1-1     By:  Thompson (Senate Sponsor - Gallegos)             H.B. No. 1573
 1-2           (In the Senate - Received from the House April 9, 2001;
 1-3     April 9, 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 the establishment of a retirement system for officers
1-10     and employees of certain municipalities and of the retirement
1-11     system and the transfer of credit from one retirement system to the
1-12     established system.
1-13           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-14           SECTION 1.  DEFINITIONS. In this Act:
1-15                 (1)  "Authorized absence" means:
1-16                       (A)  each day an employee is absent due to an
1-17     approved holiday, vacation, accident, or sickness, if the employee
1-18     is continued on the employment rolls of the city or the pension
1-19     system, receives the employee's regular salary from the city or the
1-20     pension system for each day of absence, and remains eligible to
1-21     work on recovery or return; or
1-22                       (B)  any period that a person is on military
1-23     leave of absence under Section 18(a) of this Act, provided the
1-24     person complies with the requirements of that section.
1-25                 (2)  "Average monthly salary" means:
1-26                       (A)  the amount computed by dividing the sum of
1-27     the 78 highest biweekly salaries paid to an employee during years
1-28     of credited service by 36; or
1-29                       (B)  if there are fewer than 78 biweekly salaries
1-30     paid to an employee during the employee's period of credited
1-31     service, the amount computed by multiplying the average of all
1-32     biweekly salaries paid to the employee during the period of
1-33     credited service by 26 and dividing the product by 12.
1-34                 (3)  "Benefit accrual rate" means the percentage in
1-35     Section 10(d) or (e) of this Act for each year of a member's
1-36     credited service used to compute a pension or benefit.
1-37                 (4)  "City" means a municipality having a population of
1-38     more than 1.5 million.
1-39                 (5)  "Credited service" means each day of service and
1-40     prior service of a member for which:
1-41                       (A)  the city has and, for service in group A,
1-42     the member has made required contributions to the pension fund that
1-43     were not subsequently withdrawn;
1-44                       (B)  the member has purchased service credit or
1-45     converted service credit from group B to group A by paying into the
1-46     pension fund required amounts that were not subsequently withdrawn;
1-47                       (C)  the member has reinstated service under
1-48     Section 7(g) of this Act; and
1-49                       (D)  the member has previously made payments to
1-50     the pension fund that, under then existing provisions of law, make
1-51     the member eligible for credit for the service and that were not
1-52     subsequently withdrawn.
1-53                 (6)  "Deferred participant" means a person who:
1-54                       (A)  has separated from service;
1-55                       (B)  has at least five years of credited service
1-56     in the pension system;
1-57                       (C)  has not met the eligibility requirements for
1-58     a normal retirement pension; and
1-59                       (D)  has made an election under Section 17(c) of
1-60     this Act.
1-61                 (7)  "Dependent child" means an unmarried natural or
1-62     legally adopted child of a member, deferred participant, or retiree
1-63     who:
1-64                       (A)  was supported by the member, deferred
 2-1     participant, or retiree; and
 2-2                       (B)  is under 21 years of age or is totally and
 2-3     permanently disabled from performing any full-time employment
 2-4     because of an injury, illness, or retardation that began before the
 2-5     child became 18 years of age and before the death of the member,
 2-6     deferred participant, or retiree.
 2-7                 (8)  "Disability" means the complete and permanent
 2-8     inability of a member to perform the usual and customary duties
 2-9     that the member has been performing as an employee, or any other
2-10     full-time duties for which the member is reasonably suited by
2-11     training or experience, as determined by the pension board on the
2-12     basis of a medical examination and any other evidence the pension
2-13     board determines is necessary.
2-14                 (9)  "Effective retirement date" means the first day
2-15     retirement begins for a member or deferred participant who is
2-16     eligible for retirement.  If the pension system receives a member's
2-17     application for normal retirement before the member's separation
2-18     from service or not later than the 90th day after the date of the
2-19     member's separation from service, the effective retirement date is
2-20     the later of the first day of the month following the month of
2-21     separation or the date specified in the application.  If the
2-22     pension system receives the member's application after the 90th day
2-23     after the date of the member's separation from service, the
2-24     effective retirement date is the later of the first day of the
2-25     month after the pension system receives the application or the date
2-26     specified in the application.  The effective retirement date for a
2-27     member who qualifies for a service or ordinary disability
2-28     retirement is the later of the day following the member's last day
2-29     of credited service or the date the pension system receives the
2-30     member's request for disability retirement.
2-31                 (10)  "Eligible survivor" means a surviving spouse or
2-32     dependent child.
2-33                 (11)  "Employee" means any person, including an elected
2-34     official during the official's service to the city, who is eligible
2-35     under this Act and:
2-36                       (A)  who holds a municipal position or a position
2-37     with the pension system;
2-38                       (B)  whose name appears on a regular full-time
2-39     payroll of a city or of the pension fund; and
2-40                       (C)  who is paid a regular salary for services.
2-41                 (12)  "Marriage" means a marriage in which:
2-42                       (A)  a marriage certificate is  recorded in the
2-43     records of the county clerk's office in the county in which the
2-44     marriage ceremony was performed; or
2-45                       (B)  in the case of a common-law marriage, a
2-46     marriage declaration is executed by the couple and recorded in the
2-47     records of the county clerk's office in the county in which the
2-48     couple resides.  For separations from service after June 29, 2002,
2-49     a marriage that is evidenced by a declaration of common-law
2-50     marriage signed before a notary public after June 30, 2002, may not
2-51     be treated as effective before the date it was signed before the
2-52     notary public.
2-53                 (13)  "Member" means each active employee included in
2-54     the pension system, except for an employee who is ineligible under
2-55     Section 4 of this Act.
2-56                 (14)  "Military service" means active service in the
2-57     armed forces of the United States or wartime service in the armed
2-58     forces of the United States or in the allied forces, if credit for
2-59     military service has not been granted under any federal or other
2-60     state system or used in any other retirement system.
2-61                 (15)  "Pension" means a benefit payable to a retired
2-62     member out of the pension fund based on a disability or service
2-63     retirement.
2-64                 (16)  "Pension board" means the board of trustees of
2-65     the pension system created under Chapter 358, Acts of the 48th
2-66     Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
2-67     Civil Statutes), and reenacted and continued under this Act for the
2-68     purpose of administering the pension system.
2-69                 (17)  "Pension fund" means assets consisting of the
 3-1     contributions made by the city, contributions made by any member,
 3-2     and any income, profits, or other amounts resulting from the
 3-3     investment of those contributions.
 3-4                 (18)  "Pension system" means the retirement,
 3-5     disability, and survivor benefit plans for municipal employees of a
 3-6     city under this Act and employees under Section 3(d) of this Act.
 3-7                 (19)  "Predecessor system" means the retirement system
 3-8     authorized by Chapter 358, Acts of the 48th Legislature, Regular
 3-9     Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes).
3-10                 (20)  "Previous service" means any service as an
3-11     employee, other than prior service, that preceded a member's
3-12     current period of employment.
3-13                 (21)  "Prior service" means any service performed as an
3-14     employee before September 1, 1943.
3-15                 (22)  "Retiree" means a former member of the pension
3-16     system who:
3-17                       (A)  has separated from service;
3-18                       (B)  has met the eligibility requirements for a
3-19     deferred retirement pension, normal retirement pension, or
3-20     disability pension under this Act; and
3-21                       (C)  is receiving a deferred retirement pension,
3-22     normal retirement pension, or disability pension under this Act
3-23     based on service that was credited to the person.
3-24                 (23)  "Salary" means base pay, longevity pay, and
3-25     shift-differential pay paid to an employee and attributable to
3-26     services rendered by the employee, regardless of how the employee
3-27     was paid.
3-28                 (24)  "Separation from service" means the cessation of
3-29     work for the city or the pension system in an eligible position
3-30     covered by this Act for any reason involving the person's removal
3-31     from the employment rolls of the city or the pension system,
3-32     including death, discharge, resignation, or retirement, the
3-33     effective date of which shall be certified by the city or the
3-34     pension system. The term includes the termination of employment.
3-35                 (25)  "Service" means each day of services and work
3-36     performed by an employee, including an authorized absence.  The
3-37     term does not include a period in which a person:
3-38                       (A)  is a DROP participant;
3-39                       (B)  is suspended from duty without pay;
3-40                       (C)  is on leave of absence without pay;
3-41                       (D)  is ineligible for membership under Section 4
3-42     of this Act; or
3-43                       (E)  is separated from service.
3-44                 (26)  "Surviving spouse" means a person who was married
3-45     to a member, deferred participant, or retiree at the time of death
3-46     of the member, deferred participant, or retiree and before
3-47     separation from service by the member, deferred participant, or
3-48     retiree.
3-49                 (27)  "Trustee" means a trustee of the pension board.
3-50           SECTION 2. PENSION BOARD. (a)  The pension board of the
3-51     predecessor system shall continue to administer, manage, and
3-52     operate the pension system, including directing investments and
3-53     overseeing the fund's assets.
3-54           (b)  The pension system shall operate for the benefit of the
3-55     employees of a city and the pension system.  The pension system
3-56     continues to operate regardless of whether the city's population
3-57     falls below the population required for the city.  The pension
3-58     board is not subject to Title 9, Property Code.
3-59           (c)  The pension board consists of 11 trustees as follows:
3-60                 (1)  the mayor of the city, or the director of the
3-61     civil service  commission as the mayor's representative;
3-62                 (2)  the city treasurer or a person performing the
3-63     duties of treasurer;
3-64                 (3)  four municipal employees of the city who are
3-65     members of the pension system;
3-66                 (4)  two retirees, each of whom:
3-67                       (A)  has at least five years of credited service
3-68     in the pension system;
3-69                       (B)  receives a retirement pension from the
 4-1     pension system; and
 4-2                       (C)  is not an officer or employee of the city;
 4-3     and
 4-4                 (5)  three persons, each of whom:
 4-5                       (A)  is a registered voter in the city;
 4-6                       (B)  has been a resident of the city for the
 4-7     three years preceding the date of initial appointment; and
 4-8                       (C)  is not a city officer or employee.
 4-9           (d)  To serve as a trustee under Subsection (c)(3) of this
4-10     section, a person must be a member with at least five years of
4-11     credited service and be elected by the active members of the
4-12     pension system at an election called by the pension board.  No more
4-13     than two of the employee trustees may be employees of the same
4-14     department.
4-15           (e)  A person elected as an employee trustee under Subsection
4-16     (d) of this section who retires during the trustee's term shall
4-17     remain in office until the expiration of the term.  Persons elected
4-18     as employee trustees serve staggered four-year terms, with the
4-19     terms of two  of the trustees expiring in each even-numbered year.
4-20     Each employee trustee shall continue to serve until a successor is
4-21     qualified.
4-22           (f)  A vacancy caused by an employee trustee's death,
4-23     resignation, or removal shall be filled by an appointment made by a
4-24     majority of the trustees elected by the members of the pension
4-25     system on a notarized affidavit of appointment submitted to the
4-26     executive director not later than the 10th day after the date the
4-27     vacancy occurs.  The appointee serves for the remainder of the
4-28     unexpired term of the replaced trustee.  If the notarized affidavit
4-29     of appointment is not timely submitted, the executive director
4-30     shall call an election to be held not later than the 90th day after
4-31     the date of the vacancy to elect an employee trustee to fill the
4-32     vacancy.
4-33           (g)  To serve as a trustee under Subsection (c)(4) of this
4-34     section, a person must be elected by the retired members of the
4-35     pension system at an election called by the pension board.
4-36           (h)  Persons elected as  retiree trustees serve four-year
4-37     staggered terms, with the term of one trustee expiring in each
4-38     even-numbered year.
4-39           (i)  Each retiree trustee serves until the retiree's
4-40     successor is qualified.  A vacancy caused by a retiree trustee's
4-41     death, resignation, or removal shall be filled by appointment made
4-42     by the other trustee normally chosen by retiree election on a
4-43     notarized affidavit of appointment submitted to the executive
4-44     director not later than the 10th day after the date the vacancy
4-45     occurs.  The appointee serves for the remainder of the unexpired
4-46     term of the replaced trustee.  If the notarized affidavit of
4-47     appointment is not timely submitted, the executive director shall
4-48     call an election to be held not later than the 90th day after the
4-49     date of the vacancy to elect a retiree trustee to fill the vacancy.
4-50           (j)  To serve as a trustee under Subsection (c)(5) of this
4-51     section, a person must be appointed by the governing body of the
4-52     city.  Each trustee appointed under Subsection (c)(5) of this
4-53     section serves a two-year term.  The appointment or reappointment
4-54     of both the appointed trustees shall take place in January of each
4-55     even-numbered year.  A vacancy caused by an appointed trustee's
4-56     death, resignation, or removal shall be filled by the governing
4-57     body of the city.  The appointee serves for the remainder of the
4-58     unexpired term of the replaced trustee.  An appointed trustee may
4-59     not serve beyond the expiration of the two-year term other than by
4-60     appointment for a new term by the governing body of the city.
4-61           (k)  Notwithstanding any other provision in this section, if
4-62     an eligible candidate for an elected trustee position on the
4-63     pension board is unopposed for an election, the election may not be
4-64     held for that position, and the pension board shall certify the
4-65     candidate as elected to the pension board on the executive
4-66     director's designation that the candidate is eligible to be a
4-67     trustee under this section and is unopposed for election.  The
4-68     pension board's certification shall be effective on the day
4-69     following the date the preceding term for the trustee position
 5-1     expires.
 5-2           (l)  Each trustee shall, at the first pension board meeting
 5-3     following the trustee's most recent election or appointment, take
 5-4     an oath of office that the trustee:
 5-5                 (1)  will diligently and honestly administer the
 5-6     pension system; and
 5-7                 (2)  will not knowingly violate this Act or willingly
 5-8     allow a violation of this Act to occur.
 5-9           (m)  A trustee serves without bond unless otherwise required
5-10     by law and may not receive compensation for service on the pension
5-11     board. The pension board by resolution may adopt a policy for
5-12     removal of a trustee.
5-13           (n)  The person serving as a trustee under Subsection (c)(2)
5-14     of this section serves as the treasurer of the pension fund under
5-15     penalty of that person's official bond and oath of office.  That
5-16     person's official bond to the city shall cover the person's
5-17     position as treasurer of the pension fund, and that person's
5-18     sureties are liable for the treasurer's actions pertaining to the
5-19     pension fund to the same extent as the sureties are liable under
5-20     the terms of the bond for other actions and conduct of the
5-21     treasurer.
5-22           (o)  The pension board shall receive, manage, and disburse
5-23     the pension fund as provided by this Act and rules adopted by the
5-24     pension board.
5-25           (p)  In each odd-numbered year, the pension board shall elect
5-26     from the elected trustees a chair, vice chair, and secretary.
5-27           (q)  The pension board shall hold regular monthly meetings at
5-28     a time and place set by the chair.  The chair, the secretary, or a
5-29     majority of the trustees may call a special meeting of the pension
5-30     board.
5-31           (r)  The city shall allow city employees who are trustees to
5-32     promptly attend all pension board and committee meetings.  The city
5-33     shall allow trustees the time required to travel to and attend
5-34     educational workshops, legislative hearings, and meetings regarding
5-35     proposed amendments to this Act if attendance is consistent with a
5-36     trustee's duty to the pension board.
5-37           (s)  Notice shall be given to all trustees of the pension
5-38     board, unless waived in writing, as to any proposed meeting by any
5-39     method reasonably calculated to give adequate notice  of the
5-40     meeting.  The notice may be delivered by mail, personal delivery,
5-41     or electronically transmitted notice, including facsimile, and
5-42     shall be properly addressed to each trustee.  If a meeting occurs
5-43     that all trustees of the pension board attend, notice is not
5-44     necessary under this subsection.
5-45           (t)  Each trustee is entitled to one vote on the pension
5-46     board.  A majority of concurring votes present at any meeting of
5-47     the pension board is needed for a decision by the trustees.  A
5-48     majority of the trustees is a quorum.  A trustee who is a member
5-49     may not vote on any issue relating specifically to that trustee.
5-50           (u)  The city shall provide full and timely information to
5-51     the pension board about employees as reasonably required by the
5-52     pension board to administer the pension fund and provide benefits
5-53     properly, including information relating to the hiring of
5-54     employees, members' service dates, compensation of members,
5-55     members' deaths, and terminations of employment.
5-56           (v)  The pension board may purchase from an insurer licensed
5-57     to do business in this state an insurance policy that provides for
5-58     reimbursement of a trustee, officer, or employee of the pension
5-59     board for liability imposed for damages caused by an alleged act,
5-60     error, or omission committed in the individual's capacity as
5-61     fiduciary or cofiduciary of assets of the pension fund and for
5-62     costs and expenses incurred by a fiduciary or cofiduciary in
5-63     defense of a claim of an alleged act, error, or omission.  A policy
5-64     of insurance purchased under this subsection may not provide for
5-65     reimbursement of a trustee, officer, or employee of the pension
5-66     board for liability imposed or expenses incurred because of the
5-67     individual's personal dishonesty, fraudulent breach of trust, lack
5-68     of good faith, intentional fraud or deception, or intentional
5-69     failure to act prudently.  The cost of insurance coverage purchased
 6-1     under this subsection shall be paid from money in the pension fund.
 6-2           (w)  If the insurance described in Subsection (v) of this
 6-3     section is not in effect, the pension board may indemnify a
 6-4     trustee, officer, or employee of the pension board for liability
 6-5     imposed as damages because of an alleged act, error, or omission
 6-6     committed in the individual's capacity as fiduciary or cofiduciary
 6-7     of assets of the pension fund and for reasonable costs and expenses
 6-8     incurred by a fiduciary or a cofiduciary in defense of a claim of
 6-9     an alleged act, error, or omission.  Indemnification may not extend
6-10     to liability imposed or expenses incurred by a trustee, officer, or
6-11     employee of the pension board because of the individual's personal
6-12     dishonesty, fraudulent breach of trust, lack of good faith,
6-13     intentional fraud or deception, or intentional failure to act
6-14     prudently.  A determination of indemnification shall be made by a
6-15     majority vote of the pension board.  If a proposed indemnification
6-16     is of a trustee, that trustee may not vote on the matter.  In the
6-17     event the vote of the pension board results in a tie, the
6-18     indemnification shall be approved.  The pension board may adopt a
6-19     policy establishing a method for presentation, approval, and
6-20     payment of claims for indemnification.  Indemnification approved
6-21     under this subsection extends to acts, errors, and omissions of
6-22     trustees, officers, or employees of the predecessor system as long
6-23     as the alleged act, error, or omission occurs after July 1, 1989.
6-24           (x)  The pension board shall manage the pension fund under
6-25     this Act and under the Internal Revenue Code of 1986, as amended,
6-26     and may:
6-27                 (1)  adopt, for the administration of the pension fund,
6-28     written rules and guidelines;
6-29                 (2)  interpret and construe this Act and any summary
6-30     plan, descriptions, or benefits procedures, except that each
6-31     construction must meet any qualification requirements established
6-32     under Section 401, Internal Revenue Code of 1986, as amended;
6-33                 (3)  correct any defect, supply any omission, and
6-34     reconcile any inconsistency that appears in this Act in a manner
6-35     and to the extent that the pension board considers expedient to
6-36     administer this Act for the greatest benefit of all members;
6-37                 (4)  determine all questions, whether legal or factual,
6-38     relating to eligibility for membership, service, or benefits or
6-39     relating to the administration of the pension fund to promote the
6-40     uniform administration of the pension fund for the benefit of all
6-41     members and retirees; and
6-42                 (5)  establish and maintain records necessary or
6-43     appropriate for the proper administration of the pension fund.
6-44           (y)  The determination of any fact by the pension board and
6-45     the pension board's interpretation of this Act are final and
6-46     binding on any interested party, including members, deferred
6-47     participants, retirees, eligible survivors, beneficiaries, and the
6-48     city.
6-49           (z)  The pension board shall determine the prior service to
6-50     be credited to each member of the pension system based on:
6-51                 (1)  the personnel records of the city; or
6-52                 (2)  affidavits, if the personnel records are
6-53     incomplete.
6-54           (aa)  The pension board shall determine each member's
6-55     credited service based on the personnel and financial records of
6-56     the city and the records of the pension board.
6-57           (bb)  The trustees and the executive director may rely on:
6-58                 (1)  tables, valuations, certificates, and reports
6-59     furnished by any actuary employed by the pension board;
6-60                 (2)  certificates and reports made by an accountant
6-61     selected or approved by the pension board;
6-62                 (3)  any report furnished by the treasurer; and
6-63                 (4)  opinions given by any legal counsel selected or
6-64     approved by the pension board.
6-65           (cc)  The trustees, executive director, and employees of the
6-66     pension system are fully protected and free of liability for any
6-67     action taken or suffered by them in good faith in reliance on the
6-68     actuary, accountant, treasurer, or counsel, and the action is
6-69     conclusively binding on all employees, members, deferred
 7-1     participants, retirees, eligible survivors, beneficiaries, and
 7-2     other persons.
 7-3           (dd)  A gathering of any number of trustees to investigate,
 7-4     research, or review prospective or current investments, without
 7-5     formal action by the trustees, is not a deliberation or meeting
 7-6     under Chapter 551, Government Code,  and is not required to be open
 7-7     to the public.
 7-8           SECTION 3.  ADDITIONAL POWERS OF PENSION BOARD. (a)  If the
 7-9     pension board determines that there is a surplus of funds in an
7-10     amount exceeding the current obligations of the pension fund, the
7-11     pension board may invest the surplus in the manner provided by
7-12     Chapter 802, Government Code.
7-13           (b)  The pension board may contract with a person to perform
7-14     any investment, administrative, legal, medical, accounting,
7-15     clerical, or other service the pension board considers appropriate,
7-16     including:
7-17                 (1)  a certified public accountant or firm of certified
7-18     public accountants to perform an audit of the pension fund at times
7-19     and intervals the pension board considers necessary;
7-20                 (2)  a professional investment manager or firm of
7-21     managers as provided by Section 802.204, Government Code;
7-22                 (3)  an actuary or actuarial firm at times and for
7-23     purposes the pension board considers appropriate; and
7-24                 (4)  an attorney or law firm to advise, assist, or
7-25     represent the pension board in any legal matter relating to the
7-26     pension fund.
7-27           (c)  A fee for a service or person contracted with under
7-28     Subsection (b) of this section may be paid from the pension fund.
7-29           (d)  The pension board may hire employees as the pension
7-30     board considers advisable for the proper and efficient
7-31     administration of the system, including persons described in
7-32     Subsection (b) of this section, whose positions and salaries shall
7-33     be set by the pension board.
7-34           (e)  The executive director hired by the pension board is the
7-35     plan administrator.
7-36           (f)  The pension board shall compensate from the pension fund
7-37     the persons performing services under Subsections (d) and (e) of
7-38     this section and may provide other employee benefits that the
7-39     pension board considers proper.  Any person employed by the pension
7-40     board under Subsection (d) or (e) of this section who has service
7-41     credits with the pension system at the time of the person's
7-42     employment by the pension board retains the person's status in the
7-43     pension system.  Any person employed by the pension system who does
7-44     not have service credits with the pension system at the time of
7-45     employment is a group A member.  The pension board shall adopt a
7-46     detailed annual budget detailing its proposed administrative
7-47     expenditures under this subsection for the next fiscal year.
7-48           (g)  The pension board may institute legal action in the name
7-49     of the pension board on behalf of the pension system, including a
7-50     civil action to recover from any offending party, or from the
7-51     party's surety, money paid out or obtained from the pension fund
7-52     through fraud, misrepresentation, defalcation, theft, embezzlement,
7-53     or misapplication.
7-54           (h)  The pension board may offset amounts received wrongly or
7-55     in error by a member, deferred participant, retiree, eligible
7-56     survivor, alternate payee, or beneficiary from future pension or
7-57     benefit payments payable to the person or the person's
7-58     beneficiaries.
7-59           (i)  On written request from the chair, the city attorney
7-60     shall represent the pension board or the pension fund in any legal
7-61     matter.  The city attorney may not be compensated from the pension
7-62     fund for providing representation.  The pension board may employ,
7-63     if necessary, legal counsel instead of the city attorney or to
7-64     assist the city attorney and may pay reasonable compensation from
7-65     the pension fund.
7-66           (j)  The pension board may obtain from any member, deferred
7-67     participant, retiree, eligible survivor, alternate payee, or
7-68     beneficiary any information the pension board considers necessary
7-69     for the proper administration of the pension system.  The pension
 8-1     board may require any member, survivor, or other person or entity
 8-2     to furnish information the pension board requires for the
 8-3     determination of benefits under this Act.  If a person or entity
 8-4     does not cooperate in the furnishing or obtaining of information,
 8-5     the pension board may withhold payment of the pension or other
 8-6     benefits until the pension board receives the information.
 8-7           (k)  On majority vote of the trustees, the pension board may
 8-8     allocate among the trustees the responsibilities of the pension
 8-9     board under this Act and may designate any person who is not a
8-10     trustee, including the executive director and other employees, to
8-11     carry out the responsibilities of the pension board under this Act.
8-12           (l)  The pension board may by resolution make the
8-13     implementation of a provision of this Act contingent on receipt of
8-14     a favorable private letter ruling or favorable determination letter
8-15     from the Internal Revenue Service if the pension board determines
8-16     that the action is in the best interest of the pension system.
8-17           (m)  It is intended that this Act be construed and
8-18     administered in a manner so that the pension system's benefit plan
8-19     will be considered a qualified plan under Section 401(a), Internal
8-20     Revenue Code of 1986, as amended.  The pension board may adopt
8-21     rules that qualify the plan to the extent necessary for the pension
8-22     system to be a qualified plan.  Rules adopted by the pension board
8-23     under this subsection are considered a part of the plan.  In
8-24     determining qualification status under Section 401(a), Internal
8-25     Revenue Code of 1986, as amended, the pension system's benefit plan
8-26     shall be considered the primary retirement plan for members of the
8-27     pension system.
8-28           SECTION 4.  INELIGIBLE INDIVIDUALS.  Notwithstanding any
8-29     other provision of this Act, the following employees of the city or
8-30     of the pension system are not eligible to become members of the
8-31     pension system:
8-32                 (1)  persons on quasi-legislative, quasi-judicial, and
8-33     advisory pension boards and commissions;
8-34                 (2)  part-time employees, as defined by the city, other
8-35     than elected officials whose service is made part-time by law or
8-36     charter;
8-37                 (3)  seasonal employees;
8-38                 (4)  independent contractors, including consultants;
8-39     and
8-40                 (5)  employees in positions covered by any other
8-41     pension plan of the city to which the city contributes, including
8-42     employees who are excluded from membership in another pension plan
8-43     by action of the board of trustees of the other pension plan,
8-44     except to the extent that they are covered in another pension plan
8-45     only as a beneficiary.
8-46           SECTION 5.  INDIVIDUALS ELIGIBLE FOR MEMBERSHIP. (a)
8-47     Individuals described in this section are eligible for membership
8-48     under this Act.
8-49           (b)  Except as provided by Subsection (c) of this section and
8-50     Sections 4 and 6 of this Act, an employee is a group A member of
8-51     the pension system as a condition of employment if the employee:
8-52                 (1)  is hired or rehired as an employee by the city,
8-53     the predecessor system, or the pension system on or after September
8-54     1, 1999;
8-55                 (2)  was a member of the predecessor system before
8-56     September 1, 1981, under the terms of Chapter 358, Acts of the 48th
8-57     Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
8-58     Civil Statutes), and did not make an election before December 1,
8-59     1981, under Section 22(a) of that Act to receive a refund of
8-60     contributions and become a group B member;
8-61                 (3)  was a group A member who terminated employment
8-62     included in the predecessor system before May 3, 1991, elected
8-63     under Section 16, Chapter 358, Acts of the 48th Legislature,
8-64     Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
8-65     Statutes), to leave the member's contributions in that pension
8-66     fund, met the minimum service requirements for retirement at an
8-67     attained age, was reemployed in a position included in the
8-68     predecessor system before September 1, 1999, and elected, not later
8-69     than the 30th day after the date reemployment began, to continue as
 9-1     a group A member;
 9-2                 (4)  became a member of, or resumed membership in, the
 9-3     predecessor system as an employee or elected official of the city
 9-4     after January 1, 1996, and before September 1, 1999, and elected by
 9-5     submission of a signed and notarized form in a manner determined by
 9-6     the pension board to become a group A member and to contribute a
 9-7     portion of the person's salary to the pension fund as required by
 9-8     Chapter 358, Acts of the 48th Legislature, Regular Session, 1943
 9-9     (Article 6243g, Vernon's Texas Civil Statutes); or
9-10                 (5)  met the requirements of Section 3B, Chapter 358,
9-11     Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g,
9-12     Vernon's Texas Civil Statutes), or Subsection (f) of this section
9-13     for membership in group A.
9-14           (c)  Except as otherwise provided by this section or Section
9-15     4 of this Act, an employee continues as a group B member of the
9-16     pension system as a condition of employment if the employee:
9-17                 (1)  was hired or rehired by the city or the
9-18     predecessor system after September 1, 1981, and before September 1,
9-19     1999, and did not make an election under Section 3A, Chapter 358,
9-20     Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g,
9-21     Vernon's Texas Civil Statutes), to become a group A member; or
9-22                 (2)  was a member of the predecessor system before
9-23     September 1, 1981, under the terms of Chapter 358, Acts of the 48th
9-24     Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
9-25     Civil Statutes), and made an election before December 1, 1981,
9-26     under Section 22 of that Act to receive a refund of contributions
9-27     and become a group B member.
