2016 -- S 2353

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LC004319

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2016

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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 McCaffrey, and Lombardi

     Date Introduced: February 10, 2016

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 45-65-4 and 45-65-6 of the General Laws in Chapter 45-65

entitled "Retirement Security Act for Locally Administered Pension Funds" are hereby amended

to read as follows:

     45-65-4. Definitions. -- As used in this chapter the following terms shall have the

following meanings:

      (1) "Actuarial experience study" means a report provided by an actuary that includes a

recent discussion of plan experience, recommendations for actuarial assumptions and methods,

and information about the actuarial impact of these recommendations on the liabilities and other

key actuarial measures. The report shall include a twenty (20) year amortization schedule of

annual required contribution, actuarial accrued liability, unfunded actuarial accrued liability and

plan funding percentage.

      (2) "Annual actuarial valuation study" means a valuation of a locally administered plan

completed by an actuary, and a certification based on that valuation indicating whether such plan

is or is not in critical status, on an annual basis.

      (3) "Critical status" means that, as determined by its actuary, as of the beginning of the

plan year, a plan's funded percentage for such plan year is less than sixty percent (60%).

      (4) "Locally administered plan" or "plan" means any defined benefit pension plan

established by a municipality for its employees, other than: (a) A plan that is part of the

Employees' Retirement System of Rhode Island as defined in chapter 36-8 or the Municipal

Employees' Retirement System of Rhode Island as defined in chapter 45-21; or (b) A plan

established by a municipality that has filed for bankruptcy protection pursuant to chapter 9 of title

11 of the United States Code, a plan established by a municipality for which a receiver has been

appointed pursuant to chapter 45-9 or a plan established by a municipality for which a fiscal

overseer has been appointed pursuant to chapter 45-9.

      (5) "Municipality" means any town or city in the State of Rhode Island, any city or town

housing authority, fire, water, sewer district, regional school district or public building authority

as established by chapter 14 of title 37.

     45-65-6. Certification and notice requirements. -- (1) Every municipality that

maintains a locally administered plan shall submit its initial annual actuarial valuation study to

the study commission created herein under § 45-64-8 on or before April 1, 2012, and for each

plan year ending on or after December 31, 2012, within six (6) months of completing such plan

year. The initial actuarial experience study shall be submitted to the study commission on or

before April 1, 2012, and .

     (2) subsequent Subsequent actuarial experience studies must be submitted to the study

commission completed by the municipality administering the plan no less frequently than once

every three (3) years.

      (2)(3) In any case in which an actuary certifies that a locally administered plan is in

critical status for a plan year, the municipality administering such a plan shall, not later than thirty

(30) business days following the certification, provide notification of the critical status to the

participants and beneficiaries of the plan and to the general assembly, the governor, the general

treasurer, the director of revenue, and the auditor general. The notification shall also be posted

electronically on the general treasurer's website. Within one hundred eighty (180) days of sending

the critical status notice, the municipality shall submit to the study commission general treasurer,

the director of revenue, and the auditor general a reasonable alternative funding improvement

plan to emerge from critical status.

     (3) The state shall reimburse every municipality for fifty percent (50%) of the cost of

undertaking its annual actuarial valuation study, which is due on April 1, 2012.

      (4) Notwithstanding any other law to the contrary, the funding improvement plans and

actuarial valuation studies submitted pursuant to this section shall be public records.

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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 require municipalities to include in their locally administered defined

benefit pension plan triennial reports a twenty (20) year amortization schedule of annual required

contributions, actuarial accrued liability, unfunded actuarial accrued liability, and plan funding

percentage. The act would also require that in instances wherein an actuary certifies that a locally

administered plan is in critical status for a plan year, the municipality must submit to the general

treasurer, the director of revenue and auditor general within one hundred eighty (180) days from

the date the notice is sent a reasonable alternative funding improvement plan to emerge from

critical status.

     This act would take effect upon passage.

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