Introduced Version






SENATE BILL No. 332

_____


DIGEST OF INTRODUCED BILL



Citations Affected: IC 5-10; IC 11-8-2-12; IC 20-12-19.5-1.

Synopsis: Department of correction pension benefits. Provides that the correctional officers and hazardous duty employees pension fund (fund) shall be established for department of correction employees who work within a prison or juvenile facility or perform parole or emergency response operations and functions, if the commissioner of the department of correction makes a finding that the fund should be established and that there is sufficient funding for the fund. Provides that the public employees' retirement fund (PERF) board administers the fund. Provides that if an individual who is a member of PERF becomes a member of the fund, the PERF board shall transfer to the fund all money and years of creditable service standing to the credit of the member in PERF. Provides that a member of the fund is entitled to a full pension benefit if the member: (1) is at least 55 years of age and completes at least 25 years of creditable service in the fund; or (2) is at least 65 years of age and completes at least ten years of creditable service in the fund. Provides that a member of the fund who is at least 45 years of age and completes at least 20 years of creditable service in the fund is eligible for early retirement with a reduced pension. Provides for disability and survivor benefits. Provides that a member's annual benefit equals the product of: (1) the average of the member's five highest annual salary amounts; (2) the member's years of service; and (3) a multiplier of 2% (if the member has at least 20 years of service) or 1.1% (if the member has less than 20 years of service). Provides that a member is entitled to service credit in the fund for any prior service in PERF or the Indiana state teachers' retirement fund (TRF). Provides that prior service within a prison or juvenile facility or

(Continued next page)

Effective: July 1, 2006; January 1, 2007.





Young R Michael




    January 10, 2006, read first time and referred to Committee on Pensions and Labor.





Digest Continued

while performing parole or emergency response operations and functions may be used with the 2% multiplier in determining a member's retirement benefits. Provides that other prior service may be used with the 1.1% multiplier in determining a member's retirement benefits. Allows a member to purchase prior PERF or TRF service credit at actuarial cost so that the prior service is used with the 2% multiplier, even if it was not for service within a prison or juvenile facility or while performing parole or emergency response operations and functions. Provides that retired members, survivors, and beneficiaries receive the same cost-of-living adjustment as is provided to PERF members, survivors, and beneficiaries. Establishes a deferred retirement option plan (DROP) for members of the correctional officers and hazardous duty employees pension fund. Provides that a member is eligible to participate in the DROP if the member may retire and receive an unreduced benefit. Provides that a member who wishes to participate in the DROP must make an irrevocable election and choose a retirement date that is not sooner than 12 months and not later than 36 months after the member enters the DROP. Provides that a member in the DROP continues in active service and both the member and the member's employer continue to make contributions to the applicable fund. Provides that a member retiring from the DROP receives a monthly benefit plus an additional amount paid either in a lump sum or in installments. Provides that if a member exits the DROP for any reason other than retirement on the member's chosen retirement date, the member's or the member's survivors' benefits are calculated as if the member never entered the DROP. Specifies that if an employee of the department of correction: (1) works within a prison or juvenile facility or performs parole or emergency response operations and functions; and (2) dies in the line of duty; the employee's survivor is entitled to the $150,000 death benefit from the special death benefit fund. Provides that each child and surviving spouse of such an employee is eligible to attend any state supported college, university, or technical school without paying tuition or mandatory fees.



Introduced

Second Regular Session 114th General Assembly (2006)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts between statutes enacted by the 2005 Regular Session of the General Assembly.

SENATE BILL No. 332



    A BILL FOR AN ACT to amend the Indiana Code concerning pensions.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 5-10-5.6; (06)IN0332.1.1. -->     SECTION 1. IC 5-10-5.6 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2006]:
    Chapter 5.6. Correctional Officers and Hazardous Duty Employees Pension Fund
    Sec. 1. As used in this chapter, "average annual salary" means the average annual salary of a member in a position covered by the fund during the member's five (5) years of highest annual salary in the ten (10) years immediately preceding the member's retirement date, determined without regard to any salary reduction agreement established under Section 125 of the Internal Revenue Code.
    Sec. 2. As used in this chapter, "department" means the department of correction.
    Sec. 3. As used in this chapter, "fund" means the correctional

officers and hazardous duty employees pension fund established by section 13 of this chapter.
     Sec. 4. As used in this chapter, "Internal Revenue Code":
        (1) means the Internal Revenue Code of 1954, as in effect on September 1, 1974, if permitted with respect to governmental plans;
or
        (2) to the extent not inconsistent with subdivision (1), has the meaning set forth in IC 6-3-1-11.

