1-1 By: Armbrister, Barrientos, Bernsen S.B. No. 1128
1-2 (In the Senate - Filed March 10, 1999; March 11, 1999, read
1-3 first time and referred to Committee on State Affairs;
1-4 April 20, 1999, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 9, Nays 0; April 20, 1999,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 1128 By: Shapleigh
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to systems and programs administered by the Teacher
1-11 Retirement System of Texas.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Section 822.201, Government Code, is amended by
1-14 amending Subsection (b), as amended by Chapters 330 and 1035, Acts
1-15 of the 75th Legislature, Regular Session, 1997, and adding
1-16 Subsection (e) to read as follows:
1-17 (b) "Salary and wages" as used in Subsection (a) means:
1-18 (1) normal periodic payments of money for service the
1-19 right to which accrues on a regular basis in proportion to the
1-20 service performed;
1-21 (2) amounts by which the member's salary is reduced
1-22 under a salary reduction agreement authorized by Chapter 610;
1-23 (3) amounts that would otherwise qualify as salary and
1-24 wages under Subdivision (1) but are not received directly by the
1-25 member pursuant to a good faith, voluntary written salary reduction
1-26 agreement in order to finance payments to a deferred compensation
1-27 or tax sheltered annuity program specifically authorized by state
1-28 law or to finance benefit options under a cafeteria plan qualifying
1-29 under Section 125 of the Internal Revenue Code of 1986 (26 U.S.C.
1-30 Section 125), if:
1-31 (A) the program or benefit options are made
1-32 available to all employees of the employer; and
1-33 (B) the benefit options in the cafeteria plan
1-34 are limited to one or more options that provide deferred
1-35 compensation, group health and disability insurance, group term
1-36 life insurance, dependent care assistance programs, or group legal
1-37 services plans; [and]
1-38 (4) performance pay awarded to an employee by a school
1-39 district as part of a total compensation plan approved by the board
1-40 of trustees of the district and meeting the requirements of
1-41 Subsection (e); and[.]
1-42 (5) [(4)] the benefit replacement pay a person earns
1-43 under Subchapter H, Chapter 659, as added by Chapter 417, Acts of
1-44 the 74th Legislature, 1995, except as provided by Subsection (c).
1-45 (e) For purposes of Subsection (b)(4), a total compensation
1-46 plan must:
1-47 (1) describe all elements of compensation received by
1-48 all employees of the employer;
1-49 (2) provide at least one type of performance pay to
1-50 classroom teachers employed by the employer;
1-51 (3) identify each type of performance pay, the
1-52 performance criteria for each type of performance pay, and the
1-53 classes of employees eligible for each type of performance pay;
1-54 (4) contain sufficient information concerning the plan
1-55 to ascertain the amount of each qualifying employee's pay under the
1-56 plan;
1-57 (5) contain performance criteria for earning
1-58 performance pay that preclude the exercise of discretion for
1-59 awarding the pay on any basis other than an evaluation of employee
1-60 or group performance or availability of funding; and
1-61 (6) satisfy any other requirements adopted by the
1-62 retirement system.
1-63 SECTION 2. Subchapter A, Chapter 823, Government Code, is
1-64 amended by adding Section 823.006 to read as follows:
2-1 Sec. 823.006. PERMISSIVE SERVICE CREDIT RESTRICTIONS.
2-2 (a) In this section:
2-3 (1) "Nonqualified service" means service for which
2-4 permissive service credit is authorized by this subtitle, other
2-5 than:
2-6 (A) military service; and
2-7 (B) service for any agency or instrumentality of
2-8 this state, including a political subdivision of this state, or for
2-9 any public school supported by the United States or a state or
2-10 territory of the United States, if credit for the service would not
2-11 cause a person to receive a retirement benefit for the same service
2-12 from more than one retirement system or program.
2-13 (2) "Permissive service credit" means service credit:
2-14 (A) that is not membership credit authorized to
2-15 be reinstated;
2-16 (B) that is recognized under this subtitle for
2-17 purposes of computing a member's benefit under the retirement
2-18 system;
2-19 (C) for which the member has not received credit
2-20 with the retirement system; and
2-21 (D) that a member may receive only by making a
2-22 voluntary additional contribution in an amount determined as
2-23 provided by this subtitle that does not exceed the amount necessary
2-24 to fund the benefit attributable to the service credit.
2-25 (b) The purchase of permissive service credit by a person
2-26 who first becomes a member of the retirement system after August
2-27 31, 2000, is subject to the restrictions and conditions of
2-28 Subsection (d) in addition to all other requirements of this
2-29 subtitle applicable to the purchase.
2-30 (c) The purchase by any person of permissive service credit
2-31 that was first made available under the retirement system after
2-32 December 31, 1997, is subject to the restrictions and conditions of
2-33 Subsection (d) in addition to all other requirements of this
2-34 subtitle applicable to the purchase.
2-35 (d) Under a circumstance described by Subsection (b) or (c),
2-36 a member may not purchase more than five years of permissive
2-37 service credit for nonqualified service, and a member may not
2-38 purchase service credit for nonqualified service before the member
2-39 has at least five years of membership service credit.
