S.B. No. 593
                                        AN ACT
    1-1  relating to participation and credit in, contributions to, and
    1-2  benefits and administration of the Texas Municipal Retirement
    1-3  System.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Subdivision (15), Section 851.001, Government
    1-6  Code, is amended to read as follows:
    1-7              (15)  "Amortization period" means, as to a particular
    1-8  municipality, the time ending with the later <latest> of:
    1-9                    (A)  the expiration of 25 years after the
   1-10  effective date of the municipality's participation in the
   1-11  retirement system<, after the effective date of the most recent
   1-12  annuity increases allowed by the municipality under Section
   1-13  854.203, or after the effective date of the most recent updated
   1-14  service credits allowed by the municipality under Section 853.401>;
   1-15  or
   1-16                    (B)  the expiration of 25 <20> years after the
   1-17  most recent actuarial valuation date for the municipality <date the
   1-18  municipality allowed any special prior service credits or
   1-19  antecedent service credits>.
   1-20        SECTION 2.  Subsection (a), Section 852.006, Government Code,
   1-21  is amended to read as follows:
   1-22        (a)  Except as provided by this section, a municipality may
   1-23  not terminate participation in the retirement system <or in the
   1-24  supplemental disability benefits fund> if the municipality has
    2-1  employees who are members of the system <or who participate in the
    2-2  fund>, but the municipality may elect to discontinue the
    2-3  participation in the system <or the fund> of persons employed or
    2-4  reemployed after the date of an election to discontinue.
    2-5        SECTION 3.  Subchapter A, Chapter 852, Government Code, is
    2-6  amended by adding Section 852.007 to read as follows:
    2-7        Sec. 852.007.  MUNICIPALITY NOT AGENT OF SYSTEM.  Neither a
    2-8  municipality that participates in the retirement system nor any
    2-9  employee or officer of a participating municipality has authority
   2-10  to act as an agent of the retirement system.  An action of or
   2-11  inaction on the part of a participating municipality or its
   2-12  employee or officer is not binding on the retirement system.
   2-13        SECTION 4.  Section 852.103, Government Code, is amended to
   2-14  read as follows:
   2-15        Sec. 852.103.  WITHDRAWAL OF CONTRIBUTIONS.  (a)  A living
   2-16  person who is not an employee of a participating department and who
   2-17  has not retired may, after application, withdraw all of the
   2-18  accumulated contributions credited to the person's individual
   2-19  account in the employees saving fund, and the retirement system
   2-20  shall close the account.
   2-21        (b)  If a person to whom a withdrawal would be paid under
   2-22  this section elects to have all or a portion of the accumulated
   2-23  contributions paid directly to an eligible retirement plan and
   2-24  specifies the eligible retirement plan to which the contributions
   2-25  are to be paid, on forms approved for that purpose by the board of
   2-26  trustees, the retirement system shall make the payment in the form
   2-27  of a direct trustee-to-trustee transfer but is under no obligation
    3-1  to determine whether or not the other plan in fact is an eligible
    3-2  retirement plan for that purpose.
    3-3        SECTION 5.  Subsections (a) and (c), Section 853.305,
    3-4  Government Code, are amended to read as follows:
    3-5        (a)  The governing body of a participating municipality by
    3-6  ordinance may authorize the granting of restricted prior service
    3-7  credit to an employee who is a member of the retirement system for
    3-8  service previously performed as an employee of any incorporated
    3-9  city or town in the United States or of any council of governments
   3-10  in this state and for which the person has not otherwise received
   3-11  credited service in this system, including combined service credit
   3-12  under Chapter 803.
   3-13        (c)  A member seeking to establish restricted prior service
   3-14  credit under this section must obtain from the clerk or secretary
   3-15  of the city or town, or from the similar official of a council of
   3-16  governments, for which the previous service was performed a
   3-17  detailed statement of the service, verified by that official, and
   3-18  file the statement with the clerk or secretary of the participating
   3-19  municipality by which the member is employed.
   3-20        SECTION 6.  The section heading to Section 853.305,
   3-21  Government Code, is amended to read as follows:
   3-22        Sec. 853.305.  CREDIT FOR SERVICE WITH NONPARTICIPATING
   3-23  MUNICIPALITY OR WITH COUNCIL OF GOVERNMENTS.
   3-24        SECTION 7.  Subsections (a), (d), and (e), Section 853.401,
   3-25  Government Code, are amended to read as follows:
   3-26        (a)  Except as provided by Subsection (b), the governing body
   3-27  of a participating municipality by ordinance may authorize the
    4-1  crediting in the retirement system of updated service credits for
    4-2  service performed for the municipality by members.  An updated
    4-3  service credit authorized under this section replaces any updated
    4-4  service credit or<,> prior service credit<, special prior service
    4-5  credit, or antecedent service credit> previously authorized for
    4-6  part of the same service.
