73R6347 SOS-F By Conley H.B. No. 2066 Substitute the following for H.B. No. 2066: By McCoulskey C.S.H.B. No. 2066 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the retirement system for fire fighters and police 1-3 officers in certain municipalities. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 ARTICLE 1. GENERAL PROVISIONS 1-6 SECTION 1.01. PURPOSE. The purpose of the fund is to 1-7 provide for the protection of pensions in a municipality to which 1-8 this Act applies for fire fighters and police officers and their 1-9 beneficiaries because of the hazardous nature of the professions of 1-10 fire fighting and law enforcement. 1-11 SECTION 1.02. DEFINITIONS. In this Act: 1-12 (1) "Board" means the board of trustees of a fund to 1-13 which this Act applies. 1-14 (2) "Fund" means the fire fighters and police officers 1-15 pension fund of a municipality to which this Act applies. 1-16 (3) "Retirement annuity" means monthly pension 1-17 benefits. 1-18 (4) "Surviving spouse" means a widow or a widower. 1-19 SECTION 1.03. APPLICABILITY. This Act applies to paid fire 1-20 and police departments of a municipality with a population between 1-21 750,000 and 1,000,000, according to the most recent federal census. 1-22 SECTION 1.04. STATUTORY TRUST. (a) The fund is a statutory 1-23 trust and is not a subdivision of government. 1-24 (b) The board shall hold in trust the assets of the fund for 2-1 the benefit of the members and retirees of the fund and their 2-2 beneficiaries and for defraying reasonable administrative expenses 2-3 of the fund. 2-4 (c) The fund may not be diverted, transferred, or used for 2-5 any purpose inconsistent with this Act and with the instruments 2-6 governing the fund. 2-7 (d) A public or private agency or authority may not alter or 2-8 impair any contract made by the board or under the authority or 2-9 direction of the board. 2-10 SECTION 1.05. EXEMPTIONS. A retirement annuity from the 2-11 fund is exempt from garnishment, assignment, attachment, judgments, 2-12 other legal process, and inheritance or other taxes established by 2-13 this state. 2-14 SECTION 1.06. OTHER PENSION SYSTEM ESTABLISHED BY STATE LAW. 2-15 Notwithstanding any other law, if the employees of the fire or 2-16 police department who have been members of the fund are included in 2-17 another pension system established by state law, the board shall 2-18 act for any similar board created by that law with regard to the 2-19 receipt and payment of amounts owed to the employees under this 2-20 Act. Employees of a department who are members of the fund and are 2-21 not included in the other pension system may not participate in any 2-22 payment under this section. 2-23 ARTICLE 2. ADMINISTRATIVE PROVISIONS 2-24 SECTION 2.01. BOARD OF TRUSTEES. (a) The fund is governed 2-25 by a board of trustees consisting of the following nine members: 2-26 (1) the mayor of a municipality to which this Act 2-27 applies; 3-1 (2) two members of the governing body of a 3-2 municipality to which this Act applies, appointed by that governing 3-3 body; 3-4 (3) two active fire fighters below the rank of fire 3-5 chief, elected by secret ballot by majority vote of the members of 3-6 the fire department who are contributing members of the fund; 3-7 (4) two active police officers below the rank of 3-8 police chief, elected by secret ballot by majority vote of the 3-9 members of the police department who are contributing members of 3-10 the fund; 3-11 (5) a retiree or beneficiary representative of the 3-12 fire department, elected by secret ballot by majority vote of the 3-13 retirees, or the surviving spouses of the retirees, from the fire 3-14 department; and 3-15 (6) a retiree or beneficiary representative of the 3-16 police department, elected by secret ballot by majority vote of the 3-17 retirees, or the surviving spouses of the retirees, from the police 3-18 department. 3-19 (b) The board, through its secretary, shall administer the 3-20 required elections of the retiree or beneficiary representatives by 3-21 mailing ballots to out-of-town retirees or beneficiaries. Only 3-22 retirees and surviving spouses of members properly enrolled on the 3-23 pension rolls are eligible to be elected as retiree or beneficiary 3-24 representatives. 3-25 (c) The fund is independent of the control of a municipality 3-26 to which this Act applies. 3-27 SECTION 2.02. TERMS OF TRUSTEES. (a) The mayor of a 4-1 municipality to which this Act applies serves on the board for the 4-2 term of the mayor's office. 4-3 (b) The two members of the municipal governing body serve on 4-4 the board for the term of the office to which they are elected. 4-5 (c) The two active fire fighters below the rank of fire 4-6 chief serve on the board for staggered four-year terms, with one 4-7 member's term expiring every two years. 4-8 (d) The two active police officers below the rank of police 4-9 chief serve on the board for staggered four-year terms, with one 4-10 member's term expiring every two years. 4-11 (e) The retiree or beneficiary representatives serve on the 4-12 board for staggered four-year terms, with one member's term 4-13 expiring every two years. 4-14 SECTION 2.03. REMOVAL OF TRUSTEES. (a) The members of the 4-15 board who are fire fighters or police officers may be removed by a 4-16 vote of the membership of their respective departments. 4-17 (b) The members of the board who are retiree or beneficiary 4-18 representatives may be removed by a vote of the group eligible to 4-19 elect them. 4-20 (c) A petition for removal under this section must be filed 4-21 with the board within 45 days after the date the first signature on 4-22 the petition has been obtained. A signature is invalid if it is 4-23 not dated. 4-24 (d) A removal election under this section must be held 4-25 within 30 days after the date the board certifies that a proper 4-26 petition for a removal election has been signed by at least 20 4-27 percent of the membership from which the trustee was elected. A 5-1 trustee's term of service ends on the entry of an order by the 5-2 board declaring the results of a removal election under this 5-3 section to favor removal. 5-4 (e) On the date the board enters an order under Subsection 5-5 (d) of this section, the board shall call a special election to be 5-6 held not less than 20 nor more than 30 days after that date to fill 5-7 the vacancy for the unexpired term of the trustee who was removed. 