PRINTER'S NO. 1569
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
900
Session of
2015
INTRODUCED BY McGINNIS, METCALFE, BLOOM, CALTAGIRONE, COX,
CUTLER, IRVIN, KAUFFMAN, F. KELLER, KOTIK, ORTITAY, PETRI,
RAPP, ROAE, SANKEY, SAYLOR, SCHEMEL, TALLMAN, TRUITT, TURZAI,
WARD AND ZIMMERMAN, MAY 13, 2015
REFERRED TO COMMITTEE ON STATE GOVERNMENT, MAY 13, 2015
AN ACT
Amending Titles 24 (Education) and 71 (State Government) of the
Pennsylvania Consolidated Statutes, in retirement for school
employees, further providing for actuarial cost method; and,
in retirement for State employees and officers, further
providing for actuarial cost method.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 8328(c)(4), (d)(2), (e) and (g)(2) of
Title 24 of the Pennsylvania Consolidated Statutes are amended
to read:
§ 8328. Actuarial cost method.
* * *
(c) Accrued liability contribution rate.--
* * *
(4) For the fiscal year beginning July 1, 2011, the
accrued liability contribution rate shall be computed as the
rate of total compensation of all active members which shall
be certified by the actuary as sufficient to fund as a level
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percentage of compensation over a period of 24 years from
July 1, 2011, the present value of the liabilities for all
prospective benefits calculated as of June 30, 2010,
including the supplemental benefits as provided in sections
8348, 8348.1, 8348.2, 8348.3, 8348.4, 8348.5, 8348.6 and
8348.7, in excess of the actuarially calculated assets in the
fund (calculated recognizing all realized and unrealized
investment gains and losses each year in level annual
installments over a ten-year period). The balance of any
recognized unfunded accrued liability net of market value of
assets as of June 30, 2014, shall be funded in equal dollar
annual contributions over a period of 20 years from July 1,
2015. In the event that the accrued liability is increased by
legislation enacted subsequent to June 30, 2010, and before
July 1, 2014, such additional liability shall be funded as a
level percentage of compensation over a period of ten years
from the July 1 second succeeding the date such legislation
is enacted. In the event that the accrued liability is
increased by legislation enacted subsequent to June 30, 2014,
such additional liability shall be funded in equal dollar
annual contributions over a period of 20 years from the July
1 second succeeding the date such legislation is enacted.
(d) Supplemental annuity contribution rate.--
* * *
(2) For fiscal years beginning July 1, 2011,
contributions from the Commonwealth and other employers whose
employees are members of the system required to provide for
the payment of supplemental annuities as provided in sections
8348, 8348.1, 8348.2, 8348.3, 8348.4, 8348.5, 8348.6 and
8348.7 shall be paid as part of the accrued liability
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contribution rate as provided for in subsection (c)(4), and
there shall not be a separate supplemental annuity
contribution rate attributable to those supplemental
annuities. In the event that supplemental annuities are
increased by legislation enacted subsequent to June 30, 2010,
and before July 1, 2014, the additional liability for the
increase in benefits shall be funded as a level percentage of
compensation over a period of ten years from the July 1
second succeeding the date such legislation is enacted. In
the event that supplemental annuities are increased by
legislation enacted subsequent to June 30, 2014, the
additional liability for the increase in benefits shall be
funded in equal dollar annual contributions over a period of
20 years from the July 1 second succeeding the date such
legislation is enacted.
(e) Experience adjustment factor.--
(1) For each year after the establishment of the accrued
liability contribution rate for the fiscal year beginning
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,
shall be amortized as a level percentage of compensation over
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a period of 24 years beginning with the July 1 second
succeeding the actuarial valuation determining said increases
or decreases[.] when the actuarial valuation occurs on or
before June 30, 2013, and over a period of 20 years beginning
with the July 1 succeeding the actuarial valuation
determining said increases or decreases when the actuarial
valuation occurs after June 30, 2013. Any remaining balances
of annual increases or decreases in the unfunded accrued
liability due to actual experience differing from assumed
experience determined under this paragraph by actuarial
valuations occurring on or before June 30, 2013, as of June
30, 2014, shall be amortized in equal dollar annual
contributions over a period of 20 years beginning July 1,
2015.
(2) (Reserved).
* * *
(g) Temporary application of collared contribution rate.--
* * *
(2) If, for any of the fiscal years beginning July 1,
2011, July 1, 2012, [and on or after] July 1, 2013, and July
1, 2014, the actuarially required contribution rate,
calculated without regard for the costs added by legislation,
is more than 3%, 3.5%, 4.5% and 4.5%, respectively, of the
total compensation of all active members greater than the
prior year's final contribution rate, then the collared
contribution rate shall be applied and be equal to the prior
year's final contribution rate increased by 3%, 3.5%, 4.5%
and 4.5%, respectively, of total compensation of all active
members. Otherwise, and for all other fiscal years, the
collared contribution rate shall not be applicable. In no
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case shall the collared contribution rate be less than 4% of
the total compensation of all active members.
* * *
Section 2. Section 5508(c)(3), (e)(2), (f)(1) and (h) of
Title 71 are amended to read:
§ 5508. Actuarial cost method.
