1-1     By:  Armbrister                                        S.B. No. 292
 1-2           (In the Senate - Filed January 18, 2001; January 22, 2001,
 1-3     read first time and referred to Committee on State Affairs;
 1-4     April 17, 2001, reported adversely, with favorable Committee
 1-5     Substitute by the following vote:  Yeas 7, Nays 0; April 17, 2001,
 1-6     sent to printer.)
 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 292               By:  Armbrister
 1-8                            A BILL TO BE ENTITLED
 1-9                                   AN ACT
1-10     relating to programs and systems administered by the Employees
1-11     Retirement System of Texas.
1-12           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13           SECTION 1.  Subdivisions (12) and (14), Section 811.001,
1-14     Government Code, are amended to read as follows:
1-15                 (12)  "Occupational death or disability" means death or
1-16     disability from an injury or disease that directly results from a
1-17     specific act or occurrence determinable by a definite time and
1-18     place, and directly results from a [an inherent] risk or a hazard
1-19     peculiar to and inherent in a duty that arises from and in the
1-20     course of state employment.
1-21                 (14)  "Retiree" means a person who, except as provided
1-22     by Section 812.203 [or 814.209], receives an annuity based on
1-23     service that was credited to the person in a class of membership.
1-24           SECTION 2.  Subsection (b), Section 813.201, Government Code,
1-25     is amended to read as follows:      
1-26           (b)  A member may not[, after August 31, 1997,] accrue or
1-27     establish service credit in the employee class of membership when
1-28     the total amount of service credit, multiplied by the percentage in
1-29     effect for computing annuities under Section 814.103, 814.105, or
1-30     814.107 would exceed the number 100.  When the maximum amount of
1-31     service credit is accrued or established by a member in the
1-32     employee or elected class, member and state contributions cease,
1-33     although the member retains membership subject to Section 812.005.
1-34           SECTION 3.  Subsection (a), Section  813.504, Government
1-35     Code, is amended to read as follows:
1-36           (a)  A person [member of the employee class] may reestablish
1-37     service credit previously canceled in the retirement system if:
1-38                 (1)  the person is a member of the employee class and
1-39     at least six months have elapsed since the end of the month in
1-40     which the cancellation became effective; or
1-41                 (2)  the person is:
1-42                       (A)  a former member of the employee class; and
1-43                       (B)  a participant in the optional retirement
1-44     program under Chapter 830.
1-45           SECTION 4.  Section 813.509, Government Code, is amended to
1-46     read as follows:
1-47           Sec. 813.509.  CREDIT FOR ACCUMULATED SICK LEAVE.  (a)  A
1-48     member is entitled to service credit in the retirement system for
1-49     the member's sick leave that has accumulated and is unused on the
1-50     last day of employment if the member:
1-51                 (1)  [who] holds a position included in the employee
1-52     class of membership during the month that includes the effective
1-53     date of the member's retirement and [who] retires based on service
1-54     or a disability; or
1-55                 (2)  on or after September 1, 2000, has at least 10
1-56     years of membership service that has never been canceled and holds
1-57     a position included in the employee class of membership during the
1-58     month that includes the effective date of the member's termination
1-59     of employment [is entitled to service credit in the retirement
1-60     system for the member's sick leave that has accumulated and is
1-61     unused on the last day of employment].
1-62           (b)  A death benefit designee under Section 814.301 or
1-63     814.302 of a member who holds a position included in the employee
1-64     class of membership during the month that includes the member's
 2-1     date of death is entitled to service credit in the retirement
 2-2     system for the member's sick leave that has accumulated and is
 2-3     unused on the member's date of death.
 2-4           (c)  Sick leave is creditable in the retirement system at the
 2-5     rate of one month of service credit for each 20 days, or 160 hours,
 2-6     of accumulated sick leave and one month for each fraction of days
 2-7     or hours remaining after division of the total hours of accumulated
 2-8     sick leave by 160.
 2-9           (d) [(b)]  A member who holds a position included in the
2-10     employee class may use sick leave creditable under this section to
2-11     satisfy service requirements for retirement under Section 814.104
2-12     or 814.107 if the sick leave attributed to the eligibility
2-13     requirements remains otherwise unused on the last day of
2-14     employment.
2-15           (e)  A death benefit designee under Section 814.302 may use
2-16     the deceased member's sick leave credit under this section to
2-17     qualify for making a death benefit plan selection under Section
2-18     814.302.
2-19           (f) [(c)]  Except as provided by Subsection (g) [(d)], the
2-20     disbursing officer of each department or agency shall, before the
2-21     11th day after the effective date of retirement, the date of
2-22     another employment termination described by Subsection (a), or the
2-23     date of death of one or more employees of the department or agency,
2-24     certify to the retirement system:
2-25                 (1)  the name of each person:
2-26                       (A)  whose employment termination is described by
2-27     Subsection (a);
2-28                       (B)  whose retirement from the department or
2-29     agency, and from state service, became effective during the
2-30     preceding month; or
2-31                       (C)  who died during the preceding month; and
2-32                 (2)  the amount of the person's accumulated sick leave
2-33     on the last day of employment or date of death.
2-34           (g) [(d)]  The disbursing officer of a department or agency
2-35     that employs a member who applies for retirement under Subsection
2-36     (d) [(b)] shall, not more than 90 or less than 30 days before the
2-37     effective date of the member's retirement, certify to the
2-38     retirement system the amount of the member's accumulated and unused
2-39     sick leave.  The officer shall immediately notify the retirement
2-40     system if the member uses sick leave after the date of
2-41     certification.
2-42           (h) [(e)]  On receipt of a certification under Subsection (f)
2-43     [(c)] or (g) [(d)], the retirement system shall grant any credit to
2-44     which the [a] retiring member, [or] retiree, or member whose
2-45     employment has terminated [who is a subject of the certification]
2-46     is entitled.  An increase in the computation of an annuity because
2-47     of credit provided by this section after a certification under
2-48     Subsection (f) [(c)] begins with the first payment that becomes due
2-49     after certification.
2-50           (i) [(f)]  The retirement system shall cancel the retirement
2-51     of a person who used sick leave creditable under this section to
2-52     qualify for service retirement if the sick leave is otherwise used
2-53     by the person before the effective date of retirement.
2-54           (j) [(g)]  In this section, "sick leave" does not include
2-55     credit granted under an agency sick-leave pool or under the Family
2-56     and Medical Leave Act of 1993 (Pub. L. 103-3), and its subsequent
2-57     amendments.
2-58           (k)  If a member returns to employment with the state before
2-59     the first anniversary of the date of the member's termination of
2-60     employment, the member is not entitled to service credit previously
2-61     credited under this section.