2-40 SECTION 3. Subchapter C, Chapter 823, Government Code, is
2-41 amended by adding Section 823.203 to read as follows:
2-42 Sec. 823.203. MEMBERSHIP SERVICE FOR OPTIONAL RETIREMENT
2-43 PROGRAM. A member may not establish service credit in the
2-44 retirement system for any period when the member was participating
2-45 in the optional retirement program under Chapter 830.
2-46 SECTION 4. Subsections (b) and (f), Section 823.501,
2-47 Government Code, are amended to read as follows:
2-48 (b) A person eligible to reinstate service credit under this
2-49 section is one who is a [contributing] member of the retirement
2-50 system at the time the service is reinstated.
2-51 (f) A [contributing] member may have an account that was
2-52 terminated by absence from service reactivated by requesting the
2-53 reactivation in writing. The beneficiary of a decedent who was a
2-54 [contributing] member at the time of death may have an account that
2-55 was terminated by the decedent's absence from service reactivated
2-56 by requesting the reactivation in writing before the first payment
2-57 of a death benefit.
2-58 SECTION 5. Subsection (c), Section 824.101, Government Code,
2-59 is amended to read as follows:
2-60 (c) Only one person may be designated as beneficiary of an
2-61 optional retirement annuity under Section 824.204(c)(1), (c)(2), or
2-62 (c)(5), and a designation of beneficiary under any of those options
2-63 may not be made, changed, or revoked, except as provided by
2-64 Sections 824.1011, [and] 824.1012, and 824.1013, after the later of
2-65 the date on which the retirement system makes the first annuity
2-66 payment to the retiree or the date the first payment becomes due.
2-67 For purposes of this section, the term "makes payment" includes the
2-68 depositing in the mail of a payment warrant or the crediting of an
2-69 account with payment through electronic funds transfer.
3-1 SECTION 6. Subsection (a), Section 824.1011, Government
3-2 Code, is amended to read as follows:
3-3 (a) A retiree who is receiving a standard service or
3-4 disability retirement annuity under Section 824.203 or 824.304(b)
3-5 and who marries after the date of the person's retirement may
3-6 replace the annuity by selecting an optional retirement annuity
3-7 under Section 824.204(c)(1), (c)(2), or (c)(5) or under Section
3-8 824.308(c)(1), (c)(2), or (c)(5), as applicable, and designating
3-9 the person's spouse as beneficiary before the second [first]
3-10 anniversary of the marriage in the same manner as an annuity
3-11 selection and designation of beneficiary may be made before
3-12 retirement.
3-13 SECTION 7. Section 824.1012, Government Code, as added by
3-14 Chapter 1416, Acts of the 75th Legislature, Regular Session, 1997,
3-15 is redesignated as Section 824.1013 to read as follows:
3-16 Sec. 824.1013 [824.1012]. CHANGE OF BENEFICIARY AFTER
3-17 RETIREMENT. (a) A retiree receiving an optional retirement
3-18 annuity under Section 824.204(c)(1), (c)(2), or (c)(5) or Section
3-19 824.308(c)(1), (c)(2), or (c)(5) may change the designated
3-20 beneficiary as provided by this section for the benefits payable
3-21 after the retiree's death under those sections.
3-22 (b) If the beneficiary designated at the time of the
3-23 retiree's retirement is the spouse or former spouse of the retiree:
3-24 (1) the spouse or former spouse must give written,
3-25 notarized consent to the change; or
3-26 (2) a court with jurisdiction over the marriage must
3-27 have ordered the change.
3-28 (c) A beneficiary designated under this section is entitled
3-29 on the retiree's death to receive monthly payments of the
3-30 survivor's portion of the retiree's optional retirement annuity for
3-31 the shorter of:
3-32 (1) the remainder of the life expectancy of the
3-33 beneficiary designated as of the effective date of the retiree's
3-34 retirement; or
3-35 (2) the remainder of the new beneficiary's life.
3-36 (d) A retiree may not change a beneficiary under this
3-37 section after retirement if the retiree has previously changed or
3-38 designated after retirement a beneficiary for optional retirement
3-39 annuity payments under this subtitle.
3-40 SECTION 8. Subsections (a) and (e), Section 824.203,
3-41 Government Code, are amended to read as follows:
3-42 (a) Except as provided by Subsections (c), (d), and (e), the
3-43 standard service retirement annuity is an amount computed on the
3-44 basis of the member's average annual compensation for the three
3-45 years of service, whether or not consecutive, in which the member
3-46 received the highest annual compensation, times 2.2 [two] percent
3-47 for each year of service credit in the retirement system.
3-48 (e) The annual standard service retirement annuity for a
3-49 person who immediately before retirement holds a position as a
3-50 classroom teacher or full-time librarian, or the annual death
3-51 benefit annuity based on the service of a member who at the time of
3-52 death held a position as a classroom teacher or full-time
3-53 librarian, may not be less than an amount computed on the basis of
3-54 the minimum annual salary provided by the Education Code for a
3-55 classroom teacher or full-time librarian, multiplied by 2.2 [two]
3-56 percent for each year of service credit in the retirement system.
