SB 0679 - Fiscal Note

Fiscal Note - SB 0679 - Modifies state deferred compensation matching amount for state employees

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 2166-03

BILL NO. SB 679

SUBJECT: State Employees: Contributions

TYPE: Original

DATE: January 21, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
All State Funds (including federal funds)	($43,000,000 to $373,162,000)	($43,000,000 to $382,491,000)	($43,000,000 to $392,053,000)
Total Estimated Net Effect on All State Funds	($43,000,000 to $373,162,000)	($43,000,000 to $382,491,000)	($43,000,000 to $392,053,000)

SUBJECT TO APPROPRIATIONS

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
None	$0	$0	$0
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 3 pages.

FISCAL ANALYSIS

ASSUMPTION

The Department of Conservation assumes that the fiscal impact of this proposal is unknown. This appears to be enabling legislation and the fiscal impact on Conservation Commission Funds would depend upon available appropriated funds.

Officials from the Department of Revenue and the Office of Administration assume this proposal would not fiscally impact their agencies.

Officials from the Public Employees Benefit Corporation (PEBSCO) assume this proposal could cost the state up to $43,000,000 annually, based on current plan participation. Approximately 35,000 state employees currently participate in the State's Deferred Compensation Program, with an average deferral of $100 per month. The total amount deferred by state employees annually is $53,500,000. The state presently contributes $25 per month per participating employee equaling about $876,000 per month, equal to $10,500,000 annually. The difference between the current deferral amount and incentive amount paid by the state is $43,000,000 annually. However, Oversight believes the amount would be greater given the likelihood that more employees will participate in the plan and make larger deferrals.

The State of Missouri's annual payroll is $1,534,648,335. Assuming that all state employees decided to participate in the deferred compensation plan and contributed the maximum of 25% of their annual salary, the State of Missouri would experience an increase in their incentive payment of $373,162,000 annually.

Officials from the Department of Transportation assume this proposal could have a large fiscal impact on the Highway Fund. However, Oversight has included these costs in the total costs provided by PEBSCO and therefore, did not show the costs separately.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
ALL STATE FUNDS
Cost - All State Agencies
Increase in State match on Deferred	($43,000,000	($43,000,000	($43,000,000
Compensation Funds	to	to	to
	$373,162,000)	$382,491,000)	$392,053,000)
			SUBJECT TO APPROPRIATIONS
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	$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 proposal would allow state employees to receive a true match from the state for deferred compensation, however, the amount matched cannot exceed that appropriated by the General Assembly.

This act has an emergency clause effective upon passage and approval or July 1, 1998, 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

Department of Conservation

Office of Administration

Department of Transportation

Department of Revenue

Public Employees Benefit Services Corporation

Jeanne Jarrett, CPA

Director

January 21, 1998