83R8981 KFF-F
By: Murphy H.B. No. 2432
A BILL TO BE ENTITLED
AN ACT
relating to benefits from and administration of certain public
retirement systems; providing civil penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 552.0038(c), (h), and (i), Government
Code, are amended to read as follows:
(c) Records of individual members, annuitants, retirees,
beneficiaries, alternate payees, program participants, or persons
eligible for benefits from a retirement system under a retirement
plan or program administered by the retirement system that are in
the custody of the system or in the custody of an administering
firm, a carrier, or another governmental agency, including the
comptroller, acting in cooperation with or on behalf of the
retirement system are confidential and not subject to public
disclosure. [The retirement system, administering firm, carrier,
or governmental agency is not required to accept or comply with a
request for a record or information about a record or to seek an
opinion from the attorney general because the records are exempt
from the provisions of this chapter, except as otherwise provided
by this section.]
(h) [The retirement system has sole discretion in
determining whether a record is subject to this section.] For
purposes of this section, a record includes any identifying
information about a person, living or deceased, who is or was a
member, annuitant, retiree, beneficiary, alternate payee, program
participant, or person eligible for benefits from the retirement
system under any retirement plan or program administered by the
retirement system.
(i) To the extent of a conflict between this section and any
other law with respect to the confidential information held by a
public retirement system or other entity described by Subsection
(c) concerning an individual member, annuitant, retiree,
beneficiary, alternate payee, program participant, or person
eligible for benefits from the retirement system:
(1) [,] the prevailing provision is the provision that
provides the greater substantive [and procedural] protection for
the privacy of information concerning that individual member,
annuitant, retiree, beneficiary, alternate payee, program
participant, or person eligible for benefits; and
(2) a procedural provision of this chapter prevails.
SECTION 2. Subchapter A, Chapter 802, Government Code, is
amended by adding Sections 802.004 through 802.007 to read as
follows:
Sec. 802.004. DISCLOSURE OF CERTAIN POTENTIAL CONFLICTS OF
INTEREST REQUIRED; ANNUAL FILING. (a) This section applies to:
(1) a member of the governing body of a public
retirement system;
(2) an investment manager for a public retirement
system appointed by contract under Section 802.204; and
(3) any other person, including an investment
consultant or advisor, providing services under contract to a
public retirement system relating to the management and investment
of the system's assets.
(b) Not later than the 30th day after the date the person
learns of the relationship, a person to whom this section applies
shall disclose in writing to the public retirement system that the
person or an immediate family member of the person, including the
person's spouse, has a business, commercial, or other relationship
that a reasonable person would find likely to diminish the person's
independence of judgment in the performance of the person's
responsibilities with respect to the management or investment of
the system's assets, including a relationship in which the person
or the person's immediate family member:
(1) is employed by or participates in the management
of a business entity or other organization receiving funds from the
retirement system; or
(2) owns or controls, directly or indirectly, an
interest in a business entity or other organization receiving funds
from the retirement system.
(c) If a person described by Subsection (a)(1) fails to
disclose a relationship under Subsection (b), it is a ground for
removal from the governing body of the public retirement system on
which the person serves. If the board determines that a person
described by Subsection (a)(1) should be removed under this
subsection, the board shall:
(1) notify the appropriate appointing officer that a
ground for removal exists; or
(2) if the person was elected to the governing body,
notify the presiding officer or the assistant presiding officer of
the governing body of the ground for removal.
(d) An appointing officer or, in the case of an elected
trustee, the governing body, on receipt of notice under Subsection
(c) or on making the officer's or body's own determination, may
remove the person from the governing body if the appointing officer
or governing body determines a violation of Subsection (b) has
occurred.
(e) If a person described by Subsection (a)(2) or (3) fails
to disclose a relationship under Subsection (b):
(1) the contract is voidable by the public retirement
system; and
(2) the governing body of the retirement system may
enter an order declaring the person ineligible to contract for
business relating to the management or investment of the system's
assets.
(f) At least annually on a date specified by the public
retirement system, a person to whom this section applies shall file
a statement with the system stating that the person is aware that
the person is required to disclose material conflicts of interest
under this section and that the person is in compliance with this
section.
(g) The board by rule shall adopt guidelines relating to the
types of relationships that must be disclosed under Subsection (b).
Sec. 802.005. PROHIBITION AGAINST ACCEPTANCE OF CERTAIN
BENEFITS. (a) In this section, "benefit" has the meaning assigned
by Section 1.07, Penal Code.
(b) Except as provided by Subsection (c), a person to whom
Section 802.004 applies or a member of the immediate family of the
person may not accept any benefit with an aggregate value in any
calendar year of more than $1,000 from any individual who enters
into or seeks to enter into a contract with a public retirement
system.
(c) Food, lodging, and transportation related to attending
a conference in this state that is attended or expected to be
attended by at least 50 individuals representing more than one
public retirement system are exempt from this section.
Sec. 802.006. PROHIBITED EMPLOYMENT AND CONTRACTS. A
public retirement system may not knowingly employ or contract with,
either directly or indirectly, a former member of the governing
body of the system before the first anniversary of the date the
individual ceased to be a member of the system's governing body.
Sec. 802.007. CIVIL PENALTY. (a) In this section, "theft"
means the conduct prohibited by Section 31.03, Penal Code.
(b) A person who commits theft in relation to a service
provided by the person to a public retirement system is liable to
the system for a civil penalty in an amount not to exceed $250,000
for each violation. An action may be brought under this subsection
regardless of whether a criminal conviction under Section 31.03,
Penal Code, has been sought or obtained against the person.
(c) A person who commits a breach of the person's fiduciary
duty in relation to a service provided by the person to a public
retirement system is liable to the system for a civil penalty in an
amount not to exceed:
(1) $500 for each violation; or
(2) $10,000 in the aggregate for all violations of a
similar nature.
(d) The amount of a civil penalty imposed under this section
must be in an amount that is reasonably related to the harm to the
public retirement system.
(e) The attorney general may bring an action to impose and
recover a civil penalty for a violation of this section made in
relation to:
(1) the Employees Retirement System of Texas,
including a retirement system administered by that system;
(2) the Teacher Retirement System of Texas;
(3) the Texas Municipal Retirement System;
(4) the Texas County and District Retirement System;
and
(5) the Texas Emergency Services Retirement System.
(f) A local prosecuting attorney may bring an action to
impose or recover a civil penalty for a violation of this section
made in relation to a public retirement system other than a system
described by Subsection (e).
(g) A penalty under this section is in addition to any other
remedy provided by law.
SECTION 3. Section 802.103, Government Code, is amended by
adding Subsection (d) to read as follows:
(d) The governing body of a public retirement system shall
require that all records, including documents used to prepare or
explain the annual financial report required under this section,
be:
(1) retained in compliance with the records retention
schedule adopted by the Texas State Library and Archives Commission
applicable to all local governments; and
(2) made available to the board on request.
SECTION 4. Subchapter C, Chapter 802, Government Code, is
amended by adding Sections 802.2041 and 802.2042 to read as
follows:
Sec. 802.2041. PROCUREMENT OF INVESTMENT MANAGERS AND
CERTAIN OTHERS. (a) The board shall by rule adopt guidelines for
the procurement of investment managers and other persons, including
an investment consultant or advisor, who provide a public
retirement system with services relating to the management and
investment of the system's assets.
(b) The board may require a public retirement system to
provide the board with a statement, not later than the 30th day
after the date of the procurement, detailing the system's method of
selecting any person described by Subsection (a).
Sec. 802.2042. CONTRACTS WITH INVESTMENT MANAGERS AND
CERTAIN OTHERS. A contract with an investment manager or other
person to provide services to a public retirement system relating
to the management and investment of the system's assets is subject,
at the board's request, to review by the board regarding the fees
charged and paid by the system and the services rendered to the
system in consideration for the fees.
SECTION 5. Chapter 810, Government Code, is amended by
adding Section 810.002 to read as follows:
Sec. 810.002. DETERMINATION OF CERTAIN PUBLIC RETIREMENT
SYSTEM BENEFITS. (a) In this section "public retirement system"
has the meaning assigned by Section 802.001.
(b) Notwithstanding any other law, if benefits provided
under a public retirement system's defined benefit plan are
calculated based in part on a member's final average salary, the
determination of that salary may not include overtime pay or any
other amounts received by the member as payment for time worked in
excess of the member's normal work schedule.
SECTION 6. (a) Not later than January 1, 2014, the State
Pension Review Board shall adopt rules as required by Sections
802.004 and 802.2041, Government Code, as added by this Act.
(b) Notwithstanding Section 802.004, Government Code, as
added by this Act, a person is not required to comply with that
section before the 30th day after the date the State Pension Review
Board adopts initial rules under that section.
SECTION 7. (a) Section 810.002, Government Code, as added
by this Act, applies only to a member of a public retirement system
who:
(1) is hired on or after the effective date of this
Act; and
(2) was not a member of the system on the date the
member was hired.
(b) A member of a public retirement system who was hired
before the effective date of this Act or who was a member of a public
retirement system on the date the member was hired is subject to the
law in effect on the date the member was hired, and that law is
continued in effect for that purpose.
SECTION 8. This Act takes effect September 1, 2013.