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PRINTER'S NO. 89
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
7
Session of
2017
INTRODUCED BY FOLMER, BARTOLOTTA, SCARNATI, EICHELBERGER,
GORDNER, ARGALL, HUTCHINSON, VULAKOVICH, STEFANO, WAGNER,
LANGERHOLC, AUMENT, DiSANTO, RAFFERTY, VOGEL, WHITE, LAUGHLIN
AND MARTIN, JANUARY 19, 2017
REFERRED TO FINANCE, JANUARY 19, 2017
AN ACT
Amending Titles 24 (Education), 71 (State Government) and 72
(Taxation and Fiscal Affairs) of the Pennsylvania
Consolidated Statutes, in retirement for school employees as
to membership, contributions and benefits, further providing
for actuarial cost method; in administration and
miscellaneous provisions, further providing for
administrative duties of board; in retirement for State
employees and officers as to contributions, further providing
for actuarial cost method; in administration, funds,
accounts, general provisions, further providing for
administrative duties of board; providing for taxpayer
protection and establishing the Taxpayer Protection Fund; and
repealing certain provisions of the Fiscal Code.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 8328(e)(1) of Title 24 of the
Pennsylvania Consolidated Statutes is amended to read:
§ 8328. Actuarial cost method.
* * *
(e) Experience adjustment factor.--
(1) For each year after the establishment of the accrued
liability contribution rate for the fiscal year beginning
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July 1, 2011, any increase or decrease in the unfunded
accrued liability, excluding the gains or losses on the
assets of the health insurance account, due to actual
experience differing from assumed experience, changes in
actuarial assumptions, changes in contributions caused by the
final contribution rate being different from the actuarially
required contribution rate, active members making shared-risk
contributions or changes in the terms and conditions of the
benefits provided by the system by judicial, administrative
or other processes other than legislation, including, but not
limited to, reinterpretation of the provisions of this part,
and money distributed to the board by the State Treasurer
from the PSERS/SERS Unfunded Accrued Liability Fund, shall be
amortized as a level percentage of compensation over a period
of 24 years beginning with the July 1 second succeeding the
actuarial valuation determining said increases or decreases.
* * *
Section 2. Section 8502 of Title 24 is amended by adding a
subsection to read:
§ 8502. Administrative duties of board.
* * *
(q) Distributions from PSERS/SERS Unfunded Accrued Liability
Fund.--The board is authorized to accept money provided by the
State Treasurer as a result of a distribution from the
PSERS/SERS Unfunded Accrued Liability Fund.
Section 3. Section 5508(f)(1) of Title 71 is amended to
read:
§ 5508. Actuarial cost method.
* * *
(f) Experience adjustment factor.--
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(1) For each year after the establishment of the accrued
liability contribution rate and the supplemental annuity
contribution rate for the fiscal year beginning July 1, 2010,
any increase or decrease in the unfunded accrued liability
and any increase or decrease in the liabilities and funding
for supplemental annuities, due to actual experience
differing from assumed experience (recognizing all realized
and unrealized investment gains and losses over a five-year
period), money provided to the board as a result of a
distribution by the State Treasurer from the PSERS/SERS
Unfunded Accrued Liability Fund, changes in contributions
caused by the final contribution rate being different from
the actuarially required contribution rate, State employees
making shared-risk member contributions, changes in actuarial
assumptions or changes in the terms and conditions of the
benefits provided by the system by judicial, administrative
or other processes other than legislation, including, but not
limited to, reinterpretation of the provisions of this part,
shall be amortized in equal dollar annual contributions over
a period of 30 years beginning with the July 1 succeeding the
actuarial valuation determining said increases or decreases.
* * *
Section 4. Section 5902 of Title 71 is amended by adding a
subsection to read:
§ 5902. Administrative duties of the board.
* * *
(p) Distributions from the PSERS/SERS Unfunded Accrued
Liability Fund.--The board is authorized to accept money
provided to the board as a result of a distribution by the State
Treasurer from the PSERS/SERS Unfunded Accrued Liability Fund.
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Section 5. Title 72 is amended by adding a chapter to read:
CHAPTER 7
TAXPAYER PROTECTION
Sec.
701. Short title of chapter.
702. Definitions.
703. Spending limitations.
704. Disposition of surplus funds.
§ 701. Short title of chapter.
This chapter shall be known and may be cited as the Taxpayer
Protection Act.
§ 702. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
" Appropriation limit. " The total of the amount approved as
executive authorizations by the Governor plus the total amounts
of preferred and nonpreferred appropriations made by the General
Assembly from the General Fund during the fiscal year
immediately prior to the budget year under consideration,
adjusted by the lesser of:
(1) the average percentage change in personal income in
this Commonwealth for the three preceding calendar years as
reported by the Federal Government or as determined by an act
of the General Assembly; or
(2) the average percentage change in inflation for the
three preceding calendar years plus the average percentage
change in the State population for the three preceding years
as reported by the annual Federal census estimates, the
number being adjusted every decade to match the official
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Federal census.
" Average percentage change in inflation. " The average of the
percentage change for each of the three calendar years, from
October to October, immediately preceding the calendar year in
which a given executive budget is submitted by the Governor, in
the Consumer Price Index for All Urban Consumers (CPI-U), not
seasonally adjusted, All Items Indexes or its successor index,
as officially reported by the United States Department of Labor,
Bureau of Labor Statistics.
