FISCAL NOTE

Date Requested: February 12, 2026
Time Requested: 05:30 PM

4057	Introduced	SB930
Agency:	Municipal Pensions Oversight Board
CBD Number:	Version:	Bill Number:	Resolution Number:
CBD Subject:	Municipalities; Retirement

FUND(S):

Special Revenue

Sources of Revenue:

Special Fund

Legislation creates:

Increases Existing Expenses

Fiscal Note Summary

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

The MPOB expects that the firm contracted by the MPOB for actuarial services would need to re-tool existing processes to determine the effect of the changes on the actuarial valuation of each of the 53 plans for which the MPOB provides oversight. This increased cost would only appear in the year after implementation of the change while the actuary completed the annual actuarial valuations using the new COLA assumptions.

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	0	20,000	0
Personal Services	0	0	0
Current Expenses	0	0	0
Repairs and Alterations	0	0	0
Assets	0	0	0
Other	0	20,000	0
2. Estimated Total Revenues	0	0	0

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

Memorandum

The proposed increase to the Cost of Living Allowance (COLA) threshold for retirees and beneficiaries of the Municipal Policemen’s and Municipal Firemen’s Pension and Relief Funds would have a minimal direct fiscal impact on the Municipal Pension Oversight Board (MPOB). Costs to the MPOB would likely be limited to a single year of increased actuarial service fees to re-tool valuation processes for the 53 overseen plans. Under the proposed legislation, the portion of a retiree’s pension eligible for COLA would triple from $15,000 to $45,000. While current actuarial analysis accounts for the cost of future increases, the bill’s current construction implies a retrospective application that has not been estimated. In the aggregate, these future increases are projected to increase the Actuarial Accrued Liability (AAL) of all plans by approximately 10.1%, or $151 million, resulting in an average decrease in funded status of 4.4%. Additionally, the annual normal cost required from municipalities is expected to rise by approximately $2.5 million. This represents an average increase of 17% per pension fund, with specific impacts ranging from 0% to 19.8%. Because WV Code §8-22-20(h) requires plan change deficiencies to be amortized over closed five-year periods, the combined increase in AAL and normal costs would result in an additional $38.2 million annual obligation for municipalities over the next five years. It is important to note that the Alternative funding policy used by some cities does not follow standard actuarial principles, as contributions are capped at 107% of the previous year’s amount rather than being actuarially determined. While these cities would not face an immediate spike in required contributions, the COLA enhancement would require them to make payments for more years to reach full funding, in some cases many more years. Ultimately, Increasing the COLA threshold would subject the plans to a higher degree of longevity risk as a larger percentage of the total benefit would be indexed to inflation and, consequently, any deviations from assumed life expectancy would be magnified. Further, the plan’s exposure to market/economic risk would increase since the plan could experience greater liability fluctuation if inflation and COLA experience do not match the actuarial assumptions. Finally, cash flow and liquidity needs may shift if plans were to pay larger COLAs than they would have otherwise paid under the current plan provisions.

Person submitting Fiscal Note: Matthew D. Pauley, CFO
Email Address: matthew.d.pauley@wv.gov