HBA-SEB S.B. 1226 76(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 1226
By: Shapiro
Pensions and Investments
5/10/1999
Engrossed



BACKGROUND AND PURPOSE 

Currently, the Teacher Retirement System of Texas (TRS) maintains an early
retirement program called the deferred retirement option plan (DROP).  A
person participating in the Employees Retirement System of Texas (ERS) may
transfer credit from ERS to TRS for the purpose of establishing eligibility
in DROP.  S.B. 1226 authorizes a person to transfer credit to TRS from ERS
and authorizes that credit to be used to establish eligibility for DROP.
This bill also modifies language establishing DROP eligibility and the
computation of an annuity.  

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 824.802, Government Code, as follows:

Sec. 824.802.  PARTICIPATION IN PLAN.  (a)  Authorizes a member to transfer
credit established in the Employees Retirement System of Texas (ERS) to the
Teacher Retirement System of Texas (TRS), notwithstanding Chapter 805
(Credit Transfer Between Employees Retirement System of Texas and Teacher
Retirement System of Texas).  Authorizes the transferred credit to be used
to establish eligibility for participation in and the amount of benefits
under the deferred retirement option plan (DROP).   

(b)  Deletes existing text which specifies that an election to participate
in DROP may be only once and is irrevocable after filing.   

(c)  Authorizes a contributing member to revoke an election to participate
in DROP on a form prescribed by and filed with TRS.  Authorizes a
revocation to be made only once. Requires TRS to transfer all contributions
and interest in a deferred retirement option account to the appropriate
system accounts upon revocation as a result of the member's election. 

(d)  Makes conforming changes.

SECTION 2.  Amends Section 824.803(b), Government Code, to provide that the
amount of service credit used to compute the service retirement annuity of
a member participating in DROP is determined as of the effective date of
participation in DROP.  Establishes that the amount of the annuity is
computed on the effective date of termination of participation according to
the formula used to compute annuities that is in effect at that time.  

SECTION 3.  Amends Sections 824.804(a), (c), and (d), Government Code, as
follows: 

(a)  Requires TRS, during a member's participation in DROP, to transfer
monthly from the retired reserve account to an account for the member in
the deferred retirement option account an amount equal to 61, rather than
79, percent of the amount the member would receive that month under a
standard service retirement annuity if the member had retired  during the
preceding month.  Makes conforming changes. 

(c)  Entitles a member's beneficiary to a death benefit based on age,
compensation, and years of service on the date of the member's death.
Makes conforming changes. 

(d)  Requires a person who has elected to participate in DROP on or before
August 31, 1999, to be entitled to receive monthly transfers to the
member's account in the deferred retirement option account in the amount
equal to 79 percent of the amount the member would receive under a standard
service retirement annuity if the member had retired the preceding month.
Entitles the person to receive the transfers after September 1, 1999, and
for the remainder of the person's participation in DROP, notwithstanding
any provisions to the contrary.  Deletes existing text providing that
payment of the benefit provided under DROP is an addition to any other
annuity. 

SECTION 4.  Effective date: September 1, 1999.

SECTION 5.  Emergency clause.