TITLE 34.PUBLIC FINANCE

Part 3. TEACHER RETIREMENT SYSTEM OF TEXAS

The Board of Trustees (Board) of the Teacher Retirement System of Texas (TRS) adopts amended §25.34, concerning changes to the administration of the membership waiting period. The amended section is adopted without changes to the proposed text as published in the November 4, 2005, issue of the Texas Register (30 TexReg 7192).

The amendments to §25.34 will allow TRS to delete unnecessary provisions relating to administration of the 90-day membership waiting period, which was enacted by the 78th Legislature (Act of June 2, 2003, 78th Legislature, Regular Session, Chapter 201, §43, 2003 Texas General Laws 812, 824) . The statute requiring the 90-day waiting period for TRS membership expired by operation of law on September 1, 2005. Consequently, TRS proposes to retain only the provisions that may useful as reference in the administration of the purchase of waiting period service credit by eligible members who were affected by the waiting period.

With appropriate amendments, the text of subsection (i) of the former rule is retained and renumbered. This subsection addresses when a person may obtain membership service credit for a school year in which the person was required to observe the membership waiting period. This provision will be helpful for years to come in the administration of membership service credit for school years in which members were subject to the waiting period and did not work a sufficient length of time after the waiting period to obtain a year of membership service credit for the year. The retained rule text also preserves the explanation of whether membership service may be credited in years in which a waiting period was applicable.

TRS received no public comments regarding the proposed amendments.

Statutory Authority: §825.102, Government Code, which authorizes the Board to adopt rules for the administration of the funds of the retirement system.

Cross-reference to Statute: §822.001, Government Code, amended by Act of June 2, 2003, 78th Legislature, Regular Session, Chapter 201, §43, subsection (f), 2003 Texas General Laws 812, 825, which provides for the expiration of the 90-day membership waiting period.

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 January 20, 2006.

TRD-200600294

Ronnie G. Jung

Executive Director

Teacher Retirement System of Texas

Effective date: February 9, 2006

Proposal publication date: November 4, 2005

For further information, please call: (512) 542-6438

Subchapter L. OTHER SPECIAL SERVICE CREDIT

34 TAC §25.163

The Board of Trustees (Board) of the Teacher Retirement System of Texas (TRS) adopts amended §25.163, concerning changes to purchase of additional service credit under the service credit purchase option. The amended section is adopted without changes to the proposed text as published in the November 4, 2005, issue of the Texas Register (30 TexReg 7193).

The amendments to §25.163 will allow TRS to implement House Bill 3169 and Senate Bill 1691, 79th Legislature, Regular Session (2005), which repeal the option to purchase one, two, or three years of additional service credit under §823.405, Government Code, effective January 1, 2006. The amendments provide that, unless the service credit is purchased by December 31, 2005 or an installment payment agreement is filed with TRS by that date, the opportunity to purchase this service credit will be permanently forfeited. TRS is not proposing changes to the three tables attached as graphics to the section that are used to calculate the costs to purchase one, two, or three years of service.

TRS received no public comments regarding the proposed amendments.

Statutory Authority: §825.102, Government Code, which authorizes the Board to adopt rules for the administration of the funds of the retirement system.

Cross-reference to Statute: House Bill 3169 and §55(b) and §62 of Senate Bill 1691, 79th Legislature, Regular Session (2005), repealing §823.405, Government Code, but providing that the repeal does not affect an installment agreement entered into before January 1, 2006.

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 January 20, 2006.

TRD-200600295

Ronnie G. Jung

Executive Director

Teacher Retirement System of Texas

Effective date: February 9, 2006

Proposal publication date: November 4, 2005

For further information, please call: (512) 542-6438

Chapter 41. HEALTH CARE AND INSURANCE PROGRAMS

Subchapter A. RETIREE HEALTH CARE BENEFITS (TRS-CARE)

