89R11871 KFF-F
By: Schwertner S.B. No. 2345
A BILL TO BE ENTITLED
AN ACT
relating to the administration of, contributions to, and benefits
under retirement systems for firefighters in certain
municipalities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Art. 6243e.1. FIREFIGHTERS RELIEF AND RETIREMENT FUND IN
CITIES OF 950,000 [450,000] TO 1,050,000 [500,000].
SECTION 2. Section 1.02, Chapter 183 (S.B. 598), Acts of the
64th Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), is amended by amending Subdivisions (1),
(2), (3), and (4) and adding Subdivisions (1-a), (2-a), (2-b),
(2-c), (2-d), (5-a), (5-b), (5-c), (5-d), (6-a), (6-b), (6-c),
(6-d), (6-e), (9-a), (9-b), (9-c), (10-a), (10-b), (10-c), (10-d),
(10-e), (10-f), (11-a), (11-b), (11-c), (11-d), (11-e), (11-f),
(11-g), (13-a), and (13-b) to read as follows:
(1) "Accumulated contributions" means all sums of
money, including interest, if applicable, credited to [in] the
individual account of a member or former firefighter, as shown on
the books and records of the fund.
(1-a) "Actuarial accrued liability" means the portion
of the actuarial present value of projected benefits of the fund
attributed to past periods of member service based on the cost
method used in the risk sharing valuation study prepared under
Section 10.05 or 10.06 of this Act, as applicable.
(2) "Actuarial equivalent" means a benefit that, at
the time that it begins being paid, has the same present value as
the benefit it replaces, based on the recommendations of the
board's actuary.
(2-a) "Actuarial value of assets" means the value of
the fund's assets as calculated using the asset smoothing method
used in the risk sharing valuation study prepared under Section
10.05 or 10.06 of this Act, as applicable.
(2-b) "Amortization period" means:
(A) the period necessary to fully pay a liability
layer; or
(B) if referring to the amortization period of
the fund as a whole, the number of years incorporated in a weighted
average amortization factor for the sum of the legacy liability and
all liability layers as determined in each annual actuarial
valuation of assets and liabilities of the fund.
(2-c) "Amortization rate" means, for a given calendar
year, the percentage rate determined by:
(A) adding the scheduled amortization payments
required to pay off the then-existing liability layers;
(B) subtracting the municipal legacy
contribution amount for the same calendar year, as determined in
the risk sharing valuation study prepared under Section 10.05 or
10.06 of this Act, as applicable, from the sum under Paragraph (A)
of this subdivision; and
(C) dividing the amount determined under
Paragraph (B) of this subdivision by the projected pensionable
payroll for the same calendar year.
(2-d) "Annual investment return" means the annual
money-weighted rate of return, net of investment expenses, reported
by the fund in the annual report for a given calendar year.
(3) "Board of trustees" or "board" means the board of
[firefighters relief and retirement fund] trustees of the fund
under [existing pursuant to] this Act, unless the context requires
otherwise.
(4) "Board's actuary" means the actuary engaged by the
fund [employed] under Section 12.03 of this Act.
(5-a) "Corridor" means the range of municipal
contribution rates that are:
(A) equal to or greater than the minimum
municipal contribution rate; and
(B) equal to or less than the maximum municipal
contribution rate.
(5-b) "Corridor lower margin" means five percentage
points.
(5-c) "Corridor midpoint" means the projected
municipal contribution rate specified for each calendar year for 28
years as provided by the initial risk sharing valuation study under
Section 10.05 of this Act, rounded to the nearest hundredths
decimal place.
(5-d) "Corridor upper margin" means seven percentage
points.
(6-a) "DROP" means the deferred retirement option plan
under Article 8 of this Act.
(6-b) "DROP participant" means a member who is
participating in the DROP.
(6-c) "DROP period" means the period between the
effective date of a member's election to participate in DROP and the
effective date of the member's retirement, subject to the
seven-year limitation prescribed by Section 8.02 of this Act.
(6-d) "Employer normal cost rate" means, for a given
calendar year, the normal cost rate minus the applicable
firefighter contribution rate determined under Section 10.011 of
this Act.
(6-e) "Estimated municipal contribution rate" means,
for a given calendar year, a municipal contribution rate equal to
the sum of the municipal normal cost rate and the amortization rate
of the liability layers, as applicable, excluding the legacy
liability layer, and before any adjustment to the rate under
Section 10.07 or 10.08 of this Act, as applicable.
(9-a) "Funded ratio" means the ratio of the actuarial
value of assets divided by the actuarial accrued liability.
(9-b) "Group A member" means a member included in
group A membership under Section 3.011 of this Act.
(9-c) "Group B member" means a member included in
group B membership under Section 3.011 of this Act.
(10-a) "Legacy liability" means the unfunded
actuarial accrued liability determined as of December 31, 2024, and
for each subsequent calendar year, adjusted as follows:
(A) reduced by the municipal legacy contribution
amount for the calendar year allocated to the amortization of the
legacy liability; and
(B) adjusted by the assumed rate of return
adopted by the board of trustees for the calendar year ending
December 31, 2024.
(10-b) "Level percent of payroll method" means the
amortization method that defines the amount of the liability layer
recognized each calendar year as a level percent of pensionable
payroll until the amount of the liability layer remaining is
reduced to zero.
(10-c) "Liability gain layer" means a liability layer
that decreases the unfunded actuarial accrued liability.
(10-d) "Liability layer" means:
(A) the legacy liability established in the
initial risk sharing valuation study under Section 10.05 of this
Act; or
(B) for calendar years after December 31, 2024,
the amount that the fund's unfunded actuarial accrued liability
increases or decreases, as applicable, due to the unanticipated
change for the calendar year as determined in each subsequent risk
sharing valuation study prepared under Section 10.06 of this Act.
(10-e) "Liability loss layer" means a liability layer
that increases the unfunded actuarial accrued liability. For
purposes of this Act, the legacy liability is a liability loss
layer.
(10-f) "Maximum municipal contribution rate" means,
for a given calendar year, the rate equal to the corridor midpoint
plus the corridor upper margin.
(11-a) "Minimum municipal contribution rate" means,
for a given calendar year, the rate equal to the corridor midpoint
minus the corridor lower margin.
(11-b) "Municipal contribution rate" means, for a
given calendar year, a percentage rate equal to the sum of the
employer normal cost rate and the amortization rate, as adjusted
under Section 10.07 or 10.08 of this Act, if applicable.
(11-c) "Municipal legacy contribution amount" means,
for each calendar year, a predetermined payment amount expressed in
dollars in accordance with a payment schedule amortizing the legacy
liability for the calendar year ending December 31, 2024, that is
included in the initial risk sharing valuation study under Section
10.05 of this Act.
(11-d) "Normal cost rate" means, for a given calendar
year, the salary weighted average of the individual normal cost
rates determined for the current active member population, plus the
assumed administrative expenses determined in the most recent
actuarial experience study.
(11-e) "Payoff year" means the year a liability layer
is fully amortized under the amortization period.
(11-f) "Pensionable payroll" means the compensation
of all members in active service for a calendar year or pay period,
as applicable.
(11-g) "Projected pensionable payroll" means the
estimated pensionable payroll for the calendar year beginning 12
months after the date of the risk sharing valuation study prepared
under Section 10.05 or 10.06 of this Act, as applicable, at the time
of calculation by:
(A) projecting the prior calendar year's
pensionable payroll forward two years using the current payroll
growth rate assumption adopted by the board of trustees; and
(B) adjusting, if necessary, for changes in
population or other known factors, provided those factors would
have a material impact on the calculation, as determined by the
board of trustees.
(13-a) "Unanticipated change" means, with respect to
the unfunded actuarial accrued liability in each subsequent risk
sharing valuation study prepared under Section 10.06 of this Act,
the difference between:
(A) the remaining balance of all then-existing
liability layers as of the date of the risk sharing valuation study;
and
(B) the actual unfunded actuarial accrued
liability as of the date of the risk sharing valuation study.
(13-b) "Unfunded actuarial accrued liability" means
the difference between the actuarial accrued liability and the
actuarial value of assets.
SECTION 3. Article 1, Chapter 183 (S.B. 598), Acts of the
64th Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), is amended by adding Section 1.031 to read as
follows:
Sec. 1.031. OPERATING NAME. The board of trustees may by
rule adopt a name under which the fund may operate other than the
name prescribed by Section 1.03 of this Act.
SECTION 4. Article 2, Chapter 183 (S.B. 598), Acts of the
64th Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), is amended by adding Section 2.015 to read as
follows:
Sec. 2.015. FUND QUALIFICATION. This Act shall be
construed, and the fund shall be administered, in a manner that
maintains the qualified status of the fund under Section 401(a) of
the Internal Revenue Code.
SECTION 5. Section 2.02, Chapter 183 (S.B. 598), Acts of the
64th Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), is amended to read as follows:
Sec. 2.02. COMPOSITION OF BOARD. (a) The board of
trustees is composed of:
(1) the mayor of the municipality or a governing body
of the municipality member designated by the mayor;
(2) the city treasurer or, if there is no treasurer,
the person who by law, charter provision, or ordinance performs the
duty of city treasurer; [and]
(3) four [three] members of the fund to be selected by
vote of the firefighters and retirees in the manner provided by this
Act; and
(4) one member of the public selected and appointed by
the governing body of the municipality in accordance with Section
2.025 of this Act.
(b) The board of trustees may by rule specify the number of
elected members of the board of trustees under Subsection (a) of
this section who must be firefighters or retirees.
SECTION 6. Article 2, Chapter 183 (S.B. 598), Acts of the
64th Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), is amended by adding Section 2.025 to read as
follows:
Sec. 2.025. APPOINTED PUBLIC MEMBER OF BOARD. (a) To serve
on the board under Section 2.02(a)(4) of this Act, a person:
(1) must:
(A) be a qualified voter;
(B) be a resident and have been a resident of the
municipality for the five-year period preceding the date of the
appointment; and
(C) have demonstrated experience in the field of
finance or investments; and
(2) may not be:
(A) an employee of the municipality; or
(B) a member of the fund.
(b) A member of the board of trustees under Section
2.02(a)(4) of this Act:
(1) holds office for a term of four years; and
(2) serves during the term for which the member was
appointed and until the member's successor is selected and has
qualified, unless a vacancy results because of death, resignation,
or removal.
(c) A vacancy on the board of trustees in the position under
Section 2.02(a)(4) of this Act shall be filled in the same manner as
the original appointment.
SECTION 7. Section 2.03, Chapter 183 (S.B. 598), Acts of the
64th Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), is amended by amending Subsections (c), (e),
and (h) and adding Subsection (c-1) to read as follows:
(c) Each election is by secret [written] ballot on a date
and using a method the board of trustees determines. Only persons
who have been nominated may be listed on the [written]
ballot. Nominations:
(1) may be made in person, by mail, [or] by telephone,
or by any other method approved by the board of trustees; [to the
office of the fund] and
(2) must be received between September 1 and September
15.
(c-1) Nominations or elections may be conducted by
electronic means.
(e) The elected members of the board of trustees hold office
for staggered terms of four [three] years, with the term of one
trustee expiring each year. Elected members of the board of
trustees shall serve during the term for which they are elected and
until their successors are elected and have qualified, unless a
vacancy results because of death, resignation, or removal.
(h) The administrative expenses of an election under this
section may be paid from the assets of the fund. Assets of the fund
may not be used to pay campaign expenses incurred by or for a
candidate [member]. Administrative office supplies and equipment
belonging to the fund may not be used to assist any candidate or
person seeking to assist a candidate for a position on the board of
trustees.
SECTION 8. Section 2.05, Chapter 183 (S.B. 598), Acts of the
64th Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), is amended to read as follows:
Sec. 2.05. OFFICERS. [The mayor is the presiding officer
and the city treasurer is the secretary-treasurer of the board of
trustees.] The board shall elect annually from its membership a
chair to serve as the presiding officer and a vice-chair to serve as
the [an] alternate presiding officer who shall preside in the
absence or disability of the chair [mayor].
SECTION 9. Section 2.07, Chapter 183 (S.B. 598), Acts of the
64th Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), is amended to read as follows:
Sec. 2.07. MEETINGS; MINUTES. The board of trustees shall
hold regular [monthly] meetings not fewer than four times each
calendar year at a time and place that it designates and may hold
special meetings on the call of the presiding officer or alternate
presiding officer. The board of trustees shall keep accurate
minutes of its meetings and records of its proceedings.
SECTION 10. Section 2.08, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 2.08. ADMINISTRATION OF FUNDS. The board of trustees
shall:
(1) keep separate from all other municipal funds all
money and other assets it receives for the benefit of the fund;
(2) keep a record of all claims, receipts, and
disbursements and make disbursements only [on vouchers signed] by
such persons as the board of trustees designates [by resolution];
and
(3) publish annually a report containing a balance
sheet showing the financial and actuarial condition of the fund, a
statement showing receipts and disbursements during the year
covered by the report, and such additional matters as may be
determined appropriate by the board of trustees.
SECTION 11. Section 2.09, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 2.09. DETERMINATION BY BOARD. (a) The board of
trustees is authorized to hear and determine all matters regarding:
(1) eligibility of any person to participate in a fund
under this Act;
(2) eligibility of any person to receive a service,
disability, or survivor's benefit and the amount of that benefit;
[and]
(3) whether a child or a parent of a deceased member
was dependent on the member for financial support; and
(4) any other determinations related to the
administration of the fund.
(b) All determinations made by the board of trustees shall
be final and binding.
SECTION 12. Section 2.13(a), Chapter 183 (S.B. 598), Acts
of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
(a) Information contained in records in the custody of the
fund concerning an individual member, retiree, annuitant, or
beneficiary is confidential and not subject to public disclosure
under Chapter 552 [Section 552.101], Government Code, and may not
be disclosed in a form identifiable with a specific individual
unless:
(1) the information is disclosed to:
(A) the individual or the individual's attorney,
guardian, executor, administrator, conservator, or other person
who the executive director [administrator] of the fund determines
is acting in the interest of the individual or the individual's
estate;
(B) a spouse or former spouse of the individual
after the executive director [administrator] of the fund determines
that the information is relevant to the spouse's or former spouse's
interest in member accounts, benefits, or other amounts payable by
the fund;
(C) a governmental official or employee after the
executive director [administrator] of the fund determines that
disclosure of the information requested is reasonably necessary to
the performance of the duties of the official or employee; or
(D) a person authorized by the individual in
writing to receive the information; or
(2) the information is disclosed pursuant to a
subpoena and the executive director [administrator] of the fund
determines that the individual will have a reasonable opportunity
to contest the subpoena.
SECTION 13. Article 2, Chapter 183 (S.B. 598), Acts of the
64th Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), is amended by adding Section 2.14 to read as
follows:
Sec. 2.14. PROCESS FOR EXPERIENCE STUDIES AND CHANGES TO
ACTUARIAL ASSUMPTIONS. (a) At least once every five years, the
board of trustees shall have the board's actuary conduct an
experience study to review the actuarial assumptions and methods
adopted by the board for the purposes of determining the actuarial
liabilities and actuarially determined contribution rates of the
fund. The fund shall notify the municipality at the beginning of an
upcoming experience study by the board's actuary.
(b) In connection with the fund's experience study, the
municipality may:
(1) conduct a separate experience study using an
actuary chosen by the municipality;
(2) have the municipality's actuary review the
experience study prepared by the board's actuary; or
(3) accept the experience study prepared by the
board's actuary.
(c) If the municipality chooses to:
(1) have a separate experience study performed under
Subsection (b)(1) of this section, the municipality shall complete
the study not later than three months after the date the fund
notified the municipality of the fund's intent to conduct an
experience study; or
(2) have the municipality's actuary review the fund's
experience study under Subsection (b)(2) of this section, the
municipality shall complete the review not later than one month
after the date the preliminary results of the experience study are
presented to the board of trustees.
(d) If the municipality chooses to have a separate
experience study performed under Subsection (b)(1) of this section,
or to have the municipality's actuary review the fund's experience
study under Subsection (b)(2) of this section, the board's actuary
and the municipality's actuary shall determine what the
hypothetical municipal contribution rate would be using the
proposed actuarial assumptions from the experience studies and data
from the most recent actuarial valuation.
