LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 80TH LEGISLATIVE REGULAR SESSION
 
April 11, 2007

TO:
Honorable Vicki Truitt, Chair, House Committee on Pensions & Investments
 
FROM:
John S. O'Brien, Director, Legislative Budget Board
 
IN RE:
HB3380 by Cook, Robby (Relating to retirement benefits for retired Texas Rangers.), As Introduced



Estimated Two-year Net Impact to General Revenue Related Funds for HB3380, As Introduced: a negative impact of ($3,515,804) through the biennium ending August 31, 2009.

The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2008 ($1,724,873)
2009 ($1,790,931)
2010 ($1,864,330)
2011 ($1,937,729)
2012 ($2,011,128)




Fiscal Year Probable (Cost) from
GENERAL REVENUE FUND
1 		Probable (Cost) from
GR DEDICATED ACCOUNTS
994 		Probable (Cost) from
FEDERAL FUNDS
555 		Probable (Cost) from
STATE HIGHWAY FUND
6
2008 ($1,724,873) ($20,919) ($5,705) ($150,237)
2009 ($1,790,931) ($21,720) ($5,924) ($155,991)
2010 ($1,864,330) ($22,610) ($6,166) ($162,384)
2011 ($1,937,729) ($23,501) ($6,409) ($168,777)
2012 ($2,011,128) ($24,391) ($6,652) ($175,170)

Fiscal Analysis

The bill would increase Law Enforcement and Custodial Officers (LECOS) retirement benefits for employees of the Department of Public Safety who retire on or after September 1, 2007 and meet other eligibility requirements.  

 

The bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority vote in both houses of the Legislature. Otherwise, it would take effect September 1, 2007.


Methodology

The bill would increase the Law Enforcement and Custodial Officers Supplemental Retirement (LECOS) unfunded actuarial accrued liabilities by $28.4 million and would increase the contribution rate required to achieve a 31-year funding period stipulated in statute by 0.14 percent. Enactment of this bill without sufficient funding to achieve the 31-year funding period would violate statutory funding requirements.

Assuming the state would fund the contribution rate required to achieve the 31-year funding period, the cost of the additional 0.14 percent contribution is estimated at $19.6 million in General Revenue in fiscal year 2008 and $20.3 million in General Revenue in fiscal year 2009.

ERS funding statutes prevent increases to benefits unless the system's liabilities are funded within 31 years. Based on the February, 2007 actuarial valuation, the annual required contribution rate exclusive of the provisions of the bill would be 1.73 percent. It is also assumed that the bill would not apply to members who retired prior to September 1, 2007, or who are no longer actively employed as of September 1, 2007.


Local Government Impact

No fiscal implication to units of local government is anticipated.


Source Agencies:
327 Employees Retirement System
LBB Staff:
JOB, KJG, MS, JW