1-1 By: Kuempel (Senate Sponsor - Armbrister) H.B. No. 1113
1-2 (In the Senate - Received from the House April 9, 1997;
1-3 April 10, 1997, read first time and referred to Committee on
1-4 Intergovernmental Relations; April 21, 1997, reported favorably by
1-5 the following vote: Yeas 11, Nays 0; April 21, 1997, sent to
1-6 printer.)
1-7 A BILL TO BE ENTITLED
1-8 AN ACT
1-9 relating to participation and credit in, contributions to, and
1-10 benefits and administration of the Texas Municipal Retirement
1-11 System.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Section 851.001(15), Government Code, is amended
1-14 to read as follows:
1-15 (15) "Amortization period" means, as to a particular
1-16 municipality, the time ending with the later of:
1-17 (A) the expiration of 25 years after the
1-18 effective date of the municipality's participation in the
1-19 retirement system; [or]
1-20 (B) the expiration of 25 years after the most
1-21 recent actuarial valuation date for the municipality; or
1-22 (C) the period determined under Section
1-23 855.407(h).
1-24 SECTION 2. Section 853.305, Government Code, is amended by
1-25 amending Subsections (a) and (c) and adding Subsection (f) to read
1-26 as follows:
1-27 (a) The governing body of a participating municipality by
1-28 ordinance may authorize the granting of restricted prior service
1-29 credit to an employee who is a member of the retirement system for
1-30 service previously performed:
1-31 (1) as a full-time, paid [an] employee of [any
1-32 incorporated city or town in] the United States, of any public
1-33 authority or agency created by the United States, of any state or
1-34 territory of the United States, of any political subdivision of any
1-35 state of the United States, or of any public agency or authority
1-36 created by a state or territory of the United States [any council
1-37 of governments in this state, or an airport board or authority
1-38 governing an airport for two cities having a combined population
1-39 greater than 1,000,000], and for which service the person has not
1-40 otherwise received credited service in this system, including
1-41 combined service credit under Chapter 803; or
1-42 (2) as an employee of the state or any branch, agency,
1-43 or subdivision of the state for which the person received credited
1-44 service under the Employees Retirement System of Texas, the Teacher
1-45 Retirement System of Texas, the Judicial Retirement System of Texas
1-46 Plan One, the Judicial Retirement System of Texas Plan Two, the
1-47 Texas County and District Retirement System, or this retirement
1-48 system, and the credit for which was canceled because of withdrawal
1-49 of contributions and has not been reinstated.
1-50 (c) A member seeking to establish restricted prior service
1-51 credit under Subsection (a)(1) must obtain from the official
1-52 custodian of personnel records of the entity [clerk or secretary of
1-53 the city or town, or from the similar official of a council of
1-54 governments or airport board or authority,] for which the previous
1-55 service was performed a detailed statement of the service, verified
1-56 by that official, and file the statement with the clerk or
1-57 secretary of the participating municipality by which the member is
1-58 employed. A member seeking to establish restricted prior service
1-59 credit under Subsection (a)(2) must obtain from the public
1-60 retirement system in which the canceled service was credited a
1-61 detailed statement of the service, verified by an official of that
1-62 retirement system, and file that statement with the clerk or
1-63 secretary of the participating municipality by which the member is
1-64 employed.
2-1 (f) In this section, "full-time, paid employee" has the
2-2 meaning assigned "employee" by Section 851.001, except that the
2-3 services do not have to be performed for a municipality.
2-4 SECTION 3. Section 853.403(a), Government Code, is amended
2-5 to read as follows:
2-6 (a) An ordinance adopted under Section 853.401 may not take
2-7 effect unless the board of trustees approves the ordinance as
2-8 meeting the requirements of this section. The board may not
2-9 approve an ordinance unless the actuary first determines, and the
2-10 board concurs in the determination, that all obligations charged
2-11 against the municipality's account in the municipality accumulation
2-12 fund, including obligations proposed in the ordinance, can be
2-13 funded by the municipality within its maximum total contribution
2-14 rate and within its amortization period as in effect on [before the
2-15 25th anniversary of] the date the updated service credits take
2-16 effect.
2-17 SECTION 4. Section 853.404(d), Government Code, is amended
2-18 to read as follows:
2-19 (d) Except as provided by Subsection (e), an ordinance under
2-20 this section continues in effect for each year that the actuary
2-21 determines that all obligations charged against the municipality's
2-22 account in the municipality accumulation fund, including the
2-23 obligations to become effective the next January 1, can be funded
2-24 by the municipality within its maximum contribution rate and within
2-25 its amortization period as in effect on [before the 25th
2-26 anniversary of] the next January 1. An ordinance under this
2-27 section will cease to be in effect for future years if the actuary
2-28 cannot make that determination, but shall again take effect for
2-29 future years beginning January 1 of the first year after the
2-30 actuary can make that determination.
2-31 SECTION 5. Section 853.505(b), Government Code, is amended
2-32 to read as follows:
2-33 (b) Except as provided by Section 853.506, military
2-34 [Military] service credit allowed under Section 853.501 shall have
2-35 no monetary value in calculating the annuity payments allowable to
2-36 the member and shall not be used in other computations, including
2-37 computation of updated service credits or prior service credits.
2-38 SECTION 6. Subchapter F, Chapter 853, Government Code, is
2-39 amended by adding Section 853.506 to read as follows:
2-40 Sec. 853.506. CURRENT SERVICE FOR REEMPLOYED VETERANS.
2-41 Notwithstanding any provision of this subtitle to the contrary,
2-42 contributions, benefits, and service credit for qualified military
2-43 service will be provided in accordance with Section 414(u) of the
2-44 Internal Revenue Code of 1986 (26 U.S.C. Section 414). The board
2-45 of trustees may adopt rules that modify the terms of this subtitle
2-46 for the purpose of compliance with the Uniformed Services
2-47 Employment and Reemployment Rights Act (38 U.S.C. Section 4301 et
2-48 seq.).
2-49 SECTION 7. Sections 854.007(d) and (e), Government Code, are
2-50 amended to read as follows:
2-51 (d) Except as provided by Subsections (f), (h), and (i), an
2-52 annual benefit payable by the retirement system may not exceed [the
2-53 lesser of:]
2-54 [(1)] $115,641, or another amount as adjusted each
2-55 January 1 by the secretary of the treasury under Section 415 of the
2-56 Internal Revenue Code of 1986 (26 U.S.C. Section 415) for
2-57 cost-of-living increases after January 1, 1993[; or]
2-58 [(2) 100 percent of the former member's highest
2-59 average annual compensation, including annual cost-of-living
2-60 increases after separation from service].
2-61 (e) If payment of a benefit begins before a member attains
2-62 age 62, the dollar limitation is the actuarial equivalent of an
2-63 annual benefit beginning at age 62 as described by Subsection (d)
2-64 [(d)(1)] for a person at age 62. A reduction under this
2-65 subsection may not exceed that required by the Internal Revenue
2-66 Code of 1986 [reduce the dollar limitation below $75,000 if the
2-67 benefit begins at or after age 55 or, if the benefit begins before
2-68 age 55, the actuarial equivalent of a $75,000 limitation beginning
2-69 at age 55].
3-1 SECTION 8. Subchapter A, Chapter 854, Government Code, is
3-2 amended by adding Section 854.008 to read as follows:
3-3 Sec. 854.008. PARTIAL LUMP-SUM DISTRIBUTION ON RETIREMENT.
3-4 (a) A member who is eligible for service retirement and who
3-5 terminates employment with all participating municipalities may
3-6 apply for a partial lump-sum distribution under this section.
3-7 (b) The amount of a lump-sum distribution under this section
3-8 may not exceed one-half of the total contributions and accumulated
3-9 interest in the member's individual account in the employees saving
3-10 fund at the time of the member's retirement.
3-11 (c) Subject to the limitation in Subsection (b), the member
3-12 may elect to have the lump-sum distribution be equal to the monthly
3-13 annuity payments, excluding any distributive benefit payments, that
3-14 the member would have received if the member had selected the
3-15 standard service retirement annuity described in Section 854.103
3-16 over a period of:
3-17 (1) 12 months after the effective date of the member's
3-18 retirement;
3-19 (2) 24 months after the effective date of the member's
3-20 retirement; or
3-21 (3) 36 months after the effective date of the member's
3-22 retirement.
3-23 (d) The lump-sum distribution will be made as a single
3-24 payment, payable at the same time as the first monthly annuity
3-25 payment that is paid to the member.
3-26 (e) The amount of the lump-sum distribution will be deducted
3-27 from the sum used in computing the member's current service annuity
3-28 under Section 854.002(c). If a payment is made under Section
3-29 854.502, the amount of the lump-sum distribution will be considered
3-30 to be included in the payments made by reason of the annuity.
