LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 22, 2001
TO: Honorable Florence Shapiro, Chair, Senate Committee on
State Affairs
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1068 by Armbrister (Relating to the benefits and
administration of a statewide retirement system for
volunteer firefighters and other emergency services
personnel.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1068, As Introduced: negative impact of $(134,000) 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. *
**************************************************************************
General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(67,000) *
* 2003 (67,000) *
* 2004 (67,000) *
* 2005 (67,000) *
* 2006 (67,000) *
****************************************************
All Funds, Five-Year Impact:
*****************************************************
* Fiscal Year Probable Savings/(Cost) from *
* General Revenue Fund *
* 0001 *
* 2002 $(67,000) *
* 2003 (67,000) *
* 2004 (67,000) *
* 2005 (67,000) *
* 2006 (67,000) *
*****************************************************
Fiscal Analysis
The bill would increase benefits for the Texas Statewide Emergency
Services Personnel Retirement Fund, which is administered by the Fire
Fighters' Pension Commissioner. The plan currently provides a monthly
pension benefit equal to six times the governing body's average monthly
contribution, with the monthly pension benefit compounded by 7.0 percent
for each year of qualified service in excess of 15 years. Under the
provisions of this bill, the monthly pension benefit would be equal to
seven times the governing body's average monthly contribution, with the
monthly pension benefit compounded by 7.5 percent for each year of
qualified service in excess of 15 years. The resulting increase in the
liabilities, and the required contribution necessary to amortize the
unfunded accrued actuarial liability would result in a state
contribution of at least $67,000 per year.
Methodology
This analysis is based on an updated actuarial valuation performed by the
fund's actuary that used the August 31, 2000 valuation but adjusted for
the investment loss experienced by the fund since August 31, 2000. The
valuation was updated because the fund's value of assets is based on the
market value of the investments with no smoothing. This update did not
factor in the additional $105,000 that the House and Senate versions of
the appropriations bill have appropriated to the agency for
administrative costs. Once that increase in annual expenditures is
factored in, the monthly contributions from the local emergency services
departments to the fund are not sufficient to amortize the unfunded
accrued actuarial liability within 30 years. Existing statute requires
the state to make contributions to the fund if the unfunded liability can
not be amortized within 30 years. The estimated state contribution
required to bring the funding period down to 30 years is $67,000 each
year.
The fiscal impact to the state shown above may be understated. The
actuary for the State Pension Review Board has raised concerns about the
methodology and assumptions used by the fund's actuary, and it is
expected the state's contribution would be higher if a more appropriate
methodology and assumptions were used.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 325 Fire Fighters Pension Commission
LBB Staff: JK, RB, SC