By: Lucio, et al. S.B. No. 706
(In the Senate - Filed February 26, 2021; March 11, 2021,
read first time and referred to Committee on Finance;
April 13, 2021, reported favorably by the following vote: Yeas 15,
Nays 0; April 13, 2021, sent to printer.)
Click here to see the committee vote
A BILL TO BE ENTITLED
AN ACT
relating to the continuation and functions of the Teacher
Retirement System of Texas.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 824.002(c), Government Code, is amended
to read as follows:
(c) For the purposes of this section, a member's employment
in a position covered by the retirement system does not end if the
member is on leave of absence or has a contract for future
employment in a public school, other than a contract for employment
that would, if the retiring member and the employer were to comply
with all procedural requirements, qualify under Section 824.602 for
an exception to a reduction or [the] loss of monthly benefits
required by Section 824.601.
SECTION 2. Section 824.2031(b), Government Code, is amended
to read as follows:
(b) A determination under this section shall be founded on
the information in the most recent report of an investment
practices and performance evaluation [audit] conducted under
Section 802.109 [825.512] and the application of that information
to:
(1) the present amortization period for liabilities of
the retirement system;
(2) the rate of return on retirement system
investments over and above the rate of inflation of the investment
portfolio as a whole, of the portion of the investment portfolio
entrusted to private investment entities, and of the portion of the
investment portfolio entrusted to investment officers who are
employees of the retirement system;
(3) economic projections of market conditions and
future investment rates of return as reflected in the comptroller's
most recent economic forecast and revenue estimate;
(4) the costs, including changes in the amortization
period for liabilities of the retirement system, of providing
cost-of-living or other increases in benefits to current
annuitants; and
(5) an evaluation of the diversity of retirement
system investments and whether the portfolio provides low-risk,
long-term growth.
SECTION 3. The heading to Subchapter G, Chapter 824,
Government Code, is amended to read as follows:
SUBCHAPTER G. REDUCTION OR LOSS OF BENEFITS ON RESUMPTION OF
SERVICE
SECTION 4. The heading to Section 824.601, Government Code,
is amended to read as follows:
Sec. 824.601. REDUCTION OR LOSS OF MONTHLY BENEFITS.
SECTION 5. Section 824.601, Government Code, is amended by
amending Subsections (b) and (e) and adding Subsections (b-3) and
(b-4) to read as follows:
(b) Except as provided by Subsection (b-1), (b-3), or (b-4),
or Section 824.602 and subject to Subsection (b-2), during [a
retiree is not entitled to service or disability retirement benefit
payments, as applicable, for] any month in which a [the] retiree is
employed in any position by a Texas public educational institution,
the retiree's entitlement to service or disability retirement
benefit payments for that month is reduced by an amount equal to the
lesser of:
(1) the retiree's benefit payment for that month; or
(2) the total compensation earned by the retiree for
the employment during that month:
(A) as reported by the retiree's employer; or
(B) if not reported, verified in a manner
prescribed by the retirement system.
(b-3) If the total compensation earned by a retiree is not
reported or verified under Subsection (b)(2), the retiree's
entitlement to service or disability retirement benefit payments
for that month is reduced by an amount equal to the retiree's
benefit payment for that month.
(b-4) A retiree under Section 824.302 who is employed in any
position by a Texas public educational institution for more than 90
days in a school year is not entitled to disability retirement
benefit payments for the months the retiree was employed by the
institution unless the retiree qualifies for the exception
described by Section 824.602(g).
(e) A reduction or loss [Loss] of benefits under this
section does not extend any period of guaranteed benefits elected
pursuant to Section 824.204.
SECTION 6. Sections 824.602(a), (g), and (k), Government
Code, are amended to read as follows:
(a) Subject to Section 825.506, the retirement system may
not, under Section 824.601, reduce or withhold a monthly benefit
payment if the retiree is employed in a Texas public educational
institution:
(1) as a substitute only with pay not more than the
daily rate of substitute pay established by the employer and, if the
retiree is a disability retiree, the employment has not exceeded a
total of 90 days in the school year;
(2) in a position, other than as a substitute, on no
more than a one-half time basis for the month;
(3) in one or more positions on as much as a full-time
basis, if the retiree has been separated from service with all Texas
public educational institutions for at least 12 full consecutive
months after the retiree's effective date of retirement; or
(4) in a position, other than as a substitute, on no
more than a one-half time basis for no more than 90 days in the
school year, if the retiree is a disability retiree.
