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  S.B. No. 976
 
 
 
 
AN ACT
  relating to the public retirement system of certain municipalities.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Title 109, Revised Statutes, is amended by
  adding Article 6243i to read as follows:
         Art. 6243i.  UNITARY RETIREMENT SYSTEM FOR CERTAIN
  MUNICIPALITIES
  PART 1.  GENERAL PROVISIONS
         Sec. 1.01.  APPLICABILITY. This article applies only to a
  municipality with a population of 500,000 or more that on January 1,
  2007, has a single unitary public retirement system established by
  municipal ordinance for employees of all departments of the
  municipality.
         Sec. 1.02.  DEFINITIONS. In this article:
               (1)  "Administrative rules" means the rules adopted to
  govern a public retirement system, including rules regarding the
  participation in, contributions to, and benefits from the public
  retirement system.
               (2)  "Board of trustees" means the persons elected or
  appointed to administer the public retirement system.
               (3)  "Governing body" means the governing body of a
  municipality to which this article applies.
               (4)  "Participating member" means a person who makes
  contributions to the public retirement system as an employee of a
  municipality to which this article applies.
               (5)  "Participating retiree" means a person who
  receives or who is eligible to receive a service retirement annuity
  from the retirement fund.
               (6)  "Pension office" means the administrative office
  of the public retirement system.
               (7)  "Public retirement system" means a continuing,
  organized program or plan of service retirement, disability
  retirement, or death benefits for employees of a municipality to
  which this article applies but does not include:
                     (A)  a program for which benefits are administered
  by a life insurance company;
                     (B)  a program providing only workers'
  compensation benefits;
                     (C)  a program administered by the federal
  government;
                     (D)  an individual retirement account or
  individual retirement annuity within the meaning of Section 408, or
  a retirement bond within the meaning of Section 409, of the Internal
  Revenue Code of 1986;
                     (E)  a plan described by Section 401(d) of the
  Internal Revenue Code of 1986;
                     (F)  an individual account plan consisting of an
  annuity contract described by Section 403(b) of the Internal
  Revenue Code of 1986; or
                     (G)  an eligible state deferred compensation plan
  described by Section 457(b) of the Internal Revenue Code of 1986.
               (8)  "Retirement fund" means the trust fund established
  by or in conjunction with the public retirement system for the
  purpose of holding assets to be used to provide benefits payable by
  the public retirement system.
               (9)  "Rule amendment" includes any amendment of, repeal
  of, addition to, deletion of, modification of, or change to an
  administrative rule.
               (10)  "Survivor" means a person, including the
  surviving spouse or dependent, who receives survivor benefits from
  a retirement fund.
               (11)  "Vested" means the accrued right of a
  participating member who has met the age and length-of-service
  requirements for service retirement required by the public
  retirement system.  A member whose retirement rights are vested may
  withdraw from employment with the municipality, leave the member's
  accumulated contributions on deposit with the public retirement
  system, and begin to receive the member's service retirement
  annuity.
  PART 2.  MEMBERSHIP
         Sec. 2.01.  GENERAL MEMBERSHIP REQUIREMENT.  (a)  Except as
  otherwise provided by administrative rule, municipal ordinance, or
  this section, a person becomes a participating member of the public
  retirement system on the date of the person's employment by the
  municipality.
         (b)  A person employed by the municipality is not eligible to
  be a participating member if the person is:
               (1)  an independent contractor or an employee of an
  independent contractor doing work for the municipality;
               (2)  an elected officer or a nonsalaried, appointed
  member of an administrative board or commission of the
  municipality, except an employee who serves as a member of the board
  or commission;
               (3)  an employee serving on a part-time basis of less
  than one-half the time required to serve as a full-time employee;
               (4)  an employee who is paid in part by the municipality
  and in part by a county, state, or other governmental agency; or
               (5)  a temporary employee, as determined by the records
  of the municipality, on the payroll of the municipality.
         (c)  A person may appeal a determination regarding the
  person's eligibility to be a participating member to the board of
  trustees. The board's decision regarding eligibility is final.
  PART 3.  CREDITABLE SERVICE
         Sec. 3.01.  TYPES OF CREDITABLE SERVICE.  The board of
  trustees by rule shall establish the types of service for which a
  participating member earns credit.
         Sec. 3.02.  BENEFIT ELIGIBILITY BASED ON CREDITED SERVICE.  
  A participating member's eligibility to receive a service
  retirement benefit is based on credited service at the time of
  retirement.
  PART 4.  BENEFITS
         Sec. 4.01.  TYPES OF BENEFITS.  The types and calculation of
  benefits provided by the public retirement system are determined in
  accordance with applicable laws, municipal ordinances, and
  administrative rules.
         Sec. 4.02.  AMENDMENTS INCREASING BENEFITS.  Before taking
  effect, any amendment to the administrative rules proposed by the
  board of trustees that increases the benefits provided by the
  public retirement system must be reviewed and approved by the
  governing body.
         Sec. 4.03.  AMENDMENTS REDUCING BENEFITS.  (a)  Only the
  governing body may adopt an amendment to the administrative rules
  that reduces a benefit provided by the public retirement system.
