A BILL to amend and reenact sections sixteen-a, seventeen and twenty, article twenty-two, chapter eight of the code of West Virginia, one thousand nine hundred thirty-one, as amended; and further amend said chapter by adding thereto five new sections, designated sections seventeen-a, seventeen-b, seventeen-c, twenty-nine and thirty; all to relating to setting forth legislative findings; creating a statewide municipal police and fire pension fund oversight board; composition of board; compensation and expenses of board; providing for executive director of oversight board; requiring board employ one actuary to evaluate all municipal police and firemen's pension funds; meetings; quorum; actuarial reports; setting forth content of actuarial report; setting forth dates; requiring municipal police and firemen's pension funds be solvent for at least twenty-five years; setting forth permissive alternative funding for municipal police and firemen's pension funds; setting forth definition of normal cost; specifying minimum contribution by municipality to municipal police and firemen's pension funds; requiring municipal contribution to municipal police and firemen's pension funds to be met exclusively from municipal funds and prohibiting use of state moneys by municipalities to offset amount required to be contributed to municipal police and firemen's pension funds; setting forth penalties and interest where municipalities fail to contribute timely to municipal police and firemen's pension fund; specifying due dates; setting forth civil penalty on members of municipal governing body in certain instances; setting forth criminal penalties; providing for statewide uniform rules and regulations by oversight board; authorizing payment of oversight board's expenses from premium tax; and supersedure.

Be it enacted by the Legislature of West Virginia:
That sections sixteen-a, seventeen and twenty, article twenty- two, chapter eight of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted; and that said chapter be further amended by adding thereto five new sections, designated sections seventeen-a, seventeen-b, seventeen-c, twenty- nine and thirty, 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.

§8-22-16a. Legislative findings.
The Legislature finds that prudence often dictates a review of well meaning actions previously taken. The Legislature further finds that implementation of the cost of living benefit enacted during the one thousand nine hundred ninety regular legislative session would be disadvantageous to members of the municipal policemen and firemen pension funds and municipal budgets due to the large cost associated with that benefit and that this fact was unknown at the time of enactment of the cost of living benefit. The Legislature further finds that the fiscal integrity of the various municipal policemen and firemen pension funds will be in extreme jeopardy if an alternative benefit is not enacted. The Legislature further finds that maintenance of an actuarially sound pension system is incumbent upon the administrators of the various funds and is also incumbent upon the Legislature when it enacts changes to the benefit structure. The Legislature further finds that the implementation of the cost of living benefit enacted in the one thousand nine hundred ninety regular legislative session would prevent the maintenance of an actuarially sound pension system and would jeopardize the interests of the members of the retirement funds, therefore, it is necessary to amend the cost of living benefit as previously enacted.
The Legislature further finds and declares in the regular session of two thousand one that the municipal policemen and firemen pension plans provided for in this article are generally very poorly funded across the state. The funding ranges from one percent to ninety-six percent when unfunded liability is compared to plan assets, with thirty-five pension funds of the fifty-three pension funds in this state funded at fifty percent or less. Consequently, the Legislature recognizes that most of the firemen and policemen pension funds in this state are in extremely poor financial condition, and that additional statutory enactments are necessary to preserve valuable benefits for the firemen and policemen in our state who are members of these funds.
The Legislature further finds and declares that the municipalities are obligated to fund these pension plans on an actuarially sound basis and that these are strictly municipal funds and are in no way the responsibility of the state. The legislature also finds that most of the municipal pension funds have significant unfunded actuarial accrued liabilities.

