By: Madla S.B. No. 1568
A BILL TO BE ENTITLED
AN ACT
1-1 relating to a retirement health trust for firefighters and police
1-2 officers of certain municipalities.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 ARTICLE 1. GENERAL PROVISIONS
1-5 SECTION 1.01. PURPOSE. The purpose of a fund established by
1-6 this Act is to provide health care benefits for persons who retired
1-7 on or after October 1, 1989, from a municipal fire or police
1-8 department to which this Act applies because of the lasting health
1-9 consequences associated with the stressful nature of the
1-10 professions of firefighting and law enforcement.
1-11 SECTION 1.02. DEFINITIONS. In this Act:
1-12 (1) "Board" means the board of trustees of a fund
1-13 established by this Act.
1-14 (2) "Fund" means the firefighter's and police
1-15 officer's retiree health care fund of a municipality to which this
1-16 Act applies.
1-17 SECTION 1.03. APPLICABILITY. This Act applies to a paid
1-18 fire and police department of a municipality with a population of
1-19 750,000 or more that has adopted Chapter 174, Local Government
1-20 Code.
1-21 SECTION 1.04. STATUTORY TRUST. (a) The fund is a statutory
1-22 trust and is not a subdivision of government.
1-23 (b) The board shall administer and hold in trust the assets
2-1 of the fund for the benefit of the members and retirees of the fund
2-2 and their spouses in retirement.
2-3 (c) The fund may not be diverted, transferred, or used for
2-4 any other purpose inconsistent with this Act and with the
2-5 instruments governing the fund.
2-6 (d) A public or private agency or authority may not alter or
2-7 impair any contract made by the board or under the authority or
2-8 direction of the board.
2-9 SECTION 1.05. EXEMPTIONS. The benefits of the fund are
2-10 exempt from garnishment, assignment, attachment, judgments, other
2-11 legal processes, and inheritance or other taxes established by this
2-12 state.
2-13 ARTICLE 2. ADMINISTRATIVE PROVISIONS
2-14 SECTION 2.01. BOARD OF TRUSTEES. (a) The fund of a
2-15 municipality is governed by a board of trustees consisting of the
2-16 following nine members:
2-17 (1) the mayor of the municipality;
2-18 (2) two members of the municipal governing body,
2-19 appointed by that governing body;
2-20 (3) two active firefighters below the rank of fire
2-21 chief, elected by secret ballot by a majority of the votes cast by
2-22 the members of the fire department who are contributing members of
2-23 the fund;
2-24 (4) two active police officers below the rank of
2-25 police chief, elected by secret ballot by a majority of the votes
3-1 cast by the members of the police department who are contributing
3-2 members of the fund;
3-3 (5) a retiree or beneficiary representative of the
3-4 fire department, elected by secret ballot by a majority of the
3-5 votes cast by the retirees and the spouses of the retirees of the
3-6 fire department; and
3-7 (6) a retiree or beneficiary representative of the
3-8 police department, elected by secret ballot by a majority of the
3-9 votes cast by the retirees and the spouses of the retirees of the
3-10 police department.
3-11 (b) The board, through its secretary, shall administer the
3-12 required elections of the firefighter, police officer, and retiree
3-13 representative members.
3-14 (c) The fund is independent of the control of the
3-15 municipality.
3-16 SECTION 2.02. TERMS OF BOARD MEMBERS. (a) The mayor of the
3-17 municipality serves on the board for the term of the mayor's
3-18 office.
3-19 (b) The two members of the municipal governing body serve on
3-20 the board for the term of the office to which they were elected.
3-21 (c) The two active firefighters below the rank of fire chief
3-22 serve on the board for staggered four-year terms, with one member's
3-23 term expiring every two years.
3-24 (d) The two active police officers below the rank of police
3-25 chief serve on the board for staggered four-year terms, with one
4-1 member's term expiring every two years.
4-2 (e) The retiree or beneficiary representatives serve on the
4-3 board for staggered four-year terms, with one member's term
4-4 expiring every two years.
4-5 SECTION 2.03. REMOVAL OF BOARD MEMBERS. (a) Certain
4-6 members of the board may be removed in accordance with this
4-7 section. An active firefighter board member may be removed by the
4-8 contributing members of the fire department. An active police
4-9 officer board member may be removed by the contributing members of
4-10 the police department. A retiree or beneficiary board member may
4-11 be removed by the fund members eligible to elect the member.
4-12 (b) A petition for removal under this section must be filed
4-13 with the board within 45 days after the date the first signature on
4-14 the petition was obtained. A signature is not valid if it is not
4-15 dated.
