Second Regular Session Sixty-eighth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 12-0688.01 Gregg Fraser x4325 SENATE BILL 12-119 SENATE SPONSORSHIP Neville, Lambert, Harvey, Grantham, King K., Lundberg, Renfroe HOUSE SPONSORSHIP Holbert, Senate Committees House Committees Finance A BILL FOR AN ACT Concerning measures to increase the fiscal sustainability of the public employees' retirement association. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) The bill requires the board of the public employees' retirement association (PERA) to adjust the provisions governing service credit, service retirement, benefit amounts, annual benefit increases, and other benefit requirements for each PERA division when the amortization period for the division exceeds 30 years or when indicated by actuarial experience. The board is required to make the adjustments as equitably as possible and only to the extent necessary to maintain the long-term actuarial soundness of each trust fund. Adjustments shall be calculated to make each trust fund actuarially sound within one year of implementing the adjustment. The board and the general assembly are prohibited from increasing the combined rate of member contributions, employer contributions, amortization equalization disbursements, and supplemental amortization equalization disbursements above the combined rate of such contributions and disbursements authorized by law as of December 31, 2011. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. In Colorado Revised Statutes, amend 24-51-211 as follows: 24-51-211. Amortization of liabilities - board changes to benefits - maximum contribution rates. (1) An amortization period for each of the state division, school division, local government division, judicial division, and Denver public schools division trust funds shall be calculated separately. A maximum amortization period of thirty years shall be deemed actuarially sound. Upon recommendation of the board, and With the advice of the actuary, the employer or member contribution rates the board shall adjust provisions governing service credit, service retirement, benefit amounts, annual benefit increases, and other benefit requirements set forth in this article for the plan may be adjusted by the general assembly each division when the amortization period for the division exceeds thirty years or when indicated by actuarial experience. To the extent feasible, the board shall make adjustments as equitably as possible and only to such an extent necessary to maintain the long-term actuarial soundness of each trust fund. Adjustments shall be calculated to make each trust fund actuarially sound within one year of implementing the adjustment. All such adjustments shall be made by rule in accordance with the authority set forth in section 24-51-204 (5). (2) On or before November 1, 2009, the board shall submit specific, comprehensive recommendations to the general assembly regarding possible methods to respond to the decrease in the value of the association's assets, including real estate, private equity, and other investments, to decrease the amortization period of each division of the association, and to ensure that each division of the association will become and remain fully funded Notwithstanding any other provision of this article to the contrary, the board shall not propose, nor shall the general assembly adopt by bill or otherwise, any increase in the combined rate of contributions, amortization equalization disbursements, and supplemental amortization equalization disbursements above the combined rate of such contributions and disbursements authorized pursuant to this article as it existed on December 31, 2011. SECTION 2. In Colorado Revised Statutes, amend 24-51-211.5 as follows: 24-51-211.5. Notice of possible change in benefits - actuarial necessity. The association shall provide written notice to each member, DPS member, and inactive member of the association that the possibility of an actuarial necessity could occur in the future, and the board or the general assembly may modify by bill the benefits allowed to members of the defined benefit plan. SECTION 3. Act subject to petition - effective date. This act takes effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 8, 2012, if adjournment sine die is on May 9, 2012); except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part will not take effect unless approved by the people at the general election to be held in November 2012 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.