TITLE 34. PUBLIC FINANCE

PART 3. TEACHER RETIREMENT SYSTEM OF TEXAS

CHAPTER 21. PURPOSE AND SCOPE

The Teacher Retirement System of Texas (TRS) proposes to repeal §21.1 (relating to Statement of Policy) of Chapter 21 (relating to Purpose and Scope) in Title 34, Part 3, of the Texas Administrative Code.

BACKGROUND AND PURPOSE

In TRS' adopted four-year rule review published in the Texas Register (51 TexReg 5257) on August 7, 2026 , TRS identified §21.1 as a rule for future repeal because §21.1 provides no substantive requirements that require a rule. For this reason, TRS now proposes to repeal this rule. Further, because §21.1 is the only rule in Chapter 21 of TRS rules, TRS also proposes the repeal of Chapter 21 (relating to Purpose and Scope).

FISCAL NOTE

Don Green, TRS Chief Financial Officer, has determined that for each year of the first five years the proposed repeal will be in effect, there will be no foreseeable fiscal implications to state or local governments as a result of administering the proposed repeal.

PUBLIC COST/BENEFIT

For each year of the first five years the proposed repeal will be in effect, Mr. Green also has determined that the public benefit anticipated as a result of adopting the proposed repeal will be to remove unnecessary rules from the Texas Administrative Code. Mr. Green has also determined that that there is no economic cost to entities or persons required to comply with the proposed repeal. The repeal imposes no new requirements.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

TRS has determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed repeal. Therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under Government Code §2006.002.

LOCAL EMPLOYMENT IMPACT STATEMENT

TRS has determined that there will be no effect on local employment because of the proposed repeal. Therefore, no local employment impact statement is required under Government Code §2001.022.

GOVERNMENT GROWTH IMPACT STATEMENT

TRS has determined that for the first five years the proposed repeal will be in effect the proposed repeal will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to TRS; will not require an increase or decrease in fees paid to TRS; will not create a new regulation; will not expand or limit an existing regulation; will not increase or decrease the number of individuals subject to the rule's applicability; and will not affect the state's economy.

The proposed repeal does, however, repeal §21.1.

TAKINGS IMPACT ASSESSMENT

TRS has determined that since there are no private real property interests affected by the proposed repeal, a takings impact assessment is not required under Government Code §2007.043.

COSTS TO REGULATED PERSONS

TRS has determined that Government Code §2001.0045 does not apply to the proposed repeal because the proposed repeal does not impose a cost on regulated persons.

COMMENTS

TRS requests written comments regarding the proposed repeal. The comments may include information related to the costs, benefits, or effects of the proposed repeal, including any applicable data, research, or analysis, from any person required to comply with the proposed repeal or any other interested person.

Comments and information regarding the cost, benefit, and effect of the proposed repeal may be submitted in writing to Brian Guthrie, TRS Executive Director, P.O. Box 149676, Austin, Texas 78714-0185. Written comments and cost/benefit information must be received by TRS no later than 30 days after publication of this notice in the Texas Register.

STATUTORY AUTHORITY

The repeal of §21.1 is proposed under the authority of Government Code §825.102 which authorizes the TRS Board of Trustees to adopt rules for the eligibility for membership, the administration of the funds of the retirement system, and the transaction of business of the board.

CROSS-REFERENCE TO STATUTE

The proposed repeal of §21.1 implements Government Code §825.102.

§21.1. Statement of Policy.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 26, 2026.

TRD-202604504

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (512) 542-6506

CHAPTER 25. MEMBERSHIP CREDIT

The Teacher Retirement System of Texas (TRS) proposes amendments to the following rules in Chapter 25 (relating to Membership Credit) in Part 3 of Title 34 of the Texas Administrative Code: §25.66 of Subchapter E (relating to Military Service); §25.75 of Subchapter F (relating to Veteran's (USERRA) Service Credit); and §25.82 of Subchapter G (relating to Purchase of Credit for Out-of-State Service). In addition, TRS proposes to repeal the following rules in Chapter 25 in Part 3 of Title 34 of the Texas Administrative Code: §25.34 of Subchapter B (relating to Compensation); §25.84, and §25.86 of Subchapter G (relating to Purchase of Credit for Out-of-State Service); and §25.163 of Subchapter L (relating to Other Special Service Credit).

BACKGROUND AND PURPOSE

TRS proposes to amend three rules (§§25.66, 25.75, and 25.82) and repeal four rules (§§25.34, 25.84, 25.86, and 25.163) in Chapter 25 of TRS rules to implement the determinations made by the TRS Board of Trustees in TRS's recently adopted rule review (51 TexReg 5257). The proposed amendments are all either minor, nonsubstantive revisions or removals of obsolete provisions. The rules proposed for repeal are no longer necessary for administration of the TRS pension plan.

SECTION-BY-SECTION SUMMARY

TRS proposes to repeal §25.34 (relating to Membership Waiting Period) because the original reason for adopting this rule, the 90-day membership waiting period that existed from September 1, 2003 to September 1, 2005, has expired in law. Members who were subject to this rule may still purchase this service under §25.164 of this title (relating to Credit for Service During School Year With Membership Waiting Period).

The proposed amendments to §25.66 (relating to Application for Military Credit) and §25.75 (relating to Application for Eligible Active Military Duty under the Uniformed Services Employment and Re-Employment Rights Act) are both minor updates to TRS' street address.

The proposed amendments to §25.82 (relating to Cost) deletes subsections (f) and (g) from the rule because the time period to purchase credit for out-of-state service at the fee costs listed has expired.

TRS proposes to repeal §25.84 (relating to Crediting Fees) because the requirement for fees no longer exists in law.

TRS proposes to repeal §25.86 (relating to Computing Average Compensation) because the requirements of this rule already exist in Government Code §823.403.

TRS proposes to repeal §25.163 (relating to Service Credit Purchase) because this rule no longer has substantive requirements, and the original reason for adopting the rule, purchasing service credit under former Government Code §823.405, no longer exists as that statute has been repealed.

FISCAL NOTE

Don Green, TRS Chief Financial Officer, has determined that for each year of the first five years the proposed amended and repealed rules will be in effect, there will be no foreseeable fiscal implications for state or local governments as a result of administering the proposed amended and repealed rules.

PUBLIC COST/BENEFIT

For each year of the first five years the proposed amended and repealed rules will be in effect, Mr. Green also has determined that the public benefit anticipated as a result of adopting the proposed amended and repealed rules will be to remove unnecessary rules and requirements from the Texas Administrative Code and to update outdated references. In addition, Mr. Green has determined that the public will benefit from increased readability of the proposed amended rules.

Mr. Green has also determined that the public will incur no new costs as a result of complying with the proposed amended and repealed rules.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

TRS has determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed amended and repealed rules. Therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under Government Code §2006.002.

LOCAL EMPLOYMENT IMPACT STATEMENT

TRS has determined that there will be no effect on local employment because of the proposed amended and repealed rules. Therefore, no local employment impact statement is required under Government Code §2001.022.

GOVERNMENT GROWTH IMPACT STATEMENT

TRS has determined that for the first five years the proposed amended and repealed rules are in effect, the proposed amended and repealed rules will not create or eliminate any TRS programs; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to TRS; will not eliminate any fees currently paid to TRS; will not create a new regulation; will not expand or limit an existing regulation; will not increase or decrease the number of individuals subject to the rules' applicability; and will not affect the state's economy.

The proposed repealed rules, however, will repeal four current TRS rules: §§25.34, 25.84, 25.86, and 25.163.

TAKINGS IMPACT ASSESSMENT

TRS has determined that there are no private real property interests affected by the proposed amended and repealed rules, therefore, a takings impact assessment is not required under Government Code §2007.043.

COSTS TO REGULATED PERSONS

TRS has determined that Government Code §2001.0045 does not apply to the proposed amended and repealed rules because the proposed amended and repealed rules do not impose a cost on regulated persons.

COMMENTS

TRS requests written comments regarding the proposed amendments and repeals. The comments may include information related to the costs, benefits, or effects of the proposed amendments and repeals, including any applicable data, research, or analysis, from any person required to comply with the proposed amendments or repeals or any other interested person.

Comments and information regarding the cost, benefit, and effect of the proposed amendments or repeals may be submitted in writing to Brian Guthrie, TRS Executive Director, P.O. Box 149676, Austin, Texas 78714-0185. Written comments and cost/benefit information must be received by TRS no later than 30 days after publication of this notice in the Texas Register.

SUBCHAPTER B. COMPENSATION

STATUTORY AUTHORITY

The proposed repealed rule is proposed under the authority of Government Code §825.102, which authorizes the board of trustees to adopt rules for the transaction of the business of the board.

CROSS-REFERENCE TO STATUTE

The proposed repealed rule affects the following statutes: Government Code §825.4041, which relates to employer payments.

§25.34. Membership Waiting Period.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 26, 2026.

TRD-202604505

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (512) 542-6506

SUBCHAPTER E. MILITARY SERVICE

STATUTORY AUTHORITY

The amendments to §25.66 are proposed under the authority of Government Code §825.102, which authorizes the board of trustees to adopt rules for the transaction of the business of the board.

CROSS-REFERENCE TO STATUTE

The proposed amendments to §25.66 affect the following statutes: Chapter 823, Subchapter D, of the Government Code, which provides for the establishment of military service credit with TRS.

§25.66. Application for Military Credit.

Members desiring to make deposits for military credit should request in writing to be billed for the cost of the credit. Requests should be addressed to Teacher Retirement System of Texas, P.O. Box 149676, Austin, Texas 78714-0185 [1000 Red River Street, Austin, Texas 78701-2698]. Included with the request should be a certified or legible unaltered copy or copies of the member's military service record showing the dates and nature of the member's active duty. The system may require the member to make available to it such other evidence as may be required to establish the member's eligibility for service credit and the amount of deposits due. When the system determines the duty eligible for credit, it shall bill members for the total amounts of deposits and fees due for the credit at the last address of the member of which the system has record. The member must return the bill to the system with the total amount due for the military duty credit or with an installment payment agreement and all subsequent installment payments due. Deposits for military duty credit will not be accepted after date of death, except to the extent permitted under the laws and rules governing installment payments, or date of service retirement of a member.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 26, 2026.

TRD-202604506

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (512) 542-6506

SUBCHAPTER F. VETERAN'S (USERRA) SERVICE CREDIT

STATUTORY AUTHORITY

The amendments to §25.75 are proposed under the authority of Government Code §825.102, which authorizes the board of trustees to adopt rules for the transaction of the business of the board.

CROSS-REFERENCE TO STATUTE

The proposed amendments to §25.75 affect the following statutes: Chapter 823, Subchapter D, of the Government Code, which provides for the establishment of military service credit with TRS.

§25.75. Application for Eligible Active Military Duty under the Uniformed Services Employment and Re-Employment Rights Act.

Members desiring to make deposits for service or compensation credit for eligible military duty under the Uniformed Services Employment and Re-Employment Rights Act (USERRA) should request in writing to be billed for the cost of the credit. Requests should be addressed to Teacher Retirement System of Texas, P.O. Box 149676, Austin, Texas 78714-0185 [1000 Red River Street, Austin, Texas 78701-2698]. Included with the request should be a certified or legible unaltered copy or copies of the member's military service record showing the dates and nature of the member's military duty. Also included with the request should be a certification of the date of the member's application for reemployment with a Teacher Retirement System of Texas (TRS) covered employer or other proof of the date of employment with a TRS covered employer. The system may also require the member to make available to it such other evidence as may be required to establish the member's eligibility under the USERRA and §25.71 of this title (relating to Service Credit for Eligible Active Military Duty under the Uniformed Services Employment and Re-Employment Rights Act) for service credit and the amount of the deposits due. When the system determines the duty is eligible for credit, it shall bill the member for the total amounts of deposits and fees due for the credit at the last address of the member of which the system has record. The member must return the bill to the system with the total amount due for the eligible credit or with an installment payment agreement and all subsequent installment payments due. Deposits for military duty eligible for credit under the USERRA and §25.71 of this title must be made no later than five years after the date of re-employment or application for re-employment, subject to any additional period available under USERRA.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 26, 2026.

