By Kuempel H.B. No. 1113
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to participation and credit in, contributions to, and
1-3 benefits and administration of the Texas Municipal Retirement
1-4 System.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 851.001(15), Government Code, is amended
1-7 to read as follows:
1-8 (15) "Amortization period" means, as to a particular
1-9 municipality, the time ending with the later of:
1-10 (A) the expiration of 25 years after the
1-11 effective date of the municipality's participation in the
1-12 retirement system; [or]
1-13 (B) the expiration of 25 years after the most
1-14 recent actuarial valuation date for the municipality; or
1-15 (C) the period determined under Section
1-16 855.407(h).
1-17 SECTION 2. Section 853.305, Government Code, is amended by
1-18 amending Subsections (a) and (c) and adding Subsection (f) to read
1-19 as follows:
1-20 (a) The governing body of a participating municipality by
1-21 ordinance may authorize the granting of restricted prior service
1-22 credit to an employee who is a member of the retirement system for
1-23 service previously performed:
1-24 (1) as a full-time, paid [an] employee of [any
2-1 incorporated city or town in] the United States, of any public
2-2 authority or agency created by the United States, of any state or
2-3 territory of the United States, of any political subdivision of any
2-4 state of the United States, or of any public agency or authority
2-5 created by a state or territory of the United States [any council
2-6 of governments in this state, or an airport board or authority
2-7 governing an airport for two cities having a combined population
2-8 greater than 1,000,000], and for which service the person has not
2-9 otherwise received credited service in this system, including
2-10 combined service credit under Chapter 803; or
2-11 (2) as an employee of the state or any branch, agency,
2-12 or subdivision of the state for which the person received credited
2-13 service under the Employees Retirement System of Texas, the Teacher
2-14 Retirement System of Texas, the Judicial Retirement System of Texas
2-15 Plan One, the Judicial Retirement System of Texas Plan Two, the
2-16 Texas County and District Retirement System, or this retirement
2-17 system, and the credit for which was canceled because of withdrawal
2-18 of contributions and has not been reinstated.
2-19 (c) A member seeking to establish restricted prior service
2-20 credit under Subsection (a)(1) must obtain from the official
2-21 custodian of personnel records of the entity [clerk or secretary of
2-22 the city or town, or from the similar official of a council of
2-23 governments or airport board or authority,] for which the previous
2-24 service was performed a detailed statement of the service, verified
2-25 by that official, and file the statement with the clerk or
2-26 secretary of the participating municipality by which the member is
2-27 employed. A member seeking to establish restricted prior service
3-1 credit under Subsection (a)(2) must obtain from the public
3-2 retirement system in which the canceled service was credited a
3-3 detailed statement of the service, verified by an official of that
3-4 retirement system, and file that statement with the clerk or
3-5 secretary of the participating municipality by which the member is
3-6 employed.
3-7 (f) In this section, "full-time, paid employee" has the
3-8 meaning assigned "employee" by Section 851.001, except that the
3-9 services do not have to be performed for a municipality.
3-10 SECTION 3. Section 853.403(a), Government Code, is amended
3-11 to read as follows:
3-12 (a) An ordinance adopted under Section 853.401 may not take
3-13 effect unless the board of trustees approves the ordinance as
3-14 meeting the requirements of this section. The board may not
3-15 approve an ordinance unless the actuary first determines, and the
3-16 board concurs in the determination, that all obligations charged
3-17 against the municipality's account in the municipality accumulation
3-18 fund, including obligations proposed in the ordinance, can be
3-19 funded by the municipality within its maximum total contribution
3-20 rate and within its amortization period as in effect on [before the
3-21 25th anniversary of] the date the updated service credits take
3-22 effect.
3-23 SECTION 4. Section 853.404(d), Government Code, is amended
3-24 to read as follows:
3-25 (d) Except as provided by Subsection (e), an ordinance under
3-26 this section continues in effect for each year that the actuary
3-27 determines that all obligations charged against the municipality's
4-1 account in the municipality accumulation fund, including the
4-2 obligations to become effective the next January 1, can be funded
4-3 by the municipality within its maximum contribution rate and within
4-4 its amortization period as in effect on [before the 25th
4-5 anniversary of] the next January 1. An ordinance under this
4-6 section will cease to be in effect for future years if the actuary
4-7 cannot make that determination, but shall again take effect for
4-8 future years beginning January 1 of the first year after the
4-9 actuary can make that determination.
4-10 SECTION 5. Section 853.505(b), Government Code, is amended
4-11 to read as follows:
4-12 (b) Except as provided by Section 853.506, military
4-13 [Military] service credit allowed under Section 853.501 shall have
4-14 no monetary value in calculating the annuity payments allowable to
4-15 the member and shall not be used in other computations, including
4-16 computation of updated service credits or prior service credits.
4-17 SECTION 6. Subchapter F, Chapter 853, Government Code, is
4-18 amended by adding Section 853.506 to read as follows:
4-19 Sec. 853.506. CURRENT SERVICE FOR REEMPLOYED VETERANS.
4-20 Notwithstanding any provision of this subtitle to the contrary,
4-21 contributions, benefits, and service credit for qualified military
4-22 service will be provided in accordance with Section 414(u) of the
4-23 Internal Revenue Code of 1986 (26 U.S.C. Section 414). The board
4-24 of trustees may adopt rules that modify the terms of this subtitle
4-25 for the purpose of compliance with the Uniformed Services
4-26 Employment and Reemployment Rights Act (38 U.S.C. Section 4301 et
4-27 seq.).
5-1 SECTION 7. Sections 854.007(d) and (e), Government Code, are
5-2 amended to read as follows:
5-3 (d) Except as provided by Subsections (f), (h), and (i), an
5-4 annual benefit payable by the retirement system may not exceed [the
5-5 lesser of:]
5-6 [(1)] $115,641, or another amount as adjusted each
5-7 January 1 by the secretary of the treasury under Section 415 of the
5-8 Internal Revenue Code of 1986 (26 U.S.C. Section 415) for
5-9 cost-of-living increases after January 1, 1993[; or]
5-10 [(2) 100 percent of the former member's highest
5-11 average annual compensation, including annual cost-of-living
5-12 increases after separation from service].
5-13 (e) If payment of a benefit begins before a member attains
5-14 age 62, the dollar limitation is the actuarial equivalent of an
5-15 annual benefit beginning at age 62 as described by Subsection (d)
5-16 [(d)(1)] for a person at age 62. A reduction under this
5-17 subsection may not exceed that required by the Internal Revenue
5-18 Code of 1986 [reduce the dollar limitation below $75,000 if the
5-19 benefit begins at or after age 55 or, if the benefit begins before
5-20 age 55, the actuarial equivalent of a $75,000 limitation beginning
5-21 at age 55].
5-22 SECTION 8. Subchapter A, Chapter 854, Government Code, is
5-23 amended by adding Section 854.008 to read as follows:
5-24 Sec. 854.008. PARTIAL LUMP-SUM DISTRIBUTION ON RETIREMENT.
5-25 (a) A member who is eligible for service retirement and who
5-26 terminates employment with all participating municipalities may
5-27 apply for a partial lump-sum distribution under this section.
6-1 (b) The amount of a lump-sum distribution under this section
6-2 may not exceed one-half of the total contributions and accumulated
6-3 interest in the member's individual account in the employees saving
6-4 fund at the time of the member's retirement.
6-5 (c) Subject to the limitation in Subsection (b), the member
6-6 may elect to have the lump-sum distribution be equal to the monthly
6-7 annuity payments, excluding any distributive benefit payments, that
6-8 the member would have received if the member had selected the
6-9 standard service retirement annuity described in Section 854.103
6-10 over a period of:
6-11 (1) 12 months after the effective date of the member's
6-12 retirement;
6-13 (2) 24 months after the effective date of the member's
6-14 retirement; or
6-15 (3) 36 months after the effective date of the member's
6-16 retirement.
6-17 (d) The lump-sum distribution will be made as a single
6-18 payment, payable at the same time as the first monthly annuity
6-19 payment that is paid to the member.
6-20 (e) The amount of the lump-sum distribution will be deducted
6-21 from the sum used in computing the member's current service annuity
6-22 under Section 854.002(c). If a payment is made under Section
6-23 854.502, the amount of the lump-sum distribution will be considered
6-24 to be included in the payments made by reason of the annuity.
