State Employee Leave Amendments

17
49-22-403
49-23-403
63A-17-505
63A-17-506
63A-17-507
63A-17-508
63A-17-508.1
67-19d-201
0
State Employee Leave Amendments
2026 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Thomas W. Peterson
Senate Sponsor:
LONG TITLE
General Description:
This bill modifies retirement benefits for state employees.
Highlighted Provisions:
This bill:
establishes the Unused Sick Leave Retirement Option Program III (Program III) for state
employees;
provides that, under Program III, a state employee receives a payment equal to 50% of the
value of the employee's unused sick leave hours accrued on or after January 4, 2014,
calculated at the employee's rate of pay at the time of retirement;
allows a state employee with unused Program I or Program II sick leave hours to make a
one-time, irrevocable election to convert those hours to Program III sick leave hours
eligible for the 50% payment described above; and
makes technical and conforming changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
49-22-403
, as last amended by Laws of Utah 2021, Chapter 345
49-23-403
, as last amended by Laws of Utah 2021, Chapter 345
63A-17-505
, as renumbered and amended by Laws of Utah 2021, Chapter 344
63A-17-506
, as renumbered and amended by Laws of Utah 2021, Chapter 344
63A-17-507
, as renumbered and amended by Laws of Utah 2021, Chapter 344
63A-17-508
, as renumbered and amended by Laws of Utah 2021, Chapter 344
67-19d-201
, as last amended by Laws of Utah 2021, Chapter 344
ENACTS:
63A-17-508.1
, Utah Code Annotated 1953
Be it enacted by the Legislature of the state of Utah:
Section 1. Section
49-22-403
is amended to read:
49-22-403
. Eligibility to receive a retirement allowance for a benefit tied to a
retirement date for defined contribution members.
(1)
As used in this section, "eligible to receive a retirement allowance" means the date
selected by the member who is a participant under this part on which the member has
ceased employment and would be qualified to receive an allowance under Section
49-22-304
if the member had been under the Tier II Hybrid Retirement System for the
same period of employment.
(2)
The office and a participating employer shall make an accounting of years of service
credit accrued for a member who is a participant under this part in order to calculate
when a member would be eligible to receive a retirement allowance for purposes of
establishing when a member may be eligible for a benefit tied to a retirement date that
may be provided under Section
63A-17-508
,
Section
63A-17-508.1
,
this title, another
state statute, or by a participating employer.
Section 2. Section
49-23-403
is amended to read:
49-23-403
. Eligibility to receive a retirement allowance for a benefit tied to a
retirement date for defined contribution members.
(1)
As used in this section, "eligible to receive a retirement allowance" means the date
selected by the member who is a participant under this part on which the member has
ceased employment and would be qualified to receive an allowance under Section
49-23-303
if the member had been under the Tier II Hybrid Retirement System for the
same period of employment.
(2)
The office and a participating employer shall make an accounting of years of service
credit accrued for a member who is a participant under this part in order to calculate
when a member would be eligible to receive a retirement allowance for purposes of
establishing when a member may be eligible for a benefit tied to a retirement date that
may be provided under Section
63A-17-508
,
Section
63A-17-508.1
,
this title, another
state statute, or by a participating employer.
Section 3. Section
63A-17-505
is amended to read:
63A-17-505
. Sick leave -- Definitions -- Unused sick days retirement programs --
Rulemaking.
(1)
In accordance with
Title 63G, Chapter 3, Utah Administrative Rulemaking Act
, the
director shall make rules:
(a)
for the procedures to implement the provisions of this section through Section
63A-17-508
63A-17-508.1
; and
(b)
to establish the maximum number of hours of converted sick leave an employee may
accrue.
(2)
The Division of Finance shall develop and maintain a system of accounting for
employee sick leave and converted sick leave as necessary to implement the provisions
of this section through Section
63A-17-508
63A-17-508.1
.
Section 4. Section
63A-17-506
is amended to read:
63A-17-506
. Converted sick leave.
Converted sick leave hours that are not used
prior to
before
an employee's retirement
date shall be used under the:
(1)
Unused Sick Leave Retirement Option Program I under Section
63A-17-507
if earned
prior to
before
January 1, 2006, unless the transfer is made under Subsection
63A-17-508(1)(c)
; or
or Subsection
63A-17-508.1(1)(c)
;
(2)
Unused Sick Leave Retirement Option Program II under Section
63A-17-508
if earned
on or after January 1, 2006
.
