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| PRIOR PRINTER'S NOS. 2384, 2521, 2606, 2609 | PRINTER'S NO. 2638 |
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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY WILLIAMS AND D. EVANS, JULY 3, 2009 |
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| AMENDMENTS TO SENATE AMENDMENTS, HOUSE OF REPRESENTATIVES, SEPTEMBER 10, 2009 |
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| AN ACT |
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1 | Amending the act of December 18, 1984 (P.L.1005, No.205), |
2 | entitled "An act mandating actuarial funding standards for |
3 | all municipal pension systems; establishing a recovery |
4 | program for municipal pension systems determined to be |
5 | financially distressed; providing for the distribution of the |
6 | tax on the premiums of foreign fire insurance companies; and |
7 | making repeals," amending the title of the act; in |
8 | preliminary provisions, further providing for definitions; in |
9 | preliminary provisions, providing for methodology; in |
10 | municipal pension plan actuarial reporting, further providing |
11 | for contents of actuarial valuation report and providing for |
12 | actuarial asset valuation and for revised actuarial valuation |
13 | report; in minimum funding standard for municipal pension |
14 | plans, further providing for minimum funding standard and |
15 | defined benefit plans self-insured in whole or in part; in |
16 | revisions applicable to municipal pension fund financing, |
17 | further providing for revision of financing from State |
18 | revenue sources and General Municipal Pension System State |
19 | Aid Program; in financially distressed municipal pension plan |
20 | determination procedure, further providing for initiation of |
21 | distress determination, for pension plans to be included in |
22 | determination and for determination procedure; in financially | <-- |
23 | distressed municipal pension system recovery program, further |
24 | providing for application, for election determination |
25 | procedure, for recovery program level I, for recovery program |
26 | level II, for recovery program level III, for remedies |
27 | applicable to various recovery program levels, for |
28 | supplemental State assistance program and fund and for |
29 | municipal employee retirement program; in financially |
30 | distressed municipal pension system recovery program, |
31 | establishing programs for municipal pension recovery and |
32 | municipal employee retirement; in financially distressed |
33 | municipal pension system recovery program, further providing |
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1 | for rules and regulations; providing for standards for |
2 | municipal pension systems for second class cities and for |
3 | level III administration in cities of the second class; in |
4 | alternative funding mechanism, providing special provisions |
5 | relating to certain cities and counties; in financially | <-- |
6 | distressed municipal pension system recovery program, further |
7 | providing for application, for election determination |
8 | procedures, for recovery program level I, for recovery |
9 | program level II, for recovery program level III, for |
10 | remedies, for supplemental State Assistance Program and Fund |
11 | and for regulations; providing for standards for municipal |
12 | pension systems; in alternative funding mechanisms, making an |
13 | editorial change, further providing for alternative funding |
14 | mechanism and providing for cities of the first class and for |
15 | special taxing authority; providing for deferred retirement |
16 | option plans; and making a related repeal. |
17 | The General Assembly of the Commonwealth of Pennsylvania |
18 | hereby enacts as follows: |
19 | Section 1. The title of the act of December 18, 1984 |
20 | (P.L.1005, No.205), known as the Municipal Pension Plan Funding |
21 | Standard and Recovery Act, is amended to read: |
22 | AN ACT |
23 | Mandating actuarial funding standards for all municipal pension |
24 | systems; establishing a recovery program for municipal |
25 | pension systems determined to be financially distressed; |
26 | providing for the distribution of the tax on the premiums of |
27 | foreign fire insurance companies; providing for the |
28 | establishment and administration of deferred retirement |
29 | option plans in local governments and for local tax; and |
30 | making repeals. |
31 | Section 2. The definition of "municipal employee" in section |
32 | 102 of the act is amended and the section is amended by adding |
33 | definitions to read: |
34 | Section 102. Definitions. |
35 | Except as provided in Chapter 7, the following words and |
36 | phrases when used in this act shall have the meanings given to |
37 | them in this section unless the context clearly indicates |
38 | otherwise: |
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1 | * * * |
2 | "Benefit plan study." A study of an individual benefit plan | <-- |
3 | conducted to identify the effectiveness of the plan that |
4 | includes an analysis of all of the following: |
5 | (1) The cost of each benefit. |
6 | (2) The administrative cost of the benefit plan per |
7 | employee. |
8 | (3) The sufficiency of employee contributions. |
9 | (4) A comparison of each benefit and proposed benefit |
10 | and its cost in other jurisdictions, including other |
11 | municipalities and states of comparable size to this |
12 | Commonwealth. |
13 | (5) The benefit plan's asset valuation. |
14 | (6) Assumed and realized investment earnings during the |
15 | preceding five years. |
16 | (7) Annual cash flow and losses. |
17 | (8) Full utilization of earned income tax and other tax |
18 | revenue sources. |
19 | (9) Other existing assets and revenues available to meet |
20 | pension obligations. |
21 | (10) the municipality's minimum municipal obligation |
22 | payment history. |
23 | * * * |
24 | "DROP." A deferred retirement option plan created and |
25 | operated by a local government or the Pennsylvania Municipal |
26 | Retirement System under Chapter 11 or any deferred retirement |
27 | option plan or similar program established by a local government |
28 | that provides for the commencement and accumulation of |
29 | retirement benefit payments for active employees with |
30 | disbursement of the accumulated payments and interest earnings |
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1 | as a lump sum upon termination of employment. |
2 | "DROP participant." A retired member of a local government- |
3 | defined benefit pension plan who is eligible to participate in a |
4 | DROP under section 1112, who has elected to participate in a |
5 | DROP under section 1113 and who is not an elected official. |
6 | "DROP participant account." A pension trust fund ledger |
7 | account established under section 1121(a). |
8 | * * * |
9 | "Local government." A municipality or any county. |
10 | * * * |
11 | "Municipal employee." Any person [other than an independent |
12 | contractor] who provides regular services for a municipality in |
13 | return for compensation from the municipality. The term does not |
14 | include an independent contractor or a DROP participant. |
15 | * * * |
16 | Section 2.1. The act is amended by adding a section to read: |
17 | Section 103. Methodology. |
18 | In Notwithstanding any provisions of the act of August 31, | <-- |
19 | 1971 (P.L.398, No.96), known as the County Pension Law, to the |
20 | contrary, in performing an actuarial study under this act or the |
21 | act of December 6, 1972 (P.L.1383, No.293), entitled "An act |
22 | requiring municipal pension systems to have an actuarial |
23 | investigation of the fund made by an actuary who shall report |
24 | his findings to the Department of Community Affairs," |
25 | municipalities and counties may utilize any reasonable actuarial |
26 | assumptions or methodologies provided for in this act. |
27 | Section 3. Section 202(b)(4)(i), (ii), (iii), (iv) and (v) |
28 | of the act, amended July 15, 2004 (P.L.715, No.81), are amended |
29 | to read: |
30 | Section 202. Contents of actuarial valuation report. |
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1 | * * * |
2 | (b) Contents of actuarial exhibits; defined benefit plans |
3 | self-insured in whole or in part.--For any pension plan which is |
4 | a defined benefit plan and which is self-insured in whole or in |
5 | part, all applicable actuarial exhibits shall be prepared in |
6 | accordance with the entry age normal actuarial cost method with |
7 | entry age established as the actual entry age for all plan |
8 | members unless the municipality applies for and is granted |
9 | authorization by the commission to use an alternative actuarial |
10 | cost method. Authorization shall be granted if the municipality |
11 | demonstrates on an individual pension plan basis that there are |
12 | compelling reasons of an actuarial nature for the use of an |
13 | alternative actuarial cost method. The commission shall issue |
14 | rules and regulations specifying the criteria which the |
15 | commission will use to determine the question of the existence |
16 | of compelling reasons for the use of an alternative actuarial |
17 | cost method, the documentation which a municipality seeking the |
18 | authorization will be required to supply and the acceptable |
19 | alternative actuarial cost methods which the commission may |
20 | authorize. The actuarial cost method shall be used to value all |
21 | aspects of the benefit plan or plans of the pension plan unless |
22 | the municipality applies for and is granted authorization by the |
23 | commission to use approximation techniques other than the |
24 | actuarial cost method for aspects of the benefit plan or plans |
25 | of the pension plan other than the retirement benefit. |
26 | Authorization shall be granted if the municipality demonstrates |
27 | on an individual pension plan basis that there are compelling |
28 | reasons of an actuarial nature for the use of these |
29 | approximation techniques. The commission shall issue rules and |
30 | regulations specifying the criteria which the commission will |
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1 | use to determine the question of the existence of compelling |
2 | reasons for the use of approximation techniques, the |
3 | documentation which a municipality seeking the authorization |
4 | will be required to supply and the acceptable approximation |
5 | technique which the commission may authorize. The actuarial |
6 | exhibits shall use actuarial assumptions which are, in the |
7 | judgment of the actuary and the governing body of the plan, the |
8 | best available estimate of future occurrences in the case of |
9 | each assumption. With respect to economic actuarial assumptions, |
10 | the assumptions shall either be within the range specified in |
11 | rules and regulations issued by the commission or documentation |
12 | explaining and justifying the choice of assumptions outside the |
13 | range shall accompany the report. The actuarial exhibits shall |
14 | measure all aspects of the benefit plan or plans of the pension |
15 | plan in accordance with modifications in the benefit plan or |
16 | plans, if any, and salaries which as of the valuation date are |
17 | known or can reasonably be expected to be in force during the |
18 | ensuing plan year. In preparing the actuarial exhibits or any |
19 | actuarial valuation report, the municipality shall exclude the |
20 | compensation of all DROP participants from the active member |
21 | payroll and all DROP participants from active member data. The |
22 | actuarial valuation report shall contain the following actuarial |
23 | exhibits: |
24 | * * * |
25 | (4) An exhibit of any additional funding costs |
26 | associated with the amortization of any unfunded actuarial |
27 | accrued liability of the pension plan, indicating for each |
28 | increment of unfunded actuarial accrued liability specified |
29 | in paragraph (3), the level annual dollar contribution |
30 | required to pay an amount equal to the actuarial assumption |
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1 | as to investment earnings applied to the principal amount of |
2 | the remaining balance of the increment of unfunded actuarial |
3 | accrued liability and to retire by the applicable |
4 | amortization target date specified in this paragraph the |
5 | principal amount of the remaining balance of the increment of |
6 | unfunded actuarial accrued liability. The amortization target |
7 | date applicable for each type of increment of unfunded |
8 | actuarial accrued liability shall be as follows: |
9 | (i) The following apply: |
10 | (A) In the case of a pension plan established on |
11 | or prior to January 1, 1985 for the unfunded |
12 | actuarial accrued liability in existence as of the |
13 | beginning of the plan year occurring in calendar year |
14 | 1985, at the end of the plan year occurring in |
15 | calendar year 2015; or |
16 | (B) In the case of a pension plan established |
17 | after January 1, 1985, for the unfunded actuarial |
18 | accrued liability then or subsequently determined to |
19 | be or to have been in existence as of the date of the |
20 | establishment of the plan, at the end of the plan |
21 | year occurring 30 years after the calendar year in |
22 | which the pension plan was established. |
23 | (ii) The following apply: |
24 | (A) Increment or decrement of net unfunded |
25 | actuarial accrued liability attributable to a change |
26 | in actuarial assumptions, at the end of the plan year |
27 | occurring 20 years after the calendar year in which |
28 | actuarial assumption modification was effective. |
29 | (B) Increment or decrement of net unfunded |
30 | actuarial accrued liability attributable to a change |
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1 | in actuarial assumptions made on or after the |
2 | effective date of this clause, at the end of the plan |
3 | year occurring 15 years after the calendar year in |
4 | which the actuarial assumption modification was |
5 | effective. |
6 | (iii) The following apply: |
7 | (A) Increment of net unfunded actuarial accrued |
8 | liability attributable to a modification in the |
9 | benefit plan applicable to active members, at the end |
10 | of the plan year occurring 20 years after the |
11 | calendar year in which the benefit plan modification |
12 | was effective. |
13 | (B) From and after the effective date of this |
14 | clause, the increment of net unfunded actuarial |
15 | accrued liability attributable to a modification in |
16 | the benefit plan mandated by new legislation, at the |
17 | end of the plan year occurring 20 years after the |
18 | calendar year in which the benefit plan modification |
19 | was effective. |
20 | (iv) The following apply: |
21 | (A) Increment of unfunded actuarial accrued |
22 | liability attributable to a modification in the |
23 | benefit plan applicable to retired members and other |
24 | benefit recipients, at the end of the plan year |
25 | occurring 10 years after the calendar year in which |
26 | the benefit plan modification was effective. |
27 | (B) Except as provided under clause (C), |
28 | increment of unfunded actuarial accrued liability |
29 | attributable to a modification in the benefit plan |
30 | for active members adopted on or after the effective |
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1 | date of this clause and not mandated by new |
2 | legislation, at the end of the plan year occurring |
3 | ten years after the calendar year in which the |
4 | benefit plan modification was effective. |
5 | (C) An increment of unfunded actuarial accrued |
6 | liability attributable to a modification in the |
7 | benefit plan applicable to retired members and other |
8 | benefit recipients not mandated by new legislation, |
9 | at the end of the plan year following the year in |
10 | which the modification was effective. |
11 | (v) The following apply: |
12 | (A) Increment or decrement of net unfunded |
13 | actuarial accrued liability attributable to an |
14 | actuarial experience loss or gain, at the end of plan |
15 | year occurring [15] 20 years after the calendar year |
16 | in which the actuarial experience loss or gain was |
17 | recognized. |
18 | (B) Notwithstanding any other provision of this |
19 | act or other law, as of the beginning of the plan |
20 | year occurring in calendar year 2003, the outstanding |
21 | balance of the increment of unfunded actuarial |
22 | accrued liability attributable to the net actuarial |
23 | investment losses incurred in calendar years 2001 and |
24 | 2002 may, at the sole discretion of the municipality, |
25 | be amortized with the amortization target date being |
26 | the end of the plan year occurring 30 years after |
27 | January 1, 2003. In order for a municipality to |
28 | extend the applicable amortization period pursuant to |
29 | this clause, the municipality must file a revised |
30 | actuarial valuation report reflecting the |
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1 | amortization period extension provided for under this |
2 | clause with the executive director of the commission |
3 | no later than September 30, 2004. Any such revised |
4 | actuarial valuation report may not be filed in lieu |
5 | of the actuarial valuation report prepared in |
6 | compliance with clause (A) and required to be filed |
7 | on or before March 31, 2004, and may be used only for |
8 | the purposes of recalculating the 2004 minimum |
9 | municipal obligation of the municipality and |
10 | calculating the 2005 minimum municipal obligation of |
11 | the municipality to reflect the amortization period |
12 | extension. Any such revised actuarial valuation |
13 | report shall not affect distributions under the |
14 | General Municipal Pension System State Aid Program |
15 | under Chapter 4. |
16 | * * * |
17 | Section 4. The act is amended by adding sections to read: |
18 | Section 210. Actuarial asset valuation. |
19 | (a) General rule.--A municipality may value the assets in |
20 | each of its pension plans to equal the greater of: |
21 | (1) the actuarial value of assets from the most recent |
22 | biennial actuarial valuation report accepted by the |
23 | commission: |
24 | (i) increased by contributions and other deposits |
25 | except investment income; |
26 | (ii) decreased by benefit payments and |
27 | administrative expenses or other payments; and |
28 | (iii) credited with interest at 1% less than the |
29 | plan's assumed rate, to the date of the actuarial |
30 | valuation; or |
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1 | (2) the market value of assets on the valuation date. |
2 | (b) Methodology.-- |
3 | (1) The actuarial value of pension plan assets is the |
4 | value of cash, investment securities and other property |
5 | belonging to the municipal pension plan according to a method |
6 | for valuing assets adopted by the governing body of the |
7 | municipal pension plan upon the recommendation of the |
8 | actuary. |
9 | (2) The method for valuing assets shall be adequately |
10 | disclosed in the accompanying documentation or exhibits and, |
