LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 79TH LEGISLATIVE REGULAR SESSION
 
March 16, 2005

TO:
Honorable Craig Eiland, Chair, House Committee on Pensions & Investments
 
FROM:
John S. O'Brien, Deputy Director, Legislative Budget Board
 
IN RE:
HB1579 by Kolkhorst (Relating to eligibility for benefits of and reports concerning certain retired members of the Teacher Retirement System of Texas; imposing a penalty.), As Introduced



Estimated Two-year Net Impact to General Revenue Related Funds for HB1579, As Introduced: an impact of $0 through the biennium ending August 31, 2007.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2006 $0
2007 $0
2008 $0
2009 $0
2010 $0




Fiscal Year Probable Revenue Gain/(Loss) from
TRS TRUST ACCOUNT FUND
960 		Probable Revenue Gain/(Loss) from
RETIRED SCHOOL EMP GROUP INSURANCE
989
2006 $21,400,000 $10,500,000
2007 $23,500,000 $11,500,000
2008 $25,800,000 $12,700,000
2009 $28,400,000 $14,000,000
2010 $31,300,000 $15,400,000

Fiscal Analysis

The bill would tighten up eligibility for receiving full retirement benefits for retirees of the Teacher Retirement System (TRS) who have returned to work for a public school. Additionally, a public school employer would be required to make contributions to TRS in the amount that the state and member would have made had the retiree been an active member. Also, the employer would be required to make a contribution to the TRS insurance trust fund equal to the difference in retiree premiums for the retiree and their dependents, and their full cost of participating in TRS-Care.

Long term savings to these funds will likely reduce General Revenue costs to fund TRS retirement benefits, and the TRS-Care insurance program.


Methodology

Estimates of additional contributions by school districts are based on reducing the number of full-time return-to-work employees by 50 percent in the Fiscal Year 2006 school year, and increasing by 10 percent thereafter. For the TRS-Care Insurance Fund revenue gain, it is assumed that 50 percent of return-to-work retirees are covered by TRS-Care, which costs $5,000 more than retiree premiums. For the TRS Retirement Fund revenue gain, it is assumed that the average return-to-work teacher salary is $41,000 per year, and that the current state plus member contribution is 12.4 percent of pay.

To the extent that some active employees delay retirement because of a reduced ability to return-to-work, there may be additional savings to the TRS Retirement Fund and TRS-Care Fund, though these would not show up as revenue. 


Local Government Impact

The bill would increase the cost for school districts to employ retired TRS members after September 1, 2005, in amounts equal to those reflected in the above tables.


Source Agencies:
323 Teacher Retirement System
LBB Staff:
JOB, SR, WP, WM