     Sec. 5. As used in this chapter, "member" means an employee of the department who does any of the following after June 30, 2006:
         (1) Works within a prison or juvenile facility.
        (2) Performs parole or emergency response operations and functions.

     Sec. 6. As used in this chapter, "pension trust" means the agreement between the department and the PERF board as trustee under the terms of which an actuarially sound retirement pension plan is established and operated for the exclusive benefit of the members and their beneficiaries.
     Sec. 7. As used in this chapter, "PERF board" refers to the board of trustees of PERF.
     Sec. 8. As used in this chapter, "public employees' retirement fund" or "PERF" means the public employees' retirement fund established by IC 5-10.3-2-1.
     Sec. 9. As used in this chapter, "salary" means the total compensation, excluding expense allowances, paid to any member by the department, determined without regard to any salary reduction agreement established under Section 125 of the Internal Revenue Code.
     Sec. 10. As used in this chapter, "trust fund" means the following assets of the pension trust established under this chapter:
        (1) Contributions from the department.
        (2) Contributions from members.
        (3) Any other payments or contributions made to the pension trust.
        (4) The income and proceeds derived from the investment of the assets of the pension trust.

     Sec. 11. Except as provided in this chapter and unless the context clearly indicates otherwise, other words and phrases used in this chapter, for purposes of this chapter, have the meanings set forth in IC 5-10.3.
     Sec. 12. (a) The commissioner of the department may make a

finding that a state retirement fund should be established under this chapter and that there is sufficient funding for the state retirement fund.
    (b) If the commissioner of the department makes the finding required by subsection (a), a state retirement fund shall be established by the PERF board to provide retirement, disability, and survivor benefits to employees of the department who do any of the following:
        (1) Work within a prison or juvenile facility.
        (2) Perform parole or emergency response operations and functions.
    (c) The trust agreement
established by agreement between the department and the PERF board, this chapter, and any rules adopted by the PERF under this chapter constitute the plan document for the fund.
     (d) The trust agreement may provide other terms and conditions that are consistent with this chapter.
     Sec. 13. (a) The correctional officers and hazardous duty employees pension fund is established.
     (b) The following apply to the fund:
        (1) The fund is a trust.
        (2) The fund consists of the following:
            (A) Contributions from the department.
            (B) Contributions from members.
            (C) Any other payments or contributions made to the fund.
            (D) The income and proceeds derived from the investment of the assets of the fund.
        (3) The fund shall be used to make benefit payments to members and their survivors in the amounts and under the conditions specified in this chapter.
        (4) The PERF board shall administer the fund.
        (5) Money in the fund may be commingled for investment purposes only with assets of other funds administered by the PERF board.
        (6) The fund shall be invested only in accordance with state laws governing the investment of public trust funds. However, the fund may be invested in other investments specifically designated in the pension trust.
        (7) Subject to the terms of the pension trust, the PERF board
may establish investment guidelines and limits on all types of investments, including stocks and bonds, and take other action necessary to fulfill its duty as a fiduciary for the fund.


         (8) The PERF board shall invest the fund assets with the same care, skill, prudence, and diligence that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a similar character with similar aims.
        (9) The PERF board shall diversify the fund's investments in accordance with prudent investment standards.
        (10) The PERF board shall receive and hold as trustee for the uses and purposes set forth in the pension trust any money paid to the fund by the department, a member, or any other person.
    Sec. 14. The PERF board is the trustee of the fund and shall manage and administer the fund.
    Sec. 15. (a) The PERF board shall:
        (1) determine eligibility for and make payments of benefits under this chapter;
        (2) in accordance with the powers and duties granted in IC 5-10.3-3-7, IC 5-10.3-3-7.1, IC 5-10.3-3-8, and IC 5-10.3-5-3 through IC 5-10.3-5-6, administer the fund; and
        (3) provide by rule for the implementation of this chapter.
    (b) A determination by the PERF board may be appealed under IC 4-21.5.
    (c) The powers and duties of:
        (1) the director of PERF;
        (2) the actuary for the PERF board;
        (3) the treasurer of state;
        (4) the attorney general; and
        (5) the auditor of state;
with respect to the fund are those specified in IC 5-10.3.
    (d) The fund records of individual members and members' information are confidential, except for the name and years of service of a fund member.

     Sec. 16. The fund must satisfy the qualification requirements in Section 401 of the Internal Revenue Code, as applicable to the plan. To meet those requirements, the plan is subject to the following provisions, notwithstanding any other law:
        (1) The PERF board shall distribute the corpus and income of the plan to members and their beneficiaries in accordance with this chapter.
        (2) No part of the corpus or income of the fund may be used for or diverted to a purpose other than the exclusive benefit of the members and their beneficiaries.
        (3) Forfeitures arising from severance of employment, death, or for any other reason may not be applied to increase the benefits a member would otherwise receive under this chapter.
        (4) If the fund is terminated, or if all contributions to the fund are completely discontinued, the rights of each affected member to the benefits accrued at the date of termination or discontinuance, to the extent then funded, are nonforfeitable.
        (5) All benefits paid from the fund shall be distributed in accordance with the requirements of Section 401(a)(9) of the Internal Revenue Code and the regulations under that Section.
        (6) The PERF board may not:
            (A) determine eligibility for benefits;
            (B) compute rates of contribution; or
            (C) compute benefits of a member's beneficiaries;
        in a manner that discriminates in favor of members who are considered officers, supervisors, or highly compensated, as prohibited under Section 401(a)(4) of the Internal Revenue Code.
        (7) Benefits paid under this chapter may not exceed the maximum benefits and contributions specified by Section 415 of the Internal Revenue Code.
        (8) The salary taken into account under this chapter may not exceed the applicable amount under Section 401(a)(17) of the Internal Revenue Code.
        (9) The PERF board may not engage in a transaction prohibited by Section 503(b) of the Internal Revenue Code.

     Sec. 17. The fund shall be administered in a manner that is consistent with the Americans with Disabilities Act (42 U.S.C. 12101 et seq.) and any amendments and regulations related to the Act, to the extent required by the Act.
     Sec. 18. Notwithstanding any other provision of this chapter, to the extent required by Internal Revenue Code Section 401(a)(31), as added by the Unemployment Compensation Amendments of 1992 (P.L. 102-318), and any amendments and regulations related to Section 401(a)(31), the fund shall allow members and qualified beneficiaries to elect a direct rollover of eligible distributions to another eligible retirement plan.
     Sec. 19. (a) Notwithstanding any provision of this chapter, the fund shall be administered in a manner consistent with the Family and Medical Leave Act of 1993 (29 U.S.C. 2601 et seq.). A member

on a leave of absence that qualifies for the benefits and protections afforded by the Family and Medical Leave Act is entitled to receive credit for vesting and eligibility purposes to the extent required by the Family and Medical Leave Act, but is not entitled to receive credit for service for benefit purposes.
    (b) Notwithstanding any provision of this article, a participant is entitled to creditable service and benefits in the amount and to the extent required by the Uniformed Services Employment and Reemployment Rights Act (38 U.S.C. 4301 et seq.).

     Sec. 20. On or before December 31 of each year, the PERF board shall prepare and file a report with the department and the state board of accounts. The report must include the following with respect to the fiscal year ending on the preceding June 30:
        (1) Receipts and disbursements from the fund.
        (2) Assets of the fund.
        (3) The actuarial status of the fund, including the projected pension payments for the next twenty (20) years and the present value of the total future projected pension payments.
        (4) Any other information required by the trust agreement.

     Sec. 21. (a) Each individual who is employed by the department on July 1, 2006, and:
        (1) works within a prison or juvenile facility; or
        (2) performs parole or emergency response operations and functions;
shall become a member of the fund.
    (b) Each individual who becomes employed by the department after June 30, 2006, and:
        (1) works within a prison or juvenile facility; or
        (2) performs parole or emergency response operations and functions;
shall become a member of the fund as a condition of the individual's employment.

     Sec. 22. (a) The PERF board shall transfer the following to the fund for each individual who becomes a member of the fund:
        (1) All money standing to the credit of the individual in the public employees' retirement fund or the Indiana state teachers' retirement fund.
        (2) The present value of any accrued pension benefit of the individual in the public employees' retirement fund or the Indiana state teachers' retirement fund.

     (b) Except as otherwise provided in this chapter, a transfer of money under subsection (a) for an individual constitutes a full and

complete discharge of all the rights of the individual under the public employees' retirement fund or the Indiana state teachers' retirement fund.
     Sec. 23. (a) The PERF board shall transfer all creditable service standing to the credit of an individual under the public employees' retirement fund or the Indiana state teachers' retirement fund to the credit of the individual under the fund.
    (b) Except as otherwise provided in this chapter, a transfer of creditable service under subsection (a) for an individual constitutes a full and complete discharge of all the rights of the individual under the public employees' retirement fund or the Indiana state teachers' retirement fund.
    Sec. 24. Creditable service under this chapter, including credit for military service, shall accrue and be computed and credited to members in the same manner and in the same amount as creditable service accrues and is computed and credited under IC 5-10.2 and IC 5-10.3.

