C.S.H.B. 1984 78(R) BILL ANALYSIS
C.S.H.B. 1984
By: Kuempel
Pensions & Investments
Committee Report (Substituted)
BACKGROUND AND PURPOSE
The Texas County and District Retirement System (TCDRS) is a voluntary,
statewide retirement system that administers service retirement,
disability retirement, and death benefits for employees and officers of
counties and other political subdivisions, excluding cities and school
districts. Each participating subdivision separately funds its benefits,
with both employers and employees making contributions to TCDRS, and the
system receives no state funding. As proposed, C.S.H.B. 1984 would
authorize members to reinstate forfeited service credit with or without
member contributions; authorize changes and funding for subdivision plans
in cases in which the plans are not enrolling new members, have no
depositing members, or have been taken over by another public employer;
authorize TCDRS to conform to federal law, including authorizing the
creation of a program to pay benefits that otherwise would be limited by
federal law; shorten funding periods for subdivisions in certain cases to
ensure financial stability; authorize retirees to be appointed to the
TCDRS board of trustees; make minor changes in the crediting of member
service and computation and payment of benefits; and make administrative
changes. These changes respond to the changing needs of more than 130,000
members and more than 23,000 annuitants of the system.
RULEMAKING AUTHORITY
Rulemaking authority is expressly granted to the TCDRS board of trustees
in SECTION 1 (Section 841.001(6), Government Code), SECTION 20 (proposed
Section 844.010(b), Government Code), and SECTION 35 (proposed Section
845.504, Government Code) of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1: Amends Section 841.001(6), Government Code, to allow the TCDRS
board of trustees by rule to increase the limit of compensation that is
subject to TCDRS deductions as the result of changes in federal law.
Amends Section 841.001(7), Government Code, to conform to the repeal of
Sections 843.106 and 843.107, Government Code, in SECTION 37 of the bill.
Amends Section 841.001(8) and deletes current Section 841.001(19),
Government Code, to allow participating subdivisions to determine who is a
temporary employee.
Amends Section 841.001(18), deletes current Section 841.001(20), and
renumbers current Section 841.001(21), Government Code, to consolidate
duplicative definitions that were enacted in error.
SECTION 2: Amends Sections 842.008(a), (f), and (i), Government Code, to
allow a subdivision that is not enrolling new members to make changes in
its retirement plan with TCDRS board approval and to allow employer
funding of the plan to be at any sufficient fractional percentage of
compensation.
SECTION 3: Amends Section 842.009(b) and (g), Government Code, to allow a
subdivision that has a reduction in payroll of at least 26 percent of its
employees to fund its retirement plan at any sufficient fractional
percentage of compensation.
SECTION 4: Amends Section 842.010(e), Government Code, to allow a
subdivision that has no contributing members to make changes in its
retirement plan with TCDRS board approval.
SECTION 5: Amends Section 842.101(b), Government Code, to delete an
obsolete provision that dated from the time before 1985 when there was a
30-day waiting period for TCDRS membership.
SECTION 6: Amends Section 842.108(b), Government Code, to conform to the
change in law made by Chapter 1240, Acts of the 77th Legislature, Regular
Session, 2001, relating to the proportionate retirement program for
statewide retirement systems and certain local retirement systems, and to
conform to the proposed change in SECTION 10 of this bill.
SECTION 7: Amends Section 842.112, Government Code, to allow TCDRS to
create a simplified method for correcting membership and service records
within Internal Revenue Service guidelines.
SECTION 8: Amends the heading to Section 843.003, Government Code, to
read "REESTABLISHING CREDITED SERVICE AND SERVICE CREDIT PREVIOUSLY
FORFEITED."
SECTION 9: Amends Section 843.003(b) and (d), Government Code, to remove
the requirement that a member work at least 24 months after resumption of
employment before taking advantage of a subdivision's offer to reestablish
forfeited service and credit.
SECTION 10: Amends Subchapter A, Chapter 843, Government Code, by adding
Section 843.0031 to authorize a member who has forfeited credit and
service to reestablish the service on application, authorize a member to
repay all or a portion of the withdrawn contributions, and provide that
amounts repaid under the section are not subject to employer matching
contributions.
SECTION 11: Amends Section 843.102, Government Code, to move a provision
from Section 843.107, Government Code, which is repealed in SECTION 37 of
the bill.
SECTION 12: Amends Section 843.103, Government Code, to clarify that
prior service credit must be applied for within five years of becoming a
member.
SECTION 13: Amends Section 843.201(d), Government Code, to reduce from 25
to 20 years the maximum funding period for a subdivision that contributes
at a fixed rate and wants to authorize certain kinds of prior service
credit.
SECTION 14: Amends Section 843.203(a), Government Code, to authorize any
public employer that assumes the functions of a participating subdivision
to assume, with TCDRS board approval, the obligations to TCDRS that the
former employer had incurred.
SECTION 15: Amends Section 843.204(b), Government Code, to reduce from 25
to 20 years the maximum funding period for a subdivision that contributes
at a fixed rate and wants to grant credit for persons who exceeded a
maximum age for membership that existed before September 1, 1987.
