1-1 By: Turner S.B. No. 593
1-2 (In the Senate - Filed March 3, 1993; March 4, 1993, read
1-3 first time and referred to Committee on Intergovernmental
1-4 Relations; March 24, 1993, reported favorably by the following
1-5 vote: Yeas 10, Nays 0; March 24, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Armbrister x
1-9 Leedom x
1-10 Carriker x
1-11 Henderson x
1-12 Madla x
1-13 Moncrief x
1-14 Patterson x
1-15 Rosson x
1-16 Shapiro x
1-17 Wentworth x
1-18 Whitmire x
1-19 A BILL TO BE ENTITLED
1-20 AN ACT
1-21 relating to participation and credit in, contributions to, and
1-22 benefits and administration of the Texas Municipal Retirement
1-23 System.
1-24 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-25 SECTION 1. Subdivision (15), Section 851.001, Government
1-26 Code, is amended to read as follows:
1-27 (15) "Amortization period" means, as to a particular
1-28 municipality, the time ending with the later <latest> of:
1-29 (A) the expiration of 25 years after the
1-30 effective date of the municipality's participation in the
1-31 retirement system<, after the effective date of the most recent
1-32 annuity increases allowed by the municipality under Section
1-33 854.203, or after the effective date of the most recent updated
1-34 service credits allowed by the municipality under Section 853.401>;
1-35 or
1-36 (B) the expiration of 25 <20> years after the
1-37 most recent actuarial valuation date for the municipality <date the
1-38 municipality allowed any special prior service credits or
1-39 antecedent service credits>.
1-40 SECTION 2. Section 852.006, Government Code, is amended to
1-41 read as follows:
1-42 (a) Except as provided by this section, a municipality may
1-43 not terminate participation in the retirement system <or in the
1-44 supplemental disability benefits fund> if the municipality has
1-45 employees who are members of the system <or who participate in the
1-46 fund>, but the municipality may elect to discontinue the
1-47 participation in the system <or the fund> of persons employed or
1-48 reemployed after the date of an election to discontinue.
1-49 SECTION 3. Subchapter A, Chapter 852, Government Code, is
1-50 amended by adding Section 852.007 to read as follows:
1-51 Sec. 852.007. MUNICIPALITY NOT AGENT OF SYSTEM. Neither a
1-52 municipality that participates in the retirement system nor any
1-53 employee or officer of a participating municipality has authority
1-54 to act as an agent of the retirement system. An action of or
1-55 inaction on the part of a participating municipality or its
1-56 employee or officer is not binding on the retirement system.
1-57 SECTION 4. Section 852.103, Government Code, is amended to
1-58 read as follows:
1-59 Sec. 852.103. WITHDRAWAL OF CONTRIBUTIONS. (a) A living
1-60 person who is not an employee of a participating department and who
1-61 has not retired may, after application, withdraw all of the
1-62 accumulated contributions credited to the person's individual
1-63 account in the employees saving fund, and the retirement system
1-64 shall close the account.
1-65 (b) If a person to whom a withdrawal would be paid under
1-66 this section elects to have all or a portion of the accumulated
1-67 contributions paid directly to an eligible retirement plan and
1-68 specifies the eligible retirement plan to which the contributions
2-1 are to be paid, on forms approved for that purpose by the board of
2-2 trustees, the retirement system shall make the payment in the form
2-3 of a direct trustee-to-trustee transfer but is under no obligation
2-4 to determine whether or not the other plan in fact is an eligible
2-5 retirement plan for that purpose.
2-6 SECTION 5. Subsections (a) and (c), Section 853.305,
2-7 Government Code, are amended to read as follows:
2-8 (a) The governing body of a participating municipality by
2-9 ordinance may authorize the granting of restricted prior service
2-10 credit to an employee who is a member of the retirement system for
2-11 service previously performed as an employee of any incorporated
2-12 city or town in the United States or of any council of governments
2-13 in this state and for which the person has not otherwise received
2-14 credited service in this system, including combined service credit
2-15 under Chapter 803.
