Fiscal/Actuarial Note
Date Requested:April 02, 2009
Time Requested:02:00 PM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
Comm. Sub. HB2870
CBD Subject: DEADLINE OF "BUYBACK"
Retirement Systems Impacted by Legislation:
Teachers Retirement System
FUND(S)
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

    The CommSub provides that any member who requested an audited calculation of their Make-up contribution by the effective date of this legislation shall have 90 days from the date that the WVCPRB supplies such audited Make-up contribution amount in writing to the member to complete the purchase. This extension does apply to loan applications to TRS to fund the purchase. The completion of the purchase during the 90 day period shall be treated as if it were completed by June 30, 2009. It is noted that members that have already received their audited calculation before April 1, 2009 or those who have not requested a calculation by the effective date of this legislation shall have until June 30, 2009 to complete their purchase and that no additional extension is granted.
    
    Based on the number of members potentially impacted by the 90 day election period, additional costs are estimated to be between $75,000 and $125,000. The median amount of $100,000 is the actuarially expected amount. This amount represents the expected actuarial interest loss due to the delay of the final deposit from June 30, 2009 through the end of the 90 day extended election period for those impacted by the extension.
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 $100,000.00 $14,000.00 0.00 %
Normal Cost of System N/A $0.00 0.00 %
Past Service Liabilities $100,000.00 $14,000.00 0.00 %
Fiscal Year Past Service
Amortization Period Ends
N/A FY2019 N/A
Explanation of above estimates
    The increase in Unfunded Actuarial Accrued Liabilities results from a loss of actuarial interest at 7.5% annually for the members impacted by the 90 day extension period ending after June 30, 2009. Costs have been estimated based on approximately 20% of the membership having an extension past June 30, 2009 with that extension averaging 30 days.
Analysis of Impact on Public Pension Policy
    The Bill provides a minor administrative based benefit increase under TRS normally prohibited under 2005 Pension Reform statutes. The CommSub provides specific language exempting the bill from the 2005 Pension Reform Statutes.
    
    The financial impact of the CommSub is not significant to the actuarial financial results for TRS.
Fiscal Note Summary

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

    The CommSub provides that any member who requested an audited calculation of their Make-up contribution by the effective date of this legislation shall have 90 days from the date that the WVCPRB supplies such audited Make-up contribution amount in writing to the member to complete the purchase. This extension does apply to loan applications to TRS to fund the purchase. The completion of the purchase during the 90 day period shall be treated as if it were completed by June 30, 2009. It is noted that members that have already received their audited calculation before April 1, 2009 or those who have not requested a calculation by the effective date of this legislation shall have until June 30, 2009 to complete their purchase and that no additional extension is granted.
    
    Based on the number of members potentially impacted by the 90 day election period, additional costs are estimated to be between $75,000 and $125,000. The median amount of $100,000 is the actuarially expected amount. This amount represents the expected actuarial interest loss due to the delay of the final deposit from June 30, 2009 through the end of the 90 day extended election period for those impacted by the extension.

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 14000 14000
Personal Services
Current Expenses
Repairs and Alterations
Assets
Other
2. Estimated Total Revenues
3. Explanation of above estimates (including long-range effect):
    The increase in Unfunded Actuarial Accrued Liabilities results from a loss of actuarial interest at 7.5% annually for the members impacted by the 90 day extension period ending after June 30, 2009. Costs have been estimated based on approximately 20% of the membership having an extension past June 30, 2009 with that extension averaging 30 days.


Memorandum
    The Bill provides a minor administrative based benefit increase under TRS normally prohibited under 2005 Pension Reform statutes. The CommSub provides specific language exempting the bill from the 2005 Pension Reform Statutes.
    
    The financial impact of the CommSub is not significant to the actuarial financial results for TRS.
Person Submitting Fiscal Note
Harry W. Mandel, Board Actuary, MAAA, MSPA
Email
harry.w.mandel@wv.gov