SRC-DBM H.B. 3377 76(R) BILL ANALYSIS
Senate Research Center H.B. 3377
By: Turner, Sylvester (Gallegos)
Intergovernmental Relations
5/3/1999
Engrossed
DIGEST
Currently, Articles 6243g-1 and 6243g-3, V.T.C.S., provide for police
officers pension systems in cities with populations of 1,200,000 or more.
To date, these articles only apply to the City of Houston. Consolidation of
these articles, with modifications, may make the administration of police
officer pension systems in applicable cities simpler and more efficient.
H.B. 3377 would repeal Articles 6243g-1 and 6243g-3, V.T.C.S., and set
forth provisions regulating membership, credit in, and benefits and
administration of public retirement systems for police officers in certain
municipalities.
PURPOSE
As proposed, H.B. 3377 repeals Articles 6243g-1 and 6243g-3, V.T.C.S., and
sets forth provisions regulating membership, credit in, and benefits and
administration of public retirement systems for police officers in certain
municipalities.
RULEMAKING AUTHORITY
This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Title 109, V.T.C.S., by adding Article 6243g-4, as
follows:
Art. 6243g-4. POLICE OFFICERS PENSION SYSTEM IN CERTAIN MUNICIPALITIES
Sec. 1. PURPOSE. Provides that the purpose of this article is to restate
and amend the provisions of former law governing a police officers pension
system in each city in this state having a population of 1.5 million or
more to permit the consolidation of the terms of certain pension plans.
Sec. 2. DEFINITIONS. Defines "active member," "average total district
pay," "base salary," "board," "code," "dependent," "dependent child,"
"dependent parent," "DROP," "employee," "former member," "fund," "inactive
member," "member," "normal retirement date," "pension," "pension system" or
"system," "school," "retired member," "separation from service," "service,"
"surviving spouse," and "total direct pay."
Sec. 3. PENSION BOARD. Provides that the board of trustees of the pension
system (board) that was created under Chapter 76, Acts of the 50th
Legislature, Regular Session, 1947 (Article 6243g-1, V.T.C.S.), continues
to be responsible for the general administration, management, and operation
of the pension system, including the direction of investment and oversight
of the fund's assets. Sets forth the composition of the board. Sets forth
the terms of office of board members elected as described by Subsections
(b) (2) and (b) (3) of this section. Provides that a board member vacates
the member's seat on the board if the member is removed under Section 7 of
this article or ceases to meet the qualifications of the seat. Prohibits
an officer or employee of any employee or retiree organization or an
employee of the pension system from being elected to, appointed to, or in
any other way becoming a board member if it is so determined at the onetime
election held for the pension system before October 1, 1999. Requires each
board member to take an oath of office within a specific time frame.
Sec. 4. BOARD MEMBER LEAVE AND COMPENSATION. Provides that elected
members of the board who are employees of the city's police department are
entitled to leave from their employer to attend the official business of
the pension system. Authorizes the pension system to elect to compensate
the city for the loss of service of a member if the city employing an
elected board member would withhold the any portion of the member's salary
who is attending to official business of the pension system. Requires
amounts to be remitted from the fund to the city, and the city to pay the
board member's salary as if no loss of service had occurred, if the board,
by an affirmative vote of at least four members makes this election.
Authorizes the board, by an affirmative vote of at least four board
members, to elect to reimburse board members who are not employees of the
city for their time while attending to official business of the pension
system. Prohibits the amount of reimbursement from exceeding $350 per
month for each affected board member.
Sec. 5. OFFICERS; MEETINGS; EMPLOYEES. Requires the board to annually
elect, from its active and retired membership, a chairman. Requires the
board to annually elect a vice chairman, and secretary from its membership.
Authorizes the board to hire one or more employees whose positions and
salaries shall be set by the board and who, acting under the direction of
the board shall keep all of the records of and perform all of the clerical
services for the pension system. Authorizes the board to employ
professional investment managers and advisors to manage or advise the board
regarding the management and investment of the fund. Authorizes these
professional services to include certain investment services. Authorizes
the board to employ certain professionals and pay for theses services from
the fund. Requires the board to hold regular monthly meetings at the time
and place it designates by resolution. Authorizes the chairman, secretary,
or any four members to call a special meeting. Provides that each board
member is entitled to one vote. Requires adequate notice to be given to
all board members of any proposed meeting by any method reasonably
calculate to provide adequate notice of the meeting, unless waived in
writing. Authorizes a notice to be delivered by certain methods with
recordation of receipt by the receiving board member. Provides that if all
board members attend a meeting, however, failure to give notice as required
by this subsection is excused. Requires the board to keep accurate minutes
of its meetings and records of its proceedings.
Sec. 6. GENERAL POWERS AND DUTIES. Requires the board to retain control
over all money collected or to be collected for the pension system; to
keep separate from all other funds all money for the use and benefit of the
system; and to keep a record of all claims, receipts, and disbursements in
one or more books maintained for that purpose. Requires the board to
establish the policies and procedures for appropriate disbursements from
the fund that it considers appropriate. Authorizes the board to reimburse
a board member, officer, or employee of the board for liability imposed as
damages because of an alleged act, error, or omission committed in the
individual's capacity as fiduciary or co-fiduciary of the fund's assets,
or as an officer or employee of the board and for costs and expenses
incurred by a fiduciary or cofiduciary officer or employee in defense of a
claim or an alleged act, error, or omission, or may purchase from an
insurer licensed to do business in this state, one or more insurance
policies that provides for the reimbursement. Prohibits any reimbursement
from being provided nor any insurance policy from being purchased that
would provide for reimbursement of a board member or an officer or employee
of the board for liability imposed or expenses incurred because of the
individual's personal dishonesty, fraudulent breach of trust, lack of good
faith, intentional fraud or deception, or intentional failure to act
prudently. Requires the cost of reimbursement or insurance coverage to be
paid from money in the fund. Requires the board to administer the pension
system consistent with the applicable provisions of the code. Provides
that the board is vested with the power to adopt written rules and
guidelines consistent with this article for the administration of the
pension system. Provides that the board has full discretion and authority
to administer the pension system, to construe and interpret this article,
and to perform all other acts necessary to carry out the purpose of this
article. Provides that all board decisions are final and binding on all
affected parties.
Sec. 7. REMOVAL OF BOARD MEMBER. (a) Authorizes an elected board member
to be removed from the board either by a vote of the membership of the
pension system at a removal election initiated and held or by a vote of
five board members together with a decision to remove the board member made
by a hearing examiner as provided by this section.
(b) Authorizes an appointed member of the board to be removed from the
board by the administrative head of the city.
(c) Sets forth the initiation, time frame, and results of a removal
election for the members of the pension system.
(d) Requires the board to call a special election to be held within a
specific time frame to fill the vacancy for the unexpired term of the
person who was removed. Provides that the person who was removed is not
eligible to run in the special election, but is eligible to run in all
subsequent board elections.
(e) Authorizes a board member to be removed as provided by this subsection
and Subsections (f) and (g) of this section, except as otherwise provided
by Subsections (a) and (b) of this section. Requires the board or its
designee and the board member whose removal is proposed to attempt to agree
on the selection of an impartial hearing examiner, after an affirmative
vote of the board to remove a member under Subsection (a) of this section.
Requires the parties, if the parties do not agree on the selection of a
hearing examiner not later than a certain time, on the next workday, to
request a certain list of qualified neutral arbitrators. Authorizes the
board member whose removal is proposed and the board or their designees to
agree on one of the seven neutral arbitrators on the list. Requires each
party or the party's designee to alternate striking a name for the list,
and the name remaining is the hearing examiner, if the parties fail to
agree before the 26th day after the date the board first votes to remove a
board member. Requires the parties to strike names from a list on the next
workday, if the 25th day falls on a Saturday, Sunday, or legal holiday.
Requires the parties or their designees to agree on a date for a hearing
that is withing the period prescribed by Subsection (f) of this section.
(f) Sets forth the hearing process. Authorizes the hearing examiner's
final decision to be to remove or not to remove a board member.
Authorizes the board member to be removed only if the hearing examiner
determines that the board member violated Chapter 121A, Property Code.
Requires the pension system to pay the fees and cost of the hearing
examiner. Requires the costs of a witness to be paid by the party who
called the witness.
(g) Provides that a person removed from the board is entitled to have the
hearing examiner's decision reviewed, if the hearing examiner's decision is
to remove a board member. Sets forth the process of having the decision
reviewed. Requires a board member to be reinstated if a majority of the
active and retired members of the pension system participate favor
overruling the hearing examiner's decision. Requires a replacement
election to be held not later than the 30th day preceding election, if a
majority did not vote to overrule the decision to remove a board member.
(h) Provides that during a certain period, a person's privileges as a
board member are suspended.
Sec. 8. CONTRIBUTIONS BY MEMBERS. Requires each active member to pay
8-3/4 percent of the member's total direct pay into the pension system each
month. Requires the payments to be deducted by the city from the salary of
each active member monthly and paid to the pension system. Prohibits a
person from being required or permitted to make any payments into the
pension system after the person separates from service, except for the
repayment of withdrawn contributions. Provides that this article does not
increase or decrease the contribution obligation of any member that arose
before September 1, 1999, or give rise to any claim for refund for any
contributions made before that date.
Sec. 9. MONTHLY PAYMENT BY CITY. (a) Requires the city to make
contributions to the fund after each payroll period in an amount
previously agreed to by the city and board for fiscal years ending before
June 30, 2002. Sets forth the contribution rate for the fiscal year ending
June 30, 2002, and another rate for each fiscal year ending after June 30,
2002.
(b) Requires the city, in addition to the contributions required by
Subsection (a) of this section, to contribute to the fund each month an
amount equal to the aggregate payments the city would have paid during that
month to members who have separated from service for unused sick leave,
vacation pay, and accumulated overtime pay to which the members were
entitled at the time of separation from service under certain
circumstances, if requested to do so by the board. Prohibits members
described by this section from receiving these payments directly.
(c) Authorizes the governing body of a city, to which this article
applies, by ordinance or resolution, to provide that the city pick up
active member contributions required by Section 8 so that the contributions
of all active members of the pensions system qualify as picked up
contributions under Section 414(h)(2) of the code. Requires the city,
board, and any other necessary party to implement an action as soon as
practicable, if a governing body of a city adopts an ordinance or
resolution under this section. Requires picked up contributions, as
provided by this Subsection, to be included in the determination of an
active member's total pay, deposited to the individual account of the
active member on whose behalf they are made, and treated, for all purposes,
other than federal tax purposes, in the same manner and with like effect
as if they had been deducted from the salary of, and made by the active
member.
Sec. 10. INVESTMENT OF SURPLUS. Requires the board to invest a surplus of
funds in the manner provided by Chapter 802, Government Code, if the board
determines that a surplus of funds exists in an amount exceeding the
current demands upon the pension system. Authorizes the board to select an
investment manager or investment advisor if the board determines the
service is desirable. Requires selection of mangers or advisors to be made
from a firm that has made presentations in person or in writing to the
board. Authorizes the board to terminate a contract with an investment
advisor at any time and to terminate a contract with an investment manager
by notice the board considers to be appropriate. Prohibits a contract from
requiring the pension system to pay a penalty for early termination.
Requires the costs of the investment management of advisory services to be
paid from the fund.
Sec. 11. SERVICE CREDIT. Provides that a member returns to service after
an interruption in service is entitled to credit for previous service, to
the extent provided by Section 19 of this article. Requires a member who
is retiring to receive one-half day of service for each day for which the
city is required to make contributions with respect to the member's unused
sick leave, vacation pay, or accumulated overtime under Section 9(b) of
this article, except to the extent the member elects to have the amounts
credited to the member's deferred retirement option plan (DROP) account.
