Honorable Dan Flynn, Chair, House Committee on Pensions
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB2608 by Murphy (Relating to municipal control of certain public retirement systems established for the benefit of municipal employees.), As Introduced
The bill would add Section 810.004 to the Government Code, concerning municipal control of certain public retirement systems' operative provisions. If the bill is enacted, the actuarial impact of any future plan changes made through a municipal ordinance or resolution could be positive or negative. Therefore, the actuarial impact of the bill cannot be determined at this time.
The bill would preserve the provisions contained in Sections 66 and 67, Article XVI, Texas Constitution, concerning state and local retirement systems, but would allow the sponsoring authority of a municipal retirement system created under state statute to adopt provisions by ordinance or resolution that supplement or supersede the operative provisions contained in the public retirement system's state statute. Under the bill, a municipal ordinance or resolution adopted by the sponsoring authority of a municipal retirement system could change operative provisions of a retirement system, including provisions relating to the benefits, participation and eligibility requirements, funding source or amount, and administration of the system. The bill is silent on potential ordinances or resolutions relating to investment management, investment consulting, actuarial consulting, and legal services. The bill would not affect a system that is a part of a statewide retirement system.
The bill would allow potential conflicting operative provisions for a retirement system between a municipal ordinance or resolution and applicable state statute. The bill provides that in the event of a conflict between the state statute that applies to a public retirement system and a municipal ordinance or resolution adopted by the governing body of the sponsoring municipality of that retirement system, the municipal ordinance or resolution would prevail.
The bill would take effect immediately if it receives the required votes; otherwise, it would take effect September 1, 2015.
Of the 93 actuarially-funded defined benefit plans currently registered with the State Pension Review Board, the bill would affect 13 municipal retirement systems and 41 paid and part-paid systems organized under the Texas Local Fire Fighters Retirement Act (TLFFRA). The bill would also affect 81 pay-as-you-go volunteer firefighter plans organized under TLFFRA. The bill would not affect 3 municipal retirement systems created by city ordinances or city charter, 28 systems governed by Chapter 810 of the Government Code, or the 8 statewide public retirement systems.
The bill does not propose to change the current benefit structure or obligations of any systems; however, it would allow the sponsoring authority of a public retirement system created under a state statute (that is not a part of a statewide retirement system) to adopt plan provisions by municipal ordinance or resolution that may change the benefit structure or obligations of the retirement system affected by the ordinance or resolution in the future.