         (b)  At least 90 days before the date the governing body is
  scheduled to vote on an amendment to the administrative rules that
  would reduce a benefit provided by the public retirement system,
  the governing body must give notice to the board of trustees of the
  governing body's intention to consider and vote on the amendment.
  PART 5.  ADMINISTRATION
         Sec. 5.01.  COMPOSITION OF BOARD OF TRUSTEES. (a)  The
  board of trustees is composed of 13 members.
         (b)  Each of the following groups of participating members
  shall elect one vested, participating member from their respective
  group to serve as a member of the board of trustees:
               (1)  police officers; and
               (2)  firefighters.
         (c)  The group of participating members who are general
  employees of the municipality and who are not employed as police
  officers or firefighters shall elect two vested, participating
  members  from  the  group  to  serve  as  members  of  the  board  of
  trustees.
         (d)  Each of the following groups of participating retirees
  shall elect one participating retiree from their respective group
  to serve as a member of the board of trustees:
               (1)  retired police officers;
               (2)  retired firefighters; and
               (3)  other retired general employees of the
  municipality who did not retire from service as a police officer or
  firefighter.
         (e)  The mayor shall nominate and the governing body shall
  confirm, by majority vote, five residents of the municipality to
  serve as members of the board of trustees. A person appointed under
  this subsection may not be a member of the governing body.
         (f)  The governing body shall designate the chief financial
  officer of the municipality to serve as a member of the board of
  trustees.
         (g)  Members of the board of trustees hold office for terms
  of two years.
         Sec. 5.02.  BOARD POWERS AND DUTIES. (a)  The board of
  trustees shall administer the public retirement system, including
  the retirement fund of the public retirement system.
         (b)  The board of trustees may adopt amendments to the
  administrative rules in accordance with Sections 5.06, 5.07, 5.09,
  and 5.10 of this article.
         Sec. 5.03.  BOARD CHAIR. The board of trustees shall elect a
  chair from the membership of the board.
         Sec. 5.04.  QUORUM; VOTING.  (a)  Each member of the board of
  trustees is entitled to one vote.
         (b)  Except as provided by Subsection (c) of this section,
  seven members of the board of trustees constitute a quorum to
  transact the business of the board.
         (c)  In the event of a vacancy on the board of trustees, the
  number of members required to constitute a quorum is reduced by the
  number of vacancies on the board of trustees.
         Sec. 5.05.  QUALIFIED ACTUARY; ACTUARIAL ASSUMPTIONS.  
  (a)  The board of trustees may employ a qualified actuary.
         (b)  To be a qualified actuary, an actuary must be:
               (1)  a fellow of the Society of Actuaries; or
               (2)  a member of the American Academy of Actuaries.
         (c)  At least 30 days before the date the board of trustees
  adopts actuarial assumptions to be used by the public retirement
  system, the board must submit to the governing body a detailed
  report regarding the proposed actuarial assumptions.  The report
  must include the fiscal impact of the proposed actuarial
  assumptions on the public retirement system.
         Sec. 5.06.  RULE AMENDMENTS ADOPTED BY BOARD OF TRUSTEES.
  (a)  Except as provided by Sections 4.03, 5.07, 5.09, and 5.10 of
  this article and subject to Section 4.02 of this article, the board
  of trustees may adopt amendments to the administrative rules if:
               (1)  a qualified actuary performs an actuarial analysis
  of the fiscal impact of the proposed amendment and determines that
  the amendment will not impact the actuarial soundness of the
  retirement fund;
               (2)  the proposed amendment is placed on the agenda of
  the board of trustees for at least two consecutive meetings of the
  board that are not less than 30 days apart for the purpose of giving
  participating members an opportunity to comment on the proposed
  amendment; and
               (3)  the proposed amendment is approved by a majority
  vote of the full membership of the board of trustees.
         (b)  An amendment to the administrative rules adopted in
  accordance with this section becomes effective immediately unless
  otherwise provided by the amendment.
         Sec. 5.07.  AMENDMENTS CONCERNING CONTRIBUTIONS BY
  MUNICIPALITY.  (a)  An amendment to the administrative rules
  governing municipal contributions, including an amendment to the
  rate or manner of making contributions, may be made only if:
               (1)  a qualified actuary performs an actuarial analysis
  of the fiscal impact of the proposed amendment;
               (2)  the board of trustees or the governing body, by
  majority vote, calls a special election of all participating
  members to approve the amendment;
               (3)  the amendment is approved by a majority of the
  participating members eligible to vote in the special election; and
               (4)  the amendment is approved by a majority vote of:
                     (A)  the board of trustees, if the governing body
  called the special election under Subdivision (2) of this
  subsection; or
                     (B)  the governing body, if the board of trustees
  called the special election under Subdivision (2) of this
  subsection.
         (b)  The board of trustees or the governing body, as
  applicable, shall approve or reject the proposed amendment under
  Subsection (a)(4) of this section by the 90th day after the date the
  votes of the special election are canvassed.
