BILL ANALYSIS
C.S.S.B. 9
By: Armbrister (Gray)
04-18-95
Committee Report (Substituted)
BACKGROUND
A 1936 amendment to the Texas Constitution authorized a retirement
system for teachers. The following year, the 45th Texas
Legislature created the Teacher Retirement System of Texas and its
nine-member Board of Trustees. The Board of Trustees is responsi-
ble for administering the retirement system and investing the
assets of the retirement fund. The agency is administered by the
executive director and is divided into four major divisions:
executive, financial, investments, and member benefits. To provide
benefits to members of the system and invest the fund, the agency
had a budget of $27.3 million and 423 employees in fiscal year
1994.
The Teacher Retirement System of Texas is subject to the Sunset
Act, but is not abolished under that Act. As a result of its
review of the system, the Sunset Advisory Commission recommended
several statutory modifications that are contained in this legisla-
tion.
PURPOSE
The purpose of this bill is to make statutory modifications
recommended by the Sunset Advisory Commission, and provide for
other changes. The modifications proposed by the bill:
- use available pension funds to raise retirement benefits
for TRS retirees by allowing retirees to take the
highest of three options:
- an ad hoc increase to their current benefit based upon
33.3 percent of the difference between the retiree's
annuity and what it would have been had the annuity kept
up with inflation;
- a recalculation of benefits based on the current
retirement formula (three highest years final average
salary times a 2.0 percent multiplier) plus all
intervening ad hoc increases and the 33.3 percent of
inflation ad hoc; or
- a minimum benefit calculated on the minimum starting
teacher salary as set in the Education Code;
- allow for persons to retire and receive the standard
service retirement annuity at age 50 with 30 years of
service;
- increase the ceiling on the lump-sum death benefit
option from $60,000 to $80,000;
- provide for the establishment of an additional joint
survivor benefit option;
- raise the minimum monthly payment for disability
retirements;
- provide for a three-month retirement "window";
- authorize Teacher Retirement System (TRS) trustees to
offer TRS-Care 3 to school districts to cover active
employees with costs of the program to be funded by the
school district and participants;
- provide for an independent evaluation of TRS investment
performance and establish a uniform reporting process;
- increase the level of investment and business expertise
on the TRS Board of Trustees and require the State Board
of Education to nominate two members for the Governor
to appoint instead of direct appointment by the State
Board of Education;
- remove the limit on the number of days retirees may work
in public schools as substitutes;
- subject TRS operating expenses to the state
appropriation process including general administrative
provisions in the General Appropriations Act and require
TRS to participate in the state's strategic planning and
performance budgeting process;
- prohibit TRS trustees and staff from using Fund
resources, state contributions, or member's
contributions for advocacy to influence legislative
action and prescribes that advocacy may be grounds for
dismissal;
- eliminate the benefit increase reserve account;
- require the TRS to comply with the provisions related
to space usage in the General Appropriations Act and in
the state purchasing statute;
- require TRS to follow provisions in the State Purchasing
and General Services Act regarding historically
underutilized business (HUB) requirements;
- schedule TRS for the standard Sunset review in four
years if TRS operating expenses are subject to the
appropriations process, or provide for Sunset review in
two years, if not subject to appropriations;
- eliminate the collection of membership fees to fund the
administration of the retirement system; and
- provide for other changes.
RULEMAKING AUTHORITY
In the committee's opinion, this bill grants rulemaking authority
to the Teacher Retirement System board of trustees in the following
Sections: SECTION 7 - Section 823.005, Government Code; SECTION
9 - Section 823.304, Government Code; SECTION 51 - Section 825.506,
Government Code; and SECTION 59 -Section 7A, Article 3.50-4,
Insurance Code.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Sections 821.001(7) and (15), Government
Code.
(7) Redefines "Employer" to remove the State Board of
Education and the Central Education Agency.
(15) Redefines "School Year" to include oral or written work
agreements with contracts.
SECTION 2. Amends Subchapter A, Chapter 821, Government
Code, by adding Section 821.007. Specifies that the buildings
comprising the home offices of the retirement system are under the
control and custodianship of the retirement system. Requires the
retirement system to comply with space use regulations in the State
Purchasing and General Services Act, the General Appropriations
Act, or other state law. Requires the retirement system to lease
to other persons at fair market value all significant unused space
in the buildings.
