KSC, TITLE 18.  PUBLIC SERVICE SYSTEM
 
 
Chapter 7.  Early
Retirement Program

Section 18.701.  Short Title.
Section 18.702.  Purpose.
Section 18.703.  Findings.
Section 18.704. Definitions.
Section 18.705.  Early Retirement Program: Commencement.
Section 18.706.  Eligibility; Procedures; Requirements.
Section 18.707.  Compensation to employees under the program.
Section 18.708.  Employees in program not eligible for re-employment.
Section 18.709.  Government shall provide counseling and training.
Section 18.710.  Program Fund, uses, loan repayment and reversion of funds.
Section 18.711.  Annual Report.
Section 18.712.  Act supersedes other laws

Background
Title 18, Chapter 7 added by State Law 6-122 and renumbered by State Law 6-136.

      Section 18.701.   Short Title.
       Chapter 7 of Title 18 of the Kosrae State Code shall be known and may be cited as the "Kosrae State Early Retirement Act of 1997".

      Section 18.702.  Purpose.
      The purpose of this chapter is to lower the long-term cost of Kosrae State Government operations by establishing a program of early retirement for employees of the State Government due to the impending reduction in compact funding during the compact step-down and the potential termination of compact funding after the initial fifteen year compact period.

      Section 18.703.   Findings.
      The State finds that:

     (a)  The State must initiate and implement cost savings measures as it faces certain reductions and possible future termination of funds under the Compact of Free Association between the Federated States of Micronesia and the United States of America.

     (b)  The State cannot continue to provide essential public services unless cost-saving and cost reduction measures are implemented immediately.

     (c)  The State must ease the impact of the necessary cost-saving and cost-reduction measures on the people of the State of Kosrae.  An early retirement program will help to alleviate the fiscal difficulties facing the State of Kosrae.

      Section 18.704. Definitions.
      As used in this chapter, unless the context clearly requires otherwise, the term:

     (a)  "Base Salary" means the specific rate of pay based on a fifty-six hour bi-weekly pay period, for a given pay level and step as contained within the Base Salary Schedule established by the State Public Service System Act of 1997, as amended.

     (b)  "Compact" means the Compact of Free Association between the Federated States of Micronesia and the United States of America.

     (c)  "Participating employee" means a permanent employee who qualifies to participate in the Program as set forth in Section 18.706.

     (d)  "Permanent employees" means employees appointed to positions in the public service system who have successfully completed their probationary employment status.

     (e)  "Probationary [employees]" means employees appointed to positions in the public service system who have not completed their probationary employment status for a period not less than six months and not more than one year.

     (f)  "Program" means the early retirement program established and prepared within Kosrae State Government.

Background
Amended by State Laws 6-132 and 6-136.

      Section 18.705.  Early Retirement Program: Commencement.

     (a)  The State hereby establishes a Kosrae State Early Retirement Program for the benefit of permanent employees recruited pursuant to the State Public Service System Act whose positions may be abolished from the public service system in a manner consistent with this chapter and the economic realities of the State.

     (b)  The program shall begin on the date the Governor certifies that there are funds available in the Program for disbursement to employees and shall continue from the date of certification for a period not to exceed two years.

     (c)  The certification shall clearly state the date when the program will end.

     (d)  Copies of certification shall be provided to each branch of the Kosrae State Government.

      Section 18.706.  Eligibility; Procedures; Requirements.
      Eligibility for the benefits under the program shall be determined as follows:

     (a)  Within 30 days of the commencement of the program, the Governor of Kosrae for the executive branch, the Chief Justice of Kosrae State for the judicial branch, the Speaker of the Kosrae Legislature, and the chief executive officer for each agency of the State Government shall submit to the Governor, or his designee, a list for their respective branch or agency.  Each list may be updated from time to time and shall include each position:

     (1)  Which shall be ineligible for inclusion in the program.  A position shall be ineligible if such position is exempt by law from provisions of the Public Service System Act, or provides essential public service and if abolished would cause the Kosrae State Government to fail to provide essential public services;

     (2)  Which shall be terminated because such position is redundant, inefficient, no longer funded or subject to abolishment from the public service without causing a failure by the Kosrae State Government to provide essential public services; and

     (3)  Which may be eligible for inclusion in the program.

     (b)  A permanent employee in a position which shall be terminated under section 18.706(a)(2) of this chapter shall be deemed a mandatory participant in the program subject only to the abolishment of the position. Such abolishment may occur at anytime during the program period but not less than 60 days after the employee has received notice that the position is to be abolished.  Eligibility for compensation under the program shall be subject to the criteria in section 18.707(a) of this chapter.

     (c)  A permanent employee in a position eligible for inclusion in the program under section 18.706(a)(3) of this chapter may participate in the program voluntarily by submitting written application to the Governor or his designee.  Eligibility for compensation under the program shall be subject to the criteria in section 18.707(a) of this chapter.

      Section 18.707.  Compensation to employees under the program.

     (a)  Permanent employees eligible for participation in the program shall be eligible for compensation under the program if:

     (1)  There are funds available in the program; and

     (2)  Long-term cost savings would be achieved by the employee. s participation in the program with compensation; and

     (3)  The respective branch or agency of the Kosrae State Government shall abolish the position without compromising essential public services or such position shall be filled by a permanent or probationary employee and such employee's previous position shall be abolished.

