The Vermont Statutes Online

Title 3: Executive

Chapter 019: Social Security for State and Municipal Employees

• § 571. Declaration of policy

  In order to extend to employees of the State and its political subdivisions and to the dependents and survivors of such employees the basic protection accorded to others by the Old Age and Survivors Insurance System embodied in the Social Security Act, the State of Vermont authorizes and empowers the Treasurer of the State as a State agency to enter into appropriate agreements with the Secretary of Health and Human Services for the purpose of making available under the provisions of this chapter, to employees of the State and its political subdivisions, the benefits of the Social Security Act. It is also the policy of the legislature that the federal-State agreement permitted by this chapter be made applicable to the services of all employees of the State of Vermont to the extent and in the manner permitted by the federal Social Security Act.

• § 572. Definitions

  For the purposes of this chapter:

  (1) “Employee” includes an officer of a State or political subdivision thereof;

  (2) “Employment” means any service performed by any employee in the employ of the State, or any political subdivision thereof, for such employer, except (1) service which in the absence of an agreement entered into under this chapter would constitute “employment” as defined in the Social Security Act; or (2) service which under the Social Security Act may not be included in an agreement between the State and the Secretary of Health and Human Services entered into under this chapter. Service which under the Social Security Act may be included in an agreement only upon certification by the Governor in accordance with Section 218(d)(3) or 218(d)(7) of that Act shall be included in the term “employment” if and when the Governor issues, with respect to such service, a certificate to the Secretary of Health and Human Services pursuant to subsection 578(b) of this title.

  (3) “Federal Insurance Contributions Act” means subchapter A of chapter 9 of the federal Internal Revenue Code of 1939 and subchapters A and B of chapter 21 of the federal Internal Revenue Code of 1954, as such codes have been and may from time to time be amended; and the term “employee tax” means the tax imposed by Section 1400 of such Code of 1939 and Section 3101 of such Code of 1954.

  (4) “Political subdivision” includes an instrumentality of a state, of one or more of its political subdivisions, or of a state and one or more of its political subdivisions, but only if such instrumentality is a juristic entity which is legally separate and distinct from the State or subdivision and only if its employees are not by virtue of their relation to such juristic entity employees of the State or subdivision.

  (5) “Secretary of Health and Human Services” includes any individual to whom the Secretary of Health and Human Services has delegated any of his or her functions under the Social Security Act with respect to coverage under such act of employees of states and their political subdivisions, and with respect to any action taken prior to April 11, 1953, includes the Federal Security Administrator and any individual to whom such Administrator had delegated any such function.

  (6) “Social Security Act” means the act of Congress approved August 14, 1935, chapter 531, 49 Stat. 620, officially cited as the “Social Security Act,” including regulations and requirements issued pursuant thereto, as such Act has been and may from time to time be amended.

  (7) “State agency” means the State Treasurer.

  (8) “Wages” means all remuneration for employment as defined herein, including the cash value of all remuneration paid in any medium other than cash, except that such term shall not include that part of such remuneration which, even if it were for “employment” within the meaning of the federal Insurance Contributions Act, would not constitute “wages” within the meaning of that Act. (Amended 1963, No. 164, § 1, eff. June 25, 1963.)

• § 573. Federal-State agreement; interstate instrumentalities

  (a) The State agency, with the approval of the Governor, is hereby authorized to enter on behalf of the State into an agreement with the Secretary of Health and Human Services, consistent with the terms and provisions of this chapter, for the purpose of extending the benefits of the federal Old Age and Survivors Insurance System to employees of the State or any political subdivision thereof with respect to services specified in such agreement which constitute “employment” as defined in section 572 of this title. Such agreement may contain such provisions relating to coverage, benefits, contributions, effective date, modification, and termination of the agreement, administration, and other appropriate provisions as the State agency and Secretary of Health and Human Services shall agree upon, but, except as may be otherwise required by or under the Social Security Act as to the services to be covered, such agreement shall provide in effect that:

  (1) Benefits will be provided for employees whose services are covered by the agreement and their dependents and survivors on the same basis as though such services constituted employment within the meaning of Title II of the Social Security Act;

  (2) The State will pay to the Secretary of the Treasury, at such time or times as may be prescribed under the Social Security Act, contributions with respect to wages (as defined in section 572 of this title), equal to the sum of the taxes which would be imposed by the federal Insurance Contributions Act if the services covered by the agreement constituted employment within the meaning of that Act;

  (3) Such agreement or any modification of such agreement shall be effective with respect to services in employment covered by the agreement or any modification of such agreement after the date specified therein in accordance with Section 218 of the Social Security Act;

  (4) All services which constitute employment as defined in section 572 of this title and are performed in the employ of the State by employees of the State, shall be covered by the agreement;

  (5) All services which (A) constitute employment as defined in section 572 of this title; (B) are performed in the employ of a political subdivision of the State; and (C) are covered by a plan which is in conformity with the terms of the agreement and has been approved by the State agency under section 575 of this title, shall be covered by the agreement;

  (6) As modified, the agreement shall include all services described in either subdivision (4) or subdivision (5) of this subsection and performed by individuals to whom Section 218(c)(3)(C) of the Social Security Act is applicable, and shall provide that the service of any such individual shall not continue to be covered by the agreement in case he or she thereafter becomes eligible to be a member of a Retirement System except as provided by subdivision (7) hereof; and

  (7) As modified, the agreement shall include all services described in either subdivision (4) or subdivision (5) of this subsection and performed by individuals in positions covered by a Retirement System with respect to which the Governor has issued a certificate to the Secretary of Health and Human Services pursuant to subsection 578(b) of this title.

  (b) Any instrumentality jointly created by this State and any other state or states is hereby authorized, upon the granting of like authority by such other state or states, (1) to enter an agreement with the Secretary of Health and Human Services whereby the benefits of the federal Old Age and Survivors Insurance System shall be extended to employees of such instrumentality; (2) to require its employees to pay (and for that purpose to deduct from their wages) contributions equal to the amounts which they would be required to pay under subsection 574(a) of this title if they were covered by an agreement made pursuant to subsection (a) of this section; and (3) to make payments to the Secretary of the Treasury in accordance with such agreement, including payments from its own funds, and otherwise to comply with such agreements. Such agreement shall, to the extent practicable, be consistent with the terms and provisions of subsection (a) and other provisions of this chapter. (Amended 1959, No. 204.)

• § 574. Contributions by State employees

  (a) Every employee of the State whose services are covered by an agreement entered into under section 573 of this title shall be required to pay for the period of such coverage, into the Contribution Fund established by section 576 of this title, contributions, with respect to wages as defined in section 572 of this title, equal to the amount of the employee tax which would be imposed by the federal Insurance Contributions Act if such services constituted employment within the meaning of that Act. Such liability shall arise in consideration of the employee’s retention in the service of the State, or his or her entry upon such service, after April 26, 1951.

  (b) The contribution imposed by this section shall be collected by deducting the amount of the contribution from the wages as and when paid, but failure to make such deduction shall not relieve the employee from liability for such contribution.

  (c) If more or less than the correct amount of the contribution imposed by this section is paid or deducted with respect to any remuneration, proper adjustments, or refund if adjustment is impracticable, shall be made, without interest, in such manner and at such times as the State agency shall prescribe.

• § 575. Plans for coverage of employees of political subdivisions

  (a) Each political subdivision of the State, acting through its legislative branch in the case of a municipality, or through its governing body in the case of an instrumentality, is hereby authorized, and in the case of any political subdivision employing teachers is required, to submit for approval by the State agency a plan for extending the benefits of Title II of the Social Security Act, in conformity with applicable provisions of such act, to employees of such political subdivision. Each such plan and any amendment thereof shall be approved by the State agency if it finds that such plan, or such plan as amended, is in conformity with such requirements as are provided in regulations of the State agency, except that no such plan shall be approved unless:

  (1) it is in conformity with the requirements of the Social Security Act and with the agreement entered into under section 573 of this title;

  (2) it provides that all services which constitute employment as defined in section 572 of this title and are performed in the employ of the political subdivision by employees thereof, shall be covered by the plan; except that it may exclude services performed by individuals to whom Section 218(c)(3)(B) of the Social Security Act is applicable;

  (3) it specifies the source or sources from which the funds necessary to make the payments required by subdivision (c)(1) of this section and by subsection (d) of this section are expected to be derived and contains reasonable assurance that such sources will be adequate for such purposes;

  (4) it provides for such methods of administration of the plan by the political subdivision as are found by the State agency to be necessary for the proper and efficient administration of the plan;

  (5) it provides that the political subdivision will make such reports, in such form and containing such information, as the State agency may from time to time require, and comply with such provisions as the State Agency or the Secretary of Health and Human Services may from time to time find necessary to assure the correctness and verification of such reports; and

  (6) it authorizes the State agency to terminate the plan in its entirety, in the discretion of the State agency, if it finds that there has been a failure to comply substantially with any provisions contained in such plan, such termination to take effect at the expiration of such notice and on such conditions as may be provided by regulations of the State agency and may be consistent with the provisions of the Social Security Act.

  (b) The State agency shall not finally refuse to approve a plan submitted by a political subdivision under subsection (a) of this section, and shall not terminate an approval plan, without reasonable notice and opportunity for hearing to the political subdivision affected thereby.

  (c)(1) Each political subdivision as to which a plan has been approved under this section is authorized to and shall pay into the Contribution Fund, with respect to wages (as defined in section 572 of this title), at such time or times as the State agency may by regulation prescribe, contributions in the amounts and at the rates specified in the applicable agreement entered into by the State agency under section 573 of this title.

  (2) Each political subdivision required to make payments under subdivision (1) of this subsection is authorized, in consideration of the employee’s retention in, or entry upon, employment after April 26, 1951, to impose upon each of its employees, as to services which are covered by an approved plan, a contribution with respect to his or her wages as defined in section 572 of this title, not exceeding the amount of the employee tax which would be imposed by the federal Insurance Contributions Act if such services constituted employment within the meaning of that Act, and to deduct the amount of such contribution from his or her wages as and when paid. Contributions so collected shall be paid into the Contribution Fund in partial discharge of the liability of such political subdivision or instrumentality under subdivision (1) of this subsection. Failure to deduct such contribution shall not relieve the employee or employer of liability therefor.

  (d) Delinquent payments due under subdivision (c)(1) of this section may, with interest at the rate of six percent per annum, be recovered by action in a court of competent jurisdiction against the political subdivision liable therefor or may be deducted, with interest, by, or at the request of, the State Treasurer from any other monies payable to such subdivision by any department or agency of the State. (Amended 1981, No. 41, § 22.)

• § 576. Contribution Fund

  (a) There is hereby established a special fund to be known as the Contribution Fund. Such Fund shall consist of and there shall be deposited in such Fund: (1) all contributions, interest, and penalties collected under sections 574 and 575 of this title; (2) all monies appropriated thereto under this chapter; (3) any property or securities and earnings thereof acquired through the use of monies belonging to the Fund; (4) interest earned upon any monies in the Fund; and (5) all sums recovered upon the bond of the custodian or otherwise for losses sustained by the Fund and all other monies received for the Fund from any other source. All monies in the Fund shall be mingled and undivided. Subject to the provisions of this chapter, the State agency is vested with full power, authority, and jurisdiction over the Fund, including all monies and property or securities belonging thereto, and may perform any and all acts whether or not specifically designated, which are necessary to the administration thereof and are consistent with the provisions of this chapter.

  (b) The Contribution Fund shall be established and held separate and apart from any other funds or monies of the State and shall be used and administered exclusively for the purpose of this chapter. Withdrawals from such Fund shall be made for, and solely for (1) payment of amounts required to be paid to the Secretary of the Treasury pursuant to an agreement entered into under section 573 of this title; (2) payment of refunds provided for in subsection 574(c) of this title; and (3) refunds of overpayments, not otherwise adjustable, made by a political subdivision or instrumentality.

  (c) From the Contribution Fund the custodian of the Fund shall pay to the Secretary of the Treasury such amounts and at such time or times as is provided under the terms of the agreement entered into under section 573 of this title and the Social Security Act.

  (d) The Treasurer of the State shall be ex officio treasurer and custodian of the Contribution Fund and shall administer such fund in accordance with the provisions of this chapter. The State Treasurer may appoint a director and other assistants as he or she may deem necessary to administer this chapter and fix their salaries, under the provisions of section 310 of this title, with the approval of the Governor.

  (e) There are hereby authorized to be appropriated annually to the Contribution Fund, in addition to the contributions collected and paid into the Contribution Fund under sections 574 and 575 of this title, to be available for the purposes of subsections (b) and (c) of this section until expended, such additional sums as are found to be necessary in order to make the payments to the Secretary of the Treasury which the State is obligated to make pursuant to an agreement entered into under section 573 of this title. (Amended 2003, No. 122 (Adj. Sess.), § 294c.)

• § 577. Regulations

  The State agency shall make and publish such rules and regulations, not inconsistent with the provisions of this chapter, as it finds necessary or appropriate to the efficient administration of the functions with which it is charged under this chapter.

• § 578. Referenda and certification

  (a) The Governor is empowered to authorize a referendum in accordance with the requirements of Section 218(d)(3) of the Social Security Act or to authorize a vote to be held according to Section 218(d)(6)(C) and Section 218(d)(7) of the Social Security Act on the question of whether service in positions covered by a retirement system established by the State or by a political subdivision thereof should be excluded from or included under an agreement under this chapter, and to designate an agency or individual to supervise the conduct of such referendum or vote. Where a vote is held according to Sections 218(d)(6)(C) and 218(d)(7) of the Social Security Act, the Retirement System shall be divided into two parts. One part, Part A, shall be composed of the positions of members who in such vote have expressed a desire to have their services in such positions included under the agreement and of the positions of all individuals who become members of such System after the agreement is extended to include the service of those members who have expressed a desire to be covered under the Social Security Act; and the other part, Part B, shall be composed of the positions of members who have not expressed a desire in such vote to have their services included under the agreement and the positions of any individual who was ineligible to be a member of such retirement system on August 1, 1956 or, if later, on the day he or she first occupied such position. The notice of referendum required by Section 218(d)(3)(C) of the Social Security Act or the notice of the vote required by Section 218(d)(7)(B) of the Social Security Act shall contain or shall be accompanied by a statement, in such form and such detail as the agency or individual designated to supervise the conduct of the referendum or the vote shall deem necessary and sufficient to inform individuals to whom such notice is given of the rights which will accrue to them and their dependents and survivors, and the liabilities to which they will be subject, if their services are included under an agreement under this chapter.

  (b) Upon receiving evidence satisfactory to him or her that with respect to any such referendum or any such vote the conditions specified in Section 218(d)(3) or in Section 218(d)(7), respectively of the Social Security Act have been met, the Governor shall so certify to the Secretary of Health and Human Services.

  (c) Where a Retirement System covers positions of employees of the State and positions of employees of one or more political subdivisions of the State, or covers positions of employees of two or more political subdivisions of the State, then, for purposes of this section, there may, in accordance with a determination by the State agency, be deemed to be a separate Retirement System with respect to any one or more of the political subdivisions concerned and, where the Retirement System covers positions of employees of the State, a separate Retirement System with respect to the State or with respect to the State and any one or more of the political subdivisions concerned. (Amended 1963, No. 164, § 2, eff. June 25, 1963.)

• § 579. Warrant for State’s share of contribution

  (a) Employees not members of a retirement system. The Commissioner of Finance and Management is hereby directed to issue his or her warrant in favor of the Vermont State Treasurer, agent, for the amounts necessary to pay the State’s share of the contribution due the federal government as the result of such agreement being made applicable to the services of employees of the State who are not members of a State retirement system. The contribution of the State to cover members whose salaries are paid from other than the General Fund appropriation shall be paid from the department appropriation from which such members’ salaries are paid. It is further directed that after July 1, 1957, these amounts be charged back to the individual departmental appropriations.

  (b) Members of Vermont Employees’ Retirement System. The Commissioner of Finance and Management is hereby directed to issue his or her warrant in favor of Vermont State Treasurer, agent, for the amounts necessary to pay the employer’s share of the old age and survivors insurance tax due the federal government as the result of the coverage agreement authorized by this chapter being extended to employees of the State who are members of the Vermont Employees’ Retirement System. It is further directed that after July 1, 1957 this tax be charged back to the individual departmental appropriations.

  (c) Members of Vermont State Retirement System. The Commissioner of Finance and Management is hereby directed to issue his or her warrant in favor of Vermont State Treasurer, agent, for the amounts necessary to pay the employer’s share of the old age and survivors insurance tax due the federal government as the result of the coverage agreement authorized by this chapter being extended to employees of the State who are members of the Vermont State Retirement System and who were not subject to the provisions of subsection (b) of this section as in effect on June 30, 1972. It is further directed that after July 1, 1972 this tax be charged back to the individual departmental appropriations. (Amended 1971, No. 231 (Adj. Sess.), § 3; 1983, No. 195 (Adj. Sess.), § 5(b).)