§8-22-17. Powers and duties of boards of trustees.
Such board of trustees, or boards of trustees, shall be public corporations by the name and style of "The Board of Trustees of the Policemen's Pension and Relief Fund of (name of municipality)," or "The Board of Trustees of the Firemen's Pension and Relief Fund of (name of municipality)," as the case may be, by which names they may sue and be sued, plead and be impleaded, contract and be contracted with, take and hold real and personal property for the use of said policemen's pension and relief fund or said firemen's pension and relief fund and have and use a common seal. In the absence of such a seal, the seal of the president of any such corporation shall be equivalent to such common seal. Any such board of trustees may also in its corporate name do and perform any and all other acts and business pertaining to the trust created hereby or by any conveyance, devise or dedication made for the uses and purposes of said board.
After the thirtieth day of June, one thousand nine hundred eighty-one, any such board of trustees, boards of trustees and any members thereof shall, as fund fiduciaries, discharge their duties with respect to such pension and relief funds solely in the interest of the members and members' beneficiaries for the exclusive purpose of providing benefits to members and their beneficiaries and defraying reasonable expenses of administering the fund.
§8-22-17a. Retirement oversight board created; powers and duties generally; composition; executive director of board.
(a) The West Virginia municipal police and firemen's pension funds oversight board is hereby created. This board has authority to make all rules and regulations regarding municipal police and firemen's pension funds as set forth in section seventeen-b of this article.
(b) This oversight board shall consist of nine members as follows: (1) The secretary of the department of administration, as an ex officio member; (2) The executive director of the West Virginia consolidated public retirement board, as an ex officio member; (3) One police officer who is a member of a municipal plan created pursuant to the provisions of this article nominated by the state lodge of the West Virginia fraternal order of police; (4) One municipal firefighter who is a member of a municipal retirement plan created pursuant to the provisions of this article and nominated by the professional firefighter's association of West Virginia; (5) One municipal official of a municipality having a police and a firemen retirement plan created pursuant to the provisions of this article; and (6) Four municipal citizens who are not members, retirants or beneficiaries of any plan created pursuant to the provisions of this article, at least one of which is a medical doctor and who has experience in the management of pensions or other financial markets or who is a certified public accountant or an attorney at law, to be appointed by the governor from a list of three names submitted to him from the speaker of the house and three names submitted by the president of the senate. This oversight board shall hold its first meeting by the thirtieth day of August, two thousand one and shall meet at least monthly thereafter. Neither ex officio member of the oversight board may participate in any vote of the board.
(c) The appointed members shall serve five year staggered terms and may be reappointed to successive terms. In the event of a vacancy on the board, the governor shall fill the vacancy by appointment for the unexpired term within sixty days of the vacancy occurring. No more than five appointees may be of the same political party.
(d) The oversight board shall evaluate municipal police and firemen's pension plans and prepare and submit to the governor, the treasurer and to the Legislature not later than the first day of December each year, an annual report containing an actuarial evaluation of all municipal pension funds and funding requirements of each plan, and a list of the municipalities failing to comply with the provisions of this article. This report shall also specify the level of unfunded accrued actuarial liability of each fund and other pertinent employment and retirement data.
(e) The board shall employ an executive director to serve as the full time chief administrative officer for the board. In addition, the board shall employ such other administrative, legal and clerical staff as necessary to ensure the proper administration of its duties under this article.
(f) The board may enter into contracts for accounting, legal and actuarial services as may be required from time to time.
§8-22-17b. Conduct of meetings; quorum; compensation; and bonding.
The board shall meet at times and places specified by the executive director. Notice of each meeting shall be given in writing to each member by the executive director at least seven days in advance of the meeting. Six members constitutes a quorum and a majority of those present is required for action. The board shall pay each member the same compensation and expense reimbursement as is paid to members of the Legislature for their interim duties for each day or portion thereof the board member is engaged in the discharge of his or her official duties.
§8-22-17c. Hiring of actuary; preparation of actuarial valuations.
(a) The oversight board shall contract with an actuary who shall be the technical advisor to the retirement board with regard to the operation of the municipal police or firemen's retirement fund on an actuarially sound basis.
(b) The actuary shall complete the valuation in accordance with actuarial standards of practice promulgated by the actuarial standards board of the american academy of actuaries. The report of the valuation shall include: (1) a summary of the benefit provisions evaluated; (2) a summary of the census data and financial information used in the valuation; (3) a description of the actuarial assumptions, actuarial costs method and asset valuation method used in the valuation, including a statement of the assumed rate of payroll growth and assumed rate of growth or decline in the number of the fund members' contribution to the pension fund; (4) a summary of findings that includes a statement of the actuarially accrued pension liabilities and unfunded actuarial accrued pension liabilities; (5) a schedule showing the effect of any changes in the benefit provisions, actuarial assumptions or cost methods since the last annual actuarial valuation; and (6) a statement of whether contributions to the pension fund are in accordance with the provisions of this chapter and whether they are expected to be sufficient.

