130th Ohio General Assembly
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As Reported by the House Health, Retirement and Aging Committee

122nd General Assembly
Regular Session
1997-1998
Sub. H. B. No. 673

REPRESENTATIVES PADGETT-WESTON-COUGHLIN-LOGAN-FORD-OPFER- REID-CAREY-TERWILLEGER-PERZ-VESPER-OGG-BRITTON-GARCIA- METELSKY-THOMAS-MOTTLEY-MAIER-BRADING-BEATTY-PATTON-OLMAN


A BILL
To amend sections 145.30, 3305.05, 3305.06, 3309.36, 3309.38, 3309.50, and 3309.69, to enact section 3305.051, and to repeal section 3309.37 of the Revised Code to increase the School Employees Retirement System (SERS) service retirement benefit for retirants with more than 30 years' service credit, to increase the SERS death benefit to $1,000, to increase the SERS reimbursement for insurance coverage under Medicare Part B, to make changes with regard to military service credit granted by the Public Employees Retirement System, to make changes to the law governing alternative retirement programs for employees of public institutions of higher education, and to change the date by which the Ohio Retirement Study Commission is required to have completed and submitted an actuarial study of the alternative retirement program for employees of public institutions of higher education.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:


Section 1. That sections 145.30, 3305.05, 3305.06, 3309.36, 3309.38, 3309.50, and 3309.69 be amended and section 3305.051 of the Revised Code be enacted to read as follows:

Sec. 145.30. (A) As used in this section and section 145.301 of the Revised Code:

(1) "Armed forces" of the United States includes the following:

(a) Army, navy, air force, marine corps, coast guard, auxiliary corps as established by congress, red cross nurse serving with the army, navy, air force, or hospital service of the United States, army nurse corps, navy nurse corps, full-time service with the American red cross in a combat zone, and such other service as may be designated by congress as included therein;

(b) Personnel of the Ohio national guard and the reserve components of any of the armed forces enumerated in division (A)(1) of this section who are called to active duty pursuant to an executive order issued by the president of the United States or an act of congress;

(c) Persons on whom United States merchant marine veteran status has been conferred for service aboard oceangoing merchant ships in service to the United States during World War II.

(2) "State retirement system" means any of the following: the police and firemen's disability and pension fund, public employees retirement system, school employees retirement system, state highway patrol retirement system, or the state teachers retirement system.

(B) Upon reemployment in the public service and completion of one year of service credit as covered by a state retirement system or the Cincinnati retirement system, within two years after service in the uniformed services ARMED FORCES that is terminated in a manner other than as described in section 4304 of Title 38 of the United States Code, "Uniformed Services Employment and Reemployment Rights Act of 1994," 108 Stat. 3149, 38 U.S.C.A. 4304, and presentation of documentation of the service and subject to rules adopted by the retirement board, any member of the public employees retirement system who was a member with not less than one year of payroll deductions before entering active duty with the armed forces and maintained membership in the public employees retirement system as provided by section 145.41 of the Revised Code, and who was or is out of active service as a public employee by reason of having become a member of the armed forces of the United States on active duty or service shall have such military service, not in excess of ten years, considered as the equivalent of prior service. Uniformed service SERVICE IN THE ARMED FORCES as established by documentation of the service, not in excess of ten years, shall also be considered prior service for a person who was a public employee and who has acquired service credit for five years prior to, and within the one year preceding, the date of entering on active duty in the armed forces of the United States if such person was reemployed in the public service within one year after service in the uniformed services ARMED FORCES that is terminated in a manner other than as described in section 4304 of Title 38 of the United States Code, "Uniformed Services Employment and Reemployment Rights Act of 1994," 108 Stat. 3149, 38 U.S.C.A. 4304, AND ESTABLISHED TOTAL SERVICE CREDIT AS DEFINED IN SECTION 145.01 of the Revised Code of twenty years exclusive of credit for SERVICE IN THE uniformed service SERVICES, AS DEFINED IN SECTION 145.302 of the Revised Code. This division shall not serve to cancel any military service credit earned or granted prior to November 1, 1965.

