LEGISLATIVE BUDGET BOARD
Austin, Texas
 
ACTUARIAL IMPACT STATEMENT
 
79TH LEGISLATURE 3rd CALLED SESSION - 2006
 
May 5, 2006

TO:
Honorable Craig Eiland, Chair, House Committee on Pensions & Investments
 
FROM:
John S. O'Brien, Deputy Director, Legislative Budget Board
 
IN RE:
HB73 by Eiland (Relating to public financing of the public education employee retirement system and certain retirement benefits; making an appropriation.), Committee Report 1st House, Substituted

 

Fiscal Year 2007

Teacher Retirement System

Current

Proposed

Difference

State Contribution

Employee Contribution

Total Contribution

6.00 %

     6.40 %

12.40 %

                 7.19 %

      6.40 %

13.59 %

+1.19%

      0.0%

+1.19%

Normal Cost (% of payroll)

10.40 %

10.40 %

 0.0%

Amortization Period (years)

Infinite*

N/A**

0.0

*The current contribution rate is insufficient to amortize the unfunded liability over a 30-year period. Currently, based on the August 31, 2005 actuarial valuation, the state contribution rate necessary to maintain a 30-year funding period is 7.19% of payroll.

**Not available in the actuarial analysis.

 

 

ACTUARIAL EFFECTS: CSHB 73 would increase the required state contribution rate to the Teacher Retirement System (TRS) to an amount sufficient to amortize, within a 30-year period, the actuarial liability of TRS.

 

SYNOPSIS OF PROVISIONS

 

This bill, to be effective immediately if receiving required votes or if not, August 15, 2006, would provide the following changes:

 

 

·        Appropriate an amount estimated to be $310 million to provide a one-time supplemental benefit to TRS retirees equal to the lesser of $2,000 and the participant's regular monthly annuity.

·        Require the state to make an actuarially sound contribution to TRS, based on an actuarial valuation.



Source Agencies:
338 Pension Review Board
LBB Staff:
JOB, SR, CT, WM