1-1 By: Kuempel (Senate Sponsor - Montford) H.B. No. 2283
1-2 (In the Senate - Received from the House April 24, 1995;
1-3 April 25, 1995, read first time and referred to Committee on State
1-4 Affairs; May 8, 1995, reported favorably by the following vote:
1-5 Yeas 12, Nays 0; May 8, 1995, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to participation and credit in, contributions to, and
1-9 benefits and administration of the Texas County and District
1-10 Retirement System.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Section 841.001, Government Code, is amended by
1-13 amending Subdivisions (5) and (6) and adding Subdivision (15) to
1-14 read as follows:
1-15 (5) "Compensation" means the payments that do not
1-16 exceed $150,000 in a calendar year, indexed in the same manner as
1-17 is provided by Section 401(a)(17) of the Internal Revenue Code of
1-18 1986 (26 U.S.C. Section 417) and that are made to an employee of a
1-19 participating subdivision by the subdivision for service, including
1-20 nonmonetary compensation, the value of which is determined by the
1-21 governing body of the subdivision.
1-22 (6) "Employee" means a person, other than a temporary
1-23 employee, who is certified by a subdivision as being employed in,
1-24 or elected or appointed to, a position or office in the subdivision
1-25 that normally requires services from the person for not less than
1-26 900 hours a year and for which the person is compensated by the
1-27 subdivision. The term includes a person employed on a probationary
1-28 basis except as provided by Section 842.107(c).
1-29 (15) "Temporary employee" means a person who is
1-30 scheduled to hold a position for less than six months and only:
1-31 (A) until another person can be hired;
1-32 (B) for the duration of a project scheduled to
1-33 end less than six months after the date of hiring;
1-34 (C) until a specific date less than six months
1-35 after the date of hiring; or
1-36 (D) until a volume of work is completed that is
1-37 estimated to be completed in less than six months after the date of
1-38 hiring.
1-39 SECTION 2. Section 842.101, Government Code, is amended by
1-40 adding Subsection (c) to read as follows:
1-41 (c) If a person's status as a temporary employee ceases, and
1-42 the person becomes an employee within the meaning of this subtitle,
1-43 the subdivision shall certify the change to the retirement system,
1-44 and the person becomes a member effective on the date of the
1-45 certification, but without credit for the period during which the
1-46 person was a temporary employee.
1-47 SECTION 3. The section heading of Section 842.110,
1-48 Government Code, is amended to read as follows:
1-49 Sec. 842.110. RESUMPTION OF SERVICE WITH SAME EMPLOYER BY
1-50 RETIREE
1-51 SECTION 4. Section 842.110, Government Code, is amended by
1-52 amending Subsections (a), (b), (g), and (h) and adding Subsection
1-53 (i) to read as follows:
1-54 (a) A person who has retired with a service retirement
1-55 benefit under this subtitle shall, if the person later becomes an
1-56 employee of a reemploying <any participating> subdivision, become a
1-57 member of the system on the date of reemployment <employment>, but
1-58 credits and benefits allowable to the person under this subtitle
1-59 are limited as provided by this section.
1-60 (b) The retirement system shall discontinue and suspend
1-61 payments of each service retirement annuity allowed because of the
1-62 person's previous service with a reemploying subdivision, beginning
1-63 with the month the retirement system determines that the person has
1-64 resumed employment with the reemploying subdivision <following the
1-65 month in which the person again becomes a member under Subsection
1-66 (a)>. After the determination, the <The> retirement system may not
1-67 make payments of the annuity for any month during which the person
1-68 remains an employee of the reemploying <a participating>
2-1 subdivision. The suspension of a benefit under this section does
2-2 not suspend payment of a benefit to an alternate payee under a
2-3 qualified domestic relations order.
2-4 (g) The additional service retirement benefit allowable to a
2-5 person to whom this section applies is, at the option of that
2-6 person, either a refund of accumulated contributions made since
2-7 reemployment plus any accrued interest on the accumulated
2-8 contributions allowed by the retirement system or a benefit
2-9 consisting of a basic annuity actuarially determined from the sum
2-10 of the member's deposits made and accumulated since the date of
2-11 last becoming a member and current service credit computed on the
2-12 amount of the deposits and a supplemental annuity actuarially
2-13 determined from the multiple matching credit applicable to the
2-14 amount of contributions made and accumulated with interest in the
2-15 person's individual account since last becoming a member. The
2-16 additional benefit is payable as a standard service retirement
2-17 benefit or, at the election of the member, any optional benefit
2-18 authorized under this subtitle that is the actuarial equivalent of
2-19 the standard retirement benefit. The first benefit payment date
2-20 under this section is the later of the end of the month following
2-21 the last month of employment or the end of the first month that
2-22 ends after the expiration of 45 <if the person files an application
2-23 not less than 60> days since the date the person filed an
2-24 application for payment. The first payment may not be made if the
2-25 person <before the payment date and> has <not> resumed employment
2-26 with a reemploying <any participating> subdivision in a position
2-27 that would make the person an employee.
2-28 (h) If a person becomes an employee of a reemploying <any
2-29 participating> subdivision within one calendar month after that
2-30 person's effective date of retirement from that reemploying
2-31 subdivision, the person is considered not to have retired, and the
2-32 person's membership shall be restored. The retirement system shall
2-33 deduct the sum of one-half of the basic annuity payments made
2-34 before the membership is restored from the person's individual
2-35 account in the employees saving fund and shall transfer that amount
2-36 to the current service annuity reserve fund. The retirement system
2-37 shall reduce the person's maximum prior service credit by an amount
2-38 equal to the sum of the prior service annuity payments made before
2-39 the membership is restored, divided by the product of the
2-40 subdivision's allocated prior service credit percentage multiplied
2-41 by the interest factor for interest from the subdivision's
2-42 participation date to the person's effective retirement date, both
2-43 of which were used in computing the amount of the prior service
2-44 annuity.
2-45 (i) In this section, "reemploying subdivision" is a
2-46 subdivision for which a person previously has performed creditable
2-47 service and is receiving or would receive a retirement benefit
2-48 except for this section.
2-49 SECTION 5. Subchapter B, Chapter 842, Government Code, is
2-50 amended by adding Sections 842.111 and 842.112 to read as follows:
2-51 Sec. 842.111. RESUMPTION OF SERVICE WITH DIFFERENT EMPLOYER
2-52 BY RETIREE. (a) If a person becomes an employee of a
2-53 participating subdivision after beginning to receive a retirement
2-54 benefit, no portion of which is based on service with that
2-55 subdivision, the person resumes membership in the retirement system
2-56 without suspension of the person's retirement annuity.
2-57 (b) Member contributions under Section 845.403 shall be made
2-58 on all compensation paid to the employee by the subdivision at the
2-59 same rate as is required of other employees of the subdivision.
2-60 The retirement system shall deposit the contributions on receipt in
2-61 an individual account for the member in the employees saving fund
2-62 and shall credit the account with interest at the same rate and in
2-63 the same manner as the accounts of other members are credited.
2-64 The compensation paid to the employee by the subdivision shall be
2-65 included in computing the monthly contributions the subdivision
2-66 makes to the subdivision accumulation fund.
2-67 (c) If a person with credited service under this section
2-68 dies before a payment under Subsection (d) is made, the person's
2-69 beneficiary or, if no beneficiary survives, the executor or
2-70 administrator of the person's estate, may elect payment as provided
3-1 by Section 844.105(c).
