By Sadler                                             H.B. No. 3343
         Substitute the following for H.B. No. 3343:
         By Sadler, Flores, Clark, Dutton, Ehrhardt,       C.S.H.B. No. 3343
            Gallego, Hochberg, Junell, Marchant, Oliveira,
            Pitts, Smith, Telford, Tillery, Wilson
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the operation and funding of certain group coverage
 1-3     programs for certain school and educational employees and their
 1-4     dependents.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6                  ARTICLE 1.  GROUP HEALTH COVERAGE PROGRAM
 1-7           SECTION 1.01.  Subchapter E, Chapter 3, Insurance Code, is
 1-8     amended by adding Article 3.50-7 to read as follows:
 1-9           Art. 3.50-7.  TEXAS SCHOOL EMPLOYEES UNIFORM GROUP HEALTH
1-10     COVERAGE ACT
1-11           Sec. 1.  SHORT TITLE. This article may be cited as the Texas
1-12     School Employees Uniform Group Health Coverage Act.
1-13           Sec. 2.  DEFINITIONS. In this article:
1-14                 (1)  "Administering firm" means any entity designated
1-15     by the trustee to administer any coverages, services, benefits, or
1-16     requirements under this article and the trustee's rules adopted
1-17     under this article.
1-18                 (2)  "Cafeteria plan" means a plan as defined and
1-19     authorized by Section 125, Internal Revenue Code of 1986, and its
1-20     subsequent amendments.
1-21                 (3)  "Charter school"  means an open-enrollment charter
1-22     school established under Subchapter D, Chapter 12, Education Code.
1-23                 (4)  "Employee" means a participating member of the
1-24     Teacher Retirement System of Texas who is employed by a
 2-1     participating entity and who  is not receiving coverage from a
 2-2     uniform group insurance program under the Texas Employees Uniform
 2-3     Group Insurance Benefits Act (Article 3.50-2, Vernon's Texas
 2-4     Insurance Code), the Texas State College and University Employees
 2-5     Uniform Insurance Benefits Act (Article 3.50-3, Vernon's Texas
 2-6     Insurance Code), or the Texas Public School Retired Employees Group
 2-7     Insurance Program established under Article 3.50-4 of this code.
 2-8     The term does not include an individual performing personal
 2-9     services as an independent contractor.
2-10                 (5)  "Health coverage plan" means any group policy or
2-11     contract, hospital service agreement, health maintenance
2-12     organization agreement, preferred provider arrangement, or any
2-13     similar group arrangement or any combination of those policies,
2-14     contracts, agreements, or arrangements that provides for, pays for,
2-15     or reimburses expenses for health care services.
2-16                 (6)  "Participating entity" means an entity
2-17     participating in the uniform group coverage program established
2-18     under this article.  The term includes:
2-19                       (A)  a school district;
2-20                       (B)  a regional education service center; and
2-21                       (C)  a charter school that meets the requirements
2-22     of Section 6 of this article.
2-23                 (7)  "Program" means the uniform group coverage program
2-24     established under this article.
2-25                 (8)  "Regional education service center" means a
2-26     regional education service center established under Chapter 8,
2-27     Education Code.
 3-1                 (9)  "Trustee" means the Teacher Retirement System of
 3-2     Texas.
 3-3           Sec. 3.  ADMINISTRATION. (a)  The Teacher Retirement System
 3-4     of Texas, as trustee, shall implement and administer the uniform
 3-5     group coverage program described by this article.
 3-6           (b)  The trustee may hire and compensate employees.
 3-7           (c)  The trustee may, on a competitive bid basis, contract
 3-8     with a qualified, experienced firm of group insurance plan
 3-9     specialists or an administering firm who will act for the trustee
3-10     in the capacity of independent administrators and managers of the
3-11     program.  The independent administrator selected by the trustee
3-12     shall assist the trustee to ensure the proper administration of
3-13     this article and the coverages, services, and benefits provided for
3-14     or authorized by this article and shall be paid by the trustee.
3-15           (d)  The trustee may enter into interagency contracts with
3-16     any agency of the state, including the Employees Retirement System
3-17     of Texas, for the purpose of assistance in implementing the
3-18     program.
3-19           (e)  The trustee has the powers with regard to the program
3-20     that the Employees Retirement System of Texas has in administering
3-21     the Texas Employees Uniform Group Insurance Benefits Act (Article
3-22     3.50-2, Vernon's Texas Insurance Code), including the power to
3-23     adjudicate claims, expel participants from the program for cause,
3-24     and adopt rules to administer this article.
3-25           Sec. 4.  GROUP COVERAGES. (a)  The trustee by rule shall
3-26     establish plans of group coverages for employees participating in
3-27     the program and their dependents.  The plans must include at least
 4-1     two tiers of group coverage, with coverage at different levels in
 4-2     each tier, ranging from the catastrophic care coverage plan to the
 4-3     primary care coverage plan.  Each tier must contain a health
 4-4     coverage plan.
 4-5           (b)  The trustee by rule shall define the requirements of
 4-6     each coverage plan and tier of coverage.  The coverage provided
 4-7     under the catastrophic care coverage plan shall be prescribed by
 4-8     the trustee by rule and must provide coverage at least as extensive
 4-9     as the coverage provided under the TRS-Care 2 plan operated under
4-10     Article 3.50-4 of this code.  The coverage provided under the
4-11     primary care coverage plan must be comparable in scope and, to the
4-12     greatest extent possible, in cost to the coverage provided under
4-13     the Texas Employees Uniform Group Insurance Benefits Act (Article
4-14     3.50-2, Vernon's Texas Insurance Code).
4-15           (c)  Comparable coverage plans of each tier of coverage
4-16     established must be offered to employees of all participating
4-17     entities.
4-18           (d)  Coverage provided under the program may not be made
4-19     subject to a preexisting condition limitation.
4-20           (e)  The trustee may provide a cafeteria plan for employees
4-21     of participating entities.
4-22           Sec. 5.  PARTICIPATION IN PROGRAM BY SCHOOL DISTRICTS AND
4-23     REGIONAL EDUCATION SERVICE CENTERS. (a)  Effective September 1,
4-24     2002, each school district with 500 or fewer employees and each
4-25     regional education service center is required to participate in the
4-26     program.
4-27           (a-1)  Effective September 1, 2002, a school district with
 5-1     more than 500 employees but not more than 1,000 employees may elect
 5-2     to participate in the program.  A school district that elects to
 5-3     participate in the program under this subsection must notify the
 5-4     trustee of the election, in the manner prescribed by the trustee,
 5-5     not later than September 30, 2001.  This subsection expires January
 5-6     1, 2002.
 5-7           (b)  Effective September 1, 2005, a school district with more
 5-8     than 500 employees may elect to participate in the program.  A
 5-9     school district that elects to participate under this subsection
5-10     shall apply for participation in the manner prescribed by the
5-11     trustee by rule.
5-12           Sec. 6.  PARTICIPATION BY CHARTER SCHOOLS; ELIGIBILITY. (a)
5-13     A charter school is eligible to participate in the program if the
5-14     school agrees:
5-15                 (1)  that all records of the school relating to
5-16     participation in the program are open to inspection by the trustee,
5-17     the administering firm, the commissioner of education, or a
5-18     designee of any of those entities; and
5-19                 (2)  to have its accounts relating to participation in
5-20     the program annually audited by a certified public accountant at
5-21     the school's expense.
5-22           (b)  A charter school must notify the trustee of the school's
5-23     intent to participate in the program in the manner and within the
5-24     time required by trustee rule.
5-25           Sec. 7.  PARTICIPATION BY EMPLOYEE. (a)  In this section,
5-26     "full-time employee" and "part-time employee" have the meanings
5-27     assigned by trustee rules.
 6-1           (b)  Except as provided by Subsection (c) of this section,
 6-2     participation in the program is limited to  employees of
 6-3     participating entities who are full-time employees and to part-time
 6-4     employees who are participating members in the Teacher Retirement
 6-5     System of Texas.  Such an employee who applies for coverage during
 6-6     an open enrollment period prescribed by the trustee is
 6-7     automatically covered by the catastrophic care coverage plan
 6-8     unless the employee:
 6-9                 (1)  specifically waives coverage under this article;
6-10                 (2)  selects a higher tier coverage plan; or
6-11                 (3)  is expelled from the program.
6-12           (c)  A part-time employee of a participating entity who is
6-13     not a participating member in the Teacher Retirement System of
6-14     Texas is eligible to participate in the program only if the
6-15     employee pays all of the premiums and other costs associated with
6-16     the health coverage plan selected by the employee.
6-17           Sec. 8.  FUND. (a)  The Texas school employees uniform group
6-18     coverage trust fund is established as a trust fund with the
6-19     comptroller.
6-20           (b)  The fund is composed of:
6-21                 (1)  all contributions made to the fund under this
6-22     article from employees, participating entities, and the state;
6-23                 (2)  contributions made by employees or participating
6-24     entities for optional coverages;
6-25                 (3)  investment income;
6-26                 (4)  any additional amounts appropriated by the
6-27     legislature for contingency reserves, administrative expenses, or
 7-1     other expenses; and
 7-2                 (5)  any other money required or authorized to be paid
 7-3     into the fund.
 7-4           (c)  The trustee may use amounts in the fund only to provide
 7-5     group coverages under this article and to pay the expenses of
 7-6     administering the program.
 7-7           (d)  The trustee may invest assets of the fund in the manner
 7-8     provided by Section 67(a)(3), Article XVI, Texas Constitution.
 7-9           Sec. 9.  PAYMENT OF CONTRIBUTIONS FOR PROGRAM. (a)  For each
7-10     participating entity, the state shall contribute the sum certain
7-11     prescribed as a state contribution under Article 3.50-9 of this
7-12     code to the fund established under Section 8 of this article.
7-13           (b)  A school district shall make contributions for the
7-14     program as provided by Article 3.50-10 of this code.  A charter
7-15     school or regional education service center shall make
7-16     contributions for the program as provided by trustee rule.
7-17           (c)  An employee covered by the program shall pay that
7-18     portion of the cost of coverage selected by the employee that
7-19     exceeds the amount of the state and participating entity
7-20     contributions under Subsections (a) and (b) of this section.  The
7-21     employee may pay the employee's contribution under this subsection
7-22     from the amount distributed to the employee under Article 3.50-8 of
7-23     this code.
7-24           SECTION 1.02.  Effective September 1, 2002, Subchapter E,
7-25     Chapter 3, Insurance Code, is amended by adding Article 3.50-8 to
7-26     read as follows:
7-27           Art. 3.50-8.  SCHOOL EMPLOYEE HEALTH COVERAGE OR COMPENSATION
 8-1     SUPPLEMENTATION
 8-2           Sec. 1.  DEFINITIONS. In this article:
 8-3                 (1)  "Eligible charter school" means an open-enrollment
 8-4     charter school established under Subchapter D, Chapter 12,
 8-5     Education Code, that is eligible for participation in the uniform
 8-6     group coverage program established under Article 3.50-7 of this
 8-7     code.
 8-8                 (2)  "Employee" means a participating member of the
 8-9     Teacher Retirement System of Texas who:
8-10                       (A)  is employed by a school district, eligible
8-11     charter school, or regional education service center; and
8-12                       (B)  is not:
8-13                             (i)  receiving coverage from a uniform
8-14     group insurance program under the Texas Employees Uniform Group
8-15     Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
8-16     Code) or the Texas State College and University Employees Uniform
8-17     Insurance Benefits Act (Article 3.50-3, Vernon's Texas Insurance
8-18     Code); or
8-19                             (ii)  a retiree covered under the Texas
8-20     Public School Retired Employees Group Insurance Program established
8-21     under Article 3.50-4 of this code.
8-22                 (3)  "Regional education service center" means a
8-23     regional education service center established under Chapter 8,
8-24     Education Code.
8-25                 (4)  "Trustee" means the Teacher Retirement System of
8-26     Texas.
8-27           Sec. 2.  SCHOOL EMPLOYEE HEALTH COVERAGE OR COMPENSATION
 9-1     SUPPLEMENTATION. (a)  Each year, the trustee shall deliver to each
 9-2     school district, including a school district that is ineligible for
 9-3     state aid under Chapter 42, Education Code, each eligible charter
 9-4     school, and each regional education service center state funds in
 9-5     an amount, as determined by the trustee, equal to the product of
 9-6     the specific amount provided by appropriation for purposes of this
 9-7     article multiplied by the number of employees employed by the
 9-8     district, school, or service center.
 9-9           (b)  All funds received by a school district, eligible
9-10     charter school, or regional education service center under this
9-11     article are held in trust for the benefit of the employee on whose
9-12     behalf the district, school, or service center received the funds.
9-13           (c)  The trustee shall distribute funds under this article in
9-14     equal monthly installments.  The trustee is entitled to recover
9-15     from a school district, eligible charter school, or regional
9-16     education service center any amount distributed under this article
9-17     to which the district, school, or service center was not entitled.
9-18           (d)  A determination by the trustee under this section is
9-19     final and may not be appealed.
9-20           Sec. 3.  EMPLOYEE ELECTION. (a)  Each employee shall elect
9-21     whether state funds distributed under this article to the school
9-22     district, eligible charter school, or regional education service
9-23     center employing the employee are to be:
9-24                 (1)  placed into a health care reimbursement account;
9-25                 (2)  used by the district, school, or service center to
9-26     pay for optional health care coverage for the employee or the
9-27     employee's dependents;
 10-1                (3)  paid to the employee as supplemental compensation;
 10-2    or
 10-3                (4)  divided among two or more of the options permitted
 10-4    by Subdivisions (1)-(3) of this subsection.
 10-5          (b)  For each state fiscal year, an election under this
 10-6    section must be made before the later of:
 10-7                (1)  August 1 of the preceding state fiscal year; or
 10-8                (2)  the 31st day after the date the employee is hired.
 10-9          (c)  The trustee shall prescribe and distribute to each
10-10    school district, eligible charter school, and regional education
10-11    service center:
10-12                (1)  a model explanation of the options employees may
10-13    elect under this section and the effect of electing each option;
10-14    and
10-15                (2)  an election form to be completed by employees.
10-16          (d)  Each state fiscal year, a school district, eligible
10-17    charter school, or regional education service center shall prepare
10-18    and distribute to each employee a written explanation of the
10-19    options the employee may elect under this section.  The explanation
10-20    must be based on the model explanation prepared by the trustee
10-21    under Subsection (c) of this section and must reflect all available
10-22    health coverage options available to the employee.  The explanation
10-23    must be distributed to an employee before the later of:
10-24                (1)  July 1 of the preceding state fiscal year; or
10-25                (2)  the fifth day after the date the employee is
10-26    hired.
10-27          (e)  The written explanation under Subsection (d) of this
 11-1    section must be accompanied by a copy of the election form
 11-2    prescribed under Subsection (c)(2) of this section.
 11-3          Sec. 4.  RULES.  The trustee may adopt rules to implement
 11-4    this article.
 11-5          SECTION 1.03. Effective September 1, 2002, Subchapter E,
 11-6    Chapter 3, Insurance Code, is amended by adding Article 3.50-9 to
 11-7    read as follows:
 11-8          Art. 3.50-9.  STATE CONTRIBUTION FOR COVERAGE PLANS FOR
 11-9    EDUCATIONAL EMPLOYEES
11-10          Sec. 1.  DEFINITIONS. In this article:
11-11                (1)  "Covered entity" means:
11-12                      (A)  a public school district of this state;
11-13                      (B)  a regional education service center
11-14    established under Chapter 8, Education Code; and
11-15                      (C)  a charter school that meets the requirements
11-16    of Section 6, Article 3.50-7, of this code.
11-17                (2)  "Employee" has the meaning assigned by Article
11-18    3.50-7 of this code.
11-19                (3)  "Health coverage plan" has the meaning assigned by
11-20    Article 3.50-7 of this code.
11-21          Sec. 2.  STATE CONTRIBUTION. (a)  The state shall contribute
11-22    monthly for each employee of a covered entity who participates in a
11-23    group health coverage plan provided by or through the covered
11-24    entity $75.00, to be used by the covered entity only for the
11-25    purchase of health care coverage plans for employees of the covered
11-26    entity as authorized by:
11-27                (1)  Article 3.50-7 of this code;
 12-1                (2)  Section 22.004, Education Code; or
 12-2                (3)  another applicable law of this state.
 12-3          (b)  A state contribution made under this section shall be
 12-4    deposited, as applicable, in:
 12-5                (1)  the Texas school employees uniform group coverage
 12-6    trust fund established under Section 8, Article 3.50-7, of this
 12-7    code; or
 12-8                (2)  another fund established for the payment of school
 12-9    employee health coverages that meets requirements for those funds
12-10    prescribed by the comptroller or another appropriate officer of
12-11    this state.
