By:  Armbrister                                        S.B. No. 523
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to participation and credit in, contributions to, and
 1-3     benefits and administration of the Texas County and District
 1-4     Retirement System.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6           SECTION 1.  Section 841.001, Government Code, is amended to
 1-7     read as follows:
 1-8           Sec. 841.001.  DEFINITIONS.  In this subtitle:
 1-9                 (1)  "Actuarial equivalent" means a benefit that, at
1-10     the time it is begun [entered upon], has the same present value as
1-11     the benefit it replaces, based on seven percent annual interest and
1-12     the mortality table published by the Conference of Actuaries in
1-13     Public Practice and known as the UP-1984 table with an age setback
1-14     of five years for retired or disabled annuitants and an age setback
1-15     of 10 years for beneficiaries, with a 30-percent reserve refund
1-16     assumption for the standard benefit.
1-17                 (2)  "Accumulated contributions" means the
1-18     contributions, other member deposits, and interest credited to a
1-19     member's individual account in the employees saving fund.  ["Annual
1-20     compensation" means the compensation that is paid to an employee of
1-21     a participating subdivision by the subdivision that does not exceed
1-22     the rate of compensation fixed by the subdivision governing body as
1-23     the maximum compensation for a year on which contributions by the
1-24     employee to the retirement system may be based.]
1-25                 (3)  "Annuity" means an amount of money payable in
 2-1     equal monthly installments at the end of each month for a period
 2-2     determined under this subtitle.
 2-3                 (4)  "Beneficiary" means an individual or entity
 2-4     designated by a member or annuitant or by statute to receive a
 2-5     benefit payable under this subtitle because of the death of a
 2-6     member or an annuitant.  The term does not include an "alternate
 2-7     payee" as defined by Section 804.001.
 2-8                 (5)  "Board of trustees" means the persons appointed
 2-9     under this subtitle to administer the retirement system.
2-10                 (6) [(5)]  "Compensation" means the payments on which
2-11     contributions by an employee to the retirement system are based
2-12     that do not exceed $150,000 in a calendar year, indexed in the same
2-13     manner as is provided by Section 401(a)(17) of the Internal Revenue
2-14     Code of 1986 (26 U.S.C. Section 417) and that are made to an
2-15     employee of a participating subdivision by the subdivision for
2-16     service, including nonmonetary compensation, the value of which is
2-17     determined by the governing body of the subdivision.  The term does
2-18     not include workers' compensation benefits received by a member
2-19     under Section 504.011, Labor Code.
2-20                 (7)  "Credited service" means the number of months of
2-21     prior and current service ascribed to a member in the retirement
2-22     system or included in a prior service certificate in effect for the
2-23     member.
2-24                 (8) [(6)]  "Employee" means a person, other than a
2-25     temporary employee, who is certified by a subdivision as being
2-26     employed in, or elected or appointed to, a position or office in
 3-1     the subdivision that normally requires services from the person for
 3-2     not less than 900 hours a year and for which the person is
 3-3     compensated by the subdivision.  The term includes a person
 3-4     employed on a probationary basis except as provided by Section
 3-5     842.107 [842.107(c)].
 3-6                 (9) [(7)]  "Governing body" means the commissioners
 3-7     court of a county or, in any other subdivision, the body that is
 3-8     authorized to raise and expend revenue.
 3-9                 (10) [(8)]  "Initial deposit rate" means the percentage
3-10     of the annual compensation of an employee of a participating
3-11     subdivision that is required by the subdivision on the effective
3-12     date of subdivision participation in the retirement system as the
3-13     rate for employee contributions to the retirement system.
3-14                 (11) [(9)]  "Local pension system" means a public
3-15     retirement benefit program of less than statewide scope.
3-16                 (12) [(10)]  "Retirement" means the withdrawal from
3-17     service with a retirement benefit granted under this subtitle.
3-18                 (13)  "Retirement annuity" means the service,
3-19     disability, or survivor benefit paid under this subtitle in the
3-20     form of an annuity.
3-21                 (14) [(11)]  "Retirement system" means the Texas County
3-22     and District Retirement System.
3-23                 (15) [(12)]  "Service" means the time a person is an
3-24     employee.
3-25                 (16)  "Service credit" means the monetary credits
3-26     allowed a member for service for a participating subdivision.
 4-1                 (17) [(13)  "Credited service" means the number of
 4-2     months of prior and current service ascribed to a member in the
 4-3     retirement system or included in a prior service certificate in
 4-4     effect for the member.]
 4-5                 [(14)]  "Subdivision" means a county, a political unit
 4-6     that consists of all of the geographical area of one county or of
 4-7     all or part of more than one county, a political unit of a county
 4-8     that has taxing authority, an authority created by the state [State
 4-9     of Texas] to conduct redevelopment activities on or related to
4-10     closed military installations of the United States, a crime control
4-11     and prevention district, the Texas Association of Counties, the
4-12     Texas County and District Retirement System, or a city and county
4-13     that jointly operate a city-county hospital under Subchapter B,
4-14     Chapter 265, Health and Safety Code, but does not include an
4-15     incorporated city or town, a school district, or a junior college
4-16     district.
4-17                 (18)  "Supplemental death benefit program" means the
4-18     optional death benefit program established under Subchapter F,
4-19     Chapter 844.
4-20                 (19) [(15)]  "Temporary employee" means a person who is
4-21     scheduled to hold a position for less than six months and only:
4-22                       (A)  until another person can be hired;
4-23                       (B)  for the duration of a project scheduled to
4-24     end less than six months after the date of hiring;
4-25                       (C)  until a specific date less than six months
4-26     after the date of hiring; or
 5-1                       (D)  until a volume of work is completed that is
 5-2     estimated to be completed in less than six months after the date of
 5-3     hiring.
 5-4                 (20) [(16)]  "Supplemental death benefit program" means
 5-5     the voluntary, employer-funded optional death benefits program
 5-6     under Subchapter F, Chapter 844.  The program constitutes
 5-7     "group-term life insurance purchased for employees" as described by
 5-8     Section 79 of the Internal Revenue Code of 1986.
 5-9                 (21) [(17)]  "Vested member" means a member who may
5-10     withdraw from employment with all participating subdivisions, leave
5-11     the member's accumulated contributions on deposit with the
5-12     retirement system, and, on meeting the age and length-of-service
5-13     requirements for service retirement, file an application for
5-14     retirement and begin to receive a service retirement annuity
5-15     [benefit].
5-16           SECTION 2.  Section 841.008, Government Code, is amended to
5-17     read as follows:
5-18           Sec. 841.008.  APPLICATIONS BY, AND PAYMENTS TO, PERSONS
5-19     OTHER THAN MEMBERS, BENEFICIARIES, AND ANNUITANTS [THE MEMBER].
5-20     (a)  The board of trustees may accept an application for any
5-21     benefit under this subtitle that is signed on behalf of a person
5-22     entitled to the benefit [the member] by:
5-23                 (1)  an [a duly] appointed guardian of the person and
5-24     estate of the person [member]; or
5-25                 (2)  an attorney in fact [a person] authorized to act
5-26     on behalf of the person [member] by a written power of attorney
 6-1     that provides that the power is not revoked by disability of the
 6-2     person [member], except that an attorney in fact who is not the
 6-3     person's spouse may not select a benefit in which the attorney in
 6-4     fact is a named beneficiary, unless the attorney in fact designates
 6-5     as the person's beneficiary each individual who would be entitled
 6-6     to the entire benefit if the person had died intestate [is the
 6-7     spouse of the member].
 6-8           (b)  If it is made to appear to the director by affidavit of
 6-9     a [duly] licensed physician that a person entitled to a benefit
6-10     [member] is not mentally capable of managing the person's
6-11     [member's] own affairs, and if it is further established to the
6-12     satisfaction of the director that the estate of the person [member]
6-13     is insufficient to justify the expense of establishing a
6-14     guardianship or continuing a guardianship after letters of
6-15     guardianship have expired, the director may make payment of any
6-16     annuity or other benefit:
6-17                 (1)  to the spouse of the person [member], as trustee
6-18     for the person [member]; or
6-19                 (2)  [if there is no spouse,] to an individual or
6-20     entity [a person] actually providing for the needs of and caring
6-21     for the person [member], as trustee for the person until current
6-22     letters of guardianship are filed with the retirement system
6-23     [member].
6-24           (c)  If requested by the person entitled to the benefit or
6-25     the guardian, attorney in fact, or trustee of the person, the
6-26     director may, if the director determines that it is in the best
 7-1     interest of the person entitled to the benefit, make payments
 7-2     directly to the trustee of:
 7-3                 (1)  a trust described by Section 867, Texas Probate
 7-4     Code, that has been created for the management of guardianship
 7-5     funds for the benefit of the person; or
 7-6                 (2)  a trust described by 42 U.S.C. Section
 7-7     1396p(d)(4)(A), (B), or (C) that has been established to qualify
 7-8     the person for benefits or other assistance under a state or
 7-9     federal program or to supplement the benefits or other assistance
7-10     provided under the program.
7-11           (d)  The director may require proof of [such] facts used to
7-12     establish a right under this section by evidence the director
7-13     determines is satisfactory [to the director].
7-14           SECTION 3.  Section 841.010, Government Code, is amended to
7-15     read as follows:
7-16           Sec. 841.010.  DISTRIBUTION REQUIREMENTS.  (a)
7-17     Notwithstanding any other provision of this subtitle, all
7-18     distributions under this subtitle must be determined and made in
7-19     accordance with Section 401(a)(9) of the Internal Revenue Code of
7-20     1986 (26 U.S.C. Section 401) and the regulations adopted under that
7-21     provision, including the minimum incidental death benefit
7-22     distribution requirement of Section 401(a)(9)(G) of that code.  The
7-23     board of trustees may adopt rules relating to the selection,
7-24     payment, and distribution of benefits to ensure compliance with
7-25     federal statutes and regulations.
7-26           (b)  The entire vested interest of a participant must be
 8-1     distributed or begin to be distributed not later than April 1
 8-2     following the later of the year in which the participant attains
 8-3     age 70-1/2 or the year in which the participant separates from
 8-4     service with all participating subdivisions.  If the participant
 8-5     dies after distribution of the participant's interest has begun,
 8-6     the remaining portion of the interest will continue to be
 8-7     distributed at least as rapidly as the method of distribution being
 8-8     used before the participant's death.  If the participant dies
 8-9     before distribution of the participant's interest begins,
8-10     distribution of the participant's entire interest must be made in a
8-11     manner complying with Section 401(a)(9)(B) of the code.
8-12           SECTION 4.  Section 841.101, Government Code, is amended by
8-13     adding a new Subsection (c) and redesignating current Subsection
8-14     (c) as Subsection (d) to read as follows:
8-15           (c)  A person commits an offense if the person knowingly
8-16     fails to return money received from the retirement system to which
8-17     the person is not entitled.
8-18           (d)  An offense under this section is a misdemeanor
8-19     punishable by a fine of not less than $100 nor more than $1,000, by
8-20     confinement in jail for not less than 30 days nor more than one
8-21     year, or both.
8-22           SECTION 5.  Section 842.002, Government Code, is amended to
8-23     read as follows:
8-24           Sec. 842.002.  RULES FOR PARTICIPATING SUBDIVISIONS.  The
8-25     board of trustees may adopt rules concerning:
8-26                 (1)  notices, information, and reports the board of
 9-1     trustees requires from a subdivision that elects to participate in
 9-2     the retirement system; [and]
 9-3                 (2)  the time that a subdivision that elects to
 9-4     participate in the retirement system may begin participation; and
 9-5                 (3)  the powers and duties of a participating
 9-6     subdivision to adopt orders or resolutions, make elections, and
 9-7     otherwise exercise decision-making authority concerning the rights
 9-8     and benefits of the members and annuitants under a plan adopted or
 9-9     assumed by the subdivision.
9-10           SECTION 6.  Subsections (a) and (d), Section 842.004,
9-11     Government Code, are amended to read as follows:
9-12           (a)  A [If a] subdivision [is] participating in the
9-13     retirement system [on a full salary basis, the subdivision] may
9-14     elect to participate in the supplemental death benefits fund.
