85R9163 TSR-F     By: Flynn H.B. No. 4078       A BILL TO BE ENTITLED   AN ACT   relating to contributions to, benefits from, late fees imposed by,   and the administration of systems and programs administered by the   Teacher Retirement System of Texas.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 822.002, Government Code, is amended to   read as follows:          Sec. 822.002.  EXCEPTIONS TO MEMBERSHIP REQUIREMENT. (a)     An employee of the public school system is not permitted to be a   member of the retirement system if the employee:                (1)  is eligible and elects to participate in the   optional retirement program under Chapter 830; or                (2)  [is solely employed by a public institution of   higher education that as a condition of employment requires the   employee to be enrolled as a student in the institution; or                [(3)]  has retired under the retirement system and has   not been reinstated to membership pursuant to Section 824.005 or   824.307.          (b)  An employee of a public institution of higher education   who is required to be enrolled as a student in the institution as a   condition of employment is not permitted to be a member of the   retirement system based on that student employment, and   compensation paid to the employee for work performed as a student   employee is not compensation subject to report and deduction for   member contributions or to credit in benefit computations under   Section 822.201.          SECTION 2.  Section 824.1012, Government Code, is amended by   amending Subsection (a) and adding Subsection (a-1) to read as   follows:          (a)  As an exception to Section 824.101(c), a retiree who   selected an optional service retirement annuity under Section   824.204(c)(1), (c)(2), or (c)(5) or an optional disability   retirement annuity under Section 824.308(c)(1), (c)(2), or (c)(5)   and who has received at least one payment under the plan selected   may change the optional annuity selection made by the retiree to a   standard service or disability retirement annuity as provided for   in this section.  If the beneficiary of the optional annuity was   [is] the spouse [or former spouse] of the retiree when the retiree   designated the spouse as beneficiary of the optional annuity, to   change from the optional annuity to a standard retirement annuity   under this subsection, the spouse or former spouse, as applicable,   who was designated [,] the beneficiary of the optional annuity must   sign a notarized consent to the change[,] or a court with   jurisdiction over the marriage of [in a divorce proceeding   involving] the retiree and beneficiary must approve or order the   change [in the divorce decree or acceptance of a property   settlement].  The change in plan selection takes effect when the   retirement system receives the request to change the plan, provided   the signed consent form or court order, as applicable, is   subsequently received by the retirement system [it].          (a-1)  The executive director or the executive director's   designee has exclusive authority to determine whether the language   in a court order described by Subsection (a) is sufficient to   indicate that the court has approved or ordered the change in plan   selection. A determination by the executive director or the   executive director's designee under this subsection may be appealed   only to the board of trustees, except that the board by rule may   waive the requirement that an appeal be to the board. An appeal to   the board is a contested case under Chapter 2001. The standard of   review of an appeal brought under this subsection is by substantial   evidence.          SECTION 3.  Section 824.1013, Government Code, is amended by   amending Subsections (b) and (c-1) and adding Subsection (c-2) to   read as follows:          (b)  If the beneficiary designated at the time of the   retiree's retirement is the spouse of the retiree at the time of the   designation:                (1)  the spouse must give written, notarized consent to   the change;                (2)  if the parties divorce after the designation, the   former spouse who was designated beneficiary must give written,   notarized consent to the change; or                (3)  a court with jurisdiction over the marriage must   approve or order [have ordered] the change.          (c-1)  Notwithstanding Subsection (c), a beneficiary   designated under this section is entitled on the retiree's death to   receive monthly payments of the survivor's portion of the retiree's   optional retirement annuity for the remainder of the beneficiary's   life if the beneficiary designated at the time of the retiree's   retirement is a trust and the beneficiary designated under this   section is:                (1)  the sole beneficiary of that trust; or                (2)  an individual who at the time of the retiree's   death is the sole beneficiary of that trust.          (c-2)  The executive director or the executive director's   designee has exclusive authority to determine whether the language   in a court order described by Subsection (b) is sufficient to   indicate that the court has approved or ordered the change in the   designated beneficiary. A determination by the executive director   or the executive director's designee under this subsection may be   appealed only to the board of trustees, except that the board by   rule may waive the requirement that an appeal be to the board. An   appeal to the board is a contested case under Chapter 2001. The   standard of review of an appeal brought under this subsection is by   substantial evidence.          SECTION 4.  Section 824.402, Government Code, is amended by   adding Subsection (a-1) to read as follows:          (a-1)  In determining under Subsection (a)(4) whether to   reduce the optional retirement annuity amount because of early   retirement and in determining the amount of that reduction, if   applicable, the retirement system shall make the determination as   if the member had retired with an additional five years of service   credit on the last day of the month preceding the month in which the   member dies. The additional five years of service credit used in   making a determination under this subsection may not be used to   determine the amount of the benefit under Section 824.203 or   whether the benefit under this subsection is authorized under   Section 824.401.          