§ 2.5-7 DISABILITY PENSION.

(a) Service breaks. Pension credits shall be granted for all credited service for which a member of the fund receives employment compensation from the city, subject to the following regulations pertaining to service breaks.

(1) Authorized service breaks of 90 or less consecutive calendar days without pay shall not be deducted from credited service.

(2) Except as provided below, periods of absence in excess of 90 consecutive calendar days without pay shall be deducted from credited service, and no contributions shall be made by members or by the city during such periods.

(3) a. An absence of any period shall be permitted without loss of prior credited service, unless the member receives a distribution of his or her total contributions, plus regular interest, and any period of absence shall cancel all prior credited service if the member receives a distribution of the member's total contributions, plus regular interest; however, if a member is absent, the member may regain prior credited service by repaying the total amount of the refund, less the amount received from the member's cash balance account, from the date of withdrawal to the date of repayment, pursuant to policies adopted by the Board under one of the two following options:

1. Repay in a single lump sum payment within 90 days of reemployment, including buy back interest on the date of repayment that also includes buy back interest for the period of absence on the date of the repayment; or

2. Repay through a payroll deduction pay-back plan which commences within 90 days of reemployment, and provides buy back interest for the period of absence and that buy back interest will be charged throughout the pay-back period and that the repayment period will not exceed three years.

b. No other repayment option is authorized for the repayment of prior credited service.

(4) Effective on or after December 12, 1994, any member who is reemployed by the city upon completion of service in the uniformed services (within the time frame provided under the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended) shall be granted credited service for such uniformed service, provided the member makes the contributions (with no interest) to the fund that the member would have been required to contribute if the member had remained continuously employed by the city throughout the period of uniformed service. Such payment must be made during the period which commences with the date of reemployment by the city and which duration is three times the period of the member's service in the uniformed services, not to exceed five years. If a reemployed member makes such contributions, the city shall also make its corresponding contributions to the fund. This provision shall be construed consistently with the requirements of the Uniformed Services Employment and Reemployment Act of 1994, as amended.

(5) Any member whose employment was terminated involuntarily and was thereafter reinstated as the direct result of an appeal or suit arising from the involuntary termination shall be granted all credited service for the period of absence, provided, however that contributions for credited service for such period of absence must be made by the city and by or on behalf of the member in accordance with § 2.5-3.

(b) Accumulated sick leave and major medical leave. Subject to all further terms and conditions of this § 2.5-4(b), only that portion of a person's accumulated sick leave and major medical leave that was earned prior to July 20, 2019 and that remains unused (or otherwise uncompensated to the member) as of the date the person retires shall be taken into account in calculating that person's credited service, provided, however, that such balance shall never be taken into account in calculating the pension of a member receiving a line of duty disability pension.

(1) For accumulated sick leave and/or major medical leave earned prior to July 20, 2019:

a. 1. Subject to the provisions of this section, at retirement and in calculating a vested terminated pension, a member shall have added to his or her credited service hours of accumulated sick leave and/or major medical leave to the extent the official personnel records of the city reflect that such leave was (i) earned prior to July 20, 2019 and (ii) not used by or otherwise compensated to the member, with leave that meets both of these criteria being considered and referred to herein as "qualified leave." For credited service purposes, qualified leave shall be converted into months using the following formula:

2. The total number of hours of qualified leave divided by the annual scheduled hours for the position from which the member is retiring multiplied by 12. The resulting product represents the number of months in whole numbers and/or a decimal portion of a month. Any whole number shall constitute that number of months to be added to credited service. If the resulting product contains a decimal value that is less than five tenths (0.50), then no addition to credited service shall be made with respect to such decimal value; however, if the resulting product contains a decimal value that is five tenths (0.50) or greater, then an additional month of credited service shall be provided for such decimal value.

b. Qualified leave shall not be applied toward determining of retirement eligibility, but only toward calculation of retirement benefits.

c. Group I general members and group III police members who have qualified leave that was earned prior to October 1, 2013, will have the leave added to credited service earned or purchased prior to October 1, 2013. Qualified leave earned on or after October 1, 2013 and before July 20, 2019 will be added to credited service earned or purchased during that period.

d. Group I general members and group III police members who use sick leave and/or major medical leave on or after July 20, 2019 will have the leave deducted as follows:

1. First from accrued sick leave and/or major medical leave hours earned on or after July 20, 2019 to the extent such leave is available for use;

2. Second from accumulated sick leave and/or major medical leave hours earned prior to October 1, 2013 until such time as those hours are completely exhausted; and

3. Finally from accumulated sick leave and/or major medical leave hours earned from October 1, 2013 through July 19, 2019 until such hours are completely exhausted.

e. Group V firefighters who have qualified leave that was earned prior to January 10, 2015, will have the leave added to credited service earned or purchased prior to January 10, 2015. Qualified leave earned on or after January 10, 2015 and before July 20, 2019 will be added to credited service earned or purchased during that period.

f. Group V firefighters who use sick leave and/or major medical leave on or after July 20, 2019 will have the leave deducted as follows:

1. First from accrued sick leave and/or major medical leave hours earned on or after July 20, 2019 to the extent such leave is available for use;

2. Second from accumulated sick leave and/or major medical leave hours earned prior to January 10, 2015 until such time as those hours are completely exhausted; and

3. Finally from accumulated sick leave and/or major medical leave hours earned from January 10, 2015 through July 19, 2019 until such hours are completely exhausted.

g. Group II general members, group IV police members, and group VI firefighters who use sick leave and/or major medical leave on or after July 20, 2019 will have the leave deducted as follows:

1. First from accrued sick leave and/or major medical leave hours earned on or after July 20, 2019 to the extent such leave is available for use; and

2. Second from accumulated sick leave and/or major medical leave hours earned through July 19, 2019 until such time as those hours are completely exhausted.

(2) For accumulated sick leave and/or major medical leave earned on or after July 20, 2019:

a. Accumulated sick leave and/or major medical leave earned on or after July 20, 2019, will not be added to credited service at retirement.

(1) General. Effective on or after October 1, 2002, a member who has earnings from the city for the then current year may elect to purchase permissive service credits and have his or her period of credited service increased for purposes of calculating the member’s retirement benefit, pursuant to the provisions of this division. The actuary shall prepare factors which shall be used to determine the voluntary additional contributions that a member must make to purchase permissive service credits, provided, however, that in no event shall a member be required to contribute an amount that exceeds the amount necessary to fund the benefit attributable to the additional credited service that is purchased.

(2) Limitations. A member may purchase up to five years of permissive service credits that are attributable to non-qualified service, and a member cannot purchase any permissive service credits for non-qualified service prior to completion of five years of participation as a member.

(3) Non-qualified service. For purposes of this subsection (c), the term NON-QUALIFIED SERVICE means service other than:

a. Service (including parental, medical, sabbatical and similar leave) as an employee of the government of the United States, any state or political subdivision thereof, or any agency instrumentality of any of the foregoing (other than military service or service for credit which was obtained as a result of the repayment described in § 415(k)(3) of the Code);

b. Service (including parental, medical, sabbatical and similar leave) as an employee (other than as an employee described in subsection (c)(3)a. above) of an education organization described in § 170(b)(l)(A)(ii) of the Code which is a public, private or sectarian school which provides elementary or secondary education (through grade 12), as determined under state law;

c. Service as an employee of an association of employees who are described in subsection (c)(3)a. above; or

d. Military service (other than qualified military service under § 414(u) of the Code) recognized by such governmental plan. In the case of service described in subsections (c)(3)a.1., (c)(3)b. or (c)(3)c. above, such service will be non-qualified service if recognition of such service would cause a member to receive retirement benefits for the same service under more than one plan.

(4) Purchase of permissive service credits. A member may purchase permissive service credits pursuant to the rules, procedures and forms as may be adopted and amended by the board in its complete discretion, which shall be uniform and nondiscriminatory and which shall be interpreted in a manner that is consistent with the provision of the retirement ordinance and applicable law. Permissive service credits may be purchased by a member’s direct payment to the trustee of the amount determined by the factors provided by the actuary, or through a trustee to trustee transfer of such amount from the member’s account under an eligible deferred compensation plan (as defined in Code § 457) or a qualified plan within the meaning of Code § 401(a), including a 401(k) plan, or the member’s annuity contract meeting the requirements of Code § 403(b).

(Ord. 20471-10-2012, § 2, passed 10-23-2012; Ord. 21459-09-2014, § 1, passed 9-16-2014; Ord. 21510-10-2014, § 1, passed 10-21-2014; Ord. 23034-12-2017, § 1, passed 12-12-2017; Ord. 23516-12-2018, § 1, passed 12-11-2018)

§ 2.5-5 ADMINISTRATION.

(a) The board of trustees. The fund shall be administered by the board. The board shall consist of 13 trustees designated as Place 1, Place 2, Place 3, Place 4, Place 5, Place 6, Place 7, Place 8, Place 9, Place 10, Place 11, Place 12 and Place 13, respectively. A trustee’s term shall be for two years, subject to this section. Trustees shall be elected as follows.

(1) Trustees elected by employees.

a. Election. Four trustees who are vested, participating members of the fund, as defined by Tex. Revised Civil Statutes Article 6243i, shall be elected by the employees of the city, who are also members of the fund; said trustees shall serve in Places 1, 2, 3 and 4 respectively.

b. Employee groups. Each of the trustees shall be elected by one of the employee groups as follows:

1. Place 1. The trustee for Place 1 shall be elected from group A, which shall consist of those members of the fund who are employed as group III and group IV members as defined by this division. Only group III and group IV members who qualify for employee group A shall be eligible to vote for a nominee for Place 1. Only group III and group IV members who qualify for employee group A shall be eligible to serve in Place 1 on the board.

2. Place 2. The trustee for Place 2 shall be elected from group B, which shall consist of those members of the fund who are employed as firefighters. Only firefighters who qualify for employee group B shall be eligible to vote for a nominee for Place 2. Only firefighters who qualify for employee group B shall be eligible to serve in Place 2 on the board.

3. Place 3. The trustee for Place 3 shall be elected from group C, which shall consist of those group I and group II members who are assigned to work in the following departments: water, planning and development, budget, financial management services, city manager’s office, city secretary, human resources, internal audit, city attorney’s office and municipal court, including the marshal’s office. Group C shall also include group I and group II members assigned to work in the police department who are not eligible to vote for a nominee for Place 1. Only group I and group II members who qualify for employee group C shall be eligible to vote for a nominee for Place 3. Group I and group II members who qualify for employee group C shall be eligible to serve in Place 3 on the board.

4. Place 4. The trustee for Place 4 shall be elected from group D, which shall consist of those group I and group II members who are assigned to work in the following departments: IT solutions, economic development, neighborhood services, library, parks and community service, public events, aviation, code compliance, property management and transportation and public works. Group D shall also include group I and group II member assigned to work in the fire department who are not eligible to vote for a nominee for Place 2. Only group I and group II members who qualify for employee group D shall be eligible to vote for a nominee for Place 4. Only group I and group II members who qualify for employee group D shall be eligible to serve in Place 4 on the board.

c. Term. In accordance with the nomination and election procedures prescribed in this section, trustees shall be elected to Places 1, 2, 3 and 4, and shall serve for a two-year term, subject to the following provisions. Trustees for Places 1 and 3 shall be elected every odd numbered year beginning in 2007, and shall serve from September 1 of such odd numbered year through August 31 of the next odd numbered year. Trustees for Places 2 and 4 shall be elected in 2007 to serve a term from September 1, 2007 through August 31, 2008. Thereafter, the trustees for Place 2 and 4 shall be elected every even numbered year and shall serve from September 1 of such even numbered year through August 31 of the next even numbered year. Should the employment status of any member elected trustee change so that said trustee is no longer a member of the employee group from which the trustee was elected, then said trustee shall automatically forfeit the office of trustee. Should a vacancy occur, for whatever reason, in Place 1, 2, 3 or 4, during the term thereof, then a majority of all trustees remaining on the board shall appoint to the board a qualified member from the employee group whose place has been vacated, which qualified member shall serve the remainder of the unexpired term; provided, however, that if, at the time the vacancy arises, more than one year remains in the unexpired term, then in lieu of the board appointing a replacement trustee, there shall be an election pursuant to the nomination and election provisions set forth below, with the board making reasonable modifications in the dates and time frames for the nomination and election in light of the time of the vacancy.

d. Method of nominating members for election. Nominations of members for election to the board shall be by petition only. Before May 31 of each election year, the executive director shall make available to members of each employee group eligible to vote in the scheduled election petition forms with written instructions. Petitions containing the names of nominees shall be returned to the executive director prior to July 1 of said election year. Nominees may use copies of the petition form or may create their own petition forms, provided each page of each returned petition shall identify the name of the nominee, the department in which the nominee is employed, the employee group of which the nominee is a member, and the place on the board for which the member is being nominated. No person’s name shall be placed upon the official ballot as a nominee unless that person is nominated by petition. Said nominating petition must contain the signature and employee number of at least 75 members of the employee group who are qualified to vote for said place on the date said petition is submitted to the executive director. Only those employees who are members of the fund shall be entitled to be listed upon the official ballot as a nominee. No person’s name shall be placed upon the official ballot as a nominee for Place 1 unless that person is a member of employee group A. No person’s name shall be placed upon the official ballot as a nominee for Place 2 unless that person is a member of employee group B. No person’s name shall be placed upon the official ballot as a nominee for Place 3 unless that person is a member of employee group C. No person’s name shall be placed upon the official ballot as a nominee for Place 4 unless that person is a member of employee group D.

e. Method of electing member trustees.

