Texas 2011 - 82nd Regular

Texas House Bill HB2731 Compare Versions

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1	1	82R23412 KFF-F
2	2	By: Truitt H.B. No. 2731
3	3	Substitute the following for H.B. No. 2731:
4	4	By: Truitt C.S.H.B. No. 2731
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to contributions to, benefits from, and administration of
10	10	certain public retirement systems; providing administrative
11	11	penalties.
12	12	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
13	13	SECTION 1. Subchapter C, Chapter 801, Government Code, is
14	14	amended by adding Sections 801.208 and 801.209 to read as follows:
15	15	Sec. 801.208. INVESTIGATION OF CERTAIN COMPLAINTS; ACTION
16	16	BY ATTORNEY GENERAL. (a) The board shall adopt rules and
17	17	procedures for receiving a complaint against a person who provides
18	18	management or investment services to a public retirement system for
19	19	a complaint alleging that the person:
20	20	(1) violated or may have violated Sections 802.004
21	21	through 802.007 or a conflict of interest provision applicable
22	22	under other law; or
23	23	(2) has been or may have been involved in criminal
24	24	conduct relating to the services provided by the person to the
25	25	system.
26	26	(b) The board may refer a complaint to the attorney general
27	27	for investigation.
28	28	(c) The attorney general may subpoena witnesses or books,
29	29	records, or other documents relevant to an investigation under this
30	30	section.
31	31	(d) If, as a result of an investigation under Subsection
32	32	(b), the attorney general determines that a criminal offense has
33	33	been committed, the attorney general may refer the case to the
34	34	appropriate law enforcement agency for prosecution.
35	35	Sec. 801.209. STATEMENT TO BOARD ON PROCUREMENT OF
36	36	INVESTMENT MANAGERS AND CERTAIN OTHERS. (a) If a complaint is
37	37	filed and the board determines it appropriate, the board may
38	38	require a public retirement system to provide the board with a
39	39	statement not later than the 30th day after the date the system
40	40	receives the request for a statement detailing the system's method
41	41	of selecting any person who provides the system with services
42	42	relating to the management and investment of the system's assets.
43	43	(b) The Employees Retirement System of Texas, the Teacher
44	44	Retirement System of Texas, the Texas County and District
45	45	Retirement System, the Texas Municipal Retirement System, and the
46	46	Judicial Retirement System of Texas Plan Two are exempt from this
47	47	section.
48	48	SECTION 2. Section 802.002(a), Government Code, is amended
49	49	to read as follows:
50	50	(a) Except as provided by Subsection (b), the Employees
51	51	Retirement System of Texas, the Teacher Retirement System of Texas,
52	52	the Texas County and District Retirement System, the Texas
53	53	Municipal Retirement System, and the Judicial Retirement System of
54	54	Texas Plan Two are exempt from Sections 802.004, 802.101(a),
55	55	802.101(b), 802.101(d), 802.1013, 802.102, 802.103(a), 802.103(b),
56	56	802.202, 802.203, 802.204, 802.205, 802.206, and 802.207. The
57	57	Judicial Retirement System of Texas Plan One is exempt from all of
58	58	Subchapters B and C except Sections 802.104 and 802.105. The
59	59	optional retirement program governed by Chapter 830 is exempt from
60	60	all of Subchapters B and C except Section 802.106.
61	61	SECTION 3. Subchapter A, Chapter 802, Government Code, is
62	62	amended by adding Sections 802.004 through 802.007 to read as
63	63	follows:
64	64	Sec. 802.004. DISCLOSURE OF CERTAIN POTENTIAL CONFLICTS OF
65	65	INTEREST REQUIRED; ANNUAL FILING. (a) This section applies to:
66	66	(1) a member of the governing body of a public
67	67	retirement system;
68	68	(2) an investment manager for a public retirement
69	69	system appointed by contract under Section 802.204; and
70	70	(3) any other person, including an investment
71	71	consultant or advisor, providing services under contract to a
72	72	public retirement system relating to the management and investment
73	73	of the system's assets.
