S.B. No. 1459
 
 
 
 
AN ACT
  relating to the powers and duties of and contributions to and
  benefits from the systems and programs administered by the
  Employees Retirement System of Texas.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subsection (a), Section 411.1402, Government
  Code, is amended to read as follows:
         (a)  The Employees Retirement System of Texas is entitled to
  obtain from the department, the Federal Bureau of Investigation
  Criminal Justice Information Services Division, or another law
  enforcement agency criminal history record information maintained
  by the department, division, or agency that relates to a person who
  is:
               (1)  an applicant for employment with, or who is or has
  been employed by, the retirement system;
               (2)  a consultant, contract employee, independent
  contractor, intern, or volunteer for the retirement system or an
  applicant to serve in one of those positions; or
               (3)  a candidate for appointment or election to the
  board of trustees of the retirement system or an advisory committee
  to that board.
         SECTION 2.  Subsection (a), Section 661.091, Government
  Code, is amended to read as follows:
         (a)  A contributing member of the Employees Retirement
  System of Texas who retires is entitled to a lump-sum payment [be
  paid in a lump sum], from funds of the agency or department from
  which the member retires, for the member's accrued vacation time as
  of the date of retirement, unless the member opts to receive for
  that accrued vacation time service credit under Section 813.511(a).
         SECTION 3.  Section 811.007, Government Code, is amended to
  read as follows:
         Sec. 811.007.  IMMUNITY FROM LIABILITY. The board of
  trustees, executive director, members of an advisory committee
  appointed by the board of trustees, and employees of the retirement
  system are not liable for any action taken or omission made or
  suffered by them in good faith in the performance of any duty in
  connection with any program or system administered by the
  retirement system.
         SECTION 4.  Subsection (b), Section 812.003, Government
  Code, is amended to read as follows:
         (b)  An office or employment that is included in the coverage
  of the Teacher Retirement System of Texas, the Judicial Retirement
  System of Texas Plan One, or the Judicial Retirement System of Texas
  Plan Two or, except as provided by Section 9.01, Chapter 238
  (S.B. 378), Acts of the 73rd Legislature, Regular Session, 1993, is
  with a university system or institution of higher education, as
  defined by Section 61.003, Education Code, is not a position with a
  department, commission, board, agency, or institution of the state
  for purposes of this subtitle.
         SECTION 5.  Subsection (c), Section 813.202, Government
  Code, is amended to read as follows:
         (c)  The state shall contribute for service established
  under this section an amount in the same ratio to the member's
  contribution and interest paid under Subsection (b) for the service
  as the state's contribution bears to the contribution for current
  service required of a member of the employee class at the time the
  service is established under this section. The state's
  contribution and interest must be paid from the fund or account from
  which the member receives compensation at the time the service is
  established or, if the member does not hold a position at the time
  the service is established, from the fund or account from which the
  member received compensation when the member most recently held a
  position.
         SECTION 6.  Subsection (b), Section 813.302, Government
  Code, is amended to read as follows:
         (b)  A member eligible to establish military service credit
  is one who:
               (1)  does not receive and is not eligible to receive
  federal retirement payments based on 20 years or more of active
  federal military duty [or its equivalent];
               (2)  has been released from military duty under
  conditions not dishonorable; and
               (3)  has credit in the retirement system for membership
  service performed after the member's date of release from active
  military duty.
         SECTION 7.  Subsection (k), Section 813.509, Government
  Code, is amended to read as follows:
         (k)  A member [who was not a member on the date hired and was
  hired on or after September 1, 2009,] or a death benefit beneficiary
  of that member may use sick leave creditable under this section only
  for purposes of calculating the member's or beneficiary's annuity.
         SECTION 8.  Subsections (a) and (j), Section 813.511,
  Government Code, are amended to read as follows:
         (a)  A member who holds a position included in the employee
  class of membership during the month that includes the effective
  date of the member's retirement and who retires based on service or
  a disability is entitled to service credit in the retirement system
  for the member's annual leave that has accumulated and is unused on
  the last day of employment, unless the member opts to receive for
  that accumulated leave a lump-sum payment under Section 661.091.
         (j)  A member [who was not a member on the date hired and was
  hired on or after September 1, 2009,] or a death benefit beneficiary
  of that member may use annual leave creditable under this section
  only for purposes of calculating the member's or beneficiary's
  annuity.