2-62           SECTION 5.  Section 813.511, Government Code, as added by
2-63     Chapter 1541, Acts of the 76th Legislature, Regular Session, 1999,
2-64     is amended to read as follows:
2-65           Sec. 813.511.  CREDIT FOR ACCUMULATED ANNUAL LEAVE.  (a)  A
2-66     member who holds a position included in the employee class of
2-67     membership during the month that includes the effective date of the
2-68     member's retirement and who retires based on service or a
2-69     disability is entitled to service credit in the retirement system
 3-1     for the member's annual leave that has accumulated and is unused on
 3-2     the last day of employment.
 3-3           (b)  A death benefit designee under Section 814.301 or
 3-4     814.302 of a member who holds a position included in the employee
 3-5     class of membership during the month that includes the member's
 3-6     date of death is entitled to service credit in the retirement
 3-7     system for the member's annual leave that has accumulated and is
 3-8     unused on the member's date of death.
 3-9           (c)  Annual leave is creditable in the retirement system at
3-10     the rate of one month of service credit for each 20 days, or 160
3-11     hours, of accumulated annual leave and one month for each fraction
3-12     of days or hours remaining after division of the total hours of
3-13     accumulated annual leave by 160.
3-14           (d) [(b)]  A member who holds a position included in the
3-15     employee class may use annual leave creditable under this section
3-16     to satisfy service requirements for retirement under Section
3-17     814.104 or 814.107 if the annual leave attributed to the
3-18     eligibility requirements remains otherwise unused on the last day
3-19     of employment.
3-20           (e)  A death benefit designee under Section 814.302 may use
3-21     the deceased member's annual leave credit under this section to
3-22     qualify for making a death benefit plan selection under Section
3-23     814.302.
3-24           (f) [(c)]  Except as provided by Subsection (g) [(d)], the
3-25     disbursing officer of each department or agency shall, before the
3-26     11th day after the effective date of retirement or date of death of
3-27     one or more employees of the department or agency, certify to the
3-28     retirement system:
3-29                 (1)  the name of each person:
3-30                       (A)  whose retirement from the department or
3-31     agency, and from state service, became effective during the
3-32     preceding month; or
3-33                       (B)  who died during the preceding month; and
3-34                 (2)  the amount of the person's accumulated annual
3-35     leave on the last day of employment or date of death.
3-36           (g) [(d)]  The disbursing officer of a department or agency
3-37     that employs a member who applies for retirement under Subsection
3-38     (d) [(b)] shall, not more than 90 or less than 30 days before the
3-39     effective date of the member's retirement, certify to the
3-40     retirement system the amount of the member's accumulated and unused
3-41     annual leave.  The officer shall immediately notify the retirement
3-42     system if the member uses annual leave after the date of
3-43     certification.
3-44           (h) [(e)]  On receipt of a certification under Subsection (f)
3-45     [(c)] or (g) [(d)], the retirement system shall grant any credit to
3-46     which a retiring member or retiree who is a subject of the
3-47     certification is entitled.  An increase in the computation of an
3-48     annuity because of credit provided by this section after a
3-49     certification under Subsection (f) [(d)] begins with the first
3-50     payment that becomes due after certification.
3-51           (i) [(f)]  The retirement system shall cancel the retirement
3-52     of a person who used annual leave creditable under this section to
3-53     qualify for service retirement if the annual leave is otherwise
3-54     used by the person before the effective date of retirement.
3-55           SECTION 6.  Subchapter F, Chapter 813, Government Code, is
3-56     amended by adding Section 813.513 to read as follows:
3-57           Sec. 813.513.  CREDIT PURCHASE OPTION.  (a)  An eligible
3-58     member may establish not more than 60 months of equivalent
3-59     membership service credit, including law enforcement or custodial
3-60     officer service, in either the elected class or the employee class.
3-61           (b)  A member is eligible to establish service credit under
3-62     this section if the member has at least 120 months of actual
3-63     membership service of the type of service that the member seeks to
3-64     establish.
3-65           (c)  A member may establish service credit under this section
3-66     by depositing with the retirement system, for each month of service
3-67     credit, the actuarial present value, at the time of deposit, of the
3-68     additional standard retirement annuity benefits that would be
3-69     attributable to the purchase of the service credit under this
 4-1     section, based on rates and tables recommended by the retirement
 4-2     system's actuary and adopted by the board of trustees.
 4-3           (d)  After a member makes the deposits required by this
 4-4     section, the retirement system shall grant the member one month of
 4-5     equivalent membership service credit for each month of credit
 4-6     approved.
 4-7           (e)  The retirement system shall deposit the amount of the
 4-8     actuarial present value of the service credit purchased in the
 4-9     member's individual account in the employees saving account.
4-10           (f)  The board of trustees may adopt rules to administer this
4-11     section, including rules that impose restrictions on the
4-12     application of this section.
4-13           SECTION 7.  Subsections (b) and (f), Section 814.107,
4-14     Government Code, are amended to read as follows:
4-15           (b)  The standard service retirement annuity payable for at
4-16     least 20 years of service credit as a law enforcement or custodial
4-17     officer is an amount computed on the basis of the member's average
4-18     monthly compensation [for that service] for the 36 highest months
4-19     of compensation in the employee class, times the sum of the
4-20     percentage factor used in the computation of a standard service
4-21     retirement annuity under Section 814.105 plus .5 percent.
4-22           (f)  The standard combined service retirement annuity payable
4-23     for at least 20 years of service credit as a law enforcement or
4-24     custodial officer may not exceed 100 percent of the [higher of the]
4-25     average compensation computed under [Section 814.105 or the average
4-26     compensation computed under] Subsection (b).
4-27           SECTION 8.  Section 814.108, Government Code, is amended by
4-28     adding Subsection (h) to read as follows:
4-29           (h)  A beneficiary designation that names a former spouse as
4-30     beneficiary for a guaranteed optional annuity is invalid unless the
4-31     designation is made after the date of the divorce.
4-32           SECTION 9.  Subsection (b), Section 814.1081, Government
4-33     Code, is amended to read as follows:
4-34           (b)  If a retiree files a request as provided by Subsection
4-35     (a), the retirement system shall recompute the annuity as a
4-36     standard service retirement annuity.  The increase in the [right to
4-37     receive payment of an] annuity under [as adjusted as provided by]
4-38     this section begins with the monthly [first] payment made to the
4-39     retiree for the month following the month in which [that becomes
4-40     due after the date] a request is filed as provided by Subsection
4-41     (a).
4-42           SECTION 10.  Section 814.201, Government Code, is amended by
4-43     amending Subsection (c) and adding Subsection (d) to read as
4-44     follows:
4-45           (c)  An application for an occupational disability retirement
4-46     annuity may not be made after the second anniversary of the date
4-47     the injury or disease that causes the disability occurs unless the
4-48     executive director permits the application after that date because
4-49     of a showing of good cause for delay.
