1-1     By:  Greenberg, et al. (Senate Sponsor - Armbrister)  H.B. No. 1780

 1-2           (In the Senate - Received from the House May 9, 1997;

 1-3     May 12, 1997, read first time and referred to Committee on State

 1-4     Affairs; May 16, 1997, reported favorably by the following vote:

 1-5     Yeas 13, Nays 0; May 16, 1997, sent to printer.)

 1-6                            A BILL TO BE ENTITLED

 1-7                                   AN ACT

 1-8     relating to the purchase of service credit in the Employees

 1-9     Retirement System of Texas and the Teacher Retirement System of

1-10     Texas.

1-11           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-12           SECTION 1.  Section 813.104, Government Code, is amended to

1-13     read as follows:

1-14           Sec. 813.104.  ALTERNATIVE PAYMENTS TO ESTABLISH OR

1-15     REESTABLISH SERVICE CREDIT.  (a)  The board of trustees may adopt

1-16     rules to provide procedures for making installment payments to

1-17     establish or reestablish credit in the retirement system as

1-18     alternatives to lump-sum payments otherwise authorized or required

1-19     by this subtitle.  The methods may include payment by payroll

1-20     deduction.  [A member who is otherwise eligible may establish or

1-21     reestablish service creditable in the retirement system by making

1-22     payments as provided by this section in lieu of lump-sum payments

1-23     otherwise authorized or required by this subtitle.]

1-24           (b)  [A payment authorized by this section consists of the

1-25     contribution required to establish or reestablish at least one year

1-26     of service credit, including any required interest and membership

1-27     fees, except that a person's last in a series of payments under

1-28     this section may be for a period of remaining service that is less

1-29     than one year.]

1-30           [(c)  The retirement system shall grant the applicable amount

1-31     of service credit after each payment is made under this section.]

1-32           [(d)]  Except as provided by Subsection (c) [Subsection (e)],

1-33     payments may not be made under a rule adopted under this section:

1-34                 (1)  to establish or reestablish service credit of a

1-35     person who has retired or died; or

1-36                 (2)  to establish current service under Section

1-37     813.201.

1-38           (c)  Under a rule adopted under this section, the [(e)  The]

1-39     designated beneficiary of a deceased member or, if none exists, the

1-40     personal representative of the decedent's estate may establish or

1-41     reestablish service for which the member was eligible at the time

1-42     of death if the establishment of the service would result in the

1-43     payment of a death benefit annuity or an increase in the amount of

1-44     a death benefit annuity.

1-45           (d) [(f)]  The payment for the establishment or

1-46     reestablishment of service under Subsection (c) [Subsection (e)]

1-47     must be made in a lump sum and completed before the first payment

1-48     of a death benefit annuity, but not later than the 60th day after

1-49     the date the retirement system receives notice of the death.

1-50           [(g)  The retirement system may adopt rules to administer

1-51     this section.]

1-52           SECTION 2.  Section 813.106, Government Code, is amended to

1-53     read as follows:

1-54           Sec. 813.106.  SERVICE NOT PREVIOUSLY ESTABLISHED.  The state

1-55     shall make contributions for service not previously established

1-56     that is established under Section 813.104 [or 813.105] in the

1-57     amount provided by Section 813.202(e) for membership service or the

1-58     amount provided by Section 813.302(d) for military service, as

1-59     applicable.  The state contributions will be made at the time the

1-60     service credit is granted.

1-61           SECTION 3.  Section 813.510(d), Government Code, is amended

1-62     to read as follows:

1-63           (d)  An election under this section must be filed with the

1-64     retirement system on a form provided by the system.  Credit may be

 2-1     established under this section by a lump-sum payment or by payments

 2-2     authorized by Section 813.104 [or 813.105].

 2-3           SECTION 4.  Subchapter E, Chapter 825, Government Code, is

 2-4     amended by adding Section 825.411 to read as follows:

 2-5           Sec. 825.411.  PAYROLL DEDUCTIONS FOR SERVICE CREDIT.  (a)  A

 2-6     contributing member who is otherwise eligible may establish or

 2-7     reestablish service creditable in the retirement system by making

 2-8     payments as provided by this section in lieu of lump-sum payments

 2-9     otherwise authorized or required by this subtitle or payments under

2-10     Section 825.410.  Except as provided by Subsection (c), the

2-11     retirement system shall permit a member to purchase service credit

2-12     over a period of up to five years under an agreement under this

2-13     section.

2-14           (b)  A payment authorized by this section consists of a

2-15     monthly payroll deduction in an amount not less than one-twelfth of

2-16     the contribution required to establish at least one year of service

2-17     credit, including any required interest and membership fee, except

2-18     as provided by Subsection (c).

2-19           (c)  Payments to establish service credit by a member who

2-20     plans to retire in less than a year may be made by payroll

2-21     deduction for a period determined by the retirement system.

2-22           (d)  Payroll deductions for payments under this section shall

2-23     be made and submitted to the retirement system at the times and in

2-24     the manner provided for member contributions under Section 825.403.

2-25           (e)  The retirement system shall credit a member's payments

2-26     made under this section to a suspense account in the trust fund

2-27     until the sum of the payments equals the amount required for one

2-28     year of service credit, at which time the retirement system shall

2-29     deposit the payments in the appropriate accounts in the trust fund

2-30     and grant the applicable amount of service credit.

2-31           (f)  A member who, while making payments under this section,

2-32     ceases to hold a position covered by the retirement system or

2-33     withdraws the authority for payroll deductions may:

2-34                 (1)  contract with the retirement system for an

2-35     alternative method of continuing the payments;

2-36                 (2)  receive a prorated amount of service based on the

2-37     payments made; or

2-38                 (3)  receive a refund of payments credited to the

2-39     suspense account and not transferred to a trust fund account.

2-40           (g)  Payments may not be made under this section to establish

2-41     service credit of a person who has retired or died, except that a

2-42     beneficiary may make payment in a lump sum for the remainder of

2-43     service credit for which payments were begun before the member's

2-44     death.

2-45           (h)  The retirement system may adopt rules to administer this

2-46     section.

2-47           SECTION 5.  Section 813.105, Government Code, is repealed.

2-48           SECTION 6.  This Act takes effect September 1, 1997.

2-49           SECTION 7.  The importance of this legislation and the

2-50     crowded condition of the calendars in both houses create an

2-51     emergency and an imperative public necessity that the

2-52     constitutional rule requiring bills to be read on three several

2-53     days in each house be suspended, and this rule is hereby suspended.

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