3-57 SECTION 9. Subchapter C, Chapter 824, Government Code, is
3-58 amended by adding Section 824.2045 to read as follows:
3-59 Sec. 824.2045. PARTIAL LUMP-SUM OPTION. (a) A member who
3-60 is eligible for an unreduced service retirement annuity and is not
3-61 participating in the deferred retirement option plan under
3-62 Subchapter I may select a standard service retirement annuity or an
3-63 optional service retirement annuity described by Section 824.204,
3-64 together with a partial lump-sum distribution.
3-65 (b) The amount of the lump-sum distribution under this
3-66 section may not exceed the sum of 36 months of a standard service
3-67 retirement annuity computed without regard to this section.
3-68 (c) The service retirement annuity selected by the member
3-69 shall be actuarially reduced to reflect the lump-sum option
4-1 selected by the member and shall be actuarially equivalent to a
4-2 standard or optional service retirement annuity, as applicable,
4-3 without the partial lump-sum distribution. The annuity and lump
4-4 sum shall be computed to result in no actuarial loss to the
4-5 retirement system.
4-6 (d) The retiring member may choose a lump sum equal to 12
4-7 months of a standard service retirement annuity and payable at the
4-8 same time that the first monthly payment of the annuity is paid, a
4-9 lump sum equal to 24 months of a standard annuity and payable in
4-10 one or two annual payments, or a lump sum equal to 36 months of a
4-11 standard annuity and payable in one, two, or three annual payments.
4-12 (e) The amount of the lump-sum distribution will be deducted
4-13 from any amounts otherwise payable under Section 824.503.
4-14 (f) The partial lump-sum option under this section may be
4-15 elected only once by a member and may not be elected by a retiree.
4-16 A member retiring under the proportionate retirement program under
4-17 Chapter 803 is not eligible for the partial lump-sum option.
4-18 (g) The board of trustees may adopt rules for the
4-19 implementation of this section.
4-20 SECTION 10. Section 824.502, Government Code, is amended to
4-21 read as follows:
4-22 Sec. 824.502. BENEFITS ON DEATH OF DISABILITY RETIREE. The
4-23 designated beneficiary of a disability retiree who retires before
4-24 September 1, 1992, who has not selected an optional annuity under
4-25 Section 824.308, and who dies while receiving a retirement benefit
4-26 may elect to receive, instead of survivor benefits provided by
4-27 Section 824.501, a benefit available under Section 824.402,
4-28 computed as if the decedent had been in service at the time of
4-29 death.
4-30 SECTION 11. Subsections (a) and (d), Section 824.602,
4-31 Government Code, are amended to read as follows:
4-32 (a) The retirement system may not, under Section 824.601,
4-33 withhold a monthly benefit payment if the retiree is employed in a
4-34 Texas public educational institution:
4-35 (1) as a substitute only with pay not more than the
4-36 daily rate of substitute pay established by the employer and, if
4-37 the retiree is a disability retiree, the employment has not
4-38 exceeded a total of 90 days in the school year;
4-39 (2) in a position, other than as a substitute, on no
4-40 more than a one-half time basis for the month;
4-41 (3) in one or more positions on as much as a full-time
4-42 basis, if[:]
4-43 [(A)] the work occurs in not more than six
4-44 months of a school year that begins after the retiree's effective
4-45 date of retirement;
4-46 [(B) the work occurs in no more than six months
4-47 of the school year; and]
4-48 [(C) the retiree executes on a form and within
4-49 any deadline prescribed by the retirement system a written election
4-50 to have this exception apply for the school year in determining
4-51 whether benefits are to be suspended for employment after
4-52 retirement;] or
4-53 (4) in a position, other than as a substitute, on no
4-54 more than a one-half time basis for no more than 90 days in the
4-55 school year, if the retiree is a disability retiree.
4-56 (d) A retiree to whom [who has elected to avoid loss of
4-57 monthly benefits in a school year pursuant to] Subsection (a)(3)
4-58 applies is not eligible during that school year for any other
4-59 exceptions to loss of benefits provided in this section. If a
4-60 retiree is employed under [elects] the exemption provided in
4-61 Subsection (a)(3) for a school year, the retirement system must
4-62 include any previous employment during the school year, including
4-63 any employment that relied upon the exemptions in Subsection (a)(1)
4-64 or (a)(2), in determining whether and when the retiree has exceeded
4-65 six months of employment in the school year.
4-66 SECTION 12. Subsection (a), Section 824.804, Government
4-67 Code, is amended to read as follows:
4-68 (a) On the effective date of a member's participation in the
4-69 plan, the retirement system shall make the transfers required by
5-1 Section 825.309 to the retired reserve account as if the member had
5-2 retired on that date. The retirement system shall transfer
5-3 monthly, during the period of the member's participation in the
5-4 plan, from the retired reserve account to an account for the member
5-5 in the deferred retirement option account an amount equal to 61
5-6 [79] percent of the amount the member would have received that
5-7 month under a standard service retirement annuity if the member had
5-8 retired under the multiplier currently in effect [on the effective
5-9 date of plan participation].
