Legislature(2013 - 2014)SENATE FINANCE 532
04/16/2014 01:30 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB379 | |
| SB220 | |
| HB308 | |
| HB361 | |
| HB160 | |
| HB116 | |
| SB48 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 278 | TELECONFERENCED | |
| + | HB 385 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | HB 379 | ||
| = | SB 220 | ||
| = | HB 308 | ||
| = | HB 361 | ||
| = | HB 160 | ||
| = | SB 48 | ||
| = | HB 116 | ||
SENATE BILL NO. 220
"An Act relating to additional state contributions to
the teachers' defined benefit retirement plan and the
public employees' defined benefit retirement plan; and
providing for an effective date."
2:17:39 PM
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
discussed some slides dated 4/16/14 (copy on file). He
stated that there was a presentation of the Teacher
Retirement System (TRS) on the previous day, but there was
some additional information received in the meantime. He
drafted a graph based on some of the information from the
actuaries. He stated that the chart was very similar to the
graph that was presented on the previous day. He looked at
the slide titled, "Cumulative Costs of Options to Eliminate
PERS and TRS Unfunded Liability ($ millions)". He stated
that the graph was a combination of TRS and PERS. He noted
that the base case showed the lowest cost in the early
years and the highest total cost. The dark blue line
represented the governor's proposal, which deposited $3
billion total cash infusion, and ended up costing less in
the long run. He stated that the graph showed two scenarios
for PERS. He stressed that the graph would be too muddied
if he addressed level-dollar and level-percent for each of
the options. He remarked that the graph was only a sample
of an outcome. He shared that a $4 billion cash infusion
would be expensive initially, but would become the cheapest
over time. He stated that a $3 billion cash infusion, as
requested by the governor, but went to level-percent of
pay-amortization, it would be cheaper than the base case by
approximately $500 million per year. He stressed that it
would pass the level dollar, and would end up slightly more
expensive than a $4 billion cash infusion. He remarked that
there was always an opportunity to increase the cash
infusion, or make other changes to the system. He noted
that the lines in the future were far from a reliable
prediction or projection.
Mr. Teal looked at the slide titled, "PERS and TRS
Combined." He stated that the slide represented the
previous graph, but in number-form.
Mr. Teal highlighted the slide titled, "Cumulative Costs of
Options to Eliminate PERS Unfunded Liability ($ millions)."
He stated that the graph showed some changes that were
caused by the differential between the rate that was
charged to employers, which was 12.56 percent in PERS, but
the normal cost was 12 percent. He stressed that there was
very little difference between the full-employer rate and
the normal cost of the program. He stated that the rate cap
in TRS was 22 percent, and the normal cost was
approximately 10 percent, so there was a drastic
difference. He stated that there was more money flowing
from employers, as the defined benefit employees were
replaced with defined contribution employees. He stated
that a $3 billion cash infusion into PERS would mean that
the debt would be paid off in five years. He felt that the
option may not be wise, because the rates would drop to
zero.
2:23:19 PM
Mr. Teal looked at the slide titled, "PERS options." He
stated that the numbers showed the same outcomes as the
graphs. He felt like the numbers showed an unreliable
degree of accuracy. He felt that the graphs helped
determine the overall spread between the different options.
SB 220 was HEARD and HELD in committee for further
consideration.
2:24:18 PM
AT EASE
2:30:37 PM
RECONVENED