1-1 By: Turner of Harris (Senate Sponsor - Gallegos) H.B. No. 3377 1-2 (In the Senate - Received from the House April 21, 1999; 1-3 April 22, 1999, read first time and referred to Committee on 1-4 Intergovernmental Relations; May 6, 1999, reported favorably by the 1-5 following vote: Yeas 5, Nays 0; May 6, 1999, sent to printer.) 1-6 A BILL TO BE ENTITLED 1-7 AN ACT 1-8 relating to membership and credit in and benefits and 1-9 administration of public retirement systems for police officers in 1-10 certain municipalities. 1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-12 SECTION 1. Title 109, Revised Statutes, is amended by adding 1-13 Article 6243g-4 to read as follows: 1-14 Art. 6243g-4. POLICE OFFICERS PENSION SYSTEM IN CERTAIN 1-15 MUNICIPALITIES 1-16 Sec. 1. PURPOSE. The purpose of this article is to restate 1-17 and amend the provisions of former law governing a police officers 1-18 pension system in each city in this state having a population of 1-19 1.5 million or more, according to the most recent federal decennial 1-20 census, to permit the consolidation of the terms of certain pension 1-21 plans. 1-22 Sec. 2. DEFINITIONS. In this article: 1-23 (1) "Active member" means an employee who holds a 1-24 classified position in a police department of a city subject to 1-25 this article, except an employee who is a part-time, seasonal, or 1-26 temporary employee. 1-27 (2) "Average total direct pay" means a member's total 1-28 direct pay for the 26 pay periods immediately preceding the date of 1-29 separation from service or the date of entry into DROP, if earlier, 1-30 divided by 12. 1-31 (3) "Base salary" means the monthly base pay provided 1-32 for the classified position in the police department held by the 1-33 member. 1-34 (4) "Board" means the board of trustees of the pension 1-35 system. 1-36 (5) "Code" means the federal Internal Revenue Code of 1-37 1986, or any successor, as amended. 1-38 (6) "Dependent" means a dependent child or a dependent 1-39 parent. 1-40 (7) "Dependent child" means a deceased member's 1-41 unmarried natural or adopted child who: 1-42 (A) has not attained age 18; 1-43 (B) has attained age 18 but not age 22 and is 1-44 attending school on a full-time basis; or 1-45 (C) has attained age 18 and is permanently 1-46 disabled as the result of a disability that began before the child 1-47 attained age 18. 1-48 (8) "Dependent parent" means a natural parent of a 1-49 deceased member or an adoptive parent who adopted the member before 1-50 the member attained age 18 and at least 50 percent of whose support 1-51 was received from the member during the one-year period preceding 1-52 the date of death of the member. 1-53 (9) "DROP" means the deferred retirement option plan 1-54 described by Section 14 of this article. 1-55 (10) "Employee" means an individual who holds a 1-56 classified position in the police department of a city subject to 1-57 this article. 1-58 (11) "Former member" means a person who was once an 1-59 active member, vested or not, but has terminated active member 1-60 status and received a refund of member contributions. 1-61 (12) "Fund" means the fund originally established by 1-62 Chapter 76, Acts of the 50th Legislature, Regular Session, 1947 1-63 (Article 6243g-1, Vernon's Texas Civil Statutes). 1-64 (13) "Inactive member" means a person who has 2-1 separated from service and has a vested right to a service pension 2-2 from the pension system but is not eligible for an immediate 2-3 service pension. The term does not include a former member. 2-4 (14) "Member" includes an active member, inactive 2-5 member, or retired member, as the context may require, but does not 2-6 include a former member. 2-7 (15) "Normal retirement date" means the date at which 2-8 a member is eligible for an immediate service pension under Section 2-9 12 of this article. 2-10 (16) "Pension" means a monthly payment for life from 2-11 the fund to a retired member. 2-12 (17) "Pension system" or "system" means the retirement 2-13 and disability plan for employees of any police department subject 2-14 to this article. 2-15 (18) "School" means any public or private school 2-16 through the 12th grade or any trade school, junior college, 2-17 college, or university beyond the 12th grade that is accredited by 2-18 a generally recognized accrediting authority. 2-19 (19) "Retired member" means a member who has separated 2-20 from service and who is eligible to receive an immediate service or 2-21 disability pension under this article. 2-22 (20) "Separation from service" means cessation of work 2-23 for the police department of a city subject to this article, 2-24 whether caused by death, discharge, resignation, or transfer to an 2-25 unclassified position. 2-26 (21) "Service" means the period of time a person is 2-27 employed in the police department of a city subject to this 2-28 article, except for any period of DROP participation, and includes 2-29 any period that the person is receiving a disability pension under 2-30 Section 15 of this article or is on a military leave of absence 2-31 described by Section 23 of this article, but only if the person 2-32 returns to active service after the period of disability or 2-33 military leave. The term does not include periods in which a 2-34 person is suspended from duty without pay, on leave of absence 2-35 without pay, or separated from service. 2-36 (22) "Surviving spouse" means a person who was married 2-37 to an active, inactive, or retired member at the time of the 2-38 member's death and, in the case of an inactive or retired member, 2-39 before the member's separation from service or for a period of at 2-40 least five years before the retired or inactive member's death. 2-41 (23) "Total direct pay" means wages as defined by 2-42 Section 3401(a) of the code, plus any amounts that are not included 2-43 in gross income by reason of Section 125, 402(g)(2), or 457 of the 2-44 code and member contributions picked up pursuant to Section 2-45 414(h)(2) of the code, less any pay received for overtime work. 2-46 The term does not include nontaxable payments not expressly 2-47 described by this subdivision. 2-48 Sec. 3. PENSION BOARD. (a) The board of trustees of the 2-49 pension system that was created under Chapter 76, Acts of the 50th 2-50 Legislature, Regular Session, 1947 (Article 6243g-1, Vernon's Texas 2-51 Civil Statutes), continues to be responsible for the general 2-52 administration, management, and operation of the pension system, 2-53 including the direction of investment and oversight of the fund's 2-54 assets. 2-55 (b) The board is composed of seven members as follows: 2-56 (1) the administrative head of the city or the 2-57 administrative head's authorized representative; 2-58 (2) three employees of the police department having 2-59 membership in the pension system and elected in the manner 2-60 determined at a one-time election held for the pension system 2-61 before October 1, 1999; 2-62 (3) two retired members, elected in the manner 2-63 determined at a one-time election held for the pension system 2-64 before October 1, 1999, who are receiving pensions from the system 2-65 and are not officers or employees of the city; and 2-66 (4) the treasurer of the city or the person 2-67 discharging the duties of the city treasurer. 2-68 (c) The terms of office of the board members elected as 2-69 described by Subsection (b)(2) of this section shall be three 3-1 years, with one board member being elected every year at an 3-2 election called by the board and held in December. If a vacancy 3-3 occurs among the three elected active board members, the board 3-4 shall hold an election within 60 days after the date the vacancy 3-5 occurred. At that election, an active member shall be elected to 3-6 serve for the remainder of the term of the vacant position or for a 3-7 full term if the term of the board member that caused the vacancy 3-8 would have ended in that year. 3-9 (d) The terms of office of the board members elected as 3-10 described by Subsection (b)(3) of this section shall be three 3-11 years. Beginning in 1999, and each third succeeding year, one 3-12 board member shall be elected at an election called by the board 3-13 and held in December. Beginning in 2000, and each third succeeding 3-14 year, a second board member shall be elected at an election called 3-15 by the board and held in December. If a vacancy occurs among the 3-16 two elected retired members of the board, the board shall hold an 3-17 election within 60 days after the date the vacancy occurred. At 3-18 that election, a retired member shall be elected to serve for the 3-19 remainder of the term of the vacant position or for a full term if 3-20 the term of the board member that caused the vacancy would have 3-21 ended in that year. A board member who is a retired member and who 3-22 was appointed to the board before January 1999 shall serve the 3-23 remainder of the board member's term. On expiration of the 3-24 appointed term, the appointed board member is eligible to run for 3-25 the board position described by Subsection (b)(3) of this section 3-26 in the same manner as any other retired member. 3-27 (e) A board member vacates the member's seat on the board if 3-28 the member is removed under Section 7 of this article or ceases to 3-29 meet the qualifications for the seat. 3-30 (f) If it is so determined at a one-time election held for 3-31 the pension system before October 1, 1999, an officer or employee 3-32 of any employee organization or retiree organization or an employee 3-33 of the pension system is prohibited from being elected to, 3-34 appointed to, or in any other way becoming a member of the board. 3-35 (g) Each board member shall, within 30 days after the date 3-36 of appointment or election, take an oath of office to diligently 3-37 and honestly administer the affairs of the pension system and not 3-38 knowingly violate, or willingly permit to be violated, this 3-39 article. 3-40 Sec. 4. BOARD MEMBER LEAVE AND COMPENSATION. (a) Elected 3-41 members of the board who are employees of the city's police 3-42 department are entitled to leave from their employer to attend to 3-43 the official business of the pension system. 3-44 (b) If the city employing an elected board member would 3-45 withhold any portion of the salary of the member who is attending 3-46 to official business of the pension system, the pension system may 3-47 elect to adequately compensate the city for the loss of service of 3-48 the member. If the board, by an affirmative vote of at least four 3-49 board members, makes this election, the amounts shall be remitted 3-50 from the fund to the city, and the city shall pay the board 3-51 member's salary as if no loss of service had occurred. 3-52 (c) The board, by an affirmative vote of at least four board 3-53 members, may elect to reimburse board members who are not employees 3-54 of the city for their time while attending to official business of 3-55 the pension system. The amount of any reimbursement may not exceed 3-56 $350 a month for each affected board member. 