H.B. No. 407

	AN ACT
	relating to participation and credit in, contributions to, benefits
	from, 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 (1), (6), and (17) and adding Subdivision
	(1-a) to read as follows:
	(1)  "Actuarial equivalent" means a benefit that, at
	the time it is begun, has the same present value as the benefit it
	replaces, based on seven percent annual interest and either:
	(A)  the mortality table published by the
	Conference of Actuaries in Public Practice and known as the UP-1984
	table with an age setback of five years for retired or disabled
	annuitants and an age setback of 10 years for beneficiaries, with a
	30-percent reserve refund assumption for the standard benefit; or
	(B)  a mortality basis adopted under Section
	845.110(c).
	(1-a)  "Accrued benefit" means the sum of a member's
	accumulated contributions and service credit calculated as of a
	specified date.
	(6)  "Compensation" means the sum of payments that are
	made to an employee for performance of personal services as
	certified by a participating subdivision, including nonmonetary
	compensation, the value of which is determined by the governing
	body of the subdivision, on which contributions by an employee to
	the retirement system are based [that do not exceed the amount
	established by board rule], which may not exceed either the limit
	provided by Section 401(a)(17) of the Internal Revenue Code of 1986
	[(26 U.S.C. Section 417)], as indexed in the manner provided by that
	section, or a lesser amount established by rule of the board of
	trustees. The term includes amounts by which payment for earnings
	is reduced because of employer pick-up of employee contributions to
	the retirement system under Section 845.403, deferral of
	compensation under benefit plans or tax-sheltered annuity programs
	adopted by the subdivision under Section 401(k), 403(b), or 457 of
	the Internal Revenue Code of 1986, the costs of benefits furnished
	under qualified cafeteria plans adopted by the subdivision under
	Section 125 of the Internal Revenue Code of 1986, and deductions for
	Federal Insurance Contribution Act taxes, federal income taxes, or
	other obligations of the employee [and that are made to an employee
	of a participating subdivision by the subdivision for service,
	including nonmonetary compensation, the value of which is
	determined by the governing body of the subdivision]. The term does
	not include workers' compensation benefits received by a member
	under Section 504.011, Labor Code.
	(17)  "Subdivision" means a political subdivision of
	the state that is not eligible to participate in any other statewide
	retirement system or that is not currently participating in a
	retirement system established by the legislature.  The term
	includes the Texas Association of Counties, the retirement system
	[Texas County and District Retirement System], and a city-county
	hospital jointly managed under Subchapter B, Chapter 265, Health
	and Safety Code.  The term does not include a branch, division,
	department, employee classification group, or other separately
	identified component of a political subdivision.
	SECTION 2.  Section 841.006, Government Code, is amended to
	read as follows:
	Sec. 841.006.  EXEMPTION FROM EXECUTION. (a)  All
	retirement annuity payments, other benefit payments, and a member's
	accumulated contributions are unassignable and are exempt from
	execution, garnishment, attachment, and state and local taxation.
	(b)  Notwithstanding Subsection (a), the board of trustees
	by rule may authorize the retirement system, in accordance with a
	retiree's voluntary election, to:
	(1)  deduct qualified health insurance premiums from
	the retirement annuity otherwise distributable to a retiree who is
	an eligible public safety officer or a retiree who meets any
	expanded eligibility provision for a similar tax exemption under
	subsequent federal legislation; and
	(2)  pay the deducted amount directly to the health
	plan provider, subject to the requirements of Section 402(l),
	Internal Revenue Code of 1986, or other applicable federal law, and
	the rules adopted by the board.
	SECTION 3.  Subchapter A, Chapter 841, Government Code, is
	amended by adding Section 841.0091 to read as follows:
	Sec. 841.0091.  DIVISION OF BENEFITS ON DIVORCE OF MEMBER.
	(a) On receipt of a qualified domestic relations order incident to
	a divorce that awards a portion of a member's accrued benefit to a
	former spouse of the member and that strictly follows the terms and
	format of the model qualified domestic relations order, as well as
	any other requirements, adopted by the board of trustees for this
	purpose, the retirement system shall divide the accrued benefit
	into two separate benefits that, in combination at the time of
	division, are actuarially equivalent to the undivided accrued
	benefit.
	(b)  Following a division described by Subsection (a), the
	portion of the accrued benefit awarded the alternate payee is
	considered the alternate payee's sole and separate property in
	which the member has no interest. The board of trustees by rule
	shall define and specify the rights and responsibilities of the
	alternate payee and the terms and features of the benefit awarded
	the alternate payee under the order, but in no event may the
	alternate payee vest in the accrued benefit before the member vests
	or attain greater rights than are attained by the member or the
	member's beneficiary.
	(c)  Notwithstanding Section 804.101, the board of trustees
	by rule may prescribe terms on which the interest awarded the
	alternate payee under a qualified domestic relations order
	described by this section may be transferred at the alternate
	payee's death.
	(d)  The board of trustees has sole authority and discretion
	to:
	(1)  specify the terms and format that are required for
	a qualified domestic relations order to be acceptable for purposes
	of Subsection (a);
	(2)  require strict compliance for qualification;
	(3)  specify the dates on which a distribution to an
	alternate payee may or must begin; and
	(4)  establish rules for the administration of this
	section.
	(e)  This section applies to all domestic relations orders
	described by this section that the retirement system first
	determines to be qualified on or after September 1, 2009, and to
	those domestic relations orders determined to be qualified before
	September 1, 2009, that the system further determines can be
	construed to allow a division described by this section without
	harm or injury to the member's interest awarded under the original
	qualified order. The actuarial equivalent value of the accrued
	benefit payable to an alternate payee may not be greater than the
	actuarial equivalent value of the accrued benefit as if there had
	been no division and the accrued benefit had been payable to the
	member in the form of an annuity.
	SECTION 4.  Section 842.108, Government Code, is amended to
	read as follows:
	Sec. 842.108.  WITHDRAWAL OF ACCUMULATED CONTRIBUTIONS.
	(a) [(b)]  A member who has separated from employment with a
	participating subdivision may submit an application to withdraw the
	member's accumulated contributions attributable to service with
	that subdivision. A withdrawal cancels the person's [credited
	service and] service credit attributable to service with that
	subdivision on the date the retirement system makes payment of any
	portion of the member's accumulated contributions[.   Credited
	service that has been canceled may not be used to determine
	eligibility for a later retirement unless it is reestablished under
	Section 803.203, 843.003, or 843.0031].
	(b) [(c)]  Except for a [terminated] membership terminated
	under prior law or in accordance with Section 842.109(b) [described
	by Subsection (a)], interest is computed on the balance in the
	member's individual account in the employees saving fund on January
	1 of the year of withdrawal through the month before the month in
	which the withdrawal occurs [for a person described by Subsection
	(b)].
	(c) [(d)]  If a person eligible to receive a withdrawal or
	another non-periodic distribution [under this section or Section
	844.401] elects to have all or a portion of the distribution
	[accumulated contributions] paid directly to an eligible
	retirement plan and specifies the plan to which the distribution is
	[contributions are] to be paid on forms approved by the board of
	trustees, the retirement system shall make the payment in the form
	of a direct trustee-to-trustee transfer but is under no obligation
	to determine whether the other plan in fact is an eligible
	retirement plan for that purpose.
	(d)  Notwithstanding Subsection (c), the board of trustees
	shall adopt rules to administer this section as necessary to
	maintain the retirement system as a qualified plan under Section
	401(a) of the Internal Revenue Code of 1986. The rules may include
	the adoption of definitions and limitations relating to
	distributions, eligible recipients, and eligible retirement plans.
	SECTION 5.  The heading to Section 842.110, Government Code,
	is amended to read as follows:
	Sec. 842.110.  RESUMPTION OF SERVICE AFTER WITHDRAWAL OR
	RETIREMENT [BY RETIREE].
	SECTION 6.  Sections 842.110(a) and (b), Government Code,
	are amended to read as follows:
	(a)  Except as provided by Subsection (b), a person who has
	withdrawn the person's accumulated contributions or who has retired
	from a participating subdivision with a service retirement annuity
	based on a bona fide termination of employment and with a break in
	service of not less than one calendar month resumes membership in
	the retirement system without repayment of the amount distributed
	or cancellation [suspension] of the person's annuity if the person
	becomes an employee of any participating subdivision.
