HBA-TBM C.S.H.B. 1428 77(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 1428 By: Longoria Pensions & Investments 4/20/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE Currently, statewide retirement systems that offer proportionate retirement have different rules and regulations as to who is eligible to buy back service credit. Because the rules lack uniformity, some member employees may have mistakenly terminated membership in a retirement system and lost prior established service credit. C.S.H.B. 1428 establishes a uniform policy regarding purchasing prior service credit and sets forth provisions for the reestablishment of service credit previously canceled. 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. ANALYSIS C.S.H.B. 1428 amends the Government Code to authorize a member of a retirement system participating in the proportionate retirement program (program) to reestablish service credit, including prior service credit if applicable, previously canceled in another retirement system participating in the program if the person is not a current member of the system under which the service was performed, or in the case of the Texas County and District Retirement System (TCDRS), does not have an open account with the subdivision for which the person performed the service for which credit is sought. A person is authorized to apply to reestablish service credit by filing an application with the retirement system in which the service was originally credited and a certification that the applicant is currently a member of the certifying system. The bill requires a system other than TCDRS or the Texas Municipal Retirement System (TMRS) in which the service was originally credited to grant the service credit after receiving an application, a certification, and a contribution in the amount generally required to reestablish service credit in the system, including any applicable interest and membership fees. A subdivision participating in TCDRS or a municipality participating in TMRS is authorized to make a onetime election to authorize the reestablishment of service credit by payment by an applicant of a contribution for reestablishment of service credit generally in the particular system. For such a subdivision or municipality, TCDRS or TMRS is required to reestablish service credit upon receiving an application and a certification and, at the option of the applicant, a statement that the applicant does not wish to make a contribution for the service credit or the actuarial present value of the additional standard service benefits that would be attributable to the credit based on rates and tables recommended by the actuary and adopted by the board of trustees of the system. The bill authorizes service credit reestablished in TCDRS or TMRS by a member who opts not to make a contribution to be used only to meet eligibility requirements for benefits. Credit reestablished in either system has the same value as service credit performed for the particular subdivision or municipality at the time of deposit. The credit is creditable to the member's and employer's accounts in each subdivision or municipality for which the service was performed. To reestablish service credit in a public retirement system for municipal employees, a person must pay the actuarial present value as determined by the appropriate system of the additional service retirement benefits that would be attributable to the credit to be reestablished in any other public retirement system. The bill prohibits service credit from being reestablished if it is subject to provisions regarding service credit that is canceled by a termination of membership that occurs after August 31, 1993. The bill also prohibits the reestablishment of service credit in a subdivision participating in TCDRS or a municipality participating in TMRS if the person who seeks to reestablish the credit is a member only of a retirement system that the subdivision or municipality excludes from participation in the proportionate retirement program. EFFECTIVE DATE January 1, 2002. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 1428 differs from the original by modifying provisions relating to eligibility to reestablish service credit in a retirement system and removing provisions regarding limitation of participation by retirement systems. The substitute modifies provisions relating to the application for and reestablishment of service credit. The substitute sets forth provisions regarding payment for reestablished service credit. The substitute sets forth provisions regarding the prohibition under specified circumstances of credit reestablishment.