TX
Texas House Bill HB2434

Texas 2017 - 85th Regular

Texas House Bill HB2434 Compare Versions

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11 85R26547 TSR-D
22 By: Flynn, Paul H.B. No. 2434
33 Substitute the following for H.B. No. 2434:
44 By: Paul C.S.H.B. No. 2434
55
66
77 A BILL TO BE ENTITLED
88 AN ACT
99 relating to requiring certain public retirement systems to take
1010 certain actions or implement certain plans designed to achieve
1111 actuarial soundness.
1212 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1313 SECTION 1. Section 801.209(a), Government Code, is amended
1414 to read as follows:
1515 (a) For each public retirement system, the board shall post
1616 on the board's Internet website, or on a publicly available website
1717 that is linked to the board's website, the most recent data from
1818 reports received under Sections 802.101, 802.103, 802.104,
1919 802.105, 802.108, 802.2015, [and] 802.2016, 802.2017, and
2020 802.2018.
2121 SECTION 2. Sections 802.002(a) and (c), Government Code,
2222 are amended to read as follows:
2323 (a) Except as provided by Subsection (b), the Employees
2424 Retirement System of Texas, the Teacher Retirement System of Texas,
2525 the Texas County and District Retirement System, the Texas
2626 Municipal Retirement System, and the Judicial Retirement System of
2727 Texas Plan Two are exempt from Sections 802.101(a), 802.101(b),
2828 802.101(d), 802.102, 802.103(a), 802.103(b), 802.2015, 802.2016,
2929 802.2017, 802.2018, 802.202, 802.203, 802.204, 802.205, 802.206,
3030 and 802.207. The Judicial Retirement System of Texas Plan One is
3131 exempt from all of Subchapters B and C except Sections 802.104 and
3232 802.105. The optional retirement program governed by Chapter 830
3333 is exempt from all of Subchapters B and C except Section 802.106.
3434 (c) Notwithstanding any other law, a defined contribution
3535 plan is exempt from Sections 802.101, 802.1012, 802.1014, 802.103,
3636 802.104, 802.2017, 802.2018, and 802.202(d). This subsection may
3737 not be construed to exempt any plan from Section 802.105 or
3838 802.106(h).
3939 SECTION 3. Section 802.2015(d), Government Code, is amended
4040 to read as follows:
4141 (d) The governing body of a public retirement system and the
4242 associated governmental entity that have formulated a funding
4343 soundness restoration plan under Subsection (e) are no longer
4444 subject to this section and are subject to Section 802.2017 [shall
4545 formulate a revised funding soundness restoration plan under that
4646 subsection, in accordance with the system's governing statute,] if
4747 [the system conducts an actuarial valuation showing that:
4848 [(1) the system's amortization period exceeds 40
4949 years; and
5050 [(2)] the board determines, in accordance with Section
5151 802.2017(b), that the previously formulated funding soundness
5252 restoration plan has not been adhered to.
5353 SECTION 4. Section 802.2016(d), Government Code, is amended
5454 to read as follows:
5555 (d) An associated governmental entity that has formulated a
5656 funding soundness restoration plan under Subsection (e) is no
5757 longer subject to this section and is subject to Section 802.2018
5858 [shall formulate a revised funding soundness restoration plan under
5959 that subsection, in accordance with the public retirement system's
6060 governing statute,] if [the system conducts an actuarial valuation
6161 showing that:
6262 [(1) the system's amortization period exceeds 40
6363 years; and
6464 [(2)] the board determines, in accordance with Section
6565 802.2018(b), that the previously formulated funding soundness
6666 restoration plan has not been adhered to.
6767 SECTION 5. Subchapter C, Chapter 802, Government Code, is
6868 amended by adding Sections 802.2017 and 802.2018 to read as
6969 follows:
7070 Sec. 802.2017. ACTIONS AND PLANS DESIGNED TO ACHIEVE
7171 ACTUARIAL SOUNDNESS. (a) In this section, "governmental entity"
7272 has the meaning assigned by Section 802.1012.
7373 (b) This section does not apply to:
7474 (1) a public retirement system and its associated
7575 governmental entity subject to Section 802.2018; or
7676 (2) a public retirement system and its associated
7777 governmental entity if the retirement system and governmental
7878 entity are adhering to, as determined by the board, a funding
7979 soundness restoration plan formulated under Section 802.2015
8080 before June 1, 2018, including a revised funding soundness
8181 restoration plan that was formulated before June 1, 2018.
8282 (c) Subsection (b)(2) does not prevent application of this
8383 section to a public retirement system and its associated
8484 governmental entity after the retirement system and governmental
8585 entity have completed a funding soundness restoration plan
8686 formulated under Section 802.2015.
8787 (d) Except as otherwise provided by this section or the
8888 Texas or United States Constitution and notwithstanding any other
8989 law, if a public retirement system receives an actuarial valuation
9090 showing that the retirement system's actual contributions are not
9191 sufficient to amortize the retirement system's unfunded actuarial
9292 accrued liability within 30 years:
9393 (1) the governing body of the retirement system shall
9494 immediately:
9595 (A) suspend the provision of any prospective
9696 benefit increases provided under the retirement system, including
9797 any cost-of-living adjustments; and
9898 (B) notify the retirement system's associated
9999 governmental entity in writing of the fact that:
100100 (i) the retirement system has received an
101101 actuarial valuation showing that the retirement system's actual
102102 contributions are not sufficient to amortize the retirement
103103 system's unfunded actuarial accrued liability within 30 years; and
104104 (ii) the associated governmental entity is
105105 required to take the action required by Subdivision (2); and
106106 (2) on receipt of a notice from the retirement system
107107 under Subdivision (1)(B), the associated governmental entity:
108108 (A) shall immediately pay to the retirement
109109 system any employer contributions previously deferred by the
110110 governmental entity; and
111111 (B) may not defer the payment of any future
112112 employer contributions to the retirement system.
113113 (d-1) The governing body of a public retirement system and
114114 its associated governmental entity subject to this section, as
115115 effective June 1, 2018, are not required to comply with Subsection
116116 (d) until June 1, 2024, if the retirement system has an amortization
117117 period that exceeds 30 years and, not later than June 1, 2018, the
118118 retirement system submits to the board a copy of a written plan that
119119 is designed to achieve a contribution rate that is sufficient to
120120 amortize the unfunded actuarial accrued liability of the retirement
121121 system within 30 years not later than June 1, 2024, as determined by
122122 the board. The plan must comply with Subsection (g), as effective
123123 June 1, 2018, and the retirement system must adhere to the plan.
124124 If, on June 1, 2018, a public retirement system's most recent
125125 actuarial valuation conducted before that date shows that the
126126 system's amortization period exceeds 30 years, and the retirement
127127 system fails to submit or adhere to a written plan as provided by
128128 this subsection, the governing body of the retirement system and
129129 its associated governmental entity shall immediately comply with
130130 the requirements of Subsection (d). This subsection expires June
131131 1, 2024.
132132 (e) If a public retirement system subject to Subsection (d)
133133 later receives an actuarial valuation showing that the retirement
134134 system's actual contributions are sufficient to amortize the
135135 retirement system's unfunded actuarial accrued liability within 30
136136 years, the retirement system shall immediately notify its
137137 associated governmental entity in writing that the retirement
138138 system has received an actuarial valuation showing that the
139139 retirement system's actual contributions are sufficient to
140140 amortize the retirement system's unfunded actuarial accrued
141141 liability within 30 years.
142142 (f) Except as otherwise provided by the Texas or United
143143 States Constitution and notwithstanding any other law, if the
144144 period required to amortize the unfunded actuarial liability of a
145145 public retirement system has exceeded 30 years for the three most
146146 recent consecutive annual actuarial valuations, or the two most
147147 recent consecutive actuarial valuations in the case of a retirement
148148 system that conducts the valuations every two or three years, the
149149 retirement system and its associated governmental entity shall
150150 jointly develop a written plan designed to achieve a contribution
151151 rate that will be sufficient to amortize the unfunded actuarial
152152 accrued liability of the retirement system within 30 years not
153153 later than the sixth anniversary of the date on which the final
154154 version of the plan is submitted to the board under this section.
