Texas 2017 - 85th Regular

Texas Senate Bill SB2190 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	S.B. No. 2190
	1	+	By: Huffman S.B. No. 2190
	2	+	(Flynn, Coleman, Murphy, Huberty, Walle)
2	3
3	4
	5	+	A BILL TO BE ENTITLED
4	6		AN ACT
5	7		relating to the public retirement systems of certain
6	8		municipalities.
7	9		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	10		ARTICLE 1. FIREFIGHTERS' RELIEF AND RETIREMENT FUND
9	11		SECTION 1.01. Section 1, Article 6243e.2(1), Revised
10	12		Statutes, is amended by amending Subdivisions (1-a), (1-b), (3),
11		-	(13-a), (15-a), (15-b), and (16) and adding Subdivisions ~~(1-c),~~
12		-	(1-d), (1-e), (1-f), (1-g), (3-a), (3-b), (3-c), (3-d), ~~(10-a),~~
13		-	(10-b), (11-a), (12-a), (12-b), (12-c), (12-d), (12-e), ~~(12-f),~~
14		-	(12-g), (13-b), (13-c), (13-d), (13-e), (15-c), (15-d), ~~(15-e),~~
15		-	(15-f), (16-a), (16-b), (16-c), (16-d), (16-e), and (16-f) ~~to read~~
16		-	as follows:
	13	+	(12), (13-a), (15-a), (15-b), and (16) and adding Subdivisions
	14	+	(1-c), (1-d), (1-e), (1-f), (1-g), (3-a), (3-b), (3-c), (3-d),
	15	+	(10-a), (10-b), (11-a), (12-a), (12-b), (12-c), (12-d), (12-e),
	16	+	(12-f), (12-g), (13-b), (13-c), (13-d), (13-e), (15-c), (15-d),
	17	+	(15-e), (15-f), (16-a), (16-b), (16-c), (16-d), (16-e), and (16-f)
	18	+	to read as follows:
17	19		(1-a) "Actuarial data" includes:
18	20		(A) the census data, assumption tables,
19	21		disclosure of methods, and financial information that are routinely
20	22		used by the fund actuary for the fund's valuation studies or an
21	23		actuarial experience study under Section 13D of this article; and
22	24		(B) other data that is reasonably necessary to
23	25		implement Sections 13A through 13F of this article. ["Average
24	26		monthly salary" means one thirty-sixth of the member's salary as a
25	27		firefighter for the member's highest 78 biweekly pay periods during
26	28		the member's participation in the fund or, if the member has
27	29		participated in the fund for less than three years, the total salary
28	30		paid to the member for the periods the member participated in the
29	31		fund divided by the number of months the member has participated in
30	32		the fund. If a member is not paid on the basis of biweekly pay
31	33		periods, "average monthly salary" is determined on the basis of the
32	34		number of pay periods under the payroll practices of the
33	35		municipality sponsoring the fund that most closely correspond to 78
34	36		biweekly pay periods.]
35	37		(1-b) "Actuarial experience study" has the meaning
36	38		assigned by Section 802.1014, Government Code ["Beneficiary adult
37	39		child" means a child of a member by birth or adoption who:
38	40		[(A) is not an eligible child; and
39	41		[(B) is designated a beneficiary of a member's
40	42		DROP account by valid designation under Section 5(j-1)].
41	43		(1-c) "Amortization period" means the time period
42	44		necessary to fully pay a liability layer.
43	45		(1-d) "Amortization rate" means the sum of the
44	46		scheduled amortization payments for a given fiscal year for the
45	47		current liability layers divided by the projected pensionable
46	48		payroll for that fiscal year.
47	49		(1-e) "Assumed rate of return" means the assumed
48	50		market rate of return on fund assets, which is seven percent per
49	51		annum unless adjusted as provided by this article.
50	52		(1-f) "Average monthly salary" means, if the member
51	53		has participated in the fund for:
52	54		(A) three or more years, the total salary
53	55		received by a member as a firefighter over the member's:
54	56		(i) highest 78 biweekly pay periods for a
55	57		member hired before the year 2017 effective date, including a
56	58		member who was hired before the year 2017 effective date and who
57	59		involuntarily separated from service but was retroactively
58	60		reinstated in accordance with an arbitration, civil service, or
59	61		court ruling; or
60	62		(ii) last 78 biweekly pay periods ending
61	63		before the earlier of the date the member terminates employment
62	64		with the fire department, divided by 36, or the member began
63	65		participation in the DROP, divided by 36; or
64	66		(B) fewer than three years, the total salary paid
65	67		to the member for the periods the member participated in the fund
66	68		divided by the number of months the member has participated in the
67	69		fund.
68	70		If a member is not paid on the basis of biweekly pay periods,
69	71		"average monthly salary" is determined on the basis of the number of
70	72		pay periods under the payroll practices of the municipality
71	73		sponsoring the fund that most closely correspond to 78 biweekly pay
72	74		periods.
73	75		(1-g) "Beneficiary adult child" means a child of a
74	76		member by birth or adoption who:
75	77		(A) is not an eligible child; and
76	78		(B) is designated a beneficiary of a member's
77	79		DROP account by valid designation under Section 5(j-1).
78	80		(3) "Code" means the federal Internal Revenue Code of
79	81		1986, as amended.
80	82		(3-a) "Confidentiality agreement" means a letter
81	83		agreement sent from the municipal actuary or an independent actuary
82	84		in which the municipal actuary or the independent actuary, as
83	85		applicable, agrees to comply with the confidentiality provisions of
84	86		this article.
85	87		(3-b) "Corridor" means the range of municipal
86	88		contribution rates that are:
87	89		(A) equal to or greater than the minimum
88	90		contribution rate; and
89	91		(B) equal to or less than the maximum
90	92		contribution rate.
91	93		(3-c) "Corridor margin" means five percentage points.
92	94		(3-d) "Corridor midpoint" means the projected
93	95		municipal contribution rate specified for each fiscal year for 31
94	96		years in the initial risk sharing valuation study under Section 13C
95	97		of this article, and as may be adjusted under Section 13E or 13F of
96	98		this article, and in each case rounded to the nearest hundredths
97	99		decimal place.
98	100		(10-a) "Employer normal cost rate" means the normal
99	101		cost rate minus the member contribution rate.
100	102		(10-b) "Estimated municipal contribution rate" means
101	103		the municipal contribution rate estimated in a final risk sharing
102	104		valuation study under Section 13B or 13C of this article, as
103	105		applicable, as required by Section 13B(a)(5) of this article.
104	106		(11-a) "Fiscal year," except as provided by Section 1B
105	107		of this article, means a fiscal year beginning on July 1 and ending
106	108		on June 30.
	109	+	(12) "Fund," except as provided by Sections 1C and 1D
	110	+	of this article or unless the context requires otherwise, means a
	111	+	firefighters' relief and retirement fund established under this
	112	+	article.
107	113		(12-a) "Funded ratio" means the ratio of the fund's
108	114		actuarial value of assets divided by the fund's actuarial accrued
109	115		liability.
110	116		(12-b) "Legacy liability" means the unfunded
111	117		actuarial accrued liability:
112	118		(A) for the fiscal year ending June 30, 2016,
113	119		reduced to reflect:
114	120		(i) changes to benefits or contributions
115	121		under this article that took effect on the year 2017 effective date;
116	122		and
117	123		(ii) payments by the municipality and
118	124		earnings at the assumed rate of return allocated to the legacy
119	125		liability from July 1, 2016, to July 1, 2017, excluding July 1,
120	126		2017; and
121	127		(B) for each subsequent fiscal year:
122	128		(i) reduced by the contributions for that
123	129		year allocated to the amortization of the legacy liability; and
124	130		(ii) adjusted by the assumed rate of
125	131		return.
126	132		(12-c) "Level percent of payroll method" means the
127	133		amortization method that defines the amount of the liability layer
128	134		recognized each fiscal year as a level percent of pensionable
129	135		payroll until the amount of the liability layer remaining is
130	136		reduced to zero.
131	137		(12-d) "Liability gain layer" means a liability layer
132	138		that decreases the unfunded actuarial accrued liability.
133	139		(12-e) "Liability layer" means the legacy liability
134	140		established in the initial risk sharing valuation study under
135	141		Section 13C of this article and the unanticipated change as
136	142		established in each subsequent risk sharing valuation study
137	143		prepared under Section 13B of this article.
138	144		(12-f) "Liability loss layer" means a liability layer
139	145		that increases the unfunded actuarial accrued liability. For
140	146		purposes of this article, the legacy liability is a liability loss
141	147		layer.
142	148		(12-g) "Maximum contribution rate" means the rate
143	149		equal to the corridor midpoint plus the corridor margin.
144	150		(13-a) "Minimum contribution rate" means the rate
145	151		equal to the corridor midpoint minus the corridor margin ["Normal
146	152		retirement age" means the earlier of:
147	153		[(A) the age at which the member attains 20 years
148	154		of service; or
149	155		[(B) the age at which the member first attains
150	156		the age of at least 50 years and at least 10 years of service].
151	157		(13-b) "Municipality" means a municipality in this
152	158		state having a population of more than 2 million.
153	159		(13-c) "Municipal contribution rate" means a percent
154	160		of pensionable payroll that is the sum of the employer normal cost
155	161		rate and the amortization rate for liability layers, except as
156	162		determined otherwise under the express provisions of Sections 13E
157	163		and 13F of this article.
158	164		(13-d) "Normal cost rate" means the salary weighted
159	165		average of the individual normal cost rates determined for the
160	166		current active population plus an allowance for projected
161	167		administrative expenses. The allowance for projected
162	168		administrative expenses equals the administrative expenses divided
163	169		by the pensionable payroll for the previous fiscal year, provided
164	170		the administrative allowance may not exceed 1.25 percent of the
165	171		pensionable payroll for the current fiscal year unless agreed to by
166	172		the municipality.
167	173		(13-e) "Normal retirement age" means:
168	174		(A) for a member, including a member who was
169	175		hired before the year 2017 effective date and who involuntarily
170	176		separated from service but has been retroactively reinstated in
171	177		accordance with an arbitration, civil service, or court ruling,
172	178		hired before the year 2017 effective date, the age at which the
173	179		member attains 20 years of service; or
174	180		(B) except as provided by Paragraph (A) of this
175	181		subdivision, for a member hired or rehired on or after the year 2017
176	182		effective date, the age at which the sum of the member's age, in
177	183		years, and the member's years of participation in the fund equals at
178	184		least 70.
179	185		(15-a) "Payoff year" means the year a liability layer
180	186		is fully amortized under the amortization period. A payoff year may
181	187		not be extended or accelerated for a period that is less than one
182	188		month. ["PROP" means the post-retirement option plan under Section
183	189		5A of this article.]
184	190		(15-b) "Pensionable payroll" means the aggregate
185	191		salary of all the firefighters on active service, including all
186	192		firefighters participating in an alternative retirement plan
187	193		established under Section 1C of this article, in an applicable
188	194		fiscal year ["PROP account" means the notional account established
189	195		to reflect the credits and contributions of a member or surviving
190	196		spouse who has made a PROP election in accordance with Section 5A of
191	197		this article].
192	198		(15-c) "Price inflation assumption" means:
193	199		(A) the most recent headline consumer price index
194	200		10-year forecast published in the Federal Reserve Bank of
195	201		Philadelphia Survey of Professional Forecasters; or
196	202		(B) if the forecast described by Paragraph (A) of
197	203		this subdivision is not available, another standard as determined
198	204		by mutual agreement between the municipality and the board.
199	205		(15-d) "Projected pensionable payroll" means the
200	206		estimated pensionable payroll for the fiscal year beginning 12
201	207		months after the date of the risk sharing valuation study prepared
202	208		under Section 13B of this article at the time of calculation by:
203	209		(A) projecting the prior fiscal year's
204	210		pensionable payroll forward two years using the current payroll
205	211		growth rate assumptions; and
206	212		(B) adjusting, if necessary, for changes in
207	213		population or other known factors, provided those factors would
208	214		have a material impact on the calculation, as determined by the
209	215		board.
210	216		(15-e) "PROP" means the post-retirement option plan
211	217		under Section 5A of this article.
212	218		(15-f) "PROP account" means the notional account
213	219		established to reflect the credits and contributions of a member or
214	220		surviving spouse who made a PROP election in accordance with
215	221		Section 5A of this article before the year 2017 effective date.
216	222		(16) "Salary" means wages as defined by Section
217	223		3401(a) of the code, [the amounts includable in gross income of a
218	224		member] plus any amount not includable in gross income under
219	225		Section 104(a)(1), Section 125, Section 132(f), Section 402(g)(2)
220	226		[402(e)(3) or (h)], Section 457 [403(b)], or Section 414(h)(2)
221	227		[414(h)] of the code, except that with respect to amounts earned on
222	228		or after the year 2017 effective date, salary excludes overtime pay
223	229		received by a firefighter or the amount by which the salary earned
224	230		by a firefighter on the basis of the firefighter's appointed
225	231		position exceeds the salary of the firefighter's highest tested
226	232		rank.
227	233		(16-a) "Third quarter line rate" means the corridor
228	234		midpoint plus 2.5 percentage points.
229	235		(16-b) "Ultimate entry age normal" means an actuarial
230	236		cost method under which a calculation is made to determine the
231	237		average uniform and constant percentage rate of contributions that,
232	238		if applied to the compensation of each member during the entire
233	239		period of the member's anticipated covered service, would be
234	240		required to meet the cost of all benefits payable on the member's
235	241		behalf based on the benefits provisions for newly hired employees.
236	242		For purposes of this definition, the actuarial accrued liability
237	243		for each member is the difference between the member's present
238	244		value of future benefits based on the tier of benefits that apply to
239	245		the member and the member's present value of future normal costs
240	246		determined using the normal cost rate.
241	247		(16-c) "Unfunded actuarial accrued liability" means
242	248		the difference between the actuarial accrued liability and the
243	249		actuarial value of assets. For purposes of this definition:
244	250		(A) "actuarial accrued liability" means the
245	251		portion of the actuarial present value of projected benefits
246	252		attributed to past periods of member service based on the cost
247	253		method used in the risk sharing valuation study prepared under
248	254		Section 13B or 13C of this article, as applicable; and
249	255		(B) "actuarial value of assets" means the value
250	256		of fund investments as calculated using the asset smoothing method
251	257		used in the risk sharing valuation study prepared under Section 13B
252	258		or 13C of this article, as applicable.
253	259		(16-d) "Unanticipated change" means, with respect to
254	260		the unfunded actuarial accrued liability in each subsequent risk
255	261		sharing valuation study prepared under Section 13B of this article,
256	262		the difference between:
257	263		(A) the remaining balance of all then-existing
258	264		liability layers as of the date of the risk sharing valuation study;
259	265		and
260	266		(B) the actual unfunded actuarial accrued
261	267		liability as of the date of the risk sharing valuation study.
262	268		(16-e) "Unused leave pay" means the accrued value of
263	269		unused leave time payable to an employee after separation from
264	270		service in accordance with applicable law and agreements.
265	271		(16-f) "Year 2017 effective date" means the date on
266	272		which S.B. No. 2190, Acts of the 85th Legislature, Regular Session,
267	273		2017, took effect.
268	274		SECTION 1.02. Article 6243e.2(1), Revised Statutes, is
269	275		amended by adding Sections 1A, 1B, 1C, 1D, and 1E to read as
270	276		follows:
271	277		Sec. 1A. INTERPRETATION OF ARTICLE. This article,
272	278		including Sections 2(p) and (p-1) of this article, does not and may
273	279		not be interpreted to:
274	280		(1) relieve the municipality, the board, or the fund
275	281		of their respective obligations under Sections 13A through 13F of
276	282		this article;
277	283		(2) reduce or modify the rights of the municipality,
278	284		the board, or the fund, including any officer or employee of the
279	285		municipality, board, or fund, to enforce obligations described by
280	286		Subdivision (1) of this section;
281	287		(3) relieve the municipality, including any official
282	288		or employee of the municipality, from:
283	289		(A) paying or directing to pay required
284	290		contributions to the fund under Section 13 or 13A of this article or
285	291		carrying out the provisions of Sections 13A through 13F of this
286	292		article; or
287	293		(B) reducing or modifying the rights of the board
288	294		and any officer or employee of the board or fund to enforce
289	295		obligations described by Subdivision (1) of this section;
290	296		(4) relieve the board or fund, including any officer
291	297		or employee of the board or fund, from any obligation to implement a
292	298		benefit change or carry out the provisions of Sections 13A through
293	299		13F of this article; or
294	300		(5) reduce or modify the rights of the municipality
295	301		and any officer or employee of the municipality to enforce an
296	302		obligation described by Subdivision (4) of this section.
297	303		Sec. 1B. FISCAL YEAR. If either the fund or the
298	304		municipality changes its respective fiscal year, the fund and the
299	305		municipality may enter into a written agreement to change the
300	306		fiscal year for purposes of this article. If the fund and
301	307		municipality enter into an agreement described by this section, the
302	308		parties shall, in the agreement, adjust the provisions of Sections
303	309		13A through 13F of this article to reflect that change.
304	310		Sec. 1C. ALTERNATIVE RETIREMENT PLANS. (a) In this
305		-	section, "salary-based benefit plan" means a retirement plan
306		-	provided by the fund under this article that provides member
307		-	benefits calculated in accordance with a formula that is based on
308		-	multiple factors, one of which is the member's salary at the time of
309		-	the member's retirement.
	311	+	section, "fund" means the retirement, disability, or death benefit
	312	+	plan established under this article for firefighters other than an
	313	+	alternative retirement plan established under this section.
310	314		(b) Notwithstanding any other law, including Section 13G of
311		-	this article, the board and the municipality may enter into a
312		-	written agreement to offer an alternative retirement plan or plans,
313		-	including a cash balance retirement plan or plans, if both parties
314		-	consider it appropriate.
	315	+	this article, and except as provided by Subsection (e) of this
	316	+	section, the board and the municipality may enter into a written
	317	+	agreement to offer an alternative retirement plan or plans,
	318	+	including cash balance retirement plans, if both parties consider
	319	+	it appropriate.
315	320		(c) Notwithstanding any other law, including Section 13G of
316		-	this article, if, beginning with the final risk sharing valuation
317		-	study prepared under Section 13B of this article on or after July 1,
318		-	2021, either the funded ratio of the fund is less than 65 percent as
319		-	determined in the final risk sharing valuation study without making
320		-	any adjustments under Section 13E or 13F of this article, or the
321		-	funded ratio of the fund is less than 65 percent as determined in a
322		-	revised and restated risk sharing valuation study prepared under
323		-	Section 13B(a)(7) of this article, the board and the municipality
324		-	shall, as soon as practicable but not later than the 60th day after
325		-	the date the determination is made:
326		-	(1) enter into a written agreement to establish a cash
327		-	balance retirement plan that complies with Section 1D of this
328		-	article; and
329		-	(2) require each firefighter first hired by the
330		-	municipality on or after the 90th day after the date the cash
331		-	balance retirement plan is established to participate in the cash
332		-	balance retirement plan established under this subsection instead
333		-	of participating in the salary-based benefit plan, provided the
334		-	firefighter would have otherwise been eligible to participate in
335		-	the salary-based benefit plan.
	321	+	this article, and except as provided by Subsection (e) of this
	322	+	section, if, on or after September 1, 2021, the funded ratio of the
	323	+	fund is less than 65 percent as determined in a final risk sharing
	324	+	valuation study prepared under Section 13B of this article without
	325	+	making any adjustments under Section 13E or 13F of this article, or
	326	+	if, on or after September 1, 2021, the funded ratio of the fund is
	327	+	less than 65 percent as determined in a revised and restated risk
	328	+	sharing valuation study prepared under Section 13B(a)(7) of this
	329	+	article, the board and the municipality shall, as soon as
	330	+	practicable but not later than the 60th day after the date the
	331	+	determination is made:
	332	+	(1) enter into a written agreement to establish, as an
	333	+	alternative retirement plan under this section, a cash balance
	334	+	retirement plan that complies with Section 1D of this article; and
	335	+	(2) require each firefighter hired by the municipality
	336	+	on or after the date the cash balance retirement plan is established
	337	+	to participate in the cash balance retirement plan established
	338	+	under this subsection instead of participating in the fund,
	339	+	provided the firefighter would have otherwise been eligible to
	340	+	participate in the fund.
	341	+	(d) Notwithstanding any other law, including Section 13G of
	342	+	this article, and except as provided by Subsection (e) of this
	343	+	section, if, on or after September 1, 2021, the board and the
	344	+	municipality fail to establish a cash balance retirement plan
	345	+	within the time prescribed by Subsection (c) of this section, the
	346	+	municipality shall by ordinance:
	347	+	(1) unilaterally establish, as an alternative
	348	+	retirement plan, a cash balance retirement plan that complies with
	349	+	Section 1D of this article; and
	350	+	(2) require each firefighter hired by the municipality
	351	+	on or after the date the cash balance retirement plan is established
	352	+	to participate in the cash balance retirement plan established
	353	+	under this subsection instead of participating in the fund,
	354	+	provided the firefighter would have otherwise been eligible to
	355	+	participate in the fund.
	356	+	(e) If the municipality fails to deliver the proceeds of the
	357	+	pension obligation bonds described by Section 9B(j)(1), Article
	358	+	6243g-4, Revised Statutes, within the time prescribed by that
	359	+	subdivision, notwithstanding the funded ratio of the fund:
	360	+	(1) the board and the municipality may not establish a
	361	+	cash balance retirement plan under Subsection (c) of this section;
	362	+	and
	363	+	(2) the municipality may not establish a cash balance
	364	+	retirement plan under Subsection (d) of this section.
336	365		Sec. 1D. REQUIREMENTS FOR CERTAIN CASH BALANCE RETIREMENT
337	366		PLANS. (a) In this section:
338		-	(1) "Cash balance plan participant" means a
339		-	firefighter who participates in a cash balance retirement plan.
340		-	(2) "Cash balance retirement plan" means a cash
	367	+	(1) "Cash balance retirement plan" means a cash
341	368		balance retirement plan established by written agreement under
342		-	Section 1C(b) or 1C(c) of this article.
343		-	(3) "Interest" means the interest credited to a cash
344		-	balance plan participant's notional account, which may not:
345		-	(A) exceed a percentage rate equal to the cash
346		-	balance retirement plan's most recent five fiscal years' smoothed
347		-	rate of return; or
348		-	(B) be less than zero percent.
349		-	(4) "Salary-based benefit plan" has the meaning
350		-	assigned by Section 1C of this article.
351		-	(b) The written agreement establishing a cash balance
352		-	retirement plan must:
	369	+	Section 1C(c) of this article or by ordinance under Section 1C(d) of
	370	+	this article.
	371	+	(2) "Fund" has the meaning assigned by Section 1C of
	372	+	this article.
	373	+	(3) "Interest" means the interest earned as the result
	374	+	of returns on investments, which may not exceed a percentage rate
	375	+	equal to the cash balance retirement plan's most recent five fiscal
	376	+	years' smoothed rate of return.
	377	+	(4) "Participant" means a firefighter who
	378	+	participates in a cash balance retirement plan.
	379	+	(b) The written agreement or ordinance establishing a cash
	380	+	balance retirement plan must:
353	381		(1) provide for the administration of the cash balance
354	382		retirement plan;
355	383		(2) provide for a closed amortization period not to
356		-	exceed 20 years from the date an actuarial gain or loss is realized;
357		-	(3) ~~provide for the crediting of~~ municipal and ~~cash~~
358		-	~~balance plan participant~~ contributions to ~~each cash balance plan~~
359		-	participant~~'s notional account~~;
360		-	(4) provide for the crediting of interest to ~~each cash~~
361		-	~~balance plan~~ participant's ~~notional~~ account;
	384	+	exceed 15 years from the date an actuarial gain or loss is realized;
	385	+	(3) require that municipal and participant
	386	+	contributions be credited to an account maintained for the benefit
	387	+	of the participant;
	388	+	(4) provide for the crediting of interest to the
	389	+	participant's account;
362	390		(5) include a vesting schedule;
363	391		(6) include benefit options, including options for
364		-	cash balance plan participants who separate from service prior to
365		-	retirement;
	392	+	participants who separate from service prior to retirement;
366	393		(7) provide for death and disability benefits;
367		-	(8) allow a ~~cash balance plan~~ participant who is
368		-	~~eligible to retire~~ under the plan to elect to:
	394	+	(8) allow a participant who is eligible to retire
	395	+	under the plan to elect to:
369	396		(A) receive a monthly annuity payable for the
370		-	life of the cash balance plan participant in an amount actuarially
371		-	determined on the date of the cash balance plan participant's
372		-	retirement based on the cash balance plan participant's accumulated
373		-	notional account balance annuitized in accordance with the
374		-	actuarial assumptions and actuarial methods established in the most
375		-	recent actuarial experience study conducted under Section 13D of
376		-	this article, except that the assumed rate of return applied may not
377		-	exceed the fund's assumed rate of return in the most recent risk
378		-	sharing valuation study; or
379		-	(B) receive a single, partial lump-sum payment
380		-	from the cash balance plan participant's accumulated notional
381		-	account balance and a monthly annuity payable for life in an amount
382		-	determined in accordance with Paragraph (A) of this subdivision
383		-	based on the cash balance plan participant's notional account
384		-	balance after receiving the partial lump-sum payment; and
	397	+	life of the participant in an amount actuarially determined on the
	398	+	date of the participant's retirement based on the participant's
	399	+	accumulated account balance annuitized in accordance with the
	400	+	actuarial assumptions and actuarial methods established in the
	401	+	written agreement or ordinance establishing the plan, except that
	402	+	the discount rate applied may not exceed the fund's assumed rate of
	403	+	return in the most recent risk sharing valuation study;
	404	+	(B) receive a single lump-sum payment of the
	405	+	participant's accumulated account balance; or
	406	+	(C) receive a single, partial lump-sum payment
	407	+	from the participant's accumulated account balance and a monthly
	408	+	annuity payable for life in an amount determined in accordance with
	409	+	Paragraph (A) of this subdivision based on the participant's
	410	+	account balance after receiving the partial lump-sum payment; and
385	411		(9) include any other provision determined necessary
386		-	by:
387		-	(A) the board and the municipality; or
388		-	(B) the fund for purposes of maintaining the
389		-	tax-qualified status of the fund under Section 401 of the code.
390		-	(c) Notwithstanding any other law, including Section 13 of
	412	+	by the board and the municipality if the plan is established under
	413	+	Section 1C(c) of this article or by the municipality if the plan is
	414	+	established under Section 1C(d) of this article.
	415	+	(c) The written agreement or ordinance establishing a cash
	416	+	balance retirement plan must address whether firefighters who were
	417	+	employed by the municipality before the date the cash balance
	418	+	retirement plan was established and who resumed employment with the
	419	+	municipality on or after the date the cash balance retirement plan
	420	+	was established are required to participate in the fund or in the
	421	+	cash balance retirement plan.
	422	+	(d) Notwithstanding any other law, including Section 13 of
391	423		this article, a firefighter who participates in a cash balance
392	424		retirement plan:
393		-	(1) ~~subject to~~ Subsection (d) of this ~~section, is not~~
394		-	eligible to be a member of and may not participate ~~in the fund's~~
395		-	~~salary-based benefit plan~~; and
	425	+	(1) except as provided by Subsection (c) of this
	426	+	section, is not eligible to be a member of and may not participate
	427	+	in the fund; and
396	428		(2) may not accrue years of participation or establish
397		-	service credit in the salary-based benefit plan during the period
398		-	the firefighter is participating in the cash balance retirement
399		-	plan.
400		-	(d) A cash balance plan participant is considered a member
401		-	for purposes of Sections 13A through 13H of this article.
402		-	(e) At the time the cash balance retirement plan is
403		-	implemented, the employer normal cost rate of the cash balance
404		-	retirement plan may not exceed the employer normal cost rate for the
405		-	salary-based benefit plan.
	429	+	service credit in the fund during the period the firefighter is
	430	+	participating in the cash balance retirement plan.
	431	+	(e) The combined municipal contribution for the cash
	432	+	balance retirement plan and the fund may not:
	433	+	(1) exceed the municipal contribution for the fund
	434	+	calculated as if all participants in the cash balance retirement
	435	+	plan were members of the fund; or
	436	+	(2) be less than the required normal cost contribution
	437	+	for the fund calculated as if all participants of the cash balance
	438	+	retirement plan were members of the fund.
406	439		Sec. 1E. CONFLICT OF LAW. To the extent of a conflict
407	440		between this article and any other law, this article prevails.
408	441		SECTION 1.03. Section 2, Article 6243e.2(1), Revised
409	442		Statutes, is amended by amending Subsection (b) and adding
410	443		Subsection (t) to read as follows:
411	444		(b) The board of trustees of the fund shall be known as the
412	445		"(name of municipality) Firefighters' Relief and Retirement Fund
413	446		Board of Trustees" and the fund shall be known as the "(name of
414	447		municipality) Firefighters' Relief and Retirement Fund." The board
415	448		consists of 10 trustees, including:
416	449		(1) the mayor or an appointed representative of the
417	450		mayor;
418	451		(2) the director of finance or the director of
419	452		finance's designee [treasurer] of the municipality or, if there is
420	453		not a director of finance [treasurer], the highest ranking employee
421	454		of the municipality, excluding elected officials, with
422	455		predominately financial responsibilities, as determined by the
423	456		mayor, or that employee's designee [secretary, clerk, or other
424	457		person who by law, charter provision, or ordinance performs the
425	458		duty of treasurer of the municipality];
426	459		(3) five firefighters who are members of the fund;
427	460		(4) one person who is a retired firefighter and a
428	461		member of the fund with at least 20 years of participation; and
429	462		(5) two persons, each of whom is a registered voter of
430	463		the municipality, has been a resident of the municipality for at
431	464		least one year preceding the date of initial appointment, and is not
432	465		a municipal officer or employee.
433	466		(t) The officers and employees of the municipality are fully
434	467		protected and free of liability for any action taken or omission
435	468		made or any action or omission suffered by them in good faith,
436	469		objectively determined, in the performance of their duties related
437	470		to the fund. The protection from liability provided by this
438	471		subsection is cumulative of and in addition to any other
439	472		constitutional, statutory, or common law official or governmental
440	473		immunity, defense, and civil or procedural protection provided to
441	474		the municipality as a governmental entity and to a municipal
442	475		official or employee as an official or employee of a governmental
443	476		entity. Except for a waiver expressly provided by this article,
444	477		this article does not grant an implied waiver of any immunity.
445	478		SECTION 1.04. Article 6243e.2(1), Revised Statutes, is
446	479		amended by adding Sections 2A and 2B to read as follows:
447	480		Sec. 2A. QUALIFICATIONS OF MUNICIPAL ACTUARY. (a) An
448	481		actuary hired by the municipality for purposes of this article must
449	482		be an actuary from a professional service firm who:
450	483		(1) is not already engaged by the fund or any other
451	484		pension system authorized under Article 6243g-4, Revised Statutes,
452	485		or Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular
453	486		Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), to
454	487		provide actuarial services to the fund or pension system, as
455	488		applicable;
456	489		(2) has a minimum of 10 years of professional
457	490		actuarial experience; and
458	491		(3) is a fellow of the Society of Actuaries or a member
459	492		of the American Academy of Actuaries and who, in carrying out duties
460	493		for the municipality, has met the applicable requirements to issue
461	494		statements of actuarial opinion.
462	495		(b) Notwithstanding Subsection (a) of this section, the
463	496		municipal actuary does not need to meet any greater qualifications
464	497		than those required by the board for the fund actuary.
465	498		Sec. 2B. REPORT ON INVESTMENTS BY INDEPENDENT INVESTMENT
466	499		CONSULTANT. At least once every three years, the board shall hire
467	500		an independent investment consultant to conduct a review of fund
468	501		investments and submit a report to the board and the municipality
469	502		concerning the review or demonstrate in the fund's annual financial
470	503		report that the review was conducted. The independent investment
471	504		consultant shall review and report on at least the following:
472	505		(1) the fund's compliance with its investment policy
473	506		statement, ethics policies, including policies concerning the
474	507		acceptance of gifts, and policies concerning insider trading;
475	508		(2) the fund's asset allocation, including a review
476	509		and discussion of the various risks, objectives, and expected
477	510		future cash flows;
478	511		(3) the fund's portfolio structure, including the
479	512		fund's need for liquidity, cash income, real return, and inflation
480	513		protection and the active, passive, or index approaches for
481	514		different portions of the portfolio;
482	515		(4) investment manager performance reviews and an
483	516		evaluation of the processes used to retain and evaluate managers;
484	517		(5) benchmarks used for each asset class and
485	518		individual manager;
486	519		(6) an evaluation of fees and trading costs;
487	520		(7) an evaluation of any leverage, foreign exchange,
488	521		or other hedging transaction; and
489	522		(8) an evaluation of investment-related disclosures
490	523		in the fund's annual reports.
491	524		SECTION 1.05. Section 3(d), Article 6243e.2(1), Revised
492	525		Statutes, is amended to read as follows:
493	526		(d) The board may have an actuarial valuation performed each
494	527		year, and for determining the municipality's contribution rate as
495	528		provided by Section 13A [13(d)] of this article, the board may adopt
496	529		a new actuarial valuation each year[, except that an actuarial
497	530		valuation that will result in an increased municipal contribution
498	531		rate that is above the statutory minimum may be adopted only once
499	532		every three years, unless the governing body of the municipality
500	533		consents to a more frequent increase].
501	534		SECTION 1.06. Article 6243e.2(1), Revised Statutes, is
502	535		amended by adding Section 3A to read as follows:
503	536		Sec. 3A. CERTAIN ALTERATIONS BY LOCAL AGREEMENT.
504	537		(a) Except as provided by Subsection (b) of this section, the
505	538		board is authorized, on behalf of the members or beneficiaries of
506	539		the fund, to alter benefit types or amounts, the means of
507	540		determining contribution rates, or the contribution rates provided
508	541		under this article if the alteration is included in a written
509	542		agreement between the board and the municipality. An agreement
510	543		entered into under this section:
511	544		(1) must:
512	545		(A) if the agreement concerns benefit increases,
513	546		other than benefit increases that are the result of Section 13E of
514	547		this article, adhere to the processes and standards set forth in
515	548		Section 10 of this article; and
516	549		(B) operate prospectively only; and
517	550		(2) may not, except as provided by Sections 13A
518	551		through 13F of this article, have the effect or result of increasing
519	552		the unfunded liability of the fund.
520	553		(b) In a written agreement entered into between the
521	554		municipality and the board under this section, the parties may not:
522	555		(1) alter Sections 13A through 13F of this article,
523	556		except and only to the extent necessary to comply with federal law;
524	557		(2) increase the assumed rate of return to more than
525	558		seven percent per year;
526	559		(3) extend the amortization period of a liability
527	560		layer to more than 30 years from the first day of the fiscal year
528	561		beginning 12 months after the date of the risk sharing valuation
529	562		study in which the liability layer is first recognized; or
530	563		(4) allow a municipal contribution rate in any year
531	564		that is less than or greater than the municipal contribution rate
532	565		required under Section 13E or 13F of this article, as applicable.
533	566		(c) If the board is directed or authorized in Sections 13A
534	567		through 13F of this article to effect an increase or decrease to
535	568		benefits or contributions, this article delegates the authority to
536	569		alter provisions concerning benefits and contributions otherwise
537	570		stated in this article in accordance with the direction or
538	571		authorization only to the extent the alteration is set forth in an
539	572		order or other written instrument and is consistent with this
540	573		section, the code, and other applicable federal law and
541	574		regulations. The order or other written instrument must be
542	575		included in each applicable risk sharing valuation study under
543	576		Section 13B or 13C of this article, as applicable, adopted by the
544	577		board, and published in a manner that makes the order or other
545	578		written instrument accessible to the members.
546	579		SECTION 1.07. Section 4, Article 6243e.2(1), Revised
547	580		Statutes, is amended by amending Subsections (a), (b), and (d) and
548	581		adding Subsections (b-1) and (b-2) to read as follows:
549	582		(a) A member [with at least 20 years of participation] who
550	583		terminates active service for any reason other than death is
551	584		entitled to receive a service pension provided by this section if
552	585		the member was:
553	586		(1) hired as a firefighter before the year 2017
554	587		effective date, including a member who was hired before the year
555	588		2017 effective date and who involuntarily separated from service
556	589		but has been retroactively reinstated in accordance with an
557	590		arbitration, civil service, or court ruling, at the age at which the
558	591		member attains 20 years of service; and
559	592		(2) except as provided by Subdivision (1) of this
560	593		subsection and subject to Subsection (b-2) of this section, hired
561	594		or rehired as a firefighter on or after the year 2017 effective
562	595		date, when the sum of the member's age in years and the member's
563	596		years of participation in the fund equals at least 70.
564	597		(b) Except as otherwise provided by Subsection (d) of this
565	598		section, the monthly service pension for a member described by:
566	599		(1) Subsection (a)(1) of this section is equal to the
567	600		sum of:
568	601		(A) the member's accrued monthly service pension
569	602		based on the member's years of participation before the year 2017
570	603		effective date, determined under the law in effect on the date
571	604		immediately preceding the year 2017 effective date;
572	605		(B) 2.75 percent of the member's average monthly
573	606		salary multiplied by the member's years of participation on or
574	607		after the year 2017 effective date, for each year or partial year of
575	608		participation of the member's first 20 years of participation; and
576	609		(C) two percent of the member's average monthly
577	610		salary multiplied by the member's years of participation on or
578	611		after the year 2017 effective date, for each year or partial year of
579	612		participation on or after the year 2017 effective date that
580	613		occurred after the 20 years of participation described by Paragraph
581	614		(B) of this subdivision; and
582	615		(2) Subsection (a)(2) of this section is equal to the
583	616		sum of:
584	617		(A) 2.25 percent of the member's average monthly
585	618		salary multiplied by the member's years or partial years of
586	619		participation for the member's first 20 years of participation; and
587	620		(B) two percent of the member's average monthly
588	621		salary multiplied by the member's years or partial years of
589	622		participation for all years of participation that occurred after
590	623		the 20 years of participation described by Paragraph (A) of this
591	624		subdivision.
592	625		(b-1) For purposes of Subsection (b) of this section,
593	626		partial years shall be computed to the nearest one-twelfth of a
594	627		year.
595	628		(b-2) A member's monthly service pension under Subsection
596	629		(a)(2) of this section may not exceed 80 percent of the member's
597	630		average monthly salary [A member who terminates active service on
598	631		or after November 1, 1997, and who has completed at least 20 years
599	632		of participation in the fund on the effective date of termination of
600	633		service is entitled to a monthly service pension, beginning after
601	634		the effective date of termination of active service, in an amount
602	635		equal to 50 percent of the member's average monthly salary, plus
603	636		three percent of the member's average monthly salary for each year
604	637		of participation in excess of 20 years, but not in excess of 30
605	638		years of participation, for a maximum total benefit of 80 percent of
606	639		the member's average monthly salary].
607	640		(d) The total monthly benefit payable to a retired or
608	641		disabled member, other than a deferred retiree or active member who
609	642		has elected the DROP under Section 5(b) of this article, or payable
610	643		to an eligible survivor of a deceased member as provided by Section
611	644		7(a) or 7(b) of this article, shall be increased by the following
612	645		amounts: by $100, beginning with the monthly payment made for July
613	646		1999; by $25, beginning with the monthly payment made for July,
614	647		2000; and by $25, beginning with the monthly payment made for July
615	648		2001. These additional benefits may not be increased under Section
616	649		11(c), (c-1), or (c-2) of this article.
617	650		SECTION 1.08. Section 5, Article 6243e.2(1), Revised
618	651		Statutes, is amended by amending Subsections (a), (b), (c), (d),
619	652		and (m) and adding Subsections (a-1), (b-1), (b-2), (d-1), (d-2),
620	653		and (e-1) to read as follows:
621	654		(a) A member who is eligible to receive a service pension
622	655		under Section 4(a)(1) [4] of this article and who remains in active
623	656		service may elect to participate in the deferred retirement option
624	657		plan provided by this section. A member who is eligible to receive
625	658		a service pension under Section 4(a)(2) of this article may not
626	659		elect to participate in the deferred retirement option plan
627	660		provided by this section. On subsequently terminating active
628	661		service, a member who elected the DROP may apply for a monthly
629	662		service pension under Section 4 of this article, except that the
630	663		effective date of the member's election to participate in the DROP
631	664		will be considered the member's retirement date for determining the
632	665		amount of the member's monthly service pension. The member may also
633	666		apply for any DROP benefit provided under this section on
634	667		terminating active service. An election to participate in the
635	668		DROP, once approved by the board, is irrevocable.
636	669		(a-1) The monthly benefit of a [A] DROP participant who has
637	670		at least 20 years of participation on the year 2017 effective date
638	671		[participant's monthly benefit at retirement] is increased at
639	672		retirement by two percent of the amount of the member's original
640	673		benefit for every full year of participation in the DROP by the
641	674		member for up to 10 years of participation in the DROP. For a
642	675		member's final year of participation, but not beyond the member's
643	676		10th year in the DROP, if a full year of participation is not
644	677		completed, the member shall receive a prorated increase of 0.166
645	678		percent of the member's original benefit for each month of
646	679		participation in that year. An increase provided by this
647	680		subsection does not apply to benefits payable under Subsection (l)
648	681		of this section. An increase under this subsection is applied to
649	682		the member's benefit at retirement and is not added to the member's
650	683		DROP account. The total increase under this subsection may not
651	684		exceed 20 percent for 10 years of participation in the DROP by the
652	685		member.
653	686		(b) A member may elect to participate in the DROP by
654	687		complying with the election process established by the board. The
655	688		member's election may be made at any time beginning on the date the
656	689		member has completed 20 years of participation in the fund and is
657	690		otherwise eligible for a service pension under Section 4(a)(1) [4]
658	691		of this article. [The election becomes effective on the first day
659	692		of the month following the month in which the board approves the
660	693		member's DROP election.] Beginning on the first day of the month
661	694		following the month in which the member makes an election to
662	695		participate in the DROP, subject to board approval, and ending on
663	696		the year 2017 effective date [of the member's DROP election],
664	697		amounts equal to the deductions made from the member's salary under
665	698		Section 13(c) of this article shall be credited to the member's DROP
666	699		account. Beginning after the year 2017 effective date, amounts
667	700		equal to the deductions made from the member's salary under Section
668	701		13(c) of this article may not be credited to the member's DROP
669	702		account.
670	703		(b-1) On or after the year 2017 effective date, an active
671	704		[A] member may not participate in the DROP for more than 13 [10]
672	705		years. If a DROP participant remains in active service after the
673	706		13th [10th] anniversary of the effective date of the member's DROP
674	707		election:
675	708		(1) [,] subsequent deductions from the member's salary
676	709		under Section 13(c) of this article, except for unused leave pay,
677	710		may not be credited to the member's DROP account; and
678	711		(2) the account shall continue to be credited with
679	712		earnings in accordance with Subsection (d) of this section [and may
680	713		not otherwise increase any benefit payable from the fund for the
681	714		member's service].
682	715		(b-2) For a member who is a DROP participant, the fund shall
683	716		credit to the member's DROP account, in accordance with Section
684		-	13(c-1) of this article, the amount of unused leave pay otherwise
	717	+	13(c) of this article, the amount of unused leave pay otherwise
685	718		payable to the member and received as a contribution to the fund
686	719		from the municipality.
687	720		(c) After a member's DROP election becomes effective, an
688	721		amount equal to the monthly service pension the member would have
689	722		received under Section 4 of this article [and Section 11(c) of this
690	723		article], if applicable, had the member terminated active service
691	724		on the effective date of the member's DROP election shall be
692	725		credited to a DROP account maintained for the member. That monthly
693	726		credit to the member's DROP account shall continue until the
694	727		earlier of the date the member terminates active service or the 13th
695	728		[10th] anniversary of the [effective] date of the first credit to
696	729		the member's DROP account [election].
697	730		(d) A member's DROP account shall be credited with earnings
698	731		at an annual rate equal to 65 percent of the compounded average
699	732		annual return earned by the fund over the five years preceding, but
700	733		not including, the year during which the credit is given.
701	734		Notwithstanding the preceding, however, the credit to the member's
702	735		DROP account shall be at an annual rate of not less than 2.5 [five]
703	736		percent [nor greater than 10 percent], irrespective of actual
704	737		earnings.
705	738		(d-1) Earnings credited to a member's DROP account under
706	739		Subsection (d) of this section [Those earnings] shall be computed
707	740		and credited at a time and in a manner determined by the board,
708	741		except that earnings shall be credited not less frequently than
709	742		once in each 13-month period and shall take into account partial
710	743		years of participation in the DROP[. If the member has not
711	744		terminated active service, the member's DROP account may not be
712	745		credited with earnings after the 10th anniversary of the effective
713	746		date of the member's DROP election].
714	747		(d-2) A member may not roll over accumulated unused sick or
715	748		vacation time paid to the member as a lump-sum payment after
716	749		termination of active service into the member's DROP account.
717	750		(e-1) In lieu of receiving a lump-sum payment on termination
718	751		from active service, a retired member who has been a DROP
719	752		participant or, if termination from active service was due to the
720	753		DROP participant's death, the surviving spouse of the DROP
721	754		participant may elect to leave the retired member's DROP account
722	755		with the fund and receive earnings credited to the DROP account in
723	756		the manner described by Subsection (d) of this section.
724	757		(m) A DROP participant with a break in service may receive
725	758		service credit within DROP for days worked after the regular
726	759		expiration of the maximum [permitted] DROP participation period
727	760		prescribed by this section. The service credit shall be limited to
728	761		the number of days in which the participant experienced a break in
729	762		service or the number of days required to constitute 13 [10] years
730	763		of DROP participation, whichever is smaller. A retired member who
731	764		previously participated in the DROP and who returns to active
732	765		service is subject to the terms of this section in effect at the
733	766		time of the member's return to active service.
734	767		SECTION 1.09. Section 5A, Article 6243e.2(1), Revised
735	768		Statutes, is amended by adding Subsection (o) to read as follows:
736	769		(o) Notwithstanding any other provision of this article, on
737	770		or after the year 2017 effective date:
738	771		(1) a PROP participant may not have any additional
739	772		amounts that the participant would otherwise receive as a monthly
740	773		service pension or other benefits under this article credited to
741	774		the participant's PROP account; and
742	775		(2) a person, including a member or surviving spouse,
743	776		may not elect to participate in the PROP.
744	777		SECTION 1.10. Section 8, Article 6243e.2(1), Revised
745	778		Statutes, is amended to read as follows:
746	779		Sec. 8. DEFERRED PENSION AT AGE 50; REFUND OF
747	780		CONTRIBUTIONS. (a) On or after the year 2017 effective date, a [A]
748	781		member who is hired as a firefighter before the year 2017 effective
749	782		date, including a member who was hired before the year 2017
750	783		effective date and who involuntarily separated from service but has
751	784		been retroactively reinstated in accordance with an arbitration,
752	785		civil service, or court ruling, terminates active service for any
753	786		reason other than death with at least 10 years of participation, but
754	787		less than 20 years of participation, is entitled to a monthly
755	788		deferred pension benefit, beginning at age 50, in an amount equal to
756	789		1.7 percent of the member's average monthly salary multiplied by
757	790		the amount of the member's years of participation.
758	791		(b) In lieu of the deferred pension benefit provided under
759	792		Subsection (a) of this section, a member who terminates active
760	793		service for any reason other than death with at least 10 years of
761	794		participation, but less than 20 years of participation, may elect
762	795		to receive a lump-sum refund of the member's contributions to the
763	796		fund with interest computed at five percent, not compounded, for
764	797		the member's contributions to the fund made before the year 2017
765	798		effective date and without interest for the member's contributions
766	799		to the fund made on or after the year 2017 effective date. A
767	800		member's election to receive a refund of contributions must be made
768	801		on a form approved by the board. The member's refund shall be paid
769	802		as soon as administratively practicable after the member's election
770	803		is received.
771	804		(c) Except as provided by Subsection (a) of this section, a
772	805		[A] member who is hired or rehired as a firefighter on or after the
773	806		year 2017 effective date or a member who terminates employment for
774	807		any reason other than death before the member has completed 10 years
775	808		of participation is entitled only to a refund of the member's
776	809		contributions without interest and is not entitled to a deferred
777	810		pension benefit under this section or to any other benefit under
778	811		this article. The member's refund shall be paid as soon as
779	812		administratively practicable after the effective date of the
780	813		member's termination of active service.
781	814		SECTION 1.11. Section 11, Article 6243e.2(1), Revised
782	815		Statutes, is amended by amending Subsection (c) and adding
783	816		Subsections (c-1), (c-2), (c-3), and (c-4) to read as follows:
784	817		(c) Subject to Subsection (c-3) of this section and except
785	818		as provided by Subsection (c-4) of this section, beginning with the
786	819		fiscal year ending June 30, 2021, the [The] benefits, including
787	820		survivor benefits, payable based on the service of a member who has
788	821		terminated active service and who is or would have been at least 55
789	822		[48] years old, received or is receiving an on-duty disability
790	823		pension under Section 6(c) of this article, or died under the
791	824		conditions described by Section 7(c) of this article, shall be
792	825		increased [by three percent] in October of each year by a percentage
793	826		rate equal to the most recent five fiscal years' smoothed return, as
794	827		determined by the fund actuary, minus 475 basis points [and, if the
795	828		benefit had not previously been subject to that adjustment, in the
796	829		month of the member's 48th birthday].
797	830		(c-1) Subject to Subsection (c-3) of this section and except
798	831		as provided by Subsection (c-4) of this section, for the fund's
799	832		fiscal years ending June 30, 2018, and June 30, 2019, the benefits,
800	833		including survivor benefits, payable based on the service of a
801	834		member who is or would have been at least 70 years old and who
802	835		received or is receiving a service pension under Section 4 of this
803	836		article, received or is receiving an on-duty disability pension
804	837		under Section 6(c) of this article, or died under the conditions
805	838		described by Section 7(c) of this article, shall be adjusted in
806	839		October of each applicable fiscal year by a percentage rate equal to
807	840		the most recent five fiscal years' smoothed return, as determined
808	841		by the fund actuary, minus 500 basis points.
809	842		(c-2) Subject to Subsection (c-3) of this section and except
810	843		as provided by Subsection (c-4) of this section, for the fund's
811	844		fiscal year ending June 30, 2020, members described by Subsection
812	845		(c-1) of this section shall receive the increase provided under
813	846		Subsection (c) of this section.
814	847		(c-3) The percentage rate prescribed by Subsections (c),
815	848		(c-1), and (c-2) of this section may not be less than zero percent
816	849		or more than four percent, irrespective of the return rate of the
817	850		fund's investment portfolio.
818	851		(c-4) Each year after the year 2017 effective date, a member
819	852		who elects to participate in the DROP under Section 5 of this
820	853		article may not receive the increase provided under Subsection (c),
821	854		(c-1), or (c-2) of this section in any October during which the
822	855		member participates in the DROP.
823	856		SECTION 1.12. The heading to Section 13, Article
824	857		6243e.2(1), Revised Statutes, is amended to read as follows:
825	858		Sec. 13. MEMBERSHIP AND MEMBER CONTRIBUTIONS.
826	859		SECTION 1.13. Section 13, Article 6243e.2(1), Revised
827	860		Statutes, is amended by amending Subsection (c) and adding
828	861		Subsections (c-1) and (c-2) to read as follows:
829	862		(c) Subject to adjustments authorized by Section 13E or 13F
830	863		of this article, each [Each] member in active service shall make
831	864		contributions to the fund in an amount equal to 10.5 [8.35] percent
832	865		of the member's salary at the time of the contribution[, and as of
833	866		July 1, 2004, in an amount equal to nine percent of the member's
834	867		salary at the time of the contribution].
835	868		(c-1) In addition to the contribution under Subsection (c)
836	869		of this section, each DROP participant, as identified by the fund to
837		-	the municipality for purposes of this ~~subsection~~, shall contribute
838		-	to the fund an amount equal to 100 percent of the participant's
839		-	~~unused~~ leave pay that would otherwise be payable to the member. The
840		-	~~fund~~ shall credit any unused leave pay amount contributed by a DROP
	870	+	the municipality for purposes of this section, shall contribute to
	871	+	the fund an amount equal to 100 percent of the participant's unused
	872	+	leave pay that would otherwise be payable to the member. The fund
	873	+	shall credit any unused leave pay amount contributed by a DROP
841	874		participant to the participant's DROP account.
842	875		(c-2) The governing body of the municipality shall deduct
843	876		from the salary of each member the contribution required by this
844	877		section [the contributions from the member's salary] and shall
845	878		forward the contributions to the fund as soon as practicable.
846	879		SECTION 1.14. Article 6243e.2(1), Revised Statutes, is
847	880		amended by adding Sections 13A, 13B, 13C, 13D, 13E, 13F, 13G, and
848	881		13H to read as follows:
849	882		Sec. 13A. MUNICIPAL CONTRIBUTIONS. (a) Beginning with the
850	883		year 2017 effective date, the municipality shall make contributions
851	884		to the fund as provided by this section and Section 13B, 13C, 13E,
852	885		or 13F of this article, as applicable. The municipality shall
853	886		contribute:
854	887		(1) beginning with the year 2017 effective date and
855	888		ending with the fiscal year ending June 30, 2018, an amount equal to
856	889		the municipal contribution rate, as determined in the initial risk
857	890		sharing valuation study conducted under Section 13C of this article
858	891		and adjusted under Section 13E or 13F of this article, as
859	892		applicable, multiplied by the pensionable payroll for the fiscal
860	893		year; and
861	894		(2) for each fiscal year after the fiscal year ending
862	895		June 30, 2018, an amount equal to the municipal contribution rate,
863	896		as determined in a subsequent risk sharing valuation study
864	897		conducted under Section 13B of this article and adjusted under
865	898		Section 13E or 13F of this article, as applicable, multiplied by the
866	899		pensionable payroll for the applicable fiscal year.
867	900		(b) Except by written agreement between the municipality
868	901		and the board providing for an earlier contribution date, at least
869	902		biweekly, the municipality shall make the contributions required by
870	903		Subsection (a) of this section by depositing with the fund an amount
871	904		equal to the municipal contribution rate multiplied by the
872	905		pensionable payroll for the applicable biweekly period.
873	906		(c) With respect to each fiscal year:
874	907		(1) the first contribution by the municipality under
875	908		this section for the fiscal year shall be made not later than the
876	909		date payment is made to firefighters for their first full biweekly
877	910		pay period beginning on or after the first day of the fiscal year;
878	911		and
879	912		(2) the final contribution by the municipality under
880	913		this section for the fiscal year shall be made not later than the
881	914		date payment is made to firefighters for the final biweekly pay
882	915		period of the fiscal year.
883	916		(d) In addition to the amounts required under this section,
884	917		the municipality may at any time contribute additional amounts for
885	918		deposit in the fund by entering into a written agreement with the
886	919		board.
887	920		(e) Notwithstanding any other law, the municipality may not
888	921		issue a pension obligation bond to fund the municipal contribution
889	922		rate under this section.
890	923		Sec. 13B. RISK SHARING VALUATION STUDIES. (a) The fund
891	924		and the municipality shall separately cause their respective
892	925		actuaries to prepare a risk sharing valuation study in accordance
893	926		with this section and actuarial standards of practice. A risk
894	927		sharing valuation study must:
895	928		(1) be dated as of the first day of the fiscal year in
896	929		which the study is required to be prepared;
897	930		(2) be included in the fund's standard valuation study
898	931		prepared annually for the fund;
899	932		(3) calculate the unfunded actuarial accrued
900	933		liability of the fund;
901	934		(4) be based on actuarial data provided by the fund
902	935		actuary or, if actuarial data is not provided, on estimates of
903	936		actuarial data;
904	937		(5) estimate the municipal contribution rate, taking
905	938		into account any adjustments required under Section 13E or 13F of
906	939		this article for all applicable prior fiscal years;
907	940		(6) subject to Subsection (g) of this section, be
908	941		based on the following assumptions and methods that are consistent
909	942		with actuarial standards of practice:
910	943		(A) an ultimate entry age normal actuarial
911	944		method;
912	945		(B) for purposes of determining the actuarial
913	946		value of assets:
914	947		(i) except as provided by Subparagraph (ii)
915	948		of this paragraph and Section 13E(c)(1) or 13F(c)(2) of this
916	949		article, an asset smoothing method recognizing actuarial losses and
917	950		gains over a five-year period applied prospectively beginning on
918	951		the year 2017 effective date; and
919	952		(ii) for the initial risk sharing valuation
920	953		study prepared under Section 13C of this article, a
921	954		marked-to-market method applied as of June 30, 2016;
922	955		(C) closed layered amortization of liability
923	956		layers to ensure that the amortization period for each layer begins
924	957		12 months after the date of the risk sharing valuation study in
925	958		which the liability layer is first recognized;
926	959		(D) each liability layer is assigned an
927	960		amortization period;
928	961		(E) each liability loss layer amortized over a
929	962		period of 30 years from the first day of the fiscal year beginning
930	963		12 months after the date of the risk sharing valuation study in
931	964		which the liability loss layer is first recognized, except that the
932	965		legacy liability must be amortized from July 1, 2016, for a 30-year
933	966		period beginning July 1, 2017;
934	967		(F) the amortization period for each liability
935	968		gain layer being:
936	969		(i) equal to the remaining amortization
937	970		period on the largest remaining liability loss layer and the two
938	971		layers must be treated as one layer such that if the payoff year of
939	972		the liability loss layer is accelerated or extended, the payoff
940	973		year of the liability gain layer is also accelerated or extended; or
941	974		(ii) if there is no liability loss layer, a
942	975		period of 30 years from the first day of the fiscal year beginning
943	976		12 months after the date of the risk sharing valuation study in
944	977		which the liability gain layer is first recognized;
945	978		(G) liability layers, including the legacy
946	979		liability, funded according to the level percent of payroll method;
947	980		(H) the assumed rate of return, subject to
948	981		adjustment under Section 13E(c)(2) of this article or, if Section
949	982		13C(g) of this article applies, adjustment in accordance with a
950	983		written agreement, except the assumed rate of return may not exceed
951	984		seven percent per annum;
952	985		(I) the price inflation assumption as of the most
953	986		recent actuarial experience study, which may be reset by the board
954	987		by plus or minus 50 basis points based on that actuarial experience
955	988		study;
956	989		(J) projected salary increases and payroll
957	990		growth rate set in consultation with the municipality's finance
958	991		director; and
959	992		(K) payroll for purposes of determining the
960	993		corridor midpoint and municipal contribution rate must be projected
961	994		using the annual payroll growth rate assumption, which for purposes
962	995		of preparing any amortization schedule may not exceed three
963	996		percent; and
964	997		(7) be revised and restated, if appropriate, not later
965	998		than:
966	999		(A) the date required by a written agreement
967	1000		entered into between the municipality and the board; or
968	1001		(B) the 30th day after the date required action
969	1002		is taken by the board under Section 13E or 13F of this article to
970	1003		reflect any changes required by either section.
971	1004		(b) As soon as practicable after the end of a fiscal year,
972	1005		the fund actuary at the direction of the fund and the municipal
973	1006		actuary at the direction of the municipality shall separately
974	1007		prepare a proposed risk sharing valuation study based on the fiscal
975	1008		year that just ended.
976	1009		(c) Not later than September 30 following the end of the
977	1010		fiscal year, the fund shall provide to the municipal actuary, under
978	1011		a confidentiality agreement in which the municipal actuary agrees
979	1012		to comply with the confidentiality provisions of Section 17 of this
980	1013		article, the actuarial data described by Subsection (a)(4) of this
981	1014		section.
982	1015		(d) Not later than the 150th day after the last day of the
983	1016		fiscal year:
984	1017		(1) the fund actuary, at the direction of the fund,
985	1018		shall provide the proposed risk sharing valuation study prepared by
986	1019		the fund actuary under Subsection (b) of this section to the
987	1020		municipal actuary; and
988	1021		(2) the municipal actuary, at the direction of the
989	1022		municipality, shall provide the proposed risk sharing valuation
990	1023		study prepared by the municipal actuary under Subsection (b) of
991	1024		this section to the fund actuary.
992	1025		(e) Each actuary described by Subsection (d) of this section
993	1026		may provide copies of the proposed risk sharing valuation studies
994	1027		to the municipality or to the fund, as appropriate.
995	1028		(f) If, after exchanging proposed risk sharing valuation
996	1029		studies under Subsection (d) of this section, it is found that the
997	1030		difference between the estimated municipal contribution rate
998	1031		recommended in the proposed risk sharing valuation study prepared
999	1032		by the fund actuary and the estimated municipal contribution rate
1000	1033		recommended in the proposed risk sharing valuation study prepared
1001	1034		by the municipal actuary for the corresponding fiscal year is:
1002	1035		(1) less than or equal to two percentage points, the
1003	1036		estimated municipal contribution rate recommended by the fund
1004	1037		actuary will be the estimated municipal contribution rate for
1005	1038		purposes of Subsection (a)(5) of this section, and the proposed
1006	1039		risk sharing valuation study prepared for the fund is considered to
1007	1040		be the final risk sharing valuation study for the fiscal year for
1008	1041		the purposes of this article; or
1009	1042		(2) greater than two percentage points, the municipal
1010	1043		actuary and the fund actuary shall have 20 business days to
1011	1044		reconcile the difference, provided that, without the mutual
1012	1045		agreement of both actuaries, the difference in the estimated
1013	1046		municipal contribution rate recommended by the municipal actuary
1014	1047		and the estimated municipal contribution rate recommended by the
1015	1048		fund actuary may not be further increased and:
1016	1049		(A) if, as a result of reconciliation efforts
1017	1050		under this subdivision, the difference is reduced to less than or
1018	1051		equal to two percentage points:
1019	1052		(i) subject to any adjustments under
1020	1053		Section 13E or 13F of this article, as applicable, the estimated
1021	1054		municipal contribution rate proposed under the reconciliation by
1022	1055		the fund actuary will be the estimated municipal contribution rate
1023	1056		for purposes of Subsection (a)(5) of this section; and
1024	1057		(ii) the fund's risk sharing valuation
1025	1058		study is considered to be the final risk sharing valuation study for
1026	1059		the fiscal year for the purposes of this article; or
1027	1060		(B) if, after 20 business days, the fund actuary
1028	1061		and the municipal actuary are not able to reach a reconciliation
1029	1062		that reduces the difference to an amount less than or equal to two
1030	1063		percentage points, subject to any adjustments under Section 13E or
1031	1064		13F of this article, as applicable:
1032	1065		(i) the municipal actuary at the direction
1033	1066		of the municipality and the fund actuary at the direction of the
1034	1067		fund each shall deliver to the finance director of the municipality
1035	1068		and the executive director of the fund a final risk sharing
1036	1069		valuation study with any agreed-to changes, marked as the final
1037	1070		risk sharing valuation study for each actuary; and
1038	1071		(ii) not later than the 90th day before the
1039	1072		first day of the next fiscal year, the finance director and the
1040	1073		executive director shall execute a joint addendum to the final risk
1041	1074		sharing valuation study received under Subparagraph (i) of this
1042	1075		paragraph that is a part of the final risk sharing valuation study
1043	1076		for the fiscal year for all purposes and reflects the arithmetic
1044	1077		average of the estimated municipal contribution rates for the
1045	1078		fiscal year stated by the municipal actuary and the fund actuary in
1046	1079		the final risk sharing valuation study for purposes of Subsection
1047	1080		(a)(5) of this section.
1048	1081		(g) The assumptions and methods used and the types of
1049	1082		actuarial data and financial information used to prepare the
1050	1083		initial risk sharing valuation study under Section 13C of this
1051	1084		article shall be used to prepare each subsequent risk sharing
1052	1085		valuation study under this section, unless changed based on the
1053	1086		actuarial experience study conducted under Section 13D of this
1054	1087		article.
1055	1088		(h) The actuarial data provided under Subsection (a)(4) of
1056	1089		this section may not include the identifying information of
1057	1090		individual members.
1058	1091		Sec. 13C. INITIAL RISK SHARING VALUATION STUDIES; CORRIDOR
1059	1092		MIDPOINT. (a) The fund and the municipality shall separately
1060	1093		cause their respective actuaries to prepare an initial risk sharing
1061	1094		valuation study that is dated as of July 1, 2016, in accordance with
1062	1095		this section. An initial risk sharing valuation study must:
1063	1096		(1) except as otherwise provided by this section, be
1064	1097		prepared in accordance with Section 13B of this article and, for
1065	1098		purposes of Section 13B(a)(4) of this article, be based on
1066	1099		actuarial data as of June 30, 2016, or, if actuarial data is not
1067	1100		provided, on estimates of actuarial data; and
1068	1101		(2) project the corridor midpoint for 31 fiscal years
1069	1102		beginning with the fiscal year beginning July 1, 2017.
1070	1103		(b) If the initial risk sharing valuation study has not been
1071	1104		prepared consistent with this section before the year 2017
1072	1105		effective date, as soon as practicable after the year 2017
1073	1106		effective date:
1074	1107		(1) the fund shall provide to the municipal actuary,
1075	1108		under a confidentiality agreement, the necessary actuarial data
1076	1109		used by the fund actuary to prepare the proposed initial risk
1077	1110		sharing valuation study; and
1078	1111		(2) not later than the 30th day after the date the
1079	1112		municipal actuary receives the actuarial data:
1080	1113		(A) the municipal actuary, at the direction of
1081	1114		the municipality, shall provide a proposed initial risk sharing
1082	1115		valuation study to the fund actuary; and
1083	1116		(B) the fund actuary, at the direction of the
1084	1117		fund, shall provide a proposed initial risk sharing valuation study
1085	1118		to the municipal actuary.
1086	1119		(c) If, after exchanging proposed initial risk sharing
1087	1120		valuation studies under Subsection (b)(2) of this section, it is
1088	1121		determined that the difference between the estimated municipal
1089	1122		contribution rate for any fiscal year recommended in the proposed
1090	1123		initial risk sharing valuation study prepared by the fund actuary
1091	1124		and the estimated municipal contribution rate for any fiscal year
1092	1125		recommended in the proposed initial risk sharing valuation study
1093	1126		prepared by the municipal actuary is:
1094	1127		(1) less than or equal to two percentage points, the
1095	1128		estimated municipal contribution rate for that fiscal year
1096	1129		recommended by the fund actuary will be the estimated municipal
1097	1130		contribution rate for purposes of Section 13B(a)(5) of this
1098	1131		article; or
1099	1132		(2) greater than two percentage points, the municipal
1100	1133		actuary and the fund actuary shall have 20 business days to
1101	1134		reconcile the difference and:
1102	1135		(A) if, as a result of reconciliation efforts
1103	1136		under this subdivision, the difference in any fiscal year is
1104	1137		reduced to less than or equal to two percentage points, the
1105	1138		estimated municipal contribution rate recommended by the fund
1106	1139		actuary for that fiscal year will be the estimated municipal
1107	1140		contribution rate for purposes of Section 13B(a)(5) of this
1108	1141		article; or
1109	1142		(B) if, after 20 business days, the municipal
1110	1143		actuary and the fund actuary are not able to reach a reconciliation
1111	1144		that reduces the difference to an amount less than or equal to two
1112	1145		percentage points for any fiscal year:
1113	1146		(i) the municipal actuary at the direction
1114	1147		of the municipality and the fund actuary at the direction of the
1115	1148		fund each shall deliver to the finance director of the municipality
1116	1149		and the executive director of the fund a final initial risk sharing
1117	1150		valuation study with any agreed-to changes, marked as the final
1118	1151		initial risk sharing valuation study for each actuary; and
1119	1152		(ii) the finance director and the executive
1120	1153		director shall execute a joint addendum to the final initial risk
1121	1154		sharing valuation study that is a part of each final initial risk
1122	1155		sharing valuation study for all purposes and that reflects the
1123	1156		arithmetic average of the estimated municipal contribution rate for
1124	1157		each fiscal year in which the difference was greater than two
1125	1158		percentage points for purposes of Section 13B(a)(5) of this
1126	1159		article.
1127	1160		(d) In preparing the initial risk sharing valuation study,
1128	1161		the municipal actuary and fund actuary shall:
1129	1162		(1) adjust the actuarial value of assets to be equal to
1130	1163		the market value of assets as of July 1, 2016; and
1131	1164		(2) assume benefit and contribution changes under this
1132	1165		article as of the year 2017 effective date.
1133	1166		(e) If the municipal actuary does not prepare an initial
1134	1167		risk sharing valuation study for purposes of this section, the fund
1135	1168		actuary's initial risk sharing valuation study will be used as the
1136	1169		final risk sharing valuation study for purposes of this article
1137	1170		unless the municipality did not prepare a proposed initial risk
1138	1171		sharing valuation study because the fund actuary did not provide
1139	1172		the necessary actuarial data in a timely manner. If the
1140	1173		municipality did not prepare a proposed initial risk sharing
1141	1174		valuation study because the fund actuary did not provide the
1142	1175		necessary actuarial data in a timely manner, the municipal actuary
1143	1176		shall have 60 days to prepare the proposed initial risk sharing
1144	1177		valuation study on receipt of the necessary information.
1145	1178		(f) If the fund actuary does not prepare a proposed initial
1146	1179		risk sharing valuation study for purposes of this section, the
1147	1180		proposed initial risk sharing valuation study prepared by the
1148	1181		municipal actuary will be the final risk sharing valuation study
1149	1182		for purposes of this article.
1150	1183		(g) The municipality and the board may agree on a written
1151	1184		transition plan for resetting the corridor midpoint:
1152	1185		(1) if at any time the funded ratio is equal to or
1153	1186		greater than 100 percent; or
1154	1187		(2) for any fiscal year after the payoff year of the
1155	1188		legacy liability.
1156	1189		(h) If the municipality and the board have not entered into
1157	1190		an agreement described by Subsection (g) of this section in a given
1158	1191		fiscal year, the corridor midpoint will be the corridor midpoint
1159	1192		determined for the 31st fiscal year in the initial risk sharing
1160	1193		valuation study prepared in accordance with this section.
1161	1194		(i) If the municipality makes a contribution to the fund of
1162	1195		at least $5 million more than the amount that would be required by
1163	1196		Section 13A(a) of this article, a liability gain layer with the same
1164	1197		remaining amortization period as the legacy liability is created
1165	1198		and the corridor midpoint shall be decreased by the amortized
1166	1199		amount in each fiscal year covered by the liability gain layer
1167	1200		produced divided by the projected pensionable payroll.
1168	1201		Sec. 13D. ACTUARIAL EXPERIENCE STUDIES. (a) At least once
1169	1202		every four years, the fund actuary at the direction of the fund
1170	1203		shall conduct an actuarial experience study in accordance with
1171	1204		actuarial standards of practice. The actuarial experience study
1172	1205		required by this subsection must be completed not later than
1173	1206		September 30 of the year in which the study is required to be
1174	1207		conducted.
1175	1208		(b) Except as otherwise expressly provided by Sections
1176	1209		13B(a)(6)(A)-(I) of this article, actuarial assumptions and
1177	1210		methods used in the preparation of a risk sharing valuation study,
1178	1211		other than the initial risk sharing valuation study, shall be based
1179	1212		on the results of the most recent actuarial experience study.
1180	1213		(c) Not later than the 180th day before the date the board
1181	1214		may consider adopting any assumptions and methods for purposes of
1182	1215		Section 13B of this article, the fund shall provide the municipal
1183	1216		actuary with a substantially final draft of the fund's actuarial
1184	1217		experience study, including:
1185	1218		(1) all assumptions and methods recommended by the
1186	1219		fund actuary; and
1187	1220		(2) summaries of the reconciled actuarial data used in
1188	1221		creation of the actuarial experience study.
1189	1222		(d) Not later than the 60th day after the date the
1190	1223		municipality receives the final draft of the fund's actuarial
1191	1224		experience study under Subsection (c) of this section, the
1192	1225		municipal actuary and fund actuary shall confer and cooperate on
1193	1226		reconciling and producing a final actuarial experience study.
1194	1227		During the period prescribed by this subsection, the fund actuary
1195	1228		may modify the recommended assumptions in the draft actuarial
1196	1229		experience study to reflect any changes to assumptions and methods
1197	1230		to which the fund actuary and the municipal actuary agree.
1198	1231		(e) At the municipal actuary's written request, the fund
1199	1232		shall provide additional actuarial data used by the fund actuary to
1200	1233		prepare the draft actuarial experience study, provided that
1201	1234		confidential data may only be provided subject to a confidentiality
1202	1235		agreement in which the municipal actuary agrees to comply with the
1203	1236		confidentiality provisions of Section 17 of this article.
1204	1237		(f) The municipal actuary at the direction of the
1205	1238		municipality shall provide in writing to the fund actuary and the
1206	1239		fund:
1207	1240		(1) any assumptions and methods recommended by the
1208	1241		municipal actuary that differ from the assumptions and methods
1209	1242		recommended by the fund actuary; and
1210	1243		(2) the municipal actuary's rationale for each method
1211	1244		or assumption the actuary recommends and determines to be
1212	1245		consistent with standards adopted by the Actuarial Standards Board.
1213	1246		(g) Not later than the 30th day after the date the fund
1214	1247		actuary receives the municipal actuary's written recommended
1215	1248		assumptions and methods and rationale under Subsection (f) of this
1216	1249		section, the fund shall provide a written response to the
1217	1250		municipality identifying any assumption or method recommended by
1218	1251		the municipal actuary that the fund does not accept. If any
1219	1252		assumption or method is not accepted, the fund shall recommend to
1220	1253		the municipality the names of three independent actuaries for
1221	1254		purposes of this section.
1222	1255		(h) An actuary may only be recommended, selected, or engaged
1223	1256		by the fund as an independent actuary under this section if the
1224	1257		person:
1225	1258		(1) is not already engaged by the municipality, the
1226	1259		fund, or any other pension system authorized under Article 6243g-4,
1227	1260		Revised Statutes, or Chapter 88 (H.B. 1573), Acts of the 77th
1228	1261		Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
1229	1262		Civil Statutes), to provide actuarial services to the municipality,
1230	1263		the fund, or another pension system referenced in this subdivision;
1231	1264		(2) is a member of the American Academy of Actuaries;
1232	1265		and
1233	1266		(3) has at least five years of experience as an actuary
1234	1267		working with one or more public retirement systems with assets in
1235	1268		excess of $1 billion.
1236	1269		(i) Not later than the 20th day after the date the
1237	1270		municipality receives the list of three independent actuaries under
1238	1271		Subsection (g) of this section, the municipality shall identify and
1239	1272		the fund shall hire one of the listed independent actuaries on terms
1240	1273		acceptable to the municipality and the fund to perform a scope of
1241	1274		work acceptable to the municipality and the fund. The municipality
1242	1275		and the fund each shall pay 50 percent of the cost of the
1243	1276		independent actuary engaged under this subsection. The
1244	1277		municipality shall be provided the opportunity to participate in
1245	1278		any communications between the independent actuary and the fund
1246	1279		concerning the engagement, engagement terms, or performance of the
1247	1280		terms of the engagement.
1248	1281		(j) The independent actuary engaged under Subsection (i) of
1249	1282		this section shall receive on request from the municipality or the
1250	1283		fund:
1251	1284		(1) the fund's draft actuarial experience study,
1252	1285		including all assumptions and methods recommended by the fund
1253	1286		actuary;
1254	1287		(2) summaries of the reconciled actuarial data used to
1255	1288		prepare the draft actuarial experience study;
1256	1289		(3) the municipal actuary's specific recommended
1257	1290		assumptions and methods together with the municipal actuary's
1258	1291		written rationale for each recommendation;
1259	1292		(4) the fund actuary's written rationale for its
1260	1293		recommendations; and
1261	1294		(5) if requested by the independent actuary and
1262	1295		subject to a confidentiality agreement in which the independent
1263	1296		actuary agrees to comply with the confidentiality provisions of
1264	1297		Section 17 of this article, additional confidential actuarial data.
1265	1298		(k) Not later than the 30th day after the date the
1266	1299		independent actuary receives all the requested information under
1267	1300		Subsection (j) of this section, the independent actuary shall
1268	1301		advise the fund and the municipality whether it agrees with the
1269	1302		assumption or method recommended by the municipal actuary or the
1270	1303		corresponding method or assumption recommended by the fund actuary,
1271	1304		together with the independent actuary's rationale for making the
1272	1305		determination. During the period prescribed by this subsection,
1273	1306		the independent actuary may discuss recommendations in
1274	1307		simultaneous consultation with the fund actuary and the municipal
1275	1308		actuary.
1276	1309		(l) The fund and the municipality may not seek any
1277	1310		information from any prospective independent actuary about
1278	1311		possible outcomes of the independent actuary's review.
1279	1312		(m) If an independent actuary has questions or concerns
1280	1313		regarding an engagement entered into under this section, the
1281	1314		independent actuary shall simultaneously consult with both the
1282	1315		municipal actuary and the fund actuary regarding the questions or
1283	1316		concerns. This subsection does not limit the fund's authorization
1284	1317		to take appropriate steps to complete the engagement of the
1285	1318		independent actuary on terms acceptable to both the fund and the
1286	1319		municipality or to enter into a confidentiality agreement with the
1287	1320		independent actuary, if needed.
1288	1321		(n) If the board does not adopt an assumption or method
1289	1322		recommended by the municipal actuary to which the independent
1290	1323		actuary agrees, or recommended by the fund actuary, the municipal
1291	1324		actuary is authorized to use that recommended assumption or method
1292	1325		in connection with preparation of a subsequent risk sharing
1293	1326		valuation study under Section 13B of this article until the next
1294	1327		actuarial experience study is conducted.
1295	1328		Sec. 13E. MUNICIPAL CONTRIBUTION RATE WHEN ESTIMATED
1296	1329		MUNICIPAL CONTRIBUTION RATE LOWER THAN CORRIDOR MIDPOINT;
1297	1330		AUTHORIZATION FOR CERTAIN ADJUSTMENTS. (a) This section governs
1298	1331		the determination of the municipal contribution rate applicable in
1299	1332		a fiscal year if the estimated municipal contribution rate is lower
1300	1333		than the corridor midpoint.
1301	1334		(b) If the funded ratio is:
1302	1335		(1) less than 90 percent, the municipal contribution
1303	1336		rate for the fiscal year equals the corridor midpoint; or
1304	1337		(2) equal to or greater than 90 percent and the
1305	1338		municipal contribution rate is:
1306	1339		(A) equal to or greater than the minimum
1307	1340		contribution rate, the estimated municipal contribution rate is the
1308	1341		municipal contribution rate for the fiscal year; or
1309	1342		(B) except as provided by Subsection (e) of this
1310	1343		section, less than the minimum contribution rate for the
1311	1344		corresponding fiscal year, the municipal contribution rate for the
1312	1345		fiscal year equals the minimum contribution rate achieved in
1313	1346		accordance with Subsection (c) of this section.
1314	1347		(c) For purposes of Subsection (b)(2)(B) of this section,
1315	1348		the following adjustments shall be applied sequentially to the
1316	1349		extent required to increase the estimated municipal contribution
1317	1350		rate to equal the minimum contribution rate:
1318	1351		(1) first, adjust the actuarial value of assets equal
1319	1352		to the current market value of assets, if making the adjustment
1320	1353		causes the municipal contribution rate to increase;
1321	1354		(2) second, under a written agreement between the
1322	1355		municipality and the board entered into not later than April 30
1323	1356		before the first day of the next fiscal year, reduce the assumed
1324	1357		rate of return;
1325	1358		(3) third, under a written agreement between the
1326	1359		municipality and the board entered into not later than April 30
1327	1360		before the first day of the next fiscal year, prospectively restore
1328	1361		all or part of any benefit reductions or reduce increased employee
1329	1362		contributions, in each case made after the year 2017 effective
1330	1363		date; and
1331	1364		(4) fourth, accelerate the payoff year of the existing
1332	1365		liability loss layers, including the legacy liability, by
1333	1366		accelerating the oldest liability loss layers first, to an
1334	1367		amortization period that is not less than 10 years from the first
1335	1368		day of the fiscal year beginning 12 months after the date of the
1336	1369		risk sharing valuation study in which the liability loss layer is
1337	1370		first recognized.
1338	1371		(d) If the funded ratio is:
1339	1372		(1) equal to or greater than 100 percent:
1340	1373		(A) all existing liability layers, including the
1341	1374		legacy liability, are considered fully amortized and paid;
1342	1375		(B) the applicable fiscal year is the payoff year
1343	1376		for the legacy liability; and
1344	1377		(C) for each fiscal year subsequent to the fiscal
1345	1378		year described by Paragraph (B) of this subdivision, the corridor
1346	1379		midpoint shall be determined as provided by Section 13C(g) of this
1347	1380		article; and
1348	1381		(2) greater than 100 percent in a written agreement
1349	1382		between the municipality and the fund, the fund may reduce member
1350	1383		contributions or increase pension benefits if, as a result of the
1351	1384		action:
1352	1385		(A) the funded ratio is not less than 100
1353	1386		percent; and
1354	1387		(B) the municipal contribution rate is not more
1355	1388		than the minimum contribution rate.
1356	1389		(e) Except as provided by Subsection (f) of this section, if
1357	1390		an agreement under Subsection (d) of this section is not reached on
1358	1391		or before April 30 before the first day of the next fiscal year,
1359	1392		before the first day of the next fiscal year the board shall reduce
1360	1393		member contributions and implement or increase cost-of-living
1361	1394		adjustments, but only to the extent that the municipal contribution
1362	1395		rate is set at or below the minimum contribution rate and the funded
1363	1396		ratio is not less than 100 percent.
1364	1397		(f) If any member contribution reduction or benefit
1365	1398		increase under Subsection (e) of this section has occurred within
1366	1399		the previous three fiscal years, the board may not make additional
1367	1400		adjustments to benefits, and the municipal contribution rate must
1368	1401		be set to equal the minimum contribution rate.
1369	1402		Sec. 13F. MUNICIPAL CONTRIBUTION RATE WHEN ESTIMATED
1370	1403		MUNICIPAL CONTRIBUTION RATE EQUAL TO OR GREATER THAN CORRIDOR
1371	1404		MIDPOINT; AUTHORIZATION FOR CERTAIN ADJUSTMENTS. (a) This
1372	1405		section governs the determination of the municipal contribution
1373	1406		rate in a fiscal year when the estimated municipal contribution
1374	1407		rate is equal to or greater than the corridor midpoint.
1375	1408		(b) If the estimated municipal contribution rate is:
1376	1409		(1) less than or equal to the maximum contribution
1377	1410		rate for the corresponding fiscal year, the estimated municipal
1378	1411		contribution rate is the municipal contribution rate; or
1379	1412		(2) except as provided by Subsection (d) or (e) of this
1380	1413		section, greater than the maximum contribution rate for the
1381	1414		corresponding fiscal year, the municipal contribution rate equals
1382	1415		the corridor midpoint achieved in accordance with Subsection (c) of
1383	1416		this section.
1384	1417		(c) For purposes of Subsection (b)(2) of this section, the
1385	1418		following adjustments shall be applied sequentially to the extent
1386	1419		required to decrease the estimated municipal contribution rate to
1387	1420		equal the corridor midpoint:
1388	1421		(1) first, if the payoff year of the legacy liability
1389	1422		was accelerated under Section 13E(c) of this article, extend the
1390	1423		payoff year of existing liability loss layers, by extending the
1391	1424		most recent loss layers first, to a payoff year not later than 30
1392	1425		years from the first day of the fiscal year beginning 12 months
1393	1426		after the date of the risk sharing valuation study in which the
1394	1427		liability loss layer is first recognized; and
1395	1428		(2) second, adjust the actuarial value of assets to
1396	1429		the current market value of assets, if making the adjustment causes
1397	1430		the municipal contribution rate to decrease.
1398	1431		(d) If the municipal contribution rate after adjustment
1399	1432		under Subsection (c) of this section is greater than the third
1400	1433		quarter line rate:
1401	1434		(1) the municipal contribution rate equals the third
1402	1435		quarter line rate; and
1403	1436		(2) to the extent necessary to comply with Subdivision
1404	1437		(1) of this subsection, the municipality and the board shall enter
1405	1438		into a written agreement to increase member contributions and make
1406	1439		other benefit or plan changes not otherwise prohibited by
1407	1440		applicable federal law or regulations.
1408	1441		(e) If an agreement under Subsection (d)(2) of this section
1409	1442		is not reached on or before April 30 before the first day of the next
1410	1443		fiscal year, before the start of the next fiscal year to which the
1411	1444		municipal contribution rate would apply, the board, to the extent
1412	1445		necessary to set the municipal contribution rate equal to the third
1413	1446		quarter line rate, shall:
1414	1447		(1) increase member contributions and decrease
1415	1448		cost-of-living adjustments;
1416	1449		(2) increase the normal retirement age; or
1417	1450		(3) take any combination of actions authorized under
1418	1451		Subdivisions (1) and (2) of this subsection.
1419	1452		(f) If the municipal contribution rate remains greater than
1420	1453		the corridor midpoint in the third fiscal year after adjustments
1421	1454		are made in accordance with Subsection (d)(2) of this section, in
1422	1455		that fiscal year the municipal contribution rate equals the
1423	1456		corridor midpoint achieved in accordance with Subsection (g) of
1424	1457		this section.
1425	1458		(g) The municipal contribution rate must be set at the
1426	1459		corridor midpoint under Subsection (f) of this section by:
1427	1460		(1) in the risk sharing valuation study for the third
1428	1461		fiscal year described by Subsection (f) of this section, adjusting
1429	1462		the actuarial value of assets to equal the current market value of
1430	1463		assets, if making the adjustment causes the municipal contribution
1431	1464		rate to decrease; and
1432	1465		(2) under a written agreement entered into between the
1433	1466		municipality and the board:
1434	1467		(A) increasing member contributions; and
1435	1468		(B) making any other benefit or plan changes not
1436	1469		otherwise prohibited by applicable federal law or regulations.
1437	1470		(h) If an agreement under Subsection (g)(2) of this section
1438	1471		is not reached on or before April 30 before the first day of the next
1439	1472		fiscal year, before the start of the next fiscal year, the board, to
1440	1473		the extent necessary to set the municipal contribution rate equal
1441	1474		to the corridor midpoint, shall:
1442	1475		(1) increase member contributions and decrease
1443	1476		cost-of-living adjustments;
1444	1477		(2) increase the normal retirement age; or
1445	1478		(3) take any combination of actions authorized under
1446	1479		Subdivisions (1) and (2) of this subsection.
1447	1480		Sec. 13G. INTERPRETATION OF CERTAIN RISK SHARING
1448	1481		PROVISIONS; UNILATERAL DECISIONS AND ACTIONS PROHIBITED.
1449	1482		(a) Nothing in this article, including Section 2(p) or (p-1) of
1450	1483		this article and any authority of the board to construe and
1451	1484		interpret this article, to determine any fact, to take any action,
1452	1485		or to interpret any terms used in Sections 13A through 13F of this
1453	1486		article, may alter or change Sections 13A through 13F of this
1454	1487		article.
1455	1488		(b) No unilateral decision or action by the board is binding
1456	1489		on the municipality and no unilateral decision or action by the
1457	1490		municipality is binding on the fund with respect to the application
1458	1491		of Sections 13A through 13F of this article unless expressly
1459	1492		provided by a provision of those sections. Nothing in this
1460	1493		subsection is intended to limit the powers or authority of the
1461	1494		board.
1462	1495		(c) Section 10 of this article does not apply to a benefit
1463	1496		increase under Section 13E of this article, and Section 10 of this
1464	1497		article is suspended while Sections 13A through 13F of this article
1465	1498		are in effect.
1466	1499		Sec. 13H. STATE PENSION REVIEW BOARD; REPORT. (a) After
1467	1500		preparing a final risk sharing valuation study under Section 13B or
1468	1501		13C of this article, the fund and the municipality shall jointly
1469	1502		submit a copy of the study or studies, as appropriate, to the State
1470	1503		Pension Review Board for a determination that the fund and
1471	1504		municipality are in compliance with this article.
1472	1505		(b) Not later than the 30th day after the date an action is
1473	1506		taken under Section 13E or 13F of this article, the fund shall
1474	1507		submit a report to the State Pension Review Board regarding any
1475	1508		actions taken under those sections.
1476	1509		(c) The State Pension Review Board shall notify the
1477	1510		governor, the lieutenant governor, the speaker of the house of
1478	1511		representatives, and the legislative committees having principal
1479	1512		jurisdiction over legislation governing public retirement systems
1480	1513		if the State Pension Review Board determines the fund or the
1481	1514		municipality is not in compliance with Sections 13A through 13G of
1482	1515		this article.
1483	1516		SECTION 1.15. Section 17, Article 6243e.2(1), Revised
1484	1517		Statutes, is amended by adding Subsections (f), (g), (h), (i), and
1485	1518		(j) to read as follows:
1486	1519		(f) To carry out the provisions of Sections 13A through 13F
1487	1520		of this article, the board and the fund must provide the municipal
1488	1521		actuary under a confidentiality agreement the actuarial data used
1489	1522		by the fund actuary for the fund's actuarial valuations or
1490	1523		valuation studies and other data as agreed to between the
1491	1524		municipality and the fund that the municipal actuary determines is
1492	1525		reasonably necessary for the municipal actuary to perform the
1493	1526		studies required by Sections 13A through 13F of this article.
1494	1527		Actuarial data described by this subsection does not include
1495	1528		information described by Subsection (a) of this section.
1496	1529		(g) A risk sharing valuation study prepared by either the
1497	1530		municipal actuary or the fund actuary under Sections 13A through
1498	1531		13F of this article may not:
1499	1532		(1) include information described by Subsection (a) of
1500	1533		this section; or
1501	1534		(2) provide confidential or private information
1502	1535		regarding specific individuals or be grouped in a manner that
1503	1536		allows confidential or private information regarding a specific
1504	1537		individual to be discerned.
1505	1538		(h) The information, data, and document exchanges under
1506	1539		Sections 13A through 13F of this article have all the protections
1507	1540		afforded by applicable law and are expressly exempt from the
1508	1541		disclosure requirements under Chapter 552, Government Code, except
1509	1542		as may be agreed to by the municipality and fund in a written
1510	1543		agreement.
1511	1544		(i) Subsection (h) of this section does not apply to:
1512	1545		(1) a proposed risk sharing valuation study prepared
1513	1546		by the fund actuary and provided to the municipal actuary or
1514	1547		prepared by the municipal actuary and provided to the fund actuary
1515	1548		under Section 13B(d) or 13C(b)(2); or
1516	1549		(2) a final risk sharing valuation study prepared
1517	1550		under Section 13B or 13C of this article.
1518	1551		(j) Before a union contract is approved by the municipality,
1519	1552		the mayor of the municipality shall cause the municipal actuaries
1520	1553		to deliver to the mayor a report estimating the impact of the
1521	1554		proposed union contract on fund costs.
1522	1555		SECTION 1.16. Sections 13(d) and (e), Article 6243e.2(1),
1523	1556		Revised Statutes, are repealed.
1524	1557		SECTION 1.17. The firefighters' relief and retirement fund
1525	1558		established under Article 6243e.2(1), Revised Statutes, shall
1526	1559		require the fund actuary to prepare the first actuarial experience
1527	1560		study required under Section 13D, Article 6243e.2(1), Revised
1528	1561		Statutes, as added by this Act, not later than September 30, 2020.
1529	1562		ARTICLE 2. POLICE OFFICERS' PENSION SYSTEM
1530	1563		SECTION 2.01. Section 1, Article 6243g-4, Revised Statutes,
1531	1564		is amended to read as follows:
1532	1565		Sec. 1. PURPOSE. The purpose of this article is to restate
1533	1566		and amend the provisions of former law creating and governing a
1534	1567		police officers pension system in each city in this state having a
1535	1568		population of two [1.5] million or more, according to the most
1536	1569		recent federal decennial census, and to reflect changes agreed to
1537	1570		by the city and the board of trustees of the pension system under
1538	1571		Section 27 of this article. The pension system shall continue to
1539	1572		operate regardless of whether the city's population falls below two
1540	1573		[1.5] million.
1541	1574		SECTION 2.02. Article 6243g-4, Revised Statutes, is amended
1542	1575		by adding Section 1A to read as follows:
1543	1576		Sec. 1A. INTERPRETATION OF ARTICLE. This article does not
1544	1577		and may not be interpreted to:
1545	1578		(1) relieve the city, the board, or the pension system
1546	1579		of their respective obligations under Sections 9 through 9E of this
1547	1580		article;
1548	1581		(2) reduce or modify the rights of the city, the board,
1549	1582		or the pension system, including any officer or employee of the
1550	1583		city, board, or pension system, to enforce obligations described by
1551	1584		Subdivision (1) of this section;
1552	1585		(3) relieve the city, including any official or
1553	1586		employee of the city, from:
1554	1587		(A) paying or directing to pay required
1555	1588		contributions to the pension system under Section 8 or 9 of this
1556	1589		article or carrying out the provisions of Sections 9 through 9E of
1557	1590		this article; or
1558	1591		(B) reducing or modifying the rights of the board
1559	1592		and any officer or employee of the board or pension system to
1560	1593		enforce obligations described by Subdivision (1) of this section;
1561	1594		(4) relieve the pension system or board, including any
1562	1595		officer or employee of the pension system or board, from any
1563	1596		obligation to implement a benefit change or carry out the
1564	1597		provisions of Sections 9 through 9E of this article; or
1565	1598		(5) reduce or modify the rights of the city and any
1566	1599		officer or employee of the city to enforce an obligation described
1567	1600		by Subdivision (4) of this section.
1568	1601		SECTION 2.03. Section 2, Article 6243g-4, Revised Statutes,
1569	1602		is amended by amending Subdivisions (1), (2), (3), (4-a), (11),
1570	1603		(13), (14-a), (17), (17-a), and (22) and adding Subdivisions (1-a),
1571	1604		(1-b), (1-c), (4-b), (4-c), (4-d), (5-a), (5-b), (5-c), (10-a),
1572	1605		(10-b), (10-c), (10-d), (12-a), (13-a), (13-b), (13-c), (13-d),
1573	1606		(13-e), (13-f), (14-b), (14-c), (15-a), (15-b), (16-a), (16-b),
1574	1607		(17-b), (17-c), (17-d), (17-e), (24), (25), (26), (27), (28), and
1575	1608		(29) to read as follows:
1576	1609		(1) "Active member" means an employee of the city
1577	1610		within [a person employed as a classified police officer by] the
1578	1611		police department of a city subject to this article, in a classified
1579	1612		or appointed position, except for a person in an appointed position
1580	1613		who opts out of the plan, a person who is a part-time, seasonal, or
1581	1614		temporary employee, or a person who elected to remain a member of a
1582	1615		pension system described by Chapter 88, Acts of the 77th
1583	1616		Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
1584	1617		Civil Statutes). The term does not include a person who is a member
1585	1618		of another pension system of the same city, except to the extent
1586	1619		provided by Section [15(j) or] 18 of this article.
1587	1620		(1-a) "Actuarial data" includes:
1588	1621		(A) the census data, assumption tables,
1589	1622		disclosure of methods, and financial information that are routinely
1590	1623		used by the pension system actuary for the pension system's
1591	1624		valuation studies or an actuarial experience study under Section 9C
1592	1625		of this article; and
1593	1626		(B) other data that is reasonably necessary to
1594	1627		implement Sections 9 through 9E of this article, as agreed to by the
1595	1628		city and the board.
1596	1629		(1-b) "Actuarial experience study" has the meaning
1597	1630		assigned by Section 802.1014, Government Code.
1598	1631		(1-c) "Amortization period" means the time period
1599	1632		necessary to fully pay a liability layer.
1600	1633		(2) "Amortization rate" means the sum of the scheduled
1601	1634		amortization payments for a given fiscal year for the current
1602	1635		liability layers divided by the projected pensionable payroll for
1603	1636		that fiscal year. ["Average total direct pay" means an amount
1604	1637		determined by dividing the following sum by 12:
1605	1638		[(A) the highest biweekly pay received by a
1606	1639		member for any single pay period in the last 26 pay periods in which
1607	1640		the member worked full-time, considering only items of total direct
1608	1641		pay that are included in each paycheck, multiplied by 26; plus
1609	1642		[(B) the total direct pay, excluding all items of
1610	1643		the type included in Paragraph (A) received during the same last 26
1611	1644		biweekly pay periods.]
1612	1645		(3) "Assumed rate of return" means the assumed market
1613	1646		rate of return on pension system assets, which is seven percent per
1614	1647		annum unless adjusted as provided by this article ["Base salary"
1615	1648		means the monthly base pay provided for the classified position in
1616	1649		the police department held by the member].
1617	1650		(4-a) "Catastrophic injury" means a sudden, violent,
1618	1651		life-threatening, duty-related injury sustained by an active
1619	1652		member that is due to an externally caused motor vehicle accident,
1620	1653		gunshot wound, aggravated assault, or other external event or
1621	1654		events and results, as supported by evidence, in one of the
1622	1655		following conditions:
1623	1656		(A) total, complete, and permanent loss of sight
1624	1657		in one or both eyes;
1625	1658		(B) total, complete, and permanent loss of the
1626	1659		use of one or both feet at or above the ankle;
1627	1660		(C) total, complete, and permanent loss of the
1628	1661		use of one or both hands at or above the wrist;
1629	1662		(D) injury to the spine that results in a total,
1630	1663		permanent, and complete paralysis of both arms, both legs, or one
1631	1664		arm and one leg; or
1632	1665		(E) an externally caused physical traumatic
1633	1666		injury to the brain rendering the member physically or mentally
1634	1667		unable to perform the member's duties as a police officer.
1635	1668		(4-b) "City" means a city subject to this article.
1636	1669		(4-c) "City contribution rate" means a percent of
1637	1670		pensionable payroll that is the sum of the employer normal cost rate
1638	1671		and the amortization rate for liability layers, except as
1639	1672		determined otherwise under the express provisions of Sections 9D
1640	1673		and 9E of this article.
1641	1674		(4-d) "Classified" means any person classified by the
1642	1675		city as a police officer.
1643	1676		(5-a) "Corridor" means the range of city contribution
1644	1677		rates that are:
1645	1678		(A) equal to or greater than the minimum
1646	1679		contribution rate; and
1647	1680		(B) equal to or less than the maximum
1648	1681		contribution rate.
1649	1682		(5-b) "Corridor margin" means five percentage points.
1650	1683		(5-c) "Corridor midpoint" means the projected city
1651	1684		contribution rate specified for each fiscal year for 31 years in the
1652	1685		initial risk sharing valuation study under Section 9B of this
1653	1686		article, as may be adjusted under Section 9D or 9E of this article,
1654	1687		and in each case rounded to the nearest hundredths decimal place.
1655	1688		(10-a) "Employer normal cost rate" means the normal
1656	1689		cost rate minus the member contribution rate.
1657	1690		(10-b) "Estimated city contribution rate" means the
1658	1691		city contribution rate estimated in a final risk sharing valuation
1659	1692		study under Section 9A or 9B of this article, as applicable, as
1660	1693		required by Section 9A(a)(5) of this article.
1661	1694		(10-c) "Fiscal year," except as provided by Section 2A
1662	1695		of this article, means a fiscal year beginning July 1 and ending
1663	1696		June 30.
1664	1697		(10-d) "Final average pay" means the pay received by a
1665	1698		member over the last 78 biweekly pay periods ending before the
1666	1699		earlier of:
1667	1700		(A) the date the member terminates employment
1668	1701		with the police department, divided by 36; or
1669	1702		(B) the date the member began participation in
1670	1703		DROP, divided by 36.
1671	1704		(11) "Former member" means a person who was once an
1672	1705		active member, eligible for benefits [vested] or not, but who
1673	1706		terminated active member status and received a refund of member
1674	1707		contributions.
1675	1708		(12-a) "Funded ratio" means the ratio of the pension
1676	1709		system's actuarial value of assets divided by the pension system's
1677	1710		actuarial accrued liability.
1678	1711		(13) "Inactive member" means a person who has
1679	1712		separated from service and is eligible to receive [has a vested
1680	1713		right to] a service pension from the pension system but is not
1681	1714		eligible for an immediate service pension. The term does not
1682	1715		include a former member.
1683	1716		(13-a) "Legacy liability" means the unfunded
1684	1717		actuarial accrued liability as of June 30, 2016, as reduced to
1685	1718		reflect:
1686	1719		(A) changes to benefits and contributions under
1687	1720		this article that took effect on the year 2017 effective date;
1688	1721		(B) the deposit of pension obligation bond
1689	1722		proceeds on December 31, 2017, in accordance with Section 9B(j)(2)
1690	1723		of this article;
1691	1724		(C) payments by the city and earnings at the
1692	1725		assumed rate of return allocated to the legacy liability from July
1693	1726		1, 2016, to July 1, 2017, excluding July 1, 2017; and
1694	1727		(D) for each subsequent fiscal year,
1695	1728		contributions for that year allocated to the amortization of the
1696	1729		legacy liability and adjusted by the assumed rate of return.
1697	1730		(13-b) "Level percent of payroll method" means the
1698	1731		amortization method that defines the amount of the liability layer
1699	1732		recognized each fiscal year as a level percent of pensionable
1700	1733		payroll until the amount of the liability layer remaining is
1701	1734		reduced to zero.
1702	1735		(13-c) "Liability gain layer" means a liability layer
1703	1736		that decreases the unfunded actuarial accrued liability.
1704	1737		(13-d) "Liability layer" means the legacy liability
1705	1738		established in the initial risk sharing valuation study under
1706	1739		Section 9B of this article and the unanticipated change as
1707	1740		established in each subsequent risk sharing valuation study
1708	1741		prepared under Section 9A of this article.
1709	1742		(13-e) "Liability loss layer" means a liability layer
1710	1743		that increases the unfunded actuarial accrued liability. For
1711	1744		purposes of this article, the legacy liability is a liability loss
1712	1745		layer.
1713	1746		(13-f) "Maximum contribution rate" means the rate
1714	1747		equal to the corridor midpoint plus the corridor margin.
1715	1748		(14-a) "Minimum contribution rate" means the rate
1716	1749		equal to the corridor midpoint minus the corridor margin.
1717	1750		(14-b) "Normal cost rate" means the salary weighted
1718	1751		average of the individual normal cost rates determined for the
1719	1752		current active population plus an allowance for projected
1720	1753		administrative expenses. The allowance for projected
1721	1754		administrative expenses equals the administrative expenses divided
1722	1755		by the pensionable payroll for the previous fiscal year, provided
1723	1756		the administrative allowance may not exceed one percent of
1724	1757		pensionable payroll for the current fiscal year unless agreed to by
1725	1758		the city.
1726	1759		(14-c) "Normal retirement age" means:
1727	1760		(A) for a member hired before October 9, 2004,
1728	1761		including a member hired before October 9, 2004, who involuntarily
1729	1762		separated from service but was retroactively reinstated under an
1730	1763		arbitration, civil service, or court ruling after October 9, 2004,
1731	1764		the earlier of:
1732	1765		(i) [(A)] the age at which the member
1733	1766		attains 20 years of service; or
1734	1767		(ii) [(B)] the age at which the member
1735	1768		first attains both the age of at least 60 and at least 10 years of
1736	1769		service; or
1737	1770		(B) except as provided by Paragraph (A) of this
1738	1771		subdivision, for a member hired or rehired on or after October 9,
1739	1772		2004, the age at which the sum of the member's age in years and years
1740	1773		of service equals at least 70.
1741	1774		(15-a) "Pay," unless the context requires otherwise,
1742	1775		means wages as defined by Section 3401(a) of the code, plus any
1743	1776		amounts that are not included in gross income by reason of Section
1744	1777		104(a)(1), 125, 132(f), 402(g)(2), 457, or 414(h)(2) of the code,
1745	1778		less any pay received for overtime work, exempt time pay, strategic
1746	1779		officer staffing program pay, motorcycle allowance, clothing
1747	1780		allowance, or mentor pay. The definition of "pay" for purposes of
1748	1781		this article may only be amended by written agreement of the board
1749	1782		and the city under Section 27 of this article.
1750	1783		(15-b) "Payoff year" means the year a liability layer
1751	1784		is fully amortized under the amortization period. A payoff year may
1752	1785		not be extended or accelerated for a period that is less than one
1753	1786		month.
1754	1787		(16-a) "Pension obligation bond" means a bond issued
1755	1788		in accordance with Chapter 107, Local Government Code.
1756	1789		(16-b) "Pensionable payroll" means the combined
1757	1790		salaries, in an applicable fiscal year, paid to all:
1758	1791		(A) active members; and
1759	1792		(B) if applicable, participants in any
1760	1793		alternative retirement plan established under Section 2B of this
1761	1794		article, including a cash balance retirement plan established under
1762	1795		that section.
1763	1796		(17) "Pension system" or "system," unless the context
1764	1797		requires otherwise, means the retirement and disability plan for
1765		-	employees of any police department subject to this article.
	1798	+	employees of any police department subject to this article. In this
	1799	+	context, the term does not include an alternative retirement plan
	1800	+	established under Section 2B of this article.
1766	1801		(17-a) "Police department" means one or more law
1767	1802		enforcement agencies designated as a police department by a city.
1768	1803		(17-b) "Price inflation assumption" means:
1769	1804		(A) the most recent headline consumer price index
1770	1805		10-year forecast published in the Federal Reserve Bank of
1771	1806		Philadelphia Survey of Professional Forecasters; or
1772	1807		(B) if the forecast described by Paragraph (A) of
1773	1808		this subdivision is not available, another standard as determined
1774	1809		by mutual agreement between the city and the board entered into
1775	1810		under Section 27 of this article.
1776	1811		(17-c) "Projected pensionable payroll" means the
1777	1812		estimated pensionable payroll for the fiscal year beginning 12
1778	1813		months after the date of the risk sharing valuation study prepared
1779	1814		under Section 9A of this article, as applicable, at the time of
1780	1815		calculation by:
1781	1816		(A) projecting the prior fiscal year's
1782	1817		pensionable payroll projected forward two years by using the
1783	1818		current payroll growth rate assumptions; and
1784	1819		(B) adjusting, if necessary, for changes in
1785	1820		population or other known factors, provided those factors would
1786	1821		have a material impact on the calculation, as determined by the
1787	1822		board.
1788	1823		(17-d) "Retired member" means a member who has
1789	1824		separated from service and who is eligible to receive an immediate
1790	1825		service or disability pension under this article.
1791	1826		(17-e) "Salary" means pay provided for the classified
1792	1827		position in the police department held by the employee.
1793	1828		(22) "Surviving spouse" means a person who was married
1794	1829		to an active, inactive, or retired member at the time of the
1795	1830		member's death and, in the case of a marriage or remarriage after
1796	1831		the member's retirement, [an inactive or retired member, before the
1797	1832		member's separation from service or] for a period of at least five
1798	1833		consecutive years [before the retired or inactive member's death].
1799	1834		(24) "Third quarter line rate" means the corridor
1800	1835		midpoint plus 2.5 percentage points.
1801	1836		(25) "Trustee" means a member of the board.
1802	1837		(26) "Ultimate entry age normal" means an actuarial
1803	1838		cost method under which a calculation is made to determine the
1804	1839		average uniform and constant percentage rate of contributions that,
1805	1840		if applied to the compensation of each member during the entire
1806	1841		period of the member's anticipated covered service, would be
1807	1842		required to meet the cost of all benefits payable on the member's
1808	1843		behalf based on the benefits provisions for newly hired employees.
1809	1844		For purposes of this definition, the actuarial accrued liability
1810	1845		for each member is the difference between the member's present
1811	1846		value of future benefits based on the tier of benefits that apply to
1812	1847		the member and the member's present value of future normal costs
1813	1848		determined using the normal cost rate.
1814	1849		(27) "Unfunded actuarial accrued liability" means the
1815	1850		difference between the actuarial accrued liability and the
1816	1851		actuarial value of assets. For purposes of this definition:
1817	1852		(A) "actuarial accrued liability" means the
1818	1853		portion of the actuarial present value of projected benefits
1819	1854		attributed to past periods of member service based on the cost
1820	1855		method used in the risk sharing valuation study prepared under
1821	1856		Section 9A or 9B of this article, as applicable; and
1822	1857		(B) "actuarial value of assets" means the value
1823	1858		of pension system investments as calculated using the asset
1824	1859		smoothing method used in the risk sharing valuation study prepared
1825	1860		under Section 9A or 9B of this article, as applicable.
1826	1861		(28) "Unanticipated change" means, with respect to the
1827	1862		unfunded actuarial accrued liability in each subsequent risk
1828	1863		sharing valuation study prepared under Section 9A of this article,
1829	1864		the difference between:
1830	1865		(A) the remaining balance of all then-existing
1831	1866		liability layers as of the date of the risk sharing valuation study;
1832	1867		and
1833	1868		(B) the actual unfunded actuarial accrued
1834	1869		liability as of the date of the risk sharing valuation study.
1835	1870		(29) "Year 2017 effective date" means the date on
1836	1871		which S.B. No. 2190, Acts of the 85th Legislature, Regular Session,
1837	1872		2017, took effect.
1838	1873		SECTION 2.04. Article 6243g-4, Revised Statutes, is amended
1839	1874		by adding Sections 2A, 2B, 2C, and 2D to read as follows:
1840	1875		Sec. 2A. FISCAL YEAR. If either the pension system or the
1841	1876		city changes its respective fiscal year, the pension system and the
1842	1877		city shall enter into a written agreement under Section 27 of this
1843	1878		article to adjust the provisions of Sections 9 through 9E of this
1844	1879		article to reflect that change for purposes of this article.
1845		-	Sec. 2B. ALTERNATIVE RETIREMENT PLANS. (a) In this
1846		-	section, "salary-based benefit plan" means a retirement plan
1847		-	provided by the pension system under this article that provides
1848		-	member benefits calculated in accordance with a formula that is
1849		-	based on multiple factors, one of which is the member's salary at
1850		-	the time of the member's retirement.
	1880	+	Sec. 2B. ALTERNATIVE RETIREMENT PLANS.
	1881	+	(a) Notwithstanding any other law, including Section 9F of this
	1882	+	article, and except as provided by Subsection (b) of this section,
	1883	+	the board and the city may enter into a written agreement under
	1884	+	Section 27 of this article to offer an alternative retirement plan
	1885	+	or plans, including cash balance retirement plans, if both parties
	1886	+	consider it appropriate.
1851	1887		(b) Notwithstanding any other law, including Section 9F of
1852		-	this article, and except as provided by Subsection (c) of this
1853		-	section, the board and the city may enter into a written agreement
1854		-	under Section 27 of this article to offer an alternative retirement
1855		-	plan or plans, including a cash balance retirement plan or plans, if
1856		-	both parties consider it appropriate.
	1888	+	this article, and except as provided by Subsection (d) of this
	1889	+	section, if, on or after September 1, 2021, the funded ratio of the
	1890	+	pension system is less than 65 percent as determined in a final risk
	1891	+	sharing valuation study prepared under Section 9A of this article
	1892	+	without making any adjustments under Section 9D or 9E of this
	1893	+	article, or if, on or after September 1, 2021, the funded ratio of
	1894	+	the pension system is less than 65 percent as determined in a
	1895	+	revised and restated risk sharing valuation study prepared under
	1896	+	Section 9A(a)(7) of this article, the board and the city shall, as
	1897	+	soon as practicable but not later than the 60th day after the date
	1898	+	the determination is made:
	1899	+	(1) enter into a written agreement under Section 27 of
	1900	+	this article to establish, as an alternative retirement plan under
	1901	+	this section, a cash balance retirement plan that complies with
	1902	+	Section 2C of this article; and
	1903	+	(2) require each employee hired by the city on or after
	1904	+	the date the cash balance retirement plan is established to
	1905	+	participate in the cash balance retirement plan established under
	1906	+	this subsection instead of participating in the pension system,
	1907	+	provided the employee would have otherwise been eligible to
	1908	+	participate in the pension system.
1857	1909		(c) Notwithstanding any other law, including Section 9F of
1858	1910		this article, and except as provided by Subsection (d) of this
1859		-	section, if, beginning with the final risk sharing valuation study
1860		-	prepared under Section 9A of this article on or after July 1, 2021,
1861		-	either the funded ratio of the pension system is less than 65
1862		-	percent as determined in the final risk sharing valuation study
1863		-	without making any adjustments under Section 9D or 9E of this
1864		-	article, or the funded ratio of the pension system is less than 65
1865		-	percent as determined in a revised and restated risk sharing
1866		-	valuation study prepared under Section 9A(a)(7) of this article,
1867		-	the board and the city shall, as soon as practicable but not later
1868		-	than the 60th day after the date the determination is made:
1869		-	(1) enter into a written agreement under Section 27 of
1870		-	this article to establish a cash balance retirement plan that
1871		-	complies with Section 2C of this article; and
1872		-	(2) require each employee first hired by the city on or
1873		-	after the 90th day after the date the cash balance retirement plan
1874		-	is established to participate in the cash balance retirement plan
1875		-	established under this subsection instead of participating in the
1876		-	salary-based benefit plan, provided the employee would have
1877		-	otherwise been eligible to participate in the salary-based benefit
1878		-	plan.
	1911	+	section, if, on or after September 1, 2021, the board and the city
	1912	+	fail to establish a cash balance retirement plan within the time
	1913	+	prescribed by Subsection (b) of this section, the city shall by
	1914	+	ordinance:
	1915	+	(1) unilaterally establish, as an alternative
	1916	+	retirement plan, a cash balance retirement plan that complies with
	1917	+	Section 2C of this article; and
	1918	+	(2) require each employee hired by the city on or after
	1919	+	the date the cash balance retirement plan is established to
	1920	+	participate in the cash balance retirement plan established under
	1921	+	this subsection instead of participating in the pension system,
	1922	+	provided the employee would have otherwise been eligible to
	1923	+	participate in the pension system.
1879	1924		(d) If the city fails to deliver the proceeds of the pension
1880	1925		obligation bonds described by Section 9B(j)(1) of this article
1881	1926		within the time prescribed by that subdivision, notwithstanding the
1882		-	funded ratio of the pension system, the board and the city may not
1883		-	establish a cash balance retirement plan under Subsection (c) of
1884		-	this section.
	1927	+	funded ratio of the pension system:
	1928	+	(1) the board and the city may not establish a cash
	1929	+	balance retirement plan under Subsection (b) of this section; and
	1930	+	(2) the city may not establish a cash balance
	1931	+	retirement plan under Subsection (c) of this section.
1885	1932		Sec. 2C. REQUIREMENTS FOR CERTAIN CASH BALANCE RETIREMENT
1886	1933		PLANS. (a) In this section:
1887		-	(1) "Cash balance plan participant" means an employee
1888		-	who participates in a cash balance retirement plan.
1889		-	(2) "Cash balance retirement plan" means a cash
	1934	+	(1) "Cash balance retirement plan" means a cash
1890	1935		balance retirement plan established by written agreement under
1891		-	Section 2B(b) of this article or Section 2B(c) of this article.
1892		-	(3) "Interest" means the interest credited to a cash
1893		-	balance plan participant's notional account, which may not:
1894		-	(A) exceed a percentage rate equal to the cash
1895		-	balance retirement plan's most recent five fiscal years' smoothed
1896		-	rate of return; or
1897		-	(B) be less than zero percent.
1898		-	(4) "Salary-based benefit plan" has the meaning
1899		-	assigned by Section 2B of this article.
1900		-	(b) The written agreement establishing a cash balance
1901		-	retirement plan must:
	1936	+	Section 2B(b) of this article or by ordinance under Section 2B(c) of
	1937	+	this article.
	1938	+	(2) "Interest" means the interest earned as the result
	1939	+	of returns on investments, which may not exceed a percentage rate
	1940	+	equal to the cash balance retirement plan's most recent five fiscal
	1941	+	years' smoothed rate of return.
	1942	+	(3) "Participant" means an employee who participates
	1943	+	in a cash balance retirement plan.
	1944	+	(b) The written agreement or ordinance establishing a cash
	1945	+	balance retirement plan must:
1902	1946		(1) provide for the administration of the cash balance
1903	1947		retirement plan;
1904	1948		(2) provide for a closed amortization period not to
1905		-	exceed 20 years from the date an actuarial gain or loss is realized;
1906		-	(3) ~~provide for the crediting of~~ city and ~~cash balance~~
1907		-	~~plan participant contributions~~ to ~~each cash balance plan~~
1908		-	participant~~'s notional account~~;
1909		-	(4) provide for the crediting of interest to ~~each cash~~
1910		-	~~balance plan~~ participant's ~~notional~~ account;
	1949	+	exceed 15 years from the date an actuarial gain or loss is realized;
	1950	+	(3) require that city and participant contributions be
	1951	+	credited to an account maintained for the benefit of the
	1952	+	participant;
	1953	+	(4) provide for the crediting of interest to the
	1954	+	participant's account;
1911	1955		(5) include a vesting schedule;
1912	1956		(6) include benefit options, including options for
1913		-	cash balance plan participants who separate from service prior to
1914		-	retirement;
	1957	+	participants who separate from service prior to retirement;
1915	1958		(7) provide for death and disability benefits;
1916		-	(8) allow a ~~cash balance plan~~ participant who is
1917		-	~~eligible to retire~~ under the plan to elect to:
	1959	+	(8) allow a participant who is eligible to retire
	1960	+	under the plan to elect to:
1918	1961		(A) receive a monthly annuity payable for the
1919		-	life of the ~~cash balance plan~~ participant in an amount actuarially
1920		-	~~determined on the~~ date of the ~~cash balance plan~~ participant's
1921		-	~~retirement based on the cash~~ balance ~~plan participant's accumulated~~
1922		-	~~notional account balance annuitized~~ in ~~accordance with~~ the
1923		-	~~actuarial assumptions and actuarial methods established in~~ the ~~most~~
1924		-	~~recent actuarial experience study conducted under Section 9C of~~
1925		-	~~this article, except that the~~ assumed rate of return ~~applied may not~~
1926		-	~~exceed the pension system's assumed rate of return in the most~~
1927		-	~~recent risk sharing valuation study;~~ or
1928		-	~~(B) receive a single, partial lump-sum payment~~
1929		-	~~from the cash balance plan participant's accumulated account~~
1930		-	balance and a monthly ~~annuity payable for life in an amount~~
1931		-	determined in accordance with ~~Paragraph (A) of this subdivision~~
1932		-	based on the ~~cash balance plan~~ participant's ~~notional account~~
1933		-	balance after receiving the partial lump-sum payment; and
	1962	+	life of the participant in an amount actuarially determined on the
	1963	+	date of the participant's retirement based on the participant's
	1964	+	accumulated account balance annuitized in accordance with the
	1965	+	actuarial assumptions and actuarial methods established in the
	1966	+	written agreement or ordinance establishing the plan, except that
	1967	+	the discount rate applied may not exceed the pension system's
	1968	+	assumed rate of return in the most recent risk sharing valuation
	1969	+	study;
	1970	+	(B) receive a single lump-sum payment of the
	1971	+	participant's accumulated account balance; or
	1972	+	(C) receive a single, partial lump-sum payment
	1973	+	from the participant's accumulated account balance and a monthly
	1974	+	annuity payable for life in an amount determined in accordance with
	1975	+	Paragraph (A) of this subdivision based on the participant's
	1976	+	account balance after receiving the partial lump-sum payment; and
1934	1977		(9) include any other provision determined necessary
1935		-	by:
1936		-	(A) the board and the city; or
1937		-	(B) the pension system for purposes of
1938		-	maintaining the tax-qualified status of the pension system under
1939		-	Section 401 of the code.
1940		-	(c) Notwithstanding any other law, including Sections 2(1),
	1978	+	by the board and the city if the plan is established under Section
	1979	+	2B(b) of this article or by the city if the plan is established
	1980	+	under Section 2B(c) of this article.
	1981	+	(c) The written agreement or ordinance establishing a cash
	1982	+	balance retirement plan must address whether employees who were
	1983	+	employed by the city before the date the cash balance retirement
	1984	+	plan was established and who resumed employment with the city on or
	1985	+	after the date the cash balance retirement plan was established are
	1986	+	required to participate in the pension system or in the cash balance
	1987	+	retirement plan.
	1988	+	(d) Notwithstanding any other law, including Sections 2(1),
1941	1989		11, and 12 of this article, an employee who participates in a cash
1942	1990		balance retirement plan:
1943		-	(1) ~~subject to~~ Subsection (d) of this ~~section, is not~~
1944		-	eligible to be an active member of and may not ~~participate in the~~
1945		-	~~salary-based benefit plan~~; and
	1991	+	(1) except as provided by Subsection (c) of this
	1992	+	section, is not eligible to be an active member of and may not
	1993	+	participate in the pension system; and
1946	1994		(2) may not accrue years of service or establish
1947		-	service credit in the salary-based benefit plan during the period
1948		-	the employee is participating in the cash balance retirement plan.
1949		-	(d) A cash balance plan participant is considered an active
1950		-	member for purposes of Sections 9 through 9G of this article.
1951		-	(e) At the time of implementation of the cash balance
1952		-	retirement plan, the employer normal cost rate of the cash balance
1953		-	retirement plan may not exceed the employer normal cost rate of the
1954		-	salary-based benefit plan.
	1995	+	service credit in the pension system during the period the employee
	1996	+	is participating in the cash balance retirement plan.
	1997	+	(e) The combined city contribution for the cash balance
	1998	+	retirement plan and the pension system may not:
	1999	+	(1) exceed the city contribution for the pension
	2000	+	system calculated as if all participants in the cash balance
	2001	+	retirement plan were active members of the pension system; or
	2002	+	(2) be less than the required normal cost contribution
	2003	+	for the pension system calculated as if all participants in the cash
	2004	+	balance retirement plan were active members of the pension system.
1955	2005		Sec. 2D. CONFLICT OF LAW. To the extent of a conflict
1956	2006		between this article and any other law, this article prevails.
1957	2007		SECTION 2.05. Section 3, Article 6243g-4, Revised Statutes,
1958	2008		is amended by amending Subsection (b) and adding Subsections (i)
1959	2009		and (j) to read as follows:
1960	2010		(b) The board is composed of seven members as follows:
1961	2011		(1) the administrative head of the city or the
1962	2012		administrative head's authorized representative;
1963	2013		(2) three employees of the police department having
1964	2014		membership in the pension system, elected by the active, inactive,
1965	2015		and retired members of the pension system;
1966	2016		(3) two retired members who are receiving pensions
1967	2017		from the system, who are elected by the active, inactive, and
1968	2018		retired members of the pension system, and who are not:
1969	2019		(A) officers or employees of the city; or
1970	2020		(B) current or former employees of any other fund
1971	2021		or pension system authorized under:
1972	2022		(i) Article 6243e.2(1), Revised Statutes;
1973	2023		or
1974	2024		(ii) Chapter 88 (H.B. 1573), Acts of the
1975	2025		77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
1976	2026		Texas Civil Statutes)[, elected by the active, inactive, and
1977	2027		retired members of the pension system]; and
1978	2028		(4) the director of finance [treasurer] of the city or
1979	2029		the person discharging the duties of the director of finance, or the
1980	2030		director's designee [city treasurer].
1981	2031		(i) If a candidate for either an active or retired board
1982	2032		member position does not receive a majority vote for that position,
1983	2033		a runoff election for that position shall be held. The board shall
1984	2034		establish a policy for general and runoff elections for purposes of
1985	2035		this subsection.
1986	2036		(j) Beginning with the year 2017 effective date:
1987	2037		(1) the term of office for a board member in the
1988	2038		phase-down program A or B shall be one year; and
1989	2039		(2) a board member who subsequently enters phase-down
1990	2040		program A or B and has served at least one year of the member's
1991	2041		current term shall vacate the member's seat and may run for
1992	2042		reelection.
1993	2043		SECTION 2.06. Section 4, Article 6243g-4, Revised Statutes,
1994	2044		is amended to read as follows:
1995	2045		Sec. 4. BOARD MEMBER LEAVE AND COMPENSATION. (a) The city
1996	2046		shall allow active members who are trustees to promptly attend all
1997	2047		board and committee meetings. The city shall allow trustees the
1998	2048		time required to travel to and attend educational workshops and
1999	2049		legislative hearings and to attend to other pension system
2000	2050		business, including meetings regarding proposed amendments to this
2001	2051		article, if attendance is consistent with a trustee's duty to the
2002	2052		board [Elected members of the board who are employees of the city's
2003	2053		police department are entitled to leave from their employer to
2004	2054		attend to the official business of the pension system and are not
2005	2055		required to report to the city or any other governmental entity
2006	2056		regarding travel or the official business of the pension system,
2007	2057		except when on city business].
2008	2058		(b) [If the city employing an elected board member would
2009	2059		withhold any portion of the salary of the member who is attending to
2010	2060		official business of the pension system, the pension system may
2011	2061		elect to adequately compensate the city for the loss of service of
2012	2062		the member. If the board, by an affirmative vote of at least four
2013	2063		board members, makes this election, the amounts shall be remitted
2014	2064		from the fund to the city, and the city shall pay the board member's
2015	2065		salary as if no loss of service had occurred.
2016	2066		[(c)] The board, by an affirmative vote of at least four board
2017	2067		members, may elect to reimburse board members who are not employees
2018	2068		of the city for their time while attending to official business of
2019	2069		the pension system. The amount of any reimbursement may not exceed
2020	2070		$750 [$350] a month for each affected board member.
2021	2071		SECTION 2.07. Article 6243g-4, Revised Statutes, is amended
2022	2072		by adding Sections 5A and 5B to read as follows:
2023	2073		Sec. 5A. QUALIFICATIONS OF CITY ACTUARY. (a) An actuary
2024	2074		hired by the city for purposes of this article must be an actuary
2025	2075		from a professional service firm who:
2026	2076		(1) is not already engaged by the pension system or any
2027	2077		other fund or pension system authorized under Article 6243e.2(1),
2028	2078		Revised Statutes, or Chapter 88 (H.B. 1573), Acts of the 77th
2029	2079		Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
2030	2080		Civil Statutes), to provide actuarial services to the pension
2031	2081		system or other fund or pension system, as applicable;
2032	2082		(2) has a minimum of 10 years of professional
2033	2083		actuarial experience; and
2034	2084		(3) is a member of the American Academy of Actuaries or
2035	2085		a fellow of the Society of Actuaries and meets the applicable
2036	2086		requirements to issue statements of actuarial opinion.
2037	2087		(b) Notwithstanding Subsection (a) of this section, the
2038	2088		city actuary must at least meet the qualifications required by the
2039	2089		board for the pension system actuary. The city actuary is not
2040	2090		required to have greater qualifications than those of the pension
2041	2091		system actuary.
2042	2092		Sec. 5B. LIABILITY OF CERTAIN PERSONS. (a) The trustees,
2043	2093		executive director, and employees of the pension system are fully
2044	2094		protected from and free of liability for any action taken or
2045	2095		suffered by them that were performed in good faith and in reliance
2046	2096		on an actuary, accountant, counsel, or other professional service
2047	2097		provider, or in reliance on records provided by the city.
2048	2098		(b) The officers and employees of the city are fully
2049	2099		protected and free of liability for any action taken or suffered by
2050	2100		the officer or employee, as applicable, in good faith and on
2051	2101		reliance on an actuary, accountant, counsel, or other professional
2052	2102		service provider.
2053	2103		(c) The protection from liability provided by this section
2054	2104		is cumulative of and in addition to any other constitutional,
2055	2105		statutory, or common law official or governmental immunity,
2056	2106		defense, and civil or procedural protection provided to the city or
2057	2107		pension system as a governmental entity and to a city or pension
2058	2108		system official or employee as an official or employee of a
2059	2109		governmental entity. Except for a waiver expressly provided by
2060	2110		this article, this article does not grant an implied waiver of any
2061	2111		immunity.
2062	2112		SECTION 2.08. Section 6, Article 6243g-4, Revised Statutes,
2063	2113		is amended by amending Subsections (f) and (g) and adding
2064	2114		Subsections (f-1), (i), and (j) to read as follows:
2065	2115		(f) The board has full discretion and authority to:
2066	2116		(1) administer the pension system;
2067	2117		(2) [, to] construe and interpret this article and any
2068	2118		summary plan descriptions or benefits procedures;
2069	2119		(3) subject to Section 9F of this article, correct any
2070	2120		defect, supply any omission, and reconcile any inconsistency that
2071	2121		appears in this article;[,] and
2072	2122		(4) take [to do] all other acts necessary to carry out
2073	2123		the purpose of this article in a manner and to the extent that the
2074	2124		board considers expedient to administer this article for the
2075	2125		greatest benefit of all members.
2076	2126		(f-1) Except as provided by Section 9F of this article, all
2077	2127		[All] decisions of the board under Subsection (f) of this section
2078	2128		are final and binding on all affected parties.
2079	2129		(g) The board, if reasonably necessary in the course of
2080	2130		performing a board function, may issue process or subpoena a
2081	2131		witness or the production of a book, record, or other document as to
2082	2132		any matter affecting retirement, disability, or death benefits
2083	2133		under any pension plan provided by the pension system. The
2084	2134		presiding officer of the board may issue, in the name of the board,
2085	2135		a subpoena only if a majority of the board approves. The presiding
2086	2136		officer of the board, or the presiding officer's designee, shall
2087	2137		administer an oath to each witness. A peace officer shall serve a
2088	2138		subpoena issued by the board. If the person to whom a subpoena is
2089	2139		directed fails to comply, the board may bring suit to enforce the
2090	2140		subpoena in a district court of the county in which the person
2091	2141		resides or in the county in which the book, record, or other
2092	2142		document is located. If the district court finds that good cause
2093	2143		exists for issuance of the subpoena, the court shall order
2094	2144		compliance. The district court may modify the requirements of a
2095	2145		subpoena that the court finds are unreasonable. Failure to obey the
2096	2146		order of the district court is punishable as contempt.
2097	2147		(i) If the board or its designee determines that any person
2098	2148		to whom a payment under this article is due is a minor or is unable
2099	2149		to care for the person's affairs because of a physical or mental
2100	2150		disability, and if the board or its designee, as applicable,
2101	2151		determines the person does not have a guardian or other legal
2102	2152		representative and that the estate of the person is insufficient to
2103	2153		justify the expense of establishing a guardianship, or continuing a
2104	2154		guardianship after letters of guardianship have expired, then until
2105	2155		current letters of guardianship are filed with the pension system,
2106	2156		the board or its designee, as applicable, may make the payment:
2107	2157		(1) to the spouse of the person, as trustee for the
2108	2158		person;
2109	2159		(2) to an individual or entity actually providing for
2110	2160		the needs of and caring for the person, as trustee for the person;
2111	2161		or
2112	2162		(3) to a public agency or private charitable
2113	2163		organization providing assistance or services to the aged or
2114	2164		incapacitated that agrees to accept and manage the payment for the
2115	2165		benefit of the person as a trustee.
2116	2166		(j) The board or its designee is not responsible for
2117	2167		overseeing how a person to whom payment is made under Subsection (i)
2118	2168		of this section uses or otherwise applies the payments. Payments
2119	2169		made under Subsection (i) of this section constitute a complete
2120	2170		discharge of the pension system's liability and obligation to the
2121	2171		person on behalf of whom payment is made.
2122	2172		SECTION 2.09. Section 8(a), Article 6243g-4, Revised
2123	2173		Statutes, is amended to read as follows:
2124	2174		(a) Subject to adjustments authorized by Section 9D or 9E of
2125	2175		this article, each [Each] active member of the pension system shall
2126	2176		pay into the system each month 10.5 [8-3/4] percent of the member's
2127	2177		[total direct] pay. The payments shall be deducted by the city from
2128	2178		the salary of each active member each payroll period and paid to the
2129	2179		pension system. Except for the repayment of withdrawn
2130	2180		contributions under Section 17(f) [or 18(c)(3)] of this article and
2131	2181		rollovers permitted by Section 17(h) of this article, a person may
2132	2182		not be required or permitted to make any payments into the pension
2133	2183		system after the person separates from service.
2134	2184		SECTION 2.10. Section 9, Article 6243g-4, Revised Statutes,
2135	2185		is amended to read as follows:
2136	2186		Sec. 9. CONTRIBUTIONS BY THE CITY. (a) Beginning with the
2137	2187		year 2017 effective date, the city shall make contributions to the
2138	2188		pension system for deposit into the fund as provided by this section
2139	2189		and Section 9A, 9B, 9D, or 9E of this article, as applicable. The
2140	2190		city shall contribute:
2141	2191		(1) beginning with the year 2017 effective date and
2142	2192		ending with the fiscal year ending June 30, 2018, an amount equal to
2143	2193		the city contribution rate, as determined in the initial risk
2144	2194		sharing valuation study conducted under Section 9B of this article
2145	2195		and adjusted under Section 9D or 9E of this article, as applicable,
2146	2196		multiplied by the pensionable payroll for the fiscal year; and
2147	2197		(2) for each fiscal year after the fiscal year ending
2148	2198		June 30, 2018, an amount equal to the city contribution rate, as
2149	2199		determined in a subsequent risk sharing valuation study conducted
2150	2200		under Section 9A of this article and adjusted under Section 9D or 9E
2151	2201		of this article, as applicable, multiplied by the pensionable
2152	2202		payroll for the applicable fiscal year.
2153	2203		(b) Except by written agreement between the city and the
2154	2204		board under Section 27 of this article providing for an earlier
2155	2205		contribution date, at least biweekly, the city shall make the
2156	2206		contributions required by Subsection (a) of this section by
2157	2207		depositing with the pension system an amount equal to the city
2158	2208		contribution rate multiplied by the pensionable payroll for the
2159	2209		biweekly period.
2160	2210		(c) With respect to each fiscal year:
2161	2211		(1) the first contribution by the city under this
2162	2212		section for the fiscal year shall be made not later than the date
2163	2213		payment is made to employees for their first full biweekly pay
2164	2214		period beginning on or after the first day of the fiscal year; and
2165	2215		(2) the final contribution by the city under this
2166	2216		section for the fiscal year shall be made not later than the date
2167	2217		payment is made to employees for the final biweekly pay period of
2168	2218		the fiscal year.
2169	2219		(d) In addition to the amounts required under this section,
2170	2220		the city may at any time contribute additional amounts to the
2171	2221		pension system for deposit in the pension fund by entering into a
2172	2222		written agreement with the board in accordance with Section 27 of
2173	2223		this article [The city shall make substantially equal contributions
2174	2224		to the fund as soon as administratively feasible after each payroll
2175	2225		period. For each fiscal year ending after June 30, 2005, the city's
2176	2226		minimum contribution shall be the greater of 16 percent of the
2177	2227		members' total direct pay or the level percentage of salary payment
2178	2228		required to amortize the unfunded actuarial liability over a
2179	2229		constant period of 30 years computed on the basis of an acceptable
2180	2230		actuarial reserve funding method approved by the board. However,
2181	2231		for the fiscal year ending June 30, 2002, the city's contribution
2182	2232		shall be $32,645,000, for the fiscal year ending June 30, 2003, the
2183	2233		city's contribution shall be $34,645,000, for the fiscal year
2184	2234		ending June 30, 2004, the city's contribution shall be $36,645,000,
2185	2235		and for the fiscal year ending June 30, 2005, the city's
2186	2236		contribution shall be 16 percent of the members' total direct pay].
2187	2237		(e) [(c)] The governing body of a city to which this article
2188	2238		applies by ordinance or resolution may provide that the city pick up
2189	2239		active member contributions required by Section 8 of this article
2190	2240		so that the contributions of all active members of the pension
2191	2241		system qualify as picked-up contributions under Section 414(h)(2)
2192	2242		of the code. If the governing body of a city adopts an ordinance or
2193	2243		resolution under this section, the city, the board, and any other
2194	2244		necessary party shall implement the action as soon as practicable.
2195	2245		Contributions picked up as provided by this subsection shall be
2196	2246		included in the determination of an active member's [total direct]
2197	2247		pay, deposited to the individual account of the active member on
2198	2248		whose behalf they are made, and treated for all purposes, other than
2199	2249		federal tax purposes, in the same manner and with like effect as if
2200	2250		they had been deducted from the salary of, and made by, the active
2201	2251		member.
2202	2252		(f) Only amounts paid by the city to the pension system
2203	2253		shall be credited against any amortization schedule of payments due
2204	2254		to the pension system under this article.
2205	2255		(g) Subsection (f) of this section does not affect changes
2206	2256		to an amortization schedule of a liability layer under Section
2207	2257		9A(a)(6)(F), 9B(i), or 9D(c)(4) of this article.
2208	2258		(h) Notwithstanding any other law and except for the pension
2209	2259		obligation bond assumed under Section 9B(d)(2) of this article, the
2210	2260		city may not issue a pension obligation bond to fund the city
2211	2261		contribution rate under this section.
2212	2262		SECTION 2.11. Article 6243g-4, Revised Statutes, is amended
2213	2263		by adding Sections 9A, 9B, 9C, 9D, 9E, 9F, and 9G to read as follows:
2214	2264		Sec. 9A. RISK SHARING VALUATION STUDIES. (a) The pension
2215	2265		system and the city shall separately cause their respective
2216	2266		actuaries to prepare a risk sharing valuation study in accordance
2217	2267		with this section and actuarial standards of practice. A risk
2218	2268		sharing valuation study must:
2219	2269		(1) be dated as of the first day of the fiscal year in
2220	2270		which the study is required to be prepared;
2221	2271		(2) be included in the pension system's standard
2222	2272		valuation study prepared annually for the pension system;
2223	2273		(3) calculate the unfunded actuarial accrued
2224	2274		liability of the pension system;
2225	2275		(4) be based on actuarial data provided by the pension
2226	2276		system actuary or, if actuarial data is not provided, on estimates
2227	2277		of actuarial data;
2228	2278		(5) estimate the city contribution rate, taking into
2229	2279		account any adjustments required under Section 9D or 9E of this
2230	2280		article for all applicable prior fiscal years;
2231	2281		(6) subject to Subsection (g) of this section, be
2232	2282		based on the following assumptions and methods that are consistent
2233	2283		with actuarial standards of practice:
2234	2284		(A) an ultimate entry age normal actuarial
2235	2285		method;
2236	2286		(B) for purposes of determining the actuarial
2237	2287		value of assets:
2238	2288		(i) except as provided by Subparagraph (ii)
2239	2289		of this paragraph and Section 9D(c)(1) or 9E(c)(2) of this article,
2240	2290		an asset smoothing method recognizing actuarial losses and gains
2241	2291		over a five-year period applied prospectively beginning on the year
2242	2292		2017 effective date; and
2243	2293		(ii) for the initial risk sharing valuation
2244	2294		study prepared under Section 9B of this article, a marked-to-market
2245	2295		method applied as of June 30, 2016;
2246	2296		(C) closed layered amortization of liability
2247	2297		layers to ensure that the amortization period for each layer begins
2248	2298		12 months after the date of the risk sharing valuation study in
2249	2299		which the liability layer is first recognized;
2250	2300		(D) each liability layer is assigned an
2251	2301		amortization period;
2252	2302		(E) each liability loss layer amortized over a
2253	2303		period of 30 years from the first day of the fiscal year beginning
2254	2304		12 months after the date of the risk sharing valuation study in
2255	2305		which the liability loss layer is first recognized, except that the
2256	2306		legacy liability must be amortized from July 1, 2016, for a 30-year
2257	2307		period beginning July 1, 2017;
2258	2308		(F) the amortization period for each liability
2259	2309		gain layer being:
2260	2310		(i) equal to the remaining amortization
2261	2311		period on the largest remaining liability loss layer and the two
2262	2312		layers must be treated as one layer such that if the payoff year of
2263	2313		the liability loss layer is accelerated or extended, the payoff
2264	2314		year of the liability gain layer is also accelerated or extended; or
2265	2315		(ii) if there is no liability loss layer, a
2266	2316		period of 30 years from the first day of the fiscal year beginning
2267	2317		12 months after the date of the risk sharing valuation study in
2268	2318		which the liability gain layer is first recognized;
2269	2319		(G) liability layers, including the legacy
2270	2320		liability, funded according to the level percent of payroll method;
2271	2321		(H) the assumed rate of return, subject to
2272	2322		adjustment under Section 9D(c)(2) of this article or, if Section
2273	2323		9B(g) of this article applies, adjustment in accordance with a
2274	2324		written agreement entered into under Section 27 of this article,
2275	2325		except the assumed rate of return may not exceed seven percent per
2276	2326		annum;
2277	2327		(I) the price inflation assumption as of the most
2278	2328		recent actuarial experience study, which may be reset by the board
2279	2329		by plus or minus 50 basis points based on that actuarial experience
2280	2330		study;
2281	2331		(J) projected salary increases and payroll
2282	2332		growth rate set in consultation with the city's finance director;
2283	2333		and
2284	2334		(K) payroll for purposes of determining the
2285	2335		corridor midpoint and city contribution rate must be projected
2286	2336		using the annual payroll growth rate assumption, which for purposes
2287	2337		of preparing any amortization schedule may not exceed three
2288	2338		percent; and
2289	2339		(7) be revised and restated, if appropriate, not later
2290	2340		than:
2291	2341		(A) the date required by a written agreement
2292	2342		entered into between the city and the board; or
2293	2343		(B) the 30th day after the date required action
2294	2344		is taken by the board under Section 9D or 9E of this article to
2295	2345		reflect any changes required by either section.
2296	2346		(b) As soon as practicable after the end of a fiscal year,
2297	2347		the pension system actuary at the direction of the pension system
2298	2348		and the city actuary at the direction of the city shall separately
2299	2349		prepare a proposed risk sharing valuation study based on the fiscal
2300	2350		year that just ended.
2301	2351		(c) Not later than September 30 following the end of the
2302	2352		fiscal year, the pension system shall provide to the city actuary,
2303	2353		under a confidentiality agreement with the board in which the city
2304	2354		actuary agrees to comply with the confidentiality provisions of
2305	2355		Section 29 of this article, the actuarial data described by
2306	2356		Subsection (a)(4) of this section.
2307	2357		(d) Not later than the 150th day after the last day of the
2308	2358		fiscal year:
2309	2359		(1) the pension system actuary, at the direction of
2310	2360		the pension system, shall provide the proposed risk sharing
2311	2361		valuation study prepared by the pension system actuary under
2312	2362		Subsection (b) of this section to the city actuary; and
2313	2363		(2) the city actuary, at the direction of the city,
2314	2364		shall provide the proposed risk sharing valuation study prepared by
2315	2365		the city actuary under Subsection (b) of this section to the pension
2316	2366		system actuary.
2317	2367		(e) Each actuary described by Subsection (d) of this section
2318	2368		may provide copies of the proposed risk sharing valuation studies
2319	2369		to the city or to the pension system, as appropriate.
2320	2370		(f) If, after exchanging proposed risk sharing valuation
2321	2371		studies under Subsection (d) of this section, it is found that the
2322	2372		difference between the estimated city contribution rate
2323	2373		recommended in the proposed risk sharing valuation study prepared
2324	2374		by the pension system actuary and the estimated city contribution
2325	2375		rate recommended in the proposed risk sharing valuation study
2326	2376		prepared by the city actuary for the corresponding fiscal year is:
2327	2377		(1) less than or equal to two percentage points, the
2328	2378		estimated city contribution rate recommended by the pension system
2329	2379		actuary will be the estimated city contribution rate for purposes
2330	2380		of Subsection (a)(5) of this section, and the proposed risk sharing
2331	2381		valuation study prepared for the pension system is considered to be
2332	2382		the final risk sharing valuation study for the fiscal year for the
2333	2383		purposes of this article; or
2334	2384		(2) greater than two percentage points, the city
2335	2385		actuary and the pension system actuary shall have 20 business days
2336	2386		to reconcile the difference, provided that without the mutual
2337	2387		agreement of both actuaries, the difference in the estimated city
2338	2388		contribution rate recommended by the city actuary and the estimated
2339	2389		city contribution rate recommended by the pension system actuary
2340	2390		may not be further increased and:
2341	2391		(A) if, as a result of reconciliation efforts
2342	2392		under this subdivision, the difference is reduced to less than or
2343	2393		equal to two percentage points:
2344	2394		(i) the estimated city contribution rate
2345	2395		proposed under the reconciliation by the pension system actuary
2346	2396		will be the estimated city contribution rate for purposes of
2347	2397		Subsection (a)(5) of this section; and
2348	2398		(ii) the pension system's risk sharing
2349	2399		valuation study is considered to be the final risk sharing
2350	2400		valuation study for the fiscal year for the purposes of this
2351	2401		article; or
2352	2402		(B) if, after 20 business days, the pension system
2353	2403		actuary and the city actuary are not able to reach a reconciliation
2354	2404		that reduces the difference to an amount less than or equal to two
2355	2405		percentage points:
2356	2406		(i) the city actuary at the direction of the
2357	2407		city and the pension system actuary at the direction of the pension
2358	2408		system each shall deliver to the finance director of the city and
2359	2409		the executive director of the pension system a final risk sharing
2360	2410		valuation study with any agreed-to changes, marked as the final
2361	2411		risk sharing valuation study for each actuary; and
2362	2412		(ii) not later than the 90th day before the
2363	2413		first day of the next fiscal year, the finance director and the
2364	2414		executive director shall execute a joint addendum to the final risk
2365	2415		sharing valuation study received by them under Subparagraph (i) of
2366	2416		this paragraph that is a part of the final risk sharing valuation
2367	2417		study for the fiscal year for all purposes and reflects the
2368	2418		arithmetic average of the estimated city contribution rates for the
2369	2419		fiscal year stated by the city actuary and the pension system
2370	2420		actuary in the final risk sharing valuation study for purposes of
2371	2421		Subsection (a)(5) of this section, and for reporting purposes the
2372	2422		pension system may treat the pension system actuary's risk sharing
2373	2423		valuation study with the addendum as the final risk sharing
2374	2424		valuation study.
2375	2425		(g) The assumptions and methods used and the types of
2376	2426		actuarial data and financial information used to prepare the
2377	2427		initial risk sharing valuation study under Section 9B of this
2378	2428		article shall be used to prepare each subsequent risk sharing
2379	2429		valuation study under this section, unless changed based on the
2380	2430		actuarial experience study conducted under Section 9C of this
2381	2431		article.
2382	2432		(h) The actuarial data provided under Subsection (a)(4) of
2383	2433		this section may not include the identifying information of
2384	2434		individual members.
2385	2435		Sec. 9B. INITIAL RISK SHARING VALUATION STUDIES; CORRIDOR
2386	2436		MIDPOINT. (a) The pension system and the city shall separately
2387	2437		cause their respective actuaries to prepare an initial risk sharing
2388	2438		valuation study that is dated as of July 1, 2016, in accordance with
2389	2439		this section. An initial risk sharing valuation study must:
2390	2440		(1) except as otherwise provided by this section, be
2391	2441		prepared in accordance with Section 9A of this article and, for
2392	2442		purposes of Section 9A(a)(4) of this article, be based on actuarial
2393	2443		data as of June 30, 2016, or, if actuarial data is not provided, on
2394	2444		estimates of actuarial data; and
2395	2445		(2) project the corridor midpoint for 31 fiscal years
2396	2446		beginning with the fiscal year beginning July 1, 2017.
2397	2447		(b) If the initial risk sharing valuation study has not been
2398	2448		prepared consistent with this section before the year 2017
2399	2449		effective date, as soon as practicable after the year 2017
2400	2450		effective date:
2401	2451		(1) the pension system shall provide to the city
2402	2452		actuary, under a confidentiality agreement, the necessary
2403	2453		actuarial data used by the pension system actuary to prepare the
2404	2454		proposed initial risk sharing valuation study; and
2405	2455		(2) not later than the 30th day after the date the
2406	2456		city's actuary receives the actuarial data:
2407	2457		(A) the city actuary, at the direction of the
2408	2458		city, shall provide a proposed initial risk sharing valuation study
2409	2459		to the pension system actuary; and
2410	2460		(B) the pension system actuary, at the direction
2411	2461		of the pension system, shall provide a proposed initial risk
2412	2462		sharing valuation study to the city actuary.
2413	2463		(c) If, after exchanging proposed initial risk sharing
2414	2464		valuation studies under Subsection (b)(2) of this section, it is
2415	2465		determined that the difference between the estimated city
2416	2466		contribution rate for any fiscal year recommended in the proposed
2417	2467		initial risk sharing valuation study prepared by the pension system
2418	2468		actuary and in the proposed initial risk sharing valuation study
2419	2469		prepared by the city actuary is:
2420	2470		(1) less than or equal to two percentage points, the
2421	2471		estimated city contribution rate for that fiscal year recommended
2422	2472		by the pension system actuary will be the estimated city
2423	2473		contribution rate for purposes of Section 9A(a)(5) of this article;
2424	2474		or
2425	2475		(2) greater than two percentage points, the city
2426	2476		actuary and the pension system actuary shall have 20 business days
2427	2477		to reconcile the difference and:
2428	2478		(A) if, as a result of reconciliation efforts
2429	2479		under this subdivision, the difference in any fiscal year is
2430	2480		reduced to less than or equal to two percentage points, the
2431	2481		estimated city contribution rate recommended by the pension system
2432	2482		actuary for that fiscal year will be the estimated city
2433	2483		contribution rate for purposes of Section 9A(a)(5) of this article;
2434	2484		or
2435	2485		(B) if, after 20 business days, the city actuary
2436	2486		and the pension system actuary are not able to reach a
2437	2487		reconciliation that reduces the difference to an amount less than
2438	2488		or equal to two percentage points for any fiscal year:
2439	2489		(i) the city actuary at the direction of the
2440	2490		city and the pension system actuary at the direction of the pension
2441	2491		system each shall deliver to the finance director of the city and
2442	2492		the executive director of the pension system a final initial risk
2443	2493		sharing valuation study with any agreed-to changes, marked as the
2444	2494		final initial risk sharing valuation study for each actuary; and
2445	2495		(ii) the finance director and the executive
2446	2496		director shall execute a joint addendum to the final initial risk
2447	2497		sharing valuation study that is a part of each final initial risk
2448	2498		sharing valuation study for all purposes and that reflects the
2449	2499		arithmetic average of the estimated city contribution rate for each
2450	2500		fiscal year in which the difference was greater than two percentage
2451	2501		points for purposes of Section 9A(a)(5) of this article, and for
2452	2502		reporting purposes the pension system may treat the pension system
2453	2503		actuary's initial risk sharing valuation study with the addendum as
2454	2504		the final initial risk sharing valuation study.
2455	2505		(d) In preparing the initial risk sharing valuation study,
2456	2506		the city actuary and pension system actuary shall:
2457	2507		(1) adjust the actuarial value of assets to be equal to
2458	2508		the market value of assets as of July 1, 2016;
2459	2509		(2) assume the issuance of planned pension obligation
2460	2510		bonds by December 31, 2017, in accordance with Subsection (j)(2) of
2461	2511		this section; and
2462	2512		(3) assume benefit and contribution changes
2463	2513		contemplated by this article as of the year 2017 effective date.
2464	2514		(e) If the city actuary does not prepare an initial risk
2465	2515		sharing valuation study for purposes of this section, the pension
2466	2516		system actuary's initial risk sharing valuation study will be used
2467	2517		as the final risk sharing valuation study for purposes of this
2468	2518		article unless the city did not prepare a proposed initial risk
2469	2519		sharing valuation study because the pension system actuary did not
2470	2520		provide the necessary actuarial data in a timely manner. If the
2471	2521		city did not prepare a proposed initial risk sharing valuation
2472	2522		study because the pension system actuary did not provide the
2473	2523		necessary actuarial data in a timely manner, the city actuary shall
2474	2524		have 60 days to prepare the proposed initial risk sharing valuation
2475	2525		study on receipt of the necessary information.
2476	2526		(f) If the pension system actuary does not prepare a
2477	2527		proposed initial risk sharing valuation study for purposes of this
2478	2528		section, the proposed initial risk sharing valuation study prepared
2479	2529		by the city actuary will be the final risk sharing valuation study
2480	2530		for purposes of this article.
2481	2531		(g) The city and the board may agree on a written transition
2482	2532		plan for resetting the corridor midpoint:
2483	2533		(1) if at any time the funded ratio is equal to or
2484	2534		greater than 100 percent; or
2485	2535		(2) for any fiscal year after the payoff year of the
2486	2536		legacy liability.
2487	2537		(h) If the city and the board have not entered into an
2488	2538		agreement described by Subsection (g) of this section in a given
2489	2539		fiscal year, the corridor midpoint will be the corridor midpoint
2490	2540		determined for the 31st fiscal year in the initial risk sharing
2491	2541		valuation study prepared in accordance with this section.
2492	2542		(i) If the city makes a contribution to the pension system
2493	2543		of at least $5 million more than the amount that would be required
2494	2544		by Section 9(a) of this article, a liability gain layer with the
2495	2545		same remaining amortization period as the legacy liability is
2496	2546		created and the corridor midpoint shall be decreased by the
2497	2547		amortized amount in each fiscal year covered by the liability gain
2498	2548		layer produced divided by the projected pensionable payroll.
2499	2549		(j) Notwithstanding any other provision of this article,
2500	2550		including Section 9F of this article:
2501	2551		(1) if the city fails to deliver the proceeds of
2502	2552		pension obligation bonds totaling $750 million on or before March
2503	2553		31, 2018, the board shall:
2504	2554		(A) except as provided by Paragraph (B) of this
2505	2555		subdivision, immediately rescind, prospectively, any or all
2506	2556		benefit changes made effective under S.B. No. 2190, Acts of the
2507	2557		85th Legislature, Regular Session, 2017, as of the year 2017
2508	2558		effective date; or
2509	2559		(B) reestablish the deadline for the delivery of
2510	2560		pension obligation bond proceeds, which may not be later than May
2511	2561		31, 2018, reserving the right to rescind the benefit changes
2512	2562		authorized by this subdivision if the bond proceeds are not
2513	2563		delivered by the reestablished deadline; and
2514	2564		(2) subject to Subsection (k) of this section, if the
2515	2565		board rescinds benefit changes under Subdivision (1) of this
2516	2566		subsection or pension obligation bond proceeds are not delivered on
2517	2567		or before December 31, 2017, the initial risk sharing valuation
2518	2568		study shall be prepared again and restated without assuming the
2519	2569		delivery of the pension obligation bond proceeds, the later
2520	2570		delivery of pension obligation bond proceeds, or the rescinded
2521	2571		benefit changes, as applicable, and the resulting city contribution
2522	2572		rate will become effective in the fiscal year following the
2523	2573		completion of the restated initial risk sharing valuation study.
2524	2574		(k) The restated initial risk sharing valuation study
2525	2575		required under Subsection (j)(2) of this section must be completed
2526	2576		at least 30 days before the start of the fiscal year:
2527	2577		(1) ending June 30, 2019, if the board does not
2528	2578		reestablish the deadline under Subsection (j)(1) of this section;
2529	2579		or
2530	2580		(2) immediately following the reestablished deadline,
2531	2581		if the board reestablishes the deadline under Subsection (j)(1) of
2532	2582		this section and the city fails to deliver the pension obligation
2533	2583		bond proceeds described by Subsection (j)(1) of this section by the
2534	2584		reestablished deadline.
2535	2585		Sec. 9C. ACTUARIAL EXPERIENCE STUDIES. (a) At least once
2536	2586		every four years, the pension system actuary at the direction of the
2537	2587		pension system shall conduct an actuarial experience study in
2538	2588		accordance with actuarial standards of practice. The actuarial
2539	2589		experience study required by this subsection must be completed not
2540	2590		later than September 30 of the year in which the study is required
2541	2591		to be conducted.
2542	2592		(b) Except as otherwise expressly provided by Sections
2543	2593		9A(a)(6)(A)-(I) of this article, actuarial assumptions and methods
2544	2594		used in the preparation of a risk sharing valuation study, other
2545	2595		than the initial risk sharing valuation study, shall be based on the
2546	2596		results of the most recent actuarial experience study.
2547	2597		(c) Not later than the 180th day before the date the board
2548	2598		may consider adopting any assumptions and methods for purposes of
2549	2599		Section 9A of this article, the pension system shall provide the
2550	2600		city actuary with a substantially final draft of the pension
2551	2601		system's actuarial experience study, including:
2552	2602		(1) all assumptions and methods recommended by the
2553	2603		pension system's actuary; and
2554	2604		(2) summaries of the reconciled actuarial data used in
2555	2605		creation of the actuarial experience study.
2556	2606		(d) Not later than the 60th day after the date the city
2557	2607		receives the final draft of the pension system's actuarial
2558	2608		experience study under Subsection (c) of this section, the city
2559	2609		actuary and pension system actuary shall confer and cooperate on
2560	2610		reconciling and producing a final actuarial experience study.
2561	2611		During the period prescribed by this subsection, the pension system
2562	2612		actuary may modify the recommended assumptions in the draft
2563	2613		actuarial experience study to reflect any changes to assumptions
2564	2614		and methods to which the pension system actuary and the city actuary
2565	2615		agree.
2566	2616		(e) At the city actuary's written request, the pension
2567	2617		system shall provide additional actuarial data used by the pension
2568	2618		system actuary to prepare the draft actuarial experience study,
2569	2619		provided that confidential data may only be provided subject to a
2570	2620		confidentiality agreement in which the city actuary agrees to
2571	2621		comply with the confidentiality provisions of Section 29 of this
2572	2622		article.
2573	2623		(f) The city actuary at the direction of the city shall
2574	2624		provide in writing to the pension system actuary and the pension
2575	2625		system:
2576	2626		(1) any assumptions and methods recommended by the
2577	2627		city actuary that differ from the assumptions and methods
2578	2628		recommended by the pension system actuary; and
2579	2629		(2) the city actuary's rationale for each method or
2580	2630		assumption the actuary recommends and determines to be consistent
2581	2631		with standards adopted by the Actuarial Standards Board.
2582	2632		(g) Not later than the 30th day after the date the pension
2583	2633		system actuary receives the city actuary's written recommended
2584	2634		assumptions and methods and rationale under Subsection (f) of this
2585	2635		section, the pension system shall provide a written response to the
2586	2636		city identifying any assumption or method recommended by the city
2587	2637		actuary that the pension system does not accept. If any assumption
2588	2638		or method is not accepted, the pension system shall recommend to the
2589	2639		city the names of three independent actuaries for purposes of this
2590	2640		section.
2591	2641		(h) An actuary may only be recommended, selected, or engaged
2592	2642		by the pension system as an independent actuary under this section
2593	2643		if the person:
2594	2644		(1) is not already engaged by the city, the pension
2595	2645		system, or any other fund or pension system authorized under
2596	2646		Article 6243e.2(1), Revised Statutes, or Chapter 88 (H.B. 1573),
2597	2647		Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h,
2598	2648		Vernon's Texas Civil Statutes), to provide actuarial services to
2599	2649		the city, the pension system, or another fund or pension system
2600	2650		referenced in this subdivision;
2601	2651		(2) is a member of the American Academy of Actuaries;
2602	2652		and
2603	2653		(3) has at least five years of experience as an actuary
2604	2654		working with one or more public retirement systems with assets in
2605	2655		excess of $1 billion.
2606	2656		(i) Not later than the 20th day after the date the city
2607	2657		receives the list of three independent actuaries under Subsection
2608	2658		(g) of this section, the city shall identify and the pension system
2609	2659		shall hire one of the listed independent actuaries on terms
2610	2660		acceptable to the city and the pension system to perform a scope of
2611	2661		work acceptable to the city and the pension system. The city and
2612	2662		the pension system each shall pay 50 percent of the cost of the
2613	2663		independent actuary engaged under this subsection. The city shall
2614	2664		be provided the opportunity to participate in any communications
2615	2665		between the independent actuary and the pension system concerning
2616	2666		the engagement, engagement terms, or performance of the terms of
2617	2667		the engagement.
2618	2668		(j) The independent actuary engaged under Subsection (i) of
2619	2669		this section shall receive on request from the city or the pension
2620	2670		system:
2621	2671		(1) the pension system's draft actuarial experience
2622	2672		study, including all assumptions and methods recommended by the
2623	2673		pension system actuary;
2624	2674		(2) summaries of the reconciled actuarial data used to
2625	2675		prepare the draft actuarial experience study;
2626	2676		(3) the city actuary's specific recommended
2627	2677		assumptions and methods together with the city actuary's written
2628	2678		rationale for each recommendation;
2629	2679		(4) the pension system actuary's written rationale for
2630	2680		its recommendations; and
2631	2681		(5) if requested by the independent actuary and
2632	2682		subject to a confidentiality agreement in which the independent
2633	2683		actuary agrees to comply with the confidentiality provisions of
2634	2684		this article, additional confidential actuarial data.
2635	2685		(k) Not later than the 30th day after the date the
2636	2686		independent actuary receives all the requested information under
2637	2687		Subsection (j) of this section, the independent actuary shall
2638	2688		advise the pension system and the city whether it agrees with either
2639	2689		the assumption or method recommended by the city actuary or the
2640	2690		corresponding method or assumption recommended by the pension
2641	2691		system actuary, together with the independent actuary's rationale
2642	2692		for making the determination. During the period prescribed by this
2643	2693		subsection, the independent actuary may discuss recommendations in
2644	2694		simultaneous consultation with the pension system actuary and the
2645	2695		city actuary.
2646	2696		(l) The pension system and the city may not seek any
2647	2697		information from any prospective independent actuary about
2648	2698		possible outcomes of the independent actuary's review.
2649	2699		(m) If an independent actuary has questions or concerns
2650	2700		regarding an engagement entered into under this section, the
2651	2701		independent actuary shall simultaneously consult with both the city
2652	2702		actuary and the pension system actuary regarding the questions or
2653	2703		concerns. This subsection does not limit the pension system's
2654	2704		authorization to take appropriate steps to complete the engagement
2655	2705		of the independent actuary on terms acceptable to both the pension
2656	2706		system and the city or to enter into a confidentiality agreement
2657	2707		with the independent actuary, if needed.
2658	2708		(n) If the board does not adopt an assumption or method
2659	2709		recommended by the city actuary to which the independent actuary
2660	2710		agrees, or recommended by the pension system actuary, the city
2661	2711		actuary is authorized to use that recommended assumption or method
2662	2712		in connection with preparation of a subsequent risk sharing
2663	2713		valuation study under Section 9A of this article until the next
2664	2714		actuarial experience study is conducted.
2665	2715		Sec. 9D. CITY CONTRIBUTION RATE WHEN ESTIMATED CITY
2666	2716		CONTRIBUTION RATE LOWER THAN CORRIDOR MIDPOINT; AUTHORIZATION FOR
2667	2717		CERTAIN ADJUSTMENTS. (a) This section governs the determination
2668	2718		of the city contribution rate applicable in a fiscal year if the
2669	2719		estimated city contribution rate is lower than the corridor
2670	2720		midpoint.
2671	2721		(b) If the funded ratio is:
2672	2722		(1) less than 90 percent, the city contribution rate
2673	2723		for the fiscal year equals the corridor midpoint; or
2674	2724		(2) equal to or greater than 90 percent and the city
2675	2725		contribution rate is:
2676	2726		(A) equal to or greater than the minimum
2677	2727		contribution rate, the estimated city contribution rate is the city
2678	2728		contribution rate for the fiscal year; or
2679	2729		(B) except as provided by Subsection (e) of this
2680	2730		section, less than the minimum contribution rate for the
2681	2731		corresponding fiscal year, the city contribution rate for the
2682	2732		fiscal year equals the minimum contribution rate achieved in
2683	2733		accordance with Subsection (c) of this section.
2684	2734		(c) For purposes of Subsection (b)(2)(B) of this section,
2685	2735		the following adjustments shall be applied sequentially to the
2686	2736		extent required to increase the estimated city contribution rate to
2687	2737		equal the minimum contribution rate:
2688	2738		(1) first, adjust the actuarial value of assets equal
2689	2739		to the current market value of assets, if making the adjustment
2690	2740		causes the city contribution rate to increase;
2691	2741		(2) second, under a written agreement between the city
2692	2742		and the board entered into under Section 27 of this article not
2693	2743		later than April 30 before the first day of the next fiscal year,
2694	2744		reduce the assumed rate of return;
2695	2745		(3) third, under a written agreement between the city
2696	2746		and the board entered into under Section 27 of this article no later
2697	2747		than April 30 before the first day of the next fiscal year,
2698	2748		prospectively restore all or part of any benefit reductions or
2699	2749		reduce increased employee contributions, in each case made after
2700	2750		the year 2017 effective date; and
2701	2751		(4) fourth, accelerate the payoff year of the existing
2702	2752		liability loss layers, including the legacy liability, by
2703	2753		accelerating the oldest liability loss layers first, to an
2704	2754		amortization period that is not less than 10 years from the first
2705	2755		day of the fiscal year beginning 12 months after the date of the
2706	2756		risk sharing valuation study in which the liability loss layer is
2707	2757		first recognized.
2708	2758		(d) If the funded ratio is:
2709	2759		(1) equal to or greater than 100 percent:
2710	2760		(A) all existing liability layers, including the
2711	2761		legacy liability, are considered fully amortized and paid;
2712	2762		(B) the applicable fiscal year is the payoff year
2713	2763		for the legacy liability; and
2714	2764		(C) for each fiscal year subsequent to the fiscal
2715	2765		year described by Paragraph (B) of this subdivision, the corridor
2716	2766		midpoint shall be determined as provided by Section 9B(g) of this
2717	2767		article; and
2718	2768		(2) greater than 100 percent in a written agreement
2719	2769		between the city and the pension system under Section 27 of this
2720	2770		article, the pension system may reduce member contributions or
2721	2771		increase pension benefits if, as a result of the action:
2722	2772		(A) the funded ratio is not less than 100
2723	2773		percent; and
2724	2774		(B) the city contribution rate is not more than
2725	2775		the minimum contribution rate.
2726	2776		(e) Except as provided by Subsection (f) of this section, if
2727	2777		an agreement under Subsection (d) of this section is not reached on
2728	2778		or before April 30 before the first day of the next fiscal year,
2729	2779		before the first day of the next fiscal year the board shall reduce
2730	2780		member contributions and implement or increase cost of living
2731	2781		adjustments, but only to the extent that the city contribution rate
2732	2782		is set at or below the minimum contribution rate and the funded
2733	2783		ratio is not less than 100 percent.
2734	2784		(f) If any member contribution reduction or benefit
2735	2785		increase under Subsection (e) of this section has occurred within
2736	2786		the previous three fiscal years, the board may not make additional
2737	2787		adjustments to benefits, and the city contribution rate must be set
2738	2788		to equal the minimum contribution rate.
2739	2789		Sec. 9E. CITY CONTRIBUTION RATE WHEN ESTIMATED CITY
2740	2790		CONTRIBUTION RATE EQUAL TO OR GREATER THAN CORRIDOR MIDPOINT;
2741	2791		AUTHORIZATION FOR CERTAIN ADJUSTMENTS. (a) This section governs
2742	2792		the determination of the city contribution rate in a fiscal year
2743	2793		when the estimated city contribution rate is equal to or greater
2744	2794		than the corridor midpoint.
2745	2795		(b) If the estimated city contribution rate is:
2746	2796		(1) less than or equal to the maximum contribution
2747	2797		rate for the corresponding fiscal year, the estimated city
2748	2798		contribution rate is the city contribution rate; or
2749	2799		(2) except as provided by Subsection (d) or (e) of this
2750	2800		section, greater than the maximum contribution rate for the
2751	2801		corresponding fiscal year, the city contribution rate equals the
2752	2802		corridor midpoint achieved in accordance with Subsection (c) of
2753	2803		this section.
2754	2804		(c) For purposes of Subsection (b)(2) of this section, the
2755	2805		following adjustments shall be applied sequentially to the extent
2756	2806		required to decrease the estimated city contribution rate to equal
2757	2807		the corridor midpoint:
2758	2808		(1) first, if the payoff year of the legacy liability
2759	2809		was accelerated under Section 9D(c) of this article, extend the
2760	2810		payoff year of existing liability loss layers, by extending the
2761	2811		most recent loss layers first, to a payoff year not later than 30
2762	2812		years from the first day of the fiscal year beginning 12 months
2763	2813		after the date of the risk sharing valuation study in which the
2764	2814		liability loss layer is first recognized; and
2765	2815		(2) second, adjust the actuarial value of assets to
2766	2816		the current market value of assets, if making the adjustment causes
2767	2817		the city contribution rate to decrease.
2768	2818		(d) If the city contribution rate after adjustment under
2769	2819		Subsection (c) of this section is greater than the third quarter
2770	2820		line rate:
2771	2821		(1) the city contribution rate equals the third
2772	2822		quarter line rate; and
2773	2823		(2) to the extent necessary to comply with Subdivision
2774	2824		(1) of this subsection, the city and the board shall enter into a
2775	2825		written agreement under Section 27 of this article to increase
2776	2826		member contributions and make other benefits or plan changes not
2777	2827		otherwise prohibited by applicable federal law or regulations.
2778	2828		(e) If an agreement under Subsection (d)(2) of this section
2779	2829		is not reached on or before April 30 before the first day of the next
2780	2830		fiscal year, before the start of the next fiscal year to which the
2781	2831		city contribution rate would apply, the board, to the extent
2782	2832		necessary to set the city contribution rate equal to the third
2783	2833		quarter line rate, shall:
2784	2834		(1) increase member contributions and decrease
2785	2835		cost-of-living adjustments;
2786	2836		(2) increase the normal retirement age; or
2787	2837		(3) take any combination of the actions authorized
2788	2838		under Subdivisions (1) and (2) of this subsection.
2789	2839		(f) If the city contribution rate remains greater than the
2790	2840		corridor midpoint in the third fiscal year after adjustments are
2791	2841		made in accordance with an agreement under Subsection (d)(2) of
2792	2842		this section, in that fiscal year the city contribution rate equals
2793	2843		the corridor midpoint achieved in accordance with Subsection (g) of
2794	2844		this section.
2795	2845		(g) The city contribution rate must be set at the corridor
2796	2846		midpoint under Subsection (f) of this section by:
2797	2847		(1) in the risk sharing valuation study for the third
2798	2848		fiscal year described by Subsection (f) of this section, adjusting
2799	2849		the actuarial value of assets to equal the current market value of
2800	2850		assets, if making the adjustment causes the city contribution rate
2801	2851		to decrease; and
2802	2852		(2) under a written agreement entered into between the
2803	2853		city and the board under Section 27 of this article:
2804	2854		(A) increasing member contributions; and
2805	2855		(B) making any other benefits or plan changes not
2806	2856		otherwise prohibited by applicable federal law or regulations.
2807	2857		(h) If an agreement under Subsection (g)(2) of this section
2808	2858		is not reached on or before April 30 before the first day of the next
2809	2859		fiscal year, before the start of the next fiscal year, the board, to
2810	2860		the extent necessary to set the city contribution rate equal to the
2811	2861		corridor midpoint, shall:
2812	2862		(1) increase member contributions and decrease
2813	2863		cost-of-living adjustments;
2814	2864		(2) increase the normal retirement age; or
2815	2865		(3) take any combination of the actions authorized
2816	2866		under Subdivisions (1) and (2) of this subsection.
2817	2867		Sec. 9F. UNILATERAL DECISIONS AND ACTIONS PROHIBITED.
2818	2868		(a) Notwithstanding Section 6(f) or 5B of this article, the board
2819	2869		may not change, terminate, or modify Sections 9 through 9E of this
2820	2870		article.
2821	2871		(b) No unilateral decision or action by the board is binding
2822	2872		on the city and no unilateral decision or action by the city is
2823	2873		binding on the pension system with respect to the application of
2824	2874		Sections 9 through 9E of this article unless expressly provided by a
2825	2875		provision of those sections. Nothing in this subsection is
2826	2876		intended to limit the powers or authority of the board.
2827	2877		Sec. 9G. STATE PENSION REVIEW BOARD; REPORT. (a) After
2828	2878		preparing a final risk sharing valuation study under Section 9A or
2829	2879		9B of this article, the pension system and the city shall jointly
2830	2880		submit a copy of the study or studies, as appropriate, to the State
2831	2881		Pension Review Board for a determination that the pension system
2832	2882		and city are in compliance with this article.
2833	2883		(b) Not later than the 30th day after the date an action is
2834	2884		taken under Section 9D or 9E of this article, the pension system
2835	2885		shall submit a report to the State Pension Review Board regarding
2836	2886		any actions taken under those sections.
2837	2887		(c) The State Pension Review Board shall notify the
2838	2888		governor, the lieutenant governor, the speaker of the house of
2839	2889		representatives, and the legislative committees having principal
2840	2890		jurisdiction over legislation governing public retirement systems
2841	2891		if the State Pension Review Board determines the pension system or
2842	2892		the city is not in compliance with Sections 9 through 9F of this
2843	2893		article.
2844	2894		SECTION 2.12. Article 6243g-4, Revised Statutes, is amended
2845	2895		by adding Section 10A to read as follows:
2846	2896		Sec. 10A. REPORT ON INVESTMENTS BY INDEPENDENT INVESTMENT
2847	2897		CONSULTANT. (a) At least once every three years, the board shall
2848	2898		hire an independent investment consultant, including an
2849	2899		independent investment consulting firm, to conduct a review of
2850	2900		pension system investments and submit a report to the board and the
2851	2901		city concerning that review. The independent investment consultant
2852	2902		shall review and report on at least the following:
2853	2903		(1) the pension system's compliance with its
2854	2904		investment policy statement, ethics policies, including policies
2855	2905		concerning the acceptance of gifts, and policies concerning insider
2856	2906		trading;
2857	2907		(2) the pension system's asset allocation, including a
2858	2908		review and discussion of the various risks, objectives, and
2859	2909		expected future cash flows;
2860	2910		(3) the pension system's portfolio structure,
2861	2911		including the system's need for liquidity, cash income, real
2862	2912		return, and inflation protection and the active, passive, or index
2863	2913		approaches for different portions of the portfolio;
2864	2914		(4) investment manager performance reviews and an
2865	2915		evaluation of the processes used to retain and evaluate managers;
2866	2916		(5) benchmarks used for each asset class and
2867	2917		individual manager;
2868	2918		(6) evaluation of fees and trading costs;
2869	2919		(7) evaluation of any leverage, foreign exchange, or
2870	2920		other hedging transaction; and
2871	2921		(8) an evaluation of investment-related disclosures
2872	2922		in the pension system's annual reports.
2873	2923		(b) When the board retains an independent investment
2874	2924		consultant under this section, the pension system may require the
2875	2925		consultant to agree in writing to maintain the confidentiality of:
2876	2926		(1) information provided to the consultant that is
2877	2927		reasonably necessary to conduct a review under this section; and
2878	2928		(2) any nonpublic information provided for the pension
2879	2929		system for the review.
2880	2930		(c) The costs for the investment report required by this
2881	2931		section must be paid from the fund.
2882	2932		SECTION 2.13. Sections 11(a) and (c), Article 6243g-4,
2883	2933		Revised Statutes, are amended to read as follows:
2884	2934		(a) A member who returns to service after an interruption in
2885	2935		service is eligible for [entitled to] credit for the previous
2886	2936		service to the extent provided by Section 17 or 19 of this article.
2887	2937		(c) A member may not have any service credited for unused
2888	2938		sick leave, vacation pay, [or] accumulated overtime, or equivalent
2889	2939		types of pay until the date the member retires, at which time the
2890	2940		member may apply some or all of the service to satisfy the
2891	2941		requirements for retirement, although the member otherwise could
2892	2942		not meet the service requirement without the credit.
2893	2943		SECTION 2.14. Section 12, Article 6243g-4, Revised
2894	2944		Statutes, is amended by amending Subsections (a), (b), (c), (d),
2895	2945		(e), (h), and (i) and adding Subsections (b-1), (b-2), (b-3),
2896	2946		(c-1), (c-2), (j), (k), (l), and (m) to read as follows:
2897	2947		(a) A member who separates from service after attaining
2898	2948		normal retirement age [earning 20 or more years of service] is
2899	2949		eligible to receive a monthly service pension, beginning in the
2900	2950		month of separation from service. A member who separates from
2901	2951		service as a classified police officer with the city after November
2902	2952		23, 1998, after earning 10 or more but less than 20 years of service
2903	2953		in [any of] the [city's] pension system [systems] and who complies
2904	2954		with all applicable requirements of Section 19 of this article is
2905	2955		eligible to receive a monthly service pension, beginning in the
2906	2956		month the individual attains normal retirement [60 years of] age.
2907	2957		An individual may not receive a pension under this article while
2908	2958		still an active member[, except as provided by Subsection (f) of
2909	2959		this section]. All service pensions end with the month in which the
2910	2960		retired member dies. The city shall supply all personnel,
2911	2961		financial, and payroll records necessary to establish the member's
2912	2962		eligibility for a benefit, the member's credited service, and the
2913	2963		amount of the benefit. The city must provide those records in the
2914	2964		format specified by the pension system.
2915	2965		(b) Except as otherwise provided by this section, including
2916	2966		Subsection (b-3) of this section, the monthly service pension of a
2917	2967		member who:
2918	2968		(1) is hired before October 9, 2004, including a
2919	2969		member hired before October 9, 2004, who involuntarily separated
2920	2970		from service but has been retroactively reinstated under
2921	2971		arbitration, civil service, or a court ruling, [that becomes due
2922	2972		after May 1, 2001,] is equal to the sum of:
2923	2973		(A) 2.75 percent of the member's final average
2924	2974		[total direct] pay multiplied by the member's years or partial
2925	2975		years of service [or, if the member retired before November 24,
2926	2976		1998, 2.75 percent of the member's base salary,] for [each of] the
2927	2977		member's first 20 years of service; and
2928	2978		(B) [, plus an additional] two percent of the
2929	2979		member's final average [total direct] pay multiplied by the
2930	2980		member's years or partial years of service for the member's years of
2931	2981		service in excess of the 20 years of service described by Paragraph
2932	2982		(A) of this subdivision; or
2933	2983		(2) except as provided by Subdivision (1) of this
2934	2984		subsection and subject to Subsection (b-3) of this section, is
2935	2985		hired or rehired as an active member on or after October 9, 2004, is
2936	2986		equal to the sum of:
2937	2987		(A) 2.25 percent of the member's final average
2938	2988		pay multiplied by the member's years or partial years of service for
2939	2989		the member's first 20 years of service; and
2940	2990		(B) two percent of the member's final average pay
2941	2991		multiplied by the member's years or partial years of service in
2942	2992		excess of 20 years of service described by Paragraph (A) of this
2943	2993		subdivision [for each of the member's subsequent years of service,
2944	2994		computed to the nearest one-twelfth of a year].
2945	2995		(b-1) A member who [separates from service after November
2946	2996		23, 1998, including a member who was a DROP participant, and] begins
2947	2997		to receive a monthly service pension under Subsection (b)(1) of
2948	2998		this section shall also receive a one-time lump-sum payment of
2949	2999		$5,000 at the same time the first monthly pension payment is made.
2950	3000		The lump-sum payment under this subsection is not available to a
2951	3001		member who has previously received a $5,000 payment under this
2952	3002		section or Section 16 of this article. A member described by
2953	3003		Subsection (b)(2) of this section may not receive the lump-sum
2954	3004		payment described by this subsection.
2955	3005		(b-2) For purposes of Subsections (b) and (b-1) of this
2956	3006		section, partial years shall be computed to the nearest one-twelfth
2957	3007		of a year.
2958	3008		(b-3) A member's monthly service pension determined under
2959	3009		Subsection (b)(2) of this section may not exceed 80 percent of the
2960	3010		member's final average pay.
2961	3011		(c) Subject to Subsection (c-2) of this section, beginning
2962	3012		with the fiscal year ending June 30, 2021, the [The] pension payable
2963	3013		to a [each] retired member or survivor who is 55 years of age or
2964	3014		older as of April 1 of the applicable fiscal year, a member or
2965	3015		survivor who received benefits or survivor benefits before June 8,
2966	3016		1995, or a survivor of an active member who dies from a cause
2967	3017		connected with the performance of the member's duties [of the
2968	3018		pension system] shall be adjusted annually, effective April 1 of
2969	3019		each year, upward at a rate equal to the most recent five fiscal
2970	3020		years' smoothed return, as determined by the pension system
2971	3021		actuary, minus 500 basis points [two-thirds of any percentage
2972	3022		increase in the Consumer Price Index for All Urban Consumers for the
2973	3023		preceding year. The amount of the annual adjustment may not be less
2974	3024		than three percent or more than eight percent of the pension being
2975	3025		paid immediately before the adjustment, notwithstanding a greater
2976	3026		or lesser increase in the consumer price index].
2977	3027		(c-1) Subject to Subsection (c-2) of this section, for the
2978	3028		pension system's fiscal years ending June 30, 2018, June 30, 2019,
2979	3029		and June 30, 2020, the pension payable to each retired member or
2980	3030		survivor who is 70 years of age or older shall be adjusted annually,
2981	3031		effective April 1 of each year, upward at a rate equal to the most
2982	3032		recent five fiscal years' smoothed return, as determined by the
2983	3033		pension system actuary, minus 500 basis points.
2984	3034		(c-2) The percentage rate prescribed by Subsections (c) and
2985	3035		(c-1) of this section may not be less than zero percent or more than
2986	3036		four percent, irrespective of the return rate of the pension
2987	3037		system's investment portfolio.
2988	3038		(d) A retired member who receives a service pension under
2989	3039		this article is eligible [entitled] to receive an additional amount
2990	3040		each month equal to $150, beginning on the later of the date the
2991	3041		retired member's pension begins or the date the first monthly
2992	3042		payment becomes due after June 18, 2001, and continuing until the
2993	3043		end of the month in which the retired member dies. This amount is
2994	3044		intended to defray the retired member's group medical insurance
2995	3045		costs and will be paid directly by the fund to the retired member
2996	3046		for the retired member's lifetime.
2997	3047		(e) At the end of each calendar year beginning after 1998,
2998	3048		and subject to the conditions provided by this subsection, the
2999	3049		pension system shall make a 13th benefit payment to each member or
3000	3050		survivor who is hired or rehired before October 9, 2004, including a
3001	3051		member hired or rehired before October 9, 2004, who was reinstated
3002	3052		under arbitration, civil service, or a court ruling after that
3003	3053		date, and [person] who is receiving a service pension. The amount
3004	3054		of the 13th payment shall be the same as the last monthly payment
3005	3055		received by the retiree or survivor before issuance of the payment,
3006	3056		except the payment received by any person who has been in pay status
3007	3057		for less than 12 months shall be for a prorated amount determined by
3008	3058		dividing the amount of the last payment received by 12 and
3009	3059		multiplying this amount by the number of months the person has been
3010	3060		in pay status. The 13th payment may be made only for those calendar
3011	3061		years in which the pension system's funded ratio is 120 percent or
3012	3062		greater[:
3013	3063		[(1) the assets held by the fund will equal or exceed
3014	3064		its liabilities after the 13th payment is made;
3015	3065		[(2) the rate of return on the fund's assets exceeded
3016	3066		9.25 percent for the last fiscal year ending before the payment; and
3017	3067		[(3) the payment will not cause an increase in the
3018	3068		contribution the city would have been required to make if the 13th
3019	3069		payment had not been made].
3020	3070		(h) Final average [Average total direct] pay for a member
3021	3071		who retires after participating in a phase-down program in which
3022	3072		the member receives a periodic payment that is generated from the
3023	3073		member's accumulated sick time, vacation time, and overtime
3024	3074		balances shall be based on the final average pay the member received
3025	3075		on the earlier of the date:
3026	3076		(1) immediately preceding the date the member began
3027	3077		phase-down participation; or
3028	3078		(2) if the member began DROP participation on or after
3029	3079		the year 2017 effective date, the member began participation in
3030	3080		DROP [highest pay period, excluding any pay for overtime work, in
3031	3081		the periods during which the member worked full-time before
3032	3082		participating in the phase-down program].
3033	3083		(i) The computation of final average [total direct] pay
3034	3084		shall be made in accordance with procedures and policies adopted by
3035	3085		the board.
3036	3086		(j) A member participating in the phase-down program,
3037	3087		defined in the 2011 labor agreement between the city and the police
3038	3088		officers' union, who has separated from service is eligible to
3039	3089		receive a monthly service pension as if the member had attained
3040	3090		normal retirement age. Notwithstanding any other law, a member
3041	3091		participating in option A or B of the phase-down program whose
3042	3092		effective date of entry into DROP is on or before the year 2017
3043	3093		effective date is, on exiting the phase-down program and separating
3044	3094		from service, eligible to receive a monthly service pension equal
3045	3095		to the amount credited to the member's DROP account under Section
3046	3096		14(d) of this article immediately before the member separated from
3047	3097		service.
3048	3098		(k) If a member is hired on or after October 9, 2004, the
3049	3099		member may elect to receive a partial lump-sum optional payment
3050	3100		equal to not more than 20 percent of the actuarial value of the
3051	3101		member's accrued pension at retirement. The lump-sum payment under
3052	3102		this subsection shall be actuarially neutral. Notwithstanding any
3053	3103		other law, if a member elects to receive a lump-sum payment under
3054	3104		this subsection, the value of the member's monthly service pension
3055	3105		shall be reduced actuarially to reflect the lump-sum payment.
3056	3106		(l) A member who is receiving workers' compensation
3057	3107		payments or who has received workers' compensation and subsequently
3058	3108		retires or begins participation in DROP will have the member's
3059	3109		pension or DROP benefit, as applicable, calculated on the pay that
3060	3110		the member would have received had the member not been receiving
3061	3111		workers' compensation benefits.
3062	3112		(m) For a member who is promoted or appointed to a position
3063	3113		above the rank of captain on or after the year 2017 effective date,
3064	3114		the member's monthly service pension and member contributions shall
3065	3115		be based on, as determined by the board:
3066	3116		(1) the member's pay for the position the member held
3067	3117		immediately before being promoted or appointed; or
3068	3118		(2) the pay of the highest civil rank for classified
3069	3119		police officers for those members who have no prior service with the
3070	3120		city, which pay must be calculated based on the three-year average
3071	3121		prior to retirement.
3072	3122		SECTION 2.15. Section 14, Article 6243g-4, Revised
3073	3123		Statutes, is amended by amending Subsections (b), (c), (d), (e),
3074	3124		(f-1), (h), (i), (k), and (l) and adding Subsections (c-1) and (c-2)
3075	3125		to read as follows:
3076	3126		(b) An active member who was hired before October 9, 2004,
3077	3127		including a member hired before October 9, 2004, who has been
3078	3128		reinstated under arbitration, civil service, or a court ruling
3079	3129		after that date, and has at least 20 years of service with the
3080	3130		police department may file with the pension system an election to
3081	3131		participate in DROP and receive a DROP benefit instead of the
3082	3132		standard form of pension provided by this article as of the date the
3083	3133		active member attained 20 years of service. The election may be
3084	3134		made, under procedures established by the board, by an eligible
3085	3135		active member who has attained the required years of service. A
3086	3136		DROP election that is made and accepted by the board may not be
3087	3137		revoked [before the member's separation from service].
3088	3138		(c) The monthly service pension or [and] death benefits of
3089	3139		an active member who is a DROP participant that were accrued under
3090	3140		this article as it existed immediately before the year 2017
3091	3141		effective date remain accrued.
3092	3142		(c-1) The monthly service pension or death benefits of an
3093	3143		active member who becomes a DROP participant on or after the year
3094	3144		2017 effective date will be determined as if the [active] member had
3095	3145		separated from service and begun receiving a pension on the
3096	3146		effective date of the member's DROP election and the[. The active]
3097	3147		member does not retire but does not accrue additional service
3098	3148		credit beginning on the effective date of the member's entry into
3099	3149		DROP.
3100	3150		(c-2) For a member who exits DROP on or after the year 2017
3101	3151		effective date:
3102	3152		(1) any [the election, and] increases in the member's
3103	3153		pay that occur on or after the effective date of the member's entry
3104	3154		into DROP [that date] may not be used in computing the [active]
3105	3155		member's monthly service pension; and
3106	3156		(2) any[, except as provided by Subsection (l) of this
3107	3157		section, but] cost-of-living adjustments that occur on or after the
3108	3158		effective date of the member's entry into DROP [that date] and that
3109	3159		otherwise would be applicable to the pension will not be made during
3110	3160		the time the member participates in DROP.
3111	3161		(d) The member's DROP benefit is determined as provided by
3112	3162		this subsection and Subsection (e) of this section. Each month an
3113	3163		amount equal to the monthly service pension the active member would
3114	3164		have been eligible [entitled] to receive if the active member had
3115	3165		separated from service on the effective date of entry into DROP,
3116	3166		less any amount that is intended to help defray the active member's
3117	3167		group medical insurance costs as described by Section 12(d) of this
3118	3168		article, shall be credited to a notional DROP account for the active
3119	3169		member[, and each month an amount equal to the monthly
3120	3170		contributions the active member makes to the fund on and after the
3121	3171		effective date of entry into DROP also shall be credited to the same
3122	3172		notional DROP account]. In any year in which a 13th payment is made
3123	3173		to retired members under Section 12(e) of this article, an amount
3124	3174		equal to the amount of the 13th payment that would have been made to
3125	3175		the DROP participant if the DROP participant had retired on the date
3126	3176		of DROP entry will be credited to the DROP account.
3127	3177		(e) As of the end of each month an amount is credited to each
3128	3178		active member's notional DROP account at the rate of one-twelfth of
3129	3179		a hypothetical earnings rate on amounts in the account. The
3130	3180		hypothetical earnings rate is determined for each calendar year
3131	3181		based on the compounded average of the aggregate annual rate of
3132	3182		return on investments of the pension system for the five
3133	3183		consecutive fiscal years ending June 30 preceding the calendar year
3134	3184		to which the earnings rate applies, multiplied by 65 percent. The
3135	3185		hypothetical earnings rate may not be less than 2.5 percent [zero].
3136	3186		(f-1) If a DROP participant separates from service due to
3137	3187		death, [and] the participant's surviving spouse is eligible [person
3138	3188		entitled] to receive benefits under Sections 16 and 16A of this
3139	3189		article and the surviving spouse may elect to receive [does not
3140	3190		revoke the DROP election,] the DROP benefit [may be received] in the
3141	3191		form of an additional annuity over the life expectancy of the
3142	3192		surviving spouse.
3143	3193		(h) Instead of beginning to receive a service pension on
3144	3194		separation from service in accordance with Section 12 of this
3145	3195		article, a retired member who is a DROP participant may elect to
3146	3196		have part or all of the amount that would otherwise be paid as a
3147	3197		monthly service pension, less any amount required to pay the
3148	3198		retired member's share of group medical insurance costs, credited
3149	3199		to a DROP account, in which case the additional amounts will become
3150	3200		eligible to be credited with hypothetical earnings in the same
3151	3201		manner as the amounts described by Subsection (g) of this section.
3152	3202		On and after the year 2017 effective date, additional amounts may
3153	3203		not be credited to a DROP account under this subsection. Any
3154	3204		amounts credited under this subsection before the year 2017
3155	3205		effective date shall remain accrued in a retired member's DROP
3156	3206		account.
3157	3207		(i) A retired member who has not attained age 70-1/2,
3158	3208		whether or not a DROP participant before retirement, may elect to
3159	3209		have part or all of an amount equal to the monthly service pension
3160	3210		the retired member would otherwise be entitled to receive, less any
3161	3211		amount required to pay the retired member's share of group medical
3162	3212		insurance costs, credited to a DROP account, in which case the
3163	3213		amounts will become eligible to be credited with hypothetical
3164	3214		earnings in the same manner as the amounts described by Subsection
3165	3215		(g) of this section. On and after the year 2017 effective date,
3166	3216		additional amounts may not be credited to a DROP account under this
3167	3217		subsection. Any amounts credited under this subsection before the
3168	3218		year 2017 effective date shall remain accrued in a retired member's
3169	3219		DROP account [A retired member who has elected to have monthly
3170	3220		service pension benefits credited to a DROP account under this
3171	3221		subsection or Subsection (h) of this section may direct that the
3172	3222		credits stop and the monthly service pension resume at any time.
3173	3223		However, a retired member who stops the credits at any time after
3174	3224		September 1, 1999, may not later resume the credits].
3175	3225		(k) If a retired member who is [or was] a DROP participant is
3176	3226		rehired as an employee of the police department, any pension or DROP
3177	3227		distribution that was being paid shall be suspended and the monthly
3178	3228		amount described by Subsection (d) of this section will again begin
3179	3229		to be credited to the DROP account while the member continues to be
3180	3230		an employee. If the member's DROP account has been completely
3181	3231		distributed, a new notional account may not [will] be created and
3182	3232		the monthly amount described by Subsection (d) of this section may
3183	3233		not be credited to a DROP account on behalf of the member [to
3184	3234		receive the member's monthly credits. If a retired member who was
3185	3235		never a DROP participant is rehired as an employee of the police
3186	3236		department, that member shall be eligible to elect participation in
3187	3237		DROP on the same basis as any other member].
3188	3238		(l) The maximum number of years an active member may
3189	3239		participate in DROP is 20 years. Except as provided by this
3190	3240		subsection, after the DROP participant has reached the maximum
3191	3241		number of years of DROP participation prescribed by this
3192	3242		subsection, including DROP participants with 20 years or more in
3193	3243		DROP on or before the year 2017 effective date, the DROP participant
3194	3244		may not receive the monthly service pension that was credited to a
3195	3245		notional DROP account but may receive the hypothetical earnings
3196	3246		rate stated in Subsection (e) of this section. Notwithstanding the
3197	3247		preceding, a member's DROP account balance before the year 2017
3198	3248		effective date may not be reduced under the preceding provisions of
3199	3249		this subsection [The DROP account of each DROP participant who was
3200	3250		an active member on May 1, 2001, shall be recomputed and adjusted,
3201	3251		effective on that date, to reflect the amount that would have been
3202	3252		credited to the account if the member's pension had been computed
3203	3253		based on 2.75 percent of the member's average total direct pay, or
3204	3254		base pay if applicable, for each of the member's first 20 years of
3205	3255		service. The DROP account adjustment shall also include the
3206	3256		assumed earnings that would have been credited to the account if the
3207	3257		2.75 percent multiplier for the first 20 years of service had been
3208	3258		in effect from the time the member became a DROP participant].
3209	3259		SECTION 2.16. Section 15, Article 6243g-4, Revised
3210	3260		Statutes, is amended by amending Subsections (a), (b), (c), (d),
3211	3261		(e), and (i) and adding Subsections (a-1), (c-1), (l), (m), and (n)
3212	3262		to read as follows:
3213	3263		(a) An active member who becomes totally and permanently
3214	3264		incapacitated for the performance of the member's duties as a
3215	3265		result of a bodily injury received in, or illness caused by, the
3216	3266		performance of those duties shall, on presentation to the board of
3217	3267		proof of total and permanent incapacity, be retired and shall
3218	3268		receive an immediate duty-connected disability pension equal to:
3219	3269		(1) for members hired or rehired before October 9,
3220	3270		2004, the greater of 55 percent of the member's final average [total
3221	3271		direct] pay at the time of retirement or the member's accrued
3222	3272		service pension; or
3223	3273		(2) for members hired or rehired on or after October 9,
3224	3274		2004, the greater of 45 percent of the member's:
3225	3275		(A) final average pay at the time of retirement;
3226	3276		or
3227	3277		(B) accrued service pension.
3228	3278		(a-1) If the injury or illness described by Subsection (a)
3229	3279		of this section involves a traumatic event that directly causes an
3230	3280		immediate cardiovascular condition resulting in a total
3231	3281		disability, the member is eligible for a duty-connected disability
3232	3282		pension. A disability pension granted by the board shall be paid to
3233	3283		the member for the remainder of the member's life, [or for] as long
3234	3284		as the incapacity remains, subject to Subsection (e) of this
3235	3285		section. If a member is a DROP participant at the commencement of
3236	3286		the member's disability, the member shall have the option of
3237	3287		receiving the DROP balance in any manner that is approved by the
3238	3288		board and that satisfies the requirements of Section 401(a)(9) of
3239	3289		the code and Treasury Regulation Section 1.104-1(b) (26 C.F.R.
3240	3290		Section 1.104-1) and is otherwise available to any other member
3241	3291		under this article.
3242	3292		(b) A member [with 10 years or more of credited service] who
3243	3293		becomes totally and permanently incapacitated for the performance
3244	3294		of the member's duties and is not eligible for either an immediate
3245	3295		service pension or a duty-connected disability pension is eligible
3246	3296		for an immediate monthly pension computed in the same manner as a
3247	3297		service retirement pension but based on final average [total
3248	3298		direct] pay and service accrued to the date of the disability. The
3249	3299		pension under this subsection may not be less than:
3250	3300		(1) for members hired before October 9, 2004,
3251	3301		including a member who involuntarily separated from service but has
3252	3302		been retroactively reinstated under arbitration, civil service, or
3253	3303		a court ruling, 27.5 percent of the member's final average [total
3254	3304		direct] pay; or
3255	3305		(2) except as provided by Subdivision (1) of this
3256	3306		subsection, for members hired or rehired on or after October 9,
3257	3307		2004, 22.5 percent of the member's final average pay.
3258	3308		(c) A member hired or rehired before October 9, 2004, who
3259	3309		becomes eligible [entitled] to receive a disability pension after
3260	3310		November 23, 1998, is eligible [entitled] to receive:
3261	3311		(1) subject to Subsection (c-1) of this section, a
3262	3312		one-time lump-sum payment of $5,000 at the same time the first
3263	3313		monthly disability pension payment is made, but only if the member
3264	3314		has not previously received a $5,000 payment under this section or
3265	3315		Section 12 of this article; and
3266	3316		(2) [. The retired member shall also receive] an
3267	3317		additional amount each month equal to $150, beginning on the later
3268	3318		of the date the pension begins or the date the first monthly payment
3269	3319		becomes due after June 18, 2001, and continuing as long as the
3270	3320		disability pension continues, to help defray the cost of group
3271	3321		medical insurance.
3272	3322		(c-1) For any year in which a 13th payment is made to retired
3273	3323		members under Section 12(e) of this article, a 13th payment,
3274	3324		computed in the same manner and subject to the same conditions,
3275	3325		shall also be paid to members who have retired under this section.
3276	3326		(d) A person may not receive a disability pension unless the
3277	3327		person files with the board an application for a disability pension
3278	3328		not later than 180 days after the date of separation from service,
3279	3329		at which time the board shall have the person examined, not later
3280	3330		than the 90th day after the date the member files the application,
3281	3331		by a physician or physicians chosen and compensated by the board.
3282	3332		The physician shall make a report and recommendations to the board
3283	3333		regarding the extent of any disability and whether any disability
3284	3334		that is diagnosed is a duty-connected disability. Except as
3285	3335		provided by Subsection (j) of this section, a person may not receive
3286	3336		a disability pension for an injury received or illness incurred
3287	3337		after separation from service. In accordance with Section 6(g) of
3288	3338		this article, the board may, through its presiding officer, issue
3289	3339		process, administer oaths, examine witnesses, and compel witnesses
3290	3340		to testify as to any matter affecting retirement, disability, or
3291	3341		death benefits under any pension plan within the pension system.
3292	3342		(e) A retired member who has been retired for disability is
3293	3343		subject at all times to reexamination by a physician chosen and
3294	3344		compensated by the board and shall submit to further examination as
3295	3345		the board may require. If a retired member refuses to submit to an
3296	3346		examination, the board shall [may] order the payments stopped. If a
3297	3347		retired member who has been receiving a disability pension under
3298	3348		this section recovers so that in the opinion of the board the
3299	3349		retired member is able to perform the usual and customary duties
3300	3350		formerly performed for the police department, and the retired
3301	3351		member is reinstated or offered reinstatement to the position, or
3302	3352		hired by another law enforcement agency to a comparable position
3303	3353		[reasonably comparable in rank and responsibility to the position,
3304	3354		held at the time of separation from service], the board shall order
3305	3355		the member's disability pension stopped. A member may apply for a
3306	3356		normal pension benefit, if eligible, if the member's disability
3307	3357		benefit payments are stopped by the board under this subsection.
3308	3358		(i) Effective for payments that become due after April 30,
3309	3359		2000, and instead of the disability benefit provided by Subsection
3310	3360		(a) or[,] (b)[, or (h)] of this section, a member who suffers a
3311	3361		catastrophic injury shall receive a monthly benefit equal to 100
3312	3362		percent of the member's final average [total direct] pay determined
3313	3363		as of the date of retirement, and the member's DROP balance, if any.
3314	3364		(l) A disability pension may not be paid to a member for any
3315	3365		disability if:
3316	3366		(1) the disability resulted from an intentionally
3317	3367		self-inflicted injury or a chronic illness resulting from:
3318	3368		(A) an addiction by the member through a
3319	3369		protracted course of non-coerced ingestion of alcohol, narcotics,
3320	3370		or prescription drugs not prescribed to the member; or
3321	3371		(B) other substance abuse; or
3322	3372		(2) except as provided by Subsection (m) of this
3323	3373		section, the disability was a result of the member's commission of a
3324	3374		felony.
3325	3375		(m) The board may waive Subsection (l)(2) of this section if
3326	3376		the board determines that facts exist that mitigate denying the
3327	3377		member's application for a disability pension.
3328	3378		(n) A person who fraudulently applies for or receives a
3329	3379		disability pension may be subject to criminal and civil
3330	3380		prosecution.
3331	3381		SECTION 2.17. Section 16, Article 6243g-4, Revised
3332	3382		Statutes, is amended to read as follows:
3333	3383		Sec. 16. RIGHTS OF SURVIVORS. (a) For purposes of this
3334	3384		article, a marriage is considered to exist only if the couple is
3335	3385		lawfully married under the laws of a state, the District of
3336	3386		Columbia, a United States territory, or a foreign jurisdiction and
3337	3387		the marriage would be recognized as a marriage under the laws of at
3338	3388		least one state, possession, or territory of the United States,
3339	3389		regardless of domicile [marriage is recorded in the records of the
3340	3390		recorder's office in the county in which the marriage ceremony was
3341	3391		performed]. In the case of a common-law marriage, a marriage
3342	3392		declaration must be signed by the member and the member's
3343	3393		common-law spouse before a notary public or similar official and
3344	3394		recorded in the records of the applicable jurisdiction [county
3345	3395		clerk's office in the county] in which the couple resides at the
3346	3396		commencement of the marriage. In addition, a marriage that is
3347	3397		evidenced by a declaration of common-law marriage signed before a
3348	3398		notary public or similar official after December 31, 1999, may not
3349	3399		be treated as effective earlier than the date on which it was signed
3350	3400		before the notary public or similar official.
3351	3401		(b) If a retired member dies after becoming eligible for
3352	3402		[entitled to] a service or disability pension, the board shall pay
3353	3403		an immediate monthly benefit as follows:
3354	3404		(1) to the surviving spouse for life, if there is a
3355	3405		surviving spouse, a sum equal to the pension that was being received
3356	3406		by the retired member at the time of death;
3357	3407		(2) to the guardian of any dependent child under 18
3358	3408		years of age or a child with a disability as long as the dependent
3359	3409		child complies with the definition of dependent child under Section
3360	3410		2(7) of this article [children], on behalf of the dependent child
3361	3411		[children], or directly to a dependent child described by Section
3362	3412		2(7)(B) of this article, and if there is no spouse eligible for
3363	3413		[entitled to] an allowance, the sum a surviving spouse would have
3364	3414		received, to be divided equally among all [the] dependent children
3365	3415		if there is more than one dependent child; or
3366	3416		(3) to any dependent parents for life if no spouse or
3367	3417		dependent child is eligible for [entitled to] an allowance, the sum
3368	3418		the spouse would have received, to be divided equally between the
3369	3419		two parents if there are two dependent parents.
3370	3420		(c) If an active [a] member of the pension system who has not
3371	3421		completed 20 [10] years of service in the police department is
3372	3422		killed or dies from any cause growing out of or in consequence of
3373	3423		any act clearly not in the actual performance of the member's
3374	3424		official duty, the member's surviving spouse, dependent child or
3375	3425		children, or dependent parent or parents are eligible [entitled] to
3376	3426		receive an immediate benefit. The benefit is computed in the same
3377	3427		manner as a service retirement pension but is based on the deceased
3378	3428		member's service and final average [total direct] pay at the time of
3379	3429		death. The monthly benefit may not be less than:
3380	3430		(1) 27.5 percent of the member's final average [total
3381	3431		direct] pay for members hired before October 9, 2004, including a
3382	3432		member who involuntarily separated from service but has been
3383	3433		retroactively reinstated under arbitration, civil service, or a
3384	3434		court ruling; or
3385	3435		(2) 22.5 percent of the member's final average pay for
3386	3436		members hired or rehired on or after October 9, 2004.
3387	3437		(e) If any active member is killed or dies from any cause
3388	3438		growing out of or in consequence of the performance of the member's
3389	3439		duty, the member's surviving spouse, dependent child or children,
3390	3440		or dependent parent or parents are eligible [entitled] to receive
3391	3441		immediate benefits computed in accordance with Subsection (b) of
3392	3442		this section, except that the benefit [payable to the spouse, or to
3393	3443		the guardian of the dependent child or children if there is no
3394	3444		surviving spouse, or the dependent parent or parents if there is no
3395	3445		surviving spouse or dependent child,] is equal to 100 percent of the
3396	3446		member's final average [total direct] pay, computed as of the date
3397	3447		of death.
3398	3448		(f) A surviving spouse who receives a survivor's benefit
3399	3449		under this article is eligible [entitled] to receive an additional
3400	3450		amount each month equal to $150, beginning with the later of the
3401	3451		date the first payment of the survivor's benefit is due or the date
3402	3452		the first monthly payment becomes due after June 18, 2001, and
3403	3453		continuing until the end of the month in which the surviving spouse
3404	3454		dies.
3405	3455		(g) A surviving spouse or dependent who becomes eligible to
3406	3456		receive benefits with respect to an active member who was hired or
3407	3457		rehired before October 9, 2004, who dies in active service after
3408	3458		November 23, 1998, is eligible [entitled] to receive a one-time
3409	3459		lump-sum payment of $5,000 at the time the first monthly pension
3410	3460		benefit is paid, if the member has not already received a $5,000
3411	3461		lump-sum payment under Section 12 or 15(c) of this article. If more
3412	3462		than one dependent is eligible to receive a payment under this
3413	3463		subsection, the $5,000 shall be divided equally among the eligible
3414	3464		dependents. This payment has no effect on the amount of the
3415	3465		surviving spouse's or dependents' monthly pension and may not be
3416	3466		paid more than once.
3417	3467		(h) The monthly benefits of surviving spouses or dependents
3418	3468		provided under this section, except the $150 monthly payments
3419	3469		described by Subsection (f) of this section, shall be increased
3420	3470		annually at the same time and by the same percentage as the pensions
3421	3471		of retired members are increased in accordance with Section 12(c)
3422	3472		or 12(c-1) of this article. Also, for any year in which a 13th
3423	3473		payment is made pursuant to Section 12(e) of this article, a 13th
3424	3474		payment, computed in the same manner and subject to the same
3425	3475		conditions, shall also be made to the survivor [survivors] who is
3426	3476		eligible [are entitled] to receive death benefits at that time if
3427	3477		the member would have been entitled to a 13th payment, if living.
3428	3478		(i) If a member or individual receiving a survivor's pension
3429	3479		dies before monthly payments have been made for at least five years,
3430	3480		leaving no person otherwise eligible [entitled] to receive further
3431	3481		monthly payments with respect to the member, the monthly payments
3432	3482		shall continue to be made [to the designated beneficiary of the
3433	3483		member or survivor, or to the estate of the member or survivor if a
3434	3484		beneficiary was not designated,] in the same amount as the last
3435	3485		monthly payment made to the member or[,] survivor[, or estate,]
3436	3486		until payments have been made for five years with respect to the
3437	3487		member. The payments shall be made to the spouse of the member, if
3438	3488		living, and if no spouse is living, to the natural or adopted
3439	3489		children of the member, to be divided equally among the children if
3440	3490		the member has more than one child. If the member has no spouse or
3441	3491		children who are living, the benefit may not be paid. If the member
3442	3492		dies after becoming eligible to receive benefits [vested] but
3443	3493		before payments begin, leaving no survivors eligible for benefits,
3444	3494		the amount of each monthly payment over the five-year period shall
3445	3495		be the same as the monthly payment the member would have received if
3446	3496		the member had taken disability retirement on the date of the
3447	3497		member's death and shall be paid to the member's spouse or children
3448	3498		in the manner provided by this subsection. If the member has no
3449	3499		spouse or children who are living, then the benefit may not be paid
3450	3500		[A member may designate a beneficiary in lieu of the member's estate
3451	3501		to receive the remaining payments in the event the member and all
3452	3502		survivors die before payments have been received for five years].
3453	3503		The member's estate or a beneficiary who is not a survivor or
3454	3504		dependent is not eligible [entitled] to receive the payment
3455	3505		described by Subsection (g) of this section.
3456	3506		(j) A benefit payment made in accordance with this section
3457	3507		on behalf of a minor or other person under a legal disability fully
3458	3508		discharges the pension system's obligation to that person.
3459	3509		(k) A retired member or surviving spouse may designate a
3460	3510		beneficiary on a form prescribed by the pension system to receive
3461	3511		the final monthly payment owed but not received before the member's
3462	3512		or surviving spouse's death.
3463	3513		(l) The board may at any time require a person receiving
3464	3514		death benefits as a disabled child under this article to undergo a
3465	3515		medical examination by a physician appointed or selected by the
3466	3516		board for that purpose.
3467	3517		SECTION 2.18. Section 16A, Article 6243g-4, Revised
3468	3518		Statutes, is amended to read as follows:
3469	3519		Sec. 16A. BENEFICIARY DESIGNATION FOR DROP. (a) Except
3470	3520		for the marriage requirement described by Section 16(a) of this
3471	3521		article, the [The] provisions of Section 16 of this article
3472	3522		pertaining to rights of survivors do not apply to an amount held in
3473	3523		a member's DROP account. A member who participates in DROP may
3474	3524		designate a beneficiary in the form and manner prescribed by or on
3475	3525		behalf of the board to receive the balance of the member's DROP
3476	3526		account in the event of the member's death, as permitted by Section
3477	3527		401(a)(9) of the code and the board's policies. A member who is
3478	3528		married is considered to have designated the member's spouse as the
3479	3529		member's beneficiary unless the spouse consents, in a notarized
3480	3530		writing delivered to the board, to the designation of another
3481	3531		person as beneficiary. If no designated beneficiary survives the
3482	3532		member, the board shall [may] pay the balance of the member's DROP
3483	3533		account to the member's beneficiaries in the following order:
3484	3534		(1) to the member's spouse;
3485	3535		(2) if the member does not have a spouse, to each
3486	3536		natural or adopted child of the member, or to the guardian of the
3487	3537		child if the child is a minor or has a disability, in equal shares;
3488	3538		(3) if the member does not have a spouse or any
3489	3539		children, to each surviving parent of the member in equal shares; or
3490	3540		(4) if the member has no beneficiaries described by
3491	3541		Subdivisions (1), (2), and (3) of this subsection, to the estate of
3492	3542		the member.
3493	3543		(b) If a member names a spouse as a beneficiary and is
3494	3544		subsequently divorced from that spouse, the divorce voids the
3495	3545		designation of the divorced spouse as the member's beneficiary. A
3496	3546		designation of a divorced spouse will cause the board to pay any
3497	3547		balance remaining in the member's DROP account in the order
3498	3548		prescribed by Subsection (a) of this section.
3499	3549		(c) The surviving spouse may designate a beneficiary on a
3500	3550		form prescribed by the pension system to receive the balance of the
3501	3551		DROP account owed but not received before the surviving spouse's
3502	3552		death.
3503	3553		(d) Payment of the balance of the member's DROP account made
3504	3554		in accordance with this section on behalf of a minor or other person
3505	3555		under a legal disability fully discharges the pension system's
3506	3556		obligation to that person.
3507	3557		SECTION 2.19. Section 17, Article 6243g-4, Revised
3508	3558		Statutes, is amended by amending Subsections (b), (d), and (e) and
3509	3559		adding Subsection (i) to read as follows:
3510	3560		(b) A member of the pension system who has not completed 20
3511	3561		years of service at the time of separation from service with the
3512	3562		police department is eligible for [entitled to] a refund of the
3513	3563		total of the contributions the member made to the pension system,
3514	3564		plus any amount that was contributed for the member by the city and
3515	3565		not applied in accordance with this section to provide the member
3516	3566		with 10 years of service. The refund does not include interest, and
3517	3567		neither the city nor the member is eligible for [entitled to] a
3518	3568		refund of the contributions the city made on the member's behalf,
3519	3569		except as expressly provided by this subsection. By receiving the
3520	3570		refund, the member forfeits any service earned before separation
3521	3571		from service, even if it is otherwise nonforfeitable.
3522	3572		(d) A member must apply to the board for a refund within one
3523	3573		year after the date of separation from service. Failure to apply
3524	3574		for the refund within the one-year period results in a forfeiture of
3525	3575		the right to the refund except for an inactive member who is
3526	3576		eligible for a pension [whose right to a pension is
3527	3577		nonforfeitable]. However, the board may reinstate any amount
3528	3578		forfeited and allow the refund on application by the former member.
3529	3579		(e) Heirs, executors, administrators, personal
3530	3580		representatives, or assignees are not eligible [entitled] to apply
3531	3581		for and receive the refund authorized by this section [except as
3532	3582		provided by Section 16(c) of this article].
3533	3583		(i) Former members reemployed on or after October 9, 2004,
3534	3584		or current members who left service after October 9, 2004, if
3535	3585		reemployed by the city, may purchase prior service credit at a rate
3536	3586		of interest equal to 2.25 percent per year. Active members hired
3537	3587		before October 9, 2004, who have not yet purchased prior service
3538	3588		credit or members hired before October 9, 2004, who involuntarily
3539	3589		separated from service but have been retroactively reinstated under
3540	3590		arbitration, civil service, or a court ruling may purchase prior
3541	3591		service credit at a rate of interest equal to 2.75 percent per year.
3542	3592		The board may adopt rules necessary to implement this section.
3543	3593		SECTION 2.20. Section 18(a), Article 6243g-4, Revised
3544	3594		Statutes, is amended to read as follows:
3545	3595		(a) Except as provided by this section:
3546	3596		(1) credit may not be allowed to any person for service
3547	3597		with any department in the city other than the police department;
3548	3598		[and]
3549	3599		(2) a person's service will be computed from the date
3550	3600		of entry into the service of the police department as a classified
3551	3601		police officer until the date of separation from service with the
3552	3602		police department; and
3553	3603		(3) a member who received service credit for service
3554	3604		with any department in the city other than the police department and
3555	3605		who is receiving a monthly pension benefit or who began
3556	3606		participation in DROP before the year 2017 effective date shall
3557	3607		continue to have the service credit apply.
3558	3608		SECTION 2.21. Sections 19(b) and (d), Article 6243g-4,
3559	3609		Revised Statutes, are amended to read as follows:
3560	3610		(b) A person who rejoins the pension system under this
3561	3611		section is eligible [entitled] to receive service credit for each
3562	3612		day of service and work performed by the person in a classified
3563	3613		position in the police department, except for any period during
3564	3614		which the person is a DROP participant. The board shall add service
3565	3615		earned after the transfer to the prior service the active member
3566	3616		accrued in a classified position in the police department.
3567	3617		However, the active member may not receive service credit under
3568	3618		this article, except to the extent provided by Section 18, for
3569	3619		service performed for the city other than in a classified position
3570	3620		in the police department.
3571	3621		(d) When a member who has transferred as described by this
3572	3622		section subsequently retires, the retired member is eligible for
3573	3623		[entitled to] a pension computed on the basis of the combined
3574	3624		service described by Subsection (b) of this section, after
3575	3625		deducting any period in which the member was suspended from duty
3576	3626		without pay, on leave of absence without pay, separated from
3577	3627		service, or employed by the city in a capacity other than in a
3578	3628		classified position in the police department.
3579	3629		SECTION 2.22. Section 21, Article 6243g-4, Revised
3580	3630		Statutes, is amended to read as follows:
3581	3631		Sec. 21. DETERMINATION OF BENEFITS; PROVISION OF
3582	3632		INFORMATION. (a) The board may require any member, survivor, or
3583	3633		other person or entity to furnish information the board requires
3584	3634		for the determination of benefits under this article. If a person
3585	3635		or entity does not cooperate in the furnishing or obtaining of
3586	3636		information required as provided by this section, the board may
3587	3637		withhold payment of the pension or other benefits dependent on the
3588	3638		information.
3589	3639		(b) The city, not later than the 14th day after the date the
3590	3640		city receives a request by or on behalf of the board, shall, unless
3591	3641		otherwise prohibited by law, supply the pension system with
3592	3642		personnel, payroll, and financial records in the city's possession
3593	3643		that the pension system determines necessary to provide pension
3594	3644		administrative and fiduciary services under this section, to
3595	3645		establish beneficiaries' eligibility for any benefit, or to
3596	3646		determine a member's credited service or the amount of any
3597	3647		benefits, including disability benefits, and such other
3598	3648		information the pension system may need, including:
3599	3649		(1) information needed to verify service, including
3600	3650		the following information:
3601	3651		(A) the date a person is sworn in to a position;
3602	3652		(B) the days a person is under suspension;
3603	3653		(C) the days a person is absent without pay,
3604	3654		including the days a person is on maternity leave;
3605	3655		(D) the date of a person's termination from
3606	3656		employment; and
3607	3657		(E) the date of a person's reemployment with the
3608	3658		city;
3609	3659		(2) medical records;
3610	3660		(3) workers' compensation records and pay information;
3611	3661		(4) payroll information;
3612	3662		(5) information needed to verify whether a member is
3613	3663		on military leave; and
3614	3664		(6) information regarding phase-down participants,
3615	3665		including information related to entry date and phase-down plan.
3616	3666		(c) The city shall provide any information that may be
3617	3667		reasonably necessary to enable the pension system to comply with
3618	3668		administrative services the pension system performs for the city as
3619	3669		reasonably necessary to obtain any ruling or determination letter
3620	3670		from the Internal Revenue Service.
3621	3671		(d) The information provided by the city shall be
3622	3672		transmitted to the pension system electronically in a format
3623	3673		specified by the pension system, to the extent available to the
3624	3674		city, or in writing if so requested on behalf of the pension system.
3625	3675		(e) The pension system shall determine each member's
3626	3676		credited service and pension benefits on the basis of the personnel
3627	3677		and financial records of the city and the records of the pension
3628	3678		system.
3629	3679		SECTION 2.23. Section 23, Article 6243g-4, Revised
3630	3680		Statutes, is amended to read as follows:
3631	3681		Sec. 23. MEMBERS IN MILITARY SERVICE. (a) A member of the
3632	3682		pension system engaged in active service in a uniformed service may
3633	3683		not be required to make the monthly payments into the fund and may
3634	3684		not lose any previous years' service with the city because of the
3635	3685		uniformed service. The uniformed service shall count as continuous
3636	3686		service in the police department if the member returns to the city
3637	3687		police department after discharge from the uniformed service as an
3638	3688		employee within the period required by the Uniformed Services
3639	3689		Employment and Reemployment Rights Act of 1994 (38 U.S.C. Section
3640	3690		4301 et seq.), as amended, and the uniformed service does not exceed
3641	3691		the period for which a person is eligible [entitled] to have service
3642	3692		counted pursuant to that Act. Notwithstanding any other provision
3643	3693		of this article, contributions and benefits shall be paid and
3644	3694		qualified service for military service shall be determined in
3645	3695		compliance with Section 414(u) of the code.
3646	3696		(b) The city is required to make its payments into the fund
3647	3697		on behalf of each member while the member is engaged in a uniformed
3648	3698		service. If a member who has less than 10 years of service in the
3649	3699		pension system dies directly or indirectly as a result of the
3650	3700		uniformed service, and without returning to active service, the
3651	3701		spouse, dependent children, dependent parent, or estate of the
3652	3702		member is eligible [entitled] to receive a benefit in the same
3653	3703		manner as described by Section 16(c) of this article.
3654	3704		SECTION 2.24. Section 24(b), Article 6243g-4, Revised
3655	3705		Statutes, is amended to read as follows:
3656	3706		(b) Payments due on behalf of a dependent child shall be
3657	3707		paid to the dependent child's guardian, if any, or if none to the
3658	3708		person with whom the dependent child is living, except that the
3659	3709		board may make payments directly to a dependent child in an
3660	3710		appropriate case and withhold payments otherwise due on behalf of
3661	3711		any person if the board has reason to believe the payments are not
3662	3712		being applied on behalf of the person eligible [entitled] to
3663	3713		receive them. The board may request a court of competent
3664	3714		jurisdiction to appoint a person to receive and administer the
3665	3715		payments due to any dependent child or person under a disability.
3666	3716		SECTION 2.25. Section 25, Article 6243g-4, Revised
3667	3717		Statutes, is amended by amending Subsections (b), (c), (d), (g),
3668	3718		and (h) and adding Subsections (c-1) and (h-1) through (h-13) to
3669	3719		read as follows:
3670	3720		(b) A member or survivor of a member of the pension system
3671	3721		may not accrue a retirement pension, disability retirement
3672	3722		allowance, death benefit allowance, DROP benefit, or any other
3673	3723		benefit under this article in excess of the benefit limits
3674	3724		applicable to the fund under Section 415 of the code. The board
3675	3725		shall reduce the amount of any benefit that exceeds those limits by
3676	3726		the amount of the excess. If total benefits under this fund and the
3677	3727		benefits and contributions to which any member is eligible
3678	3728		[entitled] under any other qualified plans maintained by the city
3679	3729		that employs the member would otherwise exceed the applicable
3680	3730		limits under Section 415 of the code, the benefits the member would
3681	3731		otherwise receive from the fund shall be reduced to the extent
3682	3732		necessary to enable the benefits to comply with Section 415.
3683	3733		(c) Subject to Subsection (c-1) of this section, any
3684	3734		distributee [Any member or survivor] who receives [any distribution
3685	3735		that is] an eligible rollover distribution [as defined by Section
3686	3736		402(c)(4) of the code] is eligible [entitled] to have that
3687	3737		distribution transferred directly to another eligible retirement
3688	3738		plan of the distributee's [member's or survivor's] choice on
3689	3739		providing direction to the pension system regarding that transfer
3690	3740		in accordance with procedures established by the board.
3691	3741		(c-1) For purposes of Subsection (c) of this section:
3692	3742		(1) "Direct rollover" means a payment by the plan to
3693	3743		the eligible retirement plan specified by the distributee.
3694	3744		(2) "Distributee" means a member or a member's
3695	3745		surviving spouse or non-spouse designated beneficiary or a member's
3696	3746		spouse or former spouse who is the alternate payee under a qualified
3697	3747		domestic relations order with regard to the interest of the spouse
3698	3748		or former spouse.
3699	3749		(3) "Eligible retirement plan" means:
3700	3750		(A) an individual retirement account as defined
3701	3751		by Section 408(a) of the code;
3702	3752		(B) an individual retirement annuity as defined
3703	3753		by Section 408(b) of the code;
3704	3754		(C) an annuity plan as described by Section
3705	3755		403(a) of the code;
3706	3756		(D) an eligible deferred compensation plan as
3707	3757		defined by Section 457(b) of the code that is maintained by an
3708	3758		eligible employer as described by Section 457(e)(1)(A) of the code;
3709	3759		(E) an annuity contract as described by Section
3710	3760		403(b) of the code;
3711	3761		(F) a qualified trust as described by Section
3712	3762		401(a) of the code that accepts the distributee's eligible rollover
3713	3763		distribution; and
3714	3764		(G) in the case of an eligible rollover
3715	3765		distribution, for a designated beneficiary that is not the
3716	3766		surviving spouse, a spouse, or a former spouse who is an alternate
3717	3767		payee under a qualified domestic relations order, an eligible
3718	3768		retirement plan means only an individual retirement account or
3719	3769		individual retirement annuity that is established for the purpose
3720	3770		of receiving the distribution on behalf of the beneficiary.
3721	3771		(4) "Eligible rollover distribution" means any
3722	3772		distribution of all or any portion of the balance to the credit of
3723	3773		the distributee, except that an eligible rollover distribution does
3724	3774		not include:
3725	3775		(A) any distribution that is one of a series of
3726	3776		substantially equal periodic payments, not less frequently than
3727	3777		annually, made for life or life expectancy of the distributee or the
3728	3778		joint lives or joint life expectancies of the distributee and the
3729	3779		distributee's designated beneficiary or for a specified period of
3730	3780		10 years or more;
3731	3781		(B) any distribution to the extent the
3732	3782		distribution is required under Section 401(a)(9) of the code; or
3733	3783		(C) any distribution that is made on hardship of
3734	3784		the employee.
3735	3785		(d) The annual compensation for each member [total salary]
3736	3786		taken into account for any purpose under this article [for any
3737	3787		member of the pension system] may not exceed $200,000 for any year
3738	3788		for an eligible participant, or for years beginning after 2001 for
3739	3789		an ineligible participant, or $150,000 a year before 2001 for an
3740	3790		ineligible participant. These dollar limits shall be adjusted from
3741	3791		time to time in accordance with guidelines provided by the United
3742	3792		States secretary of the treasury and must comply with Section
3743	3793		401(a)(17) of the code. For purposes of this subsection, an
3744	3794		eligible participant is a person who first became an active member
3745	3795		before 1996, and an ineligible participant is a member who is not an
3746	3796		eligible participant.
3747	3797		(g) Distribution of benefits must begin not later than April
3748	3798		1 of the year following the calendar year during which the member
3749	3799		eligible for [entitled to] the benefits becomes 70-1/2 years of age
3750	3800		or terminates employment with the employer, whichever is later, and
3751	3801		must otherwise conform to Section 401(a)(9) of the code.
3752	3802		(h) For purposes of adjusting any benefit due to the
3753	3803		limitations prescribed by Section 415 of the code, the following
3754	3804		provisions shall apply:
3755	3805		(1) the 415(b) limitation with respect to any member
3756	3806		who at any time has been a member in any other defined benefit plan
3757	3807		as defined in Section 414(j) of the code maintained by the city
3758	3808		shall apply as if the total benefits payable under all the defined
3759	3809		benefit plans in which the member has been a member were payable
3760	3810		from one plan; and
3761	3811		(2) the 415(c) limitation with respect to any member
3762	3812		who at any time has been a member in any other defined contribution
3763	3813		plan as defined in Section 414(i) of the code maintained by the city
3764	3814		shall apply as if the total annual additions under all such defined
3765	3815		contribution plans in which the member has been a member were
3766	3816		payable from one plan.
3767	3817		(h-1) For purposes of adjusting any benefit due to the
3768	3818		limitations prescribed by Section 415(b) of the code, the following
3769	3819		provisions shall apply:
3770	3820		(1) before January 1, 1995, a member may not receive an
3771	3821		annual benefit that exceeds the limits specified in Section 415(b)
3772	3822		of the code, subject to the applicable adjustments in that section;
3773	3823		(2) on and after January 1, 1995, a member may not
3774	3824		receive an annual benefit that exceeds the dollar amount specified
3775	3825		in Section 415(b)(1)(A) of the code, subject to the applicable
3776	3826		adjustments in Section 415(b) of the code and subject to any
3777	3827		additional limits that may be specified in the pension system;
3778	3828		(3) in no event may a member's annual benefit payable
3779	3829		under the pension system, including any DROP benefits, in any
3780	3830		limitation year be greater than the limit applicable at the annuity
3781	3831		starting date, as increased in subsequent years pursuant to Section
3782	3832		415(d) of the code, including regulations adopted under that
3783	3833		section; and
3784	3834		(4) the "annual benefit" means a benefit payable
3785	3835		annually in the form of a straight life annuity, with no ancillary
3786	3836		benefits, without regard to the benefit attributable to any
3787	3837		after-tax employee contributions, unless attributable under
3788	3838		Section 415(n) of the code, and to rollover contributions as
3789	3839		defined in Section 415(b)(2)(A) of the code. For purposes of this
3790	3840		subdivision, the "benefit attributable" shall be determined in
3791	3841		accordance with applicable federal regulations.
3792	3842		(h-2) For purposes of adjustments to the basic limitation
3793	3843		under Section 415(b) of the code in the form of benefits, the
3794	3844		following provisions apply:
3795	3845		(1) if the benefit under the pension system is other
3796	3846		than the form specified in Subsections (h-1)(1)-(3) of this
3797	3847		section, including DROP benefits, the benefit shall be adjusted so
3798	3848		that it is the equivalent of the annual benefit, using factors
3799	3849		prescribed in applicable federal regulations; and
3800	3850		(2) if the form of benefit without regard to the
3801	3851		automatic benefit increase feature is not a straight life annuity
3802	3852		or a qualified joint and survivor annuity, Subdivision (1) of this
3803	3853		subsection is applied by either reducing the limit under Section
3804	3854		415(b) of the code applicable at the annuity starting date or
3805	3855		adjusting the form of benefit to an actuarially equivalent amount
3806	3856		determined by using the assumptions specified in Treasury
3807	3857		Regulation Section 1.415(b)-1(c)(2)(ii) that takes into account
3808	3858		the additional benefits under the form of benefit as follows:
3809	3859		(A) for a benefit paid in a form to which Section
3810	3860		417(e)(3) of the code does not apply, the actuarially equivalent
3811	3861		straight life annuity benefit that is the greater of:
3812	3862		(i) the annual amount of the straight life
3813	3863		annuity, if any, payable to the member under the pension system
3814	3864		commencing at the same annuity starting date as the form of benefit
3815	3865		to the member or the annual amount of the straight life annuity
3816	3866		commencing at the same annuity starting date that has the same
3817	3867		actuarial present value as the form of benefit payable to the
3818	3868		member, computed using a five percent interest assumption or the
3819	3869		applicable statutory interest assumption; and
3820	3870		(ii) for years prior to January 1, 2009, the
3821	3871		applicable mortality tables described in Treasury Regulation
3822	3872		Section 1.417(e)-1(d)(2), and for years after December 31, 2008,
3823	3873		the applicable mortality tables described in Section 417(e)(3)(B)
3824	3874		of the code; or
3825	3875		(B) for a benefit paid in a form to which Section
3826	3876		417(e)(3) of the code applies, the actuarially equivalent straight
3827	3877		life annuity benefit that is the greatest of:
3828	3878		(i) the annual amount of the straight life
3829	3879		annuity commencing at the annuity starting date that has the same
3830	3880		actuarial present value as the particular form of benefit payable,
3831	3881		computed using the interest rate and mortality table, or tabular
3832	3882		factor, specified in the plan for actuarial experience;
3833	3883		(ii) the annual amount of the straight life
3834	3884		annuity commencing at the annuity starting date that has the same
3835	3885		actuarial present value as the particular form of benefit payable,
3836	3886		computed using a 5.5 percent interest assumption or the applicable
3837	3887		statutory interest assumption, and for years prior to January 1,
3838	3888		2009, the applicable mortality tables for the distribution under
3839	3889		Treasury Regulation Section 1.417(e)-1(d)(2), and for years after
3840	3890		December 31, 2008, the applicable mortality tables described in
3841	3891		Section 417(e)(3)(B) of the code; or
3842	3892		(iii) the annual amount of the straight
3843	3893		life annuity commencing at the annuity starting date that has the
3844	3894		same actuarial present value as the particular form of benefit
3845	3895		payable computed using the applicable interest rate for the
3846	3896		distribution under Treasury Regulation Section 1.417(e)-1(d)(3)
3847	3897		using the rate in effect for the month prior to retirement before
3848	3898		January 1, 2017, and using the rate in effect for the first day of
3849	3899		the plan year with a one-year stabilization period on and after
3850	3900		January 1, 2017, and for years prior to January 1, 2009, the
3851	3901		applicable mortality tables for the distribution under Treasury
3852	3902		Regulation Section 1.417(e)-1(d)(2), and for years after December
3853	3903		31, 2008, the applicable mortality tables described in Section
3854	3904		417(e)(3)(B) of the code, divided by 1.05.
3855	3905		(h-3) The pension system actuary may adjust the limitation
3856	3906		under Section 415(b) of the code at the annuity starting date in
3857	3907		accordance with Subsections (h-1) and (h-2) of this section.
3858	3908		(h-4) The following are benefits for which no adjustment of
3859	3909		the limitation in Section 415(b) of the code is required:
3860	3910		(1) any ancillary benefit that is not directly related
3861	3911		to retirement income benefits;
3862	3912		(2) the portion of any joint and survivor annuity that
3863	3913		constitutes a qualified joint and survivor annuity; and
3864	3914		(3) any other benefit not required under Section
3865	3915		415(b)(2) of the code and regulations adopted under that section to
3866	3916		be taken into account for purposes of the limitation of Section
3867	3917		415(b)(1) of the code.
3868	3918		(h-5) The following provisions apply to other adjustments
3869	3919		of the limitation under Section 415(b) of the code:
3870	3920		(1) in the event the member's pension benefits become
3871	3921		payable before the member attains 62 years of age, the limit
3872	3922		prescribed by this section shall be reduced in accordance with
3873	3923		federal regulations adopted under Section 415(b) of the code, so
3874	3924		that that limit, as reduced, equals an annual straight life annuity
3875	3925		benefit when the retirement income benefit begins, that is
3876	3926		equivalent to a $160,000, as adjusted, annual benefit beginning at
3877	3927		62 years of age;
3878	3928		(2) in the event the member's benefit is based on at
3879	3929		least 15 years of service as a full-time employee of any police or
3880	3930		fire department or on 15 years of military service, in accordance
3881	3931		with Sections 415(b)(2)(G) and (H) of the code, the adjustments
3882	3932		provided for in Subdivision (1) of this section may not apply; and
3883	3933		(3) in accordance with Section 415(b)(2)(I) of the
3884	3934		code, the reductions provided for in Subdivision (1) of this
3885	3935		section may not be applicable to preretirement disability benefits
3886	3936		or preretirement death benefits.
3887	3937		(h-6) The following provisions of this subsection govern
3888	3938		adjustment of the defined benefit dollar limitation for benefits
3889	3939		commenced after 65 years of age:
3890	3940		(1) if the annuity starting date for the member's
3891	3941		benefit is after 65 years of age and the pension system does not
3892	3942		have an immediately commencing straight life annuity payable at
3893	3943		both 65 years of age and the age of benefit commencement, the
3894	3944		defined benefit dollar limitation at the member's annuity starting
3895	3945		date is the annual amount of a benefit payable in the form of a
3896	3946		straight life annuity commencing at the member's annuity starting
3897	3947		date that is the actuarial equivalent of the defined benefit dollar
3898	3948		limitation, with actuarial equivalence computed using a five
3899	3949		percent interest rate assumption and the applicable mortality table
3900	3950		for that annuity starting date as defined in Section 417(e)(3)(B)
3901	3951		of the code, expressing the member's age based on completed
3902	3952		calendar months as of the annuity starting date;
3903	3953		(2) if the annuity starting date for the member's
3904	3954		benefit is after age 65, and the pension system has an immediately
3905	3955		commencing straight life annuity payable at both 65 years of age and
3906	3956		the age of benefit commencement, the defined benefit dollar
3907	3957		limitation at the member's annuity starting date is the lesser of
3908	3958		the limitation determined under Subdivision (1) of this section and
3909	3959		the defined benefit dollar limitation multiplied by the ratio of
3910	3960		the annual amount of the adjusted immediately commencing straight
3911	3961		life annuity under the pension system at the member's annuity
3912	3962		starting date to the annual amount of the adjusted immediately
3913	3963		commencing straight life annuity under the pension system at 65
3914	3964		years of age, both determined without applying the limitations of
3915	3965		this subsection; and
3916	3966		(3) notwithstanding the other requirements of this
3917	3967		section:
3918	3968		(A) no adjustment shall be made to reflect the
3919	3969		probability of a member's death between the annuity starting date
3920	3970		and 62 years of age, or between 65 years of age and the annuity
3921	3971		starting date, as applicable, if benefits are not forfeited on the
3922	3972		death of the member prior to the annuity starting date; and
3923	3973		(B) to the extent benefits are forfeited on death
3924	3974		before the annuity starting date, the adjustment shall be made, and
3925	3975		for this purpose no forfeiture shall be treated as occurring on the
3926	3976		member's death if the pension system does not charge members for
3927	3977		providing a qualified preretirement survivor annuity, as defined in
3928	3978		Section 417(c) of the code, on the member's death.
3929	3979		(h-7) For the purpose of Subsection (h-6)(2) of this
3930	3980		section, the adjusted immediately commencing straight life annuity
3931	3981		under the pension system at the member's annuity starting date is
3932	3982		the annual amount of such annuity payable to the member, computed
3933	3983		disregarding the member's accruals after 65 years of age but
3934	3984		including actuarial adjustments even if those actuarial
3935	3985		adjustments are used to offset accruals, and the adjusted
3936	3986		immediately commencing straight life annuity under the pension
3937	3987		system at 65 years of age is the annual amount of the annuity that
3938	3988		would be payable under the pension system to a hypothetical member
3939	3989		who is 65 years of age and has the same accrued benefit as the
3940	3990		member.
3941	3991		(h-8) The maximum pension benefits payable to any member who
3942	3992		has completed less than 10 years of participation shall be the
3943	3993		amount determined under Subsection (h-1) of this section, as
3944	3994		adjusted under Subsection (h-2) or (h-5) of this section,
3945	3995		multiplied by a fraction, the numerator of which is the number of
3946	3996		the member's years of participation and the denominator of which is
3947	3997		10. The limit under Subsection (h-9) of this section concerning the
3948	3998		$10,000 limit shall be similarly reduced for any member who has
3949	3999		accrued less than 10 years of service, except the fraction shall be
3950	4000		determined with respect to years of service instead of years of
3951	4001		participation. The reduction provided by this subsection cannot
3952	4002		reduce the maximum benefit below 10 percent of the limit determined
3953	4003		without regard to this subsection. The reduction provided for in
3954	4004		this subsection may not be applicable to preretirement disability
3955	4005		benefits or preretirement death benefits.
3956	4006		(h-9) Notwithstanding Subsection (h-8) of this section, the
3957	4007		pension benefit payable with respect to a member shall be deemed not
3958	4008		to exceed the limit provided by Section 415 of the code if the
3959	4009		benefits payable, with respect to such member under this pension
3960	4010		system and under all other qualified defined benefit pension plans
3961	4011		to which the city contributes, do not exceed $10,000 for the
3962	4012		applicable limitation year and for any prior limitation year and
3963	4013		the city has not at any time maintained a qualified defined
3964	4014		contribution plan in which the member participated.
3965	4015		(h-10) On and after January 1, 1995, for purposes of
3966	4016		applying the limits under Section 415(b) of the code to a member's
3967	4017		benefit paid in a form to which Section 417(e)(3) of the code does
3968	4018		not apply, the following provisions apply:
3969	4019		(1) a member's applicable limit shall be applied to the
3970	4020		member's annual benefit in the member's first limitation year
3971	4021		without regard to any cost-of-living adjustments under Section 12
3972	4022		of this article;
3973	4023		(2) to the extent that the member's annual benefit
3974	4024		equals or exceeds the limit, the member shall no longer be eligible
3975	4025		for cost-of-living increases until such time as the benefit plus
3976	4026		the accumulated increases are less than the limit; and
3977	4027		(3) after the time prescribed by Subdivision (2) of
3978	4028		this subsection, in any subsequent limitation year, a member's
3979	4029		annual benefit, including any cost-of-living increases under
3980	4030		Section 12 of this article, shall be tested under the applicable
3981	4031		benefit limit, including any adjustment under Section 415(d) of the
3982	4032		code to the dollar limit under Section 415(b)(1)(A) of the code, and
3983	4033		the regulations under those sections.
3984	4034		(h-11) Any repayment of contributions, including interest
3985	4035		on contributions, to the plan with respect to an amount previously
3986	4036		refunded on a forfeiture of service credit under the plan or another
3987	4037		governmental plan maintained by the pension system may not be taken
3988	4038		into account for purposes of Section 415 of the code, in accordance
3989	4039		with applicable federal regulations.
3990	4040		(h-12) Reduction of benefits or contributions to all plans,
3991	4041		where required, shall be accomplished by:
3992	4042		(1) first, reducing the member's benefit under any
3993	4043		defined benefit plans in which the member participated, with the
3994	4044		reduction to be made first with respect to the plan in which the
3995	4045		member most recently accrued benefits and then in the priority
3996	4046		determined by the pension system and the plan administrator of such
3997	4047		other plans; and
3998	4048		(2) next, reducing or allocating excess forfeitures
3999	4049		for defined contribution plans in which the member participated,
4000	4050		with the reduction to be made first with respect to the plan in
4001	4051		which the member most recently accrued benefits and then in the
4002	4052		priority determined by the pension system and the plan
4003	4053		administrator for such other plans.
4004	4054		(h-13) Notwithstanding Subsection (h-12) of this section,
4005	4055		reductions may be made in a different manner and priority pursuant
4006	4056		to the agreement of the pension system and the plan administrator of
4007	4057		all other plans covering such member. [If the amount of any benefit
4008	4058		is to be determined on the basis of actuarial assumptions that are
4009	4059		not otherwise specifically set forth for that purpose in this
4010	4060		article, the actuarial assumptions to be used are those earnings
4011	4061		and mortality assumptions being used on the date of the
4012	4062		determination by the pension system's actuary and approved by the
4013	4063		board. The actuarial assumptions being used at any particular time
4014	4064		shall be attached as an addendum to a copy of this article and
4015	4065		treated for all purposes as a part of this article. The actuarial
4016	4066		assumptions may be changed by the pension system's actuary at any
4017	4067		time if approved by the board, but a change in actuarial assumptions
4018	4068		may not result in any decrease in benefits accrued as of the
4019	4069		effective date of the change.]
4020	4070		SECTION 2.26. Section 26(b)(3), Article 6243g-4, Revised
4021	4071		Statutes, is amended to read as follows:
4022	4072		(3) "Maximum benefit" means the retirement benefit a
4023	4073		retired member and the spouse, dependent child, or dependent parent
4024	4074		of a retired member or deceased member or retiree are eligible
4025	4075		[entitled] to receive from all qualified plans in any month after
4026	4076		giving effect to Section 25(b) of this article and any similar
4027	4077		provisions of any other qualified plans designed to conform to
4028	4078		Section 415 of the code.
4029	4079		SECTION 2.27. Sections 26(c), (d), and (e), Article
4030	4080		6243g-4, Revised Statutes, are amended to read as follows:
4031	4081		(c) An excess benefit participant who is receiving benefits
4032	4082		from the pension system is eligible for [entitled to] a monthly
4033	4083		benefit under this excess benefit plan in an amount equal to the
4034	4084		lesser of:
4035	4085		(1) the member's unrestricted benefit less the maximum
4036	4086		benefit; or
4037	4087		(2) the amount by which the member's monthly benefit
4038	4088		from the fund has been reduced because of the limitations of Section
4039	4089		415 of the code.
4040	4090		(d) If a spouse, dependent child, or dependent parent is
4041	4091		eligible for [entitled to] preretirement or postretirement death
4042	4092		benefits under a qualified plan after the death of an excess benefit
4043	4093		participant, the surviving spouse, dependent child, or dependent
4044	4094		parent is eligible for [entitled to] a monthly benefit under the
4045	4095		excess benefit plan equal to the benefit determined in accordance
4046	4096		with this article without regard to the limitations under Section
4047	4097		25(b) of this article or Section 415 of the code, less the maximum
4048	4098		benefit.
4049	4099		(e) Any benefit to which a person is eligible [entitled]
4050	4100		under this section shall be paid at the same time and in the same
4051	4101		manner as the benefit would have been paid from the pension system
4052	4102		if payment of the benefit from the pension system had not been
4053	4103		precluded by Section 25(b) of this article. An excess benefit
4054	4104		participant or any beneficiary may not, under any circumstances,
4055	4105		elect to defer the receipt of all or any part of a payment due under
4056	4106		this section.
4057	4107		SECTION 2.28. The heading to Section 27, Article 6243g-4,
4058	4108		Revised Statutes, is amended to read as follows:
4059	4109		Sec. 27. CERTAIN WRITTEN AGREEMENTS BETWEEN PENSION SYSTEM
4060	4110		AND CITY AUTHORIZED [AGREEMENT TO CHANGE BENEFITS].
4061	4111		SECTION 2.29. Section 27, Article 6243g-4, Revised
4062	4112		Statutes, is amended by amending Subsection (b) and adding
4063	4113		Subsection (c) to read as follows:
4064	4114		(b) A pension benefit or allowance provided by this article
4065	4115		may be increased if the increase:
4066	4116		(1) is first approved by a qualified actuary selected
4067	4117		by the board;
4068	4118		(2) is approved by the board and the city in a written
4069	4119		agreement as authorized by this section; and
4070	4120		(3) does not deprive a member, without the member's
4071	4121		written consent, of a right to receive benefits when [that have
4072	4122		become fully vested and matured in] the member is fully eligible.
4073	4123		(c) In a written agreement entered into between the city and
4074	4124		the board under this section, the parties may not:
4075	4125		(1) alter Sections 9 through 9E of this article,
4076	4126		except and only to the extent necessary to comply with federal law;
4077	4127		(2) increase the assumed rate of return to more than
4078	4128		seven percent per year;
4079	4129		(3) extend the amortization period of a liability
4080	4130		layer to more than 30 years from the first day of the fiscal year
4081	4131		beginning 12 months after the date of the risk sharing valuation
4082	4132		study in which the liability layer is first recognized; or
4083	4133		(4) allow a city contribution rate in any year that is
4084	4134		less than or greater than the city contribution rate required under
4085	4135		Section 9D or 9E of this article, as applicable.
4086	4136		SECTION 2.30. Section 29, Article 6243g-4, Revised
4087	4137		Statutes, is amended by adding Subsections (c), (d), (e), (f), and
4088	4138		(g) to read as follows:
4089	4139		(c) To carry out the provisions of Sections 9 through 9E of
4090	4140		this article, the board and the pension system shall provide the
4091	4141		city actuary under a confidentiality agreement the actuarial data
4092	4142		used by the pension system actuary for the pension system's
4093	4143		actuarial valuations or valuation studies and other data as agreed
4094	4144		to between the city and the pension system that the city actuary
4095	4145		determines is reasonably necessary for the city actuary to perform
4096	4146		the studies required by Sections 9A through 9E of this article.
4097	4147		Actuarial data described by this subsection does not include
4098	4148		information described by Subsection (a) of this section.
4099	4149		(d) A risk sharing valuation study prepared by either the
4100	4150		city actuary or the pension system actuary under Sections 9A
4101	4151		through 9E of this article may not:
4102	4152		(1) include information described by Subsection (a) of
4103	4153		this section; or
4104	4154		(2) provide confidential or private information
4105	4155		regarding specific individuals or be grouped in a manner that
4106	4156		allows confidential or private information regarding a specific
4107	4157		individual to be discerned.
4108	4158		(e) The information, data, and document exchanges under
4109	4159		Sections 9 through 9E of this article have all the protections
4110	4160		afforded by applicable law and are expressly exempt from the
4111	4161		disclosure requirements under Chapter 552, Government Code, except
4112	4162		as may be agreed to by the city and pension system in a written
4113	4163		agreement under Section 27 of this article.
4114	4164		(f) Subsection (e) of this section does not apply to:
4115	4165		(1) a proposed risk sharing valuation study prepared
4116	4166		by the pension system actuary and provided to the city actuary or
4117	4167		prepared by the city actuary and provided to the pension system
4118	4168		actuary under Section 9A(d) or 9B(b)(2) of this article; or
4119	4169		(2) a final risk sharing valuation study prepared
4120	4170		under Section 9A or 9B of this article.
4121	4171		(g) Before a union contract is approved by the city, the
4122	4172		mayor of the city must cause the city actuaries to deliver to the
4123	4173		mayor a report estimating the impact of the proposed union contract
4124	4174		on fund costs.
4125	4175		SECTION 2.31. Article 6243g-4, Revised Statutes, is amended
4126	4176		by adding Section 30 to read as follows:
4127	4177		Sec. 30. FORFEITURE OF BENEFITS. (a) Notwithstanding any
4128	4178		other law, a member who is convicted, after exhausting all appeals,
4129	4179		of an offense punishable as a felony of the first degree in relation
4130	4180		to, arising out of, or in connection with the member's service as a
4131	4181		classified police officer may not receive any benefits under this
4132	4182		article.
4133	4183		(b) After the member described by Subsection (a) of this
4134	4184		section is finally convicted, the member's spouse may apply for
4135	4185		benefits if the member, but for application of Subsection (a) of
4136	4186		this section, would have been eligible for a pension benefit or a
4137	4187		delayed payment of benefits. If the member would not have been
4138	4188		eligible for a pension benefit or a delayed payment of benefits, the
4139	4189		member's spouse may apply for a refund of the member's
4140	4190		contributions. A refund under this subsection does not include
4141	4191		interest and does not include contributions the city made on the
4142	4192		member's behalf. The city may not receive a refund of any
4143	4193		contributions the city made on the member's behalf.
4144	4194		SECTION 2.32. Sections 2(19) and (23), 8(b), 12(f), 14(f)
4145	4195		and (m), 15(h) and (j), and 18(b) and (c), Article 6243g-4, Revised
4146	4196		Statutes, are repealed.
4147	4197		SECTION 2.33. A city and board that have entered into one or
4148	4198		more agreements under Section 27, Article 6243g-4, Revised
4149	4199		Statutes, shall agree in writing that any provisions in the
4150	4200		agreements that specifically conflict with this Act are no longer
4151	4201		in effect, as of the year 2017 effective date, and any
4152	4202		nonconflicting provisions of the agreements remain in full force
4153	4203		and effect.
4154	4204		SECTION 2.34. The pension system established under Article
4155	4205		6243g-4, Revised Statutes, shall require the pension system actuary
4156	4206		to prepare the first actuarial experience study required under
4157	4207		Section 9C, Article 6243g-4, Revised Statutes, as added by this
4158	4208		Act, not later than September 30, 2022.
4159	4209		ARTICLE 3. MUNICIPAL EMPLOYEES PENSION SYSTEM
4160	4210		SECTION 3.01. Section 1, Chapter 88 (H.B. 1573), Acts of the
4161	4211		77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
4162	4212		Texas Civil Statutes), is amended by amending Subdivisions (1),
4163	4213		(4), (5), (7), (11), (14), (18), and (26) and adding Subdivisions
4164	4214		(1-a), (1-b), (1-c), (1-d), (1-e), (1-f), (4-a), (4-b), (4-c),
4165	4215		(4-d), (4-e), (4-f), (11-a), (11-b), (11-c), (11-d), (11-e),
4166	4216		(11-f), (11-g), (11-h), (11-i), (11-j), (11-k), (12-a), (12-b),
4167	4217		(14-a), (14-b), (17-a), (18-a), (18-b), (20-a), (21-a), (26-a),
4168	4218		(26-b), (28), (29), (30), and (31) to read as follows:
4169	4219		(1) "Actuarial data" includes:
4170	4220		(A) the census data, assumption tables,
4171	4221		disclosure of methods, and financial information that are routinely
4172	4222		used by the pension system actuary for the pension system's studies
4173	4223		or an actuarial experience study under Section 8D of this Act; and
4174	4224		(B) other data that is reasonably necessary to
4175	4225		implement Sections 8A through 8F of this Act, as agreed to by the
4176	4226		city and pension board.
4177	4227		(1-a) "Actuarial experience study" has the meaning
4178	4228		assigned by Section 802.1014, Government Code.
4179	4229		(1-b) "Adjustment factor" means the assumed rate of
4180	4230		return less two percentage points.
4181	4231		(1-c) "Amortization period" means the time period
4182	4232		necessary to fully pay a liability layer.
4183	4233		(1-d) "Amortization rate" means the sum of the
4184	4234		scheduled amortization payments less the city contribution amount
4185	4235		for a given fiscal year for the liability layers divided by the
4186	4236		projected pensionable payroll for the same fiscal year.
4187	4237		(1-e) "Assumed rate of return" means the assumed
4188	4238		market rate of return on pension system assets, which is seven
4189	4239		percent per annum unless adjusted as provided by this Act.
4190	4240		(1-f) "Authorized absence" means:
4191	4241		(A) each day an employee is absent due to an
4192	4242		approved holiday, vacation, accident, or sickness, if the employee
4193	4243		is continued on the employment rolls of the city or the pension
4194	4244		system, receives the employee's regular salary from the city or the
4195	4245		pension system for each day of absence, and remains eligible to work
4196	4246		on recovery or return; or
4197	4247		(B) any period that a person is on military leave
4198	4248		of absence under Section 18(a) of this Act, provided the person
4199	4249		complies with the requirements of that section.
4200	4250		(4) "City" means a municipality having a population of
4201	4251		more than two [1.5] million.
4202	4252		(4-a) "City contribution amount" means, for each
4203	4253		fiscal year, a predetermined payment amount expressed in dollars in
4204	4254		accordance with a payment schedule amortizing the legacy liability,
4205	4255		using the level percent of payroll method and the amortization
4206	4256		period and payoff year, that is included in the initial risk sharing
4207	4257		valuation study under Section 8C(a)(3) of this Act, as may be
4208	4258		restated from time to time in:
4209	4259		(A) a subsequent risk sharing valuation study to
4210	4260		reflect adjustments to the amortization schedule authorized by
4211	4261		Section 8E or 8F of this Act; or
4212	4262		(B) a restated initial risk sharing valuation
4213	4263		study or a subsequent risk sharing valuation study to reflect
4214	4264		adjustments authorized by Section 8C(i) or (j) of this Act.
4215	4265		(4-b) "City contribution rate" means a percent of
4216	4266		pensionable payroll that is the sum of the employer normal cost rate
4217	4267		and the amortization rate for liability layers, excluding the
4218	4268		legacy liability, except as determined otherwise under the express
4219	4269		provisions of Sections 8E and 8F of this Act.
4220	4270		(4-c) "Corridor" means the range of city contribution
4221	4271		rates that are:
4222	4272		(A) equal to or greater than the minimum
4223	4273		contribution rate; and
4224	4274		(B) equal to or less than the maximum
4225	4275		contribution rate.
4226	4276		(4-d) "Corridor margin" means five percentage points.
4227	4277		(4-e) "Corridor midpoint" means the projected city
4228	4278		contribution rate specified for each fiscal year for 31 years in the
4229	4279		initial risk sharing valuation study under Section 8C of this Act,
4230	4280		and as may be adjusted under Section 8E or 8F of this Act, and in
4231	4281		each case rounded to the nearest hundredths decimal place.
4232	4282		(4-f) "Cost-of-living adjustment percentage" means a
4233	4283		percentage that:
4234	4284		(A) except as provided by Paragraph (B), is equal
4235	4285		to the pension system's five-year investment return, based on a
4236	4286		rolling five-year basis and net of investment expenses, minus the
4237	4287		adjustment factor, and multiplied by 50 percent; and
4238	4288		(B) may not be less than zero or more than two
4239	4289		percent.
4240	4290		(5) "Credited service" means each day of service and
4241	4291		prior service of a member for which:
4242	4292		(A) the city [has] and[, for service in group A,]
4243	4293		the member have [has] made required contributions to the pension
4244	4294		fund that were not subsequently withdrawn;
4245	4295		(B) the member has purchased service credit or
4246	4296		converted service credit from group B to group A by paying into the
4247	4297		pension fund required amounts that were not subsequently withdrawn;
4248	4298		(C) the member has reinstated service under
4249	4299		Section 7(g) of this Act; and
4250	4300		(D) the member has previously made payments to
4251	4301		the pension fund that, under then existing provisions of law, make
4252	4302		the member eligible for credit for the service and that were not
4253	4303		subsequently withdrawn.
4254	4304		(7) "Dependent child" means an unmarried natural or
4255	4305		legally adopted child of a member, deferred participant, or retiree
4256	4306		who:
4257	4307		(A) was supported by the member, deferred
4258	4308		participant, or retiree before the termination of employment of the
4259	4309		member, deferred participant, or retiree; and
4260	4310		(B) is under 21 years of age or is totally and
4261	4311		permanently disabled from performing any full-time employment
4262	4312		because of an injury, illness, serious mental illness, intellectual
4263	4313		disability, or pervasive development disorder [or retardation]
4264	4314		that began before the child became 18 years of age and before the
4265	4315		termination of employment [death] of the member, deferred
4266	4316		participant, or retiree.
4267	4317		(11) "Employee" means any person, including an elected
4268	4318		official during the official's service to the city, who is eligible
4269	4319		to be a member of the pension system or to participate in an
4270	4320		alternative retirement plan established under this Act and:
4271	4321		(A) who holds a municipal position or a position
4272	4322		with the pension system;
4273	4323		(B) whose name appears on a regular full-time
4274	4324		payroll of a city or of the pension fund; and
4275	4325		(C) who is paid a regular salary for services.
4276	4326		(11-a) "Employer normal cost rate" means the normal
4277	4327		cost rate minus the applicable member contribution rate for newly
4278	4328		hired employees, initially set as three percent for group D members
4279	4329		on the year 2017 effective date. The present value of additional
4280	4330		member contributions different from the group D rate taken into
4281	4331		account for purposes of determining the employer normal cost rate
4282	4332		must be applied toward the actuarial accrued liability.
4283	4333		(11-b) "Estimated city contribution amount" means the
4284	4334		city contribution amount estimated in a final risk sharing
4285	4335		valuation study under Section 8B or 8C of this Act, as applicable,
4286	4336		as required by Section 8B(a)(5) of this Act.
4287	4337		(11-c) "Estimated city contribution rate" means the
4288	4338		city contribution rate estimated in a final risk sharing valuation
4289	4339		study under Section 8B or 8C of this Act, as applicable, as required
4290	4340		by Section 8B(a)(5) of this Act.
4291	4341		(11-d) "Estimated total city contribution" means the
4292	4342		total city contribution estimated by the pension system actuary or
4293	4343		the city actuary, as applicable, by using the estimated city
4294	4344		contribution rates and the estimated city contribution amounts
4295	4345		recommended by each actuary for purposes of preparing the initial
4296	4346		risk sharing valuation study under Section 8C of this Act.
4297	4347		(11-e) "Fiscal year," except as provided by Section 1B
4298	4348		of this Act, means a fiscal year beginning on July 1 and ending on
4299	4349		June 30.
4300	4350		(11-f) "Funded ratio" means the ratio of the pension
4301	4351		system's actuarial value of assets divided by the pension system's
4302	4352		actuarial accrued liability.
4303	4353		(11-g) "Legacy liability" means the unfunded
4304	4354		actuarial accrued liability:
4305	4355		(A) for the fiscal year ending June 30, 2016,
4306	4356		reduced to reflect:
4307	4357		(i) changes to benefits and contributions
4308	4358		under this Act that took effect on the year 2017 effective date;
4309	4359		(ii) the deposit of pension obligation bond
4310	4360		proceeds on December 31, 2017, in accordance with Section 8C(j)(2)
4311	4361		of this Act; and
4312	4362		(iii) payments by the city and earnings at
4313	4363		the assumed rate of return allocated to the legacy liability from
4314	4364		July 1, 2016, to July 1, 2017, excluding July 1, 2017; and
4315	4365		(B) for each subsequent fiscal year:
4316	4366		(i) reduced by the city contribution amount
4317	4367		for that year allocated to the amortization of the legacy
4318	4368		liability; and
4319	4369		(ii) adjusted by the assumed rate of
4320	4370		return.
4321	4371		(11-h) "Level percent of payroll method" means the
4322	4372		amortization method that defines the amount of the liability layer
4323	4373		recognized each fiscal year as a level percent of pensionable
4324	4374		payroll until the amount of the liability layer remaining is
4325	4375		reduced to zero.
4326	4376		(11-i) "Liability gain layer" means a liability layer
4327	4377		that decreases the unfunded actuarial accrued liability.
4328	4378		(11-j) "Liability layer" means the legacy liability
4329	4379		established in the initial risk sharing valuation study under
4330	4380		Section 8C of this Act and the unanticipated change as established
4331	4381		in each subsequent risk sharing valuation study prepared under
4332	4382		Section 8B of this Act.
4333	4383		(11-k) "Liability loss layer" means a liability layer
4334	4384		that increases the unfunded actuarial accrued liability. For
4335	4385		purposes of this Act, the legacy liability is a liability loss
4336	4386		layer.
4337	4387		(12-a) "Maximum contribution rate" means the rate
4338	4388		equal to the corridor midpoint plus the corridor margin.
4339	4389		(12-b) "Minimum contribution rate" means the rate
4340	4390		equal to the corridor midpoint minus the corridor margin.
4341	4391		(14) "Military service" means active service in the
4342	4392		armed forces of the United States or wartime service in the armed
4343	4393		forces of the United States or in the allied forces, if credit for
4344	4394		military service has not been granted under any federal or other
4345	4395		state system or used in any other retirement system, except as
4346	4396		expressly required under federal law.
4347	4397		(14-a) "Normal cost rate" means the salary weighted
4348	4398		average of the individual normal cost rates determined for the
4349	4399		current active population, plus the assumed administrative
4350	4400		expenses determined in the most recent actuarial experience study
4351	4401		conducted under Section 8D of this Act, expressed as a rate,
4352	4402		provided the assumed administrative expenses may not exceed 1.25
4353	4403		percent of pensionable payroll for the current fiscal year unless
4354	4404		agreed to by the city.
4355	4405		(14-b) "Payoff year" means the year a liability layer
4356	4406		is fully amortized under the amortization period. A payoff year may
4357	4407		not be extended or accelerated for a period that is less than one
4358	4408		month.
4359	4409		(17-a) "Pension obligation bond" means a bond issued
4360	4410		in accordance with Chapter 107, Local Government Code.
4361	4411		(18) "Pension system," unless the context otherwise
4362	4412		requires, means the retirement, disability, and survivor benefit
4363	4413		plans for municipal employees of a city under this Act and employees
4364		-	under Section 3(d) of this Act.
	4414	+	under Section 3(d) of this Act. In this context, the term does not
	4415	+	include a cash balance retirement plan established under Section 1C
	4416	+	of this Act.
4365	4417		(18-a) "Pension system actuary" means the actuary
4366	4418		engaged by the pension system under Section 2B of this Act.
4367	4419		(18-b) "Pensionable payroll" means the combined
4368	4420		salaries, in an applicable fiscal year, paid to all:
4369	4421		(A) members; and
4370	4422		(B) if applicable, participants in any
4371	4423		alternative retirement plan established under Section 1C of this
4372	4424		Act, including a cash balance retirement plan established under
4373	4425		that section.
4374	4426		(20-a) "Price inflation assumption" means:
4375	4427		(A) the most recent headline consumer price index
4376	4428		10-year forecast published in the Federal Reserve Bank of
4377	4429		Philadelphia Survey of Professional Forecasters; or
4378	4430		(B) if the forecast described by Paragraph (A) of
4379	4431		this subdivision is not available, another standard as determined
4380	4432		by mutual agreement between the city and the pension board entered
4381	4433		into under Section 3(n) of this Act.
4382	4434		(21-a) "Projected pensionable payroll" means the
4383	4435		estimated pensionable payroll for the fiscal year beginning 12
4384	4436		months after the date of the risk sharing valuation study prepared
4385	4437		under Section 8B of this Act, at the time of calculation by:
4386	4438		(A) projecting the prior fiscal year's
4387	4439		pensionable payroll forward two years using the current payroll
4388	4440		growth rate assumptions; and
4389	4441		(B) adjusting, if necessary, for changes in
4390	4442		population or other known factors, provided those factors would
4391	4443		have a material impact on the calculation, as determined by the
4392	4444		pension board.
