(1) The general assembly hereby finds and declares that:
(a) The litigation of disputes regarding the payment of contributions by
employers to the public employees' retirement association represents an
inappropriate allocation of public moneys. Courts already suffer from overcrowded
dockets, and the use of judicial resources to resolve such disputes means that
taxpayers foot the bill for plaintiffs, defendants, and judges alike. Once all
appropriate benefits have been accorded to members or inactive members of the
association, any dispute then remaining is solely between governmental entities.
The general assembly finds that the litigation of these disputes is an inappropriate
use of the limited resources of the association, public employers, and the courts
because it is possible to establish reasonable and fair rules for the resolution of
such disputes without any need for judicial involvement. The general assembly
therefore intends to resolve any current disputes and to clearly delineate the
responsibilities of governmental entities so that future disputes do not require any
litigation or unnecessary expenditure of state moneys.
(b) Fairness requires that the general assembly prescribe uniform results in
every circumstance, a goal that is not obtainable when varying results arise from
litigation of contributions disputes in the courts;
(c) Under the provisions of this section, members and inactive members will
receive the full benefits promised by law and, therefore, there is no question
regarding the equal treatment of any individual;
(d) In order to minimize the risk of future litigation between the public
employees' retirement association and other governmental entities, it is appropriate
to clarify under sections 24-51-205 (3.5) and 24-51-207 (2) that the board of
trustees of the association may reasonably settle or compromise disputes without
violating any principle of fiduciary responsibility;
(e) Should any judicial determination regarding an employer's liability for
contributions be contrary to the results provided under this section, the association
will be required under section 24-51-401 (7) to accept a reduced employer
contribution level to offset all excess damages above the level of contributions the
general assembly has established. The general assembly further finds that the
establishment of a proper rate of contributions is clearly a legislative function and
that it is appropriate for the general assembly to modify the level of employer
contributions when necessary to offset the results of judicial awards that are
contrary to the amounts established by the general assembly. The general
assembly declares that it is its express intent to overrule any judicial decision
entered prior to May 22, 1995, that is contrary to the provisions of this section.
(2) The provisions of this section and sections 13-80-103.5 (1)(d) and 13-80-108 (13), C.R.S., apply to the following:
(a) Any cause of action accruing on or after May 22, 1995;
(b) Any unresolved cause of action accruing prior to May 22, 1995; and
(c) (I) Any cause of action resolved on or after July 1, 1994, but prior to May
22, 1995. The following shall govern the application of this section to the causes of
action specified in this paragraph (c):
(A) This section shall affect only the total amount of the payments in any
cause of action specified by this paragraph (c). Such total amount of payments
shall not exceed the amount specified under subsection (3)(a) or (3)(b)(I) of this
section, whichever is applicable. The association shall refund, or shall not collect,
any difference between the amount paid, agreed to be paid, or awarded in any such
cause of action and the amount specified under subsection (3)(a) or (3)(b)(I) of this
section. Subsection (3)(b)(II) of this section shall not affect the allocation of
payments pursuant to an agreement, settlement agreement, or judgment resolving
a cause of action specified by this paragraph (c).
(B) This section shall not require any member or inactive member to make
any payment of unpaid contributions with respect to any cause of action specified
by this paragraph (c) if such member or inactive member is not required to make
such payment under the agreement, settlement agreement, or judgment resolving
the cause of action.
(C) This section shall not affect any benefits provided to individuals as the
result of the payment of unpaid contributions with respect to any cause of action
specified by this paragraph (c).
(II) For the purposes of this paragraph (c), a cause of action is resolved if
there is an agreement to make payment under the cause of action, whether or not
the full payment has been made, if there is a settlement agreement in a lawsuit
between the parties, whether or not the full payment under the settlement
agreement has been made, or if there is a final judgment entered, whether or not
the judgment has been fully paid or collected.
(3) If an employer fails to provide membership in the association to an
individual so entitled pursuant to the provisions of this article or fails to provide the
required level of employer contributions for an individual pursuant to the provisions
of this article, the following payment shall be made to the association:
(a) If the individual is not a member or inactive member at the time the
association first notifies the employer of its claim for unpaid contributions, the
employer shall pay the unpaid employer contributions on behalf of the individual for
the period contributions should have been made at the contribution rate applicable
during such period, plus the amortization equalization disbursement in effect
pursuant to section 24-51-411 for the period contributions should have been made,
plus interest on such employer contributions and the amortization equalization
disbursement at the applicable actuarial investment assumption rate, as such
interest rate is from time to time adjusted, until such contributions are paid. If an
employer pays contributions pursuant to this paragraph (a) on behalf of an
individual who was not a member or inactive member when the association first
notifies the employer and such individual subsequently becomes a member and
completes one year of earned service credit, the member may purchase service
credit for the appropriate period by paying the unpaid member contributions for the
period for which contributions should have been made at the contribution rate
applicable during such period, plus interest on such member contributions at the
applicable actuarial investment assumption rate, as such interest rate is from time
to time adjusted, until such contributions are paid.
