By Puente H.B. No. 1537
76R5628 BDH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to a health care plan for firefighters and police officers
1-3 in certain municipalities.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 1.02, Chapter 1332, Acts of the 75th
1-6 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
1-7 Civil Statutes), is amended to read as follows:
1-8 Sec. 1.02. DEFINITIONS. In this Act:
1-9 (1) "Active member" means a member of the fund who is
1-10 an active firefighter or police officer of the municipality.
1-11 (2) "Board" means the board of trustees of [by][(2)] "Fund" means the firefighter's and police
2-3 officer's retiree health care fund of a municipality to which this
2-4 Act applies.
2-5 (7) "Police officer" means an employee of the police
2-6 department who is classified as a police officer by the personnel
2-7 department of a municipality to which this Act applies.
2-8 (8) "Retiree" means a member of the fund who was
2-9 formerly a firefighter or police officer of the municipality and
2-10 who has a right to retirement health benefits under Section 5.01 of
2-11 this Act.
2-12 (9) "Trustee" means a member of the board.
2-13 SECTION 2. Section 1.04, Chapter 1332, Acts of the 75th
2-14 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
2-15 Civil Statutes), is amended to read as follows:
2-16 Sec. 1.04. FUND; STATUTORY TRUST. (a) The firefighters' and
2-17 police officers' retiree health care fund is established for each
2-18 municipality to which this Act applies. The fund is a statutory
2-19 trust and is not a subdivision of government.
2-20 (b) The board shall administer and hold in trust the assets
2-21 of the fund for the exclusive benefit of the beneficiaries of the
2-22 fund. The board may pay from the fund reasonable administrative
2-23 expenses incurred in administering the fund [members and retirees
2-24 of the fund and their spouses in retirement].
2-25 (c) The fund may not be diverted, transferred, or used for
2-26 any other purpose inconsistent with this Act and with the
2-27 instruments governing the fund.
3-1 (d) A public or private agency, entity, or authority may not
3-2 alter or impair any contract made by the board or under the
3-3 authority or direction of the board.
3-4 SECTION 3. Section 1.05, Chapter 1332, Acts of the 75th
3-5 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
3-6 Civil Statutes), is amended to read as follows:
3-7 Sec. 1.05. EXEMPTIONS. The health benefits paid or payable
3-8 by [of] the fund are exempt from garnishment, assignment,
3-9 attachment, judgments, other legal processes, and inheritance or
3-10 other taxes established by this state.
3-11 SECTION 4. Sections 2.01(a) and (b), Chapter 1332, Acts of
3-12 the 75th Legislature, Regular Session, 1997 (Article 6243q,
3-13 Vernon's Texas Civil Statutes), are amended to read as follows:
3-14 (a) The firefighters' and police officers' retiree health
3-15 care fund of a municipality is governed by a board of trustees
3-16 consisting of the following nine members:
3-17 (1) the mayor of the municipality;
3-18 (2) two members of the municipal governing body,
3-19 appointed by that governing body;
3-20 (3) two active members of the fund who are
3-21 firefighters below the rank of fire chief, elected by secret ballot
3-22 by a majority of the votes cast by the active members of the fund
3-23 [fire department] who are firefighters [contributing members of the
3-24 fund];
3-25 (4) two active members of the fund who are police
3-26 officers below the rank of police chief, elected by secret ballot
3-27 by a majority of the votes cast by the active members of the fund
4-1 [police department] who are police officers [contributing members
4-2 of the fund];
4-3 (5) a retiree [or beneficiary] representative of the
4-4 fire department, elected by secret ballot by a majority of the
4-5 votes cast by the retirees of the fire department who are
4-6 beneficiaries of the fund and the surviving spouses of deceased
4-7 firefighters who are beneficiaries of the fund [spouses of the
4-8 retirees of the fire department]; and
4-9 (6) a retiree [or beneficiary] representative of the
4-10 police department, elected by secret ballot by a majority of the
4-11 votes cast by the retirees of the police department who are
4-12 beneficiaries of the fund and the surviving spouses of deceased
4-13 police officers who are beneficiaries of the fund [spouses of the
4-14 retirees of the police department].
4-15 (b) The board, through its secretary, shall administer the
4-16 required elections of the active members and [firefighter, police
4-17 officer, and] retiree trustees [representative members]. The board
4-18 shall hold a runoff election between the two candidates receiving
4-19 the most votes if no candidate receives a majority of the votes
4-20 cast for a trustee position.