         SECTION 9.  Subsections (a) and (d), Section 814.105,
  Government Code, are amended to read as follows:
         (a)  The [Except as otherwise provided by this section, the]
  standard service retirement annuity for service credited in the
  employee class of membership is an amount computed as the member's
  average monthly compensation for service in that class for the 60
  [36] highest months of compensation multiplied by 2.3 percent for
  each year of service credit in that class.
         (d)  The standard service retirement annuity computed under
  this section [Subsection (c)] is reduced by five percent for each
  year the member retires before the member reaches age 62 [60, with a
  maximum possible reduction of 25 percent].
         SECTION 10.  Section 814.107, Government Code, is amended by
  amending Subsections (b) and (c) and adding Subsection (c-1) to
  read as follows:
         (b)  The standard service retirement annuity payable for at
  least 20 years of service credit as a law enforcement or custodial
  officer is an amount computed on the basis of the member's average
  monthly compensation for the 60 [36] highest months of compensation
  in the employee class, times the sum of the percentage factor used
  in the computation of a standard service retirement annuity under
  Section 814.105 plus .5 percent.
         (c)  The standard combined service retirement annuity that
  is payable under this section is based on retirement on or after the
  attainment of the normal retirement age, which for purposes of this
  section is the earlier of either the age of 57 [50] or the age at
  which the sum of the member's age and amount of service credit in
  the employee class equals the number 80. The annuity of a law
  enforcement or custodial officer who retires before reaching the
  age of 57 under any eligibility criteria is actuarially reduced by
  five percent for each year of difference between the member's age at
  retirement and 57. The actuarial reduction described by this
  section is in addition to any other actuarial reduction required by
  law.
         (c-1)  A law enforcement or custodial officer who retires
  before attaining the [normal retirement] age of 50 is entitled only
  to an annuity that is actuarially reduced from the annuity
  available at the [normal retirement] age of 50 to the law
  enforcement or custodial officer whose service credit annuity
  amount is based on the sum of the member's age and amount of law
  enforcement or custodial officer service credit and employee class
  service credit, and is not entitled to have the annuity
  recalculated at normal retirement age. The standard or reduced
  annuity under this section is payable from the trust fund
  established by Section 815.310 and the law enforcement and
  custodial officer supplemental retirement fund in a ratio
  determined by the retirement system.
         SECTION 11.  Subsection (a), Section 814.1081, Government
  Code, is amended to read as follows:
         (a)  A person who retired and selected an optional service
  retirement annuity described by Section 814.108(c)(1), (c)(2), or
  (c)(5) may change the optional annuity selection to the selection
  of a standard service retirement annuity if:
               (1)  pursuant to a divorce decree, a court orders the
  change in the annuity selection to a standard service retirement
  annuity; or
               (2)  the retiree files [by filing] with the retirement
  system a request to change the annuity selection, if the retiree
  designated a person as beneficiary who:
                     (A) [(1)]  was not at the time of designation and
  is not currently the retiree's spouse or dependent child; or
                     (B)  is not currently the retiree's spouse or
  dependent child and [(2)] has executed since the designation a
  written, notarized instrument that releases the retirement system
  from any claim to the annuity by the beneficiary and that transfers
  all [transfer and release, approved by a court of competent
  jurisdiction pursuant to a divorce decree,] of the beneficiary's
  interest in the annuity to the retiree [and is not currently the
  retiree's spouse or dependent child].
         SECTION 12.  Subchapter G, Chapter 814, Government Code, is
  amended by adding Section 814.604 to read as follows:
         Sec. 814.604.  COST-OF-LIVING ADJUSTMENT. (a)  The
  retirement system shall grant a one-time cost-of-living adjustment
  as provided by Subsections (b) and (c) on a finding by the board of
  trustees that, as determined by an actuarial valuation:
               (1)  the amortization period for the unfunded actuarial
  liabilities of the retirement system does not exceed 30 years by one
  or more years; and
               (2)  as a result of paying the adjustment, the time
  required to amortize the unfunded actuarial liabilities of the
  retirement system would not be increased to a period that exceeds 30
  years by one or more years.
         (b)  The retirement system shall pay the cost-of-living
  adjustment under this section to a retiree who has been retired for
  20 years or more on the date the board of trustees makes the finding
  in Subsection (a), or to a beneficiary of the retiree, as an
  increase to a monthly service retirement benefit, disability
  retirement benefit, or death benefit, as applicable, paid under
  this chapter for service credited in the employee class.
