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  82R372 KFF-D
 
  By: Chisum H.B. No. 2506
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to creating defined contribution retirement plans for
  persons eligible to participate in the Employees Retirement System
  of Texas and the Teacher Retirement System of Texas.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
  ARTICLE 1. CREATION OF DEFINED CONTRIBUTION PLANS
         SECTION 1.01.  Section 812.002, Government Code, is amended
  by amending Subsection (b) and adding Subsection (d) to read as
  follows:
         (b)  Subject to Subsection (d), membership [Membership] in
  the elected class is optional.
         (d)  A person required to participate in the defined
  contribution plan under Section 816.003 may not become a member of
  the elected class.
         SECTION 1.02.  Effective September 1, 2012, Section
  812.003(a), Government Code, is amended to read as follows:
         (a)  Except as provided by Subsection [Subsections] (b) [and
  (d)], membership in the employee class of the retirement system
  includes all employees and appointed officers of every department,
  commission, board, agency, or institution of the state except:
               (1)  independent contractors and their employees
  performing work for the state; [and]
               (2)  persons disqualified from membership under
  Section 812.201; and
               (3)  persons who are required to or elect to
  participate in the defined contribution plan under Chapter 816.
         SECTION 1.03.  Sections 812.201(b) and (c), Government Code,
  are amended to read as follows:
         (b)  Except as provided by Section 816.003(a)(2)(B), a [A]
  retiree who takes a position not included in a membership class from
  which the retiree receives retirement benefit payments:
               (1)  is required to become or remain a member if the
  position is included in the employee class; or
               (2)  may elect to become or remain a member if the
  position is included in the elected class.
         (c)  A person who is retired from the elected class of
  membership and who again holds a position included in that class may
  elect to become a member again by filing notice with the retirement
  system unless Section 816.003(a)(2)(B) applies.  Except as
  provided by Section 812.203(c), when benefit payments are resumed,
  the retirement system shall recompute the annuity selected at the
  time of the person's original retirement to include the additional
  service established during membership under this subsection.
         SECTION 1.04.  Sections 815.403(b), (d), and (e), Government
  Code, are amended to read as follows:
         (b)  Before November 2 of each even-numbered year, the
  retirement system shall certify to the Legislative Budget Board and
  to the budget division of the governor's office for review:
               (1)  an estimate of the amount necessary to pay the
  state's contribution under Subsections (a)(1), (a)(2), (a)(3), and
  (a)(5) for the following biennium; [and]
               (2)  as a separate item, an estimate of the amount
  required to administer the law enforcement and custodial officer
  supplemental retirement fund for the following biennium; and
               (3)  an estimate of the amount necessary to pay the
  state's contribution under Section 816.009(a).
         (d)  Before September 1 of each year, the retirement system
  shall certify to the state comptroller of public accounts:
               (1)  an estimate of the amount necessary to pay the
  state's contribution under Subsection (a)(1) for the following
  fiscal year;
               (2)  an estimate of the amount necessary to pay
  membership fees for the following fiscal year, if the legislature
  has appropriated money for that purpose; [and]
               (3)  an estimate of the amount required to pay lump-sum
  death benefits for retirees under Section 814.501 for the following
  fiscal year; and
               (4)  an estimate of the amount necessary to pay the
  state's contribution under Section 816.009(a) for the following
  fiscal year.
         (e)  All money allocated and appropriated by the state to the
  retirement system for benefits provided by the retirement system,
  except money for the payment of lump-sum death benefits, [and] for
  the payment of benefits from the law enforcement and custodial
  officer supplemental retirement fund, and for the payment of the
  state's contribution under Section 816.009(a), shall be paid, based
  on the annual estimate of the retirement system, in monthly
  installments to the state accumulation fund. The money required
  for state contributions and membership fees shall be from
  respective funds appropriated to pay the compensation of the member
  for whose benefit the contribution or fee is paid. If the total of
  the estimated required payments is not equal to the total of the
  actual payments required for a fiscal year, the retirement system
  shall certify to the state comptroller of public accounts at the end
  of that year the amount required for necessary adjustments, and the
  comptroller shall make the required adjustments.
         SECTION 1.05.  Subtitle B, Title 8, Government Code, is
  amended by adding Chapter 816 to read as follows:
  CHAPTER 816. DEFINED CONTRIBUTION PLAN
         Sec. 816.001.  DEFINITIONS. In this chapter:
               (1)  "Defined contribution plan" means the defined
  contribution plan established under this chapter.
               (2)  "Qualified plan" means an employee benefit plan
  qualified under Section 401(a), Internal Revenue Code of 1986.
         Sec. 816.002.  ESTABLISHMENT AND ADMINISTRATION OF DEFINED
  CONTRIBUTION PLAN. (a)  The retirement system shall establish and
  administer a defined contribution plan that is a qualified plan and
  under which a participant pays contributions to the plan for the
  purchase of investment products selected by the participant from
  among products that are offered by companies authorized to provide
  the products in this state and selected by the retirement system
  under Subsection (b).
         (b)  The retirement system shall adopt rules for the
  selection of companies to provide investment products under the
  defined contribution plan. The rules must provide for the
  selection of vendors of a wide variety of investment products
  authorized for a qualified plan. The retirement system shall select
  vendors every two years.
         (c)  A provider of investment products is exempt from the
  payment of franchise or premium taxes on products issued under the
  defined contribution plan.
         Sec. 816.003.  MANDATORY PARTICIPATION IN PLAN. (a) Except
  as provided by Subsection (b), a person must participate in the
  defined contribution plan if the person:
               (1)  on or after September 1, 2012:
                     (A)  was hired as an employee or appointed as an
  officer of a department, commission, board, agency, or institution
  of this state; or
                     (B)  was elected:
                           (i)  to a state office that is normally
  filled by statewide election and that is not included in the
  coverage of the Judicial Retirement System of Texas Plan One or the
  Judicial Retirement System of Texas Plan Two;
                           (ii)  as a member of the legislature; or
                           (iii)  as a district or criminal district
  attorney, to the extent the person receives a salary from the state
  general revenue fund; and
               (2)  on the date the person was elected, appointed, or
  hired, as applicable:
                     (A)  was not a member of the system; or
                     (B)  was a member of the system who was not serving
  in a position included in the coverage of the system during the 30
  days preceding the date the person was elected, appointed, or
  hired.
         (b)  For purposes of Subsection (a)(1)(A), an office or
  employment that is included in the coverage of the Teacher
  Retirement System of Texas, the Judicial Retirement System of Texas
  Plan One, or the Judicial Retirement System of Texas Plan Two is not
  a position with a department, commission, board, agency, or
  institution of the state.
         Sec. 816.004.  OPTIONAL PARTICIPATION IN PLAN. (a) A
  contributing member of the retirement system may elect to
  participate in the defined contribution plan. An election to
  participate in the defined contribution plan under this section
  must be on a form prescribed by and filed with the retirement
  system.
         (b)  Participation in the defined contribution plan is an
  alternative to participation as a contributing member of the
  retirement system for the same period.
         (c)  An election made under this section is irrevocable.
         (d)  If a person elects to participate in the defined
  contribution plan under this section, the retirement system shall
  transfer to the vendors of investment products selected by the
  participant an amount equal to the actuarial present value of the
  person's accrued service benefit in the retirement system. The
  transfer shall be made not later than the 45th day after the date
  the election is filed with the retirement system.
         (e)  A transfer under Subsection (d) terminates a person's
  membership in the retirement system and all rights and benefits
  from the system based on the person's previous service, including
  the right to withdraw accumulated contributions from the retirement
  system.
         Sec. 816.005.  EFFECT OF EMPLOYMENT CHANGES. A person
  participating in the defined contribution plan continues to
  participate in the plan when the person changes employment to
  another position included in the coverage of the retirement system.
         Sec. 816.006.  VESTING OF BENEFITS; TERMINATION OF
  PARTICIPATION. (a) Benefits in the defined contribution plan vest
  in a participant on the first anniversary of the person's
  participation in the plan.
         (b)  A person terminates participation in the defined
  contribution plan, without losing any vested benefits, by:
               (1)  death;
               (2)  retirement; or
               (3)  termination of employment in all positions
  included in the coverage of the retirement system.
         (c)  The benefits of a product purchased under the defined
  contribution plan become available under the terms of the annuity
  but not before the earlier of the date the member:
               (1)  terminates participation as provided by
  Subsection (b); or
               (2)  attains the age of 70-1/2 years.
         Sec. 816.007.  CREDITABLE SERVICE. A person may not
  establish in the retirement system credit for service performed
  during a period the person was participating in the defined
  contribution plan.
         Sec. 816.008.  INVESTMENT ADVISORY FEES. (a)  A participant
  in the defined contribution plan may authorize the payment of
  investment advisory fees from the amount in the participant's
  custodial account or product if:
               (1)  the investment advisory fees for each fiscal year
  do not exceed two percent of the annual value of the participant's
  custodial account or product as of the last day of that fiscal year;
               (2)  the fees are paid directly to a registered
  investment advisor that provides investment advice to the
  participant;
               (3)  the investment advisor to whom the fees are paid is
  registered with the Securities and Exchange Commission under the
  Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.)
  and is engaged full-time in the business of providing investment
  advice;
               (4)  the participant and the investment advisor enter
  into a contract, for a term of not more than one year, for services
  that provides for the payment of fees as provided by this section;
  and
               (5)  the retirement system has received an official
  determination from the Internal Revenue Service that payment of
  investment advisory fees as prescribed by this section is not a
  distribution of funds that is prohibited or subject to taxation and
  penalty under the Internal Revenue Code.
         (b)  The executive director of the retirement system shall
  request an official determination from the Internal Revenue Service
  concerning whether the payment of investment advisory fees as
  prescribed by this section is a distribution of funds that is
  prohibited or subject to taxation and penalty under the Internal
  Revenue Code. If the executive director receives an official
  determination from the Internal Revenue Service as specified by
  this subsection, the executive director shall file the official
  determination with the secretary of state's office for publication
  in the Texas Register.
         Sec. 816.009.  CONTRIBUTIONS. (a) A participant in the
  defined contribution plan shall make contributions to the plan at
  the same rate that a member of the retirement system is required to
  make for current service, and the state shall make contributions to
  the plan for each participant at the same rate as is made for
  contributing members of the retirement system. Contributions
  required under this subsection shall be credited to the benefit of
  the participant.
         (b)  A participant in the defined contribution plan and the
  participant's employer shall execute an agreement under which the
  salary of the participant is reduced by the amount of the
  contribution required by this section. An agreement under this
  subsection is irrevocable until the participant terminates
  participation in the plan under Section 816.006.
         (c)  Participant contributions shall be made in the manner
  provided by Section 815.402, and state contributions shall be made
  in the manner provided by Section 815.403.
         Sec. 816.010.  EXCESS BENEFIT ARRANGEMENT. The retirement
  system may establish a governmental excess benefit arrangement as
  provided by Section 415(m), Internal Revenue Code of 1986, for the
  purpose of providing to participants in the defined contribution
  plan any portion of a participant's benefits that would otherwise
  be payable under the terms of the plan except for the limitation on
  benefits imposed by Section 415, Internal Revenue Code of 1986.
         Sec. 816.011.  HEALTH BENEFITS AND OTHER COVERAGES. A
  person who participates or who is eligible to participate in the
  defined contribution plan established under this chapter is
  eligible for health benefits and other coverages under Subtitle H,
  Title 8, Insurance Code, to the same extent as a person who is a
  member or who is eligible to be a member of the retirement system.
         Sec. 816.012.  RULES. The retirement system may adopt rules
  necessary to implement this chapter.
         SECTION 1.06.  Section 822.001(a), Government Code, is
  amended to read as follows:
         (a)  Subject to Subsection (b), membership [Membership] in
  the retirement system includes:
               (1)  all persons who were members of the retirement
  system on the day before the effective date of this subtitle; and
               (2)  all employees of the public school system.
