S.B. No. 1664
AN ACT
relating to contributions to, benefits from, membership in, 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. 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. 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 rules must
provide for consideration of the] following factors shall be
considered [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 2. Subchapter A, Chapter 821, Government Code, is
amended by adding Section 821.0011 to read as follows:
Sec. 821.0011. DETERMINATION OF EMPLOYEE OR INDEPENDENT
CONTRACTOR STATUS. In determining whether an individual is an
employee or independent contractor of an employer, the retirement
system shall use the test applied under common law and any guidance
issued by the Internal Revenue Service regarding factors to
consider when determining an individual's employment status.
SECTION 3. 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 4. Section 823.004(a), Government Code, is amended
to read as follows:
(a) All credit for military service, out-of-state service,
developmental leave, work experience in a career or technological
field, and service transferred to the retirement system under
Chapter 805 shall be computed on a September 1 through August 31
school year. Payments for service described by this section must be
completed:
(1) not later than two calendar months after the later
of the member's retirement date or the last day of the month in
which the member submits a retirement application; and
(2) before the later of the due date for the member's
first monthly annuity payment or the date on which the retirement
system issues the first monthly annuity payment to the member.
SECTION 5. Section 823.403, Government Code, is amended by
amending Subsections (c) and (d) and adding Subsection (d-1) to
read as follows:
(c) On receipt of a certification under Subsection (b) and
payment under Subsection (d) of this section, the retirement system
shall grant any credit to which a retiree who is a subject of the
certification is entitled. Unless a member declines to purchase
service credit under this section as provided by Subsection (d-1),
an annuity payment may not begin until the retirement system is paid
the full cost of the service credit. [The increase in the annuity
payment begins with the first payment that becomes due after
certification and payment.]
(d) In order to receive credit, the member shall pay to the
retirement system at the time service credit is granted under this
section the actuarial present value of the additional standard
retirement annuity benefits under the option selected by the member
that would be attributable to the conversion of the unused state
personal or sick leave into the service credit based on rates and
tables recommended by the actuary and adopted by the board of
trustees. Except as provided by this subsection, the retirement
system must receive the payment for service credit under this
section not later than the 90th day after the date the retirement
system issues a cost statement for the purchase of service credit
under this section. The retirement system may grant a member a
one-time extension of not more than 30 days to complete the purchase
of the service credit if the purchase is made by:
(1) a rollover distribution from another eligible
retirement plan; or
(2) a direct trustee-to-trustee transfer of funds
from:
(A) an eligible deferred compensation plan
described by Section 457(b), Internal Revenue Code of 1986, that is
maintained by an eligible governmental employer; or
(B) an annuity contract described by Section
403(b), Internal Revenue Code of 1986, that is purchased under a
governmental plan.
(d-1) A member who fails to make the payment described by
Subsection (d) within the time prescribed by that subsection may:
(1) decline to purchase service credit under this
section and maintain the member's effective date of retirement; or
(2) revoke the member's retirement as provided by
Section 824.005(a) and select a later retirement date that provides
the member with sufficient time to complete the purchase of the
service credit under this section.
SECTION 6. Sections 824.002(e) and (f), Government Code,
are amended to read as follows:
(e) Except as provided by Section 823.403(d), if
applicable, not [Not] later than two months after the later of a
member's retirement date or the last day of the month in which the
member's application for retirement is submitted, and before the
later of the due date for the first monthly annuity payment or the
date on which the retirement system issues the first monthly
annuity payment, a member applying for service retirement may,
after providing notice to the retirement system, reinstate
withdrawn contributions, make deposits for military service and
equivalent membership service, and receive service credit as
provided by this subtitle.
(f) An effective retirement date may not be changed after it
is established except by revocation of retirement under Section
824.005 [and retirement at a later date].
SECTION 7. Section 825.307(a), Government Code, is amended
to read as follows:
(a) The retirement system shall deposit in a member's
individual account in the member savings account:
(1) the amount of contributions to the retirement
system that is deducted from the member's compensation;
(2) the portion of a deposit made on or after
resumption of membership that represents the amount of retirement
benefits received;
(3) the portion of a deposit to reinstate service
credit previously canceled that represents the amount withdrawn or
refunded;
(4) the portion of a deposit to establish military
service credit required by Section 823.302(c);
(5) the portion of a deposit to establish USERRA
credit required by Section 823.304(c);
(6) the portion of a deposit to establish:
(A) equivalent membership service credit
required by Section 823.401(d), 823.402(e) [823.402(e)(1) or
(e)(2)], 823.403(d), [or] 823.404(c), or 823.406(b) or former
Section 823.405; or
(B) unreported service credit or compensation
required by Section 825.403(h); and
(7) [(6)] interest earned on money in the account as
provided by Subsections (b) and (c) and Section 825.313(c).
SECTION 8. 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 agrees to separately account for:
(A) the amounts transferred and the earnings on
the 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 9. 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 10. This Act takes effect September 1, 2017.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1664 passed the Senate on
April 19, 2017, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1664 passed the House on
May 24, 2017, by the following vote: Yeas 144, Nays 0, three
present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor