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F I S C A L I M P A C T R E P O R T
SPONSOR Rodella
ORIGINAL DATE
LAST UPDATED
1-25-07
3-05-07 HB 243/aSPAC
SHORT TITLE Volunteer Firefighter Service Credits
SB
ANALYST Aubel
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
Indeterminate
Recurring Fire Protection Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
REVENUE (dollars in thousands)
Estimated Revenue
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
FY09
Indeterminate
Recurring
Volunteer Firefighters
Retirement Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)
FY07 FY08
FY09 3 Year
Total Cost
Recurring
or Non-Rec
Fund
Affected
Total
$20.0
$20.0
$40.0 Recurring
Public
Employees
Retirement
Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
SOURCES OF INFORMATION
LFC Files
Response Received From
Public Employees Retirement Association (PERA)
pg_0002
House Bill 243/aSPAC – Page
2
SUMMARY
Synopsis of SPAC Amendment
The Senate Public Affairs Committee Amendment corrects the dates as specified under
Technical Issues, by replacing “2006" with “2007".
Synopsis of Original Bill
House Bill 243 would allow a volunteer firefighter member, or former member who was a
member at any time on or after June 20, 2003, to post or adjust unlimited service credit already
earned, but not posted, by filing with PERA no later than December 31, 2006. Current law
requires the posting of service credit for the preceding year on or before March 31
st
of each year.
(See Technical Issues for a discussion of dates.)
FISCAL IMPLICATIONS
The Volunteer Firefighters Retirement Plan (“Plan"), passed by the Legislature in 1983, is unlike
any other PERA plan because it is not funded by salary contributions. Volunteer firefighters are
not salaried employees and their “retirement benefits" do not derive from employment. Rather,
the benefits are provided by the Legislature and funded by the Legislature from the Fire
Protection Fund with an annual appropriation of $750,000. This amount is supplemented, as
required, to meet unfunded obligations.
In general, adding new liabilities to any fund may increase the annual contribution required to
keep the fund actuarially sound. However, due to the recent favorable experience of members
retiring less frequently than anticipated, the Plan is currently 175 percent funded for the year
ending June 30, 2006. Thus PERA does not anticipate that this legislation, which will allow
posting of additional service credit, will impact the current contribution to the fund. There is the
possibility that unfunded liability will be generated in the future, which would require additional
contribution funding.
If HB 243 is enacted, PERA noted it will incur operating costs for printing and disseminating
information associated with department procedures and reporting forms. In addition, PERA staff
will have increased workload for reviewing reporting records and posting eligible service credit.
SIGNIFICANT ISSUES
House Bill 243 allows a member, or former member who was an active member on the rolls of a
volunteer fire department at any time on or after June 20, 2003, to post unlimited years of service
credit earned prior to January 1, 2006 by filing with the PERA no later than December 31, 2006.
This bill proposes that volunteer firefighters should be given an opportunity to post and/or adjust
service credit earned for one or more calendar years of service prior to January 1, 2006.
Prior to 2003, certain members were statutorily ineligible to post prior earned service credit
because their first year of service was performed when the member was 45 years of age or older.
This limitation was removed from the statute effective June 20, 2003. However, the change was
prospective only. Firefighters who had been excluded from membership based upon age were
unable to post service credit for any year prior to 2003. Another amendment in 2005 partially
pg_0003
House Bill 243/aSPAC – Page
3
addressed this issue by allowing an active member in 2005 to post or adjust up to 5 years of
service credit already earned prior to 2005.
House Bill 243 broadens this group and removes the five-year cap by allowing any member who
has been active since the effective date of the removal of the age limitation (June 20, 2003) to
post unlimited prior service credit. As was done in 2005, HB 243 again places the responsibility
for reporting service credit corrections upon the member, rather than upon the chief of the
respective fire department.
PERA stated that HB 243 will not address the issue of those individuals whose service as an
active volunteer firefighter ended prior to June 20, 2003 and who were not on the active rolls of a
volunteer fire department on that date. These individuals remain ineligible for retirement
benefits for their past volunteer firefighter service.
PERFORMANCE IMPLICATIONS
HB 243 should not affect PERA’s performance measures.
ADMINISTRATIVE IMPLICATIONS
PERA stated that it cannot assess the precise administrative impact of this legislation because it
does not have sufficient information regarding the number of persons who will seek to post or
adjust additional service credit under the provisions of this bill. PERA did report, however, that
the 2005 legislation significantly impacted PERA’s staff. Volunteer fire departments statewide
reported or adjusted past service credit for approximately 1,300-1,500 individual volunteer
firefighters, requiring PERA staff to absorb the additional service credit reporting and auditing.
Furthermore, it has been PERA’s experience that significant follow-up with volunteer fire
departments is required to ensure correct reporting for individual firefighter members. Currently,
PERA has 1 FTE posting volunteer firefighter service credit, which is in addition to the regular
fulltime duties.
TECHNICAL ISSUES
Since the date for reporting has already passed, PERA recommended replacing “2006" with
some future date, such as following technical changes:
Page 2, line 24 – replace “2006" with “2007"
Page 3, line 1 – replace “2006" with “2007"
WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL
Volunteer firefighter members will be required to have service credit for the preceding year
posted to their accounts by March 31
st
. Failure to post service credit by the chief of each
volunteer firefighter department on or before the March 31
st
deadline shall result in the member’s
loss of service credit for the preceding year. Volunteer firefighter members with actual service
earned prior to January 1, 2006 that was not reported to PERA will not be able to correct their
service credit histories for retirement benefits purposes.
MA/nt:csd