80R2998 KFF-F

By: Brimer S.B. No. 976

A BILL TO BE ENTITLED

AN ACT

relating to the public retirement system of certain municipalities.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Title 109, Revised Statutes, is amended by adding Article 6243i to read as follows:

Art. 6243i. UNITARY RETIREMENT SYSTEM FOR CERTAIN MUNICIPALITIES PART 1. GENERAL PROVISIONS

Sec. 1.01. APPLICABILITY. This article applies only to a municipality with a population of 500,000 or more that has established, by municipal ordinance, a single unitary public retirement system for employees of all departments of the municipality.

Sec. 1.02. DEFINITIONS. In this article:

(1) "Administrative rules" means the rules adopted to govern a public retirement system, including rules regarding the participation in, contributions to, and benefits from the public retirement system.

(2) "Board of trustees" means the persons elected or appointed to administer the public retirement system.

(3) "Governing body" means the governing body of a municipality to which this article applies.

(4) "Participating member" means a person who makes contributions to the public retirement system as an employee of a municipality to which this article applies.

(5) "Participating retiree" means a person who receives or who is eligible to receive a service retirement annuity from the retirement fund.

(6) "Pension office" means the administrative office of the public retirement system.

(7) "Public retirement system" means a continuing, organized program or plan of service retirement, disability retirement, or death benefits for employees of a municipality, to which this article applies but does not include:

(A) a program for which benefits are administered by a life insurance company;

(B) a program providing only workers' compensation benefits;

(C) a program administered by the federal government;

(D) an individual retirement account or individual retirement annuity within the meaning of Section 408, or a retirement bond within the meaning of Section 409, of the Internal Revenue Code of 1986;

(E) a plan described by Section 401(d) of the Internal Revenue Code of 1986;

(F) an individual account plan consisting of an annuity contract described by Section 403(b) of the Internal Revenue Code of 1986; or

(G) an eligible state deferred compensation plan described by Section 457(b) of the Internal Revenue Code of 1986.

(8) "Retirement fund" means the trust fund established by or in conjunction with the public retirement system for the purpose of holding assets to be used to provide benefits payable by the public retirement system.

(9) "Rule amendment" includes any amendment of, repeal of, addition to, deletion of, modification of, or change to an administrative rule.

(10) "Survivor" means a person, including the surviving spouse or dependent, who receives survivor benefits from a retirement fund.

(11) "Vested" means the accrued right of a participating member who has met the age and length-of-service requirements for service retirement required by the public retirement system. A member whose retirement rights are vested may withdraw from employment with the municipality, leave the member's accumulated contributions on deposit with the public retirement system, and begin to receive the member's service retirement annuity. PART 2. MEMBERSHIP

Sec. 2.01. GENERAL MEMBERSHIP REQUIREMENT. Except as otherwise provided by administrative rule, municipal ordinance, or this section, a person becomes a participating member of the retirement system on the date of the person's employment by the municipality. A person employed by the municipality is not eligible to be a participating member if the person is an independent contractor or an employee of an independent contractor doing work for the municipality. PART 3. CREDITABLE SERVICE

Sec. 3.01. TYPES OF CREDITABLE SERVICE. The board by rule shall establish the types of service for which a participating member earns credit.

Sec. 3.02. BENEFIT ELIGIBILITY BASED ON CREDITED SERVICE. A participating member's eligibility to receive a service retirement benefit is based on credited service at the time of retirement. PART 4. BENEFITS

Sec. 4.01. TYPES OF BENEFITS. The types and calculation of benefits provided by the retirement system are determined in accordance with:

(1) administrative rules governing benefits in effect on January 1, 2007; or

(2) amendments to those rules adopted under procedures prescribed by this article.

Sec. 4.02. AMENDMENTS CONCERNING BENEFIT PROGRAMS OR PLANS. (a) An amendment to the administrative rules governing the benefit plan or program of the public retirement system may only be made if:

(1) a qualified actuary performs an actuarial analysis of the fiscal impact of the proposed amendment and determines that the amendment will not require increased contributions by the municipality to the public retirement system;

(2) the board of trustees, by majority vote, calls a special election or elects to place the proposed amendment on the ballot as a separate proposition to be voted on at a trustee election in which all participating members may vote; and

(3) a majority of all participating members eligible to vote casts ballots in the special election and a majority of those voting approves the amendment.

(b) An amendment to the administrative rules governing the benefit plan or program of the public retirement system applies to:

(1) all participating members of the public retirement system; and

(2) a participating retiree or survivor only if:

(A) the amendment changes the basic formula or any other calculation of benefits; or

(B) the amendment states that it applies to all participating retirees and survivors.

(c) If an amendment changes the basic formula or any other calculation of benefits, the benefits of a participating retiree or survivor must be recalculated using the amended formula or calculation.

(d) An election under Subsection (a) of this section must be by secret ballot. If a special election is called, the pension office shall conduct the election and the board of trustees shall canvass the vote.

(e) A person who is a participating member on the date of an election held under this section is eligible to vote in the election.

(f) An amendment to the administrative rules governing the benefit plan or program of a public retirement system may not deprive a person, without the person's written consent, of the person's right to receive benefits from the retirement system that are fully vested.

(g) Unless otherwise provided by the proposed amendment, an amendment to the administrative rules adopted under this section becomes effective immediately on approval by the participating members under Subsection (a)(3) of this section. PART 5. ADMINISTRATION

Sec. 5.01. COMPOSITION OF THE BOARD OF TRUSTEES. (a) The board of trustees is composed of 10 members.

(b) Each of the following groups of participating members shall elect one vested, participating member from their respective group to serve as a member of the board of trustees:

(1) police officers;

(2) firefighters; and

(3) other general employees of the municipality who are not employed as a police officer or firefighter.

(c) Each of the following groups of participating retirees shall elect one participating retiree from their respective group to serve as a member of the board of trustees:

(1) retired police officers;

(2) retired firefighters; and

(3) other retired general employees of the municipality who did not retire from service as a police officer or firefighter.

(d) The mayor shall nominate and the governing body shall confirm, by majority vote, three residents of the municipality to serve as members of the board of trustees. A person appointed under this subsection may be a member of the governing body.

(e) The governing body shall designate the treasurer or finance director of the municipality to serve as a member of the board of trustees if the treasurer or finance director is a vested, participating member of the public retirement system. If the treasurer or finance director is not a vested, participating member, the governing body shall designate a participating member of the municipality's finance department to serve as a member of the board of trustees.

(f) Members of the board of trustees hold office for terms of two years.

Sec. 5.02. BOARD POWERS AND DUTIES. (a) The board of trustees shall administer the public retirement system, including the retirement fund of the public retirement system.

(b) The board of trustees may adopt amendments to the administrative rules in accordance with Sections 4.02, 5.06, 5.07, and 5.08 of this article.

Sec. 5.03. BOARD CHAIR. The board of trustees shall elect a chair from the membership of the board.

Sec. 5.04. QUORUM; VOTING. (a) Except as provided by Subsection (b) of this section, each member of the board of trustees is entitled to one vote.

(b) Unless otherwise provided by this article, the chair of the board of trustees may only vote in the event of a tie.

(c) Except as provided by Subsection (d) of this section, six members of the board of trustees constitute a quorum to transact the business of the board.

(d) In the event of a vacancy on the board of trustees, the number of members required to constitute a quorum is reduced by the number of vacancies on the board of trustees.

Sec. 5.05. QUALIFIED ACTUARY. (a) The board of trustees may employ a qualified actuary.

(b) To be a qualified actuary, an actuary must be:

(1) a fellow of the Society of Actuaries; or

(2) a member of the American Academy of Actuaries.

Sec. 5.06. RULE AMENDMENTS ADOPTED BY BOARD OF TRUSTEES. (a) Except as provided by Sections 4.02, 5.07, and 5.08 of this article, the board of trustees may adopt amendments to the administrative rules if:

(1) a qualified actuary performs an actuarial analysis of the fiscal impact of the proposed amendment and determines that the amendment will not impact the actuarial soundness of the fund;

(2) the proposed amendment is placed on the agenda of the board for at least two consecutive meetings of the board that are not less than 30 days apart for the purpose of giving participating members an opportunity to comment on the proposed amendment; and

(3) the proposed amendment is approved by a majority vote of the full membership of the board of trustees.

(b) An amendment to the administrative rules adopted in accordance with this section becomes effective immediately unless otherwise provided by the amendment.

Sec. 5.07. AMENDMENTS CONCERNING CONTRIBUTIONS BY MUNICIPALITY. (a) An amendment to the administrative rules governing municipal contributions, including an amendment to the rate or manner of making contributions, may be made only if:

(1) a qualified actuary performs an actuarial analysis of the fiscal impact of the proposed amendment;

(2) the board of trustees or the governing body, by majority vote, calls a special election of all participating members to approve the amendment;

(3) the amendment is approved by a majority of the participating members eligible to vote in the special election; and

(4) except as provided by Subsection (b) of this section, the amendment is approved by a majority vote of:

(A) the board of trustees, if the governing body called the special election under Subdivision (2) of this subsection; or

(B) the governing body, if the board of trustees called the special election under Subdivision (2) of this subsection.

(b) If the board of trustees or the governing body, as applicable, has not approved or rejected the proposed amendment under Subsection (a)(4) of this section by the 60th day after the date the votes of the special election are canvassed, the proposed amendment takes effect on the 60th day after the date the votes are canvassed.

(c) The pension office shall conduct a special election under Subsection (a) of this section by secret ballot. The board of trustees shall canvass the vote.

(d) A person who is a participating member on the date of the special election is eligible to vote in the special election.

(e) Unless otherwise provided by the proposed amendment and except as provided by Subsection (b) of this section, an amendment to the administrative rules becomes effective on approval by the board of trustees or the governing body, as appropriate, under Subsection (a)(4) of this section.

Sec. 5.08. EMERGENCY, ROUTINE, OR STATUTORILY REQUIRED AMENDMENTS. (a) Unless an amendment to the administrative rules requires adoption in accordance with Section 4.02 or 5.07 of this article, the board of trustees may adopt emergency, routine, or statutorily required amendments to the administrative rules that are required by federal or state law if the board of trustees by unanimous vote of the members present and voting:

(1) agrees that the proposed amendment is an emergency, routine, or statutorily required amendment; and

(2) approves the proposed amendment.

(b) An amendment adopted in accordance with this section is an automatic agenda item for the next regular meeting of the board of trustees and is subject to review or repeal by the board at that meeting.

SECTION 2. (a) The administrative rules governing the public retirement system of a municipality to which this Act applies under Section 1.01, Article 6243i, Revised Statutes, as added by this Act, in effect on January 1, 2007, shall continue in effect on and after the effective date of this Act.

(b) The changes in law made by Sections 4.02, 5.06, 5.07, and 5.08, Article 6243i, Revised Statutes, as added by this Act, apply to a change in the administrative rules governing a public retirement system of a municipality to which this Act applies under Section 1.01, Article 6243i, Revised Statutes, as added by this Act, adopted on or after the effective date of this Act.

SECTION 3. (a) As soon as practicable after the effective date of this Act, a new board of trustees charged with administering the public retirement system of a municipality described by Section 1.01, Article 6243i, Revised Statutes, as added by this Act, shall be elected or appointed in accordance with Section 5.01, Article 6243i, Revised Statutes, as added by this Act.

(b) The term of a member of the board of trustees or other board administering the public retirement system described by Subsection (a) of this section who is serving on the board on the effective date of this Act expires on the date that a majority of the new board of trustees has been elected or appointed under Subsection (a) of this section.

SECTION 4. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2007.