FISCAL NOTE



FUND(S):

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.


This bill provides for an extension of time to June 30, 2010 for certain members to complete the 25% TDC service purchase. Eligible members are those who completed a written verification of cost for such purchase but failed to complete the purchase by the original deadline, and those members who attempted to complete the purchase of service by the original deadline but were denied in writing by the Board on or before December 31, 2009. Those members wishing to take advantage of the extension of time to purchase must request an updated purchase cost amount on or before April 15, 2010. The purchase must be completed by June 30, 2010 or 60 days following the mailing of the updated cost amount by the CPRB. The updated cost amount shall equal the original cost amount as of June 30, 2009 updated at the 7.5% actuarial rate of interest to June 30, 2010. The bill also provides the CPRB Executive Director the authority to correct any clerical errors occurring in the purchase process for any member who attempts to complete the purchase process in writing. The purchase of service was included as a benefit right for former TDC members who elected to transfer to TRS. This bill extends the time for members who failed to properly complete the purchase by the original deadline but does not increase the amount of benefit service that may be purchased. The costs associated with the extension are paid by the member through the increase at the 7.5% actuarial rate of interest of the purchase cost. As such, there is no increase in the Unfunded Actuarial Accrued Liabilities of TRS due to additional benefits beyond those approved in the original legislation. Additional administrative costs of the extension are included in CPRB staff time and administrative expense charges to TRS. It is anticipated that the extension of time will significantly reduce litigation costs anticipated from the extension group.



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 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):


There is no increase in either the Normal Cost nor the Actuarial Accrued Liabilities for TRS in that no new benefits are provided under the bill not already included in prior legislation. The bill extends the time for the purchase of benefits already provided and included in past legislation and actuarial valuations. It is anticipated that savings on future litigation costs will offset any costs associated with the extension of time to complete the service purchase.



Memorandum


The extension of time to complete the 25% TDC service purchase allows for the original intended benefits provided under previous legislation. Such benefits could not be purchased by the original deadline in either a timely manner or due to clerical errors.



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