Honorable Robert Duncan, Chair, Senate Committee on State Affairs
FROM:
John S O'Brien, Director, Legislative Budget Board
IN RE:
SB1612 by Ogden (Relating to the monitoring, oversight, and funding of certain public retirement systems.), As Introduced
No significant fiscal implication to the State is anticipated as a result of the new requirements relating to the legislation.
It is anticipated that the legislation would result in an estimated $2,133,868 in revenue to the State Pension Review Board Fund No. 662 during the 2012-13 biennium.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2012
$0
2013
$0
2014
$0
2015
$0
2016
$0
Fiscal Year
Probable Revenue Gain from State Pension Review Bd 662
2012
$1,066,934
2013
$1,066,934
2014
$1,066,934
2015
$1,066,934
2016
$1,066,934
Fiscal Analysis
The bill would amend Section 801.113(c) of Government Code to require that the governing board of a public retirement system make an annual lump sum payment to the State Pension Review Board (PRB) in an amount equal to 50 cents per active member and annuitant of the retirement system, as of September 1 of each year in which the payment is made, with the initial payment being made on or before September 1, 2011. The bill would also amend Subsection (e) to allow the PRB to authorize training sessions or other educational activities for trustees and administrators of the public retirement system and charge an appropriate fee for these activities and services.
In addition, the bill would amend Section 801.203 by adding Subsections (c), (d), and (e) to make the PRB responsible for preparing an annual report on the performance of each public retirement system that administers a defined benefit plan and has total assets of at least $100 million and publish the reports on the PRB's Internet website. The bill would also amend Section 802.1013 to allow the PRB to request an actuarial experience study be performed by a public retirement system for a plan year. The PRB would not be able to request more than one study be performed every five years.
Finally, the bill would repeal Chapter 107 of Local Government Code, which authorizes the use of pension obligation bonds. This repeal would not affect the validity of an obligation, nor would it diminish the rights of a holder of an obligation of a municipality issued before the effective date of the legislation.
The bill would take effect on the 91st day after the last day of the legislative session, or immediately with two-thirds vote of all members of the Legislature.
Methodology
The bill would result in an increase in revenue to the State Pension Review Board Fund No. 662 of approximately $1.1 million each fiscal year based on the PRB's current active and annuitant membership figures of Texas public retirement systems, with no overall growth assumption included. It is assumed that this revenue would fund any additional administrative costs to the PRB for the assessment of the mandatory fee to the public retirement systems.
Local Government Impact
The bill would require local and state pension plans in Texas to pay a fee of 50 cents for each active member and annuitant to fund the PRB.
The potential fiscal impact on local governments would vary depending on whether the local government entity sponsors a public retirement system impacted by the legislation and the membership size of the public retirement system. The range of costs to these systems is $0.50 for the smallest system with only one member, to $10,836.50 for the largest local retirement system with 21,673 members.
The Texas Municipal Retirement System estimated new costs of $69,290 for member municipalities per year statewide.
The Texas County and District Retirement System estimated new statewide costs of $117,400 for fiscal year (FY) 2012, $121,350 for FY 2013, $125,900 for FY 2014, $131,000 for FY 2015, and $136,750 for FY 2016.