SRC-MKV S.B. 1010 77(R)   BILL ANALYSIS


Senate Research Center   S.B. 1010
77R3592 SMJ-DBy: Lucio
Education
4/23/2001
As Filed


DIGEST AND PURPOSE 

Under current Teacher Retirement System (TRS) statutes, a member is
entitled to reinstate retirement service credit by payroll deduction over a
five-year maximum period on an after-tax or pre-tax basis. However, this
repayment must be completed before the teacher's retirement date.  As
proposed, S.B. 1010 requires TRS to allow teachers to retire with full
benefits even if they have previously withdrawn money from their retirement
account before December 31, 2000, by establishing a loan program for
members seeking to reinstate service credit canceled by termination.  It
also requires TRS to provide full benefits to the retired teachers by
lending them the amount they had withdrawn and allowing them to repay it
over a five-year period at an annual interest rate of no more than eight
percent.  Finally, it requires the retiree to purchase credit life
insurance and designate the retirement system as the beneficiary to secure
the loan. 

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the board of trustees of the
Employees Retirement System of  Texas in SECTION 1 (Section 823.5015,
Government Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 823F, Government Code, by adding Section
823.5015, as follows: 

Sec. 823.5015.  LOAN TO REESTABLISH SERVICE CREDIT.  (a) Authorizes the
board of trustees of the Teacher Retirement System of Texas (board) to make
a loan to a member for the purpose of reinstating service credit canceled
by member termination under certain conditions. 

(b) Requires the board to set an annual rate of interest for a loan made
under this section at a rate not to exceed eight percent. 

(c) Provides that the maximum repayment term for a loan made under this
section is the fifth anniversary of the date in which the contract for the
loan is made. 

(d) Authorizes a loan made under this section to be used only to reinstate
the canceled service credit. 

  (e) Requires the board to adopt rules to implement this section.

SECTION 2.  Effective date: upon passage or September 1, 2001.