Actuarial Fiscal Note
Date Requested:February 16, 2022
Time Requested:04:35 PM |
| Agency: |
Consolidated Public Retirement Board |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2673 |
Comm. Sub. |
SB641 |
|
|---|
| CBD Subject: |
Retirement |
|---|
|
Retirement Systems Impacted by Legislation:
DSRS 2150
FUND(S):
Other Fund
Sources of Revenue:
Local Governments Creates New Expense
Legislation creates:
DSRS
Actuarial Note Summary
Impact this measure will have on the liabilities and contributions associated with the retirement system(s).
Committee Substitute for SB 641 removes the 13.0% limit on the DSRS employer contribution rate and replaces the limit with the amount set actuarially by the Consolidated Public Retirement Board (CPRB). This bill will allow for proper funding of the plan.
The bill does not increase benefits payable under the Plan and therefore has no impact on either the employer Normal Cost or the Actuarial Accrued Liability of the Plan.
The bill could result in an increase in employer contributions above 13.0% of payroll if actuarially necessary and subject to Board action. Such action would represent an increase in the funding incidence and not increased costs to DSRS.
From the July 1, 2021, funding valuation for DSRS, each 1% of payroll currently represents approximately $623,000 in annual employer contributions.
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 |
$0.00 |
0.00 % |
| Normal Cost of System |
N/A |
$0.00 |
0.00 % |
| 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:
The bill does not provide for any additional benefits under the Plan. The DSRS employer Normal Cost and the DSRS Actuarial Accrued Liability are not impacted by the Bill.
Analysis of Impact on Public Pension Policy:
The change is required to assure the adequate long-term funding for DSRS. Without the change, the Board does not have the ability to assure the proper long- term funding of the Plan under the current DSRS funding policy for the employer to contribute no less than the annual employer Normal Cost plus the amount necessary to amortize the Unfunded Actuarial Accrued Liability (UAAL) by June 30, 2029, on a level-dollar basis.
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
DSRS consists of county governments within West Virginia and does not cover any state employees. Funding for DSRS is through member contributions of 8.50% of payroll and the employer contribution rate set by the CPRB determined to be no less than the annual DSRS employer Normal Cost plus the amount necessary to amortize the DSRS Unfunded Actuarial Accrued Liability (UAAL) by June 30, 2029, on a level-dollar basis. Currently the DSRS employer contribution rate is capped at 13.0% of payroll, however, this bill would remove this cap.
DSRS does not impact the costs or revenues of state government.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2022
Increase/Decrease
(use"-") |
2023
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above Fiscal Note estimates (include possible long-range effect):
DSRS consists of county governments within West Virginia and does not cover any state employees. Funding for DSRS is through member contributions of 8.50% of payroll and the employer contribution rate set by the CPRB determined to be no less than the annual DSRS employer Normal Cost plus the amount necessary to amortize the DSRS Unfunded Actuarial Accrued Liability (UAAL) by June 30, 2029, on a level-dollar basis. Currently the DSRS employer contribution rate is capped at 13.0% of payroll, however, this bill would remove this cap.
DSRS does not impact the costs or revenues of state government.
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 DSRS, 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.
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