Senate Bill 1239 - Distressed Municipal Pension System Act

• Establishes the "Distressed Municipal Pension System Act" to identify and manage municipal pension systems meeting specified distress criteria, requiring the state treasurer to make initial determinations upon notification from trustees, actuaries, pension members, or municipal officials.

• Defines distressed pension systems by six criteria including failure to make required contributions over 120 days, employer contributions exceeding 30% of payroll for 3 consecutive years, unfunded liabilities at 125% or more of assets, and investment underperformance of 2+ percentage points below the statewide municipal employees retirement system.

• Mandates that municipalities with distressed pension systems become participating municipalities in the Municipal Employees Retirement System by a transition date (within 180 days of determination), transferring all pension assets, obligations, and administrative functions to the statewide system.

• Prohibits municipalities and pension system officers from impeding the transition process and establishes criminal penalties (misdemeanor, up to $2,000 fine or 1 year imprisonment) and civil liability for intentional violations; protects accrued pension benefits from diminishment during the transition.

• Provides due process through administrative hearings and court appeal procedures, grants immunity to the retirement system and its officials from liability related to the transition, and ensures the retirement system manages transferred assets separately with costs paid from distressed system funds only.