Regular Session 2019-2020 House Bill 1982 P.N. 2895

PRIOR PRINTER'S NO. 2787

PRINTER'S NO. 2895

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,

GREINER AND CIRESI, OCTOBER 25, 2019

AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES,

NOVEMBER 18, 2019

AN ACT

Amending Title 71 (State Government) of the Pennsylvania

Consolidated Statutes, IN PRELIMINARY PROVISIONS, FURTHER

PROVIDING FOR DEFINITIONS; 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:

SECTION 1. SECTION 5102 OF TITLE 71 OF THE PENNSYLVANIA

CONSOLIDATED STATUTES IS AMENDED BY ADDING A DEFINITION TO READ:

§ 5102. DEFINITIONS.

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THE FOLLOWING WORDS AND PHRASES AS USED IN THIS PART, UNLESS

A DIFFERENT MEANING IS PLAINLY REQUIRED BY THE CONTEXT, SHALL

HAVE THE FOLLOWING MEANINGS:

* * *

"ELIGIBLE EMPLOYER." ANY EMPLOYING UNIT, AGENCY OR

DEPARTMENT THAT EMPLOYS STATE EMPLOYEES, OTHER THAN THE

PENNSYLVANIA TURNPIKE COMMISSION, THE DELAWARE RIVER PORT

AUTHORITY, THE PORT AUTHORITY TRANSIT CORPORATION, THE

PHILADELPHIA REGIONAL PORT AUTHORITY, THE DELAWARE RIVER JOINT

TOLL BRIDGE COMMISSION, THE STATE PUBLIC SCHOOL BUILDING

AUTHORITY, THE DEPARTMENT OF GENERAL SERVICES, THE STATE HIGHWAY

AND BRIDGE AUTHORITY, THE DELAWARE VALLEY REGIONAL PLANNING

COMMISSION, THE DELAWARE RIVER BASIN COMMISSION, THE SUSQUEHANNA

RIVER BASIN COMMISSION AND ANY SEPARATE INDEPENDENT PUBLIC

CORPORATION CREATED BY STATUTE, NOT INCLUDING ANY MUNICIPAL OR

QUASI-MUNICIPAL CORPORATION.

* * *

SECTION 2. 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 ARE

AMENDED TO READ:

§ 5302. Credited State service.

* * *

(b) Creditable leaves of absence.--

* * *

(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,

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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

determination of the contributions that an employee

organization pays or reimburses the Commonwealth or other

ELIGIBLE employer under this paragraph shall be made without

regard to any setoff the Commonwealth or any ELIGIBLE

employer receives for advance payment of accrued liability

contributions under section 5507(h).

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* * *

§ 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 ELIGIBLE 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

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

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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 ELIGIBLE 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.

* * *

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

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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 ELIGIBLE

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

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 ELIGIBLE employer receives for advance payment of accrued

liability contributions under section 5507(h), and expressed

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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

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 ELIGIBLE employer receives

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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 ELIGIBLE

employer receives for advance payment of accrued liability

contributions under section 5507(h), expressed as a

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

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member contribution rate to be effective July 1, 2029, the

determination period shall be January 1, 2020, through

December 31, 2028.

* * *

Section 2 3. 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 THAT

IS AN ELIGIBLE EMPLOYER 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

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.

* * *

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(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%

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%

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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 ELIGIBLE

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 4. Section 5508(c)(3) and (4) and (f)(1) of Title

71 are amended to read:

§ 5508. Actuarial cost method.

* * *

(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

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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 ELIGIBLE 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 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

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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 ELIGIBLE 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

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-

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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 ELIGIBLE employer under section 5507(h).

* * *

Section 4 5. 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 ELIGIBLE employer of members of the system may enter into an

agreement by which the employing unit, agency or department

ELIGIBLE EMPLOYER agrees to make one lump sum payment of all or

a part of the ELIGIBLE employer's portion of the present value

of future accrued liability contributions 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

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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 ELIGIBLE

EMPLOYER 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 ELIGIBLE EMPLOYER .

(3) The calculation of the unfunded actuarial accrued

liability of the system and the portion allocated to the

employing unit, agency or department ELIGIBLE EMPLOYER 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

ELIGIBLE EMPLOYER 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 ELIGIBLE EMPLOYERS 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 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

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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 ELIGIBLE EMPLOYER

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

ELIGIBLE EMPLOYER 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

subsection.

(7) The agreement shall provide a mechanism or method of

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recognizing or crediting the setoff against the actual

contributions of the employing unit, agency or department

ELIGIBLE EMPLOYER , 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

ELIGIBLE EMPLOYER 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 ELIGIBLE employer

that are eligible for the setoff. If in any fiscal year

the available setoff amount is larger than the actual

contributions by the ELIGIBLE 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

or department ELIGIBLE EMPLOYER , the proceeds of which are

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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

ELIGIBLE EMPLOYER . 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 ELIGIBLE EMPLOYER 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 ELIGIBLE

EMPLOYER 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.

follows:

(1) Any employing unit, agency or department ELIGIBLE

EMPLOYER 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

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provided in the agreement. If the amount of the annual setoff

exceeds the accrued liability contributions of the employing

unit, agency or department ELIGIBLE EMPLOYER 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

ELIGIBLE EMPLOYER . 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 ELIGIBLE EMPLOYER 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 ELIGIBLE employer.

(2) Advance payment of accrued liability contributions

results only in a dollar amount setoff against actual future

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contributions as set forth in the agreement between the board

and employing unit, agency or department ELIGIBLE EMPLOYER

and determined by the actuary and certified by the board. An

employing unit, agency or department ELIGIBLE EMPLOYER 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 ELIGIBLE EMPLOYER 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 ELIGIBLE EMPLOYER until

the board provides a written estimate of the costs to the

employing unit, agency or department ELIGIBLE EMPLOYER and

receives written approval from the employing unit, agency or

department ELIGIBLE EMPLOYER to incur the costs on the

employing unit's, agency's or department's ELIGIBLE

EMPLOYER'S behalf.

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(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 ELIGIBLE employer without regard to whether an

agreement is entered into between the board and the head of

department of an ELIGIBLE 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 ELIGIBLE 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 6. Section 5902(k) of Title 71 is amended to read:

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§ 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

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 ELIGIBLE EMPLOYER 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

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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 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 7. 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 A DEPARTMENT THAT IS AN ELIGIBLE EMPLOYER may

enter into an agreement with the board to make advance payment

of accrued liability contributions of the employing unit, agency

or department ELIGIBLE EMPLOYER as provided in this part. After

entering into such an agreement, the head of department THE

DEPARTMENT THAT IS AN ELIGIBLE EMPLOYER may make, or direct and

have made, advance payment as provided under this part and the

agreement.

Section 7 8. 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

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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

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

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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

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 9. 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 ELIGIBLE EMPLOYER.

(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 ELIGIBLE EMPLOYER has

entered into an agreement with the board under this act,

except that if any employing unit, agency or department

ELIGIBLE EMPLOYER has made an advance payment of accrued

liability contributions, that employing unit, agency or

department ELIGIBLE EMPLOYER 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.

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(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

entity for any action or calculation related to

calculating and certifying:

(A) An employer normal contribution rate.

(B) A supplemental contribution rate.

final contribution rate or actual employer

contribution rate.

(D) An allocation of the unfunded actuarial

accrued liability to an employing unit, agency or

department ELIGIBLE EMPLOYER.

(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 ELIGIBLE EMPLOYER that makes an advanced

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payment of accrued liability contributions under this

act.

Section 9 10. This act shall take effect immediately.

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