Senate Study Bill 3140 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON LOCAL GOVERNMENT BILL BY CHAIRPERSON GARRETT) A BILL FOR An Act relating to municipal utility retirement systems. 1 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 2 TLSB 6150XC (3) 87 ec/rn
S.F. _____ Section 1. Section 97B.1A, subsection 8, paragraph a, Code 1 2018, is amended by adding the following new subparagraph: 2 NEW SUBPARAGRAPH . (11A) Persons with service under this 3 chapter who are employed by a municipal utility, other than a 4 municipal water utility or waterworks, that has established 5 a pension and annuity retirement system for its employees 6 pursuant to chapter 412, and who are covered under this chapter 7 at the time of commencement of employment with the municipal 8 utility. 9 Sec. 2. Section 97B.1A, Code 2018, is amended by adding the 10 following new subsection: 11 NEW SUBSECTION . 15A. “Municipal utility” means a public 12 utility as defined in section 412.5. 13 Sec. 3. Section 97B.42C, Code 2018, is amended to read as 14 follows: 15 97B.42C Retirement system merger. 16 A municipal water utility or waterworks that has established 17 a pension and annuity retirement system for its employees 18 pursuant to chapter 412 , or a school district that has 19 established a pension and annuity retirement system for its 20 employees pursuant to chapter 294 , may adopt a resolution to 21 authorize the merger of its pension and annuity retirement 22 system with and into the Iowa public employees’ retirement 23 system. The system is authorized, but is not required, to 24 accept such a proposal. The governing body of the municipal 25 water utility or waterworks or school district and the Iowa 26 public employees’ retirement system shall, acting in their 27 fiduciary capacities, mutually determine the terms and 28 conditions of such a merger, including any additional funds 29 necessary to fund the service credits being transferred to the 30 Iowa public employees’ retirement system, and either party 31 may decline the merger if they cannot agree on such terms and 32 conditions. The system shall adopt such rules as it deems 33 necessary and prudent to effectuate mergers as provided by this 34 section . 35 -1- LSB 6150XC (3) 87 ec/rn 1/ 3
S.F. _____ Sec. 4. Section 412.4, Code 2018, is amended to read as 1 follows: 2 412.4 Payments and investments. 3 The council, board of waterworks trustees, or other board 4 or commission, whichever is authorized by law to manage and 5 operate any such waterworks, or other municipally owned and 6 operated public utility, shall have the right and power to 7 contract with any legal reserve insurance company authorized to 8 conduct its business in the state, or any bank located in Iowa 9 having trust powers for the investment of funds contributed to 10 an annuity or pension system, for the payment of the pensions 11 or annuities provided in such pension or annuity retirement 12 system, and may pay the premiums or make the contribution of 13 such contract out of the fund provided in section 412.2 . Funds 14 shall be invested in accordance with the investment policy for 15 the retirement fund, as established by the governing body of 16 the public utility. In establishing the investment policy, 17 the council, board, or commission shall be governed by the 18 standards set forth in section 97B.7A . However, permissible 19 investments shall be limited to those investments authorized in 20 section 12B.10, subsection 5 , and investments in diversified 21 commingled investment funds holding only publicly traded 22 securities and under the management of an investment advisor 23 registered with the federal securities and exchange commission 24 under the Investment Advisor Act of 1940. Funds contributed 25 to a bank pursuant to such a contract shall be invested in 26 the manner prescribed in section 633.123A or chapter 633A, 27 subchapter IV, part 3 , and may be commingled with and invested 28 as a part of a common or master fund managed for the benefit of 29 more than one public utility. 30 EXPLANATION 31 The inclusion of this explanation does not constitute agreement with 32 the explanation’s substance by the members of the general assembly. 33 This bill relates to municipal utility retirement systems. 34 Code section 97B.1A(8), defining employees for purposes of 35 -2- LSB 6150XC (3) 87 ec/rn 2/ 3
S.F. _____ mandatory membership in the Iowa public employees’ retirement 1 system (IPERS), is amended. Currently, the definition of 2 “employee” identifies certain categories of employees who have 3 the ability to opt out of mandatory membership in IPERS under 4 certain circumstances. The bill includes in this category 5 persons with service under IPERS who are also covered under 6 IPERS at the time they commence employment with a municipal 7 utility, other than a municipal water utility or waterworks, 8 that has established its own pension system. 9 Code section 97B.1A is also amended by providing that the 10 term “municipal utility” means a public utility as defined in 11 Code section 412.5. 12 Code section 97B.42C, concerning retirement system mergers, 13 is amended to authorize a merger with IPERS by any municipal 14 utility with a pension system for its employees under 15 Code chapter 412 and not just a municipal water utility or 16 waterworks with a pension system established under Code chapter 17 412. 18 Code section 412.4, concerning investments authorized by a 19 pension system established under Code chapter 412, is amended 20 to eliminate the provision limiting permissible investments 21 to those investments authorized in Code section 12B.10(5) 22 and certain other diversified investment funds. The bill 23 also eliminates a provision prescribing how certain funds 24 contributed to a bank may be invested. 25 -3- LSB 6150XC (3) 87 ec/rn 3/ 3