78R2999 RCJ-F

By:  Hamric                                                       H.B. No. 1388


A BILL TO BE ENTITLED
AN ACT
relating to a firefighters' relief and retirement fund in certain municipalities. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Section 1, Article 6243e.2(1), Revised Statutes, is amended by renumbering Subdivision (1) as Subdivision (1-a) and amending Subdivisions (1) and (7) to read as follows: (1) "Active service" means a status of current employment as a firefighter by the fire department of a municipality described by Section 2(a) of this article. (1-a) "Average monthly salary" means one thirty-sixth of the member's salary as a firefighter for the member's highest 78 biweekly pay periods during the member's participation in the fund or, if the member has participated in the fund for less than three years, the total salary paid to the member for the periods the member participated in the fund divided by the number of months the member has participated in the fund. If a member is not paid on the basis of biweekly pay periods, "average monthly salary" is determined on the basis of the number of pay periods under the payroll practices of the municipality sponsoring the fund that most closely correspond to 78 biweekly pay periods. (7) "DROP account" means the notional account established to reflect the credits, contributions, and earnings [or losses] of a member who has made a DROP election in accordance with Section 5 of this article. SECTION 2. Section 2(b), Article 6243e.2(1), Revised Statutes, is amended to read as follows: (b) The board of trustees of the fund shall be known as the "(name of municipality) Firefighters' Relief and Retirement Fund Board of Trustees" and the fund shall be known as the "(name of municipality) Firefighters' Relief and Retirement Fund." ["Board of Firefighters' Relief and Retirement Fund Trustees of __________, Texas."] The board consists of 10 trustees, including: (1) the mayor or an appointed representative of the mayor; (2) the treasurer of the municipality or, if there is not a treasurer, the secretary, clerk, or other person who by law, charter provision, or ordinance performs the duty of treasurer of the municipality; (3) five firefighters who are members of the fund; (4) one person who is a retired firefighter and a member of the fund with at least 20 years of participation; and (5) two persons, each of whom is a registered voter of the municipality, has been a resident of the municipality for at least three years preceding the date of initial appointment, and is not a municipal officer or employee. SECTION 3. Section 3, Article 6243e.2(1), Revised Statutes, is amended by adding Subsections (j)-(p) to read as follows: (j) The board may pay with fund assets, and distribute to survivors of deceased firefighters, commemorative flags and similar memorabilia, having a value of $75 or less, to honor service rendered by the firefighters. (k) The board may accept gifts and donations to the fund. The gifts and donations shall be added to the fund for the use of the fund. (l) The trustees, executive director, and employees of the fund are fully protected and free of liability for any action taken or omission made or any action or omission suffered by them in good faith in the performance of their duties for the fund. (m) A gathering of any number of trustees to investigate, research, or review prospective or current investments, without formal action by the trustees, is not a deliberation or meeting for purposes of Chapter 551, Government Code, and is not required to be open to the public. (n) The board, or a committee of the board sitting in review of medical or psychiatric records, may consider the medical or psychiatric records of multiple individual applicants for disability benefits within a single closed session under Section 551.078, Government Code, but any action on an application shall be taken on an individual basis. (o) The board may delegate all or part of its duties concerning benefits provided under this article to a pension benefits committee composed of five trustees appointed by the chair of the board. All actions of the committee concerning benefits provided under this article are final, unless otherwise provided by the policies and procedures approved by the board. The chair of the board may appoint a trustee as an alternate member of the committee. (p) The board may delegate all or part of its duties under this article concerning personnel matters, the making of fund policies and procedures, and the conduct of other administrative matters, to a personnel and procedures committee composed of five trustees appointed by the chair of the board. All actions of the committee concerning these matters are final, unless otherwise provided by the policies and procedures approved by the board or the committee. The chair of the board may appoint a trustee as an alternate member of the committee. SECTION 4. Section 4(d), Article 6243e.2(1), Revised Statutes, is amended to read as follows: (d) The total monthly benefit payable to a retired or disabled member, other than a deferred retiree or active member who has elected the DROP under Section 5(b) of this article, or payable to an eligible survivor of a deceased member as provided by Section 7(a) or 7(b) of this article, shall be increased by the following amounts: by $100, beginning with the monthly payment made for July 1999; by $25, beginning with the monthly payment made for July, 2000; and by $25, beginning