3-57 Sec. 5. OFFICERS; MEETINGS; EMPLOYEES. (a) The board 3-58 annually shall elect from its active and retired membership a 3-59 chairman. The board also annually shall elect from its membership 3-60 a vice chairman and a secretary. 3-61 (b) The board may hire one or more employees whose positions 3-62 and salaries shall be set by the board and who, acting under the 3-63 direction of the board, shall keep all of the records of and 3-64 perform all of the clerical services for the pension system. 3-65 (c) The board may employ professional investment managers 3-66 and advisors to manage, or advise the board regarding the 3-67 management and investment of, the fund. These professional 3-68 services may include investment counseling, evaluation of fund 3-69 performance, investment research, and other comparable services. 4-1 (d) The board may employ an actuary, legal counsel, an 4-2 accountant, or another professional and pay the compensation for 4-3 these services from the fund. 4-4 (e) The board shall hold regular monthly meetings at the 4-5 time and place it designates by resolution. The chairman, 4-6 secretary, or any four board members may call a special meeting of 4-7 the board. 4-8 (f) Each board member is entitled to one vote. 4-9 (g) Notice shall be given to all board members, unless 4-10 waived in writing, of any proposed meeting, by any method 4-11 reasonably calculated to provide adequate notice of the meeting. 4-12 The notice may be delivered by mail, in-hand personal delivery, or 4-13 facsimile or other electronically transmitted notice with 4-14 recordation of receipt by the receiving board member. If all board 4-15 members attend a meeting, however, failure to give notice as 4-16 required by this subsection is excused. 4-17 (h) The board shall keep accurate minutes of its meetings 4-18 and records of its proceedings. 4-19 Sec. 6. GENERAL POWERS AND DUTIES. (a) The board shall 4-20 retain control over all money collected or to be collected for the 4-21 pension system, shall keep separate from all other funds all money 4-22 for the use and benefit of the system, and shall keep a record of 4-23 all claims, receipts, and disbursements in one or more books 4-24 maintained for that purpose. 4-25 (b) The board shall establish the policies and procedures 4-26 for disbursements from the fund that it considers appropriate. 4-27 (c) The board may reimburse a board member or an officer or 4-28 employee of the board for liability imposed as damages because of 4-29 an alleged act, error, or omission committed in the individual's 4-30 capacity as a fiduciary or co-fiduciary of assets of the fund or as 4-31 an officer or employee of the board and for costs and expenses 4-32 incurred by a fiduciary or co-fiduciary officer or employee in 4-33 defense of a claim of an alleged act, error, or omission, or may 4-34 purchase from an insurer licensed to do business in this state one 4-35 or more policies of insurance that provide for the reimbursement. 4-36 However, no reimbursement may be provided and no policy of 4-37 insurance may be purchased under this subsection that would provide 4-38 for reimbursement of a board member or an officer or employee of 4-39 the board for liability imposed or expenses incurred because of the 4-40 individual's personal dishonesty, fraudulent breach of trust, lack 4-41 of good faith, intentional fraud or deception, or intentional 4-42 failure to act prudently. The cost of reimbursement or insurance 4-43 coverage purchased under this subsection shall be paid from money 4-44 in the fund. 4-45 (d) The board shall administer the pension system consistent 4-46 with the applicable provisions of the code. 4-47 (e) The board is vested with the power to adopt for the 4-48 administration of the pension system written rules and guidelines 4-49 consistent with this article, including rules or guidelines to 4-50 ensure that the pension system and the fund meet the qualification 4-51 requirements of the code and regulations and rulings issued under 4-52 the code and that are applicable to governmental plans. 4-53 (f) The board has full discretion and authority to 4-54 administer the pension system, to construe and interpret this 4-55 article, and to do all other acts necessary to carry out the 4-56 purpose of this article. All decisions of the board are final and 4-57 binding on all affected parties. 4-58 Sec. 7. REMOVAL OF BOARD MEMBER. (a) An elected board 4-59 member may be removed from the board either by a vote of the 4-60 membership of the pension system at a removal election initiated 4-61 and held as provided by this section or by a vote of five board 4-62 members together with a decision to remove the board member made by 4-63 a hearing examiner as provided by this section. 4-64 (b) An appointed member of the board may be removed from the 4-65 board by the administrative head of the city. 4-66 (c) To initiate an election for removal of an elected board 4-67 member, a petition for removal signed by at least one-third of the 4-68 members and retired members of the pension system must be filed 4-69 with the board not later than the 45th day after the date the first 5-1 signature on the petition is obtained. Each signature must be 5-2 legible and accompanied by the signer's printed name and employee 5-3 payroll number, if any. A member's payroll number may not be 5-4 publicly disclosed. A removal election must be held not later than 5-5 the 30th day after the date the board certifies that a petition for 5-6 removal satisfies the requirements for a petition under this 5-7 subsection. The results of a removal election are binding only if 5-8 a majority of the active and retired members participate in the 5-9 election. A board member's service on the board ends on the 5-10 declaration by the board that a majority of those voting in the 5-11 removal election voted in favor of removal. 5-12 (d) On the date the board makes a declaration under 5-13 Subsection (c) of this section, the board shall call a special 5-14 election to be held not earlier than the 20th or later than the 5-15 30th day after that date to fill the vacancy for the unexpired term 5-16 of the person who was removed. The person who was removed is not 5-17 eligible to run in the special election but is eligible to run in 5-18 all subsequent board elections. 5-19 (e) Except as otherwise provided by Subsections (a) and (b) 5-20 of this section, a board member may be removed only as provided by 5-21 this subsection and Subsections (f) and (g) of this section. After 5-22 an affirmative vote of the board to remove a board member under 5-23 Subsection (a) of this section, the board or its designee and the 5-24 board member whose removal is proposed shall attempt to agree on 5-25 the selection of an impartial hearing examiner. If the parties do 5-26 not agree on the selection of a hearing examiner not later than the 5-27 10th day after the date the board votes to remove the board member, 5-28 on the next workday the parties involved shall request a list of 5-29 seven qualified neutral arbitrators from the American Arbitration 5-30 Association of the Federal Mediation and Conciliation Service or 5-31 another arbitration organization with similarly stringent 5-32 standards. The board member whose removal is proposed and the 5-33 board or their designees may agree on one of the seven neutral 5-34 arbitrators on the list. If the parties fail to agree before the 5-35 26th day after the date the board first votes to remove the board 5-36 member, each party or the party's designee shall alternate striking 5-37 a name from the list, and the name remaining is the hearing 5-38 examiner. The board member whose removal is proposed or the board 5-39 member's designee is entitled to strike the first name. If the 5-40 25th day falls on a Saturday, Sunday, or legal holiday, the parties 5-41 must strike names from the list on the next workday. The parties 5-42 or their designees must agree on a date for the hearing that is 5-43 within the period prescribed by Subsection (f) of this section. 5-44 (f) The hearing must begin as soon as the hearing examiner 5-45 can be scheduled but not later than the 60th day after the date the 5-46 board votes to remove the board member. In a hearing conducted 5-47 under this subsection, the hearing examiner may issue subpoenas. 5-48 The parties may agree to an expedited hearing procedure. Unless 5-49 otherwise agreed by the parties, in an expedited procedure, the 5-50 hearing examiner must issue a decision not later than the 10th day 5-51 after the date the hearing ends. Unless operating under an 5-52 expedited hearing procedure, the hearing examiner shall make a 5-53 reasonable effort to issue a decision not later than the 30th day 5-54 after the date the hearing ends. The hearing examiner's inability 5-55 to meet the time requirements imposed by this subsection does not 5-56 affect the hearing examiner's jurisdiction or final decision. The 5-57 final decision of the hearing examiner may be either to remove the 5-58 board member or not to remove the board member from the board. A 5-59 decision may be made to remove the board member from the board only 5-60 if the hearing examiner determines that the board member violated 5-61 Subchapter A, Chapter 121, Property Code. The hearing examiner's 5-62 fees and expenses shall be paid by the pension system. The costs 5-63 of a witness shall be paid by the party who calls the witness. 5-64 (g) If the hearing examiner's decision is to remove a board 5-65 member, the person removed is entitled to an opportunity to have 5-66 the hearing examiner's decision reviewed. To have the decision 5-67 reviewed, not later than the 30th day after the date of a decision 5-68 under Subsection (f) of this section, the person removed must 5-69 obtain signatures of at least one-third of the active and retired 6-1 members of the pension system requesting an election to overrule 6-2 the removal decision under Subsection (f). If the 30th day is a 6-3 Saturday, Sunday, or legal holiday, the following workday is 6-4 considered the 30th day. Each signature must indicate the signing 6-5 date beside the signature, be legible, and be accompanied by the 6-6 signer's printed name and employee payroll number, if any. A 6-7 member's payroll number may not be publicly disclosed. The board 6-8 shall verify the list not later than the 10th day after the date 6-9 the board receives it. Not later than the 30th day after the date 6-10 the board has verified the signatures, the board shall hold an 6-11 election among the active and retired members. If a majority of 6-12 the votes cast at an election in which a majority of the active and 6-13 retired members of the pension system participate favor overruling 6-14 the hearing examiner's decision, the board member shall be 6-15 reinstated. If a majority do not vote to overrule the decision to 6-16 remove a board member, a replacement election must be held not 6-17 later than the 30th day after the date of the preceding election. 6-18 (h) During the period beginning on the date of the board 6-19 vote to remove a board member and ending on the date the board 6-20 member is reinstated under this section, the person's privileges as 6-21 a board member, including voting privileges, are suspended. 6-22 Sec. 8. CONTRIBUTIONS BY MEMBERS. (a) Each active member 6-23 of the pension system shall pay into the system each month 8-3/4 6-24 percent of the member's total direct pay. The payments shall be 6-25 deducted by the city from the salary of each active member monthly 6-26 and paid to the pension system. Except for the repayment of 6-27 withdrawn contributions under Section 17(f) or 18(c)(3) of this 6-28 article, a person may not be required or permitted to make any 6-29 payments into the pension system after the person separates from 6-30 service. 6-31 (b) This article does not increase or decrease the 6-32 contribution obligation of any member that arose before September 6-33 1, 1999, or give rise to any claim for refund for any contributions 6-34 made before that date. 6-35 Sec. 9. MONTHLY PAYMENT BY CITY. (a) For fiscal years 6-36 ending before June 30, 2002, the city shall make contributions to 6-37 the fund after each payroll period in an amount previously agreed 6-38 to by the city and the board. For the fiscal year ending June 30, 6-39 2002, the city's contribution rate shall be composed of the normal 6-40 cost plus the level percentage of salary payment required to 6-41 amortize the actuarial liability over a period of 40 years from 6-42 January 1, 1983, computed on the basis of an acceptable actuarial 6-43 reserve funding method approved by the board. For each fiscal year 6-44 ending after June 30, 2002, the city's contribution shall be the 6-45 sum of (1) an amount computed in the manner provided for the 6-46 contribution for the fiscal year ending June 30, 2002, plus (2) $2 6-47 million multiplied by the number of fiscal years that have ended 6-48 since June 30, 2002, but not more than 16 percent of the aggregate 6-49 total direct pay of all active members for the fiscal year. If the 6-50 amount described by (1) in the preceding sentence is greater than 6-51 16 percent of the aggregate total direct pay of all active members 6-52 for the year, the amount described by (1) shall be contributed. 6-53 (b) In addition to the contributions required by Subsection 6-54 (a) of this section, the city, if requested to do so by the board, 6-55 shall contribute to the fund each month an amount equal to the 6-56 aggregate payments the city, in the absence of this subsection, 6-57 would have paid during that month to members who have separated 6-58 from service for unused sick leave, vacation pay, and accumulated 6-59 overtime pay to which the members were entitled at the time of 6-60 separation from service if the members had 10 years or more of 6-61 service or would have had 10 years or more of service after 6-62 application of these amounts to provide additional service as 6-63 provided by Section 17 of this article. Members described by this 6-64 section may no longer receive these payments directly. 6-65 (c) The governing body of a city to which this article 6-66 applies by ordinance or resolution may provide that the city pick 6-67 up active member contributions required by Section 8 of this 6-68 article so that the contributions of all active members of the 6-69 pension system qualify as picked-up contributions under Section 7-1 414(h)(2) of the code. If the governing body of a city adopts an 7-2 ordinance or resolution under this section, the city, the board, 7-3 and any other necessary party shall implement the action as soon as 7-4 practicable. Contributions picked up as provided by this 7-5 subsection shall be included in the determination of an active 7-6 member's total direct pay, deposited to the individual account of 7-7 the active member on whose behalf they are made, and treated for 7-8 all purposes, other than federal tax purposes, in the same manner 7-9 and with like effect as if they had been deducted from the salary 7-10 of, and made by, the active member. 7-11 Sec. 10. INVESTMENT OF SURPLUS. (a) If the board 7-12 determines that a surplus of funds exists in an amount exceeding 7-13 the current demands upon the pension system, the board shall invest 7-14 the surplus funds in the manner provided for by Chapter 802, 7-15 Government Code. 7-16 (b) The board may select an investment manager or investment 7-17 advisor if the board determines the service is desirable. 7-18 Selection of managers or advisors must be made from firms that have 7-19 made presentations in person or in writing to the board. 7-20 (c) The board may terminate a contract with an investment 7-21 advisor at any time. The board may terminate a contract with an 7-22 investment manager on notice the board considers appropriate. A 7-23 contract may not require the pension system to pay a penalty for 7-24 early termination. The costs of investment management or advisory 7-25 services shall be paid from the fund. 7-26 Sec. 11. SERVICE CREDIT. (a) A member who returns to 7-27 service after an interruption in service is entitled to credit for 7-28 the previous service to the extent provided by Section 19 of this 7-29 article. In addition, a member who is retiring shall receive 7-30 one-half day of service for each day for which the city is required 7-31 to make contributions with respect to the member's unused sick 7-32 leave, vacation pay, or accumulated overtime under Section 9(b) of 7-33 this article, except to the extent that the member elects to have 7-34 the amounts credited to the member's DROP account. Under no 7-35 circumstances may payments for the same days of unused sick leave, 7-36 vacation pay, or accumulated overtime be used to both increase a 7-37 member's service and credit the member's DROP account. 7-38 (b) Notwithstanding Subsection (a) of this section, if a 7-39 member has withdrawn the contributions made during any previous 7-40 period of service, the previous period of service may not be 7-41 counted in determining years of service unless the contributions 7-42 are repaid to the pension system in accordance with Section 17 of 7-43 this article. 7-44 (c) A member may not have any service credited for unused 7-45 sick leave, vacation pay, or accumulated overtime until the date 7-46 the member retires, at which time the member may apply some or all 7-47 of the service to satisfy the requirements for retirement, although 7-48 the member otherwise could not meet the service requirement without 7-49 the credit. 7-50 (d) The board shall determine the prior service to be 7-51 credited to each employee of the police department who becomes an 7-52 active member of the pension system. The board shall rely on the 7-53 personnel records of the city or the police department in 7-54 determining prior service credits. 7-55 Sec. 12. RETIREMENT; AMOUNT OF PENSION; ANNUAL ADJUSTMENTS. 7-56 (a) A member who separates from service after earning 20 or more 7-57 years of service is eligible to receive a monthly service pension, 7-58 beginning in the month of separation from service. A member who 7-59 separates from service with the city after November 23, 1998, 7-60 after earning 10 or more but less than 20 years of service in any 7-61 of the city's pension systems and who complies with all applicable 7-62 requirements of Section 19 of this article is eligible to receive a 7-63 monthly service pension, beginning in the month the individual 7-64 attains 60 years of age. An individual may not receive a pension 7-65 under this article while still an active member, except as provided 7-66 by Subsection (f) of this section. All service pensions end with 7-67 the month in which the retired member dies. 7-68 (b) Except as otherwise provided by this section, the 7-69 monthly service pension of a member who separates from service 8-1 after November 23, 1998, is equal to 2.5 percent of the member's 8-2 average total direct pay for each of the member's first 20 years of 8-3 service, plus an additional two percent of the member's average 8-4 total direct pay for each of the member's subsequent years of 8-5 service, computed to the nearest one-twelfth of a year. A member 8-6 who separates from service after November 23, 1998, including a 8-7 member who was a DROP participant, and begins to receive a monthly 8-8 service pension shall also receive a one-time lump-sum payment of 8-9 $5,000 at the same time the first monthly pension payment is made. 8-10 The lump-sum payment under this subsection is not available to a 8-11 member who has previously received a $5,000 payment under this 8-12 section or Section 16 of this article. 8-13 (c) The pension payable to each retired member of the 8-14 pension system shall be adjusted annually, effective April 1 of 8-15 each year, upward at a rate equal to two-thirds of any percentage 8-16 increase in the Consumer Price Index for All Urban Consumers for 8-17 the preceding year. The amount of the annual adjustment may not be 8-18 less than three percent or more than eight percent of the pension 8-19 being paid immediately before the adjustment, notwithstanding a 8-20 greater or lesser increase in the consumer price index. 8-21 (d) A retired member who receives a service pension under 8-22 this article is entitled to receive an additional amount each month 8-23 equal to $88.05, beginning on the date the retired member's pension 8-24 begins and continuing until the end of the month in which the 8-25 retired member dies. This amount is intended to defray the retired 8-26 member's group medical insurance costs and will be paid directly by 8-27 the fund to the retired member for the retired member's lifetime. 8-28 (e) At the end of each calendar year beginning after 1998, 8-29 and subject to the conditions provided by this subsection, the 8-30 pension system shall make a 13th benefit payment to each person who 8-31 is receiving a service pension. The amount of the 13th payment 8-32 shall be the same as the last monthly payment received by the 8-33 retiree or survivor before issuance of the payment, except the 8-34 payment received by any person who has been in pay status for less 8-35 than 12 months shall be for a prorated amount determined by 8-36 dividing the amount of the last payment received by 12 and 8-37 multiplying this amount by the number of months the person has been 8-38 in pay status. The 13th payment may be made only for those 8-39 calendar years in which: 8-40 (1) the assets held by the fund will equal or exceed 8-41 its liabilities after the 13th payment is made; 8-42 (2) the rate of return on the fund's assets exceeded 8-43 9.25 percent for the last fiscal year ending before the payment; 8-44 and 8-45 (3) the payment will not cause an increase in the 8-46 contribution the city would have been required to make if the 13th 8-47 payment had not been made. 8-48 (f) Notwithstanding anything to the contrary in this 8-49 article, an active or inactive member who is eligible to 8-50 participate in the executive official pension plan established by 8-51 Chapter 358, Acts of the 48th Legislature, Regular Session, 1943 8-52 (Article 6243g, Vernon's Texas Civil Statutes), or a successor 8-53 statute, may, while continuing employment with the police 8-54 department, participate in the executive official pension plan and 8-55 elect: 8-56 (1) if an active member: 8-57 (A) to begin receiving an immediate pension 8-58 benefit and be considered a retired member eligible for all rights 8-59 and privileges afforded any other retired member under this 8-60 article, if the member has 20 years or more of service and is 8-61 eligible for retirement under this section except for the 8-62 continuing employment; or 8-63 (B) to enter DROP if the member satisfies all 8-64 requirements of this article for DROP membership; or 8-65 (2) if an inactive member, to begin receiving an 8-66 immediate pension benefit equal to 2.5 percent of the member's 8-67 average total direct pay at the time the member became inactive for 8-68 the member's first 20 years of service and be entitled to all 8-69 rights and privileges afforded a retired member under this article. 