2019 -- H 5819

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LC002048

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO EDUCATION - TEACHERS RETIREMENT [SEE TITLE 16 CHAPTER 97-

THE RHODE ISLAND BOARD OF EDUCATION ACT]

     Introduced By: Representatives Craven, Morin, McEntee, and Caldwell

     Date Introduced: March 07, 2019

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 16-16-40 of the General Laws in Chapter 16-16 entitled "Teachers'

Retirement [See Title 16 Chapter 97 - The Rhode Island Board of Education Act]" is hereby

amended to read as follows:

     16-16-40. Additional benefits payable to retired teachers.

     (a) All teachers and all beneficiaries of teachers receiving any service retirement or

ordinary or accidental disability retirement allowance pursuant to the provisions of this chapter

and chapter 17 of this title, on or before December 31, 1967, shall receive a cost of living

retirement adjustment equal to one and one-half percent (1.5%) per year of the original retirement

allowance, not compounded, for each year the retirement allowance has been in effect. For

purposes of computation credit shall be given for a full calendar year regardless of the effective

date of the retirement allowance. This cost of living retirement adjustment shall be added to the

amount of the service retirement allowance as of January 1, 1970, and payment shall begin as of

July 1, 1970. An additional cost of living retirement adjustment shall be added to the original

retirement allowance equal to three percent (3%) of the original retirement allowance on the first

day of January, 1971, and each year thereafter through December 31, 1980.

     (b) All teachers and beneficiaries of teachers receiving any service retirement or ordinary

disability retirement allowance pursuant to the provisions of this title who retired on or after

January 1, 1968, shall, on the first day of January, next following the third (3rd) year on

retirement, receive a cost of living adjustment, in addition to his or her retirement allowance, an

amount equal to three percent (3%) of the original retirement allowance. In each succeeding year

thereafter, on the first day of January, the retirement allowance shall be increased an additional

three percent (3%) of the original retirement allowance, not compounded, to be continued through

December 31, 1980.

     (c)(1) Beginning on January 1, 1981, for all teachers and beneficiaries of teachers

receiving any service retirement and all teachers and all beneficiaries of teachers who have

completed at least ten (10) years of contributory service on or before July 1, 2005, pursuant to the

provisions of this chapter, and for all teachers and beneficiaries of teachers who receive a

disability retirement allowance pursuant to §§ 16-16-14 -- 16-16-17, the cost of living adjustment

shall be computed and paid at the rate of three percent (3%) of the original retirement allowance

or the retirement allowance as computed in accordance with § 16-16-40.1, compounded annually

from the year for which the cost of living adjustment was determined to be payable by the

retirement board pursuant to the provisions of subsection (a) or (b) of this section. Such cost of

living adjustments are available to teachers who retire before October 1, 2009, or are eligible to

retire as of September 30, 2009.

     (2) The provisions of this subsection shall be deemed to apply prospectively only and no

retroactive payment shall be made.

     (3) The retirement allowance of all teachers and all beneficiaries of teachers who have

not completed at least ten (10) years of contributory service on or before July 1, 2005, or were not

eligible to retire as of September 30, 2009, shall, on the month following the third anniversary

date of the retirement, and on the month following the anniversary date of each succeeding year

be adjusted and computed by multiplying the retirement allowance by three percent (3%) or the

percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) as

published by the United States Department of Labor Statistics, determined as of September 30 of

the prior calendar year, whichever is less; the cost of living adjustment shall be compounded

annually from the year for which the cost of living adjustment was determined payable by the

retirement board; provided, that no adjustment shall cause any retirement allowance to be

decreased from the retirement allowance provided immediately before such adjustment.

     (d) For teachers not eligible to retire in accordance with this chapter as of September 30,

2009, and not eligible upon passage of this article, and for their beneficiaries, the cost of living

adjustment described in subsection (3) above shall only apply to the first thirty-five thousand

dollars ($35,000) of retirement allowance, indexed annually, and shall commence upon the third

(3rd) anniversary of the date of retirement or when the retiree reaches age sixty-five (65),

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whichever is later. The thirty-five thousand dollar ($35,000) limit shall increase annually by the

percentage increase in the Consumer Price Index for all Urban Consumer (CPI-U) as published

by the United States Department of Labor Statistics determined as of September 30 of the prior

calendar year or three percent (3%), whichever is less. The first thirty-five thousand dollars

($35,000), as indexed, of retirement allowance shall be multiplied by the percentage of increase

in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the United States

Department of Labor Statistics determined as of September 30 of the prior calendar year or three

percent (3%), whichever is less, on the month following the anniversary date of each succeeding

year. For teachers eligible to retire as of September 30, 2009, or eligible upon passage of this

article, and for their beneficiaries, the provisions of this subsection (d) shall not apply.

     (e) The provisions of §§ 45-13-7 -- 45-13-10 shall not apply to this section.

