notice not later than *[ninety]* 90 days subsequent to the date the member may have separated from service, any member who has had *[ten]* five or more years of creditable service and has served as a teacher in the state during the five years immediately preceding the date of such separation from service, may be retired by the board of trustees on a disability retirement allowance on the first day of the calendar month next following receipt of application, provided such application is filed not less than *[thirty]* 30 nor more than one *[hundred and eighty]* 180 days subsequent to the filing of such notice, or on the first day of the calendar month next following *[his]* the member’s separation from service provided such application is filed prior to such separation, and further provided that the medical board, after a medical examination of such member, shall certify that the member is mentally or physically incapacitated for ordinary service; and, if previously separated from service, that such incapacity has existed since the time of the member's separation from such service; and that such incapacity is likely to be permanent.

Sec. 10. 16 V.S.A. § 1939(a)(2) is amended to read:

(2) receives compensation in excess of *[50]* 60 percent of the average compensation in the teacher system.

Sec. 11. 16 V.S.A. § 1940(a) is amended to read:

(a) Upon the withdrawal of a member from service prior to retirement, the amount of *[his]* the member’s accumulated contributions, less not more than one-third of the regular interest credited thereon as determined by the board, will be returnable to *[him]* the member. In lieu of the return of *[his]* contributions, a member who completes *[ten]* five or more years of creditable service may allow his or her contributions to remain in the system and receive a retirement allowance, commencing at age *[sixty]* 60, consisting of the annuity provided by his or her accumulated contributions with interest to the date on which the allowance commences, and a pension equal to a service retirement pension computed on the basis of *[his]* the member’s compensation and creditable service to his or her date of withdrawal from service.

Sec. 12. 3 V.S.A. § 470 is amended to read:

§ 470. POST-RETIREMENT ADJUSTMENTS TO RETIREMENT ALLOWANCES

(a) For group A, group C and group D members, as of June 30 in each year, commencing June 30, 1972, a determination shall be made of the increase or decrease, to the nearest one-tenth of a percent, in the ratio of the average of the Consumer Price Index for the month ending on that date to the average of said index for the month ending on June 30, 1971 or the month ending on June 30 of the most recent year subsequent thereto as of which an increase or decrease in retirement allowance was made. If the increase or decrease, so determined, equals or exceeds one percent, the retirement allowance of each beneficiary in receipt of an allowance for at least one year on the next following December 31st shall be increased or decreased, as the case may be, by an equal percentage. Such increase or decrease shall commence on the January 1st immediately following such December 31st. Such percentage increase or decrease shall also be made in the retirement allowance payable to a beneficiary in receipt of an allowance under an optional election, provided the member on whose account the allowance is payable and such other person shall have received a total of at least 12 monthly payments by such December 31st. The maximum adjustment of any retirement allowance resulting from any such determination shall be five percent and the minimum shall be one percent, and no retirement allowance shall be reduced below the amount payable to the beneficiary without regard to the provisions of this section.

(b) For group F members, as of June 30 in each year, commencing January 1, 1991, a determination shall be made of the increase or decrease, to the nearest one-tenth of a percent of the Consumer Price Index for the preceding fiscal year. The retirement allowance of each beneficiary in receipt of an allowance for at least one year on the next following December 31st shall be increased or decreased, as the case may be, by an amount equal to one-half of the percentage increase or decrease. The increase or decrease shall commence on the January 1st immediately following such December 31st. The adjustment shall apply to group F members receiving an early *[or a normal]* retirement allowance only in the year following attainment of age 62, provided the member has received benefits for at least 12 months as of December 31 of the year preceding any January adjustment. The maximum adjustment of any retirement allowance resulting from any such determination shall be five percent and the minimum shall be one percent, and no retirement allowance shall be reduced below the amount payable to the beneficiary without regard to the provisions of this section.

