Changes to Existing Law

The Board of Trustees board may provide under its rules for a modified monthly8 benefit to a member or beneficiary in lieu of the monthly benefit payable under any provision9 of this chapter if the benefit is not greater than the actuarial equivalent of the benefit due the10 member or beneficiary under this chapter. Any such request must be made in writing on the form prescribed by and filed with the board before the date of the first payment of the unmodified benefit. An election of a modified form of payment is effective only after the date of acceptance by the board and may not be modified or revoked after that date without the consent of the board.

In the event of the death of a member who is receiving benefits under this chapter, or on whose account a benefit is payable or children are no longer qualified, the benefit payable to or on account of that person shall be terminated on the last day of the month in which an event occurs which effects a termination. Monthly benefits paid to a member cease on the last day of the month in which the member died. Monthly benefits paid to a surviving spouse cease on the last day of the month in which the surviving spouse died. Monthly benefits paid to a child cease on the last day of the month in which the child died or the last day of the month in which the child became ineligible, whichever occurs first.

To determine and verify the adequacy of the member and employer contributions20 to the system, an actuarial valuation of the system shall be made annually by an approved21 actuary. The actuarial valuation shall include: (1)A demonstration of the relationship of the current member and employer24 - 21 -HB 1010 contributions, expressed as a percentage of payroll, to the minimum actuarial1 requirement to support benefits; and2 (2)The current year's actuarial value funded ratio and fair value funded ratio as well as3 the ratios from the prior actuarial valuations performed after July 1, 1974.

If, after March 31, 2010, a retired member reenters covered employment at some19 time after the three consecutive calendar months that start with the member's effective date of20 retirement, the member's retirement benefits and continued membership shall be administered21 pursuant to this section. If the retired member's benefits have not been reduced pursuant to § 3-12-106, the member's23 monthly retirement benefit shall be reduced by fifteen percent and the annual increase shall be24 - 32 -HB 1010 eliminated throughout the period that the member reenters covered employment in accord with § 3-12-88. The reduction and elimination shall cease if the member again terminates covered2 employment. However, the reduction and elimination do not apply if the member retired as a3 Class B member other than a justice, judge, or magistrate judge and subsequently reenters4 covered employment as a Class A member. If the retired member's benefits have been reduced pursuant to § 3-12-106, the member's6 benefits shall be suspended during the period that the member reenters covered employment and7 the annual increase shall be eliminated during the period that the member reenters covered8 employment pursuant to § 3-12-111.1. The suspension and elimination shall cease if the9 member again terminates covered employment. Whether the member's retirement benefits are unreduced or reduced, contributions required11 of the member pursuant to § 3-12-71 shall be deposited by the member's participating unit with12 the system for the benefit of the member to be transferred to an account within the deferred13 compensation program established pursuant to chapter 3-13. The contributions shall be14 governed by § 457 of the Internal Revenue Code. However, the contributions required of the15 member's employer unit pursuant to § 3-12-71 shall be deposited into the fund created by this16 chapter, but with no association or credit to the member. The member may not earn any17 additional benefits associated with the period that the member reenters covered employment.

A contributing member who becomes disabled and who has acquired at least three20 years of contributory service or noncontributory service since the member's most recent entry21 into active status and before becoming disabled, or was disabled by accidental means while22 performing usual duties for an employer, is eligible for disability benefits if the disability is23 expected to be of long, continued, and indefinite duration of at least one year and the member24 - 27 -HB 1010 is disabled on the date the member's contributory service ends. For purposes of this section, a1 transfer within a participating unit, or a change in employment from one participating unit to2 another participating unit if there is no break in contributory service, does not constitute a new3 entry into active status. The provisions of this section apply to any member whose application for disability benefits is received by the system after June 30, 2015.

No member may receive credited service for the period during which the member7 receives disability benefits pursuant to § 3-12-207.

If a member receiving disability benefits pursuant to § 3-12-207 becomes10 employed by a participating unit, the member and employer shall make active contributions11 pursuant to § 3-12-71 during the period of the employment. The contributions required of the12 member pursuant to § 3-12-71 shall be deposited by the member's employer with the system for13 the benefit of the member to be transferred to an account within the deferred compensation14 program established pursuant to chapter 3-13. The contributions shall be governed by § 457 of15 the Internal Revenue Code. Notwithstanding the provisions of § 3-12-71, the contributions16 required of the member's employer pursuant to § 3-12-71 shall be deposited into the member17 trust fund created by this chapter 3-12, but without any association with or credit to the member.

