SRC-JEC S.B. 669 77(R)   BILL ANALYSIS


Senate Research Center   S.B. 669
77R1440 GJH-DBy: Gallegos
Intergovernmental Relations
3/5/2001
As Filed


DIGEST AND PURPOSE 

Currently, the Houston Municipal Employees Pension System has approximately
20,000 active and retired participants.  As proposed, S.B. 669 provides
benefit improvements for members, retirees, and survivors by increasing the
benefit percentage for certain groups; increasing the maximum benefit
accrual percentage; increasing the annual cost of living adjustment;
allowing reinstatement of service covered by a lump-sum payment; and
permitting retired classified employees working in municipal positions to
purchase credited service for otherwise ineligible service prior to
September 1, 1999.  It also makes certain administrative changes to
lengthen periods in which to file benefit claims. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency.  

SECTION BY SECTION ANALYSIS

SECTION 1.  DEFINITIONS.  Defines "authorized absence," "average monthly
salary," "benefit accrual rate," "city," "credited service," "deferred
participant," "dependent child," "disability," "effective retirement date,"
"eligible survivor," "employee," "marriage," "member," "military service,"
"pension," "pension board," "pension fund," "pension system," "predecessor
system," "previous service," "prior service," "retiree," "salary,"
"separation from service," "service," "surviving spouse," and "trustee." 

SECTION 2.  PENSION BOARD.  (a)  Requires the pension board of the
predecessor system to continue to administer, manage, and operate the
pension system, including directing investments and overseeing the fund's
assets. 

(b)  Requires the pension system to operate for the benefit of the
employees of a city and the pension system.  Provides that the pension
system operates regardless of whether the city's population falls below the
population required for the city.  Provides that the pension board is not
subject to Title 9 (Trusts), Property Code. 

(c)  Provides that the pension board consists of 11 trustees and sets forth
the composition of the board. 

(d)-(k)  Provides for the election or appointment of the pension board
trustees.  Provides that no more than two of the employee trustees may be
employees of the same department. Establishes trustee terms and term
limits.  Provides for the filling of a board vacancy caused by a trustee's
death, resignation, or removal.  Requires employee trustees and retiree
trustees to continue to serve after their terms have expired until a
successor is qualified.  Prohibits appointed trustees from continuing to
serve after their terms have expired.  Provides that if an eligible
candidate for an elected trustee position on the pension board is unopposed
for an election, the election is prohibited from being held for that
position, and requires the pension board to certify the candidate as
elected to the pension board. 

 (l)  Requires each trustee, at the first pension board meeting following
the trustee's most recent election or appointment, to take a certain oath
of office.   

(m)  Provides that a trustee serves without bond and is prohibited from
receiving compensation for service on the pension board.  Authorizes the
pension board, by resolution, to adopt a policy for removal of a trustee. 

(n)  Provides that the trustee who is the city treasurer or a person
performing the duties city of treasurer serves as the treasurer of the
pension fund under penalty of that person's official bond and oath of
office.  Requires that person's official bond to the city tocover the
person's position as treasurer of the pension fund, including sureties and
liabilities. 

(o)  Requires the pension board to receive, manage, and disburse the
pension fund as provided by this Act and rules adopted by the pension
board. 

(p)  Requires the pension board to elect from the elected trustees a chair,
vice chair, and secretary in each odd-numbered year. 

(q)  Requires the pension board to hold regular monthly meetings, and
provides for a special pension board meeting. 

(r)  Requires the city to allow city employees who are trustees to promptly
attend pension board and committee meetings, and to attend any other event
regarding proposed amendments to this Act if attendance is consistent with
a trustee's duty to the pension board. 

 (s)  Requires adequate notice to be given to all trustees as to any
proposed meeting. 

(t)  Entitles each trustee to one vote on the pension board.  Provides that
a majority is needed for a decision.  Provides that a majority is a quorum.
Prohibits a trustee who is a member from voting on any issue relating
specifically to that trustee. 

(u)  Requires the city to provide information to the pension board about
employees as reasonably required by the pension board to administer the
fund and provide benefits properly. 

(v)  Authorizes the pension board to purchase an insurance policy providing
for reimbursement of a trustee, officer, or employee of the pension board
for liability imposed for damages caused by an alleged act, error, or
omission committed in the performance of the person's duty with the pension
board.  Prohibits a policy purchased under this subsection from providing
reimbursement for damages caused by the individual's personal dishonesty,
fraudulent breach of trust, lack of good faith, intentional fraud or
deception, or intentional failure to act prudently. Requires the cost of
insurance coverage purchased under this subsection to be paid from money in
the pension fund. 