(C) A member of the public employees retirement system is ineligible to receive service credit under this section for any year of military service credit used in the calculation of any retirement benefit currently being paid to the member or payable in the future under any other retirement program, except social security, or used to obtain service credit pursuant to section 145.301 or 145.302 of the Revised Code. At the time such credit is requested, the member shall certify on a form supplied by the retirement board that the member does and will conform to this requirement. This division does not cancel any military service credit earned prior to March 15, 1979.

Sec. 3305.05. (A) A person whose employment as an academic or administrative employee of a public institution of higher education commences after the initial date on which the board of trustees of the public institution establishes the alternative retirement program may, not later than ninety days after the starting date of employment, make an election to participate in an alternative retirement plan available at the public institution. If no election to an alternative retirement plan is in effect at the end of ninety days after the person's starting date of employment, the person shall be deemed to have elected participation in the state retirement system that applies to the person's employment. Except as provided under division (F) of this section, an election that is made under this division or division (B) of this section and that is in effect at the end of ninety days after the person's starting date of employment, shall be irrevocable while the electing employee remains continuously employed. A person who makes an election to participate in an alternative retirement plan shall be forever barred from claiming or purchasing service credit under any state retirement system for the period of that person's employment that the election is in effect. If a person ceases to be continuously employed and subsequently is employed by a public institution of higher education in a position for which an alternative retirement plan is available under this chapter, the person may make another election under this division. Each public institution of higher education employing a person eligible to make an election under this division shall notify, within ten days of the person's employment, that THE state retirement system that applies to that person's employment in the manner specified by that state retirement system, which notice shall include the new employee's name and address.

This division does not apply to any person who has made an election under this division or division (B) of this section unless the person has ceased to be continuously employed.

(B)(1) Not later than one hundred twenty days after the date on which the board of trustees of a public institution of higher education establishes the initial alternative retirement program for that public institution, each ELIGIBLE academic or administrative employee of the public institution with less than five years of total service credit in the state retirement system in which the person is a member on that initial establishment date may make an election to participate in an alternative retirement plan available at the public institution. If a person to whom this division applies fails to make an election, the person shall be deemed to have elected continued participation in the state retirement system in which the person is a member.

(2)(a) IF A PUBLIC INSTITUTION'S ALTERNATIVE RETIREMENT PROGRAM IS ESTABLISHED NOT LATER THAN SIX MONTHS AFTER THE DEPARTMENT OF INSURANCE MAKES A DESIGNATION UNDER SECTION 3305.03 of the Revised Code, A MEMBER OF THE PUBLIC EMPLOYEES RETIREMENT SYSTEM OR SCHOOL EMPLOYEES RETIREMENT SYSTEM WHO IS AN ACADEMIC OR ADMINISTRATIVE EMPLOYEE OF THE PUBLIC INSTITUTION IS ELIGIBLE TO ELECT TO PARTICIPATE IF THE MEMBER HAS LESS THAN FIVE YEARS OF SERVICE CREDIT IN THE RETIREMENT SYSTEM ON THE LAST DAY OF THE MONTH IN WHICH THE DESIGNATION IS MADE. IF A PUBLIC INSTITUTION'S ALTERNATIVE RETIREMENT PROGRAM IS ESTABLISHED MORE THAN SIX MONTHS AFTER THE DEPARTMENT OF INSURANCE MAKES THE DESIGNATION, A MEMBER OF THE PUBLIC EMPLOYEES RETIREMENT SYSTEM OR SCHOOL EMPLOYEES RETIREMENT SYSTEM WHO IS AN ACADEMIC OR ADMINISTRATIVE EMPLOYEE OF THE PUBLIC INSTITUTION IS ELIGIBLE TO ELECT TO PARTICIPATE IF THE MEMBER HAS LESS THAN FIVE YEARS OF SERVICE CREDIT IN THE RETIREMENT SYSTEM ON THE FIRST DAY THE MONTH IN WHICH THE PROGRAM IS ESTABLISHED.

(b) A MEMBER OF THE STATE TEACHERS RETIREMENT SYSTEM WHO IS AN ACADEMIC OR ADMINISTRATIVE EMPLOYEE OF A PUBLIC INSTITUTION THAT ESTABLISHES AN ALTERNATIVE RETIREMENT PROGRAM IS ELIGIBLE TO PARTICIPATE IN THE PROGRAM IF THE MEMBER HAS LESS THAN FIVE YEARS OF SERVICE CREDIT IN THE RETIREMENT SYSTEM ON THE THIRTIETH DAY OF JUNE IMMEDIATELY PRECEDING THE DATE THE PROGRAM IS ESTABLISHED.

(C) Each academic or administrative employee shall make any AN election under division (A) or (B) of this section in writing and submit the election to the designated officer of the employee's employing public institution of higher education. The officer shall file a certified copy of the election within ten days with the state retirement system to which, apart from this election, the employee's employment would be subject.

(D)(1) Each election made under division (A) of this section shall be effective on the electing employee's starting date of employment.

(2) Each IN THE CASE OF A MEMBER OF THE PUBLIC EMPLOYEES RETIREMENT SYSTEM OR SCHOOL EMPLOYEES RETIREMENT SYSTEM, AN election made under division (B) of this section shall be effective on the first day of the month next following the date on which the electing employee submits the election under division (C) of this section DATE DESCRIBED IN DIVISION (B)(2)(a) OF THIS SECTION. IN THE CASE OF A MEMBER OF THE STATE TEACHERS RETIREMENT SYSTEM, AN ELECTION SHALL BE EFFECTIVE ON THE DATE DESCRIBED IN DIVISION (B)(2)(b) OF THIS SECTION.

(E) Any election made under division (A) or (B) of this section shall only apply to the electing employee's employment in positions for which an alternative retirement program is available pursuant to this chapter. Employment of the electing employee in any other position shall be subject to the applicable state retirement system.

(F) The board of trustees of a public institution of higher education shall permit an electing employee to change the alternative retirement plan in which the electing employee participates if the plan ceases, pursuant to division (C) of section 3305.03 of the Revised Code, to be a designated plan.

Sec. 3305.051. THE STATE RETIREMENT SYSTEM THAT COVERS THE POSITION HELD BY AN EMPLOYEE OF A PUBLIC INSTITUTION OF HIGHER EDUCATION WHO MAKES AN ELECTION UNDER DIVISION (A) OF SECTION 3305.06 of the Revised Code TO PARTICIPATE IN THE PUBLIC INSTITUTION'S ALTERNATIVE RETIREMENT PROGRAM SHALL RETURN TO THE PUBLIC INSTITUTION ANY EMPLOYEE AND EMPLOYER CONTRIBUTIONS MADE TO THE RETIREMENT SYSTEM FOR THE NINETY-DAY PERIOD DESCRIBED IN THAT DIVISION LESS THE AMOUNT DUE THE RETIREMENT SYSTEM PURSUANT TO DIVISION (E) OF SECTION 3305.06 of the Revised Code FOR THAT PERIOD.

THE STATE RETIREMENT SYSTEM THAT COVERS THE POSITION HELD BY AN EMPLOYEE OF A PUBLIC INSTITUTION OF HIGHER EDUCATION WHO MAKES AN ELECTION UNDER DIVISION (B) OF SECTION 3305.06 of the Revised Code TO PARTICIPATE IN THE PUBLIC INSTITUTION'S ALTERNATIVE RETIREMENT PROGRAM SHALL RETURN TO THE PUBLIC INSTITUTION ANY EMPLOYEE AND EMPLOYER CONTRIBUTIONS MADE TO THE RETIREMENT SYSTEM FOR ANY PERIOD COMMENCING AFTER THE APPLICABLE DATE DESCRIBED IN DIVISION (B)(2)(a) OR (b) OF SECTION 3305.06 of the Revised Code LESS THE AMOUNT DUE THE RETIREMENT SYSTEM PURSUANT TO DIVISION (E) OF SECTION 3305.06 of the Revised Code FOR THAT PERIOD.

Sec. 3305.06. (A) Each electing employee shall contribute an amount, which shall be a certain percentage of the employee's compensation, to the alternative retirement plan in which the employee participates. This percentage shall be the percentage the electing employee would have otherwise been required to contribute to the state retirement system that applies to the employee's position, except that the percentage shall not be less than three per cent. Employee contributions under this division may be treated as employer contributions in accordance with Internal Revenue Code 414 (h).

(B) Each public institution of higher education employing an electing employee shall contribute an amount, which shall be a certain percentage of the employee's compensation, to the alternative retirement plan the employee has elected. This percentage shall be determined by the board of trustees of the public institution.

