The 2015 Oregon Legislative Assembly passed three bills which require rulemaking:
Senate Bill 80 (Chapter 767, Oregon Laws 2015), became effective July 27, 2015. Section 2 of SB 80 abolishes the Oregon University System as of July 1, 2015. Each of the seven public universities now has an independent governing board. The rule modifications reflect this change in reference to the universities' Optional Retirement Plan (ORP).
Senate Bill 454 (Chapter 537, Oregon Laws 2015), which becomes effective on January 1, 2016, requires Oregon employers to provide a minimum rate of accrual of "sick time" to employees (up to 40 hours per year), whether paid or unpaid. ORS 238.350 allows employers to elect to participate in the unused sick leave program, which affects the calculation of Final Average Salary for Tier One and Tier Two members.
Under that program, employees may accrue sick leave at the lowest rate in effect for the covered group. Staff received many questions from employers regarding the effect of SB 454 on the unused sick leave program. Employers represented that the types of positions expected to be covered by SB 454 (part-time, seasonal, or temporary workers) would not be in PERS "qualifying positions" and, therefore, not be covered by the unused sick leave program.
In addition, the language of SB 454 specifies that this law is not to be construed to "preempt, limit or otherwise impact any employer policy . . . that provides for greater use of paid or unpaid sick time." This language indicates that the legislature specifically intended not to interfere with any similar, existing policy or program. Therefore, construing "sick time" in SB 454 as limiting the "sick leave" used for purposes of ORS 238.350 could have a limiting effect with respect to the number of hours accrued under the PERS program, contrary to the legislative intent.
For these reasons, PERS staff concluded that SB 454 does not impact the unused paid sick leave accrual available to Tier One and Tier Two members under ORS 238.350. The proposed amendments to OAR 459-011-0500 confirm this understanding by specifically stating that "sick time" (the term used by SB 454) does not constitute "sick leave" for PERS purposes.
House Bill 3495 (Chapter 326, Oregon Laws 2015), amending ORS 238A.100 and 238A.330, becomes effective on January 1, 2016. As previously reported to the PERS Board, this bill amends the "contribution start date" for new OPSRP and IAP members, such that employer contributions to fund the pension benefit and employee contributions to the IAP will be due for wages attributable to services performed by the employee during the first full pay period following the new member's six-month waiting time. The modifications to OAR 459-080-0150 implement this change for new members as of January 1, 2016.
The proposed rule modifications are summarized below.
OAR 459-005-0001, Definitions, Generally; 459-005-0310, Date of Participation and Transfer of Employee Funds to the Optional Retirement Plan; and 459-005-0350, Membership Status of Persons in Concurrent Employment Eligible to Participate in an Optional or Alternative Retirement Plan: The modifications replace "Oregon University System" with "public university." A new definition for "public university" was added in 459-005-0001 to clarify that the term means a public university with a governing board listed in ORS 352.002, in accordance with SB 80.
OAR 459-011-0500, Accumulated Unused Sick Leave: Clarifies that the new "sick time" provisions provided by SB 454 do not constitute "sick leave" for purposes of ORS 238.350.
OAR 459-080-0150, Employee Contributions into the IAP Account: Provides that contributions for newly established IAP members will be made for wages attributable to services performed by the employee during the first full pay period after the employee has established membership in the IAP.
Partial Year for Academic Employees
PERS membership is based on employment in a "qualifying position," which generally requires 600 hours of employment in a year. ORS 238.074 provides specific conditions for determining whether an academic employee of a community college has worked 600 hours for all purposes under ORS Chapter 238 (.375 Full Time Equivalent (FTE) on a 12-month basis or .50 FTE on a 9-month basis). The modifications to OAR 459-010-0012 clarify that, for academic employees of community colleges, a year shall be the 12-month period beginning July 1 and ending the following June 30, also known as an "academic year." Under PERS administration of the statute and rule, PERS uses an academic year rather than a calendar year as the standard of measure when determining qualifying position for academic employees of community colleges under OAR 459-010-0003, including during a partial year of employment.
Payment for Retirement Benefits
ORS 238.372 prohibits PERS from paying "tax remedy" increases under SB 656 (Chapter 796, Oregon Laws 1991), or HB 3349 (Chapter 569, Oregon Laws 1995) if the benefits are not subject to Oregon personal income tax because the recipient is not an Oregon resident (as provided in ORS 316.127(9)). ORS 238.378 requires PERS and the Department of Revenue (DOR) to share information necessary to determine whether a member's benefit is subject to Oregon income tax. OAR 459-013-0310 explains how PERS uses the information provided by DOR, and residency status information provided by the recipient, to make residency status determinations.
One scenario the current administrative rule did not take into account is how to determine residency when a person files a partial year return (40P) for the tax year in which they submit a residency status form to PERS. The proposed rule modification in new paragraph (2)(a)(G) clarify that, if a person filed a 40P according to DOR data query information and that person also submitted a residency status certification between January 1 and December 15 for the same calendar year, PERS will base residency on the recipient's form, since the form requires the recipient to certify under penalty of perjury that they are an Oregon resident for income tax purposes. In addition, a new section (4) has been added to provide further clarification that all residency status information received by PERS between December 16 and December 31 of a calendar year will be treated as received the following calendar year.
The modifications to OAR 459-013-0060 are housekeeping edits to conform the administrative rule to current business practice. In section (1), a new subsection was added to clarify that when the first day of the month falls on a weekend or a PERS holiday, retirement benefits processed through electronic funds transfer must be issued no later than the previous business day. A new section (3) was added stating the only exception applies for retirement benefits payable on January 1, which must always be paid in the month of January to avoid exceeding 12 monthly payments in a year.