By Telford H.B. No. 2375
75R3102 GCH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to systems and programs administered by the Employees
1-3 Retirement System of Texas.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 805.002(g), Government Code, is amended
1-6 to read as follows:
1-7 (g) To be eligible to make a transfer pursuant to Subsection
1-8 (d), a person must be the same beneficiary under both retirement
1-9 systems, except that if the only service credited in the system
1-10 from which service is being transferred is reinstated service and
1-11 no beneficiary designation was made at or after the time of
1-12 reinstatement, the beneficiary in the receiving system may make the
1-13 election.
1-14 SECTION 2. Section 811.001(9), Government Code, is amended
1-15 to read as follows:
1-16 (9) "Law enforcement officer" means a member of the
1-17 retirement system who has been commissioned as a law enforcement
1-18 officer by the Department of Public Safety, the Texas Alcoholic
1-19 Beverage Commission, [the State Purchasing and General Services
1-20 Commission, Capitol Area Security Force,] the State Board of
1-21 Pharmacy, or the Parks and Wildlife Department and who is
1-22 recognized as a commissioned law enforcement officer by the
1-23 Commission on Law Enforcement Officer Standards and Education.
1-24 SECTION 3. Section 813.104, Government Code, is amended to
2-1 read as follows:
2-2 Sec. 813.104. ALTERNATIVE PAYMENTS TO ESTABLISH OR
2-3 REESTABLISH SERVICE CREDIT. (a) The board of trustees may adopt
2-4 rules to provide procedures for making installment payments to
2-5 establish or reestablish credit in the retirement system as
2-6 alternatives to lump-sum payments otherwise authorized or required
2-7 by this subtitle. The methods may include payment by payroll
2-8 deduction. [A member who is otherwise eligible may establish or
2-9 reestablish service creditable in the retirement system by making
2-10 payments as provided by this section in lieu of lump-sum payments
2-11 otherwise authorized or required by this subtitle.]
2-12 (b) [A payment authorized by this section consists of the
2-13 contribution required to establish or reestablish at least one year
2-14 of service credit, including any required interest and membership
2-15 fees, except that a person's last in a series of payments under
2-16 this section may be for a period of remaining service that is less
2-17 than one year.]
2-18 [(c) The retirement system shall grant the applicable amount
2-19 of service credit after each payment is made under this section.]
2-20 [(d)] Except as provided by Subsection (c) [Subsection (e)],
2-21 payments may not be made under a rule adopted under this section:
2-22 (1) to establish or reestablish service credit of a
2-23 person who has retired or died; or
2-24 (2) to establish current service under Section
2-25 813.201.
2-26 (c) Under a rule adopted under this section, the [(e) The]
2-27 designated beneficiary of a deceased member or, if none exists, the
3-1 personal representative of the decedent's estate may establish or
3-2 reestablish service for which the member was eligible at the time
3-3 of death if the establishment of the service would result in the
3-4 payment of a death benefit annuity or an increase in the amount of
3-5 a death benefit annuity.
3-6 (d) [(f)] The payment for the establishment or
3-7 reestablishment of service under Subsection (c) [Subsection (e)]
3-8 must be made in a lump sum and completed before the first payment
3-9 of a death benefit annuity, but not later than the 60th day after
3-10 the date the retirement system receives notice of the death.
3-11 [(g) The retirement system may adopt rules to administer
3-12 this section.]
3-13 SECTION 4. Section 813.106, Government Code, is amended to
3-14 read as follows:
3-15 Sec. 813.106. SERVICE NOT PREVIOUSLY ESTABLISHED. The state
3-16 shall make contributions for service not previously established
3-17 that is established under Section 813.104 [or 813.105] in the
3-18 amount provided by Section 813.202(c) [813.202(e)] for membership
3-19 service or the amount provided by Section 813.302(d) for military
3-20 service, as applicable. The state contributions will be made at
3-21 the time the service credit is granted.
3-22 SECTION 5. Section 813.202, Government Code, is amended to
3-23 read as follows:
3-24 Sec. 813.202. MEMBERSHIP SERVICE NOT PREVIOUSLY ESTABLISHED.
3-25 (a) Except as provided by Section 813.402 [and Subsection (b)],
3-26 any member may establish service credit in the retirement system
3-27 for membership service not previously established.
4-1 (b) A [Membership service not previously credited because of
4-2 a waiting period required before September 1, 1958, may be
4-3 established only by a contributing member.]
4-4 [(c) Except as provided by Subsection (d), a] member may
4-5 establish credit under this section by depositing with the
4-6 retirement system in a lump sum a contribution computed as provided
4-7 by Section 813.404 or 813.505, plus all membership fees due, plus
4-8 interest computed on the basis of the state fiscal year at an
4-9 annual rate of 10 percent from the date the service was performed
4-10 to the date of deposit.
4-11 [(d) A member claiming credit for service not previously
4-12 creditable because of a waiting period required before September 1,
4-13 1958, is exempt from the payment of interest on the required
4-14 contribution if the member establishes the credit before the first
4-15 anniversary of the person's becoming a member of the retirement
4-16 system.]
4-17 (c) [(e)] The state shall contribute for service established
4-18 under this section an amount in the same ratio to the member's
4-19 contribution for the service as the state's contribution bears to
4-20 the contribution for current service required of a member of the
4-21 employee class at the time the service is established under this
4-22 section. The state's contribution must be paid from the fund or
4-23 account from which the member receives compensation at the time the
4-24 service is established or, if the member does not hold a position
4-25 at the time the service is established, from the fund or account
4-26 from which the member received compensation when the member most
4-27 recently held a position.
5-1 SECTION 6. Section 813.301(b), Government Code, is amended
5-2 to read as follows:
5-3 (b) A member may [not] establish one month of service credit
5-4 for each month or fraction of a month of duty, but not more than 60
5-5 months of service credit in the retirement system for military
5-6 service.
