By Johnson                                            H.B. No. 2711
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the administration of, benefits payable by, eligibility
    1-3  for benefits payable by, and credit under programs administered by,
    1-4  the Teacher Retirement System of Texas; prohibiting certain
    1-5  interests in contracts; and providing for the sunset review of the
    1-6  system.
    1-7        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-8        SECTION 1.  Section 821.001, Government Code, is amended by
    1-9  adding Subdivisions (18) and (19) to read as follows:
   1-10              (18)  "Alternate payee" has the meaning assigned that
   1-11  term by Section 804.001.
   1-12              (19)  "Beneficiary" means the person or entity who,
   1-13  under a valid written designation or by law, is entitled to receive
   1-14  benefits payable by the retirement system on the death of a member
   1-15  or annuitant.
   1-16        SECTION 2.  Section 823.401, Government Code, is amended by
   1-17  amending Subsections (c) and (f) and adding Subsection (h) to read
   1-18  as follows:
   1-19        (c)  A member eligible to establish credit under this section
   1-20  is one who has at least five <10> years of service credit in the
   1-21  retirement system for actual service in public schools.
   1-22        (f)  The amount of service credit a member may establish
   1-23  under this section may not exceed the lesser of the number of years
    2-1  of membership service credit the member has in the retirement
    2-2  system for actual service in public schools or 10 years.
    2-3        (h)  A member purchasing out-of-state service credit does not
    2-4  qualify for insurance coverage until the member has 10 or more
    2-5  years of membership service credit for actual service in public
    2-6  schools.
    2-7        SECTION 3.  Section 823.402(e), Government Code, is amended
    2-8  to read as follows:
    2-9        (e)  A member may establish credit under this section by
   2-10  depositing with the retirement system for each year of
   2-11  developmental leave claimed an amount equal to the sum of:
   2-12              (1)  the rate of member contributions required during
   2-13  the <member's most recent> year of <service that preceded the
   2-14  developmental> leave, times the member's annual rate of
   2-15  compensation during the member's most recent year of creditable
   2-16  service that preceded the year of leave <that year>; plus
   2-17              (2)  the amount that the state would have contributed
   2-18  had the member performed membership service during the year of
   2-19  leave at the member's annual rate of compensation during the most
   2-20  recent year of service that preceded the leave; plus
   2-21              (3)  any membership fees in effect during the year of
   2-22  leave.
   2-23        SECTION 4.  Section 823.501(b), Government Code, is amended
   2-24  to read as follows:
   2-25        (b)  A person eligible to reinstate service credit under this
    3-1  section is one who resumes membership service in the retirement
    3-2  system <and subsequently performs membership service for the
    3-3  shorter of the following periods:>
    3-4              <(1)  two consecutive years; or>
    3-5              <(2)  a continuous period equal in duration to the
    3-6  period from the date of termination to the date of resumption of
    3-7  membership>.
    3-8        SECTION 5.  Sections 824.101(c) and (e), Government Code, are
    3-9  amended to read as follows:
   3-10        (c)  Only one person may be designated as beneficiary of an
   3-11  optional retirement annuity under Section 824.204(c)(1) or (c)(2),
   3-12  and a designation of beneficiary under either of those options may
   3-13  not be made, changed, or revoked after the later of the date on
   3-14  which the retirement system makes the first annuity payment to the
   3-15  retiree or the date the first payment becomes due.  For purposes of
   3-16  this section, the term "makes payment" includes the depositing in
   3-17  the mail of a payment warrant or the crediting of an account with
   3-18  payment through electronic funds transfer <of the member's
   3-19  retirement>.
   3-20        (e)  The retirement system by rule may provide for the
   3-21  designation of alternate beneficiaries and may adopt other rules to
   3-22  administer this section.
   3-23        SECTION 6.  Subchapter C, Chapter 824, Government Code, is
   3-24  amended by adding Section 824.2021 to read as follows:
   3-25        Sec. 824.2021.  TEMPORARY ELIGIBILITY FOR SERVICE RETIREMENT.
    4-1  (a)  This section applies only to retirements that occur on or
    4-2  after May 31, 1994, but before September 1, 1994.
    4-3        (b)  Notwithstanding Section 824.202, a member is eligible to
    4-4  retire and receive a service retirement annuity if:
    4-5              (1)  the member has at least 20 years of service
    4-6  credit; and
    4-7              (2)  the member is at least 53 years of age.
    4-8        (c)  The standard service retirement annuity of an eligible
    4-9  member under this section is computed under Section 824.203 using
   4-10  the amount of the member's service credit plus two years, except
   4-11  that:
   4-12              (1)  the addition to the member's service credit may
   4-13  not be used in determining the member's average annual
   4-14  compensation; or
   4-15              (2)  if the addition to the member's service credit
   4-16  results in an amount that is more than 50 years, the member's total
   4-17  service credit is equal to 50 years.
   4-18        (d)  An annuity reduced because of age under Section
   4-19  824.202(b), (c), or (d) of an eligible member under this section is
   4-20  computed using the amount of the member's service credit plus two
   4-21  years and the member's age plus two years.
   4-22        (e)  An optional service retirement annuity under Section
   4-23  824.204 of an eligible member under this section must be
   4-24  actuarially reduced, using the member's age plus two years, from
   4-25  the annuity otherwise payable under this chapter.
    5-1        (f)  An employer shall reimburse the retirement system for
    5-2  the unfunded liability, as determined by the actuary of the
    5-3  retirement system and certified by the State Pension Review Board,
    5-4  incurred by the retirement system that is attributable to the
    5-5  employees of the employer who retire under this section.  The
    5-6  retirement system shall establish the time and method of
    5-7  reimbursement under this subsection.  An employer may require an
    5-8  employee of the employer who retires under this section to
    5-9  reimburse the employer for part or all of the unfunded liability
   5-10  incurred by the retirement system that is attributable to the
   5-11  employee and that is paid by the employer.  It is provided,
   5-12  however, that the employee may elect in writing not to take
   5-13  advantage of the benefit provided by this section.
   5-14        (g)  This section expires September 1, 1995.
   5-15        SECTION 7.  Section 824.204(a), Government Code, is amended
   5-16  to read as follows:
   5-17        (a)  Instead of the standard service retirement annuity
   5-18  payable under Section 824.203 or an annuity reduced because of age
   5-19  under Section 824.202, a retiring member may elect to receive an
   5-20  optional service retirement annuity, reduced for early retirement
   5-21  if applicable, under this section.  An election to receive an
   5-22  optional service retirement annuity must be filed with the board of
   5-23  trustees not later than the effective date of retirement.
   5-24        SECTION 8.  Subchapter C, Chapter 824, Government Code, is
   5-25  amended by adding Section 824.206 to read as follows:
    6-1        Sec. 824.206.  CHANGE OF SERVICE RETIREMENT ANNUITY PAYMENT
    6-2  PLAN.  (a)  A retiree may change the retiree's choice of service
    6-3  retirement annuity payment plans after the retiree's effective date
    6-4  of retirement by filing written notice with the board of trustees
    6-5  before the later of the date on which the retirement system makes
    6-6  the first annuity payment or the date the first payment becomes
    6-7  due.  After the first payment has been made by the retirement
    6-8  system or has become due, a retiree may not change the annuity
    6-9  payment plan selected.
   6-10        (b)  For purposes of this section, the term "makes payment"
   6-11  includes the depositing in the mail of a payment warrant or the
   6-12  crediting of an account with payment through electronic funds
   6-13  transfer.
   6-14        (c)  The retirement system may adopt rules to administer this
   6-15  section.
   6-16        SECTION 9.  Section 824.304(d), Government Code, is
   6-17  redesignated as Section 824.304(c) to read as follows:
   6-18        (c) <(d)>  Before the 31st day after the date on which the
   6-19  medical board certifies a member's disability, the member may
   6-20  reinstate withdrawn contributions and make deposits for service
   6-21  previously waived, military service, and equivalent membership
   6-22  service and receive service credit as provided by this subtitle.
   6-23        SECTION 10.  Section 824.308(a), Government Code, is amended
   6-24  to read as follows:
   6-25        (a)  Instead of an annuity payable under Section 824.304(b),
    7-1  a member retiring under that section may elect to receive an
    7-2  optional disability retirement annuity under this section.  An
    7-3  election to receive an optional disability retirement annuity must
    7-4  be filed with the board of trustees not later than the effective
    7-5  date of retirement.
    7-6        SECTION 11.  Subchapter D, Chapter 824, Government Code, is
    7-7  amended by adding Section 824.309 to read as follows:
    7-8        Sec. 824.309.  CHANGE OF DISABILITY RETIREMENT PAYMENT PLAN.
    7-9  (a)  A retiree may change the retiree's choice of disability
   7-10  retirement payment plans after the retiree's effective date of
   7-11  retirement by filing written notice with the board of trustees
   7-12  before the later of the date on which the retirement system makes
   7-13  the first annuity payment or the date the first payment becomes
   7-14  due.  After the first payment has been made by the retirement
   7-15  system or has become due, a retiree may not change the annuity
   7-16  payment plan selected.
   7-17        (b)  For purposes of this section, the term "makes payment"
   7-18  includes the depositing in the mail of a payment warrant or the
   7-19  crediting of an account with payment through electronic funds
   7-20  transfer.
   7-21        (c)  The retirement system may adopt rules to administer this
   7-22  section.
   7-23        SECTION 12.  Sections 824.404(b), (c), and (d), Government
   7-24  Code, are amended to read as follows:
   7-25        (b)  If the designated beneficiary is the spouse or a
    8-1  dependent parent of the decedent, the beneficiary may elect to
    8-2  receive for life a monthly benefit of $150 <$100>, beginning
    8-3  immediately or on the date the beneficiary becomes 65 years old,
    8-4  whichever is later.