11 | except as set forth in subsection (c) or Chapter 6, may not |
12 | produce a result that in total is: |
13 | (i) greater than 120% of the fair market value of |
14 | the assets of the municipal pension plan; or |
15 | (ii) less than 80% of the fair market value of the |
16 | assets of the municipal pension plan. |
17 | (c) Temporary valuation.-- |
18 | (1) For the two-year actuarial valuation reporting |
19 | period beginning in 2009, a municipality may utilize a method |
20 | for valuing assets which does not produce a result that in |
21 | total is: |
22 | (i) greater than 130% of the fair market value of |
23 | the assets of the municipal pension plan; or |
24 | (ii) less than 70% of the fair market value of the |
25 | assets of the municipal pension plan. |
26 | (2) Upon the expiration of that two-year actuarial |
27 | valuation reporting period, subsection (b) applies. |
28 | Section 211. Revised actuarial valuation report. |
29 | Upon enactment of legislation which would alter the actuarial |
30 | valuation of a pension plan, a revised actuarial valuation |
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1 | report shall be filed with the commission as the commission |
2 | directs. |
3 | Section 5. Section 302(b)(2) of the act, amended December |
4 | 18, 1990 (P.L.753, No.189), is amended to read: |
5 | Section 302. Minimum funding standard; defined benefit plans |
6 | self-insured in whole or in part. |
7 | * * * |
8 | (b) Financial requirements of the pension plan.-- |
9 | * * * |
10 | (2) The normal cost and administrative expense |
11 | requirements for the following plan year shall be expressed |
12 | as a dollar amount and shall be determined by applying the |
13 | normal cost of the benefit plan and the administrative |
14 | expense payable from the assets attributable to the benefit |
15 | plan, as reported in the actuarial valuation report of the |
16 | pension plan and expressed as a percentage of payroll, to the |
17 | payroll of the active membership of the pension plan as of |
18 | the date the financial requirements of the pension plan are |
19 | determined. In expressing the normal cost and administrative |
20 | expense requirements as a dollar amount, the municipality |
21 | shall exclude the compensation of all DROP participants from |
22 | the payroll of the active membership of the pension plan. |
23 | * * * |
24 | Section 6. Sections 402(e)(2), 501 and 502 of the act are |
25 | amended to read: |
26 | Section 402. Revision of financing from State revenue sources; |
27 | General Municipal Pension System State Aid Program. |
28 | * * * |
29 | (e) Allocation of general municipal pension system State |
30 | aid.-- |
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1 | * * * |
2 | (2) The applicable number of units shall be attributable |
3 | to each active employee who was employed on a full-time basis |
4 | for a minimum of six consecutive months prior to December 31 |
5 | preceding the date of certification and who was participating |
6 | in a pension plan maintained by that municipality, provided |
7 | that the municipality maintains a generally applicable |
8 | pension plan for that type of employee which was either |
9 | established on or prior to December 31, 1984, or, if |
10 | established after December 31, 1984, has been maintained by |
11 | that municipality for at least three plan years. For the |
12 | purpose of computing and reporting the applicable number of |
13 | units, a DROP participant shall not be reported to the |
14 | Auditor General as an active employee. The applicable number |
15 | of units per employee attributable to each eligible recipient |
16 | county of the second class shall be two units for each police |
17 | officer. The applicable number of units attributable to each |
18 | eligible recipient city, borough, incorporated town and |
19 | township shall be as follows: |
20 | (i) Police officer - two units. |
21 | (ii) Firefighter - two units. |
22 | (iii) Employee other than police officer or |
23 | firefighter - one unit. |
24 | * * * |
25 | Section 501. Initiation of distress determination. |
26 | [Each municipality which wishes to avail itself of any of the |
27 | provisions of sections 604, 605 and 606 shall apply to the |
28 | commission for a determination of its status pursuant to this |
29 | chapter. The application shall be in the form and shall contain |
30 | the required information as prescribed in rules and regulations |
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1 | issued by the commission. Determinations pursuant to this |
2 | chapter shall be made annually.] The commission shall review the |
3 | biennial actuarial valuation reports filed on behalf of each |
4 | municipal pension plan to determine the municipality's |
5 | eligibility to avail itself of sections 604, 605 and 606. |
6 | Section 502. Pension plans for inclusion in determination. |
7 | The determination provided for in this chapter shall be made |
8 | for a municipality taking into account all pension plans which |
9 | the municipality has established and maintains[.], except those |
10 | created after the last biennial actuarial valuation date. The |
11 | initial actuarial valuation report for any plan shall not be |
12 | recognized in the determination of a municipality's distress |
13 | level. If the municipality filed an actuarial valuation report |
14 | for any pension plan in the prior reporting period, that |
15 | valuation report shall control the determination of distress |
16 | without regard to the funding status of any newly established |
17 | plan. If no other plan was previously maintained by a |
18 | municipality, the newly established plan shall be assigned a |
19 | distress score of 0. |
20 | Section 7. Sections 503 and 602 of the act, amended December |
21 | 10, 1996 (P.L.934, No.150), are amended to read: |
22 | Section 503. Determination procedure. |
23 | (a) Generally.--The determination provided for in this |
24 | chapter shall be made by the commission using the actuarial |
25 | [indicators] indicator specified in subsection (b) [and the |
26 | municipal finance indicators specified in subsection (c), and |
27 | the scoring system associated with each]. |
28 | (b) Actuarial [indicators] indicator.--The actuarial |
29 | [indicators] indicator shall be based on the most current |
30 | actuarial valuation report or reports filed by the applicable |
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1 | municipality with the commission pursuant to law and shall be |
2 | made in aggregate for all pension plans maintained by the |
3 | applicable municipality. [The actuarial indicators and the |
4 | associated scoring system for each shall be as follows: |
5 | (1) The aggregate amount of current pension plan |
6 | benefits payable shall be computed as a percentage of the |
7 | current market value of aggregate plan assets: |
8 9 10 | Benefits Payable as Percentage of Assets | Scoring | 11 | 0 - 5% | 0 | 12 | 6 - 10% | 10 | 13 | 11 - 15% | 20 | 14 | 16 - 20% | 30 | 15 | 21 - 30% | 40 | 16 | 31 - 40% | 50 | 17 | 41 - 50% | 60 | 18 | 51 - 60% | 70 | 19 | 61 - 70% | 80 | 20 | 71 - 80% | 90 | 21 | 81% or greater | 100 |
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22 | (2) The aggregate actuarial value of plan assets shall |
23 | be computed as a percentage of the aggregate accrued |
24 | actuarial liability: |
25 26 27 | Assets as Percentage of Accrued Actuarial Liability | Scoring | 28 | 50.0% or greater | 0 | 29 | 40.0 - 49.0% | 10 | 30 | 30.0 - 39.0% | 20 | | 1 | 25.0 - 29.0% | 30 | 2 | 20.0 - 24.0% | 40 | 3 | 15.0 - 19.0% | 50 | 4 | 10.0 - 14.0% | 60 | 5 | 7.5 - 9.0% | 70 | 6 | 5.0 - 7.4% | 80 | 7 | 2.5 - 4.9% | 90 | 8 | 0 - 2.4% | 100 |
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9 | (3) The aggregate amount of normal cost expressed as a |
10 | percentage of covered payroll reduced by the aggregate amount |
11 | of any member contributions expressed as a percentage of |
12 | covered payroll is added to the aggregate amount of any |
13 | employer contributions to the Federal old age, survivors, |
14 | disability and health insurance program expressed as a |
15 | percentage of covered payroll: |
16 17 | Total Employer Retirement Cost | Scoring | 18 | 0 - 9.99% | 0 | 19 | 10.00 - 11.99% | 10 | 20 | 12.00 - 12.99% | 20 | 21 | 13.00 - 13.99% | 30 | 22 | 14.00 - 14.99% | 40 | 23 | 15.00 - 15.99% | 50 | 24 | 16.00 - 16.99% | 60 | 25 | 17.00 - 17.99% | 70 | 26 | 18.00 - 18.99% | 80 | 27 | 19.00 - 19.99% | 90 | 28 | 20.00% or greater | 100 |
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29 | (4) The aggregate requirement to amortize the unfunded |
30 | accrued actuarial liability on a level annual dollar basis |
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1 | according to the applicable amortization schedules specified |
2 | in section 202(b)(4) is divided by the aggregate normal cost |
3 | requirement: |
4 5 6 | Amortization Requirement Divided by Normal Cost Result | Scoring | 7 | 0 - 0.39 | 0 | 8 | 0.40 - 0.79 | 10 | 9 | 0.80 - 1.19 | 20 | 10 | 1.20 - 1.39 | 30 | 11 | 1.40 - 1.59 | 40 | 12 | 1.60 - 1.79 | 50 | 13 | 1.80 - 1.99 | 60 | 14 | 2.00 - 2.19 | 70 | 15 | 2.20 - 2.39 | 80 | 16 | 2.40 - 2.59 | 90 | 17 | 2.60 or over | 100 |
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18 | (5) The difference between the aggregate amount of |
19 | normal cost plus the requirement to amortize the unfunded |
20 | accrued actuarial liability on a level annual dollar basis |
21 | according to the applicable amortization schedules specified |
22 | in section 202(b)(4), and the total aggregate amount of |
23 | member contributions, State allocations dedicated for pension |
24 | purposes and municipal contributions received for the |
25 | previous year is computed and expressed as a percentage of |
26 | covered payroll: |
27 28 29 30 | Difference Between Full Actuarial Requirement and Current Contributions | Scoring | | 1 | 0 - 2.4% | 0 | 2 | 2.5 - 4.9% | 10 | 3 | 5 - 9.9% | 20 | 4 | 10 - 14.9% | 30 | 5 | 15 - 19.9% | 40 | 6 | 20 - 24.9% | 50 | 7 | 25 - 29.9% | 60 | 8 | 30 - 34.9% | 70 | 9 | 35 - 39.9% | 80 | 10 | 40 - 44.9% | 90 | 11 | 45% or over | 100 |
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12 | (6) The compound annual percentage rate of increase in |
13 | the aggregate amount of the unfunded accrued actuarial |
14 | liability over the most recent four-year period is computed, |
15 | unless the amount of the unfunded accrued actuarial liability |
16 | equals less than 10% of the amount of assets in either the |
17 | first or fourth year: |
18 19 20 21 | Compound Rate of Increase in Unfunded Accrued Actuarial Liability | Scoring | 22 | 0.0 - 9.9% | 0 | 23 | 10.0 - 12.4% | 10 | 24 | 12.5 - 14.9% | 20 | 25 | 15.0 - 17.4% | 30 | 26 | 17.5 - 19.9% | 40 | 27 | 20.0 - 22.4% | 50 | 28 | 22.5 - 24.9% | 60 | 29 | 25% or over | 70 |
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30 | (7) The compound annual percentage rate of increase in |
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1 | the aggregate amount of municipal contributions over the most |
2 | recent four-year period is computed: |
3 4 5 | Compound Rate of Increase in Municipal Contributions | Scoring | 6 | 20% or over | 0 | 7 | 15 - 19.9% | 10 | 8 | 10 - 14.9% | 20 | 9 | 0 - 9.9% | 30] |
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10 | The actuarial indicator shall be the ratio of the actuarial |
11 | value of assets to the actuarial accrued liability, expressed as |
12 | a percentage known as the funding ratio, and shall be applied in |
13 | accordance with the following actuarial distress scoring system: |
14 | Funding Ratio | Score | 15 | 90% or over | 0 | 16 | 70 - 89% | 1 | 17 | 50 - 69% | 2 | 18 | Less than 50% | 3 |
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19 | [(c) Municipal finance indicators.--The municipal finance |
20 | indicators shall be based on the most recent financial report or |
21 | reports filed by the applicable municipality with the Department |
22 | of Community Affairs and certified by the secretary or by the |
23 | designee of the secretary. Before certification for a |
24 | municipality that has issued bonds or notes to fund an unfunded |
25 | actuarial accrued liability under the act of July 12, 1972 |
26 | (P.L.781, No.185), known as the Local Government Unit Debt Act, |
27 | or under the laws applicable to the municipality, the municipal |
28 | finance data extracted from the most recent financial report or |
29 | reports shall be adjusted as directed by the commission to hold |
30 | harmless the municipality under section 404(c) by excluding the |
|
1 | municipal debt issued to fund an unfunded actuarial accrued |
2 | liability and the debt service on that debt. The municipal |
3 | finance indicators and the associated scoring system for each |
4 | shall be as follows: |
5 | (1) The total amount of taxes collected by the |
6 | municipality for the current year are divided by the |
7 | population of the municipality as of the last Federal census, |
8 | and the percentage increase in the amount of municipal taxes |
9 | collected per capita in the most recent five-year period: |
10 11 12 | Taxes Collected Per Capita | Scoring | Gross Percentage Increase in Taxes Per Capita | Scoring | 13 | $ 0.00 - 79.99 | 0 | 0.00 - 19.99% | 0 | 14 | 80.00 - 84.99 | 5 | 20.00 - 29.99% | 3 | 15 | 85.00 - 89.99 | 10 | 30.00 - 34.99% | 6 | 16 | 90.00 - 99.99 | 15 | 35.00 - 39.99% | 9 | 17 | 100.00 - 109.99 | 20 | 40.00 - 44.99% | 12 | 18 | 110.00 - 124.99 | 25 | 45.00 - 49.99% | 15 | 19 | 125.00 - 139.99 | 30 | 50.00 - 54.99% | 18 | 20 | 140.00 - 159.99 | 35 | 55.00 - 59.99% | 21 | 21 | 160.00 - 179.99 | 40 | 60.00 - 64.99% | 24 | 22 | 180.00 - 199.99 | 45 | 65.00 - 69.99% | 27 | 23 | 200.00 or greater | 50 | 70.00% or greater | 30 |
|
24 | (2) The municipal tax rate on the market value of real |
25 | property (adjusted mill rate) in the municipality for the |
26 | most recent year and the percentage increase in the amount of |
27 | that adjusted mill rate in the most recent five-year period: |
28 29 30 | Adjusted | | Gross Percentage Increase in Adjusted Mill | | | 1 | Mill Rate | Scoring | Rate | Scoring | 2 | 0.00 - 5.99 | 0 | 0.00 - 3.99% | 0 | 3 | 6.00 - 7.99 | 5 | 4.00 - 6.99% | 3 | 4 | 8.00 - 9.99 | 10 | 7.00 - 9.99% | 6 | 5 | 10.00 - 11.99 | 15 | 10.00 - 12.99% | 9 | 6 | 12.00 - 12.99 | 20 | 13.00 - 15.99% | 12 | 7 | 13.00 - 13.99 | 25 | 16.00 - 18.99% | 15 | 8 | 14.00 - 14.99 | 30 | 19.00 - 21.99% | 18 | 9 | 15.00 - 15.99 | 35 | 22.00 - 24.99% | 21 | 10 | 16.00 - 16.99 | 40 | 25.00 - 27.99% | 24 | 11 | 17.00 - 17.99 | 45 | 28.00 - 30.99% | 27 | 12 | 18.00 or greater | 50 | 31.00% or greater | 30 |
|
13 | (3) For the most recent year, the result of the total |
14 | municipal bonded debt plus the total municipal floating debt |
15 | less the total municipal credits against municipal debt is |
16 | divided by the population of the municipality as of the last |
17 | Federal census: |
18 19 | Net Debt Per Capita | Scoring | 20 | $ 0.00 - 9.99 | 0 | 21 | 10.00 - 19.99 | 8 | 22 | 20.00 - 29.99 | 16 | 23 | 30.00 - 39.99 | 24 | 24 | 40.00 - 49.99 | 32 | 25 | 50.00 - 59.99 | 40 | 26 | 60.00 - 69.99 | 48 | 27 | 70.00 - 79.99 | 56 | 28 | 80.00 - 89.99 | 64 | 29 | 90.00 - 99.99 | 72 | 30 | 100.00 or greater | 80 |
|
|
1 | (4) For the most recent year, the result of the total |
2 | municipal bonded debt plus the total municipal floating debt |
3 | less the total municipal credits against municipal debt is |
4 | computed as a percentage of the assessed value of real |
5 | property in the municipality: |
6 7 8 9 | Municipal Debt as Percentage of Municipal Property Tax Base | Scoring | 10 | 0.00 - 0.49% | 0 | 11 | 0.50 - 0.99% | 6 | 12 | 1.00 - 1.99% | 12 | 13 | 2.00 - 2.99% | 18 | 14 | 3.00 - 4.49% | 24 | 15 | 4.50 - 5.99% | 30 | 16 | 6.00 - 6.99% | 36 | 17 | 7.00 - 7.99% | 42 | 18 | 8.00 - 8.99% | 48 | 19 | 9.00 - 9.99% | 54 | 20 | 10.00% or greater | 60 |
|
21 | (5) For the most recent year, the result of the total |
22 | municipal bonded debt plus the total municipal floating debt |
23 | less the total municipal credits against municipal debt is |
24 | computed as a percentage of the market value of real property |
25 | in the municipality: |
26 27 28 29 | Municipal Debt as Percentage of Potential Municipal Property Tax Base | Scoring | 30 | 0.00 - 0.24% | 0 | | 1 | 0.25 - 0.49% | 6 | 2 | 0.50 - 0.99% | 12 | 3 | 1.00 - 1.49% | 18 | 4 | 1.50 - 1.99% | 24 | 5 | 2.00 - 2.99% | 30 | 6 | 3.00 - 3.49% | 36 | 7 | 3.50 - 3.99% | 42 | 8 | 4.00 - 4.49% | 48 | 9 | 4.50 - 4.99% | 54 | 10 | 5.00% or greater | 60 |
|
11 | (6) For the most recent year, the municipal bonded debt |
12 | retired during the preceding 12 months plus the interest paid |
13 | during the preceding 12 months on all municipal debt is |
14 | computed as a percentage of the total taxes collected by the |
15 | municipality for the same period: |
16 17 18 19 | Debt Service as Percentage of Municipal Tax Revenue | Scoring | 20 | 0.00 - 4.49% | 0 | 21 | 4.50 - 5.49% | 8 | 22 | 4.50 - 5.49% | 16 | 23 | 6.50 - 7.49% | 24 | 24 | 7.50 - 8.49% | 32 | 25 | 8.50 - 9.49% | 40 | 26 | 9.50 - 10.49% | 48 | 27 | 10.50 - 11.49% | 56 | 28 | 11.50 - 12.49% | 64 | 29 | 12.50 - 13.49% | 72 | 30 | 13.50% or greater | 80 |
|
|
1 | (7) The market value of real property in the |
2 | municipality for the current year is divided by the |
3 | population of the municipality as of the last Federal census, |
4 | and the percentage increase in the amount of market value per |
5 | capita in the most recent year over the amount of market |
6 | value per capita in the most recent five-year period: |
7 8 9 10 | Market Value Per Capita | Scoring | Gross Percentage Increase in Market Value Per Capita | Scoring | 11 | $8,000 or greater | 0 | 41.00% or greater | 0 | 12 | 7,500 - 7,999 | 5 | 39.00 - 40.99% | 3 | 13 | 7,000 - 7,499 | 10 | 35.00 - 38.99% | 6 | 14 | 6,500 - 6,999 | 15 | 31.00 - 34.99% | 9 | 15 | 6,000 - 6,499 | 20 | 27.00 - 30.99% | 12 | 16 | 5,500 - 5,999 | 25 | 23.00 - 26.99% | 15 | 17 | 5,000 - 5,499 | 30 | 19.00 - 22.99% | 18 | 18 | 4,500 - 4,999 | 35 | 15.00 - 18.99% | 21 | 19 | 4,000 - 4,499 | 40 | 11.00 - 14.99% | 24 | 20 | 3,500 - 3,999 | 45 | 7.00 - 10.99% | 27 | 21 | 0 - 3,499 | 50 | 0.00 - 6.99% | 30 |
|
22 | (8) For the most recent year, adjusted total municipal |
23 | expenditures (total municipal expenditures less any municipal |
24 | urban renewal expenditures and less any municipal enterprise |
25 | expenditures) divided by the population of the municipality |
26 | as of the last Federal census and the percentage increase in |
27 | the amount of adjusted total municipal expenditures per |
28 | capita in the most recent year over the amount of adjusted |
29 | total municipal expenditures per capita in the most recent |
30 | five-year period: |
| 1 2 3 4 5 | Adjusted Total Municipal Expenditure Per Capita | Scoring | Gross Percentage Increase in Adjusted Total Municipal Expenditures Per Capita | Scoring | 6 | $ 0.00 - 149.99 | 0 | 0.00 - 13.99% | 0 | 7 | 150.00 - 164.99 | 5 | 14.00 - 17.99% | 3 | 8 | 165.00 - 179.99 | 10 | 18.00 - 21.99% | 6 | 9 | 180.00 - 194.99 | 15 | 22.00 - 25.99% | 9 | 10 | 195.00 - 209.99 | 20 | 26.00 - 29.99% | 12 | 11 | 210.00 - 224.99 | 25 | 30.00 - 33.99% | 15 | 12 | 225.00 - 239.99 | 30 | 34.00 - 37.99% | 18 | 13 | 240.00 - 254.99 | 35 | 38.00 - 41.99% | 21 | 14 | 255.00 - 269.99 | 40 | 42.00 - 45.99% | 24 | 15 | 270.00 - 284.99 | 45 | 46.00 - 48.99% | 27 | 16 | 285.00 or greater | 50 | 49.00% or greater | 30] |
|
17 | (d) Levels of distress.--The three levels of municipal |
18 | pension system financial distress shall be as follows: |
19 | (1) Minimal [financial] distress, which shall include |
20 | any municipality which has a distress determination scoring |
21 | [greater than zero but not greater than 299] equal to one. |
22 | (2) Moderate [financial] distress, which shall include |
23 | any municipality which has a distress determination scoring |
24 | equal to [or greater than 300 but not greater than 499] two |
25 | or greater than two but with an unfunded actuarial accrued | <-- |
26 | liability of less than $50,000. |
27 | (3) Severe [financial] distress, which shall include any |
28 | municipality which has a distress determination scoring equal |
29 | to [or greater than 500] three and an unfunded actuarial | <-- |
30 | accrued liability of not less than $50,000. |
|
1 | Section 602. Application. |
2 | (a) Generally.--The various remedies contained in this |
3 | recovery program shall be available to municipalities based on |
4 | the extent of financial distress of the municipal pension system |
5 | determined by the commission, as provided in this section. |
6 | (b) Minimally distressed municipal pension systems.--The |
7 | remedies contained in level I of the recovery program as |
8 | specified in section 604 shall apply to any municipality which |
9 | [seeks to utilize them, whether the municipality] is minimally |
10 | distressed, as that status is defined based upon the actuarial |
11 | considerations [and municipal finance considerations] of the |
12 | determination procedure pursuant to section 503 [is not |
13 | determined to be distressed or is determined to be distressed |
14 | but elects not to participate in level II of section 605 or |
15 | level III of section 606 of the recovery program, whichever is |
16 | applicable]. |
17 | (c) Moderately distressed municipal pension systems.--The |
18 | remedies contained in level II of the recovery program as |
19 | specified in section 605 shall apply to any municipality which |
20 | is determined to be moderately distressed, as that status is |
21 | defined based on the actuarial considerations [and municipal |
22 | finance considerations] of the determination procedure in rules |
23 | and regulations issued by the commission pursuant to section |
24 | 503[, which complies with any applicable preconditions for |
25 | participation in this level of the recovery program and which |
26 | elects to participate in this level of the recovery program]. |
27 | (d) Severely distressed municipal pension systems.--The |
28 | remedies contained in level III of the recovery program as |
29 | specified in section 606 shall apply to any municipality which |
30 | is determined to be severely distressed, as that status is |
|
1 | defined based on the actuarial considerations [and municipal |
2 | finance considerations] of the determination procedure in rules |
3 | and regulations issued by the commission pursuant to section |
4 | 503[, which complies with any applicable preconditions for |
5 | participation in this level of the recovery program and which |
6 | elects to participate in this level of the recovery program]. |
7 | (e) Continuation of elected remedies.--[In the event that |
8 | the extent of financial distress of a municipal pension system |
9 | determined by the commission subsequent to the initial |
10 | determination is lower than the minimum prescribed in section |
11 | 503(d) for a recovery program level previously elected by a |
12 | municipality, the] A municipality may continue to utilize any of |
13 | the remedies elected and implemented while it was eligible to |
14 | participate in [a higher recovery program level, provided that |
15 | the municipality continues to comply with the preconditions for |
16 | participation in the higher recovery program level and to |
17 | utilize the mandatory remedies applicable to the higher recovery |
18 | program level.] any recovery program authorized by this act at |
19 | the time of commencement and of implementation. Any change or | <-- |
20 | amendment of recovery remedies in this act subsequent to |
21 | election and implementation shall be deemed to be cumulative and |
22 | not in lieu of previously adopted remedies. |
23 | Section 8. Section 603 of the act is amended to read: |
24 | Section 603. [Election] Determination procedure. |
25 | The [election to utilize the various remedies contained in |
26 | one of the levels of the recovery program shall be made by the |
27 | governing body of the municipality. The election] determination |
28 | process shall be initiated by [an application filed with] the |
29 | commission for the determination of financial distress with |
30 | respect to the municipal pension system pursuant to section 501. |
|
1 | Upon notification of the determination of financial distress by |
2 | the commission, the municipality shall elect whether or not to |
3 | utilize the voluntary remedies of any level of the recovery |
4 | program which may be applicable to the municipality. [Any |
5 | election to utilize the remedies contained in a level of the |
6 | recovery program shall be made on forms prescribed by the |
7 | commission and shall include any information required by the |
8 | commission.] |
9 | Section 9. Section 604 of the act, amended February 14, 1986 |
10 | (P.L.23, No.9), is amended to read: |
11 | Section 604. Recovery program level I. |
12 | (a) Level I.--Any municipality to which level I of the |
13 | recovery program applies may utilize the following remedies: |
14 | (1) The aggregation of trust funds pursuant to section |
15 | 607(b). |
16 | (2) The establishment of total member contribution |
17 | pursuant to section 607(c). |
18 | (3) The deviation from municipal contribution |
19 | limitations pursuant to section 607(d). |
20 | [(b) Implementation.--Any municipality which receives an |
21 | initial distress determination scoring in 1985 which is equal to |
22 | or greater than 200, but not greater than 299, and cannot meet |
23 | the minimum municipal obligation for the year 1986 because the |
24 | payment of the minimum municipal obligation would result in the |
25 | municipality exceeding the maximum contribution limitation for |
26 | that municipality as set forth in the pertinent laws for that |
27 | class of municipality, may delay the implementation of the full |
28 | funding of the minimum municipal obligation until 1987. Any |
29 | municipality electing to delay full implementation of the |
30 | minimum municipal obligation shall make a municipal contribution |
|
1 | for 1986 as set forth in section 607(g). In addition to the one- |
2 | year delay of the full actuarial funding standard, the |
3 | municipality may utilize the following additional remedies: |
4 | (1) The deviation from municipal contribution |
5 | limitations pursuant to section 607(d). |
6 | (2) The special municipal taxing authority pursuant to |
7 | section 607(f).] |
8 | (c) Reduction for Level I municipalities.-- |
9 | (1) A level I municipality may elect to pay a reduced |
10 | minimum municipal obligation consisting of the normal cost |
11 | and administrative expenses of the pension plans plus: |
12 | (i) 75% of the amortization contribution |
13 | requirement, calculated according to section 202(b)(4); |
14 | minus |
15 | (ii) anticipated member contributions. |
16 | (2) This reduction of payments to amortize the actuarial |
17 | accrued liability shall be authorized for a period of one |
18 | biennial actuarial valuation reporting period (total of two |
19 | years) under section 607(h.1). At the end of this period, |
20 | section 302(c) shall apply to the minimum municipal |
21 | obligation calculation. |
22 | (d) Asset valuation.-- |
23 | (1) Following the expiration of the period applicable to |
24 | asset valuation under section 210(c), for an additional |
25 | period of one biennial actuarial valuation reporting period |
26 | (allowing an additional two years for a total of four years), |
27 | a level I municipality may utilize a method for valuing |
28 | assets that may not produce a result that, in total, is: |
29 | (i) greater than 130% of the fair market value of |
30 | the assets of the municipal pension plan; or |
|
1 | (ii) less than 70% of the fair market value of the |
2 | assets of the municipal pension plan. |
3 | (2) At the end of the additional period under paragraph |
4 | (1), section 210 shall apply to the actuarial valuation of |
5 | assets. |
6 | Section 10. Sections 605 and 606 of the act are amended to |
7 | read: |
8 | Section 605. Recovery program level II. |
9 | (a) Mandatory remedies.--Any municipality to which level II |
10 | of the recovery program applies shall utilize the following |
11 | remedies: |
12 | (1) The aggregation of trust funds pursuant to section |
13 | 607(b). |
14 | (2) The submission of a plan for administrative |
15 | improvement pursuant to section 607(i). |
16 | (b) Discretionary remedies.--Any municipality to which level |
17 | II of the recovery program applies may utilize the following |
18 | remedies: |
19 | (1) [The aggregation of trust funds pursuant to section |
20 | 607(b). |
21 | (2)] The establishment of total member contributions |
22 | pursuant to section 607(c). |
23 | [(3)] (2) The deviation from municipal contribution |
24 | limitations pursuant to section 607(d). |
25 | [(4)] (3) The establishment of a revised benefit plan |
26 | for newly hired municipal employees pursuant to section |
27 | 607(e). |
28 | [(5)] (4) The special municipal taxing authority |
29 | pursuant to section 607(f). |
30 | [(6) The delayed implementation of funding standard over |
|
1 | ten years pursuant to section 607(g). |
2 | (7) Supplemental State assistance pursuant to section |
3 | 607(j).] |
4 | (8) (i) A level II municipality may elect to pay a |
5 | reduced minimum municipal obligation consisting of the |
6 | normal cost and administrative expenses of the pension |
7 | plan plus: |
8 | (A) 75% of the amortization contribution |
9 | requirement, calculated according to section 202(b) |
10 | (4); minus |
11 | (B) anticipated member contributions. |
12 | (ii) This reduction of payments to amortize the |
13 | actuarial accrued liability shall be authorized for a |
14 | period of two consecutive actuarial valuation reporting |
15 | periods (total of four years) under section 607(h.1). At |
16 | the end of this period, section 302(c) shall apply to the |
17 | minimum municipal obligation calculation. |
18 | (9) (i) Following the expiration of the period |
19 | applicable to the asset valuation provisions of section |
20 | 210(c), for an additional period of two biennial |
21 | actuarial valuation reporting periods (allowing an |
22 | additional four years for a total of six years), a level |
23 | II municipality may utilize a method for valuing assets |
24 | that may not produce a result that in total is: |
25 | (A) greater than 130% of a period of two |
26 | consecutive actuarial valuation reporting periods |
27 | (total of four years); or |
28 | (B) less than 70% of the fair market value of |
29 | the assets of the municipal pension plan. |
30 | (ii) At the end of the additional period under |
|
1 | subparagraph (i), section 210 shall apply to the |
2 | actuarial valuation of assets. |
3 | (c) Benefit modification.--No benefit plan modification | <-- |
4 | shall be adopted unless the actuarial value of the assets of the |
5 | pension plan are: |
6 | (1) at least equal to 90% of the actuarial value of |
7 | liabilities prior to adoption; and |
8 | (2) at least 80% of the actuarial value of liabilities |
9 | after adoption. |
10 | Section 606. Recovery program level III. |
11 | (a) Optional [remedies] remedy remedies.--Any municipality | <-- |
12 | to which level III of the recovery program applies may utilize |
13 | the [following remedies: | <-- |
14 | (1) The establishment of total member contributions |
15 | pursuant to section 607(c). |
16 | (2) The deviation from municipal contribution |
17 | limitations pursuant to section 607(d). |
18 | (3) The] special municipal taxing authority pursuant to | <-- |
19 | section 607(f). |
20 | [(4) The delayed implementation of funding standard over |
21 | ten years pursuant to section 607(g) or the delayed |
22 | implementation of funding standard over 15 years with 40-year |
23 | amortization pursuant to section 607(h). |
24 | (5) Supplemental State assistance pursuant to section |
25 | 607(j).] |
26 | (b) Mandatory remedies.--Any municipality to which level III |
27 | of the recovery program applies shall utilize the following |
28 | remedies: |
29 | [(1) The aggregation of trust funds pursuant to section | <-- |
30 | 607(b). |
|
1 | (2) The establishment of a revised benefit plan for |
2 | newly hired municipal employees pursuant to section 607(e). |
3 | [The revised benefit plan shall have a normal cost which is | <-- |
4 | less than the normal cost of the benefit plan applicable to |
5 | current municipal employees as reported in the most recent |
6 | prior actuarial valuation report for the pension plan. In |
7 | making this determination, the normal cost for the revised |
8 | benefit plan shall be calculated by applying the revised |
9 | benefit plan to the current active membership demographics.] | <-- |
10 | (3) The preparation, submission and implementation of a |
11 | plan for improvement of the administration of the pension |
12 | plan or plans pursuant to section 607(i).] | <-- |
13 | (1) Participation in the Municipal Pension Recovery |
14 | Program for active, vested and retired municipal employees |
15 | under section 608.1. |
16 | (i) The amortization target date for the unfunded |
17 | actuarial accrued liability in existence as of the first |
18 | day of the valuation year in which a municipality is |
19 | determined to be severely distressed shall be 30 years. |
20 | The annual amortization contribution shall be calculated |
21 | on the basis of a level annual dollar amortization |
22 | contribution specified in section 202. |
23 | (ii) The biennial actuarial valuation report filed |
24 | on behalf of each level III municipality shall utilize an |
25 | actuarial assumption as to investment earnings that is |
26 | equal to the regular interest rate fixed by the |
27 | Pennsylvania Municipal Retirement Board, from time to |
28 | time, plus 1.5%. |
29 | (iii) Each level III municipality shall pay a |
30 | reduced minimum municipal obligation consisting of an |
|
1 | amount equal to: |
2 | (A) the normal cost and administrative expenses |
3 | of the pension plan; minus |
4 | (B) anticipated member contributions; plus |
5 | (C) a percentage of the amortization |
6 | contribution requirement calculated according to |
7 | section 202(b)(4). |
8 | (iv) Payment under subparagraph (iii) shall be |
9 | pursuant to the following schedule, beginning with the |
10 | year in which the municipality is first determined to be |
11 | severely distressed and subject to level III: |
12 13 | First year | 12.5% of amortization contribution | 14 | Second year | 25% of amortization contribution | 15 16 | Third year | 37.5% of amortization contribution | 17 | Fourth year | 50% of amortization contribution | 18 19 | Fifth year | 62.5% of amortization contribution | 20 | Sixth year | 75% of amortization contribution | 21 22 | Seventh year | 87.5% of amortization contribution | 23 | Eighth year and thereafter | 100% of amortization contribution |
|
24 | (c) Reduction for Level III municipalities.-- | <-- |
25 | (1) A Level III municipality may elect to pay a reduced |
26 | minimum municipal obligation consisting of the normal cost |
27 | and administrative expenses of the pension plan, plus 75% of |
28 | the amortization contribution requirement calculated |
29 | according to section 202(b)(4) minus anticipated member |
30 | contributions. |
|
1 | (2) The municipality may utilize the reduction described |
2 | in paragraph (1) for a period of three consecutive actuarial |
3 | valuation reporting periods, total of six years, under |
4 | section 607(h.1). At the end of this period, section 302(c) |
5 | shall apply to the minimum municipal obligation calculation. |
6 | (v) (3) Following the expiration of the period | <-- |
7 | applicable to the asset valuation provisions of section |
8 | 210(c), a level III municipality may utilize a method for |
9 | valuing assets that may not produce a result that in total is |
10 | greater than 130% or less than 70% of the fair market value |
11 | of the assets of the municipal pension plan, for an |
12 | additional period of two biennial actuarial valuation |
13 | reporting periods (allowing an additional four years for a |
14 | total of six years), at the end of which period the actuarial |
15 | valuation of assets shall revert to the method provided by |
16 | section 210. |
17 | (2) Participation in the Cooperative Municipal Pension | <-- |
18 | Program for newly hired municipal employees under section |
19 | 608.2. |
20 | Section 11. Section 607(b), (e), (f), (g), (h), (j) and (k) |
21 | of the act, amended February 14, 1986 (P.L.23, No.9), December |
22 | 10, 1996 (P.L.934, No.150) and June 18, 1998 (P.L.626, No.82), |
23 | are amended and the section is amended by adding subsections to |
24 | read: |
25 | Section 607. Remedies applicable to various recovery program |
26 | levels. |
27 | * * * |
28 | (b) Aggregation of trust funds.--If the municipality has |
29 | established and maintained more than one pension plan for its |
30 | employees and there are pension funds associated with those |
|
1 | pension plans, the municipality may aggregate the assets to the |
2 | credit of the various pension funds into a single pension trust |
3 | fund. Subsequent to the aggregation, the pension trust fund |
4 | shall be the funding mechanism for all pension plans connected |
5 | with the aggregation. |
6 | (1) Each pension plan subject to the aggregation shall |
7 | have an undivided participation in the assets of the combined |
8 | pension trust fund. For accounting purposes, the value of the |
9 | participation by each plan shall be calculated annually. The |
10 | value for the initial year following aggregation shall be |
11 | that portion of the total value of the pension trust fund |
12 | which bears the same relationship that the value of the |
13 | assets of the pension plan, as of the date of the aggregation |
14 | plus the contributions received by the pension trust fund |
15 | with respect to that pension plan since the date of |
16 | aggregation and reduced by the amount of retirement annuities |
17 | and benefits paid from the pension trust fund for annuitants |
18 | and benefit recipients of that pension plan since the date of |
19 | aggregation, bears to the total value of all assets |
20 | transferred to the pension trust fund as of the date of |
21 | aggregation plus the total contributions received by the |
22 | pension trust fund since the date of aggregation and reduced |
23 | by the total amount of retirement annuities and benefits paid |
24 | for all annuitants and benefit recipients since the date of |
25 | aggregation. The value of the participation for each year |
26 | subsequent to the initial year following aggregation shall be |
27 | that portion of the total value of the pension trust fund |
28 | which bears the same relationship that the value of the |
29 | participation of the pension plan, as of the close of the |
30 | preceding year plus the contributions received by the pension |
|
1 | trust fund with respect to that pension plan during the year |
2 | and reduced by the amount of retirement annuities and |
3 | benefits paid from the pension trust fund for annuitants and |
4 | benefit recipients of that pension plan during the year, |
5 | bears to the total value of all participation in the pension |
6 | trust fund as of the close of the preceding year plus the |
7 | total contributions received by the pension trust fund during |
8 | the year and reduced by the total amount of retirement |
9 | annuities and benefits paid for all annuitants and benefit |
10 | recipients during the year. |
11 | (2) Legal title to assets in the aggregated pension |
12 | trust fund shall be in the municipality as trustee, or its |
13 | nominees as trustees, for any person having a beneficial |
14 | interest in a particular pension plan which is associated |
15 | with the pension trust fund. |
16 | (3) The assets of the aggregated pension trust fund |
17 | shall be invested in investment securities which are |
18 | authorized investments pursuant to any applicable law for any |
19 | of the associated pension plans. |
20 | (4) Investment earnings shall be allocated to each |
21 | associated pension plan in proportion to the most recently |
22 | determined participation value. |
23 | (5) Valuation of assets shall be pursuant to the |
24 | provisions of section 202(e)(1) and any applicable rules and |
25 | regulations issued by the commission. |
26 | (6) The aggregated pension trust fund shall be managed |
27 | by a board of trustees. The board of trustees shall include |
28 | at least one representative of the active membership of each |
29 | pension plan included in the aggregated pension trust fund, |
30 | who shall be elected by the active membership of the |
|
1 | applicable pension plan. The remaining members of the board |
2 | of trustees shall be drawn from the managing boards or |
3 | entities of the associated pension plans, in a number equal |
4 | to the members elected by the employees. If there is a |
5 | deadlock, the members of the managing boards or entities |
6 | shall mutually agree upon a member of the general public to |
7 | cast the deciding vote. |
8 | * * * |
9 | (e) Establishment of a revised benefit plan for newly hired |
10 | municipal employees.--The municipality may establish a revised |
11 | benefit plan of the pension plan applicable to any employee |
12 | first hired on or after the effective date of the instrument |
13 | establishing the revised benefit plan. At the option of the |
14 | municipality, the revised benefit plan may be extended to |
15 | include an employee first hired prior to the effective date of |
16 | the instrument establishing the revised benefit who elects the |
17 | coverage. The revised benefit plan may provide for defined | <-- |
18 | benefits, defined contributions or a combination of both. Member |
19 | contributions with respect to [the] a revised defined benefit | <-- |
20 | plan of the pension plan shall at a minimum be equal to or |
21 | exceed 30% and at a maximum not to exceed 50%, of the normal |
22 | cost of the pension plan, expressed as a percentage of covered |
23 | payroll, as reported in the most recent actuarial valuation |
24 | report of the pension plan. A revised defined contribution plan | <-- |
25 | shall be centrally administered and invested and shall provide |
26 | for mandatory employee contributions of not less than 6% of |
27 | covered payroll and a matching employer contribution not to |
28 | exceed 6% of covered payroll. A revised benefit plan for newly |
29 | hired municipal employees shall be developed with consultation |
30 | with representatives of the collective bargaining unit |
|
1 | applicable to the affected type of municipal employee, if any, |
2 | and shall be within the scope of collective bargaining pursuant |
3 | to the applicable law subsequent to the establishment of the |
4 | revised benefit plan. |
5 | (e.1) Construction.--Nothing in this act shall be construed | <-- |
6 | to permit or deny the right of a municipality which has, prior |
7 | to the effective date of this subsection, adopted a benefit plan |
8 | under section 606 to adopt or implement an additional or |
9 | successor, revised pension benefit plan affecting future |
10 | employees of the municipality. |
11 | (f) Special municipal taxing authority.-- |
12 | (1) If the tax rates set by the municipality on earned |
13 | income or on real property are at the maximum provided by |
14 | applicable law, the municipality may increase its tax on |
15 | either earned income or real property above those maximum |
16 | rates. The proceeds of this special municipal tax increase |
17 | shall be used solely to defray the additional costs required |
18 | to be paid pursuant to this act which are directly related to |
19 | the pension plans of the municipality. The municipality |
20 | utilizing this special municipal taxing authority shall not |
21 | reduce the level of municipal contributions to the pension |
22 | plans prior to the implementation of the special municipal |
23 | taxing authority. |
24 | (2) The average level of municipal contributions to the |
25 | pension plans from all revenue sources for the three years |
26 | immediately prior to the implementation of the special |
27 | municipal taxing authority shall be expressed as a percentage |
28 | of the average covered payroll for that same three-year |
29 | period: Provided, however, That any supplemental |
30 | contributions made to the plans pursuant to any pension |
|
1 | recovery legislation enacted by the municipalities shall be |
2 | excluded for purposes of determining the level of municipal |
3 | contribution to the pension plans prior to the implementation |
4 | of the special municipal taxing authority. In each year |
5 | subsequent to the implementation of the special municipal |
6 | taxing authority, the municipal contributions to the pension |
7 | plan from all revenue sources existing prior to the |
8 | implementation of the special existing municipal taxing |
9 | authority, reduced by any supplemental pension recovery |
10 | contributions, shall equal or exceed this average percentage |
11 | of the current covered payroll. A municipality utilizing the |
12 | provisions of section 404 may levy or continue to levy the |
13 | special municipal tax increase under this subsection provided |
14 | that the municipality does not reduce the level of municipal |
15 | contributions to the pension plans prior to the |
16 | implementation of the special municipal taxing authority. In |
17 | executing the procedure prescribed in this subsection to |
18 | determine the level of municipal contributions, the debt |
19 | service payments for bonds or notes issued under section 404 |
20 | shall be considered municipal contributions. |
21 | (f.1) Limitation on special municipal taxing authority.-- |
22 | Beginning January 1, 2010, and continuing for each year |
23 | thereafter, the special municipal tax authorized in subsection |
24 | (f) may no longer be assessed or used for any purpose other than |
25 | to defray the additional costs required to be paid pursuant to |
26 | this act and which are directly related to the pension plans of |
27 | the municipality and which are included in the calculation of |
28 | the financial requirements of the pension plan and the minimum |
29 | municipal obligation. If the municipality assesses or utilizes |
30 | the special municipal tax increase to fund other post-employment |
|
1 | benefits, the cost of those benefits shall be subject to the |
2 | actuarial funding and reporting standards of this act. |
3 | [(g) Delayed implementation of funding standard over ten |
4 | years.--The municipality may delay full implementation of the |
5 | actuarial funding standard specified in section 302 or 303, |
6 | whichever is applicable, over a period not to exceed ten years |
7 | in duration, and may calculate that actuarial funding standard |
8 | on the basis of a 30-year amortization period for the increment |
9 | of unfunded actuarial accrued liability in existence as of the |
10 | beginning of the plan year occurring in calendar year 1985. |
11 | During the delayed implementation period, the municipality shall |
12 | make a municipal contribution to each municipal pension plan of |
13 | an amount equal to not less than the municipal contribution to |
14 | the municipal pension plan made in the immediate prior year and |
15 | the following percentage of the difference between that amount |
16 | and the full minimum municipal obligation with respect to the |
17 | pension plan pursuant to section 302 or 303, whichever is |
18 | applicable: |
19 | Year | Percentage of Difference | 20 | 1985 | 10% | 21 | 1986 | 20% | 22 | 1987 | 30% | 23 | 1988 | 40% | 24 | 1989 | 50% | 25 | 1990 | 60% | 26 | 1991 | 70% | 27 | 1992 | 80% | 28 | 1993 | 90% | 29 | 1994 and thereafter | 100% |
|
30 | The municipality may calculate the annual amortization |
|
1 | contribution on the basis of a level percentage of future |
2 | increasing covered payroll amortization contribution rather than |
3 | on the basis of the level annual dollar amortization |
4 | contribution specified in section 202. |
5 | (h) Delayed implementation of funding standard over 15 |
6 | years; 40-year amortization period.--The municipality may delay |
7 | full implementation of the actuarial funding standard specified |
8 | in section 302 or 303, whichever is applicable, over a period |
9 | not to exceed 15 years in duration and may calculate that |
10 | actuarial funding standard on the basis of a 40-year |
11 | amortization period for the increment of unfunded actuarial |
12 | accrued liability in existence as of the beginning of the plan |
13 | year occurring in calendar year 1985. During the delayed |
14 | implementation period, the municipality shall make a municipal |
15 | contribution to each municipal pension plan of an amount equal |
16 | to not less than the municipal contribution to the municipal |
17 | pension plan made in the immediate prior year and the following |
18 | percentage of the difference between that amount and the full |
19 | minimum municipal obligation with respect to the pension plan |
20 | pursuant to section 302 or 303, whichever is applicable, |
21 | calculated using the applicable 40-year amortization period: |
22 | Year | Percentage of Difference | 23 | 1985 | 6.7% | 24 | 1986 | 13.4% | 25 | 1987 | 20.1% | 26 | 1988 | 26.8% | 27 | 1989 | 33.5% | 28 | 1990 | 40.2% | 29 | 1991 | 46.9% | 30 | 1992 | 53.6% | | 1 | 1993 | 60.3% | 2 | 1994 | 67.0% | 3 | 1995 | 73.7% | 4 | 1996 | 80.4% | 5 | 1997 | 87.1% | 6 | 1998 | 93.8% | 7 | 1999 | 100.0% |
|
8 | The municipality may calculate the annual amortization |
9 | contribution on the basis of a level percentage of future |
10 | increasing covered payroll amortization contribution rather than |
11 | on the basis of the level annual dollar amortization |
12 | contribution specified in section 202.] |
13 | (h.1) Reduced minimum municipal obligation.-- |
14 | (1) The time period for use of the reduced minimum |
15 | municipal obligation and reduced amortization payment shall |
16 | be limited to the period applicable to the municipality's |
17 | level of distress as last determined by the commission. |
18 | (2) If a municipality's distress level becomes worse as |
19 | of a future filing period, the special reduced amortization | <-- |
20 | and minimum municipal contribution obligation remedy shall be | <-- |
21 | extended by the difference between: |
22 | (i) the period allowed for the previous distress |
23 | level; and |
24 | (ii) the period applicable to the new level of |
25 | distress. |
26 | (3) If a municipality's distress level improves, the |
27 | reduced minimum municipal obligation and special reduced | <-- |
28 | amortization period shall continue for the duration of the |
29 | period applicable to the previous distress level |
30 | determination. |
|
1 | * * * |
2 | [(j) Supplemental State assistance.--If every pension plan |
3 | of the municipality which is a defined benefit plan and which is |
4 | self-insured in whole or in part has filed an actuarial |
5 | valuation report utilizing the standardized actuarial cost |
6 | method and economic actuarial assumptions within the range of |
7 | actuarial assumptions specified in section 202(b) and if the |
8 | municipality has implemented the aggregation of trust funds |
9 | pursuant to subsection (b), the municipality may receive |
10 | supplemental State assistance from the Supplemental State |
11 | Assistance Fund established pursuant to section 608. The amount |
12 | of the supplemental State assistance to which the municipality |
13 | is entitled shall be determined annually based on the |
14 | determination scoring which the municipality received from the |
15 | commission pursuant to section 503, as follows: |
16 | (1) The determination score of the municipality shall be |
17 | reduced by an amount equal to 25% of the maximum possible |
18 | determination score. |
19 | (2) The result calculated pursuant to paragraph (1) |
20 | shall be expressed as a percentage of the maximum possible |
21 | determination score. |
22 | (2.1) For the supplemental State assistance distributed |
23 | in December of 1997, the percentage calculated pursuant to |
24 | paragraph (2) shall be applied to the dollar amount of |
25 | difference between the greater of the amount of the municipal |
26 | contribution or the amount of the actual municipal deposit to |
27 | all municipal pension plans in aggregate and the full minimum |
28 | municipal obligation with respect to the pension plans |
29 | pursuant to section 302 or 303, whichever is applicable, to |
30 | determine the amount of supplemental State assistance for the |
|
1 | municipality. |
2 | (3) For the supplemental State assistance distributed in |
3 | December of 1998 and thereafter, the percentage calculated |
4 | pursuant to paragraph (2) shall be applied to the dollar |
5 | amount of difference between the amount of the municipal |
6 | contribution to all municipal pension plans in aggregate and |
7 | the full minimum municipal obligation with respect to the |
8 | pension plan pursuant to section 302 or 303, whichever is |
9 | applicable, to determine the amount of supplemental State |
10 | assistance for the municipality. For the purposes of this |
11 | paragraph, the municipal contribution of a municipality that |
12 | has issued bonds or notes to fund an unfunded actuarial |
13 | accrued liability under the act of July 12, 1972 (P.L.781, |
14 | No.185), known as the Local Government Unit Debt Act, or |
15 | under other laws applicable to the municipality, shall |
16 | include debt service on the bonds or notes, or both, issued |
17 | to fund an unfunded actuarial accrued liability. |
18 | In the event that the total amount of supplemental State |
19 | assistance determined as payable to all municipalities entitled |
20 | to receive supplemental State assistance exceeds the maximum |
21 | appropriation provided for in section 608(b), the amount of |
22 | supplemental State assistance which shall be payable to each |
23 | municipality shall be proportionately reduced. The supplemental |
24 | State assistance shall be distributed annually on the first |
25 | business day occurring in December. For the purposes of this |
26 | subsection, the term "municipal contribution" shall mean the sum |
27 | of the current year's minimum municipal obligation, the annual |
28 | interest payable on any current or prior period funding |
29 | deficiencies and the total amount of any discretionary deposits |
30 | to the pension fund in the current year. |
|
1 | (k) Emergency loan procedures.--The municipality may receive |
2 | a loan from the Supplemental State Assistance Fund in any year |
3 | during the existence of the fund in an amount certified by the |
4 | commission. The loan amount shall be sufficient to eliminate the |
5 | possibility of imminent default during the next 12 consecutive |
6 | calendar months in the payment of retirement and other benefits |
7 | by one or more of the pension plans maintained by the |
8 | municipality. Terms for the repayment of any loan shall be |
9 | established by agreement between the municipality and the |
10 | commission prior to the loan.] |
11 | Section 12. Section 608 of the act is amended to read: |
12 | [Section 608. Supplemental State Assistance Program and Fund. |
13 | (a) Establishment.--There is hereby established a |
14 | Supplemental State Assistance Program and Fund. The Supplemental |
15 | State Assistance Fund shall be comprised of a Supplemental State |
16 | Assistance Account. The Supplemental State Assistance Program |
17 | and Fund shall be administered by the Auditor General. |
18 | (b) Supplemental State Assistance Account.--Supplemental |
19 | State assistance payable pursuant to section 607(j) shall be |
20 | paid from the Supplemental State Assistance Account. The |
21 | Supplemental State Assistance Account shall be funded from an |
22 | appropriation by the Commonwealth from the General Fund of the |
23 | Commonwealth. Annually the commission shall calculate the amount |
24 | of supplemental State assistance payable to all eligible |
25 | municipalities and shall certify the required amount to the |
26 | General Assembly. The amount of any annual certification of an |
27 | appropriation by the commission shall not exceed $35,000,000. |
28 | The General Assembly shall make an appropriation to the |
29 | Supplemental State Assistance Account sufficient to provide for |
30 | the amount certified by the commission. The appropriation shall |
|
1 | be deposited on the last business day in November annually. |
2 | (c) Preconditions.--As a precondition for the receipt of any |
3 | supplemental State assistance, the municipality shall |
4 | demonstrate prior good faith compliance with any applicable |
5 | municipal pension plan actuarial funding standard in effect. . |
6 | The municipality shall also implement any mandatory aspects of |
7 | the applicable recovery program level. |
8 | (d) Warrants.--Any supplemental State assistance shall be |
9 | payable on warrants drawn by the Auditor General based on |
10 | certifications of the commission. |
11 | (e) Expiration.--The Supplemental State Assistance Program |
12 | and Fund shall terminate in 2003 or in the first year in which |
13 | there are no municipalities entitled to receive supplemental |
14 | State assistance, whichever occurs earlier.] |
15 | Section 13. The act is amended by adding sections to read: | <-- |
16 | Section 608.1. Municipal Pension Recovery Program. |
17 | (a) Establishment.--The Municipal Pension Recovery Program |
18 | is established. The program shall be administered by the |
19 | Pennsylvania Municipal Retirement Board. |
