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H.B. No. 633
AN ACT
relating to participation and credit in, contributions to, and
benefits and administration of the Texas County and District
Retirement System.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 75.112(c), Government Code, is amended
to read as follows:
(c) A senior district court judge appointed under this
subchapter who is not a retiree of the Texas County and District
Retirement System is subject to the conditions for membership in
that retirement system during the period the appointment is in
effect that are provided by Section 842.107 [Sections 842.201,
842.202, and 842.203]. If a senior district court judge begins,
retains, or resumes membership in the Texas County and District
Retirement System, the judge accrues service credit in that
retirement system for each month of membership in which the
appointment is in effect.
SECTION 2. Sections 841.001(8) and (17), Government Code,
are amended to read as follows:
(8) "Employee" means a person, other than a person
determined by a subdivision to be a temporary employee, who is
certified by a subdivision as being employed in, or elected or
appointed to, a position or office in the subdivision [that
normally requires services from the person for not less than 900
hours a year and] for which the person is compensated by the
subdivision. The term includes a person described by Section
842.107 only as provided by that section [employed on a
probationary basis, except as provided by Section 842.107].
(17) "Subdivision" means a political subdivision of
the state that is not eligible to participate in any other statewide
retirement system or that is not currently participating in a
retirement system established by the legislature. The term
includes [county, a political unit that consists of all of the
geographical area of one county or of all or part of more than one
county, a political unit of a county that has taxing authority, an
authority created by the state to conduct redevelopment activities
on or related to closed military installations of the United
States, a crime control and prevention district,] the Texas
Association of Counties, the Texas County and District Retirement
System, and [or a city and county that jointly operate] a
city-county hospital jointly managed under Subchapter B, Chapter
265, Health and Safety Code. The term[, but] does not include a
branch, division, department, employee classification group, or
other separately identified component of a political subdivision
[an incorporated city or town, a school district, or a junior
college district].
SECTION 3. Subchapter A, Chapter 841, Government Code, is
amended by adding Section 841.0051 to read as follows:
Sec. 841.0051. VENUE. (a) The venue of any action brought
against the retirement system in a state court or before the State
Office of Administrative Hearings is in Travis County.
(b) The venue of any action brought in a state court by the
retirement system is in Travis County or in the county in which the
defendant is situated, domiciled, or does business.
SECTION 4. Section 841.010(b), Government Code, is amended
to read as follows:
(b) The entire vested interest of a participant must be
distributed or begin to be distributed not later than the required
beginning date as determined in accordance with Section 401(a)(9)
of the Internal Revenue Code of 1986 and the regulations adopted
under that provision [April 1 following the later of the year in
which the participant attains age 70-1/2 or the year in which the
participant separates from service with all participating
subdivisions]. If the participant dies after distribution of the
participant's interest has begun, the remaining portion of the
interest will continue to be distributed at least as rapidly as the
method of distribution being used before the participant's death.
If the participant dies before distribution of the participant's
interest begins, distribution of the participant's entire interest
must be made in a manner complying with Section 401(a)(9)(B) of the
code.
SECTION 5. Subchapter A, Chapter 842, Government Code, is
amended by adding Section 842.0075 to read as follows:
Sec. 842.0075. ASSUMPTION BY SUCCESSOR SUBDIVISION. (a)
The governing body of a participating subdivision may, with the
consent of the board of trustees and on terms approved by the board,
assume the subdivision account and pension liabilities of a
subdivision that no longer exists, is in the process of
dissolution, is changing its operational form, or no longer has
employees. The account and pension liabilities of a subdivision
described by this subsection may not be assumed if the subdivision
has executed a voluntary termination agreement under Section
842.052 or if the board has specified a date under Section 842.053
for the involuntary termination of the subdivision's participation
in the retirement system.
(b) Subject to any limitation set by the board of trustees,
the governing body of the assuming subdivision may exercise any
authority with respect to plan provisions applicable to members and
annuitants of the subdivision plan being assumed that the governing
body of that subdivision could have exercised.
(c) Except as otherwise provided by this section, all
retirement plan provisions in effect on the assumption date remain
in effect until changed by the governing body of the assuming
subdivision.
(d) As of the assumption date, the account in the
subdivision accumulation fund being assumed and the account of the
assuming subdivision will be treated as one account for the
purposes of receiving allocations under this subtitle and paying
benefits accrued with respect to either subdivision.
(e) The retirement system is not liable to any person for
any claim or loss of benefits resulting from the assumption by
another participating subdivision of the account and pension
liabilities of a subdivision described by Subsection (a).
(f) The board of trustees by rule may establish standards,
definitions, and procedures it considers necessary to administer
this section and shall take reasonable actions and exercise its
discretion in a fair and equitable manner on a case-by-case basis to
preserve accrued benefits.
SECTION 6. Chapter 842, Government Code, is amended by
adding Subchapter A-1 to read as follows:
SUBCHAPTER A-1. TERMINATION OF PARTICIPATION BY SUBDIVISIONS
Sec. 842.051. GENERAL PROVISIONS. (a) Notwithstanding any
provision of this subchapter to the contrary, to the extent
required by applicable provisions of the Internal Revenue Code of
1986, on termination of a subdivision's participation in the
retirement system or on complete discontinuance of contributions,
each member becomes fully vested in the member's accrued benefit
with respect to the subdivision to the extent funded as of the date
of termination or contribution discontinuance.
(b) The retirement system is not liable to any person for
any claim or loss of benefits resulting from the termination of a
subdivision's participation in the system or the failure of a
subdivision to make required contributions or payments under a
termination agreement.
(c) The board of trustees by rule may establish standards,
definitions, and procedures it considers necessary to administer
this subchapter and shall take reasonable actions and exercise its
discretion in a fair and equitable manner on a case-by-case basis to
preserve accrued benefits.
