HB 2136 proposes to amend section 14 of article 6243b of Vernon's Civil Statutes relating to the El Paso Firemen's and Policemen's Pension Funds. If the amortization period of either plan were greater than 40 years, it would allow for an increase in city contributions without a majority vote of the voters of the city. Any increase in contributions by the city would be accompanied by an increase in the member rate per the statute. In the event of an increase, the total contribution rate would be capped at a total contribution rate which would amortize the unfunded liability over a period of 40 years. 

The bill would also permit the city of El Paso  to decrease contributions to the El Paso Firemen's and Policemen's pension plans if a qualified actuary determines that the total contribution rate is sufficient to amortize the unfunded actuarial accrued liability (UAAL) over a 25-year period. HB 2136 would also require that the decrease in contribution rate may not be more than the amount that would result in a total contribution rate that would be necessary to amortize the unfunded actuarial accrued liability over a 25-year (or shorter) period.

PRB Guidelines for Actuarial Soundness establish a minimum amortization period of 40 years, with 15 to 25 years being the recommended range. The bill would allow a contribution reduction when current contributions are sufficient to amortize the UAAL over a 25-year period or less, with reduction limits as stated above. As a result, the bill may allow a contribution reduction that could change the plan's amortization period from less than 25 years to 25 years, which would be at the high end of the PRB recommended range.

Under the provisions of the bill, an action that decreases the total contribution rate of either plan could result in reduced actuarial soundness if either plan suffered an adverse actuarial experience, such as not achieving the plan's assumed rate of return.