         (c)  The pension office shall conduct a special election
  under Subsection (a) of this section by secret ballot.  The board of
  trustees shall canvass the vote.
         (d)  A person who is a participating member on the date of the
  special election is eligible to vote in the special election.
         (e)  Unless otherwise provided by the proposed amendment, an
  amendment to the administrative rules becomes effective on approval
  by the board of trustees or the governing body, as appropriate,
  under Subsection (a)(4) of this section.
         (f)  Notwithstanding Subsections (a) through (e) of this
  section, only the governing body may adopt an amendment to the
  administrative rules that increases municipal contributions.
         Sec. 5.08.  AMENDMENTS BY GOVERNING BODY IN EVENT OF FISCAL
  EMERGENCY. (a)  Notwithstanding Section 5.07 of this article, in
  the event a municipality to which this article applies has a fiscal
  emergency that requires an amendment to the administrative rules
  governing municipal contributions, the governing body may amend the
  administrative rules to address the emergency if the governing
  body:
               (1)  determines that the emergency exists and approves
  the proposed amendment by the unanimous vote of all members of the
  governing body; and
               (2)  provides written notice to the administrative head
  of the public retirement system at least five business days before
  the date the proposed amendment takes effect.
         (b)  On the 90th day after the date an amendment under this
  section takes effect and for each subsequent 90-day period while
  the amendment is in effect, the governing body shall determine
  whether the emergency continues to exist. If the governing body
  does not determine by a unanimous vote that the emergency continues
  to exist or if the governing body fails to vote on whether the
  emergency exists as required by this subsection, the amendment
  automatically expires on the date the vote is taken or on the date
  the vote should have been taken, as applicable.
         Sec. 5.09.  AMENDMENTS INCREASING CONTRIBUTIONS BY MEMBERS.
  (a)  An amendment to the administrative rules that increases member
  contributions must be adopted in accordance with the procedures
  provided by Sections 5.07(a) through (e) of this article for
  adopting an amendment governing municipal contributions.
         (b)  Notwithstanding any other law, an amendment made in
  accordance with Subsection (a) of this section may require a
  participating member to contribute an amount that exceeds 10
  percent of the compensation paid to the participating member for
  each payroll period.
         Sec. 5.10.  EMERGENCY, ROUTINE, OR STATUTORILY REQUIRED
  AMENDMENTS BY BOARD. (a)  Unless an amendment to the
  administrative rules requires adoption in accordance with Section
  5.07 or 5.09 of this article, the board of trustees may adopt
  emergency or routine amendments to the administrative rules or
  amendments that are required by federal or state law if the board of
  trustees by unanimous vote of the members present and voting:
               (1)  agrees that the proposed amendment is an
  emergency, routine, or statutorily required amendment; and
               (2)  approves the proposed amendment.
         (b)  An amendment adopted in accordance with this section is
  an automatic agenda item for the next regular meeting of the board
  of trustees and is subject to review or repeal by the board at that
  meeting.
         Sec. 5.11.  SEMIANNUAL MEETING OF BOARD AND GOVERNING BODY.
  At least once every six months, the board of trustees and the
  governing body shall meet to review the performance of the
  retirement fund and determine how to address the unfunded
  liabilities, if any, of the public retirement system.
         SECTION 2.  (a)  The administrative rules governing the
  public retirement system of a municipality to which this Act
  applies under Section 1.01, Article 6243i, Revised Statutes, as
  added by this Act, in effect on May 31, 2007, shall continue in
  effect on and after the effective date of this Act.
         (b)  The changes in law made by Sections 4.02, 4.03, 5.06,
  5.07, 5.08, 5.09, and 5.10, Article 6243i, Revised Statutes, as
  added by this Act, apply to a change in the administrative rules
  governing a public retirement system of a municipality to which
  this Act applies under Section 1.01, Article 6243i, Revised
  Statutes, as added by this Act, adopted on or after the effective
  date of this Act.
         SECTION 3.  (a)  As soon as practicable after the effective
  date of this Act, a new board of trustees charged with administering
  the public retirement system of a municipality described by Section
  1.01, Article 6243i, Revised Statutes, as added by this Act, shall
  be elected or appointed in accordance with Section 5.01, Article
  6243i, Revised Statutes, as added by this Act.
         (b)  The term of a member of the board of trustees or other
  board administering the public retirement system described by
  Subsection (a) of this section who is serving on the board on the
  effective date of this Act expires on the date that a majority of
  the new board of trustees has been elected or appointed under
  Subsection (a) of this section.
         SECTION 4.  This Act takes effect immediately if it receives
  a vote of two-thirds of all the members elected to each house, as
  provided by Section 39, Article III, Texas Constitution.  If this
  Act does not receive the vote necessary for immediate effect, this
  Act takes effect September 1, 2007.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 976 passed the Senate on
  April 19, 2007, by the following vote: Yeas 31, Nays 0; and that
  the Senate concurred in House amendment on May 21, 2007, by the
  following vote: Yeas 31, Nays 0.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 976 passed the House, with
  amendment, on May 17, 2007, by the following vote: Yeas 143,
  Nays 0, two present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor