Actuarial Fiscal Note

Date Requested:February 13, 2026
Time Requested:01:09 PM

3425	Introduced	HB5088
Agency:	Consolidated Public Retirement Board
CBD Number:	Version:	Bill Number:	Resolution Number:
CBD Subject:	Natural Resources; Retirement

Retirement Systems Impacted by Legislation:

NRPORS 2397

FUND(S):

Special Fund

Sources of Revenue:

Creates New Expense

Legislation creates:

NRPORS

Actuarial Note Summary

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

    The purpose of HB 5088 is to modify the definition of “Accrued Benefit” in NRPORS as follows: “members who retire after July 1, 2026, shall have an accrued benefit of two and three-fourths percent of the member’s final average salary multiplied by the member’s years of credited service”. Finally, the bill provides an additional NRPORS employer contribution of $4,250,000 for FY 2027 in addition to the NPRORS annual recommended employer contribution for FY 2027.

    To analyze the impact from increasing the benefit multiplier to 2.75% for all years of credited service and providing an additional employer contribution of $4,250,000 for FY 2027, we perform two deterministic asset/liability projection scenarios.

    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 NRPORS.

    Scenario 1 is the baseline projection scenario which uses the current assumptions and plan provisions from the July 1, 2025, funding valuation for NRPORS, without including the provisions from the bill. In this scenario no additional contributions are made to the plan, and the benefit multiplier is not increased to 2.75% for all credited service.

    Scenario 2 is the projection scenario that incorporates the bill. This scenario also uses the current assumptions from the July 1, 2025, funding valuation for NRPORS. However, anticipating fewer retirements prior to the benefit multiplier increase in July 2026, the expected experience is modified to allow no retirements for Calendar Year 2025 and twice the current retirement rates for Calendar Year 2026. The plan provisions used in Scenario 2 are the same plan provisions from the July 1, 2025, funding valuation for NRPORS, except, retirements after July 1, 2026, have a benefit multiplier of 2.75% applied to all credited service. Under scenario 2, we assume an additional contribution of $4,250,000 for FY 2027 is made above and beyond the employer contribution amount actuarially set by the CPRB.

    Measured as of July 1, 2025, the impact from the benefit multiplier increase to 2.75% applied to all credited service and the additional employer contribution of $4,250,000 for FY 2027 would increase the unfunded actuarial accrued liability (UAAL) for NRPORS by approximately $2.688 million and amortizing this amount by June 30, 2051 (26 years from July 1, 2025) on a level dollar basis would increase the annual recommended employer contribution for NRPORS by approximately $225,000 or 2.60% of FY 2026 NRPORS payroll .

    Moreover, these changes would increase the NRPORS employer normal cost by about $122,000 per year, or 1.41% of FY 2026 NRPORS payroll. Therefore, measured as of July 1, 2025, the total FY 2026 NRPORS annual recommended employer contribution would increase by approximately $347,000, or 4.01% of NRPORS payroll, from these changes.

    The UAAL from scenario 1 is expected to increase to $11.032 million as of July 1, 2025, and then orderly decrease to $7.603 million as of July 1, 2034. The actuarially recommended employer contribution rate ranges from 18.8% of payroll for FY 2026 and then orderly decreases to 15.9% of payroll, or $1.698 million for FY 2035.

    The UAAL from scenario 2 is expected to increase to $13.720 million as of July 1, 2025, and then orderly decrease to $6.796 million as of July 1, 2034. The actuarially recommended employer contribution rate ranges from 22.8% of payroll for FY 2026 and then orderly decreases to 16.6% of payroll, or $1.782 million for FY 2035. However, under scenario 2, an additional employer contribution of $4,250,000 is made for FY 2027.

    Comparing the annual recommended employer contribution for NRPORS, under the two scenarios outlined above, we see that in FY 2035 the difference is expected to be around $84,000. This small amount indicates that the enhanced benefit multiplier is mostly paid for through the additional contribution of $4,250,000 for FY 2027.

