By: Bonnen H.B. No. 600
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. Subchapter H, Chapter 824, Government Code, is
amended by adding Sections 824.703 and 824.704 to read as follows:
Sec. 824.703. GAIN SHARING COST-OF-LIVING ADJUSTMENT. (a)
Beginning with the fiscal year that begins on September 1, 2028 and
for each subsequent fiscal year, the retirement system shall make a
cost-of-living adjustment payable to eligible annuitants receiving
a retirement or death benefit annuity payment under this section
only if the retirement system's average return on the investment of
system's cash and securities during the preceding five fiscal
years, expressed as a percentage rate, is equal to or exceeds seven
percent.
(b) Subject to Subsection (c), the amount of the
cost-of-living adjustment that the retirement system shall provide
to an annuitant during a fiscal year if required to provide an
adjustment under Subsection (a) is an amount equal to the
annuitant's monthly annuity payment the month the adjustment is
effective multiplied by a percentage equal to:
(1) Five subtracted from the average rate of return on
investment during the preceding five fiscal years as described by
subsection (a); and
(2) the difference determined in subdivision (1)
multiplied by 50 percent and rounded down to the nearest one-tenth
of a percent.
(c) The amount of the cost-of-living adjustment provided by
Subsection (a) may not exceed two percent of an annuitant's monthly
benefit.
(d) Subject to Subsections (e) and (f), a person is eligible
to receive a cost-of-living adjustment under this section if the
person is, in the month in which the adjustment is effective and
disregarding any forfeiture of benefits under Section 824.601, an
annuitant that:
(1) is eligible to receive:
(A) a standard service or disability retirement
annuity payment;
(2) an optional service or disability retirement
annuity payment as either a retiree or beneficiary;
(3) an annuity payment under Section
824.402(a)(3) or (4);
(4) an annuity payment under Section 824.502; or
(5) an alternate payee annuity payment under
Section 804.005;
(2) became entitled to receive annuity payments at
least three years prior to the beginning of the fiscal year in which
the cost-of-living adjustment is to be made; and
(3) is alive in the month in which the cost-of-living
adjustment is effective.
(e) A beneficiary receiving an optional service or
disability retirement annuity payment is eligible to receive a
cost-of-living adjustment under Subsection (a) if the beneficiary
meets the requirements of Subsections (d)(1) and (d)(3) and either
the beneficiary or the retiree who selected to optional service or
disability retirement plan became entitled to receive annuity
payments at least three years prior to the beginning of the fiscal
year in which the cost-of-living adjustment is to be made.
(f) An adjustment made under this section does not apply to
payments under:
(1) Section 824.203(d), relating to retirees who
receive a standard service retirement annuity in an amount fixed by
statute;
(2) Section 824.304(a), relating to disability
retirees with less than 10 years of service credit;
(3) Section 824.304(b)(2), relating to disability
retirees who receive a disability annuity in an amount fixed by
statute;
(4) Section 824.404(a), relating to active member
survivor beneficiaries who receive a survivor annuity in an amount
fixed by statute;
(5) Section 824.501(a), relating to retiree survivor
beneficiaries who receive a survivor annuity in an amount fixed by
statute; or
(6) Section 824.804(b), relating to participants in
the deferred retirement option plan with regard to payments from
their deferred retirement option plan accounts.
Sec. 824.704. COST-OF-LIVING ADJUSTMENT. (a) The
retirement system shall make a one-time cost-of-living adjustment
payable to annuitants receiving a monthly death or retirement
benefit annuity, as provided by this section.
(b) Subject to Subsections (c) and (d), to be eligible for
the adjustment, a person must be, on the effective date of the
adjustment and disregarding any forfeiture of benefits under
Section 824.601, an annuitant eligible to receive:
(1) a standard service or disability retirement
annuity payment;
(2) an optional service or disability retirement
annuity payment as either a retiree or beneficiary;
(3) an annuity payment under Section 824.402(a)(3) or
(4);
(4) an annuity payment under Section 824.502; or
(5) an alternate payee annuity payment under Section
804.005.
