1-1 By: Barrientos S.B. No. 192
1-2 (In the Senate - Filed January 10, 1997; January 15, 1997,
1-3 read first time and referred to Committee on Intergovernmental
1-4 Relations; February 24, 1997, reported adversely, with favorable
1-5 Committee Substitute by the following vote: Yeas 11, Nays 0;
1-6 February 24, 1997, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 192 By: Moncrief
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to benefits under, eligibility for benefits under, and
1-11 investment of surplus funds of retirement systems for firefighters
1-12 in certain municipalities.
1-13 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-14 SECTION 1. Section 5.05, Chapter 183, Acts of the 64th
1-15 Legislature, 1975 (Article 6243e.1, Vernon's Texas Civil Statutes),
1-16 is amended to read as follows:
1-17 Sec. 5.05. EARLY RETIREMENT. (a) A member is eligible to
1-18 retire and receive a normal [reduced] service retirement annuity if
1-19 the member, while serving as a firefighter in the fire department:
1-20 (1) has attained the age of 45 [48] years and has at
1-21 least 10 years of service credit in the fund; or
1-22 (2) has at least 20 [23] years of service credit,
1-23 regardless of age.
1-24 (b) The retirement annuity of a person who retires under
1-25 this section after September 1, 1997, is the same as for normal
1-26 service retirement, but may not be increased under Section 9.04 of
1-27 this Act until the person would have met the requirements of
1-28 Section 5.01 of this Act if the person had remained in active
1-29 service as a firefighter [is a monthly payment equal to the payment
1-30 described by Section 5.04 of this Act, reduced according to tables
1-31 recommended by the board's actuary and adopted by the board of
1-32 trustees for early retirement].
1-33 SECTION 2. Section 7.02, Chapter 183, Acts of the 64th
1-34 Legislature, 1975 (Article 6243e.1, Vernon's Texas Civil Statutes),
1-35 is amended to read as follows:
1-36 Sec. 7.02. SURVIVING SPOUSE OF RETIREE. On the death of a
1-37 retiree, the retiree's surviving spouse[, if married to the retiree
1-38 at the time of the retiree's retirement,] is entitled to receive an
1-39 immediate monthly benefit from the fund of 75 percent of the
1-40 retirement benefit that was being paid to the retiree if the
1-41 spouse:
1-42 (1) was married to the retiree at the time of the
1-43 retiree's retirement; or
1-44 (2) married the retiree after the retiree's retirement
1-45 and was married to the retiree for at least 24 consecutive months.
1-46 SECTION 3. Section 7.04, Chapter 183, Acts of the 64th
1-47 Legislature, 1975 (Article 6243e.1, Vernon's Texas Civil Statutes),
1-48 is amended to read as follows:
1-49 Sec. 7.04. DURATION [TERMINATION] OF SPOUSE'S BENEFIT. The
1-50 [If, at the time of termination of employment with the fire
1-51 department, the deceased firefighter or retiree met the
1-52 requirements for normal retirement eligibility as provided by
1-53 Section 5.01 of this Act, the] benefit payable to a surviving
1-54 spouse is payable throughout the surviving spouse's remaining
1-55 lifetime. A surviving spouse whose benefit was terminated under
1-56 this section as it existed before September 1, 1997, is entitled to
1-57 receive a benefit beginning on the date the surviving spouse files
1-58 an application for resumption of benefits with the board of
1-59 trustees, but is not entitled to receive a benefit for the period
1-60 in which the benefit was terminated under the former law.
1-61 [Otherwise, the benefit ceases on the earlier of the spouse's death
1-62 or marriage to any other person.]
1-63 SECTION 4. Section 8.02, Chapter 183, Acts of the 64th
1-64 Legislature, 1975 (Article 6243e.1, Vernon's Texas Civil Statutes),
2-1 is amended to read as follows:
2-2 Sec. 8.02. ELECTION TO PARTICIPATE IN DROP. The election to
2-3 participate in the DROP shall be made in accordance with procedures
2-4 adopted by the board of trustees. The election may be made at any
2-5 time on or after the date the member becomes eligible for normal
2-6 service retirement under Section 5.01 of this Act or early
2-7 retirement under Section 5.05 of this Act and becomes effective on
2-8 the first day of the first month after the date of the election.
2-9 At the same time that a member makes an election to participate in
2-10 the DROP, the member must agree in writing to terminate service
2-11 with the fire department on a date not later than the fifth
2-12 [second] anniversary of the effective date of the election under
2-13 this section. An agreement to terminate service is binding on the
2-14 member and the fire department, except that the member may
2-15 terminate active service at any time before the date selected. An
2-16 election to participate in the DROP has no effect on either the
2-17 municipality's or the member's contributions under Section 10.01 of
2-18 this Act.
2-19 SECTION 5. Section 8.06, Chapter 183, Acts of the 64th
2-20 Legislature, 1975 (Article 6243e.1, Vernon's Texas Civil Statutes),
2-21 is amended to read as follows:
2-22 Sec. 8.06. ESTABLISHMENT OF DROP ACCOUNT AT RETIREMENT.
2-23 (a) In lieu of electing to participate in the DROP before actual
2-24 retirement, a member who is eligible for normal service retirement
2-25 or early retirement and who terminates or has terminated [may elect
2-26 to terminate] active service as a firefighter may [and] establish a
2-27 DROP account under this section.
2-28 (b) A member who is eligible to receive a service retirement
2-29 benefit under Section 5.06 of this Act may establish a DROP account
2-30 under this section on retiring under Section 5.06 of this Act.
2-31 (c) If a member [so] elects to participate in the DROP under
2-32 this section:
2-33 (1) the board of trustees shall cause to be credited
2-34 to a DROP account maintained within the fund for the benefit of
2-35 that person an amount equal to the credits that the member's DROP
2-36 account would have received, including interest, if the member had
2-37 established the DROP account after becoming eligible for [normal]
2-38 service retirement, but not more than five [two] years before the
2-39 effective date of the person's retirement;
2-40 (2) the date used in computations under Subdivision
2-41 (1) of this section as if the member had established the DROP
2-42 account on that date is the effective date of the member's election
2-43 to participate in the DROP;
2-44 (3) the member will receive payments from the member's
2-45 DROP account as the member may select under Section 8.05 of this
2-46 Act; and
2-47 (4) the member's DROP account shall be credited with
2-48 interest as provided by Section 8.05 of this Act.
2-49 SECTION 6. Section 9.04, Chapter 183, Acts of the 64th
2-50 Legislature, 1975 (Article 6243e.1, Vernon's Texas Civil Statutes),
2-51 is amended by amending the heading and Subsection (a) and adding
2-52 Subsection (d) to read as follows:
2-53 Sec. 9.04. COST-OF-LIVING ADJUSTMENT; OTHER ADJUSTMENTS.
2-54 (a) Except as provided by Section 5.05 of this Act, a [A] person
2-55 receiving a retirement or survivor's benefit under this Act is
2-56 entitled to an annual cost-of-living adjustment of that person's
2-57 benefit based on any increase in the Consumer Price Index for All
2-58 Urban Consumers as determined by the United States Department of
2-59 Labor since the last increase in benefits under this section.
2-60 (d) Retirement or survivor's benefits adjusted under
2-61 Subsection (a) of this section may be increased by an amount
2-62 determined by an affirmative vote of the board of trustees. An
2-63 adjustment may not be made under this subsection unless the board's
2-64 actuary has advised the board of trustees that the adjustment would
2-65 not impair the financial stability of the fund.
2-66 SECTION 7. Section 11.01, Chapter 183, Acts of the 64th
2-67 Legislature, 1975 (Article 6243e.1, Vernon's Texas Civil Statutes),
2-68 is amended to read as follows:
2-69 Sec. 11.01. PERMITTED INVESTMENTS. When the board of
3-1 trustees determines that there is in the fund a surplus exceeding
3-2 the reasonable, safe amount necessary to take care of the current
3-3 demands on the fund, the surplus, or so much of it as the board of
3-4 trustees considers prudent, may be invested in:
3-5 (1) direct obligations of or obligations the principal
3-6 and interest of which are guaranteed [or fully insured] by the
3-7 United States or its agencies or instrumentalities;
3-8 (2) [commercial paper rated as investment quality or
3-9 higher by a nationally recognized investment rating firm;]
3-10 [(3)] short-term investment funds, mutual funds, or
3-11 their equivalent[,] that[:]
3-12 [(A)] are rated as investment quality or higher
3-13 by a nationally recognized investment rating firm;
3-14 (3) [and]
3-15 [(B) do not exceed an average of 270 days to
3-16 maturity;]
3-17 [(4)] fully collateralized or direct repurchase
3-18 agreements, including direct and reverse security repurchase
3-19 agreements and security lending agreements that:
3-20 (A) have a defined termination date;
3-21 (B) are secured by obligations described by this
3-22 section or by cash; and
3-23 (C) are pledged with a third party selected or
3-24 approved by a majority vote of the board of trustees;
3-25 (4) [(5)] corporate bonds, including convertible
3-26 bonds, [and] collateralized mortgage obligations, and asset-backed
3-27 securities, rated as investment quality or higher by a nationally
3-28 recognized investment rating firm;
3-29 (5) [(6)] common stocks, [and] preferred stocks, and
3-30 convertible preferred stocks of companies incorporated in the
3-31 United States and foreign stocks that are designated in United
3-32 States dollars and that are registered with the Securities and
3-33 Exchange Commission and listed on a United States exchange or by
3-34 the National Association of Securities Dealers Automated
3-35 Quotations;
3-36 (6) [(7) major] foreign equity and fixed income
3-37 [market] investments; [and]
3-38 (7) mutual funds, common funds, and their equivalents
3-39 that contain only items listed in Subdivisions (1)-(6) of this
3-40 section; and
3-41 (8) convertible stocks and bonds recognized as
3-42 investment quality or higher by a nationally recognized investment
3-43 rating firm or by the investment manager.
3-44 SECTION 8. Section 11.03, Chapter 183, Acts of the 64th
3-45 Legislature, 1975 (Article 6243e.1, Vernon's Texas Civil Statutes),
3-46 is amended to read as follows:
3-47 Sec. 11.03. LIMITATIONS ON INVESTMENTS. The fund may not
3-48 own more than five percent of the voting stock of any one
3-49 corporation. Under an investment measure at market [cost]:
3-50 (1) total fixed-income investments should not
3-51 represent less than 30 [50 percent nor more than 80] percent of the
3-52 value of the investment portfolio;
3-53 (2) total investments in common stocks should not
3-54 represent [less than 20 percent nor] more than 70 [50] percent of
3-55 the value of the investment portfolio;
3-56 (3) total investments in common stocks and bonds of
3-57 foreign corporations may not represent more than 20 [five] percent
3-58 of the value of the investment portfolio; and
3-59 (4) total investments in any one corporation may not
3-60 represent more than five [three] percent of the value of the
3-61 investment portfolio.
3-62 SECTION 9. Subsection (c), Section 9.03, and Section 11.02,
3-63 Chapter 183, Acts of the 64th Legislature, 1975 (Article 6243e.1,
3-64 Vernon's Texas Civil Statutes), are repealed.
3-65 SECTION 10. This Act takes effect September 1, 1997.
3-66 SECTION 11. The importance of this legislation and the
3-67 crowded condition of the calendars in both houses create an
3-68 emergency and an imperative public necessity that the
3-69 constitutional rule requiring bills to be read on three several
4-1 days in each house be suspended, and this rule is hereby suspended.
4-2 * * * * *