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.

89(R) HB 4029 - House Committee Report version - Bill Text

89R5292 RDR-D

By: Guillen, Plesa, et al.

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.