SB 0197 - Fiscal Note

Fiscal Note - SB 0197 - Modifies Kansas City Police and Civilian Retirement Systems

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO.: 0668-01

BILL NO.: Truly Agreed to and Finally Passed SB 197

SUBJECT: Retirement: Kansas City Police and Civilian

TYPE: Original

DATE: April 30, 1999

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
None	$0	$0	$0
Total Estimated Net Effect on All State Funds	$0	$0	$0

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
None	$0	$0	$0
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
City of Kansas City*	$0*	$0*	$0*

*DOES NOT REFLECT INCREASE IN UNFUNDED ACTUARIAL ACCRUED LIABILITY OF KANSAS CITY POLICE RETIREMENT SYSTEM, WHICH ARE NOT CONSIDERED LOCAL FUNDS FOR FISCAL NOTE PURPOSES.

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 3 pages.

FISCAL ANALYSIS

ASSUMPTION

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

Officials of the Office of Administration assume that any fiscal impact would be determined by the Kansas City Police and Civilian Retirement Systems.

The Kansas City Police and Civilian Retirement Systems obtained an actuarial cost analysis of this proposal. The provisions affecting the Police System that would result in costs are changing the formula for monthly pension benefits paid to future surviving spouses of members of the system and adding a $600 minimum monthly benefit for retirees and surviving spouses. Officials assume that there would be no additional cost to either the Police Retirement System or to the Civilian Employees' Retirement System, nor to the City of Kansas City, since the provisions affecting the Civilian System do not create any additional costs, and the costs associated with the provisions affecting the Police System are fully covered by the present funding contribution rates for the system. Officials indicate that annual costs for those provisions affecting the Police System would approximate 0.61% of covered payroll, which would approximate $304,390 based on the current covered payroll. However, this cost is not significant enough to result in a change to the City's contribution rate.

Oversight notes that while there is fiscal impact to the Police Retirement System, there is no immediate cost to the City of Kansas City as a result of this proposal. Funds of the retirement system are not considered local funds for fiscal note purposes. There will be long-term fiscal impact as a result of this legislation, since a reduction in the system's surplus will contribute to any need for increased contributions from the City of Kansas City.

FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
	0	0	0
FISCAL IMPACT - Local Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
CITY OF KANSAS CITY *	0*	0*	0*
*DOES NOT REFLECT INCREASE IN UNFUNDED ACTUARIAL ACCRUED LIABILITY OF KANSAS CITY POLICE RETIREMENT SYSTEM, WHICH ARE NOT CONSIDERED LOCAL FUNDS FOR FISCAL NOTE PURPOSES.
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.

DESCRIPTION

The proposal would modify the Kansas City Police and Civilian Police Retirement Systems with respect to members, surviving spouses and investment funds. Within the Kansas City Police Retirement System, it would establish a minimum pension benefit of $600 for all members with at least 25 years of service or who have been permanently incapacitated as a result of an on-the-job accident or injury. A $600 monthly minimum pension is also established for surviving spouses of members entitled to the same minimum pension. If a member dies while in service, the surviving spouse would receive a base pension of 40% of the member's final compensation. If a member retires and dies after commencement of benefits, the surviving spouse would receive a base pension of 80% of the member's pension amount.

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

Kansas City Police and Civilian Police Retirement System

Jeanne Jarrett, CPA

Director

April 30, 1999