By: Kolkhorst, et al. (Senate Sponsor - Duncan) H.B. No. 1579
(In the Senate - Received from the House May 4, 2005;
May 5, 2005, read first time and referred to Committee on State
Affairs; May 21, 2005, reported adversely, with favorable
Committee Substitute by the following vote: Yeas 7, Nays 0;
May 21, 2005, sent to printer.)
COMMITTEE SUBSTITUTE FOR H.B. No. 1579 By: Duncan
A BILL TO BE ENTITLED
AN ACT
relating to certain retired school employees and the powers and
duties of the Teacher Retirement System of Texas.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 22, Education Code, is
amended by adding Section 22.007 to read as follows:
Sec. 22.007. INCENTIVES FOR EARLY RETIREMENT. A district
may not offer or provide a financial or other incentive to an
employee of the district to encourage the employee to retire from
the Teacher Retirement System of Texas.
SECTION 2. Sections 823.401(d) and (e), Government Code,
are amended to read as follows:
(d) A member may establish credit under this section by
depositing with the retirement system for each year of service
credit the actuarial present value, at the time of deposit, of the
additional standard retirement annuity benefits that would be
attributable to the purchase of the service credit under this
section, based on rates and tables recommended by the retirement
system's actuary and adopted by the board of trustees [claimed a
contribution computed at the rate of:
[(1) 12 percent of the full-time rate of the member's
annual compensation, plus any additional eligible compensation
received, during the first year of service for which the member
received membership credit in the retirement system that is both
after the service for which credit is sought and after September 1,
1956; or
[(2) 12 percent of the full-time rate of the member's
annual compensation, plus any additional eligible compensation
received, during the most recent year of service for which the
member received membership credit that is after the service for
which credit is sought, if the member has performed no service in
Texas since September 1, 1956].
(e) [In addition to the contribution required by Subsection
(d), a member claiming credit under this section must pay a fee of
eight percent, compounded annually, of the required contribution
from the date of first eligibility to the date of deposit.] A
deposit for at least one year of credit[, including the fee,] must
be made with an initial application for credit, and all payments for
service claimed under this section must be made before retirement.
SECTION 3. Sections 824.202(a), (b), and (d), Government
Code, are amended to read as follows:
(a) A member is eligible to retire and receive a standard
service retirement annuity if:
(1) the member is at least 65 years old and has at
least five years of service credit in the retirement system; or
(2) the member is at least 60 years old and has at
least five [20] years of service credit in the retirement system and
[;
[(3) the member is at least 50 years old and has at
least 30 years of service credit in the retirement system; or
[(4)] the sum of the member's age and amount of service
credit in the retirement system equals the number 80.
(b) If a member is at least 55 years old and has at least
five years of service credit in the retirement system, but does not
meet the requirements under Subsection (d), the member is eligible
to retire and receive a service retirement annuity reduced from the
standard service retirement annuity available under Subsection
(a)(1), to a percentage derived from the following table:
[Years of Service Age at Date of Retirement] Age at date of retirement 55 56 57 58 59 60 61 62 63 64 65
Percentage of standard annuity receivable 47% 51% 55% 59% 63% 67% 73% 80% 87% 93% 100%
a] member has at least 30 years
of service credit in the retirement system, the member is eligible
to retire regardless of age and receive a service retirement
annuity, reduced from [consisting of a percentage of] the standard
service retirement annuity available under Subsection (a)(2)
[(a)(3)], to a percentage derived from the following table: Age at date of retirement 50 51 52 53 54 55 56 57 58 59 60
Percentage of standard annuity receivable 70% 73% 76% 79% 82% 85% 88% 91% 94% 97% 100%
For each year of age under 50 years with 30 years of service
credit, the standard service retirement annuity shall be three
percent less than the percentage for age 50 with 30 years of service
credit [in Subsection (c). The board of trustees shall extend the
table in Subsection (c) to ages earlier than 50 years by decreasing
the percentages by two percent for each year of age under 50 years].
SECTION 4. Section 824.203(a), Government Code, is amended
to read as follows:
(a) Except as provided by Subsections (c) and [,] (d), [and
(e),] the standard service retirement annuity is an amount computed
on the basis of the member's average annual compensation for the
five [three] years of service, whether or not consecutive, in which
the member received the highest annual compensation, times 2.3
percent for each year of service credit in the retirement system.
SECTION 5. Sections 824.2045(a), (b), (c), and (d),
Government Code, are amended to read as follows:
(a) A member [who is eligible for an unreduced service
retirement annuity and is not participating in the deferred
retirement option plan under Subchapter I] may select a standard
service retirement annuity or an optional service retirement
annuity described by Section 824.204, reduced for early age as
applicable under Section 824.202, together with a partial lump-sum
distribution, if:
(1) the member is eligible for a service retirement
annuity;
(2) the sum of the member's age and amount of service
credit in the retirement system equals the number 90; and
(3) the member is not participating in the deferred
retirement option plan under Subchapter I.
(b) The amount of the lump-sum distribution under this
section may not exceed the sum of 36 months of a standard service
retirement annuity reduced for early age as applicable under
Section 824.202 computed without regard to this section.
(c) The service retirement annuity selected by the member
shall be actuarially reduced to reflect the lump-sum option
selected by the member and shall be actuarially equivalent to a
standard or optional service retirement annuity, as applicable,
reduced for early age as applicable under Section 824.202, without
the partial lump-sum distribution. The annuity and lump sum shall
be computed to result in no actuarial loss to the retirement system.
(d) The retiring member may choose a lump sum equal to 12
months of a standard service retirement annuity and payable at the
same time that the first monthly payment of the annuity is paid, a
lump sum equal to 24 months of a standard annuity and payable in one
or two annual payments, or a lump sum equal to 36 months of a
standard annuity and payable in one, two, or three annual payments.
At the option of the member, a payment under this subsection may be
made as provided by Section 825.509. The amount of the lump sum
shall be computed based on a standard service retirement annuity
reduced for early age as applicable under Section 824.202.
SECTION 6. Section 824.405, Government Code, is amended to
read as follows:
Sec. 824.405. TABLES FOR DETERMINATION OF DEATH BENEFIT
ANNUITY. For the purpose of computing a death benefit annuity under
Section 824.402(a)(4) or 824.403, the board of trustees shall
extend the tables:
(1) in Section 824.202(b) to ages earlier than 55
years by actuarially reducing the benefit available at the age of 55
years to the actuarial equivalent at the attained age of the
beneficiary; and
(2) in Section 824.202(d) [824.202(c)] to ages earlier
than the earliest retirement age by actuarially reducing the
benefit available at the earliest retirement age to the actuarial
equivalent at the attained age of the beneficiary.
SECTION 7. Section 824.602(a), Government Code, is amended
to read as follows:
(a) Subject to Section 825.506, the retirement system may
not, under Section 824.601, withhold a monthly benefit payment if
the retiree is employed in a Texas public educational institution:
(1) as a substitute only with pay not more than the
daily rate of substitute pay established by the employer and, if the
retiree is a disability retiree, the employment has not exceeded a
total of 90 days in the school year;
(2) in a position, other than as a substitute, on no
more than a one-half time basis for the month;
(3) in one or more positions on as much as a full-time
basis, if the work occurs in not more than six months of a school
year that begins after the retiree's effective date of retirement;
(4) in a position, other than as a substitute, on no
more than a one-half time basis for no more than 90 days in the
school year, if the retiree is a disability retiree;
(5) in a position as a classroom teacher on as much as
a full-time basis, if the retiree has retired under Section
824.202(a), is certified under Subchapter B, Chapter 21, Education
Code, to teach the subjects assigned, is teaching in an acute
shortage area as determined by the board of trustees of a school
district as provided by Subsection (m), and has been separated from
service with all public schools for at least 12 months;
(6) in a position as a principal, including as an
assistant principal, on as much as a full-time basis, if the retiree
has retired under Section 824.202(a) without reduction for
retirement at an early age, is certified under Subchapter B,
Chapter 21, Education Code, to serve as a principal, and has been
separated from service with all public schools for at least 12
months; or
(7) as a bus driver for a school district on as much as
a full-time basis, if the retiree has retired under Section
824.202(a) and the retiree's primary employment is as a bus driver.
SECTION 8. Subchapter G, Chapter 824, Government Code, is
amended by adding Section 824.6022 to read as follows:
Sec. 824.6022. REQUIRED REPORTS; OFFENSE. (a) An employer
shall file a monthly certified statement of employment of a retiree
in the form and manner required by the retirement system.
(b) A person commits an offense if the person is an
administrator of an employer, is responsible for filing a statement
under Subsection (a), and knowingly fails to file the statement as
required.
SECTION 9. Section 825.307(a), Government Code, is amended
to read as follows:
(a) The retirement system shall deposit in a member's
individual account in the member savings account:
(1) the amount of contributions to the retirement
system that is deducted from the member's compensation;
(2) the portion of a deposit made on or after
resumption of membership that represents the amount of retirement
benefits received;
(3) the portion of a deposit to reinstate service
credit previously canceled that represents the amount withdrawn or
refunded;
(4) the portion of a deposit to establish military
service credit required by Section 823.302(c);
(5) the portion of a deposit to establish equivalent
membership service credit required by Section 823.401(d),
823.402(e)(1) or (e)(2), or 823.404(c)[, 823.405, or
823.3021(f)(1)]; and
(6) interest earned on money in the account as
provided by Subsections (b) and (c) and Section 825.313(c).
SECTION 10. Section 825.308, Government Code, is amended to
read as follows:
Sec. 825.308. STATE CONTRIBUTION ACCOUNT. The retirement
system shall deposit in the state contribution account:
(1) all state contributions to the retirement system
required by Section 825.404;
(2) amounts from the interest account as provided by
Section 825.313(b)(2);
(3) retirement annuities waived or forfeited in
accordance with Section 824.601 or 824.004;
(4) fees collected under Section 825.403(h);
(5) fees and interest for reinstatement of service
credit or establishment of membership service credit as provided by
Section 823.501;
(6) the portion of a deposit required by Section
823.302 to establish military service credit that represents a fee;
and
(7) employer contributions required under Section
825.4092 [the portion of a deposit required by Section 823.401(e)
to establish out-of-state service credit that represents a fee].
SECTION 11. Section 825.404(a), Government Code, is amended
to read as follows:
(a) During each fiscal year, the state shall contribute to
the retirement system an amount equal to not less than six percent
and not more than 10 [eight] percent of the aggregate annual
compensation of all members of the retirement system during that
fiscal year.
SECTION 12. Subchapter E, Chapter 825, Government Code, is
amended by adding Section 825.4041 to read as follows:
Sec. 825.4041. EMPLOYER PAYMENTS. (a) For purposes of
this section, a new member is a person first employed on or after
September 1, 2005, including a former member who withdrew
retirement contributions under Section 822.003 and is reemployed on
or after September 1, 2005.
(b) During each fiscal year, an employer shall pay an amount
equal to the state contribution rate, as established by the General
Appropriations Act for the fiscal year, applied to the aggregate
compensation of new members of the retirement system, as described
by Subsection (a), during their first 90 days of employment.
(c) On a monthly basis an employer shall:
(1) report to the retirement system, in a form
prescribed by the system, a certification of the total amount of
salary paid during the first 90 days of employment of a new member
and the total amount of employer payments due under this section for
the payroll periods; and
(2) retain information, as determined by the
retirement system, sufficient to allow administration of this
section, including information for each employee showing the
applicable salary as well as aggregate compensation for the first
90 days of employment for new employees.
(d) A person who was hired before September 1, 2005, and was
subject to a 90-day waiting period for membership in the retirement
system becomes eligible to participate in the retirement system as
a member starting September 1, 2005. For the purpose of this
section, the member shall be treated as a new member for the
remainder of the waiting period.
(e) The employer must remit the amount required under this
section to the retirement system at the same time the employer
remits the member's contribution. In computing the amount required
to be remitted, the employer shall include compensation paid to an
employee for the entire pay period that contains the 90th calendar
day of new employment.
(f) At the end of each school year, the retirement system
shall certify to the commissioner of education and to the state
auditor:
(1) the name of each employer that has failed to remit,
within the period required by Section 825.408, all payments
required under this section for the school year; and
(2) the amounts of the unpaid required payments.
(g) If the commissioner of education or the state auditor
receives a certification under Subsection (f), the commissioner or
the state auditor shall direct the comptroller to withhold the
amount certified, plus interest computed at the rate and in the
manner provided by Section 825.408, from the first state money
payable to the employer. The amount withheld shall be deposited to
the credit of the appropriate accounts of the retirement system.
(h) The board of trustees shall take this section into
consideration in adopting the biennial estimate of the amount
necessary to pay the state's contributions to the system.
(i) During the period for which an employer must make a
payment under Subsection (b), the employee:
(1) is not eligible to receive compensation
supplementation under Chapter 1580, Insurance Code; and
(2) is not included for purposes of computing the
amount of state assistance under Section 1579.251, Insurance Code.
SECTION 13. Subchapter E, Chapter 825, Government Code, is
amended by adding Section 825.4092 to read as follows:
Sec. 825.4092. EMPLOYER CONTRIBUTIONS FOR EMPLOYED
RETIREES. (a) This section applies to an employer who reports to
the retirement system the employment of a retiree.
(b) Except as provided by Subsection (e), during each
payroll period for which a retiree is reported, the employer shall
contribute to the retirement system for each retiree reported an
amount based on the retiree's salary equal to the sum of:
(1) the current contribution amount that would be
contributed by the retiree if the retiree were an active,
contributing member; and
(2) the current contribution amount authorized by the
General Appropriations Act that the state would contribute for that
retiree if the retiree were an active, contributing member.
(c) Except as provided by Subsection (e), each payroll
period, for each retiree who is enrolled in the Texas Public School
Employees Group Benefits Program under Chapter 1575, Insurance
Code, the employer who reports the employment of a retiree shall
contribute to the trust fund established under that chapter any
difference between the amount the retiree is required to pay for the
retiree and any enrolled dependents to participate in the group
program and the full cost of the retiree's and enrolled dependents'
participation in the group program, as determined by the retirement
system. If more than one employer reports the retiree to the
retirement system during a month, the amount of the required
payment shall be prorated among the employers.
(d) Contributions under this section are subject to the
requirements of Section 825.408.
(e) The amounts required to be paid under Subsections (b)
and (c) are not required to be paid by a reporting employer for a
retiree who was reported by that employer under retirement system
rules in effect for the report month of January 2005.
SECTION 14. Section 1575.203(a), Insurance Code, is amended
to read as follows:
(a) Each state fiscal year, each active employee shall, as a
condition of employment, contribute to the fund an amount equal to
0.65 [0.5] percent of the employee's salary.
SECTION 15. Section 1575.204, Insurance Code, is amended to
read as follows:
Sec. 1575.204. PUBLIC SCHOOL CONTRIBUTION. (a) Each state
fiscal year, each public school shall contribute to the fund the
amount prescribed by the General Appropriations Act, which may not
be less than 0.25 percent or greater than 0.75 percent of the salary
of each active employee of the public school. The public school
shall make the contributions on a monthly basis and as otherwise
prescribed by the trustee.
(b) Each state fiscal year, each employer who reports to the
retirement system under Section 824.6022, Government Code, the
employment of a retiree who is enrolled in the group program shall
contribute to the fund the difference, if any, between the
contribution amount that the reported retiree is required to pay
for the retiree and any enrolled dependents to participate in the
group program and the full cost of the retiree's and enrolled
dependents' participation in the group program, as determined by
the trustee. The amounts required to be paid under this subsection
are not required to be paid by a reporting employer for a retiree
who was reported by that employer under retirement system rules in
effect for the report month of January 2005.
SECTION 16. (a) Section 824.202(c), Government Code, is
repealed.
(b) Section 823.405, Government Code, is repealed.
SECTION 17. (a) The Teacher Retirement System of Texas
shall make a one-time supplemental payment of a retirement or death
benefit, as provided by this section.
(b) The supplemental payment is payable in January 2006 and,
to the extent practicable, on a date or dates that coincide with the
regular annuity payment payable to each eligible annuitant.
(c) The amount of the supplemental payment is equal to the
gross amount of the regular annuity payment to which the eligible
annuitant is otherwise entitled for the month of December 2005 and
is payable in January 2006, without regard to any forfeiture of
benefits under Section 824.602, Government Code. The Teacher
Retirement System of Texas shall make applicable tax withholding
and other legally required deductions before disbursing the
supplemental payment. The supplemental payment under this section
is in addition to and not in lieu of the regular monthly annuity
payment to which the eligible annuitant is otherwise entitled.
(d) Subject to Subsection (e) of this section, to be
eligible for the supplemental payment, a person must be, for the
month of December 2005, and disregarding any forfeiture of monthly
benefits under Section 824.602, Government Code, an annuitant
eligible to receive:
(1) a standard retirement annuity payment;
(2) an optional retirement annuity payment as either a
retiree or beneficiary;
(3) a life annuity payment under Section
824.402(a)(4), Government Code;
(4) an annuity for a guaranteed period of 60 months
under Section 824.402(a)(3), Government Code; or
(5) an alternate payee annuity payment under Section
804.005, Government Code.
(e) If the annuitant is a retiree or a beneficiary under an
optional retirement payment plan, to be eligible for the
supplemental payment, the effective date of the retirement of the
member of the Teacher Retirement System of Texas must have been
before September 1, 2003. If the annuitant is a beneficiary under
Section 824.402(a)(3) or (4), Government Code, to be eligible for
the supplemental payment, the date of death of the member of the
retirement system must have been before September 1, 2003. The
supplemental payment shall be made to an alternate payee who is an
annuitant under Section 804.005, Government Code, only if the
annuity payments to the alternate payee commenced before September
1, 2003. The supplemental payment is in addition to the guaranteed
number of payments under Section 824.402(a)(3) or 824.204(c)(3) or
(4), Government Code, and may not be counted as one of the
guaranteed monthly payments.
(f) The supplemental payment does not apply to payments
under:
(1) Section 824.304(a), Government Code, relating to
disability retirees with less than 10 years of service credit;
(2) Section 824.804(b), Government Code, relating to
participants in the deferred retirement option plan with regard to
payments from their deferred retirement option plan accounts;
(3) Section 824.501(a), Government Code, relating to
retiree survivor beneficiaries receiving a survivor annuity in an
amount fixed by statute; or
(4) Section 824.404(a), Government Code, relating to
active member survivor beneficiaries receiving a survivor annuity
in an amount fixed by statute.
(g) Except as provided by this section, the board of
trustees of the Teacher Retirement System of Texas shall determine
the eligibility for and the amount and timing of a supplemental
payment and the manner in which the payment is made.
(h) The Teacher Retirement System of Texas shall pay the
supplemental payment made under this section from the retired
reserve account and may transfer to that account from the state
contribution account any portion of the amount that exceeds the
amount in the retired reserve account available to finance the
supplemental payment and that is actuarially determined to be
necessary to finance the supplemental payment. The supplemental
payment under this section must comply with Section 821.006,
Government Code.
SECTION 18. (a) Notwithstanding Sections 823.401(d) and
(e), Government Code, as amended by this Act, a member of the
Teacher Retirement System of Texas may establish out-of-state
service credit by making the contribution required under Section
823.401, Government Code, as it existed before amendment by this
Act, if the person was a member of the system on December 31, 2005,
and the out-of-state service was performed before January 1, 2006.
(b) The Teacher Retirement System of Texas shall deposit in
the state contribution account under Section 825.308, Government
Code, the portion of a deposit required under Section 823.401,
Government Code, as it existed before amendment by this Act, to
establish out-of-state service that represents a fee.
SECTION 19. (a) The changes in law made by this Act to
Sections 824.202, 824.203, and 824.2045, Government Code, apply
only to a person who retires under the Teacher Retirement System of
Texas on or after September 1, 2005, unless the person meets one of
the requirements of Subsection (b) of this section. A person who
retires under the Teacher Retirement System of Texas before
September 1, 2005, is governed by the law as it existed immediately
before that date, and that law is continued in effect for that
purpose.
(b) A person who retires under the Teacher Retirement System
of Texas on or after September 1, 2005, and who meets one or more of
the following requirements on or before August 31, 2005, is
governed by the law as it existed immediately before September 1,
2005, and that law is continued in effect for that purpose:
(1) the person has attained age 50;
(2) the sum of the person's age and amount of service
credit in the retirement system equals 70 or greater; or
(3) the person has at least 25 years of service credit
in the retirement system.
(c) Only service actually credited in the retirement system
on or before August 31, 2005, may be used to determine eligibility
under Subsections (b)(2) and (3) of this section. Service credit
that will be established only after completion of additional
payments under an installment agreement after August 31, 2005, may
not be considered to be actually credited for the purpose of
Subsections (b)(2) and (3) of this section.
SECTION 20. Section 824.602, Government Code, as amended by
this Act, applies only to a person who retires from the Teacher
Retirement System of Texas on or after the effective date of this
Act. A person who retires from the Teacher Retirement System of
Texas before the effective date of this Act is governed by the law
as it existed immediately before the effective date of this Act, and
that law is continued in effect for that purpose.
SECTION 21. The changes in law made by this Act by the
addition of Section 825.4092, Government Code, and the amendment of
Section 1575.204, Insurance Code, apply to a reporting entity that
reports a retiree of the Teacher Retirement System of Texas during
any month after the effective date of this Act.
SECTION 22. Unless the agreement is terminated before all
payments are made, the change in law made by this Act does not apply
to an agreement that existed immediately before January 1, 2006,
between an individual and the Teacher Retirement System of Texas
for the purchase in installments of service credit under Section
823.405, Government Code.
SECTION 23. (a) Except as provided by Subsections (b) and
(c) of this section, this Act takes effect September 1, 2005.
(b) The change in law made by this Act to Section
825.307(a), Government Code, takes effect January 1, 2009.
(c) The repeal by this Act of Section 823.405, Government
Code, takes effect January 1, 2006.
* * * * *