Bill Text: NH SB339 | 2014 | Regular Session | Amended
Bill Title: Relative to instituting a credit card affinity program in which fees received are directed to offset the retirement systems unfunded liability.
Spectrum: Slight Partisan Bill (Republican 9-5)
Status: (Passed) 2014-06-27 - Signed by the Governor on 06/16/14; Chapter 0142; Effective 06/16/14 [SB339 Detail]
Download: New_Hampshire-2014-SB339-Amended.html
SB 339-FN – AS AMENDED BY THE SENATE
02/19/14 0522s
2014 SESSION
10/06
SENATE BILL 339-FN
AN ACT relative to instituting a credit card affinity program in which fees received are directed to offset the retirement system’s unfunded liability.
SPONSORS: Sen. Stiles, Dist 24; Sen. Bradley, Dist 3; Sen. Carson, Dist 14; Sen. Cataldo, Dist 6; Sen. D'Allesandro, Dist 20; Sen. Fuller Clark, Dist 21; Sen. Gilmour, Dist 12; Sen. Morse, Dist 22; Sen. Odell, Dist 8; Sen. Reagan, Dist 17; Sen. Watters, Dist 4; Rep. F. Rice, Rock 21; Rep. Cali-Pitts, Rock 30; Rep. C. McGuire, Merr 29
This bill requires the commissioner of administrative services to determine the feasibility of contracting with a credit card issuer to establish a credit card affinity program in which the fees received by the state are dedicated to reducing the retirement system’s unfunded liability, prior to instituting such a program.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
02/19/14 0522s
14-2783
10/06
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Fourteen
AN ACT relative to instituting a credit card affinity program in which fees received are directed to offset the retirement system’s unfunded liability.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Commissioner of Administrative Services; Feasibility; State Credit Card Affinity Program.
I. The commissioner of administrative services shall, not later than July 1, 2014, issue a letter of inquiry to appropriate banks, credit unions, and financial service companies seeking interest in entering into a contractual relationship with the state to provide and operate a credit card affinity program as described in this act. Based on the responses received from the letters of inquiry, the commissioner shall assess the initial requirements, time frames, and continuing state responsibilities that are necessary in order to institute the establishment of a state credit card affinity program which shall require no additional state appropriation other than costs that are recoverable from fees and other revenues provided for in an agreement.
II. If the commissioner determines that a state credit card affinity program may be established meeting the criteria of paragraph I, the commissioner shall further determine the feasibility for participation from New Hampshire civic organizations and associations, and state and local governmental agencies, including but not limited to the administration and membership of the New Hampshire retirement system, the New Hampshire Municipal Association, and the New Hampshire School Boards Association.
III. If the commissioner positively determines the likelihood that instituting a credit card affinity program for the purpose of dedicating the proceeds to a reduction in the retirement system’s unfunded liability would have sufficient interest and benefit to the state, the commissioner may issue a request for proposals as provided in RSA 21-I:95. The commissioner shall provide a report detailing any findings and relevant data to the senate president, the speaker of the house of representatives, and the chairpersons of the senate and house finance committees.
2 New Subdivision; State Credit Card Affinity Program. Amend RSA 21-I by inserting after section 94 the following new subdivision:
State Credit Card Affinity Program
21-I:95 State Credit Card Affinity Program; Administration.
I. Upon a determination by the commissioner of administrative services of the feasibility of a state credit card affinity program which meets the requirements of this subdivision and the minimum enrollment required of financial services companies administering a credit card affinity program, the commissioner shall have the authority to enter into an agreement with a credit card issuer for the issuance of a co-branded or affinity credit card. The credit card issuer and terms of the co-branded card most favorable to the purpose described in paragraph II shall be selected following a request for proposals and awarded through competitive bidding.
II. All fees and other revenue attributable to payments made to the state by the credit card issuer through a co-branding or affinity agreement shall not be general funds of the state but, after deducting the necessary costs of administration by the department of administrative services, shall be paid to the board of trustees of the New Hampshire retirement system and dedicated to an annual reduction in the retirement system’s unfunded liability determined under RSA 100-A:16, II.
3 Retirement System; Financing; Annual Offset Against Unfunded Accrued Liability. Amend RSA 100-A:16, II(e) to read as follows:
(e) Immediately following the actuarial valuation prepared as of June 30 of each fiscal year, the board shall have an actuary determine the amount of the unfunded accrued liability for each member classification, proportionally reduced using sums dedicated as provided in RSA 21-I:95, II, as the amount of the total liabilities of the state annuity accumulation fund on account of such classification which is not dischargeable by the total of the funds in hand to the credit of the state annuity accumulation fund on account of such classification, and the aforesaid normal contributions to be made on account of the members in such classification during the remainder of their active service. The amount so determined with respect to each member classification shall be known as the “unfunded accrued liability” with respect to such classification. On the basis of each such unfunded accrued liability, the board shall have an actuary determine the level annual contribution required to discharge such amount over a period of 30 years or the maximum period allowed by standards adopted by the Government Accounting Standards Board, whichever is less.
4 Effective Date. This act shall take effect upon its passage.
LBAO
14-2783
11/26/13
SB 339-FN - FISCAL NOTE
AN ACT authorizing the department of administrative services to contract for a credit card affinity program in which fees received are directed to offset the retirement system’s unfunded liability.
FISCAL IMPACT:
The Department of Administrative Services states this bill, as introduced, may increase state restricted revenue by $20,000 in FY 2016, $25,000 in FY 2017, and $30,000 in FY 2018, and increase state expenditures by $121,531 in FY 2015, $117,933 in FY 2016, $123,300 in FY 2017, and $127,782 in FY 2018. The New Hampshire Retirement System states the bill will have an indeterminable impact on state and local expenditures in FY 2015 and each year thereafter. There will be no impact on county expenditures, or county and local revenue.
METHODOLOGY:
The Department of Administrative Services states this bill authorizes it to contract with a credit card issuer to establish a credit card affinity program in which fees received by the state are used to reduce the Retirement System’s unfunded liability. The Department makes the following assumptions with respect to the bill’s fiscal impact:
• Implementation of the bill will require additional budgetary resources. Absorption of additional responsibilities at current staffing levels will negatively affect the availability of personnel to complete capital budget projects and address other duties assigned to the Department. As such, beginning in FY 2015 the Department expects to hire one full-time Administrator II, labor grade 29, and one part-time Financial Data Specialist I, labor grade 26.
• The program will take three months to assemble and five months to bid, review, and award through Governor and Council, with the resulting contract in place by March 2015.
• Because the program is new, it will take time to build and generate income. Based on similar programs with over 100,000 potential clients, the Department assumes no income in FY 2015, $20,000 in FY 2016, $25,000 in FY 2017, and $30,000 in FY 2018.
The Department states that all of the above assumptions are premised on the overarching assumption that the state is able to provide a list of a minimum of 100,000 potential customers. The Department also states that, in order to make the card appealing to potential users, the state will likely need to develop an incentive program. For example, the state could offer everyone who obtains and uses the cards a discount at state parks. These incentives will come at a cost to the state, but because the Department is unable to identify the types of incentives that may be offered, it is unable to determine the potential cost. In addition, the Department states that due to stiff competition across the country, affinity cards have been losing popularity with banks, with many banks dropping their past programs. Finally, the Department states that only a few banks nationally offer this type of program, with less funding being returned to affinity program benefiters. Based on its cost and revenue assumptions, the Department projects the program will have the following fiscal impact beginning in FY 2015:
FY 2015
FY 2016
FY 2017
FY 2018
Estimated Revenue
-
$20,000
$25,000
$30,000
Estimated Expenditures:
Administrator II Salary (LG 29, with annual steps)
$53,937
$56,336
$58,812
$61,484
Position Benefits
$28,065
$29,668
$31,361
$33,171
Financial Data Specialist I Salary (LG 26, @ 20 hours/week with biannual steps)
$25,293
$25,293
$26,406
$26,406
Position Benefits
$1,936
$1,936
$2,021
$2,021
Other Expenses (hardware, software, etc)
$12,300
$4,700
$4,700
$4,700
Total Cost to State
$121,531
$117,933
$123,300
$127,782
Net Increase (Decrease) in State Revenue
($121,531)
($97,933)
($98,300)
($97,782)
The bill states that, after deducting the Department’s costs of administration, fees and other revenue shall be paid to the New Hampshire Retirement System and dedicated to an annual reduction in the System’s unfunded liability. Under the scenario presented by the Department, the Retirement System would receive no revenue during the period covered by this fiscal note.
The New Hampshire Retirement System states that it consulted with its contracted actuary on the effects on the unfunded liability of any fees received by the System. The System does not predict how much, if any, revenue will be generated by the bill. For illustrative purposes, however, the System states that for every one percent of payroll expenditures (approximately $25 million per year), the funded ratio for normal employees will increase 0.30 percent, while the funded ratio for teachers, police, and fire will increase 0.20 percent. In addition, employer contributions will decrease 0.06 percent for normal employees (currently 10.44 percent of salary), 0.07 percent for teachers (currently 11.96 percent of salary), 0.11 percent for police (currently 21.35 percent of salary), and 0.12 percent for fire (currently 23.79 percent of salary). The System states that different amounts of fees would have a proportional effect on the funded ratio and employer contribution amounts.
