§ 24-11-214 - Allocation of insurance premium tax -- Division among localities.
24-11-214. Allocation of insurance premium tax -- Division among localities.
(a) An actuary certified by the Society of Actuaries shall evaluate the information submitted under 24-11-213 -- 24-11-215 to determine the amount of the premium tax revenues to be directed to each city, town, or fire protection district.
(b) (1) It is the intent of the General Assembly that the allocation of revenues to the Firemen's and Police Officers' Pension and Relief Fund be directed to a city, town, or fire protection district based on the actuarial cost of their retirement programs.
(2) The actuarial cost for a calendar year:
(A) (i) For a group that is a member of the Arkansas Local Police and Fire Retirement System, shall equal that group's calculated contribution rate, as defined in 24-10-405, as of the beginning of that calendar year multiplied by that group's estimated annual payroll as of the beginning of that calendar year.
(ii) The group's actuarial cost under this section shall be reduced by the group's estimated annual payroll as of the beginning of that calendar year multiplied by one percent (1%) for the 2008 allocation, two percent (2%) for the 2009 allocation, and three percent (3%) for allocations after 2009.
(iii) However, for volunteer members the actuarial cost shall equal the group's per person cost, less the mandatory employer per person cost, as of the beginning of that calendar year multiplied by the number of volunteer members in that group as of the beginning of that calendar year;
(B) For a group that is covered by a local pension and relief fund, shall be the dollar cost calculated by the actuary for the Arkansas Fire and Police Pension Review Board for the preceding calendar year;
(C) Shall include the cost of any benefit enhancements mandated by state law but shall not include any benefit enhancement that is the result of local options or increases after January 1, 2003; and
(D) Shall not include the cost of any benefit enhancements, either mandated by state law or as a result of local options, enacted after January 1, 2007.
(c) The amount of revenues to be directed to cities, towns, and fire protection districts shall equal the amount in the Firemen's and Police Officers' Pension and Relief Fund, less:
(1) The payment for the administrative and actuarial expenses of the board under subsection (k) of this section and under 24-11-203(k)(3); and
(2) The amount described in subsection (g) of this section.
(d) (1) In general, the revenues shall be allocated in each calendar year to each city, town, or fire protection district so that each city, town, or fire protection district receives the same percentage of its total cost as it received in 2002 but not more than one hundred percent (100%) of its cost.
(2) Any remaining revenues are to be allocated to those receiving less than one hundred percent (100%) of their cost.
(e) This allocation shall keep the fire portion and the police portion separate and shall be accomplished by the following steps:
(1) The actuarial cost for calendar year 2002 for each local pension and relief fund shall be determined;
(2) The actual dollar amount of contributions for calendar year 2002 for each group covered by the system shall be determined;
(3) The total of subdivisions (e)(1) and (2) of this section shall be determined for each city, town, and fire protection district, and this total shall be determined separately for the fire portion and for the police portion, and a combined total of the fire portion and the police portion shall also be determined;
(4) The amount of premium tax revenue allocated to each city, town, and fire protection district in calendar year 2002 shall be determined, and this amount shall be determined separately for the fire portion and for the police portion, and a combined total of the fire portion and the police portion shall also be determined;
(5) A percentage called the "calendar year 2002 percentage of costs covered by premium tax" shall be determined as the ratio of subdivision (e)(4) of this section divided by subdivision (e)(3) of this section, and the percentage shall be determined separately for the fire portion, for the police portion, and for the combined total;
(6) (A) A percentage called the "minimum percentage covered" shall be determined as the lesser of:
(i) The calendar year 2002 percentage of costs covered by premium tax; or
(ii) One hundred percent (100%).
(B) This minimum percentage covered shall be determined separately for the fire portion, for the police portion, and for the combined total.
(C) The minimum percentage covered shall be a fixed percentage and shall not change over time, except as provided in subdivision (e)(6)(E) of this section.