(c) If the annuitant:
(1) is a retiree, or is a beneficiary under an optional
retirement payment plan, to be eligible for the adjustment under
this section:
(A) the annuitant must be living on the effective
date of the adjustment; and
(B) the effective date of the retirement of the
member of the Teacher Retirement System of Texas must have been on
or before December 31, 2020;
(2) is a beneficiary under Section 824.402(a)(3) or
(4) or 824.502, to be eligible for the adjustment:
(A) the annuitant must be living on the effective
date of the adjustment; and
(B) the date of death of the member of the
retirement system must have been on or before December 31, 2020; or
(3) is an alternate payee under Section 804.005, the
annuitant is eligible for the adjustment only if the effective date
of the election to receive the annuity payment was on or before
December 31, 2020.
(d) An adjustment made under this section does not apply to
payments under:
(1) Section 824.203(d), relating to retirees who
receive a standard service retirement annuity in an amount fixed by
statute;
(2) Section 824.304(a), relating to disability
retirees with less than 10 years of service credit;
(3) Section 824.304(b)(2), relating to disability
retirees who receive a disability annuity in an amount fixed by
statute;
(4) Section 824.404(a), relating to active member
survivor beneficiaries who receive a survivor annuity in an amount
fixed by statute;
(5) Section 824.501(a), relating to retiree survivor
beneficiaries who receive a survivor annuity in an amount fixed by
statute; or
(6) Section 824.804(b), relating to participants in
the deferred retirement option plan with regard to payments from
their deferred retirement option plan accounts.
(e) An adjustment under this section must be made beginning
with an annuity payable for the month of January 2024.
(f) The amount of the adjustment provided under this section
is calculated by multiplying the amount of the first monthly
benefit subject to the adjustment by a percentage determined as
follows:
(1) For annuitants described by Subsection (c)(1):
(A) If the retiree's effective date of retirement
was before January 1, 2004, an adjustment of six percent;
(B) If the retiree's effective date of retirement
was on or after January 1, 2004, but before January 1, 2014, an
adjustment of four percent; and
(C) If the retiree's effective date of retirement
was on or after January 1, 2014, but before January 1, 2021, an
adjustment of two percent;
(2) For annuitants described by Subsection (c)(2):
(A) If the member's date of death was before
January 1, 2004, an adjustment of six percent;
(B) If the member's date of death was on or after
January 1, 2004, but before January 1, 2014, an adjustment of four
percent; and
(C) If the member's date of death was on or after
January 1, 2014, but before January 1, 2021, an adjustment of two
percent; and
(3) For annuitants described by Subsection (c)(3):
(A) If the annuitant's date of election was
before January 1, 2004, an adjustment of six percent;
(B) If the annuitant's date of election was on or
after January 1, 2004, but before January 1, 2014, an adjustment of
four percent; and
(C) If the annuitant's date of election was on or
after January 1, 2014, but before January 1, 2021, an adjustment of
two percent.
(g) The board of trustees shall determine the eligibility
for and the amount of any adjustment in monthly annuities in
accordance with this section.
