South Carolina General Assembly
117th Session, 2007-2008

H. 3620
General Appropriations Bill for fiscal year 2007-2008
As Passed by the House

PART II

PERMANENT PROVISIONS

SECTION 1

The Code Commissioner is directed to include all permanent general laws in this Part in the next edition of the Code of Laws of South Carolina, 1976, and all supplements to the Code.

SECTION 2

TO AMEND SECTION 12-6-510 OF THE 1976 CODE, RELATING TO THE RATES AND INCOME BRACKETS APPLICABLE FOR INDIVIDUALS, ESTATES, AND TRUSTS FOR PURPOSES OF THE SOUTH CAROLINA INCOME TAX ACT, SO AS TO REDUCE THE TOP MARGINAL TAX RATE FROM SEVEN PERCENT TO 6.83 PERCENT AND TO UPDATE THE BRACKETS TO REFLECT PAST INFLATION ADJUSTMENTS.

Section 12-6-510(A) of the 1976 Code is amended to read:

     "(A)      For taxable years beginning after 1994 2006, a tax is imposed on the South Carolina taxable income of individuals, estates, and trusts and any other entity except those taxed or exempted from taxation under Sections 12-6-530 through 12-6-550 computed at the following rates with the income brackets indexed in accordance with Section 12-6-520:

     Not over $2,220                              2.5 percent of taxable income

     over $2,220 but                              $56 plus 3 percent of
     not over $4,440                              the excess over $2,220;

     over $4,440 but                              $123 plus 4 percent of
     not over $6,660                              the excess over $4,440;

     over $6,660 but                              $212 plus 5 percent of
     not over $8,880                              the excess of $6,660;

     over $8,880 but                              $323 plus 6 percent of
     not over $11,100                              the excess over $8,880;

     over $11,100                                    $456 plus 7 percent of
                                                                       the excess over $11,100.
     OVER                  BUT NOT
                                         OVER                                          -0-
$            0                              $2,630                  2.5% Times the amount
  2,630                         5,260                  3% Times the amount less $13
  5,260                         7,890                  4% Times the amount less $66
  7,890                        10,520                  5% Times the amount less $144
10,520                        13,150                  6% Times the amount less $250
13,150+                        or more            6.83% Times the amount less $381."

SECTION 3

TO RETITLE ARTICLE 5, CHAPTER 11, TITLE 1, OF THE 1976 CODE, RELATING TO EMPLOYEES AND RETIREMENT INSURANCE AS "EMPLOYEES AND RETIREES INSURANCE-ACCOUNTING FOR POST-EMPLOYMENT BENEFITS", TO MAKE FINDINGS WITH RESPECT TO THE STATE'S COMPLIANCE WITH NEW REQUIREMENTS OF THE GOVERNMENTAL ACCOUNTING STANDARDS BOARD FOR POST-EMPLOYMENT BENEFITS; BY ADDING SECTIONS 1-11-703, 1-11-705, AND 1-11-707 SO AS TO ESTABLISH THE SOUTH CAROLINA RETIREE HEALTH INSURANCE TRUST FUND (SCRHI TRUST FUND) AND THE SOUTH CAROLINA LONG TERM DISABILITY INSURANCE TRUST FUND AS THE METHOD OF PAYING AND ACCOUNTING FOR RETIREE HEALTH INSURANCE PREMIUMS AND BASIC LONG TERM DISABILITY INCOME BENEFIT PLAN PREMIUMS IN COMPLIANCE WITH NEW ACCOUNTING STANDARDS, TO PROVIDE FOR THE ACTUARIAL FUNDING AND INVESTMENT OF THE ASSETS OF THESE TRUST FUNDS, AND TO PROVIDE DEFINITIONS; TO AMEND SECTION 1-11-710, RELATING TO THE STATE HEALTH AND DENTAL PLANS, SO AS TO PROVIDE FUNDING FOR THE SCRHI TRUST FUND BY MEANS OF INCREASED EMPLOYER CONTRIBUTION RATES; AND TO AMEND SECTION 1-11-730, RELATING TO PERSONS ELIGIBLE FOR POST-EMPLOYMENT PARTICIPATION IN THE STATE HEALTH AND DENTAL PLANS AND ELIGIBILITY FOR EMPLOYER PAID PREMIUMS FOR RETIREES, SO AS TO CONFORM THE PAYMENT OF EMPLOYER PREMIUMS FOR RETIREES TO THE REVISED METHOD PROVIDED IN THIS ACT, PROSPECTIVELY TO REVISE THE ELIGIBILITY REQUIREMENTS FOR EMPLOYER PAID PREMIUMS FOR RETIREES; AND TO DELETE AN OBSOLETE PROVISION.

A.      (A)      The General Assembly finds that:

           (1)      The Governmental Accounting Standards Board (GASB) has issued new standards to account for post-employment benefits (OPEB) other than pensions for public employees.
           (2)      South Carolina currently provides OPEB benefits in the form of state health and dental insurance and basic long term disability income benefit plan on a "pay as you go" basis to retirees  and that this method of payment fails adequately to account for benefits as they are earned by current employees under the new GASB OPEB accounting standards.
           (3)      It is necessary to establish trust funds as provided in this act so that these post-employment benefits and the liabilities they give rise to may be determined currently in a manner similar to the way in which pension fund liabilities are reported.
     (B)      The General Assembly further finds that bringing the accounting for OPEB into compliance with new GASB standards is solely for the purpose of GASB compliance and the trust funds established by this act and other changes in OPEB contained in this act do not in any way limit the authority of the General Assembly to alter or eliminate these benefits as it determines appropriate, nor do they limit the authority of the State Budget and Control Board to amend the plan of benefits pursuant to Section 1-11-710(A)(2) of the 1976 Code, nor do the provisions of this act give rise to any contract or other right of employees and retirees as to the OPEB's to which the provisions of this act apply.

B.      Article 5, Chapter 11, Title 1 of the 1976 Code is retitled "Employees and Retirees Insurance-Accounting for Post-Employment Benefits".

C.      Article 5, Chapter 11, Title 1 of the 1976 Code is amended by adding:

     "Section 1-11-703.      As used in this article:
     (1)      'Actuarial accrued liability' means that portion, as determined by a particular actuarial cost method, of the actuarial present value of fund obligations and administrative expenses which is not provided for by future normal costs.
     (2)      'Actuarial assumptions' means assumptions regarding the occurrence of future events affecting costs of the SCRHI Trust Fund or LTDI Trust Fund such as mortality, withdrawal, disability, and retirement; changes in compensation; aging effects and cost trends for post-employment benefits; benefit election rates; rates of investment earnings and asset appreciation or depreciation; procedures used to determine the actuarial value of assets; and other such relevant items.
     (3)      'Actuarial cost method' means a method for determining the actuarial present value of the obligations and administrative expenses of the SCRHI Trust Fund or LTDI Trust Fund and for developing an actuarially equivalent allocation of such value to time periods, usually in the form of a normal cost and an actuarial accrued liability.  Acceptable actuarial methods are the aggregate, attained age, individual entry age, frozen attained age, frozen entry age, and projected unit credit methods.
     (4)      'Actuarial present value of total projected benefits' means the present value, at the valuation date, of the cost to finance benefits payable in the future, discounted to reflect the expected effects of the time value of money and the probability of payment.
     (5)      'Actuarial valuation' means the determination, as of a valuation date, of the normal cost, actuarial accrued liability, actuarial value of assets, and related actuarial present values for the SCRHI Trust Fund or LTDI Trust Fund.
     (6)      'Actuarially sound' means that calculated contributions to the SCRHI Trust Fund or LTDI Trust Fund are sufficient to pay the full actuarial cost of these trust funds.  The full actuarial cost includes both the normal cost of providing for fund obligations as they accrue in the future and the cost of amortizing the unfunded actuarial accrued liability over a period of no more than thirty years.
     (7)      'Administrative expenses' means all expenses incurred in the operation of the SCRHI Trust Fund and LTDI Trust Fund, including all investment expenses.
     (8)      'LTDI Trust Fund' means the Long Term Disability Insurance Trust Fund established pursuant to Section 1-11-707 to fund benefits under the State's Basic Long Term Disability (BLTD) Income Benefit Plan.
     (9)      'Board' means the State Budget and Control Board.
     (10)      'Employee insurance program' or 'EIP' means the office of the board designated by the board to operate insurance programs pursuant to this article.
     (11)      'IBNR' means unpaid health claims incurred but not reported.  The liability for IBNR claims is actuarially estimated based on the most current historical claims experience of previous payments, inflation, award trends, and estimates of health care trend changes.
     (12)      'Operating account' means the health insurance program's business operating activities account maintained by the State Treasurer in which are deposited all premiums for enrollees in self-funded health plans authorized in this article, along with employer contributions for active employees covered by such self-funded health plans, and from which claims and administrative expenses of the self-funded health and dental plans administered by the employee insurance program are paid.
     (13)      'State-covered entity' means state agencies and institutions, however described, and school districts.  It also includes political subdivisions of the State that participate in the state health and dental plans.
     (14)      'State health and dental plans' means any insurance program administered by the employee insurance program pursuant to this article.
     (15)      'SCRHI Trust Fund' means the South Carolina Retiree Health Insurance Trust Fund established pursuant to Section 1-11-705 to fund the employer cost for health benefits for retired state employees and retired public school district employees.
     (16)      'State Retirement System' or 'State Retirement Systems' means all retirement systems established pursuant to Title 9 except for the National Guard Retirement System.
     (17)      'Unfunded actuarial accrued liability' means for any actuarial valuation the excess of the actuarial accrued liability over the actuarial value of the assets of the fund under an actuarial cost method utilized by the fund for funding purposes.
     (18)      'Trust fund paid premiums' means the employer premium for state health and dental plans coverage paid by the SCRHI Trust Fund on behalf of a retiree.  When it is expressed as a percentage of trust fund paid premiums, it means that the SCRHI Trust Fund shall pay the stated percentage of the employer premiums, with the retiree paying the balance of the employer premiums and the entire employee premium.

     Section 1-11-705.      (A)      There is established in the State Treasury separate and distinct from the general fund of the State and all other funds the South Carolina Retiree Health Insurance Trust Fund (SCRHI Trust Fund) to provide for the employer costs of retiree post-employment health insurance benefits for retired state employees and retired employees of public school districts.  Earnings on the SCRHI Trust Fund must be credited to it and unexpended funds carried forward in it to succeeding fiscal years.
     (B)      The board is the trustee of the SCRHI Trust Fund.
     (C)      The employee insurance program shall administer the SCRHI Trust Fund.
     (D)      The employee insurance program shall engage actuarial and other services as required to transact the business of the SCRHI Trust Fund.  The actuary engaged by the employee insurance program shall provide technical advice to the board regarding operation of the SCRHI Trust Fund.
     (E)      Upon recommendations of the actuary, the board shall adopt generally accepted and reasonable actuarial assumptions and methods for the operation and funding of the SCRHI Trust Fund as it considers necessary and prudent.  The actuarial assumptions and methods adopted by the board must be appropriate for the purposes at hand and must be reasonable, individually and in the aggregate, taking into account the experience of the plan and reasonable expectations.  Utilizing the actuarial assumptions most recently adopted by the board, the actuary engaged by the employee insurance program shall set the annual actuarial valuations of normal cost, actuarial liability, actuarial value of assets, and related actuarial present values for the SCRHI Trust Fund.
     (F)      The board may adopt rules and promulgate regulations as necessary for the proper administration of the SCRHI Trust Fund.
     (G)(1)The funds of the SCRHI Trust Fund must be invested and reinvested by the State Treasurer in the manner allowed by law.  The State Treasurer shall consult with the employee insurance program and the employee insurance program's actuary to develop an annual investment plan for the SCRHI Trust Fund taking into account the cash flow needs of the employee insurance program with regard to payment of the employer share of premiums and claims for covered retirees.
           (2)      Effective beginning with the first fiscal year after the ratification of an amendment to Section 16, Article X of the Constitution of this State allowing funds in post-employment benefits trust funds to be invested in equity securities, the Retirement System Investment Commission (RSIC) established pursuant to Chapter 16 of Title 9, shall invest and reinvest the funds of the SCRHI Trust Fund as assets of a retirement system are invested.  The chief investment officer shall consult with the employee insurance program and the employee insurance program's actuary to develop an annual investment plan for the SCRHI Trust Fund taking into account the cash flow needs of the employee insurance program with regard to payment of the employer share of premiums and claims for covered retirees.  After the initial fiscal year the RSIC assumes this investing function, the annual investment plan for the SCRHI Trust Fund must be approved by the commission no later than June first of each year for the fiscal year beginning July first of the same calendar year.
     (H)      The board annually shall determine the minimum annual required contributions to the SCRHI Trust Fund on an actuarially sound basis in accordance with Governmental Accounting Standards Board Statement No. 45, or any other Governmental Accounting Standards Board statements that may be applicable to the SCRHI Trust Fund.
     (I)            The board shall fund the SCRHI Trust Fund:
           (1)      through an increase in the employer contribution rate for the South Carolina Retirement Systems as provided in Section 1-11-710(A)(2).  The total employer contributions collected from the state and school districts for post-employment benefits must be transferred immediately to the SCRHI Trust Fund for investment, reinvestment and the payment of post-employment benefits; and
           (2)      as of January thirty-first of each calendar year, the employee insurance program shall transfer to the trust fund from the employee insurance program's operating account, the cash balance in the operating account in excess of one hundred forty percent of the actuarially-determined IBNR reserves of the State's health plans as of December thirty-first of the preceding year.  On the reference date, an initial transfer must take place applicable to the cash balance as of December 31, 2006.
     (J)      Each month, the employee insurance program shall determine the monthly amount of the state-funded employer premium with respect to retired state employees and retired public school district employees who are eligible for state-paid employer premiums pursuant to Section 1-11-730, and shall transfer this amount to the operating account from the SCRHI Trust Fund.  In addition, the employee insurance program shall transfer the total cost of post-employment benefits for retirees and their dependents, net of premium contributions made on behalf of retirees and other sources of revenue attributable to retirees, in accordance with Governmental Accounting Standards Board Statements No. 43 and 45 and the Implementation Guide.
     (K)      The funds of the SCRHI Trust Fund may only be used for the payment of employer-provided other post-employment benefits under the terms of the state health and dental plans.  The administrative costs related to the administration of the SCRHI Trust Fund, and the investment and reinvestment of its funds, may be funded from the earnings of the SCRHI Trust Fund.
     (L)      As a trust, the funds of the SCRHI Trust Fund are not assets of the state or the school districts or their respective agencies.  The contributions to the SCRHI Trust Fund are irrevocable and may not revert to the employer except upon complete satisfaction of all liabilities and administrative expenses of the state health and dental plans of other post-employment benefits provided pursuant to the state health and dental plans.

     Section 1-11-707.      (A)      There is established in the State Treasury separate and distinct from the general fund of the State and all other funds the South Carolina Long Term Disability Insurance Trust Fund (LTDI Trust Fund) to provide for the payment of benefits under the State's Basic Long Term Disability Income Benefit Plan.  Earnings on the LTDI Trust Fund must be credited to it and unexpended funds carry forward in it to succeeding fiscal years.
     (B)      The board is the trustee of the LTDI Trust Fund.
     (C)      The employee insurance program shall administer the LTDI Trust Fund.
     (D)      The employee insurance program shall engage actuarial and other services as required to transact the business of the LTDI Trust Fund.  The actuary engaged by the employee insurance program shall provide technical advice to the board regarding operation of the LTDI Trust Fund.
     (E)      Upon recommendations of the actuary, the board shall adopt generally accepted and reasonable actuarial assumptions and methods for the operation and funding of the LTDI Trust Fund as it considers necessary and prudent.  The actuarial assumptions and methods adopted by the board must be appropriate for the purposes at hand and must be reasonable, individually and in the aggregate, taking into account the experience of the plan and reasonable expectations.  Utilizing the actuarial assumptions most recently adopted by the board, the actuary engaged by the employee insurance program shall set the annual actuarial valuations of normal cost, actuarial liability, actuarial value of assets, and related actuarial present values for the LTDI Trust Fund.
     (F)      The board may adopt rules and promulgate regulations as necessary for the proper administration of the LTDI Trust Fund.
     (G)(1)      The funds of the LTDI Trust Fund must be invested and reinvested by the State Treasurer in the manner allowed by law.  The State Treasurer shall consult with the employee insurance program and the employee insurance program's actuary to develop an annual investment plan for the LTDI Trust Fund taking into account the cash flow needs of the employee insurance program with regard to payment of the employer share of premiums and claims for covered retirees.
           (2)      Effective beginning with the first fiscal year after the ratification of an amendment to Section 16, Article X of the Constitution of this State allowing funds in post-employment benefits trust funds to be invested in equity securities, the Retirement System Investment Commission (RSIC) established pursuant to Chapter 16 of Title 9, shall invest and reinvest the funds of the LTDI Trust Fund as assets of a retirement system are invested.  The chief investment officer shall consult with the employee insurance program and the employee insurance program's actuary to develop an annual investment plan for the LTDI Trust Fund taking into account the cash flow needs of the employee insurance program with regard to payment of the employer share of premiums and claims for covered retirees.  After the initial fiscal year the RSIC assumes this investing function, the annual investment plan for the LTDI Trust Fund must be approved by the commission no later than June first of each year for the fiscal year beginning July first of the same calendar year.
     (H)      The board annually shall determine the minimum annual required contributions to the LTDI Trust Fund on an actuarially sound basis in accordance with Governmental Accounting Standards Board Statement No. 45, or any other Governmental Accounting Standards Board statements that may be applicable to the LTDI Trust Fund.
     (I)            The board shall increase the employer contributions used to fund the BLTD Plan by an amount equal to or greater than the minimum annual required contribution for the LTDI Trust Fund as determined in subsection (H) of this section.  The increased employer contributions remitted to the employee insurance program under this subsection must be deposited in the LTDI Trust Fund.
     (J)      Each month, the employee insurance program shall transfer to the operating account from the LTDI Trust Fund the amount invoiced by the third-party administrator for the BLTD Plan for payment of LTDI claims, including reasonable expenses associated with claims administration of the BLTD Plan.
     (K)      The assets of the LTDI Trust Fund may only be used for the payment of the State's claims under the BLTD Plan along with reasonable expenses associated with the operation of the BLTD Plan, and the assets of the LTDI Trust Fund may not be used for any other purpose.  The administrative costs related to the administration of the LTDI Trust Fund, and the investment and reinvestment of its funds, must be funded from the earnings of the LTDI Trust Fund.
     (L)      As a trust, the funds of the LTDI Trust Fund are not assets of the state or the school districts or their respective agencies.  The contributions to the LTDI Trust Fund are irrevocable and may not revert to the employer except upon complete satisfaction of all liabilities and administrative expenses of the State Basic Long Term Disability Income Benefit Plan of other post-employment benefits provided pursuant to the State Basic Long Term Disability Income Benefit Plan."

