ENGROSSED
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 129
(By Senators Tomblin, Mr. President, and Caruth,
By Request of the Executive)
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[Originating in the Committee on Finance;
reported February 26, 2007.]
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A BILL to amend and reenact §5-16-25 of the Code of West Virginia,
1931, as amended; and to amend and reenact §5-16D-1 and §5-
16D-6; all relating generally to the Public Employees
Insurance Agency; and the allocation by the Public Employees
Insurance Agency Finance Board of employer contributions to
the West Virginia Retiree Health Benefit Trust Fund.
Be it enacted by the Legislature of West Virginia:
That §5-16-25 of the Code of West Virginia, 1931, as amended,
be amended and reenacted; and that §5-16D-1 and §5-16D-6 of said
code be amended and reenacted, all to read as follows:
ARTICLE 16. WEST VIRGINIA PUBLIC EMPLOYEES INSURANCE ACT.
§5-16-25. Reserve fund.
Upon the effective date of this section, the finance board
shall establish and maintain a reserve fund for the purposes of
offsetting unanticipated claim losses in any fiscal year. Beginning with the fiscal year two thousand two plan and for each
succeeding fiscal year plan, the finance board shall transfer ten
percent of the projected total plan costs for that year into the
reserve fund, which is to be certified by the actuary and included
in the final, approved financial plan submitted to the Governor and
Legislature in accordance with the provisions of this article. Any
moneys saved in a plan year shall be transferred into the reserve
fund. At the close of any fiscal year in which the balance in the
reserve fund exceeds the recommended reserve amount by fifteen
percent, the executive director shall transfer that amount to the
fund established in section fourteen-a, article two, chapter five-a
of this code for appropriation by the Legislature West Virginia
Retiree Health Benefit Trust Fund created in section two, article
sixteen-d of this chapter.
ARTICLE 16D. West Virginia Retirement Health Benefit Trust Fund.
§5-16D-1. Definitions.
As used in this article, the term:
(a) "Actuarial accrued liability" means that portion, as
determined by a particular actuarial cost method, of the actuarial
present value of fund obligations and administrative expenses which
is not provided by future normal costs.
(b) "Actuarial cost method" means a method for determining the
actuarial present value of the obligations and administrative
expenses of the fund and for developing an actuarially equivalent
allocation of the value to time periods, usually in the form of a
normal cost and an actuarial accrued liability. Acceptable actuarial methods are the aggregate, attained age, entry age,
frozen attained age, frozen entry age and projected unit credit
methods.
(c) "Actuarially sound" means that calculated contributions to
the fund are sufficient to pay the full actuarial cost of the fund.
The full actuarial cost includes both the normal cost of providing
for fund obligations as they accrue in the future and the cost of
amortizing the unfunded actuarial accrued liability over a period
of no more than thirty years.
(d) "Actuarial present value of total projected benefits"
means the present value, at the valuation date, of the cost to
finance benefits payable in the future, discounted to reflect the
expected effects of the time value of money and the probability of
payment.
(e) "Actuarial assumptions" means assumptions regarding the
occurrence of future events affecting the fund such as mortality,
withdrawal, disability, and retirement; changes in compensation and
offered post-employment benefits; rates of investment earnings and
other asset appreciation or depreciation; procedures used to
determine the actuarial value of assets; and other relevant items.
(f) "Actuarial valuation" means the determination, as of a
valuation date, of the normal cost, actuarial accrued liability,
actuarial value of assets and related actuarial present values for
the fund.
(g) "Administrative expenses" means all expenses incurred in
the operation of the fund, including all investment expenses.
(h) "Annual required contribution" means the amount employers
must contribute in a given year to fully fund the trust, as
determined by the actuarial valuation in accordance with
requirements of generally accepted accounting principles. This
amount shall represent a level of funding that if paid on an
ongoing basis is projected to cover the normal cost each year and
amortize any unfunded actuarial liabilities of the plan over a
period not to exceed thirty years.
(i) "Board" means the Public Employees Insurance Agency
Finance Board created in section four, article sixteen of this
chapter.
