1-1 By: Yarbrough (Senate Sponsor - Brown) H.B. No. 1569
1-2 (In the Senate - Received from the House March 26, 2001;
1-3 March 27, 2001, read first time and referred to Committee on
1-4 Intergovernmental Relations; April 17, 2001, reported favorably by
1-5 the following vote: Yeas 7, Nays 0; April 17, 2001, sent to
1-6 printer.)
1-7 A BILL TO BE ENTITLED
1-8 AN ACT
1-9 relating to a firefighters' relief and retirement fund in certain
1-10 municipalities.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Section 4(d), Article 6243e.2(1), Revised
1-13 Statutes, is amended to read as follows:
1-14 (d) The total monthly benefit payable to a retired or
1-15 disabled member, other than a deferred retiree or active member who
1-16 has elected the DROP under Section 5(b) of this article, or payable
1-17 to an [each] eligible survivor of a deceased member as provided by
1-18 Section 7(a) of this article, shall be increased by the following
1-19 amounts: by $100, beginning with the monthly payment made for July
1-20 1999; by $25, beginning with the monthly payment made for July,
1-21 2000; and by $25, beginning with the monthly payment made for July
1-22 2001. These [That] additional benefits [benefit] may not be
1-23 increased under Section 11(c) of this article.
1-24 SECTION 2. Section 5, Article 6243e.2(1), Revised Statutes,
1-25 is amended by amending Subsections (a), (b), (c), (d), (i), and (l)
1-26 and adding Subsections (p), (q), and (r) to read as follows:
1-27 (a) A member who is eligible to receive a service pension
1-28 under Section 4 of this article and who remains in active service
1-29 may elect to participate in the deferred retirement option plan
1-30 provided by this section. On subsequently terminating active
1-31 service, a member who elected the DROP may apply for a monthly
1-32 service pension under Section 4 of this article, except that the
1-33 effective date of the member's election to participate in the DROP
1-34 will be considered the member's retirement date for determining the
1-35 amount of the member's monthly service pension. The member may
1-36 also apply for any DROP benefit provided under this section on
1-37 terminating active service. An [Except as provided by Subsection
1-38 (l) of this section, an] election to participate in the DROP, once
1-39 approved by the board, is irrevocable. A DROP participant's
1-40 monthly benefit at retirement is increased by two percent of the
1-41 amount of the member's original benefit for every full year of
1-42 participation in the DROP by the member. This increase is applied
1-43 to the member's benefit at retirement and is not added to the
1-44 member's DROP account. The total increase under this subsection
1-45 may not exceed 20 percent for 10 years of participation in the DROP
1-46 by the member.
1-47 (b) A member may elect to participate in the DROP by
1-48 complying with the election process established by the board. The
1-49 member's election may be made at any time beginning on the date the
1-50 member has completed 20 years of participation in the fund and is
1-51 otherwise eligible for a service pension under Section 4 of this
1-52 article. The election becomes effective on the first day of the
1-53 month following the month in which the board approves the member's
1-54 DROP election. Beginning on the effective date of the member's
1-55 DROP election, amounts equal to the deductions made from the
1-56 member's salary under Section 13(c) of this article shall be
1-57 credited to the member's DROP account. A member may not
1-58 participate in the DROP for more than 10 years. If a DROP
1-59 participant remains in active service after the 10th [seventh]
1-60 anniversary of the effective date of the member's DROP election,
1-61 subsequent deductions from the member's salary under Section 13(c)
1-62 of this article may not be credited to the member's DROP account
1-63 and may not otherwise increase any benefit payable from the fund
1-64 for the member's service.
2-1 (c) Beginning in the month a member's DROP election becomes
2-2 effective, an amount equal to the monthly service pension the
2-3 member would have received under Section 4 of this article and
2-4 Section 11(c) of this article, if applicable, had the member
2-5 terminated active service on the effective date of the member's
2-6 DROP election shall be credited to a DROP account maintained for
2-7 the member. That monthly credit to the member's DROP account shall
2-8 continue until the earlier of the date the member terminates active
2-9 service or the 10th [seventh] anniversary of the effective date of
2-10 the member's DROP election.
2-11 (d) A member's DROP account shall be credited with earnings
2-12 or losses at an annual rate equal to the average annual return
2-13 earned by the fund over the five years preceding, but not
2-14 including, the year during which the credit is given. Those
2-15 earnings or losses shall be computed and credited at a time and in
2-16 a manner determined by the board, except that earnings or losses
2-17 shall be credited not less frequently than once in each 13-month
2-18 period and shall take into account partial years of participation
2-19 in the DROP. If the member has not terminated active service, the
2-20 member's DROP account may not be credited with earnings or losses
2-21 after the 10th [seventh] anniversary of the effective date of the
2-22 member's DROP election.
