HB 3432 would reclassify certain law enforcement officers working at the Department at Public Safety (DPS) to the salary group above the group they are currently in, which would provide a salary increase for these officers ranging from 9.4 to 17.0 percent. It would also move law enforcement officers working for the Office of the Attorney General (OAG) from Salary Schedule B to Salary Schedule C.

The pay increases to DPS officers would be well in excess of the amounts assumed by the Employees Retirement System (ERS), or generally 5.0 to 5.5 percent for the more experienced officers affected by this proposal. These increases would be in addition to any other increases provided to Schedule C employees in the General Appropriations Act. The Legislative Budget Board has estimated that the increases under HB 3432 would increase the Unfunded Actuarial Accrued Liability (UAAL) of ERS by $28 million, and would increase the UAAL of the Law Enforcement and Custodial Officers Supplemental Retirement Fund (LECOS) by $6 million. Other actuarial impacts to these funds are not estimated to be significant.

The increases to officers at OAG could also increase the UAAL of ERS, however the additional increase from OAG is estimated to not be significant.

The UAAL of ERS as of February 28, 2013 is $6,019.3 million, and is estimated to increase to $6,047.3 million under the bill. The actuarially sound funding rate would increase from 18.94% to 18.97%.

The UAAL of LECOS as of February 28, 2013 is $225.3 million, and is estimated to increase to $231.3 million under the bill. The actuarially sound funding rate would increase from 3.09% to 3.12%.

Section 811.006 of Government Code prohibits increasing certain benefits unless ERS is receiving adequate contributions to remain actuarially sound after the enactment of those benefits. However, a salary increase does not fall under the list of benefit increases subject to 811.006. So if the bill passed, and contributions to ERS were not increased, the bill would still be in compliance with Section 811.006 of Government Code.