By:  McClendon, et al. (Senate Sponsor - Madla)                   H.B. No. 2747
	(In the Senate - Received from the House May 11, 2005; 
May 13, 2005, read first time and referred to Committee on 
Intergovernmental Relations; May 20, 2005, reported favorably by 
the following vote:  Yeas 3, Nays 2; May 20, 2005, sent to 
printer.)

A BILL TO BE ENTITLED
AN ACT
relating to the administration of a retirement health care plan for firefighters and police officers in certain municipalities. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Section 1.02, Chapter 1332, Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), is amended by amending Subdivisions (1), (3), (4), and (8) and adding Subdivisions (1-a), (6-a)-(6-d), (8-a), and (10) to read as follows: (1) "Active member" means a firefighter or a police officer who is a current contributing member of the fund [who is an active firefighter or police officer of the municipality]. (1-a) "Actuary" means an actuary selected by the board to conduct an actuarial study who is a Fellow of the Society of Actuaries, a Fellow of the Conference of Consulting Actuaries, or a member of the American Academy of Actuaries. (3) "Beneficiary" means a retired police officer, a retired firefighter, or the spouse or other eligible dependent of a retired or deceased police officer or retired or deceased firefighter who is entitled to receive retiree health benefits under Section 5.01(a) of this Act. (4) "Collective bargaining agreements [agreement]" means the [a] collectively bargained agreements in effect on January 1, 2004, [agreement] between a municipality to which this Act applies and the exclusive bargaining agents of the firefighters and police officers of the municipality under Chapter 174, Local Government Code. (6-a) "Master contract document" means the master contract in effect on January 1, 2004, containing the terms and conditions of the health and medical benefits plan established under the collective bargaining agreements. (6-b) "Member" means a firefighter or police officer who has become a member of the fund as provided by Section 4.01 of this Act and has not retired, died, or forfeited the person's interest in the fund. (6-c) "Member payroll" means, for any applicable pay period, the base pay plus additional compensation for employment longevity paid to all active members who were active members during the pay period. (6-d) "Pension act" means Chapter 824, Acts of the 73rd Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas Civil Statutes). (8) "Retiree" means a member of the fund who was formerly a firefighter or police officer of the municipality, who retired after September 30, 1989, and who has a right to retirement health benefits under Section 5.01(a) of this Act. (8-a) "Retiree health plan" means the group family health plan established by the collective bargaining agreements and the master contract document. (10) "Years of service" means the number of full years beginning on the date the firefighter or police officer becomes a member of the fund until the date the firefighter or police officer retires or otherwise terminates employment as a firefighter or police officer less any service credit for the amount of time the member is engaged in active service with any uniformed service of the United States that the member does not purchase as provided by Section 4.022 of this Act. SECTION 2. Section 1.03, Chapter 1332, Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), is amended to read as follows: Sec. 1.03. APPLICABILITY. This Act applies to a paid fire and police department of a municipality with a population of one million or more but less than 1,175,000, according to the most recent federal census [of 750,000 or more that has adopted Chapter 174, Local Government Code]. SECTION 3. Section 2.01(b), Chapter 1332, Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), is amended to read as follows: (b) The board, through its secretary, shall administer the required elections of the active members and retiree trustees. The board shall hold a runoff election between the two candidates receiving the most votes if no candidate receives a majority of the votes cast for a trustee position. On the executive director's certification that a candidate for trustee is eligible for office and is unopposed for election, the board shall certify the candidate as elected to the board. SECTION 4. Section 2.03(c), Chapter 1332, Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), is amended to read as follows: (c) A removal election must be held within 90 [30] days after the date the board certifies that a proper petition for a removal election has been signed by at least 20 percent of the persons eligible to vote to elect the trustee. A trustee's term of service ends on the entry of an order by the board declaring that a majority of the votes cast in a removal election under this section favor removal. SECTION 5. Section 2.04(b), Chapter 1332, Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), is amended to read as follows: (b) The board in its discretion may elect other officers of the board. An officer may be, but is not required