SB338 Alabama 2022 Session

Summary

Primary Sponsor

Del Marsh

Republican

Co-Sponsor

Bobby D. Singleton

Session

Regular Session 2022

Title

Retirement Systems, Employees Retirement System, procedure for funding benefit increases for retirees provided, actual annual cost identified in annual appropriation act

Summary

SB338 would create a pay-as-you-go funding process for future retiree benefit increases in Alabama's Employees' Retirement System and Teachers' Retirement System, requiring the exact annual cost to be funded in the state budget or the increase will not be paid.

What This Bill Does

It sets up an annual funding procedure where the actual cost of any retiree benefit increase must be estimated by the system's actuary and shown in the yearly General Fund and Education Trust Fund budget acts. If the funding amount is not identified and appropriated, the increase for that year is not paid, and the increase could be resumed in a future year if funded. The payment is made on a pay-as-you-go basis in the same month the funds are collected from the covered entities, using a separate employer rate to fund the cost. Local units under the Employees' Retirement System must follow the same funding method, and the Teachers' Retirement System has the same requirements. Any new increase requires a separate legislative act, and the bill does not apply to previous cost-of-living increases or one-time bonuses.

Who It Affects

• Retirees of the Employees' Retirement System (ERS) and Teachers' Retirement System (TRS) who would receive increases only if funded.
• State and local government entities that contribute to ERS/TRS (employers), who must provide the identified funding via the new employer rate.
• Local units (cities, counties, school systems) that grant ERS benefit increases, which must fund costs annually as mandated.
• The Retirement Systems of Alabama (RSA), which administers the funding mechanism and enforces the funding requirements.

Key Provisions

• Any benefit increase must have its actual annual cost identified in the appropriation acts (General Fund and Education Trust Fund) with a separate employer rate to fund that cost.
• If funding is not identified and appropriated, the benefit increase will not be paid for that year; funding may resume in a later year if included in appropriation acts.
• The increase is a one-year pay-as-you-go adjustment and does not affect the unfunded liability of the ERS or TRS.
• Funds for the increase must be collected from the covered entities in the same month as the retiree payment, and local units must transfer the amount similarly to normal employer contributions.
• For TRS and ERS, any new benefit increase requires a separate legislative act establishing the amount and eligible retirees.
• The act does not apply to or affect any previous cost-of-living increases or one-time bonuses.
• Effective date is the first day of the third month after passage and approval by the Governor.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Retirement Systems