LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 2, 1997
TO: Honorable Robert Junell, Chair IN RE: House Bill No. 2174
Committee on Appropriations By: Kubiak
House
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on HB2174 ( Relating
to increasing the longevity pay of state employees.) this office
has detemined the following:
Biennial Net Impact to General Revenue Funds by HB2174-As Introduced
Implementing the provisions of the bill would result in a net
negative impact of $(22,745,000) to General Revenue Related
Funds through the biennium ending August 31, 1999.
The bill would make no appropriation but would provide the legal
basis for an appropriation of funds to implement the provisions
of the bill.
Fiscal Analysis
The bill would increase longevity pay for state employees (including
employees of institutions of higher education) from $4 per year
of service to $5 per year of service. It currently is available
after 5 years of service and is increased only at 10, 15, 20,
and 25 years of service. The bill would add additional increments
to be paid after 30, 35, and 40 years.
Methodolgy
An estimated $48.0 million in longevity pay will be paid in
fiscal year 1997, of which $33.7 million will be paid from General
Revenue Fund 1. The majority of the remaining longevity pay
expenditures are made out of the State Highway Fund 6. Expenditures
made by institutions of higher education from funds outside
the state treasury are not included in this analysis. The main
part of the estimate comes from increasing these amounts by
25 percent, and projecting the result by the average rate of
growth in longevity payments over the last five years.
The
cost of adding additional increments at 30, 35, and 40 years
of service was estimated based on February 1997 information
from the Comptroller's payroll system. This estimate was adjusted
for the projected turnover in the state workforce over the next
five years.
The resulting increase in total state longevity
expenditures for fiscal years 1998 through 2002 was then allocated
the same proportional method of finance as the 1997 expenditures.
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 Probable Probable
Savings/(Cost) Savings/(Cost) Savings/(Cost)
from General from State from Other State
Revenue Fund Highway Fund Funds
0001 0006 OTHER-OTH
1998 ($10,821,000) ($2,484,000) ($2,108,000)
1998 (11,924,000) (2,737,000) (2,322,000)
2000 (12,660,000) (2,906,000) (2,466,000)
2001 (13,150,000) (3,019,000) (2,561,000)
2002 (13,480,000) (3,094,000) (2,625,000)
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 ($10,821,000)
1999 (11,924,000)
2000 (12,660,000)
2001 (13,150,000)
2002 (13,480,000)
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: Agencies: 327 Employees Retirement System
323 Teacher Retirement System and Optional Retirement Program
781 Higher Education Coordinating Board
304 Comptroller of Public Accounts
LBB Staff: JK ,RR ,WM