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A BILL TO BE ENTITLED
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AN ACT
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relating to contributions to, benefits from, and the administration |
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of systems and programs administered by the Teacher Retirement |
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System of Texas. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter H, Chapter 824, Government Code, is |
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amended by adding Sections 824.703 and 824.704 to read as follows: |
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Sec. 824.703. GAIN SHARING COST-OF-LIVING ADJUSTMENT. (a) |
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Beginning with the fiscal year that begins on September 1, 2028 and |
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for each subsequent fiscal year, the retirement system shall make a |
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cost-of-living adjustment payable to eligible annuitants receiving |
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a retirement or death benefit annuity payment under this section |
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only if the retirement system's average return on the investment of |
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system's cash and securities during the preceding five fiscal |
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years, expressed as a percentage rate, is equal to or exceeds seven |
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percent. |
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(b) Subject to Subsection (c), the amount of the |
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cost-of-living adjustment that the retirement system shall provide |
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to an annuitant during a fiscal year if required to provide an |
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adjustment under Subsection (a) is an amount equal to the |
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annuitant's monthly annuity payment the month the adjustment is |
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effective multiplied by a percentage equal to: |
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(1) Five subtracted from the average rate of return on |
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investment during the preceding five fiscal years as described by |
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subsection (a); and |
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(2) the difference determined in subdivision (1) |
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multiplied by 50 percent and rounded down to the nearest one-tenth |
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of a percent. |
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(c) The amount of the cost-of-living adjustment provided by |
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Subsection (a) may not exceed two percent of an annuitant's monthly |
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benefit. |
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(d) Subject to Subsections (e) and (f), a person is eligible |
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to receive a cost-of-living adjustment under this section if the |
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person is, in the month in which the adjustment is effective and |
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disregarding any forfeiture of benefits under Section 824.601, an |
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annuitant that: |
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(1) is eligible to receive: |
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(A) a standard service or disability retirement |
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annuity payment; |
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(2) an optional service or disability retirement |
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annuity payment as either a retiree or beneficiary; |
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(3) an annuity payment under Section |
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824.402(a)(3) or (4); |
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(4) an annuity payment under Section 824.502; or |
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(5) an alternate payee annuity payment under |
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Section 804.005; |
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(2) became entitled to receive annuity payments at |
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least three years prior to the beginning of the fiscal year in which |
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the cost-of-living adjustment is to be made; and |
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(3) is alive in the month in which the cost-of-living |
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adjustment is effective. |
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(e) A beneficiary receiving an optional service or |
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disability retirement annuity payment is eligible to receive a |
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cost-of-living adjustment under Subsection (a) if the beneficiary |
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meets the requirements of Subsections (d)(1) and (d)(3) and either |
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the beneficiary or the retiree who selected to optional service or |
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disability retirement plan became entitled to receive annuity |
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payments at least three years prior to the beginning of the fiscal |
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year in which the cost-of-living adjustment is to be made. |
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(f) An adjustment made under this section does not apply to |
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payments under: |
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(1) Section 824.203(d), relating to retirees who |
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receive a standard service retirement annuity in an amount fixed by |
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statute; |
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(2) Section 824.304(a), relating to disability |
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retirees with less than 10 years of service credit; |
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(3) Section 824.304(b)(2), relating to disability |
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retirees who receive a disability annuity in an amount fixed by |
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statute; |
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(4) Section 824.404(a), relating to active member |
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survivor beneficiaries who receive a survivor annuity in an amount |
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fixed by statute; |
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(5) Section 824.501(a), relating to retiree survivor |
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beneficiaries who receive a survivor annuity in an amount fixed by |
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statute; or |
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(6) Section 824.804(b), relating to participants in |
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the deferred retirement option plan with regard to payments from |
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their deferred retirement option plan accounts. |
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Sec. 824.704. COST-OF-LIVING ADJUSTMENT. (a) The |
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retirement system shall make a one-time cost-of-living adjustment |
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payable to annuitants receiving a monthly death or retirement |
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benefit annuity, as provided by this section. |
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(b) Subject to Subsections (c) and (d), to be eligible for |
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the adjustment, a person must be, on the effective date of the |
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adjustment and disregarding any forfeiture of benefits under |
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Section 824.601, an annuitant eligible to receive: |
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(1) a standard service or disability retirement |
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annuity payment; |
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(2) an optional service or disability retirement |
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annuity payment as either a retiree or beneficiary; |
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(3) an annuity payment under Section 824.402(a)(3) or |
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(4); |
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(4) an annuity payment under Section 824.502; or |
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(5) an alternate payee annuity payment under Section |
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804.005. |
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(c) If the annuitant: |
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(1) is a retiree, or is a beneficiary under an optional |
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retirement payment plan, to be eligible for the adjustment under |
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this section: |
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(A) the annuitant must be living on the effective |
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date of the adjustment; and |
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(B) the effective date of the retirement of the |
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member of the Teacher Retirement System of Texas must have been on |
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or before December 31, 2020; |
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(2) is a beneficiary under Section 824.402(a)(3) or |
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(4) or 824.502, to be eligible for the adjustment: |
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(A) the annuitant must be living on the effective |
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date of the adjustment; and |
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(B) the date of death of the member of the |
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retirement system must have been on or before December 31, 2020; or |
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(3) is an alternate payee under Section 804.005, the |
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annuitant is eligible for the adjustment only if the effective date |
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of the election to receive the annuity payment was on or before |
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December 31, 2020. |
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(d) An adjustment made under this section does not apply to |
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payments under: |
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(1) Section 824.203(d), relating to retirees who |
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receive a standard service retirement annuity in an amount fixed by |
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statute; |
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(2) Section 824.304(a), relating to disability |
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retirees with less than 10 years of service credit; |
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(3) Section 824.304(b)(2), relating to disability |
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retirees who receive a disability annuity in an amount fixed by |
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statute; |
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(4) Section 824.404(a), relating to active member |
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survivor beneficiaries who receive a survivor annuity in an amount |
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fixed by statute; |
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(5) Section 824.501(a), relating to retiree survivor |
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beneficiaries who receive a survivor annuity in an amount fixed by |
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statute; or |
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(6) Section 824.804(b), relating to participants in |
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the deferred retirement option plan with regard to payments from |
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their deferred retirement option plan accounts. |
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(e) An adjustment under this section must be made beginning |
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with an annuity payable for the month of January 2024. |
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(f) The amount of the adjustment provided under this section |
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is calculated by multiplying the amount of the first monthly |
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benefit subject to the adjustment by a percentage determined as |
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follows: |
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(1) For annuitants described by Subsection (c)(1): |
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(A) If the retiree's effective date of retirement |
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was before January 1, 2004, an adjustment of six percent; |
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(B) If the retiree's effective date of retirement |
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was on or after January 1, 2004, but before January 1, 2014, an |
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adjustment of four percent; and |
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(C) If the retiree's effective date of retirement |
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was on or after January 1, 2014, but before January 1, 2021, an |
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adjustment of two percent; |
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(2) For annuitants described by Subsection (c)(2): |
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(A) If the member's date of death was before |
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January 1, 2004, an adjustment of six percent; |
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(B) If the member's date of death was on or after |
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January 1, 2004, but before January 1, 2014, an adjustment of four |
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percent; and |
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(C) If the member's date of death was on or after |
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January 1, 2014, but before January 1, 2021, an adjustment of two |
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percent; and |
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(3) For annuitants described by Subsection (c)(3): |
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(A) If the annuitant's date of election was |
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before January 1, 2004, an adjustment of six percent; |
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(B) If the annuitant's date of election was on or |
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after January 1, 2004, but before January 1, 2014, an adjustment of |
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four percent; and |
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(C) If the annuitant's date of election was on or |
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after January 1, 2014, but before January 1, 2021, an adjustment of |
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two percent. |
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(g) The board of trustees shall determine the eligibility |
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for and the amount of any adjustment in monthly annuities in |
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accordance with this section. |
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SECTION 2. Section 825.402, Government Code, is amended to |
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read as follows: |
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Sec. 825.402. RATE OF MEMBER CONTRIBUTIONS. The rate of |
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contributions for each member of the retirement system is: |
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(1) five percent of the member's annual compensation |
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or $180, whichever is less, for service rendered after August 31, |
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1937, and before September 1, 1957; |
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(2) six percent of the first $8,400 of the member's |
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annual compensation for service rendered after August 31, 1957, and |
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before September 1, 1969; |
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(3) six percent of the member's annual compensation |
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for service rendered after August 31, 1969, and before the first day |
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of the 1977-78 school year; |
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(4) 6.65 percent of the member's annual compensation |
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for service rendered after the last day of the period described by |
