AN ACT AUTHORIZING THE CITY OF MELROSE TO ISSUE PENSION FUNDING BONDS OR NOTES.
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. The city of Melrose may issue bonds or notes for the purpose of funding all or a portion of the unfunded pension liability of the retirement system of the city of Melrose. Bonds or notes issued under this act shall be outside the limit of indebtedness prescribed in section 10 of chapter 44 of the General Laws, shall be issued for terms not in excess of 30 years from their date of issue and, except as otherwise provided in this act, shall be subject to the applicable provisions of said chapter 44. The aggregate amount of bonds or notes which may be issued by the city under this act shall not exceed the amount which the retirement board of the city, with the approval of the city's chief financial officer, treasurer and city council, shall determine to be necessary to be issued to fund the unfunded pension liability of the retirement system of the city as of a particular date and to provide for issuance costs and other necessary or incidental expenses. The determination of the retirement board of the city of the unfunded pension liability shall be based upon the report of a nationally-recognized independent consulting firm, which shall be acceptable to the public employee retirement administration commission and which may be the consulting actuary generally retained by the retirement board of the city.
SECTION 2. The maturities of bonds or notes issued under this act: (i) shall be arranged so that for each issue, the annual combined payments of principal and interest shall be as nearly equal as practicable, in the opinion of the treasurer and mayor, or in accordance with a schedule providing for a more rapid amortization of the principal; or (ii) shall be arranged so that for each issue, the annual combined payments of principal and interest shall be in amounts specifically approved by the secretary for administration and finance.
SECTION 3. Proceeds of any bonds or notes issued under this act other than amounts to be applied to issuance costs or other expenses shall be paid by the city of Melrose to the retirement board of the city, shall be allocated solely to reduce the unfunded pension liability to which the bonds or notes relate, shall be invested in any investments which are permitted under chapter 32 of the General Laws and shall otherwise be held and expended by the retirement board of the city in accordance with the law.
SECTION 4. Before the issuance of any bonds or notes under this act, the city of Melrose shall submit to the executive office for administration and finance a plan showing the amount of the bonds and notes to be issued, the amount of the unfunded pension liability to be funded with the proceeds of the bonds and notes, the proposed maturity schedule of the bonds and notes, the proposed allocation of and plan to finance the principal of and interest on the bonds and notes, if any, the present value savings reasonably expected to be achieved as a result of the issuance of the bonds or notes, and any other information requested by the secretary for administration and finance relating to the bonds and notes. No bonds or notes shall be issued under this act until the secretary has approved the plan and specifically approved the maturity schedule of the bonds or notes if required by section 2. In granting the approval, the secretary shall require the establishment of a reserve to be created from a portion, not to exceed 60 per cent in any year, of the amount of the annual savings used to calculate the present value savings. Subject to the regulations established by the secretary, the reserve shall be held and controlled by the city and shall be separate from any other reserve or fund of the city allowed or required by statute. The secretary shall establish a method to calculate both the required amount of annual contribution to the reserve and the minimum value to be maintained in the reserve and shall prescribe conditions for expenditure from the reserve, including its use if necessary to prevent or limit any future unfunded actuarial pension liability, and the conditions under which all or a portion of the funds in the reserve may be available for unrestricted purposes, in which case such funds or portions thereof shall be transferred to the city treasury. Any funds in the reserve shall be trust funds under section 54 of chapter 44 of the General Laws and, except as otherwise provided in this act, shall be subject to the provisions of said section 54 of said chapter 44.
SECTION 5. If the unfunded pension liability to be funded with the proceeds of an issuance of bonds or notes issued under this act relates in part to employees of a governmental unit other than the city of Melrose, that governmental unit shall be responsible for reimbursing the city for the proportion of the annual debt service expense paid by the city for bonds or notes issued under this act that is equal to the proportion of the total unfunded pension liability to be funded with the proceeds of the bonds or notes as relates to that governmental unit. Notwithstanding any general or special law to the contrary, the public employee retirement administration commission shall increase the annual amount to be certified under section 22 of chapter 32 of the General Laws as the amount necessary to be paid by each governmental unit other than the city by each such governmental unit's proportionate share of the annual debt service expense as determined in this act. The city shall have the same legal rights and authority as the retirement board of the city to collect any amount so assessed to any such governmental unit.
SECTION 6. Notwithstanding chapter 70 of the General Laws or any other general or special law to the contrary, the portion of the annual debt service paid by the city of Melrose for bonds or notes issued under this act applicable to school department personnel who are members of the city's retirement system shall be included in the computation of net school spending for the purposes of said chapter 70 or any other law.
SECTION 7. This act shall take effect upon its passage.
Approved June 16, 2008