Relating to service retirement benefits payable by the Employees Retirement System of Texas to certain law enforcement officers and custodial officers.
ModeratePlan for compliance
High Cost
Effective:2025-09-01
Enforcing Agencies
Employees Retirement System of Texas (ERS) • Texas Juvenile Justice Department • Comptroller of Public Accounts • Office of the Attorney General
01
Compliance Analysis
Key implementation requirements and action items for compliance with this legislation
Implementation Timeline
Effective Date: September 1, 2025.
Compliance Deadline: Payroll deductions must commence the first pay period after September 1, 2025. Monthly reporting to ERS begins immediately thereafter (due by the 12th of the following month).
Agency Rulemaking:
October 1, 2025 (Hard Stop): ERS must publish a finding in the *Texas Register* confirming legislative funding. If negative, the Act is void.
Post-Sept 1, 2025: TJJD must adopt standards for "custodial officer" eligibility involving hazardous duty definitions.
Immediate Action Plan
Immediate: Archive the December 1, 2024, employee roster to secure retroactive eligibility data.
By August 1, 2025: Program payroll systems for the new LECOS deduction codes but set them to "pending."
By August 15, 2025: Legal counsel must review TJJD/OAG/CPA job descriptions to issue formal eligibility determinations for staff.
October 1, 2025: Monitor the *Texas Register* for the ERS funding certification before finalizing Q4 benefits communications.
Operational Changes Required
Contracts
Employment Agreements: Update offer letters and contracts for OAG investigators, CPA peace officers, and TJJD custodial staff to reflect LECOS membership and mandatory payroll deductions.
Collective Bargaining: If applicable, notify employee representatives regarding the reduction in net pay due to the new mandatory statutory deduction (0.5% to 2.0%).
Hiring/Training
Job Classification: HR must audit job descriptions against new TJJD "hazardous duty" standards. You must affirmatively determine which "caseworkers" or "inspectors" qualify based on "regularly planned contact with youth."
Recruitment: Update benefits packages in recruitment materials to reflect the 20-year retirement structure, which is a significant retention tool against private sector competitors.
Reporting & Record-Keeping
Monthly Certification: Implement a workflow to certify to ERS the names of all eligible employees who began or ceased employment in the previous month. Deadline: 12th day of the following month.
The "Snapshot" Roster: You must permanently preserve the employment roster from December 1, 2024. Employees on payroll as of this date are eligible for retroactive service credit; failure to produce this record will result in benefit disputes.
Fees & Costs
Payroll Deductions: Configure payroll systems to deduct an additional 0.5% (Traditional Members) or 2.0% (Cash Balance Members) from the compensation of eligible officers for the LECOS fund.
Refund Liability: Prepare a contingency mechanism to refund these deductions if the ERS Board issues a negative funding finding on October 1, 2025.
Strategic Ambiguities & Considerations
The "Poison Pill" (Section 6): The Act is void if ERS does not certify sufficient funding. There is a "regulatory gray zone" between the September 1 effective date and the October 1 certification deadline. Businesses must decide whether to deduct funds immediately (risk of refunding) or delay (risk of non-compliance).
"Regularly Planned Contact": The statute expands eligibility to those with "frequent or infrequent regularly planned contact" with youth. TJJD rulemaking must define "infrequent." Until defined, this creates a risk of misclassification lawsuits from administrative staff seeking enhanced benefits.
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Certified law enforcement and custodial officers who work at certain Texas state agencies contribute to both a regular ERS retirement account (the ERS Trust Fund) and the Law Enforcement and Custodial Officer (LECO) Supplemental Retirement Fund.
S.B. 1737 seeks to reduce turnover in, and increase the recruitment capabilities of, the Texas Juvenile Justice Department, the Comptroller of Public Accounts of the State of Texas, and the Office of the Attorney General by providing for the inclusion of certain custodial and law enforcement officers at these agencies in the LECO Supplemental Retirement Fund.
As proposed, S.B. 1737 amends current law relating to service retirement benefits payable by the Employees Retirement System of Texas to certain law enforcement officers and custodial officers.
RULEMAKING AUTHORITY
Rulemaking authority is expressly granted to the board of trustees of the Employees Retirement System of Texas in SECTION 5 of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Sections 811.001(8) and (9), Government Code, to redefine "custodial officer" and "law enforcement officer."
SECTION 2. Amends Section 813.506, Government Code, by Subsection (b-1) and amending Subsection (c), as follows:
(b-1) Requires the Texas Juvenile Justice Department (TJJD) to adopt standards for determining eligibility for service credit as a custodial officer employed by TJJD based on the need to encourage early retirement of persons whose duties are hazardous. Requires that custodial officer service, to be creditable as service under TJJD, be performed:
(1) as a juvenile correctional officer, as that term is defined by Section 242.009 (Juvenile Correctional Officers; Staffing), Human Resources Code, or a caseworker; or
(2) in a position, other than a position described by Subdivision (1), the primary duties of which include the custodial supervision of or other close, regularly planned contact with youth in the custody of TJJD.
(c) Requires certain state agencies, including TJJD, as applicable, to determine a person's eligibility to receive credit as a custodial officer. Prohibits a determination under this subsection, rather than a determination of the department, unit, or board, from being appealed by an employee but provides that a determination is subject to change by the Employees Retirement System of Texas (ERS).
SECTION 3. Amends Section 814.104(b), Government Code, as follows
(b) Provides that a member is eligible to retire and receive a service retirement annuity if the member has at least 10 years of service credit as a law enforcement officer.
Deletes existing text providing that a member who has at least 10 years of service credit as a commissioned peace officer engaged in criminal law enforcement activities of the Department of Public Safety, the Texas Alcoholic Beverage Commission (TABC), the Parks and Wildlife Department, or the office of inspector general at TJJD or as a custodial officer is eligible to retire and receive a service retirement annuity. Makes nonsubstantive changes.
SECTION 4. Amends Section 815.505, Government Code, as follows:
Sec. 815.505. CERTIFICATION OF NAMES OF LAW ENFORCEMENT AND CUSTODIAL OFFICERS. Requires the governmental entity that employs or ceased employing the law enforcement officer or custodial officer, rather than the Public Safety Commission, TABC, the Parks and Wildlife Commission, the office of inspector general at TJJD, the Board of Pardons and Paroles, or the Texas Board of Criminal Justice, as applicable, not later than the 12th day of the month following the month in which a person begins or ceases employment as a law enforcement officer or custodial officer, to certify to ERS, in the manner prescribed by the system, the name of the employee and such other information as the system determines is necessary for the crediting of service and financing of benefits under Subtitle B (Employees Retirement System of Texas).
SECTION 5. (a) Provides that, subject to Subsection (b) or (c) of this section, as applicable, the changes in law made by this Act apply to a member of ERS who is employed by TJJD, the Comptroller of Public Accounts of the State of Texas (comptroller), or the attorney general as a law enforcement officer or custodial officer, as applicable, on or after the effective date of this Act, regardless of whether the member was hired before, on, or after the effective date of this Act.
(b)� Provides that this subsection applies only to a member described by Subsection (a) of this section not subject to Subsection (c) of this section who, on December 1, 2024, was employed in a law enforcement officer or custodial officer position with TJJD, the comptroller, or the attorney general, as applicable. Provides that service credit earned by the member before the effective date of this Act in a position for which service is creditable as a law enforcement officer or custodial officer under Subtitle B, Title 8 (Public Retirement Systems), Government Code, as amended by this Act, is considered service credit established as a law enforcement officer or custodial officer, as applicable, for purposes of determining the benefits payable from the law enforcement and custodial officer supplemental retirement fund.
(c) Provides that this subsection applies only to a member described by Subsection (a) of this section who is subject to Chapter 820 (Cash Balance Benefit), Government Code. Authorizes the member to establish service credit as a law enforcement officer or custodial officer with TJJD, the comptroller, or the attorney general, as applicable, only for service performed on or after the effective date of this Act.
(d) Requires the board of trustees of ERS, in consultation with TJJD, the comptroller, and the attorney general, as soon as practicable after the effective date of this Act, to adopt rules necessary to implement the changes in law made by this Act.
(e)� Requires TJJD, the comptroller, and the attorney general to:
(1) as soon as practicable after the effective date of this Act, certify to ERS, in the form and manner prescribed by the board of trustees of ERS the name of each member who is employed by TJJD, comptroller, or attorney general as a law enforcement officer or custodial officer on the effective date of this Act; if the member is subject to Subsection (b) of this section, the amount of service credit established by the member as a law enforcement officer or custodial officer before the effective date of this Act; and any other information ERS determines is necessary to credit law enforcement officer or custodial officer service in accordance with the changes in law made by this Act; and
(2) beginning with the first pay period that occurs after the effective date of this Act and with respect to each member employed by the department, comptroller, or attorney general as a law enforcement officer or custodial officer, begin making deductions and collecting member contributions for the law enforcement and custodial officer supplemental retirement fund as prescribed by Section 815.402(h) (relating to requiring each department or agency of the state that employs a law enforcement or custodial officer to deduct an additional 0.5 percent contribution from that member's compensation, to be deposited in the law enforcement and custodial officer supplemental retirement fund) or 820.101(b) (relating to requiring each department or agency of the state that employs a law enforcement or custodial officer to deduct an additional two percent contribution to be deposited in the law enforcement and custodial officer supplemental retirement fund), Government Code, as applicable.
