First Regular Session Sixty-ninth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 13-0190.01 Gregg Fraser x4325 HOUSE BILL 13-1040 HOUSE SPONSORSHIP Priola, SENATE SPONSORSHIP (None), House Committees Senate Committees Finance Appropriations A BILL FOR AN ACT Concerning an increase in the number of years used to calculate the highest average salary of a member of the public employees' retirement association for the purpose of determining the amount of the member's retirement benefit. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) Current law averages the 3 highest annual salaries of a member of the public employees' retirement association (PERA) when calculating that member's retirement benefit amount. The bill increases the number of highest annual salaries used from 3 to 7 for anyone who was not a member, inactive member, or retiree of PERA as of December 31, 2013. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. In Colorado Revised Statutes, 24-51-101, amend (25) (a) (I) and (25) (a) (II); and add (25) (b) (VI) as follows: 24-51-101. Definitions. As used in this article, unless the context otherwise requires and except as otherwise defined in part 17 of this article: (25) (a) "Highest average salary" means: (I) (A) For a member who was a member, inactive member, or retiree on December 31, 2013, one-twelfth of the average of the highest annual salaries upon which contributions were paid, whether earned from one or more employers, that are associated with three periods of twelve consecutive months of service credit; or (B) For a member who was not a member, inactive member, or retiree on December 31, 2013, one-twelfth of the average of the highest annual salaries upon which contributions were paid, whether earned from one or more employers, that are associated with seven periods of twelve consecutive months of service credit. (II) For a member who does not have the requisite three years of service credit, one-twelfth of the average of the total annual salaries earned during membership upon which contributions were paid; (b) (VI) Notwithstanding any other provision of this paragraph (b), in calculating highest average salary for a member or inactive member with a highest average salary defined pursuant to sub-subparagraph (B) of subparagraph (I) of paragraph (a) of this subsection (25), the association shall determine the highest annual salaries associated with eight periods of twelve consecutive months of service credit. The lowest of such annual salaries is the base salary. The first annual salary to be used in the highest average salary calculation is the actual salary reported up to one hundred eight percent of the base salary. The second annual salary to be used in the highest average salary calculation is the actual salary reported up to one hundred eight percent of the first annual salary used in the highest average salary calculation. The third annual salary to be used in the highest average salary calculation is the actual salary reported up to one hundred eight percent of the second annual salary used in the highest average salary calculation. The fourth annual salary to be used in the highest average salary calculation is the actual salary reported up to one hundred eight percent of the third annual salary used in the highest average salary calculation. The fifth annual salary to be used in the highest average salary calculation is the actual salary reported up to one hundred eight percent of the fourth annual salary used in the highest average salary calculation. The sixth annual salary to be used in the highest average salary calculation is the actual salary reported up to one hundred eight percent of the fifth annual salary used in the highest average salary calculation. The seventh annual salary to be used in the highest average salary calculation is the actual salary reported up to one hundred eight percent of the sixth annual salary used in the highest average salary calculation. This subparagraph (VI) does not apply to members of the judicial division, except for DPS members of the judicial division who have exercised portability pursuant to section 24-51-1747 and selected the DPS benefit structure. This subparagraph (VI) applies to DPS members in accordance with section 24-51-1702 (17). SECTION 2. Act subject to petition - effective date. This act takes effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 7, 2013, if adjournment sine die is on May 8, 2013); except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part will not take effect unless approved by the people at the general election to be held in November 2014 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.