(w)  Authorizes the pension board, if the insurance described in Subsection
(v) of this section is not in effect, to indemnify a trustee, officer, or
employee of the pension board for the same reasons for which an insurance
policy is authorized.  Prohibits the extension of indemnity in the same
cases as are prohibited in an insurance policy.  Requires a determination
of indemnification to be made by a majority vote of the pension board.
Prohibits a trustee from voting when the proposed indemnification is of
that trustee.  In the event the vote of the pension board results in a tie,
requires that the indemnification be approved.  Authorizes the pension
board to adopt a policy establishing a method for presentation, approval,
and payment of claims for indemnification.  Extends indemnification
approved under this subsection to acts, errors, and omissions of trustees,
officers, or employees of the predecessor system as long as the alleged
act, error, or omission occurs after July 1, 1989. 

 (x)  Requires the pension board to manage the pension fund under this Act
and under the Internal Revenue Code of 1986, as amended, and sets forth
certain authorizations regarding administration and records of the pension
fund. 

(y)  Makes the determination of any fact by the pension board and the
pension board's interpretation of this Act final and binding on any
interested party, including members, deferred participants, retirees,
eligible survivors, beneficiaries, and the city. 

(z)  Requires the pension board to determine the prior service to be
credited to each member of the pension system based on certain information. 

(aa)  Requires the pension board to determine each member's credited
service based on certain records. 

 (bb)  Authorizes the trustees and the executive director to rely on
certain information. 

(cc)  Provides that the trustees, executive director, and employees of the
pension system are fully protected and free of liability for any action
taken or suffered by them in good faith in reliance on the actuary,
accountant, treasurer, or counsel, and that the action is conclusively
binding on all employees, members, and certain other persons. 

(dd)  Provides that a gathering of any number of trustees to investigate,
research, or review prospective or current investments, without formal
action by the trustees, is not a deliberation or meeting under Chapter 551
(Open Meetings), Government Code, and is not required to be open to the
public. 

SECTION 3.  ADDITIONAL POWERS OF PENSION BOARD.  (a)  Authorizes the
pension board, if it determines that there is a surplus of funds in an
amount exceeding the current obligations of the pension fund, to invest the
surplus in the manner provided by Chapter 802 (Administrative
Requirements), Government Code. 

(b)  Authorizes the pension board to contract with a person to perform any
investment, administrative, legal, medical, accounting, clerical, or other
service the pension board considers appropriate, including certain
professionals. 

(c)  Authorizes a fee for a service or person under Subsection (b) of this
section to be paid from the pension fund. 

(d)  Authorizes the pension board to hire employees whose positions and
salaries are required to be set by the pension board. 

(e)  Provides that the executive director hired by the pension board is the
plan administrator. 

(f)  Requires the pension board to compensate from the pension fund the
persons employed by and performing services for the board.  Authorizes the
pension board to provide these employees other benefits it considers
proper.  Provides that a person employed under Subsection (d) or (e) of
this section who has service credits with the pension system at the time of
the person's employment by the pension board retains the person's status in
the pension system.  Provides that a person employed by the pension system
with no service credits is a group A member.  Requires the pension board to
adopt a detailed annual budget detailing its proposed administrative
expenditures under this subsection for the next fiscal year. 

(g)  Authorizes the pension board to institute legal action in the name of
the pension board on behalf of the pension system. 

 (h)  Authorizes the pension board to offset amounts received wrongly or
erroneously by any member of the pension system from future pension or
benefit payments payable to the person or the person's beneficiaries. 

(i)  Requires the city attorney, upon written request from the chair, to
represent the pension board or pension fund in any legal matter.  Prohibits
the city attorney from receiving compensation for legal services.
Authorizes the pension board to employ legal counsel instead of or in
addition to the city attorney and to pay reasonable compensation from the
pension fund. 

(j)  Authorizes the pension board to obtain from any participant in the
system information it considers necessary for the proper administration of
the pension system.  Authorizes the pension board to require a participant
or other entity to furnish information it requires for the determination of
benefits under this Act.  On noncooperation, authorizes the pension board
to withhold payment of the pension or other benefits until the pension
board receives the information. 

(k)  Authorizes the pension board, upon majority vote, to allocate among
the trustees the responsibilities of the pension board under this Act and
to designate another person who is not a trustee to carry out the
responsibilities of the pension board under this Act. 