A member's disability benefits pursuant to § 3-12-207 terminate if the member20 is no longer disabled, as certified by a health care provider. Upon receipt of certification the21 executive director shall determine whether the member meets the qualifications for disability22 benefits. In making this determination the executive director shall follow the same procedure23 used in making the initial determination of disability provided in § 3-12-205. A member's24 - 28 -HB 1010 disability benefits shall be suspended and subject to termination if the member refuses to1 undergo an examination or assessment requested by the disability advisory committee or the2 executive director. If the executive director finds that the member no longer meets the3 qualifications for disability benefits, the executive director shall notify the member of this4 finding by certified mail and the payment of disability benefits shall terminate thirty days after5 receipt of the notice. The finding by the executive director is subject to appeal and review as a6 contested case.

If a member's disability benefits pursuant to § 3-12-207 have terminated and the9 member returns to covered employment, the member and employer shall make contributions10 pursuant to § 3-12-71.

Upon retirement, a member who received disability benefits pursuant to § 3-12- 207 and whose benefits were terminated and who returned to covered employment shall receive14 a retirement benefit based on the member's credited service before receiving disability benefits15 and after receiving disability benefits. The final average compensation used in the calculation16 of the retirement benefit is the greater of: (1)The member's final average compensation at the date of retirement; or18 (2)The member's final average compensation at the date of disability, increased by the19 COLA from the date of the termination of disability benefits to the date of retirement.

Upon retirement, a member who received disability benefits pursuant to § 3-12- 207 and whose benefits were terminated and who did not return to covered employment shall23 receive a retirement benefit based on the member's credited service before receiving disability24 - 29 -HB 1010 benefits. The final average compensation used in the calculation of the retirement benefit shall1 be the final average compensation at the date of disability, increased by the COLA from the date2 of the termination of disability benefits to the date of retirement.

Upon the death of a member receiving disability benefits pursuant to § 3-12-207, who dies prior to normal retirement age, a family benefit shall be paid on behalf of any eligible child of the member. The monthly amount of the family benefit is the amount of the monthly7 disability benefits the member received before death. The monthly family benefit shall be8 equally apportioned among any eligible children of the member and shall be paid on behalf of9 any child to the conservator or custodian of the child, as applicable. However, if the child is10 eighteen years of age the benefit is payable directly to the child. As a child becomes ineligible, the family benefit shall be reallocated among any remaining eligible children of the deceased12 member. The family benefit terminates if there are no eligible children of the deceased member.

If no family benefit is being paid pursuant to § 3-12-214, a surviving spouse of15 a foundation or generational member who received disability benefits pursuant to § 3-12-207 shall, upon attaining the age of sixty-five or sixty-seven, respectively, receive a monthly benefit, payable for the life of the surviving spouse, equal to one of the following calculations, whichever is applicable: (1)If there was a family benefit paid, sixty percent of the family benefit paid at the time20 the family benefit ended, increased by the COLA from the date the last family benefit21 was paid; or22 (2)If there was no family benefit paid, sixty percent of the deceased member's disability23 benefit paid at the time of the member's death, increased by the COLA from the date24 - 30 -HB 1010 of the member's death.

If a member dies after normal retirement age while receiving disability benefits3 pursuant to § 3-12-207, and no other benefits are being paid on behalf of the member, the4 member's surviving spouse shall receive a surviving spouse benefit, payable in monthly5 installments, equal to sixty percent of the monthly disability benefit that the member received6 prior to before death.

