89R3041 KFF-F

By: Harless H.B. No. 3521

A BILL TO BE ENTITLED

AN ACT

relating to the police officers' public retirement system of certain municipalities.

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

SECTION 1. Sections 2(4-a), (10), and (17-e), Article 6243g-4, Revised Statutes, are amended to read as follows:

(4-a) "Catastrophic injury":

(A) means a sudden, violent, life-threatening, duty-related injury sustained by an active member that is due to an externally caused motor vehicle collision, gunshot wound, aggravated assault, or other physical external event or events and results, as supported by evidence, in one of the following conditions:

(i) [(A)] total, complete, and permanent loss of sight in one or both eyes;

(ii) [(B)] total, complete, and permanent loss of the body part [use] of one or both feet at or above the ankle;

(iii) [(C)] total, complete, and permanent loss of the body part [use] of one or both hands at or above the wrist;

(iv) [(D)] injury to the spine that results in a total, permanent, and complete paralysis of both arms, both legs, or one arm and one leg; or

(v) [(E)] an externally caused physical traumatic injury to the brain that, as determined using evidence-based medicine, results in a permanent major neurocognitive disorder for which the member requires occasional supervision in the performance of routine daily tasks of self-care and that renders the member permanently unemployable; and

(B) does not include the following diseases, disorders, or injuries:

(i) infectious diseases;

(ii) noninfectious diseases, including heart disease or lung disease, contracted as a result of repeated exposure to occupational environmental conditions over a period of months or years;

(iii) an anxiety disorder, including post-traumatic stress disorder; or

(iv) a soft-tissue back, neck, or spine injury, including a sprain, strain, subluxation, or repetitive stress injury, that does not result in paralysis, as determined by a physician chosen and compensated by the board [rendering the member physically or mentally unable to perform the member's duties as a police officer].

(10) "Employee" means an individual who holds a classified or appointed position in the police department of a city subject to this article.

(17-e) "Salary" means pay provided for the classified or appointed position in the police department held by the employee.

SECTION 2. Sections 3(d) and (f), Article 6243g-4, Revised Statutes, are amended to read as follows:

(d) The terms of office of the board members elected as described by Subsection (b)(3) of this section shall be three years, beginning on January 1 and ending on December 31. Beginning in 1999, and each third succeeding year, one board member shall be elected at an election called by the board and held before the end of the calendar year [in December]. Beginning in 2000, and each third succeeding year, a second board member shall be elected at an election called by the board and held before the end of the calendar year [in December]. If a vacancy occurs among the two elected retired members of the board, the board shall hold an election within 60 days after the date the vacancy occurred. At that election, a retired member shall be elected to serve for the remainder of the term of the vacant position or for a full term if the term of the board member that caused the vacancy would have ended in that year. A board member who is a retired member and who was appointed to the board before January 1999 shall serve the remainder of the board member's term. On expiration of the appointed term, the appointed board member is eligible to run for the board position described by Subsection (b)(3) of this section in the same manner as any other retired member.

(f) The following individuals are prohibited from being elected to or otherwise serving on the board:

(A) an [An] individual who is an elected or appointed member [officer] or employee of, or who receives compensation or gifts directly or indirectly from, any employee [organization] or retiree organization;

(B) an individual who is [or] an employee of the pension system or was an employee of the pension system during the 60-day period preceding the announcement of the trustee election; or

(C) an individual who holds a position that creates or may have the potential to create a conflict of interest with the fiduciary responsibility imposed on each member of [is prohibited from being elected to] the board, as determined by [appointed to] the board[, or in any other way serving as a member of the board].

SECTION 3. Section 4, Article 6243g-4, Revised Statutes, is amended by amending Subsection (b) and adding Subsection (c) to read as follows:

(b) The board, by an affirmative vote of at least four board members, may elect to provide a stipend to [reimburse] board members who are not employees of the city for their time while attending to official business of the pension system. The amount of any stipend [reimbursement] may not exceed $750 a month for each affected board member.

(c) Board members are entitled to reimbursement for actual expenses incurred in performing official duties and business, as determined by board rule.

SECTION 4. Section 12, Article 6243g-4, Revised Statutes, is amended by amending Subsections (b) and (m) and adding Subsection (n) to read as follows:

(b) Except as otherwise provided by this section, including Subsection (b-3) of this section, the monthly service pension of a member who:

(1) is hired before October 9, 2004, including a member hired before October 9, 2004, who involuntarily separated from service but has been retroactively reinstated under arbitration, civil service, or a court ruling, is equal to the sum of:

(A) 2.75 percent of the member's final average pay multiplied by the member's years or partial years of service for the member's first 20 years of service; and

(B) two percent of the member's final average pay multiplied by the member's years or partial years of service for the member's years of service in excess of the 20 years of service described by Paragraph (A) of this subdivision; or

(2) except as provided by Subdivision (1) of this subsection and subject to Subsection (b-3) of this section, is hired or rehired as an active member on or after October 9, 2004, is equal to [the sum of]:

(A) for members with less than 20 years of service, 2.25 percent of the member's final average pay multiplied by the member's years or partial years of service [for the member's first 20 years of service]; or

(B) for members with at least 20 years of service, the sum of:

(i) 2.75 percent of the member's final average pay multiplied by the members first 20 years of service; and

(ii) [(B)] two percent of the member's final average pay multiplied by the member's years or partial years of service in excess of 20 years of service described by Subparagraph (i) [Paragraph (A)] of this paragraph [subdivision].

(m) For a member who is promoted or appointed to a position above the rank of commander or a similar position that is the highest classified or non-appointed position in the police department:

(1) before the year 2017 effective date, the member's monthly service pension and member contributions shall be based on the member's initial pay for that position, regardless of subsequent promotions or appointments; and

(2) [captain] on or after the year 2017 effective date, the member's monthly service pension and member contributions shall be based on, as determined by the board:

(A) [(1)] the member's pay for the position the member held immediately before being promoted or appointed; or

(B) [(2)] the pay of the highest civil rank for classified police officers for those members who have no prior service with the city, which pay must be calculated based on the three-year average prior to retirement.

(n) Except as provided by Subsection (m)(1) of this section, a member's monthly service pension and contributions may not be based on final average pay and contributions that exceed the salary and contributions made by a member who:

(1) achieves the position of commander or a similar position that is the highest classified or non-appointed position in the police department; and

(2) retires or elects to participate in DROP on or after the year 2017 effective date.

SECTION 5. Sections 14(b), (e), and (i), Article 6243g-4, Revised Statutes, are amended to read as follows:

(b) An active member who [was hired before October 9, 2004, including a member hired before October 9, 2004, who] has attained normal retirement age [been reinstated under arbitration, civil service, or a court ruling after that date, and has at least 20 years of service with the police department] may file with the pension system an election to participate in DROP and receive a DROP benefit instead of the standard form of pension provided by this article on or after [as of] the date the active member attained normal retirement age [20 years of service]. The election may be made, under procedures established by the board, by an eligible active member who has attained the required years of service. A DROP election that is made and accepted by the board may not be revoked.

(e) As of the end of each month an amount is credited to each active member's notional DROP account at the rate of one-twelfth of a hypothetical earnings rate on amounts in the account. The hypothetical earnings rate is determined for each calendar year based on the compounded average of the aggregate annual rate of return on investments of the pension system for the five consecutive fiscal years ending June 30 preceding the calendar year to which the earnings rate applies, multiplied by:

(1) except as provided by Subdivision (2) of this subsection, 65 percent; or

(2) once the funded ratio is equal to or greater than 95 percent and regardless of the funded ratio in subsequent years, 70 percent. [The hypothetical earnings rate may not be less than 2.5 percent.]

(i) A retired member who has not attained the applicable age required under the code to make a minimum distribution [70-1/2], whether or not a DROP participant before retirement, may elect to have part or all of an amount equal to the monthly service pension the retired member would otherwise be entitled to receive, less any amount required to pay the retired member's share of group medical insurance costs, credited to a DROP account, in which case the amounts will become eligible to be credited with hypothetical earnings in the same manner as the amounts described by Subsection (g) of this section. On and after the year 2017 effective date, additional amounts may not be credited to a DROP account under this subsection. Any amounts credited under this subsection before the year 2017 effective date shall remain accrued in a retired member's DROP account.

SECTION 6. Section 14(k), Article 6243g-4, Revised Statutes, is redesignated as Section 14A, Article 6243g-4, Revised Statutes, and amended to read as follows:

Sec. 14A. RESUMPTION OF SERVICE BY DROP PARTICIPANTS. (a) This section applies only to [(k) If] a retired member and [who is a] DROP participant who is rehired by [as an employee of] the police department in a classified or appointed position.

(b) The pension system shall, during the period of subsequent service by a member subject to this section:

(1) in accordance with Section 17(f) of this article, reinstate the member as an active member of the pension system;

(2) suspend the member's monthly service [, any] pension and any [or] DROP distribution that was being paid to the member; and

(3) except as provided by Subsection (c)(2)(B) of this section, credit to the member's DROP account a [shall be suspended and the] monthly amount equal to the member's monthly service pension determined as if the member had remained separated from service [described by Subsection (d) of this section will again begin to be credited to the DROP account while the member continues to be an employee]. [If the member's DROP account has been completely distributed, a new notional account may not be created and the monthly amount described by Subsection (d) of this section may not be credited to a DROP account on behalf of the member.]

(c) During the period of a member's subsequent service:

(1) in accordance with Section 9 of this article, the city shall make employer contributions attributable to the member's subsequent service; and

(2) the member:

(A) in accordance with Section 8 of this article, shall make member contributions; and

(B) may not:

(i) receive any annual adjustments under Section 12(c) of this article;

(ii) accrue additional years of service or establish additional service credit; and

(iii) in accordance with Section 14 of this article, receive a distribution of the member's DROP account.

(d) Once the member again separates from service, payment of the member's monthly service pension shall resume, including application of annual adjustments under Section 12(c) of this article. The member's monthly service pension may not be adjusted to reflect years of service, service credit, or pay for the member's subsequent period of service.

(e) A member is not eligible for a refund of the member contributions made during the member's subsequent period of service.

SECTION 7. Section 15, Article 6243g-4, Revised Statutes, is amended by amending Subsections (a), (b), (d), (e), and (i) and adding Subsections (d-1), (d-2), (d-3), (d-4), and (i-1) to read as follows:

(a) An active member who becomes totally and permanently incapacitated for the performance of the member's duties as a result of a bodily injury received in, or illness caused by, the performance of those duties shall, on presentation to the board's satisfaction [board] of proof of total and permanent incapacity, be retired and shall receive an immediate duty-connected disability pension equal to:

(1) for members hired or rehired before October 9, 2004, the greater of 55 percent of the member's final average pay at the time of retirement or the member's accrued service pension; or

(2) for members hired or rehired on or after October 9, 2004, the greater of 45 percent of the member's:

(A) final average pay at the time of retirement; or

(B) accrued service pension.

(b) A member who becomes totally and permanently incapacitated for the performance of the member's duties and is not eligible for either an immediate service pension or a duty-connected disability pension is eligible for an immediate monthly pension computed in the same manner as a service retirement pension but based on final average pay and service accrued to the date of the disability. The pension under this subsection may not be less than[:

[(1) for members hired before October 9, 2004, including a member who involuntarily separated from service but has been retroactively reinstated under arbitration, civil service, or a court ruling,] 27.5 percent of the member's final average pay[; or

[(2) except as provided by Subdivision (1) of this subsection, for members hired or rehired on or after October 9, 2004, 22.5 percent of the member's final average pay].

(d) Except as provided by Subsection (d-1) of this section, a [A] person may not receive a disability pension unless the person files with the board an application for a disability pension not later than the later of:

(1) 180 days after the date of separation from service; or

(2) the 18th month after the date the injury or illness described by Subsection (a) of this section occurs or began, as applicable.

(d-1) The board may accept an application filed after the deadline prescribed by Subsection (d) of this section on a showing of good cause, as determined by the board.

(d-2) On filing and acceptance by the board of an application for a disability pension, [at which time] the board shall have the person examined, not later than the 90th day after the date the member files the application, by a physician or physicians chosen and compensated by the board. The physician shall make a report and recommendations to the board regarding, based on reasonable medical probability:

(1) the extent of any disability; and

(2) whether any disability that is diagnosed is a duty-connected disability.

(d-3) A [Except as provided by Subsection (j) of this section, a] person may not receive a disability pension for an injury received or illness incurred after separation from service.

(d-4) In accordance with Section 6(g) of this article, the board may, through its presiding officer, issue process, administer oaths, examine witnesses, and compel witnesses to testify as to any matter affecting retirement, disability, or death benefits under any pension plan within the pension system.

(e) A retired member who has been retired for disability is subject at all times to reexamination by a physician chosen and compensated by the board and shall submit to further examination as the board may require. If a retired member refuses to submit to an examination, the board shall order the payments stopped. If a retired member who has been receiving a disability pension under this section recovers so that in the opinion of the board the retired member is able to perform the usual and customary duties formerly performed for the police department, or if a [and the] retired member is reinstated or offered reinstatement to the position, or hired by another law enforcement agency to a comparable position, the board shall order the member's disability pension stopped. A member may apply for a normal pension benefit, if eligible, if the member's disability benefit payments are stopped by the board under this subsection.

(i) Except as provided by Subsection (i-1) of this section, [Effective for payments that become due after April 30, 2000, and] instead of the disability benefit provided by Subsection (a) or (b) of this section, a member who suffers a catastrophic injury shall receive a monthly benefit equal to 90 [100] percent of the member's final average pay determined as of the date of retirement, and the member's DROP balance, if any.

(i-1) A member who attains normal retirement age is not eligible to receive a disability pension under Subsection (i) of this section.

SECTION 8. Article 6243g-4, Revised Statutes, is amended by adding Section 15A to read as follows:

Sec. 15A. REDUCTION OF DISABILITY BENEFITS. (a) The board shall require any member who is receiving a disability pension to provide the board annually, on or before July 1 of each year, with a true and complete copy of those portions of the person's federal and, if applicable, state tax return, including appropriate schedules, for the previous calendar year that indicate the person's occupations, if any, and earned income for the previous calendar year. If the member did not file a tax return for the previous calendar year, the board may require other documentation reflecting the member's occupation or earned income that the board determines appropriate.

(b) The pension system may grant an extension of the July 1 date under Subsection (a) of this section to a date later in the same calendar year if the member provides the board with a true and complete copy of a grant of the extension of time for filing the person's tax return from the appropriate governmental entity or a true and complete copy of an extension request that results in an automatic extension.

(c) If, after evaluating the information received under this section, the board finds the member is or has been receiving earned income from one or more employments, including self-employment, during the preceding year, the board shall reduce future disability pension payments to the member by the amount of $1 for each month for each $2 of income earned by the member from the other employment during each month of the previous year, except that the disability pension payment may not be decreased below the amount determined for a monthly service pension under Section 12 of this article.

(d) If a retired member who has been receiving a disability pension for a catastrophic injury recovers such that in the opinion of the board the member no longer has a catastrophic injury, the board shall reclassify the benefit as a duty-connected disability pension in accordance with Section 15(a) of this article.

SECTION 9. Section 16(i), Article 6243g-4, Revised Statutes, is amended to read as follows:

(i) If a member or individual receiving a survivor's pension dies before monthly payments have been made for at least five years, leaving no person otherwise eligible to receive further monthly payments with respect to the member, the monthly payments shall continue to be made in the same amount as the last monthly payment made to the member or survivor until payments have been made for five years with respect to the member. The payments shall be made to the spouse of the member, if living, and if no spouse is living, to the natural or adopted children of the member, to be divided equally among the children if the member has more than one child. If the member has no spouse or children who are living, the benefit may not be paid. If the member dies after becoming eligible to receive benefits but before payments begin, leaving no survivors eligible for benefits, the amount of each monthly payment over the five-year period shall be the same as the monthly payment the member would have received if the member had taken disability retirement on the date of the member's death and shall be paid to the member's spouse or children in the manner provided by this subsection. If the member has no spouse or children who are living, then the benefit may not be paid. The member's estate or a beneficiary who is not a survivor or dependent is not eligible to receive the payment described by Subsection (g) of this section and the final monthly payment owed but not received before the member's or surviving spouse's death.

SECTION 10. Section 17(b), Article 6243g-4, Revised Statutes, is amended to read as follows:

(b) A member of the pension system who has not completed 20 years of service at the time of separation from service with the police department is eligible for a refund of the total of the contributions the member made to the pension system[, plus any amount that was contributed for the member by the city and not applied in accordance with this section to provide the member with 10 years of service]. The refund does not include interest, and neither the city nor the member is eligible for a refund of the contributions the city made on the member's behalf, except as expressly provided by this subsection. By receiving the refund, the member forfeits any service earned before separation from service, even if it is otherwise nonforfeitable.

SECTION 11. The heading to Section 19, Article 6243g-4, Revised Statutes, is amended to read as follows:

Sec. 19. PERSONS REJOINING OR TRANSFERRED BY CITY; SERVICE CREDIT; DOUBLE BENEFITS[; RETURN TO SERVICE].

SECTION 12. Section 21(b), Article 6243g-4, Revised Statutes, is amended to read as follows:

(b) The city, not later than the 14th day after the date the city receives a request by or on behalf of the board, shall, unless otherwise prohibited by law, supply the pension system with personnel, payroll, and financial records in the city's possession that the pension system determines necessary to provide pension administrative and fiduciary services under this section, to establish beneficiaries' eligibility for any benefit, or to determine a member's credited service or the amount of any benefits, including disability benefits, and such other information the pension system may need, including:

(1) information needed to verify service, including the following information:

(A) the date a person is sworn in to a position;

(B) the days a person is under suspension;

(C) the days a person is absent without pay, including the days a person is on maternity leave;

(D) the date of a person's termination from employment; and

(E) the date of a person's reemployment with the city;

(2) medical records;

(3) workers' compensation records and pay information;

(4) payroll information;

(5) information needed to verify whether a member is on military leave; [and]

(6) information regarding phase-down participants, including information related to entry date and phase-down plan; and

(7) personnel files, including any disciplinary action taken against a person and the result of any appeal of the disciplinary action.

SECTION 13. Section 25(g), Article 6243g-4, Revised Statutes, is amended to read as follows:

(g) Distribution of benefits must begin not later than April 1 of the year following the calendar year during which the member eligible for the benefits becomes the applicable [70-1/2 years of] age under the code to make a minimum distribution or terminates employment with the employer, whichever is later, and must otherwise conform to Section 401(a)(9) of the code.

SECTION 14. Section 30(b), Article 6243g-4, Revised Statutes, is amended to read as follows:

(b) After the member described by Subsection (a) of this section is finally convicted, the member's survivors, including their representatives, [spouse] may apply for benefits if the member, but for application of Subsection (a) of this section, would have been eligible for a pension benefit or a delayed payment of benefits. If the member would not have been eligible for a pension benefit or a delayed payment of benefits, the member's survivors, including their representatives, [spouse] may apply for a refund of the member's contributions. A refund under this subsection does not include interest and does not include contributions the city made on the member's behalf. The city may not receive a refund of any contributions the city made on the member's behalf.

SECTION 15. The following provisions of Article 6243g-4, Revised Statutes, are repealed:

(1) Section 12(k);

(2) Section 13;

(3) Section 16(j);

(4) Section 17(i); and

(5) Section 19(f).

SECTION 16. Sections 12(b) and 17(b), Article 6243g-4, Revised Statutes, as amended by this Act, apply only to a member who retires on or after the effective date of this Act. A member who retires before the effective date of this Act is governed by the law in effect immediately before that date, and the former law is continued in effect for that purpose.

SECTION 17. Section 13, Article 6243g-4, Revised Statutes, as repealed by this Act, and Section 14A, Article 6243g-4, Revised Statutes, as added by this Act, apply only to a retired member who resumes service with the police department on or after the effective date of this Act. A person who resumes service with the police department before the effective date of this Act is governed by the law in effect immediately before that date, and the former law is continued in effect for that purpose.

SECTION 18. Section 15(i), Article 6243g-4, Revised Statutes, as amended by this Act, and Section 15(i-1), Article 6243g-4, Revised Statutes, as added by this Act, apply only to a disability pension granted after June 1, 2025. A disability pension granted on or before June 1, 2025, is governed by the law in effect immediately before the effective date of this Act, and the former law is continued in effect for that purpose.

SECTION 19. Section 15A, Article 6243g-4, Revised Statutes, as added by this Act, applies only to a member who is granted a disability pension after July 1, 2025. A member who is granted a disability pension on or before July 1, 2025, is governed by the law in effect immediately before the effective date of this Act, and the former law is continued in effect for that purpose.

SECTION 20. The changes in law made by this Act do not affect any nonconflicting provisions of an agreement entered into in accordance with Section 27, Article 6243g-4, Revised Statutes, and those provisions remain in full force and effect.

SECTION 21. If this Act conflicts with another Act of the 89th Legislature, Regular Session, 2025, this Act controls unless the conflict is expressly resolved by the legislature by reference to this Act.

SECTION 22. This Act takes effect July 1, 2025, if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for effect on that date, this Act takes effect September 1, 2025.