84R15583 KFF-F
By: Huffman S.B. No. 1939
A BILL TO BE ENTITLED
AN ACT
relating to contributions to, benefits from, and the administration
of systems and programs administered by the Teacher Retirement
System of Texas.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 822.201(b), Government Code, is amended
to read as follows:
(b) "Salary and wages" as used in Subsection (a) means:
(1) normal periodic payments of money for service the
right to which accrues on a regular basis in proportion to the
service performed;
(2) amounts by which the member's salary is reduced
under a salary reduction agreement authorized by Chapter 610;
(3) amounts that would otherwise qualify as salary and
wages under Subdivision (1) but are not received directly by the
member pursuant to a good faith, voluntary written salary reduction
agreement in order to finance payments to a deferred compensation
or tax sheltered annuity program specifically authorized by state
law or to finance benefit options under a cafeteria plan qualifying
under Section 125 of the Internal Revenue Code of 1986, if:
(A) the program or benefit options are made
available to all employees of the employer; and
(B) the benefit options in the cafeteria plan are
limited to one or more options that provide deferred compensation,
group health and disability insurance, group term life insurance,
dependent care assistance programs, or group legal services plans;
(4) performance pay awarded to an employee by a school
district as part of a total compensation plan approved by the board
of trustees of the district and meeting the requirements of
Subsection (e);
(5) the benefit replacement pay a person earns under
Subchapter H, Chapter 659, except as provided by Subsection (c);
(6) stipends paid to teachers in accordance with
Section 21.410, 21.411, 21.412, or 21.413, Education Code;
(7) amounts by which the member's salary is reduced or
that are deducted from the member's salary as authorized by
Subchapter J, Chapter 659;
(8) a merit salary increase made under Section 51.962,
Education Code;
(9) amounts received under the relevant parts of the
educator excellence awards program under Subchapter O, Chapter 21,
Education Code, or a mentoring program under Section 21.458,
Education Code, that authorize compensation for service;
(10) salary amounts designated as health care
supplementation by an employee under Subchapter D, Chapter 22,
Education Code; and
(11) to the extent required by Sections 3401(h) and
414(u)(12) [414(u)(2)], Internal Revenue Code of 1986,
differential wage payments received by an individual from an
employer on or after January 1, 2009, while the individual is
performing qualified military service as defined by Section 414(u),
Internal Revenue Code of 1986.
SECTION 2. Section 823.006, Government Code, is amended to
read as follows:
Sec. 823.006. LIMITS ON ANNUAL CONTRIBUTIONS FOR PURCHASE
OF SERVICE CREDIT. Notwithstanding any other provision of this
subtitle, the retirement system shall [may] limit the purchase of
service credit to the extent required by applicable limits on the
amount of annual contributions a participant may make to a
qualified plan under Sections 401(a) and 415(c), Internal Revenue
Code of 1986.
SECTION 3. Section 824.1012(a), Government Code, is amended
to read as follows:
(a) As an exception to Section 824.101(c), a retiree who
selected an optional service retirement annuity under Section
824.204(c)(1), (c)(2), or (c)(5) or an optional disability
retirement annuity under Section 824.308(c)(1), (c)(2), or (c)(5)
and who has received at least one payment under the plan selected
may change the optional annuity selection made by the retiree to a
standard service or disability retirement annuity as provided for
in this section. If the beneficiary of the optional annuity was
[is] the spouse [or former spouse] of the retiree when the retiree
designated the spouse as beneficiary of the optional annuity, to
change from the optional annuity to a standard retirement annuity
under this subsection, the spouse or former spouse, as applicable,
who was designated [,] the beneficiary of the optional annuity must
sign a notarized consent to the change[,] or a court with
jurisdiction over the marriage of [in a divorce proceeding
involving] the retiree and beneficiary must approve or order the
change [in the divorce decree or acceptance of a property
settlement]. The change in plan selection takes effect when the
retirement system receives the request to change the plan, provided
the signed consent form or court order, as applicable, is
subsequently received by the retirement system [it].
SECTION 4. Sections 824.1013(b) and (c-1), Government Code,
are amended to read as follows:
(b) If the beneficiary designated at the time of the
retiree's retirement is the spouse of the retiree at the time of the
designation:
(1) the spouse must give written, notarized consent to
the change;
(2) if the parties divorce after the designation, the
former spouse who was designated beneficiary must give written,
notarized consent to the change; or
(3) a court with jurisdiction over the marriage must
approve or order [have ordered] the change.
(c-1) Notwithstanding Subsection (c), a beneficiary
designated under this section is entitled on the retiree's death to
receive monthly payments of the survivor's portion of the retiree's
optional retirement annuity for the remainder of the beneficiary's
life if the beneficiary designated at the time of the retiree's
retirement is a trust and the beneficiary designated under this
section is:
(1) the sole beneficiary of that trust; or
(2) an individual who is the sole beneficiary
designated in the trust instrument to receive the survivor's
portion of the retiree's optional retirement annuity.
SECTION 5. Section 825.004, Government Code, is amended by
adding Subsection (c) to read as follows:
(c) A trustee appointed under Section 825.002(c) or (e) who
retires from a public school district, charter school, regional
education service center, or institution of higher education, as
applicable, while serving on the board may continue to serve on the
board for the remainder of the term for which the person was
appointed if there remains at least one trustee on the board who is
a contributing member of the retirement system.
SECTION 6. Section 825.115, Government Code, is amended by
adding Subsection (f) to read as follows:
(f) Notwithstanding any other law, Chapter 551 does not
apply to an assembly of the board of trustees or one of the board's
committees while attending a summit, conference, convention,
workshop, or other event held for educational purposes and not for
the purpose of deliberating, voting, or taking action on a specific
matter of public business or public policy over which the board of
trustees or a committee of the board has supervision or control.
This subsection does not apply to a regular, special, or emergency
meeting of the board of trustees scheduled or called under the
board's bylaws.
SECTION 7. Section 825.208(b), Government Code, is amended
to read as follows:
(b) The retirement system is exempt from Sections 651.002
and 651.004, Chapter 660, [and] Subchapter K, Chapter 659, and
Subchapter A, Chapter 661, to the extent the board of trustees
determines an exemption is necessary for the performance of
fiduciary duties.
SECTION 8. Section 825.212, Government Code, is amended by
adding Subsection (d) to read as follows:
(d) Notwithstanding any other law, all personal financial
disclosures made by employees of the retirement system under this
section, including a rule or policy adopted under this section, are
confidential and excepted from the requirements of Section 552.021.
SECTION 9. Section 825.306, Government Code, is amended to
read as follows:
Sec. 825.306. CREDITING SYSTEM ASSETS. (a) The assets of
the retirement system shall be maintained and reported in a manner
that reflects the source of the assets or the purpose for which the
assets are held in accordance with appropriate accounting
standards. In the alternative, the assets may be credited,
according to the purpose for which they are held, to one of the
following accounts:
(1) member savings account;
(2) state contribution account;
(3) retired reserve account;
(4) interest account;
(5) expense account; or
(6) deferred retirement option account.
(b) Notwithstanding any other law, a requirement to deposit
in or transfer assets from one of the accounts described under
Subsection (a) is satisfied by maintaining and reporting the assets
in accordance with that subsection.
SECTION 10. Section 825.403, Government Code, is amended by
amending Subsections (h) and (j) and adding Subsections (h-1),
(h-2), (h-3), and (h-4) to read as follows:
(h) Subject to Subsections (h-1), (h-2), (h-3), and (h-4),
if [If] deductions were previously required but not paid, the
retirement system may not provide benefits based on the service or
compensation unless the deposits required by this section have been
fully paid.
(h-1) If, due to an error, an employer does not report to the
retirement system all service rendered or compensation paid as
required by this section and the error relates to service rendered
or compensation paid by a member in:
(1) the current school year, the error may be
corrected by submitting to the retirement system in the manner
prescribed by the retirement system:
(A) a corrected report; and
(B) contributions on the unreported service or
compensation, plus interest at the rate provided under Section
825.408, computed from the final date on which the service or
compensation should have been reported to the retirement system to
the date the contributions related to that service or compensation
are submitted to the retirement system; or
(2) the preceding school year, the error may be
corrected if the following requirements are met:
(A) the member for whom contributions are due is
employed by the employer and the employer owes the member
compensation payable in the current year;
(B) the employer requests from the retirement
system a waiver of the documentation requirements under Section
825.408(a) and the request is granted by the retirement system;
(C) the employer, in the manner prescribed by the
retirement system:
(i) submits to the retirement system member
contributions on the unreported service or compensation in the
manner provided by Section 825.409 by making the corresponding
reduction in the compensation owed to the member;
(ii) submits to the retirement system any
employer contributions due on the compensation;
(iii) pays the interest on the
contributions described by Subparagraphs (i) and (ii) at the rate
provided by Section 825.408; and
(iv) corrects the records relating to the
report months in which the service or compensation are at issue; and
(D) the error is corrected in accordance with
this subsection not later than the final day of the school year
following the school year in which the service or compensation at
issue was rendered or paid, as applicable.
