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  H.B. No. 1587
 
 
 
 
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 841.001, Government Code, is amended by
  amending Subdivisions (7) and (18) and adding Subdivision (7-a) to
  read as follows:
               (7)  "Credited service" means the number of months of
  prior, [and] current, and optional service ascribed to a member in
  the retirement system.
               (7-a)  "Director" means the person appointed as
  director under Section 845.202.
               (18)  "Optional group term life [Supplemental death
  benefit] program" means the voluntary, employer-funded optional
  death benefit program established under Subchapter F, Chapter 844.
         SECTION 2.  Section 841.004, Government Code, is amended to
  read as follows:
         Sec. 841.004.  POWERS, [AND] PRIVILEGES, AND IMMUNITIES.  
  (a) The retirement system is a governmental entity and has the
  powers, privileges, and immunities of a corporation, as well as the
  powers, privileges, and immunities conferred by this subtitle.
         (b)  The board of trustees, director, investment officer,
  and employees of the retirement system are not liable for any action
  taken or omission made or suffered by them in the good faith
  performance of any duty in connection with any program or benefit
  administered by the retirement system.
         SECTION 3.  Section 841.008, Government Code, is amended by
  amending Subsections (a) and (b) and by adding Subsection (c-1) to
  read as follows:
         (a)  The board of trustees may accept an application for any
  benefit under this subtitle that is signed on behalf of a person
  entitled to the benefit by:
               (1)  an appointed guardian of the person and estate of
  the person; or
               (2)  an attorney in fact authorized to act on behalf of
  the person by a written power of attorney that provides that the
  power is not revoked by disability of the person, except that an
  attorney in fact who is not the person's spouse may not select a
  benefit in which the attorney in fact or a direct ancestor or lineal
  descendant of the attorney in fact is a named beneficiary, unless
  the attorney in fact designates as the person's beneficiary:
                     (A)  the same individuals, with the same share of
  the benefit that each would have received if the person had died
  immediately before the beneficiary designation by the attorney in
  fact; or
                     (B)  all individuals who bear the same
  relationship to the attorney in fact, with the same share of the
  benefit that each would have received [each individual who would be
  entitled to the entire benefit] if the person had died intestate.
         (b)  If it is made to appear to the director by affidavit of a
  licensed physician that a person entitled to a benefit is not
  mentally capable of managing the person's own affairs, and if the
  director reasonably believes [it is further established to the
  satisfaction of the director] that the estate of the person is
  insufficient to justify the expense of establishing a guardianship,
  or continuing a guardianship after letters of guardianship have
  expired, then until current letters of guardianship are filed with
  the retirement system, the director may make payment of any annuity
  or other benefit:
               (1)  to the spouse of the person, as trustee for the
  person; [or]
               (2)  to an individual or entity actually providing for
  the needs of and caring for the person, as trustee for the person;
  or
               (3)  to a public agency or private charitable
  organization providing assistance or services to the aged or
  incapacitated that agrees to accept and manage the payment for the
  benefit of the person as a trustee [until current letters of
  guardianship are filed with the retirement system].
         (c-1)  If the director reasonably believes that the
  individual or entity accepting benefits for the person has breached
  a fiduciary duty owed to the person or is failing to act in the
  interest of or for the benefit of the person and the person may
  suffer personal or financial harm as a result, the retirement
  system, on giving notice to the individual or entity receiving
  payments on behalf of the person, may cease making payments to the
  individual or entity. Thereafter, the system may make payment of
  any annuity or other benefit in a manner provided by Subsection (b).  
  This subsection does not apply if a court of competent jurisdiction
  has appointed the individual or entity accepting benefits for the
  person.
         SECTION 4.  Section 842.001(d), Government Code, is amended
  to read as follows:
         (d)  Subject to the approval of the board of trustees, an
  electing subdivision under this section may begin participation in
  the retirement system on the date specified [first day of any month
  designated] by the subdivision's governing body.
         SECTION 5.  Section 842.002, Government Code, is amended to
  read as follows:
         Sec. 842.002.  RULES FOR PARTICIPATING SUBDIVISIONS.  The
  board of trustees may adopt rules concerning:
               (1)  notices, information, and reports the board of
  trustees requires from a subdivision that elects to participate in
  the retirement system;
               (2)  the time that a subdivision that elects to
  participate in the retirement system may begin participation and
  the actions that subdivision may take in anticipation of board
  approval under Section 842.001; and
               (3)  the powers and duties of a participating
  subdivision to adopt orders or resolutions, make elections, and
  otherwise exercise decision-making authority concerning the rights
  and benefits of the members and annuitants under a plan adopted or
  assumed by the subdivision.
         SECTION 6.  Section 842.004, Government Code, is amended to
  read as follows:
         Sec. 842.004.  OPTIONAL GROUP TERM LIFE PROGRAM
  [SUPPLEMENTAL DEATH BENEFITS FUND].  (a)  A subdivision
  participating in the retirement system may elect to participate in
  the optional group term life program [supplemental death benefits
  fund].
         (b)  A subdivision that elects to participate in the program
  [fund] may elect coverage providing postretirement death benefits
  in addition to coverage providing in-service death benefits.
         (c)  [Before a subdivision that has fewer than 10 employees
  who are members of the retirement system is permitted to
  participate in the fund, the board of trustees may require the
  subdivision to provide evidence that is satisfactory to the board
  that the members are in good health. The board of trustees may allow
  participation in the fund by those subdivision employees who are in
  good health on the effective date of participation and exclude
  those subdivision employees who are not in good health at that time.
         [(d)]  A subdivision that elects to participate in the
  program [fund] may begin participation on the first day of any month
  after the month in which the subdivision gives notice of its
  election to the board of trustees.
         (d) [(e)]  If before November 1 of any year a subdivision
  gives written notice of its intention to the retirement system, the
  subdivision may terminate coverage under and discontinue
  participation in the program [supplemental death benefits fund]. A
  termination under this subsection is effective on January 1 of the
  year following the year in which notice is given.
         (e) [(f)]  If a subdivision has previously discontinued
  participation in the program [fund], the board of trustees in its
  discretion may restrict the right of the subdivision to participate
  again.
         SECTION 7.  Subchapter A, Chapter 842, Government Code, is
  amended by adding Section 842.008 to read as follows:
         Sec. 842.008.  PARTIAL ASSUMPTION BY TRANSFEREE
  SUBDIVISION. If a function or activity previously performed by
  employees of a participating subdivision is transferred to or
  otherwise taken over by another participating subdivision and any
  of the employees performing the function or activity transfer to
  and become employees of the subdivision taking over the function or
  activity, with the consent of and on terms approved by the board of
  trustees, the pension liabilities accrued by the transferring
  employees for service with the transferring subdivision, together
  with an appropriate portion of trust assets in the account of the
  transferring subdivision, may be treated as and considered to be a
  separate account and pension liabilities of the subdivision taking
  over the function or activity.
         SECTION 8.  Section 842.052(d), Government Code, is amended
  to read as follows:
         (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 governmental successor in interest in accordance
  with Section 845.317(b).
         SECTION 9.  Sections 842.053(d) and (e), Government Code,
  are amended to read as follows:
         (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
  governmental 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 governmental 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.
         SECTION 10.  Section 842.101(b), Government Code, is amended
  to read as follows:
         (b)  Except as otherwise provided by this subtitle or by
  rules adopted by the board of trustees, the rights and benefits of a
  member are determined separately with respect to each subdivision
  with which the member has credited service.
         SECTION 11.  Section 842.106, Government Code, is amended to
  read as follows:
         Sec. 842.106.  MULTIPLE RETIREMENT SYSTEM MEMBERSHIP.  [(a)]
  A person who is a member of [an employee eligible for membership and
  eligible to receive credit in] this retirement system [for service
  performed for a participating subdivision is not eligible for
  credit for that service in another public retirement system
  described by Section 801.001 that is at least partly supported by
  the subdivision at public expense. It is the responsibility of the
  subdivision to enforce this provision.
         [(b)     A person may simultaneously be a member of this
  retirement system] and another state or local retirement system
  authorized under Section 67, Article XVI, Texas Constitution, [.
  However, a person] may receive a benefit from this system only to
  the extent that the amount of the benefit is computed solely on the
  member's [compensation and] accumulated contributions and service
  credit in this [the] system. Service credited by another
  retirement system may not be used to determine eligibility for a
  benefit in this retirement system except as provided by Chapter
  803.
         SECTION 12.  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
               (2) [(3)]  withdrawal of all of the person's
  accumulated contributions.
         (b)  Unless terminated under Subsection (a), a [A] person's
  membership in the retirement system terminates on the earlier of
  the date of the person's death or the last day of the month ending
  before the person's [may not extend beyond the] required beginning
  date determined in accordance with Section 841.010.
         SECTION 13.  Section 842.112, Government Code, is amended by
  amending Subsections (e) and (f) and adding Subsections (f-1) and
  (f-2) to read as follows:
         (e)  If the act of a third person causes the retirement
  system to make a payment of a survivor benefit or death benefit to
  someone other than the person entitled to the payment, the system
  shall, after receiving credible evidence of an erroneous payment,
  determine the beneficiary [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 to any person for
  any payments described by Subsection (e) 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.
         (f-1)  If, pursuant to a valid application for a withdrawal
  or for retirement, the retirement system issues a check made
  payable to the applicant, properly addressed as directed on the
  application and sent by first-class mail, and the check is
  negotiated by any person, the system is not liable to any person
  with respect to the payment after the first anniversary of the date
  the check was mailed.
         (f-2)  If, pursuant to a valid application for a withdrawal
  or for retirement, the retirement system causes funds to be
  electronically transferred to the account specified on the
  application, the system is not liable to any person for that payment
  or any claim relating to the payment beginning on the date of the
  transfer.
         SECTION 14.  Subchapter B, Chapter 842, Government Code, is
  amended by adding Section 842.114 to read as follows:
         Sec. 842.114.  BURDEN OF PROOF. (a) A person disputing the
  validity of a form, application, or other document filed with the
  retirement system has the burden of proving the document to be
  false, fraudulent, or otherwise invalid.
         (b)  A person seeking a correction based on an error caused
  by an act or omission of the retirement system or a subdivision has
  the burden of proving the error and the act or omission causing the
  error.
         (c)  A person described by Subsection (a) or (b) has the
  burden of showing:
               (1)  reasonableness and diligence in discovering the
  invalidity or error; and
               (2)  timeliness in notifying the retirement system or
  the appropriate subdivision.
         SECTION 15.  Section 843.001, Government Code, is amended to
  read as follows:
         Sec. 843.001.  TYPES OF CREDITABLE SERVICE.  The types of
  service creditable as credited service in the retirement system are
  prior service, [and] current service, and optional service.
         SECTION 16.  Sections 843.003 and 843.0031, Government Code,
  are amended to read as follows:
         Sec. 843.003.  AUTHORIZATION TO REESTABLISH [REESTABLISHING
  CREDITED SERVICE AND] SERVICE CREDIT PREVIOUSLY FORFEITED.  (a)  An
  eligible member who has withdrawn contributions from the retirement
  system may reestablish the forfeited service credit in the system
  if the current service on which the credit was based was performed
  for a participating subdivision the governing body of which by
  order authorizes reestablishment of the credit by eligible employee
  members of the subdivision.
         (b)  A member eligible to reestablish service credit under
  this section is one who is a member as an employee of the
  subdivision on the effective date of an order authorized by the
  subdivision under Subsection (a).
