BILL ANALYSIS
S.B. 774
By: Barrientos
Intergovernmental Relations
03-16-95
Committee Report (Unamended)
BACKGROUND
Chapter 183, Article 6243e.1, V.T.C.S., is the act governing the
retirement, disability, and death benefits fund for fire fighters
of the City of Austin, Texas. The act, originally enacted in 1975,
has been repeatedly amended, and now contains obsolete and
ambiguous provisions.
PURPOSE
As proposed, S.B. 774 amends provisions relating to the
participation in, contributions to, and benefits and administration
of retirement systems for firefighters.
RULEMAKING AUTHORITY
It is the committee's opinion that rulemaking authority is granted
to the board of trustees of the firefighters relief and retirement
fund under SECTION 1 (Section 2.11, Article 6243e.1, V.T.C.S.) of
this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Chapter 183, Article 6243e.1, V.T.C.S., as
follows:
ARTICLE 1. GENERAL PROVISIONS
Sec. 1.01. APPLICABILITY. Provides that this Act applies
only to a municipality having a population of more than
450,000 and less than 500,000.
Sec. 1.02. DEFINITIONS. Defines "accumulated contributions,"
"actuarial equivalent," "board of trustees," "board's
actuary," "compensation," "dependent child or dependent
children," "fire department," "firefighter," "fund," "internal
revenue code," "member," and "retiree."
Sec. 1.03. CONTINUED EXISTENCE. Provides that a firefighters
relief and retirement fund is continued in existence in each
municipality to which this Act applies. Requires the name of
a fund to be the name of the municipality as prescribed.
Sec. 1.04. EXEMPTION FROM EXECUTION. Provides that all
retirement annuity payments, other benefit payments, and a
member's accumulated contributions are unassignable and are
exempt from execution, garnishment, attachment, and state and
local taxation.
ARTICLE 2. ADMINISTRATION
Sec. 2.01. RESPONSIBILITY. Provides that each fund
established under this Act is a trust and that the board of
trustees (board) is responsible for the administration of the
fund.
Sec. 2.02. COMPOSITION OF BOARD. Sets forth the composition
of the board.
Sec. 2.03. ELECTED MEMBERS OF BOARD. (a) Requires the
elected members of the board to be elected and hold office in
accordance with this section.
(b) Requires the board to hold an election to elect one
member of the board between November 1 of each year and
before the first Monday in January of the following year.
(c) Provides that each election is by secret written ballot
on a date determined by the board. Authorizes only persons
who have been nominated to be listed on the written ballot.
Authorizes nominations to be made in person, by mail, or by
telephone to the office of the fund and must be received
between October 1 and October 15.
(d) Requires the board of trustees to certify the results
of each election. Provides that a newly elected board
member takes office at the first board meeting in January.
(e) Sets forth the length of term members of the board are
to serve in office.
(f) Provides that a vacancy in the position of an elected
member of the board is to be filled for the remainder of the
term at an election to be held within 60 days after the date
of the event that caused the vacancy.
(g) Provides that the firefighter or retiree receiving the
highest number of votes in an election under this section is
elected, except when no person receives a majority of the
votes cast, a runoff election shall be held between the two
persons receiving the highest number of votes. Provides
that a runoff election is held on a date determined by the
board, and the person receiving the highest number of votes
in the runoff election is elected.
(h) Authorizes the administrative expenses of an election
to be paid from the assets of the fund. Prohibits assets of
the fund from being used to pay campaign expenses incurred
by or for a member. Prohibits office supplies and equipment
belonging to the fund from being used to assist any
candidate or person seeking to assist a candidate for a
position on the board.
Sec. 2.04. COMPENSATION. Prohibits a member of the board
from receiving compensation for service on the board.
Sec. 2.05. OFFICERS. Provides that the mayor is the
presiding officer and the city treasurer is the secretary-treasurer of the board. Requires the board to elect annually
from its membership an alternate presiding officer who will
preside in the absence or disability of the mayor.
Sec. 2.06. QUORUM AND VOTING. Provides that each member of
the board is entitled to one vote. Provides that it is
necessary to have a majority vote of the board at a meeting in
which a quorum is present. Requires a resolution or order of
the board to be made by a vote recorded in the minutes of the
proceedings.
Sec. 2.07. MEETINGS; MINUTES. Requires the board of trustees
to hold regular monthly meetings at a time and place that it
designates and authorizes the board to hold special meetings
on the call of the presiding officer or alternate presiding
officer. Requires the board to keep accurate minutes of its
meetings and records of its proceedings.
Sec. 2.08. ADMINISTRATION OF FUNDS. Sets forth the
administration of funds by the board of trustees.
