March 19, 2021 - Executive Director Update: Week Number Ten of the Legislative Session

The 93rd General Assembly

Joint Public Retirement & Social Security Committee (JRC)

The Joint Retirement Committee (JRC) met on Monday, March 15th. The next Joint Retirement Committee meeting will be held on Monday, March 22, 2021 at 8:30 a.m. where Representative David Tollett will present HB1169.

SB232 was passed out of the House and the Senate this week. It is on the Governor’s desk to sign. I would like to thank Senator Greg Leding for advocating on behalf of ATRS members through this legislation. Thank you to Representative Les Warren for assisting in the presentation of this bill. This change to ATRS law will allow public school employees serving in roles such as paraprofessionals, food service staff, and bus drivers the opportunity to have additional paid training that will not jeopardize their noncontributory status.

HB1275 was passed out of the House and the Senate this week. It is on the Governor’s desk to sign. I would like to thank Representative Stu Smith for advocating on behalf of ATRS members through this legislation. Thank you to Senator Kim Hammer for presenting this bill on the Senate floor this week. This change to ATRS law will clarify the ATRS process for establishing reciprocal service for participating in an alternate retirement plan. Fairness is added for members that have served Arkansas at both the higher-education level and the secondary-education level by providing exceptions for withdrawals made after the member reaches the age of 59 ½ and eligible rollover transactions.

House Bill 1169 - Public School Employees Heroes Act

HB1169, sponsored by Representative David Tollett, will be presented at the March 22nd JRC meeting. This bill was last amended on March 15th.

First of all, I would like to thank Representative David Tollett for advocating for our public school employees for their service and sacrifice during this pandemic. I certainly agree with the spirit of this bill and agree that all public school employees are heroes. Their courage and dedication demonstrated this year, in an effort to keep our children from falling behind in their education, is commendable. 

This bill would give ATRS members, who were employed by a public school for the full 2020-2021 school year, an option to retire early with 27 years of service with only a 5% reduction. Currently this level of early retirement has a 10% reduction. However, this retirement benefit comes at a price. The ATRS unfunded liabilities would be increased by about $10 million and increase the amortization period by about 3 months. This bill was amended on March 2^nd in a way to reduce the cost effect on ATRS. However, the bill in its current form still takes the ATRS unfunded liabilities in the wrong direction. The ATRS Board and I have a fiduciary duty to strengthen the retirement system so that it can be counted on to provide lifetime retirement benefits for all educators, both now and well into the future. I agree with the sentiment of this bill. But from the fiduciary point of view, the strength and stability of the Teacher Retirement System should take precedence.

Monitoring Teacher Retirement Related Legislation

Now that the deadline for filing bills that directly impact one of the Arkansas public retirement plans has passed, ATRS is monitoring other bills as they are filed to determine if they could indirectly impact ATRS. As these bills are identified, we will add them to the ATRS Legislation page on the website. These bills will start in the “ATRS Monitoring” status. As more information is gathered about the purpose, intent, or actuarial cost of the bills, the status could change to “ATRS Opposes” or “ATRS Supports”.

As a reminder, the Joint Retirement Committee (JRC) meeting will be video streamed over the Internet each Monday morning during the session. Just visit the Arkansas Legislative Meetings and Events web page on Monday at 8:30 a.m. Look for the item “PUBLIC RETIREMENT & SOCIAL SECURITY PROGRAMS-JOINT” and click on the “video” icon. The agenda for the meeting will be posted here at least 18 hours before the start of the meeting.

Here is the link to the full procedures for public access to the committee meetings: Committee Procedures and Public Access for 2021 Regular Session

ATRS will try to keep its members informed about the bills that impact ATRS, its members and employers. For more information regarding the ATRS Bill Package and Bills that may Impact ATRS visit the Legislation page on our website.

Stay in Touch with ATRS and View YOUR Account Information

The ATRS website allows members to have direct access to specific member account information. Now, approximately 24,200 members have direct account access to individualized account information. Here is the link to the instructions to sign up: www.artrs.gov/registration.

You can also sign up to obtain these executive director updates through your private email address. Updates are made throughout the year such as at retirement season and other times when information needs to be shared. Now, over 26,000 people have signed up to receive this executive director update by direct email delivery. It is always a great pleasure for ATRS staff to learn of more ways to provide information to ATRS members, employers, beneficiaries, government officials, and the public. The ATRS Board is committed to providing a system that is member friendly and transparent. Remember that ATRS is here to serve you.

Best regards,

Clint Rhoden
Executive Director ATRS
Office: (501) 588-4367
Mobile: (501) 291-1623
clintr@artrs.gov

March 11, 2021 - Executive Director Update: Week Number Nine of the Legislative Session - JRC Meeting Room Change!

The 93rd General Assembly

Joint Public Retirement & Social Security Committee (JRC)

The March 15th Joint Retirement Committee (JRC) meeting will be in Room 151 of the State Capitol.

The Joint Retirement Committee (JRC) met on Monday, March 8th. The next Joint Retirement Committee meeting will be held on Monday, March 15, 2021 at 8:30 a.m. where Senator Greg Leding, Representative Stu Smith, and I will present SB232 and HB1275. 

