HBA-GUM H.B. 2886 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2886
By: Bailey
Pensions and Investments
3/26/1999
Introduced



BACKGROUND AND PURPOSE 

Currently, the Teacher Retirement System (TRS) uses a benefit multiplier of
2.0, while the Employees Retirement System uses a benefit multiplier of
2.25.  School employees contribute 6.4 percent of their gross pay to TRS
and the state contributes an amount equal to six percent of the school
payroll, the constitutional minimum. 

A recent study conducted by Texas A&M University ranked the benefit package
for Texas teachers last among the 50 states and the District of Columbia.
Low retirement benefits were cited as a major contributor to the low
standing.  H.B. 2886 increases the TRS benefit multiplier from 2.0 to 2.25
percent once the legislature appropriates sufficient funds, provides for
cost-of-living increases ranging from five to seven percent for those
already receiving TRS annuities, and requires TRS to estimate a date when
the 2.25 percent multiplier could be made retroactive without additional
appropriations. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 824.203, Government Code, by amending Subsection
(a) and adding Subsection (f), as follows: 

(a)  Includes Subsection (f) as an exception to the guidelines defining the
standard service retirement annuity payable by the Teacher Retirement
System (TRS). 

(f)  Increases to 2.25 the percentage used to compute annuities under this
section, providing that the board of trustees determines, upon consulting
with the actuary for TRS, that the increase does not cause the amortization
period to exceed 24 years by one or more years. Provides for an increase
under this subsection to take effect at the beginning of any state fiscal
year on or after September 1, 1999. 

SECTION 2.  Provides for increased monthly annuity payments to begin with
the payment due at the  end of September 1999.  Excludes payments under
Section 824.304(a)(relating to disability retirement benefits), 824.404
(relating to survivor benefits regarding a  member's death), or
824.501(relating to survivor benefits regarding a retiree's death),
Government Code.  Provides that the monthly increase be computed by
specifications furnished by this section. 

SECTION 3.  Requires the executive director of TRS to report to the
legislature, no later than December 1, 2000, the financial feasibility of
recomputing all annuities as though the amendments made by Section
824.203(f) in  this Act, applied to the annuities on the date these first
became payable.  Requires a report under this section, subject to the
limitation of the amortization period being less than 26 years by one or
more years, to include an estimated date the recomputed annuities would be
payable without further appropriation by the 77th Legislature, and the
amount of appropriation needed to provide the recomputed annuities on
September 1, 2001. 

 SECTION 4.  Effective date: September 1, 1999.

SECTION 5.  Emergency clause.