         (c)  A member eligible under this section may reestablish
  service credit by depositing with the retirement system in a lump
  sum the amount withdrawn from the system, plus a withdrawal charge
  computed at an annual rate of five percent from the date of
  withdrawal to the date of redeposit.
         (d)  Prior service credit forfeited because of a withdrawal
  of contributions may not be reestablished under this section [A
  governing body may not make an order under Subsection (a) except on
  the terms provided by Subchapter H, Chapter 844].
         Sec. 843.0031.  [ALTERNATIVE] REESTABLISHMENT OF CREDITED
  SERVICE [PREVIOUSLY FORFEITED]; OPTION TO PAY LUMP-SUM AMOUNT.  (a)  
  A member who has withdrawn contributions from the retirement system
  and who subsequently resumes employment with a subdivision may by
  application to the system at any time before retirement reestablish
  forfeited prior, [and] current, and optional credited service.
         (b)  A member who has withdrawn contributions from the
  retirement system and who subsequently resumes employment with a
  subdivision may at any time before retirement pay to the system a
  lump sum in any amount that does not exceed the actuarial present
  value of the additional benefits that would have been attributable
  to the withdrawn contributions. Any amount paid under this
  subsection and interest accrued on the amount may not be considered
  in the computation of service credits.
         (c)  With respect to the account with the subdivision for
  which contributions had been withdrawn, after the date an amount is
  deposited under Subsection (b), the member is ineligible to
  reestablish any service credit with the subdivision that had been
  forfeited before the date of redeposit [An amount paid under
  Subsection (b) is not subject to employer matching contributions],
  even if the member would otherwise be eligible under an order
  adopted under Section 843.003.
         SECTION 17.  Section 843.102, Government Code, is amended to
  read as follows:
         Sec. 843.102.  ELIGIBILITY FOR PRIOR SERVICE CREDIT.  (a)  A
  [Except as provided by Section 843.108, a] member is eligible to
  receive service credit in the retirement system for prior service
  if the member[:
               [(1)]  became a member as an employee of a subdivision:
               (1)  on the effective date of the subdivision's
  participation in the retirement system; or
               (2)  [became a member as an employee of a subdivision]
  before the second [fifth] anniversary of the effective date of its
  participation and continues as an employee of the subdivision for
  at least six months [five consecutive years] after reemployment.
         (b)  The board of trustees may adopt rules concerning
  eligibility for prior service credit under Subsection (a).
         (c)  A person who has withdrawn contributions from an account
  for service for a subdivision and who subsequently resumes
  employment with the subdivision is not eligible to receive service
  credit under this section for prior service for the subdivision
  [that was not established before the person withdrew the
  contributions].
         SECTION 18.  Sections 843.104(a) and (d), Government Code,
  are amended to read as follows:
         (a)  A member eligible to receive prior service credit may
  claim the credit by filing a detailed statement of the service with
  the subdivision for which the service was performed. After the
  statement is filed [As soon as practicable after a member files a
  statement of prior service under Section 843.103], the subdivision
  shall [employing the officer receiving the statement shall verify
  the prior service claimed and] certify [to the board of trustees]
  the amount of the member's prior service [approved] and the member's
  average prior service compensation.
         (d)  The board of trustees may adopt rules concerning
  [verification and] certification of service and the definition and
  computation of average prior service compensation under this
  section.
         SECTION 19.  Section 843.105, Government Code, is amended to
  read as follows:
         Sec. 843.105.  DETERMINATION OF MAXIMUM AND ALLOCATED PRIOR
  SERVICE CREDIT.  (a)  After receiving a certification of prior
  service and average prior service compensation under Section
  843.104, the retirement system shall credit to the member the prior
  service certified and [board of trustees shall] determine the
  member's maximum and allocated prior service credits.
         (b)  The maximum prior service credit is an amount equal to
  the accumulation at interest of a series of equal monthly amounts
  for the number of months of certified [approved] prior service.
  Each monthly amount equals twice the subdivision's initial deposit
  rate, times the member's average prior service compensation.
  Interest is allowed at the end of each 12-month period on an
  accumulated amount at the beginning of each period and is credited
  only for each whole 12-month period. The rate of interest allowed
  on a maximum prior service credit [granted by a subdivision having
  an effective date of participation in the retirement system after
  December 31, 1981,] is three percent a year.
         (c)  Allocated prior service credit is a monetary credit
  granted by a subdivision to be computed at a member's retirement
  date and, together with any multiple matching credit, used in
  determining a member's supplemental annuity. The allocated prior
  service credit of a member is an amount equal to a percentage of the
  maximum prior service credit, increased from the subdivision's
  effective date of participation to the member's effective date of
  retirement at the applicable rate of interest provided under this
  subtitle or prior law for the period [The allocated prior service
  credit is the percentage of the maximum prior service credit
  granted by the subdivision to all members who performed prior
  service for the subdivision].
         (d)  The governing body of a subdivision may adopt a
  percentage to be used to determine allocated prior service credits.
  The rate may be limited to zero or any multiple of five percent
  [Interest is earned on an allocated prior service credit from the
  effective date of membership to the effective date of retirement at
  the applicable rate for the period as provided by Section 845.314].
         SECTION 20.  Sections 843.201(a), (b), and (c), Government
  Code, are amended to read as follows:
         (a)  In accordance with rules adopted by the board of
  trustees, the [The] governing body of a participating subdivision
  by order may authorize the establishment of credited service and
  prior service credit in the retirement system for service performed
  in a public hospital, utility, or other public facility or
  governmental function during a time the facility was operated or
  function was performed by a unit of government other than the
  subdivision and before:
               (1)  the effective date of the subdivision's
  participation in the retirement system, if the facility was
  acquired or the governmental function was taken over by the
  subdivision before that date; or
               (2)  the date of acquisition of the facility or the date
  the governmental function was taken over, if the facility was
  acquired or the governmental function was taken over after the
  effective date of the subdivision's participation in the retirement
  system.
         (b)  A member eligible to establish credited service and
  prior service credit under this section after an order under
  Subsection (a) is one who was employed by a public facility or by an
  entity performing the governmental function:
               (1)  on the effective date of subdivision
  participation, for service under Subsection (a)(1); or
               (2)  on the date of acquisition of the facility or the
  date the governmental function was taken over, for service under
  Subsection (a)(2).
         (c)  The allocated prior service credit percentage allowable
  under this section may be limited by the order of the governing body
  to zero or to any percentage that is a multiple of five percent [and
  that does not exceed the percentage applicable to the computation
  of allocated prior service credits for employees of other
  departments of the subdivision].
         SECTION 21.  Section 843.401, Government Code, is amended to
  read as follows:
         Sec. 843.401.  CURRENT SERVICE GENERALLY.  Current service
  is service performed by an employee of a participating subdivision
  while a member of the retirement system and credited as provided
  under this section. The retirement system shall credit a member
  with [grant] one month of current service for each month for which
  the required contributions are made, reported, and certified by the
  employing subdivision.
         SECTION 22.  Subchapter E, Chapter 843, Government Code, is
  amended by adding Section 843.402 to read as follows:
         Sec. 843.402.  CURRENT SERVICE CREDIT AND MULTIPLE MATCHING
  CREDIT.  (a)  Current service credit is a monetary amount credited
  by a subdivision to be computed at a member's effective retirement
  date and used in determining the member's basic annuity. At the
  determination date, a member's current service credit is an amount
  equal to the sum of the employee contributions in the member's
  individual account and the interest accumulated on those
  contributions as provided by this subtitle.
         (b)  Multiple matching credit is a monetary amount credited
  by the governing body of a subdivision to be computed at a member's
  effective retirement date and, together with any prior service
  credit, used in determining a member's supplemental annuity.
  Multiple matching credit is an amount equal to a percentage of the
  sum of employee contributions in a member's individual account that
  were made for a particular calendar year and the interest
  accumulated on those contributions as provided under this subtitle.
  At the determination date, the multiple matching credit of a member
  is equal to the sum of the multiple matching credit for all years of
  the person's membership.
         (c)  The percentage to be used in the computation of the
  multiple matching credit for a particular year is adopted by the
  governing body of a subdivision and applied in accordance with this
  subtitle.
         SECTION 23.  The heading to Subchapter F, Chapter 843,
  Government Code, is amended to read as follows:
  SUBCHAPTER F. OPTIONAL CREDITED [CURRENT] SERVICE [FOR LEGISLATIVE
  SERVICE]
         SECTION 24.  Section 843.501, Government Code, is amended to
  read as follows:
         Sec. 843.501.  CREDITED SERVICE FOR LEGISLATIVE SERVICE.  
  [(a)]  A member may establish credited service in the retirement
  system for service performed as a member of the legislature. A
  member claiming credited service for previous legislative service
  shall file with the retirement system a detailed statement of the
  service [with the subdivision by which the member is currently
  employed. As soon as practicable after the filing of a statement,
  the employing subdivision shall verify the service claimed and
  certify to the board of trustees the amount of service approved].
         [(b)     Credited service may not be established under this
  section for service that is credited by another retirement system
  or program established or governed by state law.]
         SECTION 25.  Section 843.601, Government Code, is
  transferred to Subchapter F, Chapter 843, Government Code,
  renumbered as Section 843.502, and amended to read as follows:
         Sec. 843.502 [843.601].  CREDITED [CURRENT] SERVICE FOR
  QUALIFIED MILITARY SERVICE.  (a)  In this section, "qualified
  military service" means service in the uniformed services, as that
  term is defined in the Uniformed Services Employment and
  Reemployment Rights Act of 1994 (38 U.S.C. Section 4301 et seq.),
  that meets the requirements of that Act as it now exists or is
  amended as to the character of service performed.
         (b)  All members of the retirement system are entitled to be
  credited with service [receive credit] for qualified military
  service that is subject to the Uniformed Services Employment and
  Reemployment Rights Act of 1994 (38 U.S.C. Section 4301 et seq.).  
  Notwithstanding any provision of this subtitle to the contrary,
  contributions, benefits, and service credit for qualified military
  service will be provided in accordance with Section 414(u) of the
  Internal Revenue Code of 1986. The board of trustees may adopt
  rules that modify the terms of this subtitle for the purpose of
  compliance with the provisions of that Act.
         (c)  The governing body of a participating subdivision also
  may, on the terms provided by Section 844.704, authorize the
  establishment of credited 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 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.  An eligible member may establish credited service under
  this subsection by filing an application with the retirement
  system.
         (d)  A subdivision whose governing body authorized "current
  service for military duty" before December 31, 1999, has authorized
  credited service [credit] for qualified military [current] service
  under Subsection (c).
         (e)  Except for credited service established with the
  retirement system before December 31, 1999, the maximum amount of
  credited service that a person may receive under this section is
  five years. If a person would receive more than five years of
  credited service as a result of having received credit under
  Subsection (c) before receiving credit under Subsection (b), the
  retirement system shall cancel credited service under Subsection
  (c) to the extent necessary to reduce the total to five years of
  credit.
         [(f)     Credited service 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 26.  Subchapter F, Chapter 843, Government Code, is
  amended by adding Sections 843.503 and 843.504 to read as follows:
         Sec. 843.503.  CREDITED SERVICE FOR SERVICE WITH SUBDIVISION
  PREDECESSOR. The governing body of a participating subdivision
  may, with the consent of and on terms approved by the board of
  trustees, authorize the establishment of credited service in the
  retirement system for service performed as an employee of the
  immediate predecessor entity of the subdivision.
