Agenda Item 10
June 14,2011
Public Hearing
MEMORANDUM
June 10,2011
TO:
FROM:
SUBJECT:
County Council
Robert H. Drummer, Senior Legislative Attorney
£\
l\d
Public Hearing:
Expedited Bill 17-11, Personnel - Other Post Employment
Benefits Trust - County - funded Agency
Expedited Bill 17-11, Personnel - Other Post Employment Benefits Trust - County
funded Agency, sponsored by Council President Ervin, Councilmembers Navarro, Floreen,
Andrews, Riemer, Rice, Leventhal, EIrich, and Council Vice President Berliner was introduced
on May 26, 2011. A Government Operations and Fiscal Policy Committee worksession is
tentatively scheduled for June 27 at 9:30 a.m.
Bill 17-11 would amend the Retiree Health Benefits Trust (RHB) to provide a funding
mechanism to pay for other post employment benefits (OPEB) for employees of Montgomery
County Public Schools (MCPS) and Montgomery College (College). The Council President
described the purpose of the Bill at ©16-17.
Background
The RHB was established by Bill 28-07, enacted on April 1,2008, to secure funding for
all or a portion of certain County benefit plans providing retiree health and life insurance
benefits. The RHB resulted from the implementation of Government Accounting Standards
Board (GASB) Statement 45,
Accounting and Financial Reporting by Employers for Post­
employment Benefits Other than Pensions.
Prior to the issuance of Statement No. 45 by GASB
(GASB 45), government financial statements reported the effect of these other retiree benefits
when they were paid. Since these retiree benefits are consideration for employee services
rendered, GASB 45 directs state and local governments to recognize the cost of these benefits
when the related employee services are received instead of when they are paid. GASB 45
became effective for jurisdictions with more than $100 million in revenue in FY08.
GASB 45 does not require funding the accrued expense, but credit rating agencies expect
state and local governments to do so. The Council adopted Resolution 16-87 on April 10, 2007,
committing to fund the difference between the Other Post Employment Benefits (OPEB) pay-as­
you-go contributions and the annual required contribution on an amortized even basis over a
five-year period beginning in FY08. The Council appropriated $31.9 million in FY08 for the
RHB. However, due to growing fiscal pressures in FY09, the Council changed the phase-in
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schedule to eight years. In FYlO, the only tax supported OPEB appropriation was $12 million
for MCPS.
In
FYII, there was no tax supported contribution for any agency. The RHB fund is
managed by the Board of Investment Trustees (BIT) in the same manner as the Board manages
investments for the County retirement plans. The BIT has broad authority to manage the
investments of the RHB trust fund through the use of investment managers consistent with the
Uniform Management of Public Employee Retirement Systems Act (UMPERSA). The funds
placed into the trust· fund are held for the exclusive benefit of the participants in the County
retiree benefit plans.
Both MCPS and the College created their own separate OPEB Trusts, but funding is
subject to Council appropriation. The Bill would expand the RHB to enable funding for retiree
benefit plans operated by MCPS and the College. This consolidated approach to pre-funding
retiree benefit plans to achieve economies in administration and investment of funds has been
adopted in other jurisdictions, including Baltimore, Frederick, and Howard Counties. The Bill
would permit the Council to appropriate OPEB funding to the RHB on behalf of MCPS and the
College for the exclusive use of their retirees. The County Government Approved FY12
Operating Budget appropriated, in non-departmental accounts (NDA), $20 million for MCPS
OPEB funds and $1 million for College OPEB funds. These funds would be placed into the
consolidated RHB fund if the Bill is enacted.
The Bill would create a new Board of Trustees to manage the consolidated RHB
consisting of the existing 13 member BIT and 1 representative nominated by MCPS and 1
nominated by the College. The 2 additional trustees would be appointed by the Executive
subject to Council confirmation.
This packet contains:
Expedited Bill 17-11
Legislative Request Report
Council President Memo
Circle #
1
15
16
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Expedited Bill No.
_--!1..:...7-,-1,-,1~_-=-_
Concerning: Personnel - Other Post
Employment Benefits Trust
County-funded Agencv
Revised: 5 -23 -11 Draft No. ",-8_ _
Introduced:
May 26, 2011
Expires:
November 26,2012
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date:
~N~o~n~e:..._.