TRD-202604507

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (512) 542-6506

SUBCHAPTER G. PURCHASE OF CREDIT FOR OUT-OF-STATE SERVICE

STATUTORY AUTHORITY

The amendments are proposed under the authority of Government Code §823.401, which relates to the out-of-state service and members' ability to purchase credit based on that service in TRS; and Government Code §825.102, which authorizes the board of trustees to adopt rules for the transaction of the business of the board.

CROSS-REFERENCE TO STATUTE

The proposed amendments affect the following statutes: Government Code §823.401, which relates to the out-of-state service and members' ability to purchase credit based on that service in TRS.

§25.82. Cost.

(a) The [Except as provided by subsections (g) and (h) of this section, the] cost of establishing out-of-state service credit is the actuarial cost, as determined by TRS, of the additional standard annuity retirement benefits that would be attributable to the out-of-state service credit purchased under this section.

(b) To calculate the actuarial cost, TRS will use the cost factors and method described in §25.302 of this title (relating to Calculation of Actuarial Cost).

(c) The purchase cost described in this section assumes a lump-sum deposit will be made. If deposits are made under an installment agreement, a non-refundable installment fee of 9% applies.

(d) No credit will be applied to the cost of a year of out-of-state service credit for any TRS contributions made in the same school year.

(e) The date of first eligibility to purchase credit for any year of out-of-state service shall be the latest of the following dates:

(1) the date the member received 5 years' credit for service in the public schools of Texas;

(2) the date state law made the out-of-state service available for TRS service credit;

(3) the date in which the member qualified to deposit payment for each year of out-of-state service under the one for two rule in effect until March 20, 1975;

(4) the date the member completed one year of creditable service in the public schools of Texas after relevant out-of-state service.

(f) No deposits for out-of-state service credit may be made before the member accumulates 5 years of credit for service in the public schools of Texas.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 26, 2026.

TRD-202604508

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (512) 542-6506

STATUTORY AUTHORITY

The repeals are proposed under the authority of Government Code §823.401, which relates to the out-of-state service and members' ability to purchase credit based on that service in TRS; and Government Code §825.102, which authorizes the board of trustees to adopt rules for the transaction of the business of the board.

CROSS-REFERENCE TO STATUTE

The proposed repeals affect the following statutes: Government Code §823.401, which relates to the out-of-state service and members' ability to purchase credit based on that service in TRS.

§25.84. Crediting Fees.

§25.86. Computing Average Compensation.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 26, 2026.

TRD-202604531

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (512) 542-6506

SUBCHAPTER L. OTHER SPECIAL SERVICE CREDIT

STATUTORY AUTHORITY

The repeal of §25.163 is proposed under the authority of Government Code §825.102, which authorizes the board of trustees to adopt rules for the transaction of the business of the board.

CROSS-REFERENCE TO STATUTE

The proposed repealed rule affects no current TRS statutes as the statutory authority for this type of service credit purchase, Government Code §823.405, was repealed effective January 1, 2006.

§25.163. Service Credit Purchase.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 26, 2026.

TRD-202604509

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (512) 542-6506

CHAPTER 27. TERMINATION OF MEMBERSHIP AND REFUNDS

The Teacher Retirement System of Texas (TRS) proposes amendments to §27.8 (relating to Reinstatement of Membership and Service Credit by ORP Participants) of Chapter 27 (relating to Termination of Membership and Refunds) in Title 34, Part 3, of the Texas Administrative Code.

BACKGROUND AND PURPOSE

In TRS' adopted four-year rule review published in the Texas Register on August 7, 2026 (51 TexReg 5257), TRS identified §27.8 as a rule for future amendment because TRS determined that subsection (a) of the rule is no longer necessary for TRS to administer this section as the election period described in subsection (a) is expired.

FISCAL NOTE

Don Green, TRS Chief Financial Officer, has determined that for each year of the first five years the proposed amendments will be in effect, there will be no foreseeable fiscal implications to state or local governments as a result of administering the proposed amendments.

PUBLIC COST/BENEFIT

For each year of the first five years the proposed repeal will be in effect, Mr. Green also has determined that the public benefit anticipated as a result of adopting the proposed amendments will be to remove unnecessary provisions from the Texas Administrative Code. Mr. Green has also determined that there is no economic cost to entities or persons required to comply with the proposed amendments. The proposed amendments impose no new requirements.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

TRS has determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed amendments. Therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under Government Code §2006.002.

LOCAL EMPLOYMENT IMPACT STATEMENT

TRS has determined that there will be no effect on local employment because of the proposed amendments. Therefore, no local employment impact statement is required under Government Code §2001.022.

GOVERNMENT GROWTH IMPACT STATEMENT

TRS has determined that for the first five years the proposed amendments will be in effect the proposed repeal will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to TRS; will not require an increase or decrease in fees paid to TRS; will not create a new regulation; will not expand, limit, or repeal an existing regulation; will not increase or decrease the number of individuals subject to the rule's applicability; and will not affect the state's economy.

TAKINGS IMPACT ASSESSMENT

TRS has determined that since there are no private real property interests affected by the proposed amendments a takings impact assessment is not required under Government Code §2007.043.

COSTS TO REGULATED PERSONS

TRS has determined that Government Code §2001.0045 does not apply to the proposed amendments because the proposed amendments do not impose a cost on regulated persons.

COMMENTS

TRS requests written comments regarding the proposed amendments. The comments may include information related to the costs, benefits, or effects of the proposed amendments, including any applicable data, research, or analysis, from any person required to comply with the proposed amendments or any other interested person.

Comments and information regarding the cost, benefit, and effect of the proposed amendments may be submitted in writing to Brian Guthrie, TRS Executive Director, P.O. Box 149676, Austin, Texas 78714-0185. Written comments and cost/benefit information must be received by TRS no later than 30 days after publication of this notice in the Texas Register.

STATUTORY AUTHORITY

The amendments to §27.8 are proposed under the authority of Government Code §825.102 which authorizes the TRS Board of Trustees to adopt rules for the eligibility for membership, the administration of the funds of the retirement system, and the transaction of business of the board.

CROSS-REFERENCE TO STATUTE

The proposed amendments to §27.8 implement Government Code §830.106.

§27.8. Reinstatement of Membership and Service Credit by ORP Participants.

(a) [(b)] ORP participants who elected to return to TRS membership between September 1, 1979, and September 1, 1980[, under subsection (a) of this section,] are eligible to reinstate all previously held TRS credit, except student employment credit, under the provisions of this section only. Reinstatement may occur at any time after resumption of membership in TRS. All eligible credit must be reinstated at one time. If the member's account was withdrawn, the member must pay the accumulated contributions plus a reinstatement fee of 10% per year of the amount due compounded annually from the date of withdrawal to the date of repayment. Reinstatement fees will be credited to the state contribution account. Credit will be reinstated upon application by the member on a form prescribed by TRS and the deposit of all required payments. No credit may be established for service in public education while an ORP participant.

(b) [(c)] Former ORP participants who return or have returned to TRS membership in the retirement system other than by an election under this section must make reinstatement under §27.6 of this title (relating to Reinstatement of an Account).

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 26, 2026.

TRD-202604510

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (512) 542-6506

CHAPTER 29. BENEFITS

SUBCHAPTER E. DEFERRED RETIREMENT OPTION PLAN

The Teacher Retirement System of Texas (TRS) proposes to repeal §29.63 (relating to Deadline for Purchase of Special Service Credit) in Subchapter E of Chapter 29 in Title 34, Part 3, of the Texas Administrative Code.

BACKGROUND AND PURPOSE

In TRS' adopted four-year rule review published in the Texas Register on August 7, 2026 (51 TexReg 5257), TRS identified §29.63 as a rule for future repeal because §29.63 contains a deadline for service credit purchases by members who elected to participate in the Deferred Retirement Option Plan (DROP) and states the service credit must be purchased before DROP is elected (with some exceptions). As TRS members have not been able to elect DROP since 2005, a rule containing this deadline is no longer necessary. Further, §29.63(b) also contains a December 31, 2001, deadline for service credit purchases by certain DROP participants, and that deadline has passed.

FISCAL NOTE

Don Green, TRS Chief Financial Officer, has determined that for each year of the first five years the proposed repeal will be in effect, there will be no foreseeable fiscal implications to state or local governments as a result of administering the proposed repeal.

PUBLIC COST/BENEFIT

For each year of the first five years the proposed repeal will be in effect, Mr. Green also has determined that the public benefit anticipated as a result of adopting the proposed repeal will be to remove unnecessary requirements from the Texas Administrative Code. Mr. Green has also determined that that there is no economic cost to entities or persons required to comply with the proposed repeal. The repeal imposes no new requirements.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

TRS has determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed repeal. Therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under Government Code §2006.002.

LOCAL EMPLOYMENT IMPACT STATEMENT

TRS has determined that there will be no effect on local employment because of the proposed repeal. Therefore, no local employment impact statement is required under Government Code §2001.022.

GOVERNMENT GROWTH IMPACT STATEMENT

TRS has determined that for the first five years the proposed repeal will be in effect the proposed repeal will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to TRS; will not require an increase or decrease in fees paid to TRS; will not create a new regulation; will not expand or limit an existing regulation; will not increase or decrease the number of individuals subject to the rule's applicability; and will not affect the state's economy.

The proposed repeal does, however, repeal §29.63.

TAKINGS IMPACT ASSESSMENT

TRS has determined that since there are no private real property interests affected by the proposed repeal, a takings impact assessment is not required under Government Code §2007.043.

COSTS TO REGULATED PERSONS

TRS has determined that Government Code §2001.0045 does not apply to the proposed repeal because the proposed repeal does not impose a cost on regulated persons.

COMMENTS

TRS requests written comments regarding the proposed repeal. The comments may include information related to the costs, benefits, or effects of the proposed repeal, including any applicable data, research, or analysis, from any person required to comply with the proposed repeal or any other interested person.

Comments and information regarding the cost, benefit, and effect of the proposed repeal may be submitted in writing to Brian Guthrie, TRS Executive Director, P.O. Box 149676, Austin, Texas 78714-0185. Written comments and cost/benefit information must be received by TRS no later than 30 days after publication of this notice in the Texas Register.

STATUTORY AUTHORITY

The repeal of §29.63 is proposed under the authority of Government Code §825.102 which authorizes the TRS Board of Trustees to adopt rules for the eligibility for membership, the administration of the funds of the retirement system, and the transaction of business of the board.

CROSS-REFERENCE TO STATUTE

The proposed repeal of §29.63 affects Subchapter I (relating to Deferred Retirement Option Plan) of Chapter 824 of the Government Code.

§29.63. Deadline for Purchase of Special Service Credit.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 26, 2026.

TRD-202604511

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (512) 542-6506

CHAPTER 31. EMPLOYMENT AFTER RETIREMENT

The Teacher Retirement System of Texas (TRS) proposes amendments to the following rules in Chapter 31 (relating to Employment After Retirement) in Part 3 of Title 34 of the Texas Administrative Code: §31.2 and §31.3 of Subchapter A (relating to General Provisions and Procedures) and §§31.12, 31.13, 31.15, 31.18, and 31.19 of Subchapter B (relating to Employment After Retirement Exceptions). TRS also proposes to repeal §31.16 in Subchapter B of Chapter 31 in Part 3 of Title 34 of the Texas Administrative Code.

BACKGROUND AND PURPOSE

TRS proposes to amend seven rules (§§31.2, 31.3, 31.12, 31.13, 31.15, 31.18, and 31.19) and repeal one rule (§31.16) in Chapter 31 of TRS rules to implement the determinations made by the TRS Board of Trustees in TRS's recently adopted rule review (51 TexReg 5257). The proposed amendments are all either minor, nonsubstantive revisions, or they remove obsolete provisions. TRS also proposes to repeal §31.16 (relating to Federally-funded COVID-19 Personnel) because the statutory authority for this provision expired on February 1, 2025.

SECTION-BY-SECTION SUMMARY

The proposed amendments to §31.2 (relating to Monthly Certified Statements) and §31.3 (relating to Return-to-work Employer Pension Surcharge) delete references to the §31.16 as the statutory authority for that rule, Government Code §824.6021, expired on February 1, 2025. The proposed amendments also make conforming edits and correct typographical errors.

The proposed amendments to §31.12 (relating to Substitute Service) delete the portion of the substitute definition that includes work "on a temporary basis to monitor an in-person class while the classroom teacher temporarily instructs the class virtually." This portion of the substitute employment after retirement (EAR) exception was added to the rule during the COVID-19 pandemic and is now no longer used by TRS-covered employers.

