SRC-AAA S.B. 1102 75(R)   BILL ANALYSIS


Senate Research Center   S.B. 1102
By: Armbrister
State Affairs
4-10-97
As Filed


DIGEST 

Currently, the Employees Retirement System provides retirement benefits
for state employees, elected state officials, and members of the
judiciary.  The Employees Retirement System Board and staff continually
review the programs administered and make recommendations.  This bill
revises regulations for purchase or repurchase of service credit,
establishment of a permanent rate increase for the computation of employee
class service retirement benefits, clarification that the portfolio
concept is authorized in making investment decisions, establishes the
"rule of 80," creates an excess benefits arrangement, increases annuities
for certain persons, and clarifies that the Employees Retirement System
Board holds deferred compensation funds in trust. 

PURPOSE

As proposed, S.B. 1102  revises regulations for purchase or repurchase of
service credit, establishment of a permanent rate increase for the
computation of employee class service retirement benefits, clarification
that the portfolio concept is authorized in making investment decisions,
establishes the "rule of 80," creates an excess benefits arrangement,
increases annuities for certain persons, and clarifies that the Employees
Retirement System Board holds deferred compensation funds in trust. 

RULEMAKING AUTHORITY

Rulemaking authority is granted to the Board of Trustees of the Employees
Retirement System in SECTION 3 (Section 813.104, Government Code), SECTION
12 (Section 814.105(c), Government Code), SECTION 18 (Section 815.5072(f),
Government Code), SECTION 23 (Section 833.105(a), Government Code),
SECTION 28 (Section 838.105(a), Government Code), and SECTION 43 (Section
11(d), Article 3.50-2, Insurance Code) of this bill.  
 
SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 805.002(g), Government Code, to provide an
exception in making an election by a beneficiary under the Employees
Retirement System and the Teacher Retirement System. 

SECTION 2. Amends Section 811.001(9), Government Code, to redefine "law
enforcement officer." 

SECTION 3. Amends Section 813.104, Government Code, to authorize the board
of trustees of the Employees Retirement System (trustees) to adopt rules
for procedures for making installment payments to establish or reestablish
credit in the retirement system.  Deletes existing Subsections (a)(c) and
Subsection (g).  Makes conforming changes. 

SECTION 4. Amends Section 813.106, Government Code, to require the state
to make contributions established under only Section 813.104 in an amount
provided by Section 813.202(c), Government Code, rather than 813.202(e). 

SECTION 5. Amends Section 813.202, Government Code, to delete Subsection
(b) as an exception to this section.  Deletes existing Subsections (b) and
(d). Sets forth requirement of the state's contribution in this section.
Makes conforming changes. 
 
SECTION 6. Amends Section 813.301(b), Government Code, to authorize a
member to establish one month of service credit for each month or fraction
of a month of duty, but not more than 60 months of service credit for
military service. 

SECTION 7. Amends Section 813.402, Government Code, to delete the word
"contributing member" which authorizes any member to establish service
credit. Makes a conforming change. 
  
SECTION 8. Amends Section 813.504, Government Code, to authorize a member
to reestablish service credit if it has been canceled for at least six
months.  Deletes provisions regarding cancellation of credit. 

SECTION 9. Amends Section 813.509(a), Government Code, to provide that
sick leave is credited one month for each fraction of days or hours
remaining after division of the total hours of accumulated sick leave by
160.  Deletes a provision regarding increments of less than 20 days. 

SECTION 10. Amends Section 814.005(a), Government Code, to require the
Employees Retirement System (retirement system) to give effect as a waiver
to a full or partial disclaimer executed in accordance with Section 37A,
Probate Code, unless the benefit is a lifetime annuity. 

SECTION 11. Section 814.104, Government Code, to provide eligibility to
retire and receive a service retirement annuity if a person is at least 50
years old and the sum of the member's age and amount of service credit
equals the number 80.  Deletes a provision regarding State Purchasing and
General Services Commission Capital Area Security Force. 

SECTION 12. Amends Section 814.105, Government Code, by adding Subsection
(c), to set forth requirements of percentages used to compute benefits. 

SECTION 13. Amends Section 815.003(d), Government Code, to require
elections to be held before August 31, rather than August 1, of each
odd-numbered year. 

SECTION 14. Amends Chapter 815B, Government Code, by adding Section
815.106, as follows: 

Sec. 815.106. INFORMATION TO LEGISLATURE.  Sets forth requirements and
prohibitions in making recommendations to the legislature regarding the
retirement system. 

SECTION 15. Amends Section 815.303(b), Government Code, to require a bank
or brokerage firm to execute an indemnifying agreement which indemnifies
the retirement system against loss resulting from borrower default. 

SECTION 16. Amends Section 815.307, Government Code, to set forth the duty
of care for the retirement system in investing the assets of the
retirement system.  Deletes existing Section 815.307, Government Code. 

SECTION 17. Amends Section 815.403(a), Government Code, to make a
conforming change. 

SECTION 18. Amends Chapter 815F, Government Code, by adding Section
815.5072, as follows: 

Sec. 815.5072. EXCESS BENEFIT ARRANGEMENT.  Sets forth requirements of
unfunded excess benefit arrangements. 

SECTION 19. Amends Section 815.510(a), Government Code, to provide that a
report from the retirement system to certain officials is to include the
current fair, rather than book, value of the trust fund. 

SECTION 20. Amends Chapter 815F, Government Code, by adding Section
815.512, as follows: 

Sec. 815.512. PROTECTION FROM DOUBLE OR MULTIPLE LIABILITY.  Sets forth
provisions regarding protection of the retirement system from double or
multiple liability. 