9-1 (g) Notwithstanding anything to the contrary in this 9-2 article, service pensions that began before September 1, 1999, 9-3 shall continue to be paid in accordance with applicable prior law, 9-4 subject only to the adjustments that are specifically provided by 9-5 this section. 9-6 Sec. 13. RESUMPTION OF SERVICE AS DEPARTMENT HEAD AFTER 9-7 RETIREMENT. (a) The pension system shall suspend all pension 9-8 payments to a retired member who has separated from service and is 9-9 subsequently appointed as the department head of the police 9-10 department. The suspension of payments begins on the effective 9-11 date of the person's appointment. 9-12 (b) Pension benefits based on the person's previous period 9-13 of service do not accrue during the period of pension payment 9-14 suspension described by Subsection (a) of this section, but the 9-15 person again becomes an active member during this period, and 9-16 contributions of the city and the department head for the 9-17 subsequent service are payable during the period. The department 9-18 head retains credit for all previous service and acquires credit 9-19 for the subsequent service unless the department head is or becomes 9-20 a DROP participant. 9-21 (c) Once the department head again separates from service, 9-22 pension benefits under this article shall resume based on both 9-23 periods of service. 9-24 Sec. 14. DEFERRED RETIREMENT OPTION PLAN. (a) In this 9-25 section "DROP benefit" means the total amount credited to a 9-26 member's notional DROP account, payable as described by this 9-27 section, plus a monthly retirement pension. 9-28 (b) An active member who has at least 20 years of service 9-29 with the police department may file with the pension system an 9-30 irrevocable election to participate in DROP and receive a DROP 9-31 benefit instead of the standard form of pension provided by this 9-32 article. The election may be made, under procedures established by 9-33 the board, by an active member who has attained the required years 9-34 of service. 9-35 (c) The monthly service pension and death benefits of an 9-36 active member who becomes a DROP participant will be determined as 9-37 if the active member had separated from service and begun receiving 9-38 a pension on the effective date of the DROP election. The active 9-39 member does not retire but does not accrue additional service 9-40 credit beginning on the effective date of the election, and 9-41 increases in pay that occur on or after that date may not be used 9-42 in computing the active member's monthly service pension, but 9-43 cost-of-living adjustments that occur on or after that date and 9-44 that otherwise would be applicable to the pension will be made. 9-45 (d) The member's DROP benefit is determined as provided by 9-46 this subsection and Subsection (e) of this section. Each month an 9-47 amount equal to the monthly service pension the active member would 9-48 have been entitled to receive if the active member had separated 9-49 from service on the effective date of entry into DROP, less any 9-50 amount that is intended to help defray the active member's group 9-51 medical insurance costs as described by Section 12(d) of this 9-52 article, shall be credited to a notional DROP account for the 9-53 active member, and each month an amount equal to the monthly 9-54 contributions the active member makes to the fund on and after the 9-55 effective date of entry into DROP also shall be credited to the 9-56 same notional DROP account. In any year in which a 13th payment is 9-57 made to retired members under Section 12(e) of this article, an 9-58 amount equal to the amount of the 13th payment that would have been 9-59 made to the DROP participant if the DROP participant had retired on 9-60 the date of DROP entry will be credited to the DROP account. In 9-61 addition, any amount that is contributed by the city under Section 9-62 9(b) of this article with respect to the active member's unused 9-63 sick leave, vacation pay, or accumulated overtime, and that is not 9-64 required to be used to provide 10 or 20 years of service to the 9-65 member under Section 11 of this article or used to repay withdrawn 9-66 contributions under Section 18(c) of this article shall be credited 9-67 to the DROP account as of the end of the month in which it is 9-68 contributed. 9-69 (e) As of the end of each month an amount is credited to 10-1 each active member's notional DROP account at the rate of 10-2 one-twelfth of a hypothetical earnings rate on amounts in the 10-3 account. The hypothetical earnings rate is determined for each 10-4 calendar year based on the average of the aggregate annual rate of 10-5 return on investments of the pension system for the five 10-6 consecutive fiscal years ending June 30 preceding the calendar year 10-7 to which the earnings rate applies. The board may lower any future 10-8 rate below the rate otherwise prescribed by this subsection to the 10-9 extent necessary to ensure that the DROP does not adversely affect 10-10 the financial condition of the fund. 10-11 (f) If a DROP participant separates from service because of 10-12 disability or death, the member or the member's spouse or, if there 10-13 is no eligible spouse, any other person eligible to receive 10-14 benefits under Section 16 of this article, as applicable, may 10-15 either receive an amount equal to the member's DROP account or 10-16 revoke the member's DROP election and elect to receive benefits as 10-17 provided by this article without regard to this section. A 10-18 revocation and election under this subsection must be made at the 10-19 time and in the manner provided in a procedure that the board may 10-20 adopt from time to time. Alternatively, the retired member, a 10-21 deceased member's spouse, or, if there is no spouse, the person 10-22 entitled to receive benefits under Section 16 of this article may 10-23 elect to receive a distribution that is equal to the member's DROP 10-24 account and benefits as described by Subsection (c) of this 10-25 section. 10-26 (g) In lieu of receiving a lump-sum DROP benefit on 10-27 separation from service, a retired member who has been a DROP 10-28 participant may leave the retired member's DROP account with the 10-29 pension system, in which case interest will be credited to the DROP 10-30 account in the manner described by this subsection. The interest 10-31 credited for any month shall be at the applicable annual interest 10-32 rate as defined by Section 417(e)(3)(A)(ii)(II) of the code and 10-33 published by the Internal Revenue Service for June of the year 10-34 preceding the calendar year in which the interest is credited. 10-35 (h) Instead of beginning to receive a service pension on 10-36 separation from service in accordance with Section 12 of this 10-37 article, a retired member who is a DROP participant may elect to 10-38 have part or all of the amount that would otherwise be paid as a 10-39 monthly service pension, less any amount required to pay the 10-40 retired member's share of group medical insurance costs, credited 10-41 to a DROP account, in which case the additional amounts will become 10-42 eligible to be credited with hypothetical earnings in the same 10-43 manner as the amounts described by Subsection (g) of this section. 10-44 (i) A retired member who has not attained age 70-1/2, 10-45 whether or not a DROP participant before retirement, may elect to 10-46 have part or all of an amount equal to the monthly service pension 10-47 the retired member would otherwise be entitled to receive, less any 10-48 amount required to pay the retired member's share of group medical 10-49 insurance costs, credited to a DROP account, in which case the 10-50 amounts will become eligible to be credited with hypothetical 10-51 earnings in the same manner as the amounts described by Subsection 10-52 (g) of this section. A retired member who has elected to have 10-53 monthly service pension benefits credited to a DROP account under 10-54 this subsection or Subsection (h) of this section may direct that 10-55 the credits stop and the monthly service pension resume at any 10-56 time. However, a retired member who stops the credits at any time 10-57 after September 1, 1999, may not later resume the credits. 10-58 (j) A retired member who is a DROP participant may elect to 10-59 receive distribution of the DROP account in a one-time lump-sum 10-60 payment or in any other form of distribution that is approved by 10-61 the board and satisfies the requirements of Section 401(a)(9) of 10-62 the code. Distributions to a deceased member's survivors, as 10-63 described by Subsection (f) of this section, shall be made in a 10-64 lump sum as soon as administratively feasible after the deceased 10-65 member's death. 10-66 (k) If a retired member who is or was a DROP participant is 10-67 rehired as an employee of the police department, any pension or 10-68 DROP distribution that was being paid shall be suspended and the 10-69 monthly amount described by Subsection (d) of this section will 11-1 again begin to be credited to the DROP account while the member 11-2 continues to be an employee. If the member's DROP account has been 11-3 completely distributed, a new notional account will be created to 11-4 receive the member's monthly credits. If a retired member who was 11-5 never a DROP participant is rehired as an employee of the police 11-6 department, that member shall be eligible to elect participation in 11-7 DROP on the same basis as any other member. 11-8 (l) If DROP causes any unanticipated actuarial costs, the 11-9 board may take action as necessary to mitigate the unanticipated 11-10 actuarial cost, including discontinuing acceptance of additional 11-11 elections to participate in the DROP, but the pension system shall 11-12 continue to administer DROP for the members participating before 11-13 the date of discontinuance of enrollment. 