20 | (b) Membership.--Once a municipality is determined to |
21 | qualify for the level III recovery program under section 606, |
22 | any and all pension plans and assets then maintained by the |
23 | municipality shall be transferred to the Pennsylvania Municipal |
24 | Retirement System for administration under the program; and all |
25 | pension rights, privileges and benefits, except hospital, |
26 | medical and other health insurance coverage, shall be governed |
27 | solely and exclusively by the program. No other statute, |
28 | ordinance, contract, arbitration award or practice shall permit |
29 | or authorize any deviation from or alteration of the terms of |
30 | the legislative enactments specifically governing the terms of |
|
1 | the program. |
2 | (c) Exclusions.--For purposes of this section, multiemployer |
3 | jointly trusteed Taft-Hartley collectively bargained pension |
4 | plans shall not be considered as pension plans and assets then |
5 | maintained by the municipality, and employees subject to |
6 | multiemployer collectively bargained pension plans shall not be |
7 | included in the program. |
8 | (d) Liability.-- |
9 | (1) The liability to continue payment of pension |
10 | benefits shall remain the exclusive responsibility of the |
11 | employing municipality. |
12 | (2) Except as set forth in paragraph (3), the minimum |
13 | municipal obligation of each municipality qualified for the |
14 | level III recovery program shall be determined on the basis |
15 | of actuarial valuation reports utilizing the actuarial |
16 | assumptions adopted by the Pennsylvania Municipal Retirement |
17 | Board. |
18 | (3) The investment earnings assumption shall be 1.5% |
19 | higher than the assumption applicable to municipalities |
20 | participating under Article II, III or IV of act of February |
21 | 1, 1974 (P.L.34, No.15), known as the Pennsylvania Municipal |
22 | Retirement Law. |
23 | Section 608.2. Cooperative Municipal Pension Program. |
24 | (a) Establishment.--The Cooperative Municipal Pension |
25 | Program is established. The program shall be administered by the |
26 | Pennsylvania Municipal Retirement Board. |
27 | (b) Membership.--Once a municipality is determined to |
28 | qualify for the level III recovery program under section 606, |
29 | all employees subsequently hired or returning to employment |
30 | after separation from service and all employees to whom pension |
|
1 | coverage is newly extended by the municipality shall be enrolled |
2 | in the program; and all pension rights, privileges and benefits, |
3 | except hospital, medical and other health insurance coverage, |
4 | shall be governed solely and exclusively thereby. No other |
5 | statute, ordinance, contract, arbitration award or practice |
6 | shall permit or authorize any deviation from or alteration of |
7 | the terms of the legislative enactments specifically governing |
8 | the terms of the program. |
9 | (c) Benefits.--Superannuation retirement benefits shall be |
10 | calculated as follows: |
11 | (1) In all cities subject to this section, public safety |
12 | employees in the police, fire or emergency services |
13 | departments shall be entitled to superannuation retirement |
14 | upon attainment of age 50 and completion of not less than 20 |
15 | years of service, calculated at the rate of 2.25% of final |
16 | average salary earned during the three highest consecutive |
17 | years of service. |
18 | (2) In all cities subject to this section, general |
19 | municipal employees shall be entitled to superannuation |
20 | retirement upon attainment of age 60 and completion of not |
21 | less than 30 years of service, calculated at the rate of 2% |
22 | of final average salary earned during the three highest |
23 | consecutive years of service. |
24 | (3) In all municipalities other than cities subject to |
25 | this section, public safety employees in the police, fire or |
26 | emergency services departments shall be entitled to |
27 | superannuation retirement upon attainment of age 55 and |
28 | completion of not less than 25 years of service, calculated |
29 | at the rate of 2% of final average salary earned during the |
30 | three highest consecutive years of service. |
|
1 | (4) In all municipalities other than cities subject to |
2 | these provisions, general municipal employees shall be |
3 | entitled to superannuation retirement upon attainment of age |
4 | 60 and completion of not less than 30 years of service, |
5 | calculated at the rate of 1.5% of final average salary earned |
6 | during the three highest consecutive years of service. |
7 | (5) If positions covered by this section are included in |
8 | an agreement under the Social Security Act (49 Stat. 620, 42 |
9 | U.S.C. § 301 et seq.), the benefit set forth in paragraph |
10 | (1), (2), (3) or (4) shall, upon the member's attainment of |
11 | eligibility to receive full Social Security old-age benefits, |
12 | be offset by 50% of the member's Social Security old-age |
13 | insurance benefit calculated in accordance with the |
14 | provisions of the Social Security Act in effect on the date |
15 | of termination of employment. Only compensation for services |
16 | actually rendered by the member and covered by the pension |
17 | system created by this section shall be included in |
18 | calculating the offset under this paragraph. |
19 | (6) As used in this subsection, the term "salary" means |
20 | the fixed amount of compensation paid at regular, periodic |
21 | intervals by a municipality to the member and from which |
22 | pension contributions have been deducted. The term does not |
23 | include overtime. |
24 | (d) Contributions.-- |
25 | (1) Except as set forth in paragraph (2), all members of |
26 | the cooperative municipal pension and security program shall |
27 | contribute to their pension, by payroll deduction, an amount |
28 | equal to three times the accrual rate appropriate to their |
29 | class of service. |
30 | (2) Members subject to the Social Security offset of |
|
1 | subsection (c)(5) shall contribute to their pension, by |
2 | payroll deduction, an amount equal to the accrual rate |
3 | appropriate to their class of service. |
4 | (e) Retirement options.--At the time of retirement, a member |
5 | may elect to receive benefits in a retirement allowance payable |
6 | throughout the member's life. This election is known as a single |
7 | life annuity. Instead of receiving a single life annuity, the |
8 | member may elect to receive the equivalent actuarial value at |
9 | the time of retirement in a lesser allowance, payable throughout |
10 | life with provisions that, upon the member's death: |
11 | (1) the member's retirement allowance shall be continued |
12 | throughout the life of and paid to the member's survivor |
13 | annuitant, if then living; or |
14 | (2) one-half of the member's retirement allowance shall |
15 | be continued throughout the life of and paid to the member's |
16 | survivor annuitant, if then living. |
17 | (f) Disability retirement.-- |
18 | (1) This subsection applies to all of the following |
19 | members: |
20 | (i) An active municipal employee who has accumulated |
21 | at least five years of total credited service. |
22 | (ii) An active municipal police officer or municipal |
23 | firefighter regardless of credited years of service. |
24 | (2) A member subject to this subsection under paragraph |
25 | (1) may, upon application, be retired by the board of |
26 | pensions and retirement on a disability allowance if |
27 | determined to be mentally or physically permanently incapable |
28 | of continuing to perform the duties for which the member is |
29 | employed. The disability annuity shall be determined under |
30 | the following paragraphs. |
|
1 | (3) Multiply: |
2 | (i) the benefit accrual rate applicable to the |
3 | member's retirement plan; by |
4 | (ii) the member's total number of years of credited |
5 | service. |
6 | (4) If the product under paragraph (3) is more than |
7 | 16.667, the disability annuity is the product of: |
8 | (i) a standard single life annuity; and |
9 | (ii) the benefit accrual rate applicable to the |
10 | member's retirement plan. |
11 | (5) If the product under paragraph (3) is not more than |
12 | 16.667, the disability annuity is determined as follows: |
13 | (i) Multiply: |
14 | (A) the accrual rate applicable to the member on |
15 | the effective date of the disability; by |
16 | (B) either: |
17 | (I) the total years and partial years of |
18 | credited service the member would have earned if |
19 | the member were to continue as an employee until |
20 | attaining eligibility for a superannuation |
21 | retirement allowance; or |
22 | (II) if the member has attained eligibility |
23 | for a superannuation retirement allowance at the |
24 | time of the disability, the number of years of |
25 | credited service. |
26 | (ii) Divide: |
27 | (A) the product under subparagraph (i); by |
28 | (B) the number of years and partial years of |
29 | credited service earned by the member as of the |
30 | effective date of the disability. |
|
1 | (iii) Divide: |
2 | (A) 16.667; by |
3 | (B) the number of years and partial years of |
4 | credited service earned by the member as of the |
5 | effective date of the disability. |
6 | (iv) Multiply the standard single life annuity by |
7 | the lesser of: |
8 | (A) the quotient under subparagraph (ii); or |
9 | (B) the quotient under subparagraph (iii). |
10 | (g) Service connected disability.-- |
11 | (1) This subsection applies if: |
12 | (i) a member has been found to be eligible for a |
13 | disability annuity; and |
14 | (ii) the disability has been found to be a service |
15 | connected disability. |
16 | (2) A member subject to this subsection under paragraph |
17 | (1) shall receive a supplement equal to: |
18 | (i) 70% of the member's final average salary; minus |
19 | (ii) the sum of: |
20 | (A) the annuity as determined under subsection |
21 | (f); and |
22 | (B) payments paid or payable on account of the |
23 | disability under: |
24 | (I) the act of June 2, 1915 (P.L.736, |
25 | No.338), known as the Workers' Compensation Act; |
26 | (II) the act of June 21, 1939 (P.L.566, |
27 | No.284), known as The Pennsylvania Occupational |
28 | Disease Act; and |
29 | (III) the Social Security Act (49 Stat. 620, |
30 | 42 U.S.C. § 301 et seq.). |
|
1 | (h) Vesting.--A member who ceases to be an active member for |
2 | any reason after having completed at least ten years of credited |
3 | service but before meeting the superannuation retirement service |
4 | requirement shall be entitled to vest retirement benefits until |
5 | the member attains superannuation retirement age. |
6 | (i) Alternative retirement program.-- |
7 | (1) A municipal employee may, within 30 days of |
8 | initiating employment covered by this section, make an |
9 | irrevocable election to participate in an alternative |
10 | independent defined contribution retirement program approved |
11 | by the board. |
12 | (2) To be approved, the alternative defined contribution |
13 | program must: |
14 | (i) centralize management and investment; |
15 | (ii) offer a variety of investment asset |
16 | allocations; |
17 | (iii) mandate both the employee and employer to |
18 | contribute 6% of the member's covered payroll; and |
19 | (iv) Annuitize benefits of retirement. |
20 | (3) An election by an employee to participate shall be |
21 | final, binding and irrevocable and shall apply to all future |
22 | employment with any municipality subject to these provisions. |
23 | Section 14 13. Section 609 of the act is amended to read: | <-- |
24 | Section 609. Rules and regulations. |
25 | The commission may issue any rules [and], regulations, |
26 | policies and procedures necessary for the effective |
27 | administration and operation of the provisions of this act. |
28 | Section 14. (Reserved). | <-- |
29 | Section 15. The act is amended by adding a chapter to read: |
30 | CHAPTER 7-A |
|
1 | STANDARDS FOR MUNICIPAL PENSION SYSTEMS |
2 | Section 701-A. Definitions. |
3 | The following words and phrases when used in this chapter |
4 | shall have the meanings given to them in this section unless the |
5 | context clearly indicates otherwise: |
6 | "Affiliated entity." Any of the following: |
7 | (1) A subsidiary or holding company of a lobbying firm |
8 | or other business entity owned in whole or in part by a |
9 | lobbying firm. |
10 | (2) An organization recognized by the Internal Revenue |
11 | Service as a tax-exempt organization under section 501(c) of |
12 | the Internal Revenue Code of 1986 (Public Law 99-514, 26 |
13 | U.S.C. § 501(c)) established by a lobbyist or lobbying firm |
14 | or an affiliated entity. |
15 | "Contributions." As defined in section 1621 of the act of |
16 | June 3, 1937 (P.L.1333, No.320), known as the Pennsylvania |
17 | Election Code. |
18 | "Executive level employee." An employee of a person or the |
19 | person's affiliated entity who: |
20 | (1) can affect or influence the outcome of the person's |
21 | or affiliated entity's actions, policies or decisions |
22 | relating to pensions and the conduct of business with a | <-- |
23 | municipality or a municipal pension system; or |
24 | (2) is directly involved in the implementation or | <-- |
25 | development of policies relating to pensions, investments, | <-- |
26 | contracts or procurement or to the conduct of business with a | <-- |
27 | municipality or a municipal pension system. |
28 | "Municipal pension system." Includes the Pennsylvania |
29 | Municipal Retirement System. |
30 | "Political committee." As defined in section 1621 of the act |
|
1 | of June 3, 1937 (P.L.1333, No.320), known as the Pennsylvania |
2 | Election Code. |
3 | "Professional services contract." A contract to which the |
4 | municipal pension system is a party that is: |
5 | (1) for the purchase or provision of professional |
6 | services, including investment services, legal services, real |
7 | estate services and other consulting services; and |
8 | (2) not subject to a requirement that the lowest bid be |
9 | accepted. |
10 | Section 702-A. Procurement for professional services contracts. |
11 | (a) Procedures.--Each municipal pension system, including |
12 | the Pennsylvania Municipal Retirement System, shall develop |
13 | procedures to select the most qualified person to enter into a |
14 | professional services contract. The procedures shall ensure that |
15 | the availability of a professional services contract is |
16 | advertised to potential participants in a timely and efficient |
17 | manner. Procedures shall include applications and disclosure |
18 | forms to be used to submit a proposal for review and to receive |
19 | the award of a professional services contract. |
20 | (b) Advertisement.-–An advertisement of the availability of |
21 | a proposal for a professional services contract shall set forth: |
22 | (1) The services that are the subject of the proposed |
23 | contract. |
24 | (2) Specifications relating to the services. |
25 | (3) Procedures to compete for the contracts. |
26 | (4) Required disclosures. |
27 | (c) Review.--Procedures to select the most qualified person |
28 | shall include a review of the person's qualifications, |
29 | experience and expertise and the compensation to be charged. |
30 | (d) Personnel.-- |
|
1 | (1) Prior to entering into a professional services |
2 | contract with a municipal pension system, the contractor |
3 | shall disclose the names and titles of each individual who |
4 | will be providing professional services to the municipal |
5 | pension system, including advisors or subcontractors of the |
6 | contractor. |
7 | (2) Disclosure under this subsection shall include all |
8 | of the following: |
9 | (i) Whether the individual is a current or former |
10 | official or employee of the municipality entering into |
11 | the contract. |
12 | (ii) Whether the individual has been a registered |
13 | Federal or State lobbyist. |
14 | (iii) A description of the responsibilities of each |
15 | individual with regard to the contract. |
16 | (3) The resume of an individual included in the |
17 | disclosure shall be provided to the municipality upon |
18 | request. |
19 | (4) The information under this subsection shall be |
20 | updated as changes occur. |
21 | (e) Conflict of interest.-–The municipal pension system |
22 | shall adopt policies relating to potential conflicts of interest |
23 | in the review of a proposal or the negotiation of a contract. |
24 | The policies shall include a minimum one-year restriction on: |
25 | (1) Participation by a former employee of a contractor |
26 | or potential contractor in the review of a proposal or |
27 | negotiation of a contract with that contractor. |
28 | (2) Participation by a former employee of the municipal |
29 | pension system in the submission of a proposal or the |
30 | performance of a contract. |
|
1 | (f) Public information.-–Following the award of a |
2 | professional services contract, all applications and disclosure |
3 | forms shall be public except for proprietary information or |
4 | other information protected by law. |
5 | (g) Increase.–-A professional services contract shall not be |
6 | amended to increase the cost of the contract by more than 10% or |
7 | $10,000, whichever is greater, unless the increase and a written |
8 | justification for the increase are public and posted on the |
9 | municipal pension system's Internet website, if an Internet |
10 | website is maintained, at least seven days prior to the |
11 | effective date of the amendment. |
12 | (h) Notice and summary.–-The relevant factors that resulted |
13 | in the award of the professional services contract must be |
14 | summarized in a written statement to be included in or attached |
15 | to the documents awarding the contract. Within ten days of the |
16 | award of the professional services contract, the original |
17 | application, a summary of the basis for the award and all |
18 | required disclosure forms must be transmitted to all |
19 | unsuccessful applicants and posted on the municipal pension |
20 | system's Internet website, if an Internet website is maintained, |
21 | at least seven days prior to the execution of the professional |
22 | services contract. |
23 | Section 703-A. Agents; solicitation. |
24 | (a) Prohibition Disclosure.--A person or an affiliated | <-- |
25 | entity that intends to enter or that enters into a professional |
26 | services contract may not directly or indirectly hire, engage, | <-- |
27 | utilize, retain or compensate any contract shall disclose the | <-- |
28 | employment or compensation of a third party intermediary, agent |
29 | or lobbyist to directly or indirectly communicate with a |
30 | municipal pension system official or employee or a municipal |
|
1 | official or employee in connection with any transaction or |
2 | investment involving the contractor and the municipal pension |
3 | system. The prohibition shall include the solicitation of an | <-- |
4 | investment or investment management services from a municipal |
5 | pension system or influencing or attempting to influence the |
6 | outcome of an investment or other financial decision by the |
7 | system. The prohibition disclosure shall not apply to an officer | <-- |
