LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 24, 2001
TO: Honorable Bill Ratliff, Lieutenant Governor, Senate
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB372 by Barrientos (Relating to the reestablishment of
service credit in a public retirement system
participating in the proportionate retirement program.),
As Passed 2nd House
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB372, As Passed 2nd House: negative impact of $(1,138,000) *
* 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 $(530,000) *
* 2003 (608,000) *
* 2004 (763,000) *
* 2005 (748,000) *
* 2006 (782,000) *
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All Funds, Five-Year Impact:
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*Fiscal Probable Revenue Gain/(Loss) Probable Savings/(Cost) from *
* Year from General Revenue Fund General Revenue Fund *
* 0001 0001 *
* 2002 $(230,000) $(300,000) *
* 2003 (208,000) (400,000) *
* 2004 (263,000) (500,000) *
* 2005 (248,000) (500,000) *
* 2006 (282,000) (500,000) *
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Fiscal Analysis
The bill as substituted makes several changes to the Judicial Retirement
System Plan 1 (JRS-1), which covers judges who joined the bench before
September 1, 1985, and the Judicial Retirement System Plan Two (JRS-2),
which covers judges who joined the bench after that date. Both programs
are administered by the Employees Retirement System (ERS).
JRS I and JRS II members would be able to purchase service credit for the
remaining months in any calendar year in which the member held office
for part of that calendar year. The 10% increase in the benefit factor
that currently applies to JRS I and JRS II members who have not been out
of judicial office for more than one year would be extended to visiting
judges if the first anniversary of their last day of that service has
not occurred. The 6% member contribution for JRS I members would cease
when the member has at least 20 years of service credit.
Methodology
The JRS-1 program is a pay-as-you-go program, with the state depositing
member contributions into the General Revenue Fund and paying benefits
out of the General Revenue Fund each year. The provision to discontinue
the required member contributions once the member has 20 years of service
results in a revenue loss to the General Revenue Fund estimated at
$230,000 in fiscal year 2002 and increasing to $282,000 in fiscal year
2006 as more members reach 20 years of service.
The provision to allow JRS-1 members to purchase additional service
credit, and the increase in benefits for certain visiting judges will
result in a net increase in the amount of benefits paid annually. ERS
estimates the additional benefit payments will total $300,000 in fiscal
year 2002, and increase to $500,000 by fiscal year 2006 as more JRS-1
judges retire.
The JRS-2 program is pre-funded, with contributions being made today to
pay for benefits that will be provided at a later date. The proposed
benefit changes would have some actuarial impact on the program;
however, the JRS-2 fund would continue to have an actuarial surplus and
there would be no increase required in the state's contributions.
Local Government Impact
No significant fiscal implication to units of local government is
anticipated.
The bill would allow members of the retirement systems that participate
in the Proportionate Retirement Program (PRP) to re-establish service
credit for previously canceled service in another system covered by the
Proportionate Retirement System. Members of Texas Municipal Retirement
System (TMRS) and Texas County and District Retirement System (TCDRS)
could use the service for eligibility only, though TCDRS would allow any
member to count the service for benefits as well by paying the actuarial
cost of increased benefits, allowing for minimal costs to the systems.
Members of El Paso Firemen and Policeman's Pension System would also pay
the actuarial cost of increased benefits, so there should be no costs to
this underfunded system.
Municipalities in TMRS and subdivisions in TCDRS would make a
determination as to whether they want to allow members to re-establish
service by returning withdrawn contributions with interest. For the vast
majority of municipalities and subdivisions, electing this provision
will not have a material impact on their system.
Source Agencies: 327 Employees Retirement System
LBB Staff: JK, RB, TB, SC, WM