Bill Text - HB1756 (2018)
(New Title) relative to a one-time allowance for certain state retirees.
Revision: April 27, 2018, 1:32 p.m.
HB 1756-FN-A - AS AMENDED BY THE SENATE
04/26/2018 1814s
2018 SESSION
18-2196
10/04
HOUSE BILL 1756-FN-A
AN ACT relative to a one-time allowance for certain state retirees.
SPONSORS: Rep. Shurtleff, Merr. 11; Rep. Schuett, Merr. 20; Rep. Freitas, Hills. 14
COMMITTEE: Finance
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AMENDED ANALYSIS
This bill grants a one-time additional allowance to retires in the state retirement system. The bill makes a general fund appropriation for the retirement allowances.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
04/26/2018 1814s 18-2196
10/04
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eighteen
AN ACT relative to a one-time allowance for certain state retirees.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Retirement System; Additional Allowance; Appropriation.
I. An additional one-time allowance of $500 shall be paid during state fiscal year 2019 to retired members of the retirement system receiving an allowance who are eligible as follows:
(a) The member retired with at least 20 years of creditable service;
(b) The member retired and has been receiving an allowance for at least 5 years prior to July 1, 2018.
(c) The annual retirement allowance of the member on June 30, 2018 is not greater than $30,000.
II. The additional allowance shall not become a permanent addition to the member's base retirement allowance.
III. The sum necessary to fund the additional allowances granted under this act is hereby appropriated to the board of trustees of the retirement system. The governor is authorized to draw a warrant for said sum out of any money in the treasury not otherwise appropriated.
2 Effective Date. This act shall take effect July 1, 2018.
18-2196
Revised 1/22/18
HB 1756-FN-A- FISCAL NOTE
AS INTRODUCED
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 | $10,375,888 | $0 | $0 |
Revenue | $0 | $0 | $0 | $0 |
Expenditures | $0 | $11,185,292 | $832,000 | $859,000 |
Funding Source: | [ X ] General [ ] Education [ X ] Highway [ X ] Other - | |||
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POLITICAL SUBDIVISIONS*: |
|
|
|
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Revenue | $0 | $0 | $0 | $0 |
Expenditures | $0 | $3,435,000 | $3,542,000 | $3,653,000 |
* 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 grants a one-time additional allowance of $500 to certain retirees in the state retirement system funded by General Fund appropriations in FY 2020. The one-time allowance applies to retirees receiving a benefit under $30,000 per year who have been retired for at least 60 months (5 years). The bill also grants a cost of living adjustment (COLA) of 1.5 percent to the same retirees contingent on funding for the total actuarial cost in FY 2021. The actuarial analysis indicates the estimated one-time upfront cost of funding the $500 additional allowance in FY 2020 would be a General Fund appropriation of $7,842,167 based on the actuarial valuation of June 30, 2015, the most recent rate-setting valuation available. This cost would be anticipated to increase by 7.25% per year until appropriated, for a total of $10,375,888 if appropriated on July 1, 2019. The actuarial analysis also indicates the 1.5% COLA is projected to cost $51,367,194 based on the actuarial valuation of June 30, 2015, the most recent rate-setting valuation available. This cost would be anticipated to increase by 7.25% per year until appropriated, for a total of $72,890,738 if appropriated on July 1, 2020. The bill states "the general court shall provide in separate legislation for the approved source of funds to be used for payment of the total actuarial cost of the supplemental allowance." With this contingency, the only option for the actuary was to project the annual cost of funding these benefits through increased future employer contribution rates. The expected cost to make these changes to the NHRS pension database software Pension Gold is estimated to be approximately $3,404 in other funds. Assuming an annual rate of return or 7.25 percent, wage inflation of 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:
AGENCIES CONTACTED:
New Hampshire Retirement System