* * *

Sec. 13. 16 V.S.A. § 1949 is amended to read:

§ 1949. POST-RETIREMENT ADJUSTMENTS TO RETIREMENT ALLOWANCES

(a) For all group A members, as of June 30 in each year, beginning June 30, 1972, the board shall determine the increase or decrease, to the nearest one-tenth of one percent, in the ratio of the average of the consumer price index for the month ending on that date to the average of the index for the month ending on June 30, 1971, or the month ending on June 30 of the most recent year subsequent thereto as to which an increase or decrease in retirement allowance was made. If the increase or decrease, so determined, equals or exceeds one percent, the retirement allowance of each beneficiary in receipt of an allowance for at least one year on the next following December 31 shall be increased or decreased, as the case may be, by an equal percentage. The increase or decrease shall begin on January 1 immediately following that December 31. An equivalent percentage increase or decrease shall also be made in the retirement allowance payable to a beneficiary in receipt of an allowance under an optional election, provided the member on whose account the allowance is payable and such other person shall have received a total of at least 12 monthly payments by such December 31. The maximum adjustment of any retirement allowance in any calendar year resulting from any determination under this section shall be five percent and the minimum shall be one percent, and no retirement allowance shall be reduced below the amount payable to the beneficiary without regard to the provisions of this section.

(b) For group C members, as of June 30 in each year, commencing June 30, 1981, a determination shall be made of the increase or decrease, to the nearest one-tenth of a percent of the consumer price index for the preceding fiscal year. The retirement allowance of each beneficiary in receipt of an allowance for at least one year on the next following December 31st shall be increased or decreased, as the case may be, by an amount equal to one-half of the percentage increase or decrease. The increase or decrease shall commence on the January 1st immediately following such December 31st. The adjustment shall apply to group C members receiving an early retirement allowance only in the year following attainment of age 62, provided the member has received benefits for at least 12 months as of December 31 of the year preceding any January adjustment. The maximum adjustment of any retirement allowance resulting from any such determination shall be five percent and the minimum shall be one percent, and no retirement allowance shall be reduced below the amount payable to the beneficiary without regard to the provisions of this section.

* * *

Sec. 14. 24 V.S.A. § 5064(b) is amended to read:

(b) Annuity savings fund. The annuity savings fund shall be the fund in which shall be accumulated contributions deducted from the compensation of members. Contributions shall be made by group A members at the rate of three percent of earnable compensation. Contributions shall be made by group B members at the rate of five percent of earnable compensation. Contributions shall be made by group C and group D members at a rate of 11 percent of earnable compensation. Additionally, if an employee remains in group C and is employed by an employer who elects to revoke its group C membership in accordance with subsection (f) of section 5068 of this title, the rate established above will be adjusted. This adjustment shall be determined by subtracting the group B rate, or if not applicable, the group A rate determined in subdivision (c)(1) of this section from the group C rate determined in subdivision (c)(1) of this section. Notwithstanding the provisions of this subsection, for the period July 1, 2000 through June 30, 2005, contributions shall be made by group A members at the rate of two and one-half percent of earnable compensation, by group B members at the rate of four and one-half percent of earnable compensation, and by group C members at the rate of nine percent of earnable compensation.

Sec. 15. 24 V.S.A. § 5069 is amended to read:

§ 5069. INSURANCE

(a) The board may enter into insurance arrangements to provide health and medical benefits for retired members and their dependents.

(b) As an alternative to providing health care insurance, the board, in its discretion, may assist retired members of the system with the cost of health care by authorizing payment of a health care stipend to retired members in an amount to be determined by the board. In the event the board determines to provide such a stipend, it shall annually review the stipend, in consultation with the actuary designated pursuant to subsection 5052(j) of this title, and determine whether to continue to provide the stipend and the amount to be paid. If authorized by the board, a stipend shall be paid in 12 monthly installments commencing on July 1 of that year.