6-25 SECTION 9. Section 854.104, Government Code, is amended by
6-26 amending Subsection (c) and adding Subsection (g) to read as
6-27 follows:
7-1 (c) An eligible person may select an [any] optional annuity
7-2 that provides [approved by the board of trustees, the entire
7-3 benefit of which is certified by the actuary as the actuarial
7-4 equivalent of the annuity to which the person is entitled, or may
7-5 select one of the following options, which provide] that:
7-6 (1) after the retiree's death, the reduced annuity is
7-7 payable throughout the life of a person designated by the retiree;
7-8 (2) after the retiree's death, one-half of the reduced
7-9 annuity is payable throughout the life of a person designated by
7-10 the retiree;
7-11 (3) if the retiree dies before 120 monthly annuity
7-12 payments have been made, the remainder of the 120 payments are
7-13 payable to the retiree's beneficiary or, if one does not exist, to
7-14 the retiree's estate;
7-15 (4) if the retiree dies before 180 monthly annuity
7-16 payments have been made, the remainder of the 180 payments are
7-17 payable to the retiree's beneficiary or, if one does not exist, to
7-18 the retiree's estate; [or]
7-19 (5) after the retiree's death, two-thirds of the
7-20 reduced annuity is payable throughout the life of a person
7-21 designated by the retiree; or
7-22 (6) the annuity is payable only during the retiree's
7-23 lifetime.
7-24 (g) If a person who retires after August 31, 1997, elects a
7-25 reduced retirement annuity that is payable until the death of the
7-26 last to die of the retiree and a person designated under Subsection
7-27 (e), and if the retiree survives the other person, the monthly
8-1 payments to the retiree will be increased to the amounts that would
8-2 have been payable if the retiree at the time of retirement had
8-3 elected to receive an annuity payable only during the retiree's
8-4 life, and adjustments had been made for any applicable
8-5 postretirement increases in that benefit. The increased benefit
8-6 becomes payable the month after the month in which the person
8-7 designated under Subsection (e) dies and continues until the
8-8 retiree dies.
8-9 SECTION 10. Section 854.203(g), Government Code, is amended
8-10 to read as follows:
8-11 (g) An ordinance under this section may not take effect
8-12 until it is approved by the board of trustees as meeting the
8-13 requirements of this section. The board may not approve an
8-14 ordinance unless the actuary first determines that all obligations
8-15 charged against the municipality's account in the municipality
8-16 accumulation fund, including the obligations proposed in the
8-17 ordinance, can be funded by the municipality within its maximum
8-18 contribution rate and within its amortization period as in effect
8-19 on [before the 25th anniversary of] the effective date of the
8-20 increases.
8-21 SECTION 11. Section 854.305, Government Code, is amended by
8-22 amending Subsection (c) and adding Subsection (g) to read as
8-23 follows:
8-24 (c) An eligible person may select an [any] optional annuity
8-25 that provides [approved by the board of trustees, the entire
8-26 benefit of which is certified by the actuary as the actuarial
8-27 equivalent of the annuity to which the person is entitled, or may
9-1 select one of the following options, which provide] that:
9-2 (1) after the retiree's death, the reduced annuity is
9-3 payable throughout the life of a person designated by the retiree;
9-4 (2) after the retiree's death, one-half of the reduced
9-5 annuity is payable throughout the life of a person designated by
9-6 the retiree;
9-7 (3) if the retiree dies before 120 monthly annuity
9-8 payments have been made, the remainder of the 120 payments are
9-9 payable to the retiree's beneficiary or, if one does not exist, to
9-10 the retiree's estate; [or]
9-11 (4) if the retiree dies before 180 monthly annuity
9-12 payments have been made, the remainder of the 180 payments are
9-13 payable to the retiree's beneficiary or, if one does not exist, to
9-14 the retiree's estate; or
9-15 (5) after the retiree's death, two-thirds of the
9-16 reduced annuity is payable throughout the life of a person
9-17 designated by the retiree.
9-18 (g) If a person who retires after August 31, 1997, elects a
9-19 reduced retirement annuity that is payable until the death of the
9-20 last to die of the retiree and a person designated under Subsection
9-21 (e), and if the retiree survives the other person, the monthly
9-22 payments to the retiree will be increased to the amounts that would
9-23 have been payable if the retiree had elected to receive an annuity
9-24 payable only during the retiree's life, and adjustments had been
9-25 made for any applicable postretirement increases in that benefit.
9-26 The increased benefit becomes payable the month after the month in
9-27 which the person designated under Subsection (e) dies and
10-1 continues until the retiree dies.
