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A BILL TO BE ENTITLED
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AN ACT
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relating to the liabilities of, contributions to, and the |
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administration of certain public retirement systems. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 802.002(a), Government Code, is amended |
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to read as follows: |
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(a) Except as provided by Subsection (b), the Employees |
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Retirement System of Texas, the Teacher Retirement System of Texas, |
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the Texas County and District Retirement System, the Texas |
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Municipal Retirement System, the Texas Emergency Services |
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Retirement System, and the Judicial Retirement System of Texas Plan |
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Two are exempt from Sections 802.101(a), 802.101(b), 802.101(d), |
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802.102, 802.103(a), 802.103(b), 802.202, 802.203, 802.204, |
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802.205, 802.206, and 802.207, and from all of Subchapter E. The |
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Judicial Retirement System of Texas Plan One is exempt from all of |
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Subchapters B, [and] C, and E except Sections 802.104 and 802.105. |
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The optional retirement program governed by Chapter 830 is exempt |
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from all of Subchapters B, [and] C, and E except Section 802.106. |
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SECTION 2. Chapter 802, Government Code, is amended by |
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adding Subchapter E to read as follows: |
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SUBCHAPTER E. ADDITIONAL PROVISIONS APPLICABLE TO CERTAIN |
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ACTUARIALLY FUNDED PUBLIC RETIREMENT SYSTEMS |
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Sec. 802.401. AMORTIZATION OF UNFUNDED LIABILITY. (a) If |
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the governing body of a public retirement system receives an |
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actuarial valuation conducted in accordance with Section 802.101 |
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indicating an infinite amortization period, the governing body |
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shall notify the board and the governing body of the plan sponsor of |
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that determination in writing not later than the 30th day after the |
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date the valuation is received. |
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(b) Following the provision of notice under Subsection (a), |
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the public retirement system has six fiscal years to take |
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corrective action without additional reporting requirements. If by |
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the expiration of the sixth fiscal year the system has not received |
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an actuarial valuation conducted in accordance with Section 802.101 |
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indicating that the system is able to amortize unfunded liability |
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over a finite period, the governing body of the system shall prepare |
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a written corrective action plan detailing actions to be taken by |
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the public retirement system and plan sponsor to achieve a funded |
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ratio of not less than 80 percent and an amortization period that |
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does not exceed 30 years. |
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(c) The corrective action plan described by Subsection (b) |
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must be signed by the governing body of the public retirement system |
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and by the governing body of the plan sponsor, and must be submitted |
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to the board not later than the 270th day after the expiration of |
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the six-fiscal-year period described by that subsection. If the |
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governing body of the public retirement system and the governing |
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body of the plan sponsor do not jointly approve a single corrective |
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action plan, the two governing bodies may submit separate |
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corrective action plans. |
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(d) The corrective action plan described by Subsection (b) |
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must be updated and resubmitted to the board every third year until |
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the public retirement system receives an actuarial valuation |
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conducted in accordance with Section 802.101 indicating that the |
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system has achieved a funded ratio of not less than 80 percent and |
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an amortization period that does not exceed 30 years. |
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Sec. 802.402. ACTION INCREASING AMORTIZATION PERIOD. A new |
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monetary benefit payable by the public retirement system may not be |
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established, and the determination of the amount of a monetary |
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benefit from the system may not be increased, if, as a result of the |
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action, the time required to amortize the unfunded actuarial |
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liabilities of the retirement system would be increased to a period |
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that exceeds 30 years by one or more years, as determined by an |
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actuarial valuation. |
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Sec. 802.403. CONTRIBUTIONS. (a) The plan sponsoring |
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entity contributions and employee contributions to a public |
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retirement system, as applicable, should be made at regular |
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intervals of at least one payment during each fiscal year. |
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(b) The allocation of the normal cost portion of |
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contributions under this section must be level or declining as a |
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percentage of payroll over all generations of employees of the |
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sponsoring entity, calculated according to applicable actuarial |
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standards. |
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Sec. 802.404. ADDITIONAL STUDIES AND REPORTS. (a) Except |
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as otherwise provided by this chapter, this section applies only to |
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a public retirement system with total assets the book value of |
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which, as of the last day of the preceding fiscal year, is greater |
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than or equal to $100 million. |
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(b) In addition to the requirements of Subchapter B, the |
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governing body of a public retirement system to which this |
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subchapter applies shall, at reasonable intervals not to exceed |
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five years, conduct or arrange to have conducted: |
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(1) an actuarial experience study in which actuarial |
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assumptions are reviewed in light of relevant experience factors, |
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important trends, and economic projections with the purpose of |
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determining whether the actuarial assumptions require adjustment; |
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and |
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(2) a study of the public retirement system's assets |
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and liabilities for use in reviewing asset allocations. |
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Sec. 802.405. ETHICAL STANDARDS. The governing body of a |
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public retirement system shall adopt ethical standards and |
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conflict-of-interest policies. Policies adopted under this |
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section must include a provision requiring trustees to report any |
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potential conflicts of interest and must be consistent with and not |
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less restrictive than Section 802.203. |
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SECTION 3. (a) Notwithstanding Section 802.401, Government |
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Code, as added by this Act, a public retirement system that receives |
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an actuarial valuation indicating an infinite amortization period |
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as described by that section on or after the effective date of this |
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Act is entitled to the six-fiscal-year period described by that |
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section to take corrective action described by that section |
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regardless of whether the public retirement system received a |
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previous actuarial valuation indicating an infinite amortization |
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period before the effective date of this Act. |
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(b) Section 802.402, Government Code, as added by this Act, |
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applies only to a new monetary benefit granted under a statute |
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enacted, or a contract entered into or renewed, on or after the |
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effective date of this Act. A monetary benefit granted under a |
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statute enacted, or a contract entered into or renewed, before the |
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effective date of this Act is governed by the law in effect |
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immediately before that date, and the former law is continued in |
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effect for that purpose. |
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SECTION 4. The governing body of a public retirement system |
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to which Subchapter E, Chapter 802, Government Code, as added by |
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this Act, applies shall adopt rules or procedures necessary to |
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implement that subchapter as soon as practicable after the |
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effective date of this Act, but not later than April 1, 2014. |
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SECTION 5. This Act takes effect on the 91st day after the |
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last day of the legislative session. |