1-1 By: Coleman (Senate Sponsor - Gallegos) H.B. No. 3531
1-2 (In the Senate - Received from the House May 3, 1999;
1-3 May 3, 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 retirement systems for officers and employees of
1-10 certain municipalities.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Section 4, Chapter 358, Acts of the 48th
1-13 Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
1-14 Civil Statutes), is amended to read as follows:
1-15 Sec. 4. PERSONS NOT ELIGIBLE UNDER THIS ACT. Employees of
1-16 such city who may not become members of the Pension System shall
1-17 include:
1-18 (a) All quasi-legislative, quasi-judicial and advisory
1-19 boards and commissions;
1-20 (b) All part-time employees, as defined by such city,
1-21 other than any elected officials whose service is made part-time by
1-22 law or charter;
1-23 (c) All seasonal employees and all consultants and
1-24 independent contractors; and
1-25 (d) Employees in positions covered by any other
1-26 pension plan of such city to which the city contributes [or persons
1-27 drawing a pension from any such system], including employees who
1-28 are excluded from membership in another pension plan by action of
1-29 the board of trustees of the pension plan, except to the extent
1-30 that they are covered in another pension plan only as a
1-31 beneficiary.
1-32 SECTION 2. Chapter 358, Acts of the 48th Legislature,
1-33 Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
1-34 Statutes), is amended by adding Section 16B to read as follows:
1-35 Sec. 16B. TRANSFER OF MEMBERSHIP. (a) The Board may
1-36 authorize a person who is a member of the Pension System as
1-37 previously authorized by this Act, who is in a position covered by
1-38 another retirement system to which the city contributes, and who
1-39 has not begun to receive payment of benefits from the Pension
1-40 System to make a one-time irrevocable election, on a date and in a
1-41 manner to be established by the Board, to cease to be a member of
1-42 the Pension System and, for future service only, become a member of
1-43 the retirement system governed by Article 6243e.2(1) or 6243g-3,
1-44 Revised Statutes; Chapter 76, Acts of the 50th Legislature, Regular
1-45 Session, 1947 (Article 6243g-1, Vernon's Texas Civil Statutes); or
1-46 a successor statute to any of those laws.
1-47 (b) A person who does not make an election to cease
1-48 membership in the Pension System under Subsection (a) of this
1-49 section remains a member of the Pension System as authorized under
1-50 this Act.
1-51 (c) For purposes of this Act, a person who makes an election
1-52 to cease membership in the Pension System is considered to have
1-53 separated from service on the date of the election established by
1-54 the Board.
1-55 SECTION 3. Chapter 358, Acts of the 48th Legislature,
1-56 Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
1-57 Statutes), is amended by adding Section 22A to read as follows:
1-58 Sec. 22A. GROUP C MEMBERSHIP, SERVICE REQUIREMENTS, AND
1-59 BENEFITS. (a) A Group C member is subject to the same provisions
1-60 that are applicable to Group A members under this Act except as
1-61 otherwise specifically provided by this section.
1-62 (b) In this section:
1-63 (1) "Credited service" means the number of whole and
1-64 fractional years of a member's eligible service in Group C as an
2-1 executive official after the executive official's effective date of
2-2 participation in Group C for which member and employer
2-3 contributions are on deposit with the fund.
2-4 (2) "Effective date of participation" in Group C means
2-5 September 1, 1999, except for persons who first become executive
2-6 officials and whose contributions to the plan begin after that
2-7 date, in which case the effective date of participation in the plan
2-8 is the first date on which the person qualifies as an executive
2-9 official and for which applicable contributions are made for
2-10 service in the plan as an executive official.
2-11 (3) "Executive official" means a person in one of the
2-12 following categories:
2-13 (A) the chief administrative officer of the
2-14 city;
2-15 (B) the executive director of the Pension
2-16 System; or
2-17 (C) the full-time, appointed director of each
2-18 department of the city as designated by the governing body of the
2-19 city and approved by the Board, other than a director who is
2-20 covered by another pension system to which the city contributes or
2-21 an acting director or the equivalent.
2-22 (4) "Group C" or "plan" means the executive officials'
2-23 plan.
2-24 (c) All executive officials are members of Group C, except
2-25 that an executive official may elect not to participate in Group C
2-26 by making the election in writing on a form provided by and filed
2-27 with the Pension System not later than the 30th day after the date
2-28 the executive official becomes eligible to participate in Group C.
2-29 The election is effective retroactive to the first day of the
2-30 executive official's eligibility. An election not to participate is
2-31 irrevocable and constitutes a waiver of all benefits provided by
2-32 the plan. An executive official who elects not to participate in
2-33 Group C shall participate in Group A or Group B under this Act, as
2-34 applicable.
2-35 (d) A Group C member who separates from service for any
2-36 reason other than death or retirement is eligible to receive a
2-37 refund of the member's Group C contributions from the plan. The
2-38 distribution shall be made in the form and at the time prescribed
2-39 by the Board. A member who receives a refund of the member's
2-40 contributions from the plan under this subsection forfeits the
2-41 member's credited service, and all rights to benefits under the
2-42 plan and membership in the plan terminate.
2-43 (e) If an executive official who has terminated membership
2-44 in Group C under Subsection (d) subsequently becomes eligible for
2-45 membership in the plan under Subsection (c), credited service
2-46 accrues only beginning on the date the member's most recent
2-47 eligibility as an executive official began.
2-48 (f) A person who receives a refund under Subsection (d) and
2-49 is reemployed and resumes membership under this Act may restore the
2-50 credited service forfeited under Subsection (d) by filing a written
2-51 election form with the Board after the reemployment and repaying
2-52 the amount of the member's contributions previously withdrawn under
2-53 Subsection (d) within the earlier of five years after the date of
2-54 the member's election or 60 days after the date of the member's
2-55 separation from service, with interest on that amount at the rate
2-56 of six percent. Credited service may not be restored until
2-57 complete repayment is made to the fund.
2-58 (g) A Group C member shall receive twice the number of
2-59 actual years of credited service in Group C solely for the purpose
2-60 of fulfilling the eligibility requirements for a normal retirement
2-61 pension in Group C as provided by Subsection (h). For all other
2-62 computations under this Act, the actual years of credited service
2-63 in Group C shall be used.
2-64 (h) A Group C member who ceases to be an executive official
2-65 is eligible for a normal retirement pension when the official
2-66 separates from service and:
2-67 (1) fulfills the requirement for age and years of
2-68 credited service applicable to Group A members for a normal
2-69 retirement pension under Section 11 of this Act; or
3-1 (2) attains 65 years of age with any amount of
3-2 credited service.
3-3 (i) The amount of the monthly pension for each Group C
3-4 member equals the member's average monthly salary multiplied by two
3-5 times the percentage accrual rate in effect for Group A members and
3-6 by the member's actual years of credited service in Group C. For
3-7 purposes of this subsection, the member's average monthly salary
3-8 shall be computed by adding together the 78 highest biweekly
3-9 salaries paid to a member during the member's period of credited
3-10 service and dividing the sum by 36, or, if the member has less than
3-11 78 total biweekly salaries, by multiplying 26 times the average of
3-12 all of the member's biweekly salaries and dividing by 12. However,
3-13 a Group C member's pension may not be more than 80 percent of the
3-14 member's average monthly salary and may not be less than the
3-15 greater of $8 a month for each year of credited service or a total
3-16 of $100 a month.
3-17 (j) Any previous service of a Group C member in Group A or
3-18 Group B is governed by the applicable Group A or Group B provisions
3-19 of this Act and may not be credited to Group C. Group C service
3-20 may not be credited to Group A or Group B.
3-21 (k) Except as provided by Subsection (j), this section
3-22 applies to a plan member only while the individual is an eligible
3-23 executive official. An individual who ceases to be an executive
3-24 official and transfers to a municipal position covered by Group A
3-25 shall participate in Group A but does not forfeit Group C service
3-26 and remains eligible for normal retirement for Group C service as
3-27 provided under Subsection (h) of this section.
3-28 SECTION 4. Chapter 358, Acts of the 48th Legislature,
3-29 Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
3-30 Statutes), is amended by adding Section 33A to read as follows:
3-31 Sec. 33A. PROPORTIONATE RETIREMENT PROGRAM WITH
3-32 PARTICIPATING RETIREMENT SYSTEMS. (a) The Board may establish a
3-33 program of proportionate retirement benefits subject to the
3-34 requirements of this section.
3-35 (b) In this section:
3-36 (1) "Combined service credit" means the combined sum
3-37 of an eligible participant's service credit in each participating
3-38 retirement system in which the participant has service credit and
3-39 for which the total satisfies the length-of-service requirements
3-40 for service retirement from that system at the participant's
3-41 attained age.
3-42 (2) "Eligible participant" means a person who is
3-43 employed by the city and covered by a participating retirement
3-44 system at the time of full participation by all participating
3-45 retirement systems under their respective statutory authority and
3-46 who is or has been a member of the Pension System under this Act.
3-47 The term does not include any individual who is in retirement,
3-48 deferred, or DROP status, who is receiving a pension benefit under
3-49 this Act, or who is in a probationary or trainee firefighter or
3-50 police officer position.
3-51 (3) "Maximum benefit" means the maximum amount of
3-52 benefits payable to an eligible participant who has used combined
3-53 service credit to qualify for benefits from a participating
3-54 retirement system, which is 80 percent of the participant's average
3-55 monthly compensation at the time the participant ceases employment
3-56 in a position covered by the Pension System.
3-57 (4) "Participating retirement system" means a
3-58 retirement system established by Article 6243e.2(1) or 6243g-3,
3-59 Revised Statutes; Chapter 76, Acts of the 50th Legislature, Regular
3-60 Session, 1947 (Article 6243g-1, Vernon's Texas Civil Statutes); a
3-61 successor statute to any of those laws; or this Act, to the extent
3-62 that the retirement system recognizes and allows the use of
3-63 combined service credit and disability determinations to provide
3-64 proportionate retirement benefits in its system for an eligible
3-65 participant under circumstances described by this Act.
3-66 (5) "Service credit" means service that is credited by
3-67 the rules of a participating retirement system and that may be used
3-68 to meet length-of-service requirements for service retirement in
3-69 that system, except that service credit that would otherwise be
4-1 allowed by more than one participating retirement system for the
4-2 same service period may be counted only once in determining the
4-3 amount of a person's combined service credit and will apply as
4-4 service credit only in the participating retirement system in which
4-5 the person first established the service credit.
4-6 (c) Participation by the Pension System in the proportionate
4-7 retirement program is voluntary. The Board may elect to
4-8 participate in the proportionate retirement program by adopting a
4-9 resolution to that effect. On adoption, the Board shall notify the
4-10 other participating retirement systems of the election. The
4-11 effective date of participation in the proportionate retirement
4-12 program for which an election is made is the first day of the third
4-13 month after the month in which notice is given. Participation in
4-14 the proportionate retirement program by the Pension System may be
4-15 terminated by Board resolution for any reason, except that the
4-16 proportionate retirement program will be continued by the Pension
4-17 System for eligible participants who are actively employed at the
4-18 time of the termination and remain actively employed without a
4-19 break in service. On adoption of a resolution of termination, the
4-20 Board shall notify the other participating retirement systems of
4-21 the termination. The effective date of termination from the
4-22 proportionate retirement program is the first day of the month
4-23 following the month in which notice is given.
4-24 (d) An eligible participant's combined service credit is
4-25 usable solely for determining eligibility for service retirement
4-26 benefits, including DROP participation if the person is in a
4-27 position covered by this Act, and may not be used in determining
4-28 eligibility for disability retirement benefits, death benefits, or
4-29 any type of benefit other than service retirement benefits or DROP
4-30 participation or determining the amount of any type of benefit.
4-31 The amount of a benefit payable by the Pension System is determined
4-32 according to and in the manner prescribed by the statutes and rules
4-33 governing the Pension System and is based solely on an eligible
4-34 participant's service credit in the Pension System and allowable
4-35 maximum benefit. The Pension System has sole responsibility and
4-36 discretion to determine the eligibility of eligible participants
4-37 for benefits, including whether sufficient combined service credit
4-38 exists to qualify eligible participants for proportionate
4-39 retirement benefits from the Pension System, and the amount and
4-40 duration of proportionate retirement benefits payable by the
4-41 Pension System.
4-42 (e) A person who withdraws pension contributions from a
4-43 participating retirement system ceases to be a member of that
4-44 participating retirement system. Membership and service credit for
4-45 which contributions were withdrawn or otherwise forfeited may be
4-46 reestablished under the statutes and rules governing that system.
4-47 To be counted as combined service credit, all service in a
4-48 participating retirement system for which the person withdrew
4-49 contributions or that was otherwise forfeited must be reinstated in
4-50 accordance with the statutes and rules applicable to that system.
4-51 A lump-sum distribution is governed by the statutes and rules
4-52 applicable to the particular retirement system.
4-53 (f) A person who has service credit in another participating
4-54 retirement system for which the person is receiving or may become
4-55 eligible to receive a benefit from the other system is not eligible
4-56 to vote in a Board election or hold a position on the Board.
4-57 (g) The Board shall make determinations regarding an
4-58 eligible participant's combined service credit based on complete
4-59 and certified records of a participating retirement system,
4-60 including the Pension System, and of the city.
4-61 (h) The provisions of Sections 15 and 16 of this Act
4-62 pertaining to interruption of service and termination of employment
4-63 do not apply to an eligible participant to the extent the
4-64 participant is absent from service covered by the Pension System
4-65 during a period for which the participant earns service credit in
4-66 another participating retirement system for service performed for
4-67 the city in an amount sufficient to meet the length-of-service
4-68 requirement, using combined service credit, for a retirement
4-69 benefit from the participating retirement system.
5-1 (i) A proportionate retirement benefit may be paid by the
5-2 Pension System under the proportionate retirement program to an
5-3 eligible participant who fulfills the requirements for receiving a
5-4 proportionate retirement benefit in the Pension System using
5-5 combined service credit only if the participant is eligible to
5-6 receive and has applied for proportionate retirement benefits from
5-7 the applicable other participating retirement systems. An eligible
5-8 participant may not become eligible to begin receiving a
5-9 proportionate retirement benefit from the Pension System while
5-10 employed in a position covered by the Pension System.
5-11 (j) The Pension System is governed solely by its own
5-12 statutory provisions, policies, and procedures relating to
5-13 disability benefit determinations for members who apply for a
5-14 disability pension from the Pension System, except that if an
5-15 eligible participant has combined service credit from any other
5-16 participating retirement system in addition to this system, files
5-17 for a disability pension for the first time as a member of the
5-18 other participating retirement system, is otherwise eligible for a
5-19 disability retirement benefit in both participating retirement
5-20 systems, and receives a determination from the board of trustees of
5-21 the other participating pension system that the person has a
5-22 disability that is of a type recognized by the Pension System, and
5-23 the other participating retirement system grants the disability
5-24 pension, the Pension System shall pay the proportionate amount of
5-25 benefit attributable to the service credited under the Pension
5-26 System, based on the schedule of benefits in effect for the Pension
5-27 System at the time the eligible participant ceased membership in
5-28 the Pension System. If the disability is determined to be
5-29 service-related, the Pension System shall pay only the ordinary
5-30 disability benefit amount. The Board has the right to require
5-31 examinations, reports, and any other information as provided by
5-32 this Act for the administration and payment of disability benefits
5-33 and the right to reduce, suspend, or terminate a benefit
5-34 accordingly. The benefit allowed under this subsection is payable
5-35 only if the other participating retirement systems authorize and
5-36 pay a disability benefit under the same circumstances as provided
5-37 by this subsection. A person who is receiving a disability benefit
5-38 from a participating retirement system is not eligible for a
5-39 disability pension under this Act except as provided by this
5-40 subsection.
5-41 (k) Creditable military service, if any, will be credited in
5-42 the Pension System only as provided by this Act and only if the
5-43 service is not credited in any other participating retirement
5-44 system.
5-45 (l) The Board may adopt rules and policies for implementing
5-46 and administering the proportionate retirement program.
5-47 (m) A person may not become eligible to receive a benefit
5-48 under this section that is greater than the benefit the person
5-49 would otherwise receive under this Act if this section did not
5-50 apply. A benefit otherwise payable under Section 13(b) of this Act
5-51 on behalf of a person who has used combined service credit to
5-52 qualify for benefits from at least one participating retirement
5-53 system shall instead be computed and payable as provided by Section
5-54 13(a) of this Act.
5-55 SECTION 5. This Act takes effect September 1, 1999.
5-56 SECTION 6. The importance of this legislation and the
5-57 crowded condition of the calendars in both houses create an
5-58 emergency and an imperative public necessity that the
5-59 constitutional rule requiring bills to be read on three several
5-60 days in each house be suspended, and this rule is hereby suspended.
5-61 * * * * *