         Sec. 843.504.  NO DOUBLE CREDITING OF SERVICE. Except as
  provided by Chapter 803, credited service may not be established
  under this subchapter 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 27.  Section 844.001, Government Code, is amended to
  read as follows:
         Sec. 844.001.  TYPES OF BENEFITS.  (a)  Pension [The types
  of] benefits payable from the retirement plan and trust [by the
  retirement system] are:
               (1)  [service] retirement annuities payable on service
  retirements;
               (2)  [disability] retirement annuities payable on
  disability retirements;
               (3)  survivor annuities payable on the deaths of
  members [annuity death benefits]; and
               (4)  [supplemental death benefits; and
               [(5)]  refunds of accumulated contributions.
         (b)  Nonpension group term life coverage may be provided by
  an electing subdivision for its employees and retirees under the
  optional group term life program. The board of trustees shall
  administer the program, and insurance proceeds are payable from the
  optional group term life fund.
         SECTION 28.  Sections 844.002(b), (c), (d), and (e),
  Government Code, are amended to read as follows:
         (b)  A basic annuity is an amount payable from the current
  service annuity reserve fund and is actuarially determined from the
  sum of a member's:
               (1)  accumulated contributions; and
               (2)  current service credit[, accumulated at interest
  as provided by Section 843.403(d)].
         (c)  A supplemental annuity is an amount payable from the
  subdivision accumulation fund, subject to limitation under Section
  844.008 [reduction under Section 842.054, 842.055, 842.056,
  842.057, 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)].
         (d)  Any increase in the annuity granted by a participating
  subdivision [after December 31, 1978,] is payable from the
  subdivision accumulation fund as part of the supplemental annuity.
         (e)  A separate retirement annuity is payable with respect to
  [for] each [participating] subdivision from which a person retires
  under this subtitle or is considered to have retired.
         SECTION 29.  Section 844.003, Government Code, is amended to
  read as follows:
         Sec. 844.003.  EFFECTIVE DATE OF RETIREMENT.  (a)  Except as
  otherwise provided by this section [Subsections (b) and (d)], the
  effective date of a member's service retirement is the date the
  member designates at the time the member applies for retirement
  under Section 844.101, but the date must be the last day of a
  calendar month and may not precede the date the member terminates
  employment with the subdivision from which the member seeks to
  retire.
         (b)  If a member who is an eligible member under Section
  844.407 [to select an optional retirement annuity] dies before
  retirement, the member is considered to have retired on the last day
  of the month before the month in which death occurred.
         (b-1)  A vested member who has not retired before the
  member's required beginning date determined under Section 841.010
  is considered to have retired on the last day of the month preceding
  the member's required beginning date.
         (c)  The [Except as provided by Subsection (b), the]
  effective date of a member's disability retirement is the date the
  member designates at the time the member applies for retirement
  under [designated on the application for retirement filed by or for
  the member as provided by] Section 844.301, but the date must be the
  last day of a calendar month and may not precede the date the member
  terminates employment with all participating subdivisions.
         (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.]
         (e)  Notwithstanding Subsections (a), (b), (b-1), and (c),
  the effective retirement date of a member may not precede the first
  anniversary of [the earlier of the effective date of the person's
  membership in the retirement system or] the effective date of
  participation of the subdivision [from which the member had most
  recently earned credited service].
         SECTION 30.  Subchapter A, Chapter 844, Government Code, is
  amended by adding Sections 844.004, 844.0041, and 844.0042 to read
  as follows:
         Sec. 844.004.  STANDARD RETIREMENT ANNUITY.  (a)  The
  standard retirement annuity payable under this subtitle is computed
  with an allowance for the possible payment of a benefit under
  Section 844.402 and is the actuarial equivalent of the sum of a
  member's:
               (1)  accumulated contributions;
               (2)  current service credit;
               (3)  allocated prior service credit; and
               (4)  multiple matching credit.
         (b)  A standard retirement annuity is payable throughout the
  life of a retiree.
         Sec. 844.0041.  OPTIONAL RETIREMENT ANNUITIES.  (a)  Instead
  of the standard retirement annuity payable under Section 844.004, a
  retiring member may receive an optional retirement annuity under
  this section or an optional retirement annuity in another form
  authorized by the board of trustees.
         (b)  At a member's effective retirement date, an optional
  retirement annuity is actuarially equivalent to the standard
  retirement annuity to which the member is entitled.
         (c)  An optional retirement annuity under this section is:
               (1)  a retirement annuity that is payable monthly
  throughout the life of a retiree, and after the retiree's death,
  throughout the life of an individual designated by the retiree; or
               (2)  a monthly retirement annuity that is payable
  throughout the life of a retiree and, if the retiree dies before 180
  monthly payments have been made, the remainder of the 180 monthly
  payments are payable to the retiree's beneficiary or, if a
  beneficiary does not exist, to the retiree's spouse or, if no
  surviving spouse exists, to the retiree's estate.
         (d)  The board of trustees by rule may authorize additional
  forms of optional retirement annuities, each of which must be
  actuarially equivalent to the standard retirement annuity to which
  the retiree is entitled as of the effective retirement date.
         Sec. 844.0042.  AUTHORITY TO PAY BENEFITS UNDER ALTERNATE
  FORMS.  (a)  The board of trustees may authorize the payment of the
  benefit that is due a recipient to be made as a lump sum or in
  another alternate form that is actuarially equivalent to the
  benefit that would otherwise be payable to the recipient at the time
  payments to the recipient would begin. An authorization under this
  subsection may be made as a policy of general application or may be
  made on a case-by-case basis considering the particular facts and
  circumstances.
         (b)  Payment to a retiree in a lump sum or other alternate
  form may not be made without the retiree's consent if the payment is
  to be sent to an address in the United States and the present value
  of the retiree's benefit exceeds a minimum amount set by the board
  of trustees. A retiree who receives payment in a lump sum or other
  alternate form under this section continues as a retiree for
  purposes of a benefit provided by the subdivision under the
  optional group term life program.
         (c)  Except as otherwise limited under Subsection (b),
  payment under this section is within the exclusive discretion of
  the board of trustees, and payment in a lump sum or other alternate
  form constitutes full satisfaction of the retirement benefit
  otherwise owed to the recipient.
         (d)  The board of trustees may adopt rules for the
  administration of this section, including rules for the payment of
  benefits internationally and for the verification of a continuing
  right to receive payments.
         SECTION 31.  Section 844.005, Government Code, is amended by
  amending Subsections (a) and (b) and adding Subsection (b-1) to
  read as follows:
         (a)  A retiree may revoke an application for retirement,
  change the retiree's choice of retirement annuity payment plans, or
  change the designation of beneficiary after the retiree's effective
  date of retirement by filing written notice with the retirement
  system not later than the last day of the month a benefit payment is
  first made [following the month that includes the effective date of
  retirement].  After that day, a retiree may not revoke the
  application for retirement, change the annuity payment plan
  selected, or change the designated beneficiary except under Section
  844.006.
         (b)  If an applicant for retirement dies on or before the
  last day that the application for retirement could have been
  revoked under Subsection (a), the decedent's application for
  retirement is considered canceled, except that the valid
  beneficiary designations made in connection with the retirement
  application remain in effect. The beneficiary of a decedent who had
  been an eligible member under Section 844.407 may receive an
  annuity in accordance with that section [A retiree who dies before
  the first day of the second month following the month that includes
  the effective date of retirement and who did not select an optional
  retirement annuity is considered to have selected an optional
  annuity under Section 844.104(c)(7) or Section 844.305(c)(7), as
  applicable. Alternatively, the decedent's beneficiary may elect to
  receive a refund of the decedent's accumulated contributions under
  Section 844.401].
         (b-1)  Under rules established by the board of trustees, the
  retirement system may cancel an application for retirement if the
  applicant fails to timely provide all information and forms
  necessary to put the retirement into effect.
         SECTION 32.  Sections 844.006(a), (b), (c), and (d),
  Government Code, are amended to read as follows:
         (a)  A retiree who is receiving payments under a [of a
  standard service or disability] retirement annuity computed on the
  life of the retiree only [or of an annuity for the retiree's life
  but with payments to continue after the retiree's death until a
  determined number of payments have been made] may revoke any
  existing selection and designation of beneficiary nominated to
  receive any payments that may become due under the annuity after the
  retiree's death and may select a new beneficiary to whom payments
  may be made.
         (b)  A person who, as beneficiary of a deceased retiree, is
  receiving monthly payments of any fixed-term annuity described by
  Subsection (a) may select and designate a person to whom shall be
  paid any monthly payments that may become due under the annuity
  after the death of the beneficiary making the designation.  If a
  valid beneficiary designation is not on file with the retirement
  system, any monthly payments that become due after the death of the
  beneficiary are payable to the beneficiary's spouse or, if no
  surviving spouse exists, to the beneficiary's estate.
         (c)  A retiree who is receiving payments under a retirement
  annuity computed on the joint lives of the retiree and the retiree's
  designated beneficiary [selected an optional annuity under Section
  844.104(c)(1), (c)(2), (c)(5), or (c)(6) or Section 844.305(c)(1),
  (c)(2), (c)(5), or (c)(6)] may revoke the designation of the
  beneficiary to receive the annuity on the death of the retiree, if a
  court of competent jurisdiction in a divorce proceeding involving
  the retiree and beneficiary awards to the retiree the entire
  retirement benefit earned by the retiree. The order awarding the
  retirement benefit may be set forth in the divorce decree or in an
  order approving the terms of a property settlement agreement
  incident to the divorce of the retiree and beneficiary but must be
  dated on or after December 31, 1999. The revocation takes effect
  when the retirement system receives it and cancels the optional
  annuity selection made by the retiree. Beginning with the month
  following the month in which the retirement system receives the
  notice of revocation, the retiree is entitled to receive a standard
  [service or disability] retirement annuity[, as applicable,] in the
  same amount that the retiree would receive for the same month if the
  retiree had originally retired with a standard [service or
  disability] retirement annuity.
         (d)  If a qualified domestic relations order, as that term is
  defined by Section 804.001, so provides, the benefit payable to a
  retiree who is receiving payments of a retirement [an] annuity
  computed on the joint lives of the retiree and the person designated
  as beneficiary by the retiree [for the retiree's life with payments
  to continue after the retiree's death until the death of another
  person] may be divided by the retirement system into two annuities
  if:
               (1)  the person who was designated as beneficiary by
  the retiree [to receive the continued payment after the retiree's
  death] is the same person as the alternate payee;
               (2)  the order specifies that one of the two annuities
  is payable over the remaining life of the retiree, with no payments
  to be made under that annuity after the death of the retiree; and
               (3)  the order specifies that the annuity payable to
  the alternate payee is payable over the remaining life of that
  person, with no payments to be made under that annuity after the
  death of the alternate payee named in the order[; and
               [(4)     the annuity that would be payable to the person as
  the alternate payee under the order would not exceed the annuity
  that would be payable to that person as the retiree's surviving
  beneficiary under the option selected if the retiree were
  deceased].
         SECTION 33.  Section 844.007, Government Code, is amended to
  read as follows:
         Sec. 844.007.  INTEREST CREDIT FOR OTHER THAN DECEMBER
  [ADJUSTMENTS APPLICABLE TO MIDYEAR] RETIREMENTS.  A member who
  retires with an effective retirement date other than December 31
  [(a)   The adjustments prescribed in this section shall be made in
  computing the benefits of and to the accounts of any member who
  retires effective at the end of any month other than December.
         [(b)  Interest] will be credited interest on the beginning
  balance in the member's individual account from [in the employees
  saving fund on] January 1 of the year of retirement [from that date]
  to the effective date of retirement.
         [(c)     An amount equal to the interest computed under
  Subsection (b) will be credited to the account in the subdivision
  accumulation fund for the subdivision that employed the member.]
         SECTION 34.  Sections 844.009(a), (c), and (h), Government
  Code, are amended to read as follows:
         (a)  With the consent of the board of trustees, the governing
  body of a subdivision may authorize partial lump-sum distributions
  under this section. [The governing body of a contributing
  subdivision with a member contribution rate of at least four
  percent that has not elected to discontinue enrolling employees may
  adopt the provisions of this section:
               [(1)  on the terms provided by Subchapter H; or
               [(2)     if the board of trustees determines that, based
  on computations by the retirement system's actuary, the adoption
  would not impair the ability of the subdivision to fund all
  obligations against its account in the subdivision accumulation
  fund before the 20th anniversary of the subdivision's most recent
  actuarial valuation date.]
         (c)  The amount of a lump-sum distribution under this section
  may not exceed 100 percent of the total accumulated contributions
  in the member's individual account in the employees saving fund
  attributable to [the credited] service with the subdivision for
  [on] which the member has applied for retirement.
         (h)  No portion of a benefit awarded to an alternate payee
  under a qualified domestic relations order may be distributed in
  the form of a lump sum under this section, unless [except that if]
  the member and the alternate payee agree in writing that the
  alternate payee will receive all or a portion of the lump-sum
  distribution payable under this section instead of or as part of the
  benefits awarded under the qualified domestic relations order[, the
  amount of the lump-sum distribution described in the agreement may
  be paid directly to the alternate payee in complete satisfaction of
  the alternate payee's marital property rights and interest in the
  member's benefit].
         SECTION 35.  Section 844.010, Government Code, is amended by
  adding Subsection (d) to read as follows:
         (d)  The board of trustees may adopt rules concerning the
  designation, validity, cancellation, revocation, and eligibility
  of beneficiaries under this subtitle.
         SECTION 36.  Section 844.101, Government Code, is amended to
  read as follows:
         Sec. 844.101.  APPLICATION FOR SERVICE RETIREMENT ANNUITY.  
  To receive a retirement annuity for service, an eligible [A] member
  must [may] apply [for a service retirement annuity] by filing a
  valid [an] application [for retirement] with the retirement system
  on or before the member's effective retirement date designated on
  the application.
         SECTION 37.  Section 844.102, Government Code, is amended to
  read as follows:
         Sec. 844.102.  SYSTEMWIDE ELIGIBILITY FOR SERVICE
  RETIREMENT ANNUITY.  (a)  A member is eligible to apply for and
  receive a service retirement annuity if the member:
               (1)  is at least 60 years old and has at least 10 [12]
  years of credited service in the retirement system;
               (2)  has at least 30 years of credited service in the
  retirement system; or
               (3)  has at least 10 years of credited service in the
  retirement system and the sum of the member's credited service and
  attained age equals or exceeds the number 80 [met the eligibility
  requirements for service retirement under Section 844.207,
  844.210, 844.211, or 844.212].
         (b)  A person who has retired under this section with a
  service retirement annuity is eligible, without regard to any age
  or credited service requirement, to apply for and receive a service
  retirement annuity based on the member's accumulated contributions
  and service credit with any [for another] participating subdivision
  from which the person has terminated employment.
         SECTION 38.  Subchapter B, Chapter 844, Government Code, is
  amended by adding Sections 844.1021 and 844.1022 to read as
  follows:
         Sec. 844.1021.  OPTIONAL ELIGIBILITY PROVISIONS FOR SERVICE
  RETIREMENT.  (a) In accordance with this subtitle, a subdivision
  may adopt any optional service retirement eligibility provision
  described by this section or authorized by the board of trustees.
         (b)  A subdivision may not revoke its adoption of an optional
  service retirement eligibility provision described by this
  section. A subdivision may adopt an optional service retirement
  eligibility provision providing less restrictive eligibility
  requirements.
         (c)  An optional service retirement eligibility provision
  may provide that a member who has at least 10 years of credited
  service is eligible to apply for retirement if the member has
  attained age 60 or an age at which the sum of the member's credited
  service and attained age equals or exceeds the number 75.
         (d)  An optional service retirement eligibility provision
  may provide that a member who has at least eight years of credited
  service is eligible to apply for retirement if the member has
  attained age 60.
         (e)  An optional service retirement eligibility provision
  may provide that a member who has at least five years of credited
  service is eligible to apply for retirement if the member has
  attained age 60.
         (f)  An optional service retirement eligibility provision
  may provide that a member who has at least 20 years of credited
  service is eligible to apply for retirement.
         (g)  The board of trustees may authorize additional optional
  service retirement eligibility provisions for adoption by
  participating subdivisions.
         (h)  The board of trustees shall establish rules for
  recognizing and combining a member's service credited under
  dissimilar retirement eligibility provisions for purposes of
  meeting the retirement eligibility provisions of the respective
  subdivisions.
         Sec. 844.1022.  SPECIAL ELIGIBILITY PROVISIONS FOR SERVICE
  RETIREMENT.  (a) Subject to the consent of the board of trustees
  and effective for the period and on terms that the board approves, a
  subdivision may adopt a special service retirement eligibility
  provision that relates to a singular, identifiable event or action
  particular to the subdivision and that applies only to its members
  who satisfy the specific terms of the special eligibility
  provision.
         (b)  A special service retirement eligibility provision must
  bear a rational relationship to the operation, management, and
  function of the subdivision.
         (c)  A special service retirement eligibility provision may
  not be adopted or implemented under this section in a manner that
  has the effect of establishing a separate, ongoing retirement
  program for a branch, department, division, employee occupational
  group, or other separately identifiable component of the
  subdivision.
         SECTION 39.  Sections 844.208(b), (c), and (d), Government
  Code, are 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 and [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 10 [30] percent nor more
  than 100 percent and is a multiple of 10 percent.
         (c)  The [Except as provided by Subsection (g), the]
  effective date of an order or resolution under this section is
  January 1 of the year that begins after the year in which the
  governing body adopts and notifies the retirement system of the
  order or resolution.
         (d)  An increase in an annuity that was reduced because of an
  option selection or partial lump-sum distribution is reducible in
  the same proportion and in the same manner that the original annuity
  was reduced.
         SECTION 40.  Section 844.209(e), Government Code, is amended
  to read as follows:
         (e)  An increase in an annuity that was reduced because of an
  option selection or partial lump-sum distribution is reducible in
  the same proportion and in the same manner that the original annuity
  was reduced.
         SECTION 41.  Section 844.301, Government Code, is amended to
  read as follows:
         Sec. 844.301.  APPLICATION FOR DISABILITY RETIREMENT
  [ANNUITY].  (a)  A member may apply for [a] disability retirement
  [annuity] by[:
               [(1)]  filing a valid [an] application for retirement
  with the retirement system[; or
               [(2)     having an application filed with the system by
  the member's employer or legal representative.
         [(b)     An application for a disability retirement annuity
  must be filed] on or before the member's effective retirement date
  designated on the application.
         (b) [(c)]  An applicant must provide medical and other
  pertinent information for evaluation by the medical board and
  submit to medical examination as required by the medical board.
         SECTION 42.  Subchapter D, Chapter 844, Government Code, is
  amended by adding Section 844.3011 to read as follows:
         Sec. 844.3011.  ANNUITY PAYABLE ON DISABILITY RETIREMENT.
  Except for eligibility requirements and as otherwise provided by
  this subtitle, a retirement annuity payable on the disability
  retirement of a member is equal in amount and equivalent in all
  respects under this subtitle to a retirement annuity payable on the
  service retirement of the member at the same age.
         SECTION 43.  Section 844.302, Government Code, is amended to
  read as follows:
         Sec. 844.302.  ELIGIBILITY FOR DISABILITY RETIREMENT
  ANNUITY.  (a)  A [Except as provided by Subsection (c), a] member
  who is not [a] vested for service retirement beginning on or before
  the date the member attains age 60 and who has applied for
  disability retirement [member under Section 844.202] is eligible to
  [apply for and] receive a disability retirement annuity if the
  member is the subject of a certification issued as provided by
  Section 844.303(b)(1).
         (b)  A [Except as provided by Subsection (c), a] member who
  is [a] vested for service retirement based on service in this system
  alone beginning on or before the date the member attains age 60 and
  who has applied for disability retirement [member under Section
  844.202] is eligible to [apply for and] receive a [disability]
  retirement annuity if the member is the subject of a certification
  issued as provided by Section 844.303(b)(2). [A member eligible to
  receive a disability retirement annuity under this subsection may,
  if the member is eligible for service retirement, elect to receive a
  service retirement annuity but may not receive both annuities.]
         (c)  If a member who has filed an application for disability
  retirement under this subchapter is eligible for service
  retirement, an evaluation by the medical board under Section
  844.303 will not be made and the retirement system shall consider
  the retirement application as an application filed for service
  retirement. [A member is not eligible to retire for disability
  before the first anniversary of the earlier of the effective date of
  the person's membership or the effective date of participation of
  the subdivision from which the member had most recently earned
  credited service.]
         SECTION 44.  Section 844.303, Government Code, is amended to
  read as follows:
         Sec. 844.303.  CERTIFICATION OF DISABILITY.  (a)  Except as
  provided by Section 844.302(c) and Subsection (c) of this section,
  as [As] soon as practicable after an application for disability
  retirement is filed, the medical board shall evaluate the medical
  and other pertinent information concerning the member's
  application.
         (b)  The medical board shall issue a certification of
  disability and submit it to the board of trustees, if the medical
  board finds:
               (1)  in the case of a member described by Section
  844.302(a) [who is not a vested member under Section 844.202],
  that:
                     (A)  the member is mentally or physically
  incapacitated for any gainful occupation;
                     (B)  the incapacity is the direct result of
  injuries sustained during membership by external and violent means
  as a direct and proximate result of the performance of duty; and
                     (C)  the incapacity is likely to be permanent;
  [and
                     [(D)  the member should be retired;] or
               (2)  in the case of a member described by Section
  844.302(b) [who is a vested member under Section 844.202], that:
                     (A)  the member is mentally or physically
  incapacitated for any gainful occupation; and
                     (B)  the incapacity is likely to be permanent[;
  and
                     [(C)  the member should be retired].
         (c)  The board of trustees may establish a procedure for
  summary disposition of disability retirement applications without
  medical board review under facts and circumstances that the board
  has determined cause a review by the medical board to be
  unnecessary. The board may delegate to the director the authority
  and discretion to make determinations under the summary disposition
  procedure and, if appropriate, to issue a certification of
  disability described by Subsection (b) or refer the matter to the
  medical board. The director is not authorized under this section to
  make a finding that an applicant is not permanently incapacitated.
         (d)  The board of trustees may define terms and standards to
  be applied by the medical board in making its determinations and
  shall establish such other rules as the board considers necessary
  to administer this subchapter.
