2012 -- H 7144

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LC00488

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO TOWNS AND CITIES -- OTHER POST- EMPLOYMENT BENEFITS

TRUSTS

     Introduced By: Representatives Gallison, Ruggiero, Edwards, Martin, and Brien

     Date Introduced: January 17, 2012

     Referred To: House Municipal Government

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 45-21-65 of the General Laws in Chapter 45-21 entitled

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"Retirement of Municipal Employees" is hereby amended to read as follows:

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     45-21-65. Other post-employment benefits -- OPEB trusts. -- (a) Notwithstanding the

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provisions of any general or special law, or the provisions of any municipality's home rule

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charter, to the contrary, for purposes of funding any unfunded liability for other post-employment

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benefits including, but not limited to, health care and dental care benefits hereinafter referred to

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as ("OPEB") in accordance with government accounting standards board statements 43 and 45, a

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municipality, acting by its treasurer or director of finance, upon an approving resolution of the

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city or town council or agency board as applicable, may enter into a trust agreement between the

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municipality and a corporate trustee which shall be a bank or trust company doing business in the

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state, or a corporation established pursuant to chapter 5 of title 45 of the general laws. This trust

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agreement shall be in any form deemed proper by the treasurer or director of finance of the

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municipality, and shall be executed by its treasurer or director of finance and countersigned by its

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mayor or president of the town council. It shall be lawful for any bank or, trust company, or entity

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organized pursuant to section 45-5-20.1 doing business in the state to act as a depository or

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trustee under this trust agreement, and to furnish indemnification and pledge securities that may

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be required by any municipality.

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      (b) OPEB trust funds shall be credited with all amounts appropriated or otherwise made

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available by the municipality for the purposes of meeting the current and future OPEB costs

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payable by the municipality. OPEB trust funds shall also be credited with all amounts contributed

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or otherwise made available by employees of the municipality for the purpose of meeting future

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OPEB costs payable by the municipality. Amounts in an OPEB trust fund, including any earnings

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or interest accruing from the investment of these amounts, shall be expended only for the

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payment of the costs payable by the municipality for OPEB or as otherwise permitted by the

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terms of the trust and applicable law. The director of finance or treasurer, as applicable, shall

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invest and reinvest the amounts in the OPEB trust fund not needed for current disbursement in

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any investment permitted for the municipality's pension funds consistent with the prudent person

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rule and investment policies of the municipality, if any.

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      (c) Municipalities are hereby authorized to enter into agreements, trusts, contracts, and

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other arrangements with the state and any of its departments, agencies, boards or commissions

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relating to the execution, management or operation of the OPEB trust funds, including, but not

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limited to, investments, and the state and its departments, agencies, boards and commissions are

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hereby authorized to enter into such agreements, contracts and other arrangements with

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municipalities. Notwithstanding any provisions of any general or special law or principle of

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equity to the contrary, the state shall have no liability to any municipality for entering into such

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agreements. A municipality may employ any qualified bank, trust company, corporation, firm or

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person to advise it on the investment of the OPEB trust fund and may pay from the OPEB trust

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fund for this advice and other services. Procurement for these services shall be subject to the

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procurement procedures and rules governing municipalities in the state.

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     (d) A municipality may employ any qualified bank, trust company, corporation, firm or

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person to advise it on the investment of the OPEB trust fund and may pay for the OPEB trust

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fund for this advice and other services. Procurement for these services shall be subject to the

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procurement procedures and rules governing municipalities in the state.

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     (e) Municipalities are also hereby authorized to enter into agreements, trusts, contracts,

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and other arrangements with any corporation established pursuant to chapter 5 of title 45 of the

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general laws relating to the execution management or operations of OPEB trust funds including,

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but not limited to, investments, and the corporations established pursuant to section 45-5-20.1 of

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the general laws are hereby authorized to enter into such agreements, trusts, contracts or other

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arrangements with municipalities.

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      (d)(f) Any OPEB trusts that have been created by municipalities and are in effect on the

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date hereof are hereby ratified and confirmed.

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      (e)(g) Nothing herein shall be construed to exempt OPEB trusts from the Rhode Island

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Access to Public Records Act, RIGL 38-2-1 et seq.

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     SECTION 2. Chapter 45-5 of the General Laws entitled "Councils and Governing

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Bodies" is hereby amended by adding thereto the following section:

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     45-5-20.2. Power of city and town councils and regional school districts to jointly

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establish a corporation to manage and operate OPEB trusts. -- (a) Notwithstanding the

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provisions of any general or special law to the contrary, corporations established pursuant to

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section 45-5-20.1 also shall have the power to manage and operate such other post-employment

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benefit OPEB trusts as are established pursuant to section 45-21-65 and section 16-2-9.5. Such

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corporations shall have the powers set forth in section 45-5-20.1, and shall have additional

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powers as are necessary to effectuate the purposes of this section.

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     (b) For the purpose of OPEB trusts managed and operated pursuant to this section, the

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corporation shall maintain discrete sub-trust accounts for each of the participating entities setting

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forth the contributions made by each participating entity, the allocated income assigned to each

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participating entity as it may be derived from investments and other revenue sources, the funds

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distributed to each participating entity for use in meeting its OPEB obligations, each entity's

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allocated share of the administrative costs, including investment management fees, for operating

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the OPEB trust, and such other items as the directors of the corporation hereby established shall

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deem proper and necessary. Agreements made pursuant to this section may provide for pooling of

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administrative expenses, including investment management and advisory services, associated

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with the operation of the OPEB trust and sub-trusts.

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     (c) The corporation shall ensure that a separate audit of OPEB trusts and sub-trusts is

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performed annually, copies of which shall be provided to the participating entities of the OPEB

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trust and the auditor general.

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     SECTION 3. This act shall take effect upon passage.

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LC00488

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TOWNS AND CITIES -- OTHER POST- EMPLOYMENT BENEFITS

TRUSTS

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     This act would allow for shared service administration of OPEB trusts between

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municipalities. It would also allow city and town councils and regional school districts to jointly

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establish a corporation to manage and operate OPEB trust.

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     This act would take effect upon passage.

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LC00488

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