4-16 (c) A removal election must be held within 30 days after the
4-17 date the board certifies that a proper petition for a removal
4-18 election has been signed by at least 20 percent of the membership
4-19 from which the board member was elected. A board member's term of
4-20 service ends on the entry of an order by the board declaring that
4-21 the results of a removal election under this section favor removal.
4-22 (d) On the date the board enters an order under Subsection
4-23 (c) of this section, the board shall call a special election to be
4-24 held not less than 20 and not more than 30 days after that date to
4-25 fill the vacancy for the unexpired term of the board member who was
5-1 removed. The board member who was removed is not eligible to run
5-2 in the special election but is eligible to run in all subsequent
5-3 board elections for the category in which the person is a member.
5-4 SECTION 2.04. OFFICERS. (a) The board shall elect a chair,
5-5 a vice chair, and a secretary from among the board members.
5-6 (b) The finance director of the municipality is the
5-7 treasurer of the board.
5-8 SECTION 2.05. EMPLOYEES. The board may employ an executive
5-9 director and staff to administer the fund.
5-10 SECTION 2.06. MEETINGS. The board shall hold regular
5-11 monthly meetings and special meetings at the call of the chair or
5-12 on written demand by a majority of the members of the board.
5-13 SECTION 2.07. BOARD COMMITTEES. (a) The chair of the board
5-14 may appoint committees that report to the board.
5-15 (b) Only members of the board may be appointed to a
5-16 committee under this section.
5-17 (c) A committee must be composed of not fewer than three and
5-18 not more than five members of the board, except as otherwise
5-19 specifically provided by the board.
5-20 (d) Only members of a committee may vote as committee
5-21 members.
5-22 (e) The board may direct staff and advisors to assist the
5-23 committees.
5-24 (f) All members of the board may attend committee meetings.
5-25 (g) Members of a committee serve at the pleasure of the
6-1 board.
6-2 (h) Permanent or standing committees may not be appointed.
6-3 ARTICLE 3. GENERAL POWERS AND DUTIES OF BOARD
6-4 SECTION 3.01. GENERAL POWERS AND DUTIES. (a) The board has
6-5 complete authority and power to:
6-6 (1) administer the fund;
6-7 (2) order payments to the treasurer from the fund as
6-8 required by this Act; and
6-9 (3) independently control the fund.
6-10 (b) The board shall adopt rules relating to:
6-11 (1) the disbursement of the fund's assets; and
6-12 (2) the name of the board and the fund.
6-13 (c) The board shall report annually to the governing body of
6-14 the municipality regarding the condition of the fund and the
6-15 receipts and disbursements of the fund.
6-16 SECTION 3.02. HEARINGS. (a) Any member of the fund may
6-17 appear before the board in person or through an attorney to contest
6-18 health coverage or benefit decisions.
6-19 (b) The chair of the board may issue process for witnesses,
6-20 administer oaths to those witnesses, and examine any witness in any
6-21 manner affecting a coverage or benefit under this Act. Process for
6-22 witnesses may be served on any member of the fund. On the failure
6-23 of any witness to attend and testify, that person may be compelled
6-24 to attend and testify as in any judicial proceeding, according to
6-25 the practice in a justice court.
7-1 SECTION 3.03. ORDERS FOR PAYMENTS. (a) The board shall
7-2 issue orders for payments from the fund signed by the chair or vice
7-3 chair and the secretary of the board and forward the orders to the
7-4 treasurer for payment. The order shall state the purposes for the
7-5 payments. The board shall keep a record of those orders.
7-6 (b) At each monthly board meeting, the board shall send to
7-7 the treasurer of the board a written list of the parties entitled
7-8 to a payment from the fund, stating the amount and reason for the
7-9 payment. The list must be certified and signed by the chair or
7-10 vice chair of the board and secretary of the board.
7-11 (c) The treasurer shall submit to the board a quarterly
7-12 written request that states the amount of reasonable reimbursement
7-13 owed to the municipality for the municipality's operating cost
7-14 incurred on behalf of the fund.
7-15 (d) Money may not be disbursed from the fund without a
7-16 record vote of the board.
7-17 (e) A quorum of the board is five members. When a quorum
7-18 exists, an action of the board requires a majority vote of the
7-19 members present.
7-20 ARTICLE 4. MEMBERSHIP
7-21 SECTION 4.01. MEMBERSHIP. Membership shall be determined by
7-22 the exclusive collective bargaining agents of the firefighters and
7-23 police officers recognized under Subchapter D, Chapter 174, Local
7-24 Government Code.
7-25 SECTION 4.02. CONTRIBUTIONS. (a) Contributions shall be
8-1 determined in accordance with collectively bargained agreements
8-2 between the municipality and the exclusive bargaining agents of the
8-3 firefighters and police officers under Chapter 174, Local
8-4 Government Code.