(D) The minimum percentage covered for the volunteer portion of the actuarial cost for a calendar year in the Arkansas Local Police and Fire Retirement System shall be one hundred percent (100%).
(E) (i) The minimum percentage covered shall be adjusted when a local fire or police pension fund assigns administrative responsibility for the fund to the Arkansas Local Police and Fire Retirement System under 24-10-301 and 24-10-302.
(ii) The minimum percentage covered shall be adjusted so that the dollar amount of premium tax allocated under this section for the year after the assignment of administrative responsibility will be the same as it was the year of the assignment of administrative responsibility.
(iii) For the purpose of this adjustment, subdivision (b)(2)(D) of this section does not apply to the addition of a cost of living adjustment of three percent (3%) compounded each year, provided the addition was a part of the consolidation process;
(7) The actuarial cost for the calendar year of allocation for each local pension and relief fund shall be determined;
(8) The actuarial cost for the calendar year of allocation for each group covered by the system shall be determined;
(9) The total of subdivisions (e)(7) and (8) of this section shall be determined for each city, town, and fire protection district, and this total shall be determined separately for the fire portion and for the police portion, and a combined total of the fire portion and the police portion shall also be determined;
(10) (A) The "first allocation" for each city, town, and fire protection district shall be equal to the result of the minimum percentage covered from subdivision (e)(6) of this section multiplied by subdivision (e)(9) of this section.
(B) This first allocation shall be the greater of:
(i) The "first allocation" for the fire portion plus the "first allocation" for the police portion; or
(ii) The "first allocation" for the combined total;
(11) The results of subdivision (e)(10) of this section shall be reduced, but not below zero (0), by the amount in the subsidy account of the city, town, or fire protection district at the beginning of the calendar year under subsection (f) of this section;
(12) (A) If the total premium tax revenue as determined under subsection (c) of this section is less than the total allocated through subdivision (e)(11) of this section, the total premium tax revenue shall be allocated pro rata on the amounts under subdivision (e)(10) of this section, so that the total through subdivision (e)(11) of this section equals the amount determined under subsection (c) of this section.
(B) If the total premium tax revenue as determined under subsection (c) of this section is more than the total allocated through subdivision (e)(11) of this section, the excess, not to exceed the total of amounts under subdivision (e)(9) of this section minus the amounts under subdivision (e)(10) of this section, shall be allocated pro rata on the excess, if any, of the amounts under subdivision (e)(9) of this section over the amounts under subdivision (e)(10) of this section.
(C) If the total premium tax revenue as determined under subsection (c) of this section is more than the total allocated through subdivision (e)(11) of this section plus the amount allocated under subdivision (e)(12)(B) of this section, the excess shall be allocated to the Future Supplement Fund-Police or Future Supplement Fund-Fire under 24-11-212; and
(13) (A) The total amount allocated to a city, town, or fire protection district shall be the sum of amounts under subdivisions (e)(11) and (12) of this section.
(B) However, a city covered under 24-11-435 shall receive the same dollar amount as it received in calendar year 2002.
(f) (1) The allocation in subdivision (e)(10) of this section is reduced under subdivision (e)(11) of this section by the subsidy account for each city, town, or fire protection district.
(2) The subsidy account for a city, town, or fire protection district as of January 1, 2003, shall be determined by the board to be the excess, if any, of the total premium tax for fire and police pension and relief funds allocated to the city, town, or fire protection district in the calendar years 1997 through 2002 over the sum of:
(A) The contributions paid to the system for calendar years 1997 through 2002; plus
(B) The amount of premium tax allocated to the local pension and relief funds for 1997 through 2002; plus
(C) Any transfers from the "LOPFI subsidy account" to the local pension and relief funds from 1997 through 2002.
