Fiscal/Actuarial Note
Date Requested:February 14, 2009
Time Requested:02:27 PM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
2009R1863 Introduced HB2338
CBD Subject: DISABILITY BENEFITS WAITING PERIOD REMOVED
Retirement Systems Impacted by Legislation:
Teachers Retirement System
FUND(S)
TRS 2601
Sources of Revenue
You must select Revenue Source(s)!
General Fund
Does the proposed legislation create:
You must make a selection(s)!
Neither Program nor Fund

    This Bill as drafted violates WV Statutes under 2005 Pension Reform Legislation. Section 18-7A-28e( c ) which prohibits any increase in benefits to active members. The bill would provide up to 6 additional months of disability retirement benefits to active members who retire under disability retirement in the future.
    
     See the Pension Committee chairman for details.
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 $999,999,999.00 $999,999,999.00 99.99 %
Normal Cost of System N/A $999,999,999.00 99.99 %
Past Service Liabilities $999,999,999.00 $999,999,999.00 99.99 %
Fiscal Year Past Service
Amortization Period Ends
N/A N/A
Explanation of above estimates
    The bill eliminates the disability retirement eligibility requirement that the member with 10 or more years of service must be disabled for 6 months prior to application for disability requirement. Additionally, members with 5 but less than 10 years of service would no longer be required to be absent from work due to disability for 6 months prior to application.
    
    The elimination of the 6 month waiting periods effectively allows members to receive 6 additional months of disability retirement benefits.
Analysis of Impact on Public Pension Policy
    The bill as drafted violates 2005 Pension Reform restrictions for improvements to active members benefits. The bill would need to amend 2005 Pension Reform restrictions to be allowable under current Statutes. Such amendment in the 2005 Pension Reform statutes would be contrary to public pension policy set by the Legislature in 2005 when Pension Reform was adopted by the Legislature.
Fiscal Note Summary

Explain in a clear and concise manner what effect this measure will have on costs and revenues of state government.

    This Bill as drafted violates WV Statutes under 2005 Pension Reform Legislation. Section 18-7A-28e( c ) which prohibits any increase in benefits to active members. The bill would provide up to 6 additional months of disability retirement benefits to active members who retire under disability retirement in the future.
    
     See the Pension Committee chairman for details.

Fiscal Note Detail
Show over-all effect in Item 1 and 2 and, in Item 3, give an explanation of Breakdown by fiscal year, including long-range effect.
Effect of Proposal Fiscal Year
2009
Increase/Decrease
(use"-")
2010
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 999999999 999999999 999999999
Personal Services
Current Expenses
Repairs and Alterations
Assets
Other
2. Estimated Total Revenues
3. Explanation of above estimates (including long-range effect):
    The bill eliminates the disability retirement eligibility requirement that the member with 10 or more years of service must be disabled for 6 months prior to application for disability requirement. Additionally, members with 5 but less than 10 years of service would no longer be required to be absent from work due to disability for 6 months prior to application.
    
    The elimination of the 6 month waiting periods effectively allows members to receive 6 additional months of disability retirement benefits.


Memorandum
    The bill as drafted violates 2005 Pension Reform restrictions for improvements to active members benefits. The bill would need to amend 2005 Pension Reform restrictions to be allowable under current Statutes. Such amendment in the 2005 Pension Reform statutes would be contrary to public pension policy set by the Legislature in 2005 when Pension Reform was adopted by the Legislature.
Person Submitting Fiscal Note
Harry W. Mandel, Board Actuary, MAAA, MSPA, EA
Email
harry.w.mandel@wv.gov