C.S.H.J.R. 54 78(R)    BILL ANALYSIS


C.S.H.J.R. 54
By: King
Pensions & Investments
Committee Report (Substituted)



BACKGROUND AND PURPOSE 
     
Texas statutory law and local ordinances created pension plans, but a
Depression-era ruling by the Texas Supreme Court, City of Dallas v.
Trammell, in 1937 subordinated Texans' right to that property, should the
Legislature or local government take actions to diminish or abolish
people's benefits. Dallas public employees' pensions were actually cut in
half and the Texas Supreme Court ruled Texas law allowed this action.
Currently, Texas law allows for pension plans for employees of local
governments.  However, there is no law that provides a guarantee that
retiring municipal employees will receive the pension benefits promised to
them under these pension plans.  Even if a public employee has fulfilled
all obligations required to collect full benefits at the time of his or
her retirement, he or she may not receive the full benefits earned through
a lifetime of public service. Under ERISA (Employee Retirement Income
Security Act), private-sector employees have no similar jeopardy.  This
issue dramatically impacts the retirement security of the men and women
who provide police and fire protection, as well as those who operate our
cities and other units of local government.  Texas's neighbors, Louisiana
and Oklahoma, have the toughest laws protecting public employee pension
funds. 

CSHJR 54 would guarantee an annuitant's  benefit, and provide for securing
the formula/multiplier for the active or inactive member for the years
worked should it need to be changed in the future. It also states that a
local government is only responsible for what they have previously agreed
to. 


RULEMAKING AUTHORITY

It is the committee's opinion that this resolution does not expressly
grant any additional rulemaking authority to a state officer, department,
agency, or institution.. 

ANALYSIS

SECTION 1:  Amends Section 67, Article XVI, Texas Constitution by adding
Subsection (h) which states that the retirement and death benefits
provided by a public retirement system which is not a statewide retirement
system or is a statewide system for voluntary emergency services personnel
may not reduce or impair benefits for service performed before the
effective date of this amendment. Annuitants are guaranteed their
formula/multiplier for the years they worked under that
formula/multiplier.  Future benefits to the persons not retired, however,
may be manipulated by the pension system if necessary to ensure the funds
soundness.  It also provides that a local government is responsible for
only what they have previously agreed to. 


FOR ELECTION
  
Election to be held November 4, 2003.



COMPARISON OF ORIGINAL TO SUBSTITUTE

The original bill guaranteed  pension and death benefits for  members of a
public pension fund that is not a statewide plan or is a statewide plan
for volunteer emergency services personnel by stating  that membership in
such a plan is a contractual  relationship.  It did not guarantee any
benefits for persons who were no longer members on its effective date.
The substitute changes this provision to guarantee only benefits already
received under formulas worked under and guarantee benefits for current
annuitants..  It gives the local government  the ability to alter benefits
in the future for protection of the pension fund.  A local government  is
not responsible for anything other than what has been previously agreed
to.