Actuarial Fiscal Note

Date Requested:May 30, 2017
Time Requested:03:49 PM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
4016 Comm. Sub. HB106
CBD Subject: Governor -- Bills Requested By, Legislature, State Personnel

Retirement Systems Impacted by Legislation:

PERS, TRS, TDc, SPTA, SPTB

FUND(S):

PERS 2501, TRS 2600, TDC 2192, SPTA 2392, SPTB 2393

Sources of Revenue:

General Fund

Legislation creates:

Neither Program nor Fund



Actuarial Note Summary

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


    The bill as proposed would allow furlough of certain non-essential state employees in the event that the governor does not approve or the Legislature does not pass a budget prior to the start of a given Fiscal Year. For purposes of retirement, the bill outlines that the days, part of days, or weeks for which employees are furloughed will count as days employed or days worked for purposes of calculating retirement eligibility and state service time.
    
    Note that it is the understanding of the CPRB that the intent of a forthcoming strike-and-insert amendment to the bill would provide that employer and employee contributions be made for the furlough period. Costs presented in the Actuarial/Fiscal Note assume that such contributions would be made to the plan.
    



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 0 N/A


Explanation of above Actuarial estimates:


    Assuming that employer and employee contributions are made to the plans for periods of furlough, the provisions of the bill do not change the Unfunded Actuarial Accrued Liability or the Normal Cost of the plans.

Analysis of Impact on Public Pension Policy:


    The bill in its current form does not address any employee or employer contributions to be made to the plans for periods of furlough. The CPRB’s understanding is that a forthcoming strike-and-insert amendment will provide for employee and employer contributions to be made to the plans, and so this Actuarial/Fiscal Note is provided assuming such contributions will be made on the basis of each member’s normal rate of pay and normal hours/days worked.



Fiscal Note Summary


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


    The bill as proposed would allow furlough of certain non-essential state employees in the event that the governor does not approve or the Legislature does not pass a budget prior to the start of a given Fiscal Year. For purposes of retirement, the bill outlines that the days, part of days, or weeks for which employees are furloughed will count as days employed or days worked for purposes of calculating retirement eligibility and state service time.
    
    Note that it is the understanding of the CPRB that the intent of a forthcoming strike-and-insert amendment to the bill would provide that employer and employee contributions be made for the furlough period. Costs presented in the Actuarial/Fiscal Note assume that such contributions would be made to the plan.
    
    While not a direct cost to the plans, the CPRB would incur significant administrative costs in implementing “furlough service” into our administrative procedures and pension administration computer system.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2017
Increase/Decrease
(use"-")
2018
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 151,522 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 151,522 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):


    If the bill were passed, the CPRB would incur significant administrative costs in implementing “furlough service” into our administrative procedures and pension administration computer system.



Memorandum


    The bill in its current form does not address any employee or employer contributions to be made to the plans for periods of furlough. The CPRB’s understanding is that a forthcoming strike-and-insert amendment will provide for employee and employer contributions to be made to the plans, and so this Actuarial/Fiscal Note is provided assuming such contributions will be made on the basis of each member’s normal rate of pay and normal hours/days worked.



    Person submitting Fiscal Note: Melody Bailey, Actuarial Analyst, WVCPRB
    Email Address: melody.j.bailey@wv.gov