Actuarial Fiscal Note

Retirement Systems Impacted by Legislation:

Judges Retirement System

FUND(S):

2140

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).

    This Bill as drafted violates WV Statutes under 2005 Pension Reform Legislation. Section 51-9-6c ( c )& (d) of the Judges Retirement System (JRS) prohibits increases to active members’ benefit provisions until July 1, 2019, regardless of the amount of the increase. See the Pension Committee chairman for details.

    This Bill would result in an increased in WV State costs for JRS if enacted. Costs were not calculated due to the Pension Reform restriction.

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	$999,999.00	$999,999.00	9.00 %
Normal Cost of System	N/A	$999,999.00	9.00 %
Past Service Liabilities	$999,999.00	$999,999.00	9.00 %
Fiscal Year Past Service Amortization Period Ends	N/A		N/A

Explanation of above Actuarial estimates:

    Due to Pension Reform restrictions the provisions of this Bill were not priced.

    The bill would increase costs due to:

    1. Ending Member Contributions to JRS upon retirement eligibility. This would require an offsetting increase in the Employer Contribution to JRS.

    2. Recognition of time service as an elected or appointed Municipal Judge. Currently, only service for judges of a court of record are recognized. By allowing Municipal Judge service under JRS, all current and future covered judges with prior Municipal Judge service would receive service credits toward retirement without any previous contributions for such service. This would significantly increase the employer contribution requirement for JRS.

Analysis of Impact on Public Pension Policy:

    Currently, all other systems require those eligible for retirement to continue to pay member contributions until actual retirement. JRS would be the only system to no longer have this requirement. Equity issues could result in a significant increase in the employer costs of other systems if a similar provision were adopted in those plans.

    Recognition of Municipal Judge service provides service credits not currently covered under JRS and expands coverage of service without payment of contributions.

    To be considered, Pension Reform legislation would need to be amended to allow for the increases in active member benefits. Such amendment could adversely impact the credit rating of the State of West Virginia.

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	2007 Increase/Decrease (use"-")	2008 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	0	999,999	999,999
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):

Memorandum

Person submitting Fiscal Note: Harry W. Mandel, MAAA, MSPA, Board Actuary
Email Address: HMandel@wvadmin.gov