COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. No.:         5027-02

Bill No.:          SCS for HB 1331

Subject:           Retirement - State; Transportation Dept.; Highway Patrol

Type:              Original

Date:               April 20, 2012

Bill Summary:            Modifies provisions relating to reciprocal transfers of creditable service for MOSERS and MPERS.

FISCAL SUMMARY

Numbers within parentheses: ( ) indicate costs or losses.

This fiscal note contains 10 pages.

☒ Estimated Total Net Effect on All funds expected to exceed $100,000 savings or (cost).

☐ Estimated Net Effect on General Revenue Fund expected to exceed $100,000 (cost).

FISCAL ANALYSIS

ASSUMPTION

The Joint Committee on Public Employee Retirement (JCPER) has reviewed this proposal and has determined an actuarial study is not needed under the provisions of section 105.660, subdivision (5).

Officials from the Department of Transportation, MoDOT & Patrol Employees’ Retirement System and Missouri Highway Patrol assume there will be no fiscal impact to their agencies.

Officials from the Office of Administration - Division of Budget & Planning (BAP) assume this proposal should not result in additional costs or savings to the BAP. They defer to MOSERS and MPERS on the fiscal impact of transferring service in this proposal.

Officials from the Missouri State Employees Retirement System assume this proposal is estimated to have no effect on their current benefit obligation or current employer contributions for members presently covered under the system.

Section 104.1084 & 104.1091

The Joint Committee on Public Retirement indicates that this legislation does represent a “substantial proposed change” in future plan benefits as defined in Section 105.660(5). Therefore, an actuarial cost statement as defined in Section 105.665 must be provided prior to final action on this legislation by either legislative body or committee thereof.

Pursuant to Section 105.670, this actuarial cost statement must be filed with 1) the Chief Clerk of the Missouri House of Representatives, 2) the Secretary of the Senate and 3) the Joint Committee on Public Employee Retirement as public information for at least (5) legislative days before final passage of the bill.

An actuarial cost statement for this legislation has not been filed with the Joint Committee on Public Employee Retirement. It would be impossible to accurate determine the fiscal impact of this proposed legislation without the actuarial cost statement prepared in accordance with Section 105.665, RSMo.

Officials from the Office of Administration defer their response to the Missouri State Employees’ Retirement Plan.

ASSUMPTION (continued)

Officials from the MoDOT & Patrol Employees’ Retirement System assume this proposal provides an insignificant savings to their system.

Officials at the Office of the Secretary of State (SOS) state many bills considered by the General Assembly include provisions allowing or requiring agencies to submit rules and regulations to implement the act. The Secretary of State’s Office is provided with core funding to handle a certain amount of normal activity resulting from each year’s legislative session. The fiscal impact for this fiscal not to Secretary of State’s office for Administrative Rules is less than $2,500. The Secretary of State’s Office recognizes that this is a small amount and does not expect that additional funding would be required to meet these costs. However, we also recognize that many such bills may be passed by the General Assembly in a give year and that collectively the costs may be in excess of what their office can sustain with their core budget. Therefore, they reserve the right to request funding for the cost of supporting administrative rules requirements should the need arise based on a review of the finally approved bills signed by the governor.

Officials from the State Treasurer’s Office and State Auditor’s Office assume no fiscal impact to their agency.

Officials from the Governor’s Office assume there should be no added cost to their office as a result of this measure.

Officials from the Office of Administration - Division of Budget & Planning assume this proposal should not result in additional costs or savings. They defer to MOSERS for an estimated fiscal impact on the retirement system.

Officials from the Missouri State Employees’ Retirement System (MOSERS) assume the proposed legislation described in Fiscal Note. No. 4489-01 (SB 492) would, if enacted, require any member of the General Assembly and any statewide elected official who first holds office on or after January 1, 2013, to participate in the Missouri State Employee Plan 2011 (MSEP 2011) for general employees in lieu of participating in the MSEP 2011 retirement plan for members of the General Assembly or statewide elected officials.

As illustrated below, members of the General Assembly and statewide elected officials participate in the legislative retirement plan or the statewide elected official plan, respectively, which provides a different level of benefits as compared to general employees.

ASSUMPTION (continued)

Current Benefits for

Members of the General Assembly

MSEP 2011

Normal Retirement Eligibility                        Age 62 with completion of at least 3 full

                                                                       biennial assemblies; or

                                                                       Age 55 with completion of at least 3 full

                                                                       biennial assemblies with age plus

                                                                       credited service as equal to 90 or more.

Benefit Formula                                             Life benefit equivalent to 1/24 of pay times

                                                                       the first 24 years of credited service as a member

                                                                       of the General Assembly.

Early Retirement Eligibility                           Not applicable.

Vesting                                                           3 full biennial assemblies (6 years).

Member Contributions                                   4% of salary with 4% interest credited to

                                                                       member contributions.

ASSUMPTION (continued)

Current Benefits for

Statewide Elected Officials

MSEP 2011

Normal Retirement Eligibility                         Age 62 with at least 4 years of credited

                                                                         service; or age 55 with age plus credited

                                                                         service equal to 90 or more.

Benefit Formula                                               Life benefit equivalent to 1/24 of pay times the first

                                                                         12 years of credited service as a statewide

                                                                         elected official.

Early Retirement Eligibility                             Not applicable.

Vesting                                                             1 term (4 years).

Member Contributions                                     4% of salary with 4% interest credited to

                                                                         member contributions.

Current Benefits for

General Employees

MSEP 2011

Normal Retirement Eligibility                         Age 67 with at least 10 years of credited

                                                                         service; or age 55 with age plus credited

                                                                         service equal to 90 or more.

Benefit Formula                                               Life benefit equivalent to 1.7% of final pay

                                                                         times years of credited service.

Early Retirement Eligibility                             Age 62 with at least 10 years of credited

                                                                         service.

Early Retirement Benefit Amount                   Normal retirement amount reduced by ½%

                                                                         for each month that retirement precedes

                                                                         eligibility for normal retirement.

Vesting                                                             10 years.

Member Contributions                                     4% of salary with 4% interest credited to member

                                                                         contributions.

Fiscal Impact

The proposed change to benefits for new hires has no effect on MOSERS’ current benefit obligation or current employer contributions for the active members presently covered under

ASSUMPTION (continued)

the MSEP 2000; however, the long-term effect of the proposed change is a decrease in the employer normal cost of approximately 0.04% of total MOSERS’ payroll.

Impact on MOSERS Employer Contributions

ASSUMPTION (continued)

Projected Change in Annual Employer Contributions

FISCAL IMPACT - Small Business

No direct fiscal impact to small businesses would be expected as a result of this proposal.

FISCAL DESCRIPTION

The proposed legislation modifies the amount of retirement benefits transferred when employees transfer between certain retirement systems.

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

Missouri State Employees’ Retirement System

Governor’s Office

State Auditor’s Office

State Treasurer’s Office

Secretary of State’s Office

Office of Administration - 

            Division of Budget and Planning

MoDOT & Patrol Employees’ Retirement System

                                                                                                Mickey Wilson, CPA

                                                                                                Director

                                                                                                April 20, 2012