(b) (I) If the individual is a member or inactive member at the time the
association first notifies the employer of its claim for unpaid contributions, the
payment equals the lesser of the following amounts:
(A) For a member, the cost to purchase the appropriate amount of service
credit at the rate established pursuant to section 24-51-505, plus the amortization
equalization disbursement in effect pursuant to section 24-51-411 for the period
contributions should have been made; and, for an inactive member, the cost to
purchase the appropriate amount of service credit at the rate established pursuant
to section 24-51-505, based upon the salary at the date of last employment, plus
the amortization equalization disbursement that should have been made, plus
interest at the applicable actuarial investment assumption rate, as such interest
rate is from time to time adjusted, from the date of last employment until the date
contributions are paid; or
(B) The unpaid employer and member contributions and amortization
equalization disbursement for the period contributions should have been made, plus
interest on such employer and member contributions and the amortization
equalization disbursement at the applicable actuarial investment assumption rate,
as such interest rate is from time to time adjusted, until such contributions are paid.
(II) The amounts paid to the association shall be allocated and collected in
the following order until the full amount that is owed under subparagraph (I) of this
paragraph (b) is reached:
(A) The employer shall first pay the unpaid employer contributions and
amortization equalization disbursement on behalf of the member or inactive
member for the period contributions should have been made, plus interest on such
employer contributions and amortization equalization disbursement at the
applicable actuarial investment assumption rate, as such interest rate is from time
to time adjusted, until such contributions are paid;
(B) The member or inactive member shall next pay the unpaid employee
contributions for the period contributions should have been made, without interest;
and
(C) The employer shall next pay interest on the unpaid employee
contributions for the period contributions should have been made at the applicable
actuarial investment assumption rate, as such interest rate is from time to time
adjusted, until such contributions are paid; except that the employer is only
required to pay interest on the amount of employee contributions owed by the
member or inactive member under sub-subparagraph (B) of this subparagraph (II)
that the member or inactive member actually pays.
(III) If the full amount owed pursuant to the provisions of this paragraph (b) is
not paid because the member or inactive member pays less than the full amount of
employee contributions, then:
(A) If the member or inactive member was not provided membership during
the applicable time period, the association shall provide partial service credit to the
member or inactive member in the same proportion to the total amount of service
credit that would have been earned if contributions had been made as the amount
actually paid to the association bears to the amount that was owed to the
association; and
(B) If the member or inactive member was provided membership during the
applicable time period, the association shall provide a partial increase in the highest
average salary of the member or inactive member in the same proportion to the
increase in highest average salary that would have been earned if contributions had
been paid as the amount actually paid to the association bears to the amount that
was owed to the association.
(4) Within ninety days after the time the association first notifies an
employer of its claim for unpaid contributions, the association shall attempt to
notify all members and inactive members regarding their rights to pay unpaid
employee contributions pursuant to subsection (3)(b)(II)(B) of this section. Any
member or inactive member who elects to pay all or any portion of unpaid employee
contributions shall notify the association of such election within one year after the
date the employer pays the unpaid employer contributions pursuant to subsection
(3)(b)(II)(A) of this section. If a member or inactive member fails to notify the
association of the member's or inactive member's intent to pay as allowed under
this subsection (4), the association may elect to treat the member or inactive
member as having forfeited the right to make such contributions. Any member or
inactive member who elects to pay all or any portion of unpaid employee
contributions may pay employee contributions in installment payments over a
period not to exceed sixty months or over a period equal to the amount of service
credit that would have been earned if contributions had been made, whichever
period is shorter.
(5) If an individual for whom contributions are being claimed is not a member
of the association at the time the association first notifies an employer of its claim
for unpaid contributions, an action to collect unpaid contributions is subject to the
limitations provided in section 13-80-103.5 (1)(d), C.R.S. If an individual for whom
contributions are being claimed is a member or inactive member at the time the
association first notifies an employer of its claim for unpaid contributions, an action
to collect unpaid contributions is not subject to any limitation under article 80 of
title 13, C.R.S.