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.