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PRINTER'S NO. 2787
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1982
Session of
2019
INTRODUCED BY BENNINGHOFF, EVERETT, BERNSTINE, BOYLE, BRADFORD,
DUNBAR, HERSHEY, JONES, MILLARD, MOUL, PICKETT, SAYLOR,
SCHMITT, SCHWEYER, TOBASH, LAWRENCE, B. MILLER, GLEIM AND
GREINER, OCTOBER 25, 2019
REFERRED TO COMMITTEE ON STATE GOVERNMENT, OCTOBER 25, 2019
AN ACT
Amending Title 71 (State Government) of the Pennsylvania
Consolidated Statutes, in membership, credited service,
classes of service, and eligibility for benefits, further
providing for credited State service; in contributions,
further providing for shared-risk member contributions and
shared-gain adjustments to regular member contributions, for
contributions to the system by the Commonwealth and other
employers and for actuarial cost method and providing for
advance payment of accrued liability contributions; in
administration, funds, accounts and general provisions,
further providing for administrative duties of the board, for
duties of heads of departments and for State accumulation
account; providing for obligations of the board, for exercise
of legislative power and for liability.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Sections 5302(b)(2) and 5501.1(b)(4), (7) and
(8), (c)(4), (e)(4), (7) and (8) and (f)(4) of Title 71 of the
Pennsylvania Consolidated Statutes are amended to read:
§ 5302. Credited State service.
* * *
(b) Creditable leaves of absence.--
* * *
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(2) An active member or active participant on paid leave
granted by an employer for purposes of serving as an elected
full-time officer for a Statewide employee organization which
is a collective bargaining representative under the act of
June 24, 1968 (P.L.237, No.111), referred to as the Policemen
and Firemen Collective Bargaining Act, or the act of July 23,
1970 (P.L.563, No.195), known as the Public Employe Relations
Act, and up to 14 full-time business agents appointed by an
employee organization that represents correction officers
employed at State correctional institutions: Provided, That
for elected full-time officers such leave shall not be for
more than three consecutive terms of the same office and for
up to 14 full-time business agents appointed by an employee
organization that represents correction officers employed at
State correctional institutions no more than three
consecutive terms of the same office; that the employer shall
fully compensate the member or participant, including, but
not limited to, salary, wages, pension and retirement
contributions and benefits, other benefits and seniority, as
if he were in full-time active service; and that the
Statewide employee organization shall fully reimburse the
employer for all expenses and costs of such paid leave,
including, but not limited to, contributions and payment in
accordance with sections 5501, 5501.1, 5505.1, 5507, 5804
(relating to participant contributions), 5805 (relating to
mandatory pickup participant contributions) and 5806
(relating to employer defined contributions), if the employee
organization either directly pays, or reimburses the
Commonwealth or other employer for, contributions made in
accordance with sections 5507, 5804, 5805 and 5806. The
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determination of the contributions that an employee
organization pays or reimburses the Commonwealth or other
employer under this paragraph shall be made without regard to
any setoff the Commonwealth or any employer receives for
advance payment of accrued liability contributions under
section 5507(h).
* * *
§ 5501.1. Shared-risk member contributions and shared-gain
adjustments to regular member contributions.
* * *
(b) Determination of shared-risk contribution rate for Class
A-3 and Class A-4 service.--The shared-risk contribution for
Class A-3 and Class A-4 service shall be determined as follows:
* * *
(4) Notwithstanding paragraphs (2) and (3), the shared-
risk contribution rate shall not be less than zero and shall
not be more than the experience adjustment factor resulting
from investment gains or losses during the determination
period in effect on the first day when the new rate would be
applied, determined without regard to any setoff the
Commonwealth or any employer receives for advance payment of
accrued liability contributions under section 5507(h)
(relating to contributions to the system by the Commonwealth
and other employers), and expressed as a percentage of member
compensation, and shall not be more than 2%. For the
determination of the shared-risk contribution rate to be
effective July 1, 2017, the determination period shall be
January 1, 2011, through December 31, 2016. For the
determination of the shared-risk contribution rate to be
effective July 1, 2020, the determination period shall be
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January 1, 2011, through December 31, 2019.
* * *
(7) For any fiscal year in which the actual
contributions, plus any annual setoff for that fiscal year
resulting from advance payment of accrued liability
contributions under section 5507(h), by the Commonwealth or
an employer are lower than the actuarially required
contributions, the prospective shared-risk contribution rate
for those employees whose employers are not making the
actuarially required contributions shall be zero and shall
not subsequently be increased, except as otherwise provided
in this section. For purposes of this paragraph, the
actuarially required contribution shall be no less than the
normal cost plus the cost to fully amortize the unfunded
actuarial accrued liability calculated using actuarial
methods and assumptions that are consistent with generally
accepted actuarial standards and generally accepted
accounting principles, including professional actuarial
standards of practice.
(8) If the actuary certifies that the accrued liability
contributions calculated in accordance with the actuarial
cost method provided in section 5508(b) (relating to
actuarial cost method) and without regard to any setoff the
Commonwealth or any employer receives for advance payment of
accrued liability contributions under section 5507(h), as
adjusted by the experience adjustment factor, are zero or
less, then the shared-risk contribution rate for the next
fiscal year shall be zero and shall not subsequently be
increased, except as otherwise provided in this section.
* * *
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(c) Determination of shared-gain adjustment to regular
member contributions for Class A-3 and Class A-4 service.--The
regular member contributions for Class A-3 and Class A-4 service
shall be determined as follows:
* * *
(4) Notwithstanding paragraphs (2) and (3), the regular
member contribution rate may not be greater than the product
of the basic contribution rate and the class of service
multiplier; and the amount of the adjustment to a lower
regular member contribution rate may not be greater than the
reduction in the actuarially required contribution rate by
the experience adjustment factor resulting from investment
gains or losses during the determination period in effect on
the first day when the new rate would be applied, determined
without regard to any setoff the Commonwealth or any employer
receives for advance payment of accrued liability
contributions under section 5507(h), and expressed as a
percentage of member compensation. In no event may the
adjustment to the regular member contribution rate be more
than 2%. For the determination of the regular member
contribution rate to be effective July 1, 2020, the
determination period shall be January 1, 2011, through
December 31, 2019.
* * *
(e) Determination of shared-risk contribution rate for Class
A-5 and Class A-6 service.--The shared-risk contribution for
Class A-5 or Class A-6 service shall be determined as follows:
* * *
(4) Notwithstanding paragraphs (2) and (3), the shared-
risk contribution rate may not be less than zero and may not
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be more than the experience adjustment factor resulting from
investment gains or losses during the determination period in
effect on the first day when the new rate would be applied,
determined without regard to any setoff the Commonwealth or
any employer receives for advance payment of accrued
liability contributions under section 5507(h), and expressed
as a percentage of member compensation, and shall not be more
than 3%. For the determination of the shared-risk
contribution rate to be effective July 1, 2026, the
determination period shall be January 1, 2020, through
December 31, 2025. For the determination of the shared-risk
contribution rate to be effective July 1, 2029, the
determination period shall be January 1, 2020, through
December 31, 2028.
* * *
(7) For any fiscal year in which the actual
contributions, plus any annual setoff for that fiscal year
resulting from advance payment of accrued liability
contributions under section 5507(h), by the Commonwealth or
an employer are lower than the actuarially required
contributions, the prospective shared-risk contribution rate
for those employees whose employers are not making the
actuarially required contributions shall be zero and shall
not subsequently be increased, except as otherwise provided
in this section. For purposes of this paragraph, the
actuarially required contribution shall be no less than the
normal cost plus the cost to fully amortize the unfunded
actuarial accrued liability calculated using actuarial
methods and assumptions that are consistent with generally
accepted actuarial standards and generally accepted
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accounting principles, including professional actuarial
standards of practice.
(8) If the actuary certifies that the accrued liability
contributions calculated in accordance with the actuarial
cost method provided in section 5508(b) and without regard to
any setoff the Commonwealth or any employer receives for
advance payment of accrued liability contributions under
section 5507(h), as adjusted by the experience adjustment
factor, are zero or less, then the shared-risk contribution
rate for the next fiscal year shall be zero and shall not
subsequently be increased, except as otherwise provided in
this section.
* * *
(f) Determination of shared-gain adjustment to regular
member contributions for Class A-5 or Class A-6 service.--The
regular member contributions for Class A-5 or Class A-6 service
shall be determined as follows:
* * *
(4) Notwithstanding paragraphs (2) and (3), the regular
member contribution rate may not be greater than the product
of the basic contribution rate and the class of service
multiplier; and the amount of the adjustment to a lower
regular member contribution rate may not be greater than the
reduction in the actuarially required contribution rate by
the experience adjustment factor resulting from investment
gains or losses during the determination period in effect on
the first day when the new rate would be applied, determined
without regard to any setoff the Commonwealth or any employer
receives for advance payment of accrued liability
contributions under section 5507(h), expressed as a
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percentage of member compensation. In no event may the
adjustment to the regular member contribution rate be more
than 3%. For the determination of the regular member
contribution rate to be effective July 1, 2026, the
determination period shall be January 1, 2020, through
December 31, 2025. For the determination of the regular
member contribution rate to be effective July 1, 2029, the
determination period shall be January 1, 2020, through
December 31, 2028.
* * *
Section 2. Section 5507(d) and (g) of Title 71 are amended,
subsection (b.1) is amended by adding a paragraph and the
section is amended by adding a subsection to read:
§ 5507. Contributions to the system by the Commonwealth and
other employers.
* * *
(b.1) Payment of employer contributions to the system.--
* * *
(3) The amount of employer contributions determined and
payable as a percentage of compensation under this subsection
may be offset by a dollar amount as established in an
agreement between the board and the head of department as a
result of advance payment of accrued liability contributions
under subsection (h).
* * *
(d) Payment of final contribution rate.--Notwithstanding the
calculation of the actuarially required contribution rate and
the provisions of subsections (a) and (b), the Commonwealth and
other employers whose employees are members of the system or
participants in the plan shall make contributions to the fund on
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behalf of all active members and annuitants in such amounts as
shall be certified by the board in accordance with section
5508(i). The certified amount and actual contributions may
include any setoff for advance payment of accrued liability
contributions.
* * *
(g) Payment of additional accrued liability contributions.--
In addition to all other contributions required or made under
this section and [sections 5508 and] section 5508, 5508.1
(relating to advance payment of accrued liability contributions)
or 5941, the Commonwealth and other employers whose employees
are members of the system or participants in the plan shall make
contributions as certified by the board as a percentage of the
compensation of each active member and each active participant
as provided in this subsection, unless the actuary certifies
that the accrued liability contribution rate determined under
section 5508(c) is zero or less for that fiscal year. Additional
accrued liability contributions received by the board as a
result of this subsection shall be recognized as part of the
experience adjustment factor under section 5508(f).
Fiscal year
beginning date
Additional accrued liability
contribution rate
July 1, 2018 0.00%
July 1, 2019 0.71%
July 1, 2020 0.66%
July 1, 2021 0.62%
July 1, 2022 0.00%
July 1, 2023 0.00%
July 1, 2024 0.00%
July 1, 2025 0.00%
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July 1, 2026 0.00%
July 1, 2027 0.00%
July 1, 2028 0.00%
July 1, 2029 0.00%
July 1, 2030 0.00%
July 1, 2031 0.00%
July 1, 2032 0.10%
July 1, 2033 0.22%
July 1, 2034 0.33%
July 1, 2035 0.43%
July 1, 2036 0.53%
July 1, 2037 0.62%
July 1, 2038 0.71%
July 1, 2039 0.79%
July 1, 2040 0.86%
July 1, 2041 0.93%
(h) Advance payment of accrued liability contributions.--In
addition to all other contributions required under this section
and sections 5508 and 5941, the Commonwealth and other employers
whose employees are members of the system may make, and the
board may accept, advance payment of accrued liability
contributions in a lump sum as agreed by the board and the head
of department as provided under section 5508.1. Advance payment
of accrued liability contributions received by the board as a
result of this subsection shall be recognized as a setoff
against future accrued liability contributions as provided under
section 5508.1.
Section 3. Section 5508(c)(3) and (4) and (f)(1) of Title 71
are amended to read:
§ 5508. Actuarial cost method.
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* * *
(c) Accrued liability contribution rate.--
* * *
(3) For the fiscal year beginning July 1, 2010, the
accrued liability contribution rate shall be computed as the
rate of total compensation of all active members which shall
be certified by the actuary as sufficient to fund in equal
dollar installments over a period of 30 years from July 1,
2010, the present value of the liabilities for all
prospective benefits calculated as of the immediately prior
valuation date, including the supplemental benefits as
provided in sections 5708, 5708.1, 5708.2, 5708.3, 5708.4,
5708.5, 5708.6, 5708.7 and 5708.8, but excluding the benefits
payable from the retirement benefit plan established pursuant
to section 5941 (relating to benefits completion plan), in
excess of the actuarially calculated assets in the fund
(calculated recognizing all realized and unrealized
investment gains and losses each year in level annual
installments over five years), including the balance in the
supplemental annuity account, and the present value of
employer normal contributions determined without regard to
any setoff the Commonwealth or any employer will receive for
advance payment of accrued liability contributions under
section 5507(h), and of member contributions payable with
respect to all active members, inactive members on leave
without pay, vestees and special vestees on December 31,
2009. If the accrued liability is changed by legislation
enacted subsequent to December 31, 2009, such change in
liability shall be funded in equal dollar installments over a
period of ten years from the first day of July following the
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valuation date coincident with or next following the date
such legislation is enacted.
(4) For fiscal years beginning on or after July 1, 2018,
the accrued liability contribution rate shall be computed as
provided for under this section, except that the rate shall
be computed as a rate of total compensation of all active
members and active participants for the applicable period[.]
and the accrued liability shall be determined and the rate
shall be computed without regard to the portion of any
advance payment of accrued liability contributions made by
the Commonwealth or any employer under section 5507(h) for
which an annual setoff has not been credited or recognized in
a prior fiscal year. If the accrued liability is changed by
legislation enacted subsequent to December 31, 2016, such
change in liability shall be funded in equal dollar
installments as a percentage of compensation of all active
members and active participants over a period of ten years
from the first day of July following the valuation date
coincident with or next following the date such legislation
is enacted. In addition to any employer defined contributions
made to the trust, the Commonwealth and other employers of
participants shall make the accrued liability contributions
to the fund certified by the board.
* * *
(f) Experience adjustment factor.--
(1) For each fiscal year after the establishment of the
accrued liability contribution rate and the supplemental
annuity contribution rate for the fiscal year beginning July
1, 2010, any increase or decrease in the unfunded accrued
liability and any increase or decrease in the liabilities and
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funding for supplemental annuities, due to actual experience
differing from assumed experience (recognizing all realized
and unrealized investment gains and losses over a five-year
period), changes in contributions caused by the final
contribution rate being different from the actuarially
required contribution rate, State employees making shared-
risk member contributions or having shared-gain adjustments
to their regular member contributions, payment of additional
accrued liability contributions under section 5507(g),
changes in actuarial assumptions or changes in the terms and
conditions of the benefits provided by the system by
judicial, administrative or other processes other than
legislation, including, but not limited to, reinterpretation
of the provisions of this part, shall be amortized in equal
dollar annual contributions as a percentage of compensation
of all active members and active participants over a period
of 30 years beginning with the July 1 succeeding the
actuarial valuation determining said increases or decreases.
The experience adjustment factor calculated under this
paragraph shall be determined without regard to any advance
payment of accrued liability contributions made by the
Commonwealth or any employer under section 5507(h).
* * *
Section 4. Title 71 is amended by adding a section to read:
§ 5508.1. Advance payment of accrued liability contributions.
(a) Authorization.--The board and the head of department of
an employer of members of the system may enter into an agreement
by which the employing unit, agency or department agrees to make
one lump sum payment of all or a part of the employer's portion
of the present value of future accrued liability contributions
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determined under section 5508(c)(4) (relating to actuarial cost
method) as modified by the cumulative experience adjustment
factors calculated under section 5508(f)(1). The amount shall be
calculated by the actuary in a manner and using actuarial
factors and assumptions as the board, after obtaining the advice
of the board's actuary, shall determine, and shall be certified
by the board.
(b) Terms of lump sum payment.--The terms of an advance
payment of accrued liability contributions shall be set forth in
the agreement between the board and the head of department and
subject to the following restrictions:
(1) Each employing unit, agency or department may make
only one lump sum advance payment of accrued liability
contributions.
(2) The lump sum may be based on not less than 75% and
not more than 100% of the portion of the unfunded actuarial
accrued liability of the system allocated to the employing
unit, agency or department.
(3) The calculation of the unfunded actuarial accrued
liability of the system and the portion allocated to the
employing unit, agency or department shall be made by the
actuary and approved by the board.
(4) The allocation of the unfunded actuarial accrued
liability to the employing unit, agency or department must be
made using a methodology, and the setoff schedule and other
terms and conditions of the agreement must be such that if
all employing units, agencies and departments that employ
members of the system simultaneously enter into agreements to
make 100% advance payments of accrued liability contributions
using the same date to calculate and allocate the unfunded
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actuarial accrued liability contributions and the same date
to make lump sum payments, the total of the lump sum payments
would equal the unfunded actuarial accrued liability on the
calculation date.
(5) The agreement must establish a schedule of dollar-
denominated annual setoffs against the future contributions
of the employing unit, agency or department to amortize the
lump sum advance payment of actuarial accrued liability
contributions.
(6) The following shall apply:
(i) The agreement must provide a schedule of annual
setoffs to provide for not less than 75% and not more
than 100% of the anticipated future accrued liability
contributions of the employing unit, agency or department
as determined by the actuary and approved by the board as
of the determination date. The schedule of setoffs of
anticipated future accrued liability contributions:
(A) must be in dollar amounts that are
consistent with the system's amortization bases that
exist as of the determination date; and
(B) cannot be for a time period longer than the
longest remaining amortization period for any initial
actuarial accrued liability or experience adjustment
factor included in the calculation of the advance
payment of accrued liability contributions.
(ii) A good faith determination, calculation and
payment of the lump sum that produces an annual setoff
that is less than 75% or more than 100% of the
anticipated future accrued liability contribution by a de
minimis amount shall not be a violation of this
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subsection.
(7) The agreement shall provide a mechanism or method of
recognizing or crediting the setoff against the actual
contributions of the employing unit, agency or department,
which may include recognizing or crediting the setoff in
monthly, semi-monthly, biweekly or other periodic or
reconciling increments to correspond to the schedule by which
the employing unit, agency or department makes employer
contributions to and to account for and reflect changes in
the schedule of compensation payments to the members.
(8) After the lump sum payment is made, the annual
setoff schedule and amounts established in the agreement
cannot be changed except that:
(i) in no fiscal year can the recognized setoff be
larger than the contributions by the employer that are
eligible for the setoff. If in any fiscal year the
available setoff amount is larger than the actual
contributions by the employer that are eligible to be
setoff, the excess setoff for that fiscal year shall be
added to the next fiscal year's setoff amount as provided
under subsection (c); and
(ii) if the General Assembly changes the actuarial
cost method under section 5508, the board may change the
schedule or amount of annual setoffs to conform to the
amended actuarial cost method, as determined actuarially
by the board, with the agreement of the head of the
department.
(9) The board may not be involved in the issuance,
service or administration of any bonds or financial
instruments or any obligations of an employing unit, agency
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or department, the proceeds of which are used in total or in
part to make any part of the lump sum advance payment of
accrued liability contributions. The board may not provide
financial advice or in any way act as a broker, banker,
financial advisor, investment manager or in a similar
capacity to the employing unit, agency or department. Any
money received as a result of a lump sum payment of advance
payment of accrued liability contributions shall be part of
the general assets of the funds and may not be segregated or
invested separately for the account of or benefit of the
employing unit, agency or department that made the payment.
(10) An amount paid into the fund as an advance payment
of accrued liability contributions may not be refunded or
repaid to any employing unit, agency or department except as
a setoff against future employer contributions.
(11) Advance payment of accrued liability contributions
made prior to the execution of an agreement that, in the sole
determination of the board or in the determination of the
commissioner, could result in the system failing to satisfy
the requirements necessary to be a qualified pension plan
under IRC § 401(a) and other applicable provisions of the
IRC, shall not be permitted.
(c) Effect of payment.--The effect of a payment shall be as
follows:
(1) Any employing unit, agency or department that makes
a lump sum payment of advance accrued liability contributions
shall receive an annual setoff on a fiscal year basis against
the payment of future accrued liability contributions in an
amount and for the time period provided in the agreement. If
the amount of the annual setoff exceeds the accrued liability
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contributions of the employing unit, agency or department for
that fiscal year, the remaining setoff amount shall be
applied against any supplemental annuity contributions
determined under section 5508(e)(2). If no supplemental
annuity contributions are due, or if the remaining annual
setoff exceeds the amount of the supplemental annuity
contributions, any remaining annual setoff shall be applied
against the employer normal contributions of the employing
unit, agency or department. Any annual setoff amount in
excess of the actual accrued liability contributions,
supplemental annuity contributions and employer normal
contributions for that fiscal year shall be deferred without
interest and made part of the scheduled annual setoff amount
of the employing unit, agency or department for the next
subsequent year as determined by the actuary and certified by
the board. In no event shall a setoff for advance payments
reduce or be used to pay additional accrued liability
contributions under section 5507(g) (relating to
contributions to the system by the Commonwealth and other
employers), benefits completion plan contributions under
section 5507(e), employer defined contributions paid into the
trust on account of a participant's State service, or any
member or participant contributions to the system or the
plan. A lump sum amount or annual excess setoff of advance
accrued liability contributions may not be paid from the fund
by the board to the employer.
(2) Advance payment of accrued liability contributions
results only in a dollar amount setoff against actual future
contributions as set forth in the agreement between the board
and employing unit, agency or department and determined by
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the actuary and certified by the board. An employing unit,
agency or department shall be subject to all changes in
employer contributions rates and actual contribution amounts
caused by any reason, including actual recognition of
investment returns, changes in economic or demographic
actuarial assumptions, including the assumed rate of
investment return, actual experience being different from the
economic or demographic assumptions, including the number of
State employees who are members of the system and their
compensation, changes in benefits and changes in the
actuarial cost method.
(d) Payment of costs and fees.--
(1) The costs incurred by the board after the effective
date of this section, including any fees charged by the
actuary, to estimate, determine, calculate or administer the
amount of any lump sum payment and annual setoff potentially
or actually resulting from advance payment of accrued
liability contributions shall be paid by the employing unit,
agency or department on whose behalf the costs were incurred,
in amounts certified by the board. Notwithstanding this
paragraph, costs may not be paid by the employing unit,
agency or department until the board provides a written
estimate of the costs to the employing unit, agency or
department and receives written approval from the employing
unit, agency or department to incur the costs on the
employing unit's, agency's or department's behalf.
(2) Payment of fees and costs incurred by the board at
the request of the head of a department shall be paid by the
corresponding employer without regard to whether an agreement
is entered into between the board and the head of department
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of an employer under subsection (a) and without regard to
whether the costs and fees are incurred before or after an
agreement is entered into under subsection (a).
(3) The board may require advance payment of costs and
fees before performing any estimate, determination,
calculation or administrative work under this section.
(4) The board may setoff the payment of costs and fees
against either the lump sum payment or annual setoffs.
(5) Notwithstanding this subsection, the board may waive
all or part of the reimbursement due by an employer if the
board in its sole discretion determines that it is in the
best interests of the fund and the members of the system to
do so.
(e) Limitation of time.--
(1) A lump sum payment for advance payment of accrued
liability contributions made on or after July 1 and on or
before the following May 1 will be recognized by annual
setoffs beginning the next fiscal year. A lump sum payment
for advance payment of accrued liability contributions made
on or after May 2 and before July 1 will be recognized by
annual setoffs beginning the second following fiscal year.
(2) Any agreement under this section must be entered
into by December 31, 2024. Any lump sum payment under this
section must be made by May 1, 2025.
Section 5. Section 5902(k) of Title 71 is amended to read:
§ 5902. Administrative duties of the board.
* * *
(k) Certification of employer contributions to fund.--The
board shall, each year in addition to the itemized budget
required under section 5509 (relating to appropriations and
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assessments by the Commonwealth), certify, as a percentage of
the members' payroll, the shared-risk contribution rate, the
shared-gain adjustment to the regular member contribution rate,
the employers' contributions as determined pursuant to section
5508 (relating to actuarial cost method) necessary for the
funding of prospective annuities for active members and the
annuities of annuitants and certify the rates and amounts of the
employers' normal contributions as determined pursuant to
section 5508(b), accrued liability contributions as determined
pursuant to section 5508(c), supplemental annuities contribution
rate as determined pursuant to section 5508(e), the experience
adjustment factor as determined pursuant to section 5508(f), the
collared contribution rate pursuant to section 5508(h) and the
final contribution rate pursuant to section 5508(i), which shall
be paid to the fund and credited to the appropriate accounts.
The board shall certify the dollar amount of the annual
contribution setoff for each employing unit, agency or
department that has made advance payment of accrued liability
contributions under section 5507(h) (relating to contributions
to the system by the Commonwealth and other employers). The
board may allocate the final contribution rate and certify
various employer contribution rates and amounts based upon
advance payment of accrued liability contributions and the
different benefit eligibility, class of service multiplier,
superannuation age, final average salary calculation,
compensation limits and other benefit differences resulting from
State service credited for individual members even though such
allocated employer contribution rate on behalf of any given
member may be more or less than 5% of the member's compensation
for the period from July 1, 2010, to June 30, 2011, or may
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differ from the prior year's contribution for that member by
more or less than the percentages used to calculate the collared
contribution rate for that year and may be below any minimum
contribution rate established for the collared contribution rate
or final contribution rate. These certifications shall be
regarded as final and not subject to modification by the
Secretary of the Budget.
* * *
Section 6. Section 5906 of Title 71 is amended by adding a
subsection to read:
§ 5906. Duties of heads of departments.
* * *
(o) Advance payment of accrued liability contributions.--The
head of department may enter into an agreement with the board to
make advance payment of accrued liability contributions of the
employing unit, agency or department as provided in this part.
After entering into such an agreement, the head of department
may make, or direct and have made, advance payment as provided
under this part and the agreement.
Section 7. Section 5934 of Title 71 is amended to read:
§ 5934. State accumulation account.
The State accumulation account shall be the ledger account to
which shall be credited all contributions of the Commonwealth or
other employers whose employees are members of the system and
made in accordance with the provisions of section 5507(a) or (d)
(relating to contributions to the system by the Commonwealth and
other employers) except that the amounts received under the
provisions of the act of May 12, 1943 (P.L.259, No.120), and the
amounts received under the provisions of the Liquor Code, act of
April 12, 1951 (P.L.90, No.21), shall be credited to the State
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Police benefit account or the enforcement officers' benefit
account as the case may be. All amounts transferred to the fund
by county retirement systems or pension plans in accordance with
the provisions of section 5507(c) also shall be credited to the
State accumulation account. All amounts transferred to the fund
by the Public School Employees' Retirement System in accordance
with section 5303.2(e) (relating to election to convert school
service to State service), except amounts credited to the
members' savings account, and all amounts paid by the Department
of Corrections in accordance with section 5303.2(f) also shall
be credited to the State accumulation account. All advance
payment of accrued liability contributions under section 5507(h)
shall be credited to the State accumulation account. The State
accumulation account shall be credited with valuation interest.
The reserves necessary for the payment of annuities and death
benefits resulting from membership in the system as approved by
the board and as provided in Chapter 57 (relating to benefits)
shall be transferred from the State accumulation account to the
annuity reserve account provided for in section 5935 (relating
to annuity reserve account), except that the reserves necessary
on account of a member who is an officer of the Pennsylvania
State Police or an enforcement officer shall be transferred from
the State accumulation account to the State Police benefit
account provided for in section 5936 (relating to State Police
benefit account) or to the enforcement officers' benefit account
as provided for in section 5937 (relating to enforcement
officers' benefit account) as the case may be. The reserves
necessary for the payment of supplemental annuities in excess of
those reserves credited to the supplemental annuity account on
June 30, 2010, shall be transferred from the State accumulation
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account to the supplemental annuity account. In the event that
supplemental annuities are increased by legislation enacted
after December 31, 2009, the necessary reserves shall be
transferred from the State accumulation account to the
supplemental annuity account.
Section 8. The following shall apply:
(1) The board is not obligated to enter into any
agreement with the head of department of any employing unit,
agency or department.
(2) The General Assembly reserves to itself the further
exercise of its legislative power to amend, supplement or
repeal the provisions of this act, or 71 Pa.C.S. Pt. XXV,
including the actuarial cost method under 71 Pa.C.S. § 5508,
without regard to whether the head of department of an
employing unit, agency or department has entered into an
agreement with the board under this act, except that if any
employing unit, agency or department has made an advance
payment of accrued liability contributions, that employing
unit, agency or department shall receive setoffs of future
employer contributions as determined by the State Employees'
Retirement Board's actuary and certified by the State
Employees' Retirement Board.
(3) Notwithstanding any other provision of law,
fiduciary requirement, actuarial standard of practice or
other requirement to the contrary, the members of the State
Employees' Retirement Board, the actuary and other employees
and officials of the State Employees' Retirement System:
(i) May not be held liable or in breach or violation
of any law or standard either as individuals or in their
official capacity or as a governmental or corporate
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entity for any action or calculation related to
calculating and certifying:
(A) An employer normal contribution rate.
(B) A supplemental contribution rate.
(C) An accrued liability contribution rate or
final contribution rate or actual employer
contribution rate.
(D) An allocation of the unfunded actuarial
accrued liability to an employing unit, agency or
department.
(E) A lump sum amount of advance payment of
accrued liability contributions.
(F) A setoff against employer contributions.
(G) The actual employer contributions as
provided in this act.
(ii) Do not warrant, guarantee or promise that any
actuarial, economic or demographic assumptions,
projections or estimates used for calculations under
subparagraph (i) will in fact occur, or that future
increases of accrued liability contributions will not
occur or be assessed against any employing unit, agency
or department that makes an advanced payment of accrued
liability contributions under this act.
Section 9. This act shall take effect immediately.
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