By: Paul H.B. No. 3310
A BILL TO BE ENTITLED
AN ACT
relating to the funding policies, actuarial valuations, and
reporting requirements 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, 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), 802.2015, 802.202,
802.203, 802.204, 802.205, 802.206, and 802.207. 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. Section 802.101(a), Government Code, is amended
to read as follows:
(a) The governing body of a public retirement system shall
employ an actuary, as a full-time or part-time employee or as a
consultant, to make a valuation at least once every three years of
the assets and liabilities of the system on the basis of assumptions
and methods that are reasonable in the aggregate, considering the
experience of the program and reasonable expectations, and that, in
combination, offer the actuary's best estimate of anticipated
experience under the program. The valuation must include an
actuarially determined contribution.
SECTION 3. Section 802.1014(b), Government Code, is amended
to read as follows:
(b) Except as provided by Subsection (c), a public
retirement system that has assets of at least $100 million shall
conduct once every five years [conducts] an actuarial experience
study and shall submit to the board a copy of the actuarial
experience study before the 31st day after the date of the study's
adoption.
SECTION 4. Subchapter B, Chapter 802, Government Code, is
amended by adding Section 802.2015 to read as follows:
Sec. 802.2015. FUNDING POLICY. (a) In this section,
"governmental entity" has the meaning assigned by Section 802.1012.
(b) The governing body of a public retirement system and the
associated governmental entity shall cooperate in formulating and
adopting a funding policy for the retirement system to enable the
retirement system to achieve and maintain actuarial soundness.
(c) A funding policy adopted under this section must
establish a funding level based on the actuarially determined
contribution. The public retirement system and the governmental
entity, in consultation with the system's actuary, shall develop
the actuarially determined contribution needed to achieve and
maintain an amortization period that is in accordance with the
board's Guidelines for Actuarial Soundness.
(d) Each public retirement system shall adopt a funding
policy as provided by this section and submit a copy of that policy
to the board. A public retirement system shall provide the board
with a copy of any change to the adopted policy not later than the
31st day after the date on which the change is adopted.
(e) A public retirement system shall notify the associated
governmental entity in writing if the retirement system receives an
actuarial valuation indicating that the system's actual
contributions are not sufficient to achieve and maintain the
amortization period applicable to the retirement system as
established in the retirement system's adopted funding policy.
(f) If a public retirement system receives three
consecutive annual actuarial valuations, or two consecutive
actuarial valuations in the case of a system that conducts the
valuations every two or three years, indicating that the funding
level is not sufficient to meet the requirements of the system's
funding policy, the retirement system and the associated
governmental entity shall develop a written plan with specific
measures reasonably designed to restore funding to a level adequate
to achieve and maintain the amortization period applicable to the
retirement system as established in the retirement system's adopted
funding policy. The public retirement system shall submit a copy of
the plan developed under this subsection to the board.
SECTION 5. A public retirement system subject to Section
802.2015, Government Code, as added by this Act, and the associated
governmental entity, as defined by that section, shall adopt a
funding policy based on the most recent actuarial valuation study
conducted under Section 802.101, Government Code, not later than
November 1, 2016. The first actuarial valuation study that is
conducted for or by a public retirement system on or after the date
the retirement system adopts its funding policy must include an
actuarially determined contribution rate.
SECTION 6. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2015.