Bill Summary – FastDemocracy

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                                   _____________ BILL NO. _____________
                                         (Primary Sponsor)
                           INTRODUCED BY _________________________________________________
     BY REQUEST OF THE STATE ADMINISTRATION AND VETERANS' AFFAIRS INTERIM COMMITTEE
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 A BILL FOR AN ACT ENTITLED: “AN ACT REVISING SUPPLEMENTAL EMPLOYER CONTRIBUTIONS TO
 RETIREMENT SYSTEMS; EXTENDING AND INCREASING THE SUPPLEMENTAL EMPLOYER
 CONTRIBUTION RATE FOR THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM; ADDING
 SUPPLEMENTAL EMPLOYER CONTRIBUTION RATES FOR THE HIGHWAY PATROL OFFICERS'
 RETIREMENT SYSTEM, THE SHERIFFS' RETIREMENT SYSTEM, AND THE GAME WARDENS' AND
 PEACE OFFICERS' RETIREMENT SYSTEM; AMENDING SECTIONS 19-3-316, 19-6-404, 19-7-404, AND 19-
 8-504, MCA; AND PROVIDING AN EFFECTIVE DATE.”
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 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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         Section 1. Section 19-3-316, MCA, is amended to read:
         "19-3-316. Employer contribution rates. (1) Each employer shall contribute to the system. Except
 as provided in subsection (2), the employer shall pay as employer contributions 6.9% of the compensation paid
 to all of the employer's employees plus any additional contribution under subsection (3), except for those
 employees properly excluded from membership. Of employer contributions made under this subsection for both
 defined benefit plan and defined contribution plan members, a portion must be allocated for educational
 programs as provided in 19-3-112. Employer contributions for members under the defined contribution plan
 must be allocated as provided in 19-3-2117.
         (2)      Local government and school district employer contributions must be the total employer
 contribution rate provided in subsection (1) minus the state contribution rates under 19-3-319.
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         (3)      (a) Subject to subsection (4), each employer shall contribute to the system an additional
 employer contribution equal to the percentage specified in subsection (3)(b) of the compensation paid to all of
 the employer's employees, except for those employees properly excluded from membership.
         (b)      The percentage of compensation to be contributed under subsection (3)(a) is 1.27% for fiscal
 year 2014 and increases by 0.1% each fiscal year through fiscal year 2024 fiscal year 2035. For fiscal years
 beginning after June 30, 2024, June 30, 2025, the percentage of compensation to be contributed under
 subsection (3)(a) is 2.27% 3.27%.
         (4)      (a) The board shall annually review annually the additional employer contribution provided for
 under subsection (3) and recommend adjustments to the legislature as needed to maintain the amortization
 schedule set by the board for payment of the system's unfunded liabilities.
         (b)      The employer contribution required under subsection (3) terminates on January 1 July 1
 following the board's receipt of the system's actuarial valuation if the actuarial valuation determines that
 terminating the additional employer contribution pursuant to this subsection (4)(b) and reducing the employee
 contribution pursuant to 19-3-315(2) would not cause the amortization period to exceed 25 years."
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         Section 2. Section 19-6-404, MCA, is amended to read:
         "19-6-404. State employer contribution -- definitions. (1) (a) From July 1, 2023, through June 30,
 2024, the state shall pay as employer contributions 38.33% of compensation paid to all of the employer's
 employees, except those properly excluded from membership.
         (b)      Beginning July 1, 2023, and each fiscal year thereafter, the state treasurer shall transfer
 $500,000 from the state special revenue fund provided for in 17-2-102 to the highway patrol officers' retirement
 pension trust fund by August 15. This transfer must terminate when the public employees' retirement board's
 actuary determines that the funded ratio for the highway patrol officers' pension system is 100% funded.
         (2)      (a) Beginning July 1, 2024, the state shall pay as employer contributions an actuarially
 determined employer contribution that is determined annually by the public employees' retirement board's
 actuary in accordance with the provisions of this section and part of the plan's annual actuarial valuation. This
 actuarially determined employer contribution is effective July 1 following the annual actuarial valuation
 completed in the prior calendar year with a maximum annual increase of no more than 0.5% in any year.
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          (b)      The actuarially determined employer contribution must be the sum of the following contribution
 rates minus the employee contribution provided for in 19-6-402:
          (i)      the contribution rate determined under subsection (2)(c) to pay off the legacy unfunded liability;
          (ii)     the contribution rate determined under subsection (2)(d) to pay for the contemporary unfunded
 liability; and
          (iii)    the contribution rate determined under subsection (2)(e) to pay for the normal cost of benefits
 as they accrue.
          (c)      (i) Except as provided in subsection (2)(c)(ii), the contribution rate under subsection (2)(b)(i) for
 the legacy unfunded liability must be the amount required on a level percent basis to amortize the legacy
 unfunded liability attributable to the employer's employees over a closed 25-year amortization period beginning
 July 1, 2023.
          (ii)     If the June 30, 2023, actuarial valuation determines the system's amortization period is less
 than 25 years, then the closed amortization period used for the purposes of subsection (2)(c)(i) must be that
 amortization period.
          (d)      The contribution rate under subsection (2)(b)(ii) for the contemporary unfunded liability must be
 the amount required on a level percent basis to pay the annual contemporary unfunded liabilities attributable to
 the employer's employees over a layered amortization schedule so that each fiscal year's contemporary
 unfunded liability is amortized over a closed 10-year period, starting with the contemporary unfunded liability for
 the fiscal year ending June 30, 2024.
          (e)      The contribution rate under subsection (2)(b)(iii) for the normal cost of benefits as they accrue
 must be the amount required on a level percent basis to pay the normal cost of benefits as determined in the
 annual actuarial valuation as the benefits accrue for each of the employer's employees.
          (3)      (a) Subject to subsection (4), the state shall contribute to the system an additional employer
 contribution equal to the percentage specified in subsection (3)(b) of the compensation paid to all of the
 employer's employees, except for those properly excluded from membership.
          (b)      The percentage of compensation to be contributed under subsection (3)(a) is 0.1% for fiscal
 year 2026 and increases by 0.1% each fiscal year through fiscal year 2035. For fiscal years beginning after
 June 30, 2035, the percentage of compensation to be contributed under subsection (3)(a) is 1%.
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          (4)      (a) The board shall review annually the additional employer contribution provided for under
 subsection (3) and recommend adjustments to the legislature as needed to maintain the amortization schedule
 set by the board for payment of the system's unfunded liabilities.
          (b)      The employer contribution required under subsection (3) terminates on July 1 following the
 board's receipt of the system's actuarial valuation if the actuarial valuation determines that terminating the
 additional employer contribution pursuant to this subsection (4)(b) would not cause the amortization period to
 exceed 25 years.
          (5)      For the purposes of this section, the following definitions apply:
          (a)      "Contemporary unfunded liability" means the plan's annual fiscal year actuarial gains and
 losses smoothed over 5 years starting with the fiscal year ending June 30, 2019.
          (b)      "Legacy unfunded liability" means the unfunded liability of the plan as of June 30, 2023."
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          Section 3. Section 19-7-404, MCA, is amended to read:
          "19-7-404. Employer contributions -- definitions. (1) From July 1, 2023, through June 30, 2024,
 each employer shall pay 13.115% of the compensation paid to all of the employer's employees.
          (2)      (a) Beginning July 1, 2024, each employer shall pay as employer contributions an actuarially
 determined employer contribution that is determined annually by the public employees' retirement board's
 actuary in accordance with the provisions of this section and part of the plan's annual actuarial valuation. This
 actuarially determined employer contribution is effective July 1 following the annual actuarial valuation
 completed in the prior calendar year with a maximum annual increase of no more than 0.5% in any year.
          (b)      The actuarially determined employer contribution must be the sum of the following contribution
 rates minus the employee contribution provided for in 19-7-403:
          (i)      the contribution rate determined under subsection (2)(c) to pay off the legacy unfunded liability;
          (ii)     the contribution rate determined under subsection (2)(d) to pay for the contemporary unfunded
 liability; and
          (iii)    the contribution rate determined under subsection (2)(e) to pay for the normal cost of benefits
 as they accrue.
          (c)      (i) Except as provided in subsection (2)(c)(ii), the contribution rate under subsection (2)(b)(i) for
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 the legacy unfunded liability must be the amount required on a level percent basis to amortize the legacy
 unfunded liability attributable to the employer's employees over a closed 25-year amortization period beginning
 July 1, 2023.
         (ii)     If the June 30, 2023, actuarial valuation determines the system's amortization period is less
 than 25 years, then the closed amortization period used for the purposes of subsection (2)(c)(i) must be that
 amortization period.
         (d)      The contribution rate under subsection (2)(b)(ii) for the contemporary unfunded liability must be
 the amount required on a level percent basis to pay the annual contemporary unfunded liabilities attributable to
 the employer's employees over a layered amortization schedule so that each fiscal year's contemporary
 unfunded liability is amortized over a closed 10-year period, starting with the contemporary unfunded liability for
 the fiscal year ending June 30, 2024.
         (e)      The contribution rate under subsection (2)(b)(iii) for the normal cost of benefits as they accrue
 must be the amount required on a level percent basis to pay the normal cost of benefits as determined in the
 annual actuarial valuation as the benefits accrue for each of the employer's employees.
         (3)      (a) If the required contributions under subsections (1) and (2) exceed the funds available to a
 county from general revenue sources, a county may, subject to 15-10-420, budget, levy, and collect annually a
 tax on the taxable value of all taxable property within the county that is sufficient to raise the amount of revenue
 needed to meet the county's obligation.
         (b)      (i) A county may impose a mill levy to fund the employer contribution required under
 subsections (1) and (2). The mill levy is not subject to 15-10-420(1) or to approval at an election under 15-10-
 425.
         (ii)     Each year prior to implementing a levy under subsection (3)(b)(i), after notice of the hearing
 given under 7-1-2121, a public hearing must be held regarding any proposed increase.
         (iii)    If a levy pursuant to this subsection (3)(b) is decreased or ceases to be levied, the revenue
 may not be combined with the revenue determined in 15-10-420(1)(a).
         (4)      (a) Subject to subsection (5), each employer shall contribute to the system an additional
 employer contribution equal to the percentage specified in subsection (4)(b) of the compensation paid to all of
 the employer's employees, except for those members properly excluded from membership.
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         (b)      The percentage of compensation to be contributed under subsection (4)(a) is 0.1% for fiscal
 year 2026 and increases by 0.1% each fiscal year through fiscal year 2035. For fiscal years beginning after
 June 30, 2035, the percentage of compensation to be contributed under subsection (4)(a) is 1%.
         (5)      (a) The board shall review annually the additional employer contribution provided for under
 subsection (4) and recommend adjustments to the legislature as needed to maintain the amortization schedule
 set by the board for payment of the system's unfunded liabilities.
         (b)      The employer contribution required under subsection (4) terminates on July 1 following the
 board's receipt of the system's actuarial valuation if the actuarial valuation determines that terminating the
 additional employer contribution pursuant to this subsection (5)(b) and reducing the member contributions
 pursuant to 19-7-403(1)(b) would not cause the amortization period to exceed 25 years.
         (6)      For the purposes of this section, the following definitions apply:
         (a)      "Contemporary unfunded liability" means the plan's annual fiscal year actuarial gains and
 losses smoothed over 5 years starting with the fiscal year ending June 30, 2019.
         (b)      "Legacy unfunded liability" means the unfunded liability of the plan as of June 30, 2023."
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         Section 4. Section 19-8-504, MCA, is amended to read:
         "19-8-504. Employer's contribution -- definitions. (1) From July 1, 2023, through June 30, 2024,
 the employer shall pay as employer contributions 10.56% of the compensation paid to all of the employer's
 employees, except those properly excluded from membership.
         (2)      (a) Beginning July 1, 2024, each employer shall pay as employer contributions an actuarially
 determined employer contribution that is determined annually by the public employees' retirement board's
 actuary in accordance with the provisions of this section and part of the plan's annual actuarial valuation. This
 actuarially determined employer contribution is effective July 1 following the annual actuarial valuation
 completed in the prior calendar year with a maximum annual increase of no more than 0.5% in any year.
         (b)      The actuarially determined employer contribution must be the sum of the following contribution
 rates minus the employee contribution provided in 19-8-502:
         (i)      the contribution rate determined under subsection (2)(c) to pay off the legacy unfunded liability;
         (ii)     the contribution rate determined under subsection (2)(d) to pay for the contemporary unfunded
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 liability; and
          (iii)    the contribution rate determined under subsection (2)(e) to pay for the normal cost of benefits
 as they accrue.
          (c)      (i) Except as provided in subsection (2)(c)(ii), the contribution rate under subsection (2)(b)(i) for
 the legacy unfunded liability must be the amount required on a level percent basis to amortize the legacy
 unfunded liability attributable to the employer's employees over a closed 25-year amortization period beginning
 July 1, 2023.
          (ii)     If the June 30, 2023, actuarial valuation determines the system's amortization period is less
 than 25 years, then the closed amortization period used for the purposes of subsection (2)(c)(i) must be that
 amortization period.
          (d)      The contribution rate under subsection (2)(b)(ii) for the contemporary unfunded liability must be
 the amount required on a level percent basis to pay the annual conte