(C)(1) In no event shall the amount contributed by the electing employee pursuant to division (A) of this section and on the electing employee's behalf pursuant to division (B) of this section be less than the amount necessary to qualify the plan as a state retirement system pursuant to Internal Revenue Code 3121(B)(7) and the regulations adopted thereunder.

(2) The full amount of the electing employee's contribution under division (A) of this section and the full amount of the employer's contribution made on behalf of that employee under division (B) of this section shall be paid to the entity providing the employee's alternative retirement plan for application to that plan in accordance with any contract the electing employee has entered into for purposes of that plan. In no event shall any benefits be paid under that plan prior to the time an electing employee ceases to be continuously employed.

(D) An electing employee may make voluntary deposits to the employee's alternative retirement plan in addition to the employee contribution required under division (A) of this section.

(E) Each public institution of higher education employing an electing employee shall contribute on behalf of that employee to the state retirement system that otherwise applies to the electing employee's position an amount equal to six per cent of the electing employee's compensation to mitigate any negative financial impact of the alternative retirement program on the state retirement system; provided that on the first day of July following the first year after the effective date of this section DEPARTMENT OF INSURANCE DESIGNATES AN ALTERNATIVE RETIREMENT PLAN UNDER SECTION 3305.03 of the Revised Code and every third year thereafter, the Ohio retirement study commission shall cause an independent actuarial study to be completed and submitted to the Ohio board of regents. The study shall determine any adjustments in contributions necessary to reflect any change in the level of the negative financial impact resulting from the establishment of the alternative retirement program. The amount contributed to the state retirement system pursuant to this division shall be increased or decreased to reflect the amount needed to mitigate the negative financial impact, if any, on the system, as determined by each actuarial study. Any increase or decrease in contributions shall become effective on the first day of July in the year in which the actuarial study is completed. Contributions on behalf of an electing employee shall continue in accordance with this division until the occurrence of the following:

(1) If the electing employee would be subject to Chapter 145. of the Revised Code had the employee not made an election pursuant to section 3305.05 of the Revised Code, until the unfunded actuarial accrued liability for all benefits, except health care benefits provided under section 145.325 or 145.58 of the Revised Code, is fully amortized, as determined by the annual actuarial valuation prepared under section 145.22 of the Revised Code;

(2) If the electing employee would be subject to Chapter 3307. of the Revised Code had the employee not made an election pursuant to section 3305.05 of the Revised Code, until the unfunded actuarial accrued liability for all benefits, except health care benefits provided under section 3307.405 or 3307.74 of the Revised Code, is fully amortized, as determined by the annual actuarial valuation prepared under section 3307.20 of the Revised Code;

(3) If the electing employee would be subject to Chapter 3309. of the Revised Code had the employee not made an election pursuant to section 3305.05 of the Revised Code, until the unfunded actuarial accrued liability for all benefits, except health care benefits provided under section 3309.375 or 3309.69 of the Revised Code, is fully amortized, as determined by the annual actuarial valuation prepared under section 3309.21 of the Revised Code.

Sec. 3309.36. (A) A member retiring on service retirement shall be granted a retirement allowance consisting of the lesser of the sum of the following amounts or the limit established by section 415 of the "Internal Revenue Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 415, as amended:

(A)(1) An annuity having a reserve equal to the amount of the employee's accumulated contributions at that time;

(B)(2) A pension of equivalent amount;

(C)(3) An additional pension of forty dollars multiplied by the number of years of such prior service credit;

(D)(4) For members who have ten or more years of service credit accumulated prior to October 1, 1956, a basic annual pension equal to one hundred eighty dollars, except that such basic annual pension shall not exceed the sum of the total annual benefits provided by divisions (A)(1), (B)(2), and (C)(3) of this section.

