| SENATE AMENDED |
| PRIOR PRINTER'S NOS. 2384, 2521 | PRINTER'S NO. 2606 |
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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY WILLIAMS AND D. EVANS, JULY 3, 2009 |
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| SENATOR BROWNE, FINANCE, IN SENATE, AS AMENDED, AUGUST 24, 2009 |
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| AN ACT |
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1 | Amending the act of December 18, 1984 (P.L.1005, No.205), | <-- |
2 | entitled "An act mandating actuarial funding standards for |
3 | all municipal pension systems; establishing a recovery |
4 | program for municipal pension systems determined to be |
5 | financially distressed; providing for the distribution of the |
6 | tax on the premiums of foreign fire insurance companies; and |
7 | making repeals," adding special provisions for amortization |
8 | of unfunded actuarial accrued liability and minimum municipal |
9 | obligation in cities of the first class; and providing for |
10 | special taxing authority for cities of the first class. |
11 | Amending the act of December 18, 1984 (P.L.1005, No.205), | <-- |
12 | entitled "An act mandating actuarial funding standards for |
13 | all municipal pension systems; establishing a recovery |
14 | program for municipal pension systems determined to be |
15 | financially distressed; providing for the distribution of the |
16 | tax on the premiums of foreign fire insurance companies; and |
17 | making repeals," amending the title of the act; in |
18 | preliminary provisions, further providing for definitions; in |
19 | preliminary provisions, providing for methodology; in |
20 | municipal pension plan actuarial reporting, further providing |
21 | for contents of actuarial valuation report and providing for |
22 | actuarial asset valuation and for revised actuarial valuation |
23 | report; in minimum funding standard for municipal pension |
24 | plans, further providing for minimum funding standard and |
25 | defined benefit plans self-insured in whole or in part; in |
26 | revisions applicable to municipal pension fund financing, |
27 | further providing for revision of financing from State |
28 | revenue sources and General Municipal Pension System State |
29 | Aid Program; in financially distressed municipal pension plan |
30 | determination procedure, further providing for initiation of |
31 | distress determination, for pension plans to be included in |
32 | determination and for determination procedure; in financially |
33 | distressed municipal pension system recovery program, further |
34 | providing for application, for election determination |
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1 | procedure, for recovery program level I, for recovery program |
2 | level II, for recovery program level III, for remedies |
3 | applicable to various recovery program levels, for |
4 | supplemental State assistance program and fund and for |
5 | municipal employee retirement program; in financially |
6 | distressed municipal pension system recovery program, |
7 | establishing programs for municipal pension recovery and |
8 | municipal employee retirement; in financially distressed |
9 | municipal pension system recovery program, further providing |
10 | for rules and regulations; providing for standards for |
11 | municipal pension systems; in alternative funding mechanism, |
12 | providing special provisions relating to certain cities and |
13 | counties; further providing for alternative funding |
14 | mechanism; providing for cities of the first and second |
15 | classes, for special taxing authority, for cities of the |
16 | second class and for municipal excess payments; authorizing |
17 | certain deferred retirement option plans; and making a |
18 | related repeal. |
19 | The General Assembly of the Commonwealth of Pennsylvania |
20 | hereby enacts as follows: |
21 | Section 1. Chapter 10 heading of the act of December 18, | <-- |
22 | 1984 (P.L.1005, No.205), known as the Municipal Pension Plan |
23 | Funding Standard and Recovery Act, added June 18, 1998 (P.L.626, |
24 | No.82), is amended to read: |
25 | CHAPTER 10 |
26 | [ALTERNATIVE FUNDING MECHANISM] |
27 | PROVISIONS RELATING TO CITIES OF THE FIRST CLASS |
28 | Section 2. Section 1001(b) of the act, added June 18, 1998 |
29 | (P.L.626, No.82), is amended and the section is amended by |
30 | adding a subsection to read: |
31 | Section 1001. Alternative funding mechanism. |
32 | * * * |
33 | (b) Period of payment requirements prior to July 1, 2009.-- |
34 | The period of the city's payment requirements under an |
35 | alternative funding mechanism implemented prior to December 31, |
36 | 2002, shall be the greater of: |
37 | (1) the remaining period not exceeding 30 years during |
38 | which the city would have amortized the unfunded actuarial |
39 | accrued liability reported in its last actuarial valuation |
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1 | report filed under Chapter 2 using the total amortization |
2 | payment and interest assumption, reported in that actuarial |
3 | valuation report; or |
4 | (2) 30 years. |
5 | If an alternative funding mechanism is implemented after |
6 | December 31, 2002, but before July 1, 2009, the period described |
7 | in paragraph (1) shall be the period of the city's payment |
8 | requirements. |
9 | (b.1) Period of payment requirements beginning July 1, |
10 | 2009.--The period of the city's payment requirements under an |
11 | alternative funding mechanism implemented or refinanced in whole |
12 | or in part on or after July 1, 2009, and prior to the beginning |
13 | of the plan year that commences in 2019, shall be the greater |
14 | of: |
15 | (1) the remaining period not exceeding 30 years during |
16 | which the city would have amortized the unfunded actuarial |
17 | accrued liability reported in its last actuarial valuation |
18 | report filed under Chapter 2 using the total amortization |
19 | payment and interest assumption, reported in that actuarial |
20 | valuation report; or |
21 | (2) 30 years. |
22 | If an alternative funding mechanism is implemented after July 1, |
23 | 2019, the period described in paragraph (1) shall be the period |
24 | of the city's payment requirements. |
25 | * * * |
26 | Section 3. The act is amended by adding sections to read: |
27 | Section 1002. Special provisions for amortization of unfunded |
28 | actuarial accrued liability and minimum municipal |
29 | obligation. |
30 | (a) Amortization of unfunded actuarial accrued liability.-- |
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1 | (1) Notwithstanding any other provision of this act or |
2 | other law, a city of the first class, in its sole discretion, |
3 | may amortize its entire unfunded actuarial accrued liability, |
4 | as measured on a valuation date selected by the city of the |
5 | first class and occurring in the plan year commencing after |
6 | January 1, 2009, and ending before December 31, 2010, as a |
7 | level dollar amount with the amortization target date being |
8 | the end of the plan year occurring 30 years after the plan |
9 | year commencing on July 1, 2009, with payments to commence in |
10 | the next plan year. |
11 | (2) In order for a city of the first class to extend the |
12 | applicable amortization period pursuant to this subsection, |
13 | the city of the first class must file a revised actuarial |
14 | valuation report reflecting the amortization period extension |
15 | provided for under this section and the actuarial assumed |
16 | rate in effect on the valuation date with the commission no |
17 | later than March 31, 2010. |
18 | (3) Any such revised actuarial valuation report may not |
19 | be filed in lieu of the actuarial valuation report prepared |
20 | in compliance with section 202(b)(4)(v)(A) and required to be |
21 | filed on or before March 31, 2009, and may be used only for |
22 | the purposes of recalculating the minimum municipal |
23 | obligation of the city of the first class for the plan year |
24 | commencing on July 1, 2009, and calculating the minimum |
25 | municipal obligation of the city of the first class for the |
26 | plan year commencing on July 1, 2010, to reflect the |
27 | amortization period extension. The revised report shall |
28 | supersede the original report to the extent of the revisions. |
29 | (4) Any such revised actuarial valuation report shall |
30 | not affect distributions under the General Municipal Pension |
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1 | System State Aid Program under Chapter 4. |
2 | (b) Revised minimum municipal obligation for certain plan |
3 | years.-- |
4 | (1) Notwithstanding any other provision of this act or |
5 | other law, a city of the first class is authorized to defer a |
6 | portion of the minimum municipal obligation provided for |
7 | section 302: |
8 | (i) for the plan year ending June 30, 2010, in an |
9 | amount not to exceed $155,000,000; and |
10 | (ii) for the plan year ending June 30, 2011, in an |
11 | amount not to exceed $80,000,000. |
12 | (2) The amounts deferred shall bear interest at the rate |
13 | of 8.25%, which shall be calculated from the beginning of the |
14 | plan year in which the deferral was made. Accrued interest on |
15 | any amounts deferred shall be paid yearly on or before June |
16 | 30, 2010, June 30, 2011, and June 30, 2012. |
17 | (3) On or before June 30, 2013, the city of the first |
18 | class shall repay: |
19 | (i) at least $90,000,000 of any amounts deferred, |
20 | plus interest accrued on all amounts deferred; or |
21 | (ii) if the total amount deferred is less than |
22 | $90,000,000, the total amount deferred, plus interest |
23 | accrued on that amount. |
24 | (4) The balance of all amounts deferred, including |
25 | interest accrued and unpaid on amounts deferred, shall be |
26 | repaid by June 30, 2014. |
27 | (5) Any of the amounts deferred, including interest |
28 | accrued on deferred amounts, which remain unpaid at the end |
29 | of the plan year ending June 30, 2014, shall be added to the |
30 | minimum municipal obligation of the city of the first class |
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1 | for the following plan year, with interest calculated and due |
2 | until the date that the amounts due are paid. |
3 | (6) The calculation of the unfunded actuarial accrued |
4 | liability made by and certified by an approved actuary under |
5 | section 202 shall not include any amounts deferred pursuant |
6 | to this subsection, so long as the city of the first class is |
7 | paying interest accrued on such deferred amounts and repaying |
8 | such deferred amounts in accordance with the terms of this |
9 | subsection. |
10 | (7) The repayment of any amounts deferred, including |
11 | interest accrued on deferred amounts, as and when required in |
12 | this subsection, shall constitute a commitment and |
13 | obligation, binding and absolute, on the city of the first |
14 | class; and the city of the first class shall include all |
15 | amounts due to be paid under this subsection in the budget of |
16 | the city, and all amounts due to be paid shall be |
17 | appropriated and paid in order to make timely repayment of |
18 | any amounts deferred, including interest accrued on deferred |
19 | amounts, with such payment being unconditional and without |
20 | setoff. |
21 | (8) (i) Any person who is beneficially interested in |
22 | the city of the first class paying its minimum municipal |
23 | obligation under this subsection shall have standing to |
24 | institute a legal proceeding for mandamus to enforce the |
25 | obligation of the city of the first class to make |
26 | payments under this subsection in the same manner as |
27 | payment requirements of an alternative funding mechanism |
28 | may be enforced under section 1001. |
29 | (ii) For purposes of this paragraph, a person is |
30 | beneficially interested under this subsection if the |
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1 | person is a beneficially interested person under section |
2 | 1001(f). |
3 | (9) The city of the first class shall be required to pay |
4 | the balance of its minimum municipal obligation in full when |
5 | due in each plan year. |
6 | Section 1003. Special taxing authority. |
7 | (a) Imposition of special tax.–- |
8 | (1) Solely for the purposes set forth in subsection (b), |
9 | a city of the first class is authorized to impose a tax on |
10 | the sale at retail of tangible personal property or services |
11 | or use of tangible personal property or services purchased at |
12 | retail, as those terms are defined in Article II of the act |
13 | of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code |
14 | of 1971, which tax shall be in addition to the tax authorized |
15 | under the provisions of section 503(a) and (b) of the act of |
16 | June 5, 1991 (P.L.9, No.6), known as the Pennsylvania |
17 | Intergovernmental Cooperation Authority Act for Cities of the |
18 | First Class. The tax authorized by this subsection shall not |
19 | be levied, assessed and collected upon the occupancy of a |
20 | room or rooms in a hotel in the city. |
21 | (2) The tax authorized under this subsection shall be |
22 | imposed and collected at the rate of 1%, and shall be |
23 | computed as set forth at section 503(e)(2) of the |
24 | Pennsylvania Intergovernmental Cooperation Authority Act for |
25 | Cities of the First Class. |
26 | (3) The tax authorized under this subsection shall be |
27 | administered, collected, deposited and disbursed in the same |
28 | manner as the tax imposed under Chapter 5 of the Pennsylvania |
29 | Intergovernmental Cooperation Authority Act for Cities of the |
30 | First Class and the situs of the tax authorized under this |
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1 | subsection shall be determined in accordance with that act |
2 | and Article II-A of the Tax Reform Code of 1971. The |
3 | department shall use the money received by the department to |
4 | cover its costs of administration of the tax authorized by |
5 | the provisions of Chapter 5 of the Pennsylvania |
6 | Intergovernmental Cooperation Authority Act for Cities of the |
7 | First Class to cover the costs of administration of the tax |
8 | authorized by this section; and the department shall not |
9 | retain any additional amounts for the costs of collection of |
10 | the tax authorized by this section. No additional fee shall |
11 | be charged for either a license or any renewal in addition to |
12 | a license or renewal fee otherwise authorized and imposed |
13 | pursuant to Article II of the Tax Reform Code of 1971. |
14 | (b) Municipal action.-- |
15 | (1) If a city of the first class determines to impose |
16 | the tax authorized by subsection (a), the governing body of |
17 | the city shall adopt or shall previously have adopted an |
18 | ordinance which shall state the tax rate. |
19 | (2) The city ordinance, including an ordinance adopted |
20 | prior to the effective date of this article, may take effect |
21 | no earlier than 20 days after the adoption of the ordinance |
22 | or 20 days after the effective date of this section, |
23 | whichever is later. |
24 | (3) A certified copy of a city ordinance imposing the |
25 | tax authorized by subsection (a) shall be delivered to the |
26 | department within ten days prior to or after the effective |
27 | date of that ordinance. |
28 | (4) A certified copy of a repeal ordinance shall be |
29 | delivered to the department at least 30 days prior to the |
30 | effective date of the repeal. |
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1 | (c) Use of tax receipts.--Any moneys received by the city |
2 | from the levy, assessment and collection of the tax authorized |
3 | under subsection (a) may only be used to: |
4 | (1) pay as and when due in any plan year any amounts of |
5 | the city's minimum municipal obligation provided for in |
6 | section 302, including, but not limited to, amounts deferred |
7 | pursuant to section 1002(b) and interest accrued on deferred |
8 | amounts; and |
9 | (2) reimburse the city for payments made by the city, |
10 | from sources other than the tax authorized in subsection (a), |
11 | of the city's minimum municipal obligation for that year, |
12 | including, but not limited to, amounts deferred pursuant to |
13 | section 1002(b) and interest accrued on deferred amounts. |
14 | (d) Expiration.-- |
15 | (1) This section shall expire July 1, 2014. |
16 | (2) Notwithstanding the expiration of this section, any |
17 | tax imposed pursuant to subsection (a) on sales or uses |
18 | occurring before July 1, 2014, shall be paid to and received |
19 | by the department and, along with interest and penalties, |
20 | less any refunds and credits paid, shall be credited to the |
21 | Local Sales and Use Tax Fund created pursuant to the |
22 | Pennsylvania Intergovernmental Cooperation Authority Act for |
23 | Cities of the First Class as if this section had not expired. |
24 | Such moneys shall be disbursed to the city imposing the tax |
25 | in the manner provided by section 509 of the Pennsylvania |
26 | Intergovernmental Cooperation Authority Act for Cities of the |
27 | First Class. |
28 | (e) Effect of imposition, expiration or repeal of tax.--The |
29 | imposition, termination or repeal of the tax authorized under |
30 | subsection (a) shall not affect in any way the amount of |
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1 | supplemental State assistance allocable to the city imposing the |
2 | tax. |
3 | Section 1004. Additional assistance. |
4 | Notwithstanding any other provision of this act or other law, |
5 | a city of the first class shall continue to receive State |
6 | supplemental assistance and any other assistance available under |
7 | this act. |
8 | Section 4. This act shall take effect immediately. |
9 | Section 1. The title of the act of December 18, 1984 | <-- |
10 | (P.L.1005, No.205), known as the Municipal Pension Plan Funding |
11 | Standard and Recovery Act, is amended to read: |
12 | AN ACT |
13 | Mandating actuarial funding standards for all municipal pension |
14 | systems; establishing a recovery program for municipal |
15 | pension systems determined to be financially distressed; |
16 | providing for the distribution of the tax on the premiums of |
17 | foreign fire insurance companies; providing for the |
18 | establishment and administration of deferred retirement |
19 | option plans in local governments and for local tax; and |
20 | making repeals. |
21 | Section 2. The definition of "municipal employee" in section |
22 | 102 of the act is amended and the section is amended by adding |
23 | definitions to read: |
24 | Section 102. Definitions. |
25 | Except as provided in Chapter 7, the following words and |
26 | phrases when used in this act shall have the meanings given to |
27 | them in this section unless the context clearly indicates |
28 | otherwise: |
29 | * * * |
30 | "DROP." A deferred retirement option plan created and |
