Texas 2025 - 89th Regular

Texas House Bill HB4736 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	89R8740 JCG-F
2	2	By: Bonnen H.B. No. 4736
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7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the Texas Emergency Services Retirement System.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Section 614.104(d), Government Code, is amended
12	12	to read as follows:
13	13	(d) Money in the fund may be appropriated for a contribution
14	14	to the Texas Emergency Services Retirement System [subject to
15	15	Section 865.015].
16	16	SECTION 2. Section 861.001, Government Code, is amended by
17	17	amending Subdivisions (1), (7), and (12) and adding Subdivisions
18	18	(2), (7-a), (7-b), (7-c), (7-d), and (12-a) to read as follows:
19	19	(1) "Actuarially sound" [sound pension system"] means
20	20	circumstances under [a system in] which the amount of contributions
21	21	to the pension system is sufficient to cover the normal cost of and
22	22	amortize the unfunded actuarial accrued [actuarial] liability of
23	23	the pension system in a period that does not exceed the later of the
24	24	following:
25	25	(A) 15 years after the date of the actuarial
26	26	valuation on which the determination of whether the retirement
27	27	system is actuarially sound is made; or
28	28	(B) September 1, 2055 [30 years].
29	29	(2) "Amortization period" means:
30	30	(A) if amortizing a liability loss layer, the
31	31	period necessary to fully pay the liability loss layer;
32	32	(B) if amortizing a liability gain layer, the
33	33	period described by Section 865.015(b)(4); or
34	34	(C) if referring to the amortization period of
35	35	all liability layers of the pension system, the number of years
36	36	incorporated in a weighted average amortization factor for the sum
37	37	of all liability layers as determined in each biennial actuarial
38	38	valuation of assets and liabilities of the system.
39	39	(7) "Legacy liability" means the total unfunded
40	40	actuarial accrued liability of the pension system:
41	41	(A) determined as of August 31, 2024, using an
42	42	assumed rate of investment return of seven percent; and
43	43	(B) for each calendar year following 2024, that
44	44	total adjusted as follows:
45	45	(i) reduced by the contribution amount made
46	46	under Section 865.015 for the calendar year allocated to the
47	47	amortization of the legacy liability; and
48	48	(ii) adjusted by the assumed rate of
49	49	investment return of seven percent.
50	50	(7-a) "Liability gain layer" means a liability layer
51	51	that decreases the unfunded actuarial accrued liability of the
52	52	pension system.
53	53	(7-b) "Liability layer" means:
54	54	(A) the legacy liability; or
55	55	(B) for each fiscal year after August 31, 2024,
56	56	the amount by which the pension system's unfunded actuarial accrued
57	57	liability increases or decreases in a fiscal year, as applicable,
58	58	due to the unanticipated change in revenue caused by factors, other
59	59	than changes to a benefit formula, as determined in the actuarial
60	60	valuation analyzing that fiscal year.
61	61	(7-c) "Liability loss layer" means a liability layer
62	62	that increases the unfunded actuarial accrued liability. For the
63	63	purposes of this subtitle, the legacy liability is a liability loss
64	64	layer.
65	65	(7-d) "Local board" means a local board of trustees
66	66	established under Section 865.012.
67	67	(12) "Unfunded actuarial accrued liability" means, as
68	68	determined in an actuarial valuation, the difference between the
69	69	actuarial accrued liability and the actuarial value of assets,
70	70	where the liability is determined using an expected rate of
71	71	investment return not greater than:
72	72	(A) seven percent; or
73	73	(B) if greater than seven percent, the average of
74	74	the rates used by the Employees Retirement System of Texas and the
75	75	Teacher Retirement System of Texas in the most recently published
76	76	actuarial valuations preceding the actuarial valuation in which the
77	77	unfunded actuarial accrued liability is being determined.
78	78	(12-a) "Volunteer" means a person who performs
79	79	emergency services for civic, charitable, or humanitarian reasons,
80	80	receives no monetary compensation from a participating department,
81	81	and is not subject to the compensation requirements provided for
82	82	employees by the Fair Labor Standards Act of 1938 (29 U.S.C. Section
83	83	201 et seq.).
84	84	SECTION 3. Section 864.002(a), Government Code, is amended
85	85	to read as follows:
86	86	(a) A service retirement annuity is payable in monthly
87	87	installments based on:
88	88	(1) the average monthly contribution during the
89	89	member's term of qualified service with all participating
90	90	departments under this subtitle, not including a contribution to
91	91	reduce the unfunded actuarial accrued [actuarial] liability of the
92	92	pension system; and
93	93	(2) a formula adopted by the state board by rule that
94	94	allows the pension system[, assuming maximum state contributions
95	95	are provided under Section 865.015,] to be maintained as
96	96	actuarially sound.
97	97	SECTION 4. Section 864.0135, Government Code, is amended by
98	98	adding Subsections (a-1) and (c) to read as follows:
99	99	(a-1) The rules adopted under Subsection (a) may:
100	100	(1) include procedures for the governing body of a
101	101	participating department to request the approval of the state board
102	102	to make a supplemental payment or increase an annuity under the
103	103	rules; and
104	104	(2) prohibit the governing body of a participating
105	105	department from making a supplemental payment or increasing an
106	106	annuity under the rules without approval from the state board.
107	107	(c) State contributions may not be used to fund any option
108	108	elected under a rule adopted under this section to make a
109	109	supplemental payment or increase an annuity.
110	110	SECTION 5. Section 865.011(f), Government Code, is amended
111	111	to read as follows:
112	112	(f) The state board shall determine the meaning of
113	113	"significant change" for purposes of Subsection (d)(1), which must
114	114	include circumstances in which there is an increase in the time
115	115	required to amortize the unfunded liabilities of the pension system
116	116	such that that the pension system would not be actuarially sound [to
117	117	a period that exceeds 30 years, assuming a maximum state
118	118	contribution under Section 865.015].
119	119	SECTION 6. Section 865.014, Government Code, is amended by
120	120	adding Subsection (f) to read as follows:
121	121	(f) The governing body of a political subdivision
122	122	associated with the participating department who elects to provide
123	123	a supplemental payment or annuity increase under Section 864.0135
124	124	shall contribute the money necessary to cover the costs of all
125	125	increased benefits provided, as required by Section 864.0135(b).
126	126	The state board may adopt rules for the regular payment of money
127	127	required by this subsection.
128	128	SECTION 7. Section 865.015, Government Code, is amended to
129	129	read as follows:
130	130	Sec. 865.015. STATE CONTRIBUTIONS. (a) The state shall
131	131	contribute the amount necessary to make the pension system
132	132	actuarially sound each year, except that for each fiscal year in
133	133	which the legacy liability has not been fully paid, the state shall
134	134	make an actuarially determined payment in the amount necessary to
135	135	amortize the pension system's legacy liability by not later than
136	136	the fiscal year ending August 31, 2055 [the state's contribution
137	137	may not exceed one-third of the total of all contributions by
138	138	governing bodies in a particular year].
139	139	(b) The pension system's actuary shall biennially determine
140	140	an actuarially determined contribution amount required under
141	141	Subsection (a) that is consistent with actuarial standards of
142	142	practice and the following principles:
143	143	(1) closed layered amortization of liability layers to
144	144	ensure that the amortization period for each liability layer begins
145	145	12 months after the date the liability layer is first recognized;
146	146	(2) each liability layer is assigned an amortization
147	147	period;
148	148	(3) each liability loss layer is amortized over a
149	149	period of 15 years or until September 1, 2055, whichever is later;
150	150	and
151	151	(4) each liability gain layer is amortized over:
152	152	(A) if there is a liability loss layer, a period
153	153	equal to the remaining amortization period of the largest remaining
154	154	liability loss layer, and the two layers must be treated as one
155	155	layer such that if the payoff year of the liability loss layer is
156	156	accelerated or extended, the payoff year of the liability gain
157	157	layer is also accelerated or extended; or
158	158	(B) if there is no liability loss layer, a period
159	159	of 15 years beginning the first day of the fiscal year beginning 12
160	160	months after the liability gain layer is first recognized or until
161	161	September 1, 2055, whichever is later.
162	162	(c) Before each regular legislative session, the pension
163	163	system shall provide the Legislative Budget Board with the amount
164	164	necessary to make the actuarially determined payment required under
165	165	this section. The director of the Legislative Budget Board, under
166	166	the direction of the Legislative Budget Board, shall include that
167	167	payment in the general appropriations bill prepared for
168	168	introduction at each regular legislative session under Section
169	169	322.008. This subsection expires September 1, 2057.
170	170	SECTION 8. This Act takes effect immediately if it receives
171	171	a vote of two-thirds of all the members elected to each house, as
172	172	provided by Section 39, Article III, Texas Constitution. If this
173	173	Act does not receive the vote necessary for immediate effect, this
174	174	Act takes effect September 1, 2025.