The proposed amendments to §31.13 (relating to One-half Time Employment) and §31.15 (relating to Tutors under Education Code §33.913) to correct minor typographical errors.

TRS proposes to repeal §31.16 (relating to Federally-funded COVID-19 Personnel) as the statutory authority for that rule, Government Code §824.6021, expired on February 1, 2025.

The proposed amendments to §31.18 (relating to Combining EAR Exceptions) and §31.19 (relating to Combining EAR Exceptions and Employer Surcharges) delete references to the §31.16 (relating to Federally-funded COVID-19 Personnel) as the statutory authority for that rule, Government Code §824.6021, expired on February 1, 2025. The proposed amendments also make conforming edits and correct typographical errors.

FISCAL NOTE

Don Green, TRS Chief Financial Officer, has determined that for each year of the first five years the proposed amended and repealed rules will be in effect, there will be no foreseeable fiscal implications for state or local governments as a result of administering the proposed amended and repealed rules.

PUBLIC COST/BENEFIT

For each year of the first five years the proposed amended and repealed rules will be in effect, Mr. Green also has determined that the public benefit anticipated as a result of adopting the proposed amended rules will be to remove unnecessary rules and requirements from the Texas Administrative Code. In addition, Mr. Green has determined that the public will benefit from increased readability of the proposed amended rules.

Mr. Green has also determined that the public will incur no new costs as a result of complying with the proposed amended and repealed rules.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

TRS has determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed amended and repealed rules. Therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under Government Code §2006.002.

LOCAL EMPLOYMENT IMPACT STATEMENT

TRS has determined that there will be no effect on local employment because of the proposed amended and repealed rules. Therefore, no local employment impact statement is required under Government Code §2001.022.

GOVERNMENT GROWTH IMPACT STATEMENT

TRS has determined that for the first five years the proposed amended and repealed rules are in effect, the proposed amended and repealed rules will not create or eliminate any TRS programs; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to TRS; will not eliminate any fees currently paid to TRS; will not create a new regulation; will not expand or limit an existing regulation; will not increase or decrease the number of individuals subject to the rules' applicability; and will not affect the state's economy.

The proposed repealed rules, however, will repeal §31.16.

TAKINGS IMPACT ASSESSMENT

TRS has determined that there are no private real property interests affected by the proposed amended and repealed rules, therefore, a takings impact assessment is not required under Government Code §2007.043.

COSTS TO REGULATED PERSONS

TRS has determined that Government Code §2001.0045 does not apply to the proposed amended and repealed rules because the proposed amended and repealed rules do not impose a cost on regulated persons.

COMMENTS

TRS requests written comments regarding the proposed amendments and repeals. The comments may include information related to the costs, benefits, or effects of the proposed amendments and repeals, including any applicable data, research, or analysis, from any person required to comply with the proposed amendments or repeals or any other interested person.

Comments and information regarding the cost, benefit, and effect of the proposed amendments or repeals may be submitted in writing to Brian Guthrie, TRS Executive Director, P.O. Box 149676, Austin, Texas 78714-0185. Written comments and cost/benefit information must be received by TRS no later than 30 days after publication of this notice in the Texas Register.

SUBCHAPTER A. GENERAL PROVISIONS AND PROCEDURES

STATUTORY AUTHORITY

The proposed amended rules are proposed under the authority of Government Code §824.604, which authorizes TRS to adopt rules necessary for administering the requirements of Subchapter G of Chapter 824, Government Code, which relates to loss of benefits on resumption of TRS service after retirement; and Government Code §825.102, which authorizes the board of trustees to adopt rules for the transaction of the business of the board.

CROSS-REFERENCE TO STATUTE

The proposed amended rules affect the following statutes: Subchapter G of Chapter 824, Government Code, which relates to loss of benefits on resumption of TRS service after retirement; and Government Code §825.4092, which relates to employer contributions for employed retirees.

§31.2. Monthly Certified Statement.

(a) In accordance with the requirements of Government Code § 824.6022, an employer shall submit to TRS a monthly certified statement of employment for all retirees employed by the employer during each month of a school year.

(b) Employers must submit the monthly certified statement and all required employer surcharges under §31.3 of this title (relating to Return-to-Work Employer Pension Surcharges) for each report month from September through July before the eleventh day of the month following the applicable report month. For the monthly certified statement for the report month of August, the employer shall submit the monthly certified statement and all required employer surcharges before the seventh day of September.

(c) If the due date for submission of a monthly certified statement and required employer surcharges under subsection (b) of this section falls on a weekend or federal holiday, an employer shall submit the monthly certified statement and required employer surcharges on the last business day prior to the due date.

(d) An employer that fails to timely submit a monthly certified statement and all required employer surcharges must also pay all applicable interest and late fees provided in subsections (f) and (g) of this section.

(e) A monthly certified statement is not considered submitted to TRS until it is completed. To be complete, the monthly certified statement must include all the following information regarding a retiree employed by the employer during the report month:

(1) the number of hours and days worked by the retiree;

(2) whether the retiree's employment qualifies as one or more of the following types:

(A) substitute employment;

(B) one-half time or less employment;

(C) employment as a tutor under Section 33.913 of the Education Code;

(D) [(E)] full-time employment;

(E) [(F)] trial employment of a disability retiree for up to three months; or

(F) [(G)] any combination of these types;

(3) the amount of gross compensation paid to the retiree during the report month;

(4) the total amount due under §41.4 of this title (relating to Employer Health Benefit Surcharge); and

(5) any other information requested by TRS to administer this chapter.

(f) Employers that fail to timely submit a monthly certified statement, any required employer surcharges, or interest on unpaid amounts as required in this section shall pay to TRS the late fee established in this subsection for each business day that the monthly certified statement is past due. The late fees required to be paid are as follows:

(1) For employers with fewer than 100 employees, the late fee for the first business day the monthly certified statement is past due is $100. For each subsequent business day that the monthly certified statement is past due, the employer shall pay an additional $10.

(2) For employers with at least 100 employees but no more than 500 employees, the late fee for the first business day the monthly certified statement is past due is $250. For each subsequent business day that the monthly certified statement is past due, the employer shall pay an additional $25.

(3) For employers with more than 500 employees but no more than 1,000 employees, the late fee for the first business day the report or documentation is past due is $500. For each subsequent business day that the monthly certified statement is past due, the employer shall pay an additional $50.

(4) For employers with more than 1,000 employees, the late fee for the first business day the monthly certified statement is past due is $1,000. For each subsequent business day that the monthly certified statement is past [pat] due, the employer shall pay an additional $100.

(g) In determining the number of employees for purposes of assessing the late fee in subsection (f) of this section, TRS shall base the fee on the number of employees reflected on the employer's monthly certified statement for May of the preceding school year. New employers will pay late fees for the first school year as provided in subsection (f)(1) of this section.

§31.3. Return-to-Work Employer Pension Surcharge.

(a) For each report month a retiree is employed by an employer for more than 92 hours in a calendar month and that retiree is not exempt from surcharge under subsection (b) of this section, the employer shall pay to TRS a surcharge based on the compensation paid to the retiree during that report month. The criteria used to determine if a retiree is working more than 92 hours in a calendar month are the same as the criteria for determining one-half time employment under §31.13 of this title (relating to One-half Time Employment) even if the retiree's employment also qualifies for an exception under §31.14 of this title (relating to Full-time Employment after 12 Consecutive Month Break in Service), or §31.15 of this title (relating to Tutors under Education Code §33.913).

(b) Employers are not required to submit employer surcharges based on the employment of a retiree during a calendar month if:

(1) the retiree works 92 hours or less during the applicable report month;

(2) the retiree retired prior to September 1, 2005;

(3) the retiree is employed solely as a substitute and that employment meets all the requirements §31.12 of this title (relating to Substitute Service) even if the retiree's substitute employment also qualifies for another exception under Subchapter B of this chapter (relating to Employment After Retirement Exceptions); or

(4) the retiree is employed in multiple positions during the calendar month and does not exceed the limits for such combined employment under §31.19 of this title (relating to Combining EAR Exceptions and Employer Surcharges).[; or

(c) The amount of the employer surcharge that an employer must contribute to TRS for each retiree subject to surcharge under this section is equal to the sum of the compensation paid to the retiree during the report month multiplied by the member contribution rate in effect for the report month plus the compensation paid to the retiree during the report month multiplied by the state contribution rate in effect for that report month.

(d) If a retiree is employed concurrently in more than one position, the employer surcharge is owed if the combined employment exceeds the monthly limits described by §31.19 of this title. If the employment is with more than one employer, the employer surcharge is owed by each employer.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 26, 2026.

TRD-202604512

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (512) 542-6506

SUBCHAPTER B. EMPLOYMENT AFTER RETIREMENT EXCEPTIONS

STATUTORY AUTHORITY

The proposed amended rules are proposed under the authority of Government Code §824.604, which authorizes TRS to adopt rules necessary for administering the requirements of Subchapter G of Chapter 824, Government Code, which relates to loss of benefits on resumption of TRS service after retirement; and Government Code §825.102, which authorizes the board of trustees to adopt rules for the transaction of the business of the board.

CROSS-REFERENCE TO STATUTE

The proposed amended rules affect the following statutes: Subchapter G of Chapter 824, Government Code, which relates to loss of benefits on resumption of TRS service after retirement; and Government Code §825.4092, which relates to employer contributions for employed retirees.

§31.12. Substitute Service.

(a) In this section, "substitute' means a retiree employed by a Texas public educational institution and paid no more than the daily rate of pay for substitutes as set by the employer to work:

(1) on a temporary basis in the place of a current employee(s); or

(2) in a vacant position for no more than 20 days if the retiree was not the last person to hold the vacant position and the retiree has not previously been employed in that vacant position during the same school year.[; or]

(b) A retiree may be employed in a month solely as a substitute in a public educational institution without forfeiting the annuity payment for that month.

(c) A retiree who reports for duty as a daily substitute during any day and works any portion of that day shall be considered to have worked one day.

(d) A disability retiree may not be employed as a substitute under this section for more than 90 days in a school year. A disability retiree who works more than 90 days in a substitute position shall forfeit the disability retiree's annuity for the month during which the disability retiree exceeded 90 days and in each subsequent month during the same school year that the disability retiree is employed by a Texas public educational institution.

§31.13. One-half Time Employment.

(a) A retiree may be employed by a Texas public educational institution in any position, other than as a substitute, on as much as a one-half time basis without forfeiting annuity payments for the applicable months of employment. In this section, one-half time basis means no more than 92 hours in a calendar month. The total number of hours allowed for that month may be worked in any arrangement or schedule.

(b) Paid time-off, including sick leave, vacation leave, administrative leave, and compensatory time for overtime worked, is employment for purposes of this section and must be included in determining the total amount of time worked in a calendar month and reported to TRS as employment for the calendar month in which it is taken.

(c) For the purpose of this section, employment as an instructor for actual course or lab instruction with an institution of higher education (including community and junior colleges and online coursework) in classes taken by students for college credit or classes that are taken to prepare students for college level work shall be counted as a minimum of two clock hours for each clock hour of instruction or time in the classroom or lab in order to reflect instructional time as well as preparation, grading, and other time typically associated with one hour of instruction. If the employer has established a greater amount of preparation time for each hour in the classroom or lab, the employer's established standard will be used to determine the number of courses or labs a retiree may teach under the exception to loss of annuity provided by this section. The equivalent clock hours computed under this subsection must be equal to or less than the number of work hours authorized in subsection (a) of this section for the retiree to be considered as working on a one-half time basis.

(d) Employment as an instructor of continuing education, adult education, or classes offered to employers or businesses for employee training, that is not measured or expressed in terms of the number of courses; semester or course hours/credits; or instructional units or other units of time rather than clock hours and for which the students or participants do not receive college credit, must be counted based on the number of clock hours worked.

(e) A disability retiree may not be employed on as much as a one-half time basis under this section for more than 90 days in a school year. A disability retiree who works more than 90 days on as much as one-half time basis under this section shall forfeit the disability retiree's annuity for the month during which the disability retiree exceeded 90 days and in each subsequent month during the same school year that the disability retiree is employed by a Texas public educational institution.

(f) For the purposes of calculating the number of days worked by a disability retiree has worked during a school year under this section, working any part of a day counts as working the entire day.

