Agenda Item 3B
October 18,2016
Introduction
MEMORANDUM
October 14,2016
TO:
FROM:
County Council
Robert H. Drummer, Senior Legislative
Attome~
Introduction:
Expedited Bill 43-16, Retirement - Membership Groups - Group
J
SUBJECT:
- Established
Expedited Bill 43-16, Retirement - Membership Groups - Group
J -
Established,
sponsored by Lead Sponsor Council President at the request ofthe County Executive, is scheduled
to be introduced on October 18, 2016. A public hearing is tentatively scheduled for November 15
at 1:30 p.m.
.
Bill 43-16 would establish Group
J
in the Employees' Retirement System and transfer
employees in Group E who are not deputy sheriffs or correctional officers to Group
J
as of the
effective date of this legislation.
Background
The County Code currently has group designations for all uniformed employees who
participate in the ERS. There are employees currently participating in Group E, which is
designated for deputy sheriffs and correctional officers, who are non-uniformed employees.
Moving these non-uniformed employees into their own group would provide better information
for the actuary to project the liability for their benefits and better track the participation by each
retirement group. The Bill would not change the retirement benefits for these employees.
This packet contains:
Expedited Bill 43-16
Legislative Request Report
Memo from County Executive
Fiscal and Economic Impact statement
Circle
#
1
13
15
16
F:\LAW\BILLS\1643 Retirement-Membership Groups-Group J\Intro Memo.Docx
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Expedited Bill No.
43-16
Concerning:
Retirement - Membership
Groups - Group
J -
Established
Revised: October
14, 2016
Draft No.
..L.
Introduced:
October
18,2016
Expires:
April
18, 2018
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _----'-_
Effective: _ _:--_ _ _ _ _ __
Sunset Date:
~No!:!.!n~e~____:=___---_
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Council President at the request of the County Executive
AN EXPEDITED ACT
to:
(1)
establish Group J in the Employees' Retirement System;
(2)
transfer employees in Group E who are not sheriffs or correctional officers to Group
J as of the effective date of the legislation; and
(3)
generally amend the law regarding the Employees' Retirement System.
By amending
Montgomery County Code
Chapter 33, Personnel and Human Resources
Sections 33-37,33-38,33-39,33-42 and 33-43
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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ExPEDITED BILL
No. 43-16
1
Sec. 1. Sections 33-37, 33-38, 33-39,33-42 and 33-43 are amended as
follows:
33-37. Membership requirements and membership groups.
2
3
4
5
*
(£)
*
Membership groups and eligibility.
Any full-time or part-time
employee is eligible for membership in the appropriate membership
group if the employee meets all of the requirements for the group:
6
7
8
*
(4)
*
*
9
10
Group E: The Chief Administrative Officer, the Council
Administrator, the hearing examiners, the County Attorney and
each head of a principal department or office of the County
government, if appointed to that position before July 30, 1978,
or a member having held that position on or before October 1,
1972. Any sworn deputy sheriff or County correctional officer
[and any County correctional staff or officer as designated by the
chief administrative officer]. Any group E member who has
reached elective early retirement date may retain membership in
group E if the member transfers from the position which
qualified the member for group E. Any group E member who is
temporarily transferred from the position which qualified the
member for group E may retain membership in group E as long
as the temporary transfer from the group E position does not
exceed 3 years. Notwithstanding the foregoing provisions in
group E, any employee who is eligible for membership in group
E must participate in the guaranteed retirement income plan or
the retirement savings plan under Article VIII if the employee:
11
12 '
13
14
15
16
17
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20
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ExPEDITED BILL
No. 43-16
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44
45
46
47
48
49
50
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53
(A)
(i)
begins, or returns to, County service on or after
October 1, 1994 (except as provided in the last sentence of
subsection (e)(2));
(ii)
(iii)
(B)
is not represented by an employee organization; and
does not occupy a bargaining unit position; or
begins County service on or after October 1, 1994;
(i)
and
(ii)
is subject to the terms of a collective bargaining
agreement between the County and an employee
organization which requires the employee to participate in
the guaranteed retirement income plan or the retirement
savings plan.
*
*
*
~
tID
Group
J:
Any County member who works in
correctional
facility and due to the required duties of the
member~
s position,
is designated
~
the Chief Administrative Officer. Any group
I
member who has reached elective early retirement date may
retain membership in group
I
if the member transfers from the
position which qualified the member for group
J.
Any group
J
member who is temporarily transferred from the position which
J
may retain membership in
group
J
as long as the temporary transfer from the group
J
position does not exceed
J.
years. Notwithstanding the foregoing
provisions in group
1.
any employee who is eligible for
membership in group
I
must participate in the guaranteed
qualified the member for group
retirement income plan or the retirement savings plan under
Article
VIn
if the employee:
C0
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EXPEDITED BILL
No. 43-16
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begins, or returns
~
County service on or after
October
L
1994 (except as provided in the last
sentence of subsection (e)(2)) or (e)(7);
(ii)
(iii)
is not represented
Qy
an employee organization; and
does not occupy
~
bargaining unit position; or
begins County service on or after October
L
1994;
and
(ii)
is subject to the tenus of
~
collective bargaining
agreement between the County and an employee
organization which requires the employee to
participate in the guaranteed retirement income plan
. or the retirement savings plan.
(g)
Transfer from one group to another.
A member who elects to transfer
from one membership group to another as a result of amendments to
this Article must transfer by December 31, 1978, or forfeit this option.
However, under paragraph 4, a group D member may transfer to group
F at any time before the member's retirement date.
Additional
contributions made as a result of the transfer must not be treated as
picked-up contributions.
(1)
Transfers From Group A to Group E, F, G,
[or]
H.,. or
J.
Whenever
a group A member transfers to a position which is qualified for
membership in group E, F, G,
[or]
H.,. or
J,
the retirement service
credits earned as a group A member must be used for the purpose
of qualifying for retirement. Except for the contribution rate
increase as of the effective date of transfer, there will be no
additional charges levied on any member who is transferred prior
to July 1, 1970. Any member who transfers after July 1, 1970,
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ExPEDITED BILL
No. 43-16
81
in addition to paying the contribution rate increase as of the
effective date of transfer, must pay the additional amount of
contributions that would have been paid as a member ofgroup E,
F, G, [or]
H~
82
83
84
or
I
from July 1, 1970, or hire date, if later, plus
85
interest at the rate of 6
Y2
percent per annum to date of full
payment.
(2)
Transfers From Group B, D, E, F, [or]
Whenever a group B, DE, F, [or]
G~
86
87
G~
or
I
to Group A or H.
88
or
I
member transfers to a
89
90
91
position which is qualified for membership in group A or H, the
retirement service credits earned as a group B, D, E, F, [or]
G~
or
I
member must be used for the purpose of qualifying for
retirement as a group A or H member. The rate of contribution
must be decreased as ofthe date oftransfer, and the difference in
member contributions must not be refunded. Notwithstanding
any other provision of this Article, any group
E~
92
93
94
95
[or] F
~
or
I
96
97
member who has not met the elective early retirement date and
who transfers to group A or H must receive credited service at
the rate of 1.25 years of service for each full year of service as a
member of group
E~
98
99
100
101
102
[or]
F~
or
I.
Notwithstanding any other
provision of this Article, any group G member who has not met
the normal retirement date and who transfers to group A or H
must receive credited service at the rate of 1.25 years of service
for each full year of service as a member of group G.
(3)
Transfers From Group B to Group E, F, [or]
G~
103
104
105
106
107
or
I.
Whenever a
group B member transfers to a position which is qualified for
membership in group E, F, [or]
G~
or
I,
the retirement date must
be adjusted accordingly. Except for the contribution rate increase
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ExPEDITED BILL
No. 43-16
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as of the effective date of transfer, there must be no additional
charges levied on any member who transferred on or before July
1, 1970. Any member who transfers after July 1, 1970, in
addition to paying the contribution rate increase as of the
effective date of transfer, must pay the additional amount of
contributions that would have been paid as a member of group E,
F, [or]
G~
or
I
from July 1, 1970, or hire date, iflater, plus interest
or
I.
A group D
at the rate of 6
~
percent per annum to date of full payment.
(4)
Transfers From Group D to Group E, F, [or]
G~
member may transfer to group E, F, [or] G
~
or
I
and the
retirement service credits earned as a group D member must be
used for the purpose of qualifying for retirement under group E,
F, [or]
G~
or
J.
Except for the contribution rate increase as of the
effective date of transfer, there will be no additional charges
levied on any member who transferred on or before July 1, 1970.
Any member who transfers after July 1, 1970, in addition to
paying the contribution rate increase as of the effective date of
transfer, must pay the additional amount of contributions that
would have been paid as a member of group E, F, [or]
from July 1, 1970, plus interest at the rate of 6
annum to date of full payment.
(5)
Transfers From Group H to Group A, E, F, [or]
H member may transfer to group A, E, F, [or]
G~
~
G~
or
I
percent per
or
I.
A group
or
I
and the
G~
retirement service credits earned as a group H member must be
used for the purpose of qualifying for retirement under group A,
E, F, [or]
G~
or
I.
Any member who transfers on or after July 1,
1989, in addition to paying the contribution rate increase as of
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ExPEDITED BILL
No. 43-16
135
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the effective date of transfer, must pay the additional amount of
contributions that would have been paid as a member of group
A, E, F,
[or]
G.1 or
1
from July 1, 1970, or hire date, if later, plus
interest at the rate of 6
'li
percent per annum to date of full
payment.
*
date, and trial retirement.
(a)
*
*
141
33-38. Normal retirement date, mandatory retirement date, early retirement
142
143
144
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147
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149
150
151
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155
156
157
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159
Normal retirement date.
The normal retirement date is the first day of
the month elected by a member after the member meets the years of
service and age requirements for the applicable membership group. For
normal retirement:
*
*
*
ill
Group J: The member must have at least:
fA}
12
years of credited service and be at least age 55; or
25 years of credited service and be at least age 46.
lID
[(8)](2}
[(9)]QQ)
*
*
*
*
*
*
*
*
*
(c)
Early retirement date.
(A)
the group A member has at least 15 years of credited
service and has reached age 50, or has at least 20 years of
credited service and has reached age 45;
(B)
the group B member has at least 15 years of credited
service and has reached age 45;
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EXPEDITED BILL
No. 43-16
160
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(C)
the group E member has at least 15 years of credited
service and has reached age 45, or has at least 20 years of
credited service and has reached age 41;
(D)
the group F member has at least 15 years of credited
service and has reached age 45, or has at least 20 years of
credited service and has reached age 41; [or]
(E)
the group H member has at least 15 years of credited
service and has reached age 50, or has at least 20 years of
credited service and has reached age 45[.]; or
(E}
the group
I
member has at least
.li
years of credited
service and has reached age 45, or has at least 20 years of
credited service and has reached age 41.
33-39. Member contributions and credited interest.
(
a)
Member contributions.
Each member of the retirement system must
contribute a portion of the member's regular earnings through regular
payroll deductions.
(1)
Member Contributions to the Optional Retirement Plan.
A
member of the Optional Retirement Plan must contribute the
following percentage of regular earnings:
[A.]fA)
[B.]ffi)
[C.](g
*
*
*
*
*
*
*
*
*
[D.]@
Group E, F, [or] G.!l or
I
member, 9 Y2 percent for
service beginning on the first pay period after June 30,
2011 and 10 Y2 percent for service beginning on the first
pay period after June 30, 2012.
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ExPEDITED BILL
No. 43-16
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(2)
Member Contributions to the Integrated Retirement Plan. A
member of the Integrated Retirement Plan must contribute the
following percentage of regular earnings:
*
(C)
*
*
Group E and Group
I,
5
%
percent for service beginning
on the first pay period after June 30, 2011 and 6
%
percent
for service beginning on the first pay period after June 30,
2012 up to the maximum Social Security wage base, and
9
Yz
percent for service beginning on the first pay period
after June 30, 2011 and 10
Yz
percent for service beginning
on the first pay period after June 30, 2012 of regular
earnings that exceed the wage base;
(b)
Credited interest.
*
(3)
*
*
Effective July 1, 1989, interest must be credited annually on each
member's accumulated contributions as of June 30, 1989, and
thereafter, as follows:
*
(D)
*
*
For group E and
I
members, interest will be credited at a
rate of 4 percent per annum.
33-42. Amount of pension at normal retirement date or early retirement date.
*
(b)
*
*
Amount ofpension at normal retirement date.
(1)
Pension amount for an Optional Retirement Plan member.
(A)
Except for a Group E, F,
[or]
G.1 or
I
member, the annual
pension for a member of the optional retirement plan who
retires on a normal retirement must equal 2 percent of
average final earnings multiplied by years of credited
212
213
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ExPEDITED BILL
No. 43-16
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service, up to a maximum of 36 years, plus sick leave
credits. Years of credited service of less than one full year
must be prorated.
(B)
For a Group E or Group
J
member who is a member of the
optional plan and retires on a normal retirement, the
annual pension must equal 2.4 percent of average final
earnings for each of the first 25 years of credited service
completed, and 2 percent of average final earnings for
each year of credited service of more than 25 years, to a
maximum of 31 years plus sick leave credits. Years of
credited service ofless than one full year must be prorated.
Sick leave credits used for years in excess of 25 years must
be credited at 2 percent of average final earnings. The
maximum benefit with the application of sick leave credits
must not exceed 76 percent of average final earnings.
*
(2)
*
*
*
*
Pension amount for an Integrated Retirement Plan member.
*
(C)
For a Group E or Group Lmember in the integrated
retirement plan who retires on a normal retirement, the
annual pension must be computed as follows:
*
(d)
*
*
*
*
Adjustmentfor pension payments previously paid.
*
(2)
If
a member receIves servIce connected disability pensIOn
payments, and subsequently returns to work and re-enters the
retirement system within 5 years of the date that disability
retirement commenced and prior to attaining age 55, if a group
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EXPEDITED BILL
No. 43-16
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A or Hmember, or age 45 ifa group B, E, F,
[or]
G~
or Jmember,
the number ofyears ofprior service, plus the number ofyears the
member was on retirement, plus the number of years accrued
after re-entering the system must be used in computing the
amount of pension at subsequent retirement.
*
Sec. 33-43. Disability Retirement
*
*
*
*
*
(g)
Medical reexamination ofdisability retiree.
The Chief Administrative
Officer must require a member receiving disability pension payments
to undergo either a yearly physical examination or to submit a medical
doctor's certificate verifying continuation of the disability during the 5
years after retirement, and once in every 3 years thereafter, until age 55
for a member of group B, E, F,
[or]
G, or
J
or age 60 for a member of
group A or H, unless the Chief Administrative Officer finds that a
physical examination is unnecessary because of the nature and severity
of the injury or illness. The Chief Administrative Officer must review
the findings of the physical examination and take appropriate action,
which may include submitting the results of the evaluation to the
Disability Review Panel for a redetermination whether the individual
qualifies for disability benefits in accordance with subsection (d).
If
a
member does not submit to the examination, the Chief Administrative
Officer may reduce or discontinue any disability pension payments
which the member receives. The Disability Review Panel may require
the member to submit to an additional independent medical
examination. A member may appeal a decision to reduce or discontinue
fU\
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EXPEDITED Bill
No. 43-16
268
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276
277
278
Approved:
disability pension payments to the appropriate Disability Arbitration
Board.
*
Sec. 2.
*
*
Expedited Effective Date.
The Council declares that this legislation is necessary for the immediate
protection ofthe public interest. This Act takes effect on the date on which it becomes
law. Any active group E member who is not a County correctional officer or a sworn
deputy sheriff must become a group J member on the date this law takes effect.
279
280
Nancy Floreen, President, County Council
Date
281
Approved:
282
Isiah Leggett, County Executive
Date
283
This is a correct copy ofCouncil action.
284
Linda M. Lauer, Clerk of the Council
Date
285
®.
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LEGISLATIVE REQUEST REPORT
Expedited Bill 43-16
Retirement
-
Membership Groups
-
Group
J
-
Established
DESCRIPTION:
The legislation creates Group J in the Employees' Retirement
System (ERS) for employees who are currently in Group E and do
not hold the position of Deputy Sheriff or Correctional Officer.
The new group J will serve to distinguish, for actuarial and
administrative purposes, their participation in the ERS. Deputy
Sheriffs and Correctional Officers would remain in Group E while
all other County employees currently in Group E would transfer to
a new Group
J.
This legislation does not change the retirement benefits provided to
either Group E or Group J participants. The sole purpose of the
legislation is to segregate the two groups in the same fashion as the
County Code does currently for Police, Fire and non-unifonned
employees who participate in the ERS.
PROBLEM:
The County Code currently has group designations for all unifonned
emp~oyees
who participate in the ERS.
There are employees
currently participating in Group E, which is designated for deputy
sheriffs and correctional officers, who are non-unifonned
employees. Moving these non-unifonned employees into their own
group would provide better infonnation for the actuary to project the
liability for their benefits and better track the participation by each
retirement group.
GOALS AND
OBJECTIVES:
To divide Group E of the Employees' Retirement System (ERS)
into two different groups. Deputy Sheriffs and Correctional
Officers would remain in Group E while all other designated
correctional staff would transfer to a new Group
J.
COORDINATION: Montgomery County Employee Retirement Plans
&
the Office of
Human Resources
FISCAL IMPACT: Office of Management and Budget
ECONOMIC
IMPACT:
EVALUATION:
Department of Finance
N/A
@
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EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
N/A
Shawn Stokes, Director ORR
Linda Hennan, Montgomery County Employee Retirement Plans
APPLICATION
WITIDN
MUNICIPALITIES:
NI
A
PENALTIES:
NI
A
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-
.,nll ...
~,
lUlu'
:.'
27
AM
to:
27
OFFICE OF THE COUNTY EXECUTIVE
ROCKVILLE, MARYLAND 20850
RECEIVED
MDNTGOMERY COUNTY
CfHl~~r'/.
Isiah Leggett
County Executive
MEMORANDUM
September 28,2016
TO:
Nancy Floreen, President
Montgomery County Council
Isiah Leggett, County Executive
FROM:
SUBJECT:
~
L
.
f/ttuJP~ (;1~?;1
')
7"~
I
Legislation to Amend Chapter 33, Personnel and Human Resources.
I am attaching for the Council's consideration a bill that would amend the
County's retirement law to create Group J in the Employees' Retirement System (ERS)
for employees who are currently
in
Group E and do not hold the position of Sheriff or
Correctional Officer. The new group J will serve to distinguish, for actuarial projection
and administrative purposes, their participation in the ERS. Deputy Sheriffs and
Correctional Officers would remain in Group E while all other County employees
currently in Group E would transfer to a new Group J.
This legislation does not change the retirement benefits provided to either
Group E or Group J participants. The sole purpose of the legislation is to segregate the
two groups in the same fashion as the County Code does currently for Police, Fire and
non-uniformed employees who participate in the ERS.
Thank you for your consideration of this matter.
Attachments: Fiscal Impact Statement
Draft legislation
c:
Shawn Stokes, Director, OHR
Linda Herman, Executive Director, MCERP
montgomerycountymd.gov/311
.,.
:,,'.
301-251-4850 TTY
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Fiscal Impact Statement
CouncD Bill XX-16 Employees' Retirement System - Establish Group
J
1.
Legislative Summary.
Bill XX-16 would:
• establish Group
J
in the Employees' Retirement System (ERS);
• transfer employees in Group E who
are
not sheriff's deputies or correctional
officers to Group
J
as of the effective date ofthe legislation;
• serve to distinguish, for actuarial projection and administrative purposes, the
participation in ERS of employees who are not sheriff's deputies or correctional
officers; and
• generally amend the. law regarding the Employees' Retirement System.
2.
An
estimate of changes
in
County revenues and expenditures regardless of whether
the revenues or expenditures are assumed
in
the recommended or approved budget.
Includes source of information, assumptions, and methodologies used.
Expenditures related to setting up the new retirement plan (Group
1)
within Oracle, the
workforce system of record within Montgomery County,
are
expected to
be
at least
$41,300 in FYI7, for approximately 340 hours of
staff
time. Expenditures
in
subsequent
fiscal years for any routine maintenance ofthe plan
are
expected to be
minimal.
These
costs will be absorbed within the Department of Technology Services, Enterprise
Resource Planning (ERP), during FY 17. ERP resources
will
cover the creation of a new
retirement code, moving employees from their current retirement code
to
the new code,
updating PeopleSoft interface files, and other administrative tasks. After Group
J
is set
up, additional staff and contractor time within the Montgomery County Employee
Retirement Plan (MCERP) office to administer the plan separate from work on other
plans is expected to be,de minimus.
3. Revenue and expenditure estimates covering at least the next 6 rlScal years.
See
#2
4.
An
estimate of expenditures related to County's information technology
(IT)
systems, including Enterprise Resource Planning (ERP) systems.
See
#2
5.
An
actuarial analysis through the entire amortization period for each
bill
that would
affect retiree pension or group insurance costs.
Not applicable. Although this bill involves the retirement system, it will simply place
employees who are not sheriff's deputies or correctional officers into a retirement plan
identical to what they have now. Retirement benefits available to these employees in
Group
J
will
not change.
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6. Later actions that may affect future revenue and expenditures
if
the bill authorizes
future spending.
Not applicable
7. An estimate of the staff time needed to implement the bill.
See #2.
8. An explanation of how the addition of new staff responsibilities would affect other
duties.
This work would be absorbed by current ERP staff, and other work may be displaced
while implementation of Group J occurs in FYI7.
9.
An
estimate of costs when an additional appropriation
is
needed.
An
additional appropriation is not assumed as part ofthis analysis.
10. A description of any variable that could affect revenue and cost estimates.
The estimate described in #2 will vary to the degree that the staffhours ultimately
necessary to establish the new Group J vary from the projection.
11. Ranges of revenue or expenditures that are uncertain or difficult to project.
No applicable
12.
If
a bill
is
likely to have no rlScal impact, why that
is
the case.
Not applicable
13. Other rlScal impacts or comments.
Not applicable
14. The following contributed to and concurred with this analysis:
Linda Herman, Director, Montgomery County Employee Retirement Plans
Corey Orlosky, Office of Management and Budget
Lori O'Brien, Office of Human Resources
Amanda Hardy-Konkus, Enterprise Resource Planning
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Economic Impact Statement
Bill XX-16, Employees' Retirement System - Establish Group
J
Background:
Bill XX-16 would:
• establish Group J in the Employees' Retirement System (ERS);
• transfer employees in Group E who are not sheriff's deputies or
correctional officers to Group J as ofthe effective date ofthe legislation;
• serve to distinguish, for actuarial projection and administrative purposes,
the participation in ERS of employees who are not sheriff's deputies or
correctional officers; and
• generally amend the law regarding the Employees' Retirement System.
1.
The sources of information, assumptions, and methodologies used.
Not Applicable.
2. A description of any variable that could affect the economic impact estimates.
There are no variables under this legislation that could have a substantive economic
impact on the County.
3. The Bill's positive or negative effect, if any on employment, spending, savings,
investment, incomes, and property values in the County.
The legislation does not have an economic impact on the County because
it
will
simply place employees who are not sheriff's deputies or correctional officers into a
retirement plan that is identical to what they have currently. Retirement benefits
available to these employees in Group J will not change. Moving the non-uniform:ed
employees into their own group will result in additional clarity for actuarial
projections of the liability and better tracking of participation by retirement group.
4.
If
a Bill is likely to have no economic impact, why is that the case?
Please see the answer to question 3.
5. The following contributed to or concurred with this analysis:
David Platt, Dennis
Hetman, and Robert Hagedoom, Finance.
. spmosa,
Department of Finance
Al
exan e
~~~
lfector
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