1-1     By:  Madla                                             S.B. No. 708
 1-2           (In the Senate - Filed February 14, 2001; February 15, 2001,
 1-3     read first time and referred to Committee on Intergovernmental
 1-4     Relations; March 1, 2001, reported favorably by the following vote:
 1-5     Yeas 7, Nays 0; March 1, 2001, sent to printer.)
 1-6                            A BILL TO BE ENTITLED
 1-7                                   AN ACT
 1-8     relating to the retirement system for firefighters and police
 1-9     officers in certain municipalities.
1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11           SECTION 1.  Subdivision (18), Section 1.02, Chapter 824, Acts
1-12     of the 73rd Legislature, Regular Session, 1993 (Article 6243o,
1-13     Vernon's Texas Civil Statutes), is amended to read as follows:
1-14                 (18)  "Years of service" means a member's total years
1-15     of service, including fractional years or full months of service,
1-16     computed as provided by Section 5.01 [5.01(e)] of this Act.
1-17           SECTION 2.  Article 1, Chapter 824, Acts of the 73rd
1-18     Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
1-19     Civil Statutes), is amended by adding Section 1.07 to read as
1-20     follows:
1-21           Sec. 1.07.  CONSTRUCTION OF ACT.  This Act does not provide
1-22     any benefit that is not specifically provided by this Act.
1-23           SECTION 3.  Subsection (e), Section 2.03, Chapter 824, Acts
1-24     of the 73rd Legislature, Regular Session, 1993 (Article 6243o,
1-25     Vernon's Texas Civil Statutes), is amended to read as follows:
1-26           (e)  On the date the board enters an order under Subsection
1-27     (d) of this section, the board shall call a special election to be
1-28     held not less than 20 nor more than 30 days after that date to fill
1-29     the vacancy for the unexpired term of the trustee who was removed.
1-30     The trustee who was removed is not eligible to run in the special
1-31     election but is eligible to run in all subsequent board elections
1-32     [for the category in which the trustee was removed].
1-33           SECTION 4.  Section 3.02, Chapter 824, Acts of the 73rd
1-34     Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
1-35     Civil Statutes), is amended by adding Subsection (e) to read as
1-36     follows:
1-37           (e)  A person's failure to give truthful information to the
1-38     board in an application or in testimony at a hearing may result in
1-39     a referral for criminal investigation.
1-40           SECTION 5.  Section 4.01, Chapter 824, Acts of the 73rd
1-41     Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
1-42     Civil Statutes), is amended to read as follows:
1-43           Sec. 4.01.  MEMBERSHIP.  (a)  A person is eligible to become
1-44     [becomes] a member of the fund as a condition of continued
1-45     employment two months after the person has received state
1-46     certification as a fire fighter or police officer, completed all
1-47     other requirements for membership in the fund, and:
1-48                 (1)  graduated from [if the person has served eight
1-49     months as a fire fighter or police officer or as a trainee in] a
1-50     fire fighter or police officer training academy of a municipality
1-51     to which this Act applies and passed the municipality's fire
1-52     fighter's or police officer's probationary exam; or
1-53                 (2)  otherwise satisfied the requirements for
1-54     employment as a fire fighter or police officer in a municipality to
1-55     which this Act applies.
1-56           (b)  A person may not become eligible for disability
1-57     retirement benefits unless the person has provided an authorization
1-58     for release of medical information for any medical records dated on
1-59     or after the date of initial application for employment or has
1-60     agreed in writing to provide that authorization when requested by
1-61     the board or, in the alternative if required by the board, has
1-62     submitted to a physical examination by a physician selected by the
1-63     board.
1-64           [(b)  Notwithstanding Subsection (a)  of this section, a
 2-1     person duly appointed and enrolled in a classified position in
 2-2     either the fire department or police department who was barred from
 2-3     entry in the fund solely because the person had attained the age of
 2-4     36 on the date that the person would have otherwise become eligible
 2-5     after October 15, 1990, to be a member of the fund and for that
 2-6     reason became a member of the Texas Municipal Retirement System and
 2-7     who is otherwise eligible for and complies with each requirement
 2-8     for membership in the fund shall become a member of the fund as a
 2-9     condition of continued employment.  The person must make
2-10     application to the fund not later than the 90th day after the date
2-11     on which the person receives notification of this provision.]
2-12           (c)  [A person who becomes a member of the fund under
2-13     Subsection (b) of this section shall be given service credit from
2-14     the date the person would have become eligible to be a member of
2-15     the fund if not for the age requirement and must pay into the fund,
2-16     in accordance with procedures established by the board, pension
2-17     contributions for all service credit allowed based on amounts that
2-18     would have been deducted if the person had been allowed to enter
2-19     the fund on that date.]
2-20           [(d)  A person who became a member of the Texas Municipal
2-21     Retirement System on or before October 15, 1990, may elect to
2-22     become a member of the fund on or before the 90th day after the
2-23     date the person receives notice of this provision.  If the person
2-24     does not elect to become a member during that period, the person
2-25     may not become a member of the fund and waives any claim against
2-26     the fund.  If the person elects to become a member of the fund, the
2-27     person must comply with each requirement for membership and must
2-28     pay into the fund, in accordance with procedures established by the
2-29     board, a sum of money equal to the amount of money that would have
2-30     been deducted from that person's salary during the period beginning
2-31     October 16, 1990, and ending on the date the person becomes a
2-32     member of the fund.  The person also may purchase service credit
2-33     for the period beginning on the date the person would have
2-34     otherwise become eligible to be a member of the fund if not for the
2-35     age prohibition, through October 15, 1990.  Service credit may be
2-36     obtained only in increments of full months, with the minimum being
2-37     one month.]