5-7 SECTION 7. Section 813.402, Government Code, is amended to
5-8 read as follows:
5-9 Sec. 813.402. CREDIT FOR YEAR IN WHICH ELIGIBLE FOR OFFICE.
5-10 (a) A [contributing] member may establish service credit in the
5-11 elected class for any calendar year during any part of which:
5-12 (1) the member held an office included in that class;
5-13 or
5-14 (2) the member was eligible to take the oath for an
5-15 office included in that class.
5-16 (b) A [contributing] member may establish credit under this
5-17 section by depositing with the retirement system in a lump sum a
5-18 contribution computed as provided by Section 813.404, plus all
5-19 membership fees due, plus interest computed at an annual rate of 10
5-20 percent from the fiscal year in which the service was performed to
5-21 the date of deposit.
5-22 SECTION 8. Section 813.504, Government Code, is amended to
5-23 read as follows:
5-24 Sec. 813.504. ELIGIBILITY FOR SERVICE CREDIT PREVIOUSLY
5-25 CANCELED. A member may reestablish service credit previously
5-26 canceled in the retirement system if at least six months have
5-27 elapsed since the cancellation and the member[, after cancellation
6-1 of the credit,] holds a position [for six months] that is included
6-2 in the employee class.
6-3 SECTION 9. Section 813.509(a), Government Code, is amended
6-4 to read as follows:
6-5 (a) A member who holds a position included in the employee
6-6 class of membership during the month that includes the effective
6-7 date of the member's retirement and who retires based on service or
6-8 a disability is entitled to service credit in the retirement system
6-9 for the member's sick leave that has accumulated and is unused on
6-10 the last day of employment. Sick leave is creditable in the
6-11 retirement system at the rate of one month of service credit for
6-12 each 20 days, or 160 hours, of accumulated sick leave and one month
6-13 for each fraction of days or hours remaining after division of the
6-14 total hours of accumulated sick leave by 160. [An increment of
6-15 less than 20 days is not creditable.]
6-16 SECTION 10. Section 814.005(a), Government Code, is amended
6-17 to read as follows:
6-18 (a) A person may, on a form prescribed by and filed with the
6-19 retirement system, waive all or a portion of any benefits from the
6-20 retirement system to which the person is entitled. The retirement
6-21 system also shall give effect as a waiver to a full or partial
6-22 disclaimer executed in accordance with Section 37A, Texas Probate
6-23 Code, unless the benefit to be disclaimed is a lifetime annuity. A
6-24 person may revoke a waiver of benefits in the same manner as the
6-25 original waiver was made, unless the original waiver by its terms
6-26 was made irrevocable.
6-27 SECTION 11. Section 814.104, Government Code, is amended to
7-1 read as follows:
7-2 Sec. 814.104. ELIGIBILITY OF MEMBER FOR SERVICE RETIREMENT.
7-3 (a) Except as provided by Section 814.102 or by rule adopted under
7-4 Section 813.304(d) or 803.202(2), a member who has service credit
7-5 in the retirement system is eligible to retire and receive a
7-6 service retirement annuity, if the member:
7-7 (1) is at least 60 years old and has 5 years of
7-8 service credit in the employee class;
7-9 (2) is at least 55 years old and has 25 years of
7-10 service credit in the retirement system; [or]
7-11 (3) is at least 50 years old and has 30 years of
7-12 service credit in the retirement system; or
7-13 (4) is at least 50 years old and the sum of the
7-14 member's age and amount of service credit in the retirement system,
7-15 including months of age and credit, equals the number 80.
7-16 (b) A member who is at least 55 years old and who has at
7-17 least 10 years of service credit as a commissioned peace officer
7-18 engaged in criminal law enforcement activities of the Department of
7-19 Public Safety, the Texas Alcoholic Beverage Commission, [the State
7-20 Purchasing and General Services Commission Capitol Area Security
7-21 Force,] the State Board of Pharmacy, or the Parks and Wildlife
7-22 Department, as an employee of the Railroad Commission of Texas who
7-23 is licensed by the Commission on Law Enforcement Officer Standards
7-24 and Education and has served at least five years as an investigator
7-25 for the oil field theft detection division, or as a custodial
7-26 officer, is eligible to retire and receive a service retirement
7-27 annuity.
8-1 SECTION 12. Section 814.105, Government Code, is amended by
8-2 adding Subsection (c) to read as follows:
8-3 (c) The legislature determines that the percentage used to
8-4 compute benefits under this section should be increased permanently
8-5 when it is actuarially sound to do so. The board of trustees may
8-6 increase the percentage to a rate that does not exceed 2.25 percent
8-7 for each year of service credit in the employee class of membership
8-8 if the actuary certifies that the action complies with Section
8-9 811.006. The board shall notify the governor, lieutenant governor,
8-10 and speaker of the house of representatives before adopting a rate
8-11 under this subsection.
8-12 SECTION 13. Section 815.003(d), Government Code, is amended
8-13 to read as follows:
8-14 (d) The board shall hold elections for the members and
8-15 retirees to nominate and elect a trustee before August 31 [1] of
8-16 each odd-numbered year. The board shall make ballots available to
8-17 members of the retirement system and retirees and all votes must be
8-18 cast on those ballots.
8-19 SECTION 14. Subchapter B, Chapter 815, Government Code, is
8-20 amended by adding Section 815.106 to read as follows:
8-21 Sec. 815.106. INFORMATION TO LEGISLATURE. (a) The
8-22 retirement system may not use any money under its control to
8-23 influence the outcome of an election or to support the passage or
8-24 defeat of legislation.
8-25 (b) This section does not prohibit the board of trustees, as
8-26 fiduciaries of the trust fund and as trustees of other programs
8-27 administered by the board, or the officers or employees of the
9-1 retirement system, as designees of the board, from making
9-2 recommendations to the legislature concerning the actuarial
9-3 soundness of a retirement system administered by the board, the
9-4 fiscal or legal implications of proposed legislation, or statutory
9-5 changes designed to more efficiently administer and effectuate the
9-6 purposes of a retirement system or other program administered by
9-7 the board. In addition, the board or an officer or employee of the
9-8 retirement system may provide to a member of the legislature or a
9-9 legislative committee, at the request of the member or committee,
9-10 any factual information that is not made confidential by law.
