HBA-TYH H.B. 706 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 706
By: Tillery
Pensions and Investments
2/25/1999
Introduced



BACKGROUND AND PURPOSE 

Currently, the Employees Retirement System of Texas (ERS) is directed to
keep a contingency fund equal to 10 percent of the fund's yearly
expenditures. Some believe that  the contingency is overfunded, since it is
calculated upon all yearly benefits payable.  H.B. 706 directs ERS to
calculate the contingency fund based upon the expected benefits payable
over a 60 day period, allowing the fund to cushion the ERS state employees
self-funded plans while not unnecessarily encumbering funds. 

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 5(f) and (g), Article 3.50-2, V.T.I.C., (Texas
Employees Uniform Group Insurance Benefits Act), as follows: 

(f)  Deletes the requirement that the Board of Trustees (trustees), who is
provided for in Chapter 815, Government Code (Administration) and
administers the Employees Retirement System of Texas, makes an estimate of
the unrestricted balance of the fund and includes in the contributions
required the amount necessary to establish an unrestricted balance in the
fund of not less than 10 percent, which shall be placed in a contingency
reserve fund to provide for adverse fluctuations in future charges. 

(g)  Requires the trustee to estimate the average 60-day biennium
expenditures from the fund anticipated for self-funded plans before the
first day of each state fiscal biennium. Requires the trustee to place the
estimated amount in a contingency reserve fund to provide for adverse
fluctuations in claims or administrative expenses.   Requires the trustee
to submit, with each request for legislative appropriations to the program,
the amount the trustee determines to be necessary to maintain the
contingency reserve fund at the level required by this subsection.  Deletes
the requirement that the trustee determine the contributions required to
provide coverages directly from the fund and submit the information to the
State Board of Insurance for examination and evaluation.  Also deletes the
requirement that the State Board of Insurance certify the actuarial
soundness of the proposed level of contributions or advise the trustees of
prerequisite modifications. 

SECTION 2.  Effective date: September 1, 1999.

SECTION 3.  Emergency clause.