| 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.), As Introduced |
The bill would amend Government Code to eliminate the provision that the member contribution equal the state contribution up to the specified rate of 6.5 percent for the ERS fund and 0.5 percent for the Law Enforcement and Custodial Officer Supplemental (LECOS) retirement fund. The bill would not change the current member contributions (as compared to the 2010-11 biennium) made to the ERS Retirement fund or the LECOS retirement fund, which are 6.5 percent and 0.5 percent, respectively.
It is expected that the state contribution rates 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.
| Source Agencies: | 327 Employees Retirement System
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| LBB Staff: | JOB, AG, MS, DEH
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