Sec. 16. 24 V.S.A. § 5064 is amended to read:

§ 5064. FUNDS

* * *

(c) Pension accumulation fund. The pension accumulation fund shall be the fund in which shall be accumulated all reserves for the payment of all pensions and other benefits payable from contributions made by an employer, any amounts transferred thereto from the annuity reserve fund, the annuity savings fund, and from which shall be paid all benefits payable under the system other than those payable from the annuity savings fund.

(1) On account of each member, an employer shall pay annually, in *[quarterly]* installments as determined by the board, into the pension accumulation fund an amount equal to the certain percentage of the annual earnable compensation of such member. Such contribution percentage shall be separately determined for each group of membership within the retirement system as the sum of "normal contribution rate" for such membership group and its "accrued liability contribution rate," such sum to be reduced by the member contribution rate provided for in subsection (b) of this section.

* * *

(e) Remittance of member contributions and employer contributions. Each employer shall remit its employer contributions and the member contributions applicable to its employees *[for each calendar quarter]* in installments as determined by the board to the state treasurer*[, within 15 days after the end of a calendar quarter]*. Any payments due which are not received within *[one month]* 30 days after the *[end of the applicable calendar quarter]* installment due date set by the board shall result in a penalty assessment against the employer at the rate of one percent of the amount due for each month calculated from the *[end of the applicable calendar quarter]* installment due date, provided that the board may, in its discretion, waive part or all of said penalty assessment if good cause is shown. The delinquent payments and penalties thereon may be recovered by action in a court of competent jurisdiction against the employer liable therefor or may be deducted by, or at the request of, the state treasurer from any other monies payable to such employer by the state or any department or agency thereof.

Sec. 17. 24 V.S.A. § 5053(b) is amended to read:

(b) Any employee who is hired subsequent to the effective date of participation of his or her employer, and who:

(1) has not been offered a choice between the defined benefit plan and the defined contribution plan, as provided for in section 5070 of this title, shall become a member of the system on the date the employee is hired.

(2) has a choice between the defined benefit plan and the defined contribution plan, as provided for in section 5070 of this title, shall become a member of the system 90 days after the date the employee is hired. Retirement credit will begin upon enrollment as a member. A member may restore retirement credit for the service prior to becoming a member of the system by depositing an amount that the member would have contributed had the member joined the retirement system on the date he or she was hired. If a member elects to restore retirement credit, the employer shall make the appropriate matching contributions.

* * * Group E Defined Contribution Option * * *

Sec. 18. DEFINED CONTRIBUTION PLAN; VESTED MEMBERS

(a) On or before December 15, 2000, a vested member of group E of the Vermont state retirement system who was not eligible to participate in the defined contribution plan under Sec. 2 of No. 129 of the Acts of 1998 because he or she had withdrawn from service may elect to participate in the defined contribution plan established under chapter 16A of Title 3, provided the member was an exempt employee at the time he or she withdrew from service.

(b) The procedure for election to participate in the defined contribution retirement plan under this act shall be established by the state treasurer.

(c) All members who elect under subsection (a) of this section to participate in the defined contribution retirement plan shall lose all rights to benefits as a member of the Vermont state retirement system, and shall attain all rights to benefits as a member of the defined contribution retirement plan. On or before January 15, 2001, the state treasurer shall transfer the full actuarial value of the accrued benefit calculated on a cost neutral basis, as of the time of transfer, of all members who elect to participate in the defined contribution retirement plan established under chapter 16A of Title 3.

(d) Election to participate in the defined contribution retirement plan is irrevocable, unless the member becomes a classified employee and elects to transfer his or her membership and the full actuarial value of the accrued benefit to the Vermont state retirement system.

* * * Employee Contribution Rates * * *

Sec. 19. 3 V.S.A. § 473(b)(2) is amended to read:

(2) Contributions shall be made on and after the date of establishment at the rate of five percent of compensation except at a rate of 6.18 percent of compensation for each group C member unless such member was a group C member on June 30, 1998 in which case contributions shall be at the rate of six percent of compensation for each such group C member who has elected not to have his compensation from the state be subject to social security withholding or at the rate of five percent of compensation if such member elected to have compensation from the state subject to Social Security withholding and at the rate of *[two and three-quarter]* 3.25 percent of compensation for each group F member. In determining the amount earnable by a member in a payroll period, the retirement board may consider the annual or other periodic rate of earnable compensation payable to such member on the first day of the payroll period as continuing throughout such payroll period, and it may omit deduction from compensation for any period less than a full payroll period if an employee was not a member on the first day of the payroll period, and to facilitate the making of deductions it may modify the deduction required of any member by such an amount as, on an annual basis, shall not exceed one-tenth of one percent of the annual earnable compensation upon the basis of which such deduction is to be made. Each of the amounts shall be deducted until the member retires or otherwise withdraws from service, and when deducted shall be paid into the annuity savings fund, and shall be credited to the individual account of the member from whose compensation the deduction was made.

Sec. 20. 3 V.S.A. § 500(c) is amended to read:

(c) Employees who elect to participate in the defined contribution retirement plan shall contribute at the rate *[equivalent to the contribution rate for group F members of the Vermont state retirement system]* of 2.85 percent of the employee’s compensation for each payroll period. The state shall contribute to each employee's account at the rate of seven percent of the employee's compensation for each payroll period. Employees may make additional contributions to the plan, provided that total annual contributions by an employee in any calendar year shall not exceed the maximum permitted for such plans under the United States Internal Revenue Code. Contributions shall not be subject to taxation until distribution is actually made or made available to the employee.

* * * Woodside Facility Employees * * *

Sec. 21. 3 V.S.A. § 459 is amended to read:

§ 459. NORMAL AND EARLY RETIREMENT

* * *

(d) Early retirement allowance.

* * *

(2) Upon early retirement, a group F member, except facility employees of the department of corrections *[and]*, department of corrections employees who provide direct security and treatment services to offenders under supervision in the community and Woodside facility employees, shall receive an early retirement allowance which shall be equal to the normal retirement allowance reduced by one-half of one percent for each month the member is under age 62 at the time of early retirement. Group F members who have 20 years of service as facility employees of the department of corrections *[or]*, as department of corrections employees who provide direct security and treatment services to offenders under supervision in the community or as Woodside facility employees shall receive an early retirement allowance which shall be equal to the normal retirement allowance at age 55 without reduction; provided the 20 years of service occurred in one or more of the following capacities as an employee of the department of corrections or Woodside facility: facility employee, community service center employee or court and reparative service unit employee.

* * *

* * * Law Enforcement New Hires in Group C * * *

Sec. 22. 3 V.S.A. § 455(9) is amended to read:

(9) "Employee" shall mean (A) any regular officer or employee of the Vermont historical society or in a department other than a person included under (B) of this subdivision, who is employed for not less than *[forty]* 40 calendar weeks in a year, and (B) any regular officer or employee of the department of public safety assigned to police and law enforcement duties, including the commissioner of public safety*[;]* *[motor vehicle inspectors so employed prior to the date of establishment including the commissioner of motor vehicles]*; but, irrespective of *[his]* the member’s classification, shall not include any member of the general assembly as such, any person who is covered by the Vermont teachers' retirement system, any person engaged under retainer or special agreement or C beneficiary employed by the department of public safety for not more than 208 hours per year, or any person whose principal source of income is other than state employment. In all cases of doubt, the retirement board shall determine whether any person is an employee as defined in this subchapter. Also included under (B) of this subdivision are employees of the department of liquor control who exercise law enforcement powers, employees of the department of fish and wildlife assigned to law enforcement duties, motor vehicle inspectors including the commissioner of motor vehicles, sheriffs, full-time deputy sheriffs, investigators employed by the office of the attorney general, department of state’s attorneys and office of the secretary of state, and full-time firefighters employed by the state of Vermont, who are first included in membership of the system on or after July 1, 2000.