8 | or employee of the investment firm who is acting within the |
9 | scope of the firm's standard professional duties on behalf of |
10 | the firm, including the actual provision of legal, accounting, |
11 | engineering, real estate or other professional advice, services |
12 | or assistance pursuant to a professional services contract with |
13 | the municipal pension system. |
14 | (b) Solicitation.--A person that enters into, or has applied |
15 | for, submitted an offer or bid for, responded to a request for |
16 | proposal on or otherwise solicited, a professional services |
17 | contract with a municipal pension system or an agent, officer, |
18 | director or employee of that person may not solicit a |
19 | contribution to any municipal official or candidate for |
20 | municipal office in the municipality where the municipal pension |
21 | system is organized or to the political party or political |
22 | action committee of that official or candidate. |
23 | (c) Limitation on communication.--Upon the advertisement for |
24 | a professional services contract by the municipal pension |
25 | system, the contractor may not cause or agree to allow a third |
26 | party to communicate with officials or employees of the |
27 | municipal pension system except for requests for technical |
28 | clarification. Requests for technical clarification shall be |
29 | made by a designated employee of the municipal pension system. |
30 | Nothing in this subsection shall preclude a potential contractor |
|
1 | from responding to requests for clarification or additional |
2 | information from the municipal pension system. |
3 | Section 704-A. Disqualification. |
4 | (a) Contributors.--A person or an affiliated entity that, |
5 | within the past two years, has made a contribution to a |
6 | municipal official or candidate for municipal office in the |
7 | municipality which controls the municipal pension system may not |
8 | enter into a professional services contract with the municipal |
9 | pension system, except that the two-year restriction shall not |
10 | apply to any contribution made prior to the effective date of |
11 | this subsection. |
12 | (b) Relationships.--A person or an affiliated entity that |
13 | enters into a professional services contract with a municipal |
14 | pension system may not have a direct financial, commercial or |
15 | business relationship with any official of the municipal pension |
16 | system or the municipality which controls the municipal pension |
17 | system unless the municipal pension system consents in writing |
18 | to the relationship following full disclosure. |
19 | (c) Gifts.--A person with a professional services contract |
20 | may not offer or confer a gift having more than a nominal value, |
21 | including money, services, loans, travel, lodging, |
22 | entertainment, discount or other thing of value, to any |
23 | official, employee or fiduciary of a municipal pension system. |
24 | Section 705-A. Disclosure. |
25 | (a) Contractors.–- |
26 | (1) A person or an affiliated entity that has a |
27 | professional services contract with a municipal pension |
28 | system shall disclose all contributions to which all of the |
29 | following apply: |
30 | (i) The contribution was made within the last five |
|
1 | years. |
2 | (ii) The contribution was made by an officer, |
3 | director, executive-level employee or owner of at least |
4 | 5% of the person or affiliated entity. |
5 | (iii) The amount of the contribution was at least |
6 | $500 in the form of: |
7 | (A) A single contribution by a person included |
8 | in subparagraph (ii). |
9 | (B) The aggregate of all contributions by all |
10 | persons listed in subparagraph (ii). |
11 | (iv) The contribution was made to: |
12 | (A) A candidate for any public office in the |
13 | Commonwealth or to an individual who holds that |
14 | office. |
15 | (B) A political committee of a candidate for |
16 | public office in the Commonwealth or of an individual |
17 | who holds that office. |
18 | (2) The information provided under this subsection shall |
19 | be updated annually. |
20 | (b) Additional disclosure.--A person or an affiliated entity |
21 | that has a professional services contract with a municipal |
22 | pension system shall disclose all of the following: |
23 | (1) Information relating to individuals making |
24 | contributions. This paragraph includes: |
25 | (i) The name and address of the contributor. |
26 | (ii) The contributor's relationship to the |
27 | contractor. |
28 | (iii) The name and office or position of each person |
29 | receiving a contribution. |
30 | (iv) The amount of the contribution. |
|
1 | (v) The date of the contribution. |
2 | (2) Gifts to an official or employee of the municipal |
3 | pension system or the municipality which controls the |
4 | municipal pension system. |
5 | (3) The employment or retention of any third-party |
6 | intermediary, agent or lobbyist and the duties of that |
7 | person. |
8 | (4) The existence of any financial relationship under |
9 | section 704-A(b). |
10 | (c) Applicability.–-The provisions of subsection (a) shall |
11 | apply to a person and an affiliated entity that has applied for, |
12 | submitted an offer or bid for, responded to a request for |
13 | proposal or otherwise solicited a professional services contract |
14 | with a municipal pension system. |
15 | (d) Forms.–-Required disclosure shall be made on a form |
16 | prepared by the municipal pension system. The form shall be |
17 | attached to the contract and posted on the system's Internet |
18 | website, if an Internet website is maintained. During the term |
19 | of the contract, an updated form shall be filed annually in |
20 | accordance with procedures adopted by the plan. |
21 | (e) Penalties.–-The following shall apply: |
22 | (1) A municipal pension system shall void the |
23 | professional services contract of a person that knowingly |
24 | makes a material misstatement or omission in a disclosure |
25 | form under this chapter and shall prohibit the person from |
26 | entering into a contract for a period of up to three years. |
27 | (2) If a contractor or person that has submitted a |
28 | proposal or bid in violation of paragraph (1) more than two |
29 | times in a 36-month period, all contracts between that |
30 | contractor and the municipal pension plan shall be void, and |
|
1 | the person shall be debarred for a period of at least three |
2 | years from the date of the last violation. |
3 | Section 706-A. Duty to act. |
4 | If a person that enters into, or has applied for, submitted |
5 | an offer or bid for, responded to a request for proposal on or |
6 | otherwise solicited, a contract with a municipal pension system |
7 | or an officer, director or employee of a municipal pension |
8 | system is aware, or reasonably should be aware, of an apparent, |
9 | potential or actual conflict of interest, the person shall |
10 | disclose the conflict and promptly eliminate the conflict. |
11 | Section 707-A. No preemption. |
12 | If a municipality establishes a code of ethics which is |
13 | stricter than this chapter, that code is not preempted by this |
14 | chapter. |
15 | Section 15.1. The act is amended by adding sections a | <-- |
16 | section to read: |
17 | Section 902. Second class cities. |
18 | (a) Taxing authority.--In taxable years beginning after |
19 | December 31, 2008, the following apply to a city of the second |
20 | class which is a home rule municipality: |
21 | (1) The city may impose on each parking transaction in |
22 | the city a tax at a rate not to exceed 37.5% of the cost of |
23 | the transaction. |
24 | (2) If the Department of Community and Economic |
25 | Development determines that the city has leased or sold all |
26 | of its parking authority facilities garages and that net | <-- |
27 | proceeds from the lease or sale have been deposited into the |
28 | Pennsylvania Municipal Retirement System and credited to the |
29 | municipality's account and transmits notice of the |
30 | determination to the Legislative Reference Bureau for |
|
1 | publication in the Pennsylvania Bulletin, in taxable years | <-- |
2 | beginning after December 31, 2009, the city may impose on |
3 | each parking transaction in the city an additional tax at a |
4 | rate not to exceed 2.5% of the cost of the transaction. |
5 | (b) Use of revenue.--Notwithstanding any other law to the |
6 | contrary, 6.75% of the revenue received under subsection (a)(1) |
7 | and 100% of the revenue received under subsection (a)(2) shall |
8 | be used to pay the city's minimum municipal obligation required |
9 | under section 302 and any interest accrued in any plan year. |
10 | (c) Mandatory administration by Pennsylvania Municipal | <-- |
11 | Retirement Board.--A city of the second class that is determined |
12 | to be in Level III distress based upon the required actuarial |
13 | valuation reports for a plan year beginning on January 1, 2011, |
14 | shall transfer all existing benefit plans established by the |
15 | city to the Pennsylvania Municipal Retirement Board solely for |
16 | administration. The biennial actuarial valuation reports for the |
17 | plan year beginning on January 1, 2011, shall be filed by the |
18 | city with the commission by September 1, 2011. The transfer, if |
19 | applicable, shall be accomplished within two years of the |
20 | effective date of this subsection. Pension benefits and |
21 | eligibility requirements shall continue to be subject to |
22 | collective bargaining, if applicable. Such plans shall not be |
23 | subject to the control or input of the board. No prior |
24 | determination of Level III distress based upon the required |
25 | actuarial valuation reports for prior plan years shall result in |
26 | transfer of the administration to the board. From and after a |
27 | determination of Level III distress based upon the required |
28 | actuarial valuation reports for a plan year beginning on January |
29 | 1, 2011, the biennial actuarial valuation report filed on behalf |
30 | of the city shall utilize an actuarial assumption as to |
|
1 | investment earnings equal to the regular interest rate fixed by |
2 | the board plus 1.5%. |
3 | Section 903. Level III administration in cities of the second | <-- |
4 | class. |
5 | For a period not to exceed 12 months from the effective date |
6 | of this section, the employees of the respective pension boards |
7 | of a home rule municipality that is a city of the second class |
8 | shall continue to provide member benefit administration for |
9 | members from the home rule municipality on behalf of the |
10 | Pennsylvania Municipal Retirement System. During the 12-month |
11 | period, a pool comprised of the employees of the respective |
12 | pension boards shall be granted priority and preference in |
13 | hiring to fill positions with the system that the employee is |
14 | qualified to fill. No new employee may be hired by the system |
15 | until the position has been offered, in order of seniority, to |
16 | all properly certified members of the pool. |
17 | Section 16. Chapter 10 heading of the act, added June 18, |
18 | 1998 (P.L.626, No.82), is amended to read: |
19 | CHAPTER 10 |
20 | [ALTERNATIVE FUNDING MECHANISM] |
21 | PROVISIONS RELATING TO |
22 | CERTAIN CITIES AND COUNTIES | <-- |
23 | CITIES OF THE FIRST CLASS | <-- |
24 | Section 17. Section 1001(b) of the act, added June 18, 1998 |
25 | (P.L.626, No.82), is amended and the section is amended by |
26 | adding a subsection to read: |
27 | Section 1001. Alternative funding mechanism. |
28 | * * * |
29 | (b) Period of payment requirements prior to July 1, 2009.-- |
30 | The period of the city's payment requirements under an |
|
1 | alternative funding mechanism implemented prior to December 31, |
2 | 2002, shall be the greater of: |
3 | (1) the remaining period not exceeding 30 years during |
4 | which the city would have amortized the unfunded actuarial |
5 | accrued liability reported in its last actuarial valuation |
6 | report filed under Chapter 2 using the total amortization |
7 | payment and interest assumption, reported in that actuarial |
8 | valuation report; or |
9 | (2) 30 years. |
10 | If an alternative funding mechanism is implemented after |
11 | December 31, 2002, but before July 1, 2009, the period described |
12 | in paragraph (1) shall be the period of the city's payment |
13 | requirements. |
14 | (b.1) Period of payment requirements beginning July 1, |
15 | 2009.--The period of the city's payment requirements under an |
16 | alternative funding mechanism implemented or refinanced in whole |
17 | or in part on or after July 1, 2009, and prior to the beginning |
18 | of the plan year that commences July 1, 2019, shall be the |
19 | greater of: |
20 | (1) the remaining period not exceeding 30 years during |
21 | which the city would have amortized the unfunded actuarial |
22 | accrued liability reported in its latest actuarial valuation |
23 | report filed under Chapter 2 using the total amortization |
24 | payment and interest assumption, reported in that actuarial |
25 | valuation report; or |
26 | (2) 30 years. |
27 | If an alternative funding mechanism is implemented after July 1, |
28 | 2019, the period described in paragraph (1) shall be the period |
29 | of the city's payment requirements. |
30 | * * * |
|
1 | Section 18. The act is amended by adding sections to read: |
2 | Section 1002. Cities of the first class. |
3 | (a) General rule.--A city of the first class may elect to | <-- |
4 | use the deferrals of required payments authorized under this |
5 | section in lieu of the mandatory provisions of the Financially |
6 | Distressed Municipal Pension System Recovery Program contained |
7 | in sections 606, 608.1 and 608.2. |
8 | (b) Limitation.--The following shall apply: |
9 | (1) In order to be eligible to use the deferrals of |
10 | required payments authorized under this section, the city may |
11 | not increase pension benefits for existing employees. In |
12 | addition, by September 10, 2009, the city shall submit a |
13 | revised benefit plan applicable to any employee first hired |
14 | on or after the effective date of the establishment of the |
15 | revised benefit plan. The revised benefit plan for newly |
16 | hired employees: |
17 | (i) shall have a normal cost of no more than 80% of |
18 | the normal cost of the preexisting plan; |
19 | (ii) may provide for defined benefits, defined |
20 | contributions or a combination of both; |
21 | (iii) shall be developed with consultation with |
22 | representatives of the collective bargaining unit |
23 | applicable to the affected type of municipal employee, if |
24 | any; and |
25 | (iv) shall be within the scope of collective |
26 | bargaining subsequent to the establishment of the revised |
27 | benefit plan. |
28 | (2) Member contributions under a revised defined benefit |
29 | plan shall be equal to 50% of the normal cost of the pension |
30 | plan, expressed as a percentage of covered payroll, as |
|
1 | reported in the most recent actuarial valuation report of the |
2 | pension plan. Any defined contribution plan shall provide for |
3 | matching employer contributions and employee contributions |
4 | not to exceed 4% of compensation per employee. |
5 | (b.1) Modification prohibited.--No other statute, ordinance, |
6 | contract, arbitration award or practice shall permit or |
7 | authorize any deviation from or alteration of the terms of this |
8 | section governing the freeze of benefits for existing employees |
9 | and the terms of the revised benefit plan for newly hired |
10 | employees. |
11 | (c) Verification.--In order to implement subsection (b), the |
12 | city shall submit evidence of collective bargaining proposals to |
13 | freeze existing benefits and to revise benefit plans for newly |
14 | hired employees and a schedule of payments to be deferred under |
15 | subsection (e) to the commission by September 10, 2009. Within |
16 | 14 days of the receipt of the collective bargaining proposals |
17 | and payment schedule from the city under this subsection, the |
18 | commission shall issue a written determination that collective |
19 | bargaining proposals meet the requirements of subsection (b). A |
20 | written determination that the freeze and proposal meet the |
21 | requirements of subsection (b) shall constitute compliance by |
22 | the city with subsection (j)(1) and (2). |
23 | (a) General rule; benefit plan study.-- | <-- |
24 | (1) A city of the first class may elect to use the |
25 | deferrals of required payments authorized under this section |
26 | in lieu of the mandatory provisions of the financially |
27 | distressed municipal pension system recovery program |
28 | contained in section 606 until January 1, 2016. |
29 | Notwithstanding any other provision of this act or other law, |
30 | the provisions of Chapters 5 and 6 in effect on July 1, 2009, |
|
1 | shall continue in effect for, shall apply to and shall be |
2 | utilized with respect to cities of the first class until |
3 | January 1, 2016. |
4 | (2) Benefit plan studies of each benefit plan maintained |
5 | or to be established by a city of the first class shall be |
6 | conducted by a special commission comprised of the members of |
7 | the city's pension and retirement board, the mayor of the |
8 | city, the chair of the commission and the chair of the |
9 | governing board of the Pennsylvania Intergovernmental |
10 | Cooperation Authority. The chair of the governing board of |
11 | the Pennsylvania Intergovernmental Cooperation Authority |
12 | shall serve as chair of the special commission. The city's |
13 | pension and retirement board shall provide and pay for |
14 | actuarial and administrative support to the special |
15 | commission. The first study shall be completed within two |
16 | years following the effective date of this section. |
17 | Subsequent reports shall be completed every two years |
18 | thereafter until January 1, 2016. Copies of the reports shall |
19 | be submitted to the chair and minority chair of the |
20 | Appropriations Committee of the Senate, the chair and |
21 | minority chair of the Finance Committee of the Senate, the |
22 | chair and minority chair of the Appropriations Committee of |
23 | the House of Representatives and the chair and minority chair |
24 | of the Finance Committee of the House of Representatives and |
25 | shall be available for inspection by the public. |
26 | (d) (b) Amortization.-–Notwithstanding any other law to the | <-- |
27 | contrary, the city may amortize its entire unfunded actuarial |
28 | accrued liability, as measured on a valuation date selected by |
29 | the city that occurs in the plan year commencing July 1, 2009, |
30 | as a level dollar amount with the amortization target date being |
|
1 | the end of the plan year occurring 30 years after the plan year |
2 | commencing July 1, 2009, with payments to commence in the next |
3 | plan year. In order to extend the amortization schedule provided |
4 | under this subsection, the city must comply with the following: |
5 | (1) File a revised actuarial valuation report reflecting |
6 | the amortization period extension and the actuarial assumed |
