1-1 By: Greenberg (Senate Sponsor - Shapleigh) H.B. No. 1739
1-2 (In the Senate - Received from the House April 14, 1999;
1-3 April 15, 1999, read first time and referred to Committee on State
1-4 Affairs; May 7, 1999, reported favorably by the following vote:
1-5 Yeas 7, Nays 0; May 7, 1999, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to membership, service credit, benefits, and
1-9 administration of the statewide retirement system for emergency
1-10 services personnel; providing an administrative penalty.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Section 1, Texas Statewide Emergency Services
1-13 Retirement Act (Article 6243e.3, Vernon's Texas Civil Statutes), is
1-14 amended by amending Subdivision (2) and adding Subdivision (18) to
1-15 read as follows:
1-16 (2) "Retirement age" means early retirement age or
1-17 normal retirement age. "Early retirement age" means age 55.
1-18 "Normal retirement age" means the later of age 55 or the month a
1-19 member completes 15 years of qualified service.
1-20 (18) "Code" means the federal Internal Revenue Code of
1-21 1986.
1-22 SECTION 2. Section 2, Texas Statewide Emergency Services
1-23 Retirement Act (Article 6243e.3, Vernon's Texas Civil Statutes), is
1-24 amended by amending Subsections (a), (b), and (c) and adding
1-25 Subsections (g)-(p) to read as follows:
1-26 (a) The Texas statewide emergency services personnel
1-27 retirement fund is a trust fund with [in] the state treasury.
1-28 (b) Participation in the fund is optional. A governing body
1-29 may, in accordance with the usual procedures prescribed for taking
1-30 official action of the governing body, elect to participate in the
1-31 requirements of this Act. Any action to not participate in the
1-32 requirements of this Act may be rescinded by the governing body at
1-33 any time. A governing body [municipality] that has elected to
1-34 participate in this fund may not rescind that election.
1-35 (c) Every governing body of a department that is eligible to
1-36 participate in the pension system and that is not currently exempt
1-37 under Subsection (b) of this section shall contribute for each
1-38 member at least $12 for each month of service beginning on the date
1-39 the member enters the pension system. [Contributions must be paid
1-40 at least every 12 months.] If the participating department is
1-41 situated in more than one political subdivision, the governing
1-42 bodies of such political subdivisions shall contribute equally
1-43 towards a total of at least $12 for each member for each month of
1-44 service. A participating department shall pay contributions to the
1-45 fund at the times and in the manner the state board of trustees
1-46 prescribes by rule. Contributions that are not paid within the
1-47 time required by the state board of trustees accrue interest at the
1-48 most recent assumed actuarial rate of return on investments of the
1-49 fund. The attorney general may sue to collect unpaid accrued
1-50 interest. Interest recovered shall be deposited in the fund.
1-51 (g) The fund is intended to qualify under Section 401 of the
1-52 code, be exempt from federal income taxes under Section 501(a) of
1-53 the code, and conform at all times to applicable governmental
1-54 authorities. If any provision of this Act is subject to more than
1-55 one construction, only one of which will permit the qualification
1-56 of the fund, the construction that will permit the fund to qualify
1-57 will prevail.
1-58 (h) The fund must be maintained for the exclusive benefit of
1-59 members and their beneficiaries. At no time before the termination
1-60 of the fund and the satisfaction of all liabilities with respect to
1-61 members and their beneficiaries may any part of the principal or
1-62 interest from the assets of the fund be used for or diverted to a
1-63 purpose other than the exclusive benefit of the members and their
1-64 beneficiaries.
2-1 (i) Notwithstanding any other provision of this Act, the
2-2 annual benefit provided in any year based on the service of any
2-3 member may not exceed the amount permitted by Section 415(b) of the
2-4 code for that year. If the aggregated benefit otherwise payable to
2-5 any member under this Act and any other defined benefit plan
2-6 maintained by a governing body that contributes to the fund on
2-7 behalf of the member would otherwise exceed the limits provided by
2-8 Section 415(b) of the code, the reductions in benefits required by
2-9 this subsection must first be made to the extent possible from the
2-10 other plan, and only after those reductions, from the fund.
2-11 (j) A member's retirement pension may not begin later than
2-12 April 1 of the year after the later of the year in which the member
2-13 leaves active service or the year in which the member attains the
2-14 age of 70-1/2. Benefits to a qualified beneficiary may not begin
2-15 later than one year after the date of the member's death and must
2-16 otherwise satisfy the requirements of Section 401(a)(9) of the
2-17 code, except that benefits to the surviving spouse of a deceased
2-18 member do not have to begin before the date the deceased member
2-19 would have attained the age of 55.
