HBA-TBM H.B. 1487 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 1487
By: Yarbrough
Pensions & Investments
3/9/2001
Introduced



BACKGROUND AND PURPOSE 

Currently, some municipal firefighters and police officers benefit from a
deferred retirement option program (DROP).  DROP plans allow the members of
retirement systems who want to continue working despite being eligible to
retire to invest in an alternative pension benefit option for up to five
years.  Affording such a benefit to law enforcement officers may enable the
Department of Public Safety to retain experienced officers.  House Bill
1487 provides a DROP plan for certain law enforcement and custodial officer
members of the Employees Retirement System of Texas.   

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the board of trustees of the Employees
Retirement System of Texas in SECTION 1 (Section 814.704, Government Code)
of this bill.   

ANALYSIS

House Bill 1487 amends the Government Code to authorize certain law
enforcement and custodial officer (officer) members of the Employees
Retirement System of Texas (ERS) to elect, if the officer remains in a
position with the state, to participate in a deferred retirement option
plan (DROP).  The bill authorizes an officer who has at least 20 years of
service credit and has attained the normal retirement age to participate in
DROP by filing a prescribed election form with ERS.  The bill sets forth
provisions regarding the terms and irrevocability of the filing and the
maximum period and effective date of participation.  ERS is required to
approve each election filed by an eligible member.   

An officer participating in DROP remains a member of ERS during the period
of participation, provided the officer does not terminate membership, but
the bill prohibits the officer during participation from accruing
additional service credit in ERS.  The bill sets forth provisions regarding
the contributions, computations of service, and payment of benefits during
the period of participation.   

On the effective date of a member's participation in DROP, ERS is required
to transfer the accumulated contributions made by the member and the state
to the retirement annuity reserve account ( reserve account).  The bill
requires ERS to transfer monthly, during participation, the amount the
member would have received that month if the member had retired on the
effective date of DROP participation from the reserve account to a DROP
account created for the member.  The bill sets forth provisions relating to
the interest credited to a member's account.  When a member retires, the
member is entitled to the accumulated amount in the member's DROP account
payable in a lump sum or in periodic installments at the option of the
member.  The bill requires the board of trustees of ERS to determine by
rule the number and frequency of installment payments.  The bill sets forth
provisions relating to the disbursement of a decedent's DROP benefit.  The
bill sets forth provisions regarding the termination of participation in
DROP and the benefits for service accumulated by a member after
participation in DROP.   



 EFFECTIVE DATE

September 1, 2001.