Texas 2025 - 89th Regular

Texas House Bill HB2802 Compare Versions

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1	1		By: Bucy H.B. No. 2802
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4	6		A BILL TO BE ENTITLED
5	7		AN ACT
6	8		relating to the public retirement systems for employees of certain
7	9		municipalities.
8	10		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	11		SECTION 1. SECTION 1. Section 1.02, Chapter 183 (S.B.
10	12		No. 509), Acts of the 64th Legislature, Regular Session, 1975
11	13		(Article 6243e.1, Vernon's Texas Civil Statutes), is amended to
12	14		read as follows:
13	15		Sec. 1.02. DEFINITIONS. In this Act:
14	16		(1) "Accumulated contributions" means all sums of
15	17		money, including interest, in the individual account of a member or
16	18		former firefighter, as shown on the books and records of the fund.
17	19		(2) "Actuarial accrued liability" means the portion of
18	20		the actuarial present value of projected benefits of the fund
19	21		attributed to past periods of member service based on the cost
20	22		method used in the risk sharing valuation study under Section
21	23		10.01B of this Act, as applicable.
22	24		(23) "Actuarial equivalent" means a benefit that, at
23	25		the time that it begins being paid, has the same present value as
24	26		the benefit it replaces, based on the recommendations of the
25	27		board's actuary.
26	28		(4) "Actuarial value of assets" means the value of the
27	29		fund's assets as calculated using the asset smoothing method used
28	30		in the risk sharing valuation study under Section 10.01B of this
29	31		Act, as applicable.
30	32		(5) "Amortization period" means:
31	33		(A) the period necessary to fully pay a liability
32	34		layer; or
33	35		(B) if referring to the amortization period of
34	36		the fund as a whole, the number of years incorporated in a weighted
35	37		average amortization factor for the sum of the legacy liability and
36	38		all liability layers as determined in each annual actuarial
37	39		valuation of assets and liabilities of the system.
38	40		(6) "Amortization rate" means, for a given calendar
39	41		year, the percentage rate determined by:
40	42		(A) adding the scheduled amortization payments
41	43		required to pay off the then-existing liability layers;
42	44		(B) subtracting the city legacy contribution
43	45		amount for the same calendar year, as determined in the risk sharing
44	46		valuation study under Section 10.01A or 10.01B of this Act, as
45	47		applicable, from the sum under Subsection (A); and
46	48		(C) dividing the difference under Subsection (B)
47	49		by the projected pensionable payroll for the same calendar year.
48	50		(37) "Board of trustees" means the board of
49	51		firefighters relief and retirement fund trustees of the fund
50	52		existing pursuant to this Act.
51	53		(48) "Board's actuary" means the actuary employed
52	54		under Section 12.03 of this Act.
53	55		(9) "City" means a municipality to which this Act
54	56		applies.
55	57		(10) "City contribution rate" means, for a given
56	58		calendar year, a percentage rate equal to the sum of the city normal
57	59		cost rate and the amortization rate, as adjusted under Sections
58	60		10.01C or 10.01D of this Act, as applicable.
59	61		(11) "City legacy contribution amount" means, for each
60	62		calendar year, a predetermined payment amount expressed in dollars
61	63		in accordance with a payment schedule amortizing the legacy
62	64		liability for the calendar year ending December 31, 2024, that is
63	65		included in the initial risk sharing valuation study under Section
64	66		10.01A of this Act.
65	67		(12) "City normal cost rate" means, for a given
66	68		calendar year, the normal cost rate minus the applicable member
67	69		contribution rate determined under Section 10.02 of this Act.
68	70		(513) "Compensation" means a firefighter's monthly
69	71		salary, excluding overtime pay, any temporary pay in higher
70	72		classifications, educational incentive pay, assignment pay,
71	73		Christmas Day bonus pay, and pay for automobile and clothing
72	74		allowances.
73	75		(14) "Corridor" means the range of city contribution
74	76		rates that are:
75	77		(A) equal to or greater than the minimum city
76	78		contribution rate; and
77	79		(B) equal to or less than the maximum city
78	80		contribution rate.
79	81		(15) "Corridor margin" means five percentage points.
80	82		(16) "Corridor midpoint" means the projected city
81	83		contribution rate specified for each calendar year for 25 years as
82	84		provided by the initial risk sharing valuation study under Section
83	85		10.01A of this Act, rounded to the nearest hundredths decimal
84	86		place.
85	87		(617) "Dependent child" or "dependent children" means
86	88		a deceased member's unmarried children under the age of 22, other
87	89		than a child who has been determined by the board of trustees not to
88	90		have been dependent on the deceased member.
89	91		(18) "Employer" means the municipality described in
90	92		Section 1.01 of this Act or the board of trustees.
91	93		(19) "Estimated city contribution rate" means, for a
92	94		given calendar year, a city contribution rate equal to the sum of
93	95		the city normal cost rate and the amortization rate of the liability
94	96		layers, as applicable, excluding the legacy liability layer, and
95	97		before any adjustments under Sections 10.01C or 10.01D of this Act.
96	98		(720) "Fire department" means a regularly organized
97	99		fire department of a city to which this Act applies.
98	100		(821) "Firefighter" means a commissioned civil
99	101		service and Texas state-certified member of a fire department.
100	102		(922) "Fund" means the firefighters relief and
101	103		retirement fund existing pursuant to this Act.
102	104		(23) "Funded ratio" means the ratio of the actuarial
103	105		value of the fund's assets divided by the fund's actuarial accrued
104	106		liability.
105	107		(24) "Group A member" means a member who was initially
106	108		hired by the city as a firefighter prior to January 1, 2026.
107	109		(25) "Group A retiree" means a retiree who was
108	110		initially hired by the city as a firefighter prior to January 1,
109	111		2026.
110	112		(26) "Group B member" means a member who was initially
111	113		hired by the city as a firefighter on or after January 1, 2026.
112	114		(27) "Group B retiree" means a retiree who was
113	115		initially hired by the city as a firefighter on or after January 1,
114	116		2026.
115	117		(1028) "Internal Revenue Code" means the Internal
116	118		Revenue Code of 1986.
117	119		(29) "Legacy liability" means the unfunded actuarial
118	120		accrued liability determined as of December 31, 2024, and for each
119	121		subsequent calendar year, adjusted as follows:
120	122		(A) reduced by the city legacy contribution
121	123		amount for the calendar year allocated to the amortization of the
122	124		legacy liability; and
123	125		(B) adjusted by the assumed rate of return
124	126		adopted by the board of trustees for the calendar year.
125	127		(30) "Level percent of payroll method" means the
126	128		amortization method that defines the amount of a liability layer
127	129		recognized each calendar year as a level percent of pensionable
128	130		payroll until the amount of the liability layer remaining is
129	131		reduced to zero.
130	132		(31) "Liability gain layer" means a liability layer
131	133		that decreases the unfunded actuarial accrued liability.
132	134		(32) "Liability layer" means:
133	135		(A) the legacy liability established in the
134	136		initial risk sharing valuation study under Section 10.01A of this
135	137		Act; or
136	138		(B) for calendar years after December 31, 2024,
137	139		the amount that the fund's unfunded actuarial accrued liability
138	140		increases or decreases, as applicable, due to the unanticipated
139	141		change for the calendar year as determined in each subsequent risk
140	142		sharing valuation study under Section 10.01B of this Act.
141	143		(33) "Liability loss layer" means a liability layer
142	144		that increases the unfunded actuarial accrued liability. For
143	145		purposes of this Act, the legacy liability is a liability loss
144	146		layer.
145	147		(34) "Life annuity" means a series of equal monthly
146	148		payments, payable after retirement for a member's life, consisting
147	149		of a combination of prior service pension and current service
148	150		annuity, or early retirement annuity, to which the member is
149	151		entitled.
150	152		(35) "Market value of assets" means the value at which
151	153		assets could be traded on the market.
152	154		(36) "Maximum employer contribution rate" means, for a
153	155		given calendar year, the rate equal to the corridor midpoint plus
154	156		the corridor margin.
155	157		(1137) "Member" means any firefighter or retiree
156	158		included in a fund under this Act.
157	159		(38) "Minimum employer contribution rate" means, for a
158	160		given calendar year, the rate equal to the corridor midpoint minus
159	161		the corridor margin.
160	162		(39) "Normal cost rate" means, for a given calendar
161	163		year, the salary weighted average of the individual normal cost
162	164		rates determined for the current active firefighter population,
163	165		plus the assumed administrative expenses determined in the most
164	166		recent actuarial experience study.
165	167		(40) "Payoff year" means the year a liability layer is
166	168		fully amortized under the amortization period.
167	169		(41) "Pensionable payroll" means the aggregate basic
168	170		hourly earnings of all active-contributory firefighters for a
169	171		calendar year or pay period, as applicable.