to be, a trustee [treasurer of the municipality is the treasurer of the board]. SECTION 6. Section 3.01, Chapter 1332, Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), is amended by adding Subsections (f)-(k) to read as follows: (f) The board has full discretion and authority to administer the fund, construe and interpret this Act, correct any defect or omission, reconcile any inconsistency, and perform all other acts necessary to carry out the purpose of this Act and administer this Act for the greatest benefit of all members. All decisions of the board are final and binding on all affected parties. (g) A gathering of any number of trustees to investigate, research, or review prospective or current investments or otherwise attend to the trustees' fiduciary responsibilities, without formal action by the trustees, is not a deliberation or meeting under Chapter 551, Government Code, and is not required to be open to the public. (h) The trustees, executive director, and employees of the fund are immune from liability for any action taken or omission made in good faith in the performance of their duties for the fund. (i) Information contained in a record that is in the custody of the fund concerning a member, former member, retiree, deceased retiree, beneficiary, or alternate payee is confidential under Sections 552.101, 552.102, and 552.117, Government Code. The information may not be disclosed in a form that identifies a specific individual, unless the information is disclosed: (1) to the individual; (2) to the individual's attorney, guardian, executor, administrator, or conservator, or to another person the executive director or the executive director's designee determines from written documentation to be acting in the interest of the individual or the individual's estate; (3) to a person authorized by the individual in writing to receive the information; or (4) under a subpoena. (j) Subsection (i) of this section does not prevent the disclosure of the status or identity of an individual as a member, former member, retiree, deceased member, deceased retiree, beneficiary, or alternate payee of the fund. (k) A determination and disclosure under Subsection (i) of this section does not require notice to the member, retiree, beneficiary, or alternate payee. SECTION 7. The heading to Article 4, Chapter 1332, Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), is amended to read as follows:
ARTICLE 4. MEMBERSHIP AND CONTRIBUTIONS
SECTION 8. Section 4.01, Chapter 1332, Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), is amended to read as follows: Sec. 4.01. MEMBERSHIP. A person becomes a member of the fund on the person's employment as a firefighter or police officer in a municipality to which this Act applies [Membership in the fund shall be determined by the collective bargaining agreements]. SECTION 9. Section 4.02, Chapter 1332, Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), is amended to read as follows: Sec. 4.02. MEMBER CONTRIBUTIONS. (a) An amount in accordance with the following schedule shall be deducted from each active member's compensation and contributed to the fund biweekly: (1) $36.99 beginning after September 30, 2005, and ending before October 1, 2006; (2) $44.32 beginning after September 30, 2006, and ending before October 1, 2007; (3) $52.17 beginning after September 30, 2007, and ending before October 1, 2008; (4) $60.57 beginning after September 30, 2008, and ending before October 1, 2009; (5) $69.54 beginning after September 30, 2009, and ending before October 1, 2010; (6) $79.13 beginning after September 30, 2010, and ending before October 1, 2011; (7) $89.35 beginning after September 30, 2011, and ending before October 1, 2012; (8) $100.26 beginning after September 30, 2012, and ending before October 1, 2013; (9) $111.89 beginning after September 30, 2013, and ending before October 1, 2014; (10) $124.28 beginning after September 30, 2014, and ending before October 1, 2015; (11) $137.46 beginning after September 30, 2015, and ending before October 1, 2016; (12) $151.49 beginning after September 30, 2016, and ending before October 1, 2017; (13) $166.41 beginning after September 30, 2017, and ending before October 1, 2018; (14) $182.26 beginning after September 30, 2018, and ending before October 1, 2019; (15) $199.11 beginning after September 30, 2019 [Contributions to the fund shall be determined in accordance with the collective bargaining agreements]. (b) Subject to Subsection (c) of this section, to be eligible for health benefits under Section 5.01 of this Act, a retiree who retired with less than 30 years of service, or the retiree's surviving spouse in the case of a deceased retiree, shall continue to make contributions to the fund as required by Subsection (a) of this section beginning on the date of the retiree's retirement until the total contributions made by the person equal the amount of contributions the retiree would have made if the retiree had retired with 30 years of service [Any donations made to the fund and all money received from any source for the fund shall be deposited in the fund at the earliest opportunity]. (c) A retiree who retired under the pension act as a result of a disability, or the disability retiree's surviving spouse in the case of a deceased disability retiree, is not required to make contributions under Subsection (b) of this section for more than 10 years following the date of the disability retiree's retirement [The municipal contribution to and health benefits paid from the fund are a part of the compensation for services rendered to the municipality. This Act is considered part of the contract of employment and appointment of the firefighters and police officers of a municipality to which this Act applies]. (d) To be eligible for health benefits under Section 5.01 of this Act, the surviving spouse of a deceased member who died in the line of duty, as determined under the collective bargaining agreements, or was an active member at the time of death, shall continue to make contributions to the fund as required by Subsection (a) of this section beginning on the date of the member's death until the earlier of: (1) the expiration of 10 years following the date of the member's death; or (2) the expiration of the period following the date of the member's death that, when added to the deceased member's years of service, equals 30 years. (e) This section applies only to members who retire, become disabled, or die in the line of duty after October 1, 2005, and their surviving spouses. (f) Persons other than active members shall pay contributions required under this section on a monthly basis by payroll deduction or in cash. (g) The municipal contributions to and health benefits paid from the fund are a part of the compensation for services rendered to a municipality to which this Act applies. This Act is considered part of the contract of employment and appointment of the firefighters and police officers of a municipality to which this Act applies. SECTION 10. Article 4, Chapter 1332, Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), is amended by adding Sections 4.021 and 4.022 to read as follows: Sec. 4.021. CONTRIBUTIONS BY A MUNICIPALITY. (a) A municipality to which this Act applies shall pay into the fund an amount equal to a percentage of member payroll, according to the following schedule: (1) 11.24 percent for each full pay period beginning after September 30, 2005, and ending before October 1, 2006; (2) 11.94 percent for each full pay period beginning after September 30, 2006, and ending before October 1, 2007; (3) 12.64 percent for each full pay period beginning after September 30, 2007, and ending before October 1, 2008; (4) 13.34 percent for each full pay period beginning after September 30, 2008, and ending before October 1, 2009; (5) 14.04 percent for each full pay period beginning after September 30, 2009, and ending before October 1, 2010; (6) 14.74 percent for each full pay period beginning after September 30, 2010, and ending before October 1, 2011; (7) 15.44 percent for each full pay period beginning after September 30, 2011, and ending before October 1, 2012; (8) 16.14 percent for each full pay period beginning after September 30, 2012, and ending before October 1, 2013; (9) 16.84 percent for each full pay period beginning after September 30, 2013, and ending before October 1, 2014; (10) 17.54 percent for each full pay period beginning after September 30, 2014, and ending before October 1, 2015; (11) 18.24 percent for each full pay period beginning after September 30, 2015, and ending before October 1, 2016; (12) 18.94 percent for each full pay period beginning after September 30, 2016, and ending before October 1, 2017; (13) 19.64 percent for each full pay period beginning after September 30, 2017, and ending before October 1, 2018; (14) 20.34 percent for each full pay period beginning after September 30, 2018, and ending before October 1, 2019; (15) 21.04 percent for each full pay period beginning after September 30, 2019. (b) The payments into the fund by the municipality for each active member shall be made on the same day the contributions are deducted from active members' compensation under Section 4.02(a) of this Act. (c) The municipal contribution to and health benefits paid from the fund are part of the compensation for services rendered to the municipality. This Act is considered part of the contract of employment and appointment of the firefighters and police officers of a municipality to which this Act applies. Sec. 4.022. UNIFORMED SERVICE. (a) A member of the fund who enters any uniformed service of the United States may not: (1) be required to make the monthly payments into the fund as required by this Act while the member is engaged in active service with the uniformed service; or (2) lose any seniority rights or retirement benefits provided by this Act because of that service. (b) Not later than the 90th day after the date of the member's reinstatement to an active status in a fire or police department, the member shall file with the secretary of the board a written statement of intent to pay into the fund an amount equal to the amount the member would have paid if the member had remained on active status in the department during the period