Bill Text: PA SB636 | 2009-2010 | Regular Session | Introduced

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Bill Title: Requiring municipal retirement systems to pay annual postretirement adjustments to certain retired municipal employees; and providing for the financing of these adjustments and for the administration of the Commonwealth's reimbursements for these adjustments.

Spectrum: Partisan Bill (Democrat 9-0)

Status: (Introduced - Dead) 2009-03-19 - Referred to FINANCE [SB636 Detail]

Download: Pennsylvania-2009-SB636-Introduced.html

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PRINTER'S NO. 691
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 636 Session of2009
INTRODUCED BY KASUNIC, BOSCOLA, FARNESE, FONTANA, LOGAN, MELLOW, STOUT, TARTAGLIONE AND WASHINGTON, MARCH 19, 2009
REFERRED TO FINANCE, MARCH 19, 2009
AN ACT
Requiring municipal retirement systems to pay annual
postretirement adjustments to certain retired municipal
employees; and providing for the financing of these
adjustments and for the administration of the Commonwealth's
reimbursements for these adjustments.
TABLE OF CONTENTS
Chapter 1. General Provisions
Section 101. Short title.
Section 102. Definitions.
Chapter 3. Annual Municipal Employee Postretirement Adjustment
Section 301. Entitlement to annual municipal employee
postretirement adjustment.
Section 302. Amount of annual adjustment.
Section 303. Payment of annual adjustment.
Chapter 5. Financing of Annual Municipal Employee
Postretirement Adjustment
Section 501. Actuarial funding by municipality.
Section 502. Reimbursement by Commonwealth for annual
adjustment.
Chapter 7. Special Account
Section 701. Establishment.
Section 702. Deposits into special account.
Chapter 9. Administrative Provisions
Section 901. Municipal retirement system certification of
adjustments paid and of reimbursable amounts.
Section 902. Commonwealth disbursement of reimbursement
payment.
Section 903. Municipal receipt of reimbursement payment.
Section 904. Administration by Auditor General.
Chapter 11. Miscellaneous Provisions
Section 1101. Limitation of prior act.
Section 1102. Repeals.
Section 1103. Effective date.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
CHAPTER 1
GENERAL PROVISIONS
Section 101. Short title.
This act shall be known and may be cited as the Annual
Municipal Employee Postretirement Adjustment Act.
Section 102. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Active employment." The situation of an individual, other
than an independent contractor, who performs for compensation
regular services for a municipality and who is regularly entered
on the payroll of the municipality.
"Annual municipal employer postretirement adjustment,"
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"annual adjustment" or "annual postretirement adjustment." An
increase in the amount of a retirement benefit as provided for
under this act.
"Chief administrative officer." The person who has the
primary responsibility for the execution of the administrative
or management affairs of a municipal retirement system or the
designee of that person.
"Firefighter." A municipal employee who holds a full-time
position in the firefighting service of a municipality and has
retirement coverage provided by a retirement system.
"Municipal employee." A firefighter, police officer or
nonuniformed employee.
"Municipality." A borough, city, incorporated town or
township, however constituted, whether operating under a
legislative charter, municipal code, optional charter adopted
under the act of July 15, 1957 (P.L.901, No.399), known as the
Optional Third Class City Charter Law, a home rule charter or an
optional plan adopted under the former act of April 13, 1972
(P.L.184, No.62), known as the Home Rule Charter and Optional
Plans Law, or 53 Pa.C.S. Part III Subpt. E (relating to home
rule and optional plan government), or other arrangement or an
association of these municipalities cooperating under the former
act of July 12, 1972 (P.L.762, No.180), referred to as the
Intergovernmental Cooperation Law, or 53 Pa.C.S. Ch. 23 Subch. A
(relating to intergovernmental cooperation).
"Nonuniformed municipal employee." A municipal employee
other than a police officer or firefighter.
"Police officer." A municipal employee who holds a full-time
position in the police service of a municipality and has
retirement coverage provided by a retirement system.
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"Postretirement adjustment." An increase in or change in the
amount of a retirement annuity, retirement benefit, service
pension or disability pension benefit granted or effective after
active employment ceases.
"Public employee retirement system." An entity, whether a
separate entity or part of a governmental entity, that collects
retirement and other employee benefit contributions from
government employees and employers, holds and manages the
resulting assets as reserves for present and future retirement
annuity, retirement benefit, service pension or disability
pension benefit payments and makes provision for these payments
to qualified retirees and beneficiaries.
"Retirement benefit." The amount paid on a regular basis to
a retired or disabled police officer or firefighter by a
municipal retirement system established for police officers or
firefighters.
"Retirement system." A public employee retirement system.
"Special account." The Annual Municipal Employee
Postretirement Adjustment Account established under section 701.
CHAPTER 3
ANNUAL MUNICIPAL EMPLOYEE POSTRETIREMENT ADJUSTMENT
Section 301. Entitlement to annual municipal employee
postretirement adjustment.
