Texas 2017 - 85th Regular

Texas House Bill HB43 Compare Versions

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1	1	85R20219 KFF-D
2	2	By: Flynn, Coleman, Murphy, Huberty H.B. No. 43
3	3	Substitute the following for H.B. No. 43:
4	4	By: Anchia C.S.H.B. No. 43
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the public retirement systems of certain
10	10	municipalities.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	ARTICLE 1. FIREFIGHTERS' RELIEF AND RETIREMENT FUND
13	13	SECTION 1.01. Section 1, Article 6243e.2(1), Revised
14	14	Statutes, is amended by amending Subdivisions (1-a), (1-b), (3),
15	15	(13-a), (15-a), (15-b), and (16) and adding Subdivisions (1-c),
16	16	(1-d), (1-e), (1-f), (1-g), (3-a), (3-b), (3-c), (3-d), (10-a),
17	17	(10-b), (11-a), (12-a), (12-b), (12-c), (12-d), (12-e), (12-f),
18	18	(12-g), (13-b), (13-c), (13-d), (13-e), (15-c), (15-d), (15-e),
19	19	(15-f), (16-a), (16-b), (16-c), (16-d), and (16-e) to read as
20	20	follows:
21	21	(1-a) "Actuarial data" includes:
22	22	(A) the census data, assumption tables,
23	23	disclosure of methods, and financial information that are routinely
24	24	used by the fund actuary for the fund's valuation studies or an
25	25	actuarial experience study under Section 13D of this article; and
26	26	(B) other data that is reasonably necessary to
27	27	implement Sections 13A through 13F of this article. ["Average
28	28	monthly salary" means one thirty-sixth of the member's salary as a
29	29	firefighter for the member's highest 78 biweekly pay periods during
30	30	the member's participation in the fund or, if the member has
31	31	participated in the fund for less than three years, the total salary
32	32	paid to the member for the periods the member participated in the
33	33	fund divided by the number of months the member has participated in
34	34	the fund. If a member is not paid on the basis of biweekly pay
35	35	periods, "average monthly salary" is determined on the basis of the
36	36	number of pay periods under the payroll practices of the
37	37	municipality sponsoring the fund that most closely correspond to 78
38	38	biweekly pay periods.]
39	39	(1-b) "Actuarial experience study" has the meaning
40	40	assigned by Section 802.1014, Government Code ["Beneficiary adult
41	41	child" means a child of a member by birth or adoption who:
42	42	[(A) is not an eligible child; and
43	43	[(B) is designated a beneficiary of a member's
44	44	DROP account by valid designation under Section 5(j-1)].
45	45	(1-c) "Amortization period" means the time period
46	46	necessary to fully pay a liability layer.
47	47	(1-d) "Amortization rate" means the sum of the
48	48	scheduled amortization payments for a given fiscal year for the
49	49	current liability layers divided by the projected pensionable
50	50	payroll for that fiscal year.
51	51	(1-e) "Assumed rate of return" means the assumed
52	52	market rate of return on fund assets, which is seven percent per
53	53	annum unless adjusted as provided by this article.
54	54	(1-f) "Average monthly salary" means, if the member
55	55	has participated in the fund for:
56	56	(A) three or more years, the total salary
57	57	received by a member as a firefighter over the member's last 78
58	58	biweekly pay periods ending before the earlier of the date:
59	59	(i) the member terminates employment with
60	60	the fire department, divided by 36; or
61	61	(ii) the member began participation in the
62	62	DROP, divided by 36; or
63	63	(B) fewer than three years, the total salary paid
64	64	to the member for the periods the member participated in the fund
65	65	divided by the number of months the member has participated in the
66	66	fund.
67	67	If a member is not paid on the basis of biweekly pay periods,
68	68	"average monthly salary" is determined on the basis of the number of
69	69	pay periods under the payroll practices of the municipality
70	70	sponsoring the fund that most closely correspond to 78 biweekly pay
71	71	periods.
72	72	(1-g) "Beneficiary adult child" means a child of a
73	73	member by birth or adoption who:
74	74	(A) is not an eligible child; and
75	75	(B) is designated a beneficiary of a member's
76	76	DROP account by valid designation under Section 5(j-1).
77	77	(3) "Code" means the federal Internal Revenue Code of
78	78	1986, as amended.
79	79	(3-a) "Confidentiality agreement" means a letter
80	80	agreement sent from the municipal actuary or an independent actuary
81	81	in which the municipal actuary or the independent actuary, as
82	82	applicable, agrees to comply with the confidentiality provisions of
83	83	this article.
84	84	(3-b) "Corridor" means the range of municipal
85	85	contribution rates that are:
86	86	(A) equal to or greater than the minimum
87	87	contribution rate; and
88	88	(B) equal to or less than the maximum
89	89	contribution rate.
90	90	(3-c) "Corridor margin" means five percentage points.
91	91	(3-d) "Corridor midpoint" means the projected
92	92	municipal contribution rate specified for each fiscal year for 31
93	93	years in the initial risk sharing valuation study under Section 13C
94	94	of this article, and as may be adjusted under Section 13E or 13F of
95	95	this article, and in each case rounded to the nearest hundredths
96	96	decimal place.
97	97	(10-a) "Employer normal cost rate" means the normal
98	98	cost rate minus the member contribution rate.
99	99	(10-b) "Estimated municipal contribution rate" means
100	100	the municipal contribution rate estimated in a final risk sharing
101	101	valuation study under Section 13B or 13C of this article, as
102	102	applicable, as required by Section 13B(a)(5) of this article.
103	103	(11-a) "Fiscal year," except as provided by Section 1B
104	104	of this article, means a fiscal year beginning on July 1 and ending
105	105	on June 30.
106	106	(12-a) "Funded ratio" means the ratio of the fund's
107	107	actuarial value of assets divided by the fund's actuarial accrued
108	108	liability.
109	109	(12-b) "Legacy liability" means the unfunded
110	110	actuarial accrued liability:
111	111	(A) for the fiscal year ending June 30, 2016,
112	112	reduced to reflect:
113	113	(i) changes to benefits or contributions
114	114	under this article that took effect on the year 2017 effective date;
115	115	and
116	116	(ii) payments by the municipality and
117	117	earnings at the assumed rate of return allocated to the legacy
118	118	liability from July 1, 2016, to July 1, 2017, excluding July 1,
119	119	2017; and
120	120	(B) for each subsequent fiscal year:
121	121	(i) reduced by the contributions for that
122	122	year allocated to the amortization of the legacy liability; and
123	123	(ii) adjusted by the assumed rate of
124	124	return.
125	125	(12-c) "Level percent of payroll method" means the
126	126	amortization method that defines the amount of the liability layer
127	127	recognized each fiscal year as a level percent of pensionable
128	128	payroll until the amount of the liability layer remaining is
129	129	reduced to zero.
130	130	(12-d) "Liability gain layer" means a liability layer
131	131	that decreases the unfunded actuarial accrued liability.
132	132	(12-e) "Liability layer" means the legacy liability
133	133	established in the initial risk sharing valuation study under
134	134	Section 13C of this article and the unanticipated change as
135	135	established in each subsequent risk sharing valuation study
136	136	prepared under Section 13B of this article.
137	137	(12-f) "Liability loss layer" means a liability layer
138	138	that increases the unfunded actuarial accrued liability. For
139	139	purposes of this article, the legacy liability is a liability loss
140	140	layer.
141	141	(12-g) "Maximum contribution rate" means the rate
142	142	equal to the corridor midpoint plus the corridor margin.
143	143	(13-a) "Minimum contribution rate" means the rate
144	144	equal to the corridor midpoint minus the corridor margin ["Normal
145	145	retirement age" means the earlier of:
146	146	[(A) the age at which the member attains 20 years
147	147	of service; or
148	148	[(B) the age at which the member first attains
149	149	the age of at least 50 years and at least 10 years of service].
150	150	(13-b) "Municipality" means a municipality in this
151	151	state having a population of more than 2 million.
152	152	(13-c) "Municipal contribution rate" means a percent
153	153	of pensionable payroll that is the sum of the employer normal cost
154	154	rate and the amortization rate for liability layers, excluding the
155	155	legacy liability, except as determined otherwise under the express
156	156	provisions of Sections 13E and 13F of this article.
157	157	(13-d) "Normal cost rate" means the salary weighted
158	158	average of the individual normal cost rates determined for the
159	159	current active population plus an allowance for projected
160	160	administrative expenses. The allowance for projected
161	161	administrative expenses equals the administrative expenses divided
162	162	by the pensionable payroll for the previous fiscal year, provided
163	163	the administrative allowance may not exceed 1.25 percent of the
164	164	pensionable payroll for the current fiscal year unless agreed to by
165	165	the municipality.
166	166	(13-e) "Normal retirement age" means:
167	167	(A) for a member, including a member who was
168	168	hired before the year 2017 effective date and who involuntarily
169	169	separated from service but has been retroactively reinstated in
170	170	accordance with an arbitration, civil service, or court ruling,
171	171	hired before the year 2017 effective date, the age at which the
172	172	member attains 20 years of service; or
173	173	(B) except as provided by Paragraph (A) of this
174	174	subdivision, for a member hired or rehired on or after the year 2017
175	175	effective date, the age at which the sum of the member's age, in
176	176	years, and the member's years of participation in the fund equals at
177	177	least 70.
178	178	(15-a) "Payoff year" means the year a liability layer
179	179	is fully amortized under the amortization period. A payoff year may
180	180	not be extended or accelerated for a period that is less than one
181	181	month. ["PROP" means the post-retirement option plan under Section
182	182	5A of this article.]
183	183	(15-b) "Pensionable payroll" means the aggregate
184	184	salary of all the firefighters on active service in an applicable
185	185	fiscal year ["PROP account" means the notional account established
186	186	to reflect the credits and contributions of a member or surviving
187	187	spouse who has made a PROP election in accordance with Section 5A of
188	188	this article].
189	189	(15-c) "Price inflation assumption" means:
190	190	(A) the most recent headline consumer price index
191	191	10-year forecast published in the Federal Reserve Bank of
192	192	Philadelphia Survey of Professional Forecasters; or
193	193	(B) if the forecast described by Paragraph (A) of
194	194	this subdivision is not available, another standard as determined
195	195	by mutual agreement between the municipality and the board.
196	196	(15-d) "Projected pensionable payroll" means the
197	197	estimated pensionable payroll for the fiscal year beginning 12
198	198	months after the date of the risk sharing valuation study prepared
199	199	under Section 13B of this article at the time of calculation by:
200	200	(A) projecting the prior fiscal year's
201	201	pensionable payroll forward two years using the current payroll
202	202	growth rate assumptions; and
203	203	(B) adjusting, if necessary, for changes in
204	204	population or other known factors, provided those factors would
205	205	have a material impact on the calculation, as determined by the
206	206	board.
207	207	(15-e) "PROP" means the post-retirement option plan
208	208	under Section 5A of this article.
209	209	(15-f) "PROP account" means the notional account
210	210	established to reflect the credits and contributions of a member or
211	211	surviving spouse who made a PROP election in accordance with
212	212	Section 5A of this article before the year 2017 effective date.
213	213	(16) "Salary" means wages as defined by Section
214	214	3401(a) of the code, [the amounts includable in gross income of a
215	215	member] plus any amount not includable in gross income under
216	216	Section 104(a)(1), Section 125, Section 132(f), Section 402(g)(2)
217	217	[402(e)(3) or (h)], Section 457 [403(b)], or Section 414(h)(2)
218	218	[414(h)] of the code, except that with respect to amounts earned on
219	219	or after the year 2017 effective date, salary excludes overtime pay
220	220	received by a member or the amount by which the salary earned by a
221	221	member on the basis of the member's appointed position exceeds the
222	222	salary of the member's highest tested rank.
223	223	(16-a) "Third quarter line rate" means the corridor
224	224	midpoint plus 2.5 percentage points.
225	225	(16-b) "Ultimate entry age normal" means an actuarial
226	226	cost method under which a calculation is made to determine the
227	227	average uniform and constant percentage rate of contributions that,
228	228	if applied to the compensation of each member during the entire
229	229	period of the member's anticipated covered service, would be
230	230	required to meet the cost of all benefits payable on the member's
231	231	behalf based on the benefits provisions for newly hired employees.
232	232	For purposes of this definition, the actuarial accrued liability
233	233	for each member is the difference between the member's present
234	234	value of future benefits based on the tier of benefits that apply to
235	235	the member and the member's present value of future normal costs
236	236	determined using the normal cost rate.
237	237	(16-c) "Unfunded actuarial accrued liability" means
238	238	the difference between the actuarial accrued liability and the
239	239	actuarial value of assets. For purposes of this definition:
240	240	(A) "actuarial accrued liability" means the
241	241	portion of the actuarial present value of projected benefits
242	242	attributed to past periods of member service based on the cost
243	243	method used in the risk sharing valuation study prepared under
244	244	Section 13B or 13C of this article, as applicable; and
245	245	(B) "actuarial value of assets" means the value
246	246	of fund investments as calculated using the asset smoothing method
247	247	used in the risk sharing valuation study prepared under Section 13B
248	248	or 13C of this article, as applicable.
249	249	(16-d) "Unanticipated change" means, with respect to
250	250	the unfunded actuarial accrued liability in each subsequent risk
251	251	sharing valuation study prepared under Section 13B of this article,
252	252	the difference between:
253	253	(A) the remaining balance of all then-existing
254	254	liability layers as of the date of the risk sharing valuation study;
255	255	and
256	256	(B) the actual unfunded actuarial accrued
257	257	liability as of the date of the risk sharing valuation study.
258	258	(16-e) "Year 2017 effective date" means the date on
259	259	which H.B. No. 43, Acts of the 85th Legislature, Regular Session,
260	260	2017, took effect.
261	261	SECTION 1.02. Article 6243e.2(1), Revised Statutes, is
262	262	amended by adding Sections 1A, 1B, and 1C to read as follows:
263	263	Sec. 1A. INTERPRETATION OF ARTICLE. This article,
264	264	including Sections 2(p) and (p-1) of this article, does not and may
265	265	not be interpreted to:
266	266	(1) relieve the municipality, the board, or the fund
267	267	of their respective obligations under Sections 13A through 13F of
268	268	this article;
269	269	(2) reduce or modify the rights of the municipality,
270	270	the board, or the fund, including any officer or employee of the
271	271	municipality, board, or fund, to enforce obligations described by
272	272	Subdivision (1) of this section;
273	273	(3) relieve the municipality, including any official
274	274	or employee of the municipality, from:
275	275	(A) paying or directing to pay required
276	276	contributions to the fund under Section 13 or 13A of this article or
277	277	carrying out the provisions of Sections 13A through 13F of this
278	278	article; or
279	279	(B) reducing or modifying the rights of the board
280	280	and any officer or employee of the board or fund to enforce
281	281	obligations described by Subdivision (1) of this section;
282	282	(4) relieve the board or fund, including any officer
283	283	or employee of the board or fund, from any obligation to implement a
284	284	benefit change or carry out the provisions of Sections 13A through
285	285	13F of this article; or
286	286	(5) reduce or modify the rights of the municipality
287	287	and any officer or employee of the municipality to enforce an
288	288	obligation described by Subdivision (4) of this section.
289	289	Sec. 1B. FISCAL YEAR. If either the fund or the
290	290	municipality changes its respective fiscal year, the fund and the
291	291	municipality may enter into a written agreement to change the
292	292	fiscal year for purposes of this article. If the fund and
293	293	municipality enter into an agreement described by this section, the
294	294	parties shall, in the agreement, adjust the provisions of Sections
295	295	13A through 13F of this article to reflect that change.
296	296	Sec. 1C. CONFLICT OF LAW. To the extent of a conflict
297	297	between this article and any other law, this article prevails.
298	298	SECTION 1.03. Section 2, Article 6243e.2(1), Revised
299	299	Statutes, is amended by amending Subsection (b) and adding
300	300	Subsection (t) to read as follows:
301	301	(b) The board of trustees of the fund shall be known as the
302	302	"(name of municipality) Firefighters' Relief and Retirement Fund
303	303	Board of Trustees" and the fund shall be known as the "(name of
304	304	municipality) Firefighters' Relief and Retirement Fund." The board
305	305	consists of 10 trustees, including:
306	306	(1) the mayor or an appointed representative of the
307	307	mayor;
308	308	(2) the director of finance or the director of
309	309	finance's designee [treasurer] of the municipality or, if there is
310	310	not a director of finance [treasurer], the highest ranking employee
311	311	of the municipality, excluding elected officials, with
312	312	predominately financial responsibilities, as determined by the
313	313	mayor, or that employee's designee [secretary, clerk, or other
314	314	person who by law, charter provision, or ordinance performs the
315	315	duty of treasurer of the municipality];
316	316	(3) five firefighters who are members of the fund;
317	317	(4) one person who is a retired firefighter and a
318	318	member of the fund with at least 20 years of participation; and
319	319	(5) two persons, each of whom is a registered voter of
320	320	the municipality, has been a resident of the municipality for at
321	321	least one year preceding the date of initial appointment, and is not
322	322	a municipal officer or employee.
323	323	(t) The officers and employees of the municipality are fully
324	324	protected and free of liability for any action taken or omission
325	325	made or any action or omission suffered by them in good faith,
326	326	objectively determined, in the performance of their duties related
327	327	to the fund. The protection from liability provided by this
328	328	subsection is cumulative of and in addition to any other
329	329	constitutional, statutory, or common law official or governmental
330	330	immunity, defense, and civil or procedural protection provided to
331	331	the municipality as a governmental entity and to a municipal
332	332	official or employee as an official or employee of a governmental
333	333	entity. Except for a waiver expressly provided by this article,
334	334	this article does not grant an implied waiver of any immunity.
335	335	SECTION 1.04. Article 6243e.2(1), Revised Statutes, is
336	336	amended by adding Sections 2A and 2B to read as follows:
337	337	Sec. 2A. QUALIFICATIONS OF MUNICIPAL ACTUARY. (a) An
338	338	actuary hired by the municipality for purposes of this article must
339	339	be an actuary from a professional service firm who:
340	340	(1) is not already engaged by the fund or any other
341	341	pension system authorized under Article 6243g-4, Revised Statutes,
342	342	or Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular
343	343	Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), to
344	344	provide actuarial services to the fund or pension system, as
345	345	applicable;
346	346	(2) has a minimum of 10 years of professional
347	347	actuarial experience; and
348	348	(3) is a fellow of the Society of Actuaries or a member
349	349	of the American Academy of Actuaries and who, in carrying out duties
350	350	for the municipality, has met the applicable requirements to issue
351	351	statements of actuarial opinion.
352	352	(b) Notwithstanding Subsection (a) of this section, the
353	353	municipal actuary does not need to meet any greater qualifications
354	354	than those required by the board for the fund actuary.
355	355	Sec. 2B. REPORT ON INVESTMENTS BY INDEPENDENT INVESTMENT
356	356	CONSULTANT. At least once every three years, the board shall hire
357	357	an independent investment consultant to conduct a review of fund
358	358	investments and submit a report to the board and the municipality
359	359	concerning the review or demonstrate in the fund's annual financial
360	360	report that the review was conducted. The independent investment
361	361	consultant shall review and report on at least the following:
362	362	(1) the fund's compliance with its investment policy
363	363	statement, ethics policies, including policies concerning the
364	364	acceptance of gifts, and policies concerning insider trading;
365	365	(2) the fund's asset allocation, including a review
366	366	and discussion of the various risks, objectives, and expected
367	367	future cash flows;
368	368	(3) the fund's portfolio structure, including the
369	369	fund's need for liquidity, cash income, real return, and inflation
370	370	protection and the active, passive, or index approaches for
371	371	different portions of the portfolio;
372	372	(4) investment manager performance reviews and an
373	373	evaluation of the processes used to retain and evaluate managers;
374	374	(5) benchmarks used for each asset class and
375	375	individual manager;
376	376	(6) an evaluation of fees and trading costs;
377	377	(7) an evaluation of any leverage, foreign exchange,
378	378	or other hedging transaction; and
379	379	(8) an evaluation of investment-related disclosures
380	380	in the fund's annual reports.
381	381	SECTION 1.05. Section 3(d), Article 6243e.2(1), Revised
382	382	Statutes, is amended to read as follows:
383	383	(d) The board may have an actuarial valuation performed each
384	384	year, and for determining the municipality's contribution rate as
385	385	provided by Section 13A [13(d)] of this article, the board may adopt
386	386	a new actuarial valuation each year[, except that an actuarial
387	387	valuation that will result in an increased municipal contribution
388	388	rate that is above the statutory minimum may be adopted only once
389	389	every three years, unless the governing body of the municipality
390	390	consents to a more frequent increase].
391	391	SECTION 1.06. Article 6243e.2(1), Revised Statutes, is
392	392	amended by adding Section 3A to read as follows:
393	393	Sec. 3A. CERTAIN ALTERATIONS BY LOCAL AGREEMENT. (a)
394	394	Except as provided by Subsection (b) of this section, the board is
395	395	authorized, on behalf of the members or beneficiaries of the fund,
396	396	to alter benefit types or amounts, the means of determining
397	397	contribution rates, or the contribution rates provided under this
398	398	article if the alteration is included in a written agreement
399	399	between the board and the municipality. An agreement entered into
400	400	under this section:
401	401	(1) must:
402	402	(A) if the agreement concerns benefit increases,
403	403	other than benefit increases that are the result of Section 13E of
404	404	this article, adhere to the processes and standards set forth in
405	405	Section 10 of this article; and
406	406	(B) operate prospectively only; and
407	407	(2) may not, except as provided by Sections 13A
408	408	through 13F of this article, have the effect or result of increasing
409	409	the unfunded liability of the fund.
410	410	(b) In a written agreement entered into between the
411	411	municipality and the board under this section, the parties may not:
412	412	(1) fundamentally alter Sections 13A through 13F of
413	413	this article;
414	414	(2) increase the assumed rate of return to more than
415	415	seven percent per year;
416	416	(3) extend the amortization period of a liability
417	417	layer to more than 30 years from the first day of the fiscal year
418	418	beginning 12 months after the date of the risk sharing valuation
419	419	study in which the liability layer is first recognized; or
420	420	(4) allow a municipal contribution rate in any year
421	421	that is less than or greater than the municipal contribution rate
422	422	required under Section 13E or 13F of this article, as applicable.
423	423	(c) If the board is directed or authorized in Sections 13A
424	424	through 13F of this article to effect an increase or decrease to
425	425	benefits or contributions, this article delegates the authority to
426	426	alter provisions concerning benefits and contributions otherwise
427	427	stated in this article in accordance with the direction or
428	428	authorization only to the extent the alteration is set forth in an
429	429	order or other written instrument and is consistent with this
430	430	section, the code, and other applicable federal law and
431	431	regulations. The order or other written instrument must be
432	432	included in each applicable risk sharing valuation study under
433	433	Section 13B or 13C of this article, as applicable, adopted by the
434	434	board, and published in a manner that makes the order or other
435	435	written instrument accessible to the members.
436	436	SECTION 1.07. Section 4, Article 6243e.2(1), Revised
437	437	Statutes, is amended by amending Subsections (a), (b), and (d) and
438	438	adding Subsections (b-1) and (b-2) to read as follows:
439	439	(a) A member [with at least 20 years of participation] who
440	440	terminates active service for any reason other than death is
441	441	entitled to receive a service pension provided by this section if
442	442	the member was:
443	443	(1) hired as a firefighter before the year 2017
444	444	effective date, including a member who was hired before the year
445	445	2017 effective date and who involuntarily separated from service
446	446	but has been retroactively reinstated in accordance with an
447	447	arbitration, civil service, or court ruling, at the age at which the
448	448	member attains 20 years of service; and
449	449	(2) except as provided by Subdivision (1) of this
450	450	subsection and subject to Subsection (b-2) of this section, hired
451	451	or rehired as a firefighter on or after the year 2017 effective
452	452	date, when the sum of the member's age in years and the member's
453	453	years of participation in the fund equals at least 70.
454	454	(b) Except as otherwise provided by Subsection (d) of this
455	455	section, the monthly service pension for a member described by:
456	456	(1) Subsection (a)(1) of this section is equal to the
457	457	sum of:
458	458	(A) the member's accrued monthly service pension
459	459	based on the member's years of participation before the year 2017
460	460	effective date, determined under the law in effect on the date
461	461	immediately preceding the year 2017 effective date;
462	462	(B) 2.75 percent of the member's average monthly
463	463	salary multiplied by the member's years of participation on or
464	464	after the year 2017 effective date, for each year or partial year of
465	465	participation of the member's first 20 years of participation; and
466	466	(C) two percent of the member's average monthly
467	467	salary multiplied by the member's years of participation on or
468	468	after the year 2017 effective date, for each year or partial year of
469	469	participation on or after the year 2017 effective date that
470	470	occurred after the 20 years of participation described by Paragraph
471	471	(B) of this subdivision; and
472	472	(2) Subsection (a)(2) of this section is equal to the
473	473	sum of:
474	474	(A) 2.25 percent of the member's average monthly
475	475	salary multiplied by the member's years or partial years of
476	476	participation for the member's first 20 years of participation; and
477	477	(B) two percent of the member's average monthly
478	478	salary multiplied by the member's years or partial years of
479	479	participation for all years of participation that occurred after
480	480	the 20 years of participation described by Paragraph (A) of this
481	481	subdivision.
482	482	(b-1) For purposes of Subsection (b) of this section,
483	483	partial years shall be computed to the nearest one-twelfth of a
484	484	year.
485	485	(b-2) A member's monthly service pension under Subsection
486	486	(a)(2) of this section may not exceed 80 percent of the member's
487	487	average monthly salary [A member who terminates active service on
488	488	or after November 1, 1997, and who has completed at least 20 years
489	489	of participation in the fund on the effective date of termination of
490	490	service is entitled to a monthly service pension, beginning after
491	491	the effective date of termination of active service, in an amount
492	492	equal to 50 percent of the member's average monthly salary, plus
493	493	three percent of the member's average monthly salary for each year
494	494	of participation in excess of 20 years, but not in excess of 30
495	495	years of participation, for a maximum total benefit of 80 percent of
496	496	the member's average monthly salary].
497	497	(d) The total monthly benefit payable to a retired or
498	498	disabled member, other than a deferred retiree or active member who
499	499	has elected the DROP under Section 5(b) of this article, or payable
500	500	to an eligible survivor of a deceased member as provided by Section
501	501	7(a) or 7(b) of this article, shall be increased by the following
502	502	amounts: by $100, beginning with the monthly payment made for July
503	503	1999; by $25, beginning with the monthly payment made for July,
504	504	2000; and by $25, beginning with the monthly payment made for July
505	505	2001. These additional benefits may not be increased under Section
506	506	11(c), (c-1), or (c-2) of this article.
507	507	SECTION 1.08. Section 5, Article 6243e.2(1), Revised
508	508	Statutes, is amended by amending Subsections (a), (b), (c), (d),
509	509	and (m) and adding Subsections (a-1), (b-1), (d-1), (d-2), and
510	510	(e-1) to read as follows:
511	511	(a) A member who is eligible to receive a service pension
512	512	under Section 4(a)(1) [4] of this article and who remains in active
513	513	service may elect to participate in the deferred retirement option
514	514	plan provided by this section. A member who is eligible to receive
515	515	a service pension under Section 4(a)(2) of this article may not
516	516	elect to participate in the deferred retirement option plan
517	517	provided by this section. On subsequently terminating active
518	518	service, a member who elected the DROP may apply for a monthly
519	519	service pension under Section 4 of this article, except that the
520	520	effective date of the member's election to participate in the DROP
521	521	will be considered the member's retirement date for determining the
522	522	amount of the member's monthly service pension. The member may
523	523	also apply for any DROP benefit provided under this section on
524	524	terminating active service. An election to participate in the
525	525	DROP, once approved by the board, is irrevocable.
526	526	(a-1) The monthly benefit of a [A] DROP participant who has
527	527	at least 20 years of participation on the year 2017 effective date
528	528	[participant's monthly benefit at retirement] is increased at
529	529	retirement by two percent of the amount of the member's original
530	530	benefit for every full year of participation in the DROP by the
531	531	member for up to 10 years of participation in the DROP. For a
532	532	member's final year of participation, but not beyond the member's
533	533	10th year in the DROP, if a full year of participation is not
534	534	completed, the member shall receive a prorated increase of 0.166
535	535	percent of the member's original benefit for each month of
536	536	participation in that year. An increase provided by this
537	537	subsection does not apply to benefits payable under Subsection (l)
538	538	of this section. An increase under this subsection is applied to
539	539	the member's benefit at retirement and is not added to the member's
540	540	DROP account. The total increase under this subsection may not
541	541	exceed 20 percent for 10 years of participation in the DROP by the
542	542	member.
543	543	(b) A member may elect to participate in the DROP by
544	544	complying with the election process established by the board. The
545	545	member's election may be made at any time beginning on the date the
546	546	member has completed 20 years of participation in the fund and is
547	547	otherwise eligible for a service pension under Section 4(a)(1) [4]
548	548	of this article. [The election becomes effective on the first day
549	549	of the month following the month in which the board approves the
550	550	member's DROP election.] Beginning on the first day of the month
551	551	following the month in which the member makes an election to
552	552	participate in the DROP, subject to board approval, and ending on
553	553	the year 2017 effective date [of the member's DROP election],
554	554	amounts equal to the deductions made from the member's salary under
555	555	Section 13(c) of this article shall be credited to the member's DROP
556	556	account. Beginning after the year 2017 effective date, amounts
557	557	equal to the deductions made from the member's salary under Section
558	558	13(c) of this article may not be credited to the member's DROP
559	559	account.
560	560	(b-1) On or after the year 2017 effective date, an active
561	561	[A] member may not participate in the DROP for more than 13 [10]
562	562	years. If a DROP participant remains in active service after the
563	563	13th [10th] anniversary of the effective date of the member's DROP
564	564	election:
565	565	(1) [,] subsequent deductions from the member's salary
566	566	under Section 13(c) of this article may not be credited to the
567	567	member's DROP account; and
568	568	(2) the account shall continue to be credited with
569	569	earnings in accordance with Subsection (d) of this section [and may
570	570	not otherwise increase any benefit payable from the fund for the
571	571	member's service].
572	572	(c) After a member's DROP election becomes effective, an
573	573	amount equal to the monthly service pension the member would have
574	574	received under Section 4 of this article [and Section 11(c) of this
575	575	article], if applicable, had the member terminated active service
576	576	on the effective date of the member's DROP election shall be
577	577	credited to a DROP account maintained for the member. That monthly
578	578	credit to the member's DROP account shall continue until the
579	579	earlier of the date the member terminates active service or the 13th
580	580	[10th] anniversary of the [effective] date of the first credit to
581	581	the member's DROP account [election].
582	582	(d) A member's DROP account shall be credited with earnings
583	583	at an annual rate equal to 65 percent of the compounded average
584	584	annual return earned by the fund over the five years preceding, but
585	585	not including, the year during which the credit is given.
586	586	Notwithstanding the preceding, however, the credit to the member's
587	587	DROP account shall be at an annual rate of not less than 2.5 [five]
588	588	percent [nor greater than 10 percent], irrespective of actual
589	589	earnings.
590	590	(d-1) Earnings credited to a member's DROP account under
591	591	Subsection (d) of this section [Those earnings] shall be computed
592	592	and credited at a time and in a manner determined by the board,
593	593	except that earnings shall be credited not less frequently than
594	594	once in each 13-month period and shall take into account partial
595	595	years of participation in the DROP[. If the member has not
596	596	terminated active service, the member's DROP account may not be
597	597	credited with earnings after the 10th anniversary of the effective
598	598	date of the member's DROP election].
599	599	(d-2) A member may not roll over accumulated unused sick or
600	600	vacation time paid to the member as a lump-sum payment after
601	601	termination of active service into the member's DROP account.
602	602	(e-1) In lieu of receiving a lump-sum payment on termination
603	603	from active service, a retired member who has been a DROP
604	604	participant or, if termination from active service was due to the
605	605	DROP participant's death, the surviving spouse of the DROP
606	606	participant may elect to leave the retired member's DROP account
607	607	with the fund and receive earnings credited to the DROP account in
608	608	the manner described by Subsection (d) of this section.
609	609	(m) A DROP participant with a break in service may receive
610	610	service credit within DROP for days worked after the regular
611	611	expiration of the maximum [permitted] DROP participation period
612	612	prescribed by this section. The service credit shall be limited to
613	613	the number of days in which the participant experienced a break in
614	614	service or the number of days required to constitute 13 [10] years
615	615	of DROP participation, whichever is smaller. A retired member who
616	616	previously participated in the DROP and who returns to active
617	617	service is subject to the terms of this section in effect at the
618	618	time of the member's return to active service.
619	619	SECTION 1.09. Section 5A, Article 6243e.2(1), Revised
620	620	Statutes, is amended by adding Subsection (o) to read as follows:
621	621	(o) Notwithstanding any other provision of this article, on
622	622	or after the year 2017 effective date:
623	623	(1) a PROP participant may not have any additional
624	624	amounts that the participant would otherwise receive as a monthly
625	625	service pension or other benefits under this article credited to
626	626	the participant's PROP account; and
627	627	(2) a person, including a member or surviving spouse,
628	628	may not elect to participate in the PROP.
629	629	SECTION 1.10. Section 8, Article 6243e.2(1), Revised
630	630	Statutes, is amended to read as follows:
631	631	Sec. 8. DEFERRED PENSION AT AGE 50; REFUND OF
632	632	CONTRIBUTIONS. (a) On or after the year 2017 effective date, a [A]
633	633	member who is hired as a firefighter before the year 2017 effective
634	634	date, including a member who was hired before the year 2017
635	635	effective date and who involuntarily separated from service but has
636	636	been retroactively reinstated in accordance with an arbitration,
637	637	civil service, or court ruling, terminates active service for any
638	638	reason other than death with at least 10 years of participation, but
639	639	less than 20 years of participation, is entitled to a monthly
640	640	deferred pension benefit, beginning at age 50, in an amount equal to
641	641	1.7 percent of the member's average monthly salary multiplied by
642	642	the amount of the member's years of participation.
643	643	(b) In lieu of the deferred pension benefit provided under
644	644	Subsection (a) of this section, a member who terminates active
645	645	service for any reason other than death with at least 10 years of
646	646	participation, but less than 20 years of participation, may elect
647	647	to receive a lump-sum refund of the member's contributions to the
648	648	fund with interest computed at five percent, not compounded, for
649	649	the member's contributions to the fund made before the year 2017
650	650	effective date and without interest for the member's contributions
651	651	to the fund made on or after the year 2017 effective date. A
652	652	member's election to receive a refund of contributions must be made
653	653	on a form approved by the board. The member's refund shall be paid
654	654	as soon as administratively practicable after the member's election
655	655	is received.
656	656	(c) Except as provided by Subsection (a) of this section, a
657	657	[A] member who is hired or rehired as a firefighter on or after the
658	658	year 2017 effective date or a member who terminates employment for
659	659	any reason other than death before the member has completed 10 years
660	660	of participation is entitled only to a refund of the member's
661	661	contributions without interest and is not entitled to a deferred
662	662	pension benefit under this section or to any other benefit under
663	663	this article. The member's refund shall be paid as soon as
664	664	administratively practicable after the effective date of the
665	665	member's termination of active service.
666	666	SECTION 1.11. Section 11, Article 6243e.2(1), Revised
667	667	Statutes, is amended by amending Subsection (c) and adding
668	668	Subsections (c-1), (c-2), (c-3), and (c-4) to read as follows:
669	669	(c) Subject to Subsection (c-3) of this section and except
670	670	as provided by Subsection (c-4) of this section, beginning with the
671	671	fiscal year ending June 30, 2021, the [The] benefits, including
672	672	survivor benefits, payable based on the service of a member who has
673	673	terminated active service and who is or would have been at least 55
674	674	[48] years old, received or is receiving an on-duty disability
675	675	pension under Section 6(c) of this article, or died under the
676	676	conditions described by Section 7(c) of this article, shall be
677	677	increased [by three percent] in October of each year by a percentage
678	678	rate equal to the most recent five fiscal years' smoothed return, as
679	679	determined by the fund actuary, minus 500 basis points [and, if the
680	680	benefit had not previously been subject to that adjustment, in the
681	681	month of the member's 48th birthday].
682	682	(c-1) Subject to Subsection (c-3) of this section and except
683	683	as provided by Subsection (c-4) of this section, for the fund's
684	684	fiscal years ending June 30, 2018, and June 30, 2019, the benefits,
685	685	including survivor benefits, payable based on the service of a
686	686	member who is or would have been at least 70 years old and who
687	687	received or is receiving a service pension under Section 4 of this
688	688	article, received or is receiving an on-duty disability pension
689	689	under Section 6(c) of this article, or died under the conditions
690	690	described by Section 7(c) of this article, shall be adjusted in
691	691	October of each applicable fiscal year by a percentage rate equal to
692	692	the most recent five fiscal years' smoothed return, as determined
693	693	by the fund actuary, minus 500 basis points.
694	694	(c-2) Subject to Subsection (c-3) of this section and except
695	695	as provided by Subsection (c-4) of this section, for the fund's
696	696	fiscal year ending June 30, 2020, members described by Subsection
697	697	(c-1) of this section shall receive the increase provided under
698	698	Subsection (c) of this section.
699	699	(c-3) The percentage rate prescribed by Subsections (c),
700	700	(c-1), and (c-2) of this section may not be less than zero percent
701	701	or more than four percent, irrespective of the return rate of the
702	702	fund's investment portfolio.
703	703	(c-4) Each year after the year 2017 effective date, a member
704	704	who elects to participate in the DROP under Section 5 of this
705	705	article may not receive the increase provided under Subsection (c),
706	706	(c-1), or (c-2) of this section in any October during which the
707	707	member participates in the DROP.
708	708	SECTION 1.12. The heading to Section 13, Article
709	709	6243e.2(1), Revised Statutes, is amended to read as follows:
710	710	Sec. 13. MEMBERSHIP AND MEMBER CONTRIBUTIONS.
711	711	SECTION 1.13. Section 13(c), Article 6243e.2(1), Revised
712	712	Statutes, is amended to read as follows:
713	713	(c) Subject to adjustments authorized by Section 13E or 13F
714	714	of this article, each [Each] member in active service shall make
715	715	contributions to the fund in an amount equal to 10.5 [8.35] percent
716	716	of the member's salary at the time of the contribution[, and as of
717	717	July 1, 2004, in an amount equal to nine percent of the member's
718	718	salary at the time of the contribution]. The governing body of the
719	719	municipality shall deduct the contributions from the member's
720	720	salary and shall forward the contributions to the fund as soon as
721	721	practicable.
722	722	SECTION 1.14. Article 6243e.2(1), Revised Statutes, is
723	723	amended by adding Sections 13A, 13B, 13C, 13D, 13E, 13F, and 13G to
724	724	read as follows:
725	725	Sec. 13A. MUNICIPAL CONTRIBUTIONS. (a) Beginning with the
726	726	year 2017 effective date, the municipality shall make contributions
727	727	to the fund as provided by this section and Section 13B, 13C, 13E,
728	728	or 13F of this article, as applicable. The municipality shall
729	729	contribute:
730	730	(1) beginning with the year 2017 effective date and
731	731	ending with the fiscal year ending June 30, 2018, an amount equal to
732	732	the municipal contribution rate, as determined in the initial risk
733	733	sharing valuation study conducted under Section 13C of this article
734	734	and adjusted under Section 13E or 13F of this article, as
735	735	applicable, multiplied by the pensionable payroll for the fiscal
736	736	year; and
737	737	(2) for each fiscal year after the fiscal year ending
738	738	June 30, 2018, an amount equal to the municipal contribution rate,
739	739	as determined in a subsequent risk sharing valuation study
740	740	conducted under Section 13B of this article and adjusted under
741	741	Section 13E or 13F of this article, as applicable, multiplied by the
742	742	pensionable payroll for the applicable fiscal year.
743	743	(b) Except by written agreement between the municipality
744	744	and the board providing for an earlier contribution date, at least
745	745	biweekly, the municipality shall make the contributions required by
746	746	Subsection (a) of this section by depositing with the fund an amount
747	747	equal to the municipal contribution rate multiplied by the
748	748	pensionable payroll for the applicable biweekly period.
749	749	(c) With respect to each fiscal year:
750	750	(1) the first contribution by the municipality under
751	751	this section for the fiscal year shall be made not later than the
752	752	date payment is made to firefighters for their first full biweekly
753	753	pay period beginning on or after the first day of the fiscal year;
754	754	and
755	755	(2) the final contribution by the municipality under
756	756	this section for the fiscal year shall be made not later than the
757	757	date payment is made to firefighters for the final biweekly pay
758	758	period of the fiscal year.
759	759	(d) In addition to the amounts required under this section,
760	760	the municipality may at any time contribute additional amounts for
761	761	deposit in the fund by entering into a written agreement with the
762	762	board.
763	763	Sec. 13B. RISK SHARING VALUATION STUDIES. (a) The fund and
764	764	the municipality shall separately cause their respective actuaries
765	765	to prepare a risk sharing valuation study in accordance with this
766	766	section and actuarial standards of practice. A risk sharing
767	767	valuation study must:
768	768	(1) be dated as of the first day of the fiscal year in
769	769	which the study is required to be prepared;
770	770	(2) be included in the fund's standard valuation study
771	771	prepared annually for the fund;
772	772	(3) calculate the unfunded actuarial accrued
773	773	liability of the fund;
774	774	(4) be based on actuarial data provided by the fund
775	775	actuary or, if actuarial data is not provided, on estimates of
776	776	actuarial data;
777	777	(5) estimate the municipal contribution rate, taking
778	778	into account any adjustments required under Section 13E or 13F of
779	779	this article for all applicable prior fiscal years;
780	780	(6) subject to Subsection (g) of this section, be
781	781	based on the following assumptions and methods that are consistent
782	782	with actuarial standards of practice:
783	783	(A) an ultimate entry age normal actuarial
784	784	method;
785	785	(B) for purposes of determining the actuarial
786	786	value of assets:
787	787	(i) except as provided by Subparagraph (ii)
788	788	of this paragraph and Section 13E(c)(1) or 13F(c)(2) of this
789	789	article, an asset smoothing method recognizing actuarial losses and
790	790	gains over a five-year period applied prospectively beginning on
791	791	the year 2017 effective date; and
792	792	(ii) for the initial risk sharing valuation
793	793	study prepared under Section 13C of this article, a
794	794	marked-to-market method applied as of June 30, 2016;
795	795	(C) closed layered amortization of liability
796	796	layers to ensure that the amortization period for each layer begins
797	797	12 months after the date of the risk sharing valuation study in
798	798	which the liability layer is first recognized;
799	799	(D) each liability layer is assigned an
800	800	amortization period;
801	801	(E) each liability loss layer amortized over a
802	802	period of 30 years from the first day of the fiscal year beginning
803	803	12 months after the date of the risk sharing valuation study in
804	804	which the liability loss layer is first recognized, except that the
805	805	legacy liability must be amortized from July 1, 2016, for a 30-year
806	806	period beginning July 1, 2017;
807	807	(F) the amortization period for each liability
808	808	gain layer being:
809	809	(i) equal to the remaining amortization
810	810	period on the largest remaining liability loss layer and the two
811	811	layers must be treated as one layer such that if the payoff year of
812	812	the liability loss layer is accelerated or extended, the payoff
813	813	year of the liability gain layer is also accelerated or extended; or
814	814	(ii) if there is no liability loss layer, a
815	815	period of 30 years from the first day of the fiscal year beginning
816	816	12 months after the date of the risk sharing valuation study in
817	817	which the liability gain layer is first recognized;
818	818	(G) liability layers, including the legacy
819	819	liability, funded according to the level percent of payroll method;
820	820	(H) the assumed rate of return, subject to
821	821	adjustment under Section 13E(c)(2) of this article or, if Section
822	822	13C(g) of this article applies, adjustment in accordance with a
823	823	written agreement, except the assumed rate of return may not exceed
824	824	seven percent per annum;
825	825	(I) the price inflation assumption as of the most
826	826	recent actuarial experience study, which may be reset by the board
827	827	by plus or minus 50 basis points based on that actuarial experience
828	828	study;
829	829	(J) projected salary increases and payroll
830	830	growth rate set in consultation with the municipality's finance
831	831	director; and
832	832	(K) payroll for purposes of determining the
833	833	corridor midpoint and municipal contribution rate must be projected
834	834	using the annual payroll growth rate assumption; and
835	835	(7) be revised and restated, if appropriate, not later
836	836	than:
837	837	(A) the date required by a written agreement
838	838	entered into between the municipality and the board; or
839	839	(B) the 30th day after the date required action
840	840	is taken by the board under Section 13E or 13F of this article to
841	841	reflect any changes required by either section.
842	842	(b) As soon as practicable after the end of a fiscal year,
843	843	the fund actuary at the direction of the fund and the municipal
844	844	actuary at the direction of the municipality shall separately
845	845	prepare a proposed risk sharing valuation study based on the fiscal
846	846	year that just ended.
847	847	(c) Not later than September 30 following the end of the
848	848	fiscal year, the fund shall provide to the municipal actuary, under
849	849	a confidentiality agreement in which the municipal actuary agrees
850	850	to comply with the confidentiality provisions of Section 17 of this
851	851	article, the actuarial data described by Subsection (a)(4) of this
852	852	section.
853	853	(d) Not later than the 150th day after the last day of the
854	854	fiscal year:
855	855	(1) the fund actuary, at the direction of the fund,
856	856	shall provide the proposed risk sharing valuation study prepared by
857	857	the fund actuary under Subsection (b) of this section to the
858	858	municipal actuary; and
859	859	(2) the municipal actuary, at the direction of the
860	860	municipality, shall provide the proposed risk sharing valuation
861	861	study prepared by the municipal actuary under Subsection (b) of
862	862	this section to the fund actuary.
863	863	(e) Each actuary described by Subsection (d) of this section
864	864	may provide copies of the proposed risk sharing valuation studies
865	865	to the municipality or to the fund, as appropriate.
866	866	(f) If, after exchanging proposed risk sharing valuation
867	867	studies under Subsection (d) of this section, it is found that the
868	868	difference between the estimated municipal contribution rate
869	869	recommended in the proposed risk sharing valuation study prepared
870	870	by the fund actuary and the estimated municipal contribution rate
871	871	recommended in the proposed risk sharing valuation study prepared
872	872	by the municipal actuary for the corresponding fiscal year is:
873	873	(1) less than or equal to two percentage points, the
874	874	estimated municipal contribution rate recommended by the fund
875	875	actuary will be the estimated municipal contribution rate for
876	876	purposes of Subsection (a)(5) of this section, and the proposed
877	877	risk sharing valuation study prepared for the fund is considered to
878	878	be the final risk sharing valuation study for the fiscal year for
879	879	the purposes of this article; or
880	880	(2) greater than two percentage points, the municipal
881	881	actuary and the fund actuary shall have 20 business days to
882	882	reconcile the difference, provided that, without the mutual
883	883	agreement of both actuaries, the difference in the estimated
884	884	municipal contribution rate recommended by the municipal actuary
885	885	and the estimated municipal contribution rate recommended by the
886	886	fund actuary may not be further increased and:
887	887	(A) if, as a result of reconciliation efforts
888	888	under this subdivision, the difference is reduced to less than or
889	889	equal to two percentage points:
890	890	(i) subject to any adjustments under
891	891	Section 13E or 13F of this article, as applicable, the estimated
892	892	municipal contribution rate proposed under the reconciliation by
893	893	the fund actuary will be the estimated municipal contribution rate
894	894	for purposes of Subsection (a)(5) of this section; and
895	895	(ii) the fund's risk sharing valuation
896	896	study is considered to be the final risk sharing valuation study for
897	897	the fiscal year for the purposes of this article; or
898	898	(B) if, after 20 business days, the fund actuary
899	899	and the municipal actuary are not able to reach a reconciliation
900	900	that reduces the difference to an amount less than or equal to two
901	901	percentage points, subject to any adjustments under Section 13E or
902	902	13F of this article, as applicable:
903	903	(i) the municipal actuary at the direction
904	904	of the municipality and the fund actuary at the direction of the
905	905	fund each shall deliver to the finance director of the municipality
906	906	and the executive director of the fund a final risk sharing
907	907	valuation study with any agreed-to changes, marked as the final
908	908	risk sharing valuation study for each actuary; and
909	909	(ii) not later than the 90th day before the
910	910	first day of the next fiscal year, the finance director and the
911	911	executive director shall execute a joint addendum to the final risk
912	912	sharing valuation study received under Subparagraph (i) of this
913	913	paragraph that is a part of the final risk sharing valuation study
914	914	for the fiscal year for all purposes and reflects the arithmetic
915	915	average of the estimated municipal contribution rates for the
916	916	fiscal year stated by the municipal actuary and the fund actuary in
917	917	the final risk sharing valuation study for purposes of Subsection
918	918	(a)(5) of this section.
919	919	(g) The assumptions and methods used and the types of
920	920	actuarial data and financial information used to prepare the
921	921	initial risk sharing valuation study under Section 13C of this
922	922	article shall be used to prepare each subsequent risk sharing
923	923	valuation study under this section, unless changed based on the
924	924	actuarial experience study conducted under Section 13D of this
925	925	article.
926	926	(h) The actuarial data provided under Subsection (a)(2) of
927	927	this section may not include the identifying information of
928	928	individual members.
929	929	Sec. 13C. INITIAL RISK SHARING VALUATION STUDIES; CORRIDOR
930	930	MIDPOINT. (a) The fund and the municipality shall separately cause
931	931	their respective actuaries to prepare an initial risk sharing
932	932	valuation study that is dated as of July 1, 2016, in accordance with
933	933	this section. An initial risk sharing valuation study must:
934	934	(1) except as otherwise provided by this section, be
935	935	prepared in accordance with Section 13B of this article and, for
936	936	purposes of Section 13B(a)(4) of this article, be based on
937	937	actuarial data as of June 30, 2016, or, if actuarial data is not
938	938	provided, on estimates of actuarial data; and
939	939	(2) project the corridor midpoint for 31 fiscal years
940	940	beginning with the fiscal year beginning July 1, 2017.
941	941	(b) If the initial risk sharing valuation study has not been
942	942	prepared consistent with this section before the year 2017
943	943	effective date, as soon as practicable after the year 2017
944	944	effective date:
945	945	(1) the fund shall provide to the municipal actuary,
946	946	under a confidentiality agreement, the necessary actuarial data
947	947	used by the fund actuary to prepare the proposed initial risk
948	948	sharing valuation study; and
949	949	(2) not later than the 30th day after the date the
950	950	municipal actuary receives the actuarial data:
951	951	(A) the municipal actuary, at the direction of
952	952	the municipality, shall provide a proposed initial risk sharing
953	953	valuation study to the fund actuary; and
954	954	(B) the fund actuary, at the direction of the
955	955	fund, shall provide a proposed initial risk sharing valuation study
956	956	to the municipal actuary.
957	957	(c) If, after exchanging proposed initial risk sharing
958	958	valuation studies under Subsection (b)(2) of this section, it is
959	959	determined that the difference between the estimated municipal
960	960	contribution rate for any fiscal year recommended in the proposed
961	961	initial risk sharing valuation study prepared by the fund actuary
962	962	and the estimated municipal contribution rate for any fiscal year
963	963	recommended in the proposed initial risk sharing valuation study
964	964	prepared by the municipal actuary is:
965	965	(1) less than or equal to two percentage points, the
966	966	estimated municipal contribution rate for that fiscal year
967	967	recommended by the fund actuary will be the estimated municipal
968	968	contribution rate for purposes of Section 13B(a)(5) of this
969	969	article; or
970	970	(2) greater than two percentage points, the municipal
971	971	actuary and the fund actuary shall have 20 business days to
972	972	reconcile the difference and:
973	973	(A) if, as a result of reconciliation efforts
974	974	under this subdivision, the difference in any fiscal year is
975	975	reduced to less than or equal to two percentage points, the
976	976	estimated municipal contribution rate recommended by the fund
977	977	actuary for that fiscal year will be the estimated municipal
978	978	contribution rate for purposes of Section 13B(a)(5) of this
979	979	article; or
980	980	(B) if, after 20 business days, the municipal
981	981	actuary and the fund actuary are not able to reach a reconciliation
982	982	that reduces the difference to an amount less than or equal to two
983	983	percentage points for any fiscal year:
984	984	(i) the municipal actuary at the direction
985	985	of the municipality and the fund actuary at the direction of the
986	986	fund each shall deliver to the finance director of the municipality
987	987	and the executive director of the fund a final initial risk sharing
988	988	valuation study with any agreed-to changes, marked as the final
989	989	initial risk sharing valuation study for each actuary; and
990	990	(ii) the finance director and the executive
991	991	director shall execute a joint addendum to the final initial risk
992	992	sharing valuation study that is a part of each final initial risk
993	993	sharing valuation study for all purposes and that reflects the
994	994	arithmetic average of the estimated municipal contribution rate for
995	995	each fiscal year in which the difference was greater than two
996	996	percentage points for purposes of Section 13B(a)(5) of this
997	997	article.
998	998	(d) In preparing the initial risk sharing valuation study,
999	999	the municipal actuary and fund actuary shall:
1000	1000	(1) adjust the actuarial value of assets to be equal to
1001	1001	the market value of assets as of July 1, 2016; and
1002	1002	(2) assume benefit and contribution changes under this
1003	1003	article as of the year 2017 effective date.
1004	1004	(e) If the municipal actuary does not prepare an initial
1005	1005	risk sharing valuation study for purposes of this section, the fund
1006	1006	actuary's initial risk sharing valuation study will be used as the
1007	1007	final risk sharing valuation study for purposes of this article
1008	1008	unless the municipality did not prepare a proposed initial risk
1009	1009	sharing valuation study because the fund actuary did not provide
1010	1010	the necessary actuarial data in a timely manner. If the
1011	1011	municipality did not prepare a proposed initial risk sharing
1012	1012	valuation study because the fund actuary did not provide the
1013	1013	necessary actuarial data in a timely manner, the municipal actuary
1014	1014	shall have 60 days to prepare the proposed initial risk sharing
1015	1015	valuation study on receipt of the necessary information.
1016	1016	(f) If the fund actuary does not prepare a proposed initial
1017	1017	risk sharing valuation study for purposes of this section, the
1018	1018	proposed initial risk sharing valuation study prepared by the
1019	1019	municipal actuary will be the final risk sharing valuation study
1020	1020	for purposes of this article.
1021	1021	(g) The municipality and the board may agree on a written
1022	1022	transition plan for resetting the corridor midpoint:
1023	1023	(1) if at any time the funded ratio is equal to or
1024	1024	greater than 100 percent; or
1025	1025	(2) for any fiscal year after the payoff year of the
1026	1026	legacy liability.
1027	1027	(h) If the municipality and the board have not entered into
1028	1028	an agreement described by Subsection (g) of this section in a given
1029	1029	fiscal year, the corridor midpoint will be the corridor midpoint
1030	1030	determined for the 31st fiscal year in the initial risk sharing
1031	1031	valuation study prepared in accordance with this section.
1032	1032	(i) If the municipality makes a contribution to the fund of
1033	1033	at least $5 million more than the amount that would be required by
1034	1034	Section 13A(a) of this article, a liability gain layer with the same
1035	1035	remaining amortization period as the legacy liability is created
1036	1036	and the corridor midpoint shall be decreased by the amortized
1037	1037	amount in each fiscal year covered by the liability gain layer
1038	1038	produced divided by the projected pensionable payroll.
1039	1039	Sec. 13D. ACTUARIAL EXPERIENCE STUDIES. (a) At least once
1040	1040	every four years, the fund actuary at the direction of the fund
1041	1041	shall conduct an actuarial experience study in accordance with
1042	1042	actuarial standards of practice. The actuarial experience study
1043	1043	required by this subsection must be completed not later than
1044	1044	September 30 of the year in which the study is required to be
1045	1045	conducted.
1046	1046	(b) Except as otherwise expressly provided by Sections
1047	1047	13B(a)(6)(A)-(I) of this article, actuarial assumptions and
1048	1048	methods used in the preparation of a risk sharing valuation study,
1049	1049	other than the initial risk sharing valuation study, shall be based
1050	1050	on the results of the most recent actuarial experience study.
1051	1051	(c) Not later than the 180th day before the date the board
1052	1052	may consider adopting any assumptions and methods for purposes of
1053	1053	Section 13B of this article, the fund shall provide the municipal
1054	1054	actuary with a substantially final draft of the fund's actuarial
1055	1055	experience study, including:
1056	1056	(1) all assumptions and methods recommended by the
1057	1057	fund actuary; and
1058	1058	(2) summaries of the reconciled actuarial data used in
1059	1059	creation of the actuarial experience study.
1060	1060	(d) Not later than the 60th day after the date the
1061	1061	municipality receives the final draft of the fund's actuarial
1062	1062	experience study under Subsection (c) of this section, the
1063	1063	municipal actuary and fund actuary shall confer and cooperate on
1064	1064	reconciling and producing a final actuarial experience study.
1065	1065	During the period prescribed by this subsection, the fund actuary
1066	1066	may modify the recommended assumptions in the draft actuarial
1067	1067	experience study to reflect any changes to assumptions and methods
1068	1068	to which the fund actuary and the municipal actuary agree.
1069	1069	(e) At the municipal actuary's written request, the fund
1070	1070	shall provide additional actuarial data used by the fund actuary to
1071	1071	prepare the draft actuarial experience study, provided that
1072	1072	confidential data may only be provided subject to a confidentiality
1073	1073	agreement in which the municipal actuary agrees to comply with the
1074	1074	confidentiality provisions of Section 17 of this article.
1075	1075	(f) The municipal actuary at the direction of the
1076	1076	municipality shall provide in writing to the fund actuary and the
1077	1077	fund:
1078	1078	(1) any assumptions and methods recommended by the
1079	1079	municipal actuary that differ from the assumptions and methods
1080	1080	recommended by the fund actuary; and
1081	1081	(2) the municipal actuary's rationale for each method
1082	1082	or assumption the actuary recommends and determines to be
1083	1083	consistent with standards adopted by the Actuarial Standards Board.
1084	1084	(g) Not later than the 30th day after the date the fund
1085	1085	actuary receives the municipal actuary's written recommended
1086	1086	assumptions and methods and rationale under Subsection (f) of this
1087	1087	section, the fund shall provide a written response to the
1088	1088	municipality identifying any assumption or method recommended by
1089	1089	the municipal actuary that the fund does not accept. If any
1090	1090	assumption or method is not accepted, the fund shall recommend to
1091	1091	the municipality the names of three independent actuaries for
1092	1092	purposes of this section.
1093	1093	(h) An actuary may only be recommended, selected, or engaged
1094	1094	by the fund as an independent actuary under this section if the
1095	1095	person:
1096	1096	(1) is not already engaged by the municipality, the
1097	1097	fund, or any other pension system authorized under Article 6243g-4,
1098	1098	Revised Statutes, or Chapter 88 (H.B. 1573), Acts of the 77th
1099	1099	Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
1100	1100	Civil Statutes), to provide actuarial services to the municipality,
1101	1101	the fund, or another pension system referenced in this subdivision;
1102	1102	(2) is a member of the American Academy of Actuaries;
1103	1103	and
1104	1104	(3) has at least five years of experience as an actuary
1105	1105	working with one or more public retirement systems with assets in
1106	1106	excess of $1 billion.
1107	1107	(i) Not later than the 20th day after the date the
1108	1108	municipality receives the list of three independent actuaries under
1109	1109	Subsection (g) of this section, the municipality shall identify and
1110	1110	the fund shall hire one of the listed independent actuaries on terms
1111	1111	acceptable to the municipality and the fund to perform a scope of
1112	1112	work acceptable to the municipality and the fund. The municipality
1113	1113	and the fund each shall pay 50 percent of the cost of the
1114	1114	independent actuary engaged under this subsection. The
1115	1115	municipality shall be provided the opportunity to participate in
1116	1116	any communications between the independent actuary and the fund
1117	1117	concerning the engagement, engagement terms, or performance of the
1118	1118	terms of the engagement.
1119	1119	(j) The independent actuary engaged under Subsection (i) of
1120	1120	this section shall receive on request from the municipality or the
1121	1121	fund:
1122	1122	(1) the fund's draft actuarial experience study,
1123	1123	including all assumptions and methods recommended by the fund
1124	1124	actuary;
1125	1125	(2) summaries of the reconciled actuarial data used to
1126	1126	prepare the draft actuarial experience study;
1127	1127	(3) the municipal actuary's specific recommended
1128	1128	assumptions and methods together with the municipal actuary's
1129	1129	written rationale for each recommendation;
1130	1130	(4) the fund actuary's written rationale for its
1131	1131	recommendations; and
1132	1132	(5) if requested by the independent actuary and
1133	1133	subject to a confidentiality agreement in which the independent
1134	1134	actuary agrees to comply with the confidentiality provisions of
1135	1135	Section 17 of this article, additional confidential actuarial data.
1136	1136	(k) Not later than the 30th day after the date the
1137	1137	independent actuary receives all the requested information under
1138	1138	Subsection (j) of this section, the independent actuary shall
1139	1139	advise the fund and the municipality whether it agrees with the
1140	1140	assumption or method recommended by the municipal actuary or the
1141	1141	corresponding method or assumption recommended by the fund actuary,
1142	1142	together with the independent actuary's rationale for making the
1143	1143	determination. During the period prescribed by this subsection,
1144	1144	the independent actuary may discuss recommendations in
1145	1145	simultaneous consultation with the fund actuary and the municipal
1146	1146	actuary.
1147	1147	(l) The fund and the municipality may not seek any
1148	1148	information from any prospective independent actuary about
1149	1149	possible outcomes of the independent actuary's review.
1150	1150	(m) If an independent actuary has questions or concerns
1151	1151	regarding an engagement entered into under this section, the
1152	1152	independent actuary shall simultaneously consult with both the
1153	1153	municipal actuary and the fund actuary regarding the questions or
1154	1154	concerns. This subsection does not limit the fund's authorization
1155	1155	to take appropriate steps to complete the engagement of the
1156	1156	independent actuary on terms acceptable to both the fund and the
1157	1157	municipality or to enter into a confidentiality agreement with the
1158	1158	independent actuary, if needed.
1159	1159	(n) If the board does not adopt an assumption or method
1160	1160	recommended by the municipal actuary or fund actuary, including an
1161	1161	assumption or method to which the independent actuary agrees, the
1162	1162	municipal actuary is authorized to use that recommended assumption
1163	1163	or method in connection with preparation of a subsequent risk
1164	1164	sharing valuation study under Section 13B of this article until the
1165	1165	next actuarial experience study is conducted.
1166	1166	Sec. 13E. MUNICIPAL CONTRIBUTION RATE WHEN ESTIMATED
1167	1167	MUNICIPAL CONTRIBUTION RATE LOWER THAN CORRIDOR MIDPOINT;
1168	1168	AUTHORIZATION FOR CERTAIN ADJUSTMENTS. (a) This section governs
1169	1169	the determination of the municipal contribution rate applicable in
1170	1170	a fiscal year if the estimated municipal contribution rate is lower
1171	1171	than the corridor midpoint.
1172	1172	(b) If the funded ratio is:
1173	1173	(1) less than 90 percent, the municipal contribution
1174	1174	rate for the fiscal year equals the corridor midpoint; or
1175	1175	(2) equal to or greater than 90 percent and the
1176	1176	municipal contribution rate is:
1177	1177	(A) equal to or greater than the minimum
1178	1178	contribution rate, the estimated municipal contribution rate is the
1179	1179	municipal contribution rate for the fiscal year; or
1180	1180	(B) except as provided by Subsection (e) of this
1181	1181	section, less than the minimum contribution rate for the
1182	1182	corresponding fiscal year, the municipal contribution rate for the
1183	1183	fiscal year equals the minimum contribution rate achieved in
1184	1184	accordance with Subsection (c) of this section.
1185	1185	(c) For purposes of Subsection (b)(2)(B) of this section,
1186	1186	the following adjustments shall be applied sequentially to the
1187	1187	extent required to increase the estimated municipal contribution
1188	1188	rate to equal the minimum contribution rate:
1189	1189	(1) first, adjust the actuarial value of assets equal
1190	1190	to the current market value of assets, if making the adjustment
1191	1191	causes the municipal contribution rate to increase;
1192	1192	(2) second, under a written agreement between the
1193	1193	municipality and the board entered into not later than April 30
1194	1194	before the first day of the next fiscal year, reduce the assumed
1195	1195	rate of return;
1196	1196	(3) third, under a written agreement between the
1197	1197	municipality and the board entered into not later than April 30
1198	1198	before the first day of the next fiscal year, prospectively restore
1199	1199	all or part of any benefit reductions or reduce increased employee
1200	1200	contributions, in each case made after the year 2017 effective
1201	1201	date; and
1202	1202	(4) fourth, accelerate the payoff year of the existing
1203	1203	liability loss layers, including the legacy liability, by
1204	1204	accelerating the oldest liability loss layers first, to an
1205	1205	amortization period that is not less than 10 years from the first
1206	1206	day of the fiscal year beginning 12 months after the date of the
1207	1207	risk sharing valuation study in which the liability loss layer is
1208	1208	first recognized.
1209	1209	(d) If the funded ratio is:
1210	1210	(1) equal to or greater than 100 percent:
1211	1211	(A) all existing liability layers, including the
1212	1212	legacy liability, are considered fully amortized and paid;
1213	1213	(B) the applicable fiscal year is the payoff year
1214	1214	for the legacy liability; and
1215	1215	(C) for each fiscal year subsequent to the fiscal
1216	1216	year described by Paragraph (B) of this subdivision, the corridor
1217	1217	midpoint shall be determined as provided by Section 13C(g) of this
1218	1218	article; and
1219	1219	(2) greater than 100 percent in a written agreement
1220	1220	between the municipality and the fund, the fund may reduce member
1221	1221	contributions or increase pension benefits if, as a result of the
1222	1222	action:
1223	1223	(A) the funded ratio is not less than 90 percent;
1224	1224	and
1225	1225	(B) the municipal contribution rate is not more
1226	1226	than the minimum contribution rate.
1227	1227	(e) Except as provided by Subsection (f) of this section, if
1228	1228	an agreement under Subsection (d) of this section is not reached on
1229	1229	or before April 30 before the first day of the next fiscal year,
1230	1230	before the first day of the next fiscal year the board shall reduce
1231	1231	member contributions and implement or increase cost-of-living
1232	1232	adjustments, but only to the extent that the municipal contribution
1233	1233	rate is set at or below the minimum contribution rate and the funded
1234	1234	ratio is not less than 90 percent.
1235	1235	(f) If any member contribution reduction or benefit
1236	1236	increase under Subsection (e) of this section has occurred within
1237	1237	the previous three fiscal years, the board may not make additional
1238	1238	adjustments to benefits, and the municipal contribution rate must
1239	1239	be set to equal the minimum contribution rate.
1240	1240	Sec. 13F. MUNICIPAL CONTRIBUTION RATE WHEN ESTIMATED
1241	1241	MUNICIPAL CONTRIBUTION RATE EQUAL TO OR GREATER THAN CORRIDOR
1242	1242	MIDPOINT; AUTHORIZATION FOR CERTAIN ADJUSTMENTS. (a) This section
1243	1243	governs the determination of the municipal contribution rate in a
1244	1244	fiscal year when the estimated municipal contribution rate is equal
1245	1245	to or greater than the corridor midpoint.
1246	1246	(b) If the estimated municipal contribution rate is:
1247	1247	(1) less than or equal to the maximum contribution
1248	1248	rate for the corresponding fiscal year, the estimated municipal
1249	1249	contribution rate is the municipal contribution rate; or
1250	1250	(2) except as provided by Subsection (d) or (e) of this
1251	1251	section, greater than the maximum contribution rate for the
1252	1252	corresponding fiscal year, the municipal contribution rate equals
1253	1253	the corridor midpoint achieved in accordance with Subsection (c) of
1254	1254	this section.
1255	1255	(c) For purposes of Subsection (b)(2) of this section, the
1256	1256	following adjustments shall be applied sequentially to the extent
1257	1257	required to decrease the estimated municipal contribution rate to
1258	1258	equal the corridor midpoint:
1259	1259	(1) first, if the payoff year of the legacy liability
1260	1260	was accelerated under Section 13E(c) of this article, extend the
1261	1261	payoff year of existing liability loss layers, by extending the
1262	1262	most recent loss layers first, to a payoff year not later than 30
1263	1263	years from the first day of the fiscal year beginning 12 months
1264	1264	after the date of the risk sharing valuation study in which the
1265	1265	liability loss layer is first recognized; and
1266	1266	(2) second, adjust the actuarial value of assets to
1267	1267	the current market value of assets, if making the adjustment causes
1268	1268	the municipal contribution rate to decrease.
1269	1269	(d) If the municipal contribution rate after adjustment
1270	1270	under Subsection (c) of this section is greater than the third
1271	1271	quarter line rate:
1272	1272	(1) the municipal contribution rate equals the third
1273	1273	quarter line rate; and
1274	1274	(2) to the extent necessary to comply with Subdivision
1275	1275	(1) of this subsection, the municipality and the board shall enter
1276	1276	into a written agreement to increase member contributions and make
1277	1277	other benefit or plan changes not otherwise prohibited by
1278	1278	applicable federal law or regulations.
1279	1279	(e) If an agreement under Subsection (d)(2) of this section
1280	1280	is not reached on or before April 30 before the first day of the next
1281	1281	fiscal year, before the start of the next fiscal year to which the
1282	1282	municipal contribution rate would apply, the board, to the extent
1283	1283	necessary to set the municipal contribution rate equal to the third
1284	1284	quarter line rate, shall:
1285	1285	(1) increase member contributions and decrease
1286	1286	cost-of-living adjustments;
1287	1287	(2) increase the normal retirement age; or
1288	1288	(3) take any combination of actions authorized under
1289	1289	Subdivisions (1) and (2) of this subsection.
1290	1290	(f) If the municipal contribution rate remains greater than
1291	1291	the corridor midpoint in the third fiscal year after adjustments
1292	1292	are made in accordance with Subsection (d)(2) of this section, in
1293	1293	that fiscal year the municipal contribution rate equals the
1294	1294	corridor midpoint achieved in accordance with Subsection (g) of
1295	1295	this section.
1296	1296	(g) The municipal contribution rate must be set at the
1297	1297	corridor midpoint under Subsection (f) of this section by:
1298	1298	(1) in the risk sharing valuation study for the third
1299	1299	fiscal year described by Subsection (f) of this section, adjusting
1300	1300	the actuarial value of assets to equal the current market value of
1301	1301	assets, if making the adjustment causes the municipal contribution
1302	1302	rate to decrease; and
1303	1303	(2) under a written agreement entered into between the
1304	1304	municipality and the board:
1305	1305	(A) increasing member contributions; and
1306	1306	(B) making any other benefit or plan changes not
1307	1307	otherwise prohibited by applicable federal law or regulations.
1308	1308	(h) If an agreement under Subsection (g)(2) of this section
1309	1309	is not reached on or before April 30 before the first day of the next
1310	1310	fiscal year, before the start of the next fiscal year, the board, to
1311	1311	the extent necessary to set the municipal contribution rate equal
1312	1312	to the corridor midpoint, shall:
1313	1313	(1) increase member contributions and decrease
1314	1314	cost-of-living adjustments;
1315	1315	(2) increase the normal retirement age; or
1316	1316	(3) take any combination of actions authorized under
1317	1317	Subdivisions (1) and (2) of this subsection.
1318	1318	Sec. 13G. INTERPRETATION OF CERTAIN RISK SHARING
1319	1319	PROVISIONS; UNILATERAL DECISIONS AND ACTIONS PROHIBITED. (a)
1320	1320	Nothing in this article, including Section 2(p) or (p-1) of this
1321	1321	article and any authority of the board to construe and interpret
1322	1322	this article, to determine any fact, to take any action, or to
1323	1323	interpret any terms used in Sections 13A through 13F of this
1324	1324	article, may alter or change Sections 13A through 13F of this
1325	1325	article.
1326	1326	(b) No unilateral decision or action by the board is binding
1327	1327	on the municipality and no unilateral decision or action by the
1328	1328	municipality is binding on the fund with respect to the application
1329	1329	of Sections 13A through 13F of this article unless expressly
1330	1330	provided by a provision of those sections. Nothing in this
1331	1331	subsection is intended to limit the powers or authority of the
1332	1332	board.
1333	1333	(c) Section 10 of this article does not apply to a benefit
1334	1334	increase under Section 13E of this article, and Section 10 of this
1335	1335	article is suspended while Sections 13A through 13F of this article
1336	1336	are in effect.
1337	1337	SECTION 1.15. Section 17, Article 6243e.2(1), Revised
1338	1338	Statutes, is amended by adding Subsections (f), (g), (h), (i), and
1339	1339	(j) to read as follows:
1340	1340	(f) To carry out the provisions of Sections 13A through 13F
1341	1341	of this article, the board and the fund must provide the municipal
1342	1342	actuary under a confidentiality agreement the actuarial data used
1343	1343	by the fund actuary for the fund's actuarial valuations or
1344	1344	valuation studies and other data as agreed to between the
1345	1345	municipality and the fund that the municipal actuary determines is
1346	1346	reasonably necessary for the municipal actuary to perform the
1347	1347	studies required by Sections 13A through 13F of this article.
1348	1348	Actuarial data described by this subsection does not include
1349	1349	information described by Subsection (a) of this section.
1350	1350	(g) A risk sharing valuation study prepared by either the
1351	1351	municipal actuary or the fund actuary under Sections 13A through
1352	1352	13F of this article may not:
1353	1353	(1) include information described by Subsection (a) of
1354	1354	this section; or
1355	1355	(2) provide confidential or private information
1356	1356	regarding specific individuals or be grouped in a manner that
1357	1357	allows confidential or private information regarding a specific
1358	1358	individual to be discerned.
1359	1359	(h) The information, data, and document exchanges under
1360	1360	Sections 13A through 13F of this article have all the protections
1361	1361	afforded by applicable law and are expressly exempt from the
1362	1362	disclosure requirements under Chapter 552, Government Code, except
1363	1363	as may be agreed to by the municipality and fund in a written
1364	1364	agreement.
1365	1365	(i) Subsection (h) of this section does not apply to final
1366	1366	risk sharing valuation studies prepared under Section 13B or 13C of
1367	1367	this article.
1368	1368	(j) Before a union contract is approved by the municipality,
1369	1369	the mayor of the municipality shall cause the municipal actuaries
1370	1370	to deliver to the mayor a report estimating the impact of the
1371	1371	proposed union contract on fund costs.
1372	1372	SECTION 1.16. Sections 13(d) and (e), Article 6243e.2(1),
1373	1373	Revised Statutes, are repealed.
1374	1374	SECTION 1.17. The firefighters' relief and retirement fund
1375	1375	established under Article 6243e.2(1), Revised Statutes, shall
1376	1376	require the fund actuary to prepare the first actuarial experience
1377	1377	study required under Section 13D, Article 6243e.2(1), Revised
1378	1378	Statutes, as added by this Act, not later than September 30, 2020.
1379	1379	ARTICLE 2. POLICE OFFICERS' PENSION SYSTEM
1380	1380	SECTION 2.01. Section 1, Article 6243g-4, Revised Statutes,
1381	1381	is amended to read as follows:
1382	1382	Sec. 1. PURPOSE. The purpose of this article is to restate
1383	1383	and amend the provisions of former law creating and governing a
1384	1384	police officers pension system in each city in this state having a
1385	1385	population of two [1.5] million or more, according to the most
1386	1386	recent federal decennial census, and to reflect changes agreed to
1387	1387	by the city and the board of trustees of the pension system under
1388	1388	Section 27 of this article. The pension system shall continue to
1389	1389	operate regardless of whether the city's population falls below two
1390	1390	[1.5] million.
1391	1391	SECTION 2.02. Article 6243g-4, Revised Statutes, is amended
1392	1392	by adding Section 1A to read as follows:
1393	1393	Sec. 1A. INTERPRETATION OF ARTICLE. This article does not
1394	1394	and may not be interpreted to:
1395	1395	(1) relieve the city, the board, or the pension system
1396	1396	of their respective obligations under Sections 9 through 9E of this
1397	1397	article;
1398	1398	(2) reduce or modify the rights of the city, the board,
1399	1399	or the pension system, including any officer or employee of the
1400	1400	city, board, or pension system, to enforce obligations described by
1401	1401	Subdivision (1) of this section;
1402	1402	(3) relieve the city, including any official or
1403	1403	employee of the city, from:
1404	1404	(A) paying or directing to pay required
1405	1405	contributions to the pension system under Section 8 or 9 of this
1406	1406	article or carrying out the provisions of Sections 9 through 9E of
1407	1407	this article; or
1408	1408	(B) reducing or modifying the rights of the board
1409	1409	and any officer or employee of the board or pension system to
1410	1410	enforce obligations described by Subdivision (1) of this section;
1411	1411	(4) relieve the pension system or board, including any
1412	1412	officer or employee of the pension system or board, from any
1413	1413	obligation to implement a benefit change or carry out the
1414	1414	provisions of Sections 9 through 9E of this article; or
1415	1415	(5) reduce or modify the rights of the city and any
1416	1416	officer or employee of the city to enforce an obligation described
1417	1417	by Subdivision (4) of this section.
1418	1418	SECTION 2.03. Section 2, Article 6243g-4, Revised Statutes,
1419	1419	is amended by amending Subdivisions (1), (2), (3), (4-a), (11),
1420	1420	(13), (14-a), (17), (17-a), and (22) and adding Subdivisions (1-a),
1421	1421	(1-b), (1-c), (4-b), (4-c), (4-d), (5-a), (5-b), (5-c), (10-a),
1422	1422	(10-b), (10-c), (10-d), (12-a), (13-a), (13-b), (13-c), (13-d),
1423	1423	(13-e), (13-f), (14-b), (14-c), (15-a), (15-b), (16-a), (16-b),
1424	1424	(17-b), (17-c), (17-d), (17-e), (24), (25), (26), (27), (28), and
1425	1425	(29) to read as follows:
1426	1426	(1) "Active member" means an employee of the city
1427	1427	within [a person employed as a classified police officer by] the
1428	1428	police department of a city subject to this article, in a classified
1429	1429	or appointed position, except for a person in an appointed position
1430	1430	who opts out of the plan, a person who is a part-time, seasonal, or
1431	1431	temporary employee, or a person who elected to remain a member of a
1432	1432	pension system described by Chapter 88, Acts of the 77th
1433	1433	Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
1434	1434	Civil Statutes). The term does not include a person who is a member
1435	1435	of another pension system of the same city, except to the extent
1436	1436	provided by Section [15(j) or] 18 of this article.
1437	1437	(1-a) "Actuarial data" includes:
1438	1438	(A) the census data, assumption tables,
1439	1439	disclosure of methods, and financial information that are routinely
1440	1440	used by the pension system actuary for the pension system's
1441	1441	valuation studies or an actuarial experience study under Section 9C
1442	1442	of this article; and
1443	1443	(B) other data that is reasonably necessary to
1444	1444	implement Sections 9 through 9E of this article, as agreed to by the
1445	1445	city and the board.
1446	1446	(1-b) "Actuarial experience study" has the meaning
1447	1447	assigned by Section 802.1014, Government Code.
1448	1448	(1-c) "Amortization period" means the time period
1449	1449	necessary to fully pay a liability layer.
1450	1450	(2) "Amortization rate" means the sum of the scheduled
1451	1451	amortization payments for a given fiscal year for the current
1452	1452	liability layers divided by the projected pensionable payroll for
1453	1453	that fiscal year. ["Average total direct pay" means an amount
1454	1454	determined by dividing the following sum by 12:
1455	1455	[(A) the highest biweekly pay received by a
1456	1456	member for any single pay period in the last 26 pay periods in which
1457	1457	the member worked full-time, considering only items of total direct
1458	1458	pay that are included in each paycheck, multiplied by 26; plus
1459	1459	[(B) the total direct pay, excluding all items of
1460	1460	the type included in Paragraph (A) received during the same last 26
1461	1461	biweekly pay periods.]
1462	1462	(3) "Assumed rate of return" means the assumed market
1463	1463	rate of return on pension system assets, which is seven percent per
1464	1464	annum unless adjusted as provided by this article ["Base salary"
1465	1465	means the monthly base pay provided for the classified position in
1466	1466	the police department held by the member].
1467	1467	(4-a) "Catastrophic injury" means a sudden, violent,
1468	1468	life-threatening, duty-related injury sustained by an active
1469	1469	member that is due to an externally caused motor vehicle accident,
1470	1470	gunshot wound, aggravated assault, or other external event or
1471	1471	events and results, as supported by evidence, in one of the
1472	1472	following conditions:
1473	1473	(A) total, complete, and permanent loss of sight
1474	1474	in one or both eyes;
1475	1475	(B) total, complete, and permanent loss of the
1476	1476	use of one or both feet at or above the ankle;
1477	1477	(C) total, complete, and permanent loss of the
1478	1478	use of one or both hands at or above the wrist;
1479	1479	(D) injury to the spine that results in a total,
1480	1480	permanent, and complete paralysis of both arms, both legs, or one
1481	1481	arm and one leg; or
1482	1482	(E) an externally caused physical traumatic
1483	1483	injury to the brain rendering the member physically or mentally
1484	1484	unable to perform the member's duties as a police officer.
1485	1485	(4-b) "City" means a city subject to this article.
1486	1486	(4-c) "City contribution rate" means a percent of
1487	1487	pensionable payroll that is the sum of the employer normal cost rate
1488	1488	and the amortization rate for liability layers, excluding the
1489	1489	legacy liability, except as determined otherwise under the express
1490	1490	provisions of Sections 9D and 9E of this article.
1491	1491	(4-d) "Classified" means any person classified by the
1492	1492	city as a police officer.
1493	1493	(5-a) "Corridor" means the range of city contribution
1494	1494	rates that are:
1495	1495	(A) equal to or greater than the minimum
1496	1496	contribution rate; and
1497	1497	(B) equal to or less than the maximum
1498	1498	contribution rate.
1499	1499	(5-b) "Corridor margin" means five percentage points.
1500	1500	(5-c) "Corridor midpoint" means the projected city
1501	1501	contribution rate specified for each fiscal year for 31 years in the
1502	1502	initial risk sharing valuation study under Section 9B of this
1503	1503	article, as may be adjusted under Section 9D or 9E of this article,
1504	1504	and in each case rounded to the nearest hundredths decimal place.
1505	1505	(10-a) "Employer normal cost rate" means the normal
1506	1506	cost rate minus the member contribution rate.
1507	1507	(10-b) "Estimated city contribution rate" means the
1508	1508	city contribution rate estimated in a final risk sharing valuation
1509	1509	study under Section 9A or 9B of this article, as applicable, as
1510	1510	required by Section 9A(a)(5) of this article.
1511	1511	(10-c) "Fiscal year," except as provided by Section 2A
1512	1512	of this article, means a fiscal year beginning July 1 and ending
1513	1513	June 30.
1514	1514	(10-d) "Final average pay" means the pay received by a
1515	1515	member over the last 78 biweekly pay periods ending before the
1516	1516	earlier of:
1517	1517	(A) the date the member terminates employment
1518	1518	with the police department, divided by 36; or
1519	1519	(B) the date the member began participation in
1520	1520	DROP, divided by 36.
1521	1521	(11) "Former member" means a person who was once an
1522	1522	active member, eligible for benefits [vested] or not, but who
1523	1523	terminated active member status and received a refund of member
1524	1524	contributions.
1525	1525	(12-a) "Funded ratio" means the ratio of the pension
1526	1526	system's actuarial value of assets divided by the pension system's
1527	1527	actuarial accrued liability.
1528	1528	(13) "Inactive member" means a person who has
1529	1529	separated from service and is eligible to receive [has a vested
1530	1530	right to] a service pension from the pension system but is not
1531	1531	eligible for an immediate service pension. The term does not
1532	1532	include a former member.
1533	1533	(13-a) "Legacy liability" means the unfunded
1534	1534	actuarial accrued liability as of June 30, 2016, as reduced to
1535	1535	reflect:
1536	1536	(A) changes to benefits and contributions under
1537	1537	this article that took effect on the year 2017 effective date;
1538	1538	(B) the deposit of pension obligation bond
1539	1539	proceeds on December 31, 2017;
1540	1540	(C) payments by the city and earnings at the
1541	1541	assumed rate of return allocated to the legacy liability from July
1542	1542	1, 2016, to July 1, 2017, excluding July 1, 2017; and
1543	1543	(D) for each subsequent fiscal year,
1544	1544	contributions for that year allocated to the amortization of the
1545	1545	legacy liability and adjusted by the assumed rate of return.
1546	1546	(13-b) "Level percent of payroll method" means the
1547	1547	amortization method that defines the amount of the liability layer
1548	1548	recognized each fiscal year as a level percent of pensionable
1549	1549	payroll until the amount of the liability layer remaining is
1550	1550	reduced to zero.
1551	1551	(13-c) "Liability gain layer" means a liability layer
1552	1552	that decreases the unfunded actuarial accrued liability.
1553	1553	(13-d) "Liability layer" means the legacy liability
1554	1554	established in the initial risk sharing valuation study under
1555	1555	Section 9B of this article and the unanticipated change as
1556	1556	established in each subsequent risk sharing valuation study
1557	1557	prepared under Section 9A of this article.
1558	1558	(13-e) "Liability loss layer" means a liability layer
1559	1559	that increases the unfunded actuarial accrued liability. For
1560	1560	purposes of this article, the legacy liability is a liability loss
1561	1561	layer.
1562	1562	(13-f) "Maximum contribution rate" means the rate
1563	1563	equal to the corridor midpoint plus the corridor margin.
1564	1564	(14-a) "Minimum contribution rate" means the rate
1565	1565	equal to the corridor midpoint minus the corridor margin.
1566	1566	(14-b) "Normal cost rate" means the salary weighted
1567	1567	average of the individual normal cost rates determined for the
1568	1568	current active population plus an allowance for projected
1569	1569	administrative expenses. The allowance for projected
1570	1570	administrative expenses equals the administrative expenses divided
1571	1571	by the pensionable payroll for the previous fiscal year, provided
1572	1572	the administrative allowance may not exceed one percent of
1573	1573	pensionable payroll for the current fiscal year unless agreed to by
1574	1574	the city.
1575	1575	(14-c) "Normal retirement age" means:
1576	1576	(A) for a member hired before October 9, 2004,
1577	1577	including a member hired before October 9, 2004, who involuntarily
1578	1578	separated from service but was retroactively reinstated under an
1579	1579	arbitration, civil service, or court ruling after October 9, 2004,
1580	1580	the earlier of:
1581	1581	(i) [(A)] the age at which the member
1582	1582	attains 20 years of service; or
1583	1583	(ii) [(B)] the age at which the member first
1584	1584	attains both the age of at least 60 and at least 10 years of service;
1585	1585	or
1586	1586	(B) except as provided by Paragraph (A) of this
1587	1587	subdivision, for a member hired or rehired on or after October 9,
1588	1588	2004, the age at which the sum of the member's age in years and years
1589	1589	of service equals at least 70.
1590	1590	(15-a) "Pay," unless the context requires otherwise,
1591	1591	means wages as defined by Section 3401(a) of the code, plus any
1592	1592	amounts that are not included in gross income by reason of Section
1593	1593	104(a)(1), 125, 132(f), 402(g)(2), 457, or 414(h)(2) of the code,
1594	1594	less any pay received for overtime work, exempt time pay, strategic
1595	1595	officer staffing program pay, motorcycle allowance, clothing
1596	1596	allowance, or mentor pay. The definition of "pay" for purposes of
1597	1597	this article may only be amended by written agreement of the board
1598	1598	and the city under Section 27 of this article.
1599	1599	(15-b) "Payoff year" means the year a liability layer
1600	1600	is fully amortized under the amortization period. A payoff year may
1601	1601	not be extended or accelerated for a period that is less than one
1602	1602	month.
1603	1603	(16-a) "Pension obligation bond" means a bond issued
1604	1604	in accordance with Chapter 107, Local Government Code.
1605	1605	(16-b) "Pensionable payroll" means the combined
1606	1606	salaries paid to active members during an applicable fiscal year.
1607	1607	(17) "Pension system" or "system," unless the context
1608	1608	requires otherwise, means the retirement and disability plan for
1609	1609	employees of any police department subject to this article.
1610	1610	(17-a) "Police department" means one or more law
1611	1611	enforcement agencies designated as a police department by a city.
1612	1612	(17-b) "Price inflation assumption" means:
1613	1613	(A) the most recent headline consumer price index
1614	1614	10-year forecast published in the Federal Reserve Bank of
1615	1615	Philadelphia Survey of Professional Forecasters; or
1616	1616	(B) if the forecast described by Paragraph (A) of
1617	1617	this subdivision is not available, another standard as determined
1618	1618	by mutual agreement between the city and the board entered into
1619	1619	under Section 27 of this article.
1620	1620	(17-c) "Projected pensionable payroll" means the
1621	1621	estimated pensionable payroll for the fiscal year beginning 12
1622	1622	months after the date of the risk sharing valuation study prepared
1623	1623	under Section 9A of this article, as applicable, at the time of
1624	1624	calculation by:
1625	1625	(A) projecting the prior fiscal year's
1626	1626	pensionable payroll projected forward two years by using the
1627	1627	current payroll growth rate assumptions; and
1628	1628	(B) adjusting, if necessary, for changes in
1629	1629	population or other known factors, provided those factors would
1630	1630	have a material impact on the calculation, as determined by the
1631	1631	board.
1632	1632	(17-d) "Retired member" means a member who has
1633	1633	separated from service and who is eligible to receive an immediate
1634	1634	service or disability pension under this article.
1635	1635	(17-e) "Salary" means pay provided for the classified
1636	1636	position in the police department held by the member.
1637	1637	(22) "Surviving spouse" means a person who was married
1638	1638	to an active, inactive, or retired member at the time of the
1639	1639	member's death and, in the case of a marriage or remarriage after
1640	1640	the member's retirement, [an inactive or retired member, before the
1641	1641	member's separation from service or] for a period of at least five
1642	1642	consecutive years [before the retired or inactive member's death].
1643	1643	(24) "Third quarter line rate" means the corridor
1644	1644	midpoint plus 2.5 percentage points.
1645	1645	(25) "Trustee" means a member of the board.
1646	1646	(26) "Ultimate entry age normal" means an actuarial
1647	1647	cost method under which a calculation is made to determine the
1648	1648	average uniform and constant percentage rate of contributions that,
1649	1649	if applied to the compensation of each member during the entire
1650	1650	period of the member's anticipated covered service, would be
1651	1651	required to meet the cost of all benefits payable on the member's
1652	1652	behalf based on the benefits provisions for newly hired employees.
1653	1653	For purposes of this definition, the actuarial accrued liability
1654	1654	for each member is the difference between the member's present
1655	1655	value of future benefits based on the tier of benefits that apply to
1656	1656	the member and the member's present value of future normal costs
1657	1657	determined using the normal cost rate.
1658	1658	(27) "Unfunded actuarial accrued liability" means the
1659	1659	difference between the actuarial accrued liability and the
1660	1660	actuarial value of assets. For purposes of this definition:
1661	1661	(A) "actuarial accrued liability" means the
1662	1662	portion of the actuarial present value of projected benefits
1663	1663	attributed to past periods of member service based on the cost
1664	1664	method used in the risk sharing valuation study prepared under
1665	1665	Section 9A or 9B of this article, as applicable; and
1666	1666	(B) "actuarial value of assets" means the value
1667	1667	of pension system investments as calculated using the asset
1668	1668	smoothing method used in the risk sharing valuation study prepared
1669	1669	under Section 9A or 9B of this article, as applicable.
1670	1670	(28) "Unanticipated change" means, with respect to the
1671	1671	unfunded actuarial accrued liability in each subsequent risk
1672	1672	sharing valuation study prepared under Section 9A of this article,
1673	1673	the difference between:
1674	1674	(A) the remaining balance of all then-existing
1675	1675	liability layers as of the date of the risk sharing valuation study;
1676	1676	and
1677	1677	(B) the actual unfunded actuarial accrued
1678	1678	liability as of the date of the risk sharing valuation study.
1679	1679	(29) "Year 2017 effective date" means the date on
1680	1680	which H.B. No. 43, Acts of the 85th Legislature, Regular Session,
1681	1681	2017, took effect.
1682	1682	SECTION 2.04. Article 6243g-4, Revised Statutes, is amended
1683	1683	by adding Sections 2A and 2B to read as follows:
1684	1684	Sec. 2A. FISCAL YEAR. If either the pension system or the
1685	1685	city changes its respective fiscal year, the pension system and the
1686	1686	city shall enter into a written agreement under Section 27 of this
1687	1687	article to adjust the provisions of Sections 9 through 9E of this
1688	1688	article to reflect that change for purposes of this article.
1689	1689	Sec. 2B. CONFLICT OF LAW. To the extent of a conflict
1690	1690	between this article and any other law, this article prevails.
1691	1691	SECTION 2.05. Section 3(b), Article 6243g-4, Revised
1692	1692	Statutes, is amended to read as follows:
1693	1693	(b) The board is composed of seven members as follows:
1694	1694	(1) the administrative head of the city or the
1695	1695	administrative head's authorized representative;
1696	1696	(2) three employees of the police department having
1697	1697	membership in the pension system, elected by the active, inactive,
1698	1698	and retired members of the pension system;
1699	1699	(3) two retired members who are receiving pensions
1700	1700	from the system and are not officers or employees of the city,
1701	1701	elected by the active, inactive, and retired members of the pension
1702	1702	system; and
1703	1703	(4) the director of finance [treasurer] of the city or
1704	1704	the person discharging the duties of the director of finance, or the
1705	1705	director's designee [city treasurer].