9-15           (d)  A subdivision that elects to participate in the fund
9-16     [after the operative date of the fund] may begin participation on
9-17     the first day of any month after the month in which the subdivision
9-18     gives notice of its election to the board of trustees.
9-19           SECTION 7.  Section 842.104, Government Code, is amended by
9-20     amending Subsection (a) and adding Subsection (e) to read as
9-21     follows:
9-22           (a)  If a county elects to participate in the retirement
9-23     system, the commissioners court of the county may elect to deny
9-24     membership to the employees of a county hospital governed by
9-25     Chapter 263, Health and Safety Code [5, Title 71, Revised
9-26     Statutes].
 10-1          (e)  The commissioners court is the governing body of a
 10-2    county hospital for the purposes of this subtitle.
 10-3          SECTION 8.  Sections 842.106, 842.107, 842.108, 842.109,
 10-4    842.110, and 842.111, Government Code, are amended to read as
 10-5    follows:
 10-6          Sec. 842.106.  MULTIPLE RETIREMENT SYSTEM MEMBERSHIP.  (a)  A
 10-7    [Except as provided by this section, a] person who is an employee
 10-8    eligible for membership and [is] eligible to receive credit in this
 10-9    retirement system for service performed for a participating
10-10    subdivision is not eligible for credit for that service in another
10-11    public [pension fund or] retirement system described by Section
10-12    801.001 that is at least partly supported by the subdivision at
10-13    public expense.  It is the responsibility of the subdivision to
10-14    enforce this provision.
10-15          (b)  A person may simultaneously be a member of this
10-16    retirement system and another state or local retirement system
10-17    authorized under Section 67, Article XVI, Texas Constitution.
10-18    However, a person may receive a benefit from this system only to
10-19    the extent that the amount of the benefit is computed solely on the
10-20    member's compensation and accumulated contributions in the system.
10-21    Service credited by another retirement system may not be used to
10-22    determine eligibility for a benefit in this retirement system
10-23    except as provided by Chapter 803[, and receive credit for service
10-24    performed during the same period in the retirement system, the
10-25    federal program providing old age and survivors insurance, the
10-26    Employees Retirement System of Texas if the service is performed by
 11-1    a prosecuting attorney, and either the Judicial Retirement System
 11-2    of Texas Plan One or the Judicial Retirement System of Texas Plan
 11-3    Two].
 11-4          [(c)  In this section, "prosecuting attorney" means a person
 11-5    who holds the office of district attorney, criminal district
 11-6    attorney, or county attorney performing the duties of a district
 11-7    attorney and who is compensated by the state in an amount set by
 11-8    appropriation.]
 11-9          Sec. 842.107.  EXCEPTION TO GENERAL MEMBERSHIP REQUIREMENT.
11-10    [(a)  If on the date a subdivision's participation in the
11-11    retirement system becomes effective a person has a basis of
11-12    employment with the subdivision that would be violated by a
11-13    membership requirement of this subchapter, the person may elect not
11-14    to become a member of the retirement system.]
11-15          [(b)  If a person qualified to make an election under this
11-16    section has been notified that the subdivision will begin
11-17    participation in the retirement system, the person is considered to
11-18    have elected membership in the retirement system unless before the
11-19    date the subdivision's participation becomes effective the person
11-20    files with the governing body of the subdivision written notice of
11-21    an election not to become a member.]
11-22          [(c)]  A subdivision that was participating in the retirement
11-23    system before January 1, 1987, and that had in effect before that
11-24    date and continues to have a policy of hiring new personnel on a
11-25    probationary basis for a specified period may exclude new personnel
11-26    from membership during the probationary period but may not, for
 12-1    purposes of retirement system membership, increase the length of
 12-2    the probationary period beyond the length of the period in effect
 12-3    on January 1, 1987.  The subdivision may reduce or eliminate the
 12-4    period.
 12-5          Sec. 842.108.  WITHDRAWAL OF ACCUMULATED CONTRIBUTIONS.
 12-6    (a)  A person, or the beneficiary of a person, whose membership
 12-7    terminated as a result of absence from service may submit an
 12-8    application to withdraw all of the person's accumulated
 12-9    contributions [who is not an employee of any participating
12-10    subdivision and who has not retired may, by written application,
12-11    withdraw from membership in the retirement system, and the person's
12-12    account will be closed and the person will be paid:]
12-13                [(1)  the accumulated contributions in the member's
12-14    individual account in the employees saving fund; plus]
12-15                [(2)  interest computed from the beginning of the
12-16    calendar year of withdrawal through the end of the month before the
12-17    month in which withdrawal occurs on the balance in the member's
12-18    individual account in the employees saving fund on January 1 of the
12-19    year of withdrawal].
12-20          (b)  A member who has separated from employment with a
12-21    participating subdivision may submit an application to withdraw the
12-22    member's accumulated contributions attributable to service with
12-23    that subdivision.  A withdrawal cancels the person's credited
12-24    service and service credit attributable to service with that
12-25    subdivision on the date the retirement system makes payment of any
12-26    portion of the member's accumulated contributions.  Credited
 13-1    service that has been canceled may not be used to determine
 13-2    eligibility for a later retirement unless it is reestablished under
 13-3    Section 843.003.
 13-4          (c)  Interest is computed on the balance in the member's
 13-5    individual account in the employees saving fund on January 1 of the
 13-6    year of withdrawal through the month before the month in which the
 13-7    withdrawal occurs for a person described by Subsection (b) and on
 13-8    January l of the year of membership termination through the month
 13-9    before the month in which the membership terminates for a person
13-10    described by Subsection (a) whose membership terminates after
13-11    December 31, 1999.
13-12          (d)  If a person eligible to receive [to whom] a withdrawal
13-13    [would be paid] under this section or Section 844.401 elects to
13-14    have all or a portion of the accumulated contributions paid
13-15    directly to an eligible retirement plan and specifies the [eligible
13-16    retirement] plan to which the contributions are to be paid on forms
13-17    approved [for that purpose] by the board of trustees, the
13-18    retirement system shall make the payment in the form of a direct
13-19    trustee-to-trustee transfer but is under no obligation to determine
13-20    whether the other plan in fact is an eligible retirement plan for
13-21    that purpose.
13-22          Sec. 842.109.  TERMINATION OF MEMBERSHIP.  (a)  A person
13-23    terminates membership in the retirement system by:
13-24                (1)  death;
13-25                (2)  retirement from all participating subdivisions
13-26    with which the person has service credit;
 14-1                (3)  withdrawal of all of the person's accumulated
 14-2    contributions [while absent from service]; or
 14-3                (4)  absence from service for five consecutive years
 14-4    before accumulating four or more years of credited service.
 14-5          (b)  A person's membership in the retirement system may not
 14-6    extend beyond March 31 of the year following the later of the year
 14-7    in which the person attains age 70-1/2 or the year in which the
 14-8    person is no longer an employee of any participating subdivision.
 14-9          (c)  A member of the retirement system who [is not absent
14-10    from service and continues to accumulate membership credited
14-11    service if the person] leaves employment with a participating
14-12    subdivision to perform and does perform qualified military service
14-13    in the uniformed services, as that term is defined in the Uniformed
14-14    Services Employment and Reemployment Rights Act of 1994 (38 U.S.C.
14-15    Section 4301 et seq.), that meets the requirements of that Act is
14-16    not absent from service and continues to accumulate credited
14-17    service with that subdivision if:
14-18                (1)  the person applies for reemployment with the same
14-19    subdivision not later than the 90th day after the date the person
14-20    is discharged from military service under honorable conditions or
14-21    released from hospitalization continuing after being discharged
14-22    under honorable conditions for a period of not more than two years;
14-23    and
14-24                (2)  the person is reemployed by the same participating
14-25    subdivision.
14-26          (d) [(c)]  On any termination of membership in the retirement
 15-1    system, a person forfeits all credited service established in the
 15-2    retirement system.
 15-3          Sec. 842.110.  RESUMPTION OF SERVICE WITH SAME EMPLOYER BY
 15-4    RETIREE.  (a)  In this section, "reemploying subdivision" is a
 15-5    subdivision for which a person previously has performed creditable
 15-6    service and is receiving or would receive a retirement annuity
 15-7    except for this section.
 15-8          (b)  A person who has retired with a service retirement
 15-9    annuity [benefit] under this subtitle shall, if the person later
15-10    becomes an employee of a reemploying subdivision, become a member
15-11    of the system on the date of reemployment, but credits and benefits
15-12    payable [allowable] to the person under this subtitle are limited
15-13    as provided by this section.
15-14          (c) [(b)]  The retirement system shall [discontinue and]
15-15    suspend payments of each service retirement annuity allowed because
15-16    of the person's previous service with a reemploying subdivision,
15-17    beginning with the month the retirement system determines that the
15-18    person has resumed employment with the reemploying subdivision.
15-19    After the determination, the retirement system may not make
15-20    payments of the annuity for any month during which the person
15-21    remains an employee of the reemploying subdivision.  The retirement
15-22    system shall transfer annuity payments that become due and would be
15-23    payable to the retiree except for the suspension to a
15-24    non-interest-bearing account in the endowment fund.  The suspension
15-25    of a benefit under this section does not suspend payment of a
15-26    benefit to an alternate payee under a qualified domestic relations
 16-1    order.
 16-2          (d)  The retirement system shall establish an individual
 16-3    account for the member in the employees saving fund for accumulated
 16-4    contributions credited after reemployment with the subdivision.
 16-5    After terminating employment with the reemploying subdivision, a
 16-6    member may elect either an additional standard or optional service
 16-7    retirement annuity based on the additional service with the
 16-8    reemploying subdivision or a refund of the member's accumulated
 16-9    contributions since reemployment  [(c)  Member contributions under
16-10    Section 845.403 shall be made on all compensation paid to the
16-11    employee by the subdivision at the same rate as required of other
16-12    employees of the subdivision.  The contributions shall be deposited
16-13    by the retirement system on receipt in an individual account for
16-14    the member in the employees saving fund and shall be credited with
16-15    interest annually at the same rate and manner as are the accounts
16-16    of other members.  The compensation paid to the employee by the
16-17    subdivision shall be included in computing the monthly
16-18    contributions the subdivision makes to the subdivision accumulation
16-19    fund].
16-20          (e) [(d)]  After termination of employment with the
16-21    reemploying subdivision [all participating subdivisions] and
16-22    [after] filing with the retirement system [of] an application for
16-23    resumption of the suspended annuity [retirement with the board of
16-24    trustees], a person described by Subsection (b) [(a)] is entitled
16-25    to receive the payments of the suspended annuity that had been
16-26    transferred to the endowment fund and future payments of the
 17-1    suspended annuity[, as provided by Subsection (e), and to the
 17-2    additional benefits as provided by Subsections (f) and (g)].
 17-3          (f)  Beginning with [(e)  Monthly payments of the suspended
 17-4    annuity shall be resumed in] the month following the month in which
 17-5    a retiree's employment is terminated with a reemploying subdivision
 17-6    by death or other separation from service, future payments of the
 17-7    suspended annuity become payable to each person entitled to the
 17-8    annuity in the same amounts that would be payable if the annuity
 17-9    had not been suspended [all participating subdivisions, without
17-10    change in the amount except for any increase allowed under Section
17-11    844.208 or the duration of or other condition pertaining to the
17-12    suspended benefit.  Payment of the resumed benefit may not be made
17-13    for any month during which the payment was suspended under this
17-14    section].
17-15          (g) [(f)]  If a person with credited service under this
17-16    section dies before a payment under Subsection (e) [(g)] is made,
17-17    monthly payments of a suspended annuity will resume under the terms
17-18    of the retirement annuity originally selected by the decedent, or a
17-19    person may make an election under Subsection (d) in the order of
17-20    preference provided by Section 844.407 [the person's beneficiary,
17-21    or if there is no beneficiary surviving, the person's spouse, or if
17-22    there is no surviving spouse, the executor or administrator of the
17-23    person's estate, may elect payment as provided by Section 844.407].
17-24          [(g)  The additional service retirement benefit allowable to
17-25    a person to whom this section applies is, at the option of that
17-26    person, either a refund of accumulated contributions made since
 18-1    reemployment plus any accrued interest on the accumulated
 18-2    contributions allowed by the retirement system or a benefit
 18-3    consisting of a basic annuity actuarially determined from the sum
 18-4    of the member's deposits made and accumulated since the date of
 18-5    last becoming a member and current service credit computed on the
 18-6    amount of the deposits and a supplemental annuity actuarially
 18-7    determined from the multiple matching credit applicable to the
 18-8    amount of contributions made and accumulated with interest in the
 18-9    person's individual account since last becoming a member.  The
18-10    additional benefit is payable as a standard service retirement
18-11    benefit or, at the election of the member, any optional benefit
18-12    authorized under this subtitle that is the actuarial equivalent of
18-13    the standard retirement benefit.  The first benefit payment date
18-14    under this section is the later of the end of the month following
18-15    the last month of employment or the end of the first month that
18-16    ends after the expiration of 45 days since the date the person
18-17    filed an application for payment.  The first payment may not be
18-18    made if the person has resumed employment with a reemploying
18-19    subdivision in a position that would make the person an employee.]
18-20          [(h)  If a person becomes an employee of a reemploying
18-21    subdivision within one calendar month after that person's effective
18-22    date of retirement from that reemploying subdivision, the person is
18-23    considered not to have retired, and the person's membership shall
18-24    be restored.  The retirement system shall deduct the sum of
18-25    one-half of the basic annuity payments made before the membership
18-26    is restored from the person's individual account in the employees
 19-1    saving fund and shall transfer that amount to the current service
 19-2    annuity reserve fund.  The retirement system shall reduce the
 19-3    person's maximum prior service credit by an amount equal to the sum
 19-4    of the prior service annuity payments made before the membership is
 19-5    restored, divided by the product of the subdivision's allocated
 19-6    prior service credit percentage multiplied by the interest factor
 19-7    for interest from the subdivision's participation date to the
 19-8    person's effective retirement date, both of which were used in
 19-9    computing the amount of the prior service annuity.]
19-10          [(i)  In this section, "reemploying subdivision" is a
19-11    subdivision for which a person previously has performed creditable
19-12    service and is receiving or would receive a retirement benefit
19-13    except for this section.]
19-14          Sec. 842.111.  RESUMPTION OF SERVICE WITH DIFFERENT EMPLOYER
19-15    BY RETIREE.  (a)  If a person becomes an employee of a
19-16    participating subdivision after beginning to receive a service
19-17    retirement annuity [benefit], no portion of which is based on
19-18    service with that subdivision, the person resumes membership in the
19-19    retirement system without suspension of the person's retirement
19-20    annuity.
19-21          (b)  After terminating employment with a participating
19-22    subdivision, a member described by Subsection (a) is eligible to
19-23    apply for and receive an additional standard or optional service
19-24    retirement annuity or a refund of the member's accumulated
19-25    contributions based on service with the subdivision, without regard
19-26    to any age or credited service requirement.  [Member contributions
 20-1    under Section 845.403 shall be made on all compensation paid to the
 20-2    employee by the subdivision at the same rate as is required of
 20-3    other employees of the subdivision.  The retirement system shall
 20-4    deposit the contributions on receipt in an individual account for
 20-5    the member in the employees saving fund and shall credit the
 20-6    account with interest at the same rate and in the same manner as
 20-7    the accounts of other members are credited.  The compensation paid
 20-8    to the employee by the subdivision shall be included in computing
 20-9    the monthly contributions the subdivision makes to the subdivision
20-10    accumulation fund.]
20-11          (c)  On the death of a member described by Subsection (a), a
20-12    person may apply for and receive an optional service retirement
20-13    annuity or a refund of the decedent's accumulated contributions
20-14    with the subdivision, without regard to any age or credited service
20-15    requirement.  [If a person with credited service under this section
20-16    dies before a payment under Subsection (d) is made, the person's
20-17    beneficiary or, if no beneficiary survives, the person's spouse, or
20-18    if there is no surviving spouse, the executor or administrator of
20-19    the person's estate, may elect payment as provided by Section
20-20    844.407.]
20-21          [(d)  The additional service retirement benefit allowable to
20-22    a person to whom this section applies is, at the option of that
20-23    person, either a refund of accumulated contributions made since
20-24    reemployment plus any accrued interest on the accumulated
20-25    contributions allowed by the retirement system or a benefit
20-26    consisting of a basic annuity actuarially determined from the sum
 21-1    of the member's deposits made and accumulated since the date of
 21-2    last becoming a member and current service credit computed on the
 21-3    amount of the deposits and a supplemental annuity actuarially
 21-4    determined from the multiple matching credit applicable to the
 21-5    amount of contributions made and accumulated with interest in the
 21-6    person's individual account since last becoming a member.  The
 21-7    additional benefit is payable as a standard service retirement
 21-8    benefit or, at the election of the member, any optional benefit
 21-9    authorized under this subtitle that is the actuarial equivalent of
21-10    the standard retirement benefit.  The first benefit payment date
21-11    under this section is the later of the end of the month following
21-12    the last month of employment or the end of the first month that
21-13    ends after the expiration of 45 days since the date the person
21-14    filed an application for payment.  The first payment may not be
21-15    made if the person has resumed employment that would result in
21-16    suspension of a benefit.]
21-17          [(e)  If a person becomes an employee of a subdivision after
21-18    beginning to receive a retirement benefit, no portion of which
21-19    benefit is based on service with that subdivision, and the person's
21-20    service retirement annuity is suspended under Section 842.110, as
21-21    it existed at the time service is resumed, the person may, on
21-22    written application to the retirement system, resume receiving the
21-23    suspended annuity.]
21-24          SECTION 9.  Subsections (b), (j), and (k), Section 842.112,
21-25    Government Code, are amended to read as follows:
21-26          (b)  Except as provided by Subsection (j) or Section 843.005,
 22-1    a [A] correction may not be made as to current service performed,
 22-2    or current service credit that should have been received, more than
 22-3    four years before the date an application, on forms approved by the
 22-4    retirement system's board of trustees, for the correction is
 22-5    received by the retirement system.
 22-6          (j)  If, as a result of a suit against a participating
 22-7    subdivision in a court of competent jurisdiction or as a result of
 22-8    a complaint or grievance against a participating subdivision filed
 22-9    with the United States Equal Employment Opportunity Commission, the
22-10    Commission on Human Rights, or a county civil service commission, a
22-11    judgment or order is issued or a settlement agreement is executed,
22-12    the terms of which require that an employee receive back pay or
22-13    that a person be employed or reemployed for a specified period[, a
22-14    person receives a judgment against a subdivision ordering that the
22-15    person be reinstated as an employee of the subdivision
22-16    retroactively to the date the person's employment was terminated]
22-17    and require [ordering] that the person receive service credit
22-18    toward retirement based on the back pay or both service credit and
22-19    credited service for the specified period of employment or
22-20    reemployment [for the reinstated service], on written application
22-21    to the retirement system, the system shall grant the service credit
22-22    and credited service if:
22-23                (1)  the judgment or order has become final and is no
22-24    longer subject to appeal;
22-25                (2)  a certified copy of the judgment, order, or
22-26    settlement agreement accompanies the application;
 23-1                (3)  the retirement system receives payment on behalf
 23-2    of [from] the person in an amount equal to the contributions the
 23-3    person would have made to the system if the back pay or additional
 23-4    service [employment] had [not] been [terminated and the service]
 23-5    reported to the system; and
 23-6                (4)  the retirement system receives payment from the
 23-7    subdivision in an amount equal to the additional contributions that
 23-8    the subdivision would have made to the system for the additional
 23-9    [credited] service credit.
23-10          (k)  If a person to whom Subsection (j) applies has forfeited
23-11    service credit as a result of withdrawal of contributions during
23-12    the time between the termination of employment and the date of
23-13    reinstatement, the person is eligible to reestablish credit under
23-14    Section 843.003.  For purposes of this subsection, forfeited credit
23-15    based on service performed for more than one participating
23-16    subdivision is considered to have been credit for service performed
23-17    only for the subdivision that is subject to the judgment, order, or
23-18    settlement agreement, except that credit may not be reinstated
23-19    under this subsection for service performed after the date of the
23-20    termination of employment that resulted in the judgment, order, or
23-21    settlement agreement.
23-22          SECTION 10.  Subsection (e), Section 842.201, Government
23-23    Code, is amended to read as follows:
23-24          (e)  In this section, "prosecuting attorney" means a person
23-25    who holds the office of district attorney, criminal district
23-26    attorney, or county attorney performing the duties of a district
 24-1    attorney and who is compensated by the state in an amount set by
 24-2    appropriation [has the meaning assigned by Section 842.106(c)].
 24-3          SECTION 11.  Section 843.002, Government Code, is amended to
 24-4    read as follows:
 24-5          Sec. 843.002.  BENEFIT ELIGIBILITY AND AMOUNT [BASED ON
 24-6    CREDITED SERVICE].  A member's eligibility to receive a benefit is
 24-7    based on the member's amount of credited service and attained age
 24-8    on the effective date [at the time] of retirement.  The monthly
 24-9    amount of a standard retirement annuity is based on the sum of the
24-10    member's service credit and accumulated contributions and is
24-11    computed using the member's attained age and the actuarial
24-12    assumptions described by Section 841.001(1).
24-13          SECTION 12.  Subchapter A, Chapter 843, Government Code, is
24-14    amended by adding Sections 843.004 and 843.005 to read as follows:
24-15          Sec. 843.004.  COMPOSITION OF SERVICE CREDIT.  Service credit
24-16    consists of allocated prior service credit, current service credit,
24-17    and multiple matching credit as authorized by a participating
24-18    subdivision and accumulated interest under this subtitle.
24-19          Sec. 843.005.  ADJUSTMENT TO CREDITED SERVICE AND CURRENT
24-20    SERVICE CREDIT.  (a)  The governing body of a participating
24-21    subdivision by order or resolution may authorize the establishment
24-22    of credited service and current service credit for a particular
24-23    person who has not received the correct amount of credited service
24-24    or current service credit for all current service performed for the
24-25    subdivision and who is barred from doing so by the limitation
24-26    period provided by Section 842.112(b).
 25-1          (b)  To authorize the establishment of credited service and
 25-2    current service credit under this section, the governing body must
 25-3    determine that the reporting error occurred without the knowledge
 25-4    or fault of the person and that the authorization is in the best
 25-5    interests of the subdivision.  The subdivision shall verify the
 25-6    amounts of service and the compensation received by the person for
 25-7    those months for which credited service and current service credit
 25-8    may be established under this section.
 25-9          (c)  The order or resolution must include the findings of the
25-10    governing body, the name of the person to whom the authorization
25-11    relates, and the months for which credited service and current
25-12    service credit may be established and must state the total
25-13    compensation paid to the person for those months.
25-14          (d)  The service credit attributable to the member
25-15    contributions deposited under this section is determined using the
25-16    credit percentages in effect for the month in which a deposit is
25-17    made.
25-18          (e)  For credited service and service credit under this
25-19    section, the retirement system must receive, not later than the
25-20    last day of the calendar year in which an order or resolution is
25-21    adopted by the governing body of a participating subdivision:
25-22                (1)  for deposit in the member's individual account,
25-23    all contributions the member would have made to the retirement
25-24    system if the current service had been correctly reported; and
25-25                (2)  for deposit in the subdivision's account, an
25-26    amount determined by the retirement system's actuary as necessary
 26-1    to fully offset the actuarial liability resulting from the
 26-2    additional credited service and service credit.
 26-3          SECTION 13.  Section 843.103, Government Code, is amended to
 26-4    read as follows:
 26-5          Sec. 843.103.  STATEMENT OF PRIOR SERVICE.  Before the fifth
 26-6    anniversary of the date a member becomes eligible to claim prior
 26-7    service credit, a  [A] member claiming credit for prior service
 26-8    shall file a detailed statement of the service with the treasurer
 26-9    or other disbursing officer of the subdivision for which the
26-10    service was performed.
