Bill Text: FL S0980 | 2018 | Regular Session | Introduced
Bill Title: Publicly Funded Retirement Programs
Spectrum: Partisan Bill (Republican 1-0)
Status: (Failed) 2018-03-10 - Died in Governmental Oversight and Accountability [S0980 Detail]
Download: Florida-2018-S0980-Introduced.html
Florida Senate - 2018 SB 980 By Senator Brandes 24-01027-18 2018980__ 1 A bill to be entitled 2 An act relating to publicly funded retirement 3 programs; amending s. 112.63, F.S.; revising minimum 4 requirements for actuarial reports for retirement 5 systems or plans subject to part VII of ch. 112, F.S.; 6 requiring the governing body responsible for the 7 retirement system or plan to review the enrolled 8 actuary’s statement within a specified timeframe; 9 requiring the governing body to provide a written 10 explanation if differing actuarial assumptions are 11 adopted; increasing the frequency by which the 12 Department of Management Services must review and 13 comment on a retirement system’s or plan’s actuarial 14 valuations; requiring each local government retirement 15 system or plan to submit certain information 16 accompanying its actuarial report to the department; 17 amending s. 112.64, F.S.; requiring the unfunded 18 liability of retirement systems or plans established 19 on or after a certain date to be amortized within a 20 specified timeframe; revising requirements for 21 determining payroll growth assumptions for unfunded 22 liability amortization schedules; amending s. 112.664, 23 F.S.; modifying requirements for annual reports 24 prepared by each defined benefit retirement system or 25 plan; amending s. 112.665, F.S.; revising duties of 26 the department as to the oversight of local retirement 27 systems or plans; amending s. 121.031, F.S.; requiring 28 the administrator of the Florida Retirement System to 29 provide the results of the system’s actuarial study to 30 the Governor and the presiding officers of the 31 Legislature annually; revising minimum requirements 32 for the actuarial study; amending s. 121.0312, F.S.; 33 requiring the Governor and the presiding officers of 34 the Legislature to acknowledge and review the 35 actuarial valuation report after receipt; specifying 36 minimum requirements for such review; requiring the 37 department to publish the written acknowledgments in a 38 certain manner; amending ss. 121.4501 and 212.055, 39 F.S.; conforming cross-references; providing a 40 declaration of important state interest; providing 41 effective dates. 42 43 Be It Enacted by the Legislature of the State of Florida: 44 45 Section 1. Section 112.63, Florida Statutes, is amended to 46 read: 47 112.63 Actuarial reports and statements of actuarial 48 impact; review.— 49 (1) Each retirement system or plan subject tothe50provisions ofthis part mustact shallhave regularly scheduled 51 actuarial reports prepared and certified by an enrolled actuary. 52 The actuarial report must includeshall consist of, but is not 53 limited to, the following: 54 (a) Adequacy of employer and employee contribution rates in 55 meeting levels of employee benefits provided in the system and 56 changes, if any, needed in such rates to achieve or preserve a 57 level of funding deemed adequate to enable payment through the 58 indefinite future of the benefit amounts prescribed by the 59 system, which shall include a valuation of present assets, based 60 on market and actuarialstatementvalue, and current and 61 prospective assets and liabilities of the system and the extent 62 of unfunded accrued liabilities, if any. 63 (b) A plan to amortize any unfunded liability pursuant to 64 s. 112.64 and a description of actions taken to reduce the 65 unfunded liability. 66 (c) A description and explanation of actuarial assumptions. 67 (d) A schedule illustrating the amortization of unfunded 68 liabilities, if any. 69 (e) A list of preretirement and postretirement benefits 70 provided to employees, including, but not limited to, life 71 insurance; health insurance; dental care; vision care; fitness 72 programs, discounts, or reimbursements; continuing education or 73 tuition credit programs; cost-of-living adjustments; payment for 74 unused leave; disability insurance; and health savings accounts 75 or flexible spending accounts. 76 (f)A comparative review illustrating the actual salary77increases granted andThe rate of investment return realized 78 over the 3-year period preceding the actuarial report with the 79 assumptions used in both the preceding and current actuarial 80 reports. 81 (g)(f)Effective January 1, 2016, the mortality tables used 82 in either of the two most recently published actuarial valuation 83 reports of the Florida Retirement System, including the 84 projection scale for mortality improvement. Appropriate risk and 85 collar adjustments must be made based on plan demographics. The 86 tables must be used for assumptions for preretirement and 87 postretirement mortality. 88 (h)(g)A statement by the enrolled actuary that the report 89 is complete and accurate and that in his or her opinion the 90 techniques and assumptions used are reasonable and meet the 91 requirements and intent of this partact. 