         (c)  A cost-of-living adjustment under this section is
  limited to the lesser of:
               (1)  an amount equal to three percent of the monthly
  benefit subject to the increase; or
               (2)  $100 a month.
         SECTION 13.  Subsection (b), Section 815.311, Government
  Code, is amended to read as follows:
         (b)  Interest on money in an individual account in the
  employees saving account is earned monthly and is computed at the
  rate of two [five] percent a year on the mean balance of the
  member's account for the fiscal year.
         SECTION 14.  Section 815.317, Government Code, is amended by
  adding Subsection (d) to read as follows:
         (d)  Member contributions to the fund deducted under Section
  815.402(h):
               (1)  earn interest at the same rate as money in an
  individual account in the employees saving account under Section
  815.311; and
               (2)  are subject to the same computations and
  limitations that apply to member contributions under Section
  815.311.
         SECTION 15.  Subsection (a), Section 815.402, Government
  Code, is amended to read as follows:
         (a)  Except as provided by Section 813.201, each payroll
  period, each department or agency of the state shall cause to be
  deducted from each member's compensation a contribution of:
               (1)  6.6 [6.5] percent of the compensation if the
  member is not a member of the legislature, for service rendered
  after August 31, 2013, and before September 1, 2014;
               (2)  6.9 percent of the compensation if the member is
  not a member of the legislature, for service rendered after August
  31, 2014, and before September 1, 2015;
               (3)  7.2 percent of the compensation if the member is
  not a member of the legislature, for service rendered after August
  31, 2015, and before September 1, 2016;
               (4)  7.5 percent of the compensation if the member is
  not a member of the legislature, for service rendered after August
  31, 2016;
               (5)  for service rendered on or after September 1,
  2017, the lesser of:
                     (A)  7.5 percent of the member's annual
  compensation; or
                     (B)  a percentage of the member's annual
  compensation equal to 7.5 percent reduced by one-tenth of one
  percent for each one-tenth of one percent that the state
  contribution rate for the fiscal year to which the service relates
  is less than the state contribution rate established for the 2015
  fiscal year [provided that if the state contribution to the
  retirement system is computed using a percentage less than 6.5
  percent, the member's contribution is computed using a percentage
  equal to the percentage used to compute the state contribution,
  which may not be less than six percent]; or
               (6) [(2)]  eight percent of the compensation if the
  member is a member of the legislature.
         SECTION 16.  Subchapter E, Chapter 815, Government Code, is
  amended by adding Section 815.4035 to read as follows:
         Sec. 815.4035.  COLLECTION OF STATE RETIREMENT
  CONTRIBUTION. (a)  Except as provided by Section 813.201, the
  board of trustees shall assess each employer whose employees are
  members of the retirement system a state retirement contribution in
  an amount equal to 0.5 percent of the employer's total payroll, as
  determined by the General Appropriations Act.
         (b)  The board of trustees shall deposit the state retirement
  contribution to the credit of the trust fund established by Section
  815.310 to be used for the purposes specified by Section 815.103.
         SECTION 17.  Section 837.002, Government Code, is amended to
  read as follows:
         Sec. 837.002.  TERMINATION OF MEMBERSHIP. A person's
  membership in the retirement system is terminated by:
               (1)  death of the person;
               (2)  retirement based on service credited in the
  retirement system; or
               (3)  withdrawal of all of the person's accumulated
  contributions[; or
               [(4) transfer of the person's accumulated contributions
  under Section 840.401(f)].
         SECTION 18.  Subsection (b), Section 838.103, Government
  Code, is amended to read as follows:
         (b)  A member eligible to establish military service credit
  is one who:
               (1)  has at least eight years of service credit in the
  retirement system;
               (2)  does not receive and is not eligible to receive
  federal retirement payments based on 20 years or more of active
  federal military duty [or its equivalent]; and
               (3)  has been released from military duty under
  conditions not dishonorable.
         SECTION 19.  Subsections (a) and (c), Section 838.106,
  Government Code, are amended to read as follows:
         (a)  A member may establish service credit in the retirement
  system for any calendar year during which the member[:
               [(1)] held an office included in the membership of the
  retirement system[; or
               [(2) was eligible to take the oath for an office
  included in the membership of the retirement system].
         (c)  For the purpose of Subsection (a) [(a)(1)], the term of
  a member leaving judicial office ends not later than December 31
  regardless of the date on which the member's successor takes the
  oath of office.
