1-1 By: Armbrister S.B. No. 574
1-2 (In the Senate - Filed February 17, 1999; February 22, 1999,
1-3 read first time and referred to Committee on Intergovernmental
1-4 Relations; March 18, 1999, reported favorably by the following
1-5 vote: Yeas 5, Nays 0; March 18, 1999, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to participation and credit in, contributions to, and
1-9 benefits and administration of the Texas Municipal Retirement
1-10 System.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Section 851.001, Government Code, is amended by
1-13 adding Subdivision (16) to read as follows:
1-14 (16) "Member" means a person for whom an account has
1-15 been established in the employees saving fund and whose membership
1-16 has not terminated under Section 852.104.
1-17 SECTION 2. Subchapter B, Chapter 852, Government Code, is
1-18 amended by adding Section 852.110 to read as follows:
1-19 Sec. 852.110. CORRECTION OF ERRORS. (a) If as a result of
1-20 a reporting error on the part of a participating municipality a
1-21 person has not received credited service or current service credit
1-22 or has received less than the correct amount of current service
1-23 credit for months in which the person performed service as an
1-24 employee of the municipality, the retirement system shall correct
1-25 the error as authorized by this section.
1-26 (b) A correction may not be made as to current service
1-27 performed, or current service credit that should have been
1-28 received, more than four years before the date an application for
1-29 the correction, on a form approved by the board of trustees, is
1-30 received by the retirement system.
1-31 (c) Except as provided by Subsection (g), a correction
1-32 described by Subsection (a) may not be made unless the retirement
1-33 system receives, in addition to the application, each of the items
1-34 required under Subsection (d) and one of the following:
1-35 (1) a written agreement, approved by the
1-36 municipality's governing body, stating that an error has occurred
1-37 and that the municipality has agreed to correct the error;
1-38 (2) a final judgment by a court of competent
1-39 jurisdiction in a proceeding to which the municipality was a party,
1-40 ordering the municipality to correct the error; or
1-41 (3) an order in an administrative proceeding to which
1-42 the municipality was a party, directing the subdivision to correct
1-43 the error, and that is no longer subject to appeal.
1-44 (d) A correction described by Subsection (a) may not be
1-45 made unless the retirement system receives:
1-46 (1) a supplemental report properly signed on behalf of
1-47 the municipality showing the corrections to credited service or
1-48 current service credit of the person;
1-49 (2) payment from the person seeking the correction in
1-50 an amount equal to the contribution or additional contribution the
1-51 person would have made to the retirement system if the service had
1-52 been correctly reported to the system; and
1-53 (3) payment from the municipality in an amount equal
1-54 to the additional contribution that the municipality should have
1-55 paid to the retirement system based on the additional credited
1-56 service or current service credit.
1-57 (e) A municipality that is the subject of an agreement, a
1-58 judgment, or an order described by Subsection (c) shall file the
1-59 supplemental report and submit the payments described by this
1-60 section not later than the 30th day after the date the municipality
1-61 is notified in writing by the retirement system that those items
1-62 should be sent to the retirement system.
1-63 (f) If as a result of a reporting error on the part of a
1-64 participating municipality a person has not received prior service
2-1 credit, on written application to the retirement system accompanied
2-2 by evidence of the prior service satisfactory to the retirement
2-3 system, the retirement system shall correct the error if the
2-4 retirement system receives the person's written application for the
2-5 correction within four years after the later of the date the
2-6 municipality began participation or the person first became a
2-7 member of the retirement system.
2-8 (g) The correction of an error affecting not more than three
2-9 monthly reports within a period of not more than three consecutive
2-10 months may be made on the basis of the application alone if the
2-11 application, the supplemental report, and the payments required by
2-12 this section are received by the retirement system before the first
2-13 day of the seventh month after the month for which the correction
2-14 is being made.
2-15 SECTION 3. Subsection (c), Section 853.401, Government Code,
2-16 is amended to read as follows:
2-17 (c) In adopting an ordinance under this section, a governing
2-18 body shall specify the percentage of base updated service credits
2-19 to be used in computing updated service credits for employees of
2-20 the municipality and shall specify the date the updated service
2-21 credits will take effect. The percentage adopted may be 50
2-22 percent, 75 percent, or [any multiple of 10 percent that does not
2-23 exceed] 100 percent of a base updated service credit. The
2-24 effective date must be January 1 of a year specified by the
2-25 governing body. If the governing body of a municipality has
2-26 specified a different percentage in an ordinance adopted under
2-27 Section 853.404(a) and in effect on December 31, 1999, the
2-28 percentage used in computing updated service credits for employees
2-29 of that municipality remains in effect until changed or
2-30 discontinued under Section 853.404.
2-31 SECTION 4. Subsection (b), Subsection 853.402, Government
2-32 Code, is amended to read as follows:
2-33 (b) The average updated service compensation of a member is
2-34 computed as the monthly average compensation [for]:
2-35 (1) for the 36 months immediately preceding the date
2-36 prescribed by Subsection (e); or
2-37 (2) if the member did not perform service in each of
2-38 the 36 months described in Subdivision (1) or did not perform any
2-39 service within the 36-month period, for the most recent 36 months
2-40 before the date prescribed by Subsection (e) in which the member
2-41 performed service[, for the number of months of service within the
2-42 36-month period; or]
2-43 [(3) if the member did not perform any service within
2-44 the 36-month period, for the number of months of service within the
2-45 36-month period ending with the last month of the calendar year in
2-46 which the member's most recent service was performed].
2-47 SECTION 5. Section 854.002, Government Code, is amended by
2-48 adding Subsection (d) to read as follows:
2-49 (d) Notwithstanding any other provision of this subtitle,
2-50 instead of an annuity, a person will receive from the retirement
2-51 system a single payment equal to the sum of the following if on the
2-52 date of that person's retirement that sum is $5,000 or less:
2-53 (1) any updated service credit or any prior service,
2-54 special prior service, or antecedent service credit for that person
2-55 on the date of retirement, plus accumulated interest;
2-56 (2) the amount credited to the person's individual
2-57 account in the employees saving fund; and
2-58 (3) the amount from the municipality accumulation fund
2-59 equal to the amount in the member's individual account or a greater
2-60 amount authorized by a participating municipality under Section
2-61 855.501.
2-62 SECTION 6. Subsection (c), Section 854.004, Government Code,
2-63 is amended to read as follows:
2-64 (c) An annuity under this subtitle is payable for a period
2-65 beginning on the last day of the first month following the month in
2-66 which retirement occurs and ending, except as otherwise provided by
2-67 this subtitle, on the last day of the month [immediately preceding
2-68 the month] in which death occurs.
2-69 SECTION 7. Section 854.006, Government Code, is amended by
3-1 adding Subsections (f) and (g) to read as follows:
3-2 (f) If a divorce decree or a qualified domestic relations
3-3 order, as that term is defined by Section 804.001, so provides, the
3-4 benefit payable to a retiree who is receiving payments of an
3-5 annuity for the retiree's life with payments to continue after the
3-6 retiree's death until the death of another person under Section
3-7 854.104(c)(1), (2), or (5), 854.305(c)(1), (2), or (5), or
3-8 854.410(c)(1), (2), or (5) may be increased to the amount that
3-9 would have been payable if the retiree had selected an annuity
3-10 payable only during the retiree's lifetime if:
3-11 (1) the proceeding in which the decree or order is
3-12 entered terminates the marriage between the retiree and the person
3-13 who was designated to receive the continued payment after the
3-14 retiree's death;
3-15 (2) the decree or order awards the retiree all
3-16 benefits resulting from the retiree's participation in the
3-17 retirement system; and
3-18 (3) the decree or order is signed after December 31,
3-19 1999.
3-20 (g) A decree or order under Subsection (f) applies only to
3-21 annuity payments made after the date the retirement system receives
3-22 and approves the decree or order as complying with Subsection (f).
