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A BILL TO BE ENTITLED
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AN ACT
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relating to the funding policies, actuarial valuations, and |
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reporting requirements 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 801.209(a), Government Code, is amended |
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to read as follows: |
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(a) For each public retirement system, the board shall post |
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on the board's Internet website, or on a publicly available website |
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that is linked to the board's website, the most recent data from |
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reports received under Sections 802.101, 802.103, 802.104, |
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802.105, [and] 802.108, 802.2015, and 802.2016. |
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SECTION 2. 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, and the Judicial Retirement System of |
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Texas Plan Two are exempt from Sections 802.101(a), 802.101(b), |
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802.101(d), 802.102, 802.103(a), 802.103(b), 802.2015, 802.2016, |
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802.202, 802.203, 802.204, 802.205, 802.206, and 802.207. 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 except Sections 802.104 and 802.105. The |
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optional retirement program governed by Chapter 830 is exempt from |
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all of Subchapters B and C except Section 802.106. |
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SECTION 3. Section 802.101(a), Government Code, is amended |
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to read as follows: |
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(a) The governing body of a public retirement system shall |
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employ an actuary, as a full-time or part-time employee or as a |
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consultant, to make a valuation at least once every three years of |
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the assets and liabilities of the system on the basis of assumptions |
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and methods that are reasonable in the aggregate, considering the |
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experience of the program and reasonable expectations, and that, in |
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combination, offer the actuary's best estimate of anticipated |
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experience under the program. The valuation must include a |
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recommended contribution rate needed for the system to achieve and |
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maintain an amortization period that does not exceed 30 years. |
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SECTION 4. Section 802.1014, Government Code, is amended by |
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adding Subsection (b-1) to read as follows: |
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(b-1) Except as provided by Subsection (c), a public |
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retirement system that has assets of at least $100 million shall |
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conduct once every five years an actuarial experience study and |
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shall submit to the board a copy of the actuarial experience study |
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before the 31st day after the date of the study's adoption. |
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SECTION 5. Subchapter C, Chapter 802, Government Code, is |
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amended by adding Sections 802.2015 and 802.2016 to read as |
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follows: |
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Sec. 802.2015. FUNDING SOUNDNESS RESTORATION PLAN. (a) In |
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this section, "governmental entity" has the meaning assigned by |
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Section 802.1012. |
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(b) This section applies to a public retirement system and |
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its associated governmental entity other than a public retirement |
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system and its associated governmental entity subject to Section |
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802.2016. |
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(c) A public retirement system shall notify the associated |
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governmental entity in writing if the retirement system receives an |
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actuarial valuation indicating that the system's actual |
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contributions are not sufficient to amortize the unfunded actuarial |
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accrued liability within 40 years. If a public retirement system's |
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actuarial valuation shows that the system's amortization period has |
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exceeded 40 years for three consecutive annual actuarial |
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valuations, or two consecutive actuarial valuations in the case of |
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a system that conducts the valuations every two or three years, the |
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governing body of the public retirement system and the associated |
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governmental entity shall formulate a funding soundness |
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restoration plan under Subsection (e) in accordance with the |
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system's governing statute. |
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(d) The governing body of a public retirement system and the |
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associated governmental entity that have formulated a funding |
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soundness restoration plan under Subsection (e) shall formulate a |
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revised funding soundness restoration plan under that subsection, |
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in accordance with the system's governing statute, if the system |
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conducts an actuarial valuation showing that: |
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(1) the system's amortization period exceeds 40 years; |
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and |
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(2) the previously formulated funding soundness |
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restoration plan has not been adhered to. |
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(e) A funding soundness restoration plan formulated under |
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this section must: |
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(1) be developed by the public retirement system and |
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the associated governmental entity in accordance with the system's |
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governing statute; and |
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(2) be designed to achieve a contribution rate that |
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will be sufficient to amortize the unfunded actuarial accrued |
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liability within 40 years not later than the 10th anniversary of the |
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date on which the final version of a funding soundness restoration |
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plan is agreed to. |
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(f) A public retirement system and the associated |
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governmental entity that formulate a funding soundness restoration |
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plan shall report any updates of progress made by the entities |
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toward improved actuarial soundness to the board every two years. |
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(g) Each public retirement system that formulates a funding |
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soundness restoration plan as provided by this section shall submit |
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a copy of that plan to the board and any change to the plan not later |
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than the 31st day after the date on which the plan or the change is |
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agreed to. |
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Sec. 802.2016. FUNDING SOUNDNESS RESTORATION PLAN FOR |
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CERTAIN PUBLIC RETIREMENT SYSTEMS. (a) In this section, |
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"governmental entity" has the meaning assigned by Section 802.1012. |
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(b) This section applies only to a public retirement system |
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that is governed by Article 6243i, Revised Statutes. |
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(c) A public retirement system shall notify the associated |
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governmental entity in writing if the retirement system receives an |
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actuarial valuation indicating that the system's actual |
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contributions are not sufficient to amortize the unfunded actuarial |
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accrued liability within 40 years. If a public retirement system's |
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actuarial valuation shows that the system's amortization period has |
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exceeded 40 years for three consecutive annual actuarial |
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valuations, or two consecutive actuarial valuations in the case of |
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a system that conducts the valuations every two or three years, the |
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associated governmental entity shall formulate a funding soundness |
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restoration plan under Subsection (e) in accordance with the public |
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retirement system's governing statute. |
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(d) An associated governmental entity that has formulated a |
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funding soundness restoration plan under Subsection (e) shall |
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formulate a revised funding soundness restoration plan under that |
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subsection, in accordance with the public retirement system's |
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governing statute, if the system conducts an actuarial valuation |
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showing that: |
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(1) the system's amortization period exceeds 40 years; |
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and |
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(2) the previously formulated funding soundness |
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restoration plan has not been adhered to. |
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(e) A funding soundness restoration plan formulated under |
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this section must: |
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(1) be developed in accordance with the public |
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retirement system's governing statute by the associated |
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governmental entity; and |
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(2) be designed to achieve a contribution rate that |
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will be sufficient to amortize the unfunded actuarial accrued |
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liability within 40 years not later than the 10th anniversary of the |
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date on which the final version of a funding soundness restoration |
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plan is formulated. |
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(f) An associated governmental entity that formulates a |
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funding soundness restoration plan shall report any updates of |
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progress made by the public retirement system and associated |
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governmental entity toward improved actuarial soundness to the |
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board every two years. |
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(g) An associated governmental entity that formulates a |
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funding soundness restoration plan as provided by this section |
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shall submit a copy of that plan to the board and any change to the |
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plan not later than the 31st day after the date on which the plan or |
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the change is formulated. |
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SECTION 6. A public retirement system subject to Section |
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802.2015, Government Code, as added by this Act, or a governmental |
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entity subject to Section 802.2016, Government Code, as added by |
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this Act, shall formulate a funding soundness restoration plan, if |
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required to do so under the applicable section, based on the most |
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recent actuarial valuation study conducted under Section 802.101, |
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Government Code, as amended by this Act, not later than November 1, |
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2016. The first actuarial valuation study that is conducted for or |
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by a public retirement system on or after the effective date of this |
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Act must include a recommended contribution rate. |
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SECTION 7. (a) Except as provided by Subsection (b) of this |
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section, a public retirement system subject to Section |
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802.1014(b-1), Government Code, as added by this Act, shall conduct |
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the first actuarial experience study required by Section |
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802.1014(b-1), Government Code, as added by this Act, not later |
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than September 1, 2016. |
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(b) A public retirement system subject to Section |
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802.1014(b-1), Government Code, as added by this Act, that |
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conducted an actuarial experience study after August 31, 2011, and |
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on or before the effective date of this Act, shall conduct the first |
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actuarial experience study required by Section 802.1014(b-1), |
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Government Code, as added by this Act, not later than the fifth |
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anniversary of the date of that preceding study. |
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SECTION 8. 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, 2015. |
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