Florida Senate - 2013                        COMMITTEE AMENDMENT
       Bill No. CS for SB 534
                                Barcode 641930                          
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                  Comm: RCS            .                                
                  03/21/2013           .                                

       The Committee on Community Affairs (Bradley) recommended the
    1         Senate Amendment (with title amendment)
    3         Delete everything after the enacting clause
    4  and insert:
    5         Section 1. Paragraphs (f) and (g) of subsection (1) of
    6  section 112.63, Florida Statutes, are amended to read:
    7         112.63 Actuarial reports and statements of actuarial
    8  impact; review.—
    9         (1) Each retirement system or plan subject to the
   10  provisions of this act shall have regularly scheduled actuarial
   11  reports prepared and certified by an enrolled actuary. The
   12  actuarial report shall consist of, but shall not be limited to,
   13  the following:
   14         (f) A disclosure of the present value of the plan’s accrued
   15  vested, nonvested, and total benefits, as adopted by the
   16  Financial Accounting Standards Board, using the Florida
   17  Retirement System’s assumed rate of return, in order to promote
   18  the comparability of actuarial data between local plans.
   19         (f)(g) A statement by the enrolled actuary that the report
   20  is complete and accurate and that in his or her opinion the
   21  techniques and assumptions used are reasonable and meet the
   22  requirements and intent of this act.
   24  The actuarial cost methods utilized for establishing the amount
   25  of the annual actuarial normal cost to support the promised
   26  benefits shall only be those methods approved in the Employee
   27  Retirement Income Security Act of 1974 and as permitted under
   28  regulations prescribed by the Secretary of the Treasury.
   29         Section 2. Subsection (14) is added to section 112.66,
   30  Florida Statutes, to read:
   31         112.66 General provisions.—The following general provisions
   32  relating to the operation and administration of any retirement
   33  system or plan covered by this part shall be applicable:
   34         (14) The state is not liable for any obligation relating to
   35  any current or future shortfall in any local government
   36  retirement system or plan.
   37         Section 3. Section 112.664, Florida Statutes, is created to
   38  read:
   39         112.664Reporting standards for defined benefit retirement
   40  plans or systems.—
   41         (1)In addition to the other reporting requirements of this
   42  part, within 180 days after the close of the first plan year
   43  that ends on or after June 30, 2013, and thereafter in each year
   44  required under s. 112.63(2), each defined benefit retirement
   45  system or plan, excluding the Florida Retirement System, shall
   46  prepare and electronically report the following information to
   47  the Department of Management Services in a format prescribed by
   48  the department:
   49         (a)Annual financial statements that are in compliance with
   50  the requirements of the Government Accounting and Standard
   51  Board’s Statement No. 67, Financial Reporting for Pension Plans
   52  and Statement No. 68, Accounting and Financial Reporting for
   53  Pensions.
   54         (b) Annual financial statements similar to those required
   55  under paragraph (a), but which use an assumed rate of return on
   56  investments and an assumed discount rate that are based on the
   57  adjusted 24-month average corporate bond segment rates
   58  determined by the Department of the Treasury under s.
   59  430(h)(2)(c)(iv) of the Internal Revenue Code.
   60         (c) Information indicating the number of months or years
   61  for which the current market value of assets are adequate to
   62  sustain the payment of expected retirement benefits as
   63  determined in the plan’s latest valuation and under the
   64  financial statements prepared pursuant to paragraphs (a) and
   65  (b).
   66         (d) Information indicating the recommended contributions to
   67  the plan based on the plan’s latest valuation, and the
   68  contributions necessary to fund the plan based on financial
   69  statements prepared pursuant to paragraphs (a) and (b), stated
   70  as an annual dollar value and a percentage of valuation payroll.
   71         (2)Each defined benefit retirement system or plan,
   72  excluding the Florida Retirement System, and its plan sponsor:
   73         (a) Shall provide the information required by this section
   74  and the funded ratio of the system or plan as determined in the
   75  most recent actuarial valuation as part of the disclosures
   76  required under s. 166.241(3) and on any website that contains
   77  budget information relating to the plan sponsor or actuarial or
   78  performance information related to the system or plan.
   79         (b) That have a publicly available website shall provide
   80  the plan’s most recent financial statement and actuarial
   81  valuation on that website.
   82         (3) The plan shall be deemed to be in noncompliance if it
   83  has not submitted the required information to the Department of
   84  Management Services within 60 days after receipt of the
   85  certified actuarial report for the plan year for which the
   86  information is required to be submitted to the department.
   87         (a) The Department of Management Services may notify the
   88  Department of Revenue and the Department of Financial Services
   89  of the noncompliance, and the Department of Revenue and the
   90  Department of Financial Services shall withhold any funds not
   91  pledged for satisfaction of bond debt service and which are
   92  payable to the plan sponsor until the information is provided to
   93  the department. The department shall specify the date the
   94  withholding is to begin and notify the Department of Revenue,
   95  the Department of Financial Services, and the plan sponsor 30
   96  days before the specified date.
   97         (b) Within 21 days after receipt of the notice, the plan
   98  sponsor may petition the Department of Management Services for a
   99  hearing under ss. 120.569 and 120.57. The Department of Revenue
  100  and the Department of Financial Services may not be parties to
  101  the hearing, but may request to intervene if requested by the
  102  department or if the Department of Revenue or the Department of
  103  Financial Services determines its interests may be adversely
  104  affected by the hearing.
  105         Section 4. Subsection (1) of section 112.665, Florida
  106  Statutes, is amended to read:
  107         112.665 Duties of Department of Management Services.—
  108         (1) The Department of Management Services shall:
  109         (a) Gather, catalog, and maintain complete, computerized
  110  data information on all public employee retirement systems or
  111  plans in the state, based upon a review of audits, reports, and
  112  other data pertaining to the systems or plans;
  113         (b) Receive and comment upon all actuarial reviews of
  114  retirement systems or plans maintained by units of local
  115  government;
  116         (c) Cooperate with local retirement systems or plans on
  117  matters of mutual concern and provide technical assistance to
  118  units of local government in the assessment and revision of
  119  retirement systems or plans;
  120         (d) Annually issue, by January 1 annually, a report to the
  121  President of the Senate and the Speaker of the House of
  122  Representatives, which report details division activities,
  123  findings, and recommendations concerning all governmental
  124  retirement systems. The report may include legislation proposed
  125  to carry out such recommendations;
  126         (e) Provide a fact sheet for each participating local
  127  government defined benefit pension plan which summarizes
  128  summarizing the plan’s actuarial status. The fact sheet should
  129  provide a summary of the plan’s most current actuarial data,
  130  minimum funding requirements as a percentage of pay, and a 5
  131  year history of funded ratios. The fact sheet must include a
  132  brief explanation of each element in order to maximize the
  133  transparency of the local government plans. The fact sheet must
  134  also contain the information specified in s. 112.664(1). These
  135  documents shall be posted on the department’s website. Plan
  136  sponsors that have websites must provide a link to the
  137  department’s website;
  138         (f) Annually issue, by January 1 annually, a report to the
  139  Special District Information Program of the Department of
  140  Economic Opportunity which that includes the participation in
  141  and compliance of special districts with the local government
  142  retirement system provisions in s. 112.63 and the state
  143  administered retirement system provisions as specified in part I
  144  of chapter 121; and
  145         (g) Adopt reasonable rules to administer the provisions of
  146  this part.
  147         Section 5. The Legislature finds that a proper and
  148  legitimate state purpose is served when employees and retirees
  149  of the state and its political subdivisions, and the dependents,
  150  survivors, and beneficiaries of such employees and retirees, are
  151  extended the basic protections afforded by governmental
  152  retirement systems that provide fair and adequate benefits and
  153  that are managed, administered, and funded in an actuarially
  154  sound manner as required by s. 14, Article X of the State
  155  Constitution and part VII of chapter 112, Florida Statutes.
  156  Therefore, the Legislature determines and declares that this act
  157  fulfills an important state interest.
  158         Section 6. This act shall take effect July 1, 2013.
  160  ================= T I T L E  A M E N D M E N T ================
  161         And the title is amended as follows:
  162         Delete everything before the enacting clause
  163  and insert:
  164                        A bill to be entitled                      
  165         An act relating to publicly funded defined benefit
  166         retirement plans; amending s. 112.63, F.S.; deleting
  167         the requirement that required actuarial reports for
  168         retirement plans include a disclosure of the present
  169         value of the plan’s benefits; amending s. 112.66,
  170         F.S.; providing that the state is not liable for
  171         shortfalls in local government retirement systems or
  172         plans; creating s. 112.664, F.S.; requiring a defined
  173         benefit system or plan to report certain information
  174         to the Department of Management Services by a certain
  175         date; requiring the plan sponsor to make certain
  176         information available on certain websites; providing
  177         consequences for failure to timely submit the required
  178         information; providing a method for a plan sponsor to
  179         request a hearing to contest such consequences;
  180         amending s. 112.665, F.S.; requiring the department to
  181         provide a fact sheet specifying certain information;
  182         providing a declaration of important state interest;
  183         providing an effective date.
  185         WHEREAS, in 2012, there were 492 local government employee
  186  defined benefit pension plans in Florida, providing pension
  187  benefits to approximately 79,000 retirees. The interests of
  188  participants in many of these plans may have property rights
  189  implications under state law, and
  190         WHEREAS, local government employee defined benefit pension
  191  plans are becoming a large financial burden on certain local
  192  governments and have already resulted in tax increases and the
  193  reduction of services, and
  194         WHEREAS, the 2012 Florida Local Government Retirement
  195  Systems Annual Report published by the Department of Management
  196  Services specifies the total unfunded actuarial accrued
  197  liability of all local government defined benefit pension plans
  198  at approximately $10 billion, and
  199         WHEREAS, some economists and observers have stated that the
  200  extent to which state or local government employee defined
  201  benefit pension plans are underfunded is obscured by
  202  governmental accounting rules and practices, particularly as
  203  they relate to the valuation of plan assets and liabilities.
  204  This results in a misstatement of the value of plan assets and
  205  an understatement of plan liabilities, a situation that poses a
  206  significant threat to the soundness of state and local budgets,
  207  and
  208         WHEREAS, there is currently a lack of meaningful disclosure
  209  regarding the value of state or local government employee
  210  defined benefit pension plan assets and liabilities. This lack
  211  of meaningful disclosure poses a direct and serious threat to
  212  the financial stability of such plans and their sponsoring
  213  governments, impairs the ability of state and local government
  214  taxpayers and officials to understand the financial obligations
  215  of their government, and reduces the likelihood that state and
  216  local government processes will be effective in assuring the
  217  prudent management of their plans, and
  218         WHEREAS, the financial health of state or local government
  219  employee pension benefit plans can have statewide public
  220  repercussions, and the meaningful disclosure of the value of
  221  their assets and liabilities is necessary and desirable in order
  222  to adequately protect plan participants and their beneficiaries
  223  as well as the general public, and to further efforts to provide
  224  for the general welfare and the free flow of commerce, NOW,