BILL ANALYSIS



S.B. 864
By: Barrientos (Greenberg)
April 6, 1995
Committee Report (Unamended)


BACKGROUND

This bill proposes a number of amendments to Chapter 452, Acts of
the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
V.T.C.S.), the state statute which governs the Austin Police
Retirement System.  The present financing provisions require the
contributing members to contribute at least 6% of pay and the City
of Austin to contribute at least 12% of the pay of contributing
members.  Through the efforts of the Austin Police Association, the
contributing members voted to increase their contribution rate from
6% to 9%.  The Board of Trustees of the Austin Police Retirement
System approved the increase, and it went into effect in October of
1993.  The Austin Police Association and the board of trustees of
the system worked with the City of Austin to develop an agreement
on a package of increased financing by the city, increasing the
rate in steps of 2% from 12% to 18%, and increased benefits for
both active and retired members.

PURPOSE

The amendments in this bill fall into three general categories: 
(1) amendments to provisions for the amount of benefits,
eligibility for benefits, and the financing of benefits; (2) new
provisions to assure compliance by the system with federal laws;
and (3) amendments that are corrective or administrative in nature.

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 Article 6243n-1, V.T.C.S., Sections 1.02(2),
(4), (6), (18), (24), and (25).  The amended definitions contain
(1) corrective changes to be consistent with the way the system is
administered and with other provisions in the statute, (2) changes
which will enable the system to comply with the Federal Age
Discrimination in Employment Act, and (3) changes to authorize a
member to retire with 25 years of service regardless of age. 

SECTION 2: Amends Article 6243n-1, V.T.C.S., Section 4.01(c) to be
consistent with other provisions in the statute.

SECTION 3: Amends Article 6243n-1, V.T.C.S., Section 4.01(e)(1) to
change the definition of Active-Noncontributory Member to enable
compliance with the Federal Age Discrimination in Employment Act.

SECTION 4: Amends Article 6243n-1, V.T.C.S., Section 4.01(f) to
amend provisions for establishing credit for previously forfeited
service and for military leave of absence.  For previously
forfeited service, this Section makes changes to allow a surviving
spouse up to 6 months after a member's death to establish credit
for previously forfeited service that the active employee member
had not established before death, to make the opportunity to
establish credit open ended for a member, and to give the board of
trustees flexibility to change the method of determining the amount
to be paid to establish credit without legislation amending the
statute.  For military leave of absence, this section makes changes
to allow installment payments to establish credit in order to
comply with federal law and provides for a one-year window ending
September 31, 1996, to establish credit for military leave of
absence if a member has been reemployed for more than 5 years.

SECTION 5: Amends Article 6243n-1, V.T.C.S., Sections 5.02 and 5.03
to amend provisions for establishing credit for premembership
military service and for certain probationary service and to give
the board of trustees flexibility to change the method of
determining the amount to be paid to establish credit without
legislation amending the statute. This Section makes changes to
allow a surviving spouse up to six months after a member's death to
establish credit for premembership military service or for certain
probationary service that the active employee member had not
established before death. This Section also makes this change for
probationary service retroactive for deaths occurring December 1,
1994 through August 31, 1995.

SECTION 6:  Amends Article 6243n-1, V.T.C.S., Sections 6.01(a),
(d), (e) and adds Subsection (f) to increase benefits for both
future retirees and current retirees, to comply with federal law,
and to change some definitions in order to be consistent with the
way the system is administered and with other provisions in the
statute.  This Section increases for future retirees the benefit
formula multiplier from 2.3% of average final compensation per year
of service to 2.8%.  For current retirees, this Section provides a
special increase in benefit based on the proposed 2.8% multiplier
effective September 1, 1995, and would provide future special
increases whenever the multiplier is changed.  This Section also
adds language to give the board of trustees flexibility to change
the benefit multiplier without legislation amending the statute. 
This Section adds a limitation on compensation taken into account,
which is necessary to assure continued "qualified plan" status of
the Austin Police Retirement System with the Internal Revenue Code. 
This Section also contains amendments which will enable compliance
with the Federal Age Discrimination in Employment Act.  

