Legislative Blog

J.B. Williams, J.D.

5 more bills that modify the Government Code

A Blog about 88th Legislature Laws

A Bit of Background

The following backgrounds help summarize the author's views on both the general topic: Texas and more specifically 88th Legislature Laws as it relates to that topic.

Brief Summary of Texas

Texas is truly a Republic. There are a multitude of items that to modify the state constitution must be modified. So there are times when Constitutional amendments are on the voting ballots. While I sometimes abhor the wording, the concept that all of those legally able to vote in Texas must vote on the change is a good one. And bills in Texas are generally short, making it easier for everyone to understand.

Summary of 88th Legislature Laws

The blogs here will discuss the laws passed by Congress and signed into law, as well as those, passed by Congress and approved by the voters to become law. There are a multitude of laws and each time I post blogs I will notate here the current effective date if it is different from prior blogs. I am currently posting bills that took effect immediately - those bills total 336. I am currently posting regarding larger bills, so each blog covers a single bill.

Blog Summary

SB 1245 - Changes to how payments are computed, and inclusion of gain share interest based upon rate of return on investments.

SB 1246 - Mostly opens the state investments up to owning real property.

SB 1305 - The water treatment system and associated items will no longer be owned by the City of Nacogdoches.

SB 1509 - Changes apply to those retiring after the act was modified.

SB 1520 - This repealed an existing code - Government Code, Section 442.0074(f).

5 more bills that modify the Government Code

Published: 2024-05-13

SB 1245

Contributions to, benefits from, and the administration of the Judicial Retirement System of Texas Plan Two

Modifies the retirement payment system such that if an amount is segregated then it must include annual interest paid on that amount.

It also now permits an retiree who resumes service to receive credit toward retirement benefits for the additional service time. This option may only be selected one time. Before this becomes an option the retirement system must determine that it is actuarially sound. It must have an amount of contributions that are sufficient to cover normal costs and amortize the unfunded actuarial accrued liability within 30 years. This section expires on September 1, 2025 such that the system does not have to continue to show that it is actuarially sound once this is either implemented or not.

There is an excess benefit arrangement section. A separate fund outside the trust fund for retirement is created to administered these 'excess funds'. They are considered excess based upon the Internal Revenue Code Section 415(m). It is done this way to ensure that these excess benefits can still be paid. The same board oversees these funds and is help to the same standard. These funds are not assignable. Retirees are eligible if the Internal Revenue Code is the reason that their retirement pay is reduced. The funds in the excess fund are from the state contribution that would otherwise be paid into the trust fund.

Then there is a new section for cash balance benefits. This only apply to members who took office on or after September 1, 2024 and was not a member before taking office. (So was not returning from judicial retirement.) A member may choose a cash balance benefit within 90 days prior to retirement but not after retirement. To be eligible the member must be at least 60 years old and have at least 8 years of service; or be at least 50 years old and have at least 12 years of service. The state will match the accumulated account balance by 150%.

The retiree may choose an optional cash balance payment and select a beneficiary for this. They may select one of the following choices:

1. after their death, a reduced annuity to the beneficiary throughout the beneficiaries lifetime;
2. after their death, 50% annuity paid throughout the life of the beneficiary;
3. if the retiree dies before 60 monthly payments, then the remainder of the 60 payments are paid to the beneficiary or to their estate;
4. if the retiree dies before 120 monthly payments, then the remainder of the 120 payments are paid to the beneficiary or to their estate;
5. after their death, 75% of the reduced annuity is payable to the beneficiary during the beneficiaries lifetime

If the beneficiary predeceases the retiree and a reduced optional payment was selected, then the monthly payment is adjusted up as it the option was not choosen. A beneficiary who becomes and ex-spouse is no longer valid unless they are re-designated post divorce. And if the option was chosen, in the event of a divorce, it may only be revoked if there is a court order or if the beneficiary signs a notarized statement releasing the system from claims and transfers their rights to the retiree.

A member may select a cash balance annuity or a partial lump sum cash balance option. The amount of the lump sum distribution cannot exceed the sum of 36 months of standard payments. The remaining payments will be reduced actuarially such that the fund results in no actuarial loss. The lump sum distribution may only be selected once, and must be selected before retirement payments begin.

For each payroll period, 6% is deducted to be the member's contribution to this plan. This amount is matched by the state out of the same fund from which the member is paid. Each member is paid 4% interest on their accumulated account balance each fiscal year. A gain share interest rate is also added, and it may not be less than 0 or more than 3%. Plus each fiscal year the retirement system will computer gain share interest as follows:

1. figure the average rate of return on investment during the preceding 5 years, expressed as a percent;
2. subtract the 4 percent from this rate; and
3. multiply the difference by 50%

The gain share interest amount is then computed for each member such that this additional amount is credited to each member. For retirees, their annuity payment is then recalculated as follows:

1. multiply the prior year annuity amount by the gain share interest rate or
2. if the retiree did not receive annuity in the prior year, then multiply the first annuity payment by the gain share interest rate

SB 1246

Authorized investments of public money by certain government entities and the confidentiality of certain information related to those investments

There are mostly minor changes that permit some things slightly differently then before. an investment in a direct security repurchase agreement may now be made through any financial institution in Texas rather than only with a state or national bank. And any direct security repurchase agreement or reverse security repurchase agreement may be submitted to a covered clearing agency.

10% of the economic stabilization fund must be invested in a way to ensure it's liquidity. And the board of trustees is to determine the maximum percentage of the retirement system that may be invested in hedge funds. The retirement system may create a title-holding entity for investment in real property. The title-holding entity must be wholly owned by the retirement system and be exempt from taxation under the Internal Revenue Code.

The following individuals may not be employed by, paid by, be a party to, or hold direct or indirect interest in the title-holding entity for the retirement system.

1. trustee or employee of the system;
2. relative of a trustee or employee of the system within a second degree of consanguinity or affinity (This excludes children, grandchildren, parents, siblings, grandparents)

Information on the title-holding entity is confidential and excepted from disclosure. This includes:

1. pre-due diligence or post-due diligence review, audit, or investigation;
2. formation of the entity;
3. potential purchase of real property

The following information on the title-holding entity is public:

1. certificate of formation;
2. date(s) when real property was purchased or sold;
3. information that qualifies the entity for federal income tax exemption;
4. name and location of any real property the entity holds ownership interest in;
5. as shown in the minutes, each recusal of a member in connection with deliberation or action;
6. name of each business entity wholly or partially owned by a relative of a board member wihtin the second degree of consanguinity, including a contract:
   • real property purcahse and sale agreement;
   • goods or servcies; or
   • lease agreements
7. copies of income tax returns filed;
8. if the system or a state agency is a tenant of property owned;

SB 1305

Transfer of the ownership rights of the City of Nacogdoches in the Central Heights Water System to the Angelina and Neches River Authority

The Central Heights Water System that is located north of the intersection of US Highway 59 and US Highway 259 is going to be transferred, with all it's property, easements, appurtenances, transmission and treatment systems, right-of-ways, and other property interest, to become an entity separate from the City of Nacogdoches.

SB 1509

Service retirement eligibility and benefits of certain members of the Employees Retirement System of Texas

Clarifies that the changes apply only to those retiring after the changes and not to those retired before the changes are made.

SB 1520

Authority of the Texas Historical Commission to take certain actions relating to the Republic of Texas Granite Boundary Marker

This repealed an existing code - Government Code, Section 442.0074(f).

 

J.B. Williams, J.D.

4,312 federal laws were passed from 1995 through December 2016.
Along with 88,819 federal rules and regulations.