Terms as used in this chapter mean: (1)"Actuarial accrued liability," the present value of all benefits less the present value17 of future normal cost contributions; (2)Repealed by SL 2018, ch 33, § 1. (3)"Actuarial experience analysis," a periodic report which that reviews basic experience20 data and furnishes actuarial analysis which that substantiates the assumptions adopted21 for the purpose of making an actuarial valuation of the system; (4)(3)"Actuarial valuation," a projection of the present value of all benefits and the current23 funded status of the system, based upon stated assumptions as to rates of interest,24 - 3 -HB 1010 mortality, disability, salary progressions, withdrawal, and retirement as established1 by a periodic actuarial experience analysis which that takes into account census data2 of all active members, vested terminated members, and retired members and their3 beneficiaries under the system; (4)"Actuarial value funded ratio," the actuarial value of assets divided by the actuarial accrued liability; (5)"Actuarial value of assets," equal to the fair value of assets; (5A)(6)"Actuarially determined contribution rate," the fixed, statutory contribution8 rate, no less than the normal cost rate with expenses assuming the minimum9 COLA, and no greater than the normal cost rate with expenses assuming the10 maximum COLA; (6)(7)"Air rescue firefighters," employees of the Department of the Military who are12 stationed at Joe Foss Field, Sioux Falls, and who are directly involved in firefighting13 activities on a daily basis; (7)(8)"Approved actuary," any actuary who is a member of the American Academy of15 Actuaries or an Associate or a Fellow of the Society of Actuaries who meets the16 qualification standards of the American Academy of Actuaries to issue actuarial17 opinions regarding the system or any firm retaining such an actuary on its staff and18 who is appointed by the board to perform actuarial services; (8)(9)"Assumed rate of return," the actuarial assumption adopted by the board pursuant to20 § 3-12-121 as the annual assumed percentage return on trust fund assets, compounded; (9)(10)"Beneficiary," the person designated by a member of the system to receive any23 payments after the death of such member;24 - 4 -HB 1010 (10)(11)"Benefits," the amounts paid to a member, spouse, spouse and family, child, or beneficiary as a result of the provisions of this chapter; (11)(12)"Board," the Board of Trustees of the South Dakota Retirement System; (12)(13)"Calendar quarter," a period of three calendar months ending March thirty- first, June thirtieth, September thirtieth, or December thirty-first of any year; (13)(14)"Campus security officers," employees of the Board of Regents whose6 positions are subject to the minimal educational training standards established7 by the law enforcement standards commission pursuant to chapter 23-3 and8 who satisfactorily complete the training required by chapter 23-3 within one9 year of employment and whose primary duty as sworn law enforcement10 officers is to preserve the safety of the students, faculty, staff, visitors and the11 property of the University of South Dakota and South Dakota State University. The employer shall file with the system evidence of the appointment as a13 sworn law enforcement officer at the time of employment and shall file14 evidence of satisfactory completion of the training program pursuant to15 chapter 23-3 within one year of employment; (14)"Child," depending on the circumstances, as follows: (a)For purposes of benefits pursuant to this chapter, an unmarried dependent child of the member, who has not passed the child's nineteenth birthday and each unmarried dependent child, who is totally and permanently disabled, either physically or mentally, regardless of the child's age, if the disability occurred before age nineteen. It includes a stepchild or a foster child who depends on the member for support and lives in the household of the member in a regular parent-child relationship. It also includes any child of the member24 - 5 -HB 1010 conceived during the member's lifetime and born after the member's death; or (b)For purposes of beneficiary-type payments pursuant to this chapter, a person entitled to take as a child via intestate succession pursuant to the provisions of Title 29A; (15)"Certified school employee," any employee of a participating unit who is required to have a certificate as defined in subdivision 13-42-1(3); (16)"Class A credited service," service credited as a Class A member of the system; (16)(17)"Class A member," any member other than a Class B member or a Class C8 member and is either a foundation member or a generational member; (17)(18)"Class B credited service," service credited as a Class B member of the10 system; (18)(19)"Class B member," a member who is a justice, judge, state law enforcement12 officer, magistrate judge, police officer, firefighter, county sheriff, deputy13 county sheriff, correctional security staff, parole agent, air rescue firefighter, campus security officer, court services officer, juvenile corrections agent, conservation officer, or park ranger and is either a foundation member or a16 generational member; (19)(20)"Class C credited service," service credited as a Class C member of the18 system; (20)(21)"Class C member," any member of the cement plant retirement plan including20 any retiree or any vested member; (21)(22)"Classified employees employee," employees an employee of a public school22 districts who are district who is not required by law to be a certified as teachers, employees of the colleges and universities school employee, an24 - 6 -HB 1010 employee of any college or university under the control of the board of regents who are Board of Regents who is not a faculty member or administrators and come an administrator and comes within the provisions of chapter 3-6D, employees of public corporations, employees of an employee of a public corporation, an employee of a chartered governmental units unit, and all any other participating employees employee not elsewhere provided for in this6 chapter; (22)(23)"Comparable level position," a member's position of employment that is8 generally equivalent to the member's prior position of employment in terms9 of required education, required experience, required training, required work10 history, geographic location, and compensation and benefits; (23)(24)"Conservation officers," employees of the Department of Game, Fish and12 Parks and the Division of Wildlife or Division of Custer State Park who are13 employed pursuant to § 41-2-11 and whose positions are subject to the14 requirements as to education and training provided in chapter 23-3; (24)(25)"Consumer price index," the consumer price index for urban wage earners and16 clerical workers calculated by the United States Bureau of Labor Statistics; (25)(26)"Contributory service," service to a participating unit during which18 contributions were made to a South Dakota Retirement System retirement system, which may not include years of credited service as granted in § 3-12- 84 or 3-12-84.2; (25A)(27)"Correctional security staff," the warden, deputy warden, and any other22 correctional staff holding a security position as verified by the Department of23 Corrections and approved by the Bureau of Human Resources and the Bureau24 - 7 -HB 1010 of Finance and Management, and determined by the board as Class B1 members; (26)(28)"Court services officers," persons appointed pursuant to § 26-7A-8; (27)(29)"Covered employment," a member's employment as a permanent full-time4 employee by a participating unit; (28)(30)"Deputy county sheriff," an employee of a county that is a participating unit, appointed by the board of county commissioners pursuant to §§ 7-12-9 and 7- 12-10, who is a permanent full-time employee and whose position is subject8 to the minimum educational and training standards established by the law9 enforcement standards commission pursuant to chapter 23-3. The term does10 not include jailers or clerks appointed pursuant to §§ 