Actuarial Fiscal Note

Date Requested:March 01, 2018
Time Requested:08:37 AM
Agency: Consolidated Public Retirement Board
CBD Number: Version: Bill Number: Resolution Number:
1025 Amendment - H ANR AM #1 SB112
CBD Subject: Natural Resources

Retirement Systems Impacted by Legislation:

PERS 2501

FUND(S):

General Fund

Sources of Revenue:

Increases Existing Expenses

Legislation creates:

PERS



Actuarial Note Summary


Impact this measure will have on the liabilities and contributions associated with the retirement system(s).


    The House Agriculture and Natural Resources Committee Substitute for SB 112 specifies that subsistence pay for Department of Natural Resources (DNR) Police Officers’ subsistence allowance is considered pensionable, both retroactively and prospectively. This would allow affected members to make contributions on the biweekly allowance of $60, and would include the subsistence allowance in calculation of Final Average Salary, thus increasing the benefit for those affected DNR Police Officers.
    
    Currently, subsistence allowance is not considered pensionable, but there is current litigation before the Circuit Court to clarify the issue. Approximately 115 current DNR Police Officers have ceased making contributions on subsistence pay as of November 2015, but subsistence allowances made between 1996 and November 2015 have yet to be returned to the members and their employer until the litigation is completed. Over one hundred DNR Police Officers have retired with the calculation of their benefits including the subsistence allowances made to them.
    
    The small size of the affected group relative to the population of PERS means that there would be no additional measurable cost to the plan by including past and future subsistence allowances to be pensionable. However, the additional payments would increase benefits to future members whose benefits would not include such subsistence allowance under current statute. The inclusion of subsistence allowance would increase FAS by $1560 per year. The increased benefit for these members could range from $200 to $1000 per year, depending on the length of service for the member.
    



Fiscal Detail of Actuarial Impact

Impact on current benefit costs, prior service benefit costs and ongoing contribution requirements following full implementation.


Impact On Following Full Implementation
Increase in Unfunded Actuarial Accrued Liability Initial Impact on Annual Contribution Requirement of System(s) Contribution Increase as a Percentage of Annual Payroll
Total Annual Costs $0.00 $0.00 0.00 %
Normal Cost of System N/A $0.00 0.00 %
Past Service Liabilities $0.00 $0.00 0.00 %
Fiscal Year Past Service
Amortization Period Ends
N/A 2035 N/A


Explanation of above estimates:


    The small size of the affected group relative to the population of PERS means that there would be no additional measurable cost to the plan by including past and future subsistence allowances to be pensionable. However, the additional payments would increase benefits to future members whose benefits would not include such subsistence allowance under current statute. The increased benefit for these members could range from $200 to $1000 per year, depending on the length of service for the member.

Analysis of Impact on Public Pension Policy:


    Currently, subsistence allowance is not considered pensionable, but there is current litigation before the Circuit Court to clarify the issue. Approximately 115 current DNR Police Officers have ceased making contributions on subsistence pay as of November 2015, but subsistence allowances made between 1996 and November 2015 have yet to be returned to the members and their employer until the litigation is completed. Over one hundred DNR Police Officers have retired with the calculation of their benefits including the subsistence allowances made to them.
    
    It must also be noted that other Police Officers who participate in the Public Safety Death, Disability, and Retirement Fund (Trooper Plan A) and the State Police Retirement System (Trooper Plan B), receive similar subsistence allowances which are not considered pensionable in their respective plans. In addition, other per diem allowances, bonuses, and most other supplemental payments made to public employees are not pensionable. Note that though this subsistence allowance is, however, still taxable (similar to bonus payments).
    



Fiscal Note Summary


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


    The House Agriculture and Natural Resources Committee Substitute for SB 112 specifies that subsistence pay for Department of Natural Resources (DNR) Police Officers’ subsistence allowance is considered pensionable, both retroactively and prospectively. This would allow affected members to make contributions on the biweekly allowance of $60, and would include the subsistence allowance in calculation of Final Average Salary, thus increasing the benefit for those affected DNR Police Officers.
    
    Currently, subsistence allowance is not considered pensionable, but there is current litigation before the Circuit Court to clarify the issue. Approximately 115 current DNR Police Officers have ceased making contributions on subsistence pay as of November 2015, but subsistence allowances made between 1996 and November 2015 have yet to be returned to the members and their employer until the litigation is completed. Over one hundred DNR Police Officers have retired with the calculation of their benefits including the subsistence allowances made to them.
    
    The small size of the affected group relative to the population of PERS means that there would be no additional measurable cost to the plan by including past and future subsistence allowances to be pensionable. However, the additional payments would increase benefits to future members whose benefits would not include such subsistence allowance under current statute. The inclusion of subsistence allowance would increase FAS by $1560 per year. The increased benefit for these members could range from $200 to $1000 per year, depending on the length of service for the member.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2018
Increase/Decrease
(use"-")
2019
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):


    The small size of the affected group relative to the population of PERS means that there would be no additional measurable cost to the plan by including past and future subsistence allowances to be pensionable. However, the additional payments would increase benefits to future members whose benefits would not include such subsistence allowance under current statute. The increased benefit for these members could range from $200 to $1000 per year, depending on the length of service for the member.



Memorandum


    Currently, subsistence allowance is not considered pensionable, but there is current litigation before the Circuit Court to clarify the issue. Approximately 115 current DNR Police Officers have ceased making contributions on subsistence pay as of November 2015, but subsistence allowances made between 1996 and November 2015 have yet to be returned to the members and their employer until the litigation is completed. Over one hundred DNR Police Officers have retired with the calculation of their benefits including the subsistence allowances made to them.
    
    It must also be noted that other Police Officers who participate in the Public Safety Death, Disability, and Retirement Fund (Trooper Plan A) and the State Police Retirement System (Trooper Plan B), receive similar subsistence allowances which are not considered pensionable in their respective plans. In addition, other per diem allowances, bonuses, and most other supplemental payments made to public employees are not pensionable. Note that though this subsistence allowance is, however, still taxable (similar to bonus payments).
    



    Person submitting Fiscal Note: Melody Bailey, Actuarial Analyst, WV CPRB
    Email Address: melody.j.bailey@wv.gov