84R12610 TSR-F
By: Menéndez S.B. No. 1772
A BILL TO BE ENTITLED
AN ACT
relating to the retirement system in certain municipalities for
firefighters and police officers.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 1.02(7) and (17), Chapter 824 (S.B.
817), Acts of the 73rd Legislature, Regular Session, 1993 (Article
6243o, Vernon's Texas Civil Statutes), are amended to read as
follows:
(7) "Dependent child" means:
(A) a person who is less than 18 years of age and
is a child of a deceased member or deceased retiree; or
(B) a person:
(i) who is at least 18 years of age;
(ii) who is mentally or physically disabled
to the extent that the person is not capable of being
self-supporting; and
(iii) whose natural or adoptive parent is a
deceased member or deceased retiree [, provided that, for the year
immediately preceding the death of the member or retiree, the
deceased member or retiree claimed the person as a dependent on the
member's or retiree's federal income tax return].
(17) "Total salary" means all salary of a member:
(A) including:
(i) amounts picked up by the municipality
under Section 4.04(b) of this Act; and
(ii) amounts that would be included in
salary but for an election under Section 125(d), 132(f)(4), 401(k),
402(e)(3), 402(h)(1)(B), or 457(b) of the code; and
(B) excluding [, except]:
(i) [(A)] overtime pay, field training
officer's pay, bomb squad pay, SWAT team pay, K-9 pay, and hostage
team pay; and
(ii) [(B)] pay for unused accrued vacation
and sick leave, holiday pay, compensatory time pay, and bonus days
leave, or any similar items of compensation that may be paid in the
future.
SECTION 2. Section 4.02(a), Chapter 824 (S.B. 817), Acts of
the 73rd Legislature, Regular Session, 1993 (Article 6243o,
Vernon's Texas Civil Statutes), is amended to read as follows:
(a) If a member takes unpaid leave as provided by the
federal Family and Medical Leave Act of 1993 (29 U.S.C. Section 2601
et seq.), that member is entitled to make voluntary contributions
for the leave period in the same amount as the member would have
paid if the member had not taken the leave. Those payments must be
made not later than the 30th day after the date the member returns
from that leave. A computation of contributions under this section
shall be made in the same manner as other computations under this
Act. A municipality to which this Act applies shall pay to the fund
an amount equal to the amount the municipality would have paid under
Section 4.05(a) of this Act if the contributions made by the member
under this section had been made by the member under Section 4.04(a)
of this Act. The payment shall be made by the municipality not
later than the 30th day after the date of notification by the fund
that the member has made the contributions under this section
[match an amount equal to twice the amount of each payment a member
makes to the fund under this subsection].
SECTION 3. Section 4.03, Chapter 824 (S.B. 817), Acts of the
73rd Legislature, Regular Session, 1993 (Article 6243o, Vernon's
Texas Civil Statutes), is amended by amending Subsection (h) and
adding Subsection (i) to read as follows:
(h) A municipality to which this Act applies shall pay to
the fund an amount equal to the amount the municipality would have
paid under Section 4.05(a) of this Act if the contributions made by
the member under this section had been made by the member under
Section 4.04(a) of this Act. The payment shall be made by the
municipality not later than the 30th day after the date of
notification by the fund that the member has made the contributions
under this section [double-match payments made to the fund under
this section].
(i) In the case of a member of the fund who dies while
performing qualified military service as defined by Section 414(u)
of the code, the survivors of the member are entitled to any
additional benefits, other than benefit accruals relating to the
period of qualified military service, that would have been provided
if the member had returned to active service and then immediately
died.
SECTION 4. Sections 4.05(a), (b), and (d), Chapter 824
(S.B. 817), Acts of the 73rd Legislature, Regular Session, 1993
(Article 6243o, Vernon's Texas Civil Statutes), are amended to read
as follows:
(a) Except as provided by Subsection (a-1) of this section,
a municipality to which this Act applies shall pay into the fund:
(1) an amount equal to double the sum total of all
member contributions made in accordance with Section 4.04 of this
Act for full pay periods ending before October 1, 2015; and
(2) an amount equal to 23.25 percent of the total
salary of each fire fighter and police officer in the employment of
the municipality for full pay periods ending after September 30,
2015.
(b) The payments into the fund by the municipality, both as
to deductions and payments under Subsection (a) of this section
[double-matching amounts], shall be made on the same day the
contributions are deducted from the members' total salary.