Sec. 2.09. DETERMINATION BY BOARD. Authorizes the board of
trustees to hear and determine all matters regarding
eligibility of certain persons to receive benefits or
participate in a fund.
Sec. 2.10. TESTIMONY. Authorizes the board of trustees to
compel witnesses to attend and testify before the board
regarding all matters related to the fund and authorizes the
presiding officer or alternate to administer oaths to
witnesses.
Sec. 2.11. RULEMAKING. Requires the board to adopt rules and
perform activities necessary for the efficient administration
of the fund.
ARTICLE 3. MEMBERSHIP
Sec. 3.01. GENERAL REQUIREMENT. Provides that a person who
begins service as a firefighter in a municipality and who is
not ineligible for membership in the fund becomes a member of
the fund as a condition of that person's appointment.
Sec. 3.02. APPOINTMENT TO CHIEF. Provides that a firefighter
who is a member of the fund continues to be a member if the
firefighter is appointed to the rank of chief or the rank
immediately below chief.
Sec. 3.03. TERMINATION OF MEMBERSHIP. Provides that a person
ceases to be a member of the fund on the date of death or
refund or escheat of the person's contributions while absent
from service.
ARTICLE 4. SERVICE CREDIT
Sec. 4.01. GENERAL PROVISION. Provides that one month of
service credit is earned in the fund for each month a member
makes a required contribution to the fund.
Sec. 4.02. MILITARY SERVICE. Provides that a member retains
all accumulated service credit and is allowed service credit
for each month during which the member performs active duty
service in the armed forces or reserves of the United States,
with exceptions and conditions.
Sec. 4.03. FORMER SERVICE. Provides that a member who is
absent from service with the department for reasons other than
military service retains all accumulated service credit for
the member's former service with the department, but receives
no credit for the period of absence, if the length of the
absence is less than five years and the member leaves the
member's contributions in the fund during the absence.
Sec. 4.04. OTHER ABSENCE. Provides that if a member who has
less than 10 years of service credit in the fund is absent
from service with the department for at least five years for
any other reason, the fund will refund the member's
accumulated contributions and cancel the person's credited
service.
Sec. 4.05. PERIODS OF DISABILITY. Prohibits a firefighter
from being granted service credit for time during which the
person receives a disability benefit from the fund.
ARTICLE 5. SERVICE RETIREMENT BENEFITS
Sec. 5.01. NORMAL SERVICE RETIREMENT ELIGIBILITY. Provides
that a member is eligible to retire and receive a normal
service retirement if the member meets certain age and service
requirements.
Sec. 5.02. CONTINUED SERVICE. Requires a member who
continues to actively serve in the department after the date
of retirement eligibility to continue to make contributions to
the fund and accrue service credit until the date of actual
retirement.
Sec. 5.03. DETERMINATION OF AVERAGE MONTHLY SALARY. Sets
forth the procedures for determining a member's average
monthly salary.
Sec. 5.04. NORMAL SERVICE RETIREMENT BENEFIT. Sets forth the
procedures for determining a monthly payment of a service
retirement annuity of a person retiring on or after January 1,
1995 based on a three percent factor. Provides for the change
of calculating percentage under certain conditions. Sets
forth the procedures for determining a monthly payment of a
service retirement annuity of a person retiring before January
1, 1995, based on a benefit formula.
Sec. 5.05. EARLY RETIREMENT. (a) Provides that a member is
eligible to retire and receive a reduced service retirement
annuity if the member meets certain age and service
requirements.
(b) Sets forth the procedures for determining a monthly
payment of a reduced service retirement annuity of a person
who retires early based on early retirement tables adopted
by the board.
Sec. 5.06. ELIGIBILITY AFTER 10 YEARS OF SERVICE. (a)
Authorizes a member to terminate employment with the
department and later retire and receive a service retirement
benefit if the member meets certain age and service
requirements and conditions at the time of retirement.
(b) Provides that the retirement benefit payable to a
member on retirement is computed on the bases of the formula
in effect at the time the member terminated employment with
the department.
Sec. 5.07. WITHDRAWAL OF CONTRIBUTIONS. Authorizes a person
who has terminated employment with the department and left
contributions with the fund to apply at any time for and
receive the accumulated contributions. Requires the fund to
make the payment in the form of a direct trustee-to-trustee
transfer if a person eligible for a refund of contributions
elects and specifies to have all or a portion of the
accumulated contributions paid directly to an eligible
retirement plan to which the contributions are to be paid on
a form approved for the purpose by the fund.
ARTICLE 6. DISABILITY RETIREMENT BENEFITS
Sec. 6.01. INITIAL ELIGIBILITY FOR DISABILITY RETIREMENT.
