HBA-GUM H.B. 3531 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 3531
By: Coleman
Pensions & Investments
3/25/1999
Introduced



BACKGROUND AND PURPOSE 

Current law prohibits a person receiving a benefit from a city pension plan
in certain large municipalities from becoming eligible to receive a pension
from another city pension system. This has created a disincentive for City
of Houston retired police officers and firefighters, interested in
returning to municipal employment, to provide their services to the city in
a municipal position. In addition, elected officials and appointed
executive officers are subject to term limits which restrict their
opportunity to accrue meaningful pension benefits under the current plan,
causing the city difficulty in attracting qualified personnel to serve in
executive positions. 

H.B. 3531 creates an executive official pension plan to provide eligible
executive officials affected by term limits with an incentive to serve in a
public position and receive meaningful retirement benefits for their
service.  The bill also removes the eligibility restriction to allow
persons receiving a pension from a municipal pension system to also become
eligible to become members of another pension system.  H.B. 3531 authorizes
the municipal pension board to establish a proportionate retirement program
to allow an employee to use combined credited service in the participating
retirement systems. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 4, Article 6243g, V.T.C.S., to delete the
section title and to delete language specifying that persons drawing a
pension from a municipal pension plan are not eligible for membership in
another municipal pension plan. 

SECTION 2.  Amends Section 5(b), Article 6243g, V.T.C.S., as follows:
 
(b)  Provides that elected members of the municipal pension board (board),
rather than the governing body of the city, will appoint the taxpayer board
members required under this section.  Prohibits the appointed taxpayers
from being retirees of the city.  Provides that the required two years the
taxpayers serve constitutes a term.  Requires that a vacancy occurring by
death, resignation, or removal of a taxpayer be filled by vote of the
elected members of the board.  Provides that a person who is appointed to
fill a vacancy holds office for the unexpired term of the member who
vacated that position. 

SECTION 3.  Amends Article 6243g, V.T.C.S., by adding Section 22A, as
follows: 

Sec. 22A.  (a)  Provides that a Group C member is subject to the same
provisions that are applicable to a Group A member except as provided by
this section. 

(b)  Defines "credited service," "effective date of participation,"
"executive official," "Group C," and "plan." 

(c)  Provides that all executive official are members of Group C.
Specifies provisions for  declining membership in Group C.  Provides that
election to not participate in Group C is irrevocable and constitutes a
waiver of the benefits provided by the plan.  Requires an eligible person
declining membership of Group C to participate in Group A or Group B, as
applicable. 

(d)  Provides that a Group C member who separates from service for a reason
other than death or retirement is eligible to receive a refund of the
member's contribution to Group C.  Requires issuance of the refund to be
made in a manner prescribed by the board. Provides that receipt of a refund
as described by this subsection forfeits the member's credited service, and
all rights to benefits under the plan, and terminates membership in the
plan. 

(e)  Provides that an executive official who terminates membership in Group
C under Subsection (d) and subsequently becomes eligible for membership in
the plan under Subsection (c), accrues credited service beginning on the
date the member's most recent eligibility began. 

(f) Authorizes a person who receives a refund under Subsection (d), to
restore the credited service forfeited under Subsection (d) by filing a
written election form with the board and repaying the amount of the
member's contributions previously  withdrawn under Subsection (d) within
five years after the date of reemployment, with interest on that amount at
the rate of six percent.  Prohibits credited service from being restored
until complete repayment is made. 

(g)  Requires a Group C member to receive twice the number of actual years
of credited service solely for the purpose of fulfilling the eligibility
requirements for a normal retirement pension in Group C as provided by
Subsection (h).  Requires all other computations under this Act to use the
actual years of credited service in Group C. 

(h)  Sets forth the provisions under which a Group C member who ceases to
be an executive official becomes eligible for a normal retirement pension. 

(i)  Provides the manner in which the amount of the monthly pension for
each Group C member will be computed. 

(j)  Provides that previous service of a Group C member in Group A or Group
B is governed by the applicable Group A or Group B provisions and may not
be credited to Group C.  Prohibits Group C service from being credited to
Group A or Group B. 

(k)  Provides that except as provided by Subsection (j), this section
applies to a plan member only while the individual is an executive
official.  Requires an individual who ceases to be an executive official
and transfers to a municipal position covered by Group A to participate in
Group A.  Provides that the individual does not forfeit Group C service and
remains eligible for normal retirement for Group C service as provided
under Subsection (h) of this section. 

SECTION 4.  Amends Article 6243g, V.T.C.S., by adding Section 33A, as
follows: 

Sec. 33A.  (a)  Authorizes the board to establish a program of
proportionate retirement benefits (program) subject to the requirements of
this section. 

(b)  Defines "combined service credit," "eligible participant," "maximum
benefit," "participating retirement system," and "service credit."  

(c)  Provides that participation by the municipal pension system in the
program is voluntary.  Provides the manner by which the board may become a
participant in the program.  Sets forth the effective date of
participation.  Provides the manner by which the board may terminate
participation.  Sets forth the effective date of termination. 

 (d)   Prohibits an eligible participant's combined service from being used
in determining eligibility for a type of benefit other than service
retirement benefits or DROP participation, or determining the amount of any
type of benefit.  Provides that the amount of a benefit payable by the
pension system conforms to the statutes and rules governing the pension
system.  Provides that the pension system has sole responsibility and
discretion to determine the eligibility of eligible participants for
benefits and the amount and duration of proportionate retirement benefits. 

(e)  Provides that a person who withdraws pension contributions from a
participating retirement system ceases to be a member of that system.
Provides that membership, service credit, and combined service credit for
which contributions were withdrawn or forfeited may be reestablished under
the statutes and rules governing that system. Provides that a lump-sum
distribution is governed by the statutes and rules applicable to the
particular retirement system. 

(f)  Prohibits a person who has service credit in another participating
retirement system from voting in a board election or holding a position on
the board. 

(g)  Requires the board to make determinations regarding an eligible
participant's combined service credit based on complete and certified
records of a participating retirement system and of the city. 

(h)  Sets forth the manner by which the provisions of Sections 15 and 16 of
this Act, pertaining to interruption of service and termination of
employment, do not apply to an eligible participant. 

(i)  Authorizes the pension system to pay a benefit under the program to an
eligible participant using combined service credit only if the participant
is eligible to receive and has applied for the benefit from the applicable
other participating retirement systems. Prohibits the participant from
becoming eligible to receive a proportionate retirement benefit from the
program while employed in a position covered by the pension system. 

(j)  Sets forth the provisions by which an eligible participant may receive
disability benefits, and the amount of the benefit.  Authorizes the board
to require examinations, reports, and other information as provided by this
Act for the administration and payment of disability benefits.  Provides
that the board has a right to reduce, suspend, or terminate a benefit
accordingly. 

(k)  Sets forth provisions by which creditable military service may be
credited in the pension system. 

(l)  Authorizes the board to adopt rules and policies for implementing and
administering the program. 

(m)  Prohibits a person from becoming eligible to receive a benefit under
this section that is greater than the benefit the person would otherwise
receive under this Act if this section did not apply.  Requires a benefit
otherwise payable under Section 13(b) of this Act on behalf of a person who
has used combined service credit to qualify for benefits from at least one
participating retirement system to be computed and payable as provided by
Section 13(a) of this Act. 

SECTION 5.  Effective date: September 1, 1999.

SECTION 6.  Emergency clause.