11-14 Sec. 15. DISABILITY BENEFITS. (a) An active member who 11-15 becomes totally and permanently incapacitated for the performance 11-16 of the member's duties as a result of a bodily injury received in, 11-17 or illness caused by, the performance of those duties shall, on 11-18 presentation to the board of proof of total and permanent 11-19 incapacity, be retired and shall receive an immediate 11-20 duty-connected disability pension equal to the greater of 50 11-21 percent of the member's average total direct pay at the time of 11-22 retirement or the member's accrued service pension. If the injury 11-23 or illness involves a traumatic event that directly causes an 11-24 immediate cardiovascular condition resulting in a total disability, 11-25 the member is eligible for a duty-connected disability pension. A 11-26 disability pension granted by the board shall be paid to the member 11-27 for the remainder of the member's life or for as long as the 11-28 incapacity remains. 11-29 (b) A member with 10 years or more of credited service who 11-30 becomes totally and permanently incapacitated for the performance 11-31 of the member's duties and is not eligible for either an immediate 11-32 service pension or a duty-connected disability pension is eligible 11-33 for an immediate monthly pension computed in the same manner as a 11-34 service retirement pension but based on average total direct pay 11-35 and service accrued to the date of the disability. 11-36 (c) A member who becomes entitled to receive a disability 11-37 pension after November 23, 1998, is entitled to receive a one-time 11-38 lump-sum payment of $5,000 at the same time the first monthly 11-39 disability pension payment is made, but only if the member has not 11-40 previously received a $5,000 payment under this section or Section 11-41 12 of this article. The person shall also receive an additional 11-42 amount each month equal to $88.05, beginning on the date the 11-43 pension begins and continuing as long as the disability pension 11-44 continues, to help defray the cost of group medical insurance. A 11-45 retired member whose disability pension continues and was in pay 11-46 status on November 23, 1998, is entitled to receive a one-time 11-47 lump-sum payment of $5,000 as soon as administratively feasible 11-48 after November 23, 1998. This payment has no effect on the amount 11-49 of the retired member's monthly pension. For any year in which a 11-50 13th payment is made to retired members under Section 12(e) of this 11-51 article, a 13th payment, computed in the same manner, shall also be 11-52 paid to members who have retired under this section. 11-53 (d) A person may not receive a disability pension unless the 11-54 person files with the board an application for a disability pension 11-55 not later than 180 days after the date of separation from service, 11-56 at which time the board shall have the person examined by a 11-57 physician chosen and compensated by the board. The physician shall 11-58 make a report and recommendations to the board regarding the extent 11-59 of any disability and whether any disability that is diagnosed is a 11-60 duty-connected disability. A person may not receive a disability 11-61 pension for an injury received or illness incurred after separation 11-62 from service. 11-63 (e) A retired member who has been retired for disability is 11-64 subject at all times to reexamination by a physician chosen and 11-65 compensated by the board and shall submit to further examination as 11-66 the board may require. If a retired member refuses to submit to an 11-67 examination, the board may order the payments stopped. If a 11-68 retired member who has been receiving a disability pension under 11-69 this section recovers so that in the opinion of the board the 12-1 retired member is able to perform the usual and customary duties 12-2 formerly performed for the police department, and the retired 12-3 member is reinstated or offered reinstatement to the position, or 12-4 to a position reasonably comparable in rank and responsibility to 12-5 the position, held at the time of separation from service, the 12-6 board shall order the member's disability pension stopped. 12-7 (f) The board may require any person who first becomes an 12-8 active member of the pension system on or after September 1, 1999, 12-9 and subsequently begins to receive a non-duty-connected disability 12-10 pension to provide the board annually, on or before May 1 of the 12-11 second year after the year the disability pension begins, a true 12-12 and complete copy of those portions of the retired member's federal 12-13 or, if applicable, state tax return, including appropriate 12-14 schedules, for the previous calendar year that indicate the retired 12-15 member's occupations and earned income for the previous calendar 12-16 year. The pension system may waive the requirement for filing a 12-17 copy of the tax return or delay the due date until later in the 12-18 same calendar year if the retired member provides the board with a 12-19 true and complete copy of a grant of an extension of time for 12-20 filing the tax return from the appropriate governmental agency or a 12-21 true and complete copy of an extension request that results in any 12-22 automatic extension. If the retired member is or has been 12-23 receiving earned income from one or more employments, including 12-24 self-employment, during the preceding year, the board may reduce 12-25 future disability pension payments in accordance with the following 12-26 formula: $1 for each $1 that the sum of "a" + "b" is greater than 12-27 "c," where "a" is the earned income of the retired member 12-28 attributable to the previous calendar year from the retired 12-29 member's employments, "b" is the amount of disability pension 12-30 received in the previous calendar year, and "c" is the total direct 12-31 pay received as of the date the member separated from service. For 12-32 purposes of this computation, the total direct pay in "c" is 12-33 considered increased at the rate prescribed by Section 12(c) of 12-34 this article, as of each April 1 that the retired member receives 12-35 the disability pension. 12-36 (g) For purposes of this section, a member is totally and 12-37 permanently incapacitated from performing duties if the member is 12-38 prevented by a physical or mental injury or illness from performing 12-39 duties in the police department after any reasonable accommodation 12-40 offered by the police department and this condition is expected to 12-41 be permanent. 12-42 Sec. 16. RIGHTS OF SURVIVORS. (a) For purposes of this 12-43 article, a marriage is considered to exist only if the marriage is 12-44 recorded in the records of the recorder's office in the county in 12-45 which the marriage ceremony was performed or, in the case of a 12-46 declaration of common-law marriage, if the declaration is signed by 12-47 the member and the member's common-law spouse before a notary 12-48 public and filed with the board. In addition, a marriage that is 12-49 evidenced by a declaration of common-law marriage signed before a 12-50 notary public after December 31, 1999, may not be treated as 12-51 effective earlier than the date on which it was signed before the 12-52 notary public. 12-53 (b) If a retired member dies after becoming entitled to a 12-54 service or disability pension, the board shall pay an immediate 12-55 monthly benefit as follows: 12-56 (1) to the surviving spouse, if there is a surviving 12-57 spouse, a sum equal to the pension that was being received by the 12-58 retired member at the time of death; 12-59 (2) to the guardian of any dependent children, on 12-60 behalf of the dependent children, if there is no spouse entitled to 12-61 an allowance, the sum a surviving spouse would have received, to be 12-62 divided equally among the dependent children if there is more than 12-63 one dependent child; or 12-64 (3) to any dependent parents if no spouse or dependent 12-65 child is entitled to an allowance, the sum the spouse would have 12-66 received, to be divided equally between the two parents if there 12-67 are two dependent parents. 12-68 (c) If a member of the pension system who has not completed 12-69 10 years of service in the police department is killed or dies from 13-1 any cause growing out of or in consequence of any act clearly not 13-2 in the actual performance of the member's official duty, the 13-3 member's surviving spouse, dependent child or children, or 13-4 dependent parent or parents are entitled only to a refund of the 13-5 member's contributions to the pension system. 13-6 (d) If any active member who has completed 10 or more years 13-7 of service in the police department is killed or dies from any 13-8 cause growing out of or in consequence of any act clearly not in 13-9 the actual performance of the member's official duty, the member's 13-10 surviving spouse, dependent child or children, or dependent parent 13-11 or parents are entitled to receive an immediate benefit, computed 13-12 in accordance with Subsection (b) of this section but based on the 13-13 deceased member's service and average total direct pay at the time 13-14 of death. If any inactive member dies from any cause after 13-15 completing 10 or more years of service in the police department, 13-16 the member's surviving spouse, dependent child or children, or 13-17 dependent parent or parents are entitled to receive benefits 13-18 computed as provided in the preceding sentence and beginning at the 13-19 time the member would have attained age 60 if the member had lived. 13-20 (e) If any active member is killed or dies from any cause 13-21 growing out of or in consequence of the performance of the member's 13-22 duty, the member's surviving spouse, dependent child or children, 13-23 or dependent parent or parents are entitled to receive immediate 13-24 benefits computed in accordance with Subsection (b) of this 13-25 section, except that the benefit payable to the spouse, or to the 13-26 guardian of the dependent child or children if there is no 13-27 surviving spouse, or the dependent parent or parents if there is no 13-28 surviving spouse or dependent child, is equal to 100 percent of the 13-29 member's average total direct pay, computed as of the date of 13-30 death. 13-31 (f) A surviving spouse who receives a survivor's benefit 13-32 under this article is entitled to receive an additional amount each 13-33 month equal to $88.05, beginning with the first payment of the 13-34 survivor's benefit and continuing until the end of the month in 13-35 which the surviving spouse dies. 13-36 (g) A surviving spouse or dependent who was in pay status on 13-37 November 23, 1998, is entitled to receive a one-time lump-sum 13-38 payment of $5,000 as soon as administratively feasible after 13-39 November 23, 1998. The surviving spouse or dependent who becomes 13-40 eligible to receive benefits with respect to an active member who 13-41 dies in active service after November 23, 1998, is entitled to 13-42 receive a one-time lump-sum payment of $5,000 at the time the first 13-43 monthly pension benefit is paid, if the member has not already 13-44 received a $5,000 lump-sum payment under Section 12 or 15(c) of 13-45 this article. If more than one dependent is eligible to receive a 13-46 payment under this subsection, the $5,000 shall be divided equally 13-47 among the eligible dependents. This payment has no effect on the 13-48 amount of the surviving spouse's or dependents' monthly pension and 13-49 may not be paid more than once. 13-50 (h) The monthly benefits of surviving spouses or dependents 13-51 provided under this section, except the $88.05 monthly payments 13-52 described by Subsection (f) of this section, shall be increased 13-53 annually at the same time and by the same percentage as the 13-54 pensions of retired members are increased in accordance with 13-55 Section 12(c) of this article. Also, for any year in which a 13th 13-56 payment is made pursuant to Section 12(e) of this article, a 13th 13-57 payment, computed in the same manner, shall also be made to 13-58 survivors who are entitled to receive death benefits at that time. 13-59 (i) If a member or individual receiving a survivor's pension 13-60 dies before monthly payments have been made for at least five 13-61 years, leaving no person otherwise entitled to receive further 13-62 monthly payments with respect to the member, the monthly payments 13-63 shall continue to be made to the designated beneficiary of the 13-64 member or survivor, or to the estate of the member or survivor if a 13-65 beneficiary was not designated, in the same amount as the last 13-66 monthly payment made to the member, survivor, or estate, until 13-67 payments have been made for five years with respect to the member. 13-68 If the member dies after becoming vested but before payments begin, 13-69 leaving no survivors eligible for benefits, the amount of each 14-1 monthly payment over the five-year period shall be the same as the 14-2 monthly payment the member would have received if the member had 14-3 taken disability retirement on the date of death. A member may 14-4 designate a beneficiary in lieu of the member's estate to receive 14-5 the remaining payments in the event the member and all survivors 14-6 die before payments have been received for five years. The 14-7 member's estate or a beneficiary who is not a survivor or dependent 14-8 is not entitled to receive the payment described by Subsection (g) 14-9 of this section. 14-10 Sec. 17. TERMINATION OF EMPLOYMENT; REFUNDS; REEMPLOYMENT. 14-11 (a) When any active member of the pension system separates from 14-12 service, either voluntarily or involuntarily, before becoming 14-13 eligible for an immediate service retirement or disability pension, 14-14 the member ceases to be an active member of the pension system. 14-15 (b) A member of the pension system who has not completed 20 14-16 years of service at the time of separation from service with the 14-17 police department is entitled to a refund of the total of the 14-18 contributions the member made to the pension system, plus any 14-19 amount that was contributed for the member by the city and not 14-20 applied in accordance with this section to provide the member with 14-21 10 years of service. The refund does not include interest, and 14-22 neither the city nor the member is entitled to a refund of the 14-23 contributions the city made on the member's behalf, except as 14-24 expressly provided by this subsection. By receiving the refund, 14-25 the member forfeits any service earned before separation from 14-26 service, even if it is otherwise nonforfeitable. 14-27 (c) The board shall notify each member of the pension system 14-28 of the right to a refund as authorized by this section. 14-29 (d) A member must apply to the board for a refund within one 14-30 year after the date of separation from service. Failure to apply 14-31 for the refund within the one-year period results in a forfeiture 14-32 of the right to the refund except for an inactive member whose 14-33 right to a pension is nonforfeitable. However, the board may 14-34 reinstate any amount forfeited and allow the refund on application 14-35 by the former member. 14-36 (e) Heirs, executors, administrators, personal 14-37 representatives, or assignees are not entitled to apply for and 14-38 receive the refund authorized by this section except as provided by 14-39 Section 16(c) of this article. 14-40 (f) If a person who separates from service and receives a 14-41 refund is subsequently reemployed as an employee of the police 14-42 department, the person shall be reinstated as an active member of 14-43 the pension system. Prior service of the active member with the 14-44 police department may not be counted toward a retirement pension 14-45 unless the member pays to the pension system, not later than the 14-46 90th day after the date of a subsequent separation from service, an 14-47 amount equal to any contributions previously refunded to the member 14-48 under this section. Except as provided by Section 18 of this 14-49 article, a person is not eligible to repay any withdrawn 14-50 contributions unless the person is reemployed by the police 14-51 department of the city for which the prior service was performed. 14-52 (g) A member who is contesting an indefinite suspension 14-53 action may, on application to the board, receive a return of the 14-54 member's contributions and be separated from service on receipt of 14-55 the contributions; otherwise, a suspended member is considered to 14-56 have a separation from service when a final decision of the 14-57 arbitrator adverse to the member is rendered. 14-58 (h) City contributions made under Section 9(b) of this 14-59 article based on the unused sick leave, vacation pay, and 14-60 accumulated overtime pay of a member who has separated from service 14-61 may be applied, at the election of the member seeking a refund, to 14-62 pay a refund of member contributions if the contributions are not 14-63 used under Section 11(c) of this article to satisfy a service 14-64 requirement for retirement. 14-65 Sec. 18. EMPLOYMENT BY ANOTHER DEPARTMENT. (a) Except as 14-66 provided by this section, credit may not be allowed to any person 14-67 for service with any department in the city other than the police 14-68 department. Except as provided by this section, if a person is 14-69 transferred to or from some other department of the city to or from 15-1 the police department, the person's service will be computed from 15-2 the date of entry into the service of the police department until 15-3 the date of separation from service with the police department. 15-4 (b) Solely for purposes of determining whether a person has 15-5 a sufficient number of years of service to receive a retirement 15-6 pension, and not for purposes of determining the amount of the 15-7 pension or DROP credit, a person who is employed in any full-time 15-8 position with the city after November 23, 1998, and has or obtains 15-9 any credited service with the pension system after that date, shall 15-10 receive service credit for any period of full-time employment with 15-11 the same city. However, a person may not receive credit for 15-12 service with both the police department and any other department of 15-13 the city for the same period. 15-14 (c) Notwithstanding Section 17 of this article and 15-15 Subsection (b) of this section, a former member of the pension 15-16 system shall be permitted to repay withdrawn contributions and 15-17 restore service credit previously earned with the pension system, 15-18 even if the former member is not reemployed by the police 15-19 department, if the former member: 15-20 (1) is employed by the same city in which the service 15-21 credit for employment with the police department was earned; 15-22 (2) is a participant in another pension plan 15-23 maintained by the city; and 15-24 (3) repays to the pension system the withdrawn 15-25 contributions not later than the 90th day after the date of 15-26 separation from active employment with the city. 15-27 Sec. 19. PERSONS REJOINING OR TRANSFERRED BY CITY; SERVICE 15-28 CREDIT; DOUBLE BENEFITS; RETURN TO SERVICE. (a) An employee of 15-29 the city who has retired under this article or under former law 15-30 governing the pension system and is or has been transferred by 15-31 action of the city to a classified position in a police department 15-32 included in the pension system again becomes an active member of 15-33 the pension system as of the effective date of the transfer. 15-34 (b) A person who rejoins the pension system under this 15-35 section is entitled to receive service credit for each day of 15-36 service and work performed by the person in a classified position 15-37 in the police department, except for any period during which the 15-38 person is a DROP participant. The board shall add service earned 15-39 after the transfer to the prior service the active member accrued 15-40 in a classified position in the police department. However, the 15-41 active member may not receive service credit under this article, 15-42 except to the extent provided by Section 18, for service performed 15-43 for the city other than in a classified position in the police 15-44 department. 15-45 (c) After a transfer described by this section, 15-46 contributions of the city and the active member become payable as 15-47 for other active members of the pension system. 15-48 (d) When a member who has transferred as described by this 15-49 section subsequently retires, the retired member is entitled to a 15-50 pension computed on the basis of the combined service described by 15-51 Subsection (b) of this section, after deducting any period in which 15-52 the member was suspended from duty without pay, on leave of absence 15-53 without pay, separated from service, or employed by the city in a 15-54 capacity other than in a classified position in the police 15-55 department. 15-56 (e) If a retired member receives both pension benefits from 15-57 the pension system and a salary from a classified position in the 15-58 police department that cover the same period, the retired member 15-59 shall repay to the pension system the pension benefits received 15-60 during that period. The board shall withhold payment of pension 15-61 benefits under this article if it is determined that a retired 15-62 member is receiving both pension benefits from the fund and a 15-63 salary from the police department that cover the same period. On 15-64 request of the board, the city attorney or a private attorney 15-65 chosen by the board shall file suit in a court of competent 15-66 jurisdiction to recover pension benefits owed to the pension system 15-67 under this subsection. 