    4-7        (d)  <An ordinance under this section also must require,
    4-8  beginning on the effective date of the updated service credits,
    4-9  that a member's monthly contributions for current service be based
   4-10  on the member's total monthly compensation from the municipality,
   4-11  if the requirement is not already in effect for employees of the
   4-12  municipality.>
   4-13        <(e)>  A governing body that adopts an ordinance under this
   4-14  section shall send it to the retirement system, and the system must
   4-15  receive it before the effective date of the updated service credits
   4-16  authorized in the ordinance.
   4-17        SECTION 8.  Subsection (d), Section 853.402, Government Code,
   4-18  is amended to read as follows:
   4-19        (d)  The updated service credit of a member is an amount
   4-20  equal to the greatest of the following:
   4-21              (1)  the percentage determined under Section
   4-22  853.401(c), times the member's base updated service credit; or
   4-23              (2)  any updated service credit previously authorized
   4-24  by the municipality and in effect for the member, accumulated at
   4-25  interest as provided by Subsection (f) from the date it took effect
   4-26  to the date prescribed by Subsection (e); or
   4-27              (3)  <the sum of any> prior service credit<, special
    5-1  prior service credit, and antecedent service credit> previously
    5-2  authorized by the municipality and in effect for the member,
    5-3  accumulated at interest as provided by Subsection (f) from the date
    5-4  the credit <dates the credits> took effect to the date prescribed
    5-5  by Subsection (e).
    5-6        SECTION 9.  Section 854.003, Government Code, is amended by
    5-7  amending Subsection (a) and adding Subsection (d) to read as
    5-8  follows:
    5-9        (a)  Except as provided by Subsections (b) and (d), the <The>
   5-10  effective date of a member's service retirement is the date the
   5-11  member designates at the time the member applies for retirement
   5-12  under Section 854.101, but the date must be the last day of a
   5-13  calendar month and may not precede the date the member terminates
   5-14  employment with all participating municipalities.
   5-15        (d)  If a person who has attained age 70-1/2 terminates
   5-16  covered employment without applying for retirement, the retirement
   5-17  system shall attempt to notify that person in writing and advise
   5-18  the person that the person is required to retire.  If, before the
   5-19  91st day after the date the retirement system sends the notice, the
   5-20  person has not filed an application with the board for retirement,
   5-21  the person is considered to have retired on the last day of the
   5-22  month in which the person terminated employment with all
   5-23  participating municipalities and:
   5-24              (1)  to have elected to receive an annuity under
   5-25  Section 854.103, if the person did not have a spouse on the date of
   5-26  employment termination; or
   5-27              (2)  if the person had a spouse on the date of
    6-1  employment termination, to have elected to receive an annuity under
    6-2  Section 854.104(c)(1) and to have designated the person's spouse as
    6-3  the beneficiary under the annuity.
    6-4        SECTION 10.  Section 854.006, Government Code, is amended by
    6-5  amending Subsection (c) and adding Subsections (d) and (e) to read
    6-6  as follows:
    6-7        (c)  Any selection and designation of beneficiary under
    6-8  Subsection (a) or (b) <this section> must be in writing, on forms
    6-9  prescribed by the board of trustees, and will become effective on
   6-10  filing with the director.
   6-11        (d)  If a qualified domestic relations order, as that term is
   6-12  defined by Section 804.001, so provides, the benefit payable to a
   6-13  retiree who is receiving payments of an annuity for the retiree's
   6-14  life with payments to continue after the retiree's death until the
   6-15  death of another person under Option 1, 2, or 5A, as defined by
   6-16  Section 123.3, Title 34, Texas Administrative Code, may be divided
   6-17  by the retirement system into two annuities if:
   6-18              (1)  the person who was designated to receive the
   6-19  continued payment after the retiree's death is the same person as
   6-20  the alternate payee;
   6-21              (2)  the domestic relations order specifies that one of
   6-22  the two annuities is payable over the remaining life of the
   6-23  retiree, with no payments to be made under that annuity after the
   6-24  death of the retiree;
   6-25              (3)  the domestic relations order specifies that the
   6-26  annuity payable to the alternate payee is payable over the
   6-27  remaining life of that person, with no payments to be made under
    7-1  that annuity after the death of the alternate payee named in the
    7-2  order; and
    7-3              (4)  the domestic relations order specifies that the
    7-4  portion of the benefit payable to the alternate payee is stated as
    7-5  a fixed percentage of the present benefit payable to the retiree,
    7-6  which percentage may not exceed 50 percent of an Option 2 benefit
    7-7  and may not exceed 66-2/3 percent of an Option 5A benefit.
