By Naishtat H.B. No. 1318
75R5668 ESH-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to benefits under, eligibility for benefits under, and
1-3 investment of surplus funds of retirement systems for firefighters
1-4 in certain municipalities.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 5.05, Chapter 183, Acts of the 64th
1-7 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
1-8 Civil Statutes), is amended to read as follows:
1-9 Sec. 5.05. EARLY RETIREMENT. (a) A member is eligible to
1-10 retire and receive a normal [reduced] service retirement annuity if
1-11 the member, while serving as a firefighter in the fire department:
1-12 (1) has attained the age of 45 [48] years and has at
1-13 least 10 years of service credit in the fund; or
1-14 (2) has at least 20 [23] years of service credit,
1-15 regardless of age.
1-16 (b) The retirement annuity of a person who retires under
1-17 this section after September 1, 1997, is the same as for normal
1-18 service retirement, but may not be increased under Section 9.04 of
1-19 this Act until the person would have met the requirements of
1-20 Section 5.01 of this Act if the person had remained in active
1-21 service as a firefighter [is a monthly payment equal to the payment
1-22 described by Section 5.04 of this Act, reduced according to tables
1-23 recommended by the board's actuary and adopted by the board of
1-24 trustees for early retirement].
2-1 SECTION 2. Section 7.02, Chapter 183, Acts of the 64th
2-2 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
2-3 Civil Statutes), is amended to read as follows:
2-4 Sec. 7.02. SURVIVING SPOUSE OF RETIREE. On the death of a
2-5 retiree, the retiree's surviving spouse[, if married to the retiree
2-6 at the time of the retiree's retirement,] is entitled to receive an
2-7 immediate monthly benefit from the fund of 75 percent of the
2-8 retirement benefit that was being paid to the retiree if the
2-9 spouse:
2-10 (1) was married to the retiree at the time of the
2-11 retiree's retirement; or
2-12 (2) married the retiree after the retiree's retirement
2-13 and was married to the retiree for at least 24 consecutive months.
2-14 SECTION 3. Section 7.04, Chapter 183, Acts of the 64th
2-15 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
2-16 Civil Statutes), is amended to read as follows:
2-17 Sec. 7.04. DURATION [TERMINATION] OF SPOUSE'S BENEFIT. The
2-18 [If, at the time of termination of employment with the fire
2-19 department, the deceased firefighter or retiree met the
2-20 requirements for normal retirement eligibility as provided by
2-21 Section 5.01 of this Act, the] benefit payable to a surviving
2-22 spouse is payable throughout the surviving spouse's remaining
2-23 lifetime. A surviving spouse whose benefit was terminated under
2-24 this section as it existed before September 1, 1997, is entitled to
2-25 receive a benefit beginning on the date the surviving spouse files
2-26 an application for resumption of benefits with the board of
2-27 trustees, but is not entitled to receive a benefit for the period
3-1 in which the benefit was terminated under the former law.
3-2 [Otherwise, the benefit ceases on the earlier of the spouse's death
3-3 or marriage to any other person.]
3-4 SECTION 4. Section 8.02, Chapter 183, Acts of the 64th
3-5 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
3-6 Civil Statutes), is amended to read as follows:
3-7 Sec. 8.02. ELECTION TO PARTICIPATE IN DROP. The election to
3-8 participate in the DROP shall be made in accordance with procedures
3-9 adopted by the board of trustees. The election may be made at any
3-10 time on or after the date the member becomes eligible for normal
3-11 service retirement under Section 5.01 of this Act or early
3-12 retirement under Section 5.05 of this Act and becomes effective on
3-13 the first day of the first month after the date of the election.
3-14 At the same time that a member makes an election to participate in
3-15 the DROP, the member must agree in writing to terminate service
3-16 with the fire department on a date not later than the fifth
3-17 [second] anniversary of the effective date of the election under
3-18 this section. An agreement to terminate service is binding on the
3-19 member and the fire department, except that the member may
3-20 terminate active service at any time before the date selected. An
3-21 election to participate in the DROP has no effect on either the
3-22 municipality's or the member's contributions under Section 10.01 of
3-23 this Act.
3-24 SECTION 5. Section 8.06, Chapter 183, Acts of the 64th
3-25 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
3-26 Civil Statutes), is amended to read as follows:
3-27 Sec. 8.06. ESTABLISHMENT OF DROP ACCOUNT AT RETIREMENT. (a)
4-1 In lieu of electing to participate in the DROP before actual
4-2 retirement, a member who is eligible for normal service retirement
4-3 or early retirement and who terminates or has terminated [may elect
4-4 to terminate] active service as a firefighter may [and] establish
4-5 a DROP account under this section.
4-6 (b) A member who is eligible to receive a service retirement
4-7 benefit under Section 5.06 of this Act may establish a DROP account
4-8 under this section on retiring under Section 5.06 of this Act.
4-9 (c) If a member [so] elects to participate in the DROP under
4-10 this section:
4-11 (1) the board of trustees shall cause to be credited
4-12 to a DROP account maintained within the fund for the benefit of
4-13 that person an amount equal to the credits that the member's DROP
4-14 account would have received, including interest, if the member had
4-15 established the DROP account after becoming eligible for [normal]
4-16 service retirement, but not more than five [two] years before the
4-17 effective date of the person's retirement;
4-18 (2) the date used in computations under Subdivision
4-19 (1) of this section as if the member had established the DROP
4-20 account on that date is the effective date of the member's election
4-21 to participate in the DROP;
4-22 (3) the member will receive payments from the member's
4-23 DROP account as the member may select under Section 8.05 of this
4-24 Act; and
4-25 (4) the member's DROP account shall be credited with
4-26 interest as provided by Section 8.05 of this Act.
4-27 SECTION 6. Section 9.04, Chapter 183, Acts of the 64th
5-1 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
5-2 Civil Statutes), is amended by amending the heading and Subsection
5-3 (a) and adding Subsection (d) to read as follows:
5-4 Sec. 9.04. COST-OF-LIVING ADJUSTMENT; OTHER ADJUSTMENTS.
5-5 (a) Except as provided by Section 5.05 of this Act, a [A] person
5-6 receiving a retirement or survivor's benefit under this Act is
5-7 entitled to an annual cost-of-living adjustment of that person's
5-8 benefit based on any increase in the Consumer Price Index for All
5-9 Urban Consumers as determined by the United States Department of
5-10 Labor since the last increase in benefits under this section.
5-11 (d) Retirement or survivor's benefits adjusted under
5-12 Subsection (a) of this section may be increased by an amount
5-13 determined by an affirmative vote of the board of trustees. An
5-14 adjustment may not be made under this subsection unless the board's
5-15 actuary has advised the board of trustees that the adjustment would
5-16 not impair the financial stability of the fund.
5-17 SECTION 7. Section 11.01, Chapter 183, Acts of the 64th
5-18 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
5-19 Civil Statutes), is amended to read as follows:
5-20 Sec. 11.01. PERMITTED INVESTMENTS. When the board of
5-21 trustees determines that there is in the fund a surplus exceeding
5-22 the reasonable, safe amount necessary to take care of the current
5-23 demands on the fund, the surplus, or so much of it as the board of
5-24 trustees considers prudent, may be invested in:
5-25 (1) direct obligations of or obligations the principal
5-26 and interest of which are guaranteed [or fully insured] by the
5-27 United States or its agencies or instrumentalities;
6-1 (2) [commercial paper rated as investment quality or
6-2 higher by a nationally recognized investment rating firm;]
6-3 [(3)] short-term investment funds, mutual funds, or
6-4 their equivalent[,] that[:]
6-5 [(A)] are rated as investment quality or higher
6-6 by a nationally recognized investment rating firm;
6-7 (3) [and]
6-8 [(B) do not exceed an average of 270 days to
6-9 maturity;]
6-10 [(4)] fully collateralized or direct repurchase
6-11 agreements, including direct and reverse security repurchase
6-12 agreements and security lending agreements that:
6-13 (A) have a defined termination date;
6-14 (B) are secured by obligations described by this
6-15 section or by cash; and
6-16 (C) are pledged with a third party selected or
6-17 approved by a majority vote of the board of trustees;
6-18 (4) [(5)] corporate bonds, including convertible
6-19 bonds, [and] collateralized mortgage obligations, and asset-backed
6-20 securities, rated as investment quality or higher by a nationally
6-21 recognized investment rating firm;
6-22 (5) [(6)] common stocks, [and] preferred stocks, and
6-23 convertible preferred stocks of companies incorporated in the
6-24 United States and foreign stocks that are designated in United
6-25 States dollars and that are registered with the Securities and
6-26 Exchange Commission and listed on a United States exchange or by
6-27 the National Association of Securities Dealers Automated
7-1 Quotations;
7-2 (6) [(7) major] foreign equity and fixed income
7-3 [market] investments; [and]
7-4 (7) mutual funds, common funds, and their equivalents
7-5 that contain only items listed in Subdivisions (1)-(6) of this
7-6 section; and
7-7 (8) convertible stocks and bonds recognized as
7-8 investment quality or higher by a nationally recognized investment
7-9 rating firm or by the investment manager.
7-10 SECTION 8. Section 11.03, Chapter 183, Acts of the 64th
7-11 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
7-12 Civil Statutes), is amended to read as follows:
7-13 Sec. 11.03. LIMITATIONS ON INVESTMENTS. The fund may not
7-14 own more than five percent of the voting stock of any one
7-15 corporation. Under an investment measure at market [cost]:
7-16 (1) total fixed-income investments should not
7-17 represent less than 30 [50 percent nor more than 80] percent of the
7-18 value of the investment portfolio;
7-19 (2) total investments in common stocks should not
7-20 represent [less than 20 percent nor] more than 70 [50] percent of
7-21 the value of the investment portfolio;
7-22 (3) total investments in common stocks and bonds of
7-23 foreign corporations may not represent more than 20 [five] percent
7-24 of the value of the investment portfolio; and
7-25 (4) total investments in any one corporation may not
7-26 represent more than five [three] percent of the value of the
7-27 investment portfolio.
8-1 SECTION 9. Sections 9.03(c) and 11.02, Chapter 183, Acts of
8-2 the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
8-3 Vernon's Texas Civil Statutes), are repealed.
8-4 SECTION 10. This Act takes effect September 1, 1997.
8-5 SECTION 11. The importance of this legislation and the
8-6 crowded condition of the calendars in both houses create an
8-7 emergency and an imperative public necessity that the
8-8 constitutional rule requiring bills to be read on three several
8-9 days in each house be suspended, and this rule is hereby suspended.