15-68 (f) This article does not authorize the return to service 15-69 with a police department or the resumption of active membership in 16-1 the pension system by a retired member except as specifically 16-2 provided by Section 13 or 14 of this article or this section. 16-3 Sec. 20. DONATIONS. The pension system may accept gifts and 16-4 donations, and the gifts and donations shall be added to the fund 16-5 for the use of the pension system. 16-6 Sec. 21. DETERMINATION OF BENEFITS; PROVISION OF 16-7 INFORMATION. The board may require any member, survivor, or other 16-8 person or entity to furnish information the board requires for the 16-9 determination of benefits under this article. If a person or 16-10 entity does not cooperate in the furnishing or obtaining of 16-11 information required as provided by this section, the board may 16-12 withhold payment of the pension or other benefits dependent on the 16-13 information. 16-14 Sec. 22. LEGAL ADVICE. The city attorney of the city shall 16-15 handle all legal matters for the pension system that are referred 16-16 by the board without additional compensation for the service. The 16-17 board may, however, as it considers necessary, employ outside legal 16-18 counsel to the exclusion of, or to assist, the city attorney and 16-19 pay reasonable compensation for the service from the fund. 16-20 Sec. 23. MEMBERS IN MILITARY SERVICE. (a) A member of the 16-21 pension system engaged in active service in a uniformed service may 16-22 not be required to make the monthly payments into the fund and may 16-23 not lose any previous years' service with the city because of the 16-24 uniformed service. The uniformed service shall count as continuous 16-25 service in the police department if the member returns to the city 16-26 police department after discharge from the uniformed service as an 16-27 employee within the period required by the Uniformed Services 16-28 Employment and Reemployment Rights Act of 1994 (38 U.S.C. Section 16-29 4301 et seq.), as amended, and the uniformed service does not 16-30 exceed the period for which a person is entitled to have service 16-31 counted pursuant to that Act. 16-32 (b) The city is required to make its regular monthly 16-33 payments into the fund on behalf of each member while the member is 16-34 engaged in a uniformed service. If a member who has less than 10 16-35 years of service in the pension system dies directly or indirectly 16-36 as a result of the uniformed service, the spouse, dependent 16-37 children, dependent parent, or estate of the member is entitled to 16-38 receive a refund in the same manner as described by Section 16(c) 16-39 of this article. 16-40 Sec. 24. ACTIONS FOR FUNDS MISAPPLIED. (a) The board may 16-41 recover by civil action from any offending party or from the 16-42 party's bondsman, if any, any money paid out or obtained from the 16-43 fund through fraud, misrepresentation, theft, embezzlement, or 16-44 misapplication and may institute, conduct, and maintain the action 16-45 in the name of the board for the use and benefit of the fund. 16-46 (b) Payments due on behalf of a dependent child shall be 16-47 paid to the dependent child's guardian, if any, or if none to the 16-48 person with whom the dependent child is living, except that the 16-49 board may make payments directly to a dependent child in an 16-50 appropriate case and withhold payments otherwise due on behalf of 16-51 any person if the board has reason to believe the payments are not 16-52 being applied on behalf of the person entitled to receive them. 16-53 The board may request a court of competent jurisdiction to appoint 16-54 a person to receive and administer the payments due to any 16-55 dependent child or person under a disability. 16-56 Sec. 25. FEDERAL TAX QUALIFICATION OF FUND. (a) The fund 16-57 described by this article is intended to qualify under Section 16-58 401(a) of the code and is for the exclusive benefit of the members 16-59 and their survivors. No part of the corpus or income of the fund 16-60 may ever be used for, or diverted to, any purpose other than the 16-61 benefit of members and their survivors as provided by this article. 16-62 (b) A member or survivor of a member of the pension system 16-63 may not accrue a retirement pension, disability retirement 16-64 allowance, death benefit allowance, DROP benefit, or any other 16-65 benefit under this article in excess of the benefit limits 16-66 applicable to the fund under Section 415 of the code. The board 16-67 shall reduce the amount of any benefit that exceeds those limits by 16-68 the amount of the excess. If total benefits under this fund and 16-69 the benefits and contributions to which any member is entitled 17-1 under any other qualified plans maintained by the city that employs 17-2 the member would otherwise exceed the applicable limits under 17-3 Section 415 of the code, the benefits the member would otherwise 17-4 receive from the fund shall be reduced to the extent necessary to 17-5 enable the benefits to comply with Section 415. 17-6 (c) Any member or survivor who receives any distribution 17-7 that is an eligible rollover distribution as defined by Section 17-8 402(c)(4) of the code is entitled to have that distribution 17-9 transferred directly to another eligible retirement plan of the 17-10 member's or survivor's choice on providing direction to the pension 17-11 system regarding that transfer in accordance with procedures 17-12 established by the board. 17-13 (d) The total salary taken into account for any purpose for 17-14 any member of the pension system may not exceed $200,000 for any 17-15 year for an eligible participant, or $150,000 a year for an 17-16 ineligible participant. These dollar limits shall be adjusted from 17-17 time to time in accordance with guidelines provided by the United 17-18 States secretary of the treasury. For purposes of this subsection, 17-19 an eligible participant is a person who first became an active 17-20 member before 1996, and an ineligible participant is a member who 17-21 is not an eligible participant. 17-22 (e) Accrued benefits under this article become 100 percent 17-23 nonforfeitable for a member on the date the member has completed 10 17-24 years of service. If the pension system or the fund is terminated 17-25 or partially terminated, or city contributions to the fund are 17-26 discontinued completely, there may not be a reversion of funds to 17-27 the employer. On complete or partial termination or discontinuance 17-28 of city contributions, the fund held by the pension system shall be 17-29 used exclusively for benefits for members and their surviving 17-30 spouses and dependents, and the affected employees' rights to the 17-31 benefits, to the extent funded, shall be nonforfeitable if not 17-32 already nonforfeitable under this subsection. 17-33 (f) Amounts representing forfeited nonvested benefits of 17-34 terminated members may not be used to increase benefits payable 17-35 from the fund. 17-36 (g) Distribution of benefits must begin not later than April 17-37 1 of the year following the calendar year during which the member 17-38 entitled to the benefits becomes 70-1/2 years of age or terminates 17-39 employment with the employer, whichever is later, and must 17-40 otherwise conform to Section 401(a)(9) of the code. 17-41 (h) If the amount of any benefit is to be determined on the 17-42 basis of actuarial assumptions that are not otherwise specifically 17-43 set forth for that purpose in this article, the actuarial 17-44 assumptions to be used are those earnings and mortality assumptions 17-45 being used on the date of the determination by the pension system's 17-46 actuary and approved by the board. The actuarial assumptions being 17-47 used at any particular time shall be attached as an addendum to a 17-48 copy of this article and treated for all purposes as a part of this 17-49 article. The actuarial assumptions may be changed by the pension 17-50 system's actuary at any time if approved by the board, but a change 17-51 in actuarial assumptions may not result in any decrease in benefits 17-52 accrued as of the effective date of the change. 17-53 (i) To the extent permitted by law, the board may adjust the 17-54 benefits of retired members and survivors by increasing any benefit 17-55 that was reduced because of Section 415 of the code. If Section 17-56 415 of the code is amended to permit the payment of amounts 17-57 previously precluded under that section, the board may adjust the 17-58 benefits of retired members or their surviving spouses or 17-59 dependents, including the restoration of benefits previously 17-60 denied. Benefits paid under this subsection are not considered as 17-61 extra base salary earned after retirement but as the delayed 17-62 payment of benefits earned before retirement. 17-63 (j) The board may make any change in this article to the 17-64 extent that the change is necessary to assure compliance with the 17-65 qualification requirements of Section 401 of the code or any other 17-66 federal law. 17-67 Sec. 26. EXCESS BENEFIT PLAN. (a) A separate, 17-68 nonqualified, unfunded excess benefit plan is created outside the 17-69 fund. 18-1 (b) In this section: 18-2 (1) "Excess benefit plan" or "plan" means the 18-3 separate, nonqualified, unfunded excess benefit plan created by 18-4 this section for the benefit of eligible members, as amended or 18-5 restated from time to time, that is intended to be a "qualified 18-6 governmental excess benefit arrangement" within the meaning of 18-7 Section 415(m) of the code. 18-8 (2) "Qualified plan" means the pension system and any 18-9 other plan maintained by the city for the exclusive benefit of some 18-10 or all of the members of the pension system that has been found by 18-11 the Internal Revenue Service to be qualified or has been treated by 18-12 the city as a qualified plan under Section 401 of the code. 18-13 (3) "Maximum benefit" means the retirement benefit a 18-14 retired member and the spouse, dependent child, or dependent parent 18-15 of a retired member or deceased member or retiree are entitled to 18-16 receive from all qualified plans in any month after giving effect 18-17 to Section 25(b) of this article and any similar provisions of any 18-18 other qualified plans designed to conform to Section 415 of the 18-19 code. 18-20 (4) "Excess benefit participant" means any retired 18-21 member whose retirement benefits as determined on the basis of all 18-22 qualified plans without regard to the limitations of Section 25(b) 18-23 of this article and comparable provisions of other qualified plans 18-24 would exceed the maximum benefit permitted under Section 415 of the 18-25 code. 18-26 (5) "Unrestricted benefit" means the monthly 18-27 retirement benefit a retired member and the spouse, dependent 18-28 child, or dependent parent of a retired member or deceased member 18-29 would have received under the terms of all qualified plans except 18-30 for the restrictions of Section 25(b) of this article and any 18-31 similar provisions of any other qualified plans designed to conform 18-32 to Section 415 of the code. 18-33 (c) An excess benefit participant who is receiving benefits 18-34 from the pension system is entitled to a monthly benefit under this 18-35 excess benefit plan in an amount equal to the lesser of: 18-36 (1) the member's unrestricted benefit less the maximum 18-37 benefit; or 18-38 (2) the amount by which the member's monthly benefit 18-39 from the fund has been reduced because of the limitations of 18-40 Section 415 of the code. 18-41 (d) If a spouse, dependent child, or dependent parent is 18-42 entitled to preretirement or postretirement death benefits under a 18-43 qualified plan after the death of an excess benefit participant, 18-44 the surviving spouse, dependent child, or dependent parent is 18-45 entitled to a monthly benefit under the excess benefit plan equal 18-46 to the benefit determined in accordance with this article without 18-47 regard to the limitations under Section 25(b) of this article or 18-48 Section 415 of the code, less the maximum benefit. 