HBA-MPM H.B. 1569 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1569 By: Yarbrough Pensions & Investments 6/14/2001 Enrolled BACKGROUND AND PURPOSE Legislation passed in 1997 created law governing the firefighters' relief and retirement fund for firefighters in cities having a population of at least 1,600,000. Due to the conservative management of the fund, the fund has continually grown each year. House Bill 1569 increases or enhances benefits for firefighters or their survivors, and proposes the creation of a proportional retirement benefits program to enable persons with service in two or more participating systems to combine service credit to meet the length of service requirements to obtain certain benefits. 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 House Bill 1569 amends law regarding a firefighters' relief and retirement fund in certain municipalities. The bill increases the total monthly benefit payable to a retired or disabled member of a firefighters' retirement system (system), other than a deferred retiree or active member participating in a deferred retirement option plan (DROP), by $25 beginning with the monthly payment made for July 2000, and by $25 beginning with the monthly payment made for July 2001 (SECTION 1). The bill increases the monthly benefit of a DROP participant at retirement by two percent of the amount of the member's original benefit for every full year of DROP participation. The increase is applied to the member's benefit at retirement and is not added to the member's DROP account. The bill provides that the total increase of the monthly benefit may not exceed 20 percent for 10 years of participation in the DROP by a member and increases the amount of time that a member may participate in DROP from seven to ten years. The bill modifies provisions regarding payment of disability benefits to a member and to a member's eligible survivors. The bill authorizes a DROP participant who was qualified to make a DROP election before the actual date of the election to elect to have the DROP account recomputed by participating in a Back-DROP, under which the member's account balance is equal to an amount that the account would have had if the member had elected to participate in the DROP on an earlier date. The bill prohibits a member from choosing a Back-DROP date earlier than three years before the date the member elected to participate in the DROP, or September 1, 1995. The member's choice to participate in Back-DROP is irrevocable, unless the member provides the firefighters' relief and retirement fund (fund) written notification that the earliest date the member chose is not permissible and the fund's board of trustees (board) determines that a member's illness or injury caused the member to be separated from service earlier than anticipated (SECTION 2). H.B. 1569 modifies provisions regarding the payment of annual supplemental benefits to certain retired members and eligible survivors by the Board of Trustees of the Firemen and Policemen Pension Fund (board). The bill increases the aggregate supplemental benefit amount to $5 million. (SECTION 3). The bill increases from $4,000 to $5,000 the lump-sum payment made by the board from the fund to retired members and member's survivors who meet the eligibility criteria. The bill removes the provision that for a survivor to receive the lump-sum payment the member's retirement or death occurs or occurred after June 30, 1998 and that the member's survivor was eligible instead of ineligible to receive service pension benefits or disability benefits (SECTION 4). The bill modifies the conditions under which benefits, including survivor benefits, are required to be increased by removing the provision that a member have completed 30 or more years of participation and lowering the age from 50 to 48 at which time these benefits may be received by a disabled member, and makes this provision applicable when calculating survivor benefits payable based on the service of a member who died in the course of duty (SECTION 5). H.B. 1569 authorizes the board to establish a proportional retirement benefits program (benefits program), if provisions governing a municipal pension system are compatible with the provisions governing the fund. The bill sets forth the requirements to determine eligibility for a benefit by an eligible member under the benefits program and for participation in the benefits program. The bill authorizes the board to modify the benefits program only to make the provisions compatible with those of a participating retirement system, and prohibits the board from modifying the benefits program to provide a new benefit. If the board determines that the provisions governing a participating retirement system are not compatible with those governing the pension fund, the bill authorizes the board to terminate the benefits program, and requires written notice to be provided to the executive director of the participating retirement system before 30 days have elapsed. The bill authorizes the board to adopt rules and implement and administer the benefits program (SECTION 6). EFFECTIVE DATE September 1, 2001. Provisions regarding the proportional retirement benefits program take effect October 1, 2001.