    7-8        (e)  The division of an annuity under Subsection (d) is
    7-9  effective when the order is determined by the retirement system to
   7-10  be a qualified domestic relations order, and the amount of each of
   7-11  the two annuities shall be computed by the retirement system at
   7-12  that time, based on tables that have been adopted by the retirement
   7-13  system and in effect at that time, so that the two annuities are
   7-14  actuarially equivalent at the time of division to the annuity being
   7-15  divided.
   7-16        SECTION 11.  The section heading to Section 854.006,
   7-17  Government Code, is amended to read as follows:
   7-18        Sec. 854.006.  CHANGE OF BENEFICIARY OR DIVISION OF BENEFIT
   7-19  FOR CERTAIN PERSONS RECEIVING MONTHLY BENEFITS <OF GUARANTEED-TERM
   7-20  ANNUITY>.
   7-21        SECTION 12.  Subchapter A, Chapter 854, Government Code, is
   7-22  amended by adding Section 854.007 to read as follows:
   7-23        Sec. 854.007.  LIMITATION ON PAYMENT OF BENEFITS.  (a)  In
   7-24  this section:
   7-25              (1)  "Annual benefit" means the total of all annuity
   7-26  payments by the retirement system to an annuitant during a calendar
   7-27  year, including any distributive benefit payments.
    8-1              (2)  "Compensation" has the meaning assigned by Section
    8-2  415, Internal Revenue Code, and the regulations adopted under that
    8-3  section, instead of the meaning assigned by Section 851.001.
    8-4              (3)  "Highest average annual compensation" means the
    8-5  average compensation for the three consecutive calendar years of
    8-6  service that produces the highest average.
    8-7              (4)  "Internal Revenue Code" means the Internal Revenue
    8-8  Code of 1986 (Title 26, United States Code).
    8-9        (b)  If the amount of any benefit payment under this subtitle
   8-10  would exceed the limitations provided by this section, the
   8-11  retirement system shall reduce the amount of the benefit in
   8-12  accordance with this section.
   8-13        (c)  Except as otherwise provided by this section, a benefit
   8-14  is adjusted to an actuarially equivalent straight life annuity for
   8-15  the purpose of determining limitations under this section.  An
   8-16  actuarial adjustment to a benefit is not required for the value of
   8-17  a qualified joint and survivor annuity and the value of
   8-18  postretirement cost-of-living increases made in accordance with
   8-19  Section 415, Internal Revenue Code.
   8-20        (d)  Except as provided by Subsections (f), (h), and (i), an
   8-21  annual benefit payable by the retirement system may not exceed the
   8-22  lesser of:
   8-23              (1)  $115,641, or another amount as adjusted each
   8-24  January 1 by the secretary of the treasury under Section 415 of the
   8-25  Internal Revenue Code for cost-of-living increases after January 1,
   8-26  1993; or
   8-27              (2)  100 percent of the former member's highest average
    9-1  annual compensation.
    9-2        (e)  If payment of a benefit begins before a member attains
    9-3  age 62, the dollar limitation is the actuarial equivalent of an
    9-4  annual benefit beginning at age 62 as described by Subsection
    9-5  (d)(1) for a person at age 62.  A reduction under this subsection
    9-6  may not reduce the dollar limitation below $75,000 if the benefit
    9-7  begins at or after age 55 or, if the benefit begins before age 55,
    9-8  the actuarial equivalent of a $75,000 limitation beginning at age
    9-9  55.
   9-10        (f)  If payment of a benefit begins after the member attains
   9-11  age 65, the dollar limitation is the actuarial equivalent of an
   9-12  annual benefit beginning at age 65 as described by Subsection
   9-13  (d)(1).
   9-14        (g)  To determine actuarial equivalence, the interest rate
   9-15  assumption under Subsection (c) or (e) is the greater of the rate
   9-16  specified by Section 855.316(a) or five percent, and the interest
   9-17  rate assumption under Subsection (f) is the lesser of those rates.
   9-18        (h)  The limitations provided by Subsections (d), (e), and
   9-19  (f) do not apply to any portion of an annual benefit payable by the
   9-20  retirement system that is paid from the balance in the member's
   9-21  individual account in the employees saving fund as of December 31,
   9-22  1983, or from interest credited to the member's account after
   9-23  December 31, 1983, as a result of deposits before that date.
   9-24        (i)  This section may not be applied to reduce the annual
   9-25  benefit payable to any person who retired under the retirement
   9-26  system before January 1, 1994, or to reduce the vested accrued
   9-27  benefit as of December 31, 1993, of any person who was a member of
   10-1  the retirement system on that date.
   10-2        (j)  If the Internal Revenue Code is amended in such a manner
   10-3  that limitations similar to those provided by this section are not
   10-4  required of governmental retirement plans to constitute qualified
   10-5  plans, the board of trustees may by rule eliminate all or any
   10-6  portion of the limitations provided by this section.
