What’s Going on in the States?

This new feature in the NTSA Advisor provides a look at what’s going on in the states and the most recent developments in their activity to provide and enhance retirement plan coverage. 

Expanded Coverage Options for Certain FL Teachers Proposed

 

Legislation is before the Florida Senate and House of Representatives that would expand retirement plan options for certain Florida teachers. 

Florida public school teachers are a part of the Florida Retirement System, which covers all state employees. By default, teachers are enrolled in the Florida Retirement System Investment Plan — a defined contribution plan — but new teachers have a choice about which retirement plan they enroll in. Florida teachers also may participate in the Deferred Retirement Option Program (DROP), which provides an alternative way for retirement benefits to be paid for a specified and limited period if eligible members of the Florida Retirement System (FRS) Pension Plan. 

Sen. Doug Broxson (R-Pensacola) has introduced SB 1670, a bill that effective July 1, 2023 would expand the amount of time in which the following DROP members can participate in the program: 

• teachers employed by the Florida School for the Deaf and the Blind and authorized by the Board of Trustees of the Florida School for the Deaf and the Blind; 
• instructional personnel employed by a developmental research school and authorized by the school’s director (principal if the school has no director); and
• K-12 administrative personnel.

Administrative personnel who would be authorized to extend DROP participation beyond the initial 60-month period would have to have a termination date that is the last day of the last calendar month of the school year within the DROP extension granted by the employer. If the member’s DROP participation has already been extended for the maximum period and the extension period concludes before the end of the school year, the member’s DROP participation could be extended through the last day of the last calendar month of that school year.

In the House of Representatives, Rep. Jennifer Harris (D-Orlando) introduced HB 905, the House version. 

The Big Picture. The legislation sets the matter in a larger context, saying: 

“The legislature finds that a proper and legitimate state purpose is served when employees and retirees of the state and its political subdivisions, and the dependents, survivors, and beneficiaries of such employees and retirees, are extended the basic protections afforded by governmental retirement systems. These persons must be provided benefits that are fair and adequate and that are managed, administered, and funded in an actuarially sound manner. Therefore, the Legislature determines and declares that this act fulfills an important state interest.”

Status. SB 1670 was referred to two Senate committees: Government Oversight and Accountability, and Appropriations. HB 905 was referred to the State Affairs Committee, which sent it to its Subcommittee on Constitutional Rights, Rule of Law and Government Operations, as well the Appropriations Committee, which sent the bill to its Subcommittee on State Administration and Technology Appropriations.

Penalties for Maine Retirement Savings Program Enrollment Failures Could Change 

 

The penalties imposed on employers for failure to enroll covered employees in Maine Retirement Savings Program would be altered under a bill now before the state Senate.

On June 24, 2021, Gov. Janet Mills (D) signed into law a measure creating the Maine Retirement Savings Program. The law requires each covered employer to allow its covered employees to decide whether or not to contribute to a payroll deduction Roth IRA by automatically enrolling them but with the opportunity to opt out. Covered employees who opt out are automatically reenrolled at regular intervals but have the opportunity to opt out again. 

The law set the following deadlines: 

• April 1, 2023: a covered employer with 25 or more covered employees must offer the program to them; 
• Oct. 1, 2023: a covered employer with 15 to 24 covered employees must offer the program to them; and
• April 1, 2024: a covered employer with 5 to 14 covered employees must offer the program to them.

SP 451, introduced in the Maine Senate on March 9, 2023, could extend the deadlines by which penalties for not enrolling covered employees without “reasonable cause” would be imposed. 
 

Deadline, Current Law	Proposed Deadline
Before April 1, 2024	From July 1, 2025 to June 30, 2026
From April 1, 2024 to March 31, 2025	From July 1, 2026 to June 30, 2027
From April 1, 2025 to Sept. 30, 2026	None; tier would be eliminated
On or after Oct. 1, 2026	On or after July 1, 2027

 

But while the bill would extend the deadlines, it also would increase some penalties that would be imposed. 
  

Deadline and Max Penalty Per Covered Employee, Current Law	Proposed Deadline and Max Penalty Per Covered Employee
Before April 1, 2024, $10	From July 1, 2025 to June 30, 2026, $20
From April 1, 2024 to March 31, 2025, $20	From July 1, 2026 to June 30, 2027, $50
From April 1, 2025 to September 30, 2026, $50	None; tier would be eliminated
On or after Oct. 1, 2026, $100	On or after July 1, 2027, $100

Status. SP 451 was referred to the Senate Committee on Health Coverage, Insurance and Financial Services on Mar 16, 2023.

Social Security Coverage for Public School Teachers

 

A bill is before the Georgia Senate that would extend Social Security coverage to teachers in public school systems in the Peach State. 

Sen. Larry Walker (R-Perry) introduced SB 206 on Feb. 16. The legislation would amend Georgia law regarding Social Security coverage for employees of the state and its political subdivisions to require certain Social Security coverage for all employees of a political subdivision who are members of the Public School Employees Retirement System.

Specifically the bill provides that each political subdivision of the state would be authorized to submit for approval by the state agency a plan for extending the benefits of Title II of the Social Security Act to employees of that political subdivision. The relevant state agency would be required to approve such a plan and any amendments concerning it if it finds that the plan conforms with that agency’s regulations.

However, in order to be approved, such a plan would have to:  

• conform with the requirements of the Social Security Act;  
• provide the plan would cover all services an employee performs for the political subdivision, except that it may exclude services performed by individuals covered by Section 218(c)(3)(C) of the Social Security Act;  
• specify the sources from which the funds necessary to make the payments are expected to be derived and contains reasonable assurance that such sources will be adequate;
• provide for methods of administration of the plan by the political subdivision that the state agency finds necessary for its proper and efficient administration; and
• provide that political subdivisions will make reports to the relevant state agency as required.  

The bill also would authorize state agencies to terminate a plan to extend Social Security to employees of state political divisions if there has been a failure to comply with any plan provision.

The measure would require that by July 1, 2023, state agencies identify each Georgia political subdivision that does not extend Social Security coverage to their employees who are members of the Public School Employees Retirement System. Further, it would require state agencies to report to the chairpersons of the House Retirement Committee and the Senate Committee on Retirement that contains the names of all such political subdivisions and also provide the total number of employees per political subdivision who do not have such coverage. 

Status. SB 206 has been referred to the Senate Committee on Retirement.