2023 Tennessee Code › Title 8 - PUBLIC OFFICERS AND EMPLOYEES (§§ 8-1-101 — 65-168) › Chapter 35 - RETIREMENT-MEMBERSHIP (§§ 8-35-101 — 8-35-504) › Part 2 - LOCAL GOVERNMENTAL UNITS (§§ 8-35-201 — 8-35-256) › Section 8-35-218 - Withdrawal by political subdivision

(a)
Upon giving at least one (1) year's advance notice in writing to the board of trustees, a political subdivision may terminate, effective July 1 following the end of the notice period, its participation in the retirement system, under the following terms and conditions:
(1)
The political subdivision shall submit a resolution to withdraw from the retirement system, legally adopted by two thirds (2/3) of the membership of the chief legislative body of the political subdivision;
(2)
The withdrawal shall apply to all departments of the political subdivision;
(3)
Such resolution to withdraw may be rescinded and withdrawn by a resolution legally adopted and approved by the chief legislative body of the political subdivision at any time prior to the expiration of the one-year notice period;
(4)
Employees who are members of the retirement system on the date such withdrawal resolution becomes effective shall continue membership in the retirement system until termination of employment, with the employer being liable for contributions and benefits as contained herein;
(5)
An employee who is not yet a member but is serving a probationary period pursuant to §
8-35-107
on the date the withdrawal becomes effective shall have such probationary period waived and shall have thirty (30) days to elect to participate in the retirement system with the employer being liable for contributions as herein provided;
(6)
Employees who are hired after the effective date of the resolution shall not be permitted to participate in the retirement system;
(7)
Any employee who continues participation in the Tennessee consolidated retirement system shall not be eligible to participate in any other retirement system provided by the employer;
(8)
Any employee who, upon termination of employment with such employer, withdraws service rendered to that employer shall not later be permitted to establish that service with the retirement system, unless the employer rejoins the retirement system pursuant to subdivision (a)(14). The establishment of such service shall be subject to §
8-37-214
;
(9)
An employee of the withdrawing political subdivision shall not be permitted to retire, begin receiving a benefit, and continue working with the same employer;
(10)
All members participating under this section, including retired former employees, shall be entitled to benefits according to the plan as it exists for such employer on the date of withdrawal;
(11)
An actuarial valuation shall be completed by the system's actuary when an employer voluntarily withdraws from the retirement system pursuant to this section. The actuarial valuation shall determine the appropriate employer contributions to be made to the plan based on a level dollar contribution so as to amortize the unfunded accrued liability over a period of time established by the board of trustees, such period not to exceed a thirty-year period. The board of trustees may, at its discretion, reestablish the amortization period at any time provided such reestablished period does not exceed thirty (30) years. The level dollar contribution amount shall be remitted monthly to the retirement system. Pursuant to §
8-34-506
, the biennial valuation shall continue to be performed;
(12)
Employer contributions may be adjusted as frequently as monthly should such additional contributions be needed to fund the benefits of members and beneficiaries covered under this section;
(13)
Any liabilities resulting from this section shall be a liability of the employer and not the state. Should any required employer costs become delinquent, the commissioner of finance and administration, at the direction of the board of trustees of the retirement system, is authorized to withhold such amount or part of such amount from any state-shared taxes which are otherwise apportioned to such employer, and any amounts so withheld shall come last from the state shared gasoline tax designated in title 54, chapter 4;
(14)
An employer may elect at a later date to rejoin the retirement system in accordance with §
8-35-201
; provided, that any such resolution to rejoin shall be irrevocable and the employer shall not later be permitted to withdraw under this section. The governing body of any such employer that rejoins the retirement system may pass a resolution to permit its employees to claim service credit for service rendered during the period from the date the employer withdrew from the retirement system through the date the employer rejoined the retirement system, if the employer authorizes the credit and assumes the employer liability for such prior service. Upon the authorization and assumption of the employer liability, any employee who meets the requirements of §
8-35-203(a)(2)(A) and (B)
shall be entitled to receive credit for such service by making a lump sum payment of the contributions such employee would have made had such employee been a contributory member during the period claimed, plus interest at the rate provided for in §
8-37-214
. The employer shall not have the option of paying the employee contributions required under this subdivision (a)(14); and
(15)
A political subdivision that withdraws its participation from the retirement system and elects to participate in the state's deferred compensation plan pursuant to §
8-25-111
, shall not be subject to the one-year advance notice requirement in this section; instead, the political subdivision shall give the board of trustees at least six (6) months advance written notice of the effective date of the withdrawal. The political subdivision shall submit a withdrawal resolution, legally adopted by two-thirds (2/3) of the membership of the chief legislative body of the political subdivision, at least six (6) months in advance of the political subdivision's effective date of the withdrawal, which shall be submitted on the first day of any quarter following the six-month minimum notice requirement. Such resolution to withdraw may be rescinded and withdrawn by a resolution legally adopted and approved by the chief legislative body of the political subdivision at any time prior to the expiration of the six-month notice period.
(b)
Upon giving at least one (1) year's advance notice in writing to the board of trustees, a hospital, nursing home, transit authority, utility, or other instrumentality that operates under the direction of its own governing board and that is not subject to the general control and administration of the chief legislative body of the political subdivision may terminate, effective July 1 following the end of the notice period, its participation in the retirement system. To terminate such participation, the following terms and conditions must be met:
(1)
The governing body of the instrumentality and the chief legislative body of the political subdivision shall each submit a resolution approving the withdrawal of the instrumentality from the retirement system. Both resolutions must be adopted by two thirds (2/3) of the membership of the chief legislative body of the political subdivision and of the governing body of the instrumentality;
(2)
Either the instrumentality or the political subdivision may, by resolution legally adopted and approved by the respective governing body, rescind the resolution approving the withdrawal at any time prior to the expiration of the one-year notice period;
(3)
Upon the effective date of any such withdrawal resolution, the current and future employees of the instrumentality shall be subject to subdivisions (a)(4)-(9);
(4)
All employees of the instrumentality that continue membership in the retirement system pursuant to subdivision (a)(4) or (a)(5), including retired former employees, shall be entitled to benefits according to the plan as it exists for such instrumentality on the date of withdrawal, with the political subdivision being liable for contributions and benefits as provided in subdivisions (a)(11)-(13); and
(5)
The political subdivision may elect at a later date to have the instrumentality rejoin the retirement system in accordance with §
8-35-201
; provided, that any such resolution to rejoin shall be irrevocable and the instrumentality shall not later be permitted to withdraw under this subsection (b). The employees of any such instrumentality that rejoins the retirement system may, pursuant to the terms and conditions described in subdivision (a)(14), establish service credit for service rendered during the period from the date the instrumentality withdrew from the retirement system through the date the instrumentality rejoined the retirement system.
Amended by 2013 Tenn. Acts, ch. 296, s 9, eff. 4/29/2013.
Acts 1983, ch. 175, § 2; 1995, ch. 164, §§ 5, 6; 2003 , ch. 12, § 6; 2005, ch. 204, § 1; 2006, ch. 870, § 15; 2010 , ch. 777, §§ 7 - 10; 2011 , ch. 140, § 9.