AGENDA ITEM 8
April 13, 2010
Public
Hearing
MEMORANDUM
TO:
FROM:
SUBJECT:
County Council
Robert
H.
Drummer, Senior Legislative
If:\
Attomeyrl!J;J
Public
Hearing:
Expedited Bill 9-10, Personnel- Retirement Incentive Program
Expedited Bill 9-10, Personnel - Retirement Incentive Program, sponsored by the Council
President at the request ofthe County Executive, was introduced on March 23, 2010. A Management and
Fiscal Policy Committee worksession is tentatively scheduled for April 19 at 2:00 p.m.
Bill 9-10 would permit a Group A (unrepresented, non-public safety employees), Group E
(Deputy Sheriffs and Correctional Officers) or Group H (non-public safety employees represented by
MCGEO) member of the Employees Retirement System to apply to participate in the 2010 Retirement
Incentive Program (RIP). An employee must be:
(I)
eligible for:
(a)
normal retirement on or before June 1,2010; or
(b)
early retirement, and within 2 years of meeting the criteria for normal retirement
on June 1,2010; and
assigned to a position in a class of positions subject to a Reduction in Force (RIF).
(2)
The Chief Administrative Officer would approve applications from Executive Branch employees
and the Council Staff Director would approve applications from Legislative Branch employees. The
number of employees who can participate in the RIP in any affected class is limited to the number of
positions in the affected class scheduled to be abolished. A participant would be able to choose an
additional retirement benefit of $35,000, $30,000 plus an enhanced retiree life insurance benefit, or
$28,000 plus an enhanced retiree health plan cost sharing benefit. In addition, a participant's pension
benefit would not be reduced for early retirement.
Elected officials, appointed officials, employees of participating outside agencies, and employees
who participate in either the Retirement Savings Plan or the Guaranteed Retirement Income Plan would
not be eligible to participate. Bill 9-10 would implement a side agreement with MCGEO.
This packet contains:
Expedited Bill 9-10
Legislative Request Report
Memo from Executive
Circle #
1
8
9
F:\LAw\BILLS\J 009 RIP 2010\Public Hearing Memo.Doc
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Expedited Bill No.
--,9~-1..:::.0--=--:-
_ _
Concerning:
Personnel - Retirement
Incentive Program
Revised: March 18. 2010 Draft No.
L
Introduced:
March 23, 2010
Expires:
September 23. 2011
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date:
.....!.N.:.::o~n:.:::.e
_ _ _ _ __
ChI _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the Request of the County Executive
AN
EXPEDITED
ACT to:
(1)
provide a retirement incentive program for certain members of the Employees'
Retirement System; and
(2)
generally amend the law regarding the Employees' Retirement System.
By amending
Montgomery County Code
Chapter 33, Personnel and Human Resources
Sections 33-40, 33-42, and 33-44
By adding
Montgomery County Code
Chapter 33, Personnel and Human Resources
Section 33-42A
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets))
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law Wlaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act.'
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Expedited Bill No. 9-10
1
Sec.
1.
Sections 33-40, 33-42, and 33-44 are amended as follows:
Sec. 33-40. Employer Contributions
*
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*
*
*
Guaranteed Retirement Income Plan
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7
*
*
(±)
For any member who received g contribution to the member's
guaranteed retirement income plan account under Section 33­
42A, interest must be credited at an annual rate of 7.25%. If the
annual 7.25% interest rate does not comply with applicable law,
the third segment rate described in Internal Revenue Code
Section 430(h)(2)(G) or any successor provision must apply.
Interest must be credited to g member's guaranteed retirement
income plan account balance on g monthly basis as of the last
day of the month.
33-42. Amount of pension at normal retirement date or early retirement date.
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*
*
*
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(b) Amount of pension at normal retirement date.
(4) Guaranteed retirement income plan. A member who retires on
or after the member's normal retirement date.,. except g member
who receives g contribution under Section 33-42A, may receive
that member's vested guaranteed retirement income plan
account balance under Section 33-44. A member who receives
g contribution under Section 33-42A must not receive g
distribution of the member's guaranteed retirement income plan
account balance until the member attains the Social Security
retirement age.
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*
*
*
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Expedited Bill No. 9-10
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33-44. Pension payment options and cost-of-living adjustments.
