By King of Parker H.B. No. 1849
77R826 GJH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the creation of a separate firefighter or police
1-3 officer municipal retirement system in certain municipalities.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. APPLICABILITY. This Act applies to a municipal
1-6 retirement system that has 500 or more active and retired
1-7 firefighters and police officers other than:
1-8 (1) a system organized under the Texas Local Fire
1-9 Fighters Retirement Act (Article 6243e, Vernon's Texas Civil
1-10 Statutes);
1-11 (2) the Texas Municipal Retirement System; or
1-12 (3) any retirement system established under any other
1-13 law exclusively for firefighters, police officers, or firefighters
1-14 and police officers.
1-15 SECTION 2. DEFINITIONS. In this Act:
1-16 (1) "Contribution" means the money put into a
1-17 retirement fund by the participating members of the fund.
1-18 (2) "Firefighter" means an employee of the fire
1-19 department of a municipality who is required to satisfy Section
1-20 419.032, Government Code, as a condition of employment.
1-21 (3) "Member" means a firefighter, police officer, or
1-22 any person who is retired from a fire or police department and who
1-23 is receiving benefits as a retiree of a retirement system.
1-24 (4) "Participating member" means a firefighter or
2-1 police officer who is currently making contributions to a
2-2 retirement fund.
2-3 (5) "Participation rate" means the money put into a
2-4 retirement system by a municipality for services rendered to the
2-5 municipality by the participating members of the system.
2-6 (6) "Police officer" means an employee of the police
2-7 department of a municipality who is required to be licensed by the
2-8 Commission on Law Enforcement Officer Standards and Education under
2-9 Chapter 1701, Occupations Code, as a condition of employment.
2-10 (7) "Qualified actuary" means an actuary who is either
2-11 a fellow of the Society of Actuaries or a member of the American
2-12 Academy of Actuaries.
2-13 (8) "Retiree" means any person who is retired from the
2-14 fire department or police department of a municipality or who is a
2-15 surviving spouse or surviving dependent of a retired fire or police
2-16 department employee.
2-17 SECTION 3. ELECTION PROCEDURES. (a) In any municipal
2-18 retirement system in which firefighters or police officers are
2-19 combined with nonemergency response employees, other than a system
2-20 excluded by Section 1 of this Act, the firefighters or police
2-21 officers or the firefighters and police officers may petition the
2-22 retirement board of the municipal retirement system to call an
2-23 election of the participating members of the petitioning group to
2-24 determine, by majority vote of the firefighters, police officers,
2-25 or police officers and firefighters, whether to separate from the
2-26 municipal retirement system and to create a retirement system under
2-27 this Act.
3-1 (b) Any petition filed under this Act must be signed by at
3-2 least 10 percent of the participating members of the fire
3-3 department, the police department, or both departments if both are
3-4 petitioning. The petition must be accompanied by an actuarial
3-5 analysis showing the impact of the proposed separation on the
3-6 existing system and the proposed system. A qualified actuary must
3-7 perform the actuarial analysis. The petitioning group is
3-8 responsible for the cost of the actuarial analysis.
3-9 (c) A municipal retirement board receiving a petition that
3-10 meets the requirements of Subsection (b) of this section shall, not
3-11 later than the 60th day after the date that the municipal
3-12 retirement board receives the petition, call an election to be
3-13 conducted by a certified public accounting firm.
3-14 (d) If a majority of the participating members of a group
3-15 vote to separate from the existing system, an election shall be
3-16 held not later than the 60th day after the date of the separation
3-17 election to elect members of the board of trustees for the system
3-18 created under this Act. The election held under this subsection
3-19 shall be conducted by the same certified public accounting firm
3-20 that conducted the separation election.
3-21 SECTION 4. COMPOSITION OF BOARD. (a) If a system created
3-22 under this Act includes both firefighters and police officers, the
3-23 initial retirement board must consist of:
3-24 (1) one firefighter and one police officer elected for
3-25 three-year terms;
3-26 (2) one firefighter and one police officer elected for
3-27 two-year terms; and
4-1 (3) one retired firefighter and one retired police
4-2 officer elected by the retired members of each of the respective
4-3 groups for one-year terms.