7 | rate in effect on the valuation date with the commission no |
8 | later than March 31, 2010. |
9 | (2) The revised actuarial valuation under paragraph (1) |
10 | may not be filed in lieu of the actuarial valuation reported | <-- |
11 | report required under section 202(b)(4)(v)(A) required to be | <-- |
12 | filed May 3 March 31, 2010, and may be used only for the | <-- |
13 | purposes of recalculating the minimum municipal obligation of |
14 | the city for the plan year commencing July 1, 2009, and |
15 | calculating the minimum municipal obligation of the city for |
16 | the plan year commencing July 1, 2010, to reflect the |
17 | amortization period extension. The revisions in the revised |
18 | report shall supersede comparable information in the original |
19 | report. |
20 | (3) Except as provided in subsection (b), a A revised | <-- |
21 | actuarial valuation report under this subsection shall not |
22 | affect distributions under the General Municipal Pension |
23 | System State Aid Program under Chapter 4. |
24 | (e) (c) Revised obligation.--Notwithstanding any other | <-- |
25 | provision of law to the contrary, the city is authorized to |
26 | defer a portion of the minimum municipal funding obligation |
27 | required under section 302 in accordance with the following: |
28 | (1) For the plan year ending June 30, 2010, deferral may |
29 | be in an amount not to exceed $155,000,000. |
30 | (2) For the plan year ending June 30, 2011, deferral may |
|
1 | be in an amount not to exceed $80,000,000. |
2 | (f) (d) Interest.--Amounts deferred under subsection (e) (c) | <-- |
3 | shall bear interest at the rate of 8.25% which shall be |
4 | calculated from the beginning of the plan year in which the |
5 | deferral was made. Accrued interest on amounts deferred shall be |
6 | paid annually on or before June 30 of the years 2010, 2011 and |
7 | 2012. |
8 | (g) (e) Repayment.--On or before June 30, 2013, the city | <-- |
9 | shall repay the following: |
10 | (1) If the amount deferred is equal to or greater than |
11 | $90,000,000, at least $90,000,000 plus interest accrued on |
12 | all amounts deferred. |
13 | (2) If the total amount deferred is less than |
14 | $90,000,000, the total amount deferred, plus interest accrued |
15 | on that amount. |
16 | (h) (f) Balance.-–The balance of all amounts deferred, | <-- |
17 | including interest accrued and unpaid on amounts deferred shall |
18 | be repaid by June 30, 2014. |
19 | (i) (g) Unpaid amounts.--Amounts deferred and interest under | <-- |
20 | subsections (e) and (f) (c) and (d) which are not repaid under | <-- |
21 | subsection (h) (f) shall be added to the minimum municipal | <-- |
22 | obligation of the city for the following plan year, with |
23 | interest calculated and due until the date the amounts due are |
24 | paid. |
25 | (j) (h) Requirements.--In order to retain the authority to | <-- |
26 | utilize the deferrals under this section, the city must comply | <-- |
27 | with the following: |
28 | (1) Freeze all pension benefits for any current employee |
29 | in accordance with subsection (b). |
30 | (2) Submit and collectively bargain for a revised |
|
1 | benefit plan applicable to any newly hired employee in |
2 | accordance with subsection (b). |
3 | (3) Exhaust the judicial appellate procedures to |
4 | challenge any arbitration, adjudication or other award which |
5 | is inconsistent with the freeze or revised benefit plan. |
6 | (4) Repay repay the deferred amount required under | <-- |
7 | subsection (g) (e) by June 30, 2013, and the deferred amount | <-- |
8 | required under subsection (h) (f) by June 30, 2014. | <-- |
9 | (k) (i) Withholding.--If the city fails to meet any of the | <-- |
10 | requirements of subsection (j)(4) (h), the following apply: | <-- |
11 | (1) The commission shall notify the Secretary of the |
12 | Budget and the State Treasurer of the city's failure to |
13 | comply with subsection (j)(4) (h) and send a copy of the | <-- |
14 | notice to the chair and minority chair of the Appropriations |
15 | Committee and the Finance Committee of the Senate and the |
16 | Appropriations Committee and the Finance Committee of the |
17 | House of Representatives. |
18 | (2) The secretary shall assist the State Treasurer in |
19 | the identification of grants, loans, entitlements and |
20 | payments made to the city by the Commonwealth. |
21 | (3) Except as set forth in paragraph (4) or (5), within | <-- |
22 | 30 days of receipt of the notice, the State Treasurer shall |
23 | withhold any grant, loan, entitlement, payment or combination |
24 | of grants, loans, entitlements and payments to the city by |
25 | the Commonwealth, or any of its agencies, in an amount equal |
26 | to deferral amounts not repaid under subsections (g) and (h) | <-- |
27 | (e) and (f). The amount withheld shall be deposited into the | <-- |
28 | city's pension fund. |
29 | (4) Paragraph (3) shall not apply if the failure is due | <-- |
30 | to compliance following exhaustion of the judicial appellate |
|
1 | procedures to challenge any arbitration, adjudication or |
2 | other award, which is inconsistent with the requirements of |
3 | subsection (b) as determined by the commission under section |
4 | 1003(g). |
5 | (5) (4) The State Treasurer shall not withhold the | <-- |
6 | following: |
7 | (i) Funds for capital projects under contract. |
8 | (ii) Funds granted from the Federal Government or |
9 | the Commonwealth relating to a declaration of disaster. |
10 | (iii) Pension fund payments. |
11 | (iv) Funds administered by the city's department of |
12 | human services or department of health. |
13 | (v) Funds pledged to repay bonds or notes issued |
14 | under the act of October 18, 1972 (P.L.955, No.234), |
15 | known as The First Class City Revenue Bond Act. |
16 | (l) Verification in order to comply with section 1003(e).-- | <-- |
17 | The city shall submit evidence of the freeze of existing |
18 | benefits and of collective bargaining proposals to reduce the |
19 | benefit plan for newly hired employees to the commission by |
20 | September 10, 2009. Within 14 days of the receipt of the |
21 | information and proposals from the city, the commission shall |
22 | issue a written determination that the bargaining proposals meet |
23 | the requirements of subsection (b). A written determination from |
24 | the commission that current benefits are frozen and the |
25 | collective bargaining proposals meet the requirements of |
26 | subsection (b) shall constitute compliance with section 1003(e) |
27 | (1) and (2). The commission shall issue a written determination |
28 | regarding any arbitration award or judicial decision as to |
29 | consistency with the requirements of subsection (b). If the |
30 | commission determines that the award or decision is inconsistent |
|
1 | with the requirements of subsection (b), the city shall appeal |
2 | the decision in order to comply with section 1003(e)(3). The |
3 | city shall provide notice to the commission of all appeals. |
4 | (m) (j) Reports.--During a period in which deferrals of the | <-- |
5 | minimum municipal obligation or interest on the obligation are |
6 | outstanding, the city shall file actuarial valuation reports |
7 | annually with the commission. |
8 | (n) (k) Calculation.-–The calculation of the unfunded | <-- |
9 | actuarial accrued liability made and certified by an approved |
10 | actuary under section 202 shall not include any amounts deferred |
11 | under this subsection so long as the city is paying interest |
12 | accrued on the deferred amounts and repaying the deferred |
13 | amounts in accordance with the terms of this subsection. |
14 | (o) (l) Binding obligation.-–The repayment of amounts | <-- |
15 | deferred, including interest accrued on deferred amounts, as and |
16 | when required under this subsection shall constitute a binding |
17 | and absolute commitment on the city. The city shall include all |
18 | amounts due to be paid under this subsection in the budget of |
19 | the city and all amounts due to be paid shall be appropriated |
20 | and paid in order to make timely repayment of any amounts |
21 | deferred, including interest accrued on deferred amounts. |
22 | Payment shall be unconditional and without setoff. |
23 | (p) (m) Standing.--A person who is beneficially interested | <-- |
24 | in the city paying its minimum municipal obligation, including |
25 | amounts deferred, under this subsection shall have standing to |
26 | institute a legal proceeding for mandamus to enforce the |
27 | obligation of the city to make required repayments in the same |
28 | manner as a proceeding to enforce payment requirements of an |
29 | alternative funding mechanism under section 1001. A beneficially |
30 | interested person is a person who meets the qualifications set |
|
1 | forth in section 1001(f). |
2 | (q) (n) Payment.--The city shall be required to pay the | <-- |
3 | balance of its minimum municipal obligation in full when due in |
4 | each plan year. |
5 | Section 1003. Special taxing authority. |
6 | (a) Imposition of tax.-- |
7 | (1) Except as provided in subsection (e), a A city of | <-- |
8 | the first class may elect to impose a tax on the "sale at |
9 | retail" of "tangible personal property" or services or "use" |
10 | of "tangible personal property" or services "purchased at |
11 | retail," as defined in section 201 of the act of March 4, |
12 | 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971. |
13 | (2) The tax imposed under this section shall be in |
14 | addition to the tax authorized under section 503(a) and (b) |
15 | of the act of June 5, 1991 (P.L.9, No.6), known as the |
16 | Pennsylvania Intergovernmental Cooperation Authority Act for |
17 | Cities of the First Class. |
18 | (3) The tax authorized under this subsection shall not |
19 | be levied, assessed and collected upon the occupancy of a |
20 | room in a hotel in the city of the first class. |
21 | (4) This subsection shall expire July 1, 2014. |
22 | (5) Notwithstanding paragraph (4), all tax imposed under |
23 | this subsection on sales or uses occurring before July 1, |
24 | 2014, shall be paid to and received by the Department of |
25 | Revenue and, along with interest and penalties, less any |
26 | refunds and credits paid, shall be credited to the local |
27 | sales and use tax fund created under the Pennsylvania |
28 | Intergovernmental Cooperation Authority Act for Cities of the |
29 | First Class. Money in the fund shall be disbursed as provided |
30 | in section 509 of the Pennsylvania Intergovernmental |
|
1 | Cooperation Authority Act for Cities of the First Class. |
2 | (b) Rate.--The tax authorized under subsection (a) shall be |
3 | imposed and collected at the rate of 1% and shall be computed as |
4 | set forth in section 503(e)(2) of the Pennsylvania |
5 | Intergovernmental Cooperation Authority Act for Cities of the |
6 | First Class. |
7 | (c) Collection.--The tax authorized under subsection (a) |
8 | shall be administered, collected, deposited and disbursed in the |
9 | same manner as the tax imposed under Chapter 5 of the |
10 | Pennsylvania Intergovernmental Cooperation Authority Act for |
11 | Cities of the First Class and the situs of the tax shall be |
12 | determined in accordance with the Pennsylvania Intergovernmental |
13 | Cooperation Authority Act and Article II-A of act of March 4, |
14 | 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971. The |
15 | Department of Revenue shall use the money received by the |
16 | Department of Revenue from the tax authorized under Chapter 5 of |
17 | the Pennsylvania Intergovernmental Cooperation Authority Act for |
18 | Cities of the First Class to cover costs for the administration |
19 | of the tax authorized under subsection (a). The Department of |
20 | Revenue shall not retain any additional amounts for the cost of |
21 | collecting the tax authorized under subsection (a). No |
22 | additional fee shall be charged for a license or license renewal |
23 | other than the license or renewal fee authorized and imposed |
24 | under Article II of the Tax Reform Code of 1971. |
25 | (d) Municipal action.--In order to impose the tax, the |
26 | governing body of the city shall adopt an ordinance stating the |
27 | tax rate. The ordinance may be adopted prior to the effective |
28 | date of this subsection. The ordinance shall be effective no |
29 | earlier than 20 days after the adoption of the ordinance or 20 |
30 | days after the effective date of this section, whichever is |
|
1 | later. A certified copy of the city ordinance shall be delivered |
2 | to the Department of Revenue within ten days prior to or after |
3 | the effective date of the ordinance. A certified copy of an |
4 | ordinance to repeal the tax authorized under subsection (a) |
5 | shall be delivered to the Department of Revenue at least 30 days |
6 | prior to the effective date of repeal. |
7 | (e) Retention of authority.--In order to retain the | <-- |
8 | authority to impose and collect the tax authorized under |
9 | subsection (a), the city shall comply with the following: |
10 | (1) Freeze all pension benefits for any current employee |
11 | in accordance with section 1002(b). |
12 | (2) Submit and bargain for a revised benefit plan |
13 | applicable to any newly hired employee in accordance with |
14 | section 1002(b). |
15 | (3) Exhaust the judicial appellate procedures to |
16 | challenge any arbitration, adjudication or other award which |
17 | is inconsistent with the freeze of the revised benefit plan. |
18 | (f) Expiration of authority.--If the city fails to meet any |
19 | of the requirements of subsection (e), the authority to impose |
20 | and collect the tax authorized under subsection (a) shall |
21 | expire. |
22 | (g) (Reserved). |
23 | (h) (e) Use of tax receipts.–-All money received by the city | <-- |
24 | from the levy, assessment and collection of the tax authorized |
25 | under subsection (a) may only be used for the following |
26 | purposes: |
27 | (1) To pay any amounts of the city's minimum municipal |
28 | obligation required under section 302, including amounts |
29 | deferred under section 1002(e) 1002(c) and interest accrued | <-- |
30 | on deferred amounts when the amounts are due in any plan |
|
1 | year. |
2 | (2) To reimburse the city for payments of the minimum |
3 | municipal obligation for fiscal year 2009-2010 and any fiscal |
4 | year during which the tax is imposed made by the city from |
5 | sources other than the tax authorized under subsection (a). |
6 | No tax receipts shall be used to reimburse the city of the |
7 | first class for any contribution to the city minimum |
8 | municipal obligation made in any year other than the year in | <-- |
9 | which the tax was collected. prior to fiscal year 2009-2010. | <-- |
10 | (i) Beginning January 1, 2016, the mandatory provisions of | <-- |
11 | sections 608, 608.1 and 608.2 shall apply to the city. |
12 | (f) Certification of continued necessity.--On or before June | <-- |
13 | 30 of each year beginning in 2010 and ending in 2013, the mayor |
14 | of a city imposing a tax authorized under subsection (a) shall |
15 | submit a certification to the chair and minority chair of the |
16 | Appropriations Committee of the Senate, the chair and minority |
17 | chair of the Finance Committee of the Senate, the chair and |
18 | minority chair of the Appropriations Committee of the House of |
19 | Representatives and the chair and minority chair of the Finance |
20 | Committee of the House of Representatives stating that |
21 | imposition of the tax imposed under subsection (a) is necessary |
22 | to implement the financial plan of the city as submitted by the |
23 | city to the Pennsylvania Intergovernmental Cooperation Authority |
24 | pursuant to section 209(e) of the act of June 5, 1991 (P.L.9, |
25 | No.6), known as the Pennsylvania Intergovernmental Cooperation |
26 | Authority Act for Cities of the First Class. The certification |
27 | required by this subsection shall be available for inspection by |
28 | the public. |
29 | Section 19. The act is amended by adding a chapter to read: |
30 | CHAPTER 11 |
|
1 | DEFERRED RETIREMENT OPTION PLANS |
2 | SUBCHAPTER A |
3 | PRELIMINARY PROVISIONS |
4 | Section 1101. Scope. |
5 | (a) Applicability.--This chapter shall apply to all of the | <-- |
6 | following: |
7 | (1) A local government which does not have a deferred |
8 | retirement option plan on the effective date of this section. |
9 | (2) Newly hired employees admitted to a deferred |
10 | retirement option plan established by a local government |
11 | prior to the effective date of this section. a local | <-- |
12 | government which does not have a deferred retirement option |
13 | plan on the effective date of this section. |
14 | (b) Elected officials.-- |
15 | (1) A deferred retirement option plan established on or |
16 | after the effective date of this paragraph shall not be |
17 | available to an elected official. |
18 | (2) A deferred retirement option plan established prior |
19 | to the effective date of this paragraph shall be available to |
20 | an official elected prior to the effective date of this |
21 | section who runs for reelection. |
22 | Section 1102. Definitions. |
23 | The following words and phrases when used in this chapter |
24 | shall have the meanings given to them in this section unless the |
25 | context clearly indicates otherwise: |
26 | "Normal retirement benefit." The retirement benefit payable |
27 | to a member of a defined benefit pension plan on or after the |
28 | date on which the member first satisfies the age and service |
29 | requirements for full, unreduced retirement benefits, including |
30 | supplemental amounts provided to the member after retirement as |
|
1 | cost-of-living increases. |
2 | "Subsidiary DROP participant account." The separate, |
3 | interest-bearing, subsidiary DROP participant account |
4 | established for a DROP participant under section 1121. |
5 | Section 1104. Employment status. |
6 | Participation in a DROP does not guarantee the DROP |
7 | participant's employment by the local government during the |
8 | specified period of the DROP. |
9 | SUBCHAPTER B |
10 | GENERAL PROVISIONS |
11 | Section 1111. Establishment of DROP. |
12 | (a) Local governments.--A local government that has |
13 | established or maintains a defined benefit pension plan for a |
14 | group of its employees which is self-insured in whole or in part |
15 | under section 202(b), except for a local government that has |
16 | joined the Pennsylvania Municipal Retirement System, may |
17 | establish by ordinance a DROP for those employees as part of the |
18 | pension plan. The ordinance establishing the DROP shall specify |
19 | a uniform participation period of not more than five years in |
20 | duration. |
21 | (b) Participants.--A local government that has established |
22 | or maintains a defined benefit plan for a group of its employees |
23 | which is self-insured in whole or in part under section 202(b) |
24 | and has joined the Pennsylvania Municipal Retirement System may |
25 | establish a DROP for those employees as a part of the pension |
26 | plan only through participation in the DROP established and |
27 | administered by the Pennsylvania Municipal Retirement System. |
