CHAPTER 344

RELATING TO COVERAGE UNDER THE FEDERAL SOCIAL SECURITY ACT

AN ACT TO PROVIDE FOR THE COVERAGE OF CERTAIN OFFICERS AND EMPLOYEES OF THE STATE AND LOCAL GOVERNMENTS, HOUSING AUTHORITIES AND OTHER POLITICAL SUBDIVISIONS UNDER THE OLD-AGE AND SURVIVORS INSURANCE PROVISIONS OF TITLE H OF THE FEDERAL SOCIAL SECURITY ACT, AS AMENDED, AND PROVIDING FOR AN APPROPRIATION TO CARRY THIS ACT INTO EFFECT.

Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met:

Section 1. Declaration of Policy:--In order to extend to employees of the State and its political subdivisions and to the dependents and survivors of such employees, the basic protection accorded to others by the old-age and survivors insurance system embodied in the Social Security Act, it is hereby declared to be the policy of the legislature, subject to the limitations of this Act, that such steps be taken as to provide such protection to employees of the State and its political subdivisions on as broad a basis as is permitted under the Social Security Act.

Section 2. Definitions:--For the purposes of this Act--

(a) The term "wages" means all remuneration for employment as defined herein, including the cash value of all remuneration paid in any medium other than cash, except that such term shall not include that part of such remuneration which, even if it were for "employment" within the meaning of the Federal Insurance Contributions Act, would not constitute "wages" within the meaning of that. Act;

(b) The term "employment" means any service performed by an employee in the employ of the State, local government, housing authority or any other political subdivision thereof, for such employer, except (1) service which in the absence of an agreement entered into under this Act would constitute "employment" as defined in the Social Security Act; or (2) service which under the Social Security Act may not be included in an agreement between the State and the Federal Security Administrator entered into under this Act;

(c) The term "employee" includes an officer of a State or political subdivision thereof;

(d) The term "State Agency" means The State Tax Department;

(e) The term "Federal Security Administrator" includes any individual to whom the Federal Security Administrator has delegated any of his functions under the Social Security Act with respect to coverage under such Act of employees of States and their political subdivisions;

(f) The term "political subdivisions" includes an instrumentality of a State, and one or more of its political subdivisions, but only if such instrumentality is a juristic entity which is legally separate and distinct from the State or subdivision and only if its employees are not by virtue of their relation to such juristic entity employees of the State or subdivision; a housing authority created under the provisions of the Housing Authority Law, Chapter 160, Article 2, Revised Code of Delaware, 1935, shall be construed to be a political subdivision;

(g) The term "Social Security Act" means the Act of Congress approved August 14, 1935, Chapter 531, 49 Stat. 620, officially cited as the "Social Security Act," (including regulations and requirements issued pursuant thereto), as such Act has been and may from time to time be amended; and

(h) The term "Federal Insurance Contributions Act" means subchapter A of Chapter 9 of the Federal Internal Revenue Code as such Code has been and may from time to time be amended.

Section 3. (a) Federal-State Agreement:--The State Agency, with the approval of the Governor, is hereby authorized to enter on behalf of the State into an agreement with the Federal
Security Administrator, consistent with the terms and provisions of this Act, for the purpose of extending the benefits of the Federal old-age and survivors insurance system to employees of the State or any political subdivision thereof with respect to services specified in such agreement which constitute "employment" as defined in Section 2 of this Act. Such agreement may contain such provisions relating to coverage, benefits, contributions, effective date, modification and termination of the agreement, administration, and other appropriate provisions as the State Agency and Federal Security Administrator shall agree upon, but, except as may be otherwise required by or under the Social Security Act as to the services to be covered, such agreement shall provide in effect that--

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

(2) The State will pay to the Secretary of the Treasury, at such time or times as may be prescribed under the Social Security Act, contributions with respect to wages (as defined in Section 2 of this Act), equal to the sum of the taxes which would be imposed by Sections 1400 and 1410 of the Federal Insurance Contributions Act if the services covered by the agreement constituted employment within the meaning of that Act;

