Bill Text - HB580 (2011)

(2nd New Title) establishing a committee to study collective bargaining by public employees.


Revision: May 4, 2011, midnight

HB 580-FN-LOCAL – VERSION ADOPTED BY BOTH BODIES

30Mar2011… 1174h

04/27/11 1527s

2011 SESSION

11-0488

10/09

HOUSE BILL 580-FN-LOCAL

AN ACT establishing a committee to study collective bargaining by public employees.

SPONSORS: Rep. Kurk, Hills 7; Rep. Hawkins, Hills 18; Sen. White, Dist 9

COMMITTEE: Special Committee on Public Employee Pensions Reform

AMENDED ANALYSIS

This bill establishes a committee to study collective bargaining by public employees.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

30Mar2011… 1174h

04/27/11 1527s

11-0488

10/09

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Eleven

AN ACT establishing a committee to study collective bargaining by public employees.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Committee Established. There is established a committee to study collective bargaining by public employees.

2 Membership and Compensation.

I. The members of the committee shall be as follows:

(a) Three members of the senate, appointed by the president of the senate.

(b) Four members of the house of representatives, appointed by the speaker of the house of representatives.

II. Members of the committee shall receive mileage at the legislative rate when attending to the duties of the committee.

3 Duties. The committee shall study matters as it deems necessary related to public employer collective bargaining agreements with public employees under RSA 273-A.

4 Chairperson; Quorum. The members of the study committee shall elect a chairperson from among the members. The first meeting of the committee shall be called by the first-named senate member. The first meeting of the committee shall be held within 45 days of the effective date of this section. Three members of the committee shall constitute a quorum.

5 Report. The committee shall report its findings and any recommendations for proposed legislation to the president of the senate, the speaker of the house of representatives, the senate clerk, the house clerk, the governor, and the state library on or before December 1, 2011.

6 Effective Date. This act shall take effect upon its passage.

LBAO

11-0488

Amended 05/03/11

HB 580 FISCAL NOTE

AN ACT relative to the New Hampshire retirement system, and relative to continuation of provisions of a collective bargaining agreement following the end of the term of the agreement.

FISCAL IMPACT:

      The New Hampshire Retirement System and Department of Administrative Services state this bill, as amended by the House (Amendment #2011-1174h), may decrease state, county, and local expenditures by an indeterminable amount in FY 2012 and each year thereafter. There will be no fiscal impact on state, county, and local revenues.

METHODOLOGY:

      The New Hampshire Retirement System states the majority of the provisions in this bill do not impact entitlement to or the amount of benefits payable under current law to members vested as of June 30, 2011. The System’s actuary has assumed there will be no grandfathering of provisions under current law, except to the extent specified in the bill. The System’s actuary’s estimated fiscal impact is based on the June 30, 2010 actuarial valuation, assumes an annual rate of return of 8.5 percent, wage inflation at 4.5 percent a year, and uses the entry-age normal cost valuation method. Any differences between the assumed total payroll increase and rate of return percentages and actual percentages will affect the estimated fiscal impact. The System notes its board of trustees is currently in the process of updating actuarial assumptions used to determine employer costs. The System states best practice is to utilize updated assumptions in recertifying rates as directed in section 19 of this bill, which could materially affect the actuarially determined cost savings stated in this fiscal note.

      The System’s actuary considered the following provisions of the bill as part of determining the fiscal impact on state, county, and local expenditures: the change in the definition of average final compensation (section 2); the change to group I and group II eligibility for certain retirement and disability benefits and the calculation of those benefits for certain members (sections 5 through 17); the change to member contribution rates for members (section 18); the transfer of the balance of the special account to the state annuity accumulation fund (section 25);

      The actuary did not consider the following provisions of the bill as part of determining the fiscal impact because there was either no impact or there was insufficient data to estimate an impact to computed contribution rates: the change to the definition of earnable compensation (section 3), the full-time membership requirement (section 4); the ban on so-called “double dipping” (section 20); the change in the composition of the board of trustees (sections 22-23); the elimination of future transfers to the special account (section 24); the member acknowledgement provision (section 31); and the establishment of a study committee (section 36).

      Impact on Current Members Pension Assets

      The following table shows the impact of the proposed bill on the June 30, 2010 valuation for the pension assets.

Supplemental Actuarial Valuation as of June 30, 2010

including proposed pension assets changes affecting current members

 

Employees

Teachers

Police

Fire

Total

June 30, 2010 Valuation

(Current Law)

         

Covered Payroll (in millions)

$1,093.1

$1,020.8

$258.5

$109.0

$2,481.4

Valuation of Assets

$1,721.0

$2,049.6

$997.3

$465.9

$5,233.8

Unfunded Actuarial Accrued Liability

$1,260.6

$1,503.5

$637.9

$318.1

$3,720.1

Funded Status

57.7%

57.7%

61.0%

59.4%

58.5%

FY 2012 Employer Rate

10.71%

11.51%

22.92%

28.25%

13.11%

FY 2013 Employer Rate

10.66%

11.51%

22.92%

28.25%

13.09%

June 30, 2010 Valuation

(Including Proposed Change)

         

Covered Payroll (in millions)

