Under the proposal, from the tax attributable to gross premiums for fire insurance and allied lines, $6.7 million from fiscal year 2006 and $6.7 from fiscal year 2007 are to be deposited to the credit of the Texas Statewide Emergency Personnel Retirement Fund (TSESPRF). The proposal is effective January 1, 2006 and expires December 31, 2008.

The bill would significantly improve the financial condition of the Fund by dedicating $13.4 million dollars of premium taxes over two years for the Fund. This is approximately equal to the Unfunded Actuarial Accrued Liability (UAAL) for the 2004 actuarial valuation. There would still be some actuarial accrued liability outstanding due to the increase in the UAAL due to interest in 2005, and in 2006 and 2007 until the full amount had been paid off. The actuary prepared an analysis assuming the payments would occur in 2007 and 2008, and stated that if the bill were passed, the Fund would still have an inadequate financing arrangement with the only other financing coming from the governing bodies of participating departments. In order to amortize the unfunded actuarial accrued liability (UAAL) over 30 years, the actuary suggested a state contribution of $350,000 to $400,000 per year, for 30 years, would be required. Since the payments occur earlier, the required contribution would be lower; perhaps annual state contributions of $250,000 would be adequate. The actuary did not include a schedule of the anticipated UAAL at the time of, and immediately after, the payments.

CSHB 1655 would make no changes to the benefits paid by the Texas Statewide Emergency Services Retirement Act Fund. The bill would not change the normal cost, or actuarial accrued liability.