83R25821 KFF-D
	By: Murphy, Flynn, Menendez, Davis of Dallas,	H.B. No. 2432
	Fallon
	Substitute the following for H.B. No. 2432:
	By:  Callegari	C.S.H.B. No. 2432

	A BILL TO BE ENTITLED
	AN ACT
	relating to benefits from and administration of certain public
	retirement systems; providing civil penalties.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 802.002(a), Government Code, is amended
	to read as follows:
	(a)  Except as provided by Subsection (b), the Employees
	Retirement System of Texas, the Teacher Retirement System of Texas,
	the Texas County and District Retirement System, the Texas
	Municipal Retirement System, and the Judicial Retirement System of
	Texas Plan Two are exempt from Sections 802.004, 802.005, 802.006,
	802.007, 802.101(a), 802.101(b), 802.101(d), 802.102, 802.103(a),
	802.103(b), 802.103(d), 802.202, 802.203, 802.204, 802.2041,
	802.2042, 802.205, 802.206, and 802.207. The Judicial Retirement
	System of Texas Plan One is exempt from all of Subchapters B and C
	except Sections 802.104 and 802.105. The optional retirement
	program governed by Chapter 830 is exempt from all of Subchapters B
	and C except Section 802.106.
	SECTION 2.  Subchapter A, Chapter 802, Government Code, is
	amended by adding Sections 802.004 through 802.008 to read as
	follows:
	Sec. 802.004.  DISCLOSURE OF CERTAIN POTENTIAL CONFLICTS OF
	INTEREST REQUIRED; ANNUAL FILING. (a)  This section applies to:
	(1)  a member of the governing body of a public
	retirement system;
	(2)  an investment manager for a public retirement
	system appointed by contract under Section 802.204; and
	(3)  any other person, including an investment
	consultant or advisor, providing services under contract to a
	public retirement system relating to the management and investment
	of the system's assets.
	(b)  Not later than the 30th day after the date the person
	learns of the relationship, a person to whom this section applies
	shall disclose in writing to the public retirement system that the
	person or an immediate family member of the person, including the
	person's spouse, has a business, commercial, or other relationship
	that a reasonable person would find likely to diminish the person's
	independence of judgment in the performance of the person's
	responsibilities with respect to the management or investment of
	the system's assets, including a relationship in which the person
	or the person's immediate family member:
	(1)  is employed by or participates in the management
	of a business entity or other organization receiving funds from the
	retirement system; or
	(2)  owns or controls, directly or indirectly, an
	interest in a business entity or other organization receiving funds
	from the retirement system.
	(c)  If a person described by Subsection (a)(1) fails to
	disclose a relationship under Subsection (b), it is a ground for
	removal from the governing body of the public retirement system on
	which the person serves.  If the board determines that a person
	described by Subsection (a)(1) should be removed under this
	subsection, the board shall:
	(1)  notify the appropriate appointing officer that a
	ground for removal exists; or
	(2)  if the person was elected to the governing body,
	notify the presiding officer or the assistant presiding officer of
	the governing body of the ground for removal.
	(d)  An appointing officer or, in the case of an elected
	trustee, the governing body, on receipt of notice under Subsection
	(c) or on making the officer's or body's own determination, may
	remove the person from the governing body if the appointing officer
	or governing body determines a violation of Subsection (b) has
	occurred.
	(e)  If a person described by Subsection (a)(2) or (3) fails
	to disclose a relationship under Subsection (b):
	(1)  the contract is voidable by the public retirement
	system; and
	(2)  the governing body of the retirement system may
	enter an order declaring the person ineligible to contract for
	business relating to the management or investment of the system's
	assets.
	(f)  At least annually on a date specified by the public
	retirement system, a person to whom this section applies shall file
	a statement with the system stating that the person is aware that
	the person is required to disclose material conflicts of interest
	under this section and that the person is in compliance with this
	section.
	(g)  The board by rule shall adopt guidelines relating to the
	types of relationships that must be disclosed under Subsection (b).
	Sec. 802.005.  PROHIBITION AGAINST ACCEPTANCE OF CERTAIN
	BENEFITS.  (a)  In this section, "benefit" has the meaning assigned
	by Section 1.07, Penal Code.
	(b)  Except as provided by Subsection (c), a person to whom
	Section 802.004 applies or a member of the immediate family of the
	person may not accept any benefit with an aggregate value in any
	calendar year of more than $1,000 from any individual who enters
	into or seeks to enter into a contract with a public retirement
	system.
	(c)  Food, lodging, and transportation related to attending
	a conference in this state that is attended or expected to be
	attended by at least 50 individuals representing more than one
	public retirement system are exempt from this section.
	Sec. 802.006.  PROHIBITED EMPLOYMENT AND CONTRACTS.  A
	public retirement system may not knowingly employ or contract with,
	either directly or indirectly, a former member of the governing
	body of the system before the first anniversary of the date the
	individual ceased to be a member of the system's governing body.
	Sec. 802.007.  CIVIL PENALTY.  (a)  In this section, "theft"
	means the conduct prohibited by Section 31.03, Penal Code.
