2012 -- H 7262

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LC00709

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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 STATE AFFAIRS AND GOVERNMENT - STATE EXPENDITURES

     Introduced By: Representatives Ehrhardt, and Reilly

     Date Introduced: January 26, 2012

     Referred To: House Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 42-149-3.1 of the General Laws in Chapter 42-149 entitled "State

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Expenditures for Non-State Employee Services" is hereby repealed.

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     42-149-3.1. Assessment on state expenditures for non-state employee services. --

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Whenever a department, commission, board, council, agency or public corporation incurs

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expenditures through contracts or agreements by which a nongovernmental person or entity

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agrees to provide services which are substantially similar to and in lieu of services hereto fore

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provided, in whole or in part, by regular employees of the department, commission, board,

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council, agency or public corporation covered by chapter 36-8, those expenditures shall be

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subject to an assessment equal to five and one-half percent (5.5%) of the cost of the service. That

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assessment shall be paid to the retirement system on a quarterly basis in accordance with

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subsection 36-10-2(e).

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     SECTION 2. Section 36-10-2 of the General Laws in Chapter 36-10 entitled "Retirement

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System-Contributions and Benefits" is hereby amended to read as follows:

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     36-10-2. State contributions. -- (a) The State of Rhode Island shall make its contribution

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for the maintenance of the system, including the proper and timely payment of benefits in

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accordance with the provisions of this chapter and chapters 8, 16, 28, 31 and 42 of this title, by

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annually appropriating an amount equal to a percentage of the total compensation paid to the

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active membership. The percentage shall be computed by the actuary employed by the retirement

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system and shall be certified by the retirement board to the director of administration on or before

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the fifteenth day of October in each year. In arriving at the yearly employer contribution the

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actuary shall determine the value of:

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      (1) The contributions made by the members;

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      (2) Income on investments; and

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      (3) Other income of the system.

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      (b) The Actuary shall thereupon compute the yearly employer contribution that will:

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      (1) Pay the actuarial estimate of the normal cost for the next succeeding fiscal year;

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      (2) Amortize the unfunded liability of the system in accordance with section 36-10-

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2.1(b).

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      (c) The State of Rhode Island shall remit to the general treasurer the employer's share of

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the contribution for state employees, state police, and judges on a payroll frequency basis, and for

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teachers in a manner pursuant to section 16-16-22.

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      (d) (1) In accordance with the intent of section 36-8-20 that the retirement system satisfy

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the requirements of section 401(a) of the Internal Revenue Code of 1986, the state shall pay to the

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retirement system:

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      (i) By June 30, 1995, an amount equal to the sum of the benefits paid to state legislators

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pursuant to section 36-10-10.1 in excess of ten thousand dollars ($10,000) per member (plus

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accrued interest on such amount at eight percent (8%)) for all fiscal years beginning July 1, 1991,

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and ending June 30, 1995, but this amount shall be paid only if section 36-10-10.1(e) becomes

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effective January 1, 1995; and

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      (ii) By December 31, 1994, twenty million seven hundred eighty eight thousand eight

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hundred twelve dollars and nineteen cents ($20,788,812.19) plus accrued interest on that amount

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at eight percent (8%) compounded monthly beginning March 1, 1991, and ending on the date this

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payment is completed (reduced by amortized amounts already repaid to the retirement system

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with respect to the amounts withdrawn by the state during the fiscal year July 1, 1990 -- June 30,

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1991); and

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      (iii) By June 30, 1995, the sum of the amounts paid by the retirement system for retiree

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health benefits described in section 36-12-4 for all fiscal years beginning July 1, 1989, and ending

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June 30, 1994, to the extent that the amounts were not paid from the restricted fund described in

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subsection (c).

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      (2) Any and all amounts paid to the retirement system under this subsection shall not

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increase the amount otherwise payable to the system by the state of Rhode Island under

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subsection (a) for the applicable fiscal year. The actuary shall make such adjustments in the

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amortization bases and other accounts of the retirement system as he or she deems appropriate to

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carry out the provisions and intent of this subsection.

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      (e) In addition to the contributions provided for in subsection (a) through (c) and in order

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to provide supplemental employer contributions to the retirement system, commencing in fiscal

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year 2006, and each year thereafter:

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      (1) Except for fiscal year 2009, fiscal year 2010 and fiscal year 2011, for each fiscal year

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in which the actuarially determined state contribution rate for state employees, including state

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contributions under chapter 36-10.3, is lower than that for the prior fiscal year, the governor shall

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include an appropriation to that system equivalent to twenty percent (20%) of the rate reduction

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for the state's contribution rate for state employees to be applied to the actuarial accrued liability

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of the state employees' retirement system for state employees for each fiscal year;

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      (2) Except for fiscal year 2009, fiscal year 2010 and fiscal year 2011, for each fiscal year

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in which the actuarially determined state contribution rate for teachers, including state

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contributions under chapter 36-10.3, is lower than that for the prior fiscal year, the governor shall

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include an appropriation to that system equivalent to twenty percent (20%) of the rate reduction

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for the state's share of the contribution rate for teachers to be applied to the actuarial accrued

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liability of the state employees' retirement system for teachers for each fiscal year;

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      (3) The amounts to be appropriated shall be included in the annual appropriation bill and

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shall be paid by the general treasurer into the retirement system.

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      (4) Assessments pursuant to section 42-149-3.1 shall be included in the annual

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appropriation bill and shall be paid by the general treasurer into the retirement system beginning

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FY2013.

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      (f) While the retirement system's actuary shall not adjust the computation of the annual

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required contribution for the year in which supplemental contributions are received, such

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contributions once made may be treated as reducing the actuarial liability remaining for

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amortization in the next following actuarial valuation to be performed.

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     SECTION 3. This act shall take effect upon passage.

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LC00709

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT - STATE EXPENDITURES

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     This act would repeal a section of the state pension and retirement reform act having to

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do with an assessment on expenditures for non-governmental contractors.

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     This act would take effect upon passage.

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LC00709

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