1. The executive director shall provide for an election procedure as authorized by the board, including, but not limited to, voting by mail, telephone and electronic means, and which may be conducted by a third-party voting service. The executive director shall prepare an official ballot for each place, listing in alphabetical order according to surname the nominees for election to that place. If, however, there is only one nominee for any place, there shall be no election for that place, and such nominee shall automatically be elected to the board. Only the names of those members who are nominated by petition as prescribed herein shall be placed upon the official ballot. No member shall be elected as a trustee whose name does not appear upon the official ballot as a nominee. Ballots shall be made available to the members no later than July 20 of the election year. Each member qualified to vote in said election shall vote for one nominee only. Any ballot containing votes for two or more persons, or for persons who are not nominees as prescribed herein, shall be declared invalid and shall not be counted. All ballots must be cast no later than August 15. Votes cast by written ballot must be returned no later than August 15 of the election year. If the ballot is returned by mail, the envelope must be postmarked by August 15 of the election year. The executive director or a designated third party shall tabulate all votes for all nominees. The nominee for each place who receives a majority of the votes cast for that place shall be declared elected to the board. Following the tabulation of votes, the executive director shall submit the results to the board at a meeting to be held before September 1 of said election year, at which time the board shall canvass the results of said election and certify which nominee is elected for each place on the board. If, at the time of canvassing said results, the nominee receiving the majority of votes for said place is no longer eligible to serve in the place to which that nominee was elected, then the nominee finishing second in the election shall be certified by the board as elected to the board.

2. If there is more than one nominee and no nominee receives a majority of the votes cast for any one place, or if there is a tie for any one place, then a run-off election shall be held, with ballots made available to the members qualified to vote for that place no later than September 1 of the election year, and in the same manner as prescribed for the first election. Only the names of candidates who tied for the highest number of votes cast for that place in the first election, or the two candidates who received the highest number of votes with neither having a majority of votes cast for that place, shall be printed on the ballot for the run-off election. All ballots for the second election must be cast by September 20 of the election year. Votes cast by written ballot must be returned by September 20. If a ballot is returned by mail, the envelope must be postmarked by September 20. The executive director or a designated third party shall tabulate the votes for the candidates in the run-off election. The candidate receiving the highest number of votes cast for that place in the run-off election shall be declared elected to the board.

3. In the event of a tie vote at the second election, the candidates who tie shall cast lots in the presence of the board to determine which one shall be declared elected. Following the tabulation of votes in the run-off election, and the casting of lots in case of ties, the executive director shall submit the results of same to the board at a meeting to be held before November 1 of said election year, at which time the board shall canvass the results of the run-off election and certify which nominee is elected to the board. If, at the time of canvassing the results of the run-off election, the nominee elected to serve on said board is no longer eligible to serve in the place to which he or she was elected, then the nominee finishing second in the election shall be certified by the board as elected to the board.

(2) Trustees elected by retired members.

a. Places.

1. Place 5. The trustee for Place 5 shall be elected by retiree group B, which shall consist of those retired members of the fund from employee group B. Only members of the fund who qualify for retiree group B shall be eligible to vote for a nominee for Place 5. Only members of the fund who qualify for retiree group B shall be eligible to serve in Place 5 on the board.

2. Place 6. The trustee for Place 6 shall be elected by retiree group A, which shall consist of those retired members of the fund from employee group A. Only members of the fund who qualify for retiree group A shall be eligible to vote for a nominee for Place 6. Only members of the fund who qualify for retiree group A shall be eligible to serve in Place 6 on the board.

3. Place 7. The trustee for Place 7 shall be elected by retiree group C, which shall consist of those retired members of the fund from employee groups C and D. Only members of the fund who qualify for retiree group C shall be eligible to vote for a nominee for Place 7. Only members of the fund who qualify for retiree group C shall be eligible to serve in Place 7 on the board.

b. Term. In accordance with the nomination and election procedures prescribed in this section, a trustee shall be elected for Places 5, 6 and 7, and shall serve for a two-year term. The trustee for Place 6 shall be elected to serve a term from September 1, 2007 through August 31, 2008. Thereafter, the trustee for Place 6 shall be elected every even numbered year and shall serve from September 1 of such even numbered year through August 31 of the next even numbered year. Trustees for Places 5 and 7 shall be elected every odd numbered year beginning in 2007, and shall serve from September 1 of such odd numbered year through August 31 of the next odd numbered year. Should a trustee for Place 5, 6 or 7 return to city employment and again become an employee member of the fund, the trustee shall automatically forfeit the office of trustee for Place 5, 6 or 7. Should a vacancy occur in Place 5, 6 or 7, during the term thereof, then a majority of all trustees remaining on the board shall appoint to the board a retired member of the applicable retiree group, to serve the remainder of the unexpired term.

c. Nomination of retired members for election. Nomination of retired members for election to the board shall be by letter of nomination only. Before May 31 of each election year, the executive director shall make available to retired members official letter of nomination forms with written instructions. Copies of the letter of nomination may be used. Completed letters of nomination shall be returned to the executive director prior to July 1 of each election year. Each returned letter of nomination shall identify the retired member being nominated and the place for which the retired member is being nominated and must contain the signature and the last four digits of the Social Security number of the retired member making the nomination. Any member of retiree group A receiving at least 25 nominations from retiree group A shall be considered a nominee for election to Place 6 on the board. Any retired member of retiree group B receiving at least 25 nominations from retiree group B shall be considered a nominee for election to Place 5 on the board. Any member of retiree group C receiving at least 25 nominations from retiree group C shall be considered a nominee for election to Place 7 on the board. No person shall be placed on the ballot as a nominee unless the person is a retired member who is nominated by the process detailed above.

d. Election of retired board members.

1. The executive director shall provide for an election procedure as authorized by the board, including, but not limited to, voting by mail, telephone and electronic means, and which may be conducted by a third-party voting service. The executive director shall prepare official ballots for the election of the retired board members, listing the nominees in alphabetical order by surname. Ballots for election of retired board members shall be made available to all retired members in retiree group A, B and C no later than July 20. If there is only one nominee for Place 5, there shall be no election for Place 5 and the one nominee shall automatically be elected to the board. If there is only one nominee for Place 6, there shall be no election for Place 6 and the one nominee shall automatically be elected to the board. If there is only one nominee for Place 7, there shall be no election for Place 7 and the one nominee shall automatically be elected to the board. No person shall be elected as trustee whose name does not appear on the official ballot as a nominee. To be considered valid, a ballot must be cast no later than August 15 of the election year. Votes cast by written ballot must be returned no later than August 15 of the election year. If the ballot is returned by mail, the envelope must be postmarked by August 15 of the election year. Each retired member qualified to vote in the election shall vote for one nominee only. Any ballot containing votes for two or more persons, or for persons who are not nominees as provided herein, shall be declared invalid and shall not be counted. The executive director or a designated third party shall tabulate all votes for all nominees. The nominees for each place receiving a majority of votes cast shall be declared elected to the board of trustees. Following the tabulation of votes, the executive director shall submit the results of same to the board meeting to be held before September 1 of the election year, at which time the board shall canvass the results of the election and certify which nominees are elected to the board. If, at the time of canvassing the results, a nominee receiving the majority of votes is no longer eligible to serve, then the nominee receiving the second highest number of votes from the appropriate retiree group will fill Place 5, 6 or 7 on the board. That member shall serve from September 1 of the election year through August 31 of the next election year for that place.

