Senate Bill No. 601
(By Senator Kessler)
____________
[Introduced February 17, 2003; referred to the Committee on
Pensions; and then to the Committee on Finance.]
____________
A BILL to amend and reenact section twenty, article twenty-two,
chapter eight of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, relating to municipal pension
and relief funds; and allowing municipalities that elected to
use the alternative funding method for their pension and
relief funds to return to the standard funding method.
Be it enacted by the Legislature of West Virginia:
That section twenty, article twenty-two, chapter eight of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted 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.
§8-22-20. 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)(A) 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 be to contribute to the fund
annually an amount which will at least, 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
(B) 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 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 may 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)
(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 (2) (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.
(C) A municipality that chose to use the funding option
provided in paragraph (B) of this subdivision may elect to use,
beginning on the first day of July, two thousand three, the funding
option provided in paragraph (A) of this subdivision. If the
municipality so elects it must contribute to the fund an amount
equal to the difference between the amount it paid under paragraph
(B) of this subdivision and the amount it would have paid if it had
not elected to use the option provided in paragraph (B) of this
subdivision. The amount must be repaid by the first day of July,
two thousand six. No refund may be made to a municipality under this paragraph.
(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 allow municipalities
that elected to use the alternative funding method for their
pension and relief funds to return to the standard funding method.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.