Sets forth conditions which make a firefighter eligible to
retire and receive a disability retirement.
Sec. 6.02. NO REQUIREMENT OF ON-THE-JOB INJURY. Provides
that to qualify for disability retirement, a person's
disability does not have to be incurred in connection with the
person's performance of duties as a firefighter and may be
incurred while employed by some person or entity other than
the fire department.
Sec. 6.03. AMOUNT OF DISABILITY BENEFIT. Provides that the
disability retirement benefit payable to a member, subject to
adjustment, is the normal service retirement benefit under
Section 5.04, but not less than the member would have received
after 20 years of service credit.
Sec. 6.04. TERMINATION DURING FIRST 2-1/2 YEARS. Authorizes
the board to terminate a retirement benefit and restore a
person to active service at not less than the same rank the
person held at the time of disability retirement, if during
the first 2-1/2 years of disability retirement, a retiree
recovers to the extent that the person is able to perform the
duties as a firefighter.
Sec. 6.05. CONTINUATION AFTER FIRST 2-1/2 YEARS. Authorizes
the board to review from time to time the situation of the
person to determine the status of disability after a retiree
has received disability retirement benefits for at least 2-1/2
years. Authorizes the board to ask the medical board for its
opinion of the status of the disability. Authorizes the board
to continue to pay full or reduced payment or discontinue
payment of a disability benefit, if the board determines that
person has recovered to the extent that the person is able to
be employed.
Sec. 6.06. APPLICATION; PHYSICIAN'S STATEMENT; MEDICAL BOARD
ACTION. (a) Requires an application for disability
retirement to be accompanied by a written statement, on a
board-approved form, and signed by a physician of the member's
choice. Requires the member to pay any costs of or fees for
obtaining the physician's statement and to file the
application and statement with the fund. Requires the board
to evaluate the medical and other pertinent information
concerning the member's application as soon as possible after
the application is filed.
(b) Authorizes the medical board to require any firefighter
to obtain additional medical opinions before issuing a
certificate that the member is unable, as a result of
physical or mental disability, to perform the duties of the
a firefighter. Requires the fund to pay any examination
costs or fees by a person other than the member's own
physician.
(c) Authorizes a certificate from the medical board to
include a finding by the medical board that the disability
is likely to be temporary or total and permanent.
(d) Authorizes the board to require a person receiving a
disability retirement benefit to appear and undergo a
medical examination by a physician selected by the board or
the medical board for the purpose. Requires the result of
the examination and report by the physician to be considered
by the board in determining whether the benefit will be
continued, increased, if less than the maximum, decreased,
or discontinued.
Sec. 6.07. EVIDENCE OF INCOME OF DISABILITY RETIREE.
Authorizes the board to require a person receiving disability
retirement benefits to provide evidence of annual income.
Authorizes the board to consider the evidence in any
determination of ability to be employed. Authorizes the board
to reduce or discontinue disability retirement benefit
payments to a person who fails or refuses to produce
information which the board has required under this section.
Sec. 6.08. REINSTATEMENT; SERVICE RETIREMENT ELIGIBILITY.
(a) Authorizes the board to reinstate any disability
retirement benefit that previously has been terminated or
reduced if the disabled firefighter's condition has worsened
as a result of the same cause for which the person was
previously granted disability retirement.
(b) Provides that a person is entitled to the service
retirement benefit on meeting all requirements for that
benefit, reduced by the amount of any disability retirement
benefit that the person continues to receive from the fund,
if a person's disability retirement benefit is reduced or
discontinued and the person is or subsequently becomes
eligible for service retirement under other provisions of
this Act.
Sec. 6.09. NO BENEFITS WHILE RECEIVING SALARY. Prohibits a
person from receiving disability retirement benefits for any
period during which the person receives full salary or
compensation from the department, including payments received
while on sick leave.
ARTICLE 7. SURVIVOR'S BENEFITS
Sec. 7.01. SURVIVING SPOUSE OR FIREFIGHTER. Provides that a
firefighter's surviving spouse, if the firefighter dies before
retirement, is entitled to receive an immediate monthly
benefit from the fund of 75 percent of the service retirement
benefit that the firefighter would have received if the
firefighter had retired on the date of death, but not less
than 75 percent of the monthly payment the decedent would have
received based on 20 years of service credit.
Sec. 7.02. SURVIVING SPOUSE OF RETIREE. Entitles the
retiree's surviving spouse, if any, to receive an immediate
monthly benefit of 75 percent of the benefit paid to the
retiree.
Sec. 7.03. SURVIVING SPOUSE OF FORMER FIREFIGHTER. (a)
Provides that an immediate monthly benefit is payable to the
surviving spouse of a former firefighter who met certain
service requirements and conditions.
