TO:	Honorable Giovanni Capriglione, Chair, House Committee on Pensions, Investments & Financial Services

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	SB10 by Huffman (Relating to certain benefits paid by the Teacher Retirement System of Texas.), As Engrossed

Estimated Two-year Net Impact to General Revenue Related Funds for SB10, As Engrossed : a negative impact of ($4,717,000,000) through the biennium ending August 31, 2025.

The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2024	($4,717,000,000)
2025	$0
2026	$0
2027	$0
2028	$0

Fiscal Year	Probable Savings/(Cost) from General Revenue Fund 1
2024	($4,717,000,000)
2025	$0
2026	$0
2027	$0
2028	$0

The bill would provide an increase in the monthly annuity for most categories of Teacher Retirement System (TRS) members in payment status who retired on or before December 31, 2021. The amount of the increase would be 2.0 percent of the annuitant's monthly benefit if the member retired on or after September 1, 2013 and before January 1, 2022. The amount of the increase would be 4.0 percent of the annuitant's monthly benefit if the member retired before September 1, 2013.

The bill would also provide a $7,500 onetime payment, not later than February 2024, to most categories of members in payment status that are age 75 or older by the month before the payment is made. TRS would be required to make the onetime payment only if the TRS Board of Trustees were to find that the legislature appropriated money to the retirement system in an amount sufficient to provide the payment.

It is assumed that the cost-of-living adjustment outlined in Section 1 of the bill would be funded through a lump sum payment to the TRS Pension Trust Fund of $3,323.0 million in General Revenue in fiscal year 2024, and would thus not impact the actuarial soundness of the fund.

According to the Pension Review Board, the Teacher Retirement System (TRS) is considered actuarially sound, with an amortization period of 27 years as of August 31, 2023. Government Code, Section 821.006 defines actuarial soundness, for the purposes of making modifications to benefit and contribution levels, as less than 31 years. If the cost-of-living adjustment outlined in Section 1 of the bill were not funded with a lump sum payment, the funding period would be required to remain below 31 years for the cost-of-living adjustment to occur.

It is assumed that the onetime payment outlined in Section 2 of the bill would cost $1,394.0 million in General Revenue in fiscal year 2024.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION


April 12, 2023