1-1 By: Armbrister, Barrientos S.B. No. 1102
1-2 (In the Senate - Filed March 10, 1997; March 13, 1997, read
1-3 first time and referred to Committee on State Affairs;
1-4 April 15, 1997, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 13, Nays 0; April 15, 1997,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 1102 By: Armbrister
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to systems and programs administered by the Employees
1-11 Retirement System of Texas.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Subsection (g), Section 805.002, Government Code,
1-14 is amended to read as follows:
1-15 (g) To be eligible to make a transfer pursuant to Subsection
1-16 (d), a person must be the same beneficiary under both retirement
1-17 systems, except that if the only service credited in the system
1-18 from which service is being transferred is reinstated service and
1-19 no beneficiary designation was made at or after the time of
1-20 reinstatement, the beneficiary in the receiving system may make the
1-21 election.
1-22 SECTION 2. Subdivisions (8) and (9), Section 811.001,
1-23 Government Code, are amended to read as follows:
1-24 (8) "Custodial officer" means a member of the
1-25 retirement system who is employed by the institutional division or
1-26 the state jail division of the Texas Department of Criminal Justice
1-27 and certified by the department as having a normal job assignment
1-28 that requires frequent or infrequent regularly planned contact
1-29 with, and in close proximity to, inmates of the institutional
1-30 division or inmates or defendants confined in the state jail
1-31 division without the protection of bars, doors, security screens,
1-32 or similar devices and includes assignments normally involving
1-33 supervision or the potential for supervision of inmates in inmate
1-34 housing areas, educational or recreational facilities, industrial
1-35 shops, kitchens, laundries, medical areas, agricultural shops or
1-36 fields, or in other areas on or away from property of the
1-37 institutional division or the state jail division. The term
1-38 includes a member who transferred from the Texas Department of
1-39 Criminal Justice to the managed health care unit of The University
1-40 of Texas Medical Branch on September 1, 1993, elected at that time
1-41 to retain membership in the retirement system, and is certified by
1-42 the managed health care unit as having a normal job assignment
1-43 described by this subdivision.
1-44 (9) "Law enforcement officer" means a member of the
1-45 retirement system who has been commissioned as a law enforcement
1-46 officer by the Department of Public Safety, the Texas Alcoholic
1-47 Beverage Commission, [the State Purchasing and General Services
1-48 Commission, Capitol Area Security Force,] the State Board of
1-49 Pharmacy, or the Parks and Wildlife Department and who is
1-50 recognized as a commissioned law enforcement officer by the
1-51 Commission on Law Enforcement Officer Standards and Education.
1-52 SECTION 3. Section 813.104, Government Code, is amended to
1-53 read as follows:
1-54 Sec. 813.104. ALTERNATIVE PAYMENTS TO ESTABLISH OR
1-55 REESTABLISH SERVICE CREDIT. (a) The board of trustees may adopt
1-56 rules to provide procedures for making installment payments to
1-57 establish or reestablish credit in the retirement system as
1-58 alternatives to lump-sum payments otherwise authorized or required
1-59 by this subtitle. The methods may include payment by payroll
1-60 deduction. [A member who is otherwise eligible may establish or
1-61 reestablish service creditable in the retirement system by making
1-62 payments as provided by this section in lieu of lump-sum payments
1-63 otherwise authorized or required by this subtitle.]
1-64 (b) [A payment authorized by this section consists of the
2-1 contribution required to establish or reestablish at least one year
2-2 of service credit, including any required interest and membership
2-3 fees, except that a person's last in a series of payments under
2-4 this section may be for a period of remaining service that is less
2-5 than one year.]
2-6 [(c) The retirement system shall grant the applicable amount
2-7 of service credit after each payment is made under this section.]
2-8 [(d)] Except as provided by Subsection (c) [(e)], payments
2-9 may not be made under a rule adopted under this section:
2-10 (1) to establish or reestablish service credit of a
2-11 person who has retired or died; or
2-12 (2) to establish current service under Section
2-13 813.201.
2-14 (c) Under a rule adopted under this section, the [(e) The]
2-15 designated beneficiary of a deceased member or, if none exists, the
2-16 personal representative of the decedent's estate may establish or
2-17 reestablish service for which the member was eligible at the time
2-18 of death if the establishment of the service would result in the
2-19 payment of a death benefit annuity or an increase in the amount of
2-20 a death benefit annuity.
2-21 (d) [(f)] The payment for the establishment or
2-22 reestablishment of service under Subsection (c) [(e)] must be made
2-23 in a lump sum and completed before the first payment of a death
2-24 benefit annuity, but not later than the 60th day after the date the
2-25 retirement system receives notice of the death.
2-26 [(g) The retirement system may adopt rules to administer
2-27 this section.]
2-28 SECTION 4. Section 813.106, Government Code, is amended to
2-29 read as follows:
2-30 Sec. 813.106. SERVICE NOT PREVIOUSLY ESTABLISHED. The state
2-31 shall make contributions for service not previously established
2-32 that is established under Section 813.104 [or 813.105] in the
2-33 amount provided by Section 813.202(c) [813.202(e)] for membership
2-34 service or the amount provided by Section 813.302(d) for military
2-35 service, as applicable. The state contributions will be made at
2-36 the time the service credit is granted.
2-37 SECTION 5. Section 813.202, Government Code, is amended to
2-38 read as follows:
2-39 Sec. 813.202. MEMBERSHIP SERVICE NOT PREVIOUSLY ESTABLISHED.
2-40 (a) Except as provided by Section 813.402 [and Subsection (b)],
2-41 any member may establish service credit in the retirement system
2-42 for membership service not previously established.
2-43 (b) A [Membership service not previously credited because of
2-44 a waiting period required before September 1, 1958, may be
2-45 established only by a contributing member.]
2-46 [(c) Except as provided by Subsection (d), a] member may
2-47 establish credit under this section by depositing with the
2-48 retirement system in a lump sum a contribution computed as provided
2-49 by Section 813.404 or 813.505, plus all membership fees due, plus
2-50 interest computed on the basis of the state fiscal year at an
2-51 annual rate of 10 percent from the date the service was performed
2-52 to the date of deposit.
2-53 (c) [(d) A member claiming credit for service not previously
2-54 creditable because of a waiting period required before September 1,
2-55 1958, is exempt from the payment of interest on the required
2-56 contribution if the member establishes the credit before the first
2-57 anniversary of the person's becoming a member of the retirement
2-58 system.]
2-59 [(e)] The state shall contribute for service established
2-60 under this section an amount in the same ratio to the member's
2-61 contribution for the service as the state's contribution bears to
2-62 the contribution for current service required of a member of the
2-63 employee class at the time the service is established under this
2-64 section. The state's contribution must be paid from the fund or
2-65 account from which the member receives compensation at the time the
2-66 service is established or, if the member does not hold a position
2-67 at the time the service is established, from the fund or account
2-68 from which the member received compensation when the member most
2-69 recently held a position.
3-1 SECTION 6. Subsection (b), Section 813.301, Government Code,
3-2 is amended to read as follows:
3-3 (b) A member may [not] establish one month of service credit
3-4 for each month or fraction of a month of duty, but not more than 60
3-5 months of service credit in the retirement system for military
3-6 service.
3-7 SECTION 7. Section 813.402, Government Code, is amended to
3-8 read as follows:
3-9 Sec. 813.402. CREDIT FOR YEAR IN WHICH ELIGIBLE FOR OFFICE.
3-10 (a) A [contributing] member may establish service credit in the
3-11 elected class for any calendar year during any part of which:
3-12 (1) the member held an office included in that class;
3-13 or
3-14 (2) the member was eligible to take the oath for an
3-15 office included in that class.
3-16 (b) A [contributing] member may establish credit under this
3-17 section by depositing with the retirement system in a lump sum a
3-18 contribution computed as provided by Section 813.404, plus all
3-19 membership fees due, plus interest computed at an annual rate of 10
3-20 percent from the fiscal year in which the service was performed to
3-21 the date of deposit.
3-22 SECTION 8. Section 813.504, Government Code, is amended to
3-23 read as follows:
3-24 Sec. 813.504. ELIGIBILITY FOR SERVICE CREDIT PREVIOUSLY
3-25 CANCELED. (a) A member of the employee class may reestablish
3-26 service credit previously canceled in the retirement system if at
3-27 least six months have elapsed since the end of the month in which
3-28 the cancellation became effective and the member[, after
3-29 cancellation of the credit,] holds a position [for six months] that
3-30 is included in the employee class.
3-31 (b) A former member of the employee class who does not
3-32 receive a disability retirement annuity from the retirement system
3-33 but who presents evidence satisfactory to the retirement system
3-34 that the person is disabled and cannot resume state employment may
3-35 reestablish service credit previously canceled in the retirement
3-36 system.
3-37 SECTION 9. Subsections (a) and (c), Section 813.506,
3-38 Government Code, are amended to read as follows:
3-39 (a) The Texas Department of Criminal Justice and the managed
3-40 health care unit of The University of Texas Medical Branch by rule
3-41 shall adopt standards for determining eligibility for service
3-42 credit as a custodial officer, based on the need to encourage early
3-43 retirement of persons whose duties are hazardous and require them
3-44 to have routine contact with inmates of or defendants confined in
3-45 the state jail division of the Texas Department of Criminal Justice
3-46 on a regular basis.
3-47 (c) The Texas Department of Criminal Justice or the managed
3-48 health care unit of The University of Texas Medical Branch, as
3-49 applicable, shall determine a person's eligibility to receive
3-50 credit as a custodial officer. A determination of the department
3-51 or unit may not be appealed by an employee but is subject to change
3-52 by the retirement system.
3-53 SECTION 10. Subsection (a), Section 813.509, Government
3-54 Code, is amended to read as follows:
3-55 (a) A member who holds a position included in the employee
3-56 class of membership during the month that includes the effective
3-57 date of the member's retirement and who retires based on service or
3-58 a disability is entitled to service credit in the retirement system
3-59 for the member's sick leave that has accumulated and is unused on
3-60 the last day of employment. Sick leave is creditable in the
3-61 retirement system at the rate of one month of service credit for
3-62 each 20 days, or 160 hours, of accumulated sick leave and one month
3-63 for each fraction of days or hours remaining after division of the
3-64 total hours of accumulated sick leave by 160. [An increment of
3-65 less than 20 days is not creditable.]
3-66 SECTION 11. Subchapter F, Chapter 813, Government Code, is
3-67 amended by adding Section 813.511 to read as follows:
3-68 Sec. 813.511. SERVICE CREDIT FOR CERTAIN GOVERNMENTAL
3-69 SERVICE. (a) A contributing member of the employee class may
4-1 establish not more than 60 months of equivalent membership service
4-2 credit in that class for service that was performed as an elected
4-3 officeholder from this state and that was previously established
4-4 but not currently credited in a retirement system that is a
4-5 qualified plan under Section 401(a) of the Internal Revenue Code of
4-6 1986 (26 U.S.C. Section 401(a)) and that is administered by the
4-7 federal government.
4-8 (b) An eligible member may establish credit under this
4-9 section by depositing with the retirement system:
4-10 (1) a contribution based on the member's compensation
4-11 for the first full month after August 31, 1997, and computed for
4-12 the number of months for which credit is sought at the combined
4-13 rates required during the period of the service for the state and
4-14 employee members of the retirement system for new service;
4-15 (2) interest computed on the basis of the state fiscal
4-16 year at an annual rate of 10 percent from the date the service was
4-17 performed to the date of deposit; and
4-18 (3) any membership fees required of members of the
4-19 retirement system during the period of service.
4-20 (c) The retirement system shall deposit the compensation
4-21 contribution in the member's individual account in the employees
4-22 saving account, interest in the state accumulation account, and
4-23 membership fees in the expense account.
4-24 (d) The retirement system shall determine the amount to be
4-25 deposited in each case and may not grant service credit under this
4-26 section until the member provides proof of eligibility for the
4-27 credit that is satisfactory to the retirement system.
4-28 (e) If service for which credit is established under this
4-29 section is subsequently credited in another qualified plan, service
4-30 credited under this section may not be used in determining benefits
4-31 under this subtitle.
4-32 SECTION 12. Subsection (a), Section 814.005, Government
4-33 Code, is amended to read as follows:
4-34 (a) A person may, on a form prescribed by and filed with the
4-35 retirement system, waive all or a portion of any benefits from the
4-36 retirement system to which the person is entitled. The retirement
4-37 system also shall give effect as a waiver to a full or partial
4-38 disclaimer executed in accordance with Section 37A, Texas Probate
4-39 Code, unless the benefit to be disclaimed is a lifetime annuity. A
4-40 person may revoke a waiver of benefits in the same manner as the
4-41 original waiver was made, unless the original waiver by its terms
4-42 was made irrevocable.
4-43 SECTION 13. Section 814.104, Government Code, is amended to
4-44 read as follows:
4-45 Sec. 814.104. ELIGIBILITY OF MEMBER FOR SERVICE RETIREMENT.
4-46 (a) Except as provided by Section 814.102 or by rule adopted under
4-47 Section 813.304(d) or 803.202(2), a member who has service credit
4-48 in the retirement system is eligible to retire and receive a
4-49 service retirement annuity, if the member:
4-50 (1) is at least 60 years old and has 5 years of
4-51 service credit in the employee class; or
4-52 (2) is at least 50 but less than 60 years old and the
4-53 sum of the member's age and amount of service credit in the
4-54 retirement system, including months of age and credit, equals the
4-55 number 80 [is at least 55 years old and has 25 years of service
4-56 credit in the retirement system; or]
4-57 [(3) is at least 50 years old and has 30 years of
4-58 service credit in the retirement system].
4-59 (b) A member who is at least 55 years old and who has at
4-60 least 10 years of service credit as a commissioned peace officer
4-61 engaged in criminal law enforcement activities of the Department of
4-62 Public Safety, the Texas Alcoholic Beverage Commission, [the State
4-63 Purchasing and General Services Commission Capitol Area Security
4-64 Force,] the State Board of Pharmacy, or the Parks and Wildlife
4-65 Department, as an employee of the Railroad Commission of Texas who
4-66 is licensed by the Commission on Law Enforcement Officer Standards
4-67 and Education and has served at least five years as an investigator
4-68 for the oil field theft detection division, or as a custodial
4-69 officer, is eligible to retire and receive a service retirement
5-1 annuity.
5-2 SECTION 14. Section 814.105, Government Code, is amended by
5-3 adding Subsection (c) to read as follows:
5-4 (c) The legislature determines that the percentage used to
5-5 compute benefits under this section should be increased permanently
5-6 when it is actuarially sound to do so. The board of trustees may
5-7 increase the percentage to a rate that does not exceed 2.25 percent
5-8 for each year of service credit in the employee class of membership
5-9 if the actuary certifies that the action complies with Section
5-10 811.006. The board shall notify the governor, lieutenant governor,
5-11 and speaker of the house of representatives before adopting a rate
5-12 under this subsection.
5-13 SECTION 15. Subsection (a), Section 814.1081, Government
5-14 Code, is amended to read as follows:
5-15 (a) A person who retired and selected an optional service
5-16 retirement annuity approved by the board of trustees or an optional
5-17 service retirement annuity described by Section 814.108(c)(1) or
5-18 (c)(2)[, and who designated a person as beneficiary who was not at
5-19 the time of designation and is not currently the retiree's spouse
5-20 or child] may change the optional annuity selection to the
5-21 selection of a standard service retirement annuity by filing with
5-22 the retirement system a request to change the annuity selection, if
5-23 the retiree designated a person as beneficiary who:
5-24 (1) was not at the time of designation and is not
5-25 currently the retiree's spouse or child; or
5-26 (2) has executed since the designation a transfer and
5-27 release, approved by a court of competent jurisdiction pursuant to
5-28 a divorce decree, of the beneficiary's interest in the annuity and
5-29 is not currently the retiree's spouse or child.
5-30 SECTION 16. Subsection (d), Section 815.003, Government
5-31 Code, is amended to read as follows:
5-32 (d) The board shall hold elections for the members and
5-33 retirees to nominate and elect a trustee before August 31 [1] of
5-34 each odd-numbered year. The board shall make ballots available to
5-35 members of the retirement system and retirees and all votes must be
5-36 cast on those ballots.
5-37 SECTION 17. Subchapter B, Chapter 815, Government Code, is
5-38 amended by adding Section 815.106 to read as follows:
5-39 Sec. 815.106. INFORMATION TO LEGISLATURE. (a) The
5-40 retirement system may not use any money under its control to
5-41 influence the outcome of an election or to support the passage or
5-42 defeat of legislation.
5-43 (b) This section does not prohibit the board of trustees, as
5-44 fiduciaries of the trust fund and as trustees of other programs
5-45 administered by the board, or the officers or employees of the
5-46 retirement system, as designees of the board, from making
5-47 recommendations to the legislature concerning the actuarial
5-48 soundness of a retirement system administered by the board, the
5-49 fiscal or legal implications of proposed legislation, or statutory
5-50 changes designed to more efficiently administer and effectuate the
5-51 purposes of a retirement system or other program administered by
5-52 the board. In addition, the board or an officer or employee of the
5-53 retirement system may provide to a member of the legislature or a
5-54 legislative committee, at the request of the member or committee,
5-55 any factual information that is not made confidential by law.
5-56 SECTION 18. Subsection (b), Section 815.303, Government
5-57 Code, is amended to read as follows:
5-58 (b) To be eligible to lend securities under this section, a
5-59 bank or brokerage firm must:
5-60 (1) be experienced in the operation of a fully secured
5-61 securities loan program;
5-62 (2) maintain adequate capital in the prudent judgment
5-63 of the retirement system to assure the safety of the securities;
5-64 (3) execute an indemnification agreement satisfactory
5-65 in form and content to the retirement system fully indemnifying the
5-66 retirement system against loss resulting from borrower default in
5-67 its operation of a securities loan program for the system's
5-68 securities; and
5-69 (4) require any securities broker or dealer to whom it
6-1 lends securities belonging to the retirement system to deliver to
6-2 and maintain with the custodian collateral in the form of cash or
6-3 United States government securities in an amount equal to not less
6-4 than 100 percent of the market value, from time to time, of the
6-5 loaned securities.
6-6 SECTION 19. Section 815.307, Government Code, is amended to
6-7 read as follows:
6-8 Sec. 815.307. DUTY OF CARE. The assets of the retirement
6-9 system shall be invested and reinvested without distinction as to
6-10 their source in accordance with Section 67, Article XVI, Texas
6-11 Constitution. Investment and management decisions concerning
6-12 individual investments shall be evaluated not in isolation but in
6-13 the context of the investment portfolio as a whole and as part of
6-14 an overall investment strategy consistent with the investment
6-15 objectives of the retirement system. [In making investments for
6-16 the retirement system, the board of trustees or the executive
6-17 director shall exercise the judgment and care, under the
6-18 circumstances prevailing at the time of the investment, that
6-19 persons of ordinary prudence, discretion, and intelligence exercise
6-20 in the management of their own affairs, not in speculation but when
6-21 making a permanent disposition of their funds, considering the
6-22 probable income from the disposition and the probable safety of
6-23 their capital.]
6-24 SECTION 20. Subsection (a), Section 815.403, Government
6-25 Code, is amended to read as follows:
6-26 (a) During each fiscal year, the state shall contribute to
6-27 the retirement system:
6-28 (1) an amount equal to 7.4 percent of the total
6-29 compensation of all members of the retirement system for that year;
6-30 (2) money to pay lump-sum death benefits for retirees
6-31 under Section 814.501;
6-32 (3) an amount for the law enforcement and custodial
6-33 officer supplemental retirement fund equal to 2.13 percent of the
6-34 aggregate state compensation of all custodial and law enforcement
6-35 officers for that year;
6-36 (4) money necessary for the administration of the law
6-37 enforcement and custodial officer supplemental retirement fund; and
6-38 (5) money for service credit not previously
6-39 established, as provided by Section 813.202(c) [813.202(e)] or
6-40 813.302(d).
6-41 SECTION 21. Subchapter F, Chapter 815, Government Code, is
6-42 amended by adding Section 815.5072 to read as follows:
6-43 Sec. 815.5072. EXCESS BENEFIT ARRANGEMENT. (a) A separate,
6-44 nonqualified, unfunded excess benefit arrangement is created
6-45 outside the trust fund of the retirement system. This excess
6-46 benefit arrangement shall be administered as a governmental excess
6-47 benefit arrangement under Section 415(m) of the Internal Revenue
6-48 Code of 1986 (26 U.S.C. Section 415(m)). The purpose of the excess
6-49 benefit arrangement is to pay to annuitants of the retirement
6-50 system benefits otherwise payable by the retirement system that
6-51 exceed the limitations on benefits imposed by Section 415(b)(1)(A)
6-52 of the Internal Revenue Code of 1986 (26 U.S.C. Section
6-53 415(b)(1)(A)).
6-54 (b) The board of trustees is responsible for the
6-55 administration of this arrangement. Except as otherwise provided
6-56 by this section, the board has the same rights, duties, and
6-57 responsibilities concerning the excess benefit arrangement as it
6-58 has to the trust fund.
6-59 (c) Benefits under this section are exempt from execution to
6-60 the same extent as provided by Section 811.005, except that the
6-61 benefits are completely unassignable. Contributions to this
6-62 arrangement are not held in trust and may not be commingled with
6-63 other funds of the retirement system.
6-64 (d) An annuitant is entitled to a monthly benefit under this
6-65 section in an amount equal to the amount by which the benefit
6-66 otherwise payable by the retirement system has been reduced by the
6-67 limitation on benefits imposed by Section 415(b)(1)(A) of the
6-68 Internal Revenue Code of 1986 (26 U.S.C. Section 415(b)(1)(A)).
6-69 The benefit payable by this arrangement is payable at the times and
7-1 in the form that the benefit payable under the trust fund is paid.
7-2 (e) The benefit payable under this section shall be paid
7-3 from state contributions that otherwise would be made to the trust
7-4 fund under Section 815.403. In lieu of deposit in the state
7-5 accumulation account, an amount determined by the retirement system
7-6 to be necessary to pay benefits under this section shall be paid
7-7 monthly to the credit of a dedicated account in the general revenue
7-8 fund maintained only for the excess benefit arrangement. The
7-9 account may include amounts needed to pay reasonable and necessary
7-10 expenses of administering this arrangement. The monthly amount to
7-11 be paid to the credit of the account shall be transferred to the
7-12 account at least 15 days before the date of a monthly disbursement
7-13 under this section.
7-14 (f) The board of trustees may adopt rules governing the
7-15 excess benefit arrangement that are necessary for the efficient
7-16 administration of the arrangement in compliance with Section 415(m)
7-17 of the Internal Revenue Code of 1986 (26 U.S.C. Section 415(m)).
7-18 SECTION 22. Subsection (a), Section 815.510, Government
7-19 Code, is amended to read as follows:
7-20 (a) The Employees Retirement System of Texas shall submit a
7-21 report not later than the 25th day of the month following the end
7-22 of each fiscal year to the governor, the lieutenant governor, the
7-23 speaker of the house of representatives, the executive director of
7-24 the State Pension Review Board, the appropriate oversight
7-25 committees of the house and senate, and the Legislative Budget
7-26 Board. The report shall include the following:
7-27 (1) the current end-of-fiscal-year market value of the
7-28 trust fund;
7-29 (2) [the current book value of the trust fund;]
7-30 [(3)] the asset allocations of the trust fund
7-31 expressed in percentages of stocks, fixed income, cash, or other
7-32 financial investments; and
7-33 (3) [(4)] the investment performance of the trust fund
7-34 utilizing accepted industry measurement standards.