2-16 (c) A member seeking to establish restricted prior service
2-17 credit under this section must obtain from the clerk or secretary
2-18 of the city or town, or from the similar official of a council of
2-19 governments, for which the previous service was performed a
2-20 detailed statement of the service, verified by that official, and
2-21 file the statement with the clerk or secretary of the participating
2-22 municipality by which the member is employed.
2-23 SECTION 6. The section heading to Section 853.305,
2-24 Government Code, is amended to read as follows:
2-25 Sec. 853.305. CREDIT FOR SERVICE WITH NONPARTICIPATING
2-26 MUNICIPALITY OR WITH COUNCIL OF GOVERNMENTS.
2-27 SECTION 7. Subsections (a), (d), and (e), Section 853.401
2-28 Government Code, are amended to read as follows:
2-29 (a) Except as provided by Subsection (b), the governing body
2-30 of a participating municipality by ordinance may authorize the
2-31 crediting in the retirement system of updated service credits for
2-32 service performed for the municipality by members. An updated
2-33 service credit authorized under this section replaces any updated
2-34 service credit or<,> prior service credit<, special prior service
2-35 credit, or antecedent service credit> previously authorized for
2-36 part of the same service.
2-37 (d) <An ordinance under this section also must require,
2-38 beginning on the effective date of the updated service credits,
2-39 that a member's monthly contributions for current service be based
2-40 on the member's total monthly compensation from the municipality,
2-41 if the requirement is not already in effect for employees of the
2-42 municipality.>
2-43 <(e)> A governing body that adopts an ordinance under this
2-44 section shall send it to the retirement system, and the system must
2-45 receive it before the effective date of the updated service credits
2-46 authorized in the ordinance.
2-47 SECTION 8. Subsection (d), Section 853.402, Government Code,
2-48 is amended to read as follows:
2-49 (d) The updated service credit of a member is an amount
2-50 equal to the greatest of the following:
2-51 (1) the percentage determined under Section
2-52 853.401(c), times the member's base updated service credit; or
2-53 (2) any updated service credit previously authorized
2-54 by the municipality and in effect for the member, accumulated at
2-55 interest as provided by Subsection (f) from the date it took effect
2-56 to the date prescribed by Subsection (e); or
2-57 (3) <the sum of any> prior service credit<, special
2-58 prior service credit, and antecedent service credit> previously
2-59 authorized by the municipality and in effect for the member,
2-60 accumulated at interest as provided by Subsection (f) from the date
2-61 the credit <dates the credits> took effect to the date prescribed
2-62 by Subsection (e).
2-63 SECTION 9. Section 854.003, Government Code, is amended by
2-64 amending Subsection (a) and adding Subsection (d) to read as
2-65 follows:
2-66 (a) Except as provided by Subsections (b) and (d), the <The>
2-67 effective date of a member's service retirement is the date the
2-68 member designates at the time the member applies for retirement
2-69 under Section 854.101, but the date must be the last day of a
2-70 calendar month and may not precede the date the member terminates
3-1 employment with all participating municipalities.
3-2 (d) If a person who has attained age 70-1/2 terminates
3-3 covered employment without applying for retirement, the retirement
3-4 system shall attempt to notify that person in writing and advise
3-5 the person that the person is required to retire. If, before the
3-6 91st day after the date the retirement system sends the notice, the
3-7 person has not filed an application with the board for retirement,
3-8 the person is considered to have retired on the last day of the
3-9 month in which the person terminated employment with all
3-10 participating municipalities and:
3-11 (1) to have elected to receive an annuity under
3-12 Section 854.103, if the person did not have a spouse on the date of
3-13 employment termination; or
3-14 (2) if the person had a spouse on the date of
3-15 employment termination, to have elected to receive an annuity under
3-16 Section 854.104(c)(1) and to have designated the person's spouse as
3-17 the beneficiary under the annuity.
