Actuarial Fiscal Note

Date Requested:January 14, 2026
Time Requested:06:11 PM

1265	Introduced	SB28
Agency:	Consolidated Public Retirement Board
CBD Number:	Version:	Bill Number:	Resolution Number:
CBD Subject:	Retirement

Retirement Systems Impacted by Legislation:

Plan B 2393

FUND(S):

Special Fund

Sources of Revenue:

Creates New Expense

Legislation creates:

Plan B

Actuarial Note Summary

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

    SB 28 would allow Plan B Tier 2 members, that is, Plan B members hired for the first time on or after July 1, 2015, to convert unused sick leave or annual leave into additional benefit service credits in Plan B. The days shall be applied on the basis of one days’ credit granted for each one day of accrued annual or sick leave days, with each month of retirement service credit to equal 20 days and with any remainder of 10 days or more to constitute a full month of additional credit and any remainder of less than 10 days to be dropped and not used. Note, Plan B members hired prior to July 1, 2015, currently have the option to convert unused annual leave or sick leave into additional credited service in Plan B applied on the basis of two days’ credit granted for each one day of accrued annual or sick leave.

    SB 28 Bill would increase the actuarial accrued liability for Plan B by approximately $957,000, calculated as of July 1, 2025. Amortizing this liability increase over 10 years on a level dollar basis would increase the annual required employer contribution for Plan B by approximately $133,000, or 0.31% of Plan B payroll.

    Moreover, SB 28 would increase the Plan B employer normal cost by about $227,000, or 0.52% of Plan B payroll. Therefore, measured as of July 1, 2025, the total required Plan B annual employer contribution would increase by approximately $360,000, or 0.83% of Plan B payroll, due to SB 28.

    Currently, Plan B Tier 2 active members, that is, members hired for the first time on or after July 1, 2015, represent about 40% of the total active population count. In the future as members leave active status, they are replaced by Plan B Tier 2 members and by Fiscal Year 2042 it is estimated that Plan B Tier 2 members will represent about 96% of the total active population. As Plan B Tier 2 active members increase, the cost of the Bill will increase. For Fiscal Year 2042, the Bill is expected to increase the total required Plan B annual employer contribution by around $1.1 million, or 1.41% of Plan B payroll for Fiscal Year 2042.


    It is important to note that the actuarial costs displayed in this actuarial/fiscal note are based on a middle-of-the-road future path, where all the assumptions are met with no experience gains or losses in the future. The actual cost from SB 28 may be different from the expected path results presented in this actuarial/fiscal note.

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	$957,000.00	$360,000.00	0.83 %
Normal Cost of System	N/A	$227,000.00	0.52 %
Past Service Liabilities	$957,000.00	$133,000.00	0.31 %
Fiscal Year Past Service Amortization Period Ends	N/A	2035	N/A

Explanation of above Actuarial estimates:

Analysis of Impact on Public Pension Policy:

    SB 28 Bill would increase the actuarial accrued liability for Plan B by approximately $957,000, calculated as of July 1, 2025. Amortizing this liability increase over 10 years on a level dollar basis would increase the annual required employer contribution for Plan B by approximately $133,000, or 0.31% of Plan B payroll.

    Moreover, SB 28 would increase the Plan B employer normal cost by about $227,000, or 0.52% of Plan B payroll. Therefore, measured as of July 1, 2025, the total required Plan B annual employer contribution would increase by approximately $360,000, or 0.83% of Plan B payroll, due to SB 28.

    Currently, Plan B Tier 2 active members, that is, members hired for the first time on or after July 1, 2015, represent about 40% of the total active population count. In the future as members leave active status, they are replaced by Plan B Tier 2 members and by Fiscal Year 2042 it is estimated that Plan B Tier 2 members will represent about 96% of the total active population. As Plan B Tier 2 active members increase, the cost of the Bill will increase. For Fiscal Year 2042, the Bill is expected to increase the total required Plan B annual employer contribution by around $1.1 million, or 1.41% of Plan B payroll for Fiscal Year 2042.


    It is important to note that the actuarial costs displayed in this actuarial/fiscal note are based on a middle-of-the-road future path, where all the assumptions are met with no experience gains or losses in the future. The actual cost from SB 28 may be different from the expected path results presented in this actuarial/fiscal note.

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	2026 Increase/Decrease (use"-")	2027 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	385,000	405,000	1,100,000
Personal Services	0	0	0
Current Expenses	25,000	0	0
Repairs and Alterations	0	0	0
Assets	0	0	0
Other	360,000	405,000	1,100,000
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 Plan B annual employer cost of $360,000, or 0.83% of payroll for FY 2026, there is a one-time $25,000 expense to set up the administrative software to allow Plan B Tier 2 members to convert unused leave into additional benefit service.

    Currently, Plan B Tier 2 active members, that is, members hired for the first time on or after July 1, 2015, represent about 40% of the total active population count. In the future as members leave active status, they are replaced by Plan B Tier 2 members and by Fiscal Year 2042 it is estimated that Plan B Tier 2 members will represent about 96% of the total active population. As Plan B Tier 2 active members increase, the cost of the Bill will increase. For Fiscal Year 2042, the Bill is expected to increase the total required Plan B annual employer contribution by around $1.1 million, or 1.41% of Plan B payroll for Fiscal Year 2042.

    It is important to note that the actuarial costs displayed in this actuarial/fiscal note are based on a middle-of-the-road future path, where all the assumptions are met with no experience gains or losses in the future. The actual cost from SB 28 may be different from the expected path results presented in this actuarial/fiscal note.

    To estimate the Plan B annual employer cost for FY 2042, two deterministic asset/liability projections were used, one without the plan provisions of SB 28 and the other with the plan provisions of SB 28. The liability projections were provided by Gallagher Benefit Services, Inc. (Gallagher). The CPRB calculated the asset/liability projections based on these liability projections.

    For the deterministic projections used in this actuarial/fiscal note, the new entrant profile was developed based on an analysis of recent new hires in Plan B.

    The projection assumptions and the valuation assumptions are the same and are equal to the assumptions from the Plan B July 1, 2024, funding valuation report, except for the projection with the plan provisions from SB 28, where the Plan B Tier 2 Unused Leave Load equals ½ the Unused Leave Load from the Plan B Tier 1 counterparts.

    The data and plan provisions used in the projections are the same data and plan provisions used in the Plan B July 1, 2024, funding valuation report, except for the projection with the plan provisions from SB 28, where the Plan B Tier 2 members are allowed to convert unused leave into additional benefit service at a rate equal to ½ the rate of their Plan B Tier 1 counterparts.

    Note, asset values in the projections were updated to reflect actual asset amounts through July 1, 2025. However, the liabilities in the projections were provided by Gallagher on February 18, 2025, and were based on July 1, 2024, valuation data, results and assumptions. Note, the analysis in this actuarial note is not expected to materially change if we update the liability projections using the July 1, 2025, valuation results.

    The gain/loss amortization policy used in the projections is the current gain/loss amortization policy . Namely, amortize gains/losses separately on a level dollar basis over 15 years.

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.

    For the appropriate actuarial disclosures, see the July 1, 2025, funding valuation report for Plan B, expected to be published in April 2026.

    In particular, future actuarial measurements may differ significantly from current measurements due to System 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 system provisions or applicable law or regulations. An analysis of the potential range of such future differences is beyond the scope of the request addressed here.

    Regarding Actuarial Standards of Practice 51, the risk assessment for Plan B may be affected by the addition of the Tier 2 conversion option to the extent that the higher contributions necessitated by its addition may not be covered.

    Actuarial Standard of Practice No. 56 provides guidance to actuaries when performing actuarial services with respect to designing, developing, selecting, modifying, using, reviewing, or evaluating models. Gallagher uses third-party software in the performance of annual actuarial valuations and projections.

    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.

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