SCS/SB 857 - This act defines salary for the purposes of teacher and nonteacher school employee retirement to exclude fringe benefits except medical benefits.

The act is necessary because of a pending lawsuit (Savannah R-III District v. Public School Retirement System). Since 1970, PSRS has included employer paid medical benefits as a part of salary for the purpose of calculating both contributions and benefits. The Savannah case challenges the PSRS calculation of salary and the Missouri Court of Appeals, Western District, has issued an opinion supporting that challenge. The Missouri Supreme Court recently remanded the case back to circuit court for further proceedings. If the Court orders a refund, the cost is estimated to be about $310 M and PSRS would be required to recover the loss either from current or future retirees.

The act provides that contributions made before the effective date of this act shall be considered in compliance, no matter how medical benefits were treated in the calculation of contributions and benefits. It is intended to ensure than PSRS would not be required to recalculate contributions and refund any excess based upon the Savannah decision.

The act has an emergency clause. OTTO FAJEN AND DAVID VALENTINE