WEST VIRGINIA LEGISLATURE
2024 REGULAR SESSION
Committee Substitute for Senate Bill 670
By Senator Nelson [Originating in the Committee on Pensions; reported on February 15, 2024]
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1 A BILL to amend and reenact §33-3-14d of the Code of West Virginia, 1931, as amended, relating
2 to distributions from funds collected from a premium tax on fire insurance and casualty
3 insurance policies; clarifying requirements of distributions from funds collected from a
4 premium tax on fire insurance and casualty policies; directing that 10 percent of funds
5 collected from a premium tax on fire insurance and casualty insurance policies currently
6 paid to the Teachers Retirement System be deposited in the Municipal Pensions Security
7 Fund to be distributed by the Municipal Pensions Oversight Board in certain
8 circumstances; deleting obsolete language; clarifying distribution and allocation amounts;
9 and decreasing the time in which a municipal policeman's or fireman's pension and relief
10 funds may fail to comply with investment provisions before it may be required to invest with
11 the state Investment Management Board in order to continue to receive funds from a
12 premium tax on fire insurance and casualty insurance policies.
Be it enacted by the Legislature of West Virginia:
ARTICLE 3. LICENSING, FEES, AND TAXATION OF INSURERS.
§33-3-14d. Additional fire and casualty insurance premium tax; allocation of proceeds;
effective date.
1 (a)(1) For the purpose of providing additional revenue for municipal policemen's and
2 firemen's pension and relief funds and the Teachers Retirement System Reserve Fund and for
3 volunteer and part-volunteer fire companies and departments, there is hereby levied and imposed
4 an additional premium tax equal to one percent of taxable premiums for fire insurance and
5 casualty insurance policies. For purposes of this section, casualty insurance does not include
6 insurance on the life of a debtor pursuant to or in connection with a specific loan or other credit
7 transaction or insurance on a debtor to provide indemnity for payments becoming due on a
8 specific loan or other credit transaction while the debtor is disabled as defined in the policy.
9 (2) All moneys collected from this additional tax shall be received by the commissioner and
10 paid by him or her into a special account in the State Treasury, designated the Municipal Pensions
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11 and Protection Fund, to be allocated as follows: Provided, That on or after January 1, 2010, the
12 commissioner shall pay 10 percent of the amount collected to the Teachers Retirement System
13 Reserve Fund created in §18-7A-18 of this code,
14 (A) 25 Twenty-five percent of the amount collected to shall be deposited in the Fire
15 Protection Fund created in §33-3-33 of this code for allocation distribution by the State Treasurer
16 to volunteer and part-volunteer fire companies and departments according to the requirements of
17 §33-3-33 of this code; and
18 (B) Beginning on January 1, 2025, and continuing until December 31, 2036, the
19 commissioner shall deposit 10 percent of the amount collected in the Municipal Pensions Security
20 Fund created in §8-22-18b of this code to be distributed in accordance with the provisions of this
21 section. Provided, this 10 percent is eligible to be distributed only to municipal policemen’s or
22 firemen’s pension and relief funds which are employing the Alternative or Conservation methods
23 of financing as defined in §8-22-20 of this code on October 1, 2024, and which change the method
24 of financing to either the Optional or the Optional II methods of financing as defined in §8-22-20 of
25 this code on or before October 1, 2027. The annual distribution of the product of a pro rata share
26 based on the corresponding municipality’s average number of police officers and firefighters who
27 worked at least 100 hours per month during the preceding fiscal year and the average monthly
28 number of retired police officers and firefighters during the preceding fiscal year shall be allocated
29 and authorized for distribution to those municipal policemen's and firemen's pension and relief
30 funds which, as of October 1, 2024, employ the Alternative or Conservation funding methodology
31 provided for in §8-22-20 of this code, and which have, by October 1, 2027, elected to change to the
32 Optional or Optional II funding methodology provided for in §8-22-20 of this code. Provided,
33 further, that eligibility for any share of this 10 percent may last no longer than 10 years or until the
34 plan demonstrates an unfunded liability of less than 40 percent, whichever occurs first. The
35 revenues from this ten percent that were allocated to a fund no longer eligible, shall be allocated to
36 all other pension and relief funds which meet the criteria described in this paragraph; and
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37 65 percent of the amount collected to the Municipal Pensions and Protection Fund:
38 Provided, however, That upon notification by the Municipal Pensions Oversight Board pursuant to
39 the provisions of §8-22-18b this code, on or after January 1, 2010, or as soon thereafter as the
40 Municipal Pensions Oversight Board is prepared to receive the funds,
41 (C) Beginning on January 1, 2025, and continuing until December 31, 2036, the
42 commissioner shall deposit 65 percent of the amount collected by the commissioner shall be
43 deposited in the Municipal Pensions Security Fund created in §8-22-18b of this code. The net
44 proceeds of this tax after appropriation thereof by the Legislature is to be distributed in accordance
45 with the provisions of this section, except for distribution from proceeds pursuant to §8-22-18a(d)
46 of this code:. Beginning on January 1, 2037, the commissioner shall deposit 75 percent of the
47 amount collected in the Municipal Pensions Security Fund created in §8-22-18b of this code to be
48 distributed in accordance with the provisions of this section, except for distribution from proceeds
49 pursuant to §8-22-18a(d) of this code. Provided, however, That, if after October 1, 2027, and
50 before January 1, 2037, the final pension and relief fund eligible to receive funds in accordance
51 with the requirements of paragraph (B) of this subdivision surpasses its 10 year eligibility limit or
52 demonstrates an unfunded liability of less than 40 percent, then the commissioner shall deposit 75
53 percent of the amount collected in the municipal Pensions Security Fund created in §8-22-18b of
54 this code to be distributed in accordance with the provisions of this section.
55 (b) Municipal Pensions Security Fund allocation and distribution —
56 (1) Before August 1 of each year, the treasurer of each municipality in which a municipal
57 policemen's or firemen’s pension and relief fund is established shall report to the State
58 Treasurer Municipal Pensions Oversight Board the average monthly number of members who
59 worked at least 100 hours per month and the average monthly number of retired members of
60 municipal policemen's or firemen’s pension and relief fund or the Municipal Police Officers and
61 Firefighters Retirement System during the preceding fiscal year. Provided, That beginning in the
62 year 2010 and continuing thereafter, the report shall be made to the oversight board created in §8-
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63 22-18a of this code. These reports received by the oversight board shall be provided annually to
64 the State Treasurer by September 1.
65 (2) Before September 1 of each calendar year, the State Treasurer, or the Municipal
66 Pensions Oversight Board once in operation, shall allocate and authorize for distribution the
67 revenues in the Municipal Pensions and Protection Fund which were collected during the
68 preceding calendar year for the purposes set forth in this section. Before September 1 of each
69 calendar year, and after the Municipal Pensions Oversight Board has notified the Treasurer and
70 commissioner pursuant to §8-22-18b of this code, the Municipal Pensions Oversight Board shall
71 allocate and authorize for distribution the revenues in the Municipal Pensions Security Fund which
72 were collected during the preceding calendar year for the purposes set forth in this section. In any
73 year the actuarial report required by §8-22-20 of this code indicates no actuarial deficiency exists
74 in the municipal policemen's or firemen's pension and relief fund and that no pension funding
75 revenue bonds of the building commission of such municipality remain outstanding, no revenues
76 may be allocated from the Municipal Pensions and Protection Fund or the Municipal Pensions
77 Security Fund to that fund. The revenues from the Municipal Pensions and
78 Protection Security Fund shall then be allocated to all other pension and relief funds which have
79 an actuarial deficiency. Pension funding revenue bonds include bonds of a municipality’s building
80 commission the net proceeds of which were used to fund either or both of a municipality’s
81 policemen's or firemen’s pension and relief fund or bonds issued to refinance such bonds.
82 (3) The Municipal Pensions Oversight Board shall annually review the investment
83 performance of each municipal policemen's or firemen's pension and relief fund. If the municipal
84 pension and relief fund's board fails for three consecutive years to comply with the investment
85 provisions established by §8-22-22a of this code, the oversight board may require the municipal
86 policemen's or firemen's pension and relief fund to invest with the Investment Management Board
87 to continue to receive its allocation of funds from the premium tax. If the municipal pension and
88 relief fund fails to move its investments to the Investment Management Fund within the 18-month
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89 drawdown period, provided in §8-22-19(e) of this code, the revenues shall be reallocated to all
90 other municipal policemen's or firemen's pension and relief funds that have drawn down one
91 hundred percent of their allocations.
92 (4) The moneys, and the interest earned thereon, in the Municipal Pensions and Protection
93 Fund allocated to volunteer and part-volunteer fire companies and departments shall be allocated
94 and distributed quarterly to the volunteer fire companies and departments. Before each
95 distribution date, the State Fire Marshal shall report to the State Treasurer the names and
96 addresses of all volunteer and part-volunteer fire companies and departments within the state
97 which meet the eligibility requirements established in §8-15-8a of this code.
98 (c) (1) (3) Each municipal pension and relief fund shall have allocated and authorized for
99 distribution a pro rata share of the revenues, the amount of which was the tax collected during the
100 fiscal year ending June 30, 1996, allocated to municipal policemen's and firemen's pension and
101 relief funds based on the corresponding municipality's average monthly number of police officers
102 and firefighters who worked at least one hundred hours per month during the preceding fiscal year.
103 On and after July 1, 1997, from the growth in any moneys collected pursuant to the tax imposed by
104 this section and earnings and interest thereon, there shall be allocated and authorized for
105 distribution to each municipal policemen’s or municipal firemen’s pension and relief fund, a pro
106 rata share of the revenues allocated to municipal policemen's and firemen's pension and relief
107 funds based on the corresponding municipality's average number of police officers and firefighters
108 who worked at least 100 hours per month during the preceding fiscal year and the average
109 monthly number of retired police officers and firefighters during the preceding fiscal year. For the
110 purposes of this subsection, the growth in moneys collected and earnings from the tax collected
111 pursuant to this section is determined by subtracting the amount of the tax collected during the
112 fiscal year ending June 30, 1996, which was $8,709,689.42, from the tax collected during the fiscal
113 year for which the allocation is being made and interest thereon. All moneys received by municipal
114 pension and relief funds under this section may be expended only for those purposes described in
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115 §8-22-16 through §8-22-28a of this code. Notwithstanding the foregoing provision of this
116 subdivision, if a municipality has outstanding pension funding revenue bonds and continues to pay
117 the normal cost of its policemen’s and firemen’s pension and relief funds, then the allocable share
118 of revenues to be allocated which would otherwise have been allocated to a municipal policemen's
119 or firemen's pension and relief fund shall instead be allocated to the trustee of any outstanding
120 pension funding revenue bonds.
121 (2) Each volunteer fire company or department shall receive an equal share of the
122 revenues allocated for volunteer and part-volunteer fire companies and departments.
123 (3) In addition to the share allocated and distributed in accordance with subdivision (1) of
124 this subsection, each municipal fire department composed of full-time paid members and
125 volunteers and part-volunteer fire companies and departments shall receive a share equal to the
126 share distributed to volunteer fire companies under subdivision (2) of this subsection reduced by
127 an amount equal to the share multiplied by the ratio of the number of full-time paid fire department
128 members who are also members of a municipal firemen's pension and relief fund or the Municipal
129 Police Officers and Firefighters Retirement System to the total number of members of the fire
130 department. If a municipality has outstanding pension funding revenue bonds and continues to
131 pay the normal cost of its policemen’s and firemen’s pension and relief funds, then the share that
132 would otherwise be payable to the municipality’s firemen’s pension and relief fund pursuant to this
133 subsection shall be paid to the trustee of such outstanding pension funding revenue bonds.
134 (d) (4) The allocation and distribution of revenues provided in this section are subject to the
135 provisions of §8-22-20, §8-15-8a, and §8-15-8b of said chapter this code.
136 (c) The Municipal Pensions Oversight Board shall annually review the investment
137 performance of each municipal policemen's or firemen’s pension and relief fund. If a municipal
138 pension and relief fund's board fails for two consecutive fiscal years to comply with the investment
139 provisions established by §8-22-22a of this code, the board may require the municipal policemen's
140 or firemen's pension and relief fund to invest with the Investment Management Board to continue
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141 to receive its allocation of funds from the premium tax. If the municipal pension and relief fund fails
142 to move its investments to the Investment Management Board within the 18-month drawdown
143 period provided in §8-22-19(e) of this code, the revenues shall be reallocated to all other municipal
144 policemen's or firemen's pension and relief funds that have drawn down 100 percent of their
145 allocations.
146 (e) (d) Based upon the findings of an audit by the Treasurer, the Legislature hereby finds
147 and declares that during the period of 1982 through April 27, 2012, allocations from the Municipal
148 Pensions and Protection Fund were miscalculated and errors were made in amounts transferred,
149 resulting in overpayments and underpayments to the relief and pension funds and to the Teachers
150 Retirement System, and that the relief and pension funds and the Teachers Retirement System
151 were not at fault for any of the overpayments and underpayments. The Legislature hereby further
152 finds and declares that any attempt by the Municipal Pension Oversight Board or other entity to
153 recover any of the overpayments would be unjust and create economic hardship for the entities
154 that received overpayments. No entity, including, without limitation, the Municipal Pension
155 Oversight Board, may seek to recover from a relief or pension fund, the Teachers Retirement
156 System or the state any overpayments received from the Municipal Pensions and Protection Fund
157 and the overpayments are not subject to recovery, offset, or litigation. Pursuant to the audit by the
158 Treasurer, the amount of $3,631,846.55 is determined owed to specific relief and pension funds
159 through the period of April 27, 2012. The Treasurer is hereby authorized to transfer the amount of
160 $3,631,846.55 from the Unclaimed Property Trust Fund to the Municipal Pensions and Protection
161 Fund, which is hereby reopened for the sole purpose of the transfer and remittances pursuant to
162 this subsection, and to use the amount transferred to remit the amounts due to the pension and
163 relief funds. The payment of $3,631,846.55 to the pension and relief funds is complete satisfaction
164 of any amounts due and no entity, including, without limitation, the Municipal Pension Oversight
165 Board, and any pension or relief fund, may seek to recover any further amounts.
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NOTE: The purpose of this bill is to reallocate ten basis points of the one percent premium tax on fire insurance and casualty policies from the Teachers Retirement System to the Municipal Pensions Security Fund, and to decrease the amount of time in which a municipal policeman's or firefighter's pension and relief fund may be in noncompliance with the Municipal Pensions Oversight Board's investment requirements before it