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Subdivision (3) and before September 1, 1985; |
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(5) 6.4 percent of the member's annual compensation |
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for service rendered after August 31, 1985, and before September 1, |
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2014; |
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(6) 6.7 percent of the member's annual compensation |
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for service rendered after August 31, 2014, and before September 1, |
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2015; |
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(7) 7.2 percent of the member's annual compensation |
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for service rendered after August 31, 2015, and before September 1, |
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2016; |
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(8) 7.7 percent of the member's annual compensation |
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for service rendered after August 31, 2016, and before September 1, |
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2017; |
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(9) for compensation paid on or after September 1, |
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2017, and before September 1, 2019, the lesser of: |
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(A) 7.7 percent of the member's annual |
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compensation; or |
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(B) a percentage of the member's annual |
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compensation equal to 7.7 percent reduced by one-tenth of one |
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percent for each one-tenth of one percent that the state |
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contribution rate for the fiscal year to which the compensation |
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relates is less than the state contribution rate established for |
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the 2015 fiscal year; |
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(10) for compensation paid on or after September 1, |
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2019, and before September 1, 2021, the lesser of: |
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(A) 7.7 percent of the member's annual |
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compensation; or |
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(B) a percentage of the member's annual |
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compensation equal to 7.7 percent reduced by one-tenth of one |
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percent for each one-tenth of one percent that the state |
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contribution rate for the fiscal year to which the compensation |
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relates is less than the state contribution rate established for |
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that fiscal year under Section 825.404(a-2); |
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(11) for compensation paid on or after September 1, |
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2021, and before September 1, 2023, the lesser of: |
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(A) eight percent of the member's annual |
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compensation; or |
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(B) a percentage of the member's annual |
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compensation equal to eight percent reduced by one-tenth of one |
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percent for each one-tenth of one percent that the state |
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contribution rate for the fiscal year to which the compensation |
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relates is less than the state contribution rate established for |
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that fiscal year under Section 825.404(a-2); and |
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(12) for compensation paid on or after September 1, |
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2023, the lesser of: |
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(A) 9.00 [8.25] percent of the member's annual |
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compensation; or |
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(B) a percentage of the member's annual |
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compensation equal to 9.00 [8.25] percent reduced by one-tenth of |
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one percent for each one-tenth of one percent that the state |
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contribution rate for the fiscal year to which the compensation |
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relates is less than the state contribution rate established for |
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that fiscal year under Section 825.404(a-2). |
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SECTION 3. Section 825.404(a-2), Government Code, is |
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amended to read as follows: |
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(a-2) The state contribution required by Subsection (a) is: |
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(1) for the fiscal years beginning on September 1, |
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2019, and September 1, 2020, 7.5 percent of the aggregate annual |
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compensation of all members of the retirement system during the |
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applicable fiscal year; |
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(2) for the fiscal year beginning on September 1, |
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2021, 7.75 percent of the aggregate annual compensation of all |
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members of the retirement system during that fiscal year; |
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(3) for the fiscal year beginning on September 1, |
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2022, eight percent of the aggregate annual compensation of all |
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members of the retirement system during that fiscal year; and |
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(4) for the fiscal year beginning on September 1, |
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2023, and each subsequent fiscal year, 9.00 [8.25] percent of the |
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aggregate annual compensation of all members of the retirement |
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system during that fiscal year. |
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SECTION 4. Subchapter E, Chapter 825, Government Code, is |
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amended by adding Section 825.4041 to read as follows: |
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Sec. 825.4041. LEGACY PAYMENTS. (a) In addition to the |
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state contributions required by this subtitle, each fiscal year the |
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state shall make an actuarially determined payment in the amount |
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necessary to amortize the system's unfunded actuarial liabilities |
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by not later than the fiscal year ending August 31, 2054. |
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(b) Before each regular legislative session, the retirement |
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system shall provide the Legislative Budget Board with the amount |
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necessary to make the actuarially determined payment required under |
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Subsection (a). The director of the Legislative Budget Board, |
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under the direction of the Legislative Budget Board, shall include |
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that payment in the general appropriations bill prepared for |
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introduction at each regular legislative session under Section |
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322.008. This subsection expires September 1, 2055. |
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SECTION 5. (a) Subject to Subsection (i) of this section |
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and Section 821.006, Government Code, the Teacher Retirement System |
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of Texas shall make a one-time supplemental payment of a retirement |
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or death benefit, as provided by this section. |
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(b) The supplemental payment is payable not later than |
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February 2024 and, to the extent practicable, on a date or dates |
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that coincide with the regular annuity payment payable to each |
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eligible annuitant. |
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(c) The amount of the supplemental payment is $5,000. |
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(d) The supplemental payment is payable without regard to |
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any forfeiture of benefits under Section 824.601, Government Code. |
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The Teacher Retirement System of Texas shall make applicable tax |
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withholding and other legally required deductions before |
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disbursing the supplemental payment. A supplemental payment under |
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this section is in addition to and not in lieu of the regular |
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monthly annuity payment to which the eligible annuitant is |
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otherwise entitled. |
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(e) Subject to Subsection (f) of this section, to be |
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eligible for the supplemental payment, a person must be, for the |
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calendar month immediately prior to the calendar month in which the |
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Teacher Retirement System of Texas issues the one-time supplemental |
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payment in accordance with Subsection (b) of this section, and |
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disregarding any forfeiture of benefits under Section 824.601, |
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Government Code, an annuitant who is at least 70 years of age and |
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eligible to receive: |
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(1) a standard retirement annuity payment; |
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(2) an optional retirement annuity payment as either a |
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retiree or beneficiary; |
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(3) a life annuity payment under Section |
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824.402(a)(4), Government Code; |
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(4) an annuity for a guaranteed period of 60 months |
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under Section 824.402(a)(3), Government Code; or |
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(5) an alternate payee annuity payment under Section |
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804.005, Government Code. |
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(f) The supplemental payment is in addition to the |
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guaranteed number of payments under Section 824.204(c)(3) or (4), |
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Section 824.308(c)(3) or (4), or Section 824.402(a)(3), Government |
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Code, and may not be counted as one of the guaranteed monthly |
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payments. |
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(g) The supplemental payment does not apply to payments |
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under: |
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(1) Section 824.304(a), Government Code, relating to |
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disability retirees with less than 10 years of service credit; |
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(2) Section 824.804(b), Government Code, relating to |
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participants in the deferred retirement option plan with regard to |
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payments from their deferred retirement option plan accounts; |
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(3) Section 824.501(a), Government Code, relating to |
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retiree survivor beneficiaries who receive a survivor annuity in an |
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amount fixed by statute; or |
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(4) Section 824.404(a), Government Code, relating to |
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active member survivor beneficiaries who receive a survivor annuity |
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in an amount fixed by statute. |
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(h) The board of trustees of the Teacher Retirement System |
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of Texas shall determine the eligibility for and the amount and |
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timing of a supplemental payment and the manner in which the payment |
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is made. |
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(i) The Teacher Retirement System of Texas is required to |
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make a one-time supplemental payment of benefits under this section |
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only if the board of trustees of the Teacher Retirement System of |
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Texas finds that the legislature appropriated money to the |
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retirement system in an amount sufficient to provide the payment. |
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The amount appropriated by the legislature to provide the payment |
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must be in addition to the amount the state is required to |
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contribute to the retirement system under Section 825.404, |
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Government Code. If the board of trustees of the Teacher Retirement |
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System of Texas finds that the retirement system did not receive the |
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full amount appropriated by the legislature to provide a one-time |
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supplemental payment of benefits under this section, the retirement |
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system may not make the payment. |
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(j) If the board of trustees of the Teacher Retirement |
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System determines that the appropriation provided by the |
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legislature for the one-time supplemental payment of benefits is |
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different from the amount required to issue the one-time |
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supplemental payment of benefits under this section, the |
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comptroller, after the end of the fiscal year, shall make |
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adjustments in the teacher retirement fund and the general revenue |
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fund so that the total transfers during the year equal the total |
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amount of the funds required for the one-time supplemental payment |
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of benefits. This transfer of funds is in addition to and separate |
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from the amount the state is required to contribute to the |
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retirement system under Section 825.404, Government Code. |
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SECTION 7. Section 824.702, Government Code, is repealed. |
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SECTION 8. This Act takes effect September 1, 2023, but only |
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if the constitutional amendment proposed by the 88th Legislature, |
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Regular Session, 2023, authorizing the legislature to provide |
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one-time or ongoing benefit enhancements to eligible annuitants of |
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the Teacher Retirement System of Texas, including a one-time |
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transfer of funds for that purpose, is approved by the voters. If |
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that proposed constitutional amendment is not approved by the |
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voters, this Act has no effect. |