ENROLLED
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 544
(Senators Foster, Wells, McCabe, Wills, Edgell, Snyder, Palumbo, Yost,
Klempa and Kessler (Acting President), original sponsors)
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[Passed March 11, 2011; in effect from passage.]
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AN ACT to amend and reenact §8-22-16 and §8-22-20 of the Code of
West Virginia, 1931, as amended; and to amend and reenact §8-
22A-28 of said code, all relating to municipal policemen's and
firemen's pension and relief funds and Municipal Police
Officers and Fire Fighters Retirement System; providing
additional method for municipalities to finance policemen's
and firemen's pension and relief funds; authorizing Municipal
Pensions Oversight Board to contract for actuarial services
without certain statutory restrictions; requiring certain
information in certain actuarial reports; and extending time
to submit plan to extend Social Security benefits to certain
individuals.
Be it enacted by the Legislature of West Virginia:
That §8-22-16 and §8-22-20 of the Code of West Virginia, 1931, as amended, be amended and reenacted; and that §8-22A-28 of said
code 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.
§8-22-16. Pension and relief funds for policemen and firemen;
creation of boards of trustees; definitions; continuance of
funds; average adjusted salary.
(a) Except as provided in subsection (e) of this section,
passed into law during the fourth extraordinary session of the
Legislature in 2009, in every Class I and Class II city having, or
which may hereafter have, a paid police department and a paid fire
department, or either of such departments, the governing body
shall, and in every Class III city and Class IV town or village
having, or which may hereafter have, a paid police department and
a paid fire department, or either of such departments, the
governing body may, by ordinance provide for the establishment and
maintenance of a policemen's pension and relief fund and for a
firemen's pension and relief fund for the purposes hereinafter
enumerated and, thereupon, there shall be created boards of
trustees which shall administer and distribute the moneys
authorized to be raised by this section and the following sections
of this article. For the purposes of this section and sections
seventeen through twenty-eight, inclusive, of this article, the term "paid police department" or "paid fire department" means only
a municipal police department or municipal fire department, as the
case may be, maintained and paid for out of public funds and whose
employees are paid on a full-time basis out of public funds. The
term shall not be taken to mean any department whose employees are
paid nominal salaries or wages or are only paid for services
actually rendered on an hourly basis.
(b) Any policemen's pension and relief fund and any firemen's
pension and relief fund established in accordance with the
provisions of former article six of this chapter or this article
shall be or remain mandatory and shall be governed by the
provisions of sections sixteen through twenty-eight, inclusive, of
this article (with like effect, in the case of a Class III city or
Class IV town or village, as if such Class III city or Class IV
town or village were a Class I or Class II city) and shall not be
affected by the transition from one class of municipal corporation
to a lower class as specified in section three, article one of this
chapter:
Provided, That any Class III or Class IV town or village
that hereafter becomes a Class I or Class II city shall not be
required to establish a pension and relief fund if the town or
village is a participant in an existing pension plan regarding paid
firemen and/or policemen.
(c) After June 30, 1981, for the purposes of sections sixteen
through twenty-eight, inclusive, of this article, the word "member"
means any paid police officer or firefighter who at time of
appointment to a paid police or fire department met the medical requirements of chapter 2-2 of the National Fire Protection
Association Standards Number 1001 -- Firefighters Professional
Qualifications '74 as updated from year to year:
Provided, That any
police officer or firefighter who was a member of the fund prior to
July 1, 1981, shall be considered a member after June 30, 1981.
(d) For purposes of sections sixteen through twenty-eight,
inclusive, of this article, the words "salary or compensation" mean
remuneration actually received by a member, plus the member's
deferred compensation under sections 125, 401(k), 414(h)(2) and 457
of the United States Internal Revenue Code of 1986, as amended:
Provided, That the remuneration received by the member during any
twelve-consecutive-month period used in determining benefits which
is in excess of an amount which is twenty percent greater than the
"average adjusted salary" received by the member in the two
consecutive twelve-consecutive-month periods immediately preceding
the twelve-consecutive-month period used in determining benefits
shall be disregarded:
Provided, however, That the "average adjusted
salary" means the arithmetic average of each year's adjusted
salary, the adjustment made to reflect current salary rate and such
average adjusted salary shall be determined as follows: Assuming
"year-one" means the second twelve-consecutive-month period
preceding such twelve-consecutive-month period used in determining
benefits, "year-two" means the twelve-consecutive-month period
immediately preceding the twelve-consecutive-month period used in
determining benefits and "year-three" means the twelve-consecutive-
month period used in determining benefits, year-one total remuneration shall be multiplied by the ratio of year-three base
salary, exclusive of all overtime and other remuneration, to year-
one base salary, exclusive of all overtime and other remuneration,
such product shall equal "year-one adjusted salary"; year-two total
remuneration shall be multiplied by the ratio of year-three base
salary, exclusive of all overtime and other remuneration, to year-
two base salary, exclusive of all overtime and other remuneration,
such product shall equal "year-two adjusted salary"; and the
arithmetic average of year-one adjusted salary and year-two
adjusted salary shall equal the average adjusted salary.
