BILL ANALYSIS |
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C.S.H.B. 2068 |
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By: Coleman |
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County Affairs |
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Committee Report (Substituted) |
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BACKGROUND AND PURPOSE
Interested parties note that a number of hospital districts currently have deferred compensation plans that are offered to district employees under which the employee must elect to opt in. Requiring an employee to opt in has led to less than optimal participation rates, and the parties note that the greater the participation, the greater the potential returns. The parties assert that providing an opt-out deferred compensation plan, whereby an employee would automatically participate in the plan with the option to opt out, would be beneficial to the districts and district employees. C.S.H.B. 2068 seeks to address this issue.
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CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
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RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
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ANALYSIS
C.S.H.B. 2068 amends the Government Code to authorize a hospital district created under general or special law that offers a deferred compensation plan to the district's employees, at the district's option, to elect to require automatic employee participation in the plan. The bill establishes that an employee of such a hospital district, if the hospital district elects to require automatic participation in a deferred compensation plan, automatically participates in the plan unless the employee affirmatively elects not to participate and that an employee is not required to affirmatively contract for and consent to participation in such a plan.
C.S.H.B. 2068 establishes that an employee automatically participating in a deferred compensation plan makes a contribution by automatic payroll deduction of one percent of the compensation earned by the employee to a default investment product selected by the plan administrator based on certain criteria and the rules adopted by the hospital district's board. The bill authorizes an employee automatically participating in a deferred compensation plan, at any time and in accordance with rules adopted by the board, to elect to end participation in the plan, to contribute to a different investment product, to contribute a different amount to the plan, or to designate all or a portion of the employee's contribution as a Roth contribution subject to the availability of a Roth contribution program.
C.S.H.B. 2068 requires a hospital district to which the bill's provisions apply to ensure that, at the time of employment, each employee is informed of the elections the employee may make and the employee's responsibilities for monitoring certain elements of the plan. The bill requires the board to adopt rules to implement the bill's requirements relating to automatic participation in the deferred compensation plan and the default investment product and requires the rules to ensure that the operation of a deferred compensation plan conforms to the applicable requirements of any federal rule that provides fiduciary relief for investments in qualified default investment alternatives or otherwise governs default investment alternatives under participant-directed individual account plans. The bill establishes that the amount deducted as part of the plan from an employee's compensation is not deducted for payment of a debt and the automatic payroll deduction is not garnishment or assignment of wages.
C.S.H.B. 2068 requires the hospital district, using existing resources, to inform new employees of their automatic enrollment in a deferred compensation plan and their right to opt out of enrollment and requires this information, using existing resources, to be included as part of the new employee orientation process. The bill requires the district to maintain a record of a new employee's acknowledgement of receipt of information regarding the ability to opt out of enrollment in a deferred compensation plan.
C.S.H.B. 2068 authorizes a hospital district to transfer an employee's deferred amounts and investment income from a qualified investment product to the trust fund of the deferred compensation plan in which the employee participates if the district determines that the transfer is in the best interest of the plan and the employee. The bill specifies that the hospital district is not required to give notice of such transfer to the employee before the transfer occurs but requires the hospital district, promptly after such a transfer occurs, to give to the employee a notice that states the reason for the transfer and requests that the employee promptly designate another qualified investment product to receive the transferred amount.
C.S.H.B. 2068 authorizes a hospital district to invest deferred amounts and investment income in a qualified investment product specifically designated by the district for that purpose instead of depositing deferred amounts and investment income in the trust fund of the deferred compensation plan.
C.S.H.B. 2068 authorizes a hospital district to contract for necessary goods and consolidated billing, accounting, and other services to be provided in connection with a deferred compensation plan. The bill authorizes the hospital district to provide for periodic audits of the person with whom such a contract is made, authorizes the audit to cover the proper handling and accounting of public or trust funds and other matters related to the proper performance of the contract, and authorizes the hospital district to contract with a private entity to conduct such an audit.
C.S.H.B. 2068 limits the applicability of its provisions relating to automatic participation in a deferred compensation plan to an employee of a hospital district subject to those provisions who initially begins employment on or after January 1, 2016. The bill establishes that the acts of a hospital district created under general or special law that relate to discretionary transfers of funds and consolidation of billing and accounting for deferred compensation plans provided by the district to the district's employees and that occurred before the bill's effective date are validated as if the acts had occurred as authorized by law except for an act that, under state law at the time the act occurred, was a misdemeanor or felony.
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EFFECTIVE DATE
On passage, or, if the bill does not receive the necessary vote, September 1, 2015.
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COMPARISON OF ORIGINAL AND SUBSTITUTE
While C.S.H.B. 2068 may differ from the original in minor or nonsubstantive ways, the following comparison is organized and formatted in a manner that indicates the substantial differences between the introduced and committee substitute versions of the bill.
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