Actuarial Fiscal Note
Date Requested:May 10, 2017
Time Requested:03:09 PM |
| Agency: |
Consolidated Public Retirement Board |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 4003 |
Introduced |
SB1001 |
|
|---|
| CBD Subject: |
Governor -- Bills Requested By |
|---|
|
Retirement Systems Impacted by Legislation:
TRS
FUND(S):
TRS 2600
Sources of Revenue:
General Fund,Other Fund State & Local Governments
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 a one-time salary increase of $808 per year for all classroom teachers as of July 1, 2017, in addition to any other salary increases already provided.
The effect of this bill is to increase the calculated state contribution for FY2018 as a result of increases in the amortization payments associated with the increase in Unfunded Actuarial Accrued Liability of TRS, as well as an increase in Normal Cost. The estimated increase in the FY2018 Employer Contribution is $3,459,000, or approximately 0.22% of payroll.
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 |
$27,576,000.00 |
$3,459,000.00 |
0.22 % |
| Normal Cost of System |
N/A |
$640,000.00 |
0.04 % |
| Past Service Liabilities |
$27,576,000.00 |
$2,819,000.00 |
0.18 % |
Fiscal Year Past Service
Amortization Period Ends |
N/A |
2034 |
N/A |
Explanation of above Actuarial estimates:
The additional pay provided to teachers results in an increase in the UAAL and Normal Cost of the plan. The additional Normal Cost of $640,000 must be paid each year beginning in FY2018, in addition to the annual amortization payment of the UAAL of $2,819,000.
The costs presented in the Note are based on the July 1, 2016 Actuarial Valuation for Funding for TRS, including asset smoothing adopted by the CPRB on March 8, 2017, and assume that all actuarial assumptions will be met in all future years.
Analysis of Impact on Public Pension Policy:
Note that any direct cost to the state to pay the additional $808 per teacher salary is NOT considered in this Note, and should be priced by the Department of Education. Only the impact of the $808 on pension costs is contemplated in this Actuarial/Fiscal Note.
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
This bill provides a one-time salary increase of $808 per year for all classroom teachers as of July 1, 2017, in addition to any other salary increases already provided.
The effect of this bill is to increase the calculated state contribution for FY2018 as a result of increases in the amortization payments associated with the increase in Unfunded Actuarial Accrued Liability of TRS, as well as an increase in Normal Cost. The estimated increase in the FY2018 Employer Contribution is $3,459,000, or approximately 0.22% of payroll.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2017
Increase/Decrease
(use"-") |
2018
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
3,459,000 |
3,459,000 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
3,459,000 |
3,459,000 |
| 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 additional pay provided to teachers results in an increase in the UAAL and Normal Cost of the plan. The additional Normal Cost of $640,000 must be paid each year beginning in FY2018, in addition to the annual amortization payment of the UAAL of $2,819,000.
The costs presented in the Note are based on the July 1, 2016 Actuarial Valuation for Funding for TRS, including asset smoothing adopted by the CPRB on March 8, 2017, and assume that all actuarial assumptions will be met in all future years.
Memorandum
Note that any direct cost to the state to pay the additional $808 per teacher salary is NOT considered in this Note, and should be priced by the Department of Education. Only the impact of the $808 on pension costs is contemplated in this Actuarial/Fiscal Note.
This Actuarial/Fiscal Note is being submitted by the Consolidated Public Retirement Board. It has been reviewed by a qualified actuary, and a letter of certification is available from CPRB upon request.
Person submitting Fiscal Note: Melody Bailey, Actuarial Analyst, WV CPRB
Email Address: melody.j.bailey@wv.gov