7-35 SECTION 23. Subchapter F, Chapter 815, Government Code, is
7-36 amended by adding Section 815.512 to read as follows:
7-37 Sec. 815.512. PROTECTION FROM DOUBLE OR MULTIPLE LIABILITY.
7-38 The executive director may cause a suit concerning a claim to be
7-39 filed on behalf of the retirement system in a district court in
7-40 Travis County to protect the system from double or multiple
7-41 liability, if the executive director determines that a claim may
7-42 expose the retirement system to such liability.
7-43 SECTION 24. (a) Annuities that are described by Section
7-44 814.107, 814.207, or 814.305, Government Code, or Subsection (a),
7-45 Section 814.601, Government Code, and are based on service
7-46 retirements, disability retirements, or deaths that occurred or
7-47 occur after August 31, 1996, but before September 1, 1999, are
7-48 increased by 12.5 percent.
7-49 (b) The increase in annuities under Subsection (a) of this
7-50 section is payable beginning with the first monthly payments of the
7-51 annuities that become due after the effective date of this Act.
7-52 (c) Except as provided by Subsection (d) of this section,
7-53 the board of trustees of the retirement system shall pay the
7-54 increased annuities provided by this section from the retirement
7-55 annuity reserve account of the retirement system and may transfer
7-56 to that account from the state accumulation account of the
7-57 retirement system any portion of the amount that exceeds the amount
7-58 in the retirement annuity reserve account available to finance the
7-59 increases in benefits, and that is actuarially determined to be
7-60 necessary to finance the increases, for the duration of the
7-61 annuities to which the increases apply.
7-62 (d) The increase in benefits payable to a law enforcement or
7-63 custodial officer who retired before the age of 50 or for service
7-64 established under Section 813.509, Government Code, is payable from
7-65 the law enforcement and custodial officer supplemental retirement
7-66 fund.
7-67 (e) The increase provided by Subsection (a) of this section
7-68 shall be computed on the service percentage value described by
7-69 Subsection (a), Section 814.105, Government Code.
8-1 SECTION 25. The board of trustees of the Employees
8-2 Retirement System of Texas shall authorize a supplemental payment
8-3 under Subsection (d), Section 814.603, Government Code, to be made
8-4 in the fiscal year beginning September 1, 1997, if the conditions
8-5 required by that subsection are met.
8-6 SECTION 26. Subsection (c), Section 830.002, Government
8-7 Code, is amended to read as follows:
8-8 (c) The Employees Retirement System of Texas [Higher
8-9 Education Coordinating Board] shall develop policies, practices,
8-10 and procedures as necessary in accordance with applicable statutes
8-11 to provide greater uniformity in the administration of the
8-12 retirement annuity insurance program available to employees of
8-13 Texas state colleges and universities through the optional
8-14 retirement program.
8-15 SECTION 27. Section 830.004, Government Code, is amended by
8-16 adding Subsection (c) to read as follows:
8-17 (c) An institution of higher education may establish a
8-18 governmental excess benefit arrangement as provided by Section
8-19 415(m) of the Internal Revenue Code of 1986 (26 U.S.C. Section
8-20 415(m)) for the purpose of providing to participants in the
8-21 optional retirement program any portion of a participant's benefits
8-22 that would otherwise be payable under the terms of the program
8-23 except for the limitation on benefits imposed by Section 415 of the
8-24 Internal Revenue Code of 1986 (26 U.S.C. Section 415). The
8-25 governing board of an institution of higher education may take any
8-26 action necessary to establish and implement a governmental excess
8-27 benefit arrangement authorized in accordance with this subsection.
8-28 SECTION 28. Section 830.006, Government Code, is amended to
8-29 read as follows:
8-30 Sec. 830.006. REPORTS FROM INSTITUTIONS. (a) The governing
8-31 board of each institution of higher education[, other than the
8-32 Texas Higher Education Coordinating Board,] shall annually submit a
8-33 report to the Employees Retirement System of Texas [coordinating
8-34 board] that includes information concerning the number of
8-35 participants and eligible positions and the amount of
8-36 contributions.
8-37 (b) The governing board of each institution required to file
8-38 a report under Subsection (a) shall keep records, make
8-39 certifications, and furnish to the Employees Retirement System of
8-40 Texas [Higher Education Coordinating Board] information and reports
8-41 as required by the retirement system [coordinating board] to enable
8-42 it to carry out its functions under this subtitle.
8-43 [(c) The Texas Higher Education Coordinating Board shall
8-44 prepare the report required by Subsection (a) and shall maintain
8-45 the information required by Subsection (b) with respect to its own
8-46 employees.]
8-47 SECTION 29. Subsection (b), Section 830.101, Government
8-48 Code, is amended to read as follows:
8-49 (b) Eligibility to participate in the optional retirement
8-50 program is subject to rules adopted by the Employees Retirement
8-51 System of Texas [Higher Education Coordinating Board].
8-52 SECTION 30. Subsection (d), Section 833.103, Government
8-53 Code, is amended to read as follows:
8-54 (d) A member may [not] establish one month of service credit
8-55 for each month or fraction of a month of duty, but not more than 48
8-56 months of service credit in the retirement system for military
8-57 service.
8-58 SECTION 31. Section 833.105, Government Code, is amended to
8-59 read as follows:
8-60 Sec. 833.105. ALTERNATIVE PAYMENTS TO ESTABLISH OR
8-61 REESTABLISH SERVICE CREDIT. (a) The board of trustees may adopt
8-62 rules to provide procedures for making installment payments to
8-63 establish or reestablish credit in the retirement system as
8-64 alternatives to lump-sum payments otherwise authorized or required
8-65 by this subtitle. The methods may include payment by payroll
8-66 deduction. [A member who is otherwise eligible may establish or
8-67 reestablish service creditable in the retirement system by making
8-68 payments as provided by this section in lieu of lump-sum payments
8-69 otherwise authorized or required by this subtitle.]
9-1 (b) Except as provided by Subsection (c), payments [A
9-2 payment authorized by this section consists of the contribution
9-3 required to establish or reestablish at least one year of service
9-4 credit, including any required interest and membership fees, except
9-5 that a person's last in a series of payments under this section may
9-6 be for a period of remaining service that is less than one year.]
9-7 [(c) The retirement system shall grant the applicable amount
9-8 of service credit after each payment is made under this section.]
9-9 [(d) Payments] may not be made under a rule adopted under
9-10 this section:
9-11 (1) to establish or reestablish service credit of a
9-12 person who has retired or died; or
9-13 (2) to establish current service under Section
9-14 833.101.
9-15 (c) Under a rule adopted under this section, the designated
9-16 beneficiary of a deceased member or, if none exists, the personal
9-17 representative of the decedent's estate may establish or
9-18 reestablish service for which the member was eligible at the time
9-19 of death if the establishment or reestablishment of the service
9-20 would result in the payment of a death benefit annuity.
9-21 (d) The payment for the establishment or reestablishment of
9-22 service under Subsection (c) must be made in a lump sum and
9-23 completed before the first payment of a death benefit annuity, but
9-24 not later than the 60th day after the date the retirement system
9-25 receives notice of the death.
9-26 [(e) The retirement system may adopt rules to administer
9-27 this section.]
9-28 SECTION 32. Subchapter A, Chapter 834, Government Code, is
9-29 amended by adding Section 834.005 to read as follows:
9-30 Sec. 834.005. DISCLAIMER OF BENEFITS. The retirement system
9-31 shall give effect to a full or partial disclaimer of benefits
9-32 executed in accordance with Section 37A, Texas Probate Code, unless
9-33 the benefit to be disclaimed is a lifetime annuity.
9-34 SECTION 33. Subsection (a), Section 834.101, Government
9-35 Code, is amended to read as follows:
9-36 (a) A member is eligible to retire and receive a base
9-37 service retirement annuity if the member:
9-38 (1) is at least 65 years old, currently holds a
9-39 judicial office, and has at least 10 years of service credited in
9-40 the retirement system[, the most recently performed of which was
9-41 for a continuous period of at least one year];
9-42 (2) is at least 65 years old and has at least 12 years
9-43 of service[, continuous or otherwise,] credited in the retirement
9-44 system, regardless of whether the member currently holds a judicial
9-45 office; or
9-46 (3) has at least 20 years of service credited in the
9-47 retirement system, [the most recently performed of which was for a
9-48 continuous period of at least 10 years,] regardless of whether the
9-49 member currently holds a judicial office.
9-50 SECTION 34. Section 834.302, Government Code, is amended to
9-51 read as follows:
9-52 Sec. 834.302. SELECTION OF DEATH BENEFIT PLAN BY SURVIVOR OF
9-53 MEMBER. (a) If a member eligible to select a death benefit plan
9-54 under Section 834.301(a) dies without having made a selection, or
9-55 if a selection cannot be made effective, the member's designated
9-56 beneficiary [surviving spouse] may select a plan in the same manner
9-57 as if the member had made the selection. If there is no designated
9-58 beneficiary [surviving spouse], the personal representative of the
9-59 decedent's estate may make the selection.
9-60 (b) If a person dies who meets the description in Section
9-61 814.302(b), the person's designated beneficiary [surviving spouse]
9-62 or the guardian of surviving minor children may select a death
9-63 benefit plan under that subsection.
9-64 SECTION 35. Subsection (d), Section 838.103, Government
9-65 Code, is amended to read as follows:
9-66 (d) A member may [not] establish one month of service credit
9-67 for each month or fraction of a month of duty, but not more than 48
9-68 months of service credit in the retirement system for military
9-69 service.
10-1 SECTION 36. Section 838.105, Government Code, is amended to
10-2 read as follows:
10-3 Sec. 838.105. ALTERNATIVE PAYMENTS TO ESTABLISH OR
10-4 REESTABLISH SERVICE CREDIT. (a) The board of trustees may adopt
10-5 rules to provide procedures for making installment payments to
10-6 establish or reestablish credit in the retirement system as
10-7 alternatives to lump-sum payments otherwise authorized or required
10-8 by this subtitle. The methods may include payment by payroll
10-9 deduction. [A member who is otherwise eligible may establish or
10-10 reestablish service creditable in the retirement system by making
10-11 payments as provided by this section in lieu of lump-sum payments
10-12 otherwise authorized or required by this subtitle.]
10-13 (b) Except as provided by Subsection (c), payments [A
10-14 payment authorized by this section consists of the contribution
10-15 required to establish or reestablish at least one year of service
10-16 credit, including any required interest and membership fees, except
10-17 that a person's last in a series of payments under this section may
10-18 be for a period of remaining service that is less than one year.]
10-19 [(c) The retirement system shall grant the applicable amount
10-20 of service credit after each payment is made under this section.]
10-21 [(d) Payments] may not be made under a rule adopted under
10-22 this section:
10-23 (1) to establish or reestablish service credit of a
10-24 person who has retired or died; or
10-25 (2) to establish current service under Section
10-26 838.101.
10-27 (c) Under a rule adopted under this section, the designated
10-28 beneficiary of a deceased member or, if none exists, the personal
10-29 representative of the decedent's estate may establish or
10-30 reestablish service for which the member was eligible at the time
10-31 of death if the establishment or reestablishment of the service
10-32 would result in the payment of a death benefit annuity.
10-33 (d) The payment for the establishment or reestablishment of
10-34 service under Subsection (c) must be made in a lump sum and
10-35 completed before the first payment of a death benefit annuity, but
10-36 not later than the 60th day after the date the retirement system
10-37 receives notice of the death.
10-38 [(e) The retirement system may adopt rules to administer
10-39 this section.]
10-40 SECTION 37. Subchapter A, Chapter 839, Government Code, is
10-41 amended by adding Section 839.004 to read as follows:
10-42 Sec. 839.004. DISCLAIMER OF BENEFITS. The retirement system
10-43 shall give effect to a full or partial disclaimer of benefits
10-44 executed in accordance with Section 37A, Texas Probate Code, unless
10-45 the benefit to be disclaimed is a lifetime annuity.
10-46 SECTION 38. Subsection (a), Section 839.101, Government
10-47 Code, is amended to read as follows:
10-48 (a) A member is eligible to retire and receive a service
10-49 retirement annuity if the member:
10-50 (1) is at least 65 years old, currently holds a
10-51 judicial office, and has at least 10 years of service credited in
10-52 the retirement system[, the most recently performed of which was
10-53 for a continuous period of at least one year];
10-54 (2) is at least 65 years old and has at least 12 years
10-55 of service[, continuous or otherwise,] credited in the retirement
10-56 system, regardless of whether the member currently holds a judicial
10-57 office; or
10-58 (3) has at least 20 years of service credited in the
10-59 retirement system, [the most recently performed of which was for a
10-60 continuous period of at least 10 years,] regardless of whether the
10-61 member currently holds a judicial office.
10-62 SECTION 39. Section 839.302, Government Code, is amended to
10-63 read as follows:
10-64 Sec. 839.302. SELECTION OF DEATH BENEFIT PLAN BY SURVIVOR OF
10-65 MEMBER. If a member eligible to select a death benefit plan under
10-66 Section 839.301 dies without having made a selection or if a plan
10-67 selected cannot be made effective, the member's designated
10-68 beneficiary [surviving spouse] may select a plan in the same manner
10-69 as if the member had made the selection. If there is no designated
11-1 beneficiary [surviving spouse], the personal representative of the
11-2 decedent's estate may make the selection.
11-3 SECTION 40. Subsection (b), Section 840.3012, Government
11-4 Code, is amended to read as follows:
11-5 (b) To be eligible to lend securities under this section, a
11-6 bank or brokerage firm must:
11-7 (1) be experienced in the operation of a fully secured
11-8 securities loan program;
11-9 (2) maintain adequate capital in the prudent judgment
11-10 of the retirement system to assure the safety of the securities;
11-11 (3) execute an indemnification agreement satisfactory
11-12 in form and content to the retirement system fully indemnifying the
11-13 retirement system against loss resulting from borrower default in
11-14 its operation of a securities loan program for the system's
11-15 securities; and
11-16 (4) require any securities broker or dealer to whom it
11-17 lends securities belonging to the retirement system to deliver to
11-18 and maintain with the custodian collateral in the form of cash or
11-19 United States government securities in an amount equal to not less
11-20 than 100 percent of the market value, from time to time, of the
11-21 loaned securities.
11-22 SECTION 41. Section 840.303, Government Code, is amended to
11-23 read as follows:
11-24 Sec. 840.303. DUTY OF CARE. The assets of the retirement
11-25 system shall be invested and reinvested without distinction as to
11-26 their source in accordance with Section 67, Article XVI, Texas
11-27 Constitution. Investment and management decisions concerning
11-28 individual investments shall be evaluated not in isolation but in
11-29 the context of the investment portfolio as a whole and as part of
11-30 an overall investment strategy consistent with the investment
11-31 objectives of the retirement system. [In making investments for
11-32 the retirement system, the board of trustees shall exercise the
11-33 judgment and care, under the circumstances prevailing at the time
11-34 of the investment, that persons of ordinary prudence, discretion,
11-35 and intelligence exercise in the management of their own affairs,
11-36 not in speculation but when making a permanent disposition of their
11-37 funds, considering the probable income from the disposition and the
11-38 probable safety of their capital.]
11-39 SECTION 42. Section 609.009, Government Code, is amended to
11-40 read as follows:
11-41 Sec. 609.009. TRUST FOR [OWNERSHIP UNDER] 457 PLAN. An
11-42 employee's deferred amounts and investment income under a 457 plan
11-43 and the qualified investment products in which the amounts are
11-44 invested are held in trust for the exclusive benefit of
11-45 participants and their beneficiaries in accordance with Section 457
11-46 of the Internal Revenue Code of 1986 (26 U.S.C. Section 457). For
11-47 purposes of this section, custodial accounts and contracts
11-48 described by Section 457 are treated as trusts. A trust does not
11-49 have to be established before January 1, 1999, for a 457 plan in
11-50 existence on August 20, 1996 [the property of the employing
11-51 political subdivision or state agency, as appropriate, until the
11-52 deferred amounts and investment income are distributed to the
11-53 employee].
11-54 SECTION 43. Subsections (a) and (b), Section 609.502,
11-55 Government Code, are amended to read as follows:
11-56 (a) The board of trustees of the Employees Retirement System
11-57 of Texas is the trustee and the plan administrator of a 401(k) plan
11-58 known as TexaSaver established under this subchapter.
11-59 (b) The board of trustees is the trustee and the plan
11-60 administrator of a 457 plan established under this subchapter.
11-61 SECTION 44. Subsection (b), Section 609.509, Government
11-62 Code, is amended to read as follows:
11-63 (b) In a contract under Subsection (a), the board of
11-64 trustees may provide for the board to audit periodically the person
11-65 with whom the contract is made. The audit may cover:
11-66 (1) the proper handling and accounting of state or
11-67 trust funds; and
11-68 (2) other matters related to the proper performance of
11-69 the contract.
12-1 SECTION 45. Subsection (b), Section 609.512, Government
12-2 Code, is amended to read as follows:
12-3 (b) The deferred compensation trust fund is in the state
12-4 treasury. The fund is for the benefit of the deferred compensation
12-5 plan described by Section 609.502(b) [609.502(a)].
12-6 SECTION 46. Subdivisions (2) and (9), Subsection (a),
12-7 Section 3, Texas Employees Uniform Group Insurance Benefits Act
12-8 (Article 3.50-2, Vernon's Texas Insurance Code), are amended to
12-9 read as follows:
12-10 (2) "Annuitant" shall mean an officer or employee who
12-11 retires under:
12-12 (A) the jurisdiction of the Employees Retirement
12-13 System of Texas and either receives an annuity or is eligible to
12-14 receive an annuity, pursuant to Subtitle B, D, or E of Title 8,
12-15 Government Code, [or Chapter 803, Government Code,] that is based
12-16 on at least 10 years of service credit or eligibility under Section
12-17 814.002 or 814.102, Government Code;
12-18 (B) the jurisdiction of the Teacher Retirement
12-19 System of Texas and either receives an annuity or is eligible to
12-20 receive an annuity, pursuant to Subtitle C, Title 8, Government
12-21 Code, [or Chapter 803, Government Code,] that is based on at least
12-22 10 years of service credit, whose last state employment prior to
12-23 retirement, including employment by a public community/junior
12-24 college, was as an employee of a department whose employees are
12-25 authorized to participate in the Texas employees uniform group
12-26 insurance program;
12-27 (C) the optional retirement program established
12-28 by Chapter 830, Government Code, and either receives an annuity or
12-29 is eligible to receive an annuity under that program, if the
12-30 person's last state employment before retirement, including
12-31 employment by a public community/junior college, was as an employee
12-32 of a department whose employees are authorized to participate in
12-33 the Texas employees uniform group insurance program and if the
12-34 person either:
12-35 (i) would have been eligible to retire and
12-36 receive a service retirement annuity from the Teacher Retirement
12-37 System of Texas or the Employees Retirement System of Texas based
12-38 on at least 10 years of service credit had the person not elected
12-39 to participate in the optional retirement program; or
12-40 (ii) is disabled as determined by the
12-41 Employees Retirement System of Texas; [or]
12-42 (D) any other federal or state statutory
12-43 retirement program to which an institution of higher education has
12-44 made employer contributions, if the employee has met service
12-45 requirements, age requirements, and other applicable requirements
12-46 comparable to the requirements for retirement under the Teacher
12-47 Retirement System of Texas, based on at least 10 years of service
12-48 credit; or
12-49 (E) the proportionate retirement program
12-50 established by Chapter 803, Government Code, and either receives an
12-51 annuity or is eligible to receive an annuity that is based on at
12-52 least 10 years of service credit, at least five of which were
12-53 performed as an employee of a department whose employees are
12-54 authorized to participate in the Texas employee uniform group
12-55 insurance program.
12-56 (9) "Qualified carrier" shall mean:
12-57 (A) any insurance company authorized to do
12-58 business in this state by the Texas Department [State Board] of
12-59 Insurance to provide any of the types of insurance coverages,
12-60 benefits, or services provided for in this Act under any of the
12-61 insurance laws of the State of Texas, which has a surplus of $1
12-62 million, a successful operating history, and which has had
12-63 successful experience in providing and servicing any of the types
12-64 of group coverage provided for in this Act as determined by the
12-65 Texas Department [State Board] of Insurance;
12-66 (B) any corporation operating under Chapter 20
12-67 or 20A of the Insurance Code which provides any of the types of
12-68 coverage, benefits, or services provided for in this Act, a
12-69 successful operating history, and which has had successful
13-1 experience in providing and servicing any of the types of group
13-2 coverage provided for in this Act as determined by the Texas
13-3 Department [State Board] of Insurance; or
13-4 (C) any combination or carriers as herein
13-5 defined, upon such terms and conditions as may be prescribed by the
13-6 trustee, providing, however, that for purposes of this Act carriers
13-7 combining for the purpose of bidding and/or underwriting this
13-8 program shall not be considered in violation of Sections 15.01
13-9 through 15.34, Chapter 15, Title 2, Competition and Trade
13-10 Practices, Texas Business & Commerce Code.
13-11 SECTION 47. (a) Subsection (e), Section 4B, Texas Employees
13-12 Uniform Group Insurance Benefits Act (Article 3.50-2, Vernon's
13-13 Texas Insurance Code), as added by Chapter 242, Acts of the 72nd
13-14 Legislature, Regular Session, 1991, is amended to read as follows:
13-15 (e) The trustee may delegate [the duties of the executive
13-16 director under this section to another employee of the Employees
13-17 Retirement System of Texas and may delegate] its duties to hear
13-18 appeals to the executive director.
13-19 (b) Subsection (e), Section 4B, Texas Employees Uniform
13-20 Group Insurance Benefits Act (Article 3.50-2, Vernon's Texas
13-21 Insurance Code), as added by Chapter 391, Acts of the 72nd
13-22 Legislature, Regular Session, 1991, is redesignated as Subsection
13-23 (f) of Section 4B to read as follows:
13-24 (f) [(e)] The executive director may delegate the duties of
13-25 the executive director under this section to another person who is
13-26 employed by the Employees Retirement System of Texas.
13-27 SECTION 48. Subsection (a), Section 4C, Texas Employees
13-28 Uniform Group Insurance Benefits Act (Article 3.50-2, Vernon's
13-29 Texas Insurance Code), is amended to read as follows:
13-30 (a) The trustee may develop a system for an employee[,
13-31 school district employee,] or annuitant to electronically
13-32 authorize:
13-33 (1) enrollment in a coverage or benefit program;
13-34 (2) contributions to a coverage or benefit program;
13-35 and
13-36 (3) deductions or reductions to the compensation or
13-37 annuity of the employee[, school district employee,] or annuitant
13-38 for participation in a coverage or benefit program.
13-39 SECTION 49. Subsections (b), (h), (i), and (j), Section 5,
13-40 Texas Employees Uniform Group Insurance Benefits Act (Article
13-41 3.50-2, Vernon's Texas Insurance Code), are amended to read as
13-42 follows:
13-43 (b) In the event the trustee shall select a [as the] carrier
13-44 [one] whose bid was not the lowest of all bids submitted, such
13-45 selection shall be submitted together with justifications and
13-46 reasons therefor to the commissioner [State Board of Insurance].
13-47 Such deviating selection shall not be deemed final and binding
13-48 unless and until the commissioner [a majority of the State Board of
13-49 Insurance] has certified [its] approval in writing to the trustee,
13-50 or upon the expiration of 30 days after receipt thereof by the
13-51 commissioner [State Board of Insurance] such deviating selection
13-52 shall be deemed approved.
13-53 (h) In the event the trustee determines that benefits shall
13-54 be provided from the Employees Life, Accident, and Health Insurance
13-55 and Benefits Fund, the trustee may contract with one or more [a]
13-56 qualified and experienced administering firms [firm] on a
13-57 competitive bid basis to administer the plans of coverage [claims
13-58 arising from the coverages] provided in Section 5 of the Act.
13-59 (i) The trustee shall select one or more [the desired]
13-60 administering firms [firm] to provide services which shall be in
13-61 the best interests of the employees covered by the Act. The
13-62 trustee is not required to select the lowest bid but shall take
13-63 into consideration such other factors as ability to service large
13-64 group programs, past experience, and other relevant criteria.
13-65 Should the trustee select a firm whose bid was not the lowest or
13-66 one whose bid differs from that specified, the reasons for such
13-67 action shall be fully justified and explained in the minutes of the
13-68 next meeting of the trustee.
13-69 (j) The trustee may not contract for or provide a plan of
14-1 [group] coverage [or with a health maintenance organization or
14-2 provide coverage directly from the fund] that:
14-3 (1) excludes or limits coverage or services for
14-4 acquired immune deficiency syndrome, as defined by the Centers for
14-5 Disease Control of the United States Public Health Service, or
14-6 human immunodeficiency virus infection; or
14-7 (2) provides coverage for serious mental illness that
14-8 is less extensive than the coverage provided for any [other]
14-9 physical illness.
14-10 SECTION 50. Subsection (a), Section 5A, Texas Employees
14-11 Uniform Group Insurance Benefits Act (Article 3.50-2, Vernon's
14-12 Texas Insurance Code), is amended to read as follows:
14-13 (a) The trustee may define the basic coverage in which every
14-14 full-time employee and every annuitant participates unless
14-15 participation is specifically waived. The trustee may define
14-16 different basic coverage plans for active full-time employees and
14-17 for annuitants. Basic coverage must include basic health coverage.
14-18 Basic health coverage may be offered through any health benefits
14-19 plan. [Basic coverage shall include, but not be limited to,
14-20 benefits and health care service required by state and federal
14-21 law.]
14-22 SECTION 51. Section 9, Texas Employees Uniform Group
14-23 Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
14-24 Code), is amended to read as follows:
14-25 Sec. 9. ANNUAL ACCOUNTING; SPECIAL CONTINGENCY RESERVE.
14-26 (a) A carrier [Carriers] providing any policy purchased under this
14-27 Act shall provide an accounting to the trustee not later than 90
14-28 days after the end of each policy year. The accounting shall set
14-29 forth, in a form approved by the trustee:
14-30 (1) the amounts of premiums actually accrued under the
14-31 policy from its date of issue to the end of the policy year;
14-32 (2) the total of all mortality and other claims,
14-33 charges, losses, costs, and expenses incurred for that period; and
14-34 (3) the amounts of the carrier's [insurers'] allowance
14-35 for a reasonable profit and contingencies for that period.
14-36 (b) An excess of the total of Subdivision (a)(1) of this
14-37 section over the sum of Subdivisions (a)(2) and (a)(3) of this
14-38 section shall be held by the carrier issuing a participating [the]
14-39 policy as a special contingency reserve to be used by the carrier
14-40 only for charges, claims, costs, and expenses under the policy.
14-41 The reserve shall bear interest at a rate determined in advance of
14-42 each policy year by the carrier and approved by the trustee as
14-43 being consistent with the rates generally used by the carrier for
14-44 similar funds held under other group insurance policies. When the
14-45 trustee determines that the special contingency reserve has
14-46 attained an amount estimated by it to make satisfactory provision
14-47 for adverse fluctuations in future charges, claims, costs, or
14-48 expenses under the policy, any further excess shall be deposited in
14-49 the State Treasury to the credit of the Employees Life, Accident,
14-50 and Health Insurance and Benefits Fund. When a policy is
14-51 discontinued, any balance remaining in the special contingency
14-52 reserve after all charges have been made shall be deposited in the
14-53 State Treasury to the credit of the fund. The carrier may make the
14-54 deposit in equal monthly installments over a period of not more
14-55 than two years.
14-56 SECTION 52. Subsection (b), Section 10, Texas Employees
14-57 Uniform Group Insurance Benefits Act (Article 3.50-2, Vernon's
14-58 Texas Insurance Code), is amended to read as follows:
14-59 (b) Policies [Exemption from Taxes on Premiums. Premiums or
14-60 contributions on policies], insurance contracts, certificates of
14-61 coverage, evidence of coverage, and agreements with health
14-62 maintenance organizations and plan administrators, or any other
14-63 coverages established under this Act, [or other coverages] shall
14-64 not be subject to any state tax, regulatory fee, or surcharge,
14-65 including premium or maintenance taxes or fees.
14-66 SECTION 53. Section 11, Texas Employees Uniform Group
14-67 Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
14-68 Code), is amended by adding Subsection (d) to read as follows:
14-69 (d) In addition to the authority granted under Article
15-1 3.50-6, Insurance Code, the trustee may adopt rules to provide for
15-2 payment of accelerated life insurance benefits to a terminally ill,
15-3 terminally injured, or permanently disabled participant in amounts
15-4 that benefit the participants without increasing the cost of
15-5 providing the benefits. The amount of any payment of an
15-6 accelerated benefit under rules adopted under this subsection must
15-7 be deducted from the amount that would otherwise be payable as a
15-8 death benefit.
15-9 SECTION 54. Section 12, Texas Employees Uniform Group
15-10 Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
15-11 Code), is amended by adding Subsection (e) to read as follows:
15-12 (e) The trustee shall give effect to a full or partial
15-13 disclaimer of benefits executed in accordance with Section 37A,
15-14 Texas Probate Code.
15-15 SECTION 55. Subsections (b) and (c), Section 13, Texas
15-16 Employees Uniform Group Insurance Benefits Act (Article 3.50-2,
15-17 Vernon's Texas Insurance Code), are amended to read as follows:
15-18 (b) Unless participation is waived specifically or unless an
15-19 employee or employee-annuitant is expelled from the program under
15-20 Section 13A of this Act, every full-time employee except one who is
15-21 described by Section 3(a)(5)(A)(x) of this Act shall be covered
15-22 automatically by the basic plan for active full-time employees and
15-23 every employee-annuitant shall be covered by the basic plan for
15-24 retired employee-annuitants. Coverage shall begin on the date he
15-25 becomes eligible, and each policy of insurance purchased by the
15-26 trustee shall provide for such automatic coverage.
15-27 (c) Unless expelled from the program under Section 13A of
15-28 this Act, each part-time employee and each employee of an
15-29 institution of higher education who is described by Section
15-30 3(a)(5)(A)(x) [3(a)(5)(A)(viii)] of this Act is eligible for
15-31 participation in the group programs provided under this Act upon
15-32 execution of appropriate application for coverage [payroll
15-33 deduction authorization for the required payment of premiums]. An
15-34 institution of higher education shall, at the time of employment,
15-35 notify each employee of the institution who is described by Section
15-36 3(a)(5)(A)(x) [3(a)(5)(A)(viii)] of this Act of the employee's
15-37 eligibility to participate in the group programs provided under
15-38 this Act.
15-39 SECTION 56. Subsection (f), Section 13A, Texas Employees
15-40 Uniform Group Insurance Benefits Act (Article 3.50-2, Vernon's
15-41 Texas Insurance Code), is amended to read as follows:
15-42 (f) An employee, annuitant, or dependent expelled from the
15-43 Texas employees uniform group insurance program may not participate
15-44 in any [a health maintenance organization or be insured under any
15-45 insurance or benefits] plan of coverage offered by the program for
15-46 a period determined by the trustee of not more than five years from
15-47 the date the expulsion from the program takes effect.