§31.15. Tutors under Education Code §33.913.

(a) Except as provided by §31.18 of this title (relating to Combining EAR Exceptions) and subsection (b) of this section, a retiree may be employed by a Texas public educational institution in a tutoring position that meets the requirements of Section 33.913 of the Education Code for any number of hours or days during a month without being subject to the forfeiture requirements of §31.4 of this title (relating to Employment Resulting in Forfeiture of Retirement Annuity).

(b) A disability retiree may not be employed [on] as a tutor under this section for more than 90 days in a school year. A disability retiree who works more than 90 days [on] as a tutor under this section shall forfeit the disability retiree's annuity for the month during which the disability retiree exceeded 90 days and in each subsequent month during the same school year that the disability retiree is employed by a Texas public educational institution.

(c) For the purposes of calculating the number of days worked by a disability retiree has worked during a school year under this section, working any part of a day counts as working the entire day.

§31.18. Combining EAR Exceptions.

(a) If, during a calendar month, a retiree works in a position subject to more than one exception under this subchapter or in multiple positions subject to different exceptions under this subchapter and the retiree does not qualify for the twelve-month separation exception under §31.14 of this title (relating to Full-time Employment after 12 Consecutive Month Break in Service), TRS shall use the following standards to determine whether the retiree's employment still meets the requirements of each applicable exception or if the retiree is subject to §31.4 of this title (Employment Resulting in Forfeiture of Retirement Annuity) based on that employment.

(b) If a retiree combines substitute service under §31.12 of this title (relating to Substitute Service) with one-half time employment under §31.13 of this title (relating to One-half Time Employment) in a calendar month and the retiree's employment in either position does not qualify for any other exceptions under this subchapter, then the retiree may not work more than 11 days combined during that month in the two or more positions.

(c) If, during a calendar month, a retiree works in more than one position and each qualifies as one-half time employment under §31.13 of this title and the retiree's employment in either position does not qualify for any other exceptions under this subchapter, then the retiree may not work more than 92 total hours in the combined positions.

(d) If a disability retiree combines substitute service under §31.12 of this title, one-half time employment under §31.13 of this title, or employment as a tutor under §31.15 of this title (relating to Tutors under Education Code §33.913) in a school year, each day worked under any of those three exceptions counts toward the maximum of 90 days that a disability retiree may work under any of the exceptions so that a disability retiree may never work more than a total of 90 days combined under the three exceptions.

(e) If, during a calendar month, a retiree works more than one-half time in a position that qualifies for the tutor exception under §31.15 of this title, then the retiree may not work in any other position for a Texas public educational institution without being subject to the forfeiture requirements of §31.4 of this title unless:

(1) the other position qualifies as substitute service and all the retiree's employment under the tutor exception under §31.15 of this title also qualifies as substitute service; or

(2) the other position qualifies for the tutor exception under §31.15 of this title [or the COVID-19 position exception under §31.16 of this title (relating to Federally-funded COVID-19 Personnel)].

(f) If, during a calendar month, a retiree works in a position that qualifies as substitute or as one-half time or less employment and that position also qualifies for the tutor exception under §31.15 of this title, then the retiree may combine work in that position with any other work that qualifies under the substitute exception under §31.12 of this title and one-half time employment under §31.13 of this title provided the retiree's combined work during the calendar month does not exceed the limits provided by subsection (b) and (c) of this section, as applicable.

(g) [(h)] A service retiree employed under the twelve-month separation exception under §31.14 of this title may be employed up to full-time by one or more Texas public educational institutions in one or more positions without limit under this section.

(h) [(i)] If, during a calendar month, a retiree's position qualifies for more than one exception under this subchapter [other than the federally-funded COVID-19 exception under §31.16 of this title], the retiree's position shall be subject to all monthly limits on that position under all applicable exceptions. If the limit under the applicable exceptions conflict or if one exception is more restrictive than the other, the least restrictive exception on a retiree's employment after retirement shall apply. [If a service retiree's employment qualifies for the federally-funded COVID-19 exception under §31.16 of this title, it shall only be subject to the requirements of that section.]

(i) [(j)] For the purposes of this section, a retiree who works part of a day is considered to have worked the entire day.

§31.19. Combining EAR Exceptions and Employer Surcharges.

(a) If, during a calendar month, a retiree works in a position subject to more than one exception under this subchapter or in multiple positions subject to different exceptions under this subchapter, TRS shall use the following standards to determine whether the retiree's employment requires an employer to pay the return-to-work pension surcharge under §31.3 of this title (relating to Return-to-Work Employer Pension Surcharges).

(b) If a retiree combines substitute service under §31.12 of this title (relating to Substitute Service) with one-half time employment under §31.13 of this title (relating to One-half Time Employment) in a calendar month, then the employer employing the retiree must remit the employer surcharge to TRS if the retiree works more than 11 total days in both positions combined.

(c) If, during a calendar month, a retiree combines substitute service under §31.12 of this title with work that qualifies for the tutor exception under §31.15 of this title (relating to Tutors under Education Code §33.913), then the employer must remit the employer surcharge to TRS based on that combined employment unless:

(1) all of the retiree's employment under the tutor exception also qualifies as substitute service; or

(2) the retiree's non-substitute employment under the tutor exception does not exceed 92 hours in the calendar month when not combined with the retiree's substitute service and the retiree's total employment does not exceed 11 total days worked under both exceptions during the month.

(d) If, during a calendar month, a retiree combines one-half time employment under §31.13 of this title with non-substitute work under the tutor exception under §31.15 of this title, the employer must remit the employer surcharge to TRS if the retiree works more than 92 combined hours in all positions. If the retiree's employment under the tutor exception also qualifies as substitute service, then the employer must remit the employer surcharge if the retiree works more than 11 total days during the month in the combined tutor position and the non-tutor one-half time position.

(e) [(j)] If, during a calendar month, a retiree's employment in a position that qualifies for as substitute service under §31.12 of this title and another exception under this subchapter that is subject to surcharge, work performed in that position is not subject to surcharge so long as the work continues to qualify as substitute service and is not combined with work in another position that is subject to surcharge during the same month.

(f) [(k)] For the purposes of this section, a retiree who works part of a day is considered to have worked the entire day.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 26, 2026.

TRD-202604513

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (512) 542-6506

STATUTORY AUTHORITY

The proposed repealed rule is proposed under the authority of Government Code §824.604, which authorizes TRS to adopt rules necessary for administering the requirements of Subchapter G of Chapter 824, Government Code, which relates to loss of benefits on resumption of TRS service after retirement; and Government Code §825.102, which authorizes the board of trustees to adopt rules for the transaction of the business of the board.

CROSS-REFERENCE TO STATUTE

The proposed repealed rule affects the following statutes: Subchapter G of Chapter 824, Government Code, which relates to loss of benefits on resumption of TRS service after retirement; and Government Code §825.4092, which relates to employer contributions for employed retirees.

§31.16. Federally-funded COVID-19 Personnel.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 27, 2026.

TRD-202604540

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (512) 542-6506

CHAPTER 39. PROOF OF AGE

The Teacher Retirement System of Texas (TRS) proposes to repeal §39.1 (relating to Establishment of Date of Birth) of Chapter 39 (relating to Proof of Age) in Title 34, Part 3, of the Texas Administrative Code.

BACKGROUND AND PURPOSE

In TRS' adopted four-year rule review published in the Texas Register on August 7, 2026 (51 TexReg 5257), TRS identified §39.1 as a rule for future repeal because §39.1 provides no substantive requirements that require a rule. For this reason, TRS now proposes to repeal this rule. Further, because §39.1 is the only rule in Chapter 39 of TRS rules, TRS also proposes the repeal of Chapter 39.

FISCAL NOTE

Don Green, TRS Chief Financial Officer, has determined that for each year of the first five years the proposed repeal will be in effect, there will be no foreseeable fiscal implications to state or local governments as a result of administering the proposed repeal.

PUBLIC COST/BENEFIT

For each year of the first five years the proposed repeal will be in effect, Mr. Green also has determined that the public benefit anticipated as a result of adopting the proposed repeal will be to remove an unnecessary rule from the Texas Administrative Code. Mr. Green has also determined that there is no economic cost to entities or persons required to comply with the proposed repeal. The repeal imposes no new requirements.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

TRS has determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed repeal. Therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under Government Code §2006.002.

LOCAL EMPLOYMENT IMPACT STATEMENT

TRS has determined that there will be no effect on local employment because of the proposed repeal. Therefore, no local employment impact statement is required under Government Code §2001.022.

GOVERNMENT GROWTH IMPACT STATEMENT

TRS has determined that for the first five years the proposed repeal will be in effect the proposed repeal will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to TRS; will not require an increase or decrease in fees paid to TRS; will not create a new regulation; will not expand or limit an existing regulation; will not increase or decrease the number of individuals subject to the rule's applicability; and will not affect the state's economy.

The proposed repeal does, however, repeal §39.1.

TAKINGS IMPACT ASSESSMENT

TRS has determined that since there are no private real property interests affected by the proposed repeal, a takings impact assessment is not required under Government Code §2007.043.

COSTS TO REGULATED PERSONS

TRS has determined that Government Code §2001.0045 does not apply to the proposed repeal because the proposed repeal does not impose a cost on regulated persons.

COMMENTS

TRS requests written comments regarding the proposed repeal. The comments may include information related to the costs, benefits, or effects of the proposed repeal, including any applicable data, research, or analysis, from any person required to comply with the proposed repeal or any other interested person.

Comments and information regarding the cost, benefit, and effect of the proposed repeal may be submitted in writing to Brian Guthrie, TRS Executive Director, P.O. Box 149676, Austin, Texas 78714-0185. Written comments and cost/benefit information must be received by TRS no later than 30 days after publication of this notice in the Texas Register.

STATUTORY AUTHORITY

The repeal of §39.1 is proposed under the authority of Government Code §825.102 which authorizes the TRS Board of Trustees to adopt rules for the eligibility for membership, the administration of the funds of the retirement system, and the transaction of business of the board.

CROSS-REFERENCE TO STATUTE

The proposed repeal of §39.1 implements Government Code §825.102.

§39.1. Establishment of Date of Birth.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 26, 2026.

TRD-202604514

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (512) 542-6506

CHAPTER 43. CONTESTED CASES

The Teacher Retirement System of Texas (TRS) proposes amendments to the following rules in Chapter 43 (relating to Contested Cases) in Part 3 of Title 34 of the Texas Administrative Code: §§43.1 - 43.3, and 43.5 of Subchapter A (relating to General Administration) and §43.106 of Subchapter B (relating to Requests for Adjudicative Hearing). TRS also proposes to repeal Subchapter C (relating to Hearings Not Docketed at SOAH) of Chapter 43 in Part 3 of Title 34 of the Texas Administrative Code and the following rules in Subchapter C: §§43.201 - 43.228.

BACKGROUND AND PURPOSE

TRS proposes to amend five rules (§§43.1 - 43.3, 43.5, and 43.106) and repeal twenty-eight rules (§§43.201 - 43.228) in Chapter 43 of TRS rules to implement the determinations made by the TRS Board of Trustees in TRS's recently adopted rule review published in the Texas Register on August 7, 2026 (51 TexReg 5257). The proposed amendments are all either minor, nonsubstantive revisions or conforming amendments necessary because of the proposed repealed rules. The rules proposed for repeal are no longer necessary for administration of the TRS pension plan.

SECTION-BY-SECTION SUMMARY

The proposed amendments to §§43.1 (relating to Applicability), 43.2 (relating to Definitions), 43.5 (relating to Extensions), and 43.106 (relating to Authority to Grant Relief) delete references to administrative law judges not affiliated with the State Office of Administrative Hearings (SOAH) because TRS does not employ or contract with administrative law judges not affiliated with SOAH and, instead, dockets all contested case hearings at SOAH.

