89R5292 RDR-D
By: Guillen H.B. No. 4029
A BILL TO BE ENTITLED
AN ACT
relating to retirement benefits for certain law enforcement
officers who are members of the Teacher Retirement System of Texas,
including the creation of a supplemental program retirement fund.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 821.001, Government Code, is amended by
adding Subdivisions (17-a), (17-b), and (17-c) to read as follows:
(17-a) "Supplemental program member" means a member of
the retirement system who has, is earning, or is eligible to earn
credit for supplemental program service under Subchapter G, Chapter
823.
(17-b) "Supplemental program service" means
membership service that qualifies as supplemental program service
under Section 823.551.
(17-c) "Supplemental program service credit" means
the amount of supplemental program service credited to a member
under Subchapter G, Chapter 823.
SECTION 2. Section 822.005, Government Code, is amended by
adding Subsection (e) to read as follows:
(e) For a supplemental program member, the withdrawal of
accumulated contributions under Subsection (a) includes all of the
member's contributions made under Section 825.403.
SECTION 3. Chapter 823, Government Code, is amended by
adding Subchapter G to read as follows:
SUBCHAPTER G. SUPPLEMENTAL PROGRAM SERVICE CREDIT
Sec. 823.551. SUPPLEMENTAL PROGRAM SERVICE:
QUALIFICATIONS. Membership service qualifies as supplemental
program service if:
(1) the membership service was provided in a position
with an employer that required the member to hold an officer license
issued by the Texas Commission on Law Enforcement under Chapter
1701, Occupations Code; and
(2) the primary duty of the position was the
enforcement of the criminal or juvenile laws of this state.
Sec. 823.552. SUPPLEMENTAL PROGRAM SERVICE: BASIS OF
CREDIT. Supplemental program service credit is creditable as
provided by rule of the board of trustees or on a month-to-month
basis, whichever is greater.
SECTION 4. Subchapter C, Chapter 824, Government Code, is
amended by adding Section 824.2035 to read as follows:
Sec. 824.2035. SERVICE RETIREMENT BENEFITS FOR
SUPPLEMENTAL PROGRAM MEMBERS. (a) Notwithstanding Sections
824.202 and 824.203, a member who has at least 25 years of
supplemental program service credit is eligible to retire
regardless of age and receive a service retirement annuity in an
amount and to be funded as provided by this section.
(b) The service retirement annuity under this section is
payable in an amount computed on the basis of the member's average
annual compensation for the five years of service, whether or not
consecutive, in which the member received the highest annual
compensation, times the sum of the percentage factor used in the
computation of a standard service retirement annuity under Section
824.203 plus 0.5 percent.
(c) The service retirement annuity under this section is
based on retirement on or after the attainment of the normal
retirement age, which for purposes of this section is the earlier of
either the age of 57 or the age at which the sum of the member's age
and amount of service credit equals the number 80. The annuity of a
supplemental program member who retires before reaching the age of
57 under any eligibility criteria is actuarially reduced by five
percent for each year of difference between the member's age at
retirement and 57. The actuarial reduction described by this
section is in addition to any other actuarial reduction required by
law.
(d) A supplemental program member who retires before
attaining the age of 50 is entitled only to an annuity that is
actuarially reduced from the annuity available at the age of 50 to
the supplemental program member whose service credit annuity amount
is based on the sum of the member's age and amount of supplemental
program service credit and other service credit, and is not
entitled to have the annuity recalculated at normal retirement age.
The standard or reduced annuity under this section is payable from
appropriate accounts described by Section 825.306 and the
supplemental program retirement fund in a ratio determined by the
retirement system.
(e) Optional retirement annuities provided by Section
824.204 are available to a supplemental program member eligible to
receive a service retirement annuity under this section, but the
same optional plan and beneficiary must be selected for the portion
of the annuity payable from the supplemental program retirement
fund and the portion payable from appropriate accounts described by
Section 825.306.
(f) The amount payable from the supplemental program
retirement fund is reducible by the amount paid from appropriate
accounts described by Section 825.306 for supplemental program
service. The total combined amount of an annuity under this section
may not be less than the authorized benefit under Subsection (b)
subtracted by any amount necessary because of selection of an
optional annuity, because of retirement before the normal
retirement age, or as provided by Subsection (g).
(g) The service retirement annuity under this section may
not exceed 100 percent of the average compensation computed under
Subsection (b).
SECTION 5. Subchapter D, Chapter 824, Government Code, is
amended by adding Section 824.3045 to read as follows:
Sec. 824.3045. DISABILITY RETIREMENT BENEFITS FOR
SUPPLEMENTAL PROGRAM MEMBERS. (a) An annuity payable for a
disability resulting from a risk to which supplemental program
members are exposed because of the nature of the members' duties is
payable under the same terms and conditions that apply to other
disability retirement annuities under this subtitle, except that
the source and amount of the annuity are as provided by this
section.
(b) Except as provided by Subsection (c), a disability
retirement annuity under this section is an amount, but not more
than 100 percent, computed on the basis of the supplemental program
member's average annual compensation, times a percentage derived by
application of Section 824.2035(b).
(c) A disability retirement annuity under this section is
not reducible because of age and may not be less than 50 percent of
the supplemental program member's average annual compensation
regardless of the amount of service credited to the member.
(d) The portions of the annuity under this section payable
from the supplemental program retirement fund are the amount
remaining after deduction of any amount payable under Section
824.304, except the portion of an amount that exceeds the minimum
payments provided by Section 824.304 and that is made for service
other than supplemental program service and any amount by which an
annuity is increased under Subsection (e).
(e) If a retiring member or retiree under this section
presents evidence satisfactory to the retirement system that the
person's disability makes the person incapable of substantial
gainful activity solely because of the disability and is considered
a total disability under federal social security law, the
retirement system shall increase the person's disability
retirement annuity to 100 percent of the member's average annual
compensation.
(f) An annuity increase under Subsection (e) is not payable
before the first month following the month in which the
satisfactory evidence is received by the retirement system under
Subsection (e).
(g) For purposes of this section, "average annual
compensation" means:
(1) a member's average annual compensation for the
three highest years of compensation; or
(2) a member's average annual compensation if a member
retires with less than three years of service.
SECTION 6. Subchapter E, Chapter 824, Government Code, is
amended by adding Section 824.4025 to read as follows:
Sec. 824.4025. ANNUITY FOR SURVIVOR OF SUPPLEMENTAL PROGRAM
MEMBER. If a supplemental program member who has at least 25 years
of supplemental program service credit dies, the amount of the
death benefit annuity payable for the member's supplemental program
service is an amount computed and funded as provided by Section
824.2035, including any applicable reduction factors.
SECTION 7. Section 825.102, Government Code, is amended to
read as follows:
Sec. 825.102. RULEMAKING. Subject to the limitations of
this subtitle, the board of trustees may adopt rules for:
(1) eligibility for membership;
(2) the administration of the funds of the retirement
system; [and]
(3) the transaction of business of the board; and
(4) the administration of supplemental benefits for
supplemental program members.
SECTION 8. Section 825.103, Government Code, is amended by
adding Subsection (b-1) to read as follows:
(b-1) The board of trustees may authorize the executive
director to acquire, hold, manage, purchase, sell, assign, trade,
transfer, and dispose of any security, evidence of debt, or other
investment in which assets of the supplemental program retirement
fund may be invested.
SECTION 9. Section 825.208, Government Code, is amended by
adding Subsection (d) to read as follows:
(d) The board of trustees shall make payments from the
supplemental program retirement fund for services rendered by the
actuary for that fund and approved by the board.
SECTION 10. Section 825.301(a), Government Code, is amended
to read as follows:
(a) The board of trustees shall invest and reinvest assets
of the retirement system without distinction as to their source in
accordance with Section 67, Article XVI, Texas Constitution, and
hold securities purchased with the assets described by this
subsection collectively for the proportionate benefit of all
accounts listed under Section 825.306 and the supplemental program
retirement fund. For purposes of the investment authority of the
board of trustees under Section 67, Article XVI, Texas
Constitution, "securities" includes any investment instrument
within the meaning of the term as defined by Section 4001.068, 15
U.S.C. Section 77b(a)(1), or 15 U.S.C. Section 78c(a)(10), any
derivative instrument, and any other instrument commonly used by
institutional investors to manage institutional investment
portfolios. An interest in a limited partnership or investment
contract is considered a security without regard to the number of
investors or the control, access to information, or rights granted
to or retained by the retirement system. Any instrument or contract
intended to manage transaction or currency exchange risk in
purchasing, selling, or holding securities is considered to be a
security. Subject to Section 825.3013, an interest in a
title-holding entity that is wholly owned, organized, and
controlled by the retirement system is considered a security.
Investment decisions are subject to the standard provided in the
Texas Trust Code by Section 117.004(b), Property Code.
SECTION 11. Section 825.305, Government Code, is amended to
read as follows:
Sec. 825.305. AVAILABLE CASH. The board of trustees may
keep on deposit with the comptroller available cash not exceeding
10 percent of the total assets of the retirement system, to pay
annuity and other disbursements, excluding the assets of the
supplemental program retirement fund.
SECTION 12. Section 825.306(a), Government Code, is amended
to read as follows:
(a) The assets of the retirement system, except assets of
the supplemental program retirement fund, shall be maintained and
reported in a manner that reflects the source of the assets or the
purpose for which the assets are held, using appropriate ledgers
and subledgers, in accordance with generally accepted accounting
principles prescribed by the Governmental Accounting Standards
Board or its successor. In addition, the maintenance and reporting
of the assets must be in compliance with applicable tax law and
consistent with any fiduciary duty owed with respect to the
trust. In the alternative, the assets may be credited, according
to the purpose for which they are held, to one of the following
accounts:
(1) member savings account;
(2) state contribution account;
(3) retired reserve account;
(4) interest account;
(5) expense account; or
(6) deferred retirement option account.
SECTION 13. Subchapter D, Chapter 825, Government Code, is
amended by adding Section 825.316 to read as follows:
Sec. 825.316. SUPPLEMENTAL PROGRAM RETIREMENT FUND. (a)
The retirement system shall deposit in the supplemental program
retirement fund state contributions and other appropriations made
by the legislature to the fund and proceeds from investment of the
fund.
(b) The retirement system may use money from the fund only
to pay supplemental retirement, disability, and death benefits to
supplemental program members and related beneficiaries as provided
by this subtitle and to pay for the administration of the fund.
(c) Money appropriated to pay benefits from the fund as
provided by this subtitle may not be diverted or used to pay any
other benefits.
(d) Member contributions to the fund deducted under Section
825.403(a-1):
(1) earn interest at the same rate as money in an
individual account in the member savings account under Section
825.307; and
(2) are subject to the same computations and
limitations that apply to member contributions under Section
825.307.
SECTION 14. Section 825.403, Government Code, is amended by
adding Subsection (a-1) to read as follows:
(a-1) In addition to the contribution under Subsection (a),
each employer of a supplemental program member shall deduct an
additional 0.5 percent contribution from that member's
compensation, to be deposited in the supplemental program
retirement fund, provided that, if the state contribution to the
supplemental program retirement fund is computed using a percentage
less than 0.5 percent, the member's contribution is computed using
a percentage equal to the percentage used to compute the state
contribution.
SECTION 15. Sections 825.404(a), (a-1), (a-2), (b), and
(b-1), Government Code, are amended to read as follows:
(a) Except as provided by Subsection (a-1) and subject to
Subsection (a-2), during each fiscal year, the state shall
contribute to the retirement system:
(1) an amount equal to at least six and not more than
10 percent of the aggregate annual compensation of all members of
the retirement system during that fiscal year;
(2) an amount for the supplemental program retirement
fund equal to 9.75 percent of the aggregate state compensation of
all members for that fiscal year; and
(3) money necessary for the administration of the
supplemental program retirement fund.
(a-1) In computing the amount owed by the state under
Subsections (a)(1) and (a-2) [this section], the compensation of
members who are employed by public junior colleges or public junior
college districts shall be included in the aggregate annual
compensation as follows:
(1) 50 percent of the eligible creditable compensation
of employees who:
(A) otherwise are eligible for membership in the
retirement system; and
(B) are instructional or administrative
employees whose salaries may be fully paid from funds appropriated
under the General Appropriations Act, regardless of whether such
salaries are actually paid from appropriated funds; and
(2) none of the eligible creditable compensation of
all other employees who:
(A) do not meet the requirements of Subdivision
(1)(B) but are otherwise eligible for membership in the retirement
system; or
(B) cannot be included as a qualifying employee
under Subdivision (1) by application of Subsection (b-1).
(a-2) The state contribution required by Subsection (a)(1)
[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, 8.25 percent of the
aggregate annual compensation of all members of the retirement
system during that fiscal year.
(b) Before November 2 of each even-numbered year, the board
of trustees, in coordination with the Legislative Budget Board,
shall certify to the comptroller of public accounts for review and
adoption an estimate of the amount necessary to pay the state's
contributions to the retirement system for the following biennium
and, as a separate item, an estimate of the amount required to
administer the supplemental program retirement fund for the
following biennium. For qualifying employees under Subsection
(a-1)(1), the board of trustees shall include only the amount
payable by the state under Subsection (a-1)(1) in determining the
amount to be certified.
(b-1) In determining the amount necessary to pay the state's
contribution under [described by] Subsection (b), excluding the
amount required to administer the supplemental program retirement
fund, the number of qualifying employees under Subsection (a-1)(1)
whose compensation may be included for each public junior college
or public junior college district in each biennium may not be
adjusted in a proportion greater than the change in student
enrollment at each college during the reporting period except that
a college that experiences a decline in student enrollment may
petition the Legislative Budget Board to maintain the number of
eligible employees up to 98 percent of the level of the prior
biennium.
SECTION 16. Subchapter F, Chapter 825, Government Code, is
amended by adding Section 825.5155 to read as follows:
Sec. 825.5155. CERTIFICATION OF NAMES OF SUPPLEMENTAL
PROGRAM MEMBERS. Not later than the 12th day of the month following
the month in which a person begins or ceases employment in a
position described by Section 823.551, the employer shall certify
to the retirement system, in the manner prescribed by the system,
the name of the employee and any other information the system
determines necessary for the crediting of service and financing of
benefits under this subtitle.
SECTION 17. (a) Except as provided by Subsection (b) of
this section, employers participating in the Teacher Retirement
System of Texas shall begin making deductions and collecting the
contributions for the supplemental program retirement fund as
provided by Section 825.403(a-1), Government Code, as added by this
Act, based on service that is performed on or after September 1,
2026.
(b) The board of trustees of the Teacher Retirement System
of Texas shall adopt rules as soon as possible after the effective
date of this Act to implement the changes in law made by this Act,
including rules governing the treatment of a member of the Teacher
Retirement System of Texas whose employment in a position described
by Section 823.551, Government Code, as added by this Act, began
before September 1, 2026.
SECTION 18. This Act takes effect September 1, 2025.