| TO: | Honorable David Dewhurst , Lieutenant Governor, Senate Honorable Tom Craddick, Speaker of the House, House of Representatives |
| FROM: | John Keel, Director, Legislative Budget Board |
| IN RE: | SB1370 by Duncan (Relating to certain group benefit plans provided to certain governmental officers, employees, and retirees and their dependents. ), Conference Committee Report |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2004 | $59,846,794 |
| 2005 | $59,846,794 |
| 2006 | $61,646,794 |
| 2007 | $61,646,794 |
| 2008 | $61,646,794 |
| Fiscal Year | Probable Savings/(Cost) from GENERAL REVENUE FUND 1 |
Probable Savings/(Cost) from GR DEDICATED ACCOUNTS 994 |
Probable Savings/(Cost) from FEDERAL FUNDS 555 |
Probable Savings/(Cost) from OTHER FUNDS 997 |
|---|---|---|---|---|
| 2004 | $59,846,794 | $1,560,356 | $6,777,599 | ($7,778,944) |
| 2005 | $59,846,794 | $1,560,356 | $6,777,599 | ($7,778,944) |
| 2006 | $61,646,794 | $1,560,356 | $6,777,599 | ($7,778,944) |
| 2007 | $61,646,794 | $1,560,356 | $6,777,599 | ($7,778,944) |
| 2008 | $61,646,794 | $1,560,356 | $6,777,599 | ($7,778,944) |
| Fiscal Year | Probable Revenue Gain/(Loss) from OTHER FUNDS 997 |
Probable Savings/(Cost) from STATE HIGHWAY FUND 6 |
|---|---|---|
| 2004 | $51,736,876 | $6,085,963 |
| 2005 | $54,323,721 | $6,085,963 |
| 2006 | $57,039,907 | $6,085,963 |
| 2007 | $59,891,902 | $6,085,963 |
| 2008 | $62,886,497 | $6,085,963 |
Estimated savings should be compared to funding levels sufficient to conform to current policies and law. Estimated savings should not be compared to agency "building block" funding requests.
The bill would establish a 90 day waiting period for insurance coverage for active and certain retired employees of state and higher education institutions under the Employee Retirement System (ERS) group insurance program. Group insurance coverage would begin on the first day of the month following the 90 days. In addition, an employee working less than 40 hours a week would have to contribute at least 50 percent of the cost of member-only coverage and at least 75 percent of the cost of dependent coverage. This would apply to graduate teaching assistants as well. However, higher education institutions would not be prohibited from using non-General Revenue funds to retain the existing state contribution rates for graduate teaching assistants. In addition, the Schools for the Deaf and the Blind and Visually Impaired, as well as the Windham School District are authorized to designate their teaching staff as full- or part-time employees for purposes of this provision
Future retirees would have to be at least 65 or satisfy the rule of 80 to be eligible for ERS insurance coverage. Members of boards and commissions would be excluded from receiving the state insurance contribution. Those board and commission members enrolled in UGIP on August 31, 2003 may continue their coverage, but at their own expense.
Employers with employees whose salaries are not paid by funds appropriated by the legislature that join ERS' group insurance program (UGIP) after August 31, 2003 could be charged a one-time assessment for administrative costs and a participation premium by ERS.
With respect to insurance coverage for employees of the University of Texas and Texas A&M University (TAMU) systems, the bill would require an employee working less than 40 hours a week to contribute at least 50 percent of the cost of member-only coverage and at least 75 percent of the cost of dependent coverage. This would apply to graduate teaching assistants as well. The bill would allow institutions to use funds other than General Revenue to supplement part time graduate teaching and research assistants' group insurance contributions. The bill would allow the TAMU System, including the Texas Veterinary Medical Laboratory, to join UGIP in fiscal year 2006. The bill would allow higher education institutions to provide group insurance coverage to Adjunct Faculty that teach at least 6 semester credit hours per academic year. Funding would be provided by non-General Revenue sources only.
The bill would increase the TRS-Care active employees' contribution rate from 0.25 percent to 0.50 percent of salary.
The bill would stipulate a $1,000 compensation supplement for all active employees beginning in fiscal year 2006. This provision would have no fiscal impact because current law provides a $1,000 compensation supplement for all active employees.
The bill would transfer $42 million from the TRS insurance fund for active school district employees to the TRS retiree insurance program. Because this would be an inter-fund transfer, it has no fiscal impact to the state.
The changes affecting the Employees Retirement System's (ERS) group insurance program for higher education and general state employees would have the following results. Instituting a 90-day waiting period would result in biennial General Revenue savings of $36 million. Reducing the state insurance contribution for employees that work less than 40 hours per week, including graduate students, would result in biennial General Revenue savings of $24 million. Changing retiree eligibility for ERS insurance coverage results in biennial General Revenue savings of $9.2 million. Excluding board and commission members from receiving state insurance contributions would result in biennial General Revenue savings of $3.1 million.
The provision requiring the University of Texas and Texas A&M University systems to institute a 90-day waiting period would result in a biennial General Revenue savings of $11.7 million. The provision reducing the state insurance contribution for employees of the University of Texas and Texas A&M systems that work less than 40 hours per week would result in biennial General Revenue savings of $35.6 million.
Providing group insurance coverage to Adjunct Faculty at junior colleges and four-year institutions that participate in UGIP would result in a biennial cost to non-General Revenue funds available to higher education institutions of $24.0 million. ERS estimates that adding the TAMU System to the UGIP would increase their administrative costs by $1.9 million per fiscal year. These costs are paid out of ERS trust funds and would not commence until fiscal year 2006, which is the timeline provided for by the bill.
Increasing the active public education employees' contribution to 0.50 percent from 0.25 percent would generate $106 million to the retiree insurance fund over the 2004-2005 biennium, reflecting in the "Other Funds" column above.
| Source Agencies: | 327 Employees Retirement System, 720 The University of Texas System Administration, 323 Teacher Retirement System
|
| LBB Staff: | JK, EB, JAW, ZS, WP, JO, SD, UP, RN
|