Actuarial Fiscal Note


Retirement Systems Impacted by Legislation:

State Police Plan B / Plan A possible

FUND(S):

2162

Sources of Revenue:

General Fund

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).


    The bill provides that members may donate leave to the Association President to use for Association business. All leave used by the president shall be subject to regular payroll deductions, including pension contribution amounts from the member and employer. As such, there is no impact on the retirement plan funding due to the provision.
    
    The bill also provides that in the case where leave donation is not available to the President, he may purchase any Association service, up to 10 years, through double member contributions. Although the double contribution rate may be less that the member plus employer contribution rate, the limited exposure of such purchase would have a minimal financial impact on the Plan.
    
    There is no actuarial impact on Plan B Normal Cost nor Unfunded Actuarial Accrued Liabilities due to the bill’s provisions.
    
    NOTE: This Actuarial Note impacts the Plan B costs only and does not comment on payroll costs possibly incurred by the State Police. A Fiscal Note should be requested from the State Police on this issue.



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 $0.00 $0.00 0.00 %
Normal Cost of System N/A $0.00 0.00 %
Past Service Liabilities $0.00 $0.00 0.00 %
Fiscal Year Past Service
Amortization Period Ends
N/A N/A


Explanation of above Actuarial estimates:


    Since the retirement system receives their regular member and employer contributions under the leave provisions, costs are not incurred by the Plan.
    
    For service purchased due to leave not being available, a minor contribution difference would impact funding slightly, but are expected to be minor since this would only occur when no leave donations were available.

Analysis of Impact on Public Pension Policy:


    The bill allows the Association President to maintain full service credits and income while serving on association business through leave donations.
    
    The payroll implications of the leave donation costs should be referred to the State Police.



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    The bill provides that members may donate leave to the Association President to use for Association business. All leave used by the president shall be subject to regular payroll deductions, including pension contribution amounts from the member and employer. As such, there is no impact on the retirement plan funding due to the provision.
    
    The bill also provides that in the case where leave donation is not available to the President, he may purchase any Association service, up to 10 years, through double member contributions. Although the double contribution rate may be less that the member plus employer contribution rate, the limited exposure of such purchase would have a minimal financial impact on the Plan.
    
    There is no actuarial impact on Plan B Normal Cost nor Unfunded Actuarial Accrued Liabilities due to the bill’s provisions.
    
    NOTE: This Actuarial Note impacts the Plan B costs only and does not comment on payroll costs possibly incurred by the State Police. A Fiscal Note should be requested from the State Police on this issue.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2009
Increase/Decrease
(use"-")
2010
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
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):


    Since the retirement system receives their regular member and employer contributions under the leave provisions, costs are not incurred by the Plan.
    
    For service purchased due to leave not being available, a minor contribution difference would impact funding slightly, but are expected to be minor since this would only occur when no leave donations were available.



Memorandum


    The bill allows the Association President to maintain full service credits and income while serving on association business through leave donations.
    
    The payroll implications of the leave donation costs should be referred to the State Police.



    Person submitting Fiscal Note: Harry W. Mandel, Board Actuary, MAAA, MSPA, EA
    Email Address: harry.w.mandel@wv.gov