ARTICLE 21

 

RELATING TO RETIREE HEALTH CARE TRUST FUND

 

     

     SECTION 1. Sections 36-12.1-9, 36-12.1-10, 36-12.1-11, 36-12.1-12, 36-12.1-13, 36-12.1-14,

36-12.1-15, 36-12.1-16, 36-12.1-17, 36-12.1-18, 36-12.1-19, 36-12.1-20, 36-12.1-21, 36-12.1-22,

36-12.1-23, 36-12.1-24, 36-12.1-25, 36-12.1-26, 36-12.1-27 and 36-12.1-28 of the General Laws

in Chapter 36-12.1 entitled “Retiree Health Care Trust Fund” are hereby amended to read as

follows:

 

     36-12.1-9. Duties of the OPEB board. -- The OPEB Board shall be responsible for the

administration and operation of the OPEB System, determination of the amount of annual

contributions, and oversight of OPEB Benefit payments to Retired Employees and their

dependents. The OPEB Board shall have the power to collect contributions from the State of

Rhode Island, quasi-public agencies or any municipality thereof, to direct benefit payments, the

right to research, question, investigate and make recommendation of findings to the department of

administration to interpret relevant plan documents, to resolve inconsistencies and ambiguities

contained therein, to decide any claims for benefits and to resolve disputes.

 

     36-12.1-10. Votes of board – record of proceedings. -- Each member of the board shall

be entitled to one vote in the board and a majority of all the votes of the entire board shall be

necessary for a decision of the board. The board shall keep a record of all the proceedings which

shall be open to public inspection.

 

     36-12.1-11. Reimbursement of board members. -- Members of the board shall serve

without compensation but shall be reimbursed for any necessary expenditures and no employee

shall suffer any loss of salary or wages through serving upon the board.

 

     36-12.1-12. Annual report and statement. -- The OPEB Board shall submit to the

governor for transmittal to the general assembly, on or before the first day of January October in

each year beginning in 2011, an annual report showing the financial transactions of the system for

the fiscal year of the state next preceding said date. The report shall contain, among other things,

a statement of plan net assets, a statement of changes in plan net assets, a valuation balance sheet

as prepared by the actuary on a schedule in accordance with generally accepted accounting

principles, and other statistical data as are deemed necessary for a proper interpretation of the

condition of the system and the results of its operations. The report shall also embody such other

data as may be of use in the advancement of knowledge concerning state employee OPEB and

any recommendations of the board for changes in the laws pertaining to the system. The OPEB

Board shall cause to be published for distribution among the members of the system a financial

statement summarizing the results of operations for the fiscal year. All financial statements issued

by the OPEB Board shall conform to the requirements of GAAP.

 

     36-12.1-13. Executive officers and secretary. -- (a) The Board shall elect a Chairperson

and Secretary. Moreover, the State Controller shall serve as the Treasurer.

     (b) Any negotiated agreement entered into after July 1, 2010, between any state or

municipal agency or department and an employee or employees, whose conditions are contrary to

the general laws or the rules, regulations, and policies as adopted and promulgated by the OPEB

Board shall be null and void unless and until approved by formal action of the OPEB Board for

good cause shown.

 

     36-12.1-14. Accounts and statistical records – clerical and professional assistance –

disbursements. -- The State Controller, under the direction and supervision of the OPEB Board,

shall be charged with the establishment and maintenance of such accounts and statistical records

as the OPEB Board may require and he or she shall employ such clerical assistance as shall be

necessary to carry out properly the provisions of chapters 12, 12.1 and 12.2 of this title. The

OPEB Board shall secure the services of an actuary who shall be the actuarial advisor of the

board and who shall make the actuarial computations and valuations required by chapters 12, 12.1

and 12.2. The state controller is hereby authorized and directed to draw his or her orders upon the

general treasurer for the payment of such sum or sums as may from time to time be necessary,

upon receipt by him or her of vouchers for payment of liabilities.

 

     36-12.1-15. Payment of administrative expenses of the OPEB board and maintaining

the OPEB system – restricted receipts account. -- (a) There is hereby created within the

general fund a restricted receipt account entitled the “OPEB system restricted receipt account”,

the proceeds of which shall be used solely to pay the expenses of the OPEB Board, the cost of

maintaining the OPEB System, and the costs of administering the OPEB System.

     (b) For fiscal years 2011 through 2014, the State Controller is authorized to disburse from

the fund established under subsection (a) above the actual cost of administration of the fund the

cost of the actuarial valuation, and the allocated share of investment manager fees incurred by the

State Investment Commission. In fiscal years, 2015 and thereafter, there shall be transferred to

this restricted receipt account twenty five (25) basis points or two hundred thousand dollars

($200,000), whichever is greater, where one hundred (100.0) basis points equals one percent

(1.0%), of the average total investments before lending activities as reported in the annual report

of the auditor general for the next preceding five fiscal years. Any non-encumbered funds on June

30 of any fiscal year shall be credited to the OPEB System.

 

     36-12.1-16. Collection of actuarial and experience data. -- The General Treasurer and

the state Retirement System, shall collect and keep in convenient form such data as shall be

necessary for the preparation of the mortality and service tables and for the compilation of such

other information as shall be required for the actuarial valuation of the assets and liabilities of the

OPEB System and to comply with the requirements of GASB 43 and 45.

 

     36-12.1-17. Actuarial investigations authorized by board. -- Immediately after his or

her selection, the actuary shall make such investigation of the mortality, service, and

compensation experience of the members as the OPEB Board shall authorize for the purpose of

determining the proper tables to be prepared and submitted to the OPEB Board for adoption.

 

     36-12.1-18. Periodic actuarial investigations and valuations. -- Every two year years

beginning with fiscal year 2012 on a schedule in accordance with generally accepted accounting

principles, the actuary shall make an actuarial investigation into the mortality, service, and

compensation experience of the members and beneficiaries of the OPEB System, and shall make

a valuation of the assets and liabilities of the system, and, taking into account the result of the

investigation and valuation, the OPEB Board shall:

     (1) Adopt for the OPEB System, such mortality, service, and other tables as shall be

deemed necessary in the OPEB System; and

     (2) Certify the levels of contribution payable by the state of Rhode Island to carry out the

provisions of chapters 12, 12.1, and 12.2 of this title.

     (3) Certify the levels of contribution payable by the Board of Governors for Higher

Education to carry out the provisions of chapter 17.1 of title 16.

     On the basis of such tables as the OPEB Board shall adopt, the actuary shall make a

valuation of the liabilities of the funds of the system created by this chapter and the investment

advisor or investment manager appointed by the OPEB Board shall make a valuation of the assets

of the OPEB System.

 

     36-12.1-19. 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, by annually appropriating an amount equal to a percentage of the total compensation

paid to the active membership and teacher payroll base. The percentage shall be computed by the

actuary employed by the OPEB Board and shall be certified by the OPEB Board to the director of

administration on or before the fifteenth day of October in each year, beginning in 2011. 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, 2006 utilizing a time

period not to exceed thirty (30) years.

     (c) The State of Rhode Island shall remit to the general treasurer the employer's share of

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

basis, and for teachers in a manner consistent with sound accounting and actuarial practice.

     (d) The Board of Governors for Higher Education shall remit to the general treasurer that

employer’s share of the contribution for its non-classified employees, and those of the University

of Rhode Island, Rhode Island College, and the Community College of Rhode Island, pursuant to

§16-17.1-1 et seq., and in a manner consistent with sound accounting and actuarial practice.

 

     36-12.1-20. Establishment of OPEB trust funds. -- The OPEB Board shall establish

one or more trust funds and/or sub trusts to hold the assets of the OPEB System, to be known as

the Rhode Island OPEB System Trust. Title and legal ownership of all assets of the OPEB

System shall be in the name of the Rhode Island OPEB System Trust. The OPEB Board, or its

delegate is authorized to execute one or more trust instruments to effectuate the purposes of this

section. However, such trust instruments shall require that: a) all funds held by such trusts shall

be used solely to pay benefits pursuant to the OPEB System, and reasonable and legitimate

administrative expenses associated therewith; b) no asset of the OPEB System or contribution

made by the State of Rhode Island, may be recovered or returned to the State, until the OPEB

Board has certified all liabilities of the System have been satisfied; and c) at no time shall the

assets of the Rhode Island OPEB System Trust shall be subject to the claims of the creditors of

the State of Rhode Island or the creditors of any beneficiary of the OPEB System.

 

     36-12.1-21. Custody and investment of funds. -- (a) All money immediately required

for the payment of OPEB Benefits shall be invested only in accordance with the written

objectives and guidelines established by the state investment commission pursuant to the

provisions of chapter 10 of title 35 and other applicable law.

     (b) All money not immediately required for the payment of OPEB Benefits shall be

invested in accordance with the provisions of chapter 10 of title 35 and other applicable law and

shall be held in a custodial or trust account in accordance with § 36-12.1-5. The trust and

custodial account established under this section shall be maintained pursuant to written

documents which expressly provide that it shall be impossible at any time prior to the satisfaction

of all liabilities with respect to employees and their beneficiaries for any part of the corpus or

income to be used for or diverted to purposes other than the payment of OPEB Benefits to

employees and their beneficiaries (except as otherwise permitted by § 36-12.1).

 

     36-12.1-22. Disposition of investment earnings. -- The OPEB Board shall credit all

earned investment income from interest and dividends on investments and bank deposits during

any fiscal year to the Rhode Island OPEB System Trust.

 

     36-12.1-23. Improper interest in investments of board. -- Except as herein provided,

no member of the OPEB Board and no employee of the OPEB Board shall have any interest,

direct or indirect, in the gains or profits of any investment made by the OPEB Board, nor as such

directly or indirectly receive any pay or emolument for his or her services. No member of the

OPEB Board or employee of the OPEB Board shall, directly or indirectly, for himself or herself

or as an agent, in any manner use the gains or profits, except to make such current and necessary

payments as are authorized by the OPEB Board; nor shall any member or employee of the OPEB

Board become an endorser or surety or become in any manner an obligor for money loaned or

borrowed from the OPEB Board. No member of the OPEB Board shall permit the OPEB System

to engage in a transaction that constitutes a sale or exchange, or leasing, of any property between

the OPEB System and a party in interest; a lending of money or other extension of credit between

the OPEB System and a party in interest; furnishing of goods, services, or facilities between the

OPEB System and a party in interest; transfer to, or use by or for the benefit of, a party in interest,

of any assets of the OPEB System.

 

     36-12.1-24. Payment of OPEB benefits. -- All OPEB Benefits shall be paid from the

Rhode Island OPEB System Trust, subject to the oversight and approval of the OPEB Board.

 

     36-12.1-25. Annual audits. -- The auditor general shall conduct upon the request of the

OPEB Board a separate annual performance audit of the OPEB System which shall include a

report on the actuarial valuation of the assets and liabilities of the OPEB System. The auditor

general may examine all records, files, and other documents, and evaluate all policies and

procedures for purposes of conducting the audit. The aforementioned performance audit shall be

in addition to the annual audit conducted by the auditor general of the financial statements of the

OPEB System. A copy of the report shall be given to the governor and the OPEB Board.

 

     36-12.1-26. Internal revenue code qualification. -- (a) Intent. It is intended that the

OPEB System and the Rhode Island OPEB System Trust satisfy the requirements of §115 or

§501(c)(9) of the Internal Revenue Code of 1986 as amended from time to time, 26 U.S.C. §§

115, 501(c)(9) - ,(hereinafter referred to as the "Code"), in form and operation, to the extent that

those requirements apply to a governmental use trust under §115 or a voluntary employee benefit

association under §501(c)(9) of the Code. To this end, the following provisions shall be

applicable, administered, and interpreted in a manner consistent with maintaining the tax

qualification of the OPEB System, and shall supersede any conflicting provisions of chapters 12,

12.1 and 12.2 of this title, [of chapter 16 of title 16, or of chapter 21 of title 45].

     (b) Exclusive benefit. All funds of the OPEB System shall be held in one or more trusts

as provided in §36-12.1-21 or if permitted, in accordance with § 401(f) of the code, in one or

more custodial accounts treated as trusts or a combination thereof. Under any trust or custodial

account, it shall be impossible at any time prior to the satisfaction of all liabilities with respect to

employees and their beneficiaries, for any part of the corpus or income to be used for, or diverted

to, purposes other than the payment of OPEB allowances and other post employment benefits to

Retired Employees and their beneficiaries.

 

     36-12.1-27. Severability. -- (a) If any provision of this chapter 36-12.1 of this title, any

rule, or regulation made thereunder, or the application thereof to any person or circumstance is

held invalid by a court of competent jurisdiction the remainder of this chapter, rules, or

regulations and the application of those provisions to other persons or circumstances shall not be

affected thereby.

     (b) The invalidity of any section or sections or parts of any section or sections of those

chapters shall not affect the validity of the remainder of this chapter.

 

     36-12.1-28. Implementation. -- Notwithstanding any law to the contrary, the provisions

of Chapter 36-12.1 entitled “Retiree Health Care Trust Fund” shall be implemented by July 1,

2010.

 

     SECTION 2. Title 36 of the General Laws entitled "Public Officers and Employees" is

hereby amended by adding thereto the following chapter:

 

CHAPTER 12.2

MEDICARE ENROLLMENT

 

     36-12.2-1. Medicare enrollment. As a condition of receiving or continuing to receive

access to post-employment benefits offered by the state, anyone entitled to this benefit shall

enroll in Medicare as soon as he or she is eligible, notwithstanding the provisions of any other

general law or public law to the contrary.

 

     SECTION 3. This Article shall take effect upon passage.