HB 1590-FN-LOCAL - AS INTRODUCED

 

 

2022 SESSION

22-2540

10/08

 

HOUSE BILL 1590-FN-LOCAL

 

AN ACT relative to municipalities withdrawing from the state retirement system.

 

SPONSORS: Rep. Berezhny, Graf. 9; Rep. Gordon, Graf. 9; Rep. Layon, Rock. 6; Rep. Johnson, Belk. 3; Rep. Turcotte, Straf. 4; Rep. Prout, Hills. 37; Rep. Cushman, Hills. 2; Rep. Ammon, Hills. 40; Rep. Harvey-Bolia, Belk. 4; Sen. Giuda, Dist 2

 

COMMITTEE: Executive Departments and Administration

 

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ANALYSIS

 

This bill establishes a procedure for political subdivision members of the retirement system to vote to withdraw from participation for its employees hired after the effective date of the vote.

 

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

22-2540

10/08

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Twenty Two

 

AN ACT relative to municipalities withdrawing from the state retirement system.

 

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

 

1  Retirement System; Withdrawal by Political Subdivision.  RSA 100-A:43 and 43-a are repealed and reenacted to read as follows:

100-A:43 Withdrawal Authorized.

I.  A political subdivision employer may withdraw from its participation in the New Hampshire retirement system for all employees who begin service after the effective date of the withdrawal.

II.  Any employee in active service with the political subdivision on the effective date of the withdrawal may remain in active service for purposes of the retirement system.  The political subdivision employer shall remain liable for payment of all contributions required under RSA 100-A:16 for such employees who remain members of the retirement system.

100-A:43-a  Withdrawal Procedure.  The withdrawal authorized by RSA 100-A:43 may be adopted using the following procedure:

I.  In a town, other than a town that has adopted a charter pursuant to RSA 49-D, the question of whether to withdraw from participation for new employees shall be placed on the warrant of a special or annual town meeting, by the governing body or by petition under RSA 39:3.

II.  In a city or town that has adopted a charter under RSA 49-C or RSA 49-D, the legislative body may consider and act upon the question in accordance with its normal procedures for passage of resolutions, ordinances, and other legislation.  In the alternative, the legislative body of such municipality may vote to place the question on the official ballot for any regular municipal election.

III.  If a majority of those voting on the question vote "yes," the withdrawal of the employees from the New Hampshire retirement system, and the effective date of the vote, shall be certified by the governing body to the board of trustees of the retirement system.

2  Effective Date.  This act shall take effect July 1, 2022.

 

LBA

22-2540

Redraft 12/13/21

 

HB 1590-FN-LOCAL- FISCAL NOTE

AS INTRODUCED

 

AN ACT relative to municipalities withdrawing from the state retirement system.

 

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

 

 

Estimated Increase / (Decrease)

STATE:

FY 2022

FY 2023

FY 2024

FY 2025

   Appropriation

$0

$0

$0

$0

   Revenue

$0

$0

$0

$0

   Expenditures

$0

Indeterminable

Indeterminable

Indeterminable

Funding Source:

  [ X ] General            [    ] Education            [ X ] Highway           [ X ] Other - Various state funds

 

POLITICAL SUBDIVISIONS:

 

 

 

 

   Revenue

$0

$0

$0

$0

   Expenditures

$0

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 would establish a procedure for political subdivision participating employers of New Hampshire Retirement System (NHRS) to vote to withdraw from their participation in NHRS for their employees hired after the effective date of the vote of withdrawal.  It allows members with the withdrawn employer to continue to participate in NHRS after withdrawal by the employer and requires the employer to make any required contributions on behalf of any employees who remain participating in NHRS.  The bill also sets the procedure employers must follow to authorize any such withdrawal.

 

The NHRS states this bill would have an indeterminable increase on State and Political Subdivision expenditures.  Costsharing contribution rates are determined under the assumption that employers continue to participate in the plan.  This bill allows for a  “partial” termination, meaning terminating employers would continue to fund only on the remaining active payroll which will eventually go to $0.  Current active members working for a withdrawn employer are allowed the option to withdraw, this will accelerate payroll going to $0.  Currently the NHRS retiree liability is not fully funded.  The NHRS actuarial valuation states this bill could effect the NHRS retiree liability by putting more of a burden on employers that don't withdraw from the NHRS by increasing their contribution.  The shift of burden could potentially result in more employers choosing to withdraw from the plan to the point all employers withdraw.  The bill does not address how the plan would be funded if every employer were to withdraw.

 

AGENCIES CONTACTED:

New Hampshire Retirement System