2-38           [(e)  A person who becomes a member of the fund under
2-39     Subsection (b) or (d) of this section must, as a condition of
2-40     employment, provide an authorization for release of medical
2-41     information for any medical records dated on or after the date of
2-42     initial application for employment when requested by the board or
2-43     in the alternative, as required by the board, must submit to a
2-44     physical examination by a physician selected by the board.]
2-45           [(f)]  A municipality to which this Act applies shall match
2-46     an amount equal to twice the amount of each payment a member makes
2-47     to the fund under this section.
2-48           (d) [(g)]  The drawing of compensation by an officer or
2-49     employee in the fire or police department for service in that
2-50     department does not of itself make that person a member of the
2-51     fund.
2-52           (e) [(h)]  The regularity of an appointment as a fire fighter
2-53     or police officer of a municipality to which this Act applies may
2-54     not be presumed from the serving of the full probationary period,
2-55     if any.  The service of the probationary period by an officer or
2-56     employee as a fire fighter or police officer of a municipality to
2-57     which this Act applies does not constitute the creation of a
2-58     position or office to which a proper appointment has been made for
2-59     purposes of this Act.
2-60           SECTION 6.  Subsection (a), Section 4.04, Chapter 824, Acts
2-61     of the 73rd Legislature, Regular Session, 1993 (Article 6243o,
2-62     Vernon's Texas Civil Statutes), is amended to read as follows:
2-63           (a)  There shall be deducted from the total salary of each
2-64     fire fighter and police officer in the employment of a municipality
2-65     to which this Act applies a percentage of the member's total salary
2-66     according to the following schedule:
2-67                 (1)  11.16 percent for full pay periods after September
2-68     30, 1993, but before October 1, 1994;
2-69                 (2)  11.32 percent for full pay periods after September
 3-1     30, 1994, but before October 1, 1995;
 3-2                 (3)  11.50 percent for full pay periods after September
 3-3     30, 1995, but before October 1, 1996;
 3-4                 (4)  11.66 percent for full pay periods after September
 3-5     30, 1996, but before October 1, 1997;
 3-6                 (5)  11.82 percent for full pay periods after September
 3-7     30, 1997, but before October 1, 1998;
 3-8                 (6)  12 percent for full pay periods after September
 3-9     30, 1998, but before October 1, 1999;
3-10                 (7)  12.16 percent for full pay periods after September
3-11     30, 1999, but before October 1, 2000; and
3-12                 (8)  12.32 percent for full pay periods after September
3-13     30, 2000[, but before October 1, 2001; and]
3-14                 [(9)  12.50 percent for full pay periods after
3-15     September 30, 2001].
3-16           SECTION 7.  Section 5.01, Chapter 824, Acts of the 73rd
3-17     Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
3-18     Civil Statutes), is amended by amending Subsection (e), adding a
3-19     new Subsection (f), amending and relettering existing Subsection
3-20     (f), and relettering the subsequent subsections accordingly to read
3-21     as follows:
3-22           (e)  The board shall compute the retirement annuity of a
3-23     member who retires after September 30, 1999, but before October 1,
3-24     2001, at the rate of 2 1/8 percent of the member's average total
3-25     salary for each of the first 20 years of service, plus four percent
3-26     of the member's average total salary for each of the next 10 years
3-27     of service, plus one percent of the member's average total salary
3-28     for each of the next five years of service, with fractional years
3-29     of service prorated based on full months served as a contributing
3-30     member.  In making the computation for a year, the year is
3-31     considered to begin on the first day a contribution is made.  A
3-32     retirement annuity under this subsection may not exceed, as of the
3-33     date of retirement, 87 1/2 percent of the member's average total
3-34     salary.
3-35           (f)  The board shall compute the retirement annuity of a
3-36     member who retires after September 30, 2001, at the rate of 2-1/4
3-37     percent of the member's average total salary for each of the first
3-38     20 years of service, plus 4-1/2 percent of the member's average
3-39     total salary for each of the next seven years of service, plus
3-40     three percent of the member's average total salary for each of the
3-41     next three years of service, plus one-half percent of the member's
3-42     average total salary for each of the next four years of service,
3-43     with fractional years of service prorated based on full months
3-44     served as a contributing member.  In making the computation for a
3-45     year, the year is considered to begin on the first day a
3-46     contribution is made.  A retirement annuity under this subsection
3-47     may not exceed, as of the date of retirement, 87-1/2 percent of the
3-48     member's average total salary.
3-49           (g)  A member may not receive an award from the fund for
3-50     service retirement until the member has at least 20 years of
3-51     service in the fire or police department and has also contributed
3-52     the required amount of money for at least 20 years.  In determining
3-53     the number of years of service in a department, the member shall be
3-54     given full credit for the period the member was an active member
3-55     plus the time the member was actively engaged in service with any
3-56     uniformed service in accordance with Section 4.03 of this Act and
3-57     for absences taken under the Family and Medical Leave Act of 1993
3-58     (29 U.S.C. Section 2601 et seq.), in accordance with Section 4.02
3-59     of this Act.  Disciplinary suspensions of 15 days or less may not
3-60     be subtracted from a member's service credit under this Act if the
3-61     member has paid into the fund, within 30 days after the later of
3-62     the termination date of each suspension or the exhaustion of any
3-63     appeal with respect to the suspension, a sum of money equal to the
3-64     amount of money that would have been deducted from that person's
3-65     salary during that period of suspension if it had not been for that
3-66     suspension.  A municipality to which this Act applies shall
3-67     double-match a payment made under this subsection.  Members of the
3-68     fund at the time of their retirement shall also receive service
3-69     credit for all unused sick leave accumulated by them under Chapter
 4-1     143, Local Government Code, but only to the extent the unused sick
 4-2     leave exceeds 90 days.  Service credit for unused sick leave shall
 4-3     be prorated based on each full month of sick leave.
