AN ORDINANCE relating to the City Employees' Retirement System; authorizing the purchase of service credit for prior City service; and amending Chapter 4.36 of the Seattle Municipal Code.

BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS:

Section 1. Section 4.36.030 of the Seattle Municipal Code is amended as follows to add a new definition and to re-letter the current definitions accordingly:

4.36.030 Definitions Alphabetical "A" through "B"

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E. "Actuarial present value" means the value of an amount or series of amounts payable or receivable at various times, determined as of a given date by the application of a particular set of actuarial assumptions.

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Section 2. Subsections F and G of Section 4.36.100 of the Seattle Municipal Code are amended as follows:

SMC 4.36.100 Membership in retirement system.

Officers and employees of the City (except those excluded by subsection H of this Section) and of the Seattle Public Library shall become members of the retirement system upon completion of six (6) months' continuous service, as follows, except that six (6) months' continuous service shall not be required for officers and employees to whom subsection L of this Section applies:

A. Mandatory Membership. Every officer or employee of the City and of the Seattle Public Library, who enters City service on or after June 21, 1986, shall become a member of the retirement system upon completion of six (6) months' continuous service, except:

1. Elective officials exempt under subsection D of this Section;

2. Individuals with a statutory right to continuation of their membership in a Washington State or federal government retirement system under subsection E of this Section;

3. Certain officers in positions exempt from civil service under subsections C and F of this Section;

4. Employees who are excluded under subsection H4 of this Section; and

5. Temporary, interim, intermittent, provisional and part-time workers under Sections 4.36.103 and 4.36.195.

B. Continuation of Current Membership. All officers and employees of the City and of the Seattle Public Library, who on or after June 21, 1986, are or are required to become members of the retirement system, shall continue their membership or become members upon completion of six (6) months' City service. A member may not withdraw from membership in the system while in City employment.

C. 1986 Nonmembers. An officer or employee with six (6) months' continuous City service, who on June 21, 1986, held an appointive position exempt from the classified civil service (1) could elect to join or rejoin the retirement system by completing and filing an election form with the Board of Administration on or before December 31, 1986, ("Option (1)"), or (2) after the effective date of this ordinance may elect to join or rejoin the retirement system as authorized by subsection F of this Section ("Option (2)"). Option (1) also extended to officers and employees, who held such position before June 21, 1986, and on or before December 31, 1986, with respect to such a position (a) were recalled from a layoff status; (b) returned from an approved leave; or (c) completed six (6) months' continuous City service. An officer or employee within Option (1) could, on or before December 31, 1986, contract for credit for "prior service" (creditable service before December 31, 1986) in the retirement system in accord with subsection B of Section 4.36.190. An officer or employee, who failed to exercise his or her option under Option (1) of this subsection in a timely manner by December 31, 1986, may join the retirement system while holding a position exempt from civil service under Option (2) as authorized by subsection F of this Section and may acquire creditable service only for City service performed after the date of his or her membership. This subsection does not apply to officers or employees covered by subsections D, E and G of this Section, or subject to RCW 41.04.120, officers or employees reentering City service after December 31, 1986.

D. Elective Officials. An elective official may elect to join the retirement system at any time during his or her City service, and may contract for credit for continuous "prior service" in accord with Seattle Municipal Code Section 4.36.190 B, provided that credit for such "prior service" shall not cover any period during which the City made payments to another retirement system on the official's behalf nor after December 31, 1987, shall a contract authorize more than five (5) years' "prior service" credit for prior City service.

E. Election Under Statutory Right. An officer or employee, who has a statutory right to continue his or her membership in a retirement system of the State of Washington or the United States of America during his or her City service may in lieu of membership in the City Employees' Retirement System arrange with the Personnel Director for a deduction from his or her pay and the City's payment for retirement system purposes to be paid directly to his or her other governmental retirement system.

F. Election by Officers Exempt from Civil Service. An officer, who holds a position exempt from the civil service system and is not already a member of the City Employees' Retirement System, may become a member of the system upon completion of six (6) months' continuous City service, by filing with the Executive Director of the City Employees' Retirement System his or her election to participate in the system. Such an officer shall receive "creditable service" for retirement system purposes only for City service accruing from and after the date of his or her membership. However, a member may purchase creditable service for City service previously rendered but not credited if the member pays into the retirement fund, at the time of resignation or at retirement, the actuarial present value of the resulting increase in his or her benefit. Terms and conditions of the purchase shall be in accordance with the provisions of SMC 4.36.190(B)(4). If an officer who is a member should leave City service and later return, the officer shall within sixty (60) days resume his or her membership by making a redeposit as contemplated by Section 4.36.190 or become a member upon completion of six (6) months' continuous service on ))his or her returning employment with creditable service accruing thereafter. An officer or employee, who is a member of the retirement system at the time of his or her appointment or election to an exempt position, shall maintain his or her membership.

G. Re-Entry. An officer or employee who withdrew his or her deposit in the retirement system before or upon his or her separation from City service and later re-enters City service, shall either (a) within sixty (60) days resume his or her membership by making a redeposit as contemplated by Section 4.36.190 , or (b) rejoin the retirement system upon six (6) months' continuous service after his or her re-entry with creditable service accruing thereafter. An officer or employee who is called to active duty in the armed forces of the United States of America or the State of Washington or who is given other military leave prior to completing six (6) months of continuous service may on re-entering City service include his or her active duty time in computing six (6) months of continuous City service for purpose of determining eligibility to join the retirement system. An officer or employee, who maintains his or her deposit in the retirement system during a separation from City service, shall continue his or her membership upon re-entry into City service.

H. The following employees shall not become members of the retirement system, except as contemplated by RCW 41.04.110:

1. Members of the Police Department entitled to the benefits of the Police Relief and Pension Fund under State law;

2. Members of the Fire Department entitled to the benefits of the Firemen's Relief and Pension Fund under State law;

3. Members of the Police Department and Fire Department entitled to the benefits of the Washington Law Enforcement Officers' and FireFighters' Retirement Fund;

4. Employees in positions established primarily to provide training leading to qualification for positions of Police Officer or Firefighter.

I. The head of each office or department of the City shall give immediate notice in writing to the Board of the change in status of any member of his office or department, resulting from transfer, promotion, leave-of-absence, family and medical leave, resignation, reinstatement, dismissal or death. The head of each office or department shall furnish such other information concerning any member as the Board may require.

J. Each member shall be subject to all the provisions of this chapter and the rules and regulations of the Board. Should any member be, in the opinion of the Board, permanently separated from City service or should the member die he or she shall thereupon cease to be a member.

K. Temporary, Interim, Intermittent, Provisional and Part-time Workers. See Sections 4.36.103 and 4.36.195 , and for 1989-1990 opportunity, Section 4.36.197.

L. Membership On and After January 1, 1999. The six (6) months' continuous service requirement shall not apply to any officer or employee, including any part-time employee authorized to become a member pursuant to Section 4.36.103, who would otherwise be obliged or have the option to become a member of the retirement system upon completion of six (6) months' continuous service, if such officer or employee enters City service on or after January 1, 1999, or has been in City service less than six (6) months as of January 1, 1999. Officers and employees who have been in City service less than six(6) months as of January 1, 1999 may become members as of January 1,1999.

Section 3. A new Section 4.36.101 is added to the Seattle Municipal Code as follows:

4.36.101. Use of other Plan funds for purchase of service credit.

A. Direct Transfers. Effective January 1, 2002, the retirement fund possesses the specific authority to enter into direct transfer of assets agreements with the trustees of an eligible plan under Section 457 of the Internal Revenue Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state or from a plan under Section 403(b) of the Internal Revenue Code, for the purchase of creditable service otherwise available pursuant to Chapter 4.36 SMC.

B. Other Rollovers. Effective January 1, 2002, the retirement fund may accept participant rollover contributions and/or direct rollovers of distributions from other retirement plans which are eligible retirement plans described in Internal Revenue Code Section 402(c)(8)(B) to the extent allowed by the Internal Revenue Code. The fund may accept rollovers from such sources and may develop such procedures and rules as it deems necessary or desirable to comply with the requirements and guide its decisions regarding participant rollover contributions and/or direct rollovers of distributions it will accept. Such rollover contributions and direct rollovers may be used for the purchase of service credit otherwise available pursuant to Chapter 4.36 SMC.

Section 4 A new Section 4.36.124 is added to the Seattle Municipal Code as follows:

4.36.124 Purchase of creditable service for Military Service.

A member may purchase creditable service for past active duty in the armed forces of the United States of America or the State of Washington, by paying into the Retirement Fund, at the time of resignation from City service or at the time of retirement, the actuarial present value of the resulting increase in his or her benefit. Terms and conditions of purchase shall be in accordance with the provisions of SMC 4.36.190(B)(4). In no instance shall military service in excess of five years be credited under this Chapter. In no instance shall military service be credited to any member who is receiving full military retirement benefits pursuant to Title 10 United States Code.