*
(g)
*
*
~
Distributions from the Guaranteed Retirement Income Plan.
[Upon
tennination of County employment, a] A participant who receives
contribution under Section 33-42A must not receive
~
distribution
until the participant attains the Social Security retirement age. Any
other participant may receive
tenninates County employment.
A participant may [request] elect a distribution from the guaranteed
retirement income plan of a participant's vested guaranteed retirement
income plan account balance as follows:
[.]
(1)
Lump Sum Method of Distribution. Unless a participant elects
an annuity under paragraph (2), a participant must receive the
participant's vested guaranteed retirement income plan account
balance in a single lump sum. The participant may have the
lump sum paid as a direct rollover to an eligible retirement
plan.:!. as defined in the Internal Revenue Code.
(2)
Annuity Method of Distribution. A participant may elect to
receive the participant's guaranteed retirement income plan
account balance paid
in~
~
distribution when the participant
®
Qll
a single life annuity payable to the participant during the
life of that participant; or
~
ioint and survivor annuity payable to the participant
over the participant's lifetime and, at the participant's
death, payable to the designated beneficiary (spouse,
domestic partner, or children only) who survives.
Payments must be made for the designated beneficiary's
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Expedited Bill No. 9-10
55
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lifetime in the amount payable to the participant or
another amount elected
.by
the participant, but not less
than 10 percent of the amount payable to the participant.
[The Board must use the participant's vested guaranteed
retirement income plan account balance to buy an
annuity contract from an insurance company authorized
to do business in the State.]
(3)
No other form of payment options listed in this Section
available to guaranteed retirement income plan participants.
Sec. 2. Section 33-42A is added as follows:
33-42A. 2010 Retirement Incentive Proeram.
(ill
IS
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Definitions.
Affected class
means an occupational class or
~
group of occupational
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classes in
~
department, including all classes in an occupational series
at and below the budget level class, if:
ill
ill
the class includes
~
position that the department director intends
to eliminate; and
eliminating the position may cause an employee in the class to
be demoted or terminated.
~
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Affected employee
means an employee assigned to
position in an
affected class who has received
Reduction in Force (RIF).
(hl
~
notice of intent or notification of
~
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Eligibility.
ill
A Group
At
or H member who is employed in
~
part time or
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full time position may apply to participate in the 2010
Retirement Incentive Program if the member:
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W
is eligible for:
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1
BiI12,Doc
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Expedited Bill No. 9-10
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ill
(ii)
normal retirement on or before June .12010; or
early retirement, and is within
2.
years of meeting
the criteria for normal retirement on June .1 2010;
and
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87
.an
ill
(A)
is an affected employee.
A member is not eligible to participate in the 2010 Retirement
Incentive Program if the member:
receives
~
disability retirement under Section 33-43;
receives
~
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.an
.cg
discontinued service retirement under Section
33-4S(d);
is an elected or appointed official; or
is employed
Qy
~
participating agency.
.em
ill
A member must apply to participate in the 2010 Retirement
Incentive Program, must complete all required forms
Qy
May
14, 2010, and must retire on June .12010.
ill
A member who applies for
~
disability retirement under Section
33-43 must not receive any benefit under this Section unless the
member's application for disability retirement is denied and all
appeals from that denial are exhausted.
W
Early retirement reduction.
A member's pension benefit must not be
reduced for early retirement if the member is eligible for early
retirement and within
~
years of eligibility for normal retirement.
@
Additional Retirement Benefit.
calculated under this Section,
~
In addition to the pension benefit
participant must elect one of the
following additional retirement benefits. A part time participant must
receive
~
pro-rata portion of the applicable retirement benefit, based
on that participant's percent of budgeted full time employment.
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Expedited Bill No. 9-10
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~
ill
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ill
$35,000 pension benefit;
$30,000 pension benefit and an enhanced retiree life insurance
benefit; or
$28,000 pension benefit and an enhanced retiree health plan
cost sharing benefit.
