Date Requested:March 10, 2005
Time Requested:01:06 PM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
2005R1438 Intro SB483
CBD Subject: State Police Dependent Child Scholarship
FUND(S)
State Police Plan A - Account 2161; Plan B - Account 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.

    Actuarial Note Regarding Pension Legislation
    
    The Bill removes the $7,500 child scholarship lifetime limit for State Police Plan A and State Police Plan B.
    
    The scholarship benefit is not funded as part of the Actuarial Accrued Liabilities. Based on recent scholarship claims, there is a 60%-to 70% chance of receiving a new claim in any year from Plan A. Currently, active membership in Plan A and Plan B is near equal.
    
    Estimated undergraduate total expenses range from $10,000 - $12,000 per year for WVU or MU. Without a limit, the undergraduate period can range from 5 to 6 years. Educational expenses are not limited by statute to undergraduate only. If advanced degrees are included in the eligible educational training, an additional 2 to 4 years are added at an average cost ranging from $15,000 to $25,000. In the “worst case”, the unlimited benefit could provide for 6 years of undergraduate at an average cost of $11,000 per year and 4 years of advanced education at an average cost of $20,000 per year for a total single claim of $146,000 per child.
    
    Based on claims experience in Plan A, about two thirds of a claim would be made each year in Plan A at an estimated net cost of $97,333. A duplicate claim would be expected in Plan B. Over the next few years, the claims would shift from Plan A to all in Plan B. The estimated cost for FY 2006 is $194,700 with inflationary increases in future years.

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 0 194,700 200,600
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 194,700 200,600
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
    The cost estimate is based on two thirds of one claim occurring in each plan each year, and is an average cost on a per claim basis for students taking a maximum advantage of the scholarship program.
    
    Currently, the limit was intended to provide undergraduate support only, in addition to support from other sources. Restrictions on the benefit, either in the form of an increased cap on lifetime benefits or limiting the scholarship to undergraduate for at most 5 years would significantly reduce the cost exposure to each plan.


Memorandum
Person submitting Fiscal Note:
Amy Langenbrunner
Email Address:
ALangenbrunner@wvadmin.gov
    The Bill should be amended to provide a replacement cap for the $7,500 cap being eliminated. The original cap level of $7,500 implies that the scholarship was not intended to meet the full expenses of the surviving dependent child, but only to supplement income available for higher education. Removal of the cap changes the intent to one of providing all educational and living expenses.