Date Requested:February 23, 2005
Time Requested:02:52 PM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
2005R1070 Intro HB2608
CBD Subject: Military Service Credit
FUND(S)
PERS fund 2510
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.

    Actuarial Note Regarding Pension Legislation
    
    The Bill provides additional PERS death and disability benefits to certain members who become disabled or die while in compulsory or armed conflict military service. The bill provides for:
    
     1. Military service credits be granted without return to PERS employment upon death or disability while in compulsory or armed conflict military service from a PERS position.
     2. PERS death and disability benefits shall be treated as vested if PERS plus military service equals 9 or more years.
    
    Current benefits require 10 years of service prior to entering military service to receive either death or disability benefits.
    
    The estimated cost of the average additional death benefits is $80,000 per incidence. For the average additional disability benefit above the 5 year terminated vested benefit is $200,000. The total cost in any year is dependent on the number of incidences.
    
    Cost estimates for FY2005 are based on 2 deaths and 4 disabilities. For FY2006, 1 death and two disabilities. Future years are difficult to predict and dependent on the duration of the current conflicts as well as future conflicts. Exact cost cannot be determined until after actual claims are made. The actuarial valuation assumptions do not anticipate this type of benefit and therefore costs are associated as actuarial losses upon each incident. Accumulated losses will probably result in an increase in the employer contribution rate.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2005
Increase/Decrease
(use"-")
2006
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 960,000 480,000 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 960,000 480,000 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
    Costs are estimated by incident for an average PERS member in the 7 to 9 year service range that might be impacted by the Bill. The exact number of incidents is difficult to predict. Costs are based on 6 total members impacted during FY2005 and 3 in FY2006. The incidents are expected to stop once the current armed conflicts end.
    
    It should be noted that although the ultimate costs are shown as $0, a continuation of current conflicts as well as future conflicts could result in additional claims under the Bill.


Memorandum
Person submitting Fiscal Note:
Amy Langenbrunner
Email Address:
ALangenbrunner@wvadmin.gov
    The language of the Bill has been interpreted within the stated intent of the Bill. Some clarification to the exact benefit language should be considered.
    
    The Bill extends benefits specifically excluded under PERS. Members made eligible under this Bill are eligible for military provided death and disability benefits. PERS benefits are a duplication of the military benefits. These benefits are treated as actuarial losses as they cannot be accurately predicted within the actuarial valuation process. Such benefits are best provided out of current revenue outside of PERS.