LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                            February 23, 2001
  
  
          TO:  Honorable Dale B. Tillery, Chair, House Committee on
               Pensions & Investments
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB921  by Zbranek (Relating to waiving certain late
               penalties imposed on subdivisions that participate in the
               Texas County and District Retirement System.), As
               Introduced
  
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*  No fiscal implication to the State is anticipated.                    *
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Local Government Impact
  
The proposal would require the Texas County and District Retirement
System (TCDRS) to waive a penalty imposed on a participating subdivision
for late contributions or failure to provide information under certain
circumstances. This penalty includes interest and an administrative fee,
and went into effect in January 1, 2000.

Prior to the penalty, TCDRS received 544 late payments in 1 year, and
estimated interest losses of $20,000. After the penalty, only 67 payments
were late, interest losses from the payments were $4,500, and interest
penalty fees of $6,000 were made. Additionally, $33,500 in administrative
fees were collected.

Under the provisions of the bill, the fees would be waived if a
subdivision

*  submits evidence showing that the subdivision made a diligent attempt
to submit information and pay employee contributions in the time frame
required by state law and that willful negligence did not cause
information required to be certified or a contribution to be untimely;
and
*  provides the information or pays the contribution no later than 21
days after the subdivision knew or should have known of the failure to
timely provide the information or contribution.

The system has prepared an analysis assuming all late payments would pass
muster under this exemption, and the system would return to having 544
late payments in a year. Under this scenario, TCDRS would lose
approximately $20,000 in interest a year, and the various participating
subdivisions would save approximately $40,000 in penalties. It is not
clear that this is the most likely scenario; other scenarios would have
smaller increases in late payments/interest losses, and a smaller
decrease in penalty fees.
  
  
Source Agencies:   
LBB Staff:         JK, RB, WM, DB