LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION April 23, 2025 TO: Honorable Bryan Hughes, Chair, Senate Committee on State Affairs FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB312 by Hughes (Relating to the fiduciary responsibility of the governing body of the public retirement systems in this state and the investment managers and proxy advisors acting on behalf of those systems.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for SB312, As Introduced: a negative impact of ($602,690) through the biennium ending August 31, 2027. 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 Funds2026($386,092)2027($216,598)2028($216,598)2029($216,598)2030($216,598)All Funds, Five-Year Impact: Fiscal Year Probable (Cost) fromGeneral Revenue Fund1 Change in Number of State Employees from FY 20252026($386,092)2.02027($216,598)2.02028($216,598)2.02029($216,598)2.02030($216,598)2.0 Fiscal AnalysisThe bill would amend the Government Code as it relates to administrative requirements of public retirement systems. Under the provisions of the bill, public retirement systems would be required to provide a report to the Pension Review Board on certain investment relationships and another report on proxy voting. The bill would also expand requirements regarding proxy voting on behalf of public retirement systems for investment managers and proxy advisors.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION
April 23, 2025
TO: Honorable Bryan Hughes, Chair, Senate Committee on State Affairs FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB312 by Hughes (Relating to the fiduciary responsibility of the governing body of the public retirement systems in this state and the investment managers and proxy advisors acting on behalf of those systems.), As Introduced
TO: Honorable Bryan Hughes, Chair, Senate Committee on State Affairs
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: SB312 by Hughes (Relating to the fiduciary responsibility of the governing body of the public retirement systems in this state and the investment managers and proxy advisors acting on behalf of those systems.), As Introduced
Honorable Bryan Hughes, Chair, Senate Committee on State Affairs
Honorable Bryan Hughes, Chair, Senate Committee on State Affairs
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
SB312 by Hughes (Relating to the fiduciary responsibility of the governing body of the public retirement systems in this state and the investment managers and proxy advisors acting on behalf of those systems.), As Introduced
SB312 by Hughes (Relating to the fiduciary responsibility of the governing body of the public retirement systems in this state and the investment managers and proxy advisors acting on behalf of those systems.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB312, As Introduced: a negative impact of ($602,690) through the biennium ending August 31, 2027. 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 SB312, As Introduced: a negative impact of ($602,690) through the biennium ending August 31, 2027. 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.
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:
2026 ($386,092)
2027 ($216,598)
2028 ($216,598)
2029 ($216,598)
2030 ($216,598)
All Funds, Five-Year Impact:
2026 ($386,092) 2.0
2027 ($216,598) 2.0
2028 ($216,598) 2.0
2029 ($216,598) 2.0
2030 ($216,598) 2.0
Fiscal Analysis
The bill would amend the Government Code as it relates to administrative requirements of public retirement systems. Under the provisions of the bill, public retirement systems would be required to provide a report to the Pension Review Board on certain investment relationships and another report on proxy voting. The bill would also expand requirements regarding proxy voting on behalf of public retirement systems for investment managers and proxy advisors.
Methodology
According to the Pension Review Board (PRB), the provisions of the bill would require the agency to receive two new annual reports from public retirement systems and make them publicly available on the agency website. The reports would contain detailed proxy voting and investment relationships and may contain large data files.The agency estimates this would result in the need for 2.0 new FTEs, an Investment Analyst III, at an annual salary of $100,000, and a Program Specialist III, at an annual salary of $65,000. Additional costs would be incurred for equipment and benefits for the FTEs. All of the funds would come from General Revenue.No significant fiscal impact from implementing the provisions of the bill is anticipated from the Employees Retirement System, the Teacher Retirement System, the Texas Emergency Retirement System, and the Texas Permanent School Fund Corporation.
The agency estimates this would result in the need for 2.0 new FTEs, an Investment Analyst III, at an annual salary of $100,000, and a Program Specialist III, at an annual salary of $65,000. Additional costs would be incurred for equipment and benefits for the FTEs. All of the funds would come from General Revenue.
No significant fiscal impact from implementing the provisions of the bill is anticipated from the Employees Retirement System, the Teacher Retirement System, the Texas Emergency Retirement System, and the Texas Permanent School Fund Corporation.
Technology
According to PRB, an additional $168,084 in General Revenue would be needed in fiscal year 2026 for IT expenditures in order to modify and update the agency's internal databases and obtain necessary licenses and equipment for new employees. The annual cost for licenses in fiscal year 2027 and subsequent years is estimated to be $2,230.
Local Government Impact
According to PRB, local public retirement systems may incur additional costs associated with the new reporting requirements, including providing reports and ensuring compliance with other provisions of the bill.
Source Agencies: b > td > 323 Teacher Retirement System, 326 Texas Emergency Services Retirement System, 327 Employees Retirement System, 338 Pension Review Board, 706 Texas Permanent School Fund Corporation
323 Teacher Retirement System, 326 Texas Emergency Services Retirement System, 327 Employees Retirement System, 338 Pension Review Board, 706 Texas Permanent School Fund Corporation
LBB Staff: b > td > JMc, WP, LCO, JPO, NV
JMc, WP, LCO, JPO, NV