SB 0351 - Fiscal Note

Fiscal Note - SB 0351 - Modifies basic life insurance and holidays for state employees

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO.: 1078-04

BILL NO.: Perfected SCS for SB 351

SUBJECT: State Employees; Holidays; Life Insurance

TYPE: Original

DATE: April 7, 1999

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
General Revenue		($1,141,571)	($2,283,142)
State Highway Fund		($246,754)	($473,545)
Total Estimated Net Effect on All State Funds	$0	($1,388,325)	($2,756,687)

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 from the Missouri State Employee's Retirement System (MOSERS) assumes the cost to implement the proposed basic life insurance benefit change for 47,024 active employees would be approximately $2.3 million per year. Increasing the present life insurance benefit from $15,000 to one times annual salary, with a $15,000 minimum, and providing triple indemnity for duty related death for all employees would increase the annual premium by $2,283,142. The State's current annual premium equals $2,454,653 (47,024 employees x $15,000 / $1,000 x .29 x 12 months). The new annual premium would be $4,737,795. Using the annual state payroll of $1,281,871,026, divided by $1,000 equals 1,281,871 in coverage; times a premium of .308 per $1,000 of coverage; times 12 months is $4.7 million. Assuming an effective date of January 1, 2001, the total fiscal impact to the General Revenue Fund would be $1,141,571 for FY 2001 and $2,283,142 for FY 2002.

Officials from the Department of Transportation (MoDOT) assume no fiscal impact due to the removal of the 3 holidays because it provides at least that much in combined holiday and annual leave. However, there is a fiscal impact to MoDOT from the life insurance provisions of the proposal. Currently, MoDOT pays .23 cents per $1,000 of coverage for the $15,000 state paid life insurance with Standard Life Insurance Company which amounts to $273,240 per year (6,600 employees x $15,000 / $1,000 x .23 x 12 months). Increasing the coverage to each employee's annual salary and having triple indemnity paid on employees whose death results from injury or disease related to actual performance of duty, will increase our current rate to 24 cents per $1,000 of coverage. Assuming an effective date of January 1, 2001 and using total payroll for FY 1998 of $206,822,161, increasing this amount 2.5% each year for inflation, the total fiscal impact to the Highway Fund would be $184,104 for FY 2001 and $348,244 for FY 2002.

Although the proposal allows the Highway Commission to elect whether or not to provide the insurance, MoDOT assumes the Commission would elect to do so.

Officials from the Missouri Highway Patrol assume this proposal will increase premium costs by $125,301 per year. Assuming an effective date of January 1, 2001, the total fiscal impact to the Patrol would be $62,650 for FY 2001 and $125,301 for FY 2002. For fiscal note purposes, the net impact to the Highway Patrol is reflected in the State Highway Fund since the majority of personnel services costs for the Patrol are charged to that fund.

Officials from the Office of Administration (COA) assume no fiscal impact with that portion of the proposal that deals with state holidays.

FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
		(6 months)
GENERAL REVENUE FUND
Cost - State Departments
Increased basic life insurance coverage	$0	($1,141,571)	($2,283,142)
STATE HIGHWAY FUND
Cost - Department of Transportation
Increased basic life insurance coverage	$0	($184,104)	($348,244)
Costs - Highway Patrol
Increased basic life insurance coverage	$0	($ 62,650)	($125,301)
ESTIMATED NET EFFECT ON
STATE HIGHWAY FUND	$0	($246,754)	($473,545)
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

The proposal would reduce the number of state holidays while allowing employees hired prior to January 1, 2000 to retain the same amount of combined annual leave and holiday leave. In addition, the proposal increases the amount of state provided basic life insurance to one times the annual pay of each employee, subject to a minimum amount of fifteen thousand dollars. Such life insurance shall provide for triple indemnity payment to employees whose death results from injury or disease related to actual performance of duty.

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

Missouri State Employees' Retirement System

Highway Patrol

Department of Transportation

Office of Administration

Jeanne Jarrett, CPA

Director

April 7, 1999