LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION
 
April 1, 2013

TO:
Honorable Bill Callegari, Chair, House Committee on Pensions
 
FROM:
Ursula Parks, Director, Legislative Budget Board
 
IN RE:
HB3148 by Anchia (Relating to the abolition of the office of the fire fighters' pension commissioner and the transfer and disposition of its functions relating to the Texas Emergency Services Retirement System and the Texas local firefighters retirement systems.), As Introduced



Estimated Two-year Net Impact to General Revenue Related Funds for HB3148, As Introduced: a positive impact of $346,000 through the biennium ending August 31, 2015.

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
2014 $173,000
2015 $173,000
2016 $173,000
2017 $173,000
2018 $173,000




Fiscal Year Probable Savings/(Cost) from
General Revenue Fund
1 		Change in Number of State Employees from FY 2013
2014 $173,000 (3.5)
2015 $173,000 (3.5)
2016 $173,000 (3.5)
2017 $173,000 (3.5)
2018 $173,000 (3.5)

Fiscal Analysis

The Fire Fighters' Pension Commissioner is subject to the Sunset Act and will be abolished on September 1, 2013 unless continued by the Legislature.  The bill would amend the Government Code; Texas Revised Civil Statutes, the Texas Local Fire Fighters Retirement Act (TLFFRA); and, the Education Code (non-substantive revisions) to abolish the Fire Fighters' Pension Commissioner and eliminate statutory duties and responsibilities of the office.  The bill would amend the Government Code to delete the appointment of the commissioner by the Governor.

 

The bill would amend the Government Code to establish the board of the Texas Emergency Services Retirement System (TESRS) as an independent state entity, with the power to employ an executive director for system administration.  The bill would amend the Government Code to provide for a review of TESRS by the Sunset Commission in 2025.  The bill would amend the Government Code to revise the procedure for appeals related to TESRS.  The bill would also amend the Government Code to include certain standard Sunset across-the-board recommendations related to potential conflicts of interest, board member training, policies required for the separation of duties between the board and the executive director, a written policy for contract management, and a policy related to file maintenance for complaints.  The bill would amend the Government Code to require certain reporting of the actuarial condition of the pension fund and both an audit of the actuarial valuation and an experience study every five years.

 

The bill would amend the Texas Revised Civil Statutes related to the procedure for appeals of decisions by local fire fighter pension boards established under this act, providing for submission of appeals directly to the State Office of Administrative Hearings instead of the Fire Fighters' Pension Commissioner.  The bill would provide certain transition provisions for the abolition of the Fire Fighters' Pension Commissioner. 

 

The bill would take effect immediately upon receiving a two-thirds majority vote in each house.  Otherwise, the bill would take effect September 1, 2013.


Methodology

The bill would eliminate the commissioner's duties and responsibilities related to the education and assistance programs for local fire fighter pension funds established under Texas Revised Civil Statutes, resulting in a savings of $173,000 in General Revenue and a reduction of 3.5 full-time equivalents (FTEs) annually.

 

The bill would continue the duties and responsibilities of the Texas Emergency Services Retirement System and this analysis assumes continued state appropriation for the cost of administration of approximately $500,000 and five FTEs per year.  The bill would require additional actuarial services, including an audit of the actuarial valuation and an experience study every five years, at an estimated cost to the pension fund of approximately $100,000 over the next five years. 

 

Based on information provided by the Office of Attorney General, State Office of Administrative Hearings, the Comptroller of Public Accounts, and the Pension Review Board, any costs associated with the bill could be absorbed within the affected agencies' existing resources.


Local Government Impact

The bill would eliminate certain services currently provided by the office of the Fire Fighters' Pension Commissioner to local pension funds organized under the Texas Local Fire Fighters Retirement Act (TLFFRA).  To the extent the pension funds have to increase administrative costs to provide the same services, there could be increased costs to the affected local plan sponsors.  However, no significant fiscal impact is anticipated.
 
The Fire Fighters' Pension Commissioner provided an example of potential increase in local costs from the Laredo Firefighters' Retirement System.  The Laredo pension plan estimates that in the absence of services currently provided by the Fire Fighters' Pension Commissioner, they would have to hire an additional employee at an annual cost of $79,000 including benefits, and would incur $57,000 in additional professional fees.
 
The Texas County and District Retirement Systems (TCDRS) reported there would be no fiscal impact to TCDRS or their member counties and districts to implement the provisions of the bill.
 
The Texas Association of Counties reported no fiscal impact to counties is anticipated.
 
The Texas Municipal Retirement System reported no fiscal impact is anticipated.


Source Agencies:
116 Sunset Advisory Commission, 302 Office of the Attorney General, 304 Comptroller of Public Accounts, 325 Fire Fighters' Pension Commissioner, 338 Pension Review Board, 360 State Office of Administrative Hearings
LBB Staff:
UP, RB, EP, PFe, TP