, and on or before January 3, 2014, unless the transfer is
made under Subsection
63A-17-508.1(1)(c)
; or
(3)
Unused Sick Leave Retirement Option Program III under Section
63A-17-508.1
if
earned on or after January 4, 2014.
Section 5. Section
63A-17-507
is amended to read:
63A-17-507
. Unused Sick Leave Retirement Option Program I -- Creation --
Payout upon eligibility for allowance -- Continuing medical and life insurance benefits
after retirement.
(1)
(a)
There is created the "Unused Sick Leave Retirement Option Program I."
(b)
An agency may offer the Unused Sick Leave Retirement Option Program I to an
employee who is eligible to receive a retirement allowance in accordance with
Title
49, Utah State Retirement and Insurance Benefit Act
.
(2)
The Unused Sick Leave Retirement Option Program I provides that
,
upon becoming
eligible to receive a retirement allowance
,
an employee who was employed by the state
prior to
before
January 1, 2006:
(a)
receives a contribution under Subsection
(3)

for
equal to
25% of the employee's
unused accumulated sick leave accrued
prior to
before
January 1, 2006, at the
employee's rate of pay at the time of retirement; and
(b)
may purchase additional continuing medical and life insurance benefits in
accordance with Subsection
(4)
.
(3)
(a)
Subject to federal requirements and limitations, the contribution under Subsection
(2)(a)
shall be transferred directly to the employee's defined contribution plan
qualified under Section 401(k) of the Internal Revenue Code which is sponsored by
the Utah State Retirement Board.
(b)
If the amount calculated under Subsection
(2)(a)
exceeds the federal contribution
limitations, the employee's unused accumulated sick leave hours representing the
excess shall be used for the purchase of continuing medical and life insurance
benefits under Subsection
(4)
.
(4)
(a)
An employee may purchase continuing medical and life insurance benefits, at the
rate of one month's coverage per policy for eight hours of unused sick leave
remaining after the contribution of unused sick leave under Subsection
(2)(a)
.
(b)
The medical coverage level for member, two person, or family coverage that is
provided to the member at the time of retirement is the maximum coverage level
available to the member under this program.
(c)
The purchase of continuing medical and life insurance benefits at the rate provided
under Subsection
(4)(a)
may be used by the employee to extend coverage:
(i)
until the employee reaches the age of eligibility for Medicare; or
(ii)
if the employee has reached the age of eligibility for Medicare, continuing
medical benefits for the employee's spouse may be purchased until the employee's
spouse reaches the age of eligibility for Medicare.
(d)
An employee and the employee's spouse who are or who later become eligible for
Medicare may purchase Medicare supplemental insurance at the rate of one month's
coverage for eight hours of the employee's unused sick leave per person.
(5)
(a)
The continuing medical and life insurance benefits purchased by an employee
under Subsection
(4)
:
(i)
may not be suspended or deferred for future use; and
(ii)
continues in effect until exhausted.
(b)
An employer participating in the Program I benefits under this section may not
provide medical or life insurance benefits to a person who is:
(i)
reemployeed
reemployed
after retirement; and
(ii)
receiving benefits under this section.
Section 6. Section
63A-17-508
is amended to read:
63A-17-508
. Unused Sick Leave Retirement Option Program II -- Creation --
Remuneration upon eligibility for allowance -- Medical expense account after retirement.
(1)
(a)
There is created the "Unused Sick Leave Retirement
Option
Program II."
(b)
An agency shall offer the Unused Sick Leave Retirement Option Program II to an
employee who is eligible to receive a retirement allowance in accordance with
Title
49, Utah State Retirement and Insurance Benefit Act
.
(c)
An employee who is participating in the Unused Sick Leave Retirement
Option
Program I under Section
63A-17-507
may make a one-time and irrevocable election
to transfer all unused sick leave hours
which shall include all
, including all

converted sick leave hours under Section
63A-17-506
,
for use
under
in accordance
with
the Unused Sick Leave Retirement
Option
Program II
under
described in
this
section.
(2)
(a)
The Unused Sick Leave Retirement
Option
Program II provides that
,
upon
becoming eligible to receive a retirement allowance
,
an employee employed by the
state between January 1, 2006, and January 3, 2014, shall receive remuneration for
the employee's unused accumulated sick leave and converted sick leave accrued
between January 1, 2006, and January 3, 2014, in accordance with this section as
follows:
(i)
subject to federal requirements and limitations, a contribution at the employee's
rate of pay at the time of retirement
for
equal to
25% of the employee's unused
accumulated sick leave and converted sick leave shall be transferred directly to the
employee's defined contribution plan qualified under Section 401(k) of the
Internal Revenue Code which is sponsored by the Utah State Retirement Board;
and
(ii)
participation in a benefit plan that provides for reimbursement for medical
expenses using money deposited at the employee's rate of pay at the time of
retirement from remaining unused accumulated sick leave and converted sick
leave balances.
(b)
If the amount calculated under Subsection
(2)(a)(i)
exceeds the federal contribution
limitations, the amount representing the excess shall be deposited under Subsection
(2)(a)(ii)
.
(c)
An employee's rate of pay at the time of retirement for purposes of Subsection
(2)(a)(ii)
may not be less than the average rate of pay of state employees who retired
in the same retirement system under
Title 49, Utah State Retirement and Insurance
Benefit Act
, during the previous calendar year.
(3)
The Utah State Retirement Office shall develop and maintain a program to provide a
benefit plan that provides for reimbursement for medical expenses under Subsection
(2)(a)(ii)
with money deposited under Subsection
(2)(a)(ii)
.
Section 7. Section
63A-17-508.1
is enacted to read:
63A-17-508.1
. Unused Sick Leave Retirement Option Program III -- Creation --
Payment upon eligibility for allowance -- Amount equal to 50% of unused accumulated
sick leave.
(1)
(a)
There is created the "Unused Sick Leave Retirement Option Program III."
(b)
An agency shall offer the Unused Sick Leave Retirement Option Program III to an
employee who is eligible to receive a retirement allowance in accordance with Title
49, Utah State Retirement and Insurance Benefit Act.
(c)
An employee who is participating in the retirement program described in Section
63A-17-507
or Section
63A-17-508
, or both, as applicable, may make a one-time and
irrevocable election to transfer all unused sick leave hours, including all converted
sick leave hours under Section
63A-17-506
, for use in accordance with the Unused
Sick Leave Retirement Option Program III described in this section.
(2)
The Unused Sick Leave Retirement Option Program III provides that, upon becoming
eligible to receive a retirement allowance, an employee shall receive a payment equal to
50% of the employee's unused accumulated sick leave and converted sick leave accrued
on or after January 4, 2014, calculated at the employee's rate of pay at the time of
retirement.
Section 8. Section
67-19d-201
is amended to read:
67-19d-201
. Trust fund -- Creation -- Oversight -- Dissolution.
(1)
There is created a post-retirement benefits trust fund entitled the "State Post-Retirement
Benefits Trust Fund."
(2)
The trust fund consists of:
(a)
revenue provided from an ongoing labor additive as defined in Subsection
67-19d-202(2)(g)
;
(b)
appropriations made to the fund by the Legislature, if any;
(c)
income as defined in Section
67-19d-102
; and
(d)
other revenues received from other sources.
(3)
The Division of Finance shall account for the receipt and expenditures of trust fund
money.
(4)
(a)
The state treasurer shall invest trust fund money by following the procedures and
requirements of
Part 3, Trust Fund Investments
.
(b)
(i)
The trust fund shall earn interest.
(ii)
The state treasurer shall deposit all interest or other income earned from
investment of the trust fund back into the trust fund.
(5)
The board of trustees created in Section
67-19d-202
may expend money from the trust
fund for:
(a)
the employer portion of the costs of the programs established in Sections
63A-17-505

through
63A-17-508
63A-17-508.1
; and
(b)
reasonable administrative costs that the board of trustees incurs in performing their
duties as trustees of the trust fund.
(6)
The board of trustees shall ensure that:
(a)
money deposited into the trust fund is irrevocable and is expended only for the
employer portion of the costs of post-retirement benefits;
(b)
assets of the trust fund are dedicated to providing benefits to retirees and their
beneficiaries according to the terms of the post-retirement benefit plans established
by statute and rule; and
(c)
creditors of the board of trustees and of employers liable for the post-retirement
benefits may not seize, attach, or otherwise obtain assets of the trust fund.
(7)
When all of the liabilities for which the trust fund was created are paid, the Division of
Finance shall transfer any assets remaining in the state trust fund into the appropriate
fund.
Section 9.
Effective Date.
This bill takes effect on
May 6, 2026
.
3-2-26 12:02 PM