2013 -- S 0522

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO TOWNS AND CITIES -- RETIREMENT SECURITY ACT FOR LOCALLY

ADMINISTERED PENSION FUNDS

     Introduced By: Senators Pearson, Satchell, Cool Rumsey, and Bates

     Date Introduced: February 28, 2013

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 45-65-7 of the General Laws in Chapter 45-65 entitled "Retirement

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Security Act for Locally Administered Pension Funds" is hereby amended to read as follows:

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     45-65-7. Failure to comply. – (a)(1) With respect to any municipality that fails to

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comply with the requirements of this chapter within the prescribed time, the general treasurer is

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authorized to withhold moneys due to the municipality from the state for any purpose other than

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education, including, but not limited to, municipal aid and other aid provided under sections 45-

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13-5.1, 45-13-12, 44-34.1-2, 44-13-13, 44-18-18.1, 44-18-36.1(b) and 42-63.1-3.

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     (b) The general treasurer is also authorized to withhold moneys due to the municipality

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from the state for any purpose other than education, including, but not limited to, municipal aid

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and other aid provided under sections 45-13-5.1, 45-13-12, 44-34.1-2, 44-13-13, 44-18-18.1, 44-

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18-36.1(b) and 42-63.1-3, as to any municipality that does not fully fund their annual required

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contribution (ARC) to any locally administered pension plan that the municipality and/or its

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employees participates in. As used herein, the term “fully fund” means that the municipality

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makes one hundred percent (100%) of its annually required ARC payment. Provided, that the

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general treasurer may consider a municipality’s capacity to pay and any local plans to fund,

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replenish, and otherwise bring the pension fund to an acceptable level, in determining whether to

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withhold such monies under this subsection (b).

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     (1) Monies withheld by the general treasurer pursuant to this subsection (b) shall be

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placed in an interest-bearing escrow account. Such funds may be held for a period of up to one

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year commencing from the date said funds are deposited, at the end of which time the funds plus

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any interest earned thereon shall be deposited by the general treasurer directly into the town’s

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locally administered pension plan. Provided, if the general treasurer determines that said plan is

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insolvent, non-existent, is no longer utilized by the municipality, or for any other reason

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determines that deposit into the plan would be fiscally unsound, the general treasurer may hold

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such funds and request instructions from the general assembly as to where to deposit said funds.

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Provided further, if the municipality presents a funding plan or proposal to fund the locally

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administered pension plan prior to the end of the year, and the general treasurer finds that such

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plan provides a reasonably adequate method for the municipality to fund the locally administered

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plan and meet its obligations, then the general treasurer may release the withheld monies to the

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municipality.

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     (2) The general treasurer shall provide at least seven (7) business days notice written

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notice to the municipality prior to depositing the funds into the municipality’s locally

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administered pension plan or of releasing the funds to the municipality. A municipality may elect

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to waive such notice.

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     (c) On or before March 30 of each year, the general treasurer shall annually provide to

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the governor’s office and to both chambers of the general assembly an annual report that includes

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the following:

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     (1) An itemized description of the amount of funds held pursuant to this section, listed by

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municipality, amount, an identification of the locally administered pension plan, the amount of

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underfunding of such plan, and a brief statement of why such funds were withheld, as applicable;

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     (2) A “performance dashboard” of all pension plans used by either the state and/or any

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municipality or municipal employees, that sets forth for each plan:

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     (i) Fund performance for each plan’s most recently completed fiscal year;

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     (ii) The total percentage of the plan that is funded;

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     (iii) The percentage of administrative costs of the fund as measured against the fund's

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assets;

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     (iv) Assumed and projected rates of return for the funds; and

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     (v) The municipality's or community’s capacity to pay the municipality’s ARC as a

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percent of their tax levy ratio.

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SECTION 2. This act shall take effect upon passage.

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LC00254

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TOWNS AND CITIES -- RETIREMENT SECURITY ACT FOR LOCALLY

ADMINISTERED PENSION FUNDS

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     This act would permit the general treasurer to withhold state aid to municipalities which

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do not fully fund their annual required contribution to a locally administered pension plan. The

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act directs the general treasurer to place said funds in an interest-bearing account until the

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municipality presents a plan for funding that is satisfactory to the general treasurer. In the event

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no such plan is prepared within one year, the general treasurer is directed to deposit the withheld

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funds directly into the locally administered pension plan. The general treasurer is also directed to

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make annual reports on those withheld funds to the governor and the general assembly.

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     This act would take effect upon passage.  

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LC00254

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