of the member's absence while in the uniformed service. (c) The member shall make the payment described by Subsection (b) of this section in full within a period of time after the member's return that is equal to three times the amount of time the member was absent, except that the maximum period for payment may not exceed five years. (d) If the member does not comply with Subsections (b) and (c) of this section, the member loses all credit toward the member's years of service for the length of time the member was engaged in active service in any uniformed service. (e) The amount of credit purchased under this section may not exceed the length of the active service in a uniformed service required to be credited by law. SECTION 11. Section 4.03(b), Chapter 1332, Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), is amended to read as follows: (b) This fund is intended to be a voluntary employee's beneficiary association as described by Section 501(c), Internal Revenue Code of 1986 (26 U.S.C. Section 501(c)), as amended, and the board has the discretion to [may] take any action necessary to ensure that the fund is classified as such. SECTION 12. Section 5.01, Chapter 1332, Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), is amended to read as follows: Sec. 5.01. RETIREMENT HEALTH BENEFITS. (a) A person is eligible to receive health and medical benefits under this Act to the same extent the person is eligible to receive health and medical benefits under the retiree health plan, subject to the terms and conditions of the retiree health plan, except as otherwise provided by this Act. (b) Health and medical benefits that are substantially similar to the health and medical benefits provided under the retiree health plan shall be provided by the fund to persons who are eligible to receive them under Subsection (a) of this section, subject to the terms and conditions of the retiree health plan, except as otherwise provided by this Act. (c) The expiration of the terms of the collective bargaining agreements or the master contract document has no effect on the benefits provided under this Act. (d) The board may adjust, modify, or change benefits provided under this section if the fund's total actuarial unfunded liability, as determined by the actuary, is not increased by the adjustment, modification, or change. (e) The board shall determine which persons are eligible to receive benefits under this section and which benefits the persons are eligible to receive under Subsections (a) and (b) of this section. (f) The board may discontinue benefits under this section for any person who does not make the contributions required by Section 4.02 of this Act. (g) Beginning on January 1, 2006, the maximum out-of-pocket (including deductible) payment for each individual each calendar year as set out in Appendix B to the retiree health plan increases from $700 to $1,200 [Retirement health benefits shall be determined in accordance with the collective bargaining agreements]. SECTION 13. Section 6.02, Chapter 1332, Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), is amended to read as follows: Sec. 6.02. ACCOUNTS AND FINANCIAL REPORTS. (a) Accounts of the fund shall be kept as ordered by the board. (b) The board shall require that monthly financial reports showing all fund receipts and disbursements be prepared and submitted to the board. SECTION 14. Section 6.04(c), Chapter 1332, Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), is amended to read as follows: (c) The board may directly manage investments of the reserve funds or may choose to contract for professional management services. If the funds own real estate, the board may, at its discretion, establish an organization described by Section 501(c)(2) or [Section] 501(c)(25), Internal Revenue Code of 1986 (26 U.S.C. Sections 501(c)(2) and [Section] 501(c)(25)), as amended, to hold title to the real estate. SECTION 15. Section 6.05(a), Chapter 1332, Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), is amended to read as follows: (a) The board may contract for professional investment management services, financial consultants, independent auditors, third-party administrators, preferred providers, health maintenance organizations, attorneys, and actuaries. Only the board may enter into those contracts. The board may establish a reasonable fee for compensation under those contracts. SECTION 16. Section 6.06, Chapter 1332, Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), is amended to read as follows: Sec. 6.06. INVESTMENT CONSULTANT [MANAGER] QUALIFICATIONS. In appointing investment consultants [managers], the board shall require that the investment consultant [manager] be: (1) registered under the Investment Advisors Act of 1940 (15 U.S.C. Section 80b-1 et seq.), as amended; (2) a bank as defined by that Act; or (3) an insurance company qualified to perform investment services under the law of more than one state. SECTION 17. Section 6.01, Chapter 1332, Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), is repealed. SECTION 18. This Act takes effect October 1, 2005.
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