HCS HB 583 -- STATE EMPLOYEES' RETIREMENT INCENTIVES

SPONSOR:  Smith (118)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Retirement
by a vote of 11 to 0.

This substitute contains provisions pertaining to medical
insurance and retirement incentives for state employees who are
members of the Highways and Transportation Employees' and Highway
Patrol Retirement System (HTEHPRS), the Missouri State Employees'
Retirement System (MOSERS), or the Missouri State Employees'
Retirement System, Year 2000 Plan (MSEP 2000).  Members of each
system must retire prior to February 1, 2004, and be eligible for
medical coverage under the Missouri Consolidated Health Care
Plan.

In its main provisions, the substitute:

(1)  Allows any retiree to elect to continue medical coverage at
the same costs as if the retiree were an active employee for a
maximum period of five years or until the retiree is eligible for
Medicare or reaches 65 years of age, whichever occurs first;

(2)  Requires the costs for medical coverage for eligible
retirees to revert to the applicable rate after the five-year
period expires or when the retiree becomes eligible for Medicare
or reaches 65 years of age;

(3)  Requires any additional years of service credited to a
retiree's annuity to be applicable to the costs of medical
coverage after the retiree becomes eligible for Medicare or
reaches 65 years of age;

(4)  Requires the governing body of any participating member
agency to elect to provide the medical coverage and retirement
incentive contained in the substitute in order for employees or
retirees to be eligible to apply the incentive to their current
coverage;

(5)  Allows the governing boards of Truman State University,
Lincoln University, state colleges listed in Section 174.020,
RSMo, the Department of Transportation, the State Highway Patrol,
and the Department of Conservation to elect to provide their
employees or retirees the same retirement incentive and medical
coverage as contained in the substitute;

(6)  Allows current employees who elect to retire and who are
eligible to receive a normal annuity under HTEHPRS or MOSERS, or
a life and any temporary annuity under MSEP 2000, to purchase
three years of additional credited service.  This election
requires an active employment status of one year, and the
employment must be immediately prior to the effective date of the
substitute.  The additional years of credited service can be
added to an employee's total years of service, an employee's age,
or a combination of both, and may be used in meeting the normal
retirement eligibility requirements.  In addition, certain
limitations will apply for employees who elect to retire;

(7)  Allows the payment for the additional years of credited
service to be made by an eligible rollover distribution from an
eligible retirement plan or by the use of annual leave accruals
in excess of $2,000;

(8)  Requires the re-calculation of a retiree's annuity and the
provision of a lump-sum payment to a retiree;

(9)  Establishes a department re-hiring cap of 25% for positions
that are vacated due to the election to retire.  Critical or
seasonal positions that are federally funded may be exempt from
this provision;

(10)  Prohibits an employee or retiree who elects to retire from
obtaining employment with any department covered by MOSERS,
HTEHPRS, or MSEP 2000 for a period of three years from the date
of election to retire;

(11)  Requires MOSERS and HTEHPRS to submit a written report to
the Governor, the Commissioner of the Office of Administration,
and the General Assembly by March 1, 2004.  The report must
examine required subject areas and the effects of the incentive
provisions contained in the substitute.  The period the report
must cover is March 1, 2003, to April 1, 2004; and

(12)  Requires the Office of Administration to submit a budgetary
report concerning the effects of the incentive provisions
contained in the substitute by April 1, 2004.  The subject areas
the report must address are also contained in the substitute.

The substitute contains an emergency clause.

FISCAL NOTE:  Estimated Net Savings to General Revenue Fund of
$15,952,714 to $30,658,908 in FY 2004, $24,031,681 to $46,848,411
in FY 2005, and $24,022,569 to $46,839,299 in FY 2006.  Estimated
Net Savings to All Other Funds of $7,799,459 to $15,598,918 in FY
2004, $12,308,165 to $24,928,326 in FY 2005, $12,308,165 to
$24,928,326 in FY 2006.  Estimated Net Savings to Workers'
Compensation of $0 to $10,245 in FY 2004, $0 to $20,490 in FY
2005, and $0 to $20,490 in FY 2006.

PROPONENTS:  Supporters say that the bill will provide eligible
employees an additional retirement option, in lieu of various
reduction-in-staff proposals.  The bill contains a medical
insurance incentive that will help offset the high cost
associated with continuing medical insurance coverage.  The bill
should result in cost savings if a sufficient number of state
employees and departments elect to participate in the retirement
incentive program.

Testifying for the bill were Representative Smith (118); Linda
Luebbering, Deputy Commissioner, Division of Budget and Planning,
Office of Administration; and Department of Transportation.

OPPONENTS:  There was no opposition voiced to the committee.

Others testifying on the bill were Gary Findlay, Executive
Director, Missouri State Employees' Retirement System.

Joseph Deering, Legislative Analyst

Missouri House of Representatives
Last Updated July 25, 2003 at 10:12 am