2024 -- S 2979

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LC005932

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2024

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A N   A C T

RELATING TO EDUCATION -- TEACHERS' RETIREMENT -- PUBLIC OFFICERS AND

EMPLOYEES -- RETIREMENT SYSTEM

     

     Introduced By: Senators Felag, Pearson, F. Lombardi, DiPalma, Sosnowski, Ciccone,
Gallo, Burke, LaMountain, and Raptakis

     Date Introduced: April 11, 2024

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

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     SECTION 1. Section 16-16-13 of the General Laws in Chapter 16-16 entitled "Teachers’

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Retirement [See Title 16 Chapter 97 — The Rhode Island Board of Education Act]" is hereby

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amended to read as follows:

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     16-16-13. Amount of service retirement allowance.

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     (a)(1)(i) For teachers eligible to retire on or before September 30, 2009, upon retirement

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from service under § 16-16-12 a teacher whose membership commenced before July 1, 2005, and

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who has completed at least ten (10) years of contributory service on or before July 1, 2005, shall,

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receive a retirement allowance which shall be determined in accordance with schedule A for service

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prior to July 1, 2012.

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SCHEDULE A

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YEARS OF SERVICE PERCENTAGE ALLOWANCE

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1st through 10th inclusive 1.7%

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11th through 20th inclusive 1.9%

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21st through 34th inclusive 3.0%

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35th 2.0%

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     (ii) For teachers eligible to retire on or after October 1, 2009, who were not eligible to retire

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on or before September 30, 2009, upon retirement for service under § 16-16-12, a teacher whose

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membership commenced before July 1, 2005, and who has completed at least ten (10) years of

 

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contributory service on or before July 1, 2005, shall receive a retirement allowance which shall be

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determined in accordance with schedule A above for service on before September 30, 2009, and

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shall be determined in accordance with schedule B in subsection (a)(2) below for service on or after

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October 1, 2009, and prior to July 1, 2012:

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     (2) Upon retirement from service under § 16-16-12 a teacher whose membership

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commenced after July 1, 2005, or who has not completed at least ten (10) years of contributory

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service as of July 1, 2005, shall receive a retirement allowance which shall be determined in

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accordance with Schedule B for service prior to July 1, 2012.

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SCHEDULE B

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YEARS OF SERVICE PERCENTAGE ALLOWANCE

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1st through 10th inclusive 1.60%

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11th through 20th inclusive 1.80%

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21st through 25th inclusive 2.0%

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26th through 30th inclusive 2.25%

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31st through 37th inclusive 2.50%

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38th 2.25%

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     (b) The retirement allowance of any teacher whose membership commenced before July 1,

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2005, and who has completed at least ten (10) years of contributory service on or before July 1,

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2005, shall be in an amount equal to the percentage allowance specified in subsection (a)(1) of his

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or her average highest three (3) consecutive years of compensation multiplied by the number of

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years of total service, but in no case to exceed eighty percent (80%) of the compensation, payable

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at completion of thirty-five (35) years of service; provided, however, for teachers retiring on or

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after October 1, 2009, who were not eligible to retire as of September 30, 2009, and who do retire

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prior to July 1, 2024, the calculation shall be based on the average highest five (5) consecutive

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years of compensation. For members eligible to and who retire on or after July 1, 2024, the

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calculation shall be based on the average highest three (3) consecutive years of compensation.

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     The retirement allowance of any teacher whose membership commenced after July 1, 2005,

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or who has not completed at least ten (10) years of contributory service as of July 1, 2005, shall be

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in an amount equal to the percentage allowance specified in Schedule B of his or her average

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highest three (3) consecutive years of compensation multiplied by the number of years of total

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service, but in no case to exceed seventy-five percent (75%) of the compensation, payable at

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completion of thirty-eight (38) years of service; provided, however, for teachers retiring on or after

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October 1, 2009, who were not eligible to retire as of September 30, 2009, and who do retire prior

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to July 1, 2024, the calculation shall be based on the average highest five (5) consecutive years of

 

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compensation. For members eligible to and who retire on or after July 1, 2024, the calculation shall

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be based on the average highest three (3) consecutive years of compensation.

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     Any teacher who has in excess of thirty-five (35) years on or before June 2, 1985, shall not

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be entitled to any refund, and any teacher with thirty-five (35) years or more on or after June 2,

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1985, shall contribute from July 1, 1985, until his or her retirement.

