2016 -- S 2985

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LC005788

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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 OF MUNICIPAL EMPLOYEES

     Introduced By: Senators Crowley, Pearson, and Doyle

     Date Introduced: May 10, 2016

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 45-21-67 of the General Laws in Chapter 45-21 entitled

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

     45-21-67. Central Falls retirees -- Settlement agreement. -- (a) Definitions. - As used

in this section:

      (1) "Base pension benefit" is the amount listed on Appendix A, Appendix D-A and

Appendix E-A attached to the settlement agreement, under the column labeled "annualized final

base pension" "amount prior to reduction" which is the amount each Central Falls retiree was

receiving as of July 31, 2011.

      (2) "Central Falls retirees" are the retirees or the beneficiaries of retirees of the city of

Central Falls listed on Appendix A to the settlement agreement, as amended from time to time

when a retiree or beneficiary dies.

      (3) "Settlement agreement" shall mean that settlement and release agreement, as set forth

in Article 22 of the public laws of 2012, Chapter 241, signed by and between the receiver of the

city of Central Falls, the director of revenue and the participating retirees, approved by the

bankruptcy court by order dated January 9, 2012.

      (b) Legislative findings and purpose.

      (1) Pursuant to Article 22 of the public laws of 2012, chapter 241, which defined the

terms of the initial appropriation, the state made an appropriation of two million six hundred

thirty-six thousand nine hundred thirty-two dollars ($2,636,932), which was deposited into a

restricted account held by the city of Central Falls, for the purpose of supplementing the reduced

pensions of the Central Falls retirees, to enable the city to pay the Central Falls retirees seventy-

five percent (75%) of their base pension benefit as of July 31, 2011 for a five-year (5) period,

with the last supplemental appropriation to be paid on or within thirty (30) days of July 1, 2016

2015.

      (2) The drastic pension reductions experienced by the Central Falls retirees provided a

harsh example of the risks of unfunded pension liabilities, which, in turn, provided the primary

incentive toward successful pension negotiations with other municipal, police and fire retirees,

saving the state more than sixty million dollars ($60,000,000);

      (3) If said appropriation is not made, as of prior to July 21, 2016, the Central Falls

retirees, many of whom sustained serious and permanent injuries in service to the city, will have

their pensions reduced yet again, in some instances to less than sixty percent (60%) of the pension

they were receiving on July 11, 2011;

      (4) It is fair and just that the state appropriate sufficient funds to the city to supplement

the city's funding of the pension benefits to the Central Falls retirees to ensure that the Central

Falls retirees continue to receive no less than seventy-five percent (75%) of the base pension

benefit, after taking into account all applicable cost-of-living adjustments, for their lifetime, and

to the extent applicable, for the life of their beneficiaries,

      (c) Appropriation payment.

      (1) Appropriation payment and restrictions on use. - In accordance with the terms set

forth in Article 22 and the settlement agreement, the state shall annually appropriate sufficient

funds to the restricted account for the city of Central Falls to supplement the city's funding for

payments to Central Falls retirees in order that they continue to receive no less than seventy-five

percent (75%) of their base pension benefit as of July 31, 2011, after taking into account all

applicable cost-of-living adjustments, for their lifetime, and to the extent applicable, for the life of

their beneficiaries. Such appropriation shall be determined annually by an actuarial valuation

("appropriation amount"), and it is expected over the life of the existing retirees to total four

million eight hundred seventeen thousand seven hundred eight dollars ($4,817,708).

      (2) Deposit of appropriation payment and payments to Central Falls retirees. - The

appropriation payment shall be immediately deposited by the city into the previously established

"participating retirees restricted five-year (5) account" which shall be redesignated as the

"participating retirees retirees' restricted account." The participating retirees retirees' account shall

be administered by the city and not by any third-party pension fund manager.

      (d) Any and all withdrawals, transfers, and payments from the participating retirees

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retirees' account shall be made as set forth in the settlement agreement and accompanying

appendices and said Article 22 (c) until the payments are made on July 1, 2016 2015.

      (e) Beginning on or within thirty (30) days of July 1, 2017 2016, and bi-annually

annually thereafter, with payments to be paid each retiree or beneficiary as applicable on or

within thirty (30) days of July 1 and January 1 of each year they are eligible for benefits under the

Central Falls pension plan, the city shall distribute to each participating retiree or beneficiary one

half (1/2) the annual amount listed on the actuarial spreadsheets prepared by Sherman Actuarial

Services, which shall supplement the pension payments paid by the city in order that each retiree

will receive no less than seventy-five percent (75%) of his or her their base pension benefit, after

taking into account all applicable cost-of-living adjustments, for his or her their lifetime, and to

the extent applicable, sixty-seven and one-half percent (67.5%) of the base pension benefit, after

taking into account all applicable cost-of-living adjustments, to his or her their beneficiaries for

their lifetime. Such supplemental distributions shall be made by the city when the funds

appropriated by the state are made available to the city, which shall be as close to July 1 as

practicable.

      (f) Relationship to base pension payments. - The supplemental payments to the Central

Falls retirees from the participating retirees' restricted account shall not be included in the

calculation of base pension benefits for the purposes of determining a retiree's or beneficiaries'

beneficiary's cost-of-living adjustment.

      (g) The cost-of-living adjustments as set forth in the settlement agreement are to be paid

by the city of Central Falls to the Central Falls retirees, and to the extent applicable, their

beneficiaries.

      (h) The following provision shall amend and supersede Article 22 (c)(4) regarding the

balance in the participating retirees retirees' restricted account as of July 2, 2016 August 1, 2015:

      (1) Distribution of balance. - As of July 2, 2016 August 1, 2015, no further supplemental

payments shall be distributed to the Central Falls retirees under the terms of the settlement

agreement. The balance of monies in the participating retirees retirees' restricted account shall be

distributed in accordance with this Article, in the amounts and to those retirees and beneficiaries

listed on the actuarial spreadsheets prepared by Sherman Actuarial Services, LLC and maintained

and administered by the city. The amounts set forth on the actuarial spreadsheets will supplement

the pension payments being made by the city in order that each retiree will receive no less than

seventy-five percent (75%) of their base pension benefit, after taking into account all applicable

cost-of-living adjustments, for their lifetime, and to the extent applicable, sixty-seven and one-

half percent (67.5%) of the base pension benefit, after taking into account all applicable cost-of-

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living adjustments, to their beneficiaries for their lifetime.

      (2) Any monies remaining in the participating retirees retirees' restricted account after

the last living retiree attains seventy-five percent (75%) of the base pension benefit, after taking

into account all applicable cost-of-living adjustments, or last living beneficiary attains sixty-seven

and one-half percent (67.5%) of the base pension benefit, after taking into account all applicable

cost-of-living adjustments, shall be returned to the state under state law.

      (i) Access to account information and records. - The city shall maintain appropriate

account information and records relating to all receipts into, maintenance of, and distributions

from, the participating retirees' restricted account, and shall allow at all reasonable times for the

full inspection and copying and sharing of information about such account and any and all

payments therefrom with any participating retiree and the state.

      (j) Unclaimed payments. - Any monies distributed to a participating retiree or

beneficiary from the participating retirees' restricted account and not claimed by a participating

retiree or beneficiary after the city has exercised good faith attempts over a six-month (6) period

to deliver it to the best last known address of such participating retiree or beneficiary, shall not

escheat under state law, but shall remain in the participating retirees' restricted account until the

conditions of subsection (h) herein have been satisfied.

      (k) Liabilities and penalties for inappropriate use of appropriation payment. - Any

person, whether in his/her individual capacity, who uses, appropriates, or takes or instructs

another to use, appropriate, or take, the appropriation payment, or any portion thereof, that is not

specifically used for making payments to participating retirees or their beneficiaries as required

hereunder and under the terms of the settlement agreement, shall be personally liable for

repayment of said funds and further shall be subject to any and all applicable civil and criminal

sanctions and/or penalties for such act(s).

     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 OF MUNICIPAL EMPLOYEES

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     This act would make certain technical and date-related revisions regarding the settlement

agreement of municipal retirees in the city of Central Falls.

     This act would take effect upon passage.

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