2. If there is more than one nominee for a place and no nominee receives a majority of the votes cast, or if there is a tie, then a run-off election shall be held, with ballots made available to the retired members for that place no later than September 1 of the election year and in the same manner as prescribed for the first election. Only the names of candidates who tied for the highest number of votes cast for that place in the first election, or the two candidates who received the highest number of votes with neither having a majority of votes cast, shall be printed on the ballot for the run-off election. All ballots for the second election must be cast by September 20 of the election year. Votes cast by written ballot must be returned by September 20 of the election year. If a ballot is returned by mail, the envelope must be postmarked by September 20 of the election year. The executive director or a designated third party shall tabulate the votes for the candidates in the run-off election. The candidate receiving the highest number of votes cast in the run-off election shall be declared elected to the board of trustees. In the event of a tie vote at the second election, the candidates who tie shall cast lots in the presence of the board of trustees to determine which one shall be declared elected.

3. Following the tabulation of votes in the run-off election, and the casting of lots in case of ties, the executive director shall submit the results of same to the board at a meeting to be held before November 1 of said election year, at which time the board shall canvass the results of the run-off election and certify which nominee is elected to the board. If, at the time of canvassing the results of the run-off election, the nominee elected to serve on said board is no longer eligible to serve, then the nominee receiving the second highest number of votes from the appropriate retiree term will fill Place 5, 6 or 7 on the board. That member shall serve from September 1 of the election year to August 31 of the next election year for that place.

(3) Trustees appointed by the governing body.

a. Place 8. The trustee for Place 8 shall be a resident of the city. A person appointed under this section may not be a member of the governing body. The trustee for Place 8 shall be appointed by a majority vote of the governing body to serve a term initially commencing September 1, 2007 and ending August 31, 2008. Thereafter, the person appointed by the governing body shall serve a term of two years (unless removed sooner by a majority vote of the governing body) commencing on September 1 of every even numbered year and ending August 31 of the next even numbered year. Should a vacancy occur in Place 8, then governing body, by majority vote, shall appoint another eligible resident of the city to serve the remainder of the unexpired term.

b. Place 9. The trustee for Place 9 shall be a resident of the city. A person appointed under this section may not be a member of the governing body. The trustee for Place 9 shall be appointed by a majority vote of the governing body to serve a term of two years (unless removed sooner by a majority vote of the governing body) commencing on September 1 of every odd numbered year through August 31 of the next odd numbered year. Should a vacancy occur in Place 9, then governing body, by a majority vote, shall appoint another eligible resident of the city to serve the remainder of the unexpired term.

c. Place 10. The trustee for Place 10 shall be a resident of the city. A person appointed under this section may not be a member of the governing body. The trustee for Place 10 shall be appointed by a majority vote of the governing body to serve a term initially commencing on September 1, 2007, and ending August 31, 2008. Thereafter, the person appointed by governing body shall serve a term of two years (unless removed sooner by a majority vote of the governing body) commencing on September 1 of every even numbered year through August 31 of the next even numbered year. Should a vacancy occur in Place 10, then governing body, by a majority vote, shall appoint another eligible resident of the city to serve the remainder of the unexpired term.

d. Place 11. The trustee for Place 11 shall be a resident of the city. A person appointed under this section may not be a member of the governing body. The trustee for Place 11 shall be appointed by a majority vote of the governing body to serve a term of two years (unless removed sooner by a majority vote of the governing body) commencing on September 1 of every odd numbered year through August 31 of the next odd numbered year. Should a vacancy occur in Place 11, then governing body, by a majority vote, shall appoint another eligible resident of the city to serve the remainder of the unexpired term.

e. Place 12. The trustee for Place 12 shall be a resident of the city. A person appointed under this section may not be a member of the governing body. The trustee for Place 12 shall be appointed by a majority vote of the governing body to serve a term initially commencing September 1, 2007, and ending August 31, 2008. Thereafter, the person appointed by governing body shall serve a term of two years (unless removed sooner by a majority vote of the governing body) commencing on September 1 of every even numbered year and ending on August 31 of the next even numbered year. Should a vacancy occur in Place 12, then the governing body, by a majority vote, shall appoint another eligible resident of the city to serve the remainder of the unexpired term.

f. Place 13. The trustee for Place 13 shall be the chief financial officer of the city. Should a vacancy occur in Place 13, then governing body, by a majority vote, shall appoint a qualified person to serve until a new chief financial officer is appointed.

(b) General provisions.

(1) The members of the board shall remain in office until their successors are duly elected or appointed.

(2) At its September meeting, the board shall elect from its membership a chair and a vice chair to serve for one year.

(3) The board shall serve without remuneration and shall meet not less than once a month and may meet at any time that the business of the fund shall require it. The chair shall have the power to call a meeting at any time necessary to carry out the business of the fund.

(4) Seven members of the board shall constitute a quorum to transact any business unless there are vacancies, in which event the quorum shall be reduced by the number of vacancies existing. Every matter before the board for vote shall require the affirmative vote of a majority of the trustees on the board (regardless of the number of trustees present at the board meeting) for final passage.

(5) The board shall have the power and duty to administer the fund and to make and establish any and all rules, regulations and procedures pertaining to the fund not inconsistent with this ordinance and applicable law.

(6) The board shall have the power, as it deems necessary and appropriate to carry out the purposes of the fund, to retain, enter into contracts and pay from fund assets for professional services, including, but not limited, to the following: actuaries, accountants, attorneys, administrators, consultants, directors and investment managers or advisors.

(7) The board shall have the power, as it deems necessary and appropriate to carry out the business of the fund, to enter into contracts, agreements and arrangements to facilitate the administration of the fund, and to pay for the costs and expenses of such business and administration out of fund assets.

(8) The board has discretion to make all determinations regarding the eligibility of members or other persons for benefits from the fund and the amount and payee thereof, not inconsistent with this ordinance and applicable law. Therefore, its decisions shall be final, binding and conclusive on all persons.

(9) In construing this ordinance, the provisions of the Texas Trust Code shall apply to the extent that they do not differ from this chapter.

(Ord. 20471-10-2012, § 2, passed 10-23-2012; Ord. 21650-02-2015, § 2, passed 2-17-2015; Ord. 21651-02-2015, § 2, passed 2-17-2015; Ord. 21652-02-2015, § 7, passed 2-17-2015)

§ 2.5-6 ANNUAL ACTUARIAL VALUATIONS.

(a) The board shall appoint an actuary for the purpose of providing annual valuations of the retirement fund. The actuary shall also serve as a technical advisor to the board and the executive director regarding the operations authorized by this chapter. The actuarial assumptions and tables used by the actuary shall assume such costs, liabilities, rates of interest, mortality, turnover and other factors as are reasonable, taking into account the experience of the fund and reasonable expectations, and shall be subject to board approval. At least 30 days before the date the board adopts actuarial assumptions to be used by the fund, the board shall submit to the city council a detailed report regarding the proposed actuarial assumptions. The report must include the fiscal impact of the proposed actuarial assumptions on the fund.

(b) The city shall engage an independent actuary every five years to perform an audit of the actuarial valuations, studies and reports of the fund in accordance with the provisions of Tex. Government Code § 802.1012, as amended.

(Ord. 20471-10-2012, § 2, passed 10-23-2012)

§ 2.5-7 DISABILITY PENSION.

