A BILL TO BE ENTITLED
AN ACT to limit the amount of transition packages or golden parachutes for state employees.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 126‑8.5 reads as rewritten:
"§ 126‑8.5.  Discontinued service retirement allowance and severance wages for certain State employees; limitation to amount of transition salary packages or golden parachutes for State employees.
(a)	When the Director of the Budget determines that the closing of a State institution or a reduction in force will accomplish economies in the State Budget, he shall pay either a discontinued service retirement allowance or severance wages to any affected State employee, provided reemployment is not available. As used in this section, "economies in the State Budget" means economies resulting from elimination of a job and its responsibilities or from a lack of funds to support the job. In determining whether to pay a discontinued service retirement allowance or severance wages, the Director of the Budget shall consider the recommendation of the department head involved and any recommendation of the State Personnel Director. Severance wages shall not be paid to an employee who chooses a discontinued service retirement. Severance wages shall not be subject to employer or employee retirement contributions. Severance wages shall be paid according to the policies adopted by the State Personnel Commission.
Notwithstanding any other provisions of the State's retirement laws, any employee of the State who is a member of the Teachers' and State Employees' Retirement System or the Law‑Enforcement Officers' Retirement System and who has his job involuntarily terminated as a result of economies in the State Budget may be entitled to a discontinued service retirement allowance, subject to the approval of the employing agency and the availability of agency funds. An unreduced discontinued service retirement allowance, not otherwise allowed, may be approved for employees with 20 or more years of creditable retirement service who are at least 55 years of age; or a discontinued service retirement allowance, not otherwise allowed, may be approved for employees with 20 or more years of creditable retirement service who are at least 50 years of age, reduced by one‑fourth of one percent (¼ of 1%) for each month that retirement precedes his fifty‑fifth birthday. In cases where a discontinued service retirement allowance is approved, the employing agency shall make a lump sum payment to the Administrator of the State Retirement Systems equal to the actuarial present value of the additional liabilities imposed upon the System, to be determined by the System's consulting actuary, as a result of the discontinued service retirement, plus an administrative fee to be determined by the Administrator.
The salary used to determine severance wages under this section is the last annual salary except that if the employee was promoted within the previous 12 months, the last annual salary is that annual salary prior to the promotion. If the annual salary prior to the promotion is used, it shall be adjusted to account for any across‑the‑board legislative salary increases. Excluded from any calculation are any benefits such as, but not limited to, overtime pay, shift pay, holiday premium, or longevity pay.
(b)	Any employee separated from State government and paid severance wages under this section shall not be employed under a contractual arrangement by any State agency, other than the constituent institutions of The University of North Carolina and the constituent institutions of the North Carolina Community College System, until 12 months have elapsed since the separation. This subsection does not affect any reduction in force rights that the employee may have.
(c)	The amount of any transition salary package payable to certain State employees employed by State agencies, departments, institutions, and The University of North Carolina shall be limited by the provisions of this subsection as follows:
(1)	Notwithstanding any other provision of law, no State employee who leaves the position that the employee most recently held shall continue to be paid the salary for that position when the employee is no longer carrying out the responsibilities for that position. This includes periods of transition.
(2)	Notwithstanding subdivision (1) of this subsection, a State employee who leaves the position that the employee most recently held may continue to be paid the salary for a position that he or she no longer holds in the following circumstances only:
a.	The payment is required as a term of the contract that was entered into at the time the person was hired for, or promoted to, the position most recently held; and
b.	The contract is signed by the appropriate finance officer or a properly designated deputy finance officer for the agency hiring the person, approved by the agency head, and approved by the Office of State Budget and Management. If the State agency is The University of North Carolina or a constituent institution of The University of North Carolina, then the contract must be signed by the appropriate finance officer or a properly designated deputy finance officer for The University of North Carolina or the constituent institution, approved by the appropriate chancellor, and approved by the UNC Board of Governors or by the Board of Trustees of the constituent institution as appropriate.
(3)	This subsection does not affect or impair a State employee's rights to severance wages or a discontinued service retirement allowance as provided in subsections (a) and (b) of this section, or terminal leave payments for vacation leave, bonus leave, and longevity, if applicable. (4)	The following definitions apply in this subsection:
a.	State employee who leaves the position that the employee most recently held. –  Includes those circumstances in which a person retires, resigns, or voluntarily or involuntarily terminates employment. The phrase also includes those circumstances in which a person continues to work for the State but accepts a lesser position with the State.
b.	Transition. – When a State employee moves from the position that the employee most recently held to a lesser position of employment. The term includes a 'golden parachute' or a sabbatical."
SECTION 2.  This act becomes effective July 1, 2010.  G.S. 126‑8.5(c)(1) applies retroactively and also applies to payments that have not yet been made unless there is a legally enforceable contract to pay.