Bill that fixes pension error passes House
CHARLESTON -- Correcting a miscalculation which led to the underpayment or overpayment into several municipal police and fire retirement plans is part of a bill that passed the House of Delegates on Wednesday.
Huntington officials are closely watching House Bill 2837, which was approved by the House on a 57-42 vote and now moves to the Senate. The city's already delicate pension funds could be exposed to greater financial trouble if the legislation falters, they say.
Between 1982 and 2012, the state Treasurer's Office used the wrong formula to allocate a portion of the 1 percent surcharge on fire and casualty premiums to the state's municipal police and fire pension funds. The error, which was discovered in an audit conducted last year, resulted in 39 pension funds being underpaid in the amount of $3.631 million.
Huntington's police and fire pension funds were among the 16 retirement plans that were overpaid to the tune of $2.944 million. Huntington's fire pension fund was overpaid $963,719, while its police pension fund received $422,007 more than it should have -- a total of nearly $1.4 million.
The Treasurer's Office was a fiduciary agent for the municipal retirement plans until it handed that responsibility over to the newly created Municipal Pension Oversight Board in 2010. The board was tasked with assisting local pension boards on investments and making sure the local boards used the same actuary so fund projections were uniform.
The Treasurer's Office audited the municipal pension funds after it had transferred the fiduciary responsibility to the Oversight Board. The Oversight Board has since started using the correct formula to allocate the fire and casualty insurance premiums to the pension funds.
The Treasurer's Office is trying to make good on the error by bringing forth the legislation. The proposed pension fix is just one part of the bill, which aims to address several administrative changes in the Treasurer's Office. The pension fix proposes to settle up with the underpaid pension funds by pulling money from the state's unclaimed properties list. The list contains unclaimed bank accounts, matured insurance policies, and stocks and bonds, among other things. The bill also does not require cities that were overpaid to return any of the funding.
Using those funds to fix the miscalculations, however, caused concerns for a few House Republicans. House Majority Leader Tim Armstead, R-Kanawha, asked about the impact that removing $3.6 million from the unclaimed properties list would have on the fund. House Finance Chairman Harry Keith White, D-Mingo, responded that the fund contains $22 million now, and only 3 or 4 percent of the money in the fund is claimed every year.
A few other Republicans, such as House Minority Whip Daryl Cowles, R-Morgan, took issue with other provisions in the bill, saying it gives the Treasurer's Office too much authority.
"There's no way this bill is good for transparency and open government," he said.
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How local delegates voted on HB 2837
YES: Cabell delegates Kevin Craig, Jim Morgan, Doug Reynolds, Dale Stephens; Wayne delegates Don Perdue, Rick Thompson.
NO: Cabell delegates Carol Miller, Kelli Sobonya.