(d) The municipality's payments to the fund
[double-matching amount] under this section are [is] in place of
all other payments previously required by law to be made by the
municipality.
SECTION 5. Section 5.01, Chapter 824 (S.B. 817), Acts of the
73rd Legislature, Regular Session, 1993 (Article 6243o, Vernon's
Texas Civil Statutes), is amended by adding Subsection (f-2) and
amending Subsection (g) to read as follows:
(f-2) The board shall compute the retirement annuity of a
member who retires after September 30, 2015, at the rate of 2.375
percent of the member's average total salary for each of the first
20 years of service, plus five percent of the member's average total
salary for each of the next seven years of service, plus 2.5 percent
of the member's average total salary for the next year of service,
plus 0.5 percent of the member's average total salary for each of
the next five years of service, with fractional years of service
prorated based on full months served as a contributing member. In
making the computation for a year, the year is considered to begin
on the first day a contribution is made. A retirement annuity under
this subsection may not exceed, as of the date of retirement, 87.5
percent of the member's average total salary.
(g) A member may not receive an award from the fund for
service retirement until the member has at least 20 years of service
in the fire or police department and has also contributed the
required amount of money for at least 20 years. In determining the
number of years of service in a department, the member shall be
given full credit for the period the member was an active member
plus the time the member was actively engaged in service with any
uniformed service in accordance with Section 4.03 of this Act and
for absences taken under the Family and Medical Leave Act of 1993
(29 U.S.C. Section 2601 et seq.), in accordance with Section 4.02 of
this Act. Disciplinary suspensions of 15 days or less may not be
subtracted from a member's service credit under this Act if the
member has paid into the fund, within 30 days after the later of the
termination date of each suspension or the exhaustion of any appeal
with respect to the suspension, a sum of money equal to the amount
of money that would have been deducted from that person's salary
during that period of suspension if it had not been for that
suspension. A municipality to which this Act applies shall pay to
the fund an amount equal to the amount the municipality would have
paid under Section 4.05(a) of this Act if the contributions made by
the member under this section had been made by the member under
Section 4.04(a) of this Act. The payment shall be made by the
municipality not later than the 30th day after the date of
notification by the fund that the member has made the contributions
under this section [double-match a payment made under this
subsection]. Members of the fund at the time of their retirement
shall also receive service credit for all unused sick leave
accumulated by them under Chapter 143, Local Government Code, but
only to the extent the unused sick leave exceeds 90 days. Service
credit for unused sick leave shall be prorated based on each full
month of sick leave. A member's service credit under this section
includes any service credit purchased in accordance with
Subsections (k)-(m) of this section.
SECTION 6. Sections 5.015(d) and (e), Chapter 824 (S.B.
817), Acts of the 73rd Legislature, Regular Session, 1993 (Article
6243o, Vernon's Texas Civil Statutes), are amended to read as
follows:
(d) The amount of a lump-sum payment to which a member
making a Back DROP election is entitled shall be computed in the
manner provided by this subsection and Subsection (d-1) of this
section. The member's retirement annuity shall be computed in the
manner provided by Section 5.01 of this Act, except that the amount
of service credit and average total salary used in making that
computation shall be determined in accordance with this
subsection. For purposes of this subsection, the member's average
total salary shall be computed based on the member's Back DROP
retirement date, which is the member's actual retirement date less
the amount of time the member elects under Subsection (b)(1) of this
section. For purposes of this subsection, the member's service
credit shall be the member's service credit determined in
accordance with Section 5.01(g) of this Act less the amount of time
for:
(1) any service credit in excess of 33 [34] years of
service, other than service credit for sick leave unused on the date
of actual retirement;
(2) any service credit given for sick leave unused on
the date of actual retirement; and
(3) any service credit in excess of 20 years but not in
excess of the amount permitted under Subsection (b)(1) of this
section that the member elects for computing the amount of the
lump-sum payment.
(e) For purposes of computing the monthly pension of a
member making a Back DROP election, the member's retirement annuity
shall be computed in the manner provided by Section 5.01 of this
Act, except that:
(1) the amount of service credit used in making that
computation shall be the member's service credit determined in
accordance with Section 5.01(g) of this Act less:
(A) the amount of time the member elects under
Subsection (b)(1) of this section; and
(B) any service credit in excess of 33 [34] years
of service excluding any service credit for sick leave unused on the
date of actual retirement; and
(2) the member's average total salary shall be
computed as if the member's retirement date were the member's actual
retirement date less the amount of time the member elects under
Subsection (b)(1) of this section.
SECTION 7. Section 5.03(c), Chapter 824 (S.B. 817), Acts of
the 73rd Legislature, Regular Session, 1993 (Article 6243o,
Vernon's Texas Civil Statutes), is amended to read as follows:
(c) Except as provided by Subsection (d) of this section, a
member of the fund who is on suspension and who becomes disabled as
a result of an injury sustained or disease contracted while the
member is on suspension is eligible for a disability retirement
annuity under Subsection (a) or (a-1) of this section, as
applicable, if the suspended member makes up each deducted
contribution lost by reason of the suspension not later than the
30th day after the later of the termination date of the suspension
or the exhaustion of any appeal with respect to the suspension. A
municipality to which this Act applies shall pay to the fund an
amount equal to the amount the municipality would have paid under
Section 4.05(a) of this Act if the contributions made by the member
under this section had been made by the member under Section 4.04(a)
of this Act. The payment shall be made by the municipality not
later than the 30th day after the date of notification by the fund
that the member has made the contributions under this section
[double-match all contributions made by a member under this
subsection].
SECTION 8. Section 5.04(a), Chapter 824 (S.B. 817), Acts of
the 73rd Legislature, Regular Session, 1993 (Article 6243o,
Vernon's Texas Civil Statutes), is amended to read as follows:
(a) A member who is eligible to retire and receive a
disability retirement annuity under Section 5.03(a) of this Act is
entitled to receive an annuity from the fund equal to:
(1) 50 percent of the member's average total salary if
the date of retirement is on or before September 30, 2015, or 47.5
percent of the member's average total salary if the date of
retirement is after September 30, 2015, if the member has served
three years or more before the date of retirement;
(2) 50 percent of the member's average monthly salary
as of the date of retirement multiplied by 12 if the date of
retirement is on or before September 30, 2015, or 47.5 percent of
the member's average monthly salary as of the date of retirement
multiplied by 12 if the date of retirement is after September 30,
2015, if the member has served at least two months and less than
three years before the date of retirement; or
(3) 50 percent of the member's average daily salary as
of the date of retirement multiplied by 360 if the date of
retirement is on or before September 30, 2015, or 47.5 percent of
the member's average daily salary as of the date of retirement if
the date of retirement is after September 30, 2015, if the member
has served less than two months before the date of retirement.
SECTION 9. Section 5.05(c), Chapter 824 (S.B. 817), Acts of
the 73rd Legislature, Regular Session, 1993 (Article 6243o,
Vernon's Texas Civil Statutes), is amended to read as follows:
(c) For those retired because of disability on or after
August 30, 1971, the disability retirement annuity may not be
reduced to an amount that is less than the product of:
(1) 2.375 [2.25] percent multiplied by the number of
years that the retiree served in the department and contributed a
portion of salary as a member of the fund multiplied by the
retiree's average total salary, if the retiree served three years
or more before the date of retirement;
(2) 2.375 [2.25] percent multiplied by the number of
years that the retiree served in the department and contributed a
portion of salary as a member of the fund multiplied by the
retiree's average monthly salary as of the date of retirement
multiplied by 12, if the retiree served at least two months and less
than three years before the date of retirement; or
(3) 2.375 [2.25] percent multiplied by the number of
years that the retiree served in the department and contributed a
portion of salary as a member of the fund multiplied by the
retiree's average daily salary as of the date of retirement
multiplied by 360, if the member has served less than two months
before the date of retirement.
SECTION 10. Section 5.09, Chapter 824 (S.B. 817), Acts of
the 73rd Legislature, Regular Session, 1993 (Article 6243o,
Vernon's Texas Civil Statutes), is amended by amending Subsection
(a) and adding Subsection (a-2) to read as follows:
(a) At or before its regular meeting in the month of March,
the board annually shall review the Consumer's Price Index for All
Urban Consumers (CPI-U), U.S. City Average or the nearest
equivalent published by the United States Bureau of Labor
Statistics for the preceding calendar year. If that index shows an
increase during the preceding calendar year in the cost of living as
compared with that index at the close of the previous year, the
board shall order an increase of all service, disability, and death
benefit retirement annuities by a percentage that varies by the
date of the member's service or disability retirement, or, in the
case of a member who died before retirement, the date on which the
member died. If the member's service retirement, disability
retirement, or death before retirement occurred before August 30,
1971, the annuity shall be increased by a percentage equal to the
percentage increase in the cost of living index. If the member's
service retirement, disability retirement, or death before
retirement occurred on or after August 30, 1971, but before October
1, 2003 [1999], or a later date the board may designate under
Subsection (a-2) of this section, the annuity shall be increased as
follows: if the percentage increase in the cost of living index is
eight percent or less, the annuity shall be increased by a
percentage equal to the percentage increase, and if the percentage
increase in the cost of living index is more than eight percent, the
annuity shall be increased by eight percent plus a percentage equal
to 75 percent of the percentage increase that is more than eight
percent. If the member's service retirement, disability
retirement, or death before retirement occurred on or after October
1, 2003 [1999], or a later date the board may designate under
Subsection (a-2) of this section, the annuity shall be increased by
a percentage equal to 75 percent of the percentage increase in the
cost of living index. A percentage increase in annuities shall be
rounded to the nearest one-tenth percentage point for a cost of
living increase.
(a-2) The board may designate another date for the date
October 1, 2003, in Subsection (a) of this section, provided that
the designation will not cause the fund's ratio of actuarial value
of assets to actuarial accrued liability to be less than 90 percent
as of the date of the board's action.
SECTION 11. Section 5.10, Chapter 824 (S.B. 817), Acts of
the 73rd Legislature, Regular Session, 1993 (Article 6243o,
Vernon's Texas Civil Statutes), is amended by amending Subsections
(b), (c), (d), (f), and (j) and adding Subsection (b-1) to read as
follows:
(b) A distributee may elect, at the time and in the manner
prescribed by the board, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified
by the distributee in a direct rollover. [Any member or beneficiary
who is entitled to receive any distribution that is an eligible
rollover distribution as defined by Section 402(c)(4) of the code
is entitled to have that distribution transferred directly to
another eligible retirement plan of the member's or beneficiary's
choice on providing direction to the fund regarding that transfer
in accordance with procedures established by the board.]
(b-1) For purposes of Subsection (b) of this section:
(1) "Eligible retirement plan" means an individual
retirement account described by Section 408(a) of the code, an
individual retirement annuity described by Section 408(b) of the
code, an annuity plan described by Section 403(a) of the code, a
qualified trust described by Section 401(a) of the code, an
eligible deferred compensation plan described by Section 457(b) of
the code that is maintained by an eligible employer described by
Section 457(e)(1)(A) of the code, or an annuity contract described
by Section 403(b) of the code that accepts the distributee's
eligible rollover distribution. However, in the case of an
eligible rollover distribution to a designated beneficiary who is
not the surviving spouse, or the spouse or former spouse under a
qualified domestic relations order, an eligible retirement plan is
an individual retirement account or individual retirement annuity
only.
(2) "Eligible rollover distribution" means a
distribution of all or any portion of the balance to the credit of
the distributee. The term does not include:
(A) a distribution that is one of a series of
substantially equal periodic payments, paid not less frequently
than once a year, made over the life, or life expectancy, of the
distributee or the joint lives, or joint life expectancies, of the
distributee and the distributee's designated beneficiary;
(B) a series of payments for a specified period
of 10 years or more;
(C) a distribution to the extent such
distribution is required under Section 401(a)(9) of the code; or
(D) the portion of a distribution that is not
includable in gross income, unless the distributee directs that the
eligible rollover distribution be transferred directly to a
qualified trust that is part of a defined contribution plan that
agrees to separately account for the portion that is includable in
gross income and the portion that is not, or to an individual
retirement account or individual annuity.
(3) "Direct rollover" means a payment by the
retirement system to the eligible retirement plan specified by a
distributee.
(4) "Distributee" means a member or former member.
The term includes a member's or former member's surviving spouse or
designated beneficiary and a member's or former member's spouse or
former spouse who is the alternate payee under a qualified domestic
relations order, as defined by Section 414(p) of the code, with
regard to the interest of the spouse or former spouse.
(c) The total salary taken into account for any purpose
under this Act [for any member of the fund] may not exceed the 2009
annual compensation limitations under Section 401(a)(17) of the
code, which are $360,000 [$200,000 per year] for an eligible member
[participant] or $245,000 [$150,000 per year] for an ineligible
member [participant]. For purposes of this subsection, an eligible
member is any employee who first became a member in a year
commencing before 1996 and an ineligible member is any other
member. The [These] dollar limits shall be [periodically] adjusted
annually for cost-of-living increases as provided by Section
401(a)(17) of the code [in accordance with guidelines provided by
the United States secretary of the treasury. For purposes of this
subsection, an eligible participant is any person who first became
a member before 1996, and an ineligible participant is any member
who is not an eligible participant].
(d) Accrued benefits under this Act become 100 percent
vested for a member on the earlier of:
(1) the date the member has completed 20 years of
service;
(2) the earlier termination or partial termination of
the pension plan created by this Act, if it affects the member; [or]
(3) the complete discontinuance of contributions by
the municipality to the fund; or
(4) the date the member attains normal retirement age.
(f) Distribution of benefits must begin not later than April
1 of the year following the later of the calendar year in [during]
which the member becomes 70-1/2 years of age, or the calendar year
in which the employee retires, and must otherwise conform to
Section 401(a)(9) of the code and the regulations under that
section of the code, including the incidental benefit rule.
(j) Notwithstanding any other provision of this Act, the
limit on maximum benefits imposed by Section 415 of the code and
Subsection (a) of this section shall be adjusted each year to the
extent permitted by cost-of-living increases announced by the
secretary of the treasury under Section 415(d) of the code and
applicable law. Any such benefit increases shall apply to members
who have terminated employment, including members who have begun
receiving benefits before the effective date of the change, and any
benefits previously denied. Benefits paid to make up for benefits
previously denied are not considered to be extra compensation
earned after retirement, but shall be considered the delayed
payment of benefits earned before retirement. [To the extent
permitted by law, the board may adjust the benefits of retired
members and beneficiaries by increasing any retirement benefit that
was reduced because of Section 415 of the code. If Section 415 of
the code is amended to permit the payment of amounts previously
precluded under Section 415 of the code, the board may adjust the
benefits of retired members and beneficiaries, including the
restoration of benefits previously denied. Benefits paid under
this subsection are not considered as extra compensation earned
after retirement but as the delayed payment of benefits earned
before retirement.]
SECTION 12. Sections 6.02(a) and (g), Chapter 824 (S.B.
817), Acts of the 73rd Legislature, Regular Session, 1993 (Article
6243o, Vernon's Texas Civil Statutes), are amended to read as
follows:
(a) Subject to Section 6.03 of this Act and the provisions
of this section, if a member or retiree receiving a disability
pension under Section 5.04(a) [5.03(a)] of this Act dies leaving a
surviving spouse or at least one dependent child, the surviving
spouse and the children are entitled to receive from the fund an
aggregate death benefit annuity, computed and payable from the date
of the member's death. The surviving spouse may elect the annuity
in an amount that is equal to [either]:
(1) 50 percent of the member's average total salary, if
the surviving spouse is the surviving spouse of a disability
retiree who was awarded a disability pension before October 1,
2015; [or]
(2) 47.5 percent of the member's average total salary;
or
(3) the same percentage of the member's average total
salary that the member would have been entitled to receive as a
retirement annuity if the member could have retired on the date of
death.
(g) A child who is adopted after the date of retirement of
the member is not entitled to a death benefit under this Act. A
child who is born after the date of retirement of the member is not
entitled to a death benefit annuity under this Act unless the
retiree was married to the other parent of the child on the date of
retirement. A surviving spouse of a retiree whose status as a
surviving spouse resulted from a marriage after the date of the
retirement of the retiree is entitled to receive only the benefits,
if any, provided under Subsection (g-1) of this section or Section
6.08 of this Act.
SECTION 13. Section 6.06, Chapter 824 (S.B. 817), Acts of
the 73rd Legislature, Regular Session, 1993 (Article 6243o,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 6.06. COMMON-LAW MARRIAGES. Common-law marriages are
not recognized under this Act and benefits may not be conferred on
common-law spouses as beneficiaries unless a declaration of
informal marriage was made and recorded under Sections 2.402 and
2.404, Family Code, [and their subsequent amendments,] or any
successor statutes, before the member's death. The date the
declaration of informal marriage is recorded is the date of
marriage for the purpose of determining whether any benefit is to be
awarded to a surviving common-law spouse as a beneficiary.
SECTION 14. This Act takes effect October 1, 2015.