Retirement legislation that has a fiscal impact can only be introduced during the 1st year of a two-year session and can only be acted on during the 2nd year. For example, a fiscal retirement bill introduced during the first year of the 2015-16 biennium session cannot be acted on until the 2016 session. The earliest effective date of any such legislation would be July 1, 2016.
The Georgia Constitution contains several provisions relating to retirement legislation, which require that retirement bills be treated differently from other legislation. In Georgia, each bill having a fiscal (monetary) impact on a public retirement system such as TRS must be funded in the year it is enacted. In TRS, both the employee and the employer pay monthly into the retirement fund to pay for the employee's retirement benefits. This "pay as you work" system ensures that future benefits are already paid for and do not depend on future appropriations. Thus, any bill that increases the liability of the retirement system must be funded "up front". This ensures the fiscal stability of the retirement system.
In compliance with the dictates of the Constitution, the General Assembly enacted the Public Retirement Systems Standards Law, Chapter 20 of Title 47 of the Official Code of Georgia Annotated. The "Standards Law" as it is called for short, establishes the procedures required for the consideration and enactment of retirement legislation.
Initially, after Legislative Counsel drafts a bill, it is sent to the State Auditor for a certificate stating whether the bill is a fiscal or a non-fiscal bill. A fiscal bill is defined in the "Standards Law" as one which: (1) increases a retirement benefit, (2) increases the actuarial accrued liability of a retirement system, or (3) increases the normal cost of the retirement system. It is important to remember that the question is the impact of the bill on a retirement system, not the impact on the State treasury. Thus, it is possible for a retirement bill to have no cost to the State (or, indeed, to save the State money) and still be a "fiscal bill". This certificate of the State Auditor must be attached to the bill at the time it is introduced. If no certificate is attached when a bill is introduced, it may not be considered.
If the State Auditor determines in his initial review of the bill that it is a non-fiscal retirement bill, the bill is treated the same as any other legislation, except that such bills must be introduced in the first 20 days of either legislative session.
If the State Auditor certifies that the bill is a fiscal retirement bill, its treatment becomes more complex. A fiscal retirement bill may be introduced any time during the first year of the biennium. No fiscal retirement bill may be introduced during the second year. No committee action will take place during the first year of the biennium.
Because of the requirement that fiscal retirement bills be funded concurrently with their enactment, it is necessary for an actuary to conduct a study to determine how much must be appropriated to the retirement system to pay the benefits granted by the legislation. Because the actuarial reviews cost money, both the House and Senate Retirement Committees meet during the interim to determine which bills should move forward for the actuarial study and which bills should die in committee.
Over the summer, the bills that pass both committees are sent to the State Auditor, who arranges an actuarial study of each bill. No later than November 1 of that year, the State Auditor provides the respective chairpersons with studies showing the cost of each bill, amortized over 20 years. A copy of that study is attached to the bill and travels with the bill throughout its life. After the actuarial study is completed, the bill may be amended only in such a manner as reduces the cost of the bill. Any substitute or amendment must be accompanied by a certificate from the State Auditor certifying whether the substitute or amendment changes the cost reflected in the actuarial study and, if so, a new actuarial study is required.
During the second year of the biennium, the respective committees meet to consider the bills again, this time with the knowledge of the cost of each bill. From that point, the movement of the legislation through the committees and full bodies is similar to other bills, except for the limitation on substitution or amendment.
Finally, after a fiscal retirement bill is enacted, a specific provision must be made in the Appropriations Act for funding the legislation. It is the responsibility of the bill's sponsor to ensure that such a funding provision appears in the Appropriations Act. Each year, the State Auditor provides a certificate stating for each fiscal retirement bill enacted whether or not provisions for funding have been made. If no funding provision has been made, the bill is automatically repealed.