26-11          SECTION 14.  Subsection (c), Section 843.105, Government
26-12    Code, is amended to read as follows:
26-13          (c)  The allocated prior service credit is the percentage of
26-14    the maximum prior service credit granted by the subdivision to all
26-15    members who performed prior service for the subdivision.  [The
26-16    total allocated prior service credits for members claiming prior
26-17    service with the subdivision may not exceed an amount for which the
26-18    prospective subdivision contributions to the retirement system will
26-19    be adequate to amortize, before the 25th anniversary of the
26-20    effective date of subdivision participation in the retirement
26-21    system:]
26-22                [(1)  all obligations charged to its account in the
26-23    subdivision accumulation fund; and]
26-24                [(2)  all basic and supplemental annuities derived from
26-25    credits granted by the subdivision.]
26-26          SECTION 15.  Section 843.304, Government Code, is amended to
 27-1    read as follows:
 27-2          Sec. 843.304.  CERTIFICATION OF SERVICE AND AVERAGE
 27-3    COMPENSATION FOR MEMBER OF OPTIONAL CLASS[; DETERMINATION OF
 27-4    ALLOCATED LOCAL SERVICE CREDIT].  (a)  A member claiming credit for
 27-5    prior service under this subchapter shall file a statement of prior
 27-6    service in the manner required by Section 843.103.
 27-7          (b)  [After a member described in Section 843.301(a) files a
 27-8    statement of prior service, the subdivision employing the officer
 27-9    receiving the statement shall certify to the board of trustees the
27-10    amount of prior service approved and the average local
27-11    compensation, determined in the manner provided for computing the
27-12    average local compensation for employees of the subdivision who
27-13    became members on the effective date of merger of the local pension
27-14    system into the retirement system.  After the board of trustees
27-15    receives a certification under this subsection, it shall determine
27-16    the maximum and allocated local service credits for the member in
27-17    the manner and using the percentages provided for employees of the
27-18    subdivision who became members on the effective date of merger.]
27-19          [(c)]  After a member described in Section 843.302 files a
27-20    statement of prior service, the subdivision employing the officer
27-21    receiving the statement shall certify to the board of trustees the
27-22    amount of prior service approved and the average monthly
27-23    compensation paid by the subdivision, determined in the manner
27-24    provided for computing the average prior service compensation for
27-25    employees of the subdivision who became members on the effective
27-26    date of subdivision participation in the retirement system.  After
 28-1    the board of trustees receives a certification under this
 28-2    subsection, it shall determine the maximum and allocated prior
 28-3    service credits for the member in the manner and using the
 28-4    percentages provided for computing the maximum and allocated prior
 28-5    service credits for employees of the subdivision who became members
 28-6    on the effective date of subdivision participation.
 28-7          SECTION 16.  Subsections (b) and (c), Section 843.403,
 28-8    Government Code, are amended to read as follows:
 28-9          (b)  The current service credit of a member is an amount
28-10    equal to a percentage of the [accumulated] contributions made by
28-11    the member to the retirement system during a calendar year.  The
28-12    percentage is determined by the governing body of the employing
28-13    subdivision at the time of its election to participate in the
28-14    retirement system, except that the percentage for a subdivision
28-15    that begins participation after December 31, 1977, is 100 percent.
28-16          (c)  The multiple matching credit of a member is an amount
28-17    equal to a percentage of the [accumulated] contributions made by
28-18    the member to the retirement system during a calendar year.  The
28-19    percentage is 0 percent until a greater percentage is adopted as
28-20    provided by Section 843.703 or, for a subdivision whose
28-21    participation in the retirement system began after October 31,
28-22    1980, unless a greater percentage is adopted by its governing body
28-23    before the first anniversary of the subdivision's effective date of
28-24    retirement system participation, after the actuary has determined
28-25    and certified that the greater percentage would not impair the
28-26    ability of the subdivision to amortize, before the 25th anniversary
 29-1    of the participation date, all obligations that are charges against
 29-2    its account in the subdivision accumulation fund.  A multiple
 29-3    matching credit includes any portion of a current service credit in
 29-4    effect on January 1, 1978, that exceeds the member's current
 29-5    service credit determined under Subsection (b).
 29-6          SECTION 17.  Section 843.501, Government Code, is amended to
 29-7    read as follows:
 29-8          Sec. 843.501.  LEGISLATIVE SERVICE.  (a)  A member may
 29-9    establish credited [credit for current] service in the retirement
29-10    system for service performed as a member of the legislature.  A
29-11    member claiming credited service [credit] for previous legislative
29-12    service shall file a detailed statement of the service with the
29-13    [treasurer or other disbursing officer of the] subdivision by which
29-14    the member is currently employed.  As soon as practicable after the
29-15    filing of a statement, the employing subdivision shall verify the
29-16    service claimed and certify to the board of trustees the amount of
29-17    service approved.
29-18          (b)  Credited service [Credit] may not be established under
29-19    this section for service that is credited by another retirement
29-20    system or program established or governed by state law.
29-21          SECTION 18.  Subsection (e), Section 843.601, Government
29-22    Code, is amended to read as follows:
29-23          (e)  Except for credited service [credit] established with
29-24    the retirement system before December 31, 1999, the maximum amount
29-25    of credited service that a person may receive under this section is
29-26    five years.  If a person would receive more than five years of
 30-1    credited service [credit] as a result of having received credit
 30-2    under Subsection (c) before receiving credit under Subsection (b),
 30-3    the retirement system shall cancel credited service [credit] under
 30-4    Subsection (c) [shall be canceled] to the extent necessary to
 30-5    reduce the total to five years of credit.
 30-6          SECTION 19.  Subsection (d), Section 843.602, Government
 30-7    Code, is amended to read as follows:
 30-8          (d)  In this section, "prosecuting attorney" has the meaning
 30-9    assigned by Section 842.201(e) [842.106(c)].
30-10          SECTION 20.  Section 844.001, Government Code, is amended to
30-11    read as follows:
30-12          Sec. 844.001.  TYPES OF BENEFITS.  The types of benefits
30-13    payable by the retirement system are:
30-14                (1)  service retirement annuities [benefits];
30-15                (2)  disability retirement annuities [benefits]; [and]
30-16                (3)  survivor annuity death benefits;
30-17                (4)  supplemental death benefits; and
30-18                (5)  refunds of accumulated contributions.
30-19          SECTION 21.  Section 844.002, Government Code, is amended by
30-20    adding Subsection (e) to read as follows:
30-21          (e)  A separate retirement annuity is payable for each
30-22    participating subdivision from which a person retires under this
30-23    subtitle or is considered to have retired.
30-24          SECTION 22.  Subsections (a) and (d), Section 844.003,
30-25    Government Code, are amended to read as follows:
30-26          (a)  Except as provided by Subsections (b) and (d), the
 31-1    effective date of a member's service retirement is the date the
 31-2    member designates at the time the member applies for retirement
 31-3    under Section 844.101, but the date must be the last day of a
 31-4    calendar month and may not precede the date the member terminates
 31-5    employment with the subdivision from which the member seeks to
 31-6    retire [all participating subdivisions].
 31-7          (d)  A member who is eligible for service retirement and who
 31-8    [on the day the member] terminates employment with a participating
 31-9    subdivision may apply for and receive a service retirement annuity
31-10    based on service for that subdivision despite the fact that the
31-11    member is or becomes an employee of another participating
31-12    subdivision.  Credited service [Service] with the member's new
31-13    employer may [not] be used in determining eligibility for service
31-14    retirement [the annuity, and contributions for the service may not
31-15    be used in determining the amount of the annuity].  A member who is
31-16    eligible for service retirement using combined credited service for
31-17    two or more subdivisions may simultaneously apply for and receive a
31-18    service retirement annuity for service to one subdivision and a
31-19    refund of accumulated contributions for service to another
31-20    subdivision. [The effective date of a retirement under this
31-21    subsection is the last day of the month in which the retirement
31-22    system receives the application, and that date may not be later
31-23    than the last day of the third month following the month in which
31-24    the member begins employment with the new employer.]  A person who
31-25    retires under this subsection is considered for all purposes to be
31-26    a retiree who resumes service with a different employer under
 32-1    Section 842.111.
 32-2          SECTION 23.  Section 844.005, Government Code, is amended to
 32-3    read as follows:
 32-4          Sec. 844.005.  WHEN ANNUITY IS PAYABLE; CHANGES BEFORE FIRST
 32-5    PAYMENT.  (a)  A retiree may revoke an application for retirement,
 32-6    change the retiree's choice of retirement annuity payment plans, or
 32-7    change the designation of beneficiary after the retiree's effective
 32-8    date of retirement by filing written notice with the retirement
 32-9    system not later than the last day of the month following the month
32-10    that includes the effective date of retirement [board of trustees
32-11    before the later of the date on which the retirement system makes
32-12    the first payment or the date the first annuity payment becomes
32-13    due].  After that day [the first payment has been made by the
32-14    retirement system or has become due], a retiree may not revoke the
32-15    application for retirement, change the annuity payment plan
32-16    selected, or [and may not] change the designated beneficiary except
32-17    under Section 844.006.
32-18          (b)  A retiree who dies before the first day of the second
32-19    month following the month that includes the effective date of
32-20    retirement and who did not select an optional retirement annuity is
32-21    considered to have selected an optional annuity under Section
32-22    844.104(c)(7) or Section 844.305(c)(7), as applicable.
32-23    Alternatively, the decedent's beneficiary may elect to receive a
32-24    refund of the decedent's accumulated contributions under Section
32-25    844.401.  [For purposes of this section, the term "makes payment"
32-26    includes the depositing in the mail of a payment or the crediting
 33-1    of an account with payment through electronic funds transfer.]
 33-2          (c)  An annuity under this subtitle is payable to a retiree
 33-3    or beneficiary through [for a period beginning on the last day of
 33-4    the first month following] the month in which the retiree or
 33-5    beneficiary dies.  A continuation of an optional annuity begins
 33-6    with payment for the month following [retirement occurs and ending,
 33-7    except as otherwise provided by this subtitle, on the last day of
 33-8    the month immediately preceding] the month in which death occurs.
 33-9          SECTION 24.  Subsection (d), Section 844.006, Government
33-10    Code, is amended to read as follows:
33-11          (d)  If a qualified domestic relations order, as that term is
33-12    defined by Section 804.001, so provides, the benefit payable to a
33-13    retiree who is receiving payments of an annuity for the retiree's
33-14    life with payments to continue after the retiree's death until the
33-15    death of another person [under Option 1, 2, 4B, or 4C, as defined
33-16    by Section 103.2, Title 34, Texas Administrative Code,] may be
33-17    divided by the retirement system into two annuities if:
33-18                (1)  the person who was designated to receive the
33-19    continued payment after the retiree's death is the same person as
33-20    the alternate payee;
33-21                (2)  the [domestic relations] order specifies that one
33-22    of the two annuities is payable over the remaining life of the
33-23    retiree, with no payments to be made under that annuity after the
33-24    death of the retiree;
33-25                (3)  the [domestic relations] order specifies that the
33-26    annuity payable to the alternate payee is payable over the
 34-1    remaining life of that person, with no payments to be made under
 34-2    that annuity after the death of the alternate payee named in the
 34-3    order; and
 34-4                (4)  the annuity that would be payable to the person as
 34-5    the alternate payee under the order would not exceed the annuity
 34-6    that would be payable to that person as the retiree's surviving
 34-7    beneficiary under the option selected if the retiree were deceased
 34-8    [domestic relations order specifies that the portion of the benefit
 34-9    payable to the alternate payee is stated as a fixed percentage of
34-10    the present benefit payable to the retiree, which percentage may
34-11    not exceed, as applicable:]
34-12                      [(A)  25 percent of an Option 4B benefit;]
34-13                      [(B)  50 percent of an Option 2 benefit; or]
34-14                      [(C)  75 percent of an Option 4C benefit].
34-15          SECTION 25.  Subsections (a), (c), and (h), Section 844.009,
34-16    Government Code, are amended to read as follows:
34-17          (a)  [This section applies to all subdivisions that elect
34-18    after December 31, 1999, to begin participation in the retirement
34-19    system.]  The governing body of a contributing [any] subdivision
34-20    with a member contribution rate of at least four percent that has
34-21    not elected to discontinue enrolling employees [participating as of
34-22    December 31, 1999,] may adopt the provisions of this section:
34-23                (1)  on the terms provided by Subchapter H; or
34-24                (2)  if the board of trustees determines that, based on
34-25    computations by the retirement system's actuary, the adoption would
34-26    not impair the ability of the subdivision to fund all obligations
 35-1    against its account in the subdivision accumulation fund before the
 35-2    25th anniversary of the subdivision's most recent actuarial
 35-3    valuation date.
