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

HB 317 is expected to increase TRS obligations. Under the proposal, payments by TRS to current and future retirees employed in a position as mentors (if any) will increase. The bill, if enacted, will not cause the funding period of TRS to increase. Because a teacher must have been retired for a period of 12 months in order to be eligible for this program, the TRS actuary does not believe the retirement patterns of teachers would be impacted by this program.

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

• Specifies that a retired teacher may be rehired without suspension of their retirement pension if the teacher is rehired as a mentor, and meet the following requirements:

1. The teacher retired after becoming eligible for an unreduced benefit,
2. The teacher is certified,
3. The teacher has been retired from all public schools for at least 12 months, and
4. The teacher taught in public schools for at least 10 years

HB317 is not expected to have a significant actuarial impact on TRS, will not cause the amortization period to increase, and will not cause TRS to violate applicable funding statutes which require legislation to not increase the funding period beyond 30 years by one or more years.

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. The analysis considers only those changes contained in the proposal. The combined economic impact of several proposals currently under consideration could exceed the economic impact of each such proposal considered individually.

• Actuarial Analysis by Lewis Ward, Consultant and W. Michael Carter, Actuary, Gabriel, Roeder, Smith & Company, February 26, 2003
• Actuarial Review by Mr. Richard E. White, Actuary, Milliman USA, Inc., March 19, 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.