LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 30, 2001
TO: Honorable Florence Shapiro, Chair, Senate Committee on
State Affairs
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1132 by Ogden (Relating to the retirement benefits of
certain law enforcement officers in the Employees
Retirement System of Texas.), Committee Report 1st
House, Substituted
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1132, Committee Report 1st House, Substituted: negative impact *
* of $(14,958,205) 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 $0 *
* 2003 (14,958,205) *
* 2004 (5,481,156) *
* 2005 (869,128) *
* 2006 (877,819) *
****************************************************
All Funds, Five-Year Impact:
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*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 (14,958,205) (336,139) (168,070) (1,344,558) *
* 2004 (5,481,156) (123,172) (61,586) (492,688) *
* 2005 (869,128) (19,531) (9,765) (78,124) *
* 2006 (877,819) (19,726) (9,863) (78,905) *
***************************************************************************
Fiscal Analysis
The bill would increase the benefit formula for the Law Enforcement and
Custodial Officers Supplemental retirement program (LECOS) for members
who retire with at least 30 years of law enforcement service credit. The
current benefit factor is 2.75% (the 2.25% benefit factor for all
Employees Retirement System (ERS) membership service plus 0.5%). The
bill increases this factor to 3.00% (the 2.25% benefit factor plus 0.75%)
if the member retires with at least 30 years of law enforcement service
credit. The increased factor will apply to all years of credited law
enforcement officer service, but requires that at least three years of
that service occur after August 31, 2001. The benefit formula for
custodial officers would not change.
ERS would only be required to implement the provisions of this bill if
the legislature appropriates money specifically for the purpose.
Otherwise they may choose whether or not to implement the provisions.
Methodology
Under the current benefit provisions, the LECOS fund has an actuarial
surplus and state contributions are not required until October 2003
(fiscal year 2004). The current version of the appropriations bill, as
adopted by the Senate Finance Committee, does not contain any funding for
state contributions for fiscal years 2002-03. The provisions of this
bill would result in an increase in the normal cost of the LECOS program
from 1.95% to 2.019% and draw down the current actuarial surplus in the
LECOS fund. State contributions would be required starting in February
2003, rather than in October 2003. Additionally, the necessary state
contribution rate would be higher, at 2.019% instead of 1.95%.
Based on projected payroll levels for LECOS members, the cost to the
state will be $16.8 million in fiscal year 2003, reflecting the need to
make contributions for the entire payroll base for the last seven months
of fiscal year 2003. For fiscal year 2004, the projected cost is $6.2
million, representing a combination of the higher contribution rate and
the need to make contributions beginning in September 2003 rather than
October 2003. The cost for fiscal year 2005, $976,548 and for fiscal
year 2006, $986,314, only represents the higher contribution rate.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 327 Employees Retirement System
LBB Staff: JK, RB, SC