PRINTER'S NO. 1752
No. 1499 Session of 1995
INTRODUCED BY NICKOL, TIGUE, BELARDI, WAUGH, NYCE, MAITLAND,
TULLI, FARGO, LYNCH, ITKIN, TRELLO, STEELMAN, HENNESSEY,
SAYLOR, CLARK, PLATTS AND SERAFINI, APRIL 27, 1995
REFERRED TO COMMITTEE ON LOCAL GOVERNMENT, APRIL 27, 1995
AN ACT
1 Amending the act of July 12, 1972 (P.L.781, No.185), entitled,
2 as amended, "An act providing debt limits for local
3 government units, including municipalities and school
4 districts; providing the methods of incurring, evidencing,
5 securing and collecting debt; defining the powers and duties
6 of the Department of Community Affairs and certain other
7 public officers and agencies with respect thereto; exercising
8 the inherent legislative authority of the General Assembly by
9 providing additional over-all limitations on the incurring of
10 lease rental and other obligations for the acquisition of
11 capital assets to be repaid from the general tax revenues of
12 such local government units; imposing penalties for filing
13 false or untrue statements or refusing to give information
14 with respect to proceedings for the incurring of debt; and
15 conferring jurisdiction on the Commonwealth Court with
16 respect to certain proceedings relating to the incurring of
17 debt," further providing for funding unfunded actuarial
18 accrued liability.
19 The General Assembly of the Commonwealth of Pennsylvania
20 hereby enacts as follows:
21 Section 1. Sections 416 and 417 of the act of July 12, 1972
22 (P.L.781, No.185), known as the Local Government Unit Debt Act,
23 reenacted and amended April 28, 1978 (P.L.124, No.52) and added
24 December 28, 1994 (P.L.1436, No.169), are amended to read:
25 Section 416. Condition Precedent to Validity of Debt
1 Incurred to Fund an Unfunded Actuarial Accrued Liability.--(a)
2 No bond or note issued to fund an unfunded actuarial accrued
3 liability shall be valid or obligatory in the hands of an
4 original purchaser thereof until certified copies of the
5 ordinance or ordinances authorizing the bonds or notes, the
6 ordinance or resolution awarding the bonds or notes and the
7 certificate of approval of the department shall have been filed
8 with the Public Employee Retirement Commission. No approval of
9 the Public Employee Retirement Commission shall be required[.],
10 except as set forth in subsection (b).
11 (b) Approval by the Public Employee Retirement Commission is
12 needed for the following local government units:
13 (1) Those local government units not in compliance with the
14 act of December 18, 1984 (P.L.1005, No.205), known as the
15 "Municipal Pension Plan Funding Standard and Recovery Act,"
16 regarding municipal pension plan actuarial reporting and funding
17 requirements. For the purpose of this clause, actuarial funding
18 requirements shall be the payment of at least ninety per cent of
19 the current year's minimum municipal obligation.
20 (2) Those local government units not subject to the
21 "Municipal Pension Plan Funding Standard and Recovery Act" which
22 are not in compliance with the applicable laws for those local
23 government units regarding minimum funding requirements for the
24 units' retirement systems.
25 Section 417. Pledge of Proceeds of Certain Bonds or Notes
26 Authorized.--A local government unit may pledge to the holders
27 of its bonds or notes issued to fund an unfunded actuarial
28 accrued liability or to a trustee or paying agent acting on
29 behalf of the holders, as security for the payment of the bonds
30 or notes, the proceeds of such bonds or notes, and investment
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1 income on such proceeds, notwithstanding that such proceeds have
2 become assets of the local government unit's retirement system,
3 pension plan or pension trust fund. The pledge shall be valid
4 and binding from the time the pledge is made, and the lien of
5 the pledge is valid and binding as against all persons having
6 claims of any kind in tort, contract or otherwise against the
7 local government unit or the retirement system, pension plan or
8 pension trust fund, whether or not the persons have notice.
9 Except as provided in section 416, neither the proceedings of
10 the local government unit relating to the bonds or notes nor any
11 other instrument by which a pledge is made nor any financing
12 statement in respect thereof need be recorded or filed. The
13 local government unit shall cause the proceeds of bonds or
14 notes, and investment earnings thereon, that are subject to the
15 pledge to be segregated from other assets of the retirement
16 system, pension plan or pension trust fund so that such proceeds
17 will be identifiable. Notwithstanding any other provision of
18 this section, no local government unit whose employees are
19 members of the Public School Employees' Retirement System or the
20 State Employees' Retirement System which issues any bonds or
21 notes to fund any unfunded actuarial accrued liability or any
22 portion thereof shall be permitted to pledge the proceeds of
23 such bonds or notes (and investment income on such proceeds) as
24 security for the payment of the bonds or notes or in any way
25 obligate the Public School Employees' Retirement Board or State
26 Employees' Retirement Board to use assets of the Public School
27 Employees' Retirement Fund or State Employees' Retirement Fund
28 as security for payment of such bonds or notes.
29 Section 2. This act shall take effect immediately.
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