HB 654-FN-LOCAL – AS INTRODUCED
2011 SESSION
10/09
HOUSE BILL 654-FN-LOCAL
AN ACT relative to credit for retirement system employer contribution overpayments.
SPONSORS: Rep. Jasper, Hills 27; Rep. O’Brien, Hills 4; Rep. Reagan, Rock 1; Rep. Rodeschin, Sull 2; Rep. Munck, Straf 2; Rep. Long, Hills 10; Rep. Flanagan, Hills 5; Rep. Chandler, Carr 1; Sen. Carson, Dist 14
COMMITTEE: Special Committee on Public Employee Pensions Reform
This bill requires the retirement system to credit overpayments by retirement system employers made prior to the recertification of employer contribution rates.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
11-1114
10/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eleven
AN ACT relative to credit for retirement system employer contribution overpayments.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Hampshire Retirement System; Credit for Certain Employer Payments. To the extent that retirement system employer contribution percentage rates in effect for any month of the state fiscal year beginning July 1, 2011 exceed the rates made effective following the recertification of employer contribution rates under 2011, 224:188, any overpayment based on the rates prior to recertification shall be credited to the benefit of the employer against future payments. The retirement system shall determine the amounts by which a retirement system employer made payments at a contribution percentage rate greater than the recalculated rate recertified as required in 2011, 224:188, and such amounts shall be deemed overpayments to be credited to the respective employer during the remainder of the state fiscal year.
2 Effective Date. This act shall take effect upon its passage.
LBAO
11-1114
Revised 11/08/11
HB 654-FN-LOCAL - FISCAL NOTE
AN ACT relative to credit for retirement system employer contribution overpayments.
FISCAL IMPACT:
The New Hampshire Retirement System states this bill will decrease state expenditures by $1,795,249 in FY 2012, have no impact in FY 2013, and increase state expenditures by $140,181 in FY 2014, $145,438 in FY 2015, and $150,891 in FY 2016. The System also states this bill will decrease county and local expenditures by $4,161,723 in FY 2012, have no impact in FY 2013, and increase county and local expenditures by $379,224 in FY 2014, $393,444 in FY 2015, and $377,818 in FY 2016. There will be no fiscal impact on state, county or local revenues.
METHODOLOGY:
The New Hampshire Retirement System states this bill would produce employer contribution credits for any month in state Fiscal Year 2012 in which the employer contribution rates in effect for the month exceeded the employer contribution rates in effect following the recertification of rates under Chapter 224:188, Laws of 2011. As rates were recertified effective August 1, 2011, therefore the only month for which contribution credits would be generated would be July 2011. The System states the amounts of the estimated credits were determined by subtracting from the originally certified employer contribution rates, the employer contribution rates as recertified effective August 1, 2011, and multiplying the difference by the applicable pensionable salaries for July 2011, as reported by all participating employers. The estimated impact is as follows:
A |
B |
C |
D |
E | |
July 2011 Certified Rate |
August 2011 Recertified Rate |
Rate Difference (A – B) |
July 2011 Pensionable Salaries |
Contribution Credit (C X D) | |
State |
|||||
Employees |
12.31% |
10.08% |
2.23% |
$57,456,058 |
$1,281,270 |
Police |
25.57% |
19.95% |
5.62% |
$8,494,797 |
$477,408 |
Fire |
30.90% |
22.89% |
8.01% |
$456,572 |
$36,571 |
Total |
$1,795,249 | ||||
Political Subdivisions |
|||||
Employees |
11.09% |
8.80% |
2.29% |
$59,978,167 |
$1,373,500 |
Teachers |
13.95% |
11.30% |
2.65% |
$34,081,040 |
$903,148 |
Police |
25.57% |
19.95% |
5.62% |
$18,959,403 |
$1,065,518 |
Fire |
30.90% |
22.89% |
8.01% |
$10,231,667 |
$819,557 |
Total |
$4,161,723 |
The New Hampshire Retirement System states this bill would also result in additional costs for the state and its political subdivisions in FY 2014 and beyond for the recovery of the amount credited in FY 2012 contributions on a present value basis. The System states these costs would continue in future years until the entire amount credited in FY 2012, plus interest, is fully recovered. The System states this would be for 26 years beginning in FY 2014. The System provided the following estimate of increase costs for the years between FY 2014 and FY 2016:
Projected Increase / (Decrease) on Employer Contributions | |||
FY 2014 |
FY 2015 |
FY 2016 | |
State |
|||
Employees |
$96,706 |
$100,332 |
$104,094 |
Police |
$40,818 |
$42,349 |
$43,937 |
Fire |
$2,657 |
$2,757 |
$2,860 |
Total |
$140,181 |
$145,438 |
$150,891 |
Political Subdivisions |
|||
Employees |
$104,903 |
$108,837 |
$112,918 |
Teachers |
$94,342 |
$97,879 |
$71,170 |
Police |
$105,865 |
$109,835 |
$113,954 |
Fire |
$74,114 |
$76,893 |
$79,776 |
Total |
$379,224 |
$393,444 |
$377,818 |
The System states this bill would result in an indeterminable amount in computer programming costs.