PUBLIC SCHOOL EMPLOYEES RETIREMENT DEFERRAL

House Bill 4530 as introduced and reported from committee

Sponsor:  Rep. Lee Gonzales

Committee:  Appropriations

First Analysis (3-22-07)

BRIEF SUMMARY: This bill makes two, one-time changes in the way the Public School Employees Retirement System (PSERS) is funded.

                        First, it allows for a one-time interest-only payment on the Unfunded Actuarially Accrued Liability (UAAL) for FY 2006-07 for the Public School Employees Retirement System.  The state's contractual actuary has recommended that the minimum interest charge is 4.5%.

                        It also allows for a one-time revaluation of system assets to their actual market value as of September 30, 2006 instead of doing a five-year smoothed valuation.  The five-year smoothing would begin again in FY 2007-08.

FISCAL IMPACT:    The state's contractual actuary has determined that the reduced employer contributions resulting from this one-time payment deferral of the UAAL principal is $86.4 million (K-12 schools and ISDs), $5.4 million (community colleges), and $1.2 million (universities).

            The asset revaluation change will reduce employer contributions by $175.6 million (K-12 schools and ISDs), $10.9 million (community colleges), and $2.8 million (universities).

 

 

                                                                                                  Fiscal Analyst:   Al Valenzio   

■ This analysis was prepared by nonpartisan House staff for use by House members in their deliberations, and does not constitute an official statement of legislative intent.