OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

HB-7061

AN ACT CONCERNING THE STATE BUDGET FOR THE BIENNIUM ENDING JUNE 30, 2017, AND MAKING APPROPRIATIONS THEREFOR, AND OTHER PROVISIONS RELATED TO REVENUE, DEFICIENCY APPROPRIATIONS AND TAX FAIRNESS AND ECONOMIC DEVELOPMENT.

AMENDMENT

LCO No.: 9356


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 16 $

FY 17 $

Various State Agencies

Various - Savings

$1.4 million

$1.4 million

State Comptroller - Fringe Benefits (Employee Health)

GF, TF - Savings

None

None

Note: Various=Various

Municipal Impact: None

Explanation

Section 1 of the bill will result in savings of approximately $1.1 million in both FY 16 and FY 17 from withholding salary increases for certain individuals in executive branch agencies.

Section 2 of the amendment, if adopted by agreement between the state and the State Employees' Bargaining Agent Coalition (SEBAC), will result in a savings to the State Employees' Retirement System (SERS) and the state in the long term. This section requires all employees hired after June 30, 2016 to participate in a defined contribution plan and makes transitioning to the defined contribution plan optional for all employees hired before that date. Employees, except for employees of higher education who have the option to either participate in the state's alternative retirement program (a defined contribution plan) or SERS, are enrolled in SERS (the state's defined benefit plan). If agreed to, there will be no savings to the state in FY 16 or FY 17 as the state's actuarially determined employer contribution (ADEC) is set for FY 16 and FY 17 based on the SERS actuarial valuation as of June 30, 2014. If the state were to require a new valuation to set the FY 17 ADEC based on the provisions of the amendment it is unlikely there would be any savings to the state in FY 17. There may be savings as early as FY 18 depending on the contribution rates set for the state and new employees. The amendment will have no impact on the SERS unfunded liability which comprises approximately 82% of the state's ADEC (or $1.12 billion of a $1.38 billion total ADEC in FY 15).

Any future savings are contingent on agreement between the state and SEBAC. The current pension and health care agreement is in effect until 2022. Pursuant to CGS 5-278(e), whenever statute is in conflict a collective bargaining agreement, the terms of the agreement supersede statute.

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.