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1 | operated by a local government or the Pennsylvania Municipal |
2 | Retirement System under Chapter 11 or any deferred retirement |
3 | option plan or similar program established by a local government |
4 | that provides for the commencement and accumulation of |
5 | retirement benefit payments for active employees with |
6 | disbursement of the accumulated payments and interest earnings |
7 | as a lump sum upon termination of employment. |
8 | "DROP participant." A retired member of a local government- |
9 | defined benefit pension plan who is eligible to participate in a |
10 | DROP under section 1112, who has elected to participate in a |
11 | DROP under section 1113 and who is not an elected official. |
12 | "DROP participant account." A pension trust fund ledger |
13 | account established under section 1121(a). |
14 | * * * |
15 | "Local government." A municipality or any county. |
16 | * * * |
17 | "Municipal employee." Any person [other than an independent |
18 | contractor] who provides regular services for a municipality in |
19 | return for compensation from the municipality. The term does not |
20 | include an independent contractor or a DROP participant. |
21 | * * * |
22 | Section 2.1. The act is amended by adding a section to read: |
23 | Section 103. Methodology. |
24 | In performing an actuarial study under this act or the act of |
25 | December 6, 1972 (P.L.1383, No.293), entitled "An act requiring |
26 | municipal pension systems to have an actuarial investigation of |
27 | the fund made by an actuary who shall report his findings to the |
28 | Department of Community Affairs," municipalities and counties |
29 | may utilize any reasonable actuarial assumptions or |
30 | methodologies provided for in this act. |
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1 | Section 3. Section 202(b)(4)(i), (ii), (iii), (iv) and (v) |
2 | of the act, amended July 15, 2004 (P.L.715, No.81), are amended |
3 | to read: |
4 | Section 202. Contents of actuarial valuation report. |
5 | * * * |
6 | (b) Contents of actuarial exhibits; defined benefit plans |
7 | self-insured in whole or in part.--For any pension plan which is |
8 | a defined benefit plan and which is self-insured in whole or in |
9 | part, all applicable actuarial exhibits shall be prepared in |
10 | accordance with the entry age normal actuarial cost method with |
11 | entry age established as the actual entry age for all plan |
12 | members unless the municipality applies for and is granted |
13 | authorization by the commission to use an alternative actuarial |
14 | cost method. Authorization shall be granted if the municipality |
15 | demonstrates on an individual pension plan basis that there are |
16 | compelling reasons of an actuarial nature for the use of an |
17 | alternative actuarial cost method. The commission shall issue |
18 | rules and regulations specifying the criteria which the |
19 | commission will use to determine the question of the existence |
20 | of compelling reasons for the use of an alternative actuarial |
21 | cost method, the documentation which a municipality seeking the |
22 | authorization will be required to supply and the acceptable |
23 | alternative actuarial cost methods which the commission may |
24 | authorize. The actuarial cost method shall be used to value all |
25 | aspects of the benefit plan or plans of the pension plan unless |
26 | the municipality applies for and is granted authorization by the |
27 | commission to use approximation techniques other than the |
28 | actuarial cost method for aspects of the benefit plan or plans |
29 | of the pension plan other than the retirement benefit. |
30 | Authorization shall be granted if the municipality demonstrates |
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1 | on an individual pension plan basis that there are compelling |
2 | reasons of an actuarial nature for the use of these |
3 | approximation techniques. The commission shall issue rules and |
4 | regulations specifying the criteria which the commission will |
5 | use to determine the question of the existence of compelling |
6 | reasons for the use of approximation techniques, the |
7 | documentation which a municipality seeking the authorization |
8 | will be required to supply and the acceptable approximation |
9 | technique which the commission may authorize. The actuarial |
10 | exhibits shall use actuarial assumptions which are, in the |
11 | judgment of the actuary and the governing body of the plan, the |
12 | best available estimate of future occurrences in the case of |
13 | each assumption. With respect to economic actuarial assumptions, |
14 | the assumptions shall either be within the range specified in |
15 | rules and regulations issued by the commission or documentation |
16 | explaining and justifying the choice of assumptions outside the |
17 | range shall accompany the report. The actuarial exhibits shall |
18 | measure all aspects of the benefit plan or plans of the pension |
19 | plan in accordance with modifications in the benefit plan or |
20 | plans, if any, and salaries which as of the valuation date are |
21 | known or can reasonably be expected to be in force during the |
22 | ensuing plan year. In preparing the actuarial exhibits or any |
23 | actuarial valuation report, the municipality shall exclude the |
24 | compensation of all DROP participants from the active member |
25 | payroll and all DROP participants from active member data. The |
26 | actuarial valuation report shall contain the following actuarial |
27 | exhibits: |
28 | * * * |
29 | (4) An exhibit of any additional funding costs |
30 | associated with the amortization of any unfunded actuarial |
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1 | accrued liability of the pension plan, indicating for each |
2 | increment of unfunded actuarial accrued liability specified |
3 | in paragraph (3), the level annual dollar contribution |
4 | required to pay an amount equal to the actuarial assumption |
5 | as to investment earnings applied to the principal amount of |
6 | the remaining balance of the increment of unfunded actuarial |
7 | accrued liability and to retire by the applicable |
8 | amortization target date specified in this paragraph the |
9 | principal amount of the remaining balance of the increment of |
10 | unfunded actuarial accrued liability. The amortization target |
11 | date applicable for each type of increment of unfunded |
12 | actuarial accrued liability shall be as follows: |
13 | (i) The following apply: |
14 | (A) In the case of a pension plan established on |
15 | or prior to January 1, 1985 for the unfunded |
16 | actuarial accrued liability in existence as of the |
17 | beginning of the plan year occurring in calendar year |
18 | 1985, at the end of the plan year occurring in |
19 | calendar year 2015; or |
20 | (B) In the case of a pension plan established |
21 | after January 1, 1985, for the unfunded actuarial |
22 | accrued liability then or subsequently determined to |
23 | be or to have been in existence as of the date of the |
24 | establishment of the plan, at the end of the plan |
25 | year occurring 30 years after the calendar year in |
26 | which the pension plan was established. |
27 | (ii) The following apply: |
28 | (A) Increment or decrement of net unfunded |
29 | actuarial accrued liability attributable to a change |
30 | in actuarial assumptions, at the end of the plan year |
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1 | occurring 20 years after the calendar year in which |
2 | actuarial assumption modification was effective. |
3 | (B) Increment or decrement of net unfunded |
4 | actuarial accrued liability attributable to a change |
5 | in actuarial assumptions made on or after the |
6 | effective date of this clause, at the end of the plan |
7 | year occurring 15 years after the calendar year in |
8 | which the actuarial assumption modification was |
9 | effective. |
10 | (iii) The following apply: |
11 | (A) Increment of net unfunded actuarial accrued |
12 | liability attributable to a modification in the |
13 | benefit plan applicable to active members, at the end |
14 | of the plan year occurring 20 years after the |
15 | calendar year in which the benefit plan modification |
16 | was effective. |
17 | (B) From and after the effective date of this |
18 | clause, the increment of net unfunded actuarial |
19 | accrued liability attributable to a modification in |
20 | the benefit plan mandated by new legislation, at the |
21 | end of the plan year occurring 20 years after the |
22 | calendar year in which the benefit plan modification |
23 | was effective. |
24 | (iv) The following apply: |
25 | (A) Increment of unfunded actuarial accrued |
26 | liability attributable to a modification in the |
27 | benefit plan applicable to retired members and other |
28 | benefit recipients, at the end of the plan year |
29 | occurring 10 years after the calendar year in which |
30 | the benefit plan modification was effective. |
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1 | (B) Increment of unfunded actuarial accrued |
2 | liability attributable to a modification in the |
3 | benefit plan adopted on or after the effective date |
4 | of this clause and not mandated by new legislation, |
5 | at the end of the plan year occurring ten years after |
6 | the calendar year in which the benefit plan |
7 | modification was effective. |
8 | (v) The following apply: |
9 | (A) Increment or decrement of net unfunded |
10 | actuarial accrued liability attributable to an |
11 | actuarial experience loss or gain, at the end of plan |
12 | year occurring [15] 20 years after the calendar year |
13 | in which the actuarial experience loss or gain was |
14 | recognized. |
15 | (B) Notwithstanding any other provision of this |
16 | act or other law, as of the beginning of the plan |
17 | year occurring in calendar year 2003, the outstanding |
18 | balance of the increment of unfunded actuarial |
19 | accrued liability attributable to the net actuarial |
20 | investment losses incurred in calendar years 2001 and |
21 | 2002 may, at the sole discretion of the municipality, |
22 | be amortized with the amortization target date being |
23 | the end of the plan year occurring 30 years after |
24 | January 1, 2003. In order for a municipality to |
25 | extend the applicable amortization period pursuant to |
26 | this clause, the municipality must file a revised |
27 | actuarial valuation report reflecting the |
28 | amortization period extension provided for under this |
29 | clause with the executive director of the commission |
30 | no later than September 30, 2004. Any such revised |
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1 | actuarial valuation report may not be filed in lieu |
2 | of the actuarial valuation report prepared in |
3 | compliance with clause (A) and required to be filed |
4 | on or before March 31, 2004, and may be used only for |
5 | the purposes of recalculating the 2004 minimum |
6 | municipal obligation of the municipality and |
7 | calculating the 2005 minimum municipal obligation of |
8 | the municipality to reflect the amortization period |
9 | extension. Any such revised actuarial valuation |
10 | report shall not affect distributions under the |
11 | General Municipal Pension System State Aid Program |
12 | under Chapter 4. |
13 | * * * |
14 | Section 4. The act is amended by adding sections to read: |
15 | Section 210. Actuarial asset valuation. |
16 | (a) General rule.--A municipality may value the assets in |
17 | each of its pension plans to equal the greater of : |
18 | (1) the actuarial value of assets from the most recent |
19 | biennial actuarial valuation report accepted by the |
20 | commission: |
21 | (i) increased by contributions and other deposits |
22 | except investment income; |
23 | (ii) decreased by benefit payments and |
24 | administrative expenses or other payments; and |
25 | (iii) credited with interest at 1% less than the |
26 | plan's assumed rate, to the date of the actuarial |
27 | valuation; or |
28 | (2) the market value of assets on the valuation date. |
29 | (b) Methodology.-- |
30 | (1) The actuarial value of pension plan assets is the |
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1 | value of cash, investment securities and other property |
2 | belonging to the municipal pension plan according to a method |
3 | for valuing assets adopted by the governing body of the |
4 | municipal pension plan upon the recommendation of the |
5 | actuary. |
6 | (2) The method for valuing assets shall be adequately |
7 | disclosed in the accompanying documentation or exhibits and, |
8 | except as set forth in subsection (c) or Chapter 6, may not |
9 | produce a result that in total is: |
10 | (i) greater than 120% of the fair market value of |
11 | the assets of the municipal pension plan; or |
12 | (ii) less than 80% of the fair market value of the |
13 | assets of the municipal pension plan. |
14 | (c) Temporary valuation.-- |
15 | (1) For the two-year actuarial valuation reporting |
16 | period beginning in 2009, a municipality may utilize a method |
17 | for valuing assets which does not produce a result that in |
18 | total is: |
19 | (i) greater than 130% of the fair market value of |
20 | the assets of the municipal pension plan; or |
21 | (ii) less than 70% of the fair market value of the |
22 | assets of the municipal pension plan. |
23 | (2) Upon the expiration of that two-year actuarial |
24 | valuation reporting period, subsection (b) applies. |
25 | Section 211. Revised actuarial valuation report. |
26 | Upon enactment of legislation which would alter the actuarial |
27 | valuation of a pension plan, a revised actuarial valuation |
28 | report shall be filed with the commission as the commission |
29 | directs. |
30 | Section 5. Section 302(b)(2) of the act, amended December |
|
1 | 18, 1990 (P.L.753, No.189), is amended and the section is |
2 | amended by adding a subsection to read: |
3 | Section 302. Minimum funding standard; defined benefit plans |
4 | self-insured in whole or in part. |
5 | * * * |
6 | (b) Financial requirements of the pension plan.-- |
7 | * * * |
8 | (2) The normal cost and administrative expense |
9 | requirements for the following plan year shall be expressed |
10 | as a dollar amount and shall be determined by applying the |
11 | normal cost of the benefit plan and the administrative |
12 | expense payable from the assets attributable to the benefit |
13 | plan, as reported in the actuarial valuation report of the |
14 | pension plan and expressed as a percentage of payroll, to the |
15 | payroll of the active membership of the pension plan as of |
16 | the date the financial requirements of the pension plan are |
17 | determined. In expressing the normal cost and administrative |
18 | expense requirements as a dollar amount, the municipality |
19 | shall exclude the compensation of all DROP participants from |
20 | the payroll of the active membership of the pension plan. |
21 | * * * |
22 | (f) Cost-of-living adjustments.--A cost-of-living adjustment |
23 | for an inactive member shall be fully amortized within one year |
24 | of the date of the implementation of the adjustment. |
25 | Section 6. Sections 402(e)(2), 501 and 502 of the act are |
26 | amended to read: |
27 | Section 402. Revision of financing from State revenue sources; |
28 | General Municipal Pension System State Aid Program. |
29 | * * * |
30 | (e) Allocation of general municipal pension system State |
|
1 | aid.-- |
2 | * * * |
3 | (2) The applicable number of units shall be attributable |
4 | to each active employee who was employed on a full-time basis |
5 | for a minimum of six consecutive months prior to December 31 |
6 | preceding the date of certification and who was participating |
7 | in a pension plan maintained by that municipality, provided |
8 | that the municipality maintains a generally applicable |
9 | pension plan for that type of employee which was either |
10 | established on or prior to December 31, 1984, or, if |
11 | established after December 31, 1984, has been maintained by |
12 | that municipality for at least three plan years. For the |
13 | purpose of computing and reporting the applicable number of |
14 | units, a DROP participant shall not be reported to the |
15 | Auditor General as an active employee. The applicable number |
16 | of units per employee attributable to each eligible recipient |
17 | county of the second class shall be two units for each police |
18 | officer. The applicable number of units attributable to each |
19 | eligible recipient city, borough, incorporated town and |
20 | township shall be as follows: |
21 | (i) Police officer - two units. |
22 | (ii) Firefighter - two units. |
23 | (iii) Employee other than police officer or |
24 | firefighter - one unit. |
25 | * * * |
26 | Section 501. Initiation of distress determination. |
27 | [Each municipality which wishes to avail itself of any of the |
28 | provisions of sections 604, 605 and 606 shall apply to the |
29 | commission for a determination of its status pursuant to this |
30 | chapter. The application shall be in the form and shall contain |
|
1 | the required information as prescribed in rules and regulations |
2 | issued by the commission. Determinations pursuant to this |
3 | chapter shall be made annually.] The commission shall review the |
4 | biennial actuarial valuation reports filed on behalf of each |
5 | municipal pension plan to determine the municipality's |
6 | eligibility to avail itself of sections 604, 605 and 606. |
7 | Section 502. Pension plans for inclusion in determination. |
8 | The determination provided for in this chapter shall be made |
9 | for a municipality taking into account all pension plans which |
10 | the municipality has established and maintains[.], except those |
11 | created after the last biennial actuarial valuation date. The |
12 | initial actuarial valuation report for any plan shall not be |
13 | recognized in the determination of a municipality's distress |
14 | level. If the municipality filed an actuarial valuation report |
15 | for any pension plan in the prior reporting period, that |
16 | valuation report shall control the determination of distress |
17 | without regard to the funding status of any newly established |
18 | plan. If no other plan was previously maintained by a |
19 | municipality, the newly established plan shall be assigned a |
20 | distress score of 0. |
21 | Section 7. Sections 503 and 602 of the act, amended December |
22 | 10, 1996 (P.L.934, No.150), are amended to read: |
23 | Section 503. Determination procedure. |
24 | (a) Generally.--The determination provided for in this |
25 | chapter shall be made by the commission using the actuarial |
26 | [indicators] indicator specified in subsection (b) [and the |
27 | municipal finance indicators specified in subsection (c), and |
28 | the scoring system associated with each]. |
29 | (b) Actuarial [indicators] indicator.--The actuarial |
