LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 16, 2001 TO: Honorable Dale B. Tillery, Chair, House Committee on Pensions & Investments FROM: John Keel, Director, Legislative Budget Board IN RE: HB437 by Gallego (Relating to retirement benefits for law enforcement officers employed and commissioned by institutions of higher education.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB437, As Introduced: negative impact of $(4,895,078) through the * * biennium ending August 31, 2003. * * * * 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 * * 2002 $0 * * 2003 (4,895,078) * * 2004 (2,832,932) * * 2005 (405,030) * * 2006 (409,080) * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Probable Probable Probable * * Year Savings/(Cost) Savings/(Cost) Savings/(Cost) Savings/(Cost) * * from General from Estimated from General from Federal * * Revenue Fund Other Revenue Funds - Federal * * 0001 Educational and Dedicated 0555 * * General Income Accounts * * Account/ 0994 * * GR-Dedicated * * 0770 * * 2002 $0 $0 $0 $0 * * 2003 (4,895,078) (26,470) (108,217) (54,109) * * 2004 (2,832,932) (133,673) (54,650) (27,325) * * 2005 (405,030) (135,010) 0 0 * * 2006 (409,080) (136,360) 0 0 * *************************************************************************** ***************************************************** * Fiscal Year Probable Savings/(Cost) from State * * Highway Fund * * 0006 * * 2002 $0 * * 2003 (432,869) * * 2004 (218,599) * * 2005 0 * * 2006 0 * ***************************************************** Technology Impact Fiscal Analysis The bill would add commissioned law enforcement officers employed by institutions of higher education to the groups eligible for a supplemental pension benefit from the Law Enforcement and Custodial Officers Supplemental retirement program (LECOS). Methodology The provisions of this bill would result in an increase in the covered state payroll of the LECOS program by adding approximately 870 state employees to the program. The LECOS fund currently has an actuarial surplus and state contributions are not required until October 2003 (fiscal year 2004). The current version of the appropriations bill, as drafted by the House Appropriations Committee, does not contain any funding for state contributions for fiscal years 2002-03. The impact of this legislation is to require state contributions to start in June 2003, rather than in October 2003, which increases the cost for both fiscal year 2003 and 2004. Additionally, since the payroll base will be higher, the state's contribution will be higher even though the contribution rate will not change. The additional state contributions required for the final 3 months of fiscal year 2003 total $5,516,700. For fiscal year 2004, the additional cost is $3,267,200, which reflects both the need to make contributions for a full year instead of 11 months, and the higher payroll base. For subsequent years, the projected cost is $873,100 in fiscal year 2005 and $881,900 in fiscal year 2006, solely as a result of the higher payroll base associated with the additional members. Local Government Impact The community college districts will be responsible for making the employer contributions for commissioned law enforcement personnel employed at the local community colleges. According to the Texas Commission on Law Enforcement Officer Standards and Education, there are approximately 540 commissioned law enforcement officers employed by community college districts. The estimated employer contribution for these officers is $65,300 in fiscal year 2003, $329,800 in fiscal year 2004, $333,100 in fiscal year 2005, and $336,400 in fiscal year 2006. Source Agencies: 327 Employees Retirement System, 323 Teacher Retirement System LBB Staff: JK, RB, SC