$1,093.1

$1,020.8

$258.5

$109.0

$2,481.4

Valuation of Assets

$1,735.6

$2,088.4

$1,118.1

$539.4

$5,481.5

Unfunded Actuarial Accrued Liability

$1,134.1

$1,366.1

$470.0

$225.3

$3,195.5

Funded Status

60.5%

60.5%

70.4%

70.5%

63.2%

FY 2012 / FY2013 Employer Rate

7.99%

8.69%

15.05%

17.86%

9.46%

      The actuary states this bill will decrease the employer contribution rates to the pension fund resulting in the amount contributed by employers to the fund decreasing by the following amounts (in millions):

 

Employees

Teachers

Police

Fire

FY 2012

($32.47)

($31.44)

($22.22)

($12.37)

FY 2013

($33.31)

($32.85)

($23.22)

($12.92)

      Impact on Special Account

      The System states as a result of the elimination of the special account, the following amounts will be transferred to the main trust:

    Valuation Group

    Estimated Balance 07/01/10

    Amount Transferred to Main Trust

    Remainder to Cover Estimated 07/01/11 TSAs

    Employees

         

    State

    $10,310,641

    $6,890,141

    $3,420,500

    Political Subdivisions

    $11,052,003

    $7,683,103

    $3,368,900

    Subtotal

    $21,362,644

    $14,573,244

    $6,789,400

           

    Teachers

    $44,715,003

    $38,810,617

    $5,904,386

           

    Police

         

    State

    $28,853,799

    $28,641,299

    $212,500

    Political Subdivisions

    $93,313,404

    $92,204,404

    $1,109,000

    Subtotal

    $122,167,203

    $120,845,703

    $1,321,500

           

    Fire

         

    State

    $2,180,466

    $2,170,466

    $10,000

    Political Subdivisions

    $72,285,980

    $71,338,480

    $947,500

    Subtotal

    $74,466,446

    $73,508,946

    $957,500

           

    Total

    $262,711,296

    $247,738,510

    $14,972,786

      * The actuary states section 37 of this bill repeals RSA 100-A:41-d, relative to additional temporary supplemental allowances (TSAs), however is unclear as to whether the repeal is effective before or after the payments scheduled under RSA 100-A:41-d, III for the fiscal year beginning July 1, 2011. The actuary assumed the July 1, 2011 TSAs would be paid at a cost of approximately $15 million.

      Impact on New Hires (After January 1, 2012)

      The System’s actuary states the proposed changes to benefits for new hires has no effect on the System’s current benefit obligation or current employer contributions for active members. The actuary states the normal cost of providing benefits to new members hired after January 1, 2012 will decrease, in total, for each group by the following:

 

Employees

Teachers

Police

Fire

Percentage of Payroll

(0.28%)

(1.08%)

(3.69%)

(3.89%)

      In summary, the New Hampshire Retirement System states projected annual state and political subdivision (county and local) employer contribution savings as a result of this bill are as follows:

 

(1)

 

(2)

(3)

(4)

 

Political Subdivisions

 

35% of Political Subdivisions

100% of State Employees

Total State Savings

(2 + 3)

2012

         

Employees

($17,003,079)

 

$0

($15,466,761)

($15,466,761)

Teachers

($20,432,063)

 

($11,001,880)

$0

($11,001,880)

Police

($10,460,070)

 

($5,632,345)

($6,121,241)

($11,753,586)

Fire

($7,759,958)

 

($4,178,439)

($431,169)

($4,609,608)

Total

($55,655,170)

 

($20,812,664)

($22,019,171)

($42,831,835)

2013

         

Employees

($17,441,596)

 

$0

($15,865,655)

($15,865,655)

Teachers

($21,351,506)

 

($11,496,965)

$0

($11,496,965)

Police

($10,930,773)

 

($5,885,801)

($6,396,697)

($12,282,498)

Fire

($8,116,961)

 

($4,370,671)

($451,006)

($4,821,677)

Total

($57,840,836)

 

($21,753,437)

($22,713,358)

($44,466,795)

2014

         

Employees

($18,226,468)

 

$0

($16,579,610)

($16,579,610)

Teachers

($23,815,636)

 

($12,823,804)

$0

($12,823,804)

Police

($12,438,650)

 

($6,697,735)

($7,279,108)

($13,976,843)

Fire

($8,816,620)

 

($4,747,411)

($489,881)

($5,237,292)

Total

($63,297,374)

 

($24,268,950)

($24,348,599)

($48,617,549)

2015

         

Employees

($18,761,316)

 

$0

($17,066,131)

($17,066,131)

Teachers

($25,300,750)

 

($13,623,481)

$0

($13,623,481)

Police

($13,301,736)

 

($7,162,473)

($7,784,186)

($14,946,659)

Fire

($9,324,167)

 

($5,020,705)

($518,082)

($5,538,787)

Total

($66,687,969)

 

($25,806,659)

($25,368,399)

($51,175,058)

    The System further states it estimates it would incur $250,800 in computer programming costs in FY 2012 to implement the changes in this bill.

      The Department of Administrative Services states this bill amends RSA 21-I:30, II(a) and RSA 21-I:30, III changing the age and years of service requirements for eligibility for retiree health insurance benefits for both group I and group II employees, unless the employee is in vested status by July 1, 2011. The Department is unable to determine the number of years of creditable service on an employee basis and therefore is unable to estimate a fiscal impact to this bill. The Department estimates the decrease in costs of delayed health benefits per retiree would be $11,471 in FY 2012, $12,618 in FY 2013, $13,881 in FY 2014, and $15,995 in FY 2015.

None