9-11 SECTION 15. Section 815.303(b), Government Code, is amended
9-12 to read as follows:
9-13 (b) To be eligible to lend securities under this section, a
9-14 bank or brokerage firm must:
9-15 (1) be experienced in the operation of a fully secured
9-16 securities loan program;
9-17 (2) maintain adequate capital in the prudent judgment
9-18 of the retirement system to assure the safety of the securities;
9-19 (3) execute an indemnification agreement satisfactory
9-20 in form and content to the retirement system fully indemnifying the
9-21 retirement system against loss resulting from borrower default in
9-22 its operation of a securities loan program for the system's
9-23 securities; and
9-24 (4) require any securities broker or dealer to whom it
9-25 lends securities belonging to the retirement system to deliver to
9-26 and maintain with the custodian collateral in the form of cash or
9-27 United States government securities in an amount equal to not less
10-1 than 100 percent of the market value, from time to time, of the
10-2 loaned securities.
10-3 SECTION 16. Section 815.307, Government Code, is amended to
10-4 read as follows:
10-5 Sec. 815.307. DUTY OF CARE. The assets of the retirement
10-6 system shall be invested and reinvested without distinction as to
10-7 their source in accordance with Section 67, Article XVI, Texas
10-8 Constitution. Investment and management decisions concerning
10-9 individual investments shall be evaluated not in isolation but in
10-10 the context of the investment portfolio as a whole and as part of
10-11 an overall investment strategy consistent with the investment
10-12 objectives of the retirement system. [In making investments for
10-13 the retirement system, the board of trustees or the executive
10-14 director shall exercise the judgment and care, under the
10-15 circumstances prevailing at the time of the investment, that
10-16 persons of ordinary prudence, discretion, and intelligence exercise
10-17 in the management of their own affairs, not in speculation but when
10-18 making a permanent disposition of their funds, considering the
10-19 probable income from the disposition and the probable safety of
10-20 their capital.]
10-21 SECTION 17. Section 815.403(a), Government Code, is amended
10-22 to read as follows:
10-23 (a) During each fiscal year, the state shall contribute to
10-24 the retirement system:
10-25 (1) an amount equal to 7.4 percent of the total
10-26 compensation of all members of the retirement system for that year;
10-27 (2) money to pay lump-sum death benefits for retirees
11-1 under Section 814.501;
11-2 (3) an amount for the law enforcement and custodial
11-3 officer supplemental retirement fund equal to 2.13 percent of the
11-4 aggregate state compensation of all custodial and law enforcement
11-5 officers for that year;
11-6 (4) money necessary for the administration of the law
11-7 enforcement and custodial officer supplemental retirement fund;
11-8 and
11-9 (5) money for service credit not previously
11-10 established, as provided by Section 813.202(c) [813.202(e)] or
11-11 813.302(d).
11-12 SECTION 18. Subchapter F, Chapter 815, Government Code, is
11-13 amended by adding Section 815.5072 to read as follows:
11-14 Sec. 815.5072. EXCESS BENEFIT ARRANGEMENT. (a) A separate,
11-15 nonqualified, unfunded excess benefit arrangement is created
11-16 outside the trust fund of the retirement system. This excess
11-17 benefit arrangement shall be administered as a governmental excess
11-18 benefit arrangement under Section 415(m) of the Internal Revenue
11-19 Code of 1986 (26 U.S.C. Section 415(m)). The purpose of the excess
11-20 benefit arrangement is to pay to annuitants of the retirement
11-21 system benefits otherwise payable by the retirement system that
11-22 exceed the limitations on benefits imposed by Section 415 of the
11-23 Internal Revenue Code of 1986 (26 U.S.C. Section 415).
11-24 (b) The board of trustees is responsible for the
11-25 administration of this arrangement. Except as otherwise provided
11-26 by this section, the board has the same rights, duties, and
11-27 responsibilities concerning the excess benefit arrangement as it
12-1 has to the trust fund.
12-2 (c) Benefits under this section are exempt from execution to
12-3 the same extent as provided by Section 811.005, except that the
12-4 benefits are completely unassignable. Contributions to this
12-5 arrangement are not held in trust and may not be commingled with
12-6 other funds of the retirement system.
12-7 (d) An annuitant is entitled to a monthly benefit under this
12-8 section in an amount equal to the amount by which the benefit
12-9 otherwise payable by the retirement system has been reduced by the
12-10 limitation on benefits imposed by Section 415(m) of the Internal
12-11 Revenue Code of 1986 (26 U.S.C. Section 415(m)). The benefit
12-12 payable by this arrangement is payable at the times and in the form
12-13 that the benefit payable under the trust fund is paid.
12-14 (e) The benefit payable under this section shall be paid
12-15 from state contributions that otherwise would be made to the trust
12-16 fund under Section 815.403. In lieu of deposit in the state
12-17 accumulation account, an amount determined by the retirement system
12-18 to be necessary to pay benefits under this section shall be paid
12-19 monthly to the credit of an account in the general revenue fund
12-20 maintained only for the excess benefit arrangement. The account
12-21 may include amounts needed to pay reasonable and necessary expenses
12-22 of administering this arrangement. The monthly amount to be paid
12-23 to the credit of the account shall be transferred to the account at
12-24 least 15 days before the date of a monthly disbursement under this
12-25 section.
12-26 (f) The board of trustees may adopt rules governing the
12-27 excess benefit arrangement that are necessary for the efficient
13-1 administration of the arrangement in compliance with Section 415(m)
13-2 of the Internal Revenue Code of 1986 (26 U.S.C. Section 415(m)).
13-3 SECTION 19. Section 815.510(a), Government Code, is amended
13-4 to read as follows:
13-5 (a) The Employees Retirement System of Texas shall submit a
13-6 report not later than the 25th day of the month following the end
13-7 of each fiscal year to the governor, the lieutenant governor, the
13-8 speaker of the house of representatives, the executive director of
13-9 the State Pension Review Board, the appropriate oversight
13-10 committees of the house and senate, and the Legislative Budget
13-11 Board. The report shall include the following:
13-12 (1) the current end-of-fiscal-year market value of the
13-13 trust fund;
13-14 (2) the current fair [book] value of the trust fund;
13-15 (3) the asset allocations of the trust fund expressed
13-16 in percentages of stocks, fixed income, cash, or other financial
13-17 investments; and
13-18 (4) the investment performance of the trust fund
13-19 utilizing accepted industry measurement standards.
13-20 SECTION 20. Subchapter F, Chapter 815, Government Code, is
13-21 amended by adding Section 815.512 to read as follows:
13-22 Sec. 815.512. PROTECTION FROM DOUBLE OR MULTIPLE LIABILITY.
13-23 The executive director may cause a suit concerning a claim to be
13-24 filed on behalf of the retirement system in a district court in
13-25 Travis County to protect the system from double or multiple
13-26 liability, if the executive director determines that a claim may
13-27 expose the retirement system to such liability.
14-1 SECTION 21. (a) Annuities that are described by Section
14-2 814.107, 814.207, 814.305, or 814.601(a), Government Code, and are
14-3 based on service retirements, disability retirements, or deaths
14-4 that occurred or occur after August 31, 1996, but before September
14-5 1, 1999, are increased by 12.5 percent.
14-6 (b) The increase in annuities under Subsection (a) of this
14-7 section is payable beginning with the first monthly payments of the
14-8 annuities that become due after the effective date of this Act.
14-9 (c) The board of trustees of the retirement system shall pay
14-10 the increased annuities provided by this section from the
14-11 retirement annuity reserve account of the retirement system and may
14-12 transfer to that account from the state accumulation account of the
14-13 retirement system any portion of the amount that exceeds the amount
14-14 in the retirement annuity reserve account available to finance the
14-15 increases in benefits, and that is actuarially determined to be
14-16 necessary to finance the increases, for the duration of the
14-17 annuities to which the increases apply.
14-18 (d) The increase provided by Subsection (a) of this section
14-19 shall be computed on the service percentage value described by
14-20 Section 814.105(a), Government Code.
14-21 SECTION 22. Section 833.103(d), Government Code, is amended
14-22 to read as follows:
14-23 (d) A member may [not] establish one month of service credit
14-24 for each month or fraction of a month of duty, but not more than 48
14-25 months of service credit in the retirement system for military
14-26 service.
14-27 SECTION 23. Section 833.105, Government Code, is amended to
15-1 read as follows:
15-2 Sec. 833.105. ALTERNATIVE PAYMENTS TO ESTABLISH OR
15-3 REESTABLISH SERVICE CREDIT. (a) The board of trustees may adopt
15-4 rules to provide procedures for making installment payments to
15-5 establish or reestablish credit in the retirement system as
15-6 alternatives to lump-sum payments otherwise authorized or required
15-7 by this subtitle. The methods may include payment by payroll
15-8 deduction. [A member who is otherwise eligible may establish or
15-9 reestablish service creditable in the retirement system by making
15-10 payments as provided by this section in lieu of lump-sum payments
15-11 otherwise authorized or required by this subtitle.]
15-12 (b) Except as provided by Subsection (c), payments [A
15-13 payment authorized by this section consists of the contribution
15-14 required to establish or reestablish at least one year of service
15-15 credit, including any required interest and membership fees, except
15-16 that a person's last in a series of payments under this section may
15-17 be for a period of remaining service that is less than one year.]
15-18 [(c) The retirement system shall grant the applicable amount
15-19 of service credit after each payment is made under this section.]
15-20 [(d) Payments] may not be made under a rule adopted under
15-21 this section:
15-22 (1) to establish or reestablish service credit of a
15-23 person who has retired or died; or
15-24 (2) to establish current service under Section
15-25 833.101.
15-26 (c) Under a rule adopted under this section, the designated
15-27 beneficiary of a deceased member or, if none exists, the personal
16-1 representative of the decedent's estate may establish or
16-2 reestablish service for which the member was eligible at the time
16-3 of death if the establishment or reestablishment of the service
16-4 would result in the payment of a death benefit annuity.
16-5 (d) The payment for the establishment or reestablishment of
16-6 service under Subsection (c) must be made in a lump sum and
16-7 completed before the first payment of a death benefit annuity, but
16-8 not later than the 60th day after the date the retirement system
16-9 receives notice of the death.
16-10 [(e) The retirement system may adopt rules to administer
16-11 this section.]
16-12 SECTION 24. Subchapter A, Chapter 834, Government Code, is
16-13 amended by adding Section 834.005 to read as follows:
16-14 Sec. 834.005. DISCLAIMER OF BENEFITS. The retirement system
16-15 shall give effect to a full or partial disclaimer of benefits
16-16 executed in accordance with Section 37A, Texas Probate Code, unless
16-17 the benefit to be disclaimed is a lifetime annuity.
16-18 SECTION 25. Section 834.101(a), Government Code, is amended
16-19 to read as follows:
16-20 (a) A member is eligible to retire and receive a base
16-21 service retirement annuity if the member:
16-22 (1) is at least 65 years old, currently holds a
16-23 judicial office, and has at least 10 years of service credited in
16-24 the retirement system[, the most recently performed of which was
16-25 for a continuous period of at least one year];
16-26 (2) is at least 65 years old and has at least 12 years
16-27 of service[, continuous or otherwise,] credited in the retirement
17-1 system, regardless of whether the member currently holds a judicial
17-2 office; or
17-3 (3) has at least 20 years of service credited in the
17-4 retirement system, [the most recently performed of which was for a
17-5 continuous period of at least 10 years,] regardless of whether the
17-6 member currently holds a judicial office.
17-7 SECTION 26. Section 834.302, Government Code, is amended to
17-8 read as follows:
17-9 Sec. 834.302. SELECTION OF DEATH BENEFIT PLAN BY SURVIVOR OF
17-10 MEMBER. (a) If a member eligible to select a death benefit plan
17-11 under Section 834.301(a) dies without having made a selection, or
17-12 if a selection cannot be made effective, the member's designated
17-13 beneficiary [surviving spouse] may select a plan in the same manner
17-14 as if the member had made the selection. If there is no designated
17-15 beneficiary [surviving spouse], the personal representative of the
17-16 decedent's estate may make the selection.
17-17 (b) If a person dies who meets the description in Section
17-18 814.302(b), the person's designated beneficiary [surviving spouse]
17-19 or the guardian of surviving minor children may select a death
17-20 benefit plan under that subsection.
17-21 SECTION 27. Section 838.103(d), Government Code, is amended
17-22 to read as follows:
17-23 (d) A member may [not] establish one month of service credit
17-24 for each month or fraction of a month of duty, but not more than 48
17-25 months of service credit in the retirement system for military
17-26 service.
17-27 SECTION 28. Section 838.105, Government Code, is amended to
18-1 read as follows:
18-2 Sec. 838.105. ALTERNATIVE PAYMENTS TO ESTABLISH OR
18-3 REESTABLISH SERVICE CREDIT. (a) The board of trustees may adopt
18-4 rules to provide procedures for making installment payments to
18-5 establish or reestablish credit in the retirement system as
18-6 alternatives to lump-sum payments otherwise authorized or required
18-7 by this subtitle. The methods may include payment by payroll
18-8 deduction. [A member who is otherwise eligible may establish or
18-9 reestablish service creditable in the retirement system by making
18-10 payments as provided by this section in lieu of lump-sum payments
18-11 otherwise authorized or required by this subtitle.]
18-12 (b) Except as provided by Subsection (c), payments [A
18-13 payment authorized by this section consists of the contribution
18-14 required to establish or reestablish at least one year of service
18-15 credit, including any required interest and membership fees, except
18-16 that a person's last in a series of payments under this section may
18-17 be for a period of remaining service that is less than one year.]
18-18 [(c) The retirement system shall grant the applicable amount
18-19 of service credit after each payment is made under this section.]
18-20 [(d) Payments] may not be made under a rule adopted under
18-21 this section:
18-22 (1) to establish or reestablish service credit of a
18-23 person who has retired or died; or
18-24 (2) to establish current service under Section
18-25 838.101.
18-26 (c) Under a rule adopted under this section, the designated
18-27 beneficiary of a deceased member or, if none exists, the personal
19-1 representative of the decedent's estate may establish or
19-2 reestablish service for which the member was eligible at the time
19-3 of death if the establishment or reestablishment of the service
19-4 would result in the payment of a death benefit annuity.
19-5 (d) The payment for the establishment or reestablishment of
19-6 service under Subsection (c) must be made in a lump sum and
19-7 completed before the first payment of a death benefit annuity, but
19-8 not later than the 60th day after the date the retirement system
19-9 receives notice of the death.
19-10 [(e) The retirement system may adopt rules to administer
19-11 this section.]
19-12 SECTION 29. Subchapter A, Chapter 839, Government Code, is
19-13 amended by adding Section 839.004 to read as follows:
19-14 Sec. 839.004. DISCLAIMER OF BENEFITS. The retirement system
19-15 shall give effect to a full or partial disclaimer of benefits
19-16 executed in accordance with Section 37A, Texas Probate Code, unless
19-17 the benefit to be disclaimed is a lifetime annuity.
19-18 SECTION 30. Section 839.101(a), Government Code, is amended
19-19 to read as follows:
19-20 (a) A member is eligible to retire and receive a service
19-21 retirement annuity if the member:
19-22 (1) is at least 65 years old, currently holds a
19-23 judicial office, and has at least 10 years of service credited in
19-24 the retirement system[, the most recently performed of which was
19-25 for a continuous period of at least one year];
19-26 (2) is at least 65 years old and has at least 12 years
19-27 of service[, continuous or otherwise,] credited in the retirement
20-1 system, regardless of whether the member currently holds a judicial
20-2 office; or
20-3 (3) has at least 20 years of service credited in the
20-4 retirement system, [the most recently performed of which was for a
20-5 continuous period of at least 10 years,] regardless of whether the
20-6 member currently holds a judicial office.
20-7 SECTION 31. Section 839.302, Government Code, is amended to
20-8 read as follows:
20-9 Sec. 839.302. SELECTION OF DEATH BENEFIT PLAN BY SURVIVOR OF
20-10 MEMBER. If a member eligible to select a death benefit plan under
20-11 Section 839.301 dies without having made a selection or if a plan
20-12 selected cannot be made effective, the member's designated
20-13 beneficiary [surviving spouse] may select a plan in the same manner
20-14 as if the member had made the selection. If there is no
20-15 designated beneficiary [surviving spouse], the personal
20-16 representative of the decedent's estate may make the selection.
20-17 SECTION 32. Section 840.3012(b), Government Code, is amended
20-18 to read as follows:
20-19 (b) To be eligible to lend securities under this section, a
20-20 bank or brokerage firm must:
20-21 (1) be experienced in the operation of a fully secured
20-22 securities loan program;
20-23 (2) maintain adequate capital in the prudent judgment
20-24 of the retirement system to assure the safety of the securities;
20-25 (3) execute an indemnification agreement satisfactory
20-26 in form and content to the retirement system fully indemnifying the
20-27 retirement system against loss resulting from borrower default in
21-1 its operation of a securities loan program for the system's
21-2 securities; and
21-3 (4) require any securities broker or dealer to whom it
21-4 lends securities belonging to the retirement system to deliver to
21-5 and maintain with the custodian collateral in the form of cash or
21-6 United States government securities in an amount equal to not less
21-7 than 100 percent of the market value, from time to time, of the
21-8 loaned securities.
21-9 SECTION 33. Section 840.303, Government Code, is amended to
21-10 read as follows:
21-11 Sec. 840.303. DUTY OF CARE. The assets of the retirement
21-12 system shall be invested and reinvested without distinction as to
21-13 their source in accordance with Section 67, Article XVI, Texas
21-14 Constitution. Investment and management decisions concerning
21-15 individual investments shall be evaluated not in isolation but in
21-16 the context of the investment portfolio as a whole and as part of
21-17 an overall investment strategy consistent with the investment
21-18 objectives of the retirement system. [In making investments for
21-19 the retirement system, the board of trustees shall exercise the
21-20 judgment and care, under the circumstances prevailing at the time
21-21 of the investment, that persons of ordinary prudence, discretion,
21-22 and intelligence exercise in the management of their own affairs,
21-23 not in speculation but when making a permanent disposition of their
21-24 funds, considering the probable income from the disposition and the
21-25 probable safety of their capital.]
21-26 SECTION 34. Section 609.009, Government Code, is amended to
21-27 read as follows:
22-1 Sec. 609.009. TRUST FOR [OWNERSHIP UNDER] 457 PLAN. An
22-2 employee's deferred amounts and investment income under a 457 plan
22-3 and the qualified investment products in which the amounts are
22-4 invested are held in trust for the exclusive benefit of
22-5 participants and their beneficiaries in accordance with Section
22-6 457 of the Internal Revenue Code of 1986 (26 U.S.C. Section 457).
22-7 For purposes of this section, custodial accounts and contracts
22-8 described by Section 457 are treated as trusts. A trust does not
22-9 have to be established before January 1, 1999, for a 457 plan in
22-10 existence on August 20, 1996 [the property of the employing
22-11 political subdivision or state agency, as appropriate, until the
22-12 deferred amounts and investment income are distributed to the
22-13 employee].
22-14 SECTION 35. Sections 609.502(a) and (b), Government Code,
22-15 are amended to read as follows:
22-16 (a) The board of trustees of the Employees Retirement System
22-17 of Texas is the trustee and the plan administrator of a 401(k) plan
22-18 known as TexaSaver established under this subchapter.
22-19 (b) The board of trustees is the trustee and the plan
22-20 administrator of a 457 plan established under this subchapter.
22-21 SECTION 36. Section 609.509(b), Government Code, is amended
22-22 to read as follows:
22-23 (b) In a contract under Subsection (a), the board of
22-24 trustees may provide for the board to audit periodically the person
22-25 with whom the contract is made. The audit may cover:
22-26 (1) the proper handling and accounting of state or
22-27 trust funds; and
23-1 (2) other matters related to the proper performance of
23-2 the contract.
23-3 SECTION 37. Section 609.512(b), Government Code, is amended
23-4 to read as follows:
23-5 (b) The deferred compensation trust fund is in the state
23-6 treasury. The fund is for the benefit of the deferred compensation
23-7 plan described by Section 609.502(b) [609.502(a)].
23-8 SECTION 38. Section 3(a)(9), Texas Employees Uniform Group
23-9 Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
23-10 Code), is amended to read as follows:
23-11 (9) "Qualified carrier" shall mean:
23-12 (A) any insurance company authorized to do
23-13 business in this state by the Texas Department [State Board] of
23-14 Insurance to provide any of the types of insurance coverages,
23-15 benefits, or services provided for in this Act under any of the
23-16 insurance laws of the State of Texas, which has a surplus of $1
23-17 million, a successful operating history, and which has had
23-18 successful experience in providing and servicing any of the types
23-19 of group coverage provided for in this Act as determined by the
23-20 Texas Department [State Board] of Insurance;
23-21 (B) any corporation operating under Chapter 20
23-22 or 20A of the Insurance Code which provides any of the types of
23-23 coverage, benefits, or services provided for in this Act, a
23-24 successful operating history, and which has had successful
23-25 experience in providing and servicing any of the types of group
23-26 coverage provided for in this Act as determined by the Texas
23-27 Department [State Board] of Insurance; or
24-1 (C) any combination or carriers as herein
24-2 defined, upon such terms and conditions as may be prescribed by the
24-3 trustee, providing, however, that for purposes of this Act carriers
24-4 combining for the purpose of bidding and/or underwriting this
24-5 program shall not be considered in violation of Sections 15.01
24-6 through 15.34, Chapter 15, Title 2, Competition and Trade
24-7 Practices, Texas Business & Commerce Code.
24-8 SECTION 39. Section 4C(a), Texas Employees Uniform Group
24-9 Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
24-10 Code), is amended to read as follows:
24-11 (a) The trustee may develop a system for an employee[,
24-12 school district employee,] or annuitant to electronically
24-13 authorize:
24-14 (1) enrollment in a coverage or benefit program;
24-15 (2) contributions to a coverage or benefit program;
24-16 and
24-17 (3) deductions or reductions to the compensation or
24-18 annuity of the employee[, school district employee,] or annuitant
24-19 for participation in a coverage or benefit program.
24-20 SECTION 40. Sections 5(b), (h), (i), and (j), Texas
24-21 Employees Uniform Group Insurance Benefits Act (Article 3.50-2,
24-22 Vernon's Texas Insurance Code), are amended to read as follows:
24-23 (b) In the event the trustee shall select a [as the] carrier
24-24 [one] whose bid was not the lowest of all bids submitted, such
24-25 selection shall be submitted together with justifications and
24-26 reasons therefor to the commissioner of insurance [State Board of
24-27 Insurance]. Such deviating selection shall not be deemed final and
25-1 binding unless and until the commissioner of insurance [a majority
25-2 of the State Board of Insurance] has certified [its] approval in
25-3 writing to the trustee, or upon the expiration of 30 days after
25-4 receipt thereof by the commissioner [State Board of Insurance] such
25-5 deviating selection shall be deemed approved.