   10-7        (k)  An employer may not provide employee retirement or
   10-8  deferred benefits to the extent that, when considered together with
   10-9  the benefits authorized by this subtitle as required by the
  10-10  Internal Revenue Code, would result in the failure of the
  10-11  retirement system's plan to meet federal qualification standards as
  10-12  applied to governmental retirement plans.
  10-13        SECTION 13.  Section 854.104, Government Code, is amended by
  10-14  adding Subsection (f) to read as follows:
  10-15        (f)  Notwithstanding any other provision of this subtitle,
  10-16  each distribution to any person or estate under this subtitle must
  10-17  be made in accordance with Section 401(a)(9) of the Internal
  10-18  Revenue Code of 1986 (26 U.S.C. Section 401(a)(9)).
  10-19        SECTION 14.  Subsection (b), Section 854.408, Government
  10-20  Code, is amended to read as follows:
  10-21        (b)  During any month in which a retiree who is less than 60
  10-22  years old receives earned income subject to taxation under the
  10-23  Federal Insurance Contributions Act  or that would be subject to
  10-24  those taxes if the employer were not an exempt organization, the
  10-25  standard occupational disability retirement annuity may not exceed
  10-26  the greater of the following amounts:
  10-27              (1)  the amount that is required to be added to the
   11-1  retiree's earned income for the month to equal the highest average
   11-2  compensation on which the retiree made membership contributions to
   11-3  the retirement system during any <the> 12 consecutive months during
   11-4  the three calendar years immediately preceding the year in which
   11-5  the retiree retired for disability <disability retirement>; or
   11-6              (2)  the monthly annuity attributable to the retiree's
   11-7  accumulated contributions at the time of the person's retirement.
   11-8        SECTION 15.  Section 854.604, Government Code, is amended to
   11-9  read as follows:
  11-10        Sec. 854.604.  Retiree Supplemental Death Benefit.  If a
  11-11  retiree dies whose most recent employment as a member of the
  11-12  retirement system was with a municipality that has elected to
  11-13  provide, and continues to provide, postretirement supplemental
  11-14  death benefits, a lump-sum supplemental death benefit is payable
  11-15  from the fund in the amount of $5,000 <$2,500>.
  11-16        SECTION 16.  Section 855.008, Government Code, is amended to
  11-17  read as follows:
  11-18        Sec. 855.008.  Compensation; Expenses.  Each trustee serves
  11-19  without compensation but is entitled to:
  11-20              (1)  reimbursement for reasonable traveling expenses
  11-21  incurred in attending board meetings and authorized committee and
  11-22  association meetings or incurred in the performance of other
  11-23  official board duties; and
  11-24              (2)  payment of an amount equal to any compensation
  11-25  withheld by the trustee's employing municipality because of the
  11-26  trustee's attendance at board meetings.
  11-27        SECTION 17.  Section 855.109, Government Code, is amended to
   12-1  read as follows:
   12-2        Sec. 855.109.  Depositories.  The board of trustees shall
   12-3  designate financial institutions to qualify and serve the
   12-4  retirement system as depositories <in accordance with Subchapter C
   12-5  of Chapter 404>.
   12-6        SECTION 18.  Section 855.407, Government Code, is amended by
   12-7  amending Subsections (c) and (e) and adding Subsection (f) to read
   12-8  as follows:
   12-9        (c)  A reduction in the member contribution rate for
  12-10  employees of a participating municipality or in the municipality's
  12-11  matching rate does not reduce the maximum rate of contribution of
  12-12  the municipality.
  12-13        (e)  If the combined rates of a municipality's normal
  12-14  contributions and prior service contributions exceed the rate
  12-15  prescribed by Subsection (a), the rate for prior service
  12-16  contributions shall be reduced to the rate that equals the
  12-17  difference between the maximum rate prescribed by Subsection (a)
  12-18  and under Section 855.501, if applicable, and the normal
  12-19  contribution rate for the municipality.
  12-20        (f)  The governing body of a municipality that is determined
  12-21  by the actuary to be unable to finance all obligations charged
  12-22  against its account in the municipality accumulation fund within 25
  12-23  years after its most recent actuarial valuation date may elect to
  12-24  have the municipality contribute to its account in the municipality
  12-25  accumulation fund at a rate that does not exceed in any year the
  12-26  sum of two percent and the maximum contribution rate specified by
  12-27  Subsection (a) and by Section 855.501, if applicable, and that the
   13-1  actuary annually may determine as necessary to finance the existing
   13-2  levels of benefits before the expiration of 25 years after the most
   13-3  recent actuarial valuation date.
   13-4        SECTION 19.  This Act takes effect January 1, 1994.
   13-5        SECTION 20.  The importance of this legislation and the
   13-6  crowded condition of the calendars in both houses create an
   13-7  emergency and an imperative public necessity that the
   13-8  constitutional rule requiring bills to be read on three several
   13-9  days in each house be suspended, and this rule is hereby suspended.