HB1451: relative to mandatory overtime and the calculation of base rate of compensation.

HB 1451-FN - AS INTRODUCED

2024 SESSION

24-2637

05/10

HOUSE BILL 1451-FN

AN ACT relative to mandatory overtime and the calculation of base rate of compensation.

SPONSORS: Rep. C. McGuire, Merr. 27; Rep. O'Brien, Hills. 10; Rep. Goley, Hills. 21

COMMITTEE: Executive Departments and Administration

ANALYSIS

This bill provides that mandatory overtime shall be reported as part of the full base rate of compensation.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

24-2637

05/10

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Twenty Four

AN ACT relative to mandatory overtime and the calculation of base rate of compensation.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 New Hampshire Retirement System; Definition of Eligible Compensation; Mandatory Overtime. Amend RSA 100-A:1, XVII(b)(1) to read as follows:

(b)(1) For members who have not attained vested status prior to January 1, 2012, the full base rate of compensation paid, as determined by the employer, plus compensation over base pay. Compensation over base pay shall include as applicable, subject to subparagraphs (2), (3), and (4), any non-mandatory overtime pay, cost of living bonus, annual attendance stipend or bonus, annual longevity pay, additional pay for extracurricular and instructional activities for full-time teachers and full-time employees who are employed in paraprofessional or support position, additional pay for instructional activities of full-time faculty of the community college system, compensation for extra and special duty, and any military differential pay, plus the fair market value of non-cash compensation paid to, or on behalf of, the member for meals or living quarters if subject to federal income tax, but excluding other compensation except supplemental pay paid by the employer while the member is receiving workers' compensation and teacher development pay that is not part of the contracted annual salary. Notwithstanding any other reference to overtime in this section, mandatory overtime, as defined by the employer, shall be reported as part of the full base rate of compensation.

2 Effective Date. This act shall take effect July 1, 2024.

LBA

24-2637

Revised 3/19/24

HB 1451-FN- FISCAL NOTE

AS INTRODUCED

AN ACT relative to mandatory overtime and the calculation of base rate of compensation.

FISCAL IMPACT: [ X ] State [ X ] County [ X ] Local [ ] None

Estimated State Impact - Increase / (Decrease)

FY 2024

FY 2025

FY 2026

FY 2027

Revenue

$0

$0

$0

$0

Revenue Fund(s)

None

Expenditures

$0

Indeterminable

Indeterminable up to $8.18m

Indeterminable up to $8.42m

Funding Source(s)

General Fund and Highway Fund

Various Agency Funds

Appropriations

$0

$0

$0

$0

Funding Source(s)

None

• Does this bill provide sufficient funding to cover estimated expenditures? [X] No

• Does this bill authorize new positions to implement this bill? [X] N/A

Estimated Political Subdivision Impact - Increase / (Decrease)

FY 2024

FY 2025

FY 2026

FY 2027

Revenue

$0

$0

$0

$0

Expenditures

$0

$0

Indeterminable up to $15.25m

Indeterminable up to $15.67m

*The New Hampshire Retirement System states it is not able to separate the fiscal impact of this legislation between county and local government, therefore the fiscal impact is shown together as political subdivisions.

METHODOLOGY:

The New Hampshire Retirement System (NHRS) states this bill provides mandatory overtime be reported as part of the full base rate of compensation, however, it does not define what constitutes mandatory overtime. The change in mandatory overtime provisions may lead to increased pension benefits compared to the current law. Although the exact cost remains unknown, the NHRS was able to work with their actuary to project a fiscal impact assuming all overtime service would be considered mandatory. Additionally, it was assumed the designation of overtime pay would not affect the teacher group, therefore they were not included in the analysis.

The New Hampshire Retirement System's actuary provided valuations based upon data used in the annual actuarial valuation as of June 30, 2021. The valuation assumes an annual rate of interest of 6.75 percent, wage inflation of 2.75 percent per year and uses the entry-age actuarial cost valuation method. Contribution rates for fiscal years 2024 and 2025 are certified and will remain unchanged. However, actual FY 2026-2027 employer rates will be based on the actuarial valuation of June 30, 2023 and are currently unknown at this time, so only the net impact of the estimated allocation of this benefit is shown below.

Estimate State Impact

Increase (Decrease) in Employer Pension Rates as a Percent of Payroll

Net Impact of Proposal

Employees

0.94%

Police

1.72%

Fire

1.78%

Expected Employer Dollar Increase (Decrease) Due to Proposal

FY 2024

FY 2025

FY 2026

FY 2027

Employees

-

-

$6,290,000

$6,470,000

Police

-

-

$1,810,000

$1,860,000

Fire

-

-

$80,000

$90,000

TOTAL

$0

$0

$8,180,000

$8,420,000

Estimated Political Subdivision Impact

Increase (Decrease) in Employer Pension Rates as a Percent of Payroll

Net Impact of Proposal

Employees

0.94%

Teachers

0.00%

Police

1.72%

Fire

1.78%

Expected Employer Dollar Increase (Decrease) Due to Proposal

FY 2024

FY 2025

FY 2026

FY 2027

Employees

-

-

$7,710,000

$7,920,000

Teachers

-

-

$0

$0

Police

-

-

$4,640,000

$4,770,000

Fire

-

-

$2,900,000

$2,980,000

TOTAL

$0

$0

$15,250,000

$15,670,000

The NHRS actuary projects an increase in the actuarial accrued liability of $176.2 million based on the provisions in the bill which will be amortized over a fixed period of no longer than 20-years.

Lastly, the NHRS states there will be an indeterminable increase in expenditures in FY 2025 due to administrative costs relating to the reprogramming of the pension administrative system.

AGENCIES CONTACTED:

New Hampshire Retirement System