2016 -- S 2496

========

LC005063

========

     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2016

____________

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 25, 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.

      (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. The report shall include a twenty (20) year

amortization schedule of annual required contribution from municipal employees, annual

contribution from taxpayers, actuarial accrued liability, unfunded actuarial accrued liability, and

the plan funding percentage for each individual plan.

      (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 or authority, regional school district or public

building authority as established by chapter 14 of title 37 or by Rhode Island public law.

     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 subsequent

     (2) Subsequent actuarial experience studies and actuarial valuation studies shall be

completed by the municipality administrating such a plan must be submitted to the study

commission no less frequently than once every three (3) years, at least by January 1 of every third

year.

      (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 and on the municipality's website, and both

postings shall be maintained until the critical status no longer exists. Within one hundred eighty

(180) days of sending the critical status notice, the municipality shall submit to the general

treasurer, the director of revenue, and the auditor general, and shall post and maintain on the

municipality's website, study commission a reasonable alternative funding improvement plan to

emerge from critical status which includes the effect on each of the other plans administered by

the municipality, the effect on the next municipal budget, and the effect on municipal tax rates.

Prior to this submission and website posting, and after a public hearing is held and closed, the

alternative funding improvement plan shall be approved by the mayor or town administrator and

LC005063 - Page 2 of 4

city or town council. The funding improvement plan shall be implemented in the next municipal

budget.

      (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,

notification of critical status, actuarial experience studies and actuarial valuation studies prepared

submitted pursuant to this section shall be public records.

     SECTION 2. This act shall take effect upon passage.

========

LC005063

========

LC005063 - Page 3 of 4

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TOWNS AND CITIES - RETIREMENT SECURITY ACT FOR LOCALLY

ADMINISTERED PENSION FUNDS

***

     This act would require municipalities that manage locally administered pension funds, to

submit reports as part of the annual actuarial valuation study. The report would require that the

municipality include a 20 year amortization schedule of annual required contributions from its

employees, from taxpayers, actuarial accrued liability and unfunded actuarial accrued liability

and plan funding percentage for each individual plan. It would also require that upon a finding

that a plan is in critical status, that the municipality post the status on its municipal website and

maintain it until the fund is no longer in critical status. Further, within 180 days of critical status

notice, the municipality would be required to submit to the general treasurer, the director of

revenue and the auditor general a reasonable funding alternative which includes the effect on

other plans administered by the municipality, the effect on the municipal budget and the effect on

municipal taxes.

     This act would take effect upon passage.

========

LC005063

========

LC005063 - Page 4 of 4