Section 5. Subsection B of Section 4.36.190 of the Seattle Municipal Code is amended as follows:

4.36.190 Discontinuance or reentrance of eligible employee - purchase of creditable service.

A. 1. Should the City service of a member not eligible for retirement under the provisions of this chapter, be discontinued, except by death, prior to completion of five (5) years' membership in the retirement system, he shall be paid six (6) months after the date of discontinuance such part of his accumulated contributions as he shall demand; provided, however, that such member may apply to the Board and by unanimous vote the Board may grant a request for immediate withdrawal of contributions. If in the opinion of the Board such member is permanently separated from City service by reason of such discontinuance, he shall be paid forthwith all his accumulated contributions, with interest. Should the City service of an employee not eligible for retirement under subsections A and B of Section 4.36.200 who has been a member of the retirement system for at least five (5) years be discontinued, except by death, he may apply for immediate withdrawal of his accumulated contributions as hereinabove provided, or elect in writing within six (6) months after such termination to leave his accumulated contributions in the retirement fund, and thereafter, upon reaching the required age and making application therefor, he shall receive a retirement allowance as provided in Section 4.36.200 C; provided, that if discontinuance of City service is caused by intemperance, wilful misconduct or violation of law on the part of the member, of which the Board shall be the judge, the Board, in its discretion, may pay to the member, in one (1) lump sum, his accumulated contributions, in lieu of all other rights, privileges or benefits under this chapter; and such payment shall constitute full satisfaction of all obligations of the City to such member, and upon receipt of such payment he shall cease

to be a member of the system.

2. Any member eligible for retirement under subsections A and B of Section 4.36.200 whose City service has been discontinued, except by death, and any member whose City service has been discontinued and who has elected to leave his accumulated contributions in the retirement fund, may, in the manner hereinabove provided, apply to the Board for withdrawal of contributions, but in such case the Board may, in its discretion, approve such request or disapprove the same and, if such member then be eligible, authorize his retirement. Upon withdrawal of contributions the full amount deposited by the City in the retirement fund for such member's benefit, plus interest, shall be available to meet the obligations of the City under this chapter.

B. Redeposit and Purchase of Creditable Service.

1. Subject to rules and regulations established by the Board, any member or former member who reenters City service may redeposit in the retirement fund an amount equal to that which he or she previously withdrew therefrom at the last termination of his or her membership, or some part thereof, plus compound interest, at the actuarial assumed rate of investment return, which would have accumulated on the amount, as determined by the Board, between the date of his or her last termination of his or her membership and the date of redeposit his or her reinstatement in the system. Such redeposit shall be paid into the retirement fund. Within thirty (30) days two (2) years after his or her re-entry into City service, a former member must redeposit the entire sum determined to be due to purchase all, or part of, their former creditable service, or sign and file with the Board a redeposit contract in accord with subsection C in order to reestablish all or part of his or her "prior service" credit former creditable service. In the event such redeposit is made by a member, the City shall reinstate all or that part of the former creditable service purchased by the member.

2. 2001-2002 window period. During the period December 1, 2001 through December 31, 2002, a current member may redeposit into the retirement fund an amount equal, or some part thereof, to that which he or she previously withdrew therefrom at the date of his or her last termination of membership plus compound interest, at the actuarial assumed rate of investment return, which would have accumulated on the amount, as determined by the Board, between the date of his or her last termination of membership and the date of redeposit. In the event such redeposit is made by a member, the City shall reinstate all, or part of, the former creditable service purchased by the member.

3. If a member within thirty (30) days two (2) years after reentering the retirement system after a termination of his or her membership does not make such a redeposit or file a properly executed redeposit contract, he or she may purchase all, or some part of, his or her former creditable service credit for "prior service" only by paying into the retirement fund the amount, or some part thereof, he or she previously withdrew plus compound interest as determined by the Board. The following provisions apply to redeposits made pursuant to this subsection SMC 4.36.190(B)(3):

a. Determination of applicable interest rates. The interest rate for each year since the date of withdrawal of contributions shall be the greater of the rate the retirement fund has earned, net of fees, as reported by the Retirement System's Investment Performance Consultant, or the interest rate equivalent to the actuarial assumed rate of investment return at the time of executing the redeposit contract.

b. Calculation of "accumulated contributions." For purposes of determining a member's accumulated contributions pursuant to SMC 4.36.030(B), only a portion of the total amount deposited shall be considered. The portion to be considered as the member's accumulated contributions shall be only the amount previously withdrawn plus interest calculated at the actuarial assumed rate of investment return.

c. Withdrawal of contributions limited. The total amount deposited for the purchase of said former creditable service will be available for withdrawal by the member only if the member terminates employment with the City and withdraws his or her total accumulated contributions prior to retirement or dies and benefits are not payable under subsections 4.36.270(B) and (C) shall not be reestablished and the rate of his or her contributions for future years shall be at the rate provided for in subsection A of Section 4.36.110.