92 1. The statement must include an analysis of the assumed 93 rate of return established by the plan’s governing body. The 94 analysis must include specific recommendations regarding an 95 appropriate assumed rate of return. 96 2. The plan’s governing body shall, within 30 days after 97 receipt, review the statement of the enrolled actuary. If the 98 governing body adopted actuarial assumptions other than those 99 recommended by the enrolled actuary producing the actuarial 100 valuation report, the plan’s governing body must provide a 101 written explanation as to why actuarial assumptions other than 102 those recommended were adopted. The written explanation must be 103 published as an addendum to the report. 104 105 The actuarial cost methods usedutilizedfor establishing the 106 amount of the annual actuarial normal cost to support the 107 promised benefits mustshallonly be those methods approved in 108 the Employee Retirement Income Security Act of 1974 and as 109 authorizedpermittedunder regulations prescribed by the 110 Secretary of the Treasury. 111 (2) The frequency of actuarial reports must be at least 112 every 3 years commencing from the last actuarial report of the 113 plan or system or October 1, 1980, if no actuarial report has 114 been issued within the 3-year period beforeprior toOctober 1, 115 1979. The results of each actuarial report mustshallbe filed 116 with the plan administrator within 60 days afterof117 certification. Thereafter, the results of each actuarial report 118 mustshallbe made available for inspection upon request. 119 Additionally, each retirement system or plan covered by this 120 partactwhich is not administered directly by the Department of 121 Management Services shall furnish a copy of each actuarial 122 report to the Department of Management Services within 60 days 123 after receipt from the actuary. The requirements of this section 124 are supplemental to actuarial valuations necessary to comply 125 with the requirements of s. 218.39. 126 (3) ANounit of local government may notshallagree to a 127 proposed change in retirement benefits unless the administrator 128 of the system, beforeprior toadoption of the change by the 129 governing body, and beforepriortothe last public hearing 130 thereon, has issued a statement of the actuarial impact of the 131 proposed change upon the local retirement system, consistent 132 with the actuarial review, and has furnished a copy of such 133 statement to the division. Such statement mustshallalso 134 indicate whether the proposed changes are in compliance with s. 135 14, Art. X of the State Constitution and with s. 112.64. 136 (4) Upon receipt, pursuant to subsection (2), of an 137 actuarial report, or, pursuant to subsection (3), of a statement 138 of actuarial impact, the Department of Management Services shall 139 acknowledge such receipt, andbut shall onlyreview and comment 140 on each retirement system’s or plan’s actuarial valuationsat141least on a triennial basis. 142 (a) If the department finds that the actuarial valuation is 143 not complete, accurate, or based on reasonable assumptions or 144 otherwise materially fails to satisfy the requirements of this 145 part; requires additional material information necessary to 146 complete its review of the actuarial valuation of a system or 147 plan or material information necessary to satisfy the duties of 148 the department pursuant to s. 112.665(1); or does not receive 149 the actuarial report or statement of actuarial impact, the 150 department shall notify the administrator of the affected 151 retirement system or plan and the affected governmental entity 152 and request appropriate adjustment, the additional material 153 information, or the required report or statement. The 154 notification must inform the administrator and the affected 155 governmental entity of the consequences for failing to comply 156 with the requirements of this subsection. 157 (b) If, after a reasonable period of time, a satisfactory 158 adjustment is not made or the report, statement, or additional 159 material information is not provided, the department may notify 160 the Department of Revenue and the Department of Financial 161 Services of the noncompliance, and the Department of Revenue and 162 the Department of Financial Services shall withhold any funds 163 not pledged for satisfaction of bond debt service which are 164 payable to the affected governmental entity until the adjustment 165 is made or the report, statement, or additional material 166 information is provided to the department. The Department of 167 Management Services shall specify the date such action is to 168 begin and notify the Department of Revenue, the Department of 169 Financial Services, and the affected governmental entity 30 days 170 before the specified date. 171 (c) Within 21 days after receipt of the notice, the 172 affected governmental entity may petition the Department of 173 Management Services for a hearing under ss. 120.569 and 120.57. 