25-6 (h) In the event the trustee determines that benefits shall
25-7 be provided from the Employees Life, Accident, and Health Insurance
25-8 and Benefits Fund, the trustee may contract with one or more [a]
25-9 qualified and experienced administering firms [firm] on a
25-10 competitive bid basis to administer the plans of coverage [claims
25-11 arising from the coverages] provided in Section 5 of the Act.
25-12 (i) The trustee shall select one or more [the desired]
25-13 administering firms [firm] to provide services which shall be in
25-14 the best interests of the employees covered by the Act. The
25-15 trustee is not required to select the lowest bid but shall take
25-16 into consideration such other factors as ability to service large
25-17 group programs, past experience, and other relevant criteria.
25-18 Should the trustee select a firm whose bid was not the lowest or
25-19 one whose bid differs from that specified, the reasons for such
25-20 action shall be fully justified and explained in the minutes of the
25-21 next meeting of the trustee.
25-22 (j) The trustee may not contract for or provide a plan of
25-23 [group] coverage [or with a health maintenance organization or
25-24 provide coverage directly from the fund] that:
25-25 (1) excludes or limits coverage or services for
25-26 acquired immune deficiency syndrome, as defined by the Centers for
25-27 Disease Control of the United States Public Health Service, or
26-1 human immunodeficiency virus infection; or
26-2 (2) provides coverage for serious mental illness that
26-3 is less extensive than the coverage provided for any [other]
26-4 physical illness.
26-5 SECTION 41. Section 5A(a), Texas Employees Uniform Group
26-6 Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
26-7 Code), is amended to read as follows:
26-8 (a) The trustee may define the basic coverage in which every
26-9 full-time employee and every annuitant participates unless
26-10 participation is specifically waived. The trustee may define
26-11 different basic coverage plans for active full-time employees and
26-12 for annuitants. Basic coverage must include basic health coverage.
26-13 Basic health coverage may be offered through any health benefits
26-14 plan. [Basic coverage shall include, but not be limited to,
26-15 benefits and health care service required by state and federal
26-16 law.]
26-17 SECTION 42. Section 9, Texas Employees Uniform Group
26-18 Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
26-19 Code), is amended to read as follows:
26-20 Sec. 9. ANNUAL ACCOUNTING; SPECIAL CONTINGENCY RESERVE. (a)
26-21 A carrier [Carriers] providing any policy purchased under this Act
26-22 shall provide an accounting to the trustee not later than 90 days
26-23 after the end of each policy year. The accounting shall set forth,
26-24 in a form approved by the trustee:
26-25 (1) the amounts of premiums actually accrued under the
26-26 policy from its date of issue to the end of the policy year;
26-27 (2) the total of all mortality and other claims,
27-1 charges, losses, costs, and expenses incurred for that period; and
27-2 (3) the amounts of the carrier's [insurers'] allowance
27-3 for a reasonable profit and contingencies for that period.
27-4 (b) An excess of the total of Subdivision (a)(1) of this
27-5 section over the sum of Subdivisions (a)(2) and (a)(3) of this
27-6 section shall be held by the carrier issuing a participating [the]
27-7 policy as a special contingency reserve to be used by the carrier
27-8 only for charges, claims, costs, and expenses under the policy.
27-9 The reserve shall bear interest at a rate determined in advance of
27-10 each policy year by the carrier and approved by the trustee as
27-11 being consistent with the rates generally used by the carrier for
27-12 similar funds held under other group insurance policies. When the
27-13 trustee determines that the special contingency reserve has
27-14 attained an amount estimated by it to make satisfactory provision
27-15 for adverse fluctuations in future charges, claims, costs, or
27-16 expenses under the policy, any further excess shall be deposited in
27-17 the State Treasury to the credit of the Employees Life, Accident,
27-18 and Health Insurance and Benefits Fund. When a policy is
27-19 discontinued, any balance remaining in the special contingency
27-20 reserve after all charges have been made shall be deposited in the
27-21 State Treasury to the credit of the fund. The carrier may make the
27-22 deposit in equal monthly installments over a period of not more
27-23 than two years.
27-24 SECTION 43. Section 11, Texas Employees Uniform Group
27-25 Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
27-26 Code), is amended by adding Subsection (d) to read as follows:
27-27 (d) In addition to the authority granted under Article
28-1 3.50-6, Insurance Code, the trustee may adopt rules to provide for
28-2 payment of accelerated life insurance benefits to a terminally ill,
28-3 terminally injured, or permanently disabled participant in amounts
28-4 that benefit the participants without increasing the cost of
28-5 providing the benefits. The amount of any payment of an
28-6 accelerated benefit under rules adopted under this subsection must
28-7 be deducted from the amount that would otherwise be payable as a
28-8 death benefit.
28-9 SECTION 44. Section 12, Texas Employees Uniform Group
28-10 Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
28-11 Code), is amended by adding Subsection (e) to read as follows:
28-12 (e) The trustee shall give effect to a full or partial
28-13 disclaimer of benefits executed in accordance with Section 37A,
28-14 Texas Probate Code.
28-15 SECTION 45. Section 13(c), Texas Employees Uniform Group
28-16 Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
28-17 Code), is amended to read as follows:
28-18 (c) Unless expelled from the program under Section 13A of
28-19 this Act, each part-time employee and each employee of an
28-20 institution of higher education who is described by Section
28-21 3(a)(5)(A)(x) [3(a)(5)(A)(viii)] of this Act is eligible for
28-22 participation in the group programs provided under this Act upon
28-23 execution of appropriate payroll deduction authorization for the
28-24 required payment of premiums. An institution of higher education
28-25 shall, at the time of employment, notify each employee of the
28-26 institution who is described by Section 3(a)(5)(A)(x)
28-27 [3(a)(5)(A)(viii)] of this Act of the employee's eligibility to
29-1 participate in the group programs provided under this Act.
29-2 SECTION 46. Section 13A(f), Texas Employees Uniform Group
29-3 Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
29-4 Code), is amended to read as follows:
29-5 (f) An employee, annuitant, or dependent expelled from the
29-6 Texas employees uniform group insurance program may not participate
29-7 in any [a health maintenance organization or be insured under any
29-8 insurance or benefits] plan of coverage offered by the program for
29-9 a period determined by the trustee of not more than five years
29-10 from the date the expulsion from the program takes effect.
29-11 SECTION 47. Sections 15(b), (c), and (d), Texas Employees
29-12 Uniform Group Insurance Benefits Act (Article 3.50-2, Vernon's
29-13 Texas Insurance Code), are amended to read as follows:
29-14 (b) The state shall contribute to the cost of each
29-15 employee's individual and dependent group coverages the amounts
29-16 appropriated for the coverages in the General Appropriations Act.
29-17 The governing board of each state department and institution of
29-18 higher education participating in the program established under
29-19 this Act shall pay the trustee a like amount for each employee's
29-20 individual or dependent group coverages for their employees who
29-21 are, and retirees who were, compensated from funds not
29-22 appropriated in the General Appropriations Act. The departments
29-23 and institutions shall include the required contributions from
29-24 funds not appropriated in the General Appropriations Act in their
29-25 annual operating budgets. Each state department and institution of
29-26 higher education participating in the program shall assure current
29-27 participant coverages on the records of the trustee, make timely
30-1 payments of amounts due the trustee from all fund sources under the
30-2 control of the department or institution, and reconcile trustee and
30-3 agency records of coverages and payments monthly. There [From and
30-4 after the effective date of this Act, there] is hereby allocated
30-5 [and appropriated] to the trustee, in accordance with the
30-6 provisions of this Act, from the several funds from which [state]
30-7 employees receive their respective salaries, a sum equal to the
30-8 total of all employer contributions computed in accordance with the
30-9 provisions of this Act and the rules and regulations of the trustee
30-10 promulgated pursuant thereto.
30-11 (c) All money hereby allocated [and appropriated] by the
30-12 state, including institutions of higher education, to the trustee
30-13 under this Act shall be paid to the trustee in monthly installments
30-14 based on the annual estimate by the trustee of the contributions to
30-15 be received for all [state] employees during said year; provided,
30-16 however, that in the event said estimate of the contributions of
30-17 the [state] employees shall vary from the actual amount of the
30-18 employer contributions during the year, such adjustments shall be
30-19 made at the close of each fiscal year as may be required. Each of
30-20 said monthly installments shall be paid into the appropriate fund
30-21 created by this Act in the amount certified by the trustee.
30-22 (d) The trustee shall certify to the governing boards of
30-23 those state departments and institutions of higher education
30-24 participating in the program established under this Act who provide
30-25 contributions for their employees' individual and dependent
30-26 coverages [employees] from operating budgets provided from sources
30-27 other than the General Appropriations Act the proportionate amounts
31-1 required [needed] to pay their respective contributions. Such
31-2 certifications shall be made at least 30 days prior to the meeting
31-3 at which the governing board adopts its operating budget.
31-4 SECTION 48. Section 18(b), Texas Employees Uniform Group
31-5 Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
31-6 Code), is amended to read as follows:
31-7 (b) All members of the committee shall be appointed or
31-8 elected for three-year terms. During a term of appointment or
31-9 election, state employee vacancies shall be filled by an employee
31-10 of the same agency from which the vacancy occurred[, being]
31-11 appointed by the governing body of the agency or institution
31-12 [trustees] for the balance of the vacated term. A vacancy in a
31-13 position held by a member of the private sector shall be filled by
31-14 the officer who originally made the appointment to that position.
31-15 SECTION 49. Section 19(a), Texas Employees Uniform Group
31-16 Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
31-17 Code), is amended to read as follows:
31-18 (a) Any employee or annuitant shall be entitled to secure
31-19 for his dependents any uniform group coverages provided for
31-20 employees under this Act, as shall be determined by the trustee,
31-21 except that a foster child is eligible for health insurance
31-22 coverage only if the child is not covered by another governmental
31-23 health program. If an employee or annuitant resides outside of a
31-24 health maintenance organization service area, the uniform group
31-25 coverages must be made available to a dependent without evidence of
31-26 insurability if the employee or annuitant applies for the coverage
31-27 for the dependent during the annual enrollment period. Payments
32-1 required of the employee in excess of employer contributions shall
32-2 be deducted from the monthly pay of the employee or from his
32-3 retirement benefits, or the employee's salary shall be reduced in
32-4 the appropriate amount, in such manner and form as the trustee
32-5 shall determine.
32-6 SECTION 50. (a) Sections 803.403, 813.105, 833.106,
32-7 838.103(i), and 838.106, Government Code, are repealed.
32-8 (b) Section 5(e), Texas Employees Uniform Group Insurance
32-9 Benefits Act (Article 3.50-2, Vernon's Texas Insurance Code), is
32-10 repealed.
32-11 SECTION 51. The change in law made by this Act in Sections
32-12 811.001(9) and 814.104(b), Government Code, is intended to reflect
32-13 the current law providing for the commissioning and administration
32-14 of the Capitol area security force by the Department of Public
32-15 Safety. Service credit previously accrued by a member of the
32-16 Capitol area security force as a commissioned law enforcement
32-17 officer of the General Services Commission, or a predecessor
32-18 agency, remains credited as service by a law enforcement officer
32-19 unless canceled as otherwise provided by Subtitle B, Title 8,
32-20 Government Code.
32-21 SECTION 52. This Act takes effect September 1, 1997.
32-22 SECTION 53. The importance of this legislation and the
32-23 crowded condition of the calendars in both houses create an
32-24 emergency and an imperative public necessity that the
32-25 constitutional rule requiring bills to be read on three several
32-26 days in each house be suspended, and this rule is hereby suspended.