For the same reason, TRS proposes to repeal §§43.201 (relating to Applicability), 43.202 (relating to Form of Pleadings), 43.203 (relating to Filing of Pleadings and Amendments), 43.204 (relating to Briefs), 43.205 (relating to Motions), 43.206 (relating to Discovery), 43.207 (relating to Notice of Hearing and Other Action), 43.208 (relating to Agreements to be in Writing), 43.209 (relating to Motion for Consolidation), 43.210 (relating to Additional Parties), 43.211 (relating to Appearance and Representation), 43.212 (relating to Lead Counsel), 43.213 (relating to Powers of the Administrative Law Judge), 43.214 (relating to Prehearing Conference and Orders), 43.215 (relating to Conduct of Hearing), 43.216 (relating to General Admissibility), 43.217 (relating to Exhibits), 43.218 (relating to Pre-filed Direct Testimony in Disability Appeal Proceedings), 43.219 (relating to Limit on Number of Witnesses), 43.220 (relating to Failure to Appear), 43.221 (relating to Conduct and Decorum at Hearing), 43.222 (relating to Official Notice), 43.223 (relating to Recording of the Hearing; Certified Language Interpreter), 43.224 (relating to Dismissal Without Hearing), 43.225 (relating to Summary Disposition), 43.226 (relating to The Record), 43.227 (relating to Findings of Fact), and 43.228 (relating to Reopening of Hearing). All of these rules only apply to hearings for which TRS employs or contracts with an administrative law judge not affiliated with SOAH, and, as stated, TRS does not use such a process.

TRS proposes to amend §43.3 (relating to Filing of Documents) in order to remove reference to administrative law judges not affiliated with SOAH and to update TRS' street address to its current street address.

FISCAL NOTE

Don Green, TRS Chief Financial Officer, has determined that for each year of the first five years the proposed amended and proposed repealed rules will be in effect, there will be no foreseeable fiscal implications for state or local governments as a result of administering the proposed amended and repealed rules.

PUBLIC COST/BENEFIT

For each year of the first five years the proposed amended and repealed rules will be in effect, Mr. Green also has determined that the public benefit anticipated as a result of adopting the proposed amended and repealed rules will be to remove outdated references and unnecessary rules from TRS rules. In addition, Mr. Green has determined that the public will benefit from increased readability of the proposed amended rules.

Mr. Green has also determined that the public will incur no new costs as a result of complying with the proposed amended and repealed rules.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

TRS has determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed amended and repealed rules. Therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under Government Code §2006.002.

LOCAL EMPLOYMENT IMPACT STATEMENT

TRS has determined that there will be no effect on local employment because of the proposed amended and repealed rules. Therefore, no local employment impact statement is required under Government Code §2001.022.

GOVERNMENT GROWTH IMPACT STATEMENT

TRS has determined that for the first five years the proposed amended and repealed rules are in effect, the proposed amended and repealed rules will not create or eliminate any TRS programs; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to TRS; will not eliminate any fees currently paid to TRS; will not create a new regulation; will not expand or limit an existing regulation; will not increase or decrease the number of individuals subject to the rules' applicability; and will not affect the state's economy.

The proposed repealed rules, however, will repeal §§43.201 - 43.228.

TAKINGS IMPACT ASSESSMENT

TRS has determined that there are no private real property interests affected by the proposed amended and repealed rules, therefore, a takings impact assessment is not required under Government Code §2007.043.

COSTS TO REGULATED PERSONS

TRS has determined that Government Code §2001.0045 does not apply to the proposed amended and repealed rules because the proposed amended and repealed rules do not impose a cost on regulated persons.

COMMENTS

TRS requests written comments regarding the proposed amendments and repeals. The comments may include information related to the costs, benefits, or effects of the proposed amendments and repeals, including any applicable data, research, or analysis, from any person required to comply with the proposed amendments or repeals or any other interested person.

Comments and information regarding the cost, benefit, and effect of the proposed amendments or repeals may be submitted in writing to Brian Guthrie, TRS Executive Director, P.O. Box 149676, Austin, Texas 78714-0185. Written comments and cost/benefit information must be received by TRS no later than 30 days after publication of this notice in the Texas Register.

SUBCHAPTER A. GENERAL ADMINISTRATION

STATUTORY AUTHORITY

The proposed amended rules are proposed under the authority of Government Code §825.102, which authorizes the Board to adopt rules for eligibility for membership, the administration of the funds of the retirement system, and the transaction of business of the Board; and Government Code §825.115(b), which authorizes the Board to adopt rules relating to the authority of the Board to make a final decision in a contested case or delegate its authority.

CROSS-REFERENCE TO STATUTE

The proposed amended rules affect Government Code §825.115, which authorizes the Board to adopt rules relating to the authority of the Board to make a final decision in a contested case or delegate its authority.

§43.1. Applicability.

(a) The procedures of this chapter apply only to administrative decisions, appeals, and adjudicative hearings relating to the TRS pension plan, unless rules relating to other programs specifically adopt by reference the provisions of this chapter.

(b) The procedures of this chapter do not apply to determinations of whether a domestic relations order is a qualified domestic relations order (QDRO) under Chapter 47 of this title (relating to Qualified Domestic Relations Orders). Appeals relating to QDROs are subject to the requirements of Chapter 47.

(c) If a contested case under this chapter is referred to the State Office of Administrative Hearings (SOAH) for adjudicative hearing, then during the period of time the case is before SOAH, the procedural rules for SOAH (1 TAC Chapter 155) shall apply unless inconsistent with applicable statutes or constitutional provisions. [If a matter is referred for an adjudicative hearing to a hearing official not affiliated with SOAH, then the rules of Subchapter C of this chapter (relating to Hearings Not Docketed at SOAH) shall apply to the conduct of the hearing while pending before the hearing official.]

§43.2. Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Administrative law judge--An individual appointed to conduct the adjudicative hearing in a contested case. [The deputy director may refer an appeal to be heard by an administrative law judge employed by the State Office of Administrative Hearings or may employ, select, or contract for the services of another administrative law judge or hearing examiner to conduct a hearing.]

(2) Appeal--A formal request to the executive director or board, as applicable under this chapter, to reverse or modify a final administrative decision by the chief benefit officer or the Medical Board on a matter over which TRS has jurisdiction and authority to grant relief.

(3) Board--The Board of Trustees of TRS.

(4) Chief Benefit Officer--The Chief Benefit Officer of TRS or person acting in that position.

(5) Contested case--A proceeding in which the legal rights, duties, or privileges of a party are to be determined by TRS after an opportunity for adjudicative hearing on a matter over which TRS has jurisdiction and authority to grant relief and the relief sought does not conflict with the terms of the pension plan.

(6) Deputy Director--The Deputy Director of TRS or person acting in that position.

(7) Executive director--The executive director of TRS or person acting in that position; when the executive director determines that a need exists, the executive director at his or her discretion may designate a person to accomplish the duties assigned in this chapter to the executive director.

(8) Final administrative decision--An action, determination, or decision by the chief benefit officer or the Medical Board, as applicable, based on review of a person's request on an administrative basis (i.e., without an adjudicative hearing).

(9) Final decision of TRS--A decision that may not be appealed further within TRS, either because of exhaustion of all opportunities for appeal within TRS or because of a failure to appeal the decision further within TRS in the manner provided for in this chapter.

(10) Medical board--The medical board appointed by the TRS board of trustees under Government Code §825.204.

(11) Member--A person who is a member, retiree, or beneficiary of TRS.

(12) Order--The whole or a part of the final disposition of an appeal, whether affirmative, negative, injunctive, or declaratory in form, of the executive director, deputy director, or the board in a contested case.

(13) Party--Each person named or admitted in a contested case.

(14) Person--Any natural person or other legal entity.

(15) Pleading--A written document that is submitted by a party, by TRS staff, or by a person seeking to participate in a case as a party and that requests procedural or substantive relief, makes claims or allegations, presents legal arguments, or otherwise addresses matters involved in a contested case.

(16) SOAH--The State Office of Administrative Hearings.

(17) State Office of Administrative Hearings--The state agency established by Chapter 2003, Government Code, which may serve as the forum for the conduct of an adjudicative hearing upon referral of an appeal by TRS.

(18) Third party respondent or petitioner--A person joined as an additional party to a proceeding; a party shall be designated as either a third party respondent or third party petitioner based on whether the person opposes the action requested in the petition or supports it or whether the person's interests are aligned with petitioner or respondent.

(19) TRS--The Teacher Retirement System of Texas.

(20) Trustee--One of the members of the board.

(21) With prejudice--Barring a subsequent contested case on the same claim, allegation, or cause of action.

§43.3. Filing of Documents.

(a) All documents relating to any appeal of a final administrative decision shall be filed with the deputy director at TRS, P.O. Box 149676, Austin, Texas 78714-0185 [1000 Red River Street, Austin, Texas 78701-2698]. A document may be filed with TRS by hand-delivery, courier-receipted delivery, facsimile transmission, or regular, certified, or registered mail. A document is deemed filed when mailed if it is received by TRS within a timely manner under Rule 5 of the Texas Rules of Civil Procedure and the sender provides adequate proof of the mailing date.

(b) If the deputy director has docketed an appeal and referred it for adjudicative hearing at SOAH, documents shall be filed in accordance with the procedural rules of SOAH and served upon TRS in accordance with those rules.

§43.5. Extensions.

(a) Unless otherwise provided by statute, the time for filing pleadings or other documents may be extended, upon the filing of a motion, prior to the expiration of the applicable period of time, showing that there is good cause for such extension of time and that the need for the extension is not caused by the neglect, indifference, or lack of diligence of the party making the motion.

(b) A copy of any such motion shall be served upon all other parties of record to the proceeding contemporaneously with its filing.

(c) In the case of filings that initiate a proceeding or that are made before an appeal has been referred for an adjudicative hearing, the deputy director will determine whether good cause exists and whether an extension should be granted.

(d) In the case of filings made in a proceeding after TRS has referred the appeal for an adjudicative hearing, rules governing hearings before SOAH will control so long as the matter is before SOAH.

(e) [(f)] For matters returned by an administrative law judge [or hearing examiner] to TRS, either through dismissal from the adjudicative hearing docket or through issuance of a proposal for decision, the executive director may determine whether good cause exists and whether an extension should be granted.

(f) [(g)] The executive director is authorized to rule on motions for extensions on matters directed to the Board if no Board meeting is scheduled before the expiration of the applicable period of time.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 26, 2026.

TRD-202604515

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (512) 542-6506

SUBCHAPTER B. REQUESTS FOR ADJUDICATIVE HEARING

STATUTORY AUTHORITY

The proposed amended rule is proposed under the authority of Government Code §825.102, which authorizes the Board to adopt rules for eligibility for membership, the administration of the funds of the retirement system, and the transaction of business of the Board; and Government Code §825.115(b), which authorizes the Board to adopt rules relating to the authority of the Board to make a final decision in a contested case or delegate its authority.

CROSS-REFERENCE TO STATUTE

The proposed amended rule affects Government Code §825.115, which authorizes the Board to adopt rules relating to the authority of the Board to make a final decision in a contested case or delegate its authority.

§43.106. Authority to Grant Relief.

(a) At any time before an appeal is referred for adjudicative hearing, the chief benefit officer or, in the matter of certification for disability retirement, the Medical Board may grant the relief sought by the petitioner and dismiss the appeal, provided that the interests of other individual parties are not adversely affected and the relief does not conflict with the terms of the pension plan.

(b) If the granted appeal has been referred to SOAH, the parties shall request that the SOAH administrative law judge dismiss the case from the SOAH docket in accordance with SOAH rules. [If the granted appeal was referred for an adjudicative hearing to a hearing official not affiliated with SOAH, then the rules of Subchapter C of this chapter (relating to Hearings Not Docketed at SOAH) shall apply to the dismissal of the case.]

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 26, 2026.

TRD-202604516

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (512) 542-6506

SUBCHAPTER C. HEARINGS NOT DOCKETED AT SOAH

STATUTORY AUTHORITY

The proposed repealed rules are proposed under the authority of Government Code §825.102, which authorizes the Board to adopt rules for eligibility for membership, the administration of the funds of the retirement system, and the transaction of business of the Board; and Government Code §825.115(b), which authorizes the Board to adopt rules relating to the authority of the Board to make a final decision in a contested case or delegate its authority.

CROSS-REFERENCE TO STATUTE

The proposed repealed rules affect Government Code §825.115, which authorizes the Board to adopt rules relating to the authority of the Board to make a final decision in a contested case or delegate its authority.

§43.201. Applicability.

§43.202. Form of Pleadings.

§43.203. Filing of Pleadings and Amendments.

§43.204. Briefs.

§43.205. Motions.

§43.206. Discovery.

§43.207. Notice of Hearing and Other Action.

§43.208. Agreements to be in Writing.

§43.209. Motion for Consolidation.

§43.210. Additional Parties.

§43.211. Appearance and Representation.

§43.212. Lead Counsel.

§43.213. Powers of the Administrative Law Judge.

§43.214. Prehearing Conference and Orders.

§43.215. Conduct of Hearing.

§43.216. General Admissibility.

§43.217. Exhibits.

§43.218. Pre-filed Direct Testimony in Disability Appeal Proceedings.

§43.219. Limit on Number of Witnesses.

§43.220. Failure to Appear.

§43.221. Conduct and Decorum at Hearing.

§43.222. Official Notice.

§43.223. Recording of the Hearing; Certified Language Interpreter.

§43.224. Dismissal without Hearing.

§43.225. Summary Disposition.

§43.226. The Record.

§43.227. Findings of Fact.

§43.228. Reopening of Hearing.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 26, 2026.

TRD-202604517

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (512) 542-6506

CHAPTER 47. QUALIFIED DOMESTIC RELATIONS ORDERS

The Teacher Retirement System of Texas (TRS) proposes to repeal §47.16 (relating to Effective Date of TRS Review of Orders) of Chapter 47 (relating to Qualified Domestic Relations Orders) in Title 34, Part 3, of the Texas Administrative Code.

BACKGROUND AND PURPOSE

In TRS' adopted four-year rule review published in the Texas Register on August 7, 2026 (51 TexReg 5257), TRS identified §47.16 as a rule for future repeal because TRS has determined that no domestic relations orders remain that could be subject to this rule. For this reason, TRS now proposes to repeal this rule.

FISCAL NOTE

Don Green, TRS Chief Financial Officer, has determined that for each year of the first five years the proposed repeal will be in effect, there will be no foreseeable fiscal implications to state or local governments as a result of administering the proposed repeal.

PUBLIC COST/BENEFIT

For each year of the first five years the proposed repeal will be in effect, Mr. Green also has determined that the public benefit anticipated as a result of adopting the proposed repeal will be to remove an unnecessary rule from the Texas Administrative Code. Mr. Green has also determined that there is no economic cost to entities or persons required to comply with the proposed repeal. The repeal imposes no new requirements.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

TRS has determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed repeal. Therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under Government Code §2006.002.

LOCAL EMPLOYMENT IMPACT STATEMENT

TRS has determined that there will be no effect on local employment because of the proposed repeal. Therefore, no local employment impact statement is required under Government Code §2001.022.

GOVERNMENT GROWTH IMPACT STATEMENT

TRS has determined that for the first five years the proposed repeal will be in effect the proposed repeal will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to TRS; will not require an increase or decrease in fees paid to TRS; will not create a new regulation; will not expand or limit an existing regulation; will not increase or decrease the number of individuals subject to the rule's applicability; and will not affect the state's economy.

The proposed repeal does, however, repeal §47.16

TAKINGS IMPACT ASSESSMENT

TRS has determined that since there are no private real property interests affected by the proposed repeal, a takings impact assessment is not required under Government Code §2007.043.

COSTS TO REGULATED PERSONS

TRS has determined that Government Code §2001.0045 does not apply to the proposed repeal because the proposed repeal does not impose a cost on regulated persons.

COMMENTS

TRS requests written comments regarding the proposed repeal. The comments may include information related to the costs, benefits, or effects of the proposed repeal, including any applicable data, research, or analysis, from any person required to comply with the proposed repeal or any other interested person.

Comments and information regarding the cost, benefit, and effect of the proposed repeal may be submitted in writing to Brian Guthrie, TRS Executive Director, P.O. Box 149676, Austin, Texas 78714-0185. Written comments and cost/benefit information must be received by TRS no later than 30 days after publication of this notice in the Texas Register.

STATUTORY AUTHORITY

The repeal of §47.16 is proposed under the authority of Government Code §825.102 which authorizes the TRS Board of Trustees to adopt rules for the eligibility for membership, the administration of the funds of the retirement system, and the transaction of business of the board.

CROSS-REFERENCE TO STATUTE

The proposed repeal of §47.16 implements Government Code §825.102.

§47.16. Effective Date of TRS Review of Orders.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 26, 2026.

TRD-202604518

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (512) 542-6506

PART 4. EMPLOYEES RETIREMENT SYSTEM OF TEXAS

CHAPTER 79. SOCIAL SECURITY

The Employees Retirement System of Texas (ERS) proposes amendments to 34 Texas Administrative Code (TAC) Chapter 79, Social Security, by amending §79.3 (Reporting Procedures) and repealing §79.4 (Reporting Periods), §79.5 (Examination of Records), §79.7 (Correction of Errors and Collection of Accounts Due), §79.9 (Reporting Official), §79.11 (State Holidays), §79.13 (Sick Pay Adjustments to Covered Wages), and §79.15 (Reporting Errors).

ERS was created by the Texas Constitution and administers a constitutional trust fund, as currently set forth in Tex. Const. art. XVI, §67. ERS is further organized pursuant to Title 8, Tex. Gov't Code, as well as 34 Texas Administrative Code, §§61.1 et seq.

The amendments and repeal of specified sections, removes obsolete language which references the reporting of wages to ERS by local political subdivisions participating in the Social Security and Medicare programs, as well as social security reporting by state agencies. As background, the Federal Social Security Act was expanded in 1951 to allow states to enter into voluntary agreements with the Social Security Administration (SSA) for Social Security coverage for state employees and to extend coverage to employees of local political subdivisions (cities, counties, utility districts, etc.) through separate amendments to the state's single agreement with the SSA. Initially, local political subdivisions reported Social Security and Medicare wages to ERS, which in turn necessitated administrative rules governing reporting. However, local political subdivisions now report wages directly to the Internal Revenue Service (IRS). Consequently, ERS no longer receives or audits wage reports from local political subdivisions, and the agency's role in program administration is largely limited to assisting local political subdivisions with obtaining coverage, drafting or modifying amendments to the state's agreement with the SSA, and maintaining existing agreements. ERS no longer takes the actions described in these rules, and the obsolete language can be removed without impact to program administration. Further, adoption of the proposed amendments does not require any change in practice among local political divisions, state agencies, ERS, or the IRS and will serve to better align the rules with current requirements.

GOVERNMENT GROWTH IMPACT STATEMENT

ERS has determined that during the first five-year period the amendments and repeals will be in effect:

(1) the proposed amendments and repeals will not create or eliminate a government program;

(2) implementation of the proposed amendments and repeals will not require the creation of new employee positions or eliminate existing employee positions;

(3) implementation of the proposed amendments will not require an increase or decrease in future legislative appropriations to the agency;

(4) the proposed amendments and repeals will not require an increase or decrease in fees paid to the agency;

(5) the proposed amendments and repeals will not create a new rule or regulation;

(6) the proposed amendments amends and repeals existing rules;

(7) the proposed amendments and repeals will not increase or decrease the number of individuals subject to the rules' applicability; and

(8) the proposed amendments and repeals will not positively or adversely affect the state's economy.

Mrs. Anne Allensworth, Enterprise Efficiency Director, has determined that for the first five-year period the amendments and repeals are in effect, there will be no fiscal implication for state or local government or local economies as a result of enforcing or administering the amended or repealed rules; and small businesses, micro-businesses, and rural communities will not be affected.

The proposed amendments and repeals do not constitute a taking. Mrs. Allensworth has also determined that, to her knowledge, there are no known anticipated economic effects for persons who are required to comply with the amendments and repeals as proposed, and the proposed amendments and repeals do not impose a cost on regulated persons.

Mrs. Allensworth also determined that for each year of the first five years the amendments and repeals are in effect, the public benefit anticipated as a result of adopting the amendments and repeals would be that rules connected with the program would better reflect current federal and state administrative requirements.

Comments on the proposed amendments and repeals may be submitted to Cynthia C. Hamilton, General Counsel and Chief Compliance Officer, Employees Retirement System of Texas, P.O. Box 13207, Austin, Texas 78711-3207, or you may email Ms. Hamilton at General.Counsel@ers.texas.gov. The deadline for receiving comments is Monday, December 6, 2026, at 10:00 a.m.

The amendments are proposed pursuant to Tex. Gov't Code §606.023 and §606.070, which explicitly authorize the ERS Board of Trustees to (1) adopt rules that it finds necessary to govern the application for and the eligibility of employees of a political subdivision to obtain social security coverage and (2) adopt rules and require state agencies to file reports regarding social security coverage for state employees. This explicit authority includes implied authority to amend and repeal such rules.

No other statutes are affected by the proposed amendments.

§79.3. Reporting Procedures.

An employing entity that is subject to Tex. Gov’t Code Chapter 606 shall submit [Each reporting entity shall make reports and payment in such manner and form as the executive director may require for periods prior to January 1, 1987, regular reports to ERS are required. On and after January 1, 1987, only such] reports to ERS as [may be] requested by the executive director in order to administer the provisions of Chapter 606 [or designee are required]. On and after January 1, 1987, including retroactive periods, all employing entities also have payment and reporting responsibilities directly to the Internal Revenue Service (IRS).

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 19, 2026.

TRD-202604435

Cynthia C. Hamilton

General Counsel and Chief Compliance Officer

Employees Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (877) 275-4377

The repeal is proposed pursuant to Tex. Gov't Code §606.023 and §606.070, which explicitly authorize the ERS Board of Trustees to (1) adopt rules that it finds necessary to govern the application for and the eligibility of employees of a political subdivision to obtain social security coverage and (2) adopt rules and require state agencies to file reports regarding social security coverage for state employees. This explicit authority includes implied authority to amend and repeal such rules.

No other statutes are affected by the proposed repeal.

§79.4. Reporting Procedures.

§79.5. Examination of Records.

§79.7. Correction of Errors and Collection of Accounts Due.

§79.9. Reporting Official.

§79.11. State Holidays.

§79.13. Sick Pay Adjustments to Covered Wages.

§79.15. Reporting Errors.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 19, 2026.

TRD-202604436

Cynthia C. Hamilton

General Counsel and Chief Compliance Officer

Employees Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (877) 275-4377

CHAPTER 82. HEALTH SERVICES IN STATE OFFICE COMPLEXES

The Employees Retirement System of Texas (ERS) proposes amendments to 34 Texas Administrative Code (TAC) Chapter 82, concerning Health Services in State Office Complexes, by amending §82.1 (Definitions), §82.3 (Administration), and §82.5 (Eligibility) and repealing §82.7 (Enrollment and Participation) and §82.9 (Termination).

ERS was created by the Texas Constitution and administers a constitutional trust fund, as currently set forth in Tex. Const. art. XVI, §67. ERS is further organized pursuant to Title 8, Tex. Gov't Code, as well as 34 Texas Administrative Code, §§61.1 et seq.

Amendments are proposed to §82.1 (Definitions) to update and refine language in the definitions, to eliminate a definition that is unnecessary because the same term ("board") is defined in Chapter 61, and to remove unnecessary language referencing a specific piece of legislation and legislative session; to §82.3 (Administration) to remove obsolete and duplicative language and to combine language from another section (§82.9) regarding the delegation of authority from the Board of Trustees to the Executive Director to continue or terminate a facility; to §82.5 (Eligibility) to remove duplicative language; to §82.7 (Enrollment and Participation) to remove a section that consists entirely of unnecessary language; and to §82.9 (Termination) to remove unnecessary language that repeats the program's enabling statute and to allow for the remaining language regarding the Executive Director's authority to be combined into §82.3. Adoption of the proposed amendments will not require any change in practice among state agencies, providers, or ERS, and will only serve to better align program rules with established practice.

GOVERNMENT GROWTH IMPACT STATEMENT

ERS has determined that during the first five-year period the amendments will be in effect:

(1) the proposed amendments will not create or eliminate a government program;

(2) implementation of the proposed amendments will not require the creation of new employee positions or eliminate existing employee positions;

(3) implementation of the proposed amendments will not require an increase or decrease in future legislative appropriations to the agency;

(4) the proposed amendments will not require an increase or decrease in fees paid to the agency;

(5) the proposed amendments will not create a new rule or regulation;

(6) the proposed amendments will not expand an existing rule or regulation;

(7) the proposed amendments will not increase or decrease the number of individuals subject to the rules' applicability; and

(8) the proposed amendments will not positively or adversely affect the state's economy.

Mrs. Anne Allensworth, Enterprise Efficiency Director, has determined that for the first five-year period the amendments are in effect, there will be no fiscal implication for state or local government or local economies as a result of enforcing or administering the amended rules; and small businesses, micro-businesses, and rural communities will not be affected.

