BILL ANALYSIS |
C.S.H.B. 3310 |
By: Paul |
Pensions |
Committee Report (Substituted) |
BACKGROUND AND PURPOSE
Concern over the ability of public retirement systems to meet their long-term obligations has grown in recent years. Interested parties note that in conducting a study on the financial health of Texas public retirement systems, the State Pension Review Board actively involved retirement systems and industry representatives in its meetings. The study highlighted key findings and provided the board's recommendations on mitigating a retirement system's risk of not meeting those obligations. In support of findings of the study, C.S.H.B. 3310 seeks to assist public retirement systems in meeting their long-term obligations by increasing transparency and providing a way for the system and its sponsoring entity to work together to ensure continued actuarial soundness.
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CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
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RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
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ANALYSIS
C.S.H.B. 3310 amends the Government Code to require a public retirement system to notify the associated governmental entity in writing if the system receives an actuarial valuation indicating that the system's actual contributions are not sufficient to amortize the unfunded actuarial accrued liability within 40 years. The bill requires the governing body of the public retirement system and the associated governmental entity, if the system's actuarial valuation shows that the system's amortization period has exceeded 40 years for three consecutive annual actuarial valuations, or two consecutive actuarial valuations in the case of a system that conducts the valuations every two or three years, to formulate a funding soundness restoration plan in accordance with the system's governing statute. The bill requires the governing body of a public retirement system and the associated governmental entity that have formulated a funding soundness restoration plan to formulate a revised funding soundness restoration plan, in accordance with the system's governing statute, if the system conducts an actuarial valuation showing that the system's amortization period exceeds 40 years and that the previously formulated funding soundness restoration plan has not been adhered to.
C.S.H.B. 3310 requires a funding soundness restoration plan to be developed by the public retirement system and the associated governmental entity in accordance with the system's governing statute and to be designed to achieve a contribution rate that will be sufficient to amortize the unfunded actuarial accrued liability within 40 years not later than the 10th anniversary of the date on which the final version of a funding soundness restoration plan is agreed to. The bill requires a public retirement system and the associated governmental entity that formulate a funding soundness restoration plan to report any updates of progress made by the entities toward improved actuarial soundness to the State Pension Review Board every two years.
C.S.H.B. 3310 requires a public retirement system required to formulate a funding soundness restoration plan to formulate the plan not later than November 1, 2016, based on the most recent actuarial valuation study and requires the first actuarial valuation study that is conducted for or by a public retirement system on or after the bill's effective date to include a recommended contribution rate. The bill requires a public retirement system that formulates a funding soundness restoration plan to submit to the board a copy of that plan and any change to the plan not later than the 31st day after the date on which the plan or the change is agreed to. The bill requires the board to post on the board's website or on a publicly available website that is linked to the board's website the most recent data from reports received under the bill's provisions relating to funding soundness restoration plans.
C.S.H.B. 3310 requires the actuarial valuation of the assets and liabilities of certain public retirement systems to include a recommended contribution rate needed for the system to achieve and maintain an amortization period that does not exceed 30 years. The bill requires a certain public retirement system that has assets of at least $100 million to conduct an actuarial experience study once every five years, with the first such study to be conducted not later than September 1, 2016, and to submit a copy of the study to the board before the 31st day after the date of the study's adoption. The bill requires such a public retirement system that conducted an actuarial experience study after August 31, 2011, and on or before the bill's effective date, to conduct the first actuarial experience study required by the bill's provisions not later than the fifth anniversary of the date of that preceding study.
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EFFECTIVE DATE
On passage, or, if the bill does not receive the necessary vote, September 1, 2015.
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COMPARISON OF ORIGINAL AND SUBSTITUTE
While C.S.H.B. 3310 may differ from the original in minor or nonsubstantive ways, the following comparison is organized and formatted in a manner that indicates the substantial differences between the introduced and committee substitute versions of the bill.
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