SRC-AXB C.S.S.B. 292 76(R)BILL ANALYSIS


Senate Research CenterC.S.S.B. 292
76R13498  GCH-DBy: Nixon
State Affairs
4/25/1999
Committee Report (Substituted)


DIGEST 

Currently, participants in the Teacher Retirement System of Texas are given
no flexibility or control over their investments which consist of monthly
payroll deductions.  Because of a growing interest in alternatives to
traditional benefit plans, eight states have enhanced their retirement
systems by including a defined contribution plan which allows investment in
a personal account throughout a teacher's career, and upon retirement the
teacher receives a lump sum.  Texas statutes contain no self-directed
investment option for members of the Teacher Retirement System.  C.S.S.B.
292 would create a self-directed investment option for participants in the
Teacher Retirement System of Texas. 

PURPOSE

As proposed, C.S.S.B. 292 creates the optional defined contribution plan
for the Teacher Retirement System, and provides regulation for the
administration of this plan. 

RULEMAKING AUTHORITY

Rulemaking authority is granted to the Teacher Retirement System in SECTION
1 (Sections 826.004(a) and (b), Government Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Title 8C, Government Code, by adding Chapter 826, as
follows: 

CHAPTER 826.  OPTIONAL DEFINED CONTRIBUTION PLAN

Sec.  826.001.  DEFINITIONS.  Defines "optional defined contribution plan"
(plan) and "qualified plan." 

Sec.  826.002.  ESTABLISHMENT OF PLAN.  Requires the Teacher Retirement
System (TRS) to administer a plan which authorizes members to pay a portion
of member contributions towards the purchase of certain securities.
Provides that a security provider is exempt from franchise or premium taxes
on products issued under the plan. 
 
Sec.  826.003.  ELECTION TO PARTICIPATE IN PLAN.  Authorizes a contributing
member, who is not part of the deferred retirement option plan, to elect to
participate in the plan.  Requires the election to include the percentage
of member contributions to be used under the plan, and prohibits the
percentage from exceeding 50 percent.  Provides exceptions to the
irrevocability of an election made under this section.  Sets forth
guidelines for a change of employers.  Provides that a plan member is
eligible to receive an annuity and other benefits in the same manner as
other members except that benefits will be reduced.  

Sec.  826.004.  RULES.  Authorizes TRS to adopt rules for plan
administration including: requiring notice of a member's choice to transfer
contributions and temporary deposits of contributions.  Requires TRS to
adopt rules which require vendors to take certain actions. 

Sec.  826.005.  WITHDRAWAL OF CONTRIBUTIONS.  Authorizes a plan member to
withdraw amounts earned under the plan under certain conditions. 

 Sec.  826.006.  REDUCTION OF BENEFITS UNDER RETIREMENT SYSTEM.  Requires
the board of trustees to adopt tables for a reduction of benefits relative
to the percentage of contributions diverted to the plan.  

Sec.  826.007.  INFORMATION TO MEMBERS.  Requires the TRS to provide
information about the plan to contributing members, and sets forth
guidelines for the required information. 

Sec.  826.008.  ENROLLMENT FEE.  Authorizes TRS to establish a maximum $15
enrollment fee and sets forth certain required procedures for depositing
the collected fees. 

SECTION 2.  Amends Section 825.312(a), Government Code, to require TRS to
deposit fees collected under Section 825.008, Government Code, in the
expense account.  Makes conforming changes. 

SECTION 3.  Authorizes TRS to establish a maximum preenrollment fee of $15,
as another enrollment option instead of the enrollment fee, under certain
conditions. 

SECTION 4.  Requires the Teacher Retirement System of Texas to implement
Chapter 826, Government Code, beginning with the 2000-2001 school year. 

SECTION 5.Emergency clause.
  Effective date:  90 days after adjournment.

SUMMARY OF COMMITTEE CHANGES

SECTION 1.

Amends Section 826.003, Government Code, to add a new Subsection (d)
regarding a change of employers, and makes conforming and nonsubstantive
changes. 

 Amends Section 826.004, Government Code, to add new rulemaking authority.

 Adds Section 826.008, Government Code, regarding an enrollment fee.

SECTION 2.

 Amends Section 825.312, Government Code, to make a conforming change.

SECTION 3.  

 Authorizes the establishment of a preenrollment fee.

SECTIONS 4 and 5.

 Redesignated from SECTIONS 2 and 3.