(a) Definition of disabled member. A member is disabled (or continues to be disabled) if, because of bodily injury, disease or mental illness, the member is incapacitated for life, in spite of reasonable accommodations by the city, from performing the essential functions of:

(1) The trade, profession or occupation in which the member was employed by the city when the member suffered the bodily injury, disease or mental illness; and

(2) Any other position which the board determines to be reasonably comparable to the position held by the member, taking into account the member’s education, qualifications, experience, salary and other factors which the board deems appropriate; provided, however, that no physical condition existing at the time of entry into the fund shall be a basis for a disability pension prior to vesting.

(b) General provisions.

(1) Such disability must exist for at least 90 consecutive days prior to application for a disability pension.

(2) Such disability must not have been contracted, suffered or incurred while the member was engaged in, or did not result from the member having engaged in, a criminal enterprise, or from habitual drunkenness, addiction to narcotics, self-inflicted injury, or from voluntary or involuntary service in the Armed Forces of the United States (including the United States Merchant Marine), any of its allies or any other foreign country.

(3) Notwithstanding the provisions of §§ 2.5-26, 2.5-36, 2.5-46, 2.5-56, 2.5-66 and 2.5-76, no disability pension shall, at the time of commencement, exceed the member’s rate of earnings.

(4) To assist the board in making disability determinations, the city shall provide the executive director with city job descriptions and qualifications, related salary ranges and other appropriate information as requested.

(5) Continuation of a disability pension, whether granted before or after the enactment of this article, shall be subject to all the provisions of this section, including review and determination of the member’s eligibility for a disability pension.

(1) A member shall not qualify for a disability pension as hereinafter provided unless one or more duly licensed and practicing physician(s) appointed by the executive director has determined that the member is not capable of performing the essential functions of the positions identified under this section. Determination of the existence of disability shall not be made until 90 days after the date such disability is alleged to have commenced, and benefits shall not commence before the first day of the month following the month in which such 90-day period ends.

(2) The executive director shall have the appointed physician(s) conduct an annual medical examination after a disability pension has been granted (unless deemed not necessary by the executive director due to the member’s medical condition) and at any other time deemed necessary by the board in order to determine whether the disability is continuing. The fund will pay the expenses for medical examinations directed by the executive director or board. To continue to receive a disability pension, the member shall submit to any medical examination required by the executive director or board.

(3) If at any time the board is in reasonable doubt as to whether the member is disabled as above defined, it may suspend the disability pension until the doubt is resolved, which shall occur within a reasonable time. Any disability pension shall be terminated upon the board’s determination that the member is not disabled as defined in this section.

(4) No disability pension coverage shall be provided during a service break in excess of 90 consecutive days unless the service break was caused by sickness or accident leading to total disability.

(5) The disability pension specified herein shall not be payable during any period for which wages are received from the city, the State of Texas or any other branch of government while performing the duties of a firefighter or peace officer.

(6) Falsification or omission on any part of the employment application of prior conditions or injuries for which a disability pension is or has been sought, falsification or omission on any part of the disability pension application, or falsification or omission in connection with the continuation of a disability pension shall constitute grounds for denial of a disability pension or for revocation of any disability pension previously granted.

(7) The board’s determination on all matters concerning the granting, refusing or revoking of a disability pension shall be final and conclusive on all parties, and no appeal can be made therefrom. A member is entitled to a reasonable hearing (at which the member may appear in person, with or by a representative, or in writing) before the board makes its determination.

(8) No disability pension shall be granted (or continued) while the member is working for the city; provided however, a member may be granted a disability pension if the executive director or the board has been informed by the city that the member’s employment is about to be terminated by the city because of the member’s inability to perform the essential functions of the member’s position. Any such disability pension granted under this subsection (c)(8) shall not become effective until the month after the member has stopped working for the city.

(9) Except as otherwise provided by law, to be eligible to continue receiving a disability pension, a member must have complied with the medical recommendations (including rehabilitation therapy and treatment) as prescribed by the member’s treating physician(s), the physician(s) appointed by the executive director and/or the Texas Rehabilitation Commission.

(d) Calculation of disability pension. The calculation for disability pension can be found in the following sections:

(1) Section 2.5-26 for a group III member;

(2) Section 2.5-36 for a group IV member;

(3) Section 2.5-46 for a group I member;

(4) Section 2.5-56 for a group II member;

(5) Section 2.5-66 for a group V firefighter; and

(6) Section 2.5-76 for a group VI firefighter.

(e) Recovery from disability. If the board determines that a disabled member receiving a disability pension hereunder is no longer disabled as above defined, the member’s disability pension shall immediately cease. If such member is re-employed by the city immediately following such determination by the board, the member’s fund membership shall be reinstated as of the date of such re-employment, with full credited service to the date of disability. The member shall receive no additional credited service for the period of disability, provided however, that such period of disability shall be used to determine attainment of normal retirement date and special retirement date. If such member is not re-employed by the city immediately following certification of recovery, the member shall be considered as a terminated fund member and shall have no further interest in the fund other than a refund of any excess of the member’s total contributions, plus regular interest, less the amount already received from the member’s cash balance account, if applicable, over the total of disability payments made to the member; provided, however, that if such member had a vested interest in pension credits as of the date of which the member was certified disabled, the member shall receive a vested termination pension from the later of the date of certification of recovery or attainment of the vested retirement date under § 2.5-24, 2.5-34, 2.5-44, 2.5-54, 2.5-64 or 2.5-74, whichever is applicable, equal to the amount which would have been payable under the provisions of this section had the member terminated employment on the date the disability pension began. Any death benefits thereafter shall be determined in accordance with the applicable provisions of this article.

(f) Report of earned income or net earnings from self employment.

(1) Any disabled member who has not attained normal retirement date or special retirement date and who is receiving a disability pension shall submit to the executive director prior to May 1 of each year following disability retirement a copy of the member’s signed income tax return filed for the preceding year, with all attachments thereto, along with all tax returns and attachments for all of the member’s affiliated entities, including, but not limited to, partnerships, corporations or other entities in which the member, or any relative, owns any interest, including community or separate property, and for which the member performs any services, whether compensated or not, as proof of the member’s earned income and net earnings from self-employment for that year obtained from any occupation or employment. At the end of the first year of disability retirement and by May 1 of each subsequent year, a disabled member shall also submit to the executive director an affidavit on the executive director’s approved form swearing that the member’s earned income and net earnings from self-employment are fully disclosed on the tax returns provided to the executive director and that the disabled member has not received any other compensation, directly or indirectly, for services rendered by the disabled member, nor performed any services for which the member received no compensation except as disclosed in the affidavit, including amounts paid to other affiliated entities for the benefit of the disabled member or to any relative of the disabled member. If the Internal Revenue Service has approved an extension to file a tax return and the tax return has not been filed by May 1, the member shall provide the executive director with a copy of the extension by May 1, and a copy of the tax return with all attachments and the related affidavit, within two weeks after the tax return has been filed.

