Texas 2013 - 83rd Regular

Texas House Bill HB2432 Compare Versions

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1	1	83R25821 KFF-D
2	2	By: Murphy, Flynn, Menendez, Davis of Dallas, H.B. No. 2432
3	3	Fallon
4	4	Substitute the following for H.B. No. 2432:
5	5	By: Callegari C.S.H.B. No. 2432
6	6
7	7
8	8	A BILL TO BE ENTITLED
9	9	AN ACT
10	10	relating to benefits from and administration of certain public
11	11	retirement systems; providing civil penalties.
12	12	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
13	13	SECTION 1. Section 802.002(a), Government Code, is amended
14	14	to read as follows:
15	15	(a) Except as provided by Subsection (b), the Employees
16	16	Retirement System of Texas, the Teacher Retirement System of Texas,
17	17	the Texas County and District Retirement System, the Texas
18	18	Municipal Retirement System, and the Judicial Retirement System of
19	19	Texas Plan Two are exempt from Sections 802.004, 802.005, 802.006,
20	20	802.007, 802.101(a), 802.101(b), 802.101(d), 802.102, 802.103(a),
21	21	802.103(b), 802.103(d), 802.202, 802.203, 802.204, 802.2041,
22	22	802.2042, 802.205, 802.206, and 802.207. The Judicial Retirement
23	23	System of Texas Plan One is exempt from all of Subchapters B and C
24	24	except Sections 802.104 and 802.105. The optional retirement
25	25	program governed by Chapter 830 is exempt from all of Subchapters B
26	26	and C except Section 802.106.
27	27	SECTION 2. Subchapter A, Chapter 802, Government Code, is
28	28	amended by adding Sections 802.004 through 802.008 to read as
29	29	follows:
30	30	Sec. 802.004. DISCLOSURE OF CERTAIN POTENTIAL CONFLICTS OF
31	31	INTEREST REQUIRED; ANNUAL FILING. (a) This section applies to:
32	32	(1) a member of the governing body of a public
33	33	retirement system;
34	34	(2) an investment manager for a public retirement
35	35	system appointed by contract under Section 802.204; and
36	36	(3) any other person, including an investment
37	37	consultant or advisor, providing services under contract to a
38	38	public retirement system relating to the management and investment
39	39	of the system's assets.
40	40	(b) Not later than the 30th day after the date the person
41	41	learns of the relationship, a person to whom this section applies
42	42	shall disclose in writing to the public retirement system that the
43	43	person or an immediate family member of the person, including the
44	44	person's spouse, has a business, commercial, or other relationship
45	45	that a reasonable person would find likely to diminish the person's
46	46	independence of judgment in the performance of the person's
47	47	responsibilities with respect to the management or investment of
48	48	the system's assets, including a relationship in which the person
49	49	or the person's immediate family member:
50	50	(1) is employed by or participates in the management
51	51	of a business entity or other organization receiving funds from the
52	52	retirement system; or
53	53	(2) owns or controls, directly or indirectly, an
54	54	interest in a business entity or other organization receiving funds
55	55	from the retirement system.
56	56	(c) If a person described by Subsection (a)(1) fails to
57	57	disclose a relationship under Subsection (b), it is a ground for
58	58	removal from the governing body of the public retirement system on
59	59	which the person serves. If the board determines that a person
60	60	described by Subsection (a)(1) should be removed under this
61	61	subsection, the board shall:
62	62	(1) notify the appropriate appointing officer that a
63	63	ground for removal exists; or
64	64	(2) if the person was elected to the governing body,
65	65	notify the presiding officer or the assistant presiding officer of
66	66	the governing body of the ground for removal.
67	67	(d) An appointing officer or, in the case of an elected
68	68	trustee, the governing body, on receipt of notice under Subsection
69	69	(c) or on making the officer's or body's own determination, may
70	70	remove the person from the governing body if the appointing officer
71	71	or governing body determines a violation of Subsection (b) has
72	72	occurred.
