LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  April 9, 1997
         
         
      TO: Honorable Kenneth Armbrister, Chair            IN RE:  Senate Bill No. 1460, Committee Report 1st House, Substituted
          Committee on State Affairs                              By: Armbrister
          Senate
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on SB1460 ( relating 
to the establishment of excess benefit plans in connection with 
the optional retirement program for higher education employees.) 
this office has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by SB1460-Committee Report 1st House, Substituted
         
No significant fiscal implication to the State is anticipated.
         

         
 
This bill would allow institutions of higher education to establish 
governmental excess benefit arrangements that would increase 
benefits to some participants in the Optional Retirement Program 
(ORP).  The bill would not require institutions to develop these 
plans. 

This bill might increase costs to state government 
for additional ORP employer contributions that are limited under 
the current ORP structure.  It is unknown which institutions 
would establish an excess benefit plan, which participants would 
be included, and how much of the extra cost would come from 
state funds and how much from local funds.  This change would 
affect only participants making in excess of the $160,000 IRS 
limit in 1997 (indexed for future years). The extra cost would 
come from either or both state and local funds, depending on 
the source of salary.

The additional cost to the state would 
be 6% of the aggregated salary paid out of state funds that 
exceeded the $160,000 IRS limit.
          
This bill might increase costs to public junior and community 
college districts for additional ORP employer contributions 
that are limited under the current ORP structure.  It is unknown 
which institutions would establish an excess benefit plan, which 
participants would be included, and how much of the extra cost 
would come from state funds and how much from local funds.  
The amount of extra cost would be 6% of the aggregated salary 
paid that exceeded the $160,000 IRS limit and that was paid 
out of local junior and community college funds.
          
   Source:            Agencies:   323   Teacher Retirement System and Optional Retirement Program
                                         781   Higher Education Coordinating Board
                                         
                      LBB Staff:   JK ,JD ,SC