,,ii  #aacth ,,congress  #ast ,session  
,s4 #ggi  ,,in ,,the ,,senate ,,of ,,the
 ,,united ,,states  ,april #bc1 #bjac   
,mr4 ,burr 7for himself1 ,mr4 ,coburn1  
and ,mr4 ,thune7 introduced the         
following bill2 which was read twice and
 referred to the ,committee on ,finance 
,a ,,bill  ,to amend the ,internal      
,revenue ,code of #aihf to provide for  
reporting and disclosure by ,state and  
local public employee retirement pension
 plans4  #a4 ,short title ,this ,act may
 be cited as the ,public ,employee      
,pension ,transparency ,act4  #b4       
,findings ,the ,congress finds the      
following3  7#a7 ,pursuant to clauses #a
 and #c of section #h of article ,i of  
the ,constitution of the ,united        
,states1 the ,congress has the authority
 to condition the continuation of       
certain specified ,federal tax benefits 
upon ,state or local government employee
 pension benefit plans on the provision 
of meaningful disclosure under section  
#dihj;,j of the ,internal ,revenue ,code

 of #aihf1 as added by this ,act4  7#b7 
,state and local government employee    
pension benefit plans have promised     
pension benefits to approximately       
#bj1jjj1jjj ,americans who are active   
employees of these entities4 ,an        
additional #g1jjj1jjj retirees and their
 dependents currently receive benefits  
from ,state or local government employee
 pension benefit plans4 ,the interests  
of participants in many of such plans   
are in the nature of property rights    
under ,state law4  7#c7 ,state and local
 government employee pension benefit    
plans are substantially facilitated by  
the favorable tax treatment of          
participants and beneficiaries1         
investment earnings1 and employee       
contributions with respect to such plans
 provided by the ,federal ,government   
under the ,internal ,revenue ,code of   
#aihf4  7#d7 ,the investment of ,state  
or local government employee pension    
benefit plan assets1 the distribution of
 benefits under such plans1 and other   

related financial activities are        
facilitated through the use of          
instrumentalities of1 and substantially 
affect1 interstate commerce4 ,these     
activities1 which are interstate in     
nature and have a substantial impact on 
the national economy1 affect capital    
formation1 regional growth and decline1 
the national markets for insurance1 and 
the markets for securities and the      
trading of securities of ,state and     
local governments4  7#e7 ,the financial 
status of ,state or local government    
employee pension benefit plans also has 
a direct impact on the national markets 
for insurance and trading of securities 
of ,state and local governments4  7#f7  
,state or local government employee     
pension benefit plans additionally have 
a substantial impact on interstate      
commerce as a consequence of the        
interstate movement of participants4    
7#g7 ,state or local government employee
 pension benefit plans are becoming a   
large financial burden on certain ,state

 and local governments and have already 
resulted in tax increases and the       
reduction of services4  7#h7 ,in fact1 a
 recent study published in the ,journal 
of ,economic ,perspectives found that   
the present value of the already        
promised pension liabilities of the #ej 
,states amount to #e1agj1jjj1jjj1jjj and
 that these pension plans are unfunded  
by #c1bcj1jjj1jjj1jjj4 ,another study   
determined that the total unfunded      
liability for all municipal plans in the
 ,united ,states is #egd1jjj1jjj1jjj4   
7#i7 ,some economists and observers have
 stated that the extent to which ,state 
or local government employee pension    
benefit plans are underfunded is        
obscured by governmental accounting     
rules and practices1 particularly as    
they relate to the valuation of plan    
assets and liabilities4 ,this results in
 a misstatement of the value of plan    
assets and an understatement of plan    
liabilities1 a situation that poses a   
significant threat to the soundness of  

,state and local budgets4  7#aj7 ,there 
currently is a lack of meaningful       
disclosure regarding the value of ,state
 or local government employee pension   
benefit plan assets and liabilities4    
,this lack of meaningful disclosure     
poses a direct and serious threat to the
 financial stability of such plans and  
their sponsoring governments1 impairs   
the ability of ,state and local         
government taxpayers and officials to   
understand the financial obligations of 
their government1 and reduces the       
likelihood that ,state and local        
government processes will be effective  
in assuring the prudent management of   
their plans4 ,the status quo also       
constitutes a serious threat to the     
future economic health of the ,nation   
and places an undue burden upon ,state  
and local government taxpayers1 who will
 be called upon to fully fund existing1 
and future1 pension promises4  7#aa7    
,state or local government employee     
pension benefit plans affect the        

