LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION March 17, 2009 TO: Honorable Vicki Truitt, Chair, House Committee on Pensions, Investments & Financial Services FROM: John S. O'Brien, Director, Legislative Budget Board IN RE:HB2283 by Truitt (Relating to increasing state employee participation in the TexaSaver program.), As Introduced No significant fiscal implication to the State is anticipated. The bill would implement recommendations from the Legislative Budget Board's 2009 Government Effectiveness and Efficiency Report entitled "Increase the Employee Participation in the TexaSaver Program." The bill would make changes to the TexaSaver Program, the 401(k) and 457 plans offered to state employees for voluntary retirement savings. Changes made by this bill include adding a Roth 401(k), adding a Roth 457 when permissible under federal law, expanding automatic enrollment to all state employees for the 401(k) plan, adding an auto-escalation feature to increase participation contributions by one percent each year until contributions equal five percent of salary, and permitting an employer match within the 401(k) plan. The Employees Retirement System estimates that there would be an administrative cost to the agency to make the program changes related to adding a Roth plan option and the expansion of automatic enrollment. The TexaSaver Program is funded by monthly participant fees. To add a Roth plan option would require fees by the participants selecting this option. Additional costs to the state would be incurred if the Legislature appropriates funds for an employer match for the 401(k) plan. A match would only be permitted if the Employees Retirement System receives funding for normal costs for the retirement system and the system has a funded ratio equal to or greater than 90 percent. The employer matching amount would be determined by a specific appropriation level and is not set to a certain amount by this bill. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies:327 Employees Retirement System LBB Staff: JOB, JRO, JI, JJO
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION
March 17, 2009
TO: Honorable Vicki Truitt, Chair, House Committee on Pensions, Investments & Financial Services FROM: John S. O'Brien, Director, Legislative Budget Board IN RE:HB2283 by Truitt (Relating to increasing state employee participation in the TexaSaver program.), As Introduced
TO: Honorable Vicki Truitt, Chair, House Committee on Pensions, Investments & Financial Services
FROM: John S. O'Brien, Director, Legislative Budget Board
IN RE: HB2283 by Truitt (Relating to increasing state employee participation in the TexaSaver program.), As Introduced
Honorable Vicki Truitt, Chair, House Committee on Pensions, Investments & Financial Services
Honorable Vicki Truitt, Chair, House Committee on Pensions, Investments & Financial Services
John S. O'Brien, Director, Legislative Budget Board
John S. O'Brien, Director, Legislative Budget Board
HB2283 by Truitt (Relating to increasing state employee participation in the TexaSaver program.), As Introduced
HB2283 by Truitt (Relating to increasing state employee participation in the TexaSaver program.), As Introduced
No significant fiscal implication to the State is anticipated.
No significant fiscal implication to the State is anticipated.
The bill would implement recommendations from the Legislative Budget Board's 2009 Government Effectiveness and Efficiency Report entitled "Increase the Employee Participation in the TexaSaver Program." The bill would make changes to the TexaSaver Program, the 401(k) and 457 plans offered to state employees for voluntary retirement savings. Changes made by this bill include adding a Roth 401(k), adding a Roth 457 when permissible under federal law, expanding automatic enrollment to all state employees for the 401(k) plan, adding an auto-escalation feature to increase participation contributions by one percent each year until contributions equal five percent of salary, and permitting an employer match within the 401(k) plan. The Employees Retirement System estimates that there would be an administrative cost to the agency to make the program changes related to adding a Roth plan option and the expansion of automatic enrollment. The TexaSaver Program is funded by monthly participant fees. To add a Roth plan option would require fees by the participants selecting this option. Additional costs to the state would be incurred if the Legislature appropriates funds for an employer match for the 401(k) plan. A match would only be permitted if the Employees Retirement System receives funding for normal costs for the retirement system and the system has a funded ratio equal to or greater than 90 percent. The employer matching amount would be determined by a specific appropriation level and is not set to a certain amount by this bill.
The bill would implement recommendations from the Legislative Budget Board's 2009 Government Effectiveness and Efficiency Report entitled "Increase the Employee Participation in the TexaSaver Program." The bill would make changes to the TexaSaver Program, the 401(k) and 457 plans offered to state employees for voluntary retirement savings. Changes made by this bill include adding a Roth 401(k), adding a Roth 457 when permissible under federal law, expanding automatic enrollment to all state employees for the 401(k) plan, adding an auto-escalation feature to increase participation contributions by one percent each year until contributions equal five percent of salary, and permitting an employer match within the 401(k) plan.
The Employees Retirement System estimates that there would be an administrative cost to the agency to make the program changes related to adding a Roth plan option and the expansion of automatic enrollment. The TexaSaver Program is funded by monthly participant fees. To add a Roth plan option would require fees by the participants selecting this option.
Additional costs to the state would be incurred if the Legislature appropriates funds for an employer match for the 401(k) plan. A match would only be permitted if the Employees Retirement System receives funding for normal costs for the retirement system and the system has a funded ratio equal to or greater than 90 percent. The employer matching amount would be determined by a specific appropriation level and is not set to a certain amount by this bill.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 327 Employees Retirement System
327 Employees Retirement System
LBB Staff: JOB, JRO, JI, JJO
JOB, JRO, JI, JJO