By Turner of Harris H.B. No. 1203
75R3208 GCH-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to credit in, benefits from, and administration of certain
1-3 municipal retirement systems for police officers.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 4, Chapter 76, Acts of the 50th
1-6 Legislature, 1947 (Article 6243g-1, Vernon's Texas Civil Statutes),
1-7 is amended by amending Subsection (a) and adding Subsection (m) to
1-8 read as follows:
1-9 (a) There is hereby created a Pension Board of the Pension
1-10 System, in which Board there is hereby vested the general
1-11 administration, management, and responsibility for the proper and
1-12 effective operation of the Pension System. The Board shall be
1-13 organized immediately after its members have qualified and taken
1-14 the oath of office and shall serve without compensation. Elected
1-15 members of the Pension Board are entitled to leave from the elected
1-16 member's police department employer to attend to the official
1-17 business of the Pension System. If the city employing the elected
1-18 members of the Pension Board withholds compensation of an elected
1-19 member who is attending to official business of the Pension System,
1-20 the Pension System may elect to adequately compensate the city for
1-21 the loss of service of the elected member. Once the Pension Board
1-22 (by an affirmative vote of at least four Board members) makes this
1-23 election, which amounts shall be remitted from the Fund to the
1-24 city, the city shall pay to the member his regular compensation as
2-1 if no loss of service occurred. The Board, by an affirmative vote
2-2 of at least four members, may elect to reimburse Board members who
2-3 are not employees of the city for their time while attending to
2-4 official business of the Pension System. The Board shall determine
2-5 the amount of any reimbursement.
2-6 (m)(1) If the Pension Board has not purchased insurance
2-7 described by Subsection (j) of this section or if the insurance is
2-8 insufficient or otherwise inadequate, the Board shall, except as
2-9 provided by Subdivision (2) of this subsection, indemnify a Board
2-10 member or officer or employee of the Board for liability imposed as
2-11 damages because of an alleged act, error, or omission committed in
2-12 the individual's capacity as Board member or officer or employee of
2-13 the Board and for reasonable costs and expenses, including
2-14 attorney's fees, incurred in the individual's defense of a claim of
2-15 an alleged act, error, or omission. Indemnification under this
2-16 subsection applies to acts, errors, or omissions by current and
2-17 former Board members, officers, and employees.
2-18 (2) The Pension Board may not indemnify a Board
2-19 member, officer, or employee for liability imposed or expenses
2-20 incurred because of the individual's dishonesty, fraudulent breach
2-21 of trust, lack of good faith, intentional fraud or deception,
2-22 intentional failure to act prudently, or gross negligence.
2-23 SECTION 2. Section 5(c), Chapter 76, Acts of the 50th
2-24 Legislature, 1947 (Article 6243g-1, Vernon's Texas Civil Statutes),
2-25 is amended to read as follows:
2-26 (c) The Pension Board shall establish the policies and
2-27 procedures for disbursements from the Fund [treasurer or the
3-1 Pension Board, as applicable, may make a disbursement from the
3-2 Fund only on regular voucher signed by the treasurer and
3-3 countersigned by the chairman or secretary of the Pension Board].
3-4 SECTION 3. Section 7, Chapter 76, Acts of the 50th
3-5 Legislature, 1947 (Article 6243g-1, Vernon's Texas Civil Statutes),
3-6 is amended to read as follows:
3-7 Sec. 7. The [Beginning July 1, 1989, or on the effective
3-8 date of the 1989 amendment of this Act, whichever is later, the]
3-9 city shall make contributions to the Fund after each payroll period
3-10 in an amount equal to the contribution rate certified by the
3-11 Pension Board, multiplied by the base salaries paid to members of
3-12 the Fund for that period. Such contribution rate, expressed as a
3-13 percentage, shall be based on the results of actuarial valuations
3-14 made at least every three (3) years, with the first such actuarial
3-15 valuation to be made as of January 1, 1982. The city's
3-16 contribution rate shall be the greater of:
3-17 (1) the rate necessary to pay [comprised of] the
3-18 normal cost plus the level percentage of salary payment required to
3-19 amortize the actuarial liability over a period of forty (40) years
3-20 from January 1, 1983, calculated on the basis of an acceptable
3-21 actuarial reserve funding method approved by the Pension Board; or
3-22 (2) twice the contribution rate required of members of
3-23 the Pension System.
