Master FIR (1988)

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

SPONSOR:	McKibben		DATE TYPED:	02/12/99		HB
SHORT TITLE:		Amend Retiree Health Care Act				SB	263
					ANALYST:		Carrillo

APPROPRIATION

Appropriation Contained		Estimated Additional Impact		Recurring or Non-Rec	Fund Affected
FY99	FY2000	FY99	FY2000	Recurring or Non-Rec	Fund Affected
		NFI	NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE

Estimated Revenue		Subsequent Years Impact	Recurring or Non-Rec	Fund Affected
FY99	FY2000	Subsequent Years Impact	Recurring or Non-Rec	Fund Affected
		224,000.0 over the next 25 years	Rec	Retiree Health Care Fund

(Parenthesis ( ) Indicate Revenue Decreases)

Relates to SB224, SB223

SOURCES OF INFORMATION

Retiree Health Care Authority

Public School Insurance Authority

LFC Files

SUMMARY

Synopsis of Bill

Senate Bill 263 proposes to allow the Retiree Health Care Authority (RHCA) Board to determine the monthly premium rates commensurate with a participants credited service with a participating employer, only for those individuals retiring on or after July 1, 2001.

Significant Issues

The RHCA is a pre-funded program in which employees contribute .5 percent of their salary to this program and their employer contributes 1 percent of their salary. These contributions are set in statute.

Individuals become vested in the program after five years of service with a participating employer. Currently, an individual who has contributed for five years and retires is entitled to the same benefit as an individual that has contributed and retires after 25 years of service. Senate Bill 263 proposes to create a more equitable environment and would establish the level of benefit entitlement according to time spent in public service and the amount they contribute to the program.

The proposed changes in Senate Bill 263 will contribute to attaining the mandatory 25 year solvency period (July 2022) for the fund. Currently, the fund is projected to be solvent through July 2011.

FISCAL IMPLICATIONS

The proposed legislation will increase the revenue to the program by allowing the Board to set premiums for eligible retirees who retire on or after July 1, 2001, commensurate with years of service. The enactment of the legislation is projected to extend the period of solvency by three year. The RHCA projects $224,000.0 will be generated over a 25 year period.

WJC/njw