D.      Section 1-11-710(A) of the 1976 Code is amended to read:

     "(A)      The State Budget and Control Board shall:
           (1)      make available to active and retired employees of this State and its public school districts and their eligible dependents group health, dental, life, accidental death and dismemberment, and disability insurance plans and benefits in an equitable manner and of maximum benefit to those covered within the available resources.;
           (2)      approve by August fifteenth of each year a plan of benefits, eligibility, and employer, employee, retiree, and dependent contributions for the next calendar year.  The board shall devise a plan for the method and schedule of payment for the employer and employee share of contributions.  Provided that the Budget and Control Board, and by July 1 first of the current fiscal year, shall develop and implement a plan increasing the employer contribution rates of the State Retirement System Systems to a level adequate to cover the employer's share for the current fiscal year's cost of providing health and dental insurance to retired state and school district employees.  For fiscal year 2007-2008, the board's plan shall increase the employer contribution rates for the State Retirement Systems by one percent above what is required to fund the current fiscal year's employer premiums for providing coverage under the state health and dental plans to currently enrolled retired state and school district employees.  In subsequent years, the board's plan shall increase the employer contribution rates for the State Retirement Systems in additional increments of one percent of payroll each year, until the minimum annual other post-employment benefit cost is attained, in accordance with Governmental Accounting Standards Board Statement No. 45.  After that time, the board shall make adjustments to the employer contribution rates for the State Retirement Systems to maintain the minimum annual required contribution determined in accordance with Section 1-11-705(H).  The plan state health and dental plans must include a method for the distribution of the funds appropriated as provided by law which are designated for retiree insurance and also must include a method for allocating to school districts, excluding EIA funding, sufficient general fund monies to offset the additional cost incurred by these entities in their federal and other fund activities as a result of this employer contribution charge.  The funds collected through increasing the employer contribution rates for the State Retirement Systems under this section must be deposited in the SCRHI Trust Fund established pursuant to Section 1-11-705.  The amounts appropriated in this section shall constitute the State's pro rata contributions to these programs except the State shall pay its pro rata share of health and dental insurance premiums for retired state and public school employees for the current fiscal year.;
           (3)      adjust the plan, benefits, or contributions, at any time to insure the fiscal stability of the system.;
           (4)      set aside in separate continuing accounts in the State Treasury, appropriately identified, all funds, state-appropriated and other, received for actual health and dental insurance premiums due.  Funds credited to these accounts may be used to pay the costs of administering the state health and dental insurance programs plans and may not be used for purposes of other than providing insurance benefits for employees and retirees.  A reserve equal to not less than an average of one and one-half months' claims must be maintained in the accounts and all funds in excess of the reserve must be used to reduce premium rates or improve or expand benefits as funding permits."

E.      Section 1-11-730 of the 1976 Code, is amended to read:

     "Section 1-11-730.      (A)      If a person began employment eligible for coverage under the state health and dental plans on or before the reference date, the following eligibility provisions govern that person's participation in state health and dental plans as a retiree:
           (A)(1)      A person covered by the state health and dental insurance plans who terminates employment with at least twenty years' retirement service credit by a state-covered entity before eligibility for retirement under a state retirement system is eligible for state health and dental plans coverage, the plans effective on the date of retirement under a state retirement system, if the last five years are consecutive and in a full-time permanent position with a state-covered entity.  With respect to a retiree eligible for coverage pursuant to this subsection, the retiree is eligible for trust fund paid premiums and the retiree is responsible for the entire employee premium.
           (B)(2)      A member of the General Assembly who leaves office or retires with at least eight years' credited service in the General Assembly Retirement System is eligible to participate in the state health and dental plans by paying the full premium costs as determined by the State Budget and Control Board.
           (C)(3)      With respect to an active employee: (a) employed by the state or a public school district, (b) retiring with ten or more years of state-covered entity service credited under a state retirement system, and (c) with the last five years of earned service credit consecutive and in a full-time permanent position with the state or a public school district, is eligible for state paid premiums, if the last five years are consecutive and in a full-time permanent position with a state covered entity the retiree is eligible for trust fund paid premiums and the retiree is responsible for the entire employee premium.
           (D)(4)      A person covered by the state health and dental plans who retires with at least five years' state-covered entity service credited under a state retirement system is eligible to participate in the plan state health and dental plans by paying the full premium costs as determined by the board, if the last five years are consecutive and in a full-time permanent position with a state-covered entity.
           (E)(5)      A spouse or dependent of a person covered by the plans who is killed in the line of duty after December 31, 2001, shall receive equivalent coverage under the state health and dental plans for a period of twelve months and the State shall be is responsible for paying the full premium costs.  After the twelve-month period, a spouse or dependent is eligible for state-paid trust fund paid premiums.  A spouse is eligible for state-paid trust fund paid premiums under this subsection until the spouse remarries.  A dependent is eligible for state-paid trust fund paid premiums under this subsection until the dependent's eligibility for coverage under the plans would ordinarily terminate.
           (F)      All state and school district employees employed before July 1, 1984, who were or would have been eligible for the plans upon completion of five years' service are exempt from the provisions of this section and are eligible for the plan effective on the date of their retirement.
           (G)(6)      A former municipal or county council member of a county or municipality which participates in the state health and dental insurance plans who served on the council for at least twelve years and who was covered under the plans at the time of termination is eligible to maintain coverage under the plans if the former member pays the full employer and employee contributions and if the county or municipal council elects to allow this coverage for former members.
           (H)(7)      A person covered by the state health and dental plans who terminated employment with at least eighteen years' retirement service credit by a state-covered entity before eligibility for retirement under a state retirement system prior to before 1990 is eligible for the plans effective on the date of retirement, if this person returns to a state-covered entity and is covered by the state health and dental plans and completes at least two consecutive years in a full-time, permanent position prior to before the date of retirement.
     (B)      If a person began employment eligible for coverage under the state health and dental plans after the reference date, the following eligibility provisions govern that person's participation in state health and dental plans as a retiree:
           (1)      An active employee covered by the state health and dental plans who retires with at least five years of earned retirement service credit under a state retirement system with a state-covered entity is eligible to participate as a retiree in the state health and dental plans if the last five years of the person's covered employment were consecutive and in a full-time permanent position.
           (2)      A person covered by the state health and dental plans who terminates employment before the person's date of retirement with at least twenty years of earned retirement service credit under a state retirement system with a state-covered entity is eligible to participate as a retiree in the state health and dental plans on the person's date of retirement under a state retirement system, if the last five years of the person's covered employment before termination were consecutive and in a full-time permanent position.
           (3)      A retired state employee or a retired employee of a public school district who retires under a state retirement system and who is eligible for state health and dental plan coverage under the provisions of item (1) or (2) of this subsection, is eligible for trust fund paid premiums as follows:
                 (a)      If the retiree's earned service credit in a state retirement system is five or more years but fewer than twelve years and six months with a state-covered entity, then the retiree shall pay the full premium for health and dental plans.
                 (b)      If the retiree's earned service credit in a state retirement system is more than twelve years and six months, but fewer than twenty-five years with a state-covered entity, then the retiree is eligible for fifty percent trust fund paid premiums and the retiree shall pay the remainder of the premium cost.  
                 (c)      If the retiree's earned service credit in a state retirement system is twenty-five or more years with a state-covered entity, then the retiree is eligible for trust fund paid premiums and the retiree is responsible for the entire employee premium.
           (4)      If a retiree under a state retirement system was employed by an entity that participates in the state health and dental plans pursuant to the provisions of Section 1-11-720 and is eligible to participate in state health and dental plans as a retiree pursuant to the provisions of item (1) or (2) of this subsection, then the retiree's employer, at its discretion, may elect to pay all or a portion of the premium for the retiree's state health and dental plans.
           (5)      A spouse or dependent of a person covered by the plans who is killed in the line of duty on or after the reference date, shall continue to maintain coverage under state health and dental plans for a period of twelve months after the covered person's death and the State is responsible for paying the full premium.  After the twelve-month period, a spouse or dependent is eligible for trust fund paid premiums and the spouse or dependent is responsible for the entire employee premium.  A spouse is eligible for trust fund paid premiums under this subsection until the spouse remarries.  A dependent is eligible for trust fund paid premiums pursuant to this subsection until the dependent's eligibility for coverage under the plans would ordinarily terminate.
     (C)      For employees who participate in the state health and dental plans pursuant to the provisions of Section 1-11-720 but who are not members of the State Retirement Systems, one year of full-time employment or its equivalent under their employment relation equates to one year of earned retirement service credit under a state retirement system for purposes of the requirements of subsection (B)(1) and (2) of this section.  The EIP shall implement the provisions of this subsection and make determinations pursuant to it.  A person aggrieved by a determination of the EIP pursuant to this subsection may appeal that determination as a contested case as provided in Chapter 23 of Title 1, the Administrative Procedures Act."

F.      If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.

G.      The Code Commissioner shall insert the effective date of this act for the phrase "reference date" where it appears in Section 1-11-705 of the 1976 Code as added by this act and in Section 1-11-730 of the 1976 Code as amended by this act.

SECTION 4

TO AMEND THE 1976 CODE BY ADDING SECTION 11-43-165 SO AS TO PROVIDE THAT THE SOUTH CAROLINA TRANSPORTATION INFRASTRUCTURE BANK ANNUALLY SHALL SET ASIDE FIVE MILLION DOLLARS FOR THE USE OF THE DEPARTMENT OF TRANSPORTATION FOR THE INTERSTATE 73 AND INTERSTATE 74 PROJECTS.

A.      Article 1, Chapter 43, Title 11 of the 1976 Code is amended by adding:

     "Section 11-43-165.      The South Carolina Transportation Infrastructure Bank annually shall set aside an amount equal to five million dollars for the use of the Department of Transportation for the Interstate Highway 73 and Interstate Highway 74 projects."

B.      This section takes effect July 1, 2007.

SECTION 5

DELETED

SECTION 6

DELETED

SECTION 7

TO AMEND SECTION 1-3-240, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE GOVERNOR'S REMOVAL OF PERSONS APPOINTED TO CERTAIN STATE OFFICES, FOR CERTAIN REASONS, SO AS TO ADD DEPARTMENT OF TRANSPORTATION COMMISSIONERS TO THIS LIST OF PERSONS WHO MAY BE REMOVED FROM OFFICE BY THE GOVERNOR; TO AMEND SECTION 1-30-10, RELATING TO THE DEPARTMENTS OF STATE GOVERNMENT AND THEIR GOVERNING BODIES, SO AS TO PROVIDE FOR THE GOVERNING STRUCTURE OF THE DEPARTMENT OF TRANSPORTATION; TO AMEND SECTION 1-30-105, RELATING TO THE ESTABLISHMENT OF THE DEPARTMENT OF TRANSPORTATION, SO AS TO MAKE TECHNICAL CHANGES AND PROVIDE FOR THE ELECTION OF ITS GOVERNING AUTHORITY UNTIL FEBRUARY 15, 2008; TO AMEND SECTION 8-13-1110, AS AMENDED, RELATING TO PUBLIC OFFICIALS WHO MUST FILE A STATEMENT OF ECONOMIC INTEREST, SO AS TO PROVIDE THAT DEPARTMENT OF TRANSPORTATION DISTRICT ENGINEERING ADMINISTRATORS MUST FILE A STATEMENT OF ECONOMIC INTEREST; TO AMEND SECTION 11-11-150, AS AMENDED, RELATING TO CALCULATING ESTIMATED STATE AND CORPORATE INCOME TAX REVENUES, AND THE TRUST FUND FOR TAX RELIEF, SO AS TO PROVIDE THAT CERTAIN AMOUNTS OF TAX REVENUES MUST BE CREDITED TO THE DEPARTMENT OF TRANSPORTATION FOR EACH FISCAL YEAR, AFTER FISCAL YEAR 2006-2007; TO AMEND SECTION 11-35-710, AS AMENDED, RELATING TO GOVERNMENTAL ENTITIES EXEMPTED FROM PURCHASING ITEMS THROUGH THE CHIEF PROCUREMENT OFFICER, SO AS TO REVISE THE LIST OF DEPARTMENT OF TRANSPORTATION PROJECTS THAT ARE SUBJECT TO THIS PROVISION, AND TO GRANT EXEMPTIONS TO COUNTY TRANSPORTATION COMMITTEES, COUNCILS ON GOVERNMENTS, THE SOUTH CAROLINA TRANSPORTATION INFRASTRUCTURE BANK AND METROPOLITAN PLANNING ORGANIZATIONS; TO AMEND SECTION 11-35-1230, AS AMENDED, RELATING TO THE AUDITING OF STATE PROCUREMENTS, SO AS TO PROVIDE THAT PROCUREMENT AUDITS SHALL VERIFY THAT PROCUREMENT CODE EXEMPTIONS GRANTED TO THE DEPARTMENT OF TRANSPORTATION ARE VALID; TO AMEND SECTION 57-1-10, RELATING TO DEFINITION OF TERMS THAT RELATE TO THE STATE'S MOTOR VEHICLE LAWS, SO AS TO DELETE THE TERM "DIRECTOR" AND REPLACE IT WITH THE TERM "SECRETARY OF TRANSPORTATION" AND TO PROVIDE A DEFINITION FOR THE TERM "HIGHWAY ENGINEERING DISTRICT"; TO AMEND SECTION 57-1-20, RELATING TO THE ESTABLISHMENT OF THE DEPARTMENT OF TRANSPORTATION, SO AS TO ESTABLISH A DIVISION OF HUMAN RESOURCES AND AN INTERNAL AUDIT DIVISION WITHIN THE DEPARTMENT; TO AMEND SECTION 57-1-40, RELATING TO CERTAIN ACTIONS COMMITTED BY THE DEPARTMENT OF TRANSPORTATION COMMISSION OR DEPARTMENT EMPLOYEES WHICH ARE UNLAWFUL, SO AS TO PROVIDE THAT THE DEPARTMENT'S COMMISSION AND ITS EMPLOYEES ARE SUBJECT TO CERTAIN PROVISIONS THAT GOVERN THE CONDUCT OF LOBBYISTS, PUBLIC OFFICIALS, AND EMPLOYEES; BY ADDING SECTION 57-1-305 SO AS TO ESTABLISH CERTAIN MINIMUM QUALIFICATIONS THAT A PERSON MUST POSSESS BEFORE HE MAY BE ELECTED AS A DEPARTMENT OF TRANSPORTATION COMMISSIONER; TO AMEND SECTION 57-1-310, RELATING TO THE ESTABLISHMENT OF DEPARTMENT OF TRANSPORTATION DISTRICTS FROM WHICH DEPARTMENT OF TRANSPORTATION COMMISSIONERS ARE ELECTED, SO AS TO REVISE THE PROCESS OF ELECTING COMMISSIONERS AND THEIR SUCCESSORS TO INCLUDE THE SCREENING OF CANDIDATES BY THE TRANSPORTATION REVIEW COMMITTEE AND THE ELECTION OF COMMISSIONERS BY THE GENERAL ASSEMBLY; TO AMEND SECTION 57-1-330, RELATING TO ELECTION OF DEPARTMENT OF TRANSPORTATION COMMISSIONERS, SO AS TO DELETE THE PROVISION THAT PROVIDES THAT THE COMMISSIONERS MUST BE ELECTED BY THE LEGISLATIVE DELEGATIONS FROM EACH CONGRESSIONAL DISTRICT, TO LIMIT THE PERIOD THAT A PERSON MAY SERVE AS A COMMISSIONER TO NOT MORE THAN TWO THREE-YEAR TERMS OR NOT MORE THAN SIX YEARS, TO ESTABLISH SEVEN HIGHWAY ENGINEERING DISTRICTS FROM WHICH COMMISSIONERS MUST BE ELECTED, TO PROVIDE FOR THE ELECTION OF THE COMMISSION'S CHAIRMAN AND HIS TERM OF SERVICE AS CHAIRMAN, TO DELETE THE PROVISION THAT PROVIDES FOR THE ELECTION OF AN AT-LARGE COMMISSIONER WHO SERVES AT THE PLEASURE OF THE GOVERNOR, AND TO PROVIDE THAT THE SECRETARY OF TRANSPORTATION SHALL NOTIFY CERTAIN OFFICIALS OF THE GENERAL ASSEMBLY AND THE TRANSPORTATION REVIEW COMMITTEE WHEN A COMMISSION VACANCY OCCURS; TO AMEND SECTION 57-1-350, RELATING TO THE DEPARTMENT OF TRANSPORTATION COMMISSION'S SEAL, RULES, PROCEDURES, AND REIMBURSEMENT FOR EXPENSES, SO AS TO REVISE THE AMOUNT OF COMPENSATION COMMISSIONERS MUST RECEIVE FOR THEIR SERVICE, AND TO PROVIDE A LIST OF DUTIES AND RESPONSIBILITIES THAT MUST BE PERFORMED BY THE DEPARTMENT AND ITS COMMISSION; TO AMEND SECTION 57-1-410, RELATING TO THE EMPLOYMENT OF THE DIRECTOR OF THE DEPARTMENT OF TRANSPORTATION BY THE GOVERNOR, SO AS TO CHANGE THE TITLE OF THIS PERSON FROM DIRECTOR TO SECRETARY OF TRANSPORTATION, AND TO PROVIDE THAT THIS PERSON MUST BE APPOINTED BY AND SERVE AT THE PLEASURE OF THE GOVERNOR; TO AMEND SECTION 57-1-450, RELATING TO THE APPOINTMENT OF DEPARTMENT OF TRANSPORTATION DEPUTY DIRECTORS BY THE DEPARTMENT'S DIRECTOR, SO AS TO PROVIDE THAT THIS DUTY SHALL BECOME THE RESPONSIBILITY OF THE SECRETARY OF TRANSPORTATION EXCEPT FOR THE APPOINTMENT OF THE INTERNAL AUDIT DIRECTOR AND THE INTERNAL AUDITORS WHO SHALL REPORT TO AND SERVE AT THE PLEASURE OF THE DEPARTMENT OF TRANSPORTATION COMMISSION AND TO PROVIDE THAT THE DEPARTMENT OF TRANSPORTATION DISTRICT ENGINEERING ADMINISTRATORS SERVE AT THE PLEASURE OF THE SECRETARY OF TRANSPORTATION; TO AMEND SECTION 57-1-490, RELATING TO THE DEPARTMENT OF TRANSPORTATION'S ANNUAL AUDIT, SO AS TO PROVIDE THAT THE LEGISLATIVE AUDIT COUNCIL SHALL CONTRACT FOR AN INDEPENDENT PERFORMANCE AND COMPLIANCE AUDIT OF CERTAIN DIVISIONS OF THE DEPARTMENT, CONDUCT FOLLOW-UP AUDITS AS NEEDED, AND TO PROVIDE THAT COPIES OF ALL AUDITS MUST BE MADE AVAILABLE TO THE GOVERNOR AND CERTAIN COMMITTEES OF THE GENERAL ASSEMBLY; BY ADDING ARTICLE 7 TO CHAPTER 1, TITLE 57 SO AS TO ESTABLISH THE TRANSPORTATION REVIEW COMMITTEE, ITS COMPOSITION, AND TO PROVIDE FOR ITS POWER AND DUTY TO REVIEW CANDIDATES FOR ELECTION TO THE DEPARTMENT OF TRANSPORTATION COMMISSION; TO AMEND SECTION 57-3-10, RELATING TO THE DIVISIONS OF THE DEPARTMENT OF TRANSPORTATION, SO AS TO PROVIDE FOR THE DIVISIONS OF HUMAN RESOURCES AND INTERNAL AUDIT; TO AMEND SECTION 57-3-20, RELATING TO THE RESPONSIBILITIES AND DUTIES OF THE DEPARTMENT OF TRANSPORTATION'S DIVISION DEPUTY DIRECTORS, SO AS TO ESTABLISH THE RESPONSIBILITIES FOR THE DIVISION DEPUTY DIRECTORS FOR HUMAN RESOURCES AND INTERNAL AUDITS; BY ADDING ARTICLE 5 TO CHAPTER 11, TITLE 57 SO AS TO PROVIDE FOR THE DISTRIBUTION OF FUNDS THAT THE DEPARTMENT OF TRANSPORTATION RECEIVES PURSUANT TO SECTION 11-11-150(H); TO AMEND SECTION 8-17-370, AS AMENDED, RELATING TO PERSONS WHO ARE EXEMPT FROM PROVISIONS CONCERNING THE STATE EMPLOYEE GRIEVANCE PROCEDURE, SO AS TO PROVIDE THAT DISTRICT ENGINEERING ADMINISTRATORS OR INDIVIDUALS PERFORMING THESE FUNCTIONS ARE EXEMPT FROM THESE PROVISIONS; TO REPEAL SECTIONS 57-1-320 AND 57-1-325 RELATING TO THE ELECTION OF DEPARTMENT OF TRANSPORTATION COMMISSIONERS WHEN A COUNTY IS DIVIDED AMONG MORE THAN ONE DEPARTMENT OF TRANSPORTATION DISTRICT, AND TO THE MEETING OF THE VARIOUS LEGISLATIVE DELEGATIONS TO ELECT DEPARTMENT OF TRANSPORTATION COMMISSIONERS; AND TO PROVIDE THE CODE COMMISSIONER WITH AUTHORITY TO MAKE CERTAIN TECHNICAL CHANGES.

