FISCAL NOTE



FUND(S):

2601

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. For active members, the bill provides benefits to active members prohibited under Section 18-7A-28e(c). For current retirees, Section 18-7A-28e ( a ) prohibits increases to retired members in excess of 1% of the TRS Actuarial Accrued Liabilities as determined in the last actuarial valuation for TRS. The estimated increase in Actuarial Accrued Liabilities under the bill could exceed the limitation as of July 1, 2010 of $89,043,000. Actual costs have not been run for this bill due to the statutory restrictions. See the Pension Committee chairman for details.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2011
Increase/Decrease
(use"-")
2012
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 bill provides for up to 5 years of “forced pregnancy leave” service (1 year per pregnancy up to 5 pregnancies) to be available for purchase to any currently active TRS member and all currently retired TRS members. Such service is granted for both benefits and eligibility for retirement. The purchase cost to the member is the contributions the member would have paid during the time being purchased. No provision has been made for interest to payment date nor for employer contributions plus interest to payment date. This results in a substantial cost to TRS of the benefit in excess of the contribution being paid by the member. In addition, for retired members, the requirement of back payments from original retirement will result in lump sum payments generally in excess of the member contributions plus the costs for the future increase in benefits. This benefit is significant given the number of potentially eligible active and retired female members and the large amount of the benefit subsidy.



Memorandum


This Bill as drafted violates WV Statutes under 2005 Pension Reform Legislation. The bill provides heavily subsidized retirement benefits to a select subgroup of female active and retired members. Such subsidized benefit are required to be granted based upon the certification of the member without any requirement to substantiate the service being claimed.



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