3-31 SECTION 9. Section 854.104, Government Code, is amended by
3-32 amending Subsection (c) and adding Subsection (g) to read as
3-33 follows:
3-34 (c) An eligible person may select an [any] optional annuity
3-35 that provides [approved by the board of trustees, the entire
3-36 benefit of which is certified by the actuary as the actuarial
3-37 equivalent of the annuity to which the person is entitled, or may
3-38 select one of the following options, which provide] that:
3-39 (1) after the retiree's death, the reduced annuity is
3-40 payable throughout the life of a person designated by the retiree;
3-41 (2) after the retiree's death, one-half of the reduced
3-42 annuity is payable throughout the life of a person designated by
3-43 the retiree;
3-44 (3) if the retiree dies before 120 monthly annuity
3-45 payments have been made, the remainder of the 120 payments are
3-46 payable to the retiree's beneficiary or, if one does not exist, to
3-47 the retiree's estate;
3-48 (4) if the retiree dies before 180 monthly annuity
3-49 payments have been made, the remainder of the 180 payments are
3-50 payable to the retiree's beneficiary or, if one does not exist, to
3-51 the retiree's estate; [or]
3-52 (5) after the retiree's death, two-thirds of the
3-53 reduced annuity is payable throughout the life of a person
3-54 designated by the retiree; or
3-55 (6) the annuity is payable only during the retiree's
3-56 lifetime.
3-57 (g) If a person who retires after August 31, 1997, elects a
3-58 reduced retirement annuity that is payable until the death of the
3-59 last to die of the retiree and a person designated under Subsection
3-60 (e), and if the retiree survives the other person, the monthly
3-61 payments to the retiree will be increased to the amounts that would
3-62 have been payable if the retiree at the time of retirement had
3-63 elected to receive an annuity payable only during the retiree's
3-64 life, and adjustments had been made for any applicable
3-65 postretirement increases in that benefit. The increased benefit
3-66 becomes payable the month after the month in which the person
3-67 designated under Subsection (e) dies and continues until the
3-68 retiree dies.
3-69 SECTION 10. Section 854.203(g), Government Code, is amended
4-1 to read as follows:
4-2 (g) An ordinance under this section may not take effect
4-3 until it is approved by the board of trustees as meeting the
4-4 requirements of this section. The board may not approve an
4-5 ordinance unless the actuary first determines that all obligations
4-6 charged against the municipality's account in the municipality
4-7 accumulation fund, including the obligations proposed in the
4-8 ordinance, can be funded by the municipality within its maximum
4-9 contribution rate and within its amortization period as in effect
4-10 on [before the 25th anniversary of] the effective date of the
4-11 increases.
4-12 SECTION 11. Section 854.305, Government Code, is amended by
4-13 amending Subsection (c) and adding Subsection (g) to read as
4-14 follows:
4-15 (c) An eligible person may select an [any] optional annuity
4-16 that provides [approved by the board of trustees, the entire
4-17 benefit of which is certified by the actuary as the actuarial
4-18 equivalent of the annuity to which the person is entitled, or may
4-19 select one of the following options, which provide] that:
4-20 (1) after the retiree's death, the reduced annuity is
4-21 payable throughout the life of a person designated by the retiree;
4-22 (2) after the retiree's death, one-half of the reduced
4-23 annuity is payable throughout the life of a person designated by
4-24 the retiree;
4-25 (3) if the retiree dies before 120 monthly annuity
4-26 payments have been made, the remainder of the 120 payments are
4-27 payable to the retiree's beneficiary or, if one does not exist, to
4-28 the retiree's estate; [or]
4-29 (4) if the retiree dies before 180 monthly annuity
4-30 payments have been made, the remainder of the 180 payments are
4-31 payable to the retiree's beneficiary or, if one does not exist, to
4-32 the retiree's estate; or
4-33 (5) after the retiree's death, two-thirds of the
4-34 reduced annuity is payable throughout the life of a person
4-35 designated by the retiree.
4-36 (g) If a person who retires after August 31, 1997, elects a
4-37 reduced retirement annuity that is payable until the death of the
4-38 last to die of the retiree and a person designated under Subsection
4-39 (e), and if the retiree survives the other person, the monthly
4-40 payments to the retiree will be increased to the amounts that would
4-41 have been payable if the retiree had elected to receive an annuity
4-42 payable only during the retiree's life, and adjustments had been
4-43 made for any applicable postretirement increases in that benefit.
4-44 The increased benefit becomes payable the month after the month in
4-45 which the person designated under Subsection (e) dies and
4-46 continues until the retiree dies.