    8-5        (c)  If the designated beneficiary is the spouse of the
    8-6  decedent and has one or more children less than 18 years old or has
    8-7  custody of one or more children of the decedent who are less than
    8-8  18 years old, the designated beneficiary may elect to receive:
    8-9              (1)  a monthly benefit of $250 <$200> payable until the
   8-10  youngest child becomes 18 years old; and
   8-11              (2)  when the youngest child has attained the age of
   8-12  18, a monthly benefit for life of $150 <$100>, beginning on the
   8-13  date the beneficiary becomes 65 years old.
   8-14        (d)  If the designated beneficiary or beneficiaries are the
   8-15  decedent's dependent children who are less than 18 years old, their
   8-16  guardian may elect to receive for them:
   8-17              (1)  a monthly benefit of $250 <$200>, payable as long
   8-18  as two or more children are less than 18 years old; and
   8-19              (2)  a monthly benefit of $150 <$100>, payable as long
   8-20  as only one child is less than 18 years old.
   8-21        SECTION 13.  Section 824.602, Government Code, is amended to
   8-22  read as follows:
   8-23        Sec. 824.602.  Exceptions.  (a)  The retirement system may
   8-24  not, under Section 824.601, withhold a monthly benefit payment if
   8-25  the retiree is employed in a Texas public educational institution:
    9-1              (1)  as a substitute only with pay not more than the
    9-2  daily rate of substitute pay established by the employer, if the
    9-3  employment has not exceeded a total of 120 days in the school year
    9-4  or, for a disability retiree, 90 days in the school year;
    9-5              (2)  in a position, other than as a substitute, on no
    9-6  more than a one-half time basis for the month; <or>
    9-7              (3)  in one or more positions on as much as a full-time
    9-8  basis, if:
    9-9                    (A)  the work occurs in a school year that begins
   9-10  after the retiree's effective date of retirement;
   9-11                    (B)  the work occurs in no more than six months
   9-12  of the school year; and
   9-13                    (C)  the retiree executes on a form and within
   9-14  any deadline prescribed by the retirement system a written election
   9-15  to have this exception apply for the school year in determining
   9-16  whether benefits are to be suspended for employment after
   9-17  retirement; or
   9-18              (4)  in a position, other than as a substitute, on no
   9-19  more than a one-half time basis for no more than 90 days in the
   9-20  school year, if the retiree is a disability retiree.
   9-21        (b)  Working <as a substitute> any portion of a day counts as
   9-22  working a full day for the purposes of Subsection (a)(1) or (a)(4).
   9-23        (c)  Working any portion of a month counts as working a full
   9-24  month for the purposes of Subsection (a)(3).
   9-25        (d)  A retiree who has elected to avoid loss of monthly
   10-1  benefits in a school year pursuant to Subsection (a)(3) is not
   10-2  eligible during that school year for any other exceptions to loss
   10-3  of benefits provided in this section.  If a retiree elects the
   10-4  exemption provided in Subsection (a)(3) for a school year, the
   10-5  retirement system must include any previous employment during the
   10-6  school year, including any employment that relied upon the
   10-7  exemptions in Subsection (a)(1) or (a)(2), in determining whether
   10-8  and when the retiree has exceeded six months of employment in the
   10-9  school year.
  10-10        (e)  A retiree working as a substitute in a month is not
  10-11  eligible for an exception to a loss of benefits for that month
  10-12  pursuant to Subsection (a)(2) or (a)(4) for that or any other
  10-13  employment in a public educational institution.
  10-14        (f)  The retirement system shall include any employment
  10-15  during the school year, including any employment that relied on the
  10-16  exemption provided by Subsection (a)(1) or (a)(4), in determining
  10-17  whether and when a disability retiree has exceeded 90 days of
  10-18  employment in the school year.
  10-19        (g)  The exceptions provided by Subsections (a)(2) and (a)(3)
  10-20  do not apply to disability retirees.  The retirement system
  10-21  nevertheless may not withhold a monthly benefit payment under
  10-22  Section 824.601 if:
  10-23              (1)  a disability retiree is employed in a Texas public
  10-24  educational institution in a position, other than as a substitute,
  10-25  for a period not to exceed three consecutive months of the school
   11-1  year;
   11-2              (2)  the work occurs in a period, designated by the
   11-3  disability retiree, of no more than three consecutive months of a
   11-4  school year;
   11-5              (3)  the disability retiree executes on a form and at a
   11-6  time prescribed by the retirement system a written election to have
   11-7  this exception apply on a one-time trial basis in determining
   11-8  whether benefits are to be suspended for the months of employment
   11-9  after retirement and in determining whether a disability retiree is
  11-10  no longer mentally or physically incapacitated for the performance
  11-11  of duty; and
  11-12              (4)  the disability retiree has not previously elected
  11-13  to avoid loss of monthly benefits in a school year under this
  11-14  subsection.
  11-15        (h) <(g)>  A disability retiree is not entitled to service
  11-16  credit for service during a trial period under Subsection (g) <(f)>
  11-17  if the retiree is restored to active service.