155155 (g) A written plan under Subsection (f) must be based on:
156156 (1) an increase in the contribution rates of the
157157 governmental entity and the active members of the retirement
158158 system;
159159 (2) a reduction of benefits; or
160160 (3) a combination of the actions described by
161161 Subdivisions (1) and (2).
162162 (h) A public retirement system shall submit to the board a
163163 copy of the written plan developed under Subsection (f) or (k) and
164164 any change to the plan not later than the 31st day after the date on
165165 which the plan or change to the plan is agreed to with the system's
166166 associated governmental entity. The system must submit the copy of
167167 the plan not later than six months after the date on which the
168168 retirement system:
169169 (1) receives the actuarial valuation that subjects the
170170 retirement system and governmental entity to the requirements of
171171 Subsection (f); or
172172 (2) is informed under Subsection (k) that the plan
173173 does not comply with Subsection (f).
174174 (i) A public retirement system and its associated
175175 governmental entity may jointly develop and submit to the board a
176176 written plan described by Subsection (f) at any time before the
177177 retirement system receives an actuarial valuation that subjects the
178178 retirement system and governmental entity to the requirements of
179179 that subsection.
180180 (j) Not later than the 90th day after the date the board
181181 receives a copy of a plan under Subsection (h), the board shall
182182 review the plan and make a determination regarding whether the plan
183183 is designed to achieve a contribution rate that is sufficient to
184184 amortize the unfunded actuarial accrued liability of the public
185185 retirement system within 30 years not later than the sixth
186186 anniversary of the date on which a copy of the plan is submitted to
187187 the board in accordance with Subsection (h). The board may require
188188 that the retirement system provide the board with an actuarial
189189 analysis of the plan for purposes of making a determination under
190190 this subsection.
191191 (k) If, after reviewing the copy of a plan under Subsection
192192 (j), the board determines that the plan is not designed to achieve a
193193 contribution rate that is sufficient to amortize the unfunded
194194 actuarial accrued liability of the public retirement system within
195195 30 years not later than the sixth anniversary of the date on which a
196196 copy of the plan is submitted to the board in accordance with
197197 Subsection (h), the board shall inform the retirement system of
198198 that determination, and the retirement system and its associated
199199 governmental entity shall jointly develop and submit to the board,
200200 in a manner prescribed by the board, amended or alternative plans
201201 until the board informs the retirement system that, based on the
202202 board's review, the plan complies with Subsection (f).
203203 (l) If, after reviewing a plan submitted to the board under
204204 Subsection (h) or (k), the board determines the plan is designed to
205205 achieve a contribution rate that is sufficient to amortize the
206206 unfunded actuarial accrued liability of the retirement system
207207 within 30 years not later than the sixth anniversary of the date on
208208 which a copy of the plan is submitted to the board in accordance
209209 with Subsection (h), the public retirement system and its
210210 associated governmental entity shall implement and adhere to the
211211 plan and are not subject to Subsection (d) or the requirement to
212212 develop a new written plan under Subsection (f) until the sixth
213213 anniversary of the date the final version of the plan being
214214 implemented under this subsection was submitted to the board.
215215 (m) A public retirement system and its associated
216216 governmental entity that develop and implement a plan under this
217217 section shall report any updates of progress made by the public
218218 retirement system and associated governmental entity toward
219219 improved actuarial soundness to the board every two years.
220220 (n) A determination of the board under this section is final
221221 and not subject to judicial review.
222222 (o) This section does not impose a fiduciary duty on the
223223 board.
224224 (p) The board may adopt rules necessary to implement this
225225 section, including rules that allow a public retirement system and
226226 its associated governmental entity to amend a plan implemented
227227 under this section.
228228 (q) A municipal ordinance or charter that conflicts with
229229 this section is void to the extent of the conflict.
230230 Sec. 802.2018. ACTIONS AND PLANS DESIGNED TO ACHIEVE
231231 ACTUARIAL SOUNDNESS FOR CERTAIN RETIREMENT SYSTEMS. (a) In this
232232 section, "governmental entity" has the meaning assigned by Section
233233 802.1012.
