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HomeMy WebLinkAboutORD-2021-023 Amendment to Personnel Ordinance, Section 28-38(j) Regarding Special Separation Buyout for Law Enforcement Officers 1 ORD-2021-023 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: October 5, 2021 Action Agenda Item No. 8-e SUBJECT: Amendment to Personnel Ordinance, Section 28-380) Regarding Special Separation Buyout for Law Enforcement Officers DEPARTMENT: Human Resources ATTACHMENT(S): INFORMATION CONTACT: 1. §143-166.42. Special Separation Brenda Bartholomew, Human Allowances for Local Officers Resources Director, 919-245-2552 2. §143-166.43. Separation Buyouts for John Roberts, County Attorney, 919- Law Enforcement Officers 245-2318 3. General Assembly of North Carolina Session 2017 Session Law 2018-22 House Bill 284 4. §28-38 of Personnel Ordinance with Recommended Revisions Underlined and Red Font PURPOSE: To consider an amendment to the Orange County Code of Ordinances providing an option to elect a lump sum buyout of the Special Separation Allowance for qualifying Law Enforcement Officers (LEOs) for early retirement or in the event of disability. BACKGROUND: Under N. C. General Statutes §143-166.42, local governments are required to pay a special separation allowance to sworn local law enforcement officers under age 62 if they: (1) Have (i) completed 30 or more years of creditable service or, (ii) have attained 55 years of age and completed five or more years of creditable service; and (2) Not have attained 62 years of age; and (3) Have completed at least five years of continuous service as a law enforcement officer as herein defined immediately preceding a service retirement. Any break in the continuous service required by this subsection because of disability retirement or disability salary continuation benefits shall not adversely affect an officer's qualification to receive the allowance, provided the officer returns to service within 45 days after the disability benefits cease and is otherwise qualified to receive the allowance. In addition, N. C. Session Law 2018-22 provides that under N. C. General Statutes §143-166.43, any local government employer, may, in its discretion, offer a lump sum separation buyout to a law enforcement officer who leaves employment prior to reaching the officer's eligibility for a separation allowance under this Article. The lump sum separation buyout shall be paid from funds available and shall not exceed the total that would otherwise be paid in separation allowance payments under G.S. 143-166.41 or G.S. 143-166.42. (2018-22, s. 1.) 2 The Orange County Sheriff's Office has requested an ordinance change to be able to offer a lump sum separation buyout as provided in the Session Law, to be based on the years of service with Orange County. This benefit would be available to qualifying Law Enforcement Officers subject to consideration of special circumstances as determined by the Sheriff and the County Manager regarding the LEO's early retirement or disability. FINANCIAL IMPACT: The financial impact of this ordinance change will be determined by the number of qualifying early retirements for Law Enforcement Officer that are approved by the Sheriff and County Manager as special circumstances. An average cost is approximately$41,000, but varies greatly since a buyout is based on the LEO's years of service with Orange County. Based on consideration of possibly three disability retirements or special consideration by the County Manager and the Sheriff each year, an annual financial impact of$123,000 is realistic. Buyout Examples Law Enforcement Officer A makes $55,000 a year with 15 years of credible service and is 51 years of age. The value of a separation buyout would be a one-time payment of$29,452. Law Enforcement Officer B makes $63,000 a year with 23 years of credible service and is 46 years of age. The value of a separation buyout would be a one-time payment of$60,350. SOCIAL JUSTICE IMPACT: There is no Orange County Social Justice Goal impact associated with this request. ENVIRONMENTAL IMPACT: There is no Orange County Environmental Responsibility Goal impact associated with this request. RECOMMENDATION(S): The Manager recommends that the Board approve the attached revision to Section 28-330) — Additional Retirement Benefits for Law Enforcement Officers in the Orange County Code of Ordinances. 3 ATTACHMENT 1 § 143-166.42. Special separation allowances for local officers. (a) On and after January 1, 1987, every sworn law enforcement officer as defined by G.S. 128-21(l ld) or G.S. 143-166.50(a)(3) employed by a local government employer who qualifies under this section shall receive, beginning in the month in which the officer retires on a basic service retirement under the provisions of G.S. 128-27(a), an annual separation allowance equal to eighty-five hundredths percent (0.85%) of the annual equivalent of the base rate of compensation most recently applicable to the officer for each year of creditable service. The allowance shall be paid in equal installments on the payroll frequency used by the employer. To qualify for the allowance, the officer shall: (1) Have (i) completed 30 or more years of creditable service or (ii) have attained 55 years of age and completed five or more years of creditable service; and (2) Not have attained 62 years of age; and (3) Have completed at least five years of continuous service as a law enforcement officer as herein defined immediately preceding a service retirement. Any break in the continuous service required by this subsection because of disability retirement or disability salary continuation benefits shall not adversely affect an officer's qualification to receive the allowance, provided the officer returns to service within 45 days after the disability benefits cease and is otherwise qualified to receive the allowance. (b) As used in this section, "creditable service" means the service for which credit is allowed under the retirement system of which the officer is a member, provided that at least fifty percent (50%) of the service is as a law enforcement officer as herein defined. (c) Payment to a retired officer under the provisions of this section shall cease at the first of: (1) The death of the officer; (2) The last day of the month in which the officer attains 62 years of age; or (3) The first day of reemployment by a local government employer in any capacity. (c 1) Notwithstanding the provisions of subdivision (3) of subsection (c) of this section, payments to a retired officer shall not cease when a local government employer employs a retired officer for any of the following: (1) In a public safety position in a capacity not requiring participation in the Local Governmental Employees' Retirement System. (2) In service to a county board of elections on an election day in a capacity that complies with G.S. 128-21(19) and does not result in cessation or suspension of the retiree's benefit from the Local Government Employees' Retirement System. (d) This section does not affect the benefits to which an individual may be entitled from State, local, federal, or private retirement systems. The benefits payable under this 4 section shall not be subject to any increases in salary or retirement allowances that may be authorized by local government employers or for retired employees of local governments. (e) The governing body of each local employer shall determine the eligibility of employees for the benefits provided herein. (f) The governing body of each local employer shall make the payments set forth in subsection (a) of this section to those persons certified under subsection (e) of this section from funds available. (1985 (Reg. Sess., 1986), c. 1019, s. 2; 2009-396, s. 1; 2018- 25, s. 1.) 