HB 5976 Summary

• State treasurer shall determine if a local pension system is "distressed" upon receiving written notification that two or more conditions exist, including: failure to make required contributions exceeding 120 days, employer contributions plus pension debt service exceeding 30% of payroll for three consecutive years, unfunded liabilities exceeding 125% of assets, aggregate pension costs exceeding 15% of general fund revenues, conviction of fiduciary for pension fund misuse, or investment returns 2+ percentage points below state system returns.

• Municipality with a distressed pension system automatically becomes a participating municipality in the state's Municipal Employees Retirement System within 180 days of determination date, unless determination is revoked after hearing and appeal process.

• All powers of the distressed pension system board transfer to the municipality's chief executive officer on the transition date; distressed pension system ceases to exist and its assets transfer to the state retirement system.

• Municipality and pension system officials must cooperate fully during transition, including producing all documents and information; intentional violations are misdemeanors punishable by up to $2,000 fine or one year imprisonment, and also create civil liability for actual and exemplary damages.

• Accrued pension benefits for current and former employees are protected and cannot be diminished; retirement system pays all benefits and expenses exclusively from transferred assets and subsequent contributions, with expenses separately accounted for annually.