OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http: //www. cga. ct. gov/ofa

SB-241

AN ACT ALLOWING ADJUNCT FACULTY MEMBERS OF THE REGIONAL COMMUNITY-TECHNICAL COLLEGE SYSTEM TO WAIVE MEMBERSHIP IN A STATE RETIREMENT PLAN.

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 13 $

FY 14 $

Office of the State Comptroller - State Employees Retirement System

Various – Precludes Cost/Savings

Minimal

Minimal

Municipal Impact: None

Explanation

The bill results in a potential minimal impact to the State Employees Retirement System (SERS) due to: 1) a potential reduction in the state's pension contribution and associated investment interest and 2) the balance of investment interest earned on employee contributions after payouts. 1 The bill permits adjunct faculty members of the regional community-technical colleges to waive membership in a retirement plan. Adjunct faculty at the community colleges currently contribute to SERS as membership in a retirement plan is mandatory for all state employees. 2

The bill appears to apply only to future hires of adjunct faculty as of FY 13, thus the precluded annual cost or savings to SERS is expected to be minimal. 3 The annual impact to SERS would depend upon actual investment experience and the number of employees opting out of retirement plan membership each year.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to investment experience.

Sources:

Office of the State Comptroller, Community-Technical Colleges

1 The State Employees Retirement Fund (SERF) currently has an assumed investment rate of return of 8. 25%. Employees not eligible for any retirement benefits (as most adjunct faculty are due to vesting requirements) may withdraw their retirement contributions, plus 5% annual interest, when leaving state service. Without withdrawal, these contributions revert to the retirement fund after 10 years following employment termination.

2 With the exception of the UConn and State University System adjunct faculty as a result of the special waiver provisions in their collective bargaining agreements.

3 In FY 12, there are 3,828 part-time lecturers at the community technical colleges with a year-to-date payroll of $32. 6 million. This represents approximately 1% of payroll covered under SERS.