 35-4          (c)  The amount of a lump-sum distribution under this section
 35-5    may not exceed 100 percent of the total accumulated contributions
 35-6    [and accumulated interest] in the member's individual account in
 35-7    the employees saving fund attributable to the credited service on
 35-8    which the member has applied for retirement.
 35-9          (h)  No portion of a benefit awarded to an alternate payee
35-10    under a qualified domestic relations order may be distributed in
35-11    the form of a lump sum under this section, except that if the
35-12    member and the alternate payee agree in writing that the alternate
35-13    payee will receive all or a portion of the [a] lump-sum
35-14    distribution payable under this section [payment] instead of
35-15    benefits awarded under the qualified domestic relations order, the
35-16    amount of the lump-sum distribution described in the agreement may
35-17    be paid directly to the alternate payee in complete satisfaction of
35-18    the alternate payee's marital property rights and interest in the
35-19    member's benefit.
35-20          SECTION 26.  Sections 844.101 and 844.102, Government Code,
35-21    are amended to read as follows:
35-22          Sec. 844.101.  APPLICATION FOR SERVICE RETIREMENT ANNUITY.  A
35-23    member may apply for a service retirement annuity by filing an
35-24    application for retirement with the retirement system [board of
35-25    trustees] on or before the member's effective retirement date
35-26    designated on the application.
 36-1          Sec. 844.102.  ELIGIBILITY FOR SERVICE RETIREMENT ANNUITY.
 36-2    (a)  A member is eligible to apply for and receive a service
 36-3    retirement annuity[,] if the member:
 36-4                (1)  is at least 60 years old and has at least 12 years
 36-5    of credited service in the retirement system;
 36-6                (2)  has at least 30 years of credited service in the
 36-7    retirement system; or
 36-8                (3)  has met the eligibility requirements for service
 36-9    retirement under Section 844.207, 844.210, or 844.211.
36-10          (b)  A person who has retired with a service retirement
36-11    annuity is eligible, without regard to any age or credited service
36-12    requirement, to apply for and receive a service retirement annuity
36-13    based on service for another participating subdivision from which
36-14    the person has terminated employment.
36-15          SECTION 27.  Subsection (c), Section 844.104, Government
36-16    Code, is amended to read as follows:
36-17          (c)  An eligible person may select any of the following
36-18    optional annuities that[, which] are the actuarial equivalent of
36-19    the annuity to which the person is entitled and that [which]
36-20    provide that:
36-21                (1)  after the retiree's death, the reduced annuity is
36-22    payable throughout the life of a person designated by the retiree;
36-23                (2)  after the retiree's death, one-half of the reduced
36-24    annuity is payable throughout the life of a person designated by
36-25    the retiree;
36-26                (3)  if the retiree dies before 60 monthly annuity
 37-1    payments have been made, the remainder of the 60 payments are
 37-2    payable to the retiree's beneficiary or, if one does not exist, to
 37-3    the retiree's estate;
 37-4                (4)  if the retiree dies before 120 monthly annuity
 37-5    payments have been made, the remainder of the 120 payments are
 37-6    payable to the retiree's beneficiary or, if one does not exist, to
 37-7    the retiree's estate;
 37-8                (5)  after the retiree's death, [one-fourth of] the
 37-9    reduced annuity is payable throughout the life of a person
37-10    designated by the retiree, except that if the beneficiary
37-11    predeceases the retiree, the annuity payable throughout the
37-12    remaining life of the retiree is the annuity that would be payable
37-13    if the retiree had chosen a standard service retirement annuity;
37-14                (6)  after the retiree's death, three-fourths of the
37-15    reduced annuity is payable throughout the life of a person
37-16    designated by the retiree; or
37-17                (7)  if the retiree dies before 180 monthly annuity
37-18    payments have been made, the remainder of the 180 payments are
37-19    payable to the retiree's beneficiary or, if one does not exist, to
37-20    the retiree's estate.
37-21          SECTION 28.  Sections 844.207, 844.210, and 844.211,
37-22    Government Code, are amended to read as follows:
37-23          Sec. 844.207.  OPTIONAL BENEFIT ELIGIBILITY PLAN.  (a)  This
37-24    [The provisions of this] section applies [shall apply] to all
37-25    subdivisions that [elect after September 1, 1985, to] begin
37-26    participation in the retirement system after September 1, 1985, and
 38-1    to all other subdivisions that have adopted the plan provisions of
 38-2    this section.  The [Subject to the conditions in this section, the]
 38-3    governing body of a participating [any] subdivision [participating
 38-4    as of September 1, 1985,] may adopt the plan provisions of this
 38-5    section only on the terms provided by Subchapter H.
 38-6          (b)  In this section "eligible credited service" [The term
 38-7    "Section 844.207 credited service" as used in this section] means
 38-8    credited service performed for one or more participating
 38-9    subdivisions that have adopted the plan provisions of this section
38-10    or [the plan provisions of] Section 844.210.
38-11          (c)  A member is eligible to apply for and receive a service
38-12    retirement annuity[,] if the member:
38-13                (1)  is at least 60 years old and has at least 10 years
38-14    of eligible [Section 844.207] credited service in the retirement
38-15    system; [or]
38-16                (2)  is less than 60 years old, except as provided by
38-17    Subsection (e), and has a sufficient amount of eligible [years of
38-18    Section 844.207] credited service in the retirement system that,
38-19    when [that number is] added to the member's [years of] attained age
38-20    [of the member], equals or exceeds [produces a sum equal to or in
38-21    excess of] the number 80; or
38-22                (3)  [if the member] is eligible for service retirement
38-23    under any other provision of this subtitle.
38-24          (d)  A member who has 10 years or more of eligible [Section
38-25    844.207] credited service is a vested member for purposes of
38-26    Sections 844.202, 844.302, and 844.303.
 39-1          (e)  A member who on December 31, 1999, had [has] any
 39-2    eligible [Section 844.207] credited service, whose membership in
 39-3    the retirement system continues after that date without
 39-4    interruption, and who accumulates four years or more of eligible
 39-5    [Section 844.207] credited service is eligible to receive a service
 39-6    retirement annuity regardless of age [benefit] when the amount of
 39-7    eligible [number of years of Section 844.207] credited service
 39-8    added to the [years of the] member's attained age equals or exceeds
 39-9    the number 80.
39-10          [(f)  After 1991, the governing body of a subdivision may not
39-11    adopt the plan provisions of this section except on the terms
39-12    provided by Subchapter H.]
39-13          Sec. 844.210.  OPTIONAL BENEFIT ELIGIBILITY PLAN TWO.
39-14    (a)  The [Subject to Subsection (f), the] governing body of a
39-15    participating subdivision may adopt the plan provisions of this
39-16    section only on the terms provided by Subchapter H.
39-17          (b)  In this section "eligible credited service" ["Section
39-18    844.210 credited service"] means credited service performed for one
39-19    or more participating subdivisions that have adopted the plan
39-20    provisions of this section.
39-21          (c)  A member is eligible to apply for and receive a service
39-22    retirement annuity if the member:
39-23                (1)  is at least 60 years old and has at least eight
39-24    years of eligible [Section 844.210] credited service in the
39-25    retirement system;
39-26                (2)  is less than 60 years old, except as provided by
 40-1    Subsection (e), and has a sufficient amount of eligible [years of
 40-2    Section 844.210] credited service in the retirement system that,
 40-3    when added to the [years of the] member's attained age, equals or
 40-4    exceeds [produces a sum equal to or in excess of] the number 80; or
 40-5                (3)  is eligible for service retirement under any other
 40-6    provision of this subtitle.
 40-7          (d)  A member who has eight years or more of eligible
 40-8    [Section 844.210] credited service in the retirement system is a
 40-9    vested member for purposes of Sections 844.202, 844.302, and
40-10    844.303.
40-11          (e)  A member who on December 31, 1999, had [has] any
40-12    eligible [Section 844.210] credited service, whose membership in
40-13    the retirement system continues after that date without
40-14    interruption, and who accumulates four years or more of eligible
40-15    [Section 844.210] credited service is eligible to receive a service
40-16    retirement annuity regardless of age [benefit] when the amount of
40-17    eligible [number of years of Section 844.210] credited service
40-18    added to the [years of the] member's attained age equals or exceeds
40-19    the number 80.  For purposes of this subsection, eligible [Section
40-20    844.210] credited service also includes credited service performed
40-21    for one or more subdivisions that have adopted the plan provisions
40-22    of Section 844.207.
40-23          [(f)  The governing body of a subdivision may not adopt the
40-24    plan provisions of this section except on the terms provided by
40-25    Subchapter H.]
40-26          Sec. 844.211.  OPTIONAL BENEFIT ELIGIBILITY PLAN THREE.
 41-1    (a)  The [Subject to Subsection (e), the] governing body of a
 41-2    participating subdivision may adopt the plan provisions of this
 41-3    section only on the terms provided by Subchapter H.
 41-4          (b)  In this section "eligible credited service" ["Section
 41-5    844.211 credited service"] means credited service performed for one
 41-6    or more participating subdivisions that have adopted the plan
 41-7    provisions of this section.
 41-8          (c)  A member is eligible to apply for and receive a service
 41-9    retirement annuity if the member:
41-10                (1)  is less than 60 years old, except as provided by
41-11    Subsection (d), and has a sufficient amount of eligible [years of
41-12    Section 844.211] credited service in the retirement system that,
41-13    when added to the [years of the] member's attained age, equals or
41-14    exceeds [produces a sum equal to or in excess of] the number 75; or
41-15                (2)  is eligible for service retirement under any other
41-16    provision of this subtitle.
41-17          (d)  A member who on December 31, 1999, had [has] any
41-18    eligible [Section 844.211] credited service, whose membership in
41-19    the retirement system continues after that date without
41-20    interruption, and who accumulates four years or more of eligible
41-21    [Section 844.211] credited service is eligible to receive a service
41-22    retirement annuity regardless of age [benefit] when the amount of
41-23    eligible [number of years of that] credited service added to the
41-24    years of the member's attained age equals or exceeds the number 75.
41-25          [(e)  The governing body of a subdivision may not adopt the
41-26    plan provisions of this section except on the terms provided by
 42-1    Subchapter H.]
 42-2          SECTION 29.  Subsection (a), Section 844.301, Government
 42-3    Code, is amended to read as follows:
 42-4          (a)  A member may apply for a disability retirement annuity
 42-5    by:
 42-6                (1)  filing an application for retirement with the
 42-7    retirement system [board of trustees]; or
 42-8                (2)  having an application filed with the system
 42-9    [board] by the member's employer or legal representative.
42-10          SECTION 30.  Subsection (a), Section 844.304, Government
42-11    Code, is amended to read as follows:
42-12          (a)  The standard disability retirement annuity is discounted
42-13    for the possibility of payment of a benefit under Section 844.402
42-14    [844.403] and is the actuarial equivalent of the sum of a member's:
42-15                (1)  accumulated contributions;
42-16                (2)  current service credit, accumulated at interest as
42-17    provided by Section 843.403(d);
42-18                (3)  allocated prior service credit, accumulated at
42-19    interest as provided by Section 843.105(d); and
42-20                (4)  multiple matching credit, accumulated at interest
42-21    as provided by Section 843.403(d).
42-22          SECTION 31.  Subsection (c), Section 844.305, Government
42-23    Code, is amended to read as follows:
42-24          (c)  An eligible person may select any of the following
42-25    optional annuities that [, which] are the actuarial equivalent of
42-26    the annuity to which the person is entitled and that [which]
 43-1    provide that:
 43-2                (1)  after the retiree's death, the reduced annuity is
 43-3    payable throughout the life of a person designated by the retiree;
 43-4                (2)  after the retiree's death, one-half of the reduced
 43-5    annuity is payable throughout the life of a person designated by
 43-6    the retiree;
 43-7                (3)  if the retiree dies before 60 monthly annuity
 43-8    payments have been made, the remainder of the 60 payments are
 43-9    payable to the retiree's beneficiary or, if one does not exist, to
43-10    the retiree's estate;
43-11                (4)  if the retiree dies before 120 monthly annuity
43-12    payments have been made, the remainder of the 120 payments are
43-13    payable to the retiree's beneficiary or, if one does not exist, to
43-14    the retiree's estate;
43-15                (5)  after the retiree's death, [one-fourth of] the
43-16    reduced annuity is payable throughout the life of a person
43-17    designated by the retiree, except that if the beneficiary
43-18    predeceases the retiree, the annuity payable throughout the
43-19    remaining life of the retiree is the annuity that would be payable
43-20    if the retiree had chosen a standard service retirement annuity;
43-21                (6)  after the retiree's death, three-fourths of the
43-22    reduced annuity is payable throughout the life of a person
43-23    designated by the retiree; or
43-24                (7)  if the retiree dies before 180 monthly annuity
43-25    payments have been made, the remainder of the 180 payments are
43-26    payable to the retiree's beneficiary or, if one does not exist, to
 44-1    the retiree's estate.
 44-2          SECTION 32.  Subchapter D, Chapter 844, Government Code, is
 44-3    amended by adding Section 844.3051 to read as follows:
 44-4          Sec. 844.3051.  ANNUITIES NOT SUBJECT TO DISCONTINUANCE.  (a)
 44-5    After the earlier of the date a disability retiree attains age 60
 44-6    or the date the disability retiree would otherwise have become
 44-7    eligible for service retirement under this subtitle, the retiree's
 44-8    disability retirement annuity may not be revoked or discontinued
 44-9    under this subtitle, and the retiree is not subject to further
44-10    medical examinations or required to submit annual earnings reports.
44-11          (b)  A disability retirement annuity that is not subject to
44-12    revocation or discontinuance is considered a service retirement
44-13    annuity if the retiree returns to employment with a participating
44-14    subdivision.
44-15          SECTION 33.  Subsection (a), Section 844.306, Government
44-16    Code, is amended to read as follows:
44-17          (a)  Once each year during the first five years after a
44-18    person retires for disability, and once in each three-year period
44-19    after that, the board of trustees may require a disability retiree
44-20    [who is less than 60 years old] to undergo a medical examination.
44-21          SECTION 34.  Subsection (a), Section 844.307, Government
44-22    Code, is amended to read as follows:
44-23          (a)  If the medical board finds that a disability retiree
44-24    [who is less than 60 years old] is no longer mentally or physically
44-25    incapacitated for the performance of duty or is engaged in or able
44-26    to engage in gainful occupation, it shall certify its findings and
 45-1    submit them to the board of trustees.
 45-2          SECTION 35.  Sections 844.308 and 844.309, Government Code,
 45-3    are amended to read as follows:
 45-4          Sec. 844.308.  RETURN OF DISABILITY RETIREE TO MEMBERSHIP.
 45-5    If the disability annuity of a person [who is less than 60 years
 45-6    old] is discontinued under Section 844.306(c) or 844.307, the
 45-7    person automatically resumes membership in the retirement system,
 45-8    and the board of trustees shall terminate the person's annuity
 45-9    payments.
45-10          Sec. 844.309.  ADJUSTMENTS AT ANNUITY DISCONTINUANCE.
45-11    (a)  If a person's membership resumes [is restored] under Section
45-12    844.308, the retirement system shall transfer:
45-13                (1)  from the current service annuity reserve fund and
45-14    credit to the person's individual account in the employees saving
45-15    fund an [the] amount equal to the amount of accumulated
45-16    contributions transferred to the current service annuity reserve
45-17    fund at the time of retirement reduced by one percent for each year
45-18    or part of a year during which disability annuity payments were
45-19    made[, if any, by which the amount in the person's individual
45-20    account in the employees saving fund at the time of disability
45-21    retirement exceeds the sum of one-half of all basic annuity
45-22    payments made before the date the annuity was discontinued]; and
45-23                (2)  from the current service annuity reserve fund to
45-24    the subdivision accumulation fund an amount equal to the amount
45-25    [sum] transferred from the subdivision accumulation fund to the
45-26    current service annuity reserve fund at the time of retirement
 46-1    reduced by one percent for each year or part of a year during which
 46-2    disability annuity payments were made [under Subdivision (1) of
 46-3    this subsection to the employees saving fund].
 46-4          (b)  If a person whose [who is restored to] membership
 46-5    resumes under Section 844.308 was receiving a supplemental annuity
 46-6    based in whole or in part on [allocated] prior service credit, the
 46-7    retirement system shall restore to effect as the person's maximum
 46-8    [allocated] prior service credit an [the] amount equal to [by
 46-9    which] the person's maximum [allocated] prior service credit at the
46-10    time of disability retirement reduced by one percent for each year
46-11    or part of a year during which disability annuity payments were
46-12    made [exceeds the sum of all annuity payments, based on prior
46-13    service credits, that were made before discontinuance of the
46-14    supplemental annuity].
46-15          (c)  A person who resumes membership under Section 844.308 is
46-16    entitled to restoration of credited service in the number of months
46-17    accumulated and allowed before disability retirement.
46-18          (d)  The board of trustees may adopt rules for the
46-19    computation and transfer of amounts and credits for a membership
46-20    resumed under this subchapter.
46-21          SECTION 36.  Subsection (a), Section 844.310, Government
46-22    Code, is amended to read as follows:
46-23          (a)  The retirement system may require a disability retiree
46-24    [who is less than 60 years old] to submit annually to the
46-25    retirement system a report of earnings.  The retirement system
46-26    shall examine each report and may require at any time that a
 47-1    disability retiree undergo a medical examination by one or more
 47-2    physicians the retirement system designates, if the retiree has
 47-3    reported earnings that the board of trustees considers to show an
 47-4    ability to engage in gainful employment.
 47-5          SECTION 37.  Sections 844.401 and 844.402, Government Code,
 47-6    are amended to read as follows:
 47-7          Sec. 844.401.  RETURN OF ACCUMULATED CONTRIBUTIONS.
 47-8    (a)  Except as provided by Subsection (c), if a member dies before
 47-9    retirement, a lump-sum death benefit is payable from the employees
47-10    saving fund in the amount of:
47-11                (1)  the decedent's accumulated contributions [in the
47-12    member's individual account in the fund]; plus
47-13                (2)  interest computed on the decedent's accumulated
47-14    contributions on January 1 of the year of death from the beginning
47-15    of that [the] year [in which death occurs] through the end of the
47-16    month before the month in which death occurs [on the balance in the
47-17    member's individual account in the employees saving fund on January
47-18    1 of the year in which the member's death occurs].
47-19          (b)  The benefit provided by this section is payable to the
47-20    decedent's beneficiary or, if no surviving beneficiary exists, to
47-21    the decedent's spouse or, if no surviving spouse exists, to the
47-22    decedent's estate [unless the decedent has directed that the
47-23    benefit be paid otherwise].
47-24          (c)  A benefit is not payable under this section if an
47-25    annuity based on the same [decedent's] service with the subdivision
47-26    is payable under this subtitle.
 48-1          Sec. 844.402.  RETURN OF EXCESS CONTRIBUTIONS [OF SERVICE
 48-2    RETIREE].  (a)  After the death of a member or former member and
 48-3    after the final payment has been made under any service,
 48-4    disability, or survivor annuity [If a person who receives a
 48-5    standard service retirement annuity dies], a lump-sum death benefit
 48-6    is payable in an amount, if any, by which the amount in the
 48-7    person's [retiree's] individual account in the employees saving
 48-8    fund on which the annuity was computed [at the time of service
 48-9    retirement] exceeds the amount of annuity payments made [before the
48-10    retiree's death].
48-11          (b)  The benefit provided by this section is payable to the
48-12    person entitled to receive the final monthly payment of the annuity
48-13    [decedent's estate unless the decedent has directed that the
48-14    benefit be paid otherwise].  If that person is deceased, the
48-15    benefit provided by this section is payable to the person's
48-16    beneficiary or, if no surviving beneficiary exists, to the person's
48-17    spouse or, if no surviving spouse exists, to the person's estate.
48-18          (c)  The benefit provided by this section is payable from the
48-19    current service annuity reserve fund and the subdivision
48-20    accumulation fund in the ratio that the parts of the [service]
48-21    retirement annuity that were payable from the funds bear to the
48-22    entire benefit as determined on the effective date of retirement.
48-23          SECTION 38.  Subsections (a), (e), and (h), Section 844.407,
48-24    Government Code, are amended to read as follows:
48-25          (a)  In this section "eligible member" means:
48-26                (1)  a member who has four or more years of credited
 49-1    service with one or more subdivisions that [on September 1, 1999,]
 49-2    are participating in the retirement system and that are not
 49-3    exempted from the application of this subdivision [or that begin
 49-4    participation in the system after that date];
 49-5                (2)  a vested member described by Section 844.202 who
 49-6    is at least 60 years of age or has 20 or more years of credited
 49-7    service [with one or more subdivisions participating] in the
 49-8    retirement system; or
 49-9                (3)  a member who is receiving a service retirement
49-10    annuity [at least 60 years of age and has 12 or more years of
49-11    credited service with one or more subdivisions participating in the
49-12    system;]
49-13                [(4)  a member who is at least 60 years of age and has
49-14    10 or more years of Section 844.207 credited service; or]
49-15                [(5)  a member who is at least 60 years of age and has
49-16    eight or more years of Section 844.210 credited service].
49-17          (e)  [An unrevoked application for deferred service
49-18    retirement executed and filed by the member with the retirement
49-19    system before December 31, 1999, shall be considered a selection of
49-20    benefit and a designation of beneficiary under Subsection (c).]  If
49-21    no application for deferred service retirement was [is] on file
49-22    with the retirement system on December 31, 1999 [on that date], an
49-23    unrevoked form executed by the member and filed with the system
49-24    naming a beneficiary to whom the member's accumulated contributions
49-25    [deposits] are to be paid in the event of death before retirement
49-26    is [shall be] considered a selection of a beneficiary under
 50-1    Subsection (d).
 50-2          (h)  If no surviving spouse exists, the executor or
 50-3    administrator of the member's estate may elect[:]
 50-4                [(1)]  for an estate beneficiary to receive the
 50-5    optional annuity under Section 844.104(c)(7)[; or]
 50-6                [(2)  for the estate to receive a refund of the
 50-7    member's accumulated contributions under Section 844.401].
 50-8          SECTION 39.  Subsection (b), Section 844.408, Government
 50-9    Code, is amended to read as follows:
50-10          (b)  If a surviving spouse or the executor or administrator
50-11    of a deceased member's estate would be entitled to make an election
50-12    under Section 842.110 [842.110(f)] or 842.111 [842.111(c)], or if a
50-13    beneficiary or the executor or administrator of a deceased member's
50-14    estate would be entitled to make an election under Section 844.407
50-15    because of the death of the member, the heirs of the deceased
50-16    member may make that election if:
50-17                (1)  no surviving spouse exists, or, if Section 844.407
50-18    is applicable, no surviving beneficiary exists;
50-19                (2)  no petition for the appointment of a personal
50-20    representative of the member is pending or has been granted;
50-21                (3)  30 days have elapsed since the date of death of
50-22    the member;
50-23                (4)  the value of the entire assets of the member's
50-24    estate, excluding homestead and exempt property, does not exceed
50-25    $50,000; and
50-26                (5)  on file with the retirement system is a certified
 51-1    copy of a small estates affidavit that has been approved and filed
 51-2    in accordance with Section 137, Texas Probate Code, or an original
 51-3    affidavit described by Subsection (c).
 51-4          SECTION 40.  Section 844.501, Government Code, is amended by
 51-5    adding Subsection (c) to read as follows:
 51-6          (c)  The supplemental death benefit program constitutes
 51-7    "group term life insurance purchased for employees" as described by
 51-8    Section 79, Internal Revenue Code of 1986.
 51-9          SECTION 41.  Subsections (a), (b), and (c), Section 844.503,
51-10    Government Code, are amended to read as follows:
51-11          (a)  In this section, the terms "regular rate of pay," "hours
51-12    worked," "salary basis," and "regular salary" have meanings that
51-13    are consistent with the Fair Labor Standards Act of 1938 (29 U.S.C.
51-14    Section 201 et seq.).
