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A BILL TO BE ENTITLED
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AN ACT
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relating to the public retirement system of certain municipalities. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Title 109, Revised Statutes, is amended by |
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adding Article 6243i to read as follows: |
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Art. 6243i. UNITARY RETIREMENT SYSTEM FOR CERTAIN |
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MUNICIPALITIES |
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PART 1. GENERAL PROVISIONS |
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Sec. 1.01. APPLICABILITY. This article applies only to a |
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municipality with a population of 500,000 or more that has |
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established, by municipal ordinance, a single unitary public |
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retirement system for employees of all departments of the |
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municipality. |
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Sec. 1.02. DEFINITIONS. In this article: |
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(1) "Administrative rules" means the rules adopted to |
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govern a public retirement system, including rules regarding the |
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participation in, contributions to, and benefits from the public |
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retirement system. |
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(2) "Board of trustees" means the persons elected or |
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appointed to administer the public retirement system. |
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(3) "Governing body" means the governing body of a |
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municipality to which this article applies. |
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(4) "Participating member" means a person who makes |
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contributions to the public retirement system as an employee of a |
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municipality to which this article applies. |
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(5) "Participating retiree" means a person who |
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receives or who is eligible to receive a service retirement annuity |
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from the retirement fund. |
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(6) "Pension office" means the administrative office |
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of the public retirement system. |
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(7) "Public retirement system" means a continuing, |
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organized program or plan of service retirement, disability |
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retirement, or death benefits for employees of a municipality to |
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which this article applies but does not include: |
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(A) a program for which benefits are administered |
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by a life insurance company; |
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(B) a program providing only workers' |
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compensation benefits; |
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(C) a program administered by the federal |
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government; |
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(D) an individual retirement account or |
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individual retirement annuity within the meaning of Section 408, or |
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a retirement bond within the meaning of Section 409, of the Internal |
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Revenue Code of 1986; |
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(E) a plan described by Section 401(d) of the |
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Internal Revenue Code of 1986; |
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(F) an individual account plan consisting of an |
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annuity contract described by Section 403(b) of the Internal |
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Revenue Code of 1986; or |
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(G) an eligible state deferred compensation plan |
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described by Section 457(b) of the Internal Revenue Code of 1986. |
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(8) "Retirement fund" means the trust fund established |
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by or in conjunction with the public retirement system for the |
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purpose of holding assets to be used to provide benefits payable by |
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the public retirement system. |
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(9) "Rule amendment" includes any amendment of, repeal |
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of, addition to, deletion of, modification of, or change to an |
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administrative rule. |
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(10) "Survivor" means a person, including the |
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surviving spouse or dependent, who receives survivor benefits from |
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a retirement fund. |
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(11) "Vested" means the accrued right of a |
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participating member who has met the age and length-of-service |
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requirements for service retirement required by the public |
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retirement system. A member whose retirement rights are vested may |
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withdraw from employment with the municipality, leave the member's |
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accumulated contributions on deposit with the public retirement |
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system, and begin to receive the member's service retirement |
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annuity. |
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PART 2. MEMBERSHIP |
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Sec. 2.01. GENERAL MEMBERSHIP REQUIREMENT. (a) Except as |
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otherwise provided by administrative rule, municipal ordinance, or |
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this section, a person becomes a participating member of the public |
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retirement system on the date of the person's employment by the |
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municipality. |
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(b) A person employed by the municipality is not eligible to |
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be a participating member if the person is: |
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(1) an independent contractor or an employee of an |
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independent contractor doing work for the municipality; |
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(2) an elected officer or a nonsalaried, appointed |
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member of an administrative board or commission of the |
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municipality, except an employee who serves as a member of the board |
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or commission; |
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(3) an employee serving on a part-time basis of less |
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than one-half the time required to serve as a full-time employee; |
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(4) an employee who is paid in part by the municipality |
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and in part by a county, state, or other governmental agency; or |
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(5) a temporary employee, as determined by the records |
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of the municipality, on the payroll of the municipality. |
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(c) A person may appeal a determination regarding the |
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person's eligibility to be a participating member to the board of |
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trustees. The board's decision regarding eligibility is final. |
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PART 3. CREDITABLE SERVICE |
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Sec. 3.01. TYPES OF CREDITABLE SERVICE. The board of |
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trustees by rule shall establish the types of service for which a |
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participating member earns credit. |
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Sec. 3.02. BENEFIT ELIGIBILITY BASED ON CREDITED SERVICE. |
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A participating member's eligibility to receive a service |
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retirement benefit is based on credited service at the time of |
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retirement. |
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PART 4. BENEFITS |
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Sec. 4.01. TYPES OF BENEFITS. The types and calculation of |
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benefits provided by the public retirement system are determined in |
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accordance with applicable laws, municipal ordinances, and |
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administrative rules. |
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Sec. 4.02. AMENDMENTS INCREASING BENEFITS. Before taking |
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effect, any amendment to the administrative rules proposed by the |
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board of trustees that increases the benefits provided by the |
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public retirement system must be reviewed and approved by the |
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governing body. |
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Sec. 4.03. AMENDMENTS REDUCING BENEFITS. (a) Only the |
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governing body may adopt an amendment to the administrative rules |
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that reduces a benefit provided by the public retirement system. |
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(b) At least 90 days before the date the governing body is |
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scheduled to vote on an amendment to the administrative rules that |
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would reduce a benefit provided by the public retirement system, |
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the governing body must give notice to the board of trustees of the |
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governing body's intention to consider and vote on the amendment. |
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PART 5. ADMINISTRATION |
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Sec. 5.01. COMPOSITION OF BOARD OF TRUSTEES. (a) The |
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board of trustees is composed of 13 members. |
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(b) Each of the following groups of participating members |
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shall elect one vested, participating member from their respective |
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group to serve as a member of the board of trustees: |
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(1) police officers; and |
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(2) firefighters. |
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(c) The group of participating members who are general |
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employees of the municipality and who are not employed as police |
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officers or firefighters shall elect two vested, participating |
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members from the group to serve as members of the board of |
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trustees. |
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(d) Each of the following groups of participating retirees |
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shall elect one participating retiree from their respective group |
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to serve as a member of the board of trustees: |
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(1) retired police officers; |
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(2) retired firefighters; and |
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(3) other retired general employees of the |
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municipality who did not retire from service as a police officer or |
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firefighter. |
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(e) The mayor shall nominate and the governing body shall |
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confirm, by majority vote, five residents of the municipality to |
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serve as members of the board of trustees. A person appointed under |
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this subsection may not be a member of the governing body. |
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(f) The governing body shall designate the chief financial |
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officer of the municipality to serve as a member of the board of |
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trustees. |
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(g) Members of the board of trustees hold office for terms |
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of two years. |
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Sec. 5.02. BOARD POWERS AND DUTIES. (a) The board of |
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trustees shall administer the public retirement system, including |
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the retirement fund of the public retirement system. |
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(b) The board of trustees may adopt amendments to the |
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administrative rules in accordance with Sections 5.06, 5.07, 5.09, |
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and 5.10 of this article. |
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Sec. 5.03. BOARD CHAIR. The board of trustees shall elect a |
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chair from the membership of the board. |
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Sec. 5.04. QUORUM; VOTING. (a) Each member of the board of |
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trustees is entitled to one vote. |
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(b) Except as provided by Subsection (c) of this section, |
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seven members of the board of trustees constitute a quorum to |
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transact the business of the board. |
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(c) In the event of a vacancy on the board of trustees, the |
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number of members required to constitute a quorum is reduced by the |
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number of vacancies on the board of trustees. |
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Sec. 5.05. QUALIFIED ACTUARY. (a) The board of trustees |
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may employ a qualified actuary. |
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(b) To be a qualified actuary, an actuary must be: |
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(1) a fellow of the Society of Actuaries; or |
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(2) a member of the American Academy of Actuaries. |
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(c) The governing body shall review and approve the |
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actuarial assumptions used to determine the funding status of the |
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retirement fund by an actuary employed by the board of trustees. |
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Sec. 5.06. RULE AMENDMENTS ADOPTED BY BOARD OF TRUSTEES. |
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(a) Except as provided by Sections 4.03, 5.07, 5.09, and 5.10 of |
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this article and subject to Section 4.02 of this article, the board |
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of trustees may adopt amendments to the administrative rules if: |
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(1) a qualified actuary performs an actuarial analysis |
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of the fiscal impact of the proposed amendment and determines that |
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the amendment will not impact the actuarial soundness of the |
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retirement fund; |
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(2) the proposed amendment is placed on the agenda of |
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the board of trustees for at least two consecutive meetings of the |
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board that are not less than 30 days apart for the purpose of giving |
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participating members an opportunity to comment on the proposed |
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amendment; and |
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(3) the proposed amendment is approved by a majority |
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vote of the full membership of the board of trustees. |
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(b) An amendment to the administrative rules adopted in |
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accordance with this section becomes effective immediately unless |
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otherwise provided by the amendment. |
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Sec. 5.07. AMENDMENTS CONCERNING CONTRIBUTIONS BY |
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MUNICIPALITY. (a) An amendment to the administrative rules |
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governing municipal contributions, including an amendment to the |
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rate or manner of making contributions, may be made only if: |
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(1) a qualified actuary performs an actuarial analysis |
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of the fiscal impact of the proposed amendment; |
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(2) the board of trustees or the governing body, by |
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majority vote, calls a special election of all participating |
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members to approve the amendment; |
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(3) the amendment is approved by a majority of the |
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participating members eligible to vote in the special election; and |
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(4) the amendment is approved by a majority vote of: |
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(A) the board of trustees, if the governing body |
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called the special election under Subdivision (2) of this |
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subsection; or |
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(B) the governing body, if the board of trustees |
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called the special election under Subdivision (2) of this |
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subsection. |
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(b) The board of trustees or the governing body, as |
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applicable, shall approve or reject the proposed amendment under |
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Subsection (a)(4) of this section by the 90th day after the date the |
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votes of the special election are canvassed. |
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(c) The pension office shall conduct a special election |
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under Subsection (a) of this section by secret ballot. The board of |
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trustees shall canvass the vote. |
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(d) A person who is a participating member on the date of the |
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special election is eligible to vote in the special election. |
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(e) Unless otherwise provided by the proposed amendment, an |
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amendment to the administrative rules becomes effective on approval |
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by the board of trustees or the governing body, as appropriate, |
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under Subsection (a)(4) of this section. |
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(f) Notwithstanding Subsections (a) through (e) of this |
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section, only the governing body may adopt an amendment to the |
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administrative rules that increases municipal contributions. |
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Sec. 5.08. AMENDMENTS BY GOVERNING BODY IN EVENT OF FISCAL |
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EMERGENCY. (a) Notwithstanding Section 5.07 of this article, in |
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the event a municipality to which this article applies has a fiscal |
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emergency that requires an amendment to the administrative rules |
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governing municipal contributions, the governing body may amend the |
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administrative rules to address the emergency if the governing |
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body: |
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(1) determines that the emergency exists and approves |
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the proposed amendment by the unanimous vote of all members of the |
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governing body; and |
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(2) provides written notice to the administrative head |
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of the public retirement system at least five business days before |
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the date the proposed amendment takes effect. |
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(b) On the 90th day after the date an amendment under this |
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section takes effect and for each subsequent 90-day period while |
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the amendment is in effect, the governing body shall determine |
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whether the emergency continues to exist. If the governing body |
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does not determine by a unanimous vote that the emergency continues |
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to exist or if the governing body fails to vote on whether the |
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emergency exists as required by this subsection, the amendment |
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automatically expires on the date the vote is taken or on the date |
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the vote should have been taken, as applicable. |
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Sec. 5.09. AMENDMENTS INCREASING CONTRIBUTIONS BY MEMBERS. |
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(a) An amendment to the administrative rules that increases member |
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contributions must be adopted in accordance with the procedures |
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provided by Sections 5.07(a) through (e) of this article for |
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adopting an amendment governing municipal contributions. |
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(b) Notwithstanding any other law, an amendment made in |
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accordance with Subsection (a) of this section may require a |
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participating member to contribute an amount that exceeds 10 |
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percent of the compensation paid to the participating member for |
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each payroll period. |
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Sec. 5.10. EMERGENCY, ROUTINE, OR STATUTORILY REQUIRED |
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AMENDMENTS BY BOARD. (a) Unless an amendment to the |
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administrative rules requires adoption in accordance with Section |
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5.07 or 5.09 of this article, the board of trustees may adopt |
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emergency or routine amendments to the administrative rules or |
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amendments that are required by federal or state law if the board of |
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trustees by unanimous vote of the members present and voting: |
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(1) agrees that the proposed amendment is an |
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emergency, routine, or statutorily required amendment; and |
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(2) approves the proposed amendment. |
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(b) An amendment adopted in accordance with this section is |
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an automatic agenda item for the next regular meeting of the board |
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of trustees and is subject to review or repeal by the board at that |
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meeting. |
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Sec. 5.11. SEMIANNUAL MEETING OF BOARD AND GOVERNING BODY. |
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At least once every six months, the board of trustees and the |
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governing body shall meet to review the performance of the |
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retirement fund and determine how to address the unfunded |
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liabilities, if any, of the public retirement system. |
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SECTION 2. (a) The administrative rules governing the |
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public retirement system of a municipality to which this Act |
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applies under Section 1.01, Article 6243i, Revised Statutes, as |
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added by this Act, in effect on May 31, 2007, shall continue in |
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effect on and after the effective date of this Act. |
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(b) The changes in law made by Sections 4.02, 4.03, 5.06, |
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5.07, 5.08, 5.09, and 5.10, Article 6243i, Revised Statutes, as |
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added by this Act, apply to a change in the administrative rules |
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governing a public retirement system of a municipality to which |
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this Act applies under Section 1.01, Article 6243i, Revised |
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Statutes, as added by this Act, adopted on or after the effective |
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date of this Act. |
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SECTION 3. (a) As soon as practicable after the effective |
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date of this Act, a new board of trustees charged with administering |
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the public retirement system of a municipality described by Section |
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1.01, Article 6243i, Revised Statutes, as added by this Act, shall |
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be elected or appointed in accordance with Section 5.01, Article |
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6243i, Revised Statutes, as added by this Act. |
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(b) The term of a member of the board of trustees or other |
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board administering the public retirement system described by |
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Subsection (a) of this section who is serving on the board on the |
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effective date of this Act expires on the date that a majority of |
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the new board of trustees has been elected or appointed under |
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Subsection (a) of this section. |
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SECTION 4. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2007. |