| (a) Compensation.
(1) Section 851.001(6) of the Act provides the definition
of compensation for purposes of the Act. For avoidance of doubt, the
definition of compensation includes, but is not limited to, the following
additional types of compensation in this paragraph and compensation
described in paragraph (2) of this subsection subject to the limitations
therein, and excludes compensation described in paragraph (3) of this
subsection:
(A) base pay and additional compensation paid for additional
duties, longevity, overtime or special duties;
(B) vacation and sick leave pay;
(C) monetary and nonmonetary compensation (the value
of which is determined by the participating municipality) taxable
as income, including, but not limited to, car or uniform allowances
and imputed income from fringe benefits;
(D) severance payments; and
(E) workers' compensation paid as temporary wage replacement
and reported or verified to the municipality.
(2) Compensation is limited to payments made to an
employee for performance of personal services and made before or within
a reasonable time, as determined by the system in its sole discretion,
after bona fide termination of the employee.
(3) Compensation does not include short-term or long-term
disability insurance payments received by an employee.
(b) Department.
(1) Definition of "department" may include:
(A) an economic development corporation established
by a participating municipality pursuant to the Development Corporation
Act (Subtitle C1, Title 12, Local Government Code), for which corporation
the municipality's governing body has passed an ordinance pursuant
to §501.067(a)(2), Local Government Code; or
(B) a recognized division that is an instrumentality
of a participating municipality:
(i) that is created to carry out a municipal function
(for example, public park creation and maintenance, economic stimulus
and development, or administration of port facilities);
(ii) that is controlled by the municipality:
(I) by the municipality maintaining the ability to
appoint and remove the members of the governing body for the instrumentality;
and
(II) by the municipality retaining the ability to dissolve
the instrumentality; and
(iii) for which the assets of the instrumentality revert
to the municipality upon the dissolution of the instrumentality.
(2) Notwithstanding the foregoing, the determination
of whether or not any economic development corporation, instrumentality,
or other recognized division is or is not a department for purposes
of the Act shall be made by the system, in its sole discretion.
(3) An employee of a participating department who performs
services for a nonparticipating entity pursuant to an agreement duly
authorized by the participating municipality that governs the department
remains a member of the system.
(c) Spouse. A spouse does not include a person separated
from the participant under a decree of divorce or annulment.
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