HCS HB 911 -- COUNTY EMPLOYEES' RETIREMENT FUND (Clayton)

This substitute substantially revises the provisions of the
county employees' retirement fund, changing the basis of the
benefit from a defined benefit of 1.5% of final average salary
times years of service for non-LAGERS counties and 1% in LAGERS
counties to a flat-dollar benefit of $24 per year of service up
to 25 years or an amount correlated to target replacement ratios
for 4 tiers of average final compensation.  LAGERS county
employees will receive benefits at 2/3 of the non-LAGERS level.

Currently, 2 benefit options exist:  a reduced annuity with 50%
survivor benefit and an actuarial equivalent.  Under the
substitute, 100%, 75%, and 50% survivor options for the reduced
annuity are provided.  A reduced annuity is available for
members who terminate employment at or after age 55.  The normal
retirement age of 62 with 8 years of vesting remains unchanged.
Automatic cost-of-living adjustments (COLAs) not to exceed 1%,
rather than the current 2%, are provided.  The 2-year marriage
limit is removed; members may not change benefit form or
beneficiary after beginning benefits.  The 50% annuity to the
surviving spouse of a member who dies with 8 years of service
remains unchanged.

On or after January 1, 2000, persons who have not already opted
out of the system and new hires will be members.  Employees who
had opted out must wait 3 years to opt back in.  Such employees
may purchase all or part of their opted-out period as creditable
service; such purchase is not required.

The board will make contributions to defined contribution
accounts beginning in 2000, and nonLAGERS employees must make
such contributions at 0.7%.  A member leaving with less than 5
years of service forfeits the matching contributions.  The
substitute permits rollovers.

The substitute has an effective date of January 1, 2000.

FISCAL NOTE:  No impact on state funds.

HCS HB 911 -- COUNTY EMPLOYEES' RETIREMENT FUND

SPONSOR:  Hagan-Harrell (Clayton)

COMMITTEE ACTION:  Voted "do pass" by the Committee on
Retirement by a vote of 11 to 0.

This substitute substantially revises the provisions of the
county employees' retirement fund, changing the basis of the
benefit from a defined benefit of 1.5% of final average salary
times years of service for non-LAGERS counties and 1% in LAGERS
counties to a flat-dollar benefit of $24 per year of service up
to 25 years or an amount correlated to target replacement ratios
for 4 tiers of average final compensation.  LAGERS county
employees will receive benefits at 2/3 of the non-LAGERS level.

Currently, 2 benefit options exist:  a reduced annuity with 50%
survivor benefit and an actuarial equivalent.  Under the
substitute, 100%, 75%, and 50% survivor options for the reduced
annuity are provided.  A reduced annuity is available for
members who terminate employment at or after age 55.  The normal
retirement age of 62 with 8 years of vesting remains unchanged.
Automatic cost-of-living adjustments (COLAs) not to exceed 1%,
rather than the current 2%, are provided.  The 2-year marriage
limit is removed; members may not change benefit form or
beneficiary after beginning benefits.  The 50% annuity to the
surviving spouse of a member who dies with 8 years of service
remains unchanged.

On or after January 1, 2000, persons who have not already opted
out of the system and new hires will be members.  Employees who
had opted out must wait 3 years to opt back in.  Such employees
may purchase all or part of their opted-out period as creditable
service; such purchase is not required.

The board will make contributions to defined contribution
accounts beginning in 2000, and nonLAGERS employees must make
such contributions at 0.7%.  A member leaving with less than 5
years of service forfeits the matching contributions.  The
substitute permits rollovers.

The substitute has an effective date of January 1, 2000.

FISCAL NOTE:  No impact on state funds.

PROPONENTS:  Supporters say that the County Employees Retirement
Fund serves 111 counties; more than half of its members have no
other retirement program.  The fund has a few weaknesses, the
most serious of which is a disconnect between the source of its
funding, which is fees, assessments and penalties, and its
benefits.  The major overhaul proposed in the bill will improve
the funding status of the system without anyone having to give
up benefits.

Testifying for the bill were Representative O'Toole; County
Employees Retirement Fund; Aon Consulting; Recorders Association
of Missouri; Missouri County Treasurers' Association; and
Missouri County Coroners' Association.

OPPONENTS:  There was no opposition voiced to the committee.

Becky DeNeve, Legislative Analyst

HB 911 -- County Employees' Retirement Fund

Co-Sponsors:  Clayton, O'Toole, Elliott, Hagan-Harrell

This bill substantially revises the provisions of the county
employees' retirement fund, changing the basis of the benefit
from a defined benefit of 1.5% of final average salary times
years of service for non-LAGERS counties and 1% in LAGERS
counties to a flat-dollar benefit of $24 per year of service up
to 25 years or an amount correlated to target replacement ratios
for 4 tiers of average final compensation.  LAGERS county
employees will receive benefits at 2/3 of the non-LAGERS level.
The board of the system is permitted to change the benefit
formula under certain conditions.

Currently, 2 benefit options exist:  a reduced annuity with 50%
survivor benefit and an actuarial equivalent.  Under the bill,
100%, 75%, and 50% survivor options for the reduced annuity are
provided.  A reduced annuity is available for members who
terminate employment at or after age 55.  The normal retirement
age of 62 with 8 years of vesting remains unchanged.  Automatic
cost-of-living adjustments (COLAs) not to exceed 1%, rather than
the current 2%, are provided, and additional increases may be
granted at the discretion of the board.  The 50% COLA cap is
removed.  The 2-year marriage limit is removed; members may not
change benefit form or beneficiary after beginning benefits.
The 50% annuity to the surviving spouse of a member who dies
with 8 years of service remains unchanged.

On or after January 1, 2000, persons who have not already opted
out of the system and new hires will be members.  Employees who
had opted out must wait 3 years to opt back in.  For these
employees, withholding for LAGERS counties is 1%; nonLAGERS
counties, 1.5%.  Such employees may purchase all or part of
their opted-out period as creditable service; such purchase is
not required.

The board will make contributions to defined contribution
accounts beginning in 2000, and nonLAGERS employees must make
such contributions at 0.7%.  A member leaving with less than 5
years of service forfeits the matching contributions.  The bill
permits rollovers.