By Madla S.B. No. 1148
74R6647 CAS-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the retirement system for police officers and
1-3 firefighters in certain municipalities.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Sections 4.01 and 4.02, Chapter 824, Acts of the
1-6 73rd Legislature, Regular Session, 1993 (Article 6243o, Vernon's
1-7 Texas Civil Statutes), are amended to read as follows:
1-8 Sec. 4.01. Membership. (a) A person becomes a member of
1-9 the fund as a condition of employment if the person:
1-10 (1) has served eight months <been properly appointed
1-11 and enrolled> as a fire fighter or police officer of a municipality
1-12 to which this Act applies, including a period as a trainee in the
1-13 appropriate training academy <in a position or office established
1-14 and classified by municipal ordinance>; and
1-15 (2) <has served the probationary period for the
1-16 position;>
1-17 <(3) has served for six months as a fire fighter or
1-18 police officer of the municipality; and>
1-19 <(4)> was not younger than 18 <and had not attained
1-20 the age of 36> at the time of appointment.
1-21 (b) Notwithstanding Subsection (a) of this section, a person
1-22 in a classified position in either the fire department or police
1-23 department who was barred from entry in the fund solely because the
1-24 person had attained the age of 36 at the time that the person would
2-1 have otherwise been eligible to enter the fund and for that reason
2-2 became a member of the Texas Municipal Retirement System and who is
2-3 otherwise eligible for membership in the fund shall become a member
2-4 of the fund as a condition of continued employment. The person
2-5 must make application to the fund not later than the 30th day after
2-6 the date on which the person receives notification of this
2-7 provision.
2-8 (c) A person who becomes a member of the fund under
2-9 Subsection (b) of this section shall be given service credit as
2-10 though the person became a member of the fund October 16, 1990, if
2-11 the person pays into the fund, in accordance with procedures
2-12 established by the board, pension contributions for all service
2-13 credit allowed based on amounts that would have been deducted if
2-14 the person had been allowed to enter the fund on that date.
2-15 (d) A person who was a member of the Texas Municipal
2-16 Retirement System and on October 16, 1990, became a member of the
2-17 fund shall be allowed service credit from the time that the person
2-18 would have otherwise been eligible for membership in the fund but
2-19 for the age prohibition, through October 15, 1990, if the person
2-20 complies with Subsection (b) of this section and pays into the
2-21 fund, in accordance with procedures established by the board, a sum
2-22 of money equal to the amount of money that would have been deducted
2-23 from that person's salary during the period for which service
2-24 credit is sought. Service credit may be obtained only in
2-25 increments of full months, with the minimum being one month and the
2-26 maximum being all of the time during the period for which service
2-27 credit is sought.
3-1 (e) A person who becomes a member of the fund under
3-2 Subsection (a) or (b) of this section or who is allowed service
3-3 credit under Subsection (d) of this section and who, before
3-4 becoming a member of the fund, did not provide an authorization for
3-5 release of medical information for any medical records dated on or
3-6 after the date of initial application for employment must provide
3-7 that authorization when requested by the board or in the
3-8 alternative, as required by the board, must submit to a physical
3-9 examination by a physician selected by the board. A person's
3-10 membership in the fund is terminated if the person fails to comply
3-11 with this subsection within a reasonable period established by the
3-12 board.
3-13 (f) <(b)> The drawing of compensation by an officer or
3-14 employee in the fire or police department for service in that
3-15 department does not of itself make that person a member of the
3-16 fund.
3-17 (g) <(c)> The regularity of an appointment as a fire fighter
3-18 or police officer of a municipality to which this Act applies may
3-19 not be presumed from the serving of the full probationary period,
3-20 if any. The service of the probationary period by an officer or
3-21 employee as a fire fighter or police officer of a municipality to
3-22 which this Act applies does not constitute the creation of a
3-23 position or office to which a proper appointment has been made for
3-24 purposes of this Act.
3-25 Sec. 4.02. FAMILY AND MEDICAL LEAVE <REINSTATEMENT>. (a)
3-26 If a member takes unpaid leave as provided by the Family and
3-27 Medical Leave Act (29 U.S.C. Section 2601 et seq.), that member is
4-1 entitled to make voluntary contributions for the leave period in
4-2 the same amount as the member would have paid if the member had not
4-3 taken the leave. Those payments must be made not later than the
4-4 30th day after the date the member returns from that leave. A
4-5 computation of contributions under this section shall be made in
4-6 the same manner as other computations under this Act. A
4-7 municipality to which this Act applies shall match an amount equal
4-8 to twice the amount of each payment a member makes to the fund
4-9 under this subsection.
4-10 (b) If the member does not comply with Subsection (a) of
4-11 this section, the member loses all credit toward the member's
4-12 retirement annuity for the period the member was on leave <A
4-13 former fund member who has reentered the fire or police department
4-14 may not be barred from membership in the fund because of age as
4-15 long as the member can qualify for a 30-year pension on or before
4-16 the member's 65th birthday>.
4-17 SECTION 2. Section 4.03(c), Chapter 824, Acts of the 73rd
4-18 Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
4-19 Civil Statutes), is amended to read as follows:
4-20 (c) The member must make the payment described by Subsection
4-21 (b) of this section in full within an amount of time after the
4-22 member's return that is equal to three times <twice> the amount of
4-23 time the member was absent, except that the maximum period for
4-24 payment may not exceed five <four> years.
4-25 SECTION 3. Sections 4.04, 4.07, and 5.01, Chapter 824, Acts
4-26 of the 73rd Legislature, Regular Session, 1993 (Article 6243o,
4-27 Vernon's Texas Civil Statutes), are amended to read as follows:
5-1 Sec. 4.04. MEMBER CONTRIBUTIONS. (a) There shall be
5-2 deducted from the wages of each fire fighter and police officer in
5-3 the employment of a municipality to which this Act applies a
5-4 percentage of the member's total salary, excluding overtime pay,
5-5 according to the following schedule:
5-6 (1) 11.16 percent for full pay periods after September
5-7 30, 1993, but before October 1, 1994;
5-8 (2) 11.32 percent for full pay periods after September
5-9 30, 1994, but before October 1, 1995;
5-10 (3) 11.50 percent for full pay periods after September
5-11 30, 1995, but before October 1, 1996;
5-12 (4) 11.66 percent for full pay periods after September
5-13 30, 1996, but before October 1, 1997;
5-14 (5) 11.82 percent for full pay periods after September
5-15 30, 1997, but before October 1, 1998;
5-16 (6) 12 percent for full pay periods after September
5-17 30, 1998, but before October 1, 1999;
5-18 (7) 12.16 percent for full pay periods after September
5-19 30, 1999, but before October 1, 2000;
5-20 (8) 12.32 percent for full pay periods after September
5-21 30, 2000, but before October 1, 2001; and
5-22 (9) 12.50 percent for full pay periods after September
5-23 30, 2001.
5-24 (b) The municipality shall pick up the member contributions
5-25 that are required by Subsection (a) of this section.
5-26 (c) Contributions picked up by the municipality shall be
5-27 treated as employer contributions in accordance with Section
6-1 414(h)(2) of the Internal Revenue Code of 1986 (26 U.S.C. Section
6-2 414) for the purpose of determining tax treatment of the amounts
6-3 under the Internal Revenue Code of 1986. Those contributions are
6-4 not included in the gross income of the employee until the time
6-5 they are distributed or made available to the employee.
6-6 Sec. 4.07. <NO> REFUND OF CONTRIBUTIONS. (a) During the
6-7 first five years of membership, a <A> member of the fund is not
6-8 entitled to any refund from the fund of any portion of the money
6-9 deducted from the member's pay for the benefit of the fund. That
6-10 money is <public money and> the property of the fund for the
6-11 benefit of the members qualifying for benefits and for their
6-12 beneficiaries.
