Florida Senate - 2013                                     SB 534
       By Senator Brandes
       22-00447C-13                                           2013534__
    1                        A bill to be entitled                      
    2         An act relating to publicly-funded defined benefit
    3         retirement plans; amending s. 112.66, F.S.; providing
    4         that the state is not liable for shortfalls in local
    5         government retirement systems or plans; creating s.
    6         112.664, F.S.; requiring a defined benefit system or
    7         plan to report certain information to the Department
    8         of Management Services and specifying the assumptions
    9         and methods to be used in determining the information
   10         submitted; requiring the plan sponsor to make the
   11         information available on certain websites; providing a
   12         time certain for submission of the information;
   13         providing consequences for failure to submit the
   14         required information; providing an effective date.
   16         WHEREAS, in 2012, there were 492 local government employee
   17  defined benefit pension plans in Florida, providing pension
   18  benefits to approximately 79,000 retirees. The interests of
   19  participants in many of these plans may have property rights
   20  implications under state law, and
   21         WHEREAS, local government employee defined benefit pension
   22  plans are becoming a large financial burden on certain local
   23  governments and have already resulted in tax increases and the
   24  reduction of services, and
   25         WHEREAS, the 2012 Florida Local Government Retirement
   26  Systems Annual Report published by the Department of Management
   27  Services specifies the total unfunded actuarial accrued
   28  liability of all local government defined benefit pension plans
   29  at approximately $10 billion, and
   30         WHEREAS, some economists and observers have stated that the
   31  extent to which state or local government employee defined
   32  benefit pension plans are underfunded is obscured by
   33  governmental accounting rules and practices, particularly as
   34  they relate to the valuation of plan assets and liabilities.
   35  This results in a misstatement of the value of plan assets and
   36  an understatement of plan liabilities, a situation that poses a
   37  significant threat to the soundness of state and local budgets,
   38  and
   39         WHEREAS, there is currently a lack of meaningful disclosure
   40  regarding the value of state or local government employee direct
   41  benefit pension plan assets and liabilities. This lack of
   42  meaningful disclosure poses a direct and serious threat to the
   43  financial stability of such plans and their sponsoring
   44  governments, impairs the ability of state and local government
   45  taxpayers and officials to understand the financial obligations
   46  of their government, and reduces the likelihood that state and
   47  local government processes will be effective in assuring the
   48  prudent management of their plans, and
   49         WHEREAS, the financial health of state or local government
   50  employee pension benefit plans can have statewide public
   51  repercussions, and the meaningful disclosure of the value of
   52  their assets and liabilities is necessary and desirable in order
   53  to adequately protect plan participants and their beneficiaries
   54  as well as the general public, and to further efforts to provide
   55  for the general welfare and the free flow of commerce, NOW,
   58  Be It Enacted by the Legislature of the State of Florida:
   60         Section 1. Subsection (14) is added to section 112.66,
   61  Florida Statutes, to read:
   62         112.66 General provisions.—The following general provisions
   63  relating to the operation and administration of any retirement
   64  system or plan covered by this part are shall be applicable:
   65         (14) The state is not liable for any obligation relating to
   66  any current or future shortfall in any local government
   67  retirement system or plan.
   68         Section 2. Section 112.664, Florida Statutes, is created to
   69  read:
   70         112.664Reporting standards for defined benefit retirement
   71  plans or systems.—
   72         (1)In addition to the other reporting requirements of this
   73  part, effective July 1, 2013, and for every other plan year
   74  completed on or after January 1, 2013, each defined benefit
   75  retirement system or plan, including the Florida Retirement
   76  System, shall electronically report the following information to
   77  the Department of Management Services in a format established by
   78  the department:
   79         (a)The long-term funded ratio calculated in a manner
   80  similar to the Government Accounting Standards Board’s Statement
   81  No. 67, Financial Reporting for Pension Plans, including the
   82  market value of its assets, the value of its actuarial
   83  liabilities, and the amount of its unfunded accrued liability,
   84  if any.
   85         (b) The dollar value of the unfunded accrued liability, if
   86  any, of the plan.
   87         (c) The number of months or years for which the current
   88  market value of assets are adequate to sustain the payment of
   89  expected retirement benefits.
   90         (d) The recommended contributions to the plan under the
   91  calculations required under paragraph (a) stated as an annual
   92  dollar value and a percentage of valuation payroll.
   93         (2)Each defined benefit retirement system or plan shall
   94  use the following assumptions and methods in determining the
   95  information required under subsection (1):
   96         (a)The actuarial cost method, which is the Entry Age
   97  Normal method.
   98         (b)The assumed rate of return on investments and the
   99  assumed discount rate, which are the adjusted 24-month average
  100  corporate bond segment rates determined under s.
  101  430(h)(2)(C)(iv) of the Internal Revenue Code by the Department
  102  of the Treasury.
  103         (c)Preretirement mortality calculated using the RP-2000
  104  Mortality Tables for male and female employees. Postretirement
  105  mortality is calculated using the RP-2000 Mortality Tables for
  106  healthy white-collar employees, as projected from the year 2000
  107  to the valuation year using Projection Scale AA.
  108         (d)The asset valuation method, which is the market value
  109  less the value of any deferred retirement option program
  110  accounts.
  111         (e)All other assumptions and methods used by the system or
  112  plan in its latest valuation.
  113         (3) Each defined benefit retirement system or plan and its
  114  plan sponsor shall provide the information required by this
  115  section and the funded ratio of the system or plan as determined
  116  in the most recent actuarial valuation as part of the
  117  disclosures required under s. 166.241(3) and on any website that
  118  contains budget information relating to the plan sponsor or
  119  actuarial or performance information related to the system or
  120  plan.
  121         (4)Each retirement system or plan shall submit the
  122  information required by this section to the department within
  123  180 days after the close of the plan year together with
  124  appropriate signed actuarial certification as established by the
  125  department. For those plan years ending between January 1, 2013,
  126  and July 1, 2013, the due date for the submission of information
  127  is October 1, 2013.
  128         (5)A plan established under chapter 175 or chapter 185
  129  that fails to submit the information on a timely basis shall be
  130  deemed to be in noncompliance with chapters 175 and 185, as
  131  applicable.
  132         (6)Any local government defined benefit pension plan that
  133  fails to submit the information on a timely basis shall be
  134  deemed to be in noncompliance with this part.
  135         Section 3. This act shall take effect July 1, 2013.