(b) Provides that the benefit is payable only if the spouse
was married to the former firefighter on the date of the
former firefighter's termination of employment with the
department, if the former firefighter died before attaining
50 years of age.
(c) Provides that the benefit is payable only if the spouse
was married to the former firefighter when the member
attained 50 years of age, if the former firefighter died
after attaining 50 years of age.
(d) Provides that the amount of the benefit payable is 75
percent of the retirement benefit the former firefighter
either was receiving or was entitled to receive at age 50.
Sec. 7.04. TERMINATION OF SPOUSE'S BENEFIT. Provides that
if, at the time of termination of employment with the
department, the deceased firefighter or retiree met the
requirements for normal retirement eligibility, the benefit
payable to a surviving spouse is payable throughout the
surviving spouse's remaining lifetime. Provides that
otherwise, the benefit ceases on the earlier of the spouse's
death or marriage to any other person.
Sec. 7.05. SURVIVING CHILDREN'S BENEFIT. (a) Provides that
a benefit is payable to the decedent's surviving dependent
children, if any, on the death of a member if there is no
surviving spouse. Provides that if there is more than one
dependant child of the decedent, each dependent child is
entitled to receive an equal share of the total monthly
payment. Makes a conforming change.
(b) Provides that a benefit is payable to each of the
decedent's surviving dependent children, if any, and if
there is a surviving spouse. Provides that the monthly
amount of the benefit payable to each child is 15 percent of
the monthly payment that the decedent would have received
under the service retirement benefit, but not less than 15
percent of the monthly payment the decedent would have
received based on 20 years of service credit. Provides that
if the decedent left more than five surviving dependent
children, the monthly benefit payable to each child is to be
reduced so that the total monthly benefit does not exceed
the total monthly benefit that would have been payable if
the decedent had left no surviving spouse.
(c) Requires payments by the fund to a dependent child to
cease on the earliest of the date of the child's death,
marriage, or attainment of age 22.
Sec. 7.06. PAYMENTS TO DEPENDENT PARENTS; PAYMENT TO ESTATE.
Provides that one or more surviving parents is entitled to
receive a monthly benefit payment equal to the monthly amount
that would have been payable to a surviving spouse of the
deceased, if a deceased member leaves no surviving spouse and
no surviving children entitled to receive a benefit. Provides
that all payments cease upon the death of the surviving
dependent parent.
Sec. 7.07. INCREASE IN SURVIVORS' BENEFITS. Authorizes
benefits to dependent children and to surviving spouses, on an
affirmative vote of a majority of the board, to be increased
to an amount not to exceed the amount approved by the actuary.
Sec. 7.08. PERSON CAUSING DEATH OF MEMBER OR BENEFICIARY.
(a) Prohibits a benefit payable on the death of a member or
beneficiary from being paid to a person convicted of causing
that death, but instead a benefit is payable to a person who
would be entitled to the benefit had the convicted person
predeceased the decedent. Provides that the benefit is
payable to the decedent's estate if no person would be
entitled to the benefit.
(b) Provides that the fund is not required to pay a benefit
under Subsection (a) unless it receives actual notice of the
conviction of the person who would have been entitled to the
benefits. Authorizes the fund to delay payment of a benefit
payable on the death of a member pending the results of a
criminal investigation and of legal proceedings relating to
the cause of death.
(c) Provides that the benefit payable under this section is
a refund of the member's accumulated contributions and
interest, reduced by any annuity payments that may have been
made as a result of the member's retirement.
(d) Provides that a person has been convicted of causing
the death of a member or beneficiary if the person has
pleaded guilty or nolo contendere to or has been found
guilty by a court and has no appeal of the conviction
pending and the deadline for an appeal has expired.
ARTICLE 8. DEFERRED RETIREMENT OPTION PLAN
Sec. 8.01. MEMBER REMAINING IN ACTIVE SERVICE. Authorizes a
member who is eligible to receive a normal service retirement
benefit to remain in action service, become a participant in
the deferred retirement option plan (DROP), and defer the
beginning of a retirement annuity, in lieu of either leaving
active service or remaining in active service and continuing
to accrue additional service credit. Provides that once an
election to participate in the DROP has been made, the
election continues in effect as long as the member remains in
active service as a firefighter. Authorizes the member to
apply for a service retirement annuity when the member leaves
active service.
Sec. 8.02. ELECTION TO PARTICIPATE IN DROP. Requires the
election to participate in the DROP to be made in accordance
with adopted procedures by the board. Authorizes the election
to be made at any time on or after the date the member becomes
eligible for normal service retirement and becomes effective
on the first day of the first month after the date of the
election. Requires a member, at the same time a member elects
to participate in the DROP, to agree in writing to terminate
service with the department on a date not later than the
second anniversary of the effective date of the election.