         SECTION 45.  Section 844.3051, Government Code, is amended
  to read as follows:
         Sec. 844.3051.  DISABILITY RETIREMENT CONSIDERED SERVICE
  RETIREMENT [ANNUITIES NOT SUBJECT TO DISCONTINUANCE].  (a)  The
  retirement annuity of a disability retiree may not be terminated
  under this subchapter after [After] the earlier of:
               (1)  the date a disability retiree attains age 60; or
               (2)  the date the disability retiree would otherwise be 
  [have become] eligible for service retirement under this subtitle[,
  the retiree's disability retirement annuity may not be revoked or
  discontinued under this subtitle, and the retiree is not subject to
  further medical examinations or required to submit annual earnings
  reports].
         (b)  The [A] disability retirement of a disability retiree
  described by Subsection (a) [annuity that is not subject to
  revocation or discontinuance] is considered for all purposes under
  this subtitle as a service retirement [annuity if the retiree
  returns to employment with a participating subdivision].
         SECTION 46.  Sections 844.306(a) and (c), Government Code,
  are amended to read as follows:
         (a)  Until the date a disability retirement is considered a
  service retirement under Section 844.3051, once [Once] each year
  during the first five years after a person retires for disability,
  and once in each three-year period after that, the board of trustees
  may, in accordance with rules and procedures established by the
  board, require a disability retiree to undergo a medical
  examination and provide current medical and other information
  reaffirming the status of the retiree as disabled within the
  meaning of this subchapter.
         (c)  If a disability retiree refuses to submit to [a] medical
  examination or fails to provide current medical or other
  information confirming the status of the retiree as disabled [as
  provided by this section], the board of trustees may cancel the
  disability retirement and terminate the retirement annuity [shall
  suspend the retiree's annuity payments until the retiree submits to
  an examination. If a retiree has not submitted to an examination as
  provided by this section before the first anniversary of the date of
  first refusal, the board shall revoke all rights of the retiree to
  an annuity].
         SECTION 47.  Section 844.307, Government Code, is amended to
  read as follows:
         Sec. 844.307.  CANCELLATION [CERTIFICATION] OF [END OF]
  DISABILITY RETIREMENT.  (a)  If the medical board finds that a
  disability retiree has experienced medical improvement to the
  extent that the retiree is no longer mentally or physically
  incapacitated [for the performance of duty or is engaged in or able
  to engage in gainful occupation], it shall certify its findings and
  submit them to the board of trustees.
         (b)  In accordance with rules and procedures adopted by the
  board, [If] the board of trustees may adopt the findings of the
  medical board and cancel the disability retirement and terminate
  [concurs in a certification under this section, it shall
  discontinue] annuity payments to the retiree.
         SECTION 48.  Section 844.309, Government Code, is amended to
  read as follows:
         Sec. 844.309.  ADJUSTMENTS AT ANNUITY TERMINATION
  [DISCONTINUANCE].  (a)  If a disability retirement is canceled and
  the retirement annuity terminated under this subchapter, the person
  automatically resumes membership in the retirement system and
  [person's membership resumes under Section 844.308,] the
  retirement system shall transfer:
               (1)  from the current service annuity reserve fund and
  credit to the person's individual account in the employees saving
  fund an amount equal to the amount of accumulated contributions
  transferred to the current service annuity reserve fund at the time
  of retirement reduced by one percent for each year or part of a year
  during which disability annuity payments were made; and
               (2)  from the current service annuity reserve fund to
  the subdivision accumulation fund an amount equal to the amount
  transferred from the subdivision accumulation fund to the current
  service annuity reserve fund at the time of retirement reduced by
  one percent for each year or part of a year during which disability
  annuity payments were made.
         (b)  If a person whose membership resumes under this section
  [Section 844.308] was receiving a supplemental annuity based in
  whole or in part on prior service credit, the retirement system
  shall restore to effect as the person's maximum prior service
  credit an amount equal to the person's maximum prior service credit
  at the time of disability retirement reduced by one percent for each
  year or part of a year during which disability annuity payments were
  made.
         (c)  A person who resumes membership under this section
  [Section 844.308] is entitled to restoration of credited service in
  the number of months accumulated and allowed before disability
  retirement.
         (d)  The board of trustees may adopt rules for the
  computation and transfer of amounts and credits for a membership
  resumed under this subchapter.
         SECTION 49.  Section 844.405, Government Code, is amended to
  read as follows:
         Sec. 844.405.  TRUST AS BENEFICIARY.  (a)  Except as limited
  [provided] by Subsection (b), a member or retiree may designate a
  trust as beneficiary for the payment of benefits from the
  retirement system or may designate multiple trusts as beneficiaries
  for the payment of benefits from the system in the same manner and
  with the same limitations that apply to the designation of multiple
  beneficiaries. If a trust is designated beneficiary, the
  beneficiary of the trust is considered the designated beneficiary
  for the purpose of determining eligibility for and the amount and
  duration of benefits. The trustee is entitled to exercise any
  rights granted a designated beneficiary to elect benefit options
  and name subsequent beneficiaries.
         (b)  Multiple trusts or a single [A] trust having multiple
  beneficiaries [more than one beneficiary] may not receive benefits
  to which multiple designated beneficiaries are not eligible under
  this chapter.
         SECTION 50.  The heading to Section 844.407, Government
  Code, is amended to read as follows:
         Sec. 844.407.  SURVIVOR ANNUITY [DEATH BENEFIT].
         SECTION 51.  Sections 844.407(a) through (e), Government
  Code, are amended to read as follows:
         (a)  In this section "eligible member" means[:
               [(1)]  a member who has four or more years of credited
  service with one or more subdivisions that are participating in the
  retirement system [and that are not exempted from the application
  of this subdivision;
               [(2)     a vested member described by Section 844.202 who
  is at least 60 years of age or has 20 or more years of credited
  service in the retirement system; or
               [(3)     a member who is receiving a service retirement
  annuity].
         (b)  Instead of any other benefit allowed under this subtitle
  other than an optional group term life benefit, an [An] annuity
  described by this section may be [selected and] paid on the death of
  an eligible member who had not filed an application for retirement
  or whose application for retirement had been revoked or canceled
  under Section 844.005 [before the effective date of the member's
  retirement instead of any other benefit allowed under this
  subtitle, except that a supplemental death benefit under Subchapter
  F may also be paid].
         (c)  An annuity under this section is payable to the valid
  beneficiary designated on the unrevoked form most recently executed
  by the member and filed with the system naming a beneficiary. If no
  valid beneficiary exists or if the member died without having
  designated a valid beneficiary, the annuity is payable to the
  deceased member's surviving spouse or, if no surviving spouse
  exists, to the deceased member's estate. [An eligible member may,
  before the effective date of the member's retirement, file with the
  board of trustees on a form prescribed by the board a selection of
  an optional service retirement annuity available under Section
  844.104 and a designation of beneficiary.]
         (d)  Any annuity payable under this section must be
  actuarially equivalent to the deceased member's benefit accrued
  under this subtitle determined as of the last day of the month
  preceding the month of the member's death. The annuity is payable
  in the form and manner authorized by the board of trustees. [A
  member who is entitled under this section to select one of the
  optional service retirement annuities authorized by Section
  844.104 may elect instead to name a beneficiary who, on the death of
  the member before retirement, will be allowed to choose any benefit
  that the member could have chosen to be paid to the beneficiary,
  with like effect as if the selection had been made by the member.]
         (e)  An annuity under this section is payable from the same
  accounts and is subject to the same conditions that are applicable
  to a service retirement benefit for the same member. [If no
  application for deferred service retirement was on file with the
  retirement system on December 31, 1999, an unrevoked form executed
  by the member and filed with the system naming a beneficiary to whom
  the member's accumulated contributions are to be paid in the event
  of death before retirement is considered a selection of a
  beneficiary under Subsection (d).]
         SECTION 52.  Section 844.408(b), Government Code, is amended
  to read as follows:
         (b)  If the [a surviving spouse or the executor or]
  administrator of a deceased member's estate would be entitled to a
  refund or an annuity [make an election under Section 842.110, 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 apply for and receive the benefit [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;
               (2) [(3)]  30 days have elapsed since the date of death
  of the member;
               (3) [(4)]  the value of the entire assets of the
  member's probate estate, excluding homestead and exempt property,
  does not exceed $50,000; and
               (4) [(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 53.  The heading to Subchapter F, Chapter 844,
  Government Code, is amended to read as follows:
  SUBCHAPTER F. OPTIONAL GROUP TERM LIFE PROGRAM [DEATH BENEFITS]
         SECTION 54.  Section 844.501, Government Code, is amended to
  read as follows:
         Sec. 844.501.  COVERAGE IN OPTIONAL GROUP TERM LIFE
  [SUPPLEMENTAL DEATH BENEFIT] PROGRAM.  (a)  An employee of a
  participating subdivision is included within the coverage of the
  optional group term life [supplemental death benefit] program on
  that day in the first month in which:
               (1)  the employing subdivision is participating in the
  program [supplemental death benefits fund] for coverage of all
  members it employs;
               (2)  the employee is a member of the retirement system;
  and
               (3)  the employee is required to make a contribution to
  the retirement system.
         (b)  Once established, coverage of a person in the
  [supplemental death benefit] program continues until the last day
  of a month in which a requirement of Subsection (a) is not met.
         (c)  The optional group term life [supplemental death
  benefit] program constitutes "group term life insurance purchased
  for employees" as described by Section 79, Internal Revenue Code of
  1986.
         SECTION 55.  The heading to Section 844.502, Government
  Code, is amended to read as follows:
         Sec. 844.502.  EXTENDED OPTIONAL GROUP TERM LIFE
  [SUPPLEMENTAL DEATH BENEFIT] COVERAGE.
         SECTION 56.  Section 844.502(a), Government Code, is amended
  to read as follows:
         (a)  A member included in the coverage of the optional group
  term life [supplemental death benefit] program who fails to earn
  compensation in a month for service to a subdivision participating
  in the program [supplemental death benefits fund] may be eligible
  to receive extended coverage in the program under this section.
         SECTION 57.  The heading to Section 844.503, Government
  Code, is amended to read as follows:
         Sec. 844.503.  MEMBER OPTIONAL GROUP TERM LIFE [SUPPLEMENTAL
  DEATH BENEFIT].
         SECTION 58.  Sections 844.503(b) and (d), Government Code,
  are amended to read as follows:
         (b)  If a person included in the coverage or extended
  coverage of the optional group term life [supplemental death
  benefit] program dies, a lump-sum supplemental death benefit is
  payable from the optional group term life [supplemental death
  benefits] fund in an amount equal to the current annual
  compensation of the member at the time of death.
         (d)  If a member, because of a change in employment, makes
  contributions to the retirement system during the same month as an
  employee of more than one subdivision participating in the optional
  group term life program [supplemental death benefits fund], a death
  benefit is payable only on the basis of the member's most recent
  employment. If a member, because of simultaneous employment by
  more than one subdivision, makes contributions to the retirement
  system during the same month as an employee of more than one
  subdivision participating in the program [supplemental death
  benefits fund], a death benefit is payable on the basis of the
  member's employment by each subdivision participating in the
  program [fund].
         SECTION 59.  Sections 844.504 and 844.505, Government Code,
  are amended to read as follows:
         Sec. 844.504.  RETIREE OPTIONAL GROUP TERM LIFE
  [SUPPLEMENTAL DEATH] BENEFIT.  If a retiree dies who was receiving a
  retirement annuity based on service for a subdivision that has
  elected to provide, and continues to provide, postretirement
  optional group term life coverage [supplemental death benefits], a
  lump-sum [supplemental] death benefit is payable from the optional
  group term life fund in the amount of $5,000.
