78R18129 SMJ-D
By: Armbrister S.B. No. 1243
Substitute the following for S.B. No. 1243:
By: Ritter C.S.S.B. No. 1243
A BILL TO BE ENTITLED
AN ACT
relating to systems and programs administered by the Teacher
Retirement System of Texas.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subsection (b), Section 12.012, Education Code,
is amended to read as follows:
(b) An employee of a home-rule school district does not
qualify [who qualifies] for membership in the Teacher Retirement
System of Texas [shall be covered under the system in the same
manner and to the same extent as a qualified employee employed by an
independent school district is covered].
SECTION 2. Subsection (b), Section 12.057, Education Code,
is amended to read as follows:
(b) An employee of an independent school district who is
employed on a campus or program granted a charter under this
subchapter and who qualifies for membership in the Teacher
Retirement System of Texas shall be covered under the system in the
same manner and to the same extent as a qualified employee of the
independent school district who is employed on a regularly
operating campus or in a regularly operating program [is covered].
SECTION 3. Subsection (a), Section 12.1057, Education Code,
is amended to read as follows:
(a) An employee of an open-enrollment charter school
operating under a charter granted by the State Board of Education
who qualifies for membership in the Teacher Retirement System of
Texas shall be covered under the system to the same extent a
qualified employee of a school district is covered.
SECTION 4. Subsection (a), Section 609.113, Government
Code, is amended to read as follows:
(a) Subject to Section 609.1145, a [A] plan administrator
shall develop and implement criteria and procedures for evaluating
a vendor's application to become a qualified vendor.
SECTION 5. Subchapter B, Chapter 609, Government Code, is
amended by adding Section 609.1145 to read as follows:
Sec. 609.1145. ADDITIONAL REQUIREMENTS FOR 457 PLAN VENDORS
IN SCHOOL DISTRICTS. A plan administrator of a 457 plan for a
political subdivision that is a public school district may approve
a vendor's application to be a qualified vendor only if the vendor
is a company that:
(1) has certified to the Teacher Retirement System of
Texas as provided by Chapter 22, Acts of the 57th Legislature, 3rd
Called Session, 1962 (Article 6228a-5, Vernon's Texas Civil
Statutes);
(2) does not have costs associated with its investment
products that exceed the maximum amounts established by rules
adopted by the Teacher Retirement System of Texas; and
(3) provides the notice described by Section 11,
Chapter 22, Acts of the 57th Legislature, 3rd Called Session, 1962
(Article 6228a-5, Vernon's Texas Civil Statutes).
SECTION 6. Subsection (c), Section 822.201, Government
Code, is amended to read as follows:
(c) Excluded from salary and wages are:
(1) expense payments;
(2) allowances;
(3) payments for unused vacation or sick leave;
(4) maintenance or other nonmonetary compensation;
(5) fringe benefits;
(6) deferred compensation other than as provided by
Subsection (b)(3);
(7) compensation that is not made pursuant to a valid
employment agreement;
(8) payments received by an employee in a school year
that exceed $5,000 for teaching a driver education and traffic
safety course that is conducted outside regular classroom hours;
(9) the benefit replacement pay a person earns as a
result of a payment made under Subchapter B or C, Chapter 661;
(10) any amount [supplemental compensation] received
by an employee under Article 3.50-8, Insurance Code; and
(11) any compensation not described in Subsection (b).
SECTION 7. (a) Section 824.601, Government Code, is
amended to read as follows:
Sec. 824.601. LOSS OF MONTHLY BENEFITS. (a) In this
section, "third-party entity" means an entity retained by a Texas
public educational institution to provide personnel to the
institution who perform duties or provide services that employees
of the institution would otherwise perform or provide.
(b) Except as provided by Section 824.602, a retiree is not
entitled to service or disability retirement benefit payments, as
applicable, for any month in which the retiree is employed in any
position by a Texas public educational institution.
(c) A Texas public educational institution, for the
purposes of this subchapter, is any entity included in the
definition of "employer" or "public school" in Section 821.001 or
any entity in whose employment the retiree has earned credit as a
member of the retirement system.
(d) A retiree who is an employee of a third-party entity is
considered to be employed by a Texas public educational institution
for purposes of this subchapter unless the retiree does not perform
duties or provide services on behalf of or for the benefit of the
institution.
(e) Loss of benefits under this section does not extend any
period of guaranteed benefits elected pursuant to Section 824.204.
(f) The retirement system may adopt rules necessary for
administering this subchapter.
(b) Notwithstanding Subsection (b), Section 824.601,
Government Code, as amended by this section, the Teacher Retirement
System of Texas may not withhold a monthly benefit payment from a
retiree who:
(1) retired under Section 824.202, Government Code,
before January 1, 2003; and
(2) is employed by a school district or an
open-enrollment charter school.
SECTION 8. Subsection (a), Section 824.802, Government
Code, is amended to read as follows:
(a) A contributing member who is eligible under Section
824.202 to retire and receive a standard service retirement annuity
that is not reduced for retirement at an early age and who has at
least 25 years of service credit in the retirement system may, if
the member remains an employee, elect to participate in the
deferred retirement option plan. A member must make an election to
participate in the plan not later than December 31, 2003.
SECTION 9. Subsection (b), Section 824.805, Government
Code, is amended to read as follows:
(b) This subsection applies only to a [A] member
participating in the plan on September 1, 2003, or to a member whose
period of participation in the plan has expired on or before
September 1, 2003, but who has not retired on or before that date. A
member described by this subsection [2001,] may, before December
31, 2003, revoke the member's decision to participate [2001, elect
to discontinue participation] in the plan on a form prescribed by
and filed with the retirement system. The retirement system shall
make account transfers and change records for a member who revokes
the member's decision to participate [elects under this subsection
to discontinue participation] in the plan as if the member had never
participated in the plan.
SECTION 10. Section 825.002, Government Code, is amended by
amending Subsection (a) and adding Subsections (h) and (i) to read
as follows:
(a) The governor shall appoint, with the advice and consent
of the senate and as provided by this section, the [seven] members
of the board of trustees.
(h) The governor shall appoint one member of the board who
is:
(1) employed by a public school district as a
classroom teacher; or
(2) retired and receiving benefits from the retirement
system based on prior membership in the retirement system.
(i) The governor shall appoint one member of the board who
is a representative of the public.
SECTION 11. Section 825.115, Government Code, is amended to
read as follows:
Sec. 825.115. APPLICABILITY OF CERTAIN LAWS. (a) The
board is subject to the open meetings law, Chapter 551, and the
administrative procedure law, Chapter 2001.
(b) Subchapter C, Chapter 2260, does not apply to the
retirement system.
SECTION 12. Subchapter D, Chapter 825, Government Code, is
amended by adding Section 825.316 to read as follows:
Sec. 825.316. CERTAIN PURCHASES BY RETIREMENT SYSTEM. (a)
The retirement system, in the exercise of its constitutional and
statutory discretion to manage the assets of the retirement system,
may exercise any purchasing function relating to the purchase of
goods or services from funds other than general revenue funds.
(b) The retirement system shall acquire goods or services by
any procurement method approved by the retirement system.
(c) The Texas Building and Procurement Commission shall
procure goods or services for the retirement system at the request
of the retirement system, and the retirement system may use the
services of the commission in procuring goods or services.
SECTION 13. The heading to Section 825.512, Government
Code, is amended to read as follows:
Sec. 825.512. ANNUAL INVESTMENT PERFORMANCE REPORT
[AUDIT].
SECTION 14. Subsection (e), Section 825.512, Government
Code, is amended to read as follows:
[(e)] The retirement system shall submit an annual
investment performance report not later than the 45th day after the
end of each fiscal year to the governor, the lieutenant governor,
the speaker of the house of representatives, the executive director
of the State Pension Review Board, the legislative audit committee,
the committees of the senate and the house of representatives
having jurisdiction over appropriations, the committees of the
senate and the house of representatives having principal
jurisdiction over legislation governing the retirement system, and
the Legislative Budget Board. The report shall include a listing of
all commissions and fees paid by the system during the reporting
period for the sale, purchase, or management of system assets. [The
report shall be in a form recommended by the evaluating firm.]
SECTION 15. Subchapter F, Chapter 825, Government Code, is
amended by adding Section 825.519 to read as follows:
Sec. 825.519. INTERAGENCY CONTRACTS FOR CERTAIN SERVICES.
The retirement system may enter into an interagency contract with
the State Office of Risk Management for workers' compensation
coverage, claims administration, and risk management services as
provided by Section 412.054, Labor Code.