with the monthly payment made for July 2001. These additional benefits may not be increased under Section 11(c) of this article. SECTION 5. Sections 5(a), (c), (d), (e), (g), (i), (j), (k), and (m), Article 6243e.2(1), Revised Statutes, are amended to read as follows: (a) A member who is eligible to receive a service pension under Section 4 of this article and who remains in active service may elect to participate in the deferred retirement option plan provided by this section. On subsequently terminating active service, a member who elected the DROP may apply for a monthly service pension under Section 4 of this article, except that the effective date of the member's election to participate in the DROP will be considered the member's retirement date for determining the amount of the member's monthly service pension. The member may also apply for any DROP benefit provided under this section on terminating active service. An election to participate in the DROP, once approved by the board, is irrevocable. A DROP participant's monthly benefit at retirement is increased by two percent of the amount of the member's original benefit for every full year of participation in the DROP by the member. This increase does not apply to benefits payable under Subsection (l) of this section. This increase is applied to the member's benefit at retirement and is not added to the member's DROP account. The total increase under this subsection may not exceed 20 percent for 10 years of participation in the DROP by the member. (c) After [Beginning in the month] a member's DROP election becomes effective, an amount equal to the monthly service pension the member would have received under Section 4 of this article and Section 11(c) of this article, if applicable, had the member terminated active service on the effective date of the member's DROP election shall be credited to a DROP account maintained for the member. That monthly credit to the member's DROP account shall continue until the earlier of the date the member terminates active service or the 10th anniversary of the effective date of the member's DROP election. (d) A member's DROP account shall be credited with earnings [or losses] at an annual rate equal to the average annual return earned by the fund over the five years preceding, but not including, the year during which the credit is given. Notwithstanding the preceding, however, the credit to the member's DROP account shall be at an annual rate of not less than five percent nor greater than ten percent, irrespective of actual earnings. Those earnings [or losses] shall be computed and credited at a time and in a manner determined by the board, except that earnings [or losses] shall be credited not less frequently than once in each 13-month period and shall take into account partial years of participation in the DROP. If the member has not terminated active service, the member's DROP account may not be credited with earnings [or losses] after the 10th anniversary of the effective date of the member's DROP election. (e) A member who terminates active service after participating in the DROP is entitled to receive, in addition to the member's service pension under Section 4 of this article, a benefit equal to the balance of the member's DROP account. [Unless the member elects to receive partial distributions in accordance with Subsection (f) of this section, the balance of a member's DROP account shall be paid to the member in a single lump-sum payment as soon as is administratively practicable after the member's termination of active service.] (g) If a member elects partial payments, for periods after a member terminates active service and before the member's DROP account is completely distributed, the member's DROP account shall be credited with earnings [or losses] of the fund as computed under Subsection (d) of this section [and reduced by an administrative fee of one percent of the account balance each year, determined before adjustment for earnings or losses for the year]. (i) For purposes of computing and providing service pension benefits under Section 4 of this article and for purposes of computing and providing death benefits under Section 7 of this article, the day immediately before the effective date of the DROP participant's election is considered to be the date the member terminates active service. A salary earned or additional years of participation completed after the member's DROP election becomes effective may not be considered in the computation of retirement or death benefits, except for the limited purpose of percentage increases provided under Subsection (a) of this section. (j) If a DROP participant dies before complete distribution of the member's DROP account has been made, the member's DROP account balance shall be distributed to the member's eligible beneficiaries, determined as follows: (1) if the member is survived by a spouse who was the member's spouse on the member's last day of active service and one or more eligible children, one-half of the member's DROP account balance shall be paid to that eligible spouse, and the remaining one-half shall be divided equally among the member's eligible children; (2) if the member is survived by a spouse described by Subdivision (1) of this subsection, but not by an eligible child, the member's entire DROP account balance shall be paid to the surviving spouse; (3) if the member is survived by one or more eligible children, but not by a spouse described by Subdivision (1) of this subsection, the member's DROP account balance shall be divided equally among the eligible children; (4) if the member is not survived by a spouse described by Subdivision (1) of this subsection or an eligible child, the member's DROP account balance shall be divided equally among the member's eligible parents; (5) if the member is not survived by a spouse described by Subdivision (1) of this subsection, an eligible child, or an eligible parent, the member's DROP account balance shall be distributed in accordance with the member's beneficiary designation filed with the board or, if the member has failed to file a valid beneficiary designation, to the member's estate; [and] (6) if a member's spouse described by Subdivision (1) of this subsection was not married to the member on the date the member's DROP election became effective, the spouse shall receive a reduced benefit equal to the benefit otherwise payable to the surviving spouse under this subsection, multiplied by the percentage of the period between the member's DROP election and the date the member left active service during which the spouse and the member were married, and the amount by which the spouse's benefit is reduced shall be divided among any other eligible survivors as if the member did not have an eligible spouse, or if there are no eligible survivors, in accordance with the member's beneficiary designation filed with the board, or, if the member failed to file a valid beneficiary designation, to the member's estate; and (7) if the conditions described by Subdivision (1), (2), or (6) of this subsection exist, the surviving spouse may elect to maintain the DROP account with the fund in the same manner described by Subsections (e), (f), and (g) of this section. (k) An eligible beneficiary's share of a deceased member's DROP account shall be distributed as soon as administratively practicable after the member's death in the form of a single lump-sum payment, unless the surviving spouse makes the election permitted by Subsection (j)(7) of this section. All distributions to beneficiaries under this subsection must be made in a manner and at a time that comply with Section 401(a)(9) of the code. (m) A DROP participant with a break in service may receive service credit within DROP for days worked after the regular expiration of the permitted DROP period. The service credit shall be limited to the number of days in which the participant experienced a break in service or the number of days required to constitute 10 years of DROP participation, whichever is smaller. A retired member who previously participated in the DROP and who returns to active service is subject to the terms of this section in effect at the time of the member's return to active service. SECTION 6. Section 6, Article 6243e.2(1), Revised Statutes, is amended by adding a new Subsection (g) and relettering existing Subsections (g) and (h) to read as follows: (g) The pension benefits committee shall review, on a case-by-case basis, existing benefit payments to members, and to survivors of deceased members, who retired as a result of a disability with 20 or more years of service under a provision of any predecessor statute previously governing the fund. The review will determine whether the member's disability was an on-duty disability that satisfies the requirements of Subsection (b) or (c) of this section. A determination that a member's disability was an on-duty disability, as described above, will apply only on a prospective basis beginning with January 1 of the calendar year in which the determination is made, and will not affect the amount of the member's or survivor's benefits. The committee shall make its review and determination under this subsection on the basis of the medical evidence and any other relevant non-testimonial evidence that was previously submitted in connection with the prior application for benefits, except that if the committee finds that the historical file is insufficient to make the determination, supplemental evidence of a probative nature may be adduced and accepted to help make the determination. (h) A person may not receive an on-duty or off-duty disability pension from the fund unless the person or the person's legal representative files with the board an application for disability benefits, in the form approved by the board, and certificates of the member's disability signed and sworn to by the member and the member's physician or by a physician selected by the board. The board may require other or additional evidence of disability before authorizing payment of disability pension benefits. (i) [(h)] The board shall make all determinations concerning benefits under this section in accordance with uniform principles consistently applied on the basis of medical or other evidence that the board determines is necessary or desirable. SECTION 7. Sections 7(b), (e), and (g), Article 6243e.2(1), Revised Statutes, are amended to read as follows: (b) If a member's eligible spouse was married to the member for less than five years and was not married to the member at the time the member left active service, the eligible spouse shall be paid a reduced benefit equal to the benefit otherwise payable to the eligible spouse under this section, multiplied by the number of months [time] the eligible spouse was married to the member, and divided by 60 months [five years]. Any benefit the eligible spouse may be granted under Section 10A of this article shall be reduced in the same