Fiscal/Actuarial 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
You must select Revenue Source(s)!
General Fund,Other Fund State & Local Governments
Does the proposed legislation create:
You must make a selection(s)!
Neither Program nor Fund

    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.
    
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 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

Explain in a clear and concise manner what 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
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
2017
Increase/Decrease
(use"-")
2018
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 3459000 3459000
Personal Services 0 0 0
Current Expenses 0 3459000 3459000
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including 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
melody.j.bailey@wv.gov