TO:	Honorable Jeff Leach, Chair, House Committee on Judiciary & Civil Jurisprudence
FROM:	Jerry McGinty, Director, Legislative Budget Board
IN RE:	HB2779 by Leach (Relating to the compensation of a district judge and the associated retirement benefits of certain other elected state officials.), As Introduced

General Revenue-Related Funds, Five- Year Impact:

All Funds, Five-Year Impact:

Fiscal Analysis

The bill would amend the Government Code to increase salaries for district court judges, court of appeals justices, supreme court justices, and court of criminal appeals justices by increasing the annual base salary of a district court judge from $140,000 to $172,494.  According to the provisions of the bill, the base salary would increase to $155,400 in fiscal year 2024 and $172,494 in fiscal year 2025. 

Methodology

Judicial Salaries: The Office of Court Administration (OCA) has data reflecting the length of state service that a judge/justice has, which permits OCA to determine the salary for every judge/justice in the state under this bill. Assuming no turnover between January 1 and the end of the FY2026-2027 biennium, the biennial cost of salaries is $33,658,772 (including the 1% payroll health contribution and 0.5% agency retirement contribution).

Associate Judge Salary Increases: OCA currently employs 73 associate judges for the child support and child protection courts. Increasing the salary for these judges to 90 percent of a district judge's salary would cost $3,193,836 (including the 1% payroll health contribution and 0.5% agency retirement contribution) beginning in the 2026-2027 biennium.  However, the federal government reimburses 66% of all eligible expenses for the IV-D (child support) program. Judicial salaries are an eligible expense. Thus, the increase would be offset by $1,155,031 over the 2026-2027 biennium. 

Regional Presiding Judge Salary Increases: The salary for the regional presiding judges is apportioned to the counties that comprise the region. Under current law, the judges of the 1st, 2nd, 3rd, 5th, 9th, and 10th AJRs who are active judges make $42,000; the judges of the 4th, 8th and 11th AJRs make $63,000; the judges of the 6th and 7th AJRs make $49,000. Under the bill, the active judges would make $46,620 (30% of $155,400), an increase per judge of $4,620, or a total of $27,720 ($55,440 for the biennium). The judges of the 4th, 8th, and 11th AJRs would make $69,930 (45% of $155,400), an increase of $6,930 per judge, or $20,790 ($41,580 for the biennium). The judges of the 6th and 7th AJRs would make $54,390 (35% of $155,400), an increase of $5,390 per judge, or $10,780 ($21,560 for the biennium). The total statewide biennial impact to counties would be $118,580.

Prosecutor Salaries: OCA has the service credit for prosecutors as of June 2022, and is able to calculate the biennial cost of salaries (including the 1% payroll health contribution and 0.5% agency retirement contribution).  The increased biennial cost to the state would be $9,150,799.

County Attorney Supplements:  Each county that has a county prosecutor is entitled to receive state supplemental salary compensation and are based on a formula and the number of counties served. A county prosecutor is entitled to no less than 1/6th of the base salary.  The increased biennial cost for the county attorney supplements would be $2,071,588.

Constitutional County Judge Supplements: As of  2022, 215 county judges were receiving the county judge supplement. Under current law, the total supplement is $25,200. Under the bill, that supplement would be $27,972 in the first year and $31,049 in the second year. Therefore, the biennial cost to the state would be $1,853,498.  

Statutory County Court Judge Reimbursement: The state reimburses counties for 60% of the state base salary of a district judge for each statutory county court judge. The increased reimbursement due to the recalculated salary would be $9,240 in the first year and and $19496 in the second year per judge. With 258 statutory county court judges, the increased biennial cost to the state would be $7,413,888.

Statutory Probate Court Judge Reimbursement: The state reimburses counties for 60% of the state base salary of a district judge for each statutory county court judge. The increased reimbursement due to the recalculated salary would be $9,240 in the first year and $19,496 in the second year per judge. With 19 statutory county court judges, the increased biennial cost to the state would be $545,984.

1st Multicounty Court at Law Judge: The increased reimbursement due to the recalculated salary would be $15,400 in the first year and $32,494 in the second year for an increased biennial cost to the state would of $47,894.

Visiting Judges:  Visiting judges are paid a daily rate that is based on the District Judge's state based salary.  The daily rate would increase from $622 per day to $691 per day for a biennial increase of $1,301,171.

The salary of the state prosecuting attorney (including the 1% payroll health contribution and 0.5% agency retirement contribution) would increase by $32,480 in the first year and $52,993 in the second year, or $86,755, per biennium.  The state prosecuting attorney will be at the highest salary tier by September 1, 2025.

According to the Employees Retirement System (ERS), the increase in judicial salaries impacts the benefits provided by Judicial Retirement System - Plan 1 (JRS 1) and Judicial Retirement System - Plan 2 (JRS 2), as well as the unfunded liabilities of the ERS and JRS 2 plans.  Specifically, the bill would increase the unfunded liability of the ERS plan by $76.9 million in fiscal year 2024.  The JRS 2 plan is currently actuarially unsound.  According to information previously provided by ERS, an appropriation of approximately $111.5 million would be required to make the fund sound as of August 31, 2024.  This analysis assumes these funds would be appropriated in House Bill 1.

The increased unfunded liability to the JRS 2 plan resulting from the provisions of the bill is $19.8 million, and the additional contributions needed for the plan are $1.9 million in fiscal year 2024 and $2.1 million in fiscal year 2025 and subsequent years.  According to ERS, the additional contributions needed to JRS 1 as a result of the increases in salary are $1.7 million in fiscal year 2024 and $3.3 million in fiscal year 2025.  The total costs to ERS, JRS 2, and JRS 1 are estimated to be $105.8 million for the biennium. 

The original projections by OCA included costs associated with ERS Health Insurance. These amounts include $7,193,218 for fiscal year 2026, $7,193,218 for fiscal year 2027, and $7,193,218 for fiscal year 2028. Since the bill does not require new FTE's, the adopted methodology removes the respective percentage. Thus, employee retirement costs, not including ERS, JRS1, and JRS2 amounts included by ERS, total $4,067,381 for fiscal year 2026, $4,067,381 for fiscal year 2027, and $4,067,381 for fiscal year 2028.

Local Government Impact

No significant fiscal implication to units of local government is anticipated.