(h-2) On receipt of the member and employer contributions
and the corrected reports under Subsection (h-1), the retirement
system shall credit the service or compensation, as applicable, to
the member.
(h-3) The retirement system may not credit service or
compensation to a member in the manner provided by Subsections
(h-1) and (h-2) for service rendered or compensation received by a
member in any school year before the preceding school year. If
service is rendered or compensation paid by a member in a school
year before the preceding school year, the member's [The person's]
employer at the time the unreported service was rendered or
compensation was paid must verify the service or compensation as
required by Subsection (j) and the member [person] must submit the
verification to the retirement system not later than five years
after the end of the school year in which the service was rendered
or compensation was paid. To establish the service or compensation
credit under this subsection:
(1) [,] the member [person] must deposit with the
retirement system the member contributions that were due on the
unreported service or compensation, plus interest at a rate of two
percent per year, computed from the final date on which the service
or compensation should have been reported to the retirement system
to the date the contributions related to that service or
compensation are submitted to the retirement system under this
subsection; and
(2) the employer must deposit with the retirement
system the actuarial present value, at the time of deposit, of the
additional standard retirement annuity benefits that would be
attributable to the purchase of service or compensation credit
under this section, based on rates and tables recommended by the
retirement system's actuary and adopted by the board of trustees,
less the member contribution under Subdivision (1).
(h-4) The board of trustees shall:
(1) prescribe terms for payments under Subsections
(h-1), (h-2), and (h-3) [this subsection]; and
(2) credit the member [person] for prior service to
which the member [person] is entitled under this subtitle.
(j) Except as otherwise provided by this section, if [If]
deductions were previously required but not paid, proof of service
satisfactory to the retirement system must be made before service
credit is granted or payment for the credit is required. Proof of
service is sufficient if the member's [person's] employer documents
that the employer has records made at or near the time of service
that establish the amount of time worked and salary earned. An
affidavit based on memory without written records made at or near
the time of service is not sufficient documentation for the
establishment of service credit. The retirement system may audit
records used for documentation under this subsection. A member
[person] who does not obtain proof of service as required by this
section may not establish the service or compensation credit.
SECTION 11. Section 825.408, Government Code, is amended by
amending Subsection (a) and adding Subsection (c) to read as
follows:
(a) Except as provided by Subsection (c), an [An] employer
that fails to remit, before the seventh day after the last day of a
month, all member and employer deposits and documentation of the
deposits required by this subchapter to be remitted by the employer
for the month shall pay to the retirement system, in addition to the
deposits, interest on the unpaid or undocumented amounts at an
annual rate compounded monthly. The rate of interest is the rate
established under Section 825.313(b)(1), plus two percent.
Interest required under this section is creditable to the interest
account. On request, the retirement system may grant a waiver of
the deadline imposed by this subsection based on an employer's
financial or technological resources.
(c) This section does not apply to service or compensation
credit established under Section 825.403(h-3).
SECTION 12. Section 825.4092(c), Government Code, is
amended to read as follows:
(c) Except as provided by Subsection (e), each payroll
period, for each retiree who is enrolled in the Texas Public School
Employees Group Insurance Program under Chapter 1575, Insurance
Code, the employer who reports the employment of a retiree shall
contribute to the trust fund established under that chapter an
amount established by the retirement system. In determining the
amount to be contributed by the employer under this subsection, the
retirement system shall consider [any difference between] the
amount the retiree is required to pay for the retiree and any
enrolled dependents to participate in the group program and the
average [full] cost of the retiree's and enrolled dependents'
participation in the group program[, as determined by the
retirement system]. If more than one employer reports the retiree
to the retirement system during a month, the amount of the required
payment shall be prorated among the employers.
SECTION 13. Section 825.410(a), Government Code, is amended
to read as follows:
(a) Payments to establish special service credit as
authorized under this subtitle, other than service credit that may
only be determined and paid for at the time of retirement such as
unused leave as authorized by Section 823.403, may be made in a lump
sum by a monthly payroll deduction in an amount not less than
one-twelfth of the contribution required to establish at least one
year of service credit, or in equal monthly installments over a
period not to exceed the lesser of the number of years of credit to
be purchased or 60 months. Installment and payroll deduction
payments are due on the first day of each calendar month in the
payment period. If an installment or payroll deduction payment is
not made in full within 60 days after the due date, the retirement
system may refund all installment or payroll deduction payments
less fees paid on the lump sum due when installment or payroll
deduction payments began. Partial payment of an installment or
payroll deduction payment may be treated as nonpayment. A check
returned for insufficient funds or a closed account shall be
treated as nonpayment. When two or more consecutive monthly
payments have a returned check, a refund may be made. [If the
retirement system refunds payments pursuant to this subsection, the
member is not permitted to use the installment method of payment or
the payroll deduction method, as applicable, for the same service
for three years after the date of the refund. A member who requests
and receives a refund of installment or payroll deduction payments
also is not permitted to use the same method of payment for the same
service for three years after the date of the refund.]
SECTION 14. Section 825.505, Government Code, is amended to
read as follows:
Sec. 825.505. AUDITS. For the purpose of determining the
propriety of employer reports, including demographic data, and
contributions or credits, the records of an employer concerning the
employment and compensation of all its personnel are subject to
audit and examination, in the offices of the employer during
regular working hours, by representatives of the retirement system
designated to conduct the audit and examination.
SECTION 15. Section 825.508(b), Government Code, is amended
to read as follows:
(b) The system must honor a power of attorney executed in
accordance with Chapter 752, Estates [Chapter XII, Section 490,
Texas Probate] Code.
SECTION 16. Section 825.509(b-1), Government Code, is
amended to read as follows:
(b-1) Notwithstanding Subsection (b)(3), with respect to a
distribution made on or after January 1, 2002, an otherwise
eligible portion of a rollover distribution that consists of
after-tax employee contributions not includable in gross income is
an eligible rollover distribution for purposes of this
section. The eligible portion may be transferred only:
(1) to an individual retirement account or annuity
described by Section 408(a) or (b), Internal Revenue Code of 1986;
(2) to a qualified plan described by Section 403(a),
Internal Revenue Code of 1986;
(3) for distributions occurring on or after January 1,
2007, to a qualified plan described by Section 401(a), Internal
Revenue Code of 1986, if the plan separately accounts for:
(A) the amounts transferred and the earnings on
amounts transferred; and
(B) the portion of the distribution that is
includable in gross income and the portion of the distribution that
is not includable in gross income; or
(4) to an annuity contract described by Section
403(b), Internal Revenue Code of 1986, that agrees to separately
account for amounts transferred and earnings on amounts
transferred, including for the portion of the distribution that is
includable in gross income and the portion of the distribution that
is not includable in gross income.
SECTION 17. Section 825.515(a), Government Code, is amended
to read as follows:
(a) At least annually, the retirement system shall acquire
and maintain records identifying members and specifying the types
of positions they hold as members. Employers shall provide to the
retirement system information specifying the type of position held
by each member as Administrative/Professional, Teacher/Full-Time
Librarian, Support, Bus Driver, Food Service Worker, or Peace
Officer. Employers shall also provide to the retirement system the
work e-mail address for each member. For each member identified as
a Peace Officer, the records must specify whether the member is an
employee of an institution of higher education or of a public school
that is not an institution of higher education. An employer shall
provide the information required by this section in the form and
manner specified by the retirement system.
SECTION 18. Section 830.201(h), Government Code, is amended
to read as follows:
(h) Before November 2 of each even-numbered year, the Texas
Higher Education Coordinating Board [board of trustees], in
coordination with the Legislative Budget Board, shall certify to
the comptroller for review and adoption an estimate of the amount
necessary to pay the state's contributions to the retirement system
for the following biennium. For qualifying employees under
Subsection (g)(1), the Texas Higher Education Coordinating Board
[board of trustees] shall include only the amount payable by the
state under Subsection (g)(1) in determining the amount to be
certified.
