FISCAL NOTE

Date Requested: March 25, 2021
Time Requested: 09:25 AM
Agency: Division of Regulatory and Fiscal Affairs
CBD Number: Version: Bill Number: Resolution Number:
2607 Comm. Sub2 SB275
CBD Subject: Courts


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Creates New Expense, Increases Existing Expenses, Decreases Existing Expenses



Fiscal Note Summary


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


The Engrossed Committee Substitute for the Committee Substitute of Senate Bill 275 would create the Intermediate Court of Appeals under the Supreme Court of Appeals effective July 1, 2022. It transfers jurisdiction of all worker’s compensation claims from the Office of Judges to the Worker’s Compensation Board, dissolves the Office of Judges, and provides for the Board of Review to take on those responsibilities with increased staffing.

In creating a new level of the Judicial Branch, General Revenue funds would be required for personnel compensation and benefits for one panel consisting of three judges, the staff of the Intermediate Court of Appeals, and general ongoing expenses including office space and travel expenses. Other costs for the court include technology enhancements, furniture, and equipment for these offices. There is also a cost related to the Board of Review, as it expands to handle their increased responsibilities. In turn, there is also a cost savings associated with the elimination of the Office of Judges. In total, we project that this version of Senate Bill 275 would cost the state $3,990,787.83 in Fiscal Year 2023 and $2,490,987.83 in each fiscal year thereafter.





Fiscal Note Detail


Effect of Proposal Fiscal Year
2021
Increase/Decrease
(use"-")
2022
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 2,490,988
Personal Services 0 0 4,781,854
Current Expenses 0 0 1,209,134
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 -3,500,000
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


The Engrossed Committee Substitute for the Committee Substitute of Senate Bill 275 would, on net, increase costs to the state beginning in FY 2023 and for each fiscal year thereafter. There are three primary drivers of the overall changes in costs: i) the introduction of the Intermediate Court of Appeals (ICA); ii) the elimination of the Office of Judges (OOJ); and iii) the expansion of the Board of Review (BOR). In total, we expect Senate Bill 275 to generate additional costs of approximately $4.0 million in Fiscal Year 2023 and $2.5 million per fiscal year thereafter.

Beginning with the ICA, additional costs in FY 2023 and each fiscal year thereafter include personal services for three judges and an anticipation of thirty staff members on the Intermediate Court of Appeals, as per information received from the Supreme Court of Appeals (SCA). The three judges are provided an annual salary of $142,500 per year, for a total cost of $585,675 per fiscal year once an estimate of an additional 30 percent for benefits and 7 percent for the Judges’ Retirement System, are included. Under this version of the bill, the Supreme Court of Appeals estimated the need for thirty full-time employees, including 17 Judicial Attorneys with an average salary of $85,000; 3 Upper Management Clerks with an average salary of $106,500; 8 Clerical and Support Staff with an average salary of $48,750; and 2 Security Personnel with a base salary of $35,000; the summation of these staff personnel costs yield $2,891,850 per fiscal year. These salaries are based on comparable current existing positions in the Judicial Branch. We also add 30 percent to the base salaries to cover benefits.

For Current Expenses, we assume that proceedings of the ICA will be conducted in existing facilities at no additional cost to the state. Office space, on the other hand, would be required for the ICA as the SCA’s currently leased space would not be able to fit their needs. The SCA currently leases 37,513 square feet of commercial space in Charleston for its Administration Offices consisting of approximately 110 FTEs at a blended rate of $17.28 per square foot per year. This yields a rate of 341 square feet per FTE, and with a total of 33 FTEs in the ICA (3 judges + 30 staff) that would necessitate an additional 11,253 square feet of office space. At their current rates this would be an additional cost per fiscal year of $191,451.84 per fiscal year.

