COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO.: 3624-01
BILL NO.: SB 817
SUBJECT: Retirement: Nonteacher Employees
TYPE: Original
DATE: January 24, 2000
FISCAL SUMMARY
FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
None | $0 | $0 | $0 |
Total Estimated
Net Effect on All State Funds |
$0 | $0 | $0 |
FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
None | $0 | $0 | $0 |
Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
School Districts | ($3,253,750) | ($3,253,750) | ($3,253,750) |
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 4 pages.
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 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.
Officials of the Office of Administration assume any fiscal impact would be determined by the Public School Retirement System.
Officials of the Public School Retirement System (PSRS) assume the proposal would provide the following benefit improvements for the Nonteacher School Employee Retirement System (NTRS):
PSRS officials note that while they have not had an actuarial study done on the proposal as written, they have had a study done on the provisions listed above, which they believe to be the intent of the proposal. The actuarial analysis indicates that the total cost of the provisions would be $101,467,000. As of June 30, 1999, the NTRS was overfunded by $166,796,000. However, because the normal cost component would exceed the current contribution rate, the contribution rate would be increased from the current 9.0% (4.5% each from local school districts and employee members) to a total of 9.95% (4.975% each from local school districts and employee members).
ASSUMPTION (continued)
Based on a covered payroll as of June 30, 1999 of $685 million and the increase in the contribution required from local school districts of 0.475%, Oversight calculates that annual contributions by school districts would increase by $3,253,750. Because the proposal has an emergency clause, a full year of costs is reflected in FY 2001 as well.
FISCAL IMPACT - State Government |
FY 2001 | FY 2002 | FY 2003 |
$0 | $0 | $0 |
FISCAL IMPACT - Local Government |
FY 2001 | FY 2002 | FY 2003 |
School Districts | ($3,253,750) | ($3,253,750) | ($3,253,750) |
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
DESCRIPTION
The proposal revises the Nonteacher School Employee Retirement System as follows:
(1) Revises the definition of final average salary from 5 years to 3 years;
(2) Increases the maximum allowable contribution rate from 4.5% to 5%;
(3) Implements the rule of 80 (retirement eligibility when age plus years of service equal 80);
(4) Increases the multiplier from 1.45% to 1.51% of final average salary;
(5) Extends the window for the 25-and-out option from July 1, 2000, to July 1, 2003, and increases the multiplier for each year of service between 25 and 29 years by .06%, ranging from 1.41% at 25 years up to 1.49% at 29 years of service in contrast to the current 1.35% for 25 years and 1.43% for 29 years;
(6) Provides a one-time benefit to members who retired before July 1, 2000, of 3.4%; and DESCRIPTION (continued)
(7) Creates a temporary multiplier of .4% for members who retire when they are less than 62 years of age and have 30 years of service or who are eligible under the rule of 80, until the
member reaches age 62.
The bill has an emergency clause.
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
January 25, 2000