LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 74th Regular Session January 27, 1995 TO: Honorable Senator Ken Armbrister, IN RE: Senate Bill No. 91 Chair By: Leedom Committee on State Affairs Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on Senate Bill No. 91 (Relating to disability retirement under the Employees Retirement System of Texas.) this office has determined the following: The bill would alter the conditions under which a member of the Employees Retirement System would be eligible for an occupational death or disability benefit. Occupational disability benefits are greater than non-occupational benefits. Under current law, such eligibility is limited to an injury or disease that results from a specific act or occurence that took place at a definite time and place, resulting from an inherent risk or hazard peculiar to state employment. The bill would allow employees or their survivors to receive occupational death or disability benefits if the employee contracted a disease related to their duties, but is not shown to be linked to a specific time or place. In addition, former state employees now receiving non- occupational disability benefits from ERS would be entitled to an administrative hearing to determine whether they would be eligible for an occupational disability benefit under the new provisions of this bill. The cost of these additional administrative hearings, as well as the cost of occupational death and disability benefits that would be incurred under this bill would be paid by the Employees Retirement System trust fund. The annual cost of the additional administrative hearings to the ERS trust fund cannot be determined. An actuarial analysis indicates that the Employees Retirement System would incur an additional $22 million in actuarial liabilities resulting from the modified occupational disability and death benefit eligibility provisions. Because the retirement system would have no unfunded liability after enactment of this bill, the period to amortize the unfunded liability would be zero years. The bill would increase the normal costs of ERS benefits. The current normal cost, calculated as the percent of total payroll necessary to actuarial fund retirement benefits on an ongoing basis, is 12.22%. The bill would increase the normal cost to 12.34%. No increase in current state or employee contribution rates would be necessary. No fiscal implication to units of local government is anticipated. Source: Employees Retirement System LBB Staff: JK, RN, DF