LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 74th Regular Session March 1, 1995 TO: Honorable Ken Armbrister, Chair IN RE: Senate Bill No. 9 Committee on State Affairs By: Armbrister, et Senate al. Austin, Texas 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 a post-retirement increase for TRS retirees that would address 25 percent of the impact of inflation, or raise retirement annuities to the monthly minimum described below, whichever is greater; - Raise the monthly minimum benefit for future retired teachers and librarians to a level that equals the annualized minimum 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; 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. All costs associated with implementing the provisions of the bill are currently included as 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 the Teacher Revenue 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: Sunset Advisory Commission, Teacher Retirement System LBB Staff: JK, RN, DF