         SECTION 20.  Subsection (a), Section 840.102, Government
  Code, is amended to read as follows:
         (a)  Except as provided by Subsections (g) and (h), each
  payroll period, a judicial officer who is a member of the retirement
  system is required to contribute:
               (1)  6.6 [six] percent of the officer's state
  compensation for service rendered after August 31, 2013, and before
  September 1, 2014;
               (2)  6.9 percent of the officer's state compensation
  for service rendered after August 31, 2014, and before September 1,
  2015;
               (3)  7.2 percent of the officer's state compensation
  for service rendered after August 31, 2015, and before September 1,
  2016;
               (4)  7.5 percent of the officer's state compensation
  for service rendered after August 31, 2016; or
               (5)  for service rendered on or after September 1,
  2017, the lesser of:
                     (A)  7.5 percent of the officer's state
  compensation; or
                     (B)  a percentage of the officer's state
  compensation equal to 7.5 percent reduced by one-tenth of one
  percent for each one-tenth of one percent that the state
  contribution rate for the fiscal year to which the service relates
  is less than the state contribution rate established for the 2015
  fiscal year [the period to the retirement system].
         SECTION 21.  Subdivisions (9) and (11), Section 1551.003,
  Insurance Code, are amended to read as follows:
               (9)  "Full-time employee" means an employee designated
  as a full-time employee under Section 1551.319(c) or (d) or an
  employee designated by the employer as working 30 [40] or more hours
  a week.
               (11)  "Part-time employee" means an employee
  designated by the employer as working less than 30 [40] hours a
  week. For purposes of this chapter, an individual described by
  Section 1551.101(e)(2) is considered a part-time employee.
         SECTION 22.  Subsection (b), Section 1551.004, Insurance
  Code, is amended to read as follows:
         (b)  In this section, "child" includes:
               (1)  a natural child, adopted child, stepchild, [or]
  foster child, or child in the possession of a participant who is
  designated as managing conservator of the child under an
  irrevocable or unrevoked affidavit of relinquishment under Chapter
  161, Family Code; or
               (2)  a child who is related by blood or marriage and was
  claimed as a dependent on the federal income tax return of an
  individual who is eligible to participate in the group benefits
  program under Section 1551.101 or 1551.102 for the calendar year
  preceding the plan year in which the child is first enrolled as a
  dependent under Subchapter D, and for each subsequent year in which
  the child is enrolled as a dependent.
         SECTION 23.  Subsections (a) and (b), Section 1551.1055,
  Insurance Code, are amended to read as follows:
         (a)  Except as provided by Subsection (c) or (d), eligibility
  under Section 1551.101 begins not later than [on the first day of
  the calendar month that begins after] the 90th day after the date
  the employee performs services for a state agency or is qualified
  for and begins to hold elected or appointed office.
         (b)  Except as provided by Subsection (c), eligibility under
  Section 1551.102, for an individual who does not retire at the end
  of the last month for which the individual is on the payroll of a
  state agency before retirement, begins not later than [on the first
  day of the calendar month that begins after] the 90th day after the
  date the individual retires.
         SECTION 24.  Subsection (a), Section 1551.158, Insurance
  Code, is amended to read as follows:
         (a)  A dependent child who is unmarried and whose coverage
  under this chapter ends when the child becomes 26 [25] years of age
  may, on expiration of continuation coverage under the Consolidated
  Omnibus Budget Reconciliation Act of 1985 (Pub. L. No. 99-272),
  reinstate health benefit plan coverage under this chapter if the
  child, or the child's participating parent, pays the full cost of
  the health benefit plan coverage.
         SECTION 25.  Subchapter G, Chapter 1551, Insurance Code, is
  amended by adding Section 1551.3196 to read as follows:
         Sec. 1551.3196.  AMOUNT OF CONTRIBUTION FOR CERTAIN
  ANNUITANTS. (a)  An annuitant receives the benefits of a state
  contribution for coverage under this chapter based on the
  annuitant's eligible service credit, as follows:
               (1)  for an annuitant with 20 years or more of eligible
  service credit, a full state contribution;
               (2)  for an annuitant with at least 15 years but less
  than 20 years of eligible service credit, 75 percent of a full state
  contribution; and
               (3)  for an annuitant with less than 15 years of
  eligible service credit, 50 percent of a full state contribution.