5 ATTACHMENT 2 § 143-166.43. Separation buyouts for law enforcement officers. Any State department, agency, or institution, or any local government employer, may, in its discretion, offer a lump sum separation buyout to a law enforcement officer who leaves employment prior to reaching the officer's eligibility for a separation allowance under this Article. The lump sum separation buyout shall be paid from funds available and shall not exceed the total that would otherwise be paid in separation allowance payments under G.S. 143-166.41 or G.S. 143-166.42. (2018-22, s. 1.) 7/28/2021 SL 2018-22(HB 284) ATTACHMENT 3 6 GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2017 SESSION LAW 2018-22 HOUSE BILL 284 AN ACT TO ALLOW LAW ENFORCEMENT OFFICERS WHO ARE MEMBERS OF THE TEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEM OR THE LOCAL GOVERNMENT EMPLOYEES' RETIREMENT SYSTEM TO RETIRE AFTER ACHIEVING TWENTY-FIVE YEARS OF CREDITABLE SERVICE, TO ALLOW FOR SEPARATION BUYOUTS FOR LAW ENFORCEMENT OFFICERS, AND TO ALLOW TRANSFERS UNDER THE SPECIAL RETIREMENT ALLOWANCE TO BE PAID IN WHOLE OR IN PART WITH EMPLOYER CONTRIBUTIONS. The General Assembly of North Carolina enacts: SECTION 1. Article 12D of Chapter 143 of the General Statutes is amended by adding a new section to read: "§ 143-166.43. Separation buyouts for law enforcement officers. Any State department, agency., or institution, or any local government employer, may., in its discretion, offer a lump sum separation buyout to a law enforcement officer who leaves employment prior to reaching the officer's eligibility for a separation allowance under this Article. The lump sum separation buyout shall be paid from funds available and shall not exceed the total that would otherwise be paid in separation allowance payments under G.S. 143-166.41 or G.S. 143-166.42." SECTION 2.(a) G.S. 135-5(m2)reads as rewritten: "(m2) Special Retirement Allowance. — At any time coincident with or following retirement, a member may make a one-time, irrevocable election to transfer any portion of the member's eligible accumulated contributions, not including any Roth after-tax contributions and the earnings thereon, from the Supplemental Retirement Income Plan of North Carolina or the North Carolina Public Employee Deferred Compensation Plan to this Retirement System and receive, in addition to the member's basic service, early or disability retirement allowance, a special retirement allowance which shall be based upon the member's transferred balance. A member who became a member of the Supplemental Retirement Income Plan prior to retirement and who remains a member of the Supplemental Retirement Income Plan may make a one-time, irrevocable election to transfer eligible balances, not including any Roth after-tax contributions and the earnings thereon, from any of the following plans to the Supplemental Retirement Income Plan, subject to the applicable requirements of the Supplemental Retirement Income Plan, and then through the Supplemental Retirement Income Plan to this Retirement System: (i) a plan participating in the North Carolina Public School Teachers' and Professional Educators' Investment Plan; (ii) a plan described in section 403(b) of the Internal Revenue Code; (iii) a plan described in section 457(b) of the Internal Revenue Code that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state; (iv) an individual retirement account or annuity described in section 408(a) or section 408(b) of the Internal Revenue Code that is eligible to be rolled over and would otherwise be includible in gross income; or (v) a tax-qualified plan described in section 401(a) or section 403(a) of the file:///C:/Users/bbartholomew/Documents/ATT 3 ABTRACT 9 14 2021 SL 2018-22(HB 284).html 1/13 7/28/2021 SL 2018-22(HB 284) 7 Internal Revenue Code. In addition, any transfer under this subsection may be paid in whole or in part with employer contributions paid directly to this Retirement System at the time of transfer. Notwithstanding anything to the contrary, a member may not transfer such amounts as will cause the member's retirement allowance under the System to exceed the amount allowable under G.S. 135-18.7(b). The Board of Trustees may establish a minimum amount that must be transferred if a transfer is elected. The member may elect a special retirement allowance with no postretirement increases or a special retirement allowance with annual postretirement increases equal to the annual increase in the U.S. Consumer Price Index. Postretirement increases on any other allowance will not apply to the special retirement allowance. The Board of Trustees shall provide educational materials to the members who apply for the transfer authorized by this section. Those materials shall describe the special retirement allowance and shall explain the relationship between the transferred balance and the monthly benefit and how the member's heirs may be impacted by the election to make this transfer and any costs and fees involved. For the purpose of determining the special retirement allowance, the Board of Trustees shall adopt straight life annuity factors on the basis of yields on U.S. Treasury Bonds and mortality and such other tables as may be necessary based upon actual experience. A single set of mortality and such other tables will be used for all members, with factors differing only based on the age of the member and the election of postretirement increases. The Board of Trustees shall modify the mortality and such other tables every five years, as shall be deemed necessary, based upon the five-year experience study as required by G.S. 135-6(n). Provided, however, a member who transfers the member's eligible accumulated contributions from an eligible retirement plan pursuant to this subsection to this Retirement System shall be taxed for North Carolina State Income Tax purposes on the special retirement allowance the same as if that special retirement allowance had been paid directly by the eligible plan or the plan through which the transfer was made, whichever is most favorable to the member. The Teachers' and State Employees' Retirement System shall be responsible to determine the taxable amount, if any, and report accordingly. The Supplemental Retirement Board of Trustees established under G.S. 135-96 may assess a one-time flat administrative fee not to exceed the actual cost of the administrative expenses relating to these transfers. An eligible plan shall not assess a fee specifically relating to a transfer of accumulated contributions authorized under this subsection. This provision shall not prohibit other fees that may be assessable under the plan. Each plan, contract, account, or annuity shall fully disclose to any member participating in a transfer under this subsection any surrender charges or other fees, and such disclosure shall be made contemporaneous with the initiation of the transfer by the member. The special retirement allowance shall continue for the life of the member and the beneficiary designated to receive a monthly survivorship benefit under Option 2, 3 or 6 as provided in G.S. 135-5(g), if any. The Board of Trustees, however, shall establish two payment options that guarantee payments as follows: (1) A member may elect to receive the special retirement allowance for life but with payments guaranteed for a number of months to be specified by the Board of Trustees. Under this plan, if the member dies before the expiration of the specified number of months, the special retirement allowance will continue to be paid to the member's designated beneficiary for the life of the beneficiary, if Option 2, 3 or 6 is selected. If Option 2, 3 or 6 is not selected, the member's designated beneficiary will receive the benefit only for the remainder of the specified number of months. If the member's designated beneficiary dies before receiving payments for the specified number of months, any remaining payments will be paid to the member's estate. file:///C:/Users/bbartholomew/Documents/ATT 3 ABTRACT 9 14 2021 SL 2018-22(HB 284).html 2/13 7/28/2021 SL 2018-22(HB 284) 8 (2) A member may elect to receive the special retirement allowance for life but is guaranteed that the sum of the special allowance payments will equal the total of the transferred amount. Under this payment option, if the member dies before receiving the total transferred amount, the special retirement allowance will continue to be paid to the member's designated beneficiary for the life of the beneficiary, if Option 2, 3 or 6 is selected. If Option 2, 3 or 6 is not selected, the member's designated beneficiary or the member's estate shall be paid any remaining balance of the transferred amount. The Board of Trustees shall report annually to the Joint Legislative Commission on Governmental Operations on the number of persons who made an election in the previous calendar year, with any recommendations it might make on amendment or repeal based on any identified problems. The General Assembly reserves the right to repeal or amend this subsection, but such repeal or amendment shall not affect any person who has already made the one-time election provided in this subsection." SECTION 2.(b) G.S. 128-27(m2) reads as rewritten: "(m2) Special Retirement Allowance. — At any time coincident with or following retirement, a member may make a one-time, irrevocable election to transfer any portion of the member's eligible accumulated contributions, not including any Roth after-tax contributions and the earnings thereon, from the Supplemental Retirement Income Plan of North Carolina or the North Carolina Public Employee Deferred Compensation Plan to this Retirement System and receive, in addition to the member's basic service, early or disability retirement allowance, a special retirement allowance which shall be based upon the member's transferred balance. A member who became a member of the Supplemental Retirement Income Plan prior to retirement and who remains a member of the Supplemental Retirement Income Plan may make a one-time, irrevocable election to transfer eligible balances, not including any Roth after-tax contributions and the earnings thereon, from any of the following plans to the Supplemental Retirement Income Plan, subject to the applicable requirements of the Supplemental Retirement Income Plan, and then through the Supplemental Retirement Income Plan to this Retirement System (i) a plan participating in the North Carolina Public School Teachers' and Professional Educators' Investment Plan; (ii) a plan described in section 403(b) of the Internal Revenue Code; (iii) a plan described in section 457(b) of the Internal Revenue Code that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state; (iv) an individual retirement account or annuity described in section 408(a) or section 408(b) of the Internal Revenue Code that is eligible to be rolled over and would otherwise be includible in gross income; or (v) a tax-qualified plan described in section 401(a) or section 403(a) of the Internal Revenue Code. In addition, any transfer under this subsection may be paid in whole or in part with employer contributions paid directly to this Retirement System at the time of transfer. Notwithstanding anything to the contrary, a member may not transfer such amounts as will cause the member's retirement allowance under the System to exceed the amount allowable under G.S. 128-38.2(b). The Board of Trustees may establish a minimum amount that must be transferred if a transfer is elected. The member may elect a special retirement allowance with no postretirement increases or a special retirement allowance with annual postretirement increases equal to the annual increase in the U.S. Consumer Price Index. Postretirement increases on any other allowance will not apply to the special retirement allowance. The Board of Trustees shall provide educational materials to the members who apply for the transfer authorized by this section. Those materials shall describe the special retirement allowance and shall explain the relationship between the transferred balance and file:///C:/Users/bbartholomew/Documents/ATT 3 ABTRACT 9 14 2021 SL 2018-22(HB 284).html 3/13 7/28/2021 SL 2018-22(HB 284) 9 the monthly benefit and how the member's heirs may be impacted by the election to make this transfer and any costs and fees involved. For the purpose of determining the special retirement allowance, the Board of Trustees shall adopt straight life annuity factors on the basis of yields on U.S. Treasury Bonds and mortality and such other tables as may be necessary based upon actual experience. A single set of mortality and such other tables will be used for all members, with factors differing only based on the age of the member and the election of postretirement increases. The Board of Trustees shall modify the mortality and such other tables every five years, as shall be deemed necessary, based upon the five-year experience study as required by G.S. 128-28(o). Provided, however, a member who transfers the member's eligible accumulated contributions from an eligible retirement plan pursuant to this subsection to this Retirement System shall be taxed for North Carolina State Income Tax purposes on the special retirement allowance the same as if that special retirement allowance had been paid directly by the eligible plan or the plan through which the transfer was made, whichever is most favorable to the member. The Local Governmental Employees' Retirement System shall be responsible to determine the taxable amount, if any, and report accordingly. The special retirement allowance shall continue for the life of the member and the beneficiary designated to receive a monthly survivorship benefit under Option 2, 3 or 6 as provided in G.S. 128-27(g), if any. The Board of Trustees, however, shall establish two payment options that guarantee payments as follows: (1) A member may elect to receive the special retirement allowance for life but with payments guaranteed for a number of months to be specified by the Board of Trustees. Under this plan, if the member dies before the expiration of the specified number of months, the special retirement allowance will continue to be paid to the member's designated beneficiary for the life of the beneficiary, if Option 2, 3 or 6 is selected. If Option 2, 3 or 6 is not selected, the member's designated beneficiary will receive the benefit only for the remainder of the specified number of months. If the member's designated beneficiary dies before receiving payments for the specified number of months, any remaining payments will be paid to the member's estate. (2) A member may elect to receive