Texas 2021 - 87th Regular

Texas House Bill HB4368 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	H.B. No. 4368
	1	+	By: Rodriguez, et al. (Senate Sponsor - Buckingham) H.B. No. 4368
	2	+	(In the Senate - Received from the House May 17, 2021;
	3	+	May 17, 2021, read first time and referred to Committee on Finance;
	4	+	May 22, 2021, reported adversely, with favorable Committee
	5	+	Substitute by the following vote: Yeas 10, Nays 0; May 22, 2021,
	6	+	sent to printer.)
	7	+	Click here to see the committee vote
	8	+	COMMITTEE SUBSTITUTE FOR H.B. No. 4368 By: Buckingham
2	9
3	10
	11	+	A BILL TO BE ENTITLED
4	12		AN ACT
5	13		relating to participation in, contributions to, and the benefits
6	14		and administration of retirement systems for police officers in
7	15		certain municipalities.
8	16		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	17		SECTION 1. Section 1.02, Chapter 452 (S.B. 738), Acts of the
10	18		72nd Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's
11	19		Texas Civil Statutes), is amended by amending Subdivisions (2) and
12	20		(4) and adding Subdivisions (1-a), (2-a), (3-a), (3-b), (6-a),
13	21		(6-b), (6-c), (6-d), (6-e), (10-a), (11-a), (13-a), (13-b), (13-c),
14	22		(15-a), (15-b), (15-c), (15-d), (15-e), (17-a), (18-a), (18-b),
15	23		(19-a), (19-b), (23-a), (29-a), and (29-b) to read as follows:
16	24		(1-a) "Actuarial accrued liability" means the portion
17	25		of the actuarial present value of projected benefits of the police
18	26		retirement system attributed to past periods of member service
19	27		based on the cost method used in the risk sharing valuation study
20	28		prepared under Section 8.03 or 8.04 of this Act, as applicable.
21	29		(2) "Actuarial equivalent" means any benefit of equal
22	30		present value to a standard benefit when computed as specified by
23	31		this Act, based on the actuarial assumptions adopted by the police
24	32		retirement board for that purpose.
25	33		(2-a) "Actuarial value of assets" means the value of
26	34		the police retirement system's investments as calculated using the
27	35		asset smoothing method used in the risk sharing valuation study
28	36		prepared under Section 8.03 or 8.04 of this Act, as applicable.
29	37		(3-a) "Amortization period" means:
30	38		(A) the period necessary to fully pay a liability
31	39		layer; or
32	40		(B) if referring to the amortization period of
33	41		the police retirement system as a whole, the number of years
34	42		incorporated in a weighted average amortization factor for the sum
35	43		of the legacy liability and all liability layers as determined in
36	44		each annual actuarial valuation of assets and liabilities of the
37	45		system.
38	46		(3-b) "Amortization rate" means, for a given calendar
39	47		year, the percentage rate determined by:
40	48		(A) adding the scheduled amortization payments
41	49		required to pay off the then-existing liability layers;
42	50		(B) subtracting the city legacy contribution
43	51		amount for the same calendar year, as determined in the risk sharing
44	52		valuation study prepared under Section 8.03 or 8.04 of this Act, as
45	53		applicable, from the sum under Paragraph (A); and
46	54		(C) dividing the sum under Paragraph (B) by the
47	55		projected pensionable payroll for the same calendar year.
48	56		(4) "Average final compensation" means the monthly
49	57		average of basic hourly earnings of a member during, as applicable:
50	58		(A) if the member has 120 months or more of
51	59		service during which the member made contributions to the system or
52	60		the predecessor system, the 36 months for a group A member or 60
53	61		months for a group B member which yielded the highest average during
54	62		the last 120 months of membership service during which the member
55	63		contributed to the system or the predecessor system;
56	64		(B) if the member has less than 120 months of
57	65		membership service during which the member contributed to the
58	66		system or the predecessor system, but has at least 36 months of
59	67		membership service for a group A member or 60 months of membership
60	68		service for a group B member during which the member made
61	69		contributions to the system or the predecessor system, the average
62	70		of the 36 months or 60 months, as applicable, which yielded the
63	71		highest average; or
64	72		(C) if the member does not have 36 months of
65	73		membership service for a group A member or 60 months of membership
66	74		service for a group B member during which the member contributed to
67	75		the system or the predecessor system, the average of the member's
68	76		months of membership service during which the member made
69	77		contributions to the system or the predecessor system.
70	78		(6-a) "City contribution rate" means, for a given
71	79		calendar year, a percentage rate equal to the sum of the employer
72	80		normal cost rate and the amortization rate, as adjusted under
73	81		Section 8.05 or 8.06 of this Act, if applicable.
74	82		(6-b) "City legacy contribution amount" means, for
75	83		each calendar year, a predetermined payment amount expressed in
76	84		dollars in accordance with a payment schedule amortizing the legacy
77	85		liability for the calendar year ending December 31, 2020, that is
78	86		included in the initial risk sharing valuation study under Section
79	87		8.03 of this Act.
80	88		(6-c) "Corridor" means the range of city contribution
81	89		rates that are:
82	90		(A) equal to or greater than the minimum city
83	91		contribution rate; and
84	92		(B) equal to or less than the maximum city
85	93		contribution rate.
86	94		(6-d) "Corridor margin" means five percentage points.
87	95		(6-e) "Corridor midpoint" means the projected city
88	96		contribution rate specified for each calendar year for 30 years as
89	97		provided by the initial risk sharing valuation study under Section
90	98		8.03 of this Act, rounded to the nearest hundredths decimal place.
91	99		(10-a) "Employer normal cost rate" means, for a given
92	100		calendar year, the normal cost rate minus the applicable member
93	101		contribution rate determined under Section 8.01 of this Act.
94	102		(11-a) "Estimated city contribution rate" means, for a
95	103		given calendar year, the city contribution rate that would be
96	104		required to maintain an amortization period for the retirement
97	105		system as a whole of no more than 30 years as determined by the
98	106		system's actuary in a risk sharing valuation study under Section
99	107		8.03 or 8.04 of this Act, as applicable, and before any adjustment
100	108		to the rate under Section 8.05 or 8.06 of this Act, as applicable.
101	109		(13-a) "Funded ratio" means the ratio of the actuarial
102	110		value of assets divided by the actuarial accrued liability.
103	111		(13-b) "Group A member" means a member included in
104	112		group A membership under Section 4.01(e-1) of this Act.
105	113		(13-c) "Group B member" means a member included in
106	114		group B membership under Section 4.01(e-1) of this Act.
107	115		(15-a) "Legacy liability" means the unfunded
108	116		actuarial accrued liability determined as of December 31, 2020, and
109	117		for each subsequent calendar year, adjusted as follows:
110	118		(A) reduced by the city legacy contribution
111	119		amount for the calendar year allocated to the amortization of the
112	120		legacy liability; and
113	121		(B) adjusted by the assumed rate of return
114	122		adopted by the police retirement board for the calendar year.