15-48 SECTION 57. Subsections (b), (c), and (d), Section 15, Texas
15-49 Employees Uniform Group Insurance Benefits Act (Article 3.50-2,
15-50 Vernon's Texas Insurance Code), are amended to read as follows:
15-51 (b) The state shall contribute to the cost of each
15-52 employee's individual and dependent group coverages the amounts
15-53 appropriated for the coverages in the General Appropriations Act.
15-54 The governing board of each state department and institution of
15-55 higher education participating in the program established under
15-56 this Act shall pay the trustee a like amount for each employee's
15-57 individual or dependent group coverages for their employees who
15-58 are, and retirees who were, compensated from funds not
15-59 appropriated in the General Appropriations Act. The departments
15-60 and institutions shall include the required contributions from
15-61 funds not appropriated in the General Appropriations Act in their
15-62 annual operating budgets. Each state department and institution of
15-63 higher education participating in the program shall assure current
15-64 participant coverages based on the records of the trustee, make
15-65 timely payments of amounts due the trustee from all fund sources
15-66 under the control of the department or institution, and reconcile
15-67 trustee and agency records of coverages and payments monthly.
15-68 There [From and after the effective date of this Act, there] is
15-69 hereby allocated [and appropriated] to the trustee, in accordance
16-1 with the provisions of this Act, from the several funds from which
16-2 [state] employees receive their respective salaries, a sum equal to
16-3 the total of all employer contributions computed in accordance with
16-4 the provisions of this Act and the rules and regulations of the
16-5 trustee promulgated pursuant thereto.
16-6 (c) All money hereby allocated [and appropriated] by the
16-7 state, including institutions of higher education, to the trustee
16-8 under this Act shall be paid to the trustee in monthly installments
16-9 based on the annual estimate by the trustee of the contributions to
16-10 be received for all [state] employees during said year; provided,
16-11 however, that in the event said estimate of the contributions of
16-12 the [state] employees shall vary from the actual amount of the
16-13 employer contributions during the year, such adjustments shall be
16-14 made at the close of each fiscal year as may be required. Each of
16-15 said monthly installments shall be paid into the appropriate fund
16-16 created by this Act in the amount certified by the trustee.
16-17 (d) The trustee shall certify to the governing boards of
16-18 those state departments and institutions of higher education
16-19 participating in the program established under this Act who provide
16-20 contributions for their employees' individual and dependent
16-21 coverages [employees] from operating budgets provided from sources
16-22 other than the General Appropriations Act the proportionate amounts
16-23 required [needed] to pay their respective contributions. Such
16-24 certifications shall be made at least 30 days prior to the meeting
16-25 at which the governing board adopts its operating budget.
16-26 SECTION 58. Subsections (a) and (b), Section 18, Texas
16-27 Employees Uniform Group Insurance Benefits Act (Article 3.50-2,
16-28 Vernon's Texas Insurance Code), are amended to read as follows:
16-29 (a) The group benefits advisory committee is composed of 26
16-30 [27] voting members as provided by this section. The office of the
16-31 attorney general, [the office of the state treasurer,] the office
16-32 of the comptroller, the Railroad Commission of Texas, the General
16-33 Land Office, and the Department of Agriculture are entitled to be
16-34 represented by one member each on the committee, who may be
16-35 appointed by the governing body of the state agency or elected by
16-36 and from the employees of the agency, as determined by rule by the
16-37 governing body of the agency. One employee shall be elected from
16-38 each of the remaining eight largest state agencies that are
16-39 governed by appointed officers by and from the employees of those
16-40 agencies. One nonvoting member shall be the executive director of
16-41 the Employees Retirement System of Texas. One member shall be an
16-42 expert in employee benefit issues from the private sector,
16-43 appointed by the governor. One member shall be an expert in
16-44 employee benefits issues from the private sector, appointed by the
16-45 lieutenant governor. One member shall be a retired state employee
16-46 appointed by the trustee. One member shall be a state employee of
16-47 a state agency other than one of the eight largest state agencies,
16-48 appointed by the trustee. Not more than one employee from a
16-49 particular state agency may serve on the committee. Each of the
16-50 seven largest institutions of higher education, as determined by
16-51 the number of employees on the payroll of an institution, shall
16-52 elect one member of the committee from among persons who have each
16-53 been nominated by a petition signed by at least 300 employees. Two
16-54 members shall be employees of institutions of higher education,
16-55 other than the seven largest institutions of higher education, who
16-56 are appointed by the Texas Higher Education Coordinating Board, but
16-57 not more than one employee shall be from any one institution. The
16-58 members shall elect a presiding officer from their membership to
16-59 serve a one-year term.
16-60 (b) All members of the committee shall be appointed or
16-61 elected for three-year terms. During a term of appointment or
16-62 election, state employee vacancies shall be filled by an employee
16-63 of the same agency from which the vacancy occurred[, being]
16-64 appointed by the governing body of the agency or institution
16-65 [trustees] for the balance of the vacated term. A vacancy in a
16-66 position held by a member of the private sector shall be filled by
16-67 the officer who originally made the appointment to that position.
16-68 SECTION 59. Subsection (a), Section 19, Texas Employees
16-69 Uniform Group Insurance Benefits Act (Article 3.50-2, Vernon's
17-1 Texas Insurance Code), is amended to read as follows:
17-2 (a) Any employee or annuitant shall be entitled to secure
17-3 for his dependents any uniform group coverages provided for
17-4 employees under this Act, as shall be determined by the trustee,
17-5 except that a foster child is eligible for health insurance
17-6 coverage only if the child is not covered by another governmental
17-7 health program. If an employee or annuitant resides outside of a
17-8 health maintenance organization service area, the uniform group
17-9 coverages must be made available to a dependent without evidence of
17-10 insurability if the employee or annuitant applies for the coverage
17-11 for the dependent during the annual enrollment period. Payments
17-12 required of the employee in excess of employer contributions shall
17-13 be deducted from the monthly pay of the employee or from his
17-14 retirement benefits, or the employee's salary shall be reduced in
17-15 the appropriate amount, in such manner and form as the trustee
17-16 shall determine.
17-17 SECTION 60. (a) Sections 803.403, 813.105, 833.106,
17-18 838.103(i), and 838.106, Government Code, are repealed.
17-19 (b) Subsection (e), Section 5, Texas Employees Uniform Group
17-20 Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
17-21 Code), is repealed.
17-22 SECTION 61. (a) The change in law made by this Act in
17-23 Subdivision (9), Section 811.001 and Subsection (b), Section
17-24 814.104, Government Code, is intended to reflect the current law
17-25 providing for the commissioning and administration of the Capitol
17-26 area security force by the Department of Public Safety. Service
17-27 credit previously accrued by a member of the Capitol area security
17-28 force as a commissioned law enforcement officer of the General
17-29 Services Commission, or a predecessor agency, remains credited as
17-30 service by a law enforcement officer unless canceled as otherwise
17-31 provided by Subtitle B, Title 8, Government Code.
17-32 (b) The Texas Higher Education Coordinating Board shall
17-33 transfer all property relating to its duties as general supervisor
17-34 of institutions of higher education under the optional retirement
17-35 program established by Chapter 830, Government Code, to the
17-36 Employees Retirement System of Texas on the effective date of this
17-37 Act. A rule adopted by the Texas Higher Education Coordinating
17-38 Board under Chapter 830, Government Code, in effect on the
17-39 effective date of this Act remains in effect until amended or
17-40 repealed by a rule adopted by the Employees Retirement System of
17-41 Texas.
17-42 SECTION 62. This Act takes effect September 1, 1997.
17-43 SECTION 63. The importance of this legislation and the
17-44 crowded condition of the calendars in both houses create an
17-45 emergency and an imperative public necessity that the
17-46 constitutional rule requiring bills to be read on three several
17-47 days in each house be suspended, and this rule is hereby suspended.
17-48 * * * * *