1-1     By:  Barrientos                                        S.B. No. 790
 1-2           (In the Senate - Filed February 20, 2001; February 21, 2001,
 1-3     read first time and referred to Committee on Intergovernmental
 1-4     Relations; April 9, 2001, reported adversely, with favorable
 1-5     Committee Substitute by the following vote:  Yeas 6, Nays 0;
 1-6     April 9, 2001, sent to printer.)
 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 790                  By:  Lindsay
 1-8                            A BILL TO BE ENTITLED
 1-9                                   AN ACT
1-10     relating to participation in and benefits and administration of
1-11     retirement systems for firefighters in certain municipalities.
1-12           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13           SECTION 1.  Article 2, Chapter 183, Acts of the 64th
1-14     Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
1-15     Civil Statutes), is amended by adding Section 2.12 to read as
1-16     follows:
1-17           Sec. 2.12.  GIFT, GRANT, OR BEQUEST.  The board of trustees
1-18     may accept for the use and benefit of the fund a gift, grant, or
1-19     bequest of money or securities from any source.
1-20           SECTION 2.  Subsection (b), Section 5.04, Chapter 183, Acts
1-21     of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
1-22     Vernon's Texas Civil Statutes), is amended to read as follows:
1-23           (b)  The three percent factor used in this section may be
1-24     changed to some other percent if the change:
1-25                 (1)  is first approved by the board's actuary;
1-26                 (2)  is approved by the board of trustees;
1-27                 (3)  applies only to:
1-28                       (A)  firefighters who are employed on an active,
1-29     full-time basis in the fire department at the time of the change;
1-30                       (B)  firefighters [and those] who begin service
1-31     with the fire department after the change becomes effective; and
1-32                       (C)  members who retire under Section 5.06 of
1-33     this Act after the change becomes effective; and
1-34                 (4)  does not reduce a member's benefit for service
1-35     credit accumulated before the date of the change.
1-36           SECTION 3.  Subsection (b), Section 5.06, Chapter 183, Acts
1-37     of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
1-38     Vernon's Texas Civil Statutes), is amended to read as follows:
1-39           (b)  The retirement benefit payable to a member on retirement
1-40     under this section is the service retirement benefit described by
1-41     Section 5.04 of this Act, computed on the basis of the formula in
1-42     effect at the time of the member's retirement under this Act [the
1-43     member terminated employment with the fire department].
1-44           SECTION 4.  Section 7.06, Chapter 183, Acts of the 64th
1-45     Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
1-46     Civil Statutes), is amended to read as follows:
1-47           Sec. 7.06.  PAYMENTS TO DEPENDENT PARENTS[; PAYMENT TO
1-48     ESTATE].  If a deceased member leaves no surviving spouse, no
1-49     surviving designated beneficiary, and no surviving children
1-50     entitled to receive a benefit under this Act but is survived by one
1-51     or more dependent parents, the dependent parent, or one of the
1-52     surviving parents designated by the board of trustees, is entitled
1-53     to receive a monthly benefit payment equal to the monthly amount
1-54     that would have been payable to a surviving spouse of the deceased.
1-55     All payments under this section cease on the death of the surviving
1-56     dependent parent.
1-57           SECTION 5.  Article 7, Chapter 183, Acts of the 64th
1-58     Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
1-59     Civil Statutes), is amended by adding Section 7.09 to read as
1-60     follows:
1-61           Sec. 7.09.  SURVIVING BENEFICIARY OF CERTAIN UNMARRIED
1-62     MEMBERS.  (a)  On the death of a retiree or of a member who is
1-63     eligible for retirement but has not retired, a benefit is payable
1-64     under this section if:
 2-1                 (1)  the retiree or member designated a beneficiary to
 2-2     receive the benefit payable under this section on a form filed with
 2-3     the fund; and
 2-4                 (2)  this Act does not otherwise provide a benefit
 2-5     payable to a surviving spouse or child of the member or retiree.
 2-6           (b)  The benefit payable under this section is an immediate
 2-7     monthly benefit from the fund of 75 percent of the amount of the:
 2-8                 (1)  retirement benefit that was being paid to the
 2-9     retiree; or
2-10                 (2)  normal service retirement benefit that the member
2-11     would have received if the member had retired on the date of death.
2-12           (c)  If the designated beneficiary of a retiree or member is
2-13     10 or more years younger than the retiree or member at the time of
2-14     the retiree's or member's death, the amount of the benefit payable
2-15     under Subsection (b) of this section shall be reduced to the
2-16     actuarial equivalent of the benefit that would have been payable if
2-17     the beneficiary and the retiree or member were the same age.
2-18           SECTION 6.  Section 8.02, Chapter 183, Acts of the 64th
2-19     Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
2-20     Civil Statutes), is amended to read as follows:
2-21           Sec. 8.02.  ELECTION TO PARTICIPATE IN DROP.  The election to
2-22     participate in the DROP shall be made in accordance with procedures
2-23     adopted by the board of trustees.  The election may be made at any
2-24     time on or after the date the member becomes eligible for normal
2-25     service retirement under Section 5.01 of this Act or early
2-26     retirement under Section 5.05 of this Act and becomes effective on
2-27     the first day of the first month after the date of the election.
2-28     At the same time that a member makes an election to participate in
2-29     the DROP, the member must agree in writing to terminate service
2-30     with the fire department on a date not later than the seventh
2-31     [fifth] anniversary of the effective date of the election under
2-32     this section.  An agreement to terminate service is binding on the
2-33     member and the fire department, except that the member may
2-34     terminate active service at any time before the date selected.  An
2-35     election to participate in the DROP has no effect on either the
2-36     municipality's or the member's contributions under Section 10.01 of
2-37     this Act.
2-38           SECTION 7.  Subsections (c) and (d), Section 8.06, Chapter
2-39     183, Acts of the 64th Legislature, Regular Session, 1975 (Article
2-40     6243e.1, Vernon's Texas Civil Statutes), are amended to read as
2-41     follows:
2-42           (c)  If a member elects to participate in the DROP under this
2-43     section:
2-44                 (1)  the board of trustees shall cause to be credited
2-45     to a DROP account maintained within the fund for the benefit of
2-46     that person an amount equal to the credits that the member's DROP
2-47     account would have received, including interest, if the member had
2-48     established the DROP account after becoming eligible for service
2-49     retirement, but not more than seven [five] years before the
2-50     effective date of the person's retirement;
2-51                 (2)  the date used in computations under Subdivision
2-52     (1) of this section as if the member had established the DROP
2-53     account on that date is the effective date of the member's election
2-54     to participate in the DROP;
2-55                 (3)  the member will receive payments from the member's
2-56     DROP account as the member may select under Section 8.05 of this
2-57     Act; and
2-58                 (4)  the member's DROP account shall be credited with
2-59     interest as provided by Section 8.05 of this Act.
2-60           (d)  If a member who did not establish a DROP account under
2-61     this section but was eligible to do so dies before retirement, the
2-62     surviving spouse, if any, of that member may elect to participate
2-63     in the DROP if the surviving spouse has not received any benefit
2-64     payments under Section 7.01 of this Act.  If a surviving spouse
2-65     makes an election under this subsection:
2-66                 (1)  the board of trustees shall cause to be paid to
2-67     the surviving spouse in a lump sum, as soon as administratively
2-68     possible after the fund receives notice of the election, an amount
2-69     equal to the credits that the member's DROP account would have
 3-1     received, including interest, if the member had established the
 3-2     DROP account after becoming eligible for service retirement, but
 3-3     not more than seven [five] years before the date of the member's
 3-4     death; and
 3-5                 (2)  the amount of the benefit payable to the surviving
 3-6     spouse under Section 7.03 of this Act is 75 percent of the benefit
 3-7     the member would have been eligible to receive if the member had
 3-8     established the DROP account on becoming eligible for service
 3-9     retirement, but not more than seven [five] years before the date of
3-10     the member's death.
3-11           SECTION 8.  Section 9.03, Chapter 183, Acts of the 64th
3-12     Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
3-13     Civil Statutes), is amended to read as follows:
3-14           Sec. 9.03.  LIMITATION ON PAYMENT OF BENEFITS.  (a)  If the
3-15     [The] amount of [the payment of] any benefit payment under this Act
3-16     [that] would exceed the limitations provided by Section 415 of the
3-17     Internal Revenue Code of 1986, and the regulations adopted under
3-18     that [set forth in this] section, the board of trustees shall
3-19     reduce the amount of the benefit as needed to comply [be reduced in
3-20     accordance] with that [this] section.
3-21           (b)  [In this section:]
3-22                 [(1)  "Compensation" has the meaning provided by
3-23     Section 415 of the Internal Revenue Code  and the regulations
3-24     adopted under that section, instead of the meaning provided by
3-25     Section 1.02 of this Act, but as to any person who begins
3-26     participation on or after December 31, 1995, "compensation"
3-27     excludes any payments received in excess of $150,000 in a calendar
3-28     year, indexed pursuant to Section 401(a)(17) of the Internal
3-29     Revenue Code.]
3-30                 [(2)  "Highest average annual compensation" means the
3-31     average compensation for the three consecutive calendar years of
3-32     service with the fire department that produces the highest average.]
3-33           [(d)  If payment of a benefit begins before a member attains
3-34     age 55, the annual benefit may not exceed the greater of:]
3-35                 [(1)  the actuarial equivalent of a $75,000 annual
3-36     benefit beginning at age 55;]
3-37                 [(2)  the actuarial equivalent of a $90,000 annual
3-38     benefit beginning at age 62; or]
3-39                 [(3)  $50,000.]
3-40           [(e)  If a member does not have at least 15 years of service
3-41     credit as a firefighter with the fire department, the $50,000
3-42     limitation provided by Subsection (d) of this section is
3-43     inapplicable.]
3-44           [(f)  If payment of a benefit begins when or after a member
3-45     attains age 55 but before the member attains age 62, the annual
3-46     benefit may not exceed the greater of:]
3-47                 [(1)  the actuarial equivalent of a $90,000 annual
3-48     benefit beginning at age 62; or]
3-49                 [(2)  $75,000.]
3-50           [(g)  If payment of a benefit begins when or after a member
3-51     attains age 62 but before the member attains age 65, the annual
3-52     benefit may not exceed $90,000.]
3-53           [(h)  If payment of a benefit begins when or after a member
3-54     attains age 65, the annual benefit may not exceed the actuarial
3-55     equivalent of a $90,000 annual benefit beginning at age 65.]
3-56           [(i)  The $90,000 and $50,000 limitations provided by this
3-57     section are automatically adjusted to the amounts determined by the
3-58     secretary of the treasury in effect at the time of the member's
3-59     retirement.]
3-60           [(j)  To determine the actuarial equivalent of a benefit
3-61     under this section, the interest rate assumption is the rate not to
3-62     exceed five percent that is adopted by the board of trustees in the
3-63     proper administration of the fund.]
3-64           [(k)]  A person's vested accrued benefit in effect on
3-65     September 1, 1995, may not be reduced under this section.
3-66           SECTION 9.  Subsection (b), Section 9.04, Chapter 183, Acts
3-67     of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
3-68     Vernon's Texas Civil Statutes), is amended to read as follows:
3-69           (b)  If an adjustment under Subsection (a) of this section
 4-1     would exceed [one-half of] one percent of a person's benefit, the
 4-2     portion of the adjustment that exceeds [one-half of] one percent of
 4-3     the benefit may not be made under this section unless the board's
 4-4     actuary has advised the board of trustees that the adjustment would
 4-5     not impair the financial stability of the fund and the adjustment
 4-6     has been approved by the affirmative vote of a majority of the
 4-7     board of trustees.  If an adjustment under Subsection (a) of this
 4-8     section would be [one-half of] one percent or less of a person's
 4-9     benefit, the adjustment may not be made under this section unless
4-10     the board's actuary has advised the board of trustees that the
4-11     adjustment would not impair the financial stability of the fund.
4-12           SECTION 10.  Article 9, Chapter 183, Acts of the 64th
4-13     Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
4-14     Civil Statutes), is amended by adding Section 9.10 to read as
4-15     follows:
4-16           Sec. 9.10.  OPTIONAL RETIREMENT ANNUITY.  (a)  An optional
4-17     retirement annuity is an annuity that is certified by the board's
4-18     actuary to be the actuarial equivalent of the annuity provided
4-19     under Section 5.04 of this Act and the survivor's benefits provided
4-20     under Article 7 of this Act.  An optional retirement annuity is
4-21     payable throughout the life of the retiree.
4-22           (b)  Instead of the annuity payable under Section 5.04 of
4-23     this Act, a member who retires may elect to receive an optional
4-24     retirement annuity approved by the board of trustees under this
4-25     section.
4-26           (c)  The survivor's benefits provided under Article 7 of this
4-27     Act are not payable on the death of a retiree who elects an
4-28     optional retirement annuity under this section.
4-29           (d)  The board of trustees by rule may provide that:
4-30                 (1)  an optional retirement annuity is payable after a
4-31     member's death throughout the life of a person designated by the
4-32     member; or
4-33                 (2)  if a retiree dies before a fixed number of monthly
4-34     annuity payments are made, the remaining number of payments are
4-35     payable to the retiree's designated beneficiary or, if a designated
4-36     beneficiary does not exist, to the retiree's estate.
4-37           (e)  To elect an optional retirement annuity, a member must
4-38     make the election and designate a beneficiary on a form prescribed
4-39     by the board of trustees.  The member must file the form with the
4-40     board on or before the effective date of the member's retirement.
4-41           (f)  Except as provided by Subsections (g), (h), and (i) of
4-42     this section, if a member elects an optional retirement annuity
4-43     that, on the member's death, pays to the member's spouse an amount
4-44     that is less than 75 percent of the annuity that is payable during
4-45     the joint lives of the member and the member's spouse, the spouse
4-46     must consent to the election.  The spouse's consent must be in
4-47     writing and witnessed by an officer or employee of the fund or
4-48     acknowledged by a notary public.
4-49           (g)  If a member's spouse has been adjudicated incompetent,
4-50     the consent required under Subsection (f) of this section may be
4-51     given by the spouse's guardian.
4-52           (h)  If a physician determines that a member's spouse is not
4-53     mentally capable of managing the spouse's affairs, the consent
4-54     required under Subsection (f) of this section may be given by the
4-55     member if the member would be qualified to serve as a guardian of
4-56     the spouse and the board of trustees determines that a guardianship
4-57     of the estate is not necessary.
4-58           (i)  Spousal consent under Subsection (f) of this section is
4-59     not required if the board of trustees determines that:
4-60                 (1)  a spouse does not exist;
4-61                 (2)  the spouse cannot be located;
4-62                 (3)  the first anniversary of the marriage will not
4-63     occur before the date the annuity first becomes payable; or
4-64                 (4)  a former spouse is entitled to receive a portion
4-65     of the member's optional retirement benefit under a qualified
4-66     domestic relations order.
4-67           SECTION 11.  This Act takes effect September 1, 2001.
4-68                                  * * * * *