Part 3.
TEACHER RETIREMENT SYSTEM OF TEXAS
Chapter 23.
ADMINISTRATIVE PROCEDURES
34 TAC §23.5
The Teacher Retirement System of Texas (TRS) proposes amendments
to §23.5, concerning nomination for appointment to the TRS Board of Trustees
(Board). The proposed amended rule addresses requirements for nominating petitions
and balloting. The proposed amendments to §23.5 would change the number
of eligible members or retirees who must sign and provide identifying information
on nominating petitions for the appointment of public school, higher education,
and retiree positions on the Board. The proposed amended rule would also change
the identifying information required to verify members' and retirees' names
on nominating petitions. In addition, the proposed amendments would specify
the option of using electronic balloting in accordance with Texas Government
Code §825.002 relating to trustees appointed by the governor.
Nominating petitions are used to determine the slate of candidates for
the election to select nominees for appointment by the governor to the public
school, higher education, and retiree positions on the TRS Board. The number
of names required on a nominating petition would change from 500 to 250 for
the public school and higher education positions and from 100 to 250 for the
retiree position. The change to 250 names on nominating petitions for all
positions would provide consistency and efficiency in administering the petition
process. Decreasing the number of names required for the public school and
higher education positions would continue to ensure that viable candidates
with sufficient constituent support are nominated while encouraging the qualification
of additional candidates. Increasing the number required for the retiree position
would likewise ensure the nomination of viable candidates with ample constituent
support but would not discourage an adequate slate of nominees.
As proposed, amended §23.5 would no longer require persons signing
nominating petitions to provide their full Social Security numbers. In lieu
of a complete Social Security number, they would have to provide the following
identifying information to verify their status as eligible members or retirees:
the first five digits of the member's or retiree's current residential zip
code and the last four digits of the member's or retiree's Social Security
number. The proposed amended rule would also allow TRS to use a member's or
retiree's identifying information on a bar code on ballots to verify a voter's
identity and status during the nomination election. These changes would provide
reasonable measures both to protect and to verify a signatory's identity.
After candidates for the nomination election have been settled on, the
proposed amendments would provide for the option of electronic balloting,
including an Internet-based method, pursuant to Government Code §825.002.
Under the amended rule, voters could request a printed ballot for write-in
candidates.
Tony C. Galaviz, TRS Chief Financial Officer, estimates that for each year
of the first five years the proposed amended rule will be in effect, there
will be no foreseeable implications relating to cost or revenues of state
or local governments as a result of enforcing or administering the amended
rule. Mr. Galaviz estimates that the cost of electronic balloting for the
nominating election would be comparable to or less than the cost of conducting
the election by paper ballot.
Mr. Galaviz also states that the public benefit will be to enhance protection
of members' and retirees' personal information, to encourage additional viable
candidates to qualify for the nominating elections, and to provide the option
of convenient yet secure Internet-based balloting. There will be no measurable
economic cost to persons required to comply with the amended rule. Because
there will be no measurable effect on a local economy or local employment
because of the proposed rule, no local employment impact statement is required
under §2001.022, Government Code. Moreover, there will be no adverse
economic effect on small businesses or micro-businesses as a result of enforcing
the proposed amended section.
Comments may be submitted in writing to Ronnie Jung, Executive Director,
Teacher Retirement System of Texas, 1000 Red River Street, Austin, Texas 78701.
To be considered, written comments must be received by TRS no later than 30
days after publication.
Statutory Authority: Government Code §825.002, which requires
the Board to adopt rules for the administration of the process for determining
nominations for appointment to the Board, and §825.102, which authorizes
the Board to adopt rules for the transaction of business of the Board.
Cross-reference to Statute: Government Code §825.002, concerning nominations
for appointment to the Board.
§23.5.Nomination for Appointment to the Board of Trustees.
(a)
(No change.)
(b)
Public school district members of the system who are currently
employed by a public school district may have their names listed on the official
ballot as candidates for nomination to a public school district position by
filing an official petition bearing the signature, printed or typed name,
first five digits of the member's current residential zip code, and last four
digits of the member's
[
(c)
Upon verification of petitions by the system or its designated
agent, the names of qualified candidates shall be
represented
[
(d) - (g)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on December 30, 2005.
TRD-200506140
Ronnie G. Jung
Executive Director
Teacher Retirement System of Texas
Earliest possible date of adoption: February 12, 2006
For further information, please call: (512) 542-6438
Subchapter G. PURCHASE OF CREDIT FOR OUT-OF-STATE SERVICE
34 TAC §§25.82, 25.84, 25.86
(Editor's Note: In accordance with Government Code, §2002.014,
which permits the omission of material which is "cumbersome, expensive, or
otherwise inexpedient," Figure: 34 TAC §25.82(d)(2) is not included in
the print version of the Texas Register. The Figure is available in the on-line
version of the January 13, 2006, issue of the Texas Register.)
The Board of Trustees ("Board") of the Teacher Retirement
System of Texas ("TRS") proposes 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 legislature recently amended state law relating to the calculation
of the cost of out-of-state service credit. Act of May 27, 2005, 79th Legislature,
Regular Session, Senate Bill 1691 ("SB 1691" or "the act"), §10, Chapter
1359 (to be codified as amendments to Texas Government Code Annotated §823.401).
The legislation requires that to establish out-of-state service credit, a
member must deposit the actuarial present value of the additional retirement
benefits attributable to the purchase of the service credit, based on rates
and tables recommended by the actuary. The legislation also provided in §57
that a member may establish the service credit at the cost established prior
to the changes, if the person was a member of the system on December 31, 2005,
and the out-of-state service was performed before January 1, 2006.
The proposed amendments to §25.82 preserve the previous cost provisions
for the members and service to which those provisions still apply under §57
of SB 1691. The proposed amendments also establish the new actuarial cost
provisions for service credit that requires the payment of actuarial cost.
The proposed amendments include actuarial factor tables and an explanation
of how those factors are to be used to determine the actuarial cost of the
service credit. The proposed amendments also reflect the calculation of the
cost for members subject to a three-year salary average and those who are
subject to a five-year salary average, as provided for under SB 1691.
The proposed amendments to §25.84 modify the requirement that crediting
fees for out-of-state service be credited to the state contribution account,
since the calculation of actuarial cost does not include a separate crediting
fee.
The proposed amendments to §25.86 modify the text relating to computation
of average compensation when out-of-state credit is purchased to delete the
reference to "best three years" of compensation. Under SB 1691, some TRS members
are subject to a five year average. The proposed amendments also clarify the
text relating to computation of average compensation.
Tony C. Galaviz, TRS Chief Financial Officer, estimates that, for each
year of the first five years that proposed amendments to §§25.82,
25.84, and 25.86 will be in effect, there will be no foreseeable implications
relating to cost or revenues of the state or local governments as a result
of enforcing or administering the amended rules. Rather, any measurable impact
on the cost or revenues of the state or local governments is the result of
the legislative enactment.
For each year of the first five years that the proposal will be in effect,
Mr. Galaviz has determined that the public benefit will be to provide a detailed
explanation and actuarial factors for the calculation of the cost of out-of-state
service credit under the new provisions of law. Any probable economic costs
to persons required to comply with the amended rules as proposed is the result
of the legislative enactment. There will be no effect on a local economy because
of the proposal, and therefore no local employment impact statement is required
under Government Code, §2001.022. Any measurable impact on a local economy
or local employment is the result of the legislative enactment. Moreover,
there will be no adverse economic effect on small businesses or micro-businesses
as a result of enforcing the proposed amended rules.
Comments may be submitted in writing to Ronnie Jung, Executive Director,
1000 Red River Street, Austin, Texas 78701-2698. To be considered, written
comments must be received by TRS no later than 30 days after publication of
this notice.
Statutory Authority: Government Code, §825.102, which authorizes
the Board to adopt rules for the administration of the funds of the retirement
system.
Cross-reference to Statute: Government Code, §823.401, which provides
for the establishment of out-of-state service credit with TRS.
§25.82.Cost.
(a)
For a person who was a member of TRS on December 31,
2005, and whose out-of-state service was performed before January 1, 2006,
the
[
(b)
For a person who does not meet the eligibility
requirements of subsection (a) of this section, the cost of establishing out-of-state
service credit is the actuarial cost, as determined by TRS, of the additional
standard annuity retirement benefits that would be attributable to the out-of-state
service credit purchased under this section.
(c)
To calculate the actuarial cost for a
member who is grandfathered to use a three-year salary average under §51.12
of this title (relating to Applicability of Certain Laws in Effect before
September 1, 2005), TRS will use the cost factors from the Out-of-State Service
Credit Tables furnished by the TRS actuary of record. Each of the tables cross-references
the member's age in rows and the member's years of credited service before
purchase in columns. The intersection of the member's age and service credit
is the cost per $1,000 of salary. When a member's service credit exceeds the
last column for years of service credit on the tables, the applicable cost
factor is found at the intersection of the member's age and the last column
for years of service credit. TRS will calculate the cost to purchase service
credit under this section by dividing the salary by 1000 and multiplying the
resulting quotient by the appropriate cost factor obtained from the tables.
The tables set forth the cost, per $1,000 of salary, to purchase from one
year to fifteen years of out-of-state service credit.
(d)
For the purpose of the actuarial cost
calculation for a member who is grandfathered to use a three-year salary average
under §51.12 of this title, the term "salary" is defined as follows:
(1)
For the upper region of each table (where the factors appear
above the line in italics), salary is the greater of current annual salary
or the average of the member's highest three years of compensation; and
(2)
For the lower region of each table (where the factors appear
below the line in bold), salary is the average of the member's highest three
years of compensation. A member's highest three years of compensation shall
be calculated as if the member were retiring at the time service credit is
purchased. The lower region of each table (where factors appear below the
line in bold) reflects those age and service combinations where the purchase
of service credit results in the immediate eligibility of the member for unreduced
retirement benefits.
Figure: 34 TAC §25.82(d)(2) (.pdf)
(e)
For the purpose of the calculation for
a member who is not grandfathered to use a three-year salary average, the
term "salary" shall have the same meaning as in subsection (d) of this section
except that a five-year salary average shall be used instead of a three-year
salary average. Additionally, the cost shall be 96 percent of the cost as
calculated under subsection (c) of this section when a factor in the upper
region of a table is used.
(f)
The purchase cost described in this section
assumes a lump-sum deposit will be made. If deposits are made under an installment
agreement, a non-refundable installment fee of 9% applies.
(g)
Payments for out-of-state service credit
shall be paid in a manner consistent with any applicable limitations of 26
U.S.C. §415, including any applicable limitations on payments as a percentage
of compensation of the participant from the employer for the school year in
which the payments are sought to be made, pursuant to Internal Revenue Code §415.
A member, or a beneficiary of a member if service credit is sought to be established
after the death of the member, may not be permitted to purchase TRS service
credit under this section if payments exceed the applicable limitations on
contributions.
(h)
The date of first eligibility to purchase credit
for any year of out-of-state service shall be the latest of the following
dates:
(1)
the date the member received 5 years' credit for service
in the public schools of Texas;
(2)
the date
state law
[
(3)
the date in which the member qualified to deposit payment
for each year of out-of-state service under the one for two rule in effect
until March 20, 1975;
(4)
the date the member completed one year of creditable service
in the public schools of Texas after relevant out-of-state service.
(i)
[
§25.84.Crediting Fees.
