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