4-21 SECTION 5. Section 2.02, Chapter 1332, Acts of the 75th
4-22 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
4-23 Civil Statutes), is amended by amending the section heading to read
4-24 as follows:
4-25 Sec. 2.02. TERMS OF TRUSTEES [BOARD MEMBERS].
4-26 SECTION 6. Sections 2.02(c), (d), and (e), Chapter 1332,
4-27 Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q,
5-1 Vernon's Texas Civil Statutes), are amended to read as follows:
5-2 (c) The two active members of the fund who are firefighters
5-3 below the rank of fire chief serve on the board for staggered
5-4 four-year terms, with one member's term expiring every two years.
5-5 (d) The two active members of the fund who are police
5-6 officers below the rank of police chief serve on the board for
5-7 staggered four-year terms, with one member's term expiring every
5-8 two years.
5-9 (e) The retiree [or beneficiary] representatives serve on
5-10 the board for staggered four-year terms, with one member's term
5-11 expiring every two years.
5-12 SECTION 7. Section 2.03, Chapter 1332, Acts of the 75th
5-13 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
5-14 Civil Statutes), is amended by amending the section heading to read
5-15 as follows:
5-16 Sec. 2.03. RESIGNATION OR REMOVAL OF TRUSTEES [BOARD
5-17 MEMBERS].
5-18 SECTION 8. Sections 2.03(a), (c), and (d), Chapter 1332,
5-19 Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q,
5-20 Vernon's Texas Civil Statutes), are amended to read as follows:
5-21 (a) A trustee who is a retiree or an active member of the
5-22 fund may resign or may be removed by a vote of the group eligible
5-23 to elect the trustee [Certain members of the board may be removed
5-24 in accordance with this section. An active firefighter board
5-25 member may be removed by the contributing members of the fire
5-26 department. An active police officer board member may be removed
5-27 by the contributing members of the police department. A retiree or
6-1 beneficiary board member may be removed by the fund members
6-2 eligible to elect the member].
6-3 (c) A removal election must be held within 30 days after the
6-4 date the board certifies that a proper petition for a removal
6-5 election has been signed by at least 20 percent of the persons
6-6 eligible to vote to elect the trustee [membership from which the
6-7 board member was elected]. A trustee's [board member's] term of
6-8 service ends on the entry of an order by the board declaring that a
6-9 majority of the votes cast in [the results of] a removal election
6-10 under this section favor removal.
6-11 (d) On the date the board enters an order under Subsection
6-12 (c) of this section, the board shall call a special election to be
6-13 held not less than 20 and not more than 30 days after that date to
6-14 fill the vacancy for the unexpired term of the trustee [board
6-15 member] who was removed. The trustee [board member] who was
6-16 removed is not eligible to run in the special election but is
6-17 eligible to run in all subsequent [board] elections in which the
6-18 person is otherwise eligible to run [for the category in which the
6-19 person is a member].
6-20 SECTION 9. Section 2.04, Chapter 1332, Acts of the 75th
6-21 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
6-22 Civil Statutes), is amended to read as follows:
6-23 Sec. 2.04. OFFICERS. (a) The board shall elect a chair, a
6-24 vice chair, and a secretary from among the trustees [board
6-25 members].
6-26 (b) The treasurer [finance director] of the municipality is
6-27 the treasurer of the board.
7-1 SECTION 10. Section 2.06, Chapter 1332, Acts of the 75th
7-2 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
7-3 Civil Statutes), is amended to read as follows:
7-4 Sec. 2.06. MEETINGS; QUORUM. (a) The board shall hold
7-5 regular monthly meetings and special meetings at the call of the
7-6 chair or on written demand by a majority of the trustees [members
7-7 of the board].
7-8 (b) Five trustees constitute a quorum. The board may act
7-9 with the consent of a majority of the members who are present at a
7-10 board meeting at which a quorum is present.
7-11 SECTION 11. Sections 2.07(b), (c), (f), and (h), Chapter
7-12 1332, Acts of the 75th Legislature, Regular Session, 1997 (Article
7-13 6243q, Vernon's Texas Civil Statutes), are amended to read as
7-14 follows:
7-15 (b) Only trustees [members of the board] may be appointed to
7-16 committees under this section.
7-17 (c) A committee must be composed of not fewer than three and
7-18 not more than four trustees [five members of the board], except as
7-19 otherwise specifically provided by the board.
7-20 (f) All trustees [members of the board] may attend committee
7-21 meetings.
7-22 (h) Permanent or standing committees may [not] be appointed.
