S.B. No. 1877
  relating to the determination of compensation under the Teacher
  Retirement System of Texas.
         SECTION 1.  Subsections (b) and (c), Section 822.201,
  Government Code, are amended to read as follows:
         (b)  "Salary and wages" as used in Subsection (a) means:
               (1)  normal periodic payments of money for service the
  right to which accrues on a regular basis in proportion to the
  service performed;
               (2)  amounts by which the member's salary is reduced
  under a salary reduction agreement authorized by Chapter 610;
               (3)  amounts that would otherwise qualify as salary and
  wages under Subdivision (1) but are not received directly by the
  member pursuant to a good faith, voluntary written salary reduction
  agreement in order to finance payments to a deferred compensation
  or tax sheltered annuity program specifically authorized by state
  law or to finance benefit options under a cafeteria plan qualifying
  under Section 125 of the Internal Revenue Code of 1986, if:
                     (A)  the program or benefit options are made
  available to all employees of the employer; and
                     (B)  the benefit options in the cafeteria plan are
  limited to one or more options that provide deferred compensation,
  group health and disability insurance, group term life insurance,
  dependent care assistance programs, or group legal services plans;
               (4)  performance pay awarded to an employee by a school
  district as part of a total compensation plan approved by the board
  of trustees of the district and meeting the requirements of
  Subsection (e);
               (5)  the benefit replacement pay a person earns under
  Subchapter H, Chapter 659, except as provided by Subsection (c);
               (6)  stipends paid to teachers in accordance with
  Section 21.410, 21.411, 21.412, or 21.413, Education Code;
               (7)  amounts by which the member's salary is reduced or
  that are deducted from the member's salary as authorized by
  Subchapter J, Chapter 659;
               (8)  a merit salary increase made under Section 51.962,
  Education Code; [and]
               (9)  amounts received under the relevant parts of the 
  awards for student achievement program under Subchapter N, Chapter
  21, Education Code, the educator excellence awards program under
  Subchapter O, Chapter 21, Education Code, or a mentoring program
  under Section 21.458, Education Code, that authorized compensation
  for service; and
               (10)  salary amounts designated as health care
  supplementation by an employee under Subchapter D, Chapter 22,
  Education Code.
         (c)  Excluded from salary and wages are:
               (1)  expense payments;
               (2)  allowances;
               (3)  payments for unused vacation or sick leave;
               (4)  maintenance or other nonmonetary compensation;
               (5)  fringe benefits;
               (6)  deferred compensation other than as provided by
  Subsection (b)(3);
               (7)  compensation that is not made pursuant to a valid
  employment agreement;
               (8)  payments received by an employee in a school year
  that exceed $5,000 for teaching a driver education and traffic
  safety course that is conducted outside regular classroom hours;
               (9)  the benefit replacement pay a person earns as a
  result of a payment made under Subchapter B or C, Chapter 661;
               (10)  [any compensation designated as health care
  supplementation by an employee under Subchapter D, Chapter 22,
  Education Code, subject to an annual limit of $1,000;
               [(11)]  any amount received by an employee under:
                     (A)  former Article 3.50–8, Insurance Code;
                     (B)  former Chapter 1580, Insurance Code;
                     (C)  Subchapter D, Chapter 22, Education Code, as
  that subchapter existed January 1, 2006; or
                     (D)  Rider 9, Page III-39, Chapter 1330, Acts of
  the 78th Legislature, Regular Session, 2003 (the General
  Appropriations Act); and
               (11) [(12)]  any compensation not described in
  Subsection (b).
         SECTION 2.  This Act takes effect September 1, 2007.
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
         I hereby certify that S.B. No. 1877 passed the Senate on
  April 19, 2007, by the following vote:  Yeas 31, Nays 0.
  Secretary of the Senate    
         I hereby certify that S.B. No. 1877 passed the House on
  May 23, 2007, by the following vote:  Yeas 144, Nays 0, two
  present not voting.
  Chief Clerk of the House