4-50           (d)  An applicant must submit to medical examination and
4-51     provide other pertinent information as required by the retirement
4-52     system.
4-53           SECTION 11.  Section 814.202, Government Code, is amended by
4-54     adding Subsection (e) to read as follows:
4-55           (e)  A member otherwise eligible may not apply for or receive
4-56     a nonoccupational disability annuity if the member is eligible for
4-57     a service retirement annuity under Section 814.102 or 814.104.
4-58           SECTION 12.  Subchapter C, Chapter 814, Government Code, is
4-59     amended by adding Section 814.2055 to read as follows:
4-60           Sec. 814.2055.  AVERAGE MONTHLY COMPENSATION.  For purposes
4-61     of Sections 814.206 and 814.207, "average monthly compensation"
4-62     means:
4-63                 (1)  a member's average monthly compensation for
4-64     service in the employee class for the 36 highest months of
4-65     compensation; or
4-66                 (2)  a member's average monthly compensation for
4-67     service in the employee class if a member retires with less than 36
4-68     months of service.
4-69           SECTION 13.  Subsections (a) and (b), Section 814.206,
 5-1     Government Code, are amended to read as follows:
 5-2           (a)  Except as provided by Subsection (b) and Section
 5-3     814.207, a standard disability retirement annuity for service
 5-4     credited in the employee class of membership is an amount computed
 5-5     at the rate of 2.25 [two] percent for each year of service credit
 5-6     in that class, times[:]
 5-7                 [(1)  the member's monthly compensation at the time of
 5-8     the disabling injury or disease, if the disability is occupational;
 5-9     or]
5-10                 [(2)]  the member's average monthly compensation [for
5-11     service in the employee class for the 36 highest months of
5-12     compensation, if the disability is nonoccupational].
5-13           (b)  A standard disability retirement annuity under this
5-14     section may not be more than 100 percent of the average monthly
5-15     [applicable rate of] compensation or, if occupational, not less
5-16     than 35 percent of the average monthly compensation [applicable
5-17     rate,] or $150 a month, whichever is greater.
5-18           SECTION 14.  Section 814.207, Government Code, is amended by
5-19     amending Subsections (b), (c), and (e) and adding Subsection (f) to
5-20     read as follows:
5-21           (b)  Except as provided by Subsection (c), an occupational
5-22     disability retirement annuity under this section is an amount, but
5-23     not more than 100 percent, computed on the basis of the officer's
5-24     average monthly compensation [at the time of the disabling injury
5-25     or disease], times a percentage derived by application of Section
5-26     814.107(b).
5-27           (c)  A disability retirement annuity under this section is
5-28     not reducible because of age and may not be less than 50 percent of
5-29     the officer's average monthly compensation regardless of the amount
5-30     of service credited to the officer in the employee class.
5-31           (e)  If a retiring member or retiree under this section
5-32     presents evidence satisfactory to the retirement system that the
5-33     person's condition makes the person incapable of gainful occupation
5-34     and is considered a total disability under federal social security
5-35     law, the retirement system shall increase the person's occupational
5-36     disability retirement annuity to 100 percent of the officer's
5-37     average monthly compensation [at the time of the disabling injury
5-38     or disease].
5-39           (f)  An annuity increase under Subsection (e) is not payable
5-40     before the first month following the month in which the
5-41     satisfactory evidence is received by the retirement system under
5-42     Subsection (e).
5-43           SECTION 15.  Section 814.401, Government Code, is amended by
5-44     adding Subsection (e) to read as follows:
5-45           (e)  A beneficiary designation that names a former spouse as
5-46     beneficiary is invalid unless the designation is made after the
5-47     date of the divorce.
5-48           SECTION 16.  Section 814.505, Government Code, is amended by
5-49     adding Subsection (i) to read as follows:
5-50           (i)  A beneficiary designation that names a former spouse as
5-51     beneficiary is invalid unless the designation is made after the
5-52     date of the divorce.
5-53           SECTION 17.  Section 815.102, Government Code, is amended to
5-54     read as follows:
5-55           Sec. 815.102.  RULEMAKING.  (a)  Subject to the limitations
5-56     of this subtitle, the board of trustees may adopt rules for:
5-57                 (1)  eligibility of membership;
5-58                 (2)  the administration of the funds of the retirement
5-59     system;
5-60                 (3)  the program of supplemental benefits for law
5-61     enforcement and custodial officers;
5-62                 (4)  hearings on contested cases or disputed claims;
5-63     and
5-64                 (5) [(4)]  the transaction of any other business of the
5-65     board.
5-66           (b)  Rules adopted under this section related to a hearing on
5-67     a contested case or disputed claim control over rules adopted under
5-68     Section 2003.050.
5-69           SECTION 18.  Section 815.103, Government Code, is amended by
 6-1     adding Subsection (e) to read as follows:
 6-2           (e)  Subchapter C, Chapter 2260, does not apply to the
 6-3     retirement system.  The acceptance of benefits by the retirement
 6-4     system under a contract does not waive immunity from suit or
 6-5     immunity from liability.
 6-6           SECTION 19.  Section 815.318, Government Code, is amended to
 6-7     read as follows:
 6-8           Sec. 815.318.  TRANSFER OF ASSETS FROM INTEREST ACCOUNT.  (a)
 6-9     The retirement system [board of trustees] shall transfer from the
6-10     interest account to the employees saving account amounts of
6-11     interest computed under Section 815.311 at the following times:
6-12                 (1)  as required during the fiscal year for a member's
6-13     account in the retirement system that is closed before the last day
6-14     of the fiscal year; and
6-15                 (2)  as of the last day of the fiscal year for a
6-16     member's account that is not closed before the last day of the
6-17     fiscal year.
6-18           (b)  As required during the year, the retirement system
6-19     [board of trustees] shall transfer from the interest account to the
6-20     expense account amounts it determines necessary for the payment of
6-21     the retirement system's expenses that exceed the amount of money
6-22     available for those expenses.
6-23           (c)  As of the last day of each fiscal year, the  retirement
6-24     system [board of trustees] shall transfer from the interest account
6-25     to the retirement annuity reserve account an amount equal to:
6-26                 (1)  five percent of the mean amount in the retirement
6-27     annuity reserve account for that fiscal year; or
6-28                 (2)  an amount computed at a greater rate if the
6-29     actuary recommends the greater rate to finance adequately the
6-30     annuities payable from the retirement annuity reserve account.
6-31           (d)  After making the transfers required by this section, the
6-32     retirement system [board of trustees], as of the last day of each
6-33     fiscal year, shall transfer the amount remaining in the interest
6-34     account to the state accumulation account.