174 The Department of Revenue and the Department of Financial 175 Services may not be parties to the hearing, but may request to 176 intervene if requested by the Department of Management Services 177 or if the Department of Revenue or the Department of Financial 178 Services determines its interests may be adversely affected by 179 the hearing. 180 1. If the administrative law judge recommends in favor of 181 the department, the department shall perform an actuarial 182 review, prepare the statement of actuarial impact, or collect 183 the requested material information. The cost to the department 184 of performing the actuarial review, preparing the statement, or 185 collecting the requested material information shall be charged 186 to the affected governmental entity whose employees are covered 187 by the retirement system or plan. If payment is not received by 188 the department within 60 days after the affected governmental 189 entity receives the request for payment, the department shall 190 certify to the Department of Revenue and the Department of 191 Financial Services the amount due, and the Department of Revenue 192 and the Department of Financial Services shall pay such amount 193 to the Department of Management Services from funds not pledged 194 for satisfaction of bond debt service which are payable to the 195 affected governmental entity. 196 2. If the administrative law judge recommends in favor of 197 the affected governmental entity and the department performs an 198 actuarial review, prepares the statement of actuarial impact, or 199 collects the requested material information, the cost to the 200 department shall be paid by the Department of Management 201 Services. 202 (d) In the case of an affected special district, the 203 Department of Management Services shall also notify the 204 Department of Economic Opportunity. Upon receipt of 205 notification, the Department of Economic Opportunity shall 206 proceed pursuant to s. 189.067. 207 1. Failure of a special district to provide a required 208 report or statement, to make appropriate adjustments, or to 209 provide additional material information after the procedures 210 specified in s. 189.067(1) are exhausted shall be deemed final 211 action by the special district. 212 2. The Department of Management Services may notify the 213 Department of Economic Opportunity of those special districts 214 that failed to come into compliance. Upon receipt of 215 notification, the Department of Economic Opportunity shall 216 proceed pursuant to s. 189.067(4). 217 (5) Payments made to the fund as required by this chapter 218 shall be based on the normal and past service costs contained in 219 the most recent actuarial valuation, subject to being state 220 accepted. 221 (6) Beginning October 1, 2018July 1, 1980, each retirement 222 system or plan of a unit of local government shall maintain and 223 submit to the Department of Management Services along with the 224 actuarial report required under this section, in an accurate and 225 accessible format prescribed by the Department of Management 226 Servicesform, the following information: 227 (a) For each active and inactive member of the system, a 228 number or other means of identification; date of birth; sex; 229 date of employment; period of credited service, split, if 230 required, between prior service and current service; and 231 occupational classification. 232 (b) For each active member, current pay rate, cumulative 233 contributions together with accumulated interest, if credited, 234 age at entry into system, and current rate of contribution. 235 (c) For each inactive member, average final compensation or 236 equivalent and age at which deferred benefit is to begin. 237 (d) For each retired member and other beneficiary, a number 238 or other means of identification, date of birth, sex, beginning 239 date of benefit, type of retirement and amount of monthly 240 benefit, and type of survivor benefit. 241 Section 2. Present subsections (4) through (7) of section 242 112.64, Florida Statutes, are renumbered as subsections (5) 243 through (8), respectively, a new subsection (4) is added to that 244 section, and subsection (3) and present subsection (5) of that 245 section are amended, to read: 246 112.64 Administration of funds; amortization of unfunded 247 liability.— 248 (3) For a retirement system or plan with its first plan 249 year beginning between October 1, 1980, and October 1, 2018 250which comes into existence after October 1, 1980, the unfunded 251 liability, if any, shall be amortized within 40 years of the 252 first plan year. 253 (4) For a retirement system or plan that comes into 254 existence after October 1, 2018, the unfunded liability, if any, 255 shall be amortized within 30 years of the first plan year. 256 (6)(5)(a)If the amortization schedule for unfunded 257 liability is to be based on a contribution derived in whole or 258 in part from a percentage of the payroll of the system or plan 259 membership, the assumption as to payroll growth mayshallnot 260 exceed the average payroll growth for the 310years before 261prior tothe latest actuarial valuation of the system or plan 262 unless a transfer, merger, or consolidation of government 263 functions or services occurs, in which case the assumptions for 264 payroll growth may be adjusted and may be based on the 265 membership of the retirement plan or system subsequent to such 266 transfer, merger, or consolidation. 267(b) An unfunded liability amortization schedule that268includes a payroll growth assumption and is in existence on269September 30, 1996, or is established thereafter, may be270continued using the same payroll growth assumption, or one not271exceeding the payroll growth assumption established at the start272of the schedule, regardless of the actual 10-year average273payroll growth rate, provided that:2741. The assumptions underlying the payroll growth rate are275consistent with the actuarial assumptions used to determine276unfunded liabilities, including, but not limited to, the277inflation assumption; and2782. The payroll growth rate is reasonable and consistent279with future expectations of payroll growth.280(c) An unfunded liability amortization schedule that does281not include a payroll growth assumption and is in existence on282September 30, 1996, or is established thereafter, may be283continued or modified to include a payroll growth assumption,284provided that such assumption does not exceed the 10-year285average payroll growth rate as of the actuarial valuation date286such change in the amortization schedule commences. Such287schedule may be continued thereafter, subject to the reasonable288and consistent requirements in paragraph (b).289 Section 3. Paragraph (d) of subsection (1) of section 290 112.664, Florida Statutes, is amended to read: 291 112.664 Reporting standards for defined benefit retirement 292 plans or systems.— 293 (1) In addition to the other reporting requirements of this 294 part, within 60 days after receipt of the certified actuarial 295 report submitted after the close of the plan year that ends on 296 or after December 31, 2015, and thereafter in each year required 297 under s. 112.63(2), each defined benefit retirement system or 298 plan, excluding the Florida Retirement System, shall prepare and 299 electronically report the following information to the 300 Department of Management Services in a format prescribed by the 301 department: 302 (d) Information indicating the recommended contributions to 303 the plan based on the plan’s latest valuation, and the 304 contributions necessary to fund the plan based on financial 305 statements prepared pursuant to paragraphs (a) and (b), stated 306 as an annual dollar value,anda percentage of valuation 307 payroll, and a percentage of the annual revenue of the plan 308 sponsor. 309 Section 4. Subsection (1) of section 112.665, Florida 310 Statutes, is amended to read: 311 112.665 Duties of Department of Management Services.— 312 (1) The Department of Management Services shall: 313 (a) Gather, catalog, publish, and maintain complete, 314 computerized data information on all public employee retirement 315 systems or plans in the state based upon receipt andareview of 316 audits, reports, and other data pertaining to the systems or 317 plans; 318 (b) Receive and comment upon all actuarial reviews of 319 retirement systems or plans maintained by units of local 320 government for compliance with the requirements of this part; 321 (c) Cooperate with local retirement systems or plans on 322 matters of mutual concern and provide technical assistance to 323 units of local government in the assessment and revision of 324 retirement systems or plans; 325 (d) Annually issue, by January 1, a report to the President 326 of the Senate and the Speaker of the House of Representatives,327 which details division activities, findings, and recommendations 328 concerning all governmental retirement systems. The report may 329 include legislation proposed to carry out such recommendations; 330 (e) Provide a fact sheet for each participating local 331 government defined benefit pension plan which summarizes the 332 plan’s actuarial status. The fact sheet should provide a summary 333 of the plan’s most current actuarial data;,minimum funding 334 requirements stated as a percentage of pay, dollar value, and a 335 percentage of the annual revenue of the plan sponsor; and a 5 336 year history of funded ratios. The fact sheet must include a 337 brief explanation of each element in order to maximize the 338 transparency of the local government plans. The fact sheet must 339 also contain the information specified in s. 112.664(1). These 340 documents shall be posted on the department’s website. Plan 341 sponsors that have websites must provide a link to the 342 department’s website; 343 (f) Annually issue, by January 1, a report to the Special 344 District Accountability Program of the Department of Economic 345 Opportunity which includes the participation in and compliance 346 of special districts with the local government retirement system 347 provisions in s. 112.63 and the state-administered retirement 348 system provisions specified in part I of chapter 121; and 349 (g) Adoptreasonablerules to administer this part. 350 Section 5. Subsections (3) and (4) of section 121.031, 351 Florida Statutes, are amended to read: 352 121.031 Administration of system; appropriation; oaths; 353 actuarial studies; public records.