1706	1706	SECTION 2.06. Section 3, Article 6243g-4, Revised Statutes,
1707	1707	is amended by amending Subsection (b) and adding Subsections (i)
1708	1708	and (j) to read as follows:
1709	1709	(b) The board is composed of seven members as follows:
1710	1710	(1) the administrative head of the city or the
1711	1711	administrative head's authorized representative;
1712	1712	(2) three employees of the police department having
1713	1713	membership in the pension system, elected by the active, inactive,
1714	1714	and retired members of the pension system;
1715	1715	(3) two retired members who are receiving pensions
1716	1716	from the system, who are elected by the active, inactive, and
1717	1717	retired members of the pension system, and who are not:
1718	1718	(A) officers or employees of the city; or
1719	1719	(B) current or former employees of any other fund
1720	1720	or pension system authorized under:
1721	1721	(i) Article 6243e.2(1), Revised Statutes;
1722	1722	or
1723	1723	(ii) Chapter 88 (H.B. 1573), Acts of the
1724	1724	77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
1725	1725	Texas Civil Statutes) [, elected by the active, inactive, and
1726	1726	retired members of the pension system]; and
1727	1727	(4) the treasurer of the city or the person
1728	1728	discharging the duties of the city treasurer.
1729	1729	(i) If a candidate for either an active or retired board
1730	1730	member position does not receive a majority vote for that position,
1731	1731	a runoff election for that position shall be held. The board shall
1732	1732	establish a policy for general and runoff elections for purposes of
1733	1733	this subsection.
1734	1734	(j) Beginning with the year 2017 effective date:
1735	1735	(1) the term of office for a board member in the
1736	1736	phase-down program A or B shall be one year; and
1737	1737	(2) a board member who subsequently enters phase-down
1738	1738	program A or B and has served at least one year of the member's
1739	1739	current term shall vacate the member's seat and may run for
1740	1740	reelection.
1741	1741	SECTION 2.07. Section 4, Article 6243g-4, Revised Statutes,
1742	1742	is amended to read as follows:
1743	1743	Sec. 4. BOARD MEMBER LEAVE AND COMPENSATION. (a) The city
1744	1744	shall allow active members who are trustees to promptly attend all
1745	1745	board and committee meetings. The city shall allow trustees the
1746	1746	time required to travel to and attend educational workshops and
1747	1747	legislative hearings and to attend to other pension system
1748	1748	business, including meetings regarding proposed amendments to this
1749	1749	article, if attendance is consistent with a trustee's duty to the
1750	1750	board [Elected members of the board who are employees of the city's
1751	1751	police department are entitled to leave from their employer to
1752	1752	attend to the official business of the pension system and are not
1753	1753	required to report to the city or any other governmental entity
1754	1754	regarding travel or the official business of the pension system,
1755	1755	except when on city business].
1756	1756	(b) [If the city employing an elected board member would
1757	1757	withhold any portion of the salary of the member who is attending to
1758	1758	official business of the pension system, the pension system may
1759	1759	elect to adequately compensate the city for the loss of service of
1760	1760	the member. If the board, by an affirmative vote of at least four
1761	1761	board members, makes this election, the amounts shall be remitted
1762	1762	from the fund to the city, and the city shall pay the board member's
1763	1763	salary as if no loss of service had occurred.
1764	1764	[(c)] The board, by an affirmative vote of at least four board
1765	1765	members, may elect to reimburse board members who are not employees
1766	1766	of the city for their time while attending to official business of
1767	1767	the pension system. The amount of any reimbursement may not exceed
1768	1768	$750 [$350] a month for each affected board member.
1769	1769	SECTION 2.08. Article 6243g-4, Revised Statutes, is amended
1770	1770	by adding Sections 5A and 5B to read as follows:
1771	1771	Sec. 5A. QUALIFICATIONS OF CITY ACTUARY. (a) An actuary
1772	1772	hired by the city for purposes of this article must be an actuary
1773	1773	from a professional service firm who:
1774	1774	(1) is not already engaged by the pension system or any
1775	1775	other fund or pension system authorized under Article 6243e.2(1),
1776	1776	Revised Statutes, or Chapter 88 (H.B. 1573), Acts of the 77th
1777	1777	Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
1778	1778	Civil Statutes), to provide actuarial services to the pension
1779	1779	system or other fund or pension system, as applicable;
1780	1780	(2) has a minimum of 10 years of professional
1781	1781	actuarial experience; and
1782	1782	(3) is a member of the American Academy of Actuaries or
1783	1783	a fellow of the Society of Actuaries and meets the applicable
1784	1784	requirements to issue statements of actuarial opinion.
1785	1785	(b) Notwithstanding Subsection (a) of this section, the
1786	1786	city actuary must at least meet the qualifications required by the
1787	1787	board for the pension system actuary. The city actuary is not
1788	1788	required to have greater qualifications than those of the pension
1789	1789	system actuary.
1790	1790	Sec. 5B. LIABILITY OF CERTAIN PERSONS. (a) The trustees,
1791	1791	executive director, and employees of the pension system are fully
1792	1792	protected from and free of liability for any action taken or
1793	1793	suffered by them that were performed in good faith and in reliance
1794	1794	on an actuary, accountant, counsel, or other professional service
1795	1795	provider, or in reliance on records provided by the city.
1796	1796	(b) The officers and employees of the city are fully
1797	1797	protected and free of liability for any action taken or suffered by
1798	1798	the officer or employee, as applicable, in good faith and on
1799	1799	reliance on an actuary, accountant, counsel, or other professional
1800	1800	service provider.
1801	1801	(c) The protection from liability provided by this section
1802	1802	is cumulative of and in addition to any other constitutional,
1803	1803	statutory, or common law official or governmental immunity,
1804	1804	defense, and civil or procedural protection provided to the city or
1805	1805	pension system as a governmental entity and to a city or pension
1806	1806	system official or employee as an official or employee of a
1807	1807	governmental entity. Except for a waiver expressly provided by
1808	1808	this article, this article does not grant an implied waiver of any
1809	1809	immunity.
1810	1810	SECTION 2.09. Section 6, Article 6243g-4, Revised Statutes,
1811	1811	is amended by amending Subsections (f) and (g) and adding
1812	1812	Subsections (f-1), (i), and (j) to read as follows:
1813	1813	(f) The board has full discretion and authority to:
1814	1814	(1) administer the pension system;
1815	1815	(2) [, to] construe and interpret this article and any
1816	1816	summary plan descriptions or benefits procedures;
1817	1817	(3) subject to Section 9F of this article, correct any
1818	1818	defect, supply any omission, and reconcile any inconsistency that
1819	1819	appears in this article;[,] and
1820	1820	(4) take [to do] all other acts necessary to carry out
1821	1821	the purpose of this article in a manner and to the extent that the
1822	1822	board considers expedient to administer this article for the
1823	1823	greatest benefit of all members.
1824	1824	(f-1) Except as provided by Section 9F of this article, all
1825	1825	[All] decisions of the board under Subsection (f) of this section
1826	1826	are final and binding on all affected parties.
1827	1827	(g) The board, if reasonably necessary in the course of
1828	1828	performing a board function, may issue process or subpoena a
1829	1829	witness or the production of a book, record, or other document as to
1830	1830	any matter affecting retirement, disability, or death benefits
1831	1831	under any pension plan provided by the pension system. The
1832	1832	presiding officer of the board may issue, in the name of the board,
1833	1833	a subpoena only if a majority of the board approves. The presiding
1834	1834	officer of the board, or the presiding officer's designee, shall
1835	1835	administer an oath to each witness. A peace officer shall serve a
1836	1836	subpoena issued by the board. If the person to whom a subpoena is
1837	1837	directed fails to comply, the board may bring suit to enforce the
1838	1838	subpoena in a district court of the county in which the person
1839	1839	resides or in the county in which the book, record, or other
1840	1840	document is located. If the district court finds that good cause
1841	1841	exists for issuance of the subpoena, the court shall order
1842	1842	compliance. The district court may modify the requirements of a
1843	1843	subpoena that the court finds are unreasonable. Failure to obey the
1844	1844	order of the district court is punishable as contempt.
1845	1845	(i) If the board or its designee determines that any person
1846	1846	to whom a payment under this article is due is a minor or is unable
1847	1847	to care for the person's affairs because of a physical or mental
1848	1848	disability, and if the board or its designee, as applicable,
1849	1849	determines the person does not have a guardian or other legal
1850	1850	representative and that the estate of the person is insufficient to
1851	1851	justify the expense of establishing a guardianship, or continuing a
1852	1852	guardianship after letters of guardianship have expired, then until
1853	1853	current letters of guardianship are filed with the pension system,
1854	1854	the board or its designee, as applicable, may make the payment:
1855	1855	(1) to the spouse of the person, as trustee for the
1856	1856	person;
1857	1857	(2) to an individual or entity actually providing for
1858	1858	the needs of and caring for the person, as trustee for the person;
1859	1859	or
1860	1860	(3) to a public agency or private charitable
1861	1861	organization providing assistance or services to the aged or
1862	1862	incapacitated that agrees to accept and manage the payment for the
1863	1863	benefit of the person as a trustee.
1864	1864	(j) The board or its designee is not responsible for
1865	1865	overseeing how a person to whom payment is made under Subsection (i)
1866	1866	of this section uses or otherwise applies the payments. Payments
1867	1867	made under Subsection (i) of this section constitute a complete
1868	1868	discharge of the pension system's liability and obligation to the
1869	1869	person on behalf of whom payment is made.
1870	1870	SECTION 2.10. Section 8(a), Article 6243g-4, Revised
1871	1871	Statutes, is amended to read as follows:
1872	1872	(a) Subject to adjustments authorized by Section 9D or 9E of
1873	1873	this article, each [Each] active member of the pension system shall
1874	1874	pay into the system each month 10.5 [8-3/4] percent of the member's
1875	1875	[total direct] pay. The payments shall be deducted by the city from
1876	1876	the salary of each active member each payroll period and paid to the
1877	1877	pension system. Except for the repayment of withdrawn
1878	1878	contributions under Section 17(f) [or 18(c)(3)] of this article and
1879	1879	rollovers permitted by Section 17(h) of this article, a person may
1880	1880	not be required or permitted to make any payments into the pension
1881	1881	system after the person separates from service.
1882	1882	SECTION 2.11. Section 9, Article 6243g-4, Revised Statutes,
1883	1883	is amended to read as follows:
1884	1884	Sec. 9. CONTRIBUTIONS BY THE CITY. (a) Beginning with the
1885	1885	year 2017 effective date, the city shall make contributions to the
1886	1886	pension system for deposit into the fund as provided by this section
1887	1887	and Section 9A, 9B, 9D, or 9E of this article, as applicable. The
1888	1888	city shall contribute:
1889	1889	(1) beginning with the year 2017 effective date and
1890	1890	ending with the fiscal year ending June 30, 2018, an amount equal to
1891	1891	the city contribution rate, as determined in the initial risk
1892	1892	sharing valuation study conducted under Section 9B of this article
1893	1893	and adjusted under Section 9D or 9E of this article, as applicable,
1894	1894	multiplied by the pensionable payroll for the fiscal year; and
1895	1895	(2) for each fiscal year after the fiscal year ending
1896	1896	June 30, 2018, an amount equal to the city contribution rate, as
1897	1897	determined in a subsequent risk sharing valuation study conducted
1898	1898	under Section 9A of this article and adjusted under Section 9D or 9E
1899	1899	of this article, as applicable, multiplied by the pensionable
1900	1900	payroll for the applicable fiscal year.
1901	1901	(b) Except by written agreement between the city and the
1902	1902	board under Section 27 of this article providing for an earlier
1903	1903	contribution date, at least biweekly, the city shall make the
1904	1904	contributions required by Subsection (a) of this section by
1905	1905	depositing with the pension system an amount equal to the city
1906	1906	contribution rate multiplied by the pensionable payroll for the
1907	1907	biweekly period.
1908	1908	(c) With respect to each fiscal year:
1909	1909	(1) the first contribution by the city under this
1910	1910	section for the fiscal year shall be made not later than the date
1911	1911	payment is made to employees for their first full biweekly pay
1912	1912	period beginning on or after the first day of the fiscal year; and
1913	1913	(2) the final contribution by the city under this
1914	1914	section for the fiscal year shall be made not later than the date
1915	1915	payment is made to employees for the final biweekly pay period of
1916	1916	the fiscal year.
1917	1917	(d) In addition to the amounts required under this section,
1918	1918	the city may at any time contribute additional amounts to the
1919	1919	pension system for deposit in the pension fund by entering into a
1920	1920	written agreement with the board in accordance with Section 27 of
1921	1921	this article [The city shall make substantially equal contributions
1922	1922	to the fund as soon as administratively feasible after each payroll
1923	1923	period. For each fiscal year ending after June 30, 2005, the city's
1924	1924	minimum contribution shall be the greater of 16 percent of the
1925	1925	members' total direct pay or the level percentage of salary payment
1926	1926	required to amortize the unfunded actuarial liability over a
1927	1927	constant period of 30 years computed on the basis of an acceptable
1928	1928	actuarial reserve funding method approved by the board. However,
1929	1929	for the fiscal year ending June 30, 2002, the city's contribution
1930	1930	shall be $32,645,000, for the fiscal year ending June 30, 2003, the
1931	1931	city's contribution shall be $34,645,000, for the fiscal year
1932	1932	ending June 30, 2004, the city's contribution shall be $36,645,000,
1933	1933	and for the fiscal year ending June 30, 2005, the city's
1934	1934	contribution shall be 16 percent of the members' total direct pay].
1935	1935	(e) [(c)] The governing body of a city to which this article
1936	1936	applies by ordinance or resolution may provide that the city pick up
1937	1937	active member contributions required by Section 8 of this article
1938	1938	so that the contributions of all active members of the pension
1939	1939	system qualify as picked-up contributions under Section 414(h)(2)
1940	1940	of the code. If the governing body of a city adopts an ordinance or
1941	1941	resolution under this section, the city, the board, and any other
1942	1942	necessary party shall implement the action as soon as practicable.
1943	1943	Contributions picked up as provided by this subsection shall be
1944	1944	included in the determination of an active member's [total direct]
1945	1945	pay, deposited to the individual account of the active member on
1946	1946	whose behalf they are made, and treated for all purposes, other than
1947	1947	federal tax purposes, in the same manner and with like effect as if
1948	1948	they had been deducted from the salary of, and made by, the active
1949	1949	member.
1950	1950	(f) Only amounts paid by the city to the pension system
1951	1951	shall be credited against any amortization schedule of payments due
1952	1952	to the pension system under this article.
1953	1953	(g) Subsection (f) of this section does not affect changes
1954	1954	to an amortization schedule of a liability layer under Section
1955	1955	9A(a)(6)(F), 9B(i), or 9D(c)(4) of this article.
1956	1956	SECTION 2.12. Article 6243g-4, Revised Statutes, is amended
1957	1957	by adding Sections 9A, 9B, 9C, 9D, 9E, and 9F to read as follows:
1958	1958	Sec. 9A. RISK SHARING VALUATION STUDIES. (a) The pension
1959	1959	system and the city shall separately cause their respective
1960	1960	actuaries to prepare a risk sharing valuation study in accordance
1961	1961	with this section and actuarial standards of practice. A risk
1962	1962	sharing valuation study must:
1963	1963	(1) be dated as of the first day of the fiscal year in
1964	1964	which the study is required to be prepared;
1965	1965	(2) be included in the pension system's standard
1966	1966	valuation study prepared annually for the pension system;
1967	1967	(3) calculate the unfunded actuarial accrued
1968	1968	liability of the pension system;
1969	1969	(4) be based on actuarial data provided by the pension
1970	1970	system actuary or, if actuarial data is not provided, on estimates
1971	1971	of actuarial data;
1972	1972	(5) estimate the city contribution rate, taking into
1973	1973	account any adjustments required under Section 9D or 9E of this
1974	1974	article for all applicable prior fiscal years;
1975	1975	(6) subject to Subsection (g) of this section, be
1976	1976	based on the following assumptions and methods that are consistent
1977	1977	with actuarial standards of practice:
1978	1978	(A) an ultimate entry age normal actuarial
1979	1979	method;
1980	1980	(B) for purposes of determining the actuarial
1981	1981	value of assets:
1982	1982	(i) except as provided by Subparagraph (ii)
1983	1983	of this paragraph and Section 9D(c)(1) or 9E(c)(2) of this article,
1984	1984	an asset smoothing method recognizing actuarial losses and gains
1985	1985	over a five-year period applied prospectively beginning on the year
1986	1986	2017 effective date; and
1987	1987	(ii) for the initial risk sharing valuation
1988	1988	study prepared under Section 9B of this article, a marked-to-market
1989	1989	method applied as of June 30, 2016;
1990	1990	(C) closed layered amortization of liability
1991	1991	layers to ensure that the amortization period for each layer begins
1992	1992	12 months after the date of the risk sharing valuation study in
1993	1993	which the liability layer is first recognized;
1994	1994	(D) each liability layer is assigned an
1995	1995	amortization period;
1996	1996	(E) each liability loss layer amortized over a
1997	1997	period of 30 years from the first day of the fiscal year beginning
1998	1998	12 months after the date of the risk sharing valuation study in
1999	1999	which the liability loss layer is first recognized, except that the
2000	2000	legacy liability must be amortized from July 1, 2016, for a 30-year
2001	2001	period beginning July 1, 2017;
2002	2002	(F) the amortization period for each liability
2003	2003	gain layer being:
2004	2004	(i) equal to the remaining amortization
2005	2005	period on the largest remaining liability loss layer and the two
2006	2006	layers must be treated as one layer such that if the payoff year of
2007	2007	the liability loss layer is accelerated or extended, the payoff
2008	2008	year of the liability gain layer is also accelerated or extended; or
2009	2009	(ii) if there is no liability loss layer, a
2010	2010	period of 30 years from the first day of the fiscal year beginning
2011	2011	12 months after the date of the risk sharing valuation study in
2012	2012	which the liability gain layer is first recognized;
2013	2013	(G) liability layers, including the legacy
2014	2014	liability, funded according to the level percent of payroll method;
2015	2015	(H) the assumed rate of return, subject to
2016	2016	adjustment under Section 9D(c)(2) of this article or, if Section
2017	2017	9B(g) of this article applies, adjustment in accordance with a
2018	2018	written agreement entered into under Section 27 of this article,
2019	2019	except the assumed rate of return may not exceed seven percent per
2020	2020	annum;
2021	2021	(I) the price inflation assumption as of the most
2022	2022	recent actuarial experience study, which may be reset by the board
2023	2023	by plus or minus 50 basis points based on that actuarial experience
2024	2024	study;
2025	2025	(J) projected salary increases and payroll
2026	2026	growth rate set in consultation with the city's finance director;
2027	2027	and
2028	2028	(K) payroll for purposes of determining the
2029	2029	corridor midpoint and city contribution rate must be projected
2030	2030	using the annual payroll growth rate assumption; and
2031	2031	(7) be revised and restated, if appropriate, not later
2032	2032	than:
2033	2033	(A) the date required by a written agreement
2034	2034	entered into between the city and the board; or
2035	2035	(B) the 30th day after the date required action
2036	2036	is taken by the board under Section 9D or 9E of this article to
2037	2037	reflect any changes required by either section.
2038	2038	(b) As soon as practicable after the end of a fiscal year,
2039	2039	the pension system actuary at the direction of the pension system
2040	2040	and the city actuary at the direction of the city shall separately
2041	2041	prepare a proposed risk sharing valuation study based on the fiscal
2042	2042	year that just ended.
2043	2043	(c) Not later than September 30 following the end of the
2044	2044	fiscal year, the pension system shall provide to the city actuary,
2045	2045	under a confidentiality agreement with the board in which the city
2046	2046	actuary agrees to comply with the confidentiality provisions of
2047	2047	Section 29 of this article, the actuarial data described by
2048	2048	Subsection (a)(4) of this section.
2049	2049	(d) Not later than the 150th day after the last day of the
2050	2050	fiscal year:
2051	2051	(1) the pension system actuary, at the direction of
2052	2052	the pension system, shall provide the proposed risk sharing
2053	2053	valuation study prepared by the pension system actuary under
2054	2054	Subsection (b) of this section to the city actuary; and
2055	2055	(2) the city actuary, at the direction of the city,
2056	2056	shall provide the proposed risk sharing valuation study prepared by
2057	2057	the city actuary under Subsection (b) of this section to the pension
2058	2058	system actuary.
2059	2059	(e) Each actuary described by Subsection (d) of this section
2060	2060	may provide copies of the proposed risk sharing valuation studies
2061	2061	to the city or to the pension system, as appropriate.
2062	2062	(f) If, after exchanging proposed risk sharing valuation
2063	2063	studies under Subsection (d) of this section, it is found that the
2064	2064	difference between the estimated city contribution rate
2065	2065	recommended in the proposed risk sharing valuation study prepared
2066	2066	by the pension system actuary and the estimated city contribution
2067	2067	rate recommended in the proposed risk sharing valuation study
2068	2068	prepared by the city actuary for the corresponding fiscal year is:
2069	2069	(1) less than or equal to two percentage points, the
2070	2070	estimated city contribution rate recommended by the pension system
2071	2071	actuary will be the estimated city contribution rate for purposes
2072	2072	of Subsection (a)(5) of this section, and the proposed risk sharing
2073	2073	valuation study prepared for the pension system is considered to be
2074	2074	the final risk sharing valuation study for the fiscal year for the
2075	2075	purposes of this article; or
2076	2076	(2) greater than two percentage points, the city
2077	2077	actuary and the pension system actuary shall have 20 business days
2078	2078	to reconcile the difference, provided that without the mutual
2079	2079	agreement of both actuaries, the difference in the estimated city
2080	2080	contribution rate recommended by the city actuary and the estimated
2081	2081	city contribution rate recommended by the pension system actuary
2082	2082	may not be further increased and:
2083	2083	(A) if, as a result of reconciliation efforts
2084	2084	under this subdivision, the difference is reduced to less than or
2085	2085	equal to two percentage points:
2086	2086	(i) the estimated city contribution rate
2087	2087	proposed under the reconciliation by the pension system actuary
2088	2088	will be the estimated city contribution rate for purposes of
2089	2089	Subsection (a)(5) of this section; and
2090	2090	(ii) the pension system's risk sharing
2091	2091	valuation study is considered to be the final risk sharing
2092	2092	valuation study for the fiscal year for the purposes of this
2093	2093	article; or
2094	2094	(B) if, after 20 business days, the pension system
2095	2095	actuary and the city actuary are not able to reach a reconciliation
2096	2096	that reduces the difference to an amount less than or equal to two
2097	2097	percentage points:
2098	2098	(i) the city actuary at the direction of the
2099	2099	city and the pension system actuary at the direction of the pension
2100	2100	system each shall deliver to the finance director of the city and
2101	2101	the executive director of the pension system a final risk sharing
2102	2102	valuation study with any agreed-to changes, marked as the final
2103	2103	risk sharing valuation study for each actuary; and
2104	2104	(ii) not later than the 90th day before the
2105	2105	first day of the next fiscal year, the finance director and the
2106	2106	executive director shall execute a joint addendum to the final risk
2107	2107	sharing valuation study received by them under Subparagraph (i) of
2108	2108	this paragraph that is a part of the final risk sharing valuation
2109	2109	study for the fiscal year for all purposes and reflects the
2110	2110	arithmetic average of the estimated city contribution rates for the
2111	2111	fiscal year stated by the city actuary and the pension system
2112	2112	actuary in the final risk sharing valuation study for purposes of
2113	2113	Subsection (a)(5) of this section, and for reporting purposes the
2114	2114	pension system may treat the pension system actuary's risk sharing
2115	2115	valuation study with the addendum as the final risk sharing
2116	2116	valuation study.
2117	2117	(g) The assumptions and methods used and the types of
2118	2118	actuarial data and financial information used to prepare the
2119	2119	initial risk sharing valuation study under Section 9B of this
2120	2120	article shall be used to prepare each subsequent risk sharing
2121	2121	valuation study under this section, unless changed based on the
2122	2122	actuarial experience study conducted under Section 9C of this
2123	2123	article.
2124	2124	(h) The actuarial data provided under Subsection (a)(2) of
2125	2125	this section may not include the identifying information of
2126	2126	individual members.
2127	2127	Sec. 9B. INITIAL RISK SHARING VALUATION STUDIES; CORRIDOR
2128	2128	MIDPOINT. (a) The pension system and the city shall separately
2129	2129	cause their respective actuaries to prepare an initial risk sharing
2130	2130	valuation study that is dated as of July 1, 2016, in accordance with
2131	2131	this section. An initial risk sharing valuation study must:
2132	2132	(1) except as otherwise provided by this section, be
2133	2133	prepared in accordance with Section 9A of this article and, for
2134	2134	purposes of Section 9A(a)(4) of this article, be based on actuarial
2135	2135	data as of June 30, 2016; and
2136	2136	(2) project the corridor midpoint for 31 fiscal years
2137	2137	beginning with the fiscal year beginning July 1, 2017.
2138	2138	(b) If the initial risk sharing valuation study has not been
2139	2139	prepared consistent with this section before the year 2017
2140	2140	effective date, as soon as practicable after the year 2017
2141	2141	effective date:
2142	2142	(1) the pension system shall provide to the city
2143	2143	actuary, under a confidentiality agreement, the necessary
2144	2144	actuarial data used by the pension system actuary to prepare the
2145	2145	proposed initial risk sharing valuation study; and
2146	2146	(2) not later than the 30th day after the date the
2147	2147	city's actuary receives the actuarial data:
2148	2148	(A) the city actuary, at the direction of the
2149	2149	city, shall provide a proposed initial risk sharing valuation study
2150	2150	to the pension system actuary; and
2151	2151	(B) the pension system actuary, at the direction
2152	2152	of the pension system, shall provide a proposed initial risk
2153	2153	sharing valuation study to the city actuary.
2154	2154	(c) If, after exchanging proposed initial risk sharing
2155	2155	valuation studies under Subsection (b)(2) of this section, it is
2156	2156	determined that the difference between the estimated city
2157	2157	contribution rate for any fiscal year recommended in the proposed
2158	2158	initial risk sharing valuation study prepared by the pension system
2159	2159	actuary and in the proposed initial risk sharing valuation study
2160	2160	prepared by the city actuary is:
2161	2161	(1) less than or equal to two percentage points, the
2162	2162	estimated city contribution rate for that fiscal year recommended
2163	2163	by the pension system actuary will be the estimated city
2164	2164	contribution rate for purposes of Section 9A(a)(5) of this article;
2165	2165	or
2166	2166	(2) greater than two percentage points, the city
2167	2167	actuary and the pension system actuary shall have 20 business days
2168	2168	to reconcile the difference and:
2169	2169	(A) if, as a result of reconciliation efforts
2170	2170	under this subdivision, the difference in any fiscal year is
2171	2171	reduced to less than or equal to two percentage points, the
2172	2172	estimated city contribution rate recommended by the pension system
2173	2173	actuary for that fiscal year will be the estimated city
2174	2174	contribution rate for purposes of Section 9A(a)(5) of this article;
2175	2175	or
2176	2176	(B) if, after 20 business days, the city actuary
2177	2177	and the pension system actuary are not able to reach a
2178	2178	reconciliation that reduces the difference to an amount less than
2179	2179	or equal to two percentage points for any fiscal year:
2180	2180	(i) the city actuary at the direction of the
2181	2181	city and the pension system actuary at the direction of the pension
2182	2182	system each shall deliver to the finance director of the city and
2183	2183	the executive director of the pension system a final initial risk
2184	2184	sharing valuation study with any agreed-to changes, marked as the
2185	2185	final initial risk sharing valuation study for each actuary; and
2186	2186	(ii) the finance director and the executive
2187	2187	director shall execute a joint addendum to the final initial risk
2188	2188	sharing valuation study that is a part of each final initial risk
2189	2189	sharing valuation study for all purposes and that reflects the
2190	2190	arithmetic average of the estimated city contribution rate for each
2191	2191	fiscal year in which the difference was greater than two percentage
2192	2192	points for purposes of Section 9A(a)(5) of this article, and for
2193	2193	reporting purposes the pension system may treat the pension system
2194	2194	actuary's initial risk sharing valuation study with the addendum as
2195	2195	the final initial risk sharing valuation study.
2196	2196	(d) In preparing the initial risk sharing valuation study,
2197	2197	the city actuary and pension system actuary shall:
2198	2198	(1) adjust the actuarial value of assets to be equal to
2199	2199	the market value of assets as of July 1, 2016;
2200	2200	(2) assume the issuance of planned pension obligation
2201	2201	bonds by December 31, 2017; and
2202	2202	(3) assume benefit and contribution changes
2203	2203	contemplated by this article as of the year 2017 effective date.
2204	2204	(e) If the city actuary does not prepare an initial risk
2205	2205	sharing valuation study for purposes of this section, the pension
2206	2206	system actuary's initial risk sharing valuation study will be used
2207	2207	as the final risk sharing valuation study for purposes of this
2208	2208	article unless the city did not prepare a proposed initial risk
2209	2209	sharing valuation study because the pension system actuary did not
2210	2210	provide the necessary actuarial data in a timely manner. If the
2211	2211	city did not prepare a proposed initial risk sharing valuation
2212	2212	study because the pension system actuary did not provide the
2213	2213	necessary actuarial data in a timely manner, the city actuary shall
2214	2214	have 60 days to prepare the proposed initial risk sharing valuation
2215	2215	study on receipt of the necessary information.
2216	2216	(f) If the pension system actuary does not prepare a
2217	2217	proposed initial risk sharing valuation study for purposes of this
2218	2218	section, the proposed initial risk sharing valuation study prepared
2219	2219	by the city actuary will be the final risk sharing valuation study
2220	2220	for purposes of this article.
2221	2221	(g) The city and the board may agree on a written transition
2222	2222	plan for resetting the corridor midpoint:
2223	2223	(1) if at any time the funded ratio is equal to or
2224	2224	greater than 100 percent; or
2225	2225	(2) for any fiscal year after the payoff year of the
2226	2226	legacy liability.
2227	2227	(h) If the city and the board have not entered into an
2228	2228	agreement described by Subsection (g) of this section in a given
2229	2229	fiscal year, the corridor midpoint will be the corridor midpoint
2230	2230	determined for the 31st fiscal year in the initial risk sharing
2231	2231	valuation study prepared in accordance with this section.
2232	2232	(i) If the city makes a contribution to the pension system
2233	2233	of at least $5 million more than the amount that would be required
2234	2234	by Section 9(a) of this article, a liability gain layer with the
2235	2235	same remaining amortization period as the legacy liability is
2236	2236	created and the corridor midpoint shall be decreased by the
2237	2237	amortized amount in each fiscal year covered by the liability gain
2238	2238	layer produced divided by the projected pensionable payroll.
2239	2239	(j) Notwithstanding any other provision of this article,
2240	2240	including Section 9F of this article:
2241	2241	(1) if the city fails to deliver the proceeds of
2242	2242	pension obligation bonds totaling $750 million on or before January
2243	2243	2, 2018, the board shall have 30 days from January 2, 2018, to
2244	2244	rescind, prospectively, any or all benefit changes made effective
2245	2245	under H.B. No. 43, Acts of the 85th Legislature, Regular Session,
2246	2246	2017, as of the year 2017 effective date, or to reestablish the
2247	2247	deadline for the delivery of pension obligation bond proceeds,
2248	2248	reserving the right to rescind the benefit changes authorized by
2249	2249	this subdivision if the bond proceeds are not delivered by the
2250	2250	reestablished deadline; and
2251	2251	(2) subject to Subsection (k) of this section, if the
2252	2252	board rescinds benefit changes under Subdivision (1) of this
2253	2253	subsection or pension obligation bond proceeds are not delivered on
2254	2254	or before the deadline or reestablished deadline prescribed by
2255	2255	Subdivision (1) of this subsection, the initial risk sharing
2256	2256	valuation study shall be prepared again and restated without
2257	2257	assuming the delivery of the pension obligation bond proceeds, the
2258	2258	extended time for delivery of pension obligation bond proceeds, or
2259	2259	the rescinded benefit changes, as applicable, and the resulting
2260	2260	city contribution rate will become effective in the fiscal year
2261	2261	following the completion of the restated initial risk sharing
2262	2262	valuation study.
2263	2263	(k) The restated initial risk sharing valuation study
2264	2264	required under Subsection (j)(2) of this section must be completed
2265	2265	at least 30 days before the start of the fiscal year:
2266	2266	(1) ending June 30, 2019, if the board does not
2267	2267	reestablish the deadline under Subsection (j)(1) of this section;
2268	2268	or
2269	2269	(2) immediately following the reestablished deadline,
2270	2270	if the board reestablishes the deadline under Subsection (j)(1) of
2271	2271	this section and the city fails to deliver the pension obligation
2272	2272	bond proceeds described by Subsection (j)(1) of this section by the
2273	2273	reestablished deadline.
2274	2274	Sec. 9C. ACTUARIAL EXPERIENCE STUDIES. (a) At least once
2275	2275	every four years, the pension system actuary at the direction of the
2276	2276	pension system shall conduct an actuarial experience study in
2277	2277	accordance with actuarial standards of practice. The actuarial
2278	2278	experience study required by this subsection must be completed not
2279	2279	later than September 30 of the year in which the study is required
2280	2280	to be conducted.
2281	2281	(b) Except as otherwise expressly provided by Sections
2282	2282	9A(a)(6)(A)-(I) of this article, actuarial assumptions and methods
2283	2283	used in the preparation of a risk sharing valuation study, other
2284	2284	than the initial risk sharing valuation study, shall be based on the
2285	2285	results of the most recent actuarial experience study.
2286	2286	(c) Not later than the 180th day before the date the board
2287	2287	may consider adopting any assumptions and methods for purposes of
2288	2288	Section 9A of this article, the pension system shall provide the
2289	2289	city actuary with a substantially final draft of the pension
2290	2290	system's actuarial experience study, including:
2291	2291	(1) all assumptions and methods recommended by the
2292	2292	pension system's actuary; and
2293	2293	(2) summaries of the reconciled actuarial data used in
2294	2294	creation of the actuarial experience study.
2295	2295	(d) Not later than the 60th day after the date the city
2296	2296	receives the final draft of the pension system's actuarial
2297	2297	experience study under Subsection (c) of this section, the city
2298	2298	actuary and pension system actuary shall confer and cooperate on
2299	2299	reconciling and producing a final actuarial experience study.
2300	2300	During the period prescribed by this subsection, the pension system
2301	2301	actuary may modify the recommended assumptions in the draft
2302	2302	actuarial experience study to reflect any changes to assumptions
2303	2303	and methods to which the pension system actuary and the city actuary
2304	2304	agree.
2305	2305	(e) At the city actuary's written request, the pension
2306	2306	system shall provide additional actuarial data used by the pension
2307	2307	system actuary to prepare the draft actuarial experience study,
2308	2308	provided that confidential data may only be provided subject to a
2309	2309	confidentiality agreement in which the city actuary agrees to
2310	2310	comply with the confidentiality provisions of Section 29 of this
2311	2311	article.
2312	2312	(f) The city actuary at the direction of the city shall
2313	2313	provide in writing to the pension system actuary and the pension
2314	2314	system:
2315	2315	(1) any assumptions and methods recommended by the
2316	2316	city actuary that differ from the assumptions and methods
2317	2317	recommended by the pension system actuary; and
2318	2318	(2) the city actuary's rationale for each method or
2319	2319	assumption the actuary recommends and determines to be consistent
2320	2320	with standards adopted by the Actuarial Standards Board.
2321	2321	(g) Not later than the 30th day after the date the pension
2322	2322	system actuary receives the city actuary's written recommended
2323	2323	assumptions and methods and rationale under Subsection (f) of this
2324	2324	section, the pension system shall provide a written response to the
2325	2325	city identifying any assumption or method recommended by the city
2326	2326	actuary that the pension system does not accept. If any assumption
2327	2327	or method is not accepted, the pension system shall recommend to the
2328	2328	city the names of three independent actuaries for purposes of this
2329	2329	section.
2330	2330	(h) An actuary may only be recommended, selected, or engaged
2331	2331	by the pension system as an independent actuary under this section
2332	2332	if the person:
2333	2333	(1) is not already engaged by the city, the pension
2334	2334	system, or any other fund or pension system authorized under
2335	2335	Article 6243e.2(1), Revised Statutes, or Chapter 88 (H.B. 1573),
2336	2336	Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h,
2337	2337	Vernon's Texas Civil Statutes), to provide actuarial services to
2338	2338	the city, the pension system, or another fund or pension system
2339	2339	referenced in this subdivision;
2340	2340	(2) is a member of the American Academy of Actuaries;
2341	2341	and
2342	2342	(3) has at least five years of experience as an actuary
2343	2343	working with one or more public retirement systems with assets in
2344	2344	excess of $1 billion.
2345	2345	(i) Not later than the 20th day after the date the city
2346	2346	receives the list of three independent actuaries under Subsection
2347	2347	(g) of this section, the city shall identify and the pension system
2348	2348	shall hire one of the listed independent actuaries on terms
2349	2349	acceptable to the city and the pension system to perform a scope of
2350	2350	work acceptable to the city and the pension system. The city and
2351	2351	the pension system each shall pay 50 percent of the cost of the
2352	2352	independent actuary engaged under this subsection. The city shall
2353	2353	be provided the opportunity to participate in any communications
2354	2354	between the independent actuary and the pension system concerning
2355	2355	the engagement, engagement terms, or performance of the terms of
2356	2356	the engagement.
2357	2357	(j) The independent actuary engaged under Subsection (i) of
2358	2358	this section shall receive on request from the city or the pension
2359	2359	system:
2360	2360	(1) the pension system's draft actuarial experience
2361	2361	study, including all assumptions and methods recommended by the
2362	2362	pension system actuary;
2363	2363	(2) summaries of the reconciled actuarial data used to
2364	2364	prepare the draft actuarial experience study;
2365	2365	(3) the city actuary's specific recommended
2366	2366	assumptions and methods together with the city actuary's written
2367	2367	rationale for each recommendation;
2368	2368	(4) the pension system actuary's written rationale for
2369	2369	its recommendations; and
2370	2370	(5) if requested by the independent actuary and
2371	2371	subject to a confidentiality agreement in which the independent
2372	2372	actuary agrees to comply with the confidentiality provisions of
2373	2373	this article, additional confidential actuarial data.
2374	2374	(k) Not later than the 30th day after the date the
2375	2375	independent actuary receives all the requested information under
2376	2376	Subsection (j) of this section, the independent actuary shall
2377	2377	advise the pension system and the city whether it agrees with either
2378	2378	the assumption or method recommended by the city actuary or the
2379	2379	corresponding method or assumption recommended by the pension
2380	2380	system actuary, together with the independent actuary's rationale
2381	2381	for making the determination. During the period prescribed by this
2382	2382	subsection, the independent actuary may discuss recommendations in
2383	2383	simultaneous consultation with the pension system actuary and the
2384	2384	city actuary.
2385	2385	(l) The pension system and the city may not seek any
2386	2386	information from any prospective independent actuary about
2387	2387	possible outcomes of the independent actuary's review.
2388	2388	(m) If an independent actuary has questions or concerns
2389	2389	regarding an engagement entered into under this section, the
2390	2390	independent actuary shall simultaneously consult with both the city
2391	2391	actuary and the pension system actuary regarding the questions or
2392	2392	concerns. This subsection does not limit the pension system's
2393	2393	authorization to take appropriate steps to complete the engagement
2394	2394	of the independent actuary on terms acceptable to both the pension
2395	2395	system and the city or to enter into a confidentiality agreement
2396	2396	with the independent actuary, if needed.
2397	2397	(n) If the board does not adopt an assumption or method
2398	2398	recommended by the city actuary or pension system actuary,
2399	2399	including an assumption or method to which the independent actuary
2400	2400	agrees, the city actuary is authorized to use that recommended
2401	2401	assumption or method in connection with preparation of a subsequent
2402	2402	risk sharing valuation study under Section 9A of this article until
2403	2403	the next actuarial experience study is conducted.
2404	2404	Sec. 9D. CITY CONTRIBUTION RATE WHEN ESTIMATED CITY
2405	2405	CONTRIBUTION RATE LOWER THAN CORRIDOR MIDPOINT; AUTHORIZATION FOR
2406	2406	CERTAIN ADJUSTMENTS. (a) This section governs the determination
2407	2407	of the city contribution rate applicable in a fiscal year if the
2408	2408	estimated city contribution rate is lower than the corridor
2409	2409	midpoint.
2410	2410	(b) If the funded ratio is:
2411	2411	(1) less than 90 percent, the city contribution rate
2412	2412	for the fiscal year equals the corridor midpoint; or
2413	2413	(2) equal to or greater than 90 percent and the city
2414	2414	contribution rate is:
2415	2415	(A) equal to or greater than the minimum
2416	2416	contribution rate, the estimated city contribution rate is the city
2417	2417	contribution rate for the fiscal year; or
2418	2418	(B) except as provided by Subsection (e) of this
2419	2419	section, less than the minimum contribution rate for the
2420	2420	corresponding fiscal year, the city contribution rate for the
2421	2421	fiscal year equals the minimum contribution rate achieved in
2422	2422	accordance with Subsection (c) of this section.
2423	2423	(c) For purposes of Subsection (b)(2)(B) of this section,
2424	2424	the following adjustments shall be applied sequentially to the
2425	2425	extent required to increase the estimated city contribution rate to
2426	2426	equal the minimum contribution rate:
2427	2427	(1) first, adjust the actuarial value of assets equal
2428	2428	to the current market value of assets, if making the adjustment
2429	2429	causes the city contribution rate to increase;
2430	2430	(2) second, under a written agreement between the city
2431	2431	and the board entered into under Section 27 of this article not
2432	2432	later than April 30 before the first day of the next fiscal year,
2433	2433	reduce the assumed rate of return;
2434	2434	(3) third, under a written agreement between the city
2435	2435	and the board entered into under Section 27 of this article no later
2436	2436	than April 30 before the first day of the next fiscal year,
2437	2437	prospectively restore all or part of any benefit reductions or
2438	2438	reduce increased employee contributions, in each case made after
2439	2439	the year 2017 effective date; and
2440	2440	(4) fourth, accelerate the payoff year of the existing
2441	2441	liability loss layers, including the legacy liability, by
2442	2442	accelerating the oldest liability loss layers first, to an
2443	2443	amortization period that is not less than 10 years from the first
2444	2444	day of the fiscal year beginning 12 months after the date of the
2445	2445	risk sharing valuation study in which the liability loss layer is
2446	2446	first recognized.
2447	2447	(d) If the funded ratio is:
2448	2448	(1) equal to or greater than 100 percent:
2449	2449	(A) all existing liability layers, including the
2450	2450	legacy liability, are considered fully amortized and paid;
2451	2451	(B) the applicable fiscal year is the payoff year
2452	2452	for the legacy liability; and
2453	2453	(C) for each fiscal year subsequent to the fiscal
2454	2454	year described by Paragraph (B) of this subdivision, the corridor
2455	2455	midpoint shall be determined as provided by Section 9B(g) of this
2456	2456	article; and
2457	2457	(2) greater than 100 percent in a written agreement
2458	2458	between the city and the pension system under Section 27 of this
2459	2459	article, the pension system may reduce member contributions or
2460	2460	increase pension benefits if, as a result of the action:
2461	2461	(A) the funded ratio is not less than 90 percent;
2462	2462	and
2463	2463	(B) the city contribution rate is not more than
2464	2464	the minimum contribution rate.
2465	2465	(e) Except as provided by Subsection (f) of this section, if
2466	2466	an agreement under Subsection (d) of this section is not reached on
2467	2467	or before April 30 before the first day of the next fiscal year,
2468	2468	before the first day of the next fiscal year the board shall reduce
2469	2469	member contributions and implement or increase cost of living
2470	2470	adjustments, but only to the extent that the city contribution rate
2471	2471	is set at or below the minimum contribution rate and the funded
2472	2472	ratio is not less than 90 percent.
2473	2473	(f) If any member contribution reduction or benefit
2474	2474	increase under Subsection (e) of this section has occurred within
2475	2475	the previous three fiscal years, the board may not make additional
2476	2476	adjustments to benefits, and the city contribution rate must be set
2477	2477	to equal the minimum contribution rate.
2478	2478	Sec. 9E. CITY CONTRIBUTION RATE WHEN ESTIMATED CITY
2479	2479	CONTRIBUTION RATE EQUAL TO OR GREATER THAN CORRIDOR MIDPOINT;
2480	2480	AUTHORIZATION FOR CERTAIN ADJUSTMENTS. (a) This section governs
2481	2481	the determination of the city contribution rate in a fiscal year
2482	2482	when the estimated city contribution rate is equal to or greater
2483	2483	than the corridor midpoint.
2484	2484	(b) If the estimated city contribution rate is:
2485	2485	(1) less than or equal to the maximum contribution
2486	2486	rate for the corresponding fiscal year, the estimated city
2487	2487	contribution rate is the city contribution rate; or
2488	2488	(2) except as provided by Subsection (d) or (e) of this
2489	2489	section, greater than the maximum contribution rate for the
2490	2490	corresponding fiscal year, the city contribution rate equals the
2491	2491	corridor midpoint achieved in accordance with Subsection (c) of
2492	2492	this section.
2493	2493	(c) For purposes of Subsection (b)(2) of this section, the
2494	2494	following adjustments shall be applied sequentially to the extent
2495	2495	required to decrease the estimated city contribution rate to equal
2496	2496	the corridor midpoint:
2497	2497	(1) first, if the payoff year of the legacy liability
2498	2498	was accelerated under Section 9D(c) of this article, extend the
2499	2499	payoff year of existing liability loss layers, by extending the
2500	2500	most recent loss layers first, to a payoff year not later than 30
2501	2501	years from the first day of the fiscal year beginning 12 months
2502	2502	after the date of the risk sharing valuation study in which the
2503	2503	liability loss layer is first recognized; and
2504	2504	(2) second, adjust the actuarial value of assets to
2505	2505	the current market value of assets, if making the adjustment causes
2506	2506	the city contribution rate to decrease.
2507	2507	(d) If the city contribution rate after adjustment under
2508	2508	Subsection (c) of this section is greater than the third quarter
2509	2509	line rate:
2510	2510	(1) the city contribution rate equals the third
2511	2511	quarter line rate; and
2512	2512	(2) to the extent necessary to comply with Subdivision
2513	2513	(1) of this subsection, the city and the board shall enter into a
2514	2514	written agreement under Section 27 of this article to increase
2515	2515	member contributions and make other benefits or plan changes not
2516	2516	otherwise prohibited by applicable federal law or regulations.
2517	2517	(e) If an agreement under Subsection (d)(2) of this section
2518	2518	is not reached on or before April 30 before the first day of the next
2519	2519	fiscal year, before the start of the next fiscal year to which the
2520	2520	city contribution rate would apply, the board, to the extent
2521	2521	necessary to set the city contribution rate equal to the third
2522	2522	quarter line rate, shall:
2523	2523	(1) increase member contributions and decrease
2524	2524	cost-of-living adjustments;
2525	2525	(2) increase the normal retirement age; or
2526	2526	(3) take any combination of the actions authorized
2527	2527	under Subdivisions (1) and (2) of this subsection.