Provides that an agreement to terminate service is binding on
the member and the fire department, except that the member may
terminate active service at any time before the date selected.
Provides that an election to participate in the DROP has no
effect on either the municipality's or the member's
contributions.
Sec. 8.03. CREDITS TO MEMBER'S DROP ACCOUNT. Requires the
board to cause an amount equal to the retirement annuity that
the member would have received for that month if the member
had left active service and been granted a retirement annuity
on the effective date of the election to be credited to a
separate DROP account maintained within the fund for the
benefit of the member, each month after a member makes an
election to participate in the DROP and until the member's
retirement. Requires a member's contributions made after the
effective date of the election to participate in the DROP to
be credited to the member's DROP account. Requires amounts
held in a member's DROP account to be credited at the end of
each calendar month with interest at a rate equal to 1/12th of
5 percent until the member's retirement.
Sec. 8.04. AMOUNT OF CREDITS TO MEMBER'S DROP ACCOUNT. Sets
forth provisions for the amount credited monthly to the
member's DROP account.
Sec. 8.05. DISTRIBUTIONS FROM MEMBER'S DROP ACCOUNT. (a)
Requires a member who participates in the DROP to begin to
receive the amount credited to the person's DROP account on
leaving active service as a firefighter and beginning to
receive a retirement annuity under certain methods of
distribution selected by the member.
(b) Makes a conforming change.
(c) Prohibits a member from receiving a distribution from
the member's DROP account before termination of active
service as a firefighter. Requires a member to notify the
fund in writing, on a form that the board may prescribe, at
least 30 days before each distribution made under this
section.
Sec. 8.06. ESTABLISHMENT OF DROP ACCOUNT AT RETIREMENT.
Authorizes a member who is eligible for normal service
retirement to elect to terminate active service as a
firefighter and establish a DROP account, in lieu of electing
to participate in the DROP before actual retirement. Sets
forth provisions and requirements for the account.
Sec. 8.07. PAYMENTS FROM DROP ACCOUNT AT MEMBER'S DEATH. (a)
Provides that the provisions of Article 7 relating to death
benefits of qualified survivors do not apply to amounts
credited to a member's DROP account. Authorizes a member who
participates in the DROP to designate a beneficiary to receive
any balance in the member's DROP account at the member's
death. Requires the beneficiary designation to be made on a
form prescribed by the board and filed with the fund before
the member's death. Provides that a designation of a
beneficiary other than the member's spouse, if the member is
married at the time of the designation, is valid only if the
spouse consents to the designation in writing on the same form
that is used to designate the beneficiary. Requires
distribution from a member's DROP account after the death of
the member to be made as provided by this section.
(b) Provides for the payment distribution to a designated
beneficiary after the death of a member who participated in
the DROP but died while in active service or who did not
file an election with the board within a certain time
period.
(c) Requires the balance of a member's DROP account to be
distributed to the designated beneficiary in a manner
selected by the member, if a member who participates in the
DROP dies after terminating active service and has filed an
election with the board.
(d) Requires a member's DROP account to be distributed in
a single-sum payment to any surviving spouse or the estate
after a member's death, if the member did not designate a
beneficiary or if the designated person does not survive the
member.
Sec. 8.08. SUBSEQUENT DISABILITY OF DROP PARTICIPANT.
Provides that a member who participates in the DROP becomes
ineligible for any disability benefits. Requires the board to
grant a normal service retirement annuity and to pay the
member both the service retirement annuity and a distribution
of the DROP account, if the board determines that the member
would have been eligible for disability retirement.
Sec. 8.09. RETIREMENT BENEFIT PAYABLE TO DROP PARTICIPANT.
Provides that the retirement benefit payable under Article 5
or 6 of this Act to a person who participates in the DROP may
or may not be increased under certain conditions.
Sec. 8.10. TERMINATION OR MODIFICATION OF DROP BY FUND.
Authorizes the board to reduce the interest paid on DROP
accounts that are established after the effective date of
action by the board or terminate the deferred retirement
option for all members who have not at the time established a
DROP account if the board's actuary, no sooner than January 1,
2000, certifies to the board that DROP participation is
resulting in a significant actuarial loss to the fund.
ARTICLE 9. MISCELLANEOUS PROVISIONS REGARDING BENEFITS
Sec. 9.01. TIME FOR PAYMENT TO RETIRED MEMBERS. Provides
that benefits to a person who retires under this Act are
payable on the first day of each month beginning with the
month following the month in which the person retires.