6-13 (b) A member of the fund who terminates employment before
6-14 the member's right to benefits under the fund has vested but who
6-15 has contributed to the fund for at least five years is entitled to
6-16 a refund of the member's contributions that were picked up by the
6-17 municipality. That refund shall be paid without interest. A
6-18 member who terminates employment to receive a disability pension or
6-19 a survivor beneficiary under this Act is not entitled to a refund
6-20 under this subsection. A person's acceptance of a refund under
6-21 this subsection precludes the person from any other right or
6-22 benefit under this Act.
6-23 Sec. 5.01. Retirement benefits. (a) If a member of the
6-24 fund has contributed a portion of that member's salary as provided
6-25 by this Act and has contributed and served for 20 years or more in
6-26 the fire or police department, the board shall, on the application
6-27 of the member for a retirement annuity, authorize a retirement
7-1 annuity to the member.
7-2 (b) The board shall compute the retirement annuity of a
7-3 member who retires after September 30, 1991, but before October 1,
7-4 1995, on the basis of the average of the member's total salary,
7-5 excluding overtime pay, for the highest three years of the last
7-6 five years, computed from the date of retirement, of the member's
7-7 pay at the rate of two percent for each of the first 20 years
7-8 served, plus 3 1/2 percent for each of the next 10 years served,
7-9 plus one percent for each of the next five years served, with
7-10 fractional years prorated based on full months served as a
7-11 contributing member, but the annuity may not exceed, as of the date
7-12 of retirement, 80 percent of the average so determined.
7-13 (c) The board shall compute the retirement annuity of a
7-14 member who retires after September 30, 1995, on the basis of the
7-15 average of the member's total salary, excluding overtime pay, for
7-16 the highest three years of the last five years, computed from the
7-17 date of retirement, of the member's pay at the rate of two percent
7-18 for each of the first 20 years served, plus four percent for each
7-19 of the next five years served, plus 3 1/2 percent for each of the
7-20 next five years served, plus one percent for each of the next five
7-21 years served, with fractional years prorated based on full months
7-22 served as a contributing member. In making the computation for a
7-23 year, the year is considered to begin on the first day a
7-24 contribution is made. An annuity under this subsection may not
7-25 exceed, as of the date of retirement, 82.5 percent of the average
7-26 determined under this subsection.
7-27 (d) <(c)> A member may not receive an award from the fund
8-1 for service retirement until the member has served at least 20
8-2 years in the fire or police department and has also contributed the
8-3 required amount of money for at least 20 years. In determining the
8-4 number of years of service in a department, the member shall be
8-5 given full credit for the time the member was actively engaged in
8-6 military service in accordance with Section 4.03 of this Act and
8-7 for absences taken under the Family and Medical Leave Act (29
8-8 U.S.C. Section 2601 et seq.), in accordance with Section 4.02(a) of
8-9 this Act. Disciplinary suspensions of 15 days or less may not be
8-10 subtracted from a member's service credit under this Act if the
8-11 member has paid into the fund within 30 days after the termination
8-12 date of each suspension a sum of money equal to the amount of money
8-13 that would have been deducted from that person's salary during that
8-14 period of suspension if it had not been for that suspension. A
8-15 municipality to which this Act applies shall double-match a payment
8-16 made under this subsection.