3-2 (d) The additional service retirement benefit allowable to a
3-3 person to whom this section applies is, at the option of that
3-4 person, either a refund of accumulated contributions made since
3-5 reemployment plus any accrued interest on the accumulated
3-6 contributions allowed by the retirement system or a benefit
3-7 consisting of a basic annuity actuarially determined from the sum
3-8 of the member's deposits made and accumulated since the date of
3-9 last becoming a member and current service credit computed on the
3-10 amount of the deposits and a supplemental annuity actuarially
3-11 determined from the multiple matching credit applicable to the
3-12 amount of contributions made and accumulated with interest in the
3-13 person's individual account since last becoming a member. The
3-14 additional benefit is payable as a standard service retirement
3-15 benefit or, at the election of the member, any optional benefit
3-16 authorized under this subtitle that is the actuarial equivalent of
3-17 the standard retirement benefit. The first benefit payment date
3-18 under this section is the later of the end of the month following
3-19 the last month of employment or the end of the first month that
3-20 ends after the expiration of 45 days since the date the person
3-21 filed an application for payment. The first payment may not be
3-22 made if the person has resumed employment that would result in
3-23 suspension of a benefit.
3-24 (e) If a person becomes an employee of a subdivision after
3-25 beginning to receive a retirement benefit, no portion of which
3-26 benefit is based on service with that subdivision, and the person's
3-27 service retirement annuity is suspended under Section 842.110, as
3-28 it existed at the time service is resumed, the person may, on
3-29 written application to the retirement system, resume receiving the
3-30 suspended annuity.
3-31 Sec. 842.112. CORRECTION OF ERRORS. (a) If, as a result of
3-32 a reporting error on the part of a participating subdivision, a
3-33 person has not received credited service or current service credit
3-34 or has received less than the correct amount of current service
3-35 credit for months in which the person performed service as an
3-36 employee of the subdivision, the retirement system shall correct
3-37 the error as authorized by this section.
3-38 (b) A correction may not be made as to current service
3-39 performed, or current service credit that should have been
3-40 received, more than four years before the date an application, on
3-41 forms approved by the retirement system's board of trustees, for
3-42 the correction is received by the retirement system.
3-43 (c) A correction may not be made unless the retirement
3-44 system receives, in addition to the application, each of the items
3-45 required under Subsections (d), (e), and (f), and one of the
3-46 following:
3-47 (1) a written agreement, approved by the subdivision's
3-48 governing body, stating that an error has occurred and that the
3-49 subdivision has agreed to correct the error;
3-50 (2) a final judgment by a court of competent
3-51 jurisdiction in proceedings to which the subdivision was a party,
3-52 ordering that the subdivision correct the error; or
3-53 (3) an order in an administrative proceeding to which
3-54 the subdivision was a party, directing that the subdivision correct
3-55 the error, that is no longer subject to appeal.
3-56 (d) A correction may not be made unless the retirement
3-57 system receives a supplemental report properly signed on behalf of
3-58 the subdivision showing the corrections to credited service or
3-59 current service credit of the person.
3-60 (e) A correction may not be made unless the retirement
3-61 system receives payment from the person seeking the correction in
3-62 an amount equal to the contributions or additional contributions
3-63 the person would have made to the system if the service had been
3-64 correctly reported to the retirement system.
3-65 (f) A correction may not be made unless the retirement
3-66 system receives payment from the subdivision in an amount equal to
3-67 the additional contribution that the subdivision should have paid
3-68 to the retirement system based on the additional credited service
3-69 or current service credit.
3-70 (g) A subdivision that is the subject of an agreement,
4-1 judgment, or order described by Subsection (c) shall file the
4-2 supplemental report and submit the payments described by this
4-3 section within 30 days after the date the subdivision is notified
4-4 in writing by the retirement system that those items should be sent
4-5 to the retirement system.
4-6 (h) If, as a result of a reporting error on the part of a
4-7 participating subdivision, a person has not received prior service
4-8 credit, on written application to the retirement system,
4-9 accompanied by evidence of the prior service satisfactory to the
4-10 retirement system, the retirement system shall correct the error if
4-11 the retirement system receives the person's written application for
4-12 the correction within four years after the later of the date the
4-13 subdivision began participation or the person first became a member
4-14 of the retirement system.
4-15 SECTION 6. Section 842.202, Government Code, is amended to
4-16 read as follows:
4-17 Sec. 842.202. Waiver of Membership. (a) A person who would
4-18 make contributions to the retirement system because of Section
4-19 842.201 <is eligible under Section 842.201(a) to become a member of
4-20 the retirement system on the effective date of the commissioners
4-21 court order> may elect to not participate in the retirement system
4-22 as an employee and not make contributions or receive service credit
4-23 at any time after the effective date of the commissioners court
4-24 order <waive membership>.
4-25 (b) The board of trustees may prescribe the form for an
4-26 election <of a membership waiver> under this section, which must be
4-27 in writing and filed with the director <within 30 days after the
4-28 date specified in an order under Section 842.201(a)>.
4-29 SECTION 7. Section 842.203, Government Code, is amended to
4-30 read as follows:
4-31 Sec. 842.203. Subsequent Election to Become Member OR RESUME
4-32 CONTRIBUTIONS. (a) A person who has made an election not to
4-33 participate and make contributions <filed a waiver> under Section
4-34 842.202 may thereafter become a member of the retirement system or
4-35 resume making contributions if already a member, if the person
4-36 meets the requirements for membership that are applicable to new
4-37 employees of the subdivision at the time that the person applies
4-38 for participation <membership> that was previously waived.
4-39 Application for membership or resumption of contributions under
4-40 this section must be on a form prescribed by the board of trustees.
4-41 (b) The effective date of membership or resumption of
4-42 accumulation of credited service applied for under this section is
4-43 the first day of the first month for which a contribution is made
4-44 for the person and <after the month in which> the application is
4-45 filed, and no credit in the retirement system may be given for any
4-46 type of service prior to that <effective> date for which the person
4-47 has not already received credit in the retirement system.
4-48 SECTION 8. Section 843.201, Government Code, is amended to
4-49 read as follows:
4-50 Sec. 843.201. SERVICE CREDIT FOR CERTAIN PUBLIC EMPLOYMENT
4-51 <FACILITIES>. (a) The governing body of a participating
4-52 subdivision by order may authorize the establishment of prior
4-53 service credit in the retirement system for service performed in a
4-54 public hospital, utility, or other public facility or governmental
4-55 function during a time the facility was operated or function was
4-56 performed by a unit of government other than the subdivision and
4-57 before:
4-58 (1) the effective date of the subdivision's
4-59 participation in the retirement system, if the facility was
4-60 acquired or the governmental function was taken over by the
4-61 subdivision before that date; or
4-62 (2) the date of acquisition of the facility or the
4-63 date the governmental function was taken over, if the facility was
4-64 acquired or the governmental function was taken over after the
4-65 effective date of the subdivision's participation in the retirement
4-66 system.
4-67 (b) A member eligible to establish credit under this section
4-68 after an order under Subsection (a) is one who was employed by a
4-69 public facility or by an entity performing the governmental
4-70 function:
5-1 (1) on the effective date of subdivision
5-2 participation, for service under Subsection (a)(1); or
5-3 (2) on the date of acquisition of the facility or the
5-4 date the governmental function was taken over, for service under
5-5 Subsection (a)(2).
5-6 (c) The <maximum prior service credit allowable to a member
5-7 under this section is computed in the manner prescribed by Section
5-8 843.105, but the> allocated prior service credit allowable under
5-9 this section may be limited by the order of the governing body to
5-10 zero or to any percentage that is a multiple of five percent and
5-11 <fractional amount of the maximum prior service credit> that does
5-12 not exceed the percentage applicable to the computation of
5-13 allocated prior service credits for employees of other departments
5-14 of the subdivision.
5-15 (d) Allocated prior service credits are allowable for a
5-16 subdivision only if the retirement system's actuary certifies that:
5-17 (1) the subdivision contribution rate will not exceed
5-18 the employee contribution rate plus three percent, if the
5-19 subdivision has adopted the provisions for an annually determined
5-20 contribution rate plan under Subchapter H, Chapter 844; or
5-21 (2) the subdivision's unfunded actuarial accrued
5-22 liability amortization period will be less than 25 years, if the
5-23 subdivision has not adopted the provisions of Subchapter H, Chapter
5-24 844.
5-25 SECTION 9. Section 844.003, Government Code, is amended by
5-26 amending Subsections (a), (c), and (d) and adding Subsections (e),
5-27 (f), and (g) to read as follows:
5-28 (a) Except as provided by Subsections (b) and (e) <(d)>, the
5-29 effective date of a member's service retirement is the date the
5-30 member designates at the time the member applies for retirement
5-31 under Section 844.101, but the date must be the last day of a
5-32 calendar month and may not precede the date the member terminates
5-33 employment with all participating subdivisions.
5-34 (c) Except as provided by Subsections (b) and (e) <(d)>, the
5-35 effective date of a member's disability retirement is the date
5-36 designated on the application for retirement filed by or for the
5-37 member as provided by Section 844.301, but the date may not precede
5-38 the date the member terminates employment with all participating
5-39 subdivisions.
5-40 (d) If a person who has attained age 70-1/2 terminates or
5-41 has terminated covered employment without applying for retirement
5-42 or a refund of accumulated contributions, the retirement system
5-43 shall attempt to send to that person the written notice described
5-44 by Subsection (e) as soon as is practical after the last to occur
5-45 of:
5-46 (1) the date the person attains age 70-1/2;
5-47 (2) the date the person terminates all covered
5-48 employment; or
5-49 (3) the date the person first becomes eligible for
5-50 retirement under this chapter <covered employment without applying
5-51 for retirement, the retirement system shall attempt to notify that
5-52 person in writing and advise the person that the person is required
5-53 to retire. If, before the 91st day after the date the retirement
5-54 system sends the notice, the person has not filed an application
5-55 with the board for retirement, the person is considered to have
5-56 retired on the last day of the month in which the person terminated
5-57 employment with all participating subdivisions and:>
5-58 <(1) to have elected to receive an annuity under
5-59 Section 844.103, if the person did not have a spouse on the date of
5-60 employment termination; or>
5-61 <(2) if the person had a spouse on the date of
5-62 employment termination, to have elected to receive an annuity under
5-63 Section 844.104(c)(1) and to have designated the person's spouse as
5-64 the beneficiary under the annuity>.
5-65 (e) The written notice shall advise the person that the
5-66 person is required to retire. If, before the 91st day after the
5-67 date the retirement system sends the notice, the person has not
5-68 filed an application for refund or retirement with the board of
5-69 trustees, the person is considered to have retired on the last day
5-70 of the month following the last to occur of the three dates
6-1 described by Subsection (d).
6-2 (f) If a person is considered by the retirement system to
6-3 have retired as a result of Subsection (e), the person also shall
6-4 be considered:
6-5 (1) to have elected to receive an annuity under
6-6 Section 844.103, if the person did not have a spouse on the date of
6-7 employment termination; or
6-8 (2) if the person had a spouse on the date of
6-9 employment termination, to have elected to receive an annuity under
6-10 Section 844.104(c)(1) and to have designated the person's spouse as
6-11 the beneficiary under the annuity.
6-12 (g) If a person who has less than four years of creditable
6-13 service and who has attained age 70-1/2 has terminated covered
6-14 employment without applying for a refund of accumulated
6-15 contributions and is not eligible to retire without additional
6-16 service or age, the retirement system shall attempt to send that
6-17 person written notice in accordance with this subsection as soon as
6-18 is practical after the person has been absent from covered
6-19 employment for five consecutive years or more. The written notice
6-20 shall advise the person that the person is required to receive a
6-21 refund of accumulated contributions in order to avoid a tax penalty
6-22 according to the Internal Revenue Code of 1986 (Title 26, United
6-23 States Code). If, before the 91st day after the date the
6-24 retirement system sends the notice, the person has not filed an
6-25 application for refund with the board of trustees, the person is
6-26 considered to have filed an application for refund and to have
6-27 elected to have withholding taxes withheld on that refund.
6-28 SECTION 10. Section 844.005, Government Code, is amended to
6-29 read as follows:
6-30 Sec. 844.005. When Annuity is Payable; CHANGES BEFORE FIRST
6-31 PAYMENT. (a) A retiree may change the retiree's choice of
6-32 retirement annuity payment plans or the designation of beneficiary
6-33 after the retiree's effective date of retirement by filing written
6-34 notice with the board of trustees before the later of the date on
6-35 which the retirement system makes the first payment or the date the
6-36 first annuity payment becomes due. After the first payment has
6-37 been made by the retirement system or has become due, a retiree may
6-38 not change the annuity payment plan selected and may not change the
6-39 designated beneficiary except under Section 844.006.
6-40 (b) For purposes of this section, the term "makes payment"
6-41 includes the depositing in the mail of a payment or the crediting
6-42 of an account with payment through electronic funds transfer.
6-43 (c) An annuity under this subtitle is payable for a period
6-44 beginning on the last day of the first month following the month in
6-45 which retirement occurs and ending, except as otherwise provided by
6-46 this subtitle, on the last day of the month immediately preceding
6-47 the month in which death occurs.
6-48 SECTION 11. Section 844.007, Government Code, is amended by
6-49 amending Subsections (b), (c), (d), and (f) to read as follows:
6-50 (b) Through December 31, 1995, current <Current> and
6-51 supplemental interest will be credited on the balance in the
6-52 member's individual account in the employees saving fund on January
6-53 1 of the year of retirement from that date to the effective date of
6-54 retirement at the rates allowed on individual accounts of members
6-55 as of December 31 of the preceding year. For periods that begin
6-56 after December 31, 1995, interest will be credited on the balance
6-57 in the member's individual account in the employees saving fund on
6-58 January 1 of the year of retirement from that date to the effective
6-59 date of retirement.
6-60 (c) An amount equal to the <current and supplemental>
6-61 interest computed under Subsection (b) will be credited to the
6-62 account in the subdivision accumulation fund for the subdivision
6-63 that employed the member.
6-64 (d) The current service credit and multiple matching credit
6-65 of the member will be computed as provided by Section 843.403,
6-66 except that they will include additional interest from the
6-67 beginning of the calendar year in which retirement occurs to the
6-68 effective date of retirement <at the same rates as additional
6-69 interest is computed under Subsection (b)>.
6-70 (f) If a distributive benefit is allowed before January 1,
7-1 1996, to persons who are annuitants on December 31 of the year in
7-2 which the person retires, the distributive benefit of a person who
7-3 retires at the end of any month in that year preceding December
7-4 31st will be reduced in the ratio that the number of months from
7-5 the first day of January of that year to the effective date of
7-6 retirement bears to 12 months.
7-7 SECTION 12. Section 844.008(a)(1), Government Code, is
7-8 amended to read as follows:
7-9 (1) "Annual benefit" means the total of all annuity
7-10 payments by the retirement system on behalf of a person who has
7-11 retired under this subtitle <to an annuitant> during a calendar
7-12 year, including any distributive benefit payments.
7-13 SECTION 13. Section 844.008(d), Government Code, is amended
7-14 to read as follows:
7-15 (d) Except as provided by Subsections (f), (h), and (i), an
7-16 annual benefit payable by the retirement system may not exceed the
7-17 lesser of:
7-18 (1) $112,221, or another amount as adjusted each
7-19 January 1 by the secretary of the treasury under Section 415 of the
7-20 Internal Revenue Code of 1986 (26 U.S.C. Section 415) for
7-21 cost-of-living increases after January 1, 1992; or
7-22 (2) 100 percent of the former member's highest average
7-23 annual compensation, including annual cost-of-living increases
7-24 after separation from service.
