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