LEGISLATIVE BUDGET BOARD

Austin, Texas

FISCAL NOTE, 86TH LEGISLATIVE REGULAR SESSION

May 13, 2019

TO:	Honorable Jim Murphy, Chair, House Committee on Pensions, Investments & Financial Services
FROM:	John McGeady, Assistant Director     Sarah Keyton, Assistant Director Legislative Budget Board
IN RE:	SB322 by Huffman (relating to the evaluation and reporting of investment practices and performance of certain public retirement systems.), Committee Report 2nd House, Substituted

Estimated Two-year Net Impact to General Revenue Related Funds for SB322, Committee Report 2nd House, Substituted: a negative impact of ($202,396) through the biennium ending August 31, 2021.

The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. The Pension Review Board is required to implement this Act only if the legislature appropriates money specifically for that purpose. If the legislature does not appropriate money specifically for that purpose, the agency may, but is not required to, implement a provision of this Act using other appropriations for that purpose.

General Revenue-Related Funds, Five-Year Impact:

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2020	($101,198)
2021	($101,198)
2022	($101,198)
2023	($101,198)
2024	($101,198)

All Funds, Five-Year Impact:

Fiscal Year	Probable (Cost) from General Revenue Fund 1
2020	($101,198)
2021	($101,198)
2022	($101,198)
2023	($101,198)
2024	($101,198)

Fiscal Year	Change in Number of State Employees from FY 2019
2020	1.0
2021	1.0
2022	1.0
2023	1.0
2024	1.0

Fiscal Analysis

The bill would amend the Government Code requiring certain public retirement systems to hire an independent firm to evaluate the retirement system's investment practices. A retirement system that has a book value of $100 million on the last day of the fiscal year would perform an evaluation every three years. A retirement system that has a book value of less than $100 million and at least $30 million on the last day of the fiscal year would perform an evaluation every 6 years. The bill excludes public retirement systems with a book value of less than $30 million on the last day of the fiscal year from this requirement.

No later than 31st day after the governing body receives a report the retirement system would submit an annual investment performance report to the Pension Review Board.

The bill would require that the Pension Review Board include an investment performance report in its biennial report to the Legislature.  

Methodology

The Pension Review Board (PRB) estimates it would need one Investment Analyst II at $75,000 per year in salary and $26,198 per year in benefits to implement the provisions of the bill. According to information provided by PRB, the agency does not currently have staff that are experts on retirement investments.

The LBB estimates any additional cost to other state agencies can be absorbed within existing resources.

Local Government Impact

According to the Texas Municipal Retirement System, the Texas Association of Counties, and the Texas Municipal League, no significant fiscal implication to units of local government is anticipated.

Source Agencies:

338 Pension Review Board, 323 Teacher Retirement System, 326 Texas Emergency Services Retirement System, 327 Employees Retirement System

LBB Staff:

WP, ASa, CMa, NV, KFB