2-20 (k) Any member or beneficiary who receives any eligible
2-21 rollover distribution, as defined by Section 402(c)(4) of the code,
2-22 from the fund is entitled to have that distribution transferred
2-23 directly to another eligible retirement plan of the member's or
2-24 beneficiary's choice on providing direction for the transfer
2-25 according to procedures established by the state board of trustees.
2-26 (l) The annual compensation taken into account for any
2-27 purpose under this Act for any ineligible participant may not
2-28 exceed $150,000 or an amount adjusted under guidelines provided by
2-29 the secretary of the United States Treasury. For purposes of this
2-30 subsection, an ineligible participant is a person who first became
2-31 a member of the fund after 1995.
2-32 (m) The retirement benefit earned by a member becomes
2-33 nonforfeitable not later than the date the member attains normal
2-34 retirement age. The retirement benefit earned by a member also
2-35 becomes nonforfeitable, if not already nonforfeitable and to the
2-36 extent the benefit has been funded, on the termination or partial
2-37 termination of the fund or the complete discontinuance of
2-38 contributions to the fund.
2-39 (n) A forfeiture occurring under this Act may not be used to
2-40 increase the benefits any member otherwise would receive under this
2-41 Act.
2-42 (o) The state board of trustees may adopt rules to implement
2-43 this Act. The board by rule shall implement this Act in a manner
2-44 that preserves the tax qualification of the fund under the code and
2-45 may revise any provision or program to the extent necessary to
2-46 retain tax qualification.
2-47 (p) Notwithstanding any other provision of this Act,
2-48 contributions, benefits, and qualified service for military service
2-49 shall be provided in compliance with Section 414(u) of the code.
2-50 SECTION 3. Section 2A(c), Texas Statewide Emergency Services
2-51 Retirement Act (Article 6243e.3, Vernon's Texas Civil Statutes), is
2-52 amended to read as follows:
2-53 (c) A member who performs qualified service for more than
2-54 one participating department under this Act may become eligible to
2-55 receive service retirement benefits for service for each
2-56 department, but, if the person dies while a member, the member's
2-57 beneficiary must choose between an on-duty and off-duty death
2-58 benefit, if applicable.
2-59 SECTION 4. Section 3, Texas Statewide Emergency Services
2-60 Retirement Act (Article 6243e.3, Vernon's Texas Civil Statutes), is
2-61 amended by amending Subsection (a) and adding Subsection (d) to
2-62 read as follows:
2-63 (a) A member who terminates service is entitled to [shall]
2-64 receive a retirement annuity payable in monthly installments on
2-65 reaching early retirement age or normal retirement age, subject to
2-66 the vesting provisions in Section 6 of this Act.
2-67 (d) The cashing or depositing of the first payment of a
2-68 retirement annuity by a person who is entitled to it is considered
2-69 acceptance of the amount of the annuity and, if the annuity is
3-1 based on the payee's service, is conclusive evidence for purposes
3-2 of this Act that the payee is retired.
3-3 SECTION 5. Section 4, Texas Statewide Emergency Services
3-4 Retirement Act (Article 6243e.3, Vernon's Texas Civil Statutes), is
3-5 amended by amending Subsections (b) and (c) and adding Subsections
3-6 (d), (e), and (f) to read as follows:
3-7 (b) A member who is disabled during the performance of
3-8 emergency service duties is automatically vested 100 percent as of
3-9 the date of disability, if the disability occurs before the member
3-10 has completed 15 years of qualified service. Benefits under this
3-11 subsection are payable if the member is unable to perform the
3-12 person's duties for the member's participating department and [or]
3-13 the duties of any other occupation for which the person is
3-14 reasonably suited by education, training, and experience.
3-15 (c) A member whose disability results from performing
3-16 emergency service duties is guaranteed a disability benefit of at
3-17 least $300 a month. The state board of trustees shall adopt rules
3-18 for an increase in disability benefits above the minimum required
3-19 by this subsection based on the monthly contributions of a
3-20 participating department for its members.
3-21 (d) A local board of trustees shall require a member who is
3-22 receiving temporary disability benefits to file a disability rating
3-23 report from a physician every three months. The board may choose
3-24 the physician. When the reports indicate a significant change of
3-25 condition, the local board, after notice and a hearing, may adopt
3-26 an order to terminate benefit payments or place the member on
3-27 permanent disability. The board shall adopt an order to terminate
3-28 benefit payments if the board determines that the standard provided
3-29 by Subsection (e) of this section has been met. The board shall
3-30 send each order adopted under this subsection to the commissioner.