(3) Such agreement shall be effective with respect to services in employment covered by the agreement performed after a date specified therein but in no event may it be effective with respect to any such services performed prior to the first day of the calendar year in which such agreement is entered into or in which the modification of the agreement making it applicable to such services, is entered into;

(4) All services which constitute employment as defined in Section 2 and are performed in the employ of the State by employees of the State, shall be covered by the agreement; and

(5) All services which (A) constitute employment as defined in Section 2, (B) are performed in the employ of a political subdivision of the State, and (C) are covered by a plan which is in conformity with the terms of the agreement and has been approved by the State Agency under Section 5, shall be covered by the agreement.

(b) Interstate Instrumentalities:--Any instrumentality jointly created by this State and any other State or States is hereby authorized, upon the granting of like authority by such other State or States, (1) to enter into an agreement with the Federal Security Administrator whereby the benefits of the Federal old-age and survivors insurance system shall be extended to employees of such instrumentality, (2) to require its employees to pay (and for that purpose to deduct from their wages) contributions equal to the amounts which they would be required to pay under Section 4 (a) if they were covered by an agreement made pursuant to subsection (a) of this Section, and (3) to make payments to the Secretary of the Treasury in accordance with such agreement, including payments from its own funds, and otherwise to comply with such agreements. Such agreement shall, to the extent practicable, be consistent with the terms and provisions of subsection (a) and other provisions of this Act.

Section 4. Contributions by State Employees:--(a) Every employee of the State whose services are covered by an agreement entered into under Section 3 shall be required to pay for the period of such coverage, into the Contribution Fund established by Section 6, contributions, with respect to wages (as defined in Section 2 of this Act), equal to the amount of tax which would be imposed by Section 1400 of the Federal Insurance Contributions Act if such services constituted employment within the meaning of that Act. Such liability shall arise in consideration of the employee's retention in the service of the State, or his entry upon such service, after the enactment of this Act.

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

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

Section 5. Plans for Coverage of Employees of Political Subdivisions:--(a) Each political subdivision of the State is hereby authorized to submit for approval by the State Agency a plan for extending the benefits of Title II of the Social Security Act, in conformity with applicable provisions of such Act, to employees of such political subdivisions. Each such plan and any amendment thereof shall be approved by the State Agency if it finds that such plan, or such plan as amended, is in conformity with such requirements as are provided in regulations of the State Agency, except that no such plan shall be approved unless--

"(1) It is in conformity with the requirements of the Social Security Act and with the agreement entered into under Section 3;

(2) It provides that all services which constitute employment as defined in Section 2 and are performed in the employ of the political subdivision by employees thereof, shall be covered by the plan;

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

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

(5) It provides that the political subdivision will make such reports, in such form and containing such information, as the State Agency may from time to time require, and comply with such provisions as the State Agency or the Federal Security Administrator may from time to time find necessary to assure the correctness and verification of such reports; and

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

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

() (1) Each political subdivision as to which a plan has been approved under this Section shall pay into the Contribution Fund, with respect to wages (as defined in Section 2 of this Act), at such time or times as the State Agency may by regulation prescribe, contributions in the amounts and at the rates specified in the applicable agreement entered into by the State Agency under Section 3.

(2) Each political subdivision required to make payments under paragraph (1) of this subsection is authorized, in consideration of the employee's retention in, or entry upon, employment after enactment of this Act, to impose upon each of its employees, as to services which are covered by an approved plan, a contribution with respect to his wages (as defined in Section 2 of this Act), not exceeding the amount of tax which would be imposed by Section 1400 of the Federal Insurance Contributions Act if such services constituted employment within the meaning of that Act, and to deduct the amount of such contribution from his wages as and when paid. Contributions so collected shall be paid into the Contribution Fund in partial discharge of the liability of such political subdivision or instrumentality under paragraph (1) of this subsection. Failure to deduct such contribution shall not relieve the employee or employer of liability therefor.

(a) Delinquent payments due under paragraph (1) of subsection (c) may, with interest at the rate of four per centum per annum, be recovered by action in a court of competent jurisdiction against the political subdivision liable therefor or may, at the request of the State Agency, be deducted from any other moneys payable to such subdivision by any department or agency of the State.

Section 6. Contribution Fund:--(a) There is hereby established a special fund to be known as the Contribution Fund. Such fund shall consist of and there shall be deposited in such fund: (1) all contributions, interest, and penalties collected under Sections 4 and 5; (2) all moneys appropriated thereto under this Act; (3) any property or securities and earnings thereof acquired through the use of moneys belonging to the fund; (4) interest earned upon any moneys in the fund, and (5) all sums recovered upon the bond of the custodian or otherwise for losses sustained by the fund and all other moneys received for the fund from any other source. All moneys in the fund shall be mingled and undivided. Subject to the provisions of this Act, the State Agency is vested with full power, authority and jurisdiction over the fund, including all moneys and property or securities belonging thereto, and may perform any and all acts whether or not specifically designated, which are necessary to the administration thereof and are consistent with the provisions of this Act.

(b) The Contribution Fund shall be established and held separate and apart from any other funds or moneys of the State and shall be used and administered exclusively for the purpose of this Act. Withdrawals from such fund shall be made for, and solely for (A) payment of amounts required to be paid to the Secretary of the Treasury pursuant to an agreement entered into under Section 3; (B) payment of refunds provided for in Section 4 (c) of this Act; and (C) refunds of overpayments, not otherwise adjustable, made by a political subdivision or instrumentality.

(c) From the Contribution Fund the custodian of the Fund shall pay to the Secretary of the Treasury such amounts and at such time or times as may be directed by the State Agency in accordance with any agreement entered into under Section 3 and the Social Security Act.

(d) The Treasurer of the State shall be ex-officio treasurer and custodian of the Contribution Fund and shall administer such fund in accordance with the provisions of this Act and the directions of the State Agency and shall pay all warrants drawn upon it in accordance with the provisions of this Section and with such regulations as the State Agency may prescribe pursuant thereto.

(e) (1) There are hereby authorized to be appropriated annually to the Contribution Fund, in addition to the contributions collected and paid into the Contribution Fund under Sections 4 and 5, to be available for the purposes of Section 6 (b) and (c) until expended, such additional sums as are found to be necessary in order to make the payments to the Secretary of the Treasury which the State is obligated to make pursuant to an agreement entered into under Section 3.

(2) The State Agency shall submit to each regular session of the State Legislature, at least 90 days in advance of the beginning of such session, an estimate of the amounts authorized to be appropriated to the Contribution Fund by paragraph (1) of this subsection for the next appropriation period.

Section 7. Administrative Appropriation:--That the sum of Four Thousand Dollars ($4,000.00) be and the same is hereby appropriated to the State Tax Department for the fiscal year beginning July 1, 1951, and ending June 30, 1952, and a like sum is hereby appropriated for the fiscal year beginning July 1, 1952, and ending June 30, 1953. This appropriation shall be paid out of the general funds of the State Treasury from funds not otherwise appropriated.

Section 8. Rules and Regulations:--The State Agency shall make and publish such rules and regulations, not inconsistent with the provisions of this Act, as it finds necessary or appropriate to the efficient administration of the functions with which it is charged under this Act.

Section 9. Studies and Reports:--The State Agency shall make studies concerning the problem of old-age and survivors insurance protection for employees of the State and local governments and their instrumentalities and concerning the operation of agreements made and plans approved under this Act and shall submit a report to the Legislature at the beginning of each regular session, covering the administration and operation of this Act during the preceding calendar year, including such recommendations for amendments to this Act as it considers proper.

Section 10. Separability:--If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the remainder of the Act and the application of such provision to other persons or circumstances shall not be affected thereby.

Section 11. Repeal:--All Acts or parts of Acts which are inconsistent with the provisions of this Act are hereby repealed.

Section 12. Effective Date:--This Act shall take effect immediately.

Approved June 8. 1951.