Sec. 9.02. TIME FOR PAYMENT TO SURVIVORS; PAYMENT TO ESTATE.
Provides that benefits to a surviving spouse, dependent child,
or dependent parent are payable on the first day of each month
beginning with the month following the month in which the
death of the member of former firefighter occurs. Provides
that, after all payments cease, any amount by which the
member's or former firefighter's total accumulated
contributions at the date of the person's death exceed the
amount of all retirement and death benefits paid by the fund
is payable to the estate of the member or former firefighter.
Sec. 9.03. LIMITATION ON PAYMENT OF BENEFITS. (a) Requires
the amount of the payment of any benefit that would exceed the
limitations set forth in this section to be reduced in
accordance with this section.
(b) Defines "compensation" and "highest average annual
compensation."
(c) Prohibits an annual benefit payable by the fund from
exceeding 100 percent of the member's highest average annual
compensation.
(d) Prohibits an annual benefit, if payment begins before
a member attains age 55, from exceeding the greater of the
actuarial equivalent of a $75,000 annual benefit beginning
at age 55, a $90,000 annual benefit beginning at age 62, or
$50,000.
(e) Provides that the $50,000 limitation is inapplicable if
a member does not have at least 15 years of service credit
as a firefighter with the department.
(f) Provides that the annual benefit may not exceed the
greater of the actuarial equivalent of a $90,000 annual
benefit beginning at age 62, or $75,000 if payment of a
benefit begins when or after a member attains age 55, but
before the member attains age 62.
(g) Provides that the annual benefit may not exceed $90,000
if payment of a benefit begins when or after a member
attains age 62, but before the member attains age 65.
(h) Provides that the annual benefit may not exceed the
actuarial equivalent of a $90,000 annual benefit beginning
at age 65, if payment of a benefit begins when or after a
member attains age 65.
(i) Provides the $90,000 and $50,000 limitations are
automatically adjusted to the amounts determined by the
secretary of treasury in effect at the time of the member's
retirement.
(j) Provides that to determine the actuarial equivalent of
a benefit under this section, the interest rate assumption
is the rate not to exceed five percent that is adopted by
the board in the proper administration of the fund.
(k) Prohibits a person's vested accrued benefit in effect
on September 1, 1995, from being reduced.
Sec. 9.04. COST-OF-LIVING ADJUSTMENT. (a) Entitles a person
receiving a retirement or survivor's benefit entitled to an
annual cost-of-living adjustment of that person's benefit
based on any increase in the Consumer Price Index for All
Urban Consumers as determined by the U.S. Department of Labor
since the last increase in benefits under this section.
(b) Prohibits an adjustment from being made unless the
board's actuary has advised the board that the adjustment
would not impair the financial stability of the fund and the
adjustment has been approved by the affirmative vote of a
majority of the board.
(c) Requires the amount of an adjustment to be determined
by the board. Prohibits an adjustment of a benefit from
reducing any person's benefit to an amount less than the
person received when the benefit first was paid to that
person.
Sec. 9.05. NO INTEGRATION WITH SOCIAL SECURITY. Prohibits a
benefit payable from being integrated with benefits payable
under the Social Security Act and Social Security benefits
from being taken into account when determining the amount of
benefits to which a person is entitled.
Sec. 9.06. WITHDRAWAL OF CONTRIBUTIONS. (a) Authorizes a
living person who has terminated all employment with the
department and who has not retired to withdraw, on
application, all of the accumulated contributions credited to
that person's individual account with the fund in excess of
the amount of benefits that the person previously has received
from the fund. Provides that on withdrawal, the person's
account will be closed and all service credit the person has
accumulated will be canceled.
(b) Authorizes the estate of a member who dies before
retirement without a surviving beneficiary to withdraw all
of the accumulated contributions credited to that person's
individual account with the fund in excess of the amount of
benefits that the person previously has received from the
fund.
Sec. 9.07. ESCHEAT OF CONTRIBUTIONS. Requires a person's
accumulated contributions to escheat to the fund if an
application for withdrawal of contributions from or on behalf
of a person who has ceased to be an employee of the department
or the person's estate has not been received by the fund
before the seventh anniversary of the termination of the
person's employment with the department for a reason other
than retirement. Requires the fund to refund the
contributions regardless of the earlier escheatment if the
person or the person's estate later applies for the
contributions.
Sec. 9.08. INSUFFICIENT FUNDS; PRORATED REDUCTION IN
BENEFITS. Requires all benefits being paid by the fund to be
reduced pro rata for the time funds are insufficient to pay in
full any benefit payable under this Act.
Sec. 9.09. REDUCTION IN BENEFIT PAYMENTS ON REQUEST.
Requires the fund to pay the lesser amount specified in the
request if a person receiving a benefit from the fund requests
in writing that the amount of the benefit be reduced to a
specified monthly amount. Requires the fund to pay the
increased amount specified if the amount does not exceed the
amount originally payable. Requires the fund to discontinue
payment of the benefit if a person requests in writing the
payment of the benefit to be discontinued. Requires the fund
to resume payment of the benefit if the person subsequently
requests the payment to be resumed. Provides that any amounts
not paid by the fund pursuant to a request are forfeited to
the fund and are not recoverable by any person.
ARTICLE 10. COLLECTION OF CONTRIBUTIONS; INTEREST
Sec. 10.01. MUNICIPAL AND MEMBER CONTRIBUTIONS. (a)
Requires each municipality in which a fire department is
located to appropriate and contribute to the fund an amount
equal to 14 percent, or a higher percentage that the
municipality authorizes, of the compensation of all members
during that month, each month before October 1, 1994.
(b) Requires each municipality in which a fire department
is located to appropriate and contribute to the fund an
amount equal to 16.05 percent of the compensation of all
members during that month, each calendar month after
September 30, 1994, and before October 1, 1995.
(c) Requires each municipality in which a fire department
is located to appropriate and contribute to the fund an
amount equal to 18.05 percent of the compensation of all
members during that month, each month after September 30,
1995.
(d) Requires each firefighter to pay into the fund each
month 13.70 percent of the firefighter's compensation for
that month.
(e) Authorizes the governing body of each municipality to
authorize the municipality to make an additional
contribution to the fund in whatever amount the governing
body may determine. Authorizes the members of the fund to
increase, by majority vote, each firefighter's contribution
above 13.70 percent to any percentage recommended by a
majority vote of the board.
Sec. 10.02. PICKUP OF FIREFIGHTER CONTRIBUTIONS. Requires a
municipality to pick up the firefighter contributions to the
fund that are required or authorized pursuant to Section
10.01, whichever is higher. Provides that firefighter
contributions will be picked up by a reduction in the monetary
compensation of the firefighters. Requires contributions
picked up to be treated as employer contributions in
accordance with Section 414(h)(2) of the Internal Revenue Code
for the purposed of determining tax treatment of the amounts
under the code. Requires the contributions to be deposited to
the credit of the individual accounts of the firefighters and
to be treated as the monthly contributions of the
firefighters. Provides that these contributions are not
includable in the gross income of a firefighter until the time
that they are distributed or made available to the firefighter
or survivors of the firefighter. Authorizes the board, by
majority vote, to discontinue the pickup of firefighter
contributions by the municipality.
Sec. 10.03. CONTRIBUTIONS AND INCOME AS ASSETS OF FUND.
Provides that all contributions paid to the fund become a part
of the assets of the fund. Requires all interest and
dividends on investments of the assets of the fund to be
deposited into the fund and are part of it.
Sec. 10.04. INTEREST ON INDIVIDUAL ACCOUNTS. Requires the
fund to credit interest on December 31 of each year to the
account of each firefighter, and of each former firefighter,
who has not retired in an amount equal to five percent of the
accumulated contributions, including previously credited, on
deposit on January 1 of that year. Prohibits the fund from
paying interest on a firefighter's contributions for part of
a year or for any period that is more than five calendar years
after the date of termination of employment.
ARTICLE 11. INVESTMENT OF ASSETS
Sec. 11.01. PERMITTED INVESTMENTS. Authorizes the board to
invest a surplus in the fund in certain commercial products.
Sec. 11.02. REDUCTION IN RATING. Provides that an investment
in corporate bonds at the time of purchase is not required to
be sold.
Sec. 11.03. LIMITATIONS ON INVESTMENTS. Prohibits the fund
from owning more than five percent of the voting stock of any
one corporation.
Sec. 11.04. FIDUCIARIES. (a) Provides that a person or
financial institution is a fiduciary of the fund to the extent
that the person or the financial institution exercises or
renders any authority, control, or responsibility over the
fund.
(d) Authorizes the board to purchase insurance indemnifying
the members of the board against personal loss or
accountability from liability resulting from a member's act
or omission as a member of the board.
ARTICLE 12. OFFICERS, EMPLOYEES, AND PROFESSIONALS
Sec. 12.01. ADMINISTRATOR AND EMPLOYEES. Requires the board
to appoint an administrator to administer the fund under the
supervision and direction of the board. Requires the board to
employ such other employees as are required for the efficient
administration of the fund.
Sec. 12.02. LEGAL COUNSEL. Requires the board to retain
legal counsel for matters affecting the operation of the fund.
Sec. 12.03. ACTUARY. (a) Requires the board to employ an
actuary who may be the consultant and technical advisor to the
board regarding the operation of the fund and may perform such
duties as may be required by the board.
(b) Requires the actuary to make a valuation at least once
every two years of the assets and liabilities of the fund on
the basis of assumptions and methods that are reasonable and
that offer the actuary's best estimate of anticipated
experience under the fund.
(c) Requires the actuary to make recommendations to the
board to ensure the actuarial soundness of the fund on the
basis of the valuation. Requires the actuary to define each
actuarial assumption used in making the valuation in making
recommendations. Requires the information to be included
either in the actuarial study or in a separate report made
available as a public record.
(d) Requires the board to file with the State Pension
Review Board a copy of each actuarial study and each
separate report made as required by law.
(e) Requires an actuary employed to be a fellow of the
Society of Actuaries, a member of the American Academy of
Actuaries, or an enrolled actuary under the federal Employee
Retirement Income Security Act of 1974.
(f) Requires the municipality to pay all or part of the
cost of the actuarial services. Provides that any cost not
paid directly by the municipality is payable from assets of
the fund.
Sec. 12.04. INVESTMENT COUNSELORS AND MANAGERS; CUSTODIAN OF
ASSETS. (a) Authorizes the board to employ professional
investment counselors to advise and assist the board in the
investment of the assets of the fund. Requires the investment
counseling service to be provided by a nationally known
organization whose business functions include rendering
continuous investment advisory service to public pension and
retirement funds. Authorizes the municipality to pay the
entire cost of this counseling service. Provides the cost to
be paid from the assets of the fund if not paid by the
municipality.
(b) Requires the board to appoint investment managers for
the fund by contracting for professional investment services
with one or more organizations, which may include a bank if
it has a trust department, that are in the business of
managing investments.
(c) Requires an investment manager to meet certain
requirements to be eligible for appointment.
(d) Requires the board to specify any policies,
requirements, or restrictions, that the board adopts for
investments of the fund in a contract.
(e) Authorizes the municipality to pay all or part of the
cost of professional investment management services under a
contract. Provides that any cost not paid directly by the
municipality is payable from assets of the fund.
(f) Requires the board to monitor the investments made by
any investment manager for the fund at frequent intervals.
Authorizes the board to contract for professional evaluation
services to fulfill this requirement.
(g) Authorizes the municipality to pay all or part of the
cost of professional evaluation services. Provides that any
cost not paid directly by the municipality is payable from
assets of the fund.
(h) Authorizes the board to enter into an investment
custody account agreement designating a state or national
bank or a trust company as custodian for all assets
allocated to or generated under the investment management
contract.
(i) Requires the board to require the designated custodian
to perform the duties and assume the responsibilities for
assets under the contract for which the agreement is
established under the custody account agreement.
(j) Authorizes the municipality to pay all or part of the
cost of services under a custody account agreement.
Provides that any cost not paid directly by the municipality
is payable from assets of the fund.
(k) Prohibits an investment manager other than a bank
having a contract with the fund from being a custodian of
any assets of the fund.
(l) Requires the board to withdraw from a custodian of fund
assets money for use in paying benefits to members and other
beneficiaries of the fund and expenses of administering the
fund when demands of the fund require.
Sec. 12.05. MEDICAL BOARD. Authorizes the board to designate
a medical board composed of three persons who must be licensed
physicians in good standing in this state. Authorizes the
board to designate persons who are not physicians to serve on
the medical board. Requires the medical board to review,
investigate, and report on all medical examinations and
reports.
Sec. 12.06. RETIREMENT COUNSELING. Authorizes the board to
pay for the cost of counseling for members of the fund
regarding retirement matters.
Sec. 12.07. AUDITS; EMPLOYMENT OF CERTIFIED PUBLIC
ACCOUNTANTS. Requires the board to employ a certified public
accountant (CPA) or firm of CPAs to perform an audit of the
fund at least annually. Authorizes the municipality to pay
the entire cost of an audit. Authorizes the cost to be paid
from the assets of the fund, if not paid by the municipality.
Sec. 12.08. CIVIL ACTIONS FOR MONEY WRONGFULLY PAID OUT OR
OBTAINED. Authorizes the board to recover by civil action
from any offending party or from the party's sureties, any
money paid out or obtained from the fund through fraud,
misrepresentation, defalcation, theft, embezzlement, or
misapplication and institute, conduct, and maintain the action
in the name of the board for the use and benefit of the fund.
Deletes existing Sections 1-23.
SECTION 2. Effective date: September 1, 1995.
SECTION 3. Emergency clause.