5-10 SECTION 13. Subsection (a), Section 825.103, Government
5-11 Code, is amended to read as follows:
5-12 (a) The board of trustees is the trustee of all assets of
5-13 the retirement system. In administering the retirement system
5-14 trust and its investments, the board of trustees may delegate
5-15 responsibility, discretion, and authority to employees, investment
5-16 managers, custodians, and other agencies and entities in the manner
5-17 that a prudent person would delegate under the circumstances. The
5-18 board of trustees shall act with prudence and in the exclusive best
5-19 interests of the members and beneficiaries of the retirement system
5-20 in deciding whether and how to delegate and in the selection and
5-21 supervision of those to whom it has delegated.
5-22 SECTION 14. Section 825.301, Government Code, is amended to
5-23 read as follows:
5-24 Sec. 825.301. INVESTMENT OF ASSETS. (a) The board of
5-25 trustees shall invest and reinvest assets of the retirement system
5-26 without distinction as to their source in accordance with Section
5-27 67, Article XVI, Texas Constitution. For purposes of the board's
5-28 investment authority, the term "securities" shall be construed
5-29 broadly and given its plain meaning to enable the board to fulfill
5-30 its fiduciary duties prudently and consider investment
5-31 opportunities, including collective investments, suitable for a
5-32 large, sophisticated, properly diversified fund and to exercise the
5-33 control or oversight the board considers prudent over those who
5-34 manage investments in which the retirement system has an interest.
5-35 Investment decisions are subject to the standard provided in the
5-36 Texas Trust Code by Section 113.056(a), Property Code.
5-37 (b) The board of trustees may contract with one or more
5-38 [private] professional investment managers to assist the board in
5-39 investing the assets of the retirement system. To be eligible for
5-40 appointment under this subsection, an investment manager must be an
5-41 investment manager registered under the Investment Advisers Act of
5-42 1940 (15 U.S.C. Section 80b-1 et seq.), a bank as defined by that
5-43 Act, or an insurance company qualified to perform investment
5-44 services under the laws of more than one state. An investment
5-45 manager appointed by the board may be authorized to invest or
5-46 reinvest, select, purchase, manage, retain, exchange, sell, or
5-47 otherwise acquire or dispose of investments or interests in
5-48 investments on behalf of the retirement system. The board shall
5-49 exercise reasonable care, skill, and caution in appointing
5-50 investment managers, establishing the scope and terms of the
5-51 delegation with due regard for the purposes of and laws governing
5-52 the retirement system, and periodically reviewing an investment
5-53 manager's compliance with the terms of the delegation. The board
5-54 shall adopt policies and procedures for monitoring the performance
5-55 of the board's investment managers. The board and an individual
5-56 member of the board or an employee of the retirement system are not
5-57 liable, personally or in a person's capacity as trustee or
5-58 employee, for the acts, omissions, or decisions of an investment
5-59 manager to whom fiduciary responsibilities have been properly
5-60 delegated in accordance with this subtitle.
5-61 (c) The board of trustees shall employ one or more
5-62 performance measurement services to evaluate and analyze the
5-63 investment results of those assets of the retirement system for
5-64 which reliable and appropriate measurement methodology and
5-65 procedures exist. Each service shall compare investment results
5-66 with the written investment objectives developed by the board[, and
5-67 shall also compare the investment of the assets being evaluated and
5-68 analyzed with the investment of other public funds].
5-69 (d) The board of trustees may invest assets of the
6-1 retirement system in obligations issued, assumed, or guaranteed by
6-2 the Inter-American Development Bank, the International Bank for
6-3 Reconstruction and Development (the World Bank), the African
6-4 Development Bank, the Asian Development Bank, and the International
6-5 Finance Corporation.
6-6 (e) The board of trustees shall develop written investment
6-7 objectives, strategies, policies, and guidelines concerning the
6-8 investment of the assets of the retirement system. In so doing,
6-9 the board may adopt a statement that provides the expected rate of
6-10 return on system assets generally, the expected rates of return and
6-11 acceptable levels of risk for each investment class in light of
6-12 prevailing circumstances, asset allocation goals, guidelines for
6-13 delegation of authority to retirement system employees and the
6-14 board's professional investment managers, advisors, and
6-15 consultants, information about the types of reports to be used to
6-16 evaluate investment performance [The objectives may address desired
6-17 rates of return, risks involved, investment time frames], and any
6-18 other relevant considerations. At least biennially the board shall
6-19 review any statement adopted under this subsection and modify or
6-20 reaffirm it.
6-21 (f) A professional investment manager appointed under
6-22 Subsection (b) shall acknowledge in writing that the investment
6-23 manager assumes fiduciary responsibilities to the retirement system
6-24 and its members and beneficiaries. An investment manager shall
6-25 perform its responsibilities to the system with the care, skill,
6-26 diligence, and caution under the prevailing circumstances that a
6-27 prudent person acting in the same capacity and familiar with such
6-28 matters would use in the conduct of an activity or enterprise of
6-29 the same character and with the same aims and in accordance with
6-30 the documents governing the delegation of responsibilities by the
6-31 board of trustees.