73	73	(e) If a person described by Subsection (a)(2) or (3) fails
74	74	to disclose a relationship under Subsection (b):
75	75	(1) the contract is voidable by the public retirement
76	76	system; and
77	77	(2) the governing body of the retirement system may
78	78	enter an order declaring the person ineligible to contract for
79	79	business relating to the management or investment of the system's
80	80	assets.
81	81	(f) At least annually on a date specified by the public
82	82	retirement system, a person to whom this section applies shall file
83	83	a statement with the system stating that the person is aware that
84	84	the person is required to disclose material conflicts of interest
85	85	under this section and that the person is in compliance with this
86	86	section.
87	87	(g) The board by rule shall adopt guidelines relating to the
88	88	types of relationships that must be disclosed under Subsection (b).
89	89	Sec. 802.005. PROHIBITION AGAINST ACCEPTANCE OF CERTAIN
90	90	BENEFITS. (a) In this section, "benefit" has the meaning assigned
91	91	by Section 1.07, Penal Code.
92	92	(b) Except as provided by Subsection (c), a person to whom
93	93	Section 802.004 applies or a member of the immediate family of the
94	94	person may not accept any benefit with an aggregate value in any
95	95	calendar year of more than $1,000 from any individual who enters
96	96	into or seeks to enter into a contract with a public retirement
97	97	system.
98	98	(c) Food, lodging, and transportation related to attending
99	99	a conference in this state that is attended or expected to be
100	100	attended by at least 50 individuals representing more than one
101	101	public retirement system are exempt from this section.
102	102	Sec. 802.006. PROHIBITED EMPLOYMENT AND CONTRACTS. A
103	103	public retirement system may not knowingly employ or contract with,
104	104	either directly or indirectly, a former member of the governing
105	105	body of the system before the first anniversary of the date the
106	106	individual ceased to be a member of the system's governing body.
107	107	Sec. 802.007. CIVIL PENALTY. (a) In this section, "theft"
108	108	means the conduct prohibited by Section 31.03, Penal Code.
109	109	(b) A person who commits theft in relation to a service
110	110	provided by the person to a public retirement system is liable to
111	111	the system for a civil penalty in an amount not to exceed $250,000
112	112	for each violation. An action may be brought under this subsection
113	113	regardless of whether a criminal conviction under Section 31.03,
114	114	Penal Code, has been sought or obtained against the person.
115	115	(c) A person who commits a breach of the person's fiduciary
116	116	duty in relation to a service provided by the person to a public
117	117	retirement system is liable to the system for a civil penalty in an
118	118	amount not to exceed $2,000 in the aggregate for the violation and
119	119	all violations of a similar nature.
120	120	(d) The amount of a civil penalty imposed under this section
121	121	must be in an amount that is reasonably related to the harm to the
122	122	public retirement system.
123	123	(e) The attorney general may bring an action to impose and
124	124	recover a civil penalty for a violation of this section made in
125	125	relation to:
126	126	(1) the Employees Retirement System of Texas,
127	127	including a retirement system administered by that system;
128	128	(2) the Teacher Retirement System of Texas;
129	129	(3) the Texas Municipal Retirement System;
130	130	(4) the Texas County and District Retirement System;
131	131	and
132	132	(5) the Texas Emergency Services Retirement System.
133	133	(f) A local prosecuting attorney may bring an action to
134	134	impose or recover a civil penalty for a violation of this section
135	135	made in relation to a public retirement system other than a system
136	136	described by Subsection (e).
137	137	(g) A penalty under this section is in addition to any other
138	138	remedy provided by law.
139	139	Sec. 802.008. ANNUAL REPORT ON CERTAIN ANNUITIES PAID BY
140	140	LOCAL RETIREMENT SYSTEMS. (a) In this section:
141	141	(1) "Statewide retirement system" has the meaning
142	142	assigned by Section 804.001.
143	143	(2) "Sponsoring authority" means the governing body of
144	144	a municipality or other political subdivision that participates, or
145	145	has an agency or instrumentality of the political subdivision that
146	146	participates, in a public retirement system.
147	147	(b) Except as provided by Subsection (f), in addition to
148	148	other reports required by law, a public retirement system, other
149	149	than a statewide public retirement system, not later than the 90th
150	150	day after the end of the fiscal year under which the system
151	151	operates, shall file with the sponsoring authority a report
152	152	regarding annuities:
153	153	(1) the retirement system began paying during the
154	154	preceding fiscal year; and
155	155	(2) the amounts of which were calculated based at
156	156	least in part:
157	157	(A) on a member's final average salary; or
158	158	(B) on a member's average salary during a
159	159	particular period of employment.
160	160	(c) The report required by this section must include:
161	161	(1) if the amount of an annuity was calculated based on
162	162	a salary that was increased as a result of overtime pay or any other
163	163	amount received by the member as payment for time worked in excess
164	164	of the member's normal work schedule:
165	165	(A) the amount by which the annuity was
166	166	increased; and
167	167	(B) a calculation of the amount that the member's
168	168	annuity would have been had the member's annuity excluded the
169	169	amounts earned for time worked in excess of the member's normal work
170	170	schedule; and
171	171	(2) the number of annuitants whose annuities meet the
172	172	terms of Subdivision (1) and the aggregate amount by which the
173	173	amounts of the annuities paid exceed the amount described by
174	174	Subdivision (1)(B).
175	175	(d) Information included in the report required by this
176	176	section that, if in the custody of the public retirement system
177	177	would be considered confidential and not subject to disclosure
178	178	under Section 552.0038, while in the custody of the sponsoring
179	179	authority is considered confidential and not subject to disclosure
180	180	in a manner that could reasonably be expected to identify an
181	181	individual.
182	182	(e) The report required by this section may be combined with
183	183	any other report that a public retirement system is required to
184	184	provide to a sponsoring authority.
185	185	(f) This section does not apply to a public retirement
186	186	system that is not designed to be funded on an actuarial basis.
187	187	SECTION 3. Section 802.103, Government Code, is amended by
188	188	adding Subsection (d) to read as follows:
189	189	(d) The governing body of a public retirement system shall
190	190	require that all records, including documents used to prepare or
191	191	explain the annual financial report required under this section,
192	192	be:
193	193	(1) retained in compliance with the records retention
194	194	schedule adopted by the Texas State Library and Archives Commission
195	195	applicable to all local governments; and
196	196	(2) made available to the board on request.
197	197	SECTION 4. Subchapter C, Chapter 802, Government Code, is
198	198	amended by adding Sections 802.2041 and 802.2042 to read as
199	199	follows:
200	200	Sec. 802.2041. PROCUREMENT OF INVESTMENT MANAGERS AND
201	201	CERTAIN OTHERS. (a) The board shall by rule adopt guidelines for
202	202	the procurement of investment managers and other persons, including
203	203	an investment consultant or advisor, who provide a public
204	204	retirement system with services relating to the management and
205	205	investment of the system's assets.
206	206	(b) The board may require a public retirement system to
207	207	provide the board with a statement, not later than the 30th day
208	208	after the date of the procurement, detailing the system's method of
209	209	selecting any person described by Subsection (a).
210	210	Sec. 802.2042. CONTRACTS WITH INVESTMENT MANAGERS AND
211	211	CERTAIN OTHERS. A contract with an investment manager or other
212	212	person to provide services to a public retirement system relating
213	213	to the management and investment of the system's assets is subject,
214	214	at the board's request, to review by the board regarding the fees
215	215	charged and paid by the system and the services rendered to the
216	216	system in consideration for the fees.
217	217	SECTION 5. (a) Not later than January 1, 2014, the State
218	218	Pension Review Board shall adopt rules as required by Sections
219	219	802.004 and 802.2041, Government Code, as added by this Act.
220	220	(b) Notwithstanding Section 802.004, Government Code, as
221	221	added by this Act, a person is not required to comply with that
222	222	section before the 30th day after the date the State Pension Review
223	223	Board adopts initial rules under that section.
224	224	SECTION 6. This Act takes effect September 1, 2013.