By Yarbrough H.B. No. 1569
77R3298 SMJ-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to a firefighters' relief and retirement fund in certain
1-3 municipalities.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 4(d), Article 6243e.2(1), Revised
1-6 Statutes, is amended to read as follows:
1-7 (d) The total monthly benefit payable to a retired or
1-8 disabled member, other than a deferred retiree or active member who
1-9 has elected the DROP under Section 5(b) of this article, or payable
1-10 to an [each] eligible survivor of a deceased member as provided by
1-11 Section 7(a) of this article, shall be increased by the following
1-12 amounts: by $100, beginning with the monthly payment made for July
1-13 1999; by $25, beginning with the monthly payment made for July,
1-14 2000; and by $25, beginning with the monthly payment made for July
1-15 2001. These [That] additional benefits [benefit] may not be
1-16 increased under Section 11(c) of this article.
1-17 SECTION 2. Section 5, Article 6243e.2(1), Revised Statutes,
1-18 is amended by amending Subsections (a), (b), (c), (d), (i), and (l)
1-19 and adding Subsections (p) and (q) to read as follows:
1-20 (a) A member who is eligible to receive a service pension
1-21 under Section 4 of this article and who remains in active service
1-22 may elect to participate in the deferred retirement option plan
1-23 provided by this section. On subsequently terminating active
1-24 service, a member who elected the DROP may apply for a monthly
2-1 service pension under Section 4 of this article, except that the
2-2 effective date of the member's election to participate in the DROP
2-3 will be considered the member's retirement date for determining the
2-4 amount of the member's monthly service pension. The member may
2-5 also apply for any DROP benefit provided under this section on
2-6 terminating active service. Except as provided by Subsection (l)
2-7 of this section, an election to participate in the DROP, once
2-8 approved by the board, is irrevocable. A DROP participant's
2-9 monthly benefit at retirement is increased by two percent for every
2-10 full year of participation in the DROP by the member. This
2-11 increase is applied to the member's benefit at retirement and is
2-12 not added to the member's DROP account. The total increase under
2-13 this subsection may not exceed 20 percent for 10 years of
2-14 participation in the DROP by the member.
2-15 (b) A member may elect to participate in the DROP by
2-16 complying with the election process established by the board. The
2-17 member's election may be made at any time beginning on the date the
2-18 member has completed 20 years of participation in the fund and is
2-19 otherwise eligible for a service pension under Section 4 of this
2-20 article. The election becomes effective on the first day of the
2-21 month following the month in which the board approves the member's
2-22 DROP election. Beginning on the effective date of the member's
2-23 DROP election, amounts equal to the deductions made from the
2-24 member's salary under Section 13(c) of this article shall be
2-25 credited to the member's DROP account. A member may not
2-26 participate in the DROP for more than 10 years. If a DROP
2-27 participant remains in active service after the 10th [seventh]
3-1 anniversary of the effective date of the member's DROP election,
3-2 subsequent deductions from the member's salary under Section 13(c)
3-3 of this article may not be credited to the member's DROP account
3-4 and may not otherwise increase any benefit payable from the fund
3-5 for the member's service.
3-6 (c) Beginning in the month a member's DROP election becomes
3-7 effective, an amount equal to the monthly service pension the
3-8 member would have received under Section 4 of this article and
3-9 Section 11(c) of this article, if applicable, had the member
3-10 terminated active service on the effective date of the member's
3-11 DROP election shall be credited to a DROP account maintained for
3-12 the member. That monthly credit to the member's DROP account shall
3-13 continue until the earlier of the date the member terminates active
3-14 service or the 10th [seventh] anniversary of the effective date of
3-15 the member's DROP election.
3-16 (d) A member's DROP account shall be credited with earnings
3-17 or losses at an annual rate equal to the average annual return
3-18 earned by the fund over the five years preceding, but not
3-19 including, the year during which the credit is given. Those
3-20 earnings or losses shall be computed and credited at a time and in
3-21 a manner determined by the board, except that earnings or losses
3-22 shall be credited not less frequently than once in each 13-month
3-23 period and shall take into account partial years of participation
3-24 in the DROP. If the member has not terminated active service, the
3-25 member's DROP account may not be credited with earnings or losses
3-26 after the 10th [seventh] anniversary of the effective date of the
3-27 member's DROP election.
4-1 (i) For [A member who elects to participate in the DROP is
4-2 considered to have terminated active service on the effective date
4-3 of the member's DROP election for] purposes of computing and
4-4 providing service pension benefits under Section 4 of this article
4-5 and for purposes of computing and providing death benefits under
4-6 Section 7 of this article, the day immediately before the effective
4-7 date of the DROP participant's election is considered to be the
4-8 date the member terminates active service. A salary earned or
4-9 additional years of participation completed after the member's DROP
4-10 election becomes effective may not be considered in the computation
4-11 of retirement[, disability,] or death benefits [unless a DROP
4-12 revocation is made as prescribed by Subsection (l) of this
4-13 section].
4-14 (l) A [Except as otherwise provided by this subsection, a]
4-15 member who participates in the DROP is ineligible for disability
4-16 benefits described by Section 6 of this article, except the
4-17 benefits described by Section 6(c). If a member who has a
4-18 disability described by Section 6(c) of this article is a DROP
4-19 participant, the disability benefit provided by Section 6(c)(1)
4-20 shall be paid to the member, as a monthly pension benefit, in
4-21 addition to payments from the DROP account balance. If a member
4-22 who dies under the conditions described by Section 7(c) of this
4-23 article is a DROP participant at the time of death or disability
4-24 resulting in death, the benefit provided by Section 7(c) shall be
4-25 paid to the member's eligible survivors, as a monthly pension
4-26 benefit, in addition to payments from the DROP account balance [and
4-27 the member's survivors are ineligible to receive enhanced death
5-1 benefits described by Section 7(c) of this article. A DROP
5-2 participant who is determined under Section 6(c) of this article to
5-3 be incapable of performing any substantial gainful employment
5-4 because of an on-duty disability may retroactively revoke the
5-5 member's DROP election if the revocation occurs before the member
5-6 receives a distribution from the member's DROP account or
5-7 retirement benefits. If a DROP participant dies in the course of
5-8 the performance of the member's duty or dies as a result of an
5-9 on-duty disability described by Section 6(c) of this article, the
5-10 DROP participant's eligible survivors under Section 7 of this
5-11 article and the member's eligible DROP beneficiaries under
5-12 Subsection (j) of this section may, by unanimous agreement,
5-13 retroactively revoke the member's DROP election if the revocation
5-14 occurs before receipt of a distribution from the member's DROP
5-15 account, service pension benefits under Section 4 of this article,
5-16 or death benefits under Section 7 of this article. For purposes of
5-17 this subsection, an on-duty disability must have occurred after the
5-18 effective date of a member's election to participate in the DROP.
5-19 If a DROP election revocation is made as prescribed by this
5-20 subsection, the member's DROP account is not distributed, and the
5-21 member or the member's beneficiary, as applicable, is entitled to
5-22 benefits under this article as if a DROP election had not been
5-23 made].
5-24 (p) A member participating in the DROP who was qualified to
5-25 make a DROP election before the actual date of the member's
5-26 election may elect to have the member's DROP account recomputed by
5-27 participating in a Back-DROP. A member may not participate in the
6-1 Back-DROP for more than 10 years. Under a Back-DROP election, the
6-2 member's account balance is equal to the amount that the account
6-3 would have had if the member had elected to participate in the DROP
6-4 on an earlier date chosen by the member. The Back-DROP benefits
6-5 are computed in the same manner as the DROP benefits under this
6-6 section, using the earlier date chosen by the member. The
6-7 Back-DROP date chosen by the member may not be earlier than the
6-8 later of the date that is three years before the date the member
6-9 elected to participate in the DROP, or September 1, 1995. The
6-10 member's choice of a Back-DROP date is irrevocable, except as
6-11 provided by Subsection (q) of this section.
6-12 (q) A member may revoke the member's Back-DROP election by
6-13 notifying the fund in writing not later than the 10th business day
6-14 after the date the member signs an application form for a
6-15 Back-DROP. A member may revoke the date chosen under a Back-DROP
6-16 election and choose another Back-DROP date only if:
6-17 (1) the first date the member chooses is not the
6-18 earliest date permitted under Subsection (p); and
6-19 (2) the board determines that the member's injury or
6-20 illness has caused the member to be separated from service earlier
6-21 than the member anticipated.
