Actuarial Fiscal Note
Date Requested:February 17, 2025
Time Requested:04:01 PM |
| Agency: |
Consolidated Public Retirement Board |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1108 |
Introduced |
HB2507 |
|
|---|
| CBD Subject: |
|
|---|
|
Retirement Systems Impacted by Legislation:
TRS 2600
FUND(S):
Special Fund
Sources of Revenue:
Creates New Expense
Legislation creates:
TRS
Actuarial Note Summary
Impact this measure will have on the liabilities and contributions associated with the retirement system(s).
HB 2507 would allow TRS Tier 2 members, that is, TRS members hired for the first time on or after July 1, 2015, to convert unused sick leave or annual leave into additional benefit service credits at a conversion rate equal to the rate of the TRS Tier 1 members. That is, for TRS Tier 2 members, the total number of days of unused leave could be converted into additional years of benefit service, where an additional year of benefit service would be based on 20 days per month times the average number of months in a contract year.
West Virginia Statute §18-7A-28e, “WV 2005 Pension Reform”, prohibits TRS active member benefit increases or the creation of new benefits for TRS active members until the restriction sunsets on July 1, 2034. Therefore, HB 2507 would violate “WV 2005 Pension Reform”.
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 |
$999,999,999.00 |
$999,999,999.00 |
9.99 % |
| Normal Cost of System |
N/A |
$999,999,999.00 |
9.99 % |
| Past Service Liabilities |
$999,999,999.00 |
$999,999,999.00 |
9.99 % |
Fiscal Year Past Service
Amortization Period Ends |
N/A |
9999 |
N/A |
Explanation of above Actuarial estimates:
West Virginia Statute §18-7A-28e, “WV 2005 Pension Reform”, prohibits TRS active member benefit increases or the creation of new benefits for TRS active members until the restriction sunsets on July 1, 2034. Therefore, HB 2507 would violate “WV 2005 Pension Reform”.
Note, the value $999,999,999 displayed above does not indicate an actuarial cost associated with the Bill, it only indicates the Bill violates West Virginia “2005 Pension Reform”.
Analysis of Impact on Public Pension Policy:
West Virginia Statute §18-7A-28e, “WV 2005 Pension Reform”, prohibits TRS active member benefit increases or the creation of new benefits for TRS active members until the restriction sunsets on July 1, 2034. Therefore, HB 2507 would violate “WV 2005 Pension Reform”.
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
HB 2507 would allow TRS Tier 2 members, that is, TRS members hired for the first time on or after July 1, 2015, to convert unused sick leave or annual leave into additional benefit service credits at a conversion rate equal to the rate of the TRS Tier 1 members. That is, for TRS Tier 2 members, the total number of days of unused leave could be converted into additional years of benefit service, where an additional year of benefit service would be based on 20 days per month times the average number of months in a contract year.
West Virginia Statute §18-7A-28e, “WV 2005 Pension Reform”, prohibits TRS active member benefit increases or the creation of new benefits for TRS active members until the restriction sunsets on July 1, 2034. Therefore, HB 2507 would violate “WV 2005 Pension Reform”.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2025
Increase/Decrease
(use"-") |
2026
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
999,999,999 |
999,999,999 |
999,999,999 |
| Personal Services |
999,999,999 |
999,999,999 |
999,999,999 |
| Current Expenses |
999,999,999 |
999,999,999 |
999,999,999 |
| Repairs and Alterations |
999,999,999 |
999,999,999 |
999,999,999 |
| Assets |
999,999,999 |
999,999,999 |
999,999,999 |
| Other |
999,999,999 |
999,999,999 |
999,999,999 |
| 2. Estimated Total Revenues |
999,999,999 |
999,999,999 |
999,999,999 |
Explanation of above Fiscal Note estimates (include possible long-range effect):
West Virginia Statute §18-7A-28e, “WV 2005 Pension Reform”, prohibits TRS active member benefit increases or the creation of new benefits for TRS active members until the restriction sunsets on July 1, 2034. Therefore, HB 2507 would violate “WV 2005 Pension Reform”.
Note, the value $999,999,999 displayed above does not indicate an actuarial cost associated with the Bill, it only indicates the Bill violates West Virginia “2005 Pension Reform”.
Memorandum
West Virginia Statute §18-7A-28e, “WV 2005 Pension Reform”, prohibits TRS active member benefit increases or the creation of new benefits for TRS active members until the restriction sunsets on July 1, 2034. Therefore, HB 2507 would violate “WV 2005 Pension Reform”.
This Actuarial/Fiscal Note is being submitted by the Consolidated Public Retirement Board. It has been reviewed by the CPRB Actuary. Both the Board and the CPRB Actuary are available upon request for questions.
For the appropriate actuarial disclosures, see the July 1, 2023, funding valuation report for TRS, published in April 2024.
In particular, future actuarial measurements may differ significantly from current measurements due to System experience differing from that anticipated by the economic and demographic assumptions, changes expected as part of the natural operation of the methodology used for these measurements, and changes in system provisions or applicable law or regulations. An analysis of the potential range of such future differences is beyond the scope of the request addressed here.
Kenneth Woodson Jr., the CPRB Board Actuary, is a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries. He meets the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained in this Actuarial/Fiscal Note.
Person submitting Fiscal Note: Kenneth M. Woodson Jr.
Email Address: kenneth.m.woodson@wv.gov