HBA-MPM S.B. 708 77(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 708 By: Madla Pensions & Investments 3/27/2001 Engrossed BACKGROUND AND PURPOSE Under current law, the fire fighters and police officers pension fund was established to provide retirement security, including benefits for disability and death in the line of duty, for the members of the fire and police departments in San Antonio and their beneficiaries. Senate Bill 708 enhances retirement benefits to such members by providing a cost of living increase for retirees, more expedient vesting of retirement benefits, an additional distribution of funds in the event the investment returns for the fund exceed certain parameters, and a lump sum payment option to a surviving spouse. 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 Senate Bill 708 amends law related to the retirement system for firefighters and police officers in certain municipalities. The bill provides that a person is eligible to become a member of the fund as a condition of continued employment two months after the person has received state certification as a fire fighter or police officer, completed all other requirements for membership in the fund, and graduated from a fire fighter or police officer training academy of a municipality and passed the municipality's firefighters or police officers probationary exam, or satisfied a municipality's requirements in another manner. The bill deletes provisions regarding persons appointed and enrolled in classified positions who has been barred from entry in the fund because of age requirements, persons who became members of the Texas Municipal Retirement System on or before October 15, 1990, and a person having served eight months as a firefighter, police officer, or trainee (SECTION 5). The bill deletes language related to the percentage of a member's total salary deducted from the total salary of each firefighter and police officer in the employment of a municipality (SECTION 6). The bill requires a board to compute the retirement annuity of a member who retires after September 30, 1999 but before October 1, 20 at a certain rate. The bill provides the method for computing the retirement annuity of a member who retires after September 30, 2001, the period for which the computation applies, and the limit of a retirement annuity relative to a member's average total salary (SECTION 7). The bill provides that for the purposes of computing the monthly pension of a member who makes a Back DROP election, the member's retirement date is the member's actual retirement date less the amount of time for any service in excess of 34 years rather than 35 years of service (SECTION 8). The bill provides that if a retiree received income from any other employment, the board may reduce the retiree's disability retirement annuity, except that the annuity may not be decreased below an amount based on 2.25 percent rather than 2 percent of the retiree's average total salary computed at the time of retirement (SECTION 9). The bill sets forth provisions for increasing a member's annuity based on the cost of living index if the service retirement, disability retirement, or member's death occurred on or after August 30, 1971 but before October 1, 1991 rather than October 1, 1989 (SECTION 10). The board may authorize the disbursement of a 14th pension check in a fiscal year if the board determines that the average annual investment yield on the market value of fund investments for the preceding five fiscal years exceeded the annual investment yield projected by the actuary for the fiscal period for those five years by at least 300 basis points. The bill sets forth provisions for making a 14th pension check payment to retirees. Payment of a 14th check does not obligate the board to authorize a 14th check for any other year (SECTION 13). The bill prohibits the amount of death benefit annuity from exceeding the service retirement annuity to which a member with the same average total salary with 29 instead of 26 years of service credit would be entitled. The bill provides that a former spouse of a deceased member or retiree is not entitled to a death benefit annuity for surviving spouses and children (SECTION 14). The bill removes the provision that annuity benefits to surviving spouses or a dependent child end upon marriage (SECTION 16). The bill authorizes a surviving spouse of a member who is entitled to receive a death benefit to elect a portion of the benefit in a lump-sum payment. The election of a lump-sum payment only applies to the surviving spouse of a member who is eligible for service retirement and to elect a Backward Deferred Retirement Option Plan, and who elects to receive a death benefit. The lump-sum payment option does not apply if a member is killed in the line of duty and the deceased member's surviving spouse is entitled to a death benefit annuity under the above provisions. The bill sets forth how the lump-sum payment is to be computed (SECTION 19). The bill provides that a person who fails to give truthful information to the board of trustees in an application or in testimony at a hearing may result in a referral for criminal investigation (SECTION 4). EFFECTIVE DATE October 1, 2001.