BILL ANALYSIS

C.S.H.B. 4945

By: Ashby

Pensions, Investments & Financial Services

Committee Report (Substituted)

BACKGROUND AND PURPOSE

The bill author has informed the committee that the Teacher Retirement System of Texas (TRS) is the largest pension in Texas and one of the largest in the country and the pension fund and its benefits are always a major discussion point during Texas legislative sessions, however, the discussion is always centered around teachers. The bill author has also informed the committee that a discussion concerning firefighters under TRS is needed and that many of the entry level firefighters are in their early twenties, which would mean a forty-year career on the fire line, while federal wildland firefighters qualify for twenty-year pensions, along with firefighters in most municipalities. This disparity may affect recruitment and retention efforts, and many firefighters may either leave for jobs with more attractive benefits or do not apply for these positions. C.S.H.B. 4945 seeks to address this issue by requiring TRS to conduct a study on the feasibility of offering members who are Texas A&M Forest Service wildland firefighters and are employed in positions related to wildland firefighting alternative service retirement benefits under the system.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 4945 amends the Government Code to require the Teacher Retirement System of Texas (TRS) to conduct a study on the feasibility of offering members who are Texas A&M Forest Service wildland firefighters and are employed in positions related to wildland firefighting alternative service retirement benefits under the system. The bill requires TRS, in conducting the study, to assess the costs to and impact on TRS associated with offering those members the following alternative service retirement benefits:

·a service retirement benefit under the existing benefit plan that provides retirement eligibility and a supplemental benefit under the bill's provisions within a new tier, to be named Hazardous Duty for the following members:

oa member who is at least 55 years old and who has at least 10 years of service credit as a wildland firefighter;

oa member of any age who has at least 25 years of service credit as a wildland firefighter, regardless of age; or

oa member who has at least 20 years of service credit as a wildland firefighter, except that the member's service retirement annuity will be actuarially reduced by five percent for every year of difference between the member's age at retirement and the normal retirement age within this tier; and

·a service retirement benefit under the existing plan that provides retirement eligibility and a supplemental benefit under the bill's provisions, as applicable, within a new tier, to be named Hazardous Duty-Administrative Support for the following members:

oa member who is vested in TRS and who has been employed as a wildland firefighter during the entirety of the member's employment with  the forest service; or

oa member who has service credit as a wildland firefighter equal to at least the minimum number of years of service credit required to vest in the system and who is employed in a position that provides support services to wildland firefighters on the member's retirement date.

C.S.H.B. 4945 establishes that the standard service retirement annuity for such members to retire would be an amount computed on the basis of the member's average annual compensation for the five years of service, whether or not consecutive, in which the member received the highest annual compensation, times the sum of the percentage factor used in the computation of a standard service retirement annuity under applicable state law plus 0.5 percent. The standard service retirement annuity for a member who is eligible to retire as a member who is employed in a position that provides support based on the age and service requirements under the bill's provisions is the standard service retirement annuity under those provisions, provided the member is not entitled to an additional 0.5 percent.

C.S.H.B. 4945 requires TRS, not later than March 1, 2026, to begin coordinating with the forest service to determine the following:

·positions that will qualify for benefits under the bill's provisions and the salaries of both existing and terminated employees who accrued service credit for service provided on or after September 1, 2009, and who would be eligible to retire under any of the requirements proposed under the bill's provisions based on that service credit;

·the effectiveness of using either the standard service retirement annuity calculation plus an additional 0.5 percent or a different annuity calculation that would provide similar or more benefits for a member who would be eligible to retire under any of the requirements proposed under the bill's provisions while maintaining the actuarial soundness of TRS;

·the additional percentage of salary contribution needed by both the employer and employee to provide for the alternative retirement benefits proposed by the bill's provisions while maintaining the actuarial soundness of TRS;

·the cost computed as additional employer and employee contributions to provide the alternative retirement benefits proposed under the bill's provisions attributable to the applicable service credit for service performed on or after September 1, 2009; and

·the cost and implications of the minimum age or service credit requirements proposed by the bill's provisions to the extent those age or service credit requirements are less stringent than the minimum age or service credit requirements provided by this subtitle.

The bill requires TRS, not later than December 31, 2026, to prepare and submit a report to the legislature that contains the findings of the study and the determinations required under the bill's provisions. The bill requires the Legislative Budget Board and the State Pension Review Board, as necessary, to assist TRS in conducting the study and provide TRS with any information needed to complete the required report. The bill's provisions expire on September 1, 2027.

EFFECTIVE DATE

On passage, or, if the bill does not receive the necessary vote, September 1, 2025.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 4945 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

While both the introduced and substitute require TRS to conduct a study on the feasibility of offering members who are forest service wildland firefighters alternative service retirement benefits under the system, the substitute specifies that the forest service wildland firefighters are employed in positions related to wildland firefighting alternative service retirement benefits under the system, which the introduced did not do.

The substitute revises components of the study that were included in the introduced as follows:

·the substitute includes assessing the cost to and impact on TRS associated with offering members a supplemental benefit under the bill's provisions within the new Hazardous Duty tier, whereas the introduced did not;

·the substitute specifies that the service credit for a member who is at least 55 years old and within that tier is as a wildland firefighter, whereas the introduced specified that the service credit for such a member is in the appropriate field;

·whereas the introduced included in the Hazardous Duty tier a member who is at any age and has 25 years of service or a member has 20 years of service that will be actuarily reduced by five percent for every year that is under the normal requirements within the tier, the substitute includes a member who has at least 25 years of service credit as a wildland firefighter, regardless of age or a member who has at least 20 years of service credit as a wildland firefighter, except that the member's service retirement annuity will be actuarially reduced by five percent for every year of difference between the member's age at retirement and the normal retirement age within the tier; and

·whereas the introduced included assessing the cost and impact on TRS of offering a service retirement benefit under the existing plan that provides retirement eligibility within a new tier described as Hazardous Duty-Administrative Support for a member who has become vested and has spent entire employment up to date of being vested in a wildland firefighter role within the forest service or a member who has transferred out of a primary wildland firefighter role to a support role within the forest service after the date of being fully vested, the substitute includes assessing the costs and impact on TRS of such a service retirement benefit for a member who is vested in TRS and who has been employed as a wildland firefighter during the entirety of the member's employment with the forest service or a member who has service credit as a wildland firefighter equal to at least the minimum number of years of service credit required to vest in TRS and who is employed in a position that provides support services to wildland firefighters on the member's retirement date.

With respect to the provision in the introduced that established the computation of a standard service annuity for a member who is eligible to retire under the bill's provisions, the substitute specifies that it is the standard service retirement annuity, whereas the introduced did not. The substitute also specifies that the annuity is for a member who is eligible to retire under the Hazardous Duty tier and a member who is vested in TRS and who has been employed as a wildland firefighter during the entirety of the member's employment with the forest service under the Hazardous Duty-Administrative Support tier, whereas the introduced established that the annuity is for all members qualified under both tiers.

The substitute omits a provision from the introduced that established that members that transfer into Hazardous Duty-Administrative Support will be able to retain the reduced service age requirements but will only earn service by the normal age percentage factor, as described under the bill's provisions.

The substitute includes a provision absent from the introduced establishing that the standard service retirement annuity for a member who is eligible to retire as a member who is employed in a position that provides support based on the age and service requirements under the bill's provisions is the standard service retirement annuity under those provisions, provided the member is not entitled to an additional 0.5 percent.

The substitute replaces a provision in the introduced requiring TRS to meet with the forest service to determine certain requirements with a provision requiring TRS to coordinate with the forest service to determine certain requirements. The substitute revises the determinations to be made in coordination between TRS and the forest service as follows:

·whereas the introduced included a determination for positions that will qualify for benefits under the Hazardous Duty tier and Hazardous Duty-Administrative Support tier and the salaries of both existing and terminated employees that qualified beginning on September 1, 2009; the substitute includes a determination for such positions who accrued service credit for service provided on or after September 1, 2009, and who would be eligible to retire under any of the requirements proposed the bill's provisions relating to both tiers based on that service credit;

·whereas the introduced includes a determination for the effectiveness of additional 0.5 percent to the percentage factor for a standard service retirement benefit or an accrual rate that is feasible for a member to retire at reduced service age requirements, while maintaining the actuarial soundness of the pension fund, the substitute includes a determination for the effectiveness of using either the standard service retirement annuity calculation plus 0.5 percent or a different annuity calculation that would provide similar or more benefits than that calculation for a member who would be eligible to retire under any of the requirements proposed by the bill's provisions relating to Hazardous Duty tier while maintaining the actuarial soundness of TRS;

·whereas the introduced included a determination for the additional percentage of salary contribution needed by both the employer and employee to sustain the additional tiers while maintaining actuarial soundness within the pension fund, the substitute includes a determination for such an additional percentage of salary contribution to provide for the alternative retirement benefits proposed by the bill's provisions relating to the additional tiers while maintaining the actuarial soundness of TRS;

·whereas the introduced included a determination for the cost to cover the additional employer and employee contributions needed between September 1, 2009, to present day, the substitute includes a determination for the cost computed as additional employer and employee contributions to provide the alternative retirement benefits proposed under the bill's provisions relating to the additional tiers attributable to service credit described by those provisions for service performed on or after September 1, 2009; and

·whereas the introduced included a determination for the cost and implications of benefits being extended to reduced retirement ages in the bill's provisions relating to the additional tiers, the substitute includes a determination for the cost and implications of the minimum age or service credit requirements proposed by those provisions of the bill to the extent those age or service credit requirements are less stringent than the minimum age or service credit requirements provided by TRS.

With respect to the requirement that TRS prepare and submit a report that contains the findings of the study and the information submitted to TRS to make those determinations, the substitute specifies that the report is submitted to the legislature, whereas the introduced did not.