Sec. 842.052. VOLUNTARY TERMINATION OF PARTICIPATION. (a)
With the consent of the board of trustees, a subdivision other than
a county may voluntarily terminate its participation in the
retirement system if the subdivision agrees to be contractually and
legally bound, on terms approved by the board, to fund:
(1) all benefits accrued before the date specified in
the termination agreement and payable on or after that date in
accordance with Subsection (e); and
(2) all supplemental annuities.
(b) Beginning with the date specified in the termination
agreement, additional employee contributions or deposits may not be
made to a member's account and additional service with the
subdivision may not be credited to a member, except as authorized by
the board. Except as otherwise provided by this section, all other
retirement plan provisions then in effect remain in effect.
(c) Beginning with the date specified in the termination
agreement, the subdivision's account in the subdivision
accumulation fund ceases to receive allocations under this subtitle
for any prior, current, or future plan year, except as authorized by
the board.
(d) On full performance of the termination agreement, the
subdivision is released from all liability for its accrued benefits
and supplemental annuities. The retirement system shall make
transfers from the subdivision's account to the appropriate funds
within the system in amounts actuarially equivalent to the accrued
benefits and supplemental annuities. The retirement system shall
pay any amounts remaining in the subdivision's account after
satisfaction of all the subdivision's pension liabilities to the
subdivision or its successor in interest in accordance with Section
845.317(b).
(e) On full performance of the termination agreement, each
member who has not received a refund of accumulated contributions
becomes fully vested in the member's accrued benefits with respect
to the subdivision and is immediately eligible to retire with a
service retirement annuity or to take a distribution of the accrued
benefits in a lump sum, regardless of age, service, or employment.
(f) A member vested under Subsection (e) or Section
842.051(a) is an eligible member under Section 844.407. For the
purpose of determining any death benefit payable under Section
844.402, the member's individual account consists only of the
deposits and contributions made by the member and the accumulated
interest attributable to those amounts.
Sec. 842.053. INVOLUNTARY TERMINATION OF PARTICIPATION.
(a) The board of trustees by order may terminate the participation
of a subdivision other than a county if the board determines that:
(1) the subdivision has failed to perform in
accordance with a termination agreement under Section 842.052;
(2) the subdivision has ceased to exist, is in the
process of dissolving, or is changing its operational form;
(3) benefits accrued for service with the subdivision
may be at risk of forfeiture;
(4) the retirement system no longer serves as an
effective program for providing retirement, disability, and death
benefits to the employees of the subdivision because of the action
or inaction of the subdivision or because of a significant change in
covered payroll, number of contributing members, workforce
composition, general revenues, or other circumstances of the
subdivision; or
(5) the continued participation of the subdivision is
not in the best interest of the retirement system, the subdivision,
the employees of the subdivision, or the other participating
subdivisions.
(b) Beginning with a date specified by the board, additional
employee deposits or contributions may not be made to a member's
account with the subdivision and additional service with the
subdivision may not be credited to a member, except as authorized by
the board. Except as otherwise provided by this subchapter, all
other retirement plan provisions then in effect remain in effect.
(c) Beginning with a date specified by the board, the
subdivision's account in the subdivision accumulation fund ceases
to receive allocations under this subtitle for any prior, current,
or future plan year except as authorized by the board.
(d) Beginning with a date specified by the board, the
retirement system shall value the accrued benefits and supplemental
annuities with respect to the subdivision's participation as
immediately payable under this subchapter. If the assets in the
subdivision's account exceed the actuarial equivalent value of
pension benefits, the subdivision is released from all liability
with respect to the accrued benefits and supplemental annuities.
The retirement system shall make transfers from the subdivision's
account to the appropriate funds within the system in amounts
actuarially equivalent to all accrued benefits and supplemental
annuities. The retirement system shall pay any amount remaining in
the subdivision's account after satisfaction of all the
subdivision's pension liabilities to the subdivision or its
successor in interest in accordance with Section 845.317(b).
(e) If the actuarial equivalent value of pension benefits
exceeds the assets in the subdivision's account, the subdivision or
its successor in interest may make a contribution in any amount to
the subdivision's account. The retirement system shall transfer
the assets of the subdivision's account in the subdivision
accumulation fund to appropriate funds within the system and
allocate the assets as provided by Sections 842.054-842.057.
Sec. 842.054. CLASS A. In a case of involuntary termination
under Section 842.053, the retirement system shall make a
proportionate transfer to the individual account of each member of
the subdivision eligible to retire based on the ratio that the
member's current service credit bears to the total current service
credit of the class. The transfer to a member's individual account
may not exceed 100 percent of the member's current service credit.
Sec. 842.055. CLASS B. If any assets remain after the
transfers are made under Section 842.054, the retirement system
shall make a proportionate transfer to the individual account of
each member of the subdivision not eligible to retire based on the
ratio that the member's current service credit bears to the total
current service credit of the class. The transfer to a member's
individual account may not exceed 100 percent of the member's
current service credit.
Sec. 842.056. CLASS C. If any assets remain after the
transfers are made under Sections 842.054 and 842.055, the
retirement system shall make a transfer to the current service
annuity reserve fund in an amount computed as necessary to fund the
supplemental annuities of the annuitants of the subdivision and a
transfer to the individual account of each member of the class
eligible to retire in an amount that equals the multiple matching
credits and prior service credits of the member. If necessary, the
retirement system shall proportionately reduce an individual's
total credits or supplemental annuity, as applicable, based on the
ratio that the individual's total actuarial equivalent of benefits
described by this section bears to the aggregate total actuarial
equivalent of all those benefits of the class.
Sec. 842.057. CLASS D. If any assets remain after the
transfers are made under Sections 842.054, 842.055, and 842.056,
the retirement system shall make a proportionate transfer to the
individual account of each member not eligible to retire based on
the ratio that the sum of the member's multiple matching credits and
prior service credits bears to the total multiple matching credits
and prior service credits of the class. The transfer to a member's
individual account may not exceed 100 percent of the member's
multiple matching credits and prior service credits.