     Sec. 25. (a) Every member shall contribute three percent (3%) of the member's annual salary to the fund.
    (b) Contributions shall be made in the form of payroll deductions from each payment of salary received by the member. Each member must, as a condition precedent to becoming a member, consent to the payroll deductions.

     Sec. 26. (a) Subject to section 16 of this chapter, the PERF board shall determine, after considering the recommendations of the PERF board's actuary, the following:
        (1) The normal contribution for the department, which is the amount necessary to fund the benefits under this chapter.
        (2) The rate of normal contribution.
        (3) Any unfunded accrued liability of the fund.

     (b) The department shall pay to the fund the employer contributions determined under subsection (a). The department shall pay employer contributions in the manner provided in the trust agreement.
    Sec. 27. A member is entitled to the full amount of the basic annual pension benefit specified in section 29 of this chapter if the member:
        (1) is at least fifty-five (55) years of age and completes at least twenty-five (25) years of creditable service in the fund; or
        (2) is at least sixty-five (65) years of age and completes at least ten (10) years of creditable service in the fund.

     Sec. 28. A member who is at least forty-five (45) years of age

and completes less than twenty-five (25) years of creditable service but at least twenty (20) years of creditable service in the fund is eligible for early retirement with a reduced pension. The reduced pension is equal to the basic annual pension benefit specified in section 29 of this chapter, reduced by an amount equal to five percent (5%) per year for each year that the member's age at the date the member begins retirement benefits is less than fifty-five (55) years of age.
     Sec. 29. (a) Subject to subsections (b) through (d), the basic annual pension benefit for a member who qualifies for a pension benefit under this chapter equals the following:
        (1) For a member with less than twenty (20) years of creditable service in the fund, an amount equal to the sum of the following:
            (A) The product of:
                (i) the member's average annual salary;
                (ii) one and one-tenth percent (1.1%); and
                (iii) the member's years of creditable service in the fund.
            (B) An amount equal to:
                (i) the total amount contributed to the fund by the member; plus
                (ii) interest credited quarterly to the member's contributions to the fund at the same interest rate applied by the PERF board to PERF members' annuity savings account investments in the PERF guaranteed fund.
            The part of the benefit paid under this clause shall be paid in a lump sum, a partial lump sum, a monthly annuity as purchased by the PERF board with the remaining amount, or a series of monthly installment payments over sixty (60), one hundred twenty (120), or one hundred eighty (180) months.
        (2) For a member with at least twenty (20) years of creditable service in the fund, an amount equal to the product of:
            (A) the member's average annual salary;
            (B) two percent (2%); and
            (C) the member's years of creditable service in the fund.
    (b) This subsection applies only to a member for whom creditable service is transferred from the public employees' retirement fund or the Indiana state teachers' retirement fund under section 23 of this chapter. Subject to subsections (c) and (d), the basic annual pension benefit for a member who is subject to

this subsection and qualifies for a pension benefit under this chapter is the sum determined in STEP THREE or STEP FOUR, as applicable:
        STEP ONE: Determine the sum of:
            (A) the number of years of creditable service the member has in the fund after June 30, 2006; plus
            (B) the number of years of creditable service the member had in the public employees' retirement fund or the Indiana state teachers' retirement fund that were transferred to the fund established by this chapter and were for a position in which the member:
                (i) worked within a prison or juvenile facility; or
                (ii) performed parole or emergency response operations and functions.
        STEP TWO: Determine the number of years of creditable service the member had in the public employees' retirement fund or the Indiana state teachers' retirement fund that were transferred to the fund established by this chapter and that were not for a position in which the member:
            (A) worked within a prison or juvenile facility; or
            (B) performed parole or emergency response operations and functions.
        STEP THREE: This STEP applies only if the amount determined under STEP ONE equals at least twenty (20) years of creditable service. Determine the sum of the following:
            (A) The product of:
                (i) the years of creditable service determined in STEP ONE;
                (ii) the member's average annual salary; and
                (iii) two percent (2%).
            (B) The product of:
                (i) the years of creditable service determined in STEP TWO;
                (ii) the member's average annual salary; and
                (iii) one and one-tenth percent (1.1%).
        STEP FOUR: This STEP applies only if the amount determined under STEP ONE is less than twenty (20) years of creditable service. Determine the sum of the following:
            (A) The product of:
                (i) the sum of the years of creditable service determined in STEP ONE plus the years of creditable service

determined in STEP TWO;
                (ii) the member's average annual salary; and
                (iii) one and one-tenth percent (1.1%).
            (B) If the sum of the member's total years of creditable service under STEP ONE and STEP TWO is less than twenty (20) years of creditable service, determine:
                (i) the total amount contributed to the fund by the member; plus
                (ii) interest credited quarterly to the member's contributions to the fund at the same interest rate applied by the PERF board to PERF members' annuity savings account investments in the PERF guaranteed fund.
            The part of the benefit paid under this subdivision shall be paid in a lump sum, a partial lump sum, a monthly annuity as purchased by the PERF board with the remaining amount, or a series of monthly installment payments over sixty (60), one hundred twenty (120), or one hundred eighty (180) months.
    (c) Benefits provided under this section are subject to section 16 of this chapter.
    (d) The portion of a member's basic annual pension benefit that is funded by employer contributions may not exceed sixty percent (60%) of the member's average annual salary.

     Sec. 30. A member who is entitled to a pension benefit under this chapter shall receive monthly pension benefits, which are guaranteed for five (5) years or until the member's death, whichever is later. A member may instead select in writing one (1) of the following forms of retirement benefit:
        (1) A joint and survivor option in which the member receives a decreased retirement benefit during the member's lifetime, and there is a benefit payable after the member's death to a designated beneficiary during the lifetime of the beneficiary, which equals, at the option of the member, the full retirement benefit payable to the member or one-half (1/2) of the retirement benefit payable to the member.

        (2) Any other retirement option that is approved by the PERF board and is the actuarial equivalent of the basic annual pension benefit guaranteed for five (5) years or until the member's death, whichever is later.
     Sec. 31. (a) If member becomes permanently or temporarily disabled from performing all suitable and available work in the

department for which the member is or may be capable of becoming qualified, considering reasonable accommodation to the extent required by the Americans with Disabilities Act, the member is eligible for a disability benefit from the fund during the period of disability.
    (b) Subject to subsections (c) and (d), the amount of the annual disability benefit payable to a member under this section is equal to the amount of the basic annual pension benefit determined under section 29 of this chapter that would have been payable to the member if the member had retired on the date of the disability, computed using only the years of creditable service worked to the date of disability and without reduction for early retirement.
    (c) The fund shall pay the disability benefits beginning with the month following the onset of the disability.
    (d) To the extent required by the Americans with Disabilities Act, the transcripts, records, and other materials generated to prove that an individual is qualified for disability benefits under this section shall be:
        (1) kept in separate medical files for each member; and
        (2) treated as confidential medical records.

     Sec. 32. (a) If a member dies while on active duty or while retired and not receiving benefits, the fund shall pay a survivor benefit to the following:
        (1) To the surviving spouse, for the life of the surviving spouse.
        (2) If there is no surviving spouse, to the member's surviving children (to be shared equally) until:
            (A) the child becomes eighteen (18) years of age; or
            (B) the child becomes twenty-three (23) years of age, if the child is enrolled in and regularly attending a secondary school or is a full-time student at an accredited college or university;
        whichever period is longer. However, if the PERF board finds upon the submission of satisfactory proof that a child who is at least eighteen (18) years of age is mentally or physically incapacitated, is not a ward of the state, and is not receiving a benefit under clause (B), the survivor benefit as long as the mental or physical incapacity of the child continues.
        (3) If there is no surviving spouse and there are no surviving children, to the parent or parents in equal shares, for the life of the parent or lives of the parents.
    (b) In the case of a member described in subsection (a) who dies

in the line of duty, as determined by the PERF board, the annual survivor benefit under subsection (a) is equal to the amount of the basic annual pension benefit the member would have received under section 29 of this chapter if the member had retired on the date of the member's death. However, for purposes of computing the survivor benefit, if the member did not have at least twenty (25) years of service or was not at least fifty-five (55) years of age, the benefit is computed as if the member:
        (1) did have twenty-five (25) years of service; and
        (2) were fifty-five (55) years of age.

    (c) In the case of a member described in subsection (a) who dies other than in the line of duty, as determined by the PERF board, the annual survivor benefit under subsection (a) is equal to the amount of the basic annual pension benefit the member would have received under section 29 of this chapter if the member had retired on the date of the member's death, computed using only the years of creditable service worked to the date of the member's death and without reduction for early retirement. A survivor benefit is payable under this section regardless of the number of years of creditable service the member had on the member's date of death.
    Sec. 33. (a) Except as otherwise provided in this chapter, a member:
        (1) whose employment in a position covered by this chapter is terminated regardless of cause; and
        (2) who has less than ten (10) years of creditable service in the fund;
is entitled to withdraw from the fund, beginning on the date specified by the member in a written application filed with the PERF board.
    (b) This subsection does not apply to a member for whom a retirement, disability, or survivor benefit is paid under this chapter. Upon the member's withdrawal, the fund shall pay to the member, the member's beneficiary, or the member's estate an amount equal to:
        (1) the total amount contributed to the fund by the member; plus
        (2) interest credited quarterly to the member's contributions to the fund at the same interest rate applied by the PERF board to PERF members' annuity savings account investments in the PERF guaranteed fund.

     (c) The withdrawal amount shall be paid by the PERF board in a lump sum, a partial lump sum, a monthly annuity as purchased

by the PERF board with the remaining amount, or a series of monthly installment payments over sixty (60), one hundred twenty (120), or one hundred eighty (180) months.
     Sec. 34. (a) If an individual:
        (1) whose employment in a position covered by this chapter is terminated regardless of cause; and
        (2) who has less than ten (10) years of creditable service in the fund;
becomes a member of the public employees' retirement fund or the Indiana state teacher's retirement fund, the member may elect to withdraw under section 33 of this chapter from the fund established by this chapter or may elect to have the PERF board transfer the member's fund assets and creditable service to the public employees' retirement fund or the Indiana state teacher's retirement fund.
    (b) If a member elects to have the PERF board transfer the member's assets and creditable service under subsection (a), the PERF board shall transfer the following to the public employees' retirement fund or the Indiana state teacher's retirement fund:
        (1) All money standing to the credit of the member in the fund established by this chapter.
        (2) The present value of any accrued pension benefit of the member in the fund established by this chapter.

         (3) All creditable service standing to the credit of an individual under the fund established by this chapter.
    (c) Except as otherwise provided in this chapter, a transfer of money and creditable service under subsection (b) for a member constitutes a full and complete discharge of all the rights of the member under the fund established by this chapter.

    Sec. 35. (a) A person entitled to, having an interest in, or sharing a pension or benefit from the fund does not, before the actual payment of the pension or benefit, have the right to anticipate, sell, assign, pledge, mortgage, or otherwise dispose of or encumber the pension or benefit.
    (b) A person's interest, share, pension, or benefit, before the actual payment of the interest, share, pension, or benefit, may not be:
        (1) used to satisfy the debts or liabilities of the person entitled to the interest, share, pension, or benefit;
        (2) subject to attachment, garnishment, execution, or levy or sale on judicial proceedings; or
        (3) transferred by any means, voluntarily or involuntarily.


    Sec. 36. (a) This section applies to an individual who:
        (1) is a member of the fund; and
        (2) before becoming a member, was:
            (A) employed in a position covered by the public employees' retirement fund or the Indiana state teachers' retirement fund; and
            (B) received creditable service:
                (i) in the public employees' retirement fund or the Indiana state teachers' retirement fund for the employment described in clause (A) that was for a position in which the member did not work within a prison or juvenile facility or perform parole or emergency response operations and functions; and
                (ii) that was transferred to the fund established by this chapter.
    (b) A member described in subsection (a) may pay to the fund an amount determined under this section so that the member's creditable service that was transferred to the fund under section 23 of this chapter and was for a position in which the member did not work within a prison or juvenile facility or perform parole or emergency response operations and functions shall be considered, for purposes of this chapter, to be years of creditable service for a position in which the member did work within a prison or juvenile facility or perform parole or emergency response operations and functions.
    (c) The member's creditable service described in subsection (b) shall be considered, for purposes of this chapter, to be years of creditable service for a position in which the member worked within a prison or juvenile facility or performed parole or emergency response operations and functions, if the member meets the following conditions:
        (1) Before the member retires, the member makes contributions to the fund as follows:
            (A) Contributions that are equal to the product of the following:
                (i) The member's salary at the time the member actually makes a contribution for the creditable service.
                (ii) A rate, determined by the actuary of the fund, that is based on the age of the member at the time the member actually makes a contribution for creditable service and computed to result in a contribution amount that approximates the actuarial present value of counting the

creditable service as years of creditable service for a position in which the member worked within a prison or juvenile facility or performed parole or emergency response operations and functions, rather than years of creditable service for a position in which the member did not work within a prison or juvenile facility or perform parole or emergency response operations and functions.
                (iii) The number of years of creditable service the member intends to have counted as years of creditable service for a position in which the member worked within a prison or juvenile facility or performed parole or emergency response operations and functions.
            (B) Contributions for any accrued interest, at a rate determined by the actuary of the fund, for the period from the member's initial membership in the fund to the date payment is made by the member.
        (2) At least ten (10) years of service in the fund is required before a member may receive a benefit based on creditable service purchased under this section. A member who terminates employment before satisfying the eligibility requirements necessary to receive a monthly retirement benefit or who receives a monthly benefit for the same service from another tax supported public employee retirement plan other than under the federal Social Security Act may withdraw the purchase amount plus accumulated interest after submitting a properly completed application to the fund for a refund.
        (3) The PERF board may allow a member to make periodic payments of the contributions required for the purchase of the creditable service. The PERF board shall determine the length of the period during which the payments must be made.
        (4) The PERF board may deny an application for the purchase of creditable service if the purchase would exceed the limitations under Section 415 of the Internal Revenue Code.
        (5) A member may not claim the creditable service for purposes of determining eligibility or computing benefits unless the member has made all payments required for the purchase of the creditable service.
        (6) If credit for prior service in the public employees' retirement fund or the Indiana state teachers' retirement fund