  11-18        (i) <(h)>  Section 824.005(b), concerning revocation of
  11-19  retirement on certain reemployment, applies to employment described
  11-20  in Subsection (a) or (g) <(f)>.
  11-21        (j) <(i)>  The board of trustees shall adopt rules governing
  11-22  the employment of a substitute and defining "one-half time basis."
  11-23        (k) <(j)>  The actuary designated by the board of trustees
  11-24  shall, in investigating the experience of the members of the
  11-25  system, note any significant increase in early age retirements and
   12-1  determine the extent to which any increase has been caused by the
   12-2  exception to loss of benefits for employment after retirement
   12-3  provided by Subsection (a)(3).  If the actuary certifies in writing
   12-4  to the retirement system that sound actuarial funding of the
   12-5  retirement system's benefits is endangered by continuation of this
   12-6  exception, the board of trustees may determine that no further
   12-7  elections of the exception will be accepted from retirees, other
   12-8  than from those who have previously relied on the exception in
   12-9  retiring under this subtitle.  A retiree may be considered to have
  12-10  relied on this exception only if retirement occurred on or after
  12-11  May 31, 1985, but before the date the board of trustees
  12-12  acknowledges receipt of such certification and if the retiree has
  12-13  first elected to receive benefits under the exception not later
  12-14  than two years after the retiree's effective date of retirement.
  12-15        SECTION 14.  Section 825.006, Government Code, is amended to
  12-16  read as follows:
  12-17        Sec. 825.006.  SUNSET PROVISION.  The board of trustees of
  12-18  the Teacher Retirement System of Texas is subject to review under
  12-19  Chapter 325 (Texas Sunset Act), but is not abolished under that
  12-20  chapter.  The board shall be reviewed during the period in which
  12-21  state agencies abolished in 1995 <1993 and every 12th year after
  12-22  1993> are reviewed.  This section expires September 1, 1995.
  12-23        SECTION 15.  Section 825.202, Government Code, is amended to
  12-24  read as follows:
  12-25        Sec. 825.202.  EXECUTIVE DIRECTOR <SECRETARY>.  (a)  The
   13-1  board of trustees, by a majority vote of all members, shall appoint
   13-2  an executive director <secretary>.
   13-3        (b)  The executive director <secretary> may not be a member
   13-4  of the board of trustees.
   13-5        (c)  To be eligible to serve as the executive director
   13-6  <secretary>, a person must have been a citizen of this state for
   13-7  the three years immediately preceding the appointment.
   13-8        (d)  The executive director <secretary> shall recommend to
   13-9  the board actuarial and other services necessary to administer the
  13-10  retirement system.
  13-11        (e)  Annually, the executive director <secretary> shall
  13-12  prepare an itemized expense budget for the following fiscal year
  13-13  and shall submit the budget to the board for review and adoption.
  13-14        SECTION 16.  Section 825.207(b), Government Code, is amended
  13-15  to read as follows:
  13-16        (b)  The state treasurer shall pay money from the accounts of
  13-17  the retirement system on warrants drawn by the comptroller of
  13-18  public accounts and authorized by vouchers signed by the executive
  13-19  director <secretary> or other persons designated by the board of
  13-20  trustees.
  13-21        SECTION 17.  Sections 825.209(b) and (c), Government Code,
  13-22  are amended to read as follows:
  13-23        (b)  The executive director <secretary> shall give a surety
  13-24  bond in the amount of $25,000.
  13-25        (c)  The board of trustees may require any trustee or
   14-1  employee of the board, other than the executive director
   14-2  <secretary>, to give a surety bond in an amount determined by the
   14-3  board.
   14-4        SECTION 18.  Subchapter C, Chapter 825, Government Code, is
   14-5  amended by adding Sections 825.211 and 825.212 to read as follows:
   14-6        Sec. 825.211.  CERTAIN INTERESTS IN LOANS, INVESTMENTS, OR
   14-7  CONTRACTS PROHIBITED.  (a)  Except as provided by Subsection (c), a
   14-8  person described by Subsection (b) may not participate in or be the
   14-9  beneficiary of, directly or indirectly, a loan, commitment to lend,
  14-10  a guarantee or endorsement to lend, or investment by the retirement
  14-11  system or a contract to advise the system or manage property or
  14-12  investments for the system.
  14-13        (b)  The prohibition provided by Subsection (a) applies to a
  14-14  trustee or employee of the retirement system, a consultant or
  14-15  advisor to the retirement system, and a person related within the
  14-16  second degree by consanguinity or affinity to a trustee, employee,
  14-17  consultant, or advisor.
  14-18        (c)  The prohibition provided by Subsection (a) does not
  14-19  apply to actions taken by a trustee or employee of the retirement
  14-20  system within the scope of that person's official duties for the
  14-21  system or actions taken by a consultant or advisor within the scope
  14-22  of the services for which the person is being compensated by the
  14-23  retirement system, if the actions do not involve a relationship
  14-24  required to be disclosed under Section 825.212.  The prohibition
  14-25  provided by Subsection (a) does not apply to an indirect benefit
   15-1  received resulting from retirement system membership.
   15-2        Sec. 825.212.  RETIREMENT SYSTEM ETHICS POLICY.  (a)  In
   15-3  addition to any other requirements provided by law, the board of
   15-4  trustees shall enforce an ethics policy as provided by this section
   15-5  for employees of and consultants and advisors to the retirement
   15-6  system.
   15-7        (b)  Each employee of the retirement system who exercises
   15-8  significant decisionmaking or fiduciary authority, as determined by
   15-9  the board, shall file financial disclosure statements with a person
  15-10  designated by the board.  The content of a financial disclosure
  15-11  statement must comply substantially with the requirements of
  15-12  Section 4, Chapter 421, Acts of the 63rd Legislature, Regular
  15-13  Session, 1973 (Article 6252-9b, Vernon's Texas Civil Statutes).  A
  15-14  statement must be filed not later than the 30th day after the date
  15-15  a person is employed in a significant decisionmaking or fiduciary
  15-16  position and annually after employment not later than April 30.
  15-17  The filing deadline may be postponed by the executive director for
  15-18  not more than 60 days on written request or for an additional
  15-19  period for good cause, as determined by the chairman of the board.
  15-20  The retirement system shall maintain a financial disclosure
  15-21  statement for at least five years after the date of its filing.
  15-22        (c)  An employee who has a business or commercial
  15-23  relationship that could reasonably be expected to diminish the
  15-24  employee's independence of judgment in the performance of the
  15-25  employee's responsibilities to the retirement system shall disclose
   16-1  that relationship in writing to a person designated by the board.
   16-2        (d)  An employee who files a disclosure statement under
   16-3  Subsection (c) shall refrain from giving advice or making decisions
   16-4  about matters affected by the conflict of interest unless the
   16-5  board, after consultation with the general counsel of the
   16-6  retirement system, expressly waives this prohibition.  The
   16-7  retirement system shall maintain a written record of each waiver
   16-8  and the reasons for it.  The board may delegate the authority to
   16-9  waive prohibitions under this subsection to one or more designated
  16-10  employees on a vote of a majority of the members of the board at an
  16-11  open meeting called and held in compliance with Chapter 271, Acts
  16-12  of the 60th Legislature, Regular Session, 1967 (Article 6252-17,
  16-13  Vernon's Texas Civil Statutes).  The board shall have any order
  16-14  delegating authority to waive prohibitions under this section
  16-15  entered into the minutes of the meeting.  The board may adopt
  16-16  criteria for designated employees to use to determine the kinds of
  16-17  relationships that do not constitute a material conflict of
  16-18  interest for purposes of this subsection.
  16-19        (e)  The board by rule shall adopt standards of conduct
  16-20  applicable to consultants and advisors to the retirement system who
  16-21  may reasonably be expected to receive more than $10,000
  16-22  compensation from the system for a fiscal year or who render
  16-23  important investment advice to the retirement system.
  16-24        (f)  A consultant or advisor who, directly or indirectly, has
  16-25  a personal or private commercial or business relationship,
   17-1  unrelated to the services that the consultant or advisor performs
   17-2  for the retirement system, with any other party to a transaction
   17-3  with the system that could reasonably be expected to diminish the
   17-4  person's independence of judgment in the performance of the
   17-5  person's responsibilities to the system shall disclose that
   17-6  relationship in writing to the executive director.
   17-7        (g)  The board by rule shall require consultants and advisors
   17-8  to the retirement system and brokers to file regularly with the
   17-9  system a report detailing any expenditure of more than $50 made on
  17-10  behalf of a trustee or employee of the system.
  17-11        (h)  The board shall prescribe forms for financial disclosure
  17-12  statements, disclosure statements of conflicts of interest, and
  17-13  waivers of the prohibition against involvement in a matter affected
  17-14  by a conflict of interest.  The statements and waivers are open
  17-15  records.  The board shall designate an employee to be the custodian
  17-16  of the statements and waivers for purposes of public disclosure.
  17-17        SECTION 19.  Subchapter D, Chapter 825, Government Code, is
  17-18  amended by adding Section 825.3021 to read as follows:
  17-19        Sec. 825.3021.  APPRAISAL AND SALE OF REAL PROPERTY.  If the
  17-20  retirement system acquires, through foreclosure or conveyance of
  17-21  deed in lieu of foreclosure, real property assets or stock in an
  17-22  entity the major asset of which is real property, the retirement
  17-23  system shall, not later than the 90th day after the date of
  17-24  acquisition:
  17-25              (1)  have the real property appraised by an appraiser
   18-1  who is not a trustee or employee of the retirement system and who
   18-2  is certified as MAI or SRA;
   18-3              (2)  acquire a foreclosure endorsement to the
   18-4  mortgagee's title insurance policy; and
   18-5              (3)  if the real property contains improvements, employ
   18-6  a property management company that is not owned by a trustee or
   18-7  employee of the retirement system and that employs a CPM, CAM, or
   18-8  RAM to manage the property.
