PRINTER'S NO. 3890
No. 2620 Session of 2004
INTRODUCED BY T. STEVENSON, ALLEN, BASTIAN, BELFANTI,
BENNINGHOFF, CAPPELLI, DENLINGER, DeWEESE, FAIRCHILD,
FICHTER, FLEAGLE, GOOD, GOODMAN, GRUCELA, HERMAN, HESS,
HUTCHINSON, KENNEY, LaGROTTA, LAUGHLIN, LEH, MANN, MARKOSEK,
McCALL, McILHATTAN, MICOZZIE, MUNDY, NAILOR, O'NEILL,
PHILLIPS, PISTELLA, REED, REICHLEY, RUBLEY, SANTONI, SATHER,
SCAVELLO, SCHRODER, SCRIMENTI, SOLOBAY, STAIRS, R. STEVENSON,
SURRA, TANGRETTI, E. Z. TAYLOR, TIGUE, TRAVAGLIO, TURZAI,
WEBER, WRIGHT AND SEMMEL, MAY 24, 2004
REFERRED TO COMMITTEE ON EDUCATION, MAY 24, 2004
AN ACT
1 Amending Title 24 (Education) of the Pennsylvania Consolidated
2 Statutes, further providing for definitions, for management
3 of funds and accounts and for actuarial cost method.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. The definition of "valuation interest" in section
7 8102 of Title 24 of the Pennsylvania Consolidated Statutes is
8 amended and the section is amended by adding definitions to
9 read:
10 § 8102. Definitions.
11 The following words and phrases when used in this part shall
12 have, unless the context clearly indicates otherwise, the
13 meanings given to them in this section:
14 * * *
15 "Actual interest." Amounts credited annually to the annuity
1 reserve account calculated by multiplying the difference of the
2 fund's time-weighted rate of return for the preceding year minus
3 the Public School Employees' Retirement Board's actuarial
4 interest rate assumption for the preceding year, times the mean
5 amount of the annuity reserve account for the preceding year.
6 * * *
7 "Time-weighted rate of return." The fund's total investment
8 return, including both realized and unrealized gains and losses,
9 based on the actuarial value of assets used for determining
10 annual contribution rates.
11 "Valuation interest." Interest at 5 1/2% per annum,
12 compounded annually and applied to all accounts other than the
13 members' savings account and the annuity reserve account.
14 * * *
15 Section 2. Section 8328(d) of Title 24 is amended and the
16 section is amended by adding a subsection to read:
17 § 8328. Actuarial cost method.
18 * * *
19 (d) Supplemental annuity contribution rate.--Contributions
20 from the Commonwealth and other employers required to provide
21 for the payment of the supplemental annuities provided for in
22 sections 8348, 8348.1, 8348.2, 8348.4 and 8348.5 shall be paid
23 over a period of ten years from July 1, 2002. The funding for
24 the supplemental annuities commencing 2002 provided for in
25 section 8348.6 shall be as provided in section 8348.6(f). The
26 funding for the supplemental annuities commencing 2003 provided
27 for in section 8348.7 shall be as provided in section 8348.7(f).
28 The amount of each annual supplemental annuities contribution
29 shall be equal to the amount of such contribution for the fiscal
30 year beginning July 1, 2002. In the event that supplemental
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1 annuities are increased by legislation enacted subsequent to
2 June 30, 2002, the additional liability for the increased
3 benefits to be amortized shall be funded in equal dollar annual
4 installments over a period of ten years. Beginning with the
5 fiscal year ending June 30, 2006, and continuing annually
6 thereafter, the supplemental annuity contribution rate shall be
7 calculated by the actuary as the contributions from the
8 Commonwealth and other employers required to provide for the
9 payment of the supplemental annuities, less the supplemental
10 annuity adjustment factor calculated in subsection (g), but in
11 no case shall it be less than zero. The sums calculated by the
12 actuary shall be funded in equal dollar annual installments over
13 periods of 20 years.
14 * * *
15 (g) Supplemental annuity adjustment factor.--Beginning with
16 the fiscal year ending June 30, 2006, and continuing annually
17 thereafter, any increase or decrease in the accrued liability
18 for annuitant member benefits due to the crediting of actual
19 interest shall be amortized in equal dollar annual installments
20 over a period of ten years beginning with July 1 next succeeding
21 the actuarial valuation.
22 Section 3. Sections 8521(b) and 8525(a) of Title 24 are
23 amended to read:
24 § 8521. Management of fund and accounts.
25 * * *
26 (b) Crediting of interest.--The board annually shall allow
27 statutory interest to the credit of the members' savings account
28 on the mean amount of the accumulated deductions of all members
29 for whom interest is payable for the preceding year [and
30 valuation]. Beginning with the fiscal year ending June 30, 2005,
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1 the board annually shall allow actual interest on the mean
2 amount of the annuity reserve account for the preceding year to
3 the credit of that account. The board annually shall allow
4 valuation interest calculated on the mean amount for the
5 preceding year of the balance in the State accumulation account
6 excluding any earnings of the fund credited to the account
7 during that year. In the event the total earnings for the year
8 do not exceed 5 1/2% of the mean amount for the preceding year
9 of the total assets of the fund less earnings credited to the
10 fund during that year plus the administrative expenses of the
11 board, the difference required to be appropriated from the
12 General Fund shall be credited to the State accumulation
13 account.
14 * * *
15 § 8525. Annuity reserve account.
16 (a) Credits and charges to account.--The annuity reserve
17 account shall be the ledger account to which shall be credited
18 the reserves held for the payment of annuities and death
19 benefits on account of all annuitants and the contributions from
20 the Commonwealth and other employers as determined in accordance
21 with section 8328 (relating to actuarial cost method) for the
22 payment of the supplemental annuities provided in sections 8348
23 (relating to supplemental annuities), 8348.1 (relating to
24 additional supplemental annuities), 8348.2 (relating to further
25 additional supplemental annuities), 8348.3 (relating to
26 supplemental annuities commencing 1994), 8348.4 (relating to
27 special supplemental postretirement adjustment), 8348.5
28 (relating to supplemental annuities commencing 1998), 8348.6
29 (relating to supplemental annuities commencing 2002) and 8348.7
30 (relating to supplemental annuities commencing 2003). The
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1 annuity reserve account shall be credited with [valuation]
2 actual interest. After the transfers provided in sections 8523
3 (relating to members' savings account) and 8524 (relating to
4 State accumulation account), all annuity and death benefit
5 payments shall be charged to the annuity reserve account and
6 paid from the fund.
7 * * *
8 Section 4. This act shall take effect immediately.
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