By: Duncan S.B. No. 1846

(In the Senate - Filed March 9, 2007; March 22, 2007, read first time and referred to Committee on State Affairs; April 25, 2007, reported adversely, with favorable Committee Substitute by the following vote: Yeas 7, Nays 0; April 25, 2007, sent to printer.)

COMMITTEE SUBSTITUTE FOR S.B. No. 1846 By: Duncan

A BILL TO BE ENTITLED

AN ACT

relating to funding for, and benefits provided under, the Teacher Retirement System of Texas.

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

SECTION 1. Subchapter A, Chapter 824, Government Code, is amended by adding Section 824.009 to read as follows:

Sec. 824.009. BENEFIT INCREASE. (a) The amount of a service retirement benefit, disability retirement benefit, or death benefit paid under this chapter may be increased only to the extent authorized by the General Appropriations Act applicable to the fiscal biennium in which the increase is initially paid.

(b) An increase made as provided by this section is subject to Section 821.006.

SECTION 2. Section 824.2031, Government Code, is amended by adding Subsection (c) to read as follows:

(c) An improvement in the plan of benefits is subject to Section 824.009.

SECTION 3. 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) contributions collected by employers from federal or private sources under Section 825.406;

(8) contributions collected by a general academic teaching institution or a medical and dental unit under Section 825.407; and

(9) employer contributions required under Sections 825.4042 and [Section] 825.4092.

SECTION 4. Section 825.402, Government Code, is amended to read as follows:

Sec. 825.402. RATE OF MEMBER CONTRIBUTIONS. (a) The rate of contributions for each member of the retirement system is:

(1) five percent of the member's annual compensation or $180, whichever is less, for service rendered after August 31, 1937, and before September 1, 1957;

(2) six percent of the first $8,400 of the member's annual compensation for service rendered after August 31, 1957, and before September 1, 1969;

(3) six percent of the member's annual compensation for service rendered after August 31, 1969, and before the first day of the 1977-78 school year;

(4) 6.65 percent of the member's annual compensation for service rendered after the last day of the period described by Subdivision (3) and before September 1, 1985; and

(5) 6.4 percent of the member's annual compensation for service rendered after August 31, 1985, subject to Subsection (b).

(b) The rate of contributions for each member of the retirement system may be increased to not more than 6.6 percent of the member's annual compensation as directed by the General Appropriations Act to ensure the actuarial soundness of the retirement system. An increase made under this subsection applies to annual compensation received for service rendered during the school years that correspond to the fiscal biennium to which the General Appropriations Act requiring the increase applies or a shorter period specified by that Act. An increase may not be required under this subsection to fund a benefit increase described by Section 824.009.

SECTION 5. Subsection (a), Section 825.404, 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 at least six and not more than 10 percent of the aggregate annual compensation of all members of the retirement system during that fiscal year. The amount of the state contribution made under this section may not be less than the amount contributed by members during that fiscal year in accordance with Section 825.402.

SECTION 6. The heading to Section 825.4041, Government Code, is amended to read as follows:

Sec. 825.4041. EMPLOYER PAYMENTS FOR CERTAIN NEW MEMBERS.

SECTION 7. Subchapter E, Chapter 825, Government Code, is amended by adding Section 825.4042 to read as follows:

Sec. 825.4042. EMPLOYER CONTRIBUTIONS. (a) During each fiscal year, an employer shall contribute to the retirement system an amount specified in the General Appropriations Act, which may not be less than .25 percent or greater than .75 percent of the aggregate annual compensation of contributing members of the retirement system employed by that employer during that fiscal year.

(b) An employer shall make the contributions required by this section in 12 monthly payments and as required by the board of trustees.

(c) A contribution made under this section is in addition to other employer contributions required by this subchapter.

(d) An employer may deduct from the amount of the contribution required under this section the amount of matching contributions that are:

(1) made for contributing employees by the employer under the Federal Insurance Contributions Act (26 U.S.C. Chapter 21); and

(2) paid by the employer from money other than money appropriated by the state.

(e) Contributions made by employers under this section do not affect the minimum state contribution required by Section 825.404(a).

(f) Contributions under this section are subject to the requirements of Section 825.408.

SECTION 8. Subsection (b), Section 825.406, Government Code, is amended to read as follows:

(b) When an employer receives money for state contributions from an application made in accordance with Subsection (a), the employer shall immediately send the money to the retirement system for deposit in the state contribution account [general revenue fund of the state treasury].

SECTION 9. Subsection (g), Section 825.407, Government Code, is amended to read as follows:

(g) The retirement system shall deposit [submit] all money it receives under this section in the state contribution account [to the comptroller of public accounts for deposit in the general revenue fund].

SECTION 10. Subsection (e), Section 825.4092, Government Code, is amended to read as follows:

(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 retired from [was reported under] the retirement system [rules in effect for the report month of January 2005 by:

[(1) that reporting employer; or

[(2) another employer, if both employers are school districts that consolidated into a consolidated school district on or] before September 1, 2005.

SECTION 11. Subsection (b), Section 1575.204, Insurance Code, is amended to read as follows:

(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 retired from the [was reported by that employer under] retirement system before September 1, [rules in effect for the report month of January] 2005.

SECTION 12. Section 1575.252, Insurance Code, is amended to read as follows:

Sec. 1575.252. APPLICATION BY EMPLOYER FOR MONEY TO PAY STATE CONTRIBUTIONS. An employer who applies for money provided by the United States or a privately sponsored source shall:

(1) if any of the money will pay part or all of an active employee's salary, also apply for any legally available money to pay state contributions required by Subchapter E; and

(2) immediately send any money received for state contributions as a result of the application to the trustee for deposit in the [general revenue] fund.

SECTION 13. (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 not later than September 2007 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 August 2007.

(d) The supplemental payment is payable without regard to any forfeiture of benefits under Section 824.601, Government Code. The Teacher Retirement System of Texas shall make applicable tax withholding and other legally required deductions before disbursing the supplemental payment. A 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.

(e) Subject to Subsection (f) of this section, to be eligible for the supplemental payment, a person must be, for the month of August 2007, and disregarding any forfeiture of benefits under Section 824.601, 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 Subdivision (4), Subsection (a), Section 824.402, Government Code;

(4) an annuity for a guaranteed period of 60 months under Subdivision (3), Subsection (a), Section 824.402, Government Code; or

(5) an alternate payee annuity payment under Section 804.005, Government Code.

(f) 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 on or before December 31, 2006. If the annuitant is a beneficiary under Subdivision (3) or (4), Subsection (a), Section 824.402, Government Code, to be eligible for the supplemental payment, the date of death of the member of the retirement system must have been on or before December 31, 2006. The supplemental payment shall be made to an alternate payee who is an annuitant under Section 804.005, Government Code, only if the annuity payment to the alternate payee commenced on or before December 31, 2006. The supplemental payment is in addition to the guaranteed number of payments under Subdivision (3), Subsection (a), Section 824.402, Government Code, or Subdivision (3) or (4), Subsection (c), Section 824.204, Government Code, and may not be counted as one of the guaranteed monthly payments.

(g) The supplemental payment does not apply to payments under:

(1) Subsection (a), Section 824.304, Government Code, relating to disability retirees with less than 10 years of service credit;

(2) Subsection (b), Section 824.804, Government Code, relating to participants in the deferred retirement option plan with regard to payments from their deferred retirement option plan accounts;

(3) Subsection (a), Section 824.501, Government Code, relating to retiree survivor beneficiaries who receive a survivor annuity in an amount fixed by statute; or

(4) Subsection (a), Section 824.404, Government Code, relating to active member survivor beneficiaries who receive a survivor annuity in an amount fixed by statute.

(h) 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.

SECTION 14. Section 825.4092, Government Code, as amended by this Act, applies only to an employer contribution required to be made under that section on or after September 1, 2007. An employer contribution required to be made before September 1, 2007, is governed by the law as it existed at the time the contribution was required to be made, and that law is continued in effect for that purpose.

SECTION 15. This Act takes effect September 1, 2007.

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