We also include $349,664.70 per fiscal year in Current Expenses. Using the Fiscal Year 2021 budget for the SCA, we note $15,170,000 in relevant Current Expenses ($19,910,000 less $1,300,000 in Rent Expenses, $2,800,000 in Attorney Legal Service Payments, $1,190,000 in Jury Fees, and $750,000 in Court Reporter Fees), $1,950,000 for Equipment, and $200,000 for Computer Software. With 1,512 FTEs, this works out to $10,595.90 per FTE. Multiplying by the 33 FTEs for the ICA that we describe in the above paragraph (3 judges + 30 FTE in staff) yields $349,664.70. Guardian Ad Litem fees for Family Court Appeals are also included at a cost of $210,000 per fiscal year. The SCA approximates 70 such cases per year and the maximum allowance for each case is $3,000.

We assume a first-year startup cost of $642,800 to cover the technology (computers, telecommunications, networking, and data storage), furniture and fixtures, office equipment, and security system (cameras and access control) needs for the ICA to begin its operations. After the first year, we assume that the current expenses in the above paragraph would sufficiently meet the ongoing expense needs of the ICA.

For travel costs, $288,122 per fiscal year is assumed. This value could change based on how often the ICA hears cases in Charleston versus how often it hears cases in existing facilities elsewhere throughout the state. This figure is based on 72 travel days per year to geographically diverse locations across the state for 12 personnel (three judges, six staff, two security personnel, and one clerk) at current standard mileage and GSA food and lodging rates.

The Office of Judges will continue operation until September 30, 2022, when every appeal to that office must be decided or disposed, per S.B. 275. Thus, we project no effects on their FY 2022 costs but expect their operations to cost one-fourth of this amount in FY 2023 as they will only operate for one quarter of the Fiscal Year (July 1 through September 30). Thus, we expect savings in FY 2023 of three-fourths their FY 2022 costs ($2,625,000) and savings of their entire costs ($3,500,000) in subsequent fiscal years. For simplicity, we list all of these cost savings as “Other”. The Board of Review will see increased workload due to the transfer of duties from the Office of Judges, and an increased cost is expected.

The Office of the Insurance Commissioner (OIC) anticipates having to hire thirteen additional employees (totaling 24) to meet the demand of the new workload, and per S.B. 275, will require two additional Board of Review Members with a maximum salary of $125,000. The OIC requested a quote from the Real Estate Division for a move to a larger facility. The area is smaller and less expensive than the current OOJ space, but larger than the current BOR space. Additional personal costs associated with the increased staffing levels the BOR reports are necessary would total $1,304,329.24 per fiscal year, beginning in FY 2023. Their current expenses, including rental of the new space, technology requirements, office supplies, and overhead costs, would total $339,920.64; this represents an increase of $169,895.05 per fiscal year over their current expenses. Thus, using the OIC’s estimates for staffing needs and the Real Estate Division’s quote for facility rental would cause the BOR’s total costs to increase from $1,025,105.17 in FY 2022 to $2,499,329.46 in FY 2023 and each fiscal year thereafter, a total increase of $1,474,224.29.





Memorandum


The rental costs we estimate for the ICA are based on their current facilities in Charleston. Should the ICA seek space elsewhere or should market conditions change, these costs could also change. The SCA indicated that renting additional floors in their current Kanawha City location would be a potential option, and one that the Court would closely consider, but that is subject to availability and market conditions.

Travel costs would be affected should the number of travel days be different from 72 or should the standard mileage and GSA food and lodging rates be adjusted.

Some previous iterations of proposals for an Intermediate Court of Appeals provided the Court with jurisdiction over criminal judgements. S.B. 275 does not provide the Intermediate Court of Appeals over such judgements, and therefore we have confirmed with the Public Defender’s Office that their cost estimate from this bill is zero.

We assume no additional costs would incur from the Attorney General’s Office as a result of S.B. 275, again, because S.B. 275 does not provide jurisdiction for the ICA over such judgements.

We have deferred to the expertise of the relevant agencies regarding the staffing levels that would be appropriate for their new roles given their knowledge of caseloads and processes that they anticipate would occur should S.B. 275 become effective.

We would like to thank the Supreme Court of Appeals, the Office of the Insurance Commissioner, and the Public Defender’s Office for timely responses to our requests for information.





    Person submitting Fiscal Note: Peter Shirley
    Email Address: peter.shirley@wvlegislature.gov