170	172		(42) "Projected pensionable payroll" means the
171	173		estimated pensionable payroll for the calendar year beginning 12
172	174		months after the date of any risk sharing valuation study under
173	175		Section 10.01A or 10.01B of this Act, as applicable, at the time of
174	176		calculation by:
175	177		(A) projecting the prior calendar year's
176	178		pensionable payroll forward two years using the current payroll
177	179		growth rate assumption adopted by the board of trustees; and
178	180		(B) adjusting, if necessary, for changes in
179	181		population or other known factors, provided those factors would
180	182		have a material impact on the calculation, as determined by the
181	183		board of trustees.
182	184		(43) "Qualified domestic relations order" has the
183	185		meaning assigned by Section 804.001, Government Code, and its
184	186		subsequent amendments.
185	187		(1244) "Retiree" means a person who has retired under
186	188		Article 5 or 6 of this Act and is receiving or is entitled to receive
187	189		an annuity from the fund.
188	190		(1345) "Spouse" means an individual to whom a member
189	191		is legally married under Subtitle A, Title 1, Family Code, or a
190	192		comparable law of another jurisdiction, provided that, in the case
191	193		of an informal marriage in this state, the marriage must be
192	194		evidenced by a declaration of informal marriage recorded in
193	195		accordance with Subchapter E, Chapter 2, Family Code.
194	196		(46) "Unanticipated change" means, with respect to the
195	197		unfunded actuarial accrued liability in each risk sharing valuation
196	198		study under Section 10.01A or 10.01B of this Act, as applicable, the
197	199		difference between:
198	200		(A) the remaining balance of all then-existing
199	201		liability layers as of the date of the risk sharing valuation study
200	202		that were created before the date of the study; and
201	203		(B) the actual unfunded actuarial accrued
202	204		liability as of the date of the study.
203	205		(47) "Unfunded actuarial accrued liability" means the
204	206		difference between the actuarial accrued liability and the
205	207		actuarial value of assets.
206	208		SECTION 2. Section 2.02, Chapter 183 (S.B. No. 509), Acts
207	209		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
208	210		Vernon's Texas Civil Statutes), is amended to read as follows:
209	211		Sec. 2.02. COMPOSITION OF BOARD. (a) The board of trustees
210	212		is composed of:
211	213		(1) the mayora member of the city council of the
212	214		municipalitycity, designated by the mayor;
213	215		(2) the chief financial officer of the city or a person
214	216		designated by the chief financial officer;the city treasurer or,
215	217		if there is no treasurer, the person who by law, charter provision,
216	218		or ordinance performs the duty of city treasurer; and
217	219		(3) three members of the fund to be selected by vote of
218	220		the firefighters and retirees in the manner provided by this Act;
219	221		(4) one qualified voter of the city appointed by the
220	222		city council who:
221	223		(A) has been a city resident for the preceding
222	224		five years;
223	225		(B) has experience in the field of securities
224	226		investment, pension administration, pension law, or finance; and
225	227		(C) is not a current or former employee of the
226	228		city, a current or former employee of the fund, a current or former
227	229		officer of the city, a current or former officer of the fund, a
228	230		current or former member of the fund, or a current beneficiary of
229	231		the fund.
230	232		(5) one qualified voter of the city appointed by the
231	233		board of trustees who:
232	234		(A) has been a city resident for the preceding
233	235		five years;
234	236		(B) has experience in the field of securities
235	237		investment, pension administration, pension law, or governmental
236	238		finance; and
237	239		(C) is not a current or former employee of the
238	240		city, a current or former employee of the fund, a current or former
239	241		officer of the city, a current or former officer of the fund, a
240	242		current or former member of the fund, or a current beneficiary of
241	243		the fund.
242	244		(b) A person appointed under subsections (4) or (5) of this
243	245		section shall serve for a term of three years and until appointment
244	246		of the person's successor.
245	247		SECTION 3. Section 2.05, Chapter 183 (S.B. No. 509), Acts
246	248		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
247	249		Vernon's Texas Civil Statutes), is amended to read as follows:
248	250		Sec. 2.05. OFFICERS. The mayorcity council member
249	251		designated in Section 2.02(1) of this Act is the presiding officer.
250	252		Alternatively, the city council member designated in Section
251	253		2.02(1) of this Act may designate another member of the board to be
252	254		the presiding officer.and tThe city treasurerperson designated in
253	255		Section 2.02(2) of this Act is the secretary-treasurer of the board
254	256		of trustees. Alternatively, the person designated in Section
255	257		2.02(2) of this Act may designate another member of the board to be
256	258		the secretary-treasurer. The board shall elect annually from its
257	259		membership an alternate presiding officer who shall preside in the
258	260		absence or disability of the mayorperson designated in Section
259	261		2.02(1) of this Act. Any designations of officer positions made
260	262		under this section shall remain in effect for one year or until the
261	263		designated member leaves the board, whichever occurs sooner.
262	264		SECTION 4. Section 2.07, Article 2, Chapter 183 (S.B.
263	265		No. 509), Acts of the 64th Legislature, Regular Session, 1975
264	266		(Article 6243e.1, Vernon's Texas Civil Statutes), is amended to
265	267		read as follows:
266	268		Sec. 2.07. MEETINGS; MINUTES. The board of trustees shall
267	269		hold regular monthly meetings, no less frequently than quarterly,
268	270		at a time and place that it designates and may hold special meetings
269	271		on the call of the presiding officer or alternate presiding
270	272		officer. The board of trustees shall keep accurate minutes of its
271	273		meetings and records of its proceedings.
272	274		SECTION 5. Article 2, Chapter 183 (S.B. No. 509), Acts of
273	275		the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
274	276		Vernon's Texas Civil Statutes), is amended by adding a new Section
275	277		2.08A to read as follows:
276	278		Sec. 2.08A EXPERIENCE STUDY; SETTING ACTUARIAL
277	279		ASSUMPTIONS.
278	280		(a) At least once every five years, the board of trustees
279	281		shall cause the board's actuary to conduct an experience study to
280	282		review the actuarial assumptions and methods adopted by the board
281	283		of trustees for purposes of determining the actuarial liabilities
282	284		and actuarially determined contribution rates of the fund. The
283	285		fund shall notify the city at the beginning of an upcoming
284	286		experience study by the board's actuary.
285	287		(b) In connection with the fund's experience study, the city
286	288		may:
287	289		(1) conduct a separate experience study using an
288	290		actuary chosen by the city;
289	291		(2) have the city's actuary review the experience
290	292		study prepared by the board's actuary; or
291	293		(3) accept the experience study prepared by the
292	294		board's actuary.
293	295		(c) If the city conducts a separate experience study using
294	296		the city's actuary, the city shall complete the study not later than
295	297		the 91st day after the date the fund notified the city of its intent
296	298		to conduct an experience study.
297	299		(d) If the city elects to have the city's actuary review the
298	300		experience study prepared by the board's actuary, the city shall
299	301		complete the review not later than the 31st day after the date the
300	302		preliminary results of the experience study prepared by the board's
301	303		actuary are presented to the board of trustees.
302	304		(e) If the city chooses to have the city's own experience
303	305		study performed or to have the city's actuary review the fund's
304	306		experience study, the board's actuary and the city's actuary shall
305	307		determine what the hypothetical employer contribution rate would be
306	308		using the proposed actuarial assumptions from the experience
307	309		studies and data from the most recent actuarial valuation.
308	310		(f) If the difference between the hypothetical employer
309	311		contribution rates determined by the board's actuary and the city's
310	312		actuary:
311	313		(1) is less than or equal to two percent of pensionable
312	314		payroll, no further action is needed and the board of trustees shall
313	315		use the experience study performed by the board's actuary in
314	316		determining assumptions; or
315	317		(2) is greater than two percent of pensionable
316	318		payroll, the board's actuary and the city's actuary shall have 20
317	319		days to reconcile the difference in actuarial assumptions or
318	320		methods causing the different hypothetical employer contribution
319	321		rates, and if:
320	322		(A) as a result of the reconciliation efforts
321	323		under this subsection, the difference between the employer
322	324		contribution rates determined by the board's actuary and the city's
323	325		actuary is reduced to less than or equal to two percentage points,
324	326		no further action is needed and the board of trustees shall use the
325	327		experience study performed by the board's actuary in determining
326	328		actuarial assumptions; or
327	329		(B) after the 20th business day, the board's
328	330		actuary and the city's actuary do not reach a reconciliation that
329	331		reduces the difference in the hypothetical employer contribution
330	332		rates to an amount less than or equal to two percentage points, an
331	333		independent third-party actuary shall be retained to opine on the
332	334		differences in the assumptions made and actuarial methods used by
333	335		the system's actuary and the city's actuary.
334	336		(g) The independent third-party actuary retained under this
335	337		section must be chosen by the city from a list of three actuarial
336	338		firms provided by the fund.