proportion as the reduced benefit provided by this subsection. The amount by which the eligible spouse's benefit is reduced shall be divided among any other eligible survivors as if the member did not have an eligible spouse. This subsection may not be construed to effect any reduction to an eligible spouse of benefits otherwise payable under Section 4(d) of this article. (e) In addition to the monthly death benefit provided under Subsection (a) of this section, if an active member or a member receiving a service pension under Section 4 of this article or a disability pension under Section 6 of this article dies on or after July 1, 1998, the member's eligible survivors are entitled to a one-time $5,000 death benefit, payable as a lump sum as follows: (1) if the member is survived by an eligible spouse, the eligible spouse is entitled to receive $5,000; (2) if the member is not survived by an eligible spouse, the member's eligible children are entitled to receive $5,000, divided equally among those children; (3) if the member is not survived by an eligible spouse or an eligible child, the $5,000 death benefit shall be divided equally among the eligible parents of the deceased member; or (4) if the member is not survived by an eligible spouse, an eligible child, or an eligible parent, the $5,000 death benefit shall be paid to the deceased member's estate or to the member's court-approved small estate through its legal representative. (g) If a member in active service dies and does not leave an eligible survivor, or the eligible survivors unanimously elect such a benefit in lieu of any other death benefit, a lump-sum benefit shall be paid in an amount equal to the refund, if any, to which the member would have been entitled under Section 8 of this article had the member terminated service on the date of the member's death. That lump-sum benefit shall be paid to the eligible survivors as provided by Subsection (a) of this section or, if there are not any eligible survivors, to the member's designated beneficiary. A member's beneficiary must be designated before the member's death on a form approved by the board. If more than one beneficiary is designated, the benefit shall be divided equally among the beneficiaries unless a different allocation is provided in the designation. If a member fails to properly designate a beneficiary, the benefit provided by this subsection shall be payable to the member's estate or to the member's court-approved small estate through its legal representative on application by the estate or legal representative. Money payable under this subsection may not escheat to the state. SECTION 8. Section 11, Article 6243e.2(1), Revised Statutes, is amended by amending Subsections (b), (d), (f), (h), and (m) and adding Subsections (n)-(p) to read as follows: (b) The [After a member terminates active service, the] amounts of all benefits that the member or the member's beneficiaries may become entitled to receive from the fund shall be computed on the basis of the schedule of benefits in effect for the fund at the member's election either on the day the member leaves active service or on the day the member ceased to carry out the member's regular duties as a firefighter [on the effective date of the termination of the member's active service], without adjustment for any subsequent increases of benefits unless those increases are expressly made applicable to previously retired members or their beneficiaries. (d) In computing a member's years of participation, time served in the armed forces of the nation during war or national emergency is considered continuous service. Except for that military service, credit for prior service shall be given only if a member returns to active service as a firefighter before the fifth anniversary of a previous effective date of termination. Notwithstanding any provision of this article to the contrary, contributions, benefits, and service credit with respect to qualified military service shall be provided in accordance with Section 414(u) of the code. A member who is engaged in active duty in any of the military services of the United States shall receive credited pension service for the period of the military service, if the member returns to employment with the employer municipality's fire department with an honorable discharge within the period required by the federal reemployment Act and the period of military service does not exceed the period prescribed by that Act. If a member sustains an injury while on military leave under the terms of the federal reemployment Act, pension benefits are payable based on the off-duty disability benefit provisions prescribed by Section 6(e) of this article. If a member dies while on military leave under the terms of the federal reemployment Act, death benefits are payable to eligible survivors based on the off-duty death benefits prescribed by Section 7 of this article. This subsection is intended to comply with the federal reemployment Act. The board may make, maintain, and amend policies and procedures as desirable or necessary to implement the federal reemployment Act. In this subsection, "federal reemployment Act" means the Uniformed Services Employment and Reemployment Rights Act of 1994 (38 U.S.C. Section 4301 et seq.), as amended. (f) A member, eligible survivor, or beneficiary who is entitled to receive a benefit payment under this article is entitled to receive the benefit beginning on the date the member ceases to carry out the member's regular duties as a firefighter, notwithstanding the fact that the member may remain on the payroll of the member's fire department or receive sick leave, vacation, or other pay after the effective date of termination of the member's regular duties as a firefighter. In this article, an authorization to receive a benefit "beginning on the effective date of the member's termination of active service" includes authority for the member to instead elect to make the member's pension effective on the date the member ceases to carry out the member's regular duties as a firefighter. If there is a delay in beginning payment of benefits resulting from the requirements of Section 6(h) [6(g)] of this article for disability pensions, the member or beneficiary shall, when the disability pension is approved by the board, be paid the full amount of the disability pension that has accrued since the effective date of termination of the member's regular duties as a firefighter. (h) A benefit payable under this article to a minor or another person under a legal disability may be made only to the legal guardian of the person, or as provided by Subsection (g) of this section [estate of the minor]. [If a benefit becomes payable to any other person under a legal disability, payment of that benefit may be made only to the conservator or the guardian of that person's estate appointed by a court of competent jurisdiction.] A payment made in accordance with this section on behalf of a minor or other person under a legal disability fully discharges the fund's obligation to that person. (m) A benefit payable under this article because of the death of a member or eligible beneficiary may not be paid to a person convicted of causing that death but instead shall be paid as if the convicted person predeceased the deceased member or beneficiary. If no beneficiary is entitled to the benefit as a result, the benefit shall be paid to the decedent's estate. Except as otherwise permitted by this subsection with respect to suspension of benefits, the board is not required to withhold payment to a person convicted of causing the death of a member or eligible beneficiary until the board receives actual notice of the conviction of that person. The board may suspend payment of a benefit payable on the death of a member or an eligible beneficiary on the indictment of the person who would otherwise be entitled to the benefit, and the suspension remains in effect until the board determines that a final disposition of the charges relating to the cause of death has occurred. If a benefit payment is suspended under this subsection and the person is not convicted, the benefit again becomes payable with interest computed at the rate earned by the fund during the time the benefit payment was suspended. For purposes of this subsection, a person has been convicted of causing the death of a member or eligible beneficiary if: (1) the person has pleaded guilty or nolo contendere to, or the person has been found guilty by a court of competent jurisdiction of, an offense at the trial of which it is established that the person's intentional or knowing act or omission caused the death of the member or eligible beneficiary, regardless of whether sentence is imposed or probated; and (2) an appeal of the conviction is not pending, and the time provided for appeal has expired. (n) If one or more persons have been given a power of attorney effective to direct distribution of benefits to any person eligible to receive benefits under this article and the fund receives conflicting directions as to those distributions, the fund may withhold benefits until either the final result of judicial proceedings determining which directive prevails or the fund receives a signed agreement between attorneys-in-fact, and principals, if applicable, on distribution directives that completely resolves the conflict. The fund may not be made a party to any proceeding or suit concerning or involving the distribution of benefits under conflicting directives. (o) The fund may offset amounts received wrongly or in error from the fund by any person receiving benefit payments under this article by making deductions from future benefit payments otherwise payable to the person or the person's beneficiaries. This remedy is not exclusive of any other remedy available to the fund. (p) A person who has a claim for a benefit under this article and is not under a legal disability has until the second anniversary of the date of eligibility for the benefit to apply to the fund for the benefit. This subsection does not apply to any election made under Subsection (f) of this section. SECTION 9. Sections 13(c) and (d), Article 6243e.2(1), Revised Statutes, are amended to read as follows: (c) Each member in active service shall make contributions to the fund in an amount equal to 8.35 [7.7] percent of the member's salary at the time of the contribution, and as of July 1, 2004, in an amount equal to nine percent of the member's salary at the time of the contribution. The governing body of the municipality shall deduct the contributions from the member's salary and shall forward the contributions to the fund as soon as practicable. (d) The municipality shall make monthly contributions to the fund in an amount equal to the product of the contribution rate certified by the board and the aggregate salaries paid to members of the fund during the month for which the contribution is made. The board shall certify the municipality's contribution rate for each year or portion of a year based on the results of actuarial valuations made at least every three years. The municipality's contribution rate shall be composed of the normal cost plus the level percentage of salary payment required to amortize the unfunded actuarial liability over a constant period of 30 [40] years [beginning on January 1, 1983,] computed on the basis of an acceptable actuarial reserve funding method approved by the board. Notwithstanding any other provision of this article, the contributions by the municipality, when added to any contributions with respect to a qualified governmental excess benefit arrangement maintained in accordance with Section 14(c) of this article, may not be less than twice the amount paid into the fund by contributions of the members. SECTION 10. Section 16(a), Article 6243e.2(1), Revised Statutes, is amended to read as follows: (a) A person who becomes a firefighter in a municipality to which this article applies may receive service credit for prior employment with the fully paid fire department of another municipality in this state with a similar fund benefiting only firefighters of that municipality to which the firefighter contributed if: (1) the firefighter is under 36 years of age at the time of applying to the fund; (2) the firefighter passes a physical examination [taken at the firefighter's expense and performed by a physician selected by the board]; (3) the firefighter pays into the fund an amount equal to the total contribution the firefighter would have made had the firefighter been employed by the municipality, at the municipality's pay scale, instead of the municipality by which the firefighter was previously employed, plus six percent interest, compounded annually; (4) the firefighter applies for that credit not later than the 60th day after the date on which membership begins; and (5) the firefighter has moved directly into employment at the fire department from the fire department for which the prior service credit is sought, without any intervening employment or extended interruption. SECTION 11. Section 17, Article 6243e.2(1), Revised Statutes, is amended by amending Subsections (a) and (b) and adding Subsections (d) and (e) to read as follows: (a) Information contained in records that are in the custody of a fund established under this article concerning an individual member, retiree, or beneficiary is not public information [confidential] under Chapter 552, Government Code. The information[, and] may not be disclosed in a form identifiable with a specific individual unless: (1) the information is disclosed to: (A) the individual; (B) the individual's attorney, guardian, executor, administrator, or conservator, or other legal representative of the individual's estate or court-approved small estate or other person who the board determines is acting in the interest of the individual or the individual's estate; (C) a spouse or former spouse of the individual, or the attorney of the spouse or former spouse, if [the board determines that] the information concerns [is relevant to] the spouse's or former spouse's interest in member accounts, benefits, or other amounts payable by the fund; or (D) a person with written authorization from the individual to receive the information; or (2) the information is disclosed under an authorization of the board that specifies the reason for the disclosure. (b) Notwithstanding Subsection (a) of this section, the fund may disclose [This section does not prevent the disclosure of] the status or identity of an individual as a member, former member, retiree, deceased member, or beneficiary of the fund, as well as the individual's dates of service, date of death, last rank held, and the divisions of the fire department of the municipality in which service has been rendered. (d) The release of information concerning members, retirees, or beneficiaries to departments of the municipality or to other municipal employee pension funds or systems of the municipality, in order to implement or advance the purposes of this article is permitted under this section. The release of that information does not constitute any waiver of confidentiality by the fund or any waiver as to confidentiality of the information under the statutes and policies governing the receiving municipal department or employee pension fund or system. (e) The publication and provision by the fund of a retiree's address, e-mail address, telephone number, dates of service, last rank held, and the divisions of the fire department of the municipality in which service was rendered, within compilations or directories of this information concerning fund retirees, is permitted under this section. The fund, in its sole discretion, may provide or distribute those compilations as it deems is in the best interest of the retirees in general. A retiree may prevent the publication under this subsection of information relating to the retiree by giving advance written notice to the fund. SECTION 12. Section 18(b), Article 6243e.2(1), Revised Statutes, is amended to read as follows: (b) The board may maintain a proportional retirement [If the board determines that the provisions governing a participating retirement system are compatible with the provisions governing the fund under this article, the board may establish the] program under this section. SECTION 13. Section 13(h), Article 6243e.2(1), Revised Statutes, is repealed. SECTION 14. This Act takes effect September 1, 2003.