 4-4           (h) [(g)]  All monthly pensions being paid by the fund to
 4-5     retirees who retired before October 1, 1989, are increased,
 4-6     effective with the first monthly payment due on or after October 1,
 4-7     1999. The amount of the increase depends on the fiscal year ending
 4-8     September 30 in which the retiree retired and is a percentage of
 4-9     the pension payment that would have been payable on October 1,
4-10     1999, except for this increase.  The amount of the percentage
4-11     increase is:
4-12           Municipality Fiscal Year            Percentage
4-13           of Retirement                       Increase
4-14           1988                                1.0%
4-15           1987                                2.0%
4-16           1986                                3.0%
4-17           1985                                4.0%
4-18           1984                                5.0%
4-19           1983                                6.0%
4-20           1982                                7.0%
4-21           1981                                8.0%
4-22           1980                                9.0%
4-23           1979 or earlier                     10.0%
4-24           SECTION 8.  Subsections (d) and (e), Section 5.015, Chapter
4-25     824, Acts of the 73rd Legislature, Regular Session, 1993 (Article
4-26     6243o, Vernon's Texas Civil Statutes), are amended to read as
4-27     follows:
4-28           (d)  The amount of a lump-sum payment to which a member
4-29     making a Back DROP election is entitled shall be computed in the
4-30     manner provided by this subsection.  The member's retirement
4-31     annuity shall be computed in the manner provided by Section 5.01
4-32     [5.01(c) or (d)] of this Act, [as applicable,] except that the
4-33     retirement date used in making that computation is the retirement
4-34     date computed as provided by this subsection.  The member's
4-35     retirement annuity as so computed shall be divided by 12 to compute
4-36     the member's monthly pension. The member's monthly pension
4-37     multiplied by the number of full months elected by the member under
4-38     Subsection (b)(1) of this section is the amount of the lump-sum
4-39     payment to which the member is entitled.  Solely for purposes of
4-40     computing the member's monthly pension under this subsection, the
4-41     member's retirement date is the member's Back DROP retirement date,
4-42     which is the member's actual retirement date less the amount of
4-43     time for:
4-44                 (1)  any service in excess of 34 [35] years of service;
4-45                 (2)  any service given for sick leave unused on the
4-46     date of actual retirement; and
4-47                 (3)  any service in excess of 20 years but not in
4-48     excess of the amount permitted under Subsection (b)(1) of this
4-49     section that the member elects for computing the amount of the
4-50     lump-sum payment.
4-51           (e)  For purposes of computing the monthly pension of a
4-52     member making a Back DROP election, the member's retirement annuity
4-53     shall be computed in the manner provided by Section 5.01 [5.01(c)
4-54     or (d)] of this Act, [as applicable,] except that the retirement
4-55     date used in making that computation is the member's actual
4-56     retirement date less the amount of time the member elects under
4-57     Subsection (b)(1) of this section.  The annuity may not exceed the
4-58     applicable limitations [limitation] provided by Section 5.01
4-59     [5.01(c) or (d)] of this Act[, as applicable].  The member's
4-60     retirement annuity shall be divided by 12 to compute the member's
4-61     monthly pension.
4-62           SECTION 9.  Subsection (b), Section 5.07, Chapter 824, Acts
4-63     of the 73rd Legislature, Regular Session, 1993 (Article 6243o,
4-64     Vernon's Texas Civil Statutes), is amended to read as follows:
4-65           (b)  If the retiree received income from other employment,
4-66     including self-employment, during the preceding year, the board may
4-67     reduce the retiree's disability retirement annuity by the amount of
4-68     $1 for each month for each $2 of income earned by the retiree from
4-69     the other employment during each month of the previous year, except
 5-1     that the disability retirement annuity may not be decreased below
 5-2     an amount based on 2-1/4 [two] percent of the retiree's average
 5-3     total salary computed at the time of retirement under Section 5.04
 5-4     of this Act for each year of service in the department.
