| TO: | Honorable Vicki Truitt, Chair, House Committee on Pensions, Investments & Financial Services |
| FROM: | John S O'Brien, Director, Legislative Budget Board |
| IN RE: | HB3100 by Orr (Relating to employee contributions to the Employees Retirement System of Texas.), Committee Report 1st House, Substituted |
The bill would amend Government Code to state that, should the state contribution rates to the ERS retirement fund and the Law Enforcement and Custodial Officer Supplemental (LECOS) retirement fund be less than the current member contribution rates of 6.5 percent and 0.5 percent, the member contribution rates do not have to decrease to equal the state contribution rates for those funds.
It is expected that the state contribution rates, as passed in House Bill 1, will decrease from the current contribution rates of 6.95 percent for ERS and 1.59 percent for LECOS to 6.0 percent and 0.0 percent, respectively, for the 2012-13 biennium. The bill would therefore prevent an expected loss of member contributions to the ERS fund estimated to be $58.8 million, and a loss of member contributions to the LECOS retirement fund estimated to be $15.0 million. Given the expected reduction in the state's contribution to the ERS and LECOS retirement funds during the 2012-13 biennium, the bill would likely have a long-term positive fiscal implication for the state. Maintaining the member contributions, with their earned interest, to the retirement funds could reduce the funds' unfunded liabilities.
The bill would take effect September 1, 2011 and expire on September 1, 2013.
| Source Agencies: | 327 Employees Retirement System
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| LBB Staff: | JOB, AG, MS, DEH
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