H.B. 3208 78(R)    BILL ANALYSIS


H.B. 3208
By: Heflin
Government Reform
Committee Report (Unamended)



BACKGROUND AND PURPOSE 
In order to cut costs, many states are using retirement incentives.  These
incentives, typically only offered for a limited amount of time, include
increased benefits and paying lump-sum or retirement bonuses.  Texas has
utilized retirement incentives in the past by increasing benefit rates.
In fiscal year 1994-1995, 65% of eligible employees retired, saving the
state annual salaries of 194 million.  
In years past, the incentives were paid from surpluses in the ERS fund.
Unfortunately, the surplus has decreased significantly which means that
Texas cannot offer increased benefits, but it can offer a one-time cash
bonus to eligible employees as long as they retire in the first month of
eligibility. Just as in the 1993 Legislature, appropriations can be
reduced for salaries of employees that retire. 


RULEMAKING AUTHORITY
It is the committee's opinion that rulemaking authority is expressly
granted to the board of trustees at ERS and the Comptroller  in SECTION 1
(Section 814.1051, Government Code) of this bill. 


ANALYSIS
Section 1: Amends Subchapter B, Chapter 814, Government Code, by adding
Section 814.1051 which gives a temporary provision of lump-sum payments to
certain retiring members of ERS of Texas.  A member  is eligible for a one
time lump-sum payment if he/she is eligible to retire on or after August
31, 2003 to before September 1, 2005.  In order to receive the lump-sum
payment, a member who is eligible  to retire on August 31, 2003 must
retire on that date or a member who is eligible to retire after August 31,
2003 but before September 1, 2005 must retire the same month the member
becomes eligible for retirement.  The lump-sum payment equals 25% of a
member's salary for a 1 year period  preceding the month the member
retires.  The lump-sum is to be paid in a single payment when the  first
monthly annuity payment is paid to retiree, except when comptroller by
rule sets another date.  In addition, ERS is to report to the comptroller
at lease once a month regarding the number of retiring members eligible
for the lump-sum payment.  The lump-sum payment option does not apply to
members who retire under Subchapter C for disability.  The board of
trustees and the comptroller may adopt rules to implement this section.
The section expires on January 1, 2006. 

Section 2: The Act will take effect immediately if it receives a
two-thirds vote of all members elected to each house.  If this Act does
not receive the necessary vote, it will take effect on September 1, 2003. 


EFFECTIVE DATE
Immediately or September 1, 2003.