Prohibits, under any circumstances, payment for the same days of unused
sick leave, vacation pay, or accumulated overtime from being used to both
increase a member's service and credit the member's DROP account. Provides
that, notwithstanding Subsection (a) of this section, if a member has
withdrawn the contributions made during any previous period of service, the
previous period of service may not be counted in determining years of
service unless the contributions are repaid to the pension system in
accordance with Section 17 of this article. Prohibits a member from having
any service credited for unused sick leave, vacation pay, or accumulated
overtime until the date the member retires, at which time the member may
apply some or all of the service to satisfy the requirements for
retirement, although the member otherwise could not meet the service
requirement without credit. Requires the board to determine the prior
service to be credited to each employee of the police department who
becomes an active member of the pension system. Requires the board to rely
on personnel records of the city or the police department in determining
prior service credits.
Sec. 12. RETIREMENT; AMOUNT OF PENSION; ANNUAL ADJUSTMENTS. (a) Provides
that a member who separates from service after earning 20 or more years of
service is eligible to receive a monthly service pension beginning in the
month of separation from service. Provides that a member who separates
from service with the city after November 23, 1998, after earning 10 or
more but less than 20 years of service in any of the city's pension systems
and who complies with all applicable requirements of Section 19 of this
article is eligible to receive a monthly service pension, beginning in the
month the individual attains 60 years of age. Prohibits a member from
receiving a pension under this article while still an active member, except
as provided by Subsection (f) of this section. Provides that all service
pensions end with the month in which the retired member dies.
(b) Sets forth the monthly service pension for a member who separates from
service after November, 23, 1998. Requires a member who separates from
service after November 23, 1998, including a member who was a DROP
participant, and begins to receive a monthly service pension to also
reci3ve a one-time limp-sum payment of $5,000 at the same time the first
monthly pension payment is made. Provides that the lump-sum payment under
this subsection is not available to a member who has previously received a
$5,000 payment under this section or Section 16 of this article.
(c) Requires the pension payable to each retired member to be adjusted
annually, effective April 1 of each year, upward at a specific rate.
Prohibits the amount of the annual adjustment from being less than three
percent or more than eight percent of the pension being paid immediately
before the adjustment, notwithstanding a greater or lesser increase in the
consumer price index.
(d) Provides that a retired member who receives a service pension under
this article is entitled to receive an additional $88.05 each month
beginning on the date the retired member's pension begins and continuing
until the end of the month in which the retired member dies. Provides that
this amount is intended to defray the retired member's group medical
insurance costs and will be paid directly by the fund to the retired member
for the retired member's lifetime.
(e) Requires the pension system, at the end of each calendar year
beginning after 1998, and subject to the conditions provided by this
subsection, to make a 13th benefit payment to each person who is receiving
a service pension. Sets forth the amount of the payment. Authorizes the
13th payment to be made only for those calendar years in which the fund
meets specific requirements.
(f) Authorizes an active or inactive member who is eligible to participate
in the executive official pension plan established by Chapter 358, Acts of
the 48th Legislature, Regular Session, 1943 (Article 6243g, V.T.C.S.), or a
successor statute, while continuing employment with the police department,
to participate in the executive official pension plan and if an active
member, to make certain elections, or if an inactive member, to begin
receiving a certain immediate pension benefit and to be entitled to all
rights and privileges afforded a retired member under this article.
(g) Requires service pensions that began before September 1, 1999,
notwithstanding anything to the contrary, to continue to be paid in
accordance with applicable prior law and subject only to the adjustments
that are specifically provided by this section.
Sec. 13. RESUMPTION OF SERVICE AS DEPARTMENT HEAD AFTER RETIREMENT.
Requires the pension system to suspend all pension payments to a retired
member who has separated from service and is subsequently appointed as the
department head of the police department. Provides that the suspension of
payments begins on the effective date of the person's appointment. Provides
that the pension payments based on a person's previous period of service do
not accrue during the pension payment suspension period, and contributions
of the city and the department head for the subsequent service are payable
during the period. Provides that the department head retains credit for
all previous service and acquires credit for the subsequent service unless
the department head is or becomes a DROP participant. Requires the pension
benefits under this article to resume once the department head again
separates from service.
Sec. 14. DEFERRED RETIREMENT OPTION PLAN. (a) Defines "DROP benefit."
(b) Authorizes an active member who has at least 20 years of service with
the police department to file an irrevocable election to participate in
DROP and receive a DROP benefit instead of the standard form of pension
provided by this article with the pension system. Authorizes an election
to be made under procedures established by the board, by an active member
who has attained the required years of service.
(c) Provides that the monthly service pension and death benefits of an
active member who becomes a DROP participant will be determined as if the
active member had separated from service and begun receiving a pension on
the effective date of the DROP election. Provides that an active member
does not retire but does not accrue additional service credit beginning on
the effective date of the election, and increases in pay that occur on or
after that date may not be used in computing the active member's monthly
service pension, but cost-of-living adjustments that occur on or after that
date and that otherwise would be applicable to the pension will be made.
(d) Sets forth the computation of the amount of a member's DROP benefit
and takes into account a 13th payment and unused sick leave, vacation pay,
and accumulated overtime.
(e) Provides that as of the end of each month an amount is credited to
each active member's notional DROP account at the rate of one-twelfth of a
hypothetical earnings rate on amounts in the account. Sets forth the
computation for a hypothetical earnings rate. Authorizes the board to
lower any future rate below the rate otherwise prescribed by this section,
to the extent necessary to ensure that the DROP does not adversely affect
the financial condition of the fund.
(f) Authorizes a member, a member's spouse, or if there is no eligible
spouse, any other person eligible to receive benefits under Section 16 of
this article, as applicable, to receive an amount equal to the member's
DROP account or revoke the member's DROP election and elect to receive
benefits as provided by this article without regard to this section, if a
DROP participant separates from service because of disability or death.
