LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session March 31, 1997 TO: Honorable Barry Telford, Chair IN RE: House Bill No. 862 Committee on Pensions and Investments By: Chisum House Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on HB862 ( Relating to credit in the Employees Retirement System of Texas for service as a peace officer.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by HB862-As Introduced Implementing the provisions of the bill would result in a net negative impact of $(966,240) to General Revenue Related Funds through the biennium ending August 31, 1999. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. Fiscal Analysis HB 862 would allow law enforcement and custodial officer members of the Employees Retirement System (ERS) to purchase service credit for previous service as a commissioned peace officer that is not credited to another system. The member may purchase up to 60 months of previous peace officer service and can purchase the service over a five year period. The member must contribute an amount based on the member contribution rate and the salary paid to the member for the service to be established, accumulated at 5% interest. The state must also make a contribution, at 6.0% of salary, at the time the service is purchased. Methodolgy The cost to the state for the state's contribution for the service purchases is estimated to be $483,120 per year. There are an estimated 1,000 members with an average of 2.64 years of previous service who would be eligible. The actuary for the ERS assumes that the average salary per member is $15,250, and that all eligible members purchase credit for the previous service over a five year period. The probable fiscal implications of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Five Year Impact: Fiscal Year Probable Savings/(Cost) from General Revenue Fund 0001 1998 ($483,120) 1998 (483,120) 2000 (483,120) 2001 (483,120) 2002 (483,120) Net Impact on General Revenue Related Funds: The probable fiscal implication to General Revenue related funds during each of the first five years is estimated as follows: Fiscal Year Probable Net Postive/(Negative) General Revenue Related Funds Funds 1998 ($483,120) 1999 (483,120) 2000 (483,120) 2001 (483,120) 2002 (483,120) Similar annual fiscal implications would continue as long as the provisions of the bill are in effect, although at a decreased cost because only newly hired employees would be making the service purchases. No fiscal implication to units of local government is anticipated. Source: Agencies: 327 Employees Retirement System LBB Staff: JK ,PE ,SC