5-8 The trustee who was removed is not eligible to run in the special 5-9 election but is eligible to run in all subsequent board elections 5-10 for the category in which the trustee was removed. 5-11 SECTION 2.04. OFFICERS. (a) The board shall elect a 5-12 chairman, a vice-chairman, and a secretary. 5-13 (b) The treasurer of the board is the treasurer of a 5-14 municipality to which this Act applies. 5-15 SECTION 2.05. EMPLOYEES. The board may employ an executive 5-16 director and staff as needed to administer the fund. 5-17 SECTION 2.06. MEETINGS. The board shall hold regular 5-18 monthly meetings and special meetings at the call of the chairman 5-19 or on written demand by a majority of the members of the board. 5-20 SECTION 2.07. COMMITTEES OF BOARD. (a) The chairman of the 5-21 board may appoint committees that report to the board. 5-22 (b) Only members of the board may be appointed to committees 5-23 under this section. 5-24 (c) Committees shall be composed of not fewer than three nor 5-25 more than five members of the board, except as otherwise 5-26 specifically provided by the board. 5-27 (d) Only members of committees may vote as committee 6-1 members. 6-2 (e) The board may direct staff and advisors to assist the 6-3 committees. 6-4 (f) All members of the board may attend committee meetings. 6-5 (g) Members of committees serve at the pleasure of the 6-6 board. 6-7 (h) Permanent or standing committees may not be appointed. 6-8 ARTICLE 3. GENERAL POWERS AND DUTIES OF BOARD 6-9 SECTION 3.01. GENERAL POWERS AND DUTIES OF BOARD. (a) The 6-10 board has complete authority and power to: 6-11 (1) administer the fund; 6-12 (2) order payments from the fund as required by this 6-13 Act; and 6-14 (3) control the fund independently. 6-15 (b) The board shall adopt rules relating to: 6-16 (1) the disbursement of the fund's assets; 6-17 (2) the designation of beneficiaries of the fund; and 6-18 (3) the name of the board and the fund. 6-19 (c) The board shall report annually to the governing body of 6-20 the municipality regarding the condition of the fund and the 6-21 receipts and disbursements of the fund. 6-22 SECTION 3.02. APPLICATIONS; HEARINGS. (a) The board shall 6-23 consider all cases for membership in the fund and for the 6-24 retirement and benefits of the members of the fund and all 6-25 applications for benefits by surviving spouses, children, and 6-26 dependent parents. 6-27 (b) The board shall give notice to persons asking for 7-1 membership in the fund or for a benefit to appear before the board 7-2 and offer sworn evidence. 7-3 (c) Any contributing member of the fund who is in good 7-4 standing in the fire or police department may: 7-5 (1) appear in person or by attorney to contest the 7-6 application for membership participation in the fund or for an 7-7 annuity or benefit by any person claiming to be entitled to an 7-8 annuity or benefit, either as a member or beneficiary; and 7-9 (2) offer supporting testimony. 7-10 (d) The chairman of the board may issue process for 7-11 witnesses, administer oaths to those witnesses, and examine any 7-12 witness in any manner affecting retirement or a benefit under this 7-13 Act. The process for witnesses may be served on any member of the 7-14 fire or police department. On the failure of any witness to attend 7-15 and testify, that person may be compelled to attend and testify as 7-16 in any judicial proceeding, according to the practice in a justice 7-17 court. 7-18 SECTION 3.03. ORDERS FOR DISBURSEMENTS. (a) The board 7-19 shall issue orders for disbursements signed by the chairman or 7-20 vice-chairman of the board and the secretary of the board to the 7-21 appropriate persons. The order shall state the purposes for the 7-22 payments. The board shall keep a record of those orders. 7-23 (b) At each monthly board meeting, the board shall send to 7-24 the treasurer of the board a written list of persons entitled to 7-25 the payment from the fund, stating the amount and reason for 7-26 payment. The list must be certified and signed by the chairman or 7-27 vice-chairman of the board and the secretary of the board. 8-1 (c) The fund may not be disbursed without a record vote of 8-2 the board. 8-3 (d) A quorum of the board is five members. When a quorum is 8-4 present, action of the board that requires a vote may be taken by a 8-5 majority of the members present. 8-6 ARTICLE 4. MEMBERSHIP AND CONTRIBUTIONS 8-7 SECTION 4.01. MEMBERSHIP. (a) A person becomes a member of 8-8 the fund as a condition of employment if the person: 8-9 (1) has been properly appointed and enrolled as a fire 8-10 fighter or police officer of a municipality to which this Act 8-11 applies in a position or office established and classified by 8-12 municipal ordinance; 8-13 (2) has served the probationary period for the 8-14 position; 8-15 (3) has served for six months as a fire fighter or 8-16 police officer of the municipality; and 8-17 (4) was not younger than 18 and had not attained the 8-18 age of 36 at the time of appointment. 8-19 (b) The drawing of compensation by an officer or employee in 8-20 the fire or police department for service in that department does 8-21 not of itself make that person a member of the fund. 8-22 (c) The regularity of an appointment as a fire fighter or 8-23 police officer of a municipality to which this Act applies may not 8-24 be presumed from the serving of the full probationary period, if 8-25 any. The service of the probationary period by an officer or 8-26 employee as a fire fighter or police officer of a municipality to 8-27 which this Act applies does not constitute the creation of a 9-1 position or office to which a proper appointment has been made for 9-2 purposes of this Act. 9-3 SECTION 4.02. REINSTATEMENT. A former fund member who has 9-4 reentered the fire or police department may not be barred from 9-5 membership in the fund because of age as long as the member can 9-6 qualify for a 30-year pension on or before the member's 65th 9-7 birthday. 9-8 SECTION 4.03. MILITARY SERVICE. (a) A member of the fund 9-9 who enters active military service may not: 9-10 (1) be required to make the monthly payments into the 9-11 fund provided by this Act as long as the member is engaged in 9-12 active military service; or 9-13 (2) lose any seniority rights or retirement benefits 9-14 provided by this Act by virtue of that military service. 