A.      Section 1-3-240(C) of the 1976 Code as last amended by Act 137 of 2005, is further amended to read:

     "(C)      (1)      Persons appointed to the following offices of the State may be removed by the Governor for malfeasance, misfeasance, incompetency, absenteeism, conflicts of interest, misconduct, persistent neglect of duty in office, or incapacity:
                             (a)      Workers' Compensation Commission;
                             (b)      Reserved Department of Transportation Commissioners;
                             (c)      Ethics Commission;
                             (d)      Election Commission;
                             (e)      Professional and Occupational Licensing Boards;
                             (f)      Juvenile Parole Board;
                             (g)      Probation, Parole and Pardon Board;
                             (h)      Director of the Department of Public Safety;
                             (i)            Board of the Department of Health and Environmental Control, excepting the chairman;
                             (j)            Chief of State Law Enforcement Division;
                             (k)      South Carolina Lottery Commission;
                             (l)            Executive Director of the Office of Regulatory Staff; and
                             (m)      Directors of the South Carolina Public Service Authority appointed pursuant to Section 58-31-20.  A director of the South Carolina Public Service Authority also may be removed for his breach of any duty arising under Section 58-31-55 or 58-31-56.  The Governor must not request a director of the South Carolina Public Service Authority to resign unless cause for removal, as established by this subsection, exists.  Removal of a director of the South Carolina Public Service Authority, except as is provided by this section or by Section 58-31-20(A), must be considered to be an irreparable injury for which no adequate remedy at law exists.
                 (2)      Upon the expiration of an officeholder's term, the individual may continue to serve until a successor is appointed and qualifies."

B.      Section 1-30-10(B) of the 1976 Code is amended to read:

     "(B)      (1)      The governing authority of each department shall be either:
                             (  i)      a director, and in the case of the Department of Commerce, the secretary, who must be appointed by the Governor with the advice and consent of the Senate, subject to removal from office by the Governor pursuant to provisions of Section 1-3-240; or,
                             ( ii)      a seven member board to be appointed and constituted in a manner provided for by law; or,
                             (iii)      in the case of the Department of Agriculture and the Department of Education, the State Commissioner of Agriculture and the State Superintendent of Education, respectively, elected to office under the Constitution of this State.; or
                             ( iv)      in the case of the Department of Transportation, a seven member board constituted in a manner provided by law, and a Secretary of Transportation appointed by and serves at the pleasure of the Governor."

C.      Section 1-30-105 of the 1976 Code is amended to read:

     "Section 1-30-105.      Effective on July 1, 1993, the following agencies, boards, and commissions, including all of the allied, advisory, affiliated, or related entities as well as the employees, funds, property and all contractual rights and obligations associated with any such agency, except for those subdivisions specifically included under another department, are hereby transferred to and incorporated in and shall be administered as part of the Department of Transportation to be initially divided into divisions for Mass Transit, Construction and Maintenance, Engineering and Planning, Finance and Administration.; provided, however However, that the State Highway Department of Transportation Commission as constituted on June 30, 1993 June 30, 2007, under the provisions of Title 56 57, shall be is the governing authority for the department until February 15, 1994 2008, or as soon as its successors are elected or appointed and qualified, whichever is later pursuant to Section 57-1-310:
     Department of Highways and Public Transportation, except Motor Vehicle Division Department of Motor Vehicles and State Highway Patrol, formerly provided for at in Section 56-1-10, et seq."

