Program Authorization: Claims Settlement Agreement
This program provided state funding for the claims settlement agreement between the State and the Firefighters' Retirement System. Act 5 of the 1988 special session abolished a number of dedications--the insurance premium dedication to the Deputy Sheriffs', Firefighters, and Municipal Police Employees' Retirement Systems being one abolished. The Municipal Police Employees' Retirement System and the Firefighters' Retirement System sued the State, citing that the dedication was protected by the State Constitution. Subsequent litigation resulted in the courts upholding the claim of these two systems. Act 397 of the 1991 Regular Session reinstated the insurance premium dedications to this retirement system. Act 397 provides for the conditions under which this system may receive insurance premium dedicated funds. The Attorney General's Office has determined that these dedicated funds may be drawn from the State Treasury without an appropriation.
In June of 1991, the state entered into a claims settlement agreement by and between the Office of the Governor, Division of Administration and the Firefighters' Retirement System. The agreement provided that the state shall appropriate over seven (7) equal annual installments an annual amount of $3,408,098. The interest of each installment was computed at the rate of 7.5% per annum. The Initiatives Supplemental Appropriations Act of the 1997 Regular Session - Act 319 - provided a state general fund appropriation of $6,600,000, more or less estimated, to retire this liability two years ahead of schedule. The outstanding balance was $6,578,422. The principal total of this settlement agreement was $18,047,991. The interest paid on this promissory note totaled $5,570,921. The accelerated payoff reduced the interest costs by approximately $237,774.
RESOURCE ALLOCATION FOR THE PROGRAM
SOURCE OF FUNDING
Funding for the payment of this claims settlement agreement was state general fund direct.
ANALYSIS OF RECOMMENDATION
This obligation was paid off in Fiscal Year 1997. Therefore, no further appropriations are necessary.
ACQUISITIONS AND MAJOR REPAIRS
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