Florida Senate - 2017                        COMMITTEE AMENDMENT
       Bill No. SB 7030
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                   Comm: WD            .                                
                  05/01/2017           .                                

       The Committee on Appropriations (Brandes) recommended the
    1         Senate Amendment to Amendment (686242) (with title
    2  amendment)
    4         Between lines 2169 and 2170
    5  insert:
    6         Section 19. Subsection (3) of section 121.031, Florida
    7  Statutes, is amended to read
    8         121.031 Administration of system; appropriation; oaths;
    9  actuarial studies; public records.—
   10         (3) The administrator shall cause an actuarial study of the
   11  system to be made at least annually and shall report the results
   12  of such study to the Legislature Governor, the President of the
   13  Senate, and the Speaker of the House of Representatives by
   14  December 31 prior to the next legislative session. The study
   15  shall, at a minimum, conform to the requirements of s. 112.63,
   16  with the following exceptions and additions:
   17         (a) The valuation of plan assets shall be based on a 5-year
   18  averaging methodology such as that specified in the United
   19  States Department of Treasury Regulations, 26 C.F.R. s.
   20  1.412(c)(2)-1 in effect on August 16, 2006, or a similar
   21  accepted approach designed to attenuate fluctuations in asset
   22  values.
   23         (b) The study shall include a narrative explaining the
   24  changes in the covered group over the period between actuarial
   25  valuations and the impact of those changes on actuarial results.
   26         (c) When substantial changes in actuarial assumptions have
   27  been made, the study shall reflect the results of an actuarial
   28  assumption as of the current date based on the assumptions
   29  utilized in the prior actuarial report.
   30         (d) The study shall include an analysis of the changes in
   31  actuarial valuation results by the factors generating those
   32  changes. Such analysis shall reconcile the current actuarial
   33  valuation results with those results from the prior valuation.
   34         (e) The study shall include measures of funding status and
   35  funding progress designed to facilitate the assessment of trends
   36  over several actuarial valuations with respect to the overall
   37  solvency of the system. Such measures shall be adopted by the
   38  department and shall be used consistently in all actuarial
   39  valuations performed on the system.
   40         (f) The study shall include an analysis of the assumed rate
   41  of return adopted by the Florida Retirement System Actuarial
   42  Assumption Conference pursuant to s. 216.136(10). This analysis
   43  shall include specific recommendations regarding an appropriate
   44  assumed rate of return.
   45         (f)(g) The actuarial model used to determine the adequate
   46  level of funding for the Florida Retirement System shall include
   47  a specific rate stabilization mechanism, as prescribed herein.
   48  It is the intent of the Legislature to maintain as a reserve a
   49  specific portion of any actuarial surplus, and to use such
   50  reserve for the purpose of offsetting future unfunded
   51  liabilities caused by experience losses, thereby minimizing the
   52  risk of future increases in contribution rates. It is further
   53  the intent of the Legislature that the use of any excess above
   54  the reserve to offset retirement system normal costs shall be in
   55  a manner that will allow system employers to plan appropriately
   56  for resulting cost reductions and subsequent cost increases. The
   57  rate stabilization mechanism shall operate as follows:
   58         1. The actuarial surplus shall be the value of actuarial
   59  assets over actuarial liabilities, as is determined on the
   60  preceding June 30 or as may be estimated on the preceding
   61  December 31.
   62         2. The full amount of any experience loss shall be offset,
   63  to the extent possible, by any actuarial surplus.
   64         3. If the actuarial surplus exceeds 5 percent of actuarial
   65  liabilities, one-half of the excess may be used to offset total
   66  retirement system costs. In addition, if the actuarial surplus
   67  exceeds 10 percent of actuarial liabilities, an additional one
   68  fourth of the excess above 10 percent may be used to offset
   69  total retirement system costs. In addition, if the actuarial
   70  surplus exceeds 15 percent of actuarial liabilities, an
   71  additional one-fourth of the excess above 15 percent may be used
   72  to offset total retirement system costs.
   73         4. Any surplus amounts available to offset total retirement
   74  system costs pursuant to subparagraph 3. should be amortized
   75  each year over a 10-year rolling period on a level-dollar basis.
   76         Section 20. Section 121.0312, Florida Statutes, is amended
   77  to read
   78         121.0312 Acknowledgement of review Review; actuarial
   79  valuation report; contribution rate determination process.—
   80         (1) The Governor, Chief Financial Officer, and Attorney
   81  General, sitting as the Board of Trustees of the State Board of
   82  Administration, shall review the actuarial valuation report
   83  prepared in accordance with the provisions of this chapter. The
   84  Board shall review the process by which Florida Retirement
   85  System contribution rates are determined and recommend and
   86  submit any comments regarding the process to the Legislature.
   87         (2) Effective July 1, 2019, the Governor, the President of
   88  the Senate, and the Speaker of the House of Representatives
   89  shall within 30 days of receipt, acknowledge in writing, their
   90  acceptance, and review of, the actuarial valuation report
   91  prepared in accordance with the provisions of this chapter and
   92  any recommendations regarding actuarial assumptions contained
   93  therein. The department shall publish the written
   94  acknowledgements as addendums to the report.
   96  ================= T I T L E  A M E N D M E N T ================
   97  And the title is amended as follows:
   98         Delete line 2303
   99  and insert:
  100         and budget authority; amending s. 121.031; providing
  101         criteria to be included in the annual actuarial
  102         valuation report; amending s. 121.0312; requiring
  103         acknowledgement and review of the report; providing
  104         effective dates.