_ _ _ _ __
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President Ervin, Councilmembers Navarro, Floreen, Andrews, Riemer, Rice,
Leventhal, EIrich, and Council Vice President Berliner
AN EXPEDITED ACT
to:
(1)
amend the Retiree Health Benefits Trust to provide a funding mechanism to pay
for other post employment benefits for employees of certain County-funded
agencies; and
(2) generally amend the law governing post employment benefits.
By amending
Montgomery County Code
Chapter 33, Personnel and Human Resources
Sections 33-158, 33-159,33-160,33-161,33-162,33-165,33-166, and 33-168
By adding
Montgomery County Code
Chapter 33, Personnel and Human Resources
Section 33-169
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* *
*
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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Expedited Bill No. 17-11
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Sec. 1. Sections 33-158,33-159,33-160,33-161,33-162,33-165,33-166,
and 33-168 are amended and Section 33-169 is added as follows:
33-158.
Definitions.
In this Article, the following words and phrases have the following
meamngs:
[(a)]
Board:
The Consolidated Retiree Health Benefits Trust
Bo~rd
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[of
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Investment Trustees] established under [Article III] Section 33-160.
[(b)]
Contribution:
payment made to the Trust Fund by the County to
.RID:
benefits for County retiree benefit plans or
benefit plan.
~
County-funded agency retiree
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County:
Montgomery County Government.
County-funded agency:
Montgomery College and Montgomery County
Public Schools.
[(c)]
Custodian:
The County Director of Finance.
[(d)]
Investment manager:
a person or entity who exercises discretion to
manage all or part of the assets of an institutional investor.
[(
e)]
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Participating Agency:
an agency eligible to participate
III
County
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benefit plans under Section 20-37 (b) which elects to participate in any
County retiree benefit plan.
[(f)]
Retiree benefit plan:
any retiree medical plan, dental plan, vision plan,
or life insurance plan maintained
by
the County and administered by the
Chief Administrative Officer. Depending on the context,
retiree benefit plan
may also refer to
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retiree medical plan, dental plan, vision plan, or life
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insurance plan established and maintained
by
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County-funded agency.
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reg)]
Trust Fund:
the Consolidated Retiree Health Benefits (RHB) Trust
Fund established to pay all or part of the benefits provided under any retiree
benefit plan.,. including
~
County-funded agency retiree benefit plan.
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33-159.
(a)
Establishment of Trust.
County Retiree Benefit Plans.
The Chief Administrative Officer must
include the terms of any County retiree benefit plan, including
eligibility and benefits,
including those benefits
collectively
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bargained, in a plan document. All benefits must meet any applicable
Federal or State requirement.
Subject to the County's obligations
under collective bargaining agreements and the collective bargaining
laws, to the extent applicable, the Chief Administrative Officer may
amend a plan document at any time.
Subject to the County's
obligations under collective bargaining agreements and the collective
bargaining laws, to the extent applicable, any retiree benefit plan may
be terminated at any time for any reason.
No retiree benefit is
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guaranteed, except as expressly provided by a contract entered into by
the County.
(b)
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Establishment of Trust.
An Other Post Employment Benefits Trust,
known as the Consolidated. Retiree Health Benefits (RHB) Trust,
[effective July 1, 2007,] is established to fund all or a portion of
benefits provided under the County retiree benefit plans or
~
County­
funded agency retiree benefit plan. The Trust is intended solely as a
funding mechanism to pay for County or County-funded agency
retiree benefits provided under the terms of any applicable retiree
benefit plan, and does not create any obligation by the County to
provide any benefit listed in any County or County-funded agency
retiree benefit plan. Any participant in a retiree benefit plan, any
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current or former County or
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County-funded agency employee, or
any current or former participating agency employee, has no right to
any asset in the Trust fund.
The Trust Fund may be, but is not
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required to be, the sole source of funding for any County or County­
funded agency retiree benefit plan.
(c)
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Type a/Trust.
The County intends that the Trust Fund:
(1)
be used to perform its essential government function of
providing benefits, including health and life insurance benefits,
to participants and eligible dependents; and
(2)
qualify as a tax exempt trust under Internal Revenue Code
Section 115.
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(d)
Assets
0/
Trust
Fund.
All contributions and all earnings and other
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additions, less payments, constitute the assets of the Trust Fund.
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County-funded agency Participation.
A County-funded agency may
participate in the Trust Fund as
fl
funding mechanism for its retiree
benefit plans.
A participant in any County-funded agency retiree
benefit plan, or any current or former employee of
fl
County-funded
agency, has no right to the assets in the Trust Fund. The County is not
responsible for establishing, maintaining, or providing any benefit for
any County-funded agency retiree benefit plan.
[(e)]
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Exclusive Benefit.
The Trust Fund must be held for the
exclusive benefit of participants in retiree benefit plans and eligible
dependents, and used only to provide benefits and defray reasonable
expenses of administering retiree benefit plans.
Trust Fund assets
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must not revert to the County or
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County-funded agency unless the
County or the County-funded agency terminates all retiree benefit
plans. Some funds may partially revert to the County if at least one
benefit plan is terminated under Section 33-166.
33-160.
Board of Trustees.
Establishment.
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The Consolidated Retiree Health Trust Board of
The Board has
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Trustees is established to manage the Trust.
members.
(hl
Membership.
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Each member of the Board of Investment Trustees established
under Section 33-59 is also
~
member of the Board.
The County Executive must appoint, subject to County Council
confirmation,
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1
voting member nominated
hv
the Montgomery
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County Board of Education, who must serve indefinitely while
remaining the designee of the Montgomery County Board of
Education.
----
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The County Executive must appoint, subject to County Council
confirmation,
1
voting member nominated
hv
the Board of
Trustees of Montgomery College, who must serve indefinitely
while remaining the designee of Montgomery College.
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Vacancies.
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A trustee who is absent from more than 25 percent of the
scheduled meetings of the Board during any l2-month period
has resigned from the Board. Scheduled meetings mean
meetings held at least
1
days after notice of the meeting.
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A vacancy on the Board must be filled for the unexpired term in
the same manner as the previous trustee was appointed.
6)
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Compensation.
The trustees must serve without compensation from
any source for service rendered to the Board, except that an active
employee trustee may receive administrative leave to serve on the
Board. The Board must reimburse
~
trustee for any expense approved
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the Board. A trustee must not receive reimbursement for expenses
from any other source.
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Written policies.
The Board must establish written policies to
administer and invest the funds created
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this Article and to transact
the business of the Trust Fund.
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Officers.
The Board must select
!!
chair, vice chair, and secretary
from the Board's members.
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The chair must preside at meetings of the Board and may take
administrative action, including executing an instrument, on
behalf of the Board. A person may rely in good faith on an act
of the chair as legally valid.
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The vice chair must perform the duties and exercise the powers
of the chair when the chair is absent from the County or
disabled, or the Board determines
perform the duties of the chair.
IS
otherwise unable to
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The secretary must record the proceedings and actions of the
Board and may certify
!!
document or action of the Board. A
person may rely in good faith on the secretary's certification as
proof of the document or action.
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(g}
Meetings and actions.
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ill
The Board must meet at least once during each calendar
quarter. The chair, or
~
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members of the Board, may call
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meeting of the Board, in the manner and at times and places
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provided under the policies of the Board. The Board is
body under the State Open Meetings Act.
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public
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A.
B.
C.
Eight trustees constitute
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quorum.
Each trustee has one vote.
Eight trustees must agree for the Board to act.
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The Board may act without
meeting. All of the trustees must
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concur in writing for the Board to approve any action the Board
takes without
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meeting.
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The Board may adopt procedures consistent with this Section.
The Board may authorize
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trustee to execute instruments on
behalf of the Board. The authority must be in writing and
specifically describe the instrument and how the trustee must
execute the instrument.
®
Records.
ill
The Board must keep investment accounts and records
necessary to calculate the value of each retiree health benefit
trust fund and evaluate the experience and perfonnance of the
Trust Fund.
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The Board may designate
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person to maintain the records.
Accounts and records are subject to State law on public records.
With the Council's approval, the County
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Removal
Q[
trustee.
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Executive may remove
good cause.
trustee for violating this Article or other
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Legal adviser.
The County Attorney is the legal adviser to the Board.
Management.
[The Board of Investment Trustees established under
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Section 33-59 is responsible for managing the Trust Fund.]
The
Board must hold legal title to all assets of the Trust Fund, but may
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transfer some incidents of ownership to the Board's agents as
provided in this Article. The powers and duties of the Board under
this Article are not effective until the Board members have accepted
the Trust Fund in writing. Within 10 days after the Council confirms
a Board member, the member must certify in writing to the Chief
Administrative Officer that the member accepts the Trust Fund and
will administer its affairs with care, skill, prudence, and diligence.
