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Legislative Report June 2015

House Bill 316, introduced as the Municipal Sustainability Act (the “Pension Bill”) by Rep. Keith Greiner (R-Lancaster), would change the defined benefit pension plan for new municipal employees to a cash-balance system and require them to contribute 6% of their salary, if they participate in Social Security, or 9% if they do not participate in Social Security. Guaranteed monthly interest earned by employees is set at one-twelfth of the 30-year yield on U.S. Treasury Securities for the last business day of the preceding month with monthly increases capped at 0.375 percent and a floor of 0%. The difference earned between the monthly capped rate of return and the actual return is applied to the liability of the present defined benefit pension plan and municipalities must contribute the amount of any shortfalls. 562 of the 1,223 Pennsylvania municipalities with pensions have distressed plans with $7.69 billion unfunded pension liability and 22 have less than 50% of the funds required to meet obligations. The Pension Bill could provide an alternative to significant losses to retirees if the related municipality becomes insolvent. The Pension Bill would provide long term relief but not address present funding deficiencies.

Senate Bill 114, introduced by Sen Judith Schwank (D-Berks) as an amendment (the “Grant Bill”) to the Public School Code of 1949, would facilitate the Governor’s proposals for career and technical instruction through competitive grants to schools to train students for high-skilled careers. First, the Department of Education (the “Department”) would establish a competitive grant program so that area vocational-technical schools and school districts (each, a “Technical Educator”) could purchase “equipment that meets industry standards.” Second, the Department would be authorized to distribute up to $8 million per academic year to Technical Educators to “offer college and career counselling in middle and high schools in order to develop pathways for students to pursue high-skill careers.” Third, the Department would be authorized to distribute up to $15 million per school year to Technical Educators with 8 or more approved vocational-technical programs to establish or enhance “career technical education programs” to prepare students for occupations “that pay a family-sustaining wage and offer a career ladder for growth opportunities.” The Grant Bill could provide a frame work for technical education grants if the Governor’s public school budget is enacted.

House Bill 1182, introduced by Rep. Thomas Caltagirone (D-Berks) as the Video Gaming Act (the “Gaming Bill”), would authorize the Pennsylvania Gaming Control Board (the “Board”) to “provide for video gaming at licensed establishments” and to regulate and adopt standards for video gaming. Video gaming terminals simulate on a screen the play of video poker, bingo, keno or any other game authorized by the Board. Such play is initiated by insertion into the terminal of coin or currency or by benefit of a winning ticket from a terminal in the same establishment and permits the player to receive free games or a credit that can be redeemed for cash. Video gaming terminals may operate by Board license issued to a “restaurant, bar, tavern, hotel or club that has a valid liquor or malt or brewed beverage license under…the Liquor Code.” Up to 5 terminals may be operated at a single licensed establishment and the Gaming Bill would require the Board to connect them to a central communications system that can monitor and communicate with each terminal. Net profits (total consideration less cash awards) are to be deposited into the State Video Gaming Fund and be distributed with interest and after payment of administrative costs as follows: (a) 50% to the licensed establishment, (b) 20% to the licensed vendor, (c) 29% to the Municipal Economic Development Fund and (d) 1% for deposit in the Host Municipality Video Game Share Account (the “Account”). The Department is to distribute funds from the Account to host municipalities at the end of each October in proportion to licenses and purchases made to licensees in each municipality. Annual transfers from the Account include at least $2 million to the Compulsive and Gaming Treatment Fund and $3 million to the General Fund to treat drug and alcohol addiction.