Section 1703-N. 2026 special ad hoc municipal police and firefighter postretirement adjustment.
(a) Entitlement.--A municipal retirement system shall pay a retired police officer or firefighter a special ad hoc postretirement adjustment under this section if all of the following apply:
(1) The retiree terminated active employment with a municipality as a police officer or firefighter.
(2) The retiree receives a retirement benefit from a municipal retirement system on the basis of active employment with the municipality as a police officer or firefighter.
(3) The retiree began receiving the retirement benefit before January 1, 2021.
(4) The retiree has not filed a written notice with the municipal retirement system requesting that the additional monthly postretirement adjustment not be paid.
(b) Amount.--
(1) Except as provided under paragraphs (2) and (3), a municipal retirement system shall pay a retired police officer or firefighter a monthly special ad hoc postretirement adjustment under subsection (a) in any of the following amounts:
(i) $75 per month if, on January 1, 2026, the retiree has been retired at least five years but less than 10 years.
(ii) $150 per month if, on January 1, 2026, the retiree has been retired at least 10 years but less than 20 years.
(iii) $300 per month if, on January 1, 2026, the retiree has been retired at least 20 years.
(2) If a retiree is entitled to receive a special ad hoc postretirement adjustment under subsection (a) from more than one municipal retirement system, each municipal retirement system shall reduce the amount of the special ad hoc postretirement adjustment under paragraph (1) so that the aggregate amount of all special ad hoc postretirement adjustments paid to the retiree does not exceed the amount specified under paragraph (1).
(3) The amount of the special ad hoc postretirement adjustment under paragraph (1) shall be reduced each year by 65% of the total amount of a postretirement adjustment provided to the retiree under the municipal retirement system after December 31, 2001, and before January 1, 2026, and paid in the immediately preceding year.
(c) Payment.--A municipal retirement system shall begin paying the special ad hoc postretirement adjustment under subsection (a) with the first retirement benefit payment made on or after August 1, 2026. If the municipal retirement system does not include the special ad hoc postretirement adjustment in the first retirement benefit payment made on or after August 1, 2026, the municipal retirement system shall include the special ad hoc postretirement adjustment as soon as practicable in a subsequent retirement benefit payment to the retiree. The first retirement benefit payment that includes the special ad hoc postretirement adjustment shall also include the aggregate amount of special ad hoc postretirement adjustments omitted from retirement benefit payments made on or after August 1, 2026.
(d) Municipal certification.--To receive reimbursement under subsection (e), a municipality shall certify to the Auditor General, by April 1 of each year in which reimbursement will be made, the municipality's annual amortization cost for the prior year attributable to the special ad hoc postretirement adjustment required under subsection (a). The municipality shall make the certification in the form and manner required by the Auditor General.
(e) Reimbursement.--From money available in the account, the Auditor General shall reimburse a municipality for the annual amortization cost of the increase in unfunded actuarial accrued liability attributable to the special ad hoc postretirement adjustment required under subsection (a), amortized over a period of 10 years.
(f) Auditor General certification.--By June 1 of each year in which a municipality is eligible to receive reimbursement under subsection (e), the Auditor General shall certify to the Department of Revenue and the State Treasurer the total amount of reimbursements for eligible municipalities for the year.
(g) Account.--The 2026 Special Ad Hoc Postretirement Adjustment Account is established as a restricted account within the Municipal Pension Aid Fund. Money in the account is appropriated to the Department of the Auditor General on a continuing basis to reimburse municipalities under subsection (e).
(h) Cash flow shortage.--The Auditor General may use money available in the Municipal Pension Aid Fund to address an acute cash flow shortage of a municipality if the Auditor General determines that the shortage is directly attributable to any of the following:
(1) The payment of the special ad hoc postretirement adjustment required under subsection (a).
(2) The reimbursement method under subsection (e).
(i) Reconciliation.--The Auditor General shall reconcile money made available to a municipality under subsection (h) against subsequent reimbursement to the municipality under subsection (e).
(j) Calculation of aid.--A cost attributable to the special ad hoc postretirement adjustment required under subsection (a) that is reimbursable under subsection (e) may not be included for the purpose of allocating aid under the act of December 18, 1984 (P.L.1005, No.205), known as the Municipal Pension Plan Funding Standard and Recovery Act.
(k) Exclusion from income.--A postretirement adjustment provided under this section shall be excluded from income for eligibility determinations for State benefits and programs unless otherwise prohibited by Federal or State law.
(l) Municipal receipt of payment.--Upon receipt of the reimbursement payment from the Commonwealth under subsection (e), the treasurer of the municipality shall deposit the reimbursement payment into the municipality's general fund.
(m) Definitions.--As used in this section, the following words and phrases shall have the meanings given to them in this subsection unless the context clearly indicates otherwise:
"Account." The 2026 Special Ad Hoc Postretirement Adjustment Account established under subsection (g).
"Act 147." The act of December 14, 1988 (P.L.1192, No.147), known as the Special Ad Hoc Municipal Police and Firefighter Postretirement Adjustment Act.
"Active employment." The situation of an individual, other than an independent contractor, who performs for compensation regular services for a municipality and who is regularly entered on the payroll of the municipality.
"Firefighter." A municipal employee who holds a full-time position in the firefighting service of a municipality and has retirement coverage provided by a retirement system.
"Municipality." A borough, city, county of the second class, incorporated town or township, however constituted, whether operating under a legislative charter; a municipal code; an optional charter adopted under the act of July 15, 1957 (P.L.901, No.399), known as the Optional Third Class City Charter Law; a home rule charter or an optional plan adopted under the former act of April 13, 1972 (P.L.184, No.62), known as the Home Rule Charter and Optional Plans Law; or other arrangement; or an association of these municipalities cooperating under the former act of July 12, 1972 (P.L.762, No.180), referred to as the Intergovernmental Cooperation Law.
"Police officer." A municipal employee who holds a full-time position in the police service of a municipality and has retirement coverage provided by a retirement system.
"Postretirement adjustment." An increase in or change in the amount of a retirement annuity, retirement benefit, service pension or disability pension benefit granted or effective after active employment ceases.
"Public employee retirement system." An entity, whether a separate entity or part of a governmental entity, that collects retirement and other employee benefit contributions from government employees and employers; holds and manages the resulting assets as reserves for present and future retirement annuity, retirement benefit, service pension or disability pension benefit payments; and makes provision for these payments to qualified retirees and beneficiaries.
"Retirement benefit." The amount paid on a regular basis to a retired or disabled police officer or firefighter by a municipal retirement system established for police officers or firefighters.
"Retirement system." A public employee retirement system.
"Special ad hoc adjustment" or "special ad hoc postretirement adjustment." An increase in the amount of a retirement benefit as provided under Act 147 and this section.
(1703-N added July 12, 2026, P.L.265, No.21)