Texas 2025 - 89th Regular

Texas House Bill HB2688 Compare Versions

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1	1		By: Harless H.B. No. 2688
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4	6		A BILL TO BE ENTITLED
5	7		AN ACT
6	8		relating to the public retirement systems of certain
7	9		municipalities.
8	10		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	11		ARTICLE 1. FIREFIGHTERS' RELIEF AND RETIREMENT FUND
10	12		SECTION 1.01. The heading to Article 6243e.2(1), Revised
11	13		Statutes, is amended to read as follows:
12	14		Art. 6243e.2(1). FIREFIGHTERS' RELIEF AND RETIREMENT FUND
13	15		IN MUNICIPALITIES OF AT LEAST 2,000,000 [1,600,000] POPULATION.
14	16		SECTION 1.02. Section 1(1-e), (13-e), and (15-f) Article
15	17		6243e.2(1), Revised Statutes, is amended to read as follows:
16	18		(1-e) "Assumed rate of return" means the assumed market rate
17	19		of return on fund assets, which is seven and a half percent per
18	20		annum unless adjusted as provided by this article.
19	21		(13-e) "Normal retirement age" means:
20	22		(A) [for a member, including a member who was
21	23		hired before the year 2017 effective date and who involuntarily
22	24		separated from service but has been retroactively reinstated in
23	25		accordance with an arbitration, civil service, or court ruling,
24	26		hired before the year 2017 effective date,] the age at which a [the]
25	27		member attains 20 years of service; or
26	28		(B) [except as provided by Paragraph (A) of this
27	29		subdivision, for a member hired or rehired on or after the year 2017
28	30		effective date,] the age at which the member first attains both the
29	31		age of at least 50 and at least 10 years of service [sum of the
30	32		member's age, in years, and the member's years of participation in
31	33		the fund equals at least 70].
32	34		(15-f) "PROP account" means the notional account
33	35		established to reflect the credits and contributions of a member or
34	36		surviving spouse who made a PROP election in accordance with
35	37		Section 5A of this article [before the year 2017 effective date].
36	38		SECTION 1.03. Section 2(a), Article 6243e.2(1), Revised
37	39		Statutes, is amended to read as follows:
38	40		(a) A firefighters' relief and retirement fund is
39	41		established in each incorporated municipality that has a population
40	42		of at least 2,000,000 [1,600,000] and a fully paid fire department.
41	43		SECTION 1.04. Section 3A(b), Article 6243e.2(1), Revised
42	44		Statutes, is amended to read as follows:
43	45		(b) In a written agreement entered into between the
44	46		municipality and the board under this section, the parties may not:
45	47		(1) alter Sections 13A through 13F of this article, except
46	48		and only to the extent necessary to comply with federal law;
47	49		(2)(1) increase the assumed rate of return to more than
48	50		seven and a half percent per year;
49	51		(3)(2) extend the amortization period of a liability layer
50	52		to more than 30 years from the first day of the fiscal year
51	53		beginning 12 months after the date of the risk sharing valuation
52	54		study in which the liability layer is first recognized; or
53	55		(4)(3) allow a municipal contribution rate in any year that
54	56		is less than or greater than the municipal contribution rate
55	57		required under Section 13E or 13F of this article, as applicable.
56	58		SECTION 1.05. Section 4(a), Article 6243e.2(1), Revised
57	59		Statutes, is amended to read as follows:
58	60		(a) A member who terminates active service for any reason
59	61		other than death is entitled to receive a service pension provided
60	62		by this section if the member was:
61	63		(1) hired as a firefighter before the year 2017
62	64		effective date, including a member who was hired before the year
63	65		2017 effective date and who involuntarily separated from service
64	66		but has been retroactively reinstated in accordance with an
65	67		arbitration, civil service, or court ruling, at the age at which the
66	68		member attains 20 years of service; and
67	69		(2) except as provided by Subdivision (1) of this
68	70		subsection and subject to Subsection (b-2) of this section, hired
69	71		or rehired as a firefighter on or after the year 2017 effective
70	72		date, at the age at which the member attains 20 years of service
71	73		[when the sum of the member's age in years and the member's years of
72	74		participation in the fund equals at least 70].
73	75		SECTION 1.06. Sections 5 Article 6243e.2(1), Revised
74	76		Statutes, is amended by amending subsections (a),(a-1), (b), and
75	77		(d) and adding subsections (a-2) and (a-3) to read as follows:
76	78		(a) A member who is eligible to receive a service pension
77	79		under Section 4 [4(a)(1)] of this article and who remains in active
78	80		service may elect to participate in the deferred retirement option
79	81		plan provided by this section. [A member who is eligible to receive
80	82		a service pension under Section 4(a)(2) of this article may not
81	83		elect to participate in the deferred retirement option plan
82	84		provided by this section.] On subsequently terminating active
83	85		service, a member who elected the DROP may apply for a monthly
84	86		service pension under Section 4 of this article, except that the
85	87		effective date of the member's election to participate in the DROP
86	88		will be considered the member's retirement date for determining the
87	89		amount of the member's monthly service pension. The member may also
88	90		apply for any DROP benefit provided under this section on
89	91		terminating active service. An election to participate in the
90	92		DROP, once approved by the board, is irrevocable.
91	93		(a-1) The monthly benefit of a DROP participant who has at
92	94		least 20 years of participation on the year 2017 effective date is
93	95		increased at retirement by two percent of the amount of the member's
94	96		original benefit for every full year of participation in the DROP by
95	97		the member for up to 10 years of participation in the DROP. For [a]
96	98		such member's final year of participation, but not beyond the
97	99		member's 10th year in the DROP, if a full year of participation is
98	100		not completed, the member shall receive a prorated increase of
99	101		0.166 percent of the member's original benefit for each month of
100	102		participation in that year.
101	103		(a-2) The monthly benefit of a DROP participant who had less
102	104		than 20 years of participation on the year 2017 effective date is
103	105		increased at retirement by one percent of the amount of the member's
104	106		original benefit for every full year of participation in the DROP by
105	107		the member for up to 10 years of participation in the DROP. For a
106	108		member's final year of participation, but not beyond the member's
107	109		10th year in the DROP, if a full year of participation is not
108	110		completed, the member shall receive a prorated increase of 0.083
109	111		percent of the member's original benefit for each month of
110	112		participation in that year.
111	113		(a-3) An increase provided by [this subsection] subsections
112	114		(a-1) and (a-2) does not apply to benefits payable under Subsection
113	115		(l) of this section. An increase under [this subsection]these
114	116		subsections is applied to the member's benefit at retirement and is
115	117		not added to the member's DROP account. The total increase under
116	118		[this] subsection (a-1) may not exceed 20 percent for 10 years of
117	119		participation in the DROP by the member. The total increase under
118	120		subsection (a-2) may not exceed 10 percent for 10 years of
119	121		participation in the DROP by the member.
120	122		(b) A member may elect to participate in the DROP by
121	123		complying with the election process established by the board. The
122	124		member's election may be made at any time beginning on the date the
123	125		member has completed 20 years of participation in the fund and is
124	126		otherwise eligible for a service pension under Section 4 [4(a)(1)]
125	127		of this article. Beginning on the first day of the month following
126	128		the month in which the member makes an election to participate in
127	129		the DROP, subject to board approval, and ending on the year 2017
128	130		effective date, amounts equal to the deductions made from the
129	131		member's salary under Section 13(c) of this article shall be
130	132		credited to the member's DROP account. Beginning after the year
131	133		2017 effective date, amounts equal to the deductions made from the
132	134		member's salary under Section 13(c) of this article may not be
133	135		credited to the member's DROP account.
134	136		(d) A member's DROP account shall be credited with earnings
135	137		at an annual rate equal to 75 [65] percent of the [compounded]
136	138		average annual return earned by the fund over the five years
137	139		preceding, but not including, the year during which the credit is
138	140		given. Notwithstanding the preceding, however, the credit to the
139	141		member's DROP account shall be at an annual rate of not less than
140	142		2.5 percent, irrespective of actual earnings.