4-47 SECTION 12. Section 854.410, Government Code, is amended by
4-48 amending Subsection (c) and adding Subsection (g) to read as
4-49 follows:
4-50 (c) An eligible person may select an [any] optional annuity
4-51 that provides [approved by the board of trustees, the entire
4-52 benefit of which is certified by the actuary as the actuarial
4-53 equivalent of the annuity to which the person is entitled, or may
4-54 select one of the following options, which provide] that:
4-55 (1) after the retiree's death, the reduced annuity is
4-56 payable throughout the life of a person designated by the retiree;
4-57 (2) after the retiree's death, one-half of the reduced
4-58 annuity is payable throughout the life of a person designated by
4-59 the retiree;
4-60 (3) if the retiree dies before 120 monthly annuity
4-61 payments have been made, the remainder of the 120 payments is
4-62 payable to the retiree's beneficiary or, if one does not exist, to
4-63 the retiree's estate; [or]
4-64 (4) if the retiree dies before 180 monthly annuity
4-65 payments have been made, the remainder of the 180 payments is
4-66 payable to the retiree's beneficiary or, if one does not exist, to
4-67 the retiree's estate; or
4-68 (5) after the retiree's death, two-thirds of the
4-69 reduced annuity is payable throughout the life of a person
5-1 designated by the retiree.
5-2 (g) If a person who retires after August 31, 1997, elects a
5-3 reduced retirement annuity that is payable until the death of the
5-4 last to die of the retiree and a person designated under Subsection
5-5 (e), and if the retiree survives the other person, the monthly
5-6 payments to the retiree will be increased to the amounts that would
5-7 have been payable if the retiree at the time of retirement had
5-8 elected to receive an annuity payable only during the retiree's
5-9 life, and adjustments had been made for any applicable
5-10 postretirement increases in that benefit. The increased benefit
5-11 becomes payable the month after the month in which the person
5-12 designated under Subsection (e) dies and continues until the
5-13 retiree dies.
5-14 SECTION 13. Section 855.407, Government Code, is amended by
5-15 adding Subsections (g) and (h) to read as follows:
5-16 (g) The governing body of a municipality may elect to have
5-17 the municipality contribute to its account in the municipality
5-18 accumulation fund at the combined rate of total compensation paid
5-19 to its employees as the actuary determines is necessary to fund all
5-20 obligations chargeable to its account in the fund within the
5-21 municipality's amortization period, regardless of other provisions
5-22 of this subtitle.
5-23 (h) If the board of trustees adopts any change in actuarial
5-24 assumptions or in actuarial method that would result in any
5-25 municipality having an increase in its combined contribution rate
5-26 of more than one-half of one percent of the total compensation paid
5-27 to its employees based on its current amortization period, and if
5-28 its governing body adopts a resolution requesting a new
5-29 amortization period, the municipality will be assigned a new
5-30 amortization period equal to the lesser of:
5-31 (1) the number of years required to limit the increase
5-32 in the combined rate to one-half of one percent of the total
5-33 compensation paid to its employees; or
5-34 (2) the maximum number of years, not to exceed 40
5-35 years, specified by the board of trustees.
5-36 SECTION 14. Subchapter G, Chapter 855, Government Code, is
5-37 amended by adding Sections 855.606 and 855.607 to read as follows:
5-38 Sec. 855.606. APPEAL OF ADMINISTRATIVE DECISION. A decision
5-39 of the board of trustees denying or limiting membership, service
5-40 credit, eligibility for or the amount of benefits payable by the
5-41 retirement system, or regarding to whom benefits should be paid is
5-42 a decision in a contested case as defined by the administrative
5-43 procedure law, Chapter 2001, and is subject to judicial review
5-44 under the substantial evidence rule in accordance with Sections
5-45 2001.174-2001.177.
5-46 Sec. 855.607. PLAN QUALIFICATION. It is intended that the
5-47 provisions of this subtitle be construed and administered in a
5-48 manner that the retirement system's benefit plan will be considered
5-49 a qualified plan under Section 401(a) of the Internal Revenue Code
5-50 of 1986 (26 U.S.C. Section 401). The board of trustees may adopt
5-51 rules that modify the plan to the extent the board considers
5-52 necessary for the retirement system to be considered a qualified
5-53 plan. Rules adopted by the board of trustees relating to plan
5-54 qualification issues are considered a part of the plan.
5-55 SECTION 15. Section 852.004(c), Government Code, is
5-56 repealed.
5-57 SECTION 16. This Act takes effect September 1, 1997.
5-58 SECTION 17. The importance of this legislation and the
5-59 crowded condition of the calendars in both houses create an
5-60 emergency and an imperative public necessity that the
5-61 constitutional rule requiring bills to be read on three several
5-62 days in each house be suspended, and this rule is hereby suspended.
5-63 * * * * *