30 | [indicators] indicator shall be based on the most current |
|
1 | actuarial valuation report or reports filed by the applicable |
2 | municipality with the commission pursuant to law and shall be |
3 | made in aggregate for all pension plans maintained by the |
4 | applicable municipality. [The actuarial indicators and the |
5 | associated scoring system for each shall be as follows: |
6 | (1) The aggregate amount of current pension plan |
7 | benefits payable shall be computed as a percentage of the |
8 | current market value of aggregate plan assets: |
9 10 11 | Benefits Payable as Percentage of Assets | Scoring | 12 | 0 - 5% | 0 | 13 | 6 - 10% | 10 | 14 | 11 - 15% | 20 | 15 | 16 - 20% | 30 | 16 | 21 - 30% | 40 | 17 | 31 - 40% | 50 | 18 | 41 - 50% | 60 | 19 | 51 - 60% | 70 | 20 | 61 - 70% | 80 | 21 | 71 - 80% | 90 | 22 | 81% or greater | 100 |
|
23 | (2) The aggregate actuarial value of plan assets shall |
24 | be computed as a percentage of the aggregate accrued |
25 | actuarial liability: |
26 27 28 | Assets as Percentage of Accrued Actuarial Liability | Scoring | 29 | 50.0% or greater | 0 | 30 | 40.0 - 49.0% | 10 | | 1 | 30.0 - 39.0% | 20 | 2 | 25.0 - 29.0% | 30 | 3 | 20.0 - 24.0% | 40 | 4 | 15.0 - 19.0% | 50 | 5 | 10.0 - 14.0% | 60 | 6 | 7.5 - 9.0% | 70 | 7 | 5.0 - 7.4% | 80 | 8 | 2.5 - 4.9% | 90 | 9 | 0 - 2.4% | 100 |
|
10 | (3) The aggregate amount of normal cost expressed as a |
11 | percentage of covered payroll reduced by the aggregate amount |
12 | of any member contributions expressed as a percentage of |
13 | covered payroll is added to the aggregate amount of any |
14 | employer contributions to the Federal old age, survivors, |
15 | disability and health insurance program expressed as a |
16 | percentage of covered payroll: |
17 18 | Total Employer Retirement Cost | Scoring | 19 | 0 - 9.99% | 0 | 20 | 10.00 - 11.99% | 10 | 21 | 12.00 - 12.99% | 20 | 22 | 13.00 - 13.99% | 30 | 23 | 14.00 - 14.99% | 40 | 24 | 15.00 - 15.99% | 50 | 25 | 16.00 - 16.99% | 60 | 26 | 17.00 - 17.99% | 70 | 27 | 18.00 - 18.99% | 80 | 28 | 19.00 - 19.99% | 90 | 29 | 20.00% or greater | 100 |
|
30 | (4) The aggregate requirement to amortize the unfunded |
|
1 | accrued actuarial liability on a level annual dollar basis |
2 | according to the applicable amortization schedules specified |
3 | in section 202(b)(4) is divided by the aggregate normal cost |
4 | requirement: |
5 6 7 | Amortization Requirement Divided by Normal Cost Result | Scoring | 8 | 0 - 0.39 | 0 | 9 | 0.40 - 0.79 | 10 | 10 | 0.80 - 1.19 | 20 | 11 | 1.20 - 1.39 | 30 | 12 | 1.40 - 1.59 | 40 | 13 | 1.60 - 1.79 | 50 | 14 | 1.80 - 1.99 | 60 | 15 | 2.00 - 2.19 | 70 | 16 | 2.20 - 2.39 | 80 | 17 | 2.40 - 2.59 | 90 | 18 | 2.60 or over | 100 |
|
19 | (5) The difference between the aggregate amount of |
20 | normal cost plus the requirement to amortize the unfunded |
21 | accrued actuarial liability on a level annual dollar basis |
22 | according to the applicable amortization schedules specified |
23 | in section 202(b)(4), and the total aggregate amount of |
24 | member contributions, State allocations dedicated for pension |
25 | purposes and municipal contributions received for the |
26 | previous year is computed and expressed as a percentage of |
27 | covered payroll: |
28 29 30 | Difference Between Full Actuarial Requirement and | | | 1 | Current Contributions | Scoring | 2 | 0 - 2.4% | 0 | 3 | 2.5 - 4.9% | 10 | 4 | 5 - 9.9% | 20 | 5 | 10 - 14.9% | 30 | 6 | 15 - 19.9% | 40 | 7 | 20 - 24.9% | 50 | 8 | 25 - 29.9% | 60 | 9 | 30 - 34.9% | 70 | 10 | 35 - 39.9% | 80 | 11 | 40 - 44.9% | 90 | 12 | 45% or over | 100 |
|
13 | (6) The compound annual percentage rate of increase in |
14 | the aggregate amount of the unfunded accrued actuarial |
15 | liability over the most recent four-year period is computed, |
16 | unless the amount of the unfunded accrued actuarial liability |
17 | equals less than 10% of the amount of assets in either the |
18 | first or fourth year: |
19 20 21 22 | Compound Rate of Increase in Unfunded Accrued Actuarial Liability | Scoring | 23 | 0.0 - 9.9% | 0 | 24 | 10.0 - 12.4% | 10 | 25 | 12.5 - 14.9% | 20 | 26 | 15.0 - 17.4% | 30 | 27 | 17.5 - 19.9% | 40 | 28 | 20.0 - 22.4% | 50 | 29 | 22.5 - 24.9% | 60 | 30 | 25% or over | 70 |
|
|
1 | (7) The compound annual percentage rate of increase in |
2 | the aggregate amount of municipal contributions over the most |
3 | recent four-year period is computed: |
4 5 6 | Compound Rate of Increase in Municipal Contributions | Scoring | 7 | 20% or over | 0 | 8 | 15 - 19.9% | 10 | 9 | 10 - 14.9% | 20 | 10 | 0 - 9.9% | 30] |
|
11 | The actuarial indicator shall be the ratio of the actuarial |
12 | value of assets to the actuarial accrued liability, expressed as |
13 | a percentage known as the funding ratio, and shall be applied in |
14 | accordance with the following actuarial distress scoring system: |
15 | Funding Ratio | Score | 16 | 90% or over | 0 | 17 | 70 - 89% | 1 | 18 | 50 - 69% | 2 | 19 | Less than 50% | 3 |
|
20 | [(c) Municipal finance indicators.--The municipal finance |
21 | indicators shall be based on the most recent financial report or |
22 | reports filed by the applicable municipality with the Department |
23 | of Community Affairs and certified by the secretary or by the |
24 | designee of the secretary. Before certification for a |
25 | municipality that has issued bonds or notes to fund an unfunded |
26 | actuarial accrued liability under the act of July 12, 1972 |
27 | (P.L.781, No.185), known as the Local Government Unit Debt Act, |
28 | or under the laws applicable to the municipality, the municipal |
29 | finance data extracted from the most recent financial report or |
30 | reports shall be adjusted as directed by the commission to hold |
|
1 | harmless the municipality under section 404(c) by excluding the |
2 | municipal debt issued to fund an unfunded actuarial accrued |
3 | liability and the debt service on that debt. The municipal |
4 | finance indicators and the associated scoring system for each |
5 | shall be as follows: |
6 | (1) The total amount of taxes collected by the |
7 | municipality for the current year are divided by the |
8 | population of the municipality as of the last Federal census, |
9 | and the percentage increase in the amount of municipal taxes |
10 | collected per capita in the most recent five-year period: |
11 12 13 | Taxes Collected Per Capita | Scoring | Gross Percentage Increase in Taxes Per Capita | Scoring | 14 | $ 0.00 - 79.99 | 0 | 0.00 - 19.99% | 0 | 15 | 80.00 - 84.99 | 5 | 20.00 - 29.99% | 3 | 16 | 85.00 - 89.99 | 10 | 30.00 - 34.99% | 6 | 17 | 90.00 - 99.99 | 15 | 35.00 - 39.99% | 9 | 18 | 100.00 - 109.99 | 20 | 40.00 - 44.99% | 12 | 19 | 110.00 - 124.99 | 25 | 45.00 - 49.99% | 15 | 20 | 125.00 - 139.99 | 30 | 50.00 - 54.99% | 18 | 21 | 140.00 - 159.99 | 35 | 55.00 - 59.99% | 21 | 22 | 160.00 - 179.99 | 40 | 60.00 - 64.99% | 24 | 23 | 180.00 - 199.99 | 45 | 65.00 - 69.99% | 27 | 24 | 200.00 or greater | 50 | 70.00% or greater | 30 |
|
25 | (2) The municipal tax rate on the market value of real |
26 | property (adjusted mill rate) in the municipality for the |
27 | most recent year and the percentage increase in the amount of |
28 | that adjusted mill rate in the most recent five-year period: |
29 30 | | | Gross Percentage Increase in | | | 1 2 | Adjusted Mill Rate | Scoring | Adjusted Mill Rate | Scoring | 3 | 0.00 - 5.99 | 0 | 0.00 - 3.99% | 0 | 4 | 6.00 - 7.99 | 5 | 4.00 - 6.99% | 3 | 5 | 8.00 - 9.99 | 10 | 7.00 - 9.99% | 6 | 6 | 10.00 - 11.99 | 15 | 10.00 - 12.99% | 9 | 7 | 12.00 - 12.99 | 20 | 13.00 - 15.99% | 12 | 8 | 13.00 - 13.99 | 25 | 16.00 - 18.99% | 15 | 9 | 14.00 - 14.99 | 30 | 19.00 - 21.99% | 18 | 10 | 15.00 - 15.99 | 35 | 22.00 - 24.99% | 21 | 11 | 16.00 - 16.99 | 40 | 25.00 - 27.99% | 24 | 12 | 17.00 - 17.99 | 45 | 28.00 - 30.99% | 27 | 13 | 18.00 or greater | 50 | 31.00% or greater | 30 |
|
14 | (3) For the most recent year, the result of the total |
15 | municipal bonded debt plus the total municipal floating debt |
16 | less the total municipal credits against municipal debt is |
17 | divided by the population of the municipality as of the last |
18 | Federal census: |
19 20 | Net Debt Per Capita | Scoring | 21 | $ 0.00 - 9.99 | 0 | 22 | 10.00 - 19.99 | 8 | 23 | 20.00 - 29.99 | 16 | 24 | 30.00 - 39.99 | 24 | 25 | 40.00 - 49.99 | 32 | 26 | 50.00 - 59.99 | 40 | 27 | 60.00 - 69.99 | 48 | 28 | 70.00 - 79.99 | 56 | 29 | 80.00 - 89.99 | 64 | 30 | 90.00 - 99.99 | 72 | | 1 | 100.00 or greater | 80 |
|
2 | (4) For the most recent year, the result of the total |
3 | municipal bonded debt plus the total municipal floating debt |
4 | less the total municipal credits against municipal debt is |
5 | computed as a percentage of the assessed value of real |
6 | property in the municipality: |
7 8 9 10 | Municipal Debt as Percentage of Municipal Property Tax Base | Scoring | 11 | 0.00 - 0.49% | 0 | 12 | 0.50 - 0.99% | 6 | 13 | 1.00 - 1.99% | 12 | 14 | 2.00 - 2.99% | 18 | 15 | 3.00 - 4.49% | 24 | 16 | 4.50 - 5.99% | 30 | 17 | 6.00 - 6.99% | 36 | 18 | 7.00 - 7.99% | 42 | 19 | 8.00 - 8.99% | 48 | 20 | 9.00 - 9.99% | 54 | 21 | 10.00% or greater | 60 |
|
22 | (5) For the most recent year, the result of the total |
23 | municipal bonded debt plus the total municipal floating debt |
24 | less the total municipal credits against municipal debt is |
25 | computed as a percentage of the market value of real property |
26 | in the municipality: |
27 28 29 30 | Municipal Debt as Percentage of Potential Municipal Property Tax Base | Scoring | | 1 | 0.00 - 0.24% | 0 | 2 | 0.25 - 0.49% | 6 | 3 | 0.50 - 0.99% | 12 | 4 | 1.00 - 1.49% | 18 | 5 | 1.50 - 1.99% | 24 | 6 | 2.00 - 2.99% | 30 | 7 | 3.00 - 3.49% | 36 | 8 | 3.50 - 3.99% | 42 | 9 | 4.00 - 4.49% | 48 | 10 | 4.50 - 4.99% | 54 | 11 | 5.00% or greater | 60 |
|
12 | (6) For the most recent year, the municipal bonded debt |
13 | retired during the preceding 12 months plus the interest paid |
14 | during the preceding 12 months on all municipal debt is |
15 | computed as a percentage of the total taxes collected by the |
16 | municipality for the same period: |
17 18 19 20 | Debt Service as Percentage of Municipal Tax Revenue | Scoring | 21 | 0.00 - 4.49% | 0 | 22 | 4.50 - 5.49% | 8 | 23 | 4.50 - 5.49% | 16 | 24 | 6.50 - 7.49% | 24 | 25 | 7.50 - 8.49% | 32 | 26 | 8.50 - 9.49% | 40 | 27 | 9.50 - 10.49% | 48 | 28 | 10.50 - 11.49% | 56 | 29 | 11.50 - 12.49% | 64 | 30 | 12.50 - 13.49% | 72 | | 1 | 13.50% or greater | 80 |
|
2 | (7) The market value of real property in the |
3 | municipality for the current year is divided by the |
4 | population of the municipality as of the last Federal census, |
5 | and the percentage increase in the amount of market value per |
6 | capita in the most recent year over the amount of market |
7 | value per capita in the most recent five-year period: |
8 9 10 11 | Market Value Per Capita | Scoring | Gross Percentage Increase in Market Value Per Capita | Scoring | 12 | $8,000 or greater | 0 | 41.00% or greater | 0 | 13 | 7,500 - 7,999 | 5 | 39.00 - 40.99% | 3 | 14 | 7,000 - 7,499 | 10 | 35.00 - 38.99% | 6 | 15 | 6,500 - 6,999 | 15 | 31.00 - 34.99% | 9 | 16 | 6,000 - 6,499 | 20 | 27.00 - 30.99% | 12 | 17 | 5,500 - 5,999 | 25 | 23.00 - 26.99% | 15 | 18 | 5,000 - 5,499 | 30 | 19.00 - 22.99% | 18 | 19 | 4,500 - 4,999 | 35 | 15.00 - 18.99% | 21 | 20 | 4,000 - 4,499 | 40 | 11.00 - 14.99% | 24 | 21 | 3,500 - 3,999 | 45 | 7.00 - 10.99% | 27 | 22 | 0 - 3,499 | 50 | 0.00 - 6.99% | 30 |
|
23 | (8) For the most recent year, adjusted total municipal |
24 | expenditures (total municipal expenditures less any municipal |
25 | urban renewal expenditures and less any municipal enterprise |
26 | expenditures) divided by the population of the municipality |
27 | as of the last Federal census and the percentage increase in |
28 | the amount of adjusted total municipal expenditures per |
29 | capita in the most recent year over the amount of adjusted |
30 | total municipal expenditures per capita in the most recent |
|
1 | five-year period: |
2 3 4 5 6 | Adjusted Total Municipal Expenditure Per Capita | Scoring | Gross Percentage Increase in Adjusted Total Municipal Expenditures Per Capita | Scoring | 7 | $ 0.00 - 149.99 | 0 | 0.00 - 13.99% | 0 | 8 | 150.00 - 164.99 | 5 | 14.00 - 17.99% | 3 | 9 | 165.00 - 179.99 | 10 | 18.00 - 21.99% | 6 | 10 | 180.00 - 194.99 | 15 | 22.00 - 25.99% | 9 | 11 | 195.00 - 209.99 | 20 | 26.00 - 29.99% | 12 | 12 | 210.00 - 224.99 | 25 | 30.00 - 33.99% | 15 | 13 | 225.00 - 239.99 | 30 | 34.00 - 37.99% | 18 | 14 | 240.00 - 254.99 | 35 | 38.00 - 41.99% | 21 | 15 | 255.00 - 269.99 | 40 | 42.00 - 45.99% | 24 | 16 | 270.00 - 284.99 | 45 | 46.00 - 48.99% | 27 | 17 | 285.00 or greater | 50 | 49.00% or greater | 30] |
|
18 | (d) Levels of distress.--The three levels of municipal |
19 | pension system financial distress shall be as follows: |
20 | (1) Minimal [financial] distress, which shall include |
21 | any municipality which has a distress determination scoring |
22 | [greater than zero but not greater than 299] equal to one. |
23 | (2) Moderate [financial] distress, which shall include |
24 | any municipality which has a distress determination scoring |
25 | equal to [or greater than 300 but not greater than 499] two |
26 | or greater than two but with an unfunded actuarial accrued |
27 | liability of less than $50,000. |
28 | (3) Severe [financial] distress, which shall include any |
29 | municipality which has a distress determination scoring equal |
30 | to [or greater than 500] three and an unfunded actuarial |
|
1 | accrued liability of not less than $50,000. |
2 | Section 602. Application. |
3 | (a) Generally.--The various remedies contained in this |
4 | recovery program shall be available to municipalities based on |
5 | the extent of financial distress of the municipal pension system |
6 | determined by the commission, as provided in this section. |
7 | (b) Minimally distressed municipal pension systems.--The |
8 | remedies contained in level I of the recovery program as |
9 | specified in section 604 shall apply to any municipality which |
10 | [seeks to utilize them, whether the municipality] is minimally |
11 | distressed, as that status is defined based upon the actuarial |
12 | considerations [and municipal finance considerations] of the |
13 | determination procedure pursuant to section 503 [is not |
14 | determined to be distressed or is determined to be distressed |
15 | but elects not to participate in level II of section 605 or |
16 | level III of section 606 of the recovery program, whichever is |
17 | applicable]. |
18 | (c) Moderately distressed municipal pension systems.--The |
19 | remedies contained in level II of the recovery program as |
20 | specified in section 605 shall apply to any municipality which |
21 | is determined to be moderately distressed, as that status is |
22 | defined based on the actuarial considerations [and municipal |
23 | finance considerations] of the determination procedure in rules |
24 | and regulations issued by the commission pursuant to section |
25 | 503[, which complies with any applicable preconditions for |
26 | participation in this level of the recovery program and which |
27 | elects to participate in this level of the recovery program]. |
28 | (d) Severely distressed municipal pension systems.--The |
29 | remedies contained in level III of the recovery program as |
30 | specified in section 606 shall apply to any municipality which |
|
1 | is determined to be severely distressed, as that status is |
2 | defined based on the actuarial considerations [and municipal |
3 | finance considerations] of the determination procedure in rules |
4 | and regulations issued by the commission pursuant to section |
5 | 503[, which complies with any applicable preconditions for |
6 | participation in this level of the recovery program and which |
7 | elects to participate in this level of the recovery program]. |
8 | (e) Continuation of elected remedies.--[In the event that |
9 | the extent of financial distress of a municipal pension system |
10 | determined by the commission subsequent to the initial |
11 | determination is lower than the minimum prescribed in section |
12 | 503(d) for a recovery program level previously elected by a |
13 | municipality, the] A municipality may continue to utilize any of |
14 | the remedies elected and implemented while it was eligible to |
15 | participate in [a higher recovery program level, provided that |
16 | the municipality continues to comply with the preconditions for |
17 | participation in the higher recovery program level and to |
18 | utilize the mandatory remedies applicable to the higher recovery |
19 | program level.] any recovery program authorized by this act at |
20 | the time of commencement and implementation. Any change or |
21 | amendment of recovery remedies in this act subsequent to |
22 | election and implementation shall be deemed to be cumulative and |
23 | not in lieu of previously adopted remedies. |
24 | Section 8. Section 603 of the act is amended to read: |
25 | Section 603. [Election] Determination procedure. |
26 | The [election to utilize the various remedies contained in |
27 | one of the levels of the recovery program shall be made by the |
28 | governing body of the municipality. The election] determination |
29 | process shall be initiated by [an application filed with] the |
30 | commission for the determination of financial distress with |
|
1 | respect to the municipal pension system pursuant to section 501. |
2 | Upon notification of the determination of financial distress by |
3 | the commission, the municipality shall elect whether or not to |
4 | utilize the voluntary remedies of any level of the recovery |
5 | program which may be applicable to the municipality. [Any |
6 | election to utilize the remedies contained in a level of the |
7 | recovery program shall be made on forms prescribed by the |
8 | commission and shall include any information required by the |
9 | commission.] |
10 | Section 9. Section 604 of the act, amended February 14, 1986 |
11 | (P.L.23, No.9), is amended to read: |
12 | Section 604. Recovery program level I. |
13 | (a) Level I.--Any municipality to which level I of the |
14 | recovery program applies may utilize the following remedies: |
15 | (1) The aggregation of trust funds pursuant to section |
16 | 607(b). |
17 | (2) The establishment of total member contribution |
18 | pursuant to section 607(c). |
19 | (3) The deviation from municipal contribution |
20 | limitations pursuant to section 607(d). |
21 | (4) The special municipal taxing authority pursuant to |
22 | section 607(f). |
23 | [(b) Implementation.--Any municipality which receives an |
24 | initial distress determination scoring in 1985 which is equal to |
25 | or greater than 200, but not greater than 299, and cannot meet |
26 | the minimum municipal obligation for the year 1986 because the |
27 | payment of the minimum municipal obligation would result in the |
28 | municipality exceeding the maximum contribution limitation for |
29 | that municipality as set forth in the pertinent laws for that |
30 | class of municipality, may delay the implementation of the full |
|
1 | funding of the minimum municipal obligation until 1987. Any |
2 | municipality electing to delay full implementation of the |
3 | minimum municipal obligation shall make a municipal contribution |
4 | for 1986 as set forth in section 607(g). In addition to the one- |
5 | year delay of the full actuarial funding standard, the |
6 | municipality may utilize the following additional remedies: |
7 | (1) The deviation from municipal contribution |
8 | limitations pursuant to section 607(d). |
9 | (2) The special municipal taxing authority pursuant to |
10 | section 607(f).] |
11 | (c) Reduction for Level I municipalities.-- |
12 | (1) A level I municipality may elect to pay a reduced |
13 | minimum municipal obligation consisting of the normal cost |
14 | and administrative expenses of the pension plans plus: |
15 | (i) 75% of the amortization contribution |
16 | requirement, calculated according to section 202(b)(4); |
17 | minus |
18 | (ii) anticipated member contributions. |
19 | (2) This reduction of payments to amortize the actuarial |
20 | accrued liability shall be authorized for a period of one |
21 | biennial actuarial valuation reporting period (total of two |
22 | years) under section 607(h.1). At the end of this period, |
23 | section 302(c) shall apply to the minimum municipal |
24 | obligation calculation. |
25 | (d) Asset valuation.-- |
26 | (1) Upon the expiration of the period applicable to |
27 | asset valuation under section 210(c), for an additional |
28 | period of one biennial actuarial valuation reporting period |
29 | (allowing an additional two years for a total of four years), |
30 | a level I municipality may utilize a method for valuing |
|
1 | assets that may not produce a result that, in total, is: |
2 | (i) greater than 130% of the fair market value of |
3 | the assets of the municipal pension plan; or |
4 | (ii) less than 70% of the fair market value of the |
5 | assets of the municipal pension plan. |
6 | (2) At the end of the additional period under paragraph |
7 | (1), section 210 shall apply to the actuarial valuation of |
8 | assets. |
9 | Section 10. Sections 605 and 606 of the act are amended to |
10 | read: |
11 | Section 605. Recovery program level II. |
12 | (a) Mandatory remedies.--Any municipality to which level II |
13 | of the recovery program applies shall utilize the following |
14 | remedies: |
15 | (1) The aggregation of trust funds pursuant to section |
16 | 607(b). |
17 | (2) The submission of a plan for administrative |
18 | improvement pursuant to section 607(i). |
19 | (b) Discretionary remedies.--Any municipality to which level |
20 | II of the recovery program applies may utilize the following |
21 | remedies: |
22 | (1) [The aggregation of trust funds pursuant to section |
23 | 607(b). |
24 | (2)] The establishment of total member contributions |
25 | pursuant to section 607(c). |
26 | [(3)] (2) The deviation from municipal contribution |
27 | limitations pursuant to section 607(d). |
28 | [(4)] (3) The establishment of a revised benefit plan |
29 | for newly hired municipal employees pursuant to section |
30 | 607(e). |
|
1 | [(5)] (4) The special municipal taxing authority |
2 | pursuant to section 607(f). |
3 | [(6) The delayed implementation of funding standard over |
4 | ten years pursuant to section 607(g). |
5 | (7) Supplemental State assistance pursuant to section |
6 | 607(j).] |
7 | (8) (i) A level II municipality may elect to pay a |
8 | reduced minimum municipal obligation consisting of the |
9 | normal cost and administrative expenses of the pension |
10 | plan plus: |
11 | (A) 75% of the amortization contribution |
12 | requirement, calculated according to section 202(b) |
13 | (4); minus |
14 | (B) anticipated member contributions. |
15 | (ii) This reduction of payments to amortize the |
16 | actuarial accrued liability shall be authorized for a |
17 | period of two consecutive actuarial valuation reporting |
18 | periods (total of four years) under section 607(h.1). At |
19 | the end of this period, section 302(c) shall apply to the |
20 | minimum municipal obligation calculation. |
21 | (9) (i) Upon the expiration of the period applicable to |
22 | the asset valuation provisions of section 210(c), for an |
23 | additional period of two biennial actuarial valuation |
24 | reporting periods (allowing an additional four years for |
25 | a total of six years), a level II municipality may |
26 | utilize a method for valuing assets that may not produce |
27 | a result that in total is: |
28 | (A) greater than 130% of a period of two |
29 | consecutive actuarial valuation reporting periods |
30 | (total of four years); or |
|
1 | (B) less than 70% of the fair market value of |
2 | the assets of the municipal pension plan. |
3 | (ii) At the end of the additional period under |
4 | subparagraph (i), section 210 shall apply to the |
5 | actuarial valuation of assets. |
6 | (c) Benefit modification.--No benefit plan modification |
7 | shall be adopted unless the actuarial value of the assets of the |
8 | pension plan are: |
9 | (1) at least equal to 100% of the actuarial value of |
10 | liabilities prior to adoption; and |
11 | (2) at least 90% of the actuarial value of liabilities |
12 | after adoption. |
13 | Section 606. Recovery program level III. |
14 | (a) Optional [remedies] remedy.--Any municipality to which |
15 | level III of the recovery program applies may utilize the |
16 | [following remedies: |
17 | (1) The establishment of total member contributions |
18 | pursuant to section 607(c). |
19 | (2) The deviation from municipal contribution |
20 | limitations pursuant to section 607(d). |
21 | (3) The] special municipal taxing authority pursuant to |
22 | section 607(f). |
23 | [(4) The delayed implementation of funding standard over |
24 | ten years pursuant to section 607(g) or the delayed |
25 | implementation of funding standard over 15 years with 40-year |
26 | amortization pursuant to section 607(h). |
27 | (5) Supplemental State assistance pursuant to section |
28 | 607(j).] |
29 | (b) Mandatory remedies.--Any municipality to which level III |
30 | of the recovery program applies shall utilize the following |
|
1 | remedies: |
2 | [(1) The aggregation of trust funds pursuant to section |
3 | 607(b). |
4 | (2) The establishment of a revised benefit plan for |
5 | newly hired municipal employees pursuant to section 607(e). |
6 | The revised benefit plan shall have a normal cost which is |
7 | less than the normal cost of the benefit plan applicable to |
8 | current municipal employees as reported in the most recent |
9 | prior actuarial valuation report for the pension plan. In |
10 | making this determination, the normal cost for the revised |
11 | benefit plan shall be calculated by applying the revised |
12 | benefit plan to the current active membership demographics. |
13 | (3) The preparation, submission and implementation of a |
14 | plan for improvement of the administration of the pension |
15 | plan or plans pursuant to section 607(i).] |
16 | (1) Participation in the Municipal Pension Recovery |
17 | Program for active, vested and retired municipal employees |
18 | under section 608.1. |
19 | (i) The amortization target date for the unfunded |
20 | actuarial accrued liability in existence as of the first |
21 | day of the valuation year in which a municipality is |
22 | determined to be severely distressed shall be 30 years. |
23 | The annual amortization contribution shall be calculated |
24 | on the basis of a level annual dollar amortization |
25 | contribution specified in section 202. |
26 | (ii) The biennial actuarial valuation report filed |
27 | on behalf of each level III municipality shall utilize an |
28 | actuarial assumption as to investment earnings that is |
29 | equal to the regular interest rate fixed by the |
30 | Pennsylvania Municipal Retirement Board, from time to |
|
1 | time, plus 1.5%. |
2 | (iii) Each level III municipality shall pay a |
3 | reduced minimum municipal obligation consisting of an |
4 | amount equal to: |
5 | (A) the normal cost and administrative expenses |
6 | of the pension plan; minus |
7 | (B) anticipated member contributions; plus |
8 | (C) a percentage of the amortization |
9 | contribution requirement calculated according to |
10 | section 202(b)(4). |
11 | (iv) Payment under subparagraph (iii) shall be |
12 | pursuant to the following schedule, beginning with the |
13 | year in which the municipality is first determined to be |
14 | severely distressed and subject to level III: |
15 16 | First year | 12.5% of amortization contribution | 17 | Second year | 25% of amortization contribution | 18 19 | Third year | 37.5% of amortization contribution | 20 | Fourth year | 50% of amortization contribution | 21 22 | Fifth year | 62.5% of amortization contribution | 23 | Sixth year | 75% of amortization contribution | 24 25 | Seventh year | 87.5% of amortization contribution | 26 | Eighth year and thereafter | 100% of amortization contribution |
|
27 | (v) Upon the expiration of the period applicable to |
28 | the asset valuation provisions of section 210(c), a level |
29 | III municipality may utilize a method for valuing assets |
30 | that may not produce a result that in total is greater |
|
1 | than 130% or less than 70% of the fair market value of |
2 | the assets of the municipal pension plan, for an |
3 | additional period of two biennial actuarial valuation |
4 | reporting periods (allowing an additional four years for |
5 | a total of six years), at the end of which period the |
6 | actuarial valuation of assets shall revert to the method |
7 | provided by section 210. |
8 | (2) Participation in the Cooperative Municipal Pension |
9 | Program for newly hired municipal employees under section |
10 | 608.2. |
11 | Section 11. Section 607(b), (e), (f), (g), (h), (j) and (k) |
12 | of the act, amended February 14, 1986 (P.L.23, No.9), December |
13 | 10, 1996 (P.L.934, No.150) and June 18, 1998 (P.L.626, No.82), |
14 | are amended and the section is amended by adding subsections to |
15 | read: |
16 | Section 607. Remedies applicable to various recovery program |
17 | levels. |
18 | * * * |
19 | (b) Aggregation of trust funds.--If the municipality has |
20 | established and maintained more than one pension plan for its |
21 | employees and there are pension funds associated with those |
22 | pension plans, the municipality may aggregate the assets to the |
23 | credit of the various pension funds into a single pension trust |
24 | fund. Subsequent to the aggregation, the pension trust fund |
25 | shall be the funding mechanism for all pension plans connected |
26 | with the aggregation. |
27 | (1) Each pension plan subject to the aggregation shall |
28 | have an undivided participation in the assets of the combined |
29 | pension trust fund. For accounting purposes, the value of the |
30 | participation by each plan shall be calculated annually. The |
|
1 | value for the initial year following aggregation shall be |
2 | that portion of the total value of the pension trust fund |
3 | which bears the same relationship that the value of the |
4 | assets of the pension plan, as of the date of the aggregation |
5 | plus the contributions received by the pension trust fund |
6 | with respect to that pension plan since the date of |
7 | aggregation and reduced by the amount of retirement annuities |
8 | and benefits paid from the pension trust fund for annuitants |
9 | and benefit recipients of that pension plan since the date of |
10 | aggregation, bears to the total value of all assets |
11 | transferred to the pension trust fund as of the date of |
12 | aggregation plus the total contributions received by the |
13 | pension trust fund since the date of aggregation and reduced |
14 | by the total amount of retirement annuities and benefits paid |
15 | for all annuitants and benefit recipients since the date of |
16 | aggregation. The value of the participation for each year |
17 | subsequent to the initial year following aggregation shall be |
18 | that portion of the total value of the pension trust fund |
19 | which bears the same relationship that the value of the |
20 | participation of the pension plan, as of the close of the |
21 | preceding year plus the contributions received by the pension |
22 | trust fund with respect to that pension plan during the year |
23 | and reduced by the amount of retirement annuities and |
24 | benefits paid from the pension trust fund for annuitants and |
25 | benefit recipients of that pension plan during the year, |
26 | bears to the total value of all participation in the pension |
27 | trust fund as of the close of the preceding year plus the |
28 | total contributions received by the pension trust fund during |
29 | the year and reduced by the total amount of retirement |
30 | annuities and benefits paid for all annuitants and benefit |
|
1 | recipients during the year. |
2 | (2) Legal title to assets in the aggregated pension |
3 | trust fund shall be in the municipality as trustee, or its |
4 | nominees as trustees, for any person having a beneficial |
5 | interest in a particular pension plan which is associated |
6 | with the pension trust fund. |
7 | (3) The assets of the aggregated pension trust fund |
8 | shall be invested in investment securities which are |
9 | authorized investments pursuant to any applicable law for any |
10 | of the associated pension plans. |
11 | (4) Investment earnings shall be allocated to each |
12 | associated pension plan in proportion to the most recently |
13 | determined participation value. |
14 | (5) Valuation of assets shall be pursuant to the |
15 | provisions of section 202(e)(1) and any applicable rules and |
16 | regulations issued by the commission. |
17 | (6) The aggregated pension trust fund shall be managed |
18 | by a board of trustees. The board of trustees shall include |
19 | at least one representative of the active membership of each |
20 | pension plan included in the aggregated pension trust fund, |
21 | who shall be elected by the active membership of the |
22 | applicable pension plan. The remaining members of the board |
23 | of trustees shall be drawn from the managing boards or |
24 | entities of the associated pension plans, in a number equal |
25 | to the members elected by the employees. If there is a |
26 | deadlock, the members of the managing boards or entities |
27 | shall mutually agree upon a member of the general public to |
28 | cast the deciding vote. |
29 | * * * |
30 | (e) Establishment of a revised benefit plan for newly hired |
|
1 | municipal employees.--The municipality may establish a revised |
2 | benefit plan of the pension plan applicable to any employee |
3 | first hired on or after the effective date of the instrument |
4 | establishing the revised benefit plan. At the option of the |
5 | municipality, the revised benefit plan may be extended to |
6 | include an employee first hired prior to the effective date of |
7 | the instrument establishing the revised benefit who elects the |
8 | coverage. The revised benefit plan may provide for defined |
9 | benefits, defined contributions or a combination of both. Member |
10 | contributions with respect to [the] a revised defined benefit |
11 | plan of the pension plan shall at a minimum be equal to or |
12 | exceed 30% and at a maximum not to exceed 50%, of the normal |
13 | cost of the pension plan, expressed as a percentage of covered |
14 | payroll, as reported in the most recent actuarial valuation |
15 | report of the pension plan. A revised defined contribution plan |
16 | shall be centrally administered and invested and shall provide |
17 | for mandatory employee contributions of not less than 6% of |
18 | covered payroll and a matching employer contribution not to |
19 | exceed 6% of covered payroll. A revised benefit plan for newly |
20 | hired municipal employees shall be developed with consultation |
21 | with representatives of the collective bargaining unit |
22 | applicable to the affected type of municipal employee, if any, |
23 | and shall be within the scope of collective bargaining pursuant |
24 | to the applicable law subsequent to the establishment of the |
25 | revised benefit plan. |
26 | (f) Special municipal taxing authority.-- |
27 | (1) If the tax rates set by the municipality on earned |
28 | income or on real property are at the maximum provided by |
29 | applicable law, the municipality may increase its tax on |
30 | either earned income or real property above those maximum |
|
1 | rates. The proceeds of this special municipal tax increase |
2 | shall be used solely to defray the additional costs required |
3 | to be paid pursuant to this act which are directly related to |
4 | the pension plans of the municipality. The municipality |
5 | utilizing this special municipal taxing authority shall not |
6 | reduce the level of municipal contributions to the pension |
7 | plans prior to the implementation of the special municipal |
8 | taxing authority. |
9 | (2) The average level of municipal contributions to the |
10 | pension plans from all revenue sources for the three years |
11 | immediately prior to the implementation of the special |
12 | municipal taxing authority shall be expressed as a percentage |
13 | of the average covered payroll for that same three-year |
14 | period: Provided, however, That any supplemental |
15 | contributions made to the plans pursuant to any pension |
16 | recovery legislation enacted by the municipalities shall be |
17 | excluded for purposes of determining the level of municipal |
18 | contribution to the pension plans prior to the implementation |
19 | of the special municipal taxing authority. In each year |
20 | subsequent to the implementation of the special municipal |
21 | taxing authority, the municipal contributions to the pension |
22 | plan from all revenue sources existing prior to the |
23 | implementation of the special existing municipal taxing |
24 | authority, reduced by any supplemental pension recovery |
25 | contributions, shall equal or exceed this average percentage |
26 | of the current covered payroll. A municipality utilizing the |
27 | provisions of section 404 may levy or continue to levy the |
28 | special municipal tax increase under this subsection provided |
29 | that the municipality does not reduce the level of municipal |
30 | contributions to the pension plans prior to the |
|
1 | implementation of the special municipal taxing authority. In |
2 | executing the procedure prescribed in this subsection to |
3 | determine the level of municipal contributions, the debt |
4 | service payments for bonds or notes issued under section 404 |
5 | shall be considered municipal contributions. |
6 | (f.1) Limitation on special municipal taxing authority.-- |
7 | Beginning January 1, 2010, and continuing for each year |
8 | thereafter, no special municipal tax increase may be assessed or |
9 | used for any purpose other than to defray the additional costs |