         Sec. 844.505.  BENEFICIARY OF OPTIONAL GROUP TERM LIFE
  BENEFIT [SUPPLEMENTAL DEATH BENEFIT].  (a)  Unless a member has
  directed otherwise on a form prescribed by the board of trustees and
  filed with the retirement system:
               (1)  an optional group term life [a supplemental death]
  benefit under Section 844.503 is payable to the person entitled to
  receive the decedent's accumulated contributions, unless the
  decedent was an eligible member under Section 844.407 [to select an
  optional service retirement annuity], in which case the benefit is
  payable to the beneficiary designated by the decedent or, if no
  designation was made, to the person entitled under that section to
  receive a survivor [an optional] annuity; and
               (2)  an optional group term life [a supplemental death]
  benefit under Section 844.504 is payable to a person entitled to
  receive any remaining payments of the decedent's annuity.
         (b)  If a person entitled under this section to receive an
  optional group term life [a supplemental death] benefit does not
  survive the member or retiree covered by the optional group term
  life [supplemental death benefit] program, the benefit is payable
  to the person to whom a benefit under Subchapter B or D is payable,
  or if no benefit is payable under those subchapters, to the person
  to whom a benefit under Subchapter E is or would be payable.
         SECTION 60.  The heading to Subchapter G, Chapter 844,
  Government Code, is amended to read as follows:
  SUBCHAPTER G. FIXED CONTRIBUTION RATE PLAN [OPTIONAL ADDITIONAL
  SUBDIVISION CONTRIBUTIONS OR DECREASE IN CREDITS]
         SECTION 61.  Section 844.606(f), Government Code, is amended
  to read as follows:
         (f)  The lower percentage to be used in determining multiple
  matching credits provided for by Subsection (b) must be a multiple
  of five [10] percent of the amount of member contributions.
         SECTION 62.  Subchapter G, Chapter 844, Government Code, is
  amended by adding Section 844.609 to read as follows:
         Sec. 844.609.  INCREASE IN SERVICE CREDITS AND ADOPTION OF
  BENEFIT OPTIONS. (a) A subdivision, other than a county, not
  otherwise subject to the provisions of Subchapter H may by order or
  resolution increase the percentages used to determine multiple
  matching credits and allocated prior service credits in the same
  manner and to the same extent as if it were a subdivision subject to
  the provisions of Subchapter H.
         (b)  A subdivision, other than a county, not otherwise
  subject to the provisions of Subchapter H may by order adopt or
  authorize any option described by Section 844.704(d) in the same
  manner and to the same extent as if it were a subdivision subject to
  the provisions of Subchapter H.
         (c)  A subdivision, other than a county, may not adopt an
  increase in service credits or an additional benefit option under
  this section, or adopt an increase in the rate of member
  contributions under Section 845.402, unless the actuary determines
  that the amortization period for all obligations of the
  subdivision, inclusive of any increase or additional benefit
  option, does not exceed 20 years.
         (d)  Notwithstanding Section 844.605(c), a subdivision,
  other than a county, may adopt a supplemental contribution rate
  under this subchapter of any percentage that the actuary determines
  will not cause the amortization period for all obligations of the
  subdivision to exceed 20 years.
         SECTION 63.  Section 844.703(e), Government Code, is amended
  to read as follows:
         (e)  In addition to the normal contributions and prior
  service contributions under this subchapter, the subdivision shall
  make the picked-up employee contributions provided by Section
  845.403(i), and those contributions, along with optional group term
  life [supplemental death benefit fund] contributions, are not
  subject to the maximum subdivision contribution rates prescribed by
  Subsection (c).
         SECTION 64.  Sections 844.704(a) 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
  843.402 [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 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 843.402 [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
  843.402 [843.403] and the percentage for multiple matching credits
  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 843.402
  [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 the percentage used in determining multiple matching credits
  under Section 843.402 [843.403] for contributions made after the
  effective date of the reduction to zero or any percentage that is a
  multiple of five percent, to take effect on the next January 1 after
  the date of the reduction.
         (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 service credit previously
  forfeited under Section 843.003;
               (4)  the establishment of credited service for military
  service under Section 843.502(c) [843.601(c)];
               (5)  an optional service retirement [the benefit]
  eligibility provision [plan] described by Section 844.1021
  [844.210, 844.211, or 844.212]; or
               (6)  the partial lump-sum distribution on service
  retirement under Section 844.009.
         SECTION 65.  Section 845.003(b), Government Code, is amended
  to read as follows:
         (b)  If a person serving as a trustee ceases to meet an
  eligibility requirement under Subsection (a), the person [may not
  act as a trustee and] shall vacate the office of trustee.
         SECTION 66.  Section 845.007, Government Code, is amended by
  amending Subsection (c) and adding Subsections (e) and (f) to read
  as follows:
         (c)  Except as otherwise permitted by Section 845.301(a-1),
  Chapter 551, or other law, all [All] meetings of the board must be
  open to the public.
         (e)  Notwithstanding Chapter 551 or any other law, the board
  of trustees may hold an open or closed meeting by telephone
  conference call, videoconference, or other similar
  telecommunication method. The board may use a telephone conference
  call, videoconference, or other similar telecommunication method
  for purposes of establishing a quorum or voting or for any other
  meeting purpose in accordance with Subsection (f) and this
  subsection. This subsection applies without regard to the subject
  matter discussed or considered by the board at the meeting.
         (f)  A meeting held by telephone conference call,
  videoconference, or other similar telecommunication method:
               (1)  is subject to the notice requirements applicable
  to other board meetings;
               (2)  may not be held unless notice of the meeting
  specifies the location of the meeting at which at least one trustee
  of the board will be physically present; and
               (3)  must be open and audible to the public at the
  location specified in the notice under Subdivision (2) during the
  open portions of the meeting.
         SECTION 67.  Section 845.102, Government Code, is amended to
  read as follows:
         Sec. 845.102.  RULES AND STANDARDS [RULEMAKING].  (a) The
  board of trustees shall adopt rules and perform reasonable
  activities necessary or desirable for efficient administration of
  the system.
         (b)  Subject to the provisions of this subtitle, the board of
  trustees may establish systemwide standards to which all
  subdivisions are subject and that apply to all members of the
  retirement system or to all members similarly situated in a class.
  The board may establish or modify a systemwide standard at a time
  and in a manner the board determines to be appropriate and in the
  best interests of the system, the members, or their beneficiaries.
         SECTION 68.  Subchapter B, Chapter 845, Government Code, is
  amended by adding Section 845.111 to read as follows:
         Sec. 845.111.  INSURANCE. Notwithstanding any other law,
  the board of trustees may self-insure or purchase any insurance the
  board considers reasonable and prudent for the performance of board
  duties and prerogatives.
         SECTION 69.  Section 845.114, Government Code, is amended to
  read as follows:
         Sec. 845.114.  DEFINITION OF PARTICIPANT; OBTAINING
  INFORMATION.  (a)  In this section, "participant" means a member,
  former member, retiree, annuitant, beneficiary, or alternate payee
  of the retirement system.
         (b)  The retirement system [board of trustees] shall obtain
  from participants and subdivisions [a member or a participating
  subdivision] information necessary for the proper operation and
  administration of the [retirement] system.
         (c)  Each participant and subdivision shall timely provide
  to the retirement system in the form and manner specified by the
  system information the board of trustees determines to be necessary
  for the proper operation and administration of the system.
  [(b)     The board may require reports from the participating
  subdivisions for the efficient handling of members' deposits. A
  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 70.  The heading to Section 845.115, Government
  Code, is amended to read as follows:
         Sec. 845.115.  CONFIDENTIALITY OF PARTICIPANT INFORMATION
  [ABOUT MEMBERS, RETIREES, ANNUITANTS, OR BENEFICIARIES].
         SECTION 71.  Section 845.115, Government Code, is amended by
  amending Subsections (a) and (d) and adding Subsections (b-1), (e),
  and (f) to read as follows:
         (a)  Information contained in records in the custody of the
  retirement system or maintained in the custody of another
  governmental entity or an administrator or carrier acting in
  cooperation with or on behalf of the retirement system concerning a
  participant [an individual member, retiree, annuitant, or
  beneficiary] is confidential.  Except as otherwise provided by this
  section, the retirement system is not required to accept or comply
  with a request for a record or information about a record of a
  participant or to seek an opinion from the attorney general because
  the records of a participant are exempt from the public information
  provisions of [and is not subject to public disclosure under]
  Chapter 552. The information may not be disclosed in a form
  identifiable with a specific individual unless:
               (1)  the information is disclosed to:
                     (A)  the participant [individual] or the
  participant's [individual's] attorney, guardian, executor,
  administrator, conservator, or other person who the director
  determines is acting in the interest of the participant 
  [individual] or the participant's [individual's] estate;
                     (B)  a spouse or former spouse of the participant 
  [individual] and the director determines that the information is
  relevant to the spouse's or former spouse's interest in member
  accounts, benefits, or other amounts payable by the retirement
  system;
                     (C)  a governmental official or employee and the
  director determines that disclosure of the information requested is
  reasonably necessary to the performance of the duties of the
  official or employee; or
                     (D)  a person authorized by the participant 
  [individual] in writing to receive the information; or
               (2)  the information is disclosed pursuant to a
  subpoena and the director determines that the participant 
  [individual] will have a reasonable opportunity to contest the
  subpoena.
         (b-1)  This section does not require the retirement system to
  compile or disclose a list of participants' names, addresses,
  social security numbers, or other descriptive or demographic
  information.
         (d)  A determination and disclosure under Subsection (a) may
  be made without notice to the participant [individual member,
  retiree, annuitant, or beneficiary].
         (e)  The records of a participant remain confidential after
  release to a person as authorized by this section. The records of
  the participant may become part of a public record of an
  administrative or judicial proceeding, and the participant waives
  the confidentiality of the records, including medical records,
  unless the records are closed to public access by a protective order
  issued under applicable law.
         (f)  In this section, "participant" has the meaning assigned
  by Section 845.114(a).
         SECTION 72.  Subchapter B, Chapter 845, Government Code, is
  amended by adding Section 845.1151 to read as follows:
         Sec. 845.1151.  ELECTRONIC INFORMATION. (a)  In this
  section, "participant" has the meaning assigned by Section
  845.114(a).
         (b)  The retirement system may provide confidential
  information electronically to a participant and to a subdivision
  and receive information electronically from those persons,
  including by use of an electronic signature or certification in a
  form acceptable to the retirement system. An unintentional
  disclosure to, or unauthorized access by, a third party related to
  the transmission or receipt of information under this section is
  not a violation by the retirement system of any law, including a
  rule relating to the protection of confidential information.
         SECTION 73.  Section 845.203(b), Government Code, is amended
  to read as follows:
         (b)  The attorney shall act as the legal adviser to the board
  [and shall represent the system in all litigation].
         SECTION 74.  Section 845.301, Government Code, is amended by
  amending Subsection (a) and adding Subsection (a-1) to read as
  follows:
         (a)  The assets of the retirement system shall be invested
  and reinvested without distinction as to their source in accordance
  with Section 67, Article XVI, Texas Constitution. For purposes of
  the investment authority of the board of trustees under Section 67,
  Article XVI, Texas Constitution, "securities" means any investment
  instrument within the meaning of the term as defined by Section 4,
  The Securities Act (Article 581-4, Vernon's Texas Civil Statutes),
  15 U.S.C. Section 77b(a)(1), or 15 U.S.C. Section 78c(a)(10). An
  interest in a limited partnership or investment contract is
  considered a security without regard to the number of investors or
  the control, access to information, or rights granted to or
  retained by the retirement system. Any instrument or contract
  intended to manage transaction, currency exchange, or interest rate
  risk in purchasing, selling, or holding securities, or that derives
  all or substantially all of its value from the value or performance
  of one or more securities, including an index or group of
  securities, is considered to be a security. Investment decisions
  are subject to the standard provided in the Texas Trust Code by
  Section 117.004(b), Property Code.
         (a-1)  Notwithstanding any provision of Chapter 551 or any
  other law, the board of trustees may discuss an investment or
  potential investment with one or more employees of the retirement
  system or with a third party to the extent permitted to the board of
  trustees of the Texas growth fund under Section 551.075.
         SECTION 75.  Section 845.303(b), Government Code, is amended
  to read as follows:
         (b)  To be eligible to lend securities under this section, a
  bank or brokerage firm must:
               (1)  be experienced in the operations of a fully
  secured securities lending program;
               (2)  maintain capital adequate in the prudent judgment
  of the retirement system to assure the safety of the securities;
               (3)  execute an indemnification agreement satisfactory
  in form and content to the retirement system [fully indemnifying
  the retirement system against loss resulting from its operation of
  a securities lending program for the system's securities]; and
               (4)  require any securities broker or dealer to whom it
  lends securities belonging to the retirement system to deliver to
  and maintain with the custodian collateral in the form of cash or
  United States government securities, the market value of which must
  equal not less than 100 percent of the market value, from time to
  time, of the loaned securities.
         SECTION 76.  Section 845.305(c), Government Code, is amended
  to read as follows:
         (c)  Amounts contributed by a subdivision to provide
  benefits under the optional group term life program [insurance] for
  its participating employees and retirees shall be deposited to the
  optional group term life fund and maintained by the board of
  trustees as the optional group term life [fund of the supplemental
  death benefits] trust.
         SECTION 77.  The heading to Section 845.312, Government
  Code, is amended to read as follows:
         Sec. 845.312.  OPTIONAL GROUP TERM LIFE [SUPPLEMENTAL DEATH
  BENEFITS] FUND.
         SECTION 78.  Sections 845.312(a) and (b), Government Code,
  are amended to read as follows:
         (a)  The retirement system shall deposit in the optional
  group term life [supplemental death benefits] fund contributions
  paid by subdivisions to the retirement system to provide optional
  group term life [supplemental death] benefits in accordance with
  Section 845.406. The retirement system may not establish separate
  accounts in the fund for subdivisions participating in the optional
  group term life program [fund] but shall credit contributions to a
  single account.
         (b)  The retirement system shall pay benefits under the
  optional group term life program [supplemental death benefits] only
  from money in the optional group term life [supplemental death
  benefits] fund, and the benefits are not an obligation of other
  funds of the system.
         SECTION 79.  Section 845.313, Government Code, is amended by
  adding Subsection (d) to read as follows:
         (d)  If payment by check to an individual would be, or has
  become, impractical, insecure, or proportionally more costly for
  the retirement system than payment by check to other persons, the
  system may hold or suspend any payment and require the individual to
  accept payment by another means or method that is practical,
  secure, and cost-effective.
         SECTION 80.  Section 845.314, Government Code, is amended to
  read as follows:
         Sec. 845.314.  INTEREST RATES.  [(a)] Unless this subtitle
  expressly states [that interest is computed using the current
  interest rate or] another specified rate of interest, for periods
  beginning after December 31, 1996, the annual rate of interest is
  seven percent [computed using the rate of:
               [(1)     three percent a year compounded annually for
  periods before January 1, 1977;
               [(2)     four percent a year compounded annually for
  periods after December 31, 1976, but before January 1, 1982;
               [(3)     four and one-half percent a year compounded
  annually for periods after December 31, 1981, but before January 1,
  1985; and
               [(4)     seven percent a year compounded annually for
  periods after December 31, 1984].
         [(b)     Subsection (a) does not change the amount of an annuity
  on which a monthly benefit payment was made before October 1, 1985,
  and does not require recomputation of that amount; but, the board
  of trustees may increase by as much as 12-1/2 percent the amount
  payable each month after October 1, 1985, by reason of basic and
  supplement annuities that were in effect during and for which a
  monthly benefit was paid by the system for the month of September,
  1985.
         [(c)     The current interest rate is seven percent for calendar
  years after December 31, 1996.]
         SECTION 81.  The heading to Section 845.316, Government
  Code, is amended to read as follows:
         Sec. 845.316.  TRANSFER OF ASSETS ON RETIREMENT [OR
  RESTORATION TO ACTIVE DUTY].
         SECTION 82.  Section 845.316(a), Government Code, is amended
  to read as follows:
         (a)  When a member retires, the retirement system shall
  transfer:
               (1)  from the employees saving fund to the current
  service annuity reserve fund, the member's accumulated
  contributions; and
               (2)  from the subdivision accumulation fund to the
  current service annuity reserve fund, an amount equal to the
  member's [accumulated] current service credit.
         SECTION 83.  Section 845.317, Government Code, is amended by
  amending Subsection (b) and adding Subsection (d) to read as
  follows:
         (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 governmental successor in
  interest, shall pay to the subdivision or its governmental
  successor any remaining credit to the account of the subdivision in
  the subdivision accumulation fund.
         (d)  If a participating subdivision has ceased to exist and
  diligent efforts by the retirement system to identify a
  governmental entity as the successor in interest to the subdivision
  have been unsuccessful, the board of trustees may close the
  subdivision's account and transfer the remaining credit to the
  endowment fund.
         SECTION 84.  The heading to Section 845.318, Government
  Code, is amended to read as follows:
         Sec. 845.318.  CONSOLIDATION OF COUNTY'S ACCOUNTS IN
  SUBDIVISION ACCUMULATION FUND; RETURN OF EXCESS FUNDS.
         SECTION 85.  Section 845.318, Government Code, is amended by
  adding Subsection (c) to read as follows:
         (c)  If the participation of a county hospital as a
  subdivision separate from other county employees is terminated
  under this subtitle, the retirement system shall pay to the county
  any excess funds remaining in the subdivision accumulation fund to
  the credit of the account of the county hospital.
         SECTION 86.  Subchapter E, Chapter 845, Government Code, is
  amended by adding Section 845.4031 to read as follows:
         Sec. 845.4031.  CONTRIBUTIONS IN ANTICIPATION OF
  PARTICIPATION. (a) After a subdivision has officially elected to
  join the retirement system and has specified the date for its
  participation to begin, and before the board of trustees has
  approved its participation, the subdivision may, with the consent
  of the director, begin deducting from an employee's compensation
  for each payroll period beginning on or after the specified
  participation date the contribution that would be deducted if the
  subdivision were then participating.
         (b)  The subdivision shall collect and segregate the amounts
  deducted from its employees' compensation and the contributions
  that the subdivision would be required to make under this subtitle
  if it were then participating.
         (c)  The period during which contributions may be deducted
  from an employee's compensation in anticipation of board approval
  of participation may not exceed six months and may not extend into a
  subsequent calendar year without consent of the board of trustees.
  During the period that board approval is pending, the subdivision
  may not participate in, and the subdivision's employees may not be
  covered by, the optional group term life program.
         (d)  On approval of participation, the subdivision shall
  immediately transfer to the retirement system, for credit to the
  appropriate funds within the system, the amounts collected and
  segregated under Subsection (b). If the subdivision previously
  elected to participate in the optional group term life program,
  participation in that program begins on the first day of the month
  following the month in which the board of trustees approves
  participation in the system.
         (e)  If the board of trustees disapproves the subdivision's
  participation in the retirement system, the subdivision shall pay
  all employee contributions collected and segregated in
  anticipation of board approval to the employees from whom the
  contributions were withheld.
         SECTION 87.  Section 845.406, Government Code, is amended to
  read as follows:
         Sec. 845.406.  OPTIONAL GROUP TERM LIFE [SUPPLEMENTAL DEATH
  BENEFITS] PROGRAM.  (a)  In addition to other contributions to the
  retirement system required by this subtitle, each subdivision
  participating in the optional group term life program [supplemental
  death benefits fund] monthly shall pay to the optional group term
  life fund an amount equal to the rate of contribution computed in
  accordance with this section, multiplied by the total compensation
  for the month of the members employed by the subdivision.
         (b)  A limitation on subdivision contribution rates provided
  by this subtitle does not apply to the rate of the contribution to
  the optional group term life [supplemental death benefits] fund.
         (c)  At the time of each investigation of members' mortality
  and service experience required by Section 845.110, the actuary
  shall investigate the mortality experience of the members and
  eligible annuitants participating in the [supplemental death
  benefits] program. On the basis of the result of that
  investigation, the actuary shall recommend to the board of trustees
  rates and tables necessary to determine optional group term life
  program [supplemental death benefits] contribution rates. The
  rates and tables may provide for the anticipated mortality
  experience of the persons covered under the program [supplemental
  death benefits fund] and for a contingency reserve.
         (d)  Before a subdivision's participation date in the
  program [supplemental death benefits fund] and before January 1 of
  each subsequent year, the actuary shall compute, on the basis of
  rates and tables adopted by the board of trustees, the
  [supplemental death benefits] contribution rate of a subdivision
  participating in the program [supplemental death benefits
  contribution fund]. The rate must be expressed as a percentage of
  the compensation of members employed by the subdivision. When the
  rate is approved by the board of trustees, the rate is effective for
  the calendar year for which it was approved.
         (e)  The board of trustees, in the exercise of its discretion
  to manage the assets of the retirement system, may lend money to the
  optional group term life [supplemental death benefits] fund if the
  amount in the fund is insufficient to pay the [supplemental death]
  benefits due. Any loan is an investment of the retirement system
  and must be repaid solely from future contributions to the
  [supplemental death benefits] fund and its share of trust earnings.
  The terms of the loan shall be set by the board of trustees, but the
  loan must bear a commercially reasonable interest rate. The board
  may adjust future contributions to the [supplemental death
  benefits] fund for purposes of repayment of the loan.
         (f)  To protect against adverse claim experience, the board
  of trustees may secure reinsurance from one or more stock insurance
  companies doing business in this state if the board determines that
  reinsurance is necessary. The retirement system shall pay the
  premiums for reinsurance from the optional group term life
  [supplemental death benefits] fund.
         SECTION 88.  Section 845.503, Government Code, is amended to
  read as follows:
         Sec. 845.503.  AUTHORITY TO RECOUP OR MAKE ADJUSTMENTS FOR
  PAYMENTS MADE IN ERROR.  (a)  The retirement system may reduce
  future payments of benefits based on the account of a member, a
  retiree, or other former member to recoup an amount overpaid or
  otherwise paid in error to or on the behalf of the member, former
  member, retiree, annuitant, or beneficiary [or other former
  member]. If no future payments are due, the retirement system may
  recover the overpayment in any manner that is permitted for the
  collection of any other debt.
