Chapter 40

40.02(48r) (48r) “Required beginning date” means the later of April 1 of the calendar year following the calendar year in which a participant attains the age set under section 401 (a) (9) of the Internal Revenue Code or April 1 of the calendar year following the calendar year in which a participating employee retires.

40.02(49) (49) “Retired employee” means a former insured employee who is not a participating employee and who is retired on an immediate or disability annuity or who receives a lump sum payment under s. 40.25 (1) which would have been an immediate annuity if paid as an annuity or who is an eligible employee under sub. (25) (b) 6., 6e., or 6g.

40.02(50) (50) “Retirement annuity” means any annuity payable under s. 40.23, including the continuation of retirement annuities after the death of the participant.

40.02(51) (51) “Retirement system” means a pension, annuity, retirement or similar fund or system established by this state or by a political subdivision of this state.

40.02(52) (52) “Salary index” means the percentage increase in the average of the total wages, as determined under 42 USC 415 (b) (3) (A), between the year before the preceding year and the preceding year.

40.02(53) (53) “Secretary” means the secretary of the department.

40.02(54) (54) “State agency” means any office, department or independent agency in the executive, legislative and judicial branches of state government and includes the following:

40.02(54)(b) (b) The Wisconsin Housing and Economic Development Authority.

40.02(54)(c) (c) The Wisconsin Health and Educational Facilities Authority.

40.02(54)(e) (e) The community development finance authority created under ch. 233, 1985 stats., before July 1, 1988.

40.02(54)(f) (f) The nonprofit corporation with which the department of workforce development contracts under s. 47.03 (1m) (a), 1989 stats.

40.02(54)(h) (h) The University of Wisconsin Hospitals and Clinics Authority.

40.02(54)(i) (i) The Fox River Navigational System Authority.

40.02(54)(j) (j) The Wisconsin Aerospace Authority.

40.02(54)(m) (m) The Wisconsin Economic Development Corporation.

40.02(54m) (54m) “State annuitant” means a person receiving a retirement annuity, beneficiary annuity or a disability annuity from this state’s retirement system who at one time received a salary or wages from this state and who is a resident of this state.

40.02(54t) (54t) “State employee” means an employee of a state agency.

40.02(55) (55) “Teacher” means any employee engaged in the exercise of any educational function for compensation in the public schools, including charter schools as defined in s. 115.001 (1) that are instrumentalities of a school district, or the university in instructing or controlling pupils or students, or in administering, directing, organizing or supervising any educational activity, but does not include any employee determined to be an auxiliary instructional employee under s. 115.29 (3). “Teacher” includes the following:

40.02(55)(a) (a) Any person employed as a librarian by any school board in a library in any school under its jurisdiction, including a charter school as defined in s. 115.001 (1) that is an instrumentality of a school district, whose qualifications as a librarian are at least equal to the minimum librarian qualifications prescribed by the state superintendent of public instruction.

40.02(55)(b) (b) Any person employed as a full-time social center, community house, adult education or recreation director, instructor or other employee employed by the board of school directors of the city of Milwaukee, who possesses the qualifications required for employment as a teacher.

40.02(55g) (55g) “Technical college educational support personnel employee” means a person who is a technical college district employee, but who is not a teacher.

40.02(55m) (55m) “Timely appeal” means a written request for the review of a determination that is filed within 90 days after the determination is mailed to the person aggrieved by the determination.

40.02(56) (56) “Union service leave” means that period of absence from employment commencing on the date an employee commences a leave of absence for the purpose of serving in a position with a labor organization representing employees of the employee’s employer, and terminating on the date that leave of absence terminates or the date that service with that labor organization terminates, whichever first occurs.

40.02(57) (57) “University” means the University of Wisconsin System under ch. 36.

40.02(57m) (57m) “U.S. armed forces” means any of the following:

40.02(57m)(a) (a) The U.S. army, including the WACS.

40.02(57m)(b) (b) The U.S. navy, including the WAVES.

40.02(57m)(c) (c) The U.S. air force, including the WAFS.

40.02(57m)(d) (d) The U.S. marine corps, including the WMS.

40.02(57m)(e) (e) The U.S. coast guard, including the SPARS.

40.02(57m)(f) (f) The U.S. maritime service, including the merchant marine.

40.02(58) (58) “Variable annuity” means any annuity provided by the accumulations in the variable annuity division established under s. 40.04 (7) providing for the dollar amount of benefits or other contractual payments or values to vary so as to reflect differences which may arise between the total value of the annuity reserve for variable annuities and the reserve that would be required if the annuities were core annuities.

40.02 History History: 1981 c. 96, 187, 250, 274, 386; 1983 a. 9, 27; 1983 a. 81 s. 11; 1983 a. 83 s. 20; 1983 a. 106, 140; 1983 a. 141 ss. 1 to 3, 20; 1983 a. 191 ss. 1, 6; 1983 a. 192 s. 304; 1983 a. 255 s. 6; 1983 a. 275, 290, 368; 1983 a. 435 s. 7; 1985 a. 29, 225; 1985 a. 332 ss. 52, 251 (1); 1987 a. 27, 62, 83, 107, 309, 340, 356, 363, 372, 399; 1987 a. 403 ss. 43 to 45, 256; 1989 a. 13, 14, 31; 1989 a. 56 s. 259; 1989 a. 166, 182, 189, 218, 230, 240, 323, 327, 336, 355, 357, 359; 1991 a. 32, 39, 113, 152, 229, 269, 315; 1993 a. 16, 263, 383, 490, 491; 1995 a. 27, ss. 1946 to 1953, 9130 (4); 1995 a. 81, 88, 89, 216, 240, 302, 381, 417; 1997 a. 3, 27, 39, 69, 110, 162, 237, 238; 1999 a. 9, 11, 42, 63, 65, 83; 2001 a. 16, 38, 103, 104, 109; 2003 a. 33; 2005 a. 153, 335; 2007 a. 20, 131, 226; 2009 a. 15, 28; 2011 a. 7, 10, 32, 116, 229; 2013 a. 20 ss. 699 to 709c, 2365m, 9448; 2013 a. 168 s. 21; 2013 a. 214; 2015 a. 55, 187; 2017 a. 12, 59, 191; 2017 a. 207 s. 5; 2017 a. 366; 2021 a. 240 s. 30; 2021 a. 245; 2023 a. 4, 12, 73.

40.02 Annotation “Active military service” and “active service” as used in sub. (15) (c) do not include “active duty for training.” Morris v. Employee Trust Funds Board, 203 Wis. 2d 172, 554 N.W.2d 205 (Ct. App. 1996), 94-0857.

40.03 40.03 Powers and duties.

40.03(1) (1) Employee trust funds board. The board:

40.03(1)(a) (a) Shall authorize and terminate the payment of all annuities and death benefits, except disability annuities, in accordance with this chapter and may adjust the computation of the amount, as provided by this chapter, as necessary to prevent any inequity which might otherwise exist if a participant has a combination of full-time and part-time service, a change in annual earnings period during the high years of earnings or has previously received an annuity which was terminated.

40.03(1)(am) (am) Shall ensure that the Wisconsin retirement system complies with the Internal Revenue Code as a qualified plan for income tax purposes and shall ensure that each benefit plan is administered in a manner consistent with all Internal Revenue Code provisions that authorize and regulate the benefit plan.

40.03(1)(b) (b) Shall approve the tables to be used for computing benefits under the Wisconsin retirement system after certification of the tables in writing by the actuary.

40.03(1)(c) (c) Shall appoint the secretary of the department and may employ or select any medical, legal and other independent contractors as are required for the administration of the fund.

40.03(1)(d) (d) Shall select and retain an actuary or an actuarial firm, under one or more contractual agreements which shall run to the department for the purpose of performing all actuarial services which are necessary for the operation and control of each of the insurance and benefit programs under this chapter. Under this paragraph, the board shall:

40.03(1)(d)1. 1. Determine the requirements for and qualifications of the actuary or the actuarial firms so retained.

40.03(1)(d)2. 2. Determine the terms and conditions of each contractual agreement, and the time any contractual agreement shall be in force.

40.03(1)(d)3. 3. Determine the procedure for the selection of an actuary or an actuarial firm.

40.03(1)(d)4. 4. Direct the secretary to sign on behalf of the department any contractual agreement approved by the board.

40.03(1)(e) (e) Shall approve the contribution rates and actuarial assumptions determined by the actuary under sub. (5) (b) and (c).

40.03(1)(f) (f) May compel witnesses to attend meetings and to testify upon any necessary matter concerning the fund and authorize fees not in excess of the statutory provisions for witnesses.

40.03(1)(g) (g) May determine the length of creditable prior service from information available. Any determination shall be conclusive as to any period of service unless, within the time limits specified in s. 40.08 (10), the board reconsiders any case and changes the determination.

40.03(1)(h) (h) May accept any gift, grant, or bequest of any money or property of any kind, for the purposes designated by the grantor if the purpose is specified as providing cash benefits to some or all of the participants, insured employees, or annuitants of this fund or for reducing employer or employee costs; or, if no purposes are designated, then for the purpose of distribution to the several accounts and reserves of the Wisconsin Retirement System at the end of the year as if the money or property were investment earnings of the core annuity division.

40.03(1)(i) (i) May determine that some or all of the disability annuities and death benefits provided from the Wisconsin retirement system shall instead be provided through group insurance plans to be established by the group insurance board either as separate plans or as integral parts of the group life and income continuation insurance plans established under this chapter.

40.03(1)(j) (j) Shall accept timely appeals from determinations made by the department, other than appeals of determinations made by the department regarding disability annuities. The board shall review the relevant facts and may hold a hearing. Upon completion of its review and hearing, if any, the board shall make a determination which it shall certify to the participating employer or the appropriate state agency and to the appropriate employee, if any. The board’s determination of an employee’s status under s. 40.06 (1) (e) shall remain in effect until receipt by the department of notification indicating a different classification. A participant may appeal that determination as provided by s. 40.06 (1) (e).

40.03(1)(k) (k) May require any employer to distribute to its employees any materials which are determined to be necessary for the efficient administration of the fund.

40.03(1)(L) (L) May delegate powers and duties as deemed necessary or desirable.

40.03(1)(m) (m) Shall approve or reject all administrative rules proposed by the secretary under sub. (2) (i).

40.03(1)(n) (n) May allow any separate retirement system for employees of one or more employers to deliver or send funds representing assets of that system to the department. If the department accepts delivery or transmission, the department shall purchase shares of the core retirement investment trust or variable retirement investment trust or both with those funds, subject to rules under sub. (2) (q). Each retirement system shall pay as provided in s. 40.04 (2) for the costs of investing and administering any of its funds sent or delivered to the department.

40.03(1)(p) (p) May, upon the recommendation of the actuary, transfer in whole or in part the assets and reserves held in any account described in s. 40.04 (9) to a different account described in s. 40.04 (9), for the purpose of providing any group insurance benefit offered by the group insurance board.

40.03(2) (2) Secretary. The secretary:

40.03(2)(a) (a) Shall be in charge of the administration of the department and exercise, as head of the department, all powers and duties specified in ss. 15.04 and 15.05.

40.03(2)(b) (b) Shall employ and select administrative, clerical or other employees as required for the administration of this chapter and establish the internal organization of the department.

40.03(2)(c) (c) Shall process all applications for annuities and benefits and may initiate payment based on estimated amounts, when the applicant is determined to be eligible, subject to correction upon final determination of the amount of the annuity or benefit.

40.03(2)(cm) (cm) May implement any payment processing system to pay moneys owing to any person under benefit plans administered by the department, including payment by direct deposit, electronic benefit transfer cards or other prepaid cards, electronic funds transfer, and automated clearinghouse procedures.

40.03(2)(d) (d) May suspend an annuity pending final action by the board, or a disability annuity pending final action by the Wisconsin retirement board or the teachers retirement board, when, in the secretary’s judgment, the annuitant is not eligible to receive the annuity.

40.03(2)(e) (e) Shall submit to each employer and, upon request, to each individual participating in any of the benefit plans administered by the department the report required under s. 15.04 (1) (d) or a summary of the report. The report shall be in lieu of any reports required by ss. 15.07 (6) and 15.09 (7) or any other law and shall include financial and actuarial balance sheets which reflect changes in the asset, liability and reserve accounts and additional statistics which the secretary determines to be necessary or desirable for a full understanding of the status of the fund and the benefit plans.

40.03(2)(f) (f) May delegate to other departmental employees any power or duty of the secretary.

40.03(2)(g) (g) Shall submit once each year to each participant currently making contributions, and to any other participant upon request or as in the secretary’s judgment is desirable, a statement of the participant’s account together with appropriate explanatory material.

40.03(2)(h) (h) May request any information from any participating employee or from any participating employer as is necessary for the proper operation of the fund.

40.03(2)(i) (i) Shall promulgate, with the approval of the board, all rules, except rules promulgated under par. (ig) or (ir), that are required for the efficient administration of the fund or of any of the benefit plans established by this chapter. In addition to being approved by the board, rules promulgated under this paragraph relating to teachers must be approved by the teachers retirement board and rules promulgated under this paragraph relating to participants other than teachers must be approved by the Wisconsin retirement board, except rules promulgated under s. 40.30.

40.03(2)(ig) (ig) Shall promulgate, with the approval of the group insurance board, all rules required for the administration of the group health, long-term care, income continuation or life insurance plans established under subchs. IV to VI and health savings accounts under subch. IV.

40.03(2)(ir) (ir) Shall promulgate, with the approval of the deferred compensation board, all rules required for the administration of deferred compensation plans established under subch. VII.

40.03(2)(j) (j) May authorize any governing body in a written designation filed by the governing body with the department to have an agent or agents to act for the governing body in all matters pertaining to the fund.

40.03(2)(k) (k) May determine an amount, and the procedure for establishing the amount, of OASDHI benefits for any person using any information the department has available in its records and any assumptions as to data not in the department’s records as deemed appropriate for estimating the benefits unless the person establishes, through a certification of the person’s social security earnings record or actual benefit amount, a different amount payable. In the case of any participant whose earnings are not subject to Titles II and XVIII of the federal social security act by reason of eligibility for a choice provided by statute, it is conclusively assumed in making the estimate, regardless of the person’s actual federal social security earnings record, that 50 percent of those earnings are and were subject to Titles II and XVIII of the federal social security act. The secretary may require the person to provide the department with a certification of the person’s social security earnings record or benefit amount as a condition for receiving benefits under this chapter. If a participant does not receive the OASDHI benefit for which the person is or will be eligible by reason of failure to apply for the benefit or by virtue of the suspension of the benefit the participant will nevertheless be deemed to have received the OASDHI benefit amount for purposes of any benefit computation under this chapter.

40.03(2)(L) (L) Shall determine each calendar year’s effective rate.

40.03(2)(m) (m) Shall have all other powers necessary to carry out the purposes and provisions of this chapter, except as otherwise specifically provided by this chapter.

40.03(2)(n) (n) Shall have any additional powers and duties as are delegated by the board.

40.03(2)(p) (p) Shall establish procedures for and conduct the elections of board members required under ss. 15.16 (1) (d) and 15.165 (3) (a) 1., 2., 6. and 7. The procedures shall include the establishment of a nominating process and shall provide for the distribution of ballots to all participating employees and annuitants eligible to vote in the election.

40.03(2)(q) (q) Shall promulgate rules governing the times when separate retirement systems may send or deliver funds under sub. (1) (n) or withdraw those funds, the amounts of money that may be sent, delivered or withdrawn, the valuation of money that has been sent, delivered or withdrawn, and the distribution of investment income among the retirement systems. These rules may modify the accounting and valuation bases and the investment earnings distribution procedures of the Wisconsin retirement system to the extent necessary to achieve equity among the various retirement systems.

40.03(2)(r) (r) Shall promulgate rules governing the times for making lump sum payments that are authorized under this chapter to be made to or from the Wisconsin retirement system and governing the valuation of money that has been sent, delivered or withdrawn, and the distribution of investment income to be credited on those amounts. The rules may modify the accounting and valuation bases and the investment earnings distribution procedures of the Wisconsin retirement system to the extent necessary to achieve equity among the various types of payments and contributions to, and payments from, the Wisconsin retirement system.

40.03(2)(s) (s) Shall reimburse the legislative audit bureau for the cost of audits required to be performed under s. 13.94 (1) (dc) and (dd).

40.03(2)(t) (t) Shall ensure that the Wisconsin retirement system complies with the Internal Revenue Code as a qualified plan for income tax purposes and shall ensure that each benefit plan is administered in a manner consistent with all Internal Revenue Code provisions that authorize and regulate the benefit plan.

40.03(2)(u) (u) Shall ensure that the department include on all publications that are printed beginning on October 14, 1997, and that are intended for distribution to participants the toll-free telephone number of the department, if the department has such a telephone number.

40.03(2)(v) (v) May settle any dispute in an appeal of a determination made by the department that is subject to review under sub. (1) (j), (6) (i), (7) (f), or (8) (f), or s. 40.80 (2g), but only with the approval of the board having the authority to accept the appeal. In deciding whether to settle such a dispute, the secretary shall consider the cost of litigation, the likelihood of success on the merits, the cost of delay in resolving the dispute, the actuarial impact on the trust fund, and any other relevant factor the secretary considers appropriate. Any moneys paid by the department to settle a dispute under this paragraph shall be paid from the appropriation account under s. 20.515 (1) (r).

40.03(2)(vm) (vm) Annually, before July 1, shall submit a report to the secretary of administration and the joint committee on finance on the department’s progress in modernizing its business processes and integrating its information technology systems.

40.03(2)(w) (w) If the secretary determines that an otherwise eligible participant has unintentionally forfeited or otherwise involuntarily ceased to be eligible for any benefit provided under this chapter principally because of an error in administration by the department, may order the correction of the error to prevent inequity. A decision under this paragraph is not subject to review. The secretary shall submit a quarterly report to the employee trust funds board on decisions made under this paragraph.

40.03(2)(x) (x)

40.03(2)(x)1. 1. May enter into a memorandum of understanding with the commissioner of the opportunity schools and partnership program under subch. IX of ch. 115 to include the commissioner and individuals employed at schools transferred to the program as participating employees and eligible for health care coverage under s. 40.51 (7). For purposes of s. 40.21 (1), a memorandum of understanding under this subdivision shall be considered a resolution adopted by a governing body. The secretary may not enter into the memorandum of understanding under this subdivision if the memorandum of understanding would result in the violation s. 40.015.

40.03(2)(x)2. 2. May enter into a memorandum of understanding with the superintendent of schools of the school district operating under ch. 119 to include individuals employed at schools transferred to the superintendent of schools opportunity schools and partnership program under s. 119.33 as participating employees and eligible for health care coverage under s. 40.51 (7). For purposes of s. 40.21 (1), a memorandum of understanding under this subdivision shall be considered a resolution adopted by a governing body. The secretary may not enter into the memorandum of understanding under this subdivision if the memorandum of understanding would result in the violation s. 40.015.

40.03(2)(x)3. 3. May enter into a memorandum of understanding with the commissioner of the opportunity schools and partnership program under subch. II of ch. 119 to include the commissioner and individuals employed at schools transferred to the program as participating employees and eligible for health care coverage under s. 40.51 (7). For purposes of s. 40.21 (1), a memorandum of understanding under this subdivision shall be considered a resolution adopted by a governing body. The secretary may not enter into a memorandum of understanding under this subdivision if the memorandum of understanding under this subdivision would result in a violation of s. 40.015.

40.03(3) (3) Department of justice. The department of justice shall furnish legal counsel and shall prosecute or defend all actions brought by or against the board, department, group insurance board or any employee of the department as a result of the performance of the department employee’s duties.

40.03(4) (4) State treasurer. The state treasurer shall be the treasurer of the fund.