3-31 (e) Disability benefits cease if the recipient becomes
3-32 capable of performing the duties of the person's most recent
3-33 position with a participating department or the duties of another
3-34 occupation for which the person is reasonably suited by education,
3-35 training, and experience. Rejection by a disability benefits
3-36 recipient of an offer of employment in an occupation for which the
3-37 person is reasonably suited by education, training, and experience
3-38 is conclusive evidence for purposes of this Act that the person is
3-39 no longer eligible to receive disability benefits, if the
3-40 employment would provide the person with pay equal to or greater
3-41 than the pay the person was earning in the person's employment at
3-42 the time the disability occurred.
3-43 (f) The state or local board of trustees may require
3-44 financial information from a person as a condition to the continued
3-45 receipt of disability benefits. The information may include
3-46 federal income tax returns and wage earning forms required by the
3-47 federal Internal Revenue Service. Failure to provide information
3-48 requested under this subsection is a ground for terminating
3-49 disability benefits.
3-50 SECTION 6. Section 8, Texas Statewide Emergency Services
3-51 Retirement Act (Article 6243e.3, Vernon's Texas Civil Statutes), is
3-52 amended to read as follows:
3-53 Sec. 8. CERTIFICATION OF PHYSICAL FITNESS. A prospective
3-54 member shall present to the local board of trustees a certification
3-55 of physical fitness by a qualified physician. If the local board
3-56 accepts the certification, the person becomes a member of the
3-57 pension system. If the local board does not accept the
3-58 certification or if the person does not present a certification,
3-59 the person becomes a member of the pension system only if the local
3-60 board assigns the person to support duties. A local board of
3-61 trustees shall assign a person to support duties if the person does
3-62 not present a certification and the person is at least 18 years of
3-63 age, is not retired from the pension system, and is not on a
3-64 probationary period of service before becoming a regular member of
3-65 a participating department.
3-66 SECTION 7. Sections 11(b), (d), and (e), Texas Statewide
3-67 Emergency Services Retirement Act (Article 6243e.3, Vernon's Texas
3-68 Civil Statutes), are amended to read as follows:
3-69 (b) The costs of the current pension plan shall be
4-1 determined on an actuarially sound basis. The costs must be
4-2 certified by a qualified actuary as of the effective date of merger
4-3 or within two [three] years following [preceding] the date of
4-4 merger.
4-5 (d) Following merger, a member's retirement benefits in the
4-6 pension system are determined by [either] the future-service
4-7 method, the buy-back accrued time method, or the buy-back method.
4-8 (e)(1) In the future-service method, the qualified service
4-9 required to earn retirement benefits in the pension system begins
4-10 as of the date of merger. [For determining a person's retirement
4-11 benefits in the pension system, a department may choose the formula
4-12 for benefits used in the current pension plan or the formula for
4-13 benefits as outlined in this Act. Any retirement benefits accrued
4-14 prior to the date of merger will also be paid on retirement
4-15 according to the formula for benefits under the current pension
4-16 plan.]
4-17 (2) In the buy-back accrued time method of [in]
4-18 determining the member's retirement benefits in the pension system,
4-19 a department may choose the formula for benefits used in the
4-20 current pension plan or the formula for benefits as outlined in
4-21 this Act. A member who has less than 15 years of service remaining
4-22 before retirement as of the date of merger may count time served
4-23 under the current pension plan before the date of merger as
4-24 qualified service if the service complies with the attendance
4-25 requirements provided for qualified service. The time period
4-26 necessary to make 15 years of service before retirement may be
4-27 used.
4-28 (3) In the buy-back method, the member's retirement
4-29 benefits in the pension system are based on the formula for
4-30 benefits as outlined in this Act without regard to the member's
4-31 age. The maximum service that may be bought under this method is
4-32 15 years.
4-33 SECTION 8. Section 21(a), Texas Statewide Emergency Services
4-34 Retirement Act (Article 6243e.3, Vernon's Texas Civil Statutes), is
4-35 amended to read as follows:
4-36 (a) The board shall employ the certified public accountant,
4-37 the actuary, and the investment consultant [advisors] for the fund
4-38 and may acquire computer or custodial services for the fund. The
4-39 costs [cost] of accounting, actuarial, investment consulting,
4-40 computer, or custodial services and administrative expenses may be
4-41 paid from income earned by investment of the fund.
