§ 411.38 — Obligations of participating cities

Iowa § 411.38

• Jurisdiction: Iowa
• Title IX: LOCAL GOVERNMENT
• Ch. 411: RETIREMENT SYSTEM FOR POLICE OFFICERS AND FIRE FIGHTERS

Text

1. Upontheestablishmentofthestatewidesystem, eachcityparticipatinginthestatewide
fire and police retirement system shall do all of the following:
a. Pay to the statewide system the normal contribution rate provided pursuant to section
411.8.
b. (1) Transfer from each terminated city fire or police retirement system to the statewide
system amounts sufficient to cover the accrued liabilities of that terminated system as
determined by the actuary of the statewide system. The actuary of the statewide system
shall redetermine the accrued liabilities of the terminated systems as necessary to take into
account additional amounts payable by the city which are attributable to errors or omissions
which occurred prior to January 1, 1992, or to matters pending as of January 1, 1992. If the
actuaryofthestatewidesystemdeterminesthattheassetstransferredbyaterminatedsystem
are insufficient to fully fund the accrued liabilities of the terminated system as determined by
the actuary as of January 1, 1992, the participating city shall pay to the statewide system an
amount equal to the unfunded liability plus interest for the period beginning January 1, 1992,
and ending with the date of payment or the date of entry into an amortization agreement
pursuant to this section. Interest on the unfunded liability shall be computed at a rate equal
to the greater of the actuarial interest rate assumption on investments of the moneys in the
fund or the actual investment earnings of the fund for the applicable calendar year. The
participating city may enter into an agreement with the statewide system to make additional
annual contributions sufficient to amortize the unfunded accrued liability of the terminated
system. The terms of an amortization agreement shall be based upon the recommendation
of the actuary of the statewide system, and the agreement shall do each of the following:
(a) Allow the city to make additional annual contributions over a period not to exceed
thirty years from January 1, 1992.
(b) Provide that the city shall pay a rate of return on the amortized amount that is at least
equal to the estimated rate of return on the investments of the statewide system for the years
covered by the amortization agreement.
(c) Contain other terms and conditions as are approved by the board of trustees for the
statewide system.

(2) In the alternative, a city may treat the city’s accrued unfunded liability for the
terminated system as legal indebtedness to the statewide system for the purposes of section
384.24, subsection 3, paragraph “f”.
c. Contribute additional amounts necessary to ensure sufficient financial support for the
statewide fire and police retirement system, as determined by the board of trustees based on
information provided by the actuary of the statewide system.
2. It is the intent of the general assembly that a terminated city fire or police retirement
system shall not subsidize any portion of any other system’s unfunded liabilities in
connection with the transition to the statewide system. The actuary of the statewide system
shall determine if the assets of a terminated city fire or police retirement system would
exceed the amount sufficient to cover the accrued liabilities of that terminated system as of
January 1, 1992, using the alternative assumptions and the proposed assumptions.
3. As used in this section, unless the context otherwise requires, “alternative
assumptions” means that the interest rate earned on investments of moneys in the fire and
police retirement fund would be seven percent and that the state would not contribute to
the fund under section 411.8 and section 411.20, Code 2009, after January 1, 1992, and
“proposed assumptions” means that the interest rate earned on investments of moneys in
the fire and police retirement fund would be seven and one-half percent and the state will
pay contributions as provided pursuant to section 411.8 and section 411.20, Code 2009, after
January 1, 1992. These assumptions are to be used solely for the purposes of this section,
and shall not impact upon decisions of the board of trustees concerning the assumption of
the interest rate earned on investments, or the contributions by the state as provided for in
section 411.8 and section 411.20, Code 2009.
4. If the determination by the actuary using the alternative assumptions reflects that the
assets of the terminated system exceed the amount sufficient to cover the accrued liabilities
as of January 1, 1992, all excess funds as determined utilizing the alternative assumptions
and the interest and earnings from those excess funds shall be used only as approved by the
city council of the participating city. The city council may approve use of the excess funds to
reduce only the city’s contribution to the statewide system, or the city council may approve
useoftheexcessfundstoreducethecity’scontributionandthemembers’contributionstothe
statewide system. If the city council approves use of the excess funds to reduce both the city’s
andthemembers’contributions, themembersshallnotwithdrawtheportionofthemembers’
contributions paid from excess funds, as would otherwise be authorized in accordance with
section 411.23.
5. If the determination by the actuary using the alternative assumptions reflects that the
assets of the terminated system do not exceed the amount sufficient to cover the accrued
liabilities as of January 1, 1992, but a determination by the actuary using the proposed
assumptions reflects that the assets of the terminated system do exceed the amount sufficient
to cover the accrued liabilities as of January 1, 1992, all excess funds as determined utilizing
the proposed assumptions and the interest and earnings from those excess funds shall be
used only to reduce the city’s contribution rate to the statewide system. The participating
city shall determine what portion of the excess funds shall be applied to reduce the city’s
contribution rate for a given year.