* * *
(c) Accrued liability contribution rate.--
* * *
(3) For the fiscal year beginning July 1, 2010, the
accrued liability contribution rate shall be computed as the
rate of total compensation of all active members which shall
be certified by the actuary as sufficient to fund in equal
dollar installments over a period of 30 years from July 1,
2010, the present value of the liabilities for all
prospective benefits calculated as of the immediately prior
valuation date, including the supplemental benefits as
provided in sections 5708, 5708.1, 5708.2, 5708.3, 5708.4,
5708.5, 5708.6, 5708.7 and 5708.8, but excluding the benefits
payable from the retirement benefit plan established pursuant
to section 5941 (relating to benefits completion plan), in
excess of the actuarially calculated assets in the fund
(calculated recognizing all realized and unrealized
investment gains and losses each year in level annual
installments over five years), including the balance in the
supplemental annuity account, and the present value of
employer normal contributions and of member contributions
payable with respect to all active members, inactive members
on leave without pay, vestees and special vestees on December
31, 2009. The balance of any recognized unfunded accrued
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liability net of market value of assets as of December 31,
2014, shall be funded in equal dollar installments over a
period of 20 years from July 1, 2015. If the accrued
liability is changed by legislation enacted subsequent to
December 31, 2009, and before January 1, 2015, such change in
liability shall be funded in equal dollar installments over a
period of ten years from the first day of July following the
valuation date coincident with or next following the date
such legislation is enacted. If the accrued liability is
changed by legislation enacted subsequent to December 31,
2014, such change in liability shall be funded in equal
dollar installments over a period of 20 years from the first
day of July following the valuation date coincident with or
next following the date such legislation is enacted.
* * *
(e) Supplemental annuity contribution rate.--
* * *
(2) For fiscal years beginning on or after July 1, 2010,
contributions from the Commonwealth and other employers whose
employees are members of the system required to provide for
the payment of supplemental annuities as provided in sections
5708, 5708.1, 5708.2, 5708.3, 5708.4, 5708.5, 5708.6, 5708.7
and 5708.8 shall be paid as part of the accrued liability
contribution rate as provided for in subsection (c)(3), and
there shall not be a separate supplemental annuity
contribution rate attributable to those supplemental
annuities. In the event that supplemental annuities are
increased by legislation enacted subsequent to December 31,
2009, and before January 1, 2015, the additional liability
for the increase in benefits shall be funded in equal dollar
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installments over a period of ten years from the first day of
July following the valuation date coincident with or next
following the date such legislation is enacted. In the event
that supplemental annuities are increased by legislation
enacted subsequent to December 31, 2014, the additional
liability for the increase in benefits shall be funded in
equal dollar installments over a period of 20 years from the
first day of July following the valuation date coincident
with or next following the date such legislation is enacted.
(f) Experience adjustment factor.--
(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), 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
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said increases or decreases[.] when the actuarial
valuation occurs on or before December 31, 2013, and over
a period of 20 years beginning with the July 1 succeeding
the actuarial valuation determining said increases or
decreases when the actuarial valuation occurs after
December 31, 2013. Any remaining balances of annual
increases or decreases in the unfunded accrued liability
due to actual experience differing from assumed
experience determined under this paragraph by actuarial
valuations occurring on or before December 31, 2013, as
of December 31, 2014, shall be amortized in equal dollar
annual contributions over a period of 20 years beginning
July 1, 2015.
* * *
(h) Temporary application of collared contribution rate.--
The collared contribution rate for each year shall be determined
by comparing the actuarially required contribution rate
calculated without regard for costs added by legislation to the
prior year's final contribution rate. If, for any of the fiscal
years beginning July 1, 2011, July 1, 2012, [and on or after]
July 1, 2013, and July 1, 2014, the actuarially required
contribution rate calculated without regard for costs added by
legislation is more than 3%, 3.5%, 4.5% and 4.5%, respectively,
of the total compensation of all active members greater than the
prior year's final contribution rate, then the collared
contribution rate shall be applied and be equal to the prior
year's final contribution rate increased by the respective
percentage above of total compensation of all active members.
Otherwise, and for all subsequent fiscal years, the collared
contribution rate shall not be applicable. In no case shall the
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collared contribution rate be less than 4% of total compensation
of all active members.
* * *
Section 3. The Public School Employees' Retirement Board
shall, notwithstanding any other provision of law, recertify to
the Secretary of the Budget the contributions, rates, factors
and amounts under 24 Pa.C.S. § 8502(k). The board's
recertification shall reflect all changes in the contributions,
rates, factors and amounts previously certified by the board for
the fiscal year beginning July 1, 2015, which are required to
comply with 24 Pa.C.S. § 8328. The recertification shall occur
within 15 days of the effective date of this section and shall
supersede the prior certification.
Section 4. The State Employees' Retirement Board shall,
notwithstanding any other provision of law, recertify to the
Secretary of the Budget the contributions, rates, factors and
amounts under 71 Pa.C.S. § 5902(k). The board's recertification
shall reflect all changes in the contributions, rates, factors
and amounts previously certified by the board prior to the
effective date of this section for the fiscal year beginning
July 1, 2015, which are required to comply with 71 Pa.C.S. §
5508. The recertification shall occur within 15 days of the
effective date of this section and shall supersede the prior
certification.
Section 5. This act shall take effect immediately.
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