10 | required to be paid pursuant to this act and which are directly |
11 | related to the pension plans of the municipality and which are |
12 | included in the calculation of the financial requirements of the |
13 | pension plan and the minimum municipal obligation. If the |
14 | municipality assesses or utilizes the special municipal tax |
15 | increase to fund other post-employment benefits, the cost of |
16 | those benefits shall be subject to the actuarial funding and |
17 | reporting standards of this act. |
18 | [(g) Delayed implementation of funding standard over ten |
19 | years.--The municipality may delay full implementation of the |
20 | actuarial funding standard specified in section 302 or 303, |
21 | whichever is applicable, over a period not to exceed ten years |
22 | in duration, and may calculate that actuarial funding standard |
23 | on the basis of a 30-year amortization period for the increment |
24 | of unfunded actuarial accrued liability in existence as of the |
25 | beginning of the plan year occurring in calendar year 1985. |
26 | During the delayed implementation period, the municipality shall |
27 | make a municipal contribution to each municipal pension plan of |
28 | an amount equal to not less than the municipal contribution to |
29 | the municipal pension plan made in the immediate prior year and |
30 | the following percentage of the difference between that amount |
|
1 | and the full minimum municipal obligation with respect to the |
2 | pension plan pursuant to section 302 or 303, whichever is |
3 | applicable: |
4 | Year | Percentage of Difference | 5 | 1985 | 10% | 6 | 1986 | 20% | 7 | 1987 | 30% | 8 | 1988 | 40% | 9 | 1989 | 50% | 10 | 1990 | 60% | 11 | 1991 | 70% | 12 | 1992 | 80% | 13 | 1993 | 90% | 14 | 1994 and thereafter | 100% |
|
15 | The municipality may calculate the annual amortization |
16 | contribution on the basis of a level percentage of future |
17 | increasing covered payroll amortization contribution rather than |
18 | on the basis of the level annual dollar amortization |
19 | contribution specified in section 202. |
20 | (h) Delayed implementation of funding standard over 15 |
21 | years; 40-year amortization period.--The municipality may delay |
22 | full implementation of the actuarial funding standard specified |
23 | in section 302 or 303, whichever is applicable, over a period |
24 | not to exceed 15 years in duration and may calculate that |
25 | actuarial funding standard on the basis of a 40-year |
26 | amortization period for the increment of unfunded actuarial |
27 | accrued liability in existence as of the beginning of the plan |
28 | year occurring in calendar year 1985. During the delayed |
29 | implementation period, the municipality shall make a municipal |
30 | contribution to each municipal pension plan of an amount equal |
|
1 | to not less than the municipal contribution to the municipal |
2 | pension plan made in the immediate prior year and the following |
3 | percentage of the difference between that amount and the full |
4 | minimum municipal obligation with respect to the pension plan |
5 | pursuant to section 302 or 303, whichever is applicable, |
6 | calculated using the applicable 40-year amortization period: |
7 | Year | Percentage of Difference | 8 | 1985 | 6.7% | 9 | 1986 | 13.4% | 10 | 1987 | 20.1% | 11 | 1988 | 26.8% | 12 | 1989 | 33.5% | 13 | 1990 | 40.2% | 14 | 1991 | 46.9% | 15 | 1992 | 53.6% | 16 | 1993 | 60.3% | 17 | 1994 | 67.0% | 18 | 1995 | 73.7% | 19 | 1996 | 80.4% | 20 | 1997 | 87.1% | 21 | 1998 | 93.8% | 22 | 1999 | 100.0% |
|
23 | The municipality may calculate the annual amortization |
24 | contribution on the basis of a level percentage of future |
25 | increasing covered payroll amortization contribution rather than |
26 | on the basis of the level annual dollar amortization |
27 | contribution specified in section 202.] |
28 | (h.1) Reduced minimum municipal obligation.-- |
29 | (1) The time period for use of the reduced minimum |
30 | municipal obligation and reduced amortization payment shall |
|
1 | be limited to the period applicable to the municipality's |
2 | level of distress as last determined by the commission. |
3 | (2) If a municipality's distress level becomes worse as |
4 | of a future filing period, the special amortization and |
5 | minimum municipal contribution remedy shall be extended by |
6 | the difference between: |
7 | (i) the period allowed for the previous distress |
8 | level; and |
9 | (ii) the period applicable to the new level of |
10 | distress. |
11 | (3) If a municipality's distress level improves, the |
12 | reduced minimum municipal obligation and special amortization |
13 | period shall continue for the duration of the period |
14 | applicable to the previous distress level determination. |
15 | * * * |
16 | [(j) Supplemental State assistance.--If every pension plan |
17 | of the municipality which is a defined benefit plan and which is |
18 | self-insured in whole or in part has filed an actuarial |
19 | valuation report utilizing the standardized actuarial cost |
20 | method and economic actuarial assumptions within the range of |
21 | actuarial assumptions specified in section 202(b) and if the |
22 | municipality has implemented the aggregation of trust funds |
23 | pursuant to subsection (b), the municipality may receive |
24 | supplemental State assistance from the Supplemental State |
25 | Assistance Fund established pursuant to section 608. The amount |
26 | of the supplemental State assistance to which the municipality |
27 | is entitled shall be determined annually based on the |
28 | determination scoring which the municipality received from the |
29 | commission pursuant to section 503, as follows: |
30 | (1) The determination score of the municipality shall be |
|
1 | reduced by an amount equal to 25% of the maximum possible |
2 | determination score. |
3 | (2) The result calculated pursuant to paragraph (1) |
4 | shall be expressed as a percentage of the maximum possible |
5 | determination score. |
6 | (2.1) For the supplemental State assistance distributed |
7 | in December of 1997, the percentage calculated pursuant to |
8 | paragraph (2) shall be applied to the dollar amount of |
9 | difference between the greater of the amount of the municipal |
10 | contribution or the amount of the actual municipal deposit to |
11 | all municipal pension plans in aggregate and the full minimum |
12 | municipal obligation with respect to the pension plans |
13 | pursuant to section 302 or 303, whichever is applicable, to |
14 | determine the amount of supplemental State assistance for the |
15 | municipality. |
16 | (3) For the supplemental State assistance distributed in |
17 | December of 1998 and thereafter, the percentage calculated |
18 | pursuant to paragraph (2) shall be applied to the dollar |
19 | amount of difference between the amount of the municipal |
20 | contribution to all municipal pension plans in aggregate and |
21 | the full minimum municipal obligation with respect to the |
22 | pension plan pursuant to section 302 or 303, whichever is |
23 | applicable, to determine the amount of supplemental State |
24 | assistance for the municipality. For the purposes of this |
25 | paragraph, the municipal contribution of a municipality that |
26 | has issued bonds or notes to fund an unfunded actuarial |
27 | accrued liability under the act of July 12, 1972 (P.L.781, |
28 | No.185), known as the Local Government Unit Debt Act, or |
29 | under other laws applicable to the municipality, shall |
30 | include debt service on the bonds or notes, or both, issued |
|
1 | to fund an unfunded actuarial accrued liability. |
2 | In the event that the total amount of supplemental State |
3 | assistance determined as payable to all municipalities entitled |
4 | to receive supplemental State assistance exceeds the maximum |
5 | appropriation provided for in section 608(b), the amount of |
6 | supplemental State assistance which shall be payable to each |
7 | municipality shall be proportionately reduced. The supplemental |
8 | State assistance shall be distributed annually on the first |
9 | business day occurring in December. For the purposes of this |
10 | subsection, the term "municipal contribution" shall mean the sum |
11 | of the current year's minimum municipal obligation, the annual |
12 | interest payable on any current or prior period funding |
13 | deficiencies and the total amount of any discretionary deposits |
14 | to the pension fund in the current year. |
15 | (k) Emergency loan procedures.--The municipality may receive |
16 | a loan from the Supplemental State Assistance Fund in any year |
17 | during the existence of the fund in an amount certified by the |
18 | commission. The loan amount shall be sufficient to eliminate the |
19 | possibility of imminent default during the next 12 consecutive |
20 | calendar months in the payment of retirement and other benefits |
21 | by one or more of the pension plans maintained by the |
22 | municipality. Terms for the repayment of any loan shall be |
23 | established by agreement between the municipality and the |
24 | commission prior to the loan.] |
25 | Section 12. Section 608 of the act is amended to read: |
26 | [Section 608. Supplemental State Assistance Program and Fund. |
27 | (a) Establishment.--There is hereby established a |
28 | Supplemental State Assistance Program and Fund. The Supplemental |
29 | State Assistance Fund shall be comprised of a Supplemental State |
30 | Assistance Account. The Supplemental State Assistance Program |
|
1 | and Fund shall be administered by the Auditor General. |
2 | (b) Supplemental State Assistance Account.--Supplemental |
3 | State assistance payable pursuant to section 607(j) shall be |
4 | paid from the Supplemental State Assistance Account. The |
5 | Supplemental State Assistance Account shall be funded from an |
6 | appropriation by the Commonwealth from the General Fund of the |
7 | Commonwealth. Annually the commission shall calculate the amount |
8 | of supplemental State assistance payable to all eligible |
9 | municipalities and shall certify the required amount to the |
10 | General Assembly. The amount of any annual certification of an |
11 | appropriation by the commission shall not exceed $35,000,000. |
12 | The General Assembly shall make an appropriation to the |
13 | Supplemental State Assistance Account sufficient to provide for |
14 | the amount certified by the commission. The appropriation shall |
15 | be deposited on the last business day in November annually. |
16 | (c) Preconditions.--As a precondition for the receipt of any |
17 | supplemental State assistance, the municipality shall |
18 | demonstrate prior good faith compliance with any applicable |
19 | municipal pension plan actuarial funding standard in effect. . |
20 | The municipality shall also implement any mandatory aspects of |
21 | the applicable recovery program level. |
22 | (d) Warrants.--Any supplemental State assistance shall be |
23 | payable on warrants drawn by the Auditor General based on |
24 | certifications of the commission. |
25 | (e) Expiration.--The Supplemental State Assistance Program |
26 | and Fund shall terminate in 2003 or in the first year in which |
27 | there are no municipalities entitled to receive supplemental |
28 | State assistance, whichever occurs earlier.] |
29 | Section 13. The act is amended by adding sections to read: |
30 | Section 608.1. Municipal Pension Recovery Program. |
|
1 | (a) Establishment.--The Municipal Pension Recovery Program |
2 | is established. The program shall be administered by the |
3 | Pennsylvania Municipal Retirement Board. |
4 | (b) Membership.--Once a municipality is determined to |
5 | qualify for the level III recovery program under section 606, |
6 | any and all pension plans and assets then maintained by the |
7 | municipality shall be transferred to the Pennsylvania Municipal |
8 | Retirement System for administration under the program; and all |
9 | pension rights, privileges and benefits, except hospital, |
10 | medical and other health insurance coverage, shall be governed |
11 | solely and exclusively by the program. No other statute, |
12 | ordinance, contract, arbitration award or practice shall permit |
13 | or authorize any deviation from or alteration of the terms of |
14 | the legislative enactments specifically governing the terms of |
15 | the program. |
16 | (c) Exclusions.--For purposes of this section, multiemployer |
17 | jointly trusteed Taft-Hartley collectively bargained pension |
18 | plans shall not be considered as pension plans and assets then |
19 | maintained by the municipality, and employees subject to |
20 | multiemployer collectively bargained pension plans shall not be |
21 | included in the program. |
22 | (d) Liability.-- |
23 | (1) The liability to continue payment of pension |
24 | benefits shall remain the exclusive responsibility of the |
25 | employing municipality. |
26 | (2) Except as set forth in paragraph (3), the minimum |
27 | municipal obligation of each municipality qualified for the |
28 | level III recovery program shall be determined on the basis |
29 | of actuarial valuation reports utilizing the actuarial |
30 | assumptions adopted by the Pennsylvania Municipal Retirement |
|
1 | Board. |
2 | (3) The investment earnings assumption shall be 1.5% |
3 | higher than the assumption applicable to municipalities |
4 | participating under Article II, III or IV of act of February |
5 | 1, 1974 (P.L.34, No.15), known as the Pennsylvania Municipal |
6 | Retirement Law. |
7 | Section 608.2. Cooperative Municipal Pension Program. |
8 | (a) Establishment.--The Cooperative Municipal Pension |
9 | Program is established. The program shall be administered by the |
10 | Pennsylvania Municipal Retirement Board. |
11 | (b) Membership.--Once a municipality is determined to |
12 | qualify for the level III recovery program under section 606, |
13 | all employees subsequently hired or returning to employment |
14 | after separation from service and all employees to whom pension |
15 | coverage is newly extended by the municipality shall be enrolled |
16 | in the program; and all pension rights, privileges and benefits, |
17 | except hospital, medical and other health insurance coverage, |
18 | shall be governed solely and exclusively thereby. No other |
19 | statute, ordinance, contract, arbitration award or practice |
20 | shall permit or authorize any deviation from or alteration of |
21 | the terms of the legislative enactments specifically governing |
22 | the terms of the program. |
23 | (c) Benefits.--Superannuation retirement benefits shall be |
24 | calculated as follows: |
25 | (1) In all cities subject to this section, public safety |
26 | employees in the police, fire or emergency services |
27 | departments shall be entitled to superannuation retirement |
28 | upon attainment of age 50 and completion of not less than 20 |
29 | years of service, calculated at the rate of 2.25% of final |
30 | average salary earned during the three highest consecutive |
|
1 | years of service. |
2 | (2) In all cities subject to this section, general |
3 | municipal employees shall be entitled to superannuation |
4 | retirement upon attainment of age 65 and completion of not |
5 | less than 30 years of service, calculated at the rate of 2% |
6 | of final average salary earned during the three highest |
7 | consecutive years of service. |
8 | (3) In all municipalities other than cities subject to |
9 | this section, public safety employees in the police, fire or |
10 | emergency services departments shall be entitled to |
11 | superannuation retirement upon attainment of age 55 and |
12 | completion of not less than 25 years of service, calculated |
13 | at the rate of 2% of final average salary earned during the |
14 | three highest consecutive years of service. |
15 | (4) In all municipalities other than cities subject to |
16 | these provisions, general municipal employees shall be |
17 | entitled to superannuation retirement upon attainment of age |
18 | 65 and completion of not less than 30 years of service, |
19 | calculated at the rate of 1.5% of final average salary earned |
20 | during the three highest consecutive years of service. |
21 | (5) If positions covered by this section are included in |
22 | an agreement under the Social Security Act (49 Stat. 620, 42 |
23 | U.S.C. § 301 et seq.), the benefit set forth in paragraph |
24 | (1), (2), (3) or (4) shall, upon the member's attainment of |
25 | eligibility to receive full Social Security old-age benefits, |
26 | be offset by the amount of the member's full Social Security |
27 | old-age insurance benefit calculated in accordance with the |
28 | provisions of the Social Security Act in effect on the date |
29 | of termination of employment. Only compensation for services |
30 | actually rendered by the member and covered by the pension |
|
1 | system created by this section shall be included in |
2 | calculating the offset under this paragraph. |
3 | (d) Contributions.-- |
4 | (1) Except as set forth in paragraph (2), all members of |
5 | the cooperative municipal pension and security program shall |
6 | contribute to their pension, by payroll deduction, an amount |
7 | equal to three times the accrual rate appropriate to their |
8 | class of service. |
9 | (2) Members subject to the Social Security offset of |
10 | subsection (c)(5) shall contribute to their pension, by |
11 | payroll deduction, an amount equal to 1.5% times the accrual |
12 | rate appropriate to their class of service. |
13 | (e) Retirement options.--At the time of retirement, a member |
14 | may elect to receive benefits in a retirement allowance payable |
15 | throughout the member's life. This election is known as a single |
16 | life annuity. Instead of receiving a single life annuity, the |
17 | member may elect to receive the equivalent actuarial value at |
18 | the time of retirement in a lesser allowance, payable throughout |
19 | life with provisions that, upon the member's death: |
20 | (1) the member's retirement allowance shall be continued |
21 | throughout the life of and paid to the member's survivor |
22 | annuitant, if then living; or |
23 | (2) one-half of the member's retirement allowance shall |
24 | be continued throughout the life of and paid to the member's |
25 | survivor annuitant, if then living. |
26 | (f) Disability retirement.-- |
27 | (1) This subsection applies to all of the following |
28 | members: |
29 | (i) An active municipal employee who has accumulated |
30 | at least five years of total credited service. |
|
1 | (ii) An active municipal police officer or municipal |
2 | firefighter regardless of credited years of service. |
3 | (2) A member subject to this subsection under paragraph |
4 | (1) may, upon application, be retired by the board of |
5 | pensions and retirement on a disability allowance if |
6 | determined to be mentally or physically permanently incapable |
7 | of continuing to perform the duties for which the member is |