3-23 SECTION 8. Subsection (b), Section 854.008, Government Code,
3-24 is amended to read as follows:
3-25 (b) The amount of a lump-sum distribution under this section
3-26 may not exceed three-fourths [one-half] of the total contributions
3-27 and accumulated interest in the member's individual account in the
3-28 employees saving fund at the time of the member's retirement.
3-29 SECTION 9. Subsection (b), Section 854.203, Government Code,
3-30 is amended to read as follows:
3-31 (b) The amount of annuity increase under this section is
3-32 computed as the sum of the prior and current service annuities on
3-33 the effective date of retirement of the person on whose service the
3-34 annuities are based, multiplied by:
3-35 (1) the percentage change in the Consumer Price Index
3-36 for All Urban Consumers, published by the Bureau of Labor
3-37 Statistics of the United States Department of Labor, from December
3-38 of the year immediately preceding the effective date of the
3-39 person's retirement to the December that is 13 months before the
3-40 effective date of the ordinance providing the increase; and
3-41 (2) 30 percent, 50 percent, or 70 percent, as [a
3-42 fraction,] specified by the governing body in the ordinance, except
3-43 that if the governing body has specified a different percentage in
3-44 an ordinance adopted under Section 853.404(c) and in effect on
3-45 December 31, 1999, the percentage used in computing annuity
3-46 increases for retirees of that municipality remains in effect until
3-47 changed or discontinued under Section 853.404 [that is not less
3-48 than 10 percent nor more than 70 percent and is a multiple of 5
3-49 percent].
3-50 SECTION 10. Section 854.204, Government Code, is amended to
3-51 read as follows:
3-52 Sec. 854.204. OPTIONAL BENEFIT FOR DESIGNATED BENEFICIARY
3-53 [SURVIVING SPOUSE] OF VESTED EMPLOYEE. (a) This section applies
3-54 to all municipalities having a participation date in the retirement
3-55 system after August 31, 1987. The governing body of any
3-56 municipality having an earlier effective date of participation may
3-57 by ordinance adopt the provisions of this section if the actuary
3-58 first determines, on the basis of mortality and other tables
3-59 adopted by the board of trustees, that all obligations of the
3-60 municipality to the municipality accumulation fund, including
3-61 obligations proposed under the ordinance, can be funded by the
3-62 municipality within its maximum contribution rate and within its
3-63 amortization period.
3-64 (b) If a member who has sufficient credited service
3-65 performed for municipalities that have adopted or are subject to
3-66 this section to entitle the member to withdraw from service, to
3-67 leave on deposit with the retirement system the member's
3-68 accumulated contributions and, on attainment of an age prescribed
3-69 by this subtitle, to retire with a service retirement benefit dies
4-1 before becoming eligible for service retirement and leaves
4-2 surviving a person [lawful spouse] whom the member has designated
4-3 as beneficiary entitled to payment of the member's accumulated
4-4 contributions in the event of the member's death before retirement,
4-5 the person [surviving spouse] may by written notice filed with the
4-6 board elect to leave the accumulated deposits with the retirement
4-7 system subject to the terms of this section. If the accumulated
4-8 deposits have not been withdrawn before such time as the member, if
4-9 living, would have become entitled to service retirement, the
4-10 person designated as beneficiary [surviving spouse] may elect to
4-11 receive, in lieu of the accumulated deposits, an annuity payable
4-12 monthly during the lifetime of the person [surviving spouse] in the
4-13 amount that would have been payable to the person [surviving
4-14 spouse] had the member lived and retired at that date under an
4-15 optional annuity described by Section 854.104(c)(1).
4-16 (c) At any time before payment of the first monthly benefit
4-17 of an annuity, a designated beneficiary [surviving spouse] to whom
4-18 this section applies may, after filing a written application with
4-19 the board of trustees, receive payment of the accumulated
4-20 contributions credited to the account of the member in lieu of any
4-21 benefits otherwise payable under this section. If the designated
4-22 beneficiary [surviving spouse] dies before payment of the first
4-23 monthly benefit of an annuity allowed under this section, the
4-24 accumulated contributions credited to the account of the member
4-25 shall be paid to the estate of the designated beneficiary [spouse].
