2012 -- S 2036

=======

LC00051

=======

STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

____________

A N A C T

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

TRUSTS

     Introduced By: Senators DiPalma, Sheehan, Bates, Ottiano, and Sosnowski

     Date Introduced: January 11, 2012

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

1-1

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

1-2

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

1-3

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

1-4

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

1-5

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

1-6

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

1-7

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

1-8

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

1-9

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

1-10

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

1-11

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

1-12

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

1-13

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

1-14

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

1-15

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

1-16

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

1-17

be required by any municipality.

1-18

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

1-19

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

2-1

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

2-2

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

2-3

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

2-4

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

2-5

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

2-6

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

2-7

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

2-8

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

2-9

rule and investment policies of the municipality, if any.

2-10

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

2-11

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

2-12

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

2-13

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

2-14

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

2-15

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

2-16

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

2-17

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

2-18

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

2-19

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

2-20

procurement procedures and rules governing municipalities in the state.

2-21

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

2-22

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

2-23

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

2-24

procurement procedures and rules governing municipalities in the state.

2-25

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

2-26

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

2-27

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

2-28

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

2-29

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

2-30

arrangements with municipalities.

2-31

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

2-32

date hereof are hereby ratified and confirmed.

2-33

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

2-34

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

3-1

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

3-2

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

3-3

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

3-4

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

3-5

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

3-6

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

3-7

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

3-8

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

3-9

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

3-10

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

3-11

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

3-12

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

3-13

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

3-14

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

3-15

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

3-16

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

3-17

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

3-18

administrative expenses, including investment management and advisory services, associated

3-19

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

3-20

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

3-21

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

3-22

trust and the auditor general.

3-23

     SECTION 3. This act shall take effect upon passage.

=======

LC00051

========

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

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

TRUSTS

***

4-1

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

4-2

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

4-3

establish a corporation to manage and operate OPEB trust.

4-4

     This act would take effect upon passage.

=======

LC00051

=======