BILL ANALYSIS



H.B. 2168
By: Kuempel
03-28-95
Committee Report (Unamended)


BACKGROUND

The Texas Municipal Retirement System (TMRS) is the statewide
system which administers retirement, disability and death benefits
for employees of Texas cities which voluntarily elect to
participate in the system.

Each of the 657 participating cities is separately funded.  Funding
is provided by employee contributions at a rate of compensation
selected by the city, and by employer contributions actuarial
determined as necessary to provide the level of benefits selected.

PURPOSE

HB 2168 proposes some 20 changes in the act governing the system,
all of which have been approved by the Board of Trustees of the
System.  The proposed changes fall into four categories. Two minor
changes relate to benefits or benefit eligibility; one change
relates to (elective) increased funding of benefits; five changes
pertain to compliance with federal-law mandates necessary to retain
the tax qualified status of the plan, and the remaining twelve are
technical or clarifying changes in the governing act. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency or institution.

SECTION BY SECTION ANALYSIS

SECTION 1:     Amends Section 851.001(6), Government Code, by
redefining "compensation" (on which benefits are based) not to
exceed the amounts now prescribed (or subsequently increased) by
Internal Revenue Code Section 401(a)(17).

SECTION 2:     Amends Section 852.004(c), Government Code, by
providing that the board of trustees for a municipality with fewer
than 10 employee members may allow participation in the fund by
employees who are in good health on the effective date of
participation and exclude those not in good health at that time.

SECTION 3:     Amends Section 852.108, Government Code, by changing
the provisions of the TMRS act requiring suspension of payments of
retirement benefits of a retiree only if the retiree returns to
employment of the same participating city from which he/she
retired.  Provides for additional benefits.
               
SECTION 4:     Amends Subchapter B, Chapter 852, Government Code,
by providing that a retiree's annuity is not suspended if the
person gains employment with a different municipality.  Provides
for further participation and additional benefits of a retiree who
is employed by a participating municipality. 

SECTION 5:     Amends the Section heading to Section 853.305,
Government Code, by adding Airport Authority and Certain Service
Previously Cancelled.

SECTION 6:     Amends Sections 853.305(a), (c), and (e), Government
Code, by allowing a participating city to grant "restricted prior
service credit"  (i.e. credit satisfying length-of-service
requirements for retirement eligibility, but not monetary credit)
for previous TMRS service forfeited by withdrawal of deposits while
absent from service, for service as an employee of certain airport
authorities, and for service forfeited under any of the other
statewide retirement systems in Texas.

SECTION 7:     Amends Section 853.404 (d), Government Code, by
authorizing automatic resumption of "updated service credits" when
a city's maximum contribution rate permits such resumption.

SECTION 8:     Amends Section 854.003, Government Code, by
clarifying present provisions relating to mandatory benefit payment
starting dates for persons over 70 1/2 years of age.

SECTION 9:     Amends Section 854.004, Government Code, by
clarifying the time within which a retiree is allowed to change
optional forms of retirement benefit, or to change the beneficiary-recipient of an optional benefit.
               
SECTION 10:    Amends Section 854.005 (a), Government Code, by
changing the provision allowing an annuitant to request reduction
in monthly benefit so as to permit a person to request no annuity
to be paid to that person.

SECTION 11:    Amends Section 854.007(a)(1), Government Code, by
redefining "annual benefit."
           
SECTION 12:    Amends Section 854.007 (d) , Government Code by
addressing IRC Section 415 limitations by incorporating provisions
for post-retirement increases allowed under Section 415.

SECTION 13:    Amends Section 854.007, Government Code, by
incorporating cost of living adjustments allowed under IRC Section
415 and incorporating the exclusion for small annuities permitted
by Section 415.
     
SECTION 14:    Amends Subchapter B, Chapter 854, Government Code,
by adding a new section allowing heirs of a small estate, under
prescribed circumstances, to make elections as to certain death
benefits, where there is no executor, administrator or named
beneficiary to make the selection.

SECTION 15:    Amends Subchapter F, Chapter 854, Government Code,
by adding a new section allowing (with certain exceptions) a trust
to be designated as beneficiary for payments of benefits of a
deceased member.

SECTION 16:    Amends Subchapter F, Chapter 854, Government Code,
by adding a new provision forbidding payment of benefits to a
person convicted of causing the death of a member or annuitant and
designating other person(s) to whom the payment is made.

SECTION 17:    Amends Subchapter F, Chapter 854, Government Code,
by adding a new section defining the effect that simultaneous death
(of a member or retiree and the spouse or designated beneficiary of
the member or retiree), has on benefit selection or on benefit
payments.

SECTION 18:    Amends Section 854.602, Government Code, by amending
the provisions governing supplemental death benefits to permit
post-death establishment of entitlement to extended coverage where
death occurs within six months after the date of discontinuance of
coverage of the member.
               
SECTION 19:    Amends Section 855.301, Government Code, by adding
a new subsection relating to investment procedures, allowing the
system to hold investment securities in the name of a nominee,
depository trust company or other selected entity.

SECTION 20:    Amends Section 855.501, Government Code, by raising
the maximum employer contribution rate which the governing body of
a participating city may elect to contribute to reserves funding
the level of benefits chosen by the city.
           
SECTION 21:    Effective date is September 1, 1995.
               
SECTION 22:    Emergency clause

SUMMARY OF COMMITTEE ACTION

Public notice was posted in accordance to the rules and a public
hearing was held on March 20, 1995.  The 

Rep. Edmund Kuempel testified as the bill's author.

The following person testified neutrally on the bill:
     Gary Anderson representing the Texas Municipal Retirement
System
     
The following person testified for the bill:
     Steve McCullough representing the Texas Municipal Retirement
System

The bill was referred to a subcommittee consisting of the following
members:
Averitt-Chair, Rangel & McCall.  On March 23, 1995, the
subcommittee met in a formal meeting and voted to report the
measure without amendments.

On March 27, 1995, the full committee voted to report HB 2168 to
the House without amendments with the recommendation that it do
pass and be placed on the Local & Consent Calendar by a record vote
of 8 ayes, 0 nays, 1 absent & 0 pnv.1