337	339		(h) If a third-party actuary is retained under this section,
338	340		the third-party actuary's findings must be presented to the board
339	341		of trustees with the experience study conducted by the board's
340	342		actuary and, if applicable, the city's actuary. If the board of
341	343		trustees adopts actuarial assumptions or methods contrary to the
342	344		independent third-party actuary's findings:
343	345		(1) the fund shall provide a formal letter to the city
344	346		council for the city and to the Texas Pension Review Board
345	347		describing the rationale for the retirement board's action; and
346	348		(2) the board's actuary and executive director shall
347	349		be made available at the request of the city council or the Texas
348	350		Pension Review Board to present in person the rationale for the
349	351		board of trustees' action.
350	352		(i) If the board of trustees proposes a change to actuarial
351	353		assumptions or methods that is not in connection with an experience
352	354		study described by this section, the fund and the city shall follow
353	355		the same process set out in this section with respect to an
354	356		experience study in connection with the proposed change.
355	357		SECTION 6. Section 5.04, Chapter 183 (S.B. No. 509), Acts
356	358		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
357	359		Vernon's Texas Civil Statutes), is amended to read as follows:
358	360		Sec. 5.04. NORMAL SERVICE RETIREMENT BENEFIT. (a) The
359	361		service retirement annuity of a Group A member person who retires
360	362		under Section 5.01 of this Act on or after January 1, 1995, is a
361	363		monthly payment that is equal to three and three-tenths percent of
362	364		the Group A member's average monthly compensation multiplied by the
363	365		Group A member's number of years of service credit and any fraction
364	366		of a year of service credit.
365	367		(b) The three percent factor used in this section may be
366	368		changed to some other percent if the change:
367	369		(1) is first approved by the board's actuary;
368	370		(2) is approved by the board of trustees;
369	371		(3) applies to one or any combination of the following
370	372		groups:
371	373		(A) firefighters who are employed on an active,
372	374		full-time basis in the fire department at the time of the change;
373	375		(B) firefighters who begin service with the fire
374	376		department after the change becomes effective; and
375	377		(C) members who retire under Section 5.06 of this
376	378		Act after the change becomes effective; and
377	379		(4) does not reduce a member's benefit for service
378	380		credit accumulated before the date of the change.
379	381		(b-1) In determining whether to approve an increase in the
380	382		factor under Subsection (b) of this section, the board's actuary
381	383		shall take into consideration whether the fund has reserves
382	384		sufficient to enable the payment of a cost-of-living adjustment
383	385		under Section 9.04(a) of this Act to all current members and
384	386		survivors at a level that is equal to the average percentage
385	387		increase in the Consumer Price Index for All Urban Consumers as
386	388		determined by the United States Department of Labor for the 10
387	389		annual periods preceding the proposed effective date of the change.
388	390		(b) The service retirement annuity of a Group B member is a
389	391		monthly payment that is equal to three percent of the Group B
390	392		member's average monthly compensation multiplied by the Group B
391	393		member's number of years of service credit and any fraction of a
392	394		year of service credit.
393	395		(c) The service retirement annuity of a person who retired
394	396		before January 1, 1995, is a monthly payment based on the benefit
395	397		formula in effect at the time of the person's retirement, together
396	398		with any increases for retirees approved by the board of trustees
397	399		after the person's retirement.
398	400		SECTION 7. Section 5.05, Chapter 183 (S.B. No. 509), Acts
399	401		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
400	402		Vernon's Texas Civil Statutes), is amended to read as follows:
401	403		Sec. 5.05. EARLY RETIREMENT. (a) A Group A member is
402	404		eligible to retire and receive a normal service retirement annuity
403	405		if the member, while serving as a firefighter in the fire
404	406		department:
405	407		(1) has attained the age of 45 years and has at least
406	408		10 years of service credit in the fund; or
407	409		(2) has at least 20 years of service credit,
408	410		regardless of age.
409	411		(b) The retirement annuity of a Group A memberperson who
410	412		retires under this section after September 1, 1997, is the same as
411	413		for normal service retirement, but may not be increased under
412	414		Section 9.04 of this Act until the Group A memberperson would have
413	415		met the requirements of Section 5.01 of this Act if the Group A
414	416		memberperson had remained in active service as a firefighter.
415	417		(c) This section does not apply to a Group B member.
416	418		Section 8. Section 5.06, Chapter 183 (S.B. No. 509), Acts
417	419		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
418	420		Vernon's Texas Civil Statutes), is amended to read as follows:
419	421		Sec. 5.06. ELIGIBILITY AFTER 10 YEARS OF SERVICE. (a) A
420	422		member may terminate employment with the fire department and later
421	423		retire and receive a service retirement benefit if, at the time of
422	424		the member's retirement:
423	425		(1) the member has accumulated at least 10 years of
424	426		service credit in the fund and made required contributions to the
425	427		fund for at least 10 years;
426	428		(2) the member does not withdraw the member's
427	429		contributions from the fund at the time of or after the termination
428	430		of employment; and
429	431		(3) the member has either attained 50 years of age or,
430	432		if the member is a Group A member, the Group A member would have
431	433		accumulated at least 25 years of service credit if the Group A
432	434		member had not terminated employment with the fire department.
433	435		(b) The retirement benefit payable to a member on retirement
434	436		under this section is the service retirement benefit described by
435	437		Section 5.04 of this Act, computed on the basis of the formula in
436	438		effect at the time of the member's retirement under this Act.
437	439		SECTION 9. Section 5.07, Chapter 183 (S.B. No. 509), Acts
438	440		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
439	441		Vernon's Texas Civil Statutes), is amended to read as follows:
440	442		Sec. 5.07. WITHDRAWAL OF CONTRIBUTIONS. A personmember
441	443		who has terminated employment with the fire department and left the
442	444		person's member's contributions with the fund under Section 5.06 of
443	445		this Act may at any time apply for and receive the person'smember's
444	446		accumulated contributions under Section 9.06 of this Act, with the
445	447		effect provided by that section. If a person member eligible for a
446	448		refund of contributions elects to have all or a portion of the
447	449		accumulated contributions paid directly to an eligible retirement
448	450		plan and specifies the eligible retirement plan to which the
449	451		contributions are to be paid on a form approved for that purpose by
450	452		the fund, the fund shall make the payment in the form of a direct
451	453		trustee-to-trustee transfer but is under no obligation to determine
452	454		whether the other plan in fact is an eligible retirement plan for
453	455		that purpose.
454	456		Section 10. Article 2, Chapter 183 (S.B. No. 509), Acts of
455	457		the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
456	458		Vernon's Texas Civil Statutes), is amended by adding a new Section
457	459		7.015 to read as follows:
458	460		Sec. 7.015. AUTHORITY TO ELECT CERTAIN ACTUARIALLY REDUCED
459	461		BENEFITS. (a) The Board of trustees shall adopt policies under
460	462		which a Group B firefighter who is leaving active service may elect
461	463		to accept an actuarially reduced life annuity benefit upon
462	464		retirement to provide a joint survivor benefit for the Group B
463	465		member's surviving spouse.
464	466		(b) The joint survivor benefit shall be an optional
465	467		retirement annuity that is certified by the Board of trustees'
466	468		actuary to be the actuarial equivalent of the annuity provided
467	469		under Section 5.04 of this Act and the survivor's benefits provided
468	470		under Section 7.02(b) of this Act. An optional retirement annuity
469	471		is payable throughout the life of the retiree.
470	472		SECTION 11. Section 7.02, Chapter 183 (S.B. No. 509), Acts
471	473		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
472	474		Vernon's Texas Civil Statutes), is amended to read as follows:
473	475		Sec. 7.02. SURVIVING SPOUSE OF RETIREE. (a) On the death
474	476		of a Group A retiree who did not select a Life Annuity option, the
475	477		Group A retiree's surviving spouse is entitled to receive an
476	478		immediate monthly benefit from the fund of 75 percent of the
477	479		retirement benefit that was being paid to the Group A retiree if the
478	480		spouse:
479	481		(1) was married to the Group A retiree at the time of
480	482		the Group A retiree's retirement; or
481	483		(2) married the Group A retiree after the Group A
482	484		retiree's retirement and was married to the Group A retiree for at
483	485		least 24 consecutive months.
484	486		(b) On the death of a Group B retiree who did not select a
485	487		Life Annuity option, the Group B retiree's surviving spouse is
486	488		entitled to receive an immediate monthly benefit from the fund of 75
487	489		percent of the retirement benefit that was being paid to the Group B
488	490		retiree if the spouse was married to the Group B retiree at the time
489	491		of the Group B retiree's retirement.