the special retirement allowance for life but is guaranteed that the sum of the special allowance payments will equal the total of the transferred amount. Under this payment option, if the member dies before receiving the total transferred amount, the special retirement allowance will continue to be paid to the member's designated beneficiary for the life of the beneficiary, if Option 2, 3 or 6 is selected. If Option 2, 3 or 6 is not selected, the member's designated beneficiary or the member's estate shall be paid any remaining balance of the transferred amount. The Supplemental Retirement Board of Trustees established under G.S. 135-96 may assess a one-time flat administrative fee not to exceed the actual cost of the administrative expenses relating to these transfers. An eligible plan shall not assess a fee specifically relating to a transfer of accumulated contributions authorized under this subsection. This provision shall not prohibit other fees that may be assessable under the plan. Each plan, contract, account, or annuity shall fully disclose to any member participating in a transfer under this subsection any surrender charges or other fees, and that disclosure shall be made contemporaneous with the initiation of the transfer by the member. The Board of Trustees shall report annually to the Joint Legislative Commission on Governmental Operations on the number of persons who made an election in the previous calendar year, with any recommendations it might make on amendment or repeal based on any identified problems. file:///C:/Users/bbartholomew/Documents/ATT 3 ABTRACT 9 14 2021 SL 2018-22(HB 284).html 4/13 7/28/2021 SL 2018-22(HB 284) 10 The General Assembly reserves the right to repeal or amend this subsection, but such repeal or amendment shall not affect any person who has already made the one-time election provided in this subsection." SECTION 3.(a) G.S. 135-5(a)(4) reads as rewritten: "(4) Any member who is a law-enforcement officer and who (i)-attains age 50 and completes 15 or more years of creditable service in this eapaeity e eke-cap a city ,_(ii)_attains age 55 and completes five or more years of creditable service in this capacity, or (iii) has completed 25 years of creditable service with a minimum of 15 years of creditable service in a law enforcement capacity may retire upon electronic submission or written application to the Board of Trustees setting forth at what time, as of the first day of a calendar month, not less than one day nor more than 120 days subsequent to the execution and filing thereof, lithe member desires to be retired; Provided, also, any member who has met the conditions herein required but does not retire, and later becomes a teacher or an employee other than as a law-enforcement officer shall continue to have the right to commence retirement." SECTION 3.(b) G.S. 135-5(bl9)reads as rewritten: "(bl9) Service Retirement Allowance of Members Retiring on or After July 1, 249-2-.2002, but Before July 1, 2018. — Upon retirement from service in accordance with subsection (a) or (al) of this section, on or after July 1, 2002, but before July 1, 2018,_a member shall receive the following service retirement allowance: (1) A member who is a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows: a. If the member's service retirement date occurs on or after his 55th birthday, and completion of five years of creditable service as a law enforcement officer, or after the completion of 30 years of creditable service, the allowance shall be equal to one and eighty-two hundredths percent (1.82%) of his average final compensation, multiplied by the number of years of his creditable service. b. If the member's service retirement date occurs on or after his 50th birthday and before his 55th birthday with 15 or more years of creditable service as a law enforcement officer and prior to the completion of 30 years of creditable service, his retirement allowance shall be equal to the greater of: 1. The service retirement allowance payable under G.S. 135-5(bl9)(1)a. reduced by one-third of one percent (1/3 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 55th birthday; or 2. The service retirement allowance as computed under G.S. 135-5(bl9)(1)a. reduced by five percent (5%) times the difference between 30 years and his creditable service at retirement. (2) A member who is not a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows: a. If the member's service retirement date occurs on or after his 65th birthday upon the completion of five years of membership service file:///C:/Users/bbartholomew/Documents/ATT 3 ABTRACT 9 14 2021 SL 2018-22(HB 284).html 5/13 7/28/2021 SL 2018-22(HB 284) 11 or after the completion of 30 years of creditable service or on or after his 60th birthday upon the completion of 25 years of creditable service, the allowance shall be equal to one and eighty-two hundredths percent (1.82%) of his average final compensation, multiplied by the number of years of creditable service. b. If the member's service retirement date occurs after his 60th birthday and before his 65th birthday and prior to his completion of 25 years or more of creditable service, his retirement allowance shall be computed as in G.S. 135-5(bl9)(2)a. but shall be reduced by one-quarter of one percent (1/4 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following his 65th birthday. C. If the member's early service retirement date occurs on or after his 50th birthday and before his 60th birthday and after completion of 20 years of creditable service but prior to the completion of 30 years of creditable service, his early service retirement allowance shall be equal to the greater of. 1. The service retirement allowance as computed under G.S. 135-5(bl9)(2)a. but reduced by the sum of five-twelfths of one percent (5/12 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 60th birthday, plus one-quarter of one percent (1/4 of 1%) thereof for each month by which his 60th birthday precedes the first day of the month coincident with or next following his 65th birthday; or 2. The service retirement allowance as computed under G.S. 135-5(bl9)(2)a. reduced by five percent (5%) times the difference between 30 years and his creditable service at retirement; or 3. If the member's creditable service commenced prior to July 1, 1994, the service retirement allowance equal to the actuarial equivalent of the allowance payable at the age of 60 years as computed in G.S. 135-5(bl9)(2)b. d. Notwithstanding the foregoing provisions, any member whose creditable service commenced prior to July 1, 1963, shall not receive less than the benefit provided by G.S. 135-5(b)." SECTION 3.(c) G.S. 135-5 is amended by adding a new subsection to read: ".(b21) Service Retirement Allowance of Members Retiring on or After July 1, 2018. — Upon retirement from service on or after July 1, 2018, in accordance with subsection (a) or (al) of this section, a member shall receive the following service retirement allowance: (1) A member who is a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows: a. If the member's service retirement date occurs on or after the member's 55th birthday and completion of five years of creditable service as a law enforcement officer, or after the completion of 30 years of creditable service, the allowance shall be equal to one and eighty-two hundredths percent (1.82%) of the member's average file:///C:/Users/bbartholomew/Documents/ATT 3 ABTRACT 9 14 2021 SL 2018-22(HB 284).html 6/13 7/28/2021 SL 2018-22(HB 284) 12 final compensation, multiplied by the number of years of the member's creditable service. b. If the member's service retirement date occurs prior to the member's 50th birthday and after the completion of 25 years of creditable service with a minimum of 15 years of creditable service in a law enforcement capacity but before the completion of 30 years of creditable service, the retirement allowance shall be equal to the greater of the following amounts: 1. The service retirement allowance payable under G.S. 135-5(b21).