By: Duncan S.B. No. 1668

A BILL TO BE ENTITLED

AN ACT

relating to purchase of service credit in the Teacher Retirement System of Texas.

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

SECTION 1. The heading to Section 823.304, Government Code, is amended to read as follows:

Sec. 823.304. USERRA [REEMPLOYED VETERAN'S] CREDIT.

SECTION 2. Subsections (a), (c), and (d), Section 823.304, Government Code, are amended to read as follows:

(a) A person eligible to establish USERRA [reemployed veteran's] credit is one who qualifies under the Uniformed Services Employment and [Veteran's] Reemployment Rights Act of 1994, 38 U.S.C. Section 4301 [2021] et seq., for the benefits of reemployment in a position included within the membership of the retirement system and who is entitled under that Act to additional credit and benefits from the retirement system because of the person's active duty in the armed forces of the United States.

(c) A person may establish credit under this section by depositing with the retirement system for each year of service claimed an amount equal to[:

[(1)] the member contributions to the retirement system, as determined by the retirement system, that the person would have made had the person continued to be employed in the person's former position covered by the retirement system during the entire period of active duty in the armed forces for which the person is to receive retirement credit[; and

[(2) a fee of five percent, compounded annually, of the required contribution from the date of the person's first eligibility to establish the credit to the date of deposit].

(d) To the extent required by the Uniformed Services Employment and [Veteran's] Reemployment Rights Act of 1994 and permitted by Sections 401(a) and 415 of the Internal Revenue Code of 1986 (26 U.S.C. Sections 401 and 415), the retirement system may:

(1) grant the person service credit for the period of active duty in the armed forces as if the person had been employed in a position eligible for membership and credit with the retirement system if the person establishes credit by making the required deposits, or, if the person has not made the required deposits, consider the period of active duty for the purpose of determining whether the person meets the length-of-service eligibility requirements for retirement or other benefits administered by the retirement system as if the person had established the credit; and

(2) include in relevant benefit computations under this subtitle the annual compensation, as determined by the retirement system, that would have been otherwise received by the person for service covered by the retirement system during any year in which the person had active duty in the armed forces.

SECTION 3. Subsection (c), Section 823.401, Government Code, is amended to read as follows:

(c) A member eligible to establish credit under this section is one who has at least five years of service credit in the retirement system for actual service in public schools, including at least one year completed after the relevant out-of-state service.

SECTION 4. Subsections (c), (d), and (e), Section 823.402, Government Code, are amended to read as follows:

(c) A member eligible to establish credit under this section is one who:

(1) has at least five years of service credited [credit] in the retirement system before the developmental leave occurs; [and]

(2) has, [is an employee of a public school] at the time the required deposits for the credit are paid, at least one year of membership service credit in the retirement system following the developmental leave; and

(3) has at least five years of service credited in the retirement system at the time the required deposits for the credit are paid [is sought].

(d) On or before the date a member takes developmental leave, the member must [shall] file with the retirement system a notice of intent to take developmental leave, and the member's employer must [shall] file with the retirement system a certification that the leave meets the requirements of Subsection (b). The notice of intent and the certification must be in the form required by the retirement system. Leave is not creditable in the retirement system if the member does not submit notice of intent and obtain the certification required by this subsection.

(e) A member may establish credit under this section by depositing with the retirement system for each year of developmental leave certified the actuarial present value, at the time of deposit, of the additional standard retirement annuity benefits that would be attributable to the purchase of the service credit under this section, based on rates and tables recommended by the retirement system's actuary and adopted by the board of trustees [claimed an amount equal to the sum of:

[(1) the rate of member contributions required during the year of leave, times the member's annual rate of compensation during the member's most recent year of creditable service that preceded the year of leave; plus

[(2) the amount that the state would have contributed had the member performed membership service during the year of leave at the member's annual rate of compensation during the most recent year of service that preceded the leave].

SECTION 5. Subsection (c), Section 823.501, Government Code, is amended to read as follows:

(c) A member may reinstate canceled credit under this section by depositing with the retirement system:

(1) the amount withdrawn or refunded; plus

(2) a reinstatement fee of eight [six] percent, compounded annually, of the amount withdrawn or refunded from the date of withdrawal or refund to the date of redeposit.