8 | employed. The disability annuity shall be determined under |
9 | the following paragraphs. |
10 | (3) Multiply: |
11 | (i) the benefit accrual rate applicable to the |
12 | member's retirement plan; by |
13 | (ii) the member's total number of years of credited |
14 | service. |
15 | (4) If the product under paragraph (3) is more than |
16 | 16.667, the disability annuity is the product of: |
17 | (i) a standard single life annuity; and |
18 | (ii) the benefit accrual rate applicable to the |
19 | member's retirement plan. |
20 | (5) If the product under paragraph (3) is not more than |
21 | 16.667, the disability annuity is determined as follows: |
22 | (i) Multiply: |
23 | (A) the accrual rate applicable to the member on |
24 | the effective date of the disability; by |
25 | (B) either: |
26 | (I) the total years and partial years of |
27 | credited service the member would have earned if |
28 | the member were to continue as an employee until |
29 | attaining eligibility for a superannuation |
30 | retirement allowance; or |
|
1 | (II) if the member has attained eligibility |
2 | for a superannuation retirement allowance at the |
3 | time of the disability, the number of years of |
4 | credited service. |
5 | (ii) Divide: |
6 | (A) the product under subparagraph (i); by |
7 | (B) the number of years and partial years of |
8 | credited service earned by the member as of the |
9 | effective date of the disability. |
10 | (iii) Divide: |
11 | (A) 16.667; by |
12 | (B) the number of years and partial years of |
13 | credited service earned by the member as of the |
14 | effective date of the disability. |
15 | (iv) Multiply the standard single life annuity by |
16 | the lesser of: |
17 | (A) the quotient under subparagraph (ii); or |
18 | (B) the quotient under subparagraph (iii). |
19 | (g) Service connected disability.-- |
20 | (1) This subsection applies if: |
21 | (i) a member has been found to be eligible for a |
22 | disability annuity; and |
23 | (ii) the disability has been found to be a service |
24 | connected disability. |
25 | (2) A member subject to this subsection under paragraph |
26 | (1) shall receive a supplement equal to: |
27 | (i) 70% of the member's final average salary; minus |
28 | (ii) the sum of: |
29 | (A) the annuity as determined under subsection |
30 | (f); and |
|
1 | (B) payments paid or payable on account of the |
2 | disability under: |
3 | (I) the act of June 2, 1915 (P.L.736, |
4 | No.338), known as the Workers' Compensation Act; |
5 | (II) the act of June 21, 1939 (P.L.566, |
6 | No.284), known as The Pennsylvania Occupational |
7 | Disease Act; and |
8 | (III) the Social Security Act (49 Stat. 620, |
9 | 42 U.S.C. § 301 et seq.). |
10 | (h) Vesting.--A member who ceases to be an active member for |
11 | any reason after having completed at least ten years of credited |
12 | service but before meeting the superannuation retirement service |
13 | requirement shall be entitled to vest retirement benefits until |
14 | the member attains superannuation retirement age. |
15 | (i) Alternative retirement program.-- |
16 | (1) A municipal employee may, within 30 days of |
17 | initiating employment covered by this section, make an |
18 | irrevocable election to participate in an alternative |
19 | independent defined contribution retirement program approved |
20 | by the board. |
21 | (2) To be approved, the alternative defined contribution |
22 | program must: |
23 | (i) centralize management and investment; |
24 | (ii) offer a variety of investment asset |
25 | allocations; and |
26 | (iii) mandate both the employee and employer to |
27 | contribute 6% of the member's covered payroll. |
28 | (3) An election by an employee to participate shall be |
29 | final, binding and irrevocable and shall apply to all future |
30 | employment with any municipality subject to these provisions. |
|
1 | (j) Definition.--As used in this section, the term "salary" |
2 | means the fixed amount of compensation paid at regular, periodic |
3 | intervals by a municipality to the member and from which pension |
4 | contributions have been deducted. |
5 | Section 14. Section 609 of the act is amended to read: |
6 | Section 609. Rules and regulations. |
7 | The commission may issue any rules [and], regulations, |
8 | policies and procedures necessary for the effective |
9 | administration and operation of the provisions of this act. |
10 | Section 15. The act is amended by adding a chapter to read: |
11 | CHAPTER 7-A |
12 | STANDARDS FOR MUNICIPAL PENSION SYSTEMS |
13 | Section 701-A. Definitions. |
14 | The following words and phrases when used in this chapter |
15 | shall have the meanings given to them in this section unless the |
16 | context clearly indicates otherwise: |
17 | "Affiliated entity." Any of the following: |
18 | (1) A subsidiary or holding company of a lobbying firm |
19 | or other business entity owned in whole or in part by a |
20 | lobbying firm. |
21 | (2) An organization recognized by the Internal Revenue |
22 | Service as a tax-exempt organization under section 501(c) of |
23 | the Internal Revenue Code of 1986 (Public Law 99-514, 26 |
24 | U.S.C. § 501(c)) established by a lobbyist or lobbying firm |
25 | or an affiliated entity. |
26 | "Contributions." As defined in section 1621 of the act of |
27 | June 3, 1937 (P.L.1333, No.320), known as the Pennsylvania |
28 | Election Code. |
29 | "Executive level employee." An employee of a person or the |
30 | person's affiliated entity who: |
|
1 | (1) can affect or influence the outcome of the person's |
2 | or affiliated entity's actions, policies or decisions; or |
3 | (2) is involved in the implementation or development of |
4 | policies relating to investments, contracts or procurement. |
5 | "Municipal pension system." Includes the Pennsylvania |
6 | Municipal Retirement System. |
7 | "Political committee." As defined in section 1621 of the act |
8 | of June 3, 1937 (P.L.1333, No.320), known as the Pennsylvania |
9 | Election Code. |
10 | "Professional services contract." A contract to which the |
11 | municipal pension system is a party that is: |
12 | (1) for the purchase or provision of professional |
13 | services, including investment services, legal services, real |
14 | estate services and other consulting services; and |
15 | (2) not subject to a requirement that the lowest bid be |
16 | accepted. |
17 | Section 702-A. Procurement for professional services contracts. |
18 | (a) Procedures.--Each municipal pension system, including |
19 | the Pennsylvania Municipal Retirement System, shall develop |
20 | procedures to select the most qualified person to enter into a |
21 | professional services contract. The procedures shall ensure that |
22 | the availability of a professional services contract is |
23 | advertised to potential participants in a timely and efficient |
24 | manner. Procedures shall include applications and disclosure |
25 | forms to be used to submit a proposal for review and to receive |
26 | the award of a professional services contract. |
27 | (b) Advertisement.-–An advertisement of the availability of |
28 | a proposal for a professional services contract shall set forth: |
29 | (1) The services that are the subject of the proposed |
30 | contract. |
|
1 | (2) Specifications relating to the services. |
2 | (3) Procedures to compete for the contracts. |
3 | (4) Required disclosures. |
4 | (c) Review.--Procedures to select the most qualified person |
5 | shall include a review of the person's qualifications, |
6 | experience and expertise and the compensation to be charged. |
7 | (d) Personnel.-- |
8 | (1) Prior to entering into a professional services |
9 | contract with a municipal pension system, the contractor |
10 | shall disclose the names and titles of each individual who |
11 | will be providing professional services to the municipal |
12 | pension system, including advisors or subcontractors of the |
13 | contractor. |
14 | (2) Disclosure under this subsection shall include all |
15 | of the following: |
16 | (i) Whether the individual is a current or former |
17 | official or employee of the municipality entering into |
18 | the contract. |
19 | (ii) Whether the individual has been a registered |
20 | Federal or State lobbyist. |
21 | (iii) A description of the responsibilities of each |
22 | individual with regard to the contract. |
23 | (3) The resume of an individual included in the |
24 | disclosure shall be provided to the municipality upon |
25 | request. |
26 | (4) The information under this subsection shall be |
27 | updated as changes occur. |
28 | (e) Conflict of interest.-–The municipal pension system |
29 | shall adopt policies relating to potential conflicts of interest |
30 | in the review of a proposal or the negotiation of a contract. |
|
1 | The policies shall include a minimum one-year restriction on: |
2 | (1) Participation by a former employee of a contractor |
3 | or potential contractor in the review of a proposal or |
4 | negotiation of a contract with that contractor. |
5 | (2) Participation by a former employee of the municipal |
6 | pension system in the submission of a proposal or the |
7 | performance of a contract. |
8 | (f) Public information.-–Following the award of a |
9 | professional services contract, all applications and disclosure |
10 | forms shall be public except for proprietary information or |
11 | other information protected by law. |
12 | (g) Increase.–-A professional services contract shall not be |
13 | amended to increase the cost of the contract by more than 10% or |
14 | $10,000, whichever is greater, unless the increase and a written |
15 | justification for the increase are public and posted on the |
16 | municipal pension system's Internet website, if an Internet |
17 | website is maintained, at least seven days prior to the |
18 | effective date of the amendment. |
19 | (h) Notice and summary.–-The relevant factors that resulted |
20 | in the award of the professional services contract must be |
21 | summarized in a written statement to be included in or attached |
22 | to the documents awarding the contract. Within ten days of the |
23 | award of the professional services contract, the original |
24 | application, a summary of the basis for the award and all |
25 | required disclosure forms must be transmitted to all |
26 | unsuccessful applicants and posted on the municipal pension |
27 | system's Internet website, if an Internet website is maintained, |
28 | at least seven days prior to the execution of the professional |
29 | services contract. |
30 | Section 703-A. Agents; solicitation. |
|
1 | (a) Prohibition.--A person or an affiliated entity that |
2 | intends to enter or that enters into a professional services |
3 | contract may not directly or indirectly hire, engage, utilize, |
4 | retain or compensate any third party intermediary, agent or |
5 | lobbyist to directly or indirectly communicate with a municipal |
6 | pension system official or employee or a municipal official or |
7 | employee in connection with any transaction or investment |
8 | involving the contractor and the municipal pension system. The |
9 | prohibition shall include the solicitation of an investment or |
10 | investment management services from a municipal pension system |
11 | or influencing or attempting to influence the outcome of an |
12 | investment or other financial decision by the system. The |
13 | prohibition shall not apply to an officer or employee of the |
14 | investment firm who is acting within the scope of the firm's |
15 | standard professional duties on behalf of the firm, including |
16 | the actual provision of legal, accounting, engineering, real |
17 | estate or other professional advice, services or assistance |
18 | pursuant to a professional services contract with the municipal |
19 | pension system. |
20 | (b) Solicitation.--A person that enters into, or has applied |
21 | for, submitted an offer or bid for, responded to a request for |
22 | proposal on or otherwise solicited, a professional services |
23 | contract with a municipal pension system or an agent, officer, |
24 | director or employee of that person may not solicit a |
25 | contribution to any municipal official or candidate for |
26 | municipal office in the municipality where the municipal pension |
27 | system is organized or to the political party or political |
28 | action committee of that official or candidate. |
29 | (c) Limitation on communication.--Upon the advertisement for |
30 | a professional services contract by the municipal pension |
|
1 | system, the contractor may not cause or agree to allow a third |
2 | party to communicate with officials or employees of the |
3 | municipal pension system except for requests for technical |
4 | clarification. Requests for technical clarification shall be |
5 | made by a designated employee of the municipal pension system. |
6 | Nothing in this subsection shall preclude a potential contractor |
7 | from responding to requests for clarification or additional |
8 | information from the municipal pension system. |
9 | Section 704-A. Disqualification. |
10 | (a) Contributors.--A person or an affiliated entity that, |
11 | within the past two years, has made a contribution to a |
12 | municipal official or candidate for municipal office in the |
13 | municipality which controls the municipal pension system may not |
14 | enter into a professional services contract with the municipal |
15 | pension system. |
16 | (b) Relationships.--A person or an affiliated entity that |
17 | enters into a professional services contract with a municipal |
18 | pension system may not have a direct financial, commercial or |
19 | business relationship with any official of the municipal pension |
20 | system or the municipality which controls the municipal pension |
21 | system unless the municipal pension system consents in writing |
22 | to the relationship following full disclosure. |
23 | (c) Gifts.--A person with a professional services contract |
24 | may not offer or confer a gift having more than a nominal value, |
25 | including money, services, loans, travel, lodging, |
26 | entertainment, discount or other thing of value, to any |
27 | official, employee or fiduciary of a municipal pension system. |
28 | Section 705-A. Disclosure. |
29 | (a) Contractors.–- |
30 | (1) A person or an affiliated entity that has a |
|
1 | professional services contract with a municipal pension |
2 | system shall disclose all contributions to which all of the |
3 | following apply: |
4 | (i) The contribution was made within the last five |
5 | years. |
6 | (ii) The contribution was made by an officer, |
7 | director, executive-level employee or owner of at least |
8 | 5% of the person or affiliated entity. |
9 | (iii) The amount of the contribution was at least |
10 | $500 in the form of: |
11 | (A) A single contribution by a person included |
12 | in subparagraph (ii). |
13 | (B) The aggregate of all contributions by all |
14 | persons listed in subparagraph (ii). |
15 | (iv) The contribution was made to: |
16 | (A) A candidate for any public office in the |
17 | Commonwealth or to an individual who holds that |
18 | office. |
19 | (B) A political committee of a candidate for |
20 | public office in the Commonwealth or of an individual |
21 | who holds that office. |
22 | (2) The information provided under this subsection shall |
23 | be updated annually. |
24 | (b) Additional disclosure.--A person or an affiliated entity |
25 | that has a professional services contract with a municipal |
26 | pension system shall disclose all of the following: |
27 | (1) Information relating to individuals making |
28 | contributions. This paragraph includes: |
29 | (i) The name and address of the contributor. |
30 | (ii) The contributor's relationship to the |
|
1 | contractor. |
2 | (iii) The name and office or position of each person |
3 | receiving a contribution. |
4 | (iv) The amount of the contribution. |
5 | (v) The date of the contribution. |
6 | (2) Gifts to an official or employee of the municipal |
7 | pension system or the municipality which controls the |
8 | municipal pension system. |
9 | (3) The employment or retention of any third-party |
10 | intermediary, agent or lobbyist and the duties of that |
11 | person. |
12 | (4) The existence of any financial relationship under |
13 | section 704-A(b). |
14 | (c) Applicability.–-The provisions of subsection (a) shall |
15 | apply to a person and an affiliated entity that has applied for, |
16 | submitted an offer or bid for, responded to a request for |
17 | proposal or otherwise solicited a professional services contract |
18 | with a municipal pension system. |
19 | (d) Forms.–-Required disclosure shall be made on a form |
20 | prepared by the municipal pension system. The form shall be |
21 | attached to the contract and posted on the system's Internet |
22 | website, if an Internet website is maintained. During the term |
23 | of the contract, an updated form shall be filed annually in |
24 | accordance with procedures adopted by the plan. |
25 | (e) Penalties.–-The following shall apply: |
26 | (1) A municipal pension system shall void the |
27 | professional services contract of a person that knowingly |
28 | makes a material misstatement or omission in a disclosure |
29 | form under this chapter and shall prohibit the person from |
30 | entering into a contract for a period of up to three years. |
|
1 | (2) If a contractor or person that has submitted a |
2 | proposal or bid in violation of paragraph (1) more than two |
3 | times in a 36-month period, all contracts between that |
4 | contractor and the municipal pension plan shall be void, and |
5 | the person shall be debarred for a period of at least three |
6 | years from the date of the last violation. |
7 | Section 706-A. Duty to act. |
8 | If a person that enters into, or has applied for, submitted |
9 | an offer or bid for, responded to a request for proposal on or |
10 | otherwise solicited, a contract with a municipal pension system |
11 | or an officer, director or employee of a municipal pension |
12 | system is aware, or reasonably should be aware, of an apparent, |
13 | potential or actual conflict of interest, the person shall |
14 | disclose the conflict and promptly eliminate the conflict. |
15 | Section 707-A. No preemption. |
16 | If a municipality establishes a code of ethics which is |
17 | stricter than this chapter, that code is not preempted by this |
18 | chapter. |
19 | Section 16. Chapter 10 heading of the act, added June 18, |
20 | 1998 (P.L.626, No.82), is amended to read: |
21 | CHAPTER 10 |
22 | [ALTERNATIVE FUNDING MECHANISM] |
23 | PROVISIONS RELATING TO CERTAIN CITIES AND COUNTIES |
24 | Section 17. Section 1001(b) of the act, added June 18, 1998 |
25 | (P.L.626, No.82), is amended and the section is amended by |
26 | adding a subsection to read: |
27 | Section 1001. Alternative funding mechanism. |
28 | * * * |
29 | (b) Period of payment requirements prior to July 1, 2009.-- |
30 | The period of the city's payment requirements under an |
|
1 | alternative funding mechanism implemented prior to December 31, |
2 | 2002, shall be the greater of: |
3 | (1) the remaining period not exceeding 30 years during |
4 | which the city would have amortized the unfunded actuarial |
5 | accrued liability reported in its last actuarial valuation |
6 | report filed under Chapter 2 using the total amortization |
7 | payment and interest assumption, reported in that actuarial |
8 | valuation report; or |
9 | (2) 30 years. |
10 | If an alternative funding mechanism is implemented after |
11 | December 31, 2002, but before July 1, 2009, the period described |
12 | in paragraph (1) shall be the period of the city's payment |
13 | requirements. |
14 | (b.1) Period of payment requirements beginning July 1, |
15 | 2009.--The period of the city's payment requirements under an |
16 | alternative funding mechanism implemented or refinanced in whole |
17 | or in part on or after July 1, 2009, and prior to the beginning |
18 | of the plan year that commences July 1, 2019, shall be the |
19 | greater of: |
20 | (1) the remaining period not exceeding 30 years during |
21 | which the city would have amortized the unfunded actuarial |
22 | accrued liability reported in its latest actuarial valuation |
23 | report filed under Chapter 2 using the total amortization |
24 | payment and interest assumption, reported in that actuarial |
25 | valuation report; or |
26 | (2) 30 years. |
27 | If an alternative funding mechanism is implemented after July 1, |
28 | 2019, the period described in paragraph (1) shall be the period |
29 | of the city's payment requirements. |
30 | * * * |
|
1 | Section 18. The act is amended by adding sections to read: |
2 | Section 1002. Cities of the first class. |
3 | (a) General rule.--A city of the first class may elect to |
4 | use the deferrals of required payments authorized under this |
5 | section in lieu of the mandatory provisions of the Financially |
6 | Distressed Municipal Pension System Recovery Program contained |
7 | in sections 606, 608.1 and 608.2. |
8 | (b) Limitation.--The following shall apply: |
9 | (1) In order to be eligible to use the deferrals of |
10 | required payments authorized under this section, the city may |
11 | not increase pension benefits for existing employees. In |
12 | addition, by June 30, 2010, the city shall adopt a revised |
13 | benefit plan applicable to any employee first hired on or |
14 | after the effective date of the establishment of the revised |
15 | benefit plan. The revised benefit plan for newly hired |
16 | employees: |
17 | (i) shall have a normal cost of no more than 75% 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 three times the effective annual |
30 | benefit accrual rate of 50% of the normal cost of the pension |
|
1 | plan, whichever is higher, expressed as a percentage of |
2 | covered payroll, as reported in the most recent actuarial |
3 | valuation report of the pension plan. Any defined |
4 | contribution plan shall provide for matching employer |
5 | contributions and mandatory employee contributions not to |
6 | exceed 4% of compensation per employee. |
7 | (c) Verification.--In order to implement subsection (b), the |
8 | city shall submit evidence of the freeze on existing benefits |
9 | and the reduced benefit plan for newly hired employees and a |
10 | schedule of payments to be deferred under subsection (e) to the |
11 | Pennsylvania Intergovernmental Cooperation Authority and to the |
12 | Public Employee Retirement Commission by September 10, 2009. |
13 | Within 14 days of the receipt of the information and plan from |
14 | the city under this subsection, the authority shall issue a |
15 | written determination that the information and plan meet the |
16 | requirements of subsection (b). |
17 | (d) Amortization.-–Notwithstanding any other law to the |
18 | contrary, the city may amortize its entire unfunded actuarial |
19 | accrued liability, as measured on a valuation date selected by |
20 | the city that occurs in the plan year commencing July 1, 2009, |
21 | as a level dollar amount with the amortization target date being |
22 | the end of the plan year occurring 30 years after the plan year |
23 | commencing July 1, 2009, with payments to commence in the next |
24 | plan year. In order to extend the amortization schedule provided |
25 | under this subsection, the city must comply with the following: |
26 | (1) File a revised actuarial valuation report reflecting |
27 | the amortization period extension and the actuarial assumed |
28 | rate in effect on the valuation date with the commission no |
29 | later than March 31, 2010. |
30 | (2) The revised actuarial valuation under paragraph (1) |
|
1 | may not be filed in lieu of the actuarial valuation reported |
2 | required under section 202(b)(4)(v)(A) required to be filed |
3 | May 3, 2010, and may be used only for the purposes of |
4 | recalculating the minimum municipal obligation of the city |
5 | for the plan year commencing July 1, 2009, and calculating |
6 | the minimum municipal obligation of the city for the plan |
7 | year commencing July 1, 2010, to reflect the amortization |
8 | period extension. The revisions in the revised report shall |
9 | supersede comparable information in the original report. |
10 | (3) Except as provided in subsection (b), a revised |
11 | actuarial valuation report under this subsection shall not |
12 | affect distributions under the General Municipal Pension |
13 | System State Aid Program under Chapter 4. |
14 | (e) Revised obligation.--Notwithstanding any other provision |
15 | of law to the contrary, the city is authorized to defer a |
16 | portion of the minimum municipal funding obligation required |
17 | under section 302 in accordance with the following: |
18 | (1) For the plan year ending June 30, 2010, deferral may |
19 | be in an amount not to exceed $155,000,000. |
20 | (2) For the plan year ending June 30, 2011, deferral may |
21 | be in an amount not to exceed $80,000,000. |
22 | (f) Interest.--Amounts deferred under subsection (e) shall |
23 | bear interest at the rate of 8.25% which shall be calculated |
24 | from the beginning of the plan year in which the deferral was |
25 | made. Accrued interest on amounts deferred shall be paid |
26 | annually on or before June 30 of the years 2010, 2011 and 2012. |
27 | (g) Repayment.--On or before June 30, 2013, the city shall |
28 | repay the following: |
29 | (1) If the amount deferred is equal to or greater than |
30 | $90,000,000, at least $90,000,000 plus interest accrued on |
|
1 | all amounts deferred. |
2 | (2) If the total amount deferred is less than |
3 | $90,000,000, the total amount deferred, plus interest accrued |
4 | on that amount. |
5 | (h) Balance.-–The balance of all amounts deferred, including |
6 | interest accrued and unpaid on amounts deferred shall be repaid |
7 | by June 30, 2014. |
8 | (i) Unpaid amounts.--Amounts deferred and interest under |
9 | subsections (e) and (f) which are not repaid under subsection |
10 | (h) shall be added to the minimum municipal obligation of the |
11 | city for the following plan year, with interest calculated and |
12 | due until the date the amounts due are paid. |
13 | (j) Pension reforms.--In order to retain the authority to |
14 | utilize the alternative funding mechanism under this section, |
15 | the city must comply with the following: |
16 | (1) Freeze all pension benefits for any current employee |
17 | in accordance with subsection (b). |
18 | (2) Adopt and collectively bargain for a revised benefit |
19 | plan applicable to any newly hired employee in accordance |
20 | with subsection (b). |
21 | (3) Exhaust the judicial appeal procedure to challenge |
22 | any arbitration or other award which is inconsistent with the |
23 | revised benefit plan. |
24 | (4) Repay the deferred amount required under subsection |
25 | (g) by June 30, 2013, and the deferred amount required under |
26 | subsection (h) by June 30, 2014. |
27 | (k) Expiration of authority.--If the city fails to meet any |
28 | of the requirements of subsection (j), the Public Employee |
29 | Retirement Commission and the authority shall certify the |
30 | failure to comply to the State Treasurer. Until the city is in |
|
1 | compliance with subsection (j) the State Treasurer shall |
2 | withhold any grant, loan, entitlement, payment or combination of |
3 | grants, loans, entitlements and payments to the city by the |
4 | Commonwealth, or any of its agencies, in an amount equal to the |
5 | amounts authorized to be deferred under subsection (e). |
6 | (l) Reports.--During a period in which deferrals of the |
7 | minimum municipal obligation or interest on the obligation are |
8 | outstanding, the city shall file actuarial valuation reports |
9 | annually with the commission. |
10 | (m) Calculation.-–The calculation of the unfunded actuarial |
11 | accrued liability made and certified by an approved actuary |
12 | under section 202 shall not include any amounts deferred under |
13 | this subsection so long as the city is paying interest accrued |
14 | on the deferred amounts and repaying the deferred amounts in |
15 | accordance with the terms of this subsection. |
16 | (n) Binding obligation.-–The repayment of amounts deferred, |
17 | including interest accrued on deferred amounts, as and when |
18 | required under this subsection shall constitute a binding and |
19 | absolute commitment on the city. The city shall include all |
20 | amounts due to be paid under this subsection in the budget of |
21 | the city and all amounts due to be paid shall be appropriated |
22 | and paid in order to make timely repayment of any amounts |
23 | deferred, including interest accrued on deferred amounts. |
24 | Payment shall be unconditional and without setoff. |
25 | (o) Standing.--A person who is beneficially interested in |
26 | the city paying its minimum municipal obligation, including |
27 | amounts deferred, under this subsection shall have standing to |
28 | institute a legal proceeding for mandamus to enforce the |
29 | obligation of the city to make required repayments in the same |
30 | manner as a proceeding to enforce payment requirements of an |
|
1 | alternative funding mechanism under section 1001. A beneficially |
2 | interested person is a person who meets the qualifications set |
3 | forth in section 1001(f). |
4 | (p) Payment.--The city shall be required to pay the balance |
5 | of its minimum municipal obligation in full when due in each |
6 | plan year. |
7 | Section 1003. Special taxing authority. |
8 | (a) Imposition of tax.-- |
9 | (1) Except as provided in subsection (e), a city of the |
10 | first class may elect to impose a tax on the "sale at retail" |
11 | of "tangible personal property" or services or "use" of |
12 | "tangible personal property" or services "purchased at |
13 | retail," as defined in section 201 of the act of March 4, |
14 | 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971. |
15 | (2) The tax imposed under this section shall be in |
16 | addition to the tax authorized under section 503(a) and (b) |
17 | of the act of June 5, 1991 (P.L.9, No.6), known as the |
18 | Pennsylvania Intergovernmental Cooperation Authority Act for |
19 | Cities of the First Class. |
20 | (3) The tax authorized under this subsection shall not |
21 | be levied, assessed and collected upon the occupancy of a |
22 | room in a hotel in the city of the first class. |
23 | (4) This subsection shall expire July 1, 2014. |
24 | (5) Notwithstanding paragraph (4), all tax imposed under |
25 | this subsection on sales or uses occurring before July 1, |
26 | 2014, shall be paid to and received by the Department of |
27 | Revenue and, along with interest and penalties, less any |
28 | refunds and credits paid, shall be credited to the local |
29 | sales and use tax fund created under the Pennsylvania |
30 | Intergovernmental Cooperation Authority Act for Cities of the |
|
1 | First Class. Money in the fund shall be disbursed as provided |
2 | in section 509 of the Pennsylvania Intergovernmental |
3 | Cooperation Authority Act for Cities of the First Class. |
4 | (b) Rate.--The tax authorized under subsection (a) shall be |
5 | imposed and collected at the rate of 1% and shall be computed as |
6 | set forth in section 503(e)(2) of the Pennsylvania |
7 | Intergovernmental Cooperation Authority Act for Cities of the |
8 | First Class. |
9 | (c) Collection.--The tax authorized under subsection (a) |
10 | shall be administered, collected, deposited and disbursed in the |
11 | same manner as the tax imposed under Chapter 5 of the |
12 | Pennsylvania Intergovernmental Cooperation Authority Act for |
13 | Cities of the First Class and the situs of the tax shall be |
14 | determined in accordance with the Pennsylvania Intergovernmental |
15 | Cooperation Authority Act and Article II-A of act of March 4, |
16 | 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971. The |
17 | Department of Revenue shall use the money received by the |
18 | Department of Revenue from the tax authorized under Chapter 5 of |
19 | the Pennsylvania Intergovernmental Cooperation Authority Act for |
20 | Cities of the First Class to cover costs for the administration |
21 | of the tax authorized under subsection (a). The Department of |
22 | Revenue shall not retain any additional amounts for the cost of |
23 | collecting the tax authorized under subsection (a). No |
24 | additional fee shall be charged for a license or license renewal |
25 | other than the license or renewal fee authorized and imposed |
26 | under Article II of the Tax Reform Code of 1971. |
27 | (d) Municipal action.--In order to impose the tax, the |
28 | governing body of the city shall adopt an ordinance stating the |
29 | tax rate. The ordinance may be adopted prior to the effective |
30 | date of this subsection. The ordinance shall be effective no |
|
1 | earlier than 20 days after the adoption of the ordinance or 20 |
2 | days after the effective date of this section, whichever is |
3 | later. A certified copy of the city ordinance shall be delivered |
4 | to the Department of Revenue within ten days prior to or after |
5 | the effective date of the ordinance. A certified copy of an |
6 | ordinance to repeal the tax authorized under subsection (a) |
7 | shall be delivered to the Department of Revenue at least 30 days |
8 | prior to the effective date of repeal. |
9 | (e) Retention of authority.--In order to retain the |
10 | authority to impose and collect the tax authorized under |
11 | subsection (a), the city must submit proof of the following to |
12 | the Pennsylvania Intergovernmental Cooperation Authority: |
13 | (1) A freeze all pension benefits for any current |
14 | employee in accordance with section 1002(b). |
15 | (2) Adoption of a revised benefit plan applicable to any |
16 | newly hired employee in accordance with section 1002(b). |
17 | (f) Expiration of authority.--If the city fails to meet any |
18 | of the requirements of subsection (e), the authority to impose |
19 | and collect the tax authorized under subsection (a) shall |
20 | expire. |
21 | (g) Verification.--The city shall, within 14 days of the |
22 | expiration of the 12-month period under section 1002(d), submit |
23 | to the Public Employee Retirement Commission data, including |
24 | data showing any savings in the city's municipal pension system. |
25 | The Public Employee Retirement Commission shall perform an |
26 | analysis of the data within 14 days of its receipt. |
27 | (h) Use of tax receipts.–-All money received by the city |
28 | from the levy, assessment and collection of the tax authorized |
29 | under subsection (a) may only be used for the following |
30 | purposes: |
|
1 | (1) To pay any amounts of the city's minimum municipal |
2 | obligation required under section 302, including amounts |
3 | deferred under section 1002(e) and interest accrued on |
4 | deferred amounts when the amounts are due in any plan year. |
5 | (2) To reimburse the city for payments of the minimum |
6 | municipal obligation for fiscal year 2009-2010 and any fiscal |
7 | year during which the tax is imposed made by the city from |
8 | sources other than the tax authorized under subsection (a). |
9 | No tax receipts shall be used to reimburse the city of the |
10 | first class for any contribution to the city minimum |
11 | municipal obligation made in any year other than the year in |
12 | which the tax was collected. |
13 | (i) Beginning January 1, 2016, the mandatory provisions of |
14 | sections 608, 608.1 and 608.2 shall apply to the city. |
15 | Section 1004. Second class cities. |
16 | (a) Taxing authority.--In taxable years beginning after |
17 | December 31, 2008, the following apply to a city of the second |
18 | class which is a home rule municipality : |
19 | (1) The city may impose on each parking transaction in |
20 | the city a tax at a rate not to exceed 37.5% of the cost of |
21 | the transaction. |
22 | (2) If Department of Community and Economic Development |
23 | determines that the city has leased or sold any of its |
24 | parking facilities in the city and that at least $200,000,000 |
25 | in net proceeds from the lease or sale has been deposited |
26 | into the Pennsylvania Municipal Retirement System and |
27 | credited to the municipality's account and transmits notice |
28 | of the determination to the Legislative Reference Bureau for |
29 | publication in the Pennsylvania Bulletin, the city may impose |
30 | on each parking transaction in the city an additional tax at |
|
1 | a rate not to exceed 2.5% of the cost of the transaction. |
2 | (b) Use of revenue.--Notwithstanding any other law to the |
3 | contrary, 6.75% of the revenue received under subsection (a)(1) |
4 | and 100% of the revenue received under subsection (a)(2) shall |
5 | be used to pay the city's minimum municipal obligation required |
6 | under section 302 and any interest accrued in any plan year. |
7 | Section 19. The act is amended by adding a chapter to read: |
8 | CHAPTER 11 |
9 | DEFERRED RETIREMENT OPTION PLANS |
10 | SUBCHAPTER A |
11 | PRELIMINARY PROVISIONS |
12 | Section 1101. Scope. |
13 | This chapter relates to deferred retirement option plans for |
14 | newly hired employees. |
15 | Section 1102. Definitions. |
16 | The following words and phrases when used in this chapter |
17 | shall have the meanings given to them in this section unless the |
18 | context clearly indicates otherwise: |
19 | "Normal retirement benefit." The retirement benefit payable |
20 | to a member of a defined benefit pension plan on or after the |
21 | date on which the member first satisfies the age and service |
22 | requirements for full, unreduced retirement benefits, including |
23 | supplemental amounts provided to the member after retirement as |
24 | cost-of-living increases. |
25 | "Subsidiary DROP participant account." The separate, |
26 | interest-bearing, subsidiary DROP participant account |
27 | established for a DROP participant under section 1121. |
28 | Section 1104. Employment status. |
29 | Participation in a DROP does not guarantee the DROP |
