Fiscal/Actuarial Note
Date Requested:January 13, 2012
Time Requested:12:48 PM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
2011R2546 Carry Over HB3097
CBD Subject: EX-US MILITARY PERSONNEL
Retirement Systems Impacted by Legislation:
Public Employees Retirement System
FUND(S)
PERS 2510
Sources of Revenue
You must select Revenue Source(s)!
General Fund,Other Fund Local governments in PERS
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 5-10-22h(c) prohibits increases in benefits to active members if PERS is less than 85% funded, determined in the last actuarial valuation for PERS. The funded percentage of PERS in the latest actuarial valuation is less than the 85% requirement for active benefit improvements.
    
    See the Pension Committee chairman for details.
    
    (Note: 9's entered for costs indicate there are costs that were not calculated.)
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 FY2022 N/A
Explanation of above estimates
    This Bill as drafted violates WV Statutes under 2005 Pension Reform Legislation.
    
    A full actuarial determination of the costs of the benefits provided under the bill has not been completed for this reason. Costs are estimated to be significant.
Analysis of Impact on Public Pension Policy
    The bill violates 2005 Pension Reform restriction on active member benefit increases.
    
    The bill expands free military service credits by removing the “armed conflict” requirement in current statutes. This is a change in public pension policy previously adopted by the West Virginia legislature.
    
    Cost for the increased benefits would result in a significant increase in the employer contribution percentage required from all PERS employers. Under PERS funding, the additional military benefits would be funded by PERS employers only, both state agencies and local governments.
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 5-10-22h(c) prohibits increases in benefits to active members if PERS is less than 85% funded, determined in the last actuarial valuation for PERS. The funded percentage of PERS in the latest actuarial valuation is less than the 85% requirement for active benefit improvements.
    
    See the Pension Committee chairman for details.
    
    (Note: 9's entered for costs indicate there are costs that were not calculated.)

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
2012
Increase/Decrease
(use"-")
2013
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):
    This Bill as drafted violates WV Statutes under 2005 Pension Reform Legislation.
    
    A full actuarial determination of the costs of the benefits provided under the bill has not been completed for this reason. Costs are estimated to be significant.


Memorandum
    The bill violates 2005 Pension Reform restriction on active member benefit increases.
    
    The bill expands free military service credits by removing the “armed conflict” requirement in current statutes. This is a change in public pension policy previously adopted by the West Virginia legislature.
    
    Cost for the increased benefits would result in a significant increase in the employer contribution percentage required from all PERS employers. Under PERS funding, the additional military benefits would be funded by PERS employers only, both state agencies and local governments.
Person Submitting Fiscal Note
Harry W. Mandel, Board Actuary, MAAA,MSPA,EA
Email
Harry.W.Mandel@wv.gov