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 ************************************************************************** * No fiscal implication to the State is anticipated. * ************************************************************************** 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