Senate Bill No. 511
(By Senators Foster, McCabe, Harrison, Sprouse and Barnes)
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[Introduced February 7, 2006; referred to the Committee
on Pensions; and then to the Committee on Finance.]
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A BILL to amend and reenact §8-22-19 and §8-22-20 of the Code of
West Virginia, 1931, as amended, all relating to municipal
policemen's and firemen's pension funds; authorizing increased
employee and employer contributions to the funds; and
promoting flexibility in contributions.
Be it enacted by the Legislature of West Virginia:
That §8-22-19 and §8-22-20 of the Code of West Virginia, 1931,
as amended, be amended and reenacted, all to read as follows:
ARTICLE 22. RETIREMENT BENEFITS GENERALLY; POLICEMEN'S PENSION
AND RELIEF FUND; FIREMEN'S PENSION AND RELIEF
FUND; PENSION PLANS FOR EMPLOYEES OF WATERWORKS
SYSTEM, SEWERAGE SYSTEM OR COMBINED WATERWORKS AND
SEWERAGE SYSTEM.
§8-22-19. Levy to maintain fund.
(a) The provisions of this subsection shall remain in effect
through the thirtieth day of June, one thousand nine hundred
eighty-three.
In every municipality in which there is a policemen's pension
and relief fund or a firemen's pension and relief fund, or both,
the same shall be maintained as follows: The governing body of the
municipality shall levy annually and in the manner provided by law
for other municipal levies, and include within the maximum levy or
levies permitted by law, and if necessary in excess of any charter
provision, a tax at such rate as will, after crediting the amount
of the contributions received during such year from the members of
the respective paid police department or paid fire department,
provide funds equal to the sum of: (1) The full amount of
estimated expenditures of the boards of trustees of the respective
funds; and (2) an additional amount equal to ten percent of
such
the estimated expenditures, said ten percent amount to be taken,
accumulated and invested, if possible, as surplus reserve:
Provided, That in no event shall
such the levy for each of the
respective boards of trustees be less than one cent nor more than
eight cents on each one hundred dollars of all real and personal
property as listed for taxation in
such the municipality:
Provided, however, That in the event that the funds derived above
are not sufficient to meet the annual expenditures and the surplus
reserve funds for any fiscal year do not contain a sufficient
balance to maintain full retirement benefits for that fiscal year,
the municipality shall for only that fiscal year levy an amount not
to exceed an additional two cents on each one hundred dollars of
all real and personal property listed for taxation in such
municipality:
Provided further, That in the event that a municipality is required to levy an amount for any fiscal year in
excess of eight cents on each one hundred dollars of all real and
personal property as provided above, the municipality shall assess
and collect for only that fiscal year from each member an
additional amount of one percent of the actual salary or
compensation for each one cent that the municipality has levied in
excess of the eight cents which shall become a required part of the
pension and relief fund to which the member belongs.
The levies authorized under the provisions of this section, or
any part of them, may by the governing body be laid in addition to
all other municipal levies, and to that extent, beyond the limit of
levy imposed by the charter of
such the municipality; and
such the
levies shall supersede and if necessary exclude levies for other
purposes if
such priority or exclusion is necessary under
limitations upon taxes or tax levies imposed by law.
Such The public corporations are authorized to take by gift,
grant, devise or bequest, any money or real or personal property,
upon such terms as to the investment and expenditures thereof as
may be fixed by the grantor or determined by
said the trustees.
In addition to all other sums provided for pensions in this
section, it shall be the duty of every municipality in which any
such policemen's pension and relief fund or firemen's pension and
relief fund or funds have been or shall be established to assess
and collect from each member of the paid police department or paid
fire department or both each month, the sum of six percent of the
actual salary or compensation of
such the member; and the amount so collected shall become a regular part of the policemen's pension
and relief fund, if collected from a policeman, and of the
firemen's pension and relief fund, if collected from a fireman.
(b) (1) After the thirtieth day of June, one thousand nine
hundred eighty-three: In order for a municipal policemen's or
firemen's pension and relief fund to receive the allocable portion
of moneys from the municipal pensions and protection fund
established in section fourteen-d, article three, chapter
thirty-three of this code, the governing body of the municipality
shall levy annually and in the manner provided by law for other
municipal levies, and include within the maximum levy or levies
permitted by law, and if necessary in excess of any charter
provision, a tax at such rate as will, after crediting: (A) The
amount of the contributions received during
such the year from the
members of the respective paid police department or paid fire
department; and (B) the allocable portion of the municipal pensions
and protection fund established in section fourteen-d, article
three, chapter thirty-three of this code provide funds equal to the
amount necessary to meet the minimum standards for actuarial
soundness as provided in section twenty of this article, said
amount to be irrevocably contributed, accumulated and invested as
fund assets described in sections twenty-one and twenty-two of this
article.
