83S20011 TJS-F
By: Callegari H.B. No. 25
A BILL TO BE ENTITLED
AN ACT
relating to the liabilities of, contributions to, and the
administration of certain public retirement systems.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 802.002(a), Government Code, is amended
to read as follows:
(a) Except as provided by Subsection (b), the Employees
Retirement System of Texas, the Teacher Retirement System of Texas,
the Texas County and District Retirement System, the Texas
Municipal Retirement System, the Texas Emergency Services
Retirement System, and the Judicial Retirement System of Texas Plan
Two are exempt from Sections 802.101(a), 802.101(b), 802.101(d),
802.102, 802.103(a), 802.103(b), 802.202, 802.203, 802.204,
802.205, 802.206, and 802.207, and from all of Subchapter E. The
Judicial Retirement System of Texas Plan One is exempt from all of
Subchapters B, [and] C, and E except Sections 802.104 and 802.105.
The optional retirement program governed by Chapter 830 is exempt
from all of Subchapters B, [and] C, and E except Section 802.106.
SECTION 2. Chapter 802, Government Code, is amended by
adding Subchapter E to read as follows:
SUBCHAPTER E. ADDITIONAL PROVISIONS APPLICABLE TO CERTAIN
ACTUARIALLY FUNDED PUBLIC RETIREMENT SYSTEMS
Sec. 802.401. AMORTIZATION OF UNFUNDED LIABILITY. (a) If
the governing body of a public retirement system receives an
actuarial valuation conducted in accordance with Section 802.101
indicating an infinite amortization period, the governing body
shall notify the board and the governing body of the plan sponsor of
that determination in writing not later than the 30th day after the
date the valuation is received.
(b) Following the provision of notice under Subsection (a),
the public retirement system has six fiscal years to take
corrective action without additional reporting requirements. If by
the expiration of the sixth fiscal year the system has not received
an actuarial valuation conducted in accordance with Section 802.101
indicating that the system is able to amortize unfunded liability
over a finite period, the governing body of the system shall prepare
a written corrective action plan detailing actions to be taken by
the public retirement system and plan sponsor to achieve a funded
ratio of not less than 80 percent and an amortization period that
does not exceed 30 years.
(c) The corrective action plan described by Subsection (b)
must be signed by the governing body of the public retirement system
and by the governing body of the plan sponsor, and must be submitted
to the board not later than the 270th day after the expiration of
the six-fiscal-year period described by that subsection. If the
governing body of the public retirement system and the governing
body of the plan sponsor do not jointly approve a single corrective
action plan, the two governing bodies may submit separate
corrective action plans.
(d) The corrective action plan described by Subsection (b)
must be updated and resubmitted to the board every third year until
the public retirement system receives an actuarial valuation
conducted in accordance with Section 802.101 indicating that the
system has achieved a funded ratio of not less than 80 percent and
an amortization period that does not exceed 30 years.
Sec. 802.402. ACTION INCREASING AMORTIZATION PERIOD. A new
monetary benefit payable by the public retirement system may not be
established, and the determination of the amount of a monetary
benefit from the system may not be increased, if, as a result of the
action, the time required to amortize the unfunded actuarial
liabilities of the retirement system would be increased to a period
that exceeds 30 years by one or more years, as determined by an
actuarial valuation.
Sec. 802.403. CONTRIBUTIONS. (a) The plan sponsoring
entity contributions and employee contributions to a public
retirement system, as applicable, should be made at regular
intervals of at least one payment during each fiscal year.
(b) The allocation of the normal cost portion of
contributions under this section must be level or declining as a
percentage of payroll over all generations of employees of the
sponsoring entity, calculated according to applicable actuarial
standards.
Sec. 802.404. ADDITIONAL STUDIES AND REPORTS. (a) Except
as otherwise provided by this chapter, this section applies only to
a public retirement system with total assets the book value of
which, as of the last day of the preceding fiscal year, is greater
than or equal to $100 million.
(b) In addition to the requirements of Subchapter B, the
governing body of a public retirement system to which this
subchapter applies shall, at reasonable intervals not to exceed
five years, conduct or arrange to have conducted:
(1) an actuarial experience study in which actuarial
assumptions are reviewed in light of relevant experience factors,
important trends, and economic projections with the purpose of
determining whether the actuarial assumptions require adjustment;
and
(2) a study of the public retirement system's assets
and liabilities for use in reviewing asset allocations.
Sec. 802.405. ETHICAL STANDARDS. The governing body of a
public retirement system shall adopt ethical standards and
conflict-of-interest policies. Policies adopted under this
section must include a provision requiring trustees to report any
potential conflicts of interest and must be consistent with and not
less restrictive than Section 802.203.
SECTION 3. (a) Notwithstanding Section 802.401, Government
Code, as added by this Act, a public retirement system that receives
an actuarial valuation indicating an infinite amortization period
as described by that section on or after the effective date of this
Act is entitled to the six-fiscal-year period described by that
section to take corrective action described by that section
regardless of whether the public retirement system received a
previous actuarial valuation indicating an infinite amortization
period before the effective date of this Act.
(b) Section 802.402, Government Code, as added by this Act,
applies only to a new monetary benefit granted under a statute
enacted, or a contract entered into or renewed, on or after the
effective date of this Act. A monetary benefit granted under a
statute enacted, or a contract entered into or renewed, before the
effective date of this Act is governed by the law in effect
immediately before that date, and the former law is continued in
effect for that purpose.
SECTION 4. The governing body of a public retirement system
to which Subchapter E, Chapter 802, Government Code, as added by
this Act, applies shall adopt rules or procedures necessary to
implement that subchapter as soon as practicable after the
effective date of this Act, but not later than March 1, 2014.
SECTION 5. This Act takes effect on the 91st day after the
last day of the legislative session.