— 354 (3) The administrator shall cause an actuarial study of the 355 system to be made at least annually andshallreport the results 356 of such study to the Governor, the President of the Senate, and 357 the Speaker of the House of RepresentativesLegislatureby 358 December 31 beforeprior tothe next regular legislative 359 session. The study mustshall, at a minimum, conform to the 360 requirements of s. 112.63, with the following exceptions and 361 additions: 362 (a) The valuation of plan assets mustshallbe based on a 363 5-year averaging methodology assuch as thatspecified in the 364 United States Department of Treasury Regulations, 26 C.F.R. s. 365 1.412(c)(2)-1 in effect on August 16, 2006, or a similar 366 accepted approach designed to attenuate fluctuations in asset 367 values. 368 (b) The study mustshallinclude a narrative explaining the 369 changes in the covered group over the period between actuarial 370 valuations and the impact of those changes on actuarial results. 371 (c) When substantial changes in actuarial assumptions have 372 been made, the study mustshallreflect the results of an 373 actuarial assumption as of the current date based on the 374 assumptions utilized in the prior actuarial report. 375 (d) The study mustshallinclude an analysis of the changes 376 in actuarial valuation results by the factors generating those 377 changes. Such analysis shall reconcile the current actuarial 378 valuation results with those results from the prior valuation. 379 (e) The study mustshallinclude measures of funding status 380 and funding progress designed to facilitate the assessment of 381 trends over several actuarial valuations with respect to the 382 overall solvency of the system. Such measures shall be adopted 383 by the department and shall be used consistently in all 384 actuarial valuations performed on the system. 385 (f) The study must include an analysis of the assumed rate 386 of return adopted by the Florida Retirement System Actuarial 387 Assumption Conference pursuant to s. 216.136(10). The analysis 388 must include specific recommendations regarding an appropriate 389 assumed rate of return. 390 (g) The actuarial model used to determine the adequate 391 level of funding for the Florida Retirement System mustshall392 include a specific rate stabilization mechanism, as prescribed 393 herein. It is the intent of the Legislature to maintain as a 394 reserve a specific portion of any actuarial surplus, and to use 395 such reserve for the purpose of offsetting future unfunded 396 liabilities caused by experience losses, thereby minimizing the 397 risk of future increases in contribution rates. It is further 398 the intent of the Legislature that the use of any excess above 399 the reserve to offset retirement system normal costs mustshall400 be in a manner that will allow system employers to plan 401 appropriately for resulting cost reductions and subsequent cost 402 increases. The rate stabilization mechanism operatesshall403operateas follows: 404 1. The actuarial surplus mustshallbe the value of 405 actuarial assets over actuarial liabilities, as is determined on 406 the preceding June 30 or as may be estimated on the preceding 407 December 31. 408 2. The full amount of any experience loss shall be offset, 409 to the extent possible, by any actuarial surplus. 410 3. If the actuarial surplus exceeds 5 percent of actuarial 411 liabilities, one-half of the excess may be used to offset total 412 retirement system costs. In addition, if the actuarial surplus 413 exceeds 10 percent of actuarial liabilities, an additional one 414 fourth of the excess above 10 percent may be used to offset 415 total retirement system costs. In addition, if the actuarial 416 surplus exceeds 15 percent of actuarial liabilities, an 417 additional one-fourth of the excess above 15 percent may be used 418 to offset total retirement system costs. 419 4. Any surplus amounts available to offset total retirement 420 system costs pursuant to subparagraph 3. should be amortized 421 each year over a 10-year rolling period on a level-dollar basis. 422 (4) Notwithstanding the provisions of s. 112.64(5)s.423112.64(4)to the contrary, the net increase, if any, in unfunded 424 liability under the system arising from significant system 425 amendments adopted or changes in assumptions mustshallbe 426 amortized within 30 plan years. 427 Section 6. Effective July 1, 2019, section 121.0312, 428 Florida Statutes, is amended to read: 429 121.0312 Acknowledgment of review; actuarial valuation 430 report; contribution rate determination process.