(j) "Cost-sharing multiple employer plan" means a single plan
with pooling (cost-sharing) arrangements for the participating
employers. All risk, rewards and costs, including benefit costs,
are shared and not attributed individually to the employers. A
single actuarial valuation covers all plan members and the same
contribution rate(s) rate applies for each employer.
(k) "Covered health care expenses" means all actual health
care expenses paid by the health plan on behalf of fund
beneficiaries. Actual health care expenses include claims payments
to providers and premiums paid to intermediary entities and health
care providers by the health plan.
(l) "Employer" means any employer as defined by section two,
article sixteen of this chapter, which has or will have retired
employees in any Public Employees Insurance Agency health plan.
(m) "Employer annual required contribution" means the portion of the annual required contribution which is the responsibility of
that particular employer.
(n) "Fund" means the West Virginia Retiree Health Benefit
Trust Fund established under this article.
(o) "Fund beneficiaries" means all persons receiving post-
employment health care benefits through the health plan.
(p) "Health plan" means the health insurance plan or plans
established under article sixteen of this chapter.
(q) "Minimum annual employer premium payment" means the annual
amount paid by employers toward retiree premiums which, when
combined with the retirees' contributions on their premiums that
year, provide sufficient funds to cover all projected retiree
covered health care expenses and related administrative costs for
that year. The finance board shall develop the minimum annual
employer premium payment as part of its financial plan each year as
addressed in section five, article sixteen of this chapter.
(r) "Normal cost" means that portion of the actuarial present
value of the fund obligations and expenses which is allocated to a
valuation year by the actuarial cost method used for the fund.
(s) "Obligations" means the administrative expenses of the
fund and the cost of covered health care expenses incurred on
behalf of fund beneficiaries.
(t) "Other post-employment benefits" or "retiree post-
employment health care benefits" means those benefits as addressed
by Governmental Accounting Standards Board Statement No. 43 or any
subsequent Governmental Standards Board Statement that may be applicable to the fund.
(u) "Plan for other post-employment benefits" means the fiscal
funding plan for retiree post-employment health care benefits as it
relates to Governmental Accounting Standards Board Statement
No. 43, or any subsequent Governmental Accounting Standards Board
Statements that may be applicable to the fund.
(v) "Retiree" means retired employee as defined by section
two, article sixteen of this chapter.
(w) "Retirement system" or "system" means the West Virginia
Consolidated Public Retirement Board created and established by
article ten of this chapter and includes any retirement systems or
funds administered or overseen by the Consolidated Public
Retirement Board.
(x) "Unfunded actuarial accrued liability" means for any
actuarial valuation the excess of the actuarial accrued liability
over the actuarial value of the assets of the fund under an
actuarial cost method used by the fund for funding purposes.
§5-16D-6. Mandatory employer contributions.
(a) The board shall annually set the total annual required
contribution sufficient to maintain the fund in an actuarially
sound manner in accordance with generally accepted accounting
principles.
(b) The board shall annually allocate to the respective
employers the employer's portion of the annual required
contribution, which allocated amount is the "employer annual
required contribution".
(c) The board may apportion the annual required contribution
into various components. These components may include the
amortized unfunded actuarial accrued liability, the total normal
cost, the employer annual required contribution and the lesser
included minimum annual employer premium payment. In the board's
annual apportionment of the annual required contribution, any
amounts of the minimum annual employer payment apportioned to
reduce the amortized unfunded actuarial accrued liability shall not
be treated as premium by the board in the finance plan, but rather,
shall be treated as contributions to prefund other post-employment
benefits.
(d) It shall be the mandatory responsibility of Employers to
shall make annual contributions to the fund in, at least, the
amount of the minimum annual employer premium payment rates
established by the board.
(e) It shall be the responsibility of The Public Employees
Insurance Agency to shall bill each employer for the employer
annual required contribution and the included minimum annual
employer premium payment. It shall be the responsibility of The
Public Employees Insurance Agency to shall annually collect the
minimum annual employer premium payment. The Public Employees
Insurance Agency shall, in addition to the minimum annual employer
premium payment, collect any amounts the employer elects to pay
toward the employer annual required contribution. Any employer
annual required contribution amount not satisfied by the respective
employer shall remain the liability of that employer until fully paid.