" Average percentage change in personal income. " The average
of the percentage change in personal income estimates for this
Commonwealth, from second calendar quarter to second calendar
quarter, for each of the three calendar years immediately
preceding the calendar year in which a given executive budget is
submitted by the Governor, as reported by the United States
Department of Commerce, Bureau of Economic Analysis, SQ4
quarterly income summary for this Commonwealth or its successor
index or as determined by an act of the General Assembly.
" Average percentage change in State population. " The average
of the percentage change in State population for each of the
three most recent years immediately preceding the calendar year
in which a given executive budget is submitted by the Governor,
as reported by the United States Census Bureau for July 1 of
each year.
" Mandated service. " A program or service administered by a
political subdivision of the Commonwealth as a result of being
required to provide that program or service by State law.
"PSERS." The Public School Employees' Retirement System.
"SERS." The State Employees' Retirement System.
" Total spending by the Commonwealth. " All General Fund
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appropriations made by the General Assembly and all
appropriations from a constitutionally or statutorily
established fund created after the effective date of this
section.
§ 703. Spending limitations.
(a) General rule.--Total spending by the Commonwealth in a
fiscal year shall not exceed the spending appropriation limit as
set forth in this chapter.
(b) Mandated expenses for political subdivisions.--The
Commonwealth's limit under subsection (a) shall be reduced by
the amount of the reduction in State appropriations to a
political subdivision for administration of a mandated service,
without an equal or greater reduction in State-mandated expenses
for the local government or a repeal of the mandate to provide a
program or service.
(c) Exceptions.--The appropriation limit of the Commonwealth
may be exceeded in a fiscal year for the following:
(1) To respond to a presidential or gubernatorial
declaration of emergency if the General Assembly approves by
two-thirds affirmative vote of the members elected to each
house of the General Assembly. In no case shall the excess
spending authorized by exceeding the appropriation limit in
this manner be included in the computation base of the
appropriation limit for any subsequent fiscal year.
(2) In other situations if the Governor so requests, in
writing, 30 days prior to the constitutional deadline for
adoption of a budget for the next fiscal year, and
simultaneously publishes that written notice in a newspaper
of general circulation in each county and senatorial and
representative district in which each newspaper shall be
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published, and the General Assembly subsequently approves by
an affirmative vote of two-thirds of the members elected to
each house of the General Assembly.
§ 704. Disposition of surplus funds.
(a) Transfer of surplus.--
(1) Except as provided under paragraph (2), for a fiscal
year in which the Governor certifies that a surplus exists,
25% of that surplus shall be deposited by the end of the next
succeeding quarter into the Budget Stabilization Reserve Fund
established in section 1701-A of the act of April 9, 1929
(P.L.343, No.176) , known as The Fiscal Code, and 25% of that
surplus shall be deposited by the end of the next succeeding
quarter into the Taxpayer Protection Fund, which is hereby
established in the State Treasury, and 50% of that surplus
shall be deposited by the end of the next succeeding quarter
into the PSERS/SERS Unfunded Accrued Liability Fund, which is
hereby established in the State Treasury .
(2) For a fiscal year in which the State Treasurer
certifies that the balance in the Budget Stabilization
Reserve Fund equals or exceeds 5% of the total of all General
Fund appropriations, 25% of the surplus certified by the
Governor under paragraph (1) shall be deposited into the
Taxpayer Protection Fund and 75% of the surplus certified by
the Governor under paragraph (1) shall be deposited into the
PSERS/SERS Unfunded Accrued Liability Fund .
(b) Distribution.--
(1) Subject to the provisions of subsection (c), the
money in the Taxpayer Protection Fund shall be distributed to
taxpayers who have liability for the tax imposed under
Article III of the act of March 4, 1971 (P.L.6, No.2) , known
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as the Tax Reform Code of 1971, through a reduction in the
rate of the tax, which reduction shall be established by an
act of the General Assembly to be effective for January 1
through December 31 of the subsequent calendar year.
(2) The Secretary of the Budget, in conjunction with the
Secretary of Revenue, shall certify the rate reduction for
the tax imposed under Article III of the Tax Reform Code of
1971, for the upcoming calendar year no later than September
30. The new rate shall be published in the Pennsylvania
Bulletin, posted on the State's publicly accessible Internet
website and reported to the chairperson and minority
chairperson of the Appropriations Committee of the Senate and
the chairperson and minority chairperson of the
Appropriations Committee of the House of Representatives.
(3) Subject to the provisions of subsection (c):
(i) The money in the PSERS/SERS Unfunded Accrued
Liability Fund shall be distributed as follows when both
systems have an unfunded accrued liability as reflected
in the most recent actuarial report for each system:
(A) Two-thirds shall be distributed to PSERS.
(B) One-third shall be distributed to SERS.
(ii) If one system no longer has an unfunded accrued
liability, then all of the distribution shall be paid to
the system that continues to have an unfunded accrued
liability.
(c) Accumulation.--No money shall be distributed from the
Taxpayer Protection Fund pursuant to subsection (b) until the
Secretary of the Budget certifies that the money deposited is
sufficient to provide a reduction of at least 0.01% in the tax
rate of taxation for the tax imposed under Article III of the
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Tax Reform Code of 1971.
(d) Appropriated funds.--The General Assembly may at any
time provide additional amounts from funds available to the
Commonwealth as an appropriation to the Budget Stabilization
Reserve Fund or to the PSERS/SERS Unfunded Accrued Liability
Fund.
Section 6. Repeals are as follows:
(1) The General Assembly declares that the repeal under
paragraph (2) is necessary to effectuate the provisions of
this act.
(2) Section 1702-A of the act of April 9, 1929 (P.L.343,
No.176), known as The Fiscal Code, is repealed.
Section 7. This act shall take effect immediately.
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