4-26 (d) A person eligible to file an election under Subsection
4-27 (b) may, by written notice filed with the board of trustees not
4-28 later than 180 days after the date of the member's death, elect to
4-29 receive a reduced annuity under this subsection instead of the
4-30 accumulated deposits or the annuity under Subsection (b). An
4-31 annuity under this subsection is payable monthly during the
4-32 person's lifetime in the amount that would have been payable to the
4-33 person if the member had been eligible to retire and had retired,
4-34 on the last day of the month immediately preceding the month in
4-35 which death occurred, under an optional annuity described by
4-36 Section 854.104(c)(1).
4-37 (e) If a member to whom this section applies has designated
4-38 as beneficiary a person to whom a retirement plan that is qualified
4-39 under Section 401, Internal Revenue Code of 1986, cannot make
4-40 payments for a period greater than five years after the date of the
4-41 member's death without losing its qualified status and the
4-42 beneficiary elects to receive an annuity under Subsection (b) or
4-43 (d), the annuity payable by the retirement system is the actuarial
4-44 equivalent of the monthly payments that the beneficiary would have
4-45 received if the member had retired on the date the annuity begins
4-46 under the optional annuity described by Section 854.104(c)(4), to
4-47 be paid over 60 months.
4-48 (f) If a member to whom this section applies has designated
4-49 more than one person as beneficiaries and those persons elect to
4-50 receive an annuity under Subsection (b) or (d), the annuity payable
4-51 by the retirement system is the actuarial equivalent of the monthly
4-52 payments that the beneficiaries would have received if the member
4-53 had retired on the date the annuity begins under the optional
4-54 annuity described by Section 854.104(c)(4), to be paid over 180
4-55 months.
4-56 SECTION 11. Subsection (c), Section 854.304, Government
4-57 Code, is amended to read as follows:
4-58 (c) A standard disability retirement annuity is payable
4-59 throughout the life of a retiree. If a retiree dies before 60
4-60 monthly payments of a standard disability retirement annuity have
4-61 been made, the remainder of the 60 monthly payments is payable to
4-62 the retiree's designated beneficiary. When a retiree who receives
4-63 an annuity under this section dies, an additional benefit may be
4-64 payable under Section 854.502.
4-65 SECTION 12. Subsection (c), Section 854.305, Government
4-66 Code, is amended to read as follows:
4-67 (c) An eligible person may select an optional annuity that
4-68 provides that:
4-69 (1) after the retiree's death, the reduced annuity is
5-1 payable throughout the life of a person designated by the retiree;
5-2 (2) after the retiree's death, one-half of the reduced
5-3 annuity is payable throughout the life of a person designated by
5-4 the retiree;
5-5 (3) if the retiree dies before 120 monthly annuity
5-6 payments have been made, the remainder of the 120 payments are
5-7 payable to the retiree's beneficiary or, if one does not exist, to
5-8 the retiree's estate;
5-9 (4) if the retiree dies before 180 monthly annuity
5-10 payments have been made, the remainder of the 180 payments are
5-11 payable to the retiree's beneficiary or, if one does not exist, to
5-12 the retiree's estate; [or]
5-13 (5) after the retiree's death, two-thirds of the
5-14 reduced annuity is payable throughout the life of a person
5-15 designated by the retiree; or
5-16 (6) the annuity is payable only during the retiree's
5-17 lifetime.
5-18 SECTION 13. Subsections (a) and (b), Section 854.408,
5-19 Government Code, are amended to read as follows:
5-20 (a) The standard occupational disability retirement annuity
5-21 payable under this subchapter is the sum of the member's prior
5-22 service annuity and current service annuity[, payable monthly
5-23 during the lifetime of the retiree, but reduced as to any month or
5-24 series of months as provided in this section]. A prior service
5-25 annuity is subject to reduction under Section 855.308(f). A
5-26 standard occupational disability retirement annuity:
5-27 (1) is payable throughout the life of the retiree, but
5-28 if the retiree dies before 60 monthly payments have been made, the
5-29 remainder of the 60 monthly payments is payable to the retiree's
5-30 designated beneficiary; and
5-31 (2) is reducible as to any month or series of months
5-32 as provided by this section.
5-33 (b) During any month in which a retiree who is less than 60
5-34 years old receives earned income subject to taxation under the
5-35 Federal Insurance Contributions Act or that would be subject to
5-36 those taxes if the employer were not an exempt organization, the
5-37 standard occupational disability retirement annuity may not exceed
5-38 the greater of the following amounts:
5-39 (1) the amount that is required to be added to the
5-40 retiree's earned income for the month to equal the highest average
5-41 compensation on which the retiree made membership contributions to
5-42 the retirement system during any 12 consecutive months during the
5-43 three calendar years immediately preceding the year in which the
5-44 retiree retired for disability, when the highest average
5-45 compensation is multiplied by the percentage increase, if any, in
5-46 the Consumer Price Index for All Urban Consumers published by the
5-47 Bureau of Labor Statistics of the United States Department of Labor
5-48 from December of the year immediately preceding the effective date
5-49 of the person's retirement to the December that is 13 months before
5-50 a computation is made under this subsection; or
5-51 (2) the monthly annuity attributable to the retiree's
5-52 accumulated contributions at the time of the person's retirement.
5-53 SECTION 14. Subsection (c), Section 854.410, Government
5-54 Code, is amended to read as follows:
5-55 (c) An eligible person may select an optional annuity that
5-56 provides that:
5-57 (1) after the retiree's death, the reduced annuity is
5-58 payable throughout the life of a person designated by the retiree;
5-59 (2) after the retiree's death, one-half of the reduced
5-60 annuity is payable throughout the life of a person designated by
5-61 the retiree;
5-62 (3) if the retiree dies before 120 monthly annuity
5-63 payments have been made, the remainder of the 120 payments is
5-64 payable to the retiree's beneficiary or, if one does not exist, to
5-65 the retiree's estate;
5-66 (4) if the retiree dies before 180 monthly annuity
5-67 payments have been made, the remainder of the 180 payments is
5-68 payable to the retiree's beneficiary or, if one does not exist, to
5-69 the retiree's estate; [or]
6-1 (5) after the retiree's death, two-thirds of the
6-2 reduced annuity is payable throughout the life of a person
6-3 designated by the retiree; or
6-4 (6) the annuity is payable only during the retiree's
6-5 lifetime.
6-6 SECTION 15. Subchapter B, Chapter 855, Government Code, is
6-7 amended by adding Section 855.116 to read as follows:
6-8 Sec. 855.116. ELECTRONIC FILING OF CERTAIN DOCUMENTS.
6-9 (a) In this section, "electronic filing" means the filing of data
6-10 by the communication of information by facsimile or in the form of
6-11 digital electronic signals transformed by computer and stored on
6-12 microfilm, magnetic tape, optical disk, or any other medium.
6-13 (b) The board of trustees may adopt rules and procedures
6-14 relating to the electronic filing of documents with the retirement
6-15 system. A document that is electronically filed in accordance with
6-16 those rules and procedures is considered to have been properly
6-17 filed with the retirement system.
6-18 SECTION 16. Subsection (d), Section 855.205, Government
6-19 Code, is amended to read as follows:
6-20 (d) On the basis of rates and tables adopted by the board,
6-21 the actuary shall:
6-22 (1) annually compute the normal contribution rate for
6-23 each participating municipality;
6-24 (2) annually compute the prior service contribution
6-25 rate for each participating municipality;
6-26 (3) compute the current interest rate in accordance
6-27 with Section 855.316(b) [855.316(c)];
6-28 (4) compute the supplemental death benefits rate and
6-29 the supplemental disability benefits rate for each participating
6-30 municipality; and
6-31 (5) [certify the amount of each annuity and benefit
6-32 granted by the board; and]
6-33 [(6)] make an annual valuation of the assets and
6-34 liabilities of the funds of the retirement system.
6-35 SECTION 17. Subsections (b) and (c), Section 855.306,
6-36 Government Code, are amended to read as follows:
6-37 (b) On December 31 of each year the retirement system shall
6-38 credit to each member's individual account interest as allowed by
6-39 this subtitle on the amount of accumulated contributions credited
6-40 to the member's account on January 1 of that year. On a person's
6-41 retirement under this subtitle on a date other than December 31,
6-42 the retirement system shall credit to that person's individual
6-43 account interest and supplemental interest, if any, at the rate
6-44 credited on members' accounts for the preceding year. The interest
6-45 must be:
6-46 (1) on the amount of accumulated contributions
6-47 credited to the member's account on January 1 of the year in which
6-48 retirement occurs; and
6-49 (2) prorated from January 1 of the year in which
6-50 retirement occurs to the effective date of retirement.
6-51 (c) The retirement system may not pay interest on money in a
6-52 person's individual account:
6-53 (1) for a part of a year except as provided by
6-54 Subsection (b); or
6-55 (2) after the person's membership has been terminated
6-56 in accordance with Section 852.104 because of absence from service.
6-57 SECTION 18. Section 855.311, Government Code, is amended by
6-58 adding Subsection (g) to read as follows:
6-59 (g) Distribution and payment to an annuitant under
6-60 Subsection (e) must be based on the ratio that the number of months
6-61 elapsing since the effective date of the person's retirement bears
6-62 to the number 12 if that person retired under this subtitle during
6-63 the year for which the distribution and payment is made.
6-64 SECTION 19. Section 855.315, Government Code, is amended by
6-65 adding Subsections (d) and (e) to read as follows:
6-66 (d) The retirement system shall make payments by electronic
6-67 funds transfer to annuitants whose first annuity payment under this
6-68 subtitle occurs after January 1, 2000. The retirement system may
6-69 use electronic funds transfers to make other payments.
7-1 (e) Notwithstanding any requirement to make a payment by
7-2 electronic funds transfer, the retirement system may make payment
7-3 by vouchers, checks, or warrants to an annuitant if making the
7-4 payment by electronic funds transfer would be impractical for the
7-5 retirement system or if the annuitant properly notifies the
7-6 retirement system that:
7-7 (1) receiving the payment by electronic funds transfer
7-8 would be impractical to the person;
7-9 (2) receiving the payment by electronic funds transfer
7-10 would be more costly to the person than receiving the payment by
7-11 check or warrant; or
7-12 (3) the person is unable to establish a qualifying
7-13 account at a financial institution to receive electronic funds
7-14 transfers.
7-15 SECTION 20. Subsection (g), Section 855.407, Government
7-16 Code, is amended to read as follows:
7-17 (g) A municipality that begins participation in the
7-18 retirement system on or after December 31, 1999, and any
7-19 municipality already participating in the retirement system on that
7-20 date whose [The] governing body elects [of a municipality may
7-21 elect] to have the municipality do so shall contribute to its
7-22 account in the municipality accumulation fund at the combined rate
7-23 of total compensation paid to its employees as the actuary
7-24 determines is necessary to fund all obligations chargeable to its
7-25 account in the fund within the municipality's amortization period,
7-26 regardless of other provisions of this subtitle.
7-27 SECTION 21. This Act takes effect December 31, 1999.
7-28 SECTION 22. The importance of this legislation and the
7-29 crowded condition of the calendars in both houses create an
7-30 emergency and an imperative public necessity that the
7-31 constitutional rule requiring bills to be read on three several
7-32 days in each house be suspended, and this rule is hereby suspended.
7-33 * * * * *