85R2508 KFF-D     By: Flynn H.B. No. 43       A BILL TO BE ENTITLED   AN ACT   relating to the public retirement systems of certain   municipalities.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:   ARTICLE 1.  FIREFIGHTERS' RELIEF AND RETIREMENT FUND          SECTION 1.01.  Section 3(d),  Article 6243e.2(1), Revised   Statutes, is amended to read as follows:          (d)  The board may have an actuarial valuation performed each   year, and for determining the municipality's contribution rate as   provided by Section 13(d) of this article, the board may adopt a new   actuarial valuation every three years [each year, except that an   actuarial valuation that will result in an increased municipal   contribution rate that is above the statutory minimum may be   adopted only once every three years, unless the governing body of   the municipality consents to a more frequent increase].          SECTION 1.02.  Article 6243e.2(1), Revised Statutes, is   amended by adding Section 3A to read as follows:          Sec. 3A.  ACTION INCREASING AMORTIZATION PERIOD. (a)   Notwithstanding any other provision of this article, a rate of a   member's or a municipality's contributions to or a rate of interest   or the amount of a fee required for the establishment of credit in   the fund may not be reduced or eliminated, a type of service may not   be made creditable in the fund, a limit on the maximum permissible   amount of a type of creditable service may not be removed or raised,   a new monetary benefit payable by the fund may not be established,   and the determination of the amount of a monetary benefit from the   fund may not be increased, if, as a result of the particular action,   the time, as determined by an actuarial valuation, required to   amortize the unfunded actuarial liabilities of the fund would be   increased to a period that exceeds 30 years.          (b)  If the amortization period for the unfunded actuarial   liabilities of the fund exceeds 30 years at the time an action   described by Subsection (a) of this section is proposed, the   proposal may not be adopted if, as a result of the adoption, the   amortization period would be increased, as determined by an   actuarial valuation.          SECTION 1.03.  Section 5, Article 6243e.2(1), Revised   Statutes, is amended by adding Subsection (s) to read as follows:          (s)  The board may adopt rules, policies, or procedures that   the board determines are necessary or desirable to implement or   administer this section, including rules that limit the amount of a   member's earnings under the DROP or that limit the length of time a   member may elect to participate in the DROP.          SECTION 1.04.  Section 10, Article 6243e.2(1), Revised   Statutes, is amended to read as follows:          Sec. 10.  NONSTATUTORY BENEFIT INCREASES.  The benefits   provided by this article may be increased if:                (1)  an actuary selected by the board who, if an   individual, is a Fellow of the Society of Actuaries, a Fellow of the   Conference of Consulting Actuaries [in Public Practice], or a   member of the American Academy of Actuaries determines that the   increase complies with Section 3A of this article [cannot   reasonably be viewed as posing a material risk of jeopardizing the   fund's ability to pay any existing benefit];                (2)  a majority of the participating members of the   fund vote for the increase by a secret ballot;                (3)  the increase does not deprive a member, without   the member's written consent, of a right to receive benefits that   have already become fully vested and matured in a member; and                (4)  the State Pension Review Board approves the   determination by the actuary selected by the board that the   increase complies with Section 3A of this article [cannot   reasonably be viewed as posing a material risk of jeopardizing the   fund's ability to pay any existing benefit].          SECTION 1.05.  Section 13(d), Article 6243e.2(1), Revised   Statutes, is amended to read as follows:          (d)  The municipality shall make contributions to the fund   once every two weeks in an amount equal to the product of the   contribution rate certified by the board and the aggregate salaries   paid to members of the fund during the period for which the   contribution is made.  The board shall certify the municipality's   contribution rate for each year or portion of a year based on the   results of actuarial valuations made at least every three   years.  The municipality's contribution rate shall be composed of   the normal cost plus the level percentage of salary payment   required to amortize the unfunded actuarial liability over a   [constant] period that does not exceed [of] 30 years [computed on   the basis of an acceptable actuarial reserve funding method   approved by the board].  Notwithstanding any other provision of   this article, the contributions by the municipality, when added to   any contributions with respect to a qualified governmental excess   benefit arrangement maintained in accordance with Section 14(c) of   this article, may not be less than twice the amount paid into the   fund by contributions of the members.   ARTICLE 2.  POLICE OFFICERS' PENSION SYSTEM          SECTION 2.01.  Article 6243g-4, Revised Statutes, is amended   by adding Section 6A to read as follows:          Sec. 6A.  ACTION INCREASING AMORTIZATION PERIOD. (a)   Notwithstanding any other provision of this article, a rate of a   member's or a city's contributions to or a rate of interest or the   amount of a fee required for the establishment of credit in the   pension system may not be reduced or eliminated, a type of service   may not be made creditable in the pension system, a limit on the   maximum permissible amount of a type of creditable service may not   be removed or raised, a new monetary benefit payable by the pension   system may not be established, and the determination of the amount   of a monetary benefit from the pension system may not be increased,   if, as a result of the particular action, the time, as determined by   an actuarial valuation, required to amortize the unfunded actuarial   liabilities of the pension system would be increased to a period   that exceeds 30 years.          (b)  If the amortization period for the unfunded actuarial   liabilities of the pension system exceeds 30 years at the time an   action described by Subsection (a) of this section is proposed, the   proposal may not be adopted if, as a result of the adoption, the   amortization period would be increased, as determined by an   actuarial valuation.          SECTION 2.02.  Section 9(a), Article 6243g-4, Revised   Statutes, is amended to read as follows:          (a)  The city shall make [substantially equal] contributions   to the fund [as soon as administratively feasible after] each   payroll period in an amount equal to the product of the contribution   rate certified by the board and the aggregate salaries paid to   members of the pension system during the period for which the   contribution is made. The board shall certify the city's   contribution rate for each year or portion of a year based on the   results of actuarial valuations made at least every three years.   For each fiscal year ending after June 30, 2005, the city's minimum   contribution shall be the normal cost plus the [greater of 16   percent of the members' total direct pay or the] level percentage of   salary payment required to amortize the unfunded actuarial   liability over a [constant] period that does not exceed [of] 30   years [computed on the basis of an acceptable actuarial reserve   funding method approved by the board]. [However, for the fiscal   year ending June 30, 2002, the city's contribution shall be   $32,645,000, for the fiscal year ending June 30, 2003, the city's   contribution shall be $34,645,000, for the fiscal year ending June   30, 2004, the city's contribution shall be $36,645,000, and for the   fiscal year ending June 30, 2005, the city's contribution shall be   16 percent of the members' total direct pay.]          SECTION 2.03.  Sections 12(c) and (e), Article 6243g-4,   Revised Statutes, are amended to read as follows:          (c)  Except as provided by Section 6A of this article, the   [The] pension payable to each retired member of the pension system   shall be adjusted annually, effective April 1 of each year, upward   at a rate determined by board rule [equal to two-thirds of any   percentage increase in the Consumer Price Index for All Urban   Consumers for the preceding year]. [The amount of the annual   adjustment may not be less than three percent or more than eight   percent of the pension being paid immediately before the   adjustment, notwithstanding a greater or lesser increase in the   consumer price index.]          (e)  Subject to Section 6A of this article, at [At] the end of   each calendar year beginning after 1998, and subject to the   conditions provided by this subsection, the pension system shall   make a 13th benefit payment to each person who is receiving a   service pension. The amount of the 13th payment shall be the same   as the last monthly payment received by the retiree or survivor   before issuance of the payment, except the payment received by any   person who has been in pay status for less than 12 months shall be   for a prorated amount determined by dividing the amount of the last   payment received by 12 and multiplying this amount by the number of   months the person has been in pay status. [The 13th payment may be   made only for those calendar years in which:                [(1)     the assets held by the fund will equal or exceed   its liabilities after the 13th payment is made;                [(2)     the rate of return on the fund's assets exceeded   9.25 percent for the last fiscal year ending before the payment; and                [(3)     the payment will not cause an increase in the   contribution the city would have been required to make if the 13th   payment had not been made.]          SECTION 2.04.  Section 14, Article 6243g-4, Revised   Statutes, is amended by adding Subsection (n) to read as follows:          (n)  The board may adopt rules, policies, or procedures that   the board determines are necessary or desirable to implement or   administer this section, including rules that limit the amount of a   member's earnings under the DROP or that limit the length of time a   member may elect to participate in the DROP.   ARTICLE 3.  MUNICIPAL EMPLOYEES PENSION SYSTEM          SECTION 3.01.  Chapter 88 (H.B. 1573), Acts of the 77th   Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas   Civil Statutes), is amended by adding Section 3A to read as follows:          Sec. 3A.  ACTION INCREASING AMORTIZATION PERIOD. (a)   Notwithstanding any other provision of this Act, a rate of a   member's or a city's contributions to or a rate of interest or the   amount of a fee required for the establishment of credit in the   pension system may not be reduced or eliminated, a type of service   may not be made creditable in the pension system, a limit on the   maximum permissible amount of a type of creditable service may not   be removed or raised, a new monetary benefit payable by the pension   system may not be established, and the determination of the amount   of a monetary benefit from the pension system may not be increased,   if, as a result of the particular action, the time, as determined by   an actuarial valuation, required to amortize the unfunded actuarial   liabilities of the pension fund would be increased to a period that   exceeds 30 years.          (b)  If the amortization period for the unfunded actuarial   liabilities of the pension system exceeds 30 years at the time an   action described by Subsection (a) of this section is proposed, the   proposal may not be adopted if, as a result of the adoption, the   amortization period would be increased, as determined by an   actuarial valuation.          SECTION 3.02.  Section 8(d), Chapter 88 (H.B. 1573), Acts of   the 77th Legislature, Regular Session, 2001 (Article 6243h,   Vernon's Texas Civil Statutes), is amended to read as follows:          (d)  The city shall make [periodic] payments into the pension   fund each payroll period in an amount equal to the product of the   contribution rate certified by the pension board and the aggregate   [percentage contribution rate multiplied by the combined] salaries   of all group A and group B members of the pension fund. The   contribution rate, expressed as a percentage, shall be based on the   results of actuarial valuations made at least every three years.   The city's contribution rate shall consist of the normal cost plus   the level percentage of salary payments required to amortize the   unfunded actuarial liability over a period that does not exceed 30   [of 40] years [from January 1, 1983, computed on the basis of an   actuarial reserve funding method approved by the pension board].   Notwithstanding any other provision of this Act, the city's   contribution rate, when added to any contributions with respect to   a qualified governmental excess benefit arrangement maintained in   accordance with Section 24 of this Act, may not be an amount less   than the greater of 10 percent of the combined salaries of all   members or two times the contribution rate of group A members as   provided in Subsection (a) of this section.          SECTION 3.03.  Section 10(h), Chapter 88 (H.B. 1573), Acts   of the 77th Legislature, Regular Session, 2001 (Article 6243h,   Vernon's Texas Civil Statutes), is amended to read as follows:          (h)  Subject to Section 3A of this Act, for [For] future   payments only, pension and survivor benefits for all retirees and   eligible survivors shall be increased annually by four percent, not   compounded, for all persons receiving a pension or survivor benefit   as of January 1 of the year in which the increase is made.          SECTION 3.04.  Section 12(q), Chapter 88 (H.B. 1573), Acts   of the 77th Legislature, Regular Session, 2001 (Article 6243h,   Vernon's Texas Civil Statutes), is amended to read as follows:          (q)  The pension board may adopt rules for the implementation   and operation of the DROP, including rules:                (1)  regarding the payment of DROP benefits; and                (2)  that limit the amount of a member's earnings under   the DROP or that limit the length of time a member may elect to   participate in the DROP.          SECTION 3.05.  Sections 15(a), (b), and (d), Chapter 88   (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001   (Article 6243h, Vernon's Texas Civil Statutes), are amended to read   as follows:          (a)  In addition to the postretirement increases under   Section 10(h) of this Act and subject to Section 3A of this Act, the   pension board may increase annuities payable under this Act by an   amount that does not exceed the annual increase in the amount of   premiums being paid under a group insurance program provided for   retirees of the city.          (b)  The pension board may distribute a supplemental payment   to all retirees and eligible survivors who are receiving annuities   as of January 1 of the year in which the supplemental payment is   made. The supplemental payment shall be credited to the DROP   participants who are participating in the DROP as of January 1 of   the year in which the supplemental payment is made, if the pension   board's actuary determines that the payment complies with Section   3A of this Act [as of the end of any fiscal year:                [(1)     the value of the pension system's assets exceeds   the amount of the pension system's accrued liability;                [(2)     the pension system has met the actuarial   investment assumption for the previous fiscal year; and                [(3)     the issuance of the supplemental check will not   cause the city's contribution rate to increase].          (d)  A pension benefit or allowance provided by this article   may be increased if:                (1)  a qualified actuary selected by the pension board   determines that the increase complies with Section 3A of this   article [cannot reasonably be considered to jeopardize the pension   system's ability to pay any existing benefit];                (2)  the increase is approved by the pension board and   the city in a written agreement as provided by Section 3(n) of this   article; and                (3)  the increase does not deprive a member or retiree,   without the written consent of the member or retiree, from   receiving the immediate or deferred retirement benefit that the   member or retiree was eligible to receive under this article before   the increase.   ARTICLE 4.  EFFECTIVE DATE          SECTION 4.01.  This Act takes effect September 1, 2017.