Introduced by Committee on Government Operations
Subject: Teachers; retirement; funding
Statement of purpose: This bill proposes to: (1) revise the actuarial method used in the Vermont state teachers’ retirement system; (2) restart the amortization period for the unfunded accrued liability of the system; and (3) require the teachers’ retirement board to submit a funding analysis to the general assembly if the governor recommends funding the state teachers’ retirement system at a level less than that which the board recommends.
AN ACT RELATING TO TEACHERS’ RETIREMENT FUNDING
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. 16 V.S.A. § 1944(c) is amended to read:
(c) Pension accumulation fund.
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with the actuarial valuation as of June
1982 2005, the contributions to be made to
the pension accumulation fund by the state shall be determined on the basis of
the actuarial cost method known as “entry age normal cost with frozen
initial liability.” On account of each member, there shall be paid
annually by the state into the pension accumulation fund a percentage of the
earnable compensation of each member to be known as the “normal contribution”
and an additional percentage of his the member’s earnable
compensation to be known as the “accrued liability contribution.” The rates
percent percentage rate of such contributions shall be fixed on the
basis of the liabilities of the system as shown by actuarial valuation. “Normal
contributions” and “accrued liability contributions” shall be by separate
appropriation in the annual budget enacted by the general assembly.
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unfunded accrued liability determined by actuarial valuation as of June 30,
1988 shall be amortized over a period of 30 years beginning July 1,
1988 in accordance with the provisions of this section. Subject
to the approval of the retirement board, the amount of unfunded accrued
liability may be adjusted after 1988 to take account of changes in the
actuarial assumptions used in annual valuations. (5) Until
the unfunded accrued liability is liquidated, the accrued liability
contribution shall be the annual payment required to liquidate the unfunded
accrued liability over a period of 30 years from July 1, 1982 2006,
provided that the amount of each annual accrued liability contribution after
June 30, 1982 2006 shall be five percent greater than
the preceding annual accrued liability contribution. Any variation in the contribution of normal or unfunded accrued
liability contributions from those recommended by the actuary and any actuarial
gains and losses shall be added or subtracted to the unfunded accrued liability
and amortized over the remaining 30-year period.
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Sec. 2. 32 V.S.A. § 311 is amended to read:
§ 311. RETIREMENT FUNDS INTEGRITY REPORT
(a) The governor shall include as a part of the annual budget report required by section 306 of this title, a statement of the extent by which the recommended appropriations to the teachers’ retirement funds and to the Vermont employees’ retirement funds differ from the amounts as recommended by the Vermont employees’ retirement system retirement board as provided by subsection 471(n) of Title 3, and by the teachers’ retirement system board of trustees as provided by subsection 1942(r) of Title 16. If the governor’s recommended appropriations are less than the amounts recommended by one or both of the boards of the two retirement systems, the governor shall set forth the long-term financial implications to the state of such shortfall and present a plan to achieve and preserve the fiscal integrity of the retirement funds of the retirement system or systems. The governor shall notify the trustees of the board of the state teachers’ retirement system and the trustees of the board of the Vermont state retirement system of the recommendations.
(b) Within 30 days of the filing of recommendations under subsections 471(n) of Title 3 and 1942(r) of Title 16, the state treasurer and the commissioner of finance and management shall present the recommendations to a joint meeting of the house and senate committees on government operations and appropriations.
(c) Where the governor’s recommendation required by this section is less than that of the Vermont state teachers’ retirement board, the board shall submit a funding analysis to the general assembly prepared by the board’s actuary, which shall include an examination of the impacts of the governor’s recommendation on the integrity of the fund, an updated amortization schedule, a projection of the impact of the governor’s recommendation on actuarial recommendations for subsequent years, and such other information as the board deems appropriate.
Sec. 3. APPROPRIATION; STATE TEACHERS’ RETIREMENT SYSTEM
There is appropriated from the general fund in fiscal year 2007 to the Vermont state teachers’ retirement system the following amounts:
(1) Normal contribution $23,537,000.00
(2) Accrued liability contribution $14,704,000.00
The Vermont General Assembly
115 State Street