LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION April 26, 2011 TO: Honorable Robert Duncan, Chair, Senate Committee on State Affairs FROM: John S O'Brien, Director, Legislative Budget Board IN RE:SB1667 by Duncan (Relating to the administration of and benefits payable by the Teacher Retirement System of Texas and to certain domestic relations orders.), Committee Report 1st House, Substituted Estimated Two-year Net Impact to General Revenue Related Funds for SB1667, Committee Report 1st House, Substituted: a positive impact of $133,675,492 through the biennium ending August 31, 2013. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION
April 26, 2011
TO: Honorable Robert Duncan, Chair, Senate Committee on State Affairs FROM: John S O'Brien, Director, Legislative Budget Board IN RE:SB1667 by Duncan (Relating to the administration of and benefits payable by the Teacher Retirement System of Texas and to certain domestic relations orders.), Committee Report 1st House, Substituted
TO: Honorable Robert Duncan, Chair, Senate Committee on State Affairs
FROM: John S O'Brien, Director, Legislative Budget Board
IN RE: SB1667 by Duncan (Relating to the administration of and benefits payable by the Teacher Retirement System of Texas and to certain domestic relations orders.), Committee Report 1st House, Substituted
Honorable Robert Duncan, Chair, Senate Committee on State Affairs
Honorable Robert Duncan, Chair, Senate Committee on State Affairs
John S O'Brien, Director, Legislative Budget Board
John S O'Brien, Director, Legislative Budget Board
SB1667 by Duncan (Relating to the administration of and benefits payable by the Teacher Retirement System of Texas and to certain domestic relations orders.), Committee Report 1st House, Substituted
SB1667 by Duncan (Relating to the administration of and benefits payable by the Teacher Retirement System of Texas and to certain domestic relations orders.), Committee Report 1st House, Substituted
Estimated Two-year Net Impact to General Revenue Related Funds for SB1667, Committee Report 1st House, Substituted: a positive impact of $133,675,492 through the biennium ending August 31, 2013. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Estimated Two-year Net Impact to General Revenue Related Funds for SB1667, Committee Report 1st House, Substituted: a positive impact of $133,675,492 through the biennium ending August 31, 2013.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2012 $0 2013 $133,675,492 2014 $0 2015 $0 2016 $0
2012 $0
2013 $133,675,492
2014 $0
2015 $0
2016 $0
All Funds, Five-Year Impact: Fiscal Year Probable Savings/(Cost) fromGeneral Revenue Fund1 Probable Savings/(Cost) fromRETIRED SCHOOL EMP GROUP INSURANCE989 2012 $0 $0 2013 $133,675,492 ($133,675,492) 2014 $0 $0 2015 $0 $0 2016 $0 $0
Fiscal Year Probable Savings/(Cost) fromGeneral Revenue Fund1 Probable Savings/(Cost) fromRETIRED SCHOOL EMP GROUP INSURANCE989 2012 $0 $0 2013 $133,675,492 ($133,675,492) 2014 $0 $0 2015 $0 $0 2016 $0 $0
2012 $0 $0
2013 $133,675,492 ($133,675,492)
2014 $0 $0
2015 $0 $0
2016 $0 $0
Fiscal Analysis
The bill would amend provisions related to retirement eligibility. The bill would allow the state contribution to the Teacher Retirement System (TRS) pension trust fund for public education and higher education retirement to be less than contributions of active members for the fiscal ending August 31, 2012. The bill would allow the state contribution to the TRS-Care insurance program to be less than 1.0 percent of total active payroll for fiscal year ending August 31, 2013.
The bill would amend provisions related to retirement eligibility.
The bill would allow the state contribution to the Teacher Retirement System (TRS) pension trust fund for public education and higher education retirement to be less than contributions of active members for the fiscal ending August 31, 2012.
The bill would allow the state contribution to the TRS-Care insurance program to be less than 1.0 percent of total active payroll for fiscal year ending August 31, 2013.
Methodology
The bill would change the effective date from September 1, 2006 to September 1, 2007 with regard to eligibility requirements. According to the TRS, the provision in the law relating to this date inadvertently used the 2006 date and was inconsistent with other provisions and legislative intent. A board rule was adopted effective in May, 2008 using the September 1, 2007 date, but TRS has administered the plan with the 2007 eligibility date since the original law passed. It is TRSs position that the bill would have no fiscal impact. For purposes of this estimate, the fiscal impact is undeterminable. For purposes of this estimate, it is assumed that the state contribution rate to the TRS Pension Trust Fund would remain the same as the rate stipulated in the 2010-11 General Appropriations Act. However, if a lower rate were adopted by the Eighty-second Legislature in fiscal year 2012 which could be reduced below 6.4 percent based on the provision of the bill removing the requirement that the state contribution rate to the TRS Pension Trust Fund be no less than the contribution rate required for active employees, state costs to General Revenue would be reduced. The TRS Pension Trust Fund would experience a revenue loss in like amounts. Senate Committee Substitute to House Bill 1 captures savings totaling $101.6 million in GR and $6.8 million in GR-Dedicated funds in fiscal year 2012 based on a state contribution rate of 6.0 percent for public and higher education retirement. For purposes of this estimate, it is assumed that by reducing the state contribution rate to the TRS-Care retiree insurance fund below 1.0 percent of active employee payroll in fiscal year 2013, state costs to General Revenue would be reduced. The TRS-Care Insurance Trust Fund would experience a revenue loss in like amounts. Senate Committee Substitute to HB 1 captures savings totaling $133.7 million in fiscal year 2013 based on a state contribution rate of 0.5 percent of payroll.
The bill would change the effective date from September 1, 2006 to September 1, 2007 with regard to eligibility requirements. According to the TRS, the provision in the law relating to this date inadvertently used the 2006 date and was inconsistent with other provisions and legislative intent. A board rule was adopted effective in May, 2008 using the September 1, 2007 date, but TRS has administered the plan with the 2007 eligibility date since the original law passed. It is TRSs position that the bill would have no fiscal impact. For purposes of this estimate, the fiscal impact is undeterminable.
For purposes of this estimate, it is assumed that the state contribution rate to the TRS Pension Trust Fund would remain the same as the rate stipulated in the 2010-11 General Appropriations Act. However, if a lower rate were adopted by the Eighty-second Legislature in fiscal year 2012 which could be reduced below 6.4 percent based on the provision of the bill removing the requirement that the state contribution rate to the TRS Pension Trust Fund be no less than the contribution rate required for active employees, state costs to General Revenue would be reduced. The TRS Pension Trust Fund would experience a revenue loss in like amounts. Senate Committee Substitute to House Bill 1 captures savings totaling $101.6 million in GR and $6.8 million in GR-Dedicated funds in fiscal year 2012 based on a state contribution rate of 6.0 percent for public and higher education retirement.
For purposes of this estimate, it is assumed that by reducing the state contribution rate to the TRS-Care retiree insurance fund below 1.0 percent of active employee payroll in fiscal year 2013, state costs to General Revenue would be reduced. The TRS-Care Insurance Trust Fund would experience a revenue loss in like amounts. Senate Committee Substitute to HB 1 captures savings totaling $133.7 million in fiscal year 2013 based on a state contribution rate of 0.5 percent of payroll.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 323 Teacher Retirement System, 405 Department of Public Safety
323 Teacher Retirement System, 405 Department of Public Safety
LBB Staff: JOB, KJG, JGM, SD, JW
JOB, KJG, JGM, SD, JW