Such The municipality contributions shall be deposited as
such fund assets on at least a quarterly basis and any revenues
received from any source by a municipality which are specifically
collected for the purpose of allocation for deposit into
such the policemen's pension and relief fund or firemen's pension and relief
fund shall be so deposited within thirty days of receipt by the
municipality.
Such Heretofore surplus reserves accumulated before
the first day of July, one thousand nine hundred eighty-three,
shall be irrevocably contributed, aggregated and invested as fund
assets described in sections twenty-one and twenty-two of this
article. Any actuarial deficiency arising under this section and
section twenty of this article shall not be the obligation of the
State of West Virginia.
(2) The levies authorized under the provisions of this
section, or any part of them, may by the governing body be laid in
addition to all other municipal levies, and to that extent, beyond
the limit of levy imposed by the charter of
such the municipality;
and
such the levies shall supersede and if necessary exclude levies
for other purposes, where
such other purposes have not already
attained priority, and within the limitations upon taxes or tax
levies imposed by the constitution and laws.
(3)
Such The public corporations are authorized to take by
gift, grant, devise or bequest, any money or real or personal
property, upon such terms as to the investment and expenditures
thereof as may be fixed by the grantor or determined by
said the
trustees.
(4)
Notwithstanding provision in section six of this article,
in addition to all other sums provided for pensions in this
section, it
shall be is the duty of every municipality in which any
such fund or funds have been or shall be established to assess and collect from each member of the paid police department or paid fire
department or both each month, the sum of seven percent of the
actual salary or compensation of such member; and the amount so
collected shall become a regular part of the policemen's pension
and relief fund, if collected from a policeman, and of the
firemen's pension and relief fund, if collected from a fireman:
Provided, That in any year that a municipality elects an
alternative contribution of not less than one hundred eight percent
as authorized in section twenty of this article, the municipality
may assess and collect from each member eight percent of salary or
compensation instead of seven percent. Such Member contributions
shall be deposited in
such the pension and relief fund on at least
a monthly basis.
(5) For the fiscal year beginning on the first day of July,
one thousand nine hundred eighty-three and for each fiscal year
thereafter, the State Treasurer shall retain the allocable portion
of the Municipal Pensions and Protection Fund, established in
section fourteen-d, article three, chapter thirty-three of this
code, until such time as the Treasurer of the municipality applies
for
such the allocable portion and certifies in writing to the
State Auditor that:
(A) The municipality has irrevocably contributed the amount
required under this section and section twenty of this article to
such the pension and relief fund for the fiscal year; and
(B) The board of trustees of
such the pension and relief fund
has made a report to the governing body of the municipality on the condition of its fund with respect to the fiscal year.
(6) When the aforementioned application and certification are
made the allocable portion of moneys from the Municipal Pensions
and Protection Fund shall be paid to the corresponding policemen's
or firemen's pension and relief fund.
(7) The State Auditor has the power and duty as
he the Auditor
deems necessary to perform or review audits on
such the pension and
relief funds or to employ an independent consulting actuary or
accountant to determine the compliance of the aforementioned
certification with the requirements of this section and section
twenty of this article. The expense of
such the audit or
determination shall be paid from the portion of the municipal
pensions and protection fund allocable to municipal policemen's and
firemen's pension and relief funds. If
such the allocable portion
of the Municipal Pensions and Protection Fund is not paid to
such
the pension and relief fund within thirty-six months,
such the
portion is forfeited by
such the pension and relief fund and is
allocable to other eligible municipal policemen's and firemen's
pension and relief funds in accordance with section fourteen-d,
article three, chapter thirty-three of this code.
§8-22-20. Minimum standards for actuarial soundness.
The board of trustees for each pension and relief fund shall
have regularly scheduled actuarial valuation reports prepared by a
qualified actuary. All of the following standards must be met:
(a) An actuarial valuation report shall be prepared at least
once every three years commencing with the later of: (1) The first day of July, one thousand nine hundred eighty-three; or (2) three
years following the most recently prepared actuarial valuation
report: Provided, That this most recently prepared actuarial
valuation report meets all of the standards of this section.
(b) The actuarial valuation report shall consist of, but is
not limited to, the following disclosures: (1) The financial
objective of the fund and how the objective is to be attained; (2)
the progress being made toward realization of the financial
objective; (3) recent changes in the nature of the fund, benefits
provided, or actuarial assumptions or methods; (4) the frequency of
actuarial valuation reports and the date of the most recent
actuarial valuation report; (5) the method used to value fund
assets; (6) the extent to which the qualified actuary relies on the
data provided and whether the data was certified by the fund's
Auditor or examined by the qualified actuary for reasonableness;
(7) a description and explanation of the actuarial assumptions and
methods; and (8) any other information the qualified actuary feels
is necessary or would be useful in fully and fairly disclosing the
actuarial condition of the fund.
(c) (1) After the thirtieth day of June, one thousand nine
hundred ninety-one, and thereafter, the financial objective of each
municipality shall not be less than to contribute to the fund
annually an amount which, together with the contributions from the
members and the allocable portion of the state premium tax fund
Municipal Pensions and Protection Fund for municipal pension and
relief funds established under section fourteen-d, article three, chapter thirty-three of this code and other income sources as
authorized by law, will be sufficient to meet the normal cost of
the fund and amortize any actuarial deficiency over a period of not
more than forty years: Provided, That in the fiscal year ending
the thirtieth day of June, one thousand nine hundred ninety-one,
the municipality may elect to make its annual contribution to the
fund utilizing using an alternative contribution in an amount not
less than: (i) One hundred seven percent of the amount contributed
for the fiscal year ending the thirtieth day of June, one thousand
nine hundred ninety; or (ii) an amount equal to the average of the
contribution payments made in the five highest fiscal years
beginning with the 1984 one thousand nine hundred eighty-four
fiscal year, whichever is greater: Provided, however, That
contribution payments in subsequent fiscal years under this
alternative contribution method may not be less than one hundred
seven percent of the amount contributed in the prior fiscal year:
Provided further, That in order to avoid penalizing municipalities
and to provide flexibility when making contributions,
municipalities using the alternative contribution method may
exclude a contribution made in any one year in excess of the
minimum required by this section to amortize any actuarial
deficiency over a period not to exceed the forty-year period
described in this subsection when calculating the one hundred seven
percent minimum contribution for the following year: And provided
further, That prior to utilizing using this alternative
contribution methodology the actuary of the fund shall certify in writing that the fund is projected to be solvent under the
alternative contribution method for the next consecutive
fifteen-year period. For purposes of determining this minimum
financial objective: (1) The value of the fund's assets shall be
determined on the basis of any reasonable actuarial method of
valuation which takes into account fair market value; and (2) all
costs, deficiencies, rate of interest, and other factors under the
fund shall be determined on the basis of actuarial assumptions and
methods which, in aggregate, are reasonable (taking into account
the experience of the fund and reasonable expectations) and which,
in combination, offer the qualified actuary's best estimate of
anticipated experience under the fund:
And provided further, That
any municipality which elected the alternative funding method under
this section and which has an unfunded actuarial liability of not
more than twenty-five percent of fund assets, may, beginning the
first day of September, two thousand three, elect to revert back to
the standard funding method, which is to contribute to the fund
annually an amount which is not less than an amount which, together
with the contributions from the members and the allocable portion
of the state premium tax fund
Municipal Pensions and Protection
Fund for municipal pension and relief funds established under
section fourteen-d, article three, chapter thirty-three of this
code and other income sources as authorized by law, will be
sufficient to meet the normal cost of the fund and amortize any
actuarial deficiency over a period of not more than forty years
,
beginning from the first day of July, one thousand nine hundred ninety-one.
(2) No municipality may anticipate or use in any manner any
state funds accruing to the police or firemen's pension fund to
offset the minimum required funding amount for any fiscal year.
(3) Notwithstanding any other provision of this section or
article to the contrary, each municipality shall contribute
annually to the fund an amount which may not be less than the
normal cost, as determined by the actuarial report.
(d) For purposes of this section the term "qualified actuary"
means only an actuary who is a member of the Society of Actuaries
or the American Academy of Actuaries. The qualified actuary shall
be designated a fiduciary and shall discharge his or her duties
with respect to a fund solely in the interest of the members and
member's beneficiaries of that fund. In order for the standards of
this section to be met, the qualified actuary shall certify that
the actuarial valuation report is complete and accurate and that in
his or her opinion the technique and assumptions used are
reasonable and meet the requirements of this section of this
article.
(e) The cost of the preparation of the actuarial valuation
report shall be paid by the fund.
(f) Notwithstanding any other provision of this section, for
the fiscal year ending the thirtieth day of June, one thousand nine
hundred ninety-one, the municipality may calculate its annual
contribution based upon the provisions of the supplemental benefit
provided for in this article enacted during the one thousand nine hundred ninety-one regular session of the Legislature.
NOTE: The purpose of this bill is to permit municipalities
which make an alternative contribution to their policemen's or
firemen's pension funds of 108 percent or more of a prior year's
contribution, to increase employee contributions to the funds from
seven percent to eight percent of salary or compensation.
The bill also promotes flexibility in municipal contributions
to the pension funds by excluding contributions made in any one
year in excess of the minimum requirement from calculation of
future minimum required contribution.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.