12-12          SECTION 1.04. Subchapter E, Chapter 3, Insurance Code, is
12-13    amended by adding Article 3.50-10 to read as follows:
12-14          Art. 3.50-10.  SCHOOL DISTRICT EXPENDITURES FOR EMPLOYEE
12-15    HEALTH COVERAGE PLANS
12-16          Sec. 1.  DEFINITION.  In this article, "participating
12-17    employee" means an employee of a school district who participates
12-18    in a group health coverage plan provided by or through the
12-19    district.
12-20          Sec. 2.  MAINTENANCE OF EFFORT FOR 2000-2001 SCHOOL YEAR.
12-21    Subject to Section 3 of this article, and except as provided by
12-22    Section 5 of this article, a school district that, for the
12-23    2000-2001 school year, paid amounts to share with employees the
12-24    cost of coverage under a group benefits plan shall, for each fiscal
12-25    year, use to provide health coverage an amount for each
12-26    participating employee at least equal to the amount computed as
12-27    provided by this subsection.  The school district shall divide the
 13-1    amount that the district paid during the 2000-2001 school year for
 13-2    the prior group benefits plan by the total number of full-time
 13-3    employees of the district in the 2000-2001 school year and multiply
 13-4    the result by the number of full-time employees of the district in
 13-5    the fiscal year for which the computation is made.  Amounts used as
 13-6    required by this section shall be deposited in a fund described by
 13-7    Section 2(b), Article 3.50-9, of this code.
 13-8          Sec. 3.  MINIMUM EFFORT. (a)  A school district shall, for
 13-9    each fiscal year, use to provide health coverage an amount equal to
13-10    the number of participating employees of the district multiplied by
13-11    $1,800.  Amounts used as required by this section shall be
13-12    deposited in a fund described by Section 2(b), Article 3.50-9, of
13-13    this code.
13-14          (b)  Amounts received by or transferred on behalf of a school
13-15    district under Article 3.50-9 of this code are not used in
13-16    computing whether the district complies with Subsection (a) of this
13-17    section.
13-18          (c)  To comply with this section, a school district may use
13-19    state funds received under Chapter 42, Education Code, other than
13-20    funds that may be used under that chapter only for a specific
13-21    purpose.
13-22          Sec. 4.  STATE ASSISTANCE FOR MEETING MINIMUM EFFORT. (a)
13-23    For any state fiscal year, a school district that imposes
13-24    maintenance and operations taxes at the maximum rate permitted
13-25    under Section 45.003(d), Education Code, is entitled to state funds
13-26    in an amount equal to the difference, if any, between:
13-27                (1)  an amount equal to the number of participating
 14-1    employees of the district multiplied by $1,800; and
 14-2                (2)  the amount the district is required to use to
 14-3    provide health coverage under Section 2 of this article for that
 14-4    fiscal year, if that amount is less than the amount specified by
 14-5    Subdivision (1) of this subsection.
 14-6          (a-1)  For the state fiscal year beginning September 1, 2002,
 14-7    a school district is entitled to state funds in an amount equal to
 14-8    the difference, if any, between:
 14-9                (1)  an amount equal to the number of participating
14-10    employees of the district multiplied by $1,800; and
14-11                (2)  the amount the district is required to use to
14-12    provide health coverage under Section 2 of this article for that
14-13    fiscal year, if that amount is less than the amount specified by
14-14    Subdivision (1) of this subsection.
14-15          (a-2)  For the state fiscal year beginning September 1, 2003,
14-16    a school district is entitled to state funds in an amount equal to
14-17    the difference, if any, between:
14-18                (1)  an amount equal to the number of participating
14-19    employees of the district multiplied by $1,500; and
14-20                (2)  the amount the district is required to use to
14-21    provide health coverage under Section 2 of this article for that
14-22    fiscal year, if that amount is less than the amount specified by
14-23    Subdivision (1) of this subsection.
14-24          (a-3)  For the state fiscal year beginning September 1, 2004,
14-25    a school district is entitled to state funds in an amount equal to
14-26    the difference, if any, between:
14-27                (1)  an amount equal to the number of participating
 15-1    employees of the district multiplied by $1,200; and
 15-2                (2)  the amount the district is required to use to
 15-3    provide health coverage under Section 2 of this article for that
 15-4    fiscal year, if that amount is less than the amount specified by
 15-5    Subdivision (1) of this subsection.
 15-6          (a-4)  For the state fiscal year beginning September 1, 2005,
 15-7    a school district is entitled to state funds in an amount equal to
 15-8    the difference, if any, between:
 15-9                (1)  an amount equal to the number of participating
15-10    employees of the district multiplied by $900; and
15-11                (2)  the amount the district is required to use to
15-12    provide health coverage under Section 2 of this article for that
15-13    fiscal year, if that amount is less than the amount specified by
15-14    Subdivision (1) of this subsection.
15-15          (a-5)  For the state fiscal year beginning September 1, 2006,
15-16    a school district is entitled to state funds in an amount equal to
15-17    the difference, if any, between:
15-18                (1)  an amount equal to the number of participating
15-19    employees of the district multiplied by $600; and
15-20                (2)  the amount the district is required to use to
15-21    provide health coverage under Section 2 of this article for that
15-22    fiscal year, if that amount is less than the amount specified by
15-23    Subdivision (1) of this subsection.
15-24          (a-6)  For the state fiscal year beginning September 1, 2007,
15-25    a school district is entitled to state funds in an amount equal to
15-26    the difference, if any, between:
15-27                (1)  an amount equal to the number of participating
 16-1    employees of the district multiplied by $300; and
 16-2                (2)  the amount the district is required to use to
 16-3    provide health coverage under Section 2 of this article for that
 16-4    fiscal year, if that amount is less than the amount specified by
 16-5    Subdivision (1) of this subsection.
