A Glossary of Actuarial Terms is provided at the end of this impact statement.

According to the Teacher Retirement System (TRS) actuary, HB 229 only impacts how the required state contribution is split between the State and the employer. The bill does not change the total employer contribution to be received by TRS, therefore no actuarial impact is expected.

This bill, to be effective September 1, 2003, would provide the following changes:

• Specifies how minimum salary for state contribution purposes is to be determined for certain school personnel.

Under current law, employing districts pay the state’s contribution on the portion of the member’s salary in excess of the statutory minimum salary. The proposal revises the definition of the statutory minimum salary. As revised, the total TRS contribution for affected members remains unchanged. The proposal merely reallocates the contribution between the state and the employing district.

The analysis relies on the participant data, financial information, benefit structure and actuarial assumptions and methods used in the August 31, 2002 actuarial valuation of TRS. According to the PRB actuary, the actuarial assumptions and methods appear to be reasonable. All actuarial projections have a degree of uncertainty because they are based on the probability of occurrence of future contingent events. Accordingly, actual results will be different from the results contained in the analysis to the extent actual future experience varies from the experience implied by the assumptions. Except as otherwise noted, the conclusions contained in the analysis seem reasonable.

• Actuarial Analysis by Lewis Ward - Consultant and W. Michael Carter - Actuary, Gabriel, Roeder, Smith & Company, March 5, 2003
• Actuarial Review by Mr. Richard E. White, Actuary, Milliman USA, Inc., March 13, 2003

Normal Cost-- the current cost as a percentage of payroll that is necessary to pre-fund pension benefits adequately during the course of an employee's career.

Unfunded Liability-- the amount of total liabilities that are not covered by the total assets of a retirement system. Both liabilities and assets are measured on an actuarial basis using certain assumptions including average annual salary increases, the investment return of the retirement fund, and the demographics of retirement system members.

Amortization Period-- the number of years required to pay-off the unfunded liability. Public retirement systems have found that amortization periods ranging from 20 to 40 years are acceptable. State law prohibits changes in TRS, ERS, or JRS-2 benefits or state contribution rates if the result is an amortization period exceeding 30.9 years.