Program Authorization: Claims Settlement Agreement
This program provided state funding for the claims settlement agreement between the State and the Municipal Police Employees' 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 court 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 condition 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 Municipal Police Employees' Retirement System. The agreement provided that the state shall provide over seven (7) equal annual installments an annual amount of $5,883,525. The interest of each installment was computed at the rate of 7.5% per annum. The Initiatives Supplemental Appropriations Act, Act 319 - of the 1997 Regular Session provided a state general fund appropriation of $11,356,572 to retire this obligation two years ahead of schedule. The principal total of this settlement agreement was $31,156,428. The interest paid over the life of this promissory note totaled $9,617,769. The early payoff reduced the interest costs by $410,478.
RESOURCE ALLOCATION FOR THE PROGRAM
SOURCE OF FUNDING
This program was funded from state general fund direct.
ANALYSIS OF RECOMMENDATION
This claim was paid off in Fiscal Year 1997, therefore, no further appropriation is required.
ACQUISITIONS AND MAJOR REPAIRS
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