	(b)  A person who resumes employment with the same
	subdivision from which the person was previously employed and does
	not meet the requirements of Subsection (a) is considered not to
	have been eligible for a withdrawal and not to have retired with
	respect to that subdivision.  The person's membership will be
	restored, the person's service retirement annuity will be canceled
	[discontinued, the person's membership will be restored], and the
	person must return any amounts distributed and payments
	received.  Appropriate adjustments will be made for any amounts not
	returned.
	SECTION 7.  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, current service, and optional service. A member may
	not be credited in this system with more than one month of credited
	service for a specific calendar month, regardless of the number of
	employers of the member, the positions held, or the types of
	service.
	SECTION 8.  The heading to Section 843.0031, Government
	Code, is amended to read as follows:
	Sec. 843.0031.  [REESTABLISHMENT OF CREDITED SERVICE;]
	OPTION TO PAY LUMP-SUM AMOUNT.
	SECTION 9.  Section 843.0031(b), Government Code, is amended
	to read as follows:
	(b)  A member who has withdrawn accumulated 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 credit [credits].
	SECTION 10.  Section 843.004, Government Code, is amended to
	read as follows:
	Sec. 843.004.  COMPOSITION OF SERVICE CREDIT.  Service
	credit consists of allocated prior service credit, current service
	credit, and multiple matching credit as authorized by a
	participating subdivision [and accumulated interest under this
	subtitle].
	SECTION 11.  Section 843.201, Government Code, is amended to
	read as follows:
	Sec. 843.201.  SERVICE CREDIT FOR CERTAIN PUBLIC
	EMPLOYMENT.  [(a)]  In accordance with rules adopted by the board
	of trustees, 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 the date that the public hospital, utility, or other public
	facility or governmental function was taken over by the subdivision
	[:
	[(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.]
	SECTION 12.  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 subtitle and in accordance with rules adopted by the
	board of trustees [section]. [The retirement system shall credit a
	member with one month of current service for each month for which
	the required contributions are made, reported, and certified by the
	employing subdivision.]
	SECTION 13.  Sections 843.502(a), (b), and (c), Government
	Code, are amended to read as follows:
	(a)  In this section:
	(1)  "Qualified [, "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.
	(2)  "USERRA" means the Uniformed Services Employment
	and Reemployment Rights Act of 1994 (38 U.S.C. Section 4301 et
	seq.).
	(b)  All members of the retirement system are entitled to be
	credited with service for qualified military service that is
	subject to USERRA [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, credited service, and service credit for
	qualified military service will be provided in accordance with
	USERRA and Section 414(u) of the Internal Revenue Code of
	1986.  The board of trustees may adopt rules for the administration
	of this section, including rules that modify the terms of this
	subtitle for the purpose of compliance with the provisions of
	USERRA [that Act].
	(c)  An eligible member may establish [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
	not creditable under Subsection (b) [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 is
	vested, based on credited service only in this system and without
	regard to service that may be established under this subsection, in
	a service retirement annuity that may begin at the age of 60 [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 not more than five
	years of credited service under this subsection by filing an
	application with the retirement system.
	SECTION 14.  Section 843.504, Government Code, is amended to
	read as follows:
	Sec. 843.504.  NO DOUBLE CREDITING OF SERVICE.  Except as
	provided by Chapter 803, only one month of credited service may
	[not] be established in the retirement system [under this
	subchapter] for any calendar month for all [of] service that is
	creditable [credited] under [another section of] this subtitle [or
	by another retirement system or program established or governed by
	state law].
	SECTION 15.  Subchapter F, Chapter 843, Government Code, is
	amended by adding Section 843.505 to read as follows:
	Sec. 843.505.  CREDITED SERVICE PREVIOUSLY ELIGIBLE FOR
	RECOGNITION UNDER PROPORTIONATE RETIREMENT PROGRAM. The board of
	trustees by rule may authorize the retirement system, on
	application by a member and for the sole purpose of determining
	eligibility for retirement from this system, to recognize service
	performed under another system participating under Chapter 803 that
	would have been recognized by this system under that chapter if the
	service had not been canceled by a withdrawal of contributions.
