Revision: April 12, 2018, 7:34 a.m.
HB 1427-FN - AS AMENDED BY THE HOUSE
6Mar2018... 0568h
2018 SESSION
18-2511
10/08
HOUSE BILL 1427-FN
AN ACT relative to membership in the retirement system for certain officials.
SPONSORS: Rep. Freeman, Hills. 12
COMMITTEE: Executive Departments and Administration
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ANALYSIS
This bill allows a school district governing body to exempt the superintendent of schools from compulsory membership in the retirement system.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
6Mar2018... 0568h 18-2511
10/08
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eighteen
AN ACT relative to membership in the retirement system for certain officials.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Retirement System; Exemption from Membership; Certain School Officials. Amend RSA 100-A:22 to read as follows:
100-A:22 Modifications.
I. Membership in the retirement system shall be optional for officers and employees of the employer who are in the service of the employer on the date when participation becomes effective, and any such officer or employee who elects to join the retirement system within one year thereafter shall be credited with prior service covering such periods of prior service rendered to such employer for which the employer is willing to make accrued liability contributions. If the employer is unable or unwilling to make such contributions, a member in service may petition the board of trustees for periods of prior service rendered to such employer. Upon payment by the member of the amount determined in accordance with RSA 100-A:3, VI(b) and with the approval of the board, the member shall receive credit for such prior service. Thereafter, service for such employer on account of which contributions are made by the employer and member shall also be considered as creditable service. However, in no event shall prior service purchased as creditable service under this section be used as creditable service for the purpose of eligibility for medical benefits under RSA 100-A:52, RSA 100-A:52-a, or RSA 100-A:52-b.
II. Membership shall be compulsory for all employees entering the service of such employer after the date participation becomes effective. Except that:
(a) Municipalities may, by action of their city council or board of selectmen, exempt their chief administrative officer, at the time of initial hiring or appointment, from compulsory membership provided herein. The chief fiscal officer of the employer, and the heads of its departments, shall submit to the board of trustees such information and shall cause to be performed with respect to the employees of such employer, who are members of the retirement system, such duties as shall be prescribed by the trustees in order to carry out the provisions of this chapter.
(b) School districts may, on or before December 31, 2018, by action of their governing body, exempt their superintendent of schools, at the time of initial hiring or appointment, from compulsory membership provided herein. If such exemption is adopted, a superintendent of schools who was enrolled as a member in the retirement system within the 2-year period preceding the effective date of this subparagraph may make a request to the school district governing body to withdraw from membership. Upon approval of a withdrawal from membership and notice provided to the retirement system, a superintendent who ceases to be a member of the retirement system shall not be permitted to re-enroll as a member for as long as he or she holds the same position. If the school district exempts the superintendent of schools from compulsory membership in the retirement system, the school district shall pay to the retirement system, for deposit in the state annuity accumulation fund, an unfunded accrued liability payment calculated as an equivalent percentage determined under RSA 100-A:16, II(e) applied to the compensation paid for the superintendent of schools position.
2 Effective Date. This act shall take effect 60 days after its passage.
18-2511
Amended 3/27/18
HB 1427-FN- FISCAL NOTE
AS AMENDED BY THE HOUSE (AMENDMENT #2018-0568h)
AN ACT relative to membership in the retirement system for certain officials.
FISCAL IMPACT: [ X ] State [ X ] County [ X ] Local [ ] None
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| Estimated Increase / (Decrease) | |||
STATE: | FY 2019 | FY 2020 | FY 2021 | FY 2022 |
Appropriation | $0 | $0 | $0 | $0 |
Revenue | $0 | $0 | $0 | $0 |
Expenditures | $2,664 | $0 | $0 | $0 |
Funding Source: | [ X ] General [ X ] Education [ X ] Highway [ X ] Other | |||
POLITICAL |
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SUBDIVISIONS*: |
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Revenue | $0 | $0 | $0 | $0 |
Expenditures | Indeterminable | Indeterminable | Indeterminable | Indeterminable |
*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 allows school districts, by action of their governing bodies, to exempt their superintendent of schools, at the time of initial hiring or appointment, from compulsory membership in the New Hampshire Retirement System (NHRS). Upon approval of such exemption, a superintendent of schools who was enrolled as a member in the NHRS within the 2 year period preceding the effective date of this bill may make a request to the governing body to withdraw from such membership. A superintendent who ceases to be a member of the NHRS shall not be permitted to re-enroll as a member for as long as he or she holds the same position with such employer. School districts that exempt the superintendent of schools from compulsory membership in the retirement system shall pay to the system an unfunded accrued liability (UAAL) payment applicable to the compensation paid for the superintendent of schools.
The Department of Education states that superintendents are Group I employees and the total compensation paid for superintendents statewide for 2017-2018 was $11,400,649, excluding 2 superintendents whom are paid an hourly rate.
The Group I employer rate for local political subdivision employees in effect through June 30, 2019 is 11.38%. The table below provides an estimated impact if all superintendents were exempt from the NHRS and superintendent compensation increases 3% annually. The employer rates are assumed to remain the same.
Group I Employer Rate Subdivision | Employer Contributions FY 2019 Estimate | Employer Contributions FY 2020 Estimate (+3%) | Employer Contributions FY 2021 Estimate (+3%) | Employer Contributions FY 2022 Estimate (+3%) | ||||
UAAL |
| 8.92% | $1,016,938 | $1,047,446 | $1,078,869 | $1,111,236 | ||
Normal Cost |
| 2.16% | $246,254 | $253,642 | $261,251 | $269,088 | ||
Medical Subsidy | 0.30% | $34,202 | $35,228 | $36,285 | $37,373 | |||
TOTAL |
| 11.38% | $1,297,394 | $1,336,316 | $1,376,405 | $1,417,697 | ||
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| FY 2019 | FY 2020 | FY 2021 | FY 2022 | ||
Statewide Superintendent Payroll | $11,400,649 | $11,742,668 | $12,094,948 | $12,457,797 | ||||
The UAAL contribution, with the rate at the current level and applied to the increasing payroll, will continue to be paid to NHRS:
Year Continued UAAL Contribution
2019 $1,016,938
2020 $1,047,446
2021 $1,078,869
2022 $1,111,235
Local expenditures for the Normal Cost and Medical Subsidy, assuming current rates remain the same, would decrease as follows:
Year Normal Cost + Medical Subsidy
2019 $280,456
2020 $288,870
2021 $297,536
2022 $306,462
The NHRS states the local expenditure is indeterminable since the changes are expected to have a small impact on the actuarial status of the system and employer contribution rates (i.e. increase of less than .01% of payroll). Each superintendent removed will reduce the covered payroll used to amortize the Medical Subsidy, and therefore, increase the amortization rate. The System states it will need to make an estimated $2,664 change to the Pension Gold software.
AGENCIES CONTACTED:
Department of Education and New Hampshire Retirement System