SB 0523 - Fiscal Note

Fiscal Note - SB 0523 - Changes in St. Louis City School Retirement

L.R. NO.  2148-01
BILL NO.  Perfected SB 523
SUBJECT:  Retirement:  Schools
TYPE:     Original
DATE:     May 1, 1996



                              FISCAL SUMMARY

                    ESTIMATED NET EFFECT ON STATE FUNDS

FUND AFFECTED            FY 1997             FY 1998              FY 1999

General Revenue               $0  $0 to $12,705,011)  ($0 to $12,705,011)

Total Estimated
Net Effect on All
State Funds*                  $0 ($0 to $12,705,011)  ($0 to $12,705,011)


                   ESTIMATED NET EFFECT ON FEDERAL FUNDS

FUND AFFECTED            FY 1997             FY 1998              FY 1999

                              $0                  $0                   $0

Total Estimated
Net Effect on All
Federal Funds                 $0                  $0                   $0


                    ESTIMATED NET EFFECT ON LOCAL FUNDS

FUND AFFECTED            FY 1997             FY 1998              FY 1999

St. Louis School
District*                     $0 ($0 to $12,705,011)  ($0 to $12,705,011)

*Depends on applicability of Article X, Section 21 of the Missouri
Constitution.


                              FISCAL ANALYSIS

ASSUMPTION

Officials of the Joint Committee on Public Employee Retirement (JCPER) have
reviewed this legislation and have determined that the proposal represents a
"substantial proposed change" in future plan benefits as defined in Section
105.660(5).  Therefore, an actuarial cost statement as defined in Section
105.665 must be provided prior to final action on the legislation by either
legislative body or committee thereof.

Officials of the Office of Administration (OA) indicate that the St. Louis
Public School Retirement System would need to determine the fiscal impact of
the proposal.  OA officials also assume that if the proposal results in an
increase in the contribution rate for member school districts, the provisions
of Article X, Section 21 of the Missouri Constitution could be violated.

St. Louis Public School Retirement System officials requested their actuary,
W. Alfred Hayes & Co. to prepare an actuarial cost analysis for the proposal.
The actuary based the analysis on the January 1, 1995 actuarial valuation,
using new actuarial assumptions adopted by the System's board of trustees in
October, 1995.  The actuary indicates that those newly-adopted assumptions
had very little fiscal impact on the valuation prepared for this proposal;
therefore, additional costs given are considered a direct result of the
proposal.  If the legislation is successful it would become effective August
28, 1996.  The first actuarial valuation that would be based on the
provisions in this proposal would be performed as of January 1, 1997, with
the school district making the required total annual contribution on December
31, 1997.  The actuary also indicated that costs determined on January 1,
1997 may actually be higher due to salary increases or other factors that may
occur, since the projected costs given are based on January 1, 1995 data.
The actuary determined that the proposal would result in an increase of the
required contribution by the St. Louis School District from the present rate
of 7.38% to 13.63% of covered payroll, or a total additional annual
contribution of $12,705,011.

Oversight assumes that since this proposal would result in an increase in the
contribution rate for the school district, the possibility for state
reimbursement under Article X, Section 21 of the Missouri Constitution would
exist.  Therefore, Oversight has reflected potential costs for the state as
well.


FISCAL IMPACT - State Government        FY 1997       FY 1998       FY 1999
                                       (10 Mo.)
GENERAL REVENUE FUND

Costs-reimbursement to St. Louis School      $0        ($0 to        ($0 to
  District *                                     $12,705,011)  $12,705,011)


FISCAL IMPACT  - Local Government       FY 1997       FY 1998       FY 1999
                                       (10 Mo.)

ST. LOUIS SCHOOL DISTRICT
                                             $0        ($0 to        ($0 to
Costs-increased contributions *                  $12,705,011)  $12,705,011)

* Depends on applicability of Article X, Section 21 of the Missouri
Constitution.


DESCRIPTION

This legislation would increase the benefit multiplier for the retirement
allowance for members of the St. Louis Public School Retirement System from
1.25% to 1.5% of the members' average final compensation.  It would also,
upon approval of the board of trustees, allow certain members to receive
additional benefits as special consultants, including annual cost-of-living
increases subject to certain limitations.

This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.


SOURCES OF INFORMATION

Joint Committee on Public Employee Retirement
Office of Administration
St. Louis Public School Retirement System
W. Alfred Hayes & Company