AN ACT TO REDUCE THE STRESS ON LOCAL PROPERTY TAXES THROUGH ENHANCED PENSION FUND INVESTMENT.
Whereas, The deferred operation of this act would tend to defeat its purpose, which is to regulate forthwith certain pension systems, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same as follows:
SECTION 1. Section 22 of said chapter 32 of the General Laws, as so appearing, is hereby amended by striking out, in line 1043, the words “electing to participate” and inserting in place thereof the following word:- participating.
SECTION 2. Subdivision (8) of said section 22 of said chapter 32, as so appearing, is hereby amended by inserting after paragraph (c) the following paragraph:-
(c½) The commission shall annually review the investment performance and funded ratio of all systems using data compiled as of January 1 of the year in which the review occurs. If on or before July 1 the funded ratio data as of January 1 is not available, the most recent data shall be used. A system found by the commission to have a funded ratio of less than 65 per cent and an average rate of return during the previous 10 years that is at least 2 percentage points less than that of the PRIT Fund rate of return over the same period shall be declared underperforming by the commission. The commission shall notify, in writing, any system deemed to be underperforming pursuant to this paragraph that it shall transfer ownership and control of all of its assets to the PRIM board. The notice shall include, without limitation: (i) a financial report on the specific underperforming system; (ii) a description of the rights and duties of the PRIM board; and (iii) a schedule for the transfer of ownership and control of a system’s assets to the PRIM board pursuant to this paragraph. A transfer of the ownership and control of a system’s assets pursuant to this paragraph shall be in perpetuity.
The PRIM board shall hold assets in trust for the participating systems. The PRIM board shall credit assets and earnings on the assets to the individual systems.
The PRIM board shall calculate regular interest as defined in subdivision (6) to allocate earnings among the various funds of each system. The board of each system shall continue to administer the system in accordance with sections 1 to 28, inclusive, including the maintenance of accounts in accordance with the funds provided for in this section. The PRIM board shall transfer monies to the various funds of the participating systems to allow them to carry out their duties pursuant to this chapter. The board of each participating system shall notify the PRIM board of the amounts needed for the various funds for the next fiscal year not later than 90 days before the start of the next fiscal year. The PRIM board shall develop a schedule of transfers to be made to the systems during the next fiscal year and notify the systems of that schedule not later than 30 days before the start of the next fiscal year. The PRIM board shall transfer those amounts in accordance with the schedule during the course of the fiscal year. From time to time, the boards may make supplemental requests of the PRIM board if the initial request is found to be insufficient. Within 30 days after the request, the PRIM board shall approve or deny it, but a denial shall be accompanied by a written statement of the reasons therefor.
A system ordered by the commission to transfer its assets under this paragraph may appeal for an exemption to a 4-member review board which shall consist of the executive director of the PRIM board or his designee, the secretary of administration and finance or his designee, a member selected by the state treasurer from a list of 3 names submitted by the Massachusetts Association of Contributory Retirement Systems and 1 member of a municipal employee union to be appointed by the governor. The system shall file written notice of its appeal with the secretary of administration and finance not later than 30 days after receiving the commission’s order to transfer its assets. The review board may establish rules for its own procedure and the rules shall not be subject to chapter 30A. The review board may grant an exemption from the transfer requirement of this paragraph if its rate of return has exceeded the PRIT Fund rate of return for the previous 2 years or if the system’s rate of return was affected by other extenuating circumstances. The review board may also consider the system’s management costs, its risk return ratio and any other factors it deems appropriate. The grant of an exemption shall require the concurrence of at least 3 of the 4 members or their designees. A system may seek judicial review of the review board’s decision to deny an exemption in the manner provided in section 14 of chapter 30A. An exemption granted by the review board pursuant to this paragraph shall take effect only upon the approval of a majority of the local governing body as follows: in a county, by the county commissioners, in a city having a Plan D or Plan E charter, by the city council and the manager, in any other city the city council and the mayor, in a town shall, by the board of selectmen, in a regional retirement system by the regional retirement board advisory council and in all other districts, by the governing board. The local governing body shall vote whether or not to approve the review board’s grant of exemption within 30 days after the review boards’ decision to provide an exemption.
SECTION 3. Notwithstanding any general or special law to the contrary, and pursuant to paragraph (c½) of subdivision (8) of section 22 of chapter 32 of the General Laws, the public employee retirement administration commission established in section 49 of chapter 7 of the General Laws shall review the investment performance and funded ratio of all systems using data compiled as of January 1, 2007. If an updated actuarial valuation is not completed by October 1, 2007, the most recent valuation completed shall be used. A system found by the public employee retirement administration commission to have a funded ratio of less than 65 per cent and an average rate of return during the previous 10 years that is at least 2 percentage points less than that of the rate of return of the PRIT Fund established in said subdivision (8) of said section 22 of said chapter 32 over the same time period shall be declared underperforming by the public employee retirement administration commission and shall transfer ownership and control of all of its assets to the PRIM board in accordance with said paragraph (c½) of said subdivision (8) of said section 22 of said chapter 32.
SECTION 4. Notwithstanding any general or special law to the contrary, a pension system established pursuant to chapter 32 or chapter 34B of the General Laws that would be deemed underperforming under paragraph (c½) of subdivision (8) of section 22 of said chapter 32 may voluntarily transfer ownership and control of all of its assets to the PRIM board. The decision to voluntarily transfer ownership and control of all of its assets to the PRIM board shall be made by the retirement board of each system, subject to the approval of a majority of the local governing body as follows: in a county, by the county commissioners, in a city having a Plan D or Plan E charter, by the city council and the manager, in any other city shall, by the city council and the, mayor, in a town, by, the board of selectmen, in a regional retirement system by the regional retirement board advisory council and in all other districts, by the governing board thereof. After the decision to participate has been approved, the decision to participate shall not be revoked for 5 years. A system that would be deemed underperforming pursuant to said paragraph (c½) of said subdivision (8) of said section 22 of said chapter 32 which chooses to exercise its right to voluntarily transfer its assets pursuant to this section shall transfer its assets before October 1, 2007.
SECTION 5. Notwithstanding any general or special law to the contrary, the public employee retirement administration commission established in section 49 of chapter 7 of the General Laws shall file an annual report with the house and senate committees on ways and means and the joint committee on public service detailing the average rate of return and funding level of each retirement system. The first annual report shall include the average rate of return and funding level of each retirement system since 1985.
SECTION 6. Notwithstanding any general or special law to the contrary, local retirement boards shall consider the annual cost-of-living adjustments to be a priority but the prioritization shall not constitute grounds for an appeal pursuant to paragraph (c½)) of subdivision (8) of section 22 of chapter 32 of the General Laws.
SECTION 7. Sections 1, 2, 3, 5, and 6 of this act shall take effect on October 1, 2007.
Approved July 25, 2007.