— 431 (1) The Governor, Chief Financial Officer, and Attorney 432 General, sitting as the Board of Trustees of the State Board of 433 Administration, shall review the actuarial valuation report 434 prepared in accordance with the provisions of this chapter. The 435 state board shall review the process by which Florida Retirement 436 System contribution rates are determined and recommend and 437 submit any comments regarding the process to the Legislature. 438 (2) The Governor, the President of the Senate, and the 439 Speaker of the House of Representatives shall, within 30 days 440 after receipt, acknowledge in writing their acceptance and 441 review of the actuarial valuation report prepared in accordance 442 with this chapter and any recommendations regarding actuarial 443 assumptions contained therein. The review must contain an 444 explanation from each principal as to why actuarial assumptions 445 other than those recommended by the enrolled actuary producing 446 the actuarial valuation report were adopted by the Florida 447 Retirement System Actuarial Assumption Conference. The 448 department shall publish the written acknowledgments as addenda 449 to the report. 450 Section 7. Paragraph (f) of subsection (4) of section 451 121.4501, Florida Statutes, is amended to read: 452 121.4501 Florida Retirement System Investment Plan.— 453 (4) PARTICIPATION; ENROLLMENT.— 454 (f) After the period during which an eligible employee had 455 the choice to elect the pension plan or the investment plan, or 456 the month following the receipt of the eligible employee’s plan 457 election, if sooner, the employee shall have one opportunity, at 458 the employee’s discretion, to choose to move from the pension 459 plan to the investment plan or from the investment plan to the 460 pension plan. Eligible employees may elect to move between plans 461 only if they are earning service credit in an employer-employee 462 relationship consistent with s. 121.021(17)(b), excluding leaves 463 of absence without pay. Effective July 1, 2005, such elections 464 are effective on the first day of the month following the 465 receipt of the election by the third-party administrator and are 466 not subject to the requirements regarding an employer-employee 467 relationship or receipt of contributions for the eligible 468 employee in the effective month, except when the election is 469 received by the third-party administrator. This paragraph is 470 contingent upon approval by the Internal Revenue Service. 471 1. If the employee chooses to move to the investment plan, 472 the provisions of subsection (3) govern the transfer. 473 2. If the employee chooses to move to the pension plan, the 474 employee must transfer from his or her investment plan account, 475 and from other employee moneys as necessary, a sum representing 476 the present value of that employee’s accumulated benefit 477 obligation immediately following the time of such movement, 478 determined assuming that attained service equals the sum of 479 service in the pension plan and service in the investment plan. 480 Benefit commencement occurs on the first date the employee is 481 eligible for unreduced benefits, using the discount rate and 482 other relevant actuarial assumptions that were used to value the 483 pension plan liabilities in the most recent actuarial valuation. 484 For any employee who, at the time of the second election, 485 already maintains an accrued benefit amount in the pension plan, 486 the then-present value of the accrued benefit is deemed part of 487 the required transfer amount. The division must ensure that the 488 transfer sum is prepared using a formula and methodology 489 certified by an enrolled actuary. A refund of any employee 490 contributions or additional member payments made which exceed 491 the employee contributions that would have accrued had the 492 member remained in the pension plan and not transferred to the 493 investment plan is not permitted. 494 3. Notwithstanding subparagraph 2., an employee who chooses 495 to move to the pension plan and who became eligible to 496 participate in the investment plan by reason of employment in a 497 regularly established position with a state employer after June 498 1, 2002; a district school board employer after September 1, 499 2002; or a local employer after December 1, 2002, must transfer 500 from his or her investment plan account, and from other employee 501 moneys as necessary, a sum representing the employee’s actuarial 502 accrued liability. A refund of any employee contributions or 503 additional member payments made which exceed the employee 504 contributions that would have accrued had the member remained in 505 the pension plan and not transferred to the investment plan is 506 not permitted. 507 4. An employee’s ability to transfer from the pension plan 508 to the investment plan pursuant to paragraphs (a) and (b), and 509 the ability of a current employee to have an option to later 510 transfer back into the pension plan under subparagraph 2., shall 511 be deemed a significant system amendment. Pursuant to s. 512 121.031(4), any resulting unfunded liability arising from actual 513 original transfers from the pension plan to the investment plan 514 must be amortized within 30 plan years as a separate unfunded 515 actuarial base independent of the reserve stabilization 516 mechanism defined in s. 121.031(3)(g)s. 121.031(3)(f). For the 517 first 25 years, a direct amortization payment may not be 518 calculated for this base. During this 25-year period, the 519 separate base shall be used to offset the impact of employees 520 exercising their second program election under this paragraph. 521 The actuarial funded status of the pension plan will not be 522 affected by such second program elections in any significant 523 manner, after due recognition of the separate unfunded actuarial 524 base. Following the initial 25-year period, any remaining 525 balance of the original separate base shall be amortized over 526 the remaining 5 years of the required 30-year amortization 527 period. 528 5. If the employee chooses to transfer from the investment 529 plan to the pension plan and retains an excess account balance 530 in the investment plan after satisfying the buy-in requirements 531 under this paragraph, the excess may not be distributed until 532 the member retires from the pension plan. The excess account 533 balance may be rolled over to the pension plan and used to 534 purchase service credit or upgrade creditable service in the 535 pension plan. 536 Section 8. Paragraphs (d) and (e) of subsection (9) of 537 section 212.055, Florida Statutes, are amended to read: 538 212.055 Discretionary sales surtaxes; legislative intent; 539 authorization and use of proceeds.—It is the legislative intent 540 that any authorization for imposition of a discretionary sales 541 surtax shall be published in the Florida Statutes as a 542 subsection of this section, irrespective of the duration of the 543 levy. Each enactment shall specify the types of counties 544 authorized to levy; the rate or rates which may be imposed; the 545 maximum length of time the surtax may be imposed, if any; the 546 procedure which must be followed to secure voter approval, if 547 required; the purpose for which the proceeds may be expended; 548 and such other requirements as the Legislature may provide. 549 Taxable transactions and administrative procedures shall be as 550 provided in s. 212.054. 551 (9) PENSION LIABILITY SURTAX.— 552 (d) The local government may use the pension liability 553 surtax proceeds in the following manner: 554 1. If the proceeds of the pension liability surtax have 555 been actuarially recognized as provided in s. 112.64(7)s.556112.64(6), the local government must distribute the proceeds to 557 an eligible defined benefit retirement plan or system, not 558 including the Florida Retirement System. 559 2. If the proceeds of the pension liability surtax have not 560 been actuarially recognized, the local government is authorized 561 to distribute the proceeds to an eligible defined benefit 562 retirement plan or system, not including the Florida Retirement 563 System, to pledge the proceeds of the surtax to repay debts 564 incurred for the purpose of making advanced payments toward the 565 unfunded liability of an underfunded defined benefit retirement 566 plan or system, and to reimburse itself from the proceeds of the 567 surtax for any borrowing costs associated with such debts. 568 (e) The ordinance providing for the imposition of the 569 pension liability surtax must specify how the proceeds will be 570 used: 571 1. The ordinance must specify the method of determining the 572 percentage of the proceeds, and the frequency of such payments, 573 distributed to each eligible defined benefit retirement plan or 574 system if the proceeds of the pension liability surtax are 575 actuarially recognized as provided in s. 112.64(7)s. 112.64(6). 576 2. The ordinance must specify the local government’s 577 intention to incur debt for the purpose of making advanced 578 payments toward the unfunded liability of an underfunded defined 579 benefit retirement plan or system if the proceeds of the pension 580 liability surtax are not actuarially recognized as provided in 581 s. 112.64(7)s. 112.64(6). 582 Section 9. The Legislature finds that a proper and 583 legitimate state purpose is served when employees and retirees 584 of the state and its political subdivisions, and the dependents, 585 survivors, and beneficiaries of such employees and retirees, are 586 extended the basic protections afforded by governmental 587 retirement systems that provide fair and adequate benefits and 588 that are managed, administered, and funded in an actuarially 589 sound manner as required by s. 14, Article X of the State 590 Constitution and part VII of chapter 112, Florida Statutes. 591 Therefore, the Legislature determines and declares that this act 592 fulfills an important state interest. 593 Section 10. Except as otherwise expressly provided in this 594 act, this act shall take effect July 1, 2018.