LRB-1266/3
RAC:kmg&jlg:jf
1997 - 1998 LEGISLATURE
May 1, 1997 - Introduced by Representatives Jensen, Hanson, Kreibich, Ott,
Musser, Brandemuehl, Powers, Grothman, Goetsch, Olsen, Freese, Sykora,
Plale, Kelso, Duff, Porter, Ziegelbauer, Kedzie, M. Lehman, Riley, Albers,
Nass
and Underheim, cosponsored by Senators George, Farrow, Huelsman,
Schultz, Roessler, Panzer
and Plache. Referred to Joint survey committee
on Retirement Systems.
AB331,1,4 1An Act to amend 40.02 (25) (b) 6m. a., 40.02 (49), 40.05 (2) (b) and 40.05 (4) (b);
2and to create chapter 37, 40.02 (25) (a) 7., 40.02 (25) (b) 12., 40.02 (46m), 40.02
3(57g) and 40.22 (2) (m) of the statutes; relating to: creating a University of
4Wisconsin optional retirement system and granting rule-making authority.
Analysis by the Legislative Reference Bureau
Under current law, all faculty and academic staff who hold positions at the
University of Wisconsin (UW) System, like other state employes, participate in the
Wisconsin retirement system (WRS). This bill creates a University of Wisconsin
optional retirement system (UWORS) for certain faculty and academic staff at the
UW System. Under the bill, faculty and academic staff hired after the UWORS is
operational may elect to participate in the UWORS in lieu of participating in the
WRS. The key features of the UWORS are as follows:
1. The UWORS is created to provide retirement annuities for certain faculty
and academic staff who elect to participate in the UWORS. An employe who elects
to become a participating employe in the UWORS may not be a participating employe
in the WRS.
2. The UWORS is established as a governmental plan and a qualified plan
under the Internal Revenue Code.
3. The UWORS is managed and administered by the board of regents of the UW
System. Under the bill, the board of regents is required to contract with an insurance
company that is authorized to transact insurance business in this state to provide

retirement annuities for faculty and academic staff who elect to participate in the
UWORS.
4. All faculty and academic staff hired after the UWORS is operational are
eligible to participate. Faculty and academic staff initially appointed to positions at
the UW System after the UWORS is operational have 60 days from the date of
appointment to elect to participate in the UWORS. If an employe who is a member
of the faculty or academic staff does not so elect, he or she must participate in the
WRS and may not subsequently elect to participate in the UWORS.
5. For all faculty and academic staff who elect to participate in the UWORS,
the board of regents must make contributions on their behalf in an amount that
equals the employe required and employer required contributions that would be
made by the board of regents on behalf of the faculty and academic staff if they were
participants in the WRS.
6. Faculty and academic staff covered under the UWORS immediately vest in
all contributions made on their behalf. If any member of the faculty or academic staff
who participates in the UWORS would subsequently separate from state service and
become employed by an employer who is not under the WRS, the faculty or academic
staff member would retain the rights to all contributions made on his or her behalf
under the UWORS.
7. With respect to contributions to fund the unfunded prior service liability of
the UW System under the WRS, the board of regents must make contributions for
all faculty and academic staff who elect to participate in the UWORS as though those
persons were participating employes in the WRS.
8. For all faculty and academic staff who elect to participate in the UWORS,
the bill does not affect their right to receive any group insurance benefits
administered by the department of employe trust funds, other than long-term
disability insurance, or to participate in the unused sick leave credit program, in
which unused sick leave credits may be used at the time of retirement to pay the cost
of group health insurance premiums.
This bill will be referred to the joint survey committee on retirement systems
for a detailed analysis, which will be printed as an appendix to this bill.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB331, s. 1 1Section 1. Chapter 37 of the statutes is created to read:
AB331,2,42 Chapter 37
3 University of Wisconsin
4 optional retirement system
AB331,3,5
137.01 University of Wisconsin optional retirement system; compliance
2with federal tax laws. (1)
The University of Wisconsin optional retirement system
3is created for the purpose of providing retirement annuities to eligible employes of
4the University of Wisconsin System who are not participating employes in the
5Wisconsin retirement system.
AB331,3,12 6(2) The University of Wisconsin optional retirement system is established as
7a governmental plan and as a qualified plan for federal income tax purposes under
8section 401 (a) or 403 (a) or (b) of the Internal Revenue Code and shall be so
9maintained and administered. No benefit plan authorized under this chapter may
10be administered in a manner which violates an Internal Revenue Code provision that
11authorizes or regulates that benefit plan or which would cause an otherwise
12tax-exempt benefit to become taxable under the Internal Revenue Code.
AB331,3,13 1337.02 Definitions. In this chapter:
AB331,3,16 14(1) "Beginning date" means the date specified in the first contract entered into
15by the board under s. 37.07 on which an annuity may be purchased for a participating
16employe.
AB331,3,17 17(2) "Board" means the board of regents of the University of Wisconsin System.
AB331,3,19 18(3) "Eligible employe" means an employe of the University of Wisconsin System
19described under s. 20.923 (4), (4m), (5) or (6) (m) or 230.08 (2) (d).
AB331,3,20 20(4) "Insurer" has the meaning given in s. 600.03 (27).
AB331,3,23 21(5) "Internal Revenue Code" means the Internal Revenue Code, as defined for
22the current taxable year under s. 71.01 (6), and applicable regulations adopted under
23the Internal Revenue Code, including temporary regulations.
AB331,4,3 24(6) "Participating employe" means an eligible employe who is currently in the
25service of, or who is on a leave of absence from, the University of Wisconsin System,

1who has met the requirements for inclusion within the University of Wisconsin
2optional retirement system under s. 37.04 and has elected to join the University of
3Wisconsin optional retirement system.
AB331,4,5 4(7) "Participating employe in the Wisconsin retirement system" means a
5participating employe, as defined in s. 40.02 (46).
AB331,4,7 6(8) "Wisconsin retirement system" means the Wisconsin retirement system
7established under ch. 40.
AB331,4,8 837.03 Powers and duties. The board:
AB331,4,10 9(1) Shall manage and administer the University of Wisconsin optional
10retirement system.
AB331,4,15 11(2) Shall ensure that the University of Wisconsin optional retirement system
12complies with the Internal Revenue Code as a qualified plan under section 401 (a)
13or 403 (a) or (b) of the Internal Revenue Code for income tax purposes and any benefit
14plan under this chapter is administered in a manner consistent with all Internal
15Revenue Code provisions that authorize and regulate the benefit plan.
AB331,4,17 16(3) Shall promulgate rules necessary for the administration of the University
17of Wisconsin optional retirement system.
AB331,4,20 18(4) May delegate any powers and duties that the board considers necessary or
19desirable for the purpose of administering the University of Wisconsin optional
20retirement system.
AB331,4,22 21(5) Shall provide for long-term disability insurance for all participating
22employes.
AB331,4,25 2337.04 Participation. (1) Any eligible employe of the University of Wisconsin
24System may become a participating employe if all of the following conditions are
25satisfied:
AB331,5,2
1(a) The employe is first employed by the University of Wisconsin System on or
2after the beginning date.
AB331,5,63 (b) The employe is expected to work at least one-third of what is considered
4full-time employment by the board, as determined by rule, and the employe has an
5expected duration of employment with the University of Wisconsin System of at least
6one year.
AB331,5,137 (c) The employe elects to participate in the University of Wisconsin optional
8retirement system by notifying the board in writing, on a form provided by the board,
9no later than 60 days after the date of the employe's initial appointment with the
10University of Wisconsin System. Subject to sub. (4) (b), an election under this
11paragraph to participate in the University of Wisconsin optional retirement system
12shall be an irrevocable election during the employe's duration of employment with
13the University of Wisconsin System.
AB331,5,1614 (d) The employe is not a participating employe in the Wisconsin retirement
15system while the employe is a participating employe in the University of Wisconsin
16optional retirement system.
AB331,5,1817 (e) The employe is not receiving a retirement annuity from the Wisconsin
18retirement system.
AB331,5,22 19(2) An eligible employe who elects to participate in the University of Wisconsin
20optional retirement system under sub. (1) shall be considered to have been a
21participating employe since the date of the employe's initial appointment with the
22University of Wisconsin System.
AB331,6,2 23(3) If an eligible employe elects to participate in the University of Wisconsin
24optional retirement system under this section, but is at the time of election a
25participating employe in the Wisconsin retirement system, the board shall notify the

1department of employe trust funds in writing that the employe is no longer a
2participating employe in the Wisconsin retirement system.
AB331,6,7 3(4) (a) Except as provided in par. (b), any eligible employe who elects to
4participate in the University of Wisconsin optional retirement system under sub. (1)
5may not subsequently become a participating employe in the Wisconsin retirement
6system during the period of his or her employment with the University of Wisconsin
7System.
AB331,6,188 (b) If a participating employe terminates employment with the University of
9Wisconsin System and is subsequently rehired by the University of Wisconsin
10System, the employe is not required to become a participating employe. But if the
11employe is an eligible employe and satisfies the conditions specified in sub. (1) (b),
12(d) and (e), the employe may elect again to become a participating employe. If the
13employe elects to become a participating employe, he or she must notify the board
14in writing, on a form provided by the board, no later than 60 days after the date of
15the employe's subsequent appointment with the University of Wisconsin System.
16Any eligible employe who elects to become a participating employe under this
17paragraph shall be considered to have been a participating employe since the date
18of his or her subsequent appointment with the University of Wisconsin System.
AB331,6,21 1937.06 Contributions. (1) The board shall remit to the insurer or insurers
20under contract with the board under s. 37.07 retirement contributions for each
21participating employe that equal the sum of all of the following:
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