Texas 2023 - 88th Regular

Texas House Bill HB3636 Compare Versions

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1	1	88R10191 BDP-D
2	2	By: Goodwin H.B. No. 3636
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to a cost-of-living adjustment applicable to certain
8	8	benefits paid by the Teacher Retirement System of Texas and a study
9	9	on the feasibility of providing annual adjustments and an optional
10	10	cash balance benefit under the system.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Subchapter H, Chapter 824, Government Code, is
13	13	amended by adding Section 824.703 to read as follows:
14	14	Sec. 824.703. ADDITIONAL COST-OF-LIVING ADJUSTMENT.
15	15	(a) Notwithstanding Section 824.702 and subject to Section
16	16	821.006, the retirement system shall make a one-time cost-of-living
17	17	adjustment payable to annuitants receiving a monthly death or
18	18	retirement benefit annuity, as provided by this section.
19	19	(b) Subject to Subsections (c) and (d), to be eligible for
20	20	the adjustment, a person must be, on the effective date of the
21	21	adjustment and disregarding any forfeiture of benefits under
22	22	Section 824.601, an annuitant eligible to receive:
23	23	(1) a standard service or disability retirement
24	24	annuity payment;
25	25	(2) an optional service or disability retirement
26	26	annuity payment as either a retiree or beneficiary;
27	27	(3) an annuity payment under Section 824.402(a)(3) or
28	28	(4);
29	29	(4) an annuity payment under Section 824.502; or
30	30	(5) an alternate payee annuity payment under Section
31	31	804.005.
32	32	(c) If the annuitant:
33	33	(1) is a retiree or is a beneficiary under an optional
34	34	retirement payment plan, to be eligible for the adjustment under
35	35	this section:
36	36	(A) the annuitant must be living on the effective
37	37	date of the adjustment; and
38	38	(B) the effective date of the retirement of the
39	39	member of the retirement system must have been on or before August
40	40	31, 2020;
41	41	(2) is a beneficiary under Section 824.402(a)(3) or
42	42	(4) or 824.502, to be eligible for the adjustment:
43	43	(A) the annuitant must be living on the effective
44	44	date of the adjustment; and
45	45	(B) the date of death of the member of the
46	46	retirement system must have been on or before August 31, 2020; or
47	47	(3) is an alternate payee under Section 804.005, the
48	48	annuitant is eligible for the adjustment only if the effective date
49	49	of the election to receive the annuity payment was on or before
50	50	August 31, 2020.
51	51	(d) An adjustment made under this section does not apply to
52	52	payments under:
53	53	(1) Section 824.203(d), relating to retirees who
54	54	receive a standard service retirement annuity in an amount fixed by
55	55	statute;
56	56	(2) Section 824.304(a), relating to disability
57	57	retirees with less than 10 years of service credit;
58	58	(3) Section 824.304(b)(2), relating to disability
59	59	retirees who receive a disability annuity in an amount fixed by
60	60	statute;
61	61	(4) Section 824.404(a), relating to active member
62	62	survivor beneficiaries who receive a survivor annuity in an amount
63	63	fixed by statute;
64	64	(5) Section 824.501(a), relating to retiree survivor
65	65	beneficiaries who receive a survivor annuity in an amount fixed by
66	66	statute; or
67	67	(6) Section 824.804(b), relating to participants in
68	68	the deferred retirement option plan with regard to payments from
69	69	their deferred retirement option plan accounts.
70	70	(e) An adjustment under this section:
71	71	(1) must be made beginning with an annuity payable for
72	72	the month of September 2023; and
73	73	(2) is limited to an amount equal to six percent of the
74	74	monthly benefit subject to the increase.
75	75	(f) The board of trustees shall determine the eligibility
76	76	for and the amount of any adjustment in monthly annuities in
77	77	accordance with this section.
78	78	SECTION 2. (a) In this section, "retirement system" means
79	79	Teacher Retirement System of Texas.
80	80	(b) The State Pension Review Board shall conduct a study on
81	81	the feasibility of the retirement system:
82	82	(1) providing an annual cost-of-living adjustment to
83	83	annuitants receiving a monthly death or retirement benefit annuity
84	84	under Chapter 824, Government Code; and
85	85	(2) offering members of the retirement system a choice
86	86	of continuing to receive benefits under the existing defined
87	87	benefit plan under an analysis that assumes a rate of return of six
88	88	percent or a cash balance benefit plan under an analysis that
89	89	assumes adoption of a cash balance benefit plan that is similar in
90	90	design and cost structure to the cash balance benefit plan
91	91	established under Chapter 820, Government Code, except that the
92	92	State Pension Review Board should evaluate the difference between
93	93	offering a cash balance benefit plan that provides a retirement
94	94	eligibility age of 62 and a plan that provides a retirement
95	95	eligibility age of 67.
96	96	(c) In conducting the study, the State Pension Review Board
97	97	shall:
98	98	(1) assume the annual state contribution rate will
99	99	increase over specific periods of time, including periods of 4
100	100	years, 8 years, 12 years, and 16 years, in an amount sufficient to
101	101	pre-fund the amount necessary to provide the annual cost-of-living
102	102	adjustments;
103	103	(2) assume the annual cost-of-living adjustment will
104	104	be the lesser of:
105	105	(A) a percentage rate equal to the percentage
106	106	increase, if any, during the preceding state fiscal year in the
107	107	Consumer Price Index that is used by the comptroller of public
108	108	accounts; or
109	109	(B) three percent;
110	110	(3) determine the additional state and employee
111	111	contribution rates necessary to provide:
112	112	(A) an annual cost-of-living adjustment for
113	113	retirees, including retirees who have resumed employment with a
114	114	Texas public educational institution, as described by Section
115	115	824.601(c), Government Code;
116	116	(B) an opt-in cost-of-living adjustment for
117	117	retirees, including retirees who have resumed employment with a
118	118	Texas public educational institution, as described by Section
119	119	824.601(c), Government Code;
120	120	(C) a transitional system developed by the
121	121	retirement system under which:
122	122	(i) current and future annuitants of the
123	123	retirement system automatically receive cost-of-living adjustments
124	124	that have been pre-funded by the state; and
125	125	(ii) current members or annuitants of the
126	126	retirement system can opt in to or opt out of the transitional
127	127	system with the understanding that opting out allows the member or
128	128	annuitant to remain under the current system with no guaranteed
129	129	cost-of-living adjustments; and
130	130	(D) any other alternative benefit adjustment
131	131	that the retirement system determines is feasible to provide the
132	132	best retirement benefits to annuitants;
133	133	(4) when calculating the state contribution rates
134	134	under this subsection, show what the cost would be over the periods
135	135	of time specified in Subdivision (1) using varying assumed rates of
136	136	return, including 5.5, 6, 6.5, and 7 percent;
137	137	(5) when calculating contribution rate increases,
138	138	show how much the employer and member contributions would need to
139	139	increase if the state contribution rate is limited to 10 percent;
140	140	(6) explore various cost-sharing options, including
141	141	at least one option that does not require members of the retirement
142	142	system to contribute any additional contributions necessary to
143	143	pre-fund amounts needed to provide annual cost-of-living
144	144	adjustments; and
145	145	(7) solicit input and feedback from the public and
146	146	other interested persons.
147	147	(d) Not later than December 31, 2024, the State Pension
148	148	Review Board shall submit to the legislature a written report on the
149	149	results of the study and any recommendations for legislative
150	150	action.
151	151	(e) This section expires January 1, 2025.
152	152	SECTION 3. This Act takes effect immediately if it receives
153	153	a vote of two-thirds of all the members elected to each house, as
154	154	provided by Section 39, Article III, Texas Constitution. If this
155	155	Act does not receive the vote necessary for immediate effect, this
156	156	Act takes effect September 1, 2023.