is purchased under this section, that creditable service in the public employees' retirement fund or the Indiana state teachers' retirement fund is waived.
        (7) To the extent permitted by the Internal Revenue Code and the applicable regulations, the fund may accept, on behalf of a participant who is purchasing permissive creditable service under this section, a rollover of a distribution from any of the following:
            (A) A qualified plan described in Section 401(a) or Section 403(a) of the Internal Revenue Code.
            (B) An annuity contract or account described in Section 403(b) of the Internal Revenue Code.
            (C) An eligible plan that is maintained by a state, a political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state under Section 457(b) of the Internal Revenue Code.
            (D) An individual retirement account or annuity described in Section 408(a) or Section 408(b) of the Internal Revenue Code.
    Sec. 37. Subject to section 16 of this chapter, the monthly benefit payable under this chapter to members, survivors, and beneficiaries shall be increased by the same percentages and under the same conditions as monthly benefits are increased under IC 5-10.2-5 for members of the public employees' retirement fund and their survivors and beneficiaries.

SOURCE: IC 5-10-5.7; (06)IN0332.1.2. -->     SECTION 2. IC 5-10-5.7 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2007]:
     Chapter 5.7. Department of Correction Deferred Retirement Option Plan (DROP)
    Sec. 1. As used in this chapter, "DROP" means the department of correction deferred retirement option plan established under this chapter.
    Sec. 2. As used in this chapter, "DROP election" means a member's election to enter the DROP.
    Sec. 3. As used in this chapter, "DROP entry date" means the date that a member's DROP election becomes effective.
    Sec. 4. As used in this chapter, "DROP frozen benefit" means a member's monthly retirement benefit calculated under the provisions of the fund and based on:
        (1) the member's average monthly salary as of the member's DROP entry date, as determined by the fund; and
        (2) the member's years of creditable service in the fund as of the member's DROP entry date.
    Sec. 5. As used in this chapter, "DROP retirement date" means the future retirement date selected by a member at the time the member makes a DROP election.
    Sec. 6. As used in this chapter, "fund" means the correctional officers and hazardous duty employees pension fund established by IC 5-10-5.6-13.
    Sec. 7. As used in this chapter, "member" means a person participating in the fund under IC 5-10-5.6.
    Sec. 8. A member may make a DROP election as provided in this chapter only if the member is eligible to receive an unreduced benefit under the provisions of the fund on the member's DROP entry date.
    Sec. 9. A member who elects to enter the DROP shall agree to the following:
        (1) The member shall execute an irrevocable election to retire on the DROP retirement date and shall remain in active service until that date.
        (2) While in the DROP, the member shall continue to make contributions to the fund under the provisions of the fund.
        (3) The member shall elect a DROP retirement date not less than twelve (12) months and not more than thirty-six (36) months after the member's DROP entry date.
        (4) The member may make an election to enter the DROP only once in the member's lifetime.
    Sec. 10. The department of correction shall continue to make the department's employer contributions to the fund on behalf of any member in the DROP.
    Sec. 11. (a) The retirement benefit for a member who enters the DROP and retires on the member's DROP retirement date is determined under this chapter rather than under the provisions of the fund.
    (b) A member who retires on the member's DROP retirement date may elect to receive a retirement benefit in one (1) of the following forms:
        (1) A retirement benefit paid by and calculated under the provisions of the fund as if the member had never entered the DROP.
        (2) A retirement benefit paid by the fund and consisting of:
            (A) the DROP frozen benefit; plus
            (B) an additional amount, paid as the member elects under