7-23 SECTION 12. Section 3.01, Chapter 1332, Acts of the 75th
7-24 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
7-25 Civil Statutes), is amended to read as follows:
7-26 Sec. 3.01. GENERAL POWERS AND DUTIES OF BOARD. (a) The
7-27 board has complete authority and power to:
8-1 (1) administer the fund for the exclusive benefit of
8-2 the beneficiaries of the fund;
8-3 (2) order payments [to the treasurer] from the fund;
8-4 [as required by this Act; and]
8-5 (3) independently control the fund; and
8-6 (4) conduct all litigation on behalf of the fund.
8-7 (b) The board may contract with a municipality or other
8-8 entity to receive the following services:
8-9 (1) the administration of benefit claims of
8-10 beneficiaries, including payment of claims from money in the fund;
8-11 (2) the administration of the board's administrative
8-12 expenses, including payment of the expenses from money in the fund
8-13 as approved in advance by the board; and
8-14 (3) other administrative services approved by the
8-15 board.
8-16 (c) The board shall adopt rules necessary for the board's
8-17 effective operation, including rules relating to:
8-18 (1) the disbursement of the fund's assets; and
8-19 (2) the name of the board and the fund.
8-20 (d) The board shall take any action necessary to ensure that
8-21 contributions to the fund and benefits received from the fund are
8-22 exempt from federal taxes and excluded from a beneficiary's taxable
8-23 income.
8-24 (e) [(c)] The board shall report annually to the governing
8-25 body of the[process the claims that may be paid from the fund,
9-7 including the power to contract with a third party administrator to
9-8 process the claims; and]
9-9 (2) provide services through a subcontractor in a
9-10 contract under Section 3.01(b);
9-11 (3) take any action necessary to ensure that
9-12 contributions to the fund and benefits received from the fund are
9-13 exempt from federal taxes and excluded from a beneficiary's taxable
9-14 income; and
9-15 (4) control the internal functions of the municipality
9-16 relating to the municipality's interactions with or activities on
9-17 behalf of the fund.
9-18 SECTION 14. Article 3, Chapter 1332, Acts of the 75th
9-19 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
9-20 Civil Statutes), is amended by adding Sections 3.04 and 3.05 to
9-21 read as follows:
9-22 Sec. 3.04. INSURANCE. (a) The board may use fund assets to
9-23 purchase insurance from any insurer licensed to do business in this
9-24 state that provides for reimbursement of the fund and any trustee,
9-25 officer, or employee of the fund for:
9-26 (1) liability imposed or damages incurred because of
9-27 an alleged act, error, or omission committed in the capacity of a
10-1 fiduciary, officer, or employee; and
10-2 (2) costs and expenses incurred in defense of a claim
10-3 for an alleged act, error, or omission.
10-4 (b) The board may not purchase insurance for reimbursement
10-5 of a trustee, officer, or employee of the fund for liability
10-6 imposed on the trustee, officer, or employee because of the
10-7 person's dishonesty, fraud, lack of good faith, or intentional
10-8 failure to act prudently.
10-9 Sec. 3.05. INDEMNITY. (a) If insurance purchased by the
10-10 board under Section 3.04 of this Act is unavailable, insufficient,
10-11 inadequate, or otherwise not in effect, the board may indemnify a
10-12 trustee, officer, or employee of the fund for liability imposed as
10-13 damages because of an alleged act, error, or omission committed by
10-14 the person in the capacity of a fiduciary, officer, or employee and
10-15 for reasonable costs and expenses incurred in defense of a claim of
10-16 an alleged act, error, or omission.
10-17 (b) The board may not indemnify a trustee, officer, or
10-18 employee of the fund for liability or expenses incurred because of
10-19 the person's personal dishonesty, fraud, lack of good faith, or
10-20 intentional failure to act prudently.
10-21 (c) A trustee may not vote on a matter of the trustee's own
10-22 indemnification or be counted in determining whether a quorum is
10-23 present for the vote.
10-24 (d) The board may adopt a policy establishing a method for
10-25 presentation, approval, and payment of claims for indemnification.
10-26 (e) If insurance purchased by the board under Section 3.04
10-27 of this Act is unvailable, insufficient, inadequate, or otherwise
11-1 not in effect, the board may indemnify a former trustee, officer,
11-2 or employee of the fund under this section for an alleged act,
11-3 error, or omission committed by the person in the capacity of a
11-4 fiduciary, officer, or employee and for reasonable costs and
11-5 expenses incurred in defense of a claim of an alleged act, error,
11-6 or omission.
11-7 (f) The board may authorize indemnification of a trustee,
11-8 officer, or employee of the fund, or a former trustee, officer, or
11-9 employee of the fund under this section regardless of when the
11-10 alleged act, error, or omission occurred, provided that the person
11-11 is considered liable for the alleged act, error, or omission in
11-12 relation to the person's capacity as a current or former trustee,
11-13 officer, or employee of the fund.