(3) Beginning January 1, 2004, and each January 1 thereafter, the subsidy account for a city, town, or fire protection district shall be determined by the board to be:
(A) The subsidy account at the prior January 1; plus
(B) The premium tax allocated in the prior calendar year; minus
(C) The contributions paid to the system for the prior calendar year; minus
(D) The actuarial cost of the local pension and relief funds for the prior calendar year; but
(E) Not less than zero (0).
(g) (1) There shall be allocated amounts to the Future Supplement Fund-Fire and the Future Supplement Fund-Police under 24-11-212 determined as the amount under subsection (c) of this section multiplied by the ratio of the number as determined in subdivision (g)(1)(A) of this section to the number as determined in subdivision (g)(1)(B) of this section as follows:
(A) The total number of active, retiree, and beneficiary members of all of the fire or police pension and relief funds as of December 31, 2000, minus the total number of active, retiree, and beneficiary members of all of the fire or police pension and relief funds as of the most recent December 31; and
(B) The number of active, retiree, and beneficiary fire or police members of the system plus the total number of active, retiree, and beneficiary members of all of the fire or police pension and relief funds as of December 31, 2000.
(2) In the case of multiple beneficiaries of a single deceased member, those beneficiaries shall be counted as one (1) for the purposes of this subsection;
(3) In the case of paid service and volunteer service members in one (1) location, one (1) paid service member shall be equal to five (5) volunteer service members for the purposes of this subsection.
(h) (1) (A) All cities, towns, and fire protection districts having fire departments organized under 24-11-801 -- 24-11-807, 24-11-809, 24-11-813 -- 24-11-815, and 24-11-818 -- 24-11-821, and all cities and towns having police departments organized under 24-11-101 et seq., 24-11-201 et seq., 24-11-301 et seq., 24-11-401 et seq., and 24-11-801 -- 24-11-807, 24-11-809, 24-11-811 -- 24-11-827, 24-11-829, and 24-11-830 that have provided the information required under 24-11-213(d) and 24-11-206 to the board and to the system shall qualify for participation in the revenues distributed.
(B) Those cities, towns, and fire protection districts that make an irrevocable decision to elect coverage in the Arkansas Local Police and Fire Retirement System by December 14 shall qualify for participation in the revenues distributed in the following calendar year.
(C) Those cities, towns, and fire protection districts that have not provided the required information shall not qualify for participation in the revenues distributed.
(2) On or before June 15 of each calendar year after 2002, the board shall certify to the Department of Finance and Administration the exact amount of tax revenues each city, town, or fire protection district is entitled to receive for the calendar year under this section.
(3) (A) The eligibility of the city, town, or fire protection district shall be continuous for a ten-year period without recertification unless otherwise directed by the board.
(B) The first year of implementation shall require a nine-year cycle from June 15, 2001.
(C) Thereafter, each city, town, or fire protection district shall resubmit the information required in 24-11-213(d)(2) and (3) every ten (10) years beginning on December 15, 2010.
(i) All nonprofit corporations formed for fire protection purposes and that participate in the system shall participate in the distribution of insurance premium tax revenues to the same extent as other fire protection organizations under this section, 24-10-401 -- 24-10-409, 24-11-809, and 26-57-610, and any other laws providing for the distribution of insurance premium tax moneys to fire protection organizations.
(j) (1) There shall be no administrative fees charged to these entities by the board upon qualification.
(2) The board shall incur all administrative and actuarial costs associated with obtaining the information required under this section.
(k) (1) The board shall establish a certain percentage of the insurance tax revenues to use to meet its proper actuarial expenses and administrative costs incurred in obtaining and evaluating the population information required under 24-11-213, but in no event shall the board be entitled to more than one percent (1%) of the Firemen's and Police Officers' Pension and Relief Fund as defined in 24-11-809(a)(2).
(2) This assessment shall be collected in addition to the assessment provided in 24-11-203(k)(3).
(3) This revenue shall also be used to provide the administrative costs incurred in obtaining and evaluating the population information for unqualified cities, towns, and fire protection districts.