The crediting fees for out-of-state service
credit, when applicable,
will be credited to the state contribution account.
§25.86.Computing Average Compensation.
Neither compensation for out-of-state
[
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on December 30, 2005.
TRD-200506142
Ronnie G. Jung
Executive Director
Teacher Retirement System of Texas
Earliest possible date of adoption: February 12, 2006
For further information, please call: (512) 542-6438
and
] social security number of
250
[
500
] members of the retirement system whose most recent
credited service is or was performed for a public school district. Institution
of higher education members of the system who are currently employed by an
institution of higher education may have their names listed on the official
ballot as candidates for nomination to the institution of higher education
position by filing an official petition bearing the signature, printed or
typed name,
first five digits of the member's current residential zip
code, and last four digits of the member's
[
and
] social security
number of
250
[
500
] members whose most recent credited
service is or was performed for an institution of higher education. Retired
members may have their names listed on the official ballot as candidates for
nomination to the retired member position by filing an official petition bearing
the signature, printed or typed name,
first five digits of the retiree's
current residential zip code, and last four digits of the retiree's
[
and
] social security number of
250
[
at least 100
]
retirees of the system. Official petition forms shall be available from the
Teacher Retirement System of Texas, 1000 Red River Street, Austin, Texas 78701-2698.
Official petitions must be filed by January 15 of the calendar year in which
the election is to be held. A qualified public school district member, institution
of higher education member, or retiree may sign more than one candidate's
petition as long as they are eligible to vote in the election of the candidate
or candidates for whom they are signing.
printed
] on the ballot. The
system may designate an agent to implement
and to monitor the ballot process. Balloting may be conducted by printed ballot
or in combination with electronic balloting. Upon request by a qualified voter,
the system or its designated agent
[
ballot
] shall [
also
] provide
the voter a printed ballot containing a
space
for write-in candidates. Voting instructions shall be mailed on or before
March 15 of the year in which the election is held to the last known home
address of each active member or retiree.
To be counted, a printed ballot
must be completed and returned to the system or its designated agent by April
30 of the year in which the election is held and in accordance with the instructions
printed on the ballot. To be counted, an electronic ballot must be completed
and submitted to the system or its designated agent by April 30 of the year
in which the election is held and in accordance with the instructions contained
in the electronic voting format.
[
Ballots with member or retiree
numbers (social security numbers) to be used for validation purposes must
be received by TRS or its designated agent by April 30 of the year in which
the election is held in order to be counted.
] The executive director
shall cause the ballots to be counted. Names of the candidates for each position
receiving the three highest number of votes shall be certified by the executive
director to the governor.
Chapter 25.
MEMBERSHIP CREDIT
The
] cost of establishing out-of-state service
credit
is 12% per year of the full annual salary rate for the first
year of service in Texas which is both after the out-of-state service and
after September 1, 1956. Annual salary is limited to $8,400 for years prior
to September 1, 1969, and $25,000 for years after September 1969 but before
September 1, 1979.
For years starting on or after September 1, 1979,
TRS will apply any relevant creditable compensation limitations to determine
the full salary rate.
[
No limit exists for years after September
1, 1979.
] Cost will not be based on years granted for substitute service.
In addition a crediting fee of 8.0% compounded annually of the amount of deposits
due and paid shall be charged from the end of the school year in which the
member was first eligible to purchase credit for such service until payment
for the credit is received.
the Teacher Retirement
Law
] made the out-of-state service available for
TRS service
credit;
(b)
] No deposits for out-of-state
service credit may be made before the member accumulates 5 years of credit
for service in the public schools of Texas.
Out-of-state
] service
nor the annual salary rate used to compute the cost of
out-of-state service credit
is [
not
] used in computing the
[
best three years
] average compensation
used in the determination
of retirement or death benefits or for any other TRS purpose
.
Subchapter L. OTHER SPECIAL SERVICE CREDIT