11-14 SECTION 15. Section 4.01, Chapter 1332, Acts of the 75th
11-15 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
11-16 Civil Statutes), is amended to read as follows:
11-17 Sec. 4.01. MEMBERSHIP. Membership in the fund shall be
11-18 determined by the [exclusive] collective bargaining agreements
11-19 [agents of the firefighters and police officers recognized under
11-20 Subchapter D, Chapter 174, Local Government Code].
11-21 SECTION 16. Section 4.02, Chapter 1332, Acts of the 75th
11-22 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
11-23 Civil Statutes), is amended to read as follows:
11-24 Sec. 4.02. CONTRIBUTIONS. (a) Contributions to the fund
11-25 shall be determined in accordance with the collective bargaining
11-26 agreements [collectively bargained agreements between the
11-27 municipality and the exclusive bargaining agents of the
12-1 firefighters and police officers under Chapter 174, Local
12-2 Government Code].
12-3 (b) [Contributions shall be treated as employer's
12-4 contributions in accordance with Section 414(h)(2), Internal
12-5 Revenue Code of 1986 (26 U.S.C. Section 414(h)(2)), as amended, for
12-6 the purpose of determining tax treatment under the Internal Revenue
12-7 Code of 1986.]
12-8 [(c)] Any donations made to the fund and all money received
12-9 from any source for the fund shall be deposited in the fund at the
12-10 earliest opportunity.
12-11 (c) [(d)] The municipal contribution to and health benefits
12-12 paid from the fund are a part of the compensation for services
12-13 rendered to the municipality. This Act is considered part of the
12-14 contract of employment and appointment of the firefighters and
12-15 police officers of a municipality to which this Act applies.
12-16 SECTION 17. Section 4.03, Chapter 1332, Acts of the 75th
12-17 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
12-18 Civil Statutes), is amended to read as follows:
12-19 Sec. 4.03. RIGHTS OF BENEFICIARIES AND MEMBERS; ASSOCIATION
12-20 [AND ASSOCIATIONS]. (a) Beneficiaries and members [A member] of
12-21 the fund are [is] entitled to all rights otherwise provided to the
12-22 beneficiaries or members [member] under [the federal Employee
12-23 Retirement Income and Security Act of 1974 (29 U.S.C. Section 1001
12-24 et seq.), as amended, or] any [other] state or federal statute.
12-25 (b) This fund is intended to be a [A] voluntary employee's
12-26 beneficiary association as described by Section 501(c), Internal
12-27 Revenue Code of 1986 (26 U.S.C. Section 501(c)), as amended, and
13-1 the board may take any action necessary to ensure that the fund is
13-2 classified as such [is entitled to all rights otherwise provided to
13-3 it under any state or federal statute].
13-4 SECTION 18. Section 5.01, Chapter 1332, Acts of the 75th
13-5 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
13-6 Civil Statutes), is amended to read as follows:
13-7 Sec. 5.01. RETIREMENT HEALTH BENEFITS. Retirement health
13-8 benefits shall be determined in accordance with the collective
13-9 bargaining agreements [collectively bargained agreements between
13-10 the municipality and the exclusive bargaining agents of the
13-11 firefighters and police officers under Chapter 174, Local
13-12 Government Code].
13-13 SECTION 19. Section 6.01, Chapter 1332, Acts of the 75th
13-14 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
13-15 Civil Statutes), is amended to read as follows:
13-16 Sec. 6.01. TREASURER'S DUTIES. (a) All money of the fund is
13-17 payable to the treasurer of the fund for the use of the fund.
13-18 (b) The treasurer shall submit monthly reports to the board
13-19 showing all fund receipts and disbursements.
13-20 (c) The duties imposed on the treasurer of the fund under
13-21 this Act and any services provided to or on behalf of the fund by
13-22 the treasurer under a contract with a municipality are considered
13-23 additional duties for which the treasurer is liable under oath and
13-24 bond as the treasurer [finance director] of the municipality.
13-25 (d) [(c)] The treasurer [finance director] is not entitled
13-26 to compensation for serving as the treasurer of the fund.
13-27 SECTION 20. Section 6.03(a), Chapter 1332, Acts of the 75th
14-1 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
14-2 Civil Statutes), is amended to read as follows:
14-3 (a) The board shall determine a reasonably safe amount of
14-4 surplus [assets] necessary to defray reasonable expenses of the
14-5 fund.
14-6 SECTION 21. Section 6.04(c), Chapter 1332, Acts of the 75th
14-7 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
14-8 Civil Statutes), is amended to read as follows:
14-9 (c) The board may directly manage investments of the reserve
14-10 funds or may choose to contract for professional management
14-11 services. If the funds own real estate, the board may, at its
14-12 discretion, establish an organization [a corporation] described by
14-13 Section 501(c)(25), Internal Revenue Code of 1986 (26 U.S.C.
14-14 Section 501(c)(25)), as amended, to hold title to the real estate.
14-15 SECTION 22. Section 6.05, Chapter 1332, Acts of the 75th
14-16 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
14-17 Civil Statutes), is amended to read as follows:
14-18 Sec. 6.05. PROFESSIONAL CONSULTANTS. (a) The board may
14-19 contract for professional investment management services, financial
14-20 consultants, independent auditors, attorneys, and actuaries. Only
14-21 the board may enter into those contracts. The board may establish
14-22 a reasonable fee for compensation under those contracts.
14-23 (b) The board may designate its own custodian or master
14-24 custodian to perform the customary duties involving the safekeeping
14-25 of the assets and the execution of transactions of either domestic
14-26 or foreign securities. The board may engage in a securities
14-27 lending program consistent with the benefits payable to [plan
15-1 participants and their] beneficiaries.
15-2 SECTION 23. Section 7.01, Chapter 1332, Acts of the 75th
15-3 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
15-4 Civil Statutes), is amended to read as follows:
15-5 Sec. 7.01. ETHICS POLICY. (a) A trustee, [member of the
15-6 board or] the executive director, or any employee of the fund may
15-7 not:
15-8 (1) buy, sell, or exchange any property to or from the
15-9 fund;
15-10 (2) deal with the assets of the fund in the person's
15-11 own interest or for the person's own account; or
15-12 (3) receive any consideration from any person dealing
15-13 with the fund [have a direct or indirect financial or other
15-14 interest, engage in a business transaction or professional
15-15 activity, or incur any obligation of any nature that is in
15-16 substantial conflict with the proper discharge of the member's or
15-17 the executive director's fiduciary duties].
15-18 (b) To implement Subsection (a) of this section and to
15-19 strengthen the faith and confidence of the members and
15-20 beneficiaries of the fund, the board shall develop standards of
15-21 conduct and financial disclosure requirements to be observed by
15-22 each member of the board and by the executive director in the
15-23 performance of the board's and executive director's official
15-24 duties.
15-25 [(c) The standards of conduct and financial disclosure
15-26 requirements must provide for:]
15-27 [(1) establishing general definitions;]
16-1 [(2) determining when there is substantial conflict;]
16-2 [(3) determining who is considered a dependent child
16-3 of a board member or the executive director;]
16-4 [(4) requiring each member of the board and the
16-5 executive director to file a financial disclosure statement;]
16-6 [(5) appointing a review board;]
16-7 [(6) establishing the composition of the review board;]
16-8 [(7) designating a custodian of records;]
16-9 [(8) establishing the manner in which records must be
16-10 retained;]
16-11 [(9) establishing which information, generally, must
16-12 be included in a financial statement;]
16-13 [(10) establishing the time for filing a financial
16-14 statement;]
16-15 [(11) establishing the form in which a financial
16-16 statement must be presented;]
16-17 [(12) determining compliance with this section;]
16-18 [(13) allowing public access to financial statements
16-19 when required by law or when appropriate;]
16-20 [(14) establishing sanctions for a violation of this
16-21 section that include removal of a member of the board or the
16-22 executive director in the case of a serious violation;]
16-23 [(15) establishing standards of conduct for board
16-24 members and the executive director; and]
16-25 [(16) identifying other matters relating to conduct of
16-26 board members and the executive director and to financial
16-27 disclosure that the board considers appropriate.]
17-1 SECTION 24. (a) Article 8, Chapter 1332, Acts of the 75th
17-2 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
17-3 Civil Statutes), is repealed.
17-4 (b) Section 3.03, Chapter 1332, Acts of the 75th
17-5 Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas
17-6 Civil Statutes), is repealed.
17-7 SECTION 25. This Act takes effect October 1, 1999.
17-8 SECTION 26. The changes in law made by this Act have no
17-9 effect on the terms of a contract entered into before the effective
17-10 date of this Act.
17-11 SECTION 27. The importance of this legislation and the
17-12 crowded condition of the calendars in both houses create an
17-13 emergency and an imperative public necessity that the
17-14 constitutional rule requiring bills to be read on three several
17-15 days in each house be suspended, and this rule is hereby suspended.