LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 84TH LEGISLATIVE REGULAR SESSION
 
April 28, 2015

TO:
Honorable Byron Cook, Chair, House Committee on State Affairs
 
FROM:
Ursula Parks, Director, Legislative Budget Board
 
IN RE:
HB2836 by King, Susan (Relating to longevity pay for certain state employees.), As Introduced



Estimated Two-year Net Impact to General Revenue Related Funds for HB2836, As Introduced: an impact of $0 through the biennium ending August 31, 2017.

However, there is estimated to be a savings of $14,470,612 in All Funds beginning in fiscal years 2018 through 2020.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2016 $0
2017 $0
2018 $1,157,845
2019 $3,068,290
2020 $5,432,465




Fiscal Year Probable Savings/(Cost) from
General Revenue Fund
1
Probable Savings/(Cost) from
GR Dedicated Accounts
994
Probable Savings/(Cost) from
Federal Funds
555
Probable Savings/(Cost) from
Other Special State Funds
998
2016 $0 $0 $0 $0
2017 $0 $0 $0 $0
2018 $1,157,845 $170,489 $197,799 $35,569
2019 $3,068,290 $451,796 $524,166 $94,257
2020 $5,432,465 $799,913 $928,047 $166,883

Fiscal Year Probable Savings/(Cost) from
State Highway Fund
6
2016 $0
2017 $0
2018 $172,994
2019 $458,434
2020 $811,666

Fiscal Analysis

The bill would amend Government Code to exclude employees who first begin state employment on or after September 1, 2015 from receiving longevity pay.

The bill would take effect September 1, 2015.

Methodology

Under the provisions of the bill, employees who begin state employment on or after September 1, 2015 would not be paid longevity pay. Longevity pay is currently part of employees' compensation, generally equal to $20 per month for every two years of lifetime service credit.

Since longevity pay is not earned until the third year of employment, there would be no cost savings to the State in fiscal years 2016-17. To calculate the savings in subsequent years the following assumptions were used:

- Classification data indicates that approximately 21,239 individuals started state employment at state agencies in fiscal year 2014 with no previous state service. This same amount of new employees was assumed for fiscal years 2016-18.

- The State Auditor's Office reports that turnover in fiscal year 2014 was 17.5 percent. This same turnover rate was assumed in fiscal years 2018-20.

- Under current law, longevity pay is $20 per month for every two years of service and is paid by the method of finance that agencies use to pay related salaries.  Funding decisions at state agencies could impact how the savings would be realized.

Using this methodology, the estimated total savings to the state would be $14,470,612 All Funds and $9,658,600 in General Revenue from fiscal years 2018-20.

Local Government Impact

No significant fiscal implication to units of local government is anticipated.


Source Agencies:
304 Comptroller of Public Accounts, 308 State Auditor's Office, 327 Employees Retirement System
LBB Staff:
UP, AG, EP, KFa