§ 16-17.2-1. Compact.
The interstate compact with respect to pension portability for educators is enacted
into law and entered into by this state with all states legally joining therein in
the form substantially as follows:
Article I. Findings.
The parties to this compact find as follows:
(A) Interstate mobility of professional employees of public schools, colleges and universities
serves the public interest by providing for a more flexible workforce that is better
able to match jobs to employees, thereby helping to avoid shortages in particular
geographic areas.
(B) Interstate mobility of professional employees of public schools and colleges and universities
is impeded by the fact that, under the pension plans in which most of them participate,
such employees who move from one state to another generally suffer a substantial forfeiture
of earned pension benefits.
(C) An agreement among the states to provide increased pension portability for the professional
employees of public schools; colleges and universities will reduce one of the major
barriers to the interstate mobility of such employees.
Article II. Definitions.
As used in this compact, unless the context clearly indicates otherwise:
(A) A pension plan is "associated� with a state if the pension plan is maintained by the
state or a political subdivision thereof;
(B) "Educator� means an individual who is employed as a teacher or in another professional
position by a public school, college or university.
(C) "Eligible educator� means an educator who (1) accrues pensionable service in a pension
plan associated with a state by reason of his or her employment by a public school,
college or university in such state after this compact becomes effective; and (2)
accrued at least one year of pensionable services in a pension plan associated with
another state by reason of his or her employment by a public school, college, or university
in such state;
(D) "Exporting plan� means a pension plan in which an eligible educator previously accrued,
but is no longer accruing pensionable service, and from which the eligible educator
has not received any pension benefits;
(E) "Importing plan� means the pension plan in which an eligible educator presently is
accruing pensionable service;
(F) "Pensionable service� means a period of employment of an eligible education by a public
school, college, or university which is included by a pension plan in calculating
the pension benefits to which the eligible educator is entitled;
(G) "Pension plan� means a plan, program, system, fund, or other operation that provides
pension benefits to educators;
(H) "State� means a state of the United States, the District of Columbia, or any territory
or possession of the United States that is a party to this compact;
(I) "Stipulated rate� means:
(1) For an exporting plan, the average annual yield on pension plan assets, net of administrative
costs, experienced by the pension plan during the period from the first day of the
fiscal year to which the contribution in question applies through the end of the fiscal
year immediately preceding the date on which the money is either transferred from
the exporting plan to the importing plan, or paid to the eligible educator, as the
case may be; and
(2) For an importing plan, the average annual yield on pension plan assets experienced
by the pension plan during the period from the first day of the fiscal year to which
the contribution would have applied through the end of the fiscal year immediately
preceding the date on which the money is transferred from the exporting plan to the
importing plan.
Article III. Procedures.
Each state that is a party to this compact shall establish and maintain procedures
adequate to effectuate the transfer of money and pensionable service from an exporting
plan to an importing plan in accordance with the following provisions:
(A) At the request of an eligible educator who has complied with the application procedures
of the states with which the exporting plan and importing plan are associated, the
exporting plan shall transfer to the importing plan an amount of money that is equal
to the lesser of the following two (2) sums:
(1) The local contributions made to the exporting plan by or on behalf of the eligible
educator, plus interest calculated at the stipulated rate for the exporting plan;
or
(2) The total contributions that would have been made to the importing plan by or on behalf
of the eligible educator if the eligible educator had been accruing pensionable service
in the importing plan for the entire period during which he or she was accruing pensionable
service in the exporting plan, assuming employment at the same salary, plus interest
calculated at the stipulated rate for the importing plan.
(B) Upon receipt of the money transferred pursuant to Article III (A), the importing plan
shall credit the eligible educator with pensionable service in the importing plan
as follows:
(1) When the amount of money transferred is the sum calculated pursuant to Article III
(A)(1), the importing plan shall, for purposes of vesting and date of eligibility
to begin receiving pension benefits, credit the eligible educator with the amount
of pensionable service that he or she accrued in the exporting plan. For purposes
of the amount of the pension benefits to be received by the eligible educator, the
importing plan shall credit the eligible educator with an amount of pensionable service
calculated as follows:
(a) The amount of pensionable service that the eligible educator accrued in the exporting
plan multiplied by
(b) A fraction, the numerator of which is the amount of money calculated under Article
III (A)(1), plus any supplementary payments made pursuant to Article III (B)(2), and
the denominator of which is the amount of money calculated under Article III (A)(2);
(2) When the amount of money transferred to the importing plan on behalf of an eligible
educator is the sum calculated under Article III (A)(1), the eligible educator may
elect to make supplementary payments to the importing plan up to the amount of the
difference between the sum transferred and the sum calculated under Article III (A)(2).
Such supplementary payments may be made by the eligible educator in conjunction with
the transfer of money from the exporting plan to the importing plan, or at any time
thereafter before the eligible educator receives any pension benefits from the importing
plan, in such minimum amounts as may be required by the importing plan, provided that
the monetary value of any supplementary payments made subsequent to the transfer of
money from the exporting plan to the importing plan shall be adjusted, as determined
by the actuary of the importing plan, to reflect the period elapsed between the date
the money is transferred from the exporting plan and the date the supplementary payment
is made;
(C) When the amount of money transferred from the exporting plan to the importing is the
sum calculated pursuant to Article III (A)(2), any money remaining to the credit of
the eligible educator in the exporting plan shall be retained in the exporting plan
and used as follows:
(1) For transfer to another importing plan at the request of the eligible educator in
accordance with the terms of this compact;
(2) To pay pension benefits to the eligible educator if he or she again becomes a participant
in the exporting plan; or
(3) If not used for purpose (1) or (2) above, for payment to the eligible educator, plus
interest calculated at the stipulated rate for the exporting plan, when notification
has been received from the eligible educator that he or she has begun to receive pension
benefits from the importing plan.
(D) There shall be no limit on the number of transfers of money and pensionable service
that an eligible educator may take from an exporting plan to an importing plan under
this compact. In the case of a subsequent transfer, money previously transferred to
an importing plan from an exporting plan shall for purposes of such subsequent transfer
be considered "contributions made to the exporting plan by or on behalf of the eligible
educator� within the meaning of Article III (A)(1).
Article IV. Effective Date of Compact; Withdrawal from Compact.
(A) When two or more states enact statutes adopting this compact, it shall become effective
in those states on the dates specified in such statutes. Any other state may thereafter
become a party to this compact by enacting a statute adopting it, and the compact
shall become effective in that state on the date specified in such statute.
(B) A party state may withdraw from this compact by repealing the statute adopting this
compact, provided that no such withdrawal shall be effective until at least one (1)
year after the governor of the withdrawing state has given written notice of the repeal
of the statute adopting this compact to the governors of all other party states. The
withdrawal of a party state shall not relieve any pension plan associated with such
state of its obligation to pay to an eligible educator on whose behalf has been transferred
under this compact prior to the effective date of such withdrawal the pension benefits
to which he or she is entitled under this compact.
Article V. Other Arrangements Unaffected.
Nothing contained in this compact shall be construed to prevent or inhibit states
that are parties to this compact from entering into other arrangements, not inconsistent
with the terms of this compact, to effectuate the purpose set forth in Article I.
Article VI. Construction and Severability.
(A) This compact shall be liberally construed so as to effectuate the purpose set forth
in Article I.
(B) If any provision of this compact, or application thereof, is held by a state or federal
court to be invalid with respect to a particular party state, said holding shall not
affect the validity of such provision, or application thereof, in any other party
state. The provisions of this compact shall be severable, and, as to the party state
subject to the court holding, this compact shall in all other respects remain in full
force and effect. If the party states that are not subject to the court holding believe
that the provision of this compact, or application thereof, that has been declared
invalid is not severable, they may, by majority vote, require the party state that
is subject to the court holding to withdraw from this compact, in which event the
withdrawal shall be effective immediately upon such vote, provided that the withdrawal
shall not relieve any pension plan associated with such party state of its obligation
to pay to an eligible educator on whose behalf money has been or is in the process
of being transferred under this compact prior to the effective date of such withdrawal
the pension benefits to which he or she is entitled under this compact.