national public interest and meaningful 
disclosure of the value of their assets 
and liabilities is necessary and        
desirable in order to adequately protect
 plan participants and their            
beneficiaries and the general public4   
,meaningful disclosure would also       
further efforts to provide for the      
general welfare and the free flow of    
commerce4  #c4 ,reporting of information
 with respect to ,state or local        
government employee pension benefit     
plans treated as a tax exemption1 etc41 
requirement for ,state and local bonds  
7a7 ,in general ,subpart ,b of part ,,iv
 of subchapter ,b of chapter #a of the  
,internal ,revenue ,code of #aihf is    
amended by adding at the end the        
following new section3  #adi;,a4        
,reporting with respect to ,state or    
local government employee pension       
benefit plans  7a7 ,in general ,in the  
case of a failure to satisfy any        
requirement of subsection 7a7 or 7b7 of 
section #dihj;,j with respect to any    

plan maintained with respect to         
employees of one or more ,states or     
political subdivisions of one or more   
,states1 no specified ,federal tax      
benefit shall be allowed or made with   
respect to any specified bond issued by 
any such ,state or political subdivision
 7or by any bonding authority acting on 
behalf1 or for the benefit1 of such     
,state or political subdivision7 during 
the noncompliance period4  7b7          
,noncompliance period ,for purposes of  
this section1 the term noncompliance    
period means1 with respect to any ,state
 or political subdivision in connection 
with any failure described in subsection
 7a71 the period beginning on the date  
that the ,secretary notifies such ,state
 or political subdivision of such       
failure and ending on the date that such
 failure is cured 7as determined by the 
,secretary74  7c7 ,specified bond ,for  
purposes of this section1 the term      
specified bond means--  7#a7 any ,state 
or local bond within the meaning of     

section #ajc1  7#b7 any qualified tax   
credit bond within the meaning of       
section #ed;,a1 and  7#c7 any build     
,america bond within the meaning of     
section #ed;,,aa4  7d7 ,specified       
federal tax benefit ,for purposes of    
this section1 the term specified        
,federal tax benefit means--  7#a7 any  
exemption from gross income allowed     
under section #ajc 7relating to interest
 on ,state and local bonds71  7#b7 any  
credit allowed under section #ed;,a     
7relating to credit to holders of       
qualified tax credit bonds71  7#c7 any  
credit allowed under section #ed;,,aa   
7relating to build ,america bonds71 and 
7#d7 any credit or payment allowed or   
made under section #fdca 7relating to   
credit for qualified bonds allowed to   
issuer74  4  7b7 ,reporting requirements
 ,chapter #dc of such ,code is amended  
by adding at the end the following new  
section3  #dihj;,j4 ,failure of ,state  
or local government employee pension    
benefit plans to meet reporting         

requirements  7a7 ,annual report ,for   
purposes of section #adi;,a1 the        
requirements of this subsection are as  
follows3  7#a7 ,in general ,the plan    
sponsor of a ,state or local government 
employee pension benefit plan shall file
 with the ,secretary1 in such form and  
manner as shall be prescribed by the    
,secretary1 a report for each plan year 
beginning on or after ,january #a1      
#bjad1 setting forth the following      
information with respect to the plan1 as
 determined by the plan sponsor as of   
the end of such plan year3  7,a7 ,a     
schedule of funding status1 which shall 
include a statement as to the current   
liability of the plan1 the amount of    
plan assets available to meet that      
liability1 the amount of the net        
unfunded liability 7if any71 and the    
funding percentage of the plan4  7,b7 ,a
 schedule of contributions by the plan  
sponsor for the plan year1 indicating   
which are or are not taken into account 
under subparagraph 7,a74  7,c7          

,alternative projections which shall be 
specified in regulations of the         
,secretary for each of the next #fj plan
 years following the plan year of the   
cash flows associated with the current  
liability1 together with a statement of 
the assumptions used in connection with 
such projections4 ,the ,secretary shall 
specify in such regulations the         
projection assumptions to be used as    
necessary to achieve comparability      
across plans4  7,d7 ,a statement of the 
actuarial assumptions used for the plan 
year1 including the rate of return on   
investment of plan assets and           
assumptions as to such other matters as 
the ,secretary may prescribe by         
regulation4  7,e7 ,a statement of the   
number of participants who are each of  
the following--  7i7 those who are      
retired or separated from service and   
are receiving benefits1  7ii7 those who 
are retired or separated and are        
entitled to future benefits1 and  7iii7 
those who are active under the plan4    

7,f7 ,a statement of the plan's         
investment returns1 including the rate  
of return1 for the plan year and the #e 
preceding plan years4  7,g7 ,a statement
 of the degree to which1 and manner in  
which1 the plan sponsor expects to      
eliminate any unfunded current liability
 that may exist for the plan year and   
the extent to which the plan sponsor has
 followed the plan's funding policy for 
each of the preceding #e plan years4    
,the ,secretary shall prescribe by      
regulation the specific criteria to be  
used for meeting the requirements of    
this paragraph4  7,h7 ,a statement of   
the amount of pension obligation bonds  
outstanding4  7,i7 ,a statement of the  
current cost of the plan for the plan   
year4  7#b7 ,timing of report ,the plan 
sponsor of a ,state or local government 
employee pension benefit plan shall make
 the filing required under paragraph    
7#a7 for each plan year not later than  
#baj days after the end of such plan    
year 7or within such time as may be     

required by regulations prescribed by   
the ,secretary in order to reduce       
duplicative filing74  7b7 ,additional   
reporting requirements ,for purposes of 
section #adi;,a1 the requirements of    
this subsection are as follows3  7#a7   
,supplementary reports ,in any case in  
which1 in determining the information   
filed in the annual report for a plan   
year under subsection 7a7--  7,a7 the   
value of plan assets is determined using
 a standard other than fair market      
value1 or  7,b7 the interest rate or    
rates used to determine the value of    
liabilities or as the discount value for
 liabilities are not the interest rates 
described in paragraph 7#c71 the plan   
sponsor shall include in the annual     
report filed for such plan year pursuant
 to subsection 7a7 the supplementary    
report for such plan year described in  
paragraph 7#b7 of this subsection4  7#b7
 ,use of prescribed valuation method and
 interest rates ,a supplementary report 
for a plan year filed for a plan year   

pursuant to this subsection shall       
include the information specified as    
required in the annual report under     
subparagraphs 7,a71 7,f71 7,g7 and 7,i7 
of subsection 7a77#a71 determined as of 
the end of such plan year by valuing    
plan assets at fair market value and by 
using the interest rates described in   
paragraph 7#c7 to value liabilities and 
as the discount value for liabilities4  
7#c7 ,interest rates based on ,u4,s4    
,treasury obligation yield curve rate   
7,a7 ,in general ,the interest rates    
described in this subsection are1 with  
respect to any day1 the rates of        
interest which shall be determined by   
the ,secretary for such day on the basis
 of the ,u4,s4 ,treasury obligation     
yield curve for such day4  7,b7 ,u4,s4  
treasury obligation yield curve ,for    
purposes of this subsection1 the term   
,u4,s4 ,treasury obligation yield curve 
means1 with respect to any day1 a yield 
curve which shall be prescribed by the  
,secretary for such day on              

interest-bearing obligations of the     
,united ,states4  7c7 ,definitions and  
special rules ,for purposes of this     
section--  7#a7 ,state or local         
government employee pension benefit plan
 ,the terms ,state or local government  
employee pension benefit plan and plan  
mean any plan1 fund1 or program1 other  
than a defined contribution plan 7within
 the meaning of section #dad7;i771 which
 was heretofore or is hereafter         
established or maintained1 in whole or  
in part1 by a ,state1 a political       
subdivision of a ,state1 or any agency  
or instrumentality of a ,state or       
political subdivision of a ,state1 to   
the extent that by its express terms or 
as a result of surrounding circumstances
 such plan1 fund1 or program--  7,a7    
provides retirement income to employees1
 or  7,b7 results in a deferral of      
income by employees for periods         
extending to the termination of covered 
employment or beyond1 regardless of the 
method of calculating the contributions 

made to the plan1 the method of         
calculating the benefits under the plan1
 or the method of distributing benefits 
from the plan4  7#b7 ,funding percentage
 ,the term funding percentage for a plan
 year means the ratio 7expressed as a   
percentage7 which--  7,a7 the value of  
plan assets as of the end of the plan   
year bears to  7,b7 the current         
liability of the plan for the plan year4
  7#c7 ,current liability ,the term     
current liability of a plan for a plan  
year means the present value of all     
benefits accrued or earned under the    
plan as of the end of the plan year4    
7#d7 ,present value  7,a7 ,in general   
,the present value of an accrued benefit
 shall be determined by discounting its 
future cash flows in accordance with    
subsection 7b77#c74 ,the present value  
of all benefits accrued for a           
participant shall be calculated as the  
sum of the present value of the accrued 
benefit for each exit event multiplied  
by the probability of the associated    

exit event4  7,b7 ,exit event ,an exit  
event occurs when the employment of a   
plan participant terminates4 ,for each  
currently employed plan participant as  
of the measurement date1 there are one  
or more potential future exit events4   
,each exit event is associated with a   
termination date1 a cause of termination
 7e4g41 retirement1 death1 disability1  
quit1 etc471 a contractual benefit1 and 
a probability that the participant will 
exit employment via the particular      
event4  7#e7 ,accrued benefit  7,a7 ,in 
general ,an accrued benefit is          
determined for each exit event as the   
projected benefit multiplied by service 
earned as of the measurement date       
divided by service projected to be      
earned by the event date4 ,for          
participants retired or separated from  
service as of the measurement date1 the 
accrued benefit equals the projected    
benefit4  7,b7 ,projected benefit ,as of
 the measurement date1 a projected      
benefit 7consisting of future cash      

flows7 is calculated for each possible  
exit event using service projected to be
 earned to the event date and salary as 
of the measurement date4 ,such projected
 benefit shall reflect any              
cost-of-living adjustments payable in   
the future based on the law in effect as
 of the measurement date4  7#f7         
,measurement date ,the term measurement 
date means the date as of which the     
value of the pension obligation is      
determined 7sometimes referred to as the
 valuation date74  7#g7 ,current cost   
,the term current cost of a plan for a  
plan year means the present value as of 
the end of the plan year of all benefits
 accrued or earned under the plan during
 the plan year4  7#h7 ,plan sponsor ,the
 term plan sponsor means1 in connection 
with a ,state or local government       
employee pension benefit plan1 the      
,state1 political subdivision of a      
,state1 or agency or instrumentality of 
a ,state or a political subdivision of a
 ,state which establishes or maintains  

the plan4  7#i7 ,participant  7,a7 ,in  
general ,the term participant means1 in 
connection with a ,state or local       
government employee pension benefit     
plan1 an individual--  7i7 who is an    
employee or former employee of a ,state1
 political subdivision of a ,state1 or  
agency or instrumentality of a ,state or
 a political subdivision of a ,state    
which is the plan sponsor of such plan1 
and  7ii7 who is or may become eligible 
to receive a benefit of any type from   
such plan or whose beneficiaries may be 
eligible to receive any such benefit4   
7,b7 ,beneficiary ,the term beneficiary 
means a person designated by a          
participant1 or by the terms of the     
plan1 who is or may become entitled to a
 benefit thereunder4  7#aj7 ,plan year  
,the term plan year means1 in connection
 with a plan1 the calendar or fiscal    
year on which the records of the plan   
are kept4  7#aa7 ,state ,the term ,state
 includes any ,state of the ,united     
,states1 the ,district of ,columbia1 the

 ,commonwealth of ,puerto ,rico1 the    
,united ,states ,virgin ,islands1       
,american ,samoa1 ,guam1 and the        
,commonwealth of the ,northern ,mariana 
,islands4  7#ab7 ,fair market value ,the
 term fair market value has the meaning 
of such term under section              
#dcj7;g77#c77;,a7 7without regard to    
section #dcj7;g77#c77;,b774  7d7 ,model 
reporting statement ,the ,secretary     
shall develop model reporting statements
 for purposes of subsections 7a7 and    
7b74 ,plan sponsors of ,state or local  
government employee pension plans may   
elect1 in such form and manner as shall 
be prescribed by the ,secretary1 to     
utilize the applicable model reporting  
statement for purposes of complying with
 requirements of such subsections4  7e7 
,transparency of information filed ,the 
,secretary shall create and maintain a  
public ,web site1 with searchable       
capabilities1 for purposes of posting   
the information received by the         
,secretary pursuant to subsections 7a7  

and 7b74 ,any such information received 
by the ,secretary 7including any updates
 to such information received by the    
,secretary7 shall be posted on the ,web 
site not later than #fj days after      
receipt and shall not be treated as     
return information for purposes of this 
title4  4  7c7 ,clerical amendments     
7#a7 ,the table of sections for subpart 
,b of part ,,iv of subchapter ,b of     
chapter #a of such ,code is amended by  
adding at the end the following new     
item3  ,sec4 #adi;,a4 ,reporting with   
respect to ,state or local government   
employee pension benefit plans4  4  7#b7
 ,the table of sections for chapter #dc 
of such ,code is amended by adding at   
the end the following new item3  ,sec4  
#dihj;,j4 ,failure of ,state or local   
government employee pension benefit     
plans to meet reporting requirements4  4
  #d4 ,general provisions and rules of  
construction  7a7 ,limitations on       
federal responsibilities relating to    
plan obligations and liabilities ,the   

,united ,states shall not be liable for 
any obligation related to any current or
 future shortfall in any ,state or local
 government employee pension plan4      
,nothing in this ,act 7or any amendment 
made by this ,act7 or any other         
provision of law shall be construed to  
provide ,federal ,government funds to   
diminish or meet any current or future  
shortfall in1 or obligation of1 any     
,state or local government employee     
pension plan4 ,the preceding sentence   
shall also apply to the ,federal        
,reserve4  7b7 ,no federal funding      
standards ,nothing in this ,act 7or any 
amendment made by this ,act7 shall be   
construed to alter existing funding     
standards for ,state or local government
 employee pension plans or to require   
,federal funding standards for such     
plans4  7c7 ,definitions ,terms used in 
this section which are also used in     
section #dihj;,j of the ,internal       
,revenue ,code of #aihf shall have the  
same meaning as when used in such       

section4