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NO. 197.  AN ACT RELATING TO THE VERMONT MUNICIPAL EMPLOYEES’ RETIREMENT SYSTEM.

(H.884)

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

Sec. 1.  24 V.S.A. § 5051 is amended to read:

§ 5051.  DEFINITIONS

As used in this chapter:

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(4)  “Average final compensation” (AFC) means,:

(A)  for a group A member, the average annual earnable compensation of a member during the 60 consecutive months five consecutive fiscal years beginning July 1 and ending June 30 of creditable service during which his or her earnable compensation was the highest, or if he or she has less than 60 months of creditable service, it shall mean his or her average annual earnable compensation during his or her total creditable service affording the highest average, or during all of the years of creditable service if fewer than five years.  If the member’s highest five years of earnable compensation are the five years prior to separation of service and the member separates prior to the end of a fiscal year, the AFC shall be determined by adding:

(i)  the actual earnable compensation earned through the date of separation and corresponding service credit; 

(ii)  the earnable compensation and service credit earned in the preceding four fiscal years; and

(iii)  the remaining service credit that is needed to complete the five full years, which shall be factored from the fiscal year preceding the four fiscal years described in subdivision (ii) of this subdivision (A).  The earnable compensation associated with this remaining service credit shall be calculated by multiplying the annual earnable compensation reported by the remaining service credit that is needed.

(B)  For a group B or C member, the term means the average annual earnable compensation of a member during the 36 consecutive months three consecutive fiscal years beginning July 1 and ending June 30 of creditable service during which his or her earnable compensation was the highest, or if he or she has less than 36 months of creditable service, it shall mean his or her average annual earnable compensation during his or her total creditable service affording the highest average, or during all of the years in his or her creditable service if fewer than three years.  If the member’s highest three years of earnable compensation are the three years prior to separation of service and the member separates prior to the end of a fiscal year, the AFC shall be determined by adding: 

(i)  the actual earnable compensation earned through the date of separation and corresponding service credit; 

(ii)  the earnable compensation and service credit earned in the preceding two fiscal years; and

(iii)  the remaining service credit that is needed to complete the three full years, which shall be factored from the fiscal year preceding the two fiscal years described in subdivision (ii) of this subdivision (B).  The earnable compensation associated with this remaining service credit shall be calculated by multiplying the annual earnable compensation reported by the remaining service credit that is needed.

(C)  For a group D member, the term means the average annual earnable compensation of a member during the 24 consecutive months two consecutive fiscal years beginning July 1 and ending June 30 of creditable service during which his or her earnable compensation was the highest, or if he or she has less than 24 months of creditable service, it shall mean his or her average annual earnable compensation during his or her total creditable service affording the highest such average, or during all of the years in his or her creditable service if fewer than two years.  If the member’s highest two years of earnable compensation are the two years prior to separation of service and the member separates prior to the end of a fiscal year, the AFC shall be determined by adding: 

(i)  the actual earnable compensation earned through the date of separation and corresponding service credit; 

(ii)  the earnable compensation and service credit earned in the preceding fiscal year; and

(iii)  the remaining service credit that is needed to complete the two full years, which shall be factored from the fiscal year preceding the fiscal year described in subdivision (ii) of this subdivision (C).  The earnable compensation associated with this remaining service credit shall be calculated by multiplying the annual earnable compensation reported by the remaining service credit that is needed.

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(10)  “Employee” means the following persons employed on a regular basis by a school district for not less than 1,040 hours in a year and for not less than 30 hours a week for the school year, as defined in section 1071 of Title 16, or for not less than 1,040 hours in a year and for not less than 24 hours a week year-round.  The term shall also mean persons employed on a regular basis by a municipality other than a school district for not less than 1,040 hours in a year and for not less than 24 hours per week, including persons employed in a library or museum at least half of whose operating expenses are met by municipal funds:

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(11)  “Employer” means a municipality or a library or a museum supported in whole or in part by at least half of whose operating expenses are paid from municipal funds.

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Sec. 2.  24 V.S.A. § 5054a(c) is added to read:

(c)  Any time a member is required to make a single contribution in connection with an election under this section, a member may contribute in equal annual installments for a period not to exceed three years.  Those contributions shall become a part of the member’s accumulated contributions.  Any member who retires before completing payment for the purchase of service under this section shall receive pro rata credit for service purchased before the date of retirement, but if the member so elects at the time of retirement, the member may pay as much in a single sum as is necessary to provide full credit at that time.

Sec. 3.  24 V.S.A. § 5056(a) is amended to read:

(a)  Upon application of a member not more than 90 days before, or later than ninety 90 days, or longer for cause shown, after the date a member may have separated separates from service, any member who has not reached his or her normal retirement date and has had five or more years of creditable service, including two and one-half years as a contributor subsequent to joining, may be retired by the retirement board on a disability retirement allowance, not less than thirty nor more than ninety days after filing the application on the first of the month following separation from service; provided that the medical board, after a medical an examination of such the medical records of the member or a medical examination by a physician or physicians designated by the medical board, shall certify that the member is mentally or physically incapacitated for the further performance of duty the member’s specific job requirements, that such incapacity has existed at/and at and since the time of the member’s separation from service and is likely to be permanent, and that he or she should be retired.  If the member has applied for and been granted a disability retirement allowance from the Social Security Administration prior to submission of municipal application, an automatic approval will be granted upon receipt of proof of Social Security disability allowance.

Sec. 4.  24 V.S.A. § 5056a is amended to read:

§ 5056a.  BENEFIT DENIAL; EVIDENTIARY HEARING

(a)  An applicant for disability retirement benefits under section 5056 of this title may file a request for an evidentiary hearing with the retirement board if the application for benefits is denied.

(b)  The hearing shall be an appeal de novo and shall be conducted by a hearing officer designated by the board and in conformance with rules adopted by the board.  Rules adopted by the board shall be consistent with section 809 of Title 3.

(c)  The decision of the hearing officer shall constitute final administrative action.

(d)  The retirement system or the applicant may appeal a decision of the hearing officer to the supreme court pursuant to Rule 13 of the Vermont Rules of Appellate Procedure.

Sec. 5.  24 V.S.A. § 5057 is amended to read:

§ 5057.  RE-EXAMINATION REEXAMINATION OF DISABILITY

              BENEFICIARY

(a)  Once each year during the first five years following the retirement of a member on a disability retirement allowance, and once in every three year period thereafter, the retirement board or the medical board may, and upon his application shall, require any disability beneficiary who has not reached his or her normal retirement date to undergo a medical examination, by the medical board or by a physician or physicians designated by the medical board, such the examination to be made at the place of residence of such the beneficiary or other place mutually agreed upon.  In lieu of a medical examination, the retirement board may request current medical records or evidence to substantiate the continued disability status.   

(b)  Should any disability beneficiary who has not reached his normal retirement date refuse to submit to such medical examination or refuse to supply current medical records or other requested medical evidence, his or her allowance may be discontinued until his withdrawal of such refusal, and should his refusal continue for one year, all his the beneficiary’s rights in and to his or her pension may be revoked by the retirement board.

Sec. 6.  24 V.S.A. § 5059(b) is amended to read:

(b)  Unless the designated dependent beneficiary elects to receive payment of a deceased member’s accumulated contributions as provided under subsection (a) of this section, the retirement allowance payable to the dependent beneficiary of a deceased group A, group B or, group C, or group D member under this section shall be equal to the retirement allowance that would have been payable had the member elected option 1 under section 5060 of this title and retired on the member’s date of death.  In the case of a member who has not attained the normal retirement date as of his or her date of death, the retirement allowance shall be computed on the basis of a disability retirement allowance or an early retirement allowance, whichever provides the greater benefit to the dependent beneficiary.  If the deceased member has no eligible designated dependent beneficiary, the member’s accumulated contributions shall be payable in accordance with the provisions of subsection (a) of this section.  If his or her dependent beneficiary so elects or if the member served less than five years, or less than two and one-half as a contributing member, the return of his or her accumulated contributions shall be made in lieu thereof to the member’s designated beneficiaries.  In the absence of a designated beneficiary, the return of his or her accumulated contributions shall be payable to the deceased member’s estate.

Sec. 7.  24 V.S.A. § 5064(c)(1) is amended to read:

(1)  On account of each member, an employer shall report earnable compensation and pay annually, in 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.

Sec. 8.  24 V.S.A. § 5067(a) is amended to read:

(a)  For members, as of June 30 in each year, commencing June 30, 1987, 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 31 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 1 immediately following such December 31st 31.  The adjustment shall apply to members of the group A, B, or D plans receiving an early retirement allowance only in the year following attainment of age 62 normal retirement age, 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 two percent for group A members and three percent for group B, C, and D members, and no retirement allowance shall be reduced below the amount payable to the beneficiary without regard to the provisions of this section.

Sec. 9.  24 V.S.A. § 5068(c) is amended to read:

(c)   On or before September 30 of any year, a municipality, at an annual or special meeting warned for the purpose, the legislative body of a municipality may designate groups of employees eligible to become members of group D. Such The designation may apply to one or more of the following groups of employees:

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Sec. 10.  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)  The board may, to the extent that it may be funded as described in this subsection, establish an uninsured program for the reimbursement of certain health care costs of retired members and their dependents pursuant to the following:

(1)  Benefits under an uninsured program shall be funded by redirecting a portion of contributions from employers.  Employer contributions shall only be so redirected to the extent that those contributions offset an existing actuarially determined surplus with respect to the actuarial cost method and funding adopted by the board.  The board may establish a trust to hold and invest employer contributions and to pay the benefits and administrative expenses of the program.  The benefits or administrative expenses of this program shall not be paid from the annuity fund, the pension fund, or the expense fund.

(2)  The board shall have the discretion to determine the method for allocating the fund balance to retired members; provided, however, that the aggregate benefits payable under this program may not exceed the aggregate contributions made by employers and earnings, if any, on those contributions.  Prior to July 1 of each year, the board shall notify each retired member of the amount available for reimbursement over the succeeding 12 months and the procedures by which the retired member or dependent may request reimbursement.

(3)  Retired members and their dependents shall be required to provide substantiation of their health care expense claims to the extent required by the Internal Revenue Service for tax-favored treatment of their reimbursements.  The board may enter into an agreement with a third party administrator to process the expense claims of retired members and their dependents.

(c)  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.

Approved:  May 29, 2006



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us