(l)  Authorizes the pension board by resolution to make the implementation
of a provision of this Act contingent on receipt of a favorable private
letter ruling or favorable determination letter from the Internal Revenue
Service if the pension board determines that the action is in the best
interest of the pension system. 

(m)  Establishes the intent that this Act  provide that the pension
system's benefit plan be considered a qualified plan under Section 401(a),
Internal Revenue Code of 1986, as amended.  Authorizes the pension board to
adopt rules that qualify the plan to the extent necessary for the pension
system to be a qualified plan.  Provides that rules adopted by the pension
board under this subsection are considered a part of the plan.  Requires
the pension system's benefit plan, in determining qualification status
under Section 401(a), Internal Revenue Code of 1986, as amended, to be
considered the primary retirement plan for members of the pension system. 

SECTION 4.  INELIGIBLE INDIVIDUALS.  Sets forth certain employees of the
city or of the pension system who are not eligible to become members of the
pension system, notwithstanding any other provision of this Act. 

SECTION 5.  INDIVIDUALS ELIGIBLE FOR MEMBERSHIP.  Provides that individuals
described in this section are eligible for membership under this Act.  Sets
forth membership provisions and criteria for members of groups A, B, and C.
Provides and sets requirements and conditions for movement between
membership groups.   

SECTION 6.  GROUP C MEMBERSHIP, SERVICE REQUIREMENTS, AND BENEFITS.
Provides that a group C member is subject to the provisions that apply to
group A members under this Act, except as otherwise provided by this
section.  Defines "credited service," "effective date of participation in
group C," "executive official," and "group C."  Makes provisions,
requirements, and conditions for group C membership. 

SECTION 7.  SERVICE; CREDITED SERVICE.  (a)  Prohibits duplication of
service or credited service in group A, B, or C of the pension system or in
the pension system and any other defined benefit pension plan to which the
city contributes. 

 (b)  Sets dates on which a member's service begins and terminates.

 (c)  Makes provisions for a group A member to pay into the pension fund
and obtain credit for city service. 

(d)  Makes provisions for a member to establish service described by
Subsection (c) of this section that occurred before September 1, 1999. 

(e)  Makes provisions for a member to establish service described by
Subsection (c) of this section that occurred on or after September 1, 1999. 

(f)  Requires the member to pay interest in addition to those sums paid
under Subsection (d) or (e) of this section.   

(g)  Makes provisions for a group B member who separates from service
before completing five years of credited service. 

(h)  Makes provisions for a group B member who was a group A member to
purchase the service credit in group B. 

SECTION 8.  CONTRIBUTIONS.  Requires monthly contributions from group A
members. Requires the employer to make pickup contributions when
appropriate.  Requires the city to make periodic payments into the pension
fund at a certain rate. 

SECTION 9.  CONTRIBUTION REFUNDS.  Provides that employment termination
before five years of service results in ineligibility to receive a pension.
Requires the pension system to refund to the terminated member the amount
paid by the member.  Requires the refund to be paid to the beneficiary if
the member dies and Section 14 of this Act does not apply. 

SECTION 10.  NORMAL RETIREMENT PENSION.  Provides that for purposes of this
section, a pension under this section is referred to as a normal retirement
pension.  Makes provisions for eligibility for a normal retirement pension
for members of groups A, B, and C.  Provides a formula to determine the
amount of the monthly normal retirement pension to an eligible member.
Prohibits the total normal retirement pension of a retired member of group
A, B, or C from exceeding 90 percent of the member's average monthly
salary.  Provides for an annual increase of pension and survivor benefits
for future payments only.  Provides that a member receiving a normal
retirement pension is considered to have resigned and will be removed from
the full-time employment rolls. 

SECTION 11.  GROUP B RETIREMENT OPTIONS.  Provides retirement options for
members of group B.  Makes provisions for a former group B member who dies
after terminating employment but before attaining the required age to begin
receiving benefits. 

SECTION 12.  DEFERRED RETIREMENT OPTION PLAN.  (a)  Defines "DROP," "DROP
account," "DROP benefit," "DROP election date," "DROP entry date," and
"DROP participant."   

(b)  Authorizes an eligible member to elect to participate in the deferred
retirement option plan (DROP).  Provides that such election is irrevocable
except as provided in this section.   

(c)  Sets forth limits of eligibility to participate in DROP.  Prohibits a
participant in DROP from changing membership from one group to another,
converting service from one group to another, purchasing service credit, or
making a claim to purchase military service. 

(d)  Provides that service and benefits cease to accrue on the day
preceding the member's DROP entry date.  Sets the period of a member's DROP
participation.  Provides for certain amounts to be credited to the DROP
participant's DROP account. 

(e)  Sets restrictions on the monthly amount credited under Subsection (d).
Provides for  supplemental  payments to be credited to the DROP accounts. 

 (f)  Establishes the period for credits to a DROP participant's DROP
account. 

(g)  Provides for a lump-sum payment to a DROP participant who terminates
employment. 

(h)  Provides for distribution of a DROP account balance if a DROP
participant dies before the full distribution of the balance. 

 (i)  Makes a DROP participant ineligible for disability benefits provided
by this Act. 

 (j)  Makes exceptions to the irrevocability of an election to participate
in the DROP. 

 (k)  Makes provisions for the revocation of a DROP election.

(l)  Under board rule, authorizes the beneficiary of a deceased member to
make the DROP election and to receive the DROP distribution in a lump sum.
Sets forth limits on the election by a beneficiary.  Makes an election
under this subsection irrevocable. 

 (m)  Provides for action in the case of an unanticipated actuarial cost.

(n)  Makes a former DROP participant who is rehired by the city or pension
system following termination of employment ineligible to participate in the
DROP. 

(o)  Sets forth specific requirements regarding a DROP participant's
retirement pension on termination of employment, the member's credited
service, the member's benefits, and cost-ofliving adjustments. 

(p)  Provides a formula to compute the survivor benefit for the survivor of
a deceased DROP participant if a DROP election is not revoked under
Subsection (j) of this section.  Sets forth eligibility guidelines for
receiving enhanced survivor benefits. 

(q)  Authorizes the pension board to adopt rules for the implementation and
operation of the DROP, including rules regarding the payment of DROP
benefits. 

SECTION 13.  DISABILITY PENSIONS.  (a)  Makes a member with five or more
years of credited service and who becomes disabled eligible, regardless of
age, for an ordinary disability retirement and requires that member to
receive a monthly disability pension computed in a certain manner. 

(b)  Makes a member who is disabled under certain circumstances eligible
for a service disability retirement, with the monthly pension to be
computed in a certain manner. 

(c)  Requires that a group A member, in addition to the monthly disability
pension under Subsection (b), receive a certain other payment to be
computed in a certain manner. 

(d)  Limits a disability pension under this section to a member who is
unable to perform work or services as an employee due to the disability.
Provides that a member who is granted a disability pension is considered to
have resigned. 

(e)  Requires certain recipients of benefits under this Act to file an
annual report of employment activities and earnings with the pension board.
Requires the pension board to establish the form and timing of the report.
Authorizes the pension board to reduce the amount of the pension if the
combination of pension and earnings exceeds a certain amount.  Provides
that after a certain date or age a disability pension recipient is not
required to submit the annual affidavit of employment and earnings. 
 
(f)  Prohibits a member from receiving a disability pension and a deferred
or normal retirement pension at the same time.  Makes provisions regarding
a member whose disability ceases to exist but who does not return to work
for the city. 

(g)  Requires a retired member receiving disability and a person receiving
survivor benefits as a disabled dependent child under this Act to submit to
an examination the pension board requires. Makes those recipients subject
at all times to reexamination by the pension board.  Upon refusal to submit
to examination or the regained ability to perform the usual and customary
duties of the employment, authorizes, in the case of refusal, and requires,
in the case of recovery of ability, the pension board to suspend or
discontinue payments.  

(h)  Requires the pension board, in determining whether the benefits shall
be continued, increased, decreased, or discontinued, to consider the result
of an examination, physician report, or report of employment activities and
earnings.  Authorizes the pension board to reduce, suspend, or discontinue
benefits to a recipient who fails to appear for an examination, fails to
file a report, or files a false report. 

 (i)  Sets forth criteria for application for a disability pension.

SECTION 14.  SURVIVING SPOUSE AND DEPENDENT CHILD MONTHLY ALLOWANCE.  Sets
forth conditions under which the pension board is required to order
survivor benefits to be paid in the form of  monthly allowance.  Sets forth
eligibility criteria for certain survivor benefits.  Makes benefits for a
dependent child payable to the guardian of the child.  Authorizes the
pension board to approve benefit payment to a child who is at least 18
years of age, rather than the child's guardian. Defines "guardian."  Makes
provisions for the case of the death of a retiree with no eligible
survivor. Sets forth dates on which a survivor benefit begins and ceases to
be payable to an eligible survivor. 

SECTION 15.  ANNUITY INCREASE.  Authorizes the pension board to
additionally increase annuities payable under this Act by a certain amount.
Authorizes the pension board to distribute a supplemental payment to
certain people.  Makes provisions for the supplemental payment to be
credited to DROP participants.  Prohibits a person from receiving more than
one supplemental payment as a result of the person's status as a retiree
and eligible survivor or a DROP participant and eligible survivor. 

SECTION 16.  LUMP-SUM BENEFIT PAYMENT.  Authorizes the pension board to pay
to a certain participant a lump-sum payment with restrictions.  Sets forth
requirements regarding the lumpsum benefit payment. 

SECTION 17.  TERMINATION OF EMPLOYMENT; DEATH; REEMPLOYMENT.  Makes
provisions regarding: (a)  a member who terminates employment involuntarily
due to a reduction in work force;  

(b)  a member who leaves employment voluntarily before becoming eligible
for a normal retirement or disability pension;  

 (c)  a member whose employment is terminated for a reason other than
death;  

 (d)  a member's who dies while still employed; and 

(e)  a member who makes a certain election and who dies before reaching the
age of eligibility for pension.   

(f)  Provides that this Act does not change the status of any former member
of the predecessor system whose services with the city or the pension
system were terminated.  Makes provisions for refunds under this section.   
 
(g) and (h)  Make provisions for a deferred participant who is reemployed
by the city or pension system and for a case in which that participant
accrues not more than two years of service after reemployment. 

(i)  Establishes a method of computing the disability pension or survivor
benefit under Subsection (h)(3) of this section. 

(j)  Makes provisions for a case in which a certain member accrues more
than two years of service after reemployment. 

(k)  Provides that if a retiree is reemployed by the city or pension system
and becomes a member, the retiree's pension under this Act ceases on the
day before the date the retiree is reemployed.  Makes provisions for the
suspension of the payment and for subsequent separation.  Requires the
reemployed retiree, after receiving any pension during the period of
reemployment, to return all of the pension received during that period to
the pension system not later than a certain date.  Establishes penalties
for a non-timely return of the pension. 

(l)  Provides that if a member meets certain conditions, the optional
annuity election, including any designation of an eligible designated
survivor, governs the payment of any pension or benefit, and no other
survivor benefit is payable.  Provides that if a member meets certain
requirements, the optional annuity election, including any designation of
an eligible designated survivor, shall control the payment of any pension
or benefit, and no other survivor benefit is payable unless the member
makes a certain election to revoke.  Provides that if revocation occurs,
any survivor benefit is paid under Subsection (j) of this section. 

(m)  Makes provisions for a member whose service is terminated before the
member has completed five years of service for any reason other than death,
a city workforce reduction, or a service disability. 

(n)  Makes this section prohibit retroactive payment of any benefits or
other amounts under this section to any member, retiree, deferred
participant, beneficiary, eligible survivor, estate, or other person or
entity. 

(o)  Provides that after separation from service, a member is subject to
the schedule of benefits and provisions in effect on the member's last day
of credited service, except as otherwise expressly provided by this Act. 

(p)  Provides that a person receiving or eligible for a survivor benefit
under this Act is subject to a certain schedule of benefits and provisions. 

SECTION 18.  MILITARY SERVICE CREDIT.  Sets forth contributions, benefits,
and service with respect to service in the uniformed services.  Requires
the city to make the employer contributions to the pension fund for the
employee's membership for each month of service credit in which the member
is engaged in service in a uniformed service, based on a certain rate.
Authorizes a member who has active military service under certain
circumstances to receive credited service if the member fulfills certain
conditions.  Makes provisions for the military service credited under this
section. 

SECTION 19.  MULTIPLE PENSIONS; TRANSFER OF EMPLOYMENT.  Authorizes the
pension board to authorize a member to make one election to cease to be a
member of the pension system and, for future service, to become a member of
the retirement system if the member meets certain conditions.  Provides
that a person who does not make such an election remains a member of the
pension system.  Provides that a person who makes such an election is
considered to have separated from service on the date of the election.
Prohibits duplication of any pension or benefit payable from the pension
system or another benefit plan to which the city contributes.  Makes
provisions for any pension or benefit payable to any person under another
pension plan. 
 
SECTION 20.  SERVICE FOR FORMERLY INELIGIBLE EMPLOYEES.  Authorizes certain
ineligible members to purchase credited service if the members meet certain
criteria.  Requires payments under this section to be made by a certain
date.  Provides for a case in which payments are not completed within the
prescribed period. 

SECTION 21.  REDUCTION OF BENEFITS; DISSOLUTION OF SYSTEM.  Authorizes the
pension board, if it determines that the pension fund is seriously
depleted, to proportionately and temporarily reduce the benefits of all
retirees, eligible survivors, alternate payees, and beneficiaries. Requires
the amount of any reduction to be paid to the recipients if the pension
board determines that the fund is sufficiently reestablished to pay the
amounts.  Authorizes the city, if the reserve and surplus in the pension
fund become exhausted and the pension payouts exceed the fund's income, to
dissolve the pension system and liquidate the pension system without any
liability to the city.  Authorizes a benefit recipient to receive a smaller
amount after a written request to the pension board. 

SECTION 22.  EXEMPTION FROM EXECUTION, ATTACHMENT, OR OTHER WRIT. Provides
that the pension fund and payments out of the pension fund shall be
sacredly held, kept, and disbursed, and may not be used by anyone or
required by anyone to fulfill any purpose other than those purposes set
forth under this Act, and payments are protected from judgment, seizing,
holding, garnishment, injunction, or any other writ, claim, process, or
proceeding.  Provides that this section does not prevent the division of
benefits accrued by a member by court order to fulfill a qualified domestic
relations order or the payment of a share of benefits to an alternate payee
in accordance with the court order.  Prohibits that this section does not
prevent the offset of amounts received wrongly or in error against future
pension or benefit payments. 

SECTION 23.  FEDERAL TAX QUALIFICATION OF PENSION FUND; MAXIMUM BENEFITS
FROM PENSION FUND.  (a)  Provides that the pension fund is intended to
qualify under Section 401(a), Internal Revenue Code of 1986, as amended,
and is for the exclusive benefit of the members and retirees and their
eligible survivors.  Prohibits any part of the corpus or income of the
pension fund from ever being used for or diverted to any purpose other than
for the benefit of members and retirees and their eligible survivors as
provided by this Act. 

(b)  Prohibits a member, retiree, or eligible survivor of the pension
system from accruing any benefit under this Act in excess of certain
benefit limits.  Requires the pension board to reduce the amount of any
benefit that exceeds those limits by the amount of the excess.  Requires
any member's benefits that exceed the applicable limits to be reduced to
the extent necessary to make the benefits conform to the limits. 

(c)  Authorizes any member, retiree, or eligible survivor who receives a
distribution that is an eligible rollover distribution as defined by
Section 402(c)(4), Internal Revenue Code of 1986, as amended, to have that
distribution transferred to another retirement plan of the member's choice
on providing direction to the pension system regarding that transfer in
accordance with pension board procedure. 

(d)  Prohibits the total salary taken into account for any purpose for any
member or retiree of the pension system from exceeding a certain amount.
Requires these dollar limits to be adjusted in accordance with the U.S.
secretary of the treasury's guidelines.  Defines an eligible participant
and an ineligible participant for the purposes of this subsection. 

(e)  Sets forth the date on which accrued benefits under this Act become
nonforfeitable. Makes provisions regarding the pension system or fund's
termination or partial termination and the discontinuance of city
contributions. 

(f)  Prohibits amounts representing forfeited benefits of terminated
members from being used to increase benefits payable to the pension fund,
but authorizes the amounts to be used to reduce contributions for future
plan years. 
 
 (g)  Sets forth requirements regarding the distribution of benefits.

(h)  Sets forth requirements regarding the actuarial assumptions to be used
in determining benefits. 

(i)  Authorizes the pension board to adjust the benefits of retirees and
eligible survivors by increasing any benefit that was reduced or denied
because of Section 415, Internal Revenue Code of 1986, as amended, under
certain circumstances.  Provides that benefits paid under this subsection
are not extra compensation earned after retirement but are the delayed
payment of benefits earned before retirement. 

(j)  Authorizes the pension board to make any change in this Act to the
extent that the change is necessary to ensure compliance with the
qualification requirements of Section 401, Internal Revenue Code of 1986,
as amended, or any other federal law. 

SECTION 24.  EXCESS BENEFIT PLAN.  (a)  Provides that a separate,
nonqualified, unfunded excess benefit plan is reenacted and continued
outside the pension fund. 

(b)  Defines "excess benefit participant," "excess benefit plan," "maximum
benefit," "qualified plan," and "unrestricted benefit." 

(c)  Makes an excess benefit participant who is receiving benefits from the
pension fund eligible for a monthly benefit under the excess benefit plan
in a certain amount. 

(d)  Makes provisions for a monthly benefit for an eligible surviving
spouse or dependent child after the death of an excess benefit participant. 

(e)  Requires payment of a benefit to a person under this chapter to be
paid at a certain time and in a certain manner.  Prohibits an excess
benefit participant or a beneficiary of the participant from electing to
defer receipt of all or any part of a payment due under this section. 

(f)  Requires the pension board to administer the excess benefit plan, and
the executive director to carry out the business of the board with respect
to the plan.  Provides that the rights, duties, and responsibilities of the
pension board and the executive director are the same for the plan as for
the pension fund. 

(g)  Requires the consultants, independent auditors, attorneys, and
actuaries selected to perform services for the pension fund to perform
services for the excess benefit plan, but prohibits their fees for services
from being paid by the pension fund.  Requires certain advice from the
actuary. 

(h)  Prohibits contributions from accumulating under the excess benefit
plan to pay future retirement benefits.  Requires the executive director to
reduce each payment of employer contributions that would otherwise be made
to the pension fund under Section 8 of this Act by a certain amount.
Requires the employer to pay to the plan not earlier than a certain time
the necessary amount.  Requires the executive director to satisfy the
obligation of the plan to pay retirement benefits from the employer
contributions transferred for that month. 

(i)  Requires employer contributions otherwise required to be made to the
pension fund under Section 8 of this Act and to any other qualified plan to
be divided into those contributions required to pay benefits under this
section and those contributions paid into and accumulated to pay the
maximum benefits required under the qualified plan.  Prohibits employer
contributions made to provide retirement benefits under this section from
being commingled with the money of the pension fund or any other qualified
plan. 

 (j)  Exempts benefits under this section from execution, attachment,
garnishment, assignment, injunction, and any other writ in the same manner
as retirement annuities under Section 22 of this Act and prohibits them
from being paid to a person other than to the person who would have
received the benefits from the pension fund except for the limitations
provided by Section 23 of this Act. 

SECTION 25.  EMPLOYEES ON RETIREMENT WHEN ACT TAKES EFFECT.  Requires any
person receiving a retirement benefit from the predecessor system
immediately before the effective date of this Act to continue to receive
the same benefit amount the person was entitled to receive under the
predecessor system.  Provides that this Act does not change the status of
any former member receiving a pension, or who is eligible to receive a
pension, from the city or the pension system under the predecessor system,
unless otherwise expressly provided by this Act. 

SECTION 26.  CONFIDENTIAL INFORMATION.  Provides that records that are in
the custody of the pension system concerning an individual participant are
not public information and are prohibited from being disclosed in a form
identifiable to a specific individual, with certain exceptions.  Provides
that this section does not prevent the disclosure of the status or identity
of an individual as a participant in the pension system.  Authorizes the
executive director to designate other employees of the pension system to
make the necessary determinations under this section.  Provides that a
determination and disclosure under this section does not require notice to
the participant. 

SECTION 27.  POWER OF ATTORNEY.  Authorizes a person eligible for benefit
payments to direct the pension system to treat as the authorized
representative of the person concerning the disposition of the pension or
other benefits an attorney-in-fact under a power of attorney that the
pension system determines complies with Section 490 (Statutory Durable
Power of Attorney), Texas Probate Code.  Provides that if the power of
attorney under this section is revoked, the pension system is not liable
for payments made to or actions taken at the request of the
attorney-in-fact before the date the pension system receives written notice
that the power of attorney has been revoked. 

SECTION 28.  PROPORTIONATE RETIREMENT PROGRAM WITH PARTICIPATING RETIREMENT
SYSTEMS.  (a)  Authorizes the pension board to establish a program of
proportionate retirement benefits subject to the requirements of this
section. 

(b)  Defines "combined service credit," "eligible participant," "full
participation," "maximum benefit," "participating retirement system," and
"service credit." 

(c)  Provides that participation by the pension system in the proportionate
retirement program is voluntary.  Authorizes the pension board to elect to
participate in the proportionate retirement program by adopting a
resolution.  Requires the pension board, if a resolution is adopted, to
notify the other participating retirement systems of the election.  Sets
forth the effective date of participation in the proportionate retirement
program.  Authorizes the participation in the proportionate retirement
program to be terminated for any reason by pension board resolution, with
an exception.  Requires the pension board, on adoption of such a
resolution, to notify the other participating retirement systems of the
termination.  Sets forth the effective date of termination. 

(d)  Sets forth authorized and unauthorized uses for an eligible
participant's combined service credit.  Prescribes the manner by which to
determine the amount of a benefit payable by the pension system.  Provides
that the pension board has sole responsibility and discretion to determine
the eligibility of participants for benefits. 

(e)  Provides that a person who withdraws pension contributions from a
participating retirement system ceases to be a member of that system.
Authorizes membership and service credit for which contributions were
withdrawn or forfeited to be reestablished under the statutes and rules
governing that system.  Sets forth criteria for service to be counted as
combined service credit.  Provides that a lump-sum distribution is governed
by the statutes and rules applicable to the particular retirement system
that distributed the payment. 

(f)  Provides that a person who has service credit in another participating
retirement system for which the person is receiving or may become eligible
to receive a benefit is not eligible to vote in a pension board election or
hold a position on the pension board. 

(g)  Requires the pension board to make determinations regarding an
eligible participant's combined service credit based on the certified
records of a participating retirement system, including the pension system,
and of the city. 

(h)  Provides that the provisions of Section 17 of this Act relating to
termination of employment do not apply to an eligible participant to the
extent the participant is separated from service covered by the pension
system during a period for which the participant earns service credit in
another participating retirement system for service performed for the city
in an amount sufficient to meet the length-of-service requirement, using
combined service credit, for a retirement benefit from the participating
retirement system. 

(i)  Authorizes a proportionate retirement benefit to be paid by the
pension system under the proportionate retirement program to an eligible
participant who fulfills certain requirements only if the participant is
eligible to receive and has applied for proportionate retirement benefits
from the applicable other participating retirement systems.  Prohibits an
eligible participant from becoming eligible to receive a proportionate
retirement benefit from the pension system while employed in a position
covered by the pension system. 

(j)  Provides that the pension system is governed solely by its own
statutory provisions, policies, and procedures relating to disability
benefit determinations for members who apply for a disability pension from
the pension system, with exceptions. 

(k)  Requires the pension system to pay only the ordinary disability
benefit amount if the disability is determined to be service-related.
Provides that the pension board has the right to require examinations,
reports, and other information for the administration and payment of
disability benefits and the right to reduce, suspend, or terminate a
benefit accordingly.  Provides that the benefit allowed under this
subsection and Subsection (j) of this section is payable only if the other
participating retirement systems authorize and pay a disability benefit
under the same circumstances as provided by this subsection.  Provides that
a person who is receiving a disability benefit from a participating
retirement system is not eligible for a disability pension under this Act,
except as provided by this subsection and Subsection (j) of this section. 

(l)  Provides that creditable military service, if any, will be credited in
the pension system only as provided by this Act and only if the service is
not credited in any other participating retirement system. 
 
(m)  Requires the pension board, if it elects to participate in the
proportionate retirement program under this section, to adopt rules for
implementing and administering the proportionate retirement program. 
 
(n)  Prohibits a person from receiving a benefit under this section in an
amount that is greater than the amount of the benefits accrued by the
person in the absence of this section.  Makes provisions for a survivor
benefit otherwise payable under Section 14(c) of this Act on behalf of a
person who has used combined service credit to qualify for benefits from at
least one participating retirement system. 
 
SECTION 29.  Repealer:  Chapter 358, Acts of the 48th Legislature, Regular
Session, 1943 (Article 6243g, V.T.C.S.) (Municipal Pension System in Cities
of 1,500,000 or More). 
 
SECTION 30.  (a)  Provides that this Act continues in effect each municipal
employees pension fund established under Article 6243g, V.T.C.S., as that
law existed before repeal by this Act. 
 
(b)  Provides that all assets, service credit reports, and liabilities
relating to persons who are covered by the predecessor system immediately
before the effective date of this Act are transferred to the pension system
created by this Act. 
 
SECTION 31.  Provides that a member of the pension board of trustees
serving under Article 6243g, V.T.C.S. before the effective date of this Act
continues to serve on the pension board created under this Act until the
expiration of the term for which the member was elected or appointed under
Article 6243g, V.T.C.S. 
 
SECTION 32.  (a)  Provides that Section 14(d) of this Act applies only to
deaths that occur on or after the effective date of this Act, without
regard to the date of a member's separation from service. 
 
(b)  Provides that Section 10(h) of this Act applies only to the payment of
pension and survivor benefits on or after the effective date of this Act,
without regard to the date of a member's death or separation from service. 
 
SECTION 33.  Effective date:  upon passage or September 1, 2001.