LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION March 24, 2023 TO: Honorable Joan Huffman, Chair, Senate Committee on Finance FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB10 by Huffman (relating to certain benefits paid by the Teacher Retirement System of Texas.), Committee Report 1st House, Substituted Estimated Two-year Net Impact to General Revenue Related Funds for SB10, Committee Report 1st House, Substituted : a negative impact of ($4,717,000,000) through the biennium ending August 31, 2025. 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 toGeneral Revenue Related Funds2024($4,717,000,000)2025$02026$02027$02028$0All Funds, Five-Year Impact: Fiscal Year Probable Savings/(Cost) fromGeneral Revenue Fund12024($4,717,000,000)2025$02026$02027$02028$0 Fiscal AnalysisThe bill would provide an increase in the monthly annuity for most categories of Teacher Retirement System (TRS) members in payment status who retired on or before December 31, 2021. The amount of the increase would be 2.0 percent of the annuitant's monthly benefit if the member retired on or after September 1, 2013 and before January 1, 2022. The amount of the increase would be 4.0 percent of the annuitant's monthly benefit if the member retired before September 1, 2013.The bill would also provide a $7,500 onetime payment, not later than February 2024, to most categories of members in payment status that are age 75 or older by the month before the payment is made. TRS would be required to make the onetime payment only if the TRS Board of Trustees were to find that the legislature appropriated money to the retirement system in an amount sufficient to provide the payment.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION
March 24, 2023
TO: Honorable Joan Huffman, Chair, Senate Committee on Finance FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB10 by Huffman (relating to certain benefits paid by the Teacher Retirement System of Texas.), Committee Report 1st House, Substituted
TO: Honorable Joan Huffman, Chair, Senate Committee on Finance
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: SB10 by Huffman (relating to certain benefits paid by the Teacher Retirement System of Texas.), Committee Report 1st House, Substituted
Honorable Joan Huffman, Chair, Senate Committee on Finance
Honorable Joan Huffman, Chair, Senate Committee on Finance
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
SB10 by Huffman (relating to certain benefits paid by the Teacher Retirement System of Texas.), Committee Report 1st House, Substituted
SB10 by Huffman (relating to certain benefits paid by the Teacher Retirement System of Texas.), Committee Report 1st House, Substituted
Estimated Two-year Net Impact to General Revenue Related Funds for SB10, Committee Report 1st House, Substituted : a negative impact of ($4,717,000,000) through the biennium ending August 31, 2025. 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 SB10, Committee Report 1st House, Substituted : a negative impact of ($4,717,000,000) through the biennium ending August 31, 2025. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
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:
2024 ($4,717,000,000)
2025 $0
2026 $0
2027 $0
2028 $0
All Funds, Five-Year Impact:
2024 ($4,717,000,000)
2025 $0
2026 $0
2027 $0
2028 $0
Fiscal Analysis
The bill would provide an increase in the monthly annuity for most categories of Teacher Retirement System (TRS) members in payment status who retired on or before December 31, 2021. The amount of the increase would be 2.0 percent of the annuitant's monthly benefit if the member retired on or after September 1, 2013 and before January 1, 2022. The amount of the increase would be 4.0 percent of the annuitant's monthly benefit if the member retired before September 1, 2013.The bill would also provide a $7,500 onetime payment, not later than February 2024, to most categories of members in payment status that are age 75 or older by the month before the payment is made. TRS would be required to make the onetime payment only if the TRS Board of Trustees were to find that the legislature appropriated money to the retirement system in an amount sufficient to provide the payment.
Methodology
It is assumed that the cost-of-living adjustment outlined in Section 1 of the bill would be funded through a lump sum payment to the TRS Pension Trust Fund of $3,323.0 million in General Revenue in fiscal year 2024, and would thus not impact the actuarial soundness of the fund. According to the Pension Review Board, the Teacher Retirement System (TRS) is considered actuarially sound, with an amortization period of 27 years as of August 31, 2023. Government Code, Section 821.006 defines actuarial soundness, for the purposes of making modifications to benefit and contribution levels, as less than 31 years. If the cost-of-living adjustment outlined in Section 1 of the bill were not funded with a lump sum payment, the funding period would be required to remain below 31 years for the cost-of-living adjustment to occur. It is assumed that the onetime payment outlined in Section 2 of the bill would cost $1,394.0 million in General Revenue in fiscal year 2024.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: b > td > 304 Comptroller of Public Accounts, 323 Teacher Retirement System
304 Comptroller of Public Accounts, 323 Teacher Retirement System
LBB Staff: b > td > JMc, KK, ASA, MMo
JMc, KK, ASA, MMo