2528	2528	(f) If the city contribution rate remains greater than the
2529	2529	corridor midpoint in the third fiscal year after adjustments are
2530	2530	made in accordance with an agreement under Subsection (d)(2) of
2531	2531	this section, in that fiscal year the city contribution rate equals
2532	2532	the corridor midpoint achieved in accordance with Subsection (g) of
2533	2533	this section.
2534	2534	(g) The city contribution rate must be set at the corridor
2535	2535	midpoint under Subsection (f) of this section by:
2536	2536	(1) in the risk sharing valuation study for the third
2537	2537	fiscal year described by Subsection (f) of this section, adjusting
2538	2538	the actuarial value of assets to equal the current market value of
2539	2539	assets, if making the adjustment causes the city contribution rate
2540	2540	to decrease; and
2541	2541	(2) under a written agreement entered into between the
2542	2542	city and the board under Section 27 of this article:
2543	2543	(A) increasing member contributions; and
2544	2544	(B) making any other benefits or plan changes not
2545	2545	otherwise prohibited by applicable federal law or regulations.
2546	2546	(h) If an agreement under Subsection (g)(2) of this section
2547	2547	is not reached on or before April 30 before the first day of the next
2548	2548	fiscal year, before the start of the next fiscal year, the board, to
2549	2549	the extent necessary to set the city contribution rate equal to the
2550	2550	corridor midpoint, shall:
2551	2551	(1) increase member contributions and decrease
2552	2552	cost-of-living adjustments;
2553	2553	(2) increase the normal retirement age; or
2554	2554	(3) take any combination of the actions authorized
2555	2555	under Subdivisions (1) and (2) of this subsection.
2556	2556	Sec. 9F. UNILATERAL DECISIONS AND ACTIONS PROHIBITED. (a)
2557	2557	Notwithstanding Section 6(f) or 5B of this article, the board may
2558	2558	not change, terminate, or modify Sections 9 through 9E of this
2559	2559	article.
2560	2560	(b) No unilateral decision or action by the board is binding
2561	2561	on the city and no unilateral decision or action by the city is
2562	2562	binding on the pension system with respect to the application of
2563	2563	Sections 9 through 9E of this article unless expressly provided by a
2564	2564	provision of those sections. Nothing in this subsection is
2565	2565	intended to limit the powers or authority of the board.
2566	2566	SECTION 2.13. Article 6243g-4, Revised Statutes, is amended
2567	2567	by adding Section 10A to read as follows:
2568	2568	Sec. 10A. REPORT ON INVESTMENTS BY INDEPENDENT INVESTMENT
2569	2569	CONSULTANT. (a) At least once every three years, the board shall
2570	2570	hire an independent investment consultant, including an
2571	2571	independent investment consulting firm, to conduct a review of
2572	2572	pension system investments and submit a report to the board and the
2573	2573	city concerning that review. The independent investment
2574	2574	consultant shall review and report on at least the following:
2575	2575	(1) the pension system's compliance with its
2576	2576	investment policy statement, ethics policies, including policies
2577	2577	concerning the acceptance of gifts, and policies concerning insider
2578	2578	trading;
2579	2579	(2) the pension system's asset allocation, including a
2580	2580	review and discussion of the various risks, objectives, and
2581	2581	expected future cash flows;
2582	2582	(3) the pension system's portfolio structure,
2583	2583	including the system's need for liquidity, cash income, real
2584	2584	return, and inflation protection and the active, passive, or index
2585	2585	approaches for different portions of the portfolio;
2586	2586	(4) investment manager performance reviews and an
2587	2587	evaluation of the processes used to retain and evaluate managers;
2588	2588	(5) benchmarks used for each asset class and
2589	2589	individual manager;
2590	2590	(6) evaluation of fees and trading costs;
2591	2591	(7) evaluation of any leverage, foreign exchange, or
2592	2592	other hedging transaction; and
2593	2593	(8) an evaluation of investment-related disclosures
2594	2594	in the pension system's annual reports.
2595	2595	(b) When the board retains an independent investment
2596	2596	consultant under this section, the pension system may require the
2597	2597	consultant to agree in writing to maintain the confidentiality of:
2598	2598	(1) information provided to the consultant that is
2599	2599	reasonably necessary to conduct a review under this section; and
2600	2600	(2) any nonpublic information provided for the pension
2601	2601	system for the review.
2602	2602	(c) The costs for the investment report required by this
2603	2603	section must be paid from the fund.
2604	2604	SECTION 2.14. Sections 11(a) and (c), Article 6243g-4,
2605	2605	Revised Statutes, are amended to read as follows:
2606	2606	(a) A member who returns to service after an interruption in
2607	2607	service is eligible for [entitled to] credit for the previous
2608	2608	service to the extent provided by Section 17 or 19 of this article.
2609	2609	(c) A member may not have any service credited for unused
2610	2610	sick leave, vacation pay, [or] accumulated overtime, or equivalent
2611	2611	types of pay until the date the member retires, at which time the
2612	2612	member may apply some or all of the service to satisfy the
2613	2613	requirements for retirement, although the member otherwise could
2614	2614	not meet the service requirement without the credit.
2615	2615	SECTION 2.15. Section 12, Article 6243g-4, Revised
2616	2616	Statutes, is amended by amending Subsections (a), (b), (c), (d),
2617	2617	(e), (h), and (i) and adding Subsections (b-1), (b-2), (b-3),
2618	2618	(c-1), (c-2), (j), (k), (l), and (m) to read as follows:
2619	2619	(a) A member who separates from service after attaining
2620	2620	normal retirement age [earning 20 or more years of service] is
2621	2621	eligible to receive a monthly service pension, beginning in the
2622	2622	month of separation from service. A member who separates from
2623	2623	service as a classified police officer with the city after November
2624	2624	23, 1998, after earning 10 or more but less than 20 years of service
2625	2625	in [any of] the [city's] pension system [systems] and who complies
2626	2626	with all applicable requirements of Section 19 of this article is
2627	2627	eligible to receive a monthly service pension, beginning in the
2628	2628	month the individual attains normal retirement [60 years of] age.
2629	2629	An individual may not receive a pension under this article while
2630	2630	still an active member[, except as provided by Subsection (f) of
2631	2631	this section]. All service pensions end with the month in which the
2632	2632	retired member dies. The city shall supply all personnel,
2633	2633	financial, and payroll records necessary to establish the member's
2634	2634	eligibility for a benefit, the member's credited service, and the
2635	2635	amount of the benefit. The city must provide those records in the
2636	2636	format specified by the pension system.
2637	2637	(b) Except as otherwise provided by this section, including
2638	2638	Subsection (b-3) of this section, the monthly service pension of a
2639	2639	member who:
2640	2640	(1) is hired before October 9, 2004, including a
2641	2641	member hired before October 9, 2004, who involuntarily separated
2642	2642	from service but has been retroactively reinstated under
2643	2643	arbitration, civil service, or a court ruling, [that becomes due
2644	2644	after May 1, 2001,] is equal to the sum of:
2645	2645	(A) 2.75 percent of the member's final average
2646	2646	[total direct] pay multiplied by the member's years or partial
2647	2647	years of service [or, if the member retired before November 24,
2648	2648	1998, 2.75 percent of the member's base salary,] for [each of] the
2649	2649	member's first 20 years of service; and
2650	2650	(B) [, plus an additional] two percent of the
2651	2651	member's final average [total direct] pay multiplied by the
2652	2652	member's years or partial years of service for the member's years of
2653	2653	service in excess of the 20 years of service described by Paragraph
2654	2654	(A) of this subdivision; or
2655	2655	(2) except as provided by Subdivision (1) of this
2656	2656	subsection and subject to Subsection (b-3) of this section, is
2657	2657	hired or rehired as an active member on or after October 9, 2004, is
2658	2658	equal to the sum of:
2659	2659	(A) 2.25 percent of the member's final average
2660	2660	pay multiplied by the member's years or partial years of service for
2661	2661	the member's first 20 years of service; and
2662	2662	(B) two percent of the member's final average pay
2663	2663	multiplied by the member's years or partial years of service in
2664	2664	excess of 20 years of service described by Paragraph (A) of this
2665	2665	subdivision [for each of the member's subsequent years of service,
2666	2666	computed to the nearest one-twelfth of a year].
2667	2667	(b-1) A member who [separates from service after November
2668	2668	23, 1998, including a member who was a DROP participant, and] begins
2669	2669	to receive a monthly service pension under Subsection (b)(1) of
2670	2670	this section shall also receive a one-time lump-sum payment of
2671	2671	$5,000 at the same time the first monthly pension payment is made.
2672	2672	The lump-sum payment under this subsection is not available to a
2673	2673	member who has previously received a $5,000 payment under this
2674	2674	section or Section 16 of this article. A member described by
2675	2675	Subsection (b)(2) of this section may not receive the lump-sum
2676	2676	payment described by this subsection.
2677	2677	(b-2) For purposes of Subsections (b) and (b-1) of this
2678	2678	section, partial years shall be computed to the nearest one-twelfth
2679	2679	of a year.
2680	2680	(b-3) A member's monthly service pension determined under
2681	2681	Subsection (b)(2) of this section may not exceed 80 percent of the
2682	2682	member's final average pay.
2683	2683	(c) Subject to Subsection (c-2) of this section, beginning
2684	2684	with the fiscal year ending June 30, 2021, the [The] pension payable
2685	2685	to a [each] retired member or survivor who is 55 years of age or
2686	2686	older as of April 1 of the applicable fiscal year, a member or
2687	2687	survivor who received benefits or survivor benefits before June 8,
2688	2688	1995, or a survivor of an active member who dies from a cause
2689	2689	connected with the performance of the member's duties [of the
2690	2690	pension system] shall be adjusted annually, effective April 1 of
2691	2691	each year, upward at a rate equal to the most recent five fiscal
2692	2692	years' smoothed return, as determined by the pension system
2693	2693	actuary, minus 500 basis points [two-thirds of any percentage
2694	2694	increase in the Consumer Price Index for All Urban Consumers for the
2695	2695	preceding year. The amount of the annual adjustment may not be less
2696	2696	than three percent or more than eight percent of the pension being
2697	2697	paid immediately before the adjustment, notwithstanding a greater
2698	2698	or lesser increase in the consumer price index].
2699	2699	(c-1) Subject to Subsection (c-2) of this section, for the
2700	2700	pension system's fiscal years ending June 30, 2018, June 30, 2019,
2701	2701	and June 30, 2020, the pension payable to each retired member or
2702	2702	survivor who is 70 years of age or older shall be adjusted annually,
2703	2703	effective April 1 of each year, upward at a rate equal to the most
2704	2704	recent five fiscal years' smoothed return, as determined by the
2705	2705	pension system actuary, minus 500 basis points.
2706	2706	(c-2) The percentage rate prescribed by Subsections (c) and
2707	2707	(c-1) of this section may not be less than zero percent or more than
2708	2708	four percent, irrespective of the return rate of the pension
2709	2709	system's investment portfolio.
2710	2710	(d) A retired member who receives a service pension under
2711	2711	this article is eligible [entitled] to receive an additional amount
2712	2712	each month equal to $150, beginning on the later of the date the
2713	2713	retired member's pension begins or the date the first monthly
2714	2714	payment becomes due after June 18, 2001, and continuing until the
2715	2715	end of the month in which the retired member dies. This amount is
2716	2716	intended to defray the retired member's group medical insurance
2717	2717	costs and will be paid directly by the fund to the retired member
2718	2718	for the retired member's lifetime.
2719	2719	(e) At the end of each calendar year beginning after 1998,
2720	2720	and subject to the conditions provided by this subsection, the
2721	2721	pension system shall make a 13th benefit payment to each member or
2722	2722	survivor who is hired or rehired before October 9, 2004, including a
2723	2723	member hired or rehired before October 9, 2004, who was reinstated
2724	2724	under arbitration, civil service, or a court ruling after that
2725	2725	date, and [person] who is receiving a service pension. The amount
2726	2726	of the 13th payment shall be the same as the last monthly payment
2727	2727	received by the retiree or survivor before issuance of the payment,
2728	2728	except the payment received by any person who has been in pay status
2729	2729	for less than 12 months shall be for a prorated amount determined by
2730	2730	dividing the amount of the last payment received by 12 and
2731	2731	multiplying this amount by the number of months the person has been
2732	2732	in pay status. The 13th payment may be made only for those calendar
2733	2733	years in which the pension system's funded ratio is 120 percent or
2734	2734	greater[:
2735	2735	[(1) the assets held by the fund will equal or exceed
2736	2736	its liabilities after the 13th payment is made;
2737	2737	[(2) the rate of return on the fund's assets exceeded
2738	2738	9.25 percent for the last fiscal year ending before the payment; and
2739	2739	[(3) the payment will not cause an increase in the
2740	2740	contribution the city would have been required to make if the 13th
2741	2741	payment had not been made].
2742	2742	(h) Final average [Average total direct] pay for a member
2743	2743	who retires after participating in a phase-down program in which
2744	2744	the member receives a periodic payment that is generated from the
2745	2745	member's accumulated sick time, vacation time, and overtime
2746	2746	balances shall be based on the final average pay the member received
2747	2747	on the earlier of the date:
2748	2748	(1) immediately preceding the date the member began
2749	2749	phase-down participation; or
2750	2750	(2) if the member began DROP participation on or after
2751	2751	the year 2017 effective date, the member began participation in
2752	2752	DROP [highest pay period, excluding any pay for overtime work, in
2753	2753	the periods during which the member worked full-time before
2754	2754	participating in the phase-down program].
2755	2755	(i) The computation of final average [total direct] pay
2756	2756	shall be made in accordance with procedures and policies adopted by
2757	2757	the board.
2758	2758	(j) A member participating in the phase-down program,
2759	2759	defined in the 2011 labor agreement between the city and the police
2760	2760	officers' union, who has separated from service is eligible to
2761	2761	receive a monthly service pension as if the member had attained
2762	2762	normal retirement age. Notwithstanding any other law, a member
2763	2763	participating in option A or B of the phase-down program whose
2764	2764	effective date of entry into DROP is on or before the year 2017
2765	2765	effective date is, on exiting the phase-down program and separating
2766	2766	from service, eligible to receive a monthly service pension equal
2767	2767	to the amount credited to the member's DROP account under Section
2768	2768	14(d) of this article immediately before the member separated from
2769	2769	service.
2770	2770	(k) If a member is hired on or after October 9, 2004, the
2771	2771	member may elect to receive a partial lump-sum optional payment
2772	2772	equal to not more than 20 percent of the actuarial value of the
2773	2773	member's accrued pension at retirement. The lump-sum payment under
2774	2774	this subsection shall be actuarially neutral. Notwithstanding any
2775	2775	other law, if a member elects to receive a lump-sum payment under
2776	2776	this subsection, the value of the member's monthly service pension
2777	2777	shall be reduced actuarially to reflect the lump-sum payment.
2778	2778	(l) A member who is receiving workers' compensation
2779	2779	payments or who has received workers' compensation and subsequently
2780	2780	retires or begins participation in DROP will have the member's
2781	2781	pension or DROP benefit, as applicable, calculated on the pay that
2782	2782	the member would have received had the member not been receiving
2783	2783	workers' compensation benefits.
2784	2784	(m) For a member who is promoted or appointed to a position
2785	2785	above the rank of captain on or after the year 2017 effective date,
2786	2786	the member's monthly service pension and member contributions shall
2787	2787	be based on, as determined by the board:
2788	2788	(1) the member's pay for the position the member held
2789	2789	immediately before being promoted or appointed; or
2790	2790	(2) the pay of the highest civil rank for classified
2791	2791	police officers for those members who have no prior service with the
2792	2792	city, which pay must be calculated based on the three-year average
2793	2793	prior to retirement.
2794	2794	SECTION 2.16. Section 14, Article 6243g-4, Revised
2795	2795	Statutes, is amended by amending Subsections (b), (c), (d), (e),
2796	2796	(f-1), (h), (i), (k), and (l) and adding Subsections (c-1) and (c-2)
2797	2797	to read as follows:
2798	2798	(b) An active member who was hired before October 9, 2004,
2799	2799	including a member hired before October 9, 2004, who has been
2800	2800	reinstated under arbitration, civil service, or a court ruling
2801	2801	after that date, and has at least 20 years of service with the
2802	2802	police department may file with the pension system an election to
2803	2803	participate in DROP and receive a DROP benefit instead of the
2804	2804	standard form of pension provided by this article as of the date the
2805	2805	active member attained 20 years of service. The election may be
2806	2806	made, under procedures established by the board, by an eligible
2807	2807	active member who has attained the required years of service. A
2808	2808	DROP election that is made and accepted by the board may not be
2809	2809	revoked [before the member's separation from service].
2810	2810	(c) The monthly service pension or [and] death benefits of
2811	2811	an active member who is a DROP participant that were accrued under
2812	2812	this article as it existed immediately before the year 2017
2813	2813	effective date remain accrued.
2814	2814	(c-1) The monthly service pension or death benefits of an
2815	2815	active member who becomes a DROP participant on or after the year
2816	2816	2017 effective date will be determined as if the [active] member had
2817	2817	separated from service and begun receiving a pension on the
2818	2818	effective date of the member's DROP election and the[. The active]
2819	2819	member does not retire but does not accrue additional service
2820	2820	credit beginning on the effective date of the member's entry into
2821	2821	DROP.
2822	2822	(c-2) For a member who exits DROP on or after the year 2017
2823	2823	effective date:
2824	2824	(1) any [the election, and] increases in the member's
2825	2825	pay that occur on or after the effective date of the member's entry
2826	2826	into DROP [that date] may not be used in computing the [active]
2827	2827	member's monthly service pension; and
2828	2828	(2) any[, except as provided by Subsection (l) of this
2829	2829	section, but] cost-of-living adjustments that occur on or after the
2830	2830	effective date of the member's entry into DROP [that date] and that
2831	2831	otherwise would be applicable to the pension will not be made during
2832	2832	the time the member participates in DROP.
2833	2833	(d) The member's DROP benefit is determined as provided by
2834	2834	this subsection and Subsection (e) of this section. Each month an
2835	2835	amount equal to the monthly service pension the active member would
2836	2836	have been eligible [entitled] to receive if the active member had
2837	2837	separated from service on the effective date of entry into DROP,
2838	2838	less any amount that is intended to help defray the active member's
2839	2839	group medical insurance costs as described by Section 12(d) of this
2840	2840	article, shall be credited to a notional DROP account for the active
2841	2841	member[, and each month an amount equal to the monthly
2842	2842	contributions the active member makes to the fund on and after the
2843	2843	effective date of entry into DROP also shall be credited to the same
2844	2844	notional DROP account]. In any year in which a 13th payment is made
2845	2845	to retired members under Section 12(e) of this article, an amount
2846	2846	equal to the amount of the 13th payment that would have been made to
2847	2847	the DROP participant if the DROP participant had retired on the date
2848	2848	of DROP entry will be credited to the DROP account.
2849	2849	(e) As of the end of each month an amount is credited to each
2850	2850	active member's notional DROP account at the rate of one-twelfth of
2851	2851	a hypothetical earnings rate on amounts in the account. The
2852	2852	hypothetical earnings rate is determined for each calendar year
2853	2853	based on the compounded average of the aggregate annual rate of
2854	2854	return on investments of the pension system for the five
2855	2855	consecutive fiscal years ending June 30 preceding the calendar year
2856	2856	to which the earnings rate applies, multiplied by 65 percent. The
2857	2857	hypothetical earnings rate may not be less than 2.5 percent [zero].
2858	2858	(f-1) If a DROP participant separates from service due to
2859	2859	death, [and] the participant's surviving spouse is eligible [person
2860	2860	entitled] to receive benefits under Sections 16 and 16A of this
2861	2861	article and the surviving spouse may elect to receive [does not
2862	2862	revoke the DROP election,] the DROP benefit [may be received] in the
2863	2863	form of an additional annuity over the life expectancy of the
2864	2864	surviving spouse.
2865	2865	(h) Instead of beginning to receive a service pension on
2866	2866	separation from service in accordance with Section 12 of this
2867	2867	article, a retired member who is a DROP participant may elect to
2868	2868	have part or all of the amount that would otherwise be paid as a
2869	2869	monthly service pension, less any amount required to pay the
2870	2870	retired member's share of group medical insurance costs, credited
2871	2871	to a DROP account, in which case the additional amounts will become
2872	2872	eligible to be credited with hypothetical earnings in the same
2873	2873	manner as the amounts described by Subsection (g) of this section.
2874	2874	On and after the year 2017 effective date, additional amounts may
2875	2875	not be credited to a DROP account under this subsection. Any
2876	2876	amounts credited under this subsection before the year 2017
2877	2877	effective date shall remain accrued in a retired member's DROP
2878	2878	account.
2879	2879	(i) A retired member who has not attained age 70-1/2,
2880	2880	whether or not a DROP participant before retirement, may elect to
2881	2881	have part or all of an amount equal to the monthly service pension
2882	2882	the retired member would otherwise be entitled to receive, less any
2883	2883	amount required to pay the retired member's share of group medical
2884	2884	insurance costs, credited to a DROP account, in which case the
2885	2885	amounts will become eligible to be credited with hypothetical
2886	2886	earnings in the same manner as the amounts described by Subsection
2887	2887	(g) of this section. On and after the year 2017 effective date,
2888	2888	additional amounts may not be credited to a DROP account under this
2889	2889	subsection. Any amounts credited under this subsection before the
2890	2890	year 2017 effective date shall remain accrued in a retired member's
2891	2891	DROP account [A retired member who has elected to have monthly
2892	2892	service pension benefits credited to a DROP account under this
2893	2893	subsection or Subsection (h) of this section may direct that the
2894	2894	credits stop and the monthly service pension resume at any time.
2895	2895	However, a retired member who stops the credits at any time after
2896	2896	September 1, 1999, may not later resume the credits].
2897	2897	(k) If a retired member who is [or was] a DROP participant is
2898	2898	rehired as an employee of the police department, any pension or DROP
2899	2899	distribution that was being paid shall be suspended and the monthly
2900	2900	amount described by Subsection (d) of this section will again begin
2901	2901	to be credited to the DROP account while the member continues to be
2902	2902	an employee. If the member's DROP account has been completely
2903	2903	distributed, a new notional account may not [will] be created and
2904	2904	the monthly amount described by Subsection (d) of this section may
2905	2905	not be credited to a DROP account on behalf of the member [to
2906	2906	receive the member's monthly credits. If a retired member who was
2907	2907	never a DROP participant is rehired as an employee of the police
2908	2908	department, that member shall be eligible to elect participation in
2909	2909	DROP on the same basis as any other member].
2910	2910	(l) The maximum number of years an active member may
2911	2911	participate in DROP is 20 years. Except as provided by this
2912	2912	subsection, after the DROP participant has reached the maximum
2913	2913	number of years of DROP participation prescribed by this
2914	2914	subsection, including DROP participants with 20 years or more in
2915	2915	DROP on or before the year 2017 effective date, the DROP participant
2916	2916	may not receive the monthly service pension that was credited to a
2917	2917	notional DROP account but may receive the hypothetical earnings
2918	2918	rate stated in Subsection (e) of this section. Notwithstanding the
2919	2919	preceding, a member's DROP account balance before the year 2017
2920	2920	effective date may not be reduced under the preceding provisions of
2921	2921	this subsection [The DROP account of each DROP participant who was
2922	2922	an active member on May 1, 2001, shall be recomputed and adjusted,
2923	2923	effective on that date, to reflect the amount that would have been
2924	2924	credited to the account if the member's pension had been computed
2925	2925	based on 2.75 percent of the member's average total direct pay, or
2926	2926	base pay if applicable, for each of the member's first 20 years of
2927	2927	service. The DROP account adjustment shall also include the
2928	2928	assumed earnings that would have been credited to the account if the
2929	2929	2.75 percent multiplier for the first 20 years of service had been
2930	2930	in effect from the time the member became a DROP participant].
2931	2931	SECTION 2.17. Section 15, Article 6243g-4, Revised
2932	2932	Statutes, is amended by amending Subsections (a), (b), (c), (d),
2933	2933	(e), and (i) and adding Subsections (a-1), (c-1), (l), (m), and (n)
2934	2934	to read as follows:
2935	2935	(a) An active member who becomes totally and permanently
2936	2936	incapacitated for the performance of the member's duties as a
2937	2937	result of a bodily injury received in, or illness caused by, the
2938	2938	performance of those duties shall, on presentation to the board of
2939	2939	proof of total and permanent incapacity, be retired and shall
2940	2940	receive an immediate duty-connected disability pension equal to:
2941	2941	(1) for members hired or rehired before October 9,
2942	2942	2004, the greater of 55 percent of the member's final average [total
2943	2943	direct] pay at the time of retirement or the member's accrued
2944	2944	service pension; or
2945	2945	(2) for members hired or rehired on or after October 9,
2946	2946	2004, the greater of 45 percent of the member's:
2947	2947	(A) final average pay at the time of retirement;
2948	2948	or
2949	2949	(B) accrued service pension.
2950	2950	(a-1) If the injury or illness described by Subsection (a)
2951	2951	of this section involves a traumatic event that directly causes an
2952	2952	immediate cardiovascular condition resulting in a total
2953	2953	disability, the member is eligible for a duty-connected disability
2954	2954	pension. A disability pension granted by the board shall be paid to
2955	2955	the member for the remainder of the member's life, [or for] as long
2956	2956	as the incapacity remains, subject to Subsection (e) of this
2957	2957	section. If a member is a DROP participant at the commencement of
2958	2958	the member's disability, the member shall have the option of
2959	2959	receiving the DROP balance in any manner that is approved by the
2960	2960	board and that satisfies the requirements of Section 401(a)(9) of
2961	2961	the code and Treasury Regulation Section 1.104-1(b) (26 C.F.R.
2962	2962	Section 1.104-1) and is otherwise available to any other member
2963	2963	under this article.
2964	2964	(b) A member [with 10 years or more of credited service] who
2965	2965	becomes totally and permanently incapacitated for the performance
2966	2966	of the member's duties and is not eligible for either an immediate
2967	2967	service pension or a duty-connected disability pension is eligible
2968	2968	for an immediate monthly pension computed in the same manner as a
2969	2969	service retirement pension but based on final average [total
2970	2970	direct] pay and service accrued to the date of the disability. The
2971	2971	pension under this subsection may not be less than:
2972	2972	(1) for members hired before October 9, 2004,
2973	2973	including a member who involuntarily separated from service but has
2974	2974	been retroactively reinstated under arbitration, civil service, or
2975	2975	a court ruling, 27.5 percent of the member's final average [total
2976	2976	direct] pay; or
2977	2977	(2) except as provided by Subdivision (1) of this
2978	2978	subsection, for members hired or rehired on or after October 9,
2979	2979	2004, 22.5 percent of the member's final average pay.
2980	2980	(c) A member hired or rehired before October 9, 2004, who
2981	2981	becomes eligible [entitled] to receive a disability pension after
2982	2982	November 23, 1998, is eligible [entitled] to receive:
2983	2983	(1) subject to Subsection (c-1) of this section, a
2984	2984	one-time lump-sum payment of $5,000 at the same time the first
2985	2985	monthly disability pension payment is made, but only if the member
2986	2986	has not previously received a $5,000 payment under this section or
2987	2987	Section 12 of this article; and
2988	2988	(2) [. The retired member shall also receive] an
2989	2989	additional amount each month equal to $150, beginning on the later
2990	2990	of the date the pension begins or the date the first monthly payment
2991	2991	becomes due after June 18, 2001, and continuing as long as the
2992	2992	disability pension continues, to help defray the cost of group
2993	2993	medical insurance.
2994	2994	(c-1) For any year in which a 13th payment is made to retired
2995	2995	members under Section 12(e) of this article, a 13th payment,
2996	2996	computed in the same manner and subject to the same conditions,
2997	2997	shall also be paid to members who have retired under this section.
2998	2998	(d) A person may not receive a disability pension unless the
2999	2999	person files with the board an application for a disability pension
3000	3000	not later than 180 days after the date of separation from service,
3001	3001	at which time the board shall have the person examined, not later
3002	3002	than the 90th day after the date the member files the application,
3003	3003	by a physician or physicians chosen and compensated by the board.
3004	3004	The physician shall make a report and recommendations to the board
3005	3005	regarding the extent of any disability and whether any disability
3006	3006	that is diagnosed is a duty-connected disability. Except as
3007	3007	provided by Subsection (j) of this section, a person may not receive
3008	3008	a disability pension for an injury received or illness incurred
3009	3009	after separation from service. In accordance with Section 6(g) of
3010	3010	this article, the board may, through its presiding officer, issue
3011	3011	process, administer oaths, examine witnesses, and compel witnesses
3012	3012	to testify as to any matter affecting retirement, disability, or
3013	3013	death benefits under any pension plan within the pension system.
3014	3014	(e) A retired member who has been retired for disability is
3015	3015	subject at all times to reexamination by a physician chosen and
3016	3016	compensated by the board and shall submit to further examination as
3017	3017	the board may require. If a retired member refuses to submit to an
3018	3018	examination, the board shall [may] order the payments stopped. If a
3019	3019	retired member who has been receiving a disability pension under
3020	3020	this section recovers so that in the opinion of the board the
3021	3021	retired member is able to perform the usual and customary duties
3022	3022	formerly performed for the police department, and the retired
3023	3023	member is reinstated or offered reinstatement to the position, or
3024	3024	hired by another law enforcement agency to a comparable position
3025	3025	[reasonably comparable in rank and responsibility to the position,
3026	3026	held at the time of separation from service], the board shall order
3027	3027	the member's disability pension stopped. A member may apply for a
3028	3028	normal pension benefit, if eligible, if the member's disability
3029	3029	benefit payments are stopped by the board under this subsection.
3030	3030	(i) Effective for payments that become due after April 30,
3031	3031	2000, and instead of the disability benefit provided by Subsection
3032	3032	(a) or[,] (b)[, or (h)] of this section, a member who suffers a
3033	3033	catastrophic injury shall receive a monthly benefit equal to 100
3034	3034	percent of the member's final average [total direct] pay determined
3035	3035	as of the date of retirement, and the member's DROP balance, if any.
3036	3036	(l) A disability pension may not be paid to a member for any
3037	3037	disability if:
3038	3038	(1) the disability resulted from an intentionally
3039	3039	self-inflicted injury or a chronic illness resulting from:
3040	3040	(A) an addiction by the member through a
3041	3041	protracted course of non-coerced ingestion of alcohol, narcotics,
3042	3042	or prescription drugs not prescribed to the member; or
3043	3043	(B) other substance abuse; or
3044	3044	(2) except as provided by Subsection (m) of this
3045	3045	section, the disability was a result of the member's commission of a
3046	3046	felony.
3047	3047	(m) The board may waive Subsection (l)(2) of this section if
3048	3048	the board determines that facts exist that mitigate denying the
3049	3049	member's application for a disability pension.
3050	3050	(n) A person who fraudulently applies for or receives a
3051	3051	disability pension may be subject to criminal and civil
3052	3052	prosecution.
3053	3053	SECTION 2.18. Section 16, Article 6243g-4, Revised
3054	3054	Statutes, is amended to read as follows:
3055	3055	Sec. 16. RIGHTS OF SURVIVORS. (a) For purposes of this
3056	3056	article, a marriage is considered to exist only if the couple is
3057	3057	lawfully married under the laws of a state, the District of
3058	3058	Columbia, a United States territory, or a foreign jurisdiction and
3059	3059	the marriage would be recognized as a marriage under the laws of at
3060	3060	least one state, possession, or territory of the United States,
3061	3061	regardless of domicile [marriage is recorded in the records of the
3062	3062	recorder's office in the county in which the marriage ceremony was
3063	3063	performed]. In the case of a common-law marriage, a marriage
3064	3064	declaration must be signed by the member and the member's
3065	3065	common-law spouse before a notary public or similar official and
3066	3066	recorded in the records of the applicable jurisdiction [county
3067	3067	clerk's office in the county] in which the couple resides at the
3068	3068	commencement of the marriage. In addition, a marriage that is
3069	3069	evidenced by a declaration of common-law marriage signed before a
3070	3070	notary public or similar official after December 31, 1999, may not
3071	3071	be treated as effective earlier than the date on which it was signed
3072	3072	before the notary public or similar official.
3073	3073	(b) If a retired member dies after becoming eligible for
3074	3074	[entitled to] a service or disability pension, the board shall pay
3075	3075	an immediate monthly benefit as follows:
3076	3076	(1) to the surviving spouse for life, if there is a
3077	3077	surviving spouse, a sum equal to the pension that was being received
3078	3078	by the retired member at the time of death;
3079	3079	(2) to the guardian of any dependent child under 18
3080	3080	years of age or a child with a disability as long as the dependent
3081	3081	child complies with the definition of dependent child under Section
3082	3082	2(7) of this article [children], on behalf of the dependent child
3083	3083	[children], or directly to a dependent child described by Section
3084	3084	2(7)(B) of this article, and if there is no spouse eligible for
3085	3085	[entitled to] an allowance, the sum a surviving spouse would have
3086	3086	received, to be divided equally among all [the] dependent children
3087	3087	if there is more than one dependent child; or
3088	3088	(3) to any dependent parents for life if no spouse or
3089	3089	dependent child is eligible for [entitled to] an allowance, the sum
3090	3090	the spouse would have received, to be divided equally between the
3091	3091	two parents if there are two dependent parents.
3092	3092	(c) If an active [a] member of the pension system who has not
3093	3093	completed 20 [10] years of service in the police department is
3094	3094	killed or dies from any cause growing out of or in consequence of
3095	3095	any act clearly not in the actual performance of the member's
3096	3096	official duty, the member's surviving spouse, dependent child or
3097	3097	children, or dependent parent or parents are eligible [entitled] to
3098	3098	receive an immediate benefit. The benefit is computed in the same
3099	3099	manner as a service retirement pension but is based on the deceased
3100	3100	member's service and final average [total direct] pay at the time of
3101	3101	death. The monthly benefit may not be less than:
3102	3102	(1) 27.5 percent of the member's final average [total
3103	3103	direct] pay for members hired before October 9, 2004, including a
3104	3104	member who involuntarily separated from service but has been
3105	3105	retroactively reinstated under arbitration, civil service, or a
3106	3106	court ruling; or
3107	3107	(2) 22.5 percent of the member's final average pay for
3108	3108	members hired or rehired on or after October 9, 2004.
3109	3109	(e) If any active member is killed or dies from any cause
3110	3110	growing out of or in consequence of the performance of the member's
3111	3111	duty, the member's surviving spouse, dependent child or children,
3112	3112	or dependent parent or parents are eligible [entitled] to receive
3113	3113	immediate benefits computed in accordance with Subsection (b) of
3114	3114	this section, except that the benefit [payable to the spouse, or to
3115	3115	the guardian of the dependent child or children if there is no
3116	3116	surviving spouse, or the dependent parent or parents if there is no
3117	3117	surviving spouse or dependent child,] is equal to 100 percent of the
3118	3118	member's final average [total direct] pay, computed as of the date
3119	3119	of death.
3120	3120	(f) A surviving spouse who receives a survivor's benefit
3121	3121	under this article is eligible [entitled] to receive an additional
3122	3122	amount each month equal to $150, beginning with the later of the
3123	3123	date the first payment of the survivor's benefit is due or the date
3124	3124	the first monthly payment becomes due after June 18, 2001, and
3125	3125	continuing until the end of the month in which the surviving spouse
3126	3126	dies.
3127	3127	(g) A surviving spouse or dependent who becomes eligible to
3128	3128	receive benefits with respect to an active member who was hired or
3129	3129	rehired before October 9, 2004, who dies in active service after
3130	3130	November 23, 1998, is eligible [entitled] to receive a one-time
3131	3131	lump-sum payment of $5,000 at the time the first monthly pension
3132	3132	benefit is paid, if the member has not already received a $5,000
3133	3133	lump-sum payment under Section 12 or 15(c) of this article. If more
3134	3134	than one dependent is eligible to receive a payment under this
3135	3135	subsection, the $5,000 shall be divided equally among the eligible
3136	3136	dependents. This payment has no effect on the amount of the
3137	3137	surviving spouse's or dependents' monthly pension and may not be
3138	3138	paid more than once.
3139	3139	(h) The monthly benefits of surviving spouses or dependents
3140	3140	provided under this section, except the $150 monthly payments
3141	3141	described by Subsection (f) of this section, shall be increased
3142	3142	annually at the same time and by the same percentage as the pensions
3143	3143	of retired members are increased in accordance with Section 12(c)
3144	3144	or 12(c-1) of this article. Also, for any year in which a 13th
3145	3145	payment is made pursuant to Section 12(e) of this article, a 13th
3146	3146	payment, computed in the same manner and subject to the same
3147	3147	conditions, shall also be made to the survivor [survivors] who is
3148	3148	eligible [are entitled] to receive death benefits at that time if
3149	3149	the member would have been entitled to a 13th payment, if living.
3150	3150	(i) If a member or individual receiving a survivor's pension
3151	3151	dies before monthly payments have been made for at least five years,
3152	3152	leaving no person otherwise eligible [entitled] to receive further
3153	3153	monthly payments with respect to the member, the monthly payments
3154	3154	shall continue to be made [to the designated beneficiary of the
3155	3155	member or survivor, or to the estate of the member or survivor if a
3156	3156	beneficiary was not designated,] in the same amount as the last
3157	3157	monthly payment made to the member or[,] survivor[, or estate,]
3158	3158	until payments have been made for five years with respect to the
3159	3159	member. The payments shall be made to the spouse of the member, if
3160	3160	living, and if no spouse is living, to the natural or adopted
3161	3161	children of the member, to be divided equally among the children if
3162	3162	the member has more than one child. If the member has no spouse or
3163	3163	children who are living, the benefit may not be paid. If the member
3164	3164	dies after becoming eligible to receive benefits [vested] but
3165	3165	before payments begin, leaving no survivors eligible for benefits,
3166	3166	the amount of each monthly payment over the five-year period shall
3167	3167	be the same as the monthly payment the member would have received if
3168	3168	the member had taken disability retirement on the date of the
3169	3169	member's death and shall be paid to the member's spouse or children
3170	3170	in the manner provided by this subsection. If the member has no
3171	3171	spouse or children who are living, then the benefit may not be paid
3172	3172	[A member may designate a beneficiary in lieu of the member's estate
3173	3173	to receive the remaining payments in the event the member and all
3174	3174	survivors die before payments have been received for five years].
3175	3175	The member's estate or a beneficiary who is not a survivor or
3176	3176	dependent is not eligible [entitled] to receive the payment
3177	3177	described by Subsection (g) of this section.
3178	3178	(j) A benefit payment made in accordance with this section
3179	3179	on behalf of a minor or other person under a legal disability fully
3180	3180	discharges the pension system's obligation to that person.
3181	3181	(k) A retired member or surviving spouse may designate a
3182	3182	beneficiary on a form prescribed by the pension system to receive
3183	3183	the final monthly payment owed but not received before the member's
3184	3184	or surviving spouse's death.
3185	3185	(l) The board may at any time require a person receiving
3186	3186	death benefits as a disabled child under this article to undergo a
3187	3187	medical examination by a physician appointed or selected by the
3188	3188	board for that purpose.
3189	3189	SECTION 2.19. Section 16A, Article 6243g-4, Revised
3190	3190	Statutes, is amended to read as follows:
3191	3191	Sec. 16A. BENEFICIARY DESIGNATION FOR DROP. (a) Except for
3192	3192	the marriage requirement described by Section 16(a) of this
3193	3193	article, the [The] provisions of Section 16 of this article
3194	3194	pertaining to rights of survivors do not apply to an amount held in
3195	3195	a member's DROP account. A member who participates in DROP may
3196	3196	designate a beneficiary in the form and manner prescribed by or on
3197	3197	behalf of the board to receive the balance of the member's DROP
3198	3198	account in the event of the member's death, as permitted by Section
3199	3199	401(a)(9) of the code and the board's policies. A member who is
3200	3200	married is considered to have designated the member's spouse as the
3201	3201	member's beneficiary unless the spouse consents, in a notarized
3202	3202	writing delivered to the board, to the designation of another
3203	3203	person as beneficiary. If no designated beneficiary survives the
3204	3204	member, the board shall [may] pay the balance of the member's DROP
3205	3205	account to the member's beneficiaries in the following order:
3206	3206	(1) to the member's spouse;
3207	3207	(2) if the member does not have a spouse, to each
3208	3208	natural or adopted child of the member, or to the guardian of the
3209	3209	child if the child is a minor or has a disability, in equal shares;
3210	3210	(3) if the member does not have a spouse or any
3211	3211	children, to each surviving parent of the member in equal shares; or
3212	3212	(4) if the member has no beneficiaries described by
3213	3213	Subdivisions (1), (2), and (3) of this subsection, to the estate of
3214	3214	the member.
3215	3215	(b) If a member names a spouse as a beneficiary and is
3216	3216	subsequently divorced from that spouse, the divorce voids the
3217	3217	designation of the divorced spouse as the member's beneficiary. A
3218	3218	designation of a divorced spouse will cause the board to pay any
3219	3219	balance remaining in the member's DROP account in the order
3220	3220	prescribed by Subsection (a) of this section.
3221	3221	(c) The surviving spouse may designate a beneficiary on a
3222	3222	form prescribed by the pension system to receive the balance of the
3223	3223	DROP account owed but not received before the surviving spouse's
3224	3224	death.
3225	3225	(d) Payment of the balance of the member's DROP account made
3226	3226	in accordance with this section on behalf of a minor or other person
3227	3227	under a legal disability fully discharges the pension system's
3228	3228	obligation to that person.
3229	3229	SECTION 2.20. Section 17, Article 6243g-4, Revised
3230	3230	Statutes, is amended by amending Subsections (b), (d), and (e) and
3231	3231	adding Subsection (i) to read as follows:
3232	3232	(b) A member of the pension system who has not completed 20
3233	3233	years of service at the time of separation from service with the
3234	3234	police department is eligible for [entitled to] a refund of the
3235	3235	total of the contributions the member made to the pension system,
3236	3236	plus any amount that was contributed for the member by the city and
3237	3237	not applied in accordance with this section to provide the member
3238	3238	with 10 years of service. The refund does not include interest, and
3239	3239	neither the city nor the member is eligible for [entitled to] a
3240	3240	refund of the contributions the city made on the member's behalf,
3241	3241	except as expressly provided by this subsection. By receiving the
3242	3242	refund, the member forfeits any service earned before separation
3243	3243	from service, even if it is otherwise nonforfeitable.
3244	3244	(d) A member must apply to the board for a refund within one
3245	3245	year after the date of separation from service. Failure to apply
3246	3246	for the refund within the one-year period results in a forfeiture of
3247	3247	the right to the refund except for an inactive member who is
3248	3248	eligible for a pension [whose right to a pension is
3249	3249	nonforfeitable]. However, the board may reinstate any amount
3250	3250	forfeited and allow the refund on application by the former member.
3251	3251	(e) Heirs, executors, administrators, personal
3252	3252	representatives, or assignees are not eligible [entitled] to apply
3253	3253	for and receive the refund authorized by this section [except as
3254	3254	provided by Section 16(c) of this article].
3255	3255	(i) Former members reemployed on or after October 9, 2004,
3256	3256	or current members who left service after October 9, 2004, if
3257	3257	reemployed by the city, may purchase prior service credit at a rate
3258	3258	of interest equal to 2.25 percent per year. Active members hired
3259	3259	before October 9, 2004, who have not yet purchased prior service
3260	3260	credit or members hired before October 9, 2004, who involuntarily
3261	3261	separated from service but have been retroactively reinstated under
3262	3262	arbitration, civil service, or a court ruling may purchase prior
3263	3263	service credit at a rate of interest equal to 2.75 percent per year.
3264	3264	The board may adopt rules necessary to implement this section.
3265	3265	SECTION 2.21. Section 18(a), Article 6243g-4, Revised
3266	3266	Statutes, is amended to read as follows:
3267	3267	(a) Except as provided by this section:
3268	3268	(1) credit may not be allowed to any person for service
3269	3269	with any department in the city other than the police department;
3270	3270	[and]
3271	3271	(2) a person's service will be computed from the date
3272	3272	of entry into the service of the police department as a classified
3273	3273	police officer until the date of separation from service with the
3274	3274	police department; and
3275	3275	(3) a member who received service credit for service
3276	3276	with any department in the city other than the police department and
3277	3277	who is receiving a monthly pension benefit or who began
3278	3278	participation in DROP before the year 2017 effective date shall
3279	3279	continue to have the service credit apply.
3280	3280	SECTION 2.22. Sections 19(b) and (d), Article 6243g-4,
3281	3281	Revised Statutes, are amended to read as follows:
3282	3282	(b) A person who rejoins the pension system under this
3283	3283	section is eligible [entitled] to receive service credit for each
3284	3284	day of service and work performed by the person in a classified
3285	3285	position in the police department, except for any period during
3286	3286	which the person is a DROP participant. The board shall add service
3287	3287	earned after the transfer to the prior service the active member
3288	3288	accrued in a classified position in the police department.
3289	3289	However, the active member may not receive service credit under
3290	3290	this article, except to the extent provided by Section 18, for
3291	3291	service performed for the city other than in a classified position
3292	3292	in the police department.
3293	3293	(d) When a member who has transferred as described by this
3294	3294	section subsequently retires, the retired member is eligible for
3295	3295	[entitled to] a pension computed on the basis of the combined
3296	3296	service described by Subsection (b) of this section, after
3297	3297	deducting any period in which the member was suspended from duty
3298	3298	without pay, on leave of absence without pay, separated from
3299	3299	service, or employed by the city in a capacity other than in a
3300	3300	classified position in the police department.
3301	3301	SECTION 2.23. Section 21, Article 6243g-4, Revised
3302	3302	Statutes, is amended to read as follows:
3303	3303	Sec. 21. DETERMINATION OF BENEFITS; PROVISION OF
3304	3304	INFORMATION. (a) The board may require any member, survivor, or
3305	3305	other person or entity to furnish information the board requires
3306	3306	for the determination of benefits under this article. If a person
3307	3307	or entity does not cooperate in the furnishing or obtaining of
3308	3308	information required as provided by this section, the board may
3309	3309	withhold payment of the pension or other benefits dependent on the
3310	3310	information.
3311	3311	(b) The city, not later than the 14th day after the date the
3312	3312	city receives a request by or on behalf of the board, shall, unless
3313	3313	otherwise prohibited by law, supply the pension system with
3314	3314	personnel, payroll, and financial records in the city's possession
3315	3315	that the pension system determines necessary to provide pension
3316	3316	administrative and fiduciary services under this section, to
3317	3317	establish beneficiaries' eligibility for any benefit, or to
3318	3318	determine a member's credited service or the amount of any
3319	3319	benefits, including disability benefits, and such other
3320	3320	information the pension system may need, including:
3321	3321	(1) information needed to verify service, including
3322	3322	the following information:
3323	3323	(A) the date a person is sworn in to a position;
3324	3324	(B) the days a person is under suspension;
3325	3325	(C) the days a person is absent without pay,
3326	3326	including the days a person is on maternity leave;
3327	3327	(D) the date of a person's termination from
3328	3328	employment; and
3329	3329	(E) the date of a person's reemployment with the
3330	3330	city;
3331	3331	(2) medical records;
3332	3332	(3) workers' compensation records and pay information;
3333	3333	(4) payroll information;
3334	3334	(5) information needed to verify whether a member is
3335	3335	on military leave; and
3336	3336	(6) information regarding phase-down participants,
3337	3337	including information related to entry date and phase-down plan.
