LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session February 14, 1997 TO: Honorable Bill Ratliff, Chair IN RE: Senate Bill No. 310 Committee on Finance By: Brown Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SB310 ( Relating to certain judicial salaries.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by SB310-As Introduced Implementing the provisions of the bill would result in a net negative impact of $(54,719,000) 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 The bill would establish $122,912 as the annual salary for a justice on the Supreme Court. The bill would also amend Government Code, Section 659.012 concerning the salary provisions for justices of the courts of appeals and the district judges. The bill would also eliminate county supplements to the salaries of court of appeals justices and district court judges. The bill would also impact salaries of district attorneys and other prosecuting attorneys performing the duties of district attorneys. The bill would repeal Chapter 31 of the Government Code concerning supplemental compensation for justices of the courts of appeal and Subchapter A, Chapter 32, Government Code, concerning supplemental compensation for district judges. The proposed salary changes would impact the Employees Retirement Fund since benefits for members of the elected class are based on the salary of a district judge. The bill would impact the Judicial Retirement System, Plan 2 (JRS2) requiring an increase of .56 on the current contribution rate to remain actuarially sound. The bill would also require an increase in the state's appropriations for benefits under the Judicial Retirement System, Plan 1. The bill would increase the liabilities and the normal cost of the Employees Retirement Fund as a result of the increase in benefits provided to members of the elected class. Because of the large actuarial surplus in that fund, an increase in state contributions to the program would not be required. However, $.186 million in FY 98 and $.201 million in FY 99, $.202 million in FY 2000, $.211 million in 2001 and $.212 million in 2002 JRS2 would be needed in general revenue to fund the increase to JRS2. $5.5 million in FY 98 and $5.9 million in FY 99, $6.3 million in FY2000, $6.7 million in FY 2001, $7.2 million in FY 2002 for JRS 1 will be needed in general revenue funding. Methodolgy The Comptroller of Public Accounts based calculations for salaries on the statutory relationships established in the bill, raising all Chief Justices, justices and judges of the appellate courts, all district court judges salaries and prosecuting attorneys' salaries. The proposed State salary changes are based on the increase in the annual salary of a district judge from $85,217 to $110,621 annually. All current and future benefits for elected class members will increase by 29.8%. Future Judicial Retirement Systems Plan One and Plan Two (JRS1 and JRS2) benefits and member contributions will increase by 29.8% as a result of the higher salary levels. Benefits for current JRS1 annuitants will increase, but benefits for current JRS2 annuitants will not change. The Employees Retirement System based calculations on an estimated increase in the normal cost of the Employees Retirement Fund from 6.305% to 6.334%, an increase in the normal cost of the Judicial Retirement Fund of .56 above the current contribution rate; and an increase in benefits paid to JRS1 annuitants. 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 ($27,152,000) 1998 (27,567,000) 2000 (27,968,000) 2001 (28,377,000) 2002 (28,878,000) 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 ($27,152,000) 1999 (27,567,000) 2000 (27,968,000) 2001 (28,377,000) 2002 (28,878,000) Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. Savings for local governmental entities would be approximately $3,034,000 annually because counties would no longer be paying a supplement to district judges and appellate judges. However, there would be some additional cost to the counties as a result of any local judges salaries which are determined based on the salary of a district judge. Source: Agencies: 304 Comptroller of Public Accounts 212 Office of Court Administration 327 Employees Retirement System 201 Supreme Court of Texas LBB Staff: JK ,RR ,DC