(2) If the disabled member’s total receipt of earned income, net earnings from self-employment, and city disability pension exceed the annualized base hourly rate of pay the member would have made during that same tax year had he or she remained employed by the city in the same position then, as soon as practicable, the board shall reduce the amount of disability benefits to be paid to the member. In reducing a member’s disability pension due to such excess earnings, the board shall consider the member’s then current earnings, and attempt to recover the cumulative excess earnings and preclude excess earnings in the future. In the event that a member’s disability pension is reduced in excess of the amount required, the board shall pay such excess to the member. For purposes of this subsection (f), base hourly rate of pay shall not include overtime, acting, assignment, holiday, longevity, educational incentive, safety award, incentive, shift differential or any other special or premium pay.

(3) The board shall withhold a disabled member’s disability pension upon the member’s failure to submit on a timely basis the required income tax returns with all attachments thereto and related documents. If the disabled member subsequently provides the required documentation by the end of the calendar year in which the return was due, the board shall cause the member’s disability pension to be reinstated, subject to the other provisions of this section, and including the payment of any previously withheld amounts, without interest. If the disabled member fails to provide the required documentation by the end of the calendar year in which the return was due, the disabled member’s disability pension shall be terminated and the member shall not be entitled to any payment for the period during which the documentation was not provided.

(4) For purposes of this section, any amounts paid to a disabled member’s affiliated entity in connection with the performance of services by the disabled member shall constitute “earned income,” and any attempt to circumvent the limitations under this article on earned income and net earnings from self-employment through the use of affiliated entities shall be grounds for the board to terminate the disabled member’s disability pension.

(Ord. 20471-10-2012, § 2, passed 10-23-2012; Ord. 21459-09-2014, § 1, passed 9-16-2014; Ord. 21510-10-2014, § 1, passed 10-21-2014; Ord. 22977-10-2017, § 1, passed 10-24-2017)

§ 2.5-8 COST OF LIVING ADJUSTMENT.

(a) History. In 1999, city council adopted Ord. 13842, which established a simple 2% cost-of- living adjustment for all members. In 2007, city council adopted Ord. 17839-10-2007, which established an ad hoc cost-of-living adjustment for all city employees hired on or after December 31, 2007, and all members who were not vested as of December 31, 2007. All members who were vested as of December 31, 2007, all retired members, and all beneficiaries were allowed to make a selection to either stay with the 2% simple cost-of-living adjustment or to receive the ad hoc cost-of-living adjustment. The members who did not make a selection were automatically defaulted into the 2% cost-of-living adjustment. In 2011, city council adopted Ord. 19599-03-2011, which eliminated the cost-of-living adjustment for group II general members. In 2012, city council adopted Ord. 20471-10-2012, which eliminated the cost-of-living adjustment for group IV police members, implemented the 2% cost-of-living adjustment for all service earned or purchased after October 1, 2013, for group I and group III police members, allowed group I general members and group III police members who were subject to the ad hoc cost-of-living adjustment to select the 2% cost-of-living adjustment for past years of service, and allowed beneficiaries who were subject to the ad hoc cost-of-living adjustment to select the 2% cost-of-living adjustment for future COLA adjustments. Active firefighters, and those firefighters who retired or separated from employment during the term of the April 13, 2010, collective bargaining agreement between the city and the Fort Worth Professional Firefighters Association IAFF Local 440, were not eligible to participate in the 2012 selection. On September 16, 2014, the city council adopted Ord. 21459-09-2014, which eliminated the cost-of-living adjustment for group VI firefighters. On October 21, 2014, city council adopted Ord. No. 21510-10-2014, which implemented the 2% cost-of-living adjustment for all service earned or purchased on or after January 10, 2015 for group V firefighters. Group V firefighters who were subject to the ad-hoc cost-of-living-adjustment were also allowed to select the 2% cost-of living adjustment for past years of service.

(b) Group II general members, group IV police officers, and group VI firefighters. Group II general members, group IV police officers and group VI firefighters (and their beneficiaries) are not eligible to receive a cost-of-living adjustment on their pension amount.

(c) Group I general members, group III police officers, and group V firefighters. Group I general members, group III police officers, and group V firefighters (and their beneficiaries) are not entitled to a cost-of living adjustment for any credited service earned or purchased on or after July 20, 2019.

(d) Group I general members, group III police officers, and group V firefighters who have not retired or entered the DROP by January 1, 2021. The following provisions apply to group I general members, group III police officers and group V firefighters who have not retired or entered the drop effective January 1, 2021:

(1) The ad-hoc cost-of-living adjustment and the 2% simple cost-of-living adjustments are eliminated for all past years of service.

(2) The ad-hoc cost-of-living adjustment and the 2% simple cost-of-living adjustment are eliminated for all future years of service.

(3) Group I general members, group III police members and group V firefighters who have not retired or entered the DROP by January 1, 2021 may receive a variable cost-of-living adjustment to be calculated as follows:

a. Upon retirement, on or after the first day of each January a cost-of-living adjustment or 13th paycheck may be made in accordance with subsection (d)(3)c. based on that portion of the base pension of a member for all credited service earned or purchased prior to July 20, 2019 (hereinafter called pro-rata base pension), with the amount of such cost-of-living adjustment or 13th paycheck to be in an amount not to exceed 4% of the member's pro-rata base pension, provided, however, that such cost-of-living adjustment or 13th paycheck may be made only if both of the following conditions are met:

1. The actuarially determined contribution (ADC), based on a closed 30-year funding of the unfunded liabilities, has been equal to or less than the fixed contribution (the contribution in place before any automatic increases under § 2.5-3(c)) for the last two consecutive calendar years based on both actuarial and market values of assets; and

2. The fund's actuary determines that funding the full cost of the 13th paycheck or cost-of-living adjustment is not anticipated to cause the ADC to exceed the fixed contribution (the contribution in place before any automatic increases under § 2.5-3(c)) for the calendar year in which the 13th paycheck or cost-of-living adjustment will apply.

b. A cost-of-living adjustment or 13th check cannot be granted under subsection (d)(3)a. if either of the following circumstances exist:

1. Any contributions under the automatic risk-sharing provisions of § 2.5-3(c) are being made in the then-current calendar year or are determined to be required for the following calendar year, including reduced-rate contributions under § 2.5-3(c)(3); or

2. The assumed rate of return as determined by the board is higher than the average of the assumed rates of return as reported by two independent sources that have been agreed to by the city and the board.

c. No later than April 30 of each year, the board shall, based on fund performance for the two immediately preceding years, advise the city council of the board's decision regarding whether to grant a variable cost-of-living adjustment or a 13th paycheck for the following calendar year, and the city council shall ratify such decision if the decision is fully in compliance with subsections (d)(3)a. and (d)(3)b..

(4) To be eligible for a cost-of-living adjustment for a particular year, either the member or any survivor must have been receiving benefits by September 30th of the prior year.

(e) Retirees and beneficiaries eligible to receive a cost-of-living adjustment who are receiving payments or who have retired on or before July 19, 2019; group I general members, group III police members, and group V firefighters who retire or enter the DROP on or before January 1, 2021; and members who receive an in the line of duty disability retirement or in the line of duty death retirement.

The following provisions apply to:

Retirees and beneficiaries eligible to receive a cost-of-living adjustment, who are receiving payments or who have retired on or before July 19, 2019;

Group I general members, group III police members, and group V firefighters who retire or enter the DROP on or before January 1, 2021; and

Members who receive an in the line of duty disability retirement or in the line of duty death retirement.

