84R10080 SGA-D
By: Klick H.B. No. 2955
A BILL TO BE ENTITLED
AN ACT
relating to 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 except Sections 802.104 and 802.105. The
optional retirement program governed by Chapter 830 is exempt from
all of Subchapters B and C 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) A
governing body of a public retirement system that receives an
actuarial valuation conducted in accordance with Section 802.101
indicating an infinite amortization period shall notify the board
and the governing body of the plan sponsor of the determination in
writing not later than the 30th day after the date the valuation is
received.
(b) Following notice described by Subsection (a), the
public retirement system is granted a period of six fiscal years to
take corrective action without further reporting requirements. If
by the expiration of the sixth fiscal year the system has not
received a 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 retirement system
shall consult with the plan sponsor and prepare a written
corrective action plan detailing actions to be taken by the public
retirement system and plan sponsor to achieve:
(1) a funded ratio of not less than 80 percent; and
(2) 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 shall 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 retirement system and the governing body of
the plan sponsor do not jointly approve a single corrective action
plan, the governing body of the retirement system and the governing
body of the plan sponsor may submit separate corrective action
plans.
(d) The corrective action plan described by Subsection (b)
shall 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 funding meets the targets described by Subsections (b)(1)
and (2).
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 with at least one payment being made 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 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. Chapter 810, Government Code, is amended by
adding Section 810.003, to read as follows:
Sec. 810.003. REORGANIZATION OF PENSION SYSTEMS PROVIDING
RETIREMENT BENEFITS FOR FIRE, POLICE, OR OTHER EMPLOYEES OF CERTAIN
MUNICIPALITIES. (a) This section applies only to a pension system
that, before September 1, 2017, operated under a statute repealed
by Section 4 of the Act enacting this section.
(b) In this section:
(1) "Board of trustees" means the board created to
administer a pension system.
(2) "Employee committee" means a group of at least
five active employees selected by a governing body and approved by a
majority vote of all employees eligible for membership in a pension
system to represent the interests of all employees eligible for
membership in the pension system.
(3) "Governing body" means the governing body of a
sponsoring municipality.
(4) "Pension system" means a pension system described
by Subsection (a).
(5) "Retiree committee" means a group of at least five
retirees nominated by a board of trustees and approved by a majority
vote of all retirees to represent the interest of all retirees of a
pension system.
(6) "Sponsoring municipality" means a municipality
whose eligible employees are members of a pension system.
(7) "Stakeholder group" means a group with a legal
interest in a pension system, including, for each pension system,
the applicable governing body, the board of trustees, the retiree
committee, and the employee committee.
(c) Not later than June 1, 2017, each pension system shall
be renegotiated by the stakeholders for that system including:
(1) the applicable board of trustees;
(2) the governing body;
(3) the retiree committee; and
(4) the employee committee.
(d) The negotiations conducted under Subsection (c) must
produce a proposal containing a revised set of rules and procedures
that address all of the issues underlying the provisions of the
pension system as it existed on September 1, 2015, including:
(1) contributions made by members of the system and
sponsoring municipality;
(2) eligibility for membership, service credit, and
retirement or other benefits;
(3) the types and amounts of benefits to be provided;
and
(4) the administration of benefits and the pension
system's assets.
(e) The proposal produced under Subsection (d) containing
the revised set of rules and procedures applicable to a pension
system must be approved by all of that pension system's stakeholder
groups. Each stakeholder group shall provide notice to the members
of that group of a vote to be held not later than August 1, 2017, on
whether to adopt the proposal. All stakeholder groups shall vote on
the same day. If approved by a majority of the members of each
stakeholder group, the proposal for the pension system takes effect
immediately. If a proposal for a pension system is not approved
under this section, the pension system continues to operate under
the rules and procedures that were in effect before the vote was
taken.
(f) A revised set of rules and procedures approved under
Subsection (e) may not reduce the service credit accrued by an
employee of a sponsoring municipality under the applicable pension
system or reduce the benefits of a person receiving retirement
benefits under the system.
(g) A pension system operating under a revised set of rules
and procedures or under the rules and procedures that were in effect
for the pension system before the vote was held under Subsection (e)
is not required to comply with the provisions of Chapter 802 except
for those in Subchapter E and the sections in Subchapter B that
relate to reports required to be filed with the Pension Review
Board.
SECTION 4. (a) The following statutes are repealed:
(1) Article 6243a-1, Revised Statutes;
(2) Chapter 101 (H.B. 31), Acts of the 43rd
Legislature, 1st Called Session, 1933 (Article 6243b, Vernon's
Texas Civil Statutes);
(3) Chapter 183 (S.B. 598), Acts of the 64th
Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes);
(4) Article 6243e.2(1), Revised Statutes;
(5) Article 6243g-4, Revised Statutes;
(6) Chapter 88 (H.B. 1573), Acts of the 77th
Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
Civil Statutes);
(7) Article 6243i, Revised Statutes;
(8) Chapter 451 (S.B. 737), Acts of the 72nd
Legislature, Regular Session, 1991 (Article 6243n, Vernon's Texas
Civil Statutes);
(9) Chapter 452 (S.B. 738), Acts of the 72nd
Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's
Texas Civil Statutes);
(10) Chapter 824 (S.B. 817), Acts of the 73rd
Legislature, Regular Session, 1993 (Article 6243o, Vernon's Texas
Civil Statutes); and
(11) Chapter 325 (H.B. 2259), Acts of the 75th
Legislature, Regular Session, 1997 (Article 6243p, Vernon's Texas
Civil Statutes).
(b) This section takes effect September 1, 2017.
SECTION 5. (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 6. A pension system described by Section 810.003,
Government Code, as added by this Act, shall:
(1) not later than October 1, 2015, notify its members
and retirees of the pending renegotiation of the rules and
procedures that govern the system and invite the members and
retirees to participate in any way, including by nominating a
person to serve on the employee or retiree committee required to be
established under that section; and
(2) not later than January 1, 2016, establish the
employee and retiree committees required under that section.
SECTION 7. 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 January 1, 2016.
SECTION 8. This Act takes effect September 1, 2015.