Chapter 10-023-16

ARTICLE 16 SUBSTITUTE A

RELATING TO PENSION REFORM

SECTION 1. Sections 36-10-2 and 36-10-35 of the General Laws in Chapter 36-10

entitled “Retirement System Contribution and Benefits” are hereby amended to read as follows:

36-10-2. State contributions. -- (a) The State of Rhode Island shall make its contribution

for the maintenance of the system, including the proper and timely payment of benefits in

accordance with the provisions of this chapter and chapters 8, 16, 28, 31 and 42 of this title, by

annually appropriating an amount equal to a percentage of the total compensation paid to the

active membership. The percentage shall be computed by the actuary employed by the retirement

system and shall be certified by the retirement board to the director of administration on or before

the fifteenth day of October in each year. In arriving at the yearly employer contribution the

actuary shall determine the value of:

(1) The contributions made by the members;

(2) Income on investments; and

(3) Other income of the system.

(b) The Actuary shall thereupon compute the yearly employer contribution that will:

(1) Pay the actuarial estimate of the normal cost for the next succeeding fiscal year;

(2) Amortize the unfunded liability of the system as of June 30, 1999 utilizing a time

period not to exceed thirty (30) years.

the contribution for state employees, state police, and judges on a payroll frequency basis, and for

teachers in a manner pursuant to § 16-16-22.

(d) In accordance with the intent of § 36-8-20 that the retirement system satisfy the

requirements of § 401(a) of the Internal Revenue Code of 1986, the state shall pay to the

retirement system:

(i) By June 30, 1995, an amount equal to the sum of the benefits paid to state legislators

pursuant to § 36-10-10.1 in excess of ten thousand dollars ($10,000) per member (plus accrued

interest on such amount at eight percent (8%)) for all fiscal years beginning July 1, 1991, and

ending June 30, 1995, but this amount shall be paid only if § 36-10-10.1(e) becomes effective

January 1, 1995; and

(ii) By December 31, 1994, twenty million seven hundred eighty eight thousand eight

hundred twelve dollars and nineteen cents ($20,788,812.19) plus accrued interest on that amount

at eight percent (8%) compounded monthly beginning March 1, 1991, and ending on the date this

payment is completed (reduced by amortized amounts already repaid to the retirement system

with respect to the amounts withdrawn by the state during the fiscal year July 1, 1990 – June 30,

1991); and

(iii) By June 30, 1995, the sum of the amounts paid by the retirement system for retiree

health benefits described in § 36-12-4 for all fiscal years beginning July 1, 1989, and ending June

30, 1994, to the extent that the amounts were not paid from the restricted fund described in

subsection (c).

(2) Any and all amounts paid to the retirement system under this subsection shall not

increase the amount otherwise payable to the system by the state of Rhode Island under

subsection (a) for the applicable fiscal year. The actuary shall make such adjustments in the

amortization bases and other accounts of the retirement system as he or she deems appropriate to

carry out the provisions and intent of this subsection.

(e) In addition to the contributions provided for in subsection (a) through (c) and in order

to provide supplemental employer contributions to the retirement system, commencing in fiscal

year 2006, and each year thereafter:

(1) Except for fiscal year 2009, fiscal year 2010 and fiscal year 2011, ~~For~~ for each fiscal

year in which the actuarially determined state contribution rate for state employees is lower than

that for the prior fiscal year, the governor shall include an appropriation to that system equivalent

to twenty percent (20%) of the rate reduction for the state's contribution rate for state employees

to be applied to the actuarial accrued liability of the state employees' retirement system for state

employees for each fiscal year;

(2) Except for fiscal year 2009, fiscal year 2010 and fiscal year 2011, ~~For~~ for each fiscal

year in which the actuarially determined state contribution rate for teachers is lower than that for

the prior fiscal year, the governor shall include an appropriation to that system equivalent to

twenty percent (20%) of the rate reduction for the state's share of the contribution rate for

teachers to be applied to the actuarial accrued liability of the state employees' retirement system

for teachers for each fiscal year;

(3) The amounts to be appropriated shall be included in the annual appropriation bill and

shall be paid by the general treasurer into the retirement system.

(f) While the retirement system's actuary shall not adjust the computation of the annual

required contribution for the year in which supplemental contributions are received, such

contributions once made may be treated as reducing the actuarial liability remaining for

amortization in the next following actuarial valuation to be performed.

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 (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.

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

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.

~~(d)~~ (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.

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

SECTION 2. Section 16-16-40 of the General Laws in Chapter 16-16 entitled “Teacher

Retirement” 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 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.

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),

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.

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

SECTION 3. Sections 8-3-15 of the General Laws in Chapter 8-3 entitled “Justices of

Supreme, Superior, and Family Courts” is hereby amended to read as follows:

8-3-15. Cost of living allowance. -- (a) All justices of the supreme court, superior court,

family court, or district court, or their surviving spouses or domestic partners, who retire after

January 1, 1970 and who receive a retirement allowance pursuant to the provisions of this title

shall, on the first day of January next following the third anniversary date of 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 during the month of January, the retirement allowance shall be increased an additional

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

of the justice or his or her surviving spouse or domestic partner. For the purpose of such

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

retirement allowance.

(b) Any justice who retired prior to January 31, 1977 shall be deemed for the purpose of

this section to have retired on January 1, 1977.

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 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

justices eligible to retire as of September 30, 2009 or eligible upon passage of this article, and for

their beneficiaries, the provisions of this subsection (c) shall not apply.

SECTION 4. Sections 8-8.2-12 of the General Laws in Chapter 8-8.2 entitled “Traffic

Tribunal” is hereby amended to read as follows:

8-8.2-12. Additional benefits payable to retired judges and their surviving spouses

or domestic partners. – (a) All judges of the administrative adjudication court and all judges of

the administrative adjudication court who have been reassigned to the traffic tribunal, or their

surviving spouses or domestic partners, who retire after January 1, 1970 and who receive a

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

following the third anniversary 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 during the month of January, the

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

allowance, compounded annually from the year cost of living adjustment was first payable to be

continued during the lifetime of the judge or his or her surviving spouse or domestic partner. For

the purpose of such computation, credit shall be given for a full calendar year regardless of the

effective date of the retirement allowance.

(b) Any judge who retired prior to January 31, 1980, shall be deemed for the purpose of

this section to have retired on January 1, 1980.

passage of this article, and for their beneficiaries, the cost of living adjustment described in

subsection (a) above shall only apply to the first thirty-five thousand dollars ($35,000) of