234234 (b) This section applies only to a public retirement system
235235 that is governed by Article 6243i, Revised Statutes. This section
236236 does not apply to a public retirement system and its associated
237237 governmental entity if the retirement system and governmental
238238 entity are adhering to, as determined by the board, a funding
239239 soundness restoration plan formulated under Section 802.2016
240240 before June 1, 2018, including a revised funding soundness
241241 restoration plan that was formulated before June 1, 2018.
242242 (c) Subsection (b) does not prevent application of this
243243 section to a public retirement system and its associated
244244 governmental entity after the governmental entity has completed a
245245 funding soundness restoration plan formulated under Section
246246 802.2016.
247247 (d) Except as otherwise provided by this section or the
248248 Texas or United States Constitution and notwithstanding any other
249249 law, if a public retirement system receives an actuarial valuation
250250 showing that the retirement system's actual contributions are not
251251 sufficient to amortize the retirement system's unfunded actuarial
252252 accrued liability within 30 years:
253253 (1) the governing body of the retirement system shall
254254 immediately:
255255 (A) suspend the provision of any prospective
256256 benefit increases provided under the retirement system, including
257257 any cost-of-living adjustments; and
258258 (B) notify the retirement system's associated
259259 governmental entity in writing of the fact that:
260260 (i) the retirement system has received an
261261 actuarial valuation showing that the retirement system's actual
262262 contributions are not sufficient to amortize the retirement
263263 system's unfunded actuarial accrued liability within 30 years; and
264264 (ii) the associated governmental entity is
265265 required to take the action required by Subdivision (2); and
266266 (2) on receipt of a notice from the retirement system
267267 under Subdivision (1)(B), the associated governmental entity:
268268 (A) shall immediately pay to the retirement
269269 system any employer contributions previously deferred by the
270270 governmental entity; and
271271 (B) may not defer the payment of any future
272272 employer contributions to the retirement system.
273273 (d-1) The governing body of a public retirement system and
274274 its associated governmental entity subject to this section, as
275275 effective June 1, 2018, are not required to comply with Subsection
276276 (d) until June 1, 2024, if the retirement system has an amortization
277277 period that exceeds 30 years and, not later than June 1, 2018, the
278278 governmental entity submits to the board a copy of a written plan
279279 that is designed to achieve a contribution rate that is sufficient
280280 to amortize the unfunded actuarial accrued liability of the
281281 retirement system within 30 years not later than June 1, 2024, as
282282 determined by the board. The plan must comply with Subsection (g),
283283 as effective June 1, 2018, and the retirement system must adhere to
284284 the plan. If, on June 1, 2018, a public retirement system's most
285285 recent actuarial valuation conducted before that date shows that
286286 the system's amortization period exceeds 30 years, and the
287287 governmental entity fails to submit or adhere to a written plan as
288288 provided by this subsection, the governing body of the retirement
289289 system and its associated governmental entity shall immediately
290290 comply with Subsection (d). This subsection expires June 1, 2024.
291291 (e) If a public retirement system subject to Subsection (d)
292292 later receives an actuarial valuation showing that the retirement
293293 system's actual contributions are sufficient to amortize the
294294 retirement system's unfunded actuarial accrued liability within 30
295295 years, the retirement system shall immediately notify its
296296 associated governmental entity in writing that the retirement
297297 system has received an actuarial valuation showing that the
298298 retirement system's actual contributions are sufficient to
299299 amortize the retirement system's unfunded actuarial accrued
300300 liability within 30 years.
301301 (f) Except as otherwise provided by the Texas or United
302302 States Constitution and notwithstanding any other law, if the
303303 period required to amortize the unfunded actuarial liability of a
304304 public retirement system has exceeded 30 years for the three most
305305 recent consecutive annual actuarial valuations, or the two most
306306 recent consecutive actuarial valuations in the case of a retirement
307307 system that conducts the valuations every two or three years, the
308308 associated governmental entity of the retirement system shall
309309 develop a written plan designed to achieve a contribution rate that
310310 will be sufficient to amortize the unfunded actuarial accrued
311311 liability of the retirement system within 30 years not later than
312312 the sixth anniversary of the date on which the final version of the
313313 plan is submitted to the board under this section.
314314 (g) A written plan under Subsection (f) must be based on:
315315 (1) an increase in the contribution rates of the
316316 governmental entity and the active members of the retirement
317317 system;
318318 (2) a reduction of benefits; or
319319 (3) a combination of the actions described by
320320 Subdivisions (1) and (2).
321321 (h) An associated governmental entity of a public
322322 retirement system shall submit a copy of the written plan developed
323323 under Subsection (f) or (k) to the board and any change to the plan
324324 not later than the 31st day after the date on which the plan or
325325 change to the plan is developed. The entity must submit the copy of
326326 the plan not later than six months after the date on which the
327327 retirement system:
328328 (1) receives the actuarial valuation that subjects the
329329 associated governmental entity to the requirements of Subsection
330330 (f); or
331331 (2) is informed under Subsection (k) that the plan
332332 does not comply with Subsection (f).
333333 (i) An associated governmental entity of a public
334334 retirement system may develop and submit to the board a written plan
335335 described by Subsection (k) at any time before the retirement
336336 system receives an actuarial valuation that subjects the
337337 governmental entity to the requirements of that subsection.
338338 (j) Not later than the 90th day after the date the board
339339 receives a copy of a plan under Subsection (h), the board shall
340340 review the plan and make a determination regarding whether the plan
341341 is designed to achieve a contribution rate that is sufficient to
342342 amortize the unfunded actuarial accrued liability of the public
343343 retirement system within 30 years not later than the sixth
344344 anniversary of the date on which a copy of the plan is submitted to
345345 the board in accordance with Subsection (h). The board may require
346346 that the governmental entity provide the board with an actuarial
347347 analysis of the plan for purposes of making a determination under
348348 this subsection.
349349 (k) If, after reviewing the copy of a plan under Subsection
350350 (j), the board determines that the plan is not designed to achieve a
351351 contribution rate that is sufficient to amortize the unfunded
352352 actuarial accrued liability of the public retirement system within
353353 30 years not later than the sixth anniversary of the date on which a
354354 copy of the plan is submitted to the board in accordance with
355355 Subsection (h), the board shall inform the associated governmental
356356 entity of that determination and the governmental entity shall
357357 develop and submit to the board, in a manner prescribed by the
358358 board, amended or alternative plans until the board informs the
359359 governmental entity that, based on the board's review, the plan
360360 complies with Subsection (f).
361361 (l) If, after reviewing a plan submitted to the board under
362362 Subsection (h) or (k), the board determines the plan is designed to
363363 achieve a contribution rate that is sufficient to amortize the
364364 unfunded actuarial accrued liability of the retirement system
365365 within 30 years not later than the sixth anniversary of the date on
366366 which a copy of the plan is submitted to the board in accordance
367367 with Subsection (h), the public retirement system and its
368368 associated governmental entity shall implement and adhere to the
369369 plan and are not subject to Subsection (d) or the requirement to
370370 develop a new written plan under Subsection (f) until the sixth
371371 anniversary of the date the final version of the plan being
372372 implemented under this subsection was submitted to the board.
373373 (m) An associated governmental entity that develops a plan
374374 under this section shall report any updates of progress made by the
375375 public retirement system and associated governmental entity toward
376376 improved actuarial soundness to the board every two years.
377377 (n) A determination of the board under this section is final
378378 and not subject to judicial review.
379379 (o) This section does not impose a fiduciary duty on the
380380 board.
381381 (p) The board may adopt rules necessary to implement this
382382 section, including rules that allow the associated governmental
383383 entity of a public retirement system to amend a plan implemented
384384 under this section.
385385 (q) A municipal ordinance or charter that conflicts with
386386 this section is void to the extent of the conflict.
387387 SECTION 6. Sections 802.2017(f) and 802.2018(f),
388388 Government Code, as added by this Act, apply only to an actuarial
389389 valuation conducted on or after June 1, 2018.
390390 SECTION 7. (a) Except as provided by Subsection (b) of this
391391 section, this Act takes effect June 1, 2018.
392392 (b) Sections 802.2017(d-1) and 802.2018(d-1), Government
393393 Code, as added by this Act, take effect September 1, 2017.