     (f) This subsection (f) shall be effective for the period July 1, 2012, through June 30,

2015.

     (1) Notwithstanding the prior paragraphs of this section, and subject to paragraph (f)(2)

below, for all present and former teachers, active and retired teachers, and beneficiaries receiving

any retirement, disability or death allowance or benefit of any kind, the annual benefit adjustment

provided in any calendar year under this section shall be equal to (A) multiplied by (B) where (A)

is equal to the percentage determined by subtracting five and one-half percent (5.5%) (the

"subtrahend") from the Five-Year Average Investment Return of the retirement system

determined as of the last day of the plan year preceding the calendar year in which the adjustment

is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent

(0%), and (B) is equal to the lesser of the teacher's retirement allowance or the first twenty-five

thousand dollars ($25,000) of retirement allowance, such twenty-five thousand dollars ($25,000)

amount to be indexed annually in the same percentage as determined under paragraph (f)(1)(A)

above. The "Five-Year Average Investment Return" shall mean the average of the investment

returns of the most recent five (5) plan years as determined by the retirement board. Subject to

paragraph (f)(2) below, the benefit adjustment provided by this paragraph shall commence upon

the third (3rd) anniversary of the date of retirement or the date on which the retiree reaches his or

her Social Security retirement age, whichever is later. In the event the retirement board adjusts

the actuarially assumed rate of return for the system, either upward or downward, the subtrahend

shall be adjusted either upward or downward in the same amount.

     (2) Except as provided in paragraph (f)(3), the benefit adjustments under this section for

any plan year shall be suspended in their entirety unless the Funded Ratio of the Employees'

Retirement System of Rhode Island, the Judicial Retirement Benefits Trust and the State Police

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Retirement Benefits Trust, calculated by the system's actuary on an aggregate basis, exceeds

eighty percent (80%) in which event the benefit adjustment will be reinstated for all teachers for

such plan year.

     In determining whether a funding level under this paragraph (f)(2) has been achieved, the

actuary shall calculate the funding percentage after taking into account the reinstatement of any

current or future benefit adjustment provided under this section.

     (3) Notwithstanding paragraph (f)(2), in each fifth plan year commencing after June 30,

2012, commencing with the plan year ending June 30, 2017, and subsequently at intervals of five

plan years, a benefit adjustment shall be calculated and made in accordance with paragraph (f)(l)

above until the Funded Ratio of the Employees' Retirement System of Rhode Island, the Judicial

Retirement Benefits Trust and the State Police Retirement Benefits Trust, calculated by the

system's actuary on an aggregate basis, exceeds eighty percent (80%).

     (4) Notwithstanding any other provisions of this chapter, the provisions of this paragraph

(f) of § 16-16-40 shall become effective July 1, 2012, and shall apply to any benefit adjustments

not granted on or prior to June 30, 2012.

     (g) This subsection (g) shall become effective July 1, 2015.

     (1)(A) As soon as administratively reasonable following the enactment into law of this

subsection (g)(1)(A), a one-time benefit adjustment shall be provided to teachers and/or

beneficiaries of teachers who retired on or before June 30, 2012, in the amount of two percent

(2%) of the lesser of either the teacher's retirement allowance or the first twenty-five thousand

dollars ($25,000) of the teacher's retirement allowance. This one-time benefit adjustment shall be

provided without regard to the retiree's age or number of years since retirement.

     (B) Notwithstanding the prior subsections of this section, for all present and former

teachers, active and retired teachers, and beneficiaries receiving any retirement, disability or

death allowance or benefit of any kind, the annual benefit adjustment provided in any calendar

year under this section for adjustments on and after January 1, 2016, and subject to subsection

(g)(2) below, shall be equal to (I) multiplied by (II):

     (I) Shall equal the sum of fifty percent (50%) of (i) plus fifty percent (50%) of (ii) where:

     (i) Is equal to the percentage determined by subtracting five and one-half percent (5.5%)

(the "subtrahend") from the five-year average investment return of the retirement system

determined as of the last day of the plan year preceding the calendar year in which the adjustment

is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent

(0%). The "five-year average investment return" shall mean the average of the investment returns

of the most recent five (5) plan years as determined by the retirement board. In the event the

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retirement board adjusts the actuarially assumed rate of return for the system, either upward or

downward, the subtrahend shall be adjusted either upward or downward in the same amount.

     (ii) Is equal to the lesser of three percent (3%) or the percentage increase in the Consumer

Price Index for all Urban Consumers (CPI-U) as published by the U.S. Department of Labor

Statistics determined as of September 30 of the prior calendar year.

     In no event shall the sum of (i) plus (ii) exceed three and one-half percent (3.5%) or be

less than (0%) percent.

     (II) is equal to the lesser of either the teacher's retirement allowance or the first twenty-

five thousand eight hundred and fifty-five dollars ($25,855) of retirement allowance, such amount

to be indexed annually in the same percentage as determined under subsection (g)(1)(B)(I) above.

     The benefit adjustments provided by this subsection (g)(1)(B) shall be provided to all

retirees entitled to receive a benefit adjustment as of June 30, 2012, under the law then in effect,

and for all other retirees the benefit adjustments shall commence upon the third anniversary of the

date of retirement or the date on which the retiree reaches his or her Social Security retirement

age, whichever is later.

     (2) Except as provided in subsection (g)(3), the benefit adjustments under subsection

(g)(1)(B) for any plan year shall be suspended in their entirety unless the funded ratio of the

employees' retirement system of Rhode Island, the judicial retirement benefits trust and the state

police retirement benefits trust, calculated by the system's actuary on an aggregate basis, exceeds

eighty percent (80%) in which event the benefit adjustment will be reinstated for all teachers for

such plan year.

     In determining whether a funding level under this subsection (g)(2) has been achieved,

the actuary shall calculate the funding percentage after taking into account the reinstatement of

any current or future benefit adjustment provided under this section.

     (3) Notwithstanding subsection (g)(2), in each fourth plan year commencing after June

30, 2012, commencing with the plan year ending June 30, 2016, and subsequently at intervals of

four plan years: (i) A benefit adjustment shall be calculated and made in accordance with

subsection (g)(1)(B) above; and (ii) Effective for teachers and/or beneficiaries of teachers who

retired on or before June 30, 2015, the dollar amount in subsection (g)(1)(B)(II) of twenty-five

thousand eight hundred and fifty-five dollars ($25,855) shall be replaced with thirty-one thousand

and twenty-six dollars ($31,026)until the funded ratio of the employees' retirement system of

Rhode Island, the judicial retirement benefits trust and the state police retirement benefits trust,

calculated by the system's actuary on an aggregate basis, exceeds eighty percent (80%).

     (4) Effective for teachers and or beneficiaries of teachers who have retired on or before

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July 1, 2015, a one-time stipend of five hundred dollars ($500) shall be payable within sixty (60)

days following the enactment of the legislation implementing this provision, and a second one-

time stipend of five hundred dollars ($500) in the same month of the following year. These

stipends shall be payable to all retired teachers or beneficiaries receiving a benefit as of the

applicable payment date and shall not be considered cost of living adjustments under the prior

provisions of this § 16-16-40.

     (5) Effective January 1, 2020, for each year in which a cost of living adjustment (COLA)

is not scheduled pursuant to subsection (g)(3) of this section, a stipend in the amount of three

percent (3%) applied to the first fifteen thousand dollars ($15,000) of pension benefits, to a

maximum of four hundred and fifty dollars ($450) shall be added to the January pension payment.

These stipends shall be payable to all (COLA) eligible retired teachers or beneficiaries receiving a

benefit as of the applicable payment date and shall not be considered cost of living adjustments

under the prior provisions of § 16-16-40.

     (6) Effective January 2022, the maximum stipend shall be increased with a cap of twenty

thousand dollars ($20,000) to six hundred dollars ($600) per the provisions of section (g)(5) of

this section.

     (7) Effective January 2026, the maximum stipend shall be increased with a cap of twenty-

five thousand dollars ($25,000) to seven hundred fifty dollars ($750) per the provisions of section

(g)(5) of this section.

     (8) Effective January 2030, the maximum stipend shall be determined by the indexed

COLA cap in effect for that calendar year.

     SECTION 2. Section 36-10-35 of the General Laws in Chapter 36-10 entitled

"Retirement System - Contributions and Benefits" is hereby amended to read as follows:

     36-10-35. Additional benefits payable to retired employees.

     (a) All state employees and all beneficiaries of state employees receiving any service

retirement or ordinary or accidental disability retirement allowance pursuant to the provisions of

this title on or before December 31, 1967, shall receive a cost of living retirement adjustment

equal to one and one-half percent (1.5%) per year of the original retirement allowance, not

compounded, for each calendar year the retirement allowance has been in effect. For the purposes

of computation, credit shall be given for a full calendar year regardless of the effective date of the

retirement allowance. This cost of living adjustment shall be added to the amount of the

retirement allowance as of January 1, 1968, and an additional one and one-half percent (1.5%)

shall be added to the original retirement allowance in each succeeding year during the month of

January, and provided further, that this additional cost of living increase shall be three percent

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(3%) for the year beginning January 1, 1971, and each year thereafter, through December 31,

1980. Notwithstanding any of the above provisions, no employee receiving any service retirement

allowance pursuant to the provisions of this title on or before December 31, 1967, or the

employee's beneficiary, shall receive any additional benefit hereunder in an amount less than two

hundred dollars ($200) per year over the service retirement allowance where the employee retired

prior to January 1, 1958.

     (b) All state employees and all beneficiaries of state employees retired on or after January

1, 1968, who are receiving any service retirement or ordinary or accidental disability retirement

allowance pursuant to the provisions of this title shall, on the first day of January next following

the third anniversary date of the retirement, receive a cost of living retirement adjustment, in

addition to his or her retirement allowance, in an amount equal to three percent (3%) of the

original retirement allowance. In each succeeding year thereafter through December 31, 1980,

during the month of January, the retirement allowance shall be increased an additional three

percent (3%) of the original retirement allowance, not compounded, to be continued during the

lifetime of the employee or beneficiary. For the purposes of computation, credit shall be given for

a full calendar year regardless of the effective date of the service retirement allowance.

     (c)(1) Beginning on January 1, 1981, for all state employees and beneficiaries of the state

employees receiving any service retirement and all state employees, and all beneficiaries of state

employees, who have completed at least ten (10) years of contributory service on or before July 1,

2005 pursuant to the provisions of this chapter, and for all state employees, and all beneficiaries

of state employees who receive a disability retirement allowance pursuant to §§ 36-10-12 -- 36-

10-15, the cost of living adjustment shall be computed and paid at the rate of three percent (3%)

of the original retirement allowance or the retirement allowance as computed in accordance with

§ 36-10-35.1, compounded annually from the year for which the cost of living adjustment was

determined to be payable by the retirement board pursuant to the provisions of subsection (a) or

(b) of this section. Such cost of living adjustments are available to members who retire before

October 1, 2009 or are eligible to retire as of September 30, 2009.

     (2) The provisions of this subsection shall be deemed to apply prospectively only and no

retroactive payment shall be made.

     (3) The retirement allowance of all state employees and all beneficiaries of state

employees who have not completed at least ten (10) years of contributory service on or before

July 1, 2005 or were not eligible to retire as of September 30, 2009, shall, on the month following

the third anniversary date of retirement, and on the month following the anniversary date of each

succeeding year be adjusted and computed by multiplying the retirement allowance by three

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percent (3%) or the percentage of increase in the Consumer Price Index for all Urban Consumers

(CPI-U) as published by the United States Department of Labor Statistics determined as of

September 30 of the prior calendar year, whichever is less; the cost of living adjustment shall be

compounded annually from the year for which the cost of living adjustment was determined

payable by the retirement board; provided, that no adjustment shall cause any retirement

allowance to be decreased from the retirement allowance provided immediately before such

adjustment.

     (d) For state employees not eligible to retire in accordance with this chapter as of

September 30, 2009 and not eligible upon passage of this article, and for their beneficiaries, the

cost of living adjustment described in subsection (3) above shall only apply to the first thirty-five

thousand dollars ($35,000) of retirement allowance, indexed annually, and shall commence upon

the third (3rd) anniversary of the date of retirement or when the retiree reaches age sixty-five

(65), whichever is later. The thirty-five thousand dollar ($35,000) limit shall increase annually by

the percentage increase in the Consumer Price Index for all Urban Consumers (CPI-U) as

published by the United States Department of Labor Statistics determined as of September 30 of

the prior calendar year or three percent (3%), whichever is less. The first thirty-five thousand

dollars ($35,000) of retirement allowance, as indexed, shall be multiplied by the percentage of

increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the

United States Department of Labor Statistics determined as of September 30 of the prior calendar

year or three percent (3%), whichever is less, on the month following the anniversary date of each

succeeding year. For state employees eligible to retire as of September 30, 2009 or eligible upon

passage of this article, and for their beneficiaries, the provisions of this subsection (d) shall not

apply.

     (e) All legislators and all beneficiaries of legislators who are receiving a retirement

allowance pursuant to the provisions of § 36-10-9.1 for a period of three (3) or more years, shall,

commencing January 1, 1982, receive a cost of living retirement adjustment, in addition to a

retirement allowance, in an amount equal to three percent (3%) of the original retirement

allowance. In each succeeding year thereafter during the month of January, the retirement

allowance shall be increased an additional three percent (3%) of the original retirement

allowance, compounded annually, to be continued during the lifetime of the legislator or

beneficiary. For the purposes of computation, credit shall be given for a full calendar year

regardless of the effective date of the service retirement allowance.

     (f) The provisions of §§ 45-13-7 -- 45-13-10 shall not apply to this section.

     (g) This subsection (g) shall be effective for the period July 1, 2012 through June 30,

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2015.

     (1) Notwithstanding the prior paragraphs of this section, and subject to paragraph (g)(2)

below, for all present and former employees, active and retired members, and beneficiaries

receiving any retirement, disability or death allowance or benefit of any kind, the annual benefit

adjustment provided in any calendar year under this section shall be equal to (A) multiplied by

(B) where (A) is equal to the percentage determined by subtracting five and one-half percent

(5.5%) (the "subtrahend") from the Five-Year Average Investment Return of the retirement

system determined as of the last day of the plan year preceding the calendar year in which the

adjustment is granted, said percentage not to exceed four percent (4%) and not to be less than

zero percent (0%), and (B) is equal to the lesser of the member's retirement allowance or the first

twenty-five thousand dollars ($25,000) of retirement allowance, such twenty-five thousand

dollars ($25,000) amount to be indexed annually in the same percentage as determined under

(g)(1)(A) above. The "Five-Year Average Investment Return" shall mean the average of the

investment returns of the most recent five (5) plan years as determined by the retirement board.

Subject to paragraph (g)(2) below, the benefit adjustment provided by this paragraph shall

commence upon the third (3rd) anniversary of the date of retirement or the date on which the

retiree reaches his or her Social Security retirement age, whichever is later. In the event the

retirement board adjusts the actuarially assumed rate of return for the system, either upward or

downward, the subtrahend shall be adjusted either upward or downward in the same amount.

     (2) Except as provided in paragraph (g)(3), the benefit adjustments under this section for

any plan year shall be suspended in their entirety unless the Funded Ratio of the Employees'

Retirement System of Rhode Island, the Judicial Retirement Benefits Trust and the State Police

Retirement Benefits Trust, calculated by the system's actuary on an aggregate basis, exceeds

eighty percent (80%) in which event the benefit adjustment will be reinstated for all members for

such plan year.

     In determining whether a funding level under this paragraph (g)(2) has been achieved, the

actuary shall calculate the funding percentage after taking into account the reinstatement of any

current or future benefit adjustment provided under this section.

     (3) Notwithstanding paragraph (g)(2), in each fifth plan year commencing after June 30,

2012 commencing with the plan year ending June 30, 2017, and subsequently at intervals of five

plan years, a benefit adjustment shall be calculated and made in accordance with paragraph (g)(1)

above until the Funded Ratio of the Employees' Retirement System of Rhode Island, the Judicial

Retirement Benefits Trust and the State Police Retirement Benefits Trust, calculated by the

system's actuary on an aggregate basis, exceeds eighty percent (80%).

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     (4) Notwithstanding any other provision of this chapter, the provisions of this paragraph

(g) of § 36-10-35 shall become effective July 1, 2012 and shall apply to any benefit adjustment

not granted on or prior to June 30, 2012.

     (h) This subsection (h) shall become effective July 1, 2015.

     (1)(A) As soon as administratively reasonable following the enactment into law of this

subsection (h)(1)(A), a one-time benefit adjustment shall be provided to members and/or

beneficiaries of members who retired on or before June 30, 2012, in the amount of 2% of the

lesser of either the member's retirement allowance or the first twenty-five thousand dollars

($25,000) of the member's retirement allowance. This one-time benefit adjustment shall be

provided without regard to the retiree's age or number of years since retirement.

     (B) Notwithstanding the prior subsections of this section, for all present and former

employees, active and retired members, and beneficiaries receiving any retirement, disability or

death allowance or benefit of any kind, the annual benefit adjustment provided in any calendar

year under this section for adjustments on and after January 1, 2016, and subject to subsection

(h)(2) below, shall be equal to (I) multiplied by (II):

     (I) Shall equal the sum of fifty percent (50%) of (i) plus fifty percent (50%) of (ii) where:

     (i) Is equal to the percentage determined by subtracting five and one-half percent (5.5%)

(the "subtrahend") from the five-year average investment return of the retirement system

determined as of the last day of the plan year preceding the calendar year in which the adjustment

is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent

(0%). The "five-year average investment return" shall mean the average of the investment returns

of the most recent five (5) plan years as determined by the retirement board. In the event the

retirement board adjusts the actuarially assumed rate of return for the system, either upward or

downward, the subtrahend shall be adjusted either upward or downward in the same amount.

     (ii) Is equal to the lesser of three percent (3%) or the percentage increase in the Consumer

Price Index for all Urban Consumers (CPI-U) as published by the U.S. Department of Labor

Statistics determined as of September 30 of the prior calendar year. In no event shall the sum of

(i) plus (ii) exceed three and one-half percent (3.5%) or be less than zero percent (0%).

     (II) Is equal to the lesser of either the member's retirement allowance or the first twenty-

five thousand eight hundred and fifty-five dollars ($25,855) of retirement allowance, such amount

to be indexed annually in the same percentage as determined under subsection (h)(1)(B)(I) above.

     The benefit adjustments provided by this subsection (h)(1)(B) shall be provided to all

retirees entitled to receive a benefit adjustment as of June 30, 2012 under the law then in effect,

and for all other retirees the benefit adjustments shall commence upon the third anniversary of the

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date of retirement or the date on which the retiree reaches his or her Social Security retirement

age, whichever is later.

     (2) Except as provided in subsection (h)(3) of this section, the benefit adjustments under

subsection (h)(1)(B) for any plan year shall be suspended in their entirety unless the funded ratio

of the employees' retirement system of Rhode Island, the judicial retirement benefits trust and the

state police retirement benefits trust, calculated by the system's actuary on an aggregate basis,

exceeds eighty percent (80%) in which event the benefit adjustment will be reinstated for all

members for such plan year.

     In determining whether a funding level under this subsection (h)(2) has been achieved,

the actuary shall calculate the funding percentage after taking into account the reinstatement of

any current or future benefit adjustment provided under this section.

     (3) Notwithstanding subsection (h)(2), in each fourth plan year commencing after June

30, 2012 commencing with the plan year ending June 30, 2016, and subsequently at intervals of

four plan years:

     (i) A benefit adjustment shall be calculated and made in accordance with subsection

(h)(1)(B) above; and

     (ii) Effective for members and/or beneficiaries of members who retired on or before June

30, 2015, the dollar amount in subsection (h)(1)(B)(II) of twenty-five thousand eight hundred and

fifty-five dollars ($25,855) shall be replaced with thirty-one thousand and twenty-six dollars

($31,026) until the funded ratio of the employees' retirement system of Rhode Island, the judicial

retirement benefits trust and the state police retirement benefits trust, calculated by the system's

actuary on an aggregate basis, exceeds eighty percent (80%).

     (i) Effective for members and or beneficiaries of members who have retired on or before

July 1, 2015, a one-time stipend of five hundred dollars ($500) shall be payable within sixty (60)

days following the enactment of the legislation implementing this provision, and a second one-

time stipend of five hundred dollars ($500) in the same month of the following year. These

stipends shall be payable to all retired members or beneficiaries receiving a benefit as of the

applicable payment date and shall not be considered cost of living adjustments under the prior

provisions of this § 36-10-3.

     (iv) Effective January 1, 2020, for each year in which a cost of living adjustment (COLA)

is not scheduled pursuant to subsection (h)(3) of this section, a stipend in the amount of three

percent (3%) applied to the first fifteen thousand dollars ($15,000) of pension benefits, to a

maximum of four hundred and fifty dollars ($450) shall be added to the January pension payment.

These stipends shall be payable to all COLA eligible retired teachers or beneficiaries receiving a

LC002048 - Page 11 of 18

benefit as of the applicable payment date and shall not be considered cost of living adjustments

under the prior provisions of § 36-10-3.

     (v) Effective January 2022, the maximum stipend shall be increased with a cap of twenty

thousand dollars ($20,000) to six hundred dollars ($600) per the provisions of section (h)(3)(iv)

of this section.

     (vi) Effective January 2026, the maximum stipend shall be increased with a cap of

twenty-five thousand dollars ($25,000) to seven hundred fifty dollars ($750) per the provisions of

section (h)(3)(iv) of this section.

     (vii) Effective January 2030, the maximum stipend shall be determined by the indexed

COLA cap in effect for the calendar year.

     SECTION 3. Section 45-21-52 of the General Laws in Chapter 45-21 entitled

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

     45-21-52. Automatic increase in service retirement allowance.

     (a) The local legislative bodies of the cities and towns may extend to their respective

employees automatic adjustment increases in their service retirement allowances, by a resolution

accepting any of the plans described in this section:

     (1) Plan A. All employees and beneficiaries of those employees receiving a service

retirement or disability retirement allowance under the provisions of this chapter on December 31

of the year their city or town accepts this section, receive a cost of living adjustment equal to one

and one-half percent (1 1/2%) per year of the original retirement allowance, not compounded, for

each calendar year the retirement allowance has been in effect. This cost of living adjustment is

added to the amount of the retirement allowance as of January 1 following acceptance of this

provision, and an additional one and one-half percent (1 1/2%) is added to the original retirement

allowance in each succeeding year during the month of January, and provided, further, that this

additional cost of living increase is three percent (3%) for the year beginning January 1 of the

year the plan is accepted and each succeeding year.

     (2) Plan B. All employees and beneficiaries of those employees receiving a retirement

allowance under the provisions of this chapter on December 31 of the year their municipality

accepts this section, receive a cost of living adjustment equal to three percent (3%) of their

original retirement allowance. This adjustment is added to the amount of the retirement allowance

as of January 1 following acceptance of this provision, and an additional three percent (3%) of the

original retirement allowance, not compounded, is payable in each succeeding year in the month

of January.

     (3) Plan C. All employees and beneficiaries of those employees who retire on or after

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January 1 of the year following acceptance of this section, on the first day of January next

following the date of the retirement, receive a cost of living adjustment in an amount equal to

three percent (3%) of the original retirement allowance.

     (b) In each succeeding year in the month of January, the retirement allowance is

increased an additional three percent (3%) of the original retirement allowance, not compounded.

     (c) This subsection (c) shall be effective for the period July 1, 2012, through June 30,

2015.

     (1) Notwithstanding any other paragraphs of this section, and subject to paragraph (c)(2)

below, for all present and former employees, active and retired members, and beneficiaries

receiving any retirement, disability or death allowance or benefit of any kind by reason of

adoption of this section by their employer, the annual benefit adjustment provided in any calendar

year under this section shall be equal to (A) multiplied by (B) where (A) is equal to the

percentage determined by subtracting five and one-half percent (5.5%) (the "subtrahend") from

the Five-Year Average Investment Return of the retirement system determined as of the last day

of the plan year preceding the calendar year in which the adjustment is granted, said percentage

not to exceed four percent (4%) and not to be less than zero percent (0%), and (B) is equal to the

lesser of the member's retirement allowance or the first twenty-five thousand dollars ($25,000) of

retirement allowance, such twenty-five thousand dollars ($25,000) amount to be indexed annually

in the same percentage as determined under (c)(1)(A) above. The "Five-Year Average Investment

Return" shall mean the average of the investment returns of the most recent five (5) plan years as

determined by the retirement board. Subject to paragraph (c)(2) below, the benefit adjustment

provided by this paragraph shall commence upon the third (3rd) anniversary of the date of

retirement or the date on which the retiree reaches his or her Social Security retirement age,

whichever is later; or for municipal police and fire retiring under the provisions of chapter 45-

21.2, the benefit adjustment provided by this paragraph shall commence on the later of the third

(3rd) anniversary of the date of retirement or the date on which the retiree reaches age fifty-five

(55). In the event the retirement board adjusts the actuarially assumed rate of return for the

system, either upward or downward, the subtrahend shall be adjusted either upward or downward

in the same amount.

     (2) Except as provided in paragraph (c)(3) the benefit adjustments provided under this

section for any plan year shall be suspended in their entirety for each municipal plan within the

municipal employees retirement system unless the municipal plan is determined to be funded at a

Funded Ratio equal to or greater than eighty percent (80%) as of the end of the immediately

preceding plan year in accordance with the retirement system's actuarial valuation report as

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prepared by the system's actuary, in which event the benefit adjustment will be reinstated for all

members for such plan year.

     In determining whether a funding level under this paragraph (c)(2) has been achieved, the

actuary shall calculate the funding percentage after taking into account the reinstatement of any

current or future benefit adjustment provided under this section.

     (3) Notwithstanding paragraph (c)(2), for each municipal plan that has a Funded Ratio of

less than eighty percent (80%) as of June 30, 2012, in each fifth plan year commencing after June

30, 2012, commencing with the plan year ending June 30, 2017, and subsequently at intervals of

five (5) plan years, a benefit adjustment shall be calculated and made in accordance with

paragraph (c)(1) above until the municipal plan's Funded Ratio exceeds eighty percent (80%).

     (d) This subsection (d) shall become effective July 1, 2015.

     (1)(A) As soon as administratively reasonable following the enactment into law of this

subsection (d)(1)(A), a one-time benefit adjustment shall be provided to members and/or

beneficiaries of members who retired on or before June 30, 2012, in the amount of two percent

(2%) of the lesser of either the employee's retirement allowance or the first twenty-five thousand

dollars ($25,000) of the member's retirement allowance. This one-time benefit adjustment shall

be provided without regard to the retiree's age or number of years since retirement.

     (B) Notwithstanding the prior subsections of this section, for all present and former

employees, active and retired employees, and beneficiaries receiving any retirement, disability or

death allowance or benefit of any kind by reason of adoption of this section by their employer, the

annual benefit adjustment provided in any calendar year under this section for adjustments on and

after January 1, 2016, and subject to paragraph (d)(2) below, shall be equal to (I) multiplied by

(II):

     (I) Shall equal the sum of fifty percent (50%) of (i) plus fifty percent (50%) of (ii) where:

     (i) Is equal to the percentage determined by subtracting five and one-half percent (5.5%)

(the "subtrahend") from the five-year average investment return of the retirement system

determined as of the last day of the plan year preceding the calendar year in which the adjustment

is granted, said percentage not to exceed four percent (4%) and not to be less than zero percent

(0%). The "five-year average investment return" shall mean the average of the investment returns

of the most recent five (5) plan years as determined by the retirement board. In the event the

retirement board adjusts the actuarially assumed rate of return for the system, either upward or

downward, the subtrahend shall be adjusted either upward or downward in the same amount.

     (ii) Is equal to the lesser of three percent (3%) or the percentage increase in the Consumer

Price Index for all Urban Consumers (CPI-U) as published by the U.S. Department of Labor

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Statistics determined as of September 30 of the prior calendar year.

     In no event shall the sum of (i) plus (ii) exceed three and one-half percent (3.5%) or be

less than zero percent (0%).

     (II) Is equal to the lesser of either the member's retirement allowance or the first twenty-

five thousand eight hundred and fifty-five dollars ($25,855) of retirement allowance, such amount

to be indexed annually in the same percentage as determined under subsection (d)(1)(B)(I) above.

     The benefit adjustments provided by this subsection (d)(1)(B) shall be provided to all

retirees entitled to receive a benefit adjustment as of June 30, 2012, under the law then in effect,

and for all other retirees the benefit adjustments shall commence upon the third anniversary of the

date of retirement or the date on which the retiree reaches his or her Social Security retirement

age, whichever is later; or for municipal police and fire retiring under the provisions of § 45-21.2-

5(b)(1)(A), the benefit adjustment provided by this paragraph shall commence on the later of the

third anniversary of the date of retirement or the date on which the retiree reaches age fifty-five

(55); or for municipal police and fire retiring under the provisions of § 45-21.2-5(b)(1)(B), the

benefit adjustment provided by this paragraph shall commence on the later of the third

anniversary of the date of retirement or the date on which the retiree reaches age fifty (50).

     (2) Except as provided in subsection (d)(3), the benefit adjustments under subsection

(d)(1)(B) for any plan year shall be suspended in their entirety for each municipal plan within the

municipal employees retirement system unless the municipal plan is determined to be funded at a

funded ratio equal to or greater than eighty percent (80%) as of the end of the immediately

preceding plan year in accordance with the retirement system's actuarial valuation report as

prepared by the system's actuary, in which event the benefit adjustment will be reinstated for all

members for such plan year.

     In determining whether a funding level under this subsection (d)(2) has been achieved,

the actuary shall calculate the funding percentage after taking into account the reinstatement of

any current or future benefit adjustment provided under this section.

     (3) Notwithstanding subsection (d)(2), in each fourth plan year commencing after June

30, 2012, commencing with the plan year ending June 30, 2016, and subsequently at intervals of

four plan years: (i) A benefit adjustment shall be calculated and made in accordance with

subsection (d)(1)(B) above; and (ii) Effective for members and/or beneficiaries of members who

retired on or before June 30, 2015, the dollar amount in subsection (d)(1)(B)(II) of twenty-five

thousand eight hundred and fifty-five dollars ($25,855) shall be replaced with thirty-one thousand

and twenty-six dollars ($31,026) until the municipal plan's funded ratio exceeds eighty percent

(80%).

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     (e) Upon acceptance of any of the plans in this section, each employee shall on January 1

next succeeding the acceptance, contribute by means of salary deductions, pursuant to § 45-21-

41, one percent (1%) of the employee's compensation concurrently with and in addition to

contributions otherwise being made to the retirement system.

     (f) The city or town shall make any additional contributions to the system, pursuant to the

terms of § 45-21-42, for the payment of any benefits provided by this section.

     (g) The East Greenwich town council shall be allowed to accept Plan C of § 45-21-

52(a)(3) for all employees of the town of East Greenwich who either, pursuant to contract

negotiations, bargain for Plan C, or who are non-union employees who are provided with Plan C

and who shall all collectively be referred to as the "Municipal-COLA Group" and shall be

separate from all other employees of the town and school department, union or non-union, who

are in the same pension group but have not been granted Plan C benefits. Upon acceptance by the

town council, benefits in accordance with this section shall be available to all such employees

who retire on or after January 1, 2003.

     (h) Effective for members and/or beneficiaries of members who have retired on or before

July 1, 2015, and without regard to whether the retired member or beneficiary is receiving a

benefit adjustment under this § 45-21-52, a one-time stipend of five hundred dollars ($500) shall

be payable within sixty (60) days following the enactment of the legislation implementing this

provision, and a second one-time stipend of five hundred dollars ($500) in the same month of the

following year. These stipends shall not be considered cost of living adjustments under the prior

provisions of this § 45-21-52.

     (i) Effective January 1, 2020, for each year in which a cost of living adjustment (COLA)

is not scheduled pursuant to subsection (d)(3) of this section, a stipend in the amount of three

percent (3%) applied to the first fifteen thousand dollars ($15,000) of pension benefits, to a

maximum of four hundred and fifty dollars ($450) shall be added to the January pension payment.

These stipends shall be payable to all COLA eligible retired teachers or beneficiaries receiving a

benefit as of the applicable payment date and shall not be considered cost of living adjustments

under the prior provisions of § 45-21-52.

     (ii) Effective January 2022, the maximum stipend shall be increased with a cap of twenty

thousand dollars ($20,000) to six hundred dollars ($600) per the provisions of section (h)(i) of

this section.

     (iii) Effective January 2026, the maximum stipend shall be increased with a cap of

twenty-five thousand dollars ($25,000) to seven hundred fifty dollars ($750) per the provisions of

section (h)(i) of this section.

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     (iv) Effective January 2030, the maximum stipend shall be determined by the indexed

COLA cap in effect for that calendar year.

     SECTION 4. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO EDUCATION - TEACHERS RETIREMENT [SEE TITLE 16 CHAPTER 97-

THE RHODE ISLAND BOARD OF EDUCATION ACT]

***

     This act would provide for an increasing stipend to be paid to certain retired state

employees, municipal employees, and teachers or their beneficiaries during years when a cost of

living adjustment is not scheduled.

     This act would take effect upon passage.

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