3-18 SECTION 10. Section 854.006, Government Code, is amended by
3-19 amending Subsection (c) and adding Subsections (d) and (e) to read
3-20 as follows:
3-21 (c) Any selection and designation of beneficiary under
3-22 Subsection (a) or (b) <this section> must be in writing, on forms
3-23 prescribed by the board of trustees, and will become effective on
3-24 filing with the director.
3-25 (d) If a qualified domestic relations order, as that term is
3-26 defined by Section 804.001, so provides, the benefit payable to a
3-27 retiree who is receiving payments of an annuity for the retiree's
3-28 life with payments to continue after the retiree's death until the
3-29 death of another person under Option 1, 2, or 5A, as defined by
3-30 Section 123.3, Title 34, Texas Administrative Code, may be divided
3-31 by the retirement system into two annuities if:
3-32 (1) the person who was designated to receive the
3-33 continued payment after the retiree's death is the same person as
3-34 the alternate payee;
3-35 (2) the domestic relations order specifies that one of
3-36 the two annuities is payable over the remaining life of the
3-37 retiree, with no payments to be made under that annuity after the
3-38 death of the retiree;
3-39 (3) the domestic relations order specifies that the
3-40 annuity payable to the alternate payee is payable over the
3-41 remaining life of that person, with no payments to be made under
3-42 that annuity after the death of the alternate payee named in the
3-43 order; and
3-44 (4) the domestic relations order specifies that the
3-45 portion of the benefit payable to the alternate payee is stated as
3-46 a fixed percentage of the present benefit payable to the retiree,
3-47 which percentage may not exceed 50 percent of an Option 2 benefit
3-48 and may not exceed 66-2/3 percent of an Option 5A benefit.
3-49 (e) The division of an annuity under Subsection (d) is
3-50 effective when the order is determined by the retirement system to
3-51 be a qualified domestic relations order, and the amount of each of
3-52 the two annuities shall be computed by the retirement system at
3-53 that time, based on tables that have been adopted by the retirement
3-54 system and in effect at that time, so that the two annuities are
3-55 actuarially equivalent at the time of division to the annuity being
3-56 divided.
3-57 SECTION 11. The section heading to Section 854.006,
3-58 Government Code, is amended to read as follows:
3-59 Sec. 854.006. CHANGE OF BENEFICIARY OR DIVISION OF BENEFIT
3-60 FOR CERTAIN PERSONS RECEIVING MONTHLY BENEFITS <OF GUARANTEED-TERM
3-61 ANNUITY>.
3-62 SECTION 12. Subchapter A, Chapter 854, Government Code, is
3-63 amended by adding Section 854.007 to read as follows:
3-64 Sec. 854.007. LIMITATION ON PAYMENT OF BENEFITS. (a) In
3-65 this section:
3-66 (1) "Annual benefit" means the total of all annuity
3-67 payments by the retirement system to an annuitant during a calendar
3-68 year, including any distributive benefit payments.
3-69 (2) "Compensation" has the meaning assigned by Section
3-70 415, Internal Revenue Code, and the regulations adopted under that
4-1 section, instead of the meaning assigned by Section 851.001.
4-2 (3) "Highest average annual compensation" means the
4-3 average compensation for the three consecutive calendar years of
4-4 service that produces the highest average.
4-5 (4) "Internal Revenue Code" means the Internal Revenue
4-6 Code of 1986 (Title 26, United States Code).
4-7 (b) If the amount of any benefit payment under this subtitle
4-8 would exceed the limitations provided by this section, the
4-9 retirement system shall reduce the amount of the benefit in
4-10 accordance with this section.
4-11 (c) Except as otherwise provided by this section, a benefit
4-12 is adjusted to an actuarially equivalent straight life annuity for
4-13 the purpose of determining limitations under this section. An
4-14 actuarial adjustment to a benefit is not required for the value of
4-15 a qualified joint and survivor annuity and the value of
4-16 postretirement cost-of-living increases made in accordance with
4-17 Section 415, Internal Revenue Code.
