Actuarial Fiscal Note

Date Requested:February 03, 2022
Time Requested:04:40 PM

2611	Introduced	HB2300
Agency:	Consolidated Public Retirement Board
CBD Number:	Version:	Bill Number:	Resolution Number:
CBD Subject:

Retirement Systems Impacted by Legislation:

JRS 2140

FUND(S):

Special Fund

Sources of Revenue:

Creates New Expense

Legislation creates:

JRS

Actuarial Note Summary

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

    HB 2300 would allow Family Court Judges to participate in the Judges’ Retirement System (JRS). There are 49 active Family Court Judges currently participating in the Public Employees’ Retirement System (PERS) and to value HB 2300 we assume all 49 Family Court Judges would elect to transfer all their service as a Family Court Judge from PERS to JRS. Upon transferring from PERS to JRS, each Family Court Judge member would transfer their corresponding PERS accumulated contributions plus any shortfall accumulated contributions to the JRS Fund as if the member contributed based on JRS member contribution rates for all transferred service. Each active Family Court Judge would enter JRS as a Tier II member.

    HB 2300 would increase the actuarial accrued liability for JRS by approximately $8.0 million. JRS is currently overfunded and if Family Court Judges were included in JRS then JRS would continue to be over funded for the foreseeable future. As a result, there is no amortization of unfunded liability due to HB 2300. As written, HB 2300 would increase the FY 2024 JRS annual required employer contribution by approximately $400,000.

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
Impact On	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	$400,000.00	2.56 %
Normal Cost of System	N/A	$400,000.00	2.56 %
Past Service Liabilities	$0.00	$0.00	0.00 %
Fiscal Year Past Service Amortization Period Ends	N/A		N/A

Explanation of above Actuarial estimates:

HB 2300 would increase the actuarial accrued liability for JRS by approximately $8.0 million. JRS is currently overfunded and if Family Court Judges were included in JRS then JRS would continue to be over funded for the foreseeable future. As a result, there is no amortization of unfunded liability due to HB 2300. As written, HB 2300 would increase the FY 2024 JRS annual required employer contribution by approximately $400,000 or 2.56% of JRS payroll.

Analysis of Impact on Public Pension Policy:

As written, the cost 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.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2022 Increase/Decrease (use"-")	2023 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	0	425,000	400,000
Personal Services	0	0	0
Current Expenses	0	25,000	0
Repairs and Alterations	0	0	0
Assets	0	0	0
Other	0	400,000	400,000
2. Estimated Total Revenues	0	0	0

Explanation of above Fiscal Note estimates (include possible long-range effect):

In addition to the increase in the JRS annual employer cost of $400,000, or 2.56% of JRS payroll for FY 2024, there is a one-time $25,000 expense to setup the administrative software to allow Family Court Judges to participate in JRS.

Memorandum

    This Actuarial/Fiscal Note is being submitted by the Consolidated Public Retirement Board. It has been reviewed by the CPRB Actuary.

    For the appropriate actuarial disclosures, see the July 1, 2021, funding valuation report for JRS, expected to be published in March 2022.

    In particular, future actuarial measurements may differ significantly from the current measurements shown in this actuarial/fiscal note due to plan experience differing from that anticipated by the economic and demographic assumptions, changes expected as part of the natural operation of the methodology used for these measurements, and changes in plan provisions, applicable law, and regulations.

    Regarding Actuarial Standards of Practice 51, the risk assessment for JRS may be affected by allowing the Family Court Judges to participate in JRS to the extent that the higher contributions necessitated by the addition of the Family Court Judges in JRS may not be covered.

    Kenneth Woodson Jr., the CPRB Board Actuary, is a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries. He meets the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained in this actuarial/fiscal note. Both the Board and the CPRB Board Actuary are available to answer any questions on the material contained in this actuarial/fiscal note.

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