Part 3.
TEACHER RETIREMENT SYSTEM OF TEXAS
Chapter 25.
MEMBERSHIP CREDIT
Subchapter A. SERVICE ELIGIBLE FOR MEMBERSHIP
34 TAC §25.4
The Board of Trustees (Board) of the Teacher Retirement System
of Texas (TRS) adopts amendments to §25.4, concerning substitute service
requirements for TRS membership eligibility as well as for purposes of verification
and purchase of substitute service credit. The amended rule includes language
redefining a substitute as a person serving on a temporary basis in the place
of a current employee. The amended section is adopted without changes to the
proposed text as published in the December 23, 2005, issue of the
Texas Register
(30 TexReg 8646).
Although §25.4 regards the verification and purchase of substitute
service, the definition of a substitute is also included in the rule. The
amended rule changes the definition of substitute used in determining whether
an employee may be classified as a substitute and excluded from TRS membership
eligibility. Under the amended rule, a substitute is a person who serves on
a temporary basis in the place of a current employee. Service in a vacant
position is not substitute service. Historically, the unique nature of the
substitute employment relationship has been a difficult concept to explain
and confusing for both TRS-covered employers and members. Many TRS-covered
employers use the titles "long-term substitute" or "permanent substitute"
to describe employment arrangements that may not be accurate descriptions
for TRS purposes. To minimize the confusion due to conflicting terms, TRS
is eliminating the time-frame aspect of temporary employment as a substitute.
Under the adopted amendments to the rule, if the person is serving in a position
held by a current employee, the length of time the substitute serves in that
position is not limited. If the person is serving in a position that is vacant,
the employment cannot be characterized as serving as a substitute. If the
position is not held by a current employee, the employment may be considered
temporary if the TRS-covered employer anticipates that the period of employment
will be less than four and 1/2 months. Temporary employment is not eligible
for TRS membership. If the TRS-covered employer anticipates that the period
of employment will be longer than four and 1/2 months or is for an indefinite
period, the employment is eligible for membership in TRS, provided it is at
least one-half time. Thus, the amended rule will provide a clear definition
of a substitute without the need to contact the substitute on a daily basis.
Finally, the amended section, as adopted, is reformatted from a single
implied subsection (a) into seven subsections to make the rule easier to read
and apply. The change to the definition of substitute is included in subsection
(b) of the amended section and provides that the definition of substitute
applies to the entire title, not just the section on the purchase of the service.
Accordingly, the amended rule will ensure the consistent application of the
definition of substitute for purposes of membership eligibility, verification
of service, and purchase of substitute service credit.
TRS received no public comments regarding the proposed amendments.
Statutory Authority: §825.102, Government Code, which authorizes
the Board to adopt rules for eligibility for membership and the administration
of the funds of the retirement system.
Cross-reference to Statute: §821.001, Government Code, relating to
definitions, including definition of "membership service"; §822.001,
Government Code, relating to membership requirement; §824.802, Government
Code, relating to participation in Deferred Retirement Option Plan (DROP); §825.403
relating to collection of membership contributions.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on March 15, 2006.
TRD-200601671
Ronnie G. Jung
Executive Director
Teacher Retirement System of Texas
Effective date: April 4, 2006
Proposal publication date: December 23, 2005
For further information, please call: (512) 542-6438
34 TAC §§25.82, 25.84, 25.86
The Board of Trustees (Board) of the Teacher Retirement System
of Texas (TRS) adopts amendments to §25.82 regarding cost of out-of-state
service credit, §25.84 relating to crediting fees for out-of-state service
credit, and §25.86 relating to computing average compensation. The amended
sections are adopted without changes to the text of the proposed rules as
published in the January 13, 2006, issue of the
Texas Register
(31 TexReg 276).
Section 823.401, Government Code, now requires cost to be the actuarial
present value, at the time of deposit, of the additional benefit attributable
to the service credit. However, the current method of calculating cost is
preserved if a person was a TRS member on December 31, 2005, and the out-of-state
service was performed before January 1, 2006.
The proposed amendments to §25.82 and §25.84 will enable TRS
to administer the new cost requirements and to preserve the current cost methodology
for those grandfathered under Senate Bill 1691 (2005, 79th Legislature, Regular
Session), and to administer other changes under that legislation. The amendments
include actuarial factor tables as described in the rule text, which are incorporated
by reference into §25.82.
Additionally, amended §25.82 and §25.86 reflect recent amendments
to §824.203, Government Code, for computing retirement benefits using
a highest five-year salary average instead of a three-year average, unless
the member is grandfathered under Senate Bill 1691 to use a three-year salary
average. The change affects how salary is calculated for the purpose of the
actuarial cost calculation. It also affects the actuarial calculation of the
factors themselves. Thus, for a member who is not grandfathered and for whom
the service credit purchase does not result in immediate eligibility for unreduced
retirement benefits, the cost is 96% of what it otherwise would be. This slightly
lower cost reflects the flow-through effect of a five-year salary average
on the benefit calculations. The 96% factor is reflected in amended §25.82.
TRS received no public comments regarding the proposed amended sections.
Statutory Authority: §825.102, Government Code, which authorizes
the Board to adopt rules for the administration of the funds of the retirement
system and the transaction of business of the Board.
Cross-reference to Statute: 26 U.S.C. §415, which imposes limitations
on certain payments for purchased service credit; §823.006, Government
Code, which provides for limits on annual contributions for purchase of service
credit; §823.401, Government Code, which provides for the establishment
of out-of-state service credit with TRS and authorizes the Board to adopt
actuarial rates and tables for the purchase of out-of-state service credit; §824.203,
Government Code, which provides for a five year salary average in the computation
of a standard service retirement annuity; and §825.410, Government Code,
which provides for payment of special service credit on an installment basis.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on March 14, 2006.
TRD-200601630
Ronnie G. Jung
Executive Director
Teacher Retirement System of Texas
Effective date: April 3, 2006
Proposal publication date: January 13, 2006
For further information, please call: (512) 542-6438
34 TAC §25.161, §25.164
The Board of Trustees (Board) of the Teacher Retirement System
of Texas (TRS) adopts amendments to §25.161 relating to the purchase
of work experience service credit and §25.164 relating to the purchase
of membership waiting period service credit. The amended sections are adopted
without changes to the text of the proposed rules as published in the January
13, 2006, issue of the
Texas Register
(31
TexReg 277).
Senate Bill 1691, 79th Legislature, Regular Session (2005), amended the
provisions of the TRS retirement plan to use a five-year salary average, instead
of a three-year salary average, for the calculation of benefits. TRS members
who are grandfathered would continue to have a three-year salary average.
State law and TRS rules permit an eligible member to purchase up to two
years of work experience service credit. The cost is actuarial cost. Section
25.161 sets forth a description of the calculation of actuarial cost. However,
because the calculation relies on a three-year salary average, both for determination
of the factors and application of the factors to salary average, the proposed
amendments to §25.161 provide for the five-year salary average to be
used for non-grandfathered members. For a member who is not grandfathered
and for whom the purchase of service credit for work experience does not result
in immediate eligibility for unreduced retirement benefits, the TRS actuary
has determined that the cost is 96% of what it otherwise would be. This slightly
lower cost reflects the flow-through effect of a five-year salary average
on the benefit calculations.
Further, amended subsection (a) of §25.161 deletes the reference to §823.006,
Government Code, because the statute no longer expressly defines "non-qualified
permissive service credit." In amended subsection (d) of §25.161, the
method of using the table when a member has more than 31 years of service
credit is clarified to conform more closely to the tables, which extend to
34 years of service credit instead of only 31 years. Amended subsection (f)
of §25.161 clarifies the use of installment agreements in light of Senate
Bill 1691, which expressly makes all types of service credit eligible for
purchase under the installment law. Amended subsection (g) of §25.161
updates the reference to using work experience service credit to meet eligibility
criteria for the retirees' health benefits program, TRS-Care, because Senate
Bill 1691 provides that the service credit may be used to meet "Rule of 80"
or "thirty years of service credit" eligibility criteria for retirement after
September 1, 2005.
State law and TRS rules permit an eligible member to purchase a year of
membership waiting period service credit for a school year in which the member
was subject to the waiting period and worked as a TRS member for less than
the required length of time to receive a year of membership service credit.
The combined service as a member and during the waiting period must be at
least the amount of time otherwise required for a year of membership service
credit. The cost of membership waiting period service credit is actuarial
cost, which the unamended section bases only on a three-year salary average,
both for determination of the factors and application of the factors to salary
average. The proposed amendments to §25.164 reflect that a five-year
salary average should be use for non-grandfathered members and apply the five-year
salary average where appropriate. For a member who is not grandfathered and
for whom the purchase of service credit for the membership waiting period
does not result in immediate eligibility for unreduced retirement benefits,
the TRS actuary has determined that the cost is 96% of what it otherwise would
be. This slightly lower cost reflects the flow-through effect of a five-year
salary average on the benefit calculations.
Further, amended subsection (a) of §25.164 clarifies the period of
time in which a membership waiting period was in effect. Amended subsection
(f) of §25.164 clarifies the use of installment agreements in light of
Senate Bill 1691, which expressly makes all types of service credit eligible
for purchase under the installment law. Amended subsection (i) of §25.164
updates the reference to using membership waiting period service credit to
meet eligibility criteria for the retirees' health benefits program, TRS-Care,
because Senate Bill 1691 provides that the service credit may be used to meet
"Rule of 80" or "thirty years of service credit" eligibility criteria for
retirement after September 1, 2005.
TRS received no public comments regarding the proposed amended sections.
Statutory Authority: §825.102, Government Code, which authorizes
the Board to adopt rules for the administration of the funds of the retirement
system and the transaction of business of the Board.
Cross-reference to Statute: 26 U.S.C. §415, which imposes limitations
on certain payments for purchased service credit; §822.001, Government
Code, which provides for the membership waiting period; §823.006, Government
Code, which provides for limits on annual contributions for purchase of service
credit; §823.404, Government Code, which provides for work experience
service credit; Government Code §823.406, which provides for membership
waiting period service credit; §824.203, Government Code, which provides
for a five year salary average in the computation of a standard service retirement
annuity; §825.410, Government Code, which provides for payment of special
service credit on an installment basis; and Chapter 1575, Insurance Code,
which defines "retiree" for the purpose of TRS-Care eligibility and describes
when purchased service credit may be used to determine TRS-Care eligibility.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on March 14, 2006.
TRD-200601631
Ronnie G. Jung
Executive Director
Teacher Retirement System of Texas
Effective date: April 3, 2006
Proposal publication date: January 13, 2006
For further information, please call: (512) 542-6438
Subchapter B. EMPLOYMENT AFTER SERVICE RETIREMENT
34 TAC §31.14
The Board of Trustees (Board) of the Teacher Retirement System
of Texas (TRS) adopts amendments to §31.14, relating to one-half time
employment. The amended section is adopted without changes to the proposed
text as published in the December 16, 2005, issue of the
Texas Register
(30 TexReg 8420).
Section 31.14 establishes the maximum number of hours a retiree employed
under the one-half time exception may work without forfeiting an annuity.
Because of the threat of imminent danger and the ultimate damage caused by
Hurricane Rita, some health care facilities covered by TRS were in need of
additional health care workers and requested TRS retirees whom they employed
in one-half time positions to work additional hours during the months of September
and October 2005. Under the authority of §418.016 of the Texas Government
Code, the Texas Governor Rick Perry suspended all rules and regulation that
may have inhibited or prevented a prompt response to the threat of Hurricane
Rita.
In response to Governor Perry's proclamation regarding the threat of Hurricane
Rita and a request from the governor's office for relief for TRS retirees
who were needed to work in health care facilities but concerned about loss
of their annuities if they worked the additional hours, staff authorized a
limited exception to the maximum number of hours a retiree working under the
one-half time exception could work without forfeiting an annuity during the
months of September and October 2005. The exception was extended through the
month of November in response to the renewal of the governor's disaster proclamation.
The Board ratified staff's actions by adopting the amended rule on a permanent
basis.
The adopted amendments provide that retirees employed in one-half time
positions may work additional hours without forfeiting their annuities and
limit the exception to only those retirees who retired before September 1,
2005 and are working in health care facilities. The amended rule further restricts
the exception to the months of September, October, and November 2005. Amended §31.14
also provides clear and consistent guidance to TRS reporting entities regarding
TRS's response to the governor's disaster proclamations and emergency relief
request.
TRS received no public comments regarding the proposed amendments.
Statutory Authority: Tex. Gov. Proclamation No. 41-3023 (signed
Sept. 20, 2005), 30 Tex. Reg. 6330 (2005), Governor Perry's initial disaster
proclamation regarding Hurricane Rita, and Tex. Gov. Proclamation No. 41-3027
(signed Oct. 20, 2005), 30 Tex. Reg. 7799 (2005), the governor's renewal of
the disaster proclamation for Hurricane Rita, both of which require adoption
of the amended rule so that TRS may provide clear and consistent guidance
to affected retirees and reporting entities regarding the limited exception
being granted to the one-half time employment provisions in response to the
governor's proclamations and emergency relief request; §418.012, Government
Code, which provides that the above-referenced gubernatorial proclamations
have the force and effect of state law; §824.601, Government Code, which
authorizes the Board to adopt rules necessary to administer Chapter 824, Subchapter
G, Government Code, relating to loss of benefits on resumption of service;
and §824.602(j), Government Code, which requires the Board to adopt rules
defining employment on a "one-half time basis" as an exception to loss of
benefits upon resumption of service.
Cross-reference to Statute: Chapter 824, Subchapter G, Government Code,
relating to loss of benefits on resumption of service.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on March 15, 2006.
TRD-200601672
Ronnie G. Jung
Executive Director
Teacher Retirement System of Texas
Effective date: April 4, 2006
Proposal publication date: December 16, 2005
For further information, please call: (512) 542-6438
Subchapter G. PURCHASE OF CREDIT FOR OUT-OF-STATE SERVICE
Subchapter L. OTHER SPECIAL SERVICE CREDIT
Chapter 31.
EMPLOYMENT AFTER RETIREMENT
Chapter 53.
CERTIFICATION BY COMPANIES OFFERING QUALIFIED INVESTMENT PRODUCTS