PART 3. TEACHER RETIREMENT SYSTEM OF TEXAS
CHAPTER 31. EMPLOYMENT AFTER RETIREMENT
SUBCHAPTER A. GENERAL PROVISIONS AND PROCEDURES
The Teacher Retirement System of Texas (TRS) adopts amendments to §31.5 (relating to Notice and Forfeiture Requirements for Certain Service Retirees) and §31.6 (relating to Second EAR Warning Payments) under Subchapter A (relating to General Provisions and Procedures) of Chapter 31 in Part 3 of Title 34 of the Texas Administrative Code without changes to the text as proposed in the October 27, 2023, issue of the Texas Register (48 TexReg 6350). The rules will not be republished.
REASONED JUSTIFICATION
TRS amends §31.5 and §31.6, so that they conform with statutory changes made to TRS' employment after retirement ("EAR") notice requirements under Government Code § 824.601.
In 2021, the Texas Legislature passed House Bill 1585 which added, among other provisions, an EAR notice procedure (also called a "three strikes" procedure) that ensured TRS would issue at least two warnings to a TRS service retiree before that retiree would forfeit his or her entire annuity for a month because the retiree exceeded the limits on employment after retirement during that month.
Importantly, this notice procedure, which is under Government Code §824.601(b-3), requires that a TRS service retiree cannot be subject to a second warning (and the possible dollar-for-dollar partial forfeiture associated with a second warning) until the month after the month TRS issues a first warning to a TRS retiree for exceeding the limits on EAR. Further, a TRS retiree cannot be subject to mandatory full forfeiture of his or her annuity until the month after the month TRS issues the second warning letter. These requirements are clear in the statute.
However, §31.5 and §31.6 currently provide, at least in part, that a TRS service retiree is not subject to a second warning until the retiree receives, rather than TRS issues, a first warning. Further, the rules provide that a TRS retiree is not subject to a mandatory forfeiture until the retiree receives, rather than TRS issues, both required notices.
By requiring that the retiree receive, rather than TRS issue, these EAR notices before the retiree can be subject to the next level of EAR forfeiture, §31.5 and §31.6 are in conflict with Government Code §824.601(b-3). In addition, the receipt, rather than issue, standard creates a substantial administrative hurdle for TRS in administering the EAR "three strikes" procedure.
Specifically, TRS sends EAR notices to service retirees by both first class and certified mail to the retiree's current mailing address on file with TRS to ensure that the retirees timely receive their EAR notices. However, if a retiree did not maintain an accurate current mailing address with TRS, and TRS was unable to locate (or at least was delayed in locating) the retiree, the retiree could arguably not be subject to the next EAR notice and potentially full forfeiture until TRS receives a current mailing address for the member.
In addition, because the month TRS issues an EAR notice can be different from the month a TRS service retiree receives that notice, the month in which a TRS retiree is subject to the next level of EAR forfeiture could, in some cases, be ambiguous even if the retiree receives the EAR notice.
For these reasons, TRS has amended §31.5 and §31.6, so that each provision conforms with the statutory language under Government Code §824.601 that triggers the next stage of notice or forfeiture for a retiree when TRS issues, rather than when the retiree receives, a warning. Amended §31.5 and §31.6 will become effective on February 1, 2024.
COMMENTS
No comments on the proposed adoption of the amendments were received.
STATUTORY AUTHORITY
The amended rules are adopted under the authority of Government Code §824.604, which provides that board of trustees may adopt rules to administer laws under Subchapter G of Chapter 824 of the Government Code; Government Code §825.102, which authorizes the board of trustees to adopt rules for the transaction of the business of the board; Section 2 of House Bill 1585 as enrolled by the 87th Texas Legislature, Regular Session, on May 26, 2021, which established the EAR notice procedure for TRS; and Section 1 of Senate Bill 288 as enrolled by the 87th Legislature, Regular Session, on May 31, 2021, which also provides the same EAR notice procedure for TRS.
CROSS-REFERENCE TO STATUTE
The adopted amendments implement Government Code §824.601, which relates to loss of monthly benefits; Government Code § 824.602, which relates to exceptions; and Government Code §824.6021, relating to temporary exception to mitigate learning loss attributable to COVID-19 pandemic.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 5, 2024.
TRD-202400059
Don Green
Chief Financial Officer
Teacher Retirement System of Texas
Effective date: February 1, 2024
Proposal publication date: October 27, 2023
For further information, please call: (512) 542-6506