OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 ¯ (860) 240-0200

http: //www. cga. ct. gov/ofa

sHB-5723

AN ACT AUTHORIZING TEACHERS WHO ARE MEMBERS OF THE TEACHERS' RETIREMENT SYSTEM TO CONTRIBUTE UP TO ONE-HALF THE COST OF RETIREMENT INCENTIVE PLANS ESTABLISHED BY BOARDS OF EDUCATION.

OFA Fiscal Note

State Impact:

Municipal Impact:

Explanation

Currently, a local Board of Education may establish a retirement incentive plan for teachers and the municipality is required to pay to the Teachers' Retirement Board (TRB) 100% of the cost of the purchase of additional credited service. Under the bill, the cost of a retirement incentive plan may be shared equally between the municipality and the teachers. To the extent that municipalities use this cost sharing provision to implement a retirement incentive plan, it would result in a municipal savings that cannot be determined until a retirement incentive plan is established. On average, the full actuarial cost of one additional year of credited service is approximately $14,000.

The bill also adds service in VISTA (Volunteers in Service to America) to the fourteen existing purchase of service provisions under the Teachers' Retirement System (TRS). As is the case with the existing purchase provisions, the teacher must pay one-half of the actuarial value of the additional credited service and the state bears the cost of the remaining half. On average, the unfunded liability of the TRS will increase $7,000 for each year of additional service credit. TRB does not currently collect data on the number of teachers with VISTA service. Therefore, the fiscal impact to TRS and the state's contribution to TRS cannot be determined by the TRS actuary at this time.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.