LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
74th Regular Session
April 13, 1995
TO: Honorable Barry Telford IN RE: Committee Substitute
Committee on Pensions & Investments for
House of Representatives Senate Bill
Austin, Texas No. 9
FROM: John Keel, Director
In response to your request for a Fiscal Note on Senate Bill No.
9 (relating to the functions and systems and programs
administered by the Teacher Retirement System of Texas) 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 implement the recommendations of the Sunset
Advisory Commission regarding the Teacher Retirement System.
Certain provisions of the bill would:
- Provide retirees the highest of three options: (1) an ad hoc
increase to the current benefit based upon 33.3 percent of the
difference between the retiree's annuity and what it would have
been had the annuity kept up with inflation, (2) a recalculation
of benefits based on the current retirement formula ( three
highest years final average salary multiplied by a 2.0 percent
multiplier) plus an intervening ad hoc increase and the 33.3
percent inflation ad hoc; or (3) a minimum benefit calculated on
the minimum starting teacher salary as set in the Education Code.
- Include a retroactive application of the pop-up provision for
the restoration of full benefits for retirees whose joint
annuitant preceded them in death;
- Raise the monthly minimum benefit for future retired teachers
and librarians to a level that equals one-twelfth the minimum
annual salary for classroom teachers multiplied by 2 percent for
each year of service;
- Modify the governance of TRS;
- Modify certain management and reporting practices of the TRS;
- Provide for audits of the investment practices of TRS;
- Require the agency to comply with the state space allocation
standard, which would result in TRS leasing-out its excess space
and receiving rental income;
- Require the legislature to appropriate funds for the
administration of the retirement system. A cost to the state
general revenue fund would result from this provision. The TRS
board of trustees would be able to expend more than the amounts
appropriated in order to meet its fiduciary duties; and
-Establish a group insurance program for active employees of
public independent school districts. School districts and their
employees would pay the cost of insurance premiums. School
districts would pay the cost of TRS administrative expenses. The
current $10 annual fee paid by TRS members employed by school
districts would continue to be paid by those members through
fiscal year 1997. The legislature would be able to appropriate
funds for the purpose of expanding the program to active members.
The House Committee Substitute would:
-Eliminates the $10 membership fee paid by TRS members into the
TRS retirement trust fund. However, the $10 fee paid by TRS
members for the active ISD employees' group insurance program
fund would be retained.
-Establish the Sunset date as fiscal year 1999, rather than
fiscal year 2007.
-Allow for normal service retirement at age 50 with 30 years
service. Current law is age 55 with 30 years of service.
-Increase the minimum disability retirement benefit from $50 to
$150 per month.
-Raise the maximum lump sum survivor benefit associated with
active TRS members from $60,000 to $80,000.
All costs associated with implementing the provisions of the bill
are currently included as recommended appropriations in Senate
Bill 2 and House Bill 1 of the 74th Legislature (General
Appropriations Act).
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 Probable Savings
Year of General to
Revenue the Teacher
Fund 001 Retirement
System Trust Fund
No. 960
1996 $26,125,000 $26,125,000
1997 26,125,000 26,125,000
1998 26,125,000 26,125,000
1999 26,125,000 26,125,000
2000 26,125,000 26,125,000
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:
LBB Staff: JK, RN, RR