Bill Details - HB366 (2017)

HB 366-FN - AS INTRODUCED

 

 

2017 SESSION

17-0506

10/01

 

HOUSE BILL 366-FN

 

AN ACT relative to the calculation of average final compensation under the retirement system for certain members.

 

SPONSORS: Rep. Shaw, Hills. 16

 

COMMITTEE: Executive Departments and Administration

 

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ANALYSIS

 

This bill modifies the calculation of average final compensation for retirement system members who commenced service on or after July 1, 2011 or who had not attained vested status prior to January 1, 2012.

 

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

17-0506

10/01

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Seventeen

 

AN ACT relative to the calculation of average final compensation under the retirement system for certain members.

 

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

 

1  Retirement System; Definition; Average Final Compensation.  Amend RSA 100-A:1, XVIII(b) to read as follows:

(b)  For members who commenced service on or after July 1, 2011 or who have not attained vested status prior to January 1, 2012, the average annual earnable compensation of a member during his or her highest 5 years of creditable service, or during all of the years in his or her creditable service if less than 5 years.  For purposes of inclusion in this calculation, the average percentage of compensation paid in excess of the full base rate of compensation in the highest 5 years shall not exceed the average percentage of compensation paid in excess of the full base rate of compensation over all the member's years of service on or after January 1, 2012[, but excluding the highest 5 years].

2  Effective Date.  This act shall take effect 60 days after its passage.

 

LBAO

17-0506

1/3/17

 

HB 366-FN- FISCAL NOTE

AS INTRODUCED

 

AN ACT relative to the calculation of average final compensation under the retirement system for certain members.

 

FISCAL IMPACT:      [ X ] State              [ X ] County               [ X ] Local              [    ] None

 

 

 

Estimated Increase / (Decrease)

STATE:

FY 2018

FY 2019

FY 2020

FY 2021

   Appropriation

$0

$0

$0

$0

   Revenue

$0

$0

$0

$0

   Expenditures

$0

$0

$730,000

$750,000

Funding Source:

  [ X ] General            [ X ] Education            [ X ] Highway           [ X ] Other

 

 

 

 

 

POLITICAL SUBDIVISIONS*:

 

 

 

 

   Revenue

$0

$0

$0

$0

   Expenditures

$0

$0

$2,420,000

$2,510,000

*The New Hampshire Retirement System states it is not able to separate the fiscal impact of this legislation between county and local government, therefore the fiscal impact is shown together as political subdivisions.

 

METHODOLOGY:

This bill modifies the calculation of average final compensation for retirement system members who commenced service on or after July 1, 2011 or who had not attained vested status prior to January 1, 2012 by including the highest five years of the members’ service.  Assuming an annual rate of return of 7.25 percent, wage inflation at 3.25 percent a year, and an amortization period of a closed 22 year period beginning in FY 2018, the New Hampshire Retirement System’s actuary determined the following increases:

State Estimated Employer Increase/(Decrease)

 

FY 2020

FY 2021

Employees

$490,000

$500,000

Police

$230,000

$240,000

Fire

$10,000

$10,000

State Total

$730,000

$750,000

Political Subdivisions Estimated Employer Increase/(Decrease)

 

FY 2020

FY 2021

Employees

$570,000

$590,000

Teachers

$850,000

$880,000

Police

$630,000

$650,000

Fire

$370,000

$390,000

Political Subdivisions Total

$2,420,000

$2,510,000

 

The System states the proposal would be reflected in the next rate setting valuation as of June 30, 2017, which determines employer contribution rates for the 2020-2021 biennium.  Since the rates for the 2020-2021 biennium are unknown at this time, only the net impact of the proposal is shown.  This bill would also increase the unfunded actuarial accrued liability by $16.5 million (a 0.1 percent decrease in the funded ratio). The unfunded actuarial accrued liability was $5.0 billion at the close of FY 2015.

 

The System states it will need to make an estimated $3,000 change to the Pension Gold reporting software.  

 

AGENCIES CONTACTED:

New Hampshire Retirement System

 

 

Docket

Date Status
Jan. 5, 2017 Introduced 01/05/2017 and referred to Executive Departments and Administration HJ 3 P. 10
Feb. 15, 2017 ==CANCELLED== Public Hearing: 02/15/2017 01:30 PM LOB 306
Feb. 21, 2017 ==RESCHEDULED== Public Hearing: 02/21/2017 01:30 PM LOB 306
March 1, 2017 Executive Session: 03/01/2017 11:00 AM LOB 306
Retained in Committee
Aug. 22, 2017 Retained Bill Full Committee Work Session: 08/22/2017 10:00 AM LOB 306
Aug. 24, 2017 ==CANCELLED== Retained Bill Subcommittee Work Session: 08/24/2017 09:00 AM LOB 306
Sept. 14, 2017 Retained Bill Subcommittee Work Session: 09/14/2017 09:00 AM LOB 307
Nov. 1, 2017 Executive Session: 11/01/2017 10:30 AM LOB 306
Jan. 3, 2018 Committee Report: Inexpedient to Legislate for 01/03/2018 (Vote 11-5; RC)
Committee Report: Inexpedient to Legislate (Vote 11-5; RC)

Action Dates

Date Body Type
Feb. 21, 2017 House Hearing
March 1, 2017 House Exec Session
Nov. 1, 2017 House Exec Session
House Floor Vote
Jan. 3, 2018 House Floor Vote

Bill Text Revisions

HB366 Revision: 184 Date: Jan. 30, 2017, 8:21 a.m.