Sec. 842.058. BENEFITS. (a) After the transfers,
allocations, and any necessary reductions described by Sections
842.054-842.057 have been made, each member who has not received a
refund of accumulated contributions becomes fully vested in the
member's accrued benefits with respect to the subdivision to the
extent funded and is immediately eligible to retire with a service
retirement annuity or to take a distribution of the accrued
benefits in a lump sum, regardless of age, service, or employment.
(b) A member vested under this section or Section 842.051(a)
is an eligible member under Section 844.407. For the purpose of
determining any death benefit payable under Section 844.402, the
member's individual account consists only of the deposits and
contributions made by the member and the accumulated interest
attributable to those amounts.
SECTION 7. Sections 842.101(a) and (b), Government Code,
are amended to read as follows:
(a) Except as otherwise provided by this subchapter, a
person who is not a member becomes a member of the retirement system
on the latest of [if]:
(1) [on] the date the subdivision's participation in
the retirement system becomes effective, if the person is a
subdivision employee on that date;
(2) the date [before September 1, 1987, and after the
date the subdivision's participation in the retirement system
became effective,] the person becomes [became] a subdivision
employee [and was less than 60 years old at the time of employment];
or
(3) January 1, 2006, if the person is an employee of a
participating subdivision on that date and was previously excluded
from retirement system membership [after August 31, 1987, and after
the date the subdivision's participation becomes effective, the
person becomes a subdivision employee].
(b) Except as otherwise provided by this subtitle, the
rights and benefits of a member are determined separately with
respect to each subdivision with which the member has credited
service [A person to whom Subsection (a)(1) applies becomes a
member of the retirement system on the date the subdivision's
participation becomes effective, and a person to whom Subsection
(a)(2) or (a)(3) applies becomes a member of the retirement system
on the first day of the person's employment].
SECTION 8. Section 842.105, Government Code, is amended to
read as follows:
Sec. 842.105. STATUS AS AN EMPLOYEE. For the purposes of
this subtitle, a person has the standing of an employee in a
participating subdivision if the person is an employee, other than
a temporary employee, of [:
[(1) is employed in a position that normally requires
services from the person for not less than 900 hours a year by] a
community supervision and corrections department that has executed
a contract with the participating subdivision under Section 76.006,
Government Code [; or
[(2) is eligible for optional membership in the
retirement system under Subchapter C].
SECTION 9. Section 842.107, Government Code, is amended to
read as follows:
Sec. 842.107. OPTIONAL [EXCEPTION TO GENERAL] MEMBERSHIP
[REQUIREMENT]. (a) A subdivision may authorize to be a member of
the retirement system a person who is accruing benefits in another
statewide retirement system for service in an elected or appointed
judicial or district office or as an employee of the state or a
governmental unit of the state during the same period the person is
receiving supplemental compensation from the subdivision. A person
described by this subsection who is first included for optional
membership after December 31, 2005, may not contribute to the
employees saving fund or receive any service credit for any
supplemental compensation received before the date the subdivision
makes the person eligible to become a member.
(b) The board by rule may establish reasonable restrictions
and limitations on the granting of membership and service credit
under this section [A subdivision that was participating in the
retirement system before January 1, 1987, and that had in effect
before that date and continues to have a policy of hiring new
personnel on a probationary basis for a specified period may
exclude new personnel from membership during the probationary
period but may not, for purposes of retirement system membership,
increase the length of the probationary period beyond the length of
the period in effect on January 1, 1987. The subdivision may reduce
or eliminate the period].
SECTION 10. Section 842.108, Government Code, is amended by
amending Subsections (a) and (c) and by adding Subsection (a-1) to
read as follows:
(a) A person, or the beneficiary of a person, whose
membership terminated before January 1, 2005, as a result of
absence from service may submit an application to withdraw all of
the person's accumulated contributions attributable to the
terminated membership.
(a-1) The accumulated contributions attributable to a
terminated membership described by Subsection (a) are held by the
retirement system in a noninterest-bearing account and may not be
considered deposits under Section 843.003 or 843.0031 until the
person:
(1) again becomes a member;
(2) is eligible under Section 843.003 or 843.0031; and
(3) submits an application to the system.
(c) Except for a terminated membership described by
Subsection (a), interest [Interest] is computed on the balance in
the member's individual account in the employees saving fund on
January 1 of the year of withdrawal through the month before the
month in which the withdrawal occurs for a person described by
Subsection (b) [and on January l of the year of membership
termination through the month before the month in which the
membership terminates for a person described by Subsection (a)
whose membership terminates after December 31, 1999].
SECTION 11. Sections 842.109(a) and (b), Government Code,
are amended to read as follows:
(a) A person terminates membership in the retirement system
by:
(1) death;
(2) retirement from all participating subdivisions
with which the person has service credit; or
(3) withdrawal of all of the person's accumulated
contributions [; or
[(4) absence from service for five consecutive years
before accumulating four or more years of credited service].
(b) A person's membership in the retirement system may not
extend beyond the required beginning date determined in accordance
with Section 841.010 [March 31 of the year following the later of
the year in which the person attains age 70-1/2 or the year in which
the person is no longer an employee of any participating
subdivision].
SECTION 12. Section 842.110, Government Code, is amended to
read as follows:
Sec. 842.110. RESUMPTION OF SERVICE [WITH SAME EMPLOYER] BY
RETIREE. (a) Except as provided by Subsection (b), a person who
has retired from a participating subdivision with a service
retirement annuity based on a bona fide termination of employment
and with a break in service of not less than one calendar month
resumes membership in the retirement system without suspension of
the person's annuity if the person becomes an employee of any
participating subdivision.
(b) A person who resumes employment with the same
subdivision from which the person was previously employed and does
not meet the requirements of Subsection (a) is considered not to
have retired with respect to that subdivision. The person's
service retirement annuity will be discontinued, the person's
membership will be restored, and the person must return any
payments received. Appropriate adjustments will be made for any
amounts not returned.
(c) A membership established under the requirements of
Subsection (a) is considered to be a new membership for the purposes
of beneficiary determinations and benefit selections.
(d) After terminating employment with a participating
subdivision, a member who has previously retired with a service
retirement annuity under this subtitle and who meets the
requirements of Subsection (a) is eligible to apply for and receive
an additional standard or optional service retirement annuity or a
refund of the member's accumulated contributions for service with
the subdivision, without regard to any age or credited service
requirement, except as provided by Subsection (f).
(e) On the death of a member who meets the requirement of
Subsection (d), a person may apply for and receive an optional
service retirement annuity or a refund of the decedent's
accumulated contributions in the manner provided by Subsection (d),
except as provided by Subsection (f).
(f) The waiver of an age or credited service requirement
under this section does not apply to a person who becomes eligible
to retire solely as a result of a subdivision's termination of
participation under Subchapter A-1, Chapter 842. [In this section,
"reemploying subdivision" is a subdivision for which a person
previously has performed creditable service and is receiving or
would receive a retirement annuity except for this section.
[(b) A person who has retired with a service retirement
annuity under this subtitle shall, if the person later becomes an
employee of a reemploying subdivision, become a member of the
system on the date of reemployment, but credits and benefits
payable to the person under this subtitle are limited as provided by
this section.
[(c) The retirement system shall suspend payments of each
service retirement annuity allowed because of the person's previous
service with a reemploying subdivision, beginning with the month
the retirement system determines that the person has resumed
employment with the reemploying subdivision. After the
determination, the retirement system may not make payments of the
annuity for any month during which the person remains an employee of
the reemploying subdivision. The retirement system shall transfer
annuity payments that become due and would be payable to the retiree
except for the suspension to a non-interest-bearing account in the
endowment fund. The suspension of a benefit under this section does
not suspend payment of a benefit to an alternate payee under a
qualified domestic relations order.
[(d) The retirement system shall establish an individual
account for the member in the employees saving fund for accumulated
contributions credited after reemployment with the subdivision.
After terminating employment with the reemploying subdivision, a
member may elect either an additional standard or optional service
retirement annuity based on the additional service with the
reemploying subdivision or a refund of the member's accumulated
contributions since reemployment.
[(e) After termination of employment with the reemploying
subdivision and filing with the retirement system an application
for resumption of the suspended annuity, a person described by
Subsection (b) is entitled to receive the payments of the suspended
annuity that had been transferred to the endowment fund and future
payments of the suspended annuity.
[(f) Beginning with the month following the month in which a
retiree's employment is terminated with a reemploying subdivision
by death or other separation from service, future payments of the
suspended annuity become payable to each person entitled to the
annuity in the same amounts that would be payable if the annuity had
not been suspended.
[(g) If a person with credited service under this section
dies before a payment under Subsection (e) is made, monthly
payments of a suspended annuity will resume under the terms of the
retirement annuity originally selected by the decedent, or a person
may make an election under Subsection (d) in the order of preference
provided by Section 844.407.]
SECTION 13. Subchapter B, Chapter 842, Government Code, is
amended by amending Section 842.112 and adding Section 842.113 to
read as follows:
Sec. 842.112. CORRECTION OF ERRORS. (a) The retirement
system may correct an [any administrative or operational] error
caused by an act or omission of the retirement system by any
appropriate means [, taking into account any applicable Internal
Revenue Service guidelines].
(b) If an act or omission of a participating subdivision
causes a person to receive more or less credited service, service
credit, or benefits than the person is entitled to receive, the
correction of the error is the responsibility of the subdivision.
(c) An error caused by an act or omission of a participating
subdivision may be corrected:
(1) by the subdivision on its own motion if approved by
the retirement system and if satisfactory proof of the error is
submitted to the retirement system; or
(2) through a judicial or quasi-judicial proceeding
between the person and the participating subdivision resulting in a
judgment, order, or settlement agreement that meets the
requirements of Section 842.113.
(d) A person seeking the correction of an error relating to
membership, rights, benefits, or benefit payments under the
retirement system must timely provide to the appropriate
subdivision or the retirement system written notice specifically
describing the error. The written notice must be received before
the first anniversary of the earlier of the date the person
discovers the error or the date a reasonable, diligent person
should have discovered the error.
(e) If the act of a third person causes the retirement
system to make a payment to someone other than the person entitled
to the payment, the system shall, after receiving credible evidence
of an erroneous payment, determine the person entitled to the
benefit and, if necessary, adjust future payments to the extent
practicable to ensure that the present value of the remainder of the
benefit will be paid to the person entitled to it.
(f) The retirement system is not liable for any payments
made before the date the system receives credible evidence of an
erroneous payment. Any payments made before that date are a
complete discharge of the system's responsibility for those
payments and benefits.
(g) A recipient who receives a payment to which the
recipient is not entitled holds the payment in constructive trust
for the person entitled to the payment.
