BILL ANALYSIS

H.B. 2783

By: Garcia, Linda

Pensions, Investments & Financial Services

Committee Report (Unamended)

BACKGROUND AND PURPOSE

Current law provides counties the ability to establish deferred compensation plans, which allows county employees to participate in retirement savings programs such as the 457 plan. However, the bill author has informed the committee that participation remains elective, and in many cases, employees miss out on potential benefits due to low engagement. H.B. 2783 seeks to address this issue and ensure that county employees are set on a path toward financial security by automatically enrolling county employees in deferred compensation plans with a default investment option in retirement savings plans, with an option to opt out, if the applicable county commissioners court elects to require such automatic participation.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

H.B. 2783 amends the Government Code to authorize a commissioners court of a county that offers a deferred compensation plan to the county's employees to by order elect to require automatic employee participation in a deferred compensation plan. With respect to such a deferred compensation plan, the bill establishes the following:

· an employee of an electing county that makes such election automatically participates in a deferred compensation plan provided by the county unless the employee affirmatively elects not to participate in the plan;

· an employee is not required to affirmatively contract for and consent to participation in the plan;

· an employee participating in the plan makes a contribution of three percent of the compensation earned by the employee to a default investment product selected by the plan administrator based on the applicable criteria and the order requiring automatic participation in the plan, including requirements prescribed by the bill; and

· the contribution is made by automatic payroll deduction.

The bill authorizes an employee participating in the plan, at any time and in accordance with the order adopted by the commissioners court of the electing county or its designee, to elect to end participation in the plan, to contribute to a different investment product, to contribute a different amount to the plan, or to designate all or a portion of the employee's contribution as a Roth contribution subject to the availability of a Roth contribution program. The bill requires an electing county to ensure that, at the time of employment, each employee is informed of the elections the employee may make and of the responsibilities of the employee under state law to monitor certain conditions related to the investments of the plan.

H.B. 2783 requires an applicable commissioners court, or its designee, to prescribe the requirements of the bill in its order establishing the plan. The bill requires the order to ensure that the operation of a deferred compensation plan conforms to the applicable requirements of any federal rule that provides fiduciary relief for investments in qualified default investment alternatives or otherwise governs default investment alternatives under participant-directed individual account plans. The bill establishes that the amount deducted from an employee's compensation is not deducted for payment of a debt and the automatic payroll deduction is not garnishment or assignment of wages.

H.B. 2783 requires the electing county, using existing resources, to inform new employees as part of the new employee orientation process of the employee's automatic enrollment in a deferred compensation plan and the right to opt out of enrollment. The bill requires the county to maintain a record of a new employee's acknowledgment of receipt of information regarding the ability to opt out of enrollment in a deferred compensation plan. The bill defines "electing county" as a county that elects to require automatic employee participation in a deferred compensation plan under the bill's provisions. The bill's provisions relating to automatic participation by certain county employees in a deferred compensation plan apply only to an employee of a county who initially begins employment on or after January 1, 2026.

EFFECTIVE DATE

On passage, or, if the bill does not receive the necessary vote, September 1, 2025.