SENATE BILL NO. 136
AS AMENDED BY
SENATE AMENDMENT NO. 2
AN ACT TO AMEND TITLES 11 AND 29 OF THE DELAWARE CODE, RELATING TO THE ESTABLISHMENT OF AN OTHER POST-EMPLOYMENT BENEFITS FUND.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE :
WHEREAS, the Governmental Accounting Standards Board has issued Statements 43 and 45, which set forth standards on accounting and reporting for post-employment benefits other than pensions by governments; and
WHEREAS, the new standards will require the State to account for such post-employment benefits on an actuarial basis during an employee’s career rather than on a pay-as-you-go basis during an employee’s retirement; and
WHEREAS, the General Assembly has determined that it would be advisable for the State to create an irrevocable trust whereby the State may begin funding those benefits in advance to address and ultimately offset the State’s accrued liabilities for such benefits;
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
Section 1. Amend Title 29, of the Delaware Code by adding thereto a new Chapter 52B to read as follows:
“Chapter 52B. Other Post-Employment Benefits Fund
(a) “Board” means the Board of Pension Trustees established by §8308 of this title.
(b) "OPEB Fund" means the Other Post-Employment Benefits Fund established by § 5281 of this title.
§5281. Establishment of Fund.
(a) There shall be established an OPEB Fund, a trust fund, separate and distinct from the funds established under §5541 and §5601 of this title and §8393 of Title 11, to which state appropriations and other employer contributions shall be deposited, and to which earnings on investments, refunds and reimbursements shall be deposited upon receipt, and from which the State's premiums as defined in §5202(b) of this title shall be paid, and any fees and expenses authorized by the Board shall be paid. No money shall be disbursed from this fund except for the purpose of payment of the State's premiums for post retirement health insurance for employees retired under 29 Del. C. Chapters 55 and 56 and 11 Del. C. Chapter 83.”
(b) The amounts remaining in the trust, if any, after all premiums, fees, and expenses have been paid for any year shall be retained in such trust for future payments until all State liabilities for post retirement health insurance premium benefits have been satisfied.
(c) This chapter 52(B), Title 29 of the Delaware Code is replacing §5550 of this title in its entirety.
(d) The trust shall be an irrevocable trust exempt from federal income tax under Section 115 of the Internal Revenue Code and subject to the financial reporting, disclosure and actuarial requirements of Government Accounting Standards Board Statements 43 and 45 or any subsequent Government Accounting Standards Board updates or statements that may be applicable.
§ 5282. Management of the OPEB Fund.
(a) The Board shall serve as the Board of Trustees for the OPEB Fund, shall adopt a trust agreement for the OPEB Fund (and may amend the trust agreement from time to time), shall take all actions necessary and appropriate to establish and maintain the OPEB Fund, and shall have control and management of the OPEB Fund and may utilize its powers pursuant to Chapter 52(B) and § 8308 of this title in the administration of the OPEB Fund.
(b) The Board shall take the actions necessary and appropriate to establish and maintain the OPEB Fund as a trust that is exempt from taxation under Internal Revenue Code Section 115. The trust shall be maintained and administered by the Board to provide payments for retiree health insurance for medical care in compliance with Internal Revenue Code Section 105 and with Title 29 Chapter 52B.
(c) The State shall indemnify a Board member in the additional duties contained in this chapter pertaining to the administration and management of the OPEB Fund or to sit on a committee of the Board who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that he or she is or was a Board member against expenses (including attorneys' fees if the Attorney General determines that he or she may not provide representation), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding, if he or she acted in good faith and in a manner he or she reasonably believed to be in the best interest of the State and with respect to any criminal action or proceeding had no reasonable cause to believe his or her conduct was unlawful. Expenses incurred in defending a civil, administrative or investigative action, suit or proceeding shall be paid by the State in advance of final disposition of such action, suit or proceeding if:
(1) Initially authorized by a majority vote of the Board exclusive of the member or members to be indemnified unless more than a majority of the Board shall also be parties to the same action, suit or proceeding, in which instance, such authorization shall be by the Governor of the State; and
(2) Such Board member agrees to repay such amount if it is ultimately determined by the Board or the Governor, as the case may be, pursuant to paragraph (1) of this subsection that such member is not entitled to indemnification under this section.
§5283. Actuarial valuations.
(a) The actuary shall prepare an actuarial valuation of the assets and liabilities of the OPEB Fund as of June 30, each year. On the basis of reasonable actuarial assumptions and tables approved by the Board, the actuary shall determine (i) the State's annual required contribution for payment of the State's premiums for post retirement health insurance for employees under 29 Del. C. Chapters 55 and 56 and 11 Del. C. Chapter 83 (ii) any unfunded actuarial accrued liability.
(b) It is not anticipated that distributions will be made from this fund until the State's annual required contribution, as determined in subsection (a) of this section, has been appropriated in a given fiscal year.”
Section 2. Amend 8308(b), Title 29, of the Delaware Code by adding a new paragraph (5) thereto as follows:
“(5) The control and management of the OPEB Fund created pursuant to Chapter 52B of this title.”
Section 3. Amend 8308(c), Title 29, of the Delaware Code by adding a new paragraph (11) thereto as follows:
"(11) To maintain and invest the OPEB Fund provided for in subdivision (b)(5) of this section. Fees and expenses authorized by the Board shall be paid from the assets of the OPEB Fund as applicable."
Section 4. Amend 8308(c), Title 29 of the Delaware Code by addition a new paragraph (12) thereto as follows:
"(12) To make and enter into any and all contracts with any agency of the State, or any outside agency, or company for the purposes of assisting in the general administration and the investing or advising as to the investment of the OPEB Fund under its control and management."
Section 5. Amend 8308(d), Title 29, of the Delaware Code by inserting the words "or other post-employment benefits" after "or pension eligibility of persons receiving pensions from the State" and before "and who are not presently employed by."
Section 6. Amend Chapter 55, Title 29, of the Delaware Code by striking §5550 in its entirety. The balance of the Post Retirement Health Insurance Premium Fund as of the date of the enactment of this legislation shall be deposited to the Other Post Employment Benefits Fund, as established by §5281 of Title 29, of the Delaware Code.
Section 7. Amend §5544(c)(2), Title 29, of the Delaware Code by striking the words “Post Retirement Health Insurance Premium Fund established by §5550 of this title” wherever they appear therein and substituting the words “OPEB Fund as established by § 5281 of this title” in lieu thereof.
Section 8. Amend Chapter 56, Title 29, of the Delaware Code by adding §5621 thereto as follows:
“5621. Other Post-Employment Benefits Appropriations.
Funds appropriated to implement this section shall be deposited into the OPEB Fund as established by § 5281 of this title.”
Section 9. Amend Chapter 83, Title 11, of the Delaware Code by adding §8397 thereto as follows:
“8397. Other Post-Employment Benefits Appropriations.
Funds appropriated to implement this section shall be deposited into the OPEB Fund as established by 29 Del. C.§ 5281.”
Section 10. Amend 5210, Title 29, of the Delaware Code by adding a new subsection (6) thereto as follows:
“(6) Whenever the balance of the fund equity of the Employees’ Health Insurance Fund exceeds the amount determined by the State Employee Benefits Committee to be sufficient to meet anticipated claims plus a reasonable reserve, the State Employee Benefits Committee, in its sole discretion, may transfer the excess balance or any part of it to the OPEB Fund, established pursuant to Chapter 52B of this title, to provide a source for the future payment of retiree health benefits or the Disability Insurance Program, pursuant to Chapter 52A of this title.”
Section 11. The Bill shall be effective July 1, 2007.
Approved June 28, 2007