FISCAL NOTE
FUND(S):
State Police Plan B- 2162
Sources of Revenue:
General Fund
Legislation creates:
Neither Program nor Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The bill reduces the age and service required for retirement with full benefits to age 50 with 20 or more years of service from age 55 with 20 years of service. Benefits at retirement prior to age 50 but after 20 or more years of service are actuarially reduced from age 50.
The Bill will increase the Unfunded Actuarial Liability (UAL) by about $3,650,000. It additionally increase the Normal Cost by approximately 4.25% of payroll. Since all new trooper classes are admitted into Plan B, the annual payroll of Plan B is expected to increase as new trooper classes graduate to replace retiring Plan A troopers. In order to remain adequately funded and to retiree the UAL over not more than 30 years, the employer contribution rate must be increased by 6.25%. That results in a total employer contribution percentage of 18.25% required for Plan B starting in FY 2004.
The increased contribution required is expected to be about $835,000 for FY 2004, increasing with payroll each year. The projected FY 2018 requirement is $2,250,000.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2003
Increase/Decrease
(use"-") |
2004
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
835,000 |
6 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
835,000 |
6 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
The 6.25 listed in the column above is 6.25% of payroll.
The bill provides for retirement benefits to start up to 5 years earlier for all State Troopers hired prior to age 35. The costs associated with the Bill represent the costs of the additional benefits payable due to the earlier commencement of benefits.
The costs are based on a study completed based on the July 1, 2001 Actuarial Valuation results. It is adjusted to reflect the July 1, 2002 Actuarial Valuation, and reflects all participants as included in the valuation as of that date.
The July 1, 2002 Actuarial Valuation showed that the current 12% of payroll paid by the employer is sufficient to fund current benefits on a sound basis, without a significant prefunding margin. To maintain the Plan on a sound actuarial basis, the contribution rate must be increased by 6.25% to 18.25% of payroll.
Memorandum
The Bill provides for unreduced retirement at age 50 with 20 or more years of service. This provision is reasonable for a plan covering law enforcement officers and makes Plan B very competitive with benefits being provided in law enforcement plans in other states.
Person submitting Fiscal Note: Donna Prunty, Department of Administration
Email Address: dprunty@gwmail.state.wv.us