LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 76th Regular Session
  
                              April 19, 1999
  
  
          TO:  Honorable Florence Shapiro, Chair, Senate Committee on
               State Affairs
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB1128  by Armbrister (relating to systems and programs
               administered by the Teacher Retirement System of Texas),
               Committee Report 1st House, Substituted
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  SB1128, Committee Report 1st House, Substituted:  negative impact     *
*  of $(20,000) 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.                                                             *
**************************************************************************
  
General Revenue-Related Funds, Five-Year Impact:
  
          ****************************************************
          *  Fiscal Year  Probable Net Positive/(Negative)   *
          *               Impact to General Revenue Related  *
          *                             Funds                *
          *       2000                            $(20,000)  *
          *       2001                                    0  *
          *       2002                                    0  *
          *       2003                                    0  *
          *       2004                                    0  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
         *****************************************************
         * Fiscal Year      Probable Savings/(Cost) from      *
         *                      General Revenue Fund          *
         *                              0001                  *
         *      2000                                $(20,000) *
         *      2001                                        0 *
         *      2002                                        0 *
         *      2003                                        0 *
         *      2004                                        0 *
         *****************************************************
  
Fiscal Analysis
  

The proposal would make numerous changes to the benefit structure of the
Teacher Retirement System benefit structure, including a 2.2 benefit
multiplier for active employees and an increase in annuities for
retirees.  These proposals would increase the normal cost by 0.66% and
increase the actuarial liability by $5.666 billion, but would not require
an increase in state contributions to TRS for retirement.

The proposal would require TRS to contract with one or more carriers to
provide an IRS 403(b) investment plan for contributing members, and a
cafeteria benefits program of insurance for all public school employees
and retirees, allowing them to purchase insurance for long term health
care, whole life, and short-term and long term disability.
  
  
Methodology
  
The Teacher Retirement System estimates that administrative costs of
$80,000 in start up costs would be incurred in the bidding process and
selection of carriers for the new insurance programs.  Of this amount,
$60,000 could be paid from a TRS insurance trust fund.  But the $20,000
in start up costs for the IRS 403(b) plan could not be paid from a TRS
trust fund, so TRS would need a General Revenue appropriation.  If the
General Appropriations Act were to have TRS administrative costs expended
from the General Revenue Fund, passage of the proposal would result in a
cost to the General Revenue Fund 0001 of $80,000 in Fiscal Year 2000.
  
  
Local Government Impact
  
No fiscal implication to units of local government is anticipated.
  
  
Source Agencies:   323   Teacher Retirement System
LBB Staff:         JK, SD, WM