Alabama 2025 Regular Session

Alabama House Bill HB136 Compare Versions

Only one version of the bill is available at this time.

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1	1	HB136INTRODUCED
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3	3	HB136
4	4	I1T9ZZ6-1
5	5	By Representative Collins
6	6	RFD: Fiscal Responsibility
7	7	First Read: 04-Feb-25
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12	12	5 I1T9ZZ6-1 1/23/2025 CD (F)dj 2024-2743
13	13	Page 1
14	14	First Read: 04-Feb-25
15	15	SYNOPSIS:
16	16	Existing law provides for the Deferred
17	17	Retirement Option Plan (DROP), which contractually
18	18	allows a member of the Teacher's Retirement System
19	19	(TRS) to continue employment with his or her employer
20	20	for a specific period of time while deferring a portion
21	21	of his or her retirement allowance until the end of the
22	22	participation period, at which time the member
23	23	withdraws from his or her service.
24	24	Existing law provides that participation in DROP
25	25	is prohibited after March 24, 2011.
26	26	This bill would reopen participation in the DROP
27	27	program and would further provide options for Tier I
28	28	and Tier II members to participate in DROP.
29	29	A BILL
30	30	TO BE ENTITLED
31	31	AN ACT
32	32	Relating to the Deferred Retirement Option Plan (DROP);
33	33	to amend Sections 16-25-150 and 16-25-151 of the Code of
34	34	Alabama 1975; to reopen participation in the DROP program for
35	35	certain members; to further provide options for Tier I and
36	36	Tier II members to participate in DROP; and to add Section
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66	66	Tier II members to participate in DROP; and to add Section
67	67	16-25-155 of the Code of Alabama 1975; relating to the
68	68	termination of DROP.
69	69	BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
70	70	Section 1. Sections 16-25-150 and 16-25-151 of the Code
71	71	of Alabama 1975, are amended to read as follows:
72	72	"§16-25-150
73	73	(a) As governed by this subsection, there exists as a
74	74	part of this retirement system an optional account known as
75	75	the Deferred Retirement Option Plan, which may be cited as
76	76	"DROP." The purpose of DROP is to allow, contractually, in
77	77	lieu of immediate withdrawal from service and receipt of a
78	78	retirement allowance, continued employment for a specific
79	79	period of time, coupled with the deferral of receipt of a
80	80	retirement allowance until the end of the period of
81	81	participation, at which time the member shall withdraw from
82	82	service.
83	83	(b)(1) Participation in DROP is an option available to
84	84	any Tier I plan member of this retirement system who meets all
85	85	of the following requirements:
86	86	(1)a. Has at least 2530 years of creditable service
87	87	exclusive of sick leave.
88	88	(2)b. Is at least 55 years of age.
89	89	(3)c. Is eligible for service retirement.
90	90	d. Is or will be employed as a classroom teacher.
91	91	(2) Participation in DROP is an option available to any
92	92	Tier II plan member of this retirement system who meets all of
93	93	the following requirements:
94	94	a. Has at least 30 years of creditable service
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124	124	a. Has at least 30 years of creditable service
125	125	exclusive of sick leave.
126	126	b. Is at least 62 years of age.
127	127	c. Is eligible for service retirement.
128	128	d. Is or will be employed as a classroom teacher.
129	129	(3)a. For purposes of this paragraph, "classroom
130	130	teacher" means an employee of a local board of education
131	131	assigned the professional activity of instructing K-12
132	132	students in an academic instructional setting for not less
133	133	than an average of four hours each day. This term excludes a
134	134	teacher's aid or a full-time administrator.
135	135	b. The State Superintendent of Education shall certify
136	136	to the retirement system:
137	137	1. Prior to the member's participation in DROP, that an
138	138	employee meets this definition; and
139	139	2. No less than annually, that a member participating
140	140	in DROP maintains employment or duties that meet this
141	141	definition.
142	142	(c) An election to participate in DROP may be made in
143	143	one year increments not to exceed five years, nor to be less
144	144	than three years. A member may participate in DROP only one
145	145	time. Any voluntary termination within the first three years
146	146	in DROP will result in a forfeiture of the portion of his or
147	147	her DROP account that constitutes the retirement allowance.
148	148	However, member contributions will not be forfeited, nor will
149	149	any interest attributable to the retirement allowance. There
150	150	will be no penalty forfeiture if the participation period is
151	151	interrupted due to an involuntary dismissal, disability,
152	152	involuntary transfer of his or her spouse, or death of the
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182	182	involuntary transfer of his or her spouse, or death of the
183	183	participant.
184	184	(d) A member who chooses to participate in DROP may
185	185	elect an option allowance set out for members of the Teachers'
186	186	Retirement System in subsection (h) of Section 16-25-14 at the
187	187	beginning of the participation period. Otherwise, he or she
188	188	shall receive the maximum benefit. Such election shall be
189	189	irrevocable once the participation period begins except as
190	190	otherwise provided in this chapter.
191	191	(e) For purposes of DROP, sick leave may not be
192	192	converted for purposes of establishing retirement eligibility,
193	193	nor used in the calculation of the original retirement
194	194	allowance except as provided in Section 16-25-151.
195	195	(f) The election to participate in DROP shall be made
196	196	in accordance with procedures set forth in a uniform and
197	197	nondiscriminatory election and application form adopted by the
198	198	Board of Control. The election to participate in DROP may be
199	199	made at any time on or after the date the member becomes
200	200	eligible to participate as set out in subsection (b). TheSuch
201	201	application must be made at least 30 days, but not more than
202	202	90 days, before the effective date of participation in DROP ,
203	203	and shall be made no later than March 24, 2011 . A member must
204	204	be eligible to participate, as provided above at the time the
205	205	application is made.
206	206	(g) Upon the effective date of the commencement in
207	207	DROP, the member's service shall remain as it existed on that
208	208	date for the duration of DROP. Once a member enters DROP,
209	209	service credit purchases are prohibited. Both the employer and
210	210	employee member contribution shall continue to be made. The
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240	240	employee member contribution shall continue to be made. The
241	241	monthly retirement allowance that would have been payable, had
242	242	the person elected to withdraw from service and receive a
243	243	retirement allowance, shall be paid into a DROP account that
244	244	reflects the credits attributed to the person in DROP.
245	245	However, the monies shall remain a part of the regular
246	246	retirement fund until disbursed to the participating member in
247	247	accordance with this section. Any monies paid into this
248	248	account are subject to the exemptions set out in Section
249	249	16-25-23.
250	250	(h)(1) The DROP account shall earn interest at the same
251	251	rate that interest is posted to active member accounts as
252	252	defined in subdivision (15) of Section 16-25-1. A
253	253	personindividual who participates in this plan shall not be
254	254	eligible to receive a retiree cost-of-living increase while
255	255	participating in DROP , and shall not be eligible for a retiree
256	256	cost-of-living increase until participation in the plan ceases
257	257	and he or she withdraws from service and has been receiving a
258	258	retirement allowance for at least one full year.
259	259	(2) Notwithstanding any other provision of this
260	260	chapter, for any member who has fulfilled his or her
261	261	obligation under DROP and does not withdraw from service and
262	262	any member who begins participation in DROP on or before April
263	263	1, 2011, and fulfills his or her obligation under DROP and
264	264	does not withdraw from service, the amount of interest payable
265	265	on benefit deposits after March 24, 2011, shall be the lesser
266	266	of (1) the investment performance of the immediately preceding
267	267	fiscal year but no less than $0, or (2) as provided in
268	268	subdivision (1) of subsection (d) of Section 16-25-151.
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298	298	subdivision (1) of subsection (d) of Section 16-25-151.
299	299	(i) DROP shall not be subject to any fees, charges, or
300	300	other similar expenses of any kind for any purpose.
301	301	(j) Participation in DROP shall not affect the rights
302	302	of any education employee to including, but not limited to,
303	303	the Fair Dismissal Act, Section 36-26-100 et seq., the tenure
304	304	law, Section 16-24-1, et seq., or any other fringe benefit.
305	305	(k) Participation in DROP shall not affect the accrual
306	306	of annual and sick leave by the participant.
307	307	(l) Participants in DROP may receive salary
308	308	cost-of-living adjustments and salary increases."
309	309	"§16-25-151
310	310	(a) On withdrawing from service pursuant to Section
311	311	16-25-14, a member who participated in DROP:
312	312	(1) Who fulfilled his or her contractual obligation
313	313	pursuant to DROP shall receive a lump-sum payment from his or
314	314	her DROP account equal to the payments made to that account on
315	315	his or her behalf plus interest. Further, the member shall
316	316	receive his or her accumulated contribution made during
317	317	participation in DROP, together with interest for the period
318	318	of DROP participation as provided in subdivision (1) of
319	319	subsection (g) of Section 16-25-14 (i)(1). In lieu of a
320	320	lump-sum payment from the DROP account, to the extent eligible
321	321	under applicable tax laws, the member's total accrued benefit
322	322	may be "rolled over" directly to the custodian of an eligible
323	323	retirement plan. The member shall also begin receiving his or
324	324	her monthly benefit that would have been payable had the
325	325	member elected to withdraw from service and receive a
326	326	retirement allowance at the commencement of which had been
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356	356	retirement allowance at the commencement of which had been
357	357	paid directly into the DROP account during his or her
358	358	participation in DROP. However, the monthly benefit shall be
359	359	recalculated prospectively to reflect any accrued sick leave
360	360	as credit for retirement purposes. Conversion of sick leave is
361	361	limited to the applicable laws pertaining to conversion of
362	362	sick leave into retirement credit. In no event can the number
363	363	of days converted be greater than the number of days the
364	364	participant had on the date he or she entered DROP. The member
365	365	is not allowed to change the option allowance chosen at the
366	366	beginning of DROP participation.
367	367	(2) Who did not fulfill his or her obligation under
368	368	DROP due to involuntary termination, disability, or
369	369	involuntary transfer of his or her spouse, shall receive a
370	370	lump-sum payment from his or her DROP account equal to the
371	371	payments made to that account on his or her behalf plus
372	372	interest. Further, the member shall receive his or her
373	373	accumulated contribution made during participation in DROP,
374	374	together with interest for the period of DROP participation as
375	375	provided in subdivision (1) of subsection (g) of Section
376	376	16-25-14(i)(1). In lieu of a lump-sum payment from the DROP
377	377	account, to the extent eligible under applicable tax laws, the
378	378	member's total accrued benefit may be "rolled over" directly
379	379	to the custodian of an eligible retirement plan. The member
380	380	shall also begin receiving his or her monthly benefit that
381	381	would have been payable had the member elected to withdraw
382	382	from service and receive a retirement allowance at the
383	383	commencement of which had been paid directly into the DROP
384	384	account during his or her participation in DROP. However, the
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414	414	account during his or her participation in DROP. However, the
415	415	monthly benefit shall be recalculated prospectively to reflect
416	416	any accrued sick leave as credit for retirement purposes.
417	417	Conversion of sick leave is limited to the applicable laws
418	418	pertaining to conversion of sick leave into retirement credit.
419	419	In no event can the number of days converted be greater than
420	420	the number of days the participant had on the date he or she
421	421	entered DROP. The member is not allowed to change the option
422	422	allowance chosen at the beginning of DROP participation.
423	423	(3) Who did not fulfill his or her obligation under
424	424	DROP due to voluntary termination within the first three years
425	425	of participation shall forfeit a portion of his or her DROP
426	426	account that constitutes the retirement allowance. The member
427	427	shall be entitled to a return of his or her member
428	428	contribution made during his or her participation in DROP as
429	429	well as any interest attributable to the retirement allowance.
430	430	However, following termination of employment, the member shall
431	431	begin receiving his or her monthly benefit which had been paid
432	432	directly into the DROP account during that would have been
433	433	payable had the member elected to withdraw from service and
434	434	receive a retirement allowance at the commencement of his or
435	435	her participation in DROP. However, the monthly benefit shall
436	436	be recalculated prospectively to reflect any accrued sick
437	437	leave as credit for retirement purposes. Conversion of sick
438	438	leave is limited to the applicable laws pertaining to
439	439	conversion of sick leave into retirement credit. In no event
440	440	can the number of days converted be greater than the number of
441	441	days the participant had on the date he or she entered DROP.
442	442	The member is not allowed to change the option allowance
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472	472	The member is not allowed to change the option allowance
473	473	chosen at the beginning of DROP participation.
474	474	(b) If a participant dies during the period of
475	475	participation in DROP, a lump-sum payment equal to the
476	476	payments made to the DROP account on his or her behalf plus
477	477	interest shall be paid to his or her named beneficiary or, if
478	478	none, to his or her estate. Further, the beneficiary of the
479	479	estate shall be entitled to a return of the member's
480	480	contribution made during his or her participation in DROP
481	481	together with interest for the period of DROP participation as
482	482	provided in subdivision (1) of subsection (g) of Section
483	483	16-25-14(i)(1). However, death benefits payable pursuant to
484	484	subsection (g) of Section 16-25-14 (i) or Section 36-27B-3
485	485	shall not be applicable. Where there is a beneficiary that
486	486	would be entitled to an ongoing monthly benefit, if applicable
487	487	laws allow, the monthly benefit may be recalculated
488	488	prospectively to reflect accrued sick leave as credit for
489	489	retirement purposes. If applicable laws allow, the beneficiary
490	490	may elect to be paid for the deceased member's sick leave as
491	491	would any other member upon retirement. In no event can the
492	492	number of sick leave days used for either calculation be
493	493	greater than the number of days the participant had on entry
494	494	into DROP. The member is not allowed to change the option
495	495	allowance chosen at the beginning of DROP participation.
496	496	(c) At the end of the specified period for DROP:
497	497	(1) Payments into the DROP account made on behalf of
498	498	the member shall cease.
499	499	(2) Payment from the DROP account shall not be made to
500	500	the member until he or she withdraws from service, nor shall
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530	530	the member until he or she withdraws from service, nor shall
531	531	the monthly retirement allowance being paid into the DROP
532	532	account during the period of participation be payable to the
533	533	member until he or she withdraws from service pursuant to
534	534	Section 16-25-14.
535	535	(3) If the member does not withdraw from service after
536	536	the period specified for participation in DROP, he or she
537	537	shall resume active contributing membership in the system for
538	538	the purpose of earning creditable service. Under no
539	539	circumstance will any time spent participating in DROP be
540	540	eligible to constitute service credit in any Alabama public
541	541	supported retirement system.
542	542	(d)(1) Upon a future withdrawal from service, the
543	543	member shall receive a lump-sum payment from his or her DROP
544	544	account equal to the payments made to that account on his or
545	545	her behalf plus interest. Further, the member shall receive
546	546	his or her accumulated contribution made during participation
547	547	in DROP together with interest for the period of DROP
548	548	participation as provided in subdivision (1) of subsection (g)
549	549	of Section 16-25-14 (i)(1). In lieu of a lump-sum payment from
550	550	the DROP account, to the extent eligible under applicable tax
551	551	laws, the member's total accrued benefit may be "rolled over"
552	552	directly to the custodian of an eligible retirement plan.
553	553	(2) Upon withdrawal from service, the monthly
554	554	retirement allowance that would have been payable had the
555	555	member elected to withdraw from service and receive a
556	556	retirement allowance at the commencement of his or her
557	557	participation in DROP was being originally paid into the DROP
558	558	account shall begin to be paid to the member. However, the
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588	588	account shall begin to be paid to the member. However, the
589	589	monthly benefit shall be recalculated prospectively to reflect
590	590	any accrued sick leave as credit for retirement purposes.
591	591	Conversion of sick leave is limited to the applicable laws
592	592	pertaining to conversion of sick leave into retirement credit.
593	593	In no event can the number of days converted be greater than
594	594	the number of days the participant had on the date he or she
595	595	entered DROP. The member is not allowed to change the option
596	596	allowance chosen at the beginning of DROP participation.
597	597	(3) Upon withdrawal from service, the member shall
598	598	receive an additional retirement benefit based on his or her
599	599	additional service rendered to the system since termination of
600	600	participating in DROP, using the normal method of computation
601	601	of benefit for that period only. This additional service shall
602	602	not be added to any service prior to his or her participation
603	603	in DROP. The member's average compensation for that time
604	604	worked after the participation in DROP shall be multiplied by
605	605	the appropriate benefit factor multiplied by the amount of
606	606	time worked after the participation in DROP. Under no
607	607	circumstances is this service to be combined with service
608	608	prior to participation in DROP.
609	609	(4) The option used for retirement purposes shall be
610	610	that applicable to the original benefit.
611	611	(5) If the member dies or becomes disabled during the
612	612	period of additional service, he or she shall be considered as
613	613	having retired on the date of death or commencement of
614	614	disability. However, no death benefits pursuant to subsection
615	615	(g) of Section 16-25-14 (i) or Section 36-27B-3 will be
616	616	applicable."
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646	646	applicable."
647	647	Section 2. Section 16-25-155 is added to the Code of
648	648	Alabama 1975, to read as follows:
649	649	§16-25-155
650	650	(a) No member may participate in DROP after July 31,
651	651	2031.
652	652	(b) The Board of Control shall adopt procedures to
653	653	implement this section.
654	654	Section 3. This act shall become effective immediately.
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