By Greenberg H.B. No. 1739
76R1068 GCH-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to membership, service credit, benefits, and
1-3 administration of the statewide retirement system for emergency
1-4 services personnel; providing an administrative penalty.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 1, Texas Statewide Emergency Services
1-7 Retirement Act (Article 6243e.3, Vernon's Texas Civil Statutes), is
1-8 amended by amending Subdivision (2) and adding Subdivision (18) to
1-9 read as follows:
1-10 (2) "Retirement age" means early retirement age or
1-11 normal retirement age. "Early retirement age" means age 55.
1-12 "Normal retirement age" means the later of age 55 or the month a
1-13 member completes 15 years of qualified service.
1-14 (18) "Code" means the federal Internal Revenue Code of
1-15 1986.
1-16 SECTION 2. Section 2, Texas Statewide Emergency Services
1-17 Retirement Act (Article 6243e.3, Vernon's Texas Civil Statutes), is
1-18 amended by amending Subsections (a), (b), and (c) and adding
1-19 Subsections (g)-(p) to read as follows:
1-20 (a) The Texas statewide emergency services personnel
1-21 retirement fund is a trust fund with [in] the state treasury.
1-22 (b) Participation in the fund is optional. A governing body
1-23 may, in accordance with the usual procedures prescribed for taking
1-24 official action of the governing body, elect to participate in the
2-1 requirements of this Act. Any action to not participate in the
2-2 requirements of this Act may be rescinded by the governing body at
2-3 any time. A governing body [municipality] that has elected to
2-4 participate in this fund may not rescind that election.
2-5 (c) Every governing body of a department that is eligible to
2-6 participate in the pension system and that is not currently exempt
2-7 under Subsection (b) of this section shall contribute for each
2-8 member at least $12 for each month of service beginning on the date
2-9 the member enters the pension system. [Contributions must be paid
2-10 at least every 12 months.] If the participating department is
2-11 situated in more than one political subdivision, the governing
2-12 bodies of such political subdivisions shall contribute equally
2-13 towards a total of at least $12 for each member for each month of
2-14 service. A participating department shall pay contributions to the
2-15 fund at the times and in the manner the state board of trustees
2-16 prescribes by rule. Contributions that are not paid within the
2-17 time required by the state board of trustees accrue interest at the
2-18 most recent assumed actuarial rate of return on investments of the
2-19 fund. The attorney general may sue to collect unpaid accrued
2-20 interest. Interest recovered shall be deposited in the fund.
2-21 (g) The fund is intended to qualify under Section 401 of the
2-22 code, be exempt from federal income taxes under Section 501(a) of
2-23 the code, and conform at all times to applicable governmental
2-24 authorities. If any provision of this Act is subject to more than
2-25 one construction, only one of which will permit the qualification
2-26 of the fund, the construction that will permit the fund to qualify
2-27 will prevail.
3-1 (h) The fund must be maintained for the exclusive benefit of
3-2 members and their beneficiaries. At no time before the termination
3-3 of the fund and the satisfaction of all liabilities with respect to
3-4 members and their beneficiaries may any part of the principal or
3-5 interest from the assets of the fund be used for or diverted to a
3-6 purpose other than the exclusive benefit of the members and their
3-7 beneficiaries.
3-8 (i) Notwithstanding any other provision of this Act, the
3-9 annual benefit provided in any year based on the service of any
3-10 member may not exceed the amount permitted by Section 415(b) of the
3-11 code for that year. If the aggregated benefit otherwise payable to
3-12 any member under this Act and any other defined benefit plan
3-13 maintained by a governing body that contributes to the fund on
3-14 behalf of the member would otherwise exceed the limits provided by
3-15 Section 415(b) of the code, the reductions in benefits required by
3-16 this subsection must first be made to the extent possible from the
3-17 other plan, and only after those reductions, from the fund.
3-18 (j) A member's retirement pension may not begin later than
3-19 April 1 of the year after the later of the year in which the member
3-20 leaves active service or the year in which the member attains the
3-21 age of 70-1/2. Benefits to a qualified beneficiary may not begin
3-22 later than one year after the date of the member's death and must
3-23 otherwise satisfy the requirements of Section 401(a)(9) of the
3-24 code, except that benefits to the surviving spouse of a deceased
3-25 member do not have to begin before the date the deceased member
3-26 would have attained the age of 55.
