RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 1 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 SENATE FLOOR VERSION February 18, 2021 SENATE BILL NO. 743 By: Weaver An Act relating to police retirement; amending 11 O.S. 2011, Sections 50-101, as amended by Section 1, Chapter 346, O.S.L. 2016 and 50-115, as last amended by Section 3, Chapter 120, O.S.L. 2020 (11 O.S. Supp. 2020, Sections 50-101 and 50-115), which relate to definitions and disability benefit; mod ifying definitions of permanent in-line disability and normal disability benefit ; modifying disability benefits received by certain disabled officers; updating statutory language; and modifying permanent impairment guidelines . BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAH OMA: SECTION 1. AMENDATORY 11 O.S. 2011, Section 50-101, as amended by Section 1, Chapter 346, O.S.L. 2016 (11 O.S. Supp. 2020, Section 50-101), is amended to read as follows: Section 50-101. As used in this article: 1. “System” means the Oklahoma Police Pension and Retirement System and all predecessor municipal Police Pension and Retirement Systems; 2. “Article” means Article 50 of this title; 3. “State Board” means the Oklahoma Police Pension and Retirement Board; RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 2 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 4. “Fund” means the Oklahoma Police Pension and Retirement Fund; 5. “Officer” means any duly appointe d and sworn full-time officer of the regular police depa rtment of a municipality whose duties are to preserve the public peace, protect l ife and property, prevent crime, serve warrants, enforce all laws and municipal ordinances of this state, and any polit ical subdivision thereof, and who is authorized to bear arms in the execution of such duties; 6. “Member” means all eligible officers of a participating municipality and any person hired by a participating municipality who is undergoing police training to become a permanent police officer of the municipality. Effective July 1, 1987, a member does not include a “leased employee” as defined under Section 414(n)(2) of the Internal Revenue Code of 1986, as amended. Effective July 1, 1999, any individual who agrees with the participating municipality that the individual’s services are to be performed as a leased employee or an independent cont ractor shall not be a member regardless of any classification as a common law employee by the Internal Revenue Service or any other governmental agency, or any court of competent jurisdiction. A member shall include e ligible commissioned officers of the O klahoma State Bureau of Narcotics a nd Dangerous Drugs Control, the Oklahoma State Bureau of Investigation, and the Alcoholic Beverage Laws Enforcement Commission who elect to RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 3 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 participate in the System pursuant to Secti on 50-111.5 of this title; 7. “Normal retirement date” means the date at which the member is eligible to receive the unreduced payments of the member ’s accrued retirement benefit. Such date shall be the first da y of the month coinciding with or following the date the member completes twenty (20) years of credited service. If the member’s employment continues past the normal retirement date of the member, th e actual retirement date of the member shall be the firs t day of the month after the member termina tes employment with more than twenty ( 20) years of credited service; 8. “Credited service” means the period of service used to determine the eligibility for and the amount of benefits payable to a member. Credited service shall consist of the period duri ng which the member participated in th e System or the predecessor municip al systems as an active employee in an eligible membership classification, plus any service prior to the establishment of the predecessor municipal systems which was credited under th e predecessor municipal systems or cre dited service granted by the State Board; 9. “Participating municipality ” means a municipality which is making contributions to the System on behalf of its officers. The Oklahoma State Bureau of Narcotics and Dangero us Drugs Control, the Oklahoma State Bureau of Investigation, and the Alc oholic Beverage RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 4 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Laws Enforcement Commission shall be treated in the same manner as a participating municipality only regarding those members who elect to participate in the System pur suant to Section 50-111.5 of this title; 10. “Permanent total disability ” means incapacity due to accidental injury or occupational disease, to earn any wag es in the employment for which the member is physically suited and reasonably fitted through educat ion, training or experience. Further, the member must be declared one hu ndred percent (100%) impaired as defined by the “American Medical Association ’s Guides to the Evaluation of Permanent Impairment ” on the basis of a physical medical examination by a p hysician licensed to practice medicine in this state, as selected by the State Board; 11. “Permanent partial disability ” means permanent disability which is less than permanent total disability as defined in this section. The member must be declared no g reater than ninety-nine percent (99%) impaired as defined by the “American Medical Association’s Guides to the Evaluation of Permanent Impairment ” on the basis of a physical medical examination by a physician lice nsed to practice medicine in this state, as selected by the State Board; 12. “Permanent in-line disability” means incapacity to earn any wages as a certified, commissioned police officer due to accid ental injury or occupational disease, incurred while in, and in consequence of, the performance of duty as an officer when a police RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 5 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 officer serving in any capacity at a regular police department of a participating municipality becomes so physically or mentally disabled, as determined by an independent medical examiner, psychiatrist or psychologist selected by the State Board, while in, and in consequence of, the performance of authorizing activities while on duty as an officer that he or she is unable to pe rform the required duties of a police officer; 13. “Beneficiary” means a member’s surviving spouse or any surviving children, including biological and adopted children, at the time of the member’s death. The surviving spouse must have been married to the member for the thirty (30) continuous months immediately preceding the member ’s death, provided a survivin g spouse of a member who died while in, and as a consequence of, the performance of the member ’s duty for a participating municipality, shall not be subject to the thirty-month marriage requirement for survivor benefits. A surviving child of a member shal l be a beneficiary until reach ing eighteen (18) years of age or t wenty-two (22) years of age if the child is enro lled full time and regularly attending a public or private school or any institution of higher education. Any child adopted by a member after the member’s retirement shall be a beneficiary only if the child is adopted by the member for the thirty (30) con tinuous months preceding the member’s death. Any child who is adopted by a member after the member’s retirement and such member dies accidenta lly or as a RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 6 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 consequence of the performance of the member ’s duty as a police officer shall not be subject to the t hirty-month adoption requirement. This definition of beneficiary shall be in addition to any other requirement set forth in this article; 14. “Executive Director” means the managing officer of the System employed by the State Board; 15. “Eligible employer” means any municipality with a m unicipal police department; 16. “Entry date” means the date as of which an eligible employer joins the Syst em. The first entry date purs uant to this article shall be Janua ry 1, 1981; 17. “Final average salary ” means the average paid base salary of the member for normally scheduled hours over the highest salaried thirty (30) consecutive months of the last sixt y (60) months of credited service. Effective July 1, 2016, the f ollowing shall apply in computing final average salary: a. only paid base salary on which required contributions have been made shall be used in computing a member ’s final average salary, b. for purposes of determining th e normal disability benefit only, final average salary shall be based on the member’s total service if less than thirt y (30) months, RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 7 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 c. in addition to other applicable limitations, and notwithstanding any other provision to th e contrary, for plan years beginning on or after July 1, 2002, th e annual compensation of each “Noneligible Member” taken into account under the Sys tem shall not exceed the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) annual compensat ion limit. The EGTRRA annual compensation limit is Two Hundred T housand Dollars ($200,000.00), as adjusted by th e Commissioner for increases in the cost of living in accordance with Section 401(a)(17)(B) of the Internal Revenue Code of 1986, as amended. The annual compensation limit in effect for a calendar year appli es to any period, not exceeding twelve (12) mont hs, over which compensation is determined (“determination period”) beginning in such calendar year. If a determination period consists of fewer than twelve (12) months, the EGTRRA annual compensation limit w ill be multiplied by a fraction, the numerator o f which is the number of months in the determination period, and the denominator of which is twelve (12). For purposes of this section, a “Noneligible Member” is any member who first became a member during a plan year commencing on or after July 1, 1996, RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 8 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 d. for plan years beginning on or a fter July 1, 2002, any reference in the System to the annual compensation limit under Section 401(a)(17) of the Internal Revenue Code of 1986, as amended, shall mean the EGT RRA annual compensation limit set forth in this provision, and e. effective January 1, 2008, back pay, within the meaning of Section 1.415(c) -2(g)(8) of the Income Tax Regulations, shall be t reated as paid base salary for the limitation year to which the b ack pay relates to the extent the back pay repre sents wages and compensation that would otherwise be included in this definition; 18. “Accrued retirement benefit ” means two and one-half percent (2 1/2%) of the member ’s final average salary multiplied by t he member’s years of credited service not to exc eed thirty (30) years; 19. “Normal disability benefit” means the greater of: a. two and one-half percent (2 1/2%) of the member ’s final average salary multiplied by twenty (20) years, notwithstanding the yea rs of actual credit service, or b. two and one-half percent (2 1/2%) of the member’s final average salary multiplied by the years of credited service of the member, not to exceed thirty (30) years, if the officer has mor e than twenty (20) years of credited service; RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 9 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 20. “Limitation year” means the year used in applying the limitations of Section 415 of the Internal Revenue Code of 1986, as amended, which year shall be the calendar year; 21. “Paid base salary” means, effective July 1, 2016, an y compensation described in subparagraph a of this paragraph that is not described in subparagraph b of this paragraph. a. Paid base salary shall in clude only: (1) normal compensation paid on a regularly scheduled pay period, including, but not limited to, regular pay for holidays, paid time off, vacation or annual leave, sick leave or compensatory tim e in lieu of overtime, any lump sum payment paid i n lieu of a normal wage incre ase, provided such lump sum payment is retroactively appl ied over the prior twelve-month period ending with the payment date, compensation for bomb s quad pay, education pay, incentive pay, K-9 pay, negotiation pay, shift differ ential, sniper pay, SWAT team pay, emergency response team pay, any other special unit pay, and any incremen tal increase in compensation which is not included by the employer in a member’s regular base pay for salary increase purposes but is paid by the employer to the member for grou p health benefits RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 10 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 based on an arrangement with a particip ating municipality that was in place on December 31, 2015, so long as the arrangement contin ues uninterrupted for a memb er employed by a participating municipality on Jun e 30, 2016, who has not since terminated employment and been rehired by such participa ting municipality, (2) any amount of elective salary reduction under Section 125 of the Inte rnal Revenue Code of 1986, as amended, that would have been treated as paid base salary but for the salary deferral reduction agreement, (3) any amount of elective salary reduction not includable in the gross income of the member under Section 132(f)(4) of the Internal Revenue Code of 1986, as amended, that would have been treated as paid base salary but for th e salary deferral reduction agreement, (4) any amount of elective salary reduct ion under Section 457 of the Internal Revenue Code of 1986, as amended, that would have been treat ed as paid base salary but for the salary deferral reduction agreement, RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 11 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (5) any amount of elective salary reduction under Section 401(k) of the Internal Reven ue Code of 1986, as amended, that would have been treated as paid base salary but for the salary d eferral reduction agreement, (6) any amount of nonelective salary reduction und er Section 414(h) of the Internal Revenue Code of 1986, as amended, (7) educational allowances paid to obtain training certification or pursue an adv anced degree, (8) longevity payments made to members based upon a standardized plan which recognizes length of service to the participating municipality, (9) paid base salary shall also include base salary, as described in divisions (1) through (8) of this subparagraph, for services, but paid by the later of two and one-half (2 1/2) months after a member’s severance from employment or the end of the calendar year tha t includes the date th e member terminated employment, if it is a payment that, absent a severance from employment, would have been paid to the member while the member continued in employment with the participating municipality, RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 12 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (10) any payments not descri bed in divisions (1) through (9) of this subparagraph shall not be considered paid base sala ry if paid after severance from employment, even if they are paid by the later of two and one-half (2 1/2) months after the date of severance from employment or the end of the calendar y ear that includes the date of severance from employment, except payments to an individual who does not currently perform services for the participat ing municipality by reason of qualified military service within the meaning of Section 414(u)(5) of the Internal Revenue Code of 1986, as amended, to the extent these payments do not exceed the amounts the individual would have received if the individual had continued to perform servi ces for the participating municipality rather than entering qualified military service, (11) back pay, within the meaning of Section 1.415(c) - 2(g)(8) of the Income Tax Regulatio ns, shall be treated as paid base salary for the l imitation year to which the back pay relates to the extent the back pay represents wag es and compensation RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 13 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 that would otherwise be included in this definition, and (12) paid base salary shall also include di fferential wage payments under Section 414(u)(12) of the Internal Revenue Code of 1986, as amended. b. Notwithstanding anything to the c ontrary in this section, paid base salary shall not include any: (1) fringe benefits, reimbu rsements, or increases in compensation due to reimbursements to the extent not specifically included above in subparagraph a of this paragraph, (2) incremental increase in compensation w hich is not included by the employer in a member ’s regular base pay for salary increase purposes b ut is paid by the employer to the member for group health benefits not otherwis e included above in division (1) of subparagraph a of thi s paragraph, (3) insurance benefits, including any reimbursements thereof, or insurance proc eeds of any type not otherwise included above in division (1) of subparagraph a of this paragraph, (4) bonuses, including signing bonuses, lump -sum payments or stipends made to the membe r not RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 14 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 otherwise included above in division (1) of subparagraph a of th is paragraph, (5) overtime compensation, (6) payments whether prior to or upon termination of employment for accumulated unused vacation or unused annual leave, acc umulated unused sick leave, or accumulated unused paid time off or other unused leave, (7) payments made in error to a m ember, (8) payments made by the participating muni cipality for services rendere d by the member, which services are not part of the membe r’s job duties and responsibilities of his or her job position with the participating munici pality, (9) severance pay, (10) unemployment payments, and (11) uniform and equipment allowances; and 22. “Actuarial equivalent ” means equality in value of the aggregate amounts expecte d to be received based on interest rate and mortality assumptions set by the State Board, in a man ner that precludes employer discretion, and based upon recommendations from independent professional advisors, and which shall be publis hed annually in the actuarial report. RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 15 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 SECTION 2. AMENDATORY 11 O.S. 2011, Section 50 -115, as last amended by Section 3, Chapter 120, O.S.L. 202 0 (11 O.S. Supp. 2020, Section 50-115), is amended to read as follows: Section 50-115. A. The State Board is authorized t o pay a disability benefit to a member of the System or a pension to the beneficiaries of such member eligible as hereinafter provided, not exceeding the accrued retirement benefit of the member, except as otherwise provided in this article. Such disabili ty benefit shall be payable immediately upon determi nation of eligibility. Any preexisting condition identified at the time of any initial or subsequent membership shall be used to offset the percentage of impairment to the whole person in determining any disability benefit. Once the initial disability be nefit has been awarded by the Board on the basis of the percentage of impairment to the whole person, the member shall have no further recourse to increase the awarded percentage of impairment. B. In order for any member to be eligible for any disability benefit, or the member ’s beneficiaries to be eligible for a pension, the member must have complied with any agreement as to contributions by the member and other members to any funds of the System where said the agreement has been made as provided by this arti cle; and the State Board must find: RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 16 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 1. That the member incurred a permanent total disability or a permanent partial disability or died while in, and in consequence of, the performance of duty as an o fficer; or 2. That such member has served ten (10) year s and incurred a permanent total disability or a permanent partial disability or has died from any cause. C. In the event of the death of any member who has been awarded a disability benefit or is el igible therefor as provided in this article, the member’s beneficiary shall be paid the benefit. D. 1. As of the date of determination by the State Board that a member is physically or mentally disabled and that the disabili ty is permanent and partial or permanent and total as was incurred while in, and in consequence of, the perf ormance or duty as an officer has a permanent in-line disability, the member shall be awarded a normal disability benefit on the basis of the percen tage of impairment to the whol e person, as defined by the most current standards of the impairment as outlined in the “American Medical Association’s Guides to the Evaluation of Permanent Impairment ”, as provided in the following table or as prescribed by paragraph 2 of this subsection with respect to injuries sustained as a result of a violent act: 1% to 49% impairment to whole person = 50% of the normal disability benefit RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 17 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 50% to 74% impairment to whole person = 75% of the normal disability benefit 75% to 100% impairment to whole per son = 100% of the normal disability benefit, as defined in Section 50 -101 of this title. 2. If an injury to a member results from a violent ac t as defined by this paragraph while in the performance of his or her duties as a police officer, the State Board shall make a determination that the member has sustain ed a one-hundred-percent disability and shall make the benefit award in accordance with that standard. As used in this paragraph, “violent act” means a violent attack upon the member by means of a dan gerous weapon, including, but not limited to, a firearm , knife, automobile, explosiv e device or other dangerous weapon. E. If the participatin g municipality denies a disabled member the option of continuing employment instead of retiring on a disability pension, then the burden of proof rests with the participating municipality to show c ause to the State Board that there is no position as a swor n officer within the police department of that municipality which the member can fill. F. Upon determination by the State Board that a member is physically or mentally disabled and that the disabi lity is permanent and total and that the member has complet ed ten (10) years of credited service and is disabled by any cause, the member shall receive a disability benefit on the basis of the member’s accrued RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 18 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 retirement benefit. A permanent and total imp airment equates to one hundred percent (100%) of accrued re tirement benefit. G. Upon determination by the State Board that a member is physically or mentally disabled and that the disability is permanent and partial and that t he member has completed ten ( 10) years of credited service as a member and is disabled f rom any cause, the member shall be awarded a disability benefit on the basis of the member’s years of credited se rvice as a member and the percentage of impairment to the whole person, as defined b y the most current standards of the impairment as outlined in the “American Medical Association’s Guides to the Evaluation of Permanent Impairment ”, on the basis of the fol lowing table: 1% to 24% impaired = 25% of accrued retir ement benefit 25% to 49% impaired = 50% of accrued retirement benefit 50% to 74% impaired = 75% of accrued retirement benefit 75% to 99% impaired = 90% 100% of accrued retirement benefit. H. Before making a finding as to the disability of a member, the State Board shall require that, if the member is able, the member shall make a certificate as t o the disability which shall be subscribed and sworn to by the member. It shall also require a certificate as to such disability to be made by some physician licensed to practice in this stat e as selected by the State Board. The State Board may require o ther evidence of disability before making the disability benefit. The salary of any such member shall RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 19 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 continue while the member is so necessarily confined to such hospital bed or home and nec essarily requires medical care or professional nursing on accoun t of such sickness or disability for a period of not more than six (6) months, after which said the period the other provisions of this article may apply. The State B oard, in making disability benefits, shall act upon the written request of the member or without such request, if it deem it for the good of the police department. Any disability benefits shall ce ase when the member receiving same shall be restored to act ive service at a salary not less than three-fourths (3/4) of the member ’s average monthly salary. I. Any member of a police department of any municipality who, in the line of duty, has been expose d to hazardous substances, including but not limited to che micals used in the manufa cture of a controlled dangerous substance or chemicals resulting fro m the manufacture of a controlled dangerous substance, or to blood -borne pathogens and who is later disa bled from a condition that was the result of such exposure and that was not revealed by the physical examination passed by the member upon entry into th e System shall be presumed to have incurred such disability while performing the officer’s duties unless the contrary is shown by competent evidence. The presumption created by this subse ction shall have no application whatever to any workers ’ compensation claim or claims, and it shall not be applied or be relied upon in any way in workers ’ compensation RBS No. 408 SENATE FLOOR VERSION - SB743 SFLR Page 20 (Bold face denotes Committee Amendments) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 proceedings. All compensation or benefits due to any member pursuant to the presumptio n created by this subsection shall be paid solely by the system. J. If the requirements of Section 50 -114.4 of this title are satisfied, a member who, by reason of disabil ity, is separated from service as a public safety officer w ith the member’s participating municipality, may elect to have payment made directly to the provider for qualified health insurance premiums by deduction from his or her monthly disability benefit, after December 31, 2006, in accordance with Section 402(l) of the Internal Revenue Code of 1986, as amended. COMMITTEE REPORT BY: COMMITTEE ON RETIREMENT AND INSURANCE February 18, 2021 - DO PASS