Regular Session News #1: 2023 Regular Session starts Monday; four bills affect TRSL
Apr 6, 2023
The 2023 Regular Legislative Session begins Monday, April 10, and TRSL is monitoring the following bills that could impact the retirement system and its members:
Senate bill affecting TRSL
Senate Bill 18 (Sen. Price) would establish a new model for providing permanent benefit increases (PBIs) to retirees and beneficiaries of the four state retirement systems for teachers, state employees, school employees, and state police. The new model changes the funding mechanism, granting criteria, and eligibility criteria for future PBIs. SB 18 is co-authored by Senate President Page Cortez and supported by the TRSL Board of Trustees.
Starting in FY 2024-25, SB 18 would fund future PBIs directly through employer contributions to the retirement system. In other words, funding for PBIs would be built into the annual employer contribution rate and be referred to as the PBI account funding contribution rate (“AFC rate”). TRSL would then deposit the AFC rate into a new PBI funding account from which PBIs would be paid.
The AFC rate would equal one-half of any decrease in the total employer contribution rate each year, and would grow over time until it reached 2.5% of payroll. As safeguards for employers, SB 18 would prohibit the AFC rate from exceeding 2.5% of payroll and would establish caps for the total employer contribution rate.
The proposed model is projected to allow for a 2% PBI every two to three years, calculated on the first $60,000 of a retiree’s annual benefit. The legislature would retain the authority to grant PBIs.
Additionally, under provisions of SB 18, when the first PBI is paid from the new PBI funding account, eligibility criteria to receive a PBI would change—required age and years retired would increase as follows:
House bill affecting TRSL
House Bill 47 (Rep. Nelson) would require a minimum of 25% of nonrecurring state revenue to be appropriated to the unfunded accrued liabilities (UALs) of the four state retirement systems for teachers, state employees, school employees, and state police, beginning FY 2024-25. Additional funding for UAL payments made cannot be used to directly or indirectly fund PBIs. [Constitutional amendment]
House Bill 170 (Rep. Turner) would create the Teachers' Retirement Initial Unfunded Accrued Liability (IUAL) Fund in the state treasury as a special fund, and deposit a portion of the 0.45% state sales and use tax into the fund for monthly payments to the IUAL, beginning July 1, 2023. Payments made to the IUAL through the Teachers’ Retirement IUAL fund cannot replace payments made pursuant to existing law and constitutional provisions. Funds in the IUAL fund cannot be used to directly or indirectly fund PBIs.
House Bill 560 (Rep. Zeringue) would make a supplemental appropriation of $49.2 million to the TRSL initial unfunded accrued liability (IUAL) from a portion of the FY 2021-22 surplus funds in the state treasury as required by the Constitution.
SB 18 has been assigned to the Senate Retirement Committee; HB 47, HB 170, and HB 560 have been assigned to the House Appropriations Committee.
Retirement bills are typically heard first in either the House or Senate retirement committee. The chair of the Senate Retirement Committee is Sen. Edward J. “Ed” Price, and the chair of the House Retirement Committee is Rep. Phillip DeVillier.
TRSL will keep you informed about the status of bills being monitored throughout the session.
Stay tuned for future updates.
Senate bill affecting TRSL
Senate Bill 18 (Sen. Price) would establish a new model for providing permanent benefit increases (PBIs) to retirees and beneficiaries of the four state retirement systems for teachers, state employees, school employees, and state police. The new model changes the funding mechanism, granting criteria, and eligibility criteria for future PBIs. SB 18 is co-authored by Senate President Page Cortez and supported by the TRSL Board of Trustees.
Starting in FY 2024-25, SB 18 would fund future PBIs directly through employer contributions to the retirement system. In other words, funding for PBIs would be built into the annual employer contribution rate and be referred to as the PBI account funding contribution rate (“AFC rate”). TRSL would then deposit the AFC rate into a new PBI funding account from which PBIs would be paid.
The AFC rate would equal one-half of any decrease in the total employer contribution rate each year, and would grow over time until it reached 2.5% of payroll. As safeguards for employers, SB 18 would prohibit the AFC rate from exceeding 2.5% of payroll and would establish caps for the total employer contribution rate.
The proposed model is projected to allow for a 2% PBI every two to three years, calculated on the first $60,000 of a retiree’s annual benefit. The legislature would retain the authority to grant PBIs.
Additionally, under provisions of SB 18, when the first PBI is paid from the new PBI funding account, eligibility criteria to receive a PBI would change—required age and years retired would increase as follows:
- Regular retiree: Must have received a benefit for two years and be at least age 62;
- Disability retiree: Must have been retired at least two years regardless of age;
- Beneficiary of retired member: Retiree would have met the above criteria, if alive;
- Survivor of non-retired member: Must have received a benefit for at least two years and the benefits must have originated from the service of a deceased member who would have been age 62 at the time the PBI is payable.
House bill affecting TRSL
House Bill 47 (Rep. Nelson) would require a minimum of 25% of nonrecurring state revenue to be appropriated to the unfunded accrued liabilities (UALs) of the four state retirement systems for teachers, state employees, school employees, and state police, beginning FY 2024-25. Additional funding for UAL payments made cannot be used to directly or indirectly fund PBIs. [Constitutional amendment]
House Bill 170 (Rep. Turner) would create the Teachers' Retirement Initial Unfunded Accrued Liability (IUAL) Fund in the state treasury as a special fund, and deposit a portion of the 0.45% state sales and use tax into the fund for monthly payments to the IUAL, beginning July 1, 2023. Payments made to the IUAL through the Teachers’ Retirement IUAL fund cannot replace payments made pursuant to existing law and constitutional provisions. Funds in the IUAL fund cannot be used to directly or indirectly fund PBIs.
House Bill 560 (Rep. Zeringue) would make a supplemental appropriation of $49.2 million to the TRSL initial unfunded accrued liability (IUAL) from a portion of the FY 2021-22 surplus funds in the state treasury as required by the Constitution.
SB 18 has been assigned to the Senate Retirement Committee; HB 47, HB 170, and HB 560 have been assigned to the House Appropriations Committee.
Retirement bills are typically heard first in either the House or Senate retirement committee. The chair of the Senate Retirement Committee is Sen. Edward J. “Ed” Price, and the chair of the House Retirement Committee is Rep. Phillip DeVillier.
TRSL will keep you informed about the status of bills being monitored throughout the session.
Stay tuned for future updates.