BEFORE THE PUBLIC EMPLOYEES' RETIREMENT BOARD

OF THE STATE OF MONTANA

 

In the matter of the amendment of ARM 2.43.2110 pertaining to calculation of highest average compensation or final average compensation

) ) ) ) )

NOTICE OF PROPOSED AMENDMENT   NO PUBLIC HEARING CONTEMPLATED

 

TO: All Concerned Persons

 

1. On November 27, 2013, the Public Employees' Retirement Board proposes to amend the above-stated rule.

 

2. The Public Employees' Retirement Board will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. If you require an accommodation, contact Montana Public Employee Retirement Administration no later than 5:00 p.m. on November 7, 2013 to advise us of the nature of the accommodation that you need. Please contact Kris Vladic, Montana Public Employee Retirement Administration, P.O. Box 200131, Helena, Montana, 59620-0131; telephone (406) 444-2578; fax (406) 444-5428; TDD (406) 444-1421; or e-mail [email protected].

 

3. The rule as proposed to be amended provides as follows, new matter underlined, deleted matter interlined:

 

           2.43.2110 CALCULATION OF HIGHEST AVERAGE COMPENSATION OR FINAL AVERAGE COMPENSATION WITH LUMP-SUM PAYMENTS (1) For "highest average compensation" and "final average compensation" purposes:

(a) for a member initially hired prior to July 1, 2011, compensation means the total compensation earned during 36 consecutive calendar months divided by 36; and

(b) for a member initially hired on or after July 1, 2011 in a PERS, SRS, or GWPORS-covered position, compensation means the total compensation earned during 60 consecutive calendar months divided by 60.

(2)  Lump-sum payments made upon termination of employment of for paid leave, including banked holiday time, vacation, personal, sick, or compensatory leave must be included in the calculation of a member's highest average compensation or final average compensation by replacing lower compensation months with the same number of higher compensation months. The number of replacement months and the amount of compensation included in the replacement months is determined by used to extend the compensation on the basis of either:

(a)  dividing the lump-sum payment by the regular hourly rate in effect for the employee at the time of termination and on identified future regular payroll reports, or the monthly salary earned at the time of termination.; or

(3) (b)  The lump-sum payment of paid leave, including banked holiday time, vacation, personal, sick, or compensatory leave, for members whose monthly compensation varies, will be extended by multiplying their hourly rate times 2,080 (the assumed number of hours worked in a fiscal year) divided by 12 to determine the monthly wage going forward and then dividing the lump-sum payment by the monthly wage.

            (4) (2) Lump-sum payments made without termination of employment for banked holiday time, compensatory leave, sick leave, or vacation leave paid without termination of employment will not be considered as compensation for any purpose regardless how the payout is classified, including identifying the payout as a bonus.

 

AUTH: 19-2-403, MCA

IMP:     19-2-303, 19-2-506, 19-2-1005, 19-3-108, 19-6-101, 19-7-101, 19-8-101, 19-9-104, 19-13-104, MCA

 

STATEMENT OF REASONABLE NECESSITY: Current (1) is proposed to be deleted as it merely reflects definitions already included in the law. New (1) is proposed to more clearly and accurately explain how lump-sum payments are treated in the calculation of a member's highest or final average compensation. MPERA receives questions on a regular basis regarding this procedure and believes that the proposed clarification will better inform our members regarding this calculation process.

 

Section 19-2-1005, MCA, is added to the list of implemented statutes as it was amended by Chapter 386 of the Montana Session Laws of 2013 to limit compensation included in the calculation of a member's highest average compensation or final average compensation to 110% of the member's previous year's compensation. No amendment to the rule itself is necessary as statute clearly defines the limiting calculation.

 

4. Concerned persons may submit their data, views, or arguments concerning the proposed action in writing to: Kris Vladic, Montana Public Employee Retirement Administration, P.O. Box 200131, Helena, Montana, 59620-0131; telephone (406) 444-2578; fax (406) 444-5428; or e-mail [email protected], and must be received no later than 5:00 p.m., November 14, 2013.

 

5. If persons who are directly affected by the proposed action wish to express their data, views, or arguments orally or in writing at a public hearing, they must make written request for a hearing and submit this request along with any written comments to Kris Vladic at the above address no later than 5:00 p.m., November 14, 2013.

 

6. If the agency receives requests for a public hearing on the proposed action from either 10 percent or 25, whichever is less, of the persons directly affected by the proposed action; from the appropriate administrative rule review committee of the Legislature; from a governmental subdivision or agency; or from an association having not less than 25 members who will be directly affected, a hearing will be held at a later date. Notice of the hearing will be published in the Montana Administrative Register.  Ten percent of those directly affected has been determined to be 6695 persons based on approximately 66,956 defined benefit retirement plan members as of June 30, 2013.

 

7. The Public Employees' Retirement Board maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices. Notices will be sent by e-mail unless a mailing preference is noted in the request.  Such written request may be mailed or delivered to the contact person in 4 above or may be made by completing a request form at any rules hearing held by the Public Employees' Retirement Board.

 

8. An electronic copy of this proposal notice is available through the Secretary of State's web site at http://sos.mt.gov/ARM/Register. The Secretary of State strives to make the electronic copy of this notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered. In addition, although the Secretary of State works to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.

 

           9. The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled. The primary bill sponsor was contacted by mail on June 21, 2013.

 

           10. With regard to the requirements of 2-4-111, MCA, the Public Employees' Retirement Board has determined that amendment of the above-referenced rule will not significantly and directly impact small businesses.

 

 

 

/s/ Melanie A. Symons                               /s/ Scott E. Moore                                       

Melanie A. Symons                                    Scott E. Moore

Chief Legal Counsel                                  President

and Rule Reviewer                                    Public Employees' Retirement Board

           

Certified to the Secretary of State October 7, 2013