SECTION 5.  Section 824.503(f), Government Code, is amended   to read as follows:          (f)  The designated beneficiary of a disability retiree is   eligible to receive the benefits described by this section if the   retiree:                (1)  retires on or after September 1, 1992; and                (2)  dies while receiving disability retirement   benefits under Section 824.304 [824.304(b)].          SECTION 6.  Section 824.601, Government Code, is amended by   amending Subsection (b) and adding Subsection (b-2) to read as   follows:          (b)  Except as provided by Subsection (b-1) or Section   824.602 and subject to Subsection (b-2), a retiree is not entitled   to service or disability retirement benefit payments, as   applicable, for any month in which the retiree is employed in any   position by a Texas public educational institution.          (b-2)  A retiree is considered to be employed by a Texas   public educational institution for purposes of Subsection (b) if   the retiree performs duties or provides services for or on behalf of   the institution that an employee of the institution would otherwise   perform or provide and:                (1)  the retiree waives, defers, or forgoes   compensation from the institution for the performance of the duties   or provision of the services at any time during the 12 consecutive   calendar months after the retiree's effective date of retirement,   notwithstanding any other law, including Sections 824.602(a)(1),   (a)(2), and (a)(4);                (2)  the retiree performs the duties or provides the   services for or on behalf of the institution as an independent   contractor at any time during the 12 consecutive calendar months   after the retiree's effective date of retirement; or                (3)  the retiree, as a volunteer without compensation,   performs the same duties or provides the same services for an   institution that the retiree performed or provided immediately   before retiring and the retiree has an agreement to perform those   duties or provide those services after the 12 consecutive calendar   months after the retiree's effective date of retirement.          SECTION 7.  Section 825.208(b), Government Code, is amended   to read as follows:          (b)  The retirement system is exempt from Section 651.002,   Chapter 660, and Subchapter K, Chapter 659, to the extent the board   of trustees determines an exemption is necessary for the   performance of fiduciary duties.          SECTION 8.  Section 825.212, Government Code, is amended by   adding Subsection (d) to read as follows:          (d)  Notwithstanding any other law, all personal financial   disclosures made by employees of the retirement system under this   section, including a rule or policy adopted under this section, are   confidential and excepted from the requirements of Section 552.021.          SECTION 9.  Section 825.3011(b), Government Code, is amended   to read as follows:          (b)  Chapter 551 does not require the board of trustees to   confer with one or more employees, consultants, or legal counsel of   the retirement system or with a third party, including   representatives of an issuer of restricted securities or a private   investment fund, in an open meeting if the only purpose of the   conference is to receive information from or question the   employees, consultants, or legal counsel of the retirement system   or the third party relating to:                (1)  [an] investment transactions or [a] potential   investment transactions if, before conducting the closed meeting, a   majority of [by] the board of trustees in an open meeting vote that   deliberating or conferring in an open meeting would have a   detrimental effect on the position of the retirement system in   negotiations with third parties or put the retirement system at a   competitive disadvantage in the market [in a private investment   fund]; or                (2)  the purchase, holding, or disposal of restricted   securities or a private investment fund's investment in restricted   securities if, under Section 552.143, the information discussed   would be confidential and excepted from the requirements of Section   552.021 if the information was included in the records of a   governmental body.          SECTION 10.  Section 825.306, Government Code, is amended to   read as follows:          Sec. 825.306.  CREDITING SYSTEM ASSETS. (a) The assets of   the retirement system 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.          (b)  Notwithstanding any other law, a requirement to deposit   in or transfer assets from one of the accounts described under   Subsection (a) is satisfied by maintaining and reporting the assets   in accordance with that subsection.          SECTION 11.  Section 825.408, Government Code, is amended by   amending Subsection (a) and adding Subsections (a-1) and (a-2) to   read as follows:          (a)  Except as provided by Subsection (a-1), an [An] employer   that fails to remit, before the seventh day after the last day of a   month, all member and employer deposits and documentation of the   deposits required by this subchapter to be remitted by the employer   for the month shall pay to the retirement system, in addition to the   deposits, interest on the unpaid [or undocumented] amounts at an   annual rate compounded monthly and a late fee in an amount   determined by the retirement system for each day after the deadline   imposed by this subsection that the employer fails to submit the   documentation of the deposits.  The rate of interest is the rate   established under Section 825.313(b)(1), plus two percent.     Interest and late fees required under this section are [is]   creditable to the interest account.  On request, the retirement   system may grant a waiver of the deadline imposed by this subsection   based on an employer's financial or technological resources.          (a-1)  This subsection applies only to an employer who   reports the employment of a retiree to the retirement system.     Subject to Subsection (a-2), an employer that fails to remit,   before the 11th day after the last day of a calendar month in which a   retiree is employed, the employer deposits required by Section   825.4092(b), documentation of those deposits as required by this   section, and the certified statement of employment required by   Section 824.6022 shall pay to the retirement system, in addition to   the deposits, interest on the unpaid amounts at the annual rate   established under Subsection (a), compounded monthly, and a late   fee for each day after the deadline imposed by this subsection that   the employer fails to file the documentation of the deposits and the   certified statement of employment.          (a-2)  If a retiree described by Subsection (a-1) performs   work in the month of August, the employer must remit the employer   deposits, documentation of those deposits, and the certified   statement of employment not later than the seventh day of   September.          SECTION 12.  Section 825.410(a), Government Code, is amended   to read as follows:          (a)  Payments to establish special service credit as   authorized under this subtitle, other than service credit that may   only be determined and paid for at the time of retirement such as   unused leave as authorized by Section 823.403, may be made in a lump   sum by a monthly payroll deduction in an amount not less than   one-twelfth of the contribution required to establish at least one   year of service credit, or in equal monthly installments over a   period not to exceed the lesser of the number of years of credit to   be purchased or 60 months.  Installment and payroll deduction   payments are due on the first day of each calendar month in the   payment period.  If an installment or payroll deduction payment is   not made in full within 60 days after the due date, the retirement   system may refund all installment or payroll deduction payments   less fees paid on the lump sum due when installment or payroll   deduction payments began.  Partial payment of an installment or   payroll deduction payment may be treated as nonpayment.  A check   returned for insufficient funds or a closed account shall be   treated as nonpayment.  When two or more consecutive monthly   payments have a returned check, a refund may be made.  [If the   retirement system refunds payments pursuant to this subsection, the   member is not permitted to use the installment method of payment or   the payroll deduction method, as applicable, for the same service   for three years after the date of the refund.     A member who requests   and receives a refund of installment or payroll deduction payments   also is not permitted to use the same method of payment for the same   service for three years after the date of the refund.]          SECTION 13.  Section 825.519, Government Code, is amended to   read as follows:          Sec. 825.519.  ELECTRONIC INFORMATION. (a)  The retirement   system may provide confidential information electronically to   members or other participants or employers and receive information   electronically from those persons, including by use of an   electronic signature or certification in a form acceptable to the   retirement system.  An unintentional disclosure to, or unauthorized   access by, a third party related to the transmission or receipt of   information under this section is not a violation by the retirement   system of any law, including a rule relating to the protection of   confidential information.          (b)  The retirement system may provide to a member or retiree   any information that is required to be provided, distributed, or   furnished under Section 802.106(a), (b), (d), or (e) by:                (1)  sending the information to an e-mail address the   member or retiree furnished to an employer covered by the   retirement system; or                (2)  directing the member or retiree through a written   notice or e-mail to an Internet website address to access the   information.          (c)  The retirement system may provide to an active member of   the retirement system the information that is required to be   provided under Section 802.106(c) by sending the information to an   e-mail address specified by the member for the purpose of receiving   confidential information.          SECTION 14.  Section 1575.402(a), Insurance Code, is amended   to read as follows:          (a)  The Retirees Advisory Committee is composed of the   following seven [nine] members appointed by the trustee:                (1)  one member who is an active school administrator;                (2)  one member who is a retired school administrator;                (3)  two members who are active teachers; and                (4)  three members who are retired teachers[;                [(5)     one member who is an active member of the   auxiliary personnel of a school district; and                [(6)     one member who is a retired member of the   auxiliary personnel of a school district].          SECTION 15.  Section 1575.403(b), Insurance Code, is amended   to read as follows:          (b)  The [Five members' terms, including the] terms of the   active school administrator, one active teacher, and two retired   teachers[, and the retired member of the auxiliary personnel,]   expire February 1, 2002, and every fourth year after that date.          SECTION 16.  Section 824.402, Government Code, as amended by   this Act, applies only to a member of the Teacher Retirement System   of Texas who retires on or after the effective date of this Act.          SECTION 17.  Section 824.601, Government Code, as amended by   this Act, applies to a retiree of the Teacher Retirement System of   Texas regardless of whether the person retired from employment   before, on, or after the effective date of this Act.          SECTION 18.  The changes in law made by this Act to Sections   1575.402 and 1575.403, Insurance Code, regarding the composition   and terms of the Retirees Advisory Committee, do not affect the   entitlement of a member serving on the committee immediately before   the effective date of this Act to continue to serve as a member of   the committee for the remainder of the member's term. As the terms   of committee members expire or as vacancies occur on the board, the   Teacher Retirement System of Texas shall appoint members to the   committee as necessary to comply with Sections 1575.402 and   1575.403, Insurance Code, as amended by this Act.          SECTION 19.  This Act takes effect September 1, 2017, except   that Section 825.212, Government Code, as amended by this Act,   takes effect immediately if this Act 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 immediate effect, Section 825.212, Government   Code, as amended by this Act, takes effect September 1, 2017.