Revision: April 4, 2017, 8:31 a.m.
HB 561-FN - AS AMENDED BY THE HOUSE
8Mar2017... 0611h
2017 SESSION
17-0651
10/01
HOUSE BILL 561-FN
AN ACT relative to contributions by retirement system employers for certain full-time positions changed to part-time or interim employment and relative to enforcement of provisions concerning retired members working part-time after retirement.
SPONSORS: Rep. Kurk, Hills. 2; Rep. L. Turcotte, Straf. 4; Rep. Ohm, Hills. 36; Rep. Azarian, Rock. 8; Sen. Giuda, Dist 2
COMMITTEE: Executive Departments and Administration
-----------------------------------------------------------------
This bill allows the executive director of the retirement system to suspend a member’s retirement allowance and assess a penalty on a retirement system employer for exceeding the limitations for part-time employment.
This bill also requires retirement system employers to make contributions based on the unfunded accrued liability and medical benefits employer share for certain full-time positions changed to part-time or interim employment.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
8Mar2017... 0611h 17-0651
10/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Seventeen
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Part-time Employment; Notice. Amend RSA 100-A:7-a to read as follows:
100-A:7-a Certain Part-Time Employment; Notice Required. The retirement system shall annually provide written notice to all retired members of the retirement system of the hourly limitations on part-time employment as defined in RSA 100-A:1, XXXIV and the potential effect that exceeding such hourly limitations could have on the retired member's retirement benefits, including restoration to service as required in RSA 100-A:7 and the procedures for imposing a penalty for exceeding hourly limitations under RSA 100-A:7-c.
2 New Sections; Suspension of Benefits; Exceeding Part-Time Hours. Amend RSA 100-A by inserting after section 7-b the following new sections:
100-A:7-c Suspension of Benefits; Exceeding Part-Time Hours.
I. A retired member of the retirement system whose employment with an employer exceeds the hourly limitations in the definition of part-time under RSA 100-A:1, XXXIV and who is not restored to service pursuant to RSA 100-A:7 may have his or her retirement allowance suspended by the executive director for one month for every month, in full or in part, in which the member’s part-time employment exceeded the limitations under RSA 100-A:1, XXXIV.
II. The employer of the retired member shall report to the retirement system instances of such retired member exceeding the hourly limitations in the definition of part-time under RSA 100-A:1, XXXIV. The executive director may establish a form or procedure for the reporting by retirement system employers.
III. The executive director may examine the circumstances of the part-time employment which exceeded hourly limitations and may, for good cause, waive or reduce the suspension authorized under paragraph I or otherwise settle the matter in a manner the executive director deems appropriate as a fair and equitable resolution. The executive director shall if requested allow the retired member to explain, in writing or in person, the circumstances relating to the retired member exceeding hourly limitations prior to the imposition of a suspension, if any.
100-A:7-d Exceeding Part-time Limitations; Employer Penalty. A retirement system employer of a retired member employed in a part-time position who knew that the employee inaccurately recorded or failed to record his or her time, including volunteer time, for that employer shall be liable for payment of a penalty equal to 3 times the amount of the employee's penalty under RSA 100-A:7-c, as determined and assessed by the executive director. Any sums collected shall be deposited in the state annuity accumulation fund.
3 New Paragraph; Retirement System; Employer Contributions; Part-time and Interim Employment. Amend RSA 100-A:16 by inserting after paragraph II-a the following new paragraph:
II-b.(a) In addition to employer contributions required under paragraph II, an employer who, on or after July 1, 2017, either (1) converts or replaces a full-time, retirement eligible position with one or more part-time or interim positions with substantially similar duties and responsibilities within 12 months of the full-time position becoming vacant, or (2) fills a full-time, retirement eligible position with a part-time or interim employee within 12 months of the full-time position becoming vacant, shall make contributions at the percentage rates certified by the board of trustees for the compensation paid to such part-time or interim employee; provided that the percentage rates which shall be applied shall only be for the employer’s share of the unfunded accrued liability determined under subparagraph II(e) and the medical benefits contributions under RSA 100-A:50 through 100-A:55 for the member classification of such part-time or interim employee.
