BILL # HB 2190

TITLE: CORP; accidental disability; definition

SPONSOR: Payne

STATUS: As Introduced

PREPARED BY: Josh Hope

 

 

Description

 

The bill would modify eligibility requirements for the Corrections Officer Retirement Plan (CORP) disability pension.

 

Estimated Impact

 

The eligibility modification would increase the number of eligible disability claims, which would increase contribution rates for CORP. Based on the timing of the CORP actuarial valuation process, the increase in claims would first be reported in the June 30, 2020 valuation and impact contribution rates for FY 2022. In the first year (FY 2022), the state fiscal impact would be approximately $281,800. In the fifth year (FY 2026), the state fiscal impact would be approximately $1.6 million. These state expenses would be paid from mostly General Fund monies.

 

Analysis

 

Currently, within CORP, an accidental disability is defined as a physical or mental condition that totally and permanently prevents an employee from performing a reasonable range of duties within the same department. HB 2190 would stipulate that an accidental disability occurs when an employee cannot perform a reasonable range of duties with equivalent pay and benefits within the same department.

 

Additionally, the bill changes the type of injuries that are eligible for a CORP disability pension. Currently, CORP members' injuries must be derived in 1 of 3 specific ways: 1) Physical contact with inmates, prisoners, parolees or persons on probation; 2) Responding to a confrontational situation with inmates, prisoners, parolees or persons on probation; and 3) A job-related motor-vehicle accident while on official business for the employee's employer (which excludes travel to and from work). HB 2190 would modify this requirement to allow a disability claim for any injuries that were incurred in the performance of the employee's duties.

 

As of June 30, 2018, there are 140 CORP members with a disability pension at a total annual cost of $3.0 million or $21,124 per disability pension. The Public Safety Personnel Retirement System (PSPRS) did not provide an estimate of how many more people would receive a CORP disability pension under the bill. However, the Department of Corrections (ADC) estimated that, based on injury incidents over the past several years, approximately 10 more ADC employees a year would receive a CORP disability pension under the bill. Using the relative proportion of ADC disability pensions (48) compared to the statewide total (140), HB 2190 is expected to add 29 new claims statewide in the first year under the new disability rules. Over the last 10 years, the number of CORP members with a disability pension has generally increased by approximately 5.0% annually this analysis assumes the number of new claims each year under HB 2190 will also increase at that rate over time. Table 1 below summarizes the number of new claims each year under HB 2190, as well as the cumulative number of claims added to the overall CORP disability count.

 

Table 1

 

 

New CORP Disability Claims Under HB 2190

 

Years After Eligibility Change

 New Claims

Cumulative

Increase 

One (FY 2022)

29

29

Two (FY 2023)

32

61

Three (FY 2024)

34

95

Four (FY 2025)

35

130

Five (FY 2026)

37

167

(Continued)

Table 2 below summarizes the fiscal impact of HB 2190 through FY 2026. First, the "baseline" level of CORP disability pensions is displayed using the 5% historical average growth rate. The fiscal impact is then calculated based on the cumulative new claims made under HB 2190 and the current average CORP disability pension ($21,124).

 

In the first year (FY 2022), the bill would have a fiscal impact of approximately $612,600. Approximately 46% of CORP disability pensions are at the state level, while approximately 54% of CORP disability pensions are at the local level. The state fiscal impact would be approximately $281,800 and the local government impact would be approximately $330,800.

In the fifth year (FY 2026), the bill would have a fiscal impact of $3.5 million. This would consist of a state cost of $1.6 million and a local cost of $1.9 million.

 

Table 2

 

 

 

 

 

 

 

CORP Disability Pension Recipient Growth Under HB 2190

PSPRS Valuation Date

June 30
2018

June 30
2019

June 30
2020

June 30
2021

June 30
2022

June 30
2023

June 30
2024

 

 

 

 

 

 

 

 

Fiscal Year

FY 2020

FY 2021

FY 2022

FY 2023

FY 2024

FY 2025

FY 2026

 

CORP Disability Pensions (Baseline)

140

147

154

162

170

179

188

Cumulative Additional HB 2190 Claims

 

29

61

95

130

167

 

CORP Disability Pensions w/ HB 2190

140

147

183

223

265

308

354

Total Cost ($21,124/Pension x Cumulative New Claims) 

$ 612,600

$1,288,600

$ 2,006,800

$ 2,746,100

$ 3,527,700

State Cost Increase (46% of Total Cost)

 

 

$ 281,800

$ 592,800

$ 926,100

$ 1,263,200

$ 1,622,700

Local Cost Increase (54% of Total Cost)

 

 

$ 330,800

$ 695,800

$ 1,080,700

$ 1,482,900

$ 1,905,000

 

Currently, the CORP disability contribution rate is 0.32%. The CORP disability contribution rate would need to be increased to pay any additional costs under HB 2190. For Tier 1 and Tier 2 CORP members (employees hired before July 1, 2018), any additional costs under the bill would be entirely paid by the employer. For Tier 3 CORP members (employees hired after July 1, 2018), employees would pay 50% of these expenses and the employer would pay the remaining 50%. Because the above fiscal impacts assume the bill's costs are entirely paid by employers, any amounts associated with Tier 3 members would reduce the fiscal impact displayed in Table 2, as some portion of Tier 3 member's cost increase would be paid by employees.

 

While PSPRS actuaries did not provide a formal estimate of the cost of the bill, they did provide a general magnitude of potential contribution rate changes. PSPRS indicated that a 25% increase in the number of disability claims (approximately 35 new claims) would increase CORP contribution rates by 0.1% - 0.2%, generating a cost increase of approximately $600,000 to $1.2 million. The estimates listed in Table 2 generally fall within the lower end of this cost range provided by PSPRS.

 

Local Government Impact

 

As noted above, in the first year (FY 2022), the local government fiscal impact would be approximately $330,800. In the fifth year (FY 2026), the local impact would be approximately $1.9 million.

 

3/5/19