     (b)  Permanent employees eligible for participation in the program and eligible for compensation under the program shall receive the following compensation:

     (1)  Persons less than 55 years of age shall receive either:

     (a)  a lump sum payment equal to 48 bi-weekly base salary payments; or

     (b)  a lump sum payment equal to 24 bi-weekly base salary payments plus periodic payments equal to 26 base salary payments; or

     (c)  periodic payments equal to 52 bi-weekly base salary payments.

     (2)  Persons aged 55 or greater but not yet eligible for FSM Social Security Administration (hereinafter "SSA") retirement benefits, shall receive a lump sum payment equal to 6 bi-weekly base salary payments and a monthly amount equal to such becoming eligible for SSA retirement benefits.  Such payment shall terminate upon the person reaching the age of 60 or applicable law.  The Director of Administration and Finance may enter into an agreement with the SSA authorizing the SSA to administer the monthly payments under this subsection.  The agreement may also provide for the collection of reasonable administrative fees by the SSA.  Should the participating employee die prior to the termination of the benefits under the program the deceased participating employee's entitlements to compensation under the program shall survive and the remainder will be paid to person's or entities in accordance with the participating employee's anticipated SSA monthly retirement benefit at age 60.

     (3)  Persons aged 60 or greater and eligible to receive SSA retirement benefits shall receive a lump sum payment equal to 6 bi-weekly base salary periods.

     (c)  Each compensation package due to an employee pursuant to this chapter shall be subject to the following adjustments prior to disbursement.

     (1)  Deduct therefrom any annual or sick leave advance;

     (2)  Deduct therefrom any salary advance;

     (3)  Deduct therefrom any per diem or other travel advances including outstanding travel authorization; and

     (4)  Deduct therefrom any other adjustment which the employee may owe to the government, or add thereto any adjustment which the government may owe to the employee.

Background
Amended by State Law 6-136.  Further amended by State Law 7-1.

      Section 18.708.  Employees in program not eligible for re-employment.
      An employee who receives compensation under the Program shall not be eligible for re-employment by the State Government pursuant to the State Public Service System Act or employment pursuant to employment contract for a period of four years following the employee's departure from the public service under the program with the exception of elected and appointed positions subject to advise and consent.

      Section 18.709.  Government shall provide counseling and training.
      The Government shall provide out placement counseling and retraining for the participating employees during the transition period which shall be made optional and at the discretion of the participating employees.

Background
Amended by State Law 6-136.

      Section 18.710.  Program Fund, uses, loan repayment and reversion of funds.

     (a)  The program shall be funded from loan proceeds or from funds from the General Fund otherwise appropriated for such use.  Upon disbursement of any loan proceeds, such funds shall be deposited in a Kosrae State Government Early Retirement Fund (hereinafter Retirement Fund) which is hereby created and established.  The Retirement Fund shall be separate from the General Fund or any other funds of the Kosrae State Government.  Money in the Retirement Fund shall be invested prudently and investment gains therefrom shall accrue within the fund.

     (b)  Funds in the Retirement Fund may only be withdrawn, unless otherwise provided by law, for the following purposes:

     (1)  Payment of compensation to employees participating in the program;

     (2)  Payment to the SSA for payments and the administration of monthly compensation to persons participating in the program under Section 18.707(b)(2) of this chapter;

     (3)  Repayment of any loan obligations directly related to the program; or

     (4)  Payment for training costs related to the program, but not exceeding $150,000 in total.

     (c)  In order to facilitate the repayment of the loan the State Government shall continue to appropriate funds equivalent to at least fifty percent of the costs for each position abolished and subject to compensation payments under the program.  The funds so appropriated shall be deposited in the Retirement and Repayment  Fund.  On or before September 30, 2001, the balance of the Retirement and Repayment  Fund must equal or exceed the principal amount borrowed for the program.

     (d)  Pursuant to the terms of the Financing Agreement, if, at any time during the term of the loan the amount in the State's Trust Fund Account with the national government, plus the amounts in the Retirement Fund, exceeds the principal amount remaining for the loan, the amount in excess may be withdrawn from the Retirement Fund first, and then from the State's Trust Fund Account if still in excess of the remaining principal amount of the loan. Such withdrawals shall revert to the General Fund.  Any funds remaining in the Retirement Fund and the State's Trust Fund Account after the loan has been paid in full shall revert to the General Fund.

Background
Amended by State Law 6-136.

      Section 18.711.  Annual Report.
      The Governor shall submit a report to the Legislature not later than the first Monday of February of each year regarding the condition of the Program, actual expenditures from the last completed fiscal year, estimated expenditures for the fiscal year in progress, a full accounting of the funds received by the State for the Program, and a full accounting of funds deposited in the escrow account as authorized in Section 18.710 of this chapter.

      Section 18.712.  Act supersedes other laws.
      The provisions of this chapter shall supersede in their entirety any other provisions of any State laws that may be interpreted as inconsistent with any provisions of this chapter.
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