The participant must elect to receive the cash portion of the additional
pension benefit paid under Subsection
@
as:
ill
~
single lump sum on July
L
2010:
to the member or the member's designated beneficiary if
the member dies before receiving the lump sum payment;
.cAl
.an
(g
as
~
direct rollover to an eligible retirement plan (as
defined in the Internal Revenue Code); or
~
combination of.cAl and
tID.;.
ill
11
equal monthly payments beginning on July
L
2010:
.cAl
to the member or the member's designated beneficiary if
the member dies before receiving all 12 payments;
.an
(g
as
~
direct rollover to an eligible retirement plan (as
defined in the Internal Revenue Code); or
~
combination of.cAl and
tID.;.
ill
~
contribution to an account established for the member under
the guaranteed retirement income plan. A member must receive
the member's guaranteed retirement income plan account
balance when the member attains the Social Security retirement
age; or
ill
an additional pension benefit paid over the member's lifetime in
the pension option elected
Qy
the member under Section 33-44,
beginning on July
L
2010.
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Expedited Bill No. 9-10
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ill
Cost
gf
Living.
Any cost of living adjustment does not apply to this
benefit. A cost of living adjustment under Section 33-44(c) must not
include the additional pension benefit paid under this Section.
(g)
Approval.
The Chief Administrative Officer must approve
~
request
to participate in the program from
~
member employed in the
Executive Branch. The Council Staff Director must approve
~
request
to participate from
~
member employed in the Legislative Branch.
The Chief Administrative Officer and the Council Staff Director must
not approve more applications from an affected class than the number
of positions that are abolished in the affected class. If more members
apply to participate in the program than the number of positions
abolished, the participant's must be approved in order of County
seniority.
regulation.
Sec. 3. Effective Date.
The Council declares that this legislation is necessary for the immediate
protection of the public interest. This Act takes effect on the date when it becomes
law.
Approved:
Seniority must be calculated under the RIF personnel
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156
Nancy Floreen, President, County Council
Date
157
Approved:
158
Isiah Leggett, County Executive
Date
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LEGISLATIVE REQUEST REPORT
Expedited Bill 9-10
Personnel
Retirement Incentive Program
DESCRIPTION:
Expedited Bill 9-10 would establish a retirement incentive program targeted
for employees who occupy a class within an occupational series affected by
the Reduction in Force (RIF) across departments. A participant must be
eligible for normal retirement or within 2 years of meeting the criteria for
normal retirement.
The Executive's proposed FY 2011 operating budget would abolish 232
filled positions. Bill 9-10 would reduce the adverse impact on affected
employees of these reductions in force by providing an incentive for senior
employees in an affected class to voluntarily retire.
PROBLEM:
GOALS AND
OBJECTIVES:
Bill 9-10 would reduce the number of employees who are terminated due to
the reduction in force by increasing the number of senior employees in each
affected class who voluntarily retire.
COORDINATION:
Office of Human Resources, Office ofthe County Attorney
FISCAL IMPACT:
Office of Management and Budget
ECONOMIC
IMPACT:
EVALUATION:
fiscal impact statement to
be
provided at a later date
nla
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OFFICE OF THE COUNTY EXEC1)TIVE
Isiah Leggett
County Executive
ROCKVILLE, MARYLAND 20850
MEMORANDUM
March 16, 2010
TO:
Nancy Floreen, President
Montgomery County Council
FROM:
SUBJECT:
Isiah Leggett, County
Executive--P(~
\
~
-(
. Expedited Bill to Create a Retirement Incentive Program
I am attaching for Council introduction an Expedited Bill which would establish
a targeted retirement incentive program (RIP) for members ofthe Employees' Retirement
System in Group A (unrepresented), Group
H
(MCGEO represented), and Group E (Department
of Corrections unrepresented and MCGEO represented). Participation
in
the 2010 RIP is limited
to employees who occupy a class within an occupational series affected by the reduction
in
force
(RIP) across departments and who meet the criteria for either normal retirement or for early
retirement and are within two years ofnormal retirement. Eligibility for the
RIP
is limited to the
number ofpositions
in
the affected class targeted for abolishment. The bill provides a choice of
financial incentives for employees who elect to participate in the RIP.
A targeted RIP is one of a variety of ways that we are trying to reduce the impact
ofthe FY 2011 budget cuts on employee reductions
in
force. This bill results from a negotiated
side agreement with the Municipal
&
County Government Employees OrganizationfUnited Food
and Commercial Workers Union Local 1994 during recent collective bargaining. A fiscal impact
statement will be provided to the Council at a later date.
Attachments
IL: sw