115	123		(15-b) "Level percent of payroll method" means the
116	124		amortization method that defines the amount of the liability layer
117	125		recognized each calendar year as a level percent of pensionable
118	126		payroll until the amount of the liability layer remaining is
119	127		reduced to zero.
120	128		(15-c) "Liability gain layer" means a liability layer
121	129		that decreases the unfunded actuarial accrued liability.
122	130		(15-d) "Liability layer" means:
123	131		(A) the legacy liability established in the
124	132		initial risk sharing valuation study under Section 8.03 of this
125	133		Act; or
126	134		(B) for calendar years after December 31, 2020,
127	135		the amount that the police retirement system's unfunded actuarial
128	136		accrued liability increases or decreases, as applicable, due to the
129	137		unanticipated change for the calendar year as determined in each
130	138		subsequent risk sharing valuation study prepared under Section 8.04
131	139		of this Act.
132	140		(15-e) "Liability loss layer" means a liability layer
133	141		that increases the unfunded actuarial accrued liability. For
134	142		purposes of this Act, the legacy liability is a liability loss
135	143		layer.
136	144		(17-a) "Maximum city contribution rate" means, for a
137	145		given calendar year, the rate equal to the corridor midpoint plus
138	146		the corridor margin.
139	147		(18-a) "Minimum city contribution rate" means, for a
140	148		given calendar year, the rate equal to the corridor midpoint minus
141	149		the corridor margin.
142	150		(18-b) "Normal cost rate" means, for a given calendar
143	151		year, the salary weighted average of the individual normal cost
144	152		rates determined for the current active member population, plus the
145	153		assumed administrative expenses determined in the most recent
146	154		actuarial experience study.
147	155		(19-a) "Payoff year" means the year a liability layer
148	156		is fully amortized under the amortization period. A payoff year may
149	157		not be extended or accelerated for a period that is less than one
150	158		month.
151	159		(19-b) "Pensionable payroll" means the aggregate
152	160		basic hourly earnings of all members in active service for a
153	161		calendar year or pay period, as applicable.
154	162		(23-a) "Projected pensionable payroll" means the
155	163		estimated pensionable payroll for the calendar year beginning 12
156	164		months after the date of the risk sharing valuation study prepared
157	165		under Section 8.03 or 8.04 of this Act, at the time of calculation
158	166		by:
159	167		(A) projecting the prior calendar year's
160	168		pensionable payroll forward two years using the current payroll
161	169		growth rate assumption adopted by the police retirement board; and
162	170		(B) adjusting, if necessary, for changes in
163	171		population or other known factors, provided those factors would
164	172		have a material impact on the calculation, as determined by the
165	173		board.
166	174		(29-a) "Unanticipated change" means, with respect to
167	175		the unfunded actuarial accrued liability in each subsequent risk
168	176		sharing valuation study prepared under Section 8.04 of this Act,
169	177		the difference between:
170	178		(A) the remaining balance of all then-existing
171	179		liability layers as of the date of the risk sharing valuation study;
172	180		and
173	181		(B) the actual unfunded actuarial accrued
174	182		liability as of the date of the risk sharing valuation study.
175	183		(29-b) "Unfunded actuarial accrued liability" means
176	184		the difference between the actuarial accrued liability and the
177	185		actuarial value of assets.
178	186		SECTION 2. Section 3.02, Chapter 452 (S.B. 738), Acts of the
179	187		72nd Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's
180	188		Texas Civil Statutes), is amended to read as follows:
181	189		Sec. 3.02. COMPOSITION OF BOARD; TRUSTEE QUALIFICATIONS.
182	190		(a) The police retirement board shall be composed of 11 members as
183	191		follows:
184	192		(1) one council member designated by the city council;
185	193		(2) the city manager or the city manager's designee;
186	194		(3) the director of finance or the director's
187	195		designee;
188	196		(4) four [five] police officer members elected by the
189	197		police officer members of the system, each of whom serves for a term
190	198		of four years;
191	199		(5) one legally qualified voter of the city, who is a
192	200		resident and has been a resident for the preceding five years, is
193	201		not an employee of the city or a member of the system, and has
194	202		demonstrated experience in the field of finance or investments, to
195	203		be appointed by the police retirement board to serve for a term of
196	204		four years and until the member's successor is duly selected and
197	205		qualified; [and]
198	206		(6) one legally qualified voter of the city, who is a
199	207		resident and has been a resident for the preceding five years, is
200	208		not an employee of the city or a member of the system, and has
201	209		demonstrated experience in the field of finance or investments, to
202	210		be appointed by the city council to serve for a term of four years
203	211		and until the member's successor is duly selected and qualified;
204	212		and
205	213		(7) two retired members to be elected by the retired
206	214		members to serve for a term of four years, with the term of one
207	215		member expiring each odd-numbered year.
208	216		(b) The terms of two members elected as described by
209	217		Subsection (a)(4) of this section expire in 2023 [2001] and every
210	218		fourth subsequent year, and the terms of two [three] members
211	219		elected as described by Subsection (a)(4) of this section expire in
212	220		2025 [2003] and every fourth subsequent year.
213	221		(b-1) A member of the police retirement board appointed
214	222		under Subsection (a)(5) or (a)(6) of this section must:
215	223		(1) have, at the time of taking office, the
216	224		qualifications required for the trustee's position; and
217	225		(2) maintain during service on the board the
218	226		qualifications required for the trustee's position.
219	227		(c) A vacancy occurring by the death, resignation, or
220	228		removal of the member appointed under:
221	229		(1) Subsection (a)(5) of this section shall be filled
222	230		by appointment by the remaining members of the police retirement
223	231		board; and
224	232		(2) Subsection (a)(6) of this section shall be filled
225	233		by appointment by the city council.
226	234		SECTION 3. Section 3.09(b), Chapter 452 (S.B. 738), Acts of
227	235		the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
228	236		Vernon's Texas Civil Statutes), is amended to read as follows:
229	237		(b) From time to time on the advice of the actuary and at the
230	238		direction of the board and as provided by Section 3.091 of this Act,
231	239		the actuary shall make an actuarial investigation of the mortality,
232	240		service, and compensation experience of members, retired members,
233	241		and beneficiaries of the system and shall recommend for adoption by
234	242		the board the tables and rates required by the system. The board
235	243		shall adopt the tables and rates to be used by the system.
236	244		SECTION 4. Article III, Chapter 452 (S.B. 738), Acts of the
237	245		72nd Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's
238	246		Texas Civil Statutes), is amended by adding Section 3.091 to read as
239	247		follows:
240	248		Sec. 3.091. PROCESS FOR EXPERIENCE STUDIES AND CHANGES TO
241	249		ACTUARIAL ASSUMPTIONS. (a) At least once every five years, the
242	250		police retirement board shall have the system's actuary designated
243	251		under Section 3.09 of this Act conduct an experience study to review
244	252		the actuarial assumptions and methods adopted by the board for the
245	253		purposes of determining the actuarial liabilities and actuarially
246	254		determined contribution rates of the system. The system shall
247	255		notify the city at the beginning of an upcoming experience study by
248	256		the system's actuary.
249	257		(b) In connection with the system's experience study, the
250	258		city will inform the system if it will:
251	259		(1) conduct the city's own experience study using the
252	260		city's own actuary;
253	261		(2) have the city's actuary review the experience
254	262		study of the system's actuary; or
255	263		(3) accept the experience study of the system's
256	264		actuary.
257	265		(c) If the city chooses to:
258	266		(1) have the city's own experience study performed
259	267		under Subsection (b)(1) of this section, the city must complete the
260	268		study not later than three months after the date the system notified
261	269		the city of the system's intent to conduct an experience study; or
262	270		(2) have the city's actuary review the system's
263	271		experience study under Subsection (b)(2) of this section, the city
264	272		must complete the review not later than one month after the date the
265	273		preliminary results of the experience study are presented to the
266	274		board.
267	275		(d) If the city chooses to have the city's own experience
268	276		study performed under Subsection (b)(1) of this section, or to have
269	277		the city's actuary review the system's experience study under
270	278		Subsection (b)(2) of this section, the system's actuary and the
271	279		city's actuary shall determine what the hypothetical city
272	280		contribution rate would be using the proposed actuarial assumptions
273	281		from the experience studies and data from the most recent actuarial
274	282		valuation.
275	283		(e) If the difference between the hypothetical city
276	284		contribution rates determined by the system's actuary and the
277	285		city's actuary under Subsection (d) of this section:
278	286		(1) is less than or equal to two percent of pensionable
279	287		payroll, then no further action is needed and the board shall use
280	288		the experience study performed by the system's actuary in
281	289		determining assumptions; or
282	290		(2) is greater than two percent of pensionable
283	291		payroll, then the system's actuary and the city's actuary shall have
284	292		20 business days to reconcile the difference in actuarial
285	293		assumptions or methods causing the different hypothetical city
286	294		contribution rates, and:
287	295		(A) if, as a result of the reconciliation efforts
288	296		under this subdivision, the difference between the city
289	297		contribution rates determined by the system's actuary and the
290	298		city's actuary is reduced to less than or equal to two percentage
291	299		points, then no further action is needed and the board shall use the
292	300		experience study performed by the system's actuary in determining
293	301		actuarial assumptions; or
294	302		(B) if, after 20 business days, the system's
295	303		actuary and the city's actuary are not able to reach a
296	304		reconciliation that reduces the difference in the hypothetical city
297	305		contribution rates to an amount less than or equal to two percentage
298	306		points, a third-party actuary shall be retained to opine on the
299	307		differences in the assumptions made and actuarial methods used by
300	308		the system's actuary and the city's actuary.
301	309		(f) The independent third-party actuary retained in
302	310		accordance with Subsection (e)(2)(B) of this section shall be
303	311		chosen by the city from a list of three actuarial firms provided by
304	312		the system.
305	313		(g) If a third-party actuary is retained under Subsection
306	314		(e)(2)(B) of this section, the third-party actuary's findings will
307	315		be presented to the board along with the experience study conducted
308	316		by the system's actuary and, if applicable, the city's actuary. If
309	317		the board adopts actuarial assumptions or methods contrary to the
310	318		third-party actuary's findings:
311	319		(1) the system shall provide a formal letter
312	320		describing the rationale for the board's action to the city council
313	321		and State Pension Review Board; and
314	322		(2) the system's actuary and executive director shall
315	323		be made available at the request of the city council or the State
316	324		Pension Review Board to present in person the rationale for the
317	325		board's action.
318	326		(h) If the board proposes a change to actuarial assumptions
319	327		or methods that is not in connection with an experience study
320	328		described in Subsection (a) of this section, the system and the city
321	329		shall follow the same process prescribed by this section with
322	330		respect to an experience study in connection with the proposed
323	331		change.
324	332		SECTION 5. Section 3.10, Chapter 452 (S.B. 738), Acts of the
325	333		72nd Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's
326	334		Texas Civil Statutes), is amended to read as follows:
327	335		Sec. 3.10. INVESTMENT MANAGERS. The police retirement
328	336		board may hire an investment manager or investment managers who
329	337		shall have full authority to invest the assets and manage any
330	338		portion of the portfolio of the system, as specified by the
331	339		manager's [employment] contract.
332	340		SECTION 6. Section 4.01, Chapter 452 (S.B. 738), Acts of the
333	341		72nd Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's
334	342		Texas Civil Statutes), is amended by amending Subsections (c) and
335	343		(e) and adding Subsections (e-1) and (e-2) to read as follows:
336	344		(c) Any person who becomes an employee of the city or the
337	345		system, if eligible for membership, shall become a member as a
338	346		condition of employment and shall make the required deposits
339	347		commencing with the first pay period following a probationary
340	348		period of six continuous months from date of employment, if
341	349		applicable, or eligibility, if later.
342	350		(e) [(1)] Membership in the police retirement system shall
343	351		consist of the following groups:
344	352		(1) [(A)] Active--Contributory: the member who is in a
345	353		status which allows payroll contributions to the police retirement
346	354		system (working a normal work week, holding a full-time position,
347	355		and, if applicable, having completed a continuous period of six
348	356		months of service initially, to attain membership).
349	357		(2) [(B)] Active--Noncontributory: the member whose
350	358		current employment status does not allow contributions to the
351	359		system (working less than a normal work week or on a leave of
352	360		absence under Subsection (f)(6)(A) of this section) and on return
353	361		to working a normal work week, the member will again be given
354	362		creditable service, with contributions resumed at time of status
355	363		change.
356	364		(3) [(C)] Inactive--Contributory: the member who is
357	365		on a uniformed service leave of absence under Subsection (f)(6)(B)
358	366		of this section, who is allowed to make deposits to the system
359	367		during the member's absence.
360	368		(4) [(D)] Vested--Noncontributory: the terminated
361	369		member who, being vested, leaves the member's accumulated deposits
362	370		in the system.
363	371		(5) [(E)] Retired: the member who is receiving a
364	372		service or disability retirement annuity.
365	373		(e-1) Each member is either a group A member or a group B
366	374		member, as follows:
367	375		(1) a member is a group A member if the member was:
368	376		(A) retired from or employed by the city or the
369	377		system on December 31, 2021;
370	378		(B) a vested--noncontributory member as of
371	379		December 31, 2021, who has not withdrawn the member's accumulated
372	380		deposits; or
373	381		(C) formerly employed by the city or the system
374	382		before December 31, 2021, returned to employment with the city or
375	383		system on or after January 1, 2022, and:
376	384		(i) did not withdraw the member's
377	385		accumulated deposits from the system; or
378	386		(ii) withdrew the member's accumulated
379	387		deposits from the system, but reinstated all of the previously
380	388		forfeited creditable service; and
381	389		(2) a member is a group B member if the member:
382	390		(A) first became employed by the city or the
383	391		system on or after January 1, 2022; or
384	392		(B) was formerly employed by the city or the
385	393		system before December 31, 2021, returned to employment with the
386	394		city or system on or after January 1, 2022, and:
387	395		(i) while the member was separated from
388	396		service, withdrew the member's accumulated deposits from the
389	397		system; and
390	398		(ii) has not reinstated all of the member's
391	399		previously forfeited creditable service.
392	400		(e-2) [(2)] It shall be the duty of the police retirement
393	401		board to determine the membership group to which each police
394	402		officer or employee of the system who becomes a member of the police
395	403		retirement system properly belongs under Subsections (e) and (e-1)
396	404		of this section.
397	405		SECTION 7. Section 5.03(a), Chapter 452 (S.B. 738), Acts of
398	406		the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
399	407		Vernon's Texas Civil Statutes), is amended to read as follows:
400	408		(a) An eligible member or eligible surviving spouse may
401	409		establish creditable service for probationary service performed as
402	410		provided under this section according to the following conditions,
403	411		limitations, and restrictions:
404	412		(1) Probationary service creditable in the system is
405	413		any probationary service following the member's commission date or
406	414		the member's first date of employment with the system for which the
407	415		member does not have creditable service.
408	416		(2) An eligible member or eligible surviving spouse
409	417		may establish creditable service under this section by contributing
410	418		to the system a single payment equal to the contribution the member
411	419		would have made to the system for that service at the time the
412	420		service was performed and an interest charge based on the
413	421		contribution amount to be repaid times an interest factor. The
414	422		interest factor is eight percent per year for the period that begins
415	423		with the beginning of the month and year at the end of the
416	424		probationary period for which creditable service is being
417	425		established to the beginning of the month and year payment is made
418	426		to the system for the purpose of establishing said service.
419	427		(3) After the eligible member or eligible surviving
420	428		spouse makes the deposit required by Subdivision (2) of this
421	429		subsection, the system shall grant the member one month of
422	430		creditable service for each month of probationary service
423	431		established under this section.
424	432		SECTION 8. Section 5.04(a), Chapter 452 (S.B. 738), Acts of
425	433		the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
426	434		Vernon's Texas Civil Statutes), is amended to read as follows:
427	435		(a) Under irrevocable action taken by the city council on
428	436		February 12, 1998, police [This section does not take effect unless
429	437		the city council authorizes the city to begin making contributions
430	438		to the police retirement system in accordance with Section 8.01(a)
431	439		of this Act for police cadets during their employment as cadets
432	440		while members of a cadet class. Police] cadets whose cadet class
433	441		begins after April 1, 1998, [the city council makes the
434	442		authorization] shall make deposits to the police retirement system
435	443		in accordance with Section 8.01(a) of this Act, and those cadets
436	444		shall be members of the police retirement system and shall receive
437	445		creditable service for employment as cadets while members of a
438	446		cadet class, notwithstanding Sections 1.02(7), (18), and (21) of
439	447		this Act.
440	448		SECTION 9. Section 6.01, Chapter 452 (S.B. 738), Acts of the
441	449		72nd Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's
442	450		Texas Civil Statutes), is amended by amending Subsections (a) and
443	451		(f) to read as follows:
444	452		(a) On retirement after having reached the member's normal
445	453		retirement date, members entitled thereto shall receive a service
446	454		retirement benefit in the form of a life annuity (modified cash
447	455		refund). Each monthly payment of the life annuity (modified cash
448	456		refund) shall be equal to one-twelfth of:
449	457		(1) for a group A member, the product of 3.2 [2.88]
450	458		percent of a member's average final compensation multiplied by the
451	459		number of months of creditable service; or
452	460		(2) for a group B member, the product of 2.5 percent of
453	461		a member's average final compensation multiplied by the number of
454	462		months of creditable service. [The retirement benefit percent
455	463		specified by this section to calculate the amount of the monthly
456	464		payment of the life annuity (modified cash refund) may be changed
457	465		after 1997 if:
458	466		[(1) the change is approved by the board's actuary;
459	467		[(2) the change is adopted by the board as a board
460	468		rule;
461	469		[(3) the change applies to all present members, all
462	470		retired members, and all who become members after the effective
463	471		date of the change in the retirement benefit percent;
464	472		[(4) a member's vested interest as of the last day of
465	473		the month immediately preceding the effective date of the change in
466	474		the retirement benefit percent is not reduced; and
467	475		[(5) a retirement annuity being paid by the police
468	476		retirement system to members or to the surviving spouses or
469	477		beneficiaries of members who retired before the effective date of
470	478		the change in the retirement benefit percent is changed as
471	479		prescribed by Subsection (d)(6) of this section, except that a
472	480		reduction in annuities may not cause the member's, surviving
473	481		spouse's, or beneficiary's annuity payment to be reduced below the
474	482		base retirement amount calculated under this Act.]
475	483		(f) For purposes of this section, compensation of each
476	484		noneligible member taken into account under this Act may not exceed
477	485		the maximum amount allowed under [$200,000 per calendar year,
478	486		indexed pursuant to] Section 401(a)(17) of the Internal Revenue
479	487		Code of 1986 (26 U.S.C. Section 401). The [$200,000] limit
480	488		prescribed by this subsection does not apply to an eligible member.
481	489		For purposes of this subsection, an eligible member is any
482	490		individual who first became a member before January 1, 1996. For
483	491		purposes of this subsection, a noneligible member is any other
484	492		member.
485	493		SECTION 10. Section 6.02, Chapter 452 (S.B. 738), Acts of
486	494		the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
487	495		Vernon's Texas Civil Statutes), is amended by amending Subsection
488	496		(a) and adding Subsection (a-1) to read as follows:
489	497		(a) A group A [Any] member shall be eligible for service
490	498		retirement if the member has attained the age of 55 years and
491	499		completed at least 20 years of creditable service with the city, or
492	500		has completed 23 years of creditable service, excluding any
493	501		military service established under Section 5.02 of this Act.
494	502		(a-1) A group B member shall be eligible for service
495	503		retirement if the member has attained the age of 50 years and
496	504		completed at least 25 years of creditable service with the city,
497	505		excluding any military service established under Section 5.02 of
498	506		this Act.
499	507		SECTION 11. Section 6.04(b), Chapter 452 (S.B. 738), Acts
500	508		of the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
501	509		Vernon's Texas Civil Statutes), is amended to read as follows:
502	510		(b) If a member who has attained the applicable age for the
503	511		minimum distribution required under Section 401(a)(9) of the
504	512		Internal Revenue Code of 1986 (26 U.S.C. Section 401(a)(9)) [age
505	513		70-1/2] separates or has separated from service without applying
506	514		for retirement or a refund of accumulated deposits, the police
507	515		retirement system shall attempt to send to that member a written
508	516		notice as soon as practicable after the later of the date the member
509	517		attains the applicable age [70-1/2] or the date the member
510	518		separates from service. The written notice must advise the member
511	519		of the requirement under Section 401(a)(9) of the Internal Revenue
512	520		Code of 1986 (26 U.S.C. Section 401(a)(9)) to retire and begin
513	521		receiving a monthly retirement benefit. If, before the 91st day
514	522		after the date the police retirement system sends the notice, the
515	523		member has not filed an application for retirement or a refund, the
516	524		member is considered to have retired on the last day of the third
517	525		month following the later of the two dates specified by this
518	526		subsection. If applicable, the retirement option shall be
519	527		determined in accordance with the member's written selection of
520	528		optional benefit and designation of beneficiary under Section
521	529		6.06(a)(1) of this Act. Otherwise, the member shall receive the
522	530		life annuity under Section 6.01 of this Act.
523	531		SECTION 12. Section 6.07(e), Chapter 452 (S.B. 738), Acts
524	532		of the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
525	533		Vernon's Texas Civil Statutes), is amended to read as follows:
526	534		(e) The first monthly annuity amount that would have been
527	535		paid during the RETRO DROP benefit accumulation period is the
528	536		amount defined by Subsection (c) of this section. [Subsequent
529	537		monthly annuity amounts that would have been paid during the RETRO
530	538		DROP benefit accumulation period must include any cost-of-living
531	539		increases or special ad hoc increases in annuity amounts granted in
532	540		accordance with Sections 6.01(c) and (d) of this Act.]
533	541		SECTION 13. Section 7.02, Chapter 452 (S.B. 738), Acts of
534	542		the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
535	543		Vernon's Texas Civil Statutes), is amended by amending Subsection
536	544		(a) and adding Subsection (a-1) to read as follows:
537	545		(a) On award of disability retirement benefits, the member
538	546		shall receive a disability retirement benefit computed in the same
539	547		manner that a service retirement benefit would be computed at the
540	548		member's normal retirement date, based on average final
541	549		compensation and creditable service at date of disability
542	550		retirement without reduction for early retirement. If the
543	551		disability is a direct or proximate result of the performance of the
544	552		member's employment duties with the system or the city, then the
545	553		disability retirement benefit will be subject to a minimum benefit
546	554		determined in accordance with Section 6.01(a)(1) or (2) of this
547	555		Act, as applicable, based on:
548	556		(1) average final compensation at date of disability
549	557		retirement; and
550	558		(2) for:
551	559		(A) a group A member, 20 years of creditable
552	560		service; or
553	561		(B) a group B member, 25 years of creditable
554	562		service.
555	563		(a-1) The options allowed under this section are life
556	564		annuity or its actuarial equivalent payable in the form described
557	565		as Option I, Option II, Option III, Option IV, or Option V in
558	566		Section 6.03 of this Act. The disability benefits paid to the
559	567		member will be paid from Fund No. 1 until the amount received equals
560	568		the member's accumulated deposits; thereafter the benefits will be
561	569		paid from Fund No. 2.
562	570		SECTION 14. Article VIII, Chapter 452 (S.B. 738), Acts of
563	571		the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
564	572		Vernon's Texas Civil Statutes), is amended by amending Section 8.01
565	573		and adding Sections 8.02 through 8.13 to read as follows:
566	574		Sec. 8.01. MEMBER CONTRIBUTIONS [METHOD OF FINANCING]. (a)
567	575		[(1)] Deposits by the members to the police retirement system shall
568	576		be made at a rate of at least:
569	577		(1) 13 percent of the basic hourly earnings of the
570	578		[each] member, for each pay period beginning before January 1,
571	579		2022; and
572	580		(2) 15 percent of the basic hourly earnings of the
573	581		member, for each pay period beginning on or after January 1, 2022,
574	582		unless a different member contribution rate is required in
575	583		accordance with Section 8.04(b)(4) of this Act, as adjusted, if
576	584		applicable, under Section 8.065 of this Act, except that the rate
577	585		may not exceed 17 percent.
578	586		(a-1) Deposits required to be made by members under
579	587		Subsection (a) of this section shall be deducted from payroll each
580	588		pay period.
581	589		(a-2) On recommendation of the board, the
582	590		Active--Contributory members may by a majority of those voting
583	591		increase the rate of member deposits above the minimum rate of
584	592		deposit established by Subsection (a) of this section [13 percent]
585	593		to whatever amount the board has recommended. If the deposit rate
586	594		for members has been increased to a rate above the rate established
587	595		by Subsection (a) of this section in accordance with this
588	596		subsection [13 percent], the rate may be decreased to a rate not
589	597		lower than the rate prescribed by Subsection (a)(2) of this section
590	598		if the board recommends the decrease, the board's actuary approves
591	599		the decrease, and a majority of the Active--Contributory members
592	600		voting on the matter approve the decrease. If an increase in the
593	601		member contribution rate is made solely as the result of an
594	602		adjustment under Section 8.065 of this Act, that increase may not be
595	603		decreased under this subsection.
596	604		Sec. 8.02. CITY CONTRIBUTIONS. (a) [(2)] The city shall
597	605		contribute amounts equal to [18 percent of the basic hourly
598	606		earnings of each member employed by the city for all periods on or
599	607		before September 30, 2010, subject to additional amounts as
600	608		provided by Subdivision (3) of this subsection. The city shall
601	609		contribute amounts equal to 19 percent of the basic hourly earnings
602	610		of each member employed by the city for all periods after September
603	611		30, 2010, and before October 1, 2011, subject to additional amounts
604	612		as provided by Subdivision (3) of this subsection. The city shall
605	613		contribute amounts equal to 20 percent of the basic hourly earnings
606	614		of each member employed by the city for all periods after September
607	615		30, 2011, and before October 1, 2012, subject to additional amounts
608	616		as provided by Subdivision (3) of this subsection. The city shall
609	617		contribute amounts equal to] 21 percent of the basic hourly
610	618		earnings of each member employed by the city for all pay periods
611	619		beginning after September 30, 2012, and before January 1, 2022,
612	620		subject to additional amounts as provided by Section 8.07 of this
613	621		Act [Subdivision (3) of this subsection]. For all pay periods
614	622		beginning on or after January 1, 2022, the city shall make
615	623		contributions to the police retirement system in accordance with
616	624		Subsections (b) and (c) of this section and Sections 8.03, 8.04,
617	625		8.05, and 8.06 of this Act, as applicable, and subject to additional
618	626		amounts as provided by Section 8.07 of this Act. The city council
619	627		may also authorize the city to make additional contributions to the
620	628		police retirement system in whatever amount the city council may
621	629		determine. Contributions by the city shall be made each pay period.
622	630		(b) For each pay period that begins on or after January 1,
623	631		2022, and before January 1, 2023, the city shall contribute an
624	632		amount equal to the sum of:
625	633		(1) the city contribution rate, as determined in the
626	634		initial risk sharing valuation study conducted under Section 8.03
627	635		of this Act, multiplied by the pensionable payroll for the
628	636		applicable pay period; and
629	637		(2) 1/26 of the city legacy contribution amount for
630	638		the 2022 calendar year, as determined and adjusted in the initial
631	639		risk sharing valuation study conducted under Section 8.03 of this
632	640		Act.
633	641		(c) For each pay period that begins on or after January 1,
634	642		2023, the city shall contribute an amount equal to the sum of:
635	643		(1) the city contribution rate for the applicable
636	644		calendar year, as determined in a subsequent risk sharing valuation
637	645		study conducted under Section 8.04 of this Act and adjusted under
638	646		Section 8.05 or 8.06 of this Act, as applicable, multiplied by the
639	647		pensionable payroll for the applicable pay period; and
640	648		(2) 1/26 of the city legacy contribution amount for
641	649		the applicable calendar year, as determined and adjusted in the
642	650		initial risk sharing valuation study conducted under Section 8.03
643	651		of this Act.
644	652		Sec. 8.03. INITIAL RISK SHARING VALUATION STUDY. (a) The
645	653		police retirement system shall cause the system's actuary to
646	654		prepare an initial risk sharing valuation study that is dated as of
647	655		December 31, 2020, in accordance with this section.
648	656		(b) The initial risk sharing valuation study must:
649	657		(1) except as otherwise provided by this section, be
650	658		prepared in accordance with the requirements of Section 8.04 of
651	659		this Act;
652	660		(2) be based on the actuarial assumptions that were
653	661		used by the system's actuary in the valuation completed for the year
654	662		ended December 31, 2020;
655	663		(3) project the corridor midpoint for the next 30
656	664		calendar years beginning with the calendar year that begins on
657	665		January 1, 2022; and
658	666		(4) include a schedule of city legacy contribution
659	667		amounts for 30 calendar years beginning with the calendar year that
660	668		begins on January 1, 2022.
661	669		(c) For purposes of Subsection (b)(4) of this section, the
662	670		schedule of city legacy contribution amounts must be determined in
663	671		such a manner that the total annual city legacy contribution amount
664	672		for the first three calendar years will result in a phase-in of the
665	673		anticipated increase in the city's contribution rate from the
666	674		calendar year that begins on January 1, 2021, in accordance with
667	675		Subsection (a) of this section, to the rate equal to the sum of the
668	676		estimated contribution rate for the calendar year that begins on
669	677		January 1, 2022, and the rate of pensionable payroll equal to the
670	678		city legacy contribution amount for January 1, 2022, determined as
671	679		if there was no phase-in of the increase to the city legacy
672	680		contribution amount. The phase-in must reflect approximately
673	681		one-third of the increase each year over the three-year phase-in
674	682		period. The city's contribution under Section 8.02 of this Act for:
675	683		(1) the calendar years that begin on January 1, 2022,
676	684		January 1, 2023, and January 1, 2024, must be adjusted to reflect
677	685		the impact of the phase-in prescribed by this section; and
678	686		(2) each calendar year that begins on January 1, 2025,
679	687		through January 1, 2051, must reflect a city legacy contribution
680	688		amount that is three percent greater than the city legacy
681	689		contribution amount for the preceding calendar year.
682	690		(d) The estimated city contribution rate for the calendar
683	691		year that begins on January 1, 2022, must be based on the projected
684	692		pensionable payroll, as determined under the initial risk sharing
685	693		valuation study required by this section, assuming a payroll growth
686	694		rate of three percent.
687	695		Sec. 8.04. SUBSEQUENT RISK SHARING VALUATION STUDIES. (a)
688	696		For each calendar year beginning after December 31, 2020, the
689	697		police retirement system shall cause the system's actuary to
690	698		prepare a risk sharing valuation study in accordance with this
691	699		section and actuarial standards of practice.
692	700		(b) Each risk sharing valuation study must:
693	701		(1) be dated as of the last day of the calendar year
694	702		for which the study is required to be prepared;
695	703		(2) calculate the unfunded actuarial accrued
696	704		liability of the system as of the last day of the applicable
697	705		calendar year, including the liability layer, if any, associated
698	706		with the most recently completed calendar year;
699	707		(3) calculate the estimated city contribution rate for
700	708		the following calendar year;
701	709		(4) determine the city contribution rate and the
702	710		member contribution rate for the following calendar year, taking
703	711		into account any adjustments required under Section 8.05, 8.06, or
704	712		8.065 of this Act, as applicable; and
705	713		(5) except as provided by Subsection (d) of this
706	714		section, be based on the assumptions and methods adopted by the
707	715		board in accordance with Section 3.091 of this Act, if applicable,
708	716		and that are consistent with actuarial standards of practice and
709	717		the following principles:
710	718		(A) closed layered amortization of liability
711	719		layers to ensure that the amortization period for each liability
712	720		layer begins 12 months after the date of the risk sharing valuation
713	721		study in which the liability layer is first recognized;
714	722		(B) each liability layer is assigned an
715	723		amortization period;
716	724		(C) each liability loss layer will be amortized
717	725		over a period of 30 years from the first day of the calendar year
718	726		beginning 12 months after the date of the risk sharing valuation
719	727		study in which the liability loss layer is first recognized, except
720	728		that the legacy liability must be amortized over a 30-year period
721	729		beginning January 1, 2022;
722	730		(D) each liability gain layer will be amortized
723	731		over:
724	732		(i) a period equal to the remaining
725	733		amortization period on the largest remaining liability loss layer,
726	734		and the two layers must be treated as one layer such that if the
727	735		payoff year of the liability loss layer is accelerated or extended,
728	736		the payoff year of the liability gain layer is also accelerated or
729	737		extended; or
730	738		(ii) if there is no liability loss layer, a
731	739		period of 30 years from the first day of the calendar year beginning
732	740		12 months after the date of the risk sharing valuation study in
733	741		which the liability gain layer is first recognized;
734	742		(E) liability layers will be funded according to
735	743		the level percent of payroll method;
736	744		(F) payroll for purposes of determining the
737	745		corridor midpoint, city contribution rate, and city legacy
738	746		contribution amount must be projected using the annual payroll
739	747		growth rate assumption adopted by the board; and
740	748		(G) the city contribution rate will be calculated
741	749		each calendar year without inclusion of the legacy liability.
742	750		(c) The city and the board may agree on a written transition
743	751		plan for resetting the corridor midpoint:
744	752		(1) if at any time the funded ratio of the system is
745	753		equal to or greater than 100 percent; or
746	754		(2) for any calendar year after the payoff year of the
747	755		legacy liability.
748	756		(d) Subject to Section 3.091 of this Act, the board may by
749	757		rule adopt actuarial principles other than those required under
750	758		Subsection (b)(5) of this section, provided the actuarial
751	759		principles:
752	760		(1) are consistent with actuarial standards of
753	761		practice;
754	762		(2) are approved by the system's actuary; and
755	763		(3) do not operate to change the city legacy
756	764		contribution amount.
757	765		Sec. 8.05. ADJUSTMENT TO CITY CONTRIBUTION RATE IF LOWER
758	766		THAN CORRIDOR MIDPOINT. (a) This section governs the
759	767		determination of the city contribution rate applicable in a
760	768		calendar year under Section 8.04(b)(4) of this Act if the estimated
761	769		city contribution rate determined under Section 8.04(b)(3) of this
762	770		Act is lower than the corridor midpoint.
763	771		(b) If the estimated city contribution rate is lower than
764	772		the corridor midpoint and the funded ratio is:
765	773		(1) less than 90 percent, the city contribution rate
766	774		for the applicable year equals the corridor midpoint; or
767	775		(2) equal to or greater than 90 percent and the city
768	776		contribution rate is:
769	777		(A) equal to or greater than the minimum city
770	778		contribution rate, the estimated city contribution rate is the city
771	779		contribution rate for the calendar year; or
772	780		(B) less than the minimum city contribution rate
773	781		for the corresponding calendar year, the city contribution rate for
774	782		the calendar year equals the minimum city contribution rate.
775	783		(c) If the funded ratio is equal to or greater than 100
776	784		percent:
777	785		(1) all existing liability layers, including the
778	786		legacy liability, are considered fully amortized and paid; and
779	787		(2) the city legacy contribution amount may no longer
780	788		be included in the city contribution under Section 8.02 of this Act.
781	789		Sec. 8.06. ADJUSTMENT TO CITY CONTRIBUTION RATE IF EQUAL TO
782	790		OR GREATER THAN CORRIDOR MIDPOINT. (a) This section governs the
783	791		determination of the city contribution rate applicable in a
784	792		calendar year under Section 8.04(b)(4) of this Act if the estimated
785	793		city contribution rate determined under Section 8.04(b)(3) of this
786	794		Act is equal to or greater than the corridor midpoint.
787	795		(b) If the estimated city contribution rate is equal to or
788	796		greater than the corridor midpoint and:
789	797		(1) less than or equal to the maximum city
790	798		contribution rate for the corresponding calendar year, the
791	799		estimated city contribution rate is the city contribution rate; or
792	800		(2) greater than the maximum city contribution rate
793	801		for the corresponding calendar year, the city contribution rate is
794	802		the maximum city contribution rate.
795	803		Sec. 8.065. INCREASED MEMBER CONTRIBUTION RATE IF ESTIMATED
796	804		CITY CONTRIBUTION RATE GREATER THAN MAXIMUM CITY CONTRIBUTION RATE.
797	805		(a) This section governs the determination of the member
798	806		contribution rate applicable in a calendar year under Section
799	807		8.04(b)(4) of this Act if the estimated city contribution rate
800	808		determined under Section 8.04(b)(3) of this Act is greater than the
801	809		maximum city contribution rate.
802	810		(b) Except as provided by Subsection (c) of this section, if
803	811		the estimated city contribution rate is greater than the corridor
804	812		maximum, the member contribution rate will increase by an amount
805	813		equal to the difference between the following:
806	814		(1) the estimated city contribution rate; and
807	815		(2) the maximum city contribution rate.
808	816		(c) The member contribution rate may not be increased by
809	817		more than two percentage points under this section.
810	818		(d) If the estimated city contribution rate is more than two
811	819		percent of pensionable payroll greater than the maximum city
812	820		contribution rate, the city and the board shall enter into
813	821		discussions to determine additional funding solutions.
814	822		Sec. 8.07. ADDITIONAL CITY CONTRIBUTIONS FOR PROPORTIONATE
815	823		RETIREMENT PROGRAM PARTICIPATION. (a) [(3)] The city shall
816	824		contribute amounts in addition to the amounts described by Section
817	825		8.02 of this Act [Subdivision (2) of this subsection] as required by
818	826		Section 803.101(h), Government Code, to fund the additional
819	827		liabilities incurred by the police retirement system as a result of
820	828		participating in the proportionate retirement program. The rate at
821	829		which the city shall contribute additional amounts under this
822	830		section [subdivision] is equal to 0.737 [0.25] percent of the basic
823	831		hourly earnings of each member employed by the city for all pay
824	832		periods commencing on or after October 1, 2020, subject to
825	833		adjustment under Subsection (b) of this section [from January 4,
826	834		2009, through September 30, 2009. The rate at which the city shall
827	835		contribute additional amounts under this subdivision is equal to
828	836		0.63 percent of the basic hourly earnings of each member employed by
829	837		the city for all periods after September 30, 2009, subject to
830	838		adjustment under Subdivision (4) of this subsection].
831	839		(b) [(4)] The additional contribution rate under Subsection
832	840		(a) of this section [Subdivision (3) of this subsection] shall
833	841		increase or decrease as considered necessary by the actuary for the
834	842		police retirement system after each five-year period of
835	843		participation by the system in the proportionate retirement program
836	844		in order to update the amount necessary to fund the additional
837	845		liabilities incurred by the system as a result of participating in
838	846		the proportionate retirement program and of the consolidation of
839	847		the city's public safety and emergency management department with
840	848		the police department on January 4, 2009. The system's actuary
841	849		shall perform an experience study that shall be the basis for a
842	850		contribution rate adjustment under this subsection [subdivision].
843	851		The effective date of the initial contribution rate adjustment
844	852		under this subsection [subdivision] is October 1, 2015. Each later
845	853		contribution rate adjustment under this subsection [subdivision]
846	854		takes effect October 1 of every fifth year after the effective date
847	855		of the initial contribution rate adjustment. The system's actuary
848	856		shall present to the police retirement board the experience study
849	857		on which any contribution rate adjustment under this subsection
850	858		[subdivision] is based not later than 45 days before the effective
851	859		date of the adjustment, and the city's actuary shall have the
852	860		opportunity to review and comment on the study. An adjustment in
853	861		the additional contribution rate under this subsection
854	862		[subdivision] may not cause the additional contribution rate under
855	863		Subsection (a) of this section [Subdivision (3) of this subsection]
856	864		to be less than zero.
857	865		Sec. 8.08. PUBLICATION OF CHANGES TO CONTRIBUTION RATES.
858	866		[(b)] Any change of the rates of deposit and the rates of
859	867		contribution shall be published when approved by the board.
860	868		Sec. 8.09. EXPENSES. (a) [(c) Contributions by the city
861	869		shall be paid to the system after appropriation by the city council.
862	870		[(d)] Expenses involved in administration and operation of
863	871		the police retirement system shall be paid from the assets of the
864	872		police retirement system subject to approval by the board. Such
865	873		expenses shall include actuarial valuations of the system no less
866	874		frequently than on a biennial basis, annual audits and/or actuarial
867	875		studies, preparation of annual reports, and staff assistance.
868	876		Additional consulting may be authorized by the board and paid for
869	877		from the assets of the police retirement system as deemed necessary
870	878		from time to time by the board.
871	879		(b) [(e)] Expenses incurred from investment advice,
872	880		counsel, and management shall be paid from the assets of the police
873	881		retirement system.
874	882		Sec. 8.10. PAYMENT OF CONTRIBUTIONS. (a) Contributions by
875	883		the city shall be paid to the system after appropriation by the city
876	884		council.
877	885		(b) [(f)] The city shall make the police officer
878	886		contributions to the system required by Section 8.02 of this Act
879	887		[Subsection (a) of this section].
880	888		(c) The system shall make the administrative staff's
881	889		contributions to the system.
882	890		(d) Member contributions will be made by a reduction in
883	891		their monetary compensation. Contributions made shall be treated
884	892		as employer contributions in accordance with Section 414(h)(2),
885	893		Internal Revenue Code (26 U.S.C. Section 414(h)(2)), for the
886	894		purpose of determining tax treatment of the amounts under the
887	895		federal Internal Revenue Code. These contributions are not
888	896		includible in the gross income of the member until such time as they
889	897		are distributed or made available to the member.
890	898		(e) Member contributions made as provided by Subsection (d)
891	899		of this section [subsection] shall be deposited to the individual
892	900		account of each affected member and shall be treated as
893	901		compensation of members for all other purposes of this Act and for
894	902		the purpose of determining contributions to the federal Old-Age,
895	903		Survivors, and Disability Insurance System (Social Security). The
896	904		provisions of this subsection shall remain in effect as long as the
897	905		plan covering members is a qualified retirement plan under Section
898	906		401(a), Internal Revenue Code (26 U.S.C. Section 401(a)), and its
899	907		related trust is tax exempt under Section 501(a), Internal Revenue
900	908		Code (26 U.S.C. Section 501(a)).
901	909		Sec. 8.11. EFFECT OF SYSTEM TERMINATION ON CONTRIBUTIONS.
902	910		[(g)] If the police retirement system is terminated, further
903	911		contributions may not be made by the city or the system, and further
904	912		deposits may not be made by the members for service after the date
905	913		of termination. Members do not accrue any additional benefits
906	914		after the date of termination. The benefit accrued by each member
907	915		on the termination of the plan or the complete discontinuance of
908	916		contributions under the plan and the benefit of any affected member
909	917		on the partial termination of the plan, to the extent funded, become
910	918		nonforfeitable notwithstanding the length of a member's service.
911	919		The benefit accrued by a member also becomes nonforfeitable, if not
912	920		already nonforfeitable, at the normal retirement date.
913	921		Sec. 8.12. EFFECT OF FORFEITURE. [(h)] A forfeiture from a
914	922		member terminating employment and withdrawing the member's
915	923		accumulated deposits may not be applied to increase the benefit
916	924		that any other member would receive from the system. The actuary
917	925		shall anticipate the effect of forfeitures in determining the costs
918	926		under the system.
919	927		Sec. 8.13. SYSTEM ASSETS. [(i)] The assets of the police
920	928		retirement system shall be held in trust for the exclusive benefit
921	929		of the members and their beneficiaries. The corpus or income may
922	930		not be used for or diverted to a purpose other than the exclusive
923	931		benefit of members or their beneficiaries, whether by operation or
924	932		natural termination of the system, by power of revocation or
925	933		amendment, by the happening of a contingency, by collateral
926	934		arrangement, or by other means.
927	935		SECTION 15. Section 13.02, Chapter 452 (S.B. 738), Acts of
928	936		the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
929	937		Vernon's Texas Civil Statutes), is amended to read as follows:
930	938		Sec. 13.02. MANDATORY DISTRIBUTIONS PROHIBITED. A member
931	939		or former member who has separated from service may not be required
932	940		to receive an eligible rollover distribution, as defined in Section
933	941		13.01(b)(1) of this Act, without the member's consent unless the
934	942		member or former member has attained the applicable age for minimum
935	943		distributions required under Section 401(a)(9) of the Internal
936	944		Revenue Code of 1986 (26 U.S.C. Section 401(a)(9)) [is at least
937	945		70-1/2 years of age].
938	946		SECTION 16. The following provisions of Chapter 452 (S.B.
939	947		738), Acts of the 72nd Legislature, Regular Session, 1991 (Article
940	948		6243n-1, Vernon's Texas Civil Statutes), are repealed:
941	949		(1) Section 5.04(b);
942	950		(2) Sections 6.01(c), (d), and (e);
943	951		(3) Section 6.02(b); and
944	952		(4) Section 7.02(b).
945	953		SECTION 17. (a) In this section, "police retirement board"
946	954		has the meaning assigned by Section 1.02, Chapter 452 (S.B. 738),
947	955		Acts of the 72nd Legislature, Regular Session, 1991 (Article
948	956		6243n-1, Vernon's Texas Civil Statutes).
949	957		(b) Section 3.02, Chapter 452 (S.B. 738), Acts of the 72nd
950	958		Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's
951	959		Texas Civil Statutes), does not affect the term of a member of the
952	960		police retirement board appointed or elected under that section, as
953	961		that section existed immediately before the effective date of this
954	962		Act, and serving on the board on the effective date of this Act.
955	963		(c) When the terms of:
956	964		(1) the two members of the police retirement board
957	965		elected under Section 3.02(a)(4), Chapter 452 (S.B. 738), Acts of
958	966		the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
959	967		Vernon's Texas Civil Statutes), as that section existed immediately
960	968		before the effective date of this Act, who have terms that expire in
961	969		December 2021, expire:
962	970		(A) one of the resulting vacancies on the board
963	971		shall be filled by appointment by the city council in accordance
964	972		with Section 3.02(a)(6), Chapter 452 (S.B. 738), Acts of the 72nd
965	973		Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's
966	974		Texas Civil Statutes), as amended by this Act; and
967	975		(B) the other resulting vacancy shall be filled
968	976		by election of the members in accordance with Sections 3.02(a)(4)
969	977		and 3.03, Chapter 452 (S.B. 738), Acts of the 72nd Legislature,
970	978		Regular Session, 1991 (Article 6243n-1, Vernon's Texas Civil
971	979		Statutes), as applicable; and
972	980		(2) the three members of the police retirement board
973	981		elected under Section 3.02(a)(4), Chapter 452 (S.B. 738), Acts of
974	982		the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
975	983		Vernon's Texas Civil Statutes), as that section existed immediately
976	984		before the effective date of this Act, who have terms that expire in
977	985		December 2023, expire, the resulting vacancies on the board shall
978	986		be filled by an election of the members in accordance with that
979	987		section and Section 3.03, Chapter 452 (S.B. 738), Acts of the 72nd
980	988		Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's
981	989		Texas Civil Statutes), as applicable, except that the member
982	990		receiving the third highest number of votes in that election shall
983	991		serve for a term of only two years with the member's term expiring
984	992		in December 2025.
985	993		SECTION 18. This Act takes effect September 1, 2021.
986		-	______________________________ ______________________________
987		-	President of the Senate Speaker of the House
988		-	I certify that H.B. No. 4368 was passed by the House on May
989		-	14, 2021, by the following vote: Yeas 141, Nays 4, 2 present, not
990		-	voting; and that the House concurred in Senate amendments to H.B.
991		-	No. 4368 on May 28, 2021, by the following vote: Yeas 126, Nays 21,
992		-	1 present, not voting.
993		-	______________________________
994		-	Chief Clerk of the House
995		-	I certify that H.B. No. 4368 was passed by the Senate, with
996		-	amendments, on May 26, 2021, by the following vote: Yeas 31, Nays
997		-	0.
998		-	______________________________
999		-	Secretary of the Senate
1000		-	APPROVED: __________________
1001		-	Date
1002		-	__________________
1003		-	Governor
	994	+	* * * * *