SECTION 2. Section 825.402, Government Code, is amended to
read as follows:
Sec. 825.402. RATE OF MEMBER CONTRIBUTIONS. The rate of
contributions for each member of the retirement system is:
(1) five percent of the member's annual compensation
or $180, whichever is less, for service rendered after August 31,
1937, and before September 1, 1957;
(2) six percent of the first $8,400 of the member's
annual compensation for service rendered after August 31, 1957, and
before September 1, 1969;
(3) six percent of the member's annual compensation
for service rendered after August 31, 1969, and before the first day
of the 1977-78 school year;
(4) 6.65 percent of the member's annual compensation
for service rendered after the last day of the period described by
Subdivision (3) and before September 1, 1985;
(5) 6.4 percent of the member's annual compensation
for service rendered after August 31, 1985, and before September 1,
2014;
(6) 6.7 percent of the member's annual compensation
for service rendered after August 31, 2014, and before September 1,
2015;
(7) 7.2 percent of the member's annual compensation
for service rendered after August 31, 2015, and before September 1,
2016;
(8) 7.7 percent of the member's annual compensation
for service rendered after August 31, 2016, and before September 1,
2017;
(9) for compensation paid on or after September 1,
2017, and before September 1, 2019, the lesser of:
(A) 7.7 percent of the member's annual
compensation; or
(B) a percentage of the member's annual
compensation equal to 7.7 percent reduced by one-tenth of one
percent for each one-tenth of one percent that the state
contribution rate for the fiscal year to which the compensation
relates is less than the state contribution rate established for
the 2015 fiscal year;
(10) for compensation paid on or after September 1,
2019, and before September 1, 2021, the lesser of:
(A) 7.7 percent of the member's annual
compensation; or
(B) a percentage of the member's annual
compensation equal to 7.7 percent reduced by one-tenth of one
percent for each one-tenth of one percent that the state
contribution rate for the fiscal year to which the compensation
relates is less than the state contribution rate established for
that fiscal year under Section 825.404(a-2);
(11) for compensation paid on or after September 1,
2021, and before September 1, 2023, the lesser of:
(A) eight percent of the member's annual
compensation; or
(B) a percentage of the member's annual
compensation equal to eight percent reduced by one-tenth of one
percent for each one-tenth of one percent that the state
contribution rate for the fiscal year to which the compensation
relates is less than the state contribution rate established for
that fiscal year under Section 825.404(a-2); and
(12) for compensation paid on or after September 1,
2023, the lesser of:
(A) 9.00 [8.25] percent of the member's annual
compensation; or
(B) a percentage of the member's annual
compensation equal to 9.00 [8.25] percent reduced by one-tenth of
one percent for each one-tenth of one percent that the state
contribution rate for the fiscal year to which the compensation
relates is less than the state contribution rate established for
that fiscal year under Section 825.404(a-2).
SECTION 3. Section 825.404(a-2), Government Code, is
amended to read as follows:
(a-2) The state contribution required by Subsection (a) is:
(1) for the fiscal years beginning on September 1,
2019, and September 1, 2020, 7.5 percent of the aggregate annual
compensation of all members of the retirement system during the
applicable fiscal year;
(2) for the fiscal year beginning on September 1,
2021, 7.75 percent of the aggregate annual compensation of all
members of the retirement system during that fiscal year;
(3) for the fiscal year beginning on September 1,
2022, eight percent of the aggregate annual compensation of all
members of the retirement system during that fiscal year; and
(4) for the fiscal year beginning on September 1,
2023, and each subsequent fiscal year, 9.00 [8.25] percent of the
aggregate annual compensation of all members of the retirement
system during that fiscal year.
SECTION 4. Subchapter E, Chapter 825, Government Code, is
amended by adding Section 825.4041 to read as follows:
Sec. 825.4041. LEGACY PAYMENTS. (a) In addition to the
state contributions required by this subtitle, each fiscal year the
state shall make an actuarially determined payment in the amount
necessary to amortize the system's unfunded actuarial liabilities
by not later than the fiscal year ending August 31, 2054.
(b) Before each regular legislative session, the retirement
system shall provide the Legislative Budget Board with the amount
necessary to make the actuarially determined payment required under
Subsection (a). The director of the Legislative Budget Board,
under the direction of the Legislative Budget Board, shall include
that payment in the general appropriations bill prepared for
introduction at each regular legislative session under Section
322.008. This subsection expires September 1, 2055.
SECTION 5. (a) Subject to Subsection (i) of this section
and Section 821.006, Government Code, the Teacher Retirement System
of Texas shall make a one-time supplemental payment of a retirement
or death benefit, as provided by this section.
