85R7380 KFF-D     By: Anderson of Dallas H.B. No. 1906       A BILL TO BE ENTITLED   AN ACT   relating to retirement benefits for certain peace officers who are   members of the Teacher Retirement System of Texas, including the   creation of a peace officer supplemental retirement fund.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 821.001, Government Code, is amended by   adding Subdivision (11-a) to read as follows:                (11-a)  "Peace officer" means a member of the   retirement system who is elected, employed, or appointed as a peace   officer under Article 2.12, Code of Criminal Procedure, Section   37.081 or 51.203, Education Code, or other law.          SECTION 2.  Section 822.005, Government Code, is amended by   adding Subsection (e) to read as follows:          (e)  For a peace officer, the withdrawal of accumulated   contributions under Subsection (a) includes all of the officer's   contributions made under Section 825.403.          SECTION 3.  Section 824.202, Government Code, is amended by   adding Subsection (g) to read as follows:          (g)  Notwithstanding any other law, a member who is at least   55 years old and who has at least 10 years of service credit as a   peace officer engaged in law enforcement activities by a school   district or institution of higher education is eligible to retire   and receive a service retirement annuity.          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 CERTAIN   PEACE OFFICERS. (a) A member who has at least 20 years of service   credit as a peace officer is eligible to retire regardless of age   and receive a standard service retirement annuity in an amount and   to be funded as provided by this section.          (b)  The standard service retirement annuity payable for at   least 20 years of service credit as a peace officer is 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 standard combined service retirement annuity that   is payable 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 peace officer 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 peace officer 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 peace officer whose   service credit annuity amount is based on the sum of the member's   age and amount of peace officer 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 peace officer supplemental retirement fund in a   ratio determined by the retirement system.          (e)  Optional retirement annuities provided by Section   824.204 are available to a 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 peace officer supplemental retirement fund and the   portion payable from appropriate accounts described by Section   825.306.          (f)  The amount payable from the peace officer supplemental   retirement fund is reducible by the amount paid from appropriate   accounts described by Section 825.306 for service as a peace   officer. 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 standard combined service retirement annuity   payable for at least 20 years of service credit as a peace officer   may not exceed 100 percent of the average compensation computed   under Subsection (b).          (h)  For purposes of this section, service as a peace officer   is creditable as provided by rule of the board of trustees or on a   month-to-month basis, whichever is greater.          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 CERTAIN   PEACE OFFICERS. (a) An annuity payable for a disability resulting   from a risk to which peace officers are exposed because of the   nature of the officers' 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 officer'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 officer's average annual compensation regardless of the amount   of service credited to the officer.          (d)  The portions of the annuity under this section payable   from the peace officer supplemental 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 as a peace officer 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 officer'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).          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 PEACE OFFICER. If a   member who has at least 20 years of service credit as a peace   officer dies, the amount of the death benefit annuity payable for   the member's service as a peace officer 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 program of supplemental benefits for peace   officers.          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 peace officer supplemental   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 peace   officer supplemental 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 peace officer   supplemental retirement fund. For purposes of the investment   authority of the board of trustees under Section 67, Article XVI,   Texas Constitution, "securities" means any investment instrument   within the meaning of the term as defined by Section 4, The   Securities Act (Article 581-4, Vernon's Texas Civil Statutes), 15   U.S.C. Section 77b(a)(1), or 15 U.S.C. Section 78c(a)(10). 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. 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 peace   officer supplemental retirement fund.          SECTION 12.  Section 825.306, Government Code, is amended to   read as follows:          Sec. 825.306.  CREDITING SYSTEM ASSETS. The assets of the   retirement system, except assets of the peace officer supplemental   retirement fund, shall 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.  PEACE OFFICER SUPPLEMENTAL RETIREMENT FUND.   (a) The retirement system shall deposit in the peace officer   supplemental 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   peace officers 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 peace officer shall deduct an additional 0.5   percent contribution from that member's compensation, to be   deposited in the peace officer supplemental retirement fund,   provided that, if the state contribution to the peace officer   supplemental 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), (b), and (b-1),   Government Code, are amended to read as follows:          (a)  Except as provided by Subsection (a-1), 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 peace officer supplemental   retirement fund equal to 2.13 percent of the aggregate state   compensation of all peace officers for that fiscal year; and                (3)  money necessary for the administration of the   peace officer supplemental retirement fund.          (a-1)  In computing the amount owed by the state under   Subsection (a)(1) [(a)], 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).          (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 peace officer supplemental 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 peace officer supplemental   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 PEACE OFFICERS.   Not later than the 12th day of the month following the month in   which a person begins or ceases employment as a peace officer, the   employer shall certify to the retirement system, in the manner   prescribed by the system, the name of the employee and such other   information as the system determines is 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 peace officer supplemental 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 December 31,   2017.          (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 as a peace officer   began before December 31, 2017. Rules adopted under this section   relating to a member whose employment as a peace officer began   before December 31, 2017, must include rules that:                (1)  notwithstanding any provision of this Act, allow   the member to opt out of participating in the peace officer   supplemental retirement fund provided by Section 825.403(a-1),   Government Code, as added by this Act; and                (2)  ensure that any benefit paid to the member from the   peace officer supplemental retirement fund is reasonably related to   the member's contribution to the fund.          SECTION 18.  This Act takes effect September 1, 2017.