SECTION 3. Amends Subchapter A, Chapter 821, Government Code,
by adding Section 821.008. Specifies that the purpose of the
retirement system is to invest and protect funds, and to deliver
the benefits provided by statute, not to advocate or influence
legislative action or inaction or to advocate higher benefits.
SECTION 4. Amends Section 822.003, Government Code. (a)
clarifies that a person terminates TRS membership by not qualifying
for service credit for five consecutive years.
(b) Specifies that membership terminated under Subsection
(a)(4) is effective on the first September 1 that occurs after the
non-qualifying years.
(c) Specifies that a person does not terminate membership
under Subsection (a)(4) if that person is earning retirement credit
under another retirement system covered by Chapter 803 or 805.
SECTION 5. Amends Section 822.201, Government Code, by adding
Subsection (d). Limits the maximum amount of compensation a person
can receive for purposes of the retirement system to comply with
federal law. Grandfathers in TRS members who joined the system
before September 1, 1996.
SECTION 6. Amends Section 823.002, Government Code. Allows
errors in the crediting of service that have been credited by the
retirement system for periods of five or more years to stand
without deletion or correction unless the error concerns three or
more years of service credit or was caused by fraud.
SECTION 7. Amends Subchapter A, Chapter 823, Government Code,
by adding Sections 823.004 and 823.005.
Section 823.004 Establishes the basis for computation of
transfer credit affecting military, out-of-state, development
leave, waiver, and transfer service credits as the standard
September 1 to August 31 school year.
Section 823.005 Authorizes the board of trustees to
establish rules on accepting rollover distributions from other
qualifying retirement accounts into the retirement system for
payment of eligible service credit payments to determine
eligibility for tax-free rollover treatment or other treatment
under federal law.
SECTION 8. Amends Section 823.302(b), Government Code.
Clarifies that the insurance coverage referred to in the section is
coverage under the Texas Public School Employees Group Insurance
Act.
SECTION 9. Amends Section 823.304, Government Code, by adding
Subsection (f). Grants the board of trustees rulemaking authority
related to compliance with the federal Uniformed Services
Employment and Reemployment Rights Act of 1994.
SECTION 10. Amends Section 823.401, Government Code, by
amending Subsection (d) and adding Subsection (i).
(d) Clarifies that a member's deposit with the retirement
system for the purpose of establishing out-of-state credit will be
computed based on the rate of annual compensation for which the
member received membership credit in the retirement system.
(i) Clarifies that part-time and less than full-year service
credit will be computed by the retirement system to the equivalent
to full-time employment when calculating out-of-state service
credit and costs.
SECTION 11. Amends Section 824.002, Government Code, by
amending Subsections (a) and (b) and adding Subsections (e) and
(f).
(a) Creates a period where a member's retirement may be
effective in any month of a three-month period in which the third
month is the month in which the member applies for retirement.
(b) Creates a period where a member's disability retirement
may be effective in any month of a three-month period in which the
third month is the month in which the member applies for
retirement.
(e) Allows members to establish service credit after
retirement for service credit previously waived by reinstating
withdrawn contributions and making deposits for service.
(f) Provides that effective retirement dates may only be
changed after establishment by following the revocation procedures
under Section 824.005.
SECTION 12. Amends Section 824.003, Government Code.
Clarifies that payments are due to be paid on the first working day
following the month the payment is accrued and provides for the
full payment of retirement system annuity for the month in which an
annuitant dies.
SECTION 13. Amends Section 824.005(a), Government Code.
Removes the 45-day revocation of retirement period to conform with
the extension of the retirement window to three months as provided
in SECTION 11 of this bill. Specifies that for a revocation of
retirement to be effective, the revocation must be received by the
board before the later of the due date for the first payment or the
date on which the retirement system makes the first payment. After
those dates, a retiree may not revoke retirement. Defines payment.
SECTION 14. Amends Subchapter A, Chapter 824, Government
Code, by adding Section 824.006. Conforming change for SECTION 12
of this bill to implement the change for full payment of retirement
system annuity for the month in which an annuitant dies. Specifies
that a monthly annuity is payable to a retiree or beneficiary
through the month in which the person dies. Specifies that for a
member who dies before retirement, the first payment of the annuity
is due at the end of the month in which the member's death
occurred.
SECTION 15. Amends Section 824.101(c), Government Code.
Conforming change to allow selection of the retirement annuity
option referenced in SECTION 22 and SECTION 24 of this bill.
SECTION 16. Amends Section 824.103(a), Government Code.
Conforming change to allow selection of the retirement annuity
option referenced in SECTION 22 and SECTION 24 of this bill.
SECTION 17. Amends Section 824.104(a), Government Code.
Conforming change to allow selection of the retirement annuity
option referenced in SECTION 22 and SECTION 24 of this bill.
SECTION 18. Amends Section 824.201(b), Government Code.
Conforming change referencing the revocation of retirement to
conform with the extension of the retirement window to three months
as provided in SECTION 11 of this bill.
SECTION 19. Amends Sections 824.202(a), (d), and (f),
Government Code.
(a) Provides that a member may retire and receive a standard
service annuity if the member is at least 50 years old and has at
least 30 years of service.
(d) Provides that a member younger that 50 years old with 30
years of service credit may retire with a percentage of the
standard service retirement annuity.
(f) Removes obsolete reference to the proportionate
retirement program.
SECTION 20. Amends Section 824.203, Government Code, by
amending Subsection (a) and adding Subsection (e).
(a) Makes a conforming change.
(e) Establishes a minimum standard service retirement annuity
for classroom teachers or full-time librarians, based on the
minimum annual salary for a classroom teacher or a full-time
librarian, multiplied by 2 percent for each year of service credit
in the retirement system.
SECTION 21. Amends Subchapter C, Chapter 824, Government
Code, by adding Section 824.2031. Specifies that each regular
session, the legislature shall determine whether the performance of
the retirement system trust fund makes the fund capable of
supporting improvements in the plan of benefits. The determination
shall be founded on the most recent report of an investment
performance audit conducted under Section 825.512 and the
application of that information to the amortization period, the
rate of return on investment, economic projections, the cost of
providing cost-of-living or other increases in benefits, and an
evaluation of the diversity of system investments.
SECTION 22. Amends Sections 824.204(c) and (e), Government
Code.
(c) Creates a new "joint-life annuity" option that provides
an actuarially reduced annuity during the life of the retiree and
pays the retiree's beneficiary 75 percent of the reduced annuity
for the life of the beneficiary.
(e) Specifies that the effective date of the benefit increase
contained in the bill begins with the payment due at the end of
September, 1995 or the first monthly payment to the retiree
following the date of death of the person nominated, whichever is
later.
SECTION 23. Amends Sections 824.304(a) and (b), Government
Code.
(a) Raises the minimum benefit for disability retirees with
less than 10 years of service from $50 to $150 per month for the
shortest of the duration of the disability, the number of months of
creditable service or the retiree's life.
(b) Creates a minimum benefit for disability retirees with 10
or more years of service of $150 per month.
SECTION 24. Amends Sections 824.308(a), (b), (c) and (d),
Government Code.
(a) Specifies that an election to receive an optional
disability retirement annuity must be filed with the board of
trustees not later than the later of the effective date of
retirement or the date the member applies for retirement.
(b) Technical correction.
(c) Creates a new "joint-life annuity" option for disability
retirees that provides an actuarially reduced annuity during the
life of the disability retiree and pays the retiree's beneficiary
75 percent of the reduced annuity for the life of the beneficiary.
(d) Includes the new retirement option in those options that
will be increased to a standard annuity if the beneficiary
predeceases the disability retiree.
SECTION 25. Amends Section 824.402(a), Government Code.
Increases the ceiling on the lump sum death benefit option from
$60,000 to $80,000. Makes a technical change.
SECTION 26. Amends Sections 824.503(a) and (c), Government
Code. Conforming change to allow selection of the disability
retirement annuity option referenced in SECTION 24 of this bill.
SECTION 27. Amends Section 824.505(a), Government Code.
Provides that the retirement system may send final monthly annuity
payments to the annuitant's bank or to another address previously
indicated by the annuitant or beneficiary.
SECTION 28. Amends Section 824.602(a), Government Code.
Removes the limit on the number of days retirees may work in public
schools as substitutes.
SECTION 29. Amends Section 825.002(b), Government Code.
Requires all three of the trustees appointed by the governor to
have demonstrated financial expertise, worked in private business
or industry, and have broad investment experience.
SECTION 30. Amends Section 825.003, Government Code.
Requires the governor to appoint two members to the board of
trustees from lists of persons nominated by the State Board of
Education instead of direct appointment by the State Board of
Education. These members must be persons who have demonstrated
financial expertise, worked in private business or industry, and
have broad investment experience.
SECTION 31. Amends Sections 825.0032(a), (b), and (f),
Government Code.
(a) Updates standard language developed by the Sunset
Commission. Prohibits appointment to the board of trustees if the
person or the person's spouse conducts business with the agency, or
otherwise has financial ties to the agency.
(b) Exempts members of the system elected by their peers and
appointed to serve on the board by the governor from provisions
prohibiting membership on the board if a person or a person's
spouse receives a substantial amount of goods, services, or funds
from the system.
(f) Updates standard language developed by the Sunset
Commission. Prohibits registered lobbyists from serving as a
trustee or from being employed by the board or system as general
counsel.
SECTION 32. Amends Subchapter A, Chapter 825, Government
Code, by adding Section 825.0041. Adds standard language developed
by the Sunset Commission. Requires that members of the board be
provided with adequate information and training to perform their
duties prior to assuming their duties and being confirmed by the
senate.
SECTION 33. Amends Section 825.006, Government Code.
Updates the agency's sunset review date to 1999, if TRS is subject
to the appropriations process. If TRS is not subject to the
appropriations process, requires the agency to be reviewed under
the Sunset process in 1997.
SECTION 34. Amends Sections 825.010(a) and (c), Government
Code. Updates standard language developed by the Sunset
Commission. Defines the grounds for removing a trustee from the
board and requires notification of the board's presiding officer or
next highest officer, the appropriate appointing officers, and the
attorney general if knowledge that a potential ground for removal
exists.
SECTION 35. Amends Section 825.108, Government Code, by
adding Subsections (e) and (f).
(e) Adds standard language developed by the Sunset
Commission. Requires the board to prepare an annual financial
report that meets the reporting requirements in the General
Appropriations Act.
(f) Requires the board to report biennially to the committees
of the senate and house with jurisdiction over appropriations, to
the committees of the senate and house with jurisdiction over
legislation governing the retirement system, and the Legislative
Budget Board detailing the uses of appropriated funds, member funds
or other resources used for governmental relations, member
counseling, or official publication of positions at the time the
retirement system submits its budget request for the next state
fiscal biennium.
SECTION 36. Amends Sections 825.113(a), (b), and (f),
Government Code.
(a) Updates standard language developed by the Sunset
Commission. Requires the executive director or a designee to
inform its trustees and employees of the qualifications for office
or employment and each person's responsibilities under the law.
(b) Updates standard language developed by the Sunset
Commission. Requires the board to clearly separate its policy-
making responsibilities from the management responsibilities of the
executive director and staff of the retirement system.
(f) Updates standard language developed by the Sunset
Commission. Requires the system to comply with state and federal
program and facility accessibility laws and requires the executive
director to develop a plan that describes how non-English speaking
persons can be provided reasonable access to the system's programs.
SECTION 37. Amends Subchapter B, Chapter 825, Government
Code, by adding Section 825.115. Adds standard language developed
by the Sunset Commission. Requires the board to comply with the
open meetings and administrative procedure laws.
SECTION 38. Amends Section 825.201, Government Code. Adds
standard language developed by the Sunset Commission. Requires the
governor to designate the presiding officer of the board to serve
in that capacity at the pleasure of the governor.
SECTION 39. Amends Section 825.206, Government Code, by
adding Subsections (d) and (e).
(d) Requires each actuarial experience study to include a
review of all actuarial assumptions in light of trends and economic
projections.
(e) Requires each actuarial valuation to include a detailed
analysis comparing experience factors to their actuarial
assumptions. The analysis shall identify significant variations in
actual experience from what was assumed. A material variation
should be the focus of an actuarial experience study.
SECTION 40. Amends Sections 825.213(a), (b), and (c),
Government Code.
(a) Updates standard language developed by the Sunset
Commission. Requires the executive director or a designee to
develop an intra-agency career ladder program that addresses
mobility and advancement opportunities for employees within the
system and requires intra-agency postings of job openings
concurrently with any public posting.
(b) Updates standard language developed by the Sunset
Commission. Requires the executive director or a designee to
develop a system of annual performance evaluations based on
documented employee performance and upon which merit salary
increases must be based.
(c) Updates standard language developed by the Sunset
Commission. Requires the executive director or a designee to
develop an equal employment policy.
SECTION 41. Amends Subchapter C, Chapter 825, Government
Code, by adding Section 825.215. Prohibits advocacy by employees
of the retirement system and prescribes that advocacy may be
grounds for dismissal.