SECTION 6. Subsections (h) and (j), Section 825.403, Government Code, are amended to read as follows:

(h) If deductions were previously required but not paid, the retirement system may not provide benefits based on the service or compensation unless the deposits required by this section have been fully paid. The person's employer at the time the unreported service was rendered or compensation was paid must verify the service or compensation as required by Subsection (j) and the person must submit the verification to the retirement system not later than five years after [member shall pay the amount of those deductions plus a fee computed at a rate of five percent a year on the unpaid amount from] the end of the school year in which the service was rendered or compensation was paid. To establish the service or compensation credit, the person must deposit with the retirement system the actuarial present value, at the time of deposit, of the additional standard retirement annuity benefits that would be attributable to the purchase of service or compensation credit under this section, based on rates and tables recommended by the retirement system's actuary and adopted by the board of trustees [deductions first became due or the end of the 1974-75 school year, whichever is later, to the date of payment]. The board of trustees shall:

(1) prescribe terms for payments under this subsection; and

(2) credit the person [member] for prior service to which the person [member] is entitled under this subtitle[; and

[(3) deposit the fee required by this subsection in the state contribution account].

(j) If deductions were previously required [of a member] but not paid, proof of service satisfactory to the retirement system must be made before service credit is granted or payment for the credit is required. Proof of service is sufficient if the person's [member's] employer documents that the employer has records made at or near the time of service that establish the amount of time worked and salary earned. [A member may submit in lieu of employer documentation internal revenue, social security, bank, or other written records that were made at or near the time of service and that establish the amount of time worked and salary earned.] An affidavit based on memory without written records made at or near the time of service is not sufficient documentation for the establishment of service credit. The retirement system may audit records used for documentation under this subsection. A person who does not obtain proof of service as required by this section may not establish the service or compensation credit.

SECTION 7. (a) The following sections of the Government Code are repealed:

(1) Subsection (i), Section 823.401;

(2) Subsections (g) and (h), Section 823.402; and

(3) Subsection (e), Section 823.501.

(b) Section 57, Chapter 1359 (S.B. 1691), Acts of the 79th Legislature, Regular Session, 2005, is repealed.

SECTION 8. Subsections (d) and (e), Section 823.401, Government Code, as amended by Section 10, Chapter 1359 (S.B. 1691), Acts of the 79th Legislature, Regular Session, effective September 1, 2005, apply to a person who was a member of the Teacher Retirement System of Texas on December 31, 2005, and to out-of-state service performed before January 1, 2006, notwithstanding Section 57 of that Act.

SECTION 9. For unreported service rendered or unreported compensation paid before the effective date of this Act, the verification required under Subsection (h), Section 825.403, Government Code, as amended by this Act, must be received by the Teacher Retirement System of Texas not later than August 31, 2016.

SECTION 10. (a) Notwithstanding the service credit cost provisions of Section 8 of this Act and Subsection (e), Section 823.402, Subdivision (2), Subsection (c), Section 823.501, and Subsection (h), Section 825.403, Government Code, as amended by this Act, a person may establish service credit by paying the deposits and fees required under Sections 823.402, 823.501, and 825.403, Government Code, and by Section 57, Chapter 1359 (S.B. 1691), Acts of the 79th Legislature, Regular Session, 2005, as those sections existed before amendment or repeal by this Act, if:

(1) the person otherwise meets all eligibility requirements under those sections as amended by this Act;

(2) the service for which credit is sought to be established was rendered, or the compensation for which credit is sought was paid, before the effective date of this Act; and

(3) the person makes payment for the service credit, or enters into an installment agreement for payment, not later than August 31, 2013.

(b) If a person has an installment agreement under Subsection (a) of this section that is terminated after August 31, 2013, before the person has made all of the payments, the person may establish credit only as provided by Sections 823.402, 823.501, and 825.403, Government Code, as amended by this Act, and by Section 8 of this Act.

SECTION 11. This Act takes effect September 1, 2011.