SB 0799 - Fiscal Note

Fiscal Note - SB 0799 - Modifies provisions of the Kansas City Police and Civilian Retirement Systems

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 2962-01

BILL NO. SB 799

SUBJECT: Retirement: Kansas City Police

TYPE: Original

DATE: February 23, 1998

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FISCAL SUMMARY

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

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

*Does not reflect increase in Kansas City Police Retirement System's unfunded actuarial accrued liability of $4,507,005.

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 benefits as defined in section 105.660(5), RSMo. Therefore, an actuarial cost statement is required to be provided prior to final action 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 System.

Kansas City Police and Civilian Retirement System officials assume that the provisions affecting the Civilian System would not create any additional costs, and that costs that may be increased by provisions affecting the Police System are fully covered by the present funding contribution rates. Therefore, there would be no additional costs to the City of Kansas City.

Information provided by the System's actuary indicates that the total increase in the System's unfunded actuarial accrued liability (UAAL) as a result of the proposal's revised widow benefit formula and $600 minimum monthly benefit would approximate $4,507,005, increasing the total UAAL from $67,234,073 to $71,741,078. The increase in the UAAL would result in an increase in annual pension costs of 0.53%, or an increase in the required contribution based on the May 1, 1997 actuarial valuation of 18.87% to 19.40% of covered payroll. However, the City of Kansas City currently contributes to the System at a rate of 20.60% of covered payroll. Therefore, the additional costs of the proposal would not result in a contribution rate increase to the City of Kansas City.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
	0	0	0
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(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

The proposal would make various modifications to provisions within the Kansas City Police and Civilian Retirement Systems regarding member benefits, surviving spouse benefits and the investment of funds. Included are modifications establishing a minimum pension of $600 per month for members and surviving spouses, as well as an increase in the monthly benefits paid to surviving spouses from 40% to 80% of the benefit a retired member was receiving immediately prior to death.

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 Retirement Systems

NOT RESPONDING: City of Kansas City

Jeanne Jarrett, CPA

Director

February 23, 1998