3-27 (k) Any member or beneficiary who receives any eligible
4-1 rollover distribution, as defined by Section 402(c)(4) of the code,
4-2 from the fund is entitled to have that distribution transferred
4-3 directly to another eligible retirement plan of the member's or
4-4 beneficiary's choice on providing direction for the transfer
4-5 according to procedures established by the state board of trustees.
4-6 (l) The annual compensation taken into account for any
4-7 purpose under this Act for any ineligible participant may not
4-8 exceed $150,000 or an amount adjusted under guidelines provided by
4-9 the secretary of the United States Treasury. For purposes of this
4-10 subsection, an ineligible participant is a person who first became
4-11 a member of the fund after 1995.
4-12 (m) The retirement benefit earned by a member becomes
4-13 nonforfeitable not later than the date the member attains normal
4-14 retirement age. The retirement benefit earned by a member also
4-15 becomes nonforfeitable, if not already nonforfeitable and to the
4-16 extent the benefit has been funded, on the termination or partial
4-17 termination of the fund or the complete discontinuance of
4-18 contributions to the fund.
4-19 (n) A forfeiture occurring under this Act may not be used to
4-20 increase the benefits any member otherwise would receive under this
4-21 Act.
4-22 (o) The state board of trustees may adopt rules to implement
4-23 this Act. The board by rule shall implement this Act in a manner
4-24 that preserves the tax qualification of the fund under the code and
4-25 may revise any provision or program to the extent necessary to
4-26 retain tax qualification.
4-27 (p) Notwithstanding any other provision of this Act,
5-1 contributions, benefits, and qualified service for military service
5-2 shall be provided in compliance with Section 414(u) of the code.
5-3 SECTION 3. Section 2A(c), Texas Statewide Emergency Services
5-4 Retirement Act (Article 6243e.3, Vernon's Texas Civil Statutes), is
5-5 amended to read as follows:
5-6 (c) A member who performs qualified service for more than
5-7 one participating department under this Act may become eligible to
5-8 receive service retirement benefits for service for each
5-9 department, but, if the person dies while a member, the member's
5-10 beneficiary must choose between an on-duty and off-duty death
5-11 benefit, if applicable.
5-12 SECTION 4. Section 3, Texas Statewide Emergency Services
5-13 Retirement Act (Article 6243e.3, Vernon's Texas Civil Statutes), is
5-14 amended by amending Subsection (a) and adding Subsection (d) to
5-15 read as follows:
5-16 (a) A member who terminates service is entitled to [shall]
5-17 receive a retirement annuity payable in monthly installments on
5-18 reaching early retirement age or normal retirement age, subject to
5-19 the vesting provisions in Section 6 of this Act.
5-20 (d) The cashing or depositing of the first payment of a
5-21 retirement annuity by a person who is entitled to it is considered
5-22 acceptance of the amount of the annuity and, if the annuity is
5-23 based on the payee's service, is conclusive evidence for purposes
5-24 of this Act that the payee is retired.
5-25 SECTION 5. Section 4, Texas Statewide Emergency Services
5-26 Retirement Act (Article 6243e.3, Vernon's Texas Civil Statutes), is
5-27 amended by amending Subsections (b) and (c) and adding Subsections
6-1 (d), (e), and (f) to read as follows:
6-2 (b) A member who is disabled during the performance of
6-3 emergency service duties is automatically vested 100 percent as of
6-4 the date of disability, if the disability occurs before the member
6-5 has completed 15 years of qualified service. Benefits under this
6-6 subsection are payable if the member is unable to perform the
6-7 person's duties for the member's participating department and [or]
6-8 the duties of any other occupation for which the person is
6-9 reasonably suited by education, training, and experience.
6-10 (c) A member whose disability results from performing
6-11 emergency service duties is guaranteed a disability benefit of at
6-12 least $300 a month. The state board of trustees shall adopt rules
6-13 for an increase in disability benefits above the minimum required
6-14 by this subsection based on the monthly contributions of a
6-15 participating department for its members.
6-16 (d) A local board of trustees shall require a member who is
6-17 receiving temporary disability benefits to file a disability rating
6-18 report from a physician every three months. The board may choose
6-19 the physician. When the reports indicate a significant change of
6-20 condition, the local board, after notice and a hearing, may adopt
6-21 an order to terminate benefit payments or place the member on
6-22 permanent disability. The board shall adopt an order to terminate
6-23 benefit payments if the board determines that the standard provided
6-24 by Subsection (e) of this section has been met. The board shall
6-25 send each order adopted under this subsection to the commissioner.
6-26 (e) Disability benefits cease if the recipient becomes
6-27 capable of performing the duties of the person's most recent
7-1 position with a participating department or the duties of another
7-2 occupation for which the person is reasonably suited by education,
7-3 training, and experience. Rejection by a disability benefits
7-4 recipient of an offer of employment in an occupation for which the
7-5 person is reasonably suited by education, training, and experience
7-6 is conclusive evidence for purposes of this Act that the person is
7-7 no longer eligible to receive disability benefits, if the
7-8 employment would provide the person with pay equal to or greater
7-9 than the pay the person was earning in the person's employment at
7-10 the time the disability occurred.
7-11 (f) The state or local board of trustees may require
7-12 financial information from a person as a condition to the continued
7-13 receipt of disability benefits. The information may include
7-14 federal income tax returns and wage earning forms required by the
7-15 federal Internal Revenue Service. Failure to provide information
7-16 requested under this subsection is a ground for terminating
7-17 disability benefits.
7-18 SECTION 6. Section 8, Texas Statewide Emergency Services
7-19 Retirement Act (Article 6243e.3, Vernon's Texas Civil Statutes), is
7-20 amended to read as follows:
7-21 Sec. 8. CERTIFICATION OF PHYSICAL FITNESS. A prospective
7-22 member shall present to the local board of trustees a certification
7-23 of physical fitness by a qualified physician. If the local board
7-24 accepts the certification, the person becomes a member of the
7-25 pension system. If the local board does not accept the
7-26 certification or if the person does not present a certification,
7-27 the person becomes a member of the pension system only if the local
8-1 board assigns the person to support duties. A local board of
8-2 trustees shall assign a person to support duties if the person does
8-3 not present a certification and the person is at least 18 years of
8-4 age, is not retired from the pension system, and is not on a
8-5 probationary period of service before becoming a regular member of
8-6 a participating department.
8-7 SECTION 7. Sections 11(b), (d), and (e), Texas Statewide
8-8 Emergency Services Retirement Act (Article 6243e.3, Vernon's Texas
8-9 Civil Statutes), are amended to read as follows:
8-10 (b) The costs of the current pension plan shall be
8-11 determined on an actuarially sound basis. The costs must be
8-12 certified by a qualified actuary as of the effective date of merger
8-13 or within two [three] years following [preceding] the date of
8-14 merger.
8-15 (d) Following merger, a member's retirement benefits in the
8-16 pension system are determined by [either] the future-service
8-17 method, the buy-back accrued time method, or the buy-back method.
8-18 (e)(1) In the future-service method, the qualified service
8-19 required to earn retirement benefits in the pension system begins
8-20 as of the date of merger. [For determining a person's retirement
8-21 benefits in the pension system, a department may choose the formula
8-22 for benefits used in the current pension plan or the formula for
8-23 benefits as outlined in this Act. Any retirement benefits accrued
8-24 prior to the date of merger will also be paid on retirement
8-25 according to the formula for benefits under the current pension
8-26 plan.]
8-27 (2) In the buy-back accrued time method of [in]
9-1 determining the member's retirement benefits in the pension system,
9-2 a department may choose the formula for benefits used in the
9-3 current pension plan or the formula for benefits as outlined in
9-4 this Act. A member who has less than 15 years of service remaining
9-5 before retirement as of the date of merger may count time served
9-6 under the current pension plan before the date of merger as
9-7 qualified service if the service complies with the attendance
9-8 requirements provided for qualified service. The time period
9-9 necessary to make 15 years of service before retirement may be
9-10 used.
9-11 (3) In the buy-back method, the member's retirement
9-12 benefits in the pension system are based on the formula for
9-13 benefits as outlined in this Act without regard to the member's
9-14 age. The maximum service that may be bought under this method is
9-15 15 years.
9-16 SECTION 8. Section 21(a), Texas Statewide Emergency Services
9-17 Retirement Act (Article 6243e.3, Vernon's Texas Civil Statutes), is
9-18 amended to read as follows:
9-19 (a) The board shall employ the certified public accountant,
9-20 the actuary, and the investment consultant [advisors] for the fund
9-21 and may acquire computer or custodial services for the fund. The
9-22 costs [cost] of accounting, actuarial, investment consulting,
9-23 computer, or custodial services and administrative expenses may be
9-24 paid from income earned by investment of the fund.
9-25 SECTION 9. Section 23, Texas Statewide Emergency Services
9-26 Retirement Act (Article 6243e.3, Vernon's Texas Civil Statutes), is
9-27 amended to read as follows:
10-1 Sec. 23. ADDITIONAL DUTIES OF [THE] LOCAL BOARD OF TRUSTEES.
10-2 (a) The local board of trustees shall monitor the timely
10-3 submission of required contributions to the commissioner.
10-4 (b) Each local board shall file with the commissioner an
10-5 annual report containing information required by the commissioner.
10-6 The report must be filed within the time required by the
10-7 commissioner.
10-8 (c) The local board shall hear and decide all claims for
10-9 benefits according to the procedures in Section 7 of this Act.
10-10 (d) [(c)] The board shall mail a copy of a decision on a
10-11 claim to the parties involved and to the commissioner.
10-12 (e) [(d)] The board shall keep complete records of all
10-13 claims and proceedings.
10-14 [(e) The local board shall require a member who is receiving
10-15 temporary disability benefits to file a disability rating report
10-16 from a physician every three months. The board may choose the
10-17 physician. When the reports indicate a significant change of
10-18 condition, the local board, after notice and a hearing, may enter
10-19 an order to terminate benefit payments or place the member on
10-20 permanent disability. The order is sent to the commissioner. If
10-21 the board terminates benefits, the member is presumed able to
10-22 perform the person's duties for a participating department or
10-23 perform the duties of another occupation for which the person is
10-24 reasonably suited by education, training, and experience.]
10-25 SECTION 10. The Texas Statewide Emergency Services
10-26 Retirement Act (Article 6243e.3, Vernon's Texas Civil Statutes) is
10-27 amended by adding Sections 23A and 23B to read as follows:
11-1 Sec. 23A. ADMINISTRATIVE PENALTY. (a) The state board of
11-2 trustees may impose an administrative penalty on a local board of
11-3 trustees that fails to file in a timely manner an annual report
11-4 required under Section 23(b) of this Act.
11-5 (b) The amount of the penalty may not exceed $5,000. The
11-6 amount shall be based on:
11-7 (1) the seriousness of the violation, including the
11-8 nature, circumstances, extent, and gravity of the violation;
11-9 (2) the history of previous violations;
11-10 (3) the amount necessary to deter a future violation;
11-11 (4) efforts to correct the violation; and
11-12 (5) any other matter that justice may require.
11-13 (c) The state board of trustees may adopt rules for
11-14 determining the amount of a penalty.
11-15 (d) The attorney general may sue to collect the penalty.
11-16 Penalties recovered will be deposited in the fund.
11-17 (e) A proceeding to impose the penalty is considered to be a
11-18 contested case under Chapter 2001, Government Code.
11-19 Sec. 23B. INTERRUPTION OF PAYMENTS. (a) The pension system
11-20 shall withhold payments of a monthly retirement annuity if a
11-21 participating department attempts to provide information to the
11-22 commissioner relating to continued eligibility to receive the
11-23 payments and the recipient fails to cooperate or provide the
11-24 requested information. The state board of trustees may adopt rules
11-25 to enforce this subsection.
11-26 (b) The pension system may not begin retirement annuity,
11-27 disability, or death payments based on the service of a person
12-1 whose local board of trustees is not current in its filing of an
12-2 annual report required under Section 23(b) of this Act.
12-3 SECTION 11. Section 404.094(d), Government Code, is amended
12-4 to read as follows:
12-5 (d) A state agency that receives money from securities
12-6 transactions under applicable law, including Chapter 815 or 825,
12-7 Government Code, Chapter 161, 162, or 164, Natural Resources Code,
12-8 [and] Chapter 43, Education Code, and the Texas Statewide Emergency
12-9 Services Retirement Act (Article 6243e.3, Vernon's Texas Civil
12-10 Statutes), with the comptroller's approval may, as an alternative
12-11 to the deposit of the funds as provided by Subsection (a), net
12-12 funds received against purchases of securities occurring within one
12-13 business day. Any proceeds received and available for reinvestment
12-14 that are not reinvested within one business day of receipt shall be
12-15 deposited in the state treasury as provided by Subsection (a). An
12-16 agency authorized to net securities transactions under this section
12-17 is subject to the accounting and reporting procedures established
12-18 by the comptroller.
12-19 SECTION 12. This Act takes effect September 1, 1999.
12-20 SECTION 13. The importance of this legislation and the
12-21 crowded condition of the calendars in both houses create an
12-22 emergency and an imperative public necessity that the
12-23 constitutional rule requiring bills to be read on three several
12-24 days in each house be suspended, and this rule is hereby suspended.