Part 3.
TEACHER RETIREMENT SYSTEM OF TEXAS
Chapter 25.
MEMBERSHIP CREDIT
Subchapter B. COMPENSATION
34 TAC §25.21
The Teacher Retirement System of Texas (TRS) adopts amendments
to §25.21, concerning compensation subject to deposit and credit without
changes to the text as published in the May 23, 2003, issue of the
Texas Register
(28 TexReg 4074) and therefore will not be republished.
The amendments clarify the types of monetary compensation that are creditable
and subject to deposit as well as the types of payments that are excluded
from eligible compensation for TRS purposes. The amendments to §25.21
expressly add to the list of payments that are excluded from annual compensation
for TRS purposes certain payments that are paid as an incentive for early
retirement or for terminating employment. In addition, the amendments clarify
that TRS may rely upon employer certifications in determining creditable compensation
or may conduct an investigation to determine if ineligible compensation has
been reported.
TRS received comments on the proposal from Mr. Lonnie Hollingsworth, representing
the Texas Classroom Teachers Association at the TRS Board of Trustees Policy
Committee meeting on June 26, 2003 and at the Board meeting on June 27, 2003.
He requested modification to the proposed language of subsection (d)(12),
which would permit TRS to presume that increased compensation paid in the
final year of employment prior to retirement is payment for termination employment
if it exceeds increases approved by the employer for all employees or classes
of employees. He noted that employers should be permitted to award increased
compensation to individual employees without a presumption that it is for
terminating employment when it in fact may be because of performance, skills,
or other attributes of the employee. He expressed concern that this rule would
operate to the detriment of the rank and file employees who receive increases
in the year preceding retirement. TRS disagrees with the comment because the
presumption would permit an employee or an employer to provide additional
information that would show the actual reason for the increase. By permitting
TRS to use a presumption about the last-year increase, the subsection recognizes
that often there is ample information to reliably show that a last-year increase
in compensation is for the purpose of encouraging termination and retirement.
Large last-year increases result in unexpected actuarial costs to the retirement
system in the form of increased benefits payable for the life of a retiree,
without adequate contributions over the career of the employee to support
such benefit levels. TRS finds that the presumption will promote efficient
administration of the provision while preserving an employee's right to provide
additional relevant information.
The amendments are adopted under the Government Code, Chapter
825, §825.102, which authorizes the Board of Trustees of the Teacher
Retirement System to adopt rules for the administration of the funds of the
retirement system and for the transaction of the business of the Board. Other
statutes that support adoption or that are affected by the proposed changes
to §25.21 include Gov't Code, Chapter 822, Subchapter B, §822.201,
Gov't Code, Chapter 824, Subchapter C, §824.203, Gov't Code, Chapter
825, Subchapter E, §825.403 and Subchapter F, §825.505.
No other codes are affected.
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 July 2, 2003.
TRD-200304085
Charles L. Dunlap
Executive Director
Teacher Retirement System of Texas
Effective date: July 22, 2003
Proposal publication date: May 23, 2003
For further information, please call: (512) 542-6115
Chapter 101.
PRACTICE AND PROCEDURE REGARDING CLAIMS
Part 5.
TEXAS COUNTY AND DISTRICT RETIREMENT SYSTEM