	SECTION 16.  Section 844.003, Government Code, is amended by
	amending Subsections (c) and (e) and adding Subsection (f) to read
	as follows:
	(c)  The effective date of a member's disability retirement
	is the date the member designates at the time the member applies for
	retirement under Section 844.301, but the date must be the last day
	of a calendar month and may not precede the later of the date the
	member became disabled or the date the member terminated
	[terminates] employment with all participating subdivisions.
	(e)  Notwithstanding Subsections (a), (b), (b-1), [and] (c),
	and (f), the effective retirement date of a member may not precede
	the first anniversary of the effective date of participation of the
	subdivision.
	(f)  The board of trustees by rule may authorize a retiring
	member to designate an effective service or disability retirement
	date that is not more than six months before the date the retirement
	system receives the retirement application. A rule adopted under
	this section may not suspend another requirement provided by this
	section for retirement.
	SECTION 17.  Sections 844.006(d) and (f), Government Code,
	are amended to read as follows:
	(d)  The [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 standard or
	optional retirement annuity [computed on the joint lives of the
	retiree and the person designated as beneficiary by the retiree]
	may be divided by the retirement system into two annuities in
	accordance with the terms of a model qualified domestic relations
	order adopted by the board of trustees by rule [if:
	[(1)     the person who was designated as beneficiary by
	the retiree 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].
	(f)  The board of trustees has sole authority and discretion
	to specify the terms and format that are required for a domestic
	relations order to be acceptable for purposes of this section, to
	require strict compliance for qualification, and to define the
	terms and features of the benefit awarded an alternate payee under
	the order. The board [retirement system] by rule may establish
	requirements for forms, documentation, and procedures necessary or
	desirable for the administration of this section.
	SECTION 18.  Section 844.008, Government Code, is amended to
	read as follows:
	Sec. 844.008.  LIMITATION ON PAYMENT OF BENEFITS.
	(a)  Notwithstanding any other provision of this subtitle, the
	benefit payable to a retiree of the retirement system may not exceed
	the maximum benefit permitted under Section 415(b) of the Internal
	Revenue Code of 1986 [(26 U.S.C. Section 415(b))] as adjusted in
	accordance with Section 415(d) of that code. Any adjustments are
	applicable to the postretirement benefits of retirees as well as to
	the benefits of retiring members. For the purpose of determining
	whether the benefit of a retiring member or retiree exceeds the
	limitations provided in this section, all defined benefit plans of
	the employer and of entities required to be aggregated with the
	employer for purposes of Section 415 of the Internal Revenue Code of
	1986 are to be treated as one defined benefit plan [and all defined
	contribution plans of the employer and of entities required to be
	aggregated with the employer] for purposes of Section 415 of that
	code [are to be treated as one defined contribution plan]. The
	limitation year for determining maximum benefits is the calendar
	year.
	(b)  An employer may not provide employee retirement [or
	deferred] benefits under a defined benefit plan other than the
	retirement system to the extent that the provision of the benefits,
	when considered together with the benefits provided under the
	retirement system, would result in the failure of the retirement
	system to meet any of the limitation requirements of Section 415 of
	the Internal Revenue Code of 1986 [(26 U.S.C. Section 415)], and the
	benefits of the other plan will automatically be reduced,
	eliminated, or adjusted to the extent necessary to prevent the
	failure.
	SECTION 19.  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
	member must apply by filing a valid application with the retirement
	system [on or before the member's effective retirement date
	designated on the application].
	SECTION 20.  Section 844.301(a), Government Code, is amended
	to read as follows:
	(a)  A member may apply for disability retirement by filing a
	valid application for retirement with the retirement system [on or
	before the member's effective retirement date designated on the
	application].
	SECTION 21.  Section 844.404, Government Code, is amended to
	read as follows:
	Sec. 844.404.  PERSON CAUSING DEATH OF MEMBER OR ANNUITANT.
	(a)  A benefit, including any optional group term life benefit,
	payable on the death of a member or annuitant may not be paid to a
	person convicted of causing that death but instead is payable to a
	person who would be entitled under this subtitle to the benefit had
	the convicted person predeceased the decedent. If no person would
	be entitled to the benefit, the benefit is payable to the decedent's
	estate.