SECTION 16. Subchapter F, Chapter 412, Labor Code, is
amended by adding Section 412.054 to read as follows:
Sec. 412.054. PROVISIONS APPLICABLE TO TEACHER RETIREMENT
SYSTEM OF TEXAS. (a) In this section, "retirement system" means
the Teacher Retirement System of Texas.
(b) Sections 412.011(c)(2) and (e) do not apply to the
retirement system.
(c) Notwithstanding any other provision of this chapter,
the retirement system may enter into an interagency contract with
the office for workers' compensation coverage, claims
administration, and risk management services.
(d) A contract under Subsection (c) may provide that the
retirement system reimburse the office for the cost of a claim paid
to an employee or former employee of the retirement system.
(e) The office shall credit to the retirement system any
money the office recovers from a third party through subrogation on
a claim paid to an employee or former employee of the retirement
system.
SECTION 17. Section 9, Article 3.50-7, Insurance Code, is
amended by adding Subsection (f) to read as follows:
(f) A premium or contribution on a policy, insurance
contract, or agreement authorized by this article is not subject to
any state tax, regulatory fee, or surcharge, including a premium or
maintenance tax or fee.
SECTION 18. Subsections (d) through (h), Section 3, Article
3.50-8, Insurance Code, are amended to read as follows:
(d) [For each state fiscal year, an election under this
section must be made before the later of:
[(1) August 1 of the preceding state fiscal year; or
[(2) the 31st day after the date the employee is hired.
[(e) The trustee shall prescribe and distribute to each
school district, other educational district, participating charter
school, and regional education service center:
[(1) a model explanation written in English and
Spanish of the options active employees may elect under this
section and the effect of electing each option; and
[(2) an election form to be completed by active
employees.
[(f)] Each state fiscal year, a school district, other
educational district, participating charter school, or regional
education service center shall prepare and distribute to each
active employee a written explanation in English and Spanish, as
appropriate, of the options the employee may elect under this
section. The explanation [must be based on the model explanation
prepared by the trustee under Subsection (e) of this section and]
must reflect all available health coverage options available to the
employee. The explanation must be distributed to an employee
before the later of:
(1) July 1 of the preceding state fiscal year; or
(2) the fifth day after the date the employee is hired.
(e) [(g) The written explanation under Subsection (f) of
this section must be accompanied by a copy of the election form
prescribed under Subsection (e)(2) of this section.
[(h)] Any unencumbered funds that are returned to the school
district from accounts established under Subsection (a) of this
section may be used only to provide employee compensation,
benefits, or both.
SECTION 19. Section 9, Chapter 22, Acts of the 57th
Legislature, 3rd Called Session, 1962 (Article 6228a-5, Vernon's
Texas Civil Statutes), is amended to read as follows:
Sec. 9. An educational institution may not:
(1) refuse to enter into a salary reduction agreement
with an employee if the qualified investment product that is the
subject of the salary reduction is an eligible qualified
investment;
(2) require or coerce an employee's attendance at any
meeting at which qualified investment products are marketed;
(3) limit the ability of an employee to initiate,
change, or terminate a qualified investment product at any time the
employee chooses;
(4) grant exclusive access to an employee by
discriminating against or imposing barriers to any agent, broker,
or company that provides qualified investment products under this
Act;
(5) grant exclusive access to information about an
employee's financial information, including information about an
employee's qualified investment products, to a company or agent
offering qualified investment products unless the employee
consents in writing to the access;
(6) accept any benefit from a company or from an agent
or affiliate of a company that offers qualified investment products
under this Act, other than benefits in the form of:
(A) a meal or entertainment valued at $50 or less
per employee receiving the meal or entertainment; or
(B) marketing material, such as pens, bags, or
hats, valued at $10 or less per employee receiving the material;
[or]
(7) use public funds to recommend a qualified
investment product offered by a company or an agent of a company
that offers a qualified investment product; or
(8) accept a bid or award a contract for a qualified
investment product under this Act or Chapter 609, Government Code,
that includes proposed financial participation by a company or
person that participated to any extent in preparing a specification
or request for proposal on which the bid or contract is based.
SECTION 20. Subsection (c), Section 11, Chapter 22, Acts of
the 57th Legislature, 3rd Called Session, 1962 (Article 6228a-5,
Vernon's Texas Civil Statutes), is amended to read as follows:
(c) The notice required under this section must be uniform
and:
(1) be in at least 14-point type;
(2) contain spaces for:
(A) the name, address, and telephone number of
the agent and company offering the annuity contract for sale;
(B) the name, address, and telephone number of
the company underwriting the annuity;
(C) the license number of the person offering to
sell the product;
(D) the name of the state agency that issued the
person's license;
(E) the name of the company account
representative who has the authority to respond to inquiries or
complaints; and
(F) with respect to fixed annuity products:
(i) the current interest rate or the
formula used to calculate the current rate of interest;
(ii) the guaranteed rate of interest and
the percentage of the premium to which the interest rate applies;
(iii) how interest is compounded;
(iv) the amount of any up-front, surrender,
withdrawal, deferred sales, and market value adjustment charges or
any other contract restriction that exceeds 10 years;
(v) the time, if any, the annuity is
required to be in force before the purchaser is entitled to the full
bonus accumulation value;
(vi) the manner in which the amount of the
guaranteed benefit under the annuity is computed;
(vii) whether loans are guaranteed to be
available under the annuity;
(viii) what restrictions, if any, apply to
the availability of money attributable to the value of the annuity
once the purchaser is retired or separated from the employment of
the employer;
(ix) the amount of any other fees, costs, or
penalties;
(x) whether the annuity guarantees the
participant the right to surrender a percentage of the surrender
value each year, and the percentage, if any; [and]
(xi) whether the annuity guarantees the
interest rate associated with any settlement option; and
(xii) the current renewal interest rate, if
any, and the current interest rate, if any, on deposits made before
the current year; and
(3) state, in plain language:
(A) that the company offering the annuity must
comply with Section 5 of this Act;
(B) that the potential purchaser may contact the
retirement system or access its Internet website to determine which
companies are in compliance with Section 5 of this Act;
(C) the civil remedies available to the employee;
(D) that the employee may purchase any eligible
qualified investment through a salary reduction agreement;
(E) the name and telephone number of the Texas
Department of Insurance division that specializes in consumer
protection; and
(F) the name and telephone number of the attorney
general's division that specializes in consumer protection.
SECTION 21. Chapter 22, Acts of the 57th Legislature, 3rd
Called Session, 1962 (Article 6228a-5, Vernon's Texas Civil
Statutes), is amended by adding Section 13 to read as follows:
Sec. 13. An entity is not eligible to certify to the
retirement system under Section 5 of this Act if:
(1) the entity is:
(A) a reinsurance company;
(B) a third–party administrator;
(C) an entity performing duties under a contract
for administrative services only; or
(D) a broker, dealer, or licensed or registered
agent; and
(2) the entity does not have primary responsibility
for performance of the obligations in the investment product
contract that the entity offers.
SECTION 22. (a) Section 825.003, Government Code, is
repealed.
(b) Subsections (a) through (d), Section 825.512,
Government Code, are repealed.
(c) Section 1575.154, Insurance Code, as effective June 1,
2003, is repealed.
SECTION 23. (a) On September 1, 2003, the governor shall
appoint the member of the board of trustees of the Teacher
Retirement System of Texas described by Subsection (h), Section
825.002, Government Code, as added by this Act.
(b) On September 1, 2007, the governor shall appoint the
member of the board of trustees of the Teacher Retirement System of
Texas described by Subsection (i), Section 825.002, Government
Code, as added by this Act.
(c) A member of the board of trustees of the Teacher
Retirement System of Texas appointed under Section 825.003,
Government Code, as that section existed before its repeal by this
Act, is entitled to serve the remainder of the trustee's unexpired
term.
(d) A vacancy in the office of a trustee appointed under
Section 825.003, Government Code, as that section existed before
its repeal by this Act, shall be filled in the manner provided by
Subsection (i), Section 825.002, Government Code, as added by this
Act.
SECTION 24. An employee of a home-rule school district that
operates under a charter under Subchapter B, Chapter 12, Education
Code, may not receive service credit in the Teacher Retirement
System of Texas for services performed for the home-rule school
district after August 31, 2003.
SECTION 25. To the extent of any conflict, this Act prevails
over another Act of the 78th Legislature, Regular Session, 2003,
relating to nonsubstantive additions to and corrections in enacted
codes.
SECTION 26. This Act takes effect September 1, 2003.