4-42 SECTION 9. Section 23, Texas Statewide Emergency Services
4-43 Retirement Act (Article 6243e.3, Vernon's Texas Civil Statutes), is
4-44 amended to read as follows:
4-45 Sec. 23. ADDITIONAL DUTIES OF [THE] LOCAL BOARD OF TRUSTEES.
4-46 (a) The local board of trustees shall monitor the timely
4-47 submission of required contributions to the commissioner.
4-48 (b) Each local board shall file with the commissioner an
4-49 annual report containing information required by the commissioner.
4-50 The report must be filed within the time required by the
4-51 commissioner.
4-52 (c) The local board shall hear and decide all claims for
4-53 benefits according to the procedures in Section 7 of this Act.
4-54 (d) [(c)] The board shall mail a copy of a decision on a
4-55 claim to the parties involved and to the commissioner.
4-56 (e) [(d)] The board shall keep complete records of all
4-57 claims and proceedings.
4-58 [(e) The local board shall require a member who is receiving
4-59 temporary disability benefits to file a disability rating report
4-60 from a physician every three months. The board may choose the
4-61 physician. When the reports indicate a significant change of
4-62 condition, the local board, after notice and a hearing, may enter
4-63 an order to terminate benefit payments or place the member on
4-64 permanent disability. The order is sent to the commissioner. If
4-65 the board terminates benefits, the member is presumed able to
4-66 perform the person's duties for a participating department or
4-67 perform the duties of another occupation for which the person is
4-68 reasonably suited by education, training, and experience.]
4-69 SECTION 10. The Texas Statewide Emergency Services
5-1 Retirement Act (Article 6243e.3, Vernon's Texas Civil Statutes) is
5-2 amended by adding Sections 23A and 23B to read as follows:
5-3 Sec. 23A. ADMINISTRATIVE PENALTY. (a) The state board of
5-4 trustees may impose an administrative penalty on a local board of
5-5 trustees that fails to file in a timely manner an annual report
5-6 required under Section 23(b) of this Act.
5-7 (b) The amount of the penalty may not exceed $5,000. The
5-8 amount shall be based on:
5-9 (1) the seriousness of the violation, including the
5-10 nature, circumstances, extent, and gravity of the violation;
5-11 (2) the history of previous violations;
5-12 (3) the amount necessary to deter a future violation;
5-13 (4) efforts to correct the violation; and
5-14 (5) any other matter that justice may require.
5-15 (c) The state board of trustees may adopt rules for
5-16 determining the amount of a penalty.
5-17 (d) The attorney general may sue to collect the penalty.
5-18 Penalties recovered will be deposited in the fund.
5-19 (e) A proceeding to impose the penalty is considered to be a
5-20 contested case under Chapter 2001, Government Code.
5-21 Sec. 23B. INTERRUPTION OF PAYMENTS. (a) The pension system
5-22 shall withhold payments of a monthly retirement annuity if a
5-23 participating department attempts to provide information to the
5-24 commissioner relating to continued eligibility to receive the
5-25 payments and the recipient fails to cooperate or provide the
5-26 requested information. The state board of trustees may adopt rules
5-27 to enforce this subsection.
5-28 (b) The pension system may not begin retirement annuity,
5-29 disability, or death payments based on the service of a person
5-30 whose local board of trustees is not current in its filing of an
5-31 annual report required under Section 23(b) of this Act.
5-32 SECTION 11. Section 404.094(d), Government Code, is amended
5-33 to read as follows:
5-34 (d) A state agency that receives money from securities
5-35 transactions under applicable law, including Chapter 815 or 825,
5-36 Government Code, Chapter 161, 162, or 164, Natural Resources Code,
5-37 [and] Chapter 43, Education Code, and the Texas Statewide Emergency
5-38 Services Retirement Act (Article 6243e.3, Vernon's Texas Civil
5-39 Statutes), with the comptroller's approval may, as an alternative
5-40 to the deposit of the funds as provided by Subsection (a), net
5-41 funds received against purchases of securities occurring within one
5-42 business day. Any proceeds received and available for reinvestment
5-43 that are not reinvested within one business day of receipt shall be
5-44 deposited in the state treasury as provided by Subsection (a). An
5-45 agency authorized to net securities transactions under this section
5-46 is subject to the accounting and reporting procedures established
5-47 by the comptroller.
5-48 SECTION 12. This Act takes effect September 1, 1999.
5-49 SECTION 13. The importance of this legislation and the
5-50 crowded condition of the calendars in both houses create an
5-51 emergency and an imperative public necessity that the
5-52 constitutional rule requiring bills to be read on three several
5-53 days in each house be suspended, and this rule is hereby suspended.
5-54 * * * * *