 SECTION 21. Sets forth requirements regarding annuities.

SECTION 22. Amends Section 833.103(d), Government Code, to authorize a
member to establish one month of service credit for each month or fraction
of a month of duty, but not more than 48 months of service credit.

SECTION 23. Amends Section 833.105, Government Code, to authorize the
board of trustees to adopt rules regarding installment payments.  Deletes
existing Subsection (a).  Sets forth requirements for the rules adopted
under this section.  Deletes existing Subsections (b), (c), and (e).
Makes conforming changes. 

SECTION 24. Amends Chapter 834A, Government Code, by adding Section
834.005, as follows: 

Sec. 834.005. DISCLAIMER OF BENEFITS.  Requires the retirement system to
give full or partial disclaimer of benefits executed in accordance with
Section 37A, Probate Code, unless the benefit to be disclaimed is a
lifetime annuity. 

SECTION 25. Amends Section 834.101(a), Government Code, to delete
provisions regarding eligibility. 

SECTION 26. Amends Section 834.302, Government Code, to provide that if a
selection cannot be made effective the member's designated beneficiary,
rather than surviving spouse, may select a plan. Makes conforming changes.

SECTION 27. Amends Section 838.103(d), Government Code, to make conforming
changes. 

SECTION 28. Amends Section 838.105, Government Code, to make conforming
changes. 

SECTION 29. Amends Chapter 839A, Government Code, to make conforming
changes. 

SECTION 30. Amends Section 839.101(a), Government Code, to make conforming
changes. 

SECTION 31. Amends Section 839.302, Government Code, to make conforming
changes. 

SECTION 32. Amends Section 840.3012(b), Government Code, to make
conforming changes. 

SECTION 33. Amends Section 840.303, Government Code, to make conforming
changes. 

SECTION 34. Amends Section 609.009, Government Code, as follows:

Sec. 609.009. New heading: TRUST FOR 457 PLAN.  Provides that an
employee's deferred amounts and investment income are held in trust in
accordance with Section 457, Internal Revenue Code.  Provides that
custodial accounts and contracts are treated as trusts.  Provides that a
trust does not have to be established before January 1, 1999, for a 457
plan in existence on August 20, 1996.  Deletes a provision regarding
disbursements of income. 

SECTION 35. Amends Sections 609.502(a) and (b), Government Code, to make
conforming changes. 

SECTION  36. Amends Section 609.509(b), Government Code, to make a
conforming change. 

SECTION 37.  Amends Section 609.512(b), Government Code, to make a
conforming change. 

SECTION 38.  Amends Section 3(a)(9), Article 3.50-2, Insurance Code (Texas
Employees Uniform Group Insurance Benefits Act), to redefine "qualified
carrier." 

SECTION 39. Amends  Section 4C(a), Article 3.50-2, Insurance Code, to
delete text regarding school district employees.  Makes a conforming
change.  

 SECTION 40. Amends Sections 5(b) and (h)-(j), Article 3.50-2, Insurance
Code,  to provide selections of a carrier to the commissioner of
insurance, rather than the State Board of Insurance. Authorizes a trustee
to contract with one or more firms to administer plans of coverage, rather
than claims arising from the coverage.  Prohibits a trustee from
contracting or providing for certain plans of converge.  Deletes text
regarding a trustee providing coverage with a health maintenance
organization or providing coverage directly from the fund. Makes
conforming and nonsubstantive changes. 

SECTION 41. Amends Section 5A(a), Article 3.50-2, Insurance Code, to
delete text regarding basic coverage. 

SECTION 42. Amends Section 9, Article 3.50-2, Insurance Code, to make
conforming changes. 

SECTION 43. Amends Section 11, Article 3.50-2, Insurance Code, by adding
Subsection (d), to authorize the trustees to adopt rules regarding payment
of accelerated life insurance benefits.  Sets forth requirements of the
payments. 

SECTION 44. Amends Section 12, Article 3.50-2, Insurance Code, by adding
Subsection (e), to make a conforming change. 

SECTION 45. Amends Section 13(c), Article 3.50-2, Insurance Code, to make
conforming changes. 

SECTION 46. Amends Section 13A(f), Article 3.50-2, Insurance Code, to
prohibit certain persons from participating in any, rather than a health
maintenance organization or being insured under any insurance or benefits
plan. 

SECTION 47. Amends Sections 15(b), (c), and (d), Article 3.50-2, Insurance
Code, to set forth requirements regarding contributions to the cost of
each employee's individual and dependent group coverages.  Deletes text
regarding the effective date, appropriations and the state,  Requires
money allocated by the state, rather than allocated and appropriated,
including institutions of higher education, to be paid to the trustee.
Requires the trustee to certify  to institutions of higher education
participating in the program established under this Act who provide
contributions for their employees' individual and dependent coverages,
proportionate amounts required, rather than needed, to pay their
respective contributions.  Makes conforming changes.  

SECTION 48. Amends Section 18(b), Article 3.50-2, Insurance Code, to
require appointees to be appointed by  the governing body of the agency or
institution, rather than the trustees. 

SECTION 49. Amends Section 19(a), Article 3.50-2, Insurance Code, to
provide an exception that a foster child is eligible for health insurance
coverage only if the child is not covered by another governmental health
program. 

SECTION 50. Repealers:  Sections 803.403, 813.105, 833.106, 838.103(i),
838.106, Government Code (Public retirement systems) and Section 5(e),
Texas Employees Uniform Group Insurance Benefits Act, Article 3.50-2,
Insurance Code (Authority to establish group coverages). 

SECTION 51. Makes application of this Act prospective.

SECTION 52. Effective date: September 1, 1997.

SECTION 53. Emergency clause.