AN ACT
1-1 relating to benefits under, eligibility for benefits under, and
1-2 investment of surplus funds of retirement systems for firefighters
1-3 in certain municipalities.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 5.05, Chapter 183, Acts of the 64th
1-6 Legislature, 1975 (Article 6243e.1, Vernon's Texas Civil Statutes),
1-7 is amended to read as follows:
1-8 Sec. 5.05. EARLY RETIREMENT. (a) A member is eligible to
1-9 retire and receive a normal [reduced] service retirement annuity if
1-10 the member, while serving as a firefighter in the fire department:
1-11 (1) has attained the age of 45 [48] years and has at
1-12 least 10 years of service credit in the fund; or
1-13 (2) has at least 20 [23] years of service credit,
1-14 regardless of age.
1-15 (b) The retirement annuity of a person who retires under
1-16 this section after September 1, 1997, is the same as for normal
1-17 service retirement, but may not be increased under Section 9.04 of
1-18 this Act until the person would have met the requirements of
1-19 Section 5.01 of this Act if the person had remained in active
1-20 service as a firefighter [is a monthly payment equal to the payment
1-21 described by Section 5.04 of this Act, reduced according to tables
1-22 recommended by the board's actuary and adopted by the board of
1-23 trustees for early retirement].
2-1 SECTION 2. Section 7.02, Chapter 183, Acts of the 64th
2-2 Legislature, 1975 (Article 6243e.1, Vernon's Texas Civil Statutes),
2-3 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, 1975 (Article 6243e.1, Vernon's Texas Civil Statutes),
2-16 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
3-1 an application for resumption of benefits with the board of
3-2 trustees, but is not entitled to receive a benefit for the period
3-3 in which the benefit was terminated under the former law.
3-4 [Otherwise, the benefit ceases on the earlier of the spouse's death
3-5 or marriage to any other person.]
3-6 SECTION 4. Section 8.02, Chapter 183, Acts of the 64th
3-7 Legislature, 1975 (Article 6243e.1, Vernon's Texas Civil Statutes),
3-8 is amended to read as follows:
3-9 Sec. 8.02. ELECTION TO PARTICIPATE IN DROP. The election to
3-10 participate in the DROP shall be made in accordance with procedures
3-11 adopted by the board of trustees. The election may be made at any
3-12 time on or after the date the member becomes eligible for normal
3-13 service retirement under Section 5.01 of this Act or early
3-14 retirement under Section 5.05 of this Act and becomes effective on
3-15 the first day of the first month after the date of the election.
3-16 At the same time that a member makes an election to participate in
3-17 the DROP, the member must agree in writing to terminate service
3-18 with the fire department on a date not later than the fifth
3-19 [second] anniversary of the effective date of the election under
3-20 this section. An agreement to terminate service is binding on the
3-21 member and the fire department, except that the member may
3-22 terminate active service at any time before the date selected. An
3-23 election to participate in the DROP has no effect on either the
3-24 municipality's or the member's contributions under Section 10.01 of
3-25 this Act.
4-1 SECTION 5. Section 8.06, Chapter 183, Acts of the 64th
4-2 Legislature, 1975 (Article 6243e.1, Vernon's Texas Civil Statutes),
4-3 is amended to read as follows:
4-4 Sec. 8.06. ESTABLISHMENT OF DROP ACCOUNT AT RETIREMENT.
4-5 (a) In lieu of electing to participate in the DROP before actual
4-6 retirement, a member who is eligible for normal service retirement
4-7 or early retirement and who terminates or has terminated [may elect
4-8 to terminate] active service as a firefighter may [and] establish a
4-9 DROP account under this section.
4-10 (b) A member who is eligible to receive a service retirement
4-11 benefit under Section 5.06 of this Act may establish a DROP account
4-12 under this section on retiring under Section 5.06 of this Act.
4-13 (c) If a member [so] elects to participate in the DROP under
4-14 this section:
4-15 (1) the board of trustees shall cause to be credited
4-16 to a DROP account maintained within the fund for the benefit of
4-17 that person an amount equal to the credits that the member's DROP
4-18 account would have received, including interest, if the member had
4-19 established the DROP account after becoming eligible for [normal]
4-20 service retirement, but not more than five [two] years before the
4-21 effective date of the person's retirement;
4-22 (2) the date used in computations under Subdivision
4-23 (1) of this section as if the member had established the DROP
4-24 account on that date is the effective date of the member's election
4-25 to participate in the DROP;
5-1 (3) the member will receive payments from the member's
5-2 DROP account as the member may select under Section 8.05 of this
5-3 Act; and
5-4 (4) the member's DROP account shall be credited with
5-5 interest as provided by Section 8.05 of this Act.
5-6 SECTION 6. Section 9.04, Chapter 183, Acts of the 64th
5-7 Legislature, 1975 (Article 6243e.1, Vernon's Texas Civil Statutes),
5-8 is amended by amending the heading and Subsection (a) and adding
5-9 Subsection (d) to read as follows:
5-10 Sec. 9.04. COST-OF-LIVING ADJUSTMENT; OTHER ADJUSTMENTS.
