82R6458 KFF-F
	By: Castro	H.B. No. 2934

	A BILL TO BE ENTITLED
	AN ACT
	relating to optional annuity increases and annual supplemental
	payments for certain retirees and beneficiaries of the Texas
	Municipal Retirement System.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 853.404(c), Government Code, is amended
	to read as follows:
	(c)  The governing body of a participating municipality that
	adopts an ordinance under Section 854.203 providing for increased
	annuities effective January 1 of a designated year may further
	provide in the ordinance that increases in annuities will be
	credited effective January 1 of each year following the designated
	year based on recomputations made as provided by Section 854.203(b)
	[854.203(b)(1)] for each year following the initial computation,
	and using the fraction specified in the ordinance as required under
	Section 854.203(b) [854.203(b)(2)] in the recomputations.
	SECTION 2.  The heading to Section 854.203, Government Code,
	is amended to read as follows:
	Sec. 854.203.  OPTIONAL ANNUITY INCREASE OR ANNUAL
	SUPPLEMENTAL PAYMENTS [IN RETIREMENT ANNUITIES].
	SECTION 3.  Section 854.203, Government Code, is amended by
	amending Subsections (a), (b), (f), and (g) and adding Subsections
	(b-1), (b-2), (b-3), and (b-4) to read as follows:
	(a)  The governing body of a participating municipality by
	ordinance, from time to time but not more frequently than once in
	each 12-month period, may authorize and provide for an increased
	annuity, a supplemental payment, or both [annuities] to be paid to
	retirees and beneficiaries of deceased retirees of the
	municipality. An annuity increased under this section replaces any
	annuity or increased annuity previously granted to the same person.
	(b)  The amount of annuity increase under this section is
	computed by one of the following methods:
	(1)  as the sum of the prior and current service
	annuities on the effective date of retirement of the person on whose
	service the annuities are based, multiplied by:
	(A) [(1)]  the percentage change in the Consumer
	Price Index for All Urban Consumers, published by the Bureau of
	Labor Statistics of the United States Department of Labor, from
	December of the year immediately preceding the effective date of
	the person's retirement to the December that is 13 months before the
	effective date of the ordinance providing the annuity increase;
	and
	(B) [(2)]  30 percent, 50 percent, or 70 percent,
	as specified by the governing body in the ordinance, except that if
	the governing body has specified a different percentage in an
	ordinance adopted under Section 853.404(c) and in effect on
	December 31, 1999, the percentage used in computing annuity
	increases for retirees of that municipality remains in effect until
	changed or discontinued under Section 853.404; or
	(2)  as the sum of the prior and current service
	annuities of the person on whose service the annuities are based on
	the effective date of the annuity increase multiplied by the
	percentage increase specified in the ordinance adopted by the
	governing body, except that an adjustment to an annuity after the
	annuity starting date for annuity increases under this subdivision
	may not cause an annuitant's annuity to exceed the amount that the
	annuitant would be entitled to had 100 percent of the amount
	described by Subsection (b)(1)(A) been applied to the annuitant's
	annuity on the effective date of retirement.
	(b-1)  An increase under Subsection (b)(2) applies to all
	annuities for which the effective date of retirement of the person
	on whose service the annuity is based is at least 12 months before
	the effective date of the increase. Notwithstanding any other
	provision of this subtitle, each distribution of a benefit under
	this subtitle must be determined and made in accordance with
	Section 401(a)(9), Internal Revenue Code of 1986. The board of
	trustees may adopt rules it considers necessary to comply with the
	distribution requirements.
	(b-2)  The amount of a supplemental payment under this
	section is an amount equal to the sum of the prior and current
	service annuities of the person on whose service the annuities are
	based on the date that is the 30th day after the effective date of
	the ordinance as described by Subsection (c) multiplied by the
	percentage specified in the ordinance adopted by the governing
	body. A supplemental payment under this section must be issued on:
	(1)  March 31, if the effective date of the ordinance
	described by Subsection (c) is January 1; or
	(2)  the 60th day after the date on which the amount of
	the payment is calculated under this subsection, if the effective
	date of the ordinance is not January 1.
	(b-3)  If the effective date of retirement of the person on
	whose service the annuity is based is less than 12 months before the
	date on which the amount of the payment is calculated under
	Subsection (b-2), the supplemental payment shall be prorated based
	on the number of months the person is retired.
	(b-4)  A supplemental payment under this section is an
	obligation of the municipality's account in the municipality
	accumulation fund.
	(f)  An increase granted to an annuitant under Subsection
	(b)(2), or the [The] amount by which an increase under Subsection
	(b)(1) [this section] exceeds all previously granted increases to
	an annuitant is:
	(1)  payable as a prior service annuity;
	(2)  [, is] an obligation of the municipality's account
	in the municipality accumulation fund;[,] and
	(3)  [is] subject to reduction under Section
	855.308(f).
	(g)  An ordinance under this section may not take effect
	until it is approved by the board of trustees as meeting the
	requirements of this section. The board may not approve an
	ordinance unless the actuary first determines that all obligations
	charged against the municipality's account in the municipality
	accumulation fund, including the obligations proposed in the
	ordinance, can be funded by the municipality within its maximum
	contribution rate and within its amortization period as in effect
	on the effective date of the annuity increases or supplemental
	payments.
	SECTION 4.  This Act takes effect immediately if it receives
	a vote of two-thirds of all the members elected to each house, as
	provided by Section 39, Article III, Texas Constitution.  If this
	Act does not receive the vote necessary for immediate effect, this
	Act takes effect September 1, 2011.