Sec. 842.113. JUDGMENTS, ORDERS, AND SETTLEMENT
AGREEMENTS. (a) If, as a result of a suit against a
participating subdivision in a court of competent jurisdiction or
as a result of a complaint or grievance against a participating
subdivision filed with the United States Equal Employment
Opportunity Commission, the civil rights division of the Texas
Workforce Commission [on Human Rights], or a county civil service
commission, a judgment or order is issued or a settlement agreement
is executed, the terms of which require that a person's membership
record be adjusted with respect to the person's account balance,
service credit, or credited service, the retirement system shall
make appropriate adjustments [an employee receive back pay or that
a person be employed or reemployed for a specified period and
require that the person receive service credit toward retirement
based on the back pay or both service credit and credited service
for the specified period of employment or reemployment, on written
application to the retirement system, the system shall grant the
service credit and credited service] if:
(1) the judgment or order has become final and is no
longer subject to appeal;
(2) a certified copy of the judgment, order, or
settlement agreement accompanies the application; and
(3) the retirement system receives payment on behalf
of the person in an amount equal to the contributions the person
would have made to the system if the acts or omissions that resulted
in the order, judgment, or settlement agreement requiring an
adjustment to the person's membership record had not occurred or,
if restoration of a refunded account is required, the system
receives payment on behalf of the person in an amount equal to the
amount withdrawn [back pay or additional service had been reported
to the system; and
[(4) the retirement system receives payment from the
subdivision in an amount equal to the additional contributions that
the subdivision would have made to the system for the additional
service credit].
(b) The retirement system may not implement an order,
judgment, or settlement agreement in a manner that would grant a
person a status, right, or benefit not otherwise available under
this subtitle.
(c) The retirement system may seek, or require the parties
to seek, clarification or modification of any judgment or order, or
may require the parties to provide a binding agreement as to the
interpretation of any settlement if the director determines that
the terms of the judgment, order, or agreement are unclear or cannot
be feasibly implemented by the system.
SECTION 14. Section 843.103, Government Code, is amended to
read as follows:
Sec. 843.103. STATEMENT OF PRIOR SERVICE. A member
eligible to receive prior service credit shall claim the credit by
filing a detailed statement of the service with the [treasurer or
other disbursing officer of the] subdivision for which the service
was performed. The statement must be filed before the fifth
anniversary of the date the person becomes a member as an employee
of the subdivision.
SECTION 15. Sections 843.601(c) and (f), Government Code,
are amended to read as follows:
(c) The governing body of a participating subdivision also
may, on the terms provided by Section 844.704, authorize the
establishment of credited service [for current service] in the
retirement system for qualified active duty military service as
provided by this subsection. Qualified military service includes
military service before becoming an employee of the subdivision. A
member eligible to establish credited service [for current service]
under this subsection is one who has credited service in the
retirement system for at least the minimum period required to
receive a service retirement annuity at the age of 60 from the
subdivision from which credit under this subsection is sought [and
who does not receive and is not eligible to receive federal
retirement payments based on 20 years or more of active federal
military duty or its equivalent]. An eligible member may establish
credited service [for current service] under this subsection by
filing an application with the retirement system.
(f) Credited service [Credit] may not be established under
this section for any month of service that is credited under another
section of this subtitle or by another retirement system or program
established or governed by state law.
SECTION 16. Section 844.002(c), Government Code, is amended
to read as follows:
(c) A supplemental annuity is an amount payable from the
subdivision accumulation fund, subject to reduction under Section
842.054, 842.055, 842.056, 842.057 [842.008(d), 842.009(d),
842.010(c)], or 845.307(c), and is actuarially determined from the
sum of:
(1) a member's allocated prior service credit,
accumulated at interest as provided by Section 843.105(d); and
(2) a member's multiple matching credit, accumulated
at interest as provided by Section 843.403(d).
SECTION 17. Section 844.003(d), Government Code, is amended
to read as follows:
(d) A member who is eligible for service retirement and who
terminates employment with a participating subdivision may apply
for and receive a service retirement annuity based on service for
that subdivision despite the fact that the member is or becomes an
employee of another participating subdivision. Credited service
with the member's new employer may be used in determining
eligibility for service retirement. A member who is eligible for
service retirement using combined credited service for two or more
subdivisions may simultaneously apply for and receive a service
retirement annuity for service to one subdivision and a refund of
accumulated contributions for service to another subdivision. A
person who retires under this subsection is considered for all
purposes to be a retiree who resumes service with a different
employer under Section 842.110 [842.111].
SECTION 18. Section 844.208(b), Government Code, is amended
to read as follows:
(b) The amount of annuity increase under this section is
computed as the sum of the basic and supplemental annuities on the
effective date of retirement of the person on whose service the
annuities are based or, if the person's current annuity has been
increased under Section 844.006(c) or (d), 844.104(c)(5), or
844.305(c)(5), the sum of the basic and supplemental annuities is
computed as if the person had selected a standard service or
disability retirement annuity on the person's effective date of
retirement, multiplied by:
(1) the percentage change in the Consumer Price Index
for All Urban Consumers, published by the Bureau of Labor
Statistics of the United States Department of Labor, from December
of the year immediately preceding the effective date of the
person's retirement to the December that is 13 months before the
month in which the effective date of the order or resolution
providing the increase occurs; and
(2) a fraction, specified by the governing body in the
order or resolution, that is not less than 30 percent nor more than
100 [80] percent and is a multiple of 10 percent.
SECTION 19. Section 844.209(c), Government Code, is amended
to read as follows:
(c) The amount of annuity increase under this section is
computed as the sum of the person's basic and supplemental
annuities on the effective date of the increase multiplied by the
integer percentage increase specified by the governing body for all
annuitants in the order or resolution adopting the increase. The
specified percentage increase may not exceed the percentage
established by the board of trustees as the maximum allowable
percentage increase.
SECTION 20. Section 844.408(b), Government Code, is amended
to read as follows:
(b) If a surviving spouse or the executor or administrator
of a deceased member's estate would be entitled to make an election
under Section 842.110 [or 842.111], or if a beneficiary or the
executor or administrator of a deceased member's estate would be
entitled to make an election under Section 844.407 because of the
death of the member, the heirs of the deceased member may make that
election if:
(1) no surviving spouse exists, or, if Section 844.407
is applicable, no surviving beneficiary exists;
(2) no petition for the appointment of a personal
representative of the member is pending or has been granted;
(3) 30 days have elapsed since the date of death of the
member;
(4) the value of the entire assets of the member's
estate, excluding homestead and exempt property, does not exceed
$50,000; and
(5) on file with the retirement system is a certified
copy of a small estates affidavit that has been approved and filed
in accordance with Section 137, Texas Probate Code, or an original
affidavit described by Subsection (c).