	(b)  The retirement system is not required to change the
	recipient of benefits under this section [pay a benefit under
	Subsection (a)] unless it receives actual notice of the conviction
	of a beneficiary [the person who would have been entitled to the
	benefits]. However, the retirement system may delay payment of a
	benefit payable on the death of a member or annuitant pending the
	results of a criminal investigation and of legal proceedings
	relating to the cause of death.
	(c)  The retirement system is not liable for any benefit paid
	to a convicted person before the date the system receives actual
	notice of the conviction, and any payment made before that date is a
	complete discharge of the system's obligation with regard to that
	benefit payment. The convicted person holds all payments received
	in constructive trust for the rightful recipient.
	(d)  If an annuity is in pay status, the [(c)  The]
	retirement system shall pay in a lump sum the actuarial equivalent
	of [convert] the remainder of any annuity or payments that would
	otherwise have been payable to [throughout the life of] the
	convicted person to the person entitled to the benefit under
	Subsection (a) or to the decedent's estate [an actuarially
	equivalent annuity payable to the decedent's estate in 60 monthly
	annuity payments]. The time of the actuarial equivalence is the
	earlier of the time the retirement system receives the notice of the
	conviction under Subsection (b) or the time the retirement system
	begins the delay in payment of a benefit under Subsection (b).
	(e) [(d)]  For the purposes of this section, a person has
	been convicted of causing the death of a member or annuitant if the
	person:
	(1)  has pleaded guilty or nolo contendere to or has
	been found guilty by a court of competent jurisdiction of an offense
	at the trial of which it is established that the person's
	intentional, knowing, or reckless act or omission resulted in the
	death of a person who was a member or annuitant, regardless of
	whether sentence is imposed or probated; and
	(2)  has no appeal of the conviction pending and the
	time provided for appeal has expired.
	SECTION 22.  Subchapter G, Chapter 844, Government Code, is
	amended by adding Section 844.601 to read as follows:
	Sec. 844.601.  PLAN FUNDING BY NON-ADOPTING COUNTY. (a)
	This section applies only to a county that began participation in
	the retirement system before January 1, 1992, and has not adopted
	the provisions of Subchapter H.
	(b)  Except as provided by Subsections (c) and (d), the
	county shall contribute to its account in the subdivision
	accumulation fund at the same rate of current service compensation
	as the employee contribution rate for the county.
	(c)  If in any year the retirement system's actuary
	determines that the contributions of the county to the subdivision
	accumulation fund under Subsection (b) will not finance the
	county's obligations to the fund within the closed or open
	amortization period recommended by the actuary and adopted by the
	board of trustees for all subdivisions, the governing body of the
	county shall adopt an order to reduce the amortization period to the
	maximum period established by the board. The actuary shall
	determine appropriate remedies for review and adoption by the
	county. An order adopted under this subsection must first be
	approved by the board of trustees and must require:
	(1)  a reduction in the employee contribution rate to a
	rate not less than four percent of current service compensation;
	(2)  additional employer contributions under a
	supplemental contribution rate as provided by Subsection (e);
	(3)  a reduction in the percentage for determining
	multiple matching credits in five percent increments for
	contributions made after the effective date of the reduction; or
	(4)  any combination of these actions.
	(d)  An order adopted under Subsection (c) takes effect on
	the first day of the calendar year that begins after the date the
	retirement system's actuary makes a determination described by
	Subsection (c).
	(e)  A supplemental contribution rate under this section is
	the rate of contribution by the county to its account in the
	subdivision accumulation fund, in addition to the contributions
	required under Subsection (b), that the retirement system's actuary
	determines and certifies is required to amortize the obligations of
	the county to the subdivision accumulation fund within the
	established amortization period.
	(f)  A county that has not adopted the provisions of
	Subchapter H may not adopt additional options and may not increase
	service credits or benefits otherwise allowable under this subtitle
	except for an increase in the rate of employee contributions or an
	increase in the percentage of multiple matching credits to a rate or
	percentage that does not exceed the rate or percentage in effect on
	January 1, 2010.