10-2 SECTION 12. Section 854.410, Government Code, is amended by
10-3 amending Subsection (c) and adding Subsection (g) to read as
10-4 follows:
10-5 (c) An eligible person may select an [any] optional annuity
10-6 that provides [approved by the board of trustees, the entire
10-7 benefit of which is certified by the actuary as the actuarial
10-8 equivalent of the annuity to which the person is entitled, or may
10-9 select one of the following options, which provide] that:
10-10 (1) after the retiree's death, the reduced annuity is
10-11 payable throughout the life of a person designated by the retiree;
10-12 (2) after the retiree's death, one-half of the reduced
10-13 annuity is payable throughout the life of a person designated by
10-14 the retiree;
10-15 (3) if the retiree dies before 120 monthly annuity
10-16 payments have been made, the remainder of the 120 payments is
10-17 payable to the retiree's beneficiary or, if one does not exist, to
10-18 the retiree's estate; [or]
10-19 (4) if the retiree dies before 180 monthly annuity
10-20 payments have been made, the remainder of the 180 payments is
10-21 payable to the retiree's beneficiary or, if one does not exist, to
10-22 the retiree's estate; or
10-23 (5) after the retiree's death, two-thirds of the
10-24 reduced annuity is payable throughout the life of a person
10-25 designated by the retiree.
10-26 (g) If a person who retires after August 31, 1997, elects a
10-27 reduced retirement annuity that is payable until the death of the
11-1 last to die of the retiree and a person designated under Subsection
11-2 (e), and if the retiree survives the other person, the monthly
11-3 payments to the retiree will be increased to the amounts that would
11-4 have been payable if the retiree at the time of retirement had
11-5 elected to receive an annuity payable only during the retiree's
11-6 life, and adjustments had been made for any applicable
11-7 postretirement increases in that benefit. The increased benefit
11-8 becomes payable the month after the month in which the person
11-9 designated under Subsection (e) dies and continues until the
11-10 retiree dies.
11-11 SECTION 13. Section 855.407, Government Code, is amended by
11-12 adding Subsections (g) and (h) to read as follows:
11-13 (g) The governing body of a municipality may elect to have
11-14 the municipality contribute to its account in the municipality
11-15 accumulation fund at the combined rate of total compensation paid
11-16 to its employees as the actuary determines is necessary to fund all
11-17 obligations chargeable to its account in the fund within the
11-18 municipality's amortization period, regardless of other provisions
11-19 of this subtitle.
11-20 (h) If the board of trustees adopts any change in actuarial
11-21 assumptions or in actuarial method that would result in any
11-22 municipality having an increase in its combined contribution rate
11-23 of more than one-half of one percent of the total compensation paid
11-24 to its employees based on its current amortization period, and if
11-25 its governing body adopts a resolution requesting a new
11-26 amortization period, the municipality will be assigned a new
11-27 amortization period equal to the lesser of:
12-1 (1) the number of years required to limit the increase
12-2 in the combined rate to one-half of one percent of the total
12-3 compensation paid to its employees; or
12-4 (2) the maximum number of years, not to exceed 40
12-5 years, specified by the board of trustees.
12-6 SECTION 14. Subchapter G, Chapter 855, Government Code, is
12-7 amended by adding Sections 855.606 and 855.607 to read as follows:
12-8 Sec. 855.606. APPEAL OF ADMINISTRATIVE DECISION. A decision
12-9 of the board of trustees denying or limiting membership, service
12-10 credit, eligibility for or the amount of benefits payable by the
12-11 retirement system, or regarding to whom benefits should be paid is
12-12 a decision in a contested case as defined by the administrative
12-13 procedure law, Chapter 2001, and is subject to judicial review
12-14 under the substantial evidence rule in accordance with Sections
12-15 2001.174-2001.177.
12-16 Sec. 855.607. PLAN QUALIFICATION. It is intended that the
12-17 provisions of this subtitle be construed and administered in a
12-18 manner that the retirement system's benefit plan will be considered
12-19 a qualified plan under Section 401(a) of the Internal Revenue Code
12-20 of 1986 (26 U.S.C. Section 401). The board of trustees may adopt
12-21 rules that modify the plan to the extent the board considers
12-22 necessary for the retirement system to be considered a qualified
12-23 plan. Rules adopted by the board of trustees relating to plan
12-24 qualification issues are considered a part of the plan.
12-25 SECTION 15. Section 852.004(c), Government Code, is
12-26 repealed.
12-27 SECTION 16. This Act takes effect September 1, 1997.
13-1 SECTION 17. The importance of this legislation and the
13-2 crowded condition of the calendars in both houses create an
13-3 emergency and an imperative public necessity that the
13-4 constitutional rule requiring bills to be read on three several
13-5 days in each house be suspended, and this rule is hereby suspended.