SECTION 7:  Amends Article 6243n-1, V.T.C.S., Section 6.02 to
authorize a member to retire with 25 years of service regardless of
age and to enable the system to comply with the Federal Age
Discrimination in Employment Act.  This new provision replaces
provisions which allow retirement with 30 years of service
regardless of age or before age 50 with an actuarially reduced
benefit with 25-29 years of service.

SECTION 8:  Amends Article 6243n-1, V.T.C.S., Section 6.03 to state
the actuarial assumptions that are used to determine actuarially
equivalent optional forms of monthly retirement or death benefits. 
This change is required to comply with federal law to assure
continued "qualified plan" status.

SECTION 9:  Amends Article 6243n-1, V.T.C.S., Section 6.04 to
prescribe the latest beginning date of benefit payments.  This
change is required to comply with federal law to assure continued
"qualified plan" status.

SECTION 10:  Amends Article 6243n-1, V.T.C.S., Section 6.05(c) to
increase the lump sum death benefit for retirees from $2,000 to
$5,000.  

SECTION 11:  Amends Article 6243n-1, V.T.C.S., Section 6.06(a)(3)
and (4) to increase the lump sum death benefit from $2,000 to
$5,000 for a member whose death results in a monthly survivor
benefit and to change a definition to be consistent with the way
the system is administered and with other provisions in the
statute.

SECTION 12:  Amends Article 6243n-1, V.T.C.S., Sections 7.01(b) and
(c) to make minor, technical changes that are either administrative
or clarifying in nature relating to disability benefits eligibility
and administration.

SECTION 13:  Amends Article 6243n-1, V.T.C.S., Section 7.02 to
state the actuarial assumptions that are used to determine
actuarially equivalent optional forms of monthly disability
benefits.  This change is required to comply with federal law to
assure continued "qualified plan" status.

SECTION 14:  Amends Article 6243n-1, V.T.C.S., Section 7.03(c)(1)
to make minor, technical changes that are either administrative or
clarifying in nature relating to disability benefits eligibility
and administration.

SECTION 15:  Amends Article 6243n-1, V.T.C.S., Section 8.01 to
codify the increases in the city contribution rate to which the
City of Austin has agreed:  14% for the fiscal year ending in 1995,
16% for the fiscal year ending in 1996, and 18% beginning with the
fiscal year ending in 1997 and for each fiscal year thereafter. 
Section 15 also clarifies that the member contribution rate is at
least 6% and would add flexibility for changing the rate in the
future.  This Section also deletes language which will enable the
system to comply with the Federal Age Discrimination in Employment
Act.  This Section also adds language required to comply with
federal law to assure continued "qualified plan" status to state
that the assets are for the exclusive benefit of members, that
forfeitures are not used for increasing benefits, and that accrued
benefits become nonforfeitable if the plan should ever be
terminated.  This Section also changes language to be consistent
with the way the system is administered and with other provisions
in the statute.

SECTION 16:  Amends Article 6243n-1, V.T.C.S., Section 10.01 to
increase the maximum amount of the fine for falsifying a report or
record from $200 to $1,000.

SECTION 17:  Amends Article 6243n-1, V.T.C.S., Chapter 452, by
adding Articles XI-XIII to prescribe the duration of benefits
payable to persons other than the member or the member's spouse, to
prescribe limits on the benefit allowable to a member, and to
authorize a transfer of a distribution to another plan.  These
changes are required to comply with federal law to assure continued
"qualified plan" status.

SECTION 18: Repeals Sections 1.02 (9), (10), and (23), and Section
4.01(g), Chapter 452, Article 6243n-1, V.T.C.S. so that the statute
will be consistent with the way the system is administered and with
other provisions in the statute.

SECTION 19:  Effective Date: September 1, 1995

SECTION 20:  Emergency clause

SUMMARY OF COMMITTEE ACTION

SB 864  was considered by the committee in a public hearing on
April 3, 1995.

Rep. Sherri Greenberg testified as the House sponsor of the bill.

The following person testified for the bill:
     Robert M. May representing the Austin Police Retirement System

The bill was reported favorably without amendments with the
recommendation that it do pass and be printed and be sent to the
Committee on Local & Consent Calendars by a record vote of 5 ayes,
0 nays, 0 pvn & 4 absent.


Committee of Pensions & Investments