7-12-9 and 7-12-1011 unless the participating unit has requested that the jailer be considered as a12 deputy county sheriff and the Board of Trustees board has approved the13 request; (29)"Disability" or "disabled," any medically determinable physical or mental impairment that prevents a member from performing the member's usual duties for the member's employer, even with accommodations, or performing the duties of a comparable level position for the member's employer. The term excludes any condition resulting from willful, self-inflicted injury; (30)(31)"Effective date of retirement," the first day of the month in which retirement20 benefits are payable; (31)(32)"Eligible retirement plan," the term eligible retirement plan includes those22 plans described in section 402(c)(8)(B) of the Internal Revenue Code; (32)(33)"Eligible rollover distribution," any distribution to a member of accumulated24 - 8 -HB 1010 contributions pursuant to § 3-12-76. The term does not include any portion of1 a distribution that represents contributions made to the system on an after tax2 basis nor distributions paid as a result of the member reaching the required3 beginning date; (33)(34)"Employer," the State of South Dakota and any department, bureau, board, or5 commission of the State of South Dakota, or any of its governmental or6 political subdivisions or any public corporation of the State of South Dakota7 which that elects to become a participating unit; (34)(35)"Employer contributions," amounts contributed by the employer of a9 contributing member, excluding member contributions made by an employer10 after June 30, 1984, pursuant to § 3-12-71; (35)(36)"Equivalent public service," any public service other than as a justice, a judge, or a magistrate judge and comparable to Class B service as defined by this13 section, if the service is in the employ of a public entity that is not a14 participating unit; (36)(37)"Fair value of assets," the total assets of the system at fair market value for16 securities traded on exchanges; for securities not traded on exchanges, a value17 based on similar securities; and for alternative investments, reported net asset18 value; (37)(38)"Fair value funded ratio," the fair value of assets divided by the actuarial20 accrued liability; (38)(39)"Fiduciary," any person who exercises any discretionary authority or control22 over the management of the system or the management or disposition of its23 assets, renders investment advice for a fee or other compensation, direct or24 - 9 -HB 1010 indirect, or has any authority or responsibility to do so, or has any1 discretionary authority or responsibility in the administration of the system; (39)(40)"Foundation member," any member of the system whose contributory service3 began before July 1, 2017; (40)(41)"Foundation retiree," any foundation member who has retired with a benefit5 payable from the system; (41)(42)"Firefighter," any full-time firefighter who works at least twenty hours a week7 and at least six months a year. The term does not include any volunteer8 firefighter; (42)"Full-time student," a person who is in full-time attendance as a student at an educational institution, as determined by the board in light of the standards and practices of the institution involved, except that no individual may be considered a full-time student, if the student is paid by the student's employer while attending an educational institution at the request of, or pursuant to a requirement of, the employer; (43)"Fund," public employees' retirement fund or funds established for the purposes of16 administration of this chapter; (44)"Funded ratio," the actuarial value of assets divided by the actuarial accrued liability; (45)"General employees employee," any full-time municipal employees who are not firefighters or police officers employee who is not a firefighter or a police officer; (46)(45)"Generational member," any member of the system whose contributory service21 began after June 30, 2017; (47)(46)"Generational retiree," any generational member who has retired with a benefit23 payable from the system;24 - 10 -HB 1010 (48)(47)"Health care provider," a physician or other health care practitioner licensed, registered, certified, or otherwise authorized by law to provide specified health2 services; (49)"Highest annual compensation," a member's compensation used to calculate benefits under §§ 3-12-95, 3-12-99 and 3-12-105 before July 1, 2004, which was the highest annual compensation earned by the member during any one of the last three years of contributory service and which was not more than one hundred fifteen percent of the member's final compensation calculated as of the date of the member's death or disability; (50)(48)"Internal Revenue Code," or "code," the Internal Revenue Code as in effect as10 of January 1, 2018 2019; (50A)(49)"Juvenile corrections agent," a designee of the secretary of corrections charged12 with the care, custody, and control of juveniles committed to the Department13 of Corrections until the age of twenty-one; (51)(50)"Law enforcement officer," an any agent of the state division of criminal15 investigation, an officer of the South Dakota Highway Patrol, a police officer, county sheriff, deputy county sheriff, or a firefighter; (52)(51)"Member," any person who is participating in and contributing or has made18 contributions to the system and is either a foundation member or generational19 member. A person's membership ceases when the person withdraws his or her20 accumulated contributions after termination of employment; (53)(52)"Member contributions," amounts contributed by members, including member22 contributions made by an employer after June 30, 1984, pursuant to § 3-12-71; (54)(53)"Military service," a period of active duty with the United States Army, the24 - 11 -HB 1010 United States Navy, the United States Air Force, the United States Marine1 Corps, or the United States Coast Guard, from which duty the member2 received an honorable discharge or an honorable release; (55)(54)"Municipality," any incorporated municipal government under chapter 9-3 or4 any chartered governmental unit under the provisions of Article IX of the5 Constitution of the State of South Dakota; (56)(55)"Noncontributory service," for foundation members, service delineated in7 subdivisions 3-12-89.3 (2), (5), (7), and (8), and for generational members, service pursuant to § 3-12-86; (57)(56)"Normal cost," the expected long-term cost of the system benefits and10 expenses expressed as a percentage of payroll; (58)(57)"Normal retirement," the termination of employment and application for12 benefits by a member with three or more years of contributory service or13 noncontributory service on or after the member's normal retirement age; (59)(58)"Other public benefits," eighty percent of the primary insurance amount or15 primary social security benefits that would be provided under federal social16 security; (60)(59)"Other public service," service for the government of the United States, including military service; service for the government of any state or political19 subdivision thereof; service for any agency or instrumentality of any of the20 foregoing; or service as an employee of an association of government entities21 described in this subdivision; (61)(60)"Park rangers," employees of the Department of Game, Fish and Parks within23 the Division of Parks and Recreation and whose positions are subject to the24 - 12 -HB 1010 requirements as to education and training provided in chapter 23-3 and whose1 primary duty is law enforcement in the state park system; (62)(61)"Parole agent," an employee of the Department of Corrections employed3 pursuant to § 24-15-14 who is actually involved in direct supervision of4 parolees on a daily basis; (63)(62)"Participating unit," the State of South Dakota and any department, bureau, board, or commission of the State of South Dakota, and any of its political7 subdivisions or any public corporation of the State of South Dakota which that has employees who are members of the retirement system created in this9 chapter; (64)Repealed by SL 2018, ch 32, § 4. (65)(63)"Permanent full-time employee," any employee who has been placed in a12 permanent classification who is customarily employed by a participating unit13 for twenty hours or more a week and at least six months a year. The14 participating unit shall decide if an employee is a permanent full-time15 employee and that decision is conclusive; (66)(64)"Plan year," a period extending from July first of one calendar year through17 June thirtieth of the following calendar year; (67)(65)"Police officer," any employee in the police department of any participating19 municipality holding the rank of patrol officer, including probationary patrol20 officer, or higher rank and whose position is subject to the minimum21 educational and training standards established by the law enforcement officers22 standards commission pursuant to chapter 23-3. The term does not include23 civilian employees of a police department nor any person employed by a24 - 13 -HB 1010 municipality whose services as a police officer require less than twenty hours1 a week and six months a year. If a municipality which is a participating unit2 operates a city jail, the participating unit may request that any jailer appointed3 pursuant to § 9-29-25 be considered a police officer, subject to the approval4 of the board; (68)(66)"Political subdivision" includes any municipality, school district, county, chartered governmental unit, public corporation or entity, and special district7 created for any governmental function; (69)(67)"Present value of all benefits," the present value of all benefits expected to be9 paid to all retired, terminated, and active members and beneficiaries, based on10 past and future credited service and future compensation increases.; (70)(68)"Present value of benefits earned to date," the present value of the benefits12 currently being paid to retired members and their beneficiaries and the present13 value of benefits payable at retirement to active members, based on their14 earnings and credited service to date of the actuarial valuation; (71)(69)"Projected compensation," a deceased or disabled member's final average16 compensation multiplied by the COLA commencing each July first for each17 complete twelve-month period elapsed between the date of the member's death18 or disability, whichever occurred earlier, and the date the member would attain19 normal retirement age; (72)(70)"Projected service," the credited service plus the service which that the21 member would have been credited with at normal retirement age had the22 member continued in the system and received credit at the same rate the23 member was credited during the year covered by the compensation that was24 - 14 -HB 1010 used in the calculation of the disability or family benefit; (73)(71)"Qualified military service," service in the uniformed services as defined in2 § 414(u)(5) of the Internal Revenue Code; (74)(72)"Required beginning date," the later of April first of the calendar year4 following the calendar year in which the member attains age seventy and one- half or April first of the calendar year following the calendar year in which the6 member retires; (75)(73)"Retiree," any foundation or generational member who retires with a lifetime8 benefit payable from the system; (76)(74)"Retirement," the severance of a member from the employ of a participating10 unit with a retirement benefit payable from the system; (77)(75)"Retirement benefit," the monthly amount payable upon the retirement of a12 member; (78)(76)"Single premium," the lump-sum amount paid by a supplemental pension14 participant pursuant to a supplemental pension contract in consideration for15 a supplemental pension benefit; (79)(77)"Social investment," investment, divestment, or prohibition of investment of17 the assets of the system for purposes other than maximum risk-adjusted18 investment return, which other purposes include ideological purposes, environmental purposes, political purposes, religious purposes, or purposes of20 local or regional economic development; (80)"Spouse," a person who was married to the member at the time of the death of the member and whose marriage was both before the member's retirement and more than twelve months before the death of the member;24 - 15 -HB 1010 (81)(78)"State employees," employees of the departments, bureaus, commissions, and1 boards of the State of South Dakota; (82)(79)"Supplemental pension benefit," any single-premium immediate pension3 benefit payable pursuant to §§ 3-12-192 and 3-12-193; (83)(80)"Supplemental pension contract," any agreement between a participant and the5 system upon which a supplemental pension is based, including the amount of6 the single premium, the type of pension benefit, and the monthly supplemental7 pension payment amount; (84)(81)"Supplemental pension contract record," the record for each supplemental9 pension participant reflecting relevant participant data; a designation of any10 beneficiary, if any; the amount of the participant's funds rolled into the fund; the provisions of the participant's supplemental pension contract; and12 supplemental pension payments made pursuant to the contract; (85)(82)"Supplemental pension participant," any member who is a retiree receiving a14 benefit from the system, or, if the member is deceased, the member's surviving15 spouse who is receiving a benefit from the system, and who chooses to16 purchase a supplemental pension benefit pursuant to the provisions of this17 chapter; (86)(83)"Supplemental pension spouse," any person who was married to a19 supplemental pension participant at the time the participant entered into the20 supplemental pension contract; (87)(84)"System," the South Dakota Retirement System created in this chapter; (88)(85)"Tax-qualifying purchase unit," any participating unit which that elects to23 allow the unit's employees to purchase credited service on a tax-deferred basis24 - 16 -HB 1010 by means of employer contribution agreements as outlined in §§ 3-12-83.1 and1 3-12-83.2; (89)"Teacher," any person who has a valid teacher's certificate issued by the State of South Dakota, who is in the employ of a public school district, and shall also include the certified teachers employed by the Human Services Center, South Dakota Developmental Center--Redfield, State Penitentiary, Department of Education, State Training School, School for the Deaf, School for the Blind and the Visually Impaired, Children's Care Hospital and School, public nonprofit special education facilities, community support providers certified by the Department of Human Services and public financed multi-district education programs; (90)"Terminated," complete severance of employment from public service of any member by resignation or discharge, not including leave of absence, layoff, vacation leave, sick leave, or jury duty, and involving all termination proceedings routinely followed by the member's participating unit, including payment to the member for unused vacation leave, payment to the member for unused sick leave, payment to the member for severance of an employment contract, severance of employer-provided health insurance coverage, severance of employer-provided life insurance coverage, or severance of any other such employer-provided perquisite of employment granted by the member's participating unit to an active employee; (91)(86)"Trustee," a member of the board of trustees; (92)(87)"Unfunded actuarial accrued liability," the actuarial accrued liability less the21 actuarial value of assets; (93)"Vested," the right to a retirement benefit from the system based on the provisions of this chapter after three years of contributory service or noncontributory service,24 - 17 -HB 1010 even if the member leaves the employment of a participating unit, provided that the member does not withdraw accumulated contributions. A member who leaves the employment of a participating unit is not entitled to benefits under §§ 3-12-95, 3-12- 98, 3-12-99, 3-12-104, and 3-12-105.

