2018 -- H 8244

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LC005652

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2018

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A N   A C T

RELATING TO TOWNS AND CITIES-RETIREMENT OF MUNICIPAL EMPLOYEES

     

     Introduced By: Representatives McLaughlin, Hull, Azzinaro, and Lombardi

     Date Introduced: May 25, 2018

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

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     SECTION 1. Section 45-21-67 of the General Laws in Chapter 45-21 entitled

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"Retirement of Municipal Employees" is hereby amended to read as follows:

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     45-21-67. Central Falls retirees -- Settlement agreement.

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     (a) Definitions. As used in this section:

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     (1) "Base pension benefit" is the amount listed on Appendix A, Appendix D-A, and

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Appendix E-A, attached to the settlement agreement, under the column labeled "amount prior to

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reduction", which is the amount each Central Falls retiree was receiving as of July 31, 2011.

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     (2) "Central Falls retirees" are the retirees, or the beneficiaries of retirees, of the city of

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Central Falls, listed on Appendix A to the settlement agreement, as amended from time to time,

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when a retiree or beneficiary dies.

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     (3) "Settlement agreement" shall mean that settlement and release agreement, as set forth

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in P.L. 2012, Ch. 241, Art. 22, signed by and between the receiver of the city of Central Falls, the

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director of revenue and the participating retirees, approved by the bankruptcy court by order

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dated January 9, 2012.

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     (b) Legislative findings and purpose.

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     (1) Pursuant to P.L. 2012, Ch. 241, Art. 22, which defined the terms of the initial

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appropriation, the state made an appropriation of two million six hundred thirty-six thousand nine

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hundred thirty-two dollars ($2,636,932), which was deposited into a restricted account held by the

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city of Central Falls, for the purpose of supplementing the reduced pensions of the Central Falls

 

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retirees, to enable the city to pay the Central Falls retirees seventy-five percent (75%) of their

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base pension benefit as of July 31, 2011, for a five-year (5) period, with the last supplemental

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appropriation to be paid on or within thirty (30) days of July 1, 2015.

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     (2) The drastic pension reductions experienced by the Central Falls retirees provided a

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harsh example of the risks of unfunded-pension liabilities, which, in turn, provided the primary

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incentive toward successful pension negotiations with other municipal, police, and fire retirees,

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saving the state more than sixty million dollars ($60,000,000).

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     (3) If said appropriation is not made prior to July 1, 2016, the Central Falls retirees, many

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of whom sustained serious and permanent injuries in service to the city, will have their pensions

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reduced yet again, in some instances to less than sixty percent (60%) of the pension they were

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receiving on July 11, 2011.

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     (4) It is fair and just that the state appropriate sufficient funds to the city to supplement

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the city's funding of the pension benefits to the Central Falls retirees to ensure that the Central

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Falls retirees continue to receive no less than seventy-five percent (75%) of the base pension

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benefit, after taking into account all applicable cost-of-living adjustments, for their lifetime, and

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to the extent applicable, for the life of their beneficiaries.

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     (c) Appropriation payment.

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     (1) Appropriation payment and restrictions on use. In accordance with the terms set forth

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in Article 22 and the settlement agreement, the state shall annually appropriate sufficient funds to

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the restricted account for the city of Central Falls to supplement the city's funding for payments to

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Central Falls retirees in order that they continue to receive no less than seventy-five percent

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(75%) of their base pension benefit as of July 31, 2011, after taking into account all applicable

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cost-of-living adjustments, for their lifetime, and to the extent applicable, for the life of their

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beneficiaries. Such appropriation shall be determined annually by an actuarial valuation

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("appropriation amount"), and it is expected over the life of the existing retirees to total four

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million eight hundred seventeen thousand seven hundred eight dollars ($4,817,708).

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     (2) Deposit of appropriation payment and payments to Central Falls retirees. The

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appropriation payment shall be immediately deposited by the city into the previously established

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"participating retirees restricted five-year (5) account", which shall be redesignated as the

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"participating retirees' restricted account." The participating retirees' account shall be

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administered by the city and not by any third-party pension-fund manager.

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     (d) Any and all withdrawals, transfers, and payments from the participating retirees'

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account shall be made as set forth in the settlement agreement and accompanying appendices and

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said Article 22 (c) until the payments are made on July 1, 2015.

 

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     (e) Beginning on or within thirty (30) days of July 1, 2016, and annually thereafter, with

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payments to be paid each retiree or beneficiary as applicable on or within thirty (30) days of July

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1 of each year they are eligible for benefits under the Central Falls pension plan, the city shall

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distribute to each participating retiree or beneficiary the annual amount listed on the actuarial

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spreadsheets prepared by Sherman Actuarial Services, which shall supplement the pension

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payments paid by the city in order that each retiree will receive no less than seventy-five percent

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(75%) of his or her base pension benefit, after taking into account all applicable cost-of-living

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adjustments, for his or her lifetime, and to the extent applicable, sixty-seven and one-half percent

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(67.5%) of the base pension benefit, after taking into account all applicable cost-of-living

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adjustments, to his or her beneficiaries for his or her lifetime. Such supplemental distributions

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shall be made by the city when the funds appropriated by the state are made available to the city,

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which shall be as close to July 1 as practicable.

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     (f) Relationship to base pension payments. The supplemental payments to the Central

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Falls retirees from the participating retirees' restricted account shall not be included in the

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calculation of base pension benefits for the purposes of determining a retiree's or beneficiary's

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cost-of-living adjustment.

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     (g) The cost-of-living adjustments as set forth in the settlement agreement are to be paid

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by the city of Central Falls to the Central Falls retirees, and to the extent applicable, their

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beneficiaries.

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     (h) The following provision shall amend and supersede P.L. 2012, Ch. 241, Art. 22 (c)(4)

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regarding the balance in the participating retirees' restricted account as of August 1, 2015:

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     (1) Distribution of balance. As of August 1, 2015, no further supplemental payments shall

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be distributed to the Central Falls retirees under the terms of the settlement agreement. The

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balance of monies in the participating retirees' restricted account shall be distributed in

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accordance with this Article, in the amounts and to those retirees and beneficiaries listed on the

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actuarial spreadsheets prepared by Sherman Actuarial Services, LLC and maintained and

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administered by the city. The amounts set forth on the actuarial spreadsheets will supplement the

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pension payments being made by the city in order that each retiree will receive no less than

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seventy-five percent (75%) of their base pension benefit, after taking into account all applicable

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cost-of-living adjustments, for his or her lifetime, and to the extent applicable, sixty-seven and

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one-half percent (67.5%) of the base pension benefit, after taking into account all applicable cost-

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of-living adjustments, to their beneficiaries for his or her lifetime. Effective July 1, 2018, each

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retiree will receive no less than seventy-five percent (75%) of their base pension benefit, after

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taking into account all applicable cost-of-living adjustments, for the retiree's lifetime, and to the

 

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extent applicable, one hundred percent (100%) of the base pension benefit, after taking into

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account all applicable cost-of-living adjustments, to the retiree's beneficiaries for the beneficiaries

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lifetime, retroactive to July 1, 2014.

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     (2) Any monies remaining in the participating retirees' restricted account after the last-

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living retiree attains seventy-five percent (75%) of the base pension benefit, after taking into

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account all applicable cost-of-living adjustments, or last-living beneficiary attains sixty-seven and

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one-half percent (67.5%) of the base pension benefit, after taking into account all applicable cost-

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of-living adjustments, shall be returned to the state under state law. Effective July 1, 2018, any

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monies remaining in the participating retirees' restricted account after the last-living retiree attains

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seventy-five percent (75%) of the base pension benefit, after taking into account all applicable

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cost-of-living adjustments, or last-living beneficiary attains one hundred percent (100%) of the

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base pension benefit, after taking into account all applicable cost-of-living adjustments, shall be

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returned to the state under state law.

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     (i) Access to account information and records. The city shall maintain appropriate

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account information and records relating to all receipts into, maintenance of, and distributions

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from, the participating retirees' restricted account, and shall allow, at all reasonable times, for the

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full inspection and copying and sharing of information about such account and any and all

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payments therefrom with any participating retiree and the state.

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     (j) Unclaimed payments. Any monies distributed to a participating retiree or beneficiary

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from the participating retirees' restricted account and not claimed by a participating retiree or

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beneficiary after the city has exercised good faith attempts over a six-month (6) period to deliver

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it to the best, last-known address of such participating retiree or beneficiary, shall not escheat

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under state law, but shall remain in the participating retirees' restricted account until the

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conditions of subsection (h) herein have been satisfied.

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     (k) Liabilities and penalties for inappropriate use of appropriation payment. Any person,

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whether in his/her individual capacity, who uses, appropriates, or takes or instructs another to use,

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appropriate, or take, the appropriation payment, or any portion thereof, that is not specifically

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used for making payments to participating retirees or their beneficiaries as required hereunder and

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under the terms of the settlement agreement, shall be personally liable for repayment of said

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funds and further shall be subject to any and all applicable civil and criminal sanctions and/or

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penalties for such act(s).

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TOWNS AND CITIES-RETIREMENT OF MUNICIPAL EMPLOYEES

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     This act would increase the base pension benefit for surviving spouses of beneficiaries

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from sixty-seven and one half (67.5%) percent to one hundred percent (100%), retroactive to July

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1, 2014.

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     This act would take effect upon passage.

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