SECTION 19. Sections 22.004(b) and (d), Education Code, are
amended to read as follows:
(b) A district that does not participate in the program
described by Subsection (a) shall make available to its employees
group health coverage provided by a risk pool established by one or
more school districts under Chapter 172, Local Government Code, or
under a policy of insurance or group contract issued by an insurer,
a company subject to Chapter 842, Insurance Code, or a health
maintenance organization under Chapter 843, Insurance Code. The
coverage must meet the substantive coverage requirements of Chapter
1251, Subchapter A, Chapter 1364, and Subchapter A, Chapter 1366,
Insurance Code, and any other law applicable to group health
insurance policies or contracts issued in this state. The coverage
must include major medical treatment but may exclude experimental
procedures. In this subsection, "major medical treatment" means a
medical, surgical, or diagnostic procedure for illness or
injury. The coverage may include managed care or preventive care
and must be comparable to the basic health coverage provided under
Chapter 1551, Insurance Code. In determining [The board of
trustees of the Teacher Retirement System of Texas shall adopt
rules to determine] whether a school district's group health
coverage is comparable to the basic health coverage specified by
this subsection, the district shall consider [. The rules must
provide for consideration of] the following factors [concerning the
district's coverage in determining whether the district's coverage
is comparable to the basic health coverage specified by this
subsection]:
(1) the deductible amount for service provided inside
and outside of the network;
(2) the coinsurance percentages for service provided
inside and outside of the network;
(3) the maximum amount of coinsurance payments a
covered person is required to pay;
(4) the amount of the copayment for an office visit;
(5) the schedule of benefits and the scope of
coverage;
(6) the lifetime maximum benefit amount; and
(7) verification that the coverage is issued by a
provider licensed to do business in this state by the Texas
Department of Insurance or is provided by a risk pool authorized
under Chapter 172, Local Government Code, or that a district is
capable of covering the assumed liabilities in the case of coverage
provided through district self-insurance.
(d) Each [district shall report the district's compliance
with this section to the executive director of the Teacher
Retirement System of Texas not later than March 1 of each
even-numbered year in the manner required by the board of trustees
of the Teacher Retirement System of Texas. For a] district that
does not participate in the program described by Subsection (a)
shall prepare a report addressing the district's compliance with
this section. The [, the] report must be available for review,
together with the policy or contract for the group health coverage
plan, at the central administrative office of each campus in the
district and be posted on the district's Internet website if the
district maintains a website, must be based on the district group
health coverage plan in effect during the current plan year, and
must include:
(1) appropriate documentation of:
(A) the district's contract for group health
coverage with a provider licensed to do business in this state by
the Texas Department of Insurance or a risk pool authorized under
Chapter 172, Local Government Code; or
(B) a resolution of the board of trustees of the
district authorizing a self-insurance plan for district employees
and of the district's review of district ability to cover the
liability assumed;
(2) the schedule of benefits;
(3) the premium rate sheet, including the amount paid
by the district and employee;
(4) the number of employees covered by the health
coverage plan offered by the district; and
(5) information concerning the ease of completing the
report[, as required by the executive director of the Teacher
Retirement System of Texas; and
[(6) any other information considered appropriate by
the executive director of the Teacher Retirement System of Texas].
SECTION 20. Section 1579.255, Insurance Code, is amended to
read as follows:
Sec. 1579.255. INTEREST ASSESSED ON LATE PAYMENT OF
CONTRIBUTIONS BY PARTICIPATING ENTITIES. (a) A participating
entity that does not remit to the trustee all contributions
required by this subchapter before the 16th [seventh] day [after
the last day] of the month shall pay to the Texas school employees
uniform group coverage trust fund:
(1) the contributions; and
(2) interest on the unpaid amounts at the annual rate
of six percent compounded monthly.
(b) The [On request, the] trustee may grant a waiver of the
deadline imposed by this section based on a participating entity's
financial or technological resources.
SECTION 21. Section 825.4092(c), Government Code, as
amended by this Act, applies to a retiree of the Teacher Retirement
System of Texas regardless of whether the person retired from
employment before, on, or after the effective date of this Act.
SECTION 22. This Act takes effect September 1, 2015.