The term, COLA or cost of living adjustment, means the annual increase in the17 amount of the benefit provided on July first, compounded annually. However, no annual18 increase may be provided unless the member has received benefit payments for at least the19 consecutive, twelve-month period before July first. The COLA payable is the baseline COLA or the restricted COLA, as applicable. The baseline COLA is equal to the increase in the consumer price index, but no less than one-half percent and no greater than three and one-half percent. The restricted COLA is equal to the increase in the consumer price index, but no less than one-half percent and no greater than the restricted COLA maximum as determined in24 - 18 -HB 1010 subdivision (2) of this section. The board shall establish the COLA payable for each fiscal year, based on the fair value funded ratio and actuarially determined contribution rate of the system as of the prior July first and the increase in the consumer price index for the preceding third calendar quarter compared to the consumer price index for the third calendar quarter for the base year (the previous year in which the consumer price index was the highest), by utilizing one of the following subdivisions, as applicable: (1)If the system meets the criteria in subdivisions 3-12-122(1) and (2) based on the baseline COLA assumption adopted by the board, the COLA payable is the baseline COLA; or (2)If the system does not meet the criteria in subdivisions 3-12-122(1) and (2) based on the baseline COLA assumption adopted by the board, the system shall calculate a restricted COLA maximum in accordance with the board's funding policy that is equal to the actuarially determined annual COLA rate that results in the criteria in subdivisions 3-12-122(1) and (2) being satisfied, if achievable. The COLA payable is the restricted COLA. If the criteria in subdivisions 3-12-122(1) and (2) cannot be satisfied with a COLA equal to or exceeding one-half percent, the COLA payable is one-half percent.

