PRINTER'S NO. 1699
No. 1252 Session of 2008
INTRODUCED BY KASUNIC, LAVALLE, LOGAN, COSTA, STOUT AND
TARTAGLIONE, JANUARY 22, 2008
REFERRED TO FINANCE, JANUARY 22, 2008
AN ACT
1 Requiring municipal retirement systems to pay annual
2 postretirement adjustments to certain retired municipal
3 employees; and providing for the financing of these
4 adjustments and for the administration of the Commonwealth's
5 reimbursements for these adjustments.
6 TABLE OF CONTENTS
7 Chapter 1. General Provisions
8 Section 101. Short title.
9 Section 102. Definitions.
10 Chapter 3. Annual Municipal Employee Postretirement Adjustment
11 Section 301. Entitlement to annual municipal employee
12 postretirement adjustment.
13 Section 302. Amount of annual adjustment.
14 Section 303. Payment of annual adjustment.
15 Chapter 5. Financing of Annual Municipal Employee
16 Postretirement Adjustment
17 Section 501. Actuarial funding by municipality.
18 Section 502. Reimbursement by Commonwealth for annual
19 adjustment.
1 Chapter 7. Special Account
2 Section 701. Establishment.
3 Section 702. Deposits into special account.
4 Chapter 9. Administrative Provisions
5 Section 901. Municipal retirement system certification of
6 adjustments paid and of reimbursable amounts.
7 Section 902. Commonwealth disbursement of reimbursement
8 payment.
9 Section 903. Municipal receipt of reimbursement payment.
10 Section 904. Administration by Auditor General.
11 Chapter 11. Miscellaneous Provisions
12 Section 1101. Limitation of prior act.
13 Section 1102. Repeals.
14 Section 1103. Effective date.
15 The General Assembly of the Commonwealth of Pennsylvania
16 hereby enacts as follows:
17 CHAPTER 1
18 GENERAL PROVISIONS
19 Section 101. Short title.
20 This act shall be known and may be cited as the Annual
21 Municipal Employee Postretirement Adjustment Act.
22 Section 102. Definitions.
23 The following words and phrases when used in this act shall
24 have the meanings given to them in this section unless the
25 context clearly indicates otherwise:
26 "Active employment." The situation of an individual, other
27 than an independent contractor, who performs for compensation
28 regular services for a municipality and who is regularly entered
29 on the payroll of the municipality.
30 "Annual municipal employer postretirement adjustment,"
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1 "annual adjustment" or "annual postretirement adjustment." An
2 increase in the amount of a retirement benefit as provided for
3 under this act.
4 "Chief administrative officer." The person who has the
5 primary responsibility for the execution of the administrative
6 or management affairs of a municipal retirement system or the
7 designee of that person.
8 "Firefighter." A municipal employee who holds a full-time
9 position in the firefighting service of a municipality and has
10 retirement coverage provided by a retirement system.
11 "Municipal employee." A firefighter, police officer or
12 nonuniformed employee.
13 "Municipality." A borough, city, incorporated town or
14 township, however constituted, whether operating under a
15 legislative charter, municipal code, optional charter adopted
16 under the act of July 15, 1957 (P.L.901, No.399), known as the
17 Optional Third Class City Charter Law, a home rule charter or an
18 optional plan adopted under the former act of April 13, 1972
19 (P.L.184, No.62), known as the Home Rule Charter and Optional
20 Plans Law, or 53 Pa.C.S. Part III Subpt. E (relating to home
21 rule and optional plan government), or other arrangement or an
22 association of these municipalities cooperating under the former
23 act of July 12, 1972 (P.L.762, No.180), referred to as the
24 Intergovernmental Cooperation Law, or 53 Pa.C.S. Ch. 23 Subch. A
25 (relating to intergovernmental cooperation).
26 "Nonuniformed municipal employee." A municipal employee
27 other than a police officer or firefighter.
28 "Police officer." A municipal employee who holds a full-time
29 position in the police service of a municipality and has
30 retirement coverage provided by a retirement system.
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1 "Postretirement adjustment." An increase in or change in the
2 amount of a retirement annuity, retirement benefit, service
3 pension or disability pension benefit granted or effective after
4 active employment ceases.
5 "Public employee retirement system." An entity, whether a
6 separate entity or part of a governmental entity, that collects
7 retirement and other employee benefit contributions from
8 government employees and employers, holds and manages the
9 resulting assets as reserves for present and future retirement
10 annuity, retirement benefit, service pension or disability
11 pension benefit payments and makes provision for these payments
12 to qualified retirees and beneficiaries.
13 "Retirement benefit." The amount paid on a regular basis to
14 a retired or disabled police officer or firefighter by a
15 municipal retirement system established for police officers or
16 firefighters.
17 "Retirement system." A public employee retirement system.
18 "Special account." The Annual Municipal Employee
19 Postretirement Adjustment Account established under section 701.
20 CHAPTER 3
21 ANNUAL MUNICIPAL EMPLOYEE POSTRETIREMENT ADJUSTMENT
22 Section 301. Entitlement to annual municipal employee
23 postretirement adjustment.
24 A municipal retirement system shall pay a retired municipal
25 employee an annual municipal employee postretirement adjustment
26 under this chapter if all of the following apply:
27 (1) The retiree has terminated active employment with
28 the municipality as a municipal employee.
29 (2) The retiree is receiving a retirement annuity,
30 retirement benefit, service pension or disability pension
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1 benefit from a municipal retirement system on the basis of
2 active employment with a municipality as a municipal
3 employee.
4 (3) The retiree began receiving the retirement annuity,
5 retirement benefit, service pension or disability pension
6 benefit before April 1 of the prior year.
7 Section 302. Amount of annual adjustment.
8 A municipal retirement system shall pay a retired municipal
9 employee an annual adjustment equal to the increase in the
10 Consumer Price Index for the prior year minus 0.5%, provided
11 that the annual adjustment may not exceed 5%.
12 Section 303. Payment of annual adjustment.
13 The annual adjustment is effective on the date of the first
14 payment of the retiree's retirement annuity, retirement benefit,
15 service pension or disability pension benefit due after April 1
16 of each year. The municipal retirement system shall pay the
17 annual adjustment as soon as practicable after that date and
18 shall include in the first payment any omitted amount payable
19 between the effective date of the adjustment and the date of the
20 first payment.
21 CHAPTER 5
22 FINANCING OF ANNUAL MUNICIPAL EMPLOYEE POSTRETIREMENT
23 ADJUSTMENT
24 Section 501. Actuarial funding by municipality.
25 A municipality shall fund the actuarial liability
26 attributable to an annual municipal employee postretirement
27 adjustment under the provisions of the act of December 18, 1984
28 (P.L.1005, No.205), known as the Municipal Pension Plan Funding
29 Standard and Recovery Act, and shall include that actuarial
30 liability in the actuarial valuation report under that act.
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1 Section 502. Reimbursement by Commonwealth for annual
2 adjustment.
3 (a) General rule.--
4 (1) Except as provided in subsection (b), beginning in
5 the year following the year in which the amortization
6 contribution requirement attributable to an annual adjustment
7 under Chapter 3 is first reflected in the financial
8 requirements of the retirement system determined under
9 Chapter 3 of the act of December 18, 1984 (P.L.1005, No.205),
10 known as the Municipal Pension Plan Funding Standard and
11 Recovery Act, the Auditor General shall determine the
12 Commonwealth reimbursement payable to the municipality
13 representing the amortization contribution requirement
14 attributable to the annual postretirement adjustment under
15 Chapter 3 that was paid with revenues of the municipality
16 other than general municipal pension system State aid
17 provided under the Municipal Pension Plan Funding Standard
18 and Recovery Act.
19 (2) The determination of the reimbursable amount of the
20 amortization contribution requirement attributable to the
21 annual postretirement adjustment under Chapter 3 in any year
22 shall be calculated as the amortization contribution
23 requirement attributable to the annual postretirement
24 adjustments under Chapter 3 and reflected in the
25 determination of the financial requirements of the pension
26 plan under Chapter 3 of the Municipal Pension Plan Funding
27 Standard and Recovery Act for the immediate prior year less
28 the product of that amortization contribution requirement
29 multiplied by the ratio of the amount of general municipal
30 pension system State aid allocated to the retirement system
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1 in the immediate prior year to the total amount of municipal
2 contributions made to the retirement system from all sources
3 other than employee contributions in the immediate prior
4 year. Where a municipality has issued bonds or notes to fund
5 an unfunded actuarial accrued liability under 53 Pa.C.S. Pt.
6 VII Subpt. B (relating to indebtedness and borrowing) or
7 under other laws applicable to the municipality, the general
8 municipal pension system State aid and municipal
9 contributions used by the municipality to make debt service
10 payments on the bonds or notes, or both, issued to fund an
11 unfunded actuarial accrued liability shall be included in the
12 calculation of the ratio applied to the amortization
13 contribution requirement.
14 (3) The Commonwealth shall reimburse a municipality,
15 from the special account established under section 701
16 (relating to establishment), for the reimbursable amount
17 determined for each year under this paragraph.
18 (b) Limitation of eligibility.--
19 (1) The Commonwealth shall not reimburse any
20 municipality for an annual adjustment paid under Chapter 3 if
21 the information required under section 901(a) either was not
22 certified to the Auditor General or was certified after April
23 1 of the year the certification was due.
24 (2) The Commonwealth shall not reimburse a municipality
25 for the reimbursable amount of the amortization contribution
26 requirement attributable to the annual postretirement
27 adjustment under Chapter 3 if the municipality fails to
28 submit a complete certification of the reimbursable amount of
29 the amortization contribution requirement determined under
30 subsection (a) to the Auditor General before April 1 of the
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1 year in which the reimbursement is payable.
2 (c) Variable definition of "amortization contribution
3 requirement."--For purposes of this section, the term
4 "amortization contribution requirement" shall have the meaning
5 specified in this subsection as follows:
6 (1) In a municipal pension plan with defined benefits
7 for which the municipality determines the financial
8 requirements of the pension plan under section 302 of the
9 Municipal Pension Plan Funding Standard and Recovery Act, the
10 term "amortization contribution requirement" shall mean the
11 amortization contribution requirement attributable to the
12 annual postretirement adjustments under Chapter 3 that was
13 reflected in the financial requirements of the pension plan
14 determined for the immediate prior year.
15 (2) In a municipal pension plan without defined benefits
16 for which the municipality determines the financial
17 requirements of the pension plan under section 303 of the
18 Municipal Pension Plan Funding Standard and Recovery Act, the
19 term "amortization contribution requirement" shall mean the
20 sum of the payments made to the retirement system in the
21 immediate prior year in order to provide the annual
22 postretirement adjustments under Chapter 3 in that year.
23 CHAPTER 7
24 SPECIAL ACCOUNT
25 Section 701. Establishment.
26 The Annual Municipal Employee Postretirement Adjustment
27 Account is established in the Municipal Pension Aid Fund. The
28 special account shall be established as soon as practicable
29 following the effective date of this section.
30 Section 702. Deposits into special account.
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1 Notwithstanding any applicable provision of the act of May
2 12, 1943 (P.L.259, No.120), referred to as the Foreign Casualty
3 Insurance Premium Tax Allocation Law, or any applicable
4 provision of the act of March 4, 1971 (P.L.6, No.2), known as
5 the Tax Reform Code of 1971, or the provisions of sections
6 402(b) and 803(c) of the act of December 18, 1984 (P.L.1005,
7 No.205), known as the Municipal Pension Plan Funding Standard
8 and Recovery Act, prior to the deposit of the proceeds of the
9 insurance premium tax on foreign casualty insurance premiums
10 into the General Municipal Pension System State Aid Program
11 revenue account, an amount sufficient to provide for the
12 Commonwealth's reimbursement payments and reimbursable amounts
13 to municipalities for annual adjustments under this act shall be
14 deposited in the separate account established under section 701.
15 CHAPTER 9
16 ADMINISTRATIVE PROVISIONS
17 Section 901. Municipal retirement system certification of
18 adjustments paid and of reimbursable amounts.
19 (a) Certification.--On January 1 of each year the chief
20 administrative officer of a municipal retirement system that
21 pays an annual adjustment under Chapter 3 in that year shall
22 certify the reimbursable amount under section 502(a) to the
23 Auditor General not later than April 1 of the following year.
24 (b) Certification form.--Not later than February 1 of each
25 year, the Auditor General shall send each municipality
26 maintaining a retirement system for municipal employees a notice
27 of the filing requirement for the certification of the
28 reimbursable amount under section 502(a), which shall include a
29 detailed description of the formula for determining the
30 reimbursable amount and the proper form on which to make the
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1 certifications under subsection (a).
2 Section 902. Commonwealth disbursement of reimbursement
3 payment.
4 (a) Payment to account.--Not later than June 1 of the year
5 in which the form is due, the Auditor General shall certify to
6 the State Treasurer the amount to be deposited into the special
7 account and shall draw a warrant, payable to the treasurer of
8 the municipality, on the State Treasurer from the special
9 account created for the amount certified under section 901(a).
10 (b) Disbursements.--Not later than the first business day of
11 October of the year in which the certification form is due, the
12 State Treasurer shall disburse the reimbursement payment for the
13 postretirement adjustments under Chapter 3 out of the special
14 account.
15 Section 903. Municipal receipt of reimbursement payment.
16 Upon receipt of the reimbursement payment from the
17 Commonwealth for the annual postretirement adjustments under
18 Chapter 3, the treasurer of the municipality shall deposit the
19 reimbursement payment into the municipality's general fund.
20 Section 904. Administration by Auditor General.
21 The Auditor General shall administer the annual municipal
22 employee postretirement adjustment reimbursement payments. Under
23 the act of July 31, 1968 (P.L.769, No.240), referred to as the
24 Commonwealth Documents Law, and 2 Pa.C.S. (relating to
25 administrative law and procedure), the Auditor General shall
26 promulgate regulations necessary for the efficient
27 administration of these reimbursement payments and shall specify
28 the form and content of any forms applicable to the
29 reimbursement payments. The Auditor General shall make an audit,
30 as deemed necessary, in accordance with generally accepted
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1 governmental auditing standards of every municipality that
2 receives a reimbursement payment under this act and of every
3 municipal retirement system that pays an annual adjustment under
4 this act.
5 CHAPTER 11
6 MISCELLANEOUS PROVISIONS
7 Section 1101. Limitation of prior act.
8 To the extent that an annual municipal employee
9 postretirement adjustment granted by the Commonwealth causes the
10 calculation of total benefits to be paid to a member of a police
11 force receiving retirement benefit to exceed the limitations
12 contained in the act of May 29, 1956 (1955 P.L.1804, No.600),
13 referred to as the Municipal Police Pension Law, the police
14 pension fund may exceed the limitations therein provided to pay
15 the adjustment to the retired or disabled member.
16 Section 1102. Repeals.
17 All acts and parts of acts are repealed insofar as they are
18 inconsistent with this act.
19 Section 1103. Effective date.
20 This act shall take effect in 60 days.
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