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A BILL TO BE ENTITLED
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AN ACT
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relating to contributions to, benefits from, and administration of |
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certain public retirement systems; providing penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter C, Chapter 801, Government Code, is |
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amended by adding Section 801.208 to read as follows: |
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Sec. 801.208. INVESTIGATION OF CERTAIN COMPLAINTS; |
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ASSISTANCE OF ATTORNEY GENERAL. (a) The board shall adopt rules |
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and procedures for receiving and investigating a complaint against |
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a person who provides management or investment services to a public |
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retirement system for a complaint alleging that the person: |
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(1) violated or may have violated Sections 802.004 |
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through 802.007 or a conflict of interest provision applicable |
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under other law; or |
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(2) has been or may have been involved in criminal |
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conduct relating to the services provided by the person to the |
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system. |
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(b) The board or the attorney general may initiate an |
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investigation under this section if the board or the attorney |
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general, as applicable, determines an investigation is |
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appropriate. |
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(c) The attorney general may subpoena witnesses or books, |
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records, or other documents relevant to an investigation under this |
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section. |
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(d) The board may enter into a memorandum of understanding |
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with the attorney general to assist in an investigation under this |
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section. The memorandum must specify the type, scope, and format of |
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the investigative assistance provided by the attorney general. |
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(e) If, as a result of an investigation, the board or the |
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attorney general determines that a criminal offense may have been |
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committed, the board or the attorney general, as applicable, shall |
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refer the case to the appropriate law enforcement agency for |
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prosecution. |
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SECTION 2. Subchapter A, Chapter 802, Government Code, is |
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amended by adding Sections 802.004 through 802.008 to read as |
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follows: |
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Sec. 802.004. DISCLOSURE OF CERTAIN POTENTIAL CONFLICTS OF |
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INTEREST REQUIRED; ANNUAL FILING. (a) This section applies to: |
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(1) a member of the governing body of a public |
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retirement system; |
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(2) an investment manager for a public retirement |
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system appointed by contract under Section 802.204; and |
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(3) any other person, including an investment |
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consultant or advisor, providing services under contract to a |
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public retirement system relating to the management and investment |
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of the system's assets. |
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(b) A person to whom this section applies shall immediately |
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disclose in writing to the public retirement system whether the |
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person or an immediate family member of the person, including the |
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person's spouse, has a business, commercial, or other relationship |
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that a reasonable person would find likely to diminish the person's |
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independence of judgment in the performance of the person's |
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responsibilities with respect to the management or investment of |
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the system's assets, including a relationship in which the person |
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or the person's immediate family member: |
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(1) is employed by or participates in the management |
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of a business entity or other organization receiving funds from the |
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retirement system; or |
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(2) owns or controls, directly or indirectly, an |
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interest in a business entity or other organization receiving funds |
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from the retirement system. |
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(c) If a person described by Subsection (a)(1) fails to |
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disclose a relationship under Subsection (b), it is a ground for |
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removal from the governing body of the public retirement system on |
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which the person serves. |
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(d) If a person described by Subsection (a)(2) or (3) fails |
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to disclose a relationship under Subsection (b): |
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(1) the contract is voidable by the public retirement |
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system; and |
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(2) the governing body of the retirement system may |
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enter an order declaring the person ineligible to contract for |
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business relating to the management or investment of the system's |
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assets. |
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(e) At least annually on a date specified by the public |
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retirement system, a person to whom this section applies shall file |
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a statement with the system stating that the person is aware that |
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the person is required to disclose material conflicts of interest |
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under this section and that the person is in compliance with this |
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section. |
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Sec. 802.005. PROHIBITION AGAINST ACCEPTANCE OF GIFTS AND |
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OTHER THINGS OF VALUE. A person who is a member of the governing |
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body of a public retirement system may not accept a gift, service, |
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or other thing of value, including food, entertainment, and a |
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promised future benefit, from another person doing business with or |
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seeking to do business with the system. |
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Sec. 802.006. PROHIBITED EMPLOYMENT AND CONTRACTS. A |
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public retirement system may not directly or indirectly employ or |
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contract with a former member of the governing body of the system |
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before the second anniversary of the date the individual ceased to |
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be a member of the system's governing body. |
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Sec. 802.007. CIVIL PENALTY. (a) A person who commits a |
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breach of the person's fiduciary duty, fraud, theft, embezzlement, |
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fraudulent conversion, unlawful appropriation, or misapplication |
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of property in relation to a service provided by the person to a |
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public retirement system is liable to this state for a civil penalty |
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in an amount not to exceed $250,000 for each violation. |
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(b) The attorney general may bring an action to recover the |
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civil penalty imposed under this section. |
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(c) The penalty under this section is in addition to any |
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other remedy provided by law. |
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Sec. 802.008. COMPUTATION OF RETIREMENT BENEFITS. |
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Notwithstanding any other law, if the retirement benefit of a |
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member of a public retirement system is based on the amount of |
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compensation received by the member during a specific period of |
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service, in computing the amount of the member's retirement |
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benefit, the compensation amount with respect to that specific |
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period of service may not exceed 125 percent of the amount of the |
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member's compensation for the same period occurring five years |
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earlier. |
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SECTION 3. Section 802.101(a), Government Code, is amended |
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to read as follows: |
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(a) The governing body of a public retirement system shall |
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employ an actuary, as a full-time or part-time employee or as a |
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consultant, to make a valuation at least once every three years of |
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the assets and liabilities of the system on the basis of assumptions |
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and methods: |
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(1) that are reasonable in the aggregate, considering |
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the experience of the program and reasonable expectations, and |
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that, in combination, offer the actuary's best estimate of |
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anticipated experience under the program; and |
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(2) prescribed by the United States secretary of the |
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treasury based on a corporate bond yield curve as the funding yield |
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curve third segment rate applicable to the month in which the |
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valuation is made. |
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SECTION 4. Section 802.1012(b), Government Code, is amended |
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to read as follows: |
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(b) Except as provided by Subsection (k), this section |
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applies only to a public retirement system with total assets the |
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book value of which, as of the last day of the preceding fiscal |
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year, is at least $10 [$100] million. |
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SECTION 5. Subchapter B, Chapter 802, Government Code, is |
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amended by adding Section 802.1013 to read as follows: |
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Sec. 802.1013. REQUIREMENT FOR CHANGE IN CONTRIBUTION RATES |
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AND BENEFIT INCREASES. (a) Notwithstanding any other law, a public |
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retirement system that is subject to Section 802.101 may not reduce |
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the rate of member or employer contributions to the system, provide |
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a cost-of-living adjustment, or otherwise increase retiree |
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benefits, unless: |
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(1) a valuation is conducted in accordance with |
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Section 802.101(a)(2) that takes into account the proposed action; |
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and |
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(2) the results of the valuation indicate that the |
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retirement system is at least 80 percent actuarially funded. |
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(b) For purposes of performing the valuation under |
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Subsection (a) to provide a cost-of-living adjustment, a public |
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retirement system must assume the cost-of-living adjustment is |
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recurring. |
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SECTION 6. Section 802.103, Government Code, is amended by |
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adding Subsections (b-1) and (d) to read as follows: |
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(b-1) If the governing body of a public retirement system |
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fails to file the annual financial report with the board within the |
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time prescribed by Subsection (b), the board may impose an |
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administrative penalty in the amount of $50 against each member of |
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the governing body and the executive director or other person |
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appointed or otherwise selected by the board of trustees to manage |
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or administer the system. |
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(d) The governing body of a public retirement system shall |
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require that all records, including the work papers involved in the |
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preparation of the annual financial report required under this |
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section, be: |
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(1) retained for at least six years after the date the |
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report is filed with the board; and |
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(2) made available to the board on request. |
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SECTION 7. Subchapter C, Chapter 802, Government Code, is |
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amended by adding Sections 802.2041 and 802.2042 to read as |
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follows: |
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Sec. 802.2041. PROCUREMENT OF INVESTMENT MANAGERS AND |
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CERTAIN OTHERS. (a) The board shall by rule adopt guidelines and |
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procedures for the procurement of investment managers and other |
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persons, including an investment consultant or advisor, who provide |
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a public retirement system with services relating to the management |
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and investment of the system's assets. |
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(b) The board may require a public retirement system to |
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provide the board with a statement, not later than the 30th day |
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after the date of the procurement, detailing the system's method of |
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selecting any person described by Subsection (a). |
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Sec. 802.2042. CONTRACTS WITH INVESTMENT MANAGERS AND |
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CERTAIN OTHERS. (a) A contract with an investment manager or other |
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person to provide services to a public retirement system relating |
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to the management and investment of the system's assets is subject |
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to review by the board regarding the fees charged and paid by the |
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system and the services rendered to the system in consideration for |
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the fees. |
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(b) If, in performing a review under this section, the board |
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requests information from an investment manager or other person, |
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the investment manager or other person, as appropriate, shall |
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immediately submit a written response to the board's request. |
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SECTION 8. Section 802.008, Government Code, as added by |
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this Act, applies only to the computation of retirement benefits |
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for a member of a public retirement system who retires on or after |
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the effective date of this Act. The computation of retirement |
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benefits for a member of a public retirement system who retires |
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before the effective date of this Act is subject to the law in |
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effect on the date of the retirement, and that law is continued in |
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effect for that purpose. |
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SECTION 9. This Act takes effect September 1, 2011. |