Before the start of this year's session in February, McDaniel held four hearings on the firefighters pension fund and a rough draft of the legislation was developed in January.
“We couldn't have made it any more transparent and open to the public,” he said.
Based on annual payroll figures for the system, the higher rates would have generated about $2.5 million per year from employer contributions and $2.5 million annually in additional employee contributions, McDaniel said. The state's increased share would be about $3.5 million a year.
The firefighter pension plan is for municipal employees. McDaniel said the state took over administration of the plan from the cities about 30 years ago when the plan was funded at 17 percent.
HB 2320 also dealt with the firefighter pension system's deferred retirement option, which is intended to provide greater savings for the system. The so-called DROP plan allows qualified members who would otherwise be eligible for retirement benefits to continue working and accrue money in a separate account.
Participating firefighters are eligible to receive either a 7.5 percent return on their investment or the system's annual investment returns minus 2 percent, whichever is greater. HB 2320 called for a flat rate of 7.5 percent.
McDaniel said he is disheartened cities still are resisting the proposal. The firefighters' pension plan was 53.4 percent funded a year ago; legislation he authored last year that required lawmakers to fund cost-of-living adjustments immediately improved the plan's funding status to 63 percent.
Committee members also discussed the process to pass legislation that would allow future “spillover” funds to shore up the state's pension systems. A measure introduced this year, Senate Bill 1264, would have provided that 30 percent of spillover money would go toward reducing the debt of the pension systems. Spillover money is money left over after the required surplus funds are deposited in the state's savings account, the Rainy Day Fund. Once all pensions systems are funded at 80 percent or more, the same share of spillover funding would be used to reduce the state's other indebtedness.
Legislation passed last year reduced the unfunded liability of the state's pension funds from $16 billion to $10.6 billion.
McDaniel said changes still are needed because retirees are living longer and the ratio of the number of workers to retirees is decreasing.