(b) The supplemental payment is payable not later than
February 2024 and, to the extent practicable, on a date or dates
that coincide with the regular annuity payment payable to each
eligible annuitant.
(c) The amount of the supplemental payment is $5,000.
(d) The supplemental payment is payable without regard to
any forfeiture of benefits under Section 824.601, Government Code.
The Teacher Retirement System of Texas shall make applicable tax
withholding and other legally required deductions before
disbursing the supplemental payment. A supplemental payment under
this section is in addition to and not in lieu of the regular
monthly annuity payment to which the eligible annuitant is
otherwise entitled.
(e) Subject to Subsection (f) of this section, to be
eligible for the supplemental payment, a person must be, for the
calendar month immediately prior to the calendar month in which the
Teacher Retirement System of Texas issues the one-time supplemental
payment in accordance with Subsection (b) of this section, and
disregarding any forfeiture of benefits under Section 824.601,
Government Code, an annuitant who is at least 70 years of age and
eligible to receive:
(1) a standard retirement annuity payment;
(2) an optional retirement annuity payment as either a
retiree or beneficiary;
(3) a life annuity payment under Section
824.402(a)(4), Government Code;
(4) an annuity for a guaranteed period of 60 months
under Section 824.402(a)(3), Government Code; or
(5) an alternate payee annuity payment under Section
804.005, Government Code.
(f) The supplemental payment is in addition to the
guaranteed number of payments under Section 824.204(c)(3) or (4),
Section 824.308(c)(3) or (4), or Section 824.402(a)(3), Government
Code, and may not be counted as one of the guaranteed monthly
payments.
(g) The supplemental payment does not apply to payments
under:
(1) Section 824.304(a), Government Code, relating to
disability retirees with less than 10 years of service credit;
(2) Section 824.804(b), Government Code, relating to
participants in the deferred retirement option plan with regard to
payments from their deferred retirement option plan accounts;
(3) Section 824.501(a), Government Code, relating to
retiree survivor beneficiaries who receive a survivor annuity in an
amount fixed by statute; or
(4) Section 824.404(a), Government Code, relating to
active member survivor beneficiaries who receive a survivor annuity
in an amount fixed by statute.
(h) The board of trustees of the Teacher Retirement System
of Texas shall determine the eligibility for and the amount and
timing of a supplemental payment and the manner in which the payment
is made.
(i) The Teacher Retirement System of Texas is required to
make a one-time supplemental payment of benefits under this section
only if the board of trustees of the Teacher Retirement System of
Texas finds that the legislature appropriated money to the
retirement system in an amount sufficient to provide the payment.
The amount appropriated by the legislature to provide the payment
must be in addition to the amount the state is required to
contribute to the retirement system under Section 825.404,
Government Code. If the board of trustees of the Teacher Retirement
System of Texas finds that the retirement system did not receive the
full amount appropriated by the legislature to provide a one-time
supplemental payment of benefits under this section, the retirement
system may not make the payment.
(j) If the board of trustees of the Teacher Retirement
System determines that the appropriation provided by the
legislature for the one-time supplemental payment of benefits is
different from the amount required to issue the one-time
supplemental payment of benefits under this section, the
comptroller, after the end of the fiscal year, shall make
adjustments in the teacher retirement fund and the general revenue
fund so that the total transfers during the year equal the total
amount of the funds required for the one-time supplemental payment
of benefits. This transfer of funds is in addition to and separate
from the amount the state is required to contribute to the
retirement system under Section 825.404, Government Code.
SECTION 7. Section 824.702, Government Code, is repealed.
SECTION 8. This Act takes effect September 1, 2023, but only
if the constitutional amendment proposed by the 88th Legislature,
Regular Session, 2023, authorizing the legislature to provide
one-time or ongoing benefit enhancements to eligible annuitants of
the Teacher Retirement System of Texas, including a one-time
transfer of funds for that purpose, is approved by the voters. If
that proposed constitutional amendment is not approved by the
voters, this Act has no effect.