6-35           SECTION 20.  Subsection (a), Section 815.402, Government
6-36     Code, is amended to read as follows:
6-37           (a)  Except as provided by Section 813.201, each [Each]
6-38     payroll period, each department or agency of the state shall cause
6-39     to be deducted from each member's compensation a contribution of:
6-40                 (1)  six percent of the compensation if the member is
6-41     not a member of the legislature; or
6-42                 (2)  eight percent of the compensation if the member is
6-43     a member of the legislature.
6-44           SECTION 21.  Section 815.503, Government Code, is amended to
6-45     read as follows:
6-46           Sec. 815.503.  RECORDS.  (a)  Records of members, [and]
6-47     annuitants, retirees, beneficiaries, and alternate payees under
6-48     retirement plans administered by the retirement system that are in
6-49     the custody of the system or of an administrator, carrier, or other
6-50     governmental agency acting in cooperation with or on behalf of the
6-51     retirement system are confidential and not subject to public
6-52     disclosure and are exempt from the public access provisions of
6-53     Chapter 552, except as otherwise provided by this section.
6-54           (b)  Records may be released to a member, [or] annuitant,
6-55     retiree, beneficiary, or alternate payee or to an authorized
6-56     attorney, family member, or representative acting on behalf of the
6-57     member, [or] annuitant, retiree, beneficiary, or alternate payee.
6-58     The retirement system may release the records to an administrator,
6-59     carrier, or agent or attorney acting on behalf of the retirement
6-60     system, to another governmental entity having a legitimate need for
6-61     the information to perform the purposes of the retirement system,
6-62     or to a party in response to a subpoena issued under applicable
6-63     law.
6-64           (c)  The records of a member, [or] annuitant, retiree,
6-65     beneficiary, or alternate payee remain confidential after release
6-66     to a person as authorized by this section.  The records of a
6-67     member, [or] annuitant, retiree, beneficiary, or alternate payee
6-68     may become part of the public record of an administrative or
6-69     judicial proceeding related to a contested case under Subtitle D or
 7-1     E or this subtitle, and the member, annuitant, retiree,
 7-2     beneficiary, or alternate payee waives the confidentiality of  the
 7-3     records, including medical records unless the records are closed to
 7-4     public access by a protective order issued under applicable law.
 7-5           (d)  The retirement system may require a person to provide
 7-6     the person's social security number as the system considers
 7-7     necessary to ensure the proper administration of all services,
 7-8     benefits, plans, and programs under the retirement system's
 7-9     administration, oversight, or participation, or as otherwise
7-10     required by state or federal law.
7-11           SECTION 22.  Section 840.402, Government Code, is amended to
7-12     read as follows:
7-13           Sec. 840.402.  RETIREMENT SYSTEM RECORDS.  Records of
7-14     members, [and] annuitants, retirees, beneficiaries, and alternate
7-15     payees of the retirement system are confidential under [within the
7-16     terms of] Section 815.503.
7-17           SECTION 23.  Subdivisions (2) and (8), Subsection (a),
7-18     Section 3, Texas Employees Uniform Group Insurance Benefits Act
7-19     (Article 3.50-2, Vernon's Texas Insurance Code), are amended to
7-20     read as follows:
7-21                 (2)  "Annuitant" shall mean an officer or employee who
7-22     has at least 10 [three] years of service as an eligible employee
7-23     with a department whose employees are authorized to participate in
7-24     the Texas employees uniform group insurance benefits program or who
7-25     has at least five years of membership and five years of military
7-26     service credited in the Employees Retirement System of Texas and
7-27     who retires under:
7-28                       (A)  the jurisdiction of the Employees Retirement
7-29     System of Texas and either receives an annuity or is eligible to
7-30     receive an annuity, pursuant to Subtitle B, D, or E of Title 8,
7-31     Government Code, or Chapter 803, Government Code, that is based on
7-32     at least 10 years of service credit or eligibility under Section
7-33     814.002 or 814.102, Government Code;
7-34                       (B)  the jurisdiction of the Teacher Retirement
7-35     System of Texas and either receives an annuity or is eligible to
7-36     receive an annuity, pursuant to Subtitle C, Title 8, Government
7-37     Code, or Chapter 803, Government Code, that is based on at least 10
7-38     years of service credit, whose last state employment prior to
7-39     retirement, including employment by a public community/junior
7-40     college, was as an employee of a department whose employees are
7-41     authorized to participate in the Texas employees uniform group
7-42     insurance program;
7-43                       (C)  the optional retirement program established
7-44     by Chapter 830, Government Code, and either receives an annuity or
7-45     is eligible to receive an annuity under that program, if the person
7-46     either:
7-47                             (i)  would have been eligible to retire and
7-48     receive a service retirement annuity from the Teacher Retirement
7-49     System of Texas or the Employees Retirement System of Texas based
7-50     on at least 10 years of service credit had the person not elected
7-51     to participate in the optional retirement program; or
7-52                             (ii)  is disabled as determined by the
7-53     Employees Retirement System of Texas; or
7-54                       (D)  any other federal or state statutory
7-55     retirement program to which an institution of higher education has
7-56     made employer contributions, if the employee has met service
7-57     requirements, age requirements, and other applicable requirements
7-58     comparable to the requirements for retirement under the Teacher
7-59     Retirement System of Texas, based on at least 10 years of service
7-60     credit.
7-61                 (8)  "Dependent" shall mean the spouse of an employee
7-62     or retired employee and:
7-63                       (A)  an unmarried child under 25 years of age,
7-64     including an adopted child and a stepchild, foster child, or other
7-65     child who is in a regular parent-child relationship;
7-66                       (B)  any such child, regardless of age, who the
7-67     trustee determines lives with or whose care is provided by an
7-68     employee or annuitant on a regular basis if:
7-69                             (i)  such child is mentally retarded or
 8-1     physically incapacitated to such an extent as to be dependent upon
 8-2     the employee or retired employee for care or support, as the
 8-3     trustee shall determine;
 8-4                             (ii)  such child's coverage under this Act
 8-5     has not lapsed; and
 8-6                             (iii)  such child is at least 25 years old
 8-7     and was enrolled as a participant in the health benefits coverage
 8-8     under the Texas employees uniform group insurance program on the
 8-9     date of the child's 25th birthday; and
8-10                       (C)  any such child who is unmarried, regardless
8-11     of age, for purposes of health benefits coverage under this Act, on
8-12     expiration of the child's continuation coverage under the
8-13     Consolidated Omnibus Budget Reconciliation Act of 1985 (Pub. L.
8-14     99-272), and its subsequent amendments.
8-15           SECTION 24.  Section 4, Texas Employees Uniform Group
8-16     Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
8-17     Code), is amended to read as follows:
8-18           Sec. 4.  ADMINISTRATION.  The administration and
8-19     implementation of this Act are vested solely in the trustee.  As it
8-20     shall deem necessary to insure the proper administration of this
8-21     Act and the insurance coverages, services, and benefits provided
8-22     for or authorized by this Act, the trustee, as an agency of the
8-23     State of Texas, shall have full power and authority to hire
8-24     employees.  The duties of such employees and their compensation
8-25     shall be determined and assigned by the trustee.  The trustee may,
8-26     on a competitive bid basis, contract with a qualified, experienced
8-27     firm of group insurance specialists or an administering firm who
8-28     shall act for the trustee in a capacity as independent
8-29     administrators and managers of the programs authorized under this
8-30     Act. The independent administrator so selected by the trustee shall
8-31     assist the trustee to insure the proper administration of the Act
8-32     and the coverages, services, and benefits provided for or
8-33     authorized by the Act and shall be paid by the trustee.
8-34     Compensation of all persons employed by the trustee and their
8-35     expenses shall be paid at such rates and in such amounts as the
8-36     trustee shall approve, providing that in no case shall they be
8-37     greater than those expenses paid for like or similar services.
8-38     Also, as an agency of the State of Texas, the trustee shall have
8-39     full power and authority to enter into interagency contracts with
8-40     any department of the State of Texas.  The interagency contracts
8-41     shall provide for reimbursement to the state departments and shall
8-42     define the services to be performed by the departments for the
8-43     trustee.  The trustee shall have full power and authority to
8-44     promulgate all rules, regulations, plans, procedures, and orders
8-45     reasonably necessary to implement and carry out the purposes and
8-46     provisions of this Act in all its particulars, including but not
8-47     limited to the following:
8-48                 (a)  preparation of specifications for coverages
8-49     provided by authority of this Act;
8-50                 (b)  prescribing the time at which and the conditions
8-51     under which an employee, annuitant, or dependent is eligible for
8-52     all coverages provided under this Act;
8-53                 (c)  determination of the methods and procedures of
8-54     claims administration;
8-55                 (d)  determination of the amount of employee payroll
8-56     deductions and reductions and the responsibility of establishing
8-57     procedures by which such deductions and reductions shall be made;
8-58                 (e)  establishment of procedures by which the trustee
8-59     shall decide contested cases arising from programs or coverages
8-60     provided under authority of this Act;
8-61                 (f)  continuing study of the operation of all coverages
8-62     provided under this Act, including such matters as gross and net
8-63     cost, administration costs, benefits, utilization of benefits, and
8-64     claims administration;
8-65                 (g)  administration of the Employees Life, Accident,
8-66     and Health Insurance and Benefits Fund, providing for the beginning
8-67     and ending dates of coverages of employees and annuitants and their
8-68     dependents under all benefit plans;
8-69                 (h)  adoption of all rules and regulations consistent
 9-1     with the provisions of this Act and its purpose as it deems
 9-2     necessary to carry out its statutory duties and responsibilities;
 9-3                 (i)  development of basic plans of group coverages and
 9-4     benefits applicable to all employees.  The trustee also may provide
 9-5     for optional group coverages and benefits in addition to the basic
 9-6     plan;
 9-7                 (j)  to provide either additional statewide optional
 9-8     programs or individual agency optional programs as the trustee may
 9-9     determine is appropriate;
9-10                 (k)  design, development, adoption, implementation, and
9-11     administration of a cafeteria plan;
9-12                 (l)  purchase of liability insurance for the coverage
9-13     of the trustees, employees, and agents of the board of trustees in
9-14     such amounts as the board of trustees, in its sole discretion,
9-15     considers reasonable and necessary;
9-16                 (m)  development of health benefits plans that permit
9-17     access to high quality, cost-effective health care;
9-18                 (n)  designing, implementing, and monitoring health
9-19     benefits plan features intended to discourage excessive
9-20     utilization, promote efficiency, and contain costs;
9-21                 (o)  development and continuing refinement of a health
9-22     care benefit strategy consistent with evolving benefit delivery
9-23     systems; [and]
9-24                 (p)  development of a funding strategy to efficiently
9-25     utilize employer contributions to achieve the purposes of this Act
9-26     and which is reasonable and assures employees and retired employee
9-27     annuitants a fair choice among health benefit plans as set out in
9-28     Section 14 of this Act; and
9-29                 (q)  appointment of an advisory committee for the
9-30     program provided by this Act under the terms provided by Section
9-31     815.509, Government Code.
9-32           SECTION 25.  Subsection (c), Section 4B, Texas Employees
9-33     Uniform Group Insurance Benefits Act (Article 3.50-2, Vernon's
9-34     Texas Insurance Code), is amended to read as follows:
9-35           (c)  A decision by the executive director under Subsection
9-36     (a) [or (a-1)] of this section may be appealed only to the trustee.
9-37     An appeal to the trustee is a contested case under the
9-38     administrative procedure law, Chapter 2001, Government Code.
9-39     Standing to pursue an administrative appeal under this section is
9-40     limited to employees, participants, annuitants, and covered
9-41     dependents participating in the Texas employees uniform group
9-42     insurance program or, after the death of an employee, [a]
9-43     participant, annuitant, or covered dependent, to the person's
9-44     [participant's] estate, personal representative, heirs at law, or
9-45     designated beneficiary.
9-46           SECTION 26.  Subsection (j), Section 5, Texas Employees
9-47     Uniform Group Insurance Benefits Act (Article 3.50-2, Vernon's
9-48     Texas Insurance Code), is amended to read as follows:
9-49           (j)  The trustee may not contract for or provide a plan of
9-50     coverage that:
9-51                 (1)  excludes or limits coverage or services for
9-52     acquired immune deficiency syndrome, as defined by the Centers for
9-53     Disease Control of the United States Public Health Service, or
9-54     human immunodeficiency virus infection; or
9-55                 (2)  provides coverage for serious mental illness that
9-56     is less extensive than the minimum coverage [provided] for serious
9-57     mental illness required by Section 3, Article 3.51-14, Insurance
9-58     Code [any physical illness].
9-59           SECTION 27.  Section 10, Texas Employees Uniform Group
9-60     Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
9-61     Code), is amended by amending Subsection (c) and adding Subsection
9-62     (d) to read as follows:
9-63           (c)  The records of a participant in the Texas Employees
9-64     Uniform Group Insurance Program in the custody of the trustee, or
9-65     of an administrator or carrier acting on behalf of the trustee, are
9-66     confidential and not subject to disclosure and are exempt from the
9-67     public access provisions of Chapter 552, Government Code, except as
9-68     provided by this subsection.  Records may be released to a
9-69     participant or to an authorized attorney, family member, or
 10-1    representative acting on behalf of the participant.  The trustee
 10-2    may release the records to an administrator, carrier, or agent or
 10-3    attorney acting on behalf of the trustee, to another governmental
 10-4    entity, to a medical provider of the participant for the purpose of
 10-5    carrying out the purposes of this Act, or to a party in response to
 10-6    a subpoena issued under applicable law.  The records of a
 10-7    participant remain confidential after release to a person as
 10-8    authorized by this subsection.  The records of a participant may
 10-9    become part of the public record of an administrative or judicial
10-10    proceeding related to a contested case under this Act, unless the
10-11    records are closed to public access by a protective order issued
10-12    under applicable law.  If a participant's records have become part
10-13    of the public record of a proceeding and the records are not the
10-14    subject of a protective order, the participant is considered to
10-15    have waived the privacy of the participant's records.
10-16          (d)  The trustee may require an individual to disclose the
10-17    individual's social security  number as the trustee considers
10-18    necessary to properly administer this Act and any coverage,
10-19    service, or benefit authorized by this Act or as otherwise required
10-20    by state or federal law.
10-21          SECTION 28.  The Texas Employees Uniform Group Insurance
10-22    Benefits Act (Article 3.50-2, Vernon's Texas Insurance Code) is
10-23    amended by adding Section 10A to read as follows:
10-24          Sec. 10A.  EXCLUSIVE REMEDY.  The remedies provided under
10-25    this Act are the exclusive remedies available to an employee,
10-26    participant, annuitant, or dependent.
10-27          SECTION 29.  Section 13A, Texas Employees Uniform Group
10-28    Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
10-29    Code), is amended to read as follows:
10-30          Sec. 13A.  ADMINISTRATIVE PROCESS AND SANCTIONS FOR INSURANCE
10-31    PROGRAM VIOLATIONS [EXPULSION FROM GROUP INSURANCE PROGRAM].
10-32    (a)  The Employees Retirement System of Texas [After notice and
10-33    hearing as provided by this section, the trustee] may impose one or
10-34    more sanctions described by this section against [expel from
10-35    participation in the Texas employees uniform group insurance
10-36    program] any employee, participant, annuitant, or dependent who:
10-37                (1)  submits a materially false [fraudulent] claim or
10-38    application for coverage under [or has defrauded or attempted to
10-39    defraud] any health maintenance organization or insurance or
10-40    benefits plan offered under the program;
10-41                (2)  defrauds or attempts to defraud any health
10-42    maintenance organization or insurance or benefits plan offered
10-43    under the program;
10-44                (3)  obtains or induces the extension of coverage under
10-45    any program provided under this Act by a materially negligent or
10-46    intentional misrepresentation, a failure to disclose material
10-47    information, or fraud; or
10-48                (4)  induces the extension of coverage under any
10-49    program provided under this Act by supplying false information on
10-50    an application for coverage or in related documentation or in any
10-51    communication.
10-52          (b)  On receipt of a complaint or on its own motion, if the
10-53    Employees Retirement System of Texas determines that an employee,
10-54    participant, annuitant, or dependent has engaged in conduct
10-55    described by Subsection (a) of this section, the retirement system
10-56    [trustee] may:
10-57                (1)  expel from the program the [call and hold a
10-58    hearing to determine whether an] employee, participant, annuitant,
10-59    or dependent;
10-60                (2)  impose limitations on the person's participation
10-61    in the program;
10-62                (3)  rescind any coverage obtained or extended as a
10-63    result of the conduct under Subsection (a) of this section;
10-64                (4)  deny a claim arising from coverage; or
10-65                (5)  require the person to reimburse the Employees
10-66    Life, Accident, and Health Insurance and Benefits Trust Account for
10-67    any benefit obtained as a result of the conduct.
10-68          (c)  An expulsion under Subsection (b) of this section may be
10-69    permanent or for a specified period.  A rescission of coverage
 11-1    under Subsection (b) of this section may be from the date of
 11-2    inception of the coverage or from the date of the prohibited
 11-3    conduct [has submitted a fraudulent claim or application for
 11-4    coverage under or has defrauded or attempted to defraud any health
 11-5    maintenance organization or insurance or benefits plan offered
 11-6    under the Texas employees uniform group insurance program].
 11-7          (d)  A person may appeal a determination made under
 11-8    Subsection (a) or (b) of this section only to the board of
 11-9    trustees.
11-10          [(c)]  A proceeding under this subsection [section] is a
11-11    contested case under the administrative procedure law, Chapter
11-12    2001, Government Code.  Section 4B of this Act applies to an appeal
11-13    to the board of trustees under this subsection.  The appellant has
11-14    the burden of proof and any sanction imposed is stayed during an
11-15    appeal under this subsection.  If a person fails to make a timely
11-16    appeal, any sanction relates back to the date of the determination
11-17    of the Employees Retirement System of Texas.
11-18          [(d)  At the conclusion of the hearing, if the trustee issues
11-19    a decision that finds that the accused employee, annuitant, or
11-20    dependent submitted a fraudulent claim or application for coverage
11-21    or has defrauded or attempted to defraud any health maintenance
11-22    organization or insurance or benefits plan offered under the Texas
11-23    employees uniform group insurance program, the trustee shall expel
11-24    the employee, annuitant, or dependent from participation in the
11-25    program.]
11-26          [(e)]  An appeal of a decision of the trustee under this
11-27    subsection [section] is under the substantial evidence rule.
11-28          (e) [(f)]  An employee, participant, annuitant, or dependent
11-29    expelled from the Texas employees uniform group insurance program
11-30    may not participate in any plan of coverage offered by the program
11-31    for the [a] period determined by the Employees Retirement System of
11-32    Texas [trustee of not more than five years from the date the
11-33    expulsion from the program takes effect].
11-34          SECTION 30.  The Texas Employees Uniform Group Insurance
11-35    Benefits Act (Article 3.50-2, Vernon's Texas Insurance Code) is
11-36    amended by adding Section 13A-1 to read as follows:
11-37          Sec. 13A-1.  MISCONDUCT INFORMATION.  (a)  This section
11-38    applies to:
11-39                (1)  the Employees Retirement System of Texas;
11-40                (2)  a carrier or other insurance company or health
11-41    maintenance organization;
11-42                (3)  an administering firm or other insurance support
11-43    organization that provides information or services to the Texas
11-44    employees uniform group insurance program or the Employees
11-45    Retirement System of Texas;
11-46                (4)  an agent or third-party administrator authorized
11-47    under this Act or licensed under the insurance laws of this state;
11-48                (5)  a regulatory authority or department; and
11-49                (6)  a board member, executive director, employee,
11-50    auditor, or actuary of an entity described by this section.
