LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session May 22, 2001 TO: Honorable James E. "Pete" Laney, Speaker of the House, House of Representatives FROM: John Keel, Director, Legislative Budget Board IN RE: HB1161 by Eiland (relating to the administration of the Business Enterprises Program trust fund.), As Passed 2nd House ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB1161, As Passed 2nd House: positive impact of $0 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 0 * * 2004 0 * * 2005 0 * * 2006 0 * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Savings/(Cost) from Probable Savings/(Cost) from * * Year Business Enterprise Program / Business Enterprise Progam / GR * * GR Dedicated Dedicated * * 5043 5043 * * 2002 $(7,605) $8,000 * * 2003 (7,701) 8,000 * * 2004 (7,797) 8,000 * * 2005 (7,893) 8,000 * * 2006 (7,989) 8,000 * *************************************************************************** Fiscal Analysis The bill would permit the Blind Commission to use professional management services to administer the Business Enterprises Program Trust Fund to maintain retirement or pension plans, health insurance, paid sick leave, and vacation time for active and retired blind vendors in conformance with the federal Randolph Shepard Act. In Texas, retirement and vacation are currently the only elected benefits. The costs of professional management services is expected to be offset by eliminating annual expenditures for actuarial services. Methodology It is assumed that the number of actively employed managers will remain constant at 2001 levels and that the number of retirees receiving distributions will increase 5% each year from 2002 to 2007. Management fees are estimated based on an average of the costs reported by five representative companies providing 401k management services for a small target market. Management cost structure is assumed to be comprised of: a one time startup fee of $920, an annual plan base fee of $1,360, an annual per life (participant-active and retired) charge of $32, and an annual distribution charge of $33 per retiree. The FY2000 agency annual cost for retiree actuary expenses is $8,000. Annual savings of $8,000 for actuarial services is assumed because the service would be provided by the selected management firm, upon adoption of the bill, as part of the stated management fee structure. The Blind Commission estimates $2,500 (125 hours at $20 per hour) as annual recurring costs for accounting, and administration of benefits and pay equalization. It is assumed that enactment of the bill would reduce the amount of staff time devoted to those activities, but not reduce FTEs. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: 304 Comptroller of Public Accounts, 318 Texas Commission for the Blind, 327 Employees Retirement System LBB Staff: JK, JO, DB, HD, KF, GM