(e)(1) Any municipality, as that term is defined in section
two, article one of this chapter, or municipal subdivision as
defined in section two, article twenty-two-a of this chapter may,
by a majority vote of its governing body, close its existing
policemen's or firemen's pension and relief fund to employees newly
hired on or after January 1, 2010, if the municipality enrolls
those newly hired police officers or firefighters in a retirement
plan created in article twenty-two-a of this chapter and approved
and administered by the West Virginia Consolidated Public
Retirement Board. On and after July 1, 2010, no new policemen's or
firemen's pension and relief fund may be established under this
section. A Class I or Class II municipality forming a new paid
police department or paid fire department after June 30, 2010,
shall, notwithstanding the provisions of section two, article
twenty-two-a of this chapter, enroll the department members in the
Municipal Police Officers and Firefighters Retirement System established in article twenty-two-a of this chapter.
(2) Any municipality using the alternative method of financing
that elects to close an existing pension and relief fund to new
hires pursuant to this subsection shall also adopt either the
optional method of financing the unfunded actuarial accrued
liability of the existing policemen's or firemen's pension and
relief fund as provided in subsection (e), or the conservation
method as provided in subsection (f), section twenty of this
article.
(3) Except as provided in section thirty-two, article twenty-
two-a of this chapter, if the qualifying municipality elects to
close enrollment in an existing municipal pension and relief fund
to newly hired police officers and firefighters pursuant to this
section, all current active members, retirees and other
beneficiaries covered by the existing policemen's or firemen's
pension and relief fund shall remain covered by that plan and shall
be paid all benefits of that plan in accordance with Part III of
this article.
§8-22-20. Actuary; actuarial valuation report; minimum standards
for annual municipality contributions to the fund;
definitions; actuarial review and audit.
(a) The West Virginia Municipal Pensions Oversight Board shall
contract with or employ a qualified actuary to annually prepare an
actuarial valuation report on each pension and relief fund. The
selection of contract vendors to provide actuarial services, including the reviewing actuary as provided in subsection (c) of
this section, shall be by competitive bid process but is
specifically exempt from purchasing provisions of article three,
chapter five-a of this code. The expense of the actuarial report
shall be paid from moneys in the Municipal Pensions Security Fund.
Uses of the actuarial valuations from the qualified actuary shall
include, but not be limited to, determining a municipal policemen's
or firemen's pension and relief fund's eligibility to receive state
money and to provide supplemental benefits.
(b) The actuarial valuation report provided pursuant to
subsection (a) of this section 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; (8) an evaluation of each plan using the alternative
funding method, to assess advantages of changing to other funding
methods as provided in this article; and (9) any other information
required in section twenty-a of this article or that the qualified actuary feels is necessary or would be useful in fully and fairly
disclosing the actuarial condition of the fund.
(c) (1) Except as provided in subsections (e) and (f) of this
section, beginning June 30, 1991, 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
Municipal Pensions and Protection Fund for municipal pension and
relief funds established under section fourteen-d, article three,
chapter thirty-three of this code or a municipality's allocation
from the Municipal Pensions Security Fund created in section
eighteen-b of this article 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 July 1, 1991:
Provided, That in the
fiscal year ending June 30, 1991, the municipality may elect to
make its annual contribution to the fund using an alternative
contribution in an amount not less than: (i) One hundred seven
percent of the amount contributed for the fiscal year ending June
30, 1990; or (ii) an amount equal to the average of the
contribution payments made in the five highest fiscal years
beginning with the fiscal year ending 1984, 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 one-time additional contribution made in any
one year in excess of the minimum required by this section:
And
provided further, That the governing body of any municipality may
elect to provide an employer continuing contribution of one percent
more than the municipality's required minimum under the alternative
contribution plan authorized in this subsection:
And provided
further, That if any municipality decides to contribute an
additional one percent, then that municipality may not reduce the
additional contribution until the respective pension and relief
fund no longer has any actuarial deficiency:
And provided further,
That any decision and any contribution payment by the municipality
is not the liability of the State of West Virginia:
And provided
further, That if any municipality or any pension fund board of
trustees makes a voluntary election and thereafter fails to
contribute the voluntarily increase as provided in this section and
in subsection (c), section nineteen of this article, then the board
of trustees is not eligible to receive funds allocated under
section fourteen-d, article three, chapter thirty-three of this
code:
And provided further, That prior to using this alternative
contribution method 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: (i) 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 (ii) 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
September 1, 2003, elect to revert 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 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 July 1, 1991.
(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.
(4) The actuarial process, which includes the selection of
methods and assumptions, shall be reviewed by the qualified actuary
no less than once every five years. Furthermore, the qualified
actuary shall provide a report to the oversight board with
recommendations on any changes to the actuarial process.
(5) The oversight board shall hire an independent reviewing
actuary to perform an actuarial audit of the work performed by the
qualified actuary no less than once every seven years.
(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
members' 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.
(e)(1) Beginning January 1, 2010, municipalities may choose
the optional method of financing municipal policemen's or firemen's
pension and relief funds as outlined in this subsection in lieu of
the standard or alternative methods as provided in subdivision (1),
subsection (c) of this section. (2) For those municipalities choosing the optional method of finance, the minimum standard for
annual municipality contributions to each policemen's or firemen's
pension and relief fund shall be an amount which, together with the
contributions from the members and allocable portion of the
Municipal Pensions and Protection Fund or Municipal Pensions
Security Fund created in section eighteen-b of this article, 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
January 1, 2010:
Provided, That those municipalities using the
standard method of financing in 2009 shall continue to amortize
their actuarial deficiencies over a period of not more than forty
years beginning July 1, 1991. The required contribution shall be
determined each plan year as described above by the actuary
retained by the oversight board, based on an actuarial valuation
reflecting actual demographic and investment experience and
consistent with the Actuarial Standards of Practice published by
the Actuarial Standards Board.
(3) A municipality choosing the optional method of financing
a policemen's or firemen's pension and relief fund as provided in
this subsection shall close the fund to police officers or fire
fighters newly hired on or after January 1, 2010, and provide for
those employees to be members of the Municipal Police Officers and
Firefighters Retirement System as established in article twenty-
two-a of this chapter.
(f) (1) Beginning April 1, 2011, any municipality using the alternative method of financing may choose a conservation method of
financing its municipal policemen's and firemen's pension and
relief funds as outlined in this subsection, in lieu of the
alternative method as provided in subdivision (1), subsection (c),
or the optional method as provided in subsection (e) of this
section.
(2) For those municipalities choosing the conservation method
of finance, until a plan is funded at one hundred percent, a part
of each plan member's employee contribution to the fund equal to
one and one-half percent of the employee's compensation, shall be
deposited into and remain in the trust and accumulate investment
return. In addition, until a plan is funded at one hundred
percent, an actuarially determined portion of the premium tax
allocation to each fund provided in accordance with section
fourteen-d, article three, and section seven, article twelve-c of
chapter thirty-three of this code shall also be deposited into and
remain in the trust and accumulate investment return. This
variable percentage of premium tax allocation to be retained in
each fund shall be determined annually by the qualified actuary
provided pursuant to subsection (a) of this section to be an amount
required, along with other assets of the fund as necessary to reach
a funded level of one hundred percent in thirty-five years from the
time of adoption of the conservation financing method. The
variable percentage shall be calculated using a prospective four-
year rolling average.
(3) Upon adoption of the conservation method of finance, the municipality shall close its pension and relief funds to new
members and shall place police officers and firefighters newly
hired after adoption of the conservation method into the Municipal
Police Officers and Firefighters Retirement System created in
article twenty-two-a of this chapter.
(4) Upon adoption of the conservation method of financing, the
minimum standard for annual municipality contributions to each
policemen's or firemen's pension and relief fund shall be an amount
which, together with member contributions and premium tax proceeds
not required to be retained in the trust pursuant to this
subsection, and other income sources as authorized by law, is
sufficient to meet the annual benefit and administrative expense
payments from the funds on a pay-as-you-go basis:
Provided: That at
the time the actuarial report required by this section indicates no
actuarial deficiency in the municipal policemen's or firemen's
pension and relief fund, the minimum annual required contribution
of the municipality may not be less than an amount which together
with all member contributions and other income authorized by law,
is sufficient to pay normal cost.
ARTICLE 22A.á WEST VIRGINIA MUNICIPAL POLICE OFFICERS AND
FIREFIGHTERS RETIREMENT SYSTEM.
§8-22A-28. How a municipality or municipal subdivision becomes a
participating public employer; duty to request referendum on
Social Security coverage.
(a) Subject to section sixteen, article twenty-two of this chapter, any municipality or municipal subdivision employing
municipal police officers or firefighters may by a majority of the
members of its governing body eligible to vote, elect to become a
participating public employer and thereby include its police
officers and firefighters in the membership of the plan. The clerk
or secretary of each municipality or municipal subdivision electing
to become a participating public employer shall certify the
determination of the municipality or municipal subdivision by
corporate resolution to the Consolidated Public Retirement Board
within ten days from and after the vote of the governing body.
Separate resolutions are required for municipal police officers and
municipal firefighters. Once a municipality or municipal
subdivision elects to participate in the plan, the action is final
and it may not, at a later date, elect to terminate its
participation in the plan.
(b) On or before October 1, 2015, the participating employers
shall jointly submit a plan to the State Auditor, pursuant to
section five, article seven, chapter five of this code, to extend
Social Security benefits to members of the retirement system.
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