6-32 (g) A professional investment manager assuming fiduciary
6-33 responsibilities to the retirement system is considered to agree
6-34 that the laws of this state govern the performance of its
6-35 responsibilities to the system and to submit to the jurisdiction of
6-36 the courts of this state. Venue of an action involving a breach of
6-37 duty owed by an investment manager to the retirement system or its
6-38 members and beneficiaries is in Travis County.
6-39 (h) Selection by the retirement system of professionals and
6-40 other agents and consultants, including investment managers,
6-41 investment consultants, actuaries, accountants, and attorneys, to
6-42 provide services necessary for the performance of the fiduciary
6-43 duties of the board of trustees is exempt from all requirements of
6-44 Chapters 2155, 2156, and 2254 that would otherwise be applicable to
6-45 the retirement system.
6-46 SECTION 15. The heading of Section 825.303, Government Code,
6-47 is amended to read as follows:
6-48 Sec. 825.303. SECURITIES CUSTODY AND SECURITIES LENDING.
6-49 SECTION 16. Subsection (a), Section 825.303, Government
6-50 Code, is amended to read as follows:
6-51 (a) The retirement system may, in the exercise of its
6-52 constitutional discretion to manage the assets of the retirement
6-53 system, select one or more commercial banks, depository trust
6-54 companies, or other entities to serve as custodian or custodians of
6-55 the system's securities and to lend the securities under rules
6-56 adopted by the board of trustees and as required by this section.
6-57 The retirement system may select one or more commercial banks,
6-58 depository trust companies, or other entities to act independently
6-59 of the custodian and lend the securities under board rules and as
6-60 required by this section.
6-61 SECTION 17. Subsection (c), Section 825.405, Government
6-62 Code, is amended to read as follows:
6-63 (c) Monthly, employers shall:
6-64 (1) report to the retirement system in a form
6-65 prescribed by the system a certification of the total amount of
6-66 salary paid above the statutory minimum salary and the total amount
6-67 of employer contributions due under this section for the payroll
6-68 period; and
6-69 (2) retain information, as determined by the
7-1 retirement system, sufficient to allow administration of this
7-2 section [The employer's form showing deductions and certification
7-3 of earnings must provide the retirement system with information
7-4 sufficient to administer this section, as determined by the
7-5 system], including information for each employee showing the
7-6 applicable minimum salary as well as aggregate annual compensation.
7-7 SECTION 18. Subsection (c), Section 825.406, Government
7-8 Code, is amended to read as follows:
7-9 (c) Monthly, employers shall:
7-10 (1) report to the retirement system in a form
7-11 prescribed by the system a certification of the total amount of
7-12 salary paid from federal funds and private grants and the total
7-13 amounts provided by the funds and grants for state contributions
7-14 for the employees; and
7-15 (2) retain the following information:
7-16 (A) [(1)] the name of each employee paid in
7-17 whole or part from a grant;
7-18 (B) [(2)] the source of the grant;
7-19 (C) [(3)] the amount of the employee's salary
7-20 paid from the grant;
7-21 (D) [(4)] the amount of the money provided by
7-22 the grant for state contributions for the employee; and
7-23 (E) [(5)] any other information the retirement
7-24 system determines is necessary to enforce this section.
7-25 SECTION 19. Subsection (c), Section 825.407, Government
7-26 Code, is amended to read as follows:
7-27 (c) The designated disbursing officer of each general
7-28 academic teaching institution and the designated disbursing officer
7-29 of each medical and dental unit shall:
7-30 (1) submit to the retirement system, at a time and in
7-31 the manner prescribed by the retirement system, a monthly report
7-32 containing a certification of the total amount of salary paid from
7-33 noneducational and general funds and the total amount of employer
7-34 contributions due under this section for the payroll period; and
7-35 (2) maintain and retain the following information:
7-36 (A) [(1)] the name of each member employed by
7-37 the institution or unit who, for the most recent payroll period,
7-38 was paid wholly or partly from noneducational and general funds;
7-39 (B) [(2)] the amount of the employee's salary
7-40 for the most recent payroll period that was paid from
7-41 noneducational and general funds;
7-42 [(3) a certification of the total amount of employer
7-43 contributions due under this section for the payroll period;] and
7-44 (C) [(4)] any other information the retirement
7-45 system determines is necessary to administer this section.
7-46 SECTION 20. Subsection (a), Section 825.408, Government
7-47 Code, is amended to read as follows:
7-48 (a) An employing district that fails to remit, before the
7-49 11th day after the last day of a month, all member and employer
7-50 deposits and documentation of the deposits required by this
7-51 subchapter to be remitted by the district for the month shall pay
7-52 to the retirement system, in addition to the deposits, interest on
7-53 the unpaid or undocumented amounts at an annual rate compounded
7-54 monthly. The rate of interest is the rate established under
7-55 Section 825.313(b)(2), plus two percent. Interest required under
7-56 this section is creditable to the interest account.
7-57 SECTION 21. Section 825.515, Government Code, is amended to
7-58 read as follows:
7-59 Sec. 825.515. INFORMATION ABOUT MEMBER POSITIONS. (a) At
7-60 least annually, the [The] retirement system shall acquire and
7-61 maintain records identifying members and the types of positions
7-62 they hold [have held] as members[, the length of service in each
7-63 type of position, and whether service in each type of position is
7-64 or was as a full-time employee]. The type of position shall be
7-65 identified as Administrative/Professional, Teacher/Full-Time
7-66 Librarian, Support, or Bus Driver [retirement system shall
7-67 cooperate with the commissioner of education in maintaining
7-68 information about the employment status of members of the
7-69 retirement system].
8-1 (b) [Each school year, the retirement system shall provide
8-2 to the commissioner of education information, of a type and in a
8-3 form determined by the commissioner, that allows contributing
8-4 members of the retirement system to be identified in information
8-5 submitted to the commissioner by school districts under the
8-6 Education Code.]
8-7 [(c)] Information contained in records of the retirement
8-8 system maintained under this section is confidential within the
8-9 limits prescribed by Section 825.507.
8-10 SECTION 22. Subsections (a) and (b), Section 825.516,
8-11 Government Code, are amended to read as follows:
8-12 (a) A retiree who is receiving an annuity from the
8-13 retirement system may request the system to withhold from the
8-14 retiree's monthly annuity payment membership dues for a nonprofit
8-15 association of retired school employees in this state, if the
8-16 association is statewide and its membership includes at least five
8-17 percent of all retirees of the retirement system. The request for
8-18 withholding must be on a form provided by the retirement system.
8-19 (b) After the retirement system receives a request
8-20 authorized by this section, the system may [shall] make the
8-21 requested deductions until the earlier of:
8-22 (1) the date the annuity is terminated; or
8-23 (2) the first payment of the annuity after the date
8-24 the system receives a written request signed by the retiree
8-25 canceling the request for the withholding.
8-26 SECTION 23. Subsection (d), Section 16A, Article 3.50-4,
8-27 Insurance Code, is amended to read as follows:
8-28 (d) Monthly, employers shall:
8-29 (1) report to the trustee in a form prescribed by the
8-30 trustee a certification of the total amount of salary paid from
8-31 federal funds and private grants and the total amounts provided by
8-32 the funds and grants for state contributions for the employees; and
8-33 (2) maintain and retain the following information:
8-34 (A) [(1)] the name of each [active] employee
8-35 paid in whole or part from a grant;
8-36 (B) [(2)] the source of the grant;
8-37 (C) [(3)] the amount of the [active] employee's
8-38 salary paid from the grant;
8-39 (D) [(4)] the amount of the money provided by
8-40 the grant for state contributions for the [active] employee; and
8-41 (E) [(5)] any other information the trustee
8-42 determines is necessary to enforce this section.
8-43 SECTION 24. Subchapter E, Chapter 3, Insurance Code, is
8-44 amended by adding Article 3.50-4A to read as follows:
8-45 Art. 3.50-4A. INSURANCE FOR SCHOOL DISTRICT EMPLOYEES AND
8-46 RETIREES
8-47 Sec. 1. DEFINITIONS. In this article:
8-48 (1) "Employee" means a person who is a participating
8-49 member of the Teacher Retirement System of Texas and is not
8-50 participating in a group insurance program under the Texas
8-51 Employees Uniform Group Insurance Benefits Act (Article 3.50-2,
8-52 Vernon's Texas Insurance Code) or the Texas State College and
8-53 University Employees Uniform Insurance Benefits Act (Article
8-54 3.50-3, Vernon's Texas Insurance Code).
8-55 (2) "Retiree" means a person who:
8-56 (A) has retired under the Teacher Retirement
8-57 System of Texas with at least 10 years of credit for service in
8-58 public schools of this state or has retired under that system for
8-59 disability and is entitled to receive an annuity from the system
8-60 based on the person's service; and
8-61 (B) is not eligible to participate in the group
8-62 insurance program provided under the Texas Employees Uniform Group
8-63 Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
8-64 Code) or the Texas State College and University Employees Uniform
8-65 Insurance Benefits Act (Article 3.50-3, Vernon's Texas Insurance
8-66 Code).
8-67 (3) "Trustee" means the Teacher Retirement System of
8-68 Texas.
8-69 Sec. 2. INSURANCE COVERAGE. (a) The trustee shall contract
9-1 with one or more carriers authorized to provide life insurance in
9-2 this state to offer employees and retirees optional permanent life
9-3 insurance coverage.
9-4 (b) The trustee shall contract with one or more carriers
9-5 authorized to provide long-term health care insurance in this state
9-6 to offer employees and retirees optional long-term health care
9-7 insurance coverage. The long-term care insurance coverage shall
9-8 include home, community, and institutional care.
9-9 (c) The trustee shall contract with one or more carriers
9-10 authorized to provide disability insurance in this state to offer
9-11 employees optional insurance against short-term or long-term loss
9-12 of salary because of disability.
9-13 (d) A contract entered into under this section is subject to
9-14 competitive bidding.
9-15 (e) Insurance coverage provided under this section shall be
9-16 made available periodically during open enrollment periods
9-17 determined by the trustee.
9-18 Sec. 3. ADMINISTRATION. (a) The trustee shall adopt rules
9-19 for the selection of contractors under this article. The rules
9-20 must require the contractors to administer enrollment, adjudication
9-21 of claims, and coordination of services under the insurance
9-22 coverages and require the contractors to account for premiums
9-23 collected and disbursed under the coverages.
9-24 (b) The trustee may adopt other rules necessary to
9-25 administer the program provided under this article.
9-26 Sec. 4. PARTICIPATION IN COVERAGE. (a) The trustee shall
9-27 offer the coverages provided under this article to employees
9-28 through their employers and to retirees through the trustee's
9-29 administration of the retirement system.
9-30 (b) The full cost of premiums in a plan of insurance
9-31 coverage provided under this article is the responsibility of the
9-32 enrollees.
9-33 (c) An employee participating in a plan of insurance
9-34 coverage provided under this article shall pay premiums by payroll
9-35 deduction remitted by the employee's employer at the times and in
9-36 the manner provided by the trustee.
9-37 (d) A retiree participating in a plan of insurance coverage
9-38 provided under this article shall pay premiums by deduction from
9-39 the retiree's monthly retirement annuity.
9-40 Sec. 5. SCHOOL DISTRICT EMPLOYEES AND RETIREES OPTIONAL
9-41 INSURANCE TRUST FUND. (a) The school district employees and
9-42 retirees optional insurance trust fund is created as a trust fund
9-43 outside the state treasury to be held by the Texas Treasury
9-44 Safekeeping Trust Company and administered by the trustee on behalf
9-45 of the participants in the plans of insurance coverage provided
9-46 under this article.
9-47 (b) Premiums paid by enrollees, amounts recovered under
9-48 contracts for the implementation of the program provided by this
9-49 article, and investment and depository income of the fund shall be
9-50 credited to the fund.
9-51 (c) Money in the fund may be used only for the purpose of
9-52 providing the program of insurance coverage provided under this
9-53 article, including the expenses of administering the program.
9-54 (d) The trustee may invest the fund in the manner provided
9-55 by Section 67(a)(3), Article XVI, Texas Constitution.
9-56 SECTION 25. Subtitle A, Title 6, Government Code, is amended
9-57 by adding Chapter 618 to read as follows:
9-58 CHAPTER 618. ANNUITIES OR INVESTMENTS FOR
9-59 EDUCATIONAL EMPLOYEES
9-60 Sec. 618.001. DEFINITION. In this chapter "retirement
9-61 system" means the Teacher Retirement System of Texas.
9-62 Sec. 618.002. ESTABLISHMENT OF PLAN. The board of trustees
9-63 of the retirement system is the trustee of a plan it shall
9-64 establish under this chapter to offer contributing members of the
9-65 retirement system the opportunity to purchase annuities or other
9-66 investments authorized by Section 403(b) of the Internal Revenue
9-67 Code of 1986.
9-68 Sec. 618.003. ADMINISTRATION OF PLAN. The board of trustees
9-69 of the retirement system shall contract with one or more persons to
10-1 administer the plan.
10-2 Sec. 618.004. SELECTION OF VENDORS AND PRODUCTS. (a) The
10-3 board of trustees of the retirement system shall adopt rules for
10-4 the selection of companies to provide investment products under the
10-5 plan. The rules must provide for the selection of vendors of a
10-6 wide variety of investment products authorized under Section 403(b)
10-7 of the Internal Revenue Code of 1986. The board shall select
10-8 vendors for the plan under the process it adopts by rule.
10-9 (b) A vendor or investment product having an ownership or
10-10 other financial interest in a contractor selected by the retirement
10-11 system to administer the plan established under this chapter is not
10-12 qualified to be selected as a vendor or investment product under
10-13 the plan.
10-14 (c) The board of trustees shall select vendors or investment
10-15 products based on the quality of investment performance, proven
10-16 ability to manage institutional assets, minimum net worth
10-17 requirements, fee structure, compliance with applicable federal and
10-18 state laws, and other criteria established by the board. The board
10-19 of trustees shall determine the minimum and maximum number of
10-20 vendors and investment products that may be offered under the plan
10-21 at any particular time.
10-22 Sec. 618.005. ELIGIBILITY AND ELECTION TO PARTICIPATE.
10-23 (a) A contributing member of the retirement system is eligible to
10-24 participate in the plan established under this chapter.
10-25 Participation is in addition to participation as a contributing
10-26 member of the retirement system.
10-27 (b) A person eligible to participate in the plan may elect
10-28 to participate on a form prescribed by and filed with the
10-29 retirement system. A participant must execute a salary reduction
10-30 agreement under which contributions for the purchase of investment
10-31 products under the plan are deducted from the participant's salary.
10-32 Sec. 618.006. RULES. The retirement system may adopt other
10-33 rules for the administration of the plan and this chapter.
10-34 SECTION 26. Subsections (c) and (d), Section 22.004,
10-35 Education Code, are amended to read as follows:
10-36 (c) Each district shall report the district's compliance
10-37 with this subsection to the executive director of the Teacher
10-38 Retirement System of Texas not later than March [November] 1 of
10-39 each even-numbered year in the manner required by the board of
10-40 trustees of the Teacher Retirement System of Texas. The report
10-41 must be based on the district group health coverage plan in effect
10-42 during the preceding plan year [on November 1] and must include:
10-43 (1) appropriate documentation of:
10-44 (A) the district's contract for group health
10-45 coverage with a provider licensed to do business in this state by
10-46 the Texas Department of Insurance or a risk pool authorized under
10-47 Chapter 172, Local Government Code; or
10-48 (B) a resolution of the board of trustees of the
10-49 district authorizing a self-insurance plan for district employees
10-50 and of the district's review of district ability to cover the
10-51 liability assumed;
10-52 (2) the schedule of benefits;
10-53 (3) the premium rate sheet, including the amount paid
10-54 by the district and employee;
10-55 (4) the number of employees covered by each health
10-56 coverage plan offered by the district; and
10-57 (5) any other information considered appropriate by
10-58 the executive director of the Teacher Retirement System of Texas.
10-59 (d) Based on the criteria prescribed by Subsection (a), the
10-60 executive director of the Teacher Retirement System of Texas shall
10-61 certify whether a district's coverage is comparable to the basic
10-62 health coverage provided under the Texas Employees Uniform Group
10-63 Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
10-64 Code). If the executive director of the Teacher Retirement System
10-65 of Texas determines that the group health coverage offered by a
10-66 district is not comparable, the executive director shall report
10-67 that information to the district and to the Legislative Budget
10-68 Board. The executive director shall submit a report to the
10-69 legislature not later than September [January] 1 of each
11-1 even-numbered [odd-numbered] year describing the status of each
11-2 district's group health coverage program based on the information
11-3 contained in the report required by Subsection (c) and the
11-4 certification required by this subsection.
11-5 SECTION 27. (a) Monthly payments of a death or retirement
11-6 benefit annuity by the Teacher Retirement System of Texas are
11-7 increased beginning with the payment due at the end of September
11-8 1999.
11-9 (b) The increase does not apply to payments under Subsection
11-10 (a), Section 824.304, Section 824.404, or Section 824.501,
11-11 Government Code.
11-12 (c) Except as provided by Subsection (d) of this section,
11-13 the amount of the monthly increase is computed by multiplying the
11-14 previous monthly benefit by a percentage determined in accordance
11-15 with the following table:
11-16 LATEST RETIREMENT DATE OR,
11-17 IF APPLICABLE, DATE OF DEATH INCREASE
11-18 Before September 1, 1973 5%
11-19 On or after September 1, 1973, but before September 1, 1974 6%
11-20 On or after September 1, 1974, but before September 1, 1979 5%
11-21 On or after September 1, 1979, but before September 1, 1981 6%
11-22 On or after September 1, 1981, but before September 1, 1982 7%
11-23 On or after September 1, 1982, but before September 1, 1983 6%
11-24 On or after September 1, 1983, but before September 1, 1990 7%
11-25 On or after September 1, 1990, but before September 1, 1991 6%
11-26 On or after September 1, 1991, but before September 1, 1992 7%
11-27 On or after September 1, 1992, but before September 1, 1995 6%
11-28 On or after September 1, 1995, but before September 1, 1997 5%
11-29 On or after September 1, 1997, but before September 1, 1998 2%
11-30 (d) After making the computations required by Subsection (c)
11-31 of this section, the Teacher Retirement System of Texas shall
11-32 increase each annuity payable by the system on September 1, 1999,
11-33 other than an annuity under Subsection (a), Section 824.304,
11-34 Section 824.404, or Section 824.501, Government Code, by 10
11-35 percent, which is a benefit equivalent to the benefit provided by
11-36 using a 2.2 percent multiplier for computing annuities.
11-37 SECTION 28. (a) Notwithstanding Section 824.1011,
11-38 Government Code, as amended by this Act, a person who is receiving
11-39 a standard service or disability retirement annuity under Section
11-40 824.203 or Subsection (b), Section 824.304, Government Code, on the
11-41 effective date of this Act and who married after retirement but
11-42 before that date may, before September 1, 2000, replace the annuity
11-43 by selecting an optional annuity and designating the person's
11-44 spouse as beneficiary as if the person had married after the
11-45 effective date of this Act.
11-46 (b) Notwithstanding Section 824.1011, Government Code, as
11-47 amended by this Act, a person who retired before September 1, 1992,
11-48 and is receiving a standard disability retirement annuity under
11-49 Subsection (b), Section 824.304, Government Code, on the effective
11-50 date of this Act may before September 1, 2001, replace the annuity
11-51 by selecting an optional annuity described by Section 824.308,
11-52 Government Code. An optional annuity selected under this
11-53 subsection shall be actuarially reduced according to the ages of
11-54 the retiree and the designated beneficiary at the time the annuity
11-55 is selected.
11-56 SECTION 29. This Act takes effect September 1, 1999.
11-57 SECTION 30. The importance of this legislation and the
11-58 crowded condition of the calendars in both houses create an
11-59 emergency and an imperative public necessity that the
11-60 constitutional rule requiring bills to be read on three several
11-61 days in each house be suspended, and this rule is hereby suspended.
11-62 * * * * *