(E)(B)(1) When a member retires on service retirement and his, THE MEMBER'S allowance when computed as an annual single lifetime allowance as provided in divisions (A)(1), (B)(2), (C)(3), and (D)(4) of this section and section 3309.38 of the Revised Code, based upon attained age sixty-five or thirty years of total service credit, is SHALL BE NOT less than the greater of the amounts determined by multiplying his THE MEMBER'S total service credit by eighty-six THE FOLLOWING:

(a) EIGHTY-SIX dollars, or by two;

(b) TWO and one-tenth per cent of his THE MEMBER'S final average salary, then the allowance shall be increased to such greater amount. If such member's attained age is other than sixty-five, or his total service credit is other than thirty years, then he shall receive an adjusted FOR EACH OF THE FIRST THIRTY YEARS OF SERVICE CREDIT OR FRACTION THEREOF PLUS TWO AND ONE-HALF PER CENT OF THE MEMBER'S FINAL AVERAGE SALARY FOR EACH SUBSEQUENT YEAR OF SERVICE CREDIT OR FRACTION THEREOF.

(2) THE annual single lifetime allowance which DETERMINED UNDER DIVISION (B)(1) OF THIS SECTION shall be ADJUSTED BY the higher percentage of a base amount determined by GREATER PERCENTAGE SHOWN IN the following schedule:

Years of

Per Cent

Attained or

Ohio Service

of

Age

Credit

Base Amount

58

25

75%

59

26

80

60

27

85

61


88


28

90

62


91

63


94


29

95

64


97

65

30 or more

100.

Members shall vest the right to a benefit in accordance with the following schedule, based on the member's attained age by September 1, 1976:

Per Cent

Attained

of

Age

Base Amount

66

102

67

104

68

106

69

108

70 or more

110.

(2)(3) The annual single lifetime allowance which a retirant shall receive under this division shall not exceed the lesser of ninety per cent of his THE MEMBER'S final average salary or the limit established by section 415 of the "Internal Revenue Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 415, as amended.

(F)(C) Retirement allowances determined under this section shall be paid as provided in section 3309.46 of the Revised Code.

Sec. 3309.38. (A) A member retiring on commuted service retirement on or after September 30, 1963, shall be granted a retirement allowance consisting of:

(A)(1) An annuity having a reserve equal to the amount of the employee's accumulated contributions at the time;

(B)(2) A pension of equivalent amount;

(C)(3) An additional pension, if such employee has prior service credit, the reserve for which, based upon regular interest and the service tables approved by the board, shall be the present worth of the reserve required for the payment of the prior service pension provided by section 3309.36 of the Revised Code, after either age sixty or thirty-two years of service credit, whichever can be first attained. The annual prior service pension shall be determined by the amount of such commuted reserve divided by the service annuity rate for the attained annuity age of retirement;.

(D)(4) For members who have ten or more years of service credit accumulated prior to October 1, 1956, a basic annual pension equal to one hundred eighty dollars, which shall be commuted in the same manner as provided for the prior service pension in division (C)(A)(3) of this section, provided such commuted basic annual pension shall not exceed the sum of the total annual benefits provided by divisions (A)(1), (B)(2), and (C)(3) of this section.

(E)(B) When a member retires on commuted service retirement, his THE MEMBER'S annual single lifetime allowance including the allowances provided in divisions (A)(1), (B)(2), (C)(3), and (D)(4) of this section shall not be less than the allowances provided under the provisions of division (E)(B) of section 3309.36 of the Revised Code and shall not exceed the limit established by division (E)(2)(B)(3) of that section.

(F)(C) Retirement allowances determined under this section shall be paid as provided in section 3309.46 of the Revised Code.

Sec. 3309.50. Upon the death of a retirant or disability benefit recipient, who at the time of death is receiving a service retirement allowance or disability benefit from the school employees retirement system, a lump-sum payment of five hundred ONE THOUSAND dollars shall be paid to any designated or qualified beneficiary under division (D) of section 3309.44 of the Revised Code, or, if none NO SUCH DESIGNATION HAS BEEN FILED OR IF THE DESIGNATED BENEFICIARY IS DECEASED OR IS NOT LOCATED WITHIN NINETY DAYS, the school employees retirement board may approve payment to either the person responsible for the burial expenses or to the decedent's estate following the completion of an application on a form approved by the board.

Sec. 3309.69. (A) As used in this section, "ineligible individual" means all of the following:

(1) A former member receiving benefits pursuant to section 3309.34, 3309.35, 3309.36, 3309.38, or 3309.381 of the Revised Code for whom eligibility is established more than five years after June 13, 1981, and who, at the time of establishing eligibility, has accrued less than ten years of service credit, exclusive of credit obtained after January 29, 1981, pursuant to sections 3309.021, 3309.301, 3309.31, and 3309.33 of the Revised Code;

(2) The spouse of the former member;

(3) The beneficiary of the former member receiving benefits pursuant to section 3309.46 of the Revised Code.