11-51          (b)  A person may collect from, furnish to, or exchange with
11-52    another person information, including medical records or other
11-53    confidential information, to the extent the person considers
11-54    necessary to detect or to impose a sanction for  a criminal act, a
11-55    misrepresentation,  or nondisclosure that is related to an attempt
11-56    to obtain coverage, payment, reimbursement, or a benefit under this
11-57    Act.
11-58          (c)  A person who acts under Subsection (b) of this section
11-59    is immune from suit and criminal or civil liability unless the
11-60    person acts with malice or intent to defraud.
11-61          SECTION 31.  Section 13B, Texas Employees Uniform Group
11-62    Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
11-63    Code), is amended by adding Subsection (e) to read as follows:
11-64          (e)  The trustee may adopt rules for the use of a debit card
11-65    or other similar technology for claims administration under this
11-66    section.
11-67          SECTION 32.  Section 615.001, Government Code, is amended to
11-68    read as follows:
11-69          Sec. 615.001.  DEFINITION.  In this chapter, "minor child"
 12-1    means a child who:
 12-2                (1)  [,]  on the date of the death of an individual
 12-3    listed under Section 615.003, is younger than 18 years of age; and
 12-4                (2)  if the child is not a biological or adopted child,
 12-5    was claimed as a dependent on the federal income tax return of an
 12-6    individual listed under Section 615.003 for the year preceding the
 12-7    year of the individual's death.
 12-8          SECTION 33.  Subsection (b), Section 615.023, Government
 12-9    Code, is amended to read as follows:
12-10          (b)  A child's entitlement to assistance payable under this
12-11    section ends on the child's 18th [21st] birthday.  At that time,
12-12    payments to any other surviving minor children shall be adjusted,
12-13    as necessary, to conform to the amounts payable under Subsection
12-14    (a).
12-15          SECTION 34.  Subsection (a), Section 615.042, Government
12-16    Code, is amended to read as follows:
12-17          (a)  The [board of trustees of the] Employees Retirement
12-18    System of Texas shall notify the comptroller of the retirement
12-19    system's [board's] determination that a claim under this chapter is
12-20    valid and justifies payment.
12-21          SECTION 35.  Section 615.043, Government Code, is amended to
12-22    read as follows:
12-23          Sec. 615.043.  DENIAL OF CLAIM.  If the [board of trustees of
12-24    the] Employees Retirement System of Texas denies a claim, the
12-25    retirement system [board] shall send a notice of the denial to:
12-26                (1)  the person making the claim; or
12-27                (2)  the duly qualified guardian or legal
12-28    representative of a surviving minor child or dependent sibling, if
12-29    a claim is being made on behalf of the child or sibling.
12-30          SECTION 36.  Section 615.044, Government Code, is amended to
12-31    read as follows:
12-32          Sec. 615.044.  APPEALS.  (a)  An eligible survivor or the
12-33    eligible survivor's legal representative [A person] whose claim for
12-34    payment [to a surviving spouse, minor child, or dependent parent or
12-35    sibling] is denied [or the person's legal representative] may
12-36    appeal the denial to the board of trustees of the Employees
12-37    Retirement System of Texas [a district court of the residence of
12-38    the surviving spouse, minor child, or dependent parent or sibling
12-39    or to a district court in Travis County].
12-40          (b)  An appeal under this section is considered to be an
12-41    appeal of a contested case under Chapter 2001 and shall be
12-42    conducted as provided by Section 815.511 [must be made not later
12-43    than the 20th day after the date the claimant or legal
12-44    representative receives notice of the denial].
12-45          (c)  Judicial review of a decision under this section is
12-46    under the substantial evidence rule as provided by Chapter 2001
12-47    [Proceedings on the appeal are by trial de novo, as that term is
12-48    used in an appeal from a justice court to the county court].
12-49          SECTION 37.  Subchapter C, Chapter 615, Government Code, is
12-50    amended by adding Section 615.045 to read as follows:
12-51          Sec. 615.045.  RECORDS.  (a)  Records of individuals listed
12-52    by Section 615.003 and of survivors eligible for benefits under
12-53    this chapter that are in the custody of the Employees Retirement
12-54    System of Texas or a carrier, administering firm as defined by the
12-55    Texas Employees Uniform Group Insurance Benefits Act (Article
12-56    3.50-2, Vernon's Texas Insurance Code), or other governmental
12-57    agency acting with or on behalf of the retirement system are
12-58    confidential, not subject to public disclosure, and exempt from the
12-59    public information provisions of Chapter 552, except as otherwise
12-60    provided by this section.
12-61          (b)  Records may be released to an eligible survivor or to an
12-62    authorized attorney, family member, or representative acting on
12-63    behalf of the eligible survivor.  The Employees Retirement System
12-64    of Texas may release the records to an administering firm, carrier,
12-65    agent, or attorney acting on behalf of the retirement system, to
12-66    another governmental entity having a legitimate need for the
12-67    information to perform the purposes of the retirement system, or to
12-68    a party in response to a subpoena issued under applicable law.
12-69          (c)  The records of individuals listed by Section 615.003 and
 13-1    of eligible survivors remain confidential after release to a person
 13-2    as authorized by this section.  The records of individuals listed
 13-3    by Section 615.003 and of eligible survivors may become part of the
 13-4    public record of an administrative or judicial proceeding related
 13-5    to an appeal filed under this chapter unless the records are closed
 13-6    to public access by a protective order issued under applicable law.
 13-7          SECTION 38.  Subsection (a), Section 615.074, Government
 13-8    Code, is amended to read as follows:
 13-9          (a)  An eligible surviving dependent who is a minor child is
13-10    entitled to continue health insurance coverage until the earlier of
13-11    [the dependent]:
13-12                (1)  the date the dependent reaches the age of 18 [21]
13-13    years; or
13-14                (2)  the date the dependent becomes eligible for group
13-15    health insurance through another employer.
13-16          SECTION 39.  Section 814.1041, Government Code, as amended by
13-17    Chapters 1013 and 1541, Acts of the 76th Legislature, Regular
13-18    Session, 1999, is reenacted to read as follows:
13-19          Sec. 814.1041.  TEMPORARY SERVICE RETIREMENT OPTION FOR
13-20    MEMBERS AFFECTED BY PRIVATIZATION OR OTHER REDUCTION IN WORKFORCE.
13-21    (a) This section applies only to members of the employee class who
13-22    are not otherwise eligible to retire and whose positions with the
13-23    Texas Workforce Commission, the Texas Department of Human Services,
13-24    the Texas Department of Mental Health and Mental Retardation, or
13-25    the Texas Department of Health are eliminated as a result of
13-26    contracts with private service providers or other reductions in
13-27    services provided by those agencies and who separate from state
13-28    service at that time.
13-29          (b)  A member described by Subsection (a) is eligible to
13-30    retire and receive a service retirement annuity if the member's age
13-31    and service credit, each equally increased only as needed to meet
13-32    minimum age and service requirements, but not by more than three
13-33    years, would meet the minimum age and service requirements for
13-34    service retirement under Section 814.104(a) at the time the member
13-35    separates from state service as described by Subsection (a).  The
13-36    annuity of a person who retires under this subsection is computed
13-37    on the person's accrued service credit increased by the minimum
13-38    amount of service credit necessary to meet the service credit
13-39    requirement for retirement, but not by more than three years.
13-40          (c)  A member who applies to retire under this section and
13-41    the state agency from which the member separated from service shall
13-42    provide documentation required by the retirement system to
13-43    establish eligibility to retire under this section.
13-44          (d)  This section applies only to positions eliminated by
13-45    privatization or other reductions in workforce before September 1,
13-46    2001.
13-47          SECTION 40.  The following sections are repealed:
13-48                (1)  Section 813.511, Government Code, as added by
13-49    Chapter 226, Acts of the 76th Legislature, Regular Session, 1999;
13-50                (2)  Section 814.1042, Government Code, as added by
13-51    Chapter 264, Acts of the 76th Legislature, Regular Session, 1999;
13-52                (3)  Section 814.1043, Government Code;
13-53                (4)  Section 815.401, Government Code;
13-54                (5)  Section 840.101, Government Code;
13-55                (6)  Subsection (a-1), Section 4B, Texas Employees
13-56    Uniform Group Insurance Benefits Act (Article 3.50-2, Vernon's
13-57    Texas Insurance Code); and
13-58                (7)  Section 18, Texas Employees Uniform Group
13-59    Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
13-60    Code).
13-61          SECTION 41.  (a)  This section applies only to annuities
13-62    under Sections 814.104, 814.1041, 814.107, 814.206, 814.207,
13-63    814.301, 814.302, and 814.305, Government Code, that first became
13-64    payable before September 1, 2001.
13-65          (b)  Payments of an annuity adjusted under this section shall
13-66    begin with the first payment that becomes due after December 31,
13-67    2001.
13-68          (c)  The amount of an annuity payable on the first day the
13-69    annuity became payable shall be adjusted for plan changes to
 14-1    reflect:
 14-2                (1)  current multiplier values and, if applicable, the
 14-3    amount of service credited at the time of retirement or death, as
 14-4    specified by Section 814.105, 814.107, 814.206, 814.207, 814.301,
 14-5    or 814.302, Government Code;
 14-6                (2)  current applicable actuarial reduction factors for
 14-7    benefits elected under Section 814.108, 814.1081, or 814.1082 or
 14-8    Subsection (d), Section 814.206, Subsection (a), Section 814.301,
 14-9    or Subsection (a), Section 814.302, Government Code; and
14-10                (3)  current minimum standard annuity and maximum
14-11    service percentage values specified by Subsection (b), Section
14-12    814.105, Government Code.
14-13          (d)  Annuities shall be adjusted for changes described by
14-14    Section 814.008, Subsection (d), Section 814.108, and Section
14-15    814.1081, Government Code, that occurred after the date the annuity
14-16    first became payable and before January 1, 2002.
14-17          (e)  After any adjustment under Subsection (c) or (d) of this
14-18    section is made, the amount of the annuities shall be adjusted
14-19    under this section by multiplying the amount of each annuity by a
14-20    fraction, not less than one, the numerator of which is the Consumer
14-21    Price Index for all urban consumers as reported by the United
14-22    States Bureau of Labor Statistics (CPI-U) for December 2001, and
14-23    the denominator of which is the CPI-U for August of the fiscal year
14-24    in which the annuity first became payable.  If the CPI-U for
14-25    December 2001 is not available for a computation under this
14-26    subsection, the numerator is the most recent month's CPI-U
14-27    available at the time of the computation, increased for each month
14-28    from that month until December 2001 by a factor equal to the
14-29    average of the monthly percentage increases in the CPI-U for the
14-30    12-month period ending with that month.
14-31          (f)  The board of trustees of the Employees Retirement System
14-32    of Texas  may adopt rules to implement this section.
14-33          (g)  An adjustment under this section may not cause a
14-34    reduction in the amount of an annuity payable immediately before
14-35    December 31, 2001.
14-36          (h)  Adjustments made under this section and rules adopted by
14-37    the board of trustees of the Employees Retirement System of Texas
14-38    under this section must comply with Section 401(a), Internal
14-39    Revenue Code of 1986, as amended, and rules adopted under that
14-40    section and Section 811.006, Government Code.
14-41          SECTION 42.  Notwithstanding Subsection (a), Section 813.509,
14-42    Government Code, as amended by this Act, a member of the Employees
14-43    Retirement System of Texas who is otherwise entitled to use sick
14-44    leave for service credit may use service credit in that system that
14-45    was canceled and reestablished before September 1, 2001, to qualify
14-46    for the 10 years of membership service required under Subsection
14-47    (a), Section 813.509, Government Code, as amended by this Act.
14-48          SECTION 43.  (a)  The change in law made by this Act to
14-49    Subdivision (2), Subsection (a), Section 3, Texas Employees Uniform
14-50    Group Insurance Benefits Act (Article 3.50-2, Vernon's Texas
14-51    Insurance Code), does not apply to a person who, on August 31,
14-52    2001:
14-53                (1)  was an eligible employee with an employer whose
14-54    employees were eligible to participate in the Texas employees
14-55    uniform group insurance program;
14-56                (2)  was eligible to participate as a retiree in the
14-57    Texas employees uniform group insurance program; or
14-58                (3)  had satisfied any service requirements under the
14-59    Texas Employees Uniform Group Insurance Benefits Act for
14-60    participation as a retiree in the Texas employees uniform group
14-61    insurance program.
14-62          (b)  The participation in the Texas employees uniform group
14-63    insurance program of a person described in Subsection (a) of this
14-64    section is governed by the law in effect immediately before the
14-65    effective date of this Act, and the former law is continued in
14-66    effect for that purpose.
14-67          SECTION 44.  The change in law made by this Act to Paragraph
14-68    (B), Subdivision (8), Subsection (a), Section 3, Texas Employees
14-69    Uniform Group Insurance Benefits Act (Article 3.50-2, Vernon's
 15-1    Texas Insurance Code), applies only to a dependent who was not
 15-2    covered by the basic coverage of a health benefits plan under the
 15-3    Texas Employees Uniform Group Insurance Benefits Act (Article
 15-4    3.50-2, Vernon's Texas Insurance Code), on August 31, 2001.
 15-5          SECTION 45.  (a)  Except as provided by this section, this
 15-6    Act takes effect September 1, 2001.
 15-7          (b)  Section 813.513, Government Code, as added by this Act,
 15-8    takes effect January 1, 2002.
 15-9                                 * * * * *