SBW H.B. 796 75(R)BILL ANALYSIS PENSIONS & INVESTMENTS H.B. 796 By: Bosse 3-25-97 Committee Report (Unamended) BACKGROUND Chapter 76, Acts of the 50th Legislature, 1947, creates a special fund known as the Police Officer's Pension Fund in each Texas city with a population of 1.2 million or more. Current law limits both the contribution and the retirement benefits of any member of the Police Pension System based on the salary level of the second highest classified position in the police department personnel classification schedule. In some instances, those who are fifth highest in rank are appointed to the second highest ranking position, thereby skipping two levels. In these cases, the member appointed to the second highest ranking position stands to receive a windfall upon retirement, placing a financial strain on the pension fund to the detriment of other contributors. Critics challenge such a system is inequitable. PURPOSE HB 796 would create a more equitable system for determining maximum contributions to and benefits from police officer retirement systems by basing the maximum contribution to the police pension fund on the base salary of the highest rank the member has obtained by civil service examination within the salary schedule of the police department. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1: Amends Section 6(b), Chapter 76, Acts of the 50th Legislature, 1947 (Art. 6243g1, Vernon's Texas Civil Statutes) by changing language to state that the maximum contribution made to the fund is required to be based upon the salary of the highest rank the member has obtained by civil service examination within the salary schedule of the police department. The contribution and retirement benefits of the member is limited to the highest rank the member obtains by civil service examination with set qualifiers. SECTION 2: Amends Section 11(b), Chapter 76, Acts of the 50th Legislature, 1947 (Art. 6243g1, Vernon's Texas Civil Statutes) to state that in the event a member in the Police Pension System is promoted to a position above a classified position obtainable by civil service examination, the members contribution and retirement benefits will be computed at the salary of the highest rank the person obtained by civil service examination within the salary schedule of the police department and sets qualifiers. Strikes language regarding the highest rank being considered the Chief of Police. SECTION 3: Amends Section 28(b), Article 6243g-3, Revised Statutes to state that the maximum contribution made by a member is required to be based on the salary of the highest rank that member obtained by civil service examination within the police department salary schedule. The contributions and retirement benefits of any member are limited to that members highest rank obtained by civil service examination except if that member has not held the same classified position for three years immediately proceeding his effective retirement date. If so, the retirement pension will be based on the members salary for the three years immediately proceeding his retirement. SECTION 4: Effective date. Upon receiving the required number of votes as stipulated by Section 39, Article III of the Texas Constitution, the effective date is July 1, 1997. If this does not happen, the effective date will be September 1, 1997. SECTION 5: Emergency clause.