9-28           (d)  Except as otherwise provided by this section, Section 4
9-29     or 6 of this Act, or Section 22A, Chapter 358, Acts of the 48th
9-30     Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
9-31     Civil Statutes), any employee of the city or of the pension system
9-32     who is an executive official as defined by Section 6 of this Act is
9-33     a group C member of the pension system.  A group C member is
9-34     subject to the same provisions that apply to group A members except
9-35     as otherwise provided by Section 6 of this Act.
9-36           (e)  Any member or former member of the pension system
9-37     elected to an office of the city on or after September 1, 1999,
9-38     becomes a group A member and is eligible to receive credit for all
9-39     previous service on the same conditions as reemployed group A
9-40     members under Sections 7(c), (d), (e), and (f) of this Act, except
9-41     as otherwise provided by this Act.  Notwithstanding any other
9-42     provision in this Act or in Chapter 358, Acts of the 48th
9-43     Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
9-44     Civil Statutes), consecutive terms of office of any elected member
9-45     who is elected to an office of the city are considered to be
9-46     continuous employment for purposes of this Act.
9-47           (f)  Each group B member of the pension system may make an
9-48     irrevocable election on a date and in a manner determined by the
9-49     pension board to change membership from group B to group A:
9-50                 (1)  for future service only; or
9-51                 (2)  for future service and to convert all past group B
9-52     service to group A service and comply with the requirements of
9-53     Subsection (h) of this section.
9-54           (g)  Each group A member with service in group B may make an
9-55     irrevocable election on a date and in a manner determined by the
9-56     pension board to convert all group B service to group A service and
9-57     to comply with the requirements of Subsection (h) of this section.
9-58           (h)  A member who makes an election under Subsection (f) or
9-59     (g) of this section must pay into the pension fund all
9-60     contributions that would have been deducted as member contributions
9-61     to group A during the period that the person was a group B member,
9-62     as computed under Section 7(c), (d), (e), or (f) of this Act,
9-63     including required interest.  Payment of these amounts must be
9-64     completed before the earliest of the date of the termination of the
9-65     member's employment or term in office, the date of the member's
9-66     retirement or death, or the fifth anniversary of the date of the
9-67     member's election under this section.  If the payments are not
9-68     completed by that date, the member or the member's estate may
9-69     either make an immediate payment of the balance due or receive a
 10-1    refund, without interest, of the amount the member paid as
 10-2    contributions to group A for the period that the person was a group
 10-3    B member.  If a refund is paid under this subsection and the member
 10-4    made the election under Subsection (f) of this section, the member
 10-5    is considered to have been a group B member during the period
 10-6    preceding the member's election and to have been a group A member
 10-7    since the date of the member's election.  If a refund is paid under
 10-8    this subsection and the member made the election under Subsection
 10-9    (g) of this section, all of the group B service that the member had
10-10    elected to convert to group A service reverts back to group B
10-11    service.
10-12          (i)  A member who makes an election under Subsection (f)(1)
10-13    or (2) of this section shall pay required contributions under
10-14    Section 8 of this Act for all service after the date of the
10-15    election.
10-16          SECTION 6. GROUP C MEMBERSHIP, SERVICE REQUIREMENTS, AND
10-17    BENEFITS. (a)  A group C member is subject to the provisions that
10-18    apply to group A members under this Act, except as otherwise
10-19    provided by this section.
10-20          (b)  In this section:
10-21                (1)  "Credited service" means the number of whole and
10-22    fractional years of a member's eligible service in group C as an
10-23    executive official after the executive official's effective date of
10-24    participation in group C for which member and employer
10-25    contributions are on deposit with the pension fund.
10-26                (2)  "Effective date of participation in group C" means
10-27    September 1, 1999, except that for an employee who first becomes an
10-28    executive official and whose contributions to group C begin after
10-29    that date, the effective date of participation in group C is the
10-30    first date on which the employee qualifies as an executive official
10-31    and for which applicable contributions are made for service in
10-32    group C as an executive official.   
10-33                (3)  "Executive official" means a person in one of the
10-34    following categories:
10-35                      (A)  the chief administrative officer of the
10-36    city;
10-37                      (B)  the executive director of the pension
10-38    system; or
10-39                      (C)  a full-time appointed director of a
10-40    department of the city as designated by the governing body of the
10-41    city and approved by the pension board, other than a director who
10-42    is covered by another pension system to which the city contributes
10-43    or an acting director or the equivalent.
10-44                (4)  "Group C" means the executive officials' plan
10-45    established under Chapter 358, Acts of the 48th Legislature,
10-46    Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
10-47    Statutes), and reenacted and continued under this Act.
10-48          (c)  An executive official becomes a member of group C on the
10-49    official's effective date of participation in group C, except that
10-50    a group A or group B member who is participating in the DROP under
10-51    Section 12 of this Act is ineligible to become a member of group C.
10-52          (d)  A group C member receives two times the number of actual
10-53    years of credited service in group C solely for the purpose of
10-54    fulfilling the eligibility requirements for a  deferred or normal
10-55    retirement pension in group C as provided by Subsection (e) of this
10-56    section. For all other computations under this Act, the actual
10-57    years of credited service in group C are used.
10-58          (e)  A group C member who ceases to be an executive official
10-59    is eligible for a deferred or normal retirement pension beginning
10-60    on the member's effective retirement date when the member separates
10-61    from service and:
10-62                (1)  fulfills the requirement for years of age and
10-63    years of credited service for a normal retirement pension under
10-64    Section 10(b) of this Act; or
10-65                (2)  attains 65 years of age with any amount of group C
10-66    credited service.
10-67          (f)  For purposes of group C service under this section, the
10-68    amount of the monthly:
10-69                (1)  normal retirement pension for a group C member
 11-1    equals the member's average monthly salary multiplied by two times
 11-2    the benefit accrual rate in effect for group A members and that
 11-3    product multiplied by the group C member's actual years of credited
 11-4    service in group C;
 11-5                (2)  deferred retirement pension for a group C member
 11-6    is computed under Subdivision (1) of this subsection, but based on
 11-7    the member's average monthly salary and actual years of credited
 11-8    service as of the member's last day of credited service and subject
 11-9    to the provisions of this Act in effect on the member's last day of
11-10    credited service;
11-11                (3)  ordinary disability pension for a group C member
11-12    under Section 13 of this Act is computed under Subdivision (1) of
11-13    this subsection;
11-14                (4)  service disability pension for a group C member
11-15    under Section 13 of this Act is the greater of:
11-16                      (A)  the amount computed under Subdivision (1) of
11-17    this subsection; or
11-18                      (B)  the amount computed under Section 13(b) of
11-19    this Act; and
11-20                (5)  survivor benefit for any eligible survivor of a
11-21    deceased group C member under Section 14(b) of this Act is computed
11-22    under Section 14(b), but based on the ordinary disability benefit
11-23    as computed under Subdivision (3) of this subsection.
11-24          (g)  Any previous service of a group C member in group A or
11-25    group B is governed by the applicable group A or group B provisions
11-26    of this Act and may not be credited to group C, except as provided
11-27    in Subsection (i) of this section.  Group C service may not be
11-28    credited to group A or group B.
11-29          (h)  This section applies to a member only while the member
11-30    is an eligible executive official.  A member who ceases to be an
11-31    executive official and transfers to or is rehired into a municipal
11-32    position covered by group A participates in group A, does not
11-33    forfeit group C service, and remains eligible for normal retirement
11-34    for group C service as provided under Subsection (e) of this
11-35    section.  A former group C member is not eligible to participate in
11-36    group B.
11-37          (i)  A group C member who has at least two years of
11-38    continuous credited service in group C  is eligible to receive
11-39    credited service in group C, on application in a manner determined
11-40    by the pension board, for all periods of service before the group C
11-41    member's effective date of participation in group C in which the
11-42    member has otherwise met the definition of "executive official"
11-43    under Subsection (b)(3) of this section, provided that:
11-44                (1)  if the service was in group A, the group C member
11-45    may not have received a refund of contributions unless the group C
11-46    member repaid refunded contributions under Sections 7(c), (d), (e),
11-47    and (f) of this Act or Section 5(j), Chapter 358, Acts of the 48th
11-48    Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
11-49    Civil Statutes); and
11-50                (2)  if service was in group B, the group C member must
11-51    elect, at a time and in a manner determined by the pension board,
11-52    to purchase the service into group C and must purchase the service
11-53    in the same manner as the service would be purchased into group A
11-54    under Section 5(f) of this Act.
11-55          (j)  If payments under Subsection (i)(1) of this section are
11-56    not timely made, the group C member may not receive credited
11-57    service in group C under this section for group A service.  If
11-58    required payments under Subsection (i)(2) of this section are not
11-59    timely made, the group C member may not receive credited service in
11-60    group C under this section for group B service.
11-61          SECTION 7.  SERVICE; CREDITED SERVICE. (a)  Notwithstanding
11-62    any other provision of this Act, duplication of service or credited
11-63    service in group A, B, or C of the pension system or in the pension
11-64    system and any other defined benefit pension plan to which the city
11-65    contributes is prohibited.
11-66          (b)  A member's service begins on the date the member first
11-67    performs services for the city, the pension system, or the
11-68    predecessor system as an eligible employee on or after September 1,
11-69    1943. A member's period of service terminates on the earliest of
 12-1    the date of the member's:
 12-2                (1)  retirement;
 12-3                (2)  death;
 12-4                (3)  resignation;
 12-5                (4)  discharge; or
 12-6                (5)  other cessation of actual performance of services
 12-7    for the city or for the pension system, other than an authorized
 12-8    absence.
 12-9          (c)  Except as provided by Section 12 of this Act, a group A
12-10    member may pay into the pension fund and obtain credit for any
12-11    service with the city or the pension system for which credit is
12-12    otherwise allowable in group A under this Act, except that:
12-13                (1)  no contributions were made by the member for the
12-14    service; or
12-15                (2)  refunded contributions attributable to the service
12-16    have not been subsequently repaid.
12-17          (d)  To establish service described by Subsection (c) of this
12-18    section that occurred before September 1, 1999, the member shall
12-19    pay a sum computed at the rate of four percent  of the member's
12-20    salary, and the city shall pay into the pension fund an amount
12-21    equal to 18 percent of that salary for the same period.
12-22          (e)  To establish service described by Subsection (c) of this
12-23    section that occurred on or after September 1, 1999, the member
12-24    shall pay a sum computed by multiplying the member's salary during
12-25    the service by the rate established by the pension board for member
12-26    contributions under Section 8 of this Act, and the city shall pay
12-27    into the pension fund an amount equal to the rate established for
12-28    city contributions under Section 8 of this Act multiplied by that
12-29    member's salary for the same period.
12-30          (f)  In addition to the amounts to be paid by the member
12-31    under Subsection (d) or (e) of this section, the member shall also
12-32    pay interest on those amounts at the rate of six percent per year,
12-33    not compounded, from the date the contributions would have been
12-34    deducted, if made, or from the date contributions were refunded to
12-35    the date of repayment of those contributions into the pension fund.
12-36          (g)  If a group B member separates from service before
12-37    completing five years of credited service, the member's service
12-38    credit is canceled at the time of separation.  If the member is
12-39    reemployed by the city before the first anniversary of the date of
12-40    separation, all credit for previous service is restored.  Any
12-41    member whose service credit is canceled under this subsection and
12-42    who is reemployed by the city after the first anniversary of the
12-43    date of separation receives one year of previous service credit in
12-44    group B for each full year of subsequent service up to the amount
12-45    of the previous service that was canceled.
12-46          (h)  A group B member who was a group A member before
12-47    September 1, 1981, and who was eligible to purchase credit for
12-48    previous service under Chapter 358, Acts of the 48th Legislature,
12-49    Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
12-50    Statutes), may purchase the service credit in group B by paying
12-51    into the pension fund an amount equal to six percent per year, not
12-52    compounded, on any contributions previously withdrawn for the
12-53    period from the date of withdrawal to the date of purchase.
12-54          SECTION 8.  CONTRIBUTIONS. (a)  Each group A member of the
12-55    pension system shall make monthly contributions during employment
12-56    in an amount determined by the pension board and expressed as a
12-57    percentage of salary. The contributions shall be deducted by the
12-58    employer from the salary of each member and paid to the pension
12-59    system for deposit in the pension fund.
12-60          (b)  This section does not increase or decrease the
12-61    contribution obligation of any member that arose before September
12-62    1, 2001, or give rise to any claim for a refund for any
12-63    contributions made before that date.
12-64          (c)  The employer shall pick up the contributions required of
12-65    group A members by Subsection (a)  of this section for all salaries
12-66    earned after the effective date of this Act. The city shall pay the
12-67    pickup contributions to the pension system from the same source of
12-68    funds that is used for paying salaries to the members.  The pickup
12-69    contributions are in lieu of contributions by group A members. The
 13-1    city may pick up those contributions by a deduction from each group
 13-2    A member's salary equal to the amount of the member's contributions
 13-3    picked up by the city.  Members may not choose to receive the
 13-4    contributed amounts directly instead of having the contributed
 13-5    amounts paid by the city to the pension system.  An accounting of
 13-6    member contributions picked up by the employer shall be maintained,
 13-7    and the contributions shall be treated for all other purposes as if
 13-8    the amount were a part of the member's salary and had been deducted
 13-9    under this section.  Contributions picked up  under this subsection
13-10    shall be treated as employer contributions in determining tax
13-11    treatment of the amounts under the Internal Revenue Code of 1986,
13-12    as amended.
13-13          (d)  The city shall make periodic payments into the pension
13-14    fund in an amount equal to the percentage contribution rate
13-15    multiplied by the combined salaries of all group A and group B
13-16    members of the pension fund.  The contribution rate, expressed as a
13-17    percentage, shall be based on the results of actuarial valuations
13-18    made at least every three years.  The city's contribution rate
13-19    shall consist of the normal cost plus the level percentage of
13-20    salary payments required to amortize the unfunded actuarial
13-21    liability over a period of 40 years from January 1, 1983, computed
13-22    on the basis of an actuarial reserve funding method approved by the
13-23    pension board.  Notwithstanding any other provision of this Act,
13-24    the city's contribution rate, when added to any contributions with
13-25    respect to a qualified governmental excess benefit arrangement
13-26    maintained in accordance with Section 24 of this Act, may not be an
13-27    amount less than the greater of 10 percent of the combined salaries
13-28    of all members or two times the contribution rate of group A
13-29    members as provided in Subsection (a) of this section.
13-30          SECTION 9.  CONTRIBUTION REFUNDS. (a)  If any member's
13-31    employment by the city or the pension system is terminated for
13-32    other than a service disability before the completion of five years
13-33    of service with the city or the pension system, the member is not
13-34    eligible to receive a pension.
13-35          (b)  The system shall refund to the terminated member the
13-36    amount paid by the member into the pension fund through salary
13-37    deduction or other authorized contributions, without interest, as
13-38    provided by Section 17 of this Act.
13-39          (c)  If a member dies and there are no eligible survivors to
13-40    receive the allowance provided for in Section 14 of this Act, the
13-41    member's beneficiary or, if there is no beneficiary, the member's
13-42    estate shall receive the refund amount.
13-43          SECTION 10.  NORMAL RETIREMENT PENSION. (a)  For purposes of
13-44    this section, a pension under this section is referred to as a
13-45    normal retirement pension.
13-46          (b)  A group A or group B member of the pension system who
13-47    terminates employment is eligible for a normal retirement pension
13-48    beginning on the member's effective retirement date after the date
13-49    the member completes at least five years of credited service and
13-50    attains either:
13-51                (1)  62 years of age; or
13-52                (2)  a combination of years of age and years of
13-53    credited service, including parts of years, the sum of which equals
13-54    the number 70.
13-55          (c)  A group C member of the pension system who terminates
13-56    employment is eligible for a normal retirement pension beginning on
13-57    the member's effective retirement date as provided by Section 6(e)
13-58    of this Act.
13-59          (d)  The amount of the monthly normal retirement pension
13-60    payable to an eligible retired group A member is equal to the
13-61    member's average monthly salary multiplied by 3-1/4 percent for
13-62    each year of the member's years of credited service in group A
13-63    during the member's first 10 years of service, 3-1/2 percent for
13-64    each of the member's years of credited service in group A during
13-65    the member's next 10 years of service, and 4-1/4 percent for each
13-66    year of credited service of the member in group A during the
13-67    member's years of service in excess of 20 years.  For purposes of
13-68    this subsection,  service credit is rounded to the nearest
13-69    one-twelfth of a year.  The normal retirement pension of a retired
 14-1    group A member may not exceed 90 percent of the member's average
 14-2    monthly salary.
 14-3          (e)  The amount of the monthly normal retirement pension
 14-4    payable to an eligible retired group B member equals the member's
 14-5    average monthly salary multiplied by 1-3/4 percent for each year of
 14-6    the member's years of credited service in group B during the
 14-7    member's first 10 years of service, 2 percent for each of the
 14-8    member's years of credited service in group B during the member's
 14-9    next 10 years of service, and 2-3/4 percent for each year of
14-10    credited service of the member in group B during the member's years
14-11    of service in excess of 20 years. For purposes of this subsection,
14-12    service credit is rounded to the nearest one-twelfth of a year.
14-13    The normal retirement pension of a retired group B member may not
14-14    exceed 90 percent of the member's average monthly salary.
14-15          (f)  The amount of the monthly normal retirement pension
14-16    payable to a retired group C member is computed as provided by
14-17    Section 6 of this Act.
14-18          (g)  Notwithstanding any other provision of this Act, the
14-19    total normal retirement pension of a retired member with credited
14-20    service in group A, group B, or group C may not exceed 90 percent
14-21    of the member's average monthly salary.
14-22          (h)  For future payments only, pension and survivor benefits
14-23    for all retirees and eligible survivors shall be increased annually
14-24    by four percent, not compounded, for all persons receiving a
14-25    pension or survivor benefit as of January 1 of the year in which
14-26    the increase is made.
14-27          (i)  A member receiving a normal retirement pension is
14-28    considered to have resigned and shall be removed from the regular
14-29    full-time employment rolls of the city or the pension system not
14-30    later than the day before the member's effective retirement date.
14-31          SECTION 11.  GROUP B RETIREMENT OPTIONS. (a)  A group B
14-32    member who terminated employment with the city or the predecessor
14-33    system before September 1, 1997, must elect before the member's
14-34    effective retirement date whether to have the member's normal
14-35    retirement pension or early retirement pension paid under one of
14-36    the options provided by Subsection (b) of this section.  The
14-37    election may be revoked, in a manner and at a time established by
14-38    the pension board, not later than the 60th day before the member's
14-39    effective retirement date.
14-40          (b)  The normal retirement pension or early retirement
14-41    pension may be one of the following actuarially equivalent amounts:
14-42                (1)  option 1: a reduced pension payable to the member,
14-43    then on the member's death one-half of the amount of that reduced
14-44    pension is payable to the member's designated survivor, for life;
14-45                (2)  option 2: a reduced pension payable to the member,
14-46    then on the member's death that same reduced pension is payable to
14-47    the member's designated survivor, for life; and
14-48                (3)  option 3: a reduced pension payable to the member,
14-49    and if the member dies within 10 years, the pension is  paid to the
14-50    member's designated survivor for the remainder of the 10-year
14-51    period beginning on the member's effective retirement date.
14-52          (c)  If a former group B member who has made the election
14-53    provided by Subsection (b) of this section dies after terminating
14-54    employment with at least five years of credited service but before
14-55    attaining the age required to begin receiving a normal or early
14-56    retirement pension, the person's designated survivor is eligible
14-57    for the benefits provided by the option selected by the former
14-58    member at the time of separation from service.  The benefits first
14-59    become payable to an eligible designated survivor on the date the
14-60    former member would have become eligible to begin receiving a
14-61    pension.
14-62          (d)  If a former group B member under Subsection (a)  of this
14-63    section does not elect one of the options under Subsection (b) of
14-64    this section, a survivor benefit is not payable.
14-65          SECTION 12.  DEFERRED RETIREMENT OPTION PLAN.  (a)  In this
14-66    section:
14-67                (1)  "DROP" means the deferred retirement option plan
14-68    established under Chapter 358, Acts of the 48th Legislature,
14-69    Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
 15-1    Statutes), and reenacted and continued under this Act.
 15-2                (2)  "DROP account" means a notional account
 15-3    established for a DROP participant that is used solely as an
 15-4    accounting convention to aid in the computation of the DROP
 15-5    participant's DROP benefit.  The DROP account may only be used for
 15-6    accounting purposes, and there is no actual separation of assets of
 15-7    the pension fund before the distribution of the DROP participant's
 15-8    DROP benefit.
 15-9                (3)  "DROP benefit" means a DROP participant's total
15-10    DROP account balance at the time the DROP participant terminates
15-11    employment.
15-12                (4)  "DROP election date" means the date the pension
15-13    system receives a member's election to participate in the DROP in
15-14    the manner and form determined by the pension system and approved
15-15    by the pension board.
15-16                (5)  "DROP entry date" means the date a member ceases
15-17    to earn service credit and begins earning credit for the member's
15-18    DROP account, which is the later of the date the member is eligible
15-19    to participate in the DROP, the date requested by the member, or
15-20    October 1, 1997, as approved by the pension board. The DROP entry
15-21    date is the first day of a month and is determined by the normal
15-22    retirement eligibility requirements of this Act or of Chapter 358,
15-23    Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g,
15-24    Vernon's Texas Civil Statutes), as applicable, in effect on the
15-25    requested DROP entry date.
15-26                (6)  "DROP participant" means a pension system member
15-27    who is participating in the DROP.
15-28          (b)  A member who is eligible to receive a normal retirement
15-29    pension under this Act and who is in active service with the city
15-30    or the pension system, or a person who is eligible to receive a
15-31    normal retirement pension under this Act and who has been separated
15-32    from service for less than 30 days and has not otherwise been
15-33    granted a pension or benefit, may file with the pension system an
15-34    election to participate in the DROP and receive a DROP benefit
15-35    under procedures established by the pension board.  An election to
15-36    participate in the DROP is irrevocable except as provided by
15-37    Subsection (j) of this section.
15-38          (c)  A member who is required to make payments to the pension
15-39    system to purchase service or to convert service is eligible to
15-40    participate in the DROP only to the extent that the member is
15-41    eligible to participate in the DROP without regard to the service
15-42    covered by the payment obligation, but must complete the
15-43    obligation.  If the payment obligation is not fully met, the
15-44    member's participation in the DROP is determined as though the
15-45    payment obligation was not entered into.  A member who is
15-46    participating in the DROP may not change membership from one group
15-47    to another group, convert service from one group to another group,
15-48    purchase service credit, or make a claim to purchase military
15-49    service.
15-50          (d)  Credited service and normal retirement benefits cease to
15-51    accrue on the day preceding the member's DROP entry date. The
15-52    period of a member's DROP participation, unless revoked as provided
15-53    by Subsection (j) of this section, begins on the DROP participant's
15-54    DROP entry date and ends on the date of the DROP participant's last
15-55    day of active service with the city or the pension system.  On the
15-56    first day of the month following the month in which the pension
15-57    board approves the member's DROP election, the DROP election
15-58    becomes effective and the pension board shall establish a DROP
15-59    account for the DROP participant.  For each month during the period
15-60    of DROP participation before a DROP participant's termination of
15-61    employment, the following amounts shall be credited to the DROP
15-62    participant's DROP account, including prorated amounts for partial
15-63    months of service:
15-64                (1)  an amount equal to what would have been the DROP
15-65    participant's monthly normal retirement benefit if the DROP
15-66    participant had retired on the DROP participant's DROP entry date,
15-67    except that the monthly amount shall be computed based on the DROP
15-68    participant's credited service and average monthly salary as of the
15-69    DROP entry date and the benefit accrual rates and maximum allowable
 16-1    benefit applicable on the DROP election date, with the
 16-2    cost-of-living adjustments that would apply if the DROP participant
 16-3    had retired on the DROP participant's DROP entry date;
 16-4                (2)  for a group A member, the member's contributions
 16-5    to the pension fund required under Section 8 of this Act during the
 16-6    member's participation in the DROP; and
 16-7                (3)  interest on the DROP participant's DROP account
 16-8    balance computed at a rate determined by the pension board and
 16-9    compounded at intervals designated by the pension board, but at
16-10    least once in each 13-month period.
16-11          (e)  The monthly amount credited under Subsection (d)(1) of
16-12    this section may not include any amount that is intended to help
16-13    defray an increase in group medical insurance costs as described by
16-14    Section 15(a) of this Act.  In any year in which a supplemental
16-15    payment is made to retirees under Section 15(b) of this Act, an
16-16    amount equal to the amount of the supplemental payment that would
16-17    have been made to the DROP participant if the DROP participant had
16-18    retired on the DROP entry date shall be credited to the DROP
16-19    participant's DROP account.
16-20          (f)  The period for credits to a DROP participant's DROP
16-21    account includes each month beginning with the DROP participant's
16-22    DROP entry date through the date the DROP participant terminates
16-23    employment with the city or the pension system.  Credits may not be
16-24    made to a DROP participant's DROP account for a period that occurs
16-25    after the date the DROP participant terminates employment, except
16-26    that interest at a rate determined by the pension board may be paid
16-27    on the person's undistributed DROP account balance after the date
16-28    the person terminates employment.
16-29          (g)  A DROP participant who terminates employment is eligible
16-30    to elect to receive the DROP participant's DROP benefit in a lump
16-31    sum, in substantially equal periodic payments, or in a partial lump
16-32    sum followed by substantially equal periodic payments. The pension
16-33    board shall determine a reasonable time for lump-sum and periodic
16-34    payments of the DROP benefit.  An election concerning single
16-35    lump-sum or partial payments as provided by this subsection must
16-36    satisfy the requirements of Section 401(a)(9), Internal Revenue
16-37    Code of 1986, as amended.  All distributions and changes in the
16-38    form of distribution must be made in a manner and at a time that
16-39    complies with that provision of the Internal Revenue Code of 1986,
16-40    as amended.
16-41          (h)  If a DROP participant dies before the full distribution
16-42    of the DROP participant's DROP account balance, the undistributed
16-43    DROP account balance shall be distributed to the DROP participant's
16-44    surviving spouse, if any, in a lump-sum payment within a reasonable
16-45    time after the pension board has determined that the surviving
16-46    spouse is eligible for the distribution.  If there is no surviving
16-47    spouse, the DROP participant's beneficiary, as designated in the
16-48    manner and on a form established by the pension board, is eligible
16-49    to receive the deceased DROP participant's undistributed DROP
16-50    account balance in a lump-sum payment within a reasonable time
16-51    after the pension board has determined that the beneficiary is
16-52    eligible for the distribution.  If no beneficiary is designated,
16-53    the undistributed DROP account balance shall be distributed to the
16-54    member's estate.
16-55          (i)  A DROP participant is ineligible for disability benefits
16-56    provided by this Act.
16-57          (j)  An election to participate in the DROP is irrevocable,
16-58    except that:
16-59                (1)  if a DROP participant is approved for a service
16-60    disability pension, the DROP participant's DROP election is
16-61    automatically revoked;
16-62                (2)  if a DROP participant dies, the surviving spouse,
16-63    if any, or the beneficiary, if any, may elect to revoke the DROP
16-64    participant's DROP election, at a time and in a manner determined
16-65    by the pension board, only if the revocation occurs before a
16-66    distribution from the DROP participant's DROP account or the
16-67    payment of a survivor benefit under this Act or Chapter 358, Acts
16-68    of the 48th Legislature, Regular Session, 1943 (Article 6243g,
16-69    Vernon's Texas Civil Statutes); and
 17-1                (3)  a DROP participant approved by the pension board
 17-2    of the predecessor system before September 1, 1999, to participate
 17-3    in the DROP may make a one-time, irrevocable election before
 17-4    termination of employment, on a date and in a manner determined by
 17-5    the pension board, to revoke the DROP election and waive any and
 17-6    all rights associated with the DROP election.
 17-7          (k)  On revocation of a DROP election under Subsection (j) of
 17-8    this section, the DROP account balance becomes zero, and a
 17-9    distribution of DROP benefits may not be made to the member, the
17-10    member's surviving spouse, or the member's beneficiaries.  In the
17-11    event of revocation, the benefits based on the member's service are
17-12    determined as if the member's DROP election had never occurred.
17-13          (l)  Under a rule adopted by the pension board under this
17-14    section, the surviving spouse of a deceased member or, if the
17-15    member has no surviving spouse,  the designated beneficiary of the
17-16    deceased member may make the DROP election that the deceased member
17-17    would have been eligible to make the day before the member's death
17-18    and may receive the DROP distribution in a lump sum within a
17-19    reasonable time after the pension board has determined that the
17-20    surviving spouse or designated beneficiary is eligible for the
17-21    distribution.  A DROP election by the surviving spouse or
17-22    designated beneficiary under this subsection may not be made after
17-23    the sixth month after the date of the member's death.  An election
17-24    may not be made under this subsection if a survivor benefit or
17-25    other distribution has been made with respect to the deceased
17-26    member.  Notwithstanding any other provision, an election made
17-27    under this subsection is irrevocable.
17-28          (m)  If an unanticipated actuarial cost occurs in
17-29    administering the DROP, the pension board, on the advice of the
17-30    pension system's actuary, may take action necessary to mitigate the
17-31    unanticipated cost, including refusal to accept additional
17-32    elections to participate in the plan.  The pension system shall
17-33    continue to administer the plan for the DROP participants
17-34    participating in the plan before the date of the mitigating action.
17-35          (n)  A former DROP participant who is rehired by the city or
17-36    the pension system following termination of employment is not
17-37    eligible to participate in the DROP.
17-38          (o)  On termination of employment, a DROP participant shall
17-39    receive a normal retirement pension under Section 10 of this Act or
17-40    under Section 11, 22A, or 24 of Chapter 358, Acts of the 48th
17-41    Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
17-42    Civil Statutes), as those sections read on the day preceding the
17-43    participant's DROP entry date, as applicable, except that the
17-44    credited service under that section is the member's credited
17-45    service as of the day before the member's DROP entry date, the
17-46    benefit accrual rate applicable to the credited service shall be
17-47    the benefit accrual rate in effect on the member's DROP election
17-48    date, the maximum allowable benefit shall be the maximum allowable
17-49    benefit in effect on the member's DROP election date, and the
17-50    member's average monthly salary is the average monthly salary
17-51    determined as of the date of the member's termination of
17-52    employment.  The DROP participant's normal retirement pension is
17-53    increased by any cost-of-living adjustments applied to the monthly
17-54    credit to the member's DROP account under Subsection (d)(1) of this
17-55    section during the member's participation in the DROP.
17-56    Cost-of-living adjustments applicable to periods after the date of
17-57    the DROP participant's termination of employment are based on the
17-58    DROP participant's normal retirement pension computed under this
17-59    subsection, excluding any cost-of-living adjustments.
17-60          (p)  If a DROP election is not revoked under Subsection (j)
17-61    of this section, the survivor benefit payable to an eligible
17-62    survivor of a deceased DROP participant under Section 14 of this
17-63    Act is computed as a percentage of the monthly ordinary disability
17-64    pension that the member would have been eligible to receive had the
17-65    member suffered a disability the day before the member's DROP entry
17-66    date, except that the ordinary disability pension is computed based
17-67    on the DROP participant's credited service as of the day before the
17-68    DROP participant's DROP entry date, the benefit accrual rate
17-69    applicable to the credited service as of the DROP participant's
 18-1    DROP election date, and the DROP participant's average monthly
 18-2    salary as of the date of the DROP participant's death.  A surviving
 18-3    spouse, if any, of a DROP participant who dies from a cause
 18-4    directly resulting from a specific incident in the performance of
 18-5    the DROP participant's duties for the city or the pension system is
 18-6    ineligible to receive enhanced survivor benefits under Section
 18-7    14(c) of this Act unless the DROP election is revoked under
 18-8    Subsection (j)(2) of this section and the surviving spouse receives
 18-9    a survivor benefit as otherwise provided by this subsection.
18-10          (q)  The pension board may adopt rules for the implementation
18-11    and operation of the DROP, including rules regarding the payment of
18-12    DROP benefits.
18-13          SECTION 13.  DISABILITY PENSIONS.  (a)  A member who has
18-14    completed five or more years of credited service and who becomes
18-15    disabled is eligible, regardless of age, for  an ordinary
18-16    disability retirement and shall receive a monthly disability
18-17    pension computed in accordance with Section 10(d) for group A
18-18    members and Section 10(e) for group B members.
18-19          (b)  A member who is disabled by reason of a personal injury
18-20    sustained or a hazard undergone as a result of, and while in the
18-21    performance of, the member's employment duties at some definite
18-22    place and at some definite time on or after the date of becoming a
18-23    member, without serious and wilful misconduct on the member's part,
18-24    is eligible for  a service disability retirement and shall receive
18-25    a monthly disability pension equal to the greater of:
18-26                (1)  the monthly normal retirement pension computed
18-27    under Section 10(d) of this Act for a group A member or Section
18-28    10(e) for a group B member; or
18-29                (2)  20 percent  of the member's monthly salary on the
18-30    date the injury occurred or the hazard was undergone.
18-31          (c)  In addition to the monthly disability pension under
18-32    Subsection (b)(2) of this section, a group A member shall receive
18-33    one percent of the salary under Subsection (b)(2) of this section
18-34    for each year of credited service.  The total disability pension
18-35    computed under Subsection (b)(2) of this section may not exceed the
18-36    greater of:
18-37                (1)  40 percent of that monthly salary; or
18-38                (2)  the monthly normal retirement pension computed in
18-39    accordance with Section 10(d) for a group A member or Section 10(e)
18-40    for a group B member.
18-41          (d)  A disability pension may be granted under this section
18-42    to a member only if the member is unable to perform work or
18-43    services as an employee due to the disability.  A member who is
18-44    granted a disability pension is considered to have resigned and
18-45    shall be removed from the employment rolls of the city or the
18-46    pension system not later than the last day of the month in which
18-47    the disability pension is approved.
18-48          (e)  A person retired for disability under this Act or a
18-49    person receiving survivor benefits as a disabled dependent child
18-50    under this Act shall file an annual report of employment activities
18-51    and earnings with the pension board. The pension board shall
18-52    establish the form of the report and the time for filing the
18-53    report.  If the amount of the earnings added to the disability
18-54    pension being received by the member exceeds the amount of the
18-55    monthly salary of the member at the time of the member's separation
18-56    from service, as adjusted annually by cost-of-living adjustments
18-57    equal to the percentage change in the Consumer Price Index for All
18-58    Urban Consumers for the preceding year, as determined by the United
18-59    States Department of Labor, but not to exceed the cost-of-living
18-60    adjustment provided by Section 10(h) of this Act, the pension board
18-61    may reduce the amount of the pension. A disability pension
18-62    recipient is not required to submit the annual affidavit of
18-63    employment activities and earnings after the recipient reaches:
18-64                (1)  the date on which the recipient would be eligible
18-65    to retire, if Section 10(b) or (c) applied to the recipient; or
18-66                (2)  65 years of age.
18-67          (f)  A member may not receive a disability pension and a
18-68    deferred or normal retirement pension at the same time. If a member
18-69    who has at least five years of credited service is eligible for a
 19-1    disability pension, the member's disability ceases to exist, and
 19-2    the member does not return to work for the city, the member is
 19-3    eligible to receive a deferred or normal retirement pension,
 19-4    beginning on the later of the member's effective retirement date or
 19-5    the date the disability ceases.  The deferred or normal retirement
 19-6    pension is based on actual credited service up to the time of
 19-7    disability and is computed based on the schedule of benefits and
 19-8    provisions in effect on the person's last day of credited service.
 19-9          (g)  A former member who is retired for disability or a
19-10    person receiving survivor benefits as a disabled dependent child
19-11    under this Act is subject at all times to reexamination by the
19-12    pension board and shall submit to an examination the pension board
19-13    requires.  If the disability retiree or dependent child who is
19-14    receiving survivor benefits as a disabled child refuses to submit
19-15    to a required examination, the pension board may order that
19-16    payments be suspended, up to and including discontinuation of the
19-17    disability pension or survivor benefit.  If the pension board
19-18    determines that a member who has been retired for a disability or a
19-19    person who is receiving survivor benefits as a disabled dependent
19-20    child recovers so that the member or person is able to perform the
19-21    usual and customary duties formerly handled by the member or person
19-22    or other full-time duties that could be performed by the member or
19-23    person, the pension board shall suspend or discontinue pension or
19-24    survivor benefit payments.
19-25          (h)  The result of an examination, report by a physician, or
19-26    report of employment activities and earnings shall be considered by
19-27    the pension board in determining whether the benefits shall be
19-28    continued, increased if less than the maximum provided, decreased,
19-29    or discontinued.  The pension board may reduce, suspend, or
19-30    discontinue all benefits to a person receiving benefits under this
19-31    section who, after notice from the pension board:
19-32                (1)  fails to appear for a required examination;
19-33                (2)  fails to file a report of employment activities
19-34    and earnings or another related report requested by the pension
19-35    board; or
19-36                (3)  files a materially false or misleading report of
19-37    employment activities and earnings or examination result or other
19-38    report, as determined by the pension board.
19-39          (i)  To apply for a disability pension, a person must be a
19-40    member or a former member whose separation from service occurred
19-41    not more than 30 days before the date the pension system receives
19-42    the person's request to apply for a disability pension as a result
19-43    of a disability that arose during employment, except that a member
19-44    may not apply for a disability pension after the sixth month after
19-45    the date of the member's last day of credited service.
19-46          SECTION 14.  SURVIVING SPOUSE AND DEPENDENT CHILD MONTHLY
19-47    ALLOWANCE.  (a)  Except as provided by Section 12 of this Act, the
19-48    pension board shall order survivor benefits to be paid in the form
19-49    of a monthly allowance under this section if:
19-50                (1)  a member or former member dies from any cause
19-51    after the completion of five years of credited service with the
19-52    city or the pension system;
19-53                (2)  while in the service of the city or the pension
19-54    system, a member dies from any cause directly resulting from a
19-55    specific incident in the performance of the member's duty; or
19-56                (3)  a member dies after the date the member retires on
19-57    a pension because of length of service or a disability and the
19-58    member leaves an eligible survivor.
19-59          (b)  A surviving spouse of a member or former member who dies
19-60    after having completed five years of credited service with the city
19-61    or the pension system, but before beginning to receive retirement
19-62    benefits, is eligible for a sum equal to 100 percent of the
19-63    retirement benefits to which the deceased member or former member
19-64    would have been eligible had the member  been totally disabled with
19-65    an ordinary disability at the time of the member's last day of
19-66    credited service, except that the allowance payable to the
19-67    surviving spouse may not be less than $100 a month.
19-68          (c)  A surviving spouse of a member who dies from a cause
19-69    directly resulting from a specific incident in the performance of
 20-1    the member's duty with the city or the pension system, without
 20-2    serious or wilful misconduct on the member's part, is eligible for
 20-3    a sum equal to 100 percent of the deceased member's final average
 20-4    salary.
 20-5          (d)  A surviving spouse of a retiree who dies after having
 20-6    received retirement benefits is eligible for a sum equal to 100
 20-7    percent of the retirement benefits being received at the time of
 20-8    the retiree's death.  The cost-of-living adjustment in the survivor
 20-9    benefit under Section 10(h) of this Act is computed based on the
20-10    unadjusted normal retirement pension of the deceased retiree.
20-11          (e)  If there is a surviving spouse, each dependent child
20-12    shall receive a survivor benefit equal to 10 percent of the pension
20-13    the member would have received if the member had been disabled at
20-14    the time of death up to a maximum of 20 percent for all dependent
20-15    children, except that if the total amount payable to the surviving
20-16    spouse and dependent children is greater than 100 percent of the
20-17    benefit the member would have received, the percentage of benefits
20-18    payable to the surviving spouse shall be reduced so that the total
20-19    amount is not greater than 100 percent of the benefit the member
20-20    would have received, and the reduction shall continue until the
20-21    total amount payable to the surviving spouse and dependent child,
20-22    if any, would not be greater than 100 percent of the benefit the
20-23    member would have received.
20-24          (f)  If there is no surviving spouse, each dependent child is
20-25    eligible to receive a survivor benefit equal to 50 percent of the
20-26    amount of the surviving spouse benefit had there been a surviving
20-27    spouse, not to exceed 100 percent of the surviving spouse benefit
20-28    for all dependent children in the aggregate.
20-29          (g)  Benefits for a dependent child are payable to the
20-30    guardian of the child, except that the pension board may approve
20-31    the payment of benefits to a child who is at least 18 years of age.
20-32    As used in this subsection, "guardian" means the person who has the
20-33    primary responsibility for a child's care and support, including
20-34    the surviving parent, a legal guardian, a managing conservator, or
20-35    any other person with a similar legal relationship to the child.
20-36          (h)  If a retiree dies and there is no eligible survivor, the
20-37    retiree's spouse, if any, or if there is no spouse, the retiree's
20-38    estate, is eligible to receive a lump-sum payment of the
20-39    unamortized balance of the retiree's accrued employee
20-40    contributions, if any, other than contributions after the DROP
20-41    entry date, as determined by an amortization schedule and method
20-42    approved by the pension board.  A pension payable to a retiree
20-43    ceases on the last day of the month preceding the month of the
20-44    retiree's death.  A survivor benefit payable to an eligible
20-45    survivor is effective on the first day of the month of the
20-46    retiree's death and ceases on the month preceding the month of the
20-47    eligible survivor's death or on the last day of the month in which
20-48    the survivor ceases to be eligible to receive a survivor's benefit.
20-49          SECTION 15.  ANNUITY INCREASE.  (a)  In addition to the
20-50    postretirement increases under Section 10(h) of this Act, the
20-51    pension board may increase annuities payable under this Act by an
20-52    amount that does not exceed the annual increase in the amount of
20-53    premiums being paid under a group insurance program provided for
20-54    retirees of the city.
20-55          (b)  The pension board may distribute a supplemental payment
20-56    to all retirees and eligible survivors who are receiving annuities
20-57    as of January 1 of the year in which the supplemental payment is
20-58    made. The supplemental payment shall be credited to DROP
20-59    participants who are participating in DROP as of January 1 of the
20-60    year in which the supplemental payment is made, if the pension
20-61    board's actuary determines that as of the end of any fiscal year:
20-62                (1)  the value of the pension system's assets exceeds
20-63    the amount of the pension system's accrued liability;
20-64                (2)  the pension system has met the actuarial
20-65    investment assumption for the previous fiscal year; and
20-66                (3)  the issuance of the supplemental check will not
20-67    cause the city's contribution rate to increase.
20-68          (c)  A person may not receive more than one supplemental
20-69    payment as a result of the person's status as:
 21-1                (1)  a retiree and eligible survivor; or
 21-2                (2)  a DROP participant and eligible survivor.
 21-3          SECTION 16.  LUMP-SUM BENEFIT PAYMENT. (a)  Notwithstanding
 21-4    any other provision of this Act, the pension board may pay to a
 21-5    member, deferred participant, eligible survivor, alternate payee,
 21-6    or beneficiary in a lump-sum payment the present value of any
 21-7    benefit payable to such a person that is less than $10,000 instead
 21-8    of paying any other benefit payable under this Act. If the lump-sum
 21-9    present value of the benefit is at least $5,000 but less than
21-10    $10,000, the pension board may make a lump-sum payment only on
21-11    written request by the member, deferred participant, eligible
21-12    survivor, alternate payee, or other beneficiary.  The pension board
21-13    shall make any payment under this subsection as soon as practicable
21-14    after eligibility under this section has been determined by the
21-15    pension board.
21-16          (b)  The pension board shall adopt actuarial assumptions,
21-17    including an interest rate, to be used in determining lump-sum
21-18    present values and amounts distributable under this section.
21-19          (c)  If the pension board determines that available resources
21-20    in the pension fund are inadequate to make lump-sum payments,
21-21    payments under this section shall be made monthly in amounts the
21-22    pension board determines.
21-23          (d)  Payments under this section may not be made for a
21-24    benefit that was being paid by the predecessor system or this
21-25    pension system.
21-26          (e)  A member who is reemployed by the city or the pension
21-27    system and who has at least two years of continuous credited
21-28    service after reemployment may reinstate service for which the
21-29    member received a lump-sum payment under this section by paying
21-30    into the pension fund the amount of the lump-sum payment, plus
21-31    interest on that amount at the rate of six percent per year, not
21-32    compounded, from the date the lump-sum payment was made to the
21-33    member until the date of repayment to the pension fund.
21-34          (f)  The actuarial value of a lump-sum payment is determined
21-35    as of the last day of credited service or September 1, 1995,
21-36    whichever is later.
21-37          SECTION 17.  TERMINATION OF EMPLOYMENT; DEATH; REEMPLOYMENT.
21-38    (a)  A member who terminates employment with the city involuntarily
21-39    due to a reduction in workforce, as determined by the pension
21-40    board, before the member becomes eligible for a normal retirement
21-41    pension or attains five years of credited service, by written
21-42    notice to the pension board, may make an irrevocable election to
21-43    leave the person's contributions in the pension fund until the
21-44    first anniversary of the date of termination. If during that period
21-45    the person is reemployed by the city, all rights and service credit
21-46    as a member shall be immediately restored without penalty. If
21-47    reemployment with the city does not occur before the first
21-48    anniversary of the date of termination, all payments made by the
21-49    person into the pension fund by salary deductions or other
21-50    authorized contributions shall be refunded to the person without
21-51    interest. If the person is subsequently reemployed, the person may
21-52    have credit restored, subject to the provisions applicable at the
21-53    time of reemployment.
21-54          (b)  A member who leaves employment voluntarily, before
21-55    becoming eligible for a normal retirement or disability pension,
21-56    ceases to be a member of the pension system and shall be refunded
21-57    all eligible payments made by the member into the pension fund by
21-58    salary deductions or other authorized contributions, without
21-59    interest, subject to this section.
21-60          (c)  A member whose employment is terminated for a reason
21-61    other than death or receipt of a retirement or disability pension
21-62    after the completion of five years of credited service may elect,
21-63    in a manner determined by the pension board, to receive a deferred
21-64    retirement pension that begins on the member's effective retirement
21-65    date after the member attains either 62 years of age or a
21-66    combination of years of age and years of credited service,
21-67    including parts of years, the sum of which equals the number 70.
21-68    The amount of monthly benefit shall be computed in the same manner
21-69    as for a normal retirement pension, but based on average monthly
 22-1    salary and credited service as of the member's last day of credited
 22-2    service and subject to the provisions of this Act or Chapter 358,
 22-3    Acts of 48th Legislature, Regular Session, 1943 (Article 6243g,
 22-4    Vernon's Texas Civil Statutes), in effect on the member's last day
 22-5    of credited service.
 22-6          (d)  If a member dies while still employed by the city,
 22-7    whether eligible for a pension or not, and Sections 12 and 14 of
 22-8    this Act do not apply, all of the member's rights in the pension
 22-9    fund shall be satisfied by the refund to the member's designated
22-10    beneficiary, if any, or if there is no designated beneficiary, to
22-11    the member's estate, of all eligible payments, if any, made by the
22-12    member into the pension fund, without interest.
22-13          (e)  The provisions of Section 14 of this Act concerning
22-14    payments to eligible survivors apply in the case of any former
22-15    member who has made the election permitted by Subsection (c) of
22-16    this section and who dies before reaching the age at which the
22-17    former member would be eligible to receive a pension.  If there is
22-18    no eligible survivor of the former member, all of the former
22-19    member's rights in the pension fund shall be satisfied by the
22-20    refund to the former member's designated beneficiary, if any, or if
22-21    there is no designated beneficiary, to the former member's estate,
22-22    of all eligible payments made by the former member into the pension
22-23    fund by way of employee contributions, without interest.
22-24          (f)  This Act does not change the status of any former member
22-25    of the predecessor system whose services with the city or the
22-26    pension system were terminated under Chapter 358, Acts of the 48th
22-27    Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
22-28    Civil Statutes), except as otherwise expressly provided.  Refunds
22-29    of contributions made under this section shall be paid to the
22-30    departing member, the member's beneficiary, or the member's estate
22-31    on written request and approval by the pension board in a lump sum,
22-32    except that if the pension board determines that funds are
22-33    insufficient to justify the lump-sum payment, the payment shall be
22-34    refunded on a monthly basis in amounts determined by the pension
22-35    board.
22-36          (g)  If a deferred participant is reemployed by the city or
22-37    the pension system before receiving a deferred retirement pension
22-38    or if a retiree is reemployed by the city or the pension system,
22-39    Subsections (h) and (j) of this section apply to the computation of
22-40    the member's pension following the member's subsequent separation
22-41    from service.
22-42          (h)  If a member described in Subsection (g) of this section
22-43    accrues not more than two years of continuous credited service
22-44    after reemployment:
22-45                (1)  the portion of the member's deferred or normal
22-46    retirement pension attributable to the member's period of credited
22-47    service accrued before the date of the member's original separation
22-48    from service is computed on the basis of the applicable provisions
22-49    of this Act or the predecessor system that were in effect on the
22-50    member's last day of credited service for the original period of
22-51    credited service;
22-52                (2)  the portion of the member's deferred or normal
22-53    retirement pension attributable to the member's period of credited
22-54    service accrued after the date of the member's reemployment by the
22-55    city or the pension system is computed on the basis of the
22-56    applicable provisions of this Act or the predecessor system in
22-57    effect on the member's last day of credited service for the
22-58    subsequent period of credited service; and
22-59                (3)  the disability pension or survivor benefit
22-60    attributable to the member's period of credited service accrued
22-61    both before the date of the member's original separation from
22-62    service and after the date of the member's reemployment by the city
22-63    or the pension system is computed on the basis of the applicable
22-64    provisions of this Act or the predecessor system that were in
22-65    effect on the member's last day of credited service for the
22-66    original period of credited service.
22-67          (i)  Subject to Subsection (l) of this section, the
22-68    disability pension or survivor benefit under Subsection (h)(3) of
22-69    this section is computed by adding the following amounts:
 23-1                (1)  the amount of the benefit derived from the
 23-2    member's credited service accrued after the date of reemployment
 23-3    based on the benefit accrual rate in effect on the member's last
 23-4    day of original credited service in the group in which the member
 23-5    participated on the member's last day of subsequent credited
 23-6    service; and
 23-7                (2)  the amount of the benefit the member, beneficiary,
 23-8    or eligible survivor was eligible to receive based on the member's
 23-9    original credited service and the provisions in effect on the
23-10    member's last day of original credited service.
23-11          (j)  If the member accrues more than two years of continuous
23-12    credited service after reemployment, for purposes of future payment
23-13    only, a deferred retirement pension, normal retirement pension,
23-14    disability pension, or survivor benefit is computed on the basis of
23-15    the applicable provisions of this Act or the predecessor system in
23-16    effect on the member's last day of credited service for the
23-17    subsequent service.
23-18          (k)  Notwithstanding any other provision of this Act, if a
23-19    retiree is reemployed by the city or the pension system and becomes
23-20    a member, the retiree's pension under this Act ceases on the day
23-21    before the date the retiree is reemployed.  Payment of the pension
23-22    shall be suspended during the period of reemployment and may not
23-23    begin until the month following the month in which the reemployed
23-24    retiree subsequently terminates employment. On subsequent
23-25    separation, benefits payable are computed under Subsections (h) and
23-26    (j) of this section. If the reemployed retiree receives any pension
23-27    during the period of reemployment, the retiree shall return all of
23-28    the pension received during that period to the pension system not
23-29    later than the 30th day after the date of receipt.  If the
23-30    reemployed retiree does not timely return all of the pension, the
23-31    pension board shall offset the amount not returned against the
23-32    payment of any future retirement pension, disability pension, or
23-33    survivor benefit payable on behalf of the reemployed retiree.
23-34          (l)  If a member is covered by Subsection (h) of this section
23-35    and has made an election or was eligible to make an election under
23-36    Section 11 of this Act or an optional annuity election under
23-37    Section 29, Chapter 358, Acts of the 48th Legislature, Regular
23-38    Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), or
23-39    has received a pension computed on the basis of an optional annuity
23-40    election, the optional annuity election, including any designation
23-41    of an eligible designated survivor, governs the payment of any
23-42    pension or benefit, and no other survivor benefit is payable.  If a
23-43    member meets the requirements of Subsection (j) of this section and
23-44    has made an optional annuity election  or has received a pension
23-45    computed on the basis of an optional annuity election, the optional
23-46    annuity election, including any designation of an eligible
23-47    designated survivor, shall control the payment of any pension or
23-48    benefit, and no other survivor benefit is payable unless the member
23-49    elects, not later than the 90th day after the date of the
23-50    separation of employment and before payment of a pension, to revoke
23-51    the optional annuity election for future payment of benefits.  If
23-52    revocation occurs, any survivor benefit is paid under Subsection
23-53    (j) of this section.
23-54          (m)  If a member's service is terminated before the member
23-55    has completed five years of service for any reason other than
23-56    death, a city workforce reduction as described by Subsection (a) of
23-57    this section, or a service disability, the member:
23-58                (1)  forfeits the member's accrued pension, service and
23-59    credited service, and any benefit payable under this Act; and
23-60                (2)  shall be refunded, on written request, the amount
23-61    paid by the member into the pension fund as employee contributions,
23-62    without interest, in full satisfaction of the member's rights under
23-63    this Act.
23-64          (n)  This section does not allow retroactive payment of any
23-65    benefits or other amounts under this section to any member,
23-66    retiree, deferred participant, beneficiary, eligible survivor,
23-67    estate, or other person or entity.
23-68          (o)  After separation from service, a member is subject to
23-69    the schedule of benefits and provisions in effect on the member's
 24-1    last day of credited service, except as otherwise expressly
 24-2    provided by this Act.
 24-3          (p)  A person receiving or eligible for a survivor benefit
 24-4    under this Act is subject to the schedule of benefits and
 24-5    provisions in effect on the last day of credited service of the
 24-6    deceased participant for whom the person is claiming survivor
 24-7    status, except as otherwise expressly provided by this Act.
 24-8          SECTION 18.  MILITARY SERVICE CREDIT.  (a)  Notwithstanding
 24-9    any other provision of this Act, contributions, benefits, and
24-10    service with respect to service in the uniformed services, as
24-11    defined in 38 U.S.C. Section 4301 et seq., of a member who is
24-12    eligible for reemployment rights with the city under 38 U.S.C.
24-13    Section 4301 et seq. for the service shall be provided in
24-14    accordance with Section 414(u), Internal Revenue Code of 1986, as
24-15    amended.
24-16          (b)  The city shall make the employer contributions to the
24-17    pension fund for the employee's membership for each month of
24-18    service credit in which the member is engaged in service in a
24-19    uniformed service described by Subsection (a) of this section,
24-20    based on the member's rate of monthly compensation as of the date
24-21    the member left the member's position.
24-22          (c)  A member who has active military service for which the
24-23    member is not eligible for reemployment rights with the city under
24-24    38 U.S.C. Section 4301 et seq. may receive credited service for the
24-25    active military service on proper action by the pension board if
24-26    the member:
24-27                (1)  has completed at least five years of credited
24-28    service in the pension system;
24-29                (2)  obtains, at the member's cost, a report approved
24-30    by the pension board of the actuarial cost of the service for which
24-31    the member claims credit, with service time expressed as a number
24-32    of whole months; and
24-33                (3)  pays the actuarially determined cost of the
24-34    service under Subdivision (2) of this subsection as approved by the
24-35    pension board, plus all administrative costs associated with
24-36    crediting the service, if any, plus six percent interest from the
24-37    due date of the amounts until the date full payment is made to the
24-38    pension fund, with the payments made before:
24-39                      (A)  the fifth anniversary of the date the claim
24-40    for service is made, if a member does not terminate employment
24-41    before the fifth anniversary; or
24-42                      (B)  the 60th day after the date employment is
24-43    terminated, if a member terminates employment before the fifth
24-44    anniversary of the date the claim for service is made.
24-45          (d)  The military service credited under Subsection (c) of
24-46    this section:
24-47                (1)  may not exceed a total of 60 months;
24-48                (2)  may be claimed as service in group A only if the
24-49    member is a group A member or group C member at the time the member
24-50    claims the service; and
24-51                (3)  may be claimed as service in group B only if the
24-52    member is a group B member at the time the member claims the
24-53    service.
24-54          SECTION 19.  MULTIPLE PENSIONS; TRANSFER OF EMPLOYMENT.  (a)
24-55    The pension board may authorize a member to make a one-time
24-56    irrevocable election, on a date and in a manner established by the
24-57    pension board, to cease to be a member of the pension system and,
24-58    for future service only, to become a member of the retirement
24-59    system governed by Article 6243e.2(1), Revised Statutes, or Article
24-60    6243g-4, Revised Statutes, or a successor statute to either of
24-61    those laws, if the member:
24-62                (1)  was a member of the pension system as authorized
24-63    under Section 16B, Chapter 358, Acts of the 48th Legislature,
24-64    Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
24-65    Statutes);
24-66                (2)  is in a position covered by another retirement
24-67    system to which the city contributes; and
24-68                (3)  has not begun to receive payment of benefits from
24-69    the pension system.
 25-1          (b)  A person who does not make an election to cease
 25-2    membership in the pension system under Subsection (a)  of this
 25-3    section remains a member of the pension system as authorized under
 25-4    this Act.
 25-5          (c)  A person who makes an election to cease membership in
 25-6    the pension system is considered to have separated from service on
 25-7    the date of the election established by the pension board.
 25-8          (d)  Notwithstanding any other provision of this Act,
 25-9    duplication of any pension or benefit payable from the pension
25-10    system and any pension or benefit payable under another defined
25-11    benefit pension plan to which the city contributes is not
25-12    permitted.  Any pension or benefit payable to any person under
25-13    another defined benefit pension plan, based on a period of service
25-14    for which credited service is given under this Act, is deducted
25-15    from the total pension or benefit otherwise payable to the
25-16    participant under this Act, except that the pension or benefit may
25-17    not be reduced to an amount less than the amount that would have
25-18    been payable if the period of service had been excluded from
25-19    service.