18-49 (e) Any benefit to which a person is entitled under this 18-50 section shall be paid at the same time and in the same manner as 18-51 the benefit would have been paid from the pension system if payment 18-52 of the benefit from the pension system had not been precluded by 18-53 Section 25(b) of this article. An excess benefit participant or 18-54 any beneficiary may not, under any circumstances, elect to defer 18-55 the receipt of all or any part of a payment due under this section. 18-56 (f) The board shall administer the plan, and the board's 18-57 designee shall also carry out the business of the board with 18-58 respect to the plan. Except as otherwise provided by this section, 18-59 the rights, duties, and responsibilities of the board and the 18-60 board's designee are the same for the plan as for the funds of the 18-61 pension system. 18-62 (g) The consultants, independent auditors, attorneys, and 18-63 actuaries selected to perform services for the fund also shall 18-64 perform services for the plan, but the fees for their services may 18-65 not be paid by the fund. The actuary engaged to perform services 18-66 for the fund shall advise the board of the amount of benefits that 18-67 may not be provided from the fund solely by reason of the 18-68 limitations of Section 415 of the code and the amount of employer 18-69 contributions that will be made to the plan rather than to the 19-1 fund. 19-2 (h) Contributions may not be accumulated under the plan to 19-3 pay future retirement benefits. Instead, each payment of city 19-4 contributions that would otherwise be made to the fund under 19-5 Section 9 of this article shall be reduced by the amount determined 19-6 by the board or its designee as necessary to meet the requirements 19-7 for retirement benefits under the plan, including reasonable 19-8 administrative expenses, until the next payment of city 19-9 contributions is expected to be made to the pension system. The 19-10 city shall then pay to the plan, from the withheld contributions, 19-11 not earlier than the 30th day before the date each distribution of 19-12 monthly retirement benefits is required to be made from the plan, 19-13 the amount necessary to satisfy the obligation to pay monthly 19-14 retirement benefits from the plan. The board or its designee shall 19-15 satisfy the obligation of the plan to pay retirement benefits from 19-16 the employer contributions so transferred for that month. 19-17 (i) Employer contributions otherwise required to be made to 19-18 the pension system under Section 9 of this article and any other 19-19 qualified plan shall be divided into those contributions required 19-20 to pay retirement benefits under this section and those 19-21 contributions paid into and accumulated to pay the maximum benefits 19-22 permitted under the qualified plan. Employer contributions made to 19-23 provide retirement benefits under this section may not be 19-24 commingled with the money of the fund forming part of the pension 19-25 system or any other qualified plan. 19-26 Sec. 27. AGREEMENT TO CHANGE BENEFITS. (a) Notwithstanding 19-27 any law to the contrary, the board or a designee of the board is 19-28 responsible for representing the interests of the pension system 19-29 and all pension issues and benefits affecting the pension system or 19-30 its members and beneficiaries under this article. The board may 19-31 enter into a written agreement with the city on behalf of the 19-32 pension system and members and beneficiaries of the pension system 19-33 if the agreement is approved by the board and signed by the mayor 19-34 and the board or the board's designee. 19-35 (b) A pension benefit or allowance provided by this article 19-36 may be increased if the increase: 19-37 (1) is first approved by a qualified actuary selected 19-38 by the board; 19-39 (2) is approved by the board and the city in a written 19-40 agreement as authorized by this section; and 19-41 (3) does not deprive a member, without the member's 19-42 written consent, of a right to receive benefits that have become 19-43 fully vested and matured in the member. 19-44 Sec. 28. NONREDUCTION, NONALIENATION, AND NONASSIGNMENT OF 19-45 BENEFITS. (a) No portion of the funds held by the pension system, 19-46 either before or after an order for its disbursement by the board, 19-47 and no amounts due or to become due to any member or survivor under 19-48 this article may be held, seized, taken, subject to, detained, or 19-49 levied on by virtue of any execution, attachment, garnishment, 19-50 injunction, or other writ, and no order or decree, and no process 19-51 may issue out of or by any court of this state for the payment or 19-52 satisfaction, in whole or in part, out of the funds held by or due 19-53 from the pension system, of any debt, damage, claim, demand, or 19-54 judgment against any member, survivor, dependent, or any other 19-55 person. 19-56 (b) No part of the funds or any claim to the funds may be 19-57 directly or indirectly assigned or transferred. Any attempt to 19-58 transfer or assign any part of the funds or a claim to the funds is 19-59 void. 19-60 (c) The funds shall be held, kept, and disbursed for the 19-61 purposes provided by this article, and for no other purpose, except 19-62 that a retired member, survivor, or dependent, at the person's 19-63 discretion, may have deducted from the person's pension the monthly 19-64 premium cost of any group insurance program in which the retired 19-65 member is participating. 19-66 (d) A benefit payable under this article may not be reduced 19-67 or discontinued for any person except under the terms applicable to 19-68 the benefit at the time the person becomes eligible to receive the 19-69 benefit. 20-1 (e) This section does not prevent the division of the 20-2 benefits accrued by a member under any court order determined by 20-3 the board or its designee to be a qualified domestic relations 20-4 order and the payment of a share of a retired member's benefits or 20-5 contributions to an alternate payee in accordance with the order. 20-6 SECTION 2. Chapter 76, Acts of the 50th Legislature, Regular 20-7 Session, 1947 (Article 6243g-1, Vernon's Texas Civil Statutes), and 20-8 Article 6243g-3, Revised Statutes, are repealed. 20-9 SECTION 3. (a) Not later than September 30, 1999, the board 20-10 of trustees of each pension system to which Article 6243g-4, 20-11 Revised Statutes, as added by this Act, applies shall hold an 20-12 election among all of its members. The board shall select an 20-13 independent party not affiliated with the board, the pension 20-14 system, or any employee or retiree organization to conduct and 20-15 tabulate the results of the election. Each active, inactive, or 20-16 retired member of the pension system is eligible to vote in the 20-17 election and has one vote. 20-18 (b) The ballot shall be printed to permit voting: 20-19 (1) alternatively either for: 20-20 "PROPOSITION A (Direct Voting)--To provide that the board of 20-21 trustees of the pension system consist in part of (1) three 20-22 employees of the police department who are members of the pension 20-23 system and who are elected by the active members of the police 20-24 department and (2) two retired members who are receiving pensions 20-25 from the pension system, who are not officers or employees of the 20-26 city, and who are elected by the inactive and retired members of 20-27 the system"; or 20-28 "PROPOSITION B (Universal Voting)--To provide that the board 20-29 of trustees of the pension system consist in part of (1) three 20-30 employees of the police department who are members of the pension 20-31 system and who are elected by the active, inactive, and retired 20-32 members of the system and (2) two retired members who are receiving 20-33 pensions from the pension system, who are not officers or employees 20-34 of the city, and who are elected by the active, inactive, and 20-35 retired members of the system"; and 20-36 (2) for or against the proposition: 20-37 "PROPOSITION ONE--To provide that officers and employees of 20-38 any employee organization or retiree organization and employees of 20-39 the pension system are prohibited from being elected to, appointed 20-40 to, or in any other way becoming a member of the board of trustees 20-41 of the pension system." 20-42 (c) The proposition described by Subsection (b)(1) of this 20-43 section receiving a majority of the votes at the election has 20-44 immediate effect as law and applies to each vacancy on the board of 20-45 trustees that occurs on or after its effective date. If a majority 20-46 of the votes at the election favor the proposition described by 20-47 Subsection (b)(2) of this section, it has immediate effect as law 20-48 and applies to each vacancy on the board of trustees that occurs on 20-49 or after its effective date. If a majority of the votes at the 20-50 election do not favor the proposition described by Subsection 20-51 (b)(2) of this section, it has no effect. 20-52 SECTION 4. Notwithstanding Section 12(b), Article 6243g-4, 20-53 Revised Statutes, as added by this Act, the monthly benefits of a 20-54 person who retires or retired after November 23, 1998, and before 20-55 January 1, 2000, is determined by the benefit formula in effect 20-56 immediately before the effective date of this Act. 20-57 SECTION 5. Each pension system to which Article 6243g-4, 20-58 Revised Statutes, as added by this Act, applies shall reimburse 20-59 each member of the system who has repaid to the system previously 20-60 refunded contributions for any interest paid on the amounts repaid. 20-61 SECTION 6. This Act takes effect September 1, 1999. 20-62 SECTION 7. The importance of this legislation and the 20-63 crowded condition of the calendars in both houses create an 20-64 emergency and an imperative public necessity that the 20-65 constitutional rule requiring bills to be read on three several 20-66 days in each house be suspended, and this rule is hereby suspended. 20-67 * * * * *