(1)a. reduced by one-third of one percent (1/3 of I%) thereof for each month by which the member's retirement date precedes the first day of the month coincident with or next following the month the member would have attained age 55. 2. The service retirement allowance as computed under G.S. 135-5(b21).(1)a. reduced by five percent (5%) times the difference between 30 years and the member's creditable service at retirement plus four percent (4%) times the difference between age 50 and the member's age at retirement. C. If the member's service retirement date occurs on or after the member's 50th birthday and before the member's 55th birthday_ with 15 or more years of creditable service as a law enforcement officer and prior to the completion of 30 years of creditable service, the retirement allowance shall be equal to the greater of the following amounts: 1. The service retirement allowance payable under G.S. 135-5(b21).(I)a. reduced by one-third of one percent .( /3 of 1%) thereof for each month by which the retirement date precedes the first day of the month coincident with or next following the month the member would have attained age 55. 2. The service retirement allowance as computed under G.S. 135-5(b21)_(I)a. reduced by five percent (5%) times the difference between 30 years and the amount of creditable service at retirement. (2). A member who is not a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows: a. If the member's service retirement date occurs on or after the member's 65th birthday upon the completion of five years of membership service, or after the completion of 30 years of creditable service, or on or after his 60th birthday upon the completion of 25 years of creditable service, the allowance shall be equal to one and eighty-two hundredths percent (1.82%) of the member's average final compensation, multiplied by the number of years of creditable service- b. If the member's service retirement date occurs after the member's 60th birthday and before the member's 65th birthday and prior to the completion of 25 years or more of creditable service, the retirement allowance shall be computed as in G.S. 135-5(b21).(2)a. but shall be reduced by one-quarter of one percent (1/4 of 1%) file:///C:/Users/bbartholomew/Documents/ATT 3 ABTRACT 9 14 2021 SL 2018-22(HB 284).html 7/13 7/28/2021 SL 2018-22(HB 284) 13 thereof for each month by which the retirement date precedes the first day of the month coincident with or next following the member's 65th birthday_ C. If the member's early service retirement date occurs on or after the member's 50th birthday and before the member's 60th birthday and after completion of 20 years of creditable service but prior to the completion of 30 years of creditable service, the early service retirement allowance shall be equal to the greater of the following amounts: 1. The service retirement allowance as computed under G.S. 135-5(b21).(2)a. but reduced by the sum of five-twelfths of one percent (5/12 of 1%) thereof for each month by which the member's retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 60th birthday., plus one-quarter of one percent (1/4 of 1%) thereof for each month by which the member's 60th birthday_precedes the first day of the month coincident with or next following the member's 65th birthday_ 2. The service retirement allowance as computed under G.S. 135-5(b21)_(2)a. reduced by five percent (5%) times the difference between 30 years and the amount of creditable service at retirement. 3. If the member's creditable service commenced prior to July_ 1, 1994, the service retirement allowance equal to the actuarial equivalent of the allowance payable at the age of 60 years as computed in G.S. 135-5(b21).(2)b. d. Notwithstanding the foregoing-provisions, any member whose creditable service commenced prior to July 1, 1963, shall not receive less than the benefit provided by G.S. 135-5(b)_" SECTION 3.(d) G.S. 135-5(m)reads as rewritten: "(m) Survivor's Alternate Benefit. — Upon the death of a member in service, the beneficiary designated to receive a return of accumulated contributions shall have the right to elect to receive in lieu thereof the reduced retirement allowance provided by Option 2 of subsection (g) above computed by assuming that the member had retired on the first day of the month following the date of h4�—the member's death, provided that all four of the following conditions apply: (1) a. The member had attained such age and/or creditable service to be eligible to commence retirement with an early or service retirement allowance, or b. The member had obtained 20 years of creditable service in which case the retirement allowance shall be computed in accordance with G.S. 135-5(b21).(1)c. or G.S. 135-5(b21).(2)c., notwithstanding the requirement of obtaining age 50, or bl. The member was a law enforcement officer who had obtained 15 years of service as a law enforcement officer and was killed in the line of duty, in which case the retirement allowance shall be computed in accordance with 135-5(b21)(1)c., notwithstanding the requirement of obtaining age 50. C. Repealed by Session Laws 2010-72, s. 2(a), effective July 1, 2010. file:///C:/Users/bbartholomew/Documents/ATT 3 ABTRACT 9 14 2021 SL 2018-22(HB 284).html 8/13 7/28/2021 SL 2018-22(HB 284) 14 SECTION 3.(e) G.S. 128-27(a)(5)reads as rewritten: "(5) Any member who is a law enforcement offieer,-officer and who (i)-attains age 50 and completes 15 or more years of creditable service in this eaptteity air capacity., or (ii)_attains age 55 and completes five or more years of creditable service in this capacity, or (iii) who has completed 25 years of creditable service with a minimum of 15 years of creditable service in a law enforcement capacity may retire upon electronic submission or written application to the Board of Trustees setting forth at what time, as of the first day of a calendar month, not less than one day nor more than 120 days subsequent to the execution and filing thereof, lie the member desires to be retired; provided, also, any member who has met the conditions required by this subdivision but does not retire, and later becomes an employee other than as a law enforcement officer, continues to have the right to commence retirement." SECTION 3.(f) G.S. 128-27(b21)reads as rewritten: "(b21) Service Retirement Allowance of Member Retiring on or After July 1, 2GG3-2003, but Before July 1, 2018. — Upon retirement from service in accordance with subsection (a) or(al) above, on or after July 1, 2003,but before July 1, 2018, a member shall receive the following service retirement allowance: (1) A member who is a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows: a. If the member's service retirement date occurs on or after his 55th birthday and completion of five years of creditable service as a law enforcement officer, or after the completion of 30 years of creditable service, the allowance shall be equal to one and eighty-five hundredths percent (1.85%) of his average final compensation, multiplied by the number of years of his creditable service. b. If the member's service retirement date occurs on or after his 50th birthday and before his 55th birthday with 15 or more years of creditable service as a law enforcement officer and prior to the completion of 30 years of creditable service, his retirement allowance shall be equal to the greater of: 1. The service retirement allowance payable under G.S. 128-27(b2l)(1)a. reduced by one-third of one percent (1/3 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 55th birthday; 2. The service retirement allowance as computed under G.S. 128-27(b21)(1)a. reduced by five percent (5%) times the difference between 30 years and his creditable service at retirement. (2) A member who is not a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows: a. If the member's service retirement date occurs on or after his 65th birthday upon the completion of five years of creditable service or after the completion of 30 years of creditable service or on or after his 60th birthday upon the completion of 25 years of creditable file:///C:/Users/bbartholomew/Documents/ATT 3 ABTRACT 9 14 2021 SL 2018-22(HB 284).html 9/13 7/28/2021 SL 2018-22(HB 284) 15 service, the allowance shall be equal to one and eighty-five hundredths percent (1.85%) of average final compensation, multiplied by the number of years of creditable service. b. If the member's service retirement date occurs after his 60th birthday and before his 65th birthday and prior to his completion of 25 years or more of creditable service, his retirement allowance shall be computed as in G.S. 128-27(b21)(2) a. but shall be reduced by one-quarter of one percent (1/4 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following his 65th birthday. C. If the member's early service retirement date occurs on or after his 50th birthday and before his 60th birthday and after completion of 20 years of creditable service but prior to the completion of 30 years of creditable service, his early service retirement allowance shall be equal to the greater of: 1. The service retirement allowance as computed under G.S. 128-27(b21)(2)a. but reduced by the sum of five-twelfths of one percent (5/12 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 60th birthday, plus one-quarter of one percent (1/4 of 1%) thereof for each month by which his 60th birthday precedes the first day of the month coincident with or next following his 65th birthday; or 2. The service retirement allowance as computed under G.S. 128-27(b21)(2)a. reduced by five percent (5%) times the difference between 30 years and his creditable service at retirement; or 3. If the member's creditable service commenced prior to July 1, 1995, the service retirement allowance equal to the actuarial equivalent of the allowance payable at the age of 60 years as computed in G.S. 128-27(b21)(2)b. d. Notwithstanding the foregoing provisions, any member whose creditable service commenced prior to July 1, 1965, shall not receive less than the benefit provided by G.S. 128-27(b)." SECTION 3.(g) G.S. 128-27 is amended by adding a new subsection to read: "(b22). Service Retirement Allowance of Member Retiring on or After July 1, 2018. — Upon retirement from service in accordance with subsection (a) or (al) of this section, on or after July 1, 2018, a member shall receive the following service retirement allowance: U). A member who is a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows: a. If the member's service retirement date occurs on or after the member's 55th birthday and completion of five years of creditable service as a law enforcement officer, or after the completion of 30 years of creditable service, the allowance shall be equal to one and eighty-five hundredths percent (1.85%) of the member's average final compensation, multiplied by the number of years of the member's creditable service. b. If the member's service retirement date occurs prior to the member's 50th birthday and after the completion of 25 years of file:///C:/Users/bbartholomew/Documents/ATT 3 ABTRACT 9 14 2021 SL 2018-22(HB 284).html 10/13 7/28/2021 SL 2018-22(HB 284) 16 creditable service with a minimum of 15 years of creditable service in a law enforcement capacity but before the completion of 30 years of creditable service, the retirement allowance shall be equal to the greater of the following amounts: I. The service retirement allowance payable under G.S. 128-27(b22).(1)a. reduced by one-third of one percent (1/3 of 1%) thereof for each month by which the member's retirement date precedes the first day of the month coincident with or next following the month the member would have attained age 55. 2. The service retirement allowance as computed under G.S. 128-27(b22).(I)a. reduced by five percent (5%) times the difference between 30 years and the member's creditable service at retirement plus four percent (40/0) times the difference between 50 and the member's age at retirement. C. If the member's service retirement date occurs on or after the member's 50th birthday and before the member's 55th birthday_ with 15 or more years of creditable service as a law enforcement officer and prior to the completion of 30 years of creditable service, the retirement allowance shall be equal to the greater of the following amounts: 1. The service retirement allowance payable under G.S. 128-27(b22).(1)a. reduced by one-third of one percent .(1/3 of I%) thereof for each month by which the retirement date precedes the first day of the month coincident with or next following the month the member would have attained age 55. 2. The service retirement allowance as computed under G.S. 128-27(b22).(1)a. reduced by five percent (5%) times the difference between 30 years and the amount of creditable service at retirement. (2). A member who is not a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows: a. If the member's service retirement date occurs on or after the member's 65th birthday upon the completion of five years of creditable service, or after the completion of 30 years of creditable service, or on or after the member's 60th birthday upon the completion of 25 years of creditable service, the allowance shall be equal to one and eighty-five hundredths percent (1.85%) of the member's average final compensation, multiplied by the number of years of creditable service. b. If the member's service retirement date occurs after the member's 60th birthday and before the member's 65th birthday and prior to the completion of 25 years or more of creditable service, the retirement allowance shall be computed as in G.S. 128-27(1122). (2)a. but shall be reduced by one-quarter of one percent (1%4 of 1%) thereof for each month by which the retirement date precedes the first day of the month coincident with or next following the member's 65th birthday_ file:///C:/Users/bbartholomew/Documents/ATT 3 ABTRACT 9 14 2021 SL 2018-22(HB 284).html 11/13 7/28/2021 SL 2018-22(HB 284) 17 C. If the member's early service retirement date occurs on or after the member's 50th birthday and before the member's 60th birthday and after completion of 20 years of creditable service but prior to the completion of 30 years of creditable service, the early service retirement allowance shall be equal to the greater of the following amounts: 1. The service retirement allowance as computed under G.S. 128-27(b22)_(2)a. but reduced by the sum of five-twelfths of one percent (5/12 of 1%) thereof for each month by which the retirement date precedes the first day_ of the month coincident with or next following the month the member would have attained the member's 60th birthda ..,_plus one-quarter of one percent (1/4 of 1%). thereof for each month by which the member's 60th birthday_precedes the first day of the month coincident with or next following the member's 65th birthday_ 2. The service retirement allowance as computed under G.S. 128-27(b22)_(2)a. reduced by five percent (5%) times the difference between 30 years and the amount of creditable service at retirement. 