D.      Section 8-13-1110(B) of the 1976 Code, as last amended by Act 6 of 1995, is further amended to read:

     "(B)      Each of the following public officials, public members, and public employees must file a statement of economic interests with the appropriate supervisory office, unless otherwise provided:
                 ( 1)      a person appointed to fill the unexpired term of an elective office;
                 ( 2)      a salaried member of a state board, commission, or agency;
                 ( 3)      the chief administrative official or employee and the deputy or assistant administrative official or employee or director of a division, institution, or facility of any agency or department of state government;
                 ( 4)      the city administrator, city manager, or chief municipal administrative official or employee, by whatever title;
                 ( 5)      the county manager, county administrator, county supervisor, or chief county administrative official or employee, by whatever title;
                 ( 6)      the chief administrative official or employee of each political subdivision including, but not limited to, school districts, libraries, regional planning councils, airport commissions, hospitals, community action agencies, water and sewer districts, and development commissions;
                 ( 7)      a school district and county superintendent of education;
                 ( 8)      a school district board member and a county board of education member;
                 ( 9)      the chief finance official or employee and the chief purchasing official or employee of each agency, institution, or facility of state government, and of each county, municipality, or other political subdivisions including, but not limited to, those named in item (6);
                 (10)      a public official;
                 (11)      a public member who serves on a state board, commission, or council. ; and
                 (12)      Department of Transportation District Engineering Administrators."

E.      Section 11-11-150 of the 1976 Code, as last amended by Part 1, Section 4A of Act 388 of 2006, is further amended by adding at the end:

     "(H)      In calculating estimated state individual and corporate income tax revenues for a fiscal year, the Board of Economic Advisors shall deduct the following amounts that must be credited to the Department of Transportation and distributed pursuant to Section 57-11-410:

           Fiscal Year 2007-2008                                          $40,000,000
           Fiscal Year 2008-2009                                          $80,000,000
           Fiscal Year 2009-2010                                          $120,000,000
           Fiscal Year 2010-2011                                          $160,000,000
           Fiscal Year 2011-2012 and thereafter      $200,000,000."

F.      Section 11-35-710 of the 1976 Code, as last amended by Act 376 of 2006, is further amended to read:

     "Section 11-35-710.      The board, upon the recommendation of the designated board office, may exempt governmental bodies from purchasing certain items through the respective chief procurement officer's area of responsibility.  The board may exempt specific supplies, services, information technology, or construction from the purchasing procedures required in this chapter and for just cause by unanimous written decision limit or may withdraw exemptions provided for in this section.  The following exemptions are granted from this chapter:
           ( 1)      the construction, maintenance, and repair of bridges, highways, and roads; vehicle and road equipment maintenance and repair; and other emergency-type parts or equipment utilized by the Department of Transportation or the Department of Public Safety;
           ( 2)      the purchase of raw materials by the South Carolina Department of Corrections, Division of Prison Industries;
           ( 3)      South Carolina State Ports Authority;
           ( 4)      Division of Public Railways of the Department of Commerce;
           ( 5)      South Carolina Public Service Authority;
           ( 6)      expenditure of funds at state institutions of higher learning derived wholly from athletic or other student contests, from the activities of student organizations, and from the operation of canteens and bookstores, except as the funds are used for the procurement of construction, architect-engineer, construction-management, and land surveying services;
           ( 7)      livestock, feed, and veterinary supplies;
           ( 8)      articles for commercial sale by all governmental bodies;
           ( 9)      fresh fruits, vegetables, meats, fish, milk, and eggs;
           (10)      South Carolina Arts Commission and South Carolina Museum Commission for the purchase of one-of-a-kind items such as paintings, antiques, sculpture, and similar objects.  Before a governmental body procures the objects, the head of the purchasing agency shall prepare a written determination specifying the need for the objects and the benefits to the State.  The South Carolina Arts Commission shall review the determination and forward a recommendation to the board for approval;
           (11)      published books, periodicals, and technical pamphlets;
           (12)      South Carolina Research Authority;
           (13)      the purchase of supplies, services, or information technology by state offices, departments, institutions, agencies, boards, and commissions or the political subdivisions of this State from the South Carolina Department of Corrections, Division of Prison Industries;
           (14)      Medical University Hospital Authority, if the Medical University Hospital Authority has promulgated a procurement process in accordance with its enabling provision.;
           (15)      the construction, maintenance, and repair of bridges, highways, and roads by the Department of Transportation when these projects receive federal funding and must comply with applicable federal laws and regulations and projects funded through County Transportation Committees, Councils of Government, the South Carolina Transportation Infrastructure Bank, and Metropolitan Planning Organizations;
           (16)      County Transportation Committees;
           (17)      Councils of Government;
           (18)      the South Carolina Transportation Infrastructure Bank; and
           (19)      Metropolitan Planning Organizations."

G.      Section 11-35-1230(1) of the 1976 Code, as last amended by Act 376 of 2006, is further amended to read:

     "(1)      The designated board office, through consultation with the chief procurement officers, shall develop written plans for the auditing of state procurements.  In procurement audits of governmental bodies thereafter, the auditors from the designated board office shall review the adequacy of the system's internal controls in order to ensure compliance with the requirement of this code and the ensuing regulations.  Additionally, the procurement audits shall verify that exemptions contained in Section 11-35-710 (15) are valid.  A noncompliance discovered through audit must be transmitted in management letters to the audited governmental body and the Budget and Control Board.  The auditors shall provide in writing proposed corrective action to governmental bodies.  Based upon audit recommendations of the designated board office, the board may revoke certification as provided in Section 11-35-1210 and require the governmental body to make all procurements through the appropriate chief procurement officer above a dollar limit set by the board, until such time as the board is assured of compliance with this code and its regulations by that governmental body."

H.      Section 57-1-10 of the 1976 Code is amended to read:

     "Section 57-1-10.      For the purposes of this title, the following words, phrases, and terms are defined as follows:
           (1)      'Commission' means the administrative and governing body of the Department of Transportation.
           (2)      'Department' means the Department of Transportation (DOT).
           (3)      "Director" 'Secretary of Transportation' means the chief administrative officer of the Department of Transportation.
           (4)      'Highway Engineering District' means the seven geographical regions created by the Department of Transportation and approved by the commission from which the members of the commission must reside and be elected."

I.      Section 57-1-20 of the 1976 Code is amended to read:

     "Section 57-1-20.      The Department of Transportation is established as an administrative agency of state government which is comprised of a Division of Mass Transit; a Division of Construction Engineering and Planning; a Division of Human Resources; an Internal Audit Division; and a Division of Finance and Administration.  Each division of the Department of Transportation shall have such functions and powers as provided for by law."

J.      Section 57-1-40 of the 1976 Code is amended by adding at the end:

     "(C)      Notwithstanding the provisions contained in subsection (A) and (B), the Department of Transportation Commission and the department's employees are subject to the provisions contained in Section 2-17-80 and 2-17-90."

K.      Article 3, Chapter 1, Title 57 of the 1976 Code is amended by adding:

     "Section 57-1-305.      (A)      The commission, is reconstituted under law in effect before the date this act is approved by the Governor, is reconstituted to continue in existence with the appointment and qualification of the members as prescribed in this article and with the changes in duties and powers as prescribed in this title.
     (B)      Nothing in this act affects the commission's jurisdiction over matters pending before the commission on or before February 15, 2008.
     (C)      The commission is composed of seven members to be elected by the General Assembly in the manner prescribed by this chapter.  For any term beginning after February 15, 2008, each member must have:
                 (1)      a baccalaureate or more advanced degree from:
                             (a)      a recognized institution of higher learning requiring face-to-face contact between its students and instructors prior to completion of the academic program;
                             (b)      an institution of higher learning that has been accredited by a regional or national accrediting body; or
                             (c)      an institution of higher learning chartered before 1962; or
                 (2)      a background of at least five years in a combination of the following:
                             (a)      transportation;
                             (b)      construction;
                             (c)      finance;
                             (d)      law;
                             (e)      environmental issues;
                             (f)      management; or
                             (g)      engineering.
     (D)      The Department of Transportation Commission shall serve as currently appointed until new commissioners are qualified and elected."

