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S1083..........................................by COMMERCE AND HUMAN RESOURCES
PUBLIC EMPLOYEE RETIREMENT SYSTEM - Amends existing law relating to
extraordinary gains in the Public Employee Retirement System to provide a
specific application for the allocation to employers of paid firefighters.
02/07 Senate intro - 1st rdg - to printing
02/10 Rpt prt - to Com/HuRes
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-seventh Legislature First Regular Session - 2003
IN THE SENATE
SENATE BILL NO. 1083
BY COMMERCE AND HUMAN RESOURCES COMMITTEE
1 AN ACT
2 RELATING TO EXTRAORDINARY GAINS IN THE PUBLIC EMPLOYEE RETIREMENT SYSTEM;
3 AMENDING SECTION 59-1309, IDAHO CODE, TO PROVIDE A SPECIFIC APPLICATION
4 FOR THE ALLOCATION TO EMPLOYERS OF PAID FIREFIGHTERS.
5 Be It Enacted by the Legislature of the State of Idaho:
6 SECTION 1. That Section 59-1309, Idaho Code, be, and the same is hereby
7 amended to read as follows:
8 59-1309. ALLOCATION OF EXTRAORDINARY GAINS. (1) At the close of each fis-
9 cal year, the board shall determine whether the fund has experienced extraor-
10 dinary gains. If extraordinary gains exist the board may allocate all or part
11 of them as set forth in this section. In determining whether extraordinary
12 gains should be allocated, the board shall exercise its fiduciary discretion.
13 (2) Extraordinary gains are defined as the excess, if any, at the close
14 of the fiscal year of plan assets over the plan's accrued actuarially deter-
15 mined liabilities plus a sum necessary to absorb a one (1) standard deviation
16 market event without increasing contribution rates, as determined by the
17 board.
18 (3) If the board determines that extraordinary gains should be allocated,
19 the gains shall be allocated to retirees, to active members, and to employers
20 in such proportion as determined by the board. The board shall determine no
21 later than the first day of December following the close of the fiscal year
22 the amount of extraordinary gains to be allocated, if any.
23 (4) Retirees shall receive their allocation in the form of a one-time
24 payment made in addition to their regular monthly benefit payments. For pur-
25 poses of this section, "retirees" include retired members, members receiving a
26 disability retirement allowance, contingent annuitants, and surviving spouses
27 who elected the annuity option under section 59-1361(5), Idaho Code. To par-
28 ticipate in the retiree allocation, a retiree must be receiving a regular
29 monthly allowance at the close of the fiscal year and on the date of distribu-
30 tion. The retiree allocation shall be distributed proportionally based on the
31 final monthly retirement allowance of the fiscal year divided by the total of
32 all monthly retirement allowances paid for the same month. The date of distri-
33 bution shall be no later than the first day of February following the close of
34 the fiscal year.
35 (5) Active members shall receive their allocation as a transfer of funds
36 to a supplemental retirement account established by the board. Funds trans-
37 ferred to or held in supplemental retirement accounts shall be accounted for
38 separately and shall not be considered in determining any other benefits under
39 this chapter. To participate in the active member allocation, the member must
40 have been an active member on the last day of the fiscal year and have accrued
41 at least twelve (12) months of service on that date. Any member who has with-
42 drawn contributions from the fund prior to the date of transfer is not eligi-
43 ble to receive a transfer under this section. The active member allocation
2
1 shall be distributed proportionally based on accumulated contributions at the
2 close of the fiscal year divided by the total accumulated contributions of all
3 active members at the close of the fiscal year, not to exceed the amount that
4 would result by applying the limits imposed by rule or by section 415(c)(1) of
5 the Internal Revenue Code to compensation earned during the fiscal year. The
6 transfer of funds shall occur in the following calendar year but shall be sub-
7 ject to reduction and forfeiture, based on the application of limits imposed
8 by rule or by section 415 of the Internal Revenue Code for that year.
9 (6) Employers shall receive their allocation as a credit against future
10 contributions required by section 59-1325, Idaho Code, except as provided in
11 subsection (7) of this section. Credits are not available to any employer who
12 has withdrawn from participation in the fund prior to the transfer date. The
13 employer allocation shall be credited proportionally based on employer contri-
14 bution liability accrued during the fiscal year as provided in section
15 59-1322, Idaho Code, divided by the total employer contribution liability for
16 the fiscal year. The credits shall be established no later than the first day
17 of February following the close of the fiscal year. The credits shall be
18 applied thereafter in the same manner as provided in section 59-1325, Idaho
19 Code, until exhausted, except as provided in subsection (7) of this section.
20 If, after twelve (12) months of remittances, an employer's credits have not
21 been exhausted, and the employer has not withdrawn from participation in the
22 fund, the value of the remaining credits shall carry over to the next year,
23 together with an interest payment equal to regular interest on the remaining
24 credits.
25 (7) Before applying credits to employers who are required to pay excess
26 costs related to the firefighters' retirement fund, as provided in section
27 59-1394, Idaho Code, the board shall determine the funding status of the fire-
28 fighters' retirement fund at the end of the same fiscal year used to determine
29 the existence of extraordinary gains. If the board determines that an unfunded
30 liability exists in the firefighters' retirement fund at that time, a portion
31 of the credits of such employers shall not be credited against future contri-
32 butions required by section 59-1325, Idaho Code, but shall be retained by the
33 board and considered a contribution toward excess costs of the firefighters'
34 retirement fund. The portion of the credit to be contributed to excess costs
35 will be determined by dividing the employer's annual contribution liability
36 under section 59-1393(3), Idaho Code, by the employer's annual contribution
37 liability used for purposes of subsection (6) of this section, multiplied by
38 the amount of the employer's gain sharing allocation, and divided by two (2).
39 In the event the amount of extraordinary gains allocated by the board pursuant
40 to subsection (1) of this section is greater than five percent (5%) of the
41 plan's accrued actuarially determined liabilities plus one (1) standard devia-
42 tion, as determined by the board in subsection (2) of this section, then the
43 portion of the credit to be contributed to excess costs will be determined by
44 dividing the employer's annual contribution liability for all employees sub-
45 ject to excess cost contributions under section 59-1394, Idaho Code, by the
46 employer's annual total contribution liability for all employees, multiplied
47 by the amount of the employer's gain sharing allocation. This application of
48 credits does not otherwise affect the employer's contribution obligations.
STATEMENT OF PURPOSE
RS 12905C1
In 1980, the existing underfunded Firefighters Retirement Fund
was merged into PERSI. The benefits received by FRF participants
are paid from FRF and PERSI funds. Most of the firefighters.
covered under FRF are now retired.
In 1999, PERSI was restructured and the concept of gain sharing
among active employees, retirees and employers was approved by
the legislature. The employer portion is held by PERSI as a
credit against future required contributions. This legislation
would allow FRF employers to make supplemental contributions to
the FRF from the employer s gain sharing funds. If the PERSI
board determines that the fund has experienced extraordinary
gains, and that gain sharing will occur pursuant to Idaho Code
59-1394 (1), it will compute the portion of the gain to be
allocated that relates to FRF employers firefighter personnel
according to a formula and transfer the funds to FRF as a
supplemental contribution.
FISCAL IMPACT
No impact to the state general fund. Additional contributions in
years when gain sharing does occur will reduce the unfunded
liability in the FRF fund.
Contact:
Name: Sen. Hal Bunderson
Phone: 332-1330
Name: Steve Purvis
Agency: City of Boise
Phone: 384-3733
STATEMENT OF PURPOSE/FISCAL IMPACT S 1083