COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:4965H.01I Bill No.:HB 2430 Subject:Retirement - Schools; Teachers Type:Original Date:March 22, 2022Bill Summary:This proposal modifies provisions relating to teacher and school employee
retirement systems.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2023FY 2024FY 2025Total Estimated Net
Effect on General
Revenue $0$0$0
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2023FY 2024FY 2025Total Estimated Net
Effect on Other State
Funds $0$0$0
Numbers within parentheses: () indicate costs or losses. L.R. No. 4965H.01I
Bill No. HB 2430
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND AFFECTEDFY 2023FY 2024FY 2025Total Estimated Net
Effect on All Federal
Funds $0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND AFFECTEDFY 2023FY 2024FY 2025Total Estimated Net
Effect on FTE 000
☐ Estimated Net Effect (expenditures or reduced revenues) expected to exceed $250,000 in any
of the three fiscal years after implementation of the act or at full implementation of the act.
☐ Estimated Net Effect (savings or increased revenues) expected to exceed $250,000 in any of
the three fiscal years after implementation of the act or at full implementation of the act.
ESTIMATED NET EFFECT ON LOCAL FUNDSFUND AFFECTEDFY 2023FY 2024FY 2025Local Government$0$9,000,000$8,000,000 L.R. No. 4965H.01I
Bill No. HB 2430
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FISCAL ANALYSIS
ASSUMPTION
Officials from the Joint Committee on Public Employee Retirement (JCPER) assume this
proposal has no fiscal impact to the Joint Committee on Public Employee Retirement.
The JCPER’s review of this proposal indicates it will affect retirement plan benefits as defined in
Section 105.660(9). The JCPER’s review of this legislation indicates that its provisions may
constitute a “substantial proposed change” in future plan benefits as defined in section
105.660(10). It is impossible to accurately determine the fiscal impact of this legislation without
an actuarial cost statement prepared in accordance with section 105.665. Pursuant to section
105.670, an actuarial cost statement must be filed with the Chief Clerk of the House of
Representatives, the Secretary of the Senate, and the Joint Committee on Public Employee
Retirement as public information for at least five legislative days prior to final passage.
Current Status of the Public School Retirement System (PSRS) as of June 30, 2020:
Active members: 78,848
Inactive members: 83,014 (includes retired, surviving beneficiary, disabled and terminated
vested)
Funded Ratio
Market Value of Assets: $40,710,304,168 84.6%
Actuarial Value of Assets: $41,705,058,666 84.4%
Liabilities: $49,641,020,407
Covered Payroll: $4,919,286,106
Recommended Contribution for FY 2022: 29% - Employers and employees contribute in equal
amounts of 14.5%.
Percent Dollars (Estimated)
Employer 14.5% $713,296,485 estimated
Employee 14.5% $713,296,485 estimated
Total 29.0% $1,426,592,970 estimated
Officials from Public Schools and Education Employee Retirement Systems assume this
legislation removes the expiration date of July 1, 2014 for the 2.55% Formula Factor Provision
with 32 or more years of service for 169.070.1(8), RSMo.
Currently, PSRS members who have 32 years or more of creditable service and retire have their
retirement benefit calculated using a multiplier of 2.55%. This legislation removes the expiration L.R. No. 4965H.01I
Bill No. HB 2430
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date of July 1, 2014, for the 2.55% Formula Factor Provision with 32 or more years of service
for 169.070.1(8), RSMo. An active member must have 32 years or more of creditable service to
have their retirement allowance calculated using the multiplier of 2.55%.
The 2.55% Benefit Formula Factor Provision allows for eligible members with 32 or more years
of service to retire with an additional 0.05% Formula Factor. Eligible service retirees who have
32 or more years of service with PSRS are eligible for normal retirement under the benefit
formula using the 2.55% factor.
In response to a similar proposal, HCS HB 828 (2021), Public Schools and Education
Employee Retirement Systems stated the Systems have an actuary firm,
PricewaterhouseCoopers (PWC), that prepares actuarial cost statements on any proposed
legislation as well as the annual actuarial valuation reports for the Systems.
There are two factors which impact the Annual Required Contribution Rate (ARC) for a public
retirement plan; Normal Cost Rate, and the Unfunded Actuarial Accrued Liability (UAAL).
There will be an annual savings of $6.02 million per year for the next 30 years due to the
reduction of the normal cost as a result of these provisions being made a permanent part of the
benefit structure. The Unfunded Actuarial Accrued Liability (UAAL) of the Plan will be
reduced by nearly $181.2 million (or $10.7 million annually) should the 2.55% benefit formula
factor bill be adopted.
The annual savings of $16.8 million per year for the next 30 years is due to the reduction of the
Unfunded Actuarial Accrued Liability and the Normal Cost Rate of the Plan as a result of this
2.55% provision being made a permanent part of the benefit structure.
The Unfunded Actuarial Accrued Liability and the Normal Cost Rate of the Plan will be reduced
by 0.37% should the 2.55% benefit formula factor be adopted. This reduction in the Normal
Cost Rate and the Unfunded Actuarial Accrued Liability will result in a decrease to the
Actuarially Determined Contribution (ADC) Rate.
This bill will not only provide an annual savings to the System of $16.8 million per year, the
reduction in the Unfunded Actuarial Accrued Liability as well as the reduction in the Present
Value of Future Benefits will result in an increase in the Plan’s funded ratio of 0.31% from
84.01% to 84.32%.
Below are the estimates provided by PricewaterhouseCoopers’ actuarial cost estimate for HB
828. L.R. No. 4965H.01I
Bill No. HB 2430
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Employer ContributionsFY 2023FY 2024FY 2025Baseline$751 million$779 million$810 millionProposed$742 million$770 million$802 millionSavings$9 million$9 million$8 million
Oversight assumes this proposal reduces the actuarially determined employer contributions as
noted above. Oversight assumes the new employer contribute rates would not become effective
until FY 2024. Therefore, Oversight will show a savings to local school districts beginning FY
2024.
FISCAL IMPACT – State GovernmentFY 2023
(10 months)
FY 2024FY 2025$0$0$0FISCAL IMPACT – Local GovernmentFY 2023
(10 months)
FY 2024FY 2025SCHOOL DISTRICTSCost Avoidance - reduction in
actuarially determined contribution$0$9,000,000$8,000,000
ESTIMATED NET EFFECT ON
SCHOOL DISTRICTS$0$9,000,000$8,000,000
FISCAL IMPACT – Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
FISCAL DESCRIPTION
This bill allows members of the Public School Retirement System of Missouri who have 32 or
more years of creditable service, regardless of age, to have their retirement allowance calculated
using a multiplier of 2.55%.
This legislation is not federally mandated, would not duplicate any other program and would not
require additional capital improvements or rental space. L.R. No. 4965H.01I
Bill No. HB 2430
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SOURCES OF INFORMATION
Joint Committee on Public Employee Retirement
Public Schools and Education Employee Retirement Systems
Julie MorffRoss StropeDirectorAssistant DirectorMarch 22, 2022March 22, 2022