* * * Securities Lending * * *

Sec. 23. 3 V.S.A. § 471(m) is amended to read:

(m) The retirement board may authorize the loan of its securities pursuant to securities lending agreements that provide for collateral consisting of cash or securities issued or guaranteed by the United States government or its agencies equal to 100 percent or more of the market value of the loaned securities. Cash collateral *[shall be invested in accordance with the requirements for investments of state funds as provided by 32 V.S.A. § 433]* may be invested by the lending institution in funds approved by the state treasurer. Approval of funds shall be made in accordance with the standard of care established by the prudent investor rule under chapter 147 of Title 7.

Sec. 24. 16 V.S.A. § 1942(q) is amended to read:

(q) The retirement board may authorize the loan of its securities pursuant to securities lending agreements that provide for collateral consisting of cash or securities issued or guaranteed by the United States government or its agencies equal to 100 percent or more of the market value of the loaned securities. Cash collateral *[shall be invested in accordance with the requirements for investments of state funds as provided by 32 V.S.A. § 433]* may be invested by the lending institution in funds approved by the state treasurer. Approval of funds shall be made in accordance with the standard of care established by the prudent investor rule under chapter 147 of Title 7.

Sec. 25. 24 V.S.A. § 5062(o) is amended to read:

(o) The retirement board may authorize the loan of its securities pursuant to securities lending agreements that provide for collateral consisting of cash or securities issued or guaranteed by the United States government or its agencies equal to 100 percent or more of the market value of the loaned securities. Cash collateral *[shall be invested in accordance with the requirements for investments of state funds as provided by 32 V.S.A. § 433]* may be invested by the lending institution in funds approved by the state treasurer. Approval of funds shall be made in accordance with the standard of care established by the prudent investor rule under chapter 147 of Title 7.

Sec. 26. EARLY RETIREMENT EXTENSION

If the secretary of administration determines that an extension previously granted under the provisions of Sec. 2 of No. 76 of the Acts of 1996 (Early Retirement Offering), and Sec. 57 of No. 66 of the Acts of 1998, should be further extended in the interests of the state, an additional extension of not more than two years may be offered. Upon retirement, an employee subject to such extension shall be entitled to the benefits under said act.

Sec. 27. STATE TREASURER; REPORT

The State Treasurer shall report to the General Assembly by January 15, 2001 on the impact on the funds of the Vermont Employees Retirement System if firefighters currently employed by the state of Vermont have the option of being included in Group C of the system. The State Treasurer shall consult with and have the cooperation of the retirement board.

Sec. 28. RESTORATION RIGHTS; STUDY

The Secretary of Administration and the Vermont State Employees’ Association shall collaborate to study restoration rights of all employees of the state of Vermont. The Secretary of Administration shall file a report with the House and Senate Committees on Government Operations by October 1, 2000 which documents the results of this study and which clarifies the restoration rights of all state employees to the greatest extent possible.

Sec. 28a. RETIREMENT SYSTEMS; STUDY OF MILITARY SERVICE CREDIT

The State Treasurer is directed to conduct a comprehensive study of the military service credit in the State Employees Retirement System, the State Teachers Retirement System, and the Municipal Employees Retirement System, and report findings and recommendations to the General Assembly on or before January 15, 2001.

Sec. 29. STATE TREASURER; REPORT ON EMPLOYEES OF DEPARTMENT OF SOCIAL AND REHABILITATION SERVICES AND STATE HOSPITAL

On or before January 15, 2001, the State Treasurer shall submit a report to the General Assembly which assesses the financial impact on the Vermont Employees Retirement System if employees of the Department of Social and Rehabilitation Service who provide supervision and treatment services to juveniles in the community and employees of the Vermont State Hospital are provided retirement benefits and options equal to those received by employees of the Department of Corrections. In the report and in consultation with the Commissioner of Personnel, the Treasurer, shall advance a basis for establishing parity among the retirement benefits and options available to employees of the Department of Corrections, Department of Social and Rehabilitation Services and Vermont State Hospital.

Approved: May 29, 2000