28 | (c) Standards.--The Pennsylvania Municipal Retirement Board |
29 | shall establish a DROP for local government-defined benefit |
30 | pension plans that have joined the Pennsylvania Municipal |
|
1 | Retirement System. The DROP shall be uniform, in compliance with |
2 | the provisions of this chapter, open to any local government and |
3 | applicable to any of the defined benefit pension plans |
4 | administered by the Pennsylvania Municipal Retirement System. |
5 | Section 1112. Eligibility. |
6 | An active member of a local government retirement system that |
7 | has a DROP as a part of its defined benefit pension plan who is |
8 | eligible for a normal retirement benefit under the pension plan |
9 | or will be eligible for a normal retirement benefit under the |
10 | pension plan prior to participation in the DROP and who is not |
11 | an elected official is eligible to participate in the DROP by |
12 | filing a written application with the retirement system at least |
13 | 30 days before the member's effective date of retirement. |
14 | Section 1113. Participation in DROP. |
15 | (a) Election.--An eligible active member may elect to |
16 | participate in a DROP for the period specified in the ordinance |
17 | under section 1111(a). |
18 | (b) DROP participation election.--Upon deciding to |
19 | participate in a DROP, a member shall submit on forms provided |
20 | and required by the retirement system: |
21 | (1) A binding and irrevocable letter of resignation from |
22 | regular employment with the local government that discloses |
23 | the member's intent to retire and specifies the member's |
24 | retirement date. |
25 | (2) An irrevocable written election to participate in |
26 | the DROP that: |
27 | (i) Details a DROP participant's rights and |
28 | obligations under the DROP. |
29 | (ii) Includes an agreement to forgo: |
30 | (A) Active membership in the retirement system. |
|
1 | (B) Any growth in the salary base used for |
2 | calculating the regular retirement benefit. |
3 | (C) Any additional benefit accrual for |
4 | retirement purposes, including length-of-service |
5 | increments. |
6 | (iii) Specifies the effective date of DROP |
7 | participation that shall be the day after the specified |
8 | retirement date. |
9 | (iv) Specifies the DROP termination date that |
10 | satisfies the limitation in subsection (a). |
11 | (3) Any other information required by the retirement |
12 | system. |
13 | (c) DROP termination.-- |
14 | (1) A DROP participant may change the DROP termination |
15 | date to an earlier date within the limitations of subsection |
16 | (a). No penalty shall be imposed for early termination of |
17 | DROP participation. |
18 | (2) Upon either early or regular termination of DROP |
19 | participation: |
20 | (i) The DROP participant shall be separated from |
21 | employment by the local government. |
22 | (ii) The retirement system shall pay the balance in |
23 | the DROP participant's subsidiary DROP participant |
24 | account to the terminating DROP participant as provided |
25 | in section 1114(d). |
26 | (iii) The DROP participant shall be ineligible to |
27 | reenroll in the DROP thereafter even if the former DROP |
28 | participant is reemployed by the local government with |
29 | renewed active membership in the retirement system. |
30 | Section 1114. Benefits payable under DROP. |
|
1 | (a) Fixing retirement benefit, retirement date, retirement |
2 | benefits and DROP dates.-- Effective with the date of |
3 | retirement, which shall be the day before the effective date of |
4 | DROP participation, the member's monthly, normal retirement |
5 | benefit under the pension plan, the member's effective date of |
6 | retirement and the member's effective dates of beginning and |
7 | terminating employment as a DROP participant shall be fixed. |
8 | (b) Effective dates.-- |
9 | (1) A retired member's effective date of participation |
10 | in a DROP shall begin the day following the effective date of |
11 | the member's regular retirement. |
12 | (2) A retired member's participation in a DROP shall end |
13 | on the last day of the participation period specified in the |
14 | ordinance establishing the DROP that is in effect on the |
15 | effective date of the retired member's participation in the |
16 | DROP. |
17 | (c) Benefit payments and accruals.--All of the retired |
18 | member's monthly, normal retirement benefit and interest thereon |
19 | at the assigned rate shall be credited to the DROP participant's |
20 | subsidiary DROP participant account in the pension trust fund |
21 | and a separate accounting of the DROP participant's accrued |
22 | benefit accumulation under the DROP shall be calculated annually |
23 | and provided to the DROP participant. |
24 | (d) Payment.--On the effective date of a DROP participant's |
25 | termination of employment with the local government as a DROP |
26 | participant, participation in the DROP shall cease and the |
27 | retirement system shall calculate and pay to the participant the |
28 | participant's total accumulated DROP benefits in the DROP |
29 | participant's subsidiary DROP participant account subject to the |
30 | following provisions: |
|
1 | (1) Except as provided in paragraph (2), the terminating |
2 | DROP participant or, if deceased, the participant's survivor |
3 | as provided by the enabling pension statute applicable to the |
4 | appropriate class of employees of the municipality or, in |
5 | lieu thereof, the participant's named beneficiary, shall |
6 | elect on a form provided by the retirement system to receive |
7 | payment of the DROP benefits in accordance with one of the |
8 | following options: |
9 | (i) The balance in the DROP participant's subsidiary |
10 | DROP participant account less withholding taxes, if any, |
11 | remitted to the Internal Revenue Service shall be paid |
12 | within 45 days by the retirement system from the account |
13 | to the DROP participant or surviving beneficiary. |
14 | (ii) The balance in the DROP participant's |
15 | subsidiary DROP participant account shall be paid within |
16 | 45 days by the retirement system from the account |
17 | directly to the custodian of an eligible retirement plan |
18 | as defined in section 402(c)(8)(b) of the Internal |
19 | Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § |
20 | 402(c)(8)(b)), or, in the case of an eligible rollover |
21 | distribution to the surviving spouse of a deceased DROP |
22 | participant, an eligible retirement plan that is an |
23 | individual retirement account or an individual retirement |
24 | annuity as described in section 402(c)(9) of the Internal |
25 | Revenue Code of 1986 (26 U.S.C. § 402(c)(9)). |
26 | (2) If the DROP participant or beneficiary fails to |
27 | elect a method of payment within 60 days after the |
28 | participant's termination date, the retirement system shall |
29 | pay the balance as a lump sum as provided in paragraph (1). |
30 | (3) The form of payment selected by the DROP participant |
|
1 | or surviving beneficiary shall comply with the minimum |
2 | distribution requirements of the Internal Revenue Code. |
3 | (e) Taxation, attachment and assignment.-- |
4 | (1) Except as provided in paragraphs (2), (3) and (4), |
5 | the right of a DROP participant to any benefit or right |
6 | accrued or accruing under the provisions of this chapter and |
7 | the moneys in the DROP participant's subsidiary DROP |
8 | participant account are exempt from any State or municipal |
9 | tax, levy and sale, garnishment, attachment, spouse's |
10 | election or any other process whatsoever. |
11 | (2) Rights under this chapter shall be subject to |
12 | forfeiture as provided by the act of July 8, 1978 (P.L.752, |
13 | No.140), known as the Public Employee Pension Forfeiture Act. |
14 | Forfeitures under this subsection or under any other |
15 | provision of law may not be applied to increase the benefits |
16 | that any DROP participant otherwise would receive under this |
17 | chapter. |
18 | (3) Rights under this chapter shall be subject to |
19 | attachment in favor of an alternate payee as set forth in a |
20 | qualified domestic relations order. |
21 | (4) (i) Under subsection (d)(1)(ii), a distributee may |
22 | elect to have an eligible rollover distribution paid |
23 | directly to an eligible retirement plan by way of a |
24 | direct rollover. |
25 | (ii) For purposes of this paragraph, a "distributee" |
26 | includes a DROP participant, a DROP participant's |
27 | survivor as provided by the enabling pension statute |
28 | applicable to the appropriate class of employees of the |
29 | municipality or, in lieu thereof, the participant's |
30 | designated beneficiary and a DROP participant's former |
|
1 | spouse who is an alternate payee under a qualified |
2 | domestic relations order. |
3 | (iii) For purposes of this paragraph, "eligible |
4 | rollover distribution" has the meaning given the term by |
5 | section 402(f)(2)(A) of the Internal Revenue Code of 1986 |
6 | (26 U.S.C. § 402(f)(2)(A)), except that a qualified trust |
7 | shall be considered an eligible retirement plan only if |
8 | it accepts the distributee's eligible rollover |
9 | distribution and, in the case of an eligible rollover |
10 | distribution to a surviving spouse, an eligible |
11 | retirement plan is an "individual retirement account" or |
12 | an "individual retirement annuity" as those terms are |
13 | defined in section 408(a) and (b) of the Internal Revenue |
14 | Code of 1986 (26 U.S.C. § 408(a) and (b)). |
15 | (f) Disability.--If a DROP participant becomes eligible for |
16 | a disability pension benefit and terminates employment, the |
17 | monthly normal retirement benefit of the DROP participant shall |
18 | terminate. |
19 | (g) Eligibility.--Except for those benefits specified under |
20 | section 1113(b)(2)(ii) as forgone by the member, a DROP |
21 | participant shall be eligible for any employee benefits provided |
22 | to active employees before retirement as set forth in the |
23 | ordinance instituting the DROP. |
24 | (h) Eligibility for other benefits.--A DROP participant |
25 | shall be eligible for all preretirement benefits for employees |
26 | otherwise provided by law, including, but not limited to, |
27 | benefits under: |
28 | (1) the act of June 2, 1915 (P.L.736, No.338), known as |
29 | the Workers' Compensation Act; |
30 | (2) the act of June 28, 1935 (P.L.477, No.193), referred |
|
1 | to as the Enforcement Officer Disability Benefits Law; |
2 | (3) the act of December 5, 1936 (2nd Sp.Sess., 1937 P.L. |
3 | 2897, No.1), known as the Unemployment Compensation Law; |
4 | (4) the act of June 24, 1976 (P.L.424, No.101), referred |
5 | to as the Emergency and Law Enforcement Personnel Death |
6 | Benefits Act; and |
7 | (5) the Public Safety Officers' Benefit Act of 1976 |
8 | (Public Law 94-430, 42 U.S.C. § 90 Stat. 1347). |
9 | Section 1115. Death benefits under DROP. |
10 | (a) Named beneficiary.--If a DROP participant dies, the DROP |
11 | participant's named beneficiary shall be entitled to apply for |
12 | and receive the benefits accrued in the DROP participant's |
13 | subsidiary DROP participant account as provided in section |
14 | 1114(d). |
15 | (b) Final benefit.--The monthly retirement system benefit |
16 | accrued in the DROP participant's subsidiary DROP participant |
17 | account during the month of a DROP participant's death shall be |
18 | the final monthly retirement system benefit credited for DROP |
19 | participation. |
20 | (c) Termination of eligibility.--A DROP participant's |
21 | eligibility to participate in the DROP terminates upon the death |
22 | of the DROP participant. If a DROP participant dies on or after |
23 | the effective date of participation in the DROP but before the |
24 | monthly retirement system benefit of the participant accruable |
25 | for the month has accrued in the DROP participant's subsidiary |
26 | DROP participant account, the local government shall pay the |
27 | monthly retirement system benefits as though the participant had |
28 | not elected DROP participation and had died after the member's |
29 | effective date of retirement but before receipt of the retired |
30 | member's first regular retirement benefit. |
|
1 | (d) Survivors ineligible for death benefit.--Except for |
2 | those benefits specifically payable as a result of death |
3 | incurred in the course of performing a hazardous public duty, |
4 | the survivors of a DROP participant who dies shall not be |
5 | eligible to receive retirement system death benefits payable in |
6 | the event of the death of an active member. |
7 | (e) Survivors eligible for retired member's death benefit.-- |
8 | The DROP participant's survivor shall be eligible to receive |
9 | retirement system death benefits normally payable in the event |
10 | of the death of a retired employee. |
11 | Section 1116. Subsequent employment. |
12 | After both the termination of a DROP participant's employment |
13 | as a DROP participant by the local government and the expiration |
14 | of the DROP participation period, a former DROP participant |
15 | shall be subject to such reemployment limitations as other |
16 | retired members and shall be eligible for renewed membership as |
17 | an active member in the local government employees' retirement |
18 | system. |
19 | SUBCHAPTER C |
20 | ADMINISTRATIVE PROVISIONS |
21 | Section 1121. DROP participant account. |
22 | (a) General rule.--If a local government creates a DROP, it |
23 | shall establish a DROP participant account as an interest- |
24 | bearing ledger account in its pension trust fund. The account |
25 | balance shall be accounted for separately but need not be |
26 | physically segregated from other pension trust fund assets. |
27 | (b) Subsidiary DROP participant accounts.--A separate |
28 | interest-bearing subsidiary DROP participant account shall be |
29 | established for each DROP participant. While a retired member is |
30 | employed as a DROP participant, the member's monthly, normal |
|
1 | retirement benefit and interest thereon shall be credited to the |
2 | DROP participant's subsidiary DROP participant account under |
3 | section 1114(c). The interest shall be compounded and credited |
4 | monthly at an annual rate specified in the ordinance | <-- |
5 | establishing the DROP that shall be not less than 1% nor more |
6 | monthly at the actual rate earned by the DROP participant | <-- |
7 | account that shall not be less than 0% nor more than 4 1/2%. |
8 | (c) Termination of employment.-- | <-- |
9 | (1) When |
10 | (c) Termination of employment.--When a DROP participant | <-- |
11 | terminates employment with the local government as a DROP |
12 | participant, the DROP participant's total accumulated benefits |
13 | shall be calculated, charged to the DROP participant account and |
14 | paid out of the pension trust fund under section 1114(d)(2). |
15 | (2) Under section 202(b), the balance in the DROP | <-- |
16 | participant account shall be excluded from actuarial |
17 | valuation reports of the retirement system prepared and filed |
18 | under this act. |
19 | (d) Account held in trust.--A DROP participant account shall |
20 | be held in trust for the exclusive benefit of DROP retired |
21 | members who are or were DROP participants and for the |
22 | beneficiaries of the members. |
23 | Section 1122. Audit. |
24 | The DROP established by the Pennsylvania Municipal Retirement |
25 | Board shall be subject to financial and compliance audits |
26 | conducted by the Auditor General with the initial audit |
27 | conducted within one year of establishment of the DROP. |
28 | Section 1123. Existing DROPs. |
29 | A local government that established a DROP prior to or on the |
30 | effective date of this section that does not conform to the |
|
1 | provisions of this chapter relating to elected officials shall | <-- |
2 | amend its plan within 180 days of the effective date of this |
3 | section or when the current labor-management contract creating |
4 | the plan expires, whichever is later, to conform with the |
5 | provisions of this chapter with respect to future DROP |
6 | participants who are elected officials. | <-- |
7 | Section 1124. Noncompliance. |
8 | (a) General rule.--If a local government that established a |
9 | DROP under section 1111(a) or the Pennsylvania Municipal |
10 | Retirement Board that established a DROP under section 1111(c) |
11 | fails to comply within 90 days with a finding by the Auditor |
12 | General of noncompliance with this chapter or if the finding is |
13 | appealed within 90 days of conclusion of the appeal process, the |
14 | failure to comply shall be deemed sufficient refusal by the |
15 | local government or the Pennsylvania Municipal Retirement Board |
16 | to comply with its duty antecedent to the commencement of a |
17 | mandamus action and the Auditor General shall refer the finding |
18 | to the Attorney General. |
19 | (b) Mandamus action.--Upon receipt of the finding from the |
20 | Auditor General, the Attorney General, following an | <-- |
21 | administrative proceeding in accordance with 2 Pa.C.S. (relating |
22 | to administrative law and procedure), shall proceed in the name |
23 | of the Commonwealth to institute a legal proceeding for mandamus |
24 | and no other remedy at law shall be deemed to be sufficiently |
25 | adequate and appropriate to bar the commencement of this action. |
26 | SUBCHAPTER D |
27 | DESIGNATIONS |
28 | Section 1131. Spouse. |
29 | (a) Authorization.--Notwithstanding any ordinance or any |
30 | rule, regulation, procedure or policy of a municipal pension |
|
1 | system to the contrary, an active member of a municipal pension |
2 | system may designate the member's spouse to be the beneficiary |
3 | of the member's pension, regardless of the date of the marriage. |
4 | (b) Applicability.--The authorization under subsection (a) |
5 | shall apply retroactively to designations made after December |
6 | 31, 2006. |
7 | Section 19.1. The provisions of the act of July 9, 1981 | <-- |
8 | (P.L.208, No.66), known as the Public Employee Retirement |
9 | Commission Act, are hereby waived and shall not apply to this | <-- |
10 | act. The Pennsylvania Employee Retirement Commission shall | <-- |
11 | prepare a letter supplementing the actuarial note, dated July |
12 | 15, 2009, relating to House Bill No. 1828, Printer's No. 2384 |
13 | (2009), and the actuarial note, dated July 28, 2009, relating to |
14 | House Bill No. 1874, Printer's No. 2522 (2009), and transmit the |
15 | letter to the Governor within five days of this act being signed |
16 | in either chamber of the General Assembly. |
17 | Section 20. Repeals are as follows: |
18 | (1) The General Assembly declares that the repeal under |
19 | paragraph (2) is necessary to effectuate the addition of |
20 | section 902 of the act. |
21 | (2) Section 308 of the act of December 31, 1965 |
22 | (P.L.1257, No.511), known as The Local Tax Enabling Act, is |
23 | repealed. |
24 | Section 21. This act shall take effect as follows: |
25 | (1) The addition of Chapter 7 7-A of the act shall take | <-- |
26 | effect in 90 days. |
27 | (2) The remainder of this act shall take effect |
28 | immediately. |
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