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MUNICIPAL LEAGUE October 30, 2003 [10V 0 '~ ~}00~ ITX A'£ MEMORANDUM PAII[8. 'I~EXA8 TO: TML Member Cities that Sponsor Non-Statewide Retirement Systems FROM: Frank Sturzl, TML Executive Director SUBJECT: H.J.R. 54 CITIES HAVE ONLY ONE OPPORTUNITY TO OPT OUT OF RETIRMENT SYSTEM MANDATE The Texas Legislature recently passed H.J.R. 54, a proposed amendment to the Texas Constitution that protects certain benefits under certain public retirement systems. The amendment was approved by Texas voters at the September constitutional election and took effect shortly thereafter. The following is a summary of the impact ofH. l.R. 54, as well as an explanation of the procedure that allows a city to exempt itself from the amendment's application. H.I.I~ 54 is now codified as Article XVI, Section 66, of the Texas Constitution. It provides that once certain benefits are granted to retkees or other annuitants, those benefits may not be subsequently reduced. It also requires political subdivisions and the retkement systems that finance the benefits to be jointly responsible for ensuring these benefits are not reduced. The new Article XVI, Section 66, applies only to public, non- statewide retirement systems that .provide service and disabilky retirement benefits and death benefits to public employees. We have reason to believe that your city has a retirement system that is affected by this new constitutional amendment. Whether your city is affected is an important question that you will need to consult with your city attorney about. {Note: TMRS cities are part of a statewide retkement system, and are therefore not affected by the amendment.) The amendment does not apply to health or life insurance benefits or certain other disability benefits. It is important to note that an employee need not currently be receiving benefits under a retirement plan for those benefits to be protected. Once the individual becomes eligible to receive benefits, even if employment continues, those benefits may not be reduced from thek current level of eligibility by a subsequent change of policy. An affected city may choose to exempt itself from the provisions of Article XVI, Section 66, if: