LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
March 14, 2001
TO: Honorable Dale B. Tillery, Chair, House Committee on
Pensions & Investments
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB464 by Longoria (Relating to eligibility for service
retirement from the Judicial Retirement System of Texas
Plan One or 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 *
* HB464, As Introduced: negative impact of $(2,860,000) 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. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(1,344,000) *
* 2003 (1,516,000) *
* 2004 (1,628,000) *
* 2005 (1,727,000) *
* 2006 (1,662,000) *
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All Funds, Five-Year Impact:
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*Fiscal Probable Probable Change in Number of *
* Year Savings/(Cost) from Savings/(Cost) from State Employees from *
* General Revenue Fund Judicial Fund FY 2001 *
* 0001 0573 *
* 2002 $(1,344,000) $(127,000) 0.0 *
* 2003 (1,516,000) (132,000) 0.0 *
* 2004 (1,628,000) (134,000) 0.0 *
* 2005 (1,727,000) (146,000) 0.0 *
* 2006 (1,662,000) (150,000) 0.0 *
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Fiscal Analysis
The bill would modify the current rules for the Judicial Retirement
System - Plan 1 (JRS-1) and Judicial Retirement System - Plan 2 (JRS-2)
to allow members to retire sooner than they can under current statutes.
Members could retire at age 65 with eight years of service credit,
instead of the current ten years of service credit if the member
currently holds a judicial office, or twelve years of service credit if
the member does not currently hold a judicial office. Members could
also retire at any age with 18 years of service credit, instead of the
current 20 years of service credit; or when the sum of the member's age
and service credit equals or exceeds 75. Additionally, death benefit
plan eligibility would drop from the current 10 years to 8 years,
thereby increasing the number of members eligible for a survivor
annuity.
Methodology
For JRS-1, which is funded on a pay-as-you-go basis from General Revenue,
the earlier retirement rules would increase the annual cost of providing
benefits, since there will be an increase in the number of judges
eligible to receive benefits each year. Based on the current eligibility
status of JRS-1 active participants, ERS estimates that there will be an
additional 6-9 judges receiving benefits each year. The costs
associated with the increased annual benefit payments ranges from
$490,000 in fiscal year 2002 to $660,000 in fiscal year 2006.
For JRS-2, the proposed provisions would increase the normal cost above
the current level of state and member contributions. As a result, the
plan would have an unfunded actuarial accrued liability (UAAL) that
could not be amortized within the 30 years required by statute. In
order to amortize the UAAL within the required period, the state's
contribution to the plan would have to increase from the current 16.83%
of salary to 18.94%. Additionally, the payroll base will increase as
the additional JRS-1 retirees are replaced with JRS-2 members. The
costs associated with the increased contribution rate and payroll base
range from $980,000 in fiscal year 2002 to $1,150,000 in fiscal year
2006.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 327 Employees Retirement System
LBB Staff: JK, RB, SC