LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 74th Regular Session April 29, 1995 TO: Honorable Barry Telford, Chair IN RE: Committee Substitute Committee on Pensions & Investments for House of Representatives House Bill Austin, Texas No. 411 FROM: John Keel, Director In response to your request for a Fiscal Note on House Bill No. 411 (relating to eligibility for service retirement from the Judicial Retirement System of Texas Plan One or the Judicial Retirement System of Texas Plan Two) this office has determined the following: 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 lower the service requirements for retirement for members of the Judicial Retirement System (JRS), Plans One and Two. Current law allows retirement with unreduced benefits at age 65 with 10 years of service if currently holding judicial office, and 12 years of service if no longer holding office. The bill proposes to lower the service requirements to 8 years for all; if age 65 or over this would be with unreduced benefits. Retirement with unreduced benefits would be allowed at any age for 18 years of service. Current law requires 20 years of service. Additionally, retirement with unreduced benefits would be allowed for anyone whose age plus years of service add up to at least 75. The estimated state contribution for a 31-year amortization period for JRS Plan Two would be 18.74%, an increase of 2.2% over the current 16.54%. The cost of additional contributions for JRS Plan Two increases from $0.5 million in Fiscal Year (FY) 1996 to $0.6 million in FY 2000. Additional contributions would also be required on a yearly basis for JRS Plan One, recognizing that members will retire earlier due to the revised eligibility for benefits. The cost of additional contributions for JRS Plan One increases from $0.3 million in FY 1996 to $0.6 million in FY 2000. The combined fiscal implication for both plans is indicated below. The probable fiscal implication of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Fiscal Probable Cost Out Year of General Revenue Fund 001 1996 $814,200 1997 924,484 1998 1,040,218 1999 1,056,425 2000 1,173,118 Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. No fiscal implication to units of local government is anticipated. Source: Employees Retirement System LBB Staff: JK, RN, WM, RR