88R19531 JCG-F
By: Huffman, et al. S.B. No. 10
(Bonnen, Burns, Capriglione, et al.)
Substitute the following for S.B. No. 10: No.
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 A, Chapter 821, Government Code, is
amended by adding Section 821.0065 to read as follows:
Sec. 821.0065. ACTUARIAL SOUNDNESS FOR BENEFIT
ENHANCEMENTS. For purposes of Section 67-a, Article XVI, Texas
Constitution, the retirement system is actuarially sound if, based
on the most recent actuarial valuation of the system, the amount of
contributions and actuarially determined payments to the system are
sufficient to cover the normal cost of the system and to amortize
the unfunded actuarial accrued liability of the system within 30
years.
SECTION 2. 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)
For each fiscal year that begins on or after September 1, 2028, the
retirement system shall make a cost-of-living adjustment payable to
eligible annuitants receiving a retirement or death benefit annuity
payment only if the retirement system's average rate of return on
the investment of the system's assets 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 provided by Subsection (a) is an amount
equal to the annuitant's monthly annuity payment for the month the
adjustment is effective multiplied by a percentage rate that is
computed by:
(1) determining the average rate of return on the
investment of the system's assets during the preceding five fiscal
years, expressed as a percentage rate;
(2) subtracting five percentage points from the
percentage rate determined under Subdivision (1);
(3) multiplying the resulting difference under
Subdivision (2) by 50 percent; and
(4) rounding 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
annuity payment.
(d) Except as provided by Subsection (f), a person is
eligible to receive a cost-of-living adjustment under this section
if the person is, on the effective date of the adjustment 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;
(B) an optional service or disability retirement
annuity payment as either a retiree or beneficiary;
(C) an annuity payment under Section
824.402(a)(3) or (4);
(D) an annuity payment under Section 824.502; or
(E) an alternate payee annuity payment under
Section 804.005;
(2) became eligible to receive the annuity payment
described by Subdivision (1) at least three years before the first
day of the fiscal year in which the adjustment is made; and
(3) is living on the effective date of the adjustment.
(e) Notwithstanding Subsection (d)(2), a beneficiary
eligible to receive an optional service or disability retirement
annuity payment on the effective date of a cost-of-living
adjustment under this section is eligible to receive the adjustment
if:
(1) the beneficiary meets the requirements of
Subsections (d)(1) and (d)(3); and
(2) either the beneficiary or the retiree who selected
the optional service or disability retirement annuity payment
became eligible to receive the annuity payment at least three years
before the first day of the fiscal year in which the adjustment is
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: JANUARY 2024. (a)
The retirement system shall make an additional 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 Subsection (c) and except as provided by
Subsection (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
service or disability 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 retirement system on whose service the annuity is
based 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 on whose service the annuity is based 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 monthly benefit
subject to the adjustment by the following percentage rate, as
applicable:
(1) for annuitants described by Subsection (c)(1):
(A) if the retiree's effective date of retirement
was before January 1, 2004, six percent;
(B) if the retiree's effective date of retirement
was on or after January 1, 2004, but before January 1, 2014, four
percent; and
(C) if the retiree's effective date of retirement
was on or after January 1, 2014, but before January 1, 2021, two
percent;
(2) for annuitants described by Subsection (c)(2):
(A) if the member's date of death was before
January 1, 2004, six percent;
(B) if the member's date of death was on or after
January 1, 2004, but before January 1, 2014, four percent; and
(C) if the member's date of death was on or after
January 1, 2014, but before January 1, 2021, two percent; and
(3) for annuitants described by Subsection (c)(3):
(A) if the annuitant's date of election was
before January 1, 2004, six percent;
(B) if the annuitant's date of election was on or
after January 1, 2004, but before January 1, 2014, four percent; and
(C) if the annuitant's date of election was on or
after January 1, 2014, but before January 1, 2021, 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 3. 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 January [September] 1, 2024 [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 January
[September] 1, 2024 [2023], the lesser of:
(A) nine [8.25] percent of the member's annual
compensation; or
(B) a percentage of the member's annual
compensation equal to nine [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 4. 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, nine [8.25] percent of the
aggregate annual compensation of all members of the retirement
system during that fiscal year.
SECTION 5. Subchapter E, Chapter 825, Government Code, is
amended by adding Section 825.4042 to read as follows:
Sec. 825.4042. ACTUARIALLY DETERMINED 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 section expires September 1, 2055.
SECTION 6. (a) Subject to Subsections (e) and (i) of this
section and Section 821.006, Government Code, and except as
provided by Subsection (g) of this section, 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 equal to
$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) 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, an annuitant who is:
(1) at least 70 years of age; and
(2) eligible to receive:
(A) a standard retirement annuity payment;
(B) an optional retirement annuity payment as
either a retiree or beneficiary;
(C) a life annuity payment under Section
824.402(a)(4), Government Code;
(D) an annuity for a guaranteed period of 60
months under Section 824.402(a)(3), Government Code; or
(E) 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
supplemental payment. The amount appropriated by the legislature
to provide the supplemental payment must be in addition to the
amount the state is required to contribute to the retirement system
under Section 825.404, Government Code, as amended by this Act.
(j) If the board of trustees of the Teacher Retirement
System of Texas determines that the appropriation provided by the
legislature for the one-time supplemental payment of benefits under
this section is different from the amount required to issue the
supplemental payment, 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 supplemental
payment. 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, as amended by this
Act.
SECTION 7. This Act takes effect January 1, 2024, but only
if the constitutional amendment proposed by the 88th Legislature,
Regular Session, 2023, authorizing the legislature to provide
cost-of-living adjustments or other benefit enhancements to
eligible annuitants of the Teacher Retirement System of Texas and
providing a one-time transfer of funds for contributions,
actuarially determined payments, and benefit enhancements is
approved by the voters. If that proposed constitutional amendment
is not approved by the voters, this Act has no effect.