(1) The 2% simple cost-of-living adjustment.

a. The 2% simple cost-of-living is applicable to the following:

1. Retirees and beneficiaries who are eligible to receive a cost-of-living adjustment, who are already receiving payments on January 1, 2021, and who selected or defaulted to the 2% cost-of-living adjustment following the 2007, 2012, and 2014 selection processes;

2. Credited service through July 19, 2019 for group I general members, group III police members, group V firefighters, and vested terminated members in any of those groups who retire or enter the DROP on or before January 1, 2021 and who selected or defaulted to the 2% cost-of-living adjustment following the 2007, 2012, and 2014 selection processes;

3. Credited service through July 19, 2019 for group I general members, group III police members, and group V firefighters who retire on disability retirement due to an in the line of duty disability, and who selected or defaulted to the 2% cost-of-living adjustment following the 2007, 2012, and 2014 selection processes;

4. Credited service through July 19, 2019 for beneficiaries of group I general members, group III police members, and group V firefighters who selected or defaulted to the 2% cost-of-living-adjustment following the 2007, 2012, and 2014 selection processes;

5. Credited service earned or purchased from October 1, 2013 through July 19, 2019 for group I general members and group III police members who retire or enter the DROP on or before January 1, 2021, and have the ad hoc cost-of-living adjustment for service prior to October 1, 2013;

6. Credited service earned or purchased from January 10, 2015 through July 19, 2019 for group V firefighters who retire or enter the DROP on or before January 1, 2021, and have the ad hoc cost-of-living adjustment for credited service prior to January 10, 2015;

7. Credited service earned or purchased from October 1, 2013 through July 19, 2019 for group I general members and group III police members who retire on disability retirement due to an in the line of duty disability and who have the ad hoc cost-of-living adjustment for credited service prior to October 1, 2013;

8. Credited service earned or purchased from January 10, 2015 through July 19, 2019 for group V firefighters who retire on disability retirement due to an in the line of duty disability and who have the ad hoc cost-of-living adjustment for credited service prior to January 10, 2015;

9. Credited service earned or purchased from October 1, 2013 through July 19, 2019 for beneficiaries of group I general members and group III police members who had the ad hoc cost-of-living adjustment for credited service prior to October 1, 2013, if the member is killed in the line of duty; and

10. Credited service earned or purchased from January 9, 2015 through July 29, 2019 for beneficiaries of group V firefighters who had the ad hoc cost-of-living adjustment for credited service prior to January 10, 2015, if the member is killed in the line of duty.

b. Calculation of the 2% simple cost-of-living adjustment. Upon retirement, on the first day of each January a cost-of-living adjustment shall be made on that portion of the base pension of the member that is subject to the 2% cost-of-living adjustment, as described in subsection (e)(1)a., by increasing the amount of the actual pension by 2% of that portion of the base pension, unless otherwise provided herein. To be eligible for a cost-of-living adjustment for a particular year, either the member or any survivor must have been receiving benefits by September 30 of the prior year.

(2) Ad hoc cost-of-living adjustment.

a. The ad hoc cost-of-living adjustment is applicable to the following:

1. Credited service through September 30, 2013, for group I general members and group III police members who retire or enter the DROP on or before January 1, 2021, who had the ad hoc cost-of-living adjustment, and who did not select to receive the 2% cost-of-living adjustment during the 2012 selection process;

2. Credited service through January 9, 2015, for group V firefighters who retire or enter the DROP on or before January 1, 2021, who had the ad hoc cost-of-living adjustment, and who did not select to receive the 2% cost-of-living adjustment during the 2014 selection process;

3. Credited service through September 30, 2013, for group I general members and group III police members who retire on disability retirement due to an in the line of duty disability, who had the ad hoc cost-of-living adjustment, and who did not select to receive the 2% cost-of-living adjustment during the 2012 selection process;

4. Credited service through September 30, 2013 for beneficiaries of group I general members and group III police members if the member is killed in the line of duty and the member had the ad hoc cost-of-living adjustment and did not select to receive the 2% cost-of-living adjustment during the 2012 selection process;

5. Credited service through January 9, 2015 for group V firefighters who retire on disability retirement due to an in the line of duty disability, who had the ad hoc cost-of-living adjustment, and who did not select to receive the 2% cost-of-living adjustment during the 2014 selection process;

6. Credited service through January 9, 2015 for beneficiaries of group V firefighters if the group V firefighter is killed in the line of duty, and the group V firefighter had the ad hoc cost-of-living adjustment and did not select the 2% cost-of-living adjustment during the 2014 selection process; and

7. Members and beneficiaries who are eligible to receive a cost-of-living adjustment, who are already receiving payments on January 1, 2021, who had the ad hoc cost-of-living adjustment, and who did not select the 2% cost-of-living adjustment during the 2012 or 2014 selection process.

b. Calculation of the ad hoc cost-of-living adjustment. Upon retirement, on the first day of each January, an ad hoc cost-of-living adjustment may be made on that portion of the base pension of the member that is subject to the ad hoc cost-of-living adjustment, as described in subsection (e)(2)a., pursuant to this subsection as follows:

1. Prior to December 31 of each year, the fund's actuary shall make a written report to the board certifying the amortization period required to pay off the unfunded actuarial accrued liability of the fund.

2. Based on the information provided by the actuary, the board shall:

i. Grant a compounded ad hoc cost-of-living adjustment of 4%, if the actuary certifies that the amortization period required to pay off the unfunded actuarial accrued liability of the fund, after granting the 4% cost-of-living adjustment, would be 18.0 years or less;

ii. Grant a compounded ad hoc cost-of-living adjustment of 3%, if the actuary certifies that the amortization period required to pay off the unfunded actuarial accrued liability of the fund, after granting the 3% cost-of-living adjustment, would be between 18.1 and 24.0 years;

iii. Grant a compounded ad hoc cost-of-living adjustment of 2%, if the actuary certifies that the amortization period required to pay off the unfunded actuarial accrued liability of the fund, after granting a 2% cost-of-living adjustment, would be between 24.1 and 28.0 years;

iv. Grant no ad hoc cost of living adjustment if the actuary certifies that the amortization period required to pay off the unfunded actuarial accrued liability of the fund is 28.1 years or more.

c. Increased contributions made in conjunction with the automatic risk-sharing provision of § 2.5-3(c) cannot be used in determining the amortization period for granting an ad hoc cost-living adjustment.

d. To be eligible for a cost-of-living adjustment for a particular year, either the member or any beneficiary must have been receiving benefits by September 30th of the prior year.

(f) DROP participants.

(1) If a member enters the DROP and remains in the DROP for two or more years, they will be entitled to receive a cost of living adjustment for their years in the DROP as if the member retired on the date they entered in the DROP. Members who do not remain in the DROP for at least two years are not entitled to a cost of living adjustment for their time in the DROP. If the cost of living adjustment takes the form of a 13th paycheck, the amount of the paycheck shall be based on the member's DROP pension amount (excluding impact of any potential qualified leave under § 2.5-4(c)), and the cumulative balance of all such 13th paychecks shall be payable to the member in a lump sum following the date of actual retirement.

