Actuarial Fiscal Note

Date Requested:February 13, 2020
Time Requested:10:45 AM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
2459 Comm. Sub2 SB597
CBD Subject: Salaries

Retirement Systems Impacted by Legislation:

PERS 2501 and JRS 2140

FUND(S):

Special Fund

Sources of Revenue:

Creates New Expense

Legislation creates:

PERS and JRS



Actuarial Note Summary


Impact this measure will have on the liabilities and contributions associated with the retirement system(s).


    The Committee Substitute for The Committee Substitute for SB 597 provides an annual salary increase for magistrates from $57,500 to $62,769 beginning July 1, 2020 and an annual salary increase for magistrates from $62,769 to $68,038 beginning July 1, 2021. The bill also provides an annual salary increase for Family Court Judges from $94,500 to $104,215 beginning July 1, 2020 and an annual salary increase for Family Court Judges from $104,215 to $113,930 beginning July 1, 2021. These salary increases would change PERS liability and the PERS annual required employer contribution by an immaterial amount.
    
    The Committee Substitute for The Committee Substitute for SB 597 provides an annual salary increase for justices of the Supreme Court of Appeals from $136,000 to $148,450 beginning July 1, 2020 and an annual salary increase for justices of the Supreme Court of Appeals from $148,450 to $160,901 beginning July 1, 2021. The bill would also increase the annual salary of Circuit Court Judges from $126,000 to $137,535 beginning July 1, 2020 and an annual salary increase for Circuit Court Judges from $137,535 to $149,070 beginning July 1, 2021.
    
    The impact from The Committee Substitute for The Committee Substitute for SB 597 for the annual salary increases would increase the JRS Actuarial Accrued Liability by $20.2 million, however, due to JRS overfunding there would be no amortization of unfunded liability due to salary increases from The Committee Substitute for The Committee Substitute for SB 597. The bill would increase the JRS annual employer normal cost by approximately $47,000. However, due to the credit for JRS overfunding that offsets a portion of the JRS employer normal cost, the bill would increase the total annual JRS employer contribution by approximately $14,000.
    



Fiscal Detail of Actuarial Impact

Impact on current benefit costs, prior service benefit costs and ongoing contribution requirements following full implementation.


Impact On Following Full Implementation
Increase in Unfunded Actuarial Accrued Liability Initial Impact on Annual Contribution Requirement of System(s) Contribution Increase as a Percentage of Annual Payroll
Total Annual Costs $0.00 $14,000.00 0.13 %
Normal Cost of System N/A $14,000.00 0.13 %
Past Service Liabilities $0.00 $0.00 0.00 %
Fiscal Year Past Service
Amortization Period Ends
N/A - N/A


Explanation of above estimates:


    The Committee Substitute for The Committee Substitute for SB 597 would increase the Actuarial Accrued Liability of JRS by $20.2 million, however, due to JRS overfunding, there is no amortization of unfunded liability.
    
    The Committee Substitute for The Committee Substitute for SB 597 would increase the JRS annual employer contribution amount by $14,000 or 0.13% of JRS payroll.
    
    The impact of The Committee Substitute for The Committee Substitute for SB 597 on PERS is immaterial.
    

Analysis of Impact on Public Pension Policy:


    As written, the costs of the bill would be sustainable by the current employee and employer contribution rates.



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    The Committee Substitute for The Committee Substitute for SB 597 provides an annual salary increase for magistrates from $57,500 to $62,769 beginning July 1, 2020 and an annual salary increase for magistrates from $62,769 to $68,038 beginning July 1, 2021. The bill also provides an annual salary increase for Family Court Judges from $94,500 to $104,215 beginning July 1, 2020 and an annual salary increase for Family Court Judges from $104,215 to $113,930 beginning July 1, 2021. These salary increases would change PERS liability and the PERS annual required employer contribution by an immaterial amount.
    
    The Committee Substitute for The Committee Substitute for SB 597 provides an annual salary increase for justices of the Supreme Court of Appeals from $136,000 to $148,450 beginning July 1, 2020 and an annual salary increase for justices of the Supreme Court of Appeals from $148,450 to $160,901 beginning July 1, 2021. The bill would also increase the annual salary of Circuit Court Judges from $126,000 to $137,535 beginning July 1, 2020 and an annual salary increase for Circuit Court Judges from $137,535 to $149,070 beginning July 1, 2021.
    
    The impact from The Committee Substitute for The Committee Substitute for SB 597 for the annual salary increases would increase the JRS Actuarial Accrued Liability by $20.2 million, however, due to JRS overfunding there would be no amortization of unfunded liability due to salary increases from The Committee Substitute for The Committee Substitute for SB 597. The bill would increase the JRS annual employer normal cost by approximately $47,000. However, due to the credit for JRS overfunding that offsets a portion of the JRS employer normal cost, the bill would increase the total annual JRS employer contribution by approximately $14,000.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2020
Increase/Decrease
(use"-")
2021
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 14,000 14,000
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 14,000 14,000
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


    The Committee Substitute for The Committee Substitute for SB 597 would increase the Actuarial Accrued Liability of JRS by $20.2 million, however, due to JRS overfunding, there is no amortization of unfunded liability.
    
    The Committee Substitute for The Committee Substitute for SB 597 would increase the JRS annual employer contribution amount by $14,000 or 0.13% of JRS payroll.
    
    The impact of The Committee Substitute for The Committee Substitute for SB 597 on PERS is immaterial.
    



Memorandum


    This Actuarial/Fiscal Note is being submitted by the Consolidated Public Retirement Board. It has been reviewed by the CPRB Actuary. Both the Board and the CPRB Actuary are available upon request for questions.



    Person submitting Fiscal Note: Kenneth M. Woodson Jr., Board Actuary, CPRB
    Email Address: kenneth.m.woodson@wv.gov