141	143		SECTION 1.07. Sections 8(a) and (c), Article 6243e.2(1),
142	144		Revised Statutes, are amended to read as follows:
143	145		(a) A [On or after the year 2017 effective date, a] member
144	146		who [is hired as a firefighter before the year 2017 effective date,
145	147		including a member who was hired before the year 2017 effective date
146	148		and who involuntarily separated from service but has been
147	149		retroactively reinstated in accordance with an arbitration, civil
148	150		service, or court ruling,] terminates active service for any reason
149	151		other than death with at least 10 years of participation, but less
150	152		than 20 years of participation, is entitled to a monthly deferred
151	153		pension benefit, beginning at age 50, in an amount equal to 1.7
152	154		percent of the member's average monthly salary multiplied by the
153	155		amount of the member's years of participation.
154	156		(c) A [Except as provided by Subsection (a) of this section,
155	157		a member who is hired or rehired as a firefighter on or after the
156	158		year 2017 effective date or a] member who terminates active service
157	159		[employment] for any reason other than death before the member has
158	160		completed 10 years of participation is entitled only to a refund of
159	161		the member's contributions without interest and is not entitled to
160	162		a deferred pension benefit under this section or to any other
161	163		benefit under this article. The member's refund shall be paid as
162	164		soon as administratively practicable after the effective date of
163	165		the member's termination of active service.
164	166		SECTION 1.08. Sections 11(d), Article 6243e.2(1), Revised
165	167		Statutes, are amended to read as follows:
166	168		(d) In computing a member's years of participation, time
167	169		served in the armed forces of the nation during war or national
168	170		emergency is considered continuous service. Except for that
169	171		military service, credit for prior service shall be given only if a
170	172		member returns to active service as a firefighter before the
171	173		[fifth]tenth anniversary of a previous effective date of
172	174		termination. Notwithstanding any provision of this article to the
173	175		contrary, contributions, benefits, and service credit with respect
174	176		to qualified military service shall be provided in accordance with
175	177		Section 414(u) of the code. A member who is engaged in active duty
176	178		in any of the military services of the United States shall receive
177	179		credited pension service for the period of the military service if
178	180		the member returns to employment with the employer municipality's
179	181		fire department with an honorable discharge within the period
180	182		required by the federal reemployment Act and the period of military
181	183		service does not exceed the period prescribed by that Act. If a
182	184		member sustains an injury while on military leave under the terms of
183	185		the federal reemployment Act, pension benefits are payable based on
184	186		the off-duty disability benefit provisions prescribed by Section
185	187		6(e) of this article. If a member dies while on military leave
186	188		under the terms of the federal reemployment Act, death benefits are
187	189		payable to eligible survivors based on the off-duty death benefits
188	190		prescribed by Section 7 of this article. This subsection is
189	191		intended to comply with the federal reemployment Act. The board may
190	192		make, maintain, and amend policies and procedures as desirable or
191	193		necessary to implement the federal reemployment Act. In this
192	194		subsection, "federal reemployment Act" means the Uniformed
193	195		Services Employment and Reemployment Rights Act of 1994 (38 U.S.C.
194	196		Section 4301 et seq.), as amended.
195	197		SECTION 1.09. Sections 13B(a)(6)(E) and (H), Article
196	198		6243e.2(1), Revised Statutes, are amended to read as follows:
197	199		(E) each liability loss layer amortized over a period of 30
198	200		years from the first day of the fiscal year beginning 12 months
199	201		after the date of the risk sharing valuation study in which the
200	202		liability loss layer is first recognized, except that the legacy
201	203		liability must be amortized from July 1, 2016, for a 30-year period
202	204		beginning July 1, 2017. Any liability loss layer whose payoff year
203	205		was accelerated pursuant to section 13E(c)(4) may, at any time by
204	206		written agreement between the board and municipality, re-extend the
205	207		payoff year of the liability loss layer to a payoff year not later
206	208		than 30 years from the first day of the fiscal year beginning 12
207	209		months after the date of the risk sharing valuation study in which
208	210		the liability loss layer is first recognized;
209	211		(H) the assumed rate of return, subject to adjustment under
210	212		Section 13E(c)(2) of this article or, if Section 13C(g) of this
211	213		article applies, adjustment in accordance with a written agreement,
212	214		except the assumed rate of return may not exceed seven and a half
213	215		percent per annum;
214	216		SECTION 1.10. Sections 13C(g), Article 6243e.2(1), Revised
215	217		Statutes, is amended to read as follows:
216	218		(g) The municipality and the board may, at any time, agree
217	219		on a written transition plan for resetting the corridor midpoint.[:
218	220		(1) if at any time the funded ratio is equal to or
219	221		greater than 100 percent; or
220	222		(2) for any fiscal year after the payoff year of the
221	223		legacy liability.]
222	224		SECTION 1.11. Sections 13E(b) and (c), Article 6243e.2(1),
223	225		Revised Statutes, is amended to read as follows:
224	226		(b) If the funded ratio is:
225	227		(1) less than 90 percent, the municipal contribution rate
226	228		for the fiscal year equals the corridor midpoint; or
227	229		(2) equal to or greater than 90 percent and the municipal
228	230		contribution rate is:
229	231		(A) equal to or greater than the minimum contribution rate,
230	232		the estimated municipal contribution rate is the municipal
231	233		contribution rate for the fiscal year; or
232	234		(B) except as provided by Subsection (e) of this section,
233	235		less than the minimum contribution rate for the corresponding
234	236		fiscal year, the municipal contribution rate for the fiscal year
235	237		equals the minimum contribution rate [achieved in accordance with
236	238		Subsection (c) of this section].
237	239		(c) For purposes of Subsection (b)(2)(B) of this section,
238	240		the following adjustments [shall]may, by written agreement between
239	241		the municipality and board entered into not later than April 30
240	242		before the first day of the next fiscal year, be applied
241	243		sequentially [to the extent required] to increase the estimated
242	244		municipal contribution rate to equal the minimum contribution rate:
243	245		(1) first, adjust the actuarial value of assets equal to the
244	246		current market value of assets, if making the adjustment causes the
245	247		municipal contribution rate to increase;
246	248		(2) second, [under a written agreement between the
247	249		municipality and the board entered into not later than April 30
248	250		before the first day of the next fiscal year,] reduce the assumed
249	251		rate of return;
250	252		(3) third, [under a written agreement between the
251	253		municipality and the board entered into not later than April 30
252	254		before the first day of the next fiscal year,] prospectively
253	255		restore all or part of any benefit reductions or reduce increased
254	256		employee contributions, in each case made after the year 2017
255	257		effective date; and
256	258		(4) fourth, accelerate the payoff year of the existing
257	259		liability loss layers, including the legacy liability, by
258	260		accelerating the oldest liability loss layers first, to an
259	261		amortization period that is not less than 10 years from the first
260	262		day of the fiscal year beginning 12 months after the date of the
261	263		risk sharing valuation study in which the liability loss layer is
262	264		first recognized.
263	265		SECTION 1.12. Sections 13G, Article 6243e.2(1), Revised
264	266		Statutes, is amended to read as follows:
265	267		[(a) Nothing in this article, including Section 2(p) or
266	268		(p-1) of this article and any authority of the board to construe and
267	269		interpret this article, to determine any fact, to take any action,
268	270		or to interpret any terms used in Sections 13A through 13F of this
269	271		article, may alter or change Sections 13A through 13F of this
270	272		article.
271	273		(b)] (a) No unilateral decision or action by the board is
272	274		binding on the municipality and no unilateral decision or action by
273	275		the municipality is binding on the fund with respect to the
274	276		application of Sections 13A through 13F of this article unless
275	277		expressly provided by a provision of those sections. Nothing in
276	278		this subsection is intended to limit the powers or authority of the
277	279		board.
278	280		[(c)](b) Section 10 of this article does not apply to a
279	281		benefit increase under Section 13E of this article, and Section 10
280	282		of this article is suspended while Sections 13A through 13F of this
281	283		article are in effect.
282	284		SECTION 1.13. Section 12 and section 5A(o), Article
283	285		6243e.2(1), Revised Statutes, are repealed.
284	286		SECTION 2. This Act takes effect on September 1, 2025.