74	74	(b) Not later than the 30th day after the date the person
75	75	learns of the relationship, a person to whom this section applies
76	76	shall disclose in writing to the public retirement system that the
77	77	person or an immediate family member of the person, including the
78	78	person's spouse, has a business, commercial, or other relationship
79	79	that a reasonable person would find likely to diminish the person's
80	80	independence of judgment in the performance of the person's
81	81	responsibilities with respect to the management or investment of
82	82	the system's assets, including a relationship in which the person
83	83	or the person's immediate family member:
84	84	(1) is employed by or participates in the management
85	85	of a business entity or other organization receiving funds from the
86	86	retirement system; or
87	87	(2) owns or controls, directly or indirectly, an
88	88	interest in a business entity or other organization receiving funds
89	89	from the retirement system.
90	90	(c) If a person described by Subsection (a)(1) fails to
91	91	disclose a relationship under Subsection (b), it is a ground for
92	92	removal from the governing body of the public retirement system on
93	93	which the person serves. If the board determines that a person
94	94	described by Subsection (a)(1) should be removed under this
95	95	subsection, the board shall notify the appropriate appointing
96	96	officer that a ground for removal exists.
97	97	(d) If a person described by Subsection (a)(2) or (3) fails
98	98	to disclose a relationship under Subsection (b):
99	99	(1) the contract is voidable by the public retirement
100	100	system; and
101	101	(2) the governing body of the retirement system may
102	102	enter an order declaring the person ineligible to contract for
103	103	business relating to the management or investment of the system's
104	104	assets.
105	105	(e) At least annually on a date specified by the public
106	106	retirement system, a person to whom this section applies shall file
107	107	a statement with the system stating that the person is aware that
108	108	the person is required to disclose material conflicts of interest
109	109	under this section and that the person is in compliance with this
110	110	section.
111	111	(f) The board shall adopt rules relating to the types of
112	112	relationships that must be disclosed under Subsection (b).
113	113	Sec. 802.005. PROHIBITION AGAINST ACCEPTANCE OF CERTAIN
114	114	BENEFITS. (a) In this section, "benefit" has the meaning assigned
115	115	by Section 1.07, Penal Code.
116	116	(b) Except as provided by Subsection (c), a person to whom
117	117	Section 802.004 applies or a member of the immediate family of the
118	118	person may not accept any benefit with an aggregate value in any
119	119	calendar year of more than $250 from any individual who enters into
120	120	or seeks to enter into a contract with a public retirement system.
121	121	(c) Food, lodging, and transportation related to attending
122	122	a conference in this state that is attended or expected to be
123	123	attended by at least 50 individuals representing more than one
124	124	public retirement system are exempt from this section.
125	125	Sec. 802.006. PROHIBITED EMPLOYMENT AND CONTRACTS. A
126	126	public retirement system may not knowingly employ or contract with,
127	127	either directly or indirectly, a former member of the governing
128	128	body of the system before the first anniversary of the date the
129	129	individual ceased to be a member of the system's governing body.
130	130	Sec. 802.007. ADMINISTRATIVE PENALTY. (a) In this
131	131	section, "theft" means the conduct prohibited by Section 31.03,
132	132	Penal Code.
133	133	(b) A person who commits theft in relation to a service
134	134	provided by the person to a public retirement system is liable to
135	135	the system for an administrative penalty in an amount not to exceed
136	136	$250,000 for each violation. An action may be brought under this
137	137	subsection regardless of whether a criminal conviction under
138	138	Section 31.03, Penal Code, has been sought or obtained against the
139	139	person.
140	140	(c) A person who commits a breach of the person's fiduciary
141	141	duty in relation to a service provided by the person to a public
142	142	retirement system is liable to the system for an administrative
143	143	penalty in an amount not to exceed:
144	144	(1) $500 for each violation; or
145	145	(2) $10,000 in the aggregate for all violations of a
146	146	similar nature.
147	147	(d) The amount of an administrative penalty imposed under
148	148	this section must be in an amount that is reasonably related to the
149	149	harm to the public retirement system.