3338	3338	(c) The city shall provide any information that may be
3339	3339	reasonably necessary to enable the pension system to comply with
3340	3340	administrative services the pension system performs for the city as
3341	3341	reasonably necessary to obtain any ruling or determination letter
3342	3342	from the Internal Revenue Service.
3343	3343	(d) The information provided by the city shall be
3344	3344	transmitted to the pension system electronically in a format
3345	3345	specified by the pension system, to the extent available to the
3346	3346	city, or in writing if so requested on behalf of the pension system.
3347	3347	(e) The pension system shall determine each member's
3348	3348	credited service and pension benefits on the basis of the personnel
3349	3349	and financial records of the city and the records of the pension
3350	3350	system.
3351	3351	SECTION 2.24. Section 23, Article 6243g-4, Revised
3352	3352	Statutes, is amended to read as follows:
3353	3353	Sec. 23. MEMBERS IN MILITARY SERVICE. (a) A member of the
3354	3354	pension system engaged in active service in a uniformed service may
3355	3355	not be required to make the monthly payments into the fund and may
3356	3356	not lose any previous years' service with the city because of the
3357	3357	uniformed service. The uniformed service shall count as continuous
3358	3358	service in the police department if the member returns to the city
3359	3359	police department after discharge from the uniformed service as an
3360	3360	employee within the period required by the Uniformed Services
3361	3361	Employment and Reemployment Rights Act of 1994 (38 U.S.C. Section
3362	3362	4301 et seq.), as amended, and the uniformed service does not exceed
3363	3363	the period for which a person is eligible [entitled] to have service
3364	3364	counted pursuant to that Act. Notwithstanding any other provision
3365	3365	of this article, contributions and benefits shall be paid and
3366	3366	qualified service for military service shall be determined in
3367	3367	compliance with Section 414(u) of the code.
3368	3368	(b) The city is required to make its payments into the fund
3369	3369	on behalf of each member while the member is engaged in a uniformed
3370	3370	service. If a member who has less than 10 years of service in the
3371	3371	pension system dies directly or indirectly as a result of the
3372	3372	uniformed service, and without returning to active service, the
3373	3373	spouse, dependent children, dependent parent, or estate of the
3374	3374	member is eligible [entitled] to receive a benefit in the same
3375	3375	manner as described by Section 16(c) of this article.
3376	3376	SECTION 2.25. Section 24(b), Article 6243g-4, Revised
3377	3377	Statutes, is amended to read as follows:
3378	3378	(b) Payments due on behalf of a dependent child shall be
3379	3379	paid to the dependent child's guardian, if any, or if none to the
3380	3380	person with whom the dependent child is living, except that the
3381	3381	board may make payments directly to a dependent child in an
3382	3382	appropriate case and withhold payments otherwise due on behalf of
3383	3383	any person if the board has reason to believe the payments are not
3384	3384	being applied on behalf of the person eligible [entitled] to
3385	3385	receive them. The board may request a court of competent
3386	3386	jurisdiction to appoint a person to receive and administer the
3387	3387	payments due to any dependent child or person under a disability.
3388	3388	SECTION 2.26. Section 25, Article 6243g-4, Revised
3389	3389	Statutes, is amended by amending Subsections (b), (c), (d), (g),
3390	3390	and (h) and adding Subsections (c-1) and (h-1) through (h-13) to
3391	3391	read as follows:
3392	3392	(b) A member or survivor of a member of the pension system
3393	3393	may not accrue a retirement pension, disability retirement
3394	3394	allowance, death benefit allowance, DROP benefit, or any other
3395	3395	benefit under this article in excess of the benefit limits
3396	3396	applicable to the fund under Section 415 of the code. The board
3397	3397	shall reduce the amount of any benefit that exceeds those limits by
3398	3398	the amount of the excess. If total benefits under this fund and the
3399	3399	benefits and contributions to which any member is eligible
3400	3400	[entitled] under any other qualified plans maintained by the city
3401	3401	that employs the member would otherwise exceed the applicable
3402	3402	limits under Section 415 of the code, the benefits the member would
3403	3403	otherwise receive from the fund shall be reduced to the extent
3404	3404	necessary to enable the benefits to comply with Section 415.
3405	3405	(c) Subject to Subsection (c-1) of this section, any [Any]
3406	3406	distributee [member or survivor] who receives [any distribution
3407	3407	that is] an eligible rollover distribution [as defined by Section
3408	3408	402(c)(4) of the code] is eligible [entitled] to have that
3409	3409	distribution transferred directly to another eligible retirement
3410	3410	plan of the distributee's [member's or survivor's] choice on
3411	3411	providing direction to the pension system regarding that transfer
3412	3412	in accordance with procedures established by the board.
3413	3413	(c-1) For purposes of Subsection (c) of this section:
3414	3414	(1) "Direct rollover" means a payment by the plan to
3415	3415	the eligible retirement plan specified by the distributee.
3416	3416	(2) "Distributee" means a member or a member's
3417	3417	surviving spouse or non-spouse designated beneficiary or a member's
3418	3418	spouse or former spouse who is the alternate payee under a qualified
3419	3419	domestic relations order with regard to the interest of the spouse
3420	3420	or former spouse.
3421	3421	(3) "Eligible retirement plan" means:
3422	3422	(A) an individual retirement account as defined
3423	3423	by Section 408(a) of the code;
3424	3424	(B) an individual retirement annuity as defined
3425	3425	by Section 408(b) of the code;
3426	3426	(C) an annuity plan as described by Section
3427	3427	403(a) of the code;
3428	3428	(D) an eligible deferred compensation plan as
3429	3429	defined by Section 457(b) of the code that is maintained by an
3430	3430	eligible employer as described by Section 457(e)(1)(A) of the code;
3431	3431	(E) an annuity contract as described by Section
3432	3432	403(b) of the code;
3433	3433	(F) a qualified trust as described by Section
3434	3434	401(a) of the code that accepts the distributee's eligible rollover
3435	3435	distribution; and
3436	3436	(G) in the case of an eligible rollover
3437	3437	distribution, for a designated beneficiary that is not the
3438	3438	surviving spouse, a spouse, or a former spouse who is an alternate
3439	3439	payee under a qualified domestic relations order, an eligible
3440	3440	retirement plan means only an individual retirement account or
3441	3441	individual retirement annuity that is established for the purpose
3442	3442	of receiving the distribution on behalf of the beneficiary.
3443	3443	(4) "Eligible rollover distribution" means any
3444	3444	distribution of all or any portion of the balance to the credit of
3445	3445	the distributee, except that an eligible rollover distribution does
3446	3446	not include:
3447	3447	(A) any distribution that is one of a series of
3448	3448	substantially equal periodic payments, not less frequently than
3449	3449	annually, made for life or life expectancy of the distributee or the
3450	3450	joint lives or joint life expectancies of the distributee and the
3451	3451	distributee's designated beneficiary or for a specified period of
3452	3452	10 years or more;
3453	3453	(B) any distribution to the extent the
3454	3454	distribution is required under Section 401(a)(9) of the code; or
3455	3455	(C) any distribution that is made on hardship of
3456	3456	the employee.
3457	3457	(d) The annual compensation for each member [total salary]
3458	3458	taken into account for any purpose under this article [for any
3459	3459	member of the pension system] may not exceed $200,000 for any year
3460	3460	for an eligible participant, or for years beginning after 2001 for
3461	3461	an ineligible participant, or $150,000 a year before 2001 for an
3462	3462	ineligible participant. These dollar limits shall be adjusted from
3463	3463	time to time in accordance with guidelines provided by the United
3464	3464	States secretary of the treasury and must comply with Section
3465	3465	401(a)(17) of the code. For purposes of this subsection, an
3466	3466	eligible participant is a person who first became an active member
3467	3467	before 1996, and an ineligible participant is a member who is not an
3468	3468	eligible participant.
3469	3469	(g) Distribution of benefits must begin not later than April
3470	3470	1 of the year following the calendar year during which the member
3471	3471	eligible for [entitled to] the benefits becomes 70-1/2 years of age
3472	3472	or terminates employment with the employer, whichever is later, and
3473	3473	must otherwise conform to Section 401(a)(9) of the code.
3474	3474	(h) For purposes of adjusting any benefit due to the
3475	3475	limitations prescribed by Section 415 of the code, the following
3476	3476	provisions shall apply:
3477	3477	(1) the 415(b) limitation with respect to any member
3478	3478	who at any time has been a member in any other defined benefit plan
3479	3479	as defined in Section 414(j) of the code maintained by the city
3480	3480	shall apply as if the total benefits payable under all the defined
3481	3481	benefit plans in which the member has been a member were payable
3482	3482	from one plan; and
3483	3483	(2) the 415(c) limitation with respect to any member
3484	3484	who at any time has been a member in any other defined contribution
3485	3485	plan as defined in Section 414(i) of the code maintained by the city
3486	3486	shall apply as if the total annual additions under all such defined
3487	3487	contribution plans in which the member has been a member were
3488	3488	payable from one plan.
3489	3489	(h-1) For purposes of adjusting any benefit due to the
3490	3490	limitations prescribed by Section 415(b) of the code, the following
3491	3491	provisions shall apply:
3492	3492	(1) before January 1, 1995, a member may not receive an
3493	3493	annual benefit that exceeds the limits specified in Section 415(b)
3494	3494	of the code, subject to the applicable adjustments in that section;
3495	3495	(2) on and after January 1, 1995, a member may not
3496	3496	receive an annual benefit that exceeds the dollar amount specified
3497	3497	in Section 415(b)(1)(A) of the code, subject to the applicable
3498	3498	adjustments in Section 415(b) of the code and subject to any
3499	3499	additional limits that may be specified in the pension system;
3500	3500	(3) in no event may a member's annual benefit payable
3501	3501	under the pension system, including any DROP benefits, in any
3502	3502	limitation year be greater than the limit applicable at the annuity
3503	3503	starting date, as increased in subsequent years pursuant to Section
3504	3504	415(d) of the code, including regulations adopted under that
3505	3505	section; and
3506	3506	(4) the "annual benefit" means a benefit payable
3507	3507	annually in the form of a straight life annuity, with no ancillary
3508	3508	benefits, without regard to the benefit attributable to any
3509	3509	after-tax employee contributions, unless attributable under
3510	3510	Section 415(n) of the code, and to rollover contributions as
3511	3511	defined in Section 415(b)(2)(A) of the code. For purposes of this
3512	3512	subdivision, the "benefit attributable" shall be determined in
3513	3513	accordance with applicable federal regulations.
3514	3514	(h-2) For purposes of adjustments to the basic limitation
3515	3515	under Section 415(b) of the code in the form of benefits, the
3516	3516	following provisions apply:
3517	3517	(1) if the benefit under the pension system is other
3518	3518	than the form specified in Subsections (h-1)(1)-(3) of this
3519	3519	section, including DROP benefits, the benefit shall be adjusted so
3520	3520	that it is the equivalent of the annual benefit, using factors
3521	3521	prescribed in applicable federal regulations; and
3522	3522	(2) if the form of benefit without regard to the
3523	3523	automatic benefit increase feature is not a straight life annuity
3524	3524	or a qualified joint and survivor annuity, Subdivision (1) of this
3525	3525	subsection is applied by either reducing the limit under Section
3526	3526	415(b) of the code applicable at the annuity starting date or
3527	3527	adjusting the form of benefit to an actuarially equivalent amount
3528	3528	determined by using the assumptions specified in Treasury
3529	3529	Regulation Section 1.415(b)-1(c)(2)(ii) that takes into account
3530	3530	the additional benefits under the form of benefit as follows:
3531	3531	(A) for a benefit paid in a form to which Section
3532	3532	417(e)(3) of the code does not apply, the actuarially equivalent
3533	3533	straight life annuity benefit that is the greater of:
3534	3534	(i) the annual amount of the straight life
3535	3535	annuity, if any, payable to the member under the pension system
3536	3536	commencing at the same annuity starting date as the form of benefit
3537	3537	to the member or the annual amount of the straight life annuity
3538	3538	commencing at the same annuity starting date that has the same
3539	3539	actuarial present value as the form of benefit payable to the
3540	3540	member, computed using a five percent interest assumption or the
3541	3541	applicable statutory interest assumption; and
3542	3542	(ii) for years prior to January 1, 2009, the
3543	3543	applicable mortality tables described in Treasury Regulation
3544	3544	Section 1.417(e)-1(d)(2), and for years after December 31, 2008,
3545	3545	the applicable mortality tables described in Section 417(e)(3)(B)
3546	3546	of the code; or
3547	3547	(B) for a benefit paid in a form to which Section
3548	3548	417(e)(3) of the code applies, the actuarially equivalent straight
3549	3549	life annuity benefit that is the greatest of:
3550	3550	(i) the annual amount of the straight life
3551	3551	annuity commencing at the annuity starting date that has the same
3552	3552	actuarial present value as the particular form of benefit payable,
3553	3553	computed using the interest rate and mortality table, or tabular
3554	3554	factor, specified in the plan for actuarial experience;
3555	3555	(ii) the annual amount of the straight life
3556	3556	annuity commencing at the annuity starting date that has the same
3557	3557	actuarial present value as the particular form of benefit payable,
3558	3558	computed using a 5.5 percent interest assumption or the applicable
3559	3559	statutory interest assumption, and for years prior to January 1,
3560	3560	2009, the applicable mortality tables for the distribution under
3561	3561	Treasury Regulation Section 1.417(e)-1(d)(2), and for years after
3562	3562	December 31, 2008, the applicable mortality tables described in
3563	3563	Section 417(e)(3)(B) of the code; or
3564	3564	(iii) the annual amount of the straight
3565	3565	life annuity commencing at the annuity starting date that has the
3566	3566	same actuarial present value as the particular form of benefit
3567	3567	payable computed using the applicable interest rate for the
3568	3568	distribution under Treasury Regulation Section 1.417(e)-1(d)(3)
3569	3569	using the rate in effect for the month prior to retirement before
3570	3570	January 1, 2017, and using the rate in effect for the first day of
3571	3571	the plan year with a one-year stabilization period on and after
3572	3572	January 1, 2017, and for years prior to January 1, 2009, the
3573	3573	applicable mortality tables for the distribution under Treasury
3574	3574	Regulation Section 1.417(e)-1(d)(2), and for years after December
3575	3575	31, 2008, the applicable mortality tables described in Section
3576	3576	417(e)(3)(B) of the code, divided by 1.05.
3577	3577	(h-3) The pension system actuary may adjust the limitation
3578	3578	under Section 415(b) of the code at the annuity starting date in
3579	3579	accordance with Subsections (h-1) and (h-2) of this section.
3580	3580	(h-4) The following are benefits for which no adjustment of
3581	3581	the limitation in Section 415(b) of the code is required:
3582	3582	(1) any ancillary benefit that is not directly related
3583	3583	to retirement income benefits;
3584	3584	(2) the portion of any joint and survivor annuity that
3585	3585	constitutes a qualified joint and survivor annuity; and
3586	3586	(3) any other benefit not required under Section
3587	3587	415(b)(2) of the code and regulations adopted under that section to
3588	3588	be taken into account for purposes of the limitation of Section
3589	3589	415(b)(1) of the code.
3590	3590	(h-5) The following provisions apply to other adjustments
3591	3591	of the limitation under Section 415(b) of the code:
3592	3592	(1) in the event the member's pension benefits become
3593	3593	payable before the member attains 62 years of age, the limit
3594	3594	prescribed by this section shall be reduced in accordance with
3595	3595	federal regulations adopted under Section 415(b) of the code, so
3596	3596	that that limit, as reduced, equals an annual straight life annuity
3597	3597	benefit when the retirement income benefit begins, that is
3598	3598	equivalent to a $160,000, as adjusted, annual benefit beginning at
3599	3599	62 years of age;
3600	3600	(2) in the event the member's benefit is based on at
3601	3601	least 15 years of service as a full-time employee of any police or
3602	3602	fire department or on 15 years of military service, in accordance
3603	3603	with Sections 415(b)(2)(G) and (H) of the code, the adjustments
3604	3604	provided for in Subdivision (1) of this section may not apply; and
3605	3605	(3) in accordance with Section 415(b)(2)(I) of the
3606	3606	code, the reductions provided for in Subdivision (1) of this
3607	3607	section may not be applicable to preretirement disability benefits
3608	3608	or preretirement death benefits.
3609	3609	(h-6) The following provisions of this subsection govern
3610	3610	adjustment of the defined benefit dollar limitation for benefits
3611	3611	commenced after 65 years of age:
3612	3612	(1) if the annuity starting date for the member's
3613	3613	benefit is after 65 years of age and the pension system does not
3614	3614	have an immediately commencing straight life annuity payable at
3615	3615	both 65 years of age and the age of benefit commencement, the
3616	3616	defined benefit dollar limitation at the member's annuity starting
3617	3617	date is the annual amount of a benefit payable in the form of a
3618	3618	straight life annuity commencing at the member's annuity starting
3619	3619	date that is the actuarial equivalent of the defined benefit dollar
3620	3620	limitation, with actuarial equivalence computed using a five
3621	3621	percent interest rate assumption and the applicable mortality table
3622	3622	for that annuity starting date as defined in Section 417(e)(3)(B)
3623	3623	of the code, expressing the member's age based on completed
3624	3624	calendar months as of the annuity starting date;
3625	3625	(2) if the annuity starting date for the member's
3626	3626	benefit is after age 65, and the pension system has an immediately
3627	3627	commencing straight life annuity payable at both 65 years of age and
3628	3628	the age of benefit commencement, the defined benefit dollar
3629	3629	limitation at the member's annuity starting date is the lesser of
3630	3630	the limitation determined under Subdivision (1) of this section and
3631	3631	the defined benefit dollar limitation multiplied by the ratio of
3632	3632	the annual amount of the adjusted immediately commencing straight
3633	3633	life annuity under the pension system at the member's annuity
3634	3634	starting date to the annual amount of the adjusted immediately
3635	3635	commencing straight life annuity under the pension system at 65
3636	3636	years of age, both determined without applying the limitations of
3637	3637	this subsection; and
3638	3638	(3) notwithstanding the other requirements of this
3639	3639	section:
3640	3640	(A) no adjustment shall be made to reflect the
3641	3641	probability of a member's death between the annuity starting date
3642	3642	and 62 years of age, or between 65 years of age and the annuity
3643	3643	starting date, as applicable, if benefits are not forfeited on the
3644	3644	death of the member prior to the annuity starting date; and
3645	3645	(B) to the extent benefits are forfeited on death
3646	3646	before the annuity starting date, the adjustment shall be made, and
3647	3647	for this purpose no forfeiture shall be treated as occurring on the
3648	3648	member's death if the pension system does not charge members for
3649	3649	providing a qualified preretirement survivor annuity, as defined in
3650	3650	Section 417(c) of the code, on the member's death.
3651	3651	(h-7) For the purpose of Subsection (h-6)(2) of this
3652	3652	section, the adjusted immediately commencing straight life annuity
3653	3653	under the pension system at the member's annuity starting date is
3654	3654	the annual amount of such annuity payable to the member, computed
3655	3655	disregarding the member's accruals after 65 years of age but
3656	3656	including actuarial adjustments even if those actuarial
3657	3657	adjustments are used to offset accruals, and the adjusted
3658	3658	immediately commencing straight life annuity under the pension
3659	3659	system at 65 years of age is the annual amount of the annuity that
3660	3660	would be payable under the pension system to a hypothetical member
3661	3661	who is 65 years of age and has the same accrued benefit as the
3662	3662	member.
3663	3663	(h-8) The maximum pension benefits payable to any member who
3664	3664	has completed less than 10 years of participation shall be the
3665	3665	amount determined under Subsection (h-1) of this section, as
3666	3666	adjusted under Subsection (h-2) or (h-5) of this section,
3667	3667	multiplied by a fraction, the numerator of which is the number of
3668	3668	the member's years of participation and the denominator of which is
3669	3669	10. The limit under Subsection (h-9) of this section concerning the
3670	3670	$10,000 limit shall be similarly reduced for any member who has
3671	3671	accrued less than 10 years of service, except the fraction shall be
3672	3672	determined with respect to years of service instead of years of
3673	3673	participation. The reduction provided by this subsection cannot
3674	3674	reduce the maximum benefit below 10 percent of the limit determined
3675	3675	without regard to this subsection. The reduction provided for in
3676	3676	this subsection may not be applicable to preretirement disability
3677	3677	benefits or preretirement death benefits.
3678	3678	(h-9) Notwithstanding Subsection (h-8) of this section, the
3679	3679	pension benefit payable with respect to a member shall be deemed not
3680	3680	to exceed the limit provided by Section 415 of the code if the
3681	3681	benefits payable, with respect to such member under this pension
3682	3682	system and under all other qualified defined benefit pension plans
3683	3683	to which the city contributes, do not exceed $10,000 for the
3684	3684	applicable limitation year and for any prior limitation year and
3685	3685	the city has not at any time maintained a qualified defined
3686	3686	contribution plan in which the member participated.
3687	3687	(h-10) On and after January 1, 1995, for purposes of
3688	3688	applying the limits under Section 415(b) of the code to a member's
3689	3689	benefit paid in a form to which Section 417(e)(3) of the code does
3690	3690	not apply, the following provisions apply:
3691	3691	(1) a member's applicable limit shall be applied to the
3692	3692	member's annual benefit in the member's first limitation year
3693	3693	without regard to any cost-of-living adjustments under Section 12
3694	3694	of this article;
3695	3695	(2) to the extent that the member's annual benefit
3696	3696	equals or exceeds the limit, the member shall no longer be eligible
3697	3697	for cost-of-living increases until such time as the benefit plus
3698	3698	the accumulated increases are less than the limit; and
3699	3699	(3) after the time prescribed by Subdivision (2) of
3700	3700	this subsection, in any subsequent limitation year, a member's
3701	3701	annual benefit, including any cost-of-living increases under
3702	3702	Section 12 of this article, shall be tested under the applicable
3703	3703	benefit limit, including any adjustment under Section 415(d) of the
3704	3704	code to the dollar limit under Section 415(b)(1)(A) of the code, and
3705	3705	the regulations under those sections.
3706	3706	(h-11) Any repayment of contributions, including interest
3707	3707	on contributions, to the plan with respect to an amount previously
3708	3708	refunded on a forfeiture of service credit under the plan or another
3709	3709	governmental plan maintained by the pension system may not be taken
3710	3710	into account for purposes of Section 415 of the code, in accordance
3711	3711	with applicable federal regulations.
3712	3712	(h-12) Reduction of benefits or contributions to all plans,
3713	3713	where required, shall be accomplished by:
3714	3714	(1) first, reducing the member's benefit under any
3715	3715	defined benefit plans in which the member participated, with the
3716	3716	reduction to be made first with respect to the plan in which the
3717	3717	member most recently accrued benefits and then in the priority
3718	3718	determined by the pension system and the plan administrator of such
3719	3719	other plans; and
3720	3720	(2) next, reducing or allocating excess forfeitures
3721	3721	for defined contribution plans in which the member participated,
3722	3722	with the reduction to be made first with respect to the plan in
3723	3723	which the member most recently accrued benefits and then in the
3724	3724	priority determined by the pension system and the plan
3725	3725	administrator for such other plans.
3726	3726	(h-13) Notwithstanding Subsection (h-12) of this section,
3727	3727	reductions may be made in a different manner and priority pursuant
3728	3728	to the agreement of the pension system and the plan administrator of
3729	3729	all other plans covering such member. [If the amount of any benefit
3730	3730	is to be determined on the basis of actuarial assumptions that are
3731	3731	not otherwise specifically set forth for that purpose in this
3732	3732	article, the actuarial assumptions to be used are those earnings
3733	3733	and mortality assumptions being used on the date of the
3734	3734	determination by the pension system's actuary and approved by the
3735	3735	board. The actuarial assumptions being used at any particular time
3736	3736	shall be attached as an addendum to a copy of this article and
3737	3737	treated for all purposes as a part of this article. The actuarial
3738	3738	assumptions may be changed by the pension system's actuary at any
3739	3739	time if approved by the board, but a change in actuarial assumptions
3740	3740	may not result in any decrease in benefits accrued as of the
3741	3741	effective date of the change.]
3742	3742	SECTION 2.27. Section 26(b)(3), Article 6243g-4, Revised
3743	3743	Statutes, is amended to read as follows:
3744	3744	(3) "Maximum benefit" means the retirement benefit a
3745	3745	retired member and the spouse, dependent child, or dependent parent
3746	3746	of a retired member or deceased member or retiree are eligible
3747	3747	[entitled] to receive from all qualified plans in any month after
3748	3748	giving effect to Section 25(b) of this article and any similar
3749	3749	provisions of any other qualified plans designed to conform to
3750	3750	Section 415 of the code.
3751	3751	SECTION 2.28. Sections 26(c), (d), and (e), Article
3752	3752	6243g-4, Revised Statutes, are amended to read as follows:
3753	3753	(c) An excess benefit participant who is receiving benefits
3754	3754	from the pension system is eligible for [entitled to] a monthly
3755	3755	benefit under this excess benefit plan in an amount equal to the
3756	3756	lesser of:
3757	3757	(1) the member's unrestricted benefit less the maximum
3758	3758	benefit; or
3759	3759	(2) the amount by which the member's monthly benefit
3760	3760	from the fund has been reduced because of the limitations of Section
3761	3761	415 of the code.
3762	3762	(d) If a spouse, dependent child, or dependent parent is
3763	3763	eligible for [entitled to] preretirement or postretirement death
3764	3764	benefits under a qualified plan after the death of an excess benefit
3765	3765	participant, the surviving spouse, dependent child, or dependent
3766	3766	parent is eligible for [entitled to] a monthly benefit under the
3767	3767	excess benefit plan equal to the benefit determined in accordance
3768	3768	with this article without regard to the limitations under Section
3769	3769	25(b) of this article or Section 415 of the code, less the maximum
3770	3770	benefit.
3771	3771	(e) Any benefit to which a person is eligible [entitled]
3772	3772	under this section shall be paid at the same time and in the same
3773	3773	manner as the benefit would have been paid from the pension system
3774	3774	if payment of the benefit from the pension system had not been
3775	3775	precluded by Section 25(b) of this article. An excess benefit
3776	3776	participant or any beneficiary may not, under any circumstances,
3777	3777	elect to defer the receipt of all or any part of a payment due under
3778	3778	this section.
3779	3779	SECTION 2.29. The heading to Section 27, Article 6243g-4,
3780	3780	Revised Statutes, is amended to read as follows:
3781	3781	Sec. 27. CERTAIN WRITTEN AGREEMENTS BETWEEN PENSION SYSTEM
3782	3782	AND CITY AUTHORIZED [AGREEMENT TO CHANGE BENEFITS].
3783	3783	SECTION 2.30. Section 27, Article 6243g-4, Revised
3784	3784	Statutes, is amended by amending Subsection (b) and adding
3785	3785	Subsection (c) to read as follows:
3786	3786	(b) A pension benefit or allowance provided by this article
3787	3787	may be increased if the increase:
3788	3788	(1) is first approved by a qualified actuary selected
3789	3789	by the board;
3790	3790	(2) is approved by the board and the city in a written
3791	3791	agreement as authorized by this section; and
3792	3792	(3) does not deprive a member, without the member's
3793	3793	written consent, of a right to receive benefits when [that have
3794	3794	become fully vested and matured in] the member is fully eligible.
3795	3795	(c) In a written agreement entered into between the city and
3796	3796	the board under this section, the parties may not fundamentally:
3797	3797	(1) alter Sections 9 through 9E of this article;
3798	3798	(2) increase the assumed rate of return to more than
3799	3799	seven percent per year;
3800	3800	(3) extend the amortization period of a liability
3801	3801	layer to more than 30 years from the first day of the fiscal year
3802	3802	beginning 12 months after the date of the risk sharing valuation
3803	3803	study in which the liability layer is first recognized; or
3804	3804	(4) allow a city contribution rate in any year that is
3805	3805	less than or greater than the city contribution rate required under
3806	3806	Section 9D or 9E of this article, as applicable.
3807	3807	SECTION 2.31. Section 29, Article 6243g-4, Revised
3808	3808	Statutes, is amended by adding Subsections (c), (d), (e), (f), and
3809	3809	(g) to read as follows:
3810	3810	(c) To carry out the provisions of Sections 9 through 9E of
3811	3811	this article, the board and the pension system shall provide the
3812	3812	city actuary under a confidentiality agreement the actuarial data
3813	3813	used by the pension system actuary for the pension system's
3814	3814	actuarial valuations or valuation studies and other data as agreed
3815	3815	to between the city and the pension system that the city actuary
3816	3816	determines is reasonably necessary for the city actuary to perform
3817	3817	the studies required by Sections 9A through 9E of this article.
3818	3818	Actuarial data described by this subsection does not include
3819	3819	information described by Subsection (a) of this section.
3820	3820	(d) A risk sharing valuation study prepared by either the
3821	3821	city actuary or the pension system actuary under Sections 9A
3822	3822	through 9E of this article may not:
3823	3823	(1) include information described by Subsection (a) of
3824	3824	this section; or
3825	3825	(2) provide confidential or private information
3826	3826	regarding specific individuals or be grouped in a manner that
3827	3827	allows confidential or private information regarding a specific
3828	3828	individual to be discerned.
3829	3829	(e) The information, data, and document exchanges under
3830	3830	Sections 9 through 9E of this article have all the protections
3831	3831	afforded by applicable law and are expressly exempt from the
3832	3832	disclosure requirements under Chapter 552, Government Code, except
3833	3833	as may be agreed to by the city and pension system in a written
3834	3834	agreement under Section 27 of this article.
3835	3835	(f) Subsection (e) of this section does not apply to final
3836	3836	risk sharing valuation studies prepared under Section 9A or 9B of
3837	3837	this article.
3838	3838	(g) Before a union contract is approved by the city, the
3839	3839	mayor of the city must cause the city actuaries to deliver to the
3840	3840	mayor a report estimating the impact of the proposed union contract
3841	3841	on fund costs.
3842	3842	SECTION 2.32. Article 6243g-4, Revised Statutes, is amended
3843	3843	by adding Section 30 to read as follows:
3844	3844	Sec. 30. FORFEITURE OF BENEFITS. (a) Notwithstanding any
3845	3845	other law, a member who is convicted, after exhausting all appeals,
3846	3846	of an offense punishable as a felony of the first degree in relation
3847	3847	to, arising out of, or in connection with the member's service as a
3848	3848	classified police officer may not receive any benefits under this
3849	3849	article.
3850	3850	(b) After the member described by Subsection (a) of this
3851	3851	section is finally convicted, the member's spouse may apply for
3852	3852	benefits if the member, but for application of Subsection (a) of
3853	3853	this section, would have been eligible for a pension benefit or a
3854	3854	delayed payment of benefits. If the member would not have been
3855	3855	eligible for a pension benefit or a delayed payment of benefits, the
3856	3856	member's spouse may apply for a refund of the member's
3857	3857	contributions. A refund under this subsection does not include
3858	3858	interest and does not include contributions the city made on the
3859	3859	member's behalf. The city may not receive a refund of any
3860	3860	contributions the city made on the member's behalf.
3861	3861	SECTION 2.33. Sections 2(19) and (23), 8(b), 12(f), 14(f)
3862	3862	and (m), 15(h) and (j), and 18(b) and (c), Article 6243g-4, Revised
3863	3863	Statutes, are repealed.
3864	3864	SECTION 2.34. A city and board that have entered into one or
3865	3865	more agreements under Section 27, Article 6243g-4, Revised
3866	3866	Statutes, shall agree in writing that any provisions in the
3867	3867	agreements that specifically conflict with this Act are no longer
3868	3868	in effect, as of the year 2017 effective date, and any
3869	3869	nonconflicting provisions of the agreements remain in full force
3870	3870	and effect.
3871	3871	SECTION 2.35. Notwithstanding any other Act of the 85th
3872	3872	Legislature, Regular Session, 2017, the issuance of pension
3873	3873	obligation bonds under Chapter 107, Local Government Code, in an
3874	3874	amount sufficient to deliver pension obligation bond proceeds to
3875	3875	the pension system established under Article 6243g-4, Revised
3876	3876	Statutes, as amended by this Act, in the amount and manner
3877	3877	prescribed by Section 9B(j), Article 6243g-4, Revised Statutes, as
3878	3878	added by this Act, may not require the approval of the qualified
3879	3879	voters of a city voting at an election held for that purpose.
3880	3880	SECTION 2.36. The pension system established under Article
3881	3881	6243g-4, Revised Statutes, shall require the pension system actuary
3882	3882	to prepare the first actuarial experience study required under
3883	3883	Section 9C, Article 6243g-4, Revised Statutes, as added by this
3884	3884	Act, not later than September 30, 2022.
3885	3885	ARTICLE 3. MUNICIPAL EMPLOYEES PENSION SYSTEM
3886	3886	SECTION 3.01. Section 1, Chapter 88 (H.B. 1573), Acts of the
3887	3887	77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
3888	3888	Texas Civil Statutes), is amended by amending Subdivisions (1),
3889	3889	(4), (5), (7), (14), (18), and (26) and adding Subdivisions (1-a),
3890	3890	(1-b), (1-c), (1-d), (1-e), (1-f), (4-a), (4-b), (4-c), (4-d),
3891	3891	(4-e), (4-f), (11-a), (11-b), (11-c), (11-d), (11-e), (11-f),
3892	3892	(11-g), (11-h), (11-i), (11-j), (11-k), (12-a), (12-b), (14-a),
3893	3893	(14-b), (17-a), (18-a), (18-b), (20-a), (21-a), (26-a), (26-b),
3894	3894	(28), (29), (30), and (31) to read as follows:
3895	3895	(1) "Actuarial data" includes:
3896	3896	(A) the census data, assumption tables,
3897	3897	disclosure of methods, and financial information that are routinely
3898	3898	used by the pension system actuary for the pension system's studies
3899	3899	or an actuarial experience study under Section 8D of this Act; and
3900	3900	(B) other data that is reasonably necessary to
3901	3901	implement Sections 8A through 8F of this Act, as agreed to by the
3902	3902	city and pension board.
3903	3903	(1-a) "Actuarial experience study" has the meaning
3904	3904	assigned by Section 802.1014, Government Code.
3905	3905	(1-b) "Adjustment factor" means the assumed rate of
3906	3906	return less two percentage points.
3907	3907	(1-c) "Amortization period" means the time period
3908	3908	necessary to fully pay a liability layer.
3909	3909	(1-d) "Amortization rate" means the sum of the
3910	3910	scheduled amortization payments less the city contribution amount
3911	3911	for a given fiscal year for the liability layers divided by the
3912	3912	projected pensionable payroll for the same fiscal year.
3913	3913	(1-e) "Assumed rate of return" means the assumed
3914	3914	market rate of return on pension system assets, which is seven
3915	3915	percent per annum unless adjusted as provided by this Act.
3916	3916	(1-f) "Authorized absence" means:
3917	3917	(A) each day an employee is absent due to an
3918	3918	approved holiday, vacation, accident, or sickness, if the employee
3919	3919	is continued on the employment rolls of the city or the pension
3920	3920	system, receives the employee's regular salary from the city or the
3921	3921	pension system for each day of absence, and remains eligible to work
3922	3922	on recovery or return; or
3923	3923	(B) any period that a person is on military leave
3924	3924	of absence under Section 18(a) of this Act, provided the person
3925	3925	complies with the requirements of that section.
3926	3926	(4) "City" means a municipality having a population of
3927	3927	more than two [1.5] million.
3928	3928	(4-a) "City contribution amount" means, for each
3929	3929	fiscal year, a predetermined payment amount expressed in dollars in
3930	3930	accordance with a payment schedule amortizing the legacy liability,
3931	3931	using the level percent of payroll method and the amortization
3932	3932	period and payoff year, that is included in the initial risk sharing
3933	3933	valuation study under Section 8C(a)(3) of this Act, as may be
3934	3934	restated from time to time in:
3935	3935	(A) a subsequent risk sharing valuation study to
3936	3936	reflect adjustments to the amortization schedule authorized by
3937	3937	Section 8E or 8F of this Act; or
3938	3938	(B) a restated initial risk sharing valuation
3939	3939	study or a subsequent risk sharing valuation study to reflect
3940	3940	adjustments authorized by Section 8C(i) or (j) of this Act.
3941	3941	(4-b) "City contribution rate" means a percent of
3942	3942	pensionable payroll that is the sum of the employer normal cost rate
3943	3943	and the amortization rate for liability layers, excluding the
3944	3944	legacy liability, except as determined otherwise under the express
3945	3945	provisions of Sections 8E and 8F of this Act.
3946	3946	(4-c) "Corridor" means the range of city contribution
3947	3947	rates that are:
3948	3948	(A) equal to or greater than the minimum
3949	3949	contribution rate; and
3950	3950	(B) equal to or less than the maximum
3951	3951	contribution rate.
3952	3952	(4-d) "Corridor margin" means five percentage points.
3953	3953	(4-e) "Corridor midpoint" means the projected city
3954	3954	contribution rate specified for each fiscal year for 31 years in the
3955	3955	initial risk sharing valuation study under Section 8C of this Act,
3956	3956	and as may be adjusted under Section 8E or 8F of this Act, and in
3957	3957	each case rounded to the nearest hundredths decimal place.
3958	3958	(4-f) "Cost-of-living adjustment percentage" means a
3959	3959	percentage that:
3960	3960	(A) except as provided by Paragraph (B), is equal
3961	3961	to the pension system's five-year investment return, based on a
3962	3962	rolling five-year basis and net of investment expenses, minus the
3963	3963	adjustment factor, and multiplied by 50 percent; and
3964	3964	(B) may not be less than zero or more than two
3965	3965	percent.
3966	3966	(5) "Credited service" means each day of service and
3967	3967	prior service of a member for which:
3968	3968	(A) the city [has] and[, for service in group A,]
3969	3969	the member have [has] made required contributions to the pension
3970	3970	fund that were not subsequently withdrawn;
3971	3971	(B) the member has purchased service credit or
3972	3972	converted service credit from group B to group A by paying into the
3973	3973	pension fund required amounts that were not subsequently withdrawn;
3974	3974	(C) the member has reinstated service under
3975	3975	Section 7(g) of this Act; and
3976	3976	(D) the member has previously made payments to
3977	3977	the pension fund that, under then existing provisions of law, make
3978	3978	the member eligible for credit for the service and that were not
3979	3979	subsequently withdrawn.
3980	3980	(7) "Dependent child" means an unmarried natural or
3981	3981	legally adopted child of a member, deferred participant, or retiree
3982	3982	who:
3983	3983	(A) was supported by the member, deferred
3984	3984	participant, or retiree before the termination of employment of the
3985	3985	member, deferred participant, or retiree; and
3986	3986	(B) is under 21 years of age or is totally and
3987	3987	permanently disabled from performing any full-time employment
3988	3988	because of an injury, illness, serious mental illness, intellectual
3989	3989	disability, or pervasive development disorder [or retardation]
3990	3990	that began before the child became 18 years of age and before the
3991	3991	termination of employment [death] of the member, deferred
3992	3992	participant, or retiree.
3993	3993	(11-a) "Employer normal cost rate" means the normal
3994	3994	cost rate minus the applicable member contribution rate for newly
3995	3995	hired employees, initially set as three percent for group D members
3996	3996	on the year 2017 effective date. The present value of additional
3997	3997	member contributions different from the group D rate taken into
3998	3998	account for purposes of determining the employer normal cost rate
3999	3999	must be applied toward the actuarial accrued liability.
4000	4000	(11-b) "Estimated city contribution amount" means the
4001	4001	city contribution amount estimated in a final risk sharing
4002	4002	valuation study under Section 8B or 8C of this Act, as applicable,
4003	4003	as required by Section 8B(a)(5) of this Act.
4004	4004	(11-c) "Estimated city contribution rate" means the
4005	4005	city contribution rate estimated in a final risk sharing valuation
4006	4006	study under Section 8B or 8C of this Act, as applicable, as required
4007	4007	by Section 8B(a)(5) of this Act.
4008	4008	(11-d) "Estimated total city contribution" means the
4009	4009	total city contribution estimated by the pension system actuary or
4010	4010	the city actuary, as applicable, by using the estimated city
4011	4011	contribution rates and the estimated city contribution amounts
4012	4012	recommended by each actuary for purposes of preparing the initial
4013	4013	risk sharing valuation study under Section 8C of this Act.
4014	4014	(11-e) "Fiscal year," except as provided by Section 1B
4015	4015	of this Act, means a fiscal year beginning on July 1 and ending on
4016	4016	June 30.
4017	4017	(11-f) "Funded ratio" means the ratio of the pension
4018	4018	system's actuarial value of assets divided by the pension system's
4019	4019	actuarial accrued liability.
4020	4020	(11-g) "Legacy liability" means the unfunded
4021	4021	actuarial accrued liability:
4022	4022	(A) for the fiscal year ending June 30, 2016,
4023	4023	reduced to reflect:
4024	4024	(i) changes to benefits and contributions
4025	4025	under this Act that took effect on the year 2017 effective date;
4026	4026	(ii) the deposit of pension obligation bond
4027	4027	proceeds on December 31, 2017; and
4028	4028	(iii) payments by the city and earnings at
4029	4029	the assumed rate of return allocated to the legacy liability from
4030	4030	July 1, 2016, to July 1, 2017, excluding July 1, 2017; and
4031	4031	(B) for each subsequent fiscal year:
4032	4032	(i) reduced by the city contribution amount
4033	4033	for that year allocated to the amortization of the legacy
4034	4034	liability; and
4035	4035	(ii) adjusted by the assumed rate of
4036	4036	return.
4037	4037	(11-h) "Level percent of payroll method" means the
4038	4038	amortization method that defines the amount of the liability layer
4039	4039	recognized each fiscal year as a level percent of pensionable
4040	4040	payroll until the amount of the liability layer remaining is
4041	4041	reduced to zero.
4042	4042	(11-i) "Liability gain layer" means a liability layer
4043	4043	that decreases the unfunded actuarial accrued liability.
4044	4044	(11-j) "Liability layer" means the legacy liability
4045	4045	established in the initial risk sharing valuation study under
4046	4046	Section 8C of this Act and the unanticipated change as established
4047	4047	in each subsequent risk sharing valuation study prepared under
4048	4048	Section 8B of this Act.
4049	4049	(11-k) "Liability loss layer" means a liability layer
4050	4050	that increases the unfunded actuarial accrued liability. For
4051	4051	purposes of this Act, the legacy liability is a liability loss
4052	4052	layer.
4053	4053	(12-a) "Maximum contribution rate" means the rate
4054	4054	equal to the corridor midpoint plus the corridor margin.
4055	4055	(12-b) "Minimum contribution rate" means the rate
4056	4056	equal to the corridor midpoint minus the corridor margin.
4057	4057	(14) "Military service" means active service in the
4058	4058	armed forces of the United States or wartime service in the armed
4059	4059	forces of the United States or in the allied forces, if credit for
4060	4060	military service has not been granted under any federal or other
4061	4061	state system or used in any other retirement system, except as
4062	4062	expressly required under federal law.
4063	4063	(14-a) "Normal cost rate" means the salary weighted
4064	4064	average of the individual normal cost rates determined for the
4065	4065	current active population, plus the assumed administrative
4066	4066	expenses determined in the most recent actuarial experience study
4067	4067	conducted under Section 8D of this Act, expressed as a rate,
4068	4068	provided the assumed administrative expenses may not exceed 1.25
4069	4069	percent of pensionable payroll for the current fiscal year unless
4070	4070	agreed to by the city.
4071	4071	(14-b) "Payoff year" means the year a liability layer
4072	4072	is fully amortized under the amortization period. A payoff year may
4073	4073	not be extended or accelerated for a period that is less than one
4074	4074	month.
4075	4075	(17-a) "Pension obligation bond" means a bond issued
4076	4076	in accordance with Chapter 107, Local Government Code.
4077	4077	(18) "Pension system," unless the context otherwise
4078	4078	requires, means the retirement, disability, and survivor benefit
4079	4079	plans for municipal employees of a city under this Act and employees
4080	4080	under Section 3(d) of this Act.
4081	4081	(18-a) "Pension system actuary" means the actuary
4082	4082	engaged by the pension system under Section 2B of this Act.
4083	4083	(18-b) "Pensionable payroll" means the combined
4084	4084	salaries paid to all members in a fiscal year.
4085	4085	(20-a) "Price inflation assumption" means:
4086	4086	(A) the most recent headline consumer price index
4087	4087	10-year forecast published in the Federal Reserve Bank of
4088	4088	Philadelphia Survey of Professional Forecasters; or
4089	4089	(B) if the forecast described by Paragraph (A) of
4090	4090	this subdivision is not available, another standard as determined
4091	4091	by mutual agreement between the city and the pension board entered
4092	4092	into under Section 3(n) of this Act.
4093	4093	(21-a) "Projected pensionable payroll" means the
4094	4094	estimated pensionable payroll for the fiscal year beginning 12
4095	4095	months after the date of the risk sharing valuation study prepared
4096	4096	under Section 8B of this Act, at the time of calculation by:
4097	4097	(A) projecting the prior fiscal year's
4098	4098	pensionable payroll forward two years using the current payroll
4099	4099	growth rate assumptions; and
4100	4100	(B) adjusting, if necessary, for changes in
4101	4101	population or other known factors, provided those factors would
4102	4102	have a material impact on the calculation, as determined by the
4103	4103	pension board.
4104	4104	(26) "Surviving spouse" means a spouse by marriage of
4105	4105	[person who was married to] a member, deferred participant, or
4106	4106	retiree at the time of death of the member, deferred participant, or
4107	4107	retiree and as of the date of [before] separation from service by
4108	4108	the member, deferred participant, or retiree.
4109	4109	(26-a) "Third quarter line rate" means the corridor
4110	4110	midpoint plus 2.5 percentage points.
4111	4111	(26-b) "Total city contribution" means, for a fiscal
4112	4112	year, an amount equal to the sum of:
4113	4113	(A) the city contribution rate multiplied by the
4114	4114	pensionable payroll for the fiscal year; and
4115	4115	(B) the city contribution amount for the fiscal
4116	4116	year.
4117	4117	(28) "Ultimate entry age normal" means an actuarial
4118	4118	cost method under which a calculation is made to determine the
4119	4119	average uniform and constant percentage rate of contributions that,
4120	4120	if applied to the compensation of each member during the entire
4121	4121	period of the member's anticipated covered service, would be
4122	4122	required to meet the cost of all benefits payable on the member's
4123	4123	behalf based on the benefits provisions for newly hired employees.
4124	4124	For purposes of this definition, the actuarial accrued liability
4125	4125	for each member is the difference between the member's present
4126	4126	value of future benefits based on the tier of benefits that apply to
4127	4127	the member and the member's present value of future normal costs
4128	4128	determined using the normal cost rate.
4129	4129	(29) "Unfunded actuarial accrued liability" means the
4130	4130	difference between the actuarial accrued liability and the
4131	4131	actuarial value of assets. For purposes of this definition:
4132	4132	(A) "actuarial accrued liability" means the
4133	4133	portion of the actuarial present value of projected benefits
4134	4134	attributed to past periods of member service based on the cost
4135	4135	method used in the risk sharing valuation study prepared under
4136	4136	Section 8B or 8C of this Act, as applicable; and
4137	4137	(B) "actuarial value of assets" means the value
4138	4138	of pension plan investments as calculated using the asset smoothing
4139	4139	method used in the risk sharing valuation study prepared under
4140	4140	Section 8B or 8C of this Act, as applicable.
4141	4141	(30) "Unanticipated change" means, with respect to the
4142	4142	unfunded actuarial accrued liability in each subsequent risk
4143	4143	sharing valuation study prepared under Section 8B of this Act, the
4144	4144	difference between:
4145	4145	(A) the remaining balance of all then-existing
4146	4146	liability layers as of the date of the risk sharing valuation study;
4147	4147	and
4148	4148	(B) the actual unfunded actuarial accrued
4149	4149	liability as of the date of the risk sharing valuation study.
4150	4150	(31) "Year 2017 effective date" means the date on
4151	4151	which H.B. No. 43, Acts of the 85th Legislature, Regular Session,
4152	4152	2017, took effect.
4153	4153	SECTION 3.02. Chapter 88 (H.B. 1573), Acts of the 77th
4154	4154	Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
4155	4155	Civil Statutes), is amended by adding Sections 1A, 1B, and 1C to
4156	4156	read as follows:
4157	4157	Sec. 1A. INTERPRETATION OF ACT. This Act does not and may
4158	4158	not be interpreted to:
4159	4159	(1) relieve the city, the pension board, or the
4160	4160	pension system of their respective obligations under Sections 8A
4161	4161	through 8F of this Act;
4162	4162	(2) reduce or modify the rights of the city, the
4163	4163	pension system, or the pension board, including any officer or
4164	4164	employee of the city, pension system, or pension board, to enforce
4165	4165	obligations described by Subdivision (1) of this subsection;
4166	4166	(3) relieve the city, including any official or
4167	4167	employee of the city, from:
4168	4168	(A) paying or directing to pay required
4169	4169	contributions to the pension system or fund under Section 8 or 8A of
4170	4170	this Act or carrying out the provisions of Sections 8A through 8F of
4171	4171	this Act; or
4172	4172	(B) reducing or modifying the rights of the
4173	4173	pension board and any officer or employee of the pension board or
4174	4174	pension system to enforce obligations described by Subdivision (1)
4175	4175	of this section;
4176	4176	(4) relieve the pension board or pension system,
4177	4177	including any officer or employee of the pension board or pension
4178	4178	system, from any obligation to implement a benefit change or carry
4179	4179	out the provisions of Sections 8A through 8F of this Act; or
4180	4180	(5) reduce or modify the rights of the city and any
4181	4181	officer or employee of the city to enforce an obligation described
4182	4182	by Subdivision (4) of this section.
4183	4183	Sec. 1B. FISCAL YEAR. If either the pension system or the
4184	4184	city changes its respective fiscal year, the pension system and the
4185	4185	city shall enter into a written agreement under Section 3(n) of this
4186	4186	Act to adjust the provisions of Sections 8A through 8F of this Act
4187	4187	to reflect that change for purposes of this Act.
4188	4188	Sec. 1C. CONFLICT OF LAW. To the extent of a conflict
4189	4189	between this Act and any other law, this Act prevails.
4190	4190	SECTION 3.03. Section 2, Chapter 88 (H.B. 1573), Acts of the
4191	4191	77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
4192	4192	Texas Civil Statutes), is amended by amending Subsections (c), (d),
4193	4193	(g), (j), (l), and (n) and adding Subsections (c-1), (c-2), (c-3),
4194	4194	(c-4), (j-1), (j-2), (ee), (ff), (gg), (hh), (ii), and (jj) to read
4195	4195	as follows:
4196	4196	(c) The pension board consists of 11 [nine] trustees as
4197	4197	follows:
4198	4198	(1) one person appointed by the mayor of the city [, or
4199	4199	the director of the civil service commission as the mayor's
4200	4200	representative];
4201	4201	(2) one person appointed by the controller of the city
4202	4202	[treasurer or a person performing the duties of treasurer];
4203	4203	(3) four municipal employees of the city who are
4204	4204	members of the pension system;
4205	4205	(4) two retirees, each of whom:
4206	4206	(A) has at least five years of credited service
4207	4207	in the pension system;
4208	4208	(B) receives a retirement pension from the
4209	4209	pension system; and
4210	4210	(C) is not an officer or employee of the city;
4211	4211	[and]
4212	4212	(5) one person appointed by the elected trustees who
4213	4213	[:
4214	4214	[(A)] has been a resident of this state for the
4215	4215	three years preceding the date of initial appointment; and
4216	4216	(6) two persons appointed by the governing body of the
4217	4217	city [(B) is not a city officer or employee].
4218	4218	(c-1) To serve as a trustee under Subsection (c)(1), (2), or
4219	4219	(6) of this section, a person may not be a participant in or
4220	4220	beneficiary of the pension system.
4221	4221	(c-2) A trustee appointed under Subsection (c)(1), (2),
4222	4222	(5), or (6) of this section must have expertise in at least one of
4223	4223	the following areas: accounting, finance, pensions, investments,
4224	4224	or actuarial science. Of the trustees appointed under Subsections
4225	4225	(c)(1), (2), and (6) of this section, not more than two trustees may
4226	4226	have expertise in the same area.
4227	4227	(c-3) A trustee appointed under Subsection (c)(1) of this
4228	4228	section shall serve a three-year term expiring in July of the
4229	4229	applicable year. The appointed trustee may be removed at any time
4230	4230	by the mayor. The mayor shall fill a vacancy caused by the
4231	4231	trustee's death, resignation, or removal and the person appointed
4232	4232	to fill the vacancy shall serve the remainder of the unexpired term
4233	4233	of the replaced trustee and may not serve beyond the expiration of
4234	4234	the unexpired term unless appointed by the mayor.
4235	4235	(c-4) A trustee appointed under Subsection (c)(2) of this
4236	4236	section shall serve a three-year term expiring in July of the
4237	4237	applicable year. The appointed trustee may be removed at any time
4238	4238	by the controller. The controller shall fill a vacancy caused by
4239	4239	the trustee's death, resignation, or removal and the person
4240	4240	appointed to fill the vacancy shall serve the remainder of the
4241	4241	unexpired term of the replaced trustee and may not serve beyond the
4242	4242	expiration of the unexpired term unless appointed by the
4243	4243	controller.
4244	4244	(d) To serve as a trustee under Subsection (c)(3) of this
4245	4245	section, a person must be a member with at least five years of
4246	4246	credited service and be elected by the active members of the pension
4247	4247	system voting at an election called by the pension board. No more
4248	4248	than two of the employee trustees may be employees of the same
4249	4249	department.
4250	4250	(g) To serve as a trustee under Subsection (c)(4) of this
4251	4251	section, a person must be elected by a majority of the retirees
4252	4252	voting [retired members of the pension system] at an election
4253	4253	called by the pension board.
4254	4254	(j) To serve as a trustee under Subsection (c)(5) of this
4255	4255	section, the person must be appointed by a vote of a majority of the
4256	4256	elected trustees of the pension board. The trustee appointed under
4257	4257	Subsection (c)(5) of this section shall serve [serves] a three-year
4258	4258	[two-year] term. The appointment or reappointment of the appointed
4259	4259	trustee shall take place in July [January] of the [each
4260	4260	even-numbered] year in which the term ends. The appointed trustee
4261	4261	may be removed at any time by a vote of a majority of the elected
4262	4262	trustees of the pension board. A vacancy caused by the appointed
4263	4263	trustee's death, resignation, or removal shall be filled by the
4264	4264	elected trustees of the pension board. The appointee serves for the
4265	4265	remainder of the unexpired term of the replaced trustee. An
4266	4266	appointed trustee may not serve beyond the expiration of the
4267	4267	three-year [two-year] term unless a majority of [other than by
4268	4268	appointment for a new term by] the elected trustees of the pension
4269	4269	board reappoint the trustee for a new term.
4270	4270	(j-1) To serve as a trustee under Subsection (c)(6) of this
4271	4271	section, a person must be appointed by a vote of a majority of the
4272	4272	members of the governing body of the city. Each trustee appointed
4273	4273	under Subsection (c)(6) of this section shall serve three-year
4274	4274	terms expiring in July of the applicable year. A trustee appointed
4275	4275	under Subsection (c)(6) of this section may be removed at any time
4276	4276	by a vote of a majority of the members of the governing body of the
4277	4277	city. A vacancy caused by the appointed trustee's death,
4278	4278	resignation, or removal shall be filled by a vote of a majority of
4279	4279	the members of the governing body of the city. A person appointed
4280	4280	to fill the vacancy shall serve the remainder of the unexpired term
4281	4281	of the replaced trustee, and may not serve beyond the expiration of
4282	4282	the unexpired term unless appointed by the governing body of the
4283	4283	city.
4284	4284	(j-2) If a majority of the pension board determines that a
4285	4285	trustee appointed under Subsection (c)(1), (2), or (6) of this
4286	4286	section has acted or is acting in a manner that conflicts with the
4287	4287	interests of the pension system or is in violation of this Act or
4288	4288	any agreement between the pension board and the city entered into
4289	4289	under Section 3(n) of this Act, the pension board may recommend to
4290	4290	the mayor, controller, or governing body, as appropriate, that the
4291	4291	appointed trustee be removed from the pension board. If the
4292	4292	appointed trustee was appointed by the governing body of the city,
4293	4293	an action item concerning the pension board's recommendation shall
4294	4294	be placed on the governing body's agenda for consideration and
4295	4295	action. The governing body shall make a determination on the
4296	4296	recommendation and communicate the determination to the pension
4297	4297	system not later than the 45th day after the date of the
4298	4298	recommendation.
4299	4299	(l) To serve on the pension board, each [Each] trustee
4300	4300	shall, on or before [at] the first pension board meeting following
4301	4301	the trustee's most recent election or appointment, take an oath of
4302	4302	office that the trustee:
4303	4303	(1) will diligently and honestly administer the
4304	4304	pension system; and
4305	4305	(2) will not knowingly violate this Act or willingly
4306	4306	allow a violation of this Act to occur.
4307	4307	(n) The person serving as a trustee under Subsection (c)(2)
4308	4308	of this section serves as the treasurer of the pension fund [under
4309	4309	penalty of that person's official bond and oath of office]. The
4310	4310	treasurer shall file an [That person's] official bond payable to
4311	4311	the [city shall cover the person's position as treasurer of the]
4312	4312	pension system. The treasurer is [fund, and that person's sureties
4313	4313	are] liable on [for] the treasurer's official bond for the faithful
4314	4314	performance of the treasurer's duties under this Act in connection
4315	4315	with [actions pertaining to] the pension fund [to the same extent as
4316	4316	the sureties are liable under the terms of the bond for other
4317	4317	actions and conduct of the treasurer].
4318	4318	(ee) A trustee appointed under Subsection (c)(1), (2), (5),
4319	4319	or (6) of this section who fails to attend at least 50 percent of all
4320	4320	regular pension board meetings, as determined annually each July 1,
4321	4321	may be removed from the pension board by the appointing entity. A
4322	4322	trustee removed under this subsection may not be appointed as a
4323	4323	trustee for one year following removal.
4324	4324	(ff) All trustees appointed under Subsection (c) of this
4325	4325	section shall complete minimum educational training requirements
4326	4326	established by the State Pension Review Board. The appointing
4327	4327	entity may remove an appointed trustee who does not complete
4328	4328	minimum educational training requirements during the period
4329	4329	prescribed by the State Pension Review Board.
4330	4330	(gg) The pension board shall adopt an ethics policy
4331	4331	governing, among other matters, conflicts of interest that each
4332	4332	trustee must comply with during the trustee's term on the pension
4333	4333	board.
4334	4334	(hh) During a trustee's term on the pension board and for
4335	4335	one year after leaving the pension board, a trustee may not
4336	4336	represent any other person or organization in any formal or
4337	4337	informal appearance before the pension board or pension system
4338	4338	staff concerning a matter for which the person has or had
4339	4339	responsibility as a trustee.
4340	4340	(ii) The pension board may establish standing or temporary
4341	4341	committees as necessary to assist the board in carrying out its
4342	4342	business, including committees responsible for risk management or
4343	4343	governance, investments, administration and compensation,
4344	4344	financial and actuarial matters, audits, disability
4345	4345	determinations, and agreements under Section 3(n) of this Act. The
4346	4346	pension board shall establish a committee responsible for
4347	4347	agreements under Section 3(n) of this Act that must be composed of
4348	4348	the elected trustees and the trustee appointed by the elected
4349	4349	trustees. Except for a committee responsible for agreements under
4350	4350	Section 3(n) of this Act and any committee responsible for
4351	4351	personnel issues:
4352	4352	(1) each committee must include at least one elected
4353	4353	trustee and one trustee appointed by the mayor, controller, or
4354	4354	governing body of the city;
4355	4355	(2) committee meetings are open to all trustees; and
4356	4356	(3) a committee may not make final decisions and may
4357	4357	only make recommendations to the pension board.
4358	4358	(jj) Subsections (x)(1) through (4), (y), and (cc) of this
4359	4359	section do not grant the pension board authority to modify or
4360	4360	terminate Sections 8A through 8F of this Act.
4361	4361	SECTION 3.04. Chapter 88 (H.B. 1573), Acts of the 77th
4362	4362	Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
4363	4363	Civil Statutes), is amended by adding Sections 2A, 2B, 2C, and 2D to
4364	4364	read as follows:
4365	4365	Sec. 2A. CONFLICTS OF INTEREST. (a) The existence or
4366	4366	appearance of a conflict of interest on the part of any trustee is
4367	4367	detrimental to the proper functioning of the pension system if not
4368	4368	properly addressed. An appointed trustee may not deliberate or
4369	4369	vote on an action relating to the investment of pension system
4370	4370	assets if:
4371	4371	(1) the trustee or an entity with which the trustee is
4372	4372	affiliated:
4373	4373	(A) is a competitor or an affiliate of the person
4374	4374	or firm that is the subject of or otherwise under consideration in
4375	4375	the action; or
4376	4376	(B) likely would be subject to a due diligence
4377	4377	review by the person or firm that is under consideration in the
4378	4378	investment-related action; or
4379	4379	(2) the pension board otherwise determines that the
4380	4380	proposed action would create a direct or indirect benefit for the
4381	4381	appointed trustee or a firm with which the appointed trustee is
4382	4382	affiliated.
4383	4383	(b) The city attorney shall:
4384	4384	(1) provide annual training to trustees appointed by
4385	4385	the city regarding conflicts of interest; and
4386	4386	(2) to the extent authorized by city ordinances, at
4387	4387	the request of the external affairs committee of the pension board,
4388	4388	review and take appropriate action on a complaint alleging a
4389	4389	conflict of interest on the part of a city-appointed trustee.
4390	4390	Sec. 2B. PENSION SYSTEM ACTUARY; ACTUARIAL VALUATIONS. (a)
4391	4391	The pension board shall retain an actuary or actuarial firm for
4392	4392	purposes of this Act.
4393	4393	(b) At least annually, the pension system actuary shall make
4394	4394	a valuation of the assets and liabilities of the pension fund. The
4395	4395	valuation must include the risk sharing valuation study conducted
4396	4396	under Section 8B or 8C of this Act, as applicable.
4397	4397	(c) The pension system shall provide a report of the
4398	4398	valuation to the city.
4399	4399	Sec. 2C. QUALIFICATIONS OF CITY ACTUARY. (a) An actuary
4400	4400	hired by the city for purposes of this Act must be an actuary from a
4401	4401	professional service firm who:
4402	4402	(1) is not already engaged by the pension system or any
4403	4403	other pension system or fund authorized under Article 6243e.2(1) or
4404	4404	6243g-4, Revised Statutes, to provide actuarial services to the
4405	4405	pension system or fund, as applicable;
4406	4406	(2) has a minimum of 10 years of professional
4407	4407	actuarial experience; and
4408	4408	(3) is a fellow of the Society of Actuaries or a member
4409	4409	of the American Academy of Actuaries and who, in carrying out duties
4410	4410	for the city, has met the applicable requirements to issue
4411	4411	statements of actuarial opinion.
4412	4412	(b) Notwithstanding Subsection (a) of this section, the
4413	4413	city actuary must at least meet the qualifications required by the
4414	4414	board for the pension system actuary. The city actuary is not
4415	4415	required to have greater qualifications than those of the pension
4416	4416	system actuary.
4417	4417	Sec. 2D. REPORT ON INVESTMENTS BY INDEPENDENT INVESTMENT
4418	4418	CONSULTANT. (a) At least once every three years, the board shall
4419	4419	hire an independent investment consultant, including an
4420	4420	independent investment consulting firm, to conduct a review of
4421	4421	pension system investments and submit a report to the board and the
4422	4422	city concerning the review or demonstrate in the pension system's
4423	4423	annual financial report that the review was conducted. The
4424	4424	independent investment consultant shall review and report on at
4425	4425	least the following:
4426	4426	(1) the pension system's compliance with its
4427	4427	investment policy statement, ethics policies, including policies
4428	4428	concerning the acceptance of gifts, and policies concerning insider
4429	4429	trading;
4430	4430	(2) the pension system's asset allocation, including a
4431	4431	review and discussion of the various risks, objectives, and
4432	4432	expected future cash flows;
4433	4433	(3) the pension system's portfolio structure,
4434	4434	including the pension system's need for liquidity, cash income,
4435	4435	real return, and inflation protection and the active, passive, or
4436	4436	index approaches for different portions of the portfolio;
4437	4437	(4) investment manager performance reviews and an
4438	4438	evaluation of the processes used to retain and evaluate managers;
4439	4439	(5) benchmarks used for each asset class and
4440	4440	individual manager;
4441	4441	(6) an evaluation of fees and trading costs;
4442	4442	(7) an evaluation of any leverage, foreign exchange,
4443	4443	or other hedging transaction; and
4444	4444	(8) an evaluation of investment-related disclosures
4445	4445	in the pension system's annual reports.
4446	4446	(b) When the board retains an independent investment
4447	4447	consultant under this section, the pension system may require the
4448	4448	consultant to agree in writing to maintain the confidentiality of:
4449	4449	(1) information provided to the consultant that is
4450	4450	reasonably necessary to conduct a review under this section; and
4451	4451	(2) any nonpublic information provided for the pension
4452	4452	system for the review.
4453	4453	(c) The costs for the investment report required by this
4454	4454	section shall be paid from the pension fund.
4455	4455	SECTION 3.05. Section 3, Chapter 88 (H.B. 1573), Acts of the
4456	4456	77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
4457	4457	Texas Civil Statutes), is amended by amending Subsections (f) and
4458	4458	(n) and adding Subsections (o), (p), (q), (r), and (s) to read as
4459	4459	follows:
4460	4460	(f) The pension board shall compensate from the pension fund
4461	4461	the persons performing services under Subsections (d) and (e) of
4462	4462	this section and may provide other employee benefits that the
4463	4463	pension board considers proper. Any person employed by the pension
4464	4464	board under Subsection (d) or (e) of this section who has service
4465	4465	credits with the pension system at the time of the person's
4466	4466	employment by the pension board retains the person's status in the
4467	4467	pension system. Any person employed by the pension system on or
4468	4468	after January 1, 2008, who does not have service credits with the
4469	4469	pension system at the time of employment is a group D [A] member in
4470	4470	accordance with Section 5 of this Act. The pension board shall
4471	4471	adopt a detailed annual budget detailing its proposed
4472	4472	administrative expenditures under this subsection for the next
4473	4473	fiscal year.
4474	4474	(n) Notwithstanding any other law and except as
4475	4475	specifically limited by Subsection (o) of this section, the pension
4476	4476	board may enter into a written agreement with the city regarding
4477	4477	pension issues and benefits. The agreement must be approved by the
4478	4478	pension board and the governing body of the city and signed by the
4479	4479	mayor and by the pension board or the pension board's designee. The
4480	4480	agreement is enforceable against and binding on the pension board,
4481	4481	the city, and the pension system, including the pension system's
4482	4482	members, retirees, deferred participants, beneficiaries, eligible
4483	4483	survivors, and alternate payees. Any reference in this Act to an
4484	4484	agreement between the city and the pension board or pension system
4485	4485	is a reference to an agreement entered under this subsection.
4486	4486	(o) In any written agreement entered into between the city
4487	4487	and the pension board under Subsection (n) of this section, the
4488	4488	parties may not:
4489	4489	(1) fundamentally alter Sections 8A through 8F of this
4490	4490	Act;
4491	4491	(2) increase the assumed rate of return to more than
4492	4492	seven percent per year;
4493	4493	(3) extend the amortization period of a liability
4494	4494	layer to more than 30 years from the first day of the fiscal year
4495	4495	beginning 12 months after the date of the risk sharing valuation
4496	4496	study in which the liability layer is first recognized; or
4497	4497	(4) allow a total city contribution in any fiscal year
4498	4498	that is less than the total city contribution required under
4499	4499	Section 8E or 8F, as applicable, of this Act.
4500	4500	(p) Annually on or before the end of the fiscal year, the
4501	4501	pension board shall make a report to the mayor and the governing
4502	4502	body of the city, each of which shall provide a reasonable
4503	4503	opportunity for the pension board to prepare and present the
4504	4504	report.
4505	4505	(q) The pension board shall provide quarterly investment
4506	4506	reports to the mayor.
4507	4507	(r) At the mayor's request, the pension board shall meet,
4508	4508	discuss, and analyze with the mayor or the mayor's representatives
4509	4509	any city proposed policy changes and ordinances that may have a
4510	4510	financial effect on the pension system.
4511	4511	(s) The pension board shall work to reduce administrative
4512	4512	expenses, including by working with any other pension fund to which
4513	4513	the city contributes.
4514	4514	SECTION 3.06. Section 5, Chapter 88 (H.B. 1573), Acts of the
4515	4515	77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
4516	4516	Texas Civil Statutes), is amended by amending Subsections (b), (e),
4517	4517	(f), and (g) and adding Subsections (j) and (k) to read as follows:
4518	4518	(b) Except as provided by Subsection (c), (j), or (k) of
4519	4519	this section and Sections 4 and 6 of this Act, an employee is a group
4520	4520	A member of the pension system as a condition of employment if the
4521	4521	employee:
4522	4522	(1) is hired or rehired as an employee by the city, the
4523	4523	predecessor system, or the pension system on or after September 1,
4524	4524	1999, and before January 1, 2008;
4525	4525	(2) was a member of the predecessor system before
4526	4526	September 1, 1981, under the terms of Chapter 358, Acts of the 48th
4527	4527	Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
4528	4528	Civil Statutes), and did not make an election before December 1,
4529	4529	1981, under Section 22(a) of that Act to receive a refund of
4530	4530	contributions and become a group B member;
4531	4531	(3) was a group A member who terminated employment
4532	4532	included in the predecessor system before May 3, 1991, elected
4533	4533	under Section 16, Chapter 358, Acts of the 48th Legislature,
4534	4534	Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
4535	4535	Statutes), to leave the member's contributions in that pension
4536	4536	fund, met the minimum service requirements for retirement at an
4537	4537	attained age, was reemployed in a position included in the
4538	4538	predecessor system before September 1, 1999, and elected, not later
4539	4539	than the 30th day after the date reemployment began, to continue as
4540	4540	a group A member;
4541	4541	(4) became a member of, or resumed membership in, the
4542	4542	predecessor system as an employee or elected official of the city
4543	4543	after January 1, 1996, and before September 1, 1999, and elected by
4544	4544	submission of a signed and notarized form in a manner determined by
4545	4545	the pension board to become a group A member and to contribute a
4546	4546	portion of the person's salary to the pension fund as required by
4547	4547	Chapter 358, Acts of the 48th Legislature, Regular Session, 1943
4548	4548	(Article 6243g, Vernon's Texas Civil Statutes); or
4549	4549	(5) met the requirements of Section 3B, Chapter 358,
4550	4550	Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g,
4551	4551	Vernon's Texas Civil Statutes), or Subsection (f) of this section
4552	4552	for membership in group A.
4553	4553	(e) Any member or former member of the pension system
4554	4554	elected to an office of the city on or after September 1, 1999, and
4555	4555	before January 1, 2008, is [becomes] a group A member and is
4556	4556	eligible to receive credit for all previous service on the same
4557	4557	conditions as reemployed group A members under Sections 7(c), (d),
4558	4558	(e), and (f) of this Act, except as otherwise provided by this Act.
4559	4559	For purposes of this subsection [Notwithstanding any other
4560	4560	provision in this Act or in Chapter 358, Acts of the 48th
4561	4561	Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
4562	4562	Civil Statutes)], consecutive terms of office of any elected member
4563	4563	who is elected to an office of the city are considered to be
4564	4564	continuous employment for purposes of this Act.
4565	4565	(f) Each group B member of the pension system may make an
4566	4566	irrevocable election on a date and in a manner determined by the
4567	4567	pension board to change membership from group B to group A:
4568	4568	(1) for future service only; or
4569	4569	(2) for future service and to convert all past group B
4570	4570	service to group A service and comply with the requirements of
4571	4571	Subsection (h) of this section provided the service is converted
4572	4572	before December 31, 2005.
4573	4573	(g) Each group A member with service in group B may make an
4574	4574	irrevocable election not later than December 31, 2005, [on a date]
4575	4575	and in a manner determined by the pension board to convert all group
4576	4576	B service to group A service and to comply with the requirements of
4577	4577	Subsection (h) of this section.
4578	4578	(j) Except as provided by Subsection (k) of this section or
4579	4579	Section 4 of this Act, an employee is a group D member of the pension
4580	4580	system as a condition of employment if the employee is hired as an
4581	4581	employee by the city or the pension system on or after January 1,
4582	4582	2008.
4583	4583	(k) Notwithstanding any provision of this section, for
4584	4584	purposes of Subsection (j) of this section:
4585	4585	(1) consecutive terms of office of an elected member
4586	4586	who is elected to an office of the city are considered to be
4587	4587	continuous employment; and
4588	4588	(2) a former employee who is rehired as an employee by
4589	4589	the city or the pension system on or after January 1, 2008, is, as a
4590	4590	condition of employment, a member of the group in which that
4591	4591	employee participated at the time of the employee's immediately
4592	4592	preceding separation from service.
4593	4593	SECTION 3.07. Section 6, Chapter 88 (H.B. 1573), Acts of the
4594	4594	77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
4595	4595	Texas Civil Statutes), is amended by adding Subsections (k) and (l)
4596	4596	to read as follows:
4597	4597	(k) Notwithstanding any other law, including Subsection
4598	4598	(b)(3) of this section, Subsections (a) through (j) of this section
4599	4599	do not apply to any employee on or after January 1, 2005. An
4600	4600	employee who meets the definition of "executive official" under
4601	4601	Subsection (b)(3) of this section is a group A member beginning
4602	4602	January 1, 2005, for credited service earned on or after January 1,
4603	4603	2005, or a member of the applicable group under Section 5 of this
4604	4604	Act. This subsection does not affect:
4605	4605	(1) any credited service or benefit percentage accrued
4606	4606	in group C before January 1, 2005;
4607	4607	(2) any group C benefit that a deferred participant or
4608	4608	retiree is eligible to receive that was earned before January 1,
4609	4609	2005; or
4610	4610	(3) the terms of any obligation to purchase service
4611	4611	credit or convert service credit to group C that was entered into
4612	4612	before January 1, 2005.
4613	4613	(l) A group C member who terminates employment before
4614	4614	January 1, 2005, is subject to the retirement eligibility
4615	4615	requirements in effect on the date of the member's termination from
4616	4616	employment. A group C member who becomes a group A member under
4617	4617	Subsection (k) of this section on January 1, 2005, is subject to the
4618	4618	retirement eligibility requirements under Section 10 of this Act.
4619	4619	SECTION 3.08. Section 7, Chapter 88 (H.B. 1573), Acts of the
4620	4620	77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
4621	4621	Texas Civil Statutes), is amended by amending Subsections (a), (c),
4622	4622	(e), (f), (g), and (h) and adding Subsections (g-1), (g-2), (i),
4623	4623	(j), (k), and (l) to read as follows:
4624	4624	(a) Notwithstanding any other provision of this Act,
4625	4625	duplication of service or credited service in group A, B, [or] C, or
4626	4626	D of the pension system or in the pension system and any other
4627	4627	defined benefit pension plan to which the city contributes is
4628	4628	prohibited.
4629	4629	(c) Except as provided by Section 12 of this Act, a [group A]
4630	4630	member may pay into the pension fund and obtain credit for any
4631	4631	service with the city or the pension system for which credit is
4632	4632	otherwise allowable [in group A] under this Act, except that:
4633	4633	(1) no required contributions were made by the member
4634	4634	for the service; or
4635	4635	(2) refunded contributions attributable to the
4636	4636	service have not been subsequently repaid.
4637	4637	(e) To establish service described by Subsection (c) of this
4638	4638	section that occurred on or after September 1, 1999, the member
4639	4639	shall pay a sum computed by multiplying the member's salary during
4640	4640	the service by the rate established [by the pension board] for
4641	4641	member contributions under Section 8 of this Act, and the city shall
4642	4642	pay into the pension fund an amount equal to the rate established
4643	4643	for city contributions under Section 8A [8] of this Act [multiplied
4644	4644	by that member's salary for the same period].
4645	4645	(f) In addition to the amounts to be paid by the member under
4646	4646	Subsection (d) or (e) of this section, the member shall also pay
4647	4647	interest on those amounts at the current assumed rate of return [six
4648	4648	percent] per year, not compounded, from the date the contributions
4649	4649	would have been deducted, if made, or from the date contributions
4650	4650	were refunded to the date of repayment of those contributions into
4651	4651	the pension fund.
4652	4652	(g) Before the year 2017 effective date, if [If] a group B or
4653	4653	group D member separates from service before completing five years
4654	4654	of credited service, the member's service credit is canceled at the
4655	4655	time of separation. If the member is reemployed by the city in a
4656	4656	position covered by the pension system before the first anniversary
4657	4657	of the date of separation, all credit for previous service is
4658	4658	restored. Any member whose service credit is canceled under this
4659	4659	subsection and who is reemployed by the city in a position covered
4660	4660	by the pension system after the first anniversary of the date of
4661	4661	separation receives one year of previous service credit in group B
4662	4662	or group D, as applicable, for each full year of subsequent service
4663	4663	up to the amount of the previous service that was canceled.
4664	4664	(g-1) On or after the year 2017 effective date, if a group B
4665	4665	or group D member who has made required member contributions
4666	4666	separates from service before completing five years of credited
4667	4667	service, the member's service credit is canceled at the time of
4668	4668	separation and the member is eligible to receive a refund of
4669	4669	required member contributions as provided by Section 17 of this
4670	4670	Act. If the member is reemployed before the first anniversary of
4671	4671	the date of separation:
4672	4672	(1) subject to Subdivision (2) of this subsection, all
4673	4673	credit for previous service for which no member contributions were
4674	4674	required is restored, along with credit for previous service for
4675	4675	which the member did not receive a refund of contributions; and
4676	4676	(2) if the member's service credit is canceled under
4677	4677	this subsection, the member is eligible to reinstate the canceled
4678	4678	credited service by paying the pension system the refund amount, if
4679	4679	any, plus interest on those amounts at the current assumed rate of
4680	4680	return per year, not compounded, from the date contributions were
4681	4681	refunded to the date of repayment of those contributions to the
4682	4682	pension fund.
4683	4683	(g-2) For purposes of Subsection (g-1)(2) of this section,
4684	4684	for any canceled service for which contributions were not required,
4685	4685	the member receives one year of previous service credit in group B
4686	4686	or group D, as appropriate, for each full year of subsequent service
4687	4687	up to the amount of the previous service that was canceled.
4688	4688	(h) A group B member who was a group A member before
4689	4689	September 1, 1981, and who was eligible to purchase credit for
4690	4690	previous service under Chapter 358, Acts of the 48th Legislature,
4691	4691	Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
4692	4692	Statutes), may purchase the service credit in group B by paying into
4693	4693	the pension fund an amount equal to the assumed rate of return [six
4694	4694	percent] per year, not compounded, on any contributions previously
4695	4695	withdrawn for the period from the date of withdrawal to the date of
4696	4696	purchase.
4697	4697	(i) Under rules and procedures adopted by the pension board,
4698	4698	a group D member may effectuate a direct trustee-to-trustee
4699	4699	transfer from a qualifying code Section 457(b) plan to the pension
4700	4700	system to purchase an increased or enhanced benefit in accordance
4701	4701	with the provisions of code Sections 415(n) and 457(e)(17) of the
4702	4702	Internal Revenue Code of 1986. The amount transferred under this
4703	4703	subsection shall be held by the pension system and the pension
4704	4704	system may not separately account for the amount. The pension board
4705	4705	by rule shall determine the additional benefit that a member is
4706	4706	entitled to based on a transfer under this subsection.
4707	4707	(j) For purposes of this subsection and Subsection (k) of
4708	4708	this section, "furlough time" means the number of days a person has
4709	4709	been furloughed. A person who has been voluntarily or
4710	4710	involuntarily furloughed shall receive credited service for each
4711	4711	day that the person has been furloughed, provided that:
4712	4712	(1) the pension system receives all required city
4713	4713	contributions and member contributions for the credited service
4714	4714	attributable to the furlough time for the pay period in which the
4715	4715	furlough occurs, based on the regular salary that each furloughed
4716	4716	member would have received if the member had worked during the
4717	4717	furlough time;
4718	4718	(2) the member may receive not more than 10 days of
4719	4719	credited service in a fiscal year for furlough time; and
4720	4720	(3) credited service for furlough time may not be used
4721	4721	to meet the five-year requirement under Section 10(b) of this Act
4722	4722	for eligibility for a benefit.
4723	4723	(k) For purposes of Subsection (j) of this section, the city
4724	4724	shall establish a unique pay code for furlough time to provide for
4725	4725	timely payment of city contributions and member contributions for
4726	4726	furlough time and to allow the pension system to identify furlough
4727	4727	time for each furloughed employee.
4728	4728	(l) Notwithstanding any provision of this section, the
4729	4729	interest rate on any service purchase shall be the then current
4730	4730	assumed rate of return, not compounded.
4731	4731	SECTION 3.09. The heading to Section 8, Chapter 88 (H.B.
4732	4732	1573), Acts of the 77th Legislature, Regular Session, 2001 (Article
4733	4733	6243h, Vernon's Texas Civil Statutes), is amended to read as
4734	4734	follows:
4735	4735	Sec. 8. MEMBER CONTRIBUTIONS.
4736	4736	SECTION 3.10. Sections 8(a), (b), and (c), Chapter 88 (H.B.
4737	4737	1573), Acts of the 77th Legislature, Regular Session, 2001 (Article
4738	4738	6243h, Vernon's Texas Civil Statutes), are amended to read as
4739	4739	follows:
4740	4740	(a) Subject to adjustments authorized under Section 8E or 8F
4741	4741	of this Act, beginning on the year 2017 effective date, each [Each
4742	4742	group A] member of the pension system shall make biweekly [monthly]
4743	4743	contributions during employment in an amount determined in
4744	4744	accordance with this section [by the pension board and expressed as
4745	4745	a percentage of salary]. The contributions shall be deducted by the
4746	4746	employer from the salary of each member and paid to the pension
4747	4747	system for deposit in the pension fund. Member contributions under
4748	4748	this section shall be made as follows:
4749	4749	(1) each group A member shall contribute:
4750	4750	(A) seven percent of the member's salary
4751	4751	beginning with the member's first full biweekly pay period that
4752	4752	occurs on or after the year 2017 effective date; and
4753	4753	(B) a total of eight percent of the member's
4754	4754	salary beginning with the member's first full biweekly pay period
4755	4755	for the member that occurs on or after July 1, 2018;
4756	4756	(2) each group B member shall contribute:
4757	4757	(A) two percent of the member's salary beginning
4758	4758	with the member's first full biweekly pay period that occurs on or
4759	4759	after the year 2017 effective date; and
4760	4760	(B) a total of four percent of the member's
4761	4761	salary beginning with the member's first full biweekly pay period
4762	4762	for the member that occurs on or after July 1, 2018; and
4763	4763	(3) each group D member shall contribute two percent
4764	4764	of the member's salary beginning with the member's first full
4765	4765	biweekly pay period that occurs on or after the year 2017 effective
4766	4766	date.
4767	4767	(b) This section does not increase or decrease the
4768	4768	contribution obligation of any member that arose before the year
4769	4769	2017 effective date [September 1, 2001,] or give rise to any claim
4770	4770	for a refund for any contributions made before that date.
4771	4771	(c) The employer shall pick up the contributions required of
4772	4772	[group A] members by Subsection (a) of this section and
4773	4773	contributions required of group D members under Section 10A(a) of
4774	4774	this Act as soon as reasonably practicable under applicable rules
4775	4775	for all salaries earned by members after the year 2017 effective
4776	4776	date and by January 1, 2018, for contributions required by Section
4777	4777	10A(a) of this Act. The city shall pay the pickup contributions to
4778	4778	the pension system from the same source of funds that is used for
4779	4779	paying salaries to the members. The pickup contributions are in
4780	4780	lieu of contributions by [group A] members. The city may pick up
4781	4781	those contributions by a deduction from each [group A] member's
4782	4782	salary equal to the amount of the member's contributions picked up
4783	4783	by the city. Members may not choose to receive the contributed
4784	4784	amounts directly instead of having the contributed amounts paid by
4785	4785	the city to the pension system. An accounting of member
4786	4786	contributions picked up by the employer shall be maintained, and
4787	4787	the contributions shall be treated for all other purposes as if the
4788	4788	amount were a part of the member's salary and had been deducted
4789	4789	under this section. Contributions picked up under this subsection
4790	4790	shall be treated as employer contributions in determining tax
4791	4791	treatment of the amounts under the Internal Revenue Code of 1986, as
4792	4792	amended.
4793	4793	SECTION 3.11. Chapter 88 (H.B. 1573), Acts of the 77th
4794	4794	Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
4795	4795	Civil Statutes), is amended by adding Sections 8A, 8B, 8C, 8D, 8E,
4796	4796	8F, 8G, and 8H to read as follows:
4797	4797	Sec. 8A. CITY CONTRIBUTIONS. (a) The city shall make
4798	4798	contributions to the pension system for deposit into the pension
4799	4799	fund as provided by this section and Section 8B, 8C, 8E, or 8F of
4800	4800	this Act, as applicable. The city shall contribute:
4801	4801	(1) beginning with the year 2017 effective date and
4802	4802	ending with the fiscal year ending June 30, 2018, an amount equal to
4803	4803	the sum of:
4804	4804	(A) the city contribution rate, as determined in
4805	4805	the initial risk sharing valuation study conducted under Section 8C
4806	4806	of this Act, multiplied by the pensionable payroll for the fiscal
4807	4807	year; and
4808	4808	(B) the city contribution amount for the fiscal
4809	4809	year; and
4810	4810	(2) for each fiscal year after the fiscal year ending
4811	4811	June 30, 2018, an amount equal to the sum of:
4812	4812	(A) the city contribution rate, as determined in
4813	4813	a subsequent risk sharing valuation study conducted under Section
4814	4814	8B of this Act and adjusted under Section 8E or 8F of this Act, as
4815	4815	applicable, multiplied by the pensionable payroll for the
4816	4816	applicable fiscal year; and
4817	4817	(B) except as provided by Subsection (e) of this
4818	4818	section, the city contribution amount for the applicable fiscal
4819	4819	year.
4820	4820	(b) Except by written agreement between the city and the
4821	4821	pension board under Section 3(n) of this Act providing for an
4822	4822	earlier contribution date, at least biweekly, the city shall make
4823	4823	the contributions required by Subsection (a) of this section by
4824	4824	depositing with the pension system an amount equal to the sum of:
4825	4825	(1) the city contribution rate multiplied by the
4826	4826	pensionable payroll for the biweekly period; and
4827	4827	(2) the city contribution amount for the applicable
4828	4828	fiscal year divided by 26.
4829	4829	(c) With respect to each fiscal year:
4830	4830	(1) the first contribution by the city under this
4831	4831	section for the fiscal year shall be made not later than the date
4832	4832	payment is made to employees for their first full biweekly pay
4833	4833	period beginning on or after the first day of the fiscal year; and
4834	4834	(2) the final contribution by the city under this
4835	4835	section for the fiscal year shall be made not later than the date
4836	4836	payment is made to employees for the final biweekly pay period of
4837	4837	the fiscal year.
4838	4838	(d) In addition to the amounts required under this section,
4839	4839	the city may at any time contribute additional amounts to the
4840	4840	pension system for deposit in the pension fund by entering into a
4841	4841	written agreement with the pension board in accordance with Section
4842	4842	3(n) of this Act.
4843	4843	(e) If, in any given fiscal year, the funded ratio is
4844	4844	greater than or equal to 100 percent, the city contribution under
4845	4845	this section may no longer include the city contribution amount.
4846	4846	(f) Contributions shall be made under this section by the
4847	4847	city to the pension system in order to be credited against any
4848	4848	amortization schedule of payments due to the pension system under
4849	4849	this Act.
4850	4850	(g) Subsection (f) of this section does not affect the
4851	4851	exclusion of contribution amounts under Subsection (e) of this
4852	4852	section or changes to an amortization schedule of a liability layer
4853	4853	under Section 8B(a)(7)(F), 8C(i)-(j), or 8E(c)(3)-(4) of this Act.
4854	4854	Sec. 8B. RISK SHARING VALUATION STUDIES. (a) The pension
4855	4855	system and the city shall separately cause their respective
4856	4856	actuaries to prepare a risk sharing valuation study in accordance
4857	4857	with this section and actuarial standards of practice. A risk
4858	4858	sharing valuation study must:
4859	4859	(1) be dated as of the first day of the fiscal year for
4860	4860	which the study is required to be prepared;
4861	4861	(2) be included in the annual valuation study prepared
4862	4862	under Section 2B of this Act;
4863	4863	(3) calculate the unfunded actuarial accrued
4864	4864	liability of the pension system;
4865	4865	(4) be based on actuarial data provided by the pension
4866	4866	system actuary or, if actuarial data is not provided, on estimates
4867	4867	of actuarial data;
4868	4868	(5) estimate the city contribution rate and the city
4869	4869	contribution amount, taking into account any adjustments required
4870	4870	under Section 8E or 8F of this Act for all applicable prior fiscal
4871	4871	years;
4872	4872	(6) detail the city contribution rate and the city
4873	4873	contribution amount, taking into account any adjustments required
4874	4874	under Section 8E or 8F of this Act for all applicable prior fiscal
4875	4875	years;
4876	4876	(7) subject to Subsection (g) of this section, be
4877	4877	based on the following assumptions and methods that are consistent
4878	4878	with actuarial standards of practice:
4879	4879	(A) an ultimate entry age normal actuarial
4880	4880	method;
4881	4881	(B) for purposes of determining the actuarial
4882	4882	value of assets:
4883	4883	(i) except as provided by Subparagraph (ii)
4884	4884	of this paragraph and Section 8E(c)(1) or 8F(c)(1) of this Act, an
4885	4885	asset smoothing method recognizing actuarial losses and gains over
4886	4886	a five-year period applied prospectively beginning on the year 2017
4887	4887	effective date; and
4888	4888	(ii) for the initial risk sharing valuation
4889	4889	study prepared under Section 8C of this Act, a marked-to-market
4890	4890	method applied as of June 30, 2016;
4891	4891	(C) closed layered amortization of liability
4892	4892	layers to ensure that the amortization period for each layer begins
4893	4893	12 months after the date of the risk sharing valuation study in
4894	4894	which the liability layer is first recognized;
4895	4895	(D) each liability layer is assigned an
4896	4896	amortization period;
4897	4897	(E) each liability loss layer amortized over a
4898	4898	period of 30 years from the first day of the fiscal year beginning
4899	4899	12 months after the date of the risk sharing valuation study in
4900	4900	which the liability loss layer is first recognized, except that the
4901	4901	legacy liability must be amortized from July 1, 2016, for a 30-year
4902	4902	period beginning July 1, 2017;
4903	4903	(F) the amortization period for each liability
4904	4904	gain layer being:
4905	4905	(i) equal to the remaining amortization
4906	4906	period on the largest remaining liability loss layer and the two
4907	4907	layers must be treated as one layer such that if the payoff year of
4908	4908	the liability loss layer is accelerated or extended, the payoff
4909	4909	year of the liability gain layer is also accelerated or extended; or
4910	4910	(ii) if there is no liability loss layer, a
4911	4911	period of 30 years from the first day of the fiscal year beginning
4912	4912	12 months after the date of the risk sharing valuation study in
4913	4913	which the liability gain layer is first recognized;
4914	4914	(G) liability layers, including the legacy
4915	4915	liability, funded according to the level percent of payroll method;
4916	4916	(H) the assumed rate of return, subject to
4917	4917	adjustment under Section 8E(c)(5) of this Act or, if Section 8C(g)
4918	4918	of this Act applies, adjustment in accordance with a written
4919	4919	agreement entered into under Section 3(n) of this Act, except that
4920	4920	the assumed rate of return may not exceed seven percent per annum;
4921	4921	(I) the price inflation assumption as of the most
4922	4922	recent actuarial experience study, which may be reset by the
4923	4923	pension board by plus or minus 50 basis points based on that
4924	4924	actuarial experience study;
4925	4925	(J) projected salary increases and payroll
4926	4926	growth rate set in consultation with the city's finance director;
4927	4927	(K) payroll for purposes of determining the
4928	4928	corridor midpoint, city contribution rate, and city contribution
4929	4929	amount must be projected using the annual payroll growth rate
4930	4930	assumption; and
4931	4931	(L) the city contribution rate calculated
4932	4932	without inclusion of the legacy liability; and
4933	4933	(8) be revised and restated, if appropriate, not later
4934	4934	than:
4935	4935	(A) the date required by a written agreement
4936	4936	entered into between the city and the pension board; or
4937	4937	(B) the 30th day after the date required action
4938	4938	is taken by the pension board under Section 8E or 8F of this Act to
4939	4939	reflect any changes required by either section.
4940	4940	(b) As soon as practicable after the end of a fiscal year,
4941	4941	the pension system actuary at the direction of the pension system
4942	4942	and the city actuary at the direction of the city shall separately
4943	4943	prepare a proposed risk sharing valuation study based on the fiscal
4944	4944	year that just ended.
4945	4945	(c) Not later than October 31 following the end of the
4946	4946	fiscal year, the pension system shall provide to the city actuary,
4947	4947	under a confidentiality agreement with the pension board in which
4948	4948	the city actuary agrees to comply with the confidentiality
4949	4949	provisions of Section 8G of this Act, the actuarial data described
4950	4950	by Subsection (a)(4) of this section.
4951	4951	(d) Not later than the 150th day after the last day of the
4952	4952	fiscal year:
4953	4953	(1) the pension system actuary, at the direction of
4954	4954	the pension system, shall provide the proposed risk sharing
4955	4955	valuation study prepared by the pension system actuary under
4956	4956	Subsection (b) of this section to the city actuary; and
4957	4957	(2) the city actuary, at the direction of the city,
4958	4958	shall provide the proposed risk sharing valuation study prepared by
4959	4959	the city actuary under Subsection (b) of this section to the pension
4960	4960	system actuary.
4961	4961	(e) Each actuary described by Subsection (d) of this section
4962	4962	may provide copies of the proposed risk sharing valuation studies
4963	4963	to the city or the pension system as appropriate.
4964	4964	(f) If, after exchanging proposed risk sharing valuation
4965	4965	studies under Subsection (d) of this section, it is found that the
4966	4966	difference between the estimated city contribution rate
4967	4967	recommended in the proposed risk sharing valuation study prepared
4968	4968	by the pension system actuary and the estimated city contribution
4969	4969	rate recommended in the proposed risk sharing valuation study
4970	4970	prepared by the city actuary for the corresponding fiscal year is:
4971	4971	(1) less than or equal to two percentage points, the
4972	4972	estimated city contribution rate recommended by the pension system
4973	4973	actuary will be the estimated city contribution rate for purposes
4974	4974	of Subsection (a)(5) of this section, and the proposed risk sharing
4975	4975	valuation study prepared for the pension system is considered to be
4976	4976	the final risk sharing valuation study for the fiscal year for the
4977	4977	purposes of this Act; or
4978	4978	(2) greater than two percentage points, the city
4979	4979	actuary and the pension system actuary shall have 20 business days
4980	4980	to reconcile the difference, provided that without the mutual
4981	4981	agreement of both actuaries, the difference in the estimated city
4982	4982	contribution rate recommended by the city actuary and the estimated
4983	4983	city contribution rate recommended by the pension system actuary
4984	4984	may not be further increased and:
4985	4985	(A) if, as a result of reconciliation efforts
4986	4986	under this subdivision, the difference is reduced to less than or
4987	4987	equal to two percentage points:
4988	4988	(i) the estimated city contribution rate
4989	4989	proposed under the reconciliation by the pension system actuary
4990	4990	will be the estimated city contribution rate for purposes of
4991	4991	Subsection (a)(5) of this section; and
4992	4992	(ii) the pension system's risk sharing
4993	4993	valuation study is considered to be the final risk sharing
4994	4994	valuation study for the fiscal year for the purposes of this Act; or
4995	4995	(B) if, after 20 business days, the pension
4996	4996	system actuary and the city actuary are not able to reach a
4997	4997	reconciliation that reduces the difference to an amount less than
4998	4998	or equal to two percentage points:
4999	4999	(i) the city actuary at the direction of the
5000	5000	city and the pension system actuary at the direction of the pension
5001	5001	system each shall deliver to the finance director of the city and
5002	5002	the executive director of the pension system a final risk sharing
5003	5003	valuation study with any agreed-to changes, marked as the final
5004	5004	risk sharing valuation study for each actuary; and
5005	5005	(ii) not later than the 90th day before the
5006	5006	first day of the next fiscal year, the finance director and the
5007	5007	executive director shall execute a joint addendum to the final risk
5008	5008	sharing valuation study received under Subparagraph (i) of this
5009	5009	paragraph that is a part of the final risk sharing valuation study
5010	5010	for the fiscal year for all purposes and reflects the arithmetic
5011	5011	average of the estimated city contribution rates for the fiscal
5012	5012	year stated by the city actuary and the pension system actuary in
5013	5013	the final risk sharing valuation study for purposes of Subsection
5014	5014	(a)(5) of this section, and for reporting purposes the pension
5015	5015	system may treat the pension system actuary's risk sharing
5016	5016	valuation study with the addendum as the final risk sharing
5017	5017	valuation study.
5018	5018	(g) The assumptions and methods used and the types of
5019	5019	actuarial data and financial information used to prepare the
5020	5020	initial risk sharing valuation study under Section 8C of this Act
5021	5021	shall be used to prepare each subsequent risk sharing valuation
5022	5022	study under this section, unless changed based on the actuarial
5023	5023	experience study conducted under Section 8D of this Act.
5024	5024	(h) The actuarial data provided under Subsection (a)(4) of
5025	5025	this section may not include the identifying information of
5026	5026	individual members.
5027	5027	Sec. 8C. INITIAL RISK SHARING VALUATION STUDIES; CORRIDOR
5028	5028	MIDPOINT AND CITY CONTRIBUTION AMOUNTS. (a) The pension system and
5029	5029	the city shall separately cause their respective actuaries to
5030	5030	prepare an initial risk sharing valuation study that is dated as of
5031	5031	July 1, 2016, in accordance with this section. An initial risk
5032	5032	sharing valuation study must:
5033	5033	(1) except as otherwise provided by this section, be
5034	5034	prepared in accordance with Section 8B of this Act, and for purposes
5035	5035	of Section 8B(a)(4) of this Act, be based on actuarial data as of
5036	5036	June 30, 2016;
5037	5037	(2) project the corridor midpoint for 31 fiscal years
5038	5038	beginning with the fiscal year beginning July 1, 2017; and
5039	5039	(3) subject to Subsections (i) and (j) of this
5040	5040	section, include a schedule of city contribution amounts for 30
5041	5041	fiscal years beginning with the fiscal year beginning July 1, 2017.
5042	5042	(b) If the initial risk sharing valuation study has not been
5043	5043	prepared consistent with this section before the year 2017
5044	5044	effective date, as soon as practicable after the year 2017
5045	5045	effective date:
5046	5046	(1) the pension system shall provide to the city
5047	5047	actuary under a confidentiality agreement the necessary actuarial
5048	5048	data used by the pension system actuary to prepare the proposed
5049	5049	initial risk sharing valuation study; and
5050	5050	(2) not later than the 30th day after the date the
5051	5051	city's actuary receives the actuarial data:
5052	5052	(A) the city actuary, at the direction of the
5053	5053	city, shall provide a proposed initial risk sharing valuation study
5054	5054	to the pension system actuary; and
5055	5055	(B) the pension system actuary, at the direction
5056	5056	of the pension system, shall provide a proposed initial risk
5057	5057	sharing valuation study to the city actuary.
5058	5058	(c) If, after exchanging proposed initial risk sharing
5059	5059	valuation studies under Subsection (b)(2) of this section, it is
5060	5060	determined that the difference between the estimated total city
5061	5061	contribution divided by the pensionable payroll for any fiscal year
5062	5062	in the proposed initial risk sharing valuation study prepared by
5063	5063	the pension system actuary and in the proposed initial risk sharing
5064	5064	valuation study prepared by the city actuary is:
5065	5065	(1) less than or equal to two percentage points, the
5066	5066	estimated city contribution rate and the estimated city
5067	5067	contribution amount for that fiscal year recommended by the pension
5068	5068	system actuary will be the estimated city contribution rate and the
5069	5069	estimated city contribution amount, as applicable, for purposes of
5070	5070	Section 8B(a)(5) of this Act; or
5071	5071	(2) greater than two percentage points, the city
5072	5072	actuary and the pension system actuary shall have 20 business days
5073	5073	to reconcile the difference and:
5074	5074	(A) if, as a result of reconciliation efforts
5075	5075	under this subdivision, the difference in any fiscal year is
5076	5076	reduced to less than or equal to two percentage points, the city
5077	5077	contribution rate and the city contribution amount recommended by
5078	5078	the pension system actuary for that fiscal year will be the
5079	5079	estimated city contribution rate and the estimated city
5080	5080	contribution amount, as applicable, for purposes of Section
5081	5081	8B(a)(5) of this Act; or
5082	5082	(B) if, after 20 business days, the city actuary
5083	5083	and the pension system actuary are not able to reach a
5084	5084	reconciliation that reduces the difference to an amount less than
5085	5085	or equal to two percentage points for any fiscal year:
5086	5086	(i) the city actuary at the direction of the
5087	5087	city and the pension system actuary at the direction of the pension
5088	5088	system each shall deliver to the finance director of the city and
5089	5089	the executive director of the pension system a final initial risk
5090	5090	sharing valuation study with any agreed-to changes, marked as the
5091	5091	final initial risk sharing valuation study for each actuary; and
5092	5092	(ii) the finance director and the executive
5093	5093	director shall execute a joint addendum to the final initial risk
5094	5094	sharing valuation study that is a part of each final initial risk
5095	5095	sharing valuation study for all purposes and that reflects the
5096	5096	arithmetic average of the estimated city contribution rate and the
5097	5097	estimated city contribution amount for each fiscal year in which
5098	5098	the difference was greater than two percentage points for purposes
5099	5099	of Section 8B(a)(5) of this Act, and for reporting purposes the
5100	5100	pension system may treat the pension system actuary's initial risk
5101	5101	sharing valuation study with the addendum as the final initial risk
5102	5102	sharing valuation study.
5103	5103	(d) In preparing the initial risk sharing valuation study,
5104	5104	the city actuary and pension system actuary shall:
5105	5105	(1) adjust the actuarial value of assets to be equal to
5106	5106	the market value of assets as of July 1, 2016;
5107	5107	(2) assume the issuance of planned pension obligation
5108	5108	bonds by December 31, 2017; and
5109	5109	(3) assume benefit and contribution changes under this
5110	5110	Act as of the year 2017 effective date.
5111	5111	(e) If the city actuary does not prepare an initial risk
5112	5112	sharing valuation study for purposes of this section, the pension
5113	5113	system actuary's initial risk sharing valuation study will be used
5114	5114	as the final risk sharing valuation study for purposes of this Act
5115	5115	unless the city did not prepare a proposed initial risk sharing
5116	5116	valuation study because the pension system actuary did not provide
5117	5117	the necessary actuarial data in a timely manner. If the city did not
5118	5118	prepare a proposed initial risk sharing valuation study because the
5119	5119	pension system actuary did not provide the necessary actuarial data
5120	5120	in a timely manner, the city actuary shall have 60 days to prepare
5121	5121	the proposed initial risk sharing valuation study on receipt of the
5122	5122	necessary information.
5123	5123	(f) If the pension system actuary does not prepare a
5124	5124	proposed initial risk sharing valuation study for purposes of this
5125	5125	section, the proposed initial risk sharing valuation study prepared
5126	5126	by the city actuary will be the final risk sharing valuation study
5127	5127	for purposes of this Act.
5128	5128	(g) The city and the pension board may agree on a written
5129	5129	transition plan for resetting the corridor midpoint:
5130	5130	(1) if at any time the funded ratio is equal to or
5131	5131	greater than 100 percent; or
5132	5132	(2) for any fiscal year after the payoff year of the
5133	5133	legacy liability.
5134	5134	(h) If the city and the pension board have not entered into
5135	5135	an agreement described by Subsection (g) of this section in a given
5136	5136	fiscal year, the corridor midpoint will be the corridor midpoint
5137	5137	determined for the 31st fiscal year in the initial risk sharing
5138	5138	valuation study prepared in accordance with this section.
5139	5139	(i) If the city makes a contribution to the pension system
5140	5140	of at least $5 million more than the amount that would be required
5141	5141	by Section 8A(a) of this Act, a liability gain layer with the same
5142	5142	remaining amortization period as the legacy liability is created.
5143	5143	In each subsequent risk sharing valuation study until the end of
5144	5144	that amortization period, the city contribution amount must be
5145	5145	decreased by the amortized amount in each fiscal year covered by the
5146	5146	liability gain layer.
5147	5147	(j) Notwithstanding any other provision of this Act,
5148	5148	including Section 8H of this Act:
5149	5149	(1) if the city fails to deliver the proceeds of
5150	5150	pension obligation bonds totaling $250 million on or before January
5151	5151	2, 2018, the pension board shall have 30 days from January 2, 2018,
5152	5152	to rescind, prospectively, any or all benefit changes made
5153	5153	effective under H.B. No. 43, Acts of the 85th Legislature, Regular
5154	5154	Session, 2017, as of the year 2017 effective date, or to reestablish
5155	5155	the deadline for the delivery of pension obligation bond proceeds,
5156	5156	reserving the right to rescind the benefit changes authorized by
5157	5157	this subdivision if the bond proceeds are not delivered by the
5158	5158	reestablished deadline; and
5159	5159	(2) subject to Subsection (k) of this section, if the
5160	5160	pension board rescinds benefit changes under Subdivision (1) of
5161	5161	this subsection or pension obligation bond proceeds are not
5162	5162	delivered on or before the deadline or reestablished deadline
5163	5163	prescribed by Subdivision (1) of this subsection, the initial risk
5164	5164	sharing valuation study shall be prepared again and restated
5165	5165	without assuming the delivery of the pension obligation bond
5166	5166	proceeds, the extended time for delivery of pension obligation bond
5167	5167	proceeds, or the rescinded benefit changes, as applicable,
5168	5168	including a reamortization of the city contribution amount for the
5169	5169	amortization period remaining for the legacy liability, and the
5170	5170	resulting city contribution rate and city contribution amount will
5171	5171	become effective in the fiscal year following the completion of the
5172	5172	restated initial risk sharing valuation study.
5173	5173	(k) The restated initial risk sharing valuation study
5174	5174	required under Subsection (j)(2) of this section must be completed
5175	5175	at least 30 days before the start of the fiscal year:
5176	5176	(1) ending June 30, 2019, if the pension board does not
5177	5177	reestablish the deadline under Subsection (j)(1) of this section;
5178	5178	or
5179	5179	(2) immediately following the reestablished deadline,
5180	5180	if the pension board reestablishes the deadline under Subsection
5181	5181	(j)(1) of this section and the city fails to deliver the pension
5182	5182	obligation bond proceeds described by Subsection (j)(1) of this
5183	5183	section by the reestablished deadline.
5184	5184	Sec. 8D. ACTUARIAL EXPERIENCE STUDIES. (a) At least once
5185	5185	every four years, the pension system actuary, at the direction of
5186	5186	the pension system, shall conduct an actuarial experience study in
5187	5187	accordance with actuarial standards of practice. The actuarial
5188	5188	experience study required by this subsection must be completed not
5189	5189	later than September 30 of the year in which the study is required
5190	5190	to be conducted.
5191	5191	(b) Except as otherwise expressly provided by Sections
5192	5192	8B(a)(7)(A)-(I) of this Act, actuarial assumptions and methods used
5193	5193	in the preparation of a risk sharing valuation study, other than the
5194	5194	initial risk sharing valuation study, shall be based on the results
5195	5195	of the most recent actuarial experience study.
5196	5196	(c) Not later than the 180th day before the date the pension
5197	5197	board may consider adopting any assumptions and methods for
5198	5198	purposes of Section 8B of this Act, the pension system shall provide
5199	5199	the city actuary with a substantially final draft of the pension
5200	5200	system's actuarial experience study, including:
5201	5201	(1) all assumptions and methods recommended by the
5202	5202	pension system actuary; and
5203	5203	(2) summaries of the reconciled actuarial data used in
5204	5204	creation of the actuarial experience study.
5205	5205	(d) Not later than the 60th day after the date the city
5206	5206	receives the final draft of the pension system's actuarial
5207	5207	experience study under Subsection (c) of this section, the city
5208	5208	actuary and pension system actuary may communicate concerning the
5209	5209	assumptions and methods used in the actuarial experience study.
5210	5210	During the period prescribed by this subsection, the pension system
5211	5211	actuary may modify the recommended assumptions in the draft
5212	5212	actuarial experience study to reflect any changes to assumptions
5213	5213	and methods to which the pension system actuary and the city actuary
5214	5214	agree.
5215	5215	(e) At the city actuary's written request, the pension
5216	5216	system shall provide additional actuarial data used by the pension
5217	5217	system actuary to prepare the draft actuarial experience study,
5218	5218	provided that confidential data may only be provided subject to a
5219	5219	confidentiality agreement entered into between the pension system
5220	5220	and the city actuary.
5221	5221	(f) The city actuary, at the direction of the city, shall
5222	5222	provide in writing to the pension system actuary and the pension
5223	5223	system:
5224	5224	(1) any assumptions and methods recommended by the
5225	5225	city actuary that differ from the assumptions and methods
5226	5226	recommended by the pension system actuary; and
5227	5227	(2) the city actuary's rationale for each method or
5228	5228	assumption the actuary recommends and determines to be consistent
5229	5229	with standards adopted by the Actuarial Standards Board.
5230	5230	(g) Not later than the 30th day after the date the pension
5231	5231	system actuary receives the city actuary's written recommended
5232	5232	assumptions and methods and rationale under Subsection (f) of this
5233	5233	section, the pension system shall provide a written response to the
5234	5234	city identifying any assumption or method recommended by the city
5235	5235	actuary that the pension system does not accept. If any assumption
5236	5236	or method is not accepted, the pension system shall recommend to the
5237	5237	city the names of three independent actuaries for purposes of this
5238	5238	section.
5239	5239	(h) An actuary may only be recommended, selected, or engaged
5240	5240	by the pension system as an independent actuary under this section
5241	5241	if the person:
5242	5242	(1) is not already engaged by the city, the pension
5243	5243	system, or any other pension system or fund authorized under
5244	5244	Article 6243e.2(1) or 6243g-4, Revised Statutes, to provide
5245	5245	actuarial services to the city, the pension system, or another
5246	5246	pension system or fund referenced in this subdivision;
5247	5247	(2) is a member of the American Academy of Actuaries;
5248	5248	and
5249	5249	(3) has at least five years of experience as an actuary
5250	5250	working with one or more public retirement systems with assets in
5251	5251	excess of $1 billion.
5252	5252	(i) Not later than the 20th day after the date the city
5253	5253	receives the list of three independent actuaries under Subsection
5254	5254	(g) of this section, the city shall identify and the pension system
5255	5255	shall hire one of the listed independent actuaries on terms
5256	5256	acceptable to the city and the pension system to perform a scope of
5257	5257	work acceptable to the city and the pension system. The city and
5258	5258	the pension system each shall pay 50 percent of the cost of the
5259	5259	independent actuary engaged under this subsection. The city shall
5260	5260	be provided the opportunity to participate in any communications
5261	5261	between the independent actuary and the pension system concerning
5262	5262	the engagement, engagement terms, or performance of the terms of
5263	5263	the engagement.
5264	5264	(j) The independent actuary engaged under Subsection (i) of
5265	5265	this section shall receive on request from the city or the pension
5266	5266	system:
5267	5267	(1) the pension system's draft actuarial experience
5268	5268	study, including all assumptions and methods recommended by the
5269	5269	pension system actuary;
5270	5270	(2) summaries of the reconciled actuarial data used to
5271	5271	prepare the draft actuarial experience study;
5272	5272	(3) the city actuary's specific recommended
5273	5273	assumptions and methods together with the city actuary's written
5274	5274	rationale for each recommendation;
5275	5275	(4) the pension system actuary's written rationale for
5276	5276	its recommendations; and
5277	5277	(5) if requested by the independent actuary and
5278	5278	subject to a confidentiality agreement between the pension system
5279	5279	and the independent actuary, additional confidential actuarial
5280	5280	data.
5281	5281	(k) Not later than the 30th day after the date the
5282	5282	independent actuary receives all the requested information under
5283	5283	Subsection (j) of this section, the independent actuary shall
5284	5284	advise the pension system and the city whether it agrees with the
5285	5285	assumption or method recommended by the city actuary or the
5286	5286	corresponding method or assumption recommended by the pension
5287	5287	system actuary, together with the independent actuary's rationale
5288	5288	for making the determination. During the period prescribed by this
5289	5289	subsection, the independent actuary may discuss recommendations in
5290	5290	simultaneous consultation with the pension system actuary and the
5291	5291	city actuary.
5292	5292	(l) The pension system and the city may not seek any
5293	5293	information from any prospective independent actuary about
5294	5294	possible outcomes of the independent actuary's review.
5295	5295	(m) If an independent actuary has questions or concerns
5296	5296	regarding an engagement entered into under this section, the
5297	5297	independent actuary shall simultaneously consult with both the city
5298	5298	actuary and the pension system actuary regarding the questions or
5299	5299	concerns. This subsection does not limit the pension system's
5300	5300	authorization to take appropriate steps to complete the engagement
5301	5301	of the independent actuary on terms acceptable to both the pension
5302	5302	system and the city or to enter into a confidentiality agreement
5303	5303	with the independent actuary, if needed.
5304	5304	(n) If the pension board does not adopt an assumption or
5305	5305	method recommended by the city actuary or pension system actuary,
5306	5306	including an assumption or method to which the independent actuary
5307	5307	agrees, the city actuary is authorized to use that recommended
5308	5308	assumption or method in connection with preparation of a subsequent
5309	5309	risk sharing valuation study under Section 8B of this Act until the
5310	5310	risk sharing valuation study following the next actuarial
5311	5311	experience study is prepared.
5312	5312	Sec. 8E. CITY CONTRIBUTION RATE WHEN ESTIMATED CITY
5313	5313	CONTRIBUTION RATE LOWER THAN CORRIDOR MIDPOINT; AUTHORIZATION FOR
5314	5314	CERTAIN ADJUSTMENTS. (a) This section governs the determination
5315	5315	of the city contribution rate applicable in a fiscal year if the
5316	5316	estimated city contribution rate is lower than the corridor
5317	5317	midpoint.
5318	5318	(b) If the funded ratio is:
5319	5319	(1) less than 90 percent, the city contribution rate
5320	5320	for the fiscal year equals the corridor midpoint; or
5321	5321	(2) equal to or greater than 90 percent and the city
5322	5322	contribution rate is:
5323	5323	(A) equal to or greater than the minimum
5324	5324	contribution rate, the estimated city contribution rate is the city
5325	5325	contribution rate for the fiscal year; or
5326	5326	(B) except as provided by Subsection (e) of this
5327	5327	section, less than the minimum contribution rate for the
5328	5328	corresponding fiscal year, the city contribution rate for the
5329	5329	fiscal year equals the minimum contribution rate achieved in
5330	5330	accordance with Subsection (c) of this section.
5331	5331	(c) For purposes of Subsection (b)(2)(B) of this section,
5332	5332	the following adjustments shall be applied sequentially to the
5333	5333	extent required to increase the estimated city contribution rate to
5334	5334	equal the minimum contribution rate:
5335	5335	(1) first, adjust the actuarial value of assets equal
5336	5336	to the current market value of assets, if making the adjustment
5337	5337	causes the city contribution rate to increase;
5338	5338	(2) second, under a written agreement between the city
5339	5339	and the pension board under Section 3(n) of this Act entered into
5340	5340	not later than the 30th day before the first day of the next fiscal
5341	5341	year, prospectively restore all or part of any benefit reductions
5342	5342	or reduce increased employee contributions, in each case made after
5343	5343	the year 2017 effective date;
5344	5344	(3) third, accelerate the payoff year of the legacy
5345	5345	liability by offsetting the remaining legacy liability by the
5346	5346	amount of the new liability loss layer, provided that during the
5347	5347	accelerated period the city will continue to pay the city
5348	5348	contribution amount as scheduled in the initial risk sharing
5349	5349	valuation study, subject to Section 8C(i) or (j) of this Act;
5350	5350	(4) fourth, accelerate the payoff year of existing
5351	5351	liability loss layers, excluding the legacy liability, by
5352	5352	accelerating the oldest liability loss layers first, to an
5353	5353	amortization period of not less than 20 years from the first day of
5354	5354	the fiscal year beginning 12 months after the date of the risk
5355	5355	sharing valuation study in which the liability loss layer is first
5356	5356	recognized; and
5357	5357	(5) fifth, under a written agreement between the city
5358	5358	and the pension board under Section 3(n) of this Act entered into
5359	5359	not later than the 30th day before the first day of the next fiscal
5360	5360	year, the city and the pension board may agree to reduce the assumed
5361	5361	rate of return.
5362	5362	(d) If the funded ratio is:
5363	5363	(1) equal to or greater than 100 percent:
5364	5364	(A) all existing liability layers, including the
5365	5365	legacy liability, are considered fully amortized and paid;
5366	5366	(B) the city contribution amount may no longer be
5367	5367	included in the city contribution under Section 8A of this Act; and
5368	5368	(C) the city and the pension system may mutually
5369	5369	agree to change assumptions in a written agreement entered into
5370	5370	between the city and the pension board under Section 3(n) of this
5371	5371	Act; and
5372	5372	(2) greater than 100 percent in a written agreement
5373	5373	between the city and the pension system entered into under Section
5374	5374	3(n) of this Act, the pension system may reduce member
5375	5375	contributions or increase pension benefits if as a result of the
5376	5376	action:
5377	5377	(A) the funded ratio is not less than 90 percent;
5378	5378	and
5379	5379	(B) the city contribution rate is not more than
5380	5380	the minimum contribution rate.
5381	5381	(e) Except as provided by Subsection (f) of this section, if
5382	5382	an agreement under Subsection (d) of this section is not reached on
5383	5383	or before the 30th day before the first day of the next fiscal year,
5384	5384	before the first day of the next fiscal year, the pension board
5385	5385	shall reduce member contributions and implement or increase
5386	5386	cost-of-living adjustments, but only to the extent that the city
5387	5387	contribution rate is set at or below the minimum contribution rate
5388	5388	and the funded ratio is not less than 90 percent.
5389	5389	(f) If any member contribution reduction or benefit
5390	5390	increase under Subsection (e) of this section has occurred within
5391	5391	the previous three fiscal years, the pension board may not make
5392	5392	additional adjustments to benefits, and the city contribution rate
5393	5393	must be set to equal the minimum contribution rate.
5394	5394	Sec. 8F. CITY CONTRIBUTION RATE WHEN ESTIMATED CITY
5395	5395	CONTRIBUTION RATE EQUAL TO OR GREATER THAN CORRIDOR MIDPOINT;
5396	5396	AUTHORIZATION FOR CERTAIN ADJUSTMENTS. (a) This section governs
5397	5397	the determination of the city contribution rate in a fiscal year
5398	5398	when the estimated city contribution rate is equal to or greater
5399	5399	than the corridor midpoint.
5400	5400	(b) If the estimated city contribution rate is:
5401	5401	(1) less than or equal to the maximum contribution
5402	5402	rate for the corresponding fiscal year, the estimated city
5403	5403	contribution rate is the city contribution rate; or
5404	5404	(2) except as provided by Subsection (d) or (f) of this
5405	5405	section, greater than the maximum contribution rate for the
5406	5406	corresponding fiscal year, the city contribution rate equals the
5407	5407	corridor midpoint achieved in accordance with Subsection (c) of
5408	5408	this section.
5409	5409	(c) For purposes of Subsection (b)(2) of this section, the
5410	5410	following adjustments shall be applied sequentially to the extent
5411	5411	required to decrease the estimated city contribution rate to equal
5412	5412	the corridor midpoint:
5413	5413	(1) first, adjust the actuarial value of assets to the
5414	5414	current market value of assets, if making the adjustment causes the
5415	5415	city contribution rate to decrease;
5416	5416	(2) second, if the payoff year of the legacy liability
5417	5417	was accelerated under Section 8E(c) of this Act:
5418	5418	(A) extend the payoff year of the legacy
5419	5419	liability by increasing the legacy liability by the amount of the
5420	5420	new liability gain layer to a maximum amount; and
5421	5421	(B) during the extended period provided by
5422	5422	Paragraph (A) of this subdivision, the city shall continue to pay
5423	5423	the city contribution amount for the extended period in accordance
5424	5424	with the schedule included in the initial risk sharing valuation
5425	5425	study, subject to Section 8C(i) or (j) of this Act; and
5426	5426	(3) third, if the payoff year of a liability loss layer
5427	5427	other than the legacy liability was previously accelerated under
5428	5428	Section 8E(c) of this Act, extend the payoff year of existing
5429	5429	liability loss layers, excluding the legacy liability, by extending
5430	5430	the most recent loss layers first, to a payoff year not later than
5431	5431	30 years from the first day of the fiscal year beginning 12 months
5432	5432	after the date of the risk sharing valuation study in which the
5433	5433	liability loss layer is first recognized.
5434	5434	(d) If the city contribution rate after adjustment under
5435	5435	Subsection (c) of this section is greater than the third quarter
5436	5436	line rate, the city contribution rate equals the third quarter line
5437	5437	rate. To the extent necessary to comply with this subsection, the
5438	5438	city and the pension board shall enter into a written agreement
5439	5439	under Section 3(n) of this Act to increase member contributions and
5440	5440	make other benefit or plan changes not otherwise prohibited by
5441	5441	applicable federal law or regulations.
5442	5442	(e) Gains resulting from adjustments made as the result of a
5443	5443	written agreement between the city and the pension board under
5444	5444	Subsection (d) of this section may not be used as a direct offset
5445	5445	against the city contribution amount in any fiscal year.
5446	5446	(f) If an agreement under Subsection (d) of this section is
5447	5447	not reached on or before the 30th day before the first day of the
5448	5448	next fiscal year, before the start of the next fiscal year to which
5449	5449	the city contribution rate would apply, the pension board, to the
5450	5450	extent necessary to set the city contribution rate equal to the
5451	5451	third quarter line rate, shall:
5452	5452	(1) increase member contributions; and
5453	5453	(2) decrease cost-of-living adjustments.
5454	5454	(g) If the city contribution rate remains greater than the
5455	5455	corridor midpoint in the third fiscal year after adjustments are
5456	5456	made in accordance with an agreement under Subsection (d) of this
5457	5457	section, in that fiscal year the city contribution rate equals the
5458	5458	corridor midpoint achieved in accordance with Subsection (h) of
5459	5459	this section.
5460	5460	(h) The city contribution rate must be set at the corridor
5461	5461	midpoint under Subsection (g) of this section by:
5462	5462	(1) in the risk sharing valuation study for the third
5463	5463	fiscal year described by Subsection (g) of this section, adjusting
5464	5464	the actuarial value of assets to equal the current market value of
5465	5465	assets, if making the adjustment causes the city contribution rate
5466	5466	to decrease; and
5467	5467	(2) under a written agreement entered into between the
5468	5468	city and the pension board under Section 3(n) of this Act:
5469	5469	(A) increasing member contributions; and
5470	5470	(B) making any other benefit or plan changes not
5471	5471	otherwise prohibited by applicable federal law or regulations.
5472	5472	(i) If an agreement under Subsection (h)(2) of this section
5473	5473	is not reached on or before the 30th day before the first day of the
5474	5474	next fiscal year, before the start of the next fiscal year, the
5475	5475	pension board, to the extent necessary to set the city contribution
5476	5476	rate equal to the corridor midpoint, shall:
5477	5477	(1) increase member contributions; and
5478	5478	(2) decrease cost-of-living adjustments.
5479	5479	Sec. 8G. CONFIDENTIALITY. (a) The information, data, and
5480	5480	document exchanges under Sections 8A through 8F of this Act have all
5481	5481	the protections afforded by applicable law and are expressly exempt
5482	5482	from the disclosure requirements under Chapter 552, Government
5483	5483	Code, except as may be agreed to by the city and pension system in a
5484	5484	written agreement under Section 3(n) of this Act.
5485	5485	(b) Subsection (a) of this section does not apply to final
5486	5486	risk sharing valuation studies prepared under Sections 8B and 8C of
5487	5487	this Act.
5488	5488	(c) A risk sharing valuation study prepared by either the
5489	5489	city actuary or the pension system actuary under Sections 8A
5490	5490	through 8F of this Act may not:
5491	5491	(1) include information in a form that includes
5492	5492	identifiable information relating to a specific individual; or
5493	5493	(2) provide confidential or private information
5494	5494	regarding specific individuals or be grouped in a manner that
5495	5495	allows confidential or private information regarding a specific
5496	5496	individual to be discerned.
5497	5497	Sec. 8H. UNILATERAL DECISIONS AND ACTIONS PROHIBITED. No
5498	5498	unilateral decision or action by the pension board is binding on the
5499	5499	city and no unilateral decision or action by the city is binding on
5500	5500	the pension system with respect to the application of Sections 8A
5501	5501	through 8F of this Act unless expressly provided by a provision of
5502	5502	those sections. Nothing in this section is intended to limit the
5503	5503	powers or authority of the pension board.
5504	5504	SECTION 3.12. Section 9(c), Chapter 88 (H.B. 1573), Acts of
5505	5505	the 77th Legislature, Regular Session, 2001 (Article 6243h,
5506	5506	Vernon's Texas Civil Statutes), is amended to read as follows:
5507	5507	(c) If a member dies and there are no eligible survivors to
5508	5508	receive the allowance provided for in Section 14 of this Act, the
5509	5509	member's spouse [beneficiary] or, if there is no spouse
5510	5510	[beneficiary], the member's estate shall receive the refund amount.
5511	5511	SECTION 3.13. Section 10, Chapter 88 (H.B. 1573), Acts of
5512	5512	the 77th Legislature, Regular Session, 2001 (Article 6243h,
5513	5513	Vernon's Texas Civil Statutes), is amended by amending Subsections
5514	5514	(b), (d), (e), (g), and (h) and adding Subsections (c-1), (d-1), and
5515	5515	(e-1) to read as follows:
5516	5516	(b) A group A or group B member of the pension system who
5517	5517	terminates employment is eligible for a normal retirement pension
5518	5518	beginning on the member's effective retirement date after the date
5519	5519	the member completes at least five years of credited service and
5520	5520	attains either:
5521	5521	(1) 62 years of age; or
5522	5522	(2) a combination of years of age and years of credited
5523	5523	service, including parts of years, the sum of which equals or is
5524	5524	greater than the number:
5525	5525	(A) 75, provided the member is at least 50 years
5526	5526	of age; or
5527	5527	(B) 70, provided the member attained a
5528	5528	combination of years of age and years of credited service,
5529	5529	including parts of years, the sum of which equals or is greater than
5530	5530	the number 68 before January 1, 2005.
5531	5531	(c-1) A group D member who terminates employment is eligible
5532	5532	for a normal retirement pension beginning on the member's effective
5533	5533	retirement date after the date the member completes at least five
5534	5534	years of credited service and attains 62 years of age.
5535	5535	(d) The amount of the monthly normal retirement pension
5536	5536	payable to an eligible:
5537	5537	(1) [retired] group A or group B member who retires
5538	5538	before January 1, 2005, shall be determined under the law in effect
5539	5539	on the member's last day of credited service, subject to Section 17
5540	5540	of this Act;
5541	5541	(2) group A member who retires on or after January 1,
5542	5542	2005, is equal to the sum of:
5543	5543	(A) the member's average monthly salary
5544	5544	multiplied by the percentage rate accrued under the law in effect on
5545	5545	December 31, 2004;
5546	5546	(B) the member's average monthly salary
5547	5547	multiplied by 2.5 [3-1/4] percent for each year of the member's
5548	5548	years of credited service in group A during the member's first 20
5549	5549	[10] years of service that is earned on or after January 1, 2005; [,
5550	5550	3-1/2 percent for each of the member's years of credited service in
5551	5551	group A during the member's next 10 years of service,] and
5552	5552	(C) the member's average monthly salary
5553	5553	multiplied by 3.25 [4-1/4] percent for each year of credited
5554	5554	service of the member in group A during the member's years of
5555	5555	service in excess of the 20 years described under Paragraph (B) of
5556	5556	this subdivision that is earned on or after January 1, 2005;
5557	5557	(3) group B member who retires on or after January 1,
5558	5558	2005, is equal to the sum of:
5559	5559	(A) the member's average monthly salary
5560	5560	multiplied by the percentage rate accrued under the law in effect on
5561	5561	December 31, 2004;
5562	5562	(B) the member's average monthly salary
5563	5563	multiplied by 1.75 percent for each year of the member's years of
5564	5564	credited service in group B during the member's first 10 years of
5565	5565	service that is earned on or after January 1, 2005;
5566	5566	(C) the member's average monthly salary
5567	5567	multiplied by two percent for each of the member's years of credited
5568	5568	service in group B in excess of the 10 years described under
5569	5569	Paragraph (B) of this subdivision that is earned on or after January
5570	5570	1, 2005; and
5571	5571	(D) the member's average monthly salary
5572	5572	multiplied by 2.5 percent for each year of credited service of the
5573	5573	member in group B during the member's years of service in excess of
5574	5574	20 years that is earned on or after January 1, 2005; or
5575	5575	(4) group D member who retires on or after January 1,
5576	5576	2008, is equal to the sum of:
5577	5577	(A) the member's average monthly salary
5578	5578	multiplied by 1.8 percent for each year of the member's years of
5579	5579	credited service during the member's first 25 years of service; and
5580	5580	(B) the member's average monthly salary
5581	5581	multiplied by 1 percent for each year of credited service of the
5582	5582	member in group D during the member's years of service in excess of
5583	5583	25 years.
5584	5584	(d-1) For purposes of Subsection (d) of this section,
5585	5585	service credit is rounded to the nearest one-twelfth of a year [For
5586	5586	purposes of this subsection, service credit is rounded to the
5587	5587	nearest one-twelfth of a year. The normal retirement pension of a
5588	5588	retired group A member may not exceed 90 percent of the member's
5589	5589	average monthly salary].
5590	5590	(e) A group D member who terminates employment with the city
5591	5591	or the pension system may elect to receive an early retirement
5592	5592	pension payable as a reduced benefit if the member has attained:
5593	5593	(1) at least 10 years of credited service and is at
5594	5594	least 55 years of age; or
5595	5595	(2) five years of credited service and a combination
5596	5596	of years of age and years of credited service, including parts of
5597	5597	years, the sum of which equals or is greater than the number 75.
5598	5598	(e-1) The amount of the early retirement pension payable to
5599	5599	a retired group D member under Subsection (e) of this section shall
5600	5600	be equal to the monthly normal retirement pension reduced by 0.25
5601	5601	percent for each month the member is less than 62 years of age at
5602	5602	retirement [monthly normal retirement pension payable to an
5603	5603	eligible retired group B member equals the member's average monthly
5604	5604	salary multiplied by 1-3/4 percent for each year of the member's
5605	5605	years of credited service in group B during the member's first 10
5606	5606	years of service, 2 percent for each of the member's years of
5607	5607	credited service in group B during the member's next 10 years of
5608	5608	service, and 2-3/4 percent for each year of credited service of the
5609	5609	member in group B during the member's years of service in excess of
5610	5610	20 years. For purposes of this subsection, service credit is
5611	5611	rounded to the nearest one-twelfth of a year. The normal retirement
5612	5612	pension of a retired group B member may not exceed 90 percent of the
5613	5613	member's average monthly salary].
5614	5614	(g) Notwithstanding any other provision of this Act, the
5615	5615	total normal retirement pension of a retired member with credited
5616	5616	service in group A, group B, [or] group C, or group D may not exceed
5617	5617	90 percent of the member's average monthly salary.
5618	5618	(h) On or after February 1, 2018, and for [For] future
5619	5619	payments only, pension benefits for all group A retirees and group B
5620	5620	retirees, and for all group D retirees who terminated employment on
5621	5621	or after the year 2017 effective date with at least five years of
5622	5622	credited service, and survivor benefits for [all retirees and]
5623	5623	eligible survivors of a former member of group A or group B, or of a
5624	5624	former member of group D who terminated employment on or after the
5625	5625	year 2017 effective date with at least five years of credited
5626	5626	service, shall be increased annually by the cost-of-living
5627	5627	adjustment percentage [four percent], not compounded, for all such
5628	5628	eligible persons receiving a pension or survivor benefit as of
5629	5629	January 1 of the year in which the increase is made.
5630	5630	SECTION 3.14. Chapter 88 (H.B. 1573), Acts of the 77th
5631	5631	Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
5632	5632	Civil Statutes), is amended by adding Section 10A to read as
5633	5633	follows:
5634	5634	Sec. 10A. GROUP D MEMBER HYBRID COMPONENT. (a) On and
5635	5635	after January 1, 2018, in addition to the group D member
5636	5636	contributions under Section 8 of this Act, each group D member shall
5637	5637	contribute one percent of the member's salary for each biweekly pay
5638	5638	period beginning with the member's first full biweekly pay period
5639	5639	after the later of January 1, 2018, or the group D member's first
5640	5640	date of employment. The contribution required by this subsection:
5641	5641	(1) shall be picked up and paid in the same manner and
5642	5642	at the same time as group D member contributions required under
5643	5643	Section 8(a)(3) of this Act, subject to applicable rules;
5644	5644	(2) is separate from and in addition to the group D
5645	5645	member contribution under Section 8(a)(3) of this Act; and
5646	5646	(3) is not subject to reduction or increase under
5647	5647	Sections 8A through 8F of this Act or a refund under Section 17 of
5648	5648	this Act.
5649	5649	(b) For each biweekly pay period of a group D member's
5650	5650	service for which the group D member makes the contribution
5651	5651	required under Subsection (a) of this section, the following
5652	5652	amounts shall be credited to a notional account, known as a cash
5653	5653	balance account, for the group D member:
5654	5654	(1) the amount of the contributions paid under
5655	5655	Subsection (a) of this section for that biweekly pay period; and
5656	5656	(2) interest on the balance of the group D member's
5657	5657	cash balance account determined by multiplying:
5658	5658	(A) an annual rate that is one-half the pension
5659	5659	system's five-year investment return based on a rolling
5660	5660	five-fiscal-year basis and net of investment expenses, with a
5661	5661	minimum annual rate of 2.5 percent and a maximum annual rate of 7.5
5662	5662	percent, and divided by 26; and
5663	5663	(B) the amount credited to the group D member's
5664	5664	cash balance account as of the end of the biweekly pay period.
5665	5665	(c) The pension system may not pay interest on amounts
5666	5666	credited to a cash balance account but not received by the pension
5667	5667	system under Subsection (b) of this section.
5668	5668	(d) On separation from service, a group D member is eligible
5669	5669	to receive only a distribution of the contributions credited to
5670	5670	that group D member's cash balance account, without interest, if
5671	5671	the group D member has attained less than one year of service while
5672	5672	contributing to the cash balance account. If a group D member
5673	5673	attains less than one year of service while contributing to the cash
5674	5674	balance account, the group D member is fully vested in the accrued
5675	5675	benefit represented by that group D member's cash balance account,
5676	5676	including interest.
5677	5677	(e) In a manner and form prescribed by the pension board, a
5678	5678	group D member who terminates employment is eligible to elect to
5679	5679	receive the group D member's cash balance account benefit in a
5680	5680	lump-sum payment, in substantially equal periodic payments, in a
5681	5681	partial lump-sum payment followed by substantially equal periodic
5682	5682	payments, or in partial payments from the group D member's cash
5683	5683	balance account.
5684	5684	(f) Contributions may not be made to a group D member's cash
5685	5685	balance account for a period that occurs after the date the group D
5686	5686	member terminates employment, except that interest at a rate that
5687	5687	is not greater than the rate under Subsection (b)(2) of this
5688	5688	section, as determined by the pension board, may be credited based
5689	5689	on the former group D member's undistributed cash balance account
5690	5690	after the date the group D member terminates employment.
5691	5691	(g) On the death of a group D member or former group D member
5692	5692	before the full distribution of the member's cash balance account,
5693	5693	the deceased member's cash balance account shall be payable in a
5694	5694	single lump-sum payment to:
5695	5695	(1) the deceased member's surviving spouse;
5696	5696	(2) if there is no surviving spouse, each designated
5697	5697	beneficiary of the deceased member, designated in the manner and on
5698	5698	a form prescribed by the pension board; or
5699	5699	(3) if there is no designated beneficiary, the
5700	5700	deceased member's estate.
5701	5701	(h) The lump-sum payment described by Subsection (g) of this
5702	5702	section shall be made within a reasonable time after the pension
5703	5703	board has determined that the individual or estate is eligible for
5704	5704	the distribution.
5705	5705	(i) Subject to the other provisions of this section, the
5706	5706	pension board may adopt rules necessary to implement this section,
5707	5707	including rules regarding the payment of the cash balance account
5708	5708	and limitations on the timing and frequency of payments. All
5709	5709	distributions and changes in the form of distribution must be made
5710	5710	in a manner and at a time that complies with the Internal Revenue
5711	5711	Code of 1986.
5712	5712	SECTION 3.15. Section 11, Chapter 88 (H.B. 1573), Acts of
5713	5713	the 77th Legislature, Regular Session, 2001 (Article 6243h,
5714	5714	Vernon's Texas Civil Statutes), is amended to read as follows:
5715	5715	Sec. 11. OPTION-ELIGIBLE PARTICIPANTS [GROUP B RETIREMENT
5716	5716	OPTIONS]. (a) In this section, "J&S Annuity" means payment of a
5717	5717	normal retirement pension or early retirement pension under one of
5718	5718	the options provided by Subsection (b) of this section.
5719	5719	(a-1) For purposes of this section, an option-eligible
5720	5720	participant is:
5721	5721	(1) a former group A or group B member who terminates
5722	5722	employment with the city or the pension system on or after June 30,
5723	5723	2011, and who is eligible to receive a normal retirement pension,
5724	5724	provided the member was not married as of the date of the member's
5725	5725	termination of employment;
5726	5726	(2) a former group B member who terminated employment
5727	5727	with the city or the predecessor system before September 1, 1997,
5728	5728	and who is eligible to receive a normal retirement pension; or
5729	5729	(3) a former group D member who terminated employment
5730	5730	with the city or the pension system and who is eligible to receive a
5731	5731	normal retirement pension or an early retirement pension.
5732	5732	(a-2) The pension board, in its sole discretion, shall make
5733	5733	determinations regarding an individual's status as an
5734	5734	option-eligible participant.
5735	5735	(a-3) Before the date an option-eligible participant
5736	5736	commences receipt of a benefit, that option-eligible participant [A
5737	5737	group B member who terminated employment with the city or the
5738	5738	predecessor system before September 1, 1997,] must elect, in a
5739	5739	manner and at a time determined by the pension board, [before the
5740	5740	member's effective retirement date] whether to receive [have] the
5741	5741	participant's [member's] normal retirement pension or early
5742	5742	retirement pension, as applicable, or to have the option-eligible
5743	5743	participant's normal retirement pension or early retirement
5744	5744	pension, as applicable, paid under one of the options provided by
5745	5745	Subsection (b) of this section. The election may be revoked, in a
5746	5746	manner and at a time established by the pension board, not later
5747	5747	than the 60th day before the date the participant commences receipt
5748	5748	of a benefit [member's effective retirement date].
5749	5749	(b) The normal retirement pension or early retirement
5750	5750	pension may be one of the following actuarially equivalent amounts:
5751	5751	(1) option 1: a reduced pension payable to the
5752	5752	participant [member], then on the participant's [member's] death
5753	5753	one-half of the amount of that reduced pension is payable to the
5754	5754	participant's [member's] designated survivor, for life;
5755	5755	(2) option 2: a reduced pension payable to the
5756	5756	participant [member], then on the participant's [member's] death
5757	5757	that same reduced pension is payable to the participant's
5758	5758	[member's] designated survivor, for life; and
5759	5759	(3) option 3: a reduced pension payable to the
5760	5760	participant [member], and if the participant [member] dies within
5761	5761	10 years, the pension is paid to the participant's [member's]
5762	5762	designated survivor for the remainder of the 10-year period
5763	5763	beginning on the participant's benefit commencement [member's
5764	5764	effective retirement] date.
5765	5765	(c) If an option-eligible participant [a former group B
5766	5766	member] who has made the election provided by Subsection (b) of this
5767	5767	section dies after terminating employment with at least five years
5768	5768	of credited service but before attaining the age required to begin
5769	5769	receiving a normal or early retirement pension, the person's
5770	5770	designated survivor is eligible for the J&S Annuity [benefits]
5771	5771	provided by the option selected by the option-eligible participant
5772	5772	[former member] at the time of separation from service. The
5773	5773	benefits first become payable to an eligible designated survivor on
5774	5774	the date the option-eligible participant [former member] would have
5775	5775	become eligible to begin receiving a pension. If the designated
5776	5776	survivor elects for earlier payment, in a time and manner
5777	5777	determined by the pension board, the actuarial equivalent of that
5778	5778	amount shall be payable at that earlier date.
5779	5779	(d) A survivor benefit under Subsection (c) of this section
5780	5780	or a J&S Annuity is not payable if:
5781	5781	(1) except as provided by Subsection (e) of this
5782	5782	section, an option-eligible participant [If a former group B member
5783	5783	under Subsection (a) of this section] does not elect one of the J&S
5784	5784	Annuity options under Subsection (b) of this section and dies
5785	5785	before retirement has commenced;
5786	5786	(2) an option-eligible participant elects a normal
5787	5787	retirement pension or early retirement pension and dies before
5788	5788	retirement has commenced; or
5789	5789	(3) an option-eligible participant dies after
5790	5790	retirement has commenced and that option-eligible participant:
5791	5791	(A) elected a normal retirement pension or early
5792	5792	retirement pension;
5793	5793	(B) did not make a valid election under
5794	5794	Subsection (b) of this section; or
5795	5795	(C) made an election that is void [, a survivor
5796	5796	benefit is not payable].
5797	5797	(e) An option-eligible participant described by Subsection
5798	5798	(a-1)(3) of this section who did not elect one of the J&S Annuity
5799	5799	options under Subsection (b) of this section is considered to have
5800	5800	elected a J&S Annuity option under Subsection (b)(1) of this
5801	5801	section and to have designated the participant's surviving spouse
5802	5802	as the optional annuitant if the participant:
5803	5803	(1) was not in service with the city or the pension
5804	5804	system at the time of the participant's death;
5805	5805	(2) is survived by a surviving spouse; and
5806	5806	(3) dies before the participant's retirement has
5807	5807	commenced.
5808	5808	(f) If the option-eligible participant described by
5809	5809	Subsection (e) of this section has no surviving spouse, a survivor
5810	5810	benefit or J&S Annuity is not payable. If a J&S Annuity is paid
5811	5811	under Subsection (e) of this section, a survivor benefit is not
5812	5812	payable under this subsection or under Section 14 of this Act.
5813	5813	(g) If Subsection (d) of this section would otherwise apply
5814	5814	to prohibit the payment of a survivor benefit or J&S Annuity, but
5815	5815	there is one or more dependent children of the deceased
5816	5816	option-eligible participant, the provisions of Section 14 of this
5817	5817	Act control the payment of survivor benefits to the dependent child
5818	5818	or children. The pension system may not pay both a J&S Annuity
5819	5819	under this section and a survivor benefit under Section 14 of this
5820	5820	Act with respect to any option-eligible participant. If a J&S
5821	5821	Annuity is paid under Subsection (e) of this section, a survivor
5822	5822	benefit is not payable.
5823	5823	(h) If an option-eligible participant has previously
5824	5824	elected a J&S Annuity for a previous period of service, no benefits
5825	5825	have been paid under that previous election, and the
5826	5826	option-eligible participant terminates employment on or after
5827	5827	January 1, 2012, the previous election is void and the
5828	5828	option-eligible participant shall make an election under
5829	5829	Subsection (b) of this section to apply to all periods of service.
5830	5830	(i) If a former group B member with service before September
5831	5831	1, 1997, was rehired in a covered position and converted the group B
5832	5832	service covered by a J&S Annuity to group A service, and that member
5833	5833	terminates employment on or after January 1, 2012, and is not an
5834	5834	option-eligible participant at the time of the member's subsequent
5835	5835	termination, the previous election is void and survivor benefits
5836	5836	for an eligible survivor, if any, are payable as provided by Section
5837	5837	14 of this Act, provided benefits were not paid under the previous
5838	5838	election.
5839	5839	(j) If an option-eligible participant who elects a J&S
5840	5840	Annuity under this section designates the participant's spouse as a
5841	5841	designated survivor and the marriage is later dissolved by divorce,
5842	5842	annulment, or a declaration that the marriage is void before the
5843	5843	participant's retirement, the designation is void unless the
5844	5844	participant reaffirms the designation after the marriage was
5845	5845	dissolved.
5846	5846	(k) A J&S Annuity payable to a designated survivor of a
5847	5847	retired option-eligible participant is effective on the first day
5848	5848	of the month following the month of the option-eligible
5849	5849	participant's death and ceases on the last day of the month of the
5850	5850	designated survivor's death or on the last day of the month in which
5851	5851	the survivor otherwise ceases to be eligible to receive a J&S
5852	5852	Annuity.
5853	5853	SECTION 3.16. Section 12(a)(5), Chapter 88 (H.B. 1573),
5854	5854	Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h,
5855	5855	Vernon's Texas Civil Statutes), is amended to read as follows:
5856	5856	(5) "DROP entry date" means the date a member ceases to
5857	5857	earn service credit and begins earning credit for the member's DROP
5858	5858	account, which is the later of the date the member is eligible to
5859	5859	participate in the DROP, the date requested by the member, or
5860	5860	October 1, 1997, as approved by the pension board. The DROP entry
5861	5861	date is the first day of a month and is determined by the normal
5862	5862	retirement eligibility requirements of this Act or of Chapter 358,
5863	5863	Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g,
5864	5864	Vernon's Texas Civil Statutes), as applicable, in effect on the
5865	5865	requested DROP entry date. A member who enters DROP on or after
5866	5866	January 1, 2005, may not have a DROP entry date that occurs before
5867	5867	the date the pension system receives the member's request to
5868	5868	participate in DROP.
5869	5869	SECTION 3.17. Section 12, Chapter 88 (H.B. 1573), Acts of
5870	5870	the 77th Legislature, Regular Session, 2001 (Article 6243h,
5871	5871	Vernon's Texas Civil Statutes), is amended by adding Subsections
5872	5872	(b-1), (d-1), (o-1), (r), (s), and (t) and amending Subsections
5873	5873	(d), (f), (g), (h), (j), (k), (m), (o), and (p) to read as follows:
5874	5874	(b-1) Notwithstanding Subsection (b) of this section, for
5875	5875	DROP participation beginning on or after January 1, 2005, a member
5876	5876	must meet the normal retirement eligibility requirements under
5877	5877	Section 10(b) or (c) of this Act to be eligible to elect to
5878	5878	participate in DROP. This subsection does not apply to a member
5879	5879	who:
5880	5880	(1) met the eligibility requirements under Section
5881	5881	10(b) of this Act in effect before January 1, 2005; or
5882	5882	(2) before January 1, 2005, had at least five years of
5883	5883	credited service and a combination of years of age and years of
5884	5884	credited service, including parts of years, the sum of which
5885	5885	equaled or was greater than 68.
5886	5886	(d) Credited service and normal retirement benefits cease
5887	5887	to accrue on the day preceding the member's DROP entry date. The
5888	5888	period of a member's DROP participation, unless revoked as provided
5889	5889	by Subsection (j) of this section, begins on the DROP participant's
5890	5890	DROP entry date and ends on the date of the DROP participant's last
5891	5891	day of active service with the city or the pension system. On the
5892	5892	first day of the month following the month in which the pension
5893	5893	board approves the member's DROP election, the DROP election
5894	5894	becomes effective and the pension board shall establish a DROP
5895	5895	account for the DROP participant. For each month during the period
5896	5896	of DROP participation before a DROP participant's termination of
5897	5897	employment, the following amounts shall be credited to the DROP
5898	5898	participant's DROP account, including prorated amounts for partial
5899	5899	months of service:
5900	5900	(1) an amount equal to what would have been the DROP
5901	5901	participant's monthly normal retirement benefit if the DROP
5902	5902	participant had retired on the DROP participant's DROP entry date,
5903	5903	except that the monthly amount shall be computed based on the DROP
5904	5904	participant's credited service and average monthly salary as of the
5905	5905	DROP entry date and the benefit accrual rates and maximum allowable
5906	5906	benefit applicable on the DROP election date, with the
5907	5907	cost-of-living adjustments payable under Subsection (s) of this
5908	5908	section, if any, that would apply if the DROP participant had
5909	5909	retired on the DROP participant's DROP entry date; and
5910	5910	(2) subject to Subsection (d-1) of this section, [for
5911	5911	a group A member, the member's contributions to the pension fund
5912	5912	required under Section 8 of this Act during the member's
5913	5913	participation in the DROP; and
5914	5914	[(3)] interest on the DROP participant's DROP account
5915	5915	balance computed at a rate determined by the pension board and
5916	5916	compounded at intervals designated by the pension board, but at
5917	5917	least once in each 13-month period.
5918	5918	(d-1) Beginning January 1, 2018, the pension board shall
5919	5919	establish the interest rate applicable under Subsection (d)(2) of
5920	5920	this section as of January 1 of each year at a rate:
5921	5921	(1) except as provided by Subdivision (2) of this
5922	5922	subsection, equal to half the pension system's five-year investment
5923	5923	return based on a rolling five-fiscal-year basis and net of
5924	5924	investment expenses; and
5925	5925	(2) that may not be less than 2.5 percent or more than
5926	5926	7.5 percent.
5927	5927	(f) The period for credits to a DROP participant's DROP
5928	5928	account includes each month beginning with the DROP participant's
5929	5929	DROP entry date through the date the DROP participant terminates
5930	5930	employment with the city or the pension system. Credits may not be
5931	5931	made to a DROP participant's DROP account for a period that occurs
5932	5932	after the date the DROP participant terminates employment, except
5933	5933	that interest at a rate determined by the pension board may be paid
5934	5934	on the person's undistributed DROP account balance after the date
5935	5935	the person terminates employment. A DROP participant must pay
5936	5936	required contributions to the pension system for all time in DROP
5937	5937	that would otherwise constitute service in order to receive
5938	5938	allowable credits to the DROP participant's DROP account.
5939	5939	(g) A DROP participant who terminates employment is
5940	5940	eligible to elect to receive the DROP participant's DROP benefit in
5941	5941	a lump sum, in substantially equal periodic payments, [or] in a
5942	5942	partial lump sum followed by substantially equal periodic payments,
5943	5943	or in partial payments from the participant's DROP account, in a
5944	5944	manner and form determined by the pension board. The pension board
5945	5945	may establish procedures concerning partial payments under this
5946	5946	subsection, including limitations on the timing and frequency of
5947	5947	those payments. A participant who elects partial payments may
5948	5948	elect to receive the participant's entire remaining DROP account
5949	5949	balance in a single lump-sum payment. The pension board shall
5950	5950	determine a reasonable time for lump-sum and periodic payments of
5951	5951	the DROP benefit. [An election concerning single lump-sum or
5952	5952	partial payments as provided by this subsection must satisfy the
5953	5953	requirements of Section 401(a)(9), Internal Revenue Code of 1986,
5954	5954	as amended.] All distributions and changes in the form of
5955	5955	distribution must be made in a manner and at a time that complies
5956	5956	with that provision of the Internal Revenue Code of 1986, as
5957	5957	amended.
5958	5958	(h) If a DROP participant dies before the full distribution
5959	5959	of the DROP participant's DROP account balance, the undistributed
5960	5960	DROP account balance shall be distributed to the DROP participant's
5961	5961	surviving spouse, if any, in a lump-sum payment within a reasonable
5962	5962	time after the pension board has determined that the surviving
5963	5963	spouse is eligible for the distribution. If there is no surviving
5964	5964	spouse, each beneficiary of the DROP participant [participant's
5965	5965	beneficiary], as designated in the manner and on a form established
5966	5966	by the pension board, is eligible to receive the beneficiary's
5967	5967	applicable portion of the deceased DROP participant's
5968	5968	undistributed DROP account balance in a lump-sum payment within a
5969	5969	reasonable time after the pension board has determined that the
5970	5970	beneficiary is eligible for the distribution. If no beneficiary is
5971	5971	designated, the undistributed DROP account balance shall be
5972	5972	distributed to the deceased participant's [member's] estate.
5973	5973	(j) An election to participate in the DROP is irrevocable,
5974	5974	except that:
5975	5975	(1) if a DROP participant is approved for a service
5976	5976	disability pension, the DROP participant's DROP election is
5977	5977	automatically revoked; and
5978	5978	(2) if a DROP participant dies, the surviving spouse,
5979	5979	if any, or the beneficiary, if any, may elect to revoke the DROP
5980	5980	participant's DROP election, at a time and in a manner determined by
5981	5981	the pension board, only if the revocation occurs before a
5982	5982	distribution from the DROP participant's DROP account or the
5983	5983	payment of a survivor benefit under this Act or Chapter 358, Acts of
5984	5984	the 48th Legislature, Regular Session, 1943 (Article 6243g,
5985	5985	Vernon's Texas Civil Statutes)[; and
5986	5986	[(3) a DROP participant approved by the pension board
5987	5987	of the predecessor system before September 1, 1999, to participate
5988	5988	in the DROP may make a one-time, irrevocable election before
5989	5989	termination of employment, on a date and in a manner determined by
5990	5990	the pension board, to revoke the DROP election and waive any and all
5991	5991	rights associated with the DROP election].
5992	5992	(k) On revocation of a DROP election under Subsection (j) of
5993	5993	this section, the DROP account balance becomes zero, and a
5994	5994	distribution of DROP benefits may not be made to the participant
5995	5995	[member], the participant's [member's] surviving spouse, or the
5996	5996	participant's [member's] beneficiaries. In the event of
5997	5997	revocation, the benefits based on the participant's [member's]
5998	5998	service are determined as if the participant's [member's] DROP
5999	5999	election had never occurred.
6000	6000	(m) If an unanticipated actuarial cost occurs in
6001	6001	administering the DROP, the pension board, on the advice of the
6002	6002	pension system [system's] actuary, may take action necessary to
6003	6003	mitigate the unanticipated cost, including refusal to accept
6004	6004	additional elections to participate in the DROP [plan]. The
6005	6005	pension system shall continue to administer the DROP [plan] for the
6006	6006	DROP participants participating in the DROP [plan] before the date
6007	6007	of the mitigating action.
6008	6008	(o) Except as provided by Subsection (o-1) of this section,
6009	6009	on [On] termination of employment, a DROP participant shall receive
6010	6010	a normal retirement pension under Section 10 of this Act or under
6011	6011	Section 11, 22A, or 24 of Chapter 358, Acts of the 48th Legislature,
6012	6012	Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
6013	6013	Statutes), as those sections read on the day preceding the
6014	6014	participant's DROP entry date, as applicable, except that the
6015	6015	credited service under that section is the member's credited
6016	6016	service as of the day before the member's DROP entry date, the
6017	6017	benefit accrual rate applicable to the credited service shall be
6018	6018	the benefit accrual rate in effect on the member's DROP election
6019	6019	date, the maximum allowable benefit shall be the maximum allowable
6020	6020	benefit in effect on the member's DROP election date, and the
6021	6021	member's average monthly salary is the average monthly salary
6022	6022	determined as of the later [date] of the member's DROP entry date or
6023	6023	January 1, 2005, as applicable [termination of employment]. The
6024	6024	DROP participant's normal retirement pension is increased by any
6025	6025	cost-of-living adjustments applied to the monthly credit to the
6026	6026	member's DROP account under Subsection (d)(1) of this section
6027	6027	during the member's participation in the DROP. Cost-of-living
6028	6028	adjustments applicable to periods after the date of the DROP
6029	6029	participant's termination of employment are based on the DROP
6030	6030	participant's normal retirement pension computed under this
6031	6031	subsection or Subsection (o-1) of this section, as applicable,
6032	6032	excluding any cost-of-living adjustments.
6033	6033	(o-1) On termination of employment, and before any benefit
6034	6034	or DROP payment, a DROP participant who is an option-eligible
6035	6035	participant shall make the required election under Section 11 of
6036	6036	this Act. If the option-eligible participant elects a J&S Annuity,
6037	6037	the DROP account, including all DROP credits, shall be recalculated
6038	6038	from the DROP entry date to termination of employment as provided by
6039	6039	Subsection (o) of this section as if the J&S Annuity was selected to
6040	6040	be effective as of the DROP entry date.
6041	6041	(p) If a DROP election is not revoked under Subsection (j)
6042	6042	of this section, the survivor benefit payable to an eligible
6043	6043	survivor of a deceased DROP participant under Section 14 of this Act
6044	6044	is computed as a percentage of the monthly ordinary disability
6045	6045	pension that the member would have been eligible to receive had the
6046	6046	member suffered a disability the day before the member's DROP entry
6047	6047	date, except that the ordinary disability pension is computed based
6048	6048	on the DROP participant's credited service as of the day before the
6049	6049	DROP participant's DROP entry date, the benefit accrual rate
6050	6050	applicable to the credited service as of the DROP participant's
6051	6051	DROP election date, and the DROP participant's average monthly
6052	6052	salary as of the later [date] of the DROP participant's DROP entry
6053	6053	date or January 1, 2005, as applicable [death]. A surviving spouse,
6054	6054	if any, of a DROP participant who dies from a cause directly
6055	6055	resulting from a specific incident in the performance of the DROP
6056	6056	participant's duties for the city or the pension system is
6057	6057	ineligible to receive enhanced survivor benefits under Section
6058	6058	14(c) of this Act unless the DROP election is revoked under
6059	6059	Subsection (j)(2) of this section and the surviving spouse receives
6060	6060	a survivor benefit as otherwise provided by this subsection.
6061	6061	(r) Except as provided by Subsection (s) of this section,
6062	6062	the pension system may not credit a DROP account with a
6063	6063	cost-of-living adjustment percentage on or after February 1, 2018.
6064	6064	(s) On or after February 1, 2018, and for future credit
6065	6065	only, the pension system shall credit a cost-of-living adjustment
6066	6066	percentage, not compounded, to the DROP account of a DROP
6067	6067	participant who was at least 62 years of age as of January 1 of the
6068	6068	year in which the increase is made.
6069	6069	(t) The pension board may establish deadlines for the
6070	6070	submission of any information, document, or other record pertaining
6071	6071	to DROP.
6072	6072	SECTION 3.18. Sections 13(a), (b), and (c), Chapter 88
6073	6073	(H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
6074	6074	(Article 6243h, Vernon's Texas Civil Statutes), are amended to read
6075	6075	as follows:
6076	6076	(a) A member who has completed five or more years of
6077	6077	credited service and who becomes disabled is eligible, regardless
6078	6078	of age, for an ordinary disability retirement and shall receive a
6079	6079	monthly disability pension computed in accordance with Section
6080	6080	10(d) of this Act [for group A members and Section 10(e) for group B
6081	6081	members].
6082	6082	(b) A member who is disabled by reason of a personal injury
6083	6083	sustained or a hazard undergone as a result of, and while in the
6084	6084	performance of, the member's employment duties at some definite
6085	6085	place and at some definite time on or after the date of becoming a
6086	6086	member, without serious and wilful misconduct on the member's part,
6087	6087	is eligible for a service disability retirement and shall receive a
6088	6088	monthly disability pension equal to the greater of:
6089	6089	(1) the monthly normal retirement pension computed
6090	6090	under Section 10(d) of this Act [for a group A member or Section
6091	6091	10(e) for a group B member]; or
6092	6092	(2) 20 percent of the member's monthly salary on the
6093	6093	date the injury occurred or the hazard was undergone.
6094	6094	(c) In addition to the monthly disability pension under
6095	6095	Subsection (b)(2) of this section, a group A member shall receive
6096	6096	one percent of the salary under Subsection (b)(2) of this section
6097	6097	for each year of credited service. The total disability pension
6098	6098	computed under Subsection (b)(2) of this section may not exceed the
6099	6099	greater of:
6100	6100	(1) 40 percent of that monthly salary; or
6101	6101	(2) the monthly normal retirement pension computed in
6102	6102	accordance with Section 10(d) of this Act [for a group A member or
6103	6103	Section 10(e) for a group B member].
6104	6104	SECTION 3.19. Section 14, Chapter 88 (H.B. 1573), Acts of
6105	6105	the 77th Legislature, Regular Session, 2001 (Article 6243h,
6106	6106	Vernon's Texas Civil Statutes), is amended by amending Subsections
6107	6107	(a), (b), (c), (d), (e), and (h) and adding Subsection (b-1) to read
6108	6108	as follows:
6109	6109	(a) Except as provided by Section 11 or [Section] 12 of this
6110	6110	Act, the pension board shall order survivor benefits to be paid to
6111	6111	an eligible survivor in the form of a monthly allowance under this
6112	6112	section if:
6113	6113	(1) a member or former member of group A or group B
6114	6114	dies from any cause after the completion of five years of credited
6115	6115	service with the city or the pension system;
6116	6116	(2) while in the service of the city or the pension
6117	6117	system, a member dies from any cause directly resulting from a
6118	6118	specific incident in the performance of the member's duty; [or]
6119	6119	(3) a member of group A or group B dies after the date
6120	6120	the member retires on a pension because of length of service or a
6121	6121	disability and the member leaves an eligible survivor; or
6122	6122	(4) a member of group D dies from any cause after the
6123	6123	completion of five years of credited service with the city or the
6124	6124	pension system if the member on the date of the member's death was
6125	6125	still in service with the city or the pension system.
6126	6126	(b) A surviving spouse of a member described by Subsection
6127	6127	(a)(1) or (4) of this section [or former member] who dies while
6128	6128	still in [dies after having completed five years of credited]
6129	6129	service with the city or the pension system [, but before beginning
6130	6130	to receive retirement benefits,] is eligible for a sum equal to the
6131	6131	following applicable percentage [100 percent] of the retirement
6132	6132	benefits to which the deceased member or former member would have
6133	6133	been eligible had the member been totally disabled with an ordinary
6134	6134	disability at the time of the member's last day of credited service:
6135	6135	(1) 80 percent, if the member's death occurs on or
6136	6136	after the year 2017 effective date and the spouse was married to the
6137	6137	member for at least one continuous year as of the member's date of
6138	6138	death, except that the allowance payable to the surviving spouse
6139	6139	may not be less than $100 a month; or
6140	6140	(2) 50 percent, if the member's death occurs on or
6141	6141	after the year 2017 effective date and the spouse was married to the
6142	6142	member for less than one continuous year as of the date of the
6143	6143	member's death.
6144	6144	(b-1) A surviving spouse of a former member described by
6145	6145	Subsection (a)(1) of this section who dies on or after the year 2017
6146	6146	effective date while not in the service of the city or the pension
6147	6147	system and before the member's retirement commenced, is eligible
6148	6148	for a sum equal to 50 percent of the deceased former member's normal
6149	6149	accrued pension at the time of the deceased former member's last day
6150	6150	of credited service. Benefits under this subsection first become
6151	6151	payable on the date the former member would have become eligible to
6152	6152	begin receiving a pension. If the surviving spouse elects for
6153	6153	earlier payment, in a time and manner determined by the pension
6154	6154	board, the actuarial equivalent of that amount shall be payable at
6155	6155	that earlier date.
6156	6156	(c) A surviving spouse of a member described by Subsection
6157	6157	(a)(2) of this section who dies from a cause directly resulting from
6158	6158	a specific incident in the performance of the member's duty with the
6159	6159	city or the pension system, without serious or wilful misconduct on
6160	6160	the member's part, is eligible for a sum equal to 80 [100] percent
6161	6161	of the deceased member's final average salary.
6162	6162	(d) A surviving spouse of a retiree described by Subsection
6163	6163	(a)(3) of this section who dies after having received retirement
6164	6164	benefits is eligible for a sum equal to the following applicable
6165	6165	percentage [100 percent] of the retirement benefits being received
6166	6166	at the time of the retiree's death, including any applicable [.
6167	6167	The] cost-of-living adjustment in the survivor benefit under
6168	6168	Section 10(h) of this Act [is] computed based on the unadjusted
6169	6169	normal retirement pension of the deceased retiree:
6170	6170	(1) 80 percent, if the retiree's death occurs on or
6171	6171	after the year 2017 effective date and the retiree separated from
6172	6172	service with the city or pension system before the year 2017
6173	6173	effective date;
6174	6174	(2) 80 percent, if the retiree's death occurs on or
6175	6175	after the year 2017 effective date and the retiree separated from
6176	6176	service with the city or pension system on or after the year 2017
6177	6177	effective date, provided the surviving spouse was married to the
6178	6178	retiree at the time of the retiree's death and for at least one
6179	6179	continuous year as of the date of the retiree's separation from
6180	6180	service; or
6181	6181	(3) 50 percent, if both the retiree's separation from
6182	6182	service and death occur on or after the year 2017 effective date and
6183	6183	the surviving spouse was married to the retiree at the time of the
6184	6184	retiree's death for less than one continuous year as of the date of
6185	6185	the retiree's separation from service.
6186	6186	(e) If there is a surviving spouse, each dependent child
6187	6187	shall receive a survivor benefit equal to 10 percent of the pension
6188	6188	the member would have received if the member had been disabled at
6189	6189	the time of death up to a maximum of 20 percent for all dependent
6190	6190	children, except that if the total amount payable to the surviving
6191	6191	spouse and dependent children is greater than 80 [100] percent of
6192	6192	the benefit the member would have received, the percentage of
6193	6193	benefits payable to the surviving spouse shall be reduced so that
6194	6194	the total amount is not greater than 80 [100] percent of the benefit
6195	6195	the member would have received, and the reduction shall continue
6196	6196	until the total amount payable to the surviving spouse and
6197	6197	dependent child, if any, would not be greater than 80 [100] percent
6198	6198	of the benefit the member would have received.
6199	6199	(h) If a retiree dies and there is no eligible survivor, the
6200	6200	retiree's spouse, if any, or if there is no spouse, the retiree's
6201	6201	estate, is eligible to receive a lump-sum payment of the
6202	6202	unamortized balance of the retiree's accrued employee
6203	6203	contributions, if any, other than contributions after the DROP
6204	6204	entry date, as determined by an amortization schedule and method
6205	6205	approved by the pension board. A pension payable to a retiree
6206	6206	ceases on the last day of the month [preceding the month] of the
6207	6207	retiree's death. A survivor benefit payable to an eligible
6208	6208	survivor is effective on the first day of the month following the
6209	6209	month of the retiree's death and ceases on the last day of [month
6210	6210	preceding] the month of the eligible survivor's death or on the last
6211	6211	day of the month in which the survivor otherwise ceases to be
6212	6212	eligible to receive a survivor's benefit.
6213	6213	SECTION 3.20. Sections 16(a) and (e), Chapter 88 (H.B.
6214	6214	1573), Acts of the 77th Legislature, Regular Session, 2001 (Article
6215	6215	6243h, Vernon's Texas Civil Statutes), are amended to read as
6216	6216	follows:
6217	6217	(a) Notwithstanding any other provision of this Act, the
6218	6218	pension board may pay to a member, deferred participant, eligible
6219	6219	survivor, alternate payee, or beneficiary in a lump-sum payment the
6220	6220	present value of any benefit payable to such a person that is less
6221	6221	than $20,000 [$10,000] instead of paying any other benefit payable
6222	6222	under this Act. If the lump-sum present value of the benefit is at
6223	6223	least $1,000 [$5,000] but less than $20,000 [$10,000], the pension
6224	6224	board may make a lump-sum payment only on written request by the
6225	6225	member, deferred participant, eligible survivor, alternate payee,
6226	6226	or other beneficiary. The pension board shall make any payment
6227	6227	under this subsection as soon as practicable after eligibility
6228	6228	under this section has been determined by the pension board.
6229	6229	(e) A member who is reemployed by the city or the pension
6230	6230	system and who has at least two years of continuous credited service
6231	6231	after reemployment may reinstate service for which the member
6232	6232	received a lump-sum payment under this section by paying into the
6233	6233	pension fund the amount of the lump-sum payment, plus interest on
6234	6234	that amount at the applicable assumed rate of return [six percent
6235	6235	per year], not compounded, from the date the lump-sum payment was
6236	6236	made to the member until the date of repayment to the pension fund.
6237	6237	SECTION 3.21. Section 17, Chapter 88 (H.B. 1573), Acts of
6238	6238	the 77th Legislature, Regular Session, 2001 (Article 6243h,
6239	6239	Vernon's Texas Civil Statutes), is amended by amending Subsections
6240	6240	(a), (c), (d), (e), (f), (g), (h), (i), (j), (k), and (l) and adding
6241	6241	Subsections (c-1), (c-2), (q), (r), and (s) to read as follows:
6242	6242	(a) A member who terminates employment with the city
6243	6243	involuntarily due to a reduction in workforce, as determined by the
6244	6244	pension board, before the member becomes eligible for a normal
6245	6245	retirement pension or attains five years of credited service, is
6246	6246	eligible to [by written notice to the pension board, may make an
6247	6247	irrevocable election to] leave the person's contributions in the
6248	6248	pension fund until the first anniversary of the date of
6249	6249	termination. If during that period the person is reemployed by the
6250	6250	city and has not withdrawn the person's contributions, all rights
6251	6251	and service credit as a member shall be immediately restored
6252	6252	without penalty. If reemployment with the city does not occur
6253	6253	before the first anniversary of the date of termination, all
6254	6254	payments made by the person into the pension fund by salary
6255	6255	deductions or other authorized contributions shall be refunded to
6256	6256	the person without interest. If the person is subsequently
6257	6257	reemployed, the person may have credit restored, subject to the
6258	6258	provisions applicable at the time of reemployment.
6259	6259	(c) A former member of group A or group B whose employment is
6260	6260	terminated for a reason other than death or receipt of a retirement
6261	6261	or disability pension after the completion of five years of
6262	6262	credited service may elect, in a manner determined by the pension
6263	6263	board, to receive a deferred retirement pension that begins on the
6264	6264	member's effective retirement date after the member attains the
6265	6265	eligibility requirements for normal retirement under Section 10 of
6266	6266	this Act as it existed on the member's last day of credited service
6267	6267	[either 62 years of age or a combination of years of age and years of
6268	6268	credited service, including parts of years, the sum of which equals
6269	6269	the number 70]. The amount of monthly benefit shall be computed in
6270	6270	the same manner as for a normal retirement pension, but based on
6271	6271	average monthly salary and credited service as of the member's last
6272	6272	day of credited service and subject to the provisions of this Act or
6273	6273	Chapter 358, Acts of 48th Legislature, Regular Session, 1943
6274	6274	(Article 6243g, Vernon's Texas Civil Statutes), in effect on the
6275	6275	former member's last day of credited service.
6276	6276	(c-1) A former member of group D whose employment is
6277	6277	terminated for a reason other than death or receipt of a retirement
6278	6278	or disability pension after the completion of five years of
6279	6279	credited service may elect, in a manner determined by the pension
6280	6280	board, to receive a deferred normal retirement pension that begins
6281	6281	on the former member's effective retirement date after the member
6282	6282	attains 62 years of age. The amount of a monthly benefit under this
6283	6283	subsection shall be computed in the same manner as a normal
6284	6284	retirement pension, except the benefit shall be based on the
6285	6285	average monthly salary and credited service of the former member as
6286	6286	of the former member's last day of credited service and subject to
6287	6287	the provisions of this Act in effect on the former member's last day
6288	6288	of credited service.
6289	6289	(c-2) A former member of group D whose employment is
6290	6290	terminated for a reason other than death or receipt of a retirement
6291	6291	or disability pension and who has met the minimum years of credited
6292	6292	service to receive an early reduced retirement pension under
6293	6293	Section 10(e) of this Act on attaining the required age, may elect,
6294	6294	in a manner determined by the pension board, to receive a deferred
6295	6295	early retirement pension that begins on the former member's
6296	6296	effective retirement date after the member attains the required age
6297	6297	under Section 10(e) of this Act. The amount of monthly benefit
6298	6298	shall be computed in the same manner as for an early retirement
6299	6299	pension under Section 10(e) of this Act, except that the benefit
6300	6300	shall be based on the average monthly salary and credited service of
6301	6301	the former member as of the former member's last day of credited
6302	6302	service and subject to the provisions of this Act in effect on the
6303	6303	former member's last day of credited service.
6304	6304	(d) If a member dies while still employed by the city,
6305	6305	whether eligible for a pension or not, and Sections 12 and 14 of
6306	6306	this Act do not apply, all of the member's rights in the pension
6307	6307	fund shall be satisfied by the refund to the member's spouse
6308	6308	[designated beneficiary], if any, or if there is no spouse
6309	6309	[designated beneficiary], to the member's estate, of all eligible
6310	6310	payments, if any, made by the member into the pension fund, without
6311	6311	interest.
6312	6312	(e) [The provisions of Section 14 of this Act concerning
6313	6313	payments to eligible survivors apply in the case of any former
6314	6314	member who has made the election permitted by Subsection (c) of this
6315	6315	section and who dies before reaching the age at which the former
6316	6316	member would be eligible to receive a pension.] If there is no
6317	6317	eligible survivor of the former member, all of the former member's
6318	6318	rights in the pension fund shall be satisfied by the refund to the
6319	6319	former member's spouse [designated beneficiary], if any, or if
6320	6320	there is no spouse [designated beneficiary], to the former member's
6321	6321	estate, of all eligible payments made by the former member into the
6322	6322	pension fund by way of employee contributions, without interest.
6323	6323	(f) This Act does not change the status of any former member
6324	6324	of the predecessor system whose services with the city or the
6325	6325	pension system were terminated under Chapter 358, Acts of the 48th
6326	6326	Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
6327	6327	Civil Statutes), except as otherwise expressly provided. Refunds
6328	6328	of contributions made under this section shall be paid to the
6329	6329	departing member, the member's spouse [beneficiary], or the
6330	6330	member's estate on written request and approval by the pension
6331	6331	board in a lump sum, except that if the pension board determines
6332	6332	that funds are insufficient to justify the lump-sum payment, the
6333	6333	payment shall be refunded on a monthly basis in amounts determined
6334	6334	by the pension board.
6335	6335	(g) If a deferred participant is reemployed by the city or
6336	6336	the pension system before receiving a deferred retirement pension
6337	6337	or if a retiree is reemployed by the city or the pension system,
6338	6338	Subsections (h) and (j) of this section apply to the computation of
6339	6339	the member's pension following the member's subsequent separation
6340	6340	from service if the member was a member on or after May 11, 2001, and
6341	6341	is not otherwise subject to Subsection (q) of this section.
6342	6342	(h) If a member described in Subsection (g) of this section
6343	6343	accrues not more than two years of continuous credited service
6344	6344	after reemployment:
6345	6345	(1) the portion of the member's deferred or normal
6346	6346	retirement pension attributable to the member's period of credited
6347	6347	service accrued before the date of the member's original or
6348	6348	previous separation from service is computed on the basis of the
6349	6349	applicable provisions of this Act or the predecessor system that
6350	6350	were in effect on the member's last day of credited service for the
6351	6351	original or previous period of credited service;
6352	6352	(2) the portion of the member's deferred or normal
6353	6353	retirement pension attributable to the member's period of credited
6354	6354	service accrued after the date of the member's reemployment by the
6355	6355	city or the pension system is computed on the basis of the
6356	6356	applicable provisions of this Act or the predecessor system in
6357	6357	effect on the member's last day of credited service for the
6358	6358	subsequent period of credited service; and
6359	6359	(3) the disability pension or survivor benefit
6360	6360	attributable to the member's period of credited service accrued
6361	6361	both before the date of the member's original or previous
6362	6362	separation from service and after the date of the member's
6363	6363	reemployment by the city or the pension system is computed on the
6364	6364	basis of the applicable provisions of this Act or the predecessor
6365	6365	system that were in effect on the member's last day of credited
6366	6366	service for the original or previous period of credited service.
6367	6367	(i) Subject to Subsection (l) of this section, the
6368	6368	disability pension or survivor benefit under Subsection (h)(3) of
6369	6369	this section is computed by adding the following amounts:
6370	6370	(1) the amount of the benefit derived from the member's
6371	6371	credited service accrued after the date of reemployment based on
6372	6372	the benefit accrual rate in effect on the member's last day of
6373	6373	original or previous credited service in the group in which the
6374	6374	member participated on the member's last day of subsequent credited
6375	6375	service; and
6376	6376	(2) the amount of the benefit the member, beneficiary,
6377	6377	or eligible survivor was eligible to receive based on the member's
6378	6378	original or previous credited service and the provisions in effect
6379	6379	on the member's last day of original or previous credited service.
6380	6380	(j) If a [the] member described by Subsection (g) of this
6381	6381	section accrues more than two years of continuous credited service
6382	6382	after reemployment, for purposes of future payment only, a deferred
6383	6383	retirement pension, normal retirement pension, disability pension,
6384	6384	or survivor benefit is computed on the basis of the applicable
6385	6385	provisions of this Act or the predecessor system in effect on the
6386	6386	member's last day of credited service for the subsequent service.
6387	6387	(k) Notwithstanding any other provision of this Act, if a
6388	6388	retiree is reemployed by the city or the pension system and becomes
6389	6389	a member, the retiree's pension under this Act ceases on the day
6390	6390	before the date the retiree is reemployed. Payment of the pension
6391	6391	shall be suspended during the period of reemployment and may not
6392	6392	begin until the month following the month in which the reemployed
6393	6393	retiree subsequently terminates employment. On subsequent
6394	6394	separation, benefits payable are computed under Subsections (h) and
6395	6395	(j) of this section, as applicable. If the reemployed retiree
6396	6396	receives any pension during the period of reemployment, the retiree
6397	6397	shall return all of the pension received during that period to the
6398	6398	pension system not later than the 30th day after the date of
6399	6399	receipt. If the reemployed retiree does not timely return all of
6400	6400	the pension, the pension board shall offset the amount not returned
6401	6401	against the payment of any future retirement pension, disability
6402	6402	pension, DROP balance, or survivor benefit payable on behalf of the
6403	6403	reemployed retiree, plus interest on the disallowed pension at the
6404	6404	applicable assumed rate of return, not compounded, from the date
6405	6405	the reemployed retiree received the disallowed pension to the date
6406	6406	of the offset on the disallowed pension.
6407	6407	(l) Except as provided by Section 14 of this Act, if [If] a
6408	6408	member is covered by Subsection (h) of this section and has made an
6409	6409	election or was eligible to make an election under Section 11 of
6410	6410	this Act or an optional annuity election under Section 29, Chapter
6411	6411	358, Acts of the 48th Legislature, Regular Session, 1943 (Article
6412	6412	6243g, Vernon's Texas Civil Statutes), or has received a pension
6413	6413	computed on the basis of an optional annuity election, the optional
6414	6414	annuity election, including any designation of an eligible
6415	6415	designated survivor, governs the payment of any pension or benefit
6416	6416	for the period of service covered by the optional annuity election,
6417	6417	and no other survivor benefit is payable for that period of service.
6418	6418	If a member meets the requirements of Subsection (j) of this section
6419	6419	and has made an optional annuity election or has received a pension
6420	6420	computed on the basis of an optional annuity election, the optional
6421	6421	annuity election, including any designation of an eligible
6422	6422	designated survivor, shall control the payment of any pension or
6423	6423	benefit, and no other survivor benefit is payable unless the member
6424	6424	elects, not later than the 90th day after the date of the separation
6425	6425	of employment and before payment of a pension, to revoke the
6426	6426	optional annuity election for future payment of benefits. If
6427	6427	revocation occurs, any survivor benefit is paid under Subsection
6428	6428	(j) of this section.
6429	6429	(q) Subsections (g) through (l) of this section do not apply
6430	6430	to the calculation of any benefit for or attributable to the period
6431	6431	of service following:
6432	6432	(1) the employment or reemployment of a member hired
6433	6433	or rehired on or after January 1, 2005; or
6434	6434	(2) the reemployment of a deferred retiree or retiree
6435	6435	who is reemployed in a pension system covered position before
6436	6436	January 1, 2005, but for a period of two years or less of continuous
6437	6437	credited service.
6438	6438	(r) If a deferred retiree or retiree subject to Subsection
6439	6439	(q)(2) of this section is reemployed in a pension system covered
6440	6440	position, the retiree's pension due on the retiree's subsequent
6441	6441	retirement shall be computed as follows:
6442	6442	(1) the portion of the retiree's pension attributable
6443	6443	to the retiree's periods of credited service that accrued before
6444	6444	the retiree's reemployment shall be calculated on the basis of the
6445	6445	schedule of benefits for retiring members that was in effect at the
6446	6446	time of the member's previous termination or terminations of
6447	6447	employment; and
6448	6448	(2) the portion of the member's pension attributable
6449	6449	to the member's period of credited service that accrued after the
6450	6450	member's reemployment shall be calculated on the basis of the
6451	6451	schedule of benefits for retiring members that is in effect at the
6452	6452	time of the member's subsequent retirement.
6453	6453	(s) The computation under Subsection (r) of this section may
6454	6454	not result in a lower pension benefit amount for the previous
6455	6455	service of the retiree than the pension benefit amount the retiree
6456	6456	was eligible to receive for the retiree's previous service before
6457	6457	the date of reemployment.
6458	6458	SECTION 3.22. Section 18(d), Chapter 88 (H.B. 1573), Acts
6459	6459	of the 77th Legislature, Regular Session, 2001 (Article 6243h,
6460	6460	Vernon's Texas Civil Statutes), is amended to read as follows:
6461	6461	(d) The military service credited under Subsection (c) of
6462	6462	this section:
6463	6463	(1) may not exceed a total of 60 months; and
6464	6464	(2) may be claimed as service solely in the group in
6465	6465	which the member participates [A only if the member is a group A
6466	6466	member or group C member] at the time the member claims the service
6467	6467	[; and
6468	6468	[(3) may be claimed as service in group B only if the
6469	6469	member is a group B member at the time the member claims the
6470	6470	service].
6471	6471	SECTION 3.23. Sections 24(h) and (i), Chapter 88 (H.B.
6472	6472	1573), Acts of the 77th Legislature, Regular Session, 2001 (Article
6473	6473	6243h, Vernon's Texas Civil Statutes), are amended to read as
6474	6474	follows:
6475	6475	(h) Contributions may not accumulate under the excess
6476	6476	benefit plan to pay future retirement benefits. The executive
6477	6477	director shall reduce each payment of employer contributions that
6478	6478	would otherwise be made to the pension fund under Section 8A [8] of
6479	6479	this Act by the amount determined to be necessary to meet the
6480	6480	requirements for retirement benefits under the plan, including
6481	6481	reasonable administrative expenses, until the next payment of
6482	6482	municipal contributions is expected to be made to the pension fund.
6483	6483	The employer shall pay to the plan, from the withheld
6484	6484	contributions, not earlier than the 30th day before the date each
6485	6485	distribution of monthly retirement benefits is required to be made
6486	6486	from the plan, the amount necessary to satisfy the obligation to pay
6487	6487	monthly retirement benefits from the plan. The executive director
6488	6488	shall satisfy the obligation of the plan to pay retirement benefits
6489	6489	from the employer contributions transferred for that month.
6490	6490	(i) Employer contributions otherwise required to be made to
6491	6491	the pension fund under Section 8A [8] of this Act and to any other
6492	6492	qualified plan shall be divided into those contributions required
6493	6493	to pay retirement benefits under this section and those
6494	6494	contributions paid into and accumulated to pay the maximum benefits
6495	6495	required under the qualified plan. Employer contributions made to
6496	6496	provide retirement benefits under this section may not be
6497	6497	commingled with the money of the pension fund or any other qualified
6498	6498	plan.
6499	6499	SECTION 3.24. Section 8(d), Chapter 88 (H.B. 1573), Acts of
6500	6500	the 77th Legislature, Regular Session, 2001 (Article 6243h,
6501	6501	Vernon's Texas Civil Statutes), is repealed.
6502	6502	SECTION 3.25. (a) The change in law made by this Act to
6503	6503	Section 2, Chapter 88 (H.B. 1573), Acts of the 77th Legislature,
6504	6504	Regular Session, 2001 (Article 6243h, Vernon's Texas Civil
6505	6505	Statutes), applies only to the appointment or election of a trustee
6506	6506	of the board of trustees of the pension system established under
6507	6507	that law that occurs on or after the effective date of this Act.
6508	6508	(b) A person who is serving as a trustee immediately before
6509	6509	the effective date of this Act may continue to serve for the
6510	6510	remainder of the trustee's term, and that trustee's qualifications
6511	6511	for serving as a trustee for that term are governed by the law in
6512	6512	effect immediately before the effective date of this Act.
6513	6513	SECTION 3.26. Notwithstanding any other Act of the 85th
6514	6514	Legislature, Regular Session, 2017, the issuance of pension
6515	6515	obligation bonds under Chapter 107, Local Government Code, in an
6516	6516	amount sufficient to deliver pension obligation bond proceeds to
6517	6517	the pension system established under Chapter 88 (H.B. 1573), Acts
6518	6518	of the 77th Legislature, Regular Session, 2001 (Article 6243h,
6519	6519	Vernon's Texas Civil Statutes), as amended by this Act, in the
6520	6520	amount and manner prescribed by Section 8C(j), Chapter 88 (H.B.
6521	6521	1573), Acts of the 77th Legislature, Regular Session, 2001 (Article
6522	6522	6243h, Vernon's Texas Civil Statutes), as added by this Act, may not
6523	6523	require the approval of the qualified voters of a city voting at an
6524	6524	election held for that purpose.
6525	6525	SECTION 3.27. The pension system established under Chapter
6526	6526	88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
6527	6527	(Article 6243h, Vernon's Texas Civil Statutes), shall require the
6528	6528	pension system actuary to prepare the first actuarial experience
6529	6529	study required under Section 8D, Chapter 88 (H.B. 1573), Acts of the
6530	6530	77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
6531	6531	Texas Civil Statutes), as added by this Act, not later than
6532	6532	September 30, 2021.
6533	6533	ARTICLE 4. CONFLICTING LEGISLATION; EFFECTIVE DATE
6534	6534	SECTION 4.01. If this Act conflicts with any other Act of
6535	6535	the 85th Legislature, Regular Session, 2017, this Act controls
6536	6536	unless the conflict is expressly resolved by the legislature by
6537	6537	reference to this Act.
6538	6538	SECTION 4.02. This Act takes effect July 1, 2017, if it
6539	6539	receives a vote of two-thirds of all the members elected to each
6540	6540	house, as provided by Section 39, Article III, Texas Constitution.
6541	6541	If this Act does not receive the vote necessary for effect on that
6542	6542	date, this Act takes effect September 1, 2017.