BILL ANALYSIS

 

 

Senate Research Center

S.B. 483

87R2487 KFF-D

By: Schwertner

 

Finance

 

4/14/2021

 

As Filed

 

 

 

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

 

The Teacher Retirement System of Texas (TRS) and the Employees Retirement System of Texas (ERS) have both failed to meet assumed rates of return over the long-term. This failure led to S.B. 12 (86R) which provides increased funding to TRS from the state, retired teachers, and employing school districts. Additional funding was necessary to shore up the fund, and keep it actuarially sound. Similarly, ERS's failure to meet assumed rates of return has led to an anticipated depletion date of 2061.

 

We cannot fail our retired teachers and our retired state employees. Accordingly, TRS and ERS both must adopt achievable assumed rates of return, and the pensions' returns should be readily available to the state and to the public.

 

S.B. 483 requires both TRS and ERS to provide a report that compares the assumed rate of return and the actual rate of return achieved by the system for the most recent one, five, 10, and 20 years.

 

The report must include the value of the fund should it have met its assumed rate of return and compare that with the value of the fund due to the actual rate of return.

 

The report is due to the governor, lieutenant governor, and legislature.

 

As proposed, S.B. 483 amends current law relating to a biennial report on the investment returns of the Employees Retirement System of Texas and the Teacher Retirement System of Texas.

 

RULEMAKING AUTHORITY

 

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

 

SECTION BY SECTION ANALYSIS

 

SECTION 1. Amends Subchapter B, Chapter 802, Government Code, by adding Section 802.1085, as follows:

 

Sec. 802.1085.  BIENNIAL REPORT ON INVESTMENT RETURNS OF CERTAIN PUBLIC RETIREMENT SYSTEMS. (a) Provides that this section applies only to the Employees Retirement System of Texas and the Teacher Retirement System of Texas.

 

(b) Requires the governing body of a public retirement system, in November of each even-numbered year, to submit to the governor, the lieutenant governor, and each member of the legislature a report that details and compares the assumed rate of return and the actual rate of return achieved by the system for the most recent 1-year, 5-year, 10-year, and 20-year periods. Requires that the report include:

 

(1)  an estimate of what the book value of the total assets of the fund would have been for each period had the system achieved the applicable assumed rate of return; and

 

(2)  for each period, a comparison of the estimate described by Subdivision (1) and the actual book value of total assets in the fund.

 

(c)  Authorizes the report required by this section to be combined with any other report required by law.

 

SECTION 2. Effective date: September 1, 2021.