AR
Arkansas House Bill HB1183

Arkansas 2023 Regular Session

Arkansas House Bill HB1183 Compare Versions

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11 Stricken language would be deleted from and underlined language would be added to present law.
2-Act 64 of the Regular Session
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54 State of Arkansas 1
65 94th General Assembly A Bill 2
76 Regular Session, 2023 HOUSE BILL 1183 3
87 4
98 By: Representative Maddox 5
109 By: Senator K. Hammer 6
1110 7
1211 For An Act To Be Entitled 8
1312 AN ACT TO AMEND AND UPDATE PROVISIONS FO R OUTSOURCING 9
1413 UNDER THE ARKANSAS T EACHER RETIREMENT SY STEM; TO 10
1514 DECLARE AN EMERGENCY ; AND FOR OTHER PURP OSES. 11
1615 12
1716 13
1817 Subtitle 14
1918 TO AMEND AND UPDATE PROVISIONS FOR 15
2019 OUTSOURCING UNDER THE ARKANSAS TEACHER 16
2120 RETIREMENT SYSTEM; AND TO DECLARE AN 17
2221 EMERGENCY. 18
2322 19
2423 20
2524 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 21
2625 22
2726 SECTION 1. Arkansas Code § 24 -7-506 is amended to read as follows: 23
2827 24-7-506. Outsourcing — Election to participate — Definitions. 24
2928 (a) As used in this section: 25
3029 (1)(A) “Covered employer” means any public school, public 26
3130 educational agency, or other eligible employer participating in the Arkansas 27
3231 Teacher Retirement System. 28
3332 (B) “Covered employer” does not include a: 29
3433 (i) Nonmandatory employer or a PSHE employer as 30
3534 defined under § 24-7-1602; or 31
3635 (ii) Covered employer that reports through the 32
3736 Arkansas Administrative Statewide Information System; 33
3837 (2)(A) “Embedded employee” means a person who: 34
3938 (i) Provides an outsourced service on the premises 35
4039 of a covered employer; and 36 HB1183
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4443
4544 (ii) Is employed and paid by an outsource 1
4645 contractor. 2
4746 (B) “Embedded employee” does not include a person who is 3
4847 employed by: 4
4948 (i) A covered employer listed under § 24-7-202; or 5
5049 (ii) An employer that offers the Arkansas Teacher 6
5150 Retirement System as an optional retirement plan as of the date of 7
5251 outsourcing; 8
5352 (3) “Outsource” or “outsourcing” means the use of a contractor 9
5453 by a covered employer for the performance of a service common to the normal 10
5554 daily operation on the premises of the covered employer; 11
5655 (4) “Outsource contractor” means a person who is contractually 12
5756 obligated under an outsourcing agreement to provide a covered employer with a 13
5857 service common to the normal daily operation of the covered employer; 14
5958 (5) “Participating employer” means a covered employer that 15
6059 outsources and opts for the embedded employees of all of its the covered 16
6160 employer's outsource contractors to become members of the Arkansas Teacher 17
6261 Retirement System; 18
6362 (6)(A) “School nursing” means a nursing service that is required 19
6463 to be offered in a public school under § 6-18-706 or the Standards for 20
6564 Accreditation of Arkansas Public Schools and School Districts. 21
6665 (B) “School nursing” does not include nursing services 22
6766 provided by a: 23
6867 (i) School-based health clinic under § 6-18-703; 24
6968 (ii) Medical clinic operated on a public school 25
7069 campus by a hospital or physician's office that is under contract with the 26
7170 public school; 27
7271 (iii) Healthcare provider other than a nurse; or 28
7372 (iv) Healthcare service reimbursed or paid for by 29
7473 Medicaid, Medicare, health insurance, or any other third-party payer; 30
7574 (7) “Service common to the normal daily operation” means and is 31
7675 limited to a service that: 32
7776 (A) Is provided by an outsource contractor or embedded 33
7877 employee to a covered employer; 34
7978 (B) Is physically provided or based on the premises of a 35
8079 covered employer; 36 HB1183
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8483
8584 (C) Is paid for with public funds and not with private 1
8685 grant funds; and 2
8786 (D) Consists of one (1) or more of the following: 3
8887 (i) The maintenance and operation of: 4
8988 (a) One (1) or more vehicles used for the 5
9089 regular and daily transport of passengers; and 6
9190 (b) A facility that provides support for the 7
9291 maintenance and operation of one (1) or more vehicles described under 8
9392 subdivision (a)(7)(D)(i)(a) of this section; 9
9493 (ii) The maintenance and operation of a cafeteria or 10
9594 other food service operation; 11
9695 (iii) Custodial or maintenance services for the 12
9796 regular and continuous maintenance, repair, and upkeep of grounds or 13
9897 facilities; 14
9998 (iv) Security services that are not covered by 15
10099 another retirement system; 16
101100 (v) School nursing; 17
102101 (vi) Substitute teaching; or 18
103102 (vii) Service as a teacher's aide; and 19
104103 (8) “Surcharge employer” means a covered employer that 20
105104 outsources and pays a surcharge to the Arkansas Teacher Retirement System in 21
106105 lieu of opting for the embedded employees of outsource contractors to accrue 22
107106 service credit in the Arkansas Teacher Retirement System. 23
108107 (b) A covered employer that enters into an agreement to outsource a 24
109108 service common to the normal daily operation shall make an irrevocable 25
110109 election to be either a participating employer or become a surcharge employer 26
111110 within sixty (60) days of the outsourcing agreement on a form provided by or 27
112111 in a manner established by the Arkansas Teacher Retirement System. 28
113112 (c)(1) If a covered employer elects to become a surcharge employer 29
114113 under this section, then the covered employer A surcharge employer shall 30
115114 account for and remit to the Arkansas Teacher Retirement System a monthly 31
116115 surcharge of no more than four percent (4%) on the total salaries paid to all 32
117116 the embedded employees on an aggregate basis as follows:. 33
118117 (A) Five-tenths of one percent (0.5%) during the 2018 34
119118 fiscal year; 35
120119 (B) One percent (1%) during the 2019 fiscal year; 36 HB1183
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124123
125124 (C) Two percent (2%) during the 2020 fiscal year; 1
126125 (D) Three percent (3%) during the 2021 fiscal year; and 2
127126 (E) An amount not to exceed four percent (4%) during the 3
128127 2022 fiscal year and succeeding fiscal years as established by a resolution 4
129128 of the Board of Trustees of the Arkansas Teacher Retirement System at a 5
130129 meeting of the board. 6
131130 (2) If the covered employer is outsourcing on August 1, 2017, 7
132131 the surcharge shall be payable beginning in the 2018 fiscal year. The Board 8
133132 of Trustees of the Arkansas Teacher Retirement System may establish by 9
134133 resolution the surcharge rate for any fiscal year following the 2022 fiscal 10
135134 year. 11
136135 (3) A surcharge adopted by the board applies to an entire fiscal 12
137136 year and shall be adopted prior to before the beginning of the fiscal year. 13
138137 (d) If a covered employer elects to become a participating employer as 14
139138 provided under this section, then the covered employer shall account for and 15
140139 remit each of the covered employer's contributions in the same amount and in 16
141140 the same manner as required for covered employer contributions under § 24-7-17
142141 401 and member contributions under § 24-7-406. 18
143142 (e)(1)(A) A covered employer that begins outsourcing after August 1, 19
144143 2017, and elects to become a participating employer may phase-in the election 20
145144 by selecting an effective date that is no later than the beginning of the 21
146145 third fiscal year after the effective date of the outsourcing agreement. 22
147146 (B) During the phase-in of becoming a participating 23
148147 employer, the covered employer shall account for and remit a phase-in 24
149148 surcharge in the same amount and manner required of a surcharge employer 25
150149 under subsection (c) of this section. 26
151150 (2)(A) If a covered employer is outsourcing on August 1, 2017, 27
152151 and the covered employer elects to become a participating employer, then the 28
153152 covered employer may phase-in the election by selecting an effective date 29
154153 that is no later than the beginning of the fourth fiscal year after August 1, 30
155154 2017. 31
156155 (B) During the phase-in of becoming a participating 32
157156 employer, the covered employer shall account for and remit a phase-in 33
158157 surcharge in the same amount and manner as required of a surcharge employer 34
159158 under subsection (c) of this section. 35
160159 (f)(1)(d)(1) The Arkansas Teacher Retirement System may require a 36 HB1183
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165164 covered employer that makes an election under this section surcharge employer 1
166165 to provide any documentation necessary to collect and account for the 2
167166 surcharge or contributions as is consistent with the covered employer's 3
168167 election. 4
169168 (2) The Arkansas Teacher Retirement System may shall collect an 5
170169 unremitted surcharge amount due, including interest, from a surcharge 6
171170 employer under § 24-7-401 or contribution due from a participating employer 7
172171 under § 24-7-406 in any manner allowed by law. 8
173172 (3) If a covered employer surcharge employer reasonably accepts 9
174173 a written statement from an outsource contractor reporting the salaries paid 10
175174 by the outsource contractor to embedded employees for services common to the 11
176175 normal daily operation of the covered employer surcharge employer, it shall 12
177176 be conclusively presumed that the written statement accurately reflects the 13
178177 salaries subject to surcharge under this section. 14
179178 (g)(1) A covered employer or an outsource contractor may request a 15
180179 determination from the Arkansas Teacher Retirement System as to whether an 16
181180 embedded employee performs or will perform a service common to the normal 17
182181 daily operation of a covered employer. 18
183182 (2) A request made under subdivision (g)(1) of this section 19
184183 shall include: 20
185184 (A) Information about the employment relationship and 21
186185 contract provisions that are necessary for the Arkansas Teacher Retirement 22
187186 System to evaluate the service provided to the covered employer; and 23
188187 (B) Any additional information requested by the Arkansas 24
189188 Teacher Retirement System to make the determination. 25
190189 (3) The board may promulgate rules necessary to administer this 26
191190 section. 27
192191 (h)(1)(e)(1) The Division of Youth Services Education System shall be 28
193192 a participating employer and may designate any or all of its embedded 29
194193 employees as eligible for membership in the Arkansas Teacher Retirement 30
195194 System. 31
196195 (2) An embedded employee of a contractor for the Division of 32
197196 Youth Services Education System who becomes a member of the Arkansas Teacher 33
198197 Retirement System shall remain a member of the Arkansas Teacher Retirement 34
199198 System as long as the member remains an embedded employee of a contractor for 35
200199 the Division of Youth Services Education System. 36 HB1183
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204203
205204 (i)(f) The use of the terms “employee” and “employer” in this section 1
206205 does not: 2
207206 (1) Create or modify an employment relationship between an 3
208207 embedded employee and a covered employer; 4
209208 (2) Create, permit, expand, or modify any liability or 5
210209 obligation by a covered employer to an embedded employee; or 6
211210 (3) Create, permit, expand, or modify any cause of action by an 7
212211 embedded employee against a covered employer under any employment, labor, 8
213212 civil rights, or other law. 9
214213 (g) The board may promulgate rules to implement this section. 10
215214 11
216215 SECTION 2. EMERGENCY CLAUSE. It is found and determined by the 12
217216 General Assembly of the State of Arkansas that the operations of a state 13
218217 public retirement system are complex; that the Arkansas Teacher Retirement 14
219218 System must be able to meet the needs of its members as anticipated by the 15
220219 General Assembly; that certain provisions of the Arkansas Teacher Retirement 16
221220 System Act, need revision and updating to address reporting, contribution, 17
222221 and other administrative complexities caused by these provisi ons and to bring 18
223222 these provisions into conformance with sound public pension policy and 19
224223 actuarial requirements; that the revisions and updates are of great 20
225224 importance to members and covered employers of the Arkansas Teacher 21
226225 Retirement System and to other c itizens of the State of Arkansas; that as the 22
227226 Arkansas Teacher Retirement System operates on a fiscal year of July 1 to 23
228227 June 30, a July 1, 2023, effective date is necessary in order to allow the 24
229228 provisions within this act to begin on the first day of the f iscal year and 25
230229 to allow for a structured and proper administration of the procedures 26
231230 referenced in this act; that the updates and revisions to the Arkansas 27
232231 Teacher Retirement System Act are of great importance and necessary for 28
233232 protecting member benefits a nd clarifying the reporting and contribution 29
234233 requirements of employers participating in the Arkansas Teacher Retirement 30
235234 System; and that this act is necessary in order to maintain an orderly system 31
236235 of benefits for the members of the Arkansas Teacher Retire ment System. 32
237236 Therefore, an emergency is declared to exist, and this act being necessary 33
238237 for the preservation of the public peace, health, and safety shall become 34
239238 effective on July 1, 2023. 35
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