 16-6          (a-7)  State funds to which a school district is entitled
 16-7    under Subsections (a-1)-(a-6) of this section shall be deposited in
 16-8    a fund described by Section 2(b), Article 3.50-9, of this code.
 16-9          (a-8)  A school district that receives state funds under
16-10    Subsection (a) of this section for a state fiscal year is not
16-11    entitled to state funds under Subsection (a-1), (a-2), (a-3),
16-12    (a-4), (a-5), or (a-6) of this section.
16-13          (a-9)  Subsections (a-1)-(a-8) of this section and this
16-14    subsection expire September 1, 2008.
16-15          (b)  The Teacher Retirement System of Texas shall distribute
16-16    state funds to school districts under this section in equal monthly
16-17    installments.  State funds received under this section shall be
16-18    deposited in a fund described by Section 2(b), Article 3.50-9, of
16-19    this code. The Texas Education Agency shall provide to the
16-20    retirement system information necessary for the retirement system
16-21    to determine a school district's eligibility for state funds under
16-22    this section.
16-23          (c)  The Teacher Retirement System of Texas is entitled to
16-24    recover from a school district any amount distributed under this
16-25    section to which the district was not entitled.  A determination by
16-26    the retirement system under this section is final and may not be
16-27    appealed.
 17-1          Sec. 5.  USE OF EXCESS MAINTENANCE OF EFFORT. If the amount a
 17-2    school district is required to use to provide health coverage under
 17-3    Section 2 of this article for a fiscal year exceeds the amount
 17-4    necessary for the district to comply with Section 3 of this article
 17-5    for that year, the district may use the difference only to provide
 17-6    employee compensation, benefits, or both.
 17-7          SECTION 1.05. Section 42.253, Education Code, is amended by
 17-8    adding Subsection (e-1) to read as follows:
 17-9          (e-1)  For the 2003-2004, 2004-2005, 2005-2006, 2006-2007,
17-10    2007-2008, or 2008-2009 school year, for a school district that is
17-11    required to increase its maintenance and operations tax rate to
17-12    permit the district to comply with Section 3(a), Article 3.50-10,
17-13    Insurance Code, the limit authorized under Subsection (e) is
17-14    increased by an amount equal to the portion of the district's
17-15    maintenance and operations tax for that year necessary for the
17-16    district, when added to state funds received under this chapter for
17-17    that portion of the tax, to comply with Section 3(a), Article
17-18    3.50-10, Insurance Code.  For the 2005-2006 and 2007-2008 school
17-19    years, the limit authorized under Subsection (e) does not include
17-20    any portion of a school district's maintenance and operations tax
17-21    rate for which the limit under Subsection (e) applicable to the
17-22    district was increased under this subsection. The commissioner may
17-23    adopt rules necessary to administer this subsection.  A
17-24    determination of the commissioner under this subsection is final
17-25    and may not be appealed.  This subsection expires September 1,
17-26    2009.
17-27          SECTION 1.06. Section 26.08, Tax Code, is amended by adding
 18-1    Subsections (k) and (l) to read as follows:
 18-2          (k)  For purposes of this section, for the 2003, 2004, 2005,
 18-3    2006, 2007, or 2008 tax year, for a school district that is
 18-4    required to increase its maintenance and operations tax rate to
 18-5    permit the district to comply with Section 3(a), Article 3.50-10,
 18-6    Insurance Code, the rollback tax rate of a school district is the
 18-7    sum of:
 18-8                (1)  the tax rate that, applied to the current total
 18-9    value for the district, would impose taxes in an amount that, when
18-10    added to state funds that would be distributed to the district
18-11    under Chapter 42, Education Code, for the school year beginning in
18-12    the current tax year using that tax rate, would provide the same
18-13    amount of state funds distributed under Chapter 42 and maintenance
18-14    and operations taxes of the district per student in weighted
18-15    average daily attendance for that school year that would have been
18-16    available to the district in the preceding year if the funding
18-17    elements for Chapters 41 and 42, Education Code, for the current
18-18    year had been in effect for the preceding year;
18-19                (2)  the tax rate that, applied to the current total
18-20    value for the district, would impose taxes in the amount that, when
18-21    added to state funds that would be distributed to the district
18-22    under Chapter 42, Education Code, for the school year beginning in
18-23    the current tax year using that tax rate, permits the district to
18-24    comply with Section 3(a), Article 3.50-10, Insurance Code;
18-25                (3)  the rate of $0.06 per $100 of taxable value; and
18-26                (4)  the district's current debt rate.
18-27          (l)  Subsection (k) and this subsection expire January 1,
 19-1    2009.
 19-2          SECTION 1.07. Subchapter C, Chapter 62, Health and Safety
 19-3    Code, is amended by adding Section 62.1015 to read as follows:
 19-4          Sec. 62.1015.  ELIGIBILITY OF CERTAIN CHILDREN; DISALLOWANCE
 19-5    OF MATCHING FUNDS. (a)  In this section, "charter school,"
 19-6    "employee," and "regional education service center" have the
 19-7    meanings assigned by Section 2, Article 3.50-7, Insurance Code.
 19-8          (b)  A child of an employee of a charter school, school
 19-9    district, or regional education service center may be enrolled in
19-10    health benefits coverage under the child health plan. A child
19-11    enrolled in the child health plan under this section participates
19-12    in the same manner as any other child enrolled in the child health
19-13    plan.
19-14          (c)  The cost of health benefits coverage for children
19-15    enrolled in the child health benefit plan under this section shall
19-16    be paid as provided in the General Appropriations Act. Expenditures
19-17    made to provide health benefits coverage under this section may not
19-18    be included for the purpose of determining the state children's
19-19    health insurance expenditures, as that term is defined by 42 U.S.C.
19-20    Section 1397ee(d)(2)(B), as amended.
19-21                     ARTICLE 2.  CONFORMING AMENDMENTS
19-22          SECTION 2.01. Article 3.50-4, Insurance Code, is amended by
19-23    adding Section 3A to read as follows:
19-24          Sec. 3A.  TRANSFER OF RECORDS. The trustee shall transfer
19-25    from the program established under this article all records
19-26    relating to active employees participating in the uniform group
19-27    coverage program established under Article 3.50-7 of this code not
 20-1    later than the date on which the program of coverages provided
 20-2    under Article 3.50-7 of this code is implemented.
 20-3          SECTION 2.02.  Section 1, Article 3.50-4, Insurance Code, is
 20-4    amended to read as follows:
 20-5          Sec. 1.  SHORT TITLE.  This article may be cited as the Texas
 20-6    Public School Retired Employees Group Insurance Act.
 20-7          SECTION 2.03.  Sections 2(3) and (4), Article 3.50-4,
 20-8    Insurance Code, are amended to read as follows:
 20-9                (3)  "Dependent" means:
20-10                      (A)  a spouse of a retiree [or active member];
20-11                      (B)  a retiree's[, an active member's,] or a
20-12    deceased active member's unmarried child who is younger than 25
20-13    years of age including:
20-14                            (i)  an adopted child;
20-15                            (ii)  a foster child, a stepchild, or other
20-16    child who is in a regular parent-child relationship; and
20-17                            (iii)  a recognized natural child; and
20-18                      (C)  a retiree's [or active member's] recognized
20-19    natural child, adopted child, foster child, stepchild, or other
20-20    child who is in a regular parent-child relationship and who lives
20-21    with or whose care is provided by the retiree[, active member,] or
20-22    surviving spouse on a regular basis, regardless of the child's age,
20-23    if the child is mentally retarded or physically incapacitated to
20-24    such an extent as to be dependent on the retiree[, active member,]
20-25    or surviving spouse for care or support, as determined by the
20-26    trustee, or in the case of a deceased active member, a recognized
20-27    natural child, adopted child, foster child, stepchild, or other
 21-1    child who was in a regular parent-child relationship and who lived
 21-2    with or whose care was provided by the deceased active member on a
 21-3    regular basis, regardless of the child's age, if the child is
 21-4    mentally retarded or physically incapacitated to such an extent as
 21-5    to have been dependent on the deceased active member or surviving
 21-6    spouse for care or support, as determined by the trustee.
 21-7                (4)  "Fund" means the retired [Texas public] school
 21-8    employees group insurance fund.
 21-9          SECTION 2.04.  Section 3(a), Article 3.50-4, Insurance Code,
21-10    is amended to read as follows:
21-11          (a)  The Texas Public School Retired Employees Group
21-12    Insurance Program is established to provide for an insurance plan
21-13    or plans under this article.
21-14          SECTION 2.05.  Section 5(a), Article 3.50-4, Insurance Code,
21-15    is amended to read as follows:
21-16          (a)  The trustee may adopt rules, plans, procedures, and
21-17    orders reasonably necessary to implement this article, including:
21-18                (1)  establishment of minimum benefit and financing
21-19    standards for group insurance coverage to be provided to all
21-20    retirees, [active employees,] dependents, surviving spouses, and
21-21    surviving dependent children;
21-22                (2)  establishment of basic and optional group coverage
21-23    to be provided to retirees, [active employees,] dependents,
21-24    surviving spouses, and surviving dependent children;
21-25                (3)  establishment of the procedures for contributions
21-26    and deductions;
21-27                (4)  establishment of periods for enrollment and
 22-1    selection of optional coverage and procedures for enrolling and
 22-2    exercising options under the plan;
 22-3                (5)  determination of methods and procedures for claims
 22-4    administration;
 22-5                (6)  study of the operation of all insurance coverage
 22-6    provided under this article;
 22-7                (7)  administration of the fund;
 22-8                (8)  adoption of a timetable for the development of
 22-9    minimum benefit and financial standards for group insurance
22-10    coverage, establishment of group insurance plans, and the taking of
22-11    bids for and awarding of contracts for insurance plans; and
22-12                (9)  contracting with an independent and experienced
22-13    group insurance consultant or actuary, who does not receive
22-14    insurance commissions from any insurance company, for advice and
22-15    counsel in implementing and administering this program.
22-16          SECTION 2.06.  Section 8(e), Article 3.50-4, Insurance Code,
22-17    is amended to read as follows:
22-18          (e)  The trustee may contract for and make available to all
22-19    retirees, dependents, surviving spouses, and surviving dependent
22-20    children optional group health benefit plans in addition to the
22-21    basic plans.  The optional coverage may include a smaller
22-22    deductible, lower coinsurance, or additional categories of benefits
22-23    permitted under Subsection (b) of this section to provide
22-24    additional levels of coverages and benefits.  The trustee may
22-25    utilize a portion of the funds received for the Texas Public School
22-26    Retired Employees Group Insurance Program to offset some portion of
22-27    costs paid by the retiree for optional coverage if such utilization
 23-1    does not reduce the period the program is projected to remain
 23-2    financially solvent by more than one year in a biennium.  Any
 23-3    additional contributions for these optional plans shall be paid for
 23-4    by the retiree, surviving spouse, or surviving dependent children.
 23-5          SECTION 2.07.  Section 9, Article 3.50-4, Insurance Code, is
 23-6    amended to read as follows:
 23-7          Sec. 9.  BENEFIT CERTIFICATES.  At such times, or upon such
 23-8    events, as designated by the trustee, each insurance carrier shall
 23-9    issue to each retiree, [active employee,] surviving spouse, or
23-10    surviving dependent child insured under this article a certificate
23-11    of insurance that:
23-12                (1)  states the benefits to which the person is
23-13    entitled;
23-14                (2)  states to whom the benefits are payable;
23-15                (3)  states to whom the claims must be submitted; and
23-16                (4)  summarizes the provisions of the policy
23-17    principally affecting the person.
23-18          SECTION 2.08.  Section 12, Article 3.50-4, Insurance Code, is
23-19    amended to read as follows:
23-20          Sec. 12.  DEATH CLAIMS:  BENEFICIARIES.  The amount of group
23-21    life insurance and group accidental death and dismemberment
23-22    insurance covering a retiree, [active employee,] surviving spouse,
23-23    dependent, or surviving dependent child at the date of death shall
23-24    be paid, on the establishment of a valid claim, only:
23-25                (1)  to the beneficiary or beneficiaries designated by
23-26    the person in a signed and witnessed written document received
23-27    before death in the trustee's office; or
 24-1                (2)  if no beneficiary is properly designated or in
 24-2    existence, to persons in accordance with the trustee's death
 24-3    benefit provisions in Subsection (b), Section 824.103, Government
 24-4    Code.
 24-5          SECTION 2.09.  Section 13, Article 3.50-4, Insurance Code, is
 24-6    amended to read as follows:
 24-7          Sec. 13.  AUTOMATIC COVERAGE. A retiree [or active employee]
 24-8    who applies during an enrollment period may not be denied any of
 24-9    the group insurance basic coverage provided under this article
24-10    unless the person has been found under Section 18A of this article
24-11    to have defrauded or attempted to defraud the Texas Public School
24-12    Retired Employees Group Insurance Program.
24-13          SECTION 2.10.  Section 15, Article 3.50-4, Insurance Code, is
24-14    amended to read as follows:
24-15          Sec. 15.  RETIRED SCHOOL EMPLOYEES GROUP INSURANCE FUND.
24-16    (a)  The retired school employees group insurance fund is created.
24-17    The comptroller is the custodian of the fund, and the trustee shall
24-18    administer the fund.  All contributions from active employees,
24-19    retirees, and the state, contributions for optional coverages,
24-20    investment income, appropriations for implementation of this
24-21    program, and other money required or authorized to be paid into the
24-22    fund shall be paid into the fund.  From the fund shall be paid,
24-23    without state fiscal year limitation, the appropriate premiums to
24-24    the carrier or carriers providing group coverage under the plan or
24-25    plans under this article, claims for benefits under the group
24-26    coverage, and the amounts expended by the trustee for
24-27    administration of the program.  The appropriate portion of the
 25-1    contributions to the fund to provide for incurred but unreported
 25-2    claim reserves and contingency reserves, as determined by the
 25-3    trustee, shall be retained in the fund.
 25-4          (b)  The trustee shall transfer the amounts deducted from
 25-5    annuities for contributions into the fund.
 25-6          (c)  Expenses for the development and administration of the
 25-7    program shall be spent as provided by a budget adopted by the
 25-8    trustee.
 25-9          (d)  The trustee may invest and reinvest the money in the
25-10    fund as provided by Subchapter D, Chapter 825, Government Code, for
25-11    assets of the Teacher Retirement System of Texas.
25-12          SECTION 2.11.  Section 18A, Article 3.50-4, Insurance Code,
25-13    is amended to read as follows:
25-14          Sec. 18A.  EXPULSION FROM PROGRAM FOR FRAUD.  (a)  After
25-15    notice and hearing as provided by this section, the trustee may
25-16    expel from participation in the Texas Public School Retired
25-17    Employees Group Insurance Program any retiree, [active employee,]
25-18    surviving spouse, dependent, or surviving dependent child who
25-19    submits a fraudulent claim under, or has defrauded or attempted to
25-20    defraud, any health benefits plan offered under the program.
25-21          (b)  On its motion or on the receipt of a complaint, the
25-22    trustee may call and hold a hearing to determine whether a person
25-23    has submitted a fraudulent claim under, or has defrauded or
25-24    attempted to defraud, any health benefits plan offered under the
25-25    Texas Public School Retired Employees Group Insurance Program.
25-26          (c)  A proceeding under this section is a contested case
25-27    under Chapter 2001, Government Code [the Administrative Procedure
 26-1    and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
 26-2    Statutes)].
 26-3          (d)  If the trustee, at the conclusion of the hearing, issues
 26-4    a decision that finds that the accused submitted a fraudulent claim
 26-5    or has defrauded or attempted to defraud any health benefits plan
 26-6    offered under the Texas Public School Retired Employees Group
 26-7    Insurance Program, the trustee shall expel the person from
 26-8    participation in the program.
 26-9          (e)  The substantial evidence rule shall be used on any
26-10    appeal of a decision of the trustee under this section.
26-11          (f)  A person expelled from the Texas Public School Retired
26-12    Employees Group Insurance Program may not be insured by any health
26-13    insurance plan offered by the program for a period, to be
26-14    determined by the trustee, of up to five years from the date the
26-15    expulsion takes effect.
26-16          SECTION 2.12.  Section 18B(a), Article 3.50-4, Insurance
26-17    Code, is amended to read as follows:
26-18          (a)  Section 825.507, Government Code, concerning the
26-19    confidentiality of information in records that are in the custody
26-20    of the Teacher Retirement System of Texas, applies to information
26-21    in records that are in the custody of the retirement system
26-22    regarding retirees, active employees, annuitants, or beneficiaries
26-23    under the Texas Public School Retired Employees Group Insurance
26-24    Program.
26-25          SECTION 2.13.  Sections 18C(c), (d), and (i), Article 3.50-4,
26-26    Insurance Code, are amended to read as follows:
26-27          (c)  The trustee, the Texas public school retired employees
 27-1    group insurance program, the retired school employees group
 27-2    insurance fund, and the board of trustees, officers, advisory
 27-3    committee members, and employees of the trustee are not liable for
 27-4    damages arising from the acts or omissions of health care providers
 27-5    who are participating health care providers in the coordinated care
 27-6    network established by the trustee.  Those health care providers
 27-7    are independent contractors and are responsible for their own acts
 27-8    and omissions.
 27-9          (d)  The trustee, the Texas public school retired employees
27-10    group insurance program, the retired school employees group
27-11    insurance fund, or a member of a credentialing committee, or the
27-12    board of trustees, officers, advisory committee members, or
27-13    employees of the trustee are not liable for damages arising from
27-14    any act, statement, determination, recommendation made, or act
27-15    reported, without malice, in the course of the evaluation of the
27-16    qualifications of health care providers or of the patient care
27-17    rendered by those providers.
27-18          (i)  A credentialing committee, a person participating in a
27-19    credentialing review, a health care provider, the trustee, the
27-20    Texas public school retired employees group insurance program, or
27-21    the board of trustees, officers, advisory committee members, or
27-22    employees of the trustee that are named as defendants in any civil
27-23    action filed as a result of participation in the credentialing
27-24    process may use otherwise confidential information obtained for
27-25    legitimate internal business and professional purposes, including
27-26    use in their own defense.  Use of information under this subsection
27-27    does not constitute a waiver of the confidential and privileged
 28-1    nature of the information.
 28-2          SECTION 2.14. Article 3.51, Insurance Code, is amended by
 28-3    adding Section 3 to read as follows:
 28-4          Sec. 3. Notwithstanding any other provision of this article,
 28-5    a common or independent school district or any other agency or
 28-6    subdivision of the public school system of this state that is
 28-7    participating in the uniform group coverage program established
 28-8    under Article 3.50-7 of this code may not procure contracts under
 28-9    this article for health insurance coverage and may not renew a
28-10    health insurance contract procured under this article after the
28-11    date on which the program of coverages provided under Article
28-12    3.50-7 of this code is implemented.
28-13          SECTION 2.15. Article 26.036, Insurance Code, is amended by
28-14    adding Subsection (c) to read as follows:
28-15          (c)  An independent school district that is participating in
28-16    the uniform group coverage program established under Article 3.50-7
28-17    of this code may not participate in the small employer market under
28-18    this article for health insurance coverage and may not renew a
28-19    health insurance contract obtained in accordance with this article
28-20    after the date on which the program of coverages provided under
28-21    Article 3.50-7 of this code is implemented.
28-22          SECTION 2.16. Section 22.004, Education Code, is amended by
28-23    adding Subsection (h) to read as follows:
28-24          (h)  Notwithstanding any other provision of this section, a
28-25    district participating in the uniform group coverage program
28-26    established under Article 3.50-7, Insurance Code, may not make
28-27    group health coverage  available to its employees under this
 29-1    section after the date on which the program of coverages provided
 29-2    under Article 3.50-7, Insurance Code, is implemented.
 29-3          SECTION 2.17. Section 822.201(c), Government Code, is amended
 29-4    to read as follows:
 29-5          (c)  Excluded from salary and wages are:
 29-6                (1)  expense payments;
 29-7                (2)  [,] allowances;
 29-8                (3)  [,] payments for unused vacation or sick leave;
 29-9                (4)  [,] maintenance or other nonmonetary compensation;
29-10                (5)  [,] fringe benefits;
29-11                (6)  [,] deferred compensation other than as provided
29-12    by Subsection (b)(3);
29-13                (7)  [,] compensation that is not made pursuant to a
29-14    valid employment agreement;
29-15                (8)  [,] payments received by an employee in a school
29-16    year that exceed $5,000 for teaching a driver education and traffic
29-17    safety course that is conducted outside regular classroom hours;
29-18                (9)  [,] the benefit replacement pay a person earns as
29-19    a result of a payment made under Subchapter B or C, Chapter 661;
29-20                (10)  supplemental compensation an employee elects to
29-21    receive under Article 3.50-8, Insurance Code;[,] and
29-22                (11)  any compensation not described in Subsection (b).
29-23          SECTION 2.18. Sections 7A, 20, and 21, Article 3.50-4,
29-24    Insurance Code, are repealed.
29-25          SECTION 2.19.  Sections 2.02-2.13, 2.17, and 2.18 of this Act
29-26    take effect September 1, 2002.
29-27                  ARTICLE 3.  TRANSITION; EFFECTIVE DATE
 30-1          SECTION 3.01. The Teacher Retirement System of Texas shall
 30-2    develop the coverage plans to be implemented in the uniform group
 30-3    coverage program established under Article 3.50-7, Insurance Code,
 30-4    as added by this Act, beginning September 1, 2001, and shall
 30-5    develop the enrollment requirements for the program during the
 30-6    2001-2002 school year, with coverage beginning September 1, 2002.
 30-7          SECTION 3.02. A school district that becomes eligible to
 30-8    participate in the uniform group coverage program established under
 30-9    Article 3.50-7, Insurance Code, as added by this Act, as provided
30-10    by Section 5(b) of that article and that elects to participate in
30-11    the program beginning September 1, 2005, must notify the Teacher
30-12    Retirement System of Texas of the election not later than January
30-13    1, 2005.
30-14          SECTION 3.03. Except as otherwise provided by this Act, this
30-15    Act takes effect September 1, 2001.