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.

AMENDMENT

LCO No.: 6676

File Copy No.: 560

House Calendar No.: 373


OFA Fiscal Note

State Impact: None

Municipal Impact:

Municipalities

Effect

FY 18 $

FY 19 $

Various Municipalities Participating in the Municipal Employees' Retirement System

See Below

See Below

See Below

Explanation

The amendment strikes the underlying bill and its associated fiscal impact. The amendment 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

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.

Sources:

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