PRIOR PRINTER'S NOS. 2384, 2521, 2606, 2609

PRINTER'S NO.  2638

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

1828

Session of

2009

  

  

INTRODUCED BY WILLIAMS AND D. EVANS, JULY 3, 2009

  

  

AMENDMENTS TO SENATE AMENDMENTS, HOUSE OF REPRESENTATIVES, SEPTEMBER 10, 2009   

  

  

  

AN ACT

  

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

 


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:

- 2 -

 


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

- 3 -

 


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.

- 4 -

 


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

- 5 -

 


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

- 6 -

 


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

- 7 -

 


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

- 8 -

 


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

- 9 -

 


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

- 10 -

 


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

- 11 -

 


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.--

- 12 -

 


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

- 13 -

 


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

- 14 -

 


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 

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

- 15 -

 


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

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

29

(4)  The aggregate requirement to amortize the unfunded

30

accrued actuarial liability on a level annual dollar basis

- 16 -

 


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

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

- 17 -

 


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

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

30

(7)  The compound annual percentage rate of increase in

- 18 -

 


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]

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

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

- 19 -

 


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

  

  

  

- 20 -

 


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

- 21 -

 


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

- 22 -

 


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

- 23 -

 


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:

- 24 -

 


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.

- 25 -

 


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

- 26 -

 


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.

- 27 -

 


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

- 28 -

 


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

- 29 -

 


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

- 30 -

 


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

- 31 -

 


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).

- 32 -

 


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

- 33 -

 


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.

- 34 -

 


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

- 35 -

 


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

- 36 -

 


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

- 37 -

 


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

- 38 -

 


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

- 39 -

 


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

- 40 -

 


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

- 41 -

 


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%

- 42 -

 


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.

- 43 -

 


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

- 44 -

 


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.

- 45 -

 


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

- 46 -

 


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

- 47 -

 


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

- 48 -

 


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.

- 49 -

 


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

- 50 -

 


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.

- 51 -

 


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.

- 52 -

 


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.).

- 53 -

 


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

- 54 -

 


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

- 55 -

 


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.--

- 56 -

 


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.

- 57 -

 


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

- 58 -

 


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

- 59 -

 


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

- 60 -

 


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.

- 61 -

 


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

- 62 -

 


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

- 63 -

 


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

- 64 -

 


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

- 65 -

 


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

* * *

- 66 -

 


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

- 67 -

 


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,

- 68 -

 


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

- 69 -

 


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

- 70 -

 


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

- 71 -

 


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

- 72 -

 


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

- 73 -

 


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

- 74 -

 


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

- 75 -

 


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

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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

- 77 -

 


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

- 78 -

 


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

- 79 -

 


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

- 80 -

 


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.

- 81 -

 


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.

- 82 -

 


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:

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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

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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

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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

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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.

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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

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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

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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

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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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