LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session May 1, 1997 TO: Honorable Eddie Lucio, Jr., Chair IN RE: House Bill No. 1638, Committee Report 2nd House, as amended Committee on Intergovernmental Relations By: Kuempel Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on HB1638 ( Relating to participation and credit in, contributions to, and benefits and administration of the Texas County and District Retirement System.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by HB1638-Committee Report 2nd House, as amended No fiscal impact to the state is anticipated. Passage of House Bill 1638 would allow the Texas County and District Retirement System (TCDRS) to change asset investment policies, change the maximum amortization period for a municipality's actuarial liabilities, make technical changes intended to comply with federal law, and allow more flexibility in contribution rates. The changes in asset investment policies would allow for investment in equities which would be expected to increase the rate of return with only a slight increase (or possible decrease) in risk. Without this change the TCDRS actuary would recommend a lower investment return which would result in increased costs to participating employers . The provision to allow employers to contribute more than is currently allowed could increase costs for some employers, but only at their discretion. Decreasing the amortization rate for overfunded actuarial liabilities would result in some cost savings for certain employers. For example, TCDRS estimates Polk County would save $13,024 annually and McCullough County would save $1,424 annually. Decreasing the allowable amortization period for unfunded actuarial liabilities could either result in additional costs for certain employers, or in reduced benefits, depending on the preferences and actions of the employer. Source: Agencies: LBB Staff: JK ,TL ,PE ,WM