The proposed amendments do not constitute a taking. Mrs. Allensworth has also determined that, to her knowledge, there are no known anticipated economic effects for persons who are required to comply with the amendments as proposed, and the proposed amendments do not impose a cost on regulated persons.

Mrs. Allensworth also determined that for each year of the first five years the amendments are in effect, the public benefit anticipated as a result of adopting the amendments would be that program rules will better reflect established program administration.

Comments on the proposed amendments may be submitted to Cynthia C. Hamilton, General Counsel and Chief Compliance Officer, Employees Retirement System of Texas, P.O. Box 13207, Austin, Texas 78711-3207, or you may email Ms. Hamilton at General.Counsel@ers.texas.gov. The deadline for receiving comments is Monday, December 6, 2026, at 10:00 a.m.

The amendments are proposed under Tex. Gov't Code §671.001(c), which authorizes the ERS Board of Trustees to adopt rules necessary for the implementation of the program for providing health services in state office complexes. This explicit authority includes implied authority to amend and repeal such rules.

No other statutes are affected by the proposed amendments.

§82.1. Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Act--The Texas Employees Group Benefits Act, Tex. Ins. Code [Act of the 77th Legislature, 2001, as amended, Insurance Code,] Chapter 1551.

(2) [(3)] Employee--A person authorized by the Act to participate in the GBP [program] as an employee.

(3) [(4)] Executive director [Director]--The executive director of the Employees Retirement System of Texas.

(4) [(5)] GBP--The Texas employees group benefits program provided by [Employees Group Benefits Program as established by the board pursuant to] the Act and known as the Group Benefits Program.

(5) [(6)] Nurse practitioner [Practitioner]--A licensed advanced practice registered nurse as defined by Tex. Occ. Code §301.152(a) [§301.152, Occupations Code].

(6) [(7)] Pilot program [Program]--The program authorized under Tex. Gov't Code § 671.001 [House Bill 952, 79th Texas Legislature, Regular Session, and codified at Chapter 671, Texas Government Code, wherein the viability of an on-site nurse practitioner to provide authorized on-site health services for state employees is to be evaluated].

(7) [(8)] Supervising physician [Physician]--A licensed physician who performs [will perform] supervisory functions under Tex. Occ. Code Chapter 157 with regard to a [as described by §157.052(e), Occupations Code, for the] nurse practitioner.

§82.3. Administration.

[The board shall implement and administer all aspects of the pilot program and determine any future expansion or continuation of the pilot program as authorized by Chapter 671, Texas Government Code. This includes the authority to execute contracts as necessary, to establish operating procedures, hours of operation, applicable fees and co-payments, administrative costs, and all other administrative and operational functions for the pilot program.] The executive director is vested with the authority to implement and make all administrative decisions related to the pilot program, including authority to continue or terminate a facility [that are vested in the board, including the determination of any future expansion or continuation of the pilot program as authorized by Chapter 671, Texas Government Code, subject to the basic and general policies, rules and regulations and appellate jurisdiction of the board].

§82.5. Eligibility and Participation.

Eligibility for participation in the pilot program is [shall be] limited to employees [of the state of Texas] who are enrolled in the GBP[, pursuant to Subchapter C, Chapter 1551, Insurance Code. Retirees and their dependents and dependents of employees are not eligible for participation].

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 19, 2026.

TRD-202604438

Cynthia C. Hamilton

General Counsel and Chief Compliance Officer

Employees Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (877) 275-4377

The repeals are proposed under Tex. Gov’t Code §671.001(c), which authorizes the ERS Board of Trustees to adopt rules necessary for the implementation of the program for providing health services in state office complexes. This explicit authority includes implied authority to amend and repeal such rules.

No other statutes are affected by the proposed repeals.

§82.7. Enrollment and Participation.

§82.9. Termination.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 19, 2026.

TRD-202604439

Cynthia C. Hamilton

General Counsel and Chief Compliance Officer

Employees Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (877) 275-4377

CHAPTER 85. FLEXIBLE BENEFITS

The Employees Retirement System of Texas (ERS) proposes amendments to 34 Texas Administrative Code (TAC) Chapter 85, concerning Flexible Benefits, by amending §85.1 (Introduction and Definitions) and §85.3. (Eligibility and Participation).

ERS was created by the Texas Constitution and administers a constitutional trust fund, as currently set forth in Tex. Const. art. XVI, §67. ERS is further organized pursuant to Title 8, Tex. Gov't Code, as well as 34 Texas Administrative Code §§61.1 et seq.

Amendments are proposed to §85.1 and §85.3 to allow participants in the dependent care flexible spending plan to incur eligible expenses after termination of employment. Rule amendments are required in order to effectuate this change to the plan. Additional amendments are included as cleanup changes to §85.1 and §85.3.

GOVERNMENT GROWTH IMPACT STATEMENT

ERS has determined that during the first five-year period the amended rules will be in effect:

(1) the proposed amendments will not eliminate a government program;

(2) implementation of the proposed amendments will not require the creation of new employee positions or eliminate existing employee positions;

(3) implementation of the proposed amendments will not require an increase or decrease in future legislative appropriations to the agency;

(4) the proposed amendments will not require an increase or decrease in fees paid to the agency;

(5) the proposed amendments will not create a new rule or regulation;

(6) the proposed amendments will expand an existing rule or regulation in a manner that is beneficial to participants;

(7) the proposed amendments will not increase or decrease the number of individuals subject to the rules' applicability; and

(8) the proposed amendments will not positively or adversely affect the state's economy.

Mr. Blaise Duran, Director of Group Benefits, has determined that for the first five-year period the rules are in effect, there will be no fiscal implications for state or local government or local economies as a result of enforcing or administering the rules; and small businesses, micro-businesses, and rural communities will not be affected.

The proposed amendments do not constitute a taking. Mr. Duran has also determined that, to his knowledge, the only known anticipated economic effect is that people impacted by the amendments will have increased opportunities to avoid the forfeiture of funds deposited into their dependent care flexible spending accounts.

Mr. Duran also determined that the public benefit anticipated as a result of enforcing the proposed rule would be to allow for the reimbursement of additional expenses after termination of employment and thereby limit forfeitures. Currently, members who leave employment are unable to use dependent care flexible spending contributions for services incurred after the date of termination, which results in the forfeiture of those funds.

Comments on the proposed amendments and rules may be submitted to Cynthia C. Hamilton, General Counsel and Chief Compliance Officer, Employees Retirement System of Texas, P.O. Box 13207, Austin, Texas 78711-3207, or you may email Ms. Hamilton at General.Counsel@ers.texas.gov. The deadline for receiving comments is Monday, December 7, 2026, at 10:00 a.m.

The amendments are proposed under Tex. Gov't Code §815.102, which authorizes the ERS Board of Trustees (Board) to adopt rules necessary for the administration of the funds of the retirement system and regarding the transaction of any other business of the Board; Tex. Ins. Code §1551.206, which authorizes the Board to develop, implement, and administer flexible spending accounts and include any benefit that may be included under federal law; and Tex. Ins. Code §1551.458, which authorizes the Board to adopt rules regarding flexible spending accounts.

No other statutes are affected by the proposed amendments and rules.

§85.1. Introduction and Definitions.

(a) Summary. The purpose of these rules is to govern the flexible benefits program. These rules constitute the Plan document for the State of Texas Employees Flexible Benefit Program (TexFlex). The flexible benefits plan (the plan) includes reimbursement account arrangements with optional benefits available for selection by participants as described in the plan and these rules. The plan is intended to be qualified under the Internal Revenue Code (the Code), §125, as amended from time to time, and is intended to continue as long as it qualifies under §125 and is advantageous to the state and institutions of higher education employees. Optional benefits offered under the plan for individual selection consist only of a choice between cash and certain statutory nontaxable fringe benefits as defined in the Code, §125, and regulations promulgated under the Code, §125. The plan may also include separate benefits as defined in the Code, §132, and regulations promulgated under the Code, §132, separate from the cafeteria plan, and governed by individual plan documents.

(b) Applicability of rules.

(1) These rules are applicable only to employees, as defined in this chapter [these rules], and terminated employees, as described in §85.3 (a)(3)(B) and (b)(1)(B) and (C) of this chapter [title (relating to Eligibility and Participation)].

(2) An employee who retired or separated from employment prior to September 1, 1988, shall not be entitled to benefits under the provisions of the plan and these rules, unless the employee is rehired and then becomes eligible for benefits.

(c) Definitions. The following words and terms when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise, and wherever appropriate, the singular includes the plural, the plural includes the singular, and the use of any gender includes the other gender.

(1) Act--The state law that authorized the establishment of a flexible benefits plan and is designated in the Texas Insurance Code, Chapter 1551, as amended.

(2) Account--A record keeping account established by the Employees Retirement System of Texas or its designee in the name of each participant for the purpose of accounting for contributions made to the account and benefits paid to a participant.

(3) Active duty--The expenditure of time and energy in the service of an employer as defined in these rules. An employee will be considered to be on active duty on each day of a regular paid vacation or on a non-work day, on which the employee is not disabled, if the employee was on active duty on the last preceding work day.

(4) Board of trustees--The board of trustees of the Employees Retirement System of Texas (ERS).

(5) Code--The Internal Revenue Code, as amended from time to time.

(6) Compensation--A participant's base salary, including amounts that would otherwise qualify as compensation but are not received directly by the participant pursuant to a good faith, voluntary, written or electronic salary reduction agreement in order to finance payments to a deferred compensation or tax sheltered annuity program specifically authorized by state law or to finance benefit options under this plan, plus longevity and hazardous duty pay and including non-monetary compensation, the value of which is determined by the Employees Retirement System of Texas, but excluding overtime pay.

(7) Debit Card--A bank issued convenience card or similar technology approved by the plan administrator and permitted to be used by participants as an optional method to pay for eligible transactions. Use of the card is governed by the plan administrator and issuing financial institution. The card is referred to as the Flex Debit Card.

(8) Dependent--An individual who qualifies as a dependent under the Code, §152, and when applicable taking into account the Code, §105, or any individual who is:

(A) except as provided by §85.6(b)(3) of this title, a dependent of the participant who is under the age of 13 and with respect to whom the participant is entitled to an exemption under the Code, §151, or, is otherwise, a qualifying individual as provided in the Code, §21; or

(B) a dependent or spouse of the participant who is physically or mentally incapable of caring for himself or herself.

(9) Dependent care reimbursement account--The bookkeeping account maintained by the plan administrator or its designee used for crediting contributions to the account and accounting for benefit payments from the account.

(10) Dependent care reimbursement plan--A separate plan under the Code, §129, adopted by the board of trustees, and designed to provide payment or reimbursement for dependent care expenses as described in §85.5(c) of this title (relating to Benefits).

(11) Dependent care expenses--Expenses incurred by a participant which:

(A) are incurred for the care of a dependent of the participant;

(B) are paid or payable to a dependent care service provider or to the participant as reimbursement for such expenses; and

(C) are incurred to enable the participant to be gainfully employed for any period for which there are one or more dependents with respect to the participant. Dependent care expenses shall not include expenses incurred for the services outside the participant's household for the care of a dependent, unless such dependent is a dependent under the age of 13 (or through age 14 as provided by §85.6(b)(3) of this title) with respect to when the participant is entitled to a tax deduction under the Code, §151, or a dependent who is physically or mentally incapable of self support. In the event that the expenses are incurred outside the dependent's household, the dependent must spend at least eight hours each day in the participant's household. Dependent care expenses shall be deemed to be incurred at the time the services to which the expenses relate are rendered.

(12) Dependent care service provider--A person or a dependent care center (as defined in the Code, §21) who provides care or other services described in the definition of "dependent care expenses" in this section, but shall not include:

(A) a related individual described in the Code, §129; or

(B) a dependent care center which does not meet the requirements of the Code, §21.

(13) Effective date of the plan--September 1, 1988.

(14) Election form--A paper or electronic form provided by the Employees Retirement System of Texas that is an agreement by and between the employer and the participant, entered into prior to an applicable period of coverage, in which the participant agrees to a reduction in compensation for purposes of purchasing benefits under the plan.

(15) Eligible employee--An employee who has satisfied the conditions for eligibility to participate in the plan in accordance with the plan and §85.3(a)(1), and (b)(1) of this title (relating to Eligibility and Participation), and, to the extent necessary, a retired or terminated employee who is entitled to benefit payments under the plan.

(16) Employee--A person who is eligible to participate in the Texas Employees Group Benefits Program as an employee.

(17) Employer--The State of Texas, its agencies, commissions, institutions of higher education, and departments, or other governmental entity whose employees are authorized to participate in the Texas Employees Group Benefits Program.

(18) Expenses incurred--Expenses for services received or performed and for which the participant is legally responsible.

(19) Executive director--The executive director of the Employees Retirement System of Texas.

(20) Flexible benefit dollars--The dollars available to a participant which may be used for purposes of purchasing benefits under the plan.

(21) General purpose health care reimbursement account--The account described in §85.5(b)(1).

(23) Health care expenses--Any expenses incurred by a participant, or by a spouse or dependent of such participant, for health care as described in or authorized in accordance with the Code, §105 and §213, but only to the extent that the participant or other person incurring the expense is not reimbursed for the expense by insurance or other means. The types of expenses include, but are not limited to, amounts paid for hospital bills, doctor bills, prescription drugs, hearing exams, vision exams, and eye exams.

(24) Health care reimbursement account--The bookkeeping account maintained by the plan administrator or its designee used for crediting contributions to the account and accounting for benefit payments from the account.

(25) Health care reimbursement plan--A separate plan, under the Code, §105, adopted by the board of trustees, and designed to provide health care expense reimbursement as described in §85.5(b) of this title (relating to Benefits).

(26) Institution of higher education--All public community/junior colleges, senior colleges or universities, or any other agency of higher education within the meaning and jurisdiction of the Education Code, Chapter 61, except the University of Texas System and the Texas A&M University System.

(27) Leave of absence without pay--The status of an employee who is certified monthly by an agency or institution of higher education administrator to be absent from duty for an entire calendar month, and who does not receive any compensation for that month.

(28) Limited purpose health care reimbursement account--The account described in §85.5(b)(3).

(29) Option--Any specific benefit offering under the plan.

(30) Participant--An eligible employee who has elected to participate in the plan for a period of coverage.

(31) Period of coverage--The plan year during which coverage of benefits under the plan is available to and elected by a participant; however, an employee who becomes eligible to participate during the plan year may elect to participate for a period lasting until the end of the current plan year. In such case, the interval commencing on such employee's entry date and ending as of the last day of the current period of coverage shall be deemed to be such participant's period of coverage.

(32) Plan--The flexible benefits plan established and adopted by the board of trustees pursuant to the laws of the state of Texas and any amendments which may be made to the plan from time to time. The plan is referred to herein as TexFlex, and is comprised of a dependent care reimbursement plan, a health care reimbursement plan, an insurance premium conversion plan, and a qualified transportation benefit plan.

(33) Plan administrator--The board of trustees of the Employees Retirement System of Texas or its designee.

(34) Plan year--A 12-month period beginning September 1 and ending August 31.

(35) Run-out period--The period following the end of the plan year between September 1 and December 31, during which participants may file claims for reimbursement of expenses incurred during the plan year.

(36) Statutory nontaxable benefit--A benefit provided to a participant under the plan, which is not includable in the participant's taxable income by reason of a specific provision in the Code and is permissible under the plan in accordance with the Code, §125.

(37) Spouse--The person to whom the participant is married. Spouse does not include a person separated from the participant under a decree of divorce, or annulment.

(38) TexFlex--The flexible benefits plan adopted by the board of trustees.

(39) Texas Employees Group Benefits Program (GBP)--The employee insurance benefits program administered by the Employees Retirement System of Texas, pursuant to Texas Insurance Code, Chapter 1551. The program consists of health, voluntary accidental death and dismemberment, optional term life, dependent term life, short and long term disability, vision, and dental insurance coverages.

(40) Third Party Administrator or TPA--The vendor, administrator or firm selected by the plan administrator to perform the day-to-day administrative responsibilities of the TexFlex program for participants of the Texas Employees Group Benefits Program who enroll in either the health care reimbursement plan, dependent care reimbursement plan or both.

§85.3. Eligibility and Participation.

(a) Dependent care reimbursement plan.

(1) Eligibility. Any employee eligible to participate in the Texas Employees Group Benefits Program may elect to participate in the dependent care reimbursement plan [account].

(2) Participation.

(A) An eligible employee [who is eligible under paragraph (1) of this subsection] may elect to participate by [completing and] submitting an election form [either in writing or electronically] on, or within 30 days after, the date on which the employee begins active duty. Upon submitting [An employee, upon executing] an election form [for participation], an employee is [either in writing or electronically, shall be deemed to have consented to and be] bound by all the terms, conditions, and limitations of the plan, [any and all amendments hereto,] any administrative rules adopted by the plan administrator, and any decision [or determinations] made by the plan administrator with respect to participant [the participant's] eligibility, obligations, rights, and benefits [available] under the plan. An election made on the date on which the employee begins active duty becomes effective on that date. An election made after the date on which the employee begins active duty becomes effective on the first day of the month following the date on which the employee begins active duty.

(B) An eligible employee who experiences [is otherwise eligible to participate in the Texas Employees Group Benefits Program but who declined participation in the dependent care reimbursement account prior to the beginning of a plan year, and who, after the beginning of a plan year, has] a qualifying life event, as described [defined] in §85.7(c) of this chapter [title (relating to Enrollment)], may elect to participate in the dependent care reimbursement plan [account] as provided in §85.7(c) [of this title].

(D) An eligible employee may elect to participate in the dependent care reimbursement plan [shall have an opportunity to enroll] or change an election [benefit options] during the annual enrollment period. The annual enrollment period occurs [shall be] prior to the beginning of each [a] new plan year. Elections and changes in elections made during the annual enrollment period become effective on the first day of the next plan year.

(E) The plan administrator shall maintain and update the participant enrollment records. Any and all changes will be communicated to the TPA via weekly file transfer protocol (FTP), tapes or other selected media.

(3) Duration of participation.

(A) An employee's election to participate [or to waive participation] in the dependent care reimbursement plan is [shall be] irrevocable for the plan year unless there is a qualifying life event as described [defined] in §85.7(c) of this chapter [title]. Automatic re-enrollment for subsequent plan years is governed by §85.7(a)(6) of this chapter.

(C) [(B)] An employee returning to active duty following termination of employment[,] or [following] a period of [approved] leave without pay may[, during the same plan year shall] reinstate the employee's election to participate in the dependent care reimbursement plan if the employee was participating in the plan [in effect] on the employee's last previous active duty date and the employee returns to active duty during the same plan year. The employee may elect to reinstate the previous election [Reinstatement becomes effective on the date on which the employee resumes active duty, unless the employee requests a change] in the same manner as a new election under §85.3(a)(2)(A) [as provided in §85.7(c)] of this chapter, and the election will become effective as provided in that section [title].

(b) Health care reimbursement plan.

(1) Eligibility.

(A) Any employee eligible to participate in the Texas Employees Group Benefits Program may elect to participate in a health care reimbursement account, except that an employee participating in a consumer directed health plan with a health savings account, as permitted under Subchapter J, Chapter 1551, Insurance Code, may only participate in the limited purpose health care reimbursement account described by §85.5(b)(3), of this title (relating to Benefits). Only participants in a consumer directed health plan are eligible to elect to participate in the limited purpose health care reimbursement account described by §85.5(b)(3) of this title.

(B) Prior to September 1, 2014, an employee whose employment has been terminated, voluntarily or involuntarily, and who had a health care reimbursement account at the time of termination, shall retain the health care reimbursement account for the applicable period of election. The terminated employee must pre-pay, on a monthly basis, the elected amount and any administrative fee for the plan year. Payments are due on the first day of each month and must be received no later than the 30th day of the month. Failure to pay will automatically cancel enrollment.

(C) On and after September 1, 2014, the employee's period of coverage ends on the date of termination of employment.

(2) Participation.

(A) An employee who is eligible under paragraph (1) of this subsection may elect to participate by completing and submitting an election form either in writing or electronically on, or within 30 days after, the date on which the employee begins active duty. An employee, upon executing an election form for participation, either in writing or electronically, shall be deemed to have consented to and be bound by all the terms, conditions, and limitations of the plan, any and all amendments hereto, any administrative rules adopted by the plan administrator, and any decision or determinations made by the plan administrator with respect to the participant's eligibility, obligations, rights and benefits available under the plan. An election made by an employee to participate in the health care reimbursement plan shall be effective on the date that the employee's coverage in a GBP health benefit plan begins. But if an employee opts out or waives GBP health coverage as provided in §81.8 of this title (relating to Waiver of Health Coverage), the employee's election shall become effective on the first day of the calendar month following 60 days of employment.

(B) An employee who is eligible but who declined participation in the health care reimbursement account prior to the beginning of a plan year, and who, after the beginning of a plan year, has a qualifying life event, as defined in §85.7(c) of this title, may elect to participate in a health care reimbursement account as provided in §85.7(c) of this title.

(C) A qualifying life event as defined in §85.7(c) of this title will permit the following changes in election during the plan year, as provided in §85.7(c) of this title:

(i) an increase in the election amount, if the increase is consistent with the qualifying life event; or

(ii) a decrease in the election or election amount, if the decrease is consistent with the qualifying life event.

(D) An eligible employee shall have an opportunity to enroll or to change benefit options during the annual enrollment period. The annual enrollment period shall be prior to the beginning of a new plan year. Elections and changes in elections made during the annual enrollment period become effective on the first day of the plan year.

(E) The plan administrator shall maintain and update the participant enrollment records. Any and all changes will be communicated to the TPA via weekly file transfer protocol (FTP), tapes or other selected media.

(F) If an eligible employee elects to enroll in a consumer directed health plan with a health savings account, any unspent flexible benefit plan dollars in the employee's health care reimbursement account at the end of the previous plan year shall automatically be transferred to and carryover into a limited purpose account as described by §85.5(b)(3) of this title, up to the maximum carryover permitted by the IRS. Such carryover shall comply with §85.7(g) of this title. Any flexible benefit plan dollars remaining that exceed the maximum carryover permitted by the IRS will be forfeited by the employee.

(3) Duration of participation.

(A) Except as otherwise provided in paragraph (2)(C)(ii) or (D) of this subsection, an employee's election to or not to participate in a health care reimbursement account shall be irrevocable for the plan year.

(B) An employee returning to active duty following termination of employment, or following a period of leave without pay, during the same plan year shall reinstate the election in effect on the employee's last previous active duty date. Reinstatement becomes effective on the date on which the employee resumes active duty, unless the employee requests a change in election as provided in §85.7(c) of this title or a different requirement is imposed by the Family and Medical Leave Act of 1993 (FMLA).

(C) For plan years beginning before September 1, 2014, an employee who is enrolled in a health care reimbursement account who terminates employment during the plan year must retain the health care account for the remainder of the plan year and prepay premiums or make monthly premium payments due for the remainder of the plan year, as described in paragraph (1)(B) of this subsection.

(D) For plan years beginning on and after September 1, 2014, an employee who is enrolled in a health care reimbursement account who terminates employment during the plan year does not retain the health care account for the remainder of the plan year. The employee's period of coverage ends on the date of termination. An employee may only file a claim for reimbursement for expenses incurred before the date of termination.

(E) Notwithstanding any provision to the contrary in this Plan, if an employee goes on a qualifying unpaid leave under the Family Medical Leave Act (FMLA), to the extent required by the FMLA, the plan administrator will continue to maintain the employee's health care reimbursement account on the same terms and conditions as though he were still an active employee (i.e., the plan administrator or its designee will continue to provide benefits to the extent the employee opts to continue his coverage). If the employee opts to continue his coverage, the employee shall pay his or her contribution in the same manner as a participant on the non-FMLA leave, including payment with after-tax dollars while on leave. The employee may also be given the option to pre-fund all or a portion of the contribution for the expected duration of the leave on a pre-tax salary reduction basis out of his pre-leave compensation by making a special election to that effect prior to the date such compensation would normally be made available to him (provided, however, that pre-tax dollars may not be utilized to fund coverage during the next plan year).

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 26, 2026.

TRD-202604527

Cynthia C. Hamilton

General Counsel and Chief Compliance Officer

Employees Retirement System of Texas

Earliest possible date of adoption: December 6, 2026

For further information, please call: (877) 275-4377