51-15          (b)  If a person included in the coverage or extended
51-16    coverage of the supplemental death benefit program dies, a lump-sum
51-17    supplemental death benefit is payable from the supplemental death
51-18    benefits fund in an amount equal to the current annual compensation
51-19    [salary] of the member at the time of death.
51-20          (c)  The [(b) Except as provided by Subsection (c), the]
51-21    current annual compensation [salary] of a member who is not exempt
51-22    from the minimum wage and maximum hour requirements of the Fair
51-23    Labor Standards Act of 1938 (29 U.S.C. Section 201 et seq.) is
51-24    computed by converting to an annual basis the regular rate of pay
51-25    of the member for the most recent hour worked and proportionately
51-26    reducing that annual basis if the member is not employed in a
 52-1    full-time position.  The current annual compensation of a member
 52-2    who is exempt from those minimum wage and maximum hour requirements
 52-3    and who is paid on a salary basis is computed by converting to an
 52-4    annual basis the regular salary paid to the member for the most
 52-5    recent pay period of active employment [as the amount paid to the
 52-6    member for service on which contributions were made to the
 52-7    retirement system during the 12 months immediately preceding the
 52-8    month of death.  If a member did not receive compensation for
 52-9    service in each of the 12 months immediately preceding the month of
52-10    death, the member's current annual salary is computed by converting
52-11    to an annual basis the amount paid to the member on which
52-12    contributions were made to the system during the period of
52-13    employment within the 12-month period.  If a member did not receive
52-14    compensation for service in any of the 12 months immediately
52-15    preceding the month of death, or if the member was employed by a
52-16    subdivision that was not participating on a full-salary basis for
52-17    12 calendar months immediately preceding the month of death, the
52-18    member's current annual salary is computed by converting to an
52-19    annual basis the rate of compensation payable to the member during
52-20    the month of death].
52-21          [(c)  The current annual salary of a member included in the
52-22    extended coverage of the supplemental death benefit program is
52-23    computed in the manner provided by Subsection (b) but as if the
52-24    member had died during the first month of extended coverage.]
52-25          SECTION 42.  Section 844.504, Government Code, is amended to
52-26    read as follows:
 53-1          Sec. 844.504.  RETIREE SUPPLEMENTAL DEATH BENEFIT.  If a
 53-2    retiree dies who was receiving a retirement annuity based on [has
 53-3    credited] service for [that has not been canceled by a withdrawal
 53-4    of contributions and that results from employment with] a
 53-5    subdivision that has elected to provide, and continues to provide,
 53-6    postretirement supplemental death benefits, a lump-sum supplemental
 53-7    death benefit is payable from the fund in the amount of $5,000
 53-8    [$2,500].  If a retiree dies who was receiving retirement annuities
 53-9    based on service for [employed by] more than one subdivision that
53-10    has elected to provide, and continues to provide, postretirement
53-11    supplemental death benefits, the financing of the lump-sum benefit
53-12    will [shall] be prorated among those [the employing] subdivisions
53-13    [participating in the fund].  If a person dies while payment of a
53-14    retirement annuity to that person is suspended as a result of
53-15    Section 842.110, the supplemental death benefit under this section
53-16    will [shall] be paid if it would have been payable except for the
53-17    suspension, unless a supplemental death benefit is payable under
53-18    Section 844.503 as a result of the member's death.
53-19          SECTION 43.  Subsection (d), Section 844.703, Government
53-20    Code, is amended to read as follows:
53-21          (d)  The actuary annually shall determine the subdivision
53-22    normal contribution rate and the prior service contribution rate
53-23    for subdivisions adopting the plan provisions of this subchapter
53-24    from the most recent data available at the time of determination.
53-25    Before January 1 of each year, the board of trustees shall certify
53-26    the rates of each subdivision that has adopted the plan provisions
 54-1    of this subchapter.  If the combined rates of the subdivision's
 54-2    normal contributions and prior service contributions under this
 54-3    subchapter exceed the rate prescribed by Subsection (c), and if the
 54-4    governing body of the subdivision has not waived that maximum rate,
 54-5    the rate for prior service contributions must be reduced to the
 54-6    rate that equals the difference between the maximum rate prescribed
 54-7    by Subsection (c) and the normal contribution rate.  The governing
 54-8    body may elect to contribute at a rate that is greater than the sum
 54-9    of the subdivision's normal contribution rate and prior service
54-10    contribution rate as determined under Subsections (a) and (b).  An
54-11    elected rate may [an integer percent but] not exceed [more than]
54-12    the maximum rate prescribed by Subsection (c), unless the governing
54-13    body has elected to waive that maximum rate[, if that elected rate
54-14    exceeds the sum of the subdivision's normal contribution rate and
54-15    its prior service contribution rate as determined under Subsections
54-16    (a) and (b)].  An [This] elected rate remains in effect for each
54-17    subsequent calendar year until it is rescinded by the governing
54-18    body.  For years in which [or until] the sum of the rates
54-19    determined under Subsections (a) and (b) exceeds the elected rate,
54-20    [at which time] the governing body must contribute the sum of the
54-21    rates determined under Subsections (a) and (b).  For years in which
54-22    the elected rate exceeds the sum of the rates determined under
54-23    Subsections (a) and (b), the prior service contribution rate is
54-24    increased to the rate that equals the difference between the
54-25    elected rate and the normal contribution rate prescribed by
54-26    Subsection (a).
 55-1          SECTION 44.  Subsections (b) and (d), Section 844.704,
 55-2    Government Code, are amended to read as follows:
 55-3          (b)  On the adoption of the plan provisions of this
 55-4    subchapter, the governing body shall select a percentage for
 55-5    determining allocated prior service credits under Section 843.105[,
 55-6    notwithstanding the limitation in Section 843.105(c)].  The
 55-7    governing body shall select a percentage that is a multiple of five
 55-8    percent.  For a subdivision that began participation before January
 55-9    1, 1992, the percentage cannot be less than the percentage in
55-10    effect immediately before the adoption of the plan.  The governing
55-11    body may [thereafter] increase the percentage used in determining
55-12    allocated prior service credits under Section 843.105, to take
55-13    effect on the next January 1 after the date of the increase.  The
55-14    selection of or increase in the percentage used in determining
55-15    allocated prior service credits may not result in greater benefits
55-16    being provided for completed service than would be provided through
55-17    current service credits and multiple matching credits for service
55-18    that is performed in the future.
55-19          (d)  The governing body of a subdivision that has adopted or
55-20    is adopting the plan provisions of this subchapter may adopt or
55-21    authorize:
55-22                (1)  an [the alternative optional] increase in
55-23    retirement annuities under Section 844.209;
55-24                (2)  an [the optional] increase in retirement annuities
55-25    under Section 844.208;
55-26                (3)  the [optional authorization of the]
 56-1    reestablishment of credited service previously forfeited under
 56-2    Section 843.003;
 56-3                (4)  the [optional authorization of the] establishment
 56-4    of credited service for military service under Section 843.601(c);
 56-5                (5)  the reduction in the credited service requirement
 56-6    for military service under Section 843.601(g);
 56-7                (6)  the [optional authorization of the] establishment
 56-8    of premembership credited service for overage employees under
 56-9    Section 843.204;
56-10                (7) [(6)]  the [optional] benefit eligibility plan
56-11    described by Section 844.210 or 844.211; or
56-12                (8)  the partial lump-sum distribution on service
56-13    retirement under Section 844.009 [(7) the optional benefit
56-14    eligibility plan described by Section 844.211].
56-15          SECTION 45.  Section 845.306, Government Code, is amended to
56-16    read as follows:
56-17          Sec. 845.306.  EMPLOYEES SAVING FUND.  (a)  The retirement
56-18    system shall deposit in a member's individual account in the
56-19    employees saving fund:
56-20                (1)  the amount of contributions to the retirement
56-21    system deducted from the member's compensation;
56-22                (2)  interest allowed on money in the account in
56-23    accordance with this subtitle;
56-24                (3)  the portion of a deposit required by Section
56-25    843.003 to reinstate credited service previously terminated that
56-26    represents the amount withdrawn;
 57-1                (4)  the amount deposited in accordance with this
 57-2    subtitle [Section 843.301(b) or 843.402(b)] to establish credit for
 57-3    prior or current service for a person who became a member in
 57-4    accordance with Subchapter C, Chapter 842;
 57-5                (5)  the amount, if any, deposited by a member in
 57-6    accordance with Section 843.601(b) to establish current service
 57-7    credit for military service; and
 57-8                (6)  the amount deposited by a person to become a
 57-9    member in accordance with Section 842.103.
57-10          (b)  The retirement system shall establish and maintain a
57-11    separate member individual account for each subdivision with which
57-12    the member has credited service.
57-13          (c)  On December 31 of each year, the retirement system shall
57-14    credit to each member's individual account interest as allowed by
57-15    this subtitle on the amount of accumulated contributions [deposits]
57-16    credited to the member's account on January 1 of that year.
57-17          SECTION 46.  Subsection (a), Section 845.307, Government
57-18    Code, is amended to read as follows:
57-19          (a)  The retirement system shall deposit in the account of a
57-20    participating subdivision in the subdivision accumulation fund:
57-21                (1)  all benefit contributions made by the subdivision
57-22    to the system pursuant to Section 845.404(a)(2);
57-23                (2)  income allocated to the fund as provided by this
57-24    subtitle;
57-25                (3)  amounts deposited by the subdivision under Section
57-26    845.408;
 58-1                (4)  the withdrawal charge for reinstatement of
 58-2    credited service as provided by Section 843.003;
 58-3                (5)  the amount of matching contributions made by a
 58-4    subdivision in accordance with this subtitle [Section 843.301(c) or
 58-5    843.402(c)] to establish credit for prior or current service for a
 58-6    person who became a member in accordance with Subchapter C, Chapter
 58-7    842; and
 58-8                (6)  the amount deposited by a subdivision for a person
 58-9    to become a member in accordance with Section 842.103.
58-10          SECTION 47.  Subsection (f), Section 845.310, Government
58-11    Code, is amended to read as follows:
58-12          (f)  The retirement system shall deposit and hold in the
58-13    perpetual endowment account funds, gifts, and awards that the
58-14    grantors designate as perpetual endowment for the retirement system
58-15    [and money forfeited to the retirement system as provided by
58-16    Section 845.505].
58-17          SECTION 48.  Section 845.313, Government Code, is amended by
58-18    adding Subsection (c) to read as follows:
58-19          (c)  The retirement system shall make payments by electronic
58-20    funds transfer to annuitants whose first annuity payment under this
58-21    subtitle occurs after January 1, 2002, except that the system may
58-22    make payment by check to an annuitant if making the payment by
58-23    electronic funds transfer would be impractical for the system or if
58-24    the annuitant properly notifies the system that:
58-25                (1)  receiving the payment by electronic funds transfer
58-26    would be impractical for the person;
 59-1                (2)  receiving the payment by electronic funds transfer
 59-2    would be more costly to the person than receiving the payment by
 59-3    check; or
 59-4                (3)  the person is unable to establish a qualifying
 59-5    account at a financial institution to receive electronic funds
 59-6    transfers.
 59-7          SECTION 49.  Subsection (a), Section 845.315, Government
 59-8    Code, is amended to read as follows:
 59-9          (a)  On December 31 of each year and after the balance of the
59-10    investment expenses account has been transferred to the
59-11    distributable income account, the board of trustees shall transfer
59-12    from the distributable income account of the interest fund the
59-13    following amounts:
59-14                (1)  to the current service annuity reserve fund,
59-15    interest on the mean amount in the current service annuity reserve
59-16    fund during that year;
59-17                (2)  to the supplemental death benefits fund, interest
59-18    on the mean amount in the supplemental death benefits fund during
59-19    that year;
59-20                (3)  to the general reserves account of the endowment
59-21    fund, a dollar amount determined by the board of trustees as
59-22    necessary to provide adequate funding of the endowment fund,
59-23    including provisions for all special needs, all contingencies,
59-24    replenishment of the amount transferred during the current year to
59-25    the employees saving fund for interest to retiring or deceased
59-26    members plus the matching amount transferred to the subdivision
 60-1    accumulation fund, and funding of investment expenses and
 60-2    administrative costs for the following year;
 60-3                (4)  to the employees saving fund, current interest on
 60-4    the sum of the accumulated contributions [deposits] in the
 60-5    employees saving fund credited on January 1 of that year to all
 60-6    persons who are members on December 31 of that year before any
 60-7    transfers for retirement effective December 31 of that year are
 60-8    made; and
 60-9                (5)  to the subdivision accumulation fund, the
60-10    remaining balance of the distributable income account in the
60-11    interest fund after transfers provided for by Subdivisions (1),
60-12    (2), (3), and (4) have been made.
60-13          SECTION 50.  Subsections (a) and (b), Section 845.316,
60-14    Government Code, are amended to read as follows:
60-15          (a)  When a member retires, the retirement system shall
60-16    transfer:
60-17                (1)  from the employees saving fund to the current
60-18    service annuity reserve fund, the member's accumulated
60-19    contributions [deposits]; and
60-20                (2)  from the subdivision accumulation fund to the
60-21    current service annuity reserve fund, an amount equal to the
60-22    member's accumulated current service credit.
60-23          (b)  If the retiring member's accumulated contributions
60-24    [deposits] are the result of service for more than one
60-25    participating subdivision, the retirement system shall reduce the
60-26    amount credited to the account of each subdivision by the amount
 61-1    chargeable to the subdivision for the member.
 61-2          SECTION 51.  Section 845.407, Government Code, is amended to
 61-3    read as follows:
 61-4          Sec. 845.407.  PENALTY FOR LATE CONTRIBUTIONS.  (a)  Except
 61-5    as provided by Subsections (c) and (d), a [A] participating
 61-6    subdivision that fails to provide the information required by
 61-7    Section 845.403 or to pay all contributions required by this
 61-8    subchapter to be made and remitted to the retirement system not
 61-9    later than the 15th [before the 16th] day of the month in which
61-10    they become [are] due shall pay a penalty under this section.  The
61-11    penalty for a past-due monthly remission is equal to interest on
61-12    the past-due amounts for each day past due at a nominal interest
61-13    rate of 12 percent, plus a $500 administrative fee.  If the penalty
61-14    is not paid within three months after the date notice of the
61-15    penalty has been sent to the subdivision, the retirement system
61-16    shall deduct the penalty from the subdivision's account in the
61-17    subdivision accumulation fund.  The interest portion of the penalty
61-18    shall be deposited by the retirement system in the distributable
61-19    income account of the interest fund.  The administrative fee
61-20    portion of the penalty shall be deposited by the retirement system
61-21    in the expense fund.
61-22          (b)  Payments [Payment] and required reports are considered
61-23    to be made when received by the retirement system.
61-24          (c)  A penalty will not be assessed under this section for a
61-25    late payment or report made in a document sent to the correct
61-26    address:
 62-1                (1)  by first-class mail not later than the 10th day of
 62-2    the month in which the payment or report becomes due; or
 62-3                (2)  using a same-day or overnight delivery method,
 62-4    approved by the board of trustees, not later than the 14th day of
 62-5    the month in which the payment or report becomes due.
 62-6          (d)  If the retirement system does not receive a payment or
 62-7    report, a penalty will not be assessed under this section if the
 62-8    subdivision provides proof satisfactory to the system that the
 62-9    document containing the payment or report was sent in accordance
62-10    with Subsection (c).
62-11          SECTION 52.  Section 845.505, Government Code, is amended to
62-12    read as follows:
62-13          Sec. 845.505.  UNCLAIMED BENEFITS [CLOSING OF ACCOUNTS].
62-14    (a)  If a person's membership in the retirement system has
62-15    terminated and a valid application for a retirement [an] annuity or
62-16    [for] a refund of [the] accumulated contributions [of a former
62-17    member whose membership has terminated under Section 842.109(a)(1)]
62-18    has not been filed with the retirement system [before the end of
62-19    the year in which the member dies], the retirement system shall
62-20    mail the notice described by Subsection (b) [(d)] to the most
62-21    recent address of the former member [decedent's beneficiary] as
62-22    shown on system records and [or, if there is none, to the
62-23    decedent's most recent address as shown on system records.  If the
62-24    notice is returned undelivered, the retirement system will] make
62-25    reasonable efforts to locate any person entitled to apply for the
62-26    benefit [the beneficiary or personal representative.  If a valid
 63-1    application for an annuity or for a refund of the accumulated
 63-2    contributions of a deceased member is not filed with the retirement
 63-3    system before the expiration of 180 days after the date the notice
 63-4    is sent, the retirement system shall transfer the accumulated
 63-5    contributions in the decedent's individual account in the employees
 63-6    saving fund to the perpetual endowment account of the endowment
 63-7    fund and close the decedent's account].
 63-8          [(b)  On termination of a person's membership under Section
 63-9    842.109(a)(4), the retirement system shall mail the notice
63-10    described by Subsection (d) to the former member's most recent
63-11    address as shown on system records.  If the notice is returned
63-12    undelivered, the retirement system will make reasonable efforts to
63-13    locate the former member.  If a valid application for a refund of
63-14    the accumulated contributions of the former member is not filed
63-15    with the retirement system before the expiration of 180 days after
63-16    the date the notice is sent, the retirement system shall transfer
63-17    the accumulated contributions in the former member's individual
63-18    account in the employees saving fund to the perpetual endowment
63-19    account of the endowment fund and close the former member's
63-20    account.]
63-21          [(c)  If a valid application for retirement or for a refund
63-22    of the accumulated contributions of a member who is no longer in
63-23    covered employment is not filed with the retirement system before
63-24    the end of the later of the year in which the member reaches age
63-25    70-1/2 or the year in which the member terminates covered
63-26    employment, the retirement system shall mail the notice described
 64-1    by Subsection (d) to the member at the member's most recent address
 64-2    as shown on system records.  If the notice is returned undelivered,
 64-3    the retirement system will make reasonable efforts to locate the
 64-4    member.  If a valid application for retirement or for a refund of
 64-5    the accumulated contributions of the member is not filed with the
 64-6    retirement system before March 15 of the year in which distribution
 64-7    must be made under Section 841.010, the person's membership
 64-8    terminates as of March 31 of that year, and the retirement system
 64-9    shall transfer the accumulated contributions in the member's
64-10    individual account in the employees saving fund to the perpetual
64-11    endowment account of the endowment fund and close the member's
64-12    account].
64-13          (b) [(d)]  A notice under this section must include the name
64-14    of the [member or] former member, the name of each subdivision with
64-15    [from] which the former member has an individual account, a
64-16    statement that no additional interest is credited after a
64-17    membership has terminated [person received service credit], a
64-18    statement that a benefit is currently payable, a statement of the
64-19    procedure for obtaining payment of that benefit, and a statement
64-20    that a failure to file a valid application for benefits may cause
64-21    unclaimed benefits to be forfeited to the retirement system.
64-22          (c) [(e)]  If a person files with the retirement system a
64-23    valid application for an annuity [retirement] based on a membership
64-24    that terminated under Section 842.109(b) [an account that has been
64-25    closed under Subsection (a) or (c)], the retirement system shall
64-26    [restore the member's individual account in the employees saving
 65-1    fund and] pay an [a retirement] annuity computed as of the date on
 65-2    which the annuity would have been required to begin under this
 65-3    subtitle.
 65-4          (d)  An applicant who is the former member may select the
 65-5    standard service retirement annuity or an optional service
 65-6    retirement annuity under Section 844.104.  An applicant who is the
 65-7    surviving spouse of the former member may select an optional
 65-8    service retirement annuity under Section 844.104.  If the applicant
 65-9    is not the former member or surviving spouse, the annuity will be
65-10    computed as an annuity under Section 844.104(c)(7).  All annuity
65-11    payments that previously would have been paid if the annuity had
65-12    begun on the date required under this subtitle will be paid to the
65-13    applicant [person as a single sum].
65-14          (e) [(f)]  If a person files with the retirement system a
65-15    valid application for a refund of a former member's accumulated
65-16    contributions [based on an account that has been closed under
65-17    Subsection (a), (b), or (c)], the retirement system shall pay to
65-18    the applicant [from the perpetual endowment account of the
65-19    endowment fund] the amount of the former member's accumulated
65-20    contributions to which the applicant is entitled.
65-21          (f) [(g)]  If a person receiving an annuity fails to
65-22    negotiate more than five consecutive annuity payments, the
65-23    retirement system may send a notice to that person, stating that
65-24    unless the previous payments are negotiated not later than the 30th
65-25    day [within 30 days] after the date of the notice, payment of
65-26    benefits will be suspended [and the account closed until the person
 66-1    files a written request with the retirement system to resume
 66-2    payments].  After receipt of a valid application [written request
 66-3    under this subsection], the retirement system shall [will] resume
 66-4    making monthly payments.  All annuity payments that would have
 66-5    otherwise been paid if the annuity had not been suspended will be
 66-6    paid to the person or, if the person has died, to the decedent's
 66-7    beneficiary or, if no beneficiary exists, to the annuitant's estate
 66-8    [as a single sum].
 66-9          (g)  If a benefit becomes payable as the result of [(h) On]
66-10    the death of a person receiving an annuity, the retirement system
66-11    shall mail a notice similar to the notice described by Subsection
66-12    (b) to the most recent address of the decedent's beneficiary as
66-13    shown on system records and make reasonable efforts to locate each
66-14    [any] person to whom the benefit is payable [annuity payments
66-15    should continue to be made as a result of that death and to notify
66-16    that person of any information necessary in order to make the
66-17    continued payments].  After receipt of a valid application, the
66-18    retirement system shall pay the applicant the benefit to which the
66-19    applicant is entitled.  All annuity payments that would previously
66-20    have been paid if the annuity had begun on the date required under
66-21    this subtitle will be paid to the applicant.
66-22          (h)  A person entitled to a benefit under this section is
66-23    solely responsible for a tax or penalty relating to the
66-24    distribution of the benefit without regard to whether the person
66-25    received notice from the retirement system.
66-26          (i)  The board of trustees may adopt rules concerning the
 67-1    notice, distribution, management, transfer, and administration of
 67-2    unclaimed benefits and the authority of an applicant to act as
 67-3    trustee of an absent beneficiary in the selection of a payment
 67-4    option or receipt of an absent beneficiary's benefit under this
 67-5    section  [If the requested information has not been received by the
 67-6    retirement system before the expiration of one year after the
 67-7    annuitant's death, the retirement system shall suspend the annuity
 67-8    and close the account until all requested information has been
 67-9    received by the retirement system.  After the retirement system
67-10    receives the requested information, it will resume making monthly
67-11    payments of the annuity and pay in a single sum all payments that
67-12    were suspended.]
67-13          [(i)  The retirement system may apply a similar process as
67-14    provided by Subsection (a), (b), (c), (d), (e), or (f) to other
67-15    money it holds for payment, if the system first determines that no
67-16    claim for the money is likely to be filed].
67-17          SECTION 53.  (a)  Section 844.504, Government Code, as
67-18    amended by this Act, applies only to the death of a retiree
67-19    occurring after December 31, 2001.  Section 844.504, Government
67-20    Code, as it existed immediately before the enactment of this Act,
67-21    applies to deaths that occurred on or before that date.
67-22          (b)  Sections 844.005 and 844.503, Government Code, as
67-23    amended by this Act, apply only to benefits that become payable
67-24    after December 31, 2001.
67-25          (c)  Sections 844.401 and 844.402, Government Code, as
67-26    amended by this Act, apply only to beneficiary determinations made
 68-1    after December 31, 2001.
 68-2          SECTION 54.  The following provisions of the Government Code
 68-3    are repealed:
 68-4                (1)  Section 843.301;
 68-5                (2)  Subsection (i), Section 844.009;
 68-6                (3)  Subsections (d), (e), (f), (g), (h), (i), (j),
 68-7    (k), (l), (m), and (n), Section 844.104;
 68-8                (4)  Subsections (d), (e), (f), (g), (h), (i), (j),
 68-9    (k), (l), and (m), Section 844.305;
68-10                (5)  Section 844.403; and
68-11                (6)  Subsection (c), Section 844.502.
68-12          SECTION 55.  (a)  Except as provided by Subsection (b) of
68-13    this section, this Act takes effect December 31, 2001.
68-14          (b)  Sections 12 and 51 of this Act take effect September 1,
68-15    2001.