4-18 (d) Except as provided by Subsections (f), (h), and (i), an
4-19 annual benefit payable by the retirement system may not exceed the
4-20 lesser of:
4-21 (1) $115,641, or another amount as adjusted each
4-22 January 1 by the secretary of the treasury under Section 415 of the
4-23 Internal Revenue Code for cost-of-living increases after January 1,
4-24 1993; or
4-25 (2) 100 percent of the former member's highest average
4-26 annual compensation.
4-27 (e) If payment of a benefit begins before a member attains
4-28 age 62, the dollar limitation is the actuarial equivalent of an
4-29 annual benefit beginning at age 62 as described by Subsection
4-30 (d)(1) for a person at age 62. A reduction under this subsection
4-31 may not reduce the dollar limitation below $75,000 if the benefit
4-32 begins at or after age 55 or, if the benefit begins before age 55,
4-33 the actuarial equivalent of a $75,000 limitation beginning at age
4-34 55.
4-35 (f) If payment of a benefit begins after the member attains
4-36 age 65, the dollar limitation is the actuarial equivalent of an
4-37 annual benefit beginning at age 65 as described by Subsection
4-38 (d)(1).
4-39 (g) To determine actuarial equivalence, the interest rate
4-40 assumption under Subsection (c) or (e) is the greater of the rate
4-41 specified by Section 855.316(a) or five percent, and the interest
4-42 rate assumption under Subsection (f) is the lesser of those rates.
4-43 (h) The limitations provided by Subsections (d), (e), and
4-44 (f) do not apply to any portion of an annual benefit payable by the
4-45 retirement system that is paid from the balance in the member's
4-46 individual account in the employees saving fund as of December 31,
4-47 1983, or from interest credited to the member's account after
4-48 December 31, 1983, as a result of deposits before that date.
4-49 (i) This section may not be applied to reduce the annual
4-50 benefit payable to any person who retired under the retirement
4-51 system before January 1, 1994, or to reduce the vested accrued
4-52 benefit as of December 31, 1993, of any person who was a member of
4-53 the retirement system on that date.
4-54 (j) If the Internal Revenue Code is amended in such a manner
4-55 that limitations similar to those provided by this section are not
4-56 required of governmental retirement plans to constitute qualified
4-57 plans, the board of trustees may by rule eliminate all or any
4-58 portion of the limitations provided by this section.
4-59 (k) An employer may not provide employee retirement or
4-60 deferred benefits to the extent that, when considered together with
4-61 the benefits authorized by this subtitle as required by the
4-62 Internal Revenue Code, would result in the failure of the
4-63 retirement system's plan to meet federal qualification standards as
4-64 applied to governmental retirement plans.
4-65 SECTION 13. Section 854.104, Government Code, is amended by
4-66 adding Subsection (f) to read as follows:
4-67 (f) Notwithstanding any other provision of this subtitle,
4-68 each distribution to any person or estate under this subtitle must
4-69 be made in accordance with Section 401(a)(9) of the Internal
4-70 Revenue Code of 1986 (26 U.S.C. Section 401(a)(9)).
5-1 SECTION 14. Subsection (b), Section 854.408, Government
5-2 Code, is amended to read as follows:
5-3 (b) During any month in which a retiree who is less than 60
5-4 years old receives earned income subject to taxation under the
5-5 Federal Insurance Contributions Act or that would be subject to
5-6 those taxes if the employer were not an exempt organization, the
5-7 standard occupational disability retirement annuity may not exceed
5-8 the greater of the following amounts:
5-9 (1) the amount that is required to be added to the
5-10 retiree's earned income for the month to equal the highest average
5-11 compensation on which the retiree made membership contributions to
5-12 the retirement system during any <the> 12 consecutive months during
5-13 the three calendar years immediately preceding the year in which
5-14 the retiree retired for disability <disability retirement>; or
5-15 (2) the monthly annuity attributable to the retiree's
5-16 accumulated contributions at the time of the person's retirement.
5-17 SECTION 15. Section 854.604, Government Code, is amended to
5-18 read as follows:
5-19 Sec. 854.604. Retiree Supplemental Death Benefit. If a
5-20 retiree dies whose most recent employment as a member of the
5-21 retirement system was with a municipality that has elected to
5-22 provide, and continues to provide, postretirement supplemental
5-23 death benefits, a lump-sum supplemental death benefit is payable
5-24 from the fund in the amount of $5,000 <$2,500>.
5-25 SECTION 16. Section 855.008, Government Code, is amended to
5-26 read as follows:
5-27 Sec. 855.008. Compensation; Expenses. Each trustee serves
5-28 without compensation but is entitled to:
5-29 (1) reimbursement for reasonable traveling expenses
5-30 incurred in attending board meetings and authorized committee and
5-31 association meetings or incurred in the performance of other
5-32 official board duties; and
5-33 (2) payment of an amount equal to any compensation
5-34 withheld by the trustee's employing municipality because of the
5-35 trustee's attendance at board meetings.
5-36 SECTION 17. Section 855.109, Government Code, is amended to
5-37 read as follows:
5-38 Sec. 855.109. Depositories. The board of trustees shall
5-39 designate financial institutions to qualify and serve the
5-40 retirement system as depositories <in accordance with Subchapter C
5-41 of Chapter 404>.
5-42 SECTION 18. Section 855.407, Government Code, is amended by
5-43 amending Subsections (c) and (e) and adding Subsection (f) to read
5-44 as follows:
5-45 (c) A reduction in the member contribution rate for
5-46 employees of a participating municipality or in the municipality's
5-47 matching rate does not reduce the maximum rate of contribution of
5-48 the municipality.
5-49 (e) If the combined rates of a municipality's normal
5-50 contributions and prior service contributions exceed the rate
5-51 prescribed by Subsection (a), the rate for prior service
5-52 contributions shall be reduced to the rate that equals the
5-53 difference between the maximum rate prescribed by Subsection (a)
5-54 and under Section 855.501, if applicable, and the normal
5-55 contribution rate for the municipality.
5-56 (f) The governing body of a municipality that is determined
5-57 by the actuary to be unable to finance all obligations charged
5-58 against its account in the municipality accumulation fund within 25
5-59 years after its most recent actuarial valuation date may elect to
5-60 have the municipality contribute to its account in the municipality
5-61 accumulation fund at a rate that does not exceed in any year the
5-62 sum of two percent and the maximum contribution rate specified by
5-63 Subsection (a) and by Section 855.501, if applicable, and that the
5-64 actuary annually may determine as necessary to finance the existing
5-65 levels of benefits before the expiration of 25 years after the most
5-66 recent actuarial valuation date.
5-67 SECTION 19. This Act takes effect January 1, 1994.
5-68 SECTION 20. The importance of this legislation and the
5-69 crowded condition of the calendars in both houses create an
5-70 emergency and an imperative public necessity that the
6-1 constitutional rule requiring bills to be read on three several
6-2 days in each house be suspended, and this rule is hereby suspended.
6-3 * * * * *
6-4 Austin,
6-5 Texas
6-6 March 24, 1993
6-7 Hon. Bob Bullock
6-8 President of the Senate
6-9 Sir:
6-10 We, your Committee on Intergovernmental Relations to which was
6-11 referred S.B. No. 593, have had the same under consideration, and I
6-12 am instructed to report it back to the Senate with the
6-13 recommendation that it do pass and be printed.
6-14 Armbrister,
6-15 Chairman
6-16 * * * * *
6-17 WITNESSES
6-18 FOR AGAINST ON
6-19 ___________________________________________________________________
6-20 Name: Terrence Kendall x
6-21 Representing: Tx Municipal Retirement
6-22 System
6-23 City: Austin
6-24 -------------------------------------------------------------------
6-25 Name: Gary Anderson x
6-26 Representing: Tx Municipal Retirement
6-27 System
6-28 City: Austin
6-29 -------------------------------------------------------------------
6-30 Name: Ronald E. Cox x
6-31 Representing: Tx Municipal Retirement
6-32 System
6-33 City: Friendwood
6-34 -------------------------------------------------------------------