(B) The school employees retirement board may enter into an agreement with insurance companies, health insuring corporations, or government agencies authorized to do business in the state for issuance of a policy or contract of health, medical, hospital, or surgical benefits, or any combination thereof, for those individuals receiving service retirement or a disability or survivor benefit subscribing to the plan and their eligible dependents.

If all or any portion of the policy or contract premium is to be paid by any individual receiving service retirement or a disability or survivor benefit, the person shall, by written authorization, instruct the board to deduct the premiums agreed to be paid by the individual to the companies, corporations, or agencies.

The board may contract for coverage on the basis of part or all of the cost of the coverage to be paid from appropriate funds of the school employees retirement system. The cost paid from the funds of the system shall be included in the employer's contribution rate provided by sections 3309.49 and 3309.491 of the Revised Code. The board shall not pay or reimburse the cost for health care under this section or section 3309.375 of the Revised Code for any ineligible individual.

The board may provide for self-insurance of risk or level of risk as set forth in the contract with the companies, corporations, or agencies, and may provide through the self-insurance method specific benefits as authorized by the rules of the board.

(C) If the board provides health, medical, hospital, or surgical benefits through any means other than a health insuring corporation, it shall offer to each individual eligible for the benefits the alternative of receiving benefits through enrollment in a health insuring corporation, if all of the following apply:

(1) The health insuring corporation provides health care services in the geographical area in which the individual lives;

(2) The eligible individual was receiving health care benefits through a health maintenance organization or a health insuring corporation before retirement;

(3) The rate and coverage provided by the health insuring corporation to eligible individuals is comparable to that currently provided by the board under division (B) of this section. If the rate or coverage provided by the health insuring corporation is not comparable to that currently provided by the board under division (B) of this section, the board may deduct the additional cost from the eligible individual's monthly benefit.

The health insuring corporation shall accept as an enrollee any eligible individual who requests enrollment.

The board shall permit each eligible individual to change from one plan to another at least once a year at a time determined by the board.

(D) The board shall, beginning the month following receipt of satisfactory evidence of the payment for coverage, make a monthly payment to each recipient of service retirement, or a disability or survivor benefit under the school employees retirement system who is eligible for insurance coverage under part B of "The Social Security Amendments of 1965," 79 Stat. 301, 42 U.S.C.A. 1395j, as amended, except that the board shall make no such payment to any ineligible individual. The EFFECTIVE ON THE FIRST DAY OF THE MONTH AFTER THE EFFECTIVE DATE OF THIS AMENDMENT, THE amount of the payment shall be the lesser of an amount equal to the basic premium for such coverage, or an amount equal to the basic premium in effect on January 1, 1988 1992.

(E) The board shall establish by rule requirements for the coordination of any coverage, payment, or benefit provided under this section or section 3309.375 of the Revised Code with any similar coverage, payment, or benefit made available to the same individual by the public employees retirement system, police and firemen's disability and pension fund, state teachers retirement system, or state highway patrol retirement system.

(F) The board shall make all other necessary rules pursuant to the purpose and intent of this section.


Section 2. That existing sections 145.30, 3305.05, 3305.06, 3309.36, 3309.38, 3309.50, and 3309.69 and section 3309.37 of the Revised Code are hereby repealed.


Section 3. The School Employees Retirement System should make a one-time payment to each person who is a current recipient of service retirement or a disability or survivor benefit from the System and was eligible to receive a monthly payment pursuant to division (D) of section 3309.69 of the Revised Code for insurance coverage under Part B of "The Social Security Amendments of 1965," 79 Stat. 301, 42 U.S.C.A. 1935j, as amended, at any time during the period commencing January 1, 1992, and ending on the effective date of this section. The amount of the payment to each recipient shall be equal to the sum of the differences between:

(A) Each monthly payment the recipient was eligible to receive under division (D) of section 3309.69 of the Revised Code during the period commencing January 1, 1992, and ending on the effective date of this section; and

(B) The amount of the monthly payment that is authorized by division (D) of section 3309.69 of the Revised Code as enacted by this act.

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