LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 10, 2001
TO: Honorable Dale B. Tillery, Chair, House Committee on
Pensions & Investments
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB292 by Armbrister (relating to programs and systems
administered by the Employees Retirement System of
Texas.), Committee Report 2nd House, Substituted
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB292, Committee Report 2nd House, Substituted: 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 (11,868,813) *
* 2005 (4,765,447) *
* 2006 37,311 *
****************************************************
All Funds, Five-Year Impact:
***************************************************************************
*Fiscal Probable Probable Probable Probable *
* Year Savings/(Cost) Savings/(Cost) Savings/(Cost) Savings/(Cost) *
* from General from General from Federal from State *
* Revenue Fund Revenue Funds - Federal Highway Fund *
* 0001 Dedicated 0555 0006 *
* Accounts *
* 0994 *
* 2002 $0 $0 $0 $0 *
* 2003 0 0 0 0 *
* 2004 (11,868,813) (266,715) (133,357) (1,066,860) *
* 2005 (4,765,447) (107,089) (53,544) (428,355) *
* 2006 37,311 838 419 3,354 *
***************************************************************************
Fiscal Analysis
The bill would make various changes to the retirement programs
administered by the Employees Retirement System (ERS). The provision
that would have a direct fiscal impact is the cost-of-living adjustment
provided to retirees in the Law Enforcement and Custodial Officers
Supplemental (LECOS) retirement program. LECOS retirees would receive a
cost-of-living adjustment based on increases in the Consumer Price
Index.
Methodology
The bill would result in a small decrease in the normal cost of the LECOS
program from the current 1.950% to 1.947%. However, the bill would also
deplete the fund's current actuarial surplus, resulting in a resumption
of state contributions to the fund in March 2004. Currently, the state
is not making contributions to the plan. Based on the existing plan
provisions and the February 29, 2001 actuarial valuation of the fund, the
state would not need to resume making contributions until November 2004
(fiscal year 2005).
The additional state contributions required for the final six months of
fiscal year 2004 total an estimated $13,335,745. For fiscal year 2005,
the additional cost is $5,354,435, which reflects the need to make
contributions for a full year, instead of 10 months. For fiscal year
2006, there would actually be a small savings to the state of $41,922
due to the lower normal cost.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 327 Employees Retirement System
LBB Staff: JK, RB, SC