8-5 (b) Contributions shall be treated as employer's
8-6 contributions in accordance with Section 414(h)(2), Internal
8-7 Revenue Code of 1986 (26 U.S.C. Section 414(h)(2)), as amended, for
8-8 the purpose of determining tax treatment under the Internal Revenue
8-9 Code of 1986.
8-10 (c) Any donations made to the fund and all money received
8-11 from any source for the fund shall be deposited in the fund at the
8-12 earliest opportunity.
8-13 (d) The municipal contribution and benefits from the fund
8-14 are a part of the compensation for services rendered to the
8-15 municipality. This Act is considered part of the contract of
8-16 employment and appointment of the firefighters and police officers
8-17 of a municipality to which this Act applies.
8-18 SECTION 4.03. RIGHTS OF MEMBERS AND ASSOCIATIONS. A member
8-19 of the fund is entitled to all rights otherwise provided to the
8-20 member under the federal Employee Retirement Income and Security
8-21 Act of 1974 (29 U.S.C. Section 1001 et seq.), as amended, or any
8-22 other state or federal statute. A voluntary employee's beneficiary
8-23 association as described by Section 501(c), Internal Revenue Code
8-24 of 1986 (26 U.S.C. Section 501(c)), as amended, is entitled to all
8-25 rights otherwise provided to it under any state or federal statute.
9-1 ARTICLE 5. RETIREMENT HEALTH BENEFITS
9-2 SECTION 5.01. RETIREMENT HEALTH BENEFITS. Retirement health
9-3 benefits shall be determined in accordance with the collectively
9-4 bargained agreements between the municipality and the exclusive
9-5 bargaining agents of the firefighters and police officers under
9-6 Chapter 174, Local Government Code.
9-7 ARTICLE 6. INVESTMENT AND FINANCIAL PROVISIONS
9-8 SECTION 6.01. TREASURER'S DUTIES. (a) All money of the
9-9 fund is payable to the treasurer of the fund for the use of the
9-10 fund.
9-11 (b) The duties imposed on the treasurer of the fund under
9-12 this Act are considered additional duties for which the treasurer
9-13 is liable under oath and bond as the finance director of the
9-14 municipality.
9-15 (c) The finance director is not entitled to compensation for
9-16 serving as the treasurer of the fund.
9-17 SECTION 6.02. ACCOUNTS. Accounts of the fund shall be kept
9-18 as ordered by the board.
9-19 SECTION 6.03. RESERVE FUNDS. (a) The board shall determine
9-20 a reasonably safe amount of surplus assets necessary to defray
9-21 reasonable expenses of the fund.
9-22 (b) All other assets shall be designated as reserve funds.
9-23 (c) Only the board may invest and manage the reserve funds.
9-24 The reserve funds must be invested and managed for the sole benefit
9-25 of the beneficiaries.
10-1 SECTION 6.04. INVESTMENT POWERS OF BOARD. (a) The board
10-2 shall invest the reserve funds in a manner that a prudent investor
10-3 would invest the funds, considering the purposes, terms,
10-4 distribution requirements, and other circumstances of an enterprise
10-5 with a similar character and similar aims.
10-6 (b) The board shall diversify the investment of the reserve
10-7 funds to minimize the risk of large losses unless under the
10-8 circumstances it is clearly prudent not to do so. In determining
10-9 whether the board has exercised prudence concerning an investment
10-10 decision, the investment of all assets of the funds, rather than
10-11 the prudence of a single investment of the funds, shall be
10-12 considered.
10-13 (c) The board may directly manage investments of the reserve
10-14 funds or may choose to contract for professional management
10-15 services. If the funds own real estate, the board may, at its
10-16 discretion, establish a corporation described by Section
10-17 501(c)(25), Internal Revenue Code of 1986 (26 U.S.C. Section
10-18 501(c)(25)), as amended, to hold title to the real estate.
10-19 (d) The board has final responsibility for the investment of
10-20 the reserve funds. The board may purchase securities or engage in
10-21 limited partnerships or make other investments not specifically
10-22 provided by this Act and has the authority to exercise discretion
10-23 in determining the nature, type, quality, and size of any
10-24 investment consistent with the investment policies it establishes.
10-25 SECTION 6.05. PROFESSIONAL CONSULTANTS. (a) The board may
11-1 contract for professional investment management services, financial
11-2 consultants, independent auditors, and actuaries. Only the board
11-3 may enter into those contracts. The board may establish a
11-4 reasonable fee for compensation under those contracts.
11-5 (b) The board may designate its own custodian or master
11-6 custodian to perform the customary duties involving the safekeeping
11-7 of the assets and the execution of transactions of either domestic
11-8 or foreign securities. The board may engage in a securities
11-9 lending program consistent with the benefits to plan participants
11-10 and their beneficiaries.
11-11 SECTION 6.06. INVESTMENT MANAGER QUALIFICATIONS. In
11-12 appointing investment managers, the board shall require that the
11-13 investment manager be:
11-14 (1) registered under the Investment Advisors Act of
11-15 1940 (15 U.S.C. Section 80b-1 et seq.), as amended;
11-16 (2) a bank as defined by that Act; or
11-17 (3) an insurance company qualified to perform
11-18 investments services under the law of more than one state.
11-19 ARTICLE 7. STANDARDS OF CONDUCT AND FINANCIAL
11-20 DISCLOSURE REQUIREMENTS
11-21 SECTION 7.01. ETHICS POLICY. (a) A member of the board or
11-22 the executive director may not have a direct or indirect financial
11-23 or other interest, engage in a business transaction or professional
11-24 activity, or incur any obligation of any nature that is in
11-25 substantial conflict with the proper discharge of the member's or
12-1 the executive director's fiduciary duties.
12-2 (b) To implement Subsection (a) of this section and to
12-3 strengthen the faith and confidence of the members and
12-4 beneficiaries of the fund, the board shall develop standards of
12-5 conduct and financial disclosure requirements to be observed by
12-6 each member of the board and by the executive director in the
12-7 performance of official duties.
12-8 (c) The standards of conduct and financial disclosure
12-9 requirements must provide for:
12-10 (1) establishing general definitions;
12-11 (2) determining when there is substantial conflict;
12-12 (3) determining who is considered a dependent child of
12-13 a board member or the executive director;
12-14 (4) requiring each member of the board and the
12-15 executive director to file a financial disclosure statement;
12-16 (5) appointing a review board;
12-17 (6) establishing the composition of the review board;
12-18 (7) designating a custodian of records;
12-19 (8) establishing the manner in which records must be
12-20 retained;
12-21 (9) establishing which information, generally, must be
12-22 included in a financial statement;
12-23 (10) establishing the time for filing a financial
12-24 statement;
12-25 (11) establishing the form in which a financial
13-1 statement must be presented;
13-2 (12) determining compliance with this section;
13-3 (13) allowing public access to financial statements
13-4 when required by law or when appropriate;
13-5 (14) establishing sanctions for a violation of this
13-6 section that include removal of a member of the board or the
13-7 executive director in the case of a serious violation;
13-8 (15) establishing standards of conduct for board
13-9 members and the executive director; and
13-10 (16) identifying other matters relating to conduct of
13-11 board members and the executive director and to financial
13-12 disclosure that the board considers appropriate.
13-13 ARTICLE 8. TRANSITION; EFFECTIVE DATE; EMERGENCY
13-14 SECTION 8.01. APPOINTMENT OF INITIAL BOARD.
13-15 (a) Notwithstanding Article 2 of this Act, the initial elections
13-16 of the board shall be conducted in accordance with this section.
13-17 (b) The firefighters association in the municipality shall
13-18 administer the initial election of active firefighter and of
13-19 retiree or beneficiary firefighter members of the board. The
13-20 police association in the municipality shall administer the initial
13-21 election of active police officer and of retiree or beneficiary
13-22 police officer members of the board. The associations shall
13-23 conduct the elections by sending and receiving ballots by mail.
13-24 (c) Only retirees who retired after October 1, 1989, and
13-25 surviving spouses of retirees who retired after October 1, 1989,
14-1 are eligible to vote or be a candidate in the initial elections for
14-2 the retiree or beneficiary representatives to the board.
14-3 (d) One active firefighter below the rank of fire chief
14-4 elected in the initial election shall serve a two-year term, and
14-5 the other active firefighter below the rank of fire chief elected
14-6 in the initial election shall serve a four-year term. One active
14-7 police officer below the rank of police chief elected in the
14-8 initial election shall serve a two-year term, and the other active
14-9 police officer below the rank of police chief elected in the
14-10 initial election shall serve a four-year term. One retiree or
14-11 beneficiary representative elected in the initial election shall
14-12 serve a two-year term, and one retiree or beneficiary
14-13 representative elected in the initial election shall serve a
14-14 four-year term.
14-15 (e) The associations shall determine by lot and indicate on
14-16 the ballots which places on the initial board are designated for
14-17 two-year or four-year terms.
14-18 SECTION 8.02. EFFECTIVE DATE. This Act takes effect October
14-19 1, 1997.
14-20 SECTION 8.03. EMERGENCY. The importance of this legislation
14-21 and the crowded condition of the calendars in both houses create an
14-22 emergency and an imperative public necessity that the
14-23 constitutional rule requiring bills to be read on three several
14-24 days in each house be suspended, and this rule is hereby suspended.