5-11 (a) Except as provided by Section 5.05 of this Act, a [A] person
5-12 receiving a retirement or survivor's benefit under this Act is
5-13 entitled to an annual cost-of-living adjustment of that person's
5-14 benefit based on any increase in the Consumer Price Index for All
5-15 Urban Consumers as determined by the United States Department of
5-16 Labor since the last increase in benefits under this section.
5-17 (d) Retirement or survivor's benefits adjusted under
5-18 Subsection (a) of this section may be increased by an amount
5-19 determined by an affirmative vote of the board of trustees. An
5-20 adjustment may not be made under this subsection unless the board's
5-21 actuary has advised the board of trustees that the adjustment would
5-22 not impair the financial stability of the fund.
5-23 SECTION 7. Section 11.01, Chapter 183, Acts of the 64th
5-24 Legislature, 1975 (Article 6243e.1, Vernon's Texas Civil Statutes),
5-25 is amended to read as follows:
6-1 Sec. 11.01. PERMITTED INVESTMENTS. When the board of
6-2 trustees determines that there is in the fund a surplus exceeding
6-3 the reasonable, safe amount necessary to take care of the current
6-4 demands on the fund, the surplus, or so much of it as the board of
6-5 trustees considers prudent, may be invested in:
6-6 (1) direct obligations of or obligations the principal
6-7 and interest of which are guaranteed [or fully insured] by the
6-8 United States or its agencies or instrumentalities;
6-9 (2) [commercial paper rated as investment quality or
6-10 higher by a nationally recognized investment rating firm;]
6-11 [(3)] short-term investment funds, mutual funds, or
6-12 their equivalent[,] that[:]
6-13 [(A)] are rated as investment quality or higher
6-14 by a nationally recognized investment rating firm;
6-15 (3) [and]
6-16 [(B) do not exceed an average of 270 days to
6-17 maturity;]
6-18 [(4)] fully collateralized or direct repurchase
6-19 agreements, including direct and reverse security repurchase
6-20 agreements and security lending agreements that:
6-21 (A) have a defined termination date;
6-22 (B) are secured by obligations described by this
6-23 section or by cash; and
6-24 (C) are pledged with a third party selected or
6-25 approved by a majority vote of the board of trustees;
7-1 (4) [(5)] corporate bonds, including convertible
7-2 bonds, [and] collateralized mortgage obligations, and asset-backed
7-3 securities, rated as investment quality or higher by a nationally
7-4 recognized investment rating firm;
7-5 (5) [(6)] common stocks, [and] preferred stocks, and
7-6 convertible preferred stocks of companies incorporated in the
7-7 United States and foreign stocks that are designated in United
7-8 States dollars and that are registered with the Securities and
7-9 Exchange Commission and listed on a United States exchange or by
7-10 the National Association of Securities Dealers Automated
7-11 Quotations;
7-12 (6) [(7) major] foreign equity and fixed income
7-13 [market] investments; [and]
7-14 (7) mutual funds, common funds, and their equivalents
7-15 that contain only items listed in Subdivisions (1)-(6) of this
7-16 section; and
7-17 (8) convertible stocks and bonds recognized as
7-18 investment quality or higher by a nationally recognized investment
7-19 rating firm or by the investment manager.
7-20 SECTION 8. Section 11.03, Chapter 183, Acts of the 64th
7-21 Legislature, 1975 (Article 6243e.1, Vernon's Texas Civil Statutes),
7-22 is amended to read as follows:
7-23 Sec. 11.03. LIMITATIONS ON INVESTMENTS. The fund may not
7-24 own more than five percent of the voting stock of any one
7-25 corporation. Under an investment measure at market [cost]:
8-1 (1) total fixed-income investments should not
8-2 represent less than 30 [50 percent nor more than 80] percent of the
8-3 value of the investment portfolio;
8-4 (2) total investments in common stocks should not
8-5 represent [less than 20 percent nor] more than 70 [50] percent of
8-6 the value of the investment portfolio;
8-7 (3) total investments in common stocks and bonds of
8-8 foreign corporations may not represent more than 20 [five] percent
8-9 of the value of the investment portfolio; and
8-10 (4) total investments in any one corporation may not
8-11 represent more than five [three] percent of the value of the
8-12 investment portfolio.
8-13 SECTION 9. Subsection (c), Section 9.03, and Section 11.02,
8-14 Chapter 183, Acts of the 64th Legislature, 1975 (Article 6243e.1,
8-15 Vernon's Texas Civil Statutes), are repealed.
8-16 SECTION 10. This Act takes effect September 1, 1997.
8-17 SECTION 11. The importance of this legislation and the
8-18 crowded condition of the calendars in both houses create an
8-19 emergency and an imperative public necessity that the
8-20 constitutional rule requiring bills to be read on three several
8-21 days in each house be suspended, and this rule is hereby suspended.
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 192 passed the Senate on
February 27, 1997, by a viva-voce vote.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 192 passed the House on
April 18, 1997, by a non-record vote.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor