SB310INTRODUCED
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50Q463-1
By Senator Orr
RFD: Finance and Taxation Education
First Read: 11-May-23
2023 Regular Session
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6 50Q463-1 05/10/2023 KMS (L)cr 2023-2051
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SYNOPSIS:
Under existing law, there is no formal procedure
for funding an increase in the pension benefits earned
by state and local government employees who have
retired under the Retirement Systems of Alabama.
This bill would establish a procedure for the
funding of benefit increases provided to retirees under
the Employees' Retirement System and the Teachers'
Retirement System by the Legislature by requiring the
actual annual cost to be identified and provided for in
the annual State General Fund Budget Act and the
Education Trust Fund Budget Act.
In the event the amounts are not identified and
appropriated or provided for, there will be no
increased benefit provided for that fiscal year. This
pay as you go procedure shall be considered a one year
benefit adjustment that does not affect the unfunded
liability of the Retirement Systems of Alabama as the
benefit increase will only be paid if the actual cost
is included in the annual appropriation acts and the
funds collected from the covered entities in the same
month that the increase is to be paid to the retiree
each month.
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A BILL
TO BE ENTITLED
AN ACT
Relating to the Retirement Systems of Alabama; to
provide for an annualized benefit adjustment procedure for the
funding of future benefit increases to retirees of the State
Employees' Retirement System and the Teachers' Retirement
System which will not increase the unfunded liability of
either system due to the provisions which require the actual
annual cost of any increase to be authorized and funded one
year at a time with no authorization or liability for the
benefit increase beyond the fiscal year for which the
appropriations are made.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. (a) Beginning in the first fiscal year that
begins after the effective date of this act, no benefit
increase provided to retirees under the Employees' Retirement
System shall be paid unless the actual amount as estimated by
the actuary of the system is included in the appropriation
acts for that year. The required amounts shall be identified
in the appropriation acts with a separate employer rate
established to fund the actual cost as determined by the
actuary. The Retirement Systems of Alabama shall require any
entity whose appropriation is not included in the
appropriation acts to transfer to the Employees' Retirement
System the amount required by the employer rate established
for the benefit increase in the same manner as normal employer
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contributions are made. In any year the required amount is not
identified and funding provided for in the appropriation acts,
the Retirement Systems of Alabama shall not be required to pay
nor shall they pay the amount of the increase provided for
that year. The increase provided may be resumed in any
subsequent year following a year where the benefit increase
was not funded if included in that years appropriation acts.
Any new benefit increase shall only be pursuant to legislative
act establishing the new benefit increase.
(b) Local units under the Employees' Retirement System
which are authorized to provide benefit increases shall
provide for the actual costs of any increase for each year in
the same manner as provided in subsection (a) for state
employees. The actuary shall provide an annual estimate to
each system which granted the increase in time to be included
in the local systems funding plan. In any year that the
funding is not included, the increase shall not be paid but
may be resumed in subsequent years as provided in subsection
(a) for state employees.
Section 2. Beginning in the first fiscal year that
begins after the effective date of this act, no increase
provided to retirees under the Teachers' Retirement System
shall be paid unless the actual amount as estimated by the
actuary of the system is included in the appropriation acts
for that year. The required amounts shall be identified in the
appropriation acts with a separate employer rate established
to fund the actual cost as determined by the actuary. The
Retirement Systems of Alabama shall require any entity whose
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appropriation is not included in the appropriation acts to
transfer to the Teachers' Retirement System the employer rate
established for the benefit increase in the same manner as
normal employer contributions are made. In any year the
required amount is not identified and funding provided for in
the appropriation acts, the Retirement Systems of Alabama
shall not be required to pay nor shall they pay the amount of
the increase provided for that year. The increase provided may
be resumed in any subsequent year following a year where the
benefit increase was not funded if included in that years
appropriation acts. Any new increase in the benefits shall
only be pursuant to legislative act establishing the new
benefit increase.
Section 3. Any benefit increase provided to retirees
shall be by separate act which shall establish the amount and
the eligible retirees. Upon passage of such an act the
provisions of the act shall be applicable to fund that
increase.
Section 4. This act is not applicable to and shall not
affect any previous cost-of-living increase or one time bonus
provided to retirees under acts previously passed by the
Legislature.
Section 5. This act shall become effective immediately
following its passage and approval by the Governor, or its
otherwise becoming law.
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