33-161.
(a)
Contributions and payments.
County Contributions.
The County may contribute to the Trust Fund
those amounts that the Council appropriates.
The County is not
required to make any contribution to the Trust Fund unless a written
contract with one or more beneficiaries so requires.
(b)
County-funded Agency Contributions.
The County may contribute to
the Trust Fund, on behalf of g County-funded agency, those amounts
that the County Council appropriates. A County-funded agency may
also make contributions to the Trust Fund in its discretion.
Notwithstanding the preceding sentence, the County must make any
contribution necessary to
m!:Y
g County-funded agency's pro rata cost
of the expenses of the Trust Fund. Contributions to the Trust Fund
made on behalf of g County-funded agency or
by
g County-funded
agency must be attributed to the County-funded agency for actuarial
valuation and financial reporting.
[(b)]
ill
Acceptance of Contributions.
The Board must accept all
contributions deposited in the Trust Fund and held by the custodian as
Trust Fund property. The Board is not responsible for calculating or
collecting any contribution, but is only responsible for contributions
deposited to the Trust Fund and amounts held in the Trust Fund. The
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Board must separately account for any contribution made on behalf of
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County-funded agency and earnings and expenses attributable to
that contribution.
[(c)]
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Payments.
Payments for County Retiree Benefit Plans.
Payments may be
made from the Trust Fund attributable to the County in those
amounts directed by the Chief Administrative Officer only to
pay for all or part of the benefits provided by any County retiree
benefit plan, administrative expenses relating to a retiree benefit
plan.1 and expenses of the Trust Fund. The Board is not liable
for any payment directed by the Chief Administrative Officer
and is not required to confirm compliance with any retiree
benefit plan.
ill
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Payments for
f!.
County-funded Agency Retiree Benefit Plan.
The Chief Administrative Officer may direct that payments be
made from the Trust Fund attributable to
agency as authorized
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County-funded
County Council appropriation
resolution. Payments from the Trust Fund must be used to
!mY
for all or part of the benefits provided
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County-funded
agency retiree benefit plan and expenses of any County-funded
agency retiree benefit plan. The Board is not liable for any
payment made under the direction of the Chief Administrative
Officer and has no responsibility to confirm compliance with
any retiree benefit plan.
[(d)]
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Expenses.
The Board must be reimbursed for expenses solely
incurred in the administration of the Trust Fund and must pay from
the Trust Fund expenses reasonably
incurred by the Chief
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Administrative Officer to administer any County retiree benefit plan
to the extent that those expenses have not been paid by the County.
The Board may pay expenses incurred under Section 33-162(h)(11)
without direction of the Chief Administrative Officer.
The Chief
Administrative Officer may direct the Board to
.m!Y
expenses
reasonably incurred hy
retiree benefit plans.
33-162.
Trust Fund management.
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County-funded agency to administer its
*
(i)
Prohibited Transactions.
*
*
The Board must not engage In any
transaction between the Trust and the County or any entity controlled
by the County, including
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County-funded agency, or a participating
agency in which the Board:
(1)
lends any part of its Income or corpus without reCeIVIng
adequate security and a reasonable rate of interest;
(2)
pays any compensation more than a reasonable allowance for
salaries or other compensation or services actually rendered;
(3)
(4)
makes any service available on a preferential basis;
makes any substantial purchase of securities or other property
for more than adequate consideration;
(5)
sells any substantial part of its securities or other property for
less than adequate consideration; or
(6)
engages in any transaction which results In a substantial
diversion of its income or corpus.
0)
To comply with Section 315 of the County Charter, a firm of certified
public accountants, under contract with the Council, must complete an
annual independent audit of the Trust Fund. The complete audit must
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be filed with the Council and each County-funded agency, and copies
made available for public inspection.
33-165.
Indemnification of Board Members.
*
(h)
*
*
County Attorney.
(1)
The County Attorney must determine whether a Board member
is eligible for indemnification with respect to any matter and
the reasonableness of any fee, expense, or settlement.
(2)
Unless the County Attorney approves the settlement, a Board
member cannot settle a claim against another Board member
usmg:
(A)
(B)
County funds;
funds of a participating agency;
!!J
County-funded agency funds;
[(C)]
CD)
funds provided by a self-insurance program of the
County; or
[(D)]
an
funds provided under a policy the County has with an
msurance company.
33-166.
Amendment and Termination.
(a)
Termination.
Except on termination, no part of the Trust Fund may
revert to the County or a participating agency or be used for any
purpose other than the exclusive benefit of participants of a retiree
benefit plan.
If
all County retiree benefit plans are terminated and all
benefit claims and expenses are paid, any remaining assets in the
Trust Fund relating to contributions made by the County and
participating agencies must revert to the County and the participating
agencIes. The Trust Fund must terminate in its [entirely] entirety on
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the earlier of the termination of all County retiree benefit plans or the
depletion of the Trust Fund. Funds may partially revert to the County
or participating agencies if one or more retiree benefit plans is
terminated.
When a County or
5!
County-funded agency retiree
benefit plan is terminated, the assets in the Trust Fund attributable to
that plan after expenses and benefits have been paid must revert to the
County and the participating agencies as provided in the adoption
agreement. If the County terminates all of its retiree benefit plans and
5!
County-funded agency continues to maintain at least one retiree
benefit plan, the assets attributable to each County-funded agency
retiree benefit plan must be transferred to
5!
trust which meets the
requirements of Internal Revenue Code Section 115.
(b)
Amendments.
Any provision of this Article may be amended at any
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time. No amendment may:
(1)
authorize any part of the Trust Fund to be used for any purpose
other than the exclusive benefit of participants of retiree benefit
plans and eligible dependents; or
(2)
cause or allow any part of the Trust Fund to revert to or become
the property of the County or
5!
County-funded agency, except
as provided in Sections 33-166(a).1 [or] 33-167.1 or 33-169.
*
33-168.
Protection from Creditors.
*
*
Any asset held by the Trust Fund is not subject to any creditor of the County
or
5!
County-funded agency and is exempt from execution, attachment, prior
assignment, or any other judicial relief or order for the benefit of any creditor or
third person.
33-169.
County-funded Agency Participation.
@
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(ill
County Liability.
Except for any obligation to refund or transfer
~
assets under subsection
(Q)
or
no legal liability for benefits must
accrue to the County
Qy
including
f!
County-funded agency in the
Trust Fund.
(Q)
Termination
Q[
Participation
f2Y.
f!
County-funded Agency.
Any Trust
Fund assets must not revert to
f!
County-funded agency. Assets may
partially revert to the County if
f!
County-funded agency terminates at
least one retiree benefit plan.
Only funds attributable to the
terminated retiree benefit plan, after benefits and expenses have been
paid, may revert to the County.
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Transfer
Q[
Trust Fund:
If the County decides to terminate
f!
County­
funded agency's participation in the Trust Fund, the County must
notify the County-funded agency in writing. If the County-funded
agency continues to maintain
f!
retiree benefit plan, assets must be
transferred to
f!
trust which meets the requirements of Internal
Revenue Code Section 115. Any transfer of assets from the Trust
Fund resulting from the termination of participation in the Trust Fund
must comply with the Internal Revenue Code.
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Sec. 2.
Transition.
The Consolidated Health Benefits Trust Fund mentioned in County Code
§33-159, as amended by Section 1 of this Act, does not create a new trust. The
Trust Fund is the same legal entity first created in County Code §33-159 and
inserted by Chapter 3, Laws of Montgomery County 2008. Any reference to the
Retiree Health Benefits Trust in any document produced before the effective date
of this Act must be treated as referring to the Consolidated Retiree Health Benefit
Trust referenced in County Code §33-159, as amended by Section 1 of this Act.
Sec. 3.
Expedited Effective Date.
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315
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0)
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The Council declares that this legislation is necessary for the immediate
protection of the public interest. This Act takes effect on July 1, 2011.
Approved:
320
321
322
323
Valerie Ervin, President, County Council
324
Date
Approved:
325
Isiah Leggett, County Executive
326
Date
This is a correct copy ofCouncil action.
327
Linda M. Lauer, Clerk of the Council
Date
F:\LAW\B1LLS\1117 OPEB Trust\BiII 8.Doc
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LEGISLATIVE REQUEST REPORT
Personnel
DESCRIPTION:
Expedited Bill 17-11
OPEB Trust County-funded Agency
Amend the Retiree Health Benefits Trust to provide a funding
mechanism to pay for other post employment benefits for employees
of the Montgomery County Public Schools and Montgomery College.
Small OPEB Trust funds created by each County-funded agency
require a duplication of effort to manage. Each separate OPEB Trust
is funded by Council appropriation.
To consolidate the separate OPEB Trusts created by the County,
MCPS and the College to achieve economies in administration and
management.
Finance, County Attorney, OMB, OHR
To be requested.
To be requested.
To be requested.
Baltimore, Frederick, and Howard
consolidated OPEB Trusts.
Counties created similar
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITIDN
MUNICIPALITIES:
PENAL TIES:
Robert H. Drummer, Senior Legislative Attorney
Not applicable.
Not applicable.
F:\LAW\BILLS\1117 OPEB Trust\Legislative Request Report.Doc
f:\law\bills\1117 opeb trust\legislative request report.doc
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MONTGOMERY COUNTY COUNCIL
ROCKVILLE, MARYLAND
OFFICE
OF THE COUNCIL PRESIDENT
MEMORANDUM
May 16, 2011
TO:
FROM:
SUBJECT:
County Council
Valerie
Ervin~~cil
President
Pre-funding Retiree Health Benefits
Starting in 2003, the Council has focused on the importance of pre-funding retiree health
benefits, or OPEB (Other Post Employment Benefits). Actuarial advisers for the four County tax
supported agencies have estimated the total liability associated with providing these benefits for
current and future retirees at $3.6 billion. As both health care costs and the numbf.r of retirees
continue to rise sharply, the agencies will not be able to cover the annual expense on a pay-as­
you-go basis, as they have done to date.
To meet the Annual Required Contribution (ARC) needed to meet future obligations, pre­
funding through a trust vehicle is essential. The agencies have all established retiree health
benefits trusts, but the severe fiscal pressures of the past several years have sharply restricted
funding for the trusts. For FY08 the Council set a five-year schedule for the agencies to phase in
their pre-funding and budgeted $31.9 million for the first year. For FY09,
in
view ofgrov,.;ng
fiscal pressures, the Council extended the phase-in schedule to eight years. For FYIO the only
t~'{
supported OPEB appropriation was $12 million for MCPS. For FYIl, an extremely difficult
year, there was no tax supported contribution for any agency.'
For FY12 the Executive proposed to resume tax supported funding at a total level of
$49.8 million: $26.1 million for County Government, $20.0 million for MCPS, $1.0 million for
Montgomery College, and $2.7 million for M-NCPPC. This funding would represent a start
toward returning to a clear phase-in schedule for all agencies.
If the County had followed the five-year phase-in schedule that was approved four years ago, the total FY 11 tax
supported contribution for all four agencies would have been $149 million. Non-tax supported cor.tributions from
proprietary funds and participating outside agencies, however, have consistently been made. On May 9 the Council
supported SI2.1 million in FYI2 funding for this purpose.
1
240/777-7::100
• TTY 2401777-7914 • FAX 24C/777-7S89
WWW.;.'IONTGOMERYCOUNTYMD.GOV
C
PRINTEO ON RECYCLED PAPER
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Based on the Council's recent discussions of this issue, I suggest two steps:
First, to provide a more coherent and consistent approach to pre-funding retiree health
benefits starting in FY12, I will introduce legislation to enable MCPS and Montgomery College
to participate in a consolidated County retiree health benefits trust
2
Many jurisdictions,
including Baltimore, Frederick, and Howard County, have adopted a consolidated approach to
achieve economies in administration and investment of funds, including lower fees and access to
investment managers with minimum asset requirements. Such an approach will also make the
Council's annual OPEB funding decisions clearer and more transparent. This will benefit both
the agencies and their retirees.
Second, I suggest that we place the proposed FY12 OPEB contributions for MCPS ($20.0
million) and the College ($1.0 million) in separate County Government Non-Departmental
Accounts, one on behalf of each agency, for transfer to the consolidated trust after the bill has
been enacted.
I believe that these steps
will
help all agencies meet their commitments to their retirees in
a fiscally responsible way.
The legislation would provide representation on the consolidated trust's governing board and would base each
agency's share oftrust assets on its contributions and on earnings on the contributions. The existing trusts of both
agencies would continue to be a source of future funding of retiree health benefits. Since M-NCPCC is a bi-county
agency. its participation would require collaboration with Prince George's County.
2
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