By: Wentworth S.B. No. 1575
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the issuance of obligations by political subdivisions
  to pay unfunded liabilities for certain retirement benefits of
  officers and employees of the political subdivisions.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subtitle H, Title 9, Government Code, is amended
  by adding Chapter 1436 to read as follows:
  CHAPTER 1436. OBLIGATIONS OF POLITICAL SUBDIVISIONS FOR CERTAIN
  RETIREMENT BENEFITS
         Sec. 1436.001.  DEFINITIONS. In this chapter:
               (1)  "Obligation" includes a bond, certificate, note,
  or book entry obligation.
               (2)  "Unfunded liability" means an unfunded actuarial
  accrued liability of a political subdivision for a nonpension
  retirement benefit.
         Sec. 1436.002.  DEFINITION OF NONPENSION RETIREMENT
  BENEFIT.  In this chapter, "nonpension retirement benefit" means a
  retirement benefit, including a health care benefit plan, for
  retired employees or officers of a political subdivision, other
  than:
               (1)  a continuing, organized program or plan of service
  retirement, disability retirement, or death benefits for officers
  or employees of a political subdivision; and
               (2)  a plan qualified under Section 401(a), Internal
  Revenue Code of 1986.
         Sec. 1436.003.  NONPENSION RETIREMENT BENEFIT OBLIGATIONS
  AUTHORIZED. (a)  A political subdivision may issue obligations to
  fund all or any part of an unfunded liability.  Obligations may not
  be issued after December 31, 2011.
         (b)  Before authorizing issuance and delivery of an
  obligation under this section, the political subdivision's
  governing body must enter into a written agreement with an entity
  that must have:
               (1)  fiduciary responsibility for:
                     (A)  assets that fund the political subdivision's
  nonpension retirement benefits; and
                     (B)  a fund created to receive the net proceeds of
  the obligations to be issued under this section; and
               (2)  the duty to oversee the investment and expenditure
  of the assets of the fund created to receive the net proceeds of the
  obligations to be issued under this section.
         (c)  The written agreement must state the amount of the
  unfunded liability and the date or dates on which the fund created
  to receive the net proceeds of the obligations to be issued under
  this section will accept the net proceeds of the obligations in
  payment of all or a portion of the unfunded liability.
         Sec. 1436.004.  PROCEEDS OF OBLIGATIONS ISSUED. The
  political subdivision shall deposit the net proceeds of obligations
  issued under Section 1436.003 to the credit of the fund created to
  receive the net proceeds of the obligations.
         Sec. 1436.005.  PAYMENT OF OBLIGATIONS. An obligation
  issued under Section 1436.003 may be made payable by the political
  subdivision from:
               (1)  the fund from which compensation is paid to its
  officers and employees;
               (2)  its general fund; or
               (3)  taxes, revenues, both taxes and revenues, or any
  other source or combination of sources of money that the political
  subdivision may use under state law to secure or pay any kind of
  bond or obligation.
         Sec. 1436.006.  OBLIGATION AS REFINANCING. An obligation
  issued under Section 1436.003 is a complete or partial refinancing
  of a commitment of the political subdivision to fund its unfunded
  liability.
         Sec. 1436.007.  SALE OF OBLIGATIONS; MATURITY. Obligations
  issued under Section 1436.003 may be sold at private or public sale
  and must mature not later than the 30th anniversary of the date of
  issuance.
         Sec. 1436.008.  ADDITIONAL AUTHORITY; CREDIT AGREEMENTS.
  (a)  In this section, "credit agreement" and "obligation" have the
  meanings assigned by Section 1371.001.
         (b)  The governing body of a political subdivision that
  issues obligations under Section 1436.003 may exercise any of the
  rights or powers of the governing body of an issuer under Chapter
  1371 and may enter into a credit agreement under that chapter. An
  obligation issued under Section 1436.003 is an obligation under
  Chapter 1371 but is not required to be rated as required by that
  chapter.
         Sec. 1436.009.  CHAPTER CONTROLLING. This chapter prevails
  over any conflict between this chapter and:
               (1)  another law respecting the issuance of obligations
  of a political subdivision; or
               (2)  a municipal home-rule charter.
         Sec. 1436.010.  CHAPTER DEPENDENT ON OTHER ACT. (a)  A
  political subdivision may exercise the authority granted by this
  chapter only if both Senate Bill No. 1102 and House Bill No. 2365,
  Acts of the 80th Legislature, Regular Session, 2007, do not become
  law. If either or both of those bills become law, a political
  subdivision may not exercise the authority granted by this chapter.
         (b)  If both of those bills do not become law, this section
  expires September 1, 2007. If either or both of those bills become
  law, this chapter expires September 1, 2007.
         SECTION 2.  This Act takes effect immediately if it receives
  a vote of two-thirds of all the members elected to each house, as
  provided by Section 39, Article III, Texas Constitution.  If this
  Act does not receive the vote necessary for immediate effect, this
  Act takes effect September 1, 2007.