FISCAL NOTE



FUND(S):

PERS 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.


This Bill as drafted violates WV Statutes under 2005 Pension Reform Legislation. Section 5-10-22h(c) prohibits increases to active members when the funded percentage in the last Actuarial Valuation for PERS was under 85%. As of July 1, 2008 Actuarial Valuation for PERS, the funded percentage was 84.2%. Actuarial costs for the provisions of the Bill were not calculated due to the restriction applicable for the 2009 Legislative Session. See the Pension Committee chairman for details.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2009
Increase/Decrease
(use"-")
2010
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 999,999,999 999,999,999 999,999,999
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):


The benefits under the Bill provide for significant unreduced retirement benefits after completion of 20 years of contributory participation. Benefits are provided under PERS but are only available to members who are classified as correctional officers. An actuarial cost study was not completed since these provisions violate the restrictions for PERS under 2005 Pension Reform. If costs are to be completed at a future date, then census information for members qualifying for such improved retirement eligibility be provided to the Actuary.



Memorandum


The concept of providing unreduced retirement benefits under PERS for a select subgroup of members is contrary to the underlying philosophy of PERS as a cost sharing plan. Cost sharing funding only works when identical benefits are generally provided to all members. Failure due to Plan design of this underlying philosophy in PERS would result in significant employer subsidies being charged to all other PERS employers for the sole benefit of the correctional member group. It is recommended by the Actuary that if improved benefits for corrections is desired, that a spin-off plan similar to Deputy Sheriffs or Emergency Medical Services be considered in place of this Bill. It should be noted that significant member and employer contributions would be expected as a result of the improved unreduced retirement benefits. A final cost analysis can only be completed once the provisions of such plan are provided in a bill and a complete census of covered correctional members is provided to the Actuary.



    Person submitting Fiscal Note: Harry W. Mandel, Board Actuary, MAAA, MSPA, EA
    Email Address: harry.w.mandel@wv.gov