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Committee flags pension-language changes in HB 2, asks finance for actuarial review
Summary
Members of the Executive Departments and Administration Committee reviewed group 2 pension provisions folded into House Bill 2, raised concerns that deleted language and drafting differences could alter the fiscal note and underfund retirement liabilities, and asked finance and actuaries to verify cost estimates.
Members of the Executive Departments and Administration Committee on Monday reviewed sections of House Bill 2 that revise Group 2 retirement calculations and other pension-related provisions, and raised concerns that edits and a drafting error could change the bill—s fiscal impact.
Committee members said parts of the draft remove a cap on how extra and special-duty pay is averaged into an employee—s final compensation and that an omission in the draft used for the fiscal note may exclude a higher annuity multiplier for service beyond 15 years. Those differences, they said, could materially change the retirement system—s cost estimates.
Representative Leon, who told the panel he compared the introduced language to earlier drafts of a stand-alone bill (HB 727), pointed to two issues: deletion of a clause that limited how special-duty pay in a member—s final years is averaged, and the apparent absence of the 2.5% multiplier that applies to creditable service beyond 15 years. Leon said the deleted sentence that limited averaging over the highest three years had been restored in prior law to prevent "spiking" and that removing it could increase the pension liability if not captured in the fiscal calculation.
The committee heard that the appropriation in the bill text discussed by the retirement system and the legislature was $27 million annually for the relevant line items. A retirement-system contact (identified in committee remarks as Mr. Kavanaugh) had told one legislator he expected something in the mid-$23 million range; committee members said the fiscal note used a version of the draft that may contain typographical or drafting differences and urged finance to confirm the actuary—s assumptions.
Staff who reviewed the draft said the statutory changes largely attempt to restore language that applied to long-tenured employees and that data limitations from earlier eras complicate retrospective calculations. Committee members asked the Office of Legislative Budget Assistant and the retirement-system actuary to ensure the fiscal note reflects current statutory language and the version of HB 2 the legislature considers.
No formal votes were recorded in the committee on these pension provisions during the meeting; members framed the matters as questions for Finance and the actuaries.
The committee also asked staff to flag two drafting issues for the Finance Committee: (1) the deleted averaging clause that limits special-duty pay inclusion (a potential fiscal upward pressure if omitted), and (2) the omitted 2.5% multiplier for service after 15 years that appears in current law but not in one draft used to estimate costs. Members requested a finance-side verification that the fiscal note used the correct statutory baseline and asked that the actuaries run numbers if the text is changed.