6-22 SECTION 3. Sections 10A(a), (b), (c), (d), (e), (h), and (i),
6-23 Article 6243e.2(1), Revised Statutes, are amended to read as
6-24 follows:
6-25 (a) The board shall pay supplemental benefits under this
6-26 section to retired members and eligible survivors who are receiving
6-27 retirement or survivor benefits on June 30 of the year preceding
7-1 the year in which the supplemental benefits are to be paid[, not
7-2 including deferred retirees, and to eligible survivors, not
7-3 including survivors of deferred retirees, if the requirements of
7-4 Subsection (b) of this section are met]. Deferred retirees or
7-5 survivors of deferred retirees may not receive [The board shall pay
7-6 the] supplemental benefits under [in January following a fiscal
7-7 year of the fund in which the requirements of Subsection (b) of]
7-8 this section [are met].
7-9 (b) The board shall pay the supplemental benefits under this
7-10 section in the first January after the end of each fiscal year of
7-11 the fund [if the fund actuary determines that, as of the end of any
7-12 fund fiscal year:]
7-13 [(1) the value of the fund's assets exceeds the amount
7-14 of the fund's accrued liability;]
7-15 [(2) the fund's gross rate of return on investments
7-16 for that fiscal year exceeds 9.25 percent; and]
7-17 [(3) payment of supplemental benefits will not result
7-18 in an increase of the municipality's contribution rate].
7-19 (c) For purposes [The board shall adopt rules and procedures
7-20 to govern the payment] of [benefits under] this section, the [and
7-21 shall establish a] minimum income level is [consistent with] the
7-22 federal [national] poverty guideline for a family of five as issued
7-23 [level set] by the United States Department of Health and Human
7-24 Services, rounded up to the nearest $1,000.
7-25 (d) The [board shall determine an] aggregate supplemental
7-26 benefit amount is $5 million [that may not exceed the lesser of:]
7-27 [(1) the amount by which the value of fund assets
8-1 exceeds the amount of accrued liability as determined under
8-2 Subsection (b)(1) of this section; or]
8-3 [(2) $4 million].
8-4 (e) Based on the aggregate supplemental benefit amount
8-5 [determined] under Subsection (d) of this section, the board shall
8-6 determine the amount of a lump-sum payment for each retired member
8-7 or eligible survivor.
8-8 (h) The product of the computation under Subsection (g) of
8-9 this section determines the lump-sum payment to the retired member
8-10 or eligible survivor unless the lump-sum payment plus the annual
8-11 retirement benefit is less than the minimum income level under
8-12 Subsection (c) [established by the board].
8-13 (i) If the lump-sum payment plus the annual retirement
8-14 benefit is less than the minimum income level under Subsection (c)
8-15 [established by the board], the retired member or eligible survivor
8-16 is entitled to receive an additional payment from the amount
8-17 determined under Subsection (d) of this section that will cause
8-18 payments to the recipient to meet but not exceed the minimum income
8-19 level.
8-20 SECTION 4. Sections 10B(a) and (b), Revised Statutes, Article
8-21 6243e.2(1), are amended to read as follows:
8-22 (a) The board shall pay the following people a $5,000
8-23 [$4,000] lump-sum payment from the fund, in addition to any other
8-24 benefits, as soon as administratively practicable after the date of
8-25 the person's retirement, if the person's retirement occurs or
8-26 occurred after June 30, 1998:
8-27 (1) each member who retires or retired after
9-1 completing 20 years of service and is eligible to receive service
9-2 pension benefits under Section 4 of this article; and
9-3 (2) each member who retires or retired and is eligible
9-4 to receive disability benefits under Section 6 of this article.
9-5 (b) The board shall pay a $5,000 [$4,000] lump-sum payment
9-6 from the fund, in addition to any other benefits, to an eligible
9-7 survivor of a member:
9-8 (1) whose death occurs or occurred after June 30,
9-9 1998;
9-10 (2) who had not terminated active service; and
9-11 (3) who was ineligible to receive service pension
9-12 benefits under Section 4 of this article or disability benefits
9-13 under Section 6 of this article.
9-14 SECTION 5. Section 11(c), Article 6243e.2(1), Revised
9-15 Statutes, is amended to read as follows:
9-16 (c) The benefits, including survivor benefits, payable based
9-17 on the service of a member who [completed 30 or more years of
9-18 participation,] is or would have been at least 48 [50] years old,
9-19 [or] received or is receiving an on-duty disability pension under
9-20 Section 6(c) of this article, or died under the conditions
9-21 described by Section 7(c), shall be increased by three percent in
9-22 October of each year and, if the benefit had not previously been
9-23 subject to that adjustment, in the month of the member's 48th
9-24 [50th] birthday.
9-25 SECTION 6. Article 6243e.2(1), Revised Statutes, is amended
9-26 by adding Section 18 to read as follows:
9-27 Sec. 18. PROPORTIONAL RETIREMENT PROGRAM. (a) In this
10-1 section:
10-2 (1) "Combined service credit" means the total amount
10-3 of service credit a member has for participation in the fund plus
10-4 service credit the member has in any participating retirement
10-5 system.
10-6 (2) "Participating retirement system" means the
10-7 retirement system established under Article 6243g-4, Revised
10-8 Statutes, Chapter 358, Acts of the 48th Legislature, Regular
10-9 Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), or a
10-10 successor statute to either of those laws.
10-11 (3) "Program" means a proportional retirement benefits
10-12 program established under this section that permits members to
10-13 establish service credit in the fund using combined service credit.
10-14 (4) "Service credit" means service or participation
10-15 that is credited under the fund or a participating retirement
10-16 system to establish service or participation requirements for
10-17 service retirement.
10-18 (b) If the board determines that the provisions governing a
10-19 participating retirement system are compatible with the provisions
10-20 governing the fund under this article, the board shall establish
10-21 the program under this section.
10-22 (c) Under the program, a member who is eligible to
10-23 participate may use combined service credit to determine
10-24 eligibility for a benefit under this article. The member must have
10-25 at least 20 years of combined service credit to receive a service
10-26 retirement benefit. The member is subject to the same requirements
10-27 and receives the same benefits, including enhancements, as a member
11-1 who establishes retirement eligibility for the same amount of
11-2 service credit without using combined service credit.
11-3 (d) A member may not:
11-4 (1) use service credit in a participating retirement
11-5 system to meet the eligibility requirements for participating in a
11-6 DROP under Section 5 of this article;
11-7 (2) receive service credit in the fund for the same
11-8 service for which the member receives service credit in a
11-9 participating retirement system; or
11-10 (3) receive a benefit under the program in an amount
11-11 that is greater than the amount the member would have received for
11-12 the same benefit without the program.
11-13 (e) A person is eligible to participate in the program if
11-14 the person is employed by the city, is covered by a participating
11-15 retirement system, and is or has been a member of the fund.
11-16 (f) A member who is retired or participating in a DROP under
11-17 Section 5 of this article may not participate in the program. A
11-18 member may not receive a disability retirement benefit and a
11-19 service retirement benefit under the program.
11-20 (g) In determining service retirement benefits under the
11-21 program for a member who has participated in the fund for less than
11-22 10 years, the member is entitled to a monthly benefit in an amount
11-23 equal to 1.7 percent of the member's average monthly salary
11-24 multiplied by the number of the member's years of participation in
11-25 the fund.
11-26 (h) A member who receives a disability benefit under a
11-27 participating retirement system may receive a proportional
12-1 disability benefit under the program as provided by Subsection (i)
12-2 of this section.
12-3 (i) In determining disability retirement benefits under the
12-4 program, the member is entitled to a monthly benefit in an amount
12-5 equal to 1.7 percent of the member's average monthly salary
12-6 multiplied by the number of the member's years of participation in
12-7 the fund.
12-8 (j) The board may modify the program only to make the
12-9 program's provisions compatible with the provisions of a
12-10 participating retirement system. The board may not modify the
12-11 program for the purpose of providing a new benefit to a member.
12-12 (k) If the board determines that the provisions governing a
12-13 participating retirement system are not compatible with the
12-14 provisions governing the fund under this article, the board may
12-15 terminate the program. The board shall provide written notice to
12-16 the executive director of the participating retirement system
12-17 before the 30th day preceding the date of the program's
12-18 termination. The board may reestablish the program at its
12-19 discretion, subject to the requirements of this section.
12-20 (l) The board may adopt rules to implement and administer
12-21 this section.
12-22 SECTION 7. (a) Except as provided by Subsection (b), this
12-23 Act takes effect September 1, 2001.
12-24 (b) Section 18, Article 6243e.2(1), Revised Statutes, as
12-25 added by this Act, takes effect October 1, 2001.