In the event such redeposit is made by a member, his rate of contribution shall be as determined under Section 4.36.110 A, and the City shall reinstate the all, or that part of, the former creditable service purchased by the "prior service" credit for such member.

4. Unless otherwise stated, members allowed to purchase creditable service pursuant to SMC Chapter 4.36, shall pay as a single lump sum payment at the time of retirement, the actuarial present value of the resulting increase in their benefit as provided in this subsection SMC 4.36.190(B)(4).

a. The actuarial present value shall be calculated by the Retirement Board using the current actuarial assumptions as approved by the Retirement Board.

b. For purposes of determining the member's accumulated contributions pursuant to SMC 4.36.030(B), only a portion of the total amount deposited shall be considered. The portion to be considered as the member's accumulated contributions shall be calculated at the employee's current hourly rate times the current contribution rate times the number of hours to be purchased.

c. If a member elects to pay at resignation from City service, the actuarial present value will be estimated at the time of resignation and adjusted at retirement for factors existing at the time of retirement, if necessary, according to rules established by the Retirement Board.

d. In the event such payment is made by a member, the City shall consider such City service previously rendered as creditable service for the member.

2. Any former employee who prior to March 1, 1977, discontinued City service to accept other public employment and who because of such subsequent public employment was permitted to leave his contributions in the retirement fund and retain membership in the retirement system shall be eligible to receive a retirement allowance as provided in Section 4.36.200 C.

5. Unless otherwise stated, the purchase price for the purchase of creditable service must be paid in full to the retirement fund prior to the time of resignation from City service or retirement, whichever occurs first.

C. Redeposit and Purchase Contracts. These terms and conditions govern redeposit contracts for reentering City officers and employees, and deposit contracts of officers and employees joining the system under subsections C and E of Section 4.36.110 and the purchase of creditable service for past City service.

1. The unpaid balance shall accrue interest at the assumption rate established by the Board for actuarial purposes and in effect at the time the redeposit agreement is signed;

2. The redeposit must be completed within five (5) )) ten (10) years from the date of the member's re-entry into City service;

3. After deducting any immediate redeposit, the balance shall be payable in approximately equal installments every pay period, computed by amortizing interest over the contract term, unless the Board by rule authorizes redeposit in installments of equal payments of principal with interest computed on declining balances;

4. Installment payments shall be deducted from the member's pay during each pay period; and

5. Redeposit agreements shall be subject to the approval of the Board.

The Board of Administration in its discretion may include supplemental terms and conditions by rule or by approving a form of agreement on the following subjects, among others:

a. A minimum installment payment per pay period;

b. The deferral of a redeposit of an installment during a member's layoff, military leave, or other approved leave, with catch-up redeposits upon the member's resumption of pay status;

c. Allocation of payments between interest and principal;

d. Appropriate arrangements in the event of a member's suspension or separation from City service, including the making of set-offs, acceleration of payments, continuation of payments from other sources during the interim, or adjusting the creditable service being purchased "prior service" credit on a pro-rata basis;

e. Other terms and conditions as the Board may deem appropriate.

The Board may also require the execution of contracts by members, who are redepositing in installments through payroll deductions on August 31, 1986.

Section 6. Effective December 1 of the year the Retirement Board files with the City Clerk notification that the funding ratio of the retirement fund is ninety-five (95) percent or higher, a new Section 4.36.191 is added to the Seattle Municipal Code as follows:

4.36.191 Purchase of creditable service for initial six months of City service.

A. Buy back. Employees who were hired during the period 1988 through 1998 who have not purchased creditable service for the initial six months of employment may purchase said creditable service by paying into the retirement fund, at the time of resignation or retirement from City service, the actuarial present value of the resulting increase in their benefit. The terms and conditions of purchase shall be in accordance with the provisions of SMC 4.36.190(B)(4).

