FISCAL NOTE



FUND(S):

PERS 2510; TRS 2601

Sources of Revenue:

General Fund,Other Fund Addl Local Govts

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


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


For PERS, the bill provides a bonus payment of $1,000 to retirees as of July 1, 2009. The bonus payments to certain beneficiaries are reduced based on the benefit option percentage being paid. Bonus payments totaling $20,960,000 are expected to be paid to 21,406 retirees and beneficiaries. This amount is within the allowable limitations under 2005 Pension Reform for PERS retiree benefits of $49,302,000. Required 6 year amortization of the bonus payment is $4,307,000 annually for FY2011-2016. For TRS, the bill provides a bonus payment of $1,000 to retirees as of July 1, 2009. The bonus payments to certain beneficiaries are reduced based on the benefit option percentage being paid. Bonus payments totaling $28,807,000 are expected to be paid to 29,152 retirees and beneficiaries. This amount is within the allowable limitations under 2005 Pension Reform for TRS retiree benefits of $86,079,000. Required 6 year amortization of the bonus payment is $5,919,000 annually for FY2011-2016. The total retirement impact of the bill is an increase in the Unfunded Actuarial Accrued Liabilities of $49,767,000. Funding is required over 6 years at a total of $10,226,000 annually. The bill additionally provides a bonus payment to certain active public employees. It is anticipated that bonus payments will be made to approximately 60,386 public employees, teachers, service personnel and state police officers for a lump sum cost of $60,386,000. If funded from surplus in FY2010, the single lump sum payment totals $110,153,000.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2010
Increase/Decrease
(use"-")
2011
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 110,153,000 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 110,153,000 0 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


The number of active members, eligible retirees and beneficiaries were derived from the July 1, 2009 actuarial valuation data. A special appropriation of $110,153,000 is required to fund the liability in a single payment in FY2010.



Memorandum


The active employee and retiree bonus payment is a one time payment totaling $110,153,000. Special appropriation funding of this increase through a one time appropriation from budget surplus is anticipated by the Bill.



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