Bill Text: PA HB1874 | 2009-2010 | Regular Session | Amended

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Bill Title: In municipal pension plan actuarial reporting, further providing for contents of actuarial valuation report and providing for actuarial asset valuation and for revised actuarial valuation report; in financially distressed municipal pension plan determination procedure, further providing for initiation of distress determination, for pension plans to be included in determination and for determination procedure; in financially distressed municipal pension system recovery program, further providing for application, for election determination procedure, for recovery program level I, for recovery program level II, for recovery program level III, for remedies applicable to various recovery program levels, for supplemental State assistance program and fund and for municipal employee retirement program; in financially distressed municipal pension system recovery program, establishing programs for municipal pension recovery and municipal employee retirement; in financially distressed municipal pension system recovery program, further providing for rules and regulations; adding special provisions for amortization of unfunded actuarial accrued liability and minimum municipal obligation in cities of the first class; further providing for alternative funding mechanism; and providing for special taxing authority for cities of the first class.

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Introduced - Dead) 2010-09-20 - Removed from table [HB1874 Detail]

Download: Pennsylvania-2009-HB1874-Amended.html

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PRIOR PRINTER'S NO. 2470 PRINTER'S NO. 2522
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1874 Session of2009
INTRODUCED BY CALTAGIRONE, EACHUS, McCALL AND D. EVANS, JULY 17, 2009
AS RE-REPORTED FROM COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES, AS AMENDED, JULY 30, 2009
AN ACT
Amending the act of December 18, 1984 (P.L.1005, No.205),
entitled "An act mandating actuarial funding standards for
all municipal pension systems; establishing a recovery
program for municipal pension systems determined to be
financially distressed; providing for the distribution of the
tax on the premiums of foreign fire insurance companies; and
making repeals," in municipal pension plan actuarial
reporting, further providing for contents of actuarial
valuation report and providing for actuarial asset valuation
and for revised actuarial valuation report; in financially
distressed municipal pension plan determination procedure,
further providing for initiation of distress determination,
for pension plans to be included in determination and for
determination procedure; in financially distressed municipal
pension system recovery program, further providing for
application, for election determination procedure, for
recovery program level I, for recovery program level II, for
recovery program level III, for remedies applicable to
various recovery program levels, for supplemental State <--
assistance program and fund and for municipal employee
retirement program; in financially distressed municipal
pension system recovery program, establishing programs for
municipal pension recovery and municipal employee retirement;
in financially distressed municipal pension system recovery
program, further providing for rules and regulations; adding <--
special provisions for amortization of unfunded actuarial
accrued liability and minimum municipal obligation in cities
of the first class; further providing for alternative funding
mechanism; and providing for special taxing authority for
cities of the first class.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 202(b)(4)(i), (ii), (iii), (iv) and (v)
of the act of December 18, 1984 (P.L.1005, No.205), known as the
Municipal Pension Plan Funding Standard and Recovery Act,
amended July 15, 2004 (P.L.715, No.81), are amended to read:
Section 202. Contents of actuarial valuation report.
* * *
(b) Contents of actuarial exhibits; defined benefit plans
self-insured in whole or in part.--For any pension plan which is
a defined benefit plan and which is self-insured in whole or in
part, all applicable actuarial exhibits shall be prepared in
accordance with the entry age normal actuarial cost method with
entry age established as the actual entry age for all plan
members unless the municipality applies for and is granted
authorization by the commission to use an alternative actuarial
cost method. Authorization shall be granted if the municipality
demonstrates on an individual pension plan basis that there are
compelling reasons of an actuarial nature for the use of an
alternative actuarial cost method. The commission shall issue
rules and regulations specifying the criteria which the
commission will use to determine the question of the existence
of compelling reasons for the use of an alternative actuarial
cost method, the documentation which a municipality seeking the
authorization will be required to supply and the acceptable
alternative actuarial cost methods which the commission may
authorize. The actuarial cost method shall be used to value all
aspects of the benefit plan or plans of the pension plan unless
the municipality applies for and is granted authorization by the
commission to use approximation techniques other than the
actuarial cost method for aspects of the benefit plan or plans
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of the pension plan other than the retirement benefit.
Authorization shall be granted if the municipality demonstrates
on an individual pension plan basis that there are compelling
reasons of an actuarial nature for the use of these
approximation techniques. The commission shall issue rules and
regulations specifying the criteria which the commission will
use to determine the question of the existence of compelling
reasons for the use of approximation techniques, the
documentation which a municipality seeking the authorization
will be required to supply and the acceptable approximation
technique which the commission may authorize. The actuarial
exhibits shall use actuarial assumptions which are, in the
judgment of the actuary and the governing body of the plan, the
best available estimate of future occurrences in the case of
each assumption. With respect to economic actuarial assumptions,
the assumptions shall either be within the range specified in
rules and regulations issued by the commission or documentation
explaining and justifying the choice of assumptions outside the
range shall accompany the report. The actuarial exhibits shall
measure all aspects of the benefit plan or plans of the pension
plan in accordance with modifications in the benefit plan or
plans, if any, and salaries which as of the valuation date are
known or can reasonably be expected to be in force during the
ensuing plan year. The actuarial valuation report shall contain
the following actuarial exhibits:
* * *
(4) An exhibit of any additional funding costs
associated with the amortization of any unfunded actuarial
accrued liability of the pension plan, indicating for each
increment of unfunded actuarial accrued liability specified
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in paragraph (3), the level annual dollar contribution
required to pay an amount equal to the actuarial assumption
as to investment earnings applied to the principal amount of
the remaining balance of the increment of unfunded actuarial
accrued liability and to retire by the applicable
amortization target date specified in this paragraph the
principal amount of the remaining balance of the increment of
unfunded actuarial accrued liability. The amortization target
date applicable for each type of increment of unfunded
actuarial accrued liability shall be as follows:
(i) The following apply:
(A) In the case of a pension plan established on
or prior to January 1, 1985 for the unfunded
actuarial accrued liability in existence as of the
beginning of the plan year occurring in calendar year
1985, at the end of the plan year occurring in
calendar year 2015; or
(B) In the case of a pension plan established
after January 1, 1985, for the unfunded actuarial
accrued liability then or subsequently determined to
be or to have been in existence as of the date of the
establishment of the plan, at the end of the plan
year occurring 30 years after the calendar year in
which the pension plan was established.
(ii) The following apply:
(A) Increment or decrement of net unfunded
actuarial accrued liability attributable to a change
in actuarial assumptions, at the end of the plan year
occurring 20 years after the calendar year in which
actuarial assumption modification was effective.
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(B) Increment or decrement of net unfunded
actuarial accrued liability attributable to a change
in actuarial assumptions made on or after the
effective date of this clause, at the end of the plan
year occurring 15 years after the calendar year in
which the actuarial assumption modification was
effective.
(iii) The following apply:
(A) Increment of net unfunded actuarial accrued
liability attributable to a modification in the
benefit plan applicable to active members, at the end
of the plan year occurring 20 years after the
calendar year in which the benefit plan modification
was effective.
(B) From and after the effective date of this
clause, the increment of net unfunded actuarial
accrued liability attributable to a modification in
the benefit plan mandated by new legislation, at the
end of the plan year occurring 20 years after the
calendar year in which the benefit plan modification
was effective.
(iv) The following apply:
(A) Increment of unfunded actuarial accrued
liability attributable to a modification in the
benefit plan applicable to retired members and other
benefit recipients, at the end of the plan year
occurring 10 years after the calendar year in which
the benefit plan modification was effective.
(B) Increment of unfunded actuarial accrued
liability attributable to a modification in the
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benefit plan adopted on or after the effective date
of this clause and not mandated by new legislation,
at the end of the plan year occurring ten years after
the calendar year in which the benefit plan
modification was effective.
(v) The following apply:
(A) Increment or decrement of net unfunded
actuarial accrued liability attributable to an
actuarial experience loss or gain, at the end of plan
year occurring [15] 20 years after the calendar year
in which the actuarial experience loss or gain was
recognized.
(B) Notwithstanding any other provision of this
act or other law, as of the beginning of the plan
year occurring in calendar year 2003, the outstanding
balance of the increment of unfunded actuarial
accrued liability attributable to the net actuarial
investment losses incurred in calendar years 2001 and
2002 may, at the sole discretion of the municipality,
be amortized with the amortization target date being
the end of the plan year occurring 30 years after
January 1, 2003. In order for a municipality to
extend the applicable amortization period pursuant to
this clause, the municipality must file a revised
actuarial valuation report reflecting the
amortization period extension provided for under this
clause with the executive director of the commission
no later than September 30, 2004. Any such revised
actuarial valuation report may not be filed in lieu
of the actuarial valuation report prepared in
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compliance with clause (A) and required to be filed
on or before March 31, 2004, and may be used only for
the purposes of recalculating the 2004 minimum
municipal obligation of the municipality and
calculating the 2005 minimum municipal obligation of
the municipality to reflect the amortization period
extension. Any such revised actuarial valuation
report shall not affect distributions under the
General Municipal Pension System State Aid Program
under Chapter 4.
* * *
Section 2. The act is amended by adding sections to read:
Section 210. Actuarial asset valuation.
(a) Formula.--A municipality may value the assets in each of <--
its pension plans to equal the greater of the following <--
paragraphs:
(1) The the actuarial value of assets from the most <--
recent biennial actuarial valuation report accepted by the
commission:
(i) increased by contributions and other deposits
except investment income;
(ii) decreased by benefit payments and
administrative expenses or other payments; and
(iii) credited with interest at 1% less than the
plan's assumed rate, to the date of the actuarial
valuation.; or <--
(2) The the market value of assets on the valuation <--
date.
(b) Valuation.-- <--
(1) (b) (1) The actuarial value of pension plan assets <--
20090HB1874PN2522 - 7 -
is the value of cash, investment securities and other
property belonging to the municipal pension plan according to
a method for valuing assets adopted by the governing body of
the municipal pension plan upon the recommendation of the
actuary.
(2) The method for valuing assets shall be adequately
disclosed in the accompanying documentation or exhibits and,
except as set forth in subsection (c) or Chapter 6, may not
produce a result that in total is:
(i) greater than 120% of the fair market value of
the assets of the municipal pension plan; or
(ii) less than 80% of the fair market value of the
assets of the municipal pension plan.
(c) Temporary valuation.--
(1) For the two-year actuarial valuation reporting
period beginning in 2009, a municipality may utilize a method
for valuing assets which does not produce a result that in
total is:
(i) greater than 130% of the fair market value of
the assets of the municipal pension plan; or
(ii) less than 70% of the fair market value of the
assets of the municipal pension plan.
(2) Upon the expiration of that two-year actuarial
valuation reporting period, subsection (b) applies.
Section 210 211. Revised actuarial valuation report. <--
Upon enactment of legislation which would alter the actuarial
valuation of a pension plan, a revised actuarial valuation
report shall be filed with the commission as the commission
directs.
Section 3. Section 501 of the act is Sections 501 and 502 of <--
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the act are amended to read:
Section 501. Initiation of distress determination.
[Each municipality which wishes to avail itself of any of the
provisions of sections 604, 605 and 606 shall apply to the
commission for a determination of its status pursuant to this
chapter. The application shall be in the form and shall contain
the required information as prescribed in rules and regulations
issued by the commission. Determinations pursuant to this
chapter shall be made annually.] The commission shall review the
biennial actuarial valuation reports filed on behalf of each
municipal pension plan to determine the municipality's
eligibility to avail itself of sections 604, 605 and 606.
Section 502. Pension plans for inclusion in determination. <--
The determination provided for in this chapter shall be made
for a municipality taking into account all pension plans which
the municipality has established and maintains[.], except those
created after the last biennial actuarial valuation date. The
initial actuarial valuation report for any plan shall not be
recognized in the determination of a municipality's distress
level. If the municipality filed an actuarial valuation report
for any pension plan in the prior reporting period, that
valuation report shall control the determination of distress
without regard to the funding status of any newly established
plan. If no other plan was previously maintained by a
municipality, the newly established plan shall be assigned a
distress score of 0.
Section 4. Sections 503 and 602 of the act, amended December
10, 1996 (P.L.934, No.150), are amended to read:
Section 503. Determination procedure.
(a) Generally.--The determination provided for in this
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chapter shall be made by the commission using the actuarial
[indicators] indicator specified in subsection (b) [and the
municipal finance indicators specified in subsection (c), and
the scoring system associated with each].
(b) Actuarial [indicators] indicator.--The actuarial
[indicators] indicator shall be based on the most current
actuarial valuation report or reports filed by the applicable
municipality with the commission pursuant to law and shall be
made in aggregate for all pension plans maintained by the
applicable municipality. [The actuarial indicators and the
associated scoring system for each shall be as follows:
(1) The aggregate amount of current pension plan
benefits payable shall be computed as a percentage of the
current market value of aggregate plan assets:
Benefits Payableas Percentageof Assets Scoring
0 - 5% 0
6 - 10% 10
11 - 15% 20
16 - 20% 30
21 - 30% 40
31 - 40% 50
41 - 50% 60
51 - 60% 70
61 - 70% 80
71 - 80% 90
81% or greater 100
(2) The aggregate actuarial value of plan assets shall
be computed as a percentage of the aggregate accrued
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actuarial liability:
Assets as Percentageof Accrued ActuarialLiability Scoring
50.0% or greater 0
40.0 - 49.0% 10
30.0 - 39.0% 20
25.0 - 29.0% 30
20.0 - 24.0% 40
15.0 - 19.0% 50
10.0 - 14.0% 60
7.5 - 9.0% 70
5.0 - 7.4% 80
2.5 - 4.9% 90
0 - 2.4% 100
(3) The aggregate amount of normal cost expressed as a
percentage of covered payroll reduced by the aggregate amount
of any member contributions expressed as a percentage of
covered payroll is added to the aggregate amount of any
employer contributions to the Federal old age, survivors,
disability and health insurance program expressed as a
percentage of covered payroll:
Total EmployerRetirement Cost Scoring
0 - 9.99% 0
10.00 - 11.99% 10
12.00 - 12.99% 20
13.00 - 13.99% 30
14.00 - 14.99% 40
15.00 - 15.99% 50
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16.00 - 16.99% 60
17.00 - 17.99% 70
18.00 - 18.99% 80
19.00 - 19.99% 90
20.00% or greater 100
(4) The aggregate requirement to amortize the unfunded
accrued actuarial liability on a level annual dollar basis
according to the applicable amortization schedules specified
in section 202(b)(4) is divided by the aggregate normal cost
requirement:
Amortization RequirementDivided by Normal Cost Result Scoring
0 - 0.39 0
0.40 - 0.79 10
0.80 - 1.19 20
1.20 - 1.39 30
1.40 - 1.59 40
1.60 - 1.79 50
1.80 - 1.99 60
2.00 - 2.19 70
2.20 - 2.39 80
2.40 - 2.59 90
2.60 or over 100
(5) The difference between the aggregate amount of
normal cost plus the requirement to amortize the unfunded
accrued actuarial liability on a level annual dollar basis
according to the applicable amortization schedules specified
in section 202(b)(4), and the total aggregate amount of
member contributions, State allocations dedicated for pension
20090HB1874PN2522 - 12 -
purposes and municipal contributions received for the
previous year is computed and expressed as a percentage of
covered payroll:
Difference BetweenFull ActuarialRequirement andCurrent Contributions Scoring
0 - 2.4% 0
2.5 - 4.9% 10
5 - 9.9% 20
10 - 14.9% 30
15 - 19.9% 40
20 - 24.9% 50
25 - 29.9% 60
30 - 34.9% 70
35 - 39.9% 80
40 - 44.9% 90
45% or over 100
(6) The compound annual percentage rate of increase in
the aggregate amount of the unfunded accrued actuarial
liability over the most recent four-year period is computed,
unless the amount of the unfunded accrued actuarial liability
equals less than 10% of the amount of assets in either the
first or fourth year:
Compound Rateof Increase inUnfunded AccruedActuarial Liability Scoring
0.0 - 9.9% 0
10.0 - 12.4% 10
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12.5 - 14.9% 20
15.0 - 17.4% 30
17.5 - 19.9% 40
20.0 - 22.4% 50
22.5 - 24.9% 60
25% or over 70
(7) The compound annual percentage rate of increase in
the aggregate amount of municipal contributions over the most
recent four-year period is computed:
Compound Rateof Increase inMunicipal Contributions Scoring
20% or over 0
15 - 19.9% 10
10 - 14.9% 20
0 - 9.9% 30]
The actuarial indicator shall be the ratio of the actuarial
value of assets to the actuarial accrued liability, expressed as
a percentage known as the funding ratio, and shall be applied in
accordance with the following actuarial distress scoring system:
Funding Ratio Score
90% or over 0
70 - 89% 1
50 - 69% 2
Less than 50% 3
[(c) Municipal finance indicators.--The municipal finance
indicators shall be based on the most recent financial report or
reports filed by the applicable municipality with the Department
of Community Affairs and certified by the secretary or by the
designee of the secretary. Before certification for a
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municipality that has issued bonds or notes to fund an unfunded
actuarial accrued liability under the act of July 12, 1972
(P.L.781, No.185), known as the Local Government Unit Debt Act,
or under the laws applicable to the municipality, the municipal
finance data extracted from the most recent financial report or
reports shall be adjusted as directed by the commission to hold
harmless the municipality under section 404(c) by excluding the
municipal debt issued to fund an unfunded actuarial accrued
liability and the debt service on that debt. The municipal
finance indicators and the associated scoring system for each
shall be as follows:
(1) The total amount of taxes collected by the
municipality for the current year are divided by the
population of the municipality as of the last Federal census,
and the percentage increase in the amount of municipal taxes
collected per capita in the most recent five-year period:
Taxes Collected Per Capita Scoring Gross PercentageIncrease in TaxesPer Capita Scoring
$ 0.00 - 79.99 0 0.00 - 19.99% 0
80.00 - 84.99 5 20.00 - 29.99% 3
85.00 - 89.99 10 30.00 - 34.99% 6
90.00 - 99.99 15 35.00 - 39.99% 9
100.00 - 109.99 20 40.00 - 44.99% 12
110.00 - 124.99 25 45.00 - 49.99% 15
125.00 - 139.99 30 50.00 - 54.99% 18
140.00 - 159.99 35 55.00 - 59.99% 21
160.00 - 179.99 40 60.00 - 64.99% 24
180.00 - 199.99 45 65.00 - 69.99% 27
200.00 or greater 50 70.00% or greater 30
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(2) The municipal tax rate on the market value of real
property (adjusted mill rate) in the municipality for the
most recent year and the percentage increase in the amount of
that adjusted mill rate in the most recent five-year period:
Adjusted Mill Rate Scoring Gross PercentageIncrease inAdjusted Mill Rate Scoring
0.00 - 5.99 0 0.00 - 3.99% 0
6.00 - 7.99 5 4.00 - 6.99% 3
8.00 - 9.99 10 7.00 - 9.99% 6
10.00 - 11.99 15 10.00 - 12.99% 9
12.00 - 12.99 20 13.00 - 15.99% 12
13.00 - 13.99 25 16.00 - 18.99% 15
14.00 - 14.99 30 19.00 - 21.99% 18
15.00 - 15.99 35 22.00 - 24.99% 21
16.00 - 16.99 40 25.00 - 27.99% 24
17.00 - 17.99 45 28.00 - 30.99% 27
18.00 or greater 50 31.00% or greater 30
(3) For the most recent year, the result of the total
municipal bonded debt plus the total municipal floating debt
less the total municipal credits against municipal debt is
divided by the population of the municipality as of the last
Federal census:
Net DebtPer Capita Scoring
$ 0.00 - 9.99 0
10.00 - 19.99 8
20.00 - 29.99 16
30.00 - 39.99 24
20090HB1874PN2522 - 16 -
40.00 - 49.99 32
50.00 - 59.99 40
60.00 - 69.99 48
70.00 - 79.99 56
80.00 - 89.99 64
90.00 - 99.99 72
100.00 or greater 80
(4) For the most recent year, the result of the total
municipal bonded debt plus the total municipal floating debt
less the total municipal credits against municipal debt is
computed as a percentage of the assessed value of real
property in the municipality:
Municipal Debt as Percentage of Municipal Property Tax Base Scoring
0.00 - 0.49% 0
0.50 - 0.99% 6
1.00 - 1.99% 12
2.00 - 2.99% 18
3.00 - 4.49% 24
4.50 - 5.99% 30
6.00 - 6.99% 36
7.00 - 7.99% 42
8.00 - 8.99% 48
9.00 - 9.99% 54
10.00% or greater 60
(5) For the most recent year, the result of the total
municipal bonded debt plus the total municipal floating debt
less the total municipal credits against municipal debt is
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computed as a percentage of the market value of real property
in the municipality:
Municipal Debt as Percentage of Potential Municipal Property Tax Base Scoring
0.00 - 0.24% 0
0.25 - 0.49% 6
0.50 - 0.99% 12
1.00 - 1.49% 18
1.50 - 1.99% 24
2.00 - 2.99% 30
3.00 - 3.49% 36
3.50 - 3.99% 42
4.00 - 4.49% 48
4.50 - 4.99% 54
5.00% or greater 60
(6) For the most recent year, the municipal bonded debt
retired during the preceding 12 months plus the interest paid
during the preceding 12 months on all municipal debt is
computed as a percentage of the total taxes collected by the
municipality for the same period:
Debt Service as Percentage of Municipal Tax Revenue Scoring
0.00 - 4.49% 0
4.50 - 5.49% 8
4.50 - 5.49% 16
6.50 - 7.49% 24
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7.50 - 8.49% 32
8.50 - 9.49% 40
9.50 - 10.49% 48
10.50 - 11.49% 56
11.50 - 12.49% 64
12.50 - 13.49% 72
13.50% or greater 80
(7) The market value of real property in the
municipality for the current year is divided by the
population of the municipality as of the last Federal census,
and the percentage increase in the amount of market value per
capita in the most recent year over the amount of market
value per capita in the most recent five-year period:
Market ValuePer Capita Scoring Gross PercentageIncrease inMarket ValuePer Capita Scoring
$8,000 or greater 0 41.00% or greater 0
7,500 - 7,999 5 39.00 - 40.99% 3
7,000 - 7,499 10 35.00 - 38.99% 6
6,500 - 6,999 15 31.00 - 34.99% 9
6,000 - 6,499 20 27.00 - 30.99% 12
5,500 - 5,999 25 23.00 - 26.99% 15
5,000 - 5,499 30 19.00 - 22.99% 18
4,500 - 4,999 35 15.00 - 18.99% 21
4,000 - 4,499 40 11.00 - 14.99% 24
3,500 - 3,999 45 7.00 - 10.99% 27
0 - 3,499 50 0.00 - 6.99% 30
(8) For the most recent year, adjusted total municipal
expenditures (total municipal expenditures less any municipal
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urban renewal expenditures and less any municipal enterprise
expenditures) divided by the population of the municipality
as of the last Federal census and the percentage increase in
the amount of adjusted total municipal expenditures per
capita in the most recent year over the amount of adjusted
total municipal expenditures per capita in the most recent
five-year period:
Adjusted TotalMunicipal ExpenditurePer Capita Scoring Gross PercentageIncrease inAdjusted TotalMunicipal ExpendituresPer Capita Scoring
$ 0.00 - 149.99 0 0.00 - 13.99% 0
150.00 - 164.99 5 14.00 - 17.99% 3
165.00 - 179.99 10 18.00 - 21.99% 6
180.00 - 194.99 15 22.00 - 25.99% 9
195.00 - 209.99 20 26.00 - 29.99% 12
210.00 - 224.99 25 30.00 - 33.99% 15
225.00 - 239.99 30 34.00 - 37.99% 18
240.00 - 254.99 35 38.00 - 41.99% 21
255.00 - 269.99 40 42.00 - 45.99% 24
270.00 - 284.99 45 46.00 - 48.99% 27
285.00 or greater 50 49.00% or greater 30]
(d) Levels of distress.--The three levels of municipal
pension system financial distress shall be as follows:
(1) Minimal [financial] distress, which shall include
any municipality which has a distress determination scoring
[greater than zero but not greater than 299] equal to 1.
(2) Moderate [financial] distress, which shall include
any municipality which has a distress determination scoring
20090HB1874PN2522 - 20 -
equal to [or greater than 300 but not greater than 499] 2 or <--
greater than 2 but with an unfunded actuarial accrued
liability of less than $50,000.
(3) Severe [financial] distress, which shall include any
municipality which has a distress determination scoring equal
to [or greater than 500] 3 and an unfunded actuarial accrued <--
liability of not less than $50,000.
Section 602. Application.
(a) Generally.--The various remedies contained in this
recovery program shall be available to municipalities based on
the extent of financial distress of the municipal pension system
determined by the commission, as provided in this section.
(b) Minimally distressed municipal pension systems.--The
remedies contained in level I of the recovery program as
specified in section 604 shall apply to any municipality which
[seeks to utilize them, whether the municipality] is minimally
distressed, as that status is defined based upon the actuarial
considerations [and municipal finance considerations] of the
determination procedure pursuant to section 503 [is not
determined to be distressed or is determined to be distressed
but elects not to participate in level II of section 605 or
level III of section 606 of the recovery program, whichever is
applicable].
(c) Moderately distressed municipal pension systems.--The
remedies contained in level II of the recovery program as
specified in section 605 shall apply to any municipality which
is determined to be moderately distressed, as that status is
defined based on the actuarial considerations [and municipal
finance considerations] of the determination procedure in rules
and regulations issued by the commission pursuant to section
20090HB1874PN2522 - 21 -
503[, which complies with any applicable preconditions for
participation in this level of the recovery program and which
elects to participate in this level of the recovery program].
(d) Severely distressed municipal pension systems.--The
remedies contained in level III of the recovery program as
specified in section 606 shall apply to any municipality which
is determined to be severely distressed, as that status is
defined based on the actuarial considerations [and municipal
finance considerations] of the determination procedure in rules
and regulations issued by the commission pursuant to section
503[, which complies with any applicable preconditions for
participation in this level of the recovery program and which
elects to participate in this level of the recovery program].
[(e) Continuation of elected remedies.--[In the event that <--
the extent of financial distress of a municipal pension system
determined by the commission subsequent to the initial
determination is lower than the minimum prescribed in section
503(d) for a recovery program level previously elected by a
municipality, the] A municipality may continue to utilize any of <--
the remedies elected and implemented while it was eligible to
participate in [a higher recovery program level, provided that <--
the municipality continues to comply with the preconditions for
participation in the higher recovery program level and to
utilize the mandatory remedies applicable to the higher recovery
program level.] any recovery program authorized by this act at <--
the time of commencement and implementation. Any change or
amendment of recovery remedies in this act subsequent to
election and implementation shall be deemed to be cumulative and
not in lieu of previously adopted remedies.
Section 5. Section 603 of the act is amended to read:
20090HB1874PN2522 - 22 -
Section 603. Election determination [Election] Determination <--
procedure.
The [election to utilize the various remedies contained in
one of the levels of the recovery program shall be made by the
governing body of the municipality. The election] determination
process shall be initiated by [an application filed with] the
commission for the determination of financial distress with
respect to the municipal pension system pursuant to section 501.
Upon notification of the determination of financial distress by
the commission, the municipality shall elect whether or not to
utilize the voluntary remedies of any level of the recovery
program which may be applicable to the municipality. [Any
election to utilize the remedies contained in a level of the
recovery program shall be made on forms prescribed by the
commission and shall include any information required by the
commission.]
Section 6. Section 604 of the act, amended February 14, 1986
(P.L.23, No.9), is amended to read:
Section 604. Recovery program level I.
(a) Level I.--Any municipality to which level I of the
recovery program applies may utilize the following remedies:
(1) The aggregation of trust funds pursuant to section
607(b).
(2) The establishment of total member contribution
pursuant to section 607(c).
(3) The deviation from municipal contribution <--
limitations pursuant to section 607(d).
(4) The special municipal taxing authority pursuant to
section 607(f).
[(b) Implementation.--Any municipality which receives an
20090HB1874PN2522 - 23 -
initial distress determination scoring in 1985 which is equal to
or greater than 200, but not greater than 299, and cannot meet
the minimum municipal obligation for the year 1986 because the
payment of the minimum municipal obligation would result in the
municipality exceeding the maximum contribution limitation for
that municipality as set forth in the pertinent laws for that
class of municipality, may delay the implementation of the full
funding of the minimum municipal obligation until 1987. Any
municipality electing to delay full implementation of the
minimum municipal obligation shall make a municipal contribution
for 1986 as set forth in section 607(g). In addition to the one-
year delay of the full actuarial funding standard, the
municipality may utilize the following additional remedies:
(1) The deviation from municipal contribution
limitations pursuant to section 607(d).