(b) Employers shall provide, in a format prescribed by the board, notice to the retirement system within 30 days of when either a conversion, replacement, or filling of a full-time retirement eligible position as described in subparagraph (a) is made.
4 Effective Date. This act shall take effect July 1, 2017.
17-0651
Amended 3/31/17
HB 561-FN- FISCAL NOTE
AS AMENDED BY THE HOUSE (AMENDMENT #2017-0611h)
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 | Indeterminable | Indeterminable | Indeterminable | Indeterminable | |
Funding Source: | [ X ] General [ X ] Education [ X ] Highway [ X ] Other | ||||
|
|
|
|
| |
POLITICAL SUBDIVISONS*: |
|
|
|
| |
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 as amended requires Retirement System employers to make contributions based on the unfunded accrued liability and medical benefits employer share for certain full-time positions changed to part-time or interim employment. The bill also requires the executive director of the Retirement System to suspend a member’s retirement allowance and assess a penalty on a Retirement System employer for exceeding the limitations for part-time employment.
The consulting actuary states the fiscal impact is indeterminable. The 2016 valuation payroll is used as the annualized amount, without adjustment for inflation. The impact on the State and political subdivisions employer contributions assumes 30% of the part-time payroll is affected. Assuming part-time members would continue employment at the current rate, an annual rate of return of 7.25 percent, and an amortization period of a closed 22 year period beginning in FY 2018, the Retirement System’s actuary determined the following:
State Pension Only Estimated Expenditure Increase/(Decrease)
| ||||
| FY 2018 | FY 2019 | FY 2020 | FY 2021 |
Employees | $440,000 | $450,000 | ($60,000) | ($60,000) |
Police | - | - | ($20,000) | ($20,000) |
Fire | - | - | - | - |
State Total | $440,0000 | $450,000 | ($80,000) | ($80,000) |
Political Subdivision Pension Only Estimated Expenditure Increase/(Decrease)
| ||||
| FY 2018 | FY 2019 | FY 2020 | FY 2021 |
Employees | $560,000 | $580,000 | ($70,000) | ($80,000) |
Teachers | $400,000 | $410,000 | ($120,000) | ($130,000) |
Police | $460,000 | $480,000 | ($50,000) | ($50,000) |
Fire | $60,000 | $60,000 | ($10,000) | ($10,000) |
State Total | $1,480,000 | $1,530,000 | ($250,000) | ($270,000) |
State Medical Subsidy Only Estimated Expenditure Increase/(Decrease)
| ||||
| FY 2018 | FY 2019 | FY 2020 | FY 2021 |
Employees | $50,000 | $50,000 | - | - |
Police | - | - | - | - |
Fire | - | - | - | - |
State Total | $50,000 | $50,000 | - | - |
Political Subdivisions Medical Subsidy Only Estimated Expenditure Increase/(Decrease)
| ||||
Employees | $20,000 | $20,000 | - | - |
Teachers | $50,000 | $50,000 | - | - |
Police and Fire | $110,000 | $110,000 |
|
|
Political Subdivisions Total |
$180,000 |
$180,000 |
- |
- |
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. The proposal could bring in additional funds in the 2018-2019 biennium which would lower the unfunded actuarial accrued liability (UAAL) over that period faster than expected. Employer contributions for the 2020-2021 biennium would be reduced as a dollar amount equal to the additional funds paid in 2018-2019. The corresponding reduction in the employer rate for 2020 and beyond would be based on the higher payroll including the part-time members.
The System estimates an administrative cost of $5,000 for changes to the NHRS pension database software. Additional compliance costs are currently indeterminable but there will be costs associated with tracking the 1,300 hour provisions and adopting formal rules to define terms such as "good cause" for exceeding this limit and what the executive director deems "appropriate as a fair and equitable resolution" to decision appeals.
AGENCIES CONTACTED:
New Hampshire Retirement System