SB 0314 - Fiscal Note

Fiscal Note - SB 0314 - Modifies provisions of the state retirement system

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO.: 1075-03

BILL NO.: SB 314

SUBJECT: Retirement

TYPE: Original

DATE: February 1, 1999

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
General Revenue	($4,014,208)	($4,817,050)	($4,817,050)
Total Estimated Net Effect on All State Funds	($4,014,208)	($4,817,050)	($4,817,050)

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
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 4 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 any fiscal impact would be determined by the Missouri State Employees' Retirement System.

Officials of the Highways and Transportation Employees' and Highway Patrol Retirement System assume the proposal would have no fiscal impact on their system.

Missouri State Employees' Retirement System (MOSERS) officials assume that the proposal would grant an unreduced joint & 50% survivor benefit, with accompanying lump sum payments (where applicable), to the following groups:

• Survivors of active employees where the active employees terminated employment on or after 10/1/84 but died prior to the effective date of HB 356 in 1997.



• Survivors of retirees where the retirees terminated employment on or after 10/1/84, retired after electing the joint and survivor option or life annuity (and were married at the time of retirement), and died prior to the effective date of HB 356 in 1997.



• Former deferred vested members who terminated employment on or after 10/1/84 and who elected the deferred retirement lump sum option. (Members' lump sum distributions were calculated using a present value factor which did not reflect the value of the unreduced joint & 50% survivor benefit.)



• Members who terminated employment on or after 10/1/84, retired (and were married at the time of retirement), and were re-employed by the state prior to the effective date of HB 356 in 1997.

In addition, the legislation would increase the retirement formula for the legislator benefit from $150 per biennial assembly to $200 per month per biennial assembly. Several administrative provisions affecting MOSERS are also included in the proposal.

The actuarial cost analysis for the benefit improvements included in the proposal indicates that the state's contribution rate would increase from 11.91% to 12.24%. Based on a covered payroll ASSUMPTION (continued)

of $1,459,712,203 as of June 30, 1998, the increase in the state's contributions would approximate $4,817,050 annually.

FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
GENERAL REVENUE FUND
Costs-increased contributions to MOSERS	($4,014,208)	($4,817,050)	($4,817,050)
FISCAL IMPACT - Local Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
	0	0	0
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.

DESCRIPTION

This legislation modifies various provisions in the current state employee retirement plan. Among the provisions are the following:

The proposed legislation would grant an unreduced joint and 50% survivor benefit, with accompanying lump sum payments (where applicable), to specified groups.

The proposal would also increase the retirement formula for the legislator benefit from $150 per month per biennial assembly to $200 per month per biennial assembly.

In addition, several administrative provisions are included in the proposal.

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

Highways and Transportation Employees' and Highway Patrol Retirement System

Missouri State Employees' Retirement System

Jeanne Jarrett, CPA

Director

February 1, 1999