Under this rule, if a grain dealer's annual producer security fund assessment (except for the portion of the assessment related to deferred payment contracts) exceeds $350,000, then that grain dealer shall pay $350,000, and no more.
If a grain warehouse keeper's annual producer security fund assessment exceeds $150,000, then that grain warehouse keeper shall pay $150,000 and no more.
Federal and surrounding state programs
Federal Programs
The United States Warehouse Act is a voluntary regulatory program administered by Farm Service Agency (FSA), a unit within USDA. Under the act, warehouse keepers who obtain a warehouse license must comply with several FSA regulations. Generally, the warehouse keeper must maintain enough grain in inventory to cover 100% of depositor obligations at all times. Further, FSA licensed warehouse keepers must submit financial statements, submit to inspections by USDA auditors, and post surety bonds. In the event the warehouse defaults, FSA can convert the bonds to cash and disperse the proceeds to depositors. While the federal grain warehouse license is officially a voluntary program; in practice, it is not completely voluntary. Every state that has significant grain production (including Wisconsin) has some type of state grain warehousing law. These laws require grain warehouse keepers to obtain a license, but allow them to choose either a state license or a federal license. Those that choose a federal license are exempt for the state licensing program.
Surrounding State Programs
Like all states with a significant grain industry, Minnesota, Michigan, Illinois, Indiana, and Iowa all require persons who buy grain from producers to obtain a grain dealer license (though they may use different names), and all persons who store grain for others are required to obtain either a state or federal grain warehouse license. Licensees must file financial statements with the state, and the warehouses must maintain 100% of depositor owned grain in inventory at all times.
Minnesota requires grain dealers and grain warehouse keepers to post bonds with the state. Indiana, Illinois, and Iowa all have a state indemnity fund (like Wisconsin) that is made up of grain dealer and warehouse assessments. Michigan has a combination of bonds and indemnity fund contributions.
When compared to other states' grain programs, there are two things that make Wisconsin's program unique. First, while there are many states that have indemnity funds to protect producers, Wisconsin's indemnity fund (The Agricultural Producer Security Fund) is unique in that it pools risks and resources across multiple agricultural sectors. Second, where other states with indemnity funds tend to charge assessments on a flat rate per amount purchased or stored, Wisconsin's assessment formulas consider the licensee's balance sheet along with total purchases or storage capacity when calculating assessments.
Small Business Impact
This rule could have a direct impact on certain grain elevators. It would also have an indirect impact on the hundreds of grain farmers with whom the elevators do business, many of which are small businesses. This rule will help facilitate a stable and orderly grain industry and protect the welfare of grain farmers.
DATCP estimates that the balance of the Agricultural Producer Security Fund, as of June 30, 2012, would be about $11.5 million under this rule and about $12.2 million under current rules. The fund balance impacts both farmers and contractors, in certain specific situations.
For example, the maximum amount that can be paid out to producers in the event of a default is 60% of the fund balance. Therefore, in the event of a very large default, there would be more money available to help reimburse producers without this rule than with it. But there is a very low probability of a default occurring that would involve that much money.
Fund balances also play a role in “assessment holidays" for licensees. If the fund balance reaches certain minimum thresholds, licensees who have participated in the fund for at least five years do not have to make annual assessment payments that year. This rule might play a role in which years grain dealers and milk contractors have an assessment holiday. But in both cases, since the impact would only be to shift an assessment holiday from one license year to another, the overall assessments collections, averaged across several years, would be similar.
Small business regulatory coordinator
Comments or concerns relating to small business may also be addressed to DATCP's small business regulatory coordinator Keeley Moll at the address above, or by email to
keeley.moll@wisconsin.gov, or by telephone at (608) 224-5039.
Fiscal Impact
The net fiscal impact for this rule could be a loss of revenue of up to $756,000. Under current rules, DATCP estimates that total assessments for both the upcoming license year (Sept. 1, 2011 to Aug. 31, 2012) and fiscal year (July 1, 2011 to June 30, 2012) could be about $1,612,000 for grain dealers and grain warehouse keepers. Under this rule, DATCP estimates that the total assessments could be about $856,000. Should the assessments be collected in accordance with the current rule, the $756,000 in revenue would represent an unexpected “windfall" to the producer security program.
This rule may affect the timing of when assessment revenues are collected in the next few years. The existing producer security assessment formulas contain provisions for “assessment holidays" that are triggered when the balance in the producer security fund reaches certain minimum balances. Although this rule may affect how the formulas determine which years grain dealers and milk contractors will have an assessment holiday, the impact would only be to shift an assessment holiday from one license year to another. The overall assessments collections, averaged across several years, would be similar.
Agency Contact Person
Questions and comments (including hearing comments) related to this rule may be directed to:
Kevin LeRoy
Department of Agriculture, Trade and Consumer Protection
P.O. Box 8911
Madison, WI 53708-8911
Telephone (608) 224-4928
Notice of Hearing
Employee Trust Funds
NOTICE IS HEREBY GIVEN that the Wisconsin Department of Employee Trust Funds (ETF) proposes an order pursuant to s.
227.14, Stats., to amend administrative rule ETF 10.08 (1) (a), (2) (a) and (b) (intro), (b) (2), (b) (3), (b) (5), (c), and (d), to amend sections
ETF 20.02 (1),
(2), and
(3); and to create section
ETF 20.02 (4), relating to governing rehired annuitants and separation from employment.
Hearing Information
Date: Friday, October 21, 2011
Time: 1:00 P.M.
Location: 801 W. Badger Road
Conference Room GB
Madison, WI 53713
Persons wishing to attend should come to the reception desk located up the stairs and directly to the left (or by elevator) from the main entrance to the building.
Copies of Proposed Rule
Copies of the proposed rule are available without cost from the Office of the Secretary, Department of Employee Trust Funds, P.O. Box 7931, Madison, WI 53707-7931. The telephone number is: (608) 266-1071.
Submittal of Written Comments
Comments may be submitted to Lucas Strelow, Policy Analyst, Department of Employee Trust Funds, 801 W Badger Rd, Madison, WI 53713-7931, P.O. Box 7931 (use ZIP Code 53707 for PO Box); Phone: 608-267-0722; E-mail:
lucas.strelow@etf.state.wi.us no later than 4:30 p.m., Central Standard Time, on
October 24, 2011.
Analysis Prepared by Department of Employee Trust Funds
Statutes interpreted
Statutory authority
Explanation of statutory authority
By statute, the ETF Secretary is expressly authorized, with appropriate board approval, to promulgate rules required for the efficient administration of any benefit plan established in ch.
40 of the Wisconsin statutes. Also, each state agency may promulgate rules interpreting the provisions of any statute enforced or administered by the agency if the agency considers it necessary to effectuate the purpose of the statute.
This rule is not subject to s.
227.135 (2), as affected by
2011 Wis. Act 21. The statement of scope for this rule, submitted to the Legislative Reference Bureau on January 20, 2011 and published in the Administrative Register on February 14, 2011, was received by the Legislative Reference Bureau prior to the effective date of
2011 Wis. Act 21.
Related rules or statutes
1)
Section
40.23 (1) (a), Stats., governs minimum break in service requirements as referenced in both ss.
ETF 20.02 and
10.08 for proper termination from employment.
2)
Section
40.22, Stats., sets forth the eligibility criteria for inclusion under the Wisconsin retirement system. Plan eligibility is relevant to both proper termination as well as becoming a rehired annuitant, and is referenced in both regulations.
Plain language analysis
The rule changes result from a need for general language clarification, stronger linkage between regulations, and better compliance with the IRC. These changes include the following:
•
Sections
ETF 20.02 and
10.08 are related regulations: s.
ETF 20.02 governs the requirements for rehired annuitants while s.
10.08 provides the terms for an initial separation from employment. By definition, rehired annuitants must first have a valid separation from employment as set forth under s.
ETF 10.08. Language has been added to both sections to clarify the interconnected nature of the sections through direct cross-reference. In addition, the change includes an amendment to the definition of rehired annuitant to specifically require a valid termination of employment as defined in s.
ETF 10.08. The language has been added to improve understanding of the sections, as well as to ensure compliance with the IRC which requires a valid separation of service before an annuitant returns to employment.
•
An additional section, s.
ETF 20.02 (4), was added to require employers to report to the Department all rehired employees, regardless of whether they meet the requirements in s.
40.22, Stats., as a WRS participating employee. Employer reporting of all rehired employees will allow ETF to more accurately monitor whether rehires have had a proper separation from employment under s.
ETF 10.08 so they qualify as a rehired annuitant under s.
ETF 20.02. This will allow ETF to maintain compliance with the IRS break-in-service requirements under IRC s. 401 (a).
•
A note following s.
ETF 10.08 (2) (b) 3. was removed for risk of IRC noncompliance. Prior to retirement, discussion with one's employer regarding re-employment of any kind is impermissible for IRS purposes. Doing so provides evidence against the intent to completely sever the employee-employer relationship. The note in this section could be construed to suggest that such agreements or discussions are acceptable.
•
Language was added to an example provided under s.
ETF 10.08 (2) (b) 5. to clarify that emeritus professors, as provided in the example, can only return to service if there is no compensation of any kind, including employer contributions to 403 (b) accounts. Contributions to 403 (b) accounts have been an issue in the past for emeritus-type programs.
Summary of, and comparison with, existing or proposed federal regulations
IRC 401 (a), governing the qualified status of the pension plan, requires that there be a valid severance from employment before one can become a rehired annuitant. The changes and clarifications made to sections
ETF 10.08 and
20.02 are intended in part to clarify language to strengthen understanding and to maintain compliance with this federal regulation. Under IRS guidelines, the IRS has made it clear that there must be a complete separation of the employee-employer relationship for a “bona fide" separation of service. The IRS has focused greatly on the intent of the employee to completely retire, with no prior arrangements to return to work for the employer. It was necessary to remove sections in the current regulation to clarify that such agreements are not permissible.
Comparison with rules in adjacent states
•
Illinois – The relevant code for the State Retirement System of Illinois (SRS) is 40 ILCS 5/14-111, Re-entry After Retirement. The Illinois statute indicates that, with some exceptions, an annuitant who reenters service after retirement shall receive no payments from the retirement annuity during the time of employment. Only if the annuitant accepts temporary employment for a period not exceeding 75 working days in any calendar year can the employee continue to receive annuity payments.
Unlike WRS, SRS statutes do not set forth conditions for a valid separation of service as a requirement for an annuitant's reemployment under the system. Therefore the proposed changes to ss.
ETF 10.08 and
20.02 do not bear relationship to regulations governing SRS due to an absence of analogous regulatory standards. As such the SRS administrative code also does not include language for full reporting of all rehired annuitants to the agency, as created under the proposed changes to s.
ETF 20.02 (4).
•
Iowa – The relevant codes governing the Iowa Public Employees' Retirement System (IPERS) includes: Iowa Admin. Code 495-12.8,
Reemployment of retired members; and Iowa Admin. Code 495-11.5,
Bona fide retirement and bona fide refund. The relationship between these administrative codes does in fact bear a similar resemblance to the relationship being emphasized between ss.
ETF 10.08 and
20.02 in the current rule change.
One code is devoted to proper termination from employment (bona fide retirement in Iowa's case) and the other to rehired annuitants (reemployment of retired members). However, there is less direct reference in the Iowa language between the regulations, in part because Iowa's rehired annuitant code is devoted instead to a type of benefit payments that does not apply to WRS.
Some of the amendments currently proposed in the ETF rule changes are, however, reflected in the Iowa code. There is a section under Iowa Admin. Code 495-11.5, for example, indicating that a school employee will not be considered to have a bona fide termination in service unless all of the employee's compensated duties for their current employer cease. Similarly, in the ETF rule change, language was added to s.
ETF 10.08 (2) (b) 5. regarding “emeritus" professors to clarify that contributions to 403 (b) accounts are included in impermissible compensation. The Iowa code also indicates that a member will fail to have a bona fide separation of service if a contract for reemployment (of any nature) is made prior to the expiration of that state's minimum separation of service. A note following s.
ETF 10.08 (2) (b) 3. was removed to make certain the no-contract requirement is properly reflected in the ETF code.
The Iowa administrative code does not, however, include language for full reporting of all rehired annuitants to the agency, as created under the proposed changes to s.
ETF 20.02 (4).
•
Michigan – Mich. Admin. Code R. 38.38 states that a “retirement allowance" shall be suspended during any time period that the “retirant" returns to work in a covered position, unless there was a bona fide termination of employment. The statutes and regulations, however, do not set forth a definition of a bona fide termination of employment, nor do they lay out conditions for proper termination. Therefore the proposed changes to ss.
ETF 10.08 and
20.02 do not bear relationship to regulations governing SRS due to an absence of analogous regulatory standards.
•
Minnesota – The relevant code for the Minnesota State Retirement System (MSRS) is M.S.A. s.
352.115 Subd. 10,
Reemployment of annuitant. The statute only indicates the maximum earnings allowable. Unlike WRS, MSRS does not have a regulation that sets forth conditions for a valid separation of service as requirement for rehired annuitants. Therefore the proposed changes to ss.
ETF 10.08 and
20.02 do not bear relationship to regulations governing SRS due to an absence of analogous regulatory standards.
Summary of data and analytical methodologies
The proposed rule amendment is intended to make ETF's regulations governing rehired annuitants and proper separation from employment clearer and more flexible, as well as to bring it into closer harmony with federal statutes. Factual data was collected from ETF departments as to the current procedures and requirements for reporting of rehired annuitants from the employer. Data was also collected from the procedures and regulations of nearby states and comparable government pension systems. Analytical methodologies included discussion with legal counsel as to using the amendments to achieve the goal of the strengthening compliance with IRS requirements for a bona fide separation of service and proper re-employment of annuitants. ETF also utilized comparative analysis to draw from other pensions' methods and regulations, as well as position ETF's proposed amendments within the statutes and regulations that present the greatest compliance with the IRC.
Analysis and supporting documentation used to determine effect on small business
The rule does not have an effect on small businesses because private employers and their employees do not participate in, and are not covered by, the Wisconsin Retirement System.
Small Business Impact
There is no effect on small business.
Fiscal Estimate
The rule will not have any fiscal effect on the administration of the Wisconsin Retirement System, nor will it have any fiscal effect on the private sector, the state or on any county, city, village, town, school district, technical college district, or sewerage districts.
Agency Contact Person
Lucas Strelow, Policy Analyst, Department of Employee Trust Funds, 801 W Badger Rd, Madison, WI 53713-7931, P.O. Box 7931 (use ZIP Code 53707 for PO Box); Phone: 608-267-0722; E-mail:
lucas.strelow@etf.state.wi.us.
ADMINISTRATIVE RULES
FISCAL ESTIMATE
AND ECONOMIC IMPACT ANALYSIS
|
Type of Estimate and Analysis
|
X Original Updated Corrected
|
Administrative Rule Chapter, Title and Number
|
S. ETF 20.02 Rehired annuitants and s. ETF 10.08 Separation from employment.
|
Subject
|
Rehired Annuitants
|
Fund Sources Affected
|
Chapter 20 , Stats. Appropriations Affected
|
GPR FED PRO PRS
SEG SEG-S
|
|
Fiscal Effect of Implementing the Rule
|
X No Fiscal Effect
Indeterminate
|
Increase Existing Revenues
Decrease Existing Revenues
|
Increase Costs
Could Absorb Within Agency's Budget
Decrease Costs
|
The Rule Will Impact the Following (Check All That Apply)
|
State's Economy
Local Government Units
|
Specific Businesses/Sectors
Public Utility Rate Payers
|
Would Implementation and Compliance Costs Be Greater Than $20 million?
Yes
X No
|
Policy Problem Addressed by the Rule
|
This rule-making is needed to create a stronger and clearer relationship between ss. ETF 20.02 and 10.08, to clarify rule language for general readability, and to make amendments needed to ensure compliance with the Internal Revenue Code (IRC).
|
Summary of Rule's Economic and Fiscal Impact on Specific Businesses, Business Sectors, Public Utility Rate Payers, Local Governmental Units and the State's Economy as a Whole (Include Implementation and Compliance Costs Expected to be Incurred)
|
There is no economic and fiscal impact on small business, business sectors, public utility rate payers, local governmental units and the state's economy as a whole.
|
Benefits of Implementing the Rule and Alternative(s) to Implementing the Rule
|
The rule language more brings ETF more clearly into compliance with the IRC, and clarifies the interrelationship between ss. ETF 20.03 and 10.08. The agency does not see alternatives to achieving the policy goal of the rule amendments.
|
Long Range Implications of Implementing the Rule
|
There are no long range economic or fiscal impacts of the rule.
|
Compare With Approaches Being Used by Federal Government
|
IRC 401 (a), governing the qualified status of the pension plan, requires that there be a valid severance from employment before one can become a rehired annuitant. The changes and clarifications made to ss. ETF 10.08 and 20.02 are intended in part to clarify language to strengthen understanding and to maintain compliance with this federal regulation. Under IRS guidelines, the IRS has made it clear that there must be a complete separation of the employee-employer relationship for a “bona fide" separation of service. The IRS has focused greatly on the intent of the employee to completely retire, with no prior arrangements to return to work for the employer. It was necessary to remove sections in the current regulation to clarify that such agreements are not permissible.
|
Compare With Approaches Being Used by Neighboring States (Illinois, Iowa, Michigan and Minnesota)
|
Illinois – The relevant code for the State Retirement System of Illinois (SRS) is 40 ILCS 5/14-111, Re-entry After Retirement. The Illinois statute indicates that, with some exceptions, an annuitant who reenters service after retirement shall receive no payments from the retirement annuity during the time of employment. Only if the annuitant accepts temporary employment for a period not exceeding 75 working days in any calendar year can the employee continue to receive annuity payments.