9-15 (b) Not later than the 90th day after the date of the 9-16 member's reinstatement to an active status in the fire or police 9-17 department, the member must file with the secretary of the board a 9-18 written statement of intent to pay into the fund an amount equal to 9-19 what the member would have paid if the member had remained on 9-20 active status in the department during the period of the member's 9-21 absence in military service. 9-22 (c) The member must make the payment described by Subsection 9-23 (b) of this section in full within an amount of time after the 9-24 member's return that is equal to twice the amount of time the 9-25 member was absent, except that the maximum period for payment may 9-26 not exceed four years. 9-27 (d) Except as provided by Subsection (f) of this section, if 10-1 the member does not comply with Subsections (b) and (c) of this 10-2 section, the member shall lose all credit toward the member's 10-3 retirement annuity for the length of time the member was engaged in 10-4 active military service. 10-5 (e) The amount of credit purchased under this section may 10-6 not exceed the length of the active military service authorized by 10-7 law. 10-8 (f) If a member does not make the payment required under 10-9 Subsection (c) of this section within the required amount of time 10-10 and the member is eligible for credit under federal law, the member 10-11 shall also pay interest, compounded annually, on the then current 10-12 rate of a member's contribution from the date the payment was 10-13 required to the date the payment was made. The board shall set the 10-14 rate of interest. 10-15 (g) A disability resulting from either injury or disease 10-16 contracted while engaged in military service does not entitle a 10-17 member to a disability retirement annuity. 10-18 (h) A municipality to which this Act applies shall 10-19 double-match payments made to the fund under this section. 10-20 SECTION 4.04. MEMBER CONTRIBUTIONS. There shall be deducted 10-21 from the wages of each fire fighter and police officer in the 10-22 employment of a municipality to which this Act applies a percentage 10-23 of the member's total salary, excluding overtime pay, according to 10-24 the following schedule: 10-25 (1) 11.16 percent for full pay periods after September 10-26 30, 1993, but before October 1, 1994; 10-27 (2) 11.32 percent for full pay periods after September 11-1 30, 1994, but before October 1, 1995; 11-2 (3) 11.50 percent for full pay periods after September 11-3 30, 1995, but before October 1, 1996; 11-4 (4) 11.66 percent for full pay periods after September 11-5 30, 1996, but before October 1, 1997; 11-6 (5) 11.82 percent for full pay periods after September 11-7 30, 1997, but before October 1, 1998; 11-8 (6) 12 percent for full pay periods after September 11-9 30, 1998, but before October 1, 1999; 11-10 (7) 12.16 percent for full pay periods after September 11-11 30, 1999, but before October 1, 2000; 11-12 (8) 12.32 percent for full pay periods after September 11-13 30, 2000, but before October 1, 2001; and 11-14 (9) 12.50 percent for full pay periods after September 11-15 30, 2001. 11-16 SECTION 4.05. MUNICIPAL CONTRIBUTIONS. (a) A municipality 11-17 to which this Act applies shall pay into the fund an amount equal 11-18 to double the sum total of all member contributions made in 11-19 accordance with Section 4.04 of this Act. 11-20 (b) The payments into the fund by the municipality, both as 11-21 to deductions and double-matching amounts, shall be made on the 11-22 same day the contributions are deducted from the members' pay. 11-23 (c) Any donations made to the fund, and all funds received 11-24 from any source for the fund, shall be deposited in the fund at the 11-25 earliest opportunity. 11-26 (d) The municipality's double-matching amount under this 11-27 section is in place of all other payments previously required by 12-1 law to be made by the municipality. 12-2 (e) The municipal contribution and retirement annuities are 12-3 a part of the compensation for services rendered to the 12-4 municipality. This Act is of the essence of the contract of 12-5 employment and appointment of the fire fighters and police officers 12-6 of a municipality to which this Act applies. 12-7 SECTION 4.06. DEFICIENCY PAYMENT BY MUNICIPALITY. A 12-8 municipality to which this Act applies shall pay the deficiency, if 12-9 any, between the amount available to pay all retirement annuities 12-10 and other benefits owed under this Act and the amount required by 12-11 this Act to pay those benefits. 12-12 SECTION 4.07. NO REFUND OF CONTRIBUTIONS. A member of the 12-13 fund is not entitled to any refund from the fund of any portion of 12-14 the money deducted from the member's pay for the benefit of the 12-15 fund. That money is public money and the property of the fund for 12-16 the benefit of the members qualifying for benefits and for their 12-17 beneficiaries. 12-18 ARTICLE 5. MEMBER BENEFITS 12-19 SECTION 5.01. RETIREMENT BENEFITS. (a) If a member of the 12-20 fund has contributed a portion of that member's salary as provided 12-21 by this Act, and has contributed and served for 20 years or more in 12-22 the fire or police department, the board shall, on the application 12-23 of the member for a retirement annuity, authorize a retirement 12-24 annuity to the member. 12-25 (b) The board shall compute the retirement annuity of a 12-26 member who retires after September 30, 1991, on the basis of the 12-27 average of the member's total salary, excluding overtime pay, for 13-1 the highest three years of the last five years, computed from the 13-2 date of retirement, of the member's pay at the rate of two percent 13-3 for each of the first 20 years served, plus 3-1/2 percent for each 13-4 of the next 10 years served, plus one percent for each of the next 13-5 five years served, with fractional years prorated based on full 13-6 months served as a contributing member, but the annuity may not 13-7 exceed, as of the date of retirement, 80 percent of the average so 13-8 determined. 