Line of Duty Act- Funding Through Premiums (language only)

Item 258 #1c

Language
Page 162, strike lines 25 through 56, and insert:  
"B.1. There is hereby established the Line of Duty Act Fund (the Fund) for the payment of benefits prescribed by and administered under the Line of Duty Act.  The funds of the Line of Duty Act Fund shall be deemed separate and independent trust funds, shall be segregated and accounted for separately from all other funds of the Commonwealth, and shall be invested and administered solely in the interests of the covered employees and beneficiaries thereof.  Neither the General Assembly nor any public officer, employee, or agency shall use or authorize the use of the Fund for any purpose other than as provided in law for benefits and administrative expenses.  Fund deposits are irrevocable and are not subject to the claims of creditors.  In addition to other such powers as shall be vested in the Board, the Board shall have the full power to invest, reinvest and manage assets of the Fund in accordance with Article 3.1 (§ 51.1-124.30 et seq.) of Chapter 1 of Title 51.1, and no officer, director, or member of the Board or of any advisory committee of the Retirement System or any of its tax exempt subsidiary corporations whose actions are within the standard of care in Article 3.1 of Chapter 1 of Title 51.1 shall be held personally liable for losses suffered by the Fund on investments made under the authority of this article. The Board is authorized to establish loans to the Fund from the Group Life program in such amounts and under such terms as may be established by the Board. On July 1, 2010 the Virginia Retirement System shall advance funds as may be needed for the initial capitalization of the Fund from fund balances of the Group Life program.  The Fund shall reimburse the Retirement System for all reasonable costs incurred and associated, directly and indirectly, with the administration, management and investment of the Fund.
2. Definitions. – As used in this item:
“Board” means the Board of Trustees of the Virginia Retirement System.
“Covered employee” means any employee, sheriff, deputy sheriff, or volunteer of a participating employer or non-participating employer eligible for coverage under the provisions of the Line of Duty Act.
“Fund” means the Line of Duty Act Fund.
“Line of Duty Act” means §9.1-400 et seq.
“Non-participating employer” means any political subdivision making the irrevocable election, in a manner and on such forms as prescribed by the Board, to self-fund Line of Duty Act benefits under Item paragraph B.4 of this Item.
“Participating employer” means any agency of the Commonwealth with covered employees and any (i) county, city, or town with covered employees that does not make the election under paragraph B.4 of this Item;, or (ii) political entity, subdivision, branch, commission, public authority, or body corporate, or other entity of a local government with covered employees that does not make the election under paragraph B.4 of this Item.
“Retirement System” means the Virginia Retirement System.
3. Payment of benefits; funding of benefits.
(a) All payments for benefits provided through the Line of Duty Act shall be paid by the State Comptroller.  The State Comptroller shall be reimbursed from the Fund for all benefit payments made on behalf of participating employers that, which payments have been approved by the State Comptroller.  The State Comptroller shall be reimbursed on no more than a monthly basis from documentation provided to the Retirement System. Reimbursement from the Fund may include reasonable administrative expenses incurred by the Department of Accounts or the State Comptroller for administering the provisions of the Line of Duty Act.  
Each participating employer shall make contributions each year to the Fund in accordance with guidelines adopted by the Board. Such contributions shall be for purposes of funding benefits and administrative expenses under the Line of Duty Act.  The employer contribution for each participating employer shall be determined by the Board on a current disbursement basis in accordance with the provisions of this section.
b) For purposes of this item, employer contributions for coverage provided to members of the National Guard and United States military reserves on active duty shall be paid by the Commonwealth.
(c) For purposes of establishing employer contribution contributions, a member of any fire company or department or rescue squad that has been recognized by an ordinance or a resolution of the governing body of any county, city, or town  of the Commonwealth as an integral part of the official safety program of such county, city, or town shall be considered part of the city, county, or town served by the company, department or rescue squad.  If a company, department, or rescue squad serves more than one city, county, or town, the affected cities, counties, or towns shall determine the basis and apportionment of the required covered payroll and contributions for each department, company, or rescue squad.
(d) Each participating employer shall provide all required data requested by the Board to administer the Fund in a form approved by the Board.
(e) In the event any participating employer fails to remit contributions or other fees and costs of the Fund as duly prescribed, the Board shall inform the State Comptroller and the participating employer of the delinquent amount. The State Comptroller shall forthwith transfer such amounts to the Fund from any moneys otherwise distributable to such participating employer.
4. Irrevocable election to become non-participating employer.
(a) A political subdivision with covered employees may make, in a manner and on such forms as prescribed by the Board, an irrevocable election on or before July 1, 2011, to be deemed a non-participating employer fully responsible for self-funding all benefits for its relating to its past and present covered employees under the Line of Duty Act from its own funds, including any responsibility apportioned to it under the provisions of paragraph 3(c) above. Non-participating employers shall continue to be subject to the provisions set forth in the Line of Duty Act.
(b) A non-participating employer shall not be required to contribute to the Fund.
(c) All payments for benefits provided through the Line of Duty Act shall be paid by the State Comptroller. The State Comptroller shall be reimbursed by the non-participating employer for all Line of Duty Act benefit payments made on behalf of such non-participating employer that, which payments have been approved by the State Comptroller.  The State Comptroller shall be reimbursed on no more than a monthly basis from documentation provided to the non-p
articipating employer."

Explanation
(This amendment transitions the funding method for the Line of Duty benefit which has previously been funded with a direct General Fund appropriation within the Department of Accounts Transfer Payments. The language would fund the benefit in future years based on premiums charged to state agencies and localities based on the number of employees who would be potentially eligible to receive benefits under the program. The budget assumes that the funding for the benefits paid out in fiscal year 2011 would be from cash borrowed from the VRS group life program and that premiums shall be collected from the effected employers beginning in fiscal year 2012.)