Office of Legislative Services
State House Annex
P.O. Box 068
Trenton, New Jersey 08625
Legislative Budget and Finance Office
Phone (609) 847-3105
Fax (609) 777-2442
www.njleg.state.nj.us
LEGISLATIVE FISCAL ESTIMATE
SENATE, No. 2689
STATE OF NEW JERSEY
220th LEGISLATURE
DATED: JUNE 28, 2023
SUMMARY
Synopsis: Expands definition of child under PFRS and SPRS.
Type of Impact: Annual expenditure increase for State General Fund and local
government funds.
Agencies Affected: Division of Pensions and Benefits, Department of the Treasury;
Counties and Municipalities.
Office of Legislative Services Estimate
Fiscal Impact Annual Cost
State Cost Increase $576,000 to $1.3 million
Local Cost Increase $3.3 million to $4.4 million
Total Cost Increase $3.8 million to $5.6 million
The Office of Legislative Services (OLS) estimates that this bill will increase total costs to the
State Police Retirement System by $2.5 million and total costs to the Police and Firemen’s
Retirement System by $18.8 million to $25.0 million. The annual payment on the resulting
liability would be $509,500 for the State Police Retirement System and $3.8 million to $5.1
million for the Police and Firemen’s Retirement System.
According to the most recent valuation report from the Division of Pensions and Benefits, the
Police and Firemen’s Retirement System membership is 85 percent local. As such, the OLS
anticipates that $3.3 million to $4.4 million in annual costs will accrue to local governments
and $576,000 to $1.3 million in annual costs will accrue to the State.
The OLS cannot predict the actual number of decedents or qualifying child beneficiaries. If
the assumptions behind the analysis were to change, the potential cost implications could be
less than the figures outlined above.
FE to S2689
2
BILL DESCRIPTION
This bill expands the definition of a child under the Police and Firemen’s Retirement System
and the State Police Retirement System to include the child of a deceased member who is under
the age of 24 and who is enrolled in a degree program in an institution of higher education for at
least 12 credit hours in each semester.
Under current law, a person is considered a child under these retirement systems if the person
is:
(1) under the age of 18;
(2) 18 years of age or older and enrolled in a secondary school;
(3) under the age of 24 and enrolled in a degree program in an institution of higher education
for at least 12 credit hours in each semester, provided that the member died in active service as a
result of an accident met in the actual performance of duty at some definite time and place, and
the death was not the result of the member's willful misconduct; or
(4) any age who, at the time of the member's or retirant's death, is disabled because of an
intellectual disability or physical incapacity, is unable to do any substantial, gainful work because
of the impairment and the impairment has lasted or can be expected to last for a continuous period
of not less than 12 months, as affirmed by the medical board.
This bill would remove the requirement that if the child is under the age of 24 and enrolled in
an institution of higher education, the child must be the survivor of a member who died in the line
of duty to be considered a child under the Police and Firemen’s Retirement System or State Police
Retirement System. This bill would permit any child of a deceased member who is under the age
of 24 and who is enrolled in a degree program in an institution of higher education for at least 12
credit hours in each semester to be considered a child regardless if the member died in the line of
duty or not.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS estimates that this bill will increase total costs to the State Police Retirement System
by $2.5 million and total costs to the Police and Firemen’s Retirement System by $18.8 million to
$25.0 million, or by a total of $3.8 million to $5.6 million annually to cover the resulting liability
based on the most recent valuation reports for each system.
According to the most recent valuation report from the Division of Pensions and Benefits,
Police and Firemen’s Retirement System membership is 85 percent local. As such, the OLS
anticipates that $3.3 million to $4.4 million in annual costs will accrue to local governments and
$576,000 to $1.3 million in annual costs will accrue to the State. The upper boundary assumes
that half of all deceased members have one child who qualifies for a retirement allowance of 20
percent of the deceased member’s final salary for a six-year period under the bill’s provisions and
the ratio of deaths in service to deaths in retirement remains constant over time, while the lower
boundary assumes that half of all deceased members of the Police and Firemen’s Retirement
System are survived by one child and a spouse, which qualifies the child for a retirement allowance
of 15 percent of deceased member’s final salary for a six-year period under the bill’s provisions FE to S2689
3
and that the ratio of deaths in service to deaths in retirement remains constant over time. The State
Police Retirement System does not provide an allowance to child beneficiaries if the deceased
member has a surviving spouse.
The OLS cannot predict the actual number of decedents or qualifying child beneficiaries and
notes that assuming that half of all deceased members have one child who qualifies for a six-year
retirement allowance under the bill’s provisions could potentially be an overestimate. If the
assumptions behind the analysis were to change, the potential cost implications could be less than
the figures outlined below.
Total Cost
Retirement
System
Child Survivor
(20% benefit)
Child and Spouse
Survivors
(15% benefit)
SPRS
1
$ 2,490,350 $ -
PFRS $ 25,024,260 $ 18,768,195
Total Cost $ 27,514,610 $ 18,768,195
1
SPRS provides an allowance to child beneficiaries only if there is no surviving spouse.
Annualized Cost
System
State
Child Survivor
(20% benefit)
Child and Spouse Survivors
(15% benefit)
SPRS $ 509,496 $ -
PFRS (15%) $ 767,950 $ 575,962
State Subtotal $ 1,277,446 $ 575,962
System
Local
Child Survivor
(20% benefit)
Child and Spouse Survivors
(15% benefit)
PFRS (85%) $ 4,351,715 $ 3,263,787
Local Subtotal $ 4,351,715 $ 3,263,787
Total $ 5,629,161 $ 3,839,749
Section: State Government
Analyst: Anna Harris
Assistant Fiscal Analyst
Approved: Thomas Koenig
Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the
failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).