SECTION 21. Section 844.703, Government Code, is amended by
adding Subsection (i) to read as follows:
(i) Notwithstanding any provision in this section to the
contrary and if approved by the board of trustees, a participating
subdivision that has experienced or is anticipating circumstances
that cause employer contributions based on covered payroll to be an
unreasonable method of funding shall contribute in an actuarially
approved method that is reasonable to regularly and consistently
fund all of its pension liabilities in the retirement system.
SECTION 22. Sections 844.704(a), (b), and (d), Government
Code, are amended to read as follows:
(a) On the adoption of the plan provisions of this
subchapter, the governing body of the subdivision shall select a
percentage for determining multiple matching credits under Section
843.403. The governing body shall select a percentage of zero or
any percentage that is a multiple of five percent and that does not
exceed [0, 25, 50, 75, 100, 125, or] 150 percent, or it may select
the multiple matching percentage that the subdivision has in effect
on the date of its adoption of the plan provisions of this
subchapter. The governing body may later increase the percentage
used in determining multiple matching credits under Section 843.403
to any percentage that is a multiple of five percent to take effect
on the next January 1 after the date the increase is adopted, except
that the sum of the percentage for current service credits under
Section 843.403 and the percentage for multiple matching credits
[If a subdivision has a current service credit percentage in excess
of 100 percent, the governing body of the subdivision may elect a
percentage under this section that, when added to the current
service credit percentage, is a multiple of 25 percent, except that
the combined percentages] may not exceed 250 percent. In its order
or resolution, the governing body may provide that the increased
percentage will be used in determining multiple matching credits
under Section 843.403 only for employee contributions made after
the effective date of the increase or that the increased percentage
will be used both prospectively and retroactively in determining
the multiple matching credits for all employee contributions not
otherwise matched at a higher percentage. The governing body may
thereafter reduce [increase] the percentage used in determining
multiple matching credits under Section 843.403 for contributions
made after the effective date of the reduction to zero or any
percentage that is a multiple of five percent [one of the
percentages specified in this subsection], to take effect on the
next January 1 after the date of the reduction [increase. However,
the sum of the percentage for current service credits under Section
843.403 and the percentage for multiple matching credits may not
exceed 250 percent. The governing body also may thereafter reduce
the percentage used in determining multiple matching credits for
contributions made after the effective date of the reduction to one
of the percentages specified in this subsection, to take effect on
the next January 1 after the date of the reduction].
(b) On the adoption of the plan provisions of this
subchapter, the governing body shall select a percentage for
determining allocated prior service credits under Section 843.105.
The governing body shall select a percentage that is a multiple of
five percent. For a subdivision that began participation before
January 1, 1992, the percentage cannot be less than the percentage
in effect immediately before the adoption of the plan. The
governing body may increase the percentage used in determining
allocated prior service credits under Section 843.105, to take
effect on the next January 1 after the date of the increase. The
percentage may not exceed one-half of the percentage that results
from adding 200 percent to the lowest percentage for determining
multiple matching credit currently applicable to any employee
contribution with respect to the subdivision. [The selection of or
increase in the percentage used in determining allocated prior
service credits may not result in greater benefits being provided
for completed service than would be provided through current
service credits and multiple matching credits for service that is
performed in the future.]
(d) The governing body of a subdivision that has adopted or
is adopting the plan provisions of this subchapter may adopt or
authorize:
(1) an increase in retirement annuities under Section
844.209;
(2) an increase in retirement annuities under Section
844.208;
(3) the reestablishment of [credited] service credit
previously forfeited under Section 843.003;
(4) the establishment of credited service for military
service under Section 843.601(c);
(5) [the establishment of premembership credited
service for overage employees under Section 843.204;
[(6)] the benefit eligibility plan described by
Section 844.210, 844.211, or 844.212; or
(6) [(7)] the partial lump-sum distribution on
service retirement under Section 844.009.
SECTION 23. Section 845.114(b), Government Code, is amended
to read as follows:
(b) The board may require reports from the participating
subdivisions for the efficient handling of members' deposits. A
[The treasurer or other payroll disbursing officer of each]
participating subdivision shall:
(1) prepare the reports in the form specified by the
board; and
(2) file the reports at the time specified by the
board.
SECTION 24. Section 845.305, Government Code, is amended to
read as follows:
Sec. 845.305. CREDITING SYSTEM ASSETS. (a) The retirement
system shall [immediately] deposit all receipts [money received by
the system] with a depository designated under Section 845.109 or a
custodian designated under Section 845.302.
(b) All assets of the pension trust of the retirement system
shall be credited according to the purpose for which they are held
to one of the following funds:
(1) employees saving fund;
(2) subdivision accumulation fund;
(3) current service annuity reserve fund;
(4) interest fund;
(5) endowment fund; or
(6) expense fund[; or
[(7) supplemental death benefits fund].
(c) Amounts contributed by a subdivision to provide
optional group term life insurance for its participating employees
and retirees shall be deposited to the fund of the supplemental
death benefits trust.
SECTION 25. Section 845.306(a), Government Code, is amended
to read as follows:
(a) The retirement system shall deposit in a member's
individual account in the employees saving fund:
(1) the amount of contributions to the retirement
system deducted from the member's compensation;
(2) interest allowed [on money in the account] in
accordance with this subtitle;
(3) the contribution made by a member in an amount
equal to the amount withdrawn to reinstate service credit under
[portion of a deposit required by] Section 843.003 [to reinstate
credited service previously terminated that represents the amount
withdrawn];
(4) the amount deposited by a member in accordance
with Section 843.0031 [this subtitle to establish credit for prior
or current service for a person who became a member in accordance
with Subchapter C, Chapter 842]; and
(5) the amount contributed[, if any, deposited] by a
member in accordance with Section 843.601(b) to establish current
service credit for military service under the Uniformed Services
Employment and Reemployment Rights Act of 1994 (38 U.S.C. Section
4301 et seq.) [; and
[(6) the amount deposited by a person to become a
member in accordance with Section 842.103].
SECTION 26. Section 845.307(a), Government Code, is amended
to read as follows:
(a) The retirement system shall credit or charge to [deposit
in] the account of a participating subdivision in the subdivision
accumulation fund:
(1) all benefit contributions made by the subdivision
to the system pursuant to Section 845.404(a)(2);
(2) net investment income or loss allocated to the
fund under Section 845.315 [as provided by this subtitle];
(3) amounts deposited by the subdivision under Section
845.408;
(4) the withdrawal charge for reinstatement of
[credited] service credit as provided by Section 843.003; and
(5) other credits and charges that may be authorized
under this subtitle [the amount of matching contributions made by a
subdivision in accordance with this subtitle to establish credit
for prior or current service for a person who became a member in
accordance with Subchapter C, Chapter 842; and
[(6) the amount deposited by a subdivision for a
person to become a member in accordance with Section 842.103].
SECTION 27. Sections 845.309(a), (b), and (c), Government
Code, are amended to read as follows:
(a) The interest fund shall account for the determination
and allocation of net investment income or loss [must contain
accounts for:
[(1) distributable income;
[(2) nondistributable income;
[(3) investment expenses; and
[(4) other accounts the board of trustees establishes
by resolution].
(b) Net investment income or loss will be determined
annually as [As] of December 31 [of each year, the nondistributable
income account will be adjusted by the net change in carrying value
necessary to value at market all domestic, fixed-income securities
owned by the retirement system as part of a passively managed,
long-term portfolio].
(c) Net investment income or loss will be allocated each
year in accordance with Section 845.315 [The distributable income
account will be credited with:
[(1) all income, interest, and dividends from deposits
and investments of the retirement system;
[(2) all changes in carrying value of the investments
described by Subsection (b) resulting from amortization,
accretion, accrual of interest payments as principal, or other
change in carrying value not resulting from a change in market
value;
[(3) all net capital gains and losses resulting from
the sale, call, maturity, or conversion of investments of the
retirement system;
[(4) all changes in carrying values of investments of
the retirement system except those to be credited in accordance
with Subsection (b); and
[(5) any amounts that the board of trustees transfers
under Section 845.310(e)].
SECTION 28. Section 845.310, Government Code, is amended by
amending Subsections (a), (c), (d), and (e) and by adding
Subsection (c-1) to read as follows:
(a) The endowment fund consists of the general reserves
account and other accounts as necessary [The retirement system
shall deposit and hold in the endowment fund gifts, awards, funds,
and assets delivered to the retirement system:
[(1) that are not specifically required by the
system's other funds; or
[(2) that are designated by the grantor as perpetual
endowments for the system].
(c) The retirement system shall credit or charge to the
general reserves account amounts [income] allocated to the
endowment fund in accordance with Section 845.315.
(c-1) As of December 31, the board of trustees shall provide
from the general reserves account the amount needed to pay the
retirement system's estimated operating expenses for the next
fiscal year.
(d) The board of trustees may allocate any amount in the
endowment fund to any other account or fund in the pension trust
[shall transfer money from the general reserves account to the
expense fund in accordance with Section 845.311(b)].
(e) Any allocation of reserves to an account of a
subdivision to which Section 842.052, 842.053, or 845.317 applies
must be specifically authorized by board resolution [If the board
of trustees determines that the amount in the general reserves
account as of December 31 of any year is in excess of the amount
necessary to provide adequate funding and reserves for all needs
and contingencies, the board may by resolution transfer part or all
of the excess to the distributable income account of the interest
fund for distribution].
SECTION 29. Section 845.311, Government Code, is amended to
read as follows:
Sec. 845.311. EXPENSE FUND. The expense fund shall account
for the administrative revenues and expenses of the retirement
system [(a) The board of trustees by resolution recorded in its
minutes shall transfer from the general reserves account of the
endowment fund to the expense fund the amount that is needed to pay
the system's estimated cash outlays for administrative and
investment expenses for the next fiscal year].
[(b) The retirement system shall pay from the expense fund:
[(1) administrative and maintenance expenses of the
system;
[(2) notes and bonds issued in accordance with Section
845.105; and
[(3) investment expenses of the system.]
SECTION 30. Sections 845.315 and 845.317, Government Code,
are amended to read as follows:
Sec. 845.315. ANNUAL ALLOCATION OF NET INVESTMENT INCOME OR
LOSS [TRANSFER OF ASSETS FROM INTEREST FUND]. (a) As of December
31 of each year [and after the balance of the investment expenses
account has been transferred to the distributable income account],
the board of trustees shall make the following allocations that in
the aggregate equal the net investment income or loss for the year
[transfer from the distributable income account of the interest
fund the following amounts]:
(1) to the current service annuity reserve fund,
interest as allowed under this subtitle on the mean amount in the
current service annuity reserve fund during that year;
(2) to the supplemental death benefits fund, interest
as allowed under this subtitle on the mean amount in the
supplemental death benefits fund during that year;
(3) to the general reserves account of the endowment
fund, a positive or negative amount determined by the board [dollar
amount determined by the board of trustees as necessary to provide
adequate funding of the endowment fund, including provisions for
all special needs, all contingencies, replenishment of the amount
transferred during the current year to the employees saving fund
for interest to retiring or deceased members plus the matching
amount transferred to the subdivision accumulation fund, and
funding of investment expenses and administrative costs for the
following year];
(4) to the employees saving fund, current interest as
allowed under this subtitle on the member account balances on
January 1 of that year of [on the sum of the accumulated
contributions in the employees saving fund credited on January 1 of
that year to] all persons who are members on December 31 of that
year [before any transfers for retirement effective December 31 of
that year are made]; [and]
(5) to the accounts of subdivisions, other than
subdivisions otherwise described by this section, an amount derived
by applying a positive or negative rate, as determined by the board,
to the January 1 balances of that year; and
(6) to the accounts of subdivisions to which Section
842.052 or 842.053 applies, positive or negative amounts as
determined by the board [subdivision accumulation fund, the
remaining balance of the distributable income account in the
interest fund after transfers provided for by Subdivisions (1),
(2), (3), and (4) have been made].
(b) The account of [each subdivision, other than] a
subdivision that has ceased participation according to Section
845.317(a)[,] will not receive an allocation under this section [a
share of the amount transferred under Subsection (a)(5) that is in
proportion to the amount that the balance credited to its account on
January 1 bears to the total credited to the subdivision
accumulation fund on that date].
Sec. 845.317. PAYMENT TO FORMERLY PARTICIPATING
SUBDIVISION. (a) If a participating subdivision, other than a
subdivision described by Subsection (b), has no employees who are
members of the retirement system and has no present or potential
liabilities resulting from the participation of former employees,
the subdivision's participation in the system stops and the system
shall repay to the subdivision on application any amount in the
subdivision accumulation fund that is credited to the subdivision.
(b) If the participation of a subdivision has terminated
under Section 842.052 or 842.053 and the subdivision has no present
or potential liabilities resulting from the participation of
current or former employees, the retirement system, after
application by the subdivision or its successor in interest, shall
pay to the subdivision or its successor any remaining credit to the
account of the subdivision in the subdivision accumulation fund [a
participating subdivision does not exist as a separate entity
because it has merged or consolidated with a city or other agency
that is not eligible to participate in the retirement system and if
under the applicable law or merger agreement the successor is
entitled to the assets of the subdivision, the retirement system,
on application, shall pay to the successor the amount in the
subdivision accumulation fund that is credited to the subdivision].
(c) A subdivision that has terminated participation in the
retirement system has no right or claim to any amounts in the
system, except as provided by this section.
SECTION 31. Sections 845.403(e), (g), and (j), Government
Code, are amended to read as follows:
(e) Each [The treasurer or disbursing officer of each]
participating subdivision shall:
(1) make deductions from each member's compensation
for contributions to the retirement system;
(2) transmit monthly, or at the time designated by the
board of trustees, the payroll and other pertinent information
prescribed by the board; and
(3) pay the deductions to the board of trustees at the
board's home office.
(g) The [treasurer or disbursing officer of a]
participating subdivision shall make the deductions required by
this section even if the member's compensation is reduced below the
amount equal to the minimum compensation provided by law.
(j) Contributions picked up as provided by Subsection (i)
shall be treated as employer contributions in determining tax
treatment of the amounts under Section 414(h) of the United States
Internal Revenue Code of 1986. Each employee contribution that is
picked up [as above provided] shall be deposited as provided in
Section 845.306 to the individual account of the member, on whose
behalf the contribution is [they are] made, and shall be treated for
all other purposes of this subtitle in the same manner [and with
like effect] as if the amount had been deducted from the
compensation of and made by the employee pursuant to Sections
845.402 and this section [845.403(a) through (h)].
SECTION 32. (a) The Texas County and District Retirement
System shall reinstate, as of the termination date, the account of a
person whose membership was terminated after December 31, 2004,
under previous law because of an absence from service for five
consecutive years, if the amount in the account has not been
withdrawn. After reinstatement, the retirement system shall adjust
the member's account to its opening balance as of January 1, 2005,
and credit it after that date with interest as allowed under
Subtitle F, Title 8, Government Code. For a membership that was
terminated after December 31, 1999, and before January 1, 2006, and
that is not reinstated, interest is computed on the balance in the
person's individual account on January 1 of the year of termination
through the month preceding the month in which the membership was
terminated.
(b) Until the first pay period beginning after December 31,
2006, a subdivision participating in the Texas County and District
Retirement System by order or resolution may exclude from
membership in the retirement system as a class persons who fill a
permanent position or office in the subdivision that normally
requires services from the person for less than 900 hours a year and
persons described by Section 842.105, Government Code, who are
employed in a position that normally requires services for less
than 900 hours a year by a community supervision and corrections
department. The optional exclusion from membership authorized by
this subsection ceases on the earlier of the date specified by a
subdivision in an order or resolution or the first pay period
beginning after December 31, 2006.
(c) A subdivision that elects to include persons as members
of the Texas County and District Retirement System under former
Section 842.201, Government Code, may, before April 1, 2006, elect
to discontinue active participation of those persons in the
retirement system by notifying the system and those persons in a
manner the system prescribes.
SECTION 33. The following provisions of the Government Code
are repealed:
(1) Section 842.003;
(2) Section 842.008;
(3) Section 842.009;
(4) Section 842.010;
(5) Section 842.102;
(6) Section 842.103;
(7) Section 842.111;
(8) Subchapter C, Chapter 842;
(9) Section 843.203;
(10) Section 843.204;
(11) Subchapter D, Chapter 843;
(12) Section 843.402;
(13) Section 843.602;
(14) Sections 845.309(d) and (e);
(15) Sections 845.310(b) and (f); and
(16) Section 845.403(c).
SECTION 34. This Act takes effect January 1, 2006, except
that the change in law made by this Act to Section 844.704(a),
Government Code, takes effect December 31, 2006.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 633 was passed by the House on March
17, 2005, by a non-record vote.
______________________________
Chief Clerk of the House
I certify that H.B. No. 633 was passed by the Senate on May
19, 2005, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor