LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  April 10, 1997
         
         
      TO: Honorable Kenneth Armbrister, Chair            IN RE:  Senate Bill No. 1102
          Committee on State Affairs                              By: Armbrister
          Senate
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on SB1102 ( Relating 
to systems and programs administered by the Employees Retirement 
System of Texas.) this office has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by SB1102-As Introduced
         
No fiscal implication to the State is anticipated.
         

         
 
This bill makes numerous changes to the statutes governing the 
Employees Retirement System (ERS), the Law Enforcement and Custodial 
Officers Supplemental Retirement Fund (LECOSRF), the Judicial 
Retirement System Plan One, and the Judicial Retirement System 
Plan Two, as well as the administration of the Uniform Group 
Insurance Program.   Many of these changes affect the administration 
of ERS programs and have no fiscal or actuarial impact.  Among 
the changes that will have an actuarial impact are the increased 
annuity given to ERS members retiring in fiscal years 1997, 
1998, and 1999, and changes in retirement eligibility requirements, 
rules regarding purchase of service credit for military service, 
and rules for receiving service credit for unused sick leave.

ERS 
projects that implementing the provisions of this bill would 
increase the actuarial liabilities of the ERS by $161.7 million, 
and increase the actuarial liabilities of the LECOSRF by $10.1 
million.  The normal cost for ERS would increase from 12.305% 
to 12.480%, or approximately $7.5 million a year.  The normal 
cost for LECOSRF would increase from 2.358% to 2.389%, or approximately 
$300,000 a year.  Both funds currently have an actuarial surplus 
sufficient to absorb the increase in liabilities. Therefore, 
an increase in state contributions would not be required.

The 
bill gives the ERS Board of Trustees the authority to permanently 
increase the benefits formula multiplier from 2.0% to 2.25% 
if the actuary certifies that the system would remain actuarially 
sound, with an amortization period not exceeding thirty years. 
 The ERS actuary projects that this increase could not be done 
under the current contribution rates; therefore, no formula 
increase was included in the analysis.
          
No fiscal implication to units of local government is anticipated.
          
   Source:            Agencies:   454   Department of Insurance
                                         304   Comptroller of Public Accounts
                                         
                      LBB Staff:   JK ,JD ,SC