34 TAC §§41.1, 41.2, 41.5 - 41.7, 41.10, 41.11

The Board of Trustees ("Board") of the Teacher Retirement System of Texas ("TRS") adopts amendments to the following rules concerning the health benefits program under the Texas Public School Retired Employees Group Benefits Act ("TRS-Care"): §41.1, relating to initial enrollment periods for TRS-Care; §41.2, relating to additional enrollment opportunities; §41.5, relating to payment of contributions; §41.6, relating to required contributions from public schools; §41.7, relating to effective dates of coverage; §41.10, relating to eligibility to enroll in TRS-Care; and §41.11, relating to years of service credit used to determine premiums for TRS-Care. Most of the adopted amendments reflect changes arising from the enactment of Senate Bill ("SB") 1691 (Act of May 27, 2005, 79th Legislature, Regular Session, Chapter 1359). The amended rules are adopted without changes to the proposed text as published in the November 4, 2005, issue of the Texas Register (30 TexReg 7197).

The substantive amendments to §§41.1, 41.7, and 41.10 result from changes SB 1691 made to eligibility requirements for TRS-Care in Insurance Code, §1575.004. To meet the definition of a "retiree" under TRS-Care, SB 1691 requires service retirees who retire on or after September 1, 2005 to have at least 10 years of service credit in TRS and either to meet the "Rule of 80" (the sum of the retiree's age and years of service credit equals 80 or more) or to have 30 years of service credit at retirement. To satisfy the requirement to have at least 10 years of service credit in TRS, these retirees may include up to five years of military service credit but not any other service credit purchased as equivalent or special service credit. All TRS service credit, however, would count toward the Rule of 80 and the 30-year service credit requirements. Conforming the rule to the changes made in statute, adopted amendments to §41.1 delete the provision granting a second initial enrollment period to certain retirees who took a service retirement after September 1, 2004. Amended §41.7 also deletes language related to the "second initial enrollment period," which, as indicated above, is deleted in amended §41.1, and replaces it language addressing the effective date of coverage for individuals allowed to enroll or upgrade their plan tier in TRS-Care during the period from September 1, 2005 through October 31, 2005, as authorized by Board resolution adopted July 8, 2005. The adopted amendments to §41.10 reflect the changes SB 1691 made to the TRS-Care definition of a "retiree." Along with the amendments to §41.2, non-substantive changes to §§41.1, 41.7, and 41.10 now more accurately refer to the TRS-Care program.

Adopted amendments to §41.5 establish the consequences for a retiree's failure to pay a premium for optional TRS-care coverage following notice of delinquency and opportunity to make payment. The adopted amendments do the following: permit rather than require TRS to deduct premium payments from a retiree's annuity; downgrade a surviving spouse to free basic coverage upon default, in lieu of being completely canceled from participation in any level of TRS-Care; advise a retiree or surviving spouse of the limited opportunities to restore higher coverage levels after being downgraded for failure to pay a premium; and delete unnecessary language regarding disability retirees. In addition, the adopted amendments to §41.5 make non-substantive changes in reorganizing the subsections of the rule.

The adopted amendment to §41.6 reflects the increase the most recent general appropriations act (Act of May 29, 2005, 79th Legislature, Regular Session, Senate Bill 1, Chapter 1369) makes in the public school contribution rate to the TRS-Care fund, from 0.40% to 0.55% of each active employee's salary.

Amended §41.11 implements the provision in SB 1691 removing limitations on the types of service credit that can be used in determining a retiree's TRS-Care premium.

TRS received no public comments regarding the proposed amendments to §§41.1, 41.2, 41.5 - 41.7, 41.10, or 41.11.

Statutory Authority: Insurance Code, §1575.052, which authorizes the Board to adopt rules it considers necessary to implement and administer TRS-Care and associated fund.

Cross-reference to Statute: For the adopted amendments to §§41.1, 41.2, 41.5, 41.7, 41.10, and 41.11: Insurance Code, Chapter 1575, which provides for the establishment and administration of the TRS-Care program and fund, and §38 of SB 1691, which amends Insurance Code, §1575.004 relating to definition of retiree. For the adopted amendments to §41.6: Insurance Code, Chapter 1575, and §42 of SB 1691, which amends Insurance Code, §1575.204, relating to public school contributions to the TRS-Care fund.

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 January 20, 2006.

TRD-200600296

Ronnie G. Jung

Executive Director

Teacher Retirement System of Texas

Effective date: February 9, 2006

Proposal publication date: November 4, 2005

For further information, please call: (512) 542-6438