150	150	(e) The attorney general may bring an action to impose and
151	151	recover an administrative penalty allowed under this section.
152	152	(f) A penalty under this section is in addition to any other
153	153	remedy provided by law.
154	154	SECTION 4. Section 802.1012, Government Code, is amended by
155	155	amending Subsections (b) and (c) and adding Subsections (c-1) and
156	156	(c-2) to read as follows:
157	157	(b) Except as provided by Subsection (k), this section
158	158	applies only to a public retirement system with total assets the
159	159	book value of which, as of the last day of the preceding fiscal
160	160	year, is at least $10 [$100] million.
161	161	(c) Subject to Subsection (c-1), every [Every] five years,
162	162	the actuarial valuations, studies, and reports of a public
163	163	retirement system most recently prepared for the retirement system
164	164	as required by Section 802.101 or other law under this title or
165	165	under Title 109, Revised Statutes, must be audited by an
166	166	independent actuary who:
167	167	(1) is engaged for the purpose of the audit by the
168	168	governmental entity; and
169	169	(2) has the credentials required for an actuary under
170	170	Section 802.101(d).
171	171	(c-1) Subsection (c) applies only to a public retirement
172	172	system with total assets the book value of which, as of the last day
173	173	of the preceding fiscal year, is at least $50 million.
174	174	(c-2) Each calendar year, the board may select five public
175	175	retirement systems with total assets the book value of which, as of
176	176	the last day of the fiscal year, is at least $10 million, but not
177	177	more than $50 million, to complete the audit described in
178	178	Subsection (c). If the retirement system is unable to employ an
179	179	independent actuary for purposes of completing the audit required
180	180	by this subsection, the board may provide the service for a fee in
181	181	an amount determined by the board.
182	182	SECTION 5. Subchapter B, Chapter 802, Government Code, is
183	183	amended by adding Section 802.1013 to read as follows:
184	184	Sec. 802.1013. ACTUARIAL EXPERIENCE STUDIES. (a) In this
185	185	section, "plan year" means the 12-month accounting period of the
186	186	affected pension plan of a public retirement system subject to this
187	187	section.
188	188	(b) Subject to Subsection (c), the board may require a
189	189	public retirement system with total assets the book value of which,
190	190	as of the last day of the preceding plan year, is at least $50
191	191	million to conduct and submit to the board an actuarial experience
192	192	study.
193	193	(c) The board may not require a public retirement system to
194	194	conduct more than one actuarial experience study every five years.
195	195	(d) The board may adopt rules to implement this section.
196	196	SECTION 6. Section 802.103, Government Code, is amended by
197	197	adding Subsections (b-1) and (d) to read as follows:
198	198	(b-1) If the governing body of a public retirement system
199	199	fails to file the annual financial report with the board before the
200	200	10th business day after the final date by which the retirement
201	201	system is required to file the report under Subsection (b), the
202	202	board shall notify appropriate local media outlets before the fifth
203	203	business day after that date. If, after local media outlets are
204	204	notified of a failure to timely file a report under this subsection,
205	205	the retirement system files the report or the board discovers that
206	206	the board notified local media outlets by mistake, the board shall
207	207	not later than the fifth business day after that date notify the
208	208	local media outlets of the receipt of the report or the discovery of
209	209	its mistake, as applicable.
210	210	(d) The governing body of a public retirement system shall
211	211	require that all records, including the work papers involved in the
212	212	preparation of the annual financial report required under this
213	213	section, be retained in compliance with the records retention
214	214	schedule adopted by the Texas State Library and Archives Commission
215	215	applicable to all local governments.
216	216	SECTION 7. (a) Not later than January 1, 2012, the State
217	217	Pension Review Board shall adopt rules as required by Section
218	218	802.004, Government Code, as added by this Act.
219	219	(b) Notwithstanding Section 802.004, Government Code, as
220	220	added by this Act, a person is not required to comply with that
221	221	section before the 30th day after the date the State Pension Review
222	222	Board adopts the rules required by that section.
223	223	SECTION 8. This Act takes effect September 1, 2011.