(2) A group I member, group III police member, or group V firefighter who enters the DROP on or before January 1, 2021 , but does not remain in the DROP for two years is still eligible to receive a cost-of-living on their pension, although they would not be eligible to receive a cost-of-living adjustment for their years in the DROP. If a member does not remain in the DROP for two years, then the member must be receiving pension benefits by September 30th to be eligible to receive a cost-of-living adjustment on their pension the next year.

(Ord. 20471-10-2012, § 2, passed 10-23-2012; Ord. 21459-09-2014, § 1, passed 9-16-2014; Ord. 21510-10-2014, § 1, passed 10-21-2014; Ord. 23516-12-2018, § 3, passed 12-11-2018)

§ 2.5-9 DEFERRED RETIREMENT OPTION PROGRAM (DROP).

(a) General. In lieu of the standard pension benefit or the alternative pension benefit, a member who has attained his or her normal retirement date may elect to remain in active service with the city and to participate in the DROP. By making an election to participate in DROP, the member’s commencement of retirement pension benefits will be deferred until the member’s actual retirement and the member will receive a lump sum payment (unless such person elects installment payments pursuant to subsection (j) below) of his or her DROP account at the time the member’s actual retirement pension benefits commence. No interest on earnings shall be paid on the lump sum payment. Once a member makes a DROP election and the DROP election is approved by the board, the DROP election is irrevocable and is effective as long as the member remains in active service with the city. Distribution of a member’s DROP account will not be made, and commencement of the member’s retirement pension benefits will not begin, until the member retires from the city. DROP shall be administered in accordance with the rules, procedures and forms as may be adopted and amended by the board in its complete discretion, which shall be uniform and nondiscriminatory and which shall be interpreted in a manner that is consistent with the provisions of this Article and applicable law.

(b) Procedure for DROP election. A DROP election shall be made in accordance with the rules, procedures and forms (including spousal consent, where applicable) as may be adopted by the board. The election form adopted by the board may be amended by the board, and, except as otherwise provided by the board, the election form in effect at the time of the member’s DROP election is effective shall control all DROP benefits the member may become entitled to receive upon retirement. A member shall not be subject to any fees, charges or any other similar expenses in connection with a DROP election.

(c) Timing and irrevocability of a DROP election. A member may make a DROP election at any time on or after the date that is 60 days prior to the date that the member will attain his or her normal retirement date or special retirement date. Once effective, a DROP election is irrevocable, provided, however, that a member’s DROP election shall not be effective until the member attains his or her normal retirement date.

(d) The DROP account. A member’s DROP account is an individual account established on behalf of the member into which a monthly amount will be credited once the DROP election is effective. The monthly amount credited to the member’s DROP account will be equal to the monthly pension benefit that the member would have initially received if the member had retired from the city and commenced his or her pension. Credits to a member’s DROP account will continue to be made until the member’s actual retirement, provided, however, that amounts will be credited to a member’s DROP account for a maximum of six years. No withdrawals may be made from the DROP account. A member will receive his or her DROP account in a lump sum distribution at the time the member’s pension benefits commences upon retirement, or, if elected by the member, the DROP account will be distributed in installments, as provided in subsection (j) below.

(e) Continued contributions to the fund. Once a DROP election is effective, both the member and the city shall continue to make the same contributions to the fund that would have been made if the member had not made a DROP election. Neither the member’s nor the city’s contributions to the fund will be credited to the member’s DROP account and the additional contributions will not affect the member’s monthly pension upon actual retirement.

(f) Monthly pension and ad hoc cost of living adjustment. Upon retirement following an effective DROP election, the member’s base pension will be the monthly pension benefits that the member had earned at the time the DROP election became effective. The member’s earnings and credited service following the DROP election will not be included in calculating the member’s base pension and monthly pension benefits. If (and only if) a member completes at least two years of service with the city after his or her DROP election is effective, then the monthly pension benefits that the member initially receives upon retirement will be adjusted for intervening cost of living adjustments, if applicable, as if the member’s monthly pension had commenced at the time the DROP election became effective. Further, such a member shall receive a cost of living adjustment on the following January 1, regardless of whether the member’s pension benefits had commenced by September 30. Notwithstanding the preceding provisions of this subsection (f), when a member’s monthly pension is initially scheduled to commence at retirement or death, the member’s base pension shall be recalculated by adjusting the member’s credited service for the member’s then accumulated sick leave and major medical leave (if any) pursuant to § 2.5-4(b).

(g) DROP election and death pension. If a member dies while his or her DROP election is in effect, the member’s DROP account shall be paid to the member’s spouse, or if there is no spouse, to the member’s estate. The spouse or estate eligible to receive the DROP account shall receive the DROP account in a lump sum distribution, unless an election is made to receive installment payments pursuant to this section. The remaining portion of the member’s pension shall be paid pursuant to the death pension provisions of this article, with the amount determined as if the member had died at the time of the DROP election.

(h) DROP election and disability pension. If a member makes a DROP election, the member will not be eligible to receive a disability pension under this article. If a member does become disabled following an effective DROP election, the member may retire from the city and receive the amount that has been credited to the member’s DROP account in a lump sum or in installment payments pursuant to subsection (j) below, and commence receipt of a monthly pension, with the amount of the pension calculated as if the member had retired at the time the DROP election became effective.

(i) Alternative pension benefit. A member who has made a DROP election shall not be eligible to elect an alternative pension benefit.

(j) Installment payments. Notwithstanding the preceding provisions of this section, a member who is entitled to receive a lump sum payment of his or her DROP account may elect (on a form adopted by the board) to receive the DROP account in five substantially equal annual installment payments, rather than a lump sum. The first installment payment shall be made at the time the member’s monthly pension commences, and the other installments shall be made on or about the anniversary of the initial installment. No interest on earnings shall be paid on the installment payments.

(Ord. 20471-10-2012, § 2, passed 10-23-2012; Ord. 23516-12-2018, § 4, passed 12-11-2018)

§ 2.5-10 PAYMENT OF BENEFITS.

(a) When benefits are payable to a minor, an individual who has legally been determined to lack capacity, or an individual whom the board determines to be unable to handle money, the board shall make payments, without any duty to see to the application thereof, to the guardian of such person’s estate or, if there is none, as the board determines to be in the best interest of such person.

(b) If a retired city employee who is receiving pension benefits from the fund is re-employed by the city as a regular employee, that person’s pension benefits shall cease upon the date of re-employment. credited service earned during the term of any member’s subsequent re-employment in which the employee’s pension benefits have been suspended shall be added to the credited service of the prior periods of employment, and upon final separation from the city, a new pension shall be calculated taking into account the member’s total years of credited service and recalculated compensation base. In no event shall the member’s monthly pension be reduced due to periods of re-employment.

(c) If the distributee of an eligible rollover distribution (as defined in the code § 402(f)(2)(A) (i) elects to have such distribution paid directly to another eligible retirement plan and (ii) specifies in writing (before the distribution is made) the eligible retirement plan to which such distribution is to be made, the distribution will be made in the form of a direct trustee-to-trustee transfer to the eligible retirement plan so specified.

(Ord. 20471-10-2012, § 2, passed 10-23-2012)

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