HB446 By Representatives Lovvorn, Crawford, Drake, Ledbetter, McCutcheon, Whorton, Rowe, Fincher, Blackshear, Whitt, Ingram, Farley, Robertson, Wood (D), Shaver, Wheeler, Pettus, Garrett, Gaston, Shedd, Stadthagen and Kiel RFD Ways and Means Education Rd 1 12-MAR-20

SYNOPSIS: This bill is the Education Retirees' Trust Fund Funding Act of 2020.

This bill would establish a separate fund in the State Treasury known as the Education Retirees' Trust Fund, to serve as a permanent trust and as an investment account for the earnings and funds received for the purpose of periodic bonus checks.

A BILL TO BE ENTITLED AN ACT

To create the Education Retirees' Trust Fund Funding Act of 2020; to establish a separate fund in the State Treasury known as the Education Retirees' Trust Fund for the purpose of establishing a permanent trust and investment account for the funds and earnings received to provide education retirees with periodic bonus checks.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. This act shall be known and may be cited as the Education Retirees' Trust Fund Funding Act of 2020.

Section 2. The Legislature finds that it is advisable for the state to create an irrevocable trust whereby the state may begin funding periodic bonus checks for Alabama retired education employees. Therefore, the Teachers' Retirement System Board of Control shall create an irrevocable trust named the Education Retirees' Trust Fund in accordance with this act.

Section 3. For the purposes of this act, the following terms shall have the following meanings:

(1) BENEFICIARY. Any individual who receives a pension, annuity, a retirement allowance, or other benefit provided by Chapter 25 of Title 16, Code of Alabama 1975.

(2) BOARD OF CONTROL. The Board of Control of the Teachers' Retirement System established pursuant to Section 16-25-2, Code of Alabama 1975.

(3) FISCAL YEAR. The fiscal year of the state as may from time to time be provided by law.

(4) PERIODIC BONUS CHECKS. Periodic bonus checks granted by the Education Retirees' Trust Fund to retirees and beneficiaries of the Teachers' Retirement System.

(5) PERMITTED INVESTMENTS. All assets and properties in which the Retirement Systems of Alabama may invest as permitted by law.

(6) RETIRED EMPLOYEE. A former employee who is a participant in the Teachers' Retirement System pursuant to Chapter 25 of Title 16, Code of Alabama 1975, and who satisfies the definitions of retirement and teacher, support personnel, or employee as provided in Section 16-25-1, Code of Alabama 1975.

(7) TRUSTEE. A trustee serving on the Board of Control.

(8) TRUST FUND. The Education Retirees' Trust Fund created by this act.

Section 4. (a) There is created the Education Retirees' Trust Fund evidenced by a written trust instrument, the terms and conditions of which shall be determined by the Board of Control creating the trust fund.

(b) The trust shall be managed and controlled by its trustees. The trustees shall serve without compensation for their service as trustees, but may be reimbursed from the trust for all reasonable and necessary expenses that they incur in connection with their service as trustees.

Section 5. (a) A trustee may not be any of the following:

(1) Personally liable for any liability, loss, or expense suffered by the trust fund, unless the liability, loss, or expense arises out of or results from the willful misconduct or intentional wrongdoing of the trustee.

(2) Responsible for the adequacy of the trust fund to meet and discharge any obligation under the relevant pension plan.

(3) Required to take action to enforce the payment of any contribution or appropriation to the trust fund.

(b) A trustee is immune from suit to the same extent as the state, its agencies, officers, and employees.

(c) A trustee may be indemnified by the trust fund and from funds of the trust fund against costs, liabilities, losses, damages, and expenses including, but not limited to, attorney's fees, as may be more fully provided in a respective trust fund agreement, unless the cost, liability, loss, damage, or expense arises out of or results from the willful misconduct or intentional wrongdoing of the trustee.

Section 6. (a) The board of control, through the trustees, shall have all powers necessary for the management and control of the trust fund and to carry out and effectuate the purposes of this act including, but not limited to, the following:

(1) To adopt, alter, and repeal rules for the operation and conduct of the affairs and business of the trust fund.

(2) To make, enter into, and execute contracts, agreements, and other instruments and to take other actions as necessary for the management and operation of the trust fund, to accomplish any purpose for which the trust fund was created, or to exercise any power granted by this act.

(3) To enter into contracts with, to accept aid and grants from, to cooperate with, and to do any and all things necessary to avail the trust fund of the aid and cooperation of the United States, the state, or any agency, instrumentality, or political subdivision of either, in furtherance of the purposes of this act.

(4) To appoint, employ, and contract with employees, agents, advisors, and consultants including, but not limited to, attorneys, accountants, actuaries, financial experts, and other advisors, consultants, and agents as determined necessary by the trustees and to establish any compensation to be paid from the funds of the trust fund.

(5) To invest the funds of the trust fund in any permitted investment.

(b) The expenses of making and disposing of investments, including brokerage commissions, legal expenses referable to a particular transaction, transfer taxes, and other customary transactional expenses with respect to a trust shall be payable out of the funds of the trust fund.

Section 7. (a)(1) The sources of funding to the trust fund may consist of all of the following:

a. Investment income.

b. Proceeds of any gifts, grants, or contributions.

c. Revenue sources as directed by the Legislature.

d. Revenue sources other than direct appropriations by the Legislature.

(2) The sources of funding to the trust fund may not consist of Education Trust Fund revenue and those revenues are expressly prohibited from that use. The trust fund shall be funded from sources other than the Education Trust Fund.

(b) The agreements creating the trust fund shall be irrevocable and the assets of the trust fund may not be expended, disbursed, loaned, or transferred, or used for any purpose other than to acquire permitted investments, pay administrative expenses, and provide periodic bonus checks to or for retired employees and their beneficiaries. The Legislature may not appropriate the assets of the trust fund.

(c) Upon certification from the actuary of the Teachers' Retirement System that the assets of the trust fund are above and beyond the minimum trust fund balance of one hundred million dollars ($100,000,000) and sufficient to fund periodic bonus checks as provided for by legislation granting the periodic bonus checks, the trustees shall transfer the amount assets certified by the board of control to the Teachers' Retirement System to fund those bonuses or increases.

(d) Notwithstanding subsection (c), the trustees may amend or modify the trust fund, consistent with the legislative intent of this act, in any of the following circumstances:

(1) If, in the opinion of counsel for the trustees, it is necessary or advisable to obtain any material tax advantage or avoid any material adverse tax result.

(2) If, in the opinion of an independent accountant for the trustees, it is necessary or advisable to cause the trust fund to be considered a post-employment benefits trust fund in accordance with generally accepted governmental accounting principles as prescribed by the Governmental Accounting Standards Board, or its successor.

(3) If, in response to a petition of the trustees requesting that the trust fund be amended, a court of competent jurisdiction determines that the amendment is necessary or advisable to accomplish the purposes of this act.

(e) All assets and income of the trust fund shall be exempt from taxation by the state or any political subdivision thereof. The assets of the trust fund are not subject to the claims of creditors of the state, the board of control, trustees, plan administrators, employees, retired employees, or beneficiaries, and are not subject to execution, attachment, garnishment, the operation of bankruptcy, insolvency laws, or other process whatsoever, and no assignment thereof shall be enforceable in any court.

(f) The trustees shall prepare the annual financial statements of the trust fund in accordance with generally accepted governmental accounting principles and shall provide for an audit of those financial statements for each fiscal year to be conducted by a qualified independent certified accounting firm in accordance with generally accepted auditing standards.

Section 8. (a) It is the intent of the Legislature that the Teachers' Retirement System invest the funds of the trust fund and the trustees operate the trust fund in compliance with the Internal Revenue Code in a manner which could allow the trust fund to maximize investment earnings while minimizing the costs to the trust fund. It is also the intent of the Legislature that the trust fund be operated in a manner that satisfies the definition of other post-employment benefits trusts under generally accepted governmental accounting principles.

(b) The trust fund is not subject to any law which conflicts with the intent of the Legislature as expressed in subsection (a) or prevents or unreasonably hinders the accomplishment of the purposes of this act.

Section 9. Nothing in this act shall be construed to define or otherwise grant any right or privilege to periodic bonus checks or other pension benefits to any person other than those periodic bonus checks, rights, and privileges previously or already granted to employees and retired employees and their beneficiaries by the Teachers' Retirement System pension plan. The rights and privileges, if any, shall be governed by the terms of the pension plan, if any. This act is not intended to assure or deny any existing or future employee or retired employee, or any of their beneficiaries or any other person of any right of employment or entitlement to any periodic bonus check or to otherwise restrict the ability of the state to modify or eliminate any existing or future increase benefit.

Section 10. All personnel employed and vendors hired by contract with funds available to the trust fund and trustees under subdivision (4) of subsection (b) of Section 36-36-5, Code of Alabama 1975, shall reflect the racial and ethnic diversity of the state.

Section 11. This act shall become effective on the first day of the third month following its passage and approval by the Governor, or its otherwise becoming law.

Education Retirees' Trust Fund Funding Act

State Treasury

Teachers' Retirement System Board of Control

Teachers' Retirement System

Education Retirees Trust Fund