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SB 3127

AN ACT RELATING TO TOWNS AND CITIES -- AUDIT OF ACCOUNTS AND INSTALLATION OF SYSTEMS

2026 Regular Session Introduced by John Burke and 4 co-sponsors

Rhode Island municipalities must aim to fund 100% of pension and OPEB ADCs, and if below, must submit actuarial data and a funding plan within three months after audits.

06/01/2026 Meeting postponed (06/02/2026)
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Bill Summary · SB 3127

Summary of SB 3127 (Rhode Island, 2026)

Purpose and Intent

  • This act amends the Audit of Accounts and Installation of Systems provisions to strengthen municipal funding for pension and other post-employment benefits (OPEB).
  • It requires municipalities that contribute less than 100% of their actuarially determined contributions (ADC) to pension plans or OPEB plans to provide additional information and adopt funding plans to reach full (100%) ADC funding.
  • It also updates and clarifies the framework for establishing and managing OPEB trusts.

Key Provisions

1) Pension Funding Compliance (GASB)
- If a municipality contributes materially less than 100% of its ADC for pension plans (as reported under GASB 27 or successor GASB guidance):
- The municipality must submit, within three months after completing its annual audited financial statements:
- The most recent actuarial study determining the ADC for the pension plan(s).
- Management’s recommendations for ensuring future payments equal to the APC (planned future contributions to achieve 100% ADC funding).
- The reporting is due to the Auditor General and the Director of Revenue.

2) OPEB Funding Compliance and Trusts
- If a municipality contributes materially less than 100% of its ADC for OPEB plans:
- The municipality must submit, within three months after completing its annual audited financial statements:
- The most recent actuarial valuations determining the ADC for the OPEB plan(s).
- Management’s recommendations for planned future contributions to achieve 100% ADC funding.
- Municipalities may establish an OPEB trust (pursuant to § 45-21-65) if not already in place.

3) OPEB Trust Provisions (Section 45-21-65)
- Trustees and Funding:
- Municipalities may create an OPEB trust funded by appropriations, employee contributions, and other available amounts.
- The trust can be established with a corporate trustee (bank/trust company or a Chapter 5 entity) and requires an approving resolution by the city/town council or applicable agency board.
- Investments and management must align with prudent investment rules and ties to the municipality’s pension fund policies where applicable.
- Use of Funds:
- OPEB funds and earnings may be used solely for OPEB costs or as permitted by the trust terms and law.
- The director of finance or treasurer is responsible for investing the funds, reinvestment, and managing investments in accordance with prudent standards.
- Intergovernmental Arrangements:
- The act authorizes agreements with the state or its departments/agencies for OPEB trust management, including investments.
- The state or its departments may enter into such agreements with municipalities.
- The state has no liability to municipalities for entering these agreements.
- Advisory Services:
- Municipalities may hire qualified advisory services for OPEB investments, with fees paid from the OPEB trust.
- Procurement for these services remains subject to municipal procurement rules.
- Authorized Organizations:
- Municipalities may work with corporations established under Rhode Island law (Chapter 5 entities, including those under § 45-5-20.1) for OPEB trust management and investments.
- Existing Trusts:
- Any OPEB trusts in effect on the act’s effective date are ratified and confirmed.
- Records:
- This act does not exempt OPEB trusts from Rhode Island’s Access to Public Records Act.

4) Effective Date
- The act takes effect upon passage.

Who Is Affected

  • Rhode Island municipalities (cities and towns) and their financing officers.
  • Pension funds and OPEB plans for municipal employees.
  • Auditors (Auditor General) and the Director of Revenue, who receive the required funding-planning submissions.
  • Financial trustees, banks, trust companies, and corporate entities involved in OPEB trust administration.
  • State agencies when entering into intergovernmental OPEB-related agreements.

Procedural and Timeline Aspects

  • For any year where ADC contributions are materially less than 100%:
    • Required submission of the most recent actuarial ADC study and management’s funding plan within three months after audit completion.
  • Effective date: upon passage (immediate effect unless otherwise specified).

Potential Impacts

  • Increased transparency and accountability for pension and OPEB funding among Rhode Island municipalities.
  • Encouragement or mandate for municipalities to move toward full (100%) ADC funding through formal plans.
  • Expanded framework for establishing and managing OPEB trusts, including intergovernmental collaboration and professional advisory services.
  • Possible long-term improvement in the funded status of pension and OPEB liabilities at the municipal level.

If you’d like, I can provide a plain-language one-page brief or a side-by-side comparison with current law to highlight exact changes.

Compiled from official sources — confirm details with the bill’s official record.

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