L.      Section 57-1-310 of the 1976 Code is amended to read:

     "Section 57-1-310.      The congressional districts of this State are constituted and created Department of Transportation districts of the State, designated by numbers corresponding to the numbers of the respective congressional districts.  The Commission of the Department of Transportation shall be composed of one member from each transportation district elected by the delegations of the congressional district and one member appointed by the Governor, upon the advice and consent of the Senate, from the State at large.  Such elections or appointment, as the case may be, shall take into account race and gender so as to represent, to the greatest extent possible, all segments of the population of the State; however, consideration of these factors in making an appointment or in an election in no way creates a cause of action or basis for an employee grievance for a person appointed or elected or for a person who fails to be appointed or elected.  (A)  The Department of Transportation Commission consists of seven commissioners who reside in South Carolina and who shall have the qualifications stated in this section, as determined by the Transportation Review Committee pursuant to Article 7 of this chapter, before being appointed in the manner prescribed by this chapter.  One member from each of the seven highway engineering districts shall be elected during a joint assembly of the House and Senate.
     Each appointment shall take into account race and gender so as to represent, to the greatest extent possible, all segments of the population of the State.  However, consideration of these factors in electing a commissioner does not create a cause of action or basis for an employee grievance for a person elected to or fails to be elected to the commission.  Each successive commissioner must be appointed from a different county within a highway engineering district based upon the alphabetical order of the counties within the district.  Each commissioner shall serve for a term of three years, except as provided in this section.  At the expiration of the term of each commissioner and of each succeeding commissioner, a successor shall be appointed in the same manner as his predecessor for a term of three years or until his successor has been appointed and qualified.  In the event of a commissioner vacancy due to death, resignation, or otherwise, his successor must be elected in the same manner as his predecessor and the successor-commissioner shall hold office for the unexpired term.  Members of the commission may be removed for cause, as established in Section 1-3-240(C), by the Governor of the State.  A member of the General Assembly of the State of South Carolina is not eligible for election as commissioner until he has been out of office for at least one year.
     (B)      Candidates for appointment to the commission must be screened by the Transportation Review Committee and, prior to election by the General Assembly, must be found qualified by meeting the minimum requirements contained in subsection (C).  The review committee must submit a written report to the Clerks of the Senate and House of Representatives setting forth its findings as to the qualifications of each candidate.  A candidate may not serve as a commissioner, even in an interim capacity, until he is screened and found qualified by the Transportation Review Committee."

M.      Section 57-1-330 of the 1976 Code is amended to read:

     "Section 57-1-330.      (A)      Beginning February 15, 1994 2008, commissioners must be elected by the legislative delegation of each congressional district.  For the purposes of electing a commission member, a legislator shall vote only in the congressional district in which he resides as provided in this article.  All commission members must serve for a term of office of three years which expires on February fifteenth of the appropriate year.  Commissioners shall continue to serve until their successors are elected and qualify, provided that a commissioner may only serve in a hold-over capacity for a period not to exceed six months.  However, a person may not serve as a commissioner for more than two three-year terms or six years.  Any vacancy occurring in the office of commissioner shall must be filled by election in the manner provided in this article for the unexpired term only.  No person is eligible to serve as a commission member who is not a resident of that district at the time of his appointment, except that the at-large commission member may be appointed from any county in the State regardless of whether another commissioner is serving from that county.  Failure by a commission member to maintain residency in the highway engineering district for which he is elected shall result in the forfeiture of his office.  The at-large commission member upon confirmation, shall serve as chairman of the commission.
     (B)      The terms of the initial members of the commission appointed from congressional highway engineering districts are as follows:
                 (1)      commission members appointed to represent odd-numbered congressional highway engineering districts--two three years; and
                 (2)      commission members appointed to represent even-numbered congressional highway engineering districts--four two years.
     (C)      The at-large commissioner shall serve at the pleasure of the Governor.  The Chairman of the Commission shall be a commissioner elected by a majority vote of the members of the commission and serve a term of two years.
     (D)      When a vacancy occurs from the death, resignation, or expiration of the term of a commissioner, the Secretary of Transportation shall notify the Clerks of the House of Representatives and Senate, and the members of the Transportation Review Committee of this occurrence."

N.      Section 57-1-350 of the 1976 Code is amended to read:

     "Section 57-1-350.      (A)      The commission may adopt an official seal for use on official documents of the department.
     (B)      The commission shall adopt its own rules and procedures and may select such additional officers to serve such terms as the commission may designate.
     (C)      Commissioners must receive one thousand dollars for each month of service as a commissioner for district expenses and must be reimbursed for official expenses per diem and mileage as provided by law for members of state boards and commissions of the General Assembly as established in the annual general appropriation Appropriations act when traveling to Columbia for official commission functions.
     (D)      The commission shall approve:
                 ( 1)      the sale of surplus property by the department;
                 ( 2)      the advertisement for consultant contracts and authorize the selection of consultants by department personnel;
                 ( 3)      the adding to and deletion of roads from the State Highway System;
                 ( 4)      the awarding of contracts by the department;
                 ( 5)      the department's annual budget;
                 ( 6)      the state transportation plan;
                 ( 7)      the dedication and naming of highway facilities by the department;
                 ( 8)      any contract entered into by the department with a value in excess of five hundred thousand dollars;
                 ( 9)      additional contracts entered into by the department during a fiscal year with an entity that has already received individual contracts during that fiscal year that together are worth at least five hundred thousand dollars; and
                 (10)      all contracts relating to road construction and maintenance.
     (E)      The department shall establish a priority list of projects to be undertaken by it.  Once the priority list has been established by the department, it shall not be changed without two-thirds approval by the commission at the request of the Secretary of Transportation.  When compiling this list of projects, the department shall use, but is not limited to use, the following criteria:
                 ( 1)      financial viability;
                 ( 2)      public safety;
                 ( 3)      potential for economic development;
                 ( 4)      traffic volume;
                 ( 5)      truck traffic;
                 ( 6)      the pavement quality index; and
                 ( 7)      environmental impact.
     (F)      The department shall conduct a public hearing in each county in which a public hearing is required by federal regulations to allow the department to share information regarding the project with the local community and to allow the local community to address its concerns with department officials.  The hearing must include the opportunity for members of the public to address a hearing officer in a format in which comments can be heard by the general public attending the hearing or in a private setting, whichever is the speakers' choice.
     (G)      The commission annually shall review a road maintenance and bridge repair plan within each highway engineering district.
     (H)      The department shall promulgate regulations that utilize the criteria contained in subsection (E) for ranking projects in each highway engineering district."

O.      Section 57-1-410 of the 1976 Code is amended to read:

     "Section 57-1-410.      The commission Governor shall employ a director Secretary of Transportation who shall serve at the his pleasure of the commission.  A person appointed to this position shall be a citizen of practical and successful business and executive ability who has a knowledge in the field of transportation.  The director Secretary of Transportation shall receive such compensation as may be established under the provisions of Section 8-11-160 and for which funds have been authorized in the general appropriation act."

P.      Section 57-1-450 of the 1976 Code is amended to read:

     "Section 57-1-450.      (A)      The director Secretary of Transportation shall appoint a deputy director for each division of the department who shall serve at the pleasure of the director, except for the internal audit director and internal auditors who shall report to and serve at the pleasure of the commission. and The Secretary of Transportation shall recommend the salary for each deputy director as allowed by statute or applicable law.
     (B)      The Department of Transportation District Engineering Administrators or individuals performing the function of district engineering administrators who oversee the seven highway engineering districts, serve at the pleasure of the Secretary of Transportation."

Q.      Section 57-1-490 of the 1976 Code is amended to read:

     "Section 57-1-490.      (A)      The department shall must be audited by a certified public accountant or firm of certified public accountants once each year to be designated by the State Auditor.  The designated accountant or firm of accountants shall issue audited financial statements in accordance with generally accepted accounting principles, and such financial statements shall be made available annually by October fifteenth to the General Assembly.  The costs and expenses of the audit must be paid by the department out of its funds.
     (B)      The Legislative Audit Council shall contract for an independent performance and compliance audit of the department's finance and administration division, mass transit division, and construction engineering and planning division.  This audit should be completed by January 15, 2009.  The Legislative Audit Council may contract for follow-up audits or conduct follow-up audits as needed based upon the audit's initial findings.  The costs of these audits, including related administrative and management expenses of the Legislative Audit Council, are an operating expense of the department.  The department shall pay directly to the Legislative Audit Council the cost of the audits.
     (C)      Copies of every audit conducted pursuant to this section must be made available to the Governor, the chairmen of the Senate Finance and Transportation Committees, and the House of Representatives Ways and Means and Education and Public Works Committees."

R.      Chapter 1, Title 57 of the 1976 Code is amended by adding:

"Article 7

Transportation Review Committee

     Section 57-1-710.      There is established the Transportation Review Committee, to be called the review committee, which must exercise the powers and fulfill the duties described in this article.

     Section 57-1-720.      (A)      The review committee is composed of ten members, three of whom must be members of the House of Representatives, including the Chairman of the Education and Public Works Committee, or his designee, and the Chairman of the Ways and Means Committee, or his designee, and one member appointed by the Speaker of the House of Representatives.  Three of the members must be members of the Senate, including the Chairman of the Transportation Committee, or his designee, the Chairman of the Senate Finance Committee, or his designee, and one member appointed by the President Pro Tempore of the Senate.  Two members of the committee must be appointed by the Speaker of the House of Representatives from the public at large, and two members of the committee must be appointed by the President Pro Tempore of the Senate from the public-at-large.  However, in making appointments to the joint committee, race, gender, and other demographic factors should be considered to assure nondiscrimination, inclusion, and representation, to the greatest extent possible, of all segments of the population of the State.  The members of the general public appointed by the Speaker and the President Pro Tempore of the Senate must be representative of all citizens of this State and must not be members of the General Assembly and must possess knowledge in a related field.
     (B)      The review committee must meet as soon as practicable after appointment and organize itself by electing one of its members as chairman and other officers as the review committee may consider necessary.  Thereafter, the review committee must meet at least annually and at the call of the chairman or by a majority of the members.  A quorum consists of six members.
     (C)      The review committee has the power and duty to review candidates for election to the Department of Transportation Commission to determine whether the candidates meet the qualifications set forth in this chapter.
     (D)      Unless the review committee finds a candidate qualified and nominates the candidate for a seat on the Department of Transportation Commission, the candidate must not be elected to the commission.
     (E)      The review committee members are entitled to such mileage, subsistence, and per diem as authorized by law for members of boards, committees, and commissions while in the performance of the duties for which appointed.  These expenses shall be paid from the general fund of the State on warrants duly signed by the chairman of the review committee and payable by the authorities from which they are appointed.
     The expenses associated with the review committee duties to qualify and nominate candidates for the commission must be paid from the general fund of the state.
     (F)      The review committee must use clerical and professional employees of the General Assembly for its staff, who must be made available to the review committee.
     (G)      The review committee may employ or retain other professional staff, upon the determination of the necessity for other staff by the review committee.
     (H)      The costs and expenses of the review committee must be funded in the annual state general appropriations act."

S.      Section 57-3-10 of the 1976 Code is amended to read:

     "Section 57-3-10.      The Department of Transportation must be divided into such divisions as the commission may prescribe but must consist of the following principal divisions: finance and administration; construction, engineering, and planning; and mass transit; human resources; and internal audit.  The commission may establish other divisions, or ancillary or service divisions as may be necessary for the efficient and economic operation of the division and to carry out the functions and purposes of the division."

T.      Section 57-3-20 of the 1976 Code is amended to read:

     "Section 57-3-20.      The responsibilities and duties of the following division deputy directors must include, but not be limited to, the following:
           (1)      division deputy director for finance and administration:
                       a.      financial planning and management;
                       b.      accounting systems necessary to comply with all federal and/or state laws and/or regulations as well as all policies established by the Comptroller General; and
                       c.      administrative functions, including recording proceedings of the commission and developing policy and procedures to ensure compliance with these policies and procedures.
           (2)      division deputy director for construction, engineering, and planning:
                       a.      development of statewide strategic highway plans; and
                       b.      directs highway engineering activities, including construction, design, construction oversight, and maintenance of state highways.
           (3)      division deputy director for mass transit:
                       a.      development of a statewide mass transit system; and
                       b.      coordinate the preservation and revitalization of existing rail corridors.
           (4)      division deputy director for human resources:
                       a.      employ an ethics compliance officer to ensure that the department's employees and commission comply fully with all laws that govern their ethical conduct.
                       b.      conduct two hours of mandatory ethics training seminars for all department employees and commissioners on a biennial basis.  However, it must conduct a mandatory two hour ethics seminar for each newly hired employee and newly elected commissioner within one month of their employment or election.
           (5)      division deputy director for internal audits shall examine the finances of the department and provide an annual financial report to the commission."

U.      Chapter 11, Title 57 of the 1976 Code is amended by adding:

"Article 5

Department of Transportation General Fund Revenue Transfers

     Section 57-11-410.      Of the amount set aside pursuant to Section 11-11-150(H), the South Carolina Department of Transportation must:
           (1)      make the following annual contributions from nonstate tax resources to the State Highway Account of the South Carolina Transportation Infrastructure Bank:

                       Fiscal Year 2007-2008                              $20,000,000
                       Fiscal Year 2008-2009                              $40,000,000
                       Fiscal Year 2009-2010                              $60,000,000
                       Fiscal Year 2010-2011                              $80,000,000
                       Fiscal Year 2011-2012 and thereafter      $100,000,000; and

           (2)      make the following annual contributions to the State Non-Federal Aid Highway Fund of the South Carolina Department of Transportation for maintenance and construction with seventy-five percent of the funds designated for maintenance and twenty-five percent designated for construction:
                       Fiscal Year 2007-2008                              $20,000,000
                       Fiscal Year 2008-2009                              $40,000,000
                       Fiscal Year 2009-2010                              $60,000,000
                       Fiscal Year 2010-2011                              $80,000,000
                       Fiscal Year 2011-2012 and thereafter      $100,000,000."

V.      Section 8-17-370 of the 1976 Code, as last amended by Act 153 of 2005, is further amended to read:

     "Section 8-17-370.      The provisions of this article do not apply to:
           ( 1)      members, officers, or employees of the General Assembly;
           ( 2)      employees within the Office of the Governor who work at the mansion or in the State House or those employees appointed by the Governor to serve at or above the organizational level of assistant directors of the individual program components;
           ( 3)      elected public officials of this State or persons appointed to fill vacancies in these offices;
           ( 4)      all judges, officers, and employees of the Judicial Department; jurors; all employees of the Commission on Prosecution Coordination; and the judges, officers, and employees of the Administrative Law Judge Division;
           ( 5)      members of state boards, commissions, councils, advisory councils, or committees compensated on a per diem basis;
           ( 6)      inmate help in a charitable, penal, or correctional institution, residents of rehabilitation facilities, or students employed in institutions of learning;
           ( 7)      part-time professional personnel engaged in consultant or contractual services;
           ( 8)      an agency head who has the authority and responsibility for an agency within state government including the divisions of the State Budget and Control Board;
           ( 9)      employees of the Public Service Authority, State Ports Authority, the Jobs-Economic Development Authority, or the Division of Public Railways and the Division of Savannah Valley Development of the Department of Commerce;
           (10)      teaching or research faculty, professional librarians, academic administrators, or other persons holding faculty appointments at a four-year post-secondary educational institution, including its branch campuses, if any, as defined in Section 59-107-10;
           (11)      athletic coaches and unclassified employees in the athletic departments of four-year post-secondary educational institutions as defined in Section 59-107-10;
           (12)      deputy directors as defined in Section 8-17-320;
           (13)      regional and county directors of the Department of Social Services as defined in Section 43-3-40(B);
           (14)      employees of the Medical University Hospital Authority, provided the Medical University Hospital Authority has promulgated an employee grievance plan in accordance with its enabling provision;
           (15)      presidents of the South Carolina Technical College System;
           (16)      a retired member of the South Carolina Police Officers Retirement System or a retired member of the South Carolina Retirement System who is hired by an agency to fill all or some fraction of a full-time equivalent (FTE) position covered by the State Employee Grievance Procedure Act; and
           (17)      notwithstanding the provisions of Section 9-1-2210(E), any participant in the Teacher and Employee Retention Incentive Program.;
           (18)      the chief investment officer and all other employees of the Retirement System Investment Commission.; and
           (19)      district engineering administrators or individuals performing the function of district engineering administrators of the Department of Transportation."

W.      Sections 57-1-320 and 57-1-325 are repealed.

X.      The repeal or amendment by this section of any law, whether temporary or permanent or civil or criminal, does not affect pending actions, rights, duties, or liabilities founded thereon, or alter, discharge, release or extinguish any penalty, forfeiture, or liability incurred under the repealed or amended law, unless the repealed or amended provision shall so expressly provide.  After the effective date of this act, all laws repealed or amended by this section must be taken and treated as remaining in full force and effect for the purpose of sustaining any pending or vested right, civil action, special proceeding, criminal prosecution, or appeal existing as of the effective date of this act, and for the enforcement of rights, duties, penalties, forfeitures, and liabilities as they stood under the repealed or amended laws.

Y.      If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this section, the General Assembly hereby declaring that it would have passed this section, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.

Z.      Wherever the term director appears in the 1976 Code and means the chief administrative officer of the Department of Transportation, it shall mean the Secretary of Transportation.  Wherever the term Department of Transportation District appears in the Code of Laws of South Carolina, 1976 and means the geographical regions from which members of the Department of Transportation Commission must be elected, it shall mean highway engineering district.  The Code Commissioner is directed to change these references at a time and in a manner that is timely and cost effective.

AA.      This section takes effect July 1, 2007.

END OF PART II

     All acts or parts of acts inconsistent with any of the provisions of Parts IA or IB of this act are suspended for Fiscal Year 2007-2008.
     All acts or parts of acts inconsistent with any of the provisions of Part II of this act are repealed.
     Except as otherwise specifically provided, this act takes effect immediately upon its approval by the Governor.

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