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     (c) For service prior to July 2012, the retirement allowance of a teacher shall be determined

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in accordance with subsections (a)(1) and (a)(2) above. For service on and after July 1, 2012:

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     (i) For teachers with fewer than twenty (20) years of total service as of June 30, 2012, a

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teacher’s retirement allowance shall be equal to one percent (1%) of the teacher’s average

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compensation multiplied by the teacher’s years of total service on and after July 1, 2012; and

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     (ii) For teachers with twenty (20) or more years of total service as of June 30, 2012, a

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teacher’s retirement allowance shall be equal to one percent (1%) of the teacher’s average

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compensation multiplied by the teacher’s years of total service between July 1, 2012, and June 30,

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2015, and two percent (2%) of the teacher’s average compensation multiplied by the teacher’s years

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of total service on and after July 1, 2015. For purposes of computing a teacher’s total service under

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the preceding sentence, service purchases shall be included in total service only with respect to

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those service purchases approved prior to June 30, 2012, and those applications for service

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purchases received by the retirement system on or before June 30, 2012. In no event shall a

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teacher’s retirement allowance exceed the maximum limitations set forth in subsection (b) above.

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     SECTION 2. Section 36-8-1 of the General Laws in Chapter 36-8 entitled "Retirement

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System — Administration" is hereby amended to read as follows:

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     36-8-1. Definition of terms.

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     The following words and phrases as used in chapters 8 to 10 of this title unless a different

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meaning is plainly required by the context, shall have the following meanings:

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     (1) “Accumulated contributions” shall mean the sum of all the amounts deducted from the

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compensation of a member and credited to his or her individual pension account.

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     (2) “Active member” shall mean any employee of the state of Rhode Island as defined in

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this section for whom the retirement system is currently receiving regular contributions pursuant to

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§§ 36-10-1 and 36-10-1.1.

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     (3) “Actuarial equivalent” shall mean an allowance or benefit of equal value to any other

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allowance or benefit when computed upon the basis of the actuarial tables in use by the system.

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     (4) “Annuity reserve” shall mean the present value of all payments to be made on account

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of any annuity, benefit, or retirement allowance granted under the provisions of chapter 10 of this

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title computed upon the basis of such mortality tables as shall be adopted from time to time by the

 

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retirement board with regular interest.

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     (5)(a) “Average compensation” for members eligible to retire as of September 30, 2009

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shall mean the average of the highest three (3) consecutive years of compensation, within the total

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service when the average compensation was the highest. For members eligible to retire on or after

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October 1, 2009, and who do retire prior to July 1, 2024, “Average compensation” shall mean the

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average of the highest five (5) consecutive years of compensation within the total service when the

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average compensation was the highest. For members eligible to and who retire on or after July 1,

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2024, "average compensation" means the average of the highest three (3) consecutive years of

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compensation within the total service when the average compensation was the highest.

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     (b) For members who become eligible to retire on or after July 1, 2012, if more than one-

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half (½) of the member’s total years of service consist of years of service during which the member

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devoted less than thirty (30) business hours per week to the service of the state, but the member’s

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average compensation consists of three (3) or more years during which the member devoted more

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than thirty (30) business hours per week to the service of the state, such member’s average

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compensation shall mean the average of the highest ten (10) consecutive years of compensation

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within the total service when the average compensation was the highest; provided however,

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effective July 1, 2015, if such member’s average compensation as defined in subsection (a) Above

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is equal to or less than thirty-five thousand dollars ($35,000), such amount to be indexed annually

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in accordance with § 36-10-35(h)(1)(B), such member’s average compensation shall mean the

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greater of: (i) The average of the highest ten (10) consecutive years of compensation within the

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total service when the average compensation was the highest; or (ii) The member’s average

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compensation as defined in subsection (a) above. To protect a member’s accrued benefit on June

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30, 2012 under this § 36-8-1(5)(b), in no event shall a member’s average compensation be lower

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than his or her average compensation determined as of June 30, 2012.

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     (6) “Beneficiary” shall mean any person in receipt of a pension, an annuity, a retirement

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allowance, or other benefit as provided by chapter 10 of this title.

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     (7) “Casual employee” shall mean those persons hired for a temporary period, a period of

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emergency or an occasional period.

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     (8) “Compensation” as used in chapters 8 — 10 of this title, chapters 16 and 17 of title 16,

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and chapter 21 of title 45 shall mean salary or wages earned and paid for the performance of duties

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for covered employment, including regular longevity or incentive plans approved by the board, but

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shall not include payments made for overtime or any other reason other than performance of duties,

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including but not limited to the types of payments listed below:

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     (i) Payments contingent on the employee having terminated or died;

 

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     (ii) Payments made at termination for unused sick leave, vacation leave, or compensatory

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time;

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     (iii) Payments contingent on the employee terminating employment at a specified time in

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the future to secure voluntary retirement or to secure release of an unexpired contract of

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employment;

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     (iv) Individual salary adjustments which are granted primarily in anticipation of the

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employee’s retirement;

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     (v) Additional payments for performing temporary or extra duties beyond the normal or

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regular work day or work year.

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     (9) “Employee” shall mean any officer or employee of the state of Rhode Island whose

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business time is devoted exclusively to the services of the state, but shall not include one whose

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duties are of a casual or seasonal nature. The retirement board shall determine who are employees

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within the meaning of this chapter. The governor of the state, the lieutenant governor, the secretary

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of state, the attorney general, the general treasurer, and the members of the general assembly, ex

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officio, shall not be deemed to be employees within the meaning of that term unless and until they

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elect to become members of the system as provided in § 36-9-6, but in no case shall it deem as an

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employee, for the purposes of this chapter, any individual who devotes less than twenty (20)

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business hours per week to the service of the state, and who receives less than the equivalent of

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minimum wage compensation on an hourly basis for his or her services, except as provided in §

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36-9-24. Any commissioner of a municipal housing authority or any member of a part-time state,

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municipal or local board, commission, committee or other public authority shall not be deemed to

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be an employee within the meaning of this chapter.

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     (10) “Full actuarial costs” or “full actuarial value” shall mean the lump sum payable by a

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member claiming service credit for certain employment for which that payment is required which

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is determined according to the age of the member and the employee’s annual rate of compensation

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at the time he or she applies for service credit and which is expressed as a rate percent of the

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employee’s annual rate of compensation to be multiplied by the number of years for which he or

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she claims service credit as prescribed in a schedule adopted by the retirement board from time to

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time on the basis of computation by the actuary. Except as provided in §§ 16-16-7.1, 36-5-3, 36-9-

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31, 36-10-10.4, 45-21-53, 36-10-8, 45-21-29, 8-3-16(c), 8-8-10.1(c), 42-28-22.1(d) and 28-30-

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18.1(c):

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     (i) all service credit purchases requested after June 16, 2009 and prior to July 1, 2012, shall

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be at full actuarial value; and

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     (ii) all service credit purchases requested after June 30, 2012 shall be at full actuarial value

 

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which shall be determined using the system’s assumed investment rate of return minus one percent

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(1%).

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     The rules applicable to a service credit purchase shall be the rules of the retirement system

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in effect at the time the purchase application is submitted to the retirement system.

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     (11) “Funded ratio” shall mean the ratio of the actuarial value of assets to the actuarial

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accrued liability consistent with the funding policy of the retirement board as defined in § 36-8-4.

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     (12) “Inactive member” shall mean a member who has withdrawn from service as an

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employee but who has not received a refund of contributions.

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     (13) “Members” shall mean any person included in the membership of the retirement

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system as provided in §§ 36-9-1 — 36-9-7.

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     (14) “Prior service” shall mean service as a member rendered before July 1, 1936, certified

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on his or her prior service certificate and allowable as provided in § 36-9-28.

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     (15) “Regular interest” shall mean interest at the assumed investment rate of return,

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compounded annually, as may be prescribed from time to time by the retirement board.

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     (16) “Retirement allowance” shall mean annual payments for life made after retirement

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under and in accordance with chapters 8 to 10 of this title. All allowances shall be paid in equal

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monthly installments beginning as of the effective date thereof; provided, that a smaller pro rata

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amount may be paid for part of a month where separation from service occurs during the month in

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which the application was filed, and when the allowance ceases before the last day of the month.

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     (17) “Retirement board” or “board” shall mean the board provided in § 36-8-3 to

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administer the retirement system.

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     (18) “Retirement system” shall mean the employees’ retirement system of the state of

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Rhode Island as defined in § 36-8-2.

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     (19) “Service” shall mean service as an employee of the state of Rhode Island as described

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in subdivision (9) of this section.

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     (20) “Social Security retirement age” shall mean a member’s full retirement age as

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determined in accordance with the federal Old Age, Survivors and Disability Insurance Act, not to

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exceed age sixty-seven (67).

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     (21) “Total service” shall mean prior service as defined above, plus service rendered as a

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member on or after July 1, 1936.

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     SECTION 3. Section 45-21-2 of the General Laws in Chapter 45-21 entitled "Retirement

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of Municipal Employees" is hereby amended to read as follows:

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     45-21-2. Definitions.

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     The following words and phrases as used in this chapter have the following meanings

 

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unless a different meaning is plainly required by the context:

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     (1) “Accumulated contributions” means the sum of all amounts deducted from the

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compensation of a member and credited to his or her individual account in the members’

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contribution reserve account.

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     (2) “Active member” means any employee of a participating municipality as defined in this

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section for whom the retirement system is currently receiving regular contributions pursuant to §§ 

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45-21-41, 45-21-41.1 or 45-21.2-14.

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     (3) “Actuarial reserve” means the present value of all payments to be made on account of

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any annuity, retirement allowance, or benefit, computed upon the basis of mortality tables adopted

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by the retirement board with regular interest.

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     (4) “Beneficiary” means any person in receipt of a retirement allowance, annuity, or other

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benefit as provided by this chapter.

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     (5) For purposes of this chapter, “domestic partner” shall be defined as a person who, prior

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to the decedent’s death, was in an exclusive, intimate and committed relationship with the decedent,

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and who certifies by affidavit that their relationship met the following qualifications:

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     (i) Both partners were at least eighteen (18) years of age and were mentally competent to

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contract;

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     (ii) Neither partner was married to anyone else;

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     (iii) Partners were not related by blood to a degree which would prohibit marriage in the

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state of Rhode Island;

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     (iv) Partners resided together and had resided together for at least one year at the time of

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death; and

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     (v) Partners were financially interdependent as evidenced by at least two (2) of the

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following:

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     (A) Domestic partnership agreement or relationship contract;

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     (B) Joint mortgage or joint ownership of primary residence;

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     (C) Two (2) of: (I) Joint ownership of motor vehicle; (II) Joint checking account; (III) Joint

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credit account; (IV) Joint lease; and/or

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     (D) The domestic partner had been designated as a beneficiary for the decedent’s will,

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retirement contract or life insurance.

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     (6) “Effective date of participation” means the date on which the provisions of this chapter

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have become applicable to a municipality accepting the provisions of the chapter in the manner

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stated in § 45-21-4.

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     (7) “Employee” means any regular and permanent employee or officer of any municipality,

 

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whose business time at a minimum of twenty (20) hours a week is devoted to the service of the

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municipality, including elective officials and officials and employees of city and town housing

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authorities. Notwithstanding the previous sentence, the term “employee,” for the purposes of this

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chapter, does not include any person whose duties are of a casual or seasonal nature. The retirement

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board shall decide who are employees within the meaning of this chapter, but in no case shall it

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deem as an employee any individual who annually devotes less than twenty (20) business hours per

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week to the service of the municipality and who receives less than the equivalent of minimum wage

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compensation on an hourly basis for his or her services, except as provided in § 45-21-14.1. Casual

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employees mean those persons hired for an occasional period or a period of emergency to perform

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special jobs or functions not necessarily related to the work of regular employees. Any

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commissioner of a municipal housing authority, or any member of a part-time state board

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commission, committee or other authority is not deemed to be an employee within the meaning of

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this chapter.

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     (8)(a) “Final compensation” for members who are eligible to retire on or prior to June 30,

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2012, means the average annual compensation, pay, or salary of a member for services rendered

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during the period of three (3) consecutive years within the total service of the member when the

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average was highest, and as the term average annual compensation is further defined in §  36-8-

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1(5)(a). For members eligible to retire on or after July 1, 2012, and who do retire prior to July 1,

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2024, “final compensation” means the average of the highest five (5) consecutive years of

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compensation within the total service when the final compensation was the highest. For members

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eligible to and who retire on or after July 1, 2024, "final compensation" means the average of the

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highest three (3) consecutive years of compensation within the total service when the final

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compensation was the highest.

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     (b) For members who become eligible to retire on or after July 1, 2012, if more than one

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half (½) of the member’s total years of service consist of years of service during which the member

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devoted less than thirty (30) business hours per week to the service of the municipality, but the

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member’s average compensation consists of three (3) or more years during which the member

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devoted more than thirty (30) business hours per week to the service of a municipality, such

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member’s average compensation shall mean the average of the highest ten (10) consecutive years

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of compensation within the total service when the average compensation was the highest; provided

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however, effective July 1, 2015, if such member’s average compensation as defined in subsection

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(a) above is equal to or less than thirty-five thousand dollars ($35,000), such amount to be indexed

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annually in accordance with § 45-21-52(d)(1)(B), such member’s average compensation shall

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mean the greater of: (i) The average of the highest ten (10) consecutive years of compensation

 

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within the total service when the average compensation was the highest; or (ii) The member’s

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average compensation as defined in subsection (a) above. To protect a member’s accrued benefit

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on June 30, 2012, under this subsection (8)(b), in no event shall a member’s average compensation

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be lower than his or her average compensation determined as of June 30, 2012.

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     Notwithstanding the preceding provisions, in no event shall a member’s final compensation

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be lower than his or her final compensation determined as of June 30, 2012.

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     (9) “Fiscal year” means the period beginning on July 1 in any year and ending on June 30

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of the next succeeding year.

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     (10) “Full actuarial costs” or “full actuarial value” mean the lump sum payable by a

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member claiming service credit for certain employment for which payment is required, which is

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determined according to the age of the member and his or her annual rate of compensation at the

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time he or she applies for service credit, and which is expressed as a rate percent of the annual rate

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of compensation to be multiplied by the number of years for which he or she claims the service

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credit, as prescribed in a schedule adopted by the retirement board, from time to time, on the basis

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of computation by the actuary. Except as provided in §§ 16-16-7.1, 36-5-3, 36-9-31, 36-10-10.4,

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and 45-21-53: (i) All service credit purchases requested after June 16, 2009, and prior to July 1,

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2012, shall be at full actuarial value; and (ii) All service credit purchases requested after June 30,

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2012, shall be at full actuarial value which shall be determined using the system’s assumed

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investment rate of return minus one percent (1%).

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     (11) “Governing body” means any and all bodies empowered to appropriate monies for,

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and administer the operation of, the units as defined in subdivision (1) of this section.

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     (12) “Member” means any person included in the membership of the retirement system as

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provided in § 45-21-8.

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     (13) “Municipality” means any town or city in the state of Rhode Island, any city or town

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housing authority, fire, water, sewer district, regional school district, public building authority as

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established by chapter 14 of title 37, or any other municipal financed agency to which the retirement

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board has approved admission in the retirement system.

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     (14) “Participating municipality” means any municipality which has accepted this chapter,

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as provided in § 45-21-4.

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     (15) “Prior service” means service as a member rendered before the effective date of

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participation as defined in this section, certified on his or her prior service certificate, and allowable

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as provided in § 45-21-15.

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     (16) “Regular interest” means interest at the assumed investment rate of return,

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compounded annually, as may be prescribed from time to time by the retirement board.

 

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     (17) “Retirement allowance” or “annuity” means the amounts paid to any member of the

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municipal employees’ retirement system of the state of Rhode Island, or a survivor of the member,

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as provided in this chapter. All retirement allowances or annuities shall be paid in equal monthly

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installments for life, unless otherwise specifically provided.

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     (18) “Retirement board” or “board” means the state retirement board created by chapter 8

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of title 36.

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     (19) “Retirement system” means the “municipal employees’ retirement system of the state

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of Rhode Island” as defined in § 45-21-32.

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     (20) “Service” means service as an employee of a municipality of the state of Rhode Island

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as defined in subdivision (7).

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     (21) “Total service” means prior service as defined in subdivision (15) plus service

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rendered as a member on or after the effective date of participation.

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     (22) Any term not specifically defined in this chapter and specifically defined in chapters

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8 through 10 of title 36 shall have the same definition as set forth in chapters 8 through 10 of title

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36.

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     SECTION 4. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO EDUCATION -- TEACHERS' RETIREMENT -- PUBLIC OFFICERS AND

EMPLOYEES -- RETIREMENT SYSTEM

***

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     This act would reduce the number of years from five (5) to three (3), when calculating for

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retirement purposes, the average of the highest consecutive years of compensation, for teachers,

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and state and municipal employees.

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     This act would take effect upon passage.

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