Honorable Jim Pitts, Chair, House Committee on Appropriations
Ursula Parks, Director, Legislative Budget Board
HB2253 by Geren (relating to compensation for commissioned peace officers employed by the attorney general.), Committee Report 1st House, Substituted
Employees' Retirement System of Texas: According to the actuarial analysis, CSHB 2253 would have no actuarial impact on the Employees Retirement System of Texas (ERS). The changes proposed in the bill would not impact the projected actuarially sound contribution rate of 18.94% and would not impact the projected unfunded actuarial accrued liability of $6.4 billion. There would be no change to either the projected August 31, 2013 funded ratio or normal cost rate rounded to the nearest basis point.
SYNOPSIS OF PROVISIONS:
The bill would compensate commissioned peace officers hired as investigators by the attorney general according to Schedule C of the position classification salary schedule prescribed by the General Appropriations Act, and qualify them as eligible for hazardous duty pay.
This bill would be effective September 1, 2013.
FINDINGS AND CONCLUSIONS:
According to the actuarial analysis, investigators hired by the attorney general are currently compensated in a manner similar to Schedule C of the position classification salary schedule prescribed by the General Appropriations Act.
METHODOLOGY AND STANDARDS:
The analysis rely on the participant data, financial information, benefit structure and actuarial assumptions and methods used in the February 28, 2013 update of the August 31, 2012 actuarial valuation of ERS. The analysis assumes no further changes are made to ERS and cautions that the combined economic impact of several proposals can exceed the effect of each proposal considered individually. According to the PRB actuary, the actuarial assumptions, methods and procedures appear to be reasonable. All actuarial projections have a degree of uncertainty because they are based on the probability of occurrence of future contingent events. Accordingly, actual results will be different from the results contained in the analysis to the extent actual future experience varies from the experience implied by the assumptions.
Actuarial Analysis by Mr. David L. Driscoll, Principal, Consulting Actuary, Buck Consultants, April 2, 2013.
GLOSSARY OF ACTUARIAL TERMS:
Normal Cost-- the current annual cost as a percentage of payroll that is necessary to pre-fund pension benefits adequately during the course of an employee's career.
Unfunded Liability-- the amount of total liabilities that are not covered by the total assets of a retirement system. Both liabilities and assets are measured on an actuarial basis using certain assumptions including average annual salary increases, the investment return of the retirement fund, and the demographics of retirement system members.
Amortization Period-- the number of years required to pay-off the unfunded liability. Public retirement systems have found that amortization periods ranging from 20 to 40 years are acceptable. State law prohibits changes in TRS, ERS, or JRS II benefits or state contribution rates if the result is an amortization period exceeding 30.9 years.
338 Pension Review Board