LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 27, 2001 TO: Honorable Teel Bivins, Chair, Senate Committee on Education FROM: John Keel, Director, Legislative Budget Board IN RE: SB1769 by Ogden (Relating to certain contributions by members of the Teacher Retirement System of Texas.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB1769, As Introduced: 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 0 * * 2005 0 * * 2006 0 * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Revenue Gain/(Loss) Probable Revenue Gain/(Loss) * * Year from Teacher Retirement System from Retired School Employees * * Trust Account Fund Group Insurance Trust Fund * * 0960 0998 * * 2002 $(90,240,000) $76,420,000 * * 2003 (95,380,000) 81,000,000 * * 2004 (100,820,000) 85,860,000 * * 2005 (106,570,000) 91,010,000 * * 2006 (112,650,000) 96,470,000 * *************************************************************************** Fiscal Analysis The bill modifies the statutory provisions related to member contributions in the Teachers Retirement System (TRS) pension system and the TRS-Care health insurance system. The bill decreases the active member contributions to the pension system from 6.4% of salary to 6.0% of salary, and increases the active member contributions to the health insurance system from 0.25% of salary to 0.65% of salary. Methodology The provisions of the bill do not require any change in the state's contributions for retirement and health insurance, but do affect the revenue that is deposited into the two program funds. For the TRS pension system, which includes both public education and higher education employees, the reduction in the contribution rate would reduce contributions to the pension trust fund by $90,240,000 in fiscal year 2002, and $112,650,000 by fiscal year 2006. This reduction in revenues would not have a significant actuarial impact on the pension fund. For the TRS-Care insurance system, which covers only public education employees, the increase in revenues to the fund would total an estimated $76,420,000 in fiscal year 2002, and $96,470,000 by fiscal year 2006. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: 323 Teacher Retirement System LBB Staff: JK, CT, SC