|
|
|
A BILL TO BE ENTITLED
|
|
AN ACT
|
|
relating to contributions to, benefits from, and administration of |
|
certain public retirement systems; providing administrative |
|
penalties. |
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
SECTION 1. Subchapter C, Chapter 801, Government Code, is |
|
amended by adding Sections 801.208 and 801.209 to read as follows: |
|
Sec. 801.208. INVESTIGATION OF CERTAIN COMPLAINTS; ACTION |
|
BY ATTORNEY GENERAL. (a) The board shall adopt rules and |
|
procedures for receiving a complaint against a person who provides |
|
management or investment services to a public retirement system for |
|
a complaint alleging that the person: |
|
(1) violated or may have violated Sections 802.004 |
|
through 802.007 or a conflict of interest provision applicable |
|
under other law; or |
|
(2) has been or may have been involved in criminal |
|
conduct relating to the services provided by the person to the |
|
system. |
|
(b) The board may refer a complaint to the attorney general |
|
for investigation. |
|
(c) The attorney general may subpoena witnesses or books, |
|
records, or other documents relevant to an investigation under this |
|
section. |
|
(d) If, as a result of an investigation under Subsection |
|
(b), the attorney general determines that a criminal offense has |
|
been committed, the attorney general may refer the case to the |
|
appropriate law enforcement agency for prosecution. |
|
Sec. 801.209. STATEMENT TO BOARD ON PROCUREMENT OF |
|
INVESTMENT MANAGERS AND CERTAIN OTHERS. (a) If a complaint is |
|
filed and the board determines it appropriate, the board may |
|
require a public retirement system to provide the board with a |
|
statement not later than the 30th day after the date the system |
|
receives the request for a statement detailing the system's method |
|
of selecting any person who provides the system with services |
|
relating to the management and investment of the system's assets. |
|
(b) The Employees Retirement System of Texas, the Teacher |
|
Retirement System of Texas, the Texas County and District |
|
Retirement System, the Texas Municipal Retirement System, and the |
|
Judicial Retirement System of Texas Plan Two are exempt from this |
|
section. |
|
SECTION 2. Section 802.002(a), Government Code, is amended |
|
to read as follows: |
|
(a) Except as provided by Subsection (b), the Employees |
|
Retirement System of Texas, the Teacher Retirement System of Texas, |
|
the Texas County and District Retirement System, the Texas |
|
Municipal Retirement System, and the Judicial Retirement System of |
|
Texas Plan Two are exempt from Sections 802.004, 802.101(a), |
|
802.101(b), 802.101(d), 802.1013, 802.102, 802.103(a), 802.103(b), |
|
802.202, 802.203, 802.204, 802.205, 802.206, and 802.207. The |
|
Judicial Retirement System of Texas Plan One is exempt from all of |
|
Subchapters B and C except Sections 802.104 and 802.105. The |
|
optional retirement program governed by Chapter 830 is exempt from |
|
all of Subchapters B and C except Section 802.106. |
|
SECTION 3. Subchapter A, Chapter 802, Government Code, is |
|
amended by adding Sections 802.004 through 802.007 to read as |
|
follows: |
|
Sec. 802.004. DISCLOSURE OF CERTAIN POTENTIAL CONFLICTS OF |
|
INTEREST REQUIRED; ANNUAL FILING. (a) This section applies to: |
|
(1) a member of the governing body of a public |
|
retirement system; |
|
(2) an investment manager for a public retirement |
|
system appointed by contract under Section 802.204; and |
|
(3) any other person, including an investment |
|
consultant or advisor, providing services under contract to a |
|
public retirement system relating to the management and investment |
|
of the system's assets. |
|
(b) Not later than the 30th day after the date the person |
|
learns of the relationship, a person to whom this section applies |
|
shall disclose in writing to the public retirement system that the |
|
person or an immediate family member of the person, including the |
|
person's spouse, has a business, commercial, or other relationship |
|
that a reasonable person would find likely to diminish the person's |
|
independence of judgment in the performance of the person's |
|
responsibilities with respect to the management or investment of |
|
the system's assets, including a relationship in which the person |
|
or the person's immediate family member: |
|
(1) is employed by or participates in the management |
|
of a business entity or other organization receiving funds from the |
|
retirement system; or |
|
(2) owns or controls, directly or indirectly, an |
|
interest in a business entity or other organization receiving funds |
|
from the retirement system. |
|
(c) If a person described by Subsection (a)(1) fails to |
|
disclose a relationship under Subsection (b), it is a ground for |
|
removal from the governing body of the public retirement system on |
|
which the person serves. If the board determines that a person |
|
described by Subsection (a)(1) should be removed under this |
|
subsection, the board shall notify the appropriate appointing |
|
officer that a ground for removal exists. |
|
(d) If a person described by Subsection (a)(2) or (3) fails |
|
to disclose a relationship under Subsection (b): |
|
(1) the contract is voidable by the public retirement |
|
system; and |
|
(2) the governing body of the retirement system may |
|
enter an order declaring the person ineligible to contract for |
|
business relating to the management or investment of the system's |
|
assets. |
|
(e) At least annually on a date specified by the public |
|
retirement system, a person to whom this section applies shall file |
|
a statement with the system stating that the person is aware that |
|
the person is required to disclose material conflicts of interest |
|
under this section and that the person is in compliance with this |
|
section. |
|
(f) The board shall adopt rules relating to the types of |
|
relationships that must be disclosed under Subsection (b). |
|
Sec. 802.005. PROHIBITION AGAINST ACCEPTANCE OF CERTAIN |
|
BENEFITS. (a) In this section, "benefit" has the meaning assigned |
|
by Section 1.07, Penal Code. |
|
(b) Except as provided by Subsection (c), a person to whom |
|
Section 802.004 applies or a member of the immediate family of the |
|
person may not accept any benefit with an aggregate value in any |
|
calendar year of more than $250 from any individual who enters into |
|
or seeks to enter into a contract with a public retirement system. |
|
(c) Food, lodging, and transportation related to attending |
|
a conference in this state that is attended or expected to be |
|
attended by at least 50 individuals representing more than one |
|
public retirement system are exempt from this section. |
|
Sec. 802.006. PROHIBITED EMPLOYMENT AND CONTRACTS. A |
|
public retirement system may not knowingly employ or contract with, |
|
either directly or indirectly, a former member of the governing |
|
body of the system before the first anniversary of the date the |
|
individual ceased to be a member of the system's governing body. |
|
Sec. 802.007. ADMINISTRATIVE PENALTY. (a) In this |
|
section, "theft" means the conduct prohibited by Section 31.03, |
|
Penal Code. |
|
(b) A person who commits theft in relation to a service |
|
provided by the person to a public retirement system is liable to |
|
the system for an administrative penalty in an amount not to exceed |
|
$250,000 for each violation. An action may be brought under this |
|
subsection regardless of whether a criminal conviction under |
|
Section 31.03, Penal Code, has been sought or obtained against the |
|
person. |
|
(c) A person who commits a breach of the person's fiduciary |
|
duty in relation to a service provided by the person to a public |
|
retirement system is liable to the system for an administrative |
|
penalty in an amount not to exceed: |
|
(1) $500 for each violation; or |
|
(2) $10,000 in the aggregate for all violations of a |
|
similar nature. |
|
(d) The amount of an administrative penalty imposed under |
|
this section must be in an amount that is reasonably related to the |
|
harm to the public retirement system. |
|
(e) The attorney general may bring an action to impose and |
|
recover an administrative penalty allowed under this section. |
|
(f) A penalty under this section is in addition to any other |
|
remedy provided by law. |
|
SECTION 4. Section 802.1012, Government Code, is amended by |
|
amending Subsections (b) and (c) and adding Subsections (c-1) and |
|
(c-2) to read as follows: |
|
(b) Except as provided by Subsection (k), this section |
|
applies only to a public retirement system with total assets the |
|
book value of which, as of the last day of the preceding fiscal |
|
year, is at least $10 [$100] million. |
|
(c) Subject to Subsection (c-1), every [Every] five years, |
|
the actuarial valuations, studies, and reports of a public |
|
retirement system most recently prepared for the retirement system |
|
as required by Section 802.101 or other law under this title or |
|
under Title 109, Revised Statutes, must be audited by an |
|
independent actuary who: |
|
(1) is engaged for the purpose of the audit by the |
|
governmental entity; and |
|
(2) has the credentials required for an actuary under |
|
Section 802.101(d). |
|
(c-1) Subsection (c) applies only to a public retirement |
|
system with total assets the book value of which, as of the last day |
|
of the preceding fiscal year, is at least $50 million. |
|
(c-2) Each calendar year, the board may select five public |
|
retirement systems with total assets the book value of which, as of |
|
the last day of the fiscal year, is at least $10 million, but not |
|
more than $50 million, to complete the audit described in |
|
Subsection (c). If the retirement system is unable to employ an |
|
independent actuary for purposes of completing the audit required |
|
by this subsection, the board may provide the service for a fee in |
|
an amount determined by the board. |
|
SECTION 5. Subchapter B, Chapter 802, Government Code, is |
|
amended by adding Section 802.1013 to read as follows: |
|
Sec. 802.1013. ACTUARIAL EXPERIENCE STUDIES. (a) In this |
|
section, "plan year" means the 12-month accounting period of the |
|
affected pension plan of a public retirement system subject to this |
|
section. |
|
(b) Subject to Subsection (c), the board may require a |
|
public retirement system with total assets the book value of which, |
|
as of the last day of the preceding plan year, is at least $50 |
|
million to conduct and submit to the board an actuarial experience |
|
study. |
|
(c) The board may not require a public retirement system to |
|
conduct more than one actuarial experience study every five years. |
|
(d) The board may adopt rules to implement this section. |
|
SECTION 6. Section 802.103, Government Code, is amended by |
|
adding Subsections (b-1) and (d) to read as follows: |
|
(b-1) If the governing body of a public retirement system |
|
fails to file the annual financial report with the board before the |
|
10th business day after the final date by which the retirement |
|
system is required to file the report under Subsection (b), the |
|
board shall notify appropriate local media outlets before the fifth |
|
business day after that date. If, after local media outlets are |
|
notified of a failure to timely file a report under this subsection, |
|
the retirement system files the report or the board discovers that |
|
the board notified local media outlets by mistake, the board shall |
|
not later than the fifth business day after that date notify the |
|
local media outlets of the receipt of the report or the discovery of |
|
its mistake, as applicable. |
|
(d) The governing body of a public retirement system shall |
|
require that all records, including the work papers involved in the |
|
preparation of the annual financial report required under this |
|
section, be retained in compliance with the records retention |
|
schedule adopted by the Texas State Library and Archives Commission |
|
applicable to all local governments. |
|
SECTION 7. (a) Not later than January 1, 2012, the State |
|
Pension Review Board shall adopt rules as required by Section |
|
802.004, Government Code, as added by this Act. |
|
(b) Notwithstanding Section 802.004, Government Code, as |
|
added by this Act, a person is not required to comply with that |
|
section before the 30th day after the date the State Pension Review |
|
Board adopts the rules required by that section. |
|
SECTION 8. This Act takes effect September 1, 2011. |