3. If the member's creditable service commenced prior to July_ 1, 1995, the service retirement allowance equal to the actuarial equivalent of the allowance payable at the age of 60 years as computed in G.S. 128-27(b22).(2)b. d. Notwithstanding the foregoing-provisions, any member whose creditable service commenced prior to July 1, 1965, shall not receive less than the benefit provided by G.S. 128-27(b)_" SECTION 3.(h) G.S. 128-27(m)reads as rewritten: "(m) Survivor's Alternate Benefit. — Upon the death of a member in service, the beneficiary designated to receive a return of accumulated contributions shall have the right to elect to receive in lieu thereof the reduced retirement allowance provided by Option two of subsection (g) above computed by assuming that the member had retired on the first day of the month following the date of lithe member's death, provided that all four of the following conditions apply: (1) a. The member had attained such age and/or creditable service to be eligible to commence retirement with an early or service retirement allowance, or b. The member had obtained 20 years of creditable service in which case the retirement allowance shall be computed in accordance with G.S. G.S. 128-27(b22)(1)c. or G.S. 128-27(b22)(2)c. notwithstanding the requirement of obtaining age 50, or bl. The member was a law enforcement officer who had obtained 15 years of service as a law enforcement officer and was killed in the line of duty, or the member was a firefighter or a rescue squad worker who had obtained 15 years of service as a firefighter or a rescue squad worker and was killed in the line of duty, in which cases the retirement allowance shall be computed in accordance with G.S. 128-27(b22).(I).., notwithstanding the requirement of obtaining age 50. C. Repealed by Session Laws 2010-72, s. 2(b), effective July 1, 2010. file:///C:/Users/bbartholomew/Documents/ATT 3 ABTRACT 9 14 2021 SL 2018-22(HB 284).html 12/13 7/28/2021 SL 2018-22(HB 284) 18 SECTION 4. Notwithstanding any other provision of law to the contrary, in order to administer the changes to the special retirement allowance, as well as the change in creditable service required for law enforcement officers to retire with a reduced benefit, as provided for in Sections 2 and 3 of this act, the Retirement Systems Division of the Department of State Treasurer may increase receipts from the retirement assets of the corresponding retirement system or pay costs associated with the administration of these changes directly from the retirement assets. SECTION 5. Sections 2 and 3 of this act become effective July 1, 2019. The remainder of this act is effective when it becomes law. In the General Assembly read three times and ratified this the 14th day of June, 2018. s/ Philip E. Berger President Pro Tempore of the Senate s/ Tim Moore Speaker of the House of Representatives s/ Roy Cooper Governor Approved 9:11 a.m. this 22nd day of June, 2018 file:///C:/Users/bbartholomew/Documents/ATT 3 ABTRACT 9 14 2021 SL 2018-22(HB 284).html 13/13 19 ATTACHMENT 4 Sec. 28-38. - Retirement. (a) Membership in the North Carolina Local Government Retirement System is mandatory for full-time permanent and part-time permanent employees. Employees become a member of the North Carolina Local Governmental Employees' Retirement System on the date of hire if the duties require the employee work at least 1,000 hours a year and the employee is under age 62 at the date of hire. (b) Vested Right. After five years of service, employees are eligible for monthly retirement benefits based on salary, age and years of service. (c) Service Retirement With 30 Years.After 30 or more years of creditable service, an employee is eligible for unreduced service retirement. An employee must not work nor be paid in advance for work dating the month following retirement. (d) Service Retirement At Age 65. At age 65 or thereafter an employee is eligible for unreduced service retirement, with at least five years of service. (Age 55 if the employee is a member of the Law Enforcement Officer's Retirement System) (e) Post Retirement Increases. After retirement, an employee may become eligible for increases that become a permanent part of retirement benefits. (f) Disability. Disability benefits are available after five years of service, should the employee become permanently disabled, mentally or physically, for the further performance of duty as certified by the Medical Board of the Retirement System, upon written application to the Board of Trustees, be retired on a disability retirement allowance.This allowance is calculated as a service retirement allowance based on the average final compensation prior to retirement and the years of service the employee would have had at age 65. (g) Death Benefit. Death benefit is paid the beneficiary if death occurs in active service after one year of service. The beneficiary would be paid a death benefit equal to the compensation earned and on which contributions were made in the previous calendar year, or the compensation earned and on which contributions were made in the 12 months preceding the month of death, whichever is greater, subject to a maximum of$20,000.00. If death occurs within 90 days after the last day of actual service,the death benefit would be payable; or, if the employee had applied for and was entitled to receive a disability retirement allowance, the death benefit would be payable provided the disability retirement allowance had not been discontinued or revoked during the one year period. In case of resignation or termination, last day of actual service is the last day actually worked; in all other cases, it is the date on which sick and annual leave expires. (h) Tax Sheltering of Retirement Contributions. Effective July 1, 1982, Orange County elected a method of tax sheltering of member contributions to the North Carolina Local Government Employees' Retirement System. This change became effective January 1, 1983 for the N.C. Law Enforcement Officer Retirement System. This is funded by the same six percent retirement contribution deducted from a member's gross salary. Using this arrangement, there is no additional cost to an employer. The Retirement System will continue to credit the amount of contribution to the employee's account in the Retirement System.Also, the Retirement System would continue to recognize an employee's full salary for purposes of compensation. Should an employee terminate and request a refund, the total of contributions both before and after the election would be refunded. Upon a refund, the System will report to the Internal Revenue Service an employee's contribution made after the election of the pick up as taxable income in the year of the refund. At retirement, an employee has to pay Federal income tax on all amounts received over and above the contributions made prior to the date of election to tax shelter the contributions. (i) Supplemental Retirement Savings Plan Employer Contribution. 