LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
March 30, 1999
TO: Honorable Sherri Greenberg, Chair, House Committee on
Pensions & Investments
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB3755 by Clark (Relating to benefits payable by the
Judicial Retirement System of Texas Plan Two.), As
Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB3755, As Introduced: negative impact of $(12,157,000) through *
* the biennium ending August 31, 2001. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2000 $(5,942,000) *
* 2001 (6,215,000) *
* 2002 (6,307,000) *
* 2003 (6,490,000) *
* 2004 (6,596,000) *
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All Funds, Five-Year Impact:
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*Fiscal Probable Savings/(Cost) from Probable Savings/(Cost) from *
* Year General Revenue Fund Judicial Fund *
* 0001 0573 *
* 2000 $(5,942,000) $(967,000) *
* 2001 (6,215,000) (1,012,000) *
* 2002 (6,307,000) (1,027,000) *
* 2003 (6,490,000) (1,056,000) *
* 2004 (6,596,000) (1,074,000) *
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Fiscal Analysis
The bill would change the retirement annuities for Judicial Retirement
Plan Two (JRS 2) members to be based on the state salary, as adjusted
from time to time, of a judge of the court on which the retiring member
last served. Currently, retirement annuities are based on the state
salary being paid at the time of retirement without any later
adjustments. The change applies to current and future JRS 2 annuitants.
Methodology
The increase in retirement annuities would increase the normal cost to
35.67% of payroll, well above the current combined state and member
contribution rates of 22.83%. In addition, it would increase the
unfunded actuarial liability of JRS 2 by $39.8 million, to $43.0
million. As a result, the funding would be inadequate and the liability
would never be amortized. In order to meet the statutory requirement
that the unfunded liability be amortized within 30 years, the state
contribution rate would have to increase from the current 16.83% to
34.89% of payroll.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies:
LBB Staff: JK, PE, WM