Pennsylvania Act 1994-168 — MUNICIPAL PENSION PLAN FUNDING STANDARD AND RECOVERY ACT - AMEND

Act text

MUNICIPAL PENSION PLAN FUNDING STANDARD AND RECOVERY ACT - AMEND
                 Act of Dec. 28, 1994, P.L. 1433, No. 168             Cl. 72
                             Session of 1994
                               No. 1994-168

     SB 1686

                                  AN ACT

     Amending the act of December 18, 1984 (P.L.1005, No.205),
        entitled "An act mandating actuarial funding standards for
        all municipal pension systems; establishing a recovery
        program for municipal pension systems determined to be
        financially distressed; providing for the distribution of the
        tax on the premiums of foreign fire insurance companies; and
        making repeals," providing for certain additions to the
        actuarial valuation reports of municipalities that have
        issued bonds or notes to fund an unfunded actuarial accrued
        liability, for the determination of general municipal pension
        system State aid and supplemental State assistance allocable
        to the municipalities and for the application of State aid or
        assistance or both to the payment of debt service on bonds or
        notes issued by municipalities to fund an unfunded actuarial
        accrued liability; authorizing the pledge of State aid or
        assistance or both as security for bonds or notes; and
        authorizing the payment of State aid or assistance to the
        trustee or paying agent for bonds or notes in certain
        circumstances.

        The General Assembly of the Commonwealth of Pennsylvania
     hereby enacts as follows:

        Section 1.  The act of December 18, 1984 (P.L.1005, No.205),
     known as the Municipal Pension Plan Funding Standard and
     Recovery Act, is amended by adding a section to read:
      Section 404.  Municipalities issuing bonds or notes for pension
                    plan funding.
        (a)  Application.--This section applies to a municipality
     that has issued bonds or notes to fund an unfunded actuarial
     accrued liability under the act of July 12, 1972 (P.L.781,
     No.185), known as the Local Government Unit Debt Act, or under
     other laws applicable to the municipality.
        (b)  Additions to actuarial valuation report.--The actuarial
     valuation report prepared under sections 201 and 202 shall
     include, in addition to the exhibits required by section 202:
            (1)  an exhibit stating the amount and date of each
        contribution to the pension plan comprised of the proceeds of
        bonds and notes and disclosing the initial and remaining
        aggregated amortization periods for each contribution
        calculated as of the date of the initial actuarial valuation
        report filed after the contribution using the total unfunded
        actuarial accrued liability of the pension plan and the
        aggregated additional funding requirements, as determined
        under paragraph (2); and
            (2)  an exhibit prepared in conformance with section
        202(b)(3) and (4), except that the actuarial value of assets
        subtracted from the actuarial accrued liability shall not
        take into account contributions comprised of proceeds of
        bonds and notes and earnings on such contributions for the
        duration of the aggregated amortization period established
        under paragraph (1).
        (c)  Determination of general municipal pension system State
     aid and supplemental State assistance.--Solely for the purposes
     of determining the amount of general municipal pension system
     State aid allocable to such a municipality under section 402 and
     the amount of supplemental State assistance allocable to such
     municipality under sections 602 and 607, the actual financial
     requirements certified for the pension plan for each plan year
     shall be determined based upon the exhibits prepared under
     subsection (b) so that the amount of general municipal pension
     system State aid and supplemental State assistance to the
     municipality shall not be reduced or increased as a result of
     any contributions to the pension plan comprised of the proceeds
     of bonds and notes for which the remaining aggregated
     amortization period, as disclosed in the exhibit required in
     subsection (a), is one or more years.
        (d)  Application of general municipal pension system State
     aid and supplemental State assistance.--In addition to the
     expenditures authorized in section 402(g), general municipal
     pension system State aid or supplemental State assistance, or
     both, may be used by a municipality to pay debt service on bonds
     or notes, or both, issued to fund an unfunded actuarial accrued
     liability.
        (e)  Pledge of general municipal pension system State aid and
     supplemental State assistance authorized.--A municipality may
     pledge to the holders of its bonds or notes issued to fund an
     unfunded actuarial accrued liability or to a trustee or paying
     agent acting on behalf of the holders, as security for the
     payment of the bonds or notes, all of the municipality's right,
     title and interest in and to any general municipal pension
     system State aid or supplemental State assistance that the
     municipality is entitled to receive under this act. The pledge
     shall be valid and binding from the time the pledge is made, and
     the lien of the pledge is valid and binding as against all
     persons having claims of any kind in tort, contract or otherwise
     against the municipality, whether or not the persons have
     notice. Except as provided in the Local Government Unit Debt
     Act, neither the proceedings of the municipality relating to the
     bonds or notes nor any other instrument by which a pledge is
     made nor any financing statement in respect thereof need be
     recorded or filed.
        (f)  Withholding remedy provided.--If, in accordance with
     subsection (e), a municipality has pledged, as security for its
     bonds or notes issued to fund an unfunded actuarial accrued
     liability, its right, title and interest in and to any general
     municipal pension system State aid or supplemental State
     assistance that the municipality is entitled to receive under
     this act and it fails to pay or provide for payment of debt
     service on the bonds or notes in accordance with the terms
     thereof, the trustee or paying agent for the bonds or notes may
     certify in writing to the State Treasurer that a pledge has been
     made and that a failure to pay has occurred, and, upon receipt
     of the certification, the State Treasurer shall:
            (1)  notify the municipality of the withholding
        provisions of this section;
            (2)  withhold, out of any general municipal pension
        system State aid or supplemental State assistance payable to
        the municipality, an amount equal to the unpaid debt service;
        and
            (3)  notify the Auditor General of these actions and
        request the Auditor General to issue a warrant for payment to
        the trustee or paying agent of the amount so withheld.
     Upon receipt of a notice from the State Treasurer, the Auditor
     General shall issue a warrant to the State Treasurer for payment
     to the trustee or paying agent, and the State Treasurer
     immediately shall pay over the amount so withheld to the trustee
     or paying agent. The trustee or paying agent shall apply the
     amount to the debt service due from the municipality.
        (g)  State Treasurer authorized to enter into certain
     agreements.--The State Treasurer is authorized to enter into an
     agreement with a municipality that has issued its bonds or notes
     to fund an unfunded actuarial accrued liability providing for
     the payment directly to the trustee or paying agent for the
     bonds or notes of any general municipal pension system State aid
     or supplemental State assistance that the municipality is
     entitled to receive under this act, regardless of whether the
     municipality has failed to pay or provide for payment of debt
     service on the bonds or notes in accordance with the terms
     thereof.
        Section 2.  This act shall take effect immediately.

     APPROVED--The 28th day of December, A. D. 1994.

     ROBERT P. CASEY