By: Seliger	S.B. No. 642

	A BILL TO BE ENTITLED
	AN ACT
	relating to optional annuity increases 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, Government Code, is amended by
	amending Subsection (c) and adding Subsection (f) 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.
	(f)  If an ordinance described by Subsection (c) will cease
	to be in effect for a future year, or if an increase in annuities
	specified in an ordinance described by Subsection (c) will be
	changed or discontinued as provided by this section, the governing
	body of the participating municipality shall provide notice to
	members and annuitants by regular mail not later than the 60th day
	before the date on which the ordinance will cease to be in effect or
	the increase will be changed or discontinued. For an annuitant who
	receives a periodic check or advice of deposit from the retirement
	system by regular mail, the notice required by this subsection must
	be included with the annuitant's check or advice of deposit.
	SECTION 2.  Section 854.203, Government Code, is amended by
	amending Subsections (b) and (f) and adding Subsection (b-1) to
	read as follows:
	(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 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 the maximum amount of the annuity
	increase allowed under Subdivision (1) been applied to the
	annuitant's annuity.
	(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.
	(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).
	SECTION 3.  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.