A municipal retirement system shall pay a retired municipal
employee an annual municipal employee postretirement adjustment
under this chapter if all of the following apply:
(1) The retiree has terminated active employment with
the municipality as a municipal employee.
(2) The retiree is receiving a retirement annuity,
retirement benefit, service pension or disability pension
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benefit from a municipal retirement system on the basis of
active employment with a municipality as a municipal
employee.
(3) The retiree began receiving the retirement annuity,
retirement benefit, service pension or disability pension
benefit before April 1 of the prior year.
Section 302. Amount of annual adjustment.
A municipal retirement system shall pay a retired municipal
employee an annual adjustment equal to the increase in the
Consumer Price Index for the prior year minus 0.5%, provided
that the annual adjustment may not exceed 5%.
Section 303. Payment of annual adjustment.
The annual adjustment is effective on the date of the first
payment of the retiree's retirement annuity, retirement benefit,
service pension or disability pension benefit due after April 1
of each year. The municipal retirement system shall pay the
annual adjustment as soon as practicable after that date and
shall include in the first payment any omitted amount payable
between the effective date of the adjustment and the date of the
first payment.
CHAPTER 5
FINANCING OF ANNUAL MUNICIPAL EMPLOYEE POSTRETIREMENT
ADJUSTMENT
Section 501. Actuarial funding by municipality.
A municipality shall fund the actuarial liability
attributable to an annual municipal employee postretirement
adjustment under the provisions of the act of December 18, 1984
(P.L.1005, No.205), known as the Municipal Pension Plan Funding
Standard and Recovery Act, and shall include that actuarial
liability in the actuarial valuation report under that act.
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Section 502. Reimbursement by Commonwealth for annual
adjustment.
(a) General rule.--
(1) Except as provided in subsection (b), beginning in
the year following the year in which the amortization
contribution requirement attributable to an annual adjustment
under Chapter 3 is first reflected in the financial
requirements of the retirement system determined under
Chapter 3 of the act of December 18, 1984 (P.L.1005, No.205),
known as the Municipal Pension Plan Funding Standard and
Recovery Act, the Auditor General shall determine the
Commonwealth reimbursement payable to the municipality
representing the amortization contribution requirement
attributable to the annual postretirement adjustment under
Chapter 3 that was paid with revenues of the municipality
other than general municipal pension system State aid
provided under the Municipal Pension Plan Funding Standard
and Recovery Act.
(2) The determination of the reimbursable amount of the
amortization contribution requirement attributable to the
annual postretirement adjustment under Chapter 3 in any year
shall be calculated as the amortization contribution
requirement attributable to the annual postretirement
adjustments under Chapter 3 and reflected in the
determination of the financial requirements of the pension
plan under Chapter 3 of the Municipal Pension Plan Funding
Standard and Recovery Act for the immediate prior year less
the product of that amortization contribution requirement
multiplied by the ratio of the amount of general municipal
pension system State aid allocated to the retirement system
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in the immediate prior year to the total amount of municipal
contributions made to the retirement system from all sources
other than employee contributions in the immediate prior
year. Where a municipality has issued bonds or notes to fund
an unfunded actuarial accrued liability under 53 Pa.C.S. Pt.
VII Subpt. B (relating to indebtedness and borrowing) or
under other laws applicable to the municipality, the general
municipal pension system State aid and municipal
contributions used by the municipality to make debt service
payments on the bonds or notes, or both, issued to fund an
unfunded actuarial accrued liability shall be included in the
calculation of the ratio applied to the amortization
contribution requirement.
(3) The Commonwealth shall reimburse a municipality,
from the special account established under section 701 for
the reimbursable amount determined for each year under this
paragraph.
(b) Limitation of eligibility.--
(1) The Commonwealth shall not reimburse any
municipality for an annual adjustment paid under Chapter 3 if
the information required under section 901(a) either was not
certified to the Auditor General or was certified after April
1 of the year the certification was due.
(2) The Commonwealth shall not reimburse a municipality
for the reimbursable amount of the amortization contribution
requirement attributable to the annual postretirement
adjustment under Chapter 3 if the municipality fails to
submit a complete certification of the reimbursable amount of
the amortization contribution requirement determined under
subsection (a) to the Auditor General before April 1 of the
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year in which the reimbursement is payable.
(c) Variable definition of "amortization contribution
requirement."--For purposes of this section, the term
"amortization contribution requirement" shall have the meaning
specified in this subsection as follows:
(1) In a municipal pension plan with defined benefits
for which the municipality determines the financial
requirements of the pension plan under section 302 of the
Municipal Pension Plan Funding Standard and Recovery Act, the
term "amortization contribution requirement" shall mean the
amortization contribution requirement attributable to the
annual postretirement adjustments under Chapter 3 that was
reflected in the financial requirements of the pension plan
determined for the immediate prior year.
(2) In a municipal pension plan without defined benefits
for which the municipality determines the financial
requirements of the pension plan under section 303 of the
Municipal Pension Plan Funding Standard and Recovery Act, the
term "amortization contribution requirement" shall mean the
sum of the payments made to the retirement system in the
immediate prior year in order to provide the annual
postretirement adjustments under Chapter 3 in that year.
CHAPTER 7
SPECIAL ACCOUNT
Section 701. Establishment.
The Annual Municipal Employee Postretirement Adjustment
Account is established in the Municipal Pension Aid Fund. The
special account shall be established as soon as practicable
following the effective date of this section.
Section 702. Deposits into special account.
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Notwithstanding any applicable provision of the act of May
12, 1943 (P.L.259, No.120), referred to as the Foreign Casualty
Insurance Premium Tax Allocation Law, or any applicable
provision of the act of March 4, 1971 (P.L.6, No.2), known as
the Tax Reform Code of 1971, or the provisions of sections
402(b) and 803(c) of the act of December 18, 1984 (P.L.1005,
No.205), known as the Municipal Pension Plan Funding Standard
and Recovery Act, prior to the deposit of the proceeds of the
insurance premium tax on foreign casualty insurance premiums
into the General Municipal Pension System State Aid Program
revenue account, an amount sufficient to provide for the
Commonwealth's reimbursement payments and reimbursable amounts
to municipalities for annual adjustments under this act shall be
deposited in the separate account established under section 701.
CHAPTER 9
ADMINISTRATIVE PROVISIONS
Section 901. Municipal retirement system certification of
adjustments paid and of reimbursable amounts.
(a) Certification.--On January 1 of each year the chief
administrative officer of a municipal retirement system that
pays an annual adjustment under Chapter 3 in that year shall
certify the reimbursable amount under section 502(a) to the
Auditor General not later than April 1 of the following year.
(b) Certification form.--Not later than February 1 of each
year, the Auditor General shall send each municipality
maintaining a retirement system for municipal employees a notice
of the filing requirement for the certification of the
reimbursable amount under section 502(a), which shall include a
detailed description of the formula for determining the
reimbursable amount and the proper form on which to make the
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certifications under subsection (a).
Section 902. Commonwealth disbursement of reimbursement
payment.
(a) Payment to account.--Not later than June 1 of the year
in which the form is due, the Auditor General shall certify to
the State Treasurer the amount to be deposited into the special
account and shall draw a warrant, payable to the treasurer of
the municipality, on the State Treasurer from the special
account created for the amount certified under section 901(a).
(b) Disbursements.--Not later than the first business day of
October of the year in which the certification form is due, the
State Treasurer shall disburse the reimbursement payment for the
postretirement adjustments under Chapter 3 out of the special
account.
Section 903. Municipal receipt of reimbursement payment.
Upon receipt of the reimbursement payment from the
Commonwealth for the annual postretirement adjustments under
Chapter 3, the treasurer of the municipality shall deposit the
reimbursement payment into the municipality's general fund.
Section 904. Administration by Auditor General.
The Auditor General shall administer the annual municipal
employee postretirement adjustment reimbursement payments. Under
the act of July 31, 1968 (P.L.769, No.240), referred to as the
Commonwealth Documents Law, and 2 Pa.C.S. (relating to
administrative law and procedure), the Auditor General shall
promulgate regulations necessary for the efficient
administration of these reimbursement payments and shall specify
the form and content of any forms applicable to the
reimbursement payments. The Auditor General shall make an audit,
as deemed necessary, in accordance with generally accepted
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governmental auditing standards of every municipality that
receives a reimbursement payment under this act and of every
municipal retirement system that pays an annual adjustment under
this act.
CHAPTER 11
MISCELLANEOUS PROVISIONS
Section 1101. Limitation of prior act.
To the extent that an annual municipal employee
postretirement adjustment granted by the Commonwealth causes the
calculation of total benefits to be paid to a member of a police
force receiving retirement benefit to exceed the limitations
contained in the act of May 29, 1956 (1955 P.L.1804, No.600),
referred to as the Municipal Police Pension Law, the police
pension fund may exceed the limitations therein provided to pay
the adjustment to the retired or disabled member.
Section 1102. Repeals.
All acts and parts of acts are repealed insofar as they are
inconsistent with this act.
Section 1103. Effective date.
This act shall take effect in 60 days.
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