Each trustee within ten days after his appointment or election being appointed or elected shall take and file in the Office of the Secretary of State the oath required by § 3-1-5.

If no family benefit is being paid pursuant to § 3-12-95.4, a surviving spouse of9 a contributing generational member who had acquired at least three years of contributory service10 or noncontributory service or died while performing usual duties for the employer or died while receiving a disability benefit, shall is, upon attaining the age sixty-seven, eligible to receive a12 surviving spouse benefit as follows: (1)If a family benefit had been paid, sixty percent of the family benefit paid at the time14 the family benefit ended, increased by the COLA from the date the last family benefit15 was paid; or16 (2)If a family benefit had not been paid, sixty percent of the amount calculated pursuant17 to subsection (a) or (b), whichever is greater, increased by the COLA from the date18 of the member's death: (a)Twenty-five percent of the member's final average compensation at the time20 of the member's death; or21 (b)The member's unreduced accrued retirement benefit at the time of the22 member's death. The surviving spouse benefit shall be paid in monthly installments for the life of the24 - 31 -HB 1010 surviving spouse.

Applications for membership for new or additional benefits, credited service, or benefit payments which may be granted by the board or any benefit shall be made to the12 executive director on forms approved by the board system.

The Board of Trustees board shall keep complete records of their its proceedings22 which shall be open to public inspection. The board shall prepare a biennial written an annual report setting forth its financial information for the previous fiscal period including the amount24 - 20 -HB 1010 of the accumulated cash and securities of the system, and the last actuarial balance sheet results of the most recent actuarial valuation. A copy of such the report shall be furnished to the fiscal officer of any participating unit, the auditor general, and the director of the Legislative Research Council available on the system's website.

In the event If a participating unit and a nonparticipating South Dakota political6 subdivision or public corporation enter into an agreement agree to provide certain public7 services on a joint basis, they may agree to consider persons employed pursuant to such the agreement as if they were solely employees of the participating unit for the exclusive purposes9 of the system created in this chapter. The total compensation paid a person because of such the employment shall be considered compensation paid him by the participating unit and services11 rendered by such the person because of such the employment shall be considered service12 rendered by him the employee to the participating unit.

Employees of an eligible political subdivision or public corporation not20 participating in the systems consolidated into the system created by this chapter, may become21 a participating unit in the system if the unit commits to deposit an amount equal to the present22 value of the benefits earned to date, based on the employee's prior service to the unit to be23 covered by the system. The expense of the actuarial determination of this amount shall be borne24 - 34 -HB 1010 by the applicant. All eligible employees of an applicant shall participate in the system upon1 admission. If the unit is unable to deposit this amount in a single sum, the unit shall have the2 option to pay the amount by periodic level installments over a period up to twenty years, the3 value of which, when discounted for compound interest at the assumed rate of return, is equal4 to the amount due at the date of participation. Section 44. The provisions of Articles 20:16 and 62:01 of the Administrative Rules of South6 Dakota promulgated pursuant to chapter 3-12 in effect as of January 1, 2019, shall continue with7 full force and effect until those rules are amended by the board. Section 45. Pursuant to § 2-16-9, the Code Counsel shall transfer sections 2 to 43, inclusive, of this Act, to a NEW CHAPTER 3-12C. Pursuant to § 2-16-9, the Code Commission and Code10 Counsel are requested to correct and integrate all cross-references from chapter 3-12 that have11 been transferred to a NEW CHAPTER 3-12C pursuant to this Act.12

If the system is terminated, or if contributions to the system are discontinued, the15 rights of all members to benefits which that have accrued as of the date of termination or16 discontinuation of contributions shall vest. A member's recourse against the fund shall be17 limited by the extent to which his the member's benefits are funded.