3-24 SECTION 4. Sections 11(a) and (g), Chapter 76, Acts of the
3-25 50th Legislature, 1947 (Article 6243g-1, Vernon's Texas Civil
3-26 Statutes), are amended to read as follows:
3-27 (a) A person who became a member of the Pension System
4-1 before September 1, 1981, who did not elect before January 1, 1982,
4-2 to become a member of the plan governed by Article 6243g-3, Revised
4-3 Statutes, and who has been in the service of the city police
4-4 department for at least [the period of] twenty (20) years may
4-5 retire on or after September 1, 1997 [July 1, 1993], and shall be
4-6 entitled to a retirement pension of an amount equal to two and
4-7 one-half [one-fourth] percent (2.5%) [(2.25%)] of the member's
4-8 [his] base salary per month for the first twenty (20) years of
4-9 service, plus an additional amount equal to two percent (2%) of the
4-10 member's [his] base salary per month for each year of service in
4-11 the police department in excess of twenty (20) years, not to exceed
4-12 a total pension equal to eighty percent (80%) of base salary. For
4-13 this purpose, the [, such] base salary is [to be] the base salary
4-14 provided for the classified position in the police department held
4-15 by the member, provided that if the member has not held the same
4-16 classified position for three (3) years prior to the date of
4-17 retirement, the retirement pension shall be based on the average
4-18 monthly base salary of the member for the three (3) years preceding
4-19 retirement.
4-20 (g) Notwithstanding any other provision of this Act, as
4-21 amended, regarding increases in pensions based on any increase or
4-22 decrease of the base salary or the average monthly base salary for
4-23 the classified position or positions from which the member retired,
4-24 the provisions of this subsection shall apply. Beginning on
4-25 January 1, 1987, the pension payable to each retired member of the
4-26 Pension System as of December 31, 1986, or the initial pension
4-27 payable to each active member who retires under the provisions of
5-1 this Act on or after January 1, 1987, which pension amounts are
5-2 referred to in this subsection as the basic pension, shall be
5-3 adjusted annually, effective April 1 of each year, upward at a rate
5-4 equal to two-thirds (2/3) of any percentage increase in the
5-5 Consumer Price Index for All Urban Consumers for the preceding
5-6 year, measured by the percentage change in the average indexes for
5-7 the two (2) respective preceding calendar years, as determined by
5-8 the United States Department of Labor. The adjusted pension shall
5-9 never be less than the basic pension that such retired member would
5-10 otherwise be entitled to receive without regard to changes in the
5-11 Consumer Price Index and shall be based on the Consumer Price Index
5-12 for All Urban Consumers as constructed on September 1, 1986,
5-13 provided such index continues to be published. In the event that
5-14 publication of the Consumer Price Index as constructed on September
5-15 1, 1986, is discontinued, then the current published Consumer Price
5-16 Index shall be used for the purposes of this section. The amount
5-17 of the annual adjustment may not be less than three percent (3%) or
5-18 more than eight percent (8%) of the pension being paid immediately
5-19 before the adjustment [adjusted pension shall never be greater than
5-20 the amount of the retired member's basic pension plus annual
5-21 increases of not more than eight percent (8%) per year, compounded,
5-22 and never less than the amount of the retired member's basic
5-23 pension plus annual increases of two and one-half percent (2.5%),
5-24 compounded], notwithstanding a greater or lesser increase in the
5-25 Consumer Price Index.
5-26 SECTION 5. Section 11B(e), Chapter 76, Acts of the 50th
5-27 Legislature, 1947 (Article 6243g-1, Vernon's Texas Civil Statutes),
6-1 is amended to read as follows:
6-2 (e) The lump-sum component of a DROP benefit is determined
6-3 as provided by this subsection. Each month an amount equal to the
6-4 monthly retirement pension the member would have received if the
6-5 member had terminated employment on the effective date of the DROP
6-6 election is credited to a notational DROP account for the member,
6-7 and each month an amount equal to the monthly contributions the
6-8 member makes to the Pension Fund on or after the effective date of
6-9 the DROP election is credited to the same notational DROP account.
