FISCAL NOTE
Date Requested: February 22, 2017
Time Requested: 08:16 AM |
| Agency: |
Consolidated Public Retirement Board |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2624 |
Introduced |
SB371 |
|
|---|
| CBD Subject: |
Education (K12), Retirement |
|---|
|
FUND(S):
TRS 2600
Sources of Revenue:
General Fund,Other Fund Local governments
Legislation creates:
Neither Program nor Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The provisions of SB 371 require that the retirement board adopt smoothing of actuarial gains and losses on TRS assets using a four-year smoothing method with no corridor as an actuarial assumption for funding valuation performed after June 30, 2016. This would retroactively affect the July 1, 2016 Actuarial Valuation for TRS, resulting in a reduction in the Unfunded Actuarial Accrued Liability of $393,194,000. The effect would be a reduction on the employer contribution for FY2018 by $43,213,000, or approximately 3.14% of payroll.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2017
Increase/Decrease
(use"-") |
2018
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
-43,213,000 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
-43,213,000 |
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 provisions of the bill result in no change to the Normal Cost of the plan, nor does the bill impact any administrative expenses for the plan. The Unfunded Actuarial Accrued Liability (UAAL) would be measured using Actuarial Value of assets using the proposed smoothing method, resulting in a decrease in the UAAL of $393,194,000. As a result, the required contribution for FY2018 would decrease by $43,213,000. Ultimately, implementation of asset smoothing will have no long-term effect on annual costs to TRS.
Cost estimates are based on the July 1, 2016 Actuarial Valuation for Funding as completed by Conduent on behalf of the WV CPRB.
Memorandum
This Actuarial/Fiscal Note is being submitted by the Consolidated Public Retirement Board. It has been reviewed by a qualified actuary, and a letter of certification is available from the CPRB upon request.
Person submitting Fiscal Note: Melody Bailey, Actuarial Analyst, WVCPRB
Email Address: melody.j.bailey@wv.gov