SECTION 42. Amends Section 825.306, Government Code.
Eliminates the benefit increase reserve account.
SECTION 43. Amends Section 825.309(b), Government Code.
Conforming change to eliminate the benefit increase reserve account
referenced in SECTION 42.
SECTION 44. Amends Sections 825.312, 825.313, and 825.314,
Government Code.
Section 825.312. (a) Requires the retirement system to
transfer money from the interest account for expenses that exceed
the amount of appropriated operating expenses into the expense
account. Makes conforming changes.
(b) Authorizes the retirement system to pay all
administrative expenses that exceed the state appropriation from
the expense account if necessary to perform fiduciary duties of the
board.
Section 825.313. Authorizes the board of trustees to transfer
funds from the interest account to the expense account to cover the
expenses of the retirement system that exceed the appropriated
operating expenses and that are required to perform the fiduciary
duties of the board. Conforming change to repeal the benefit
increase reserve account. Renumbers Subdivisions.
Section 825.314. (a) Requires the retirement system to use
all assets contributed by the state except those appropriated for
operating expenses to pay benefits authorized by this subtitle.
(b) Requires the staff of the retirement system to report at
each board meeting the amounts and uses since the preceding board
meeting of any money expended by the system for operations in
excess of the amount appropriated for operating expenses and
include an explanation of why the amounts were needed to perform
the fiduciary duties of the board. Requires the retirement system
to annually prepare and issue to all members of the system and the
governor, lieutenant governor, and the speaker of the house of
representatives a summary of reports presented to the board during
the preceding year.
SECTION 45. Amends Subchapter D, Chapter 825, Government
Code, by adding Section 825.315. Prohibits a trustee or employee
of the retirement system from using assets of the retirement
system, to advocate or influence legislative action or inaction.
Clarifies that this provision should not be construed to prohibit
the flow of information from TRS to persons or organizations
requesting information. Also clarifies that this provision should
not be construed to prohibit the use of the retirement system's
facilities by groups of members or retirees or by officers or
employees of state agencies.
SECTION 46. Amends Section 825.403, Government Code by
amending Subsection (b) and adding Subsection (j).
(b) Requires employers to use electronic fund transfer to
send employee contributions to the retirement system unless the
employer certifies that it is unable to establish a qualifying
financial institution account or that payment by electronic fund
transfer would be impractical or more costly than payment by paper
check.
(j) Requires documentation to establish unreported service.
Establishes acceptable proof of unpaid service. Grants retirement
system authority to audit records.
SECTION 47. Amends the heading of Section 825.404,
Government Code. Changes the heading from COLLECTION OF STATE
CONTRIBUTIONS to COLLECTION OF STATE CONTRIBUTIONS AND APPROPRIATED
OPERATING EXPENSES.
SECTION 48. Amends Section 825.404, Government Code, by
redesignating and amending Subsection (d) as Subsection (e) and
adding new Subsection (d).
(d) Requires the legislature to appropriate money from the
general revenue fund to pay the operating expenses of the
retirement system for each fiscal year.
(e) Specifies that money appropriated to the retirement
system for operating expenses will remain in the general revenue
fund until approved by the comptroller under the process set out in
Chapter 2103 that governs expenditures by state agencies.
SECTION 49. Amends Section 825.503, Government Code.
Authorizes the retirement system to use electronic systems for
receiving and storing information. Defines electronic storage and
electronic records.
SECTION 50. Amends Section 825.504, Government Code.
Specifies that oral contracts be put on the same contract year
basis as written contracts—year begins after June 30 and continues
after August 31. Requires employers to certify that this oral
contract year is in effect. Requires each reporting district to
cooperate with the retirement system to ascertain a member's annual
earnings.
SECTION 51. Amends Section 825.506(a), Government Code.
Limits the benefits a person can receive to not exceed those
permitted by federal law. Authorizes board to adopt rules to
ensure benefits do not exceed limits permitted by federal law.
SECTION 52. Amends Section 825.508(b), Government Code.
Updates reference to the power of attorney statute to current law.
SECTION 53. Amends Section 825.511, Government Code. (a)
Updates standard language developed by the Sunset Commission.
Requires the system to maintain files on complaints that the system
has the authority to resolve and to notify the parties regarding
the status of the complaint quarterly until disposition.
(b) Updates standard language developed by the Sunset
Commission. Requires the system to collect and maintain
information about all complaints filed with the system.
SECTION 54. Amends Subchapter F, Chapter 825, Government
Code, by adding Sections 825.512, 825.513, 825.514, and 825.515.
Section 825.512. Requires the agency's investment practices
and performance to be evaluated by an independent firm selected by
the legislative audit committee and requires a report detailing the
evaluation to be submitted to the legislative audit committee by
December 1 of even-numbered years. Authorizes the legislative
audit committee to determine the scope of the evaluation, although
the first evaluation is to be comprehensive, and requires the
retirement system to pay the costs of the independent evaluation.
Requires the retirement system to submit their annual investment
performance report to the appropriate legislative committees and
the Legislative Budget Board in a format based on recommendations
of the independent firm within 25 days of the end of each fiscal
year.
Section 825.513. Requires the retirement system to verify
with the State Pension Review Board the accuracy of information on
the effects of proposed legislation on members' retirement benefits
and the trust fund before including the information in an official
publication of the retirement system.
Section 825.514. Subjects the retirement system to the
historically underutilized business provisions of the State
Purchasing and General Services Act.
Section 825.515. Requires the retirement system to compile
and maintain information identifying members in relation to the
types of positions they have held and whether service was full or
part-time. Requires the retirement system to provide to the
commissioner of education information allowing contributing members
to be identified in information submitted by school districts under
the Education Code. Provides for the confidentiality of records
under this section.
SECTION 55. Amends Section 1, Article 3.50-4, Insurance
Code. Changes the name of the article to the Texas Public School
Employees Group Insurance Act.
SECTION 56. Amends Sections 2(3) and (4), Article 3.50-4,
Insurance Code.
(3) Expands the definition of "Dependent" to include those
related to an active member.
(4) Defines "Fund" as the Texas public school employees group
insurance fund.
SECTION 57. Amends Section 3(a), Article 3.50-4, Insurance
Code. Changes the name of the insurance program to the Texas
Public School Employees Group Insurance Program.
SECTION 58. Amends Section 5(a), Article 3.50-4, Insurance
Code. Authorizes basic and optional group coverage be provided to
active members and specifies that the trustees can set standards
for group insurance coverage that apply to active members.
SECTION 59. Amends Article 3.50-4, Insurance Code, by adding
Section 7A.
Section 7A. (a) Allows a public school district to
participate in a health insurance program for active members
offered by the retirement system. Requires a district that
participates in the system to accept a schedule of costs adopted by
the trustee and prohibits a participating district from offering an
alternative health benefit plan during participation in the
program.
(b) Provides trustee with authority to develop rules to
govern entry into and exit from the program and to minimize the
effects of adverse selection as necessary to maintain the financial
health of the program.
(c) Requires the trustee to provide optional group coverages
for active employees participating in the program. The coverages
must be separate from coverages provided to retirees. Premiums and
fees from school districts and active members participating in the
program must cover all expenses of participation.
(d) Participation of an active employee of a participating
employer is optional with the employee. A participating school
district is prohibited from offering an incentive to an active
employee for declining to participate in the program. An active
employee is entitled to obtain coverage for dependents in the same
manner as a participating retiree.
(e) Each participating school district must contribute for
each district employee an amount equal to the cost for the employee
only of the plans authorized by the trustee, except that the cost
may not exceed the amount contributed by the state for each state
employee.
(f) Requires each employee covered by the program to pay the
portion of the cost not covered by the school district.
(g) Requires the trustee to deposit in the fund all monies
collected from the $10 health insurance fee, except that portion
used to conduct the survey required by Section 44. Requires the
trustee to collect the fee through the 1996-1997 school year and
specifies that the fee expires after the 1996-1997 school year.
(h) Authorizes the state to contribute to the program to
assist in the expansion of the program to active employees.
(i) Requires the trustee to begin enrollment of active
employees in the program beginning with the 1996-1997 school year.
SECTION 60. Amends Section 9, Article 3.50-4, Insurance
Code. Adds active employees to the recipients of required
information from insurance carriers.
SECTION 61. Amends Section 10(a), Article 3.50-4, Insurance
Code. Broadens the scope of the report that the trustee is
required to make to the State Board of Insurance by deleting
"retirees, surviving spouses, dependents, and surviving dependent
children" and inserting "persons".
SECTION 62. Amends Sections 12 and 13, Article 3.50-4,
Insurance Code.
Sec. 12 Adds active employees to group life insurance and
group accidental death and dismemberment insurance coverage and
makes a conforming change.
Sec. 13 Specifies that an active employee who applies during
an enrollment period may not be denied coverage unless the person
has been found to have defrauded or attempted to defraud the
program.
SECTION 63. Amends the heading of Section 15, Article 3.50-4, Insurance Code. Changes the heading of the Section from RETIRED
SCHOOL EMPLOYEES GROUP INSURANCE FUND to SCHOOL EMPLOYEES GROUP
INSURANCE FUND.
SECTION 64. Amends Section 15(a), Article 3.50-4, Insurance
Code. Applies the new name of the fund: the school employees group
insurance fund.
SECTION 65. Amends Article 3.50-4, Insurance Code, by adding
Section 15A. Requires the legislative audit committee to select an
independent firm to conduct a study and make recommendations
concerning the funding of a school employees group insurance fund.
Requires the report of the study to be filed not later than
December 1, 1996 and that the trustee shall pay the costs of the
study. Specifies that this section expires January 1, 1997.
SECTION 66. Amends Sections 18A(a), (b), (d), and (f),
Article 3.50-4, Insurance Code. Adds active employees to the group
health insurance provisions and makes conforming changes.
SECTION 67. Amends Section 18B(a), Article 3.50-4, Insurance
Code. Adds active employees to confidentiality provisions in the
Teacher Retirement System health insurance program and refers to
the new name of the program: the Texas Public School Employees
Group Insurance Program. Makes a conforming change.
SECTION 68. Amends Sections 18C(c), (d), and (i), Article
3.50-4, Insurance Code. Makes a conforming change to refer to the
new names of the program (the Texas public school employees group
insurance program) and the fund (the school employees group
insurance fund).
SECTION 69. (a) Provides that monthly payments of a death or
retirement benefit annuity by the Teacher Retirement System of
Texas are increased beginning with the payment due at the end of
September 1995.
(b) Provides an ad hoc benefit increase equal to 33.3 percent
of the difference between the member's benefit and what the benefit
would have been had it kept pace with inflation. The percentage
increase is indexed by and based on year of retirement and provides
a percentage increase to all members who retired before September
1, 1993.
(c) Provides that annuitants are entitled to the greater of:
a monthly benefit annuity computed as if Subtitle C, Title 8,
Government Code, as it existed on January 1, 1995 had been in
effect on the date of retirement or date of death and all benefit
increases including the 33.3 percent of inflationary ad hoc were
included that applied to the annuity and were provided after the
date the annuity began; or a monthly benefit annuity option based
on one-twelfth the minimum annual salary as provided by the
Education Code for a full-time teacher or librarian, multiplied by
2 percent for each year of service credit in the retirement system;
actuarially reduced, if applicable, for early retirement.
SECTION 70. Repeals Sections 825.106, 825.310, and 825.401,
Government Code.
825.106 Repeals benefit increase reserve account.
825.310 Repeals benefit increase reserve account.
825.401 Repeals the collection of membership fees to fund the
administration of the retirement system.
SECTION 71. (a) Specifies that Section 824.304, Government
Code, as amended by this Act, applies to payments of annuities to
persons who retired for disability before the effective date as
well as to annuities that become payable on or after that date.
(b) Specifies that the balance of the benefit increase
reserve account be transferred to the retired reserve account on
September 1, 1995.
SECTION 72. Specifies that the terms of the current trustees
appointed by the State Board of Education expire August 31, 1995.
Specifies the expiration dates of the trustees appointed by the
governor with consultation from the State Board of Education as
well as the date of a trustee appointed by the governor without the
consultation of the State Board of Education.
SECTION 73. Requires the agency to develop and submit a space
allocation plan to the General Services Commission for approval no
later than March 1, 1996 and implement the plan no later than
September 1, 1996.
SECTION 74. Establishes the effective date of the Act as
September 1, 1995, except for Section 72 and this section, which
takes effect August 31, 1995.
SECTION 75. Emergency clause.
COMPARISON OF ORIGINAL TO SUBSTITUTE
Major points of difference between SB 9, as engrossed, and the
committee substitute are as follows (items 1-17 contain provisions
not found in SB 9, as engrossed):
1. The substitute redefines employer to exclude State Board
of Education and Central Education Agency, whose
employees are no longer members of TRS.
2. The substitute redefines school year to allow oral and
written work agreements in addition to contracts in
determining a school year.
3. The substitute clarifies that a person terminates TRS
membership by allowing their account to go dormant over
five years.
4. The substitute limits the maximum amount of compensation
a person can receive for purposes of the retirement
system to comply with federal law and grandfathers TRS
members who joined the system before September 1, 1996.
5. The substitute allows mistakes in the crediting of
service that have been credited by the retirement system
for periods or five or more years to stand without
deletion or correction unless the error concerns three
or more years of service credit or was caused by fraud.
6. The substitute establishes the basis for computation of
credit affecting military, out-of-state, development
leave, waiver, and transfer service credits as the
standard September 1 to August 31 school year.
7. The substitute allows the board of trustees to adopt
rules related to accepting rollover distributions of
other qualifying retirement accounts for payment of
service credit payments into the retirement system if
consistent with federal tax law.
8. The substitute grants the board rulemaking authority
related to compliance with the federal Uniformed
Services Employment and Reemployment Rights Act of 1994.
9. The substitute clarifies that part-time service credit
will be computed using full-time employment when
calculating purchase of service costs for out-of-state
service.
10. The substitute creates a period where a member's
retirement or disability retirement may be effective in
any month of a three-month period previous to
application for retirement.
11. The substitute provides that a member may retire and
receive a standard service annuity if the member is at
least 50 years old and has at least 30 years of service.
12. The substitute creates a new joint-life annuity option
for service and disability retirements that provides the
beneficiary with 75 percent of the reduced annuity for
life.
13. The substitute raises the minimum benefit for disability
retirees from $50 to $150 per month.
14. The substitute increases the ceiling on the lump sum
death benefit option from $60,000 to $80,000.
15. The substitute removes the limit on the number of days
retirees may work in public schools as substitutes.
16. The substitute eliminates the benefit increase reserve
account.
17. The substitute eliminates the $10 membership fee
previously used to fund a portion of the administration
of the retirement system.
18. The substitute changes the composition of the TRS board
by eliminating SB 9 provisions for appointments by the
lieutenant governor and speaker and instead requires two
of the governor's appointees be made from a list of
nominees submitted by the State Board of Education. The
result would be three members appointed directly by the
governor, two members appointed by the governor from a
list nominated by the State Board of Education, and four
members continue to be appointed by the governor from
list nominated by education peer groups after elections
held by these groups.
19. The substitute adds language to provisions in SB 9
clarifying that individuals and organizations may
receive requested materials directly from TRS and that
education organizations may hold meetings in TRS
buildings.
20. The substitute changes the Sunset date from 2007 to
1999.
21. The substitute removes provisions in SB 9 related to
investments in economically targeted investments.
SUMMARY OF COMMITTEE ACTION
SB 9 was considered by the committee in a public hearing on March
27, 1995.
Patricia Gray testified as the bill's House Sponsor.
The following persons testified neutrally on the bill:
John Moore representing the Texas Sunset Commission
David Holland representing the Texas Sunset Commission
Ken Levine representing the Texas Sunset Commission
Rita Horwitz representing the Pension Review Board
Lennijo Blair representing herself
Mike Barron representing the Teacher Retirement System
Randy Mercer representing himself and the Teacher Retirement
System
Frank Camp representing the Teacher Retirement System Board of
Trustees
Mike McLamore representing the Assoc. of Professional
Educators
Dana Williams representing the Teacher Retirement Board of
Trustees
Pam Thomas representing the Texas Federation of Teachers
The following persons testified for the bill:
Mike Lehr representing the Retired Teachers Assoc.
Michael L. Davidson representing himself
Elaine Nail representing herself and the Texas Counseling
Assoc.
Lonnie Hollingsworth representing the Texas Classroom Teachers
Assoc.
Myrtice N. Larson representing the Texas Retired Teachers
Assoc.
The following person testified against the bill:
Anna Nohavitza representing herself
The bill was left pending before the committee.
SB 9 was again considered in a public hearing on April 10, 1995.
Patricia Gray testified as the bill's House Sponsor.
The following person testified for the bill:
Mike Lehr representing the Texas Retired Teachers Assoc.
The following persons testified neutrally on the bill:
Don Rogers representing the Teacher Retirement System Working
Group
John Moore representing the Texas Sunset Commission
The Committee considered a complete substitute for the bill. The
substitute was adopted without objection.
The bill was reported favorably as substituted with the
recommendation that it do pass and be printed, by a record vote of
7 ayes, 0 nay, 0 pnv & 2 absent.