(1) Except as provided in section 31-31-803, any member hired before, on, or after April 7, 1978, is eligible for the benefits provided by this part 8, with the exception of the following:

(a) Any member whose employer covers them under the federal "Social Security Act" shall be exempt from the provisions of this part 8 except the provisions of section 31-31-202;

(b) Members whose employer had established an exempt defined benefit pension plan in accordance with part 8 of article 30.5 of this title, on January 1, 1980, unless an employer irrevocably elects not later than October 1, 1983, to be subject to the provisions of this part 8; and

(c) Members whose employer had established a money purchase plan on or before December 1, 1978, in accordance with the provisions of part 8 of article 30.5 of this title 31; except that members of a police or fire department of any such employer may elect, with the approval of sixty-five percent of all active members employed by the department who vote in the election proposing the coverage and with the consent of the members' employer, to be covered by the provisions of this part 8, but any member hired on or after the date determined by the board to be the effective date of affiliation for coverage under this part 8 shall be covered under said part and shall have no right of election. Upon election of such coverage, members shall complete a statewide standard health history form pursuant to section 31-31-810 (1)(c) and, for purposes of this part 8, shall be considered as if first employed as of the date the election is effective. The board shall establish procedures for obtaining the required member and employer approval for coverage under this part 8. Once a member has elected the coverage of this part 8, the member's election shall be irrevocable. No employer that elects coverage on or after July 1, 1996, under this part 8 pursuant to this subsection (1)(c) shall be permitted to withdraw from such coverage pursuant to subsection (2) of this section.

(d) Any member whose employer has affiliated with the public employees' retirement association for the purpose of administering retirement benefits for its members.

(2) (a) Any employer may withdraw the active members of its police or fire department from coverage under the disability and survivor benefit provisions of this part 8 in order to establish its own exempt disability and survivor benefit program. Such withdrawal must be approved by at least sixty-five percent of all active members employed by the department, but if the members do not so approve, the employer may request approval of the withdrawal by the board. The board shall approve the request only if the proposed alternative program will provide disability and survivor benefits which are at least the actuarial equivalent of benefits provided under this part 8, as determined by an actuary appointed by the board. In making its determination, the actuary shall follow the association's standards for actuarial equivalency and shall include a review of the income tax consequences of the benefits offered. The cost of an actuarial review shall be paid by the employer and the employer will provide the information requested by the actuary. In the event the employer proposes the use of a private insurance company to provide the alternative program, the company shall have a minimum rating from a recognized rating agency as prescribed by rules of the board.

(b) An employer requesting to withdraw as provided in this subsection (2) must file a resolution of intent to withdraw with the board no later than December 31, 1999. No withdrawal will be permitted to take effect after December 31, 2001.

(c) An employer that withdraws pursuant to this subsection (2) shall establish and maintain a locally financed alternative disability and survivor benefit plan. Except for the one time payment specified in paragraph (e) of this subsection (2), the state shall not have any financial or other responsibility for a plan that has been withdrawn pursuant to this subsection (2).

(d) The board shall promulgate rules relating to the standards for disclosure of all ramifications of and procedures for obtaining the member approval of withdrawal provided for in paragraph (a) of this subsection (2).

(e) Within sixty days of the effective date of a withdrawal under this subsection (2), the association shall pay to the withdrawn employer its actuarially determined proportionate share of the state contribution made by the state treasurer on January 31, 1997, for funding of death and disability benefits pursuant to section 31-31-811 (3). The board shall promulgate rules for determining the calculation of a withdrawn employer's actuarially determined proportionate share of the state contribution. Such rules shall consider the number of members hired prior to January 1, 1997, who are being withdrawn, the number of members hired prior to January 1, 1997, who continue to be covered for death and disability benefits under this part 8, including those members and survivors already receiving benefits, and the cost of covering the withdrawn employer's members for the period prior to the withdrawal. Any money paid to a withdrawn employer pursuant to this paragraph (e) shall be applied to the funding of that employer's exempt disability and survivor benefit program created pursuant to paragraph (a) of this subsection (2).

(f) Once an employer has withdrawn under this subsection (2), reentry into the disability and survivor benefit plan provided by this part 8 shall be permitted only once, in accordance with procedures established by the board.

(3) If an employer that is otherwise required to enroll its members under the plan fails to properly enroll such members, neither the fire and police pension association nor the death and disability trust fund is obligated or liable for any purpose to any person or employer arising from such failure.