	SECTION 23.  Section 844.701, Government Code, is amended to
	read as follows:
	Sec. 844.701.  APPLICABILITY. Except for a county
	described by Section 844.601, this [(a)  This] subchapter applies
	to each subdivision that participates [begins participation] in the
	retirement system [after December 31, 1991].
	[(b)     The governing body of any subdivision participating
	before January 1, 1992, by order or resolution may adopt the plan
	provisions of this subchapter to be effective on January 1 of the
	year following the year in which the order or resolution is received
	by the system.
	[(c)     Other provisions of this subtitle apply to the plan
	provisions of this subchapter except as modified by this
	subchapter.]
	SECTION 24.  Section 844.704, Government Code, is amended to
	read as follows:
	Sec. 844.704.  BENEFITS.  (a)  The [On the adoption of the
	plan provisions of this subchapter, the] governing body of a [the]
	subdivision shall select a percentage for determining multiple
	matching credits [under Section 843.402.     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
	to any percentage that is a multiple of five percent and that does
	not exceed 150 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 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] 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] 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.
	(b)  The [On the adoption of the plan provisions of this
	subchapter, the] governing body shall select a percentage for
	determining allocated prior service credits of zero or any
	percentage [under Section 843.105.     The governing body shall
	select a percentage] that is a multiple of five percent. [For a
	subdivision that began participation before January 1, 1992, the
	percentage cannot be less than the percentage in effect immediately
	before the adoption of the plan.]  The governing body may increase
	the percentage used in determining allocated prior service credits
	[under Section 843.105], to take effect on the next January 1 after
	the date of the increase.  The percentage may not exceed one-half
	of the percentage that results from adding 200 percent to the lowest
	percentage for determining multiple matching credit currently
	applicable to any employee contribution with respect to the
	subdivision.
	(c)  The subdivision shall provide current service credits
	in accordance with Section 843.402.
	(d)  With the approval of the board of trustees, the [The]
	governing body of a subdivision may adopt any benefit increase or
	additional benefit, option, right, or feature as authorized under
	this subtitle [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);
	[(5)     an optional service retirement eligibility
	provision described by Section 844.1021; or
	[(6)     the partial lump-sum distribution on service
	retirement under Section 844.009].
	(e)  The governing body may not adopt an increase or addition
	to the subdivision's plan [the benefits of this section] if the
	adoption would result in the combined rates of the subdivision's
	normal contributions and prior service contributions for the first
	calendar year following the adoption exceeding the maximum rate
	prescribed by Section 844.703(c), unless a waiver under that
	section is in effect.
	(f)  Other than an order or resolution of initial
	participation in the retirement system and except as otherwise
	authorized by the board of trustees, an [An] order or resolution
	under this section must be filed with the retirement system not
	later than December 15 of the year preceding the year in which it
	will take effect and may not take effect until the order or
	resolution is approved by the board of trustees as meeting the
	requirements of this section. An [After approval by the board, an]
	order or resolution adopted after participation begins may take
	effect only on January 1 of a year[, except that an order or
	resolution for a subdivision that begins participation after
	January 1, 1992, may take effect on the date the subdivision begins
	participation].
	SECTION 25.  Section 845.107, Government Code, is amended to
	read as follows:
	Sec. 845.107.  AUDITS AND REVIEWS [AUDIT]. (a) In this
	section:
	(1)  "Audit" means an audit authorized or required by a
	statute of this state or of the United States or initiated or
	commissioned by the board of trustees. The term includes a
	financial audit, compliance audit, economy and efficiency audit,
	effectiveness audit, performance audit, risk audit, and
	investigation.
	(2)  "Audit working paper" includes all information,
	documentary or otherwise, prepared or maintained in conducting an
	audit or preparing an audit report, including:
	(A)  internal or external communications relating
	to the audit that are made or received in the course of the audit;
	and
	(B)  drafts of an audit report or portions of
	those drafts.
	(b)  Annually, or more often, the board of trustees shall
	have the accounts of the retirement system audited by a certified
	public accountant.
	(c)  In addition to the financial audit required by
	Subsection (b), the board of trustees may initiate or commission an
	audit or investigation of activities, functions, or operations of
	the retirement system as the board determines appropriate.