§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) 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 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 of June, one thousand nine hundred ninety-one, the municipality may elect to make its annual contribution to the fund utilizing 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 fiscal year whichever is greater: Provided, however, That contribution payments in subsequent fiscal years under this alternative contribution method shall not be less than one hundred seven percent of the amount contributed in the prior fiscal year: Provided further, That prior to utilizing 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.
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 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 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.
(g) Notwithstanding the provisions of this section, beginning the first day of July, two thousand one, the oversight board created in section seventeen-a of this article shall select a single qualified actuary to report annually for all funds existing in this state by virtue of the provisions of this section. The oversight board shall select the actuary by competitive bid. The board shall contract for actuarial services for a three year period of time to ensure uniformity of reports. The oversight board shall select the actuarial assumptions to be used: Provided, That the assumed rate of return may not be greater than seven and one-half percent: Provided, however, That the actuary of the fund shall certify in writing that the fund is projected to be solvent for the next consecutive twenty-five-year period.

(h) Notwithstanding the provisions of this section to the contrary, beginning with the fiscal year which commences the first day of July, two thousand one, a municipality may elect to contribute the same amount to its plan or plans as it did for the immediately prior fiscal year. A municipality may elect to use this contribution amount until the fiscal year beginning two thousand four: Provided, That in no event may a municipality contribute less than one hundred ten percent of the normal cost for the plan year. For purposes of this article, "normal cost" means
the value of benefits accruing for the current valuation year under the actuarial cost method: Provided, however, That after the thirtieth day of June, two thousand one, the minimum funding requirement for municipalities shall be met exclusively from municipal funds and 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: Provided further, That in the event a municipal police or fire pension fund is less than forty percent funded and the governing body does not enact the surcharge provided for in section nineteen-b of ths article or the addition to the hotel occupancy tax provided for in section two, article eighteen, chapter seven of this code, the minimum funding obligation of that municipality shall be equal to two hundred fifty percent of the funding requirement for that municipality for the fiscal year ending June thirty, two thousand and shall remain at that amount for each fiscal year thereafter until the fund or fund of the municipality are at least eighty percent funded or until the municipality enacts a means of additional funding for the funds and that means of additional funding has been in place for two fiscal years.
(i) Beginning after the thirtieth day of June, two thousand one, each municipality having a police or firemen's pension fund, or both, shall make quarterly contributions to the fund in order to meet the funding obligation of the municipality. The oversight board shall determine if each municipality is meeting this obligation in a timely fashion. In the event a quarterly payment is not received from a municipality by the fifteenth day of the month following the quarter, the municipality shall pay a penalty equal to twenty percent of the required quarterly payment and interest at the rate of fifteen percent per year compounded monthly. This penalty and interest is in addition to required funding. The oversight board shall enforce collections of amounts hereunder.
(j) All payments are due within a fiscal year except the payment for the last quarter. In the event a municipality defaults in making any payment required by this section, or fails to make all payments required for a fiscal year within one month following the close of the fiscal year, the mayor and the city council become personally liable for such payments and the local plan trustees shall forthwith proceed against these persons by civil action to recover the amounts, including costs and attorney fees.
(k) In addition to any other civil penalty or personal liability, any mayor and any member of city council who violates any of the provisions of this section by failing to pay into, or cause to pay into a police or firemen's pension fund in a timely manner is guilty of a felony, and upon conviction, shall be fined not less than five thousand dollars and imprisoned in the state correctional facility not less than three years and shall be required to pay restitution to the affected fund.

§8-22-30. Supersedure.
It is the intent of the Legislature that in the event of any conflict or inconsistency between the provisions enacted into law in the two thousand one regular session and any other law, to the extent of the inconsistency, the provisions of this article shall be enforced and the provisions of the other law shall be of no effect.