subsection (c), calculated by multiplying:
                (i) the amount of the DROP frozen benefit; by
                (ii) the number of months that the member was in the DROP.
    (c) A member who chooses the retirement benefit described in subsection (b)(2) must elect to receive the additional amount described in subsection (b)(2)(B) as:
        (1) a lump sum paid on the member's DROP retirement date; or
        (2) three (3) equal annual payments commencing on the member's DROP retirement date and thereafter paid on the anniversary of the member's DROP retirement date.
    (d) The retirement benefits for a member who exits the DROP for any reason other than retirement on the member's DROP retirement date are calculated under the provisions of the fund as if the member had never entered the DROP.
    Sec. 12. A member who enters the DROP shall exit the DROP at the earlier of:
        (1) the member's DROP retirement date; or
        (2) thirty-six (36) months after the member's DROP entry date.
    Sec. 13. If a member dies:
        (1) in the line of duty; or
        (2) other than in the line of duty;
while the member is in the DROP, benefits for the member's survivors are calculated under the provisions of the fund as if the member had never entered the DROP.
    Sec. 14. If a member becomes disabled:
        (1) in the line of duty; or
        (2) other than in the line of duty;
while the member is in the DROP, benefits for the member are calculated under the provisions of the fund as if the member had never entered the DROP.

SOURCE: IC 5-10-10-1.5; (06)IN0332.1.3. -->     SECTION 3. IC 5-10-10-1.5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2007]: Sec. 1.5. As used in this chapter, "correctional officer" includes:
        (1) a county jail officer under IC 11-12-4-4;
        (2) a person who has received a correctional officer training certificate under IC 11-8-2-8;
        (3) a prison matron or an assistant prison matron under IC 36-8-10-5; and
        (4) any other person whose duties include the daily or ongoing

supervision and care of persons who are lawfully detained (as defined in IC 35-41-1-18) in a facility operated by the state or a political subdivision of the state; and
        (5) an employee of the department of correction who:
            (A) works within a prison or juvenile facility; or
            (B) performs parole or emergency response operations and functions.

SOURCE: IC 11-8-2-12; (06)IN0332.1.4. -->     SECTION 4. IC 11-8-2-12 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2007]: Sec. 12. Each child and surviving spouse of an employee of the department who:
        (1) works within a prison or juvenile facility; or
        (2) performs parole or emergency response operations and functions;
and dies in the line of duty is eligible to attend any Indiana state supported college, university, or technical school under IC 20-12-19.5-1 without paying tuition or mandatory fees.

SOURCE: IC 20-12-19.5-1; (06)IN0332.1.5. -->     SECTION 5. IC 20-12-19.5-1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2007]: Sec. 1. (a) The children of:
        (1) regular, paid law enforcement officers;
        (2) regular, paid firefighters;
        (3) volunteer firefighters (as defined in IC 36-8-12-2);
        (4) county police reserve officers;
        (5) city police reserve officers;
        (6) paramedics (as defined in IC 16-18-2-266);
        (7) emergency medical technicians (as defined in IC 16-18-2-112); or
        (8) advanced emergency medical technicians (as defined in IC 16-18-2-6) (repealed); or
        (9) employees of the department of correction who:
            (A) work within a prison or juvenile facility; or
            (B) perform parole or emergency response operations and functions;

who have been killed in the line of duty shall not be required to pay tuition or mandatory fees at any state supported college, university, or technical school, so long as the children are under the age of twenty-three (23) and are full-time students pursuing a prescribed course of study.
    (b) The surviving spouse of: a:
        (1) a regular, paid law enforcement officer;
        (2) a regular, paid firefighter;
        (3) a volunteer firefighter (as defined in IC 36-8-12-2);
        (4) a county police reserve officer;
        (5) a city police reserve officer;
        (6) a paramedic (as defined in IC 16-18-2-266);
        (7) an emergency medical technician (as defined in IC 16-18-2-112); or
        (8) an advanced emergency medical technician (as defined in IC 16-18-2-6) (repealed); or
        (9) an employee of the department of correction who:
            (A) works within a prison or juvenile facility; or
            (B) performs parole or emergency response operations and functions;

who has been killed in the line of duty may not be required to pay tuition or mandatory fees at any state supported college, university, or technical school, so long as the surviving spouse is pursuing a prescribed course of study at the institution towards an undergraduate degree.
    (c) This section applies to the children and surviving spouse of: a:
        (1) a regular, paid law enforcement officer;
        (2) a regular, paid firefighter;
        (3) a volunteer firefighter (as defined in IC 36-8-12-2);
        (4) a county police reserve officer;
        (5) a city police reserve officer;
        (6) a paramedic (as defined in IC 16-18-2-266);
        (7) an emergency medical technician (as defined in IC 16-18-2-112); or
        (8) an advanced emergency medical technician (as defined in IC 16-18-2-6) (repealed); or
        (9) an employee of the department of correction who:
            (A) works within a prison or juvenile facility; or
            (B) performs parole or emergency response operations and functions;

if the public safety officer described in this subsection was a resident of Indiana and was killed in the line of duty before, on, or after July 1, 1993.