490	492		(bc) For purposes of Subsection (a)(1) of this section, with
491	493		respect to an informal marriage established in this state, a
492	494		surviving spouse is considered married to a Group A retiree as of
493	495		the date a declaration of informal marriage was recorded in
494	496		accordance with Subchapter E, Chapter 2, Family Code.
495	497		SECTION 12. Section 7.07, Chapter 183 (S.B. No. 509), Acts
496	498		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
497	499		Vernon's Texas Civil Statutes), is repealed.
498	500		SECTION 13. Section 7.09, Chapter 183 (S.B. No. 509), Acts
499	501		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
500	502		Vernon's Texas Civil Statutes), is amended to read as follows:
501	503		Sec. 7.09. SURVIVING BENEFICIARY OF CERTAIN UNMARRIED
502	504		MEMBERS. (a) On the death of a Group A retiree or of a Group A
503	505		member who is eligible for retirement but has not retired, a benefit
504	506		is payable under this section if:
505	507		(1) the Group A retiree or Group A member designated a
506	508		beneficiary to receive the benefit payable under this section on a
507	509		form filed with the fund; and
508	510		(2) this Act does not otherwise provide a benefit
509	511		payable to a surviving spouse or child of the Group A member or
510	512		Group A retiree.
511	513		(b) The benefit payable under this section is an immediate
512	514		monthly benefit from the fund of 75 percent of the amount of the:
513	515		(1) retirement benefit that was being paid to the
514	516		Group A retiree; or
515	517		(2) normal service retirement benefit that the member
516	518		would have received if the member had retired on the date of death.
517	519		(c) If the designated beneficiary of a Group A retiree or
518	520		Group A member is 10 or more years younger than the Group A retiree
519	521		or Group A member at the time of the Group A retiree's or Group A
520	522		member's death, the amount of the benefit payable under Subsection
521	523		(b) of this section shall be reduced to the actuarial equivalent of
522	524		the benefit that would have been payable if the beneficiary and the
523	525		Group A retiree or Group A member were the same age.
524	526		(d) The board of trustees may adopt rules to establish
525	527		procedures for and requirements governing a member's designation of
526	528		a beneficiary under this section.
527	529		(e) This section does not apply to Group B retirees or Group
528	530		B members.
529	531		SECTION 14. Section 8.01, Chapter 183 (S.B. No. 509), Acts
530	532		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
531	533		Vernon's Texas Civil Statutes), is amended to read as follows:
532	534		Sec. 8.01. MEMBER REMAINING IN ACTIVE SERVICE. In lieu of
533	535		either leaving active service and beginning to receive a service
534	536		retirement annuity under Section 5.01 of this Act or remaining in
535	537		active service and continuing to accrue additional service credit
536	538		under Section 5.02 of this Act, a member who is eligible to receive
537	539		a normal service retirement benefit under Section 5.01 of this Act
538	540		may remain in active service, become a participant in the deferred
539	541		retirement option plan ("DROP") in accordance with Sections 8.02
540	542		and 8.03 of this Act this Article, and defer the beginning of the
541	543		person's retirement annuity. Once an election to participate in
542	544		the DROP has been made, the election continues in effect as long as
543	545		the member remains in active service as a firefighter. When the
544	546		member leaves active service, the member may apply for a service
545	547		retirement annuity under Section 5.01 of this Act.
546	548		SECTION 15. Section 8.02, Chapter 183 (S.B. No. 509), Acts
547	549		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
548	550		Vernon's Texas Civil Statutes), is amended to read as follows:
549	551		Sec. 8.02. ELECTION TO PARTICIPATE IN DROP. (a) The
550	552		election to participate in the DROP shall be made in accordance with
551	553		procedures adopted by the board of trustees. The election may be
552	554		made at any time on or after the date the member becomes eligible
553	555		for normal service retirement under Section 5.01 of this Act or
554	556		early retirement under Section 5.05 of this Act and becomes
555	557		effective on the first day of the first month after the date of the
556	558		election.
557	559		(b) At the same time that a Group A member makes an election
558	560		to participate in the DROP, the Group A member must agree in writing
559	561		to terminate service with the fire department on a date not later
560	562		than the seventh anniversary of the effective date of the election
561	563		under this section.
562	564		(c) At the same time that a Group B member makes an election
563	565		to participate in the DROP, the Group B member must agree in writing
564	566		to terminate service with the fire department on a date not later
565	567		than the fifth anniversary of the effective date of the election
566	568		under this section.
567	569		(d) An agreement to terminate service is binding on the
568	570		member and the fire department, except that the member may
569	571		terminate active service at any time before the date selected. An
570	572		election to participate in the DROP has no effect on either the
571	573		municipality's city's or the member's contributions under Section
572	574		10.01 of this Act.
573	575		SECTION 16. Section 8.03, Chapter 183 (S.B. No. 509), Acts
574	576		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
575	577		Vernon's Texas Civil Statutes), is amended to read as follows:
576	578		Sec. 8.03. CREDITS TO MEMBER'S DROP ACCOUNT. (a) Each
577	579		month after a member makes an election to participate in the DROP
578	580		and until the member's retirement, the board of trustees shall
579	581		cause an amount equal to the retirement annuity that the member
580	582		would have received under Section 5.04 of this Act for that month if
581	583		the member had left active service and been granted a retirement
582	584		annuity on the effective date of the election under Section 8.02 of
583	585		this Act to be credited to a separate DROP account maintained within
584	586		the fund for the benefit of the member.
585	587		(b) The A Group A member's contributions under Section
586	588		10.01(d) of this Act made after the effective date of the election
587	589		to participate in the DROP shall also be credited to the Group A
588	590		member's DROP account. This subsection does not apply to a Group B
589	591		member.
590	592		(c) Amounts held in a Group A member's DROP account shall be
591	593		credited at the end of each calendar month with interest at a rate
592	594		equal to one-twelfth of five percent until the Group A member's
593	595		retirement.
594	596		(d) Amounts held in a Group B member's DROP account shall be
595	597		credited at the end of each calendar month with interest at a rate
596	598		equal to one-twelfth of three percent until the Group B member's
597	599		retirement, but only if the return on investment of all assets held
598	600		by the fund was greater than zero for the preceding calendar year.
599	601		SECTION 17. Section 8.04, Chapter 183 (S.B. No. 509), Acts
600	602		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
601	603		Vernon's Texas Civil Statutes), is amended to read as follows:
602	604		Sec. 8.04. AMOUNT OF CREDITS TO GROUP A MEMBER'S DROP
603	605		ACCOUNT. The amount credited monthly to the Group A member's DROP
604	606		account:
605	607		(1) shall be increased as a result of any increase in
606	608		the formula used in computing service retirement benefits under
607	609		Section 5.04 of this Act that occurs after the effective date of the
608	610		member's election to participate in the DROP but before the
609	611		effective date of the member's retirement;
610	612		(2) shall be increased by any annual cost-of-living
611	613		adjustments under Section 9.04 of this Act that occur between the
612	614		effective date of the Group A member's election to participate in
613	615		the DROP and the effective date of the Group A member's retirement
614	616		but only as to amounts credited to the Group A member's DROP account
615	617		after a cost-of-living adjustment; and
616	618		(32) is subject to the limitations prescribed by
617	619		Section 9.03 of this Act.
618	620		SECTION 18. Section 8.05, Chapter 183 (S.B. No. 509), Acts
619	621		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
620	622		Vernon's Texas Civil Statutes), is amended to read as follows:
621	623		Sec. 8.05. DISTRIBUTIONS FROM MEMBER'S DROP ACCOUNT. (a)
622	624		On leaving active service as a firefighter and beginning to receive
623	625		a retirement annuity, a member who participates in the DROP shall
624	626		begin to receive the amount credited to the person's DROP account
625	627		under either of the following methods of distribution selected by
626	628		the member:
627	629		(1) a single-payment distribution made at a time
628	630		selected by the member but not later than April 1 of the year after
629	631		the member attains 70-1/2 years of age; or
630	632		(2) in not more than four payments, which may be equal
631	633		or unequal as the member may determine, all of which must occur not
632	634		later than April 1 of the year after the member attains 70-1/2 years
633	635		of age.
634	636		(b) The DROP account balance of a Group A member shall be
635	637		credited at the end of each calendar month with interest at a rate
636	638		equal to one-twelfth of five percent. The DROP account balance of a
637	639		Group B member shall be credited at the end of each calendar month
638	640		with interest at a rate equal to one-twelfth of three percent, but
639	641		only if the return on investment of all assets held by the fund was
640	642		greater than zero for the preceding calendar year.
641	643		(c) A member may not receive a distribution from the
642	644		member's DROP account before termination of active service as a
643	645		firefighter. A member shall notify the fund in writing, on a form
644	646		that the board of trustees may prescribe, at least 30 days before
645	647		each distribution made under this section.
646	648		(d) The board of trustees may adopt rules that modify the
647	649		availability of distributions under Subsection (a) of this section,
648	650		provided that the modifications do not:
649	651		(1) impair the distribution rights under that
650	652		subsection; or
651	653		(2) cause distributions to occur later than required
652	654		under Section 401(a)(9), Internal Revenue Code of 1986.
653	655		SECTION 19. Section 8.06, Chapter 183 (S.B. No. 509), Acts
654	656		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
655	657		Vernon's Texas Civil Statutes), is amended to read as follows:
656	658		Sec. 8.06. ESTABLISHMENT OF DROP ACCOUNT AT RETIREMENT.
657	659		(a) In lieu of electing to participate in the DROP before actual
658	660		retirement, a Group A member who is eligible for normal service
659	661		retirement or early retirement and who terminates or has terminated
660	662		active service as a firefighter may establish a DROP account under
661	663		this section.
662	664		(b) A Group A member who is eligible to receive a service
663	665		retirement benefit under Section 5.06 of this Act may establish a
664	666		DROP account under this section on retiring under Section 5.06 of
665	667		this Act.
666	668		(c) If a Group A member elects to participate in the DROP
667	669		under this section:
668	670		(1) the board of trustees shall cause to be credited to
669	671		a DROP account maintained within the fund for the benefit of that
670	672		person an amount equal to the credits that the Group A member's DROP
671	673		account would have received, including interest, if the Group A
672	674		member had established the DROP account after becoming eligible for
673	675		service retirement, but not more than seven years before the
674	676		effective date of the person's retirement;
675	677		(2) the date used in computations under Subdivision
676	678		(1) of this section as if the Group A member had established the
677	679		DROP account on that date is the effective date of the Group A
678	680		member's election to participate in the DROP;
679	681		(3) the Group A member will receive payments from the
680	682		Group A member's DROP account as the Group A member may select under
681	683		Section 8.05 of this Act; and
682	684		(4) the Group A member's DROP account shall be credited
683	685		with interest as provided by Section 8.05 of this Act.
684	686		(d) If a Group A member who did not establish a DROP account
685	687		under this section but was eligible to do so dies before retirement,
686	688		the surviving spouse, if any, of that Group A member may elect to
687	689		participate in the DROP if the surviving spouse has not received any
688	690		benefit payments under Section 7.01 of this Act. If a surviving
689	691		spouse makes an election under this subsection:
690	692		(1) the board of trustees shall cause to be paid to the
691	693		surviving spouse in a lump sum, as soon as administratively
692	694		possible after the fund receives notice of the election, an amount
693	695		equal to the credits that the Group A member's DROP account would
694	696		have received, including interest, if the Group A member had
695	697		established the DROP account after becoming eligible for service
696	698		retirement, but not more than seven years before the date of the
697	699		Group A member's death; and
698	700		(2) the amount of the benefit payable to the surviving
699	701		spouse under Section 7.03 of this Act is 75 percent of the benefit
700	702		the Group A member would have been eligible to receive if the Group
701	703		A member had established the DROP account on becoming eligible for
702	704		service retirement, but not more than seven years before the date of
703	705		the Group A member's death.
704	706		(e) If a Group A member who did not establish a DROP account
705	707		under this section but was eligible to do so dies before retirement
706	708		without leaving a surviving spouse, the surviving dependent
707	709		children, if any, may elect to participate in the DROP if the
708	710		dependent children have not received any benefit payments under
709	711		Section 7.05 of this Act. An election under this subsection must be
710	712		made by all of the surviving dependent children of the member,
711	713		except that the guardian of any child who is younger than 18 years
712	714		of age at the time of the election makes a binding election for the
713	715		child. If the surviving dependent children make an election under
714	716		this subsection:
715	717		(1) the board of trustees shall cause to be paid
716	718		jointly to the dependent children in a lump sum, as soon as
717	719		administratively possible after the fund receives notice of the
718	720		election, an amount equal to the credits the Group A member's DROP
719	721		account would have received, including interest, if the Group A
720	722		member had established the DROP account after becoming eligible for
721	723		service retirement, but not less than the credits the DROP account
722	724		would have received, including interest, based on 20 years of
723	725		service credit; and
724	726		(2) the amount of the benefit payable to the dependent
725	727		children under Section 7.05(a) is 75 percent of the benefit the
726	728		Group A member would have been entitled to receive if the Group A
727	729		member had established the DROP account on becoming eligible for
728	730		service retirement, but based on not less than 20 years of service
729	731		credit.
730	732		(f) This section does not apply to a Group B member.
731	733		SECTION 20. Section 8.09, Chapter 183 (S.B. No. 509), Acts
732	734		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
733	735		Vernon's Texas Civil Statutes), is amended to read as follows:
734	736		Sec. 8.09. RETIREMENT BENEFIT PAYABLE TO DROP PARTICIPANT.
735	737		The retirement benefit payable under Article 5 or 6 of this Act to a
736	738		person who participates in the DROP:
737	739		(1) may not be increased as a result of any increase in
738	740		the formula used in computing service retirement benefits under
739	741		Section 5.04 of this Act that occurs after the effective date of the
740	742		member's election to participate in the DROP;
741	743		(2) may not be increased as a result of any increase in
742	744		the member's compensation that occurs after the effective date of
743	745		the member's election to participate in the DROP;
744	746		(32) shall be increased by any annual cost-of-living
745	747		adjustments under Section 9.04 of this Act that occur between the
746	748		effective date of the member's election to participate in the DROP
747	749		and the effective date of the member's retirement;
748	750		(43) may not be increased for additional service
749	751		credit after the effective date of the member's election to
750	752		participate in the DROP; and
751	753		(54) is subject to the limitations prescribed by
752	754		Section 9.03 of this Act.
753	755		SECTION 21. Section 9.04, Chapter 183 (S.B. No. 509), Acts
754	756		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
755	757		Vernon's Texas Civil Statutes), is amended to read as follows:
756	758		Sec. 9.04. COST-OF-LIVING ADJUSTMENTS; OTHER ADJUSTMENTS.
757	759		(a) Subject to this section and except as provided by Section 5.05
758	760		of this Act, a person receiving a retirement or survivor's benefit
759	761		under this Act is entitled each calendar year to a cost-of-living
760	762		adjustment of that person's benefitthe board of trustees may
761	763		approve a cost of living adjustment for retirees and persons
762	764		receiving survivor benefits under Article 7 of this Act in an amount
763	765		not to exceed the amount that is determined and calculated in
764	766		accordance with this section.
765	767		(a-1) TheAnyannual cost-of-living adjustment under this
766	768		section:
767	769		(1) is based on the collective adjustment amount
768	770		calculated in accordance with Subsection (a-2) of this section and
769	771		allocated among persons eligible for an adjustment under this
770	772		section in a manner and in an amount determined by the board of
771	773		trustees;
772	774		(2) may take effect at any time during a given calendar
773	775		year, as determined by the board of trustees; and
774	776		(3) may not reduce a person's benefit to an amount less
775	777		than the person received when the benefit first was paid to that
776	778		person.
777	779		(a-2) The collective adjustment amount described by
778	780		Subsection (a-1) of this section:
779	781		(1) is an amount equal to the actuarial value, as
780	782		determined by the board's actuary based on the interest and
781	783		mortality assumptions adopted by the board of trustees for the most
782	784		recent actuarial valuation of the fund, of the percentage increase
783	785		in the Consumer Price Index for All Urban Consumers as determined by
784	786		the United States Department of Labor for the applicable
785	787		determination period ending in a calendar month that precedes by
786	788		not more than four months the month in which the cost-of-living
787	789		adjustment is to take effect, multiplied by the total amount of
788	790		benefits payable in the month immediately preceding the date an
789	791		adjustment is to take effect to persons who are eligible to receive
790	792		an adjustment under this section; and
791	793		(2) if applicable:,
792	794		(A) is reduced by an amount that the board's
793	795		actuary determines is necessary to maintain the financial stability
794	796		of the fund and comply with Subsections (b) and (c) of this section;
795	797		or
796	798		(B) is increased in accordance with Subsection
797	799		(b) of this section.
798	800		(a-3) For purposes of Subsection (a-2) of this section, the
799	801		applicable determination period is the shorter of:
800	802		(1) 12 months; or
801	803		(2) the period since the last adjustment under this
802	804		section.
803	805		(a-4) In determining whether to reduce the collective
804	806		adjustment amount under Subsection (a-2) of this section, the
805	807		board's actuary may not take into consideration the cost of future
806	808		adjustments under this section.
807	809		(b) The board of trustees may increase the collective
808	810		adjustment amount under Subsection (a-2) of this section if:
809	811		(1) the board's actuary has advised the board of
810	812		trustees that the increase would not impair the financial stability
811	813		of the fund; and
812	814		(2) the increase has been approved by the affirmative
813	815		vote of a majority of the board of trustees.