(e) If the difference between the hypothetical municipal
contribution rates determined by the board's actuary and the
municipality's actuary under Subsection (d) of this section:
(1) is less than or equal to two percent of pensionable
payroll, then no further action is needed and the board shall use
the experience study performed by the board's actuary in
determining assumptions; or
(2) is greater than two percent of pensionable
payroll, then the board's actuary and the municipality's actuary
shall have not more than 20 business days after the date of
determination to reconcile the difference in actuarial assumptions
or methods causing the different hypothetical municipal
contribution rates, and:
(A) if, as a result of the reconciliation efforts
under this subdivision, the difference between the municipal
contribution rates determined by the board's actuary and the
municipality's actuary is reduced to less than or equal to two
percentage points, then no further action is needed and the board
shall use the experience study performed by the board's actuary in
determining actuarial assumptions; or
(B) if, after 20 business days, the board's
actuary and the municipality's actuary are not able to reach a
reconciliation that reduces the difference in the hypothetical
municipal contribution rates to an amount less than or equal to two
percentage points, an independent third-party actuary shall be
retained to opine on the differences in the assumptions made and
actuarial methods used by the board's actuary and the
municipality's actuary.
(f) The independent third-party actuary retained in
accordance with Subsection (e)(2)(B) of this section shall be
chosen by the municipality from a list of three actuarial firms
provided by the fund.
(g) If an independent third-party actuary is retained under
Subsection (e)(2)(B) of this section, the third-party actuary's
findings will be presented to the board along with the experience
study conducted by the board's actuary and, if applicable, the
municipality's actuary. If the board adopts actuarial assumptions
or methods contrary to the third-party actuary's findings:
(1) the fund shall provide a formal letter describing
the rationale for the board's action to the governing body of the
municipality and State Pension Review Board; and
(2) the board's actuary and executive director shall
be made available at the request of the governing body of the
municipality or the State Pension Review Board to present in person
the rationale for the board's action.
(h) If the board proposes a change to actuarial assumptions
or methods that is not in connection with an experience study
described by this section, the fund and the municipality shall
follow the same process prescribed by this section with respect to
an experience study in connection with the proposed change.
SECTION 14. Section 3.01, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 3.01. GENERAL REQUIREMENT. A person who begins
service as a firefighter in a municipality to which this Act applies
and who is not ineligible for membership in the fund becomes a
member of the fund as a condition of that person's employment
[appointment]. Each member shall be a group A member or group B
member in accordance with Section 3.011.
SECTION 15. Article 3, Chapter 183 (S.B. 598), Acts of the
64th Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), is amended by adding Section 3.011 to read as
follows:
Sec. 3.011. GROUP A AND GROUP B MEMBERSHIP. Each member of
the fund is either a group A member or a group B member as follows:
(1) a member of the fund is a group A member if the
member was:
(A) a retiree on December 31, 2025;
(B) employed by the municipality as a firefighter
on December 31, 2025; or
(C) terminated from employment with the
municipality as a firefighter on or before December 31, 2025, if the
member:
(i) has at least 10 years of accumulated
service credit; and
(ii) has not:
(a) withdrawn the member's
accumulated contributions under Section 9.06 of this Act; or
(b) refunded the member's accumulated
contributions under Section 4.04 of this Act; and
(2) a member of the fund is a group B member if the
member:
(A) except as provided by Subdivision (1)(C) of
this section, became employed by the municipality as a firefighter
on or after January 1, 2026; or
(B) otherwise does not satisfy the requirements
of a group A member.
SECTION 16. Section 4.02, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 4.02. MILITARY SERVICE. (a) A member of the fund
retains all accumulated service credit and is allowed service
credit for each month during which the member leaves employment
with the fire department and performs active duty service in the
armed forces or the armed forces reserves of the United States or
their auxiliaries, except that:
(1) the military service credit may not be for more
than five years and the person must return to service with the fire
department not later than the 180th day after the date of discharge
or release from military service or from hospitalization continuing
after discharge for a period of not more than one year;
(2) the member must leave the member's contributions
in the fund during the period of absence; [and]
(3) the member must file a written application with
the fund for the military service credit, accompanied by
satisfactory proof of the member's military service; and
(4) for military service credit related to military
service performed on or after January 1, 2026, the member and the
municipality must each deposit to the fund an amount equal to the
sum of contributions that would have been contributed to the fund by
the member and the municipality, respectively, if the member had
remained in active employment with the fire department during the
period the claimed military service was performed.
(b) The payments required under this section must be made in
accordance with the applicable requirements of Section 414(u) of
the Internal Revenue Code and the Uniformed Services Employment and
Reemployment Rights Act of 1994 (38 U.S.C. Section 4301 et seq.).
The board of trustees may adopt rules relating to the payment of
contributions under this section as the board of trustees considers
necessary for the administration of this section.
SECTION 17. Section 5.04(a), Chapter 183 (S.B. 598), Acts
of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
(a) The service retirement annuity of:
(1) a group A member [person] who retires under
Section 5.01 of this Act [on or after January 1, 1995,] is a monthly
payment that is equal to 3.3 [three] percent of the member's average
monthly compensation multiplied by the member's number of years of
service credit and any fraction of a year of service credit; or
(2) a group B member who retires under Section 5.01 of
this Act is a monthly payment that is equal to three percent of the
member's average monthly compensation multiplied by the member's
number of years of service credit and any fraction of a year of
service credit.
SECTION 18. Section 5.05, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 5.05. EARLY RETIREMENT. (a) A group A member is
eligible to retire and receive a normal service retirement annuity
if the member, while serving as a firefighter in the fire
department:
(1) has attained the age of 45 years and has at least
10 years of service credit in the fund; or
(2) has at least 20 years of service credit,
regardless of age.
(b) The retirement annuity of a group A member [person] who
retires under this section after September 1, 1997, is the same as
for normal service retirement, but may not be increased under
Section 8A.01(b), 8A.02, or 8A.03 [Section 9.04] of this Act, as
applicable, until the person would have met the requirements of
Section 5.01 of this Act if the person:
(1) had remained in active service as a firefighter;
and
(2) otherwise satisfies the requirements for the
increase.
(c) A group B member is not eligible for early retirement
under this section.
SECTION 19. Section 6.01, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 6.01. INITIAL ELIGIBILITY FOR DISABILITY RETIREMENT.
A firefighter is eligible to retire and receive a disability
retirement annuity if:
(1) application for retirement is made by the member
or the member's legal representative [or if the board of trustees
determines that, although no application has been filed, retirement
is for the good of the fire department];
(2) the medical board certifies that the member is
unable to perform the duties of the member's occupation as a
firefighter and sends the member's application to the board of
trustees; and
(3) the board of trustees approves the disability
retirement.
SECTION 20. Section 6.03, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 6.03. AMOUNT OF DISABILITY BENEFIT. (a) Subject to
adjustment under Section 6.05 of this Act, the disability
retirement benefit payable to a member is the normal service
retirement benefit described by Section 5.04 of this Act, but not
less than the member would have received after 20 years of service
credit.
(b) For a calendar year beginning on or after January 1,
2027, a disability retirement benefit payable under this article
shall be increased by one percent each year beginning on January 1
of the calendar year immediately following the later of the year:
(1) in which the member attains 62 years of age; or
(2) the fifth anniversary of the date the member's
disability retirement benefit commenced.
SECTION 21. Section 6.04, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 6.04. TERMINATION DURING FIRST 2-1/2 YEARS. If,
during the first 2-1/2 years of disability retirement, a retiree
recovers to the extent that the person is able to perform the duties
of the person's job as a firefighter, the board of trustees may
terminate the disability retirement benefit [and restore the person
to active service at not less than the same rank the person held at
the time of disability retirement].
SECTION 22. Section 7.01, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 7.01. SURVIVING SPOUSE OF FIREFIGHTER. If a
firefighter dies before retirement, regardless of whether the
firefighter is a group A or group B member, the firefighter's
surviving spouse is entitled to receive an immediate monthly
benefit from the fund of 75 percent of the service retirement
benefit that the firefighter would have received if the firefighter
had retired on the date of death, but not less than 75 percent of the
monthly payment the decedent would have received based on 20 years
of service credit.
