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Joint Public Retirement
Feb. 27, 2023
Sen Payton: Chair sees a quorum. According to my phone, it is 9:00, so that clock back there may need to be adjusted a little bit. Certainly appreciate y’all being here this morning. Anybody in the audience that wants to speak for or against a bill, you need to sign up to do that. So, I really appreciate everybody being here this morning. But we’ve got to get straight to business. I’m going to ask Representative Warren if he wants to make any comment.
Rep Warren: Glad to have everyone here today.
Sen Payton: Thank you, Representative Warren. And without objection, we’re going to move to House Bill 1246 and follow that with 1247. Representative Vaught, you are recognized to present your bill, House Bill 1246.
Rep Vaught: Thank you, Mr. Chair. I’m DeAnn Vaught, District 87, for the record. House Bill 1246– oh, may I have Ms. Fetcher please join me at the table? Thank you.
Sen Payton: Absolutely. Come on to the table and introduce yourself for the record and you’ll be recognized.
Fetcher: Amy Fetcher, Director of APERS.
Sen Payton: Thank you.
Rep Vaught: Thank you, Mr. Chair. This bill clarifies that the effective date of survivor benefits is the month following the death of a member or retiree. It creates two sections of the Arkansas code to cover both tier one and tier two plans of the Arkansas Judicial Retirement System. This bill clarifies that the effective date of monthly benefits payable to survivors of deceased members and deceased retirees is the month following the death of the member or retiree.
Sen Payton: Thank you. Members, do you have any questions? Looks like no questions. Would you like– oh, sorry about that. Senator Hammer, you’re recognized for a question.
Sen Hammer: Thank you, Mr. Chairman. Good morning. I guess I want to make sure I get my mind around this. Is this in the event that maybe somebody two or three months after the death doesn’t get their paperwork in and this would pay retroactive back to that? Is that kind of the intent of what it’s about?
Fetcher: Yes, that is correct.
Sen Hammer: Okay. Is it a common occurrence? I know when people are in a time of grief, you’re just not thinking about taking care of business. Is this a common occurrence or?
Fetcher: It does happen some. So we wanted to clarify the language to make sure it was in code.
Rep Vaught: This actually happened to one of my judges. And I wanted to make sure it was clear.
Sen Hammer: Good deal. Thank you.
Sen Payton: Representative Andrews, you’re recognized for a question.
Rep Andrews: Representative Vaught, so this changes to the month after death, what’s the current date now?
Fetcher: Well, the code does say in one place currently that we will pay the month after from the first of the month after death. But in another area of the code, it says that we’ll pay after receiving the application. Some directors throughout the years have interpreted that, that it would not be retroactive and we would only pay from the first after application. I don’t see it that way and Representative Vaught agreed. And we just want to clarify.
Rep Andrews: Thank you.
Sen Payton: Thank you. Senator Hammer, you’re recognized for another question.
Sen Hammer: Thank you, Mr. Chair. And if I got my mind right, like in Social Security, if you get your check at a certain time after the first of the month that they actually go back and they’ll take that money back away from whoever the beneficiary was because it’s not theirs. So say somebody dies on the fifth of the month and they’ve already received their check. We don’t go back and take that money back from them, from their survivor, do we?
Fetcher: Yes, we do. We would leave the five days for them, but we would take a prorated amount back.
Sen Hammer: Okay. So why wouldn’t we take this back to the date of death then so there’s no gap in them being able to receive any of their benefit? Because if somebody died on the fifth and this goes to the– or maybe I’m not thinking right, they die on the fifth, we’re going to do it the month after they die. They’re going to have a 30 day gap in loss of income or am I thinking, right? Or they’ll have a 25 day gap?
Fetcher: I think as long as we were aware, we would only pay them for the five days on the first of the following month. We’d start– no, I’m not saying that correctly. We would start the first of the following month. We would pay them for the prorated amount of when they died. Is that correct?
Sen Payton: Do we need to bring somebody else to the table?
Sen Hammer: And I’m just trying to get it figured out because I would hate to create a 25 day gap in the loss of income for the survivor. If instead of the month after, we could take this back to the occurrence of the date of death or the day after the date of death. Maybe I’m just screwed up.
Sen Payton: Please introduce yourself for the record.
Gilson: Laura Gilson, General Counsel, APERS. So there are a couple of different situations for survivors. One is if it’s an active member and they die before they’ve retired. And then the other is somebody that’s receiving retirement benefits. And so those amounts are calculated differently. The survivor is going to have their benefit calculated under whatever option the member has chosen for them. And so we have to reconcile that. But either way, the survivor will get their benefits and it will be retroactive to the month after the date of death of the member.
Sen Hammer: Okay. So is there a potential that the survivor would go maybe between the date of death and the end of the month where this is going to kick in the next month or am I not looking?
Gilson: If I hear what you’re saying, if that check has already been deposited, we have within a certain window we can reverse that, kind of like Social Security does, you’ve mentioned that. But if it goes beyond a certain date, we can’t. So they’re still getting the member and that amount is reconciled from the survivor benefit amount that’s paid. So, yes.
Sen Hammer: Okay. All right. Thank you. Thank you for your explanation.
Sen Payton: Any further questions? Is there anybody in the audience who wishes to speak for or against this bill? I think we got them to the table. Would you like to close for you, bill?
Rep Vaught: I’m closed for my bill, and I appreciate a good vote.
Sen Payton: Thank you. We have a motion do pass by Representative Perry. Do I have a second? There’s a second. All in favor say aye. Any opposed? Congratulations, your bill passed. You’re now recognized to present House Bill 1247.
Rep Vaught: So 1247 is identical to the 1246, except for it’s the State Police Retirement. It’s just going to clarify the effective date of payments to survivors and beneficiaries in the month following the death of the member or retiree. And with that, I’m done, sir.
Sen Payton: Any other questions? Seeing no questions. Are there anybody in the audience that would like to speak for or against this bill? And we have a motion do pass by Representative Perry. I’m sorry, did you want to close?
Rep Vaught: I’m closed.
Sen Payton: Okay. Representative Perry has made a motion do pass. Do I have a second? I have a second. All in favor, say aye. Any opposed? Congratulations, your bill has passed.
Rep Vaught: Thank you, Mr. Chair. Thank you, Committee.
Sen Payton: Senator Hickey, you are recognized to present Senate Bill 126.
Sen Hickey: Thank you, Mr. Chair. I’d like Ms. Fetcher to be able to stay, if that’s okay with you.
Sen Payton: That’s great. We recognize Ms. Fetcher. She’s already introduced herself.
Sen Hickey: You ready?
Sen Payton: We’re ready.
Sen Hickey: Okay. The first one is going to be SB126. I’m just going to kind of read what I have here. This bill amends Arkansas code 24-4-606, which regards the options for a beneficiary that a member may choose when they retire. The bill specifies that a member’s federal tax return will be used for proof of dependency of a child or parent in order for these survivors to be eligible to receive a survivor benefit. Just to kind of let you all know what I remember when reading through this. Is the current language actually says that they would have to show that they were giving 50% of the care. That’s a subjective matter that we couldn’t come up with. So that’s why we took it back to the federal tax return. It also says that they have to be on that tax return for one year, of course, because all of you know that those returns are going to be run one year behind. So, of course, that would allow for that to show up for that first time on that first tax return. This is actually what APERS has been doing in practice but the current law has been too vague to determine that dependency. The bill also strikes an obsolete section that applied to surviving spouses who retire before July 1st, 1967, since there was no such beneficiary still surviving. The other changes are grammatical or technical corrections that do not affect these benefits. The bill also amends Arkansas code 24-4-608, which applies to a member who dies before retiring. And specify that a member’s tax return will be used for proof of dependency of a child or parent in order for those survivors to be eligible to receive a survivor benefit. This amendment also moves language in 24-4-608 regarding when benefits are paid, to 24-4-609. So that there is one single section of law that states when the benefits are paid. All other corrections are going to be technical. I’ll attempt to answer any questions.
Sen Payton: Members, do you have any questions for Senator Hickey? Please key up your mic. There you go. Representative Perry, you’re recognized for a question.
Rep Perry: Thank you, Mr. Chairman. Senator Hickey, would a tax return always be required in these cases?
Sen Hickey: Yes, sir.
Rep Perry: I mean, so these people would automatically have income to substantiate having to do a tax return?
Sen Hickey: Well, the main thing would be that they would have to have checked that dependent box on there, for us to prove up that survivor. So that would be something according to this legislation that would be specific to that to be able to get it.
Rep Perry: Okay. All right. Thank you.
Sen Hickey: Yes, sir.
Sen Payton: Thank you. Any other questions? Seeing none. Senator Hickey, would you like to close for your bill?
Sen Hickey: I’m closed, sir.
Sen Payton: Was there anybody in the audience that wants to speak for or against this bill? Seeing none. Senator Hickey’s already closed. I’d entertain a motion. I have a motion and a second. Do pass. All in favor say aye. Any opposed? Congratulations, your bill has passed. You’re recognized to present Senate Bill 127.
Sen Hickey: Okay. Members, Senate Bill 127. Definitions under APERS plan need to be amended to conform with legislation that was passed in 2021 and to clarify the definition to be consistent with the administration of benefits. For instance, the amended definitions of contributory member and final average compensation aligns with Acts 365 and 370 of our 2021 session. Which gradually changed the contribution rate for contributory members and created a new section regarding final average compensation. The amended definition of compensation uses a member’s form W-2 reported by the participating public employer as proof of employment, and the amended definition of public safety member is needed to clarify covered employment in APERS. The amendments to Arkansas Code 24-4-521, which defines how credited services apply to members, are technical corrections only, but are necessary to reference credited service for contributory members employed before July 1st of 2005 and after under that subchapter 11. The amendment to the Arkansas Code 24-4-603 addresses members who leave employment and receive a refund of their contributions but are reemployed by an APERS participating public employee. Service earned before the refund is not restored unless they repay that contribution that they had from their previous employment. The amendment to Arkansas Code 24-4-611 addresses members who have very little public service, and therefore their monthly benefit is small. The amendment restores a section of the law that was inadvertently repealed in 2001. Was that really 2001 or was that 2021 when that was repealed? Or was that in that other language? Okay. All right. I wanted to make sure I was telling y’all right. I thought that might have been when we did that stuff two years ago. So it was in 2001, which repealed subchapter 3 and created subchapter 4 and is consistent with APERS administration of benefits regarding small monthly benefit payouts. Finally, amendment to Arkansas Code 24-4-1002 is needed because the member’s monthly retirement benefit may be garnished for unpaid child support payments under Arkansas Code 19-14-102. However, this was not explicitly stated in APERS plan. Therefore, this amendment is needed to avoid any doubt of the legal obligation of APERS in the event a retirement benefit is garnished to pay child support by the court. I’ll attempt to answer any questions on that.
Sen Payton: Thank you, Senator Hickey. Any questions? Is there anybody in the audience to speak for or against this bill? Seeing none. Senator Hickey, are you closed for the bill?
Sen Hickey: Yes, sir. I’m closed.
Sen Payton: What’s the will of the Committee? I have a motion do pass and a second. All in favor, say aye. Any opposed? Congratulations, your bill has passed. Senator Hickey, you’re recognized to present Senate Bill 128.
Sen Hickey: All right, members. SB128 was under Act 415 of 2021. That changed the ASP employer contribution rate from 22 to 26. I want to be specific, we’re not changing this here. This was from the legislation that we did two years ago for the Arkansas State Police Retirement System Plan. Chapter 2 of that retirement plan and Title 24 that pertains to public employee plans generally, also listed ASPRS contribution rate and was inadvertently not amended during the 2021 session. This corrects that oversight in title 24, chapter 2. And again, this does not affect the current employer rate, which has been in effect since 2021. This bill is also needed because the member’s monthly retirement benefit may be garnished for the unpaid child support, just like we discussed in the previous bill. We’re just getting all of this consistent throughout our code. So I’m finished with that one, if there’s any questions.
Sen Payton: Members, do have any questions for Senator Hickey? Seeing none. Is there anybody in the audience to speak for or against this bill? Not seeing anybody. Are you closed for your bill, Senator Hickey?
Sen Hickey: Yes, sir. I’m closed.
Sen Payton: What’s the will of the Committee? I have a motion do pass and a second. All in favor, say aye. Any opposed? Congratulations, your bill has passed. You’re recognized to present Senate Bill 129.
Sen Hickey: Thank you, Mr. Chair.
Sen Payton: Sorry about the pause.
Sen Hickey: Thank you, Mr. Chair. All right, members, on this particular one. Arkansas Code 24-6-217 applies to the survivor benefit of a tier one member who dies before they retired from ASPRS. The bill specifies that a member’s federal tax return will be used in the proof of dependency, the same as the other one. Again, we’re making this consistent so that they’ll be the same. And then Arkansas code 24-6-408 applies to tier two members and currently requires a member to be married to their spouse for one year before the member can designate them as an option beneficiary. However, this is different than the marriage period required for a spousal survivor benefit if the member dies before they retire. This amendment standardizes a six-month marriage period for either pre or post retirement. This section of the bill also applies that federal tax returns are used for the proof of dependency. Again, just like the other ones. And there’s another section, which is the same thing with the dependency of the child in the tax return in the final section of the bill. So with that, I’ll attempt to answer any questions.
Sen Payton: Thank you, Senator Hickey. Any questions? Seeing none. Is there anybody in the audience to speak for or against this bill? Not seeing anybody. What’s the pleasure of the Committee? I have a motion by Representative Perry and a second by Representative Fite. Any discussion? All in favor say aye. Any opposed? Congratulations, your bill has passed.
Sen Hickey: Thank you, Members.
Sen Payton: Folks, I believe that concludes our business for today. Appreciate you showing up early.