Report Title:

Employees' Retirement System

 

Description:

Segregates teachers from all other employees for determination of employer normal cost, accrued liability contributions, and annual contributions by the State and counties.

 


THE SENATE

S.B. NO.

1025

TWENTY-FIFTH LEGISLATURE, 2009

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT


 

 

RELATING TO THE EMPLOYEES' RETIREMENT SYSTEM.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


SECTION 1. The purpose of this Act is to segregate teachers from all other employees, for determination of employer normal cost and accrued liability contributions; and for determination of amount of annual contributions by the State and counties. The segregation of teachers will properly reflect contributions to the employees' retirement system attributable to teachers as of the June 30, 2008 actuarial valuation report.

SECTION 2. Section 88-122, Hawaii Revised Statutes, is amended to read as follows:

"88-122 Determination of employer normal cost and accrued liability contributions. (a) Based on regular interest and such mortality and other tables as are adopted by the board of trustees, the actuary engaged by the board, on the basis of successive annual actuarial valuations, shall determine the employer's normal cost and accrued liability contributions for each fiscal year beginning July 1 separately for the following [two] three groups of employees:

(1) Police officers, firefighters, and corrections officers; [and]

(2) Teachers; and

[(2)] (3) All other employees.

(b) The actuarial valuations made for years after June 30, 1999, shall be based on an eight per cent investment yield rate, salary increase assumptions adopted by the board on the recommendation of the actuary described under section 88-30, and tables, contribution rates, and factors adopted by the board or legislature for actuarial valuations of the system, subject to recommendations made by the actuary appointed under section 88-29.

(c) With respect to each of the following two groups of employees [in subsection (a)], police officers, firefighters, and corrections officers; and all other employees, the normal cost for each year after June 30, 1994, shall be the percentage of the aggregate annual compensation of employees as of March 31 of the valuation year as determined by the actuary using the entry age normal cost funding method. On each June 30 the board shall determine the allocation of the assets of the pension accumulation fund between the two groups of employees [in subsection (a);], police officers, firefighters, and corrections officers; and all other employees; provided that the assets of the pension accumulation fund as of June 30, 1976, shall be allocated between the two groups in the same proportion as the aggregate annual compensation of each group as of March 31, 1976.

(d) Commencing with fiscal year 1994-1995 and each subsequent fiscal year, the actuary shall determine the total unfunded accrued liability using the entry age normal cost funding method separately for each of the following two groups of employees [in subsection (a).], police officers, firefighters, and corrections officers; and all other employees. The accrued liability contribution for [each of the two groups of employees] police officers, firefighters, and corrections officers; and all other employees shall be the annual payment required to liquidate the unfunded accrued liability over a period of twenty-nine years beginning July 1, 2000. Any increase or decrease in the total unfunded accrued liability resulting from legislative changes in the benefit provisions of the employees' retirement system shall be liquidated over a period of time to be determined by the actuary.

(e) Commencing with fiscal year 2005-2006 and each subsequent fiscal year, the employer contributions for normal cost and accrued liability for [each of the two groups of employees in subsection (a)] police officers, firefighters, and corrections officers; and all other employees shall be based on fifteen and three-fourths per cent of the member's compensation for police officers, firefighters, and corrections officers and thirteen and three-fourths per cent of the member's compensation for all other employees. Commencing with fiscal year 2008-2009 and each subsequent fiscal year, the employer contributions for normal cost and accrued liability for [each of the two groups of employees in subsection (a)] police officers, firefighters, and corrections officers; and all other employees shall be based on nineteen and seven-tenths per cent of the member's compensation for police officers, firefighters, and corrections officers and fifteen per cent of the member's compensation for all other employees.

(f) Commencing with fiscal year 2009-2010 and each subsequent fiscal year, the employer contributions for normal cost and accrued liability for each of the three groups of employees in subsection (a) shall be based on the following percentages:

(1) Nineteen and seven-tenths per cent of the member's compensation for police officers, firefighters, and corrections officers;

(2) Eighteen and eleven-hundredths per cent of the member's compensation for teachers; and

(3) Thirteen and seven-tenths per cent of the member's compensation for all other employees.

The contribution rates shall amortize the total unfunded accrued liability of the entire plan over a period not to exceed thirty years. Effective January 2, 2008 until January 2, 2011, there shall be no benefit enhancements under this chapter for any group of members, including any reduction of retirement age, when there is an unfunded accrued liability.

The contribution rates shall be subject to adjustment:

(1) If the actual period required to amortize the unfunded accrued liability exceeds thirty years;

(2) If there is no unfunded accrued liability; or

(3) Based on the actuarial investigation conducted in accordance with section 88-105."

SECTION 3. Section 88-123, Hawaii Revised Statutes, is amended to read as follows:

"88-123 Amount of annual contributions by the State and counties. The contribution payable in each year to the pension accumulation fund by the State and by each county shall be determined by allocating the sum of the normal cost and the accrued liability contribution for:

(1) Police officers, firefighters, and corrections officers, the latter after the actual transfer of all county jails pursuant to executive order of the governor; [and]

(2) Teachers; and

[(2)] (3) All other employees,

in the same proportion as the aggregate annual compensation of each group employed by the State and by each county, respectively, as of March 31 of the valuation year. Commencing with fiscal year 2005-2006, the contribution payable in each year to the pension accumulation fund by the State and each county, respectively, shall be determined by multiplying the contribution rates in section 88-122(e) by the actual covered payroll in a given fiscal year for [each of the two groups of employees in section 88-122(a).] police officers, firefighters, and corrections officers; and all other employees. Commencing with fiscal year 2009-2010, the contribution payable in each year to the pension accumulation fund by the State and each county, respectively, shall be determined by multiplying the contribution rates in section 88-122(f) by the actual covered payroll in a given fiscal year for each of the three groups of employees in section 88-122(a)."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2009.

 

INTRODUCED BY:

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By Request