8-17 (e) <(d) If a member of the fire or police department has
8-18 served for 30 years or more in either department and has
8-19 contributed a portion of that member's salary as provided by this
8-20 Act for the same period, that member is retired automatically from
8-21 service on the member's 65th birthday.>
8-22 <(e) If, on a member's 65th birthday, the member has served
8-23 less than 30 years in either department and has not contributed a
8-24 portion of that member's salary as provided by this Act for that
8-25 period, the member may continue service and contributions until the
8-26 total service equals and the contributions have been made for 30
8-27 years.>
9-1 <(f)> Except as provided by Subsection (f) <(g)> of this
9-2 section, members of the fund at the time of their retirement shall
9-3 receive service credit for all unused sick leave accumulated by
9-4 them under Chapter 143, Local Government Code, and its subsequent
9-5 amendments, with fractional years prorated based on full months of
9-6 sick leave.
9-7 (f) <(g)> The retirement annuity for a member under
9-8 Subsection (e) <(f)> of this section may not exceed, as of the date
9-9 of retirement, 82.5 <80> percent of the average, determined under
9-10 that subsection and under the ordinances of a municipality to which
9-11 this Act applies, that exceeds 90 days of accumulated sick leave.
9-12 SECTION 4. Article 5, Chapter 824, Acts of the 73rd
9-13 Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
9-14 Civil Statutes), is amended by adding Section 5.015 to read as
9-15 follows:
9-16 Sec. 5.015. LUMP-SUM BENEFIT PAYMENT AND ELECTION. (a) At
9-17 the time a member applies for retirement benefits under Section
9-18 5.01, the member may elect to receive a lump-sum payment, for and
9-19 in consideration of a reduced annuity benefit as provided by this
9-20 section.
9-21 (b) The election of a lump-sum payment with a reduced
9-22 annuity benefit:
9-23 (1) may be made only in increments of full months, not
9-24 to exceed 24 months; and
9-25 (2) must be made at the time of application for
9-26 retirement.
9-27 (c) To be eligible for a lump-sum payment under this
10-1 section, a member of the fund must have contributed a portion of
10-2 that member's salary, as provided by this Act, and have contributed
10-3 and served at least 20 years and 1 month in the fire or police
10-4 department.
10-5 (d) The amounts of the monthly annuity payments shall be
10-6 computed as of the date the member elects the lump-sum payment, but
10-7 the computation may not exceed a monthly annuity payment of 82.5
10-8 percent of the average computed as provided by Section 5.01 of this
10-9 Act. The monthly retirement computed under this subsection shall
10-10 be the monthly annuity amount for future annuity payments.
10-11 (e) For the purposes of computing the lump-sum payment, the
10-12 monthly annuity payment computed under Subsection (d) of this
10-13 section shall be recomputed to exclude service credit for sick
10-14 leave accumulated on the date of retirement. The recomputed
10-15 annuity shall be multiplied by the increments of full months
10-16 elected as provided by Subsection (a) of this section, to compute
10-17 the lump-sum payment.
10-18 (f) A member may defer receiving the lump-sum payment under
10-19 this section for a period of not longer than 12 months after the
10-20 date of the member's effective retirement date. Interest may not
10-21 be paid on the deferred amount at the time of distribution.
10-22 (g) The board by administrative rule shall implement this
10-23 section in a manner that preserves the eligibility of the tax
10-24 qualification under the Internal Revenue Code of 1986 and may
10-25 revise the program as necessary to retain tax qualification.
10-26 SECTION 5. Section 5.09(a), Chapter 824, Acts of the 73rd
10-27 Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
11-1 Civil Statutes), is amended to read as follows:
11-2 (a) At or before its regular meeting in the month of March,
11-3 the board annually shall review the Consumer's Price Index for
11-4 Moderate Income Families in Large Cities--All Items or the nearest
11-5 equivalent published by the United States Bureau of Labor
11-6 Statistics for the preceding calendar year. If that index shows an
11-7 increase during the preceding calendar year in the cost of living
11-8 as compared with that index at the close of the previous year, the
11-9 board shall order an increase of all retirement annuities by the
11-10 number of full percentage points closest to the exact amount of the
11-11 increase of that index, except that any increased retirement
11-12 annuities are payable:
11-13 (1) only at the rate of 75 percent of the applicable
11-14 cost-of-living percentage for those retirees, and the beneficiaries
11-15 of those retirees, who were retired on and after October 1, 1989;
11-16 and
11-17 (2) at the rate of 87.5 percent of the consumer price
11-18 index specified by this subsection if the index is eight percent or
11-19 less, with the maximum cost-of-living adjustment capped at the rate
11-20 of six percent, and at the rate of 75 percent of the index if the
11-21 index is greater than eight percent for those retirees, and the
11-22 beneficiaries of those retirees, who were retired on or after
11-23 August 30, 1971, but before October 1, 1989 <August 30, 1971>.
11-24 SECTION 6. Section 5.11, Chapter 824, Acts of the 73rd
11-25 Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
11-26 Civil Statutes), is amended by amending Subsection (c) and adding
11-27 Subsection (j) to read as follows:
12-1 (c) Accrued benefits under this Act become 100 percent
12-2 vested for all members on termination of the fund or on occurrence
12-3 of another event described in Section 401(a)(17) of the code and
12-4 become 100 percent vested for a member on the date the member
12-5 <becomes 65 years of age and> has completed 20 years of service.
12-6 (j) To the extent permitted by law, the board may adjust the
12-7 benefits of retired members and beneficiaries by increasing any
12-8 retirement benefit that was reduced as inflationary indexing under
12-9 Section 415 of the Internal Revenue Code of 1986 (Section 26 U.S.C.
12-10 Section 415). If the definition of compensation is amended to
12-11 include amounts previously excluded as compensation, the board may
12-12 adjust the benefits of retired members and beneficiaries, including
12-13 the payment of benefits previously forfeited. Benefits paid under
12-14 this subsection are not considered as extra compensation earned
12-15 after retirement but as the delayed payment of benefits earned
12-16 before retirement.
12-17 SECTION 7. Sections 6.02(c) and (d), Chapter 824, Acts of
12-18 the 73rd Legislature, Regular Session, 1993 (Article 6243o,
12-19 Vernon's Texas Civil Statutes), are amended to read as follows:
12-20 (c) If there are no children, the surviving spouse is
12-21 entitled to receive an amount not to exceed 60 <57.50> percent of
12-22 the average total salary, excluding overtime pay, of the deceased
12-23 member computed as provided under Subsection (a) of this section.
12-24 (d) If there is no surviving spouse, the children are
12-25 entitled to receive not more than 30 <28.75> percent of the average
12-26 total salary computed as provided under Subsection (a) of this
12-27 section, except that if the board determines on investigation that
13-1 the eligible children are destitute, the board may increase the
13-2 death benefit annuity to an amount not to exceed 40 percent of that
13-3 average total salary. The amount awarded under this subsection to
13-4 any child shall be paid by the board to the legal guardian of the
13-5 child.
13-6 SECTION 8. Section 6.04, Chapter 824, Acts of the 73rd
13-7 Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
13-8 Civil Statutes), is amended to read as follows:
13-9 Sec. 6.04. Remarriage; benefits after termination of
13-10 marriage. (a) If a surviving spouse remarries or a dependent
13-11 child marries before October 1, 1995, the <The> right of a
13-12 surviving spouse or dependent child to annuity payments under this
13-13 Act terminates on the remarriage of the surviving spouse<, either
13-14 statutory or common law,> or on the marriage of the child, as
13-15 applicable, under either statutory law or under common law as
13-16 prescribed by Section 6.06 of this Act.
13-17 (b) The right of a <If the remarried> surviving spouse or
13-18 <married> dependent child to annuity payments under this Act is not
13-19 affected by the surviving spouse's remarriage or dependent child's
13-20 marriage under either statutory or common law if the marriage or
13-21 remarriage takes place on or after October 1, 1995 <becomes
13-22 unmarried, that person is entitled, on application, to the greater
13-23 of 75 percent of the annuity that was in effect on the date of
13-24 termination or a minimum annuity of $800 each month for as long as
13-25 that person remains unmarried>.
13-26 (c) If after October 1, 1995, there is a termination of the
13-27 remarriage of a surviving spouse or the marriage of a dependent
14-1 child, that person is entitled, on application, to 100 percent of
14-2 the annuity that was in effect on the date of termination.
14-3 (d) A surviving spouse or dependent child who is unmarried
14-4 but receiving reduced benefits because of a prior marriage that
14-5 caused the benefits to be terminated is entitled to 100 percent of
14-6 the annuity that was in effect on the original date of termination.
14-7 (e) The benefit provided under Subsections (c) and (d) of
14-8 this section shall be applied prospectively beginning October 1,
14-9 1995, and the surviving spouse or dependent child is not entitled
14-10 to receive any benefits or increases in benefits relating to any
14-11 period before October 1, 1995.
14-12 SECTION 9. Section 6.05(b), Chapter 824, Acts of the 73rd
14-13 Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
14-14 Civil Statutes), is amended to read as follows:
14-15 (b) If the <surviving spouse,> dependent beneficiary<,> or
14-16 guardian fails or refuses to file an affidavit required under
14-17 Subsection (a) of this section or if an incomplete, incorrect, or
14-18 false affidavit is filed, the board may suspend annuity payments to
14-19 that person indefinitely until the person complies with the
14-20 requests and orders of the board.
14-21 SECTION 10. Section 6.07, Chapter 824, Acts of the 73rd
14-22 Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
14-23 Civil Statutes), is amended to read as follows:
14-24 Sec. 6.07. Surviving spouse's right to single entitlement.
14-25 A <Unless otherwise provided by law, a> surviving spouse who is not
14-26 a member of the fund is not entitled to more than one annuity from
14-27 the fund.
15-1 SECTION 11. Section 6.11(a), Chapter 824, Acts of the 73rd
15-2 Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
15-3 Civil Statutes), is amended to read as follows:
15-4 (a) If a member of the fire or police department in active
15-5 service dies and does not leave an eligible surviving spouse, a
15-6 child under 17 years of age, a child under 19 years of age who is
15-7 attending school, a mentally or physically disabled child, or a
15-8 dependent father or mother, the estate of the deceased member is
15-9 entitled to a death benefit payment in the amount of $10,000 from
15-10 the fund or the refund of contributions as provided by Section 4.07
15-11 of this Act, whichever amount is greater.
15-12 SECTION 12. Sections 7.04(a) and (b), Chapter 824, Acts of
15-13 the 73rd Legislature, Regular Session, 1993 (Article 6243o,
15-14 Vernon's Texas Civil Statutes), are amended to read as follows:
15-15 (a) The board shall cause the reserve retirement funds to be
15-16 invested in a manner that a prudent investor would invest,
15-17 considering the purposes, terms, distribution requirements, and
15-18 other circumstances <consistent with the care, skill, and diligence
15-19 under the prevailing circumstances that a prudent person acting in
15-20 a like capacity and familiar with matters of the type would use in
15-21 the conduct> of an enterprise with a like character and like aims.
15-22 (b) The board shall diversify the investment of the fund to
15-23 minimize the risk of large losses unless under the circumstances it
15-24 is clearly prudent not to do so. In determining whether the board
15-25 has exercised prudence concerning an investment decision, the
15-26 investment of all assets of the fund, rather than the prudence of a
15-27 single investment of <investing the assets of the fund, the board
16-1 shall be bound by the documents and instruments governing> the
16-2 fund, shall be considered.
16-3 SECTION 13. This Act takes effect October 1, 1995.
16-4 SECTION 14. The importance of this legislation and the
16-5 crowded condition of the calendars in both houses create an
16-6 emergency and an imperative public necessity that the
16-7 constitutional rule requiring bills to be read on three several
16-8 days in each house be suspended, and this rule is hereby suspended.