By Montford S.B. No. 449
74R1459 CAS-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to membership in, contributions to, and administration of
1-3 local retirement systems for fire fighters.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 3, Texas Local Fire Fighters Retirement
1-6 Act (Article 6243e, Vernon's Texas Civil Statutes), is amended by
1-7 adding Subsection (e) to read as follows:
1-8 (e) In addition to the other applicability of this Act, this
1-9 Act applies to a political subdivision outside the boundaries of a
1-10 municipality that has a regularly organized fire department not
1-11 consisting exclusively of volunteers, except a political
1-12 subdivision whose fire department is governed by another state law
1-13 providing for retirement benefits for fire department personnel.
1-14 If the political subdivision's fire department consists partly of
1-15 volunteers eligible to participate in the program provided by
1-16 Chapter 269, Acts of the 65th Legislature, Regular Session, 1977
1-17 (Article 6243e.3, Vernon's Texas Civil Statutes), and partly of
1-18 employees, this Act applies to fire department personnel who are
1-19 employees.
1-20 SECTION 2. Section 27(a), Texas Local Fire Fighters
1-21 Retirement Act (Article 6243e, Vernon's Texas Civil Statutes), is
1-22 amended to read as follows:
1-23 (a) A board of trustees established under this Act shall
1-24 keep a sufficient amount of cash on hand to make payments as they
2-1 become due under the retirement system. If a board determines that
2-2 the fund of its retirement system contains an amount in excess of
2-3 the amount needed to make payments as they become due, the board
2-4 may invest any portion of the excess <in:>
2-5 <(1) bonds or other interest-bearing obligations and
2-6 securities of the United States, the state, or a political
2-7 subdivision of the state;>
2-8 <(2) shares and share accounts of savings and loan
2-9 associations to the extent that the shares and share accounts are
2-10 insured by the Federal Savings and Loan Insurance Corporation;>
2-11 <(3) first-lien real estate mortgage securities
2-12 insured by the Federal Housing Administration;>
2-13 <(4) bonds of companies incorporated within the United
2-14 States;>
2-15 <(5) common and preferred stocks of companies
2-16 incorporated within the United States that, unless the stocks are
2-17 bank or insurance stocks, are listed on an exchange registered with
2-18 the Securities and Exchange Commission or its successor;>
2-19 <(6) guaranteed investment contracts offered by
2-20 insurance companies;>
2-21 <(7) money market funds;>
2-22 <(8) mutual funds and other pooled funds;>
2-23 <(9) international stocks traded as American
2-24 depository receipts; and>
2-25 <(10) over-the-counter stocks>. In making an
2-26 investment under this subsection, the board shall exercise the
2-27 judgment and care, under the circumstances prevailing at the time,
3-1 that a person of ordinary prudence, discretion, and intelligence
3-2 exercises in the management of the person's own affairs, not in
3-3 regard to speculation, but in regard to the permanent disposition
3-4 of the person's funds, considering the probable income from the
3-5 investment as well as the probable safety of the capital.
3-6 SECTION 3. Section 29(e), Texas Local Fire Fighters
3-7 Retirement Act (Article 6243e, Vernon's Texas Civil Statutes), is
3-8 amended to read as follows:
3-9 (e) Each person who is a member of a retirement system as a
3-10 current fire department volunteer shall contribute to the system an
3-11 annual amount <of not less than $3 nor more than $5. The amount
3-12 must be> determined by majority vote by secret ballot of the
3-13 volunteers of the department who are participating members of the
3-14 retirement system. A municipality may at any time make the member
3-15 contributions required under this subsection on behalf of its
3-16 volunteers and any other contributions the municipality chooses to
3-17 make to the retirement system.
3-18 SECTION 4. Sections 2(1), (2), and (8), Texas Local Fire
3-19 Fighters Retirement Act (Article 6243e, Vernon's Texas Civil
3-20 Statutes), are amended to read as follows:
3-21 (1) "Contribution" means an amount of money paid by a
3-22 municipality or other political subdivision to a retirement system
3-23 or required to be paid periodically to a retirement system by or on
3-24 behalf of a member of the retirement system for the purpose of
3-25 financing benefits payable by the system.
3-26 (2) "Employee" means a person who regularly performs
3-27 services for a fire department, who is a member of the retirement
4-1 system that includes the fire department, and who regularly
4-2 receives compensation for those services of at least $200 a month.
4-3 The term includes a person described by Subsection (d) of Section 9
4-4 of this Act who regularly receives compensation by the municipality
4-5 or other political subdivision of at least $200 a month.
4-6 (8) "Volunteer" means a person who regularly performs
4-7 services for a fire department, who is a member of the retirement
4-8 system that includes the fire department, and who either receives
4-9 no compensation for those services or regularly receives
4-10 compensation for those services of less than $200 a month. The
4-11 term includes a person described by Subsection (d) of Section 9 of
4-12 this Act who either receives no compensation for service to a
4-13 municipality or other political subdivision or regularly receives
4-14 compensation for that service of less than $200 a month.
4-15 SECTION 5. Section 4, Texas Local Fire Fighters Retirement
4-16 Act (Article 6243e, Vernon's Texas Civil Statutes), is amended to
4-17 read as follows:
4-18 Sec. 4. RETIREMENT SYSTEM AND TRUST FUND. A fire fighters'
4-19 retirement system and trust fund are established in each
4-20 municipality or other political subdivision to which this Act
4-21 applies. The board of trustees of each retirement system
4-22 established by this Act shall hold or cause to be held in trust the
4-23 assets appropriated or dedicated to the system or fund, separate
4-24 from other money or accounts administered by the board of trustees
4-25 or the municipality or other political subdivision, for the
4-26 exclusive benefit of the members and retirees of the system and
4-27 their beneficiaries.
5-1 SECTION 6. Section 11(b), Texas Local Fire Fighters
5-2 Retirement Act (Article 6243e, Vernon's Texas Civil Statutes), is
5-3 amended to read as follows:
5-4 (b) If a person makes the deposit described by Subsection
5-5 (a) of this section, the municipality or other political
5-6 subdivision served by the fire department that employs the person
5-7 shall deposit with the retirement system an amount determined by
5-8 the board that is equal to the sum of:
5-9 (1) the amount that the municipality or other
5-10 political subdivision would have contributed to the system if the
5-11 person's previous fire department service had been performed for
5-12 the department by which the person is employed, computed on the
5-13 <municipality> contribution rate of the municipality or other
5-14 political subdivision in effect in the retirement system at the
5-15 time the service was performed and on the person's compensation for
5-16 the previous service; and
5-17 (2) interest on the amount described by Subdivision
5-18 (1) of this subsection at the rate of eight percent, compounded
5-19 annually, from the date the service was performed to the date of
5-20 deposit.
5-21 SECTION 7. Section 18(f), Texas Local Fire Fighters
5-22 Retirement Act (Article 6243e, Vernon's Texas Civil Statutes), is
5-23 amended to read as follows:
5-24 (f) A board of trustees established under this Act may
5-25 designate a bank or, as applicable, the chief <municipal> financial
5-26 officer of the municipality or other political subdivision or the
5-27 secretary-treasurer of the board to be custodian of the assets of
6-1 the retirement system. If the chief <municipal> financial officer
6-2 or the secretary-treasurer of the board is designated custodian,
6-3 the person's official bond and oath of office are conditioned
6-4 additionally on the faithful performance of the person's duties as
6-5 custodian of the assets of the retirement system.
6-6 SECTION 8. Sections 19(a) and (b), Texas Local Fire Fighters
6-7 Retirement Act (Article 6243e, Vernon's Texas Civil Statutes), are
6-8 amended to read as follows:
6-9 (a) In each municipality and other political subdivision to
6-10 which this Act applies and that has a fire department that does not
6-11 consist exclusively of volunteers, the fire fighters' retirement
6-12 system is governed by a board of trustees consisting of:
6-13 (1) the mayor of the municipality or the mayor's
6-14 designated representative or the chief operating officer of the
6-15 political subdivision or the chief operating officer's designated
6-16 representative, as applicable;
6-17 (2) the chief <municipal> financial officer of the
6-18 municipality or other political subdivision or, if there is no
6-19 officer denominated as chief financial officer, the person who
6-20 performs the duties of chief <municipal> financial officer or a
6-21 person designated by the chief <municipal> financial officer or by
6-22 the person performing the duties of chief <municipal> financial
6-23 officer;
6-24 (3) three members of the retirement system elected by
6-25 participating members as provided by Subsection (b) of this
6-26 section; and
6-27 (4) two residents of the municipality or other
7-1 political subdivision who are not officers or employees of the
7-2 municipality or other political subdivision and who are elected by
7-3 a majority vote of the members of the board of trustees determined
7-4 as provided by Subdivisions (1), (2), and (3) of this subsection.
7-5 (b) During each period that begins on December 1 of one year
7-6 and ends on January 31 of the following year, the participating
7-7 members of a fire fighters' retirement system in a municipality or
7-8 other political subdivision subject to this section shall elect by
7-9 secret ballot and certify to the governing body of the municipality
7-10 or other political subdivision a member to the board of trustees to
7-11 serve a term of three years. To be elected a member of a board of
7-12 trustees under this subsection, a person must be a member of the
7-13 retirement system and receive a majority of the votes cast in the
7-14 election, and at least 50 percent of all participating members of
7-15 the retirement system must vote in the election.
7-16 SECTION 9. Section 24(b), Texas Local Fire Fighters
7-17 Retirement Act (Article 6243e, Vernon's Texas Civil Statutes), is
7-18 amended to read as follows:
7-19 (b) The cost of an audit may be paid by the municipality or
7-20 other political subdivision or from the assets of the fund.
7-21 SECTION 10. Section 26, Texas Local Fire Fighters Retirement
7-22 Act (Article 6243e, Vernon's Texas Civil Statutes), is amended to
7-23 read as follows:
7-24 Sec. 26. GIFTS ACCEPTED FROM ANY SOURCE. The board of
7-25 trustees of a retirement system established under this Act is
7-26 authorized to accept and receive for the use and benefit of the
7-27 fund, in addition to member contributions and <municipality>
8-1 contributions of the municipality or other political subdivision,
8-2 gifts of money from any source.
8-3 SECTION 11. Section 28(g), Texas Local Fire Fighters
8-4 Retirement Act (Article 6243e, Vernon's Texas Civil Statutes), is
8-5 amended to read as follows:
8-6 (g) The cost of investment managing or counseling services
8-7 may be paid by the municipality or other political subdivision or
8-8 from the assets of the fund.
8-9 SECTION 12. Sections 29(a)-(d), Texas Local Fire Fighters
8-10 Retirement Act (Article 6243e, Vernon's Texas Civil Statutes), are
8-11 amended to read as follows:
8-12 (a) Each person who is a member of a retirement system as a
8-13 current fire department employee shall make contributions to the
8-14 system. Except as provided by Subsection (d) of this section, a
8-15 contribution required under this subsection is computed on the
8-16 employee's periodic compensation at a rate determined by majority
8-17 vote of the employees of the department who are members, at an
8-18 election by secret ballot at which at least 50 percent of those
8-19 employees vote. Except as provided by Section 30 of this Act, the
8-20 payroll officer of the municipality or other political subdivision
8-21 shall deduct the contributions required under this subsection each
8-22 payroll period and submit them to the retirement system.
8-23 (b) A municipality or other political subdivision that has
8-24 employees who are participating members of a retirement system
8-25 shall make contributions to the system each payroll period. Except
8-26 as provided by Subsection (d) of this section, contributions
8-27 required under this subsection are computed on the total
9-1 compensation paid to the employees who are participating members of
9-2 the system. A municipality or other political subdivision is
9-3 required to make contributions under this subsection at the same
9-4 rate paid by employees or nine percent, whichever is the smaller
9-5 rate. The governing body of a municipality or other political
9-6 subdivision by ordinance may adopt a rate of employer contributions
9-7 that is greater than the rate required by this subsection.
9-8 (c) Contributions by a municipality or other political
9-9 subdivision <Municipal contributions> determined under Subsection
9-10 (b) or (d) of this section are payable each payroll period to the
9-11 retirement system.
9-12 (d) Contributions required under Subsections (a) and (b) of
9-13 this section are computed on the average compensation of all
9-14 employees of the department for the preceding year, if this method
9-15 of computation is adopted by majority vote of the employees of the
9-16 department who are members, at an election by secret ballot at
9-17 which at least 50 percent of the participating members vote, and is
9-18 also adopted by ordinance of the governing body of the municipality
9-19 or other political subdivision. The average compensation of
9-20 department employees shall be computed for each 12-month period as
9-21 determined by the board of trustees.
9-22 SECTION 13. Section 30, Texas Local Fire Fighters Retirement
9-23 Act (Article 6243e, Vernon's Texas Civil Statutes), is amended to
9-24 read as follows:
9-25 Sec. 30. PICK UP OF EMPLOYEE CONTRIBUTIONS. (a) A
9-26 municipality or other political subdivision may pick up the
9-27 employee contributions required by Subsection (a) of Section 29 of
10-1 this Act for all compensation that is earned by participating
10-2 members of the retirement system on or after the effective date of
10-3 the pick up. Employee contributions picked up as provided by this
10-4 section are in lieu of deductions of employee contributions from
10-5 paychecks or warrants and shall be paid by the municipality or
10-6 other political subdivision to the retirement system from the same
10-7 source of funds that is used in paying compensation to the
10-8 members. A pick up of employee contributions shall be accompanied
10-9 by a reduction in the compensation of members, an offset against a
10-10 future increase in member compensation, or a combination of
10-11 compensation reduction and offset against a compensation increase.
10-12 Unless otherwise determined by the governing body of the
10-13 municipality or other political subdivision and approved by
10-14 majority vote of the participating members at an election by secret
10-15 ballot, a pick up of contributions results in a corresponding
10-16 reduction in compensation.
10-17 (b) Contributions picked up as provided by this section
10-18 shall be treated as employer contributions in determining tax
10-19 treatment of the amounts under the Internal Revenue Code of 1986.
10-20 Each municipality or other political subdivision picking up
10-21 contributions shall continue, however, to compute federal income
10-22 tax withholding as if these contributions were employee wages until
10-23 the first payroll period that begins after the date the fire
10-24 fighters' pension commissioner files with the secretary of state a
10-25 notice stating that the United States Internal Revenue Service has
10-26 determined or a federal court has ruled that under Section 414(h),
10-27 Internal Revenue Code of 1986 (26 U.S.C. Section 414(h)), the
11-1 contributions are not includable in the gross income of a member
11-2 until they are distributed or made available. Employee
11-3 contributions picked up as provided by this section shall be
11-4 deposited to the credit of the individual account of each affected
11-5 member and shall be treated for all other purposes of this Act as
11-6 if the contributions had been deducted from the compensation of
11-7 members. Picked up contributions are not includable in a
11-8 computation of <municipal> contribution rates of the municipality
11-9 or other political subdivision.
11-10 (c) A pick up of employee contributions takes effect in a
11-11 municipality or other political subdivision on January 1 of the
11-12 year following the year in which:
11-13 (1) the governing body of the municipality or other
11-14 political subdivision by ordinance has adopted the pick up;
11-15 (2) the pick up has been approved by majority vote of
11-16 the participating members of the retirement system at an election
11-17 by secret ballot at which at least 50 percent of the participating
11-18 members vote; and
11-19 (3) the fire fighters' pension commissioner has filed
11-20 with the secretary of state a notice stating that the United States
11-21 Internal Revenue Service has issued a determination that the plan
11-22 covering employees of the municipality or other political
11-23 subdivision is a qualified retirement plan under Section 401(a),
11-24 Internal Revenue Code of 1986 (26 U.S.C. Section 401(a)), and that
11-25 its related trust is tax exempt under Section 501(a) of that code
11-26 (26 U.S.C. Section 501(a)).
11-27 (d) A pick up of employee contributions is terminated in a
12-1 municipality or other political subdivision on January 1 of the
12-2 year following the year in which:
12-3 (1) the termination has been approved by a two-thirds
12-4 vote of the participating members of the retirement system at an
12-5 election by secret ballot at which at least 50 percent of the
12-6 participating members vote; and
12-7 (2) the governing body of the municipality or other
12-8 political subdivision has repealed the ordinance that adopted the
12-9 pick up of employee contributions.
12-10 SECTION 14. Section 27(d), Texas Local Fire Fighters
12-11 Retirement Act (Article 6243e, Vernon's Texas Civil Statutes), is
12-12 repealed.
12-13 SECTION 15. The importance of this legislation and the
12-14 crowded condition of the calendars in both houses create an
12-15 emergency and an imperative public necessity that the
12-16 constitutional rule requiring bills to be read on three several
12-17 days in each house be suspended, and this rule is hereby suspended,
12-18 and that this Act take effect and be in force from and after its
12-19 passage, and it is so enacted.