TO:	Honorable Rafael Anchia, Chair, House Committee on Pensions, Investments & Financial Services
FROM:	Jerry McGinty, Director, Legislative Budget Board
IN RE:	HB4068 by Parker (relating to the eligibility of certain public retirement systems for police and fire fighters to participate in the Texas Municipal Retirement System.), Committee Report 1st House, Substituted

COST ESTIMATE

The bill would amend Government Code Section 852.005 to allow employees of the Dallas Police and Fire Pension System (DPFPS) to become members of the Texas Municipal Retirement System (TMRS). Members, pensioners, alternate payees, or other beneficiaries of DPFPS would not be eligible to join TMRS. The provisions of the bill would only apply to employees of DPFPS on or after September 1, 2021.

The actuarial analysis provided by TMRS states that the bill would not have an actuarial impact on TMRS as a system. The analysis notes the funding requirements and any potential cost associated with the staff of DPFPS entering TMRS would be the responsibility of the pension system, as it is with any other city that joins TMRS.
 
According to DPFPS, the system currently contributes 12.5 percent of pay to a defined contribution plan for its staff. If the bill passes, the pension system is expected to elect to contribute 12 percent to TMRS and its staff would contribute 6 percent which would result in a 0.5 percent savings for the pension system.  If the pension system elects to contribute 14 percent (employees contribute 7 percent) to TMRS, it would result in a total estimated expense increase of approximately $45,000 to the system. DPFPS states this additional expense is not expected to have an actuarial impact on the pension system because it is within the current administrative expense assumption used in its actuarial valuation.
 
The Pension Review Board actuarial review states that the bill will not have an actuarial impact on either TMRS or DPFPS.
 
SOURCES

Actuarial Analysis by Mark R. Randall, MAAA, FCA, EA, Joseph P. Newton, MAAA, FSA, EA, Gabriel Roeder Smith & Company, April 12, 2021.
Actuarial Review by Kenneth J. Herbold, ASA, EA, MAAA, Staff Actuary, Pension Review Board, April 13, 2021.
Email correspondence from Dallas Police & Fire Pension System executive director on April 13, 2021.