	(b)  A person who commits theft in relation to a service
	provided by the person to a public retirement system is liable to
	the system for a civil penalty in an amount not to exceed $250,000
	for each violation.  An action may be brought under this subsection
	regardless of whether a criminal conviction under Section 31.03,
	Penal Code, has been sought or obtained against the person.
	(c)  A person who commits a breach of the person's fiduciary
	duty in relation to a service provided by the person to a public
	retirement system is liable to the system for a civil penalty in an
	amount not to exceed $2,000 in the aggregate for the violation and
	all violations of a similar nature.
	(d)  The amount of a civil penalty imposed under this section
	must be in an amount that is reasonably related to the harm to the
	public retirement system.
	(e)  The attorney general may bring an action to impose and
	recover a civil penalty for a violation of this section made in
	relation to:
	(1)  the Employees Retirement System of Texas,
	including a retirement system administered by that system;
	(2)  the Teacher Retirement System of Texas;
	(3)  the Texas Municipal Retirement System;
	(4)  the Texas County and District Retirement System;
	and
	(5)  the Texas Emergency Services Retirement System.
	(f)  A local prosecuting attorney may bring an action to
	impose or recover a civil penalty for a violation of this section
	made in relation to a public retirement system other than a system
	described by Subsection (e).
	(g)  A penalty under this section is in addition to any other
	remedy provided by law.
	Sec. 802.008.  ANNUAL REPORT ON CERTAIN ANNUITIES PAID BY
	LOCAL RETIREMENT SYSTEMS. (a) In this section:
	(1)  "Statewide retirement system" has the meaning
	assigned by Section 804.001.
	(2)  "Sponsoring authority" means the governing body of
	a municipality or other political subdivision that participates, or
	has an agency or instrumentality of the political subdivision that
	participates, in a public retirement system.
	(b)  Except as provided by Subsection (f), in addition to
	other reports required by law, a public retirement system, other
	than a statewide public retirement system, not later than the 90th
	day after the end of the fiscal year under which the system
	operates, shall file with the sponsoring authority a report
	regarding annuities:
	(1)  the retirement system began paying during the
	preceding fiscal year; and
	(2)  the amounts of which were calculated based at
	least in part:
	(A)  on a member's final average salary; or
	(B)  on a member's average salary during a
	particular period of employment.
	(c)  The report required by this section must include:
	(1)  if the amount of an annuity was calculated based on
	a salary that was increased as a result of overtime pay or any other
	amount received by the member as payment for time worked in excess
	of the member's normal work schedule:
	(A)  the amount by which the annuity was
	increased; and
	(B)  a calculation of the amount that the member's
	annuity would have been had the member's annuity excluded the
	amounts earned for time worked in excess of the member's normal work
	schedule; and
	(2)  the number of annuitants whose annuities meet the
	terms of Subdivision (1) and the aggregate amount by which the
	amounts of the annuities paid exceed the amount described by
	Subdivision (1)(B).
	(d)  Information included in the report required by this
	section that, if in the custody of the public retirement system
	would be considered confidential and not subject to disclosure
	under Section 552.0038, while in the custody of the sponsoring
	authority is considered confidential and not subject to disclosure
	in a manner that could reasonably be expected to identify an
	individual.
	(e)  The report required by this section may be combined with
	any other report that a public retirement system is required to
	provide to a sponsoring authority.
	(f)  This section does not apply to a public retirement
	system that is not designed to be funded on an actuarial basis.
	SECTION 3.  Section 802.103, Government Code, is amended by
	adding Subsection (d) to read as follows:
	(d)  The governing body of a public retirement system shall
	require that all records, including documents used to prepare or
	explain the annual financial report required under this section,
	be:
	(1)  retained in compliance with the records retention
	schedule adopted by the Texas State Library and Archives Commission
	applicable to all local governments; and
	(2)  made available to the board on request.
	SECTION 4.  Subchapter C, Chapter 802, Government Code, is
	amended by adding Sections 802.2041 and 802.2042 to read as
	follows:
	Sec. 802.2041.  PROCUREMENT OF INVESTMENT MANAGERS AND
	CERTAIN OTHERS. (a)  The board shall by rule adopt guidelines for
	the procurement of investment managers and other persons, including
	an investment consultant or advisor, who provide a public
	retirement system with services relating to the management and
	investment of the system's assets.
	(b)  The board may require a public retirement system to
	provide the board with a statement, not later than the 30th day
	after the date of the procurement, detailing the system's method of
	selecting any person described by Subsection (a).
	Sec. 802.2042.  CONTRACTS WITH INVESTMENT MANAGERS AND
	CERTAIN OTHERS. A contract with an investment manager or other
	person to provide services to a public retirement system relating
	to the management and investment of the system's assets is subject,
	at the board's request, to review by the board regarding the fees
	charged and paid by the system and the services rendered to the
	system in consideration for the fees.
	SECTION 5.  (a)  Not later than January 1, 2014, the State
	Pension Review Board shall adopt rules as required by Sections
	802.004 and 802.2041, Government Code, as added by this Act.
	(b)  Notwithstanding Section 802.004, Government Code, as
	added by this Act, a person is not required to comply with that
	section before the 30th day after the date the State Pension Review
	Board adopts initial rules under that section.
	SECTION 6.  This Act takes effect September 1, 2013.