25-20          SECTION 20.  SERVICE FOR FORMERLY INELIGIBLE EMPLOYEES.  (a)
25-21    A member who was ineligible to be a member under Section 4(d),
25-22    Chapter 358, Acts of the 48th Legislature, Regular Session, 1943
25-23    (Article 6243g, Vernon's Texas Civil Statutes), before September 1,
25-24    1999, because the member was receiving a pension from another
25-25    pension system of the city to which the city contributes may
25-26    purchase credited service solely in group A for otherwise eligible
25-27    service previously disallowed by Section 4(d), Chapter 358, Acts of
25-28    the 48th Legislature, Regular Session, 1943 (Article 6243g,
25-29    Vernon's Texas Civil Statutes), if the member:
25-30                (1)  has been continuously employed by the city since
25-31    the date of reemployment into a municipal position that became
25-32    covered by Chapter 358, Acts of the 48th Legislature, Regular
25-33    Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), on
25-34    September 1, 1999, by removal of the prohibition under Section
25-35    4(d), Chapter 358, Acts of the 48th Legislature, Regular Session,
25-36    1943 (Article 6243g, Vernon's Texas Civil Statutes);
25-37                (2)  would have been eligible to be a member and
25-38    receive service for the municipal employment before September 1,
25-39    1999, but for the prohibition under Section 4(d), Chapter 358, Acts
25-40    of the 48th Legislature, Regular Session, 1943 (Article 6243g,
25-41    Vernon's Texas Civil Statutes);
25-42                (3)  was a member in group A on September 1, 1999, and
25-43    on September 1, 2001;
25-44                (4)  makes written application, in a manner and time
25-45    determined by the pension board, to receive credited service in
25-46    group A for all otherwise eligible service; and
25-47                (5)  on approval by the pension board, pays into the
25-48    pension fund all contributions that would have been deducted or
25-49    picked up as member contributions during the period of claimed
25-50    service as described by Section 7(c) of this Act, including
25-51    required interest.
25-52          (b)  Payments of the amounts required under this section must
25-53    be completed by the earliest of:
25-54                (1)  the date of the member's termination of employment
25-55    or term in office;
25-56                (2)  the date of the member's retirement or death; or
25-57                (3)  the fifth anniversary of the date of the member's
25-58    approved claim for credited service under this section.
25-59          (c)  If the payments are not completed within the period
25-60    described by Subsection (b) of this section, the member or the
25-61    member's estate may either make an immediate payment of the balance
25-62    due or receive a refund, without interest, of the member's
25-63    contributions to group A for the claimed service.  If the refund is
25-64    paid, the member is considered to have never been eligible for
25-65    credit for the service claimed under this section.
25-66          SECTION 21. REDUCTION OF BENEFITS; DISSOLUTION OF SYSTEM. (a)
25-67    If the pension board determines that the pension fund is seriously
25-68    depleted, the pension board may proportionately and temporarily
25-69    reduce the benefits of all retirees, eligible survivors, alternate
 26-1    payees, and beneficiaries.
 26-2          (b)  The amount of any reduction under Subsection (a) of this
 26-3    section shall be paid to the retirees, eligible survivors,
 26-4    alternate payees, and beneficiaries if the pension board determines
 26-5    that the pension fund is sufficiently reestablished to pay the
 26-6    amounts.
 26-7          (c)  If the reserve and surplus in the pension fund become
 26-8    exhausted and the payouts of the pension fund exceed the income to
 26-9    the pension fund, the governing body of the city by ordinance may
26-10    dissolve the pension system and require liquidation of the pension
26-11    system without any liability to the city.
26-12          (d)  Any retiree or eligible survivor receiving a retirement
26-13    pension or survivor benefit may, at that person's option, receive a
26-14    smaller retirement pension or survivor benefit after properly
26-15    making a request in writing to the pension board.
26-16          SECTION 22. EXEMPTION FROM EXECUTION, ATTACHMENT, OR OTHER
26-17    WRIT. (a)  No portion of the pension fund, either before or after
26-18    its order of disbursement by the pension board, and no amount due
26-19    or to become due to any retiree, eligible survivor, or beneficiary,
26-20    may be held, seized, taken, detained, or levied on by, or subjected
26-21    to, execution, attachment, garnishment, injunction, or any other
26-22    writ. No order or decree, or any process or proceeding, may be
26-23    issued by a court of this state for the payment or satisfaction in
26-24    whole or in part out of the pension fund of a debt, damage, claim,
26-25    demand, or judgment against any member, retiree, eligible survivor,
26-26    or other person. The pension fund and any claim on the pension fund
26-27    may not be directly or indirectly assigned or transferred.  Any
26-28    attempt to transfer or assign the pension fund or any part of the
26-29    pension fund, and any claim on the pension fund, is void. The
26-30    pension fund shall be sacredly held, kept, and disbursed only for
26-31    the purposes provided by this Act, except that a retiree or
26-32    eligible survivor may have deducted from that person's pension or
26-33    survivor benefit an amount required by law or a voluntary amount
26-34    authorized by law and the pension board.
26-35          (b)  This section does not prevent the division of benefits
26-36    accrued by a member under any court order determined by the pension
26-37    board or its designee to be a qualified domestic relations order
26-38    and the payment of a share of a retiree's benefits or contributions
26-39    to an alternate payee in accordance with the order.
26-40          (c)  This section does not prevent the offset of amounts
26-41    received wrongly or in error against future pension or benefit
26-42    payments under Section 3(h) of this Act.
26-43          SECTION 23. FEDERAL TAX QUALIFICATION OF PENSION FUND;
26-44    MAXIMUM BENEFITS FROM PENSION FUND. (a)  The pension fund is
26-45    intended to qualify under Section 401(a), Internal Revenue Code of
26-46    1986, as amended, and is for the exclusive benefit of the members
26-47    and retirees and their eligible survivors. No part of the corpus or
26-48    income of the pension fund may ever be used for or diverted to any
26-49    purpose other than for the benefit of members and retirees and
26-50    their eligible survivors as provided by this Act.
26-51          (b)  A member, retiree, or eligible survivor of the pension
26-52    system may not accrue a retirement pension, disability retirement
26-53    allowance, survivor benefit, death benefit allowance, DROP benefit,
26-54    or any other benefit under this Act in excess of the benefit limits
26-55    applicable to the pension fund under Section 415, Internal Revenue
26-56    Code of 1986, as amended. The pension board shall reduce the amount
26-57    of any benefit that exceeds those limits by the amount of the
26-58    excess. If total benefits under the pension fund and the benefits
26-59    and contributions to which any member is eligible under any other
26-60    qualified plan maintained by the city that employs the member would
26-61    otherwise exceed the applicable limits under Section 415, Internal
26-62    Revenue Code of 1986, as amended, the benefits the member would
26-63    otherwise receive from the pension fund shall be reduced to the
26-64    extent necessary so that the benefits do not exceed the benefit
26-65    limits under Section 415, Internal Revenue Code of 1986, as
26-66    amended.
26-67          (c)  Any member, retiree, or eligible survivor who receives
26-68    any distribution that is an eligible rollover distribution as
26-69    defined by Section 402(c)(4), Internal Revenue Code of 1986, as
 27-1    amended, is eligible to have that distribution transferred directly
 27-2    to another eligible retirement plan of the member's, retiree's, or
 27-3    eligible survivor's choice on providing direction to the pension
 27-4    system regarding that transfer in accordance with procedures
 27-5    established by the pension board.
 27-6          (d)  The total salary taken into account for any purpose for
 27-7    any member or retiree of the pension system may not exceed $200,000
 27-8    for any year for an eligible participant, or $150,000 a year for an
 27-9    ineligible participant.  These dollar limits shall be adjusted from
27-10    time to time in accordance with guidelines provided by the United
27-11    States secretary of the treasury. For purposes of this subsection,
27-12    an eligible participant is a person who first became a member of
27-13    the predecessor system before 1996, and an ineligible participant
27-14    is a member who is not an eligible participant.
27-15          (e)  Accrued benefits under this Act become 100 percent
27-16    nonforfeitable for a member on the date the member has completed
27-17    five years of credited service, except as otherwise provided by
27-18    law.  If the pension system or the pension fund is terminated or
27-19    partially terminated, or city contributions to the pension fund are
27-20    discontinued completely, there may not be a reversion of funds to
27-21    the city.  On the complete or partial termination or discontinuance
27-22    of city contributions, the pension fund held by the pension system
27-23    shall be used exclusively for benefits for members, deferred
27-24    participants, retirees, and their eligible survivors, and the
27-25    affected employees' rights to the benefits, to the extent funded,
27-26    shall be nonforfeitable if not already nonforfeitable under this
27-27    subsection.
27-28          (f)  Amounts representing forfeited benefits of terminated
27-29    members may not be used to increase benefits payable from the
27-30    pension fund, but may be used to reduce contributions for future
27-31    plan years.
27-32          (g)  Distributions of benefits must begin not later than
27-33    April 1 of the year following the calendar year during which the
27-34    member becomes 70-1/2 years of age or terminates employment with
27-35    the employer, if later, and must otherwise conform to Section
27-36    401(a)(9), Internal Revenue Code of 1986, as amended.
27-37          (h)  If the amount of any benefit is to be determined on the
27-38    basis of actuarial assumptions that are not otherwise specifically
27-39    set forth for that purpose in this Act, the actuarial assumptions
27-40    to be used are those earnings and mortality assumptions being used
27-41    on the date of the determination by the pension fund's actuary and
27-42    approved by the pension board. The actuarial assumptions being used
27-43    at any particular time shall be attached as an addendum to a copy
27-44    of this Act and treated for all purposes as a part of the Act. The
27-45    actuarial assumptions may be changed by the pension fund's actuary
27-46    at any time if approved by the pension board.  A change in
27-47    actuarial assumptions may not result in any decrease in benefits
27-48    accrued as of the effective date of the change.
27-49          (i)  To the extent permitted by law, the pension board may
27-50    adjust the benefits of retirees and eligible survivors by
27-51    increasing any benefit that was reduced because of Section 415,
27-52    Internal Revenue Code of 1986, as amended. If Section 415, Internal
27-53    Revenue Code of 1986, as amended, is amended to permit the payment
27-54    of amounts previously precluded under that section, the pension
27-55    board may adjust the benefits of retirees and eligible survivors,
27-56    including restoring benefits previously denied. Benefits paid under
27-57    this subsection are not extra compensation earned after retirement
27-58    but are the delayed payment of benefits earned before retirement.
27-59          (j)  The pension board may make any change in this Act to the
27-60    extent that the change is necessary to ensure compliance with the
27-61    qualification requirements of Section 401, Internal Revenue Code of
27-62    1986, as amended, or any other federal law.
27-63          SECTION 24. EXCESS BENEFIT PLAN. (a)  A separate,
27-64    nonqualified, unfunded excess benefit plan is reenacted and
27-65    continued outside the pension fund.
27-66          (b)  In this section:
27-67                (1)  "Excess benefit participant" means any retiree
27-68    whose retirement benefits, as determined on the basis of all
27-69    qualified plans without regard to the limitations provided by
 28-1    Section 23 of this Act and comparable provisions of other qualified
 28-2    plans, would exceed the maximum benefit permitted under Section
 28-3    415, Internal Revenue Code of 1986, as amended.
 28-4                (2)  "Excess benefit plan" means the separate,
 28-5    nonqualified, unfunded excess benefit plan that is continued under
 28-6    this section, that was created under the predecessor system for the
 28-7    benefit of eligible members, as amended or restated from time to
 28-8    time, and that is intended to be a qualified governmental excess
 28-9    benefit arrangement within the meaning of Section 415(m), Internal
28-10    Revenue Code of 1986, as amended.
28-11                (3)  "Maximum benefit" means the retirement benefit a
28-12    retiree and the surviving spouse or dependent child of a retiree or
28-13    deceased member or retiree are eligible to receive from all
28-14    qualified plans in any month after giving effect to Section 23 of
28-15    this Act and any similar provision of any other qualified plan
28-16    designed to conform to Section 415, Internal Revenue Code of 1986,
28-17    as amended.
28-18                (4)  "Qualified plan" means the fund and any other plan
28-19    that is maintained by the city for the exclusive benefit of some or
28-20    all of the members of the fund and that has been found by the
28-21    Internal Revenue Service to be qualified or has been treated by the
28-22    city as a qualified plan under Section 401, Internal Revenue Code
28-23    of 1986, as amended.
28-24                (5)  "Unrestricted benefit" means the monthly
28-25    retirement benefit a retiree and the surviving spouse and dependent
28-26    child of a retiree or deceased member or retiree would have
28-27    received under the terms of all qualified plans, except for the
28-28    limitations provided by Section 23 of this Act and any similar
28-29    provision of any other qualified plan designed to conform to
28-30    Section 415, Internal Revenue Code of 1986, as amended.
28-31          (c)  An excess benefit participant who is receiving benefits
28-32    from the pension fund is eligible for a monthly benefit under the
28-33    excess benefit plan in an amount equal to the lesser of:
28-34                (1)  the member's unrestricted benefit less the maximum
28-35    benefit; or
28-36                (2)  the amount by which the member's monthly benefit
28-37    from the pension fund has been reduced because of the limitations
28-38    provided by Section 415, Internal Revenue Code of 1986, as amended.
28-39          (d)  If a surviving spouse or dependent child is eligible for
28-40    preretirement or postretirement survivor benefits under a qualified
28-41    plan after the date of the death of an excess benefit participant,
28-42    the surviving spouse or dependent child is eligible for a monthly
28-43    benefit under the excess benefit plan equal to the benefit
28-44    determined in accordance with this Act, without regard to the
28-45    limitations provided by Section 23 of this Act or Section 415,
28-46    Internal Revenue Code of 1986, as amended, less the maximum
28-47    benefit.
28-48          (e)  Any benefit to which a person is eligible under this
28-49    section shall be paid at the same time and in the same manner as
28-50    the benefit that would have been paid from the pension fund if
28-51    payment of the benefit from the pension fund had not been precluded
28-52    by Section 23 of this Act.  An excess benefit participant or a
28-53    beneficiary of the participant may not, under any circumstances,
28-54    elect to defer receipt of all or any part of a payment due under
28-55    this section.
28-56          (f)  The pension board shall administer the excess benefit
28-57    plan, and the executive director shall carry out the business of
28-58    the board with respect to the plan.  Except as otherwise provided
28-59    by this section, the rights, duties, and responsibilities of the
28-60    pension board and the executive director are the same for the plan
28-61    as for the pension fund.
28-62          (g)  The consultants, independent auditors, attorneys, and
28-63    actuaries selected to perform services for the pension fund shall
28-64    perform services for the excess benefit plan, but their fees for
28-65    services may not be paid by the pension fund.  The actuary engaged
28-66    to perform services for the pension fund shall advise the pension
28-67    board of the amount of benefits that may not be provided from the
28-68    pension fund solely by reason of the limitations provided by
28-69    Section 415, Internal Revenue Code of 1986, as amended, and of the
 29-1    amount of employer contributions that will be made to the plan
 29-2    rather than to the pension fund.
 29-3          (h)  Contributions may not accumulate under the excess
 29-4    benefit plan to pay future retirement benefits.  The executive
 29-5    director shall reduce each payment of employer contributions that
 29-6    would otherwise be made to the pension fund under Section 8 of this
 29-7    Act by the amount determined to be necessary to meet the
 29-8    requirements for retirement benefits under the plan, including
 29-9    reasonable administrative expenses, until the next payment of
29-10    municipal contributions is expected to be made to the pension fund.
29-11    The employer shall pay to the plan, from the withheld
29-12    contributions, not earlier than the 30th day before the date each
29-13    distribution of monthly retirement benefits is required to be made
29-14    from the plan, the amount necessary to satisfy the obligation to
29-15    pay monthly retirement benefits from the plan.  The executive
29-16    director shall satisfy the obligation of the plan to pay retirement
29-17    benefits from the employer contributions transferred for that
29-18    month.
29-19          (i)  Employer contributions otherwise required to be made to
29-20    the pension fund under Section 8 of this Act and to any other
29-21    qualified plan shall be divided into those contributions required
29-22    to pay retirement benefits under this section and those
29-23    contributions paid into and accumulated to pay the maximum benefits
29-24    required under the qualified plan.  Employer contributions made to
29-25    provide retirement benefits under this section may not be
29-26    commingled with the money of the pension fund or any other
29-27    qualified plan.
29-28          (j)  Benefits under this section are exempt from execution,
29-29    attachment, garnishment, assignment, injunction, and any other writ
29-30    in the same manner as retirement annuities under Section 22 of this
29-31    Act and may not be paid to a person other than to the person who
29-32    would have received the benefits from the pension fund except for
29-33    the limitations provided by Section 23 of this Act.
29-34          SECTION 25. EMPLOYEES ON RETIREMENT WHEN ACT TAKES EFFECT.
29-35    (a)  Any person receiving a retirement benefit from the predecessor
29-36    system immediately before the effective date of this Act shall
29-37    continue to receive the same benefit amount the person was entitled
29-38    to receive under the predecessor system.
29-39          (b)  This Act does not change the status of any former member
29-40    receiving a pension, or who is eligible to receive a pension, from
29-41    the city or the pension system under the predecessor system, unless
29-42    otherwise expressly provided by this Act.
29-43          SECTION 26.  CONFIDENTIAL INFORMATION.  (a)  Records that are
29-44    in the custody of the pension system concerning an individual
29-45    member, deferred participant, retiree, eligible survivor,
29-46    beneficiary, or alternate payee are not public information under
29-47    Chapter 552, Government Code, and may not be disclosed in a form
29-48    identifiable to a specific individual unless:
29-49                (1)  the information is disclosed to:
29-50                      (A)  the individual or the individual's attorney,
29-51    guardian, executor, administrator, or conservator, or another
29-52    person who the executive director determines is acting in the
29-53    interest of the individual or the individual's estate;
29-54                      (B)  a spouse or former spouse of the individual
29-55    and the executive director determines that the information is
29-56    relevant to the spouse's or former spouse's interest in a member's
29-57    accounts or benefits or other amounts payable by the pension
29-58    system;
29-59                      (C)  a governmental official or employee and the
29-60    executive director determines that disclosure of the information
29-61    requested is reasonably necessary to the performance of the duties
29-62    of the official or employee; or
29-63                      (D)  a person authorized by the individual in
29-64    writing to receive the information; or
29-65                (2)  the information is disclosed under a subpoena and
29-66    the executive director determines that the individual will have a
29-67    reasonable opportunity to contest the subpoena.
29-68          (b)  This section does not prevent the disclosure of the
29-69    status or identity of an individual as a member, former member,
 30-1    deferred participant, retiree, deceased participant, eligible
 30-2    survivor, beneficiary, or alternate payee of the pension system.
 30-3          (c)  The executive director may designate other employees of
 30-4    the pension system to make the necessary determinations under
 30-5    Subsection (a) of this section.
 30-6          (d)  A determination and disclosure under Subsection (a) of
 30-7    this section does not require notice to the individual member,
 30-8    deferred participant, retiree, eligible survivor, beneficiary, or
 30-9    alternate payee.
30-10          SECTION 27. POWER OF ATTORNEY. (a)  A person eligible for
30-11    payment of a pension or other benefits administered by the pension
30-12    system may direct the pension system to treat as the authorized
30-13    representative of the person concerning the disposition of the
30-14    pension or other benefits an attorney-in-fact under a power of
30-15    attorney that the pension system determines complies with Section
30-16    490, Texas Probate Code.
30-17          (b)  If the power of attorney under Subsection (a) of this
30-18    section is revoked, the pension system is not liable for payments
30-19    made to or actions taken at the request of the attorney-in-fact
30-20    before the date the pension system receives written notice that the
30-21    power of attorney has been revoked.
30-22          SECTION 28. PROPORTIONATE RETIREMENT PROGRAM WITH
30-23    PARTICIPATING RETIREMENT SYSTEMS.  (a)  The pension board may
30-24    establish a program of proportionate retirement benefits subject to
30-25    the requirements of this section.
30-26          (b)  In this section:
30-27                (1)  "Combined service credit" means the combined sum
30-28    of an eligible participant's service credit in each participating
30-29    retirement system in which the participant has service credit and
30-30    for which the total satisfies the length-of-service requirements
30-31    for normal service retirement from that system at the eligible
30-32    participant's attained age.
30-33                (2)  "Eligible participant" means a person who is or
30-34    has been a member of the pension system and who is actively
30-35    employed by the city and covered by a participating retirement
30-36    system at the time of full participation by the three retirement
30-37    systems established by Article 6243e.2(1), Revised Statutes,
30-38    Article 6243g-4, Revised Statutes, a successor statute to either of
30-39    those laws, and this Act.  An eligible participant does not include
30-40    any individual who:
30-41                      (A)  is in retirement or DROP status;
30-42                      (B)  is receiving a retirement pension; or
30-43                      (C)  is in a probationary or trainee firefighter
30-44    or police officer position.
30-45                (3)  "Full participation" means that a retirement
30-46    system has met the requirements of a participating retirement
30-47    system.
30-48                (4)  "Maximum benefit" means the maximum total amount
30-49    of benefits payable to an eligible participant who has used
30-50    combined service credit to qualify for benefits from a
30-51    participating retirement system, which is 90 percent of the
30-52    participant's average monthly compensation at the time the
30-53    participant ceases employment in a position covered by the pension
30-54    system.
30-55                (5)  "Participating retirement system" means a
30-56    retirement system that is established by Article 6243e.2(1),
30-57    Revised Statutes, Article 6243g-4, Revised Statutes, a successor
30-58    statute to either of those laws, or this Act and that recognizes
30-59    and allows the use of combined service credit and disability
30-60    determinations to provide proportionate retirement benefits in its
30-61    system for an eligible participant under the provisions of this
30-62    Act.
30-63                (6)  "Service credit" means service that is credited by
30-64    the rules of a participating retirement system and that may be used
30-65    to meet length-of-service requirements for service retirement in
30-66    the system, except that service credit that would otherwise be
30-67    allowed by more than one participating retirement system for the
30-68    same service period is counted only once in determining the amount
30-69    of a person's combined service credit and applies as service credit
 31-1    only in the participating retirement system in which the person
 31-2    first established the service credit.
 31-3          (c)  Participation by the pension system in the proportionate
 31-4    retirement program is voluntary.  The pension board may elect to
 31-5    participate in the proportionate retirement program by adopting a
 31-6    resolution.  If a resolution is adopted, the pension board shall
 31-7    notify the other participating retirement systems of the election.
 31-8    The effective date of participation in the proportionate retirement
 31-9    program for which an election is made is the first day of the third
31-10    month after the month in which notice is given.  Participation in
31-11    the proportionate retirement program by the pension system may be
31-12    terminated for any reason by adoption of a pension board
31-13    resolution, except that the proportionate retirement program will
31-14    be continued by the pension system for eligible participants who
31-15    are actively employed at the time of the termination and who remain
31-16    actively employed.  On adoption of a resolution of termination, the
31-17    pension board shall notify the other participating retirement
31-18    systems of the termination.  The effective date of termination from
31-19    the proportionate retirement program is the first day of the month
31-20    following the month in which notice of termination is given.
31-21          (d)  An eligible participant's combined service credit may be
31-22    used only for determining eligibility for a normal retirement
31-23    pension under this Act and may not be used in determining
31-24    eligibility for DROP participation, a disability pension, survivor
31-25    benefits, or any type of benefit other than a normal retirement
31-26    pension, nor may combined service credit be used in determining the
31-27    amount of any type of pension or benefit.  The amount of a pension
31-28    or benefit payable by the pension system is determined according
31-29    to, and in the manner prescribed by, this Act and the rules
31-30    established by the pension board and is based solely on an eligible
31-31    participant's service credit in the pension system and allowable
31-32    maximum benefit.  The pension board has sole responsibility and
31-33    discretion to determine the eligibility of eligible participants
31-34    for benefits, including whether sufficient combined service credit
31-35    exists to qualify eligible participants for proportionate
31-36    retirement benefits from the pension system and the amount and
31-37    duration of proportionate retirement benefits payable by the
31-38    pension system.
31-39          (e)  A person who withdraws pension contributions from a
31-40    participating retirement system ceases to be a member of that
31-41    participating retirement system.  Membership and service credit for
31-42    which contributions were withdrawn or otherwise forfeited may be
31-43    reestablished under the statutes and rules governing that system.
31-44    To be counted as combined service credit, all service in a
31-45    participating retirement system for which the person withdrew
31-46    contributions or that was otherwise forfeited must be reinstated in
31-47    accordance with the statutes and rules applicable to that system.
31-48    A lump-sum distribution is governed by the statutes and rules
31-49    applicable to the particular retirement system that distributed the
31-50    lump-sum payment.
31-51          (f)  A person who has service credit in another participating
31-52    retirement system for which the person is receiving or may become
31-53    eligible to receive a benefit is not eligible to vote in a pension
31-54    board election or hold a position on the pension board.
31-55          (g)  The pension board shall make determinations regarding an
31-56    eligible participant's combined service credit based on the
31-57    certified records of a participating retirement system, including
31-58    the pension system, and of the city.
31-59          (h)  The provisions of Section 17 of this Act relating to
31-60    termination of employment do not apply to an eligible participant
31-61    to the extent the participant is separated from service covered by
31-62    the pension system during a period for which the participant earns
31-63    service credit in another participating retirement system for
31-64    service performed for the city in an amount sufficient to meet the
31-65    length-of-service requirement, using combined service credit, for a
31-66    retirement benefit from the participating retirement system.
31-67          (i)  A proportionate retirement benefit may be paid by the
31-68    pension system under the proportionate retirement program to an
31-69    eligible participant who fulfills the requirements for receiving a
 32-1    proportionate retirement benefit in the pension system using
 32-2    combined service credit only if the participant is eligible to
 32-3    receive and has applied for proportionate retirement benefits from
 32-4    the applicable other participating retirement systems.  An eligible
 32-5    participant may not become eligible to receive a proportionate
 32-6    retirement benefit from the pension system while employed in a
 32-7    position covered by the pension system.
 32-8          (j)  The pension system is governed solely by its own
 32-9    statutory provisions, policies, and procedures relating to
32-10    disability benefit determinations for members who apply for a
32-11    disability pension from the pension system, except that the pension
32-12    system shall pay a proportionate amount of the ordinary disability
32-13    benefit attributable to the service credited under the pension
32-14    system, based on the schedule of benefits in effect under this Act
32-15    or Chapter 358, Acts of the 48th Legislature, Regular Session, 1943
32-16    (Article 6243g, Vernon's Texas Civil Statutes), as applicable, on
32-17    the eligible participant's last day of credited service as a member
32-18    in the pension system if:
32-19                (1)  the eligible participant has combined service
32-20    credit from any other participating retirement system in addition
32-21    to the pension system;
32-22                (2)  the eligible participant files for a disability
32-23    pension for the first time as a member of the other participating
32-24    retirement system;
32-25                (3)  the eligible participant is otherwise eligible for
32-26    a disability pension in both participating retirement systems;
32-27                (4)  the eligible participant receives a determination
32-28    from the pension board of trustees of the other participating
32-29    pension system that the person has a disability that is of a type
32-30    recognized by the pension system; and
32-31                (5)  the other participating retirement system grants
32-32    the disability pension.
32-33          (k)  If the disability is determined to be service-related,
32-34    the pension system shall pay only the ordinary disability benefit
32-35    amount.  The pension board has the right to require examinations,
32-36    reports, and any other information permitted under this Act for the
32-37    administration and payment of disability benefits and the right to
32-38    reduce, suspend, or terminate a benefit accordingly.  The benefit
32-39    allowed under this subsection and Subsection (j) of this section is
32-40    payable only if the other participating retirement systems
32-41    authorize and pay a disability benefit under the same circumstances
32-42    as provided by this subsection.  A person who is receiving a
32-43    disability benefit from a participating retirement system is not
32-44    eligible for a disability pension under this Act, except as
32-45    provided by this subsection and Subsection (j) of this section.
32-46          (l)  Creditable military service, if any, will be credited in
32-47    the pension system only as provided by this Act and only if the
32-48    service is not credited in any other participating retirement
32-49    system.
32-50          (m)  If the pension board elects to participate in the
32-51    proportionate retirement program under this section, the pension
32-52    board shall adopt rules for implementing and administering the
32-53    proportionate retirement program.
32-54          (n)  A person may not receive a benefit under this section in
32-55    an amount that is greater than the amount of the benefits accrued
32-56    by the person in the absence of this section.  A survivor benefit
32-57    otherwise payable under Section 14(c) of this Act on behalf of a
32-58    person who has used combined service credit to qualify for benefits
32-59    from at least one participating retirement system shall be computed
32-60    and payable as provided by Section 14(b) of this Act.
32-61          SECTION 29. Chapter 358, Acts of the 48th Legislature,
32-62    Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
32-63    Statutes), is repealed.
32-64          SECTION 30. (a)  This Act continues in effect each municipal
32-65    employees pension fund established under Chapter 358, Acts of the
32-66    48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's
32-67    Texas Civil Statutes), as that law existed before repeal by this
32-68    Act.
32-69          (b)  All assets, service credit reports, and liabilities
 33-1    relating to persons who are covered by the predecessor system
 33-2    immediately before the effective date of this Act are transferred
 33-3    to the pension system created by this Act.
 33-4          SECTION 31. A member of the pension board of trustees serving
 33-5    under Chapter 358, Acts of the 48th Legislature, Regular Session,
 33-6    1943 (Article 6243g, Vernon's Texas Civil Statutes), before the
 33-7    effective date of this Act continues to serve on the pension board
 33-8    created under this Act until the expiration of the term for which
 33-9    the member was elected or appointed under Chapter 358, Acts of the
33-10    48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's
33-11    Texas Civil Statutes).
33-12          SECTION 32. (a)  Section 14(d) of this Act applies only to
33-13    deaths that occur on or after the effective date of this Act,
33-14    without regard to the date of a member's separation from service.
33-15          (b)  Section 10(h) of this Act applies only to the payment of
33-16    pension and survivor benefits on or after the effective date of
33-17    this Act, without regard to the date of a member's death or
33-18    separation from service.
33-19          SECTION 33.  This Act takes effect immediately if it receives
33-20    a vote of two-thirds of all the members elected to each house, as
33-21    provided by Section 39, Article III, Texas Constitution.  If this
33-22    Act does not receive the vote necessary for immediate effect, this
33-23    Act takes effect September 1, 2001.
33-24                                 * * * * *