If any payment from the system remains uncollected for a period of three years following the date upon which a warrant for the payment was issued, the payment shall revert20 to the system and all rights to such the payment shall terminate, if the system has made21 reasonable efforts to notify the person entitled to the payment of his the person's right to the22 payment and the effect of this section.

24 - 24 -HB 1010 3-12-77.4. No member or former member of the system who has withdrawn contributions1 from the system prior to before July 1, 1998, may receive any additional refund under the provisions of §§ 3-12-47 to 3-12-152 pursuant to this chapter.

A contributing member may acquire credited service by utilizing a trustee to21 trustee transfer of funds, excluding any after tax employee contributions, from a member's22 individual retirement plan that meets the requirements of sections 403(b) or 457 of the Internal23 Revenue Code to pay the cost of purchase pursuant to § 3-12-83, 3-12-84, or 3-12-84.2 or the24 - 23 -HB 1010 amount of a redeposit pursuant to § 3-12-80.

If a member on leave of absence performing initial qualified military service dies, the member shall be considered to have returned from the leave of absence on the day before16 the member's death and become a contributing member for purposes of survivor benefits17 pursuant to § 3-12-95.5, if the member has at least one year of credited service prior to before the member's death, including the initial period of qualified military service. If the member was19 contributing for additional survivor protection benefits pursuant to § 3-12-104 immediately20 before the leave of absence, the member shall be considered to have resumed the contributions21 on the day before the member's death. If a member on leave of absence performing initial qualified military service becomes23 disabled pursuant to the disability criteria set out in this chapter 3-12, the member shall be24 - 22 -HB 1010 considered to have returned from the leave of absence on the day before the member's discharge1 date and become a contributing member for purposes of eligibility for disability benefits2 pursuant to § 3-12-201, if the member has at least three years of credited service including the3 period of initial qualified military service. The provisions of § 3-12-201 notwithstanding, the4 member need not have been deemed to be a contributing member on the date of the member's5 disabling event.

For any foundation member, the term, accumulated contributions, means the sum3 of: (1)All contributions made by the member, including member contributions made by an5 employer after June 30, 1984, pursuant to § 3-12-71; (2)For a member whose contributory service concluded after June 30, 2010, eighty-five7 percent of the employer contributions or noncontributory service if the member had8 three years or more of contributory service and fifty percent of the employer9 contributions if the member had less than three years of service; or for a member10 whose contributory service concluded before July 1, 2010, one hundred percent of11 the employer contributions or noncontributory service if the member had three years12 or more of contributory service and seventy-five percent of the employer13 contributions if the member had less than three years of service; (3)Member redeposits pursuant to § 3-12-80 and member credited service purchases15 pursuant to §§ 3-12-83, 3-12-84, and 3-12-84.2; and16 (4)The effective rate of interest earned on the sum of subdivisions (1), (2), and (3).

Any justice of the Supreme Court or judge of the circuit court of this state who is3 automatically retired pursuant to the provisions of § 16-1-4.1 or 16-6-31, or who, having4 reached age seventy, retired prior to before January 7, 1975, and who has not fully qualified for5 retirement benefits as provided by this chapter shall nevertheless receive retirement benefits in6 the proportion that his or her total time served bears to fifteen years, or if he the justice or judge has served in excess of fifteen years then receive full benefits.

If no family benefit is being paid pursuant to § 3-12-95.4, a surviving spouse of23 a contributing foundation member who had acquired at least three years of contributory service24 - 26 -HB 1010 or noncontributory service or died while performing usual duties for the employer and who died1 after June 30, 2015, shall is, upon attaining the age of sixty-five, eligible to receive a surviving2 spouse benefit calculated as follows, whichever is applicable: (1)If a family benefit had been paid, sixty percent of the family benefit paid at the time4 the family benefit ended, increased by the COLA from the date the last family benefit5 was paid; or6 (2)If a family benefit had not been paid, sixty percent of the amount calculated pursuant7 to subsection (a) or (b), whichever is greater, increased by the COLA from the date8 of the member's death: (a)Twenty-five percent of the member's final average compensation at the time10 of the member's death; or11 (b)The member's unreduced accrued retirement benefit at the time of the12 member's death. The surviving spouse benefit shall be paid in monthly installments for the life of the14 surviving spouse.