20 (1) Orange County makes a Supplemental Retirement contribution to an authorized 401(k) or 457 Plan for each eligible employee as the Board of County Commissioners provides in its annual budget. (2) For this purpose, eligible employees are County employees both full time and part time (regularly scheduled at least 20 hours each workweek) appointed to permanent positions who are members of the N. C. Local Government Employees' Retirement System and who are not sworn law enforcement officers. See Section 28-380) for additional retirement benefits for Law Enforcement Officers. (3) To participate, an eligible employee completes the appropriate enrollment form. (4) Employees are eligible for coverage effective the date of appointment to the permanent position and enrollment in the retirement system. Contributions are suspended for any pay period in which the employee is in leave without pay status for that pay period.At termination,the County's supplemental retirement contribution ends. 0) Additional Retirement Benefits for Law Enforcement Officers. In accordance with N.C. Gen. Stat. § 143-166.70 additional retirement benefits are provided for Local Law Enforcement Officers. (1) Local governments are required to provide contributions to the Special Retirement Income Program (401 K Plan)for local law enforcement officers as follows: 2% of salary amount in F.Y. 1987- 1988 5% of salary amount in F.Y. 1988- 1989 and thereafter (2) Special Separation Allowance. Local governments are required to pay a special separation allowance to sworn local law enforcement officers in accordance with N.C. Gen.Stat.§ 143-166.42. a. Eligibility. The local law enforcement officer must meet one of the following two criteria: 1. are at least age 55 and have five years creditable service as a law enforcement officer, or 2. have at least 30 years creditable service (regardless of age) in the Local Government Employees'Retirement System with at least 50 percent of that service being in law enforcement. b. Termination of Benefits. If the law enforcement officer meets one of the two criteria in Subsection 28-380)(2) the officer is entitled to a special separation allowance from retirement until: 1. The death of the officer; 2. The last day of the month in which the officer attains 62 years of age; or 3. The first day of reemployment by a local government employer in any capacity; however, an officer may be employed in a public safety position in a capacity not requiring participation in the Local Government Employees' Retirement system, and doing so will not cause payments to cease. c. Calculation of Benefits. The Special Separation Allowance received by the officer shall be calculated as provided by N.C. Gen. Stat. § 143-166.42. d. Separation Buyout for Law Enforcement Officers. Upon a qualifying retirement,with the Local Government Employee Retirement System (LGERS),a local law enforcement officer may receive a buyout of the Special Separation Allowance subject to the following: 1.The officer has at least 10 years of service to Orange County in any classification and at least 5 years creditable service to Orange County as a law enforcement officer; and 21 2. The officer does not otherwise qualify for the Special Separation Allowance as defined within this Ordinance; and 3. Either the Officer, a. has applied for and received disability retirement from the Local Government Employees Retirement System, or b. upon submission of a written request by the Sheriff to the County Manager, the County Manager will make a determination based on the following: i. the Sheriff's request is reasonable and agreeable by the officer; and ii. there are unique circumstances for the request; and iii. the officer is in good standing based on the officer's law enforcement record; and iii. any other special considerations, including but not limited to the retiring officer and the County deriving a greater benefit from the retiring officer receiving the buyout than from their continued service as a law enforcement officer. 4. In the event a law enforcement officer is eligible for the Separation Buyout as described in subsections 1 -4 of this section the officer may receive a Separation Buyout as follows; Years of Creditable Service as a LawPercenta e of Separation Buyout Value Enforcement Officer as Calculated by Subsection c. above 5 but less than-1 0 ears 50% 10 but less than 15 ears 60% 15 but less than 20 ears 70% 20 but less than 25 years n 25 but less than 30 years 90% 5. The lump sum separation buyout shall be paid from funds available and shall not exceed the total that would otherwise be paid had the officer been eligible for the Special Separation Allowance as described herein. e. The benefits payable under this section are not subject to any increases in salary or retirement allowances that may be authorized by the Board of County Commissioners. (3) Administrative rulings,opinions and procedures of the Retirement System shall be considered in the administration of retirement benefits. (k) Separate Benefit Fund for Law Enforcement Officers Only. (1) If an employee dies while an active member of the Separate Benefit Fund, a death benefit of$5,000.00 is paid to the designated beneficiary. To qualify the employee must be an active member of six months or the employee's death is accidental, regardless of length of service. To become an active member, the employee must be under age 55, in active service and have completed and returned a written application form. (2) Retired members of the Separate Benefit Fund beneficiaries will receive a death benefit of $3,000.00. To be eligible for this benefit, the employee must have been an active member of the Separate Benefit Fund with at least 20 years of creditable service or retired because of total and permanent disability with at least ten years of creditable service or line-of-duty disability. 22 (1) Accidental Death Benefit for Law Enforcement Officers Only. (1) The accidental death benefit automatically protects the employee's survivors if the employee should die in an on-the-job accident. The accident must occur while the employee is performing duties as an officer. (2) In addition, the employee's surviving spouse, parent, or other relative will receive $1,000.00 for burial expenses. Each of the employee's dependent children under 18 (or over, if incapable of earning a living)will receive $200.00. The employee's surviving spouse will receive $500.00. If the employee has no surviving spouse, the Retirement System may distribute the $500.00 to the employee's other eligible family members. Under the accidental death benefit, the total amount of payments to the employee's survivors cannot be greater than $2,100.00. (m) A Line-of-Duty Death Benefit (For Law Enforcement Officers Only). Law Enforcement Officers may also be entitled to additional benefits to include: (1) $25,000.00 administered jointly by the North Carolina Industrial Commission and the State Auditor. (2) $50,000.00 from the Federal Law Enforcement Assistance Administration. (n) Lump Sum Death Benefit(For Law Enforcement Officers) See Section 28-38(g) Death Benefit. (Ord. of 06-07-1976, eff. 08-01-1976; Amend. of 01-21-2010, Art. IV§ 7.0, eff. 01-21-2010; Amend. of 10- 05-2010, eff. 01-01-2011; Amend. of 11-16-2010, eff. 01-01-2011; Amend. of 6-18-2013, eff. 7-1-2013)