7-25 SECTION 14. Section 844.008, Government Code, is amended by
7-26 adding Subsections (l) and (m) to read as follows:
7-27 (l) The annual benefit payable by the retirement system that
7-28 is otherwise limited by Subsection (d) may be increased each year
7-29 in accordance with cost-of-living adjustments by the secretary of
7-30 the treasury of the dollar limitation or the compensation
7-31 limitation as long as it does not exceed the amount that would be
7-32 payable without limitation of Section 415 of the Internal Revenue
7-33 Code of 1986 (26 U.S.C. Section 415).
7-34 (m) The limitations provided by this section may not be
7-35 applied to reduce the benefit of any person whose retirement
7-36 benefits under this and all other defined benefit plans of the
7-37 member's employer do not exceed $10,000, plus the benefit provided
7-38 by Subsection (h), for the plan year or for any previous plan year
7-39 and who has not at any time participated in a defined contribution
7-40 plan maintained by the person's employer.
7-41 SECTION 15. Section 844.101, Government Code, is amended to
7-42 read as follows:
7-43 Sec. 844.101. Application for Service Retirement Annuity. A
7-44 member may apply for a service retirement annuity by filing an
7-45 application for retirement with the board of trustees not less than
7-46 15 <30 nor more than 90> days before the member's effective
7-47 retirement date <the member wishes to retire>.
7-48 SECTION 16. Section 844.104(c), Government Code, is amended
7-49 to read as follows:
7-50 (c) An eligible person may select any of the following
7-51 optional annuities, which are the actuarial equivalent of the
7-52 annuity to which the person is entitled and <optional annuity
7-53 approved by the board of trustees, the entire benefit of which is
7-54 certified by the actuary as the actuarial equivalent of the annuity
7-55 to which the person is entitled, or may select one of the following
7-56 options,> which provide that:
7-57 (1) after the retiree's death, the reduced annuity is
7-58 payable throughout the life of a person designated by the retiree;
7-59 (2) after the retiree's death, one-half of the reduced
7-60 annuity is payable throughout the life of a person designated by
7-61 the retiree;
7-62 (3) if the retiree dies before 60 monthly annuity
7-63 payments have been made, the remainder of the 60 payments are
7-64 payable to the retiree's beneficiary or, if one does not exist, to
7-65 the retiree's estate; <or>
7-66 (4) if the retiree dies before 120 monthly annuity
7-67 payments have been made, the remainder of the 120 payments are
7-68 payable to the retiree's beneficiary or, if one does not exist, to
7-69 the retiree's estate;
7-70 (5) after the retiree's death, one-fourth of the
8-1 reduced annuity is payable throughout the life of a person
8-2 designated by the retiree;
8-3 (6) after the retiree's death, three-fourths of the
8-4 reduced annuity is payable throughout the life of a person
8-5 designated by the retiree; or
8-6 (7) if the retiree dies before 180 monthly annuity
8-7 payments have been made, the remainder of the 180 payments are
8-8 payable to the retiree's beneficiary or, if one does not exist, to
8-9 the retiree's estate.
8-10 SECTION 17. Subchapter B, Chapter 844, Government Code, is
8-11 amended by adding Section 844.108 to read as follows:
8-12 Sec. 844.108. NO SURVIVING SPOUSE, EXECUTOR, OR
8-13 ADMINISTRATOR. (a) If a surviving spouse, or the executor or
8-14 administrator of a deceased member's estate, would be entitled to
8-15 make an election under Section 842.110(f), 842.111(d), 844.105(c),
8-16 844.106(c), 844.207(e), or 844.210(f), or if a surviving
8-17 beneficiary would be entitled to make an election under Section
8-18 844.209(b) because of the death of the member, the heirs of the
8-19 deceased member may make that election if:
8-20 (1) no surviving spouse exists or, if Section
8-21 844.209(b) is applicable, no surviving beneficiary exists;
8-22 (2) no petition for the appointment of a personal
8-23 representative of the member is pending or has been granted;
8-24 (3) 30 days have elapsed since the date of death of
8-25 the member;
8-26 (4) the value of the entire assets of the member's
8-27 estate, excluding homestead and exempt property, does not exceed
8-28 $50,000;
8-29 (5) there are not more than three heirs; and
8-30 (6) on file with the retirement system is a certified
8-31 copy of a small estates affidavit that has been approved and filed
8-32 in accordance with Section 137 of the Texas Probate Code, or an
8-33 original affidavit as described by Subsection (b).
8-34 (b) If no affidavit has been filed with the clerk of the
8-35 court having jurisdiction and venue as provided by Section 137 of
8-36 the Texas Probate Code, the retirement system may accept instead an
8-37 affidavit sworn to by two disinterested witnesses and by those
8-38 heirs who have legal capacity and, if the facts warrant, by the
8-39 natural guardian or next of kin of any minor or incompetent who is
8-40 also an heir. The affidavit shall include the names and addresses
8-41 of the heirs and witnesses, establish the facts listed in
8-42 Subsection (a), include a list of the assets and liabilities of the
8-43 estate, show the facts that constitute the basis for the right of
8-44 the heirs to receive the estate, and show the fractional interests
8-45 of the heirs in the estate as a result of those facts.
8-46 (c) If the retirement system, acting through the director or
8-47 a person designated by the director, approves the affidavit, the
8-48 heirs may make the election if each heir agrees to it.
8-49 (d) In this section "heirs" has the meaning assigned by
8-50 Section 3, Texas Probate Code, except that the term excludes any
8-51 person who has filed a proper disclaimer or renunciation with the
8-52 retirement system.
8-53 SECTION 18. Section 844.209, Government Code, is amended by
8-54 adding Subsection (f) to read as follows:
8-55 (f) If a member to whom Subsection (b) would be applicable
8-56 designates the member's estate or more than one but not more than
8-57 three persons to receive payment of the member's accumulated
8-58 contributions if the member dies before becoming eligible to make a
8-59 selection under Section 844.105, 844.106, 844.207, or 844.210, the
8-60 executor or administrator of the estate or, if there is no executor
8-61 or administrator, the surviving beneficiaries may by written notice
8-62 filed with the board elect to receive, in lieu of the accumulated
8-63 deposits, the optional benefit described by Section 844.104(c)(4).
8-64 If the estate is not the beneficiary, the election may only be made
8-65 if all of the beneficiaries agree in writing on the selection of
8-66 the option. If any surviving beneficiary dies before the first
8-67 payment of an annuity allowed under this section, the annuity will
8-68 be paid to those beneficiaries who are still surviving on the date
8-69 of the first payment.
8-70 SECTION 19. Section 844.301(b), Government Code, is amended
9-1 to read as follows:
9-2 (b) An application for a disability retirement annuity must
9-3 be filed <may> not <be made> less than 15 <30 nor more than 90>
9-4 days before the member's effective retirement date <the member
9-5 wishes to retire>.
9-6 SECTION 20. Section 844.305(c), Government Code, is amended
9-7 to read as follows:
9-8 (c) An eligible person may select any of the following
9-9 optional annuities, which are the actuarial equivalent of the
9-10 annuity to which the person is entitled and <optional annuity
9-11 approved by the board of trustees, the entire benefit of which is
9-12 certified by the actuary as the actuarial equivalent of the annuity
9-13 to which the person is entitled, or may select one of the following
9-14 options,> which provide that:
9-15 (1) after the retiree's death, the reduced annuity is
9-16 payable throughout the life of a person designated by the retiree;
9-17 (2) after the retiree's death, one-half of the reduced
9-18 annuity is payable throughout the life of a person designated by
9-19 the retiree;
9-20 (3) if the retiree dies before 60 monthly annuity
9-21 payments have been made, the remainder of the 60 payments are
9-22 payable to the retiree's beneficiary or, if one does not exist, to
9-23 the retiree's estate; <or>
9-24 (4) if the retiree dies before 120 monthly annuity
9-25 payments have been made, the remainder of the 120 payments are
9-26 payable to the retiree's beneficiary or, if one does not exist, to
9-27 the retiree's estate;
9-28 (5) after the retiree's death, one-fourth of the
9-29 reduced annuity is payable throughout the life of a person
9-30 designated by the retiree;
9-31 (6) after the retiree's death, three-fourths of the
9-32 reduced annuity is payable throughout the life of a person
9-33 designated by the retiree; or
9-34 (7) if the retiree dies before 180 monthly annuity
9-35 payments have been made, the remainder of the 180 payments are
9-36 payable to the retiree's beneficiary or, if one does not exist, to
9-37 the retiree's estate.
9-38 SECTION 21. Subchapter D, Chapter 844, Government Code, is
9-39 amended by adding Section 844.310 to read as follows:
9-40 Sec. 844.310. REPORT OF EARNINGS OF DISABILITY RETIREE. (a)
9-41 The retirement system may require a disability retiree who is less
9-42 than 60 years old to submit annually to the retirement system a
9-43 report of earnings. The retirement system shall examine each
9-44 report and may require at any time that a disability retiree
9-45 undergo a medical examination by one or more physicians the
9-46 retirement system designates, if the retiree has reported earnings
9-47 that the board of trustees considers to show an ability to engage
9-48 in gainful employment.
9-49 (b) The board of trustees may adopt rules establishing
9-50 limits on the annual earnings of disability retirees and such other
9-51 rules as are necessary to administer this section.
9-52 (c) If a disability retiree refuses to submit an annual
9-53 report of earnings, the retirement system shall discontinue the
9-54 retiree's annuity payments until the retirement system receives
9-55 that annual report and, if so requested, the retiree submits to a
9-56 medical examination by one or more physicians designated by the
9-57 retirement system.
9-58 SECTION 22. Subchapter E, Chapter 844, Government Code, is
9-59 amended by adding Section 844.404 to read as follows:
9-60 Sec. 844.404. PERSON CAUSING DEATH OF MEMBER OR ANNUITANT.
9-61 (a) A benefit payable on the death of a member or annuitant may
9-62 not be paid to a person convicted of causing that death but instead
9-63 is payable to a person who would be entitled to the benefit had the
9-64 convicted person predeceased the decedent. If no person would be
9-65 entitled to the benefit, the benefit is payable to the decedent's
9-66 estate.
9-67 (b) The retirement system is not required to pay a benefit
9-68 under Subsection (a) unless it receives actual notice of the
9-69 conviction of the person who would have been entitled to the
9-70 benefits. However, the retirement system may delay payment of a
10-1 benefit payable on the death of a member or annuitant pending the
10-2 results of a criminal investigation and of legal proceedings
10-3 relating to the cause of death.
10-4 (c) The retirement system shall convert the remainder of any
10-5 annuity that would otherwise have been payable throughout the life
10-6 of the convicted person to an actuarially equivalent annuity
10-7 payable to the decedent's estate in 60 monthly annuity payments.
10-8 The time of the actuarial equivalence is the earlier of the time
10-9 the retirement system receives the notice of the conviction under
10-10 Subsection (b) or the time the retirement system begins the delay
10-11 in payment of a benefit under Subsection (b).
10-12 (d) For the purposes of this section, a person has been
10-13 convicted of causing the death of a member or annuitant if the
10-14 person:
10-15 (1) has pleaded guilty or nolo contendere to or has
10-16 been found guilty by a court of an offense at the trial of which it
10-17 is established that the person's intentional, knowing, or reckless
10-18 act or omission resulted in the death of a person who was a member
10-19 or annuitant, regardless of whether sentence is imposed or
10-20 probated; and
10-21 (2) has no appeal of the conviction pending and the
10-22 time provided for appeal has expired.
10-23 SECTION 23. Subchapter E, Chapter 844, Government Code, is
10-24 amended by adding Section 844.405 to read as follows:
10-25 Sec. 844.405. TRUST AS BENEFICIARY. (a) Except as provided
10-26 by Subsection (b), a member or retiree may designate a trust as
10-27 beneficiary for the payment of benefits from the retirement system.
10-28 If a trust is designated beneficiary, the beneficiary of the trust
10-29 is considered the designated beneficiary for the purpose of
10-30 determining eligibility for and the amount and duration of
10-31 benefits. The trustee is entitled to exercise any rights granted a
10-32 designated beneficiary to elect benefit options and name subsequent
10-33 beneficiaries.
10-34 (b) A trust having more than one beneficiary may not receive
10-35 benefits to which multiple designated beneficiaries are not
10-36 eligible under this chapter.
10-37 SECTION 24. Subchapter E, Chapter 844, Government Code, is
10-38 amended by adding Section 844.406 to read as follows:
10-39 Sec. 844.406. SIMULTANEOUS DEATH OF MEMBER AND BENEFICIARY.
10-40 When a member or retiree and the spouse or beneficiary of the
10-41 member or retiree have died within a period of less than 120 hours
10-42 of each other, the member or retiree is considered to have survived
10-43 the spouse or beneficiary for the purpose of determining the rights
10-44 to amounts payable under this subtitle on the death of the member
10-45 or retiree.
10-46 SECTION 25. Section 844.502, Government Code, is amended to
10-47 read as follows:
10-48 Sec. 844.502. Extended Supplemental Death Benefit Coverage.
10-49 (a) A member included in the coverage of the supplemental death
10-50 benefit program who fails to earn compensation in a month for
10-51 service to a subdivision participating in the supplemental death
10-52 benefits fund is eligible to receive extended coverage in the
10-53 program on complying with the terms of this section.
10-54 (b) A member is entitled to receive extended program
10-55 coverage if the retirement system receives at its office:
10-56 (1) notification that, as a result of illness or
10-57 injury, the member is unable to engage in gainful employment or is
10-58 on leave of absence under the Family and Medical Leave Act of 1993
10-59 (Pub. L. 103-3); and
10-60 (2) evidence that the member made a required
10-61 contribution to the retirement system as an employee of a
10-62 subdivision participating in the supplemental death benefits fund
10-63 for the month immediately preceding the first full month in which
10-64 the member was unable to engage in gainful employment <may apply to
10-65 the retirement system for extended program coverage and submit
10-66 evidence of eligibility for extended coverage>.
10-67 (c) The retirement system may request additional evidence as
10-68 to illness or injury or of the required contribution as a condition
10-69 to granting the coverage <The board of trustees shall grant
10-70 extended coverage in the supplemental death benefit program to an
11-1 applicant, if the board finds:>
11-2 <(1) that as a result of illness or injury, the member
11-3 is unable to engage in gainful occupation; and>
11-4 <(2) that the member made a required contribution to
11-5 the retirement system as an employee of a subdivision participating
11-6 in the supplemental death benefits fund for the month immediately
11-7 preceding the first full month in which the member was unable to
11-8 engage in gainful occupation>.