4393	4445		(26) "Surviving spouse" means a spouse by marriage of
4394	4446		[person who was married to] a member, deferred participant, or
4395	4447		retiree at the time of death of the member, deferred participant, or
4396	4448		retiree and as of the date of [before] separation from service by
4397	4449		the member, deferred participant, or retiree.
4398	4450		(26-a) "Third quarter line rate" means the corridor
4399	4451		midpoint plus 2.5 percentage points.
4400	4452		(26-b) "Total city contribution" means, for a fiscal
4401	4453		year, an amount equal to the sum of:
4402	4454		(A) the city contribution rate multiplied by the
4403	4455		pensionable payroll for the fiscal year; and
4404	4456		(B) the city contribution amount for the fiscal
4405	4457		year.
4406	4458		(28) "Ultimate entry age normal" means an actuarial
4407	4459		cost method under which a calculation is made to determine the
4408	4460		average uniform and constant percentage rate of contributions that,
4409	4461		if applied to the compensation of each member during the entire
4410	4462		period of the member's anticipated covered service, would be
4411	4463		required to meet the cost of all benefits payable on the member's
4412	4464		behalf based on the benefits provisions for newly hired employees.
4413	4465		For purposes of this definition, the actuarial accrued liability
4414	4466		for each member is the difference between the member's present
4415	4467		value of future benefits based on the tier of benefits that apply to
4416	4468		the member and the member's present value of future normal costs
4417	4469		determined using the normal cost rate.
4418	4470		(29) "Unfunded actuarial accrued liability" means the
4419	4471		difference between the actuarial accrued liability and the
4420	4472		actuarial value of assets. For purposes of this definition:
4421	4473		(A) "actuarial accrued liability" means the
4422	4474		portion of the actuarial present value of projected benefits
4423	4475		attributed to past periods of member service based on the cost
4424	4476		method used in the risk sharing valuation study prepared under
4425	4477		Section 8B or 8C of this Act, as applicable; and
4426	4478		(B) "actuarial value of assets" means the value
4427	4479		of pension plan investments as calculated using the asset smoothing
4428	4480		method used in the risk sharing valuation study prepared under
4429	4481		Section 8B or 8C of this Act, as applicable.
4430	4482		(30) "Unanticipated change" means, with respect to the
4431	4483		unfunded actuarial accrued liability in each subsequent risk
4432	4484		sharing valuation study prepared under Section 8B of this Act, the
4433	4485		difference between:
4434	4486		(A) the remaining balance of all then-existing
4435	4487		liability layers as of the date of the risk sharing valuation study;
4436	4488		and
4437	4489		(B) the actual unfunded actuarial accrued
4438	4490		liability as of the date of the risk sharing valuation study.
4439	4491		(31) "Year 2017 effective date" means the date on
4440	4492		which S.B. No. 2190, Acts of the 85th Legislature, Regular Session,
4441	4493		2017, took effect.
4442	4494		SECTION 3.02. Chapter 88 (H.B. 1573), Acts of the 77th
4443	4495		Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
4444	4496		Civil Statutes), is amended by adding Sections 1A, 1B, 1C, 1D, and
4445	4497		1E to read as follows:
4446	4498		Sec. 1A. INTERPRETATION OF ACT. This Act does not and may
4447	4499		not be interpreted to:
4448	4500		(1) relieve the city, the pension board, or the
4449	4501		pension system of their respective obligations under Sections 8A
4450	4502		through 8F of this Act;
4451	4503		(2) reduce or modify the rights of the city, the
4452	4504		pension system, or the pension board, including any officer or
4453	4505		employee of the city, pension system, or pension board, to enforce
4454	4506		obligations described by Subdivision (1) of this subsection;
4455	4507		(3) relieve the city, including any official or
4456	4508		employee of the city, from:
4457	4509		(A) paying or directing to pay required
4458	4510		contributions to the pension system or fund under Section 8 or 8A of
4459	4511		this Act or carrying out the provisions of Sections 8A through 8F of
4460	4512		this Act; or
4461	4513		(B) reducing or modifying the rights of the
4462	4514		pension board and any officer or employee of the pension board or
4463	4515		pension system to enforce obligations described by Subdivision (1)
4464	4516		of this section;
4465	4517		(4) relieve the pension board or pension system,
4466	4518		including any officer or employee of the pension board or pension
4467	4519		system, from any obligation to implement a benefit change or carry
4468	4520		out the provisions of Sections 8A through 8F of this Act; or
4469	4521		(5) reduce or modify the rights of the city and any
4470	4522		officer or employee of the city to enforce an obligation described
4471	4523		by Subdivision (4) of this section.
4472	4524		Sec. 1B. FISCAL YEAR. If either the pension system or the
4473	4525		city changes its respective fiscal year, the pension system and the
4474	4526		city shall enter into a written agreement under Section 3(n) of this
4475	4527		Act to adjust the provisions of Sections 8A through 8F of this Act
4476	4528		to reflect that change for purposes of this Act.
4477		-	Sec. 1C. ALTERNATIVE RETIREMENT PLANS. (a) In this
4478		-	section, "salary-based benefit plan" means a retirement plan
4479		-	provided by the pension system under this Act that provides member
4480		-	benefits that are calculated in accordance with a formula that is
4481		-	based on multiple factors, one of which is the member's salary at
4482		-	the time of the member's retirement.
	4529	+	Sec. 1C. ALTERNATIVE RETIREMENT PLANS.
	4530	+	(a) Notwithstanding any other law, including Section 8H of this
	4531	+	Act, and except as provided by Subsection (b) of this section, the
	4532	+	pension board and the city may enter into a written agreement under
	4533	+	Section 3(n) of this Act to offer an alternative retirement plan or
	4534	+	plans, including cash balance retirement plans, if both parties
	4535	+	consider it appropriate.
4483	4536		(b) Notwithstanding any other law, including Section 8H of
4484		-	this Act, and except as provided by Subsection (c) of this section,
4485		-	the pension board and the city may enter into a written agreement
4486		-	under Section 3(n) of this Act to offer an alternative retirement
4487		-	plan or plans, including a cash balance retirement plan or plans, if
4488		-	both parties consider it appropriate.
	4537	+	this Act, and except as provided by Subsection (d) of this section,
	4538	+	if, on or after September 1, 2027, the funded ratio of the pension
	4539	+	system is less than 60 percent as determined in a final risk sharing
	4540	+	valuation study prepared under Section 8B of this Act without
	4541	+	making any adjustments under Section 8E or 8F of this Act, or if, on
	4542	+	or after September 1, 2027, the funded ratio of the pension system
	4543	+	is less than 60 percent as determined in a revised and restated risk
	4544	+	sharing valuation study prepared under Section 8B(a)(8) of this
	4545	+	Act, the pension board and the city shall, as soon as practicable
	4546	+	but not later than the 60th day after the date the determination is
	4547	+	made:
	4548	+	(1) enter into a written agreement under Section 3(n)
	4549	+	of this Act to establish, as an alternative retirement plan under
	4550	+	this section, a cash balance retirement plan that complies with
	4551	+	Section 1D of this Act; and
	4552	+	(2) require each employee hired by the city on or after
	4553	+	the date the cash balance retirement plan is established to
	4554	+	participate in the cash balance retirement plan established under
	4555	+	this subsection instead of participating in the pension system,
	4556	+	provided the employee would have otherwise been eligible to
	4557	+	participate in the pension system.
4489	4558		(c) Notwithstanding any other law, including Section 8H of
4490	4559		this Act, and except as provided by Subsection (d) of this section,
4491		-	if, beginning with the final risk sharing valuation study prepared
4492		-	under Section 8B of this Act on or after July 1, 2027, either the
4493		-	funded ratio of the pension system is less than 60 percent as
4494		-	determined in the final risk sharing valuation study without making
4495		-	any adjustments under Section 8E or 8F of this Act, or the funded
4496		-	ratio of the pension system is less than 60 percent as determined in
4497		-	a revised and restated risk sharing valuation study prepared under
4498		-	Section 8B(a)(8) of this Act, the pension board and the city shall,
4499		-	as soon as practicable but not later than the 60th day after the
4500		-	date the determination is made:
4501		-	(1) enter into a written agreement under Section 3(n)
4502		-	of this Act to establish a cash balance retirement plan that
4503		-	complies with Section 1D of this Act; and
4504		-	(2) require each employee first hired by the city on or
4505		-	after the 90th day after the date the cash balance retirement plan
4506		-	is established to participate in the cash balance retirement plan
4507		-	established under this subsection instead of participating in the
4508		-	salary-based benefit plan, provided the employee would have
4509		-	otherwise been eligible to participate in the salary-based benefit
4510		-	plan.
	4560	+	if, on or after September 1, 2027, the pension board and the city
	4561	+	fail to establish a cash balance retirement plan within the time
	4562	+	prescribed by Subsection (b) of this section, the city shall by
	4563	+	ordinance:
	4564	+	(1) unilaterally establish, as an alternative
	4565	+	retirement plan, a cash balance retirement plan that complies with
	4566	+	Section 1D of this Act; and
	4567	+	(2) require each employee hired by the city on or after
	4568	+	the date the cash balance retirement plan is established to
	4569	+	participate in the cash balance retirement plan established under
	4570	+	this subsection instead of participating in the pension system,
	4571	+	provided the employee would have otherwise been eligible to
	4572	+	participate in the pension system.
4511	4573		(d) If the city fails to deliver the proceeds of the pension
4512	4574		obligation bonds described by Section 8C(j)(1) of this Act within
4513	4575		the time prescribed by that subdivision, notwithstanding the funded
4514		-	ratio of the pension system, the pension board and the city may not
4515		-	establish a cash balance retirement plan under Subsection (c) of
4516		-	this section.
	4576	+	ratio of the pension system:
	4577	+	(1) the pension board and the city may not establish a
	4578	+	cash balance retirement plan under Subsection (b) of this section;
	4579	+	and
	4580	+	(2) the city may not establish a cash balance
	4581	+	retirement plan under Subsection (c) of this section.
4517	4582		Sec. 1D. REQUIREMENTS FOR CERTAIN CASH BALANCE RETIREMENT
4518	4583		PLANS. (a) In this section:
4519		-	(1) "Cash balance plan participant" means an employee
4520		-	who participates in a cash balance retirement plan.
4521		-	(2) "Cash balance retirement plan" means a cash
	4584	+	(1) "Cash balance retirement plan" means a cash
4522	4585		balance retirement plan established by written agreement under
4523		-	Section 1C(b) or Section 1C(c) of this Act.
4524		-	(3) "Interest" means the interest credited to a cash
4525		-	balance plan participant's notional account, which may not:
4526		-	(A) exceed a percentage rate equal to the cash
4527		-	balance retirement plan's most recent five fiscal years' smoothed
4528		-	rate of return; or
4529		-	(B) be less than zero percent.
4530		-	(4) "Salary-based benefit plan" has the meaning
4531		-	assigned by Section 1C of this Act.
4532		-	(b) The written agreement establishing a cash balance
4533		-	retirement plan must:
	4586	+	Section 1C(b) or by ordinance under Section 1C(c) of this Act.
	4587	+	(2) "Interest" means the interest earned as the result
	4588	+	of returns on investments, which may not exceed a percentage rate
	4589	+	equal to the cash balance retirement plan's most recent five fiscal
	4590	+	years' smoothed rate of return.
	4591	+	(3) "Participant" means an employee who participates
	4592	+	in a cash balance retirement plan.
	4593	+	(b) The written agreement or ordinance establishing a cash
	4594	+	balance retirement plan must:
4534	4595		(1) provide for the administration of the cash balance
4535	4596		retirement plan;
4536	4597		(2) provide for a closed amortization period not to
4537		-	exceed 20 years from the date an actuarial gain or loss is realized;
4538		-	(3) ~~provide for the crediting of~~ city and ~~cash balance~~
4539		-	~~plan participant contributions~~ to ~~each cash balance plan~~
4540		-	participant~~'s notional account~~;
4541		-	(4) provide for the crediting of interest to ~~each cash~~
4542		-	~~balance plan~~ participant's ~~notional~~ account;
	4598	+	exceed 15 years from the date an actuarial gain or loss is realized;
	4599	+	(3) require that city and participant contributions be
	4600	+	credited to an account maintained for the benefit of the
	4601	+	participant;
	4602	+	(4) provide for the crediting of interest to the
	4603	+	participant's account;
4543	4604		(5) include a vesting schedule;
4544	4605		(6) include benefit options, including options for
4545		-	cash balance plan participants who separate from service prior to
4546		-	retirement;
	4606	+	participants who separate from service prior to retirement;
4547	4607		(7) provide for death and disability benefits;
4548		-	(8) allow a ~~cash balance plan~~ participant who is
4549		-	~~eligible to retire~~ under the plan to elect to:
	4608	+	(8) allow a participant who is eligible to retire
	4609	+	under the plan to elect to:
4550	4610		(A) receive a monthly annuity payable for the
4551		-	life of the ~~cash balance plan~~ participant in an amount actuarially
4552		-	~~determined on the~~ date of the ~~cash balance plan~~ participant's
4553		-	~~retirement based on the cash~~ balance ~~plan participant's accumulated~~
4554		-	~~notional account balance annuitized~~ in ~~accordance with~~ the
4555		-	~~actuarial assumptions and actuarial methods established in~~ the ~~most~~
4556		-	~~recent actuarial experience study conducted under Section 8D of~~
4557		-	~~this Act, except that the~~ assumed rate of return ~~applied may not~~
4558		-	~~exceed the pension system's assumed rate of return in the most~~
4559		-	~~recent risk sharing valuation study;~~ or
4560		-	~~(B) receive a single, partial lump-sum payment~~
4561		-	~~from the cash balance plan participant's accumulated account~~
4562		-	balance and a monthly ~~annuity payable for life in an amount~~
4563		-	determined in accordance with ~~Paragraph (A) of this subdivision~~
4564		-	based on the ~~cash balance plan~~ participant's ~~account balance after~~
4565		-	receiving the partial lump-sum payment; and
	4611	+	life of the participant in an amount actuarially determined on the
	4612	+	date of the participant's retirement based on the participant's
	4613	+	accumulated account balance annuitized in accordance with the
	4614	+	actuarial assumptions and actuarial methods established in the
	4615	+	written agreement or ordinance establishing the plan, except that
	4616	+	the discount rate applied may not exceed the pension system's
	4617	+	assumed rate of return in the most recent risk sharing valuation
	4618	+	study;
	4619	+	(B) receive a single lump-sum payment of the
	4620	+	participant's accumulated account balance; or
	4621	+	(C) receive a single, partial lump-sum payment
	4622	+	from the participant's accumulated account balance and a monthly
	4623	+	annuity payable for life in an amount determined in accordance with
	4624	+	Paragraph (A) of this subdivision based on the participant's
	4625	+	account balance after receiving the partial lump-sum payment; and
4566	4626		(9) include any other provision determined necessary
4567		-	by:
4568		-	(A) the pension board and the city; or
4569		-	(B) the pension system for purposes of
4570		-	maintaining the tax-qualified status of the pension system under
4571		-	Section 401, Internal Revenue Code of 1986, as amended.
4572		-	(c) Notwithstanding any other law, including Section 5 of
	4627	+	by the pension board and the city if the plan is established under
	4628	+	Section 1C(b) of this Act or by the city if the plan is established
	4629	+	under Section 1C(c) of this Act.
	4630	+	(c) The written agreement or ordinance establishing a cash
	4631	+	balance retirement plan must address whether employees who were
	4632	+	employed by the city before the date the cash balance retirement
	4633	+	plan was established and who resumed employment with the city on or
	4634	+	after the date the cash balance retirement plan was established are
	4635	+	required to participate in the pension system or in the cash balance
	4636	+	retirement plan.
	4637	+	(d) Notwithstanding any other law, including Section 5 of
4573	4638		this Act, an employee who participates in a cash balance retirement
4574	4639		plan:
4575		-	(1) subject to Subsection (d) of this section, is not
4576		-	eligible to be a member of and may not participate in the
4577		-	salary-based benefit plan; and
4578		-	(2) may not earn credited service in the salary-based
4579		-	benefit plan during the period the employee is participating in the
4580		-	cash balance retirement plan.
4581		-	(d) A cash balance plan participant is considered a member
4582		-	for purposes of Section 8A through 8I of this Act.
4583		-	(e) At the time of implementation of the cash balance
4584		-	retirement plan, the employer normal cost rate of the cash balance
4585		-	retirement plan may not exceed the employer normal cost rate of the
4586		-	salary-based benefit plan.
	4640	+	(1) except as provided by Subsection (c) of this
	4641	+	section, is not eligible to be a member of and may not participate
	4642	+	in the pension system; and
	4643	+	(2) may not earn credited service in the pension
	4644	+	system during the period the employee is participating in the cash
	4645	+	balance retirement plan.
	4646	+	(e) The combined city contribution for the cash balance
	4647	+	retirement plan and the pension system may not:
	4648	+	(1) exceed the city contribution for the pension
	4649	+	system calculated as if all participants in the cash balance
	4650	+	retirement plan were active members of the pension system; or
	4651	+	(2) be less than the required normal cost contribution
	4652	+	for the pension system calculated as if all participants in the cash
	4653	+	balance retirement plan were active members of the pension system.
4587	4654		Sec. 1E. CONFLICT OF LAW. To the extent of a conflict
4588	4655		between this Act and any other law, this Act prevails.
4589	4656		SECTION 3.03. Section 2, Chapter 88 (H.B. 1573), Acts of the
4590	4657		77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
4591	4658		Texas Civil Statutes), is amended by amending Subsections (c), (d),
4592	4659		(g), (j), (l), and (n) and adding Subsections (c-1), (c-2), (c-3),
4593	4660		(c-4), (j-1), (j-2), (ee), (ff), (gg), (hh), (ii), and (jj) to read
4594	4661		as follows:
4595	4662		(c) The pension board consists of 11 [nine] trustees as
4596	4663		follows:
4597	4664		(1) one person appointed by the mayor of the city[, or
4598	4665		the director of the civil service commission as the mayor's
4599	4666		representative];
4600	4667		(2) one person appointed by the controller of the city
4601	4668		[treasurer or a person performing the duties of treasurer];
4602	4669		(3) four municipal employees of the city who are
4603	4670		members of the pension system;
4604	4671		(4) two retirees, each of whom:
4605	4672		(A) has at least five years of credited service
4606	4673		in the pension system;
4607	4674		(B) receives a retirement pension from the
4608	4675		pension system; and
4609	4676		(C) is not an officer or employee of the city;
4610	4677		[and]
4611	4678		(5) one person appointed by the elected trustees who[:
4612	4679		[(A)] has been a resident of this state for the
4613	4680		three years preceding the date of initial appointment; and
4614	4681		(6) two persons appointed by the governing body of the
4615	4682		city [(B) is not a city officer or employee].
4616	4683		(c-1) To serve as a trustee under Subsection (c)(1), (2), or
4617	4684		(6) of this section, a person may not be a participant in or
4618	4685		beneficiary of the pension system.
4619	4686		(c-2) A trustee appointed under Subsection (c)(1), (2),
4620	4687		(5), or (6) of this section must have expertise in at least one of
4621	4688		the following areas: accounting, finance, pensions, investments,
4622	4689		or actuarial science. Of the trustees appointed under Subsections
4623	4690		(c)(1), (2), and (6) of this section, not more than two trustees may
4624	4691		have expertise in the same area.
4625	4692		(c-3) A trustee appointed under Subsection (c)(1) of this
4626	4693		section shall serve a three-year term expiring in July of the
4627	4694		applicable year. The appointed trustee may be removed at any time
4628	4695		by the mayor. The mayor shall fill a vacancy caused by the
4629	4696		trustee's death, resignation, or removal and the person appointed
4630	4697		to fill the vacancy shall serve the remainder of the unexpired term
4631	4698		of the replaced trustee and may not serve beyond the expiration of
4632	4699		the unexpired term unless appointed by the mayor.
4633	4700		(c-4) A trustee appointed under Subsection (c)(2) of this
4634	4701		section shall serve a three-year term expiring in July of the
4635	4702		applicable year. The appointed trustee may be removed at any time
4636	4703		by the controller. The controller shall fill a vacancy caused by
4637	4704		the trustee's death, resignation, or removal and the person
4638	4705		appointed to fill the vacancy shall serve the remainder of the
4639	4706		unexpired term of the replaced trustee and may not serve beyond the
4640	4707		expiration of the unexpired term unless appointed by the
4641	4708		controller.
4642	4709		(d) To serve as a trustee under Subsection (c)(3) of this
4643	4710		section, a person must be a member with at least five years of
4644	4711		credited service and be elected by the active members of the pension
4645	4712		system voting at an election called by the pension board. No more
4646	4713		than two of the employee trustees may be employees of the same
4647	4714		department.
4648	4715		(g) To serve as a trustee under Subsection (c)(4) of this
4649	4716		section, a person must be elected by a majority of the retirees
4650	4717		voting [retired members of the pension system] at an election
4651	4718		called by the pension board.
4652	4719		(j) To serve as a trustee under Subsection (c)(5) of this
4653	4720		section, the person must be appointed by a vote of a majority of the
4654	4721		elected trustees of the pension board. The trustee appointed under
4655	4722		Subsection (c)(5) of this section shall serve [serves] a three-year
4656	4723		[two-year] term. The appointment or reappointment of the appointed
4657	4724		trustee shall take place in July [January] of the [each
4658	4725		even-numbered] year in which the term ends. The appointed trustee
4659	4726		may be removed at any time by a vote of a majority of the elected
4660	4727		trustees of the pension board. A vacancy caused by the appointed
4661	4728		trustee's death, resignation, or removal shall be filled by the
4662	4729		elected trustees of the pension board. The appointee serves for the
4663	4730		remainder of the unexpired term of the replaced trustee. An
4664	4731		appointed trustee may not serve beyond the expiration of the
4665	4732		three-year [two-year] term unless a majority of [other than by
4666	4733		appointment for a new term by] the elected trustees of the pension
4667	4734		board reappoint the trustee for a new term.
4668	4735		(j-1) To serve as a trustee under Subsection (c)(6) of this
4669	4736		section, a person must be appointed by a vote of a majority of the
4670	4737		members of the governing body of the city. Each trustee appointed
4671	4738		under Subsection (c)(6) of this section shall serve three-year
4672	4739		terms expiring in July of the applicable year. A trustee appointed
4673	4740		under Subsection (c)(6) of this section may be removed at any time
4674	4741		by a vote of a majority of the members of the governing body of the
4675	4742		city. A vacancy caused by the appointed trustee's death,
4676	4743		resignation, or removal shall be filled by a vote of a majority of
4677	4744		the members of the governing body of the city. A person appointed
4678	4745		to fill the vacancy shall serve the remainder of the unexpired term
4679	4746		of the replaced trustee, and may not serve beyond the expiration of
4680	4747		the unexpired term unless appointed by the governing body of the
4681	4748		city.
4682	4749		(j-2) If a majority of the pension board determines that a
4683	4750		trustee appointed under Subsection (c)(1), (2), or (6) of this
4684	4751		section has acted or is acting in a manner that conflicts with the
4685	4752		interests of the pension system or is in violation of this Act or
4686	4753		any agreement between the pension board and the city entered into
4687	4754		under Section 3(n) of this Act, the pension board may recommend to
4688	4755		the mayor, controller, or governing body, as appropriate, that the
4689	4756		appointed trustee be removed from the pension board. If the
4690	4757		appointed trustee was appointed by the governing body of the city,
4691	4758		an action item concerning the pension board's recommendation shall
4692	4759		be placed on the governing body's agenda for consideration and
4693	4760		action. The governing body shall make a determination on the
4694	4761		recommendation and communicate the determination to the pension
4695	4762		system not later than the 45th day after the date of the
4696	4763		recommendation.
4697	4764		(l) To serve on the pension board, each [Each] trustee
4698	4765		shall, on or before [at] the first pension board meeting following
4699	4766		the trustee's most recent election or appointment, take an oath of
4700	4767		office that the trustee:
4701	4768		(1) will diligently and honestly administer the
4702	4769		pension system; and
4703	4770		(2) will not knowingly violate this Act or willingly
4704	4771		allow a violation of this Act to occur.
4705	4772		(n) The person serving as a trustee under Subsection (c)(2)
4706	4773		of this section serves as the treasurer of the pension fund [under
4707	4774		penalty of that person's official bond and oath of office]. The
4708	4775		treasurer shall file an [That person's] official bond payable to
4709	4776		the [city shall cover the person's position as treasurer of the]
4710	4777		pension system. The treasurer is [fund, and that person's sureties
4711	4778		are] liable on [for] the treasurer's official bond for the faithful
4712	4779		performance of the treasurer's duties under this Act in connection
4713	4780		with [actions pertaining to] the pension fund [to the same extent as
4714	4781		the sureties are liable under the terms of the bond for other
4715	4782		actions and conduct of the treasurer].
4716	4783		(ee) A trustee appointed under Subsection (c)(1), (2), (5),
4717	4784		or (6) of this section who fails to attend at least 50 percent of all
4718	4785		regular pension board meetings, as determined annually each July 1,
4719	4786		may be removed from the pension board by the appointing entity. A
4720	4787		trustee removed under this subsection may not be appointed as a
4721	4788		trustee for one year following removal.
4722	4789		(ff) All trustees appointed under Subsection (c) of this
4723	4790		section shall complete minimum educational training requirements
4724	4791		established by the State Pension Review Board. The appointing
4725	4792		entity may remove an appointed trustee who does not complete
4726	4793		minimum educational training requirements during the period
4727	4794		prescribed by the State Pension Review Board.
4728	4795		(gg) The pension board shall adopt an ethics policy
4729	4796		governing, among other matters, conflicts of interest that each
4730	4797		trustee must comply with during the trustee's term on the pension
4731	4798		board.
4732	4799		(hh) During a trustee's term on the pension board and for
4733	4800		one year after leaving the pension board, a trustee may not
4734	4801		represent any other person or organization in any formal or
4735	4802		informal appearance before the pension board or pension system
4736	4803		staff concerning a matter for which the person has or had
4737	4804		responsibility as a trustee.
4738	4805		(ii) The pension board may establish standing or temporary
4739	4806		committees as necessary to assist the board in carrying out its
4740	4807		business, including committees responsible for risk management or
4741	4808		governance, investments, administration and compensation,
4742	4809		financial and actuarial matters, audits, disability
4743	4810		determinations, and agreements under Section 3(n) of this Act. The
4744	4811		pension board shall establish a committee responsible for
4745	4812		agreements under Section 3(n) of this Act that must be composed of
4746	4813		the elected trustees and the trustee appointed by the elected
4747	4814		trustees. Except for a committee responsible for agreements under
4748	4815		Section 3(n) of this Act and any committee responsible for
4749	4816		personnel issues:
4750	4817		(1) each committee must include at least one elected
4751	4818		trustee and one trustee appointed by the mayor, controller, or
4752	4819		governing body of the city;
4753	4820		(2) committee meetings are open to all trustees; and
4754	4821		(3) a committee may not make final decisions and may
4755	4822		only make recommendations to the pension board.
4756	4823		(jj) Subsections (x)(1) through (4), (y), and (cc) of this
4757	4824		section do not grant the pension board authority to modify or
4758	4825		terminate Sections 8A through 8F of this Act.
4759	4826		SECTION 3.04. Chapter 88 (H.B. 1573), Acts of the 77th
4760	4827		Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
4761	4828		Civil Statutes), is amended by adding Sections 2A, 2B, 2C, and 2D to
4762	4829		read as follows:
4763	4830		Sec. 2A. CONFLICTS OF INTEREST. (a) The existence or
4764	4831		appearance of a conflict of interest on the part of any trustee is
4765	4832		detrimental to the proper functioning of the pension system if not
4766	4833		properly addressed. An appointed trustee may not deliberate or
4767	4834		vote on an action relating to the investment of pension system
4768	4835		assets if:
4769	4836		(1) the trustee or an entity with which the trustee is
4770	4837		affiliated:
4771	4838		(A) is a competitor or an affiliate of the person
4772	4839		or firm that is the subject of or otherwise under consideration in
4773	4840		the action; or
4774	4841		(B) likely would be subject to a due diligence
4775	4842		review by the person or firm that is under consideration in the
4776	4843		investment-related action; or
4777	4844		(2) the pension board otherwise determines that the
4778	4845		proposed action would create a direct or indirect benefit for the
4779	4846		appointed trustee or a firm with which the appointed trustee is
4780	4847		affiliated.
4781	4848		(b) The city attorney shall:
4782	4849		(1) provide annual training to trustees appointed by
4783	4850		the city regarding conflicts of interest; and
4784	4851		(2) to the extent authorized by city ordinances, at
4785	4852		the request of the external affairs committee of the pension board,
4786	4853		review and take appropriate action on a complaint alleging a
4787	4854		conflict of interest on the part of a city-appointed trustee.
4788	4855		Sec. 2B. PENSION SYSTEM ACTUARY; ACTUARIAL VALUATIONS.
4789	4856		(a) The pension board shall retain an actuary or actuarial firm
4790	4857		for purposes of this Act.
4791	4858		(b) At least annually, the pension system actuary shall make
4792	4859		a valuation of the assets and liabilities of the pension fund. The
4793	4860		valuation must include the risk sharing valuation study conducted
4794	4861		under Section 8B or 8C of this Act, as applicable.
4795	4862		(c) The pension system shall provide a report of the
4796	4863		valuation to the city.
4797	4864		Sec. 2C. QUALIFICATIONS OF CITY ACTUARY. (a) An actuary
4798	4865		hired by the city for purposes of this Act must be an actuary from a
4799	4866		professional service firm who:
4800	4867		(1) is not already engaged by the pension system or any
4801	4868		other pension system or fund authorized under Article 6243e.2(1) or
4802	4869		6243g-4, Revised Statutes, to provide actuarial services to the
4803	4870		pension system or fund, as applicable;
4804	4871		(2) has a minimum of 10 years of professional
4805	4872		actuarial experience; and
4806	4873		(3) is a fellow of the Society of Actuaries or a member
4807	4874		of the American Academy of Actuaries and who, in carrying out duties
4808	4875		for the city, has met the applicable requirements to issue
4809	4876		statements of actuarial opinion.
4810	4877		(b) Notwithstanding Subsection (a) of this section, the
4811	4878		city actuary must at least meet the qualifications required by the
4812	4879		board for the pension system actuary. The city actuary is not
4813	4880		required to have greater qualifications than those of the pension
4814	4881		system actuary.
4815	4882		Sec. 2D. REPORT ON INVESTMENTS BY INDEPENDENT INVESTMENT
4816	4883		CONSULTANT. (a) At least once every three years, the board shall
4817	4884		hire an independent investment consultant, including an
4818	4885		independent investment consulting firm, to conduct a review of
4819	4886		pension system investments and submit a report to the board and the
4820	4887		city concerning the review or demonstrate in the pension system's
4821	4888		annual financial report that the review was conducted. The
4822	4889		independent investment consultant shall review and report on at
4823	4890		least the following:
4824	4891		(1) the pension system's compliance with its
4825	4892		investment policy statement, ethics policies, including policies
4826	4893		concerning the acceptance of gifts, and policies concerning insider
4827	4894		trading;
4828	4895		(2) the pension system's asset allocation, including a
4829	4896		review and discussion of the various risks, objectives, and
4830	4897		expected future cash flows;
4831	4898		(3) the pension system's portfolio structure,
4832	4899		including the pension system's need for liquidity, cash income,
4833	4900		real return, and inflation protection and the active, passive, or
4834	4901		index approaches for different portions of the portfolio;
4835	4902		(4) investment manager performance reviews and an
4836	4903		evaluation of the processes used to retain and evaluate managers;
4837	4904		(5) benchmarks used for each asset class and
4838	4905		individual manager;
4839	4906		(6) an evaluation of fees and trading costs;
4840	4907		(7) an evaluation of any leverage, foreign exchange,
4841	4908		or other hedging transaction; and
4842	4909		(8) an evaluation of investment-related disclosures
4843	4910		in the pension system's annual reports.
4844	4911		(b) When the board retains an independent investment
4845	4912		consultant under this section, the pension system may require the
4846	4913		consultant to agree in writing to maintain the confidentiality of:
4847	4914		(1) information provided to the consultant that is
4848	4915		reasonably necessary to conduct a review under this section; and
4849	4916		(2) any nonpublic information provided for the pension
4850	4917		system for the review.
4851	4918		(c) The costs for the investment report required by this
4852	4919		section shall be paid from the pension fund.
4853	4920		SECTION 3.05. Section 3, Chapter 88 (H.B. 1573), Acts of the
4854	4921		77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
4855	4922		Texas Civil Statutes), is amended by amending Subsections (f) and
4856	4923		(n) and adding Subsections (o), (p), (q), (r), and (s) to read as
4857	4924		follows:
4858	4925		(f) The pension board shall compensate from the pension fund
4859	4926		the persons performing services under Subsections (d) and (e) of
4860	4927		this section and may provide other employee benefits that the
4861	4928		pension board considers proper. Any person employed by the pension
4862	4929		board under Subsection (d) or (e) of this section who has service
4863	4930		credits with the pension system at the time of the person's
4864	4931		employment by the pension board retains the person's status in the
4865	4932		pension system. Any person employed by the pension system on or
4866	4933		after January 1, 2008, who does not have service credits with the
4867	4934		pension system at the time of employment is a group D [A] member in
4868	4935		accordance with Section 5 of this Act. The pension board shall
4869	4936		adopt a detailed annual budget detailing its proposed
4870	4937		administrative expenditures under this subsection for the next
4871	4938		fiscal year.
4872	4939		(n) Notwithstanding any other law and except as
4873	4940		specifically limited by Subsection (o) of this section, the pension
4874	4941		board may enter into a written agreement with the city regarding
4875	4942		pension issues and benefits. The agreement must be approved by the
4876	4943		pension board and the governing body of the city and signed by the
4877	4944		mayor and by the pension board or the pension board's designee. The
4878	4945		agreement is enforceable against and binding on the pension board,
4879	4946		the city, and the pension system, including the pension system's
4880	4947		members, retirees, deferred participants, beneficiaries, eligible
4881	4948		survivors, and alternate payees. Any reference in this Act to an
4882	4949		agreement between the city and the pension board or pension system
4883	4950		is a reference to an agreement entered under this subsection.
4884	4951		(o) In any written agreement entered into between the city
4885	4952		and the pension board under Subsection (n) of this section, the
4886	4953		parties may not:
4887	4954		(1) alter Sections 8A through 8F of this Act, except
4888	4955		and only to the extent necessary to comply with federal law;
4889	4956		(2) increase the assumed rate of return to more than
4890	4957		seven percent per year;
4891	4958		(3) extend the amortization period of a liability
4892	4959		layer to more than 30 years from the first day of the fiscal year
4893	4960		beginning 12 months after the date of the risk sharing valuation
4894	4961		study in which the liability layer is first recognized; or
4895	4962		(4) allow a total city contribution in any fiscal year
4896	4963		that is less than the total city contribution required under
4897	4964		Section 8E or 8F, as applicable, of this Act.
4898	4965		(p) Annually on or before the end of the fiscal year, the
4899	4966		pension board shall make a report to the mayor and the governing
4900	4967		body of the city, each of which shall provide a reasonable
4901	4968		opportunity for the pension board to prepare and present the
4902	4969		report.
4903	4970		(q) The pension board shall provide quarterly investment
4904	4971		reports to the mayor.
4905	4972		(r) At the mayor's request, the pension board shall meet,
4906	4973		discuss, and analyze with the mayor or the mayor's representatives
4907	4974		any city proposed policy changes and ordinances that may have a
4908	4975		financial effect on the pension system.
4909	4976		(s) The pension board shall work to reduce administrative
4910	4977		expenses, including by working with any other pension fund to which
4911	4978		the city contributes.
4912	4979		SECTION 3.06. Section 5, Chapter 88 (H.B. 1573), Acts of the
4913	4980		77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
4914	4981		Texas Civil Statutes), is amended by amending Subsections (b), (e),
4915	4982		(f), and (g) and adding Subsections (j) and (k) to read as follows:
4916	4983		(b) Except as provided by Subsection (c), (j), or (k) of
4917	4984		this section and Sections 4 and 6 of this Act, an employee is a group
4918	4985		A member of the pension system as a condition of employment if the
4919	4986		employee:
4920	4987		(1) is hired or rehired as an employee by the city, the
4921	4988		predecessor system, or the pension system on or after September 1,
4922	4989		1999, and before January 1, 2008;
4923	4990		(2) was a member of the predecessor system before
4924	4991		September 1, 1981, under the terms of Chapter 358, Acts of the 48th
4925	4992		Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
4926	4993		Civil Statutes), and did not make an election before December 1,
4927	4994		1981, under Section 22(a) of that Act to receive a refund of
4928	4995		contributions and become a group B member;
4929	4996		(3) was a group A member who terminated employment
4930	4997		included in the predecessor system before May 3, 1991, elected
4931	4998		under Section 16, Chapter 358, Acts of the 48th Legislature,
4932	4999		Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
4933	5000		Statutes), to leave the member's contributions in that pension
4934	5001		fund, met the minimum service requirements for retirement at an
4935	5002		attained age, was reemployed in a position included in the
4936	5003		predecessor system before September 1, 1999, and elected, not later
4937	5004		than the 30th day after the date reemployment began, to continue as
4938	5005		a group A member;
4939	5006		(4) became a member of, or resumed membership in, the
4940	5007		predecessor system as an employee or elected official of the city
4941	5008		after January 1, 1996, and before September 1, 1999, and elected by
4942	5009		submission of a signed and notarized form in a manner determined by
4943	5010		the pension board to become a group A member and to contribute a
4944	5011		portion of the person's salary to the pension fund as required by
4945	5012		Chapter 358, Acts of the 48th Legislature, Regular Session, 1943
4946	5013		(Article 6243g, Vernon's Texas Civil Statutes); or
4947	5014		(5) met the requirements of Section 3B, Chapter 358,
4948	5015		Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g,
4949	5016		Vernon's Texas Civil Statutes), or Subsection (f) of this section
4950	5017		for membership in group A.
4951	5018		(e) Any member or former member of the pension system
4952	5019		elected to an office of the city on or after September 1, 1999, and
4953	5020		before January 1, 2008, is [becomes] a group A member and is
4954	5021		eligible to receive credit for all previous service on the same
4955	5022		conditions as reemployed group A members under Sections 7(c), (d),
4956	5023		(e), and (f) of this Act, except as otherwise provided by this Act.
4957	5024		For purposes of this subsection [Notwithstanding any other
4958	5025		provision in this Act or in Chapter 358, Acts of the 48th
4959	5026		Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
4960	5027		Civil Statutes)], consecutive terms of office of any elected member
4961	5028		who is elected to an office of the city are considered to be
4962	5029		continuous employment for purposes of this Act.
4963	5030		(f) Each group B member of the pension system may make an
4964	5031		irrevocable election on a date and in a manner determined by the
4965	5032		pension board to change membership from group B to group A:
4966	5033		(1) for future service only; or
4967	5034		(2) for future service and to convert all past group B
4968	5035		service to group A service and comply with the requirements of
4969	5036		Subsection (h) of this section provided the service is converted
4970	5037		before December 31, 2005.
4971	5038		(g) Each group A member with service in group B may make an
4972	5039		irrevocable election not later than December 31, 2005, [on a date]
4973	5040		and in a manner determined by the pension board to convert all group
4974	5041		B service to group A service and to comply with the requirements of
4975	5042		Subsection (h) of this section.
4976	5043		(j) Except as provided by Subsection (k) of this section or
4977	5044		Section 4 of this Act, an employee is a group D member of the pension
4978	5045		system as a condition of employment if the employee is hired as an
4979	5046		employee by the city or the pension system on or after January 1,
4980	5047		2008.
4981	5048		(k) Notwithstanding any provision of this section, for
4982	5049		purposes of Subsection (j) of this section:
4983	5050		(1) consecutive terms of office of an elected member
4984	5051		who is elected to an office of the city are considered to be
4985	5052		continuous employment; and
4986	5053		(2) a former employee who is rehired as an employee by
4987	5054		the city or the pension system on or after January 1, 2008, is, as a
4988	5055		condition of employment, a member of the group in which that
4989	5056		employee participated at the time of the employee's immediately
4990	5057		preceding separation from service.
4991	5058		SECTION 3.07. Section 6, Chapter 88 (H.B. 1573), Acts of the
4992	5059		77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
4993	5060		Texas Civil Statutes), is amended by adding Subsections (k) and (l)
4994	5061		to read as follows:
4995	5062		(k) Notwithstanding any other law, including Subsection
4996	5063		(b)(3) of this section, Subsections (a) through (j) of this section
4997	5064		do not apply to any employee on or after January 1, 2005. An
4998	5065		employee who meets the definition of "executive official" under
4999	5066		Subsection (b)(3) of this section is a group A member beginning
5000	5067		January 1, 2005, for credited service earned on or after January 1,
5001	5068		2005, or a member of the applicable group under Section 5 of this
5002	5069		Act. This subsection does not affect:
5003	5070		(1) any credited service or benefit percentage accrued
5004	5071		in group C before January 1, 2005;
5005	5072		(2) any group C benefit that a deferred participant or
5006	5073		retiree is eligible to receive that was earned before January 1,
5007	5074		2005; or
5008	5075		(3) the terms of any obligation to purchase service
5009	5076		credit or convert service credit to group C that was entered into
5010	5077		before January 1, 2005.
5011	5078		(l) A group C member who terminates employment before
5012	5079		January 1, 2005, is subject to the retirement eligibility
5013	5080		requirements in effect on the date of the member's termination from
5014	5081		employment. A group C member who becomes a group A member under
5015	5082		Subsection (k) of this section on January 1, 2005, is subject to the
5016	5083		retirement eligibility requirements under Section 10 of this Act.
5017	5084		SECTION 3.08. Section 7, Chapter 88 (H.B. 1573), Acts of the
5018	5085		77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
5019	5086		Texas Civil Statutes), is amended by amending Subsections (a), (c),
5020	5087		(e), (f), (g), and (h) and adding Subsections (g-1), (g-2), (i),
5021	5088		(j), (k), and (l) to read as follows:
5022	5089		(a) Notwithstanding any other provision of this Act,
5023	5090		duplication of service or credited service in group A, B, [or] C, or
5024	5091		D of the pension system or in the pension system and any other
5025	5092		defined benefit pension plan to which the city contributes is
5026	5093		prohibited.
5027	5094		(c) Except as provided by Section 12 of this Act, a [group A]
5028	5095		member may pay into the pension fund and obtain credit for any
5029	5096		service with the city or the pension system for which credit is
5030	5097		otherwise allowable [in group A] under this Act, except that:
5031	5098		(1) no required contributions were made by the member
5032	5099		for the service; or
5033	5100		(2) refunded contributions attributable to the
5034	5101		service have not been subsequently repaid.
5035	5102		(e) To establish service described by Subsection (c) of this
5036	5103		section that occurred on or after September 1, 1999, the member
5037	5104		shall pay a sum computed by multiplying the member's salary during
5038	5105		the service by the rate established [by the pension board] for
5039	5106		member contributions under Section 8 of this Act, and the city shall
5040	5107		pay into the pension fund an amount equal to the rate established
5041	5108		for city contributions under Section 8A [8] of this Act [multiplied
5042	5109		by that member's salary for the same period].
5043	5110		(f) In addition to the amounts to be paid by the member under
5044	5111		Subsection (d) or (e) of this section, the member shall also pay
5045	5112		interest on those amounts at the current assumed rate of return [six
5046	5113		percent] per year, not compounded, from the date the contributions
5047	5114		would have been deducted, if made, or from the date contributions
5048	5115		were refunded to the date of repayment of those contributions into
5049	5116		the pension fund.
5050	5117		(g) Before the year 2017 effective date, if [If] a group B or
5051	5118		group D member separates from service before completing five years
5052	5119		of credited service, the member's service credit is canceled at the
5053	5120		time of separation. If the member is reemployed by the city in a
5054	5121		position covered by the pension system before the first anniversary
5055	5122		of the date of separation, all credit for previous service is
5056	5123		restored. Any member whose service credit is canceled under this
5057	5124		subsection and who is reemployed by the city in a position covered
5058	5125		by the pension system after the first anniversary of the date of
5059	5126		separation receives one year of previous service credit in group B
5060	5127		or group D, as applicable, for each full year of subsequent service
5061	5128		up to the amount of the previous service that was canceled.
5062	5129		(g-1) On or after the year 2017 effective date, if a group B
5063	5130		or group D member who has made required member contributions
5064	5131		separates from service before completing five years of credited
5065	5132		service, the member's service credit is canceled at the time of
5066	5133		separation and the member is eligible to receive a refund of
5067	5134		required member contributions as provided by Section 17 of this
5068	5135		Act. If the member is reemployed before the first anniversary of
5069	5136		the date of separation:
5070	5137		(1) subject to Subdivision (2) of this subsection, all
5071	5138		credit for previous service for which no member contributions were
5072	5139		required is restored, along with credit for previous service for
5073	5140		which the member did not receive a refund of contributions; and
5074	5141		(2) if the member's service credit is canceled under
5075	5142		this subsection, the member is eligible to reinstate the canceled
5076	5143		credited service by paying the pension system the refund amount, if
5077	5144		any, plus interest on those amounts at the current assumed rate of
5078	5145		return per year, not compounded, from the date contributions were
5079	5146		refunded to the date of repayment of those contributions to the
5080	5147		pension fund.
5081	5148		(g-2) For purposes of Subsection (g-1)(2) of this section,
5082	5149		for any canceled service for which contributions were not required,
5083	5150		the member receives one year of previous service credit in group B
5084	5151		or group D, as appropriate, for each full year of subsequent service
5085	5152		up to the amount of the previous service that was canceled.
5086	5153		(h) A group B member who was a group A member before
5087	5154		September 1, 1981, and who was eligible to purchase credit for
5088	5155		previous service under Chapter 358, Acts of the 48th Legislature,
5089	5156		Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
5090	5157		Statutes), may purchase the service credit in group B by paying into
5091	5158		the pension fund an amount equal to the assumed rate of return [six
5092	5159		percent] per year, not compounded, on any contributions previously
5093	5160		withdrawn for the period from the date of withdrawal to the date of
5094	5161		purchase.
5095	5162		(i) Under rules and procedures adopted by the pension board,
5096	5163		a group D member may effectuate a direct trustee-to-trustee
5097	5164		transfer from a qualifying code Section 457(b) plan to the pension
5098	5165		system to purchase an increased or enhanced benefit in accordance
5099	5166		with the provisions of code Sections 415(n) and 457(e)(17) of the
5100	5167		Internal Revenue Code of 1986. The amount transferred under this
5101	5168		subsection shall be held by the pension system and the pension
5102	5169		system may not separately account for the amount. The pension board
5103	5170		by rule shall determine the additional benefit that a member is
5104	5171		entitled to based on a transfer under this subsection.
5105	5172		(j) For purposes of this subsection and Subsection (k) of
5106	5173		this section, "furlough time" means the number of days a person has
5107	5174		been furloughed. A person who has been voluntarily or
5108	5175		involuntarily furloughed shall receive credited service for each
5109	5176		day that the person has been furloughed, provided that:
5110	5177		(1) the pension system receives all required city
5111	5178		contributions and member contributions for the credited service
5112	5179		attributable to the furlough time for the pay period in which the
5113	5180		furlough occurs, based on the regular salary that each furloughed
5114	5181		member would have received if the member had worked during the
5115	5182		furlough time;
5116	5183		(2) the member may receive not more than 10 days of
5117	5184		credited service in a fiscal year for furlough time; and
5118	5185		(3) credited service for furlough time may not be used
5119	5186		to meet the five-year requirement under Section 10(b) of this Act
5120	5187		for eligibility for a benefit.
5121	5188		(k) For purposes of Subsection (j) of this section, the city
5122	5189		shall establish a unique pay code for furlough time to provide for
5123	5190		timely payment of city contributions and member contributions for
5124	5191		furlough time and to allow the pension system to identify furlough
5125	5192		time for each furloughed employee.
5126	5193		(l) Notwithstanding any provision of this section, the
5127	5194		interest rate on any service purchase shall be the then current
5128	5195		assumed rate of return, not compounded.
5129	5196		SECTION 3.09. The heading to Section 8, Chapter 88 (H.B.
5130	5197		1573), Acts of the 77th Legislature, Regular Session, 2001 (Article
5131	5198		6243h, Vernon's Texas Civil Statutes), is amended to read as
5132	5199		follows:
5133	5200		Sec. 8. MEMBER CONTRIBUTIONS.
5134	5201		SECTION 3.10. Sections 8(a), (b), and (c), Chapter 88 (H.B.
5135	5202		1573), Acts of the 77th Legislature, Regular Session, 2001 (Article
5136	5203		6243h, Vernon's Texas Civil Statutes), are amended to read as
5137	5204		follows:
5138	5205		(a) Subject to adjustments authorized under Section 8E or 8F
5139	5206		of this Act, beginning on the year 2017 effective date, each [Each
5140	5207		group A] member of the pension system shall make biweekly [monthly]
5141	5208		contributions during employment in an amount determined in
5142	5209		accordance with this section [by the pension board and expressed as
5143	5210		a percentage of salary]. The contributions shall be deducted by the
5144	5211		employer from the salary of each member and paid to the pension
5145	5212		system for deposit in the pension fund. Member contributions under
5146	5213		this section shall be made as follows:
5147	5214		(1) each group A member shall contribute:
5148	5215		(A) seven percent of the member's salary
5149	5216		beginning with the member's first full biweekly pay period that
5150	5217		occurs on or after the year 2017 effective date; and
5151	5218		(B) a total of eight percent of the member's
5152	5219		salary beginning with the member's first full biweekly pay period
5153	5220		for the member that occurs on or after July 1, 2018;
5154	5221		(2) each group B member shall contribute:
5155	5222		(A) two percent of the member's salary beginning
5156	5223		with the member's first full biweekly pay period that occurs on or
5157	5224		after the year 2017 effective date; and
5158	5225		(B) a total of four percent of the member's
5159	5226		salary beginning with the member's first full biweekly pay period
5160	5227		for the member that occurs on or after July 1, 2018; and
5161	5228		(3) each group D member shall contribute two percent
5162	5229		of the member's salary beginning with the member's first full
5163	5230		biweekly pay period that occurs on or after the year 2017 effective
5164	5231		date.
5165	5232		(b) This section does not increase or decrease the
5166	5233		contribution obligation of any member that arose before the year
5167	5234		2017 effective date [September 1, 2001,] or give rise to any claim
5168	5235		for a refund for any contributions made before that date.
5169	5236		(c) The employer shall pick up the contributions required of
5170	5237		[group A] members by Subsection (a) of this section and
5171	5238		contributions required of group D members under Section 10A(a) of
5172	5239		this Act as soon as reasonably practicable under applicable rules
5173	5240		for all salaries earned by members after the year 2017 effective
5174	5241		date and by January 1, 2018, for contributions required by Section
5175	5242		10A(a) of this Act. The city shall pay the pickup contributions to
5176	5243		the pension system from the same source of funds that is used for
5177	5244		paying salaries to the members. The pickup contributions are in
5178	5245		lieu of contributions by [group A] members. The city may pick up
5179	5246		those contributions by a deduction from each [group A] member's
5180	5247		salary equal to the amount of the member's contributions picked up
5181	5248		by the city. Members may not choose to receive the contributed
5182	5249		amounts directly instead of having the contributed amounts paid by
5183	5250		the city to the pension system. An accounting of member
5184	5251		contributions picked up by the employer shall be maintained, and
5185	5252		the contributions shall be treated for all other purposes as if the
5186	5253		amount were a part of the member's salary and had been deducted
5187	5254		under this section. Contributions picked up under this subsection
5188	5255		shall be treated as employer contributions in determining tax
5189	5256		treatment of the amounts under the Internal Revenue Code of 1986, as
5190	5257		amended.
5191	5258		SECTION 3.11. Chapter 88 (H.B. 1573), Acts of the 77th
5192	5259		Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
5193	5260		Civil Statutes), is amended by adding Sections 8A, 8B, 8C, 8D, 8E,
5194	5261		8F, 8G, 8H, and 8I to read as follows:
5195	5262		Sec. 8A. CITY CONTRIBUTIONS. (a) The city shall make
5196	5263		contributions to the pension system for deposit into the pension
5197	5264		fund as provided by this section and Section 8B, 8C, 8E, or 8F of
5198	5265		this Act, as applicable. The city shall contribute:
5199	5266		(1) beginning with the year 2017 effective date and
5200	5267		ending with the fiscal year ending June 30, 2018, an amount equal to
5201	5268		the sum of:
5202	5269		(A) the city contribution rate, as determined in
5203	5270		the initial risk sharing valuation study conducted under Section 8C
5204	5271		of this Act, multiplied by the pensionable payroll for the fiscal
5205	5272		year; and
5206	5273		(B) the city contribution amount for the fiscal
5207	5274		year; and
5208	5275		(2) for each fiscal year after the fiscal year ending
5209	5276		June 30, 2018, an amount equal to the sum of:
5210	5277		(A) the city contribution rate, as determined in
5211	5278		a subsequent risk sharing valuation study conducted under Section
5212	5279		8B of this Act and adjusted under Section 8E or 8F of this Act, as
5213	5280		applicable, multiplied by the pensionable payroll for the
5214	5281		applicable fiscal year; and
5215	5282		(B) except as provided by Subsection (e) of this
5216	5283		section, the city contribution amount for the applicable fiscal
5217	5284		year.
5218	5285		(b) Except by written agreement between the city and the
5219	5286		pension board under Section 3(n) of this Act providing for an
5220	5287		earlier contribution date, at least biweekly, the city shall make
5221	5288		the contributions required by Subsection (a) of this section by
5222	5289		depositing with the pension system an amount equal to the sum of:
5223	5290		(1) the city contribution rate multiplied by the
5224	5291		pensionable payroll for the biweekly period; and
5225	5292		(2) the city contribution amount for the applicable
5226	5293		fiscal year divided by 26.
5227	5294		(c) With respect to each fiscal year:
5228	5295		(1) the first contribution by the city under this
5229	5296		section for the fiscal year shall be made not later than the date
5230	5297		payment is made to employees for their first full biweekly pay
5231	5298		period beginning on or after the first day of the fiscal year; and
5232	5299		(2) the final contribution by the city under this
5233	5300		section for the fiscal year shall be made not later than the date
5234	5301		payment is made to employees for the final biweekly pay period of
5235	5302		the fiscal year.
5236	5303		(d) In addition to the amounts required under this section,
5237	5304		the city may at any time contribute additional amounts to the
5238	5305		pension system for deposit in the pension fund by entering into a
5239	5306		written agreement with the pension board in accordance with Section
5240	5307		3(n) of this Act.
5241	5308		(e) If, in any given fiscal year, the funded ratio is
5242	5309		greater than or equal to 100 percent, the city contribution under
5243	5310		this section may no longer include the city contribution amount.
5244	5311		(f) Contributions shall be made under this section by the
5245	5312		city to the pension system in order to be credited against any
5246	5313		amortization schedule of payments due to the pension system under
5247	5314		this Act.
5248	5315		(g) Subsection (f) of this section does not affect the
5249	5316		exclusion of contribution amounts under Subsection (e) of this
5250	5317		section or changes to an amortization schedule of a liability layer
5251	5318		under Section 8B(a)(7)(F), 8C(i)-(j), or 8E(c)(3)-(4) of this Act.
5252	5319		(h) Notwithstanding any other law and except for the pension
5253	5320		obligation bond assumed under Section 8C(d)(2) of this Act, the
5254	5321		city may not issue a pension obligation bond to fund the city
5255	5322		contribution rate under Subsection (a)(1)(A) or (a)(2)(A) of this
5256	5323		section or the city contribution amount under Subsection (a)(1)(B)
5257	5324		or (a)(2)(B) of this section.
5258	5325		Sec. 8B. RISK SHARING VALUATION STUDIES. (a) The pension
5259	5326		system and the city shall separately cause their respective
5260	5327		actuaries to prepare a risk sharing valuation study in accordance
5261	5328		with this section and actuarial standards of practice. A risk
5262	5329		sharing valuation study must:
5263	5330		(1) be dated as of the first day of the fiscal year for
5264	5331		which the study is required to be prepared;
5265	5332		(2) be included in the annual valuation study prepared
5266	5333		under Section 2B of this Act;
5267	5334		(3) calculate the unfunded actuarial accrued
5268	5335		liability of the pension system;
5269	5336		(4) be based on actuarial data provided by the pension
5270	5337		system actuary or, if actuarial data is not provided, on estimates
5271	5338		of actuarial data;
5272	5339		(5) estimate the city contribution rate and the city
5273	5340		contribution amount, taking into account any adjustments required
5274	5341		under Section 8E or 8F of this Act for all applicable prior fiscal
5275	5342		years;
5276	5343		(6) detail the city contribution rate and the city
5277	5344		contribution amount, taking into account any adjustments required
5278	5345		under Section 8E or 8F of this Act for all applicable prior fiscal
5279	5346		years;
5280	5347		(7) subject to Subsection (g) of this section, be
5281	5348		based on the following assumptions and methods that are consistent
5282	5349		with actuarial standards of practice:
5283	5350		(A) an ultimate entry age normal actuarial
5284	5351		method;
5285	5352		(B) for purposes of determining the actuarial
5286	5353		value of assets:
5287	5354		(i) except as provided by Subparagraph (ii)
5288	5355		of this paragraph and Section 8E(c)(1) or 8F(c)(1) of this Act, an
5289	5356		asset smoothing method recognizing actuarial losses and gains over
5290	5357		a five-year period applied prospectively beginning on the year 2017
5291	5358		effective date; and
5292	5359		(ii) for the initial risk sharing valuation
5293	5360		study prepared under Section 8C of this Act, a marked-to-market
5294	5361		method applied as of June 30, 2016;
5295	5362		(C) closed layered amortization of liability
5296	5363		layers to ensure that the amortization period for each layer begins
5297	5364		12 months after the date of the risk sharing valuation study in
5298	5365		which the liability layer is first recognized;
5299	5366		(D) each liability layer is assigned an
5300	5367		amortization period;
5301	5368		(E) each liability loss layer amortized over a
5302	5369		period of 30 years from the first day of the fiscal year beginning
5303	5370		12 months after the date of the risk sharing valuation study in
5304	5371		which the liability loss layer is first recognized, except that the
5305	5372		legacy liability must be amortized from July 1, 2016, for a 30-year
5306	5373		period beginning July 1, 2017;
5307	5374		(F) the amortization period for each liability
5308	5375		gain layer being:
5309	5376		(i) equal to the remaining amortization
5310	5377		period on the largest remaining liability loss layer and the two
5311	5378		layers must be treated as one layer such that if the payoff year of
5312	5379		the liability loss layer is accelerated or extended, the payoff
5313	5380		year of the liability gain layer is also accelerated or extended; or
5314	5381		(ii) if there is no liability loss layer, a
5315	5382		period of 30 years from the first day of the fiscal year beginning
5316	5383		12 months after the date of the risk sharing valuation study in
5317	5384		which the liability gain layer is first recognized;
5318	5385		(G) liability layers, including the legacy
5319	5386		liability, funded according to the level percent of payroll method;
5320	5387		(H) the assumed rate of return, subject to
5321	5388		adjustment under Section 8E(c)(5) of this Act or, if Section 8C(g)
5322	5389		of this Act applies, adjustment in accordance with a written
5323	5390		agreement entered into under Section 3(n) of this Act, except that
5324	5391		the assumed rate of return may not exceed seven percent per annum;
5325	5392		(I) the price inflation assumption as of the most
5326	5393		recent actuarial experience study, which may be reset by the
5327	5394		pension board by plus or minus 50 basis points based on that
5328	5395		actuarial experience study;
5329	5396		(J) projected salary increases and payroll
5330	5397		growth rate set in consultation with the city's finance director;
5331	5398		(K) payroll for purposes of determining the
5332	5399		corridor midpoint, city contribution rate, and city contribution
5333	5400		amount must be projected using the annual payroll growth rate
5334	5401		assumption, which for purposes of preparing any amortization
5335	5402		schedule may not exceed three percent; and
5336	5403		(L) the city contribution rate calculated
5337	5404		without inclusion of the legacy liability; and
5338	5405		(8) be revised and restated, if appropriate, not later
5339	5406		than:
5340	5407		(A) the date required by a written agreement
5341	5408		entered into between the city and the pension board; or
5342	5409		(B) the 30th day after the date required action
5343	5410		is taken by the pension board under Section 8E or 8F of this Act to
5344	5411		reflect any changes required by either section.
5345	5412		(b) As soon as practicable after the end of a fiscal year,
5346	5413		the pension system actuary at the direction of the pension system
5347	5414		and the city actuary at the direction of the city shall separately
5348	5415		prepare a proposed risk sharing valuation study based on the fiscal
5349	5416		year that just ended.
5350	5417		(c) Not later than October 31 following the end of the
5351	5418		fiscal year, the pension system shall provide to the city actuary,
5352	5419		under a confidentiality agreement with the pension board in which
5353	5420		the city actuary agrees to comply with the confidentiality
5354	5421		provisions of Section 8G of this Act, the actuarial data described
5355	5422		by Subsection (a)(4) of this section.
5356	5423		(d) Not later than the 150th day after the last day of the
5357	5424		fiscal year:
5358	5425		(1) the pension system actuary, at the direction of
5359	5426		the pension system, shall provide the proposed risk sharing
5360	5427		valuation study prepared by the pension system actuary under
5361	5428		Subsection (b) of this section to the city actuary; and
5362	5429		(2) the city actuary, at the direction of the city,
5363	5430		shall provide the proposed risk sharing valuation study prepared by
5364	5431		the city actuary under Subsection (b) of this section to the pension
5365	5432		system actuary.
5366	5433		(e) Each actuary described by Subsection (d) of this section
5367	5434		may provide copies of the proposed risk sharing valuation studies
5368	5435		to the city or the pension system as appropriate.
5369	5436		(f) If, after exchanging proposed risk sharing valuation
5370	5437		studies under Subsection (d) of this section, it is found that the
5371	5438		difference between the estimated city contribution rate
5372	5439		recommended in the proposed risk sharing valuation study prepared
5373	5440		by the pension system actuary and the estimated city contribution
5374	5441		rate recommended in the proposed risk sharing valuation study
5375	5442		prepared by the city actuary for the corresponding fiscal year is:
5376	5443		(1) less than or equal to two percentage points, the
5377	5444		estimated city contribution rate recommended by the pension system
5378	5445		actuary will be the estimated city contribution rate for purposes
5379	5446		of Subsection (a)(5) of this section, and the proposed risk sharing
5380	5447		valuation study prepared for the pension system is considered to be
5381	5448		the final risk sharing valuation study for the fiscal year for the
5382	5449		purposes of this Act; or
5383	5450		(2) greater than two percentage points, the city
5384	5451		actuary and the pension system actuary shall have 20 business days
5385	5452		to reconcile the difference, provided that without the mutual
5386	5453		agreement of both actuaries, the difference in the estimated city
5387	5454		contribution rate recommended by the city actuary and the estimated
5388	5455		city contribution rate recommended by the pension system actuary
5389	5456		may not be further increased and:
5390	5457		(A) if, as a result of reconciliation efforts
5391	5458		under this subdivision, the difference is reduced to less than or
5392	5459		equal to two percentage points:
5393	5460		(i) the estimated city contribution rate
5394	5461		proposed under the reconciliation by the pension system actuary
5395	5462		will be the estimated city contribution rate for purposes of
5396	5463		Subsection (a)(5) of this section; and
5397	5464		(ii) the pension system's risk sharing
5398	5465		valuation study is considered to be the final risk sharing
5399	5466		valuation study for the fiscal year for the purposes of this Act; or
5400	5467		(B) if, after 20 business days, the pension
5401	5468		system actuary and the city actuary are not able to reach a
5402	5469		reconciliation that reduces the difference to an amount less than
5403	5470		or equal to two percentage points:
5404	5471		(i) the city actuary at the direction of the
5405	5472		city and the pension system actuary at the direction of the pension
5406	5473		system each shall deliver to the finance director of the city and
5407	5474		the executive director of the pension system a final risk sharing
5408	5475		valuation study with any agreed-to changes, marked as the final
5409	5476		risk sharing valuation study for each actuary; and
5410	5477		(ii) not later than the 90th day before the
5411	5478		first day of the next fiscal year, the finance director and the
5412	5479		executive director shall execute a joint addendum to the final risk
5413	5480		sharing valuation study received under Subparagraph (i) of this
5414	5481		paragraph that is a part of the final risk sharing valuation study
5415	5482		for the fiscal year for all purposes and reflects the arithmetic
5416	5483		average of the estimated city contribution rates for the fiscal
5417	5484		year stated by the city actuary and the pension system actuary in
5418	5485		the final risk sharing valuation study for purposes of Subsection
5419	5486		(a)(5) of this section, and for reporting purposes the pension
5420	5487		system may treat the pension system actuary's risk sharing
5421	5488		valuation study with the addendum as the final risk sharing
5422	5489		valuation study.
5423	5490		(g) The assumptions and methods used and the types of
5424	5491		actuarial data and financial information used to prepare the
5425	5492		initial risk sharing valuation study under Section 8C of this Act
5426	5493		shall be used to prepare each subsequent risk sharing valuation
5427	5494		study under this section, unless changed based on the actuarial
5428	5495		experience study conducted under Section 8D of this Act.
5429	5496		(h) The actuarial data provided under Subsection (a)(4) of
5430	5497		this section may not include the identifying information of
5431	5498		individual members.
5432	5499		Sec. 8C. INITIAL RISK SHARING VALUATION STUDIES; CORRIDOR
5433	5500		MIDPOINT AND CITY CONTRIBUTION AMOUNTS. (a) The pension system
5434	5501		and the city shall separately cause their respective actuaries to
5435	5502		prepare an initial risk sharing valuation study that is dated as of
5436	5503		July 1, 2016, in accordance with this section. An initial risk
5437	5504		sharing valuation study must:
5438	5505		(1) except as otherwise provided by this section, be
5439	5506		prepared in accordance with Section 8B of this Act, and for purposes
5440	5507		of Section 8B(a)(4) of this Act, be based on actuarial data as of
5441	5508		June 30, 2016, or, if actuarial data is not provided, on estimates
5442	5509		of actuarial data;
5443	5510		(2) project the corridor midpoint for 31 fiscal years
5444	5511		beginning with the fiscal year beginning July 1, 2017; and
5445	5512		(3) subject to Subsections (i) and (j) of this
5446	5513		section, include a schedule of city contribution amounts for 30
5447	5514		fiscal years beginning with the fiscal year beginning July 1, 2017.
5448	5515		(b) If the initial risk sharing valuation study has not been
5449	5516		prepared consistent with this section before the year 2017
5450	5517		effective date, as soon as practicable after the year 2017
5451	5518		effective date:
5452	5519		(1) the pension system shall provide to the city
5453	5520		actuary under a confidentiality agreement the necessary actuarial
5454	5521		data used by the pension system actuary to prepare the proposed
5455	5522		initial risk sharing valuation study; and
5456	5523		(2) not later than the 30th day after the date the
5457	5524		city's actuary receives the actuarial data:
5458	5525		(A) the city actuary, at the direction of the
5459	5526		city, shall provide a proposed initial risk sharing valuation study
5460	5527		to the pension system actuary; and
5461	5528		(B) the pension system actuary, at the direction
5462	5529		of the pension system, shall provide a proposed initial risk
5463	5530		sharing valuation study to the city actuary.
5464	5531		(c) If, after exchanging proposed initial risk sharing
5465	5532		valuation studies under Subsection (b)(2) of this section, it is
5466	5533		determined that the difference between the estimated total city
5467	5534		contribution divided by the pensionable payroll for any fiscal year
5468	5535		in the proposed initial risk sharing valuation study prepared by
5469	5536		the pension system actuary and in the proposed initial risk sharing
5470	5537		valuation study prepared by the city actuary is:
5471	5538		(1) less than or equal to two percentage points, the
5472	5539		estimated city contribution rate and the estimated city
5473	5540		contribution amount for that fiscal year recommended by the pension
5474	5541		system actuary will be the estimated city contribution rate and the
5475	5542		estimated city contribution amount, as applicable, for purposes of
5476	5543		Section 8B(a)(5) of this Act; or
5477	5544		(2) greater than two percentage points, the city
5478	5545		actuary and the pension system actuary shall have 20 business days
5479	5546		to reconcile the difference and:
5480	5547		(A) if, as a result of reconciliation efforts
5481	5548		under this subdivision, the difference in any fiscal year is
5482	5549		reduced to less than or equal to two percentage points, the city
5483	5550		contribution rate and the city contribution amount recommended by
5484	5551		the pension system actuary for that fiscal year will be the
5485	5552		estimated city contribution rate and the estimated city
5486	5553		contribution amount, as applicable, for purposes of Section
5487	5554		8B(a)(5) of this Act; or
5488	5555		(B) if, after 20 business days, the city actuary
5489	5556		and the pension system actuary are not able to reach a
5490	5557		reconciliation that reduces the difference to an amount less than
5491	5558		or equal to two percentage points for any fiscal year:
5492	5559		(i) the city actuary at the direction of the
5493	5560		city and the pension system actuary at the direction of the pension
5494	5561		system each shall deliver to the finance director of the city and
5495	5562		the executive director of the pension system a final initial risk
5496	5563		sharing valuation study with any agreed-to changes, marked as the
5497	5564		final initial risk sharing valuation study for each actuary; and
5498	5565		(ii) the finance director and the executive
5499	5566		director shall execute a joint addendum to the final initial risk
5500	5567		sharing valuation study that is a part of each final initial risk
5501	5568		sharing valuation study for all purposes and that reflects the
5502	5569		arithmetic average of the estimated city contribution rate and the
5503	5570		estimated city contribution amount for each fiscal year in which
5504	5571		the difference was greater than two percentage points for purposes
5505	5572		of Section 8B(a)(5) of this Act, and for reporting purposes the
5506	5573		pension system may treat the pension system actuary's initial risk
5507	5574		sharing valuation study with the addendum as the final initial risk
5508	5575		sharing valuation study.
5509	5576		(d) In preparing the initial risk sharing valuation study,
5510	5577		the city actuary and pension system actuary shall:
5511	5578		(1) adjust the actuarial value of assets to be equal to
5512	5579		the market value of assets as of July 1, 2016;
5513	5580		(2) assume the issuance of planned pension obligation
5514	5581		bonds by December 31, 2017, in accordance with Subsection (j)(2) of
5515	5582		this section; and
5516	5583		(3) assume benefit and contribution changes under this
5517	5584		Act as of the year 2017 effective date.
5518	5585		(e) If the city actuary does not prepare an initial risk
5519	5586		sharing valuation study for purposes of this section, the pension
5520	5587		system actuary's initial risk sharing valuation study will be used
5521	5588		as the final risk sharing valuation study for purposes of this Act
5522	5589		unless the city did not prepare a proposed initial risk sharing
5523	5590		valuation study because the pension system actuary did not provide
5524	5591		the necessary actuarial data in a timely manner. If the city did
5525	5592		not prepare a proposed initial risk sharing valuation study because
5526	5593		the pension system actuary did not provide the necessary actuarial
5527	5594		data in a timely manner, the city actuary shall have 60 days to
5528	5595		prepare the proposed initial risk sharing valuation study on
5529	5596		receipt of the necessary information.
5530	5597		(f) If the pension system actuary does not prepare a
5531	5598		proposed initial risk sharing valuation study for purposes of this
5532	5599		section, the proposed initial risk sharing valuation study prepared
5533	5600		by the city actuary will be the final risk sharing valuation study
5534	5601		for purposes of this Act.
5535	5602		(g) The city and the pension board may agree on a written
5536	5603		transition plan for resetting the corridor midpoint:
5537	5604		(1) if at any time the funded ratio is equal to or
5538	5605		greater than 100 percent; or
5539	5606		(2) for any fiscal year after the payoff year of the
5540	5607		legacy liability.
5541	5608		(h) If the city and the pension board have not entered into
5542	5609		an agreement described by Subsection (g) of this section in a given
5543	5610		fiscal year, the corridor midpoint will be the corridor midpoint
5544	5611		determined for the 31st fiscal year in the initial risk sharing
5545	5612		valuation study prepared in accordance with this section.
5546	5613		(i) If the city makes a contribution to the pension system
5547	5614		of at least $5 million more than the amount that would be required
5548	5615		by Section 8A(a) of this Act, a liability gain layer with the same
5549	5616		remaining amortization period as the legacy liability is created.
5550	5617		In each subsequent risk sharing valuation study until the end of
5551	5618		that amortization period, the city contribution amount must be
5552	5619		decreased by the amortized amount in each fiscal year covered by the
5553	5620		liability gain layer.
5554	5621		(j) Notwithstanding any other provision of this Act,
5555	5622		including Section 8H of this Act:
5556	5623		(1) if the city fails to deliver the proceeds of
5557	5624		pension obligation bonds totaling $250 million on or before March
5558	5625		31, 2018, the pension board shall have 30 days from March 31, 2018,
5559	5626		to rescind, prospectively, any or all benefit changes made
5560	5627		effective under S.B. No. 2190, Acts of the 85th Legislature,
5561	5628		Regular Session, 2017, as of the year 2017 effective date, or to
5562	5629		reestablish the deadline for the delivery of pension obligation
5563	5630		bond proceeds, reserving the right to rescind the benefit changes
5564	5631		authorized by this subdivision if the bond proceeds are not
5565	5632		delivered by the reestablished deadline; and
5566	5633		(2) subject to Subsection (k) of this section, if the
5567	5634		pension board rescinds benefit changes under Subdivision (1) of
5568	5635		this subsection or pension obligation bond proceeds are not
5569	5636		delivered on or before December 31, 2017, the initial risk sharing
5570	5637		valuation study shall be prepared again and restated without
5571	5638		assuming the delivery of the pension obligation bond proceeds, the
5572	5639		later delivery of pension obligation bond proceeds, or the
5573	5640		rescinded benefit changes, as applicable, including a
5574	5641		reamortization of the city contribution amount for the amortization
5575	5642		period remaining for the legacy liability, and the resulting city
5576	5643		contribution rate and city contribution amount will become
5577	5644		effective in the fiscal year following the completion of the
5578	5645		restated initial risk sharing valuation study.
5579	5646		(k) The restated initial risk sharing valuation study
5580	5647		required under Subsection (j)(2) of this section must be completed
5581	5648		at least 30 days before the start of the fiscal year:
5582	5649		(1) ending June 30, 2019, if the pension board does not
5583	5650		reestablish the deadline under Subsection (j)(1) of this section;
5584	5651		or
5585	5652		(2) immediately following the reestablished deadline,
5586	5653		if the pension board reestablishes the deadline under Subsection
5587	5654		(j)(1) of this section and the city fails to deliver the pension
5588	5655		obligation bond proceeds described by Subsection (j)(1) of this
5589	5656		section by the reestablished deadline.
5590	5657		Sec. 8D. ACTUARIAL EXPERIENCE STUDIES. (a) At least once
5591	5658		every four years, the pension system actuary, at the direction of
5592	5659		the pension system, shall conduct an actuarial experience study in
5593	5660		accordance with actuarial standards of practice. The actuarial
5594	5661		experience study required by this subsection must be completed not
5595	5662		later than September 30 of the year in which the study is required
5596	5663		to be conducted.
5597	5664		(b) Except as otherwise expressly provided by Sections
5598	5665		8B(a)(7)(A)-(I) of this Act, actuarial assumptions and methods used
5599	5666		in the preparation of a risk sharing valuation study, other than the
5600	5667		initial risk sharing valuation study, shall be based on the results
5601	5668		of the most recent actuarial experience study.
5602	5669		(c) Not later than the 180th day before the date the pension
5603	5670		board may consider adopting any assumptions and methods for
5604	5671		purposes of Section 8B of this Act, the pension system shall provide
5605	5672		the city actuary with a substantially final draft of the pension
5606	5673		system's actuarial experience study, including:
5607	5674		(1) all assumptions and methods recommended by the
5608	5675		pension system actuary; and
5609	5676		(2) summaries of the reconciled actuarial data used in
5610	5677		creation of the actuarial experience study.
5611	5678		(d) Not later than the 60th day after the date the city
5612	5679		receives the final draft of the pension system's actuarial
5613	5680		experience study under Subsection (c) of this section, the city
5614	5681		actuary and pension system actuary may communicate concerning the
5615	5682		assumptions and methods used in the actuarial experience study.
5616	5683		During the period prescribed by this subsection, the pension system
5617	5684		actuary may modify the recommended assumptions in the draft
5618	5685		actuarial experience study to reflect any changes to assumptions
5619	5686		and methods to which the pension system actuary and the city actuary
5620	5687		agree.
5621	5688		(e) At the city actuary's written request, the pension
5622	5689		system shall provide additional actuarial data used by the pension
5623	5690		system actuary to prepare the draft actuarial experience study,
5624	5691		provided that confidential data may only be provided subject to a
5625	5692		confidentiality agreement entered into between the pension system
5626	5693		and the city actuary.
5627	5694		(f) The city actuary, at the direction of the city, shall
5628	5695		provide in writing to the pension system actuary and the pension
5629	5696		system:
5630	5697		(1) any assumptions and methods recommended by the
5631	5698		city actuary that differ from the assumptions and methods
5632	5699		recommended by the pension system actuary; and
5633	5700		(2) the city actuary's rationale for each method or
5634	5701		assumption the actuary recommends and determines to be consistent
5635	5702		with standards adopted by the Actuarial Standards Board.
5636	5703		(g) Not later than the 30th day after the date the pension
5637	5704		system actuary receives the city actuary's written recommended
5638	5705		assumptions and methods and rationale under Subsection (f) of this
5639	5706		section, the pension system shall provide a written response to the
5640	5707		city identifying any assumption or method recommended by the city
5641	5708		actuary that the pension system does not accept. If any assumption
5642	5709		or method is not accepted, the pension system shall recommend to the
5643	5710		city the names of three independent actuaries for purposes of this
5644	5711		section.
5645	5712		(h) An actuary may only be recommended, selected, or engaged
5646	5713		by the pension system as an independent actuary under this section
5647	5714		if the person:
5648	5715		(1) is not already engaged by the city, the pension
5649	5716		system, or any other pension system or fund authorized under
5650	5717		Article 6243e.2(1) or 6243g-4, Revised Statutes, to provide
5651	5718		actuarial services to the city, the pension system, or another
5652	5719		pension system or fund referenced in this subdivision;
5653	5720		(2) is a member of the American Academy of Actuaries;
5654	5721		and
5655	5722		(3) has at least five years of experience as an actuary
5656	5723		working with one or more public retirement systems with assets in
5657	5724		excess of $1 billion.
5658	5725		(i) Not later than the 20th day after the date the city
5659	5726		receives the list of three independent actuaries under Subsection
5660	5727		(g) of this section, the city shall identify and the pension system
5661	5728		shall hire one of the listed independent actuaries on terms
5662	5729		acceptable to the city and the pension system to perform a scope of
5663	5730		work acceptable to the city and the pension system. The city and
5664	5731		the pension system each shall pay 50 percent of the cost of the
5665	5732		independent actuary engaged under this subsection. The city shall
5666	5733		be provided the opportunity to participate in any communications
5667	5734		between the independent actuary and the pension system concerning
5668	5735		the engagement, engagement terms, or performance of the terms of
5669	5736		the engagement.
5670	5737		(j) The independent actuary engaged under Subsection (i) of
5671	5738		this section shall receive on request from the city or the pension
5672	5739		system:
5673	5740		(1) the pension system's draft actuarial experience
5674	5741		study, including all assumptions and methods recommended by the
5675	5742		pension system actuary;
5676	5743		(2) summaries of the reconciled actuarial data used to
5677	5744		prepare the draft actuarial experience study;
5678	5745		(3) the city actuary's specific recommended
5679	5746		assumptions and methods together with the city actuary's written
5680	5747		rationale for each recommendation;
5681	5748		(4) the pension system actuary's written rationale for
5682	5749		its recommendations; and
5683	5750		(5) if requested by the independent actuary and
5684	5751		subject to a confidentiality agreement between the pension system
5685	5752		and the independent actuary, additional confidential actuarial
5686	5753		data.
5687	5754		(k) Not later than the 30th day after the date the
5688	5755		independent actuary receives all the requested information under
5689	5756		Subsection (j) of this section, the independent actuary shall
5690	5757		advise the pension system and the city whether it agrees with the
5691	5758		assumption or method recommended by the city actuary or the
5692	5759		corresponding method or assumption recommended by the pension
5693	5760		system actuary, together with the independent actuary's rationale
5694	5761		for making the determination. During the period prescribed by this
5695	5762		subsection, the independent actuary may discuss recommendations in
5696	5763		simultaneous consultation with the pension system actuary and the
5697	5764		city actuary.
5698	5765		(l) The pension system and the city may not seek any
5699	5766		information from any prospective independent actuary about
5700	5767		possible outcomes of the independent actuary's review.
5701	5768		(m) If an independent actuary has questions or concerns
5702	5769		regarding an engagement entered into under this section, the
5703	5770		independent actuary shall simultaneously consult with both the city
5704	5771		actuary and the pension system actuary regarding the questions or
5705	5772		concerns. This subsection does not limit the pension system's
5706	5773		authorization to take appropriate steps to complete the engagement
5707	5774		of the independent actuary on terms acceptable to both the pension
5708	5775		system and the city or to enter into a confidentiality agreement
5709	5776		with the independent actuary, if needed.
5710	5777		(n) If the pension board does not adopt an assumption or
5711	5778		method recommended by the city actuary to which the independent
5712	5779		actuary agrees, or recommended by the pension system actuary, the
5713	5780		city actuary is authorized to use that recommended assumption or
5714	5781		method in connection with preparation of a subsequent risk sharing
5715	5782		valuation study under Section 8B of this Act until the risk sharing
5716	5783		valuation study following the next actuarial experience study is
5717	5784		prepared.
5718	5785		Sec. 8E. CITY CONTRIBUTION RATE WHEN ESTIMATED CITY
5719	5786		CONTRIBUTION RATE LOWER THAN CORRIDOR MIDPOINT; AUTHORIZATION FOR
5720	5787		CERTAIN ADJUSTMENTS. (a) This section governs the determination
5721	5788		of the city contribution rate applicable in a fiscal year if the
5722	5789		estimated city contribution rate is lower than the corridor
5723	5790		midpoint.
5724	5791		(b) If the funded ratio is:
5725	5792		(1) less than 90 percent, the city contribution rate
5726	5793		for the fiscal year equals the corridor midpoint; or
5727	5794		(2) equal to or greater than 90 percent and the city
5728	5795		contribution rate is:
5729	5796		(A) equal to or greater than the minimum
5730	5797		contribution rate, the estimated city contribution rate is the city
5731	5798		contribution rate for the fiscal year; or
5732	5799		(B) except as provided by Subsection (e) of this
5733	5800		section, less than the minimum contribution rate for the
5734	5801		corresponding fiscal year, the city contribution rate for the
5735	5802		fiscal year equals the minimum contribution rate achieved in
5736	5803		accordance with Subsection (c) of this section.
5737	5804		(c) For purposes of Subsection (b)(2)(B) of this section,
5738	5805		the following adjustments shall be applied sequentially to the
5739	5806		extent required to increase the estimated city contribution rate to
5740	5807		equal the minimum contribution rate:
5741	5808		(1) first, adjust the actuarial value of assets equal
5742	5809		to the current market value of assets, if making the adjustment
5743	5810		causes the city contribution rate to increase;
5744	5811		(2) second, under a written agreement between the city
5745	5812		and the pension board under Section 3(n) of this Act entered into
5746	5813		not later than the 30th day before the first day of the next fiscal
5747	5814		year, prospectively restore all or part of any benefit reductions
5748	5815		or reduce increased employee contributions, in each case made after
5749	5816		the year 2017 effective date;
5750	5817		(3) third, accelerate the payoff year of the legacy
5751	5818		liability by offsetting the remaining legacy liability by the
5752	5819		amount of the new liability loss layer, provided that during the
5753	5820		accelerated period the city will continue to pay the city
5754	5821		contribution amount as scheduled in the initial risk sharing
5755	5822		valuation study, subject to Section 8C(i) or (j) of this Act;
5756	5823		(4) fourth, accelerate the payoff year of existing
5757	5824		liability loss layers, excluding the legacy liability, by
5758	5825		accelerating the oldest liability loss layers first, to an
5759	5826		amortization period of not less than 20 years from the first day of
5760	5827		the fiscal year beginning 12 months after the date of the risk
5761	5828		sharing valuation study in which the liability loss layer is first
5762	5829		recognized; and
5763	5830		(5) fifth, under a written agreement between the city
5764	5831		and the pension board under Section 3(n) of this Act entered into
5765	5832		not later than the 30th day before the first day of the next fiscal
5766	5833		year, the city and the pension board may agree to reduce the assumed
5767	5834		rate of return.
5768	5835		(d) If the funded ratio is:
5769	5836		(1) equal to or greater than 100 percent:
5770	5837		(A) all existing liability layers, including the
5771	5838		legacy liability, are considered fully amortized and paid;
5772	5839		(B) the city contribution amount may no longer be
5773	5840		included in the city contribution under Section 8A of this Act; and
5774	5841		(C) the city and the pension system may mutually
5775	5842		agree to change assumptions in a written agreement entered into
5776	5843		between the city and the pension board under Section 3(n) of this
5777	5844		Act; and
5778	5845		(2) greater than 100 percent in a written agreement
5779	5846		between the city and the pension system entered into under Section
5780	5847		3(n) of this Act, the pension system may reduce member
5781	5848		contributions or increase pension benefits if as a result of the
5782	5849		action:
5783	5850		(A) the funded ratio is not less than 100
5784	5851		percent; and
5785	5852		(B) the city contribution rate is not more than
5786	5853		the minimum contribution rate.
5787	5854		(e) Except as provided by Subsection (f) of this section, if
5788	5855		an agreement under Subsection (d) of this section is not reached on
5789	5856		or before the 30th day before the first day of the next fiscal year,
5790	5857		before the first day of the next fiscal year, the pension board
5791	5858		shall reduce member contributions and implement or increase
5792	5859		cost-of-living adjustments, but only to the extent that the city
5793	5860		contribution rate is set at or below the minimum contribution rate
5794	5861		and the funded ratio is not less than 100 percent.
5795	5862		(f) If any member contribution reduction or benefit
5796	5863		increase under Subsection (e) of this section has occurred within
5797	5864		the previous three fiscal years, the pension board may not make
5798	5865		additional adjustments to benefits, and the city contribution rate
5799	5866		must be set to equal the minimum contribution rate.
5800	5867		Sec. 8F. CITY CONTRIBUTION RATE WHEN ESTIMATED CITY
5801	5868		CONTRIBUTION RATE EQUAL TO OR GREATER THAN CORRIDOR MIDPOINT;
5802	5869		AUTHORIZATION FOR CERTAIN ADJUSTMENTS. (a) This section governs
5803	5870		the determination of the city contribution rate in a fiscal year
5804	5871		when the estimated city contribution rate is equal to or greater
5805	5872		than the corridor midpoint.
5806	5873		(b) If the estimated city contribution rate is:
5807	5874		(1) less than or equal to the maximum contribution
5808	5875		rate for the corresponding fiscal year, the estimated city
5809	5876		contribution rate is the city contribution rate; or
5810	5877		(2) except as provided by Subsection (d) or (f) of this
5811	5878		section, greater than the maximum contribution rate for the
5812	5879		corresponding fiscal year, the city contribution rate equals the
5813	5880		corridor midpoint achieved in accordance with Subsection (c) of
5814	5881		this section.
5815	5882		(c) For purposes of Subsection (b)(2) of this section, the
5816	5883		following adjustments shall be applied sequentially to the extent
5817	5884		required to decrease the estimated city contribution rate to equal
5818	5885		the corridor midpoint:
5819	5886		(1) first, adjust the actuarial value of assets to the
5820	5887		current market value of assets, if making the adjustment causes the
5821	5888		city contribution rate to decrease;
5822	5889		(2) second, if the payoff year of the legacy liability
5823	5890		was accelerated under Section 8E(c) of this Act:
5824	5891		(A) extend the payoff year of the legacy
5825	5892		liability by increasing the legacy liability by the amount of the
5826	5893		new liability gain layer to a maximum amount; and
5827	5894		(B) during the extended period provided by
5828	5895		Paragraph (A) of this subdivision, the city shall continue to pay
5829	5896		the city contribution amount for the extended period in accordance
5830	5897		with the schedule included in the initial risk sharing valuation
5831	5898		study, subject to Section 8C(i) or (j) of this Act; and
5832	5899		(3) third, if the payoff year of a liability loss layer
5833	5900		other than the legacy liability was previously accelerated under
5834	5901		Section 8E(c) of this Act, extend the payoff year of existing
5835	5902		liability loss layers, excluding the legacy liability, by extending
5836	5903		the most recent loss layers first, to a payoff year not later than
5837	5904		30 years from the first day of the fiscal year beginning 12 months
5838	5905		after the date of the risk sharing valuation study in which the
5839	5906		liability loss layer is first recognized.
5840	5907		(d) If the city contribution rate after adjustment under
5841	5908		Subsection (c) of this section is greater than the third quarter
5842	5909		line rate, the city contribution rate equals the third quarter line
5843	5910		rate. To the extent necessary to comply with this subsection, the
5844	5911		city and the pension board shall enter into a written agreement
5845	5912		under Section 3(n) of this Act to increase member contributions and
5846	5913		make other benefit or plan changes not otherwise prohibited by
5847	5914		applicable federal law or regulations.
5848	5915		(e) Gains resulting from adjustments made as the result of a
5849	5916		written agreement between the city and the pension board under
5850	5917		Subsection (d) of this section may not be used as a direct offset
5851	5918		against the city contribution amount in any fiscal year.
5852	5919		(f) If an agreement under Subsection (d) of this section is
5853	5920		not reached on or before the 30th day before the first day of the
5854	5921		next fiscal year, before the start of the next fiscal year to which
5855	5922		the city contribution rate would apply, the pension board, to the
5856	5923		extent necessary to set the city contribution rate equal to the
5857	5924		third quarter line rate, shall:
5858	5925		(1) increase member contributions; and
5859	5926		(2) decrease cost-of-living adjustments.
5860	5927		(g) If the city contribution rate remains greater than the
5861	5928		corridor midpoint in the third fiscal year after adjustments are
5862	5929		made in accordance with an agreement under Subsection (d) of this
5863	5930		section, in that fiscal year the city contribution rate equals the
5864	5931		corridor midpoint achieved in accordance with Subsection (h) of
5865	5932		this section.
5866	5933		(h) The city contribution rate must be set at the corridor
5867	5934		midpoint under Subsection (g) of this section by:
5868	5935		(1) in the risk sharing valuation study for the third
5869	5936		fiscal year described by Subsection (g) of this section, adjusting
5870	5937		the actuarial value of assets to equal the current market value of
5871	5938		assets, if making the adjustment causes the city contribution rate
5872	5939		to decrease; and
5873	5940		(2) under a written agreement entered into between the
5874	5941		city and the pension board under Section 3(n) of this Act:
5875	5942		(A) increasing member contributions; and
5876	5943		(B) making any other benefit or plan changes not
5877	5944		otherwise prohibited by applicable federal law or regulations.
5878	5945		(i) If an agreement under Subsection (h)(2) of this section
5879	5946		is not reached on or before the 30th day before the first day of the
5880	5947		next fiscal year, before the start of the next fiscal year, the
5881	5948		pension board, to the extent necessary to set the city contribution
5882	5949		rate equal to the corridor midpoint, shall:
5883	5950		(1) increase member contributions; and
5884	5951		(2) decrease cost-of-living adjustments.
5885	5952		Sec. 8G. CONFIDENTIALITY. (a) The information, data, and
5886	5953		document exchanges under Sections 8A through 8F of this Act have all
5887	5954		the protections afforded by applicable law and are expressly exempt
5888	5955		from the disclosure requirements under Chapter 552, Government
5889	5956		Code, except as may be agreed to by the city and pension system in a
5890	5957		written agreement under Section 3(n) of this Act.
5891	5958		(b) Subsection (a) of this section does not apply to:
5892	5959		(1) a proposed risk sharing valuation study prepared
5893	5960		by the pension system actuary and provided to the city actuary or
5894	5961		prepared by the city actuary and provided to the pension system
5895	5962		actuary under Section 8B(d) or 8C(b)(2) of this Act; or
5896	5963		(2) a final risk sharing valuation study prepared
5897	5964		under Section 8B or 8C of this Act.
5898	5965		(c) A risk sharing valuation study prepared by either the
5899	5966		city actuary or the pension system actuary under Sections 8A
5900	5967		through 8F of this Act may not:
5901	5968		(1) include information in a form that includes
5902	5969		identifiable information relating to a specific individual; or
5903	5970		(2) provide confidential or private information
5904	5971		regarding specific individuals or be grouped in a manner that
5905	5972		allows confidential or private information regarding a specific
5906	5973		individual to be discerned.
5907	5974		Sec. 8H. UNILATERAL DECISIONS AND ACTIONS PROHIBITED. No
5908	5975		unilateral decision or action by the pension board is binding on the
5909	5976		city and no unilateral decision or action by the city is binding on
5910	5977		the pension system with respect to the application of Sections 8A
5911	5978		through 8F of this Act unless expressly provided by a provision of
5912	5979		those sections. Nothing in this section is intended to limit the
5913	5980		powers or authority of the pension board.
5914	5981		Sec. 8I. STATE PENSION REVIEW BOARD; REPORT. (a) After
5915	5982		preparing a final risk sharing valuation study under Section 8B or
5916	5983		8C of this Act, the pension system and the city shall jointly submit
5917	5984		a copy of the study or studies, as appropriate, to the State Pension
5918	5985		Review Board for a determination that the pension system and city
5919	5986		are in compliance with this Act.
5920	5987		(b) Not later than the 30th day after the date an action is
5921	5988		taken under Section 8E or 8F of this Act, the pension system shall
5922	5989		submit a report to the State Pension Review Board regarding any
5923	5990		actions taken under those sections.
5924	5991		(c) The State Pension Review Board shall notify the
5925	5992		governor, the lieutenant governor, the speaker of the house of
5926	5993		representatives, and the legislative committees having principal
5927	5994		jurisdiction over legislation governing public retirement systems
5928	5995		if the State Pension Review Board determines the pension system or
5929	5996		the city is not in compliance with Sections 8A through 8H of this
5930	5997		Act.
5931	5998		SECTION 3.12. Section 9(c), Chapter 88 (H.B. 1573), Acts of
5932	5999		the 77th Legislature, Regular Session, 2001 (Article 6243h,
5933	6000		Vernon's Texas Civil Statutes), is amended to read as follows:
5934	6001		(c) If a member dies and there are no eligible survivors to
5935	6002		receive the allowance provided for in Section 14 of this Act, the
5936	6003		member's spouse [beneficiary] or, if there is no spouse
5937	6004		[beneficiary], the member's estate shall receive the refund amount.
5938	6005		SECTION 3.13. Section 10, Chapter 88 (H.B. 1573), Acts of
5939	6006		the 77th Legislature, Regular Session, 2001 (Article 6243h,
5940	6007		Vernon's Texas Civil Statutes), is amended by amending Subsections
5941	6008		(b), (d), (e), (g), and (h) and adding Subsections (c-1), (d-1), and
5942	6009		(e-1) to read as follows:
5943	6010		(b) A group A or group B member of the pension system who
5944	6011		terminates employment is eligible for a normal retirement pension
5945	6012		beginning on the member's effective retirement date after the date
5946	6013		the member completes at least five years of credited service and
5947	6014		attains either:
5948	6015		(1) 62 years of age; or
5949	6016		(2) a combination of years of age and years of credited
5950	6017		service, including parts of years, the sum of which equals or is
5951	6018		greater than the number:
5952	6019		(A) 75, provided the member is at least 50 years
5953	6020		of age; or
5954	6021		(B) 70, provided the member attained a
5955	6022		combination of years of age and years of credited service,
5956	6023		including parts of years, the sum of which equals or is greater than
5957	6024		the number 68 before January 1, 2005.
5958	6025		(c-1) A group D member who terminates employment is eligible
5959	6026		for a normal retirement pension beginning on the member's effective
5960	6027		retirement date after the date the member completes at least five
5961	6028		years of credited service and attains 62 years of age.
5962	6029		(d) Subject to Section 17 of this Act, the [The] amount of
5963	6030		the monthly normal retirement pension payable to an eligible:
5964	6031		(1) [retired] group A or group B member who retires
5965	6032		before January 1, 2005, shall be determined under the law in effect
5966	6033		on the member's last day of credited service;
5967	6034		(2) group A member who retires on or after January 1,
5968	6035		2005, is equal to the sum of:
5969	6036		(A) the member's average monthly salary
5970	6037		multiplied by the percentage rate accrued under the law in effect on
5971	6038		December 31, 2004, for each year of the member's years of credited
5972	6039		service in group A that is earned before January 1, 2005;
5973	6040		(B) the member's average monthly salary
5974	6041		multiplied by 2.5 [3-1/4] percent for each year of the member's
5975	6042		years of credited service in group A during the member's first 20
5976	6043		[10] years of service that is earned on or after January 1, 2005;[,
5977	6044		3-1/2 percent for each of the member's years of credited service in
5978	6045		group A during the member's next 10 years of service,] and
5979	6046		(C) the member's average monthly salary
5980	6047		multiplied by 3.25 [4-1/4] percent for each year of credited
5981	6048		service of the member in group A during the member's years of
5982	6049		service in excess of the 20 years described under Paragraph (B) of
5983	6050		this subdivision that is earned on or after January 1, 2005;
5984	6051		(3) group B member who retires on or after January 1,
5985	6052		2005, is equal to the sum of:
5986	6053		(A) the member's average monthly salary
5987	6054		multiplied by the percentage rate accrued under the law in effect on
5988	6055		December 31, 2004, for each year of the member's years of credited
5989	6056		service in group B that is earned before January 1, 2005;
5990	6057		(B) the member's average monthly salary
5991	6058		multiplied by 1.75 percent for each year of the member's years of
5992	6059		credited service in group B during the member's first 10 years of
5993	6060		service that is earned on or after January 1, 2005;
5994	6061		(C) the member's average monthly salary
5995	6062		multiplied by two percent for each of the member's years of credited
5996	6063		service in group B in excess of the 10 years described under
5997	6064		Paragraph (B) of this subdivision that is earned on or after January
5998	6065		1, 2005; and
5999	6066		(D) the member's average monthly salary
6000	6067		multiplied by 2.5 percent for each year of credited service of the
6001	6068		member in group B during the member's years of service in excess of
6002	6069		20 years that is earned on or after January 1, 2005; or
6003	6070		(4) group D member who retires on or after January 1,
6004	6071		2008, is equal to the sum of:
6005	6072		(A) the member's average monthly salary
6006	6073		multiplied by 1.8 percent for each year of the member's years of
6007	6074		credited service during the member's first 25 years of service; and
6008	6075		(B) the member's average monthly salary
6009	6076		multiplied by 1 percent for each year of credited service of the
6010	6077		member in group D during the member's years of service in excess of
6011	6078		25 years.
6012	6079		(d-1) For purposes of Subsection (d) of this section,
6013	6080		service credit is rounded to the nearest one-twelfth of a year [For
6014	6081		purposes of this subsection, service credit is rounded to the
6015	6082		nearest one-twelfth of a year. The normal retirement pension of a
6016	6083		retired group A member may not exceed 90 percent of the member's
6017	6084		average monthly salary].
6018	6085		(e) A group D member who terminates employment with the city
6019	6086		or the pension system may elect to receive an early retirement
6020	6087		pension payable as a reduced benefit if the member has attained:
6021	6088		(1) at least 10 years of credited service and is at
6022	6089		least 55 years of age; or
6023	6090		(2) five years of credited service and a combination
6024	6091		of years of age and years of credited service, including parts of
6025	6092		years, the sum of which equals or is greater than the number 75.
6026	6093		(e-1) The amount of the early retirement pension payable to
6027	6094		a retired group D member under Subsection (e) of this section shall
6028	6095		be equal to the monthly normal retirement pension reduced by 0.25
6029	6096		percent for each month the member is less than 62 years of age at
6030	6097		retirement [monthly normal retirement pension payable to an
6031	6098		eligible retired group B member equals the member's average monthly
6032	6099		salary multiplied by 1-3/4 percent for each year of the member's
6033	6100		years of credited service in group B during the member's first 10
6034	6101		years of service, 2 percent for each of the member's years of
6035	6102		credited service in group B during the member's next 10 years of
6036	6103		service, and 2-3/4 percent for each year of credited service of the
6037	6104		member in group B during the member's years of service in excess of
6038	6105		20 years. For purposes of this subsection, service credit is
6039	6106		rounded to the nearest one-twelfth of a year. The normal retirement
6040	6107		pension of a retired group B member may not exceed 90 percent of the
6041	6108		member's average monthly salary].
6042	6109		(g) Notwithstanding any other provision of this Act, the
6043	6110		total normal retirement pension of a retired member with credited
6044	6111		service in group A, group B, [or] group C, or group D may not exceed
6045	6112		90 percent of the member's average monthly salary.
6046	6113		(h) On or after February 1, 2018, and for [For] future
6047	6114		payments only, pension benefits for all group A retirees and group B
6048	6115		retirees, and for all group D retirees who terminated employment on
6049	6116		or after the year 2017 effective date with at least five years of
6050	6117		credited service, and survivor benefits for [all retirees and]
6051	6118		eligible survivors of a former member of group A or group B, or of a
6052	6119		former member of group D who terminated employment on or after the
6053	6120		year 2017 effective date with at least five years of credited
6054	6121		service, shall be increased annually by the cost-of-living
6055	6122		adjustment percentage [four percent], not compounded, for all such
6056	6123		eligible persons receiving a pension or survivor benefit as of
6057	6124		January 1 of the year in which the increase is made.
6058	6125		SECTION 3.14. Chapter 88 (H.B. 1573), Acts of the 77th
6059	6126		Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
6060	6127		Civil Statutes), is amended by adding Section 10A to read as
6061	6128		follows:
6062	6129		Sec. 10A. GROUP D MEMBER HYBRID COMPONENT. (a) On and
6063	6130		after January 1, 2018, in addition to the group D member
6064	6131		contributions under Section 8 of this Act, each group D member shall
6065	6132		contribute one percent of the member's salary for each biweekly pay
6066	6133		period beginning with the member's first full biweekly pay period
6067	6134		after the later of January 1, 2018, or the group D member's first
6068	6135		date of employment. The contribution required by this subsection:
6069	6136		(1) shall be picked up and paid in the same manner and
6070	6137		at the same time as group D member contributions required under
6071	6138		Section 8(a)(3) of this Act, subject to applicable rules;
6072	6139		(2) is separate from and in addition to the group D
6073	6140		member contribution under Section 8(a)(3) of this Act; and
6074	6141		(3) is not subject to reduction or increase under
6075	6142		Sections 8A through 8F of this Act or a refund under Section 17 of
6076	6143		this Act.
6077	6144		(b) For each biweekly pay period of a group D member's
6078	6145		service for which the group D member makes the contribution
6079	6146		required under Subsection (a) of this section, the following
6080	6147		amounts shall be credited to a notional account, known as a cash
6081	6148		balance account, for the group D member:
6082	6149		(1) the amount of the contributions paid under
6083	6150		Subsection (a) of this section for that biweekly pay period; and
6084	6151		(2) interest on the balance of the group D member's
6085	6152		cash balance account determined by multiplying:
6086	6153		(A) an annual rate that is one-half the pension
6087	6154		system's five-year investment return based on a rolling
6088	6155		five-fiscal-year basis and net of investment expenses, with a
6089	6156		minimum annual rate of 2.5 percent and a maximum annual rate of 7.5
6090	6157		percent, and divided by 26; and
6091	6158		(B) the amount credited to the group D member's
6092	6159		cash balance account as of the end of the biweekly pay period.
6093	6160		(c) The pension system may not pay interest on amounts
6094	6161		credited to a cash balance account but not received by the pension
6095	6162		system under Subsection (b) of this section.
6096	6163		(d) On separation from service, a group D member is eligible
6097	6164		to receive only a distribution of the contributions credited to
6098	6165		that group D member's cash balance account, without interest, if
6099	6166		the group D member has attained less than one year of service while
6100	6167		contributing to the cash balance account. If a group D member
6101	6168		attains at least one year of service while contributing to the cash
6102	6169		balance account, the group D member is fully vested in the accrued
6103	6170		benefit represented by that group D member's cash balance account,
6104	6171		including interest.
6105	6172		(e) In a manner and form prescribed by the pension board, a
6106	6173		group D member who terminates employment is eligible to elect to
6107	6174		receive the group D member's cash balance account benefit in a
6108	6175		lump-sum payment, in substantially equal periodic payments, in a
6109	6176		partial lump-sum payment followed by substantially equal periodic
6110	6177		payments, or in partial payments from the group D member's cash
6111	6178		balance account.
6112	6179		(f) Contributions may not be made to a group D member's cash
6113	6180		balance account for a period that occurs after the date the group D
6114	6181		member terminates employment, except that interest at a rate that
6115	6182		is not greater than the rate under Subsection (b)(2) of this
6116	6183		section, as determined by the pension board, may be credited based
6117	6184		on the former group D member's undistributed cash balance account
6118	6185		after the date the group D member terminates employment.
6119	6186		(g) On the death of a group D member or former group D member
6120	6187		before the full distribution of the member's cash balance account,
6121	6188		the deceased member's cash balance account shall be payable in a
6122	6189		single lump-sum payment to:
6123	6190		(1) the deceased member's surviving spouse;
6124	6191		(2) if there is no surviving spouse, each designated
6125	6192		beneficiary of the deceased member, designated in the manner and on
6126	6193		a form prescribed by the pension board; or
6127	6194		(3) if there is no designated beneficiary, the
6128	6195		deceased member's estate.
6129	6196		(h) The lump-sum payment described by Subsection (g) of this
6130	6197		section shall be made within a reasonable time after the pension
6131	6198		board has determined that the individual or estate is eligible for
6132	6199		the distribution.
6133	6200		(i) Subject to the other provisions of this section, the
6134	6201		pension board may adopt rules necessary to implement this section,
6135	6202		including rules regarding the payment of the cash balance account
6136	6203		and limitations on the timing and frequency of payments. All
6137	6204		distributions and changes in the form of distribution must be made
6138	6205		in a manner and at a time that complies with the Internal Revenue
6139	6206		Code of 1986.
6140	6207		SECTION 3.15. Section 11, Chapter 88 (H.B. 1573), Acts of
6141	6208		the 77th Legislature, Regular Session, 2001 (Article 6243h,
6142	6209		Vernon's Texas Civil Statutes), is amended to read as follows:
6143	6210		Sec. 11. OPTION-ELIGIBLE PARTICIPANTS [GROUP B RETIREMENT
6144	6211		OPTIONS]. (a) In this section, "J&S Annuity" means payment of a
6145	6212		normal retirement pension or early retirement pension under one of
6146	6213		the options provided by Subsection (b) of this section.
6147	6214		(a-1) For purposes of this section, an option-eligible
6148	6215		participant is:
6149	6216		(1) a former group A or group B member who terminates
6150	6217		employment with the city or the pension system on or after June 30,
6151	6218		2011, and who is eligible to receive a normal retirement pension,
6152	6219		provided the member was not married as of the date of the member's
6153	6220		termination of employment;
6154	6221		(2) a former group B member who terminated employment
6155	6222		with the city or the predecessor system before September 1, 1997,
6156	6223		and who is eligible to receive a normal retirement pension; or
6157	6224		(3) a former group D member who terminated employment
6158	6225		with the city or the pension system and who is eligible to receive a
6159	6226		normal retirement pension or an early retirement pension.
6160	6227		(a-2) The pension board, in its sole discretion, shall make
6161	6228		determinations regarding an individual's status as an
6162	6229		option-eligible participant.
6163	6230		(a-3) Before the date an option-eligible participant
6164	6231		commences receipt of a benefit, that option-eligible participant [A
6165	6232		group B member who terminated employment with the city or the
6166	6233		predecessor system before September 1, 1997,] must elect, in a
6167	6234		manner and at a time determined by the pension board, [before the
6168	6235		member's effective retirement date] whether to receive [have] the
6169	6236		participant's [member's] normal retirement pension or early
6170	6237		retirement pension, as applicable, or to have the option-eligible
6171	6238		participant's normal retirement pension or early retirement
6172	6239		pension, as applicable, paid under one of the options provided by
6173	6240		Subsection (b) of this section. The election may be revoked, in a
6174	6241		manner and at a time established by the pension board, not later
6175	6242		than the 60th day before the date the participant commences receipt
6176	6243		of a benefit [member's effective retirement date].
6177	6244		(b) The normal retirement pension or early retirement
6178	6245		pension may be one of the following actuarially equivalent amounts:
6179	6246		(1) option 1: a reduced pension payable to the
6180	6247		participant [member], then on the participant's [member's] death
6181	6248		one-half of the amount of that reduced pension is payable to the
6182	6249		participant's [member's] designated survivor, for life;
6183	6250		(2) option 2: a reduced pension payable to the
6184	6251		participant [member], then on the participant's [member's] death
6185	6252		that same reduced pension is payable to the participant's
6186	6253		[member's] designated survivor, for life; and
6187	6254		(3) option 3: a reduced pension payable to the
6188	6255		participant [member], and if the participant [member] dies within
6189	6256		10 years, the pension is paid to the participant's [member's]
6190	6257		designated survivor for the remainder of the 10-year period
6191	6258		beginning on the participant's benefit commencement [member's
6192	6259		effective retirement] date.
6193	6260		(c) If an option-eligible participant [a former group B
6194	6261		member] who has made the election provided by Subsection (b) of this
6195	6262		section dies after terminating employment with at least five years
6196	6263		of credited service but before attaining the age required to begin
6197	6264		receiving a normal or early retirement pension, the person's
6198	6265		designated survivor is eligible for the J&S Annuity [benefits]
6199	6266		provided by the option selected by the option-eligible participant
6200	6267		[former member] at the time of separation from service. The
6201	6268		benefits first become payable to an eligible designated survivor on
6202	6269		the date the option-eligible participant [former member] would have
6203	6270		become eligible to begin receiving a pension. If the designated
6204	6271		survivor elects for earlier payment, in a time and manner
6205	6272		determined by the pension board, the actuarial equivalent of that
6206	6273		amount shall be payable at that earlier date.
6207	6274		(d) A survivor benefit under Subsection (c) of this section
6208	6275		or a J&S Annuity is not payable if:
6209	6276		(1) except as provided by Subsection (e) of this
6210	6277		section, an option-eligible participant [If a former group B member
6211	6278		under Subsection (a) of this section] does not elect one of the J&S
6212	6279		Annuity options under Subsection (b) of this section and dies
6213	6280		before retirement has commenced;
6214	6281		(2) an option-eligible participant elects a normal
6215	6282		retirement pension or early retirement pension and dies before
6216	6283		retirement has commenced; or
6217	6284		(3) an option-eligible participant dies after
6218	6285		retirement has commenced and that option-eligible participant:
6219	6286		(A) elected a normal retirement pension or early
6220	6287		retirement pension;
6221	6288		(B) did not make a valid election under
6222	6289		Subsection (b) of this section; or
6223	6290		(C) made an election that is void[, a survivor
6224	6291		benefit is not payable].
6225	6292		(e) An option-eligible participant described by Subsection
6226	6293		(a-1)(3) of this section who did not elect one of the J&S Annuity
6227	6294		options under Subsection (b) of this section is considered to have
6228	6295		elected a J&S Annuity option under Subsection (b)(1) of this
6229	6296		section and to have designated the participant's surviving spouse
6230	6297		as the optional annuitant if the participant:
6231	6298		(1) was not in service with the city or the pension
6232	6299		system at the time of the participant's death;
6233	6300		(2) is survived by a surviving spouse; and
6234	6301		(3) dies before the participant's retirement has
6235	6302		commenced.
6236	6303		(f) If the option-eligible participant described by
6237	6304		Subsection (e) of this section has no surviving spouse, a survivor
6238	6305		benefit or J&S Annuity is not payable. If a J&S Annuity is paid
6239	6306		under Subsection (e) of this section, a survivor benefit is not
6240	6307		payable under this subsection or under Section 14 of this Act.
6241	6308		(g) If Subsection (d) of this section would otherwise apply
6242	6309		to prohibit the payment of a survivor benefit or J&S Annuity, but
6243	6310		there is one or more dependent children of the deceased
6244	6311		option-eligible participant, the provisions of Section 14 of this
6245	6312		Act control the payment of survivor benefits to the dependent child
6246	6313		or children. The pension system may not pay both a J&S Annuity
6247	6314		under this section and a survivor benefit under Section 14 of this
6248	6315		Act with respect to any option-eligible participant. If a J&S
6249	6316		Annuity is paid under Subsection (e) of this section, a survivor
6250	6317		benefit is not payable.
6251	6318		(h) If an option-eligible participant has previously
6252	6319		elected a J&S Annuity for a previous period of service, no benefits
6253	6320		have been paid under that previous election, and the
6254	6321		option-eligible participant terminates employment on or after
6255	6322		January 1, 2012, the previous election is void and the
6256	6323		option-eligible participant shall make an election under
6257	6324		Subsection (b) of this section to apply to all periods of service.
6258	6325		(i) If a former group B member with service before September
6259	6326		1, 1997, was rehired in a covered position and converted the group B
6260	6327		service covered by a J&S Annuity to group A service, and that member
6261	6328		terminates employment on or after January 1, 2012, and is not an
6262	6329		option-eligible participant at the time of the member's subsequent
6263	6330		termination, the previous election is void and survivor benefits
6264	6331		for an eligible survivor, if any, are payable as provided by Section
6265	6332		14 of this Act, provided benefits were not paid under the previous
6266	6333		election.
6267	6334		(j) If an option-eligible participant who elects a J&S
6268	6335		Annuity under this section designates the participant's spouse as a
6269	6336		designated survivor and the marriage is later dissolved by divorce,
6270	6337		annulment, or a declaration that the marriage is void before the
6271	6338		participant's retirement, the designation is void unless the
6272	6339		participant reaffirms the designation after the marriage was
6273	6340		dissolved.
6274	6341		(k) A J&S Annuity payable to a designated survivor of a
6275	6342		retired option-eligible participant is effective on the first day
6276	6343		of the month following the month of the option-eligible
6277	6344		participant's death and ceases on the last day of the month of the
6278	6345		designated survivor's death or on the last day of the month in which
6279	6346		the survivor otherwise ceases to be eligible to receive a J&S
6280	6347		Annuity.
6281	6348		SECTION 3.16. Section 12(a)(5), Chapter 88 (H.B. 1573),
6282	6349		Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h,
6283	6350		Vernon's Texas Civil Statutes), is amended to read as follows:
6284	6351		(5) "DROP entry date" means the date a member ceases to
6285	6352		earn service credit and begins earning credit for the member's DROP
6286	6353		account, which is the later of the date the member is eligible to
6287	6354		participate in the DROP, the date requested by the member, or
6288	6355		October 1, 1997, as approved by the pension board. The DROP entry
6289	6356		date is the first day of a month and is determined by the normal
6290	6357		retirement eligibility requirements of this Act or of Chapter 358,
6291	6358		Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g,
6292	6359		Vernon's Texas Civil Statutes), as applicable, in effect on the
6293	6360		requested DROP entry date. A member who enters DROP on or after
6294	6361		January 1, 2005, may not have a DROP entry date that occurs before
6295	6362		the date the pension system receives the member's request to
6296	6363		participate in DROP.
6297	6364		SECTION 3.17. Section 12, Chapter 88 (H.B. 1573), Acts of
6298	6365		the 77th Legislature, Regular Session, 2001 (Article 6243h,
6299	6366		Vernon's Texas Civil Statutes), is amended by adding Subsections
6300	6367		(b-1), (d-1), (o-1), (r), (s), and (t) and amending Subsections
6301	6368		(d), (f), (g), (h), (j), (k), (m), (o), and (p) to read as follows:
6302	6369		(b-1) Notwithstanding Subsection (b) of this section, for
6303	6370		DROP participation beginning on or after January 1, 2005, a member
6304	6371		must meet the normal retirement eligibility requirements under
6305	6372		Section 10(b) or (c) of this Act to be eligible to elect to
6306	6373		participate in DROP. This subsection does not apply to a member
6307	6374		who:
6308	6375		(1) met the eligibility requirements under Section
6309	6376		10(b) of this Act in effect before January 1, 2005; or
6310	6377		(2) before January 1, 2005, had at least five years of
6311	6378		credited service and a combination of years of age and years of
6312	6379		credited service, including parts of years, the sum of which
6313	6380		equaled or was greater than 68.
6314	6381		(d) Credited service and normal retirement benefits cease
6315	6382		to accrue on the day preceding the member's DROP entry date. The
6316	6383		period of a member's DROP participation, unless revoked as provided
6317	6384		by Subsection (j) of this section, begins on the DROP participant's
6318	6385		DROP entry date and ends on the date of the DROP participant's last
6319	6386		day of active service with the city or the pension system. On the
6320	6387		first day of the month following the month in which the pension
6321	6388		board approves the member's DROP election, the DROP election
6322	6389		becomes effective and the pension board shall establish a DROP
6323	6390		account for the DROP participant. For each month during the period
6324	6391		of DROP participation before a DROP participant's termination of
6325	6392		employment, the following amounts shall be credited to the DROP
6326	6393		participant's DROP account, including prorated amounts for partial
6327	6394		months of service:
6328	6395		(1) an amount equal to what would have been the DROP
6329	6396		participant's monthly normal retirement benefit if the DROP
6330	6397		participant had retired on the DROP participant's DROP entry date,
6331	6398		except that the monthly amount shall be computed based on the DROP
6332	6399		participant's credited service and average monthly salary as of the
6333	6400		DROP entry date and the benefit accrual rates and maximum allowable
6334	6401		benefit applicable on the DROP election date, with the
6335	6402		cost-of-living adjustments payable under Subsection (s) of this
6336	6403		section, if any, that would apply if the DROP participant had
6337	6404		retired on the DROP participant's DROP entry date; and
6338	6405		(2) subject to Subsection (d-1) of this section, [for
6339	6406		a group A member, the member's contributions to the pension fund
6340	6407		required under Section 8 of this Act during the member's
6341	6408		participation in the DROP; and
6342	6409		[(3)] interest on the DROP participant's DROP account
6343	6410		balance computed at a rate determined by the pension board and
6344	6411		compounded at intervals designated by the pension board, but at
6345	6412		least once in each 13-month period.
6346	6413		(d-1) Beginning January 1, 2018, the pension board shall
6347	6414		establish the interest rate applicable under Subsection (d)(2) of
6348	6415		this section as of January 1 of each year at a rate:
6349	6416		(1) except as provided by Subdivision (2) of this
6350	6417		subsection, equal to half the pension system's five-year investment
6351	6418		return based on a rolling five-fiscal-year basis and net of
6352	6419		investment expenses; and
6353	6420		(2) that may not be less than 2.5 percent or more than
6354	6421		7.5 percent.
6355	6422		(f) The period for credits to a DROP participant's DROP
6356	6423		account includes each month beginning with the DROP participant's
6357	6424		DROP entry date through the date the DROP participant terminates
6358	6425		employment with the city or the pension system. Credits may not be
6359	6426		made to a DROP participant's DROP account for a period that occurs
6360	6427		after the date the DROP participant terminates employment, except
6361	6428		that interest at a rate determined by the pension board may be paid
6362	6429		on the person's undistributed DROP account balance after the date
6363	6430		the person terminates employment. A DROP participant must pay
6364	6431		required contributions to the pension system for all time in DROP
6365	6432		that would otherwise constitute service in order to receive
6366	6433		allowable credits to the DROP participant's DROP account.
6367	6434		(g) A DROP participant who terminates employment is
6368	6435		eligible to elect to receive the DROP participant's DROP benefit in
6369	6436		a lump sum, in substantially equal periodic payments, [or] in a
6370	6437		partial lump sum followed by substantially equal periodic payments,
6371	6438		or in partial payments from the participant's DROP account, in a
6372	6439		manner and form determined by the pension board. The pension board
6373	6440		may establish procedures concerning partial payments under this
6374	6441		subsection, including limitations on the timing and frequency of
6375	6442		those payments. A participant who elects partial payments may
6376	6443		elect to receive the participant's entire remaining DROP account
6377	6444		balance in a single lump-sum payment. The pension board shall
6378	6445		determine a reasonable time for lump-sum and periodic payments of
6379	6446		the DROP benefit. [An election concerning single lump-sum or
6380	6447		partial payments as provided by this subsection must satisfy the
6381	6448		requirements of Section 401(a)(9), Internal Revenue Code of 1986,
6382	6449		as amended.] All distributions and changes in the form of
6383	6450		distribution must be made in a manner and at a time that complies
6384	6451		with that provision of the Internal Revenue Code of 1986, as
6385	6452		amended.
6386	6453		(h) If a DROP participant dies before the full distribution
6387	6454		of the DROP participant's DROP account balance, the undistributed
6388	6455		DROP account balance shall be distributed to the DROP participant's
6389	6456		surviving spouse, if any, in a lump-sum payment within a reasonable
6390	6457		time after the pension board has determined that the surviving
6391	6458		spouse is eligible for the distribution. If there is no surviving
6392	6459		spouse, each beneficiary of the DROP participant [participant's
6393	6460		beneficiary], as designated in the manner and on a form established
6394	6461		by the pension board, is eligible to receive the beneficiary's
6395	6462		applicable portion of the deceased DROP participant's
6396	6463		undistributed DROP account balance in a lump-sum payment within a
6397	6464		reasonable time after the pension board has determined that the
6398	6465		beneficiary is eligible for the distribution. If no beneficiary is
6399	6466		designated, the undistributed DROP account balance shall be
6400	6467		distributed to the deceased participant's [member's] estate.
6401	6468		(j) An election to participate in the DROP is irrevocable,
6402	6469		except that:
6403	6470		(1) if a DROP participant is approved for a service
6404	6471		disability pension, the DROP participant's DROP election is
6405	6472		automatically revoked; and
6406	6473		(2) if a DROP participant dies, the surviving spouse,
6407	6474		if any, or the beneficiary, if any, may elect to revoke the DROP
6408	6475		participant's DROP election, at a time and in a manner determined by
6409	6476		the pension board, only if the revocation occurs before a
6410	6477		distribution from the DROP participant's DROP account or the
6411	6478		payment of a survivor benefit under this Act or Chapter 358, Acts of
6412	6479		the 48th Legislature, Regular Session, 1943 (Article 6243g,
6413	6480		Vernon's Texas Civil Statutes)[; and
6414	6481		[(3) a DROP participant approved by the pension board
6415	6482		of the predecessor system before September 1, 1999, to participate
6416	6483		in the DROP may make a one-time, irrevocable election before
6417	6484		termination of employment, on a date and in a manner determined by
6418	6485		the pension board, to revoke the DROP election and waive any and all
6419	6486		rights associated with the DROP election].
6420	6487		(k) On revocation of a DROP election under Subsection (j) of
6421	6488		this section, the DROP account balance becomes zero, and a
6422	6489		distribution of DROP benefits may not be made to the participant
6423	6490		[member], the participant's [member's] surviving spouse, or the
6424	6491		participant's [member's] beneficiaries. In the event of
6425	6492		revocation, the benefits based on the participant's [member's]
6426	6493		service are determined as if the participant's [member's] DROP
6427	6494		election had never occurred.
6428	6495		(m) If an unanticipated actuarial cost occurs in
6429	6496		administering the DROP, the pension board, on the advice of the
6430	6497		pension system [system's] actuary, may take action necessary to
6431	6498		mitigate the unanticipated cost, including refusal to accept
6432	6499		additional elections to participate in the DROP [plan]. The
6433	6500		pension system shall continue to administer the DROP [plan] for the
6434	6501		DROP participants participating in the DROP [plan] before the date
6435	6502		of the mitigating action.
6436	6503		(o) Except as provided by Subsection (o-1) of this section,
6437	6504		on [On] termination of employment, a DROP participant shall receive
6438	6505		a normal retirement pension under Section 10 of this Act or under
6439	6506		Section 11, 22A, or 24 of Chapter 358, Acts of the 48th Legislature,
6440	6507		Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
6441	6508		Statutes), as those sections read on the day preceding the
6442	6509		participant's DROP entry date, as applicable, except that the
6443	6510		credited service under that section is the member's credited
6444	6511		service as of the day before the member's DROP entry date, the
6445	6512		benefit accrual rate applicable to the credited service shall be
6446	6513		the benefit accrual rate in effect on the member's DROP election
6447	6514		date, the maximum allowable benefit shall be the maximum allowable
6448	6515		benefit in effect on the member's DROP election date, and the
6449	6516		member's average monthly salary is the average monthly salary
6450	6517		determined as of the later [date] of the member's DROP entry date or
6451	6518		January 1, 2005, as applicable [termination of employment]. The
6452	6519		DROP participant's normal retirement pension is increased by any
6453	6520		cost-of-living adjustments applied to the monthly credit to the
6454	6521		member's DROP account under Subsection (d)(1) of this section
6455	6522		during the member's participation in the DROP. Cost-of-living
6456	6523		adjustments applicable to periods after the date of the DROP
6457	6524		participant's termination of employment are based on the DROP
6458	6525		participant's normal retirement pension computed under this
6459	6526		subsection or Subsection (o-1) of this section, as applicable,
6460	6527		excluding any cost-of-living adjustments.
6461	6528		(o-1) On termination of employment, and before any benefit
6462	6529		or DROP payment, a DROP participant who is an option-eligible
6463	6530		participant shall make the required election under Section 11 of
6464	6531		this Act. If the option-eligible participant elects a J&S Annuity,
6465	6532		the DROP account, including all DROP credits, shall be recalculated
6466	6533		from the DROP entry date to termination of employment as provided by
6467	6534		Subsection (o) of this section as if the J&S Annuity was selected to
6468	6535		be effective as of the DROP entry date.
6469	6536		(p) If a DROP election is not revoked under Subsection (j)
6470	6537		of this section, the survivor benefit payable to an eligible
6471	6538		survivor of a deceased DROP participant under Section 14 of this Act
6472	6539		is computed as a percentage of the monthly ordinary disability
6473	6540		pension that the member would have been eligible to receive had the
6474	6541		member suffered a disability the day before the member's DROP entry
6475	6542		date, except that the ordinary disability pension is computed based
6476	6543		on the DROP participant's credited service as of the day before the
6477	6544		DROP participant's DROP entry date, the benefit accrual rate
6478	6545		applicable to the credited service as of the DROP participant's
6479	6546		DROP election date, and the DROP participant's average monthly
6480	6547		salary as of the later [date] of the DROP participant's DROP entry
6481	6548		date or January 1, 2005, as applicable [death]. A surviving spouse,
6482	6549		if any, of a DROP participant who dies from a cause directly
6483	6550		resulting from a specific incident in the performance of the DROP
6484	6551		participant's duties for the city or the pension system is
6485	6552		ineligible to receive enhanced survivor benefits under Section
6486	6553		14(c) of this Act unless the DROP election is revoked under
6487	6554		Subsection (j)(2) of this section and the surviving spouse receives
6488	6555		a survivor benefit as otherwise provided by this subsection.
6489	6556		(r) Except as provided by Subsection (s) of this section,
6490	6557		the pension system may not credit a DROP account with a
6491	6558		cost-of-living adjustment percentage on or after February 1, 2018.
6492	6559		(s) On or after February 1, 2018, and for future credit
6493	6560		only, the pension system shall credit a cost-of-living adjustment
6494	6561		percentage, not compounded, to the DROP account of a DROP
6495	6562		participant who was at least 62 years of age as of January 1 of the
6496	6563		year in which the increase is made.
6497	6564		(t) The pension board may establish deadlines for the
6498	6565		submission of any information, document, or other record pertaining
6499	6566		to DROP.
6500	6567		SECTION 3.18. Sections 13(a), (b), and (c), Chapter 88
6501	6568		(H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
6502	6569		(Article 6243h, Vernon's Texas Civil Statutes), are amended to read
6503	6570		as follows:
6504	6571		(a) A member who has completed five or more years of
6505	6572		credited service and who becomes disabled is eligible, regardless
6506	6573		of age, for an ordinary disability retirement and shall receive a
6507	6574		monthly disability pension computed in accordance with Section
6508	6575		10(d) of this Act [for group A members and Section 10(e) for group B
6509	6576		members].
6510	6577		(b) A member who is disabled by reason of a personal injury
6511	6578		sustained or a hazard undergone as a result of, and while in the
6512	6579		performance of, the member's employment duties at some definite
6513	6580		place and at some definite time on or after the date of becoming a
6514	6581		member, without serious and wilful misconduct on the member's part,
6515	6582		is eligible for a service disability retirement and shall receive a
6516	6583		monthly disability pension equal to the greater of:
6517	6584		(1) the monthly normal retirement pension computed
6518	6585		under Section 10(d) of this Act [for a group A member or Section
6519	6586		10(e) for a group B member]; or
6520	6587		(2) 20 percent of the member's monthly salary on the
6521	6588		date the injury occurred or the hazard was undergone.
6522	6589		(c) In addition to the monthly disability pension under
6523	6590		Subsection (b)(2) of this section, a group A member shall receive
6524	6591		one percent of the salary under Subsection (b)(2) of this section
6525	6592		for each year of credited service. The total disability pension
6526	6593		computed under Subsection (b)(2) of this section may not exceed the
6527	6594		greater of:
6528	6595		(1) 40 percent of that monthly salary; or
6529	6596		(2) the monthly normal retirement pension computed in
6530	6597		accordance with Section 10(d) of this Act [for a group A member or
6531	6598		Section 10(e) for a group B member].
6532	6599		SECTION 3.19. Section 14, Chapter 88 (H.B. 1573), Acts of
6533	6600		the 77th Legislature, Regular Session, 2001 (Article 6243h,
6534	6601		Vernon's Texas Civil Statutes), is amended by amending Subsections
6535	6602		(a), (b), (c), (d), (e), and (h) and adding Subsection (b-1) to read
6536	6603		as follows:
6537	6604		(a) Except as provided by Section 11 or [Section] 12 of this
6538	6605		Act, the pension board shall order survivor benefits to be paid to
6539	6606		an eligible survivor in the form of a monthly allowance under this
6540	6607		section if:
6541	6608		(1) a member or former member of group A or group B
6542	6609		dies from any cause after the completion of five years of credited
6543	6610		service with the city or the pension system;
6544	6611		(2) while in the service of the city or the pension
6545	6612		system, a member dies from any cause directly resulting from a
6546	6613		specific incident in the performance of the member's duty; [or]
6547	6614		(3) a member of group A or group B dies after the date
6548	6615		the member retires on a pension because of length of service or a
6549	6616		disability and the member leaves an eligible survivor; or
6550	6617		(4) a member of group D dies from any cause after the
6551	6618		completion of five years of credited service with the city or the
6552	6619		pension system if the member on the date of the member's death was
6553	6620		still in service with the city or the pension system.
6554	6621		(b) A surviving spouse of a member described by Subsection
6555	6622		(a)(1) or (4) of this section [or former member] who dies while
6556	6623		still in [dies after having completed five years of credited]
6557	6624		service with the city or the pension system[, but before beginning
6558	6625		to receive retirement benefits,] is eligible for a sum equal to the
6559	6626		following applicable percentage [100 percent] of the retirement
6560	6627		benefits to which the deceased member or former member would have
6561	6628		been eligible had the member been totally disabled with an ordinary
6562	6629		disability at the time of the member's last day of credited service:
6563	6630		(1) 80 percent, if the member's death occurs on or
6564	6631		after the year 2017 effective date and the spouse was married to the
6565	6632		member for at least one continuous year as of the member's date of
6566	6633		death, except that the allowance payable to the surviving spouse
6567	6634		may not be less than $100 a month; or
6568	6635		(2) 50 percent, if the member's death occurs on or
6569	6636		after the year 2017 effective date and the spouse was married to the
6570	6637		member for less than one continuous year as of the date of the
6571	6638		member's death.
6572	6639		(b-1) A surviving spouse of a former member described by
6573	6640		Subsection (a)(1) of this section who dies on or after the year 2017
6574	6641		effective date while not in the service of the city or the pension
6575	6642		system and before the member's retirement commenced, is eligible
6576	6643		for a sum equal to 50 percent of the deceased former member's normal
6577	6644		accrued pension at the time of the deceased former member's last day
6578	6645		of credited service. Benefits under this subsection first become
6579	6646		payable on the date the former member would have become eligible to
6580	6647		begin receiving a pension. If the surviving spouse elects for
6581	6648		earlier payment, in a time and manner determined by the pension
6582	6649		board, the actuarial equivalent of that amount shall be payable at
6583	6650		that earlier date.
6584	6651		(c) A surviving spouse of a member described by Subsection
6585	6652		(a)(2) of this section who dies from a cause directly resulting from
6586	6653		a specific incident in the performance of the member's duty with the
6587	6654		city or the pension system, without serious or wilful misconduct on
6588	6655		the member's part, is eligible for a sum equal to 80 [100] percent
6589	6656		of the deceased member's final average salary.
6590	6657		(d) A surviving spouse of a retiree described by Subsection
6591	6658		(a)(3) of this section who dies after having received retirement
6592	6659		benefits is eligible for a sum equal to the following applicable
6593	6660		percentage [100 percent] of the retirement benefits being received
6594	6661		at the time of the retiree's death, including any applicable[. The]
6595	6662		cost-of-living adjustment in the survivor benefit under Section
6596	6663		10(h) of this Act [is] computed based on the unadjusted normal
6597	6664		retirement pension of the deceased retiree:
6598	6665		(1) 80 percent, if the retiree's death occurs on or
6599	6666		after the year 2017 effective date and the retiree separated from
6600	6667		service with the city or pension system before the year 2017
6601	6668		effective date;
6602	6669		(2) 80 percent, if the retiree's death occurs on or
6603	6670		after the year 2017 effective date and the retiree separated from
6604	6671		service with the city or pension system on or after the year 2017
6605	6672		effective date, provided the surviving spouse was married to the
6606	6673		retiree at the time of the retiree's death and for at least one
6607	6674		continuous year as of the date of the retiree's separation from
6608	6675		service; or
6609	6676		(3) 50 percent, if both the retiree's separation from
6610	6677		service and death occur on or after the year 2017 effective date and
6611	6678		the surviving spouse was married to the retiree at the time of the
6612	6679		retiree's death for less than one continuous year as of the date of
6613	6680		the retiree's separation from service.
6614	6681		(e) If there is a surviving spouse, each dependent child
6615	6682		shall receive a survivor benefit equal to 10 percent of the pension
6616	6683		the member would have received if the member had been disabled at
6617	6684		the time of death up to a maximum of 20 percent for all dependent
6618	6685		children, except that if the total amount payable to the surviving
6619	6686		spouse and dependent children is greater than 80 [100] percent of
6620	6687		the benefit the member would have received, the percentage of
6621	6688		benefits payable to the surviving spouse shall be reduced so that
6622	6689		the total amount is not greater than 80 [100] percent of the benefit
6623	6690		the member would have received, and the reduction shall continue
6624	6691		until the total amount payable to the surviving spouse and
6625	6692		dependent child, if any, would not be greater than 80 [100] percent
6626	6693		of the benefit the member would have received.
6627	6694		(h) If a retiree dies and there is no eligible survivor, the
6628	6695		retiree's spouse, if any, or if there is no spouse, the retiree's
6629	6696		estate, is eligible to receive a lump-sum payment of the
6630	6697		unamortized balance of the retiree's accrued employee
6631	6698		contributions, if any, other than contributions after the DROP
6632	6699		entry date, as determined by an amortization schedule and method
6633	6700		approved by the pension board. A pension payable to a retiree
6634	6701		ceases on the last day of the month [preceding the month] of the
6635	6702		retiree's death. A survivor benefit payable to an eligible
6636	6703		survivor is effective on the first day of the month following the
6637	6704		month of the retiree's death and ceases on the last day of [month
6638	6705		preceding] the month of the eligible survivor's death or on the last
6639	6706		day of the month in which the survivor otherwise ceases to be
6640	6707		eligible to receive a survivor's benefit.
6641	6708		SECTION 3.20. Sections 16(a) and (e), Chapter 88 (H.B.
6642	6709		1573), Acts of the 77th Legislature, Regular Session, 2001 (Article
6643	6710		6243h, Vernon's Texas Civil Statutes), are amended to read as
6644	6711		follows:
6645	6712		(a) Notwithstanding any other provision of this Act, the
6646	6713		pension board may pay to a member, deferred participant, eligible
6647	6714		survivor, alternate payee, or beneficiary in a lump-sum payment the
6648	6715		present value of any benefit payable to such a person that is less
6649	6716		than $20,000 [$10,000] instead of paying any other benefit payable
6650	6717		under this Act. If the lump-sum present value of the benefit is at
6651	6718		least $1,000 [$5,000] but less than $20,000 [$10,000], the pension
6652	6719		board may make a lump-sum payment only on written request by the
6653	6720		member, deferred participant, eligible survivor, alternate payee,
6654	6721		or other beneficiary. The pension board shall make any payment
6655	6722		under this subsection as soon as practicable after eligibility
6656	6723		under this section has been determined by the pension board.
6657	6724		(e) A member who is reemployed by the city or the pension
6658	6725		system and who has at least two years of continuous credited service
6659	6726		after reemployment may reinstate service for which the member
6660	6727		received a lump-sum payment under this section by paying into the
6661	6728		pension fund the amount of the lump-sum payment, plus interest on
6662	6729		that amount at the applicable assumed rate of return [six percent
6663	6730		per year], not compounded, from the date the lump-sum payment was
6664	6731		made to the member until the date of repayment to the pension fund.
6665	6732		SECTION 3.21. Section 17, Chapter 88 (H.B. 1573), Acts of
6666	6733		the 77th Legislature, Regular Session, 2001 (Article 6243h,
6667	6734		Vernon's Texas Civil Statutes), is amended by amending Subsections
6668	6735		(a), (c), (d), (e), (f), (g), (h), (i), (j), (k), and (l) and adding
6669	6736		Subsections (c-1), (c-2), (q), (r), and (s) to read as follows:
6670	6737		(a) A member who terminates employment with the city
6671	6738		involuntarily due to a reduction in workforce, as determined by the
6672	6739		pension board, before the member becomes eligible for a normal
6673	6740		retirement pension or attains five years of credited service, is
6674	6741		eligible to [by written notice to the pension board, may make an
6675	6742		irrevocable election to] leave the person's contributions in the
6676	6743		pension fund until the first anniversary of the date of
6677	6744		termination. If during that period the person is reemployed by the
6678	6745		city and has not withdrawn the person's contributions, all rights
6679	6746		and service credit as a member shall be immediately restored
6680	6747		without penalty. If reemployment with the city does not occur
6681	6748		before the first anniversary of the date of termination, all
6682	6749		payments made by the person into the pension fund by salary
6683	6750		deductions or other authorized contributions shall be refunded to
6684	6751		the person without interest. If the person is subsequently
6685	6752		reemployed, the person may have credit restored, subject to the
6686	6753		provisions applicable at the time of reemployment.
6687	6754		(c) A former member of group A or group B whose employment is
6688	6755		terminated for a reason other than death or receipt of a retirement
6689	6756		or disability pension after the completion of five years of
6690	6757		credited service may elect, in a manner determined by the pension
6691	6758		board, to receive a deferred retirement pension that begins on the
6692	6759		member's effective retirement date after the member attains the
6693	6760		eligibility requirements for normal retirement under Section 10 of
6694	6761		this Act as it existed on the member's last day of credited service
6695	6762		[either 62 years of age or a combination of years of age and years of
6696	6763		credited service, including parts of years, the sum of which equals
6697	6764		the number 70]. The amount of monthly benefit shall be computed in
6698	6765		the same manner as for a normal retirement pension, but based on
6699	6766		average monthly salary and credited service as of the member's last
6700	6767		day of credited service and subject to the provisions of this Act or
6701	6768		Chapter 358, Acts of 48th Legislature, Regular Session, 1943
6702	6769		(Article 6243g, Vernon's Texas Civil Statutes), in effect on the
6703	6770		former member's last day of credited service.
6704	6771		(c-1) A former member of group D whose employment is
6705	6772		terminated for a reason other than death or receipt of a retirement
6706	6773		or disability pension after the completion of five years of
6707	6774		credited service may elect, in a manner determined by the pension
6708	6775		board, to receive a deferred normal retirement pension that begins
6709	6776		on the former member's effective retirement date after the member
6710	6777		attains 62 years of age. The amount of a monthly benefit under this
6711	6778		subsection shall be computed in the same manner as a normal
6712	6779		retirement pension, except the benefit shall be based on the
6713	6780		average monthly salary and credited service of the former member as
6714	6781		of the former member's last day of credited service and subject to
6715	6782		the provisions of this Act in effect on the former member's last day
6716	6783		of credited service.
6717	6784		(c-2) A former member of group D whose employment is
6718	6785		terminated for a reason other than death or receipt of a retirement
6719	6786		or disability pension and who has met the minimum years of credited
6720	6787		service to receive an early reduced retirement pension under
6721	6788		Section 10(e) of this Act on attaining the required age, may elect,
6722	6789		in a manner determined by the pension board, to receive a deferred
6723	6790		early retirement pension that begins on the former member's
6724	6791		effective retirement date after the member attains the required age
6725	6792		under Section 10(e) of this Act. The amount of monthly benefit
6726	6793		shall be computed in the same manner as for an early retirement
6727	6794		pension under Section 10(e) of this Act, except that the benefit
6728	6795		shall be based on the average monthly salary and credited service of
6729	6796		the former member as of the former member's last day of credited
6730	6797		service and subject to the provisions of this Act in effect on the
6731	6798		former member's last day of credited service.
6732	6799		(d) If a member dies while still employed by the city,
6733	6800		whether eligible for a pension or not, and Sections 12 and 14 of
6734	6801		this Act do not apply, all of the member's rights in the pension
6735	6802		fund shall be satisfied by the refund to the member's spouse
6736	6803		[designated beneficiary], if any, or if there is no spouse
6737	6804		[designated beneficiary], to the member's estate, of all eligible
6738	6805		payments, if any, made by the member into the pension fund, without
6739	6806		interest.
6740	6807		(e) [The provisions of Section 14 of this Act concerning
6741	6808		payments to eligible survivors apply in the case of any former
6742	6809		member who has made the election permitted by Subsection (c) of this
6743	6810		section and who dies before reaching the age at which the former
6744	6811		member would be eligible to receive a pension.] If there is no
6745	6812		eligible survivor of the former member, all of the former member's
6746	6813		rights in the pension fund shall be satisfied by the refund to the
6747	6814		former member's spouse [designated beneficiary], if any, or if
6748	6815		there is no spouse [designated beneficiary], to the former member's
6749	6816		estate, of all eligible payments made by the former member into the
6750	6817		pension fund by way of employee contributions, without interest.
6751	6818		(f) This Act does not change the status of any former member
6752	6819		of the predecessor system whose services with the city or the
6753	6820		pension system were terminated under Chapter 358, Acts of the 48th
6754	6821		Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
6755	6822		Civil Statutes), except as otherwise expressly provided. Refunds
6756	6823		of contributions made under this section shall be paid to the
6757	6824		departing member, the member's spouse [beneficiary], or the
6758	6825		member's estate on written request and approval by the pension
6759	6826		board in a lump sum, except that if the pension board determines
6760	6827		that funds are insufficient to justify the lump-sum payment, the
6761	6828		payment shall be refunded on a monthly basis in amounts determined
6762	6829		by the pension board.
6763	6830		(g) If a deferred participant is reemployed by the city or
6764	6831		the pension system before receiving a deferred retirement pension
6765	6832		or if a retiree is reemployed by the city or the pension system,
6766	6833		Subsections (h) and (j) of this section apply to the computation of
6767	6834		the member's pension following the member's subsequent separation
6768	6835		from service if the member was a member on or after May 11, 2001, and
6769	6836		is not otherwise subject to Subsection (q) of this section.
6770	6837		(h) If a member described in Subsection (g) of this section
6771	6838		accrues not more than two years of continuous credited service
6772	6839		after reemployment:
6773	6840		(1) the portion of the member's deferred or normal
6774	6841		retirement pension attributable to the member's period of credited
6775	6842		service accrued before the date of the member's original or
6776	6843		previous separation from service is computed on the basis of the
6777	6844		applicable provisions of this Act or the predecessor system that
6778	6845		were in effect on the member's last day of credited service for the
6779	6846		original or previous period of credited service;
6780	6847		(2) the portion of the member's deferred or normal
6781	6848		retirement pension attributable to the member's period of credited
6782	6849		service accrued after the date of the member's reemployment by the
6783	6850		city or the pension system is computed on the basis of the
6784	6851		applicable provisions of this Act or the predecessor system in
6785	6852		effect on the member's last day of credited service for the
6786	6853		subsequent period of credited service; and
6787	6854		(3) the disability pension or survivor benefit
6788	6855		attributable to the member's period of credited service accrued
6789	6856		both before the date of the member's original or previous
6790	6857		separation from service and after the date of the member's
6791	6858		reemployment by the city or the pension system is computed on the
6792	6859		basis of the applicable provisions of this Act or the predecessor
6793	6860		system that were in effect on the member's last day of credited
6794	6861		service for the original or previous period of credited service.
6795	6862		(i) Subject to Subsection (l) of this section, the
6796	6863		disability pension or survivor benefit under Subsection (h)(3) of
6797	6864		this section is computed by adding the following amounts:
6798	6865		(1) the amount of the benefit derived from the member's
6799	6866		credited service accrued after the date of reemployment based on
6800	6867		the benefit accrual rate in effect on the member's last day of
6801	6868		original or previous credited service in the group in which the
6802	6869		member participated on the member's last day of subsequent credited
6803	6870		service; and
6804	6871		(2) the amount of the benefit the member, beneficiary,
6805	6872		or eligible survivor was eligible to receive based on the member's
6806	6873		original or previous credited service and the provisions in effect
6807	6874		on the member's last day of original or previous credited service.
6808	6875		(j) If a [the] member described by Subsection (g) of this
6809	6876		section accrues more than two years of continuous credited service
6810	6877		after reemployment, for purposes of future payment only, a deferred
6811	6878		retirement pension, normal retirement pension, disability pension,
6812	6879		or survivor benefit is computed on the basis of the applicable
6813	6880		provisions of this Act or the predecessor system in effect on the
6814	6881		member's last day of credited service for the subsequent service.
6815	6882		(k) Notwithstanding any other provision of this Act, if a
6816	6883		retiree is reemployed by the city or the pension system and becomes
6817	6884		a member, the retiree's pension under this Act ceases on the day
6818	6885		before the date the retiree is reemployed. Payment of the pension
6819	6886		shall be suspended during the period of reemployment and may not
6820	6887		begin until the month following the month in which the reemployed
6821	6888		retiree subsequently terminates employment. On subsequent
6822	6889		separation, benefits payable are computed under Subsections (h) and
6823	6890		(j) of this section, as applicable. If the reemployed retiree
6824	6891		receives any pension during the period of reemployment, the retiree
6825	6892		shall return all of the pension received during that period to the
6826	6893		pension system not later than the 30th day after the date of
6827	6894		receipt. If the reemployed retiree does not timely return all of
6828	6895		the pension, the pension board shall offset the amount not returned
6829	6896		against the payment of any future retirement pension, disability
6830	6897		pension, DROP balance, or survivor benefit payable on behalf of the
6831	6898		reemployed retiree, plus interest on the disallowed pension at the
6832	6899		applicable assumed rate of return, not compounded, from the date
6833	6900		the reemployed retiree received the disallowed pension to the date
6834	6901		of the offset on the disallowed pension.
6835	6902		(l) Except as provided by Section 14 of this Act, if [If] a
6836	6903		member is covered by Subsection (h) of this section and has made an
6837	6904		election or was eligible to make an election under Section 11 of
6838	6905		this Act or an optional annuity election under Section 29, Chapter
6839	6906		358, Acts of the 48th Legislature, Regular Session, 1943 (Article
6840	6907		6243g, Vernon's Texas Civil Statutes), or has received a pension
6841	6908		computed on the basis of an optional annuity election, the optional
6842	6909		annuity election, including any designation of an eligible
6843	6910		designated survivor, governs the payment of any pension or benefit
6844	6911		for the period of service covered by the optional annuity election,
6845	6912		and no other survivor benefit is payable for that period of service.
6846	6913		If a member meets the requirements of Subsection (j) of this section
6847	6914		and has made an optional annuity election or has received a pension
6848	6915		computed on the basis of an optional annuity election, the optional
6849	6916		annuity election, including any designation of an eligible
6850	6917		designated survivor, shall control the payment of any pension or
6851	6918		benefit, and no other survivor benefit is payable unless the member
6852	6919		elects, not later than the 90th day after the date of the separation
6853	6920		of employment and before payment of a pension, to revoke the
6854	6921		optional annuity election for future payment of benefits. If
6855	6922		revocation occurs, any survivor benefit is paid under Subsection
6856	6923		(j) of this section.
6857	6924		(q) Subsections (g) through (l) of this section do not apply
6858	6925		to the calculation of any benefit for or attributable to the period
6859	6926		of service following:
6860	6927		(1) the employment or reemployment of a member hired
6861	6928		or rehired on or after January 1, 2005; or
6862	6929		(2) the reemployment of a deferred retiree or retiree
6863	6930		who is reemployed in a pension system covered position before
6864	6931		January 1, 2005, but for a period of two years or less of continuous
6865	6932		credited service.
6866	6933		(r) If a deferred retiree or retiree subject to Subsection
6867	6934		(q)(2) of this section is reemployed in a pension system covered
6868	6935		position, the retiree's pension due on the retiree's subsequent
6869	6936		retirement shall be computed as follows:
6870	6937		(1) the portion of the retiree's pension attributable
6871	6938		to the retiree's periods of credited service that accrued before
6872	6939		the retiree's reemployment shall be calculated on the basis of the
6873	6940		schedule of benefits for retiring members that was in effect at the
6874	6941		time of the member's previous termination or terminations of
6875	6942		employment; and
6876	6943		(2) the portion of the member's pension attributable
6877	6944		to the member's period of credited service that accrued after the
6878	6945		member's reemployment shall be calculated on the basis of the
6879	6946		schedule of benefits for retiring members that is in effect at the
6880	6947		time of the member's subsequent retirement.
6881	6948		(s) The computation under Subsection (r) of this section may
6882	6949		not result in a lower pension benefit amount for the previous
6883	6950		service of the retiree than the pension benefit amount the retiree
6884	6951		was eligible to receive for the retiree's previous service before
6885	6952		the date of reemployment.
6886	6953		SECTION 3.22. Section 18(d), Chapter 88 (H.B. 1573), Acts
6887	6954		of the 77th Legislature, Regular Session, 2001 (Article 6243h,
6888	6955		Vernon's Texas Civil Statutes), is amended to read as follows:
6889	6956		(d) The military service credited under Subsection (c) of
6890	6957		this section:
6891	6958		(1) may not exceed a total of 60 months; and
6892	6959		(2) may be claimed as service solely in the group in
6893	6960		which the member participates [A only if the member is a group A
6894	6961		member or group C member] at the time the member claims the
6895	6962		service[; and
6896	6963		[(3) may be claimed as service in group B only if the
6897	6964		member is a group B member at the time the member claims the
6898	6965		service].
6899	6966		SECTION 3.23. Sections 24(h) and (i), Chapter 88 (H.B.
6900	6967		1573), Acts of the 77th Legislature, Regular Session, 2001 (Article
6901	6968		6243h, Vernon's Texas Civil Statutes), are amended to read as
6902	6969		follows:
6903	6970		(h) Contributions may not accumulate under the excess
6904	6971		benefit plan to pay future retirement benefits. The executive
6905	6972		director shall reduce each payment of employer contributions that
6906	6973		would otherwise be made to the pension fund under Section 8A [8] of
6907	6974		this Act by the amount determined to be necessary to meet the
6908	6975		requirements for retirement benefits under the plan, including
6909	6976		reasonable administrative expenses, until the next payment of
6910	6977		municipal contributions is expected to be made to the pension fund.
6911	6978		The employer shall pay to the plan, from the withheld
6912	6979		contributions, not earlier than the 30th day before the date each
6913	6980		distribution of monthly retirement benefits is required to be made
6914	6981		from the plan, the amount necessary to satisfy the obligation to pay
6915	6982		monthly retirement benefits from the plan. The executive director
6916	6983		shall satisfy the obligation of the plan to pay retirement benefits
6917	6984		from the employer contributions transferred for that month.
6918	6985		(i) Employer contributions otherwise required to be made to
6919	6986		the pension fund under Section 8A [8] of this Act and to any other
6920	6987		qualified plan shall be divided into those contributions required
6921	6988		to pay retirement benefits under this section and those
6922	6989		contributions paid into and accumulated to pay the maximum benefits
6923	6990		required under the qualified plan. Employer contributions made to
6924	6991		provide retirement benefits under this section may not be
6925	6992		commingled with the money of the pension fund or any other qualified
6926	6993		plan.
6927	6994		SECTION 3.24. Section 8(d), Chapter 88 (H.B. 1573), Acts of
6928	6995		the 77th Legislature, Regular Session, 2001 (Article 6243h,
6929	6996		Vernon's Texas Civil Statutes), is repealed.
6930	6997		SECTION 3.25. (a) The change in law made by this Act to
6931	6998		Section 2, Chapter 88 (H.B. 1573), Acts of the 77th Legislature,
6932	6999		Regular Session, 2001 (Article 6243h, Vernon's Texas Civil
6933	7000		Statutes), applies only to the appointment or election of a trustee
6934	7001		of the board of trustees of the pension system established under
6935	7002		that law that occurs on or after the effective date of this Act.
6936	7003		(b) A person who is serving as a trustee immediately before
6937	7004		the effective date of this Act may continue to serve for the
6938	7005		remainder of the trustee's term, and that trustee's qualifications
6939	7006		for serving as a trustee for that term are governed by the law in
6940	7007		effect immediately before the effective date of this Act.
6941	7008		SECTION 3.26. The pension system established under Chapter
6942	7009		88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
6943	7010		(Article 6243h, Vernon's Texas Civil Statutes), shall require the
6944	7011		pension system actuary to prepare the first actuarial experience
6945	7012		study required under Section 8D, Chapter 88 (H.B. 1573), Acts of the
6946	7013		77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
6947	7014		Texas Civil Statutes), as added by this Act, not later than
6948	7015		September 30, 2021.
6949	7016		ARTICLE 4. PROVISIONS APPLICABLE TO EACH PUBLIC RETIREMENT SYSTEM
6950	7017		SUBJECT TO ACT
6951	7018		SECTION 4.01. Chapter 107, Local Government Code, is
6952	7019		amended by adding Section 107.0036 to read as follows:
6953	7020		Sec. 107.0036. VOTER APPROVAL REQUIRED FOR CERTAIN PENSION
6954	7021		FUND OBLIGATIONS. (a) This section applies only to a public
6955	7022		pension fund subject to:
6956	7023		(1) Article 6243e.2(1), Revised Statutes;
6957	7024		(2) Chapter 88 (H.B. 1573), Acts of the 77th
6958	7025		Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
6959	7026		Civil Statutes); and
6960	7027		(3) Article 6243g-4, Revised Statutes.
6961	7028		(b) A municipality may issue an obligation under Section
6962	7029		107.003 to fund all or any part of the unfunded liability of a
6963	7030		public pension fund subject to this section only if the issuance is
6964	7031		approved by a majority of the qualified voters of the municipality
6965	7032		voting at an election held for that purpose.
6966	7033		SECTION 4.02. Section 107.0036, Local Government Code, as
6967	7034		added by this Act, applies only to obligations for which the
6968	7035		governing body of a municipality executes an agreement under
6969	7036		Section 107.003(b), Local Government Code, on or after the
6970	7037		effective date of this Act.
6971	7038		ARTICLE 5. CONFLICTING LEGISLATION; EFFECTIVE DATE
6972	7039		SECTION 5.01. If this Act conflicts with any other Act of
6973	7040		the 85th Legislature, Regular Session, 2017, this Act controls
6974	7041		unless the conflict is expressly resolved by the legislature by
6975	7042		reference to this Act.
6976	7043		SECTION 5.02. This Act takes effect July 1, 2017, if it
6977	7044		receives a vote of two-thirds of all the members elected to each
6978	7045		house, as provided by Section 39, Article III, Texas Constitution.
6979	7046		If this Act does not receive the vote necessary for effect on that
6980	7047		date, this Act takes effect September 1, 2017.
6981		-	______________________________ ______________________________
6982		-	President of the Senate Speaker of the House
6983		-	I hereby certify that S.B. No. 2190 passed the Senate on
6984		-	May 1, 2017, by the following vote: Yeas 25, Nays 5, one present
6985		-	not voting; May 10, 2017, Senate refused to concur in House
6986		-	amendments and requested appointment of Conference Committee;
6987		-	May 16, 2017, House granted request of the Senate; May 23, 2017,
6988		-	Senate adopted Conference Committee Report by the following
6989		-	vote: Yeas 25, Nays 5, one present not voting.
6990		-	______________________________
6991		-	Secretary of the Senate
6992		-	I hereby certify that S.B. No. 2190 passed the House, with
6993		-	amendments, on May 9, 2017, by the following vote: Yeas 115,
6994		-	Nays 29, three present not voting; May 16, 2017, House granted
6995		-	request of the Senate for appointment of Conference Committee;
6996		-	May 24, 2017, House adopted Conference Committee Report by the
6997		-	following vote: Yeas 103, Nays 43, three present not voting.
6998		-	______________________________
6999		-	Chief Clerk of the House
7000		-	Approved:
7001		-	______________________________
7002		-	Date
7003		-	______________________________
7004		-	Governor