This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0540 - MO Rehab Center Moved From DOH To UMC Curators
L.R. NO. 2371-03
BILL NO. Truly Agreed and Finally Passed SCS for SB 540
SUBJECT: Disability; Health; Department of Health; University of Missouri
TYPE: Original
DATE: March 12, 1996
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
General Revenue $0 $0 $0
Missouri
Rehabilitation
Center $0 $0 $0
Institutional Gift $0 $0 $0
Total Estimated
Net Effect on All
State Funds $0 $0 $0
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Federal Fund $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
Local Government $0 $0 $0
FISCAL ANALYSIS
ASSUMPTION
Officials of the Office of State Treasurer (STO), the Office of Governor
(GOV), and the Office of Attorney General (AGO) assume this proposal would
not fiscally impact their agencies.
The Office of Administration (COA) states there should be no added cost to
COA as a result of this bill. Funds for fringe benefit payments for
employees at the Missouri Rehabilitation Center (MRC) that are paid through
appropriations to COA would be transferred to the University of Missouri
(UM). A total of $2,765,562 for fringe benefits would be transferred in FY
97. This would be a savings to COA but the net effect on the state budget
would be zero due to appropriations to UM increasing by the same amount.
Department of Health (DOH) officials assume that all revenues,
appropriations, and general fixed assets of the MRC would be removed from DOH
and would be transferred to UM except for the State Tuberculosis Laboratory.
UM officials assume that all revenues and appropriations received by DOH
would be transferred to UM. In addition, UM assumes one-time costs of
$2,509,522 for maintenance and repair, $800,000 for communications linkages,
$669,812 for accrued vacation, holiday, and compensatory time liabilities,
and $188,772 for retirement system contributions.
Oversight assumes that the costs for accrued vacation, holiday, compensatory
time, and sick leave liabilities would be on a pay-as-you-go basis.
Therefore, Oversight has assumed these costs would be paid from existing and
transferred appropriations. Oversight further assumes the one-time cost for
maintenance and repair and the communication linkages would be a budget issue
and not the result of this proposal. It is also assumed that the UM fringe
benefit percentage would apply to all personal service costs which is higher
than the fringe benefit costs currently being incurred for these employees.
The Missouri State Employees' Retirement System (MOSERS) states the proposed
legislation would allow the Department of Health (DOH) to transfer the
Missouri Rehabilitation Center (MRC) to the University of Missouri (UM) upon
agreement between DOH and the University s Board of Curators. MOSERS assumes
that an agreement would be reached between both parties and that all
employees of MRC shall become employees of the University on the effective
date of this proposal.
The University's Board of Curators shall, at the option of the employee and
if the employee is benefit eligible under University policies, enroll a
transferred employee in the University's benefit program, including
retirement, health, life insurance, long-term disability and accidental death
and dismemberment on that date, or shall provide for the transferred employee
to continue participation in the State's benefit programs if the employee
elects to continue in those programs within ninety days after notification of
the transfer of MRC to the University's Board of Curators. Any employee who
fails to make an election within that time frame shall be deemed to have
elected enrollment in the University's benefit program. For an employee to
transfer to the University's benefit programs without showing evidence of
good health, the employee must be currently enrolled in like benefit programs
of the State, unless none exists.
Retirement
Those employees transferring to the University's benefit programs shall
receive credit for service accrued under the MOSERS. The University's Board
of Curators would be reimbursed by MOSERS for the portion of the actuarial
accrued liability MOSERS has for the service being transferred. The amount of
such liability shall be calculated by using the ratio of the actuarial
accrued liability of each member who transfers from MOSERS to the total
actuarial accrued liability for MOSERS as a whole, and applying that ratio to
the actuarial value of total pension trust assets of MOSERS. MOSERS' funded
ratio of 84.1% (actuarial value of assets divided by accrued liability) was
determined in the June 30, 1995 valuation.