    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 HB 5088 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	$2,688,000.00	$347,000.00	4.01 %
Normal Cost of System	N/A	$122,000.00	1.41 %
Past Service Liabilities	$2,688,000.00	$225,000.00	2.60 %
Fiscal Year Past Service Amortization Period Ends	N/A	2051	N/A

Explanation of above Actuarial estimates:

    Measured as of July 1, 2025, the impact from the benefit multiplier increase to 2.75% applied to all credited service and the additional employer contribution of $4,250,000 for FY 2027 would increase the unfunded actuarial accrued liability (UAAL) for NRPORS by approximately $2.688 million and amortizing this amount by June 30, 2051 (26 years from July 1, 2025) on a level dollar basis would increase the annual recommended employer contribution for NRPORS by approximately $225,000 or 2.60% of FY 2026 NRPORS payroll .

    Moreover, these changes would increase the NRPORS employer normal cost by about $122,000 per year, or 1.41% of FY 2026 NRPORS payroll. Therefore, measured as of July 1, 2025, the total FY 2026 NRPORS annual recommended employer contribution would increase by approximately $347,000, or 4.01% of NRPORS payroll, from these changes.

Analysis of Impact on Public Pension Policy:

    To analyze the impact from increasing the benefit multiplier to 2.75% for all years of credited service and providing an additional employer contribution of $4,250,000 for FY 2027, we perform two deterministic asset/liability projection scenarios.

    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 NRPORS.

    Scenario 1 is the baseline projection scenario which uses the current assumptions and plan provisions from the July 1, 2025, funding valuation for NRPORS, without including the provisions from the bill. In this scenario no additional contributions are made to the plan, and the benefit multiplier is not increased to 2.75% for all credited service.

    Scenario 2 is the projection scenario that incorporates the bill. This scenario also uses the current assumptions from the July 1, 2025, funding valuation for NRPORS. However, anticipating fewer retirements prior to the benefit multiplier increase in July 2026, the expected experience is modified to allow no retirements for Calendar Year 2025 and twice the current retirement rates for Calendar Year 2026. The plan provisions used in Scenario 2 are the same plan provisions from the July 1, 2025, funding valuation for NRPORS, except, retirements after July 1, 2026, have a benefit multiplier of 2.75% applied to all credited service. Under scenario 2, we assume an additional contribution of $4,250,000 for FY 2027 is made above and beyond the employer contribution amount actuarially set by the CPRB.

    Measured as of July 1, 2025, the impact from the benefit multiplier increase to 2.75% applied to all credited service and the additional employer contribution of $4,250,000 for FY 2027 would increase the unfunded actuarial accrued liability (UAAL) for NRPORS by approximately $2.688 million and amortizing this amount by June 30, 2051 (26 years from July 1, 2025) on a level dollar basis would increase the annual recommended employer contribution for NRPORS by approximately $225,000 or 2.60% of FY 2026 NRPORS payroll .

    Moreover, these changes would increase the NRPORS employer normal cost by about $122,000 per year, or 1.41% of FY 2026 NRPORS payroll. Therefore, measured as of July 1, 2025, the total FY 2026 NRPORS annual recommended employer contribution would increase by approximately $347,000, or 4.01% of NRPORS payroll, from these changes.

    The UAAL from scenario 1 is expected to increase to $11.032 million as of July 1, 2025, and then orderly decrease to $7.603 million as of July 1, 2034. The actuarially recommended employer contribution rate ranges from 18.8% of payroll for FY 2026 and then orderly decreases to 15.9% of payroll, or $1.698 million for FY 2035.

    The UAAL from scenario 2 is expected to increase to $13.720 million as of July 1, 2025, and then orderly decrease to $6.796 million as of July 1, 2034. The actuarially recommended employer contribution rate ranges from 22.8% of payroll for FY 2026 and then orderly decreases to 16.6% of payroll, or $1.782 million for FY 2035. However, under scenario 2, an additional employer contribution of $4,250,000 is made for FY 2027.

    Comparing the annual recommended employer contribution for NRPORS, under the two scenarios outlined above, we see that in FY 2035 the difference is expected to be around $84,000. This small amount indicates that the enhanced benefit multiplier is mostly paid for through the additional contribution of $4,250,000 for FY 2027.

    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 HB 5088 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	372,000	4,659,000	84,000
Personal Services	0	0	0
Current Expenses	25,000	0	0
Repairs and Alterations	0	0	0
Assets	0	0	0
Other	347,000	4,659,000	84,000
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 NRPORS annual recommended employer cost of $347,000, or 4.01% of payroll for FY 2026, there is a one-time $25,000 expense to set up the administrative software to increase the benefit multiplier to 2.75% for all credited service for retirements after July 1, 2026. Note for FY 2027, there is an additional employer contribution of $4,250,000, in addition to the NRPORS annual recommended contribution.

    To analyze the impact from increasing the benefit multiplier to 2.75% for all years of credited service and providing an additional employer contribution of $4,250,000 for FY 2027, we perform two deterministic asset/liability projection scenarios.

    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 NRPORS.

    Scenario 1 is the baseline projection scenario which uses the current assumptions and plan provisions from the July 1, 2025, funding valuation for NRPORS, without including the provisions from the bill. In this scenario no additional contributions are made to the plan, and the benefit multiplier is not increased to 2.75% for all credited service.

    Scenario 2 is the projection scenario that incorporates the bill. This scenario also uses the current assumptions from the July 1, 2025, funding valuation for NRPORS. However, anticipating fewer retirements prior to the benefit multiplier increase in July 2026, the expected experience is modified to allow no retirements for Calendar Year 2025 and twice the current retirement rates for Calendar Year 2026. The plan provisions used in Scenario 2 are the same plan provisions from the July 1, 2025, funding valuation for NRPORS, except, retirements after July 1, 2026, have a benefit multiplier of 2.75% applied to all credited service. Under scenario 2, we assume an additional contribution of $4,250,000 for FY 2027 is made above and beyond the employer contribution amount actuarially set by the CPRB.

    Measured as of July 1, 2025, the impact from the benefit multiplier increase to 2.75% applied to all credited service and the additional employer contribution of $4,250,000 for FY 2027 would increase the unfunded actuarial accrued liability (UAAL) for NRPORS by approximately $2.688 million and amortizing this amount by June 30, 2051 (26 years from July 1, 2025) on a level dollar basis would increase the annual recommended employer contribution for NRPORS by approximately $225,000 or 2.60% of FY 2026 NRPORS payroll .




    Moreover, these changes would increase the NRPORS employer normal cost by about $122,000 per year, or 1.41% of FY 2026 NRPORS payroll. Therefore, measured as of July 1, 2025, the total FY 2026 NRPORS annual recommended employer contribution would increase by approximately $347,000, or 4.01% of NRPORS payroll, from these changes.

    The UAAL from scenario 1 is expected to increase to $11.032 million as of July 1, 2025, and then orderly decrease to $7.603 million as of July 1, 2034. The actuarially recommended employer contribution rate ranges from 18.8% of payroll for FY 2026 and then orderly decreases to 15.9% of payroll, or $1.698 million for FY 2035.

    The UAAL from scenario 2 is expected to increase to $13.720 million as of July 1, 2025, and then orderly decrease to $6.796 million as of July 1, 2034. The actuarially recommended employer contribution rate ranges from 22.8% of payroll for FY 2026 and then orderly decreases to 16.6% of payroll, or $1.782 million for FY 2035. However, under scenario 2, an additional employer contribution of $4,250,000 is made for FY 2027.

    Comparing the annual recommended employer contribution for NRPORS, under the two scenarios outlined above, we see that in FY 2035 the difference is expected to be around $84,000. This small amount indicates that the enhanced benefit multiplier is mostly paid for through the additional contribution of $4,250,000 for FY 2027.

    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 HB 5088 may be different from the expected path results presented in this actuarial/fiscal note.

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 NRPORS, 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 NRPORS may be affected by the benefit multiplier increase 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. The CPRB 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