Actuarial Fiscal Note
Retirement Systems Impacted by Legislation:
Teachers Retirement System / Public Employees Retirement System
FUND(S):
TRS 2601 / PERS 2510
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 provides that members of County Boards of Education shall be TRS members.
As drafted, the bill duplicates PERS membership and service credits under TRS and attempts to “double count” service in both TRS and PERS for County Boards of Education members.
Based on restrictions on duplicate participation in state systems, the bill as drafted attempts to provided duplicate benefits not allowable under state laws governing PERS and TRS. The Actuary has not attempted to price the duplication of service provided in the bill for this reason.
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 |
$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 Actuarial estimates:
The bill cannot be actuarially priced since it provides duplicate TRS benefits already provided under PERS for County Boards of Education members that are inconsistent with other provisions of state code.
Analysis of Impact on Public Pension Policy:
The bill provides that members of County Boards of Education shall be members of TRS with full past service credits. These credits would provide duplicate retirement service credits to those currently provided under PERS. It violates provisions of duplicate active coverage under two systems.
If the intent of the bill were to transfer County Boards of Education members from PERS to TRS, significant amendments would be required. Provisions would need to be added to include not less than:
1. Is the transfer from PERS to TRS voluntary or mandatory.
2. Establish a transfer date, and election period and procedures if voluntary.
3. Establish procedure to transfer assets from PERS to TRS for transferring members.
4. Establish reduced service credits under TRS at 75% to recognize the lower PERS member contribution rate of 4.5% in place of the TRS 6.0% rate.
5. Establish make-up contribution amounts, dates and procedures to allow the member to pay for the remaining 25% service credit in TRS.
6. Establish if future members of County Boards of Education are forced to become TRS members or if option is available to enter PERS or TRS.
7. Establish if loans will be available to pay make-up contributions for 25% service purchases.
After the above provisions are added to the bill, then an actuarial analysis of the impact on PERS and TRS can be made by the Board Actuary.
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
This bill provides that members of County Boards of Education shall be TRS members.
As drafted, the bill duplicates PERS membership and service credits under TRS and attempts to “double count” service in both TRS and PERS for County Boards of Education members.
Based on restrictions on duplicate participation in state systems, the bill as drafted attempts to provided duplicate benefits not allowable under state laws governing PERS and TRS. The Actuary has not attempted to price the duplication of service provided in the bill for this reason.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2009
Increase/Decrease
(use"-") |
2010
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
999,999,999 |
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):
The bill cannot be actuarially priced since it provides duplicate TRS benefits already provided under PERS for County Boards of Education members that are inconsistent with other provisions of state code.
Memorandum
The bill provides that members of County Boards of Education shall be members of TRS with full past service credits. These credits would provide duplicate retirement service credits to those currently provided under PERS. It violates provisions of duplicate active coverage under two systems.
If the intent of the bill were to transfer County Boards of Education members from PERS to TRS, significant amendments would be required. Provisions would need to be added to include not less than:
1. Is the transfer from PERS to TRS voluntary or mandatory.
2. Establish a transfer date, and election period and procedures if voluntary.
3. Establish procedure to transfer assets from PERS to TRS for transferring members.
4. Establish reduced service credits under TRS at 75% to recognize the lower PERS member contribution rate of 4.5% in place of the TRS 6.0% rate.
5. Establish make-up contribution amounts, dates and procedures to allow the member to pay for the remaining 25% service credit in TRS.
6. Establish if future members of County Boards of Education are forced to become TRS members or if option is available to enter PERS or TRS.
7. Establish if loans will be available to pay make-up contributions for 25% service purchases.
After the above provisions are added to the bill, then an actuarial analysis of the impact on PERS and TRS can be made by the Board Actuary.
Person submitting Fiscal Note: Harry W. Mandel, Board Actuary, MAAA, MSPA, EA
Email Address: harry.w.mandel@wv.gov