	(d)  Audit working papers prepared, maintained, or assembled
	by the retirement system or an agent of the system are not a record
	of the board of trustees for purposes of Section 845.112, and are
	confidential and excepted from the disclosure requirements of
	Chapter 552.
	(e)  Unless made confidential under other law, an audit
	report, when accepted by the board of trustees in its final form, is
	a record of the board and public information.
	SECTION 26.  Section 845.110, Government Code, is amended by
	adding Subsection (c) to read as follows:
	(c)  On recommendation of the retirement system's actuary,
	the board of trustees by rule may adopt a mortality basis to be used
	in determining actuarial equivalents.  A mortality basis adopted
	under this subsection may not be applied in a manner that would
	reduce a participant's monthly benefit that has accrued before the
	later of the date the mortality basis is adopted or the date the
	mortality basis is implemented.
	SECTION 27.  Section 845.114(a), Government Code, is amended
	to read as follows:
	(a)  In this chapter [section], "participant" means a
	member, former member, retiree, annuitant, beneficiary, or
	alternate payee of the retirement system.
	SECTION 28.  Section 845.1151, Government Code, is amended
	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 29.  Section 845.305(b), Government Code, is amended
	to read as follows:
	(b)  All assets of the pension trust of the retirement system
	shall be credited according to the purpose for which they are held
	to one of the following funds:
	(1)  employees saving fund;
	(2)  subdivision accumulation fund;
	(3)  current service annuity reserve fund;
	(4)  income [interest] fund;
	(5)  endowment fund; or
	(6)  expense fund.
	SECTION 30.  The heading to Section 845.309, Government
	Code, is amended to read as follows:
	Sec. 845.309.  INCOME [INTEREST] FUND.
	SECTION 31.  Section 845.309(a), Government Code, is amended
	to read as follows:
	(a)  The income [interest] fund shall account for the
	determination and allocation of net investment income or loss.
	SECTION 32.  Section 845.315(a), Government Code, is amended
	to read as follows:
	(a)  As of December 31 of each year, the board of trustees
	shall make the following allocations that in the aggregate equal
	the net investment income or loss for the year:
	(1)  to the current service annuity reserve fund,
	interest as allowed under this subtitle on the mean amount in the
	current service annuity reserve fund during that year;
	(2)  to the optional group term life [supplemental
	death benefits] fund, interest as allowed under this subtitle on
	the mean amount in the optional group term life [supplemental death
	benefits] fund during that year;
	(3)  to the general reserves account of the endowment
	fund, a positive or negative amount determined by the board;
	(4)  to the employees saving fund, current interest as
	allowed under this subtitle on the member account balances on
	January 1 of that year of all persons who are members on December 31
	of that year;
	(5)  to the accounts of subdivisions, other than
	subdivisions otherwise described by this section, [an amount
	derived by applying a] positive or negative amounts [rate,] as
	determined under rules adopted by the board prescribing the
	allocation methodology for the accounts[, to the January 1 balances
	of that year]; and
	(6)  to the accounts of subdivisions to which Section
	842.052 or 842.053 applies, positive or negative amounts as
	determined by the board.
	SECTION 33.  Sections 845.402(b) and (c), Government Code,
	are amended to read as follows:
	(b)  After timely notice to the board of trustees, the [The]
	governing body of a participating subdivision may increase the rate
	of its member contributions effective with [on] the first pay
	period beginning in the following [day of any] calendar year.
	(c)  After timely notice to the board of trustees, the [The]
	governing body of a participating subdivision may reduce the rate
	of its member contributions effective with [on] the first pay
	period beginning in the following [day of any] calendar year [if, at
	least 90 days before the date of the reduction, the subdivision has
	given written notice of the reduction to the board of trustees and
	if the actuary determines that the reduction 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].
	SECTION 34.  Subchapter E, Chapter 845, Government Code, is
	amended by adding Section 845.405 to read as follows:
	Sec. 845.405.  ALTERNATIVE PERIODS FOR ADMINISTRATIVE
	COMPLIANCE. (a) Notwithstanding any other provision of this
	subtitle, the board of trustees may authorize a subdivision to
	remit to the retirement system contributions, deposits, and other
	payments on the basis of a period that is less than a month,
	including a weekly, biweekly, or other semimonthly period. A
	subdivision authorized to remit amounts more frequently than
	monthly shall make reports and filings and perform other actions
	accordingly, and the retirement system shall credit payments
	accordingly.