HB1326 has been signed by Governor Hutchinson and is now Act 279. Act 279 is for technical corrections that will streamline the Teacher Retirement laws by eliminating obsolete language and codifying existing practice and ATRS Board intent. I want to express my appreciation to Representative Les Warren for sponsoring this bill.

House Bill 1275 - Reciprocity under an Alternate Retirement Plan

HB1275, sponsored by Representative Stu Smith, will be presented at the March 15^th JRC meeting. This bill was last amended on March 8th. 

A Teacher Retirement member may establish reciprocal service by participating in an alternate retirement plan established by an Arkansas university or vocational school. Currently, ATRS prevents these members from establishing reciprocal service if the member makes any withdrawal from the alternate retirement plan. This is the case even for withdrawals that are not penalized by the Internal Revenue Code.

Examples of these non-penalized withdrawals are:

• withdrawals made after the age of 59 ½; or
• eligible rollover transactions to Individual Retirement Accounts.

This bill establishes the basic rule that all funds must remain in the alternate retirement plan in order to establish reciprocal service. However, exceptions for withdrawals made after the member reaches the age of 59 ½ and eligible rollover transactions under the Internal Revenue Code are allowed.

This bill is needed to add fairness to the system for members that have served Arkansas at both the higher-education level and the secondary level. If the IRS does not penalize certain withdrawals from an alternate retirement plan, then they should not be penalized by ATRS. This bill will allow some members to become eligible for retirement benefits in keeping with the spirit of our reciprocity laws.

The system’s actuary found that this bill would not have any significant cost effect.

Senate Bill 232 - Contract for 185 Days or more and Contributory Designation

SB232, sponsored by Senator Greg Leding, will be presented at the March 15^th JRC meeting. This bill was last amended on March 9th. 

Currently a Teacher Retirement member employed under a contract for 181 days or more is required to make contributions on their salary to ATRS. This current law was adopted in the 1990’s. At that time the typical school teacher contract was for 181 days. Now, the typical teacher contract is for 190 days. 

The purpose of this bill is to allow ATRS members who are still in noncontributory status to be able to accept contracts up to 184 days and not be forced into the contributory designation. This is an increase of 4 days. Since the typical teacher contract has increased from 181 days to 190 days, it makes sense to increase the number of contract days that forces the contributory designation.

This bill is needed to allow for better recruitment of employees who work only on the days that students are present at a school. Public school employees serving as paraprofessionals, food service staff, and bus drivers are employed based on the number of days that students are present at school. The number is currently 179 days. By increasing the contributory mandate, the number of available paid training days will be increased from 1 day to 5 days. 

Back when the original contributory mandate was set at 181 days the typical teacher contract was for 181 days. However, over the past 20 years the school year has increased a few days and the number of required in-service days has increased by a few days. Now the typical teacher contract is for 190 days. This change is essentially technical in nature to adjust for a slightly longer school year.

The system’s actuary found that this bill would not have any significant cost effect.

Monitoring Teacher Retirement Related Legislation

Now that the deadline for filing bills that directly impact one of the Arkansas public retirement plans has passed, ATRS is monitoring other bills as they are filed to determine if they could indirectly impact ATRS. As these bills are identified, we will add them to the ATRS Legislation page on the website. These bills will start in the “ATRS Monitoring” status. As more information is gathered about the purpose, intent, or actuarial cost of the bills, the status could change to “ATRS Opposes” or “ATRS Supports”.

As a reminder, the Joint Retirement Committee (JRC) meeting will be video streamed over the Internet each Monday morning during the session. Just visit the Arkansas Legislative Meetings and Events web page on Monday at 8:30 a.m. Look for the item “PUBLIC RETIREMENT & SOCIAL SECURITY PROGRAMS-JOINT” and click on the “video” icon. The agenda for the meeting will be posted here at least 18 hours before the start of the meeting.

Here is the link to the full procedures for public access to the committee meetings: Committee Procedures and Public Access for 2021 Regular Session

ATRS will try to keep its members informed about the bills that impact ATRS, its members and employers. For more information regarding the ATRS Bill Package and Bills that may Impact ATRS visit the Legislation page on our website.

Stay in Touch with ATRS and View YOUR Account Information

The ATRS website allows members to have direct access to specific member account information. Now, approximately 24,200 members have direct account access to individualized account information. Here is the link to the instructions to sign up: www.artrs.gov/registration.

You can also sign up to obtain these executive director updates through your private email address. Updates are made throughout the year such as at retirement season and other times when information needs to be shared. Now, over 25,900 people have signed up to receive this executive director update by direct email delivery. It is always a great pleasure for ATRS staff to learn of more ways to provide information to ATRS members, employers, beneficiaries, government officials, and the public. The ATRS Board is committed to providing a system that is member friendly and transparent. Remember that ATRS is here to serve you.

Best regards,

Clint Rhoden
Executive Director ATRS
Office: (501) 588-4367
Mobile: (501) 291-1623
clintr@artrs.gov