2-23 (i) For [A member who elects to participate in the DROP is
2-24 considered to have terminated active service on the effective date
2-25 of the member's DROP election for] purposes of computing and
2-26 providing service pension benefits under Section 4 of this article
2-27 and for purposes of computing and providing death benefits under
2-28 Section 7 of this article, the day immediately before the effective
2-29 date of the DROP participant's election is considered to be the
2-30 date the member terminates active service. A salary earned or
2-31 additional years of participation completed after the member's DROP
2-32 election becomes effective may not be considered in the computation
2-33 of retirement[, disability,] or death benefits [unless a DROP
2-34 revocation is made as prescribed by Subsection (l) of this
2-35 section].
2-36 (l) A [Except as otherwise provided by this subsection, a]
2-37 member who participates in the DROP is ineligible for disability
2-38 benefits described by Section 6 of this article, except the
2-39 benefits described by Section 6(c). If a member who has a
2-40 disability described by Section 6(c) of this article is a DROP
2-41 participant, the disability benefit provided by Section 6(c)(1)
2-42 shall be paid to the member, as a monthly pension benefit, in
2-43 addition to payments from the DROP account balance. If a member
2-44 who dies under the conditions described by Section 7(c) of this
2-45 article is a DROP participant at the time of death or disability
2-46 resulting in death, the benefit provided by Section 7(c) shall be
2-47 paid to the member's eligible survivors, as a monthly pension
2-48 benefit, in addition to payments from the DROP account balance [and
2-49 the member's survivors are ineligible to receive enhanced death
2-50 benefits described by Section 7(c) of this article. A DROP
2-51 participant who is determined under Section 6(c) of this article to
2-52 be incapable of performing any substantial gainful employment
2-53 because of an on-duty disability may retroactively revoke the
2-54 member's DROP election if the revocation occurs before the member
2-55 receives a distribution from the member's DROP account or
2-56 retirement benefits. If a DROP participant dies in the course of
2-57 the performance of the member's duty or dies as a result of an
2-58 on-duty disability described by Section 6(c) of this article, the
2-59 DROP participant's eligible survivors under Section 7 of this
2-60 article and the member's eligible DROP beneficiaries under
2-61 Subsection (j) of this section may, by unanimous agreement,
2-62 retroactively revoke the member's DROP election if the revocation
2-63 occurs before receipt of a distribution from the member's DROP
2-64 account, service pension benefits under Section 4 of this article,
2-65 or death benefits under Section 7 of this article. For purposes of
2-66 this subsection, an on-duty disability must have occurred after the
2-67 effective date of a member's election to participate in the DROP.
2-68 If a DROP election revocation is made as prescribed by this
2-69 subsection, the member's DROP account is not distributed, and the
3-1 member or the member's beneficiary, as applicable, is entitled to
3-2 benefits under this article as if a DROP election had not been
3-3 made].
3-4 (p) A member participating in the DROP who was qualified to
3-5 make a DROP election before the actual date of the member's
3-6 election may elect to have the member's DROP account recomputed by
3-7 participating in a Back-DROP. Under a Back-DROP election, the
3-8 member's account balance is equal to the amount that the account
3-9 would have had if the member had elected to participate in the DROP
3-10 on an earlier date chosen by the member. The Back-DROP date chosen
3-11 by the member may not be earlier than the later of the date that
3-12 is three years before the date the member elected to participate in
3-13 the DROP, or September 1, 1995. The member's choice of a Back-DROP
3-14 date is irrevocable, except as provided by Subsection (r) of this
3-15 section.
3-16 (q) A member may revoke the member's Back-DROP election by
3-17 notifying the fund in writing not later than the 10th business day
3-18 after the date the member signs an application form for a
3-19 Back-DROP.
3-20 (r) A member may revoke the date chosen under a Back-DROP
3-21 election and choose an earlier Back-DROP date only if:
3-22 (1) the first date the member chooses is not the
3-23 earliest date permitted under Subsection (p) of this section; and
3-24 (2) the board determines that the member's injury or
3-25 illness has caused the member to be separated from service earlier
3-26 than the member anticipated.
3-27 SECTION 3. Sections 10A(a), (b), (c), (d), (e), (h), and (i),
3-28 Article 6243e.2(1), Revised Statutes, are amended to read as
3-29 follows:
3-30 (a) The board shall pay supplemental benefits under this
3-31 section to retired members and eligible survivors who are receiving
3-32 retirement or survivor benefits on June 30 of the year preceding
3-33 the year in which the supplemental benefits are to be paid[, not
3-34 including deferred retirees, and to eligible survivors, not
3-35 including survivors of deferred retirees, if the requirements of
3-36 Subsection (b) of this section are met]. Deferred retirees or
3-37 survivors of deferred retirees may not receive [The board shall pay
3-38 the] supplemental benefits under [in January following a fiscal
3-39 year of the fund in which the requirements of Subsection (b) of]
3-40 this section [are met].
3-41 (b) The board shall pay the supplemental benefits under this
3-42 section each January [if the fund actuary determines that, as of
3-43 the end of any fund fiscal year:]
3-44 [(1) the value of the fund's assets exceeds the amount
3-45 of the fund's accrued liability;]
3-46 [(2) the fund's gross rate of return on investments
3-47 for that fiscal year exceeds 9.25 percent; and]
3-48 [(3) payment of supplemental benefits will not result
3-49 in an increase of the municipality's contribution rate].
3-50 (c) For purposes [The board shall adopt rules and procedures
3-51 to govern the payment] of [benefits under] this section, the [and
3-52 shall establish a] minimum income level is [consistent with] the
3-53 federal [national] poverty guideline for a family of five as issued
3-54 [level set] by the United States Department of Health and Human
3-55 Services, rounded up to the nearest $1,000.
3-56 (d) The [board shall determine an] aggregate supplemental
3-57 benefit amount is $5 million [that may not exceed the lesser of:]
3-58 [(1) the amount by which the value of fund assets
3-59 exceeds the amount of accrued liability as determined under
3-60 Subsection (b)(1) of this section; or]
3-61 [(2) $4 million].
3-62 (e) Based on the aggregate supplemental benefit amount
3-63 [determined] under Subsection (d) of this section, the board shall
3-64 determine the amount of a lump-sum payment for each retired member
3-65 or eligible survivor.
3-66 (h) The product of the computation under Subsection (g) of
3-67 this section determines the lump-sum payment to the retired member
3-68 or eligible survivor unless the lump-sum payment plus the annual
3-69 retirement benefit is less than the minimum income level under
4-1 Subsection (c) [established by the board].
4-2 (i) If the lump-sum payment plus the annual retirement
4-3 benefit is less than the minimum income level under Subsection (c)
4-4 of this section [established by the board], the retired member or
4-5 eligible survivor is entitled to receive an additional payment from
4-6 the amount determined under Subsection (d) of this section that
4-7 will cause payments to the recipient to meet but not exceed the
4-8 minimum income level.
4-9 SECTION 4. Sections 10B(a) and (b), Article 6243e.2(1),
4-10 Revised Statutes, are amended to read as follows:
4-11 (a) The board shall pay the following members [people] a
4-12 $5,000 [$4,000] lump-sum payment from the fund, in addition to any
4-13 other benefits, as soon as administratively practicable after the
4-14 date of the member's [person's] retirement[, if the person's
4-15 retirement occurs or occurred after June 30, 1998]:
4-16 (1) each member who retires or retired after
4-17 completing 20 years of service and is eligible to receive service
4-18 pension benefits under Section 4 of this article; and
4-19 (2) each member who retires or retired and is eligible
4-20 to receive disability benefits under Section 6 of this article.
4-21 (b) The board shall pay a $5,000 [$4,000] lump-sum payment
4-22 from the fund, in addition to any other benefits, to an eligible
4-23 survivor of a member:
4-24 (1) [whose death occurs or occurred after June 30,
4-25 1998;]
4-26 [(2)] who had not terminated active service; and
4-27 (2) [(3)] who was eligible [ineligible] to receive
4-28 service pension benefits under Section 4 of this article or
4-29 disability benefits under Section 6 of this article.
4-30 SECTION 5. Section 11(c), Article 6243e.2(1), Revised
4-31 Statutes, is amended to read as follows:
4-32 (c) The benefits, including survivor benefits, payable based
4-33 on the service of a member who [completed 30 or more years of
4-34 participation,] is or would have been at least 48 [50] years old,
4-35 [or] received or is receiving an on-duty disability pension under
4-36 Section 6(c) of this article, or died under the conditions
4-37 described by Section 7(c) of this article, shall be increased by
4-38 three percent in October of each year and, if the benefit had not
4-39 previously been subject to that adjustment, in the month of the
4-40 member's 48th [50th] birthday.
4-41 SECTION 6. Article 6243e.2(1), Revised Statutes, is amended
4-42 by adding Section 18 to read as follows:
4-43 Sec. 18. PROPORTIONAL RETIREMENT PROGRAM. (a) In this
4-44 section:
4-45 (1) "Combined service credit" means the total amount
4-46 of service credit a member has for participation in the fund plus
4-47 service credit the member has in any participating retirement
4-48 system.
4-49 (2) "Participating retirement system" means the
4-50 retirement system established under Article 6243g-4, Revised
4-51 Statutes, or Chapter 358, Acts of the 48th Legislature, Regular
4-52 Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), or a
4-53 successor statute to either of those laws.
4-54 (3) "Program" means a proportional retirement benefits
4-55 program established under this section that permits members to
4-56 establish service credit for a proportional retirement benefit
4-57 using combined service credit.
4-58 (4) "Service credit" means service or participation
4-59 that is credited under the fund or a participating retirement
4-60 system to establish service or participation requirements for a
4-61 proportional retirement benefit.
4-62 (b) If the board determines that the provisions governing a
4-63 participating retirement system are compatible with the provisions
4-64 governing the fund under this article, the board may establish the
4-65 program under this section.
4-66 (c) Under the program, a member who is eligible to
4-67 participate may use combined service credit to determine
4-68 eligibility for a benefit under this article. The member must have
4-69 at least 20 years of combined service credit to receive a
5-1 proportional retirement benefit. The member is subject to the same
5-2 requirements and receives the same benefits, including
5-3 enhancements, as a member who establishes retirement eligibility
5-4 for the same amount of service credit without using combined
5-5 service credit.
5-6 (d) A member may not:
5-7 (1) use service credit in a participating retirement
5-8 system to meet the eligibility requirements for participating in a
5-9 DROP under Section 5 of this article;
5-10 (2) receive service credit in the fund for the same
5-11 service for which the member receives service credit in a
5-12 participating retirement system; or
5-13 (3) receive a benefit under the program in an amount
5-14 that is greater than the amount the member would have received for
5-15 the same benefit without the program unless the greater amount
5-16 results from a modification under Subsection (j) of this section.
5-17 (e) A person is eligible to participate in the program if
5-18 the person is employed by the city, is covered by a participating
5-19 retirement system, and is or has been a member of the fund.
5-20 (f) A member who is retired or participating in a DROP under
5-21 Section 5 of this article may not participate in the program. A
5-22 member may not receive a disability retirement benefit and a
5-23 service retirement benefit under the program.
5-24 (g) In determining proportional retirement benefits under
5-25 the program for a member who has participated in the fund for less
5-26 than 20 years, the member is entitled to a monthly benefit in an
5-27 amount equal to 1.7 percent of the member's average monthly salary
5-28 multiplied by the number of the member's years of participation in
5-29 the fund.
5-30 (h) A member who receives a disability benefit under a
5-31 participating retirement system may receive a proportional
5-32 disability benefit under the program as provided by Subsection (i)
5-33 of this section.
5-34 (i) In determining disability retirement benefits under the
5-35 program, the member is entitled to a monthly benefit in an amount
5-36 equal to 1.7 percent of the member's average monthly salary
5-37 multiplied by the number of the member's years of participation in
5-38 the fund.
5-39 (j) The board may modify the program only to make the
5-40 program's provisions compatible with the provisions of a
5-41 participating retirement system. The board may not modify the
5-42 program for the purpose of providing a new benefit to a member.
5-43 (k) If the board determines that the provisions governing a
5-44 participating retirement system are not compatible with the
5-45 provisions governing the fund under this article, the board may
5-46 terminate the program. The board shall provide written notice to
5-47 the executive director of the participating retirement system
5-48 before the 30th day preceding the date of the program's
5-49 termination. The board may reestablish the program at its
5-50 discretion, subject to the requirements of this section.
5-51 (l) The board may adopt rules to implement and administer
5-52 this section.
5-53 SECTION 7. (a) Except as provided by Subsection (b) of this
5-54 section, this Act takes effect September 1, 2001.
5-55 (b) Section 18, Article 6243e.2(1), Revised Statutes, as
5-56 added by this Act, takes effect October 1, 2001.
5-57 * * * * *