Requires a revocation and election under this subsection to be made at the
time and in the manner provided in a procedure that the board may adopt
from time to time. Authorizes the board to adopt a procedure for revocation
and election. Authorizes, alternatively, a retired member, a deceased
member's spouse, or, if there is no spouse, the person entitled to receive
benefits under Section 16 of this article may elect to receive a
distribution that is equal to the member's DROP account and benefits as
described by Subsection (c) of this section.
(g) Authorizes a retired member, in lieu of receiving a lump sum DROP
benefit on separation from service, who has been a DROP participant to
leave the retired member's DROP account with the pension system, in which
case interest will be credited to the DROP account n the manner described
by this subsection. Requires interest credited for any month to be at the
applicable annual interest rate as defined by Section 417 (e) (3) (A) (ii)
(III) of the code and published by the Internal Revenue Service for June of
the year preceding the calendar year in which the interest is credited.
(h) Authorizes a retired member who is a DROP participant to elect to have
part or all of the amount that would otherwise be paid as a monthly service
pension, less any amount required to pay the retired member's share of
group medical costs, credited to a DROP account, in which case the
additional amounts will become eligible to be credited with hypothetical
earnings in the same manner as the amounts described by Subsection (g) of
this section.
(i) Authorizes a retired member who has not attained age 70-1/2, whether
or not a DROP participant before retirement, to elect to have part or all
of an amount equal to the monthly service pension that a retired member
would otherwise be entitled to receive, less any amount required to pay the
retired member's share of group medical insurance costs, credited to a DROP
in which case the amounts will become eligible to be credited with
hypothetical earnings in the same manner as the amounts described by
Subsection (g) of this section. Authorizes, a retired member who has
elected to have monthly service pension benefits credited to a DROP account
under this subsection or Subsection (h) of this section, to direct that the
credits stop and the monthly service pension resume at any time. Prohibits
such a member from resuming the credits after stopping them after September
1, 1999.
(j) Authorizes a retired member who is a DROP participant, to elect to
receive distribution of the DROP account in a one-time lump-sum payment or
in any other form of distribution that is approved by the board and
satisfies the requirements of Section 401(a) (9) of the code. Requires
distributions to a deceased member's survivors, as described by Subsection
(f) of this section, to be made in a lump-sum as soon as administratively
feasible after the deceased member's death.
(k) Requires any pension or DROP distribution that was being paid to be
suspended and the monthly amount described by Subsection (d) of this
section will again begin to be credited to the DROP account while the
member continues to be an employee, if a retired member who is or was a
DROP participant is rehired as an employee of the police department.
Provides that a new notional account will be created to receive the
member's monthly credits if a member's DROP account has been completely
distributed. Requires a member to be eligible to elect participation in
DROP on the same basis as any other member if a retired member who was
never a DROP participant is rehired as a member of the police department.
(l) Authorizes the board to take action as necessary to mitigate the
unanticipated actuarial cost, including discontinuing acceptance of
additional elections to participate in DROP, but the pension system shall
continue to administer DROP for the members who were participating before
the discontinuance of enrollment, if DROP causes any unanticipated
actuarial costs.
Sec. 15. DISABILITY BENEFITS. (a) Requires an active member who becomes
totally and permanently incapacitated for the performance of the member's
duties as a result of a bodily injury received in, or illness caused by,
the performance of those duties, on presentation to the board of proof of
total and permanent incapacity, to be retired and to receive an immediate
duty-connected disability pension equal to the greater of 50 percent of the
member's average total direct pay at the time of retirement or the member's
accrued service pension. Provides that the member is eligible for a
duty-connected disability pension if the injury or illness involves a
traumatic event that directly causes an immediate cardiovascular condition
resulting in a total disability. Requires a disability pension granted by
the board to be paid to the member for the remainder of the member's life
or for as long as the incapacity remains.
(b) Provides that a member with 10 years or more of credited service who
becomes totally and permanently incapacitated for the performance of the
member's duties and is not eligible for either an immediate service pension
or a duty-connect disability pension is eligible for an immediate monthly
pension computed in the same manner as a service retirement pension but
based on average total direct pay and service accrued to the date of the
disability.
(c) Provides that a member who becomes entitled to receive a disability
pension after November 23, 1998, is entitled to receive a one-time
lump-sum payment of $5,000 at the same time the first monthly disability
pension payment is made, but only if the member has not previously received
a $5,000 payment under this section or Section 12 of this article.
Requires a person to also receive $88.05 beginning on the date the pension
begins and continuing as long as the disability pension continues to help
defray the cost of group medical insurance. Provides that a retired member
whose disability pension was in pay status on November 23, 1998, is
entitled to receive a one-time lumpsum payment of $5,000 as soon as
administratively feasible after November 23, 1998. Provides that the
payment has no effect on the amount of the retired member's pension.
Requires a 13th payment to also be paid to members who have retired under
this section for any year in which a 13th payment is made to retired
members.
(d) Prohibits a person from receiving a disability pension unless the
person files an application for disability pension with the board not later
than 180 days after separation from service, at which time the board shall
have the person examined by a physician chosen and compensated by the
board. Requires the physician to make a report and recommendations to the
board regarding the extent of any disability and whether any disability
that is diagnosed is a duty-connected disability. Prohibits a person from
receiving a disability pension for an injury received on or illness
incurred after separation from service.
(e) Provides that a retired member who has been retired for disability is
subject at all times to reexamination by the board's physician and
compensated by the board, and shall submit to further examination as the
board may require. Authorizes the board to order disability payments
stopped if the retired member refuses to submit to an examination.
Requires the board to order a member's disability pension stopped if, a
retired member who has been receiving a disability pension under this
section recovers so that in the opinion of the board, the retired member is
able to perform the usual and customary duties formerly prescribed by the
police department, and the retired member is reinstated or offered
reinstatement to the position, or to a position reasonably comparable in
rank and responsibility to the position, held at the time of separation
from service, the board shall order the member's disability pension
stopped.
(f) Authorizes the board to require any person who first becomes an active
member of the pension system on or after September 1, 1999, and
subsequently begins to receive a non-duty-connected disability pension to
provide the board annually, on or before May 1 of the second year after the
year the disability pension begins, a true and complete copy of those
portions of the retired member's federal or, if applicable, state tax
return, including appropriate schedules, for the previous calendar year
that indicate the retired member's occupations and earned income for the
previous calendar year. Authorizes the pension system to waive the
requirement for filing a copy of a tax return or delay the due date until
later in the same calendar year, if the retired member provides the board
with a true and complete copy of an extension request that results in any
automatic extension. Requires the board to reduce future disability
payments according to a certain specific formula if the retired member is
or has been receiving earned income from one or more employments, including
self-employment, during the previous year.
(g) Provides that, for the purposes of this section, a member is totally
and permanently incapacitated from performing duties if the member is
prevented by a physical or mental injury or illness from performing duties
in the police department after any reasonable accommodation offered by the
police department and this condition is expected to be permanent.
Sec. 16. RIGHTS OF SURVIVORS. (a) Provides that a marriage, for the
purposes of this article, is considered to exist only if the marriage is
recorded in the records of the recorder's office in the county in which the
marriage ceremony was performed or, in the case of a declaration of
common-law marriage, if the declaration is signed by the member and
member's common-law spouse before a notary public and filed with the board.
Prohibits a marriage that is evidenced by a declaration of common-law
marriage signed before a notary public after December 31, 1999, from being
treated as effective earlier than the date on which it was signed before
the notary public.
(b) Sets forth the manner in which an immediate monthly benefit is required
to be paid by the board, if a retired member dies after becoming entitled
to a service or disability pension.
(c) Provides that a member's surviving spouse, dependent child or children,
or dependent parent or parents are entitled to receive a certain
immediately computed benefit, if any active member who has not completed 10
years of service in the police department is killed or dies from any cause
not associated with the actual performance of the member's official duty.
(d) Provides that if any active member has completed 10 or more years of
service in the police department and is killed or dies from a cause not
associated with the actual performance of the member's official duty, the
member's surviving spouse, dependent child or children, or dependent parent
or parents are entitled to receive benefits to an immediate benefit,
computed in accordance with Subsection (b) of this section, but based on
the deceased member's service and average total direct pay at the time of
death. Provides that if any inactive member dies from any cause after
completing 10 or more years of service in the police department, the
member's surviving spouse, dependent child or children, or dependent parent
or parents are entitled to receive benefits computed as provided in the
preceding sentence and beginning at the time the member would have attained
age 60, if the member had lived.
(e) Provides that a member's surviving spouse, dependent child or children,
or dependent parent or parents are entitled to receive immediate benefits
computed in accordance with Subsection (b) of this section, except that the
benefit payable to the appropriate beneficiary is equal to 100 percent of
the member's average total direct pay, computed as of the date of the
death, if any active member is killed or dies from any cause associated
with the member's duty.
(f) Provides that a surviving spouse who receives a survivor's benefit
under this article is entitled to receive an additional amount each month
equal to $88.50, beginning with the first payment of the survivor's benefit
and continuing until the end of the month in which the surviving spouse
dies.
(g) Provides that a surviving spouse or dependent who was in pay status on
November 23, 1998, is entitled to receive a one-time lump-sum payment of
$5,000 as soon as administratively feasible after November 23, 1998.
Provides that the surviving spouse or dependent who become eligible to
receive benefits with respect to an active member who dies in active
service after November 23, 1998, is entitled to receive a one-time lump-sum
payment of $5,000 at the time the first monthly pension benefit is paid, if
the member has not already received a $5,000 lump-sum payment under Section
12 or 15(c) of this article. Requires that the $5,000 to be divided
equally among the eligible dependents, if more than one dependent is
eligible to receive payment under this subsection. Provides that this
payment has no effect on the amount of the surviving spouse's or
dependents' monthly pension, and prohibits it from being paid more than
once.
(h) Requires that the monthly benefits of surviving spouses or dependants
provided under this section, except the $88.05 monthly payments described
by Subsection (f)of this section, to be increased annually at the same time
and by the same percentage as the pensions of retired members are increased
in accordance with Section 12(c) of this article. Requires a 13th payment,
in any year in which one is made pursuant to Section 12(e) of this article,
to be made to survivors who are entitled to receive death benefits at that
time.
(i) Requires that the monthly payments to continue to be made to the
designated beneficiary of the member or survivor, or to the estate of the
member or survivor if a beneficiary was not designated, in the same amount
as the last monthly payment made to the member, survivor, or estate, until
payments have been made for five years with respect to the member, if a
member or an individual receiving a survivor's pension dies before monthly
payments have been made for at least five years, leaving no person
otherwise entitled to receive further monthly payments with respect to the
member. Requires that the amount of each monthly payment over the five-year
period to be the same as the monthly payment had the member would have
received if the member had taken disability retirement on the date of
death, if the member dies after becoming vested but before payments begin,
leaving no survivors eligible for benefits. Authorizes a member to
designate a beneficiary in lieu of the member's estate to receive the
remaining payments in the event the member and all survivors die before
payments have been received for five years. Provides that the member's
estate or a beneficiary who is not a survivor or dependent is not entitled
to receive the payment described by Subsection (g) of this section.
Sec. 17. TERMINATION OF EMPLOYMENT; REFUNDS; REDEPLOYMENT. (a) Provides
that when any active member separates from service, either voluntarily or
involuntarily, before becoming eligible for an immediate service retirement
or disability pension, the member ceases to be an active member.
(b) Provides that a member who has not completed 20 years of service at the
time of separation from service with the police department is entitled to a
refund of the total of the contributions the member made to the pension
system, plus any amount that was contributed for the member by the city and
not applied in accordance with this section to provide the member with 10
years of service. Provides that the refund does not include interest, and
neither the city nor the member is entitled to a refund of the
contributions the city made on the member's behalf, except as expressly
provided by this subsection. Provides that a member forfeits any service
earned before separation from service, even if it is otherwise
nonforfeitable, by receiving the refund.
(c) Requires the board to notify each member of the pension system of the
right to a refund as authorized by this section.
(d) Requires a member to apply to the board for a refund within one year
after the date of separation from service. Provides that failure to apply
for the refund within a oneyear period results in a forfeiture of the right
to a refund except for an inactive member whose right to a pension is
nonforfeitable. Authorizes, however, the board to reinstate any amount
forfeited and allow the refund on application by the former member.
(e) Provides that heirs, executors, administrators, personal
representatives, or assignees are not entitled to apply for and receive the
refund authorized by this section except as provided by Section 16(c) of
this article.
(f) Requires a person to be reinstated as an active member of the pension
system, if a person who separates from service and receives a refund is
subsequently reemployed as an employee of the police department. Prohibits
prior service of an active member with the police department from being
counted toward a retirement pension unless the member pays, not later than
the 90th day after the date of a subsequent separation from service, an
amount equal to any contributions previously refunded to the member under
this section to the pension system. Provides that, except as provided by
Section 18, a person is not eligible to repay any withdrawn contributions
unless the person is reemployed by the police department of the city for
which the prior service was performed.
(g) Authorizes a member who is contesting an indefinite suspension action,
on application to the board, to receive a return of the member's
contributions and be separated from service on receipt of the
contributions. Provides that otherwise, a suspended member is considered
to have a separation from service when a final decision of the arbitrator
adverse to the member is rendered.
(h) Authorizes city contributions made under Section 9(b) of this article,
based on unused sick leave, vacation pay, and accumulated overtime pay of a
member who has separated from service to be applied, at the election of a
member seeking a refund, to pay a refund of member contributions if the
contributions are not used under Section 11(c) of this article to satisfy a
service requirement for retirement.
Sec. 18. EMPLOYMENT BY ANOTHER DEPARTMENT (a) Prohibits credit, except
as provided by this section, from being allowed to any person for service
with any department in the city other than the police department. Provides
that, except as provided by this section, a person's service will be
computed from the date of entry into the service of the police department
until the date of separation from service with the police department, if
the person is transferred to or from some other department of the city to
or from the police department.
(b) Requires, solely for purposes of determining whether a person has a
sufficient number of years of service to receive a retirement pension, and
not for purposes of determining the amount of the pension or DROP credit, a
person who is employed in any full-time position with the city after
November 23, 1998, and has or obtains any credited service with the pension
system after that date, to receive service credit for any period of
full-time employment with the same city. Prohibits, however, a person from
receiving credit for service with both the police department and any other
department of the city for the same period.
(c) Requires, notwithstanding Section 17 of this article and Subsection
(b), a former member of the pension system to be permitted to repay
withdrawn contributions and restore service credit previously earned with
the pension system, even if the former member is not reemployed by the
police department, the member meets certain criteria, and repays to the
pension system the withdrawn contributions within a specific time frame.
Sec. 19. PERSONS REJOINING OR TRANSFERRED BY CITY; SERVICE CREDIT; DOUBLE
BENEFITS; RETURN TO SERVICE. (a) Provides that an employee who has
retired under this article or under former law governing the pension system
and is or has been transferred by action of the city to a classified
position in a police department included in the pension system again
becomes an active member of the pension system as of the effective date of
the transfer.
(b) Provides that a person who rejoins the pension system under this
section is entitled to receive service credit for each day of service and
work performed by the person in a classified position in the police
department, except for any period during which the person is a DROP
participant. Requires the board to add service earned after the transfer
to the prior service the active member accrued in a classified position in
the police department. Prohibits, however, an active member from
receiving service credit under this article, except to the extent provided
by Section 18, for service performed for the city other than in a
classified position in the police department.
(c) Provides that contributions of the city and the active member become
payable as for other active members of the pension system after a transfer
described by this section.
(d) Provides that a member who has transferred and subsequently retires
is entitled to receive a pension based on a specific computation.
(e) Requires a retired member to repay to repay to the pension system
benefits received during the period, if a retired member receives both
pension benefits and a salary from a classified position in the police
department that covers the same period. Requires the board to withhold
payment of pension benefits under this article if it is determined that a
retired member is receiving both pension benefits from the fund and a
salary from the police department that cover the same period. Requires the
city attorney or a private attorney chosen by the board, on request of the
board, to file suit in a court of competent jurisdiction to recover pension
benefits owed to the pension system under this section.
(f) Provides that this article does not authorize the return to service
with a police department or the resumption of active membership in the
pension system by a retired member except as specifically provided by
Sections 13 or 14 of this article or this section.
Sec. 20. DONATIONS. Authorizes the pension system to accept gifts and
donations. Requires the gifts and donations to be added to the fund for
the use of the pension system.
Sec. 21. DETERMINATION OF BENEFITS; PROVISION OF INFORMATION. Authorizes
the board to require any member, survivor, or other person or entity to
furnish information the board requires for the determination of benefits
under this article. Authorizes the board to withhold payment of a pension
or other benefits if a person or entity does not cooperate in the
furnishing or obtaining of information required as provided by this
section.
Sec. 22. LEGAL ADVICE. Requires the city attorney of the city to handle
all legal matters for the pension system that are referred by the board
without additional compensation for the service. Authorizes the board,
however, to employ outside legal counsel to the exclusion of, or to
assist, the city attorney and to pay reasonable compensation for the
service from the fund.
Sec. 23. MEMBERS IN MILITARY SERVICE. (a) Prohibits a member of the
pension system engaged in active uniformed service from being required to
make monthly payments into the fund and from losing any previous years'
service with the city because of the uniformed service. Requires the
uniformed service to count as continuous service in the police department
if the member returns to the city police department after discharge from
the uniformed service as an employee within the period required by the
Uniformed Services Employment and Reemployment Rights Act of 1994 (38
U.S.C. Section 4301 et seq.), as amended, and the uniformed service does
not exceed the period for which a person is entitled to have service
counted pursuant to that Act.
(b) Requires the city to make its regular monthly payments into the fund
on behalf of each member while the member is engaged in uniformed service.
Provides that a member's spouse, dependent children, dependent parent, or
estate is entitled to receive a refund in the sam manner as described by
Section 16(c) of this article, if a member who has less than 10 years of
service in the pension system dies directly or indirectly as a result of
the uniformed service.
Sec. 24. ACTIONS FOR FUNDS MISAPPLIED. Authorizes the board to recover by
civil action from any offending party or from the party's bondsman, if any,
any money paid out or obtained from the fund through fraud,
misrepresentation, theft, embezzlement, or misapplication and may
institute, conduct, and maintain the action in the name of the board for
the use and benefit of the fund. Requires payments due on behalf of a
dependent child to be paid to the dependent child's guardian, if any, or if
none to the person with whom the dependent child is living, except the
board may make payments directly to a dependent child in an appropriate
case and to withhold payments otherwise due on behalf of any person if the
board has reason to believe the payments are not being applied on behalf of
the person entitled to receive them. Authorizes the board to request a
court of competent jurisdiction to appoint a person to receive and
administer the payments due to any dependent child or person under a
disability.
Sec. 25. FEDERAL TAX QUALIFICATION OF FUND. (a) Provides that the fund
described by this article is intended to qualify under Section 401(a) of
the code and is for the exclusive benefit of the members and their
survivors. Prohibits any part of the corpus or income of the fund from
ever being used for, or diverted to, any purpose other than the benefit of
members and their survivors as provided by this article.
(b) Prohibits a member or survivor of a member of the pension system from
accruing a retirement pension, disability retirement allowance, death
benefit allowance, DROP benefit, or any other benefit under this article in
excess of the benefit limits applicable to the fund under Section 415 of
the code. Requires the board to reduce the amount of any benefit that
exceeds those limits by the amount of the excess. Requires the benefits a
member would otherwise receive form the fund to be reduced to the extent
necessary to enable the benefits to comply with Section 415 of the code, if
total benefits under this fund and the benefits and contributions to which
any member is entitled under any other qualified plans maintained by the
city that employs the member would otherwise exceed the applicable limits
under Section 415 of the code.
(c) Provides that any member or survivor who receives any distribution that
is an eligible rollover distribution as defined by Section 402(c)(4) of the
code is entitled to have that distribution transferred directly to another
eligible retirement plan of the member's or survivor's choice on providing
direction to the pension system regarding that transfer in accordance with
procedures established by the board.
(d) Prohibits the total salary taken into account for any purpose for any
member of the pension system from exceeding $200,000 for any year for an
eligible participant, or $150,000 a year for an ineligible participant.
Requires these dollar limits to be adjusted from time to time in accordance
with guidelines provided by the United States Secretary of the Treasury.
Provides that an eligible participant is a person who first became an
active member before 1996, and an ineligible participant is a member who is
not an eligible participant.
(e) Provides that accrued benefits under this article become 100 percent
nonforfeitable for a member on the date the member has completed 10 years
of service. Prohibits a reversion of funds to the employer if the pension
system or the fund is terminated or partially terminated or city
contributions to the fund are discontinued completely. Requires the fund,
on complete or partial termination or discontinuance of city contributions,
to be held by the pension system to be used exclusively for benefits for
members and their surviving spouses and dependents, and the affected
employees' rights to the benefits, to the extent funded, to be
nonforfeitable if not already nonforfeitable under this subsection.
(f) Prohibits amounts representing forfeited nonvested benefits of
terminated members from being used to increase benefits payable from the
fund.
(g) Provides that distribution of benefits must begin not later than April
1 of the year following the calendar year during which the member entitled
to the benefits becomes 70-1/2 years of age or terminates employment with
the employer, whichever is later, and must otherwise conform to Section
401(a)(9) code.
(h) Provides that if the amount of any benefit is to be determined on the
basis of actuarial assumptions that are not otherwise specifically set
forth for that purpose in this article, the actuarial assumptions to be
used are those earnings and mortality assumptions being used on the date of
the determination by the pension system's actuary and approved by the
board. Requires the actuarial assumptions being used at any particular
time to be attached as an addendum to a copy of this article and treated
for all purposes as a part of this article. Authorizes the actuarial
assumptions to be changed by the pension system's actuary at any time if
approved by the board, but a change in actuarial assumptions may not result
in any decrease in benefits accrued as of the effective date of the change.
(i) Authorizes the board, to the extent permitted by law, to adjust the
benefits of retired members and survivors by increasing any benefit that
was reduced because of Section 415 of the code. Authorizes the board to
adjust the benefits of retired members or their surviving spouses or
dependents, including the restoration of benefits previously denied, if
Section 415 of the code is amended to permit the payment of amounts
previously precluded under that section. Provides that benefits paid under
this subsection are not considered as extra base salary earned after
retirement but as the delayed payment of benefits earned before retirement.
(j) Authorizes the board to make any change in this article to the extent
that the change is necessary to assure compliance with the qualification
requirements of Section 401 of the code or any other federal law.
Sec. 26. EXCESS BENEFIT PLAN. (a) Provides that a separate,
nonqualified, unfunded excess benefit plan is created outside the fund.
(b) Defines "excess benefit plan" or "plan," "qualified plan," "maximum
benefit," "excess benefit participant," and "unrestricted benefit."
(c) Provides that an excess benefit participant who is receiving benefits
from the pension system is entitled to a monthly benefit under this excess
benefit plan in an amount equal to the lesser of the member's unrestricted
benefit less the maximum benefit or the amount by which the member's
monthly benefit from the fund has been reduced because of the limitations
of Section 415 of the code.
(d) Provides that if a spouse, dependent child, or dependent parent is
entitled to preretirement or postretirement death benefits under a
qualified plan after the death of an excess benefit participant, the
surviving spouse, dependent child, or dependent parent is entitled to a
monthly benefit under the excess benefit plan equal to the benefit
determined in accordance with this article without regard to the
limitations under Section 25(b) of this article or Section 415 of the code,
less the maximum benefit.
(e) Requires any benefit to which a person is entitled under this section
to be paid at the same time and in the same manner as the benefit would
have been paid from the pension system if payment of the benefit from the
pension system had not been precluded by Section 25(b) of this article.
Prohibits an excess benefit participant or any beneficiary from electing to
defer the receipt of all or any part of a payment due under this section.
(f) Requires the board to administer the plan, and the board's designee to
also carry out the business of the board with respect to the plan.
Provides that, except as otherwise provided by this section, the rights,
duties, and responsibilities of the board and the board's designee are the
same for the plan as for the funds of the pension system.
(g) Requires the consultants, independent auditors, attorneys, and
actuaries selected to perform services for the fund to also perform
services for the plan, but the fees for their service may not be paid by
the fund. Requires the actuary engaged to perform services for the fund to
advise the board of the amount of benefits that may not be provided from
the fund solely by reason of the limitations of Section 415 of the code and
the amount of employer contributions that will be made to the plan rather
than to the fund.
(h) Prohibits contributions from accumulating under the plan to pay future
retirement benefits. Requires each payment of city contributions that
would otherwise be made to the fund under Section 9 of this article to be
reduced by the amount determined by the board or its designee as necessary
to meet the requirements for retirement benefits under the plan, including
reasonable administrative expenses, until the next payment of city
contributions is expected to be made to the pension system. Requires the
city to then pay to the plan from the withheld contributions, not earlier
than 30 days before the date of each distribution of monthly retirement
benefits is required to be made from the plan, the amount necessary to
satisfy the obligation to pay monthly retirement benefits from the plan.
Requires the board or its designee to satisfy the obligation of the plan to
pay retirement benefits from the employer contributions so transferred for
that month.
(i) Provides that employer contributions otherwise required to be made to
the pension system under Section 9 of this article and any other qualified
plan shall be divided into those contributions required to pay retirement
benefits under this section and those contributions paid into and
accumulated to pay the maximum benefits permitted under the qualified plan.
Prohibits employer contributions made to provide retirement benefits under
this section from being commingled with the money of the fund forming part
of the pension system or any other qualified plan.
Sec. 27. AGREEMENT TO CHANGE BENEFITS. Provides that, notwithstanding
any law to the contrary, the board or a designee of the board is
responsible for representing the interests of the pension system and all
pension issues and benefits affecting the pension system or its members and
beneficiaries under this article. Authorizes the board to enter into a
written agreement with the city on behalf of the pension system and members
and beneficiaries of the pension system if the agreement is approved by the
board and signed by the mayor and the board or the board's designee.
Authorizes a pension benefit or allowance provided by this article to be
increased under certain circumstances.
Sec. 28. NONREDUCTION, NONALIENATION, AND NONASSIGNMENT OF BENEFITS. (a)
Prohibits the holding, seizure, taking, subjection to, detention, or levy
upon by virtue of any execution, attachment, garnishment, injunction, or
other writ, and provides that no order or decree and no process may issue
out of or by any court of this state for the payment or satisfaction, in
whole or in part, out of the funds held by or due from the pension system,
of any debt, damage, claim, demand, or judgment against any member,
survivor, dependent, or any other person, either before or after an order
for its disbursement by the board, and no amounts due or to become due to
any member or survivor under this article.
(b) Prohibits any part of the funds or any claim to the funds from being
directly or indirectly assigned or transferred. Provides that any attempt
to transfer or assign any part of the funds or a claim to the funds is
void.
(c) Requires the funds to be held, kept, and disbursed for the purposes
provided by this article, and for no other purpose, except that a retired
member, survivor, or dependent, at the person's discretion, may have
deducted from the person's pension the monthly premium cost of any group
insurance program in which the retired member is participating.
(d) Prohibits a benefits payable under this article from being reduced or
discontinued for any person except under the terms applicable to the
benefit at the time the person becomes eligible to receive the benefit.
(e) Provides that this section does not prevent the division of the
benefits accrued by a member under any court order determined by the board
or its designee to be a qualified domestic relations order and the payment
of a share of a retired member's benefits or contributions to an alternate
payee in accordance with the order.
SECTION 2. Repealers:
(1) Article 6243g-1, V.T.C.S., (Chapter 76, Acts of the 50th Legislature,
Regular Session, 1947) (Police Officers' Pension System in cities of
1,200,000 or More).
(2) Article 6243g-3, V.T.C.S. (Police officers' retirement plan in
certain cities).
SECTION 3. (a) Requires the board of trustees of each pension system to
which Article 6243g-4, V.T.C.S., as added by this Act, applies to hold an
election among all of its members, not later than September 30, 1999.
Requires the board to select an independent party not affiliated with the
board, the pension system, or any employee or retiree organization to
conduct and tabulate the results of the election. Provides that each
active, inactive, or retired member of the pension system is eligible to
vote in the election and has one vote.
(b) Sets forth the required ballot format to allow for voting
alternatively for certain propositions.
(c) Makes application of Subsection (b) (1) prospective. Provides that
if a majority of the votes at the election favor the proposition described
by Subsection (b) (2) of this section, it has immediate effect as law and
applies to each vacancy on the board of trustees that occurs on or after
its effective date; however, if a majority of the votes at the election do
not favor the proposition described by Subsection (b) (2) of this section,
it has no effect.
SECTION 4. Provides that the monthly benefits of a person who retires or
retired after November 23, 1998, and before January 1, 2000, is determined
by the benefit formula in effect immediately before the effective date of
this Act, notwithstanding Section 12(b), Article 6243g-4, V.T.C.S., as
added by this Act.
SECTION 5. Requires each pension system to which Article 6243g-4,
V.T.C.S., as added by this Act, applies to reimburse each member of the
system who has repaid to the system previously refunded contributions for
any interest paid on the amounts repaid.
SECTION 6. Effective date: September 1, 1999.
SECTION 7. Emergency clause.