SB 0286 - Fiscal Note

Fiscal Note - SB 0286 - Revises benefits for certain Public School Retirement System retirees

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO.: 1080-01

BILL NO.: SB 286

SUBJECT: Retirement: Teachers

TYPE: Original

DATE: February 2, 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
School Districts *	$0*	$0*	$0*

*DOES NOT REFLECT REDUCTION OF UNKNOWN AMOUNT IN SURPLUS OF PUBLIC SCHOOL 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 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. The fiscal impact of the proposal cannot be accurately determined without such a cost study.

Officials of the Office of Administration assume that any fiscal impact would be determined through an actuarial report.

Public School Retirement System (PSRS) officials assume the proposal would allow those individuals who retired prior to August 28, 1995 and who elected a "non pop-up" option to have their benefit restored to the full amount upon the death of their beneficiary as though the option had not been chosen. If these individuals had chosen the pop-up option, thereby taking a greater reduction in their original benefit, their benefit would automatically be increased upon the death of their beneficiary.

PSRS officials indicated that no cost study has been requested concerning this proposal, although they assume that such a study would be required. Officials have determined that the proposal could potentially directly affect approximately 6,500 retirees. Total costs of the proposal cannot be reasonably determined. However, as of June 30, 1998, the PSRS was overfunded by $508,309,000.

Oversight notes that while there may be significant fiscal impact to the retirement system, there would not likely be immediate costs to local school districts 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 local school districts in the future.

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.)
SCHOOL DISTRICTS *	0*	0*	0*
*DOES NOT REFLECT REDUCTION OF UNKNOWN AMOUNT IN SURPLUS OF PUBLIC SCHOOL 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 allow a member of the Public School Retirement System who retired prior to August 28, 1995 and who chose a reduced retirement allowance for a beneficiary who has died to collect the amount, beginning September 1, 1999, that the member would have received had the reduced allowance option not been chosen.

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

Public School Retirement System

Jeanne Jarrett, CPA

Director

February 2, 1999