11-9 (d) Once established, extended coverage of a person in the
11-10 supplemental death benefit program continues until the last day of
11-11 the month in which:
11-12 (1) the member returns to work as an employee of a
11-13 participating subdivision;
11-14 (2) the <board of trustees finds that the> member
11-15 becomes <is> able to engage in gainful employment <occupation>;
11-16 (3) the person's membership in the retirement system
11-17 is terminated; <or>
11-18 (4) the member retires under this subtitle; or
11-19 (5) the member's leave of absence under the Family and
11-20 Medical Leave Act of 1993 (Pub. L. 103-3) terminates.
11-21 (e) The director <board of trustees by rule> may require a
11-22 member to submit to the retirement system <it> annual proof of
11-23 continued inability to engage in gainful employment <occupation>.
11-24 The director <board> may require a member to undergo a medical
11-25 examination by a physician designated by the retirement system
11-26 <board>. Failure of a member to submit proof of inability to
11-27 engage in gainful employment or to undergo a medical examination as
11-28 required by this subsection is a ground for terminating the
11-29 member's extended coverage under this section <the board's finding
11-30 that the member has become able to engage in gainful occupation>.
11-31 (f) If a member included in the coverage of the supplemental
11-32 death benefit program becomes eligible <to apply> for extended
11-33 coverage but dies before meeting the requirements of Subsections
11-34 (b) and (c) <fails to comply with Subsections (b) and (c) before
11-35 the member's death>, the member will be considered to have had the
11-36 extended coverage if proof is furnished that the member could have
11-37 qualified for extended coverage but death occurred:
11-38 (1) before the requirements of Subsections (b) and (c)
11-39 had been met; and
11-40 (2) <if application had been made according to
11-41 Subsections (b) and (c) and that the death occurred> within six
11-42 months after the date the coverage of the supplemental death
11-43 benefit program was discontinued according to Section 844.501.
11-44 SECTION 26. Section 844.504, Government Code, is amended to
11-45 read as follows:
11-46 Sec. 844.504. Retiree Supplemental Death Benefit. If a
11-47 retiree dies who has credited service that has not been canceled by
11-48 a withdrawal of contributions and that results from employment
11-49 <whose most recent employment as a member of the retirement system
11-50 was> with a subdivision that has elected to provide, and continues
11-51 to provide, postretirement supplemental death benefits, a lump-sum
11-52 supplemental death benefit is payable from the fund in the amount
11-53 of $2,500. If a retiree dies who was employed <at the time of
11-54 retirement> by more than one subdivision that has elected to
11-55 provide, and continues to provide, postretirement supplemental
11-56 death benefits, the financing of the lump-sum benefit shall be
11-57 prorated among the employing subdivisions participating in the
11-58 fund. If a person dies while payment of a retirement annuity to
11-59 that person is suspended as a result of Section 842.110, the
11-60 supplemental death benefit under this section shall be paid if it
11-61 would have been payable except for the suspension, unless a
11-62 supplemental death benefit is payable under Section 844.503 as a
11-63 result of the member's death.
11-64 SECTION 27. Sections 844.605(a) and (b), Government Code,
11-65 are amended to read as follows:
11-66 (a) If the actuary determines that the obligations of a
11-67 participating subdivision to the subdivision accumulation fund
11-68 cannot be amortized within a period of 40 years <or that the
11-69 subdivision would have an amortization period of more than 25 years
11-70 if it adopted the optional benefit eligibility plan authorized by
12-1 Section 844.207>, the governing body of the subdivision may by
12-2 order or resolution provide additional contributions by adopting a
12-3 supplemental contribution rate under this section to reduce the
12-4 funding period <or finance the optional benefit eligibility plan>.
12-5 A supplemental contribution rate adopted under this section also
12-6 may be authorized by the governing body of a subdivision for the
12-7 purpose of restoring the level of benefits in effect for that
12-8 subdivision that existed on January 1, 1994.
12-9 (b) A supplemental contribution rate is the rate of
12-10 contribution by a subdivision to its account in the subdivision
12-11 accumulation fund, in addition to the contributions provided under
12-12 Section 845.404(a)(2), that the actuary determines and certifies is
12-13 required, together with the contributions provided under Section
12-14 845.404(a)(2), to amortize the obligations of the subdivision to
12-15 the subdivision accumulation fund within a period of 25 years. A
12-16 supplemental contribution rate may not exceed four <three> percent
12-17 of covered payroll.
12-18 SECTION 28. Subchapter G, Chapter 844, Government Code, is
12-19 amended by adding Section 844.608 to read as follows:
12-20 Sec. 844.608. REQUIRED DECREASE IN CONTRIBUTION RATE. (a)
12-21 Notwithstanding Sections 845.402(c) and (d), a subdivision's member
12-22 contribution rate may be reduced to one, two, three, four, five, or
12-23 six percent of the current service compensation of its employees,
12-24 except that the rate of member contributions may be reduced to less
12-25 than four percent only if the reduction is necessary under this
12-26 section.
12-27 (b) If the actuary determines that, despite all required
12-28 decreases described by Section 844.607, the obligations of a
12-29 participating subdivision to the subdivision accumulation fund
12-30 cannot be amortized within a period of 40 years, the retirement
12-31 system shall reduce the rate of member contributions to such lower
12-32 rate authorized by this section as, in the opinion of the actuary,
12-33 is required for the obligations of the subdivision to the
12-34 subdivision accumulation fund to be able to be amortized within a
12-35 period of 40 years. At the time the actuary determines that the
12-36 rate of employee contributions no longer must be reduced for the
12-37 obligations to be able to be amortized within 40 years, the
12-38 retirement system shall reinstate the employee contribution rate to
12-39 the rate that was in effect at the time of the reduction, unless
12-40 the governing body of the subdivision has elected to change to some
12-41 other rate authorized by Section 845.402. Any change under this
12-42 section shall be made on January 1 of the year following the
12-43 applicable determination by the actuary.
12-44 (c) Notwithstanding Section 845.404(a), the contributions
12-45 made by the subdivision shall be based on the rate of member
12-46 contributions that was in effect before a required reduction in
12-47 that rate under Subsection (b) and, if applicable, any supplemental
12-48 contribution rate adopted by the subdivision under Section 844.605.
12-49 SECTION 29. Section 844.702, Government Code, is amended to
12-50 read as follows:
12-51 Sec. 844.702. Member Contributions. (a) The governing body
12-52 of the subdivision may designate the rate of member contributions
12-53 for employees of the subdivision to take effect beginning on the
12-54 effective date of adoption of the plan provisions of this
12-55 subchapter. The subdivision may elect a rate of four, five, six,
12-56 or seven percent of the current service compensation of its
12-57 employees. The governing body of the subdivision may thereafter
12-58 increase or decrease the contribution rate to take effect on the
12-59 next January 1 after the date of adoption of the increase or
12-60 decrease, notwithstanding the provisions of Sections 845.402(c) and
12-61 (d).
12-62 (b) If necessary under Section 844.608(b) or 844.703(h), a
12-63 subdivision's member contribution rate may be reduced to one, two,
12-64 three, four, five, or six percent of the current service
12-65 compensation of its employees.
12-66 SECTION 30. Section 844.703, Government Code, is amended by
12-67 amending Subsections (c), (f), and (g) and adding Subsection (h) to
12-68 read as follows:
12-69 (c) The combined rates of a subdivision's normal
12-70 contributions and prior service contributions under this subchapter
13-1 may not exceed the rate determined as the employee contribution
13-2 rate plus three percent, except that the governing body of the
13-3 subdivision may elect to increase the maximum combined rate to not
13-4 more than the rate determined as the employee rate plus four
13-5 percent, if necessary in order to maintain the current level of
13-6 benefits or to restore the level of benefits in effect on January
13-7 1, 1994. A reduction of the member contribution rate for employees
13-8 of the subdivision does not reduce the maximum rate of contribution
13-9 of the subdivision.
13-10 (f) The governing body of the subdivision has 25 years
13-11 beginning with the effective date of the plan provisions of this
13-12 subchapter to amortize all unfunded obligations against the
13-13 subdivision's account in the subdivision accumulation fund. The
13-14 adoption of any of the following benefit increases after the
13-15 effective date of the plan provisions will result in a new
13-16 amortization period of 25 years beginning with the effective date
13-17 of the benefit increases:
13-18 (1) an increase in the percentage used in determining
13-19 multiple matching credits under Section 844.704(a);
13-20 (2) an increase in the percentage used in determining
13-21 allocated prior service credits under Section 844.704(b);
13-22 (3) the optional increase in retirement annuities
13-23 under Section 844.208;
13-24 (4) the optional benefit for a surviving beneficiary
13-25 of a member described by Section 844.209;
13-26 (5) the optional benefit eligibility plan described by
13-27 Section 844.210;
13-28 (6) the optional benefit eligibility plan described by
13-29 Section 844.211;
13-30 (7) the optional authorization of the reestablishment
13-31 of credited service previously forfeited under Section 843.003; or
13-32 (8) the optional election to have credits recomputed
13-33 on the basis of total compensation under Section 843.702.
13-34 (g) If the combined rates of the subdivision's normal
13-35 contributions and prior service contributions under this subchapter
13-36 exceed the maximum rate prescribed by Subsection (c) before the
13-37 adjustment prescribed by Subsection (d), the actuary shall
13-38 determine what lower percentage for determining multiple matching
13-39 credits of future member contributions is necessary to make the
13-40 combined rates of the subdivision not exceed the maximum rate
13-41 prescribed by Subsection (c). The actuary shall give written
13-42 notice of the determination to the director, who shall give written
13-43 notice to the governing body of the subdivision. The lower
13-44 percentage determined by the actuary and specified in the notice to
13-45 the governing body becomes effective as to all members who perform
13-46 current service for the affected subdivision on or after the first
13-47 day of the first calendar year that begins after the date of the
13-48 notice, unless before the effective date, the governing body of the
13-49 subdivision adopts an order or resolution, approved by the board of
13-50 trustees, authorizing a reduction in the percentage used in
13-51 determining multiple matching credits in accordance with Section
13-52 844.704(a) or authorizing a reduction in the rate of member
13-53 contributions in accordance with Section 844.702, or authorizing
13-54 both a reduction in the percentage used in determining multiple
13-55 matching credits and a reduction in the rate of member
13-56 contributions.
13-57 (h) If the combined rates of the subdivision's normal
13-58 contributions and prior service contributions under this subchapter
13-59 exceed the maximum rate prescribed by Subsection (c), and if all
13-60 reductions under Subsection (g), in the opinion of the actuary,
13-61 result in the combined rates of the subdivision remaining in excess
13-62 of the maximum rate prescribed by Subsection (c), the retirement
13-63 system shall reduce the rate of member contributions to a lower
13-64 rate authorized by Section 844.702 that, in the opinion of the
13-65 actuary, is required to produce a combined rate that does not
13-66 exceed the rate prescribed by Subsection (c). At the time the
13-67 actuary determines that the rate of employee contributions that was
13-68 in existence before a reduction under this subsection no longer
13-69 would result in a combined rate in excess of the maximum rate
13-70 prescribed by Subsection (c), the retirement system shall reinstate
14-1 the employee contribution to the rate that was in effect at the
14-2 time of the reduction, unless the governing body of the subdivision
14-3 has elected to change to some other rate authorized by Section
14-4 844.702(a). Any change under this section shall be made on January
14-5 1 of the year following the applicable determination by the
14-6 actuary. During the time that the member contribution rate is
14-7 reduced, the combined rates of the subdivision's normal
14-8 contributions and prior service contributions shall be equal to the
14-9 maximum rate prescribed by Subsection 844.703(c).
14-10 SECTION 31. Section 845.113(a), Government Code, is amended
14-11 to read as follows:
14-12 (a) The board of trustees shall maintain the offices of the
14-13 retirement system in Austin and may, but is not required to:
14-14 (1) cause the system to own real estate on or in which
14-15 those offices are located;
14-16 (2) contract for and construct a building or buildings
14-17 to house those offices, along with related structures such as
14-18 parking garages;
14-19 (3) lease office space from others;
14-20 (4) lease space in its offices, or in a building that
14-21 previously has been its offices, to other persons or entities;
14-22 (5) maintain, modify, or construct improvements on any
14-23 real estate, whether for the retirement system or a tenant; or
14-24 (6) sell real estate that previously has been the
14-25 retirement system's offices <contract for and construct a building
14-26 to house those offices>.
14-27 SECTION 32. Section 845.202(b), Government Code, is amended
14-28 to read as follows:
14-29 (b) The director shall<:>
14-30 <(1)> manage and administer the retirement system
14-31 under the supervision and direction of the board<; and>
14-32 <(2) invest the assets of the system>.
14-33 SECTION 33. Section 845.301, Government Code, is amended to
14-34 read as follows:
14-35 Sec. 845.301. Investment of Assets. (a) The board of
14-36 trustees shall invest and reinvest the assets of the retirement
14-37 system without distinction as to their source in:
14-38 (1) interest-bearing bonds or other evidences of
14-39 indebtedness of this state, a county, school district, city, or
14-40 other municipal corporation of this state, the United States, or an
14-41 authority or an agency of the United States;
14-42 (2) securities for which the United States or any
14-43 authority or agency of the United States guarantees the payment of
14-44 principal and interest;
14-45 (3) interest-bearing bonds, notes, or other evidences
14-46 of indebtedness that are issued by a company:
14-47 (A) incorporated in the United States and that
14-48 are rated "A" or better by one or more nationally recognized rating
14-49 agencies approved by the board; or
14-50 (B) in whose stock the retirement system may
14-51 invest as provided by Subdivision (4);
14-52 (4) common or preferred stocks of a company
14-53 incorporated in the United States that <has paid cash dividends on
14-54 its common stock for 10 consecutive years immediately before the
14-55 date of purchase and>, unless the stocks are bank or insurance
14-56 stocks, <that> is listed on an exchange registered with the
14-57 Securities and Exchange Commission or its successor;
14-58 (5) obligations issued, assumed, or guaranteed by the
14-59 Inter-American Development Bank, the International Bank for
14-60 Reconstruction and Development (the World Bank), the African
14-61 Development Bank, the Asian Development Bank, and the International
14-62 Finance Corporation; <or>
14-63 (6) real estate mortgage investment conduit securities
14-64 (REMICs) or other participation certificates issued by the Federal
14-65 National Mortgage Corporation or by the Federal Home Loan Mortgage
14-66 Corporation, evidencing an undivided beneficial interest in pools
14-67 of real estate mortgage notes that are guaranteed as to payment of
14-68 principal and interest by the issuer, or by any agency, authority,
14-69 or instrumentality of the United States, and that are to be held in
14-70 trust by the issuer for the benefit of the certificate holder;
15-1 or<.>
15-2 (7) <(6)> bonds issued, assumed, or guaranteed by the
15-3 state of Israel.
15-4 (b) The board of trustees shall exercise control of the
15-5 investment operations by employing an investment officer, who shall
15-6 supervise the investment operations for the board of trustees.
15-7 (c) The board of trustees, acting on the recommendations of
15-8 the investment officer, may contract with private professional
15-9 investment managers to assist in investing the assets of the
15-10 retirement system.