SECTION 6. (a) Provides that ERS is required to implement this Act only if the board of trustees of ERS finds that the 89th Legislature appropriated money to ERS in an amount sufficient to implement Section 5(b) of this Act, without increasing the unfunded actuarial liabilities of ERS. Requires that the amount appropriated by the 89th Legislature to implement Section 5(b) of this Act be in addition to any amounts the state is required to contribute to ERS under Subchapter E (Collection of Membership Fees and Contributions), Chapter 815 (Administration), Government Code. Prohibits ERS, if the board of trustees of ERS finds that the 89th Legislature did not appropriate money in an amount sufficient to implement Section 5(b) of this Act without increasing the unfunded actuarial liabilities of ERS, from implementing this Act.
(b) Requires the board of trustees of ERS, not later than October 1, 2025, to make and publish in the Texas Register its finding under Subsection (a) of this section and a statement regarding whether, as a result of its finding, ERS is or is not implementing this Act.
Honorable Joan Huffman, Chair, Senate Committee on Finance
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
SB1737 by Huffman (Relating to service retirement benefits payable by the Employees Retirement System of Texas to certain law enforcement officers and custodial officers.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB1737, As Introduced: a negative impact of ($40,236,264) through the biennium ending August 31, 2027.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026
($38,368,132)
2027
($1,868,132)
2028
($1,868,132)
2029
($1,868,132)
2030
($1,868,132)
All Funds, Five-Year Impact:
Fiscal Year
Probable Savings/(Cost) from General Revenue Fund 1
Probable Savings/(Cost) from GR Dedicated Accounts 994
Probable Savings/(Cost) from Federal Funds 555
2026
($38,368,132)
($38,360)
($11,508)
2027
($1,868,132)
($38,360)
($11,508)
2028
($1,868,132)
($38,360)
($11,508)
2029
($1,868,132)
($38,360)
($11,508)
2030
($1,868,132)
($38,360)
($11,508)
Fiscal Analysis
The bill would amend the Government Code to make certain members of the Texas Juvenile Justice Department (TJJD), Comptroller of Public Accounts (CPA), and Office of the Attorney General (OAG) eligible to receive benefits in the Law Enforcement and Custodial Officer Supplemental Retirement Fund (LECOS).
Under the provisions of the bill, the additional members added to LECOS from TJJD, the CPA, and the OAG hired before September 1, 2022 (Groups 1-3), and employed on December 1, 2024, would have previous service credit established in LECOS if the Employees Retirement System of Texas (ERS) was appropriated the funds required to cover the previous service credit. For those hired on or after September 1, 2022 (Group 4), LECOS service credit would be earned beginning September 1, 2025.
Methodology
According to ERS, the bill would impact approximately 1,661 juvenile justice officers and peace officers, as shown in the table below.
TJJD
CPA
OAG
Total
Groups 1-3
632
31
164
827
Group 4
793
<10
33
834
Total
1,425
39
197
1,661
According to the agency, the bill would increase the unfunded liabilities and the normal cost of the ERS plan, resulting in a one-time lump cost of $26,400,000 in General Revenue funds. The bill would also increase the unfunded liabilities of the LECOS plan, resulting in a one-time lump sum cost of $10,100,000 in General Revenue funds. In each year, state contribution costs to LECOS would increase by $1.9 million in General Revenue funds, $38,360 in General Revenue-Dedicated funds, and $11,508 in federal funds to cover the employer contribution rate of 1.75 percent of payroll.
Local Government Impact
No fiscal implication to units of local government is anticipated.
SB1737 mandates the expansion of the Law Enforcement and Custodial Officer Supplemental (LECOS) retirement system to include specific officers within the Texas Juvenile Justice Department (TJJD), Office of the Attorney General (OAG), and Comptroller of Public Accounts (CPA). Implementation is strictly contingent upon the ERS Board certifying sufficient legislative appropriation ($40M+) by October 1, 2025; without this certification, the Act is void. Implementation Timeline Effective Date: September 1, 2025.
Q
Who authored SB1737?
SB1737 was authored by Texas Senator Joan Huffman during the Regular Session.
Q
When was SB1737 signed into law?
SB1737 was signed into law by Governor Greg Abbott on June 20, 2025.
Q
Which agencies enforce SB1737?
SB1737 is enforced by Employees Retirement System of Texas (ERS), Texas Juvenile Justice Department, Comptroller of Public Accounts and Office of the Attorney General.
Q
How urgent is compliance with SB1737?
The compliance urgency for SB1737 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
Q
What is the cost impact of SB1737?
The cost impact of SB1737 is estimated as "high". This may vary based on industry and implementation requirements.
Q
What topics does SB1737 address?
SB1737 addresses topics including corrections, corrections--parole, probation & pardons, minors, minors--juvenile justice and retirement systems.
Legislative data provided by LegiScanLast updated: November 25, 2025
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