6-10 The Pension Board shall adopt one or more methods to determine the
6-11 rate of interest to be credited to notational DROP accounts and
6-12 shall provide for monthly crediting of interest. [As of the end of
6-13 each month an amount is credited to each member's notational DROP
6-14 account at the rate of one-twelfth of a hypothetical earnings rate
6-15 on amounts in the account. The hypothetical earnings rate is
6-16 determined for each calendar year based on the aggregate annual
6-17 rate of return on Pension Fund investments for the five consecutive
6-18 fiscal years ending June 30 preceding the calendar year to which
6-19 the earnings rate applies. The Pension Board may adjust the rate
6-20 before benefits are paid from a DROP account, for the purpose of
6-21 ensuring that the implementation of the DROP does not adversely
6-22 affect the actuarial condition of the Pension Fund.]
6-23 SECTION 6. Section 12, Chapter 76, Acts of the 50th
6-24 Legislature, 1947 (Article 6243g-1, Vernon's Texas Civil Statutes),
6-25 is amended to read as follows:
6-26 Sec. 12. DISABILITY BENEFITS. Any member of the police
6-27 department who becomes totally and permanently incapacitated for
7-1 the performance of his duty by reasons of any bodily injury
7-2 received in, or illness caused by, the performance of his duty
7-3 shall, upon presentation to the Pension Board of proof of permanent
7-4 disability, be retired and shall receive a retirement allowance
7-5 equal to the greater of fifty percent (50%) of the member's base
7-6 salary or the member's accrued service pension. A member of the
7-7 police department who becomes partially incapacitated for the
7-8 performance of duty by reason of any bodily injury received in, or
7-9 illness caused by, the performance of duty is entitled, on
7-10 presentation to the Pension Board of proof of partial disability,
7-11 to retire and receive a retirement allowance equal to thirty-five
7-12 percent (35%) of the member's base salary. If the injury or
7-13 illness involves a traumatic event that directly causes an
7-14 immediate cardiovascular condition resulting in partial or total
7-15 disability, the member is eligible for a partial or total
7-16 duty-connected disability pension [percentage of his disability.
7-17 Such allowance shall be computed on the same basis as a service
7-18 retirement with regard to length of service; for example, if the
7-19 member is fifty percent (50%) disabled he shall receive one-half
7-20 (1/2) the retirement allowance granted a member as a service
7-21 retirement for the period of service he has completed, provided
7-22 that in case of a disability retirement before the member has
7-23 completed twenty (20) years of service, he shall receive an
7-24 allowance based on the minimum allowed for twenty (20) years
7-25 service]. Such allowance as is granted by the Pension Board shall
7-26 be paid the member for the remainder of his life or so long as he
7-27 remains incapacitated. A member not otherwise eligible for a
8-1 service pension, with ten (10) years of credited service, who
8-2 suffers a partial disability on or after July 1, 1986, and who is
8-3 not eligible for a duty-connected disability pension, shall be
8-4 eligible for a pension equal to twenty percent (20%) of the
8-5 member's base salary [final compensation] payable for two (2) years
8-6 or for the member's life, whichever is less. A member not
8-7 otherwise eligible for a service pension who has ten (10) or more
8-8 years of credited service, who suffers a total disability on or
8-9 after July 1, 1986, and who is not eligible for a duty-connected
8-10 pension, shall be eligible for a pension computed on the same basis
8-11 as a service retirement based upon service accrued to the date of
8-12 disability. When any member has been retired for permanent, total
8-13 or partial disability, he shall be subject at all times to
8-14 re-examination by the Pension Board and shall submit himself to
8-15 such further examination as the Pension Board may require. If any
8-16 member refuses to submit himself to any such examination, the
8-17 Pension Board may, within its discretion, order the payments
8-18 stopped. If a member who has been retired under the provisions of
8-19 this Section should thereafter recover, so that in the opinion of
8-20 the Pension Board he is able to perform the usual and customary
8-21 duties formerly handled by him for the city in the police
8-22 department, and such member is reinstated or tendered reinstatement
8-23 to the position he held at the time of his retirement, then the
8-24 Pension Board shall order such payment stopped. No person shall be
8-25 retired either for total or partial disability unless he files with
8-26 the Pension Board an application for allowance, at which time the
8-27 Pension Board shall have him examined by a physician, to be chosen
9-1 and compensated by the Pension Board and who is to make a report to
9-2 the Pension Board.