(g) The exceptions provided by Subsections (a)(2) and
(a)(3) do not apply to disability retirees. The retirement system
nevertheless may not withhold a monthly benefit payment under
Section 824.601 if:
(1) a disability retiree is employed in a Texas public
educational institution in a position, other than as a substitute,
for a period not to exceed three consecutive months;
(2) the work occurs in a period, designated by the
disability retiree, of no more than three consecutive months;
(3) the disability retiree executes on a form and at a
time prescribed by the retirement system a written election to have
this exception apply on a one-time trial basis in determining
whether benefits are to be suspended for the months of employment
after retirement and in determining whether a disability retiree is
no longer mentally or physically incapacitated for the performance
of duty; and
(4) the disability retiree has not previously elected
to avoid a reduction or loss of monthly benefits under this
subsection.
(k) The actuary designated by the board of trustees shall,
in investigating the experience of the members of the system, note
any significant increase in early age retirements and determine the
extent to which any increase has been caused by the exception to a
reduction or loss of benefits for employment after retirement
provided by Subsection (a)(3). If the actuary certifies in writing
to the retirement system that sound actuarial funding of the
retirement system's benefits is endangered by continuation of this
exception, the board of trustees may determine that no further
elections of the exception will be accepted from retirees, other
than from those who have previously relied on the exception in
retiring under this subtitle. A retiree may be considered to have
relied on this exception only if retirement occurred on or after May
31, 1985, but before the date the board of trustees acknowledges
receipt of such certification and if the retiree has first elected
to receive benefits under the exception not later than two years
after the retiree's effective date of retirement.
SECTION 7. Section 824.601(f), Government Code, is
redesignated as Section 824.604, Government Code, and amended to
read as follows:
Sec. 824.604. RULES. [(f)] The board of trustees [system]
may adopt rules necessary for administering this subchapter.
SECTION 8. Section 825.0041, Government Code, is amended by
amending Subsection (b) and adding Subsection (d) to read as
follows:
(b) The [A] training program must provide the person with
information regarding:
(1) the law governing [legislation that created the]
retirement system operations; [and the system's]
(2) the programs, functions, rules, and budget of the
system;
(3) the scope of and limitations on the rulemaking
authority of the board of trustees;
(4) [(2)] the results of the most recent formal audit
of the system;
(5) [(3)] the requirements of:
(A) laws relating to open meetings, public
information, administrative procedure, and disclosing
conflicts-of-interest [conflicts of interest]; and
(B) other laws applicable to members of a state
policy-making body in performing their duties; and
(6) [(4)] any applicable ethics policies adopted by
the system or the Texas Ethics Commission.
(d) The executive director of the retirement system shall
create a training manual that includes the information required by
Subsection (b). The executive director shall distribute a copy of
the training manual annually to each member of the board of
trustees. Each member of the board of trustees shall sign and
submit to the executive director a statement acknowledging that the
member received and has reviewed the training manual.
SECTION 9. Section 825.006, Government Code, is amended to
read as follows:
Sec. 825.006. SUNSET PROVISION. The board of trustees of
the Teacher Retirement System of Texas is subject to review under
Chapter 325 (Texas Sunset Act), but is not abolished under that
chapter. The board shall be reviewed during the period in which
state agencies abolished in 2033 [2021], and every 12th year after
that year, are reviewed.
SECTION 10. Subchapter C, Chapter 825, Government Code, is
amended by adding Section 825.216 to read as follows:
Sec. 825.216. OMBUDSMAN. (a) Subject to Section 825.506,
the board of trustees shall designate an ombudsman within the
retirement system to assist members by performing member protection
and advocacy functions, including:
(1) monitoring the system's interactions with members;
(2) receiving and reviewing complaints from members;
(3) taking appropriate action regarding complaints,
including conducting investigations of complaints or escalating or
reporting complaints to the board;
(4) informing a member and the board of the results of
the ombudsman's review or investigation of a member's complaint;
and
(5) recommending corrective actions to the board as
determined necessary by the ombudsman to resolve complaints.
(b) The ombudsman designated under this section shall
regularly submit a report to the board of trustees recommending
changes to the retirement system's operations that would benefit
members and increase opportunities for the members to participate
in the system's decisions.
SECTION 11. Section 825.308, Government Code, is amended to
read as follows:
Sec. 825.308. STATE CONTRIBUTION ACCOUNT. The retirement
system shall deposit in the state contribution account:
(1) all state contributions to the retirement system
required by Section 825.404;
(2) amounts from the interest account as provided by
Section 825.313(b)(2);
(3) retirement annuities, or that portion of
annuities, as applicable, waived or forfeited in accordance with
Section 824.601 or 824.004;
(4) fees collected under Section 825.403(h);
(5) fees and interest for reinstatement of service
credit or establishment of membership service credit as provided by
Section 823.501;
(6) the portion of a deposit required by Section
823.302 to establish military service credit that represents a fee;
and
(7) employer contributions required under Section
825.4092.
SECTION 12. Section 825.4041(f), Government Code, is
amended to read as follows:
(f) At the end of each school year, the retirement system
shall certify to the [commissioner of education and to the] state
auditor:
(1) the name of each employer that is an institution of
higher education and has failed to remit, within the period
required by Section 825.408, all payments required under this
section for the school year; and
(2) the amounts of the unpaid required payments.
SECTION 13. Section 825.405(f), Government Code, is amended
to read as follows:
(f) If the commissioner of education receives a
certification from the retirement system regarding unpaid
contributions [under Subsection (e)], the commissioner shall
direct the comptroller of public accounts to withhold the amount
certified, plus interest computed at the rate and in the manner
provided by Section 825.408, from the first state money payable to
the employer. The amount withheld shall be deposited to the credit
of the appropriate accounts of the retirement system.
SECTION 14. Section 825.502, Government Code, is amended by
amending Subsection (b) and adding Subsection (c) to read as
follows:
(b) If the member or the member's heirs cannot be found
after complying with the policy adopted under Subsection (c), the
member's accumulated contributions are forfeited to the retirement
system. The retirement system shall credit the amount forfeited to
the retired reserve account.
(c) The board of trustees shall adopt a policy requiring the
retirement system to make all reasonable efforts to locate and
notify a member or, if appropriate, the member's heirs of their
entitlement to a return of accumulated contributions under this
section. The policy must ensure that the:
(1) notice:
(A) provides information on how a member or the
member's heirs, as appropriate, may withdraw the accumulated
contributions, including information on how to effectuate a
withdrawal through an election to receive a direct rollover of the
contributions to an eligible retirement plan; and
(B) is initially sent to the member by certified
mail, return receipt requested, at the last known address of the
member according to the system's records; and
(2) procedure used to locate a member or the member's
heirs:
(A) requires, at a minimum, that the system
conduct Internet searches to determine a current and accurate
mailing address of the member or the member's heir and send a notice
that complies with Subdivision (1) to the member or the member's
heir, as applicable, by certified mail, return receipt requested;
and
(B) employs a matrix based on defined factors for
determining on a graduated scale the degree and type of additional
effort required, and those efforts must include:
(i) contacting the member's designated
beneficiary;
(ii) obtaining information from consumer
reporting agencies; and
(iii) using commercial locating services.
SECTION 15. Sections 825.511(a) and (c), Government Code,
are amended to read as follows:
(a) The retirement system shall maintain a system to
promptly and efficiently act on complaints filed with the
retirement system [that the system has authority to resolve]. The
retirement system shall maintain information about parties to the
complaint, the subject matter of the complaint, a summary of the
results of the review or investigation of the complaint, and its
disposition.
(c) The retirement system shall periodically notify the
complaint parties of the status of the complaint until final
disposition unless the notice would jeopardize an investigation.
SECTION 16. Section 825.521, Government Code, is amended to
read as follows:
Sec. 825.521. DEADLINE TO APPEAL [FINAL] ADMINISTRATIVE
DECISION. In adopting rules governing an [the] appeal authorized
by law or rule of a determination or decision of the retirement
system by the system's staff, including a final administrative
decision of the [retirement] system, the board of trustees shall
ensure that rules establishing deadlines for [the] filing the [of
an] appeal afford a member or retiree at least the same amount of
time to file the [an] appeal as the retirement system has to issue
the determination or [retirement system's] decision.
SECTION 17. The heading to Subchapter G, Chapter 825,
Government Code, is amended to read as follows:
SUBCHAPTER G. OUTREACH TO MEMBERS AND EMPLOYERS [MEMBER SERVICES]
SECTION 18. Section 825.601, Government Code, is amended to
read as follows:
Sec. 825.601. OUTREACH PLAN [POLICIES GOVERNING RETIREMENT
BENEFITS COUNSELING]. (a) The board of trustees shall develop and
adopt an outreach plan designed to assist each member of the system,
and as appropriate the members' employers, in effectively planning
for the member's retirement. The plan must require the retirement
system to:
(1) identify and implement ways to improve
communication between the system and the system's members and
employers;
(2) update and develop outreach materials and other
information distributed by the system, including handbooks,
brochures, presentations, and handouts, in a manner that complies
with Section 802.106(g);
(3) update and develop policies governing retirement
benefits counseling provided to members by the system, including[.
The] policies that [must]:
(A) subject to Section 825.602, ensure [(1)
address the manner in which] the [retirement] system makes group
and individual member retirement benefits counseling available
throughout the state;
[(2) identify the geographic regions of the state most
in need of retirement benefits counseling services and the manner
in which that need will be met;] and
(B) [(3)] clarify that the retirement system
does not provide financial or legal advice;
(4) provide at least annually to each member of the
system, regardless of whether the member is vested in the system, an
estimate of the member's retirement benefits;
(5) enhance employer training and establish an
Internet portal designed to assist employers to:
(A) satisfy applicable reporting requirements;
(B) provide general information to individual
members on:
(i) employment after retirement;
(ii) enrollment in health insurance
benefit plans; and
(iii) retirement benefits and retirement
planning; and
(C) facilitate other communications or exchanges
involving members and the retirement system; and
(6) design and implement methods for maintaining
up-to-date contact information for members and beneficiaries based
on best practices for outreach.
(b) In developing the outreach plan, the board of trustees
shall solicit input through surveys or other means from members of
the system, employers, and other stakeholders, including
appropriate advisory groups.
(c) Once every five years, the retirement system shall
review and update the outreach plan adopted under this section.
SECTION 19. Section 825.602(b), Government Code, is amended
to read as follows:
(b) The retirement system shall provide retirement benefits
counseling for individual members:
(1) in different geographic regions of this state,
including regions outside of Austin; and
(2) in person or by phone, at the election of the
member.
SECTION 20. Subchapter A, Chapter 1575, Insurance Code, is
amended by adding Section 1575.010 to read as follows:
Sec. 1575.010. INFORMATION REGARDING APPEALS. The trustee
shall develop and distribute informational materials to
individuals enrolled in a health benefit plan offered under the
group program regarding:
(1) the enrollee's right to appeal denial of an adverse
determination, as defined by Section 4201.002, to an independent
review organization;
(2) the procedures for appealing to an independent
review organization; and
(3) the assistance available from the trustee in
navigating the procedures for appeal.
SECTION 21. Section 1575.453, Insurance Code, is amended to
read as follows:
Sec. 1575.453. STUDY AND REPORT BY TRUSTEE. (a) The
trustee shall study the operation and administration of this
chapter, including:
(1) conducting surveys and preparing reports on
financing group coverages and health benefit plans available to
participants; [and]
(2) studying the experience and projected cost of
coverage; and
(3) reviewing the group coverages provided to and the
benefits and services being received by individuals covered under
this chapter.
(b) The trustee shall report annually to the legislature and
the department [at each regular session] on the operation and
administration of this chapter.
SECTION 22. Subchapter A, Chapter 1579, Insurance Code, is
amended by adding Section 1579.010 to read as follows:
Sec. 1579.010. INFORMATION REGARDING APPEALS. The trustee
shall develop and distribute informational materials to
individuals enrolled in a health coverage plan provided under this
chapter regarding:
(1) an enrollee's right to appeal denial of an adverse
determination, as defined by Section 4201.002, to an independent
review organization;
(2) the procedures for appealing to an independent
review organization; and
(3) the assistance available from the trustee in
navigating the procedures for appeal.
SECTION 23. Section 1579.106, Insurance Code, is amended by
amending Subsection (c) and adding Subsection (d) to read as
follows:
(c) Every 12 [six] months the trustee shall submit to the
comptroller and the Legislative Budget Board a report regarding any
cost savings achieved in the program through implementation of the
prior authorization requirement of this section. The report must
cover the previous 12-month [six-month] period.
(d) In the report under Subsection (c), the trustee:
(1) may include any cost savings achieved in the
program for coverage of prescribed drugs that are not included in
the categories listed in Subsection (b) for which prior
authorization is required by a health coverage plan provided under
this chapter; and
(2) considering cost and medical necessity, shall
identify any categories of prescribed drugs in addition to the
categories listed in Subsection (b) for which requiring prior
authorization could achieve cost savings.
SECTION 24. The following provisions are repealed:
(1) Section 802.109(j), Government Code;
(2) Section 825.405(e), Government Code;
(3) Section 825.512, Government Code; and
(4) Section 1575.452, Insurance Code.
SECTION 25. Sections 824.601 and 824.602, Government Code,
as amended by this Act, apply only to a benefit payment made by the
Teacher Retirement System of Texas that becomes payable on or after
the effective date of this Act.
SECTION 26. (a) Except as provided by Subsection (b) of
this section, Section 825.0041, Government Code, as amended by this
Act, applies to a member of the board of trustees of the Teacher
Retirement System of Texas appointed before, on, or after the
effective date of this Act.
(b) A member of the board of trustees of the Teacher
Retirement System of Texas who, before the effective date of this
Act, completed the training program required by Section 825.0041,
Government Code, as that law existed before the effective date of
this Act, is only required to complete additional training on the
subjects added by this Act to the training program required by
Section 825.0041, Government Code. A board member described by
this subsection may not vote, deliberate, or be counted as a member
in attendance at a meeting of the board held on or after December 1,
2021, until the member completes the additional training.
SECTION 27. As soon as practicable after the effective date
of this Act, but not later than December 1, 2021, the Teacher
Retirement System of Texas shall implement the outreach plan
required by Section 825.601, Government Code, as amended by this
Act.
SECTION 28. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2021.
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