         (b)  The retirement system may not recover from a member,
  former member, retiree, annuitant, or beneficiary [or other former
  member] any overpayment made more than three years before the date
  the overpayment is discovered. This subsection does not apply to an
  overpayment a reasonable person should know the person is not
  entitled to receive.
         (c)  The retirement system may adjust amounts in a
  subdivision's account in the subdivision accumulation fund to
  correct an error caused by an act or omission of the subdivision
  [related to the account].
         SECTION 89.  The heading to Section 845.505, Government
  Code, is amended to read as follows:
         Sec. 845.505.  UNDISTRIBUTED [UNCLAIMED] BENEFITS.
         SECTION 90.  Section 845.505, Government Code, is amended by
  amending Subsections (b), (c), (d), (e), (f), and (i) and adding
  Subsection (f-1) to read as follows:
         (b)  A notice under this section must include the name of the
  former member, the name of each subdivision with which the former
  member has an individual account, a statement that no additional
  interest is credited after a membership has terminated, a statement
  that a benefit is [currently] payable, and a statement of the
  procedure for obtaining payment of that benefit[, and a statement
  that a failure to file a valid application for benefits may cause
  unclaimed benefits to be forfeited to the retirement system].
         (c)  If a person files with the retirement system a valid
  application for an annuity based on a membership that terminated
  under Section 842.109(b), the retirement system shall pay an
  annuity computed as of the former member's effective retirement
  date as determined under that section [date on which the annuity
  would have been required to begin under this subtitle].
         (d)  An applicant who is a [the] former member may select the
  standard [service] retirement annuity or an optional [service]
  retirement annuity under Section 844.0041(c) or (d) [844.104]. An
  applicant who is the surviving beneficiary or the personal
  representative [spouse] of a deceased [the] former member may
  select an [optional service retirement] annuity payable in a form
  authorized by the board of trustees under Section 844.407 [under
  Section 844.104. If the applicant is not the former member or
  surviving spouse, the annuity will be computed as an annuity under
  Section 844.104(c)(7)]. All annuity payments that previously would
  have been paid if the annuity had begun on the effective retirement
  date [required under this subtitle] will be paid to the applicant.
         (e)  If a person files with the retirement system a valid
  application for a refund of a former member's accumulated
  contributions or a valid application for a benefit payable under
  the optional group term life program, the retirement system shall
  pay to the applicant the portion [amount] of the former member's
  accumulated contributions or the portion of the optional group term
  life benefits to which the applicant is entitled.
         (f)  If a person eligible to receive a benefit fails to
  provide accurate and verifiable information regarding the
  identity, age, taxpayer identification number, or residential
  address of the person or the person's beneficiary, the retirement
  system may hold or delay payment of any benefit until the
  information is provided. If a person receiving an annuity fails to
  negotiate two or more annuity payments, fails to respond to a
  written request for information relevant to the annuitant's
  continuing right to receive benefits or relevant to the
  responsibility of the system to report accurately the distribution
  under federal or state law, fails to provide the system with an
  address for the delivery of a benefit that is safe and secure from
  loss, theft, or misdelivery, or fails in any other manner that
  interferes with or impedes the efficient administration of the
  system, the system may suspend and hold all benefit payments until
  the failure is corrected [more than five consecutive annuity
  payments, the retirement system may send a notice to that person,
  stating that unless the previous payments are negotiated not later
  than the 30th day after the date of the notice, payment of benefits
  will be suspended. After receipt of a valid application, the
  retirement system shall resume making monthly payments. All
  annuity payments that would have otherwise been paid if the annuity
  had not been suspended will be paid to the person or, if the person
  has died, to the decedent's beneficiary or, if no beneficiary
  exists, to the annuitant's estate].
         (f-1)  If there is a continuation of an optional annuity, the
  retirement system shall pay to the person receiving the continuing
  annuity any amount held by the system to which the deceased person
  was entitled. If the annuity terminates with the death of the
  person, any amount held by the retirement system to which a deceased
  person was entitled is payable under rules and procedures adopted
  by the board of trustees.
         (i)  The board of trustees may adopt rules concerning the
  notice, distribution, management, transfer, and administration of
  unclaimed, held, delayed, and suspended benefits, [and] the
  authority of an applicant to act as trustee of an absent beneficiary
  in the selection of a payment option or receipt of an absent
  beneficiary's benefit under this section, and the distribution of
  benefits to an alternate payee under a qualified domestic relations
  order with respect to a terminated membership.
         SECTION 91.  Section 845.506, Government Code, is amended to
  read as follows:
         Sec. 845.506.  APPEAL OF ADMINISTRATIVE DECISION. (a)  A
  decision of the retirement system is final and conclusive unless an
  appeal is filed in writing with the system by regular mail or
  electronic filing, as that term is defined by Section
  845.116(a)(1), not later than the 90th day after the earlier of the
  date the person subject to the decision receives notice of the
  decision by any means or the date the system files notice of its
  decision with the person by regular mail or electronic means.
         (b)  A person may appeal a decision to the board of trustees
  if the person is aggrieved by a decision of the retirement system
  relating to the system or any program administered by the system
  under this subtitle:
               (1)  denying or limiting membership, service credit, or
  eligibility for or the amount of benefits payable by the system; or
               (2)  regarding to whom benefits should be paid under
  the system or program.
         (c)  The director or the director's designee may refer an
  appeal made under Subsection (a) to the State Office of
  Administrative Hearings for a hearing or employ, select, or
  contract for the services of an administrative law judge or hearing
  examiner not affiliated with the State Office of Administrative
  Hearings to conduct a hearing. This subsection prevails over any
  other law to the extent of any conflict.
         (d)  An appeal under this section is considered to be a
  contested case under Chapter 2001. The appellant in a contested
  case under this section has the burden of proof on all issues,
  including issues in the nature of an affirmative defense.
         (e)  The board of trustees may in its sole discretion make a
  final decision on a contested case under this section.
  Notwithstanding any other law, the board may in its sole discretion
  modify, refuse to accept, or delete any proposed finding of fact or
  conclusion of law contained in a proposal for decision submitted by
  an administrative law judge or other hearing examiner, or make
  alternative findings of fact and conclusions of law, in a
  proceeding considered to be a contested case under Chapter 2001.
  The board shall state in writing the specific reason for its
  determination and may adopt rules for the implementation of this
  subsection. The board may delegate its authority under this
  subsection to the director.
         (f)  Notwithstanding Subsections (d) and (e), the retirement
  system and a person aggrieved by a decision of the system may at any
  time informally negotiate an award of benefits. Negotiated
  benefits may not exceed the maximum benefits otherwise available or
  required by law.
         (g)  A final decision of the board of trustees in a contested
  case under this section is subject to judicial review under Chapter
  2001. The standard of review is by substantial evidence. Venue of
  the appeal is only in a district court in Travis County. [A
  decision of the board of trustees denying or limiting membership,
  service credit, eligibility for or the amount of benefits payable
  by the retirement system, or regarding to whom benefits should be
  paid is a decision in a contested case as defined by the
  administrative procedure law, Chapter 2001, and is subject to
  judicial review under the substantial evidence rule in accordance
  with Sections 2001.174-2001.177.]
         SECTION 92.  The following provisions of the Government Code
  are repealed:
               (1)  Section 842.001(b);
               (2)  Section 842.006;
               (3)  Sections 842.108(a) and (a-1);
               (4)  Section 842.109(d);
               (5)  Section 843.103;
               (6)  Sections 843.104(b) and (c);
               (7)  Section 843.108;
               (8)  Section 843.201(d);
               (9)  Section 843.403;
               (10)  the heading to Subchapter G, Chapter 843;
               (11)  Subchapter H, Chapter 843;
               (12)  Sections 844.009(d) and (g);
               (13)  Section 844.103;
               (14)  Section 844.104;
               (15)  Section 844.202;
               (16)  Section 844.207;
               (17)  Section 844.208(g);
               (18)  Section 844.209(g);
               (19)  Section 844.210;
               (20)  Section 844.211;
               (21)  Section 844.212;
               (22)  Section 844.304;
               (23)  Section 844.305;
               (24)  Section 844.306(b);
               (25)  Section 844.308;
               (26)  Section 844.310;
               (27)  Sections 844.407(f), (g), (h), (i), and (j);
               (28)  Section 844.704(c);
               (29)  Section 845.304; and
               (30)  Sections 845.316(b) and (c).
         SECTION 93.  Section 841.001, Government Code, as amended by
  this Act, applies to Sections 94 through 97 of this Act.
         SECTION 94.  The accumulated contributions attributable to a
  membership in the Texas County and District Retirement System that
  was terminated before January 1, 2005, under prior law because of
  absence from service are held by the retirement system in a
  noninterest-bearing account and may not be considered deposits
  under Section 843.003 or 843.0031, Government Code, as amended by
  this Act, until the person:
               (1)  again becomes a member of the retirement system;
               (2)  is eligible under Section 843.003 or 843.0031,
  Government Code, as amended by this Act; and
               (3)  submits an application to the retirement system.
         SECTION 95.  Sections 844.102(a)(1) and (3), Government
  Code, as amended by this Act, do not apply to a participating
  subdivision in the Texas County and District Retirement System that
  on December 31, 2007, required 12 years of credited service before
  service retirement from the system at age 60 or older. The 12-year
  credited service requirement to meet the minimum eligibility for
  service retirement at age 60 or older remains in effect for a
  subdivision described by this section. A subdivision described by
  this section subsequently may elect to be subject to Section
  844.102, Government Code, as amended by this Act, effective on the
  date the election is made.
         SECTION 96.  A member of the Texas County and District
  Retirement System who on December 31, 1999, had any eligible
  credited service with a subdivision that as of that date authorized
  a service retirement annuity for a member when the sum of the
  member's age and credited service equaled or exceeded a specified
  number, whose membership in the retirement system continued after
  that date without interruption, who has accumulated at least four
  years of eligible credited service, and whose membership is
  terminated under Section 842.108(b), Government Code, because of
  the requirements of Section 841.010, Government Code, is
  immediately eligible to retire and receive a service retirement
  annuity computed without actuarial reduction because of the failure
  to satisfy a required service eligibility provision in effect for
  the subdivision on the date the annuity is computed.
         SECTION 97.  Effective September 1, 2007, a participating
  subdivision in the Texas County and District Retirement System that
  elected before January 1, 1978, to provide a ratio of current
  service credits to member contributions that is greater than
  one-to-one, resulting in the larger portion of a member's total
  service credits consisting of current service credits, may by order
  of its governing body adopted before January 1, 2008, continue the
  ratio of current service credits in effect on December 31, 2007, and
  be exempt from the change in law made to Section 843.003, Government
  Code, by this Act. The total service credits accumulated by a
  member may not be reduced as the result of an action or lack of an
  action taken under this section.
         SECTION 98.  (a)  Except as provided by Subsection (b) of
  this section, this Act takes effect January 1, 2008.
         (b)  Sections 844.609 and 845.4031, Government Code, as
  added by this Act, and Section 97 of this Act take effect September
  1, 2007.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 1587 was passed by the House on May 2,
  2007, by the following vote:  Yeas 147, Nays 0, 2 present, not
  voting.
 
  ______________________________
  Chief Clerk of the House   
 
 
         I certify that H.B. No. 1587 was passed by the Senate on May
  23, 2007, by the following vote:  Yeas 31, Nays 0.
 
  ______________________________
  Secretary of the Senate    
  APPROVED:  _____________________
                     Date          
   
            _____________________
                   Governor