Fiscal/Actuarial Note
Date Requested:February 14, 2012
Time Requested:04:16 PM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
2012R1944 Comm. Sub2. SB486
CBD Subject: JUDICIAL RETIREMENT SYSTEM
Retirement Systems Impacted by Legislation:
Judges Retirement System
FUND(S)
JRS 2140
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 Committee Substitute for the Committee Substitute for Senate Bill 486 reduces the Member Contribution requirement for all judges from 10.5% down to 7% effective July 1, 2012.
    
    Future years Member Contributions may be adjusted by the CPRB Board based on the Actuarial Valuation for JRS with the recommendation of the Actuary. The Member Contribution range shall not be less than 7% nor more than 10.5% for years starting July 1, 2013.
    
    There is no impact on the Actuarial Accrued Liabilities of JRS.
    
    The JRS employer Normal Cost increases by 3.5% of payroll due to the reduction in the Member Contribution rate to 7%. The increase in the FY2013 contribution based on mid year funding is $324,000.
    
    It is noted that the Member Contribution rate shall be actuarially adjusted, if necessary, after July 1, 2013 by the CPRB Board which could reduce or eliminate the additional 3.5% NC increase in any future year.
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 $0.00 $324,000.00 3.50 %
Normal Cost of System N/A $324,000.00 3.50 %
Past Service Liabilities $0.00 $0.00 0.00 %
Fiscal Year Past Service
Amortization Period Ends
N/A N/S N/A
Explanation of above estimates
    An analysis of the changes in AAL and NC was completed by the Board Actuary based on the July 1, 2011 Actuarial Valuation..
    
    There is no change in AAL.
    
    The ARC for JRS is equal to a payment of the employer NC, without offset for any overfunding of the AAL. The increase in NC is a result of a reduction in the Member Contribution rate. This resulted in an increase in the ARC of $324,000 for FY2013.
Analysis of Impact on Public Pension Policy
    The Bill transfers part of the total JRS NC from members to the Judiciary by a reduction in the Member Contribution Rate. The Member Contribution Rate shall be actuarially reviewed annually and increased if JRS funded position should deteriorate in the future.
Fiscal Note Summary

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

    The Committee Substitute for the Committee Substitute for Senate Bill 486 reduces the Member Contribution requirement for all judges from 10.5% down to 7% effective July 1, 2012.
    
    Future years Member Contributions may be adjusted by the CPRB Board based on the Actuarial Valuation for JRS with the recommendation of the Actuary. The Member Contribution range shall not be less than 7% nor more than 10.5% for years starting July 1, 2013.
    
    There is no impact on the Actuarial Accrued Liabilities of JRS.
    
    The JRS employer Normal Cost increases by 3.5% of payroll due to the reduction in the Member Contribution rate to 7%. The increase in the FY2013 contribution based on mid year funding is $324,000.
    
    It is noted that the Member Contribution rate shall be actuarially adjusted, if necessary, after July 1, 2013 by the CPRB Board which could reduce or eliminate the additional 3.5% NC increase in any future year.

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 0 324000 324000
Personal Services
Current Expenses
Repairs and Alterations
Assets
Other 0 324000 324000
2. Estimated Total Revenues
3. Explanation of above estimates (including long-range effect):
    An analysis of the changes in AAL and NC was completed by the Board Actuary based on the July 1, 2011 Actuarial Valuation..
    
    There is no change in AAL.
    
    The ARC for JRS is equal to a payment of the employer NC, without offset for any overfunding of the AAL. The increase in NC is a result of a reduction in the Member Contribution rate. This resulted in an increase in the ARC of $324,000 for FY2013.


Memorandum
    The Bill transfers part of the total JRS NC from members to the Judiciary by a reduction in the Member Contribution Rate. The Member Contribution Rate shall be actuarially reviewed annually and increased if JRS funded position should deteriorate in the future.
Person Submitting Fiscal Note
Harry W. Mandel, Board Actuary, MAAA, MSPA, EA
Email
harry.w.mandel@wv.gov