Bills › 88th General Assembly
Concerning benefits under the municipal fire and police retirement system
Sponsored by the House State Government Committee
Where it is now
- Done: IntroducedMarch 2, 2020
- Skipped: SubcommitteeSkipped
- Done: House committeeMarch 10, 2020
- Done: Passes the HouseMarch 10, 202099–1
- Stopped: Senate committeeDied when the General Assembly ended
- Next: Passes the Senate
- Next: To the Governor
- Next: Signed into law
Died when the session ended The 2020 session adjourned on June 14, 2020, the General Assembly’s last regular session. Bills that didn’t pass both chambers died. What’s a funnel?
What’s in it
AI summary This bill changes how retirement benefits and medical care work for municipal police and fire workers. It expands the types of injuries and mental health conditions that qualify for accidental disability benefits and death benefits. Additionally, it increases the amount of money employees must contribute from their paychecks to fund the retirement system.1
Read the official explanation
This bill concerns benefits under the municipal fire and police retirement system established under Code chapter 411.1, concerning definitions, is amended. The bill defines an “ordinary disability beneficiary” as a member retired on an ordinary disability retirement benefit for five years or less. The bill also amends the definition of “member in good standing” to mean any member in service who has not been terminated by the employing city of the member.6(5), concerning accidental disability benefits, is amended to allow an ordinary disability beneficiary to make application to the retirement system for an accidental disability retirement benefit. The subsection is further amended to provide that a person is entitled to pay and allowances if determined to be temporarily incapacitated prior to an accidental disability retirement determination and for an accidental disability retirement if the person has become totally and permanently incapacitated as a result of injury and disease arising out of and in the course of the employment and by the actual performance of duty without regard to whether that actual performance of duty was at some definite time and place. The subsection is also amended to provide that disease for purposes of an accidental disability benefit also means any incapacitating mental disorder arising out of and in the course of the employment, or while acting, pursuant to order, outside the city by which the member is regularly employed.6(6), providing for a retirement allowance upon retirement for accidental disability, is amended to provide that an ordinary disability beneficiary who is determined to be entitled to a retirement for accidental disability shall receive a retirement allowance that shall consist of the greater of an amount as determined for members receiving an accidental disability retirement or an amount equal to the disability retirement allowance previously received by the beneficiary.6(9), concerning accidental death benefits, is amended to provide that an accidental death benefit shall also be paid if the death was as a result of injury and disease arising out of and in the course of the employment or by the actual performance of duty without regard to whether that actual performance of duty was at some definite time and place.19, or other comparable process. The bill provides for the repayment of benefits paid prior to the determination of ineligibility.55 percent of pay beginning July 1, 2020.15, concerning cities’ requirement to provide hospitalization and medical attention for injuries or diseases while on duty, is amended to provide that such attention shall also be provided for injuries arising out of and in the course of employment.6, subsection 6. The Code section is further amended to provide that a member shall not be required to pay the cost of hospital, nursing, and medical attention required, including payment of any costs or premiums associated with any insurance policy providing coverage. The bill further provides that to be provided the cost of the hospital, nursing, and medical attention, the city shall have actual knowledge of the occurrence of an injury or disease or be provided notice of the occurrence of an injury or disease on behalf of a member or beneficiary within days from the date of the occurrence of the injury or disease. The bill provides that an action to require the city to provide the cost of the hospital, nursing, and medical attention shall not be maintained unless the action is commenced within two years from the date of the occurrence of the injury or disease or two years from the date the city denies a claim to provide hospital, nursing, and medical attention, whichever last occurs.
Fiscal note
Cost: up to $474,000 Compare with other bills
AI summary This bill changes how certain disability benefits are handled for members of the Municipal Fire and Police Retirement System of Iowa. It is estimated to increase the retirement system's administrative costs by $50,000 to $100,000 annually and increase the fund's unfunded liability by approximately $4.3 million. To cover these changes, the members' contribution rate is expected to increase by 0.15% to 9.55% beginning in fiscal year 2021, which would cost approximately $474,000 in fiscal year 2021. The fiscal impact on cities for additional medical costs cannot be determined at this time.3
Read the fiscal note
Description
House File 2592 amends certain benefits under the Municipal Fire and Police Retirement System of Iowa (MFPRSI), established under Iowa Code chapter 411.
Background
Effective July 1, 1992, 87 local fire and police retirement systems in 49 cities were consolidated into a single statewide system, commonly referred to as the 411 System. The MFPRSI is governed by a nine-member Board of Trustees and four legislative members as required by Iowa Code section 411.36. The voting members of the Board include two fire and two police representatives, four city representatives, and a private citizen. Based on the July 1, 2019, actuarial valuation, the MFPRSI covers approximately 4,086 active members, 4,148 retired members and beneficiaries, and 374 vested, terminated members. The current funded ratio is 81.04%. The current actuarial accrued liability is $3.269 billion, the actuarial value of assets is $2.649 billion, and the unfunded actuarial liability is $619.9 million. For FY 2021, members’ estimated contributions at the current rate of 9.40% total $29.7 million, and the cities’ estimated contributions at 25.31% total $80.0 million. Total covered payroll is $315.9 million. The average annual compensation for an active member is $77,322. The table below shows the contribution rates for FY 2017 to FY 2021.
The MFPRSI provides for both an ordinary and accidental disability for a member in good standing with the System. From 2002 through 2019, the MFPRSI reported one member in good standing case that would have been affected by HF 2592, if it were in effect at that time. The medical board determines if a member is medically able to perform their respective duties as a fire fighter or a police officer. If the member is determined to be unable to perform their duties, the MFPRSI decides if the member is eligible for an ordinary or accidental disability. The compensation for an ordinary disability is 50.0% of the average final compensation, whereas the compensation for accidental disability is 60.0% of the average final compensation. Cities are responsible for the payment of all medical costs related to MFPRSI claims under Iowa Code section 411.15. Cities cannot use workers’ compensation to cover short-term indemnity of medical cost exposure. Iowa Code section 85.1(4) states that workers’ compensation does not apply to “persons entitled to benefits pursuant to Iowa Code chapters 410 and 411”.FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Employer Contribution Rate 25.92% 25.68% 26.02% 24.41% 25.31% Employee Contribution Rate 9.40% 9.40% 9.40% 9.40% 9.40% Total 35.32% 35.08% 35.42% 33.81% 34.71%
Assumptions
1. Limiting the eligibility for an accidental disability after retirement to retirees receiving an ordinary disability and within five years of retirement would reduce the funded ratio of the Fire and Police Retirement Fund by 0.10%, from 81.04% to 80.94%.
2. The member contribution rate will be increased for any statutory changes if the increase cannot be absorbed within the current contribution rates to a maximum of 11.35%. Costs would then be applied 60/40 between the employer and employee. The costs from HF 2592 will not be absorbed within the current contribution rates, but rather will increase the members’ contribution rate from 9.40% to 9.55%.
3. The total contribution rate impact of Sections 2-5 of the Bill would be an increase of 0.15% to the members’ contribution rate.
- Allowing current ordinary disability retirees within five years of retirement to apply for an accidental disability will affect the total contribution rate by 0.08%.
- Permitting future ordinary disabilities to be treated as accidental disabilities due to the elimination of the definite time and place requirement and greater than day-to-day stress standard for mental injuries will affect the total contribution rate by 0.07%. 4. Permitting future ordinary disabilities to be treated as accidental disabilities due to the elimination of the definite time and place requirement and greater than day-to-day stress standard for mental injuries may result in additional medical costs and short-term wages being covered by city employers.
5. There are approximately seven ordinary disability retirements per year. The estimate assumes there will be no overall increase in disability incidents; however, all future disabilities would qualify for accidental disabilities.
6. Assumes that all other actuarial assumptions going forward will be met. 7. The MFPRSI may see an increase in administrative costs related to medical exams. 8. Cities may see increased medical and administrative costs for all injuries and diseases related to employment, regardless of the type of benefit received from the System.
Fiscal Impact
House File 2592 is estimated to increase the MFPRSI administrative costs for increased medical exams by $50,000 to $100,000 annually. Any increased administrative costs for the MFPRSI will be paid from the Fire and Police Retirement Fund.
The unfunded actuarial accrued liability of the Fire and Police Retirement Fund is estimated to increase by approximately $4.3 million and the funded ratio would decrease from 81.04% to 80.94%. To pay for the increase in the unfunded liability and projected future costs, the members’ contribution rate would increase by 0.15% to 9.55% beginning in FY 2021. The FY 2021 cost from increasing the members’ contribution rate from 9.40% to 9.55% is approximately $474,000 or $116 per employee. In subsequent fiscal years, this cost may increase based on covered payroll.
The fiscal impact on the cities for additional medical costs cannot be determined at this time but may be significant.
Sources
- Municipal Fire and Police Retirement System of Iowa Actuarial Valuation Report
- Municipal Fire and Police Retirement System of Iowa
- League of Cities
- 411 Retirement System · March 9, 2020 · $474,000
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88th General Assembly
Earlier and later bills are matched by wording or an identical title.
Similar bills
- HF 797 Relating to benefits concerning members of the municipal fire and police retirement system89th General Assembly · Passed HouseVery similar
- SSB 1132 SSB 113290th General Assembly · Renumbered as SF 505Very similar
- HF 417 Concerning benefits relating to members of the municipal fire and police retirement system…89th General Assembly · Approved by committeeVery similar
- HSB 745 HSB 74590th General Assembly · Renumbered as HF 2680Similar
Matched by wording or an identical title.