30 | participant's employment by the local government during the |
|
1 | specified period of the DROP. |
2 | SUBCHAPTER B |
3 | GENERAL PROVISIONS |
4 | Section 1111. Establishment of DROP. |
5 | (a) Local governments.--A local government that has |
6 | established or maintains a defined benefit pension plan for a |
7 | group of its employees hired after the effective date of this |
8 | section which is self-insured in whole or in part under section |
9 | 202(b), except for a local government that has joined the |
10 | Pennsylvania Municipal Retirement System, may establish by |
11 | ordinance a DROP for those employees as part of the pension |
12 | plan. The DROP may not apply to elected municipal officials |
13 | elected after the effective date of this subsection. The |
14 | ordinance establishing the DROP shall specify a uniform |
15 | participation period of not more than five years in duration. |
16 | (b) Participants.--A local government that has established |
17 | or maintains a defined benefit plan for a group of its employees |
18 | which is self-insured in whole or in part under section 202(b) |
19 | and has joined the Pennsylvania Municipal Retirement System may |
20 | establish a DROP for those employees as a part of the pension |
21 | plan only through participation in the DROP established and |
22 | administered by the Pennsylvania Municipal Retirement System. |
23 | (c) Standards.--The Pennsylvania Municipal Retirement Board |
24 | shall establish a DROP for local government-defined benefit |
25 | pension plans that have joined the Pennsylvania Municipal |
26 | Retirement System. The DROP shall be uniform, in compliance with |
27 | the provisions of this chapter, open to any local government and |
28 | applicable to any of the defined benefit pension plans |
29 | administered by the Pennsylvania Municipal Retirement System. |
30 | Section 1112. Eligibility. |
|
1 | An active member of a local government retirement system that |
2 | has a DROP as a part of its defined benefit pension plan who is |
3 | eligible for a normal retirement benefit under the pension plan |
4 | or will be eligible for a normal retirement benefit under the |
5 | pension plan prior to participation in the DROP and who is not |
6 | an elected official is eligible to participate in the DROP by |
7 | filing a written application with the retirement system at least |
8 | 30 days before the member's effective date of retirement. |
9 | Section 1113. Participation in DROP. |
10 | (a) Election.--An eligible active member may elect to |
11 | participate in a DROP for the period specified in the ordinance |
12 | under section 1111(a). |
13 | (b) DROP participation election.--Upon deciding to |
14 | participate in a DROP, a member shall submit on forms provided |
15 | and required by the retirement system: |
16 | (1) A binding and irrevocable letter of resignation from |
17 | regular employment with the local government that discloses |
18 | the member's intent to retire and specifies the member's |
19 | retirement date. |
20 | (2) An irrevocable written election to participate in |
21 | the DROP that: |
22 | (i) Details a DROP participant's rights and |
23 | obligations under the DROP. |
24 | (ii) Includes an agreement to forgo: |
25 | (A) Active membership in the retirement system. |
26 | (B) Any growth in the salary base used for |
27 | calculating the regular retirement benefit. |
28 | (C) Any additional benefit accrual for |
29 | retirement purposes, including length-of-service |
30 | increments. |
|
1 | (iii) Specifies the effective date of DROP |
2 | participation that shall be the day after the specified |
3 | retirement date. |
4 | (iv) Specifies the DROP termination date that |
5 | satisfies the limitation in subsection (a). |
6 | (3) Any other information required by the retirement |
7 | system. |
8 | (c) DROP termination.-- |
9 | (1) A DROP participant may change the DROP termination |
10 | date to an earlier date within the limitations of subsection |
11 | (a). No penalty shall be imposed for early termination of |
12 | DROP participation. |
13 | (2) Upon either early or regular termination of DROP |
14 | participation: |
15 | (i) The DROP participant shall be separated from |
16 | employment by the local government. |
17 | (ii) The retirement system shall pay the balance in |
18 | the DROP participant's subsidiary DROP participant |
19 | account to the terminating DROP participant as provided |
20 | in section 1114(d). |
21 | (iii) The DROP participant shall be ineligible to |
22 | reenroll in the DROP thereafter even if the former DROP |
23 | participant is reemployed by the local government with |
24 | renewed active membership in the retirement system. |
25 | Section 1114. Benefits payable under DROP. |
26 | (a) Fixing retirement benefit, retirement date, retirement |
27 | benefits and DROP dates.-- Effective with the date of |
28 | retirement, which shall be the day before the effective date of |
29 | DROP participation, the member's monthly, normal retirement |
30 | benefit under the pension plan, the member's effective date of |
|
1 | retirement and the member's effective dates of beginning and |
2 | terminating employment as a DROP participant shall be fixed. |
3 | (b) Effective dates.-- |
4 | (1) A retired member's effective date of participation |
5 | in a DROP shall begin the day following the effective date of |
6 | the member's regular retirement. |
7 | (2) A retired member's participation in a DROP shall end |
8 | on the last day of the participation period specified in the |
9 | ordinance establishing the DROP that is in effect on the |
10 | effective date of the retired member's participation in the |
11 | DROP. |
12 | (c) Benefit payments and accruals.--All of the retired |
13 | member's monthly, normal retirement benefit and interest thereon |
14 | at the assigned rate shall be credited to the DROP participant's |
15 | subsidiary DROP participant account in the pension trust fund |
16 | and a separate accounting of the DROP participant's accrued |
17 | benefit accumulation under the DROP shall be calculated annually |
18 | and provided to the DROP participant. |
19 | (d) Payment.--On the effective date of a DROP participant's |
20 | termination of employment with the local government as a DROP |
21 | participant, participation in the DROP shall cease and the |
22 | retirement system shall calculate and pay to the participant the |
23 | participant's total accumulated DROP benefits in the DROP |
24 | participant's subsidiary DROP participant account subject to the |
25 | following provisions: |
26 | (1) Except as provided in paragraph (2), the terminating |
27 | DROP participant or, if deceased, the participant's survivor |
28 | as provided by the enabling pension statute applicable to the |
29 | appropriate class of employees of the municipality or, in |
30 | lieu thereof, the participant's named beneficiary, shall |
|
1 | elect on a form provided by the retirement system to receive |
2 | payment of the DROP benefits in accordance with one of the |
3 | following options: |
4 | (i) The balance in the DROP participant's subsidiary |
5 | DROP participant account less withholding taxes, if any, |
6 | remitted to the Internal Revenue Service shall be paid |
7 | within 45 days by the retirement system from the account |
8 | to the DROP participant or surviving beneficiary. |
9 | (ii) The balance in the DROP participant's |
10 | subsidiary DROP participant account shall be paid within |
11 | 45 days by the retirement system from the account |
12 | directly to the custodian of an eligible retirement plan |
13 | as defined in section 402(c)(8)(b) of the Internal |
14 | Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § |
15 | 402(c)(8)(b)), or, in the case of an eligible rollover |
16 | distribution to the surviving spouse of a deceased DROP |
17 | participant, an eligible retirement plan that is an |
18 | individual retirement account or an individual retirement |
19 | annuity as described in section 402(c)(9) of the Internal |
20 | Revenue Code of 1986 (26 U.S.C. § 402(c)(9)). |
21 | (2) If the DROP participant or beneficiary fails to |
22 | elect a method of payment within 60 days after the |
23 | participant's termination date, the retirement system shall |
24 | pay the balance as a lump sum as provided in paragraph (1). |
25 | (3) The form of payment selected by the DROP participant |
26 | or surviving beneficiary shall comply with the minimum |
27 | distribution requirements of the Internal Revenue Code. |
28 | (e) Taxation, attachment and assignment.-- |
29 | (1) Except as provided in paragraphs (2), (3) and (4), |
30 | the right of a DROP participant to any benefit or right |
|
1 | accrued or accruing under the provisions of this chapter and |
2 | the moneys in the DROP participant's subsidiary DROP |
3 | participant account are exempt from any State or municipal |
4 | tax, levy and sale, garnishment, attachment, spouse's |
5 | election or any other process whatsoever. |
6 | (2) Rights under this chapter shall be subject to |
7 | forfeiture as provided by the act of July 8, 1978 (P.L.752, |
8 | No.140), known as the Public Employee Pension Forfeiture Act. |
9 | Forfeitures under this subsection or under any other |
10 | provision of law may not be applied to increase the benefits |
11 | that any DROP participant otherwise would receive under this |
12 | chapter. |
13 | (3) Rights under this chapter shall be subject to |
14 | attachment in favor of an alternate payee as set forth in a |
15 | qualified domestic relations order. |
16 | (4) (i) Under subsection (d)(1)(ii), a distributee may |
17 | elect to have an eligible rollover distribution paid |
18 | directly to an eligible retirement plan by way of a |
19 | direct rollover. |
20 | (ii) For purposes of this paragraph, a "distributee" |
21 | includes a DROP participant, a DROP participant's |
22 | survivor as provided by the enabling pension statute |
23 | applicable to the appropriate class of employees of the |
24 | municipality or, in lieu thereof, the participant's |
25 | designated beneficiary and a DROP participant's former |
26 | spouse who is an alternate payee under a qualified |
27 | domestic relations order. |
28 | (iii) For purposes of this paragraph, "eligible |
29 | rollover distribution" has the meaning given the term by |
30 | section 402(f)(2)(A) of the Internal Revenue Code of 1986 |
|
1 | (26 U.S.C. § 402(f)(2)(A)), except that a qualified trust |
2 | shall be considered an eligible retirement plan only if |
3 | it accepts the distributee's eligible rollover |
4 | distribution and, in the case of an eligible rollover |
5 | distribution to a surviving spouse, an eligible |
6 | retirement plan is an "individual retirement account" or |
7 | an "individual retirement annuity" as those terms are |
8 | defined in section 408(a) and (b) of the Internal Revenue |
9 | Code of 1986 (26 U.S.C. § 408(a) and (b)). |
10 | (f) Disability.--If a DROP participant becomes eligible for |
11 | a disability pension benefit and terminates employment, the |
12 | monthly normal retirement benefit of the DROP participant shall |
13 | terminate. |
14 | (g) Eligibility.--Except for those benefits specified under |
15 | section 1113(b)(2)(ii) as forgone by the member, a DROP |
16 | participant shall be eligible for any employee benefits provided |
17 | to active employees before retirement as set forth in the |
18 | ordinance instituting the DROP. |
19 | (h) Eligibility for other benefits.--A DROP participant |
20 | shall be eligible for all preretirement benefits for employees |
21 | otherwise provided by law, including, but not limited to, |
22 | benefits under: |
23 | (1) the act of June 2, 1915 (P.L.736, No.338), known as |
24 | the Workers' Compensation Act; |
25 | (2) the act of June 28, 1935 (P.L.477, No.193), referred |
26 | to as the Enforcement Officer Disability Benefits Law; |
27 | (3) the act of December 5, 1936 (2nd Sp.Sess., 1937 P.L. |
28 | 2897, No.1), known as the Unemployment Compensation Law; |
29 | (4) the act of June 24, 1976 (P.L.424, No.101), referred |
30 | to as the Emergency and Law Enforcement Personnel Death |
|
1 | Benefits Act; and |
2 | (5) the Public Safety Officers' Benefit Act of 1976 |
3 | (Public Law 94-430, 42 U.S.C. § 90 Stat. 1347). |
4 | Section 1115. Death benefits under DROP. |
5 | (a) Named beneficiary.--If a DROP participant dies, the DROP |
6 | participant's named beneficiary shall be entitled to apply for |
7 | and receive the benefits accrued in the DROP participant's |
8 | subsidiary DROP participant account as provided in section |
9 | 1114(d). |
10 | (b) Final benefit.--The monthly retirement system benefit |
11 | accrued in the DROP participant's subsidiary DROP participant |
12 | account during the month of a DROP participant's death shall be |
13 | the final monthly retirement system benefit credited for DROP |
14 | participation. |
15 | (c) Termination of eligibility.--A DROP participant's |
16 | eligibility to participate in the DROP terminates upon the death |
17 | of the DROP participant. If a DROP participant dies on or after |
18 | the effective date of participation in the DROP but before the |
19 | monthly retirement system benefit of the participant accruable |
20 | for the month has accrued in the DROP participant's subsidiary |
21 | DROP participant account, the local government shall pay the |
22 | monthly retirement system benefits as though the participant had |
23 | not elected DROP participation and had died after the member's |
24 | effective date of retirement but before receipt of the retired |
25 | member's first regular retirement benefit. |
26 | (d) Survivors ineligible for death benefit.--Except for |
27 | those benefits specifically payable as a result of death |
28 | incurred in the course of performing a hazardous public duty, |
29 | the survivors of a DROP participant who dies shall not be |
30 | eligible to receive retirement system death benefits payable in |
|
1 | the event of the death of an active member. |
2 | (e) Survivors eligible for retired member's death benefit.-- |
3 | The DROP participant's survivor shall be eligible to receive |
4 | retirement system death benefits normally payable in the event |
5 | of the death of a retired employee. |
6 | Section 1116. Subsequent employment. |
7 | After both the termination of a DROP participant's employment |
8 | as a DROP participant by the local government and the expiration |
9 | of the DROP participation period, a former DROP participant |
10 | shall be subject to such reemployment limitations as other |
11 | retired members and shall be eligible for renewed membership as |
12 | an active member in the local government employees' retirement |
13 | system. |
14 | SUBCHAPTER C |
15 | ADMINISTRATIVE PROVISIONS |
16 | Section 1121. DROP participant account. |
17 | (a) General rule.--If a local government creates a DROP, it |
18 | shall establish a DROP participant account as an interest- |
19 | bearing ledger account in its pension trust fund. The account |
20 | balance shall be accounted for separately but need not be |
21 | physically segregated from other pension trust fund assets. |
22 | (b) Subsidiary DROP participant accounts.--A separate |
23 | interest-bearing subsidiary DROP participant account shall be |
24 | established for each DROP participant. While a retired member is |
25 | employed as a DROP participant, the member's monthly, normal |
26 | retirement benefit and interest thereon shall be credited to the |
27 | DROP participant's subsidiary DROP participant account under |
28 | section 1114(c). The interest shall be compounded and credited |
29 | monthly at an annual rate specified in the ordinance |
30 | establishing the DROP that shall be not less than 1% nor more |
|
1 | than 4 1/2%. |
2 | (c) Termination of employment.-- |
3 | (1) When a DROP participant terminates employment with |
4 | the local government as a DROP participant, the DROP |
5 | participant's total accumulated benefits shall be calculated, |
6 | charged to the DROP participant account and paid out of the |
7 | pension trust fund under section 1114(d)(2). |
8 | (2) Under section 202(b), the balance in the DROP |
9 | participant account shall be excluded from actuarial |
10 | valuation reports of the retirement system prepared and filed |
11 | under this act. |
12 | (d) Account held in trust.--A DROP participant account shall |
13 | be held in trust for the exclusive benefit of DROP retired |
14 | members who are or were DROP participants and for the |
15 | beneficiaries of the members. |
16 | Section 1122. Audit. |
17 | The DROP established by the Pennsylvania Municipal Retirement |
18 | Board shall be subject to financial and compliance audits |
19 | conducted by the Auditor General with the initial audit |
20 | conducted within one year of establishment of the DROP. |
21 | Section 1123. Existing DROPs. |
22 | A local government that established a DROP prior to or on the |
23 | effective date of this section that does not conform to the |
24 | provisions of this chapter shall amend its plan within 180 days |
25 | of the effective date of this section or when the current labor- |
26 | management contract creating the plan expires, whichever is |
27 | later, to conform with the provisions of this chapter with |
28 | respect to future DROP participants. |
29 | Section 1124. Noncompliance. |
30 | (a) General rule.--If a local government that established a |
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1 | DROP under section 1111(a) or the Pennsylvania Municipal |
2 | Retirement Board that established a DROP under section 1111(c) |
3 | fails to comply within 90 days with a finding by the Auditor |
4 | General of noncompliance with this chapter or if the finding is |
5 | appealed within 90 days of conclusion of the appeal process, the |
6 | failure to comply shall be deemed sufficient refusal by the |
7 | local government or the Pennsylvania Municipal Retirement Board |
8 | to comply with its duty antecedent to the commencement of a |
9 | mandamus action and the Auditor General shall refer the finding |
10 | to the Attorney General. |
11 | (b) Mandamus action.--Upon receipt of the finding from the |
12 | Auditor General, the Attorney General, following an |
13 | administrative proceeding in accordance with 2 Pa.C.S. (relating |
14 | to administrative law and procedure), shall proceed in the name |
15 | of the Commonwealth to institute a legal proceeding for mandamus |
16 | and no other remedy at law shall be deemed to be sufficiently |
17 | adequate and appropriate to bar the commencement of this action. |
18 | Section 20. Repeals are as follows: |
19 | (1) The General Assembly declares that the repeal under |
20 | paragraph (2) is necessary to effectuate the addition of |
21 | section 1004 of the act. |
22 | (2) Section 308 of the act of December 31, 1965 |
23 | (P.L.1257, No.511), known as The Local Tax Enabling Act, is |
24 | repealed. |
25 | Section 21. This act shall take effect immediately. |
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