PDH S.B. 455 76(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 455 By: Madla Pensions and Investments 4-9-1999 Engrossed BACKGROUND AND PURPOSE The San Antonio Fire and Police Pension Fund provides pension benefits for San Antonio fire fighters, police officers, and their beneficiaries. S.B. 455 amends the Government Code regarding the Police and Fire Fighter Retirement System in certain municipalities to increase the maximum Backward Deferred Retirement Option Plan period. This bill also provides that death benefits be paid to a retiree's estate for retirees with no beneficiaries. In addition, this bill increases benefits for wholly dependent orphaned children. S.B. 455 increases spouse's benefits for retirees, provides a one-time adjustment of one percent to 10 percent in benefits, and modifies the retirement benefit formula. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 1.05, Chapter 824, Article 6243o, V.T.C.S., to provide that an amount payable, rather than a retirement annuity, from the firefighters and police officers pension fund (fund) is exempt from garnishment, assignment, attachment, judgments, other legal process, and inheritance or other state taxes. Provides that fund assets are exempt from attachment, execution, alienation, and forced sale. Prohibits a judgment lien or abstract of judgment from being filed or perfected against the fund on fund assets. Provides that a judgment lien or abstract of judgment filed against the fund on fund assets is void. SECTION 2. Amends Section 2.04(a), Chapter 824, Article 6243o, V.T.C.S., to require the board of trustees of firefighters and police officers pension fund (board) to elect from the trustees a presiding officer, rather than a chairman, an assistant presiding officer, rather than a vice chairman, and a secretary. SECTION 3. Amends Section 2.06(a), Chapter 824, Article 6243o, V.T.C.S., to make a conforming change. SECTION 4. Amends Section 2.07(a), Chapter 824, Article 6243o, V.T.C.S., to make a conforming change. SECTION 5. Amends Section 3.01, Chapter 824, Article 6243o, V.T.C.S., as follows: (a) Establishes that the board has the complete authority and power to purchase with fund assets from state license insurers insurance policies that provide for fund reimbursement and any trustee, officer, or employee of the board for liability imposed or damages because of certain actions or omissions committed in the trustee's, officer's, or employee's capacity as a fiduciary officer or employee of the fund, rather than of assets, and for costs and expenses incurred in defense of a claim for certain actions or omissions, as long as the insurance policy does not provide for reimbursement of a trustee, officer, or employee for liability imposed or expenses incurred because of personal dishonesty, fraud, lack of good faith, or intentional failure to act prudently. (b) Authorizes the board, if the insurance coverage described by Section (a) is insufficient or is not in effect, to indemnify a person for liability, damages, and reasonable legal expenses that result from certain actions or omissions occurring in the person's capacity as a trustee, officer, or employee of the fund without regard to the time of the occurrence of the allegation or whether the person continues to serve in that capacity. Prohibits the board from indemnifying an individual because of the individual's dishonesty, fraudulent act, lack of good faith, or intentional failure to act prudently. (c) Requires indemnification to be determined by a majority vote of trustees who are not the subject of the indemnification. Authorizes the board to adopt a policy for the presentation, approval, and payment of indemnification claims. Makes conforming changes. (d) Created from existing text. (e) Redesignated from existing Subsection (c). SECTION 6. Amends Section 3.02(d), Chapter 824, Article 6243o, V.T.C.S. to make a conforming change. SECTION 7. Amends Section 3.03, Chapter 824, Article 6243o, V.T.C.S., as follows: Sec. 3.03. New title: ORDERS FOR DISBURSEMENTS OF BENEFITS. Requires each member, retiree, and beneficiary to provide bank depository information to the board so that the board can disburse benefits by electronic transfer. Authorizes the board to reduce the benefit amount to which a retiree or beneficiary is otherwise entitled in order to reimburse the fund for an overpayment or incorrect payment of benefits to the retiree or beneficiary. Makes conforming changes. SECTION 8. Amends Section 5.01, Chapter 824, Article 6243o, V.T.C.S., by amending Subsections (d), (e), and (f), and adding Subsection (g), as follows: (d) Adds language to provide that this subsection applies to a member who retires after September 30, 1997, but before October 1, 1999. (e) Requires the board to compute, based on a formula set forth by this subsection, the retirement annuity of a member who retires after September 1, 1999. Prohibits a retirement annuity from exceeding, as of the date of retirement, 87 _ percent of the member's average total salary. (f) Redesignated from existing Subsection (e). Requires service credit for unused sick leave to be prorated based on each full month of sick leave. (g) Redesignated from existing Subsection (f). Provides that all monthly pensions being paid by the fund to retirees who retired before October 1, 1989, are increased, effective with the first monthly payment due on or after October 1, 1999, rather than 1997. Makes conforming and nonsubstantive changes. SECTION 9. Amends Section 5.015(b), Chapter 824, Article 6243o, V.T.C.S., to add to the provisions relating to the Backward Deferred Retirement Option Plan (Back DROP) election that the election is available only to a member who takes a service retirement. Makes conforming changes. SECTION 10. Amends Section 5.02(a), Chapter 824, Article 6243o, V.T.C.S., to delete text requiring a qualified person under this section to file an application for the retirement annuity within four years after the date the person ceased to be a fund member or properly enrolled. SECTION 11. Amends the heading Section 5.08, Chapter 824, Article 6243o, V.T.C.S., as follows: Sec. 5.08. New title: REASONABLE ACCOMMODATION. Deletes "Discretion Of Department Chief For Employment of Disability Retiree" as existing title. SECTION 12. Amends Section 5.09, Chapter 824, Article 6243o, V.T.C.S., to require the board to order an increase of all service, disability, and death benefit retirement annuities, rather than retirement annuities of all retirees and beneficiaries, due to an increase in the Consumer's Price Index for All Urban Consumers by a percentage that varies by the date of the member's service or disability retirement, rather than on the date on which the member retired, or on the date on which the member died. Makes conforming and nonsubstantive changes. SECTION 13. Amends Section 5.11(b), Chapter 824, Article 6243o, V.T.C.S., to establish that any member or beneficiary who is entitled to receive any distribution, rather than receives any distribution from any plan within the system, that is an eligible rollover distribution is entitled to have that distribution transferred directly to another eligible retirement plan under certain circustances. SECTION 14. Amends the heading to Section 5.12, Chapter 824, Article 6243o, V.T.C.S., as follows: Sec. 5.12. New title: 13TH CHECK FOR RETIREES. SECTION 15. Amends Section 5.12(b), Chapter 824, Article 6243o, V.T.C.S., to provide that the 13th pension check is paid to each retiree entitled to receive an annuity in a certain month and is in a certain amount, rather than the amount of the pension check paid immediately before the disbursement of the retiree's 13th check, except as provided by this section. Makes conforming and nonsubstantive changes. SECTION 16. Amends the heading to Article 6, Chapter 824, Article 6243o, V.T.C.S., as follows: ARTICLE 6. New title: BENEFICIARY'S BENEFITS SECTION 17. Amends Section 6.01, Chapter 824, Article 6243o, V.T.C.S., as follows: Sec. 6.01. New heading: MEMBER'S BENEFICIARY AND DEPENDENT CHILD'S RIGHTS. Entitles a dependent child to receive benefits based on the service of any parent who is a member of the fund. Makes a conforming change. SECTION 18. Amends Section 6.02, Chapter 824, Article 6243o, V.T.C.S., as follows: (a) Provides that, subject to Section 6.03 of this Act and Subsections (h), (i), (j), (k), and (l), rather than Section 6.08, of this section, rather than of this Act, if a member dies leaving a surviving spouse or at least one dependent child, rather than children under the age of 18 years, the surviving spouse and the children are entitled to receive an aggregate death benefit annuity from the fund in a certain amount. Makes conforming changes. (b) Prohibits the amount of the death benefit annuity computed under Subsection (a) from exceeding the service retirement annuity to which a member with the same average total salary and with 26, rather than 25, years of service credit would be entitled. Makes conforming changes. (c) Entitles the surviving spouse and dependent children, subject to Section 6.03 of this Act and Subsections (h), (i), (j), (k), and (l) of this section, to receive an aggregate death benefit annuity from the fund in a certain amount if a retiree dies leaving a surviving spouse or at least one dependent child. Deletes existing Subsection (c) relating to a death benefit annuity to a surviving spouse if there are no children. (d) Prohibits the amount of a death benefit annuity from exceeding a certain specified amount. Deletes existing Subsection (d) relating to a death benefit annuity to the dependent children if there is no surviving spouse. (e) Requires the board to award certain specified portions of the annuity to certain specified beneficiaries if, at the time a death benefit annuity becomes payable under Subsection (a) or (c) of this section, the deceased leaves a surviving spouse and at least one dependent child. Makes conforming and nonsubstantive changes. (f) Requires the board to award the entire annuity to the surviving spouse if there are no dependent children at the time the annuity becomes payable. (g) Requires the board, if there is not a surviving spouse at the time the annuity becomes payable, to award the entire annuity to the dependent children in equal shares if there is more than one child. (h) Redesignated from existing Subsection (b). Makes a nonsubstantive change. (i) Requires that the death benefit annuity payable to the surviving spouse, if a member or retiree dies leaving a surviving spouse and at least one dependent child, be increased as of the day no child is entitled to receive benefits to the amount the spouse would have received had there been no dependent children. (j) Requires that the death benefit annuity payable to the dependent children, if a member or retiree dies leaving a surviving spouse and at least one dependent child, be increased as of the day the surviving spouse dies to the amount the children would have received had there been no surviving spouse. (k) Redesignated from existing Subsection (e). (l) Requires the board to increase a death benefit annuity payable on October 1, 1999, to a dependent child or children who do not have a living parent on that date to the entire amount that would have been awarded had the retiree or member died leaving no surviving spouse if a surviving spouse is not entitled to receive benefits from the fund on October 1, 1999. SECTION 19. Amends Section 6.11, Chapter 824, Article 6243o, V.T.C.S., to provide that if an active member dies and does not leave a beneficiary, rather than specifically a surviving spouse, a child under 18 years of age, a mentally or physically disabled child, or a dependent father or mother, the estate of the deceased member is entitled to a specified death benefit payment. Deletes Subsection (b) regarding the prohibition of the payment of the death benefit under this section if the deceased member of the fund is survived by one or more beneficiaries. SECTION 20. Amends Chapter 824, Article 6243o, V.T.C.S., by adding Section 6.115, as follows: Sec. 6.115. DEATH BENEFIT FOR RETIREE'S ESTATE. Entitles the estate of the retiree, if a retiree dies and does not leave a beneficiary, to a death benefit payment from the fund in a certain amount. SECTION 21. Amends Section 6.12, Chapter 824, Article 6243o, V.T.C.S., as follows: Sec. 6.12. New title: 13TH CHECK FOR BENEFICIARIES. (a) Provides that a beneficiary receiving a 13th pension check under this section is a beneficiary entitled to receive an annuity in the last month of the fiscal year preceding the fiscal year in which the check is disbursed, rather than at the time of disbursement. (b) Provides that the amount of the 13th check is equal to a certain amount, except that the amount of the check shall be prorated for any beneficiary who has been receiving an annuity for less than a year. Makes conforming changes. SECTION 22. Amends Chapter 824, Article 6243o, V.T.C.S., by adding Section 6.13, as follows: Sec. 6.13. GUARDIANSHIP. Provides that a benefit payable under this article to a dependent child may be paid only to a guardian who is appointed in accordance with Chapter XIII, Texas Probate Code. SECTION 23. Amends Section 7.01(a), Chapter 824, Article 6243o, V.T.C.S., to provide that money of the fund that is paid, rather than payable, to the treasurer of the fund is for the use of that fund. SECTION 24. Amends Section 7.51(a), Chapter 824, Article 6243o, V.T.C.S., to include any employee for the fund among the persons prohibited from certain actions which misuse the fund. SECTION 25. Effective date: October 1, 1999. SECTION 26. Emergency clause.