SECTION 16: Amends Section 843.401, Government Code, to clarify that
TCDRS credit is granted for each month for which contributions are made,
reported, and certified by a subdivision.
SECTION 17: Amends Section 843.403(c), Government Code, to reduce from 25
to 20 years the maximum funding period for a subdivision that contributes
at a fixed rate and wants to increase matching credits.
SECTION 18: Amends Section 843.601 (c), Government Code, to provide that
subdivisions wanting to allow military service credit may do so for
members who have at least the minimum service credit for retirement at age
60 (normally 8 or 10 years).
SECTION 19: Amends Section 844.009 (a), Government Code, to reduce from
25 to 20 years the maximum funding period for a subdivision that
contributes at a fixed rate and wants to allow partial lump-sum
distributions on retirement.
SECTION 20: Amends Subchapter A, Chapter 844, Government Code, by adding
Section 844.010 to the Government Code, to cancel beneficiary designations
of spouses on divorce in most circumstances, allow the TCDRS board by rule
to require spousal consent before payment of a benefit to a married
retiree or former member, and provide that a benefit is not subject to a
will or law of intestacy to the extent that the decedent has a different
beneficiary under TCDRS.
SECTION 21: Amends Section 844.104 (c), Government Code, to provide that
a service retirement annuity guaranteed for 60, 120, or 180 months becomes
payable to the deceased retiree's surviving spouse if no beneficiary
exists.
SECTION 22: Amends Section 844.208 (b), Government Code, to provide that
an optional cost-ofliving increase is applied to a standard service or
disability retirement annuity in certain circumstances in which the
annuity has been increased after retirement.
SECTION 23: Amends Section 844.305 (c), Government Code, to provide that
a disability retirement annuity guaranteed for 60, 120, or 180 months
becomes payable to the deceased retiree's surviving spouse if no
beneficiary exists.
SECTION 24: Amends Section 844.504, Government Code, to allow a retiree
lump-sum death benefit to be paid by each subdivision that has elected to
provide this benefit and for which the decedent worked.
SECTION 25: Amends Section 844.605 (a), (b), and (d), Government Code, to
reduce from 40 to 30 years and from 25 to 20 years the maximum funding
period in circumstances in which the retirement plan of a subdivision that
contributes at a fixed rate is not adequately funded.
SECTION 26: Amends Section 844.606 (b), (d), and (e), Government Code, to
reduce from 25 to 20 years the maximum funding period for a subdivision
that contributes at a fixed rate and wants to reduce the value of future
benefits because its retirement plan is not adequately funded.
SECTION 27: Amends Section 844.608 (b), Government Code, to reduce from
25 to 20 years the maximum funding period for a subdivision that
contributes at a fixed rate and needs to reduce member contribution rates
to adequately fund its retirement plan.
SECTION 28: Amends Section 844.704 (d) and (f), Government Code, to
change the due date for changes in a subdivision's retirement plan from
December 31 to December 15 of the year before the changes will take effect
and to conform to the change in military credit eligibility made in
SECTION 18 of the bill.
SECTION 29: Amends Section 845.003, Government Code, to allow a TCDRS
retiree to be appointed to the TCDRS board and to allow a sitting trustee
to remain eligible for the position on retirement.
SECTION 30: Amends Section 845.007 (a), Government Code, to retain the
requirement of four regular annual TCDRS board meetings but delete
specific months for the meetings.
SECTION 31: Amends Section 845.309 (b) and (e), Government Code, to make
a purely technical correction in the crediting of amounts in system
accounts.
SECTION 32: Amends Section 845.315 (a), Government Code, to make a purely
technical correction in the transfer of amounts in system accounts.
SECTION 33: Amends Section 845.402 (c), Government Code, to reduce from
25 to 20 years the maximum funding period for a subdivision that
contributes at a fixed rate and wants to reduce the rate of member
contributions.
SECTION 34: Amends Section 845.407, Government Code, to allow TCDRS to
extend the monthly subdivision reporting due date for good cause.
SECTION 35: Adds Section 845.503 to the Government Code, to authorize
TCDRS to reduce future payments of benefits to recover amounts overpaid or
otherwise paid in error and to adjust subdivision accounts to correct
errors. Makes provisions for recovery of the overpayment if no future
payments are due. Prohibits the retirement system from going back more
than three years to recover overpayments. This subsection does not apply
to an overpayment a reasonable person intentionally takes when not
entitled to the payment.
Adds Section 845.504 to the Government Code, to authorize the TCDRS board
by rule to create a program to pay benefits that are limited by federal
law absent the program.
SECTION 36: Provides that the change in law made to Section 844.605(d),
Government Code, in SECTION 25 of the bill applies only to contribution
rates adopted on or after the bill's effective date.
SECTION 37: Repeals Sections 843.005, 843.106, 843.107, and 843.601(g),
Government Code.
SECTION 38: Effective date.
EFFECTIVE DATE
This Act takes effect January 1, 2004.
COMPARISON OF ORIGINAL TO SUBSTITUTE
In SECTION 35 the substitute bill provides for cases in which lump sum
payments were made and there are no future payments due. It allows a
means of recovery for overpayments in that instance. It also adds language
that prohibits a pension system from going back more than 3 years to
recover overpayments except in the instance of fraud.