Fiscal/Actuarial Note
Date Requested:February 15, 2013
Time Requested:01:53 PM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
2013R1288 Introduced HB2099
CBD Subject: 5% INCREASE ANNUALLY FOR 3 YEARS
Retirement Systems Impacted by Legislation:
PERS and TRS
FUND(S)
PERS 2510; TRS 2601
Sources of Revenue
You must select Revenue Source(s)!
Other Fund State and Local Govnts
Does the proposed legislation create:
You must make a selection(s)!
Neither Program nor Fund

    The benefit increases to retired members of PERS and TRS exceed the limitation contained in 2005 Pension Reform.
    
    For PERS, the Section 5-10-22h retiree increase limitation is $57,357,000. The increased benefits would increase the UAAL by $336,909,000.
    
    For TRS, the Section 18-7A-28e retiree increase limitation is $97,125,000. The increased benefits would increase the UAAL by $710,597,000.
    
    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 $1,047,506,000.00 $215,252,000.00 8.11 %
Normal Cost of System N/A $0.00 0.00 %
Past Service Liabilities $1,047,506,000.00 $215,252,000.00 8.11 %
Fiscal Year Past Service
Amortization Period Ends
N/A FY2019 N/A
Explanation of above estimates
    The bill provides a 5% benefit increase to all PERS and TRS retirees as of July 1, 2013, 2014 and 2015. Increased liabilities were valued applying actuarial software by CPRB. Amortization payments were funded over 6 years as provided in 2005 Pension Reform requirements for a qualifying improvement.
    
    The increases provided in this bill exceed the benefit improvement limitations as specified in 2005 Pension Reform.
Analysis of Impact on Public Pension Policy
    Provides a substantial retiree benefit increase of up to 15.76% for 2013 through 2015.
    
    TRS eligibility has been treated as being equal to PERS eligibility. It is assumed the TRS provisions will be corrected during the legislative process.
Fiscal Note Summary

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

    The benefit increases to retired members of PERS and TRS exceed the limitation contained in 2005 Pension Reform.
    
    For PERS, the Section 5-10-22h retiree increase limitation is $57,357,000. The increased benefits would increase the UAAL by $336,909,000.
    
    For TRS, the Section 18-7A-28e retiree increase limitation is $97,125,000. The increased benefits would increase the UAAL by $710,597,000.
    
    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
2013
Increase/Decrease
(use"-")
2014
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 215252000 215252000
Personal Services
Current Expenses
Repairs and Alterations
Assets
Other 215252000 215252000
2. Estimated Total Revenues
3. Explanation of above estimates (including long-range effect):
    The bill provides a 5% benefit increase to all PERS and TRS retirees as of July 1, 2013, 2014 and 2015. Increased liabilities were valued applying actuarial software by CPRB. Amortization payments were funded over 6 years as provided in 2005 Pension Reform requirements for a qualifying improvement.
    
    The increases provided in this bill exceed the benefit improvement limitations as specified in 2005 Pension Reform.


Memorandum
    Provides a substantial retiree benefit increase of up to 15.76% for 2013 through 2015.
    
    TRS eligibility has been treated as being equal to PERS eligibility. It is assumed the TRS provisions will be corrected during the legislative process.
Person Submitting Fiscal Note
Harry W. Mandel, MAAA, MSPA, EA, Board Actuary
Email
harry.w.mandel@wv.gov