Texas 2025 - 89th Regular

Texas Senate Bill SB2065 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1	1		By: Huffman S.B. No. 2065
2		-
3		-
	2	+	(In the Senate - Filed March 7, 2025; March 24, 2025, read
	3	+	first time and referred to Committee on Finance; April 2, 2025,
	4	+	reported favorably by the following vote: Yeas 15, Nays 0;
	5	+	April 2, 2025, sent to printer.)
	6	+	Click here to see the committee vote
4	7
5	8
6	9		A BILL TO BE ENTITLED
7	10		AN ACT
8	11		relating to the Texas Emergency Services Retirement System.
9	12		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	13		SECTION 1. Section 614.104(d), Government Code, is amended
11	14		to read as follows:
12	15		(d) Money in the fund may be appropriated for a contribution
13	16		to the Texas Emergency Services Retirement System [subject to
14	17		Section 865.015].
15	18		SECTION 2. Section 861.001, Government Code, is amended by
16	19		amending Subdivisions (1), (7), and (12) and adding Subdivisions
17	20		(2), (7-a), (7-b), (7-c), (7-d), and (12-a) to read as follows:
18	21		(1) "Actuarially sound" [sound pension system"] means
19	22		circumstances under [a system in] which the amount of contributions
20	23		to the pension system is sufficient to cover the normal cost of and
21	24		amortize the unfunded actuarial accrued [actuarial] liability of
22	25		the pension system in a period that does not exceed the later of the
23	26		following:
24	27		(A) 15 years after the date of the actuarial
25	28		valuation on which the determination of whether the retirement
26	29		system is actuarially sound is made; or
27	30		(B) September 1, 2055 [30 years].
28	31		(2) "Amortization period" means:
29	32		(A) if amortizing a liability loss layer, the
30	33		period necessary to fully pay the liability loss layer;
31	34		(B) if amortizing a liability gain layer, the
32	35		period described by Section 865.015(b)(4); or
33	36		(C) if referring to the amortization period of
34	37		all liability layers of the pension system, the number of years
35	38		incorporated in a weighted average amortization factor for the sum
36	39		of all liability layers as determined in each biennial actuarial
37	40		valuation of assets and liabilities of the system.
38	41		(7) "Legacy liability" means the total unfunded
39	42		actuarial accrued liability of the pension system:
40	43		(A) determined as of August 31, 2024, using an
41	44		assumed rate of investment return of seven percent; and
42	45		(B) for each calendar year following 2024, that
43	46		total adjusted as follows:
44	47		(i) reduced by the contribution amount made
45	48		under Section 865.015 for the calendar year allocated to the
46	49		amortization of the legacy liability; and
47	50		(ii) adjusted by the assumed rate of
48	51		investment return of seven percent.
49	52		(7-a) "Liability gain layer" means a liability layer
50	53		that decreases the unfunded actuarial accrued liability of the
51	54		pension system.
52	55		(7-b) "Liability layer" means:
53	56		(A) the legacy liability; or
54	57		(B) for each fiscal year after August 31, 2024,
55	58		the amount by which the pension system's unfunded actuarial accrued
56	59		liability increases or decreases in a fiscal year, as applicable,
57	60		due to the unanticipated change in revenue caused by factors, other
58	61		than changes to a benefit formula, as determined in the actuarial
59	62		valuation analyzing that fiscal year.
60	63		(7-c) "Liability loss layer" means a liability layer
61	64		that increases the unfunded actuarial accrued liability. For the
62	65		purposes of this subtitle, the legacy liability is a liability loss
63	66		layer.
64	67		(7-d) "Local board" means a local board of trustees
65	68		established under Section 865.012.
66	69		(12) "Unfunded actuarial accrued liability" means, as
67	70		determined in an actuarial valuation, the difference between the
68	71		actuarial accrued liability and the actuarial value of assets,
69	72		where the liability is determined using an expected rate of
70	73		investment return not greater than:
71	74		(A) seven percent; or
72	75		(B) if greater than seven percent, the average of
73	76		the rates used by the Employees Retirement System of Texas and the
74	77		Teacher Retirement System of Texas in the most recently published
75	78		actuarial valuations preceding the actuarial valuation in which the
76	79		unfunded actuarial accrued liability is being determined.
77	80		(12-a) "Volunteer" means a person who performs
78	81		emergency services for civic, charitable, or humanitarian reasons,
79	82		receives no monetary compensation from a participating department,
80	83		and is not subject to the compensation requirements provided for
81	84		employees by the Fair Labor Standards Act of 1938 (29 U.S.C. Section
82	85		201 et seq.).
83	86		SECTION 3. Section 864.002(a), Government Code, is amended
84	87		to read as follows:
85	88		(a) A service retirement annuity is payable in monthly
86	89		installments based on:
87	90		(1) the average monthly contribution during the
88	91		member's term of qualified service with all participating
89	92		departments under this subtitle, not including a contribution to
90	93		reduce the unfunded actuarial accrued [actuarial] liability of the
91	94		pension system; and
92	95		(2) a formula adopted by the state board by rule that
93	96		allows the pension system[, assuming maximum state contributions
94	97		are provided under Section 865.015,] to be maintained as
95	98		actuarially sound.
96	99		SECTION 4. Section 864.0135, Government Code, is amended by
97	100		adding Subsections (a-1) and (c) to read as follows:
98	101		(a-1) The rules adopted under Subsection (a) may:
99	102		(1) include procedures for the governing body of a
100	103		participating department to request the approval of the state board
101	104		to make a supplemental payment or increase an annuity under the
102	105		rules; and
103	106		(2) prohibit the governing body of a participating
104	107		department from making a supplemental payment or increasing an
105	108		annuity under the rules without approval from the state board.
106	109		(c) State contributions may not be used to fund any option
107	110		elected under a rule adopted under this section to make a
108	111		supplemental payment or increase an annuity.
109	112		SECTION 5. Section 865.011(f), Government Code, is amended
110	113		to read as follows:
111	114		(f) The state board shall determine the meaning of
112	115		"significant change" for purposes of Subsection (d)(1), which must
113	116		include circumstances in which there is an increase in the time
114	117		required to amortize the unfunded liabilities of the pension system
115	118		such that that the pension system would not be actuarially sound [to
116	119		a period that exceeds 30 years, assuming a maximum state
117	120		contribution under Section 865.015].
118	121		SECTION 6. Section 865.014, Government Code, is amended by
119	122		adding Subsection (f) to read as follows:
120	123		(f) The governing body of a political subdivision
121	124		associated with the participating department who elects to provide
122	125		a supplemental payment or annuity increase under Section 864.0135
123	126		shall contribute the money necessary to cover the costs of all
124	127		increased benefits provided, as required by Section 864.0135(b).
125	128		The state board may adopt rules for the regular payment of money
126	129		required by this subsection.
127	130		SECTION 7. Section 865.015, Government Code, is amended to
128	131		read as follows:
129	132		Sec. 865.015. STATE CONTRIBUTIONS. (a) The state shall
130	133		contribute the amount necessary to make the pension system
131	134		actuarially sound each year, except that for each fiscal year in
132	135		which the legacy liability has not been fully paid, the state shall
133	136		make an actuarially determined payment in the amount necessary to
134	137		amortize the pension system's legacy liability by not later than
135	138		the fiscal year ending August 31, 2055 [the state's contribution
136	139		may not exceed one-third of the total of all contributions by
137	140		governing bodies in a particular year].
138	141		(b) The pension system's actuary shall biennially determine
139	142		an actuarially determined contribution amount required under
140	143		Subsection (a) that is consistent with actuarial standards of
141	144		practice and the following principles:
142	145		(1) closed layered amortization of liability layers to
143	146		ensure that the amortization period for each liability layer begins
144	147		12 months after the date the liability layer is first recognized;
145	148		(2) each liability layer is assigned an amortization
146	149		period;
147	150		(3) each liability loss layer is amortized over a
148	151		period of 15 years or until September 1, 2055, whichever is later;
149	152		and
150	153		(4) each liability gain layer is amortized over:
151	154		(A) if there is a liability loss layer, a period
152	155		equal to the remaining amortization period of the largest remaining
153	156		liability loss layer, and the two layers must be treated as one
154	157		layer such that if the payoff year of the liability loss layer is
155	158		accelerated or extended, the payoff year of the liability gain
156	159		layer is also accelerated or extended; or
157	160		(B) if there is no liability loss layer, a period
158	161		of 15 years beginning the first day of the fiscal year beginning 12
159	162		months after the liability gain layer is first recognized or until
160	163		September 1, 2055, whichever is later.
161	164		(c) Before each regular legislative session, the pension
162	165		system shall provide the Legislative Budget Board with the amount
163	166		necessary to make the actuarially determined payment required under
164	167		this section. The director of the Legislative Budget Board, under
165	168		the direction of the Legislative Budget Board, shall include that
166	169		payment in the general appropriations bill prepared for
167	170		introduction at each regular legislative session under Section
168	171		322.008. This subsection expires September 1, 2057.
169	172		SECTION 8. This Act takes effect immediately if it receives
170	173		a vote of two-thirds of all the members elected to each house, as
171	174		provided by Section 39, Article III, Texas Constitution. If this
172	175		Act does not receive the vote necessary for immediate effect, this
173	176		Act takes effect September 1, 2025.
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