Unlike WRS, SRS statutes do not set forth conditions for a valid separation of service as a requirement for an annuitant's reemployment under the system. Therefore the proposed changes to ss. ETF 10.08 and 20.02 do not bear relationship to regulations governing SRS due to an absence of analogous regulatory standards. As such the SRS administrative code also does not include language for full reporting of all rehired annuitants to the agency, as created under the proposed changes to s. ETF 20.02 (4).
Iowa –The relevant codes governing the Iowa Public Employees' Retirement System (IPERS) includes: Iowa Admin. Code 495-12.8, Reemployment of retired members; and Iowa Admin. Code 495-11.5, Bona fide retirement and bona fide refund. The relationship between these administrative codes does in fact bear a similar resemblance to the relationship being emphasized between ss. ETF 10.08 and 20.02 in the current rule change.
One code is devoted to proper termination from employment (bona fide retirement in Iowa's case) and the other to rehired annuitants (reemployment of retired members). However, there is less direct reference in the Iowa language between the regulations, in part because Iowa's rehired annuitant code is devoted instead to a type of benefit payments that does not apply to WRS.
Some of the amendments currently proposed in the ETF rule changes are, however, reflected in the Iowa code. There is a section under Iowa Admin. Code 495-11.5, for example, indicating that a school employee will not be considered to have a bona fide termination in service unless all of the employee's compensated duties for their current employer cease. Similarly, in the ETF rule change, language was added to s. ETF 10.08 (2) (b) 5. regarding “emeritus" professors to clarify that contributions to 403 (b) accounts are included in impermissible compensation. The Iowa code also indicates that a member will fail to have a bona fide separation of service if a contract for reemployment (of any nature) is made prior to the expiration of that state's minimum separation of service. A note following s. ETF 10.08 (2) (b) 3. was removed to make certain the no-contract requirement is properly reflected in the ETF code.
The Iowa administrative code does not, however, include language for full reporting of all rehired annuitants to the agency, as created under the proposed changes to s. ETF 20.02 (4).
Michigan – Mich. Admin. Code R. 38.38 states that a “retirement allowance" shall be suspended during any time period that the “retirant" returns to work in a covered position, unless there was a bona fide termination of employment. The statutes and regulations, however, do not set forth a definition of a bona fide termination of employment, nor do they lay out conditions for proper termination. Therefore the proposed changes to ss. ETF 10.08 and 20.02 do not bear relationship to regulations governing SRS due to an absence of analogous regulatory standards.
Minnesota – The relevant code for the Minnesota State Retirement System (MSRS) is M.S.A. s. 352.115 Subd. 10, Reemployment of annuitant. The statute only indicates the maximum earnings allowable. Unlike WRS, MSRS does not have a regulation that sets forth conditions for a valid separation of service as requirement for rehired annuitants. Therefore the proposed changes to ss. ETF 10.08 and 20.02 do not bear relationship to regulations governing SRS due to an absence of analogous regulatory standards.
|
Notice of Hearing
Natural Resources
Fish, Game, etc., Chs.
NR 1—
(DNR # WM-12-11(E))
NOTICE IS HEREBY GIVEN that pursuant to sections
29.014,
29.041 and
227.11 (2) (a), and
227.24 (4) Stats., interpreting sections
29.014,
29.041 and
29.192, Stats., the Department of Natural Resources will hold public hearings on revisions to Chapter
NR 10, Wis. Adm. Code, relating to the 2011 migratory game bird seasons and waterfowl hunting zones. This emergency order takes effect upon publication in the official state newspaper on September 3, 2011.
Hearing Information
The hearing will be held on:
Date: Monday, October 3, 2011
Time: 1:00 P.M.
Location: Natural Resources State Office Building
(GEF 2)
101 South Webster Street
Room 608
Madison, WI 53703
