LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 6, 2001
TO: Honorable Royce West, Chair, Senate Committee on
Jurisprudence
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1569 by West, Royce (Relating to the Judicial
Retirement System of Texas Plan One and the Judicial
Retirement System of Texas Plan Two.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1569, As Introduced: negative impact of $(14,065,000) 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 $(6,883,000) *
* 2003 (7,182,000) *
* 2004 (7,468,000) *
* 2005 (8,056,000) *
* 2006 (8,237,000) *
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All Funds, Five-Year Impact:
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*Fiscal Probable Probable Revenue Probable *
* Year Savings/(Cost) from Gain/(Loss) from Savings/(Cost) from *
* General Revenue Fund General Revenue Fund Judicial Fund *
* 0001 0001 0573 *
* 2002 $(6,653,000) $(230,000) $(949,000) *
* 2003 (6,974,000) (208,000) (982,000) *
* 2004 (7,205,000) (263,000) (1,002,000) *
* 2005 (7,808,000) (248,000) (1,092,000) *
* 2006 (7,955,000) (282,000) (1,114,000) *
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Fiscal Analysis
The bill, to be effective September 1, 2001, 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. Retirement
annuities for JRS II members would be based on the state salary, as
adjusted from time to time, of a judge of the court which the retiring
member last served. Currently, retirement annuities for JRS II members
are based on the state salary being paid at the time of retirement
without any later adjustments.
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 bill's
provision to increase retired judges' benefits whenever the salaries for
serving judges are increased results in a higher normal cost for the
plan. The normal cost would increase from the current 16.03% to 38.55%.
The current actuarial surplus of $5.5 million would be depleted, and
there would be an unfunded actuarial accrued liability of $61.6 million.
As a result of these changes, the state would need to contribute
32.55%, instead of the current 16.83%, to fund the normal cost and
amortize the liability. Based on the current payroll levels, and
assuming increases based only an increasing number of JRS-2 judges, ERS
estimates the increase in the state's contribution will be $7.3 million
in fiscal year 2002, increasing to $8.6 million by fiscal year 2006.
JRS-2 contributions are funded by a combination of General Revenue and
the Judicial Fund No. 573.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 327 Employees Retirement System
LBB Staff: JK, TB, SC