MOSERS assumes that all 410 actual employees of MRC would elect to transfer
to the University's retirement program. Under this assumption, MOSERS would
transfer to the University's Board of Curators assets and liabilities
equivalent to $11,675,691.
Life Insurance
The State presently provides $15,000 of basic life insurance coverage at no
cost to the employee. Assuming that all 410 employees of MRC choose to
transfer to the University's life insurance program, the State's contribution
to life insurance will be reduced by approximately $21,402 per annum. (Rate
for coverage is $4.35 per month x 12 months x 410 employees = $21,402).
Long-Term Disability
The State also provides a long-term disability plan at no cost to the
employee. Again, assuming that all 410 employees of MRC choose to transfer
to the University's long-term disability program, the State's contribution to
life insurance will be reduced by approximately $50,270 per annum.
Oversight assumes this proposal would become effective July 1, 1996.
FISCAL IMPACT - State Government FY 1997 FY 1998 FY 1999
GENERAL REVENUE FUND
Savings - Department of Health
Missouri Rehabilitation Center
Personal service (229.3 FTE) $4,313,682 $0 $0
Fringe benefits $2,765,562 $0 $0
Expense and equipment $2,900,000 $0 $0
Total Savings - Department of Health $9,979,244 $0 $0
Savings - Office of Administration
MOSERS contribution $892,797 $915,117 $937,99
Decrease - Department of Health
General Fixed Asset Account Group ($20,288,453) $0 $0
Costs - University of Missouri
Personal service (229.3 FTE) ($4,313,682) $0 $0
Fringe benefits ($3,658,359) ($915,117) ($937,995)
Expense and equipment ($2,900,000) $0 $0
Total Costs - University of Missouri ($10,872,041) ($915,117) ($937,995)
Increase - University of Missouri
General Fixed Asset Account Group $20,288,453 $0 $0
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND * $0 $0 $0
* Does not include any potential unknown liability costs.
MISSOURI REHABILITATION CENTER
EARNINGS FUND
Savings - Department of Health
Missouri Rehabilitation Center
Personal service (239.95 FTE) $5,615,326 $0 $0
Expense and equipment $6,278,441 $0 $0
Total Costs - Department of Health $11,893,767 $0 $0
Costs - University of Missouri
Personal service (239.95 FTE) ($5,615,326) $0 $0
Expense and equipment ($6,278,441) $0 $0
Total Costs - University of Missouri ($11,893,767) $0 $0
ESTIMATED NET EFFECT ON
MISSOURI REHABILITATION CENTER
EARNINGS FUND $0 $0 $0
INSTITUTIONAL GIFT FUND
Savings - Department of Health
Missouri Rehabilitation Center
Expense and equipment $160,000 $0 $0
Costs - University of Missouri
Transfer of appropriations ($160,000) $0 $0
(Expense and equipment)
ESTIMATED NET EFFECT ON
INSTITUTIONAL GIFT FUND $0 $0 $0
FEDERAL FUNDS
Savings - Department of Health
Missouri Rehabilitation Center
Expense and equipment $150,000 $0 $0
ASSUMPTION (continued)
Costs - University of Missouri
Transfer of appropriations ($150,000) $0 $0
(Expense and equipment)
ESTIMATED NET EFFECT ON
FEDERAL FUNDS $0 $0 $0
DESCRIPTION
This proposal allows for the transfer of control and management of the
Missouri Rehabilitation Center (Center) from the Department of Health (DOH)
to the Board of Curators of the University of Missouri upon agreement between
DOH and the Board. The General Assembly would appropriate funds to the Board
as a separate line item to maintain the Center. All Center employees would
be transferred to the employment of the Board. This proposal would become
effective on July 1, 1996, or upon final passage and approval, whichever
later occurs.
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
Office of State Treasurer
Office of Governor
Office of Attorney General
Office of Administration
Department of Health
Missouri State Employees'
Retirement System
University of Missouri