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