 5-5           SECTION 10.  Subsection (a), Section 5.09, Chapter 824, Acts
 5-6     of the 73rd Legislature, Regular Session, 1993 (Article 6243o,
 5-7     Vernon's Texas Civil Statutes), is amended to read as follows:
 5-8           (a)  At or before its regular meeting in the month of March,
 5-9     the board annually shall review the Consumer's Price Index for All
5-10     Urban Consumers (CPI-U), U.S. City Average or the nearest
5-11     equivalent published by the United States Bureau of Labor
5-12     Statistics for the preceding calendar year.  If that index shows an
5-13     increase during the preceding calendar year in the cost of living
5-14     as compared with that index at the close of the previous year, the
5-15     board shall order an increase of all service, disability, and death
5-16     benefit retirement annuities by a percentage that varies by the
5-17     date of the member's service or disability retirement, or, in the
5-18     case of a member who died before retirement, the date on which the
5-19     member died.  If the member's service retirement, disability
5-20     retirement, or death before retirement occurred before August 30,
5-21     1971, the annuity shall be increased by a percentage equal to the
5-22     percentage increase in the cost of living index.  If the member's
5-23     service retirement, disability retirement, or death before
5-24     retirement occurred on or after August 30, 1971, but before October
5-25     1, 1991 [1989], the annuity shall be increased as follows:  if the
5-26     percentage increase in the cost of living index is eight percent or
5-27     less, the annuity shall be increased by a percentage equal to the
5-28     percentage increase, and if the percentage increase in the cost of
5-29     living index is more than eight percent, the annuity shall be
5-30     increased by eight percent plus a percentage equal to 75 percent of
5-31     the percentage increase that is more than eight percent [by a
5-32     percentage that is 87.5 percent of the percentage increase in the
5-33     cost of living index, for any year in which the cost of living
5-34     index increases by eight percent or less and by 75 percent of the
5-35     percentage increase in the cost of living index if the cost of
5-36     living index increases by more than eight percent].  If the
5-37     member's service retirement, disability retirement, or death before
5-38     retirement occurred on or after October 1, 1991 [1989], the annuity
5-39     shall be increased by a percentage equal to [that is] 75 percent of
5-40     the percentage increase in the cost of living index.  A percentage
5-41     increase in annuities shall be rounded to the nearest one-tenth
5-42     percentage point for a cost of living increase.
5-43           SECTION 11.  Section 5.11, Chapter 824, Acts of the 73rd
5-44     Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
5-45     Civil Statutes), is redesignated as Section 5.10 and amended to
5-46     read as follows:
5-47           Sec. 5.10 [5.11].  COORDINATION WITH FEDERAL LAW.  (a)  A
5-48     member or beneficiary of a member of the fund may not accrue a
5-49     service retirement annuity, disability retirement annuity, death
5-50     benefit, whether death occurs in the line of duty or otherwise, or
5-51     any other benefit under this Act in excess of the benefit limits
5-52     applicable to the fund under Section 415 of the code.  The board
5-53     shall reduce the amount of any benefit that exceeds those limits by
5-54     the amount of the excess.  If the total benefits under this fund
5-55     and the benefits and contributions to which any member is entitled
5-56     under any other qualified defined benefit plan [plans] maintained
5-57     by the municipality that employs the member would otherwise exceed
5-58     the applicable limits under Section 415 of the code, the benefits
5-59     the member would otherwise receive from the fund shall be reduced
5-60     to the extent necessary to enable the benefits to comply with
5-61     Section 415 of the code.
5-62           (b)  Any member or beneficiary who is entitled to receive any
5-63     distribution that is an eligible rollover distribution as defined
5-64     by Section 402(c)(4) of the code is entitled to have that
5-65     distribution transferred directly to another eligible retirement
5-66     plan of the member's or beneficiary's choice on providing direction
5-67     to the fund regarding that transfer in accordance with procedures
5-68     established by the board.
5-69           (c)  The total salary taken into account for any purpose for
 6-1     any member of the fund may not exceed $200,000 per year for an
 6-2     eligible participant or $150,000 per year for an ineligible
 6-3     participant.  These dollar limits shall be periodically adjusted in
 6-4     accordance with guidelines provided by the United States secretary
 6-5     of the treasury.  For purposes of this subsection, an eligible
 6-6     participant is any person who first became a member before 1996,
 6-7     and an ineligible participant is any member who is not an eligible
 6-8     participant.
 6-9           (d)  Accrued benefits under this Act become 100 percent
6-10     vested for a member on:
6-11                 (1)  the date the member has completed 20 years of
6-12     service;
6-13                 (2)  the earlier termination or partial termination of
6-14     the pension plan created by this Act, if it affects the member[, of
6-15     the fund]; or
6-16                 (3)  the complete discontinuance of contributions by
6-17     the municipality to the fund.
6-18           (e)  Amounts representing forfeited nonvested benefits of
6-19     terminated members may not be used to increase benefits payable
6-20     from the fund but may be used to reduce contributions for future
6-21     plan years.
6-22           (f)  Distribution of benefits must begin not later than April
6-23     1 of the year following the calendar year during which the member
6-24     becomes 70 1/2 years of age and must otherwise conform to Section
6-25     401(a)(9) of the code.
6-26           (g)  If the amount of any benefit is to be determined on the
6-27     basis of actuarial assumptions that are not otherwise specifically
6-28     set forth for that purpose in this Act, the actuarial assumptions
6-29     to be used are those earnings and mortality assumptions being used
6-30     on the date of the determination by the fund's actuary and approved
6-31     by the board.  The actuarial assumptions being used at any
6-32     particular time shall be attached as an addendum to a copy of this
6-33     Act and treated for all purposes as a part of this Act.  The
6-34     actuarial assumptions may be changed by the fund's actuary at any
6-35     time if approved by the board, but a change in actuarial
6-36     assumptions may not result in any decrease in benefits accrued as
6-37     of the effective date of the change.
6-38           (h)  This section applies to any benefit regardless of when
6-39     accrued.
6-40           (i)  The board may adopt rules to administer this section.  A
6-41     rule adopted by the board under this subsection is final and
6-42     binding.
6-43           (j)  To the extent permitted by law, the board may adjust the
6-44     benefits of retired members and beneficiaries by increasing any
6-45     retirement benefit that was reduced because of Section 415 of the
6-46     code.  If Section 415 of the code is amended to permit the payment
6-47     of amounts previously precluded under Section 415 of the code, the
6-48     board may adjust the benefits of retired members and beneficiaries,
6-49     including the restoration of benefits previously denied.  Benefits
6-50     paid under this subsection are not considered as extra compensation
6-51     earned after retirement but as the delayed payment of benefits
6-52     earned before retirement.
6-53           (k)  The board by rule shall implement this Act in a manner
6-54     that preserves the tax qualification of the fund under the code and
6-55     may revise any provision or program to the extent necessary to
6-56     retain tax qualification.     
6-57           (l)  In this section, "qualified plan" has the meaning
6-58     assigned by Section 8.02 of this Act.
6-59           SECTION 12.  Section 5.12, Chapter 824, Acts of the 73rd
6-60     Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
6-61     Civil Statutes), is redesignated as Section 5.11 and amended to
6-62     read as follows:
6-63           Sec. 5.11 [5.12].  13TH CHECK FOR RETIREES.  (a)  In any
6-64     fiscal year ending after 1996 for which the board determines that
6-65     the average annual investment yield on the market value of fund
6-66     investments for the preceding five fiscal years exceeded the annual
6-67     investment yield projected by the actuary for that preceding
6-68     five-fiscal-year period by at least 100 basis points, the board may
6-69     authorize the disbursement of a 13th pension check.
 7-1           (b)  The 13th pension check is paid to each retiree who is
 7-2     entitled to receive an annuity in the last month of the fiscal year
 7-3     preceding the fiscal year in which the check is disbursed and is in
 7-4     an amount equal to the amount of the annuity payment made in the
 7-5     last month of the preceding fiscal year, except the amount of any
 7-6     such check shall be prorated for any retiree who has been receiving
 7-7     an annuity for less than one year so that the amount of the check
 7-8     is one-twelfth of the check that would have been paid to the
 7-9     retiree receiving an annuity for a full year times the number of
7-10     full months an annuity has been paid.
7-11           (c)  Authorization of a 13th check for any year is subject to
7-12     the discretion of the board.  Authorization for one year does not
7-13     obligate the board to authorize a 13th check for any other year.
7-14     The 13th check shall be paid as the board directs.
7-15           (d)  In this section, "annual investment yield" means the
7-16     yield on the fund's investment portfolio for a particular year, as
7-17     a percentage of the portfolio, after reduction for costs of
7-18     investing the portfolio, but without reduction for the fund's
7-19     operating expenses.
7-20           SECTION 13.  Article 5, Chapter 824, Acts of the 73rd
7-21     Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
7-22     Civil Statutes), is amended by adding Section 5.12 to read as
7-23     follows:
7-24           Sec. 5.12.  14TH CHECK FOR RETIREES.  (a)  In this section,
7-25     "annual investment yield" has the meaning assigned by Section
7-26     5.11(d) of this Act.
7-27           (b)  In a fiscal year ending after September 1, 2000, for
7-28     which the board determines that the average annual investment yield
7-29     on the market value of fund investments for the preceding five
7-30     fiscal years exceeded the annual investment yield projected by the
7-31     actuary for that five-fiscal-year period by at least 300 basis
7-32     points, the board may authorize the disbursement of a 14th pension
7-33     check.
7-34           (c)  The 14th pension check is paid to each retiree who is
7-35     entitled to receive an annuity in the last month of the fiscal year
7-36     preceding the fiscal year in which the check is disbursed.  Except
7-37     as provided by Subsection (d) of this section, the check is in an
7-38     amount equal to the amount of the annuity payment made in the last
7-39     month of the preceding fiscal year.
7-40           (d)  For a retiree who has received an annuity for less than
7-41     one year, the amount of the 14th pension check is prorated so that
7-42     the amount of the check is one-twelfth of the check that would have
7-43     been paid to a retiree receiving an annuity for a full year times
7-44     the number of full months an annuity has been paid.
7-45           (e)  Authorization of a 14th check for any year is subject to
7-46     the discretion of the board.  Authorization for one year does not
7-47     obligate the board to authorize a 14th check for any other year.
7-48     The 14th check shall be paid as the board directs.
7-49           SECTION 14.  Section 6.02, Chapter 824, Acts of the 73rd
7-50     Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
7-51     Civil Statutes), is amended to read as follows:
7-52           Sec. 6.02.  DEATH BENEFIT ANNUITY FOR SURVIVING SPOUSES AND
7-53     CHILDREN.  (a)  Subject to Section 6.03 of this Act and the
7-54     provisions of this section [Subsections (h), (i), (j), (k), and (l)
7-55     of this section], if a member dies leaving a surviving spouse or at
7-56     least one dependent child, the surviving spouse and the children
7-57     are entitled to receive from the fund an aggregate death benefit
7-58     annuity, computed and payable from the date of the member's death.
7-59     The surviving spouse may elect the annuity[,] in an amount that is
7-60     equal to either [the greater of]:
7-61                 (1)  50 percent of the member's average total salary;
7-62     or
7-63                 (2)  the same percentage of the member's average total
7-64     salary that the member would have been entitled to receive as a
7-65     retirement annuity if the member could have retired on the date of
7-66     death.
7-67           (b)  The amount of a death benefit annuity computed under
7-68     Subsection (a)  of this section may not exceed the service
7-69     retirement annuity to which a member with the same average total
 8-1     salary and with 27 [26] years of service credit would be entitled.
 8-2           (c)  Subject to Section 6.08 of this Act and the provisions
 8-3     of this section [Subsections (h), (i), (j), (k), and (l) of this
 8-4     section], if a retiree dies leaving a surviving spouse or at least
 8-5     one dependent child, the surviving spouse and dependent children
 8-6     are entitled to receive from the fund an aggregate death benefit
 8-7     annuity, computed and payable from the date of the member's death,
 8-8     in an amount that is equal to the [same percentage of the retiree's
 8-9     average total salary that the retiree would have been entitled to
8-10     receive as a retirement annuity if the retiree had retired on the
8-11     date of death less the amount of time, if any, elected by the
8-12     retiree under Section 5.015(b)(1) of this Act.]
8-13           [(d)  The amount of a death benefit annuity computed under
8-14     Subsection (c) of this section may not exceed the] lesser of:
8-15                 (1)  the retirement annuity to which a member with the
8-16     same average total salary as the deceased retiree and 27 [26] years
8-17     of service credit would be entitled if the member retired on the
8-18     date of the deceased retiree's death; or
8-19                 (2)  the retirement annuity the retiree was receiving
8-20     at the time of the retiree's death.
8-21           (d) [(e)]  If, at the time a death benefit annuity becomes
8-22     payable under Subsection (a)  or (c) of this section, the deceased
8-23     leaves a surviving spouse and at least one dependent child, the
8-24     board shall award:
8-25                 (1)  one-half of the annuity to the surviving spouse;
8-26     and
8-27                 (2)  one-half of the annuity:
8-28                       (A)  to the dependent child, if there is only
8-29     one; or
8-30                       (B)  if there is more than one dependent child,
8-31     in equal shares to each child.
8-32           (e) [(f)]  If, at the time a death benefit annuity under
8-33     Subsection (a)  or (c) of this section becomes payable, the
8-34     deceased leaves a surviving spouse and no dependent child, the
8-35     board shall award the annuity to the surviving spouse.
8-36           (f) [(g)]  If, at the time a death benefit annuity under
8-37     Subsection (a)  or (c) of this section becomes payable, the
8-38     deceased leaves no surviving spouse and at least one dependent
8-39     child, the board shall award the annuity:
8-40                 (1)  to the dependent child, if there is only one; or
8-41                 (2)  if there is more than one child, in equal shares
8-42     to each child.
8-43           (g) [(h)]  A child who is born after the date of retirement
8-44     of the member is not entitled to a death benefit annuity under this
8-45     Act unless the retiree was married to the other parent of the child
8-46     on the date of retirement.  A surviving spouse of a retiree who was
8-47     not married to the retiree until after the retiree's retirement is
8-48     entitled to receive only the benefit, if any, provided under
8-49     Section 6.08 of this Act.
8-50           (h) [(i)]  If a member or retiree dies leaving a surviving
8-51     spouse and at least one dependent child, the death benefit annuity
8-52     payable to the surviving spouse shall be increased as of the day no
8-53     child is entitled to receive benefits to the amount the spouse
8-54     would have received had there been no dependent child.
8-55           (i) [(j)]  If a member or retiree dies leaving a surviving
8-56     spouse and at least one dependent child, the death benefit annuity
8-57     payable to the dependent children shall be increased as of the day
8-58     the surviving spouse dies to the amount the children would have
8-59     received had there been no surviving spouse.
8-60           (j) [(k)]  A child of the member who is so mentally or
8-61     physically disabled as to be incapable of being self-supporting to
8-62     any extent, if otherwise qualified and regardless of age, has the
8-63     rights of a child under 18 years of age, except that any death
8-64     benefit annuity paid under this subsection to any mentally or
8-65     physically disabled child may, at the discretion of the board,
8-66     [shall] be reduced to the extent of any state pension or aid,
8-67     including Medicaid, or any state-funded assistance received by the
8-68     child, regardless of whether the funds were made available to the
8-69     state by the federal government.  In no other instance under this
 9-1     Act is a child entitled to any benefit after becoming 18 years of
 9-2     age.
 9-3           (k) [(l)]  The board shall increase a death benefit annuity
 9-4     payable on October 1, 1999, to a dependent child or children who do
 9-5     not have a living parent on that date to the entire amount of the
 9-6     death benefit annuity that would have been awarded had the retiree
 9-7     or member died leaving no surviving spouse if a surviving spouse of
 9-8     the member or retiree is not entitled to receive benefits from the
 9-9     fund on October 1, 1999.
9-10           (l)  A former spouse of a deceased member or retiree who is
9-11     not the spouse of the member or retiree on the date of death of the
9-12     member or retiree is not entitled to a benefit under this section.
9-13           SECTION 15.  Subsection (c), Section 6.03, Chapter 824, Acts
9-14     of the 73rd Legislature, Regular Session, 1993 (Article 6243o,
9-15     Vernon's Texas Civil Statutes), is amended to read as follows:
9-16           (c)  Notwithstanding the formulas for computing the total
9-17     amounts of annuities otherwise provided by this Act, if a member is
9-18     killed in the line of duty, the member's surviving spouse and
9-19     dependent children are entitled to a death benefit annuity equal to
9-20     the total salary of the member at the time of death.  Rules
9-21     provided by this section relating to qualification and
9-22     disqualification for and apportionment of benefits apply to a death
9-23     benefit annuity computed under this subsection.  A death benefit
9-24     annuity computed under this subsection is divided in the manner
9-25     described by Section 6.02 [6.02(a)] of this Act and is subject to
9-26     the same cost-of-living adjustments that apply to pensions for
9-27     service retirement.
9-28           SECTION 16.  Section 6.04, Chapter 824, Acts of the 73rd
9-29     Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
9-30     Civil Statutes), is amended to read as follows:
9-31           Sec. 6.04.  REMARRIAGE; BENEFITS AFTER TERMINATION OF
9-32     MARRIAGE.  (a)  [If a surviving spouse remarries or a dependent
9-33     child marries before October 1, 1995, the right of a surviving
9-34     spouse or dependent child to annuity payments under this Act
9-35     terminates on the remarriage of the surviving spouse or on the
9-36     marriage of the child, as applicable, under either statutory law or
9-37     under common law as prescribed by Section 6.06 of this Act.]
9-38           [(b)]  The right of a surviving spouse or dependent child to
9-39     annuity payments under this Act is not affected by the surviving
9-40     spouse's remarriage or dependent child's marriage under either
9-41     statutory or common law if the marriage or remarriage takes place
9-42     on or after October 1, 1995.
9-43           (b) [(c)]  If after October 1, 1995, there is a termination
9-44     of the remarriage of a surviving spouse or of the marriage of a
9-45     dependent child, that person is entitled, on application, to 100
9-46     percent of the annuity that was in effect on the date of
9-47     termination of benefits.
9-48           (c) [(d)]  A surviving spouse or dependent child who is
9-49     unmarried but receiving reduced benefits because of a prior
9-50     marriage that caused the benefits to be terminated is entitled to
9-51     100 percent of the annuity that was in effect on the original date
9-52     of termination of benefits.
9-53           (d) [(e)]  The benefit provided under Subsections (b) and (c)
9-54     [and (d)] of this section shall be provided prospectively beginning
9-55     October 1, 1995, and the surviving spouse or dependent child is not
9-56     entitled to receive any benefits or increases in benefits relating
9-57     to any period before October 1, 1995.
9-58           SECTION 17.  Subsection (a), Section 6.09, Chapter 824, Acts
9-59     of the 73rd Legislature, Regular Session, 1993 (Article 6243o,
9-60     Vernon's Texas Civil Statutes), is amended to read as follows:
9-61           (a)  If a contributing member in good standing of the fire or
9-62     police department or a retiree dies before or after retirement and
9-63     leaves no surviving spouse or child but leaves surviving a father
9-64     and mother wholly dependent on that person for support, the
9-65     dependent father and mother are entitled to receive one-third of
9-66     the average total salary of the deceased member based on the same
9-67     number of years of the member's pay as is currently provided for
9-68     computations of retirement annuities under Section 5.01 [5.01(a)]
9-69     of this Act, the annuity to be equally divided between the father
 10-1    and mother as long as they are wholly dependent.  If there is only
 10-2    one dependent, either father or mother, the board shall grant the
 10-3    surviving dependent an annuity not to exceed one-fourth that
 10-4    average total salary as computed under this subsection.
 10-5          SECTION 18.  Section 6.12, Chapter 824, Acts of the 73rd
 10-6    Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
 10-7    Civil Statutes), is amended to read as follows:
 10-8          Sec. 6.12.  13TH AND 14TH CHECKS [CHECK] FOR BENEFICIARIES.
 10-9    (a)  For any year in which the board authorizes disbursement of a
10-10    13th or 14th pension check to retirees under Section 5.11 or 5.12
10-11    of this Act, the board shall also authorize disbursement of a 13th
10-12    or 14th check to each beneficiary entitled to receive an annuity in
10-13    the last month of the fiscal year preceding the fiscal year in
10-14    which the check is disbursed.
10-15          (b)  The amount of the 13th or 14th check is equal to the
10-16    amount of the annuity payment made in the last month of the
10-17    preceding fiscal year, except the amount of the check shall be
10-18    prorated for any beneficiary who has been receiving an annuity for
10-19    less than one year so that the amount of the check is one-twelfth
10-20    of the check that would have been paid to the beneficiary receiving
10-21    an annuity for a full year times the number of full months an
10-22    annuity has been paid.
10-23          SECTION 19.  Article 6, Chapter 824, Acts of the 73rd
10-24    Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
10-25    Civil Statutes), is amended by adding Section 6.14 to read as
10-26    follows:
10-27          Sec. 6.14.  LUMP-SUM PAYMENT ELECTION FOR SURVIVING SPOUSES.
10-28    (a)  A surviving spouse of a member who is entitled to receive a
10-29    death benefit under Section 6.02 of this Act may elect to receive a
10-30    portion of the benefit in a lump-sum payment under this section.
10-31          (b)  The lump-sum payment may be elected only by a surviving
10-32    spouse:
10-33                (1)  of a member who, on the date of death, is
10-34    eligible:
10-35                      (A)  for service retirement; and
10-36                      (B)  to elect a Backward Deferred Retirement
10-37    Option Plan; and
10-38                (2)  who elects to receive a death benefit under
10-39    Section 6.02(a)(2) of this Act.
10-40          (c)  If a member is killed in the line of duty and the
10-41    deceased member's surviving spouse is entitled to a death benefit
10-42    annuity under Section 6.03 of this Act, the surviving spouse may
10-43    not elect a lump-sum payment under this section.
10-44          (d)  The lump-sum payment is computed by dividing the annuity
10-45    determined under Subsection (e) by 12 and multiplying the result by
10-46    the number of months the surviving spouse elects under Subsection
10-47    (f) of this section.
10-48          (e)  The annuity used to compute the lump-sum payment is
10-49    determined in the manner provided by Section 5.01(f) of this Act
10-50    for retired members, using:
10-51                (1)  the deceased member's average total salary for all
10-52    months, excluding the number of months immediately preceding the
10-53    member's date of death that equal the number of months elected by
10-54    the surviving spouse under Subsection (f) of this section; and
10-55                (2)  the amount of service credit as determined by
10-56    Subsection (g) or (h) of this section.
10-57          (f)  The surviving spouse must elect the number of months
10-58    used in computing the lump-sum payment.  The number of months may
10-59    not exceed the lesser of:
10-60                (1)  the number of months of service credit in excess
10-61    of 20 years that the deceased member has on the date of death; or
10-62                (2)  36 months.
10-63          (g)  Except as provided by Subsection (h) of this section, in
10-64    determining the annuity under Subsection (e) of this section, the
10-65    deceased member's service credit is computed as provided by Section
10-66    5.01(g) of this Act, less:
10-67                (1)  the number of months elected by the surviving
10-68    spouse under Subsection (f) of this section; and
10-69                (2)  any service credit for unused sick leave to which
 11-1    the member would have been entitled.
 11-2          (h)  In determining the annuity under Subsection (e) of this
 11-3    section for a surviving spouse whose death benefit annuity is
 11-4    limited by Section 6.02(b) of this Act, the deceased member's
 11-5    service credit is 27 years, less the number of months elected by
 11-6    the surviving spouse under Subsection (f) of this section.
 11-7          (i)  If a surviving spouse elects to receive a lump-sum
 11-8    payment under this section, the total death benefit annuity payable
 11-9    to the surviving spouse under Section 6.02 of this Act is reduced
11-10    as provided by Subsection (j) of this section.  The lump-sum
11-11    election does not affect the amount of a death benefit annuity
11-12    payable to a dependent child of a deceased member under Section
11-13    6.02 of this Act.
11-14          (j)  The reduced annuity is determined in the manner provided
11-15    by Section 5.01(f) of this Act for retired members, using:
11-16                (1)  the deceased member's average total salary for all
11-17    months, excluding the number of months immediately preceding the
11-18    member's date of death that equal the number of months elected by
11-19    the surviving spouse under Subsection (f) of this section; and
11-20                (2)  the amount of service credit as determined by
11-21    Subsection (k) or (l) of this section.
11-22          (k)  Except as provided by Subsection (l) of this section, in
11-23    determining the reduced annuity under Subsection (j) of this
11-24    section, the deceased member's service credit is computed as
11-25    provided by Section 5.01(g) of this Act, less the number of months
11-26    elected by the surviving spouse under Subsection (f) of this
11-27    section.
11-28          (l)  In determining the reduced annuity under Subsection (j)
11-29    of this section for a surviving spouse whose death benefit annuity
11-30    is limited by Section 6.02(b) of this Act, the deceased member's
11-31    service credit is 27 years, less the number of months elected by
11-32    the surviving spouse under Subsection (f) of this section.
11-33          SECTION 20.  Subdivisions (1), (3), and (5), Section 8.02,
11-34    Chapter 824, Acts of the 73rd Legislature, Regular Session, 1993
11-35    (Article 6243o, Vernon's Texas Civil Statutes), are amended to read
11-36    as follows:
11-37                (1)  "Excess benefit participant" means any member
11-38    whose retirement benefits as determined on the basis of all
11-39    qualified plans, without regard to the limitations of Section
11-40    5.10(a) [5.11(a)] of this Act and comparable provisions of other
11-41    qualified plans, would exceed the maximum benefit under Section 415
11-42    of the code.
11-43                (3)  "Maximum benefit" means the retirement benefit a
11-44    member or the member's spouse, dependent child, or dependent parent
11-45    is entitled to receive from all qualified plans in any month after
11-46    applying Section 5.10(a) [5.11(a)] of this Act and any similar
11-47    provisions of any other qualified plans designed to conform to
11-48    Section 415 of the code.
11-49                (5)  "Unrestricted benefit" means the monthly
11-50    retirement benefit a member or the member's spouse, dependent
11-51    child, or dependent parent would have received under the terms of
11-52    all qualified plans except for the restrictions of Section 5.10(a)
11-53    [5.11(a)] of this Act and any similar provisions of any other
11-54    qualified plans designed to conform to Section 415 of the code.
11-55          SECTION 21.  Subsections (b) and (c), Section 8.03, Chapter
11-56    824, Acts of the 73rd Legislature, Regular Session, 1993 (Article
11-57    6243o, Vernon's Texas Civil Statutes), are amended to read as
11-58    follows:
11-59          (b)  In the case of the death of an excess benefit
11-60    participant whose spouse, dependent child, or dependent parent is
11-61    entitled to preretirement or postretirement death benefits under a
11-62    qualified plan, the spouse, dependent child, or dependent parent is
11-63    entitled to a monthly benefit under the excess benefit plan equal
11-64    to the benefit determined in accordance with Article 6 of this Act
11-65    without regard to the limitations under Section 5.10(a) [5.11(a)]
11-66    of this Act or Section 415 of the code, less the maximum benefit.
11-67          (c)  Any benefit to which any person is entitled under this
11-68    section shall be paid at the same time and in the same manner as
11-69    the benefit would have been paid from the fund if payment of the
 12-1    benefit from the fund had not been precluded by Section 5.10(a)
 12-2    [5.11(a)] of this Act.  An excess benefit participant or any
 12-3    beneficiary may not elect to defer the receipt of all or any part
 12-4    of a payment due under this article.
 12-5          SECTION 22.  Section 5.10, Chapter 824, Acts of the 73rd
 12-6    Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
 12-7    Civil Statutes), is repealed.
 12-8          SECTION 23.  This Act takes effect October 1, 2001.
 12-9                                 * * * * *