ENGROSSED
H. B.2457
(By Delegates Amores, Craig, Stalnaker, Browning,
Marshall, Morgan and G. White)
[Introduced February 17, 2005; referred to the
Committee on Pensions and Retirement then Finance.]
A BILL to amend and reenact §8-22-20 of the Code of West
Virginia, 1931, as amended, relating to modifying the basis
for calculating the alternate method of annual contribution
required by municipalities into the Policemen's and
Firemen's Pension and Relief Fund in certain circumstances.
Be it enacted by the Legislature of West Virginia:
That §8-22-20 of the Code of West Virginia, 1931, 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) 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 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 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: 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:
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
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.