814	816		(b) The board of trustees may not approve a cost-of-living
815	817		adjustment unless the board's actuary certifies that the funding
816	818		period required to amortize the total unfunded accrued actuarial
817	819		liability after the cost-of-living adjustment does not exceed:
818	820		(1) 25 years for cost-of-living adjustments beginning
819	821		in years 2026 through 2030;
820	822		(2) 20 years for cost-of-living adjustments beginning
821	823		in years 2031 through 2035;
822	824		(3) 15 years for cost-of-living adjustments beginning
823	825		in years 2036 through 2040;
824	826		(4) 10 years for cost-of-living adjustments beginning
825	827		in years 2041 through 2045; and
826	828		(5) five years for cost-of-living adjustments
827	829		beginning in years after 2046-2050.
828	830		(b-1) In determining whether an adjustment would impair the
829	831		financial stability of the fund under Subsection (b) of this
830	832		section, the board's actuary shall take into consideration the cost
831	833		of future adjustments under this section.
832	834		(c) Repealed by Acts 2009, 81st Leg., R.S., Ch. 707, Sec.
833	835		10, eff. September 1, 2009.
834	836		(c) The board of trustees may not approve a cost-of-living
835	837		adjustment unless the board's actuary certifies that the funded
836	838		ratio after the cost-of-living adjustment is not:
837	839		(1) less than 80 percent for any year during the
838	840		remainder of the amortization period for cost-of-living
839	841		adjustments beginning in years 2026 through 2035;
840	842		(2) less than 85 percent for any year during the
841	843		remainder of the amortization period for cost-of-living
842	844		adjustments beginning in years 2036 through 2040;
843	845		(3) less than 90 percent for any year during the
844	846		remainder of the amortization period or for a period of ten years,
845	847		whichever is greater, for cost-of-living adjustments beginning in
846	848		years 2041 through 2045;
847	849		(4) less than 95 percent for any year during the
848	850		remainder of the amortization period or for a period of ten years,
849	851		whichever is greater, for cost-of-living adjustments beginning in
850	852		years 2046 through 2050;
851	853		(5) less than 100 percent for any year for a period of
852	854		ten years for cost-of-living adjustments beginning after 2050.
853	855		(d) Repealed by Acts 2009, 81st Leg., R.S., Ch. 707, Sec.
854	856		10, eff. September 1, 2009.
855	857		(d) No cost-of-living adjustment that would result in an
856	858		increase in employer contributions in any year during the remainder
857	859		of the amortization period, or in any year during the ten years
858	860		immediately following the cost-of-living adjustment, whichever is
859	861		longer, shall be effective unless and until approved by the city
860	862		council of the city.
861	863		SECTION 22. Section 9.10, Chapter 183 (S.B. No. 509), Acts
862	864		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
863	865		Vernon's Texas Civil Statutes), is amended to read as follows:
864	866		Sec. 9.10. OPTIONAL RETIREMENT ANNUITY. (a) An optional
865	867		retirement annuity is an annuity that is certified by the board's
866	868		actuary to be the actuarial equivalent of the annuity provided
867	869		under Section 5.04 of this Act and the any applicable survivor's
868	870		benefits provided under Article 7 of this Act. An optional
869	871		retirement annuity is payable throughout the life of the retiree.
870	872		(b) Instead of the annuity payable under Section 5.04 of
871	873		this Act, a member who retires may elect to receive an optional
872	874		retirement annuity approved by the board of trustees under this
873	875		section.
874	876		(c) The survivor's benefits provided under Article 7 of this
875	877		Act are not payable on the death of a retiree who elects an optional
876	878		retirement annuity under this section.
877	879		(d) The board of trustees by rule may provide that:
878	880		(1) an optional retirement annuity is payable after a
879	881		member's death throughout the life of a person designated by the
880	882		member; or
881	883		(2) if a retiree dies before a fixed number of monthly
882	884		annuity payments are made, the remaining number of payments are
883	885		payable to the retiree's designated beneficiary or, if a designated
884	886		beneficiary does not exist, to the retiree's estate.
885	887		(e) To elect an optional retirement annuity, a member must
886	888		make the election and designate a beneficiary on a form prescribed
887	889		by the board of trustees. The member must file the form with the
888	890		board on or before the effective date of the member's retirement.
889	891		(f) Except as provided by Subsections (g), (h), and (i) of
890	892		this section, if a Group A member elects an optional retirement
891	893		annuity that, on the Group A member's death, pays to the Group A
892	894		member's spouse an amount that is less than 75 percent of the
893	895		annuity that is payable during the joint lives of the Group A member
894	896		and the Group A member's spouse, the spouse must consent to the
895	897		election. The spouse's consent must be in writing and witnessed by
896	898		an officer or employee of the fund or acknowledged by a notary
897	899		public.
898	900		(g) If a Group A member's spouse has been adjudicated
899	901		incompetent, the consent required under Subsection (f) of this
900	902		section may be given by the spouse's guardian.
901	903		(h) If a physician determines that a Group A member's spouse
902	904		is not mentally capable of managing the spouse's affairs, the
903	905		consent required under Subsection (f) of this section may be given
904	906		by the Group A member if the Group A member would be qualified to
905	907		serve as a guardian of the spouse and the board of trustees
906	908		determines that a guardianship of the estate is not necessary.
907	909		(i) Spousal consent under Subsection (f) of this section is
908	910		not required if the board of trustees determines that:
909	911		(1) a spouse does not exist;
910	912		(2) the spouse cannot be located;
911	913		(3) the first anniversary of the marriage will not
912	914		occur before the date the annuity first becomes payable; or
913	915		(4) a former spouse is entitled to receive a portion of
914	916		the member's optional retirement benefit under a qualified domestic
915	917		relations order.
916	918		(j) If a Group B member is married, spousal consent is
917	919		required for the Group B member to select a retirement annuity that
918	920		provides the Group B member's spouse with any benefit less than the
919	921		joint survivor benefit provided in Section 7.02(b) of this Act upon
920	922		the Group B member's death. Spousal consent is not required if it
921	923		is established to the satisfaction of the retirement board that the
922	924		required consent cannot be obtained because there is no spouse, the
923	925		spouse cannot be located, or other circumstances exist as
924	926		prescribed by United States Treasury regulations. Notwithstanding
925	927		other provisions of this section, the option election or
926	928		beneficiary designation made by a member and consented to by the
927	929		member's spouse may be revoked by the member in writing without
928	930		consent of the spouse at any time before retirement. The number of
929	931		revocations is not limited. A former spouse's waiver or consent is
930	932		not binding on a new spouse. An option selection becomes effective
931	933		on the member's actual retirement date. The member retains the
932	934		right to change the option selected or the beneficiary designated
933	935		until the member's actual retirement date, subject to this
934	936		subsection.
935	937		SECTION 23. Section 10.01, Chapter 183 (S.B. No. 509), Acts
936	938		of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
937	939		Vernon's Texas Civil Statutes), is amended to read as follows:
938	940		Sec. 10.01. MUNICIPAL AND MEMBER CONTRIBUTIONS. (a) Each
939	941		municipality city in which a fire department to which this Act
940	942		applies is located shall appropriate and contribute to the fund an
941	943		amounts as determined under this section. equal to a percentage of
942	944		the compensation of all members during that month as follows:
943	945		(1) 19.05 percent, beginning on the first pay date
944	946		following September 30, 2010, through the pay date immediately
945	947		preceding September 30, 2011;
946	948		(2) 20.05 percent, beginning on the first pay date
947	949		following September 30, 2011, through the pay date immediately
948	950		preceding September 30, 2012;
949	951		(3) 21.05 percent, for 24 pay dates of the
950	952		municipality beginning on the first pay date following September
951	953		30, 2012; and
952	954		(4) 22.05 percent, for all pay dates of the
953	955		municipality that follow the 24 pay dates referenced in Subdivision
954	956		(3) of this subsection.
955	957		(b) Each firefighter shall pay into the fund each month a
956	958		percentage of the firefighter's compensation for that month as
957	959		follows:
958	960		(1) 15.70 percent, for the pay dates of the
959	961		municipality following September 30, 2010, through the pay date
960	962		immediately preceding September 30, 2011;
961	963		(2) 16.20 percent, beginning on the first pay date of
962	964		the municipality following September 30, 2011, through the pay date
963	965		immediately preceding September 30, 2012;
964	966		(3) 16.70 percent, beginning on the first pay date of
965	967		the municipality following September 30, 2012, through the pay date
966	968		immediately preceding September 30, 2013;
967	969		(4) 17.20 percent, beginning on the first pay date of
968	970		the municipality following September 30, 2013, through the pay date
969	971		immediately preceding September 30, 2014;
970	972		(5) 17.70 percent, beginning on the first pay date of
971	973		the municipality following September 30, 2014, through the pay date
972	974		immediately preceding September 30, 2015;
973	975		(6) 18.20 percent, beginning on the first pay date of
974	976		the municipality following September 30, 2015, through the pay date
975	977		immediately preceding September 30, 2016; and
976	978		(7) 18.70 percent, for the first pay date of the
977	979		municipality following September 30, 2016, and all subsequent pay
978	980		dates of the municipality.
979	981		(b) Beginning with the first pay period of:
980	982		(1) calendar year 2026, and before the first pay
981	983		period of calendar year 2027, the city shall contribute an amount
982	984		equal to the sum of:
983	985		(A) the city contribution rate, as determined in
984	986		the initial risk sharing valuation study as of December 31, 2024,
985	987		multiplied by the pensionable payroll for the applicable pay
986	988		period; and
987	989		(B) 1/26 of the city's legacy contribution amount
988	990		for the 2026 calendar year, as determined and adjusted in the
989	991		initial risk sharing valuation study conducted under Section 10.01A
990	992		of this Act; and
991	993		(2) calendar year 2027, and for each subsequent
992	994		calendar year, the city shall contribute an amount equal to the sum
993	995		of:
994	996		(A) the city contribution rate for the applicable
995	997		calendar year, as determined in a subsequent risk sharing valuation
996	998		study conducted and adjusted under Section 10.01B of this Act
997	999		multiplied by the pensionable payroll for the applicable pay
998	1000		period; and
999	1001		(B) 1/26 of the city's legacy contribution amount
1000	1002		for the applicable calendar year, as determined and adjusted in the
1001	1003		initial risk sharing valuation study conducted under Section 10.01A
1002	1004		of this Act.
1003	1005		(c) If the employer elects to change the employer's payroll
1004	1006		period to a period other than a biweekly payroll period, the
1005	1007		fractional amounts of the employer's legacy contribution stated in
1006	1008		subsections (b)(1)(B) and (b)(2)(B) of this section must be
1007	1009		adjusted such that the employer's calendar year contribution equals
1008	1010		the contribution required under subsection (b)(1) or (b)(2), as
1009	1011		applicable.
1010	1012		(c) The governing body of each municipality may authorize
1011	1013		the municipality to contribute a portion of the contribution
1012	1014		required of each firefighter under this section. In that event:
1013	1015		(1) the municipality shall appropriate and contribute
1014	1016		to the fund each month at the higher percentage of compensation
1015	1017		necessary to make all contributions required and authorized to be
1016	1018		made by the municipality under this section; and
1017	1019		(2) each firefighter's individual account with the
1018	1020		fund shall be credited each month as if the firefighter had made the
1019	1021		entire contribution required of that firefighter under Section
1020	1022		10.01(b).
1021	1023		(d) The governing body of each municipalitycity may
1022	1024		authorize the municipalitycity to make an additional contribution
1023	1025		to the fund in whatever amount the governing body may determine.
1024	1026		The members of the fund, by a majority vote in favor of an increase
1025	1027		in contributions above 13.70 percent, may increase each
1026	1028		firefighter's contribution above 13.70 percent to any percentage
1027	1029		recommended by a majority vote of the board of trustees.
1028	1030		SECTION 24. Article 10, Chapter 183 (S.B. No. 509), Acts of
1029	1031		the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
1030	1032		Vernon's Texas Civil Statutes), is amended by adding a new Section
1031	1033		10.01A to read as follows:
1032	1034		Sec. 10.01A. INITIAL RISK SHARING VALUATION STUDY. (a) The
1033	1035		board's actuary shall prepare an initial risk sharing valuation
1034	1036		study as of December 31, 2024. The initial risk sharing valuation
1035	1037		study must:
1036	1038		(1) except as otherwise provided by this section, be
1037	1039		prepared in accordance with the requirements of Section 10.01B of
1038	1040		this Act;
1039	1041		(2) be based on the actuarial assumptions that were
1040	1042		used by the board's actuary in the valuation completed for the year
1041	1043		ended December 31, 2023 using the market value of assets;
1042	1044		(3) project the corridor midpoint for the next 25
1043	1045		calendar years beginning with the calendar year that begins on
1044	1046		January 1, 2026;
1045	1047		(4) include a schedule of city legacy contribution
1046	1048		amounts for 25 calendar years beginning with the calendar year that
1047	1049		begins on January 1, 2026; and
1048	1050		(5) include a city contribution for the calendar years
1049	1051		under Sections 10.01(b)(1) and (2) of this Act that begin on January
1050	1052		1, 2026, January 1, 2027, and January 1, 2028 that must be adjusted
1051	1053		to reflect the impact of the phase-in prescribed by subsection (b)
1052	1054		of this section.
1053	1055		(b) The schedule of city legacy contribution amounts under
1054	1056		subsection (a)(4) of this section must be determined such that the
1055	1057		total annual city legacy contribution amount for the first three
1056	1058		calendar years results in a phase-in of the anticipated increase in
1057	1059		the employer's contribution rate from the calendar year that begins
1058	1060		on January 1, 2026, to the rate equal to the sum of the estimated
1059	1061		contribution rate for the calendar year that begins on January 1,
1060	1062		2028, and the rate of pensionable payroll equal to the city legacy
1061	1063		contribution amount for January 1, 2026, determined as if there was
1062	1064		no phase-in of the increase to the city legacy contribution amount.
1063	1065		The phase-in must reflect approximately one-third of the increase
1064	1066		each year over the three-year phase-in period.
1065	1067		(c) The estimated employer contribution rate for the
1066	1068		calendar year that begins on January 1, 2026, must be based on the
1067	1069		projected pensionable payroll as determined under the initial risk
1068	1070		sharing valuation study required by this section, assuming a
1069	1071		payroll growth rate adopted by the board of trustees.
1070	1072		SECTION 25. Article 10, Chapter 183 (S.B. No. 509), Acts of
1071	1073		the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
1072	1074		Vernon's Texas Civil Statutes), is amended by adding a new Section
1073	1075		10.01B to read as follows:
1074	1076		Sec. 10.01B. SUBSEQUENT RISK SHARING VALUATION STUDIES.
1075	1077		(a) For each calendar year beginning with January 1, 2027, the fund
1076	1078		shall cause the board's actuary to prepare a risk sharing valuation
1077	1079		study in accordance with this section and actuarial standards of
1078	1080		practice. Each risk sharing valuation study must:
1079	1081		(1) be dated as of the last day of the calendar year
1080	1082		for which the study is required to be prepared;
1081	1083		(2) calculate the unfunded actuarial accrued
1082	1084		liability of the fund as of the last day of the applicable calendar
1083	1085		year, including the liability layer, if any, associated with the
1084	1086		most recently completed calendar year;
1085	1087		(3) calculate the estimated city contribution rate for
1086	1088		the following calendar year;
1087	1089		(4) determine the city contribution rate and the
1088	1090		member contribution rate for the following calendar year, taking
1089	1091		into account any adjustments required under this Article, as
1090	1092		applicable; and
1091	1093		(5) except as provided by subsection (d) of this
1092	1094		section, be based on the assumptions and methods adopted by the
1093	1095		board of trustees, if applicable, and be consistent with actuarial
1094	1096		standards of practice and the following principles:
1095	1097		(A) closed layered amortization of liability
1096	1098		layers to ensure that the amortization period for each liability
1097	1099		layer begins 12 months after the date of the risk sharing valuation
1098	1100		study in which the liability layer is first recognized;
1099	1101		(B) an amortization period assigned to each
1100	1102		liability layer;
1101	1103		(C) amortization of each liability loss layer
1102	1104		over a period of 20 years from the first day of the calendar year
1103	1105		beginning 12 months after the date of the risk sharing valuation
1104	1106		study in which the liability loss layer is first recognized, except
1105	1107		that the legacy liability must be amortized over a 25-year period
1106	1108		beginning January 1, 2026;
1107	1109		(D) amortization of each liability gain layer
1108	1110		over:
1109	1111		(i) a period equal to the remaining
1110	1112		amortization period on the largest remaining liability loss layer;
1111	1113		or
1112	1114		(ii) if there is no liability loss layer, a
1113	1115		period of 20 years from the first day of the calendar year beginning
1114	1116		12 months after the date of the risk sharing valuation study in
1115	1117		which the liability gain layer is first recognized;
1116	1118		(E) funding of liability layers according to the
1117	1119		level percent of payroll method;
1118	1120		(F) projection of payroll for purposes of
1119	1121		determining the corridor midpoint, employer contribution rate, and
1120	1122		city legacy contribution amount using the annual payroll growth
1121	1123		rate assumption adopted by the board of trustees; and
1122	1124		(G) calculation of the city contribution rate
1123	1125		each calendar year without inclusion of the legacy liability.
1124	1126		(b) The city may contribute an amount in addition to the
1125	1127		scheduled city legacy contribution amounts to reduce the number or
1126	1128		amount of scheduled future city legacy contribution payments. If
1127	1129		the city contributes an additional amount under this subsection,
1128	1130		the board's actuary shall create a new schedule of city legacy
1129	1131		contribution amounts that reflects payment of the additional
1130	1132		contribution.
1131	1133		(c) The city and the board of trustees may agree on a written
1132	1134		transition plan for resetting the corridor midpoint, member
1133	1135		contribution rates, or employer contribution rates:
1134	1136		(1) if at any time the funded ratio of the fund is
1135	1137		equal to or greater than 100 percent; or
1136	1138		(2) for any calendar year after the payoff year of the
1137	1139		legacy liability.
1138	1140		(d) The board of trustees may, by rule, adopt actuarial
1139	1141		principles other than those required under this section, provided
1140	1142		the actuarial principles:
1141	1143		(1) are consistent with actuarial standards of
1142	1144		practice;
1143	1145		(2) are approved by the retirement board's actuary;
1144	1146		and
1145	1147		(3) do not operate to change the city legacy
1146	1148		contribution amount.
1147	1149		SECTION 26. Article 10, Chapter 183 (S.B. No. 509), Acts of
1148	1150		the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
1149	1151		Vernon's Texas Civil Statutes), is amended by adding a new Section
1150	1152		10.01C to read as follows:
1151	1153		Sec. 10.01C. ADJUSTMENT TO EMPLOYER CONTRIBUTION RATE IF
1152	1154		ESTIMATED EMPLOYER CONTRIBUTION RATE LOWER THAN CORRIDOR MIDPOINT.
1153	1155		(a) Subject to subsection (b) of this section, for the calendar
1154	1156		year beginning January 1, 2026, and for each subsequent calendar
1155	1157		year, if the estimated employer contribution rate is lower than the
1156	1158		corridor midpoint, the employer contribution rate for the
1157	1159		applicable year is:
1158	1160		(1) the corridor midpoint if the funded ratio is less
1159	1161		than 90 percent; or
1160	1162		(2) the estimated employer contribution rate if the
1161	1163		funded ratio is 90 percent or greater.
1162	1164		(b) The employer contribution rate may not be lower than the
1163	1165		minimum employer contribution rate.
1164	1166		(c) If the funded ratio is equal to or greater than 100
1165	1167		percent:
1166	1168		(1) all existing liability layers, including the
1167	1169		legacy liability, are considered fully amortized and paid; and
1168	1170		(2) the city legacy contribution amount may no longer
1169	1171		be included in the employer contribution.
1170	1172		SECTION 27. Article 10, Chapter 183 (S.B. No. 509), Acts of
1171	1173		the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
1172	1174		Vernon's Texas Civil Statutes), is amended by adding a new Section
1173	1175		10.01D to read as follows:
1174	1176		Sec. 10.01D. ADJUSTMENT TO CITY CONTRIBUTION RATE IF
1175	1177		ESTIMATED CITY CONTRIBUTION RATE IS EQUAL TO OR GREATER THAN
1176	1178		CORRIDOR MIDPOINT. For the calendar year beginning January 1,
1177	1179		2026, and for each subsequent calendar year, if the estimated
1178	1180		employer contribution rate is equal to or greater than the corridor
1179	1181		midpoint and:
1180	1182		(1) less than or equal to the maximum employer
1181	1183		contribution rate for the corresponding calendar year, the employer
1182	1184		contribution rate is the estimated employer contribution rate; or
1183	1185		(2) greater than the maximum employer contribution
1184	1186		rate for the corresponding calendar year, the employer contribution
1185	1187		rate is the maximum employer contribution rate.
1186	1188		SECTION 28. Article 10, Chapter 183 (S.B. No. 509), Acts of
1187	1189		the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
1188	1190		Vernon's Texas Civil Statutes), is amended by adding a new Section
1189	1191		10.01E to read as follows:
1190	1192		Sec. 10.01E. ADJUSTMENT TO CONTRIBUTION RATES IF ESTIMATED
1191	1193		CITY CONTRIBUTION RATE IS GREATER THAN CORRIDOR MAXIMUM. (a)
1192	1194		Except as provided by Subsection (b) of this section, if the
1193	1195		estimated employer contribution rate is greater than the corridor
1194	1196		maximum, the member contribution rate will increase by an amount
1195	1197		equal to the difference between the estimated city contribution
1196	1198		rate and the maximum city contribution rate.
1197	1199		(b) The member contribution rate may not be increased by
1198	1200		more than two percent under Subsection (a) of this section.
1199	1201		(c) If the estimated employer contribution rate is more than
1200	1202		two percentage points above the maximum employer contribution rate,
1201	1203		the city and the board of trustees shall enter into discussions to
1202	1204		determine additional options for achieving funding soundness.
1203	1205		SECTION 29. Sec. 10.02, Chapter 183 (S.B. No. 509), Acts of
1204	1206		the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
1205	1207		Vernon's Texas Civil Statutes), is amended to read as follows:
1206	1208		Sec. 10.02. PICKUP OF FIREFIGHTER CONTRIBUTIONS. (a)
1207	1209		Beginning on the first pay date of the city following January 1,
1208	1210		2026, each firefighter shall pay into the fund each month 18.70
1209	1211		percent of the firefighter's compensation for that month. The
1210	1212		firefighter contribution rate established by this section is
1211	1213		subject to adjustment as determined by Section 10.01E of this Act
1212	1214		and 10.02(d) of this Section.
1213	1215		(b) A municipalitycity to which this Act applies shall pick
1214	1216		up the firefighter contributions to the fund that are required or
1215	1217		authorized pursuant to Section 10.01 of this Actunder this
1216	1218		section, whichever is higher. Firefighter contributions will be
1217	1219		picked up by a reduction in the monetary compensation of the
1218	1220		firefighters. Contributions picked up shall be treated as employer
1219	1221		contributions in accordance with Section 414(h)(2) of the Internal
1220	1222		Revenue Code for the purpose of determining tax treatment of the
1221	1223		amounts under that code. These contributions will be deposited to
1222	1224		the credit of the individual accounts of the firefighters in the
1223	1225		fund and shall be treated as the monthly contributions of the
1224	1226		firefighters for all purposes of this Act. These contributions are
1225	1227		not includable in the gross income of a firefighter until the time
1226	1228		that they are distributed or made available to the firefighter or
1227	1229		survivors of the firefighter. The board of trustees may at any
1228	1230		time, by majority vote, discontinue the pickup of firefighter
1229	1231		contributions by the municipality city.
1230	1232		(c) The governing body of each city may authorize the city
1231	1233		to contribute a portion of the contribution required of each
1232	1234		firefighter under this section. In that event:
1233	1235		(1) the city shall appropriate and contribute to the
1234	1236		fund each month at the higher percentage of compensation necessary
1235	1237		to make all contributions required and authorized to be made by the
1236	1238		city under this section; and
1237	1239		(2) each firefighter's individual account with the
1238	1240		fund shall be credited each month as if the firefighter had made the
1239	1241		entire contribution required of that firefighter under Section
1240	1242		10.01(b).
1241	1243		(d) The members of the fund, by a majority vote in favor of
1242	1244		an increase in contributions above 18.70 percent, may increase each
1243	1245		firefighter's contribution above 18.70 percent to any percentage
1244	1246		and for any period of time recommended by a majority vote of the
1245	1247		board of trustees.
1246	1248		SECTION 30. Sec. 10.04, Chapter 183 (S.B. No. 509), Acts of
1247	1249		the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
1248	1250		Vernon's Texas Civil Statutes), is amended to read as follows:
1249	1251		Sec. 10.04. INTEREST ON INDIVIDUAL ACCOUNTS. (a) For Group
1250	1252		A members,Tthe fund shall credit interest on December 31 of each
1251	1253		year to the account of each firefighter, and of each former
1252	1254		firefighter, who has not retired in an amount equal to five percent
1253	1255		of the accumulated contributions, including previously credited
1254	1256		interest, on deposit on January 1 of that year. The fund may not pay
1255	1257		interest on a firefighter's or former firefighter's contributions
1256	1258		for part of a year or for any period that is more than five calendar
1257	1259		years after the date of termination of employment.
1258	1260		(b) For Group B members, the fund shall credit interest on
1259	1261		December 31 of each year to the account of each firefighter, and of
1260	1262		each former firefighter, who has not retired in an amount equal to
1261	1263		three percent of the accumulated contributions for Group B members,
1262	1264		including previously credited interest, on deposit on January 1 of
1263	1265		that year. The fund may not pay interest on a firefighter's or
1264	1266		former firefighter's contributions for part of a year or for any
1265	1267		period that is more than five calendar years after the date of
1266	1268		termination of employment.
1267	1269		SECTION 31. This Act shall become effective January 1,
1268	1270		2026.