Sources of Revenue:

Special Fund

Legislation creates:

Neither Program nor Fund

Fiscal Note Summary

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

The purpose of this bill is to prohibit the Finance Board pursuant to the West Virginia Public Employees Insurance Act to increase the types and levels of cost to retired employees. The purpose of the bill is to not increase any costs to retiree health care in premium or benefit reductions. Assuming the bill was to take effect for FY 2011 beginning in July 2010, here are the estimated costs: FY-2011 - $9,500,000 This assumes the finance board has finalized the plan year and the “pay go” premium will remain constant. The $9,500,000 represents $2,500,000 in additional premiums for FY-2011 added to the retiree’s premium rates and $7,000,000 results from benefit reductions to the plan. FY-2012 - $32,000,000 Retiree benefits are financed by both retiree premiums and a “pay go” transfer from the active employee program. If the retiree benefits and premium are held constant, as proposed, all additional money to support retirees will have to come from the active program. Under the active program 80% of the “pay go” comes from the employers and 20% comes from the employees premium. “Pay go” in FY-2012 under this scenario would need to be approximately $44,500,000. Of this, 10% is the responsibility of non-state agencies and of the balance ~$40,000,000, 80% would be the responsibility of the state; $32,000,000. FY-2013 – $53,300,000 Retiree benefits are financed by both retiree premiums and a “pay go” transfer from the active employee program. If the retiree benefits and premium are held constant, as proposed, all additional money to support retirees will have to come from the active program. Under the active program 80% of the “pay go” comes from the employers and 20% comes from the employees premium. “Pay go” in FY-2012 under this scenario would need to be approximately $74,000,000. Of this, 10% is the responsibility of non-state agencies and of the balance ~$66,600,000, 80% would be the responsibility of the state; $53,300,000. The total impact for three years is approximately $94,800,000. The affect on Other Post Employment Benefits (OPEB) would be an additional $2.1 Billion.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2010 Increase/Decrease (use"-")	2011 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 estimates (including long-range effect):

Memorandum

Person submitting Fiscal Note: Chip Myers
Email Address: CLIFFORD.M.MYERS@WV.GOV