PRINTER'S NO. 2983
No. 2338 Session of 1978
INTRODUCED BY KOWALYSHYN, KNEPPER, GILLETTE, ZEARFOSS, SCHMITT,
MELUSKEY, BORSKI, GIAMMARCO, McLANE, MILLIRON, W. W. FOSTER,
MADIGAN, LIVENGOOD, DeVERTER, HALVERSON, FISHER,
A. C. FOSTER JR., DUFFY, MOWERY, RUGGIERO, REED, PRENDERGAST,
KUKOVICH, HARPER, STUBAN, ARTHURS, SCHWEDER, ZWIKL, RITTER
AND ZELLER, APRIL 10, 1978
REFERRED TO COMMITTEE ON INSURANCE, APRIL 10, 1978
AN ACT
1 Creating the Public Employees' Retirement Study Commission and
2 imposing powers and duties on the commission and certain
3 other agencies of State Government.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Short title.
7 This act shall be known and may be cited as the "Public
8 Employees' Retirement Study Commission Act."
9 Section 2. Legislative findings and intent.
10 (a) Findings.--The General Assembly finds and declares as
11 follows:
12 (1) The State Employees' Retirement System costs
13 taxpayers approximately $250,000,000 annually and the
14 system's unfunded liability exceeded $1,000,000,000 in 1974.
15 The Commonwealth's contribution to the system was 7% of
16 payroll in 1972 and has risen to 15% of payroll in 1978.
1 (2) A Pennsylvania Economy League study found the Public
2 School Employees' Retirement System had unfunded liability of
3 3.8 billion dollars in 1974 and the same study indicated that
4 the high cost of Commonwealth retirement systems results
5 partially from the General Assembly's failure to develop and
6 enforce a policy governing retirement of public employees and
7 its failure to examine proposed pension changes for long-
8 range costs.
9 (3) The Department of Community Affairs has investigated
10 local government pension funds pursuant to the act of
11 December 6, 1972 (P.L.1383, No.293) and has found
12 considerable serious and growing unfunded liabilities in
13 local government pension funds.
14 (4) The General Assembly has passed legislation creating
15 three independent Statewide pension systems pursuant to:
16 (i) Act of February 1, 1974 (P.L.34, No.15), known
17 as the "Pennsylvania Municipal Retirement Law."
18 (ii) 71 Pa.C.S. Part XXV, known as the "State
19 Employees' Retirement Code."
20 (iii) 24 Pa.C.S. Part IV, known as the "Public
21 School Employee's Retirement Code"
22 all of which shall serve as the foundation for further study
23 and implementation of actuarily sound public employee pension
24 systems.
25 (5) Various states have established commissions to
26 continuously monitor and recommend reforms for public
27 employee pension systems.
28 (6) Public employee pension policy is of vital concern
29 to both the executive and legislative branches of State
30 Government.
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1 (b) Intent.--It is the intent of the General Assembly in
2 establishing the Public Employee Retirement Study Commission to
3 provide an ongoing mechanism to monitor public employee pension
4 plans and assure their actuarial viability by review of proposed
5 changes and reforms in the plans.
6 Section 3. Definitions.
7 The following words and phrases shall have the meanings given
8 to them in this section unless the context clearly indicates
9 otherwise:
10 "Commission." The Public Employee Retirement Study
11 Commission created pursuant to this act.
12 "Public Employee Pension Plan." Any of the following:
13 (1) State Employees' Retirement System created pursuant
14 to 71 Pa.C.S. Part XXV.
15 (2) Public School Employees' Retirement System created
16 pursuant to 24 Pa.C.S. Part IV.
17 (3) Municipal Retirement System created pursuant to the
18 act of February 1, 1974 (P.L.34, No.15).
19 (4) Any other independent pension plan for public
20 officers and employees in the Commonwealth.
21 Section 4. Public Employees' Retirement Study Commission
22 created.
23 There is hereby created the Public Employees' Retirement
24 Study Commission to review legislation affecting public employee
25 pension plans and to study on a continuing basis public employee
26 pension and retirement policy as implemented at both the State
27 and local level, the interrelationships of the several systems,
28 and their actuarial soundness and cost.
29 Section 5. Commission membership.
30 (a) Legislative members.--
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1 (1) The President pro tempore of the Senate, after
2 consultation with the Senate Minority Leader, shall appoint
3 two members of the Senate, one from the majority and one from
4 the minority, to serve on the commission.
5 (2) The Speaker of the House of Representatives, after
6 consultation with the House Minority Leader, shall appoint
7 two members of the House, one from the majority and one from
8 the minority, to serve on the commission.
9 (3) The legislative members of the commission shall
10 serve on the commission for the duration of the terms for
11 which they were elected.
12 (b) Ex officio members.--
13 (1) The following public officials or their designees
14 shall serve on the commission:
15 (i) Secretary of Community Affairs.
16 (ii) Secretary of the Pennsylvania Municipal
17 Retirement system.
18 (iii) Secretary of the State Employees' Retirement
19 System.
20 (iv) Secretary of the Public School Employees'
21 Retirement System.
22 (2) The ex officio members of the commission shall serve
23 on the commission as long as they hold their qualifying
24 offices.
25 (c) Gubernatorial appointments.--
26 (1) The Governor shall appoint eight additional members
27 to the commission with the advice and consent of a majority
28 of the Senate pursuant to the procedure established in
29 section 207.1, act of April 9, 1929 (P.L.177, No.175), known
30 as "The Administrative Code of 1929."
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1 (2) The members appointed by the Governor shall be
2 selected as follows:
3 (i) One employee of the Commonwealth or any
4 political subdivision thereof.
5 (ii) One representative from a city of any class.
6 (iii) One representative from a borough.
7 (iv) One representative from a township of any
8 class.
9 (v) One representative from a county of any class.
10 (vi) One representative from a school district of
11 any class.
12 (vii) Two representatives from the general public,
13 neither of whom is an active or retired member of a
14 public employee pension plan but who both shall have
15 knowledge in the area of pension policy.
16 (3) The members of the commission appointed by the
17 Governor shall serve terms of six years, except those members
18 initially selected, two of whom shall serve for three years,
19 two for four years, two for five years and two for six years.
20 (d) Vacancies.--Vacancies in office shall be filled by the
21 appointing authority for the balance of the unexpired term.
22 (e) Organization.--The commission shall meet within 60 days
23 of its establishment for the purpose of organizing and selecting
24 officers who shall be chosen from its membership. Thereafter,
25 the commission shall meet as necessary at the call of the
26 commission chairman.
27 Section 6. Powers and duties.
28 The commission shall have the following powers and duties:
29 (1) To study and evaluate on a continuing basis all
30 aspects of public employee pension plans.
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1 (2) To analyze any bill relating to public employee
2 pension plans and issue actuarial notes pursuant to section
3 7.
4 (3) To cooperate with the several State and municipal
5 retirement and pension boards on matters of mutual concern.
6 (4) To adopt bylaws for the conduct of its official
7 business.
8 (5) To monitor and evaluate periodically all the laws
9 and regulations which relate to public employee pension plans
10 in the Commonwealth.
11 Section 7. Actuarial notes.
12 (a) Note required for bills.--No bill, joint resolution, or
13 simple or concurrent resolution proposing any change relative to
14 a public employee pension plan shall be given second
15 consideration in either House of the General Assembly, until the
16 commission has attached an actuarial note which shall include a
17 reliable estimate of the cost and actuarial effect of the
18 proposed change in any such retirement system.
19 (b) Note required for amendments.--No amendment to any bill
20 or resolution, concerning any public employee pension plan shall
21 be considered by the General Assembly until an actuarial note
22 has been attached.
23 (c) Preparation of note.--The commission shall prepare an
24 actuarial note which shall include a reliable estimate of the
25 financial and actuarial effect of the proposed change in any
26 such retirement system. The actuarial note shall be attached to
27 the original copy of the bill or resolution before it is given
28 second consideration by either House of the General Assembly.
29 (d) Contents of note.--The actuarial note shall be factual,
30 and shall, if possible, provide a reliable estimate of both the
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1 immediate cost and effect of the bill and, if determinable or
2 reasonably foreseeable, the long range actuarial cost and effect
3 of the measure.
4 Section 8. Staff.
5 The commission shall be staffed by employees of the
6 Department of Community Affairs, the Pennsylvania Municipal
7 Retirement System, the Public School Employees' Retirement
8 System, and the State Employees' Retirement System appointed by
9 the secretaries of the departments and the systems after joint
10 consultation. In no event shall the commission hire any staff.
11 Section 9. Rules and regulations.
12 (a) Promulgation.--The Department of Community Affairs,
13 after consultation with representatives of the Pennsylvania
14 Municipal Retirement Board, the Public School Employees'
15 Retirement System and the State Employees' Retirement System,
16 shall promulgate such rules and regulations as are necessary for
17 the implementation of this act.
18 (b) Submission to the General Assembly.--The Department of
19 Community Affairs shall submit the promulgated rules and
20 regulations to the General Assembly. Both Houses of the General
21 Assembly shall approve or disapprove the rules and regulations
22 by concurrent resolution within 60 calendar days. Failure of
23 both Houses to take action on the rules and regulations within
24 60 days shall be considered approval of such rules and
25 regulations. The rules and regulations shall be effective upon
26 the date of approval.
27 Section 10. Automatic termination of commission.
28 The function and operation of the commission, if not
29 terminated sooner, shall cease five years from the effective
30 date of this act unless the General Assembly, by legislation,
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1 extends the provisions of this section.
2 Section 11. Effective date.
3 This act shall take effect immediately.
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