SENATE BILL No. 1178

 

 

November 8, 2018, Introduced by Senator HANSEN and referred to the Committee on Government Operations.

 

 

 

     A bill to amend 2017 PA 202, entitled

 

"Protecting local government retirement and benefits act,"

 

by amending section 5 (MCL 38.2805); and to repeal acts and parts

 

of acts.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 5. (1) For purposes of reporting under this section, the

 

state treasurer shall annually establish uniform actuarial

 

assumptions of retirement systems that include, but are not limited

 

to, investment returns, salary increase rates, mortality tables,

 

discount rates, and health care inflation. All of the following

 

apply to assumptions established under this subsection:

 

     (a) Unfunded actuarial accrued liability must be amortized

 

using a closed schedule.

 

     (b) Annual required contributions must be determined using a

 

level dollar amortization schedule.

     (c) Annual required contributions must not be determined using

 

an amortization period of greater than 20 years for retirement

 

pension benefits.

 

     (d) Annual required contributions must not be determined using

 

an amortization period of greater than 30 years for retirement

 

health benefits.

 

     (e) Salary increase assumptions must not exceed 3.5% and must

 

be based on the local unit of government's actual historical and

 

projected salary increase trends.

 

     (f) The actuarially assumed rate of investment return is no

 

more than 200 basis points above the rate of return on 20-year

 

United States Treasury bonds.

 

     (g) The local unit of government's liability for retirement

 

pension benefits must be discounted using a market value of

 

liabilities.

 

     (h) The local unit of government's liability for retirement

 

health benefits must be valued using the average rate of return for

 

all municipal securities issued under the revised municipal finance

 

act, 2001 PA 34, MCL 141.2101 to 141.2821, as determined by the

 

state treasurer.

 

     (i) The mortality tables must be based on the most current

 

mortality table established by the Society of Actuaries.

 

     (j) The health care inflation rate must reflect the actual and

 

expected trends for this state.

 

     (2) The state treasurer shall create an evaluation system and

 

provide for review and oversight under this act of an underfunded

 

local unit of government beginning on the effective date of the

determination by the state treasurer that the local unit of

 

government is in underfunded status.

 

     (3) Each year beginning after December 31, 2017, the state

 

treasurer shall determine the underfunded status of each local unit

 

of government.

 

     (4) The state treasurer shall determine that a local unit of

 

government is in underfunded status if any of the following apply:

 

     (a) The actuarial accrued liability of a retirement health

 

system of the local unit of government is less than 40% funded,

 

according to the most recent annual report, and, if the local unit

 

of government is a city, village, township, or county, the annual

 

required contribution for all of the retirement health systems of

 

the local unit of government is greater than 12% of the local unit

 

of government's annual general fund operating revenues, based on

 

the most recent fiscal year.

 

     (b) The actuarial accrued liability of a retirement pension

 

system of the local unit of government is less than 60% funded,

 

according to the most recent annual report, and, if the local unit

 

of government is a city, village, township, or county, the annual

 

required contribution for all of the retirement pension systems of

 

the local unit of government is greater than 10% of the local unit

 

of government's annual general fund operating revenues, based on

 

the most recent fiscal year.

 

     (c) The local unit of government has not submitted reports as

 

required under this section.

 

     (d) The local unit of government fails to make the payments as

 

described under section 4(1).

     (5) For purposes of the report under subsection (6), a local

 

unit of government shall annually calculate the funded ratios of

 

each retirement system of the local unit of government using the

 

uniform actuarial assumptions established under subsection (1).

 

     (6) A local unit of government shall electronically submit a

 

report in a form prescribed by the department of treasury on an

 

annual basis to the governing body of the local unit of government

 

and the department of treasury no later than 6 months after the end

 

of the local unit of government's fiscal year. The report under

 

this subsection must include at least all of the following:

 

     (a) The funded ratios of each retirement system of the local

 

unit of government.

 

     (b) Annual required contributions for each retirement system

 

of the local unit of government.

 

     (c) The local unit of government's annual general fund

 

operating revenues, if any.

 

     (7) The state treasurer shall post publicly on the department

 

of treasury website all of the following:

 

     (a) The uniform actuarial assumptions under subsection (1).

 

     (b) A summary report of the local unit of government reports

 

submitted under subsection (6).

 

     (c) The underfunded status of local units of government as

 

determined under subsection (3).

 

     (d) The current waiver status of local units of government

 

provided under section 6.

 

     (e) Any corrective action plan approved under section 10.

 

     (8) A local unit of government shall post publicly on its

website, or in a public place if it does not have a website, the

 

information as provided in subsection (7) that is applicable to

 

that local unit of government.

 

     Enacting section 1. Section 2 of the protecting local

 

government retirement and benefits act, 2017 PA 202, MCL 38.2802,

 

is repealed.