Chapter 240
H.P. 383 - L.D. 499
PART RRR
Sec. RRR-1. 5 MRSA §286-B is enacted to read:
1. Definitions.
As used in this section, unless the context otherwise indicates, the following terms have the following meanings. A. "Retiree health benefits" means health benefits as determined from time to time by the State Employee Health Commission pursuant to section 285.
B. "Investment trust fund" means the Retiree Health Insurance Post-employment Benefits Investment Trust Fund established under section 17432.
C. "Irrevocable trust fund" means the Irrevocable Trust Fund for Other Post-employment Benefits established under subsection 2.
2. Establishment.
The Irrevocable Trust Fund for Other Post-employment Benefits is established to meet the State's unfunded liability obligations for retiree health benefits for eligible participants, as described in section 285, subsections 1-A and 11-A and Title 20-A, section 13451, subsections 2, 2-A, 2-B and 2-C, who are the beneficiaries of the irrevocable trust fund. Funds appropriated for the irrevocable trust fund must be held in trust and must be invested or disbursed for the exclusive purpose of providing for retiree health benefits and may not be encumbered for, or diverted to, other purposes. Funds appropriated for the irrevocable trust fund may not be diverted or deappropriated by any subsequent action. Annually, beginning with the fiscal year starting July 1, 2007, the Legislature shall appropriate funds to meet the State's obligations under any group health plan, policy or contract purchased by the State Employee Health Commission to provide retiree health benefits pursuant to section 285, subsection 5 and, if applicable, to meet the State's obligations under any self-insured group health plan pursuant to section 285, subsection 9. Unfunded liabilities may not be created except those resulting from experience losses. Unfunded liability resulting from experience losses must be retired over a period not exceeding 10 years.
Annually, beginning with the fiscal year starting July 1, 2009, the Legislature shall appropriate funds that will retire, in 30 years or less from July 1, 2007, the unfunded liability for retiree health benefits for eligible participants as described in this section. The unfunded liability referred to in this section is that determined by the Department of Administrative and Financial Services, Office of the State Controller's actuaries and certified by the Commissioner of Administrative and Financial Services as of June 30, 2006.
3. Trustees.
The Treasurer of State and the State Controller shall serve as trustees of the irrevocable trust fund.
4. Duties of the trustees.
The trustees of the irrevocable trust fund have the following duties. A. The trustees of the irrevocable trust fund shall calculate the funds necessary to fund the state employee health insurance program, including the unfunded liability as determined in accordance with subsection 2, on an actuarially sound basis and transmit those calculations to the State Budget Officer as required by chapter 149. The Legislature shall appropriate and transfer annually those funds the trustees of the irrevocable trust fund determine to be necessary under this subsection to fund the state employee health insurance program on an actuarially sound basis, including a contribution to the irrevocable trust fund.
B. The trustees of the irrevocable trust fund biannually shall make, or cause to be made, valuations of the assets and liabilities of the state employee health insurance program. The trustees of the irrevocable trust fund shall select an independent actuary to make annual valuations of the assets and liabilities of the state employee health insurance program on the basis of actuarial assumptions adopted by the trustees of the irrevocable trust fund. The actuary may not be an officer or employee of the State. The goal of the actuarial assumptions is to achieve a fully funded state employee health insurance program.
C. The trustees of the irrevocable trust fund annually shall conduct, or cause to be conducted, an audit of the irrevocable trust fund. The trustees of the irrevocable trust fund shall select an independent auditor to perform the audit. The auditor may not be an officer or employee of the State.
D. The trustees of the irrevocable trust fund shall make the final decision on all matters pertaining to administration, actuarial assumptions, actuarial recommendations, funding, payout schedule and long-term time horizon for the irrevocable trust fund.
5. Investment of funds.
The trustees of the investment trust fund are responsible for the investment and reinvestment of the funds appropriated to the irrevocable trust fund and transferred to the investment trust fund in accordance with the Maine Uniform Trust Code and the Maine Uniform Prudent Investor Act under Title 18-B, subject to the guidelines set for the investment trust fund in section 17435.
6. Report to Legislature.
The trustees of the irrevocable trust fund shall make a written report to the joint standing committee of the Legislature having jurisdiction over appropriations matters and the joint standing committee of the Legislature having jurisdiction over labor matters on or before March 1st of each year that contains a discussion of any areas of policy or administration of the irrevocable trust fund that, in the opinion of the trustees of the irrevocable trust fund, should be brought to the attention of the joint standing committees; a discussion of the progress toward meeting the goals of this section; and a review of the status of the irrevocable trust fund.
Sec. RRR-2. 5 MRSA c. 421, sub-c. 4, art. 9 is enacted to read:
ARTICLE 9
RETIREE HEALTH INSURANCE POST-EMPLOYMENT BENEFITS INVESTMENT TRUST FUND
As used in this article, unless the context otherwise indicates, the following terms have the following meanings.
1. Commissioner.
"Commissioner" means the Commissioner of Administrative and Financial Services.
2. Investment trust fund.
"Investment trust fund" means the Retiree Health Insurance Post-employment Benefits Investment Trust Fund established in section 17432.
3. Assets of the investment trust fund.
"Assets of the investment trust fund" means the funds appropriated or otherwise provided to fund the investment trust fund, together with the interest, earnings and returns on the funds.
4. Investment trust fund agreement.
"Investment trust fund agreement" means the trust agreement to be entered into by the State and the trustees of the investment trust fund.
5. System.
"System" means the Maine State Retirement System.
1. Investment trust fund established.
The Retiree Health Insurance Post-employment Benefits Investment Trust Fund is established as an irrevocable trust for the sole purpose of holding and investing funds appropriated or otherwise provided to the investment trust fund for the benefit of the Irrevocable Trust Fund for Other Post-employment Benefits established in section 286-B with respect to the State's liabilities for retiree health benefits. The purpose of accumulating assets in this investment trust fund is to provide funding of the State's unfunded liability obligations for retiree health benefits. The Legislature has no authority or power to divert any of the assets of the investment trust fund to use for any other purpose.
2. Date of establishment.
The date of establishment of the investment trust fund is July 1, 2007.
3. Trustees.
The trustees of the investment trust fund are the members of the Board of Trustees of the Maine State Retirement System.
Notwithstanding that Article 9 is placed in the Maine Revised Statutes in Part 20, chapter 421, subchapter 4, any reference to "Part," "in this Part," "under this Part" or similar wording in Part 20 is inapplicable to every provision in this article. Article 9 stands apart from all other provisions of this Part except by explicit reference.
1. Administration.
The trustees of the investment trust fund may delegate to the Executive Director, Chief Investment Officer or other staff of the system as appropriate the responsibility to carry out, as directed by the trustees of the investment trust fund, the administration of the investment trust fund and its investment and disbursement activities.
2. Expenses.
Associated administrative costs and expenses attributable to the investment trust fund must be charged to the investment trust fund.
The trustees of the investment trust fund have the following duties.
1. Manage assets.
The trustees of the investment trust fund shall hold, invest, reinvest and manage assets appropriated to the investment trust fund and all other assets of the investment trust fund for the sole benefit of the Irrevocable Trust Fund for Other Post-employment Benefits established in section 286-B and may not encumber, invest, divest or disburse the funds for any other purpose. The trustees of the investment trust fund have full power to hold, purchase, sell, assign, transfer and dispose of any such assets and investments and will provide for all necessary services with respect to such assets. The primary goals of the investment trust fund are the preservation and growth of principal in accordance with long-term investment assumptions established from time to time by the Board of Trustees of the Maine State Retirement System for the defined benefits plans of the system, as considered appropriate by the trustees of the investment trust fund.
2. Investment policy.
Except as provided in subsection 3, the trustees of the investment trust fund shall determine and revise as necessary an appropriate investment trust fund investment policy, including but not limited to provisions for asset allocation and investment strategy. This policy must take into account the following factors as established by the trustees of the Irrevocable Trust Fund for Other Post-employment Benefits established in section 286-B, subsection 2 and as may be revised in the investment trust fund agreement from time to time: A. A long-term time horizon for the assets of the investment trust fund;
B. A funding plan; and
C. A projected disbursement schedule that does not begin before the year 2027.
3. Transfer of funds before policy established.
Any funds transferred to the investment trust fund prior to the establishment of the investment policy in subsection 2 must be held and transitionally invested in a prudent manner as determined by the trustees of the investment trust fund.
4. Investment and management of assets.
The trustees of the investment trust fund shall invest and manage the assets of the investment trust fund in accordance with the requirements of subsections 1 and 2 and with the reasonable care, skill and expertise of a prudent investor.
5. Investment expenses.
The trustees of the investment trust fund may incur reasonable investment expenses payable from the assets of the investment trust fund, including but not limited to services of investment managers, investment consultants, actuaries, investment counsel, banks and trust companies and other investment professionals or advisors as they consider necessary and prudent in determining investment policy, in investing funds and in liquidating assets.
6. Disbursement of funds.
The trustees of the investment trust fund may disburse funds from the investment trust fund only to the Irrevocable Trust Fund for Other Post-employment Benefits as established in section 286-B, subsection 2. The trustees of the Irrevocable Trust Fund for Other Post-employment Benefits must present jointly a lawful payment order. The trustees of the investment trust fund have no responsibility to ensure that the stated use or actual use by the trustees of the Irrevocable Trust Fund for Other Post-employment Benefits of such money is to fund retiree health benefits. The trustees of the investment trust fund's duties under the investment trust fund are discharged by disbursing money under the terms of this subsection.
7. Report.
The trustees of the investment trust fund shall provide annually a report to the State, the trustees of the Irrevocable Trust Fund for Other Post-employment Benefits established in section 286-B, subsection 2 and the joint standing committee of the Legislature having jurisdiction over the system and the joint standing committee of the Legislature having jurisdiction over appropriations and financial affairs. The trustees of the investment trust fund shall provide quarterly to the trustees of the Irrevocable Trust Fund for Other Post-employment Benefits a report of the performance of the investment trust fund.
1. Limited liability of trustees of the investment trust fund.
A trustee of the investment trust fund is not: A. Personally liable for any liability, loss or expense suffered by the investment trust fund, unless such a liability, loss or expense arises out of or results from the willful misconduct or intentional wrongdoing of that trustee of the investment trust fund;
B. Responsible for the adequacy of the investment trust fund to meet and discharge any obligation; or
C. Required to take action to enforce the payment of any contribution or appropriation to the investment trust fund.
2. Immunity of trustees of the investment trust fund.
The trustees of the investment trust fund are immune from suit on any and all tort claims seeking recovery of damages to the same extent as governmental entities under the Maine Tort Claims Act.
3. Legal representation and defense of trustees of the investment trust fund.
The Attorney General is legal counsel to the trustees of the investment trust fund and shall represent and defend the trustees of the investment trust fund, as a group and individually, in connection with any claim, suit or action at law arising out of the performance or nonperformance of any actions related to the investment trust fund to the same extent as provided for governmental entities in the Maine Tort Claims Act.
4. Performance of essential governmental functions.
The exercise of the powers conferred by this article is held to be the performance of essential governmental functions.
The money in the investment trust fund is exempt from any state, county or municipal tax in the State.
The system and trustees of the investment trust fund have no obligation to comply with reporting requirements related to the investment trust fund under Governmental Accounting Standards Board Statement Number 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, or Governmental Accounting Standards Board Statement Number 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. The State is obligated to comply with the reporting requirements under Governmental Accounting Standards Board Statement Number 43 and Governmental Accounting Standards Board Statement Number 45. The system shall account for the assets of the investment trust fund in its annual financial statements.
If information regarding the investment trust fund is required from the system or the trustees of the investment trust fund for an administrative or judicial proceeding, the party seeking the information must file a written request for that information with the Executive Director of the Maine State Retirement System. The Executive Director or the executive director's designee shall make a certified response to that request within 30 days and the certified response is admissible as evidence in any administrative or judicial proceeding. A subpoena or other form of discovery directed at obtaining the information may not be issued nor may employees of the system be required to testify on the subjects covered by the certified response unless there is an express finding by an administrative agency or a court that there is a compelling necessity to permit further discovery or to require testimony. The Executive Director shall notify the trustees of the Irrevocable Trust Fund for Other Post-employment Benefits established in section 286-B, subsection 2 immediately of any request for information, subpoena or other form of discovery.
Sec. RRR-3. Calculation and transfer. Notwithstanding any other provision of law, the State Controller shall calculate the amount remaining at the close of fiscal year 2006-07 in the Retiree Health Insurance Internal Service Fund within the Department of Administrative and Financial Services and determine the amount required to make the State's premium contributions for current retired state employees and retired teachers. The remaining fund balance in the Retiree Health Insurance Internal Service Fund after the State Controller executes all necessary adjustments and closes the State's books for fiscal year 2006-07 must be transferred to the Retiree Health Insurance Post-employment Benefits Investment Trust Fund within the Maine State Retirement System by financial order upon approval of the Governor.