         SECTION 1.07.  Section 822.0015(a), Government Code, is
  amended to read as follows:
         (a)  In lieu of participating in the Employees Retirement
  System of Texas, the commissioner of education may elect to
  participate in the retirement system in the same manner and under
  the same conditions as [a member who is] an employee of the public
  school system.
         SECTION 1.08.  Section 822.002, Government Code, is amended
  to read as follows:
         Sec. 822.002.  EXCEPTIONS TO MEMBERSHIP REQUIREMENT. An
  employee of the public school system is not permitted to be a member
  of the retirement system if the employee:
               (1)  is eligible and elects to participate in the
  optional retirement program under Chapter 830;
               (2)  is solely employed by a public institution of
  higher education that as a condition of employment requires the
  employee to be enrolled as a student in the institution; [or]
               (3)  has retired under the retirement system and has
  not been reinstated to membership pursuant to Section 824.005 or
  824.307; or
               (4)  is required to or elects to participate in the
  defined contribution plan established under Chapter 826.
         SECTION 1.09.  Section 822.005(c), Government Code, is
  amended to read as follows:
         (c)  Except as provided by Section 826.004, a [A] person is
  not entitled to withdraw contributions who is employed, has applied
  for employment, or has received a promise of employment, in a
  position covered by the retirement system.
         SECTION 1.10.  Sections 825.404(b) and (e), Government Code,
  are amended to read as follows:
         (b)  Before November 2 of each even-numbered year, the board
  of trustees shall certify to the comptroller of public accounts for
  review and adoption an estimate of the amount necessary to pay the
  state's contributions to:
               (1)  the retirement system for the following biennium;
  and
               (2)  the defined contribution plan under Chapter 826
  for the following biennium.
         (e)  All money appropriated by the state to the retirement
  system shall be paid to the state contribution account in equal
  monthly installments as provided by Section 403.093(c),
  [Government Code,] except money appropriated:
               (1)  under Subsection (d), which remains in the general
  revenue fund until expenses are approved under Chapter 2103; and
               (2)  for the payment of the state's contributions under
  Section 826.009(a).
         SECTION 1.11.  Section 825.4041(a), Government Code, is
  amended to read as follows:
         (a)  For purposes of this section, a new member is a person
  who:
               (1)  was first employed on or after September 1, 2005,
  including a former member who withdrew retirement contributions
  under Section 822.003 and is reemployed on or after September 1,
  2005; and
               (2)  is not required and has not elected to participate
  in the defined contribution plan under Chapter 826.
         SECTION 1.12.  Subtitle C, Title 8, Government Code, is
  amended by adding Chapter 826 to read as follows:
  CHAPTER 826. DEFINED CONTRIBUTION PLAN
         Sec. 826.001.  DEFINITIONS. In this chapter:
               (1)  "Defined contribution plan" means the defined
  contribution plan established under this chapter.
               (2)  "Qualified plan" means an employee benefit plan
  qualified under Section 401(a) or 403(b), Internal Revenue Code of
  1986.
         Sec. 826.002.  ESTABLISHMENT AND ADMINISTRATION OF DEFINED
  CONTRIBUTION PLAN. (a)  The retirement system shall establish and
  administer a defined contribution plan that is a qualified plan and
  under which a participant pays contributions to the plan for the
  purchase of investment products selected by the participant from
  among products that are offered by companies authorized to provide
  the products in this state and selected by the retirement system
  under Subsection (b).
         (b)  The retirement system shall adopt rules for the
  selection of companies to provide investment products under the
  defined contribution plan. The rules must provide for the
  selection of vendors of a wide variety of investment products
  authorized for a qualified plan. The retirement system shall select
  vendors every two years.
         (c)  A provider of investment products is exempt from the
  payment of franchise or premium taxes on products issued under the
  defined contribution plan.
         Sec. 826.003.  MANDATORY PARTICIPATION IN PLAN. A person
  must participate in the defined contribution plan if the person:
               (1)  is an employee who was employed on or after
  September 1, 2012; and
               (2)  on the date the person began employment:
                     (A)  was not a member of the system; or
                     (B)  was a member of the system who was not serving
  in a position included in the coverage of the system during the 30
  days preceding the date the person was elected, appointed, or
  hired.
         Sec. 826.004.  OPTIONAL PARTICIPATION IN PLAN. (a) An
  employee who is a contributing member of the retirement system may
  elect to participate in the defined contribution plan. An election
  to participate in the defined contribution plan under this section
  must be on a form prescribed by and filed with the retirement
  system.
         (b)  Participation in the defined contribution plan is an
  alternative to participation as a contributing member of the
  retirement system for the same period.
         (c)  An election made under this section is irrevocable.
         (d)  If a person elects to participate in the defined
  contribution plan under this section, the retirement system shall
  transfer to the vendors of investment products selected by the
  participant an amount equal to the actuarial present value of the
  person's accrued service benefit in the retirement system. The
  transfer shall be made not later than the 45th day after the date
  the election is filed with the retirement system.
         (e)  A transfer under Subsection (d) terminates a person's
  membership in the retirement system and all rights and benefits
  from the system based on the person's previous service, including
  the right to withdraw accumulated contributions from the retirement
  system.
         Sec. 826.005.  EFFECT OF EMPLOYMENT CHANGES. A person
  participating in the defined contribution plan continues to
  participate in the plan when the person changes employment to
  another position included in the coverage of the retirement system.
         Sec. 826.006.  VESTING OF BENEFITS; TERMINATION OF
  PARTICIPATION. (a) Benefits in the defined contribution plan vest
  in a participant on the first anniversary of the person's
  participation in the plan.
         (b)  A person terminates participation in the defined
  contribution plan, without losing any vested benefits, by:
               (1)  death;
               (2)  retirement; or
               (3)  termination of employment in all positions
  included in the coverage of the retirement system.
         (c)  The benefits of a product purchased under the defined
  contribution plan become available under the terms of the annuity
  but not before the earlier of the date the member:
               (1)  terminates participation as provided by
  Subsection (b); or
               (2)  attains the age of 70-1/2 years.
         Sec. 826.007.  CREDITABLE SERVICE. A person may not
  establish in the retirement system credit for service performed
  during a period the person was participating in the defined
  contribution plan.
         Sec. 826.008.  INVESTMENT ADVISORY FEES. (a)  A participant
  in the defined contribution plan may authorize the payment of
  investment advisory fees from the amount in the participant's
  custodial account or product if:
               (1)  the investment advisory fees for each fiscal year
  do not exceed two percent of the annual value of the participant's
  custodial account or product as of the last day of that fiscal year;
               (2)  the fees are paid directly to a registered
  investment advisor that provides investment advice to the
  participant;
               (3)  the investment advisor to whom the fees are paid is
  registered with the Securities and Exchange Commission under the
  Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.)
  and is engaged full-time in the business of providing investment
  advice;
               (4)  the participant and the investment advisor enter
  into a contract, for a term of not more than one year, for services
  that provides for the payment of fees as provided by this section;
  and
               (5)  the retirement system has received an official
  determination from the Internal Revenue Service that payment of
  investment advisory fees as prescribed by this section is not a
  distribution of funds that is prohibited or subject to taxation and
  penalty under the Internal Revenue Code.
         (b)  The executive director of the retirement system shall
  request an official determination from the Internal Revenue Service
  concerning whether the payment of investment advisory fees as
  prescribed by this section is a distribution of funds that is
  prohibited or subject to taxation and penalty under the Internal
  Revenue Code. If the executive director receives an official
  determination from the Internal Revenue Service as specified by
  this subsection, the executive director shall file the official
  determination with the secretary of state's office for publication
  in the Texas Register.
         Sec. 826.009.  CONTRIBUTIONS. (a) A participant in the
  defined contribution plan shall make contributions to the plan at
  the same rate that a member of the retirement system is required to
  make for current service, and the state shall make contributions to
  the plan for each participant at the same rate as is made for
  contributing members of the retirement system. Contributions
  required under this subsection shall be credited to the benefit of
  the participant.
         (b)  A participant in the defined contribution plan and the
  participant's employer shall execute an agreement under which the
  salary of the participant is reduced by the amount of the
  contribution required by this section. An agreement under this
  subsection is irrevocable until the participant terminates
  participation in the plan under Section 826.006.
         (c)  Participant contributions shall be made in the manner
  provided by Subchapter E, Chapter 825, for member contributions to
  the retirement system.
         Sec. 826.010.  EXCESS BENEFIT ARRANGEMENT. The retirement
  system may establish a governmental excess benefit arrangement as
  provided by Section 415(m), Internal Revenue Code of 1986, for the
  purpose of providing to participants in the defined contribution
  plan any portion of a participant's benefits that would otherwise
  be payable under the terms of the plan except for the limitation on
  benefits imposed by Section 415, Internal Revenue Code of 1986.
         Sec. 826.011.  HEALTH BENEFITS AND OTHER COVERAGES. A
  person who participates or who is eligible to participate in the
  defined contribution plan established under this chapter is
  eligible for health benefits and other coverages under Subchapter
  D, Chapter 22, Education Code, and Subtitle H, Title 8, Insurance
  Code, to the same extent as a person who is a member or who is
  eligible to be a member of the retirement system.
         Sec. 826.012.  RULES. The retirement system may adopt rules
  necessary to implement this chapter.
         SECTION 1.13.  Section 830.002(b), Government Code, is
  amended to read as follows:
         (b)  Participation in the optional retirement program is an
  alternative to active membership in the retirement system or
  required participation in the defined contribution plan under
  Chapter 826, as appropriate.
         SECTION 1.14.  Sections 830.102(a) and (d), Government Code,
  are amended to read as follows:
         (a)  A person included in the coverage [member] of the
  retirement system who is eligible [to participate in the optional
  retirement program] may elect to [continue as a member of the
  retirement system or to] participate in the optional retirement
  program.
         (d)  An eligible person who does not elect to participate in
  the optional retirement program is considered to have chosen to
  continue membership in the retirement system or to participate in
  the defined contribution plan established under Chapter 826, as
  applicable.
         SECTION 1.15.  Section 830.106, Government Code, is amended
  to read as follows:
         Sec. 830.106.  ELIGIBILITY FOR RESUMPTION OF MEMBERSHIP. A
  participant in the optional retirement program is not eligible for
  membership in the retirement system unless, before September 1,
  2012, the person:
               (1)  terminates employment covered by the optional
  retirement program; and
               (2)  becomes employed in the public school system or
  with a state agency in a position that is not eligible for
  participation in the optional retirement program.
  ARTICLE 2. CONFORMING AMENDMENTS
         SECTION 2.01.  Effective September 1, 2012, Section
  91.003(b), Agriculture Code, is amended to read as follows:
         (b)  An individual appointed as an inspector or to work in
  another capacity with an inspection service under Subsection (a) of
  this section is performing work for the state under the supervision
  of the department and shall participate in the defined contribution
  plan established under Chapter 816 [is a member of the employee
  class of the Employees Retirement System of Texas under Section
  812.003], Government Code.
         SECTION 2.02.  Effective September 1, 2012, Section
  12.012(b), Education Code, is amended to read as follows:
         (b)  An employee of a home-rule school district who qualifies
  for participation in the defined contribution plan administered by
  [membership in] the Teacher Retirement System of Texas shall be
  covered under the system in the same manner and to the same extent
  as a qualified employee employed by an independent school district
  is covered.
         SECTION 2.03.  Effective September 1, 2012, Section
  12.057(b), Education Code, is amended to read as follows:
         (b)  An employee of an independent school district who is
  employed on a campus or program granted a charter under this
  subchapter and who qualifies for participation in the defined
  contribution plan administered by [membership in] the Teacher
  Retirement System of Texas shall be covered under the system in the
  same manner and to the same extent as a qualified employee of the
  independent school district who is employed on a regularly
  operating campus or in a regularly operating program.
         SECTION 2.04.  Effective September 1, 2012, Section
  12.1057(a), Education Code, is amended to read as follows:
         (a)  An employee of an open-enrollment charter school
  operating under a charter granted by the State Board of Education
  who qualifies for participation in the defined contribution plan
  administered by [membership in] the Teacher Retirement System of
  Texas shall be covered under the system to the same extent a
  qualified employee of a school district is covered.
         SECTION 2.05.  Effective September 1, 2012, Section
  19.009(e), Education Code, is amended to read as follows:
         (e)  Each employee of the district who qualifies for
  participation in the defined contribution plan administered by
  [membership in] the Teacher Retirement System of Texas shall be
  covered under the system to the same extent a qualified employee of
  any other district is covered.
         SECTION 2.06.  Section 21.0452(b), Education Code, is
  amended to read as follows:
         (b)  The board shall make available at least the following
  information regarding each educator preparation program:
               (1)  the information specified in Sections 21.045(a)
  and (b);
               (2)  in addition to any other appropriate information
  indicating the quality of persons admitted to the program, the
  average academic qualifications possessed by persons admitted to
  the program, including:
                     (A)  average overall grade point average and
  average grade point average in specific subject areas; and
                     (B)  average scores on the Scholastic Assessment
  Test (SAT), the American College Test (ACT), or the Graduate Record
  Examination (GRE), as applicable;
               (3)  the degree to which persons who complete the
  program are successful in obtaining teaching positions;
               (4)  the extent to which the program prepares teachers,
  including general education teachers and special education
  teachers, to effectively teach:
                     (A)  students with disabilities; and
                     (B)  students of limited English proficiency, as
  defined by Section 29.052;
               (5)  the activities offered by the program that are
  designed to prepare teachers to:
                     (A)  integrate technology effectively into
  curricula and instruction, including activities consistent with
  the principles of universal design for learning; and
                     (B)  use technology effectively to collect,
  manage, and analyze data to improve teaching and learning for the
  purpose of increasing student academic achievement;
               (6)  the perseverance of beginning teachers in the
  profession, as determined on the basis of the number of beginning
  teachers who maintain status as active contributing participants
  [members] in the Teacher Retirement System of Texas for at least
  three years after certification in comparison to similar programs;
               (7)  the results of exit surveys given to program
  participants on completion of the program that involve evaluation
  of the program's effectiveness in preparing participants to succeed
  in the classroom; and
               (8)  the results of surveys given to school principals
  that involve evaluation of the program's effectiveness in preparing
  participants to succeed in the classroom, based on experience with
  employed program participants.
         SECTION 2.07.  Effective September 1, 2012, Section
  21.452(c), Education Code, is amended to read as follows:
         (c)  An employee on developmental leave continues to be a
  participant in [member of] the Teacher Retirement System of Texas
  and is entitled to participate in programs, hold memberships, and
  receive benefits afforded by employment in the school district.
         SECTION 2.08.  Sections 51.107(a) and (b), Education Code,
  are amended to read as follows:
         (a)  A faculty member on faculty development leave shall
  continue to be a member of the Teacher Retirement System of Texas or
  a participant in the defined contribution plan established under
  Chapter 826, Government Code, or [of] the Optional Retirement
  Program of the institution of higher education, or to be a member of
  or participant in more than one program [both], just as any other
  member of the faculty on full-time duty.
         (b)  The institution of higher education shall cause to be
  deducted from the compensation paid to a member of the faculty on
  faculty development leave the deposit and [membership] dues
  required to be paid by him to the Teacher Retirement System of Texas
  or to the Optional Retirement Program, or both, the contribution
  for Old Age and Survivors Insurance, and any other amounts required
  or authorized to be deducted from the compensation paid any faculty
  member.
         SECTION 2.09.  Effective September 1, 2012, Section
  51.926(b), Education Code, is amended to read as follows:
         (b)  A person who participates in a qualified football
  coaches plan may also participate in another retirement plan [or be
  a member of a retirement system] established by law for employees of
  institutions of higher education.
         SECTION 2.10.  Section 606.061(4), Government Code, is
  amended to read as follows:
               (4)  "State employee" includes an elected or appointed
  state officer but does not include an individual who:
                     (A)  is compensated by fees; or
                     (B)  is in a position eligible for membership in
  the Teacher Retirement System of Texas or participation in the
  defined contribution plan administered by that system under Chapter
  826 unless the person is employed by a state department, agency, or
  institution.
         SECTION 2.11.  The heading to Subchapter D, Chapter 661,
  Government Code, is amended to read as follows:
  SUBCHAPTER D. PAYMENTS FOR VACATION TIME TO CONTRIBUTING
  PARTICIPANTS IN [MEMBERS OF] EMPLOYEES RETIREMENT SYSTEM WHO RETIRE
         SECTION 2.12.  Section 661.091(a), Government Code, is
  amended to read as follows:
         (a)  A contributing member of the Employees Retirement
  System of Texas or participant in the defined contribution plan
  administered by that system under Chapter 816 who retires is
  entitled to be paid in a lump sum, from funds of the agency or
  department from which the member retires, for the member's accrued
  vacation time as of the date of retirement.
         SECTION 2.13.  Section 2252.901(d)(2), Government Code, is
  amended to read as follows:
               (2)  "Retired agency employee" means a person:
                     (A)  whose last state service before retirement
  was for the state agency with which the retiree contracts to perform
  services; and
                     (B)  who is a retiree [of]:
                           (i)  of the employee class of membership of
  the Employees Retirement System of Texas; [or]
                           (ii)  of the Teacher Retirement System of
  Texas, the majority of whose service was credited in that system in
  a position with a state agency;
                           (iii)  receiving benefits under the defined
  contribution plan administered by the Employees Retirement System
  of Texas under Chapter 816; or
                           (iv)  receiving benefits under the defined
  contribution plan administered by the Teacher Retirement System of
  Texas under Chapter 826.
         SECTION 2.14.  Section 62.1015(b), Health and Safety Code,
  is amended to read as follows:
         (b)  A child of an employee of a charter school, school
  district, other educational district whose employees are members of
  the Teacher Retirement System of Texas or participants in the
  defined contribution plan administered by that system under Chapter
  826, Government Code, or regional education service center may be
  enrolled in health benefits coverage under the child health plan. A
  child enrolled in the child health plan under this section:
               (1)  participates in the same manner as any other child
  enrolled in the child health plan; and
               (2)  is subject to the same requirements and
  restrictions relating to income eligibility, continuous coverage,
  and enrollment, including applicable waiting periods, as any other
  child enrolled in the child health plan.
         SECTION 2.15.  The heading to Section 132.007, Natural
  Resources Code, is amended to read as follows:
         Sec. 132.007.  PARTICIPATION [MEMBERSHIP] IN EMPLOYEES
  RETIREMENT SYSTEM.
         SECTION 2.16.  Section 17, Self-Directed Semi-Independent
  Agency Project Act (Article 8930, Revised Statutes), is amended to
  read as follows:
         Sec. 17.  PARTICIPATION [MEMBERSHIP] IN EMPLOYEE RETIREMENT
  SYSTEM. Employees of the project agencies are members of the
  Employees Retirement System of Texas under Chapter 812, Government
  Code, or participants in the defined contribution plan administered
  by that system under Chapter 816, Government Code, as applicable,
  and transition to independent status shall have no effect on their
  membership or participation.
  ARTICLE 3. REPEAL AND TRANSITION PROVISIONS; EFFECTIVE DATE
         SECTION 3.01.  Effective September 1, 2012, Sections
  812.003(c), (d), (e), and (f), Government Code, are repealed.
         SECTION 3.02.  The Employees Retirement System of Texas
  shall offer participation in the defined contribution plan
  described by Chapter 816, Government Code, as added by this Act,
  beginning September 1, 2012.
         SECTION 3.03.  The Teacher Retirement System of Texas shall
  offer participation in the defined contribution plan described by
  Chapter 826, Government Code, as added by this Act, beginning
  September 1, 2012.
         SECTION 3.04.  The changes in law made by this Act requiring
  a person to participate in a defined contribution plan established
  under Chapter 816 or 826, Government Code, as added by this Act, do
  not apply to a person elected, appointed, or hired to the position
  requiring participation in the plan before the effective date of
  this Act.
         SECTION 3.05.  This Act takes effect September 1, 2011.