15-11 (d) The board of trustees shall employ one or more
15-12 performance measurement services to evaluate and analyze the
15-13 investment results of those assets of the retirement system for
15-14 which reliable and appropriate measurement methodology and
15-15 procedures exist. Each service shall compare investment results
15-16 with the written investment objectives developed by the board of
15-17 trustees and shall also compare the investment of assets being
15-18 evaluated and analyzed with the investment of other public funds.
15-19 (e) The assets of the retirement system may be held in the
15-20 name of agents, nominees, depository trust companies, or other
15-21 entities designated by the board of trustees. The records and all
15-22 relevant reports or accounts of the retirement system must show the
15-23 ownership interests of the retirement system in these assets and
15-24 the facts regarding the system's holdings.
15-25 SECTION 34. Section 845.302, Government Code, is amended to
15-26 read as follows:
15-27 Sec. 845.302. CUSTODY AND INVESTMENT OF ASSETS PENDING
15-28 TRANSACTIONS <RESTRICTIONS ON INVESTMENTS>. The board of trustees,
15-29 in the exercise of its discretion to manage the assets of the
15-30 retirement system, may select one or more commercial banks,
15-31 depository trust companies, or other entities to serve as custodian
15-32 or custodians of the system's cash or securities pending completion
15-33 of an investment transaction and may authorize the custodian to
15-34 invest the cash so held in such short-term securities as the board
15-35 of trustees determines. <(a) The board of trustees may not invest
15-36 more than 20 percent of the retirement system's total assets in
15-37 preferred and common stocks of corporations.>
15-38 <(b) The board may not invest more than one percent of the
15-39 total assets of the system in the stock of one corporation.>
15-40 <(c) The system may not own more than five percent of the
15-41 voting stock of one corporation.>
15-42 SECTION 35. Section 845.303, Government Code, is amended to
15-43 read as follows:
15-44 Sec. 845.303. SECURITIES LENDING <DUTY OF CARE>. (a) The
15-45 board of trustees, in the exercise of its discretion to manage the
15-46 assets of the retirement system, may select one or more commercial
15-47 banks, depository trust companies, or other entities to serve as
15-48 custodian or custodians of the system's securities and to lend the
15-49 securities under rules adopted by the board of trustees and as
15-50 required by this section.
15-51 (b) To be eligible to lend securities under this section, a
15-52 bank or brokerage firm must:
15-53 (1) be experienced in the operations of a fully
15-54 secured securities lending program;
15-55 (2) maintain capital adequate in the prudent judgment
15-56 of the retirement system to assure the safety of the securities;
15-57 (3) execute an indemnification agreement satisfactory
15-58 in form and content to the retirement system fully indemnifying the
15-59 retirement system against loss resulting from its operation of a
15-60 securities lending program for the system's securities; and
15-61 (4) require any securities broker or dealer to whom it
15-62 lends securities belonging to the retirement system to deliver to
15-63 and maintain with the custodian collateral in the form of cash or
15-64 United States government securities, the market value of which must
15-65 equal not less than 100 percent of the market value, from time to
15-66 time, of the loaned securities. <In making investments for the
15-67 retirement system, the board of trustees shall exercise the
15-68 judgment and care, under the circumstances, that persons of
15-69 prudence, discretion, and intelligence exercise in the management
15-70 of their own affairs, considering the probable income from the
16-1 securities and probable safety of their capital.>
16-2 SECTION 36. Section 845.310(e), Government Code, is amended
16-3 to read as follows:
16-4 (e) If the board of trustees determines that the amount
16-5 credited to the distributive benefit account on December 31 of any
16-6 year is sufficient to do so, the board by resolution may:
16-7 (1) authorize the distribution to the subdivision
16-8 accumulation fund of all or part of the amount that is credited to
16-9 the account and that is equal to the amount in the subdivision
16-10 accumulation fund on January 1 of the year multiplied by:
16-11 (A) two percent or more when the current
16-12 interest rate is equal to the rate prescribed by Section
16-13 845.314(a); or
16-14 (B) two percent when the current interest rate
16-15 is less than the rate prescribed by Section 845.314(a);
16-16 (2) authorize the distribution and payment of all or
16-17 part of the money credited to the account to persons who were
16-18 annuitants on that day in the ratio that <of the rate of> the
16-19 monthly benefit of each annuitant would bear if not reduced under
16-20 Section 844.008 to the total of all annuity payments that would
16-21 have been made by the system, if not reduced under Section 844.008,
16-22 for the final month of the year; or
16-23 (3) authorize the distribution of all or part of the
16-24 amount credited to the account to:
16-25 (A) each member's individual account in the
16-26 employees saving fund as supplemental interest in the ratio of the
16-27 amount of current interest paid on the individual's account to the
16-28 current interest paid to all individual accounts for the year; and
16-29 (B) each participating subdivision's account in
16-30 the subdivision accumulation fund as supplemental interest in the
16-31 ratio of the current interest allowed on the account of the
16-32 subdivision to the total current interest paid to all subdivisions'
16-33 accounts for the year.
16-34 SECTION 37. Section 845.314(c), Government Code, is amended
16-35 to read as follows:
16-36 (c) The current interest rate is the lesser of:
16-37 (1) the interest rate prescribed by Subsection (a); or
16-38 (2) the interest rate computed by:
16-39 (A) adding the mean amounts in the current
16-40 service annuity reserve fund and the supplemental death benefits
16-41 fund during the year and multiplying the sum by the rate prescribed
16-42 by Subsection (a);
16-43 (B) multiplying the amount in the subdivision
16-44 accumulation fund on January 1 of the year by two percent;
16-45 (C) subtracting the sum of the amount computed
16-46 under Paragraphs (A) and (B), plus an amount equal to the sum of
16-47 all interest credited during the year to the employees saving fund
16-48 accounts of members as provided by Section 844.007(b) and to the
16-49 subdivision accumulation fund as provided by Section 844.007(c),
16-50 plus an amount equal to the amount to be transferred to the expense
16-51 fund for administrative expenditures of the retirement system for
16-52 the following year, from an amount equal to the amount in the
16-53 interest fund on December 31 of the year, before transfers of
16-54 interest to other funds are made;
16-55 (D) adding an amount equal to the amount in the
16-56 endowment fund on January 1 of the year, an amount equal to the
16-57 amount in the subdivision accumulation fund on January 1 of the
16-58 year, and an amount equal to the sum of the accumulated deposits in
16-59 the employees saving fund on January 1 of the year of all persons
16-60 who are members on December 31 of the year, before any transfers
16-61 for retirements effective December 31 are made; and
16-62 (E) dividing the amount computed under Paragraph
16-63 (C) by the amount computed under Paragraph (D) and expressing the
16-64 result to the nearest one-tenth of one percent.
16-65 SECTION 38. Subchapter F, Chapter 845, Government Code, is
16-66 amended by adding Section 845.504 to read as follows:
16-67 Sec. 845.504. REPORTS CONCERNING TAXABLE INCOME. At times
16-68 the retirement system considers necessary for the purpose of
16-69 computing limitations on payment of benefits under Section 844.008,
16-70 each subdivision shall certify to the retirement system in a manner
17-1 prescribed by the board the amount of income subject to federal
17-2 income tax that the subdivision paid to each of its employees for
17-3 the calendar year or other period of time for which the retirement
17-4 system requests that information.
17-5 SECTION 39. This Act takes effect September 1, 1995, except
17-6 Sections 33, 34, 35, and this section, which take effect
17-7 immediately.
17-8 SECTION 40. The importance of this legislation and the
17-9 crowded condition of the calendars in both houses create an
17-10 emergency and an imperative public necessity that the
17-11 constitutional rule requiring bills to be read on three several
17-12 days in each house be suspended, and this rule is hereby suspended,
17-13 and that this Act take effect and be in force according to its
17-14 terms, and it is so enacted.
17-15 * * * * *