(2) The special municipal taxing authority pursuant to
section 607(f).]
(c) Reduction for Level I municipalities.--
(1) A level I municipality may elect to pay a reduced
minimum municipal obligation consisting of the normal cost
and administrative expenses of the pension plans plus:
(i) 75% of the amortization contribution
requirement, calculated according to section 202(b)(4);
minus
(ii) anticipated member contributions.
(2) This reduction of payments to amortize the actuarial
accrued liability shall be authorized for a period of one
biennial actuarial valuation reporting period (total of two
years) under section 607(h.1). At the end of this period,
section 302(c) shall apply to the minimum municipal
20090HB1874PN2522 - 24 -
obligation calculation.
(d) Asset valuation.--
(1) Upon the expiration of the period applicable to
asset valuation under section 210(c), for an additional
period of one biennial actuarial valuation reporting period
(allowing an additional two years for a total of four years),
a level I municipality may utilize a method for valuing
assets that may not produce a result that, in total, is:
(i) greater than 130% of the fair market value of
the assets of the municipal pension plan; or
(ii) less than 70% of the fair market value of the
assets of the municipal pension plan.
(2) At the end of the additional period under paragraph
(1), section 210 shall apply to the actuarial valuation of
assets.
Section 7. Sections 605 and 606 of the act are amended to
read:
Section 605. Recovery program level II.
(a) Mandatory remedies.--Any municipality to which level II
of the recovery program applies shall utilize the following
remedies:
(1) The aggregation of trust funds pursuant to section
607(b).
(2) The submission of a plan for administrative
improvement pursuant to section 607(i).
(b) Discretionary remedies.--Any municipality to which level
II of the recovery program applies may utilize the following
remedies:
(1) [The aggregation of trust funds pursuant to section
607(b).
20090HB1874PN2522 - 25 -
(2)] The establishment of total member contributions
pursuant to section 607(c).
[(3)] (2) The deviation from municipal contribution
limitations pursuant to section 607(d).
[(4)] (3) The establishment of a revised benefit plan
for newly hired municipal employees pursuant to section
607(e).
[(5)] (4) The special municipal taxing authority
pursuant to section 607(f).
[(6) The delayed implementation of funding standard over
ten years pursuant to section 607(g).
(7) Supplemental State assistance pursuant to section
607(j).]
(c) Reduction for level I municipalities.-- <--
(1) A level I (8) (i) A level II municipality may <--
elect to pay a reduced minimum municipal obligation
consisting of the normal cost and administrative expenses of
the pension plans plan plus: <--
(i) (A) 75% of the amortization contribution <--
requirement, calculated according to section 202(b)(4);
minus
(ii) (B) anticipated member contributions. <--
(2) (ii) This reduction of payments to amortize the <--
actuarial accrued liability shall be authorized for a period
of two consecutive actuarial valuation reporting periods
(total of four years) under section 607(h.1). At the end of
this period, section 302(c) shall apply to the minimum
municipal obligation calculation.
(d) Level II municipalities.-- <--
(1) (9) (i) Upon the expiration of the period <--
20090HB1874PN2522 - 26 -
applicable to the asset valuation provisions of section
210(c), for an additional period of two biennial actuarial
valuation reporting periods (allowing an additional four
years for a total of six years), a level II municipality may
utilize a method for valuing assets that may not produce a
result that in total is:
(i) (A) greater than 130% of a period of two <--
consecutive actuarial valuation reporting periods (total
of four years); or
(ii) (B) less than 70% of the fair market value of <--
the assets of the municipal pension plan.
(2) (ii) At the end of the additional period under <--
paragraph (1) subparagraph (i), section 210 shall apply to <--
the actuarial valuation of assets.
Section 606. Recovery program level III.
(a) Optional [remedies] remedy.--Any municipality to which <--
level III of the recovery program applies may utilize the
[following remedies:
(1) The establishment of total member contributions
pursuant to section 607(c).
(2) The deviation from municipal contribution
limitations pursuant to section 607(d).
(3) The] special municipal taxing authority pursuant to
section 607(f).
[(4) The delayed implementation of funding standard over
ten years pursuant to section 607(g) or the delayed
implementation of funding standard over 15 years with 40-year
amortization pursuant to section 607(h).
(5) Supplemental State assistance pursuant to section
607(j).]
20090HB1874PN2522 - 27 -
(b) Mandatory remedies.--Any municipality to which level III
of the recovery program applies shall utilize the following
remedies:
[(1) The aggregation of trust funds pursuant to section
607(b).
(2) The establishment of a revised benefit plan for
newly hired municipal employees pursuant to section 607(e).
The revised benefit plan shall have a normal cost which is
less than the normal cost of the benefit plan applicable to
current municipal employees as reported in the most recent
prior actuarial valuation report for the pension plan. In
making this determination, the normal cost for the revised
benefit plan shall be calculated by applying the revised
benefit plan to the current active membership demographics.
(3) The preparation, submission and implementation of a
plan for improvement of the administration of the pension
plan or plans pursuant to section 607(i).]
(1) Participation in the Centrally Administered <--
Municipal Pension Recovery Program for active, vested and
retired municipal employees under section 608 608.1. <--
(i) The amortization target date for the unfunded
actuarial accrued liability in existence as of the first
day of the valuation year in which a municipality is
determined to be severely distressed shall be 30 years.
The annual amortization contribution shall be calculated
on the basis of a level percentage of future increasing <--
covered payroll amortization contribution rather than on
the basis of the level annual dollar amortization
contribution specified in section 202.
(ii) The biennial actuarial valuation report filed <--
20090HB1874PN2522 - 28 -
on behalf of each level III municipality shall utilize an
actuarial assumption as to investment earnings that is
equal to the regular interest rate fixed by the
Pennsylvania Municipal Retirement Board, from time to
time, plus 1%.
(iii) Each level III municipality shall pay a
reduced minimum municipal obligation consisting of an
amount equal to:
(A) the normal cost and administrative expenses
of the pension plan; minus
(B) anticipated member contributions; plus
(C) a percentage of the amortization
contribution requirement calculated according to
section 202(b)(4).
(iii) (iv) Payment under subparagraph (ii) (iii) <--
shall be pursuant to the following schedule, beginning
with the year in which the municipality is first
determined to be severely distressed and subject to level
III:
First year 10% of amortization contribution <--
Second year 20% of amortization contribution <--
Third year 30% of amortization contribution <--
Fourth year 40% of amortization contribution <--
Fifth year 50% of amortization contribution <--
Sixth year 60% of amortization contribution <--
Seventh year 70% of amortization contribution <--
Eighth year 80% of amortization contribution <--
Ninth year 90% of amortization contribution <--
Tenth year and thereafter 100% of amortization contribution <--
First year 20% of amortization contribution <--
20090HB1874PN2522 - 29 -
Second year 40% of amortization contribution <--
Third year 60% of amortization contribution <--
Fourth year 80% of amortization contribution <--
Fifth year and thereafter 100% of amortization contribution <--
(iv) (v) Upon the expiration of the period <--
applicable to the asset valuation provisions of section
210(c), a level III municipality may utilize a method for
valuing assets that may not produce a result that in
total is greater than 130% or less than 70% of the fair
market value of the assets of the municipal pension plan,
for an additional period of two biennial actuarial
valuation reporting periods (allowing an additional four
years for a total of six years), at the end of which
period the actuarial valuation of assets shall revert to
the method provided by section 210.
(2) Participation in the Co-Operative Municipal Pension
and Security Program for newly hired municipal employees
under section 608.2.
Section 8. Section 607(g), (h), (j) and (k) of the act,
amended February 14, 1986 (P.L.23, No.9), and June 18, 1998
(P.L.626, No.82), are amended and the section is amended by
adding a subsection subsections to read: <--
Section 607. Remedies applicable to various recovery program
levels.
* * *
(f.1) Limitation on special municipal taxing authority.-- <--
Beginning January 1, 2010, and continuing for each year
thereafter, no special municipal tax increase may be assessed or
used for any purpose other than to defray the additional costs
required to be paid pursuant to this act and which are directly
20090HB1874PN2522 - 30 -
related to the pension plans of the municipality and which are
included in the calculation of the financial requirements of the
pension plan and the minimum municipal obligation. If the
municipality assesses or utilizes the special municipal tax
increase to fund other post-employment benefits, the cost of
those benefits shall be subject to the actuarial funding and
reporting standards of this act.
[(g) Delayed implementation of funding standard over ten
years.--The municipality may delay full implementation of the
actuarial funding standard specified in section 302 or 303,
whichever is applicable, over a period not to exceed ten years
in duration, and may calculate that actuarial funding standard
on the basis of a 30-year amortization period for the increment
of unfunded actuarial accrued liability in existence as of the
beginning of the plan year occurring in calendar year 1985.
During the delayed implementation period, the municipality shall
make a municipal contribution to each municipal pension plan of
an amount equal to not less than the municipal contribution to
the municipal pension plan made in the immediate prior year and
the following percentage of the difference between that amount
and the full minimum municipal obligation with respect to the
pension plan pursuant to section 302 or 303, whichever is
applicable:
Year Percentage of Difference
1985 10%
1986 20%
1987 30%
1988 40%
1989 50%
1990 60%
20090HB1874PN2522 - 31 -
1991 70%
1992 80%
1993 90%
1994 and thereafter 100%
The municipality may calculate the annual amortization
contribution on the basis of a level percentage of future
increasing covered payroll amortization contribution rather than
on the basis of the level annual dollar amortization
contribution specified in section 202.
(h) Delayed implementation of funding standard over 15
years; 40-year amortization period.--The municipality may delay
full implementation of the actuarial funding standard specified
in section 302 or 303, whichever is applicable, over a period
not to exceed 15 years in duration and may calculate that
actuarial funding standard on the basis of a 40-year
amortization period for the increment of unfunded actuarial
accrued liability in existence as of the beginning of the plan
year occurring in calendar year 1985. During the delayed
implementation period, the municipality shall make a municipal
contribution to each municipal pension plan of an amount equal
to not less than the municipal contribution to the municipal
pension plan made in the immediate prior year and the following
percentage of the difference between that amount and the full
minimum municipal obligation with respect to the pension plan
pursuant to section 302 or 303, whichever is applicable,
calculated using the applicable 40-year amortization period:
Year Percentage of Difference
1985 6.7%
1986 13.4%
1987 20.1%
20090HB1874PN2522 - 32 -
1988 26.8%
1989 33.5%
1990 40.2%
1991 46.9%
1992 53.6%
1993 60.3%
1994 67.0%
1995 73.7%
1996 80.4%
1997 87.1%
1998 93.8%
1999 100.0%
The municipality may calculate the annual amortization
contribution on the basis of a level percentage of future
increasing covered payroll amortization contribution rather than
on the basis of the level annual dollar amortization
contribution specified in section 202.]
(h.1) Reduced minimum municipal obligation.--
(1) The time period for use of the reduced minimum
municipal obligation and reduced amortization payment shall
be limited to the period applicable to the municipality's
level of distress as last determined by the commission.
(2) If a municipality's distress level becomes worse as
of a future filing period, the special amortization and
minimum municipal contribution remedy shall be extended by
the difference between:
(i) the period allowed for the previous distress
level; and
(ii) the period applicable to the new level of
distress.
20090HB1874PN2522 - 33 -
(3) If a municipality's distress level improves, the
reduced minimum municipal obligation and special amortization
period shall continue for the duration of the period
applicable to the previous distress level determination.
* * *
[(j) Supplemental State assistance.--If every pension plan
of the municipality which is a defined benefit plan and which is
self-insured in whole or in part has filed an actuarial
valuation report utilizing the standardized actuarial cost
method and economic actuarial assumptions within the range of
actuarial assumptions specified in section 202(b) and if the
municipality has implemented the aggregation of trust funds
pursuant to subsection (b), the municipality may receive
supplemental State assistance from the Supplemental State
Assistance Fund established pursuant to section 608. The amount
of the supplemental State assistance to which the municipality
is entitled shall be determined annually based on the
determination scoring which the municipality received from the
commission pursuant to section 503, as follows:
(1) The determination score of the municipality shall be
reduced by an amount equal to 25% of the maximum possible
determination score.
(2) The result calculated pursuant to paragraph (1)
shall be expressed as a percentage of the maximum possible
determination score.
(2.1) For the supplemental State assistance distributed
in December of 1997, the percentage calculated pursuant to
paragraph (2) shall be applied to the dollar amount of
difference between the greater of the amount of the municipal
contribution or the amount of the actual municipal deposit to
20090HB1874PN2522 - 34 -
all municipal pension plans in aggregate and the full minimum
municipal obligation with respect to the pension plans
pursuant to section 302 or 303, whichever is applicable, to
determine the amount of supplemental State assistance for the
municipality.
(3) For the supplemental State assistance distributed in
December of 1998 and thereafter, the percentage calculated
pursuant to paragraph (2) shall be applied to the dollar
amount of difference between the amount of the municipal
contribution to all municipal pension plans in aggregate and
the full minimum municipal obligation with respect to the
pension plan pursuant to section 302 or 303, whichever is
applicable, to determine the amount of supplemental State
assistance for the municipality. For the purposes of this
paragraph, the municipal contribution of a municipality that
has issued bonds or notes to fund an unfunded actuarial
accrued liability under the act of July 12, 1972 (P.L.781,
No.185), known as the Local Government Unit Debt Act, or
under other laws applicable to the municipality, shall
include debt service on the bonds or notes, or both, issued
to fund an unfunded actuarial accrued liability.
In the event that the total amount of supplemental State
assistance determined as payable to all municipalities entitled
to receive supplemental State assistance exceeds the maximum
appropriation provided for in section 608(b), the amount of
supplemental State assistance which shall be payable to each
municipality shall be proportionately reduced. The supplemental
State assistance shall be distributed annually on the first
business day occurring in December. For the purposes of this
subsection, the term "municipal contribution" shall mean the sum
20090HB1874PN2522 - 35 -
of the current year's minimum municipal obligation, the annual
interest payable on any current or prior period funding
deficiencies and the total amount of any discretionary deposits
to the pension fund in the current year.
(k) Emergency loan procedures.--The municipality may receive
a loan from the Supplemental State Assistance Fund in any year
during the existence of the fund in an amount certified by the
commission. The loan amount shall be sufficient to eliminate the
possibility of imminent default during the next 12 consecutive
calendar months in the payment of retirement and other benefits
by one or more of the pension plans maintained by the
municipality. Terms for the repayment of any loan shall be
established by agreement between the municipality and the
commission prior to the loan.]
Section 9. Section 608 of the act is amended to read:
[Section 608. Supplemental State Assistance Program and Fund.
(a) Establishment.--There is hereby established a
Supplemental State Assistance Program and Fund. The Supplemental
State Assistance Fund shall be comprised of a Supplemental State
Assistance Account. The Supplemental State Assistance Program
and Fund shall be administered by the Auditor General.
(b) Supplemental State Assistance Account.--Supplemental
State assistance payable pursuant to section 607(j) shall be
paid from the Supplemental State Assistance Account. The
Supplemental State Assistance Account shall be funded from an
appropriation by the Commonwealth from the General Fund of the
Commonwealth. Annually the commission shall calculate the amount
of supplemental State assistance payable to all eligible
municipalities and shall certify the required amount to the
General Assembly. The amount of any annual certification of an
20090HB1874PN2522 - 36 -
appropriation by the commission shall not exceed $35,000,000.
The General Assembly shall make an appropriation to the
Supplemental State Assistance Account sufficient to provide for
the amount certified by the commission. The appropriation shall
be deposited on the last business day in November annually.
(c) Preconditions.--As a precondition for the receipt of any
supplemental State assistance, the municipality shall
demonstrate prior good faith compliance with any applicable
municipal pension plan actuarial funding standard in effect. .
The municipality shall also implement any mandatory aspects of
the applicable recovery program level.
(d) Warrants.--Any supplemental State assistance shall be
payable on warrants drawn by the Auditor General based on
certifications of the commission.
(e) Expiration.--The Supplemental State Assistance Program
and Fund shall terminate in 2003 or in the first year in which
there are no municipalities entitled to receive supplemental
State assistance, whichever occurs earlier.]
Section 10. The act is amended by adding sections to read:
Section 608.1. Centrally Administered Municipal Pension <--
Recovery Program.
(a) Establishment.--The Centrally Administered Municipal <--
Pension Recovery Program is established. The program shall be
administered by the Pennsylvania Municipal Retirement Board.
(b) Membership.--Once a municipality is determined to
qualify for the level III recovery program under section 606,
any and all pension plans and assets then maintained by the
municipality shall be transferred to the Pennsylvania Municipal
Retirement System for administration under the program; and all
pension rights, privileges and benefits, except hospital, <--
20090HB1874PN2522 - 37 -
medical and other health insurance coverage, shall be governed
solely and exclusively by the program. No other statute, <--
ordinance, contract, arbitration award or practice shall permit
or authorize any deviation from or alteration of the terms of
the legislative enactments specifically governing the terms of
the program.
(c) Exclusions.--For purposes of this section, multi-
employer collectively bargained pension plans shall not be
considered as pension plans and assets then maintained by the
municipality, and employees subject to multi-employer
collectively bargained pension plans shall not be included in
the program.
Section 608.2. Municipal Employee Retirement Cooperative <--
Municipal Pension and Security Program.
(a) Establishment.--The Municipal Employee Retirement <--
Cooperative Municipal Pension and Security Program is <--
established. The program shall be administered by the
Pennsylvania Municipal Retirement Board.
(b) Membership.--Once a municipality is determined to
qualify for the level III recovery program under section 606,
all employees subsequently hired or returning to employment
after separation from service and all employees to whom pension
coverage is newly extended by the municipality shall be enrolled
in the program; and all pension rights, privileges and benefits, <--
except hospital, medical and other health insurance coverage,
shall be governed solely and exclusively thereby. No other <--
statute, ordinance, contract, arbitration award or practice
shall permit or authorize any deviation from or alteration of
the terms of the legislative enactments specifically governing
the terms of the program.
20090HB1874PN2522 - 38 -
Section 11. Section 609 of the act is amended to read:
Section 609. Rules and regulations.
The commission may issue any rules [and], regulations,
policies and procedures necessary for the effective
administration and operation of the provisions of this act.
Section 12. This act shall take effect in 60 days. <--
Section 12. Chapter 10 heading of the act, added June 18, <--
1998 (P.L.626, No.82), is amended to read:
CHAPTER 10
[ALTERNATIVE FUNDING MECHANISM]
PROVISIONS RELATING TO CITIES OF THE FIRST CLASS
Section 13. Section 1001(b) of the act, added June 18, 1998
(P.L.626, No.82), is amended and the section is amended by
adding a subsection to read:
Section 1001. Alternative funding mechanism.
* * *
(b) Period of payment requirements prior to July 1, 2009.--
The period of the city's payment requirements under an
alternative funding mechanism implemented prior to December 31,
2002, shall be the greater of:
(1) the remaining period not exceeding 30 years during
which the city would have amortized the unfunded actuarial
accrued liability reported in its last actuarial valuation
report filed under Chapter 2 using the total amortization
payment and interest assumption, reported in that actuarial
valuation report; or
(2) 30 years.
If an alternative funding mechanism is implemented after
December 31, 2002, but before July 1, 2009, the period described
in paragraph (1) shall be the period of the city's payment
20090HB1874PN2522 - 39 -
requirements.
(b.1) Period of payment requirements beginning July 1,
2009.--The period of the city's payment requirements under an
alternative funding mechanism implemented or refinanced in whole
or in part on or after July 1, 2009, and prior to the beginning
of the plan year that commences July 1, 2019, shall be the
greater of:
(1) the remaining period not exceeding 30 years during
which the city would have amortized the unfunded actuarial
accrued liability reported in its latest actuarial valuation
report filed under Chapter 2 using the total amortization
payment and interest assumption, reported in that actuarial
valuation report; or
(2) 30 years.
If an alternative funding mechanism is implemented after July 1,
2019, the period described in paragraph (1) shall be the period
of the city's payment requirements.
* * *
Section 14. The act is amended by adding sections to read:
Section 1002. Elective funding program.
(a) Authorization for elective funding program.--A city of
the first class shall be authorized to use an elective funding
program as provided by this section. A city of the first class
shall be exempt from all mandatory remedies imposed by sections
606, 608.1 and 608.2.
(b) Amortization of unfunded actuarial accrued liability.--
(1) Notwithstanding any other provision of this act or
other law, a city of the first class, in its sole discretion,
may amortize its entire unfunded actuarial accrued liability,
as measured on a valuation date selected by the city of the
20090HB1874PN2522 - 40 -
first class and occurring in the plan year commencing July 1,
2009, as a level dollar amount with the amortization target
date being the end of the plan year occurring 30 years after
the plan year commencing on July 1, 2009, with payments to
commence in the next plan year.
(2) In order for a city of the first class to extend the
applicable amortization period pursuant to this subsection,
the city of the first class must file a revised actuarial
valuation report reflecting the amortization period extension
provided for under this section and the actuarial assumed
rate in effect on the valuation date with the commission no
later than March 31, 2010.
(3) Any such revised actuarial valuation report may not
be filed in lieu of the actuarial valuation report prepared
in compliance with section 202(b)(4)(v)(A) and required to be
filed on or before March 31, 2009, and may be used only for
the purposes of recalculating the minimum municipal
obligation of the city of the first class for the plan year
commencing July 1, 2009, and calculating the minimum
municipal obligation of the city of the first class for the
plan year commencing July 1, 2010, to reflect the
amortization period extension. The revised report shall
supersede the original report to the extent of the revisions.
(4) Any such revised actuarial valuation report shall
not affect distributions under the General Municipal Pension
System State Aid Program under Chapter 4.
(c) Revised minimum municipal obligation for certain plan
years.--
(1) Notwithstanding any other provision of this act or
other law, a city of the first class is authorized to defer a
20090HB1874PN2522 - 41 -
portion of the minimum municipal obligation provided for
section 302:
(i) for the plan year ending June 30, 2010, in an
amount not to exceed $155,000,000; and
(ii) for the plan year ending June 30, 2011, in an
amount not to exceed $80,000,000.
(2) The amounts deferred shall bear interest at the rate
of 8.25%, which shall be calculated from the beginning of the
plan year in which the deferral was made. Accrued interest on
any amounts deferred shall be paid yearly on or before June
30, 2010, June 30, 2011, and June 30, 2012.
(3) On or before June 30, 2013, the city of the first
class shall repay:
(i) at least $90,000,000 of any amounts deferred,
plus interest accrued on all amounts deferred; or
(ii) if the total amount deferred is less than
$90,000,000, the total amount deferred, plus interest
accrued on that amount.
(4) The balance of all amounts deferred, including
interest accrued and unpaid on amounts deferred, shall be
repaid by June 30, 2014.
(5) Any of the amounts deferred, including interest
accrued on deferred amounts, which remain unpaid at the end
of the plan year ending June 30, 2014, shall be added to the
minimum municipal obligation of the city of the first class
for the following plan year, with interest calculated and due
until the date that the amounts due are paid.
(6) The calculation of the unfunded actuarial accrued
liability made by and certified by an approved actuary under
section 202 shall not include any amounts deferred pursuant
20090HB1874PN2522 - 42 -
to this subsection, so long as the city of the first class is
paying interest accrued on such deferred amounts and repaying
such deferred amounts in accordance with the terms of this
subsection.
(7) The repayment of any amounts deferred, including
interest accrued on deferred amounts, as and when required in
this subsection, shall constitute a commitment and
obligation, binding and absolute, on the city of the first
class; and the city of the first class shall include all
amounts due to be paid under this subsection in the budget of
the city, and all amounts due to be paid shall be
appropriated and paid in order to make timely repayment of
any amounts deferred, including interest accrued on deferred
amounts, with such payment being unconditional and without
setoff.
(8) (i) Any person who is beneficially interested in
the city of the first class paying its minimum municipal
obligation under this subsection shall have standing to
institute a legal proceeding for mandamus to enforce the
obligation of the city of the first class to make
payments under this subsection in the same manner as
payment requirements of an alternative funding mechanism
may be enforced under section 1001.
(ii) For purposes of this paragraph, a person is
beneficially interested under this subsection if the
person is a beneficially interested person under section
1001(f).
(9) The city of the first class shall be required to pay
the balance of its minimum municipal obligation in full when
due in each plan year.
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Section 1003. Special taxing authority.
(a) Imposition of special tax.–-
(1) Solely for the purposes set forth in subsection (b),
a city of the first class is authorized to impose a tax on
the sale at retail of tangible personal property or services
or use of tangible personal property or services purchased at
retail, as those terms are defined in Article II of the act
of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
of 1971, which tax shall be in addition to the tax authorized
under the provisions of section 503(a) and (b) of the act of
June 5, 1991 (P.L.9, No.6), known as the Pennsylvania
Intergovernmental Cooperation Authority Act for Cities of the
First Class. The tax authorized by this subsection shall not
be levied, assessed and collected upon the occupancy of a
room or rooms in a hotel in the city.
(2) The tax authorized under this subsection shall be
imposed and collected at the rate of 1%, and shall be
computed as set forth at section 503(e)(2) of the
Pennsylvania Intergovernmental Cooperation Authority Act for
Cities of the First Class.
(3) The tax authorized under this subsection shall be
administered, collected, deposited and disbursed in the same
manner as the tax imposed under Chapter 5 of the Pennsylvania
Intergovernmental Cooperation Authority Act for Cities of the
First Class and the situs of the tax authorized under this
subsection shall be determined in accordance with that act
and Article II-A of the Tax Reform Code of 1971. The
department shall use the money received by the department to
cover its costs of administration of the tax authorized by
the provisions of Chapter 5 of the Pennsylvania
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Intergovernmental Cooperation Authority Act for Cities of the
First Class to cover the costs of administration of the tax
authorized by this section; and the department shall not
retain any additional amounts for the costs of collection of
the tax authorized by this section. No additional fee shall
be charged for either a license or any renewal in addition to
a license or renewal fee otherwise authorized and imposed
pursuant to Article II of the Tax Reform Code of 1971.
(b) Municipal action.--
(1) If a city of the first class determines to impose
the tax authorized by subsection (a), the governing body of
the city shall adopt or shall previously have adopted an
ordinance which shall state the tax rate.
(2) The city ordinance, including an ordinance adopted
prior to the effective date of this article, may take effect
no earlier than 20 days after the adoption of the ordinance
or 20 days after the effective date of this section,
whichever is later.
(3) A certified copy of a city ordinance imposing the
tax authorized by subsection (a) shall be delivered to the
department within ten days prior to or after the effective
date of that ordinance.
(4) A certified copy of a repeal ordinance shall be
delivered to the department at least 30 days prior to the
effective date of the repeal.
(c) Use of tax receipts.--Any moneys received by the city
from the levy, assessment and collection of the tax authorized
under subsection (a) may only be used to:
(1) pay as and when due in any plan year any amounts of
the city's minimum municipal obligation provided for in
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section 302, including, but not limited to, amounts deferred
pursuant to section 1002(b) and interest accrued on deferred
amounts; and
(2) reimburse the city for payments made by the city,
from sources other than the tax authorized in subsection (a),
of the city's minimum municipal obligation for that year,
including, but not limited to, amounts deferred pursuant to
section 1002(b) and interest accrued on deferred amounts.
(d) Expiration.--
(1) This section shall expire July 1, 2014.
(2) Notwithstanding the expiration of this section, any
tax imposed pursuant to subsection (a) on sales or uses
occurring before July 1, 2014, shall be paid to and received
by the department and, along with interest and penalties,
less any refunds and credits paid, shall be credited to the
Local Sales and Use Tax Fund created pursuant to the
Pennsylvania Intergovernmental Cooperation Authority Act for
Cities of the First Class as if this section had not expired.
Such moneys shall be disbursed to the city imposing the tax
in the manner provided by section 509 of the Pennsylvania
Intergovernmental Cooperation Authority Act for Cities of the
First Class.
(e) Effect of imposition, expiration or repeal of tax.--The
imposition, termination or repeal of the tax authorized under
subsection (a) shall not affect in any way the amount of
supplemental State assistance allocable to the city imposing the
tax.
Section 1004. Additional assistance.
Notwithstanding any other provision of this act or other law,
a city of the first class shall continue to receive State
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supplemental assistance and any other assistance available under
this act.
Section 15. The amendment or addition of sections 501, 502,
503, 602, 603, 604, 605, 606, 607, 608, 608.1 and 609 of the act
shall apply to cities of the first class on July 1 next
following the effective date of this section.
Section 16. This act shall take effect immediately.
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