SECTION 23. Section 7.02, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 7.02. SURVIVING SPOUSE OF GROUP A RETIREE. (a) On the
death of a retiree who is a group A member, the retiree's surviving
spouse is entitled to receive an immediate monthly benefit from the
fund of 75 percent of the retirement benefit that was being paid to
the retiree if the spouse [:
[(1)] was married to the retiree at the time of the
retiree's retirement[; or
[(2) married the retiree after the retiree's
retirement and was married to the retiree for at least 24
consecutive months].
(b) With [For purposes of Subsection (a)(1) of this section,
with] respect to an informal marriage established in this state, a
surviving spouse is considered married to a retiree as of the date a
declaration of informal marriage was recorded in accordance with
Subchapter E, Chapter 2, Family Code.
SECTION 24. The heading to Section 7.03, Chapter 183 (S.B.
598), Acts of the 64th Legislature, Regular Session, 1975 (Article
6243e.1, Vernon's Texas Civil Statutes), is amended to read as
follows:
Sec. 7.03. SURVIVING SPOUSE OF FORMER GROUP A FIREFIGHTER.
SECTION 25. Section 7.03(a), Chapter 183 (S.B. 598), Acts
of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
(a) An immediate monthly benefit is payable to the surviving
spouse of a former firefighter who:
(1) was a group A member;
(2) before termination of employment with the fire
department had accumulated at least 10 years of service credit in
the fund and had made required contributions to the fund for a
period of at least 10 years; and
(3) [(2)] did not withdraw the member's contributions
from the fund at the time of or after the termination of employment.
SECTION 26. Sections 7.05(a) and (b), Chapter 183 (S.B.
598), Acts of the 64th Legislature, Regular Session, 1975 (Article
6243e.1, Vernon's Texas Civil Statutes), are amended to read as
follows:
(a) On the death of a member who was a firefighter or a
retired group A member, if there is no surviving spouse, a benefit
is payable to the decedent's surviving dependent children, if any.
The total monthly benefit payable under this subsection is 75
percent of the monthly payment that the decedent would have
received under the service retirement benefit described by Section
5.04 of this Act, but not less than 75 percent of the monthly
payment the decedent would have received based on 20 years of
service credit. If there is more than one dependent child of the
decedent, each dependent child is entitled to receive an equal
share of the total monthly payment under this subsection.
(b) On the death of a member who was a firefighter or a
retired group A member [under this Act], if there is a surviving
spouse, a benefit is payable to each of the decedent's surviving
dependent children, if any. The monthly amount of the benefit
payable to each child is 15 percent of the monthly payment that the
decedent would have received under the service retirement benefit
described by Section 5.04 of this Act, but not less than 15 percent
of the monthly payment the decedent would have received based on 20
years of service credit. If the decedent left more than five
surviving dependent children, the monthly benefit payable to each
dependent child shall be reduced so that the total monthly benefit
payable under this subsection does not exceed the total monthly
benefit that would have been payable if the decedent had left no
surviving spouse.
SECTION 27. Section 7.06, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 7.06. PAYMENTS TO DEPENDENT PARENTS. If a deceased
member who was a retired group A member leaves no surviving spouse,
no surviving designated beneficiary, and no surviving children
entitled to receive a benefit under this Act but is survived by one
or more dependent parents, the dependent parent, or one of the
surviving parents designated by the board of trustees, is entitled
to receive a monthly benefit payment equal to the monthly amount
that would have been payable to a surviving spouse of the deceased.
All payments under this section cease on the death of the surviving
dependent parent.
SECTION 28. Section 7.09, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 7.09. SURVIVING BENEFICIARY OF CERTAIN UNMARRIED
MEMBERS. (a) On the death of a [retiree or of a] member, including
a retiree, who is a group A member and, at the time of the member's
death, was eligible for retirement but had [has] not retired, a
benefit is payable under this section if:
(1) the [retiree or] member designated a beneficiary
to receive the benefit payable under this section on a form filed
with the fund; and
(2) this Act does not otherwise provide a benefit
payable to a surviving spouse or child of the member [or retiree].
(b) The benefit payable under this section is an immediate
monthly benefit from the fund of 75 percent of the amount of the:
(1) retirement benefit that was being paid to the
group A member as a retiree; or
(2) normal service retirement benefit that the group A
member would have received if the member had retired on the date of
death.
(c) If the designated beneficiary of a group A [retiree or]
member is 10 or more years younger than the [retiree or] member at
the time of the [retiree's or] member's death, the amount of the
benefit payable under Subsection (b) of this section shall be
reduced to the actuarial equivalent of the benefit that would have
been payable if the beneficiary and the [retiree or] member were the
same age.
(d) The board of trustees may adopt rules to establish
procedures for and requirements governing a group A member's
designation of a beneficiary under this section.
SECTION 29. Section 8.01, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 8.01. MEMBER REMAINING IN ACTIVE SERVICE. In lieu of
either leaving active service and beginning to receive a service
retirement annuity under Section 5.01 of this Act or remaining in
active service and continuing to accrue additional service credit
under Section 5.02 of this Act, a member who is eligible to receive
a normal service retirement benefit under Section 5.01 of this Act
may remain in active service, become a participant in the DROP
[deferred retirement option plan ("DROP")] in accordance with
Sections 8.02 and 8.03 of this Act, and defer the beginning of the
person's retirement annuity. Once an election to participate in
the DROP has been made, the election continues in effect as long as
the member remains in active service as a firefighter. When the
member leaves active service, the member may apply for a service
retirement annuity under Section 5.01 of this Act.
SECTION 30. Section 8.02, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 8.02. ELECTION TO PARTICIPATE IN DROP. The election to
participate in the DROP shall be made in accordance with procedures
adopted by the board of trustees. The election may be made at any
time on or after the date the member becomes eligible for normal
service retirement under Section 5.01 of this Act or early
retirement under Section 5.05 of this Act and becomes effective on
the first day of the first month after the date of the election. At
the same time that a member makes an election to participate in the
DROP, the member must agree in writing to terminate service with the
fire department on a date not later than the seventh anniversary of
the effective date of the election under this section. An agreement
to terminate service is binding on the member and the fire
department, except that the member may terminate active service at
any time before the date selected. An election to participate in
the DROP has no effect on either the municipality's or the member's
contributions under Article 10 [Section 10.01] of this Act.
SECTION 31. Section 8.03, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 8.03. CREDITS TO MEMBER'S DROP ACCOUNT DURING DROP
PERIOD. (a) Each month during a member's DROP period [after a
member makes an election to participate in the DROP and until the
member's retirement], the board of trustees shall cause an amount
equal to the retirement annuity that the member would have received
under Section 5.04 of this Act for that month if the member had left
active service and been granted a retirement annuity on the
effective date of the election under Section 8.02 of this Act to be
credited to a separate DROP account maintained within the fund for
the benefit of the member. The firefighter's [member's]
contributions under Section 10.011 [Section 10.01(d)] of this Act
made after the effective date of the election to participate in the
DROP shall also be credited to the member's DROP account.
(b) Amounts held in a member's DROP account during the DROP
period shall be credited with interest on December 31 [at the end]
of each calendar year [month with interest] at a rate equal to:
(1) [one-twelfth of] five percent for a group A
member; or
(2) four percent for a group B member [until the
member's retirement].
SECTION 32. Article 8, Chapter 183 (S.B. 598), Acts of the
64th Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), is amended by adding Section 8.031 to read as
follows:
Sec. 8.031. INTEREST CREDITED AFTER DROP PERIOD. (a)
Amounts held in a member's DROP account after the DROP period shall
be credited with interest:
(1) if the member is a group A member, for each period:
(A) before January 1, 2026, at the end of each
calendar month at a rate equal to one-twelfth of five percent; or
(B) on or after January 1, 2026, on December 31 of
each calendar year at a rate equal to:
(i) five percent, if the fund's annual
investment return for the preceding calendar year is greater than
zero percent; or
(ii) 2.5 percent, if the fund's annual
investment return for the preceding calendar year is equal to or
less than zero percent; or
(2) if the member is a group B member, on December 31
of each calendar year at a rate equal to:
(A) four percent, if the fund's annual investment
return for the preceding calendar year is greater than zero
percent; or
(B) two percent, if the fund's annual investment
return for the preceding calendar year is equal to or less than zero
percent.
SECTION 33. Section 8.04, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 8.04. ADJUSTMENTS TO [AMOUNT OF] CREDITS TO MEMBER'S
DROP ACCOUNT. The amount credited [monthly] to the member's DROP
account:
(1) shall be increased [as a result of any increase in
the formula used in computing service retirement benefits under
Section 5.04 of this Act that occurs after the effective date of the
member's election to participate in the DROP but before the
effective date of the member's retirement;
[(2) shall be increased] by any applicable annual
cost-of-living adjustments [under Section 9.04 of this Act] that
occur during the member's DROP period, including adjustments
granted before January 1, 2026, [between the effective date of the
member's election to participate in the DROP and the effective date
of the member's retirement] but only as to amounts credited to the
member's DROP account after a cost-of-living adjustment; and
(2) [(3)] is subject to the limitations prescribed by
Section 9.03 of this Act.
SECTION 34. Section 8.05(d), Chapter 183 (S.B. 598), Acts
of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
(d) The board of trustees may adopt rules that modify the
availability of distributions under Subsection (a) of this section,
provided that the modifications do not:
(1) impair the distribution rights under that
subsection; or
(2) cause distributions to occur later than required
under Section 401(a)(9), Internal Revenue Code [of 1986].
SECTION 35. Section 8.06, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 8.06. ESTABLISHMENT OF DROP ACCOUNT AT RETIREMENT FOR
GROUP A MEMBERS. (a) In lieu of electing to participate in the DROP
before actual retirement, a group A member who is eligible for
normal service retirement or early retirement and who terminates or
has terminated active service as a firefighter may establish a DROP
account under this section.
(b) A group A member who is eligible to receive a service
retirement benefit under Section 5.06 of this Act may establish a
DROP account under this section on retiring under Section 5.06 of
this Act.
(c) If a group A member elects to participate in the DROP
under this section:
(1) the board of trustees shall cause to be credited to
a DROP account maintained within the fund for the benefit of that
person an amount equal to the credits that the member's DROP account
would have received, including interest in accordance with Section
8.03 of this Act, if the member had established the DROP account
after becoming eligible for service retirement, but not more than
seven years before the effective date of the person's retirement;
(2) the date used in computations under Subdivision
(1) of this subsection [section] as if the member had established
the DROP account on that date is the effective date of the member's
election to participate in the DROP;
(3) the member will receive payments from the member's
DROP account as the member may select under Section 8.05 of this
Act; and
(4) the member's DROP account shall be credited with
interest as provided by Section 8.03 [8.05] of this Act.
(d) If a group A member who did not establish a DROP account
under this section but was eligible to do so dies before retirement,
the surviving spouse, if any, of that member may elect to
participate in the DROP if the surviving spouse has not received any
benefit payments under Section 7.01 of this Act. If a surviving
spouse makes an election under this subsection:
(1) the board of trustees shall cause to be paid to the
surviving spouse in a lump sum, as soon as administratively
possible after the fund receives notice of the election, an amount
equal to the credits that the member's DROP account would have
received, including interest, if the member had established the
DROP account after becoming eligible for service retirement, but
not more than seven years before the date of the member's death; and
(2) the amount of the benefit payable to the surviving
spouse under Section 7.03 of this Act is 75 percent of the benefit
the member would have been eligible to receive if the member had
established the DROP account on becoming eligible for service
retirement, but not more than seven years before the date of the
member's death.
(e) If a group A member who did not establish a DROP account
under this section but was eligible to do so dies before retirement
without leaving a surviving spouse, the surviving dependent
children, if any, may elect to participate in the DROP if the
dependent children have not received any benefit payments under
Section 7.05 of this Act. An election under this subsection must be
made by all of the surviving dependent children of the member,
except that the guardian of any child who is younger than 18 years
of age at the time of the election makes a binding election for the
child. If the surviving dependent children make an election under
this subsection:
(1) the board of trustees shall cause to be paid
jointly to the dependent children in a lump sum, as soon as
administratively possible after the fund receives notice of the
election, an amount equal to the credits the member's DROP account
would have received, including interest, if the member had
established the DROP account after becoming eligible for service
retirement, but not less than the credits the DROP account would
have received, including interest, based on 20 years of service
credit; and
(2) the amount of the benefit payable to the dependent
children under Section 7.05(a) of this Act is 75 percent of the
benefit the member would have been entitled to receive if the member
had established the DROP account on becoming eligible for service
retirement, but based on not less than 20 years of service credit.
(f) A group B member is not eligible to establish a DROP
account under this section.
SECTION 36. Section 8.08, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 8.08. SUBSEQUENT DISABILITY OF DROP PARTICIPANT. A
member who participates in the DROP becomes ineligible for any
disability benefits described by Article 6 of this Act. Instead,
if the board of trustees determines that the member would have been
eligible for disability retirement, the board of trustees shall
grant a normal service retirement annuity as described by Section
5.04 of this Act and shall pay the member both:
(1) the service retirement annuity as calculated under
Section 8.03(a) of this Act; and
(2) a distribution of the DROP account that has
accumulated as of the date of termination of employment in
accordance with [as described by] Section 8.05 of this Act.
SECTION 37. Section 8.09, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 8.09. RETIREMENT BENEFIT PAYABLE TO DROP PARTICIPANT.
The retirement benefit payable under Article 5 or 6 of this Act to a
person who participates in the DROP:
(1) [may not be increased as a result of any increase
in the formula used in computing service retirement benefits under
Section 5.04 of this Act that occurs after the effective date of the
member's election to participate in the DROP;
[(2)] may not be increased as a result of any increase
in the member's compensation that occurs after the effective date
of the member's election to participate in the DROP;
(2) [(3)] shall be increased by any applicable annual
cost-of-living adjustments [under Section 9.04 of this Act] that
occur during the member's DROP period, including adjustments
granted before January 1, 2026 [between the effective date of the
member's election to participate in the DROP and the effective date
of the member's retirement];
(3) [(4)] may not be increased for additional service
credit after the effective date of the member's election to
participate in the DROP; and
(4) [(5)] is subject to the limitations prescribed by
Section 9.03 of this Act.
SECTION 38. Section 8.10, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 8.10. TERMINATION OR MODIFICATION OF DROP BY FUND. If
the board's actuary [, not sooner than January 1, 2000,] certifies
to the board that DROP participation is resulting in a significant
actuarial loss to the fund, the board of trustees may:
(1) reduce the interest paid on DROP accounts or take
other action that would reduce the future credits to DROP accounts,
but only for all DROP accounts that are established after the
effective date of the action by the board of trustees; or
(2) terminate the deferred retirement option plan for
all members who have not at that time established a DROP account.
SECTION 39. Chapter 183 (S.B. 598), Acts of the 64th
Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), is amended by adding Article 8A to read as
follows:
ARTICLE 8A. BENEFIT INCREASES
Sec. 8A.01. ANNUAL COST-OF-LIVING ADJUSTMENT FOR CERTAIN
MEMBERS. (a) Except as provided by Subsection (b) of this section,
for each calendar year beginning on or after January 1, 2027, the
service retirement annuity benefit payable under Article 5 of this
Act to a member who is not a current or former DROP participant
shall be increased by one percent each year beginning on January 1
of the calendar year immediately following the later of the year:
(1) in which the member attains 62 years of age; or
(2) that is the fifth anniversary of the effective
date of the member's retirement.
(b) For each calendar year beginning on or after January 1,
2027, the early retirement annuity benefit payable to a member
under Section 5.05 of this Act who is not a current or former DROP
participant shall be increased by one percent each year beginning
on January 1 of the calendar year immediately following the year in
which the member attains 67 years of age.
(c) Except as provided by Section 8A.02 or 8A.03 of this
Act, a member who is a current or former DROP participant is not
entitled to a benefit increase under this Act.
Sec. 8A.02. ANNUAL COST-OF-LIVING ADJUSTMENT FOR CERTAIN
RETIREES WHO ARE CURRENT OR FORMER DROP PARTICIPANTS. (a) This
section applies only to a member who:
(1) was a retiree on January 1, 2026; and
(2) made an election to participate in DROP before
January 1, 2026.
(b) For each calendar year beginning on or after January 1,
2027, the retirement benefit payable to a retiree subject to this
section:
(1) whose DROP account has been fully distributed on
or before January 1, 2026, will be increased by one percent each
year beginning on January 1 of the calendar year immediately
following the later of the year:
(A) in which the retiree attains 62 years of age;
or
(B) that is the fifth anniversary of the
retiree's effective date of retirement; or
(2) whose DROP account has not been fully distributed
on or before January 1, 2026, will be increased by one percent each
year beginning on January 1 of the calendar year immediately
following the later of the year:
(A) in which the retiree takes a full
distribution of the retiree's DROP account;
(B) in which the retiree attains 67 years of age;
or
(C) that is the fifth anniversary of the
effective date of the retiree's retirement.
Sec. 8A.03. ANNUAL COST-OF-LIVING ADJUSTMENT FOR CERTAIN
ACTIVE MEMBERS WHO ARE CURRENT OR FORMER DROP PARTICIPANTS:
GRANDFATHERED ACTIVE MEMBERS. (a) This section applies only to a
member who on January 1, 2026, is:
(1) employed with the fire department; and
(2) eligible for a normal service retirement benefit
under Section 5.01 of this Act.
(b) Except as provided by Subsection (d) of this section,
for each calendar year beginning on or after January 1, 2027, the
normal service retirement benefit payable to a member subject to
this section who elects to participate in DROP on or after January
1, 2026, will be increased by one percent each year beginning on
January 1 of the calendar year immediately following the later of
the year:
(1) in which the member attains the age of 67; or
(2) except as provided by Subsection (c) of this
section, that is the fifth anniversary of the effective date of the
member's retirement.
(c) Subsection (b)(2) of this section applies only if the
member's DROP account is fully distributed before the date the
member attains 62 years of age.
(d) A member subject to this section who maintains a DROP
account on or after the date the member attains 62 years of age is
not eligible for any increase to the member's retirement benefit
under this section.
Sec. 8A.04. ANNUAL COST-OF-LIVING ADJUSTMENTS FOR
SURVIVORS. (a) Except as provided by Subsection (b) of this
section, for a calendar year beginning on or after January 1, 2027,
a survivor benefit payable under Article 7 of this Act to the
survivor of a member who was otherwise eligible to receive a benefit
increase under this article shall be increased by one percent each
year beginning on January 1 of the calendar year immediately
following the year in which the member died.
(b) If, on the date of the member's death, a member
described by Subsection (a) of this section had not yet attained the
age required to be eligible for a benefit increase under the
applicable provision of this article, the benefit increase provided
under Subsection (a) of this section shall take effect on January 1
of the calendar year immediately following the later of the year:
(1) in which the member would have attained the
applicable age; or
(2) that is the fifth anniversary of the effective
date of the member's retirement.
SECTION 40. Section 9.03, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 9.03. LIMITATION ON PAYMENT OF BENEFITS. (a) If the
amount of any benefit payment under this Act would exceed the
limitations provided by Section 415 of the Internal Revenue Code
[of 1986], and the regulations adopted under that section, the
board of trustees shall reduce the amount of the benefit as needed
to comply with that section.
(b) A person's vested accrued benefit in effect on September
1, 2025, [September 1, 1995,] may not be reduced under this section.
SECTION 41. Sections 9.10(a), (d), and (f), Chapter 183
(S.B. 598), Acts of the 64th Legislature, Regular Session, 1975
(Article 6243e.1, Vernon's Texas Civil Statutes), are amended to
read as follows:
(a) An optional retirement annuity is an annuity that is
certified by the board's actuary to be the actuarial equivalent of
the annuity provided under Section 5.04 of this Act and the
survivor's benefits provided under Article 7 of this Act. [An
optional retirement annuity is payable throughout the life of the
retiree.]
(d) The board of trustees by rule may provide for different
forms of optional retirement annuities, including an optional
retirement annuity that is payable:
(1) [an optional retirement annuity is payable] after
a member's death throughout the life of a person designated by the
member, including an annuity that provides that,[; or
[(2)] if a retiree dies before a fixed number of
monthly annuity payments are made, the remaining number of payments
are payable to the retiree's designated beneficiary or, if a
designated beneficiary does not exist, to the retiree's estate;
(2) throughout the life of the retiree with no
survivor benefit; or
(3) with a partial lump-sum option for a member who
does not elect to participate in the DROP.
(f) Except as provided by Subsections (g), (h), and (i) of
this section, if a group A member elects an optional retirement
annuity that, on the group A member's death, pays to the member's
spouse an amount that is less than 75 percent of the annuity that is
payable during the joint lives of the group A member and the
member's spouse, the spouse must consent to the election. The
spouse's consent must be in writing and witnessed by an officer or
employee of the fund or acknowledged by a notary public.
SECTION 42. Article 9, Chapter 183 (S.B. 598), Acts of the
64th Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), is amended by adding Section 9.11 to read as
follows:
Sec. 9.11. BENEFITS PAYABLE TO ALTERNATE PAYEES UNDER
QUALIFIED DOMESTIC RELATIONS ORDERS. (a) Benefits payable under
the fund, including service retirement benefits, disability
retirement benefits, survivor benefits, or DROP account benefits,
or a withdrawal of contributions, may be paid to a former spouse or
other alternate payee under the terms of a domestic relations
order, but only if the fund determines that the order constitutes a
qualified domestic relations order under Chapter 804, Government
Code.
(b) An alternate payee will receive a full distribution of
any portion of a member's DROP account awarded to the alternate
payee pursuant to a qualified domestic relations order as soon as
administratively practicable after the alternate payee is first
entitled to distribution of such amounts as determined by the fund.
(c) On the death of an alternate payee under a qualified
domestic relations order, the interest of the alternate payee in
the benefits under this Act ends and remaining benefits shall be
paid as if the qualified domestic relations order had not existed.
SECTION 43. The heading to Section 10.01, Chapter 183 (S.B.
598), Acts of the 64th Legislature, Regular Session, 1975 (Article
6243e.1, Vernon's Texas Civil Statutes), is amended to read as
follows:
Sec. 10.01. MUNICIPAL [AND MEMBER] CONTRIBUTIONS.
SECTION 44. Section 10.01, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended by amending Subsections
(a), (b), (c), and (d) and adding Subsections (b-1) and (b-2) to
read as follows:
(a) Each municipality in which a fire department to which
this Act applies is located shall appropriate and contribute to the
fund each pay period in accordance with the following:
(1) for all pay periods beginning after September 30,
2012, and before January 1, 2026, an amount equal to 22.05 percent
[a percentage] of the compensation of all members during the pay
period; and
(2) for all pay periods beginning on or after January
1, 2026, the amount determined in accordance with Subsections (b)
and (c) of this section and Sections 10.05, 10.06, 10.07, and 10.08
of this Act, as applicable [that month as follows:
[(1) 19.05 percent, beginning on the first pay date
following September 30, 2010, through the pay date immediately
preceding September 30, 2011;
[(2) 20.05 percent, beginning on the first pay date
following September 30, 2011, through the pay date immediately
preceding September 30, 2012;
[(3) 21.05 percent, for 24 pay dates of the
municipality beginning on the first pay date following September
30, 2012; and
[(4) 22.05 percent, for all pay dates of the
municipality that follow the 24 pay dates referenced in Subdivision
(3) of this subsection].
(b) For each pay period that begins on or after January 1,
2026, and before January 1, 2027, the municipality shall contribute
an amount equal to the sum of:
(1) the municipal contribution rate, as determined in
the initial risk sharing valuation study conducted under Section
10.05 of this Act, multiplied by the pensionable payroll for the
applicable pay period; and
(2) 1/26 of the municipal legacy contribution amount
for the 2026 calendar year, as determined and adjusted in the
initial risk sharing valuation study conducted under Section 10.05
of this Act [Each firefighter shall pay into the fund each month a
percentage of the firefighter's compensation for that month as
follows:
[(1) 15.70 percent, for the pay dates of the
municipality following September 30, 2010, through the pay date
immediately preceding September 30, 2011;
[(2) 16.20 percent, beginning on the first pay date of
the municipality following September 30, 2011, through the pay date
immediately preceding September 30, 2012;
[(3) 16.70 percent, beginning on the first pay date of
the municipality following September 30, 2012, through the pay date
immediately preceding September 30, 2013;
[(4) 17.20 percent, beginning on the first pay date of
the municipality following September 30, 2013, through the pay date
immediately preceding September 30, 2014;
[(5) 17.70 percent, beginning on the first pay date of
the municipality following September 30, 2014, through the pay date
immediately preceding September 30, 2015;
[(6) 18.20 percent, beginning on the first pay date of
the municipality following September 30, 2015, through the pay date
immediately preceding September 30, 2016; and
[(7) 18.70 percent, for the first pay date of the
municipality following September 30, 2016, and all subsequent pay
dates of the municipality].
(b-1) For each pay period that begins on or after January 1,
2027, the municipality shall contribute an amount equal to the sum
of:
(1) the municipal contribution rate for the applicable
calendar year, as determined in a subsequent risk sharing valuation
study conducted under Section 10.06 of this Act and adjusted under
Section 10.07 or 10.08 of this Act, as applicable, multiplied by the
pensionable payroll for the applicable pay period; and
(2) 1/26 of the municipal legacy contribution amount
for the applicable calendar year, as determined and adjusted in the
initial risk sharing valuation study conducted under Section 10.05
of this Act.
(b-2) If the municipality elects to change the
municipality's payroll period to a period other than a biweekly
payroll period or for any calendar year that has more than 26 pay
periods, the fractional amounts of the municipal legacy
contribution stated in Subsections (b)(2) and (b-1)(2) of this
section may be adjusted as determined by the fund such that the
municipality's municipal legacy contribution for such calendar
year equals the contribution required under Subsection (b)(2) or
(b-1)(2) of this section, as applicable.
(c) The governing body of each municipality may authorize
the municipality to contribute a portion of the contribution
required of each firefighter under Section 10.011 of this Act [this
section]. In that event:
(1) the municipality shall appropriate and contribute
to the fund each pay period [month] at the higher percentage of
compensation necessary to make all contributions required and
authorized to be made by the municipality under this section; and
(2) each firefighter's individual account with the
fund shall be credited each pay period [month] as if the firefighter
had made the entire contribution required of that firefighter under
Section 10.011 of this Act [10.01(b)].
(d) The governing body of each municipality may authorize
the municipality to make an additional contribution to the fund in
whatever amount the governing body may determine. [The members of
the fund, by a majority vote in favor of an increase in
contributions above 13.70 percent, may increase each firefighter's
contribution above 13.70 percent to any percentage recommended by a
majority vote of the board of trustees.]
SECTION 45. Article 10, Chapter 183 (S.B. 598), Acts of the
64th Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), is amended by adding Section 10.011 to read
as follows:
Sec. 10.011. FIREFIGHTER CONTRIBUTIONS. (a) Subject to
Subsection (b) of this section, each firefighter who is a member of
the fund shall pay into the fund an amount equal to 18.70 percent of
the firefighter's compensation for the first pay period of the
municipality beginning on or after September 30, 2016, and all
subsequent pay periods of the municipality thereafter.
(b) The firefighters described by Subsection (a) of this
section, by a majority vote, may voluntarily increase the
firefighter contribution to a rate that is:
(1) higher than the rate prescribed by Subsection (a)
of this section; and
(2) recommended by a majority vote of the board of
trustees.
SECTION 46. Section 10.02, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 10.02. PICKUP OF FIREFIGHTER CONTRIBUTIONS. A
municipality to which this Act applies shall pick up the
firefighter contributions to the fund that are required or
authorized pursuant to Section 10.011 [10.01] of this Act,
whichever is higher. Firefighter contributions will be picked up
by a reduction in the monetary compensation of the firefighters.
Contributions picked up shall be treated as employer contributions
in accordance with Section 414(h)(2) of the Internal Revenue Code
for the purpose of determining tax treatment of the amounts under
that code. These contributions will be credited to [deposited to
the credit of] the individual accounts of the firefighters in the
fund and shall be treated as the monthly contributions of the
firefighters for all purposes of this Act. These contributions are
not includable in the gross income of a firefighter until the time
that they are distributed or made available to the firefighter or
survivors of the firefighter. The board of trustees may at any
time, by majority vote, discontinue the pickup of firefighter
contributions by the municipality.
SECTION 47. Section 10.03, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 10.03. CONTRIBUTIONS AND INCOME AS ASSETS OF
FUND. All contributions paid to the fund under [Sections 10.01 and
10.02 of] this article [Act] become a part of the assets of the
fund. All interest and dividends on investments of the assets of
the fund shall be deposited into the fund and are part of it.
SECTION 48. Section 10.04, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 10.04. INTEREST ON INDIVIDUAL ACCOUNTS. (a) This
subsection applies only to a group A member. The fund shall credit
interest on December 31 of each year to the account of each
firefighter, and of each former firefighter, who has not retired in
an amount equal to five percent of the accumulated contributions,
including previously credited interest, on deposit on January 1 of
that year. The fund may not pay interest on a firefighter's or
former firefighter's contributions [for part of a year or] for any
period that is more than five calendar years after the date of
termination of employment. This subsection expires December 31,
2025.
(a-1) Beginning January 1, 2026, a group A member is not
entitled to interest on amounts credited to the member's individual
account.
(b) A group B member is not entitled to interest on amounts
credited to the member's individual account for any period.
SECTION 49. Article 10, Chapter 183 (S.B. 598), Acts of the
64th Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), is amended by adding Sections 10.05, 10.06,
10.07, and 10.08 to read as follows:
Sec. 10.05. INITIAL RISK SHARING VALUATION STUDY. (a) The
fund shall cause the board's actuary to prepare an initial risk
sharing valuation study that is dated as of December 31, 2024, in
accordance with this section.
(b) The initial risk sharing valuation study must:
(1) except as otherwise provided by this section, be
prepared in accordance with the requirements of Section 10.06 of
this Act;
(2) be based on the actuarial assumptions that were
used by the board's actuary in the valuation completed for the year
ending December 31, 2024, provided that for purposes of determining
the municipal legacy contribution amounts, corridor midpoint, and
municipal contribution rate for the calendar year beginning January
1, 2026, the actuarial value of assets must be equal to the market
value of assets of the fund as of December 31, 2024;
(3) project the corridor midpoint for the next 28
calendar years beginning with the calendar year that begins on
January 1, 2026; and
(4) include a schedule of municipal legacy
contribution amounts for 28 calendar years beginning with the
calendar year that begins on January 1, 2026.
(c) For purposes of Subsection (b)(4) of this section, the
schedule of municipal legacy contribution amounts must be
determined in such a manner that the total annual municipal legacy
contribution amount for the first three calendar years will result
in a phase-in of the anticipated increase in the municipal
contribution rate from the calendar year that begins on January 1,
2025, to the rate equal to the sum of the estimated municipal
contribution rate for the calendar year that begins on January 1,
2026, and the rate of pensionable payroll equal to the municipal
legacy contribution amount for January 1, 2026, determined as if
there was no phase-in of the increase to the municipal legacy
contribution amount. The phase-in must reflect approximately
one-third of the increase each year over the three-year phase-in
period.
(d) The municipality's contribution under Section 10.01 of
this Act for:
(1) the calendar years that begin on January 1, 2026,
January 1, 2027, and January 1, 2028, must be adjusted to reflect
the impact of the phase-in prescribed by this section; and
(2) each calendar year that begins on January 1, 2029,
through January 1, 2053, must reflect a municipal legacy
contribution amount that is 2.5 percent greater than the municipal
legacy contribution amount for the preceding calendar year.
(e) The estimated municipal contribution rate for the
calendar year that begins on January 1, 2026, must be based on the
projected pensionable payroll, as determined under the initial risk
sharing valuation study required by this section, assuming a
payroll growth rate of 2.5 percent.
Sec. 10.06. SUBSEQUENT RISK SHARING VALUATION STUDIES. (a)
For each calendar year beginning after December 31, 2024, the fund
shall cause the board's actuary to prepare a risk sharing valuation
study in accordance with this section and actuarial standards of
practice.
(b) Each risk sharing valuation study must:
(1) be dated as of the last day of the calendar year
for which the study is required to be prepared;
(2) calculate the unfunded actuarial accrued
liability of the fund as of the last day of the applicable calendar
year, including the liability layer, if any, associated with the
most recently completed calendar year;
(3) calculate the estimated municipal contribution
rate for the following calendar year;
(4) determine the municipal contribution rate for the
following calendar year, taking into account any adjustments
required under Section 10.07 or 10.08 of this Act, as applicable;
and
(5) except as provided by Subsection (e) of this
section, be based on the assumptions and methods adopted by the
board in accordance with Section 2.14 of this Act, if applicable,
and that are consistent with actuarial standards of practice and
the following principles:
(A) closed layered amortization of liability
layers to ensure that the amortization period for each liability
layer begins 12 months after the date of the risk sharing valuation
study in which the liability layer is first recognized;
(B) each liability layer is assigned an
amortization period;
(C) each liability loss layer will be amortized
over a period of 20 years from the first day of the calendar year
beginning 12 months after the date of the risk sharing valuation
study in which the liability loss layer is first recognized, except
that the legacy liability must be amortized over a 28-year period
beginning January 1, 2026;
(D) each liability gain layer will be amortized
over:
(i) a period equal to the remaining
amortization period on the largest remaining liability loss layer;
or
(ii) if there is no liability loss layer, a
period of 20 years from the first day of the calendar year beginning
12 months after the date of the risk sharing valuation study in
which the liability gain layer is first recognized;
(E) liability layers will be funded according to
the level percent of payroll method;
(F) payroll for purposes of determining the
corridor midpoint, municipal contribution rate, and municipal
legacy contribution amount must be projected using the annual
payroll growth rate assumption adopted by the board of trustees;
and
(G) the municipal contribution rate will be
calculated each calendar year without inclusion of the legacy
liability.
(c) The municipality may contribute an amount in addition to
the scheduled municipal legacy contribution amounts to reduce the
number or amount of scheduled future municipal legacy contribution
payments. If the municipality contributes an additional amount
under this subsection, the board's actuary shall create a new
schedule of municipal legacy contribution amounts that reflects
payment of the additional contribution.
(d) The municipality and the board of trustees may agree on
a written transition plan for resetting the corridor midpoint,
firefighter contribution rate, and municipal contribution rate:
(1) if at any time the funded ratio of the fund is
equal to or greater than 100 percent; or
(2) for any calendar year after the payoff year of the
legacy liability.
(e) Subject to Section 2.14 of this Act, the board may by
rule adopt actuarial principles other than those required under
Subsection (b)(5) of this section, provided the actuarial
principles:
(1) are consistent with actuarial standards of
practice;
(2) are approved by the board's actuary; and
(3) do not operate to change the municipal legacy
contribution amount.
Sec. 10.07. ADJUSTMENT TO MUNICIPAL CONTRIBUTION RATE IF
ESTIMATED MUNICIPAL CONTRIBUTION RATE LOWER THAN CORRIDOR
MIDPOINT. (a) Subject to Subsection (b) of this section, for the
calendar year beginning January 1, 2026, and for each subsequent
calendar year, if the estimated municipal contribution rate is
lower than the corridor midpoint, the municipal contribution rate
for the applicable year is:
(1) the corridor midpoint if the funded ratio is less
than 100 percent; or
(2) the estimated municipal contribution rate if the
funded ratio is 100 percent or greater.
(b) The municipal contribution rate may not be lower than
the minimum municipal contribution rate.
(c) If the funded ratio is equal to or greater than 100
percent:
(1) all existing liability layers, including the
legacy liability, are considered fully amortized and paid; and
(2) the municipal legacy contribution amount may no
longer be included in the municipal contribution under Section
10.01 of this Act.
Sec. 10.08. ADJUSTMENT TO MUNICIPAL CONTRIBUTION RATE IF
ESTIMATED MUNICIPAL CONTRIBUTION RATE EQUAL TO OR GREATER THAN
CORRIDOR MIDPOINT. For the calendar year beginning January 1,
2026, and for each subsequent calendar year, if the estimated
municipal contribution rate is equal to or greater than the
corridor midpoint and:
(1) less than or equal to the maximum municipal
contribution rate for the corresponding calendar year, the
municipal contribution rate is the estimated municipal
contribution rate; or
(2) greater than the maximum municipal contribution
rate for the corresponding calendar year, the municipal
contribution rate is the maximum municipal contribution rate.
SECTION 50. Section 11.03(b), Chapter 183 (S.B. 598), Acts
of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
(b) The board of trustees may not adopt an amendment to the
investment policy adopted under this section unless the proposed
amendment is approved by the affirmative vote [of a majority of the
members] of the board [at not fewer than three regular meetings of
the board].
SECTION 51. Section 12.01, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 12.01. EXECUTIVE DIRECTOR [ADMINISTRATOR] AND
EMPLOYEES. The board of trustees shall appoint an executive
director [administrator] who shall administer the fund under the
supervision and direction of the board of trustees. The board of
trustees shall employ such other employees as are required for the
efficient administration of the fund.
SECTION 52. Sections 12.03(a) and (e), Chapter 183 (S.B.
598), Acts of the 64th Legislature, Regular Session, 1975 (Article
6243e.1, Vernon's Texas Civil Statutes), are amended to read as
follows:
(a) The board of trustees shall engage [employ] an actuary
who may be the consultant and technical advisor to the board of
trustees regarding the operation of the fund and may perform such
duties as may be required by the board.
(e) An actuary engaged [employed] under this section must be
a fellow of the Society of Actuaries, a member of the American
Academy of Actuaries, or an enrolled actuary under the federal
Employee Retirement Income Security Act of 1974 (29 U.S.C. Section
1001 et seq.).
SECTION 53. Section 12.07, Chapter 183 (S.B. 598), Acts of
the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 12.07. AUDITS; ENGAGEMENT [EMPLOYMENT] OF CERTIFIED
PUBLIC ACCOUNTANTS. The board of trustees shall engage [employ] a
certified public accountant or firm of certified public accountants
to perform an audit of the fund at least annually. The municipality
may pay the entire cost of an audit. If not paid by the
municipality, the cost may be paid from the assets of the fund.
SECTION 54. The following provisions of Chapter 183 (S.B.
598), Acts of the 64th Legislature, Regular Session, 1975 (Article
6243e.1, Vernon's Texas Civil Statutes), are repealed:
(1) Sections 5.04(b), (b-1), and (c);
(2) Section 7.07;
(3) Section 8.05(b); and
(4) Section 9.04.
SECTION 55. (a) In this section, "board of trustees" has
the meaning assigned by Section 1.02(3), Chapter 183 (S.B. 598),
Acts of the 64th Legislature, Regular Session, 1975 (Article
6243e.1, Vernon's Texas Civil Statutes).
(b) Section 2.02, Chapter 183 (S.B. 598), Acts of the 64th
Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), as amended by this Act, does not affect the
term of a member of the board of trustees elected under that
section, as that section existed immediately before the effective
date of this Act, and serving on the board of trustees on the
effective date of this Act.
(c) When the term of the member of the board of trustees
elected under Section 2.02(3), Chapter 183 (S.B. 598), Acts of the
64th Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), as that section existed immediately before
the effective date of this Act, who has a term that expires in
December 2025, expires:
(1) the resulting vacancy on the board of trustees and
the new position on the board of trustees created by the amendment
of Section 2.02(3), Chapter 183 (S.B. 598), Acts of the 64th
Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), shall be filled by election of the members of
the fund in accordance with Section 2.03, Chapter 183 (S.B. 598),
Acts of the 64th Legislature, Regular Session, 1975 (Article
6243e.1, Vernon's Texas Civil Statutes), as amended by this Act, by
an election held in November 2025;
(2) the candidate who receives the highest number of
votes in the election shall serve a four-year term, ending in
December 2029; and
(3) notwithstanding Section 2.03(e), Chapter 183
(S.B. 598), Acts of the 64th Legislature, Regular Session, 1975
(Article 6243e.1, Vernon's Texas Civil Statutes), as amended by
this Act, the candidate who receives the second highest number of
votes in the election shall serve an initial three-year term,
ending in December 2028.
(d) Not later than November 1, 2025, the governing body of a
municipality subject to Chapter 183 (S.B. 598), Acts of the 64th
Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), shall appoint a member to the board of
trustees under Section 2.02(4), Chapter 183 (S.B. 598), Acts of the
64th Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
Texas Civil Statutes), as added by this Act, to serve a term
beginning January 1, 2026.
SECTION 56. This Act takes effect September 1, 2025.