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F I S C A L I M P A C T R E P O R T





SPONSOR: Heaton DATE TYPED: 02/14/99 HB 220
SHORT TITLE: Amend Educational Retirement Act SB
ANALYST: Eaton


APPROPRIATION



Appropriation Contained
 Subsequent

Years Impact

 Recurring

or Non-Rec

 Fund

Affected

FY99 FY2000
$ 10,186.0 Recurring General Fund

(Parentheses ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION



Education Retirement Board (ERB)



SUMMARY



Synopsis of Bill



This bill would increase retirement contributions by changing the funding formula multiplier from 2.35 percent to 2.425 percent. The state's contribution to the educational retirement fund will increase 0.75 percent from 8.65 percent to 9.4 percent. The funding formula is:



Final Average Salary * Years of Service * Multiplier(%)



FISCAL IMPLICATIONS



The fiscal impact would be $10.2 million dollars (recurring). This amount represents only the state's contribution to the fund. The member contribution rate will not increase. A lesser appropriation amount would increase the actuarial funding period from its current 26.7 years.



TECHNICAL ISSUES



A lesser appropriation amount would increase the actuarial funding period from its current 26.7 years.

The Governmental Accounting Standards Board (GASB) rule no. 25 establishes the funding period to be forty years through 2006 and thirty years thereafter.



The attached table may be interpreted two ways:



1. The amount that would be appropriated to each educational institution/department or,



2. The total amount of budget reductions each educational institution/department would require to have no additional impact on the general fund.



POSSIBLE QUESTIONS



JBE/gm

Attachment