13-9 (c) A member may not receive an award from the fund for 13-10 service retirement until the member has served at least 20 years in 13-11 the fire or police department and has also contributed the required 13-12 amount of money for at least 20 years. In determining the number 13-13 of years of service in a department, the member shall be given full 13-14 credit for the time the member was actively engaged in military 13-15 service in accordance with Section 4.03 of this Act. Disciplinary 13-16 suspensions of 15 days or less may not be subtracted from a 13-17 member's service credit under this Act if the member has paid into 13-18 the fund within 30 days after the termination date of each 13-19 suspension a sum of money equal to the amount of money that would 13-20 have been deducted from that person's salary during that period of 13-21 suspension if it had not been for that suspension. A municipality 13-22 to which this Act applies shall double-match a payment made under 13-23 this subsection. 13-24 (d) If a member of the fire or police department has served 13-25 for 30 years or more in either department and has contributed a 13-26 portion of that member's salary as provided by this Act for the 13-27 same period, that member is retired automatically from service on 14-1 the member's 65th birthday. 14-2 (e) If, on a member's 65th birthday, the member has served 14-3 less than 30 years in either department and has not contributed a 14-4 portion of that member's salary as provided by this Act for that 14-5 period, the member may continue service and contributions until the 14-6 total service equals and the contributions have been made for 30 14-7 years. 14-8 (f) Except as provided by Subsection (g) of this section, 14-9 members of the fund at the time of their retirement shall receive 14-10 service credit for all unused sick leave accumulated by them under 14-11 Chapter 143, Local Government Code, and its subsequent amendments, 14-12 with fractional years prorated based on full months of sick leave. 14-13 (g) The retirement annuity for a member under Subsection (f) 14-14 of this section may not exceed, as of the date of retirement, 80 14-15 percent of the average, determined under that subsection and under 14-16 the ordinances of a municipality to which this Act applies, that 14-17 exceeds 90 days of accumulated sick leave. 14-18 SECTION 5.02. RETIREMENT BENEFITS AFTER CESSATION OF 14-19 MEMBERSHIP. (a) A person who has qualified for a retirement 14-20 annuity under this Act but who has subsequently ceased to be a 14-21 member of the fund or a properly enrolled member of the fire or 14-22 police department, by whatever means or for whatever reason, is 14-23 entitled to a retirement annuity from the fund that accrued to that 14-24 person before the time that person ceased to be a member of the 14-25 fund or a properly enrolled member of the fire or police department 14-26 if the person, or the person's beneficiary in the event of the 14-27 person's death, files an application for the retirement annuity 15-1 with the board within four years after the date that person ceased 15-2 to be a member of the fund or a properly enrolled member of the 15-3 fire or police department. 15-4 (b) A retirement annuity under Subsection (a) of this 15-5 section begins the first full calendar month after the month in 15-6 which the application is filed with the board. 15-7 (c) The amount of the retirement annuity under Subsection 15-8 (a) of this section is the lesser of: 15-9 (1) the amount established as of the date the person 15-10 ceased to be a member of the fund or a properly enrolled member of 15-11 the fire or police department; or 15-12 (2) the amount established as of the date the person, 15-13 or the person's beneficiary, filed an application under this 15-14 section. 15-15 SECTION 5.03. ELIGIBILITY FOR DISABILITY RETIREMENT. (a) A 15-16 member of the fund is eligible to retire and receive a disability 15-17 retirement annuity if the member: 15-18 (1) makes a written application for disability 15-19 retirement with the board; 15-20 (2) is permanently disabled through injury or disease 15-21 so as to incapacitate the member from the performance of duties and 15-22 has been off active duty for a continuous period of not less than 15-23 30 days before the date of the application for disability 15-24 retirement; and 15-25 (3) is a member in good standing of the fire or police 15-26 department in which the member is employed at the time of 15-27 retirement. 16-1 (b) A member of the fund who has a disability resulting from 16-2 injury or disease incurred while the member was engaged in active 16-3 military service is not entitled to a disability retirement annuity 16-4 based on that disability. 16-5 (c) Except as provided by Subsection (d) of this section, a 16-6 member of the fund who is on suspension and who receives a total 16-7 and permanent disability resulting from an injury or disease 16-8 incurred while the member is on suspension is eligible for a 16-9 disability retirement annuity if the suspended member makes up each 16-10 deducted contribution lost by reason of the suspension not later 16-11 than the 30th day after the date the contribution would have been 16-12 deducted from the member's pay. A municipality to which this Act 16-13 applies shall double-match all contributions made by a member under 16-14 this subsection. 16-15 (d) A member of the fund who is on indefinite suspension is 16-16 not eligible for a disability retirement annuity until the final 16-17 determination of the suspension and all appeals of that 16-18 determination are exhausted. A member of the fund who is on 16-19 indefinite suspension is not entitled to a disability retirement 16-20 annuity if the member is finally discharged. A member of the fund 16-21 who is on indefinite suspension but who is restored to duty or who 16-22 is given a suspension for a specific period is eligible for a 16-23 disability retirement annuity as provided by Subsection (a) of this 16-24 section. 16-25 (e) A member of the fund who applies for disability 16-26 retirement under this section is subject to medical examination as 16-27 determined by the board. 17-1 (f) This section does not affect any rights under Section 17-2 5.02 of this Act. 17-3 SECTION 5.04. DISABILITY RETIREMENT BENEFITS. (a) A member 17-4 who is eligible to receive a disability retirement annuity is 17-5 entitled to receive from the fund 50 percent of the average of the 17-6 member's total salary, excluding overtime pay, for the highest 17-7 three years of the last five years, computed from the date of 17-8 retirement or, if the member has served less than three years 17-9 before the date of retirement, 50 percent of the member's average 17-10 monthly salary, excluding overtime pay, or a theoretical monthly 17-11 average if service is less than a full month. 17-12 (b) All fractional years under this section are prorated 17-13 based on full months served on the fire or police department as a 17-14 contributing member of the fund. 17-15 (c) The amount of 50 percent of the average total salary, 17-16 excluding overtime pay, is the maximum amount of disability 17-17 retirement annuity for total and permanent disability. 17-18 SECTION 5.05. MEDICAL REEXAMINATION AND REDUCTION OF 17-19 DISABILITY RETIREMENT BENEFITS. (a) The board may cause a 17-20 disability retiree to undergo a medical examination or examinations 17-21 by any reputable physician or physicians selected by the board. 17-22 Based on the examination, the board shall determine whether the 17-23 disability retirement annuity shall be continued, decreased, 17-24 restored to the original amount if it had been decreased, or 17-25 discontinued, except that a disability retirement annuity may not 17-26 be discontinued unless the disability retiree has first been 17-27 accepted for reinstatement in that person's former position or 18-1 status in the fire or police department by the chief of the 18-2 respective department. 18-3 (b) For those retired because of disability before August 18-4 30, 1971, the board may change the disability retirement annuity 18-5 provided by this Act, in accordance with any change in the degree 18-6 of disability, except that the percentage used to compute the 18-7 annuity may not, except in the case of discontinuance, be reduced 18-8 to less than two percent of the base pay of a private each month, 18-9 for each year that the retiree has served and contributed a portion 18-10 of salary as provided by this Act, based on the greater of: 18-11 (1) the rate of pay at the time of the original 18-12 granting of the disability retirement annuity; or 18-13 (2) a minimum base pay of $200 each month. 18-14 (c) For those retired because of disability on or after 18-15 August 30, 1971, the disability retirement annuity may not be 18-16 reduced to less than two percent, for each year that the retiree 18-17 has served and contributed a portion of salary, of the average of 18-18 the member's total salary, excluding overtime pay, for the highest 18-19 three years of the last five years, computed from the date of 18-20 retirement, or if the member has served less than three years 18-21 before the date of retirement, 50 percent of the member's average 18-22 monthly salary, excluding overtime pay, or a theoretical monthly 18-23 average if service is less than a full month. All fractional years 18-24 shall be prorated based on full months served on the fire or police 18-25 department as a contributing member of the fund before the date of 18-26 retirement. 18-27 (d) If a disability retiree, after notice, fails to undergo 19-1 a medical examination as provided by this section, the board may 19-2 reduce or entirely discontinue the retiree's disability annuity 19-3 payments. 19-4 SECTION 5.06. REMOVAL OF DISABILITY AND WAIVER ON 19-5 REINSTATEMENT. (a) If a disability retiree applies for 19-6 reinstatement to the department from which that person retired, the 19-7 disability retiree, in addition to complying with any applicable 19-8 civil service laws, shall file a written application with the board 19-9 for a discontinuance of that person's disability retirement 19-10 annuity, subject to medical examination, indicating that the person 19-11 has recovered from the disability for which that person has been 19-12 receiving disability retirement annuity payments, and certifying to 19-13 the board that the chief of the department from which that person 19-14 was retired approves that person's reinstatement. 19-15 (b) The applicant must execute a waiver on a form prescribed 19-16 by the board in which the applicant waives a second disability 19-17 retirement annuity resulting from the same disability that was the 19-18 basis of the first disability at a higher rate than the applicant 19-19 was receiving at the time of the reinstatement for a period of 19-20 three years after reinstatement. After three years of reinstated 19-21 service, any subsequent disability retirement annuity is computed 19-22 as any other disability retirement annuity. 19-23 (c) If the applicant is required to undergo retraining and 19-24 is compensated during a period before being officially reinstated, 19-25 the applicant's monthly disability retirement annuity shall be 19-26 reduced by the amount of any monthly departmental payroll benefit, 19-27 to the extent that the latter is greater. 20-1 (d) The board may approve the discontinuance of a disability 20-2 retirement annuity as provided by this Act. 20-3 SECTION 5.07. OUTSIDE INCOME PENSION REDUCTION. (a) The 20-4 board shall require each disability retiree retiring after August 20-5 22, 1979, to provide the board annually not later than May 1 of 20-6 each year with a true and complete copy of the retiree's income tax 20-7 return for the previous year. 20-8 (b) If the retiree received income from other employment, 20-9 including self-employment, during the preceding year, the board may 20-10 reduce the retiree's disability retirement annuity by the amount of 20-11 $1 for each month for each $2 of income earned by the retiree from 20-12 the other employment during each month of the previous year, except 20-13 that the disability retirement annuity may not be decreased below 20-14 an amount based on two percent of the retiree's average salary, 20-15 excluding overtime pay, computed at the time of retirement under 20-16 Section 5.04 of this Act for each year of service in the 20-17 department. 20-18 SECTION 5.08. DISCRETION OF DEPARTMENT CHIEF FOR EMPLOYMENT 20-19 OF DISABILITY RETIREE. (a) A disability retirement annuity may 20-20 not be granted or continued if the chief of the member's department 20-21 will provide the member employment within the department 20-22 commensurate with that person's physical and mental capabilities. 20-23 (b) A determination under this section is solely within the 20-24 discretion of the department chief and must be reasonably 20-25 exercised. 20-26 SECTION 5.09. COST-OF-LIVING INCREASES. (a) At or before 20-27 its regular meeting in the month of March, the board annually shall 21-1 review the Consumer's Price Index for Moderate Income Families in 21-2 Large Cities--All Items or the nearest equivalent published by the 21-3 United States Bureau of Labor Statistics for the preceding calendar 21-4 year. If that index shows an increase during the preceding 21-5 calendar year in the cost of living as compared with that index at 21-6 the close of the previous year, the board shall order an increase 21-7 of all retirement annuities by the number of full percentage points 21-8 closest to the exact amount of the increase of that index, except 21-9 that any increased retirement annuities are payable only at the 21-10 rate of 75 percent of the applicable cost-of-living percentage for 21-11 those retirees, and the beneficiaries of those retirees, who were 21-12 retired on and after August 30, 1971. 21-13 (b) The retirement annuities to which this section applies 21-14 shall be computed as of the month of January before that March 21-15 board meeting and shall continue in effect for at least one full 21-16 year until there has been an additional increase to that 21-17 cost-of-living index and the board enters another order as provided 21-18 by this section. 21-19 (c) The cost-of-living increase paid to any retiree or 21-20 beneficiary of a member or retiree during the first full year after 21-21 the effective date of the retirement shall be prorated on the basis 21-22 of full months retired. 21-23 SECTION 5.10. INCREASE IN EXISTING RETIREMENT ANNUITIES. 21-24 Effective October 1, 1993, all retirement annuities for members who 21-25 retired before October 1, 1989, or to the combined beneficiaries of 21-26 the retirees, are increased by $100 per month. 21-27 SECTION 5.11. COORDINATION WITH FEDERAL LAW. (a) A member 22-1 or beneficiary of a member of the fund may not accrue a service 22-2 retirement annuity; disability retirement annuity; death benefit, 22-3 whether death occurs in the line of duty or otherwise; or any other 22-4 benefit under this Act in excess of the benefit limits applicable 22-5 to the fund under Section 415 of the code. The board shall reduce 22-6 the amount of any benefit that exceeds those limits by the amount 22-7 of the excess. 22-8 (b) Annual compensation for which benefits may be paid under 22-9 this Act may not exceed $200,000 for each member or another limit 22-10 applicable under Section 401(a)(17) of the code. 22-11 (c) Accrued benefits under this Act become 100 percent 22-12 vested for all members on termination of the fund or on occurrence 22-13 of another event described in Section 401(a)(17) of the code and 22-14 become 100 percent vested for a member on the date the member 22-15 becomes 65 years of age and has completed 20 years of service. 22-16 (d) Amounts representing forfeited nonvested benefits of 22-17 terminated members may not be used to increase benefits payable 22-18 from the fund but may be used to reduce contributions for future 22-19 plan years. 22-20 (e) Distribution of benefits must begin not later than April 22-21 1 of the year following the calendar year during which the member 22-22 becomes 70-1/2 years of age and must otherwise conform to Section 22-23 401(a)(9) of the code. 22-24 (f) The fund shall be administered in a manner complying 22-25 with Section 401(a)(25) of the code, relating to actuarial 22-26 assumptions. 22-27 (g) This section applies to any benefit regardless of when 23-1 accrued. 23-2 (h) The board may adopt rules to administer this section. A 23-3 rule adopted by the board under this subsection is final and 23-4 binding. 23-5 (i) In this section, "code" means the Internal Revenue Code 23-6 of 1986 and its subsequent amendments. 23-7 ARTICLE 6. DEPENDENT'S BENEFITS 23-8 SECTION 6.01. MEMBER'S BENEFICIARY RIGHTS. A member of the 23-9 fund has, in addition to all rights accruing from the person's 23-10 membership, the same right to receive benefits as a beneficiary 23-11 that a nonmember who is a beneficiary has in similar circumstances 23-12 if the member's spouse also is a member of the fund. 23-13 SECTION 6.02. DEATH BENEFIT ANNUITY FOR SURVIVING SPOUSES 23-14 AND CHILDREN. (a) If a contributing member in good standing or a 23-15 retiree dies before or after retirement, leaving a surviving 23-16 spouse, one or more children under the age of 17 years, or one or 23-17 more unmarried children 17 years of age or older but under 19 years 23-18 of age who attend a public or private educational institution, the 23-19 surviving spouse and the children are entitled to receive from the 23-20 fund the same percentage of the member's average total salary that 23-21 the member would have been entitled to receive as a retirement 23-22 annuity, except that the percentage may not exceed the percentage 23-23 to which a member with 25 years of service credit would be 23-24 entitled. One-half of the death benefit annuity under this 23-25 subsection shall be awarded to the eligible surviving spouse and 23-26 one-half to the eligible child or children. 23-27 (b) A child resulting from any marriage occurring after the 24-1 date of retirement of the member from a spouse who was not the 24-2 spouse on the date of retirement is not entitled to a retirement 24-3 annuity under this Act. 24-4 (c) If there are no children, the surviving spouse is 24-5 entitled to receive an amount not to exceed 57.50 percent of the 24-6 average total salary, excluding overtime pay, of the deceased 24-7 member computed as provided under Subsection (a) of this section. 24-8 (d) If there is no surviving spouse, the children are 24-9 entitled to receive not more than 28.75 percent of the average 24-10 total salary computed as provided under Subsection (a) of this 24-11 section, except that if the board determines on investigation that 24-12 the eligible children are destitute, the board may increase the 24-13 death benefit annuity to an amount not to exceed 40 percent of that 24-14 average total salary. The amount awarded under this subsection to 24-15 any child shall be paid by the board to the legal guardian of the 24-16 child. 24-17 (e) A surviving spouse of a member of the fund who died 24-18 before retirement is entitled to at least 50 percent of the 24-19 member's average total salary that the member would have been 24-20 entitled to receive as a retirement annuity. 24-21 (f) A surviving spouse of a member of the fund is entitled 24-22 to a death benefit annuity based on the member's retirement 24-23 benefits in effect on the date of retirement. 24-24 (g) A child of the member who is so mentally or physically 24-25 disabled as to be incapable of being self-supporting to any extent, 24-26 if otherwise qualified and regardless of age, has the rights of a 24-27 child under 17 years of age, except that any death benefit annuity 25-1 paid under this subsection to any mentally or physically disabled 25-2 child shall be reduced to the extent of any state pension or aid, 25-3 including Medicaid, or any state-funded assistance received by the 25-4 child, regardless of whether the funds were made available to the 25-5 state by the federal government. In no other instance under this 25-6 Act is a child entitled to any benefit after becoming 19 years of 25-7 age. 25-8 SECTION 6.03. LIMITATION ON AMOUNT OF SURVIVING SPOUSE'S 25-9 DEATH BENEFIT ANNUITY. (a) The death benefit annuity of a 25-10 surviving spouse of a member of the fund who is killed in the line 25-11 of duty is governed by this section. 25-12 (b) The board shall consider the finding of a municipality 25-13 to which this Act applies that a member was killed in the line of 25-14 duty as a guideline for its determination in applying this section. 25-15 On an application for survivor's benefits by a surviving spouse or 25-16 child, the fund shall pay the normal benefits payable under Section 25-17 6.02 of this Act. When a benefit is payable under this section, 25-18 the death benefit annuity shall be recomputed, applying Subsection 25-19 (c) of this section, and any deficiency payment shall be paid to 25-20 the eligible beneficiaries. 25-21 (c) Notwithstanding the formulas for computing the total 25-22 amounts of annuities otherwise provided by this section, if a 25-23 member is killed in the line of duty, the member's surviving spouse 25-24 and dependent children are entitled to a death benefit annuity 25-25 equal to the total salary, excluding overtime pay, of the member at 25-26 the time of death. Rules provided by this section relating to 25-27 qualification and disqualification for and apportionment of 26-1 benefits apply to a death benefit annuity computed under this 26-2 subsection. A death benefit annuity computed under this subsection 26-3 is subject to the same cost-of-living adjustments that apply to 26-4 pensions for service retirement. 26-5 SECTION 6.04. REMARRIAGE; BENEFITS AFTER TERMINATION OF 26-6 MARRIAGE. (a) The right of a surviving spouse or dependent child 26-7 to annuity payments under this Act terminates on the remarriage of 26-8 the surviving spouse, either statutory or common law, or on the 26-9 marriage of the child, as applicable. 26-10 (b) If the remarried surviving spouse or married dependent 26-11 child becomes unmarried, that person is entitled, on application, 26-12 to the greater of 75 percent of the annuity that was in effect on 26-13 the date of termination or a minimum annuity of $800 each month for 26-14 as long as that person remains unmarried. 26-15 SECTION 6.05. AFFIDAVIT OF MARITAL STATUS. (a) A surviving 26-16 spouse, a dependent beneficiary under this Act, or the guardian of 26-17 a surviving spouse or dependent beneficiary may be required by the 26-18 board to file an affidavit annually concerning the person's marital 26-19 status, or the marital status of the person's wards, or to give an 26-20 affidavit to the board at other times when probable cause exists to 26-21 suspect the possibility of marriage. 26-22 (b) If the surviving spouse, dependent beneficiary, or 26-23 guardian fails or refuses to file an affidavit required under 26-24 Subsection (a) of this section, or if an incomplete, incorrect, or 26-25 false affidavit is filed, the board may suspend annuity payments to 26-26 that person indefinitely until the person complies with the 26-27 requests and orders of the board. 27-1 SECTION 6.06. COMMON-LAW MARRIAGES. Common-law marriages 27-2 are not recognized under this Act and benefits may not be conferred 27-3 on common-law spouses as beneficiaries unless a declaration of 27-4 informal marriage was made under Section 1.92, Family Code, and its 27-5 subsequent amendments before the member's death. 27-6 SECTION 6.07. SURVIVING SPOUSE'S RIGHT TO SINGLE 27-7 ENTITLEMENT. Unless otherwise provided by law, a surviving spouse 27-8 is not entitled to more than one annuity from the fund. 27-9 SECTION 6.08. LUMP-SUM DEATH BENEFIT. (a) Except as 27-10 provided by Subsection (b) of this section, a surviving spouse 27-11 whose status as such resulted from any marriage after the date of 27-12 the retirement of the member is entitled to a lump-sum death 27-13 benefit because of the member's death in the amount of: 27-14 (1) $10,000 if the marriage occurred 10 years or more 27-15 before the member's death; 27-16 (2) $7,500 if the marriage occurred 7-1/2 years before 27-17 but less than 10 years before the member's death; 27-18 (3) $5,000 if the marriage occurred five years or more 27-19 but less than 7-1/2 years before the member's death; and 27-20 (4) $2,500 if the marriage occurred 2-1/2 years or 27-21 more but less than five years before the member's death. 27-22 (b) A surviving spouse under this section is not entitled to 27-23 a lump-sum death benefit if a child is entitled to receive benefits 27-24 under this Act. 27-25 SECTION 6.09. DEATH BENEFIT ANNUITIES TO DEPENDENT PARENTS. 27-26 (a) If a contributing member in good standing of the fire or 27-27 police department or a retiree dies before or after retirement and 28-1 leaves no surviving spouse or child but leaves surviving a father 28-2 and mother wholly dependent on that person for support, the 28-3 dependent father and mother are entitled to receive one-third of 28-4 the average total salary, excluding overtime pay, of the deceased 28-5 member based on the same number of years of the member's pay as is 28-6 currently provided for computations of retirement annuities under 28-7 Section 5.01(a) of this Act, the annuity to be equally divided 28-8 between the father and mother as long as they are wholly dependent. 28-9 If there is only one dependent, either father or mother, the board 28-10 shall grant the surviving dependent an annuity not to exceed 28-11 one-fourth that average total salary as computed under this 28-12 subsection. 28-13 (b) The board may, on its own initiative, make a thorough 28-14 investigation, determine the facts as to the dependency with 28-15 respect to an application for benefits made under Subsection (a) of 28-16 this section, and at any time, on the request of any beneficiary or 28-17 any contributor to the fund, reopen any award made to any member or 28-18 dependent of any member who is receiving annuity payments under 28-19 this section and discontinue those payments as to all or any of 28-20 them. The findings of the board under this section, and all 28-21 annuities granted under this section, are final on all parties 28-22 unless set aside or revoked by a court of competent jurisdiction. 28-23 SECTION 6.10. SUSPENSION RIGHTS OF DEPENDENT PARENTS. If a 28-24 member dies who is under suspension at the time of death, including 28-25 an indefinite suspension that has not become final, the member's 28-26 dependent parents have the same rights as any other member under 28-27 this Act. 29-1 SECTION 6.11. DEATH BENEFIT FOR ACTIVE MEMBER'S ESTATE. (a) 29-2 If a member of the fire or police department in active service dies 29-3 and does not leave an eligible surviving spouse, a child under 17 29-4 years of age, a child under 19 years of age who is attending 29-5 school, a mentally or physically disabled child, or a dependent 29-6 father or mother, the estate of the deceased member is entitled to 29-7 a death benefit payment in the amount of $10,000 from the fund. 29-8 (b) The death benefit under this section is not payable if 29-9 the deceased member of the fund is survived by one or more 29-10 beneficiaries. 29-11 ARTICLE 7. INVESTMENTS AND FINANCIAL PROVISIONS 29-12 SECTION 7.01. TREASURER'S DUTIES. (a) All money of the 29-13 fund is payable to the treasurer of the fund for the use of the 29-14 fund. 29-15 (b) The duties imposed on the treasurer under this Act are 29-16 additional duties for which the treasurer is liable under oath and 29-17 bond as the treasurer of a municipality to which this Act applies. 29-18 (c) The treasurer is not entitled to compensation for 29-19 serving as the treasurer of the fund. 29-20 SECTION 7.02. ACCOUNTS. The accounts of the fund and of the 29-21 members shall be kept separately. 29-22 SECTION 7.03. RESERVE RETIREMENT FUND. (a) The board shall 29-23 determine a reasonably safe amount of surplus necessary to defray 29-24 reasonable expenses of administering the fund. 29-25 (b) All other assets shall be designated as reserve 29-26 retirement funds. 29-27 (c) Only the board may invest and manage the reserve 30-1 retirement funds for the sole benefit of the plan participants and 30-2 their beneficiaries. 30-3 SECTION 7.04. INVESTMENT POWERS OF THE BOARD. (a) The 30-4 board shall cause the reserve retirement funds to be invested in a 30-5 manner consistent with the care, skill, and diligence under the 30-6 prevailing circumstances that a prudent person acting in a like 30-7 capacity and familiar with matters of the type would use in the 30-8 conduct of an enterprise with a like character and like aims. 30-9 (b) The board shall diversify the investment of the fund to 30-10 minimize the risk of large losses unless under the circumstances it 30-11 is clearly prudent not to do so. In investing the assets of the 30-12 fund, the board shall be bound by the documents and instruments 30-13 governing the fund. 30-14 (c) The board may directly manage the investments of the 30-15 fund or may choose and contract for professional management 30-16 services. If the fund owns real estate, it may, at its discretion, 30-17 establish corporations described by Section 501(c)(25), Internal 30-18 Revenue Code of 1986 (26 U.S.C. Section 501), and its subsequent 30-19 amendments, to hold title to the real estate. 30-20 (d) The board shall have the ultimate responsibility for the 30-21 investment of the reserve retirement funds. The board may purchase 30-22 securities or engage in limited partnerships or make other 30-23 investments not specifically provided by this Act and shall have 30-24 the authority of exercising discretion in determining the nature, 30-25 type, quality, and size of any investment consistent with the 30-26 investment policies it establishes. 30-27 SECTION 7.05. PROFESSIONAL CONSULTANTS. (a) The board may 31-1 contract for professional investment management services, financial 31-2 consultants, independent auditors, and actuaries. Only the board 31-3 may enter into those contracts and may establish a reasonable fee 31-4 for compensation. 31-5 (b) The board may designate its own custodian or master 31-6 custodian to perform the customary duties involving the safekeeping 31-7 of the assets and the execution of transactions of either domestic 31-8 or foreign securities. The board may engage in a securities 31-9 lending program consistent with the benefits to plan participants 31-10 and their beneficiaries. 31-11 SECTION 7.06. INVESTMENT MANAGER QUALIFICATIONS. In 31-12 appointing investment managers, the board shall require that the 31-13 investment manager be: 31-14 (1) registered under the Investment Advisors Act of 31-15 1940 (15 U.S.C. Section 80b-1 et seq.) and its subsequent 31-16 amendments; 31-17 (2) a bank as defined by that Act; or 31-18 (3) an insurance company qualified to perform 31-19 investment services under the laws of more than one state. 31-20 ARTICLE 8. MISCELLANEOUS PROVISIONS 31-21 SECTION 8.01. REPEALER. Chapter 105, Acts of the 47th 31-22 Legislature, Regular Session, 1941 (Article 6243f, Vernon's Texas 31-23 Civil Statutes), is repealed. 31-24 SECTION 8.02. EFFECTIVE DATE. This Act takes effect October 31-25 1, 1993. 31-26 SECTION 8.03. RESTATEMENT. Unless otherwise expressly 31-27 provided by this Act, this Act is intended to be a restatement of 32-1 Chapter 105, Acts of the 47th Legislature, Regular Session, 1941 32-2 (Article 6243f, Vernon's Texas Civil Statutes), and is not intended 32-3 to impliedly repeal, reduce, or enhance any pension entitlement 32-4 that existed as of September 30, 1993, under that Act or to change 32-5 the meaning of any of the provisions of that Act. 32-6 SECTION 8.04. EMERGENCY. The importance of this legislation 32-7 and the crowded condition of the calendars in both houses create an 32-8 emergency and an imperative public necessity that the 32-9 constitutional rule requiring bills to be read on three several 32-10 days in each house be suspended, and this rule is hereby suspended.