B. One year window. During a window period of one year, beginning on the effective date of this Section, employees who were hired during the period 1988 through 1998 who have not purchased creditable service for the initial six months of City employment may purchase said creditable service by paying the purchase price, as determined by the Board, into the retirement fund, or signing a creditable service purchase contract pursuant to SMC 4.36.190 (C) and filing it with the Retirement Board. The creditable service may be purchased based on the following price formula:

(current hourly rate) x (current member contribution rate) x (amount of hours to be purchased).

C. City matching contributions under section 4.36.191(B). As matching contributions pursuant to SMC 4.36.110(A), each year the employing department shall pay into the retirement fund the matching amount equivalent to any member lump sum payment made pursuant to this Section or, if a member purchased pursuant to a contract under Section 4.36.190(C), the member's current year buy back payments all as billed by the Retirement office.

Section 7. A new Section 4.36.192 is added to the Seattle Municipal Code as follows:

4.36.192 Purchase of creditable service by past employees.

A. This Section allows members who are City employees on December 1, 2001, to purchase creditable service after termination of City employment.

B. The creditable service purchase provisions established by Council Bill 113988, Ordinance _____, shall be available to said employees until December 31, 2002 except for the purchase provisions of Section 4.36.191(B) which shall be available to said employees during the entire window period described therein.

C. Creditable service purchased pursuant to this Section must be paid in full by lump sum payment by the earlier of December 31, 2002, or by the date of retirement except purchases made pursuant to 4.36.191(B). Purchases made pursuant to 4.36.191(B) must be paid in full by lump sum payment by the end of the window period established in said subsection or the date of retirement, whichever occurs first.

Section 8. A new Subsection H is added to Section 4.36.195 of the Seattle Municipal Code as follows:

4.36.195 Buy-in of creditable service by temporary, interim, intermittent, provisional and part-time workers.

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H. Members who have otherwise failed to exercise an option to purchase creditable service for prior service previously rendered as a temporary worker, as that term is defined at SMC 4.04.030(30), shall be allowed to purchase creditable service for service previously rendered but not credited as a temporary worker, by paying into the retirement fund , at the time of resignation from City service or at retirement, the actuarial present value of the resulting increase in his or her benefit. The terms and conditions of purchase shall be in accordance with the provisions of SMC 4.36.190(B)(4).

Section 9. Section 4.36.400 of the Seattle Municipal Code is amended as follows:

4.36.400 Election to participate in RCW Chapter 41.54.

A. As authorized by RCW 41.54.061, the City irrevocably elects to participate in the portability of public retirement systems as contemplated by RCW Chapter 41.54, and to pay for the additional cost it may incur as a result of the benefits provided.

B. The eligibility of members for the portability of public retirements benefits, the benefits available thereunder, the limitations(including RCW 41.54.080), and the procedures shall be as set out in RCW Chapter 41.54. A member may aggregate service credit in two (2) or more retirement systems for the purpose of determining the percentage factor to be used in calculating a service retirement allowance pursuant to SMC Section 4.36.210 B.

C. During the period December 1, 2001 through December 31, 2002, an active dual member, as defined at RCW 41.54.010(4), who has failed to restore creditable service pursuant to RCW 41.54.020(2), may redeposit in the retirement fund an amount equal to that which he or she previously withdrew therefrom at the date of his or her last termination of membership plus compound interest, at the actuarial assumed rate of investment return, which would have accumulated on the amount as determined by the Board, between the date of his or her last termination of his or her membership and the date of redeposit.

D. Beginning January 1, 2003, a dual member, as defined at RCW 41.54.010(4), who has failed to restore creditable service pursuant to RCW 41.54.020(2), or subsection C of this Section, may redeposit in the retirement fund an amount equal to that which he or she previously withdrew therefrom at the date of his or her last termination of membership plus compound interest as determined by the Board. The terms and conditions of purchase shall be in accordance with the provisions of subsection 4.36.190(B)(3).

Section 10. Any acts consistent with the authority and prior to the effective date of this ordinance are hereby ratified and confirmed.

Section 11. This ordinance shall take effect and be in force thirty (30) days from and after its approval by the Mayor, but if not approved and returned by the Mayor within ten (10) days after presentation, it shall take effect as provided by Municipal Code Section 1.04.020.

Passed by the City Council the _____ day of ____________, 2001, and signed by me in open session in authentication of its passage this _____ day of _________________, 2001. _____________________________________ President _______ of the City Council

Approved by me this _____ day of _________________, 2001. ___________________________________________ Mayor

Filed by me this _____ day of ____________________, 2001. ___________________________________________ City Clerk

12/04/01 (Ver. 6) ta