OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

HB-7296

AN ACT AUTHORIZING THE FUNDING OF UNFUNDED ACCRUED MUNICIPAL EMPLOYEES' RETIREMENT SYSTEM LIABILITIES BY MUNICIPALITIES.

As Amended by House "A" (LCO 6676)

House Calendar No.: 373


OFA Fiscal Note

State Impact: None

Municipal Impact:

Municipalities

Effect

FY 18 $

FY 19 $

Various Municipalities

See Below

See Below

See Below

Explanation

The bill will result in a fiscal impact to municipalities who participate in the Municipal Employees' Retirement System (MERS) and choose to issue pension obligation bonds (POBs) in accordance with the amendment, to fund all or a portion of any unfunded pension liability. The impact to the municipality will depend on the outcome of the bond issuance, including the costs of issuance, interest on the POBs, and repayment terms, compared to current amortization payments required by MERS. The impact of a POB issuance is anticipated to impact only the issuing municipality. Any administrative expenses related to the receipt and review of bond documents are assumed to be paid out of the MERS fund. The MERS' current administrative fee is $130 a year per active and retired member. As of the most recent actuarial valuation (6/30/2016) the unfunded liability of MERS is $394.8 million.

House “A” eliminates the original bill and its associated fiscal impact and results in the impact described herein.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to the repayment terms of the POBs and any refinancing or refunding of the bonds.

Sources:

Municipal Employees' Retirement System Actuarial Valuation (as of June 30, 2016)