         (b)  An annuitant receiving a reduced state contribution
  under Subsection (a) shall have any state contribution for
  dependent coverage reduced in an amount proportional to the
  reduction under Subsection (a).
         (c)  This section does not apply to an individual who:
               (1)  receives or is eligible to receive an annuity that
  is based on eligibility under Section 814.002, 814.102, 834.101, or
  839.101, Government Code; or
               (2)  is eligible to participate in the group benefits
  program under:
                     (A)  Section 1551.102(d) because of a disability;
  or
                     (B)  Section 1551.102(f).
         SECTION 26.  (a)  The following provisions of the Government
  Code are repealed:
               (1)  Subsection (i), Section 76.006;
               (2)  Subsection (f), Section 606.030;
               (3)  Subsections (d) and (e), Section 813.509;
               (4)  Subsections (d) and (e), Section 813.511;
               (5)  Subsection (c), Section 814.105;
               (6)  Section 814.1075; and
               (7)  Section 840.401.
         (b)  Section 1551.321, Insurance Code, is repealed.
         SECTION 27.  The changes in law made by this Act to Sections
  661.091, 813.509, 813.511, 814.105, and 814.107, Government Code,
  apply only to a person who is hired on or after September 1, 2013, to
  work in a position that requires membership in the Employees
  Retirement System of Texas.  A person hired before September 1,
  2013, to work in a position that requires membership in the
  Employees Retirement System of Texas is subject to those laws as
  they existed immediately before that date, and the former law is
  continued in effect for that purpose.
         SECTION 28.  Section 815.311, Government Code, as amended by
  this Act, applies only to interest accrued on or after January 1,
  2014.  Interest accrued before that date is governed by the law in
  effect on the date the interest was accrued, and that law is
  continued in effect for that purpose.
         SECTION 29.  Section 1551.3196, Insurance Code, as added by
  this Act, applies only to an individual who does not have five years
  of eligible service credit on September 1, 2014. An individual who
  has at least five years of eligible service credit, or is
  participating in the group benefits program as a retiree, on that
  date is governed by the law in effect on August 31, 2014, and the
  former law is continued in effect for that purpose.
         SECTION 30.  (a)  Notwithstanding any other law, for the
  2014-2015 state fiscal biennium, it is the intent of the
  legislature that all state retirement assets and liabilities
  attributable to members and retirees of the law enforcement and
  custodial officer supplemental retirement fund be measured and
  accounted for in aggregate and separately from the retirement
  assets and liabilities attributable to members and retirees in any
  other retirement plan for purposes of determining an actuarially
  required contribution or making any other actuarial calculation.
         (b)  For purposes of Section 811.006, Government Code, the
  law enforcement and custodial officer supplemental retirement fund
  shall be considered a part of the retirement system, as that term is
  defined by Subdivision (15), Section 811.001, Government Code, and
  shall be subject to all other provisions of Subtitle B, Title 8,
  Government Code, that do not directly conflict with Subsection (a)
  of this section.
         (c)  The board of trustees of the Employees Retirement System
  of Texas may adopt rules necessary to implement or administer this
  section.
         SECTION 31.  The Employees Retirement System of Texas shall
  conduct an interim study on the feasibility of adding custodial
  officers employed by the Texas Juvenile Justice Department to the
  class of employees eligible to participate in the law enforcement
  and custodial officer supplemental retirement fund as custodial
  officers.  Not later than September 1, 2014, the retirement system
  shall report the findings of the study to the governor, the
  lieutenant governor, the speaker of the house of representatives,
  and each senate and house committee that has jurisdiction over the
  retirement system.
         SECTION 32.  Subsection (a), Section 840.102, Government
  Code, as amended by this Act, takes effect September 1, 2013.
         SECTION 33.  (a)  Except as provided by Subsections (b),
  (c), and (d) of this section, this Act takes effect September 1,
  2013.
         (b)  Section 815.311, Government Code, as amended by this
  Act, takes effect January 1, 2014.
         (c)  The changes in law made by this Act to Section
  1551.1055, Insurance Code, take effect September 1, 2014.
         (d)  Section 1551.3196, Insurance Code, as added by this Act,
  takes effect September 1, 2014.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 1459 passed the Senate on
  May 13, 2013, by the following vote:  Yeas 31, Nays 0.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 1459 passed the House on
  May 21, 2013, by the following vote:  Yeas 147, Nays 0, two
  present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor