Relating to the police officers' public retirement system of certain municipalities.

89(R) HB 3521 - Introduced version - Bill Text

89R3041 KFF-F

By: Harless

H.B. No. 3521

A BILL TO BE ENTITLED

AN ACT

relating to the police officers' public retirement system of

certain municipalities.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Sections 2(4-a), (10), and (17-e), Article

6243g-4, Revised Statutes, are amended to read as follows:

(4-a) "Catastrophic injury"
:

(A)
means a sudden, violent, life-threatening,

duty-related injury sustained by an active member that is due to an

externally caused motor vehicle collision, gunshot wound,

aggravated assault, or other
physical
external event or events and

results, as supported by evidence, in one of the following

conditions:

(i)
[
(A)
] total, complete, and permanent

loss of sight in one or both eyes;

(ii)
[
(B)
] total, complete, and permanent

loss of the
body part
[
use
] of one or both feet at or above the

ankle;

(iii)
[
(C)
] total, complete, and permanent

loss of the
body part
[
use
] of one or both hands at or above the

wrist;

(iv)
[
(D)
] injury to the spine that results

in a total, permanent, and complete paralysis of both arms, both

legs, or one arm and one leg; or

(v)
[
(E)
] an externally caused physical

traumatic injury to the brain
that, as determined using

evidence-based medicine, results in a permanent major

neurocognitive disorder for which the member requires occasional

supervision in the performance of routine daily tasks of self-care

and that renders the member permanently unemployable; and

(B)

does not include the following diseases,

disorders, or injuries:

(i) infectious diseases;

(ii)

noninfectious diseases, including

heart disease or lung disease, contracted as a result of repeated

exposure to occupational environmental conditions over a period of

months or years;

(iii)

an anxiety disorder, including

post-traumatic stress disorder; or

(iv)

a soft-tissue back, neck, or spine

injury, including a sprain, strain, subluxation, or repetitive

stress injury, that does not result in paralysis, as determined by a

physician chosen and compensated by the board
[
rendering the member

physically or mentally unable to perform the member's duties as a

police officer
].

(10) "Employee" means an individual who holds a

classified
or appointed
position in the police department of a city

subject to this article.

(17-e) "Salary" means pay provided for the classified

or appointed
position in the police department held by the

employee.

SECTION 2. Sections 3(d) and (f), Article 6243g-4, Revised

Statutes, are amended to read as follows:

(d) The terms of office of the board members elected as

described by Subsection (b)(3) of this section shall be three

years, beginning on January 1 and ending on December 31. Beginning

in 1999, and each third succeeding year, one board member shall be

elected at an election called by the board and held
before the end

of the calendar year
[
in December
]. Beginning in 2000, and each

third succeeding year, a second board member shall be elected at an

election called by the board and held
before the end of the calendar

year
[
in December
]. If a vacancy occurs among the two elected

retired members of the board, the board shall hold an election

within 60 days after the date the vacancy occurred. At that

election, a retired member shall be elected to serve for the

remainder of the term of the vacant position or for a full term if

the term of the board member that caused the vacancy would have

ended in that year. A board member who is a retired member and who

was appointed to the board before January 1999 shall serve the

remainder of the board member's term. On expiration of the

appointed term, the appointed board member is eligible to run for

the board position described by Subsection (b)(3) of this section

in the same manner as any other retired member.

(f)
The following individuals are prohibited from being

elected to or otherwise serving on the board:

(A) an
[
An
] individual who is an
elected or

appointed member
[
officer
] or employee of
, or who receives

compensation or gifts directly or indirectly from,
any employee

[
organization
] or retiree organization
;

(B) an individual who is
[
or
] an employee of the

pension system
or was an employee of the pension system during the

60-day period preceding the announcement of the trustee election;

or

(C)

an individual who holds a position that

creates or may have the potential to create a conflict of interest

with the fiduciary responsibility imposed on each member of
[
is

prohibited from being elected to
] the board,
as determined by

[
appointed to
] the board[
, or in any other way serving as a member

of the board
].

SECTION 3. Section 4, Article 6243g-4, Revised Statutes, is

amended by amending Subsection (b) and adding Subsection (c) to

read as follows:

(b) The board, by an affirmative vote of at least four board

members, may elect to
provide a stipend to
[
reimburse
] board

members who are not employees of the city for their time while

attending to official business of the pension system. The amount of

any
stipend
[
reimbursement
] may not exceed $750 a month for each

affected board member.

(c)

Board members are entitled to reimbursement for actual

expenses incurred in performing official duties and business, as

determined by board rule.

SECTION 4. Section 12, Article 6243g-4, Revised Statutes,

is amended by amending Subsections (b) and (m) and adding

Subsection (n) to read as follows:

(b) Except as otherwise provided by this section, including

Subsection (b-3) of this section, the monthly service pension of a

member who:

(1) is hired before October 9, 2004, including a

member hired before October 9, 2004, who involuntarily separated

from service but has been retroactively reinstated under

arbitration, civil service, or a court ruling, is equal to the sum

of:

(A) 2.75 percent of the member's final average

pay multiplied by the member's years or partial years of service for

the member's first 20 years of service; and

(B) two percent of the member's final average pay

multiplied by the member's years or partial years of service for the

member's years of service in excess of the 20 years of service

described by Paragraph (A) of this subdivision; or

(2) except as provided by Subdivision (1) of this

subsection and subject to Subsection (b-3) of this section, is

hired or rehired as an active member on or after October 9, 2004, is

equal to [
the sum of
]:

(A)
for members with less than 20 years of

service,
2.25 percent of the member's final average pay multiplied

by the member's years or partial years of service [
for the member's

first 20 years of service
];
or

(B)

for members with at least 20 years of

service, the sum of:

(i)

2.75 percent of the member's final

average pay multiplied by the members first 20 years of service;
and

(ii)
[
(B)
] two percent of the member's

final average pay multiplied by the member's years or partial years

of service in excess of 20 years of service described by

Subparagraph (i)
[
Paragraph (A)
] of this
paragraph
[
subdivision
].

(m) For a member who is promoted or appointed to a position

above the rank of
commander or a similar position that is the

highest classified or non-appointed position in the police

department:

(1)

before the year 2017 effective date, the member's

monthly service pension and member contributions shall be based on

the member's initial pay for that position, regardless of

subsequent promotions or appointments; and

(2)
[
captain
] on or after the year 2017 effective

date, the member's monthly service pension and member contributions

shall be based on, as determined by the board:

(A)
[
(1)
] the member's pay for the position the

member held immediately before being promoted or appointed; or

(B)
[
(2)
] the pay of the highest civil rank for

classified police officers for those members who have no prior

service with the city, which pay must be calculated based on the

three-year average prior to retirement.

(n)

Except as provided by Subsection (m)(1) of this section,

a member's monthly service pension and contributions may not be

based on final average pay and contributions that exceed the salary

and contributions made by a member who:

(1)

achieves the position of commander or a similar

position that is the highest classified or non-appointed position

in the police department; and

(2)

retires or elects to participate in DROP on or

after the year 2017 effective date.

SECTION 5. Sections 14(b), (e), and (i), Article 6243g-4,

Revised Statutes, are amended to read as follows:

(b) An active member who [
was hired before October 9, 2004,

including a member hired before October 9, 2004, who
] has
attained

normal retirement age
[
been reinstated under arbitration, civil

service, or a court ruling after that date, and has at least 20

years of service with the police department
] may file with the

pension system an election to participate in DROP and receive a DROP

benefit instead of the standard form of pension provided by this

article
on or after
[
as of
] the date the active member attained

normal retirement age
[
20 years of service
]. The election may be

made, under procedures established by the board, by an eligible

active member who has attained the required years of service. A

DROP election that is made and accepted by the board may not be

revoked.

(e) As of the end of each month an amount is credited to each

active member's notional DROP account at the rate of one-twelfth of

a hypothetical earnings rate on amounts in the account. The

hypothetical earnings rate is determined for each calendar year

based on the compounded average of the aggregate annual rate of

return on investments of the pension system for the five

consecutive fiscal years ending June 30 preceding the calendar year

to which the earnings rate applies, multiplied by
:

(1)

except as provided by Subdivision (2) of this

subsection,
65 percent
; or

(2)

once the funded ratio is equal to or greater than

95 percent and regardless of the funded ratio in subsequent years,

70 percent
. [
The hypothetical earnings rate may not be less than

2.5 percent.
]

(i) A retired member who has not attained
the applicable
age

required under the code to make a minimum distribution
[
70-1/2
],

whether or not a DROP participant before retirement, may elect to

have part or all of an amount equal to the monthly service pension

the retired member would otherwise be entitled to receive, less any

amount required to pay the retired member's share of group medical

insurance costs, credited to a DROP account, in which case the

amounts will become eligible to be credited with hypothetical

earnings in the same manner as the amounts described by Subsection

(g) of this section. On and after the year 2017 effective date,

additional amounts may not be credited to a DROP account under this

subsection. Any amounts credited under this subsection before the

year 2017 effective date shall remain accrued in a retired member's

DROP account.

SECTION 6. Section 14(k), Article 6243g-4, Revised

Statutes, is redesignated as Section 14A, Article 6243g-4, Revised

Statutes, and amended to read as follows:

Sec.

14A.

RESUMPTION OF SERVICE BY DROP PARTICIPANTS. (a)

This section applies only to
[
(k) If
] a retired member
and
[
who is

a
] DROP participant
who
is rehired
by
[
as an employee of
] the police

department
in a classified or appointed position.

(b)

The pension system shall, during the period of

subsequent service by a member subject to this section:

(1)

in accordance with Section 17(f) of this article,

reinstate the member as an active member of the pension system;

(2) suspend the member's monthly service
[
, any
]

pension
and any
[
or
] DROP distribution that was being paid
to the

member; and

(3)

except as provided by Subsection (c)(2)(B) of this

section, credit to the member's DROP account a
[
shall be suspended

and the
] monthly amount
equal to the member's monthly service

pension determined as if the member had remained separated from

service
[
described by Subsection (d) of this section will again

begin to be credited to the DROP account while the member continues

to be an employee
]. [
If the member's DROP account has been

completely distributed, a new notional account may not be created

and the monthly amount described by Subsection (d) of this section

may not be credited to a DROP account on behalf of the member.
]

(c) During the period of a member's subsequent service:

(1)

in accordance with Section 9 of this article, the

city shall make employer contributions attributable to the member's

subsequent service; and

(2) the member:

(A)

in accordance with Section 8 of this article,

shall make member contributions; and

(B) may not:

(i)

receive any annual adjustments under

Section 12(c) of this article;

(ii)

accrue additional years of service or

establish additional service credit; and

(iii)

in accordance with Section 14 of this

article, receive a distribution of the member's DROP account.

(d)

Once the member again separates from service, payment of

the member's monthly service pension shall resume, including

application of annual adjustments under Section 12(c) of this

article.

The member's monthly service pension may not be adjusted

to reflect years of service, service credit, or pay for the member's

subsequent period of service.

(e)

A member is not eligible for a refund of the member

contributions made during the member's subsequent period of

service.

SECTION 7. Section 15, Article 6243g-4, Revised Statutes,

is amended by amending Subsections (a), (b), (d), (e), and (i) and

adding Subsections (d-1), (d-2), (d-3), (d-4), and (i-1) to read as

follows:

(a) An active member who becomes totally and permanently

incapacitated for the performance of the member's duties as a

result of a bodily injury received in, or illness caused by, the

performance of those duties shall, on presentation to the
board's

satisfaction
[
board
] of proof of total and permanent incapacity, be

retired and shall receive an immediate duty-connected disability

pension equal to:

(1) for members hired or rehired before October 9,

2004, the greater of 55 percent of the member's final average pay at

the time of retirement or the member's accrued service pension; or

(2) for members hired or rehired on or after October 9,

2004, the greater of 45 percent of the member's:

(A) final average pay at the time of retirement;

or

(B) accrued service pension.

(b) A member who becomes totally and permanently

incapacitated for the performance of the member's duties and is not

eligible for either an immediate service pension or a

duty-connected disability pension is eligible for an immediate

monthly pension computed in the same manner as a service retirement

pension but based on final average pay and service accrued to the

date of the disability. The pension under this subsection may not

be less than[
:

[
(1)

for members hired before October 9, 2004,

including a member who involuntarily separated from service but has

been retroactively reinstated under arbitration, civil service, or

a court ruling,
] 27.5 percent of the member's final average pay[
; or

[
(2)

except as provided by Subdivision (1) of this

subsection, for members hired or rehired on or after October 9,

2004, 22.5 percent of the member's final average pay
].

(d)
Except as provided by Subsection (d-1) of this section,

a
[
A
] person may not receive a disability pension unless the person

files with the board an application for a disability pension not

later than
the later of:

(1)
180 days after the date of separation from

service
; or

(2)

the 18th month after the date the injury or illness

described by Subsection (a) of this section occurs or began, as

applicable.

(d-1)

The board may accept an application filed after the

deadline prescribed by Subsection (d) of this section on a showing

of good cause, as determined by the board.

(d-2)

On filing and acceptance by the board of an

application for a disability pension
, [
at which time
] the board

shall have the person examined, not later than the 90th day after

the date the member files the application, by a physician or

physicians chosen and compensated by the board. The physician

shall make a report and recommendations to the board regarding
,

based on reasonable medical probability:

(1)
the extent of any disability
;
and

(2)
whether any disability that is diagnosed is a

duty-connected disability.

(d-3) A
[
Except as provided by Subsection (j) of this

section, a
] person may not receive a disability pension for an

injury received or illness incurred after separation from service.

(d-4)
In accordance with Section 6(g) of this article, the

board may, through its presiding officer, issue process, administer

oaths, examine witnesses, and compel witnesses to testify as to any

matter affecting retirement, disability, or death benefits under

any pension plan within the pension system.

(e) A retired member who has been retired for disability is

subject at all times to reexamination by a physician chosen and

compensated by the board and shall submit to further examination as

the board may require. If a retired member refuses to submit to an

examination, the board shall order the payments stopped. If a

retired member who has been receiving a disability pension under

this section recovers so that in the opinion of the board the

retired member is able to perform the usual and customary duties

formerly performed for the police department,
or if a
[
and the
]

retired member is reinstated or offered reinstatement to the

position, or hired by another law enforcement agency to a

comparable position, the board shall order the member's disability

pension stopped. A member may apply for a normal pension benefit,

if eligible, if the member's disability benefit payments are

stopped by the board under this subsection.

(i)
Except as provided by Subsection (i-1) of this section,

[
Effective for payments that become due after April 30, 2000, and
]

instead of the disability benefit provided by Subsection (a) or (b)

of this section, a member who suffers a catastrophic injury shall

receive a monthly benefit equal to
90
[
100
] percent of the member's

final average pay determined as of the date of retirement, and the

member's DROP balance, if any.

(i-1)

A member who attains normal retirement age is not

eligible to receive a disability pension under Subsection (i) of

this section.

SECTION 8. Article 6243g-4, Revised Statutes, is amended by

adding Section 15A to read as follows:

Sec.

15A.

REDUCTION OF DISABILITY BENEFITS. (a)

The board

shall require any member who is receiving a disability pension to

provide the board annually, on or before July 1 of each year, with a

true and complete copy of those portions of the person's federal

and, if applicable, state tax return, including appropriate

schedules, for the previous calendar year that indicate the

person's occupations, if any, and earned income for the previous

calendar year.

If the member did not file a tax return for the

previous calendar year, the board may require other documentation

reflecting the member's occupation or earned income that the board

determines appropriate.

(b)

The pension system may grant an extension of the July 1

date under Subsection (a) of this section to a date later in the

same calendar year if the member provides the board with a true and

complete copy of a grant of the extension of time for filing the

person's tax return from the appropriate governmental entity or a

true and complete copy of an extension request that results in an

automatic extension.

(c)

If, after evaluating the information received under

this section, the board finds the member is or has been receiving

earned income from one or more employments, including

self-employment, during the preceding year, the board shall reduce

future disability pension payments to the member by the amount of $1

for each month for each $2 of income earned by the member from the

other employment during each month of the previous year, except

that the disability pension payment may not be decreased below the

amount determined for a monthly service pension under Section 12 of

this article.

(d)

If a retired member who has been receiving a disability

pension for a catastrophic injury recovers such that in the opinion

of the board the member no longer has a catastrophic injury, the

board shall reclassify the benefit as a duty-connected disability

pension in accordance with Section 15(a) of this article.

SECTION 9. Section 16(i), Article 6243g-4, Revised

Statutes, is amended to read as follows:

(i) If a member or individual receiving a survivor's pension

dies before monthly payments have been made for at least five years,

leaving no person otherwise eligible to receive further monthly

payments with respect to the member, the monthly payments shall

continue to be made in the same amount as the last monthly payment

made to the member or survivor until payments have been made for

five years with respect to the member. The payments shall be made

to the spouse of the member, if living, and if no spouse is living,

to the natural or adopted children of the member, to be divided

equally among the children if the member has more than one child.

If the member has no spouse or children who are living, the benefit

may not be paid. If the member dies after becoming eligible to

receive benefits but before payments begin, leaving no survivors

eligible for benefits, the amount of each monthly payment over the

five-year period shall be the same as the monthly payment the member

would have received if the member had taken disability retirement

on the date of the member's death and shall be paid to the member's

spouse or children in the manner provided by this subsection. If

the member has no spouse or children who are living, then the

benefit may not be paid. The member's estate or a beneficiary who

is not a survivor or dependent is not eligible to receive the

payment described by Subsection (g) of this section
and the final

monthly payment owed but not received before the member's or

surviving spouse's death
.

SECTION 10. Section 17(b), Article 6243g-4, Revised

Statutes, is amended to read as follows:

(b) A member of the pension system who has not completed 20

years of service at the time of separation from service with the

police department is eligible for a refund of the total of the

contributions the member made to the pension system[
, plus any

amount that was contributed for the member by the city and not

applied in accordance with this section to provide the member with

10 years of service
]. The refund does not include interest, and

neither the city nor the member is eligible for a refund of the

contributions the city made on the member's behalf, except as

expressly provided by this subsection. By receiving the refund,

the member forfeits any service earned before separation from

service, even if it is otherwise nonforfeitable.

SECTION 11. The heading to Section 19, Article 6243g-4,

Revised Statutes, is amended to read as follows:

Sec. 19. PERSONS REJOINING OR TRANSFERRED BY CITY; SERVICE

CREDIT; DOUBLE BENEFITS[
; RETURN TO SERVICE
].

SECTION 12. Section 21(b), Article 6243g-4, Revised

Statutes, is amended to read as follows:

(b) The city, not later than the 14th day after the date the

city receives a request by or on behalf of the board, shall, unless

otherwise prohibited by law, supply the pension system with

personnel, payroll, and financial records in the city's possession

that the pension system determines necessary to provide pension

administrative and fiduciary services under this section, to

establish beneficiaries' eligibility for any benefit, or to

determine a member's credited service or the amount of any

benefits, including disability benefits, and such other

information the pension system may need, including:

(1) information needed to verify service, including

the following information:

(A) the date a person is sworn in to a position;

(B) the days a person is under suspension;

(C) the days a person is absent without pay,

including the days a person is on maternity leave;

(D) the date of a person's termination from

employment; and

(E) the date of a person's reemployment with the

city;

(2) medical records;

(3) workers' compensation records and pay information;

(4) payroll information;

(5) information needed to verify whether a member is

on military leave; [
and
]

(6) information regarding phase-down participants,

including information related to entry date and phase-down plan
;

and

(7)

personnel files, including any disciplinary

action taken against a person and the result of any appeal of the

disciplinary action
.

SECTION 13. Section 25(g), Article 6243g-4, Revised

Statutes, is amended to read as follows:

(g) Distribution of benefits must begin not later than April

1 of the year following the calendar year during which the member

eligible for the benefits becomes
the applicable
[
70-1/2 years of
]

age
under the code to make a minimum distribution
or terminates

employment with the employer, whichever is later, and must

otherwise conform to Section 401(a)(9) of the code.

SECTION 14. Section 30(b), Article 6243g-4, Revised

Statutes, is amended to read as follows:

(b) After the member described by Subsection (a) of this

section is finally convicted, the member's
survivors, including

their representatives,
[
spouse
] may apply for benefits if the

member, but for application of Subsection (a) of this section,

would have been eligible for a pension benefit or a delayed payment

of benefits. If the member would not have been eligible for a

pension benefit or a delayed payment of benefits, the member's

survivors, including their representatives,
[
spouse
] may apply for

a refund of the member's contributions. A refund under this

subsection does not include interest and does not include

contributions the city made on the member's behalf. The city may

not receive a refund of any contributions the city made on the

member's behalf.

SECTION 15. The following provisions of Article 6243g-4,

Revised Statutes, are repealed:

(1) Section 12(k);

(2) Section 13;

(3) Section 16(j);

(4) Section 17(i); and

(5) Section 19(f).

SECTION 16. Sections 12(b) and 17(b), Article 6243g-4,

Revised Statutes, as amended by this Act, apply only to a member who

retires on or after the effective date of this Act. A member who

retires before the effective date of this Act is governed by the law

in effect immediately before that date, and the former law is

continued in effect for that purpose.

SECTION 17. Section 13, Article 6243g-4, Revised Statutes,

as repealed by this Act, and Section 14A, Article 6243g-4, Revised

Statutes, as added by this Act, apply only to a retired member who

resumes service with the police department on or after the

effective date of this Act. A person who resumes service with the

police department before the effective date of this Act is governed

by the law in effect immediately before that date, and the former

law is continued in effect for that purpose.

SECTION 18. Section 15(i), Article 6243g-4, Revised

Statutes, as amended by this Act, and Section 15(i-1), Article

6243g-4, Revised Statutes, as added by this Act, apply only to a

disability pension granted after June 1, 2025. A disability

pension granted on or before June 1, 2025, is governed by the law in

effect immediately before the effective date of this Act, and the

former law is continued in effect for that purpose.

SECTION 19. Section 15A, Article 6243g-4, Revised Statutes,

as added by this Act, applies only to a member who is granted a

disability pension after July 1, 2025. A member who is granted a

disability pension on or before July 1, 2025, is governed by the law

in effect immediately before the effective date of this Act, and the

former law is continued in effect for that purpose.

SECTION 20. The changes in law made by this Act do not

affect any nonconflicting provisions of an agreement entered into

in accordance with Section 27, Article 6243g-4, Revised Statutes,

and those provisions remain in full force and effect.

SECTION 21. If this Act conflicts with another Act of the

89th Legislature, Regular Session, 2025, this Act controls unless

the conflict is expressly resolved by the legislature by reference

to this Act.

SECTION 22. This Act takes effect July 1, 2025, if it

receives a vote of two-thirds of all the members elected to each

house, as provided by Section 39, Article III, Texas Constitution.

If this Act does not receive the vote necessary for effect on that

date, this Act takes effect September 1, 2025.