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