9-3 SECTION 7. Section 23A, Chapter 76, Acts of the 50th
9-4 Legislature, 1947 (Article 6243g-1, Vernon's Texas Civil Statutes),
9-5 is amended to read as follows:
9-6 Sec. 23A. In the event that the pension fund is terminated
9-7 or partially terminated, or contributions to the pension fund are
9-8 discontinued completely, there shall be no reversion of funds to
9-9 the employer. The funds shall be used exclusively for police
9-10 pensions, and the affected employees' rights to the benefits, to
9-11 the extent funded, shall be nonforfeitable.
9-12 SECTION 8. Chapter 76, Acts of the 50th Legislature, 1947
9-13 (Article 6243g-1, Vernon's Texas Civil Statutes), is amended by
9-14 adding Sections 23C and 23D to read as follows:
9-15 Sec. 23C. MAXIMUM BENEFITS FROM THE FUND. (a) The fund
9-16 created by this Act is for the exclusive benefit of the members,
9-17 retirees, and their survivors. No part of the corpus or income of
9-18 the fund may ever be used for, or diverted to, any purpose other
9-19 than the benefit of members, retirees, and their survivors as
9-20 provided in this Act.
9-21 (b) A member, retiree, or survivor of a member or retiree of
9-22 the Pension System may not accrue a retirement pension, disability
9-23 retirement allowance, death benefit allowance, DROP benefit, or any
9-24 other benefit under this Act in excess of the benefit limits
9-25 applicable to the fund under Section 415 of the Internal Revenue
9-26 Code of 1986. The Board shall reduce the amount of any benefit
9-27 that exceeds those limits by the amount of the excess. If total
10-1 benefits under this fund and the benefits and contributions to
10-2 which any member is entitled under any other qualified plans
10-3 maintained by the city that employs the member would otherwise
10-4 exceed the applicable limits under Section 415 of the Internal
10-5 Revenue Code of 1986, the benefits the member would otherwise
10-6 receive from the fund shall be reduced to the extent necessary to
10-7 enable the benefits to comply with Section 415.
10-8 (c) Any member or survivor who receives any distribution
10-9 that is an eligible rollover distribution as defined by Section
10-10 402(c)(4) of the Internal Revenue Code of 1986 is entitled to have
10-11 that distribution transferred directly to another eligible
10-12 retirement plan of the member's or survivor's choice on providing
10-13 direction to the Pension System regarding that transfer in
10-14 accordance with procedures established by the Board.
10-15 (d) The total salary taken into account for any purpose for
10-16 any member or retiree of the Pension System may not exceed $200,000
10-17 for any year for an eligible participant, or $150,000 a year for an
10-18 ineligible participant. These dollar limits shall be adjusted from
10-19 time to time in accordance with guidelines provided by the
10-20 secretary of the treasury. For purposes of this subsection, an
10-21 eligible participant is a person who first became a member before
10-22 1996, and an ineligible participant is a member who is not an
10-23 eligible participant.
10-24 (e) Accrued benefits under this Act become 100 percent
10-25 vested for a member on the date the member has completed twenty
10-26 (20) years of service.
10-27 (f) Amounts representing forfeited nonvested benefits of
11-1 terminated members may not be used to increase benefits payable
11-2 from the fund but may be used to reduce contributions for future
11-3 plan years.
11-4 (g) Distributions of benefits must begin not later than
11-5 April 1 of the year following the calendar year during which the
11-6 member becomes 70-1/2 years of age or terminates employment with
11-7 the employer, if later, and must otherwise conform to Section
11-8 401(a)(9) of the Internal Revenue Code of 1986.
11-9 (h) If the amount of any benefit is to be determined on the
11-10 basis of actuarial assumptions that are not otherwise specifically
11-11 set forth for that purpose in this Act, the actuarial assumptions
11-12 to be used are those earnings and mortality assumptions being used
11-13 on the date of the determination by the fund's actuary and approved
11-14 by the Board. The actuarial assumptions being used at any
11-15 particular time shall be attached as an addendum to a copy of this
11-16 Act and treated for all purposes as a part of the Act. The
11-17 actuarial assumptions may be changed by the fund's actuary at any
11-18 time if approved by the Board, but a change in actuarial
11-19 assumptions may not result in any decrease in benefits accrued as
11-20 of the effective date of the change.
11-21 (i) To the extent permitted by law, the Board may adjust the
11-22 benefits of retirees and survivors by increasing any benefit that
11-23 was reduced because of Section 415 of the Internal Revenue Code of
11-24 1986. If Section 415 is amended to permit the payment of amounts
11-25 previously precluded under that section, the Board may adjust the
11-26 benefits of retirees and survivors, including the restoration of
11-27 benefits previously denied. Benefits paid under this subsection
12-1 are not considered as extra compensation earned after retirement
12-2 but as the delayed payment of benefits earned before retirement.
12-3 Sec. 23D. EXCESS BENEFIT PLAN. (a) A separate,
12-4 nonqualified, unfunded excess benefit plan is created outside the
12-5 fund.
12-6 (b) In this section:
12-7 (1) "Excess benefit plan" means the separate,
12-8 nonqualified, unfunded excess benefit plan created by this section
12-9 for the benefit of eligible members, as amended or restated from
12-10 time to time, that is intended to be a "qualified governmental
12-11 excess benefit arrangement" within the meaning of Section 415(m) of
12-12 the Internal Revenue Code of 1986.
12-13 (2) "Qualified plan" means the fund and any other plan
12-14 maintained by the city for the exclusive benefit of some or all of
12-15 the members of the fund that has been found by the Internal Revenue
12-16 Service to be qualified or has been treated by the city as a
12-17 qualified plan under Section 401 of the Internal Revenue Code of
12-18 1986.
12-19 (3) "Maximum benefit" means the retirement benefit a
12-20 retiree and the spouse, dependent child, or dependent parent of a
12-21 retiree or deceased member or retiree are entitled to receive from
12-22 all qualified plans in any month after giving effect to Section 23C
12-23 of this Act and any similar provisions of any other qualified plans
12-24 designed to conform to Section 415 of the Internal Revenue Code of
12-25 1986.
12-26 (4) "Excess benefit participant" means any retiree
12-27 whose retirement benefits as determined on the basis of all
13-1 qualified plans without regard to the limitations of Section 23C of
13-2 this Act and comparable provisions of other qualified plans, would
13-3 exceed the maximum benefit permitted under Section 415 of the
13-4 Internal Revenue Code of 1986.
13-5 (5) "Unrestricted benefit" means the monthly
13-6 retirement benefit a retiree and the spouse and dependent child or
13-7 dependent parent of a retiree or deceased member or retiree would
13-8 have received under the terms of all qualified plans except for the
13-9 restrictions of Section 23C of this Act and any similar provisions
13-10 of any other qualified plans designed to conform to Section 415 of
13-11 the Internal Revenue Code of 1986.
13-12 (c) An excess benefit participant who is receiving benefits
13-13 from the fund is entitled to a monthly benefit under this excess
13-14 benefit plan in an amount equal to the lesser of:
13-15 (1) the member's unrestricted benefit less the maximum
13-16 benefit; or
13-17 (2) the amount by which the member's monthly benefit
13-18 from the fund has been reduced because of the limitations of
13-19 Section 415 of the Internal Revenue Code of 1986.
13-20 (d) If a spouse, dependent child, or dependent parent is
13-21 entitled to preretirement or postretirement death benefits under a
13-22 qualified plan after the death of an excess benefit participant,
13-23 the surviving spouse, dependent child, or dependent parent is
13-24 entitled to a monthly benefit under the excess benefit plan equal
13-25 to the benefit determined in accordance with this Act without
13-26 regard to the limitations under Section 23C(a) of this Act or
13-27 Section 415 of the Internal Revenue Code of 1986, less the maximum
14-1 benefit.
14-2 (e) Any benefit to which a person is entitled under this
14-3 section shall be paid at the same time and in the same manner as
14-4 the benefit would have been paid from the fund if payment of the
14-5 benefit from the fund had not been precluded by Section 23C(a) of
14-6 this Act. An excess benefit participant or any beneficiary may
14-7 not, under any circumstances, elect to defer the receipt of all or
14-8 any part of a payment due under this section.
14-9 (f) The Board shall administer this plan, and the Board's
14-10 designee shall also carry out the business of the Board with
14-11 respect to this plan. Except as otherwise provided by this
14-12 section, the rights, duties, and responsibilities of the Board and
14-13 the Board's designee are the same for this plan as for the fund.
14-14 (g) The consultants, independent auditors, attorneys, and
14-15 actuaries selected to perform services for the fund also shall
14-16 perform services for this plan, but their fees for their services
14-17 may not be paid by the fund. The actuary engaged to perform
14-18 services for the fund shall advise the Board of the amount of
14-19 benefits that may not be provided from the fund solely by reason of
14-20 the limitations of Section 415 of the Internal Revenue Code of 1986
14-21 and the amount of employer contributions that will be made to this
14-22 plan rather than to the fund.
14-23 (h) Contributions may not be accumulated under this plan to
14-24 pay future retirement benefits. Instead, each payment of employer
14-25 contributions that would otherwise be made to the fund under
14-26 Section 7 of this Act shall be reduced by the amount determined by
14-27 the Board or its designee as necessary to meet the requirements for
15-1 retirement benefits under this plan, including reasonable
15-2 administrative expenses, until the next payment of municipal
15-3 contributions is expected to be made to the fund. The employer
15-4 shall then pay to this plan, from the withheld contributions, not
15-5 earlier than the 30th day before the date each distribution of
15-6 monthly retirement benefits is required to be made from this plan,
15-7 the amount necessary to satisfy the obligation to pay monthly
15-8 retirement benefits from this plan. The Board or its designee
15-9 shall satisfy the obligation of this plan to pay retirement
15-10 benefits from the employer contributions so transferred for that
15-11 month.
15-12 (i) Employer contributions otherwise required to be made to
15-13 the fund under Section 7 of this Act and any other qualified plan
15-14 shall be divided into those contributions required to pay
15-15 retirement benefits under this section and those contributions paid
15-16 into and accumulated to pay the maximum benefits required under the
15-17 qualified plan. Employer contributions made to provide retirement
15-18 benefits under this section may not be commingled with the monies
15-19 of the fund or any other qualified plan.
15-20 (j) Benefits under this section are exempt from execution,
15-21 attachment, garnishment, assignment, injunction, and other writ in
15-22 the same manner as retirement annuities under Section 23B and may
15-23 not be paid to any person other than the person who would have
15-24 received the benefits from the fund except for Section 23C(a) of
15-25 this Act.
15-26 SECTION 9. Section 13, Article 6243g-3, Revised Statutes, is
15-27 amended by amending Subsection (a) and adding Subsection (d) to
16-1 read as follows:
16-2 (a) A member who becomes totally and permanently
16-3 incapacitated for the performance of duty as a result of a bodily
16-4 injury received in, or illness caused by, [suffers a partial or
16-5 total disability resulting from] an individual and specific act the
16-6 type of which would normally occur while employed as a police
16-7 officer, shall be eligible for a duty-connected disability pension
16-8 on presentation to the pension board of proof of permanent
16-9 disability. If such act involves a traumatic event which directly
16-10 causes an immediate cardiovascular condition which results in
16-11 partial or total disability, the member shall be eligible for a
16-12 partial or total duty-connected disability pension. If the member
16-13 is determined to have a partial disability, the member is eligible
16-14 for a partial disability pension.
16-15 (d) A member retired for permanent total or partial
16-16 disability is subject at all times to reexamination by the pension
16-17 board and shall submit to further examination as the pension board
16-18 requires. The pension board may suspend or terminate pension
16-19 payments to a disability retiree who refuses to submit to required
16-20 examinations after retirement.
16-21 SECTION 10. Section 15A(e), Article 6243g-3, Revised
16-22 Statutes, is amended to read as follows:
16-23 (e) The lump-sum component of a DROP benefit is determined
16-24 as provided by this subsection. Each month an amount equal to the
16-25 monthly retirement pension the member would have received if the
16-26 member had terminated employment on the effective date of the DROP
16-27 election is credited to a notational DROP account for the member,
17-1 and each month an amount equal to the monthly contributions the
17-2 member makes to the fund on or after the effective date of the DROP
17-3 election is credited to the same notational DROP account. The
17-4 pension board shall adopt one or more methods to determine the rate
17-5 of interest to be credited to notational DROP accounts and shall
17-6 provide for monthly crediting of interest. [As of the end of each
17-7 month an amount is credited to each member's notational DROP
17-8 account at the rate of one-twelfth of a hypothetical earnings rate
17-9 on amounts in the account. The hypothetical earnings rate is
17-10 determined for each calendar year based on the aggregate annual
17-11 rate of return on fund investments for the five consecutive fiscal
17-12 years ending June 30 preceding the calendar year to which the
17-13 earnings rate applies. The board may adjust the rate before
17-14 benefits are paid from a DROP account, for the purpose of ensuring
17-15 that the implementation of the DROP does not adversely affect the
17-16 actuarial condition of the fund.]
17-17 SECTION 11. Section 17(b), Article 6243g-3, Revised
17-18 Statutes, is amended to read as follows:
17-19 (b) The [Effective July 1, 1991, the] amount of the monthly
17-20 service pension payable to a [retired] member who retires on or
17-21 after September 1, 1997 [July 1, 1988], is an amount equal to 2.5
17-22 [2.25] percent of the member's base salary per month for the first
17-23 20 years of service, plus an additional amount equal to two percent
17-24 of the member's base salary per month multiplied by the number of
17-25 years of the member's service in excess of 20 years, to the nearest
17-26 one-twelfth of a year. The pension may [, in the member's period
17-27 of credited service,] not [to] exceed a total [pension] equal to
18-1 80 percent of the member's base salary [final compensation], except
18-2 that if the member has not held the same classified position for
18-3 three years immediately preceding the date of retirement, the
18-4 retirement pension shall be based on the average monthly base
18-5 salary of the member for the three years immediately preceding the
18-6 date of retirement.
18-7 SECTION 12. Section 24, Article 6243g-3, Revised Statutes,
18-8 is amended to read as follows:
18-9 Sec. 24. ADJUSTMENT OF BENEFITS. Beginning September 1,
18-10 1995, a pension payable under this article may be adjusted annually
18-11 on April 1, in accordance with two-thirds (2/3) of the percentage
18-12 changes in the Consumer Price Index for All Urban Consumers, but
18-13 not below the original pension amount. The amount of the annual
18-14 adjustment under this section shall never be less than three [two
18-15 and one-half] percent (3%) or [(2.5%) compounded and shall never
18-16 be] more than eight percent (8%) of the pension being paid
18-17 immediately before the adjustment [compounded], notwithstanding a
18-18 greater or lesser increase in the consumer price index.
18-19 SECTION 13. Section 29, Article 6243g-3, Revised Statutes,
18-20 is amended to read as follows:
18-21 Sec. 29. CONTRIBUTION BY CITY. The [Until January 1, 1983,
18-22 the city shall pay into the fund after each payroll period an
18-23 amount equal to 20 percent of the base salaries paid to members of
18-24 the fund. Beginning January 1, 1983, the] city shall make monthly
18-25 contributions to the pension fund in an amount equal to the
18-26 percentage contribution rate multiplied by the salaries paid to
18-27 members, as defined by Section 1 of this article. Such
19-1 contribution rate, expressed as a percentage, shall be based on the
19-2 results of actuarial valuations made at least every three years[,
19-3 with the first such actuarial valuation to be made as of January 1,
19-4 1982]. The city's contribution rate shall be the greater of:
19-5 (1) the rate necessary to pay [comprised of] the
19-6 normal cost plus the level percentage of salary payment required to
19-7 amortize the actuarial liability over a period of 40 years from
19-8 January 1, 1983, calculated on the basis of an acceptable actuarial
19-9 reserve funding method approved by the pension board; or
19-10 (2) twice the contribution rate required of members
19-11 of the pension system.
19-12 SECTION 14. Sections 1(k) and (o), Article 6243g-3, Revised
19-13 Statutes, are repealed.
19-14 SECTION 15. This Act takes effect September 1, 1997.
19-15 SECTION 16. The importance of this legislation and the
19-16 crowded condition of the calendars in both houses create an
19-17 emergency and an imperative public necessity that the
19-18 constitutional rule requiring bills to be read on three several
19-19 days in each house be suspended, and this rule is hereby suspended.