4-4 (b) If the system created under this Act includes only
4-5 firefighters or only police officers, the initial retirement board
4-6 shall consist of:
4-7 (1) two participating members elected for two-year
4-8 terms;
4-9 (2) two participating members elected for one-year
4-10 terms; and
4-11 (3) one retired member elected by the retired members
4-12 of the group for a one-year term.
4-13 (c) After the initial terms of office expire under
4-14 Subsection (a) or (b) of this section, each term shall be for two
4-15 years, and any vacancy shall be filled for the unexpired term.
4-16 (d) The mayor or the mayor's designee from the city council
4-17 of the municipality shall serve on a retirement board described by
4-18 Subsection (a) or (b) of this section as an ex officio member.
4-19 SECTION 5. PRESERVATION OF SYSTEM. (a) Any retirement
4-20 system separating from a municipal retirement system and creating a
4-21 separate system under this Act is governed by the rules and
4-22 regulations, procedures, benefits, and document of the municipal
4-23 retirement system, to the extent that those standards are
4-24 applicable and not in conflict with this Act, until the new
4-25 retirement board adopts, through the process contained in this Act,
4-26 new rules and regulations, procedures, benefits, and a document
4-27 that are ratified by a majority vote of the participating members
5-1 of the system and the governing body of the municipality, if
5-2 applicable.
5-3 (b) All authority granted to the retirement board of the
5-4 municipal retirement system shall be granted to the new board until
5-5 a new document is adopted as provided by this Act.
5-6 SECTION 6. EXPENDITURE AUTHORITY OF RETIREMENT BOARD DURING
5-7 SEPARATION. (a) A retirement board of trustees created under this
5-8 Act has the authority to make expenditures from the existing fund
5-9 to facilitate the separation and to prepare for the creation of the
5-10 new system or for any cause that is an appropriate expenditure for
5-11 a retirement board.
5-12 (b) All expenditures made under this section shall be
5-13 debited against that portion of the fund that is transferred to the
5-14 new system created under this Act.
5-15 (c) The new board may hire an executive director and staff,
5-16 who may be participating members of the fund, for the
5-17 administration of the fund, who:
5-18 (1) are employees of the new board; and
5-19 (2) serve at the will of the new board.
5-20 (d) The new board may rent, lease, or purchase office space
5-21 and equipment.
5-22 SECTION 7. BASIC MODIFICATIONS. Any modification of the
5-23 system that does not deal with benefits, eligibility, or
5-24 contributions may be made only after:
5-25 (1) the retirement board receives an actuarial report
5-26 stating that the proposed modification will not have a significant
5-27 impact on benefits, eligibility, contributions, or the soundness of
6-1 the system; and
6-2 (2) a majority vote of the retirement board.
6-3 SECTION 8. MODIFICATION OF BENEFITS AND ELIGIBILITY. (a)
6-4 The board of trustees of a system created under this Act may:
6-5 (1) change the benefits or eligibility requirements
6-6 for benefits payable from the retirement system;
6-7 (2) provide for reinstatement by a member of service
6-8 credit previously forfeited; and
6-9 (3) adopt or change other requirements for the payment
6-10 of benefits, except as otherwise prohibited by this Act.
6-11 (b) Before a board of trustees chooses to adopt or change a
6-12 benefit or requirement for the payment of benefits under this
6-13 section, the proposed addition or change must be approved by:
6-14 (1) a qualified actuary selected by the board; and
6-15 (2) a majority vote of the participating members of
6-16 the retirement system voting on the addition or change by secret
6-17 ballot at an election held for that purpose at which at least 50
6-18 percent of all participating members of the retirement system vote.
6-19 (c) Except as provided by Subsection (d) of this section, if
6-20 a board chooses to adopt an addition or change after it has been
6-21 approved as provided by this section, the addition or change
6-22 applies to all persons who are participating members of the
6-23 retirement system on the effective date of the addition or change
6-24 and all persons who become participating members during the time
6-25 the addition or change remains in effect. The addition or change
6-26 also may apply to:
6-27 (1) persons receiving monthly benefits; or
7-1 (2) former members of the fire or police department
7-2 who meet an applicable length-of-service requirement for service
7-3 retirement.
7-4 (d) An addition or change adopted under this section may
7-5 not, without the member's written consent, deprive a member of the
7-6 retirement system of a right to receive a vested benefit.
7-7 (e) The effective date of a change or addition adopted under
7-8 this section is a date specified by the board of trustees that is
7-9 not earlier than the date of adoption by the board. A change or
7-10 addition may not be retroactive unless retroactive application is
7-11 required to maintain a plan's tax qualification status.
7-12 SECTION 9. MODIFICATION OF PARTICIPATION RATE. The rate of
7-13 participation by the municipality in the retirement system shall be
7-14 fixed as of January 1, 2001, and any modification that requires a
7-15 change in the rate of participation by the municipality must meet
7-16 the requirements of Section 8 of this Act and be approved by the
7-17 governing body of the municipality. This Act does not require the
7-18 approval of the municipality except for an increase in the
7-19 participation rate.
7-20 SECTION 10. FUND TRANSFER. (a) A qualified actuary,
7-21 jointly approved by the predecessor system's retirement board of
7-22 trustees and the board of trustees of a retirement system created
7-23 under this Act, shall determine the amount of money to be
7-24 transferred to a retirement system created under this Act.
7-25 (b) When the retirement board created under this Act is
7-26 ready to have the money transferred into the system created by this
7-27 Act, the board shall notify the predecessor board. If the two
8-1 retirement boards are unable to agree on an actuary before the 45th
8-2 day after the date of notification, the predecessor board's actuary
8-3 as of the first day of the year in which the petition for
8-4 separation was submitted shall be appointed to serve. If the
8-5 predecessor board's actuary is appointed, after agreement could not
8-6 be reached in the required time, the retirement board created under
8-7 this Act may appoint an additional qualified actuary.
8-8 (c) The actuary or actuaries shall divide the fund so that
8-9 both retirement systems are equally funded based on an actuarial
8-10 basis.
8-11 (d) The two boards shall jointly set a schedule for the
8-12 division. If a schedule cannot be agreed on, the division shall
8-13 occur not later than the 180th day after the date the actuary or
8-14 actuaries have been selected in accordance with this Act.
8-15 SECTION 11. SEPARATION COSTS. (a) All reasonable and
8-16 prudent costs of the separation from an existing fund and of the
8-17 creation of a retirement system under this Act that are approved in
8-18 advance by both retirement boards shall be debited against the new
8-19 system created under this Act.
8-20 (b) No expense of the separation is the responsibility of
8-21 the municipality in which the new fund is created.
8-22 SECTION 12. TRUST FUND. Any fund created under this Act is a
8-23 trust fund. It shall be administered by a board of trustees known
8-24 as "The Board Of Trustees of the Firefighter's or Police Officer's
8-25 Municipal Retirement System."
8-26 SECTION 13. RECOVERY OF WRONGLY OBTAINED FUNDS. The board of
8-27 trustees may bring a civil action against any offending party or
9-1 may initiate a claim with the board's bond surety to recover any
9-2 money paid out of or obtained from the fund through fraud,
9-3 misrepresentation, defalcation, theft, embezzlement, or
9-4 misapplication. The board of trustees may institute, conduct, and
9-5 maintain the action in the name of the board of trustees for the
9-6 use and benefit of the fund.
9-7 SECTION 14. HEARING AUTHORITY. A retirement board created
9-8 under this Act may, through its presiding officer, subpoena
9-9 witnesses and documents, administer oaths, examine witnesses, and
9-10 require testimony in any matter affecting the retirement system or
9-11 benefits, eligibility, participation, procedures, or contributions.
9-12 SECTION 15. EFFECTIVE DATE. This Act takes effect
9-13 immediately if it receives a vote of two-thirds of all the members
9-14 elected to each house, as provided by Section 39, Article III,
9-15 Texas Constitution. If this Act does not receive the vote
9-16 necessary for immediate effect, this Act takes effect September 1,
9-17 2001.