Text: SSB1196            Text: SSB1198


Senate Study Bill 1197

SENATE FILE BY (PROPOSED COMMITTEE ON STATE GOVERNMENT BILL BY CO=CHAIRPERSON HORN) Passed Senate, Date Passed House, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act providing for employer and employee contributions to the 2 Iowa public employees' retirement system. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1148SC 81 5 ec/pj/5 PAG LIN 1 1 Section 1. Section 97B.11, Code 2005, is amended to read 1 2 as follows: 1 3 97B.11 CONTRIBUTIONS BY EMPLOYER AND EMPLOYEE. 1 4 1. a. Each employer shall deduct from the wages of each 1 5 member of the retirement system a contribution in the amount 1 6 of three and seven=tenths percent the applicable employee 1 7 percentage of the covered wages paid by the employer, until 1 8 the member's termination from employment. The contributions 1 9 of the employer shall be in the amount of five and seventy= 1 10 five hundredths percent the applicable employer percentage of 1 11 the covered wages of the member. 1 12 b. For purposes of this section, the "applicable employee 1 13 percentage" means the percentage rate equal to three and 1 14 seven=tenths percent plus forty percent of the total 1 15 additional required percentage and the "applicable employer 1 16 percentage" means the percentage rate equal to five and 1 17 seventy=five hundredths percent plus sixty percent of the 1 18 total additional required percentage. 1 19 2. For purposes of this section, the "total additional 1 20 required percentage" is as follows: 1 21 a. Beginning on or after July 1, 2005, but before July 1, 1 22 2006, one percent. 1 23 b. Beginning on or after July 1, 2006, but before July 1, 1 24 2007, two percent. 1 25 c. Beginning on or after July 1, 2007, but before July 1, 1 26 2008, three percent. 1 27 d. Beginning on or after July 1, 2008, but before July 1, 1 28 2009, four percent. 1 29 e. For each fiscal year beginning on or after July 1, 1 30 2009, the total required percentage, as defined in subsection 1 31 3, for that fiscal year minus nine and forty=five hundredths 1 32 percent. 1 33 3. For purposes of this section, the "total required 1 34 percentage" for a fiscal year means the percentage rate equal 1 35 to the total of nine and forty=five hundredths percent and the 2 1 total additional required percentage for the prior fiscal year 2 2 unless any of the following applies: 2 3 a. If the system determines, based upon the most recent 2 4 actuarial valuation of the retirement system, that the total 2 5 required percentage for the prior fiscal year is insufficient 2 6 to amortize the unfunded actuarial liability of the retirement 2 7 system within thirty years, the total required percentage for 2 8 the next fiscal year shall be the lesser, as determined by the 2 9 system's actuary, of the percentage rate needed to amortize 2 10 the unfunded actuarial liability of the retirement system in 2 11 thirty years or a percentage rate equal to one percentage 2 12 point greater than the total required percentage for the prior 2 13 fiscal year. 2 14 b. If the system determines, based upon the most recent 2 15 actuarial valuation of the retirement system, that the total 2 16 required percentage for the prior fiscal year is sufficient to 2 17 amortize the unfunded actuarial liability of the retirement 2 18 system within ten years or less, the total required percentage 2 19 for the next fiscal year shall be the greater, as determined 2 20 by the system, of the following: 2 21 (1) One percentage point less than the total required 2 22 percentage for the prior fiscal year. 2 23 (2) The percentage rate equal to the normal cost rate as 2 24 certified by the system's actuary plus that percentage 2 25 necessary, but in no event less than seventy=five hundredths 2 26 of one percent, to amortize any unfunded actuarial liability 2 27 of the retirement system within twenty years. 2 28 4. The determination of the total required percentage as 2 29 provided by this section for a particular fiscal year shall be 2 30 done by the system, by rule, following a determination by the 2 31 system's actuary as to the total required percentage for that 2 32 fiscal year based upon the most recent actuarial valuation of 2 33 the retirement system by the system's actuary. 2 34 Sec. 2. Section 97B.49B, subsection 3, Code 2005, is 2 35 amended to read as follows: 3 1 3. ADDITIONAL CONTRIBUTIONS. 3 2 a. Annually, the system shall actuarially determine the 3 3 cost of the additional benefits provided for members covered 3 4 under this section as a percentage of the covered wages of the 3 5 employees covered by this section. Sixty Notwithstanding any 3 6 provision of section 97B.11 to the contrary, sixty percent of 3 7 the cost shall be paid by the employers of employees covered 3 8 under this section and forty percent of the cost shall be paid 3 9 by the employees. The employer and employee contributions 3 10 required under this paragraph are in addition to the shall be 3 11 treated as contributions paid under sections 97B.11 and 3 12 97B.11A. 3 13 b. (1) For the fiscal year commencing July 1, 1988, and 3 14 each succeeding fiscal year, there is appropriated from the 3 15 state fish and game protection fund to the system the amount 3 16 necessary to pay the employer share of the cost of the 3 17 additional benefits provided to employees covered under 3 18 subsection 1, paragraph "e", subparagraph (1). 3 19 (2) Annually, during each fiscal year commencing with the 3 20 fiscal year beginning July 1, 1988, each applicable city shall 3 21 pay to the system the amount necessary to pay the employer 3 22 share of the cost of the additional benefits provided to 3 23 employees of that city covered under subsection 1, paragraph 3 24 "e", subparagraphs (2) and (4). 3 25 (3) For the fiscal year commencing July 1, 1988, and each 3 26 succeeding fiscal year, the department of corrections shall 3 27 pay to the system from funds appropriated to the Iowa 3 28 department of corrections, the amount necessary to pay the 3 29 employer share of the cost of the additional benefits provided 3 30 to employees covered under subsection 1, paragraph "e", 3 31 subparagraph (3). 3 32 (4) For the fiscal year commencing July 1, 1990, and each 3 33 succeeding fiscal year, the state department of transportation 3 34 shall pay to the system, from funds appropriated to the state 3 35 department of transportation from the road use tax fund and 4 1 the primary road fund, the amount necessary to pay the 4 2 employer share of the cost of the additional benefits provided 4 3 to employees covered under subsection 1, paragraph "e", 4 4 subparagraph (5). 4 5 (5) For the fiscal year commencing July 1, 1992, and each 4 6 succeeding fiscal year, the department of public safety shall 4 7 pay to the system from funds appropriated to the department of 4 8 public safety, the amount necessary to pay the employer share 4 9 of the cost of the additional benefits provided to a fire 4 10 prevention inspector peace officer pursuant to subsection 1, 4 11 paragraph "e", subparagraph (6). 4 12 (6) For the fiscal year commencing July 1, 1994, and each 4 13 succeeding fiscal year through the fiscal year ending June 30, 4 14 1998, each judicial district department of correctional 4 15 services shall pay to the system from funds appropriated to 4 16 that judicial district department of correctional services, 4 17 the amount necessary to pay the employer share of the cost of 4 18 the additional benefits provided to employees of a judicial 4 19 district department of correctional services who are employed 4 20 as a probation officer III or a parole officer III. 4 21 (7) For the fiscal year commencing July 1, 2004, and each 4 22 succeeding fiscal year, there is appropriated from the general 4 23 fund of the state to the system, from funds not otherwise 4 24 appropriated, an amount necessary to pay the employer share of 4 25 the cost of the additional benefits provided to airport fire 4 26 fighters under this section. 4 27 Sec. 3. Section 97B.49C, subsection 3, paragraph a, Code 4 28 2005, is amended to read as follows: 4 29 a. Annually, the system shall actuarially determine the 4 30 cost of the benefits provided for members covered under this 4 31 section as a percentage of the covered wages of the employees 4 32 covered by this section. Fifty Notwithstanding any provision 4 33 of section 97B.11 to the contrary, fifty percent of the cost 4 34 shall be paid by the employers of employees covered under this 4 35 section and fifty percent of the cost shall be paid by the 5 1 employees. The employer and employee contributions required 5 2 under this paragraph are in lieu of the shall be treated as 5 3 contributions paid under sections 97B.11 and 97B.11A. 5 4 Sec. 4. Section 97B.50A, subsection 12, Code 2005, is 5 5 amended to read as follows: 5 6 12. ADDITIONAL CONTRIBUTIONS. The expenses incurred in 5 7 the administration of this section by the system shall be paid 5 8 through additional contributions as determined pursuant to 5 9 section 97B.49B, subsection 3, or section 97B.49C, subsection 5 10 3, as applicable. 5 11 EXPLANATION 5 12 This bill makes changes to the Iowa public employees' 5 13 retirement system (IPERS) relating to contributions made to 5 14 the system by employers and employees. 5 15 Code section 97B.11, governing contributions to the 5 16 retirement fund, is amended. Currently, the employer rate is 5 17 5.75 percent and the employee rate is 3.7 percent of a 5 18 member's covered wages. The bill provides that the employer 5 19 rate will equal 5.75 percent plus 60 percent of the total 5 20 additional required percentage and the employee rate will 5 21 equal 3.7 percent plus 40 percent of the total additional 5 22 required percentage. The bill provides that the total 5 23 additional required percentage shall be 1 percentage point for 5 24 the fiscal year beginning July 1, 2005, and this rate shall 5 25 increase by 1 percentage point a year until reaching 4 percent 5 26 for the fiscal year beginning July 1, 2008. Beginning for 5 27 each fiscal year on or after July 1, 2009, the total 5 28 additional required percentage shall equal the total required 5 29 percentage minus 9.45 percent. The bill provides that the 5 30 total required percentage for a fiscal year is the total 5 31 additional required percentage for the prior year plus 9.45 5 32 percent unless IPERS determines that this total rate should be 5 33 modified. The bill provides that if the total rate for the 5 34 prior year is insufficient to amortize the system's unfunded 5 35 actuarial liability within 30 years, the rate will increase to 6 1 the lesser of the rate needed to amortize the unfunded 6 2 actuarial liability in 30 years or 1 percentage point over the 6 3 prior year's total rate. On the other hand, the bill provides 6 4 that if the total rate for the prior year is sufficient to 6 5 amortize the system's unfunded actuarial liability in 10 years 6 6 or less, the rate will decrease to the greater of 1 percentage 6 7 point less than the prior year's total rate, or the rate equal 6 8 to the normal cost rate plus the greater of an additional .75 6 9 percent or such other percent as necessary to amortize any 6 10 unfunded liability of the system over 20 years. 6 11 The bill makes conforming changes to the Code sections 6 12 providing for the contributions paid by special service 6 13 members of IPERS to retain the current contribution rate 6 14 calculation for these members. 6 15 LSB 1148SC 81 6 16 ec:rj/pj/5
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