BILL ANALYSIS

C.S.H.B. 3100

By: Orr

Pensions, Investments & Financial Services

Committee Report (Substituted)

BACKGROUND AND PURPOSE

The rate of member contributions for active members of the Employees Retirement System of Texas (ERS) and the rate of law enforcement and custodial officer contributions to the law enforcement and custodial officer supplemental retirement fund (LECOS) were set in a recent legislative session at 6.5 percent and 0.5 percent, respectively.  The statute setting those rates included a provision that the employee contribution rate would be equal to the state contribution rate if the state contribution rate was less than the statutory rate for ERS or LECOS, as applicable.  With the current budget crisis facing the state, the state contribution to the two programs likely will be set at the legal minimums, which would result in a reduction of funds flowing into those systems from both state and employee contributions.  C.S.H.B. 3100 seeks to protect the viability of the state pension systems and help minimize the systems' loss of funds by setting the employee contribution rates at their current levels by establishing that the rate of member contributions is not required to match the rate of state contributions until September 1, 2013, at which point the state and members resume a matched contribution rate.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 3100 amends the Government Code to establish that if the state contribution to the Employees Retirement System of Texas (ERS) is computed using a percentage less than the statutory rate of 6.5 percent for the state fiscal biennium beginning September 1, 2011, a nonlegislative ERS member's contribution is not required to be computed using a percentage equal to the percentage used to compute the state contribution for that biennium.

C.S.H.B. 3100 establishes that if the state contribution to the law enforcement and custodial officer supplemental retirement fund is computed using a percentage less than the statutory rate of 0.5 percent for the state fiscal biennium beginning September 1, 2011, the member's contribution is not required to be computed using a percentage equal to the percentage used to compute the state contribution for that biennium.

C.S.H.B. 3100 makes its provisions expire September 1, 2013.

EFFECTIVE DATE

September 1, 2011.

COMPARISON OF ORIGINAL AND SUBSTITUTE

C.S.H.B. 3100 differs from the original by establishing that, if the state contribution to the Employees Retirement System of Texas (ERS) or to the law enforcement and custodial officer supplemental retirement fund (LECOS) is computed using a percentage less than the applicable statutory rate for state contributions to ERS or to LECOS for the state fiscal biennium beginning September 1, 2011, a member's contribution to ERS or to LECOS, as applicable, is not required to be computed using the same percentage used to compute the state's contribution, whereas the original removes an exception in each case providing for a rate of member contributions to ERS or to LECOS, as applicable, other than the applicable statutory rate for member contributions if the state's contribution for that member is computed using a percentage less than the applicable statutory rate for state contribution, under which exception the rate of member contributions would be equal to the rate of the state's contribution, with a limit on the minimum allowable rate in the case of member contributions to ERS.

C.S.H.B. 3100 differs from the original by making its provisions expire September 1, 2013, whereas the original provides for no such expiration.