	(b)  The board of trustees may make an authorization under
	Subsection (a) by rule applicable to all subdivisions similarly
	situated or by order applicable to designated subdivisions. A rule
	adopted under this subsection is amendable or revocable in the
	manner provided for adoption, amendment, or repeal of rules
	generally. An order adopted under this subsection is revocable
	wholly or partly by subsequent board order.
	(c)  If the board of trustees adopts a rule or order under
	Subsection (b), the board shall also adopt rules, applicable to a
	subdivision electing or designated to take actions described by
	this section more frequently than monthly, to alter the periods
	required for submission of payments and reports, including the
	period when a late penalty begins to accrue or is deducted from a
	subdivision's account in the subdivision accumulation fund, in a
	manner consistent with the periods provided by this subtitle.
	(d)  A participant may not receive less credited service,
	service credit, or benefits due to an authorization under this
	section than the participant would have received on a monthly
	basis.
	SECTION 35.  Section 845.407(a), Government Code, is amended
	to read as follows:
	(a)  Except as provided by Subsections (c), (d), and (e), a
	participating subdivision that fails to provide the information
	required by Section 845.403 or to pay all contributions required by
	this subchapter to be made and remitted to the retirement system not
	later than the 15th day of the month in which they become due shall
	pay a penalty under this section. The penalty for a past-due
	monthly remission is equal to interest on the past-due amounts for
	each day past due at a nominal interest rate of 12 percent, plus a
	$500 administrative fee. If the penalty is not paid within three
	months after the date notice of the penalty has been sent to the
	subdivision, the retirement system shall deduct the penalty from
	the subdivision's account in the subdivision accumulation fund.
	The interest portion of the penalty shall be deposited by the
	retirement system in the distributable income account of the income
	[interest] fund. The administrative fee portion of the penalty
	shall be deposited by the retirement system in the expense fund.
	SECTION 36.  Sections 845.503(a) and (b), Government Code,
	are amended to read as follows:
	(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 a participant [the member, former
	member, retiree, annuitant, or beneficiary].  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 participant
	[member, former member, retiree, annuitant, or beneficiary] 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.
	SECTION 37.  Section 844.601(b), Government Code, as added
	by this Act, applies only to employer contributions to the Texas
	County and District Retirement System that become due on or after
	January 1, 2010. A county subject to Section 844.601(b),
	Government Code, is obligated to make employer contributions to the
	Texas County and District Retirement System before January 1, 2010,
	at the rate in effect on August 31, 2009.
	SECTION 38.  The following laws are repealed:
	(1)  Section 843.0031(a), Government Code;
	(2)  Sections 843.502(d) and (e), Government Code;
	(3)  Sections 844.605, 844.606, 844.607, 844.608, and
	844.609, Government Code;
	(4)  Section 845.115(f), Government Code; and
	(5)  Section 95, Chapter 873 (H.B. 1587), Acts of the
	80th Legislature, Regular Session, 2007.
	SECTION 39.  (a)  Except as provided by Subsection (b) of
	this section, this Act takes effect January 1, 2010.
	(b)  Sections 841.0091 and 844.601, Government Code, as
	added by this Act, Section 845.315, Government Code, as amended by
	this Act, and Section 37 of this Act take effect September 1, 2009.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I certify that H.B. No. 407 was passed by the House on April
	15, 2009, by the following vote:  Yeas 147, Nays 0, 1 present, not
	voting; and that the House concurred in Senate amendments to H.B.
	No. 407 on May 23, 2009, by the following vote:  Yeas 142, Nays 0, 2
	present, not voting.
	______________________________
	Chief Clerk of the House
	I certify that H.B. No. 407 was passed by the Senate, with
	amendments, on May 19, 2009, by the following vote:  Yeas 30, Nays
	0.
	______________________________
	Secretary of the Senate
	APPROVED: __________________
	Date
	__________________
	Governor