2014 -- S 2049

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LC003427

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO TOWNS AND CITIES -- RETIREMENT SECURITY ACT FOR LOCALLY

ADMINISTERED PENSION FUNDS

     Introduced By: Senators Pearson, Picard, DaPonte, Bates, and Cool Rumsey

     Date Introduced: January 15, 2014

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 45-65-7 of the General Laws in Chapter 45-65 entitled "Retirement

Security Act for Locally Administered Pension Funds" is hereby amended to read as follows:

     45-65-7. Failure to comply. – (a)(1) With respect to any municipality that fails to

comply with the requirements of this chapter within the prescribed time, the general treasurer is

authorized to withhold moneys due to the municipality from the state for any purpose other than

education, including, but not limited to, municipal aid and other aid provided under sections 45-

13-5.1, 45-13-12, 44-34.1-2, 44-13-13, 44-18-18.1, 44-18-36.1(b) and 42-63.1-3.

     (b) The general treasurer is also authorized to withhold moneys due to the municipality

from the state for any purpose other than education, including, but not limited to, municipal aid

and other aid provided under §§ 45-13-5.1, 45-13-12, 44-34.1-2, 44-13-13, 44-18-18.1, 44-18-

36.1(b) and 42-63.1-3, as to any municipality that does not fully fund their annual required

contribution (ARC) to any locally administered pension plan that the municipality and/or its

employees participates in. As used herein, the term "fully fund" means that the municipality

makes one hundred percent (100%) of its annually required ARC payment. Provided, that the

general treasurer may consider a municipality's capacity to pay and any local plans to fund,

replenish, and otherwise bring the pension fund to an acceptable level, in determining whether to

withhold such monies under this subsection.

     (1) Monies withheld by the general treasurer pursuant to this subsection (b) shall be

placed in an interest-bearing escrow account. Such funds may be held for a period of up to one

year commencing from the date said funds are deposited, at the end of which time the funds plus

any interest earned thereon shall be deposited by the general treasurer directly into the town's

locally administered pension plan. Provided, if the general treasurer determines that said plan is

insolvent, non-existent, is no longer utilized by the municipality, or for any other reason

determines that deposit into the plan would be fiscally unsound, the general treasurer may hold

such funds and request instructions from the general assembly as to where to deposit said funds.

Provided further, if the municipality presents a funding plan or proposal to fund the locally

administered pension plan prior to the end of the year, and the general treasurer finds that such

plan provides a reasonably adequate method for the municipality to fund the locally administered

plan and meet its obligations, then the general treasurer may release the withheld monies to the

municipality.

     (2) The general treasurer shall provide at least seven (7) business days notice written

notice to the municipality prior to depositing the funds into the municipality's locally

administered pension plan or of releasing the funds to the municipality. A municipality may elect

to waive such notice.

     (c) On or before March 30 of each year, the general treasurer shall annually provide to

the governor's office and to both chambers of the general assembly an annual report that includes

the following:

     (1) An itemized description of the amount of funds held pursuant to this section, listed by

municipality, amount, an identification of the locally administered pension plan, the amount of

underfunding of such plan, and a brief statement of why such funds were withheld, as applicable;

     (2) A "performance dashboard" of all pension plans used by either the state and/or any

municipality or municipal employees, that sets forth for each plan:

     (i) Fund performance for each plan's most recently completed and previous five (5) and

ten (10) fiscal years;

     (ii) The total percentage of the plan that is funded;

     (iii) The percentage of administrative costs of the fund as measured against the fund's

assets;

     (iv) Assumed and projected rates of return for the funds; and

     (v) The municipality's or community's capacity to pay the municipality's ARC as a

percent of their tax levy ratio.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TOWNS AND CITIES -- RETIREMENT SECURITY ACT FOR LOCALLY

ADMINISTERED PENSION FUNDS

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     This act would authorize the general treasurer to withhold state aid to municipalities

which do not fully fund their annual required contribution to a locally administered pension plan.

The act would direct the general treasurer to place said funds in an interest-bearing account until

the municipality presents a plan for funding that is satisfactory to the general treasurer. In the

event no such plan is prepared within one year, the general treasurer is directed to deposit the

withheld funds directly into the locally administered pension plan. The general treasurer is also

directed to make annual reports on those withheld funds to the governor and the general

assembly.

     This act would take effect upon passage.  

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