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.