HBA-ATS H.B. 827 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 827 By: Telford Pensions and Investments 3/6/1999 Introduced BACKGROUND AND PURPOSE The standard service retirement annuity for a public school employee (employee) is computed using the following two-step formula. Step one involves the multiplication of the years of service credit by two percent. Step two involves the multiplication of the average of an employee's three highest years of salary, whether or not consecutive, by the number from step one. Under this formula, an employee can expect to receive 60 percent of the employee's three highest years of salary after 30 years of service. The current two percent multiplier has remained unchanged since 1977. Most employees do not participate in Social Security and are solely dependent upon their annuity for retirement. H.B. 827 establishes a new formula to compute the standard service retirement annuity payable for a member in the Teacher Retirement System of Texas (TRS) by increasing the multiplier percentage from two percent to 2.25 percent. This bill also increases the multiplier percentage from two percent to 2.25 percent used to calculate the standard service retirement annuity and the annual death benefit annuity for a classroom teacher and full-time librarian. In addition, this bill requires TRS to recompute an annuity that first became payable before September 1, 1999, as though the 2.25 percent multiplier were in effect on the date the annuity first became payable. 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 Sections 824.203(a) and (e), Government Code, to increase from two percent to 2.25 percent the percentage used in the formula to compute the standard service retirement annuity for a member, and to make a conforming change. SECTION 2. Requires the Teacher Retirement System of Texas to recompute an annuity that first became payable before September 1, 1999, as though Sections 824.203(a) and (e) were in effect on the date the annuity first became payable. Provides that the first payment of the recomputed annuity is payable on the first payment date occurring on or after the effective date of this Act. SECTION 3. Effective date: September 1, 1999. SECTION 4. Emergency clause.