   18-9        SECTION 20.  Subchapter F, Chapter 825, Government Code, is
  18-10  amended by adding Section 825.510 to read as follows:
  18-11        Sec. 825.510.  BUDGET AND INVESTMENT INFORMATION.  (a)  The
  18-12  retirement system annually shall file with the Legislative Budget
  18-13  Board a report showing investments of the retirement system as of
  18-14  the last day of the preceding fiscal year, investments made or
  18-15  disposed of during that year, income or losses in the various kinds
  18-16  of investments, and a comparison of investment performance to
  18-17  nationally recognized indexes.
  18-18        (b)  The retirement system shall file with the Legislative
  18-19  Budget Board for review and comment a copy of each proposed annual
  18-20  budget of the retirement system.
  18-21        SECTION 21.  Section 825.303(b), Government Code, is amended
  18-22  to read as follows:
  18-23        (b)  To be eligible to lend securities under this section, a
  18-24  bank or brokerage firm must:
  18-25              (1)  be experienced in the operation of a fully secured
   19-1  securities loan program;
   19-2              (2)  maintain adequate capital in the prudent judgment
   19-3  of the retirement system to assure the safety of the securities;
   19-4              (3)  execute an indemnification agreement satisfactory
   19-5  in form and content to the retirement system fully indemnifying the
   19-6  retirement system against loss resulting from borrower default or
   19-7  the failure of the bank or brokerage firm to properly execute the
   19-8  responsibilities of the bank or brokerage firm under the applicable
   19-9  securities lending agreement <its operation of a securities loan
  19-10  program for the system's securities>; and
  19-11              (4)  require any securities broker or dealer to whom it
  19-12  lends securities belonging to the retirement system to deliver to
  19-13  and maintain with the custodian collateral in the form of cash or
  19-14  <United States> government securities eligible for book entry in
  19-15  either the Federal Reserve System or the Participants Trust
  19-16  Company, in an amount equal to not less than 100 percent of the
  19-17  market value, from time to time, of the loaned securities.
  19-18        SECTION 22.  Section 825.311, Government Code, is amended to
  19-19  read as follows:
  19-20        Sec. 825.311.  INTEREST ACCOUNT.  In the interest account the
  19-21  retirement system shall:
  19-22              (1)  deposit all income, interest, and dividends from
  19-23  deposits and investments of assets of the retirement system; <and>
  19-24              (2)  accumulate net capital gains and losses resulting
  19-25  from the sale, call, maturity, <or> conversion, or recognition of
   20-1  changes in carrying values of investments of the retirement system;
   20-2  and <of securities>
   20-3              (3)  accumulate net income or losses from other
   20-4  investments.
   20-5        SECTION 23.  Section 825.312(a), Government Code, is amended
   20-6  to read as follows:
   20-7        (a)  The retirement system shall deposit in the expense
   20-8  account:
   20-9              (1)  all membership fees required by this subtitle;
  20-10  <and>
  20-11              (2)  money required to be deposited in the account by
  20-12  Section 825.313(b)(3) or 825.313(c); and
  20-13              (3)  money received from the Texas Public School
  20-14  Retired Employees Group Insurance Program for service performed for
  20-15  the program by the retirement system.
  20-16        SECTION 24.  Sections 825.403(b) and (c), Government Code,
  20-17  are amended to read as follows:
  20-18        (b)  Each employer or the employer's designated disbursing
  20-19  officer, at a time and in a form prescribed by the retirement
  20-20  system, shall send to the executive director <secretary> all
  20-21  deductions and a certification of earnings of each member employed
  20-22  by the employer.
  20-23        (c)  The executive director <secretary> shall deposit with
  20-24  the state treasurer all deductions received by the executive
  20-25  director <secretary>.
   21-1        SECTION 25.  Section 825.405(d), Government Code, is amended
   21-2  to read as follows:
   21-3        (d)  The employer must remit the amount required under this
   21-4  section to the executive director <secretary> at the same time that
   21-5  the employer remits the member's contribution.
   21-6        SECTION 26.  Section 825.410(g), Government Code, is amended
   21-7  to read as follows:
   21-8        (g)  A member seeking to establish service credit by using
   21-9  the installment payment method shall pay an additional fee of nine
  21-10  percent per annum calculated on a declining balance method on the
  21-11  lump sum due at the time the installment payment process begins.
  21-12  For purposes of this subsection, the installment payment process
  21-13  begins on the first business day of the month in which the first
  21-14  installment payment becomes due.  None of the additional fees shall
  21-15  be returned to the member or a beneficiary.
  21-16        SECTION 27.  Section 825.503(d), Government Code, is amended
  21-17  to read as follows:
  21-18        (d)  The executive director <secretary> or an authorized
  21-19  representative may certify the authenticity of a photograph,
  21-20  microphotograph, or film of a record reproduced under this section
  21-21  and shall charge a fee for the certified photograph,
  21-22  microphotograph, or film as provided by law.
  21-23        SECTION 28.  Section 825.507, Government Code, as added by
  21-24  Chapter 16, Acts of the 72nd Legislature, Regular Session, 1991, is
  21-25  amended to read as follows:
   22-1        Sec. 825.507.  Confidentiality of Information About Members,
   22-2  Retirees, Annuitants, <or> Beneficiaries, OR ALTERNATE PAYEES.
   22-3  (a)  Information contained in records that are in the custody of
   22-4  the retirement system concerning an individual member, retiree,
   22-5  annuitant, <or> beneficiary, or alternate payee is confidential
   22-6  under Section 3(a)(1), Chapter 424, Acts of the 63rd Legislature,
   22-7  Regular Session, 1973 (Article 6252-17a, Vernon's Texas Civil
   22-8  Statutes), and may not be disclosed in a form identifiable with a
   22-9  specific individual unless:
  22-10              (1)  the information is disclosed to:
  22-11                    (A)  the individual or the individual's attorney,
  22-12  guardian, executor, administrator, conservator, or other person who
  22-13  the executive director <secretary> determines is acting in the
  22-14  interest of the individual or the individual's estate;
  22-15                    (B)  a spouse or former spouse of the individual
  22-16  if the executive director <secretary> determines that the
  22-17  information is relevant to the spouse's or former spouse's interest
  22-18  in member accounts, benefits, or other amounts payable by the
  22-19  retirement system;
  22-20                    (C)  a governmental official or employee if the
  22-21  executive director <secretary> determines that disclosure of the
  22-22  information requested is reasonably necessary to the performance of
  22-23  the duties of the official or employee; or
  22-24                    (D)  a person authorized by the individual in
  22-25  writing to receive the information; or
   23-1              (2)  the information is disclosed pursuant to a
   23-2  subpoena and the executive director <secretary> determines that the
   23-3  individual will have a reasonable opportunity to contest the
   23-4  subpoena.
   23-5        (b)  This section does not prevent the disclosure of the
   23-6  status or identity of an individual as a member, former member,
   23-7  retiree, deceased member or retiree, <or> beneficiary, or alternate
   23-8  payee of the retirement system.
   23-9        (c)  The executive director <secretary> may designate other
  23-10  employees of the retirement system to make the necessary
  23-11  determinations under Subsection (a).
  23-12        (d)  A determination and disclosure under Subsection (a) may
  23-13  be made without notice to the individual member, retiree,
  23-14  annuitant, <or> beneficiary, or alternate payee.
  23-15        SECTION 29.  Section 825.507, Government Code, as added by
  23-16  Chapter 13, Acts of the 72nd Legislature, 1st Called Session, 1991,
  23-17  is redesignated as Section 825.508 to read as follows:
  23-18        Sec. 825.508 <825.507>.  Powers of Attorney.  (a)  A person
  23-19  entitled to payment of an annuity or other benefits administered by
  23-20  the retirement system may direct the retirement system to treat as
  23-21  the authorized representative of the person concerning the
  23-22  disposition of the benefits an attorney-in-fact under a power of
  23-23  attorney that complies with Subsection (b).
  23-24        (b)  The system must honor a power of attorney executed in
  23-25  accordance with Chapter 1, Section 36A, Texas Probate Code.
   24-1        (c)  If the power of attorney is revoked, the retirement
   24-2  system is not liable for payments made to or actions taken at the
   24-3  request of the attorney-in-fact before the date the system receives
   24-4  written notice that the power of attorney has been revoked.
   24-5        SECTION 30.  Subchapter F, Chapter 825, Government Code, is
   24-6  amended by adding Section 825.509 to read as follows:
   24-7        Sec. 825.509.  TRUSTEE-TO-TRUSTEE TRANSFERS.  (a)  This
   24-8  section applies to distributions made on or after January 1, 1993.
   24-9  Notwithstanding any law governing the retirement system that would
  24-10  otherwise limit a distributee's election under this section, a
  24-11  distributee may elect, at the time and in the manner prescribed by
  24-12  the executive director or the executive director's designee, to
  24-13  have any portion of an eligible rollover distribution from the
  24-14  retirement system paid directly to an eligible retirement plan
  24-15  specified by the distributee in a direct rollover.
  24-16        (b)  An eligible rollover distribution under this section is
  24-17  any distribution of all or a portion of the balance to the credit
  24-18  of the distributee, other than:
  24-19              (1)  a distribution that is one of a series of
  24-20  substantially equal periodic payments made not less frequently than
  24-21  annually for:
  24-22                    (A)  the life or life expectancy of the
  24-23  distributee;
  24-24                    (B)  the joint lives or joint life expectancies
  24-25  of the distributee and the distributee's designated beneficiary; or
   25-1                    (C)  a specified period of 10 years or more;
   25-2              (2)  a distribution to the extent the distribution is
   25-3  required under Section 401(a)(9), Internal Revenue Code of 1986; or
   25-4              (3)  the portion of a distribution that is not
   25-5  includable in gross income for federal income tax purposes.
   25-6        (c)  An eligible retirement plan under this section is an
   25-7  individual retirement account described by Section 408(a), Internal
   25-8  Revenue Code of 1986, an individual retirement annuity described by
   25-9  Section 408(b), Internal Revenue Code of 1986, an annuity plan
  25-10  described by Section 403(a), Internal Revenue Code of 1986, or a
  25-11  qualified trust described by Section 401(a), Internal Revenue Code
  25-12  of 1986, that accepts the distributee's eligible rollover
  25-13  distribution.  However, in the case of an eligible rollover
  25-14  distribution to a surviving spouse, an eligible retirement plan
  25-15  under this section is an individual retirement account or
  25-16  individual retirement annuity.
  25-17        (d)  In this section:
  25-18              (1)  "Direct rollover" means a payment by the
  25-19  retirement system to the eligible retirement plan specified by a
  25-20  distributee.
  25-21              (2)  "Distributee" means a person who receives an
  25-22  eligible rollover distribution from the retirement system and
  25-23  includes an employee or former employee and, regarding the interest
  25-24  of an employee or former employee, the person's surviving spouse or
  25-25  alternate payee.
   26-1        SECTION 31.  Section 824.304(c), Government Code, as it was
   26-2  designated immediately before the effective date of this Act, is
   26-3  repealed.
   26-4        SECTION 32.  Monthly payments of a standard service
   26-5  retirement annuity made after September 1, 1993, under Section
   26-6  824.203, Government Code, to persons who retired before September
   26-7  1, 1991, may not be less than $6.50 a month for each year of
   26-8  service credit or, for a member who was at least 65 years old at
   26-9  the time of retirement, not less than the greater of $6.50 a month
  26-10  for each year of service credit, or $150 a month.  The minimum
  26-11  benefits provided by this section are subject to reduction in the
  26-12  same manner as other benefits because of early retirement or
  26-13  selection of an optional retirement annuity.
  26-14        SECTION 33.  The Teacher Retirement System of Texas may
  26-15  restore monthly payments of a survivor benefit under Section
  26-16  824.404, Government Code, or its predecessor statute, to a spouse
  26-17  of a deceased member or retiree that were terminated because of
  26-18  remarriage before the effective date of Section 5, Chapter 570,
  26-19  Acts of the 66th Legislature, 1979, on application for the benefits
  26-20  by the beneficiary.  Retroactive payments of the benefits may not
  26-21  be made.  Payments of the benefits resume beginning with the month
  26-22  after the month in which the beneficiary applies for restoration of
  26-23  benefits under this section.
  26-24        SECTION 34.  (a)  A retiree who is subject to loss of
  26-25  benefits under Section 824.601, Government Code, for months to
   27-1  which the exception provided by Section 824.602(a)(3), Government
   27-2  Code, could have applied if the retiree had executed the required
   27-3  form within the time provided by Section 824.602(a)(3) before its
   27-4  amendment by Chapter 13, Acts of the 72nd Legislature, 1st Called
   27-5  Session, 1991, is eligible to avoid loss of the benefits or to have
   27-6  any lost benefits restored by the Teacher Retirement System of
   27-7  Texas.
   27-8        (b)  To apply under this section to have lost benefits
   27-9  restored or to avoid loss of benefits, a retiree must submit a
  27-10  written request to the retirement system not later than March 1,
  27-11  1994.
  27-12        (c)  Benefits eligible to be paid under this section are
  27-13  those that would have been payable between September 1, 1985, and
  27-14  August 31, 1991, if the retiree had not failed to execute the
  27-15  required form in a timely manner.
  27-16        (d)  A retiree may not apply for payment of benefits under
  27-17  this section for months of employment credited under Section
  27-18  823.502, Government Code.  Months of employment in which a retiree
  27-19  receives a monthly benefit payment under this section may not be
  27-20  considered in applying Section 823.502, Government Code.  Only a
  27-21  retiree who is surviving on the effective date of this Act is
  27-22  eligible to apply for benefits under this section.
  27-23        SECTION 35.  A supplemental service retirement benefit
  27-24  provided for by Chapter 14, Acts of the 60th Legislature, Regular
  27-25  Session, 1969, that is being paid on the effective date of this Act
   28-1  to a retiree who is still living is payable to the beneficiary of
   28-2  the retiree if retirement benefits will be payable to the
   28-3  beneficiary on the death of the retiree.
   28-4        SECTION 36.  The change in law made by Section 12 of this Act
   28-5  applies to benefits paid after the effective date of this Act even
   28-6  if the beneficiary elected to receive the monthly benefits before
   28-7  that date.
   28-8        SECTION 37.  This Act takes effect September 1, 1993.
   28-9        SECTION 38.  The importance of this legislation and the
  28-10  crowded condition of the calendars in both houses create an
  28-11  emergency and an imperative public necessity that the
  28-12  constitutional rule requiring bills to be read on three several
  28-13  days in each house be suspended, and this rule is hereby suspended.