Amend CSSB 2190 (Senate committee printing) by striking all below the enacting clause and substituting the following:

ARTICLE 1. FIREFIGHTERS' RELIEF AND RETIREMENT FUND

SECTION 1.01.  Section 1, Article 6243e.2(1), Revised Statutes, is amended by amending Subdivisions (1-a), (1-b), (3), (13-a), (15-a), (15-b), and (16) and adding Subdivisions (1-c), (1-d), (1-e), (1-f), (1-g), (3-a), (3-b), (3-c), (3-d), (10-a), (10-b), (11-a), (12-a), (12-b), (12-c), (12-d), (12-e), (12-f), (12-g), (13-b), (13-c), (13-d), (13-e), (15-c), (15-d), (15-e), (15-f), (16-a), (16-b), (16-c), (16-d), (16-e), and (16-f) to read as follows:

(1-a)  "Actuarial data" includes:

(B)  other data that is reasonably necessary to implement Sections 13A through 13F of this article. ["Average monthly salary" means one thirty-sixth of the member's salary as a firefighter for the member's highest 78 biweekly pay periods during the member's participation in the fund or, if the member has participated in the fund for less than three years, the total salary paid to the member for the periods the member participated in the fund divided by the number of months the member has participated in the fund. If a member is not paid on the basis of biweekly pay periods, "average monthly salary" is determined on the basis of the number of pay periods under the payroll practices of the municipality sponsoring the fund that most closely correspond to 78 biweekly pay periods.]

(1-b)  "Actuarial experience study" has the meaning assigned by Section 802.1014, Government Code ["Beneficiary adult child" means a child of a member by birth or adoption who:

[(A)     is not an eligible child; and

[(B)     is designated a beneficiary of a member's DROP account by valid designation under Section 5(j-1)].

(3)  "Code" means the federal Internal Revenue Code of 1986, as amended.

(13-a)  "Minimum contribution rate" means the rate equal to the corridor midpoint minus the corridor margin ["Normal retirement age" means the earlier of:

[(A)     the age at which the member attains 20 years of service; or

[(B)     the age at which the member first attains the age of at least 50 years and at least 10 years of service].

(15-a)  "Payoff year" means the year a liability layer is fully amortized under the amortization period. A payoff year may not be extended or accelerated for a period that is less than one month. ["PROP" means the post-retirement option plan under Section 5A of this article.]

(15-b)  "Pensionable payroll" means the aggregate salary of all the firefighters on active service in an applicable fiscal year ["PROP account" means the notional account established to reflect the credits and contributions of a member or surviving spouse who has made a PROP election in accordance with Section 5A of this article].

(16)  "Salary" means wages as defined by Section 3401(a) of the code, [the amounts includable in gross income of a member] plus any amount not includable in gross income under Section 104(a)(1), Section 125, Section 132(f), Section 402(g)(2) [402(e)(3) or (h)], Section 457 [403(b)], or Section 414(h)(2) [414(h)] of the code, except that with respect to amounts earned on or after the year 2017 effective date, salary excludes overtime pay received by a member or the amount by which the salary earned by a member on the basis of the member's appointed position exceeds the salary of the member's highest tested rank.

SECTION 1.02.  Article 6243e.2(1), Revised Statutes, is amended by adding Sections 1A, 1B, 1C, and 1D to read as follows:

SECTION 1.03.  Section 2, Article 6243e.2(1), Revised Statutes, is amended by amending Subsection (b) and adding Subsection (t) to read as follows:

(b)  The board of trustees of the fund shall be known as the "(name of municipality) Firefighters' Relief and Retirement Fund Board of Trustees" and the fund shall be known as the "(name of municipality) Firefighters' Relief and Retirement Fund." The board consists of 10 trustees, including:

(1)  the mayor or an appointed representative of the mayor;

(2)  the director of finance or the director of finance's designee [treasurer] of the municipality or, if there is not a director of finance [treasurer], the highest ranking employee of the municipality, excluding elected officials, with predominately financial responsibilities, as determined by the mayor, or that employee's designee [secretary, clerk, or other person who by law, charter provision, or ordinance performs the duty of treasurer of the municipality];

(3)  five firefighters who are members of the fund;

(4)  one person who is a retired firefighter and a member of the fund with at least 20 years of participation; and

(5)  two persons, each of whom is a registered voter of the municipality, has been a resident of the municipality for at least one year preceding the date of initial appointment, and is not a municipal officer or employee.

SECTION 1.04.  Article 6243e.2(1), Revised Statutes, is amended by adding Sections 2A and 2B to read as follows:

SECTION 1.05.  Section 3(d), Article 6243e.2(1), Revised Statutes, is amended to read as follows:

(d)  The board may have an actuarial valuation performed each year, and for determining the municipality's contribution rate as provided by Section 13A [13(d)] of this article, the board may adopt a new actuarial valuation each year[, except that an actuarial valuation that will result in an increased municipal contribution rate that is above the statutory minimum may be adopted only once every three years, unless the governing body of the municipality consents to a more frequent increase].

SECTION 1.06.  Article 6243e.2(1), Revised Statutes, is amended by adding Section 3A to read as follows:

SECTION 1.07.  Section 4, Article 6243e.2(1), Revised Statutes, is amended by amending Subsections (a), (b), and (d) and adding Subsections (b-1) and (b-2) to read as follows:

(a)  A member [with at least 20 years of participation] who terminates active service for any reason other than death is entitled to receive a service pension provided by this section if the member was:

(2)  except as provided by Subdivision (1) of this subsection and subject to Subsection (b-2) of this section, hired or rehired as a firefighter on or after the year 2017 effective date, when the sum of the member's age in years and the member's years of participation in the fund equals at least 70.

(b)  Except as otherwise provided by Subsection (d) of this section, the monthly service pension for a member described by:

(b-2)  A member's monthly service pension under Subsection (a)(2) of this section may not exceed 80 percent of the member's average monthly salary [A member who terminates active service on or after November 1, 1997, and who has completed at least 20 years of participation in the fund on the effective date of termination of service is entitled to a monthly service pension, beginning after the effective date of termination of active service, in an amount equal to 50 percent of the member's average monthly salary, plus three percent of the member's average monthly salary for each year of participation in excess of 20 years, but not in excess of 30 years of participation, for a maximum total benefit of 80 percent of the member's average monthly salary].

(d)  The total monthly benefit payable to a retired or disabled member, other than a deferred retiree or active member who has elected the DROP under Section 5(b) of this article, or payable to an eligible survivor of a deceased member as provided by Section 7(a) or 7(b) of this article, shall be increased by the following amounts: by $100, beginning with the monthly payment made for July 1999; by $25, beginning with the monthly payment made for July, 2000; and by $25, beginning with the monthly payment made for July 2001. These additional benefits may not be increased under Section 11(c), (c-1), or (c-2) of this article.

SECTION 1.08.  Section 5, Article 6243e.2(1), Revised Statutes, is amended by amending Subsections (a), (b), (c), (d), and (m) and adding Subsections (a-1), (b-1), (b-2), (d-1), (d-2), and (e-1) to read as follows:

(a)  A member who is eligible to receive a service pension under Section 4(a)(1) [4] of this article and who remains in active service may elect to participate in the deferred retirement option plan provided by this section. A member who is eligible to receive a service pension under Section 4(a)(2) of this article may not elect to participate in the deferred retirement option plan provided by this section. On subsequently terminating active service, a member who elected the DROP may apply for a monthly service pension under Section 4 of this article, except that the effective date of the member's election to participate in the DROP will be considered the member's retirement date for determining the amount of the member's monthly service pension.  The member may also apply for any DROP benefit provided under this section on terminating active service.  An election to participate in the DROP, once approved by the board, is irrevocable.

(a-1)  The monthly benefit of a [A] DROP participant who has at least 20 years of participation on the year 2017 effective date [participant's monthly benefit at retirement] is increased at retirement by two percent of the amount of the member's original benefit for every full year of participation in the DROP by the member for up to 10 years of participation in the DROP.  For a member's final year of participation, but not beyond the member's 10th year in the DROP, if a full year of participation is not completed, the member shall receive a prorated increase of 0.166 percent of the member's original benefit for each month of participation in that year.  An increase provided by this subsection does not apply to benefits payable under Subsection (l) of this section.  An increase under this subsection is applied to the member's benefit at retirement and is not added to the member's DROP account.  The total increase under this subsection may not exceed 20 percent for 10 years of participation in the DROP by the member.

(b)  A member may elect to participate in the DROP by complying with the election process established by the board. The member's election may be made at any time beginning on the date the member has completed 20 years of participation in the fund and is otherwise eligible for a service pension under Section 4(a)(1) [4] of this article. [The election becomes effective on the first day of the month following the month in which the board approves the member's DROP election.] Beginning on the first day of the month following the month in which the member makes an election to participate in the DROP, subject to board approval, and ending on the year 2017 effective date [of the member's DROP election], amounts equal to the deductions made from the member's salary under Section 13(c) of this article shall be credited to the member's DROP account. Beginning after the year 2017 effective date, amounts equal to the deductions made from the member's salary under Section 13(c) of this article may not be credited to the member's DROP account.

(b-1)  On or after the year 2017 effective date, an active [A] member may not participate in the DROP for more than 13 [10] years. If a DROP participant remains in active service after the 13th [10th] anniversary of the effective date of the member's DROP election:

(1)  [,] subsequent deductions from the member's salary under Section 13(c) of this article, except for unused leave pay, may not be credited to the member's DROP account; and

(2)  the account shall continue to be credited with earnings in accordance with Subsection (d) of this section [and may not otherwise increase any benefit payable from the fund for the member's service].

(c)  After a member's DROP election becomes effective, an amount equal to the monthly service pension the member would have received under Section 4 of this article [and Section 11(c) of this article], if applicable, had the member terminated active service on the effective date of the member's DROP election shall be credited to a DROP account maintained for the member. That monthly credit to the member's DROP account shall continue until the earlier of the date the member terminates active service or the 13th [10th] anniversary of the [effective] date of the first credit to the member's DROP account [election].

(d)  A member's DROP account shall be credited with earnings at an annual rate equal to 65 percent of the compounded average annual return earned by the fund over the five years preceding, but not including, the year during which the credit is given. Notwithstanding the preceding, however, the credit to the member's DROP account shall be at an annual rate of not less than 2.5 [five] percent [nor greater than 10 percent], irrespective of actual earnings.

(d-1)  Earnings credited to a member's DROP account under Subsection (d) of this section [Those earnings] shall be computed and credited at a time and in a manner determined by the board, except that earnings shall be credited not less frequently than once in each 13-month period and shall take into account partial years of participation in the DROP[. If the member has not terminated active service, the member's DROP account may not be credited with earnings after the 10th anniversary of the effective date of the member's DROP election].

(m)  A DROP participant with a break in service may receive service credit within DROP for days worked after the regular expiration of the maximum [permitted] DROP participation period prescribed by this section. The service credit shall be limited to the number of days in which the participant experienced a break in service or the number of days required to constitute 13 [10] years of DROP participation, whichever is smaller. A retired member who previously participated in the DROP and who returns to active service is subject to the terms of this section in effect at the time of the member's return to active service.

SECTION 1.09.  Section 5A, Article 6243e.2(1), Revised Statutes, is amended by adding Subsection (o) to read as follows:

SECTION 1.10.  Section 8, Article 6243e.2(1), Revised Statutes, is amended to read as follows:

Sec. 8.  DEFERRED PENSION AT AGE 50; REFUND OF CONTRIBUTIONS. (a) On or after the year 2017 effective date, a [A] member who is hired as a firefighter before the year 2017 effective date, including a member who was hired before the year 2017 effective date and who involuntarily separated from service but has been retroactively reinstated in accordance with an arbitration, civil service, or court ruling, terminates active service for any reason other than death with at least 10 years of participation, but less than 20 years of participation, is entitled to a monthly deferred pension benefit, beginning at age 50, in an amount equal to 1.7 percent of the member's average monthly salary multiplied by the amount of the member's years of participation.

(b)  In lieu of the deferred pension benefit provided under Subsection (a) of this section, a member who terminates active service for any reason other than death with at least 10 years of participation, but less than 20 years of participation, may elect to receive a lump-sum refund of the member's contributions to the fund with interest computed at five percent, not compounded, for the member's contributions to the fund made before the year 2017 effective date and without interest for the member's contributions to the fund made on or after the year 2017 effective date. A member's election to receive a refund of contributions must be made on a form approved by the board. The member's refund shall be paid as soon as administratively practicable after the member's election is received.

(c)  Except as provided by Subsection (a) of this section, a [A] member who is hired or rehired as a firefighter on or after the year 2017 effective date or a member who terminates employment for any reason other than death before the member has completed 10 years of participation is entitled only to a refund of the member's contributions without interest and is not entitled to a deferred pension benefit under this section or to any other benefit under this article. The member's refund shall be paid as soon as administratively practicable after the effective date of the member's termination of active service.

SECTION 1.11.  Section 11, Article 6243e.2(1), Revised Statutes, is amended by amending Subsection (c) and adding Subsections (c-1), (c-2), (c-3), and (c-4) to read as follows:

(c)  Subject to Subsection (c-3) of this section and except as provided by Subsection (c-4) of this section, beginning with the fiscal year ending June 30, 2021, the [The] benefits, including survivor benefits, payable based on the service of a member who has terminated active service and who is or would have been at least 55 [48] years old, received or is receiving an on-duty disability pension under Section 6(c) of this article, or died under the conditions described by Section 7(c) of this article, shall be increased [by three percent] in October of each year by a percentage rate equal to the most recent five fiscal years' smoothed return, as determined by the fund actuary, minus 475 basis points [and, if the benefit had not previously been subject to that adjustment, in the month of the member's 48th birthday].

SECTION 1.12.  The heading to Section 13, Article 6243e.2(1), Revised Statutes, is amended to read as follows:

Sec. 13.  MEMBERSHIP AND MEMBER CONTRIBUTIONS.

SECTION 1.13.  Section 13, Article 6243e.2(1), Revised Statutes, is amended by amending Subsection (c) and adding Subsections (c-1) and (c-2) to read as follows:

(c)  Subject to adjustments authorized by Section 13E or 13F of this article, each [Each] member in active service shall make contributions to the fund in an amount equal to 10.5 [8.35] percent of the member's salary at the time of the contribution[, and as of July 1, 2004, in an amount equal to nine percent of the member's salary at the time of the contribution].

(c-2)  The governing body of the municipality shall deduct from the salary of each member the contribution required by this section [the contributions from the member's salary] and shall forward the contributions to the fund as soon as practicable.

SECTION 1.14.  Article 6243e.2(1), Revised Statutes, is amended by adding Sections 13A, 13B, 13C, 13D, 13E, 13F, 13G, and 13H to read as follows:

(1)  the municipal contribution rate equals the third quarter line rate; and

(1)  increase member contributions and decrease cost-of-living adjustments;

(A)  increasing member contributions; and

Sec. 13G.  INTERPRETATION OF CERTAIN RISK SHARING PROVISIONS; UNILATERAL DECISIONS AND ACTIONS PROHIBITED. (a) Nothing in this article, including Section 2(p) or (p-1) of this article and any authority of the board to construe and interpret this article, to determine any fact, to take any action, or to interpret any terms used in Sections 13A through 13F of this article, may alter or change Sections 13A through 13F of this article.

SECTION 1.15.  Section 17, Article 6243e.2(1), Revised Statutes, is amended by adding Subsections (f), (g), (h), (i), and (j) to read as follows:

SECTION 1.16.  Sections 13(d) and (e), Article 6243e.2(1), Revised Statutes, are repealed.

SECTION 1.17.  The firefighters' relief and retirement fund established under Article 6243e.2(1), Revised Statutes, shall require the fund actuary to prepare the first actuarial experience study required under Section 13D, Article 6243e.2(1), Revised Statutes, as added by this Act, not later than September 30, 2020.

ARTICLE 2. POLICE OFFICERS' PENSION SYSTEM

SECTION 2.01.  Section 1, Article 6243g-4, Revised Statutes, is amended to read as follows:

Sec. 1.  PURPOSE. The purpose of this article is to restate and amend the provisions of former law creating and governing a police officers pension system in each city in this state having a population of two [1.5] million or more, according to the most recent federal decennial census, and to reflect changes agreed to by the city and the board of trustees of the pension system under Section 27 of this article. The pension system shall continue to operate regardless of whether the city's population falls below two [1.5] million.

SECTION 2.02.  Article 6243g-4, Revised Statutes, is amended by adding Section 1A to read as follows:

Sec. 1A.  INTERPRETATION OF ARTICLE. This article does not and may not be interpreted to:

SECTION 2.03.  Section 2, Article 6243g-4, Revised Statutes, is amended by amending Subdivisions (1), (2), (3), (4-a), (11), (13), (14-a), (17), (17-a), and (22) and adding Subdivisions (1-a), (1-b), (1-c), (4-b), (4-c), (4-d), (5-a), (5-b), (5-c), (10-a), (10-b), (10-c), (10-d), (12-a), (13-a), (13-b), (13-c), (13-d), (13-e), (13-f), (14-b), (14-c), (15-a), (15-b), (16-a), (16-b), (17-b), (17-c), (17-d), (17-e), (24), (25), (26), (27), (28), and (29) to read as follows:

(1)  "Active member" means an employee of the city within [a person employed as a classified police officer by] the police department of a city subject to this article, in a classified or appointed position, except for a person in an appointed position who opts out of the plan, a person who is a part-time, seasonal, or temporary employee, or a person who elected to remain a member of a pension system described by Chapter 88, Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes). The term does not include a person who is a member of another pension system of the same city, except to the extent provided by Section [15(j) or] 18 of this article.

(A)  the census data, assumption tables, disclosure of methods, and financial information that are routinely used by the pension system actuary for the pension system's valuation studies or an actuarial experience study under Section 9C of this article; and

(2)  "Amortization rate" means the sum of the scheduled amortization payments for a given fiscal year for the current liability layers divided by the projected pensionable payroll for that fiscal year. ["Average total direct pay" means an amount determined by dividing the following sum by 12:

[(A)     the highest biweekly pay received by a member for any single pay period in the last 26 pay periods in which the member worked full-time, considering only items of total direct pay that are included in each paycheck, multiplied by 26; plus

[(B)     the total direct pay, excluding all items of the type included in Paragraph (A) received during the same last 26 biweekly pay periods.]

(3)  "Assumed rate of return" means the assumed market rate of return on pension system assets, which is seven percent per annum unless adjusted as provided by this article ["Base salary" means the monthly base pay provided for the classified position in the police department held by the member].

(4-a)  "Catastrophic injury" means a sudden, violent, life-threatening, duty-related injury sustained by an active member that is due to an externally caused motor vehicle accident, gunshot wound, aggravated assault, or other external event or events and results, as supported by evidence, in one of the following conditions:

(A)  total, complete, and permanent loss of sight in one or both eyes;

(B)  total, complete, and permanent loss of the use of one or both feet at or above the ankle;

(C)  total, complete, and permanent loss of the use of one or both hands at or above the wrist;

(D)  injury to the spine that results in a total, permanent, and complete paralysis of both arms, both legs, or one arm and one leg; or

(E)  an externally caused physical traumatic injury to the brain rendering the member physically or mentally unable to perform the member's duties as a police officer.

(A)  equal to or greater than the minimum contribution rate; and

(11)  "Former member" means a person who was once an active member, eligible for benefits [vested] or not, but who terminated active member status and received a refund of member contributions.

(13)  "Inactive member" means a person who has separated from service and is eligible to receive [has a vested right to] a service pension from the pension system but is not eligible for an immediate service pension. The term does not include a former member.

(14-a)  "Minimum contribution rate" means the rate equal to the corridor midpoint minus the corridor margin.

(14-c)  "Normal retirement age" means:

(A)  for a member hired before October 9, 2004, including a member hired before October 9, 2004, who involuntarily separated from service but was retroactively reinstated under an arbitration, civil service, or court ruling after October 9, 2004, the earlier of:

(i) [(A)]  the age at which the member attains 20 years of service; or

(ii) [(B)] the age at which the member first attains both the age of at least 60 and at least 10 years of service; or

(B)  except as provided by Paragraph (A) of this subdivision, for a member hired or rehired on or after October 9, 2004, the age at which the sum of the member's age in years and years of service equals at least 70.

(17)  "Pension system" or "system," unless the context requires otherwise, means the retirement and disability plan for employees of any police department subject to this article.

(17-a)  "Police department" means one or more law enforcement agencies designated as a police department by a city.

(A)  the most recent headline consumer price index 10-year forecast published in the Federal Reserve Bank of Philadelphia Survey of Professional Forecasters; or

(17-d)  "Retired member" means a member who has separated from service and who is eligible to receive an immediate service or disability pension under this article.

(22)  "Surviving spouse" means a person who was married to an active, inactive, or retired member at the time of the member's death and, in the case of a marriage or remarriage after the member's retirement, [an inactive or retired member, before the member's separation from service or] for a period of at least five consecutive years [before the retired or inactive member's death].

(A)  "actuarial accrued liability" means the portion of the actuarial present value of projected benefits attributed to past periods of member service based on the cost method used in the risk sharing valuation study prepared under Section 9A or 9B of this article, as applicable; and

(A)  the remaining balance of all then-existing liability layers as of the date of the risk sharing valuation study; and

SECTION 2.04.  Article 6243g-4, Revised Statutes, is amended by adding Sections 2A, 2B, and 2C to read as follows:

SECTION 2.05.  Section 3, Article 6243g-4, Revised Statutes, is amended by amending Subsection (b) and adding Subsections (i) and (j) to read as follows:

(b)  The board is composed of seven members as follows:

(1)  the administrative head of the city or the administrative head's authorized representative;

(2)  three employees of the police department having membership in the pension system, elected by the active, inactive, and retired members of the pension system;

(3)  two retired members who are receiving pensions from the system, who are elected by the active, inactive, and retired members of the pension system, and who are not:

(A)  officers or employees of the city; or

(ii)  Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes) [, elected by the active, inactive, and retired members of the pension system]; and

(4)  the director of finance [treasurer] of the city or the person discharging the duties of the director of finance, or the director's designee [city treasurer].

SECTION 2.06.  Section 4, Article 6243g-4, Revised Statutes, is amended to read as follows:

Sec. 4.  BOARD MEMBER LEAVE AND COMPENSATION. (a) The city shall allow active members who are trustees to promptly attend all board and committee meetings. The city shall allow trustees the time required to travel to and attend educational workshops and legislative hearings and to attend to other pension system business, including meetings regarding proposed amendments to this article, if attendance is consistent with a trustee's duty to the board [Elected members of the board who are employees of the city's police department are entitled to leave from their employer to attend to the official business of the pension system and are not required to report to the city or any other governmental entity regarding travel or the official business of the pension system, except when on city business].

(b)  [If the city employing an elected board member would withhold any portion of the salary of the member who is attending to official business of the pension system, the pension system may elect to adequately compensate the city for the loss of service of the member. If the board, by an affirmative vote of at least four board members, makes this election, the amounts shall be remitted from the fund to the city, and the city shall pay the board member's salary as if no loss of service had occurred.

[(c)] The board, by an affirmative vote of at least four board members, may elect to reimburse board members who are not employees of the city for their time while attending to official business of the pension system. The amount of any reimbursement may not exceed $750 [$350] a month for each affected board member.

SECTION 2.07.  Article 6243g-4, Revised Statutes, is amended by adding Sections 5A and 5B to read as follows:

SECTION 2.08.  Section 6, Article 6243g-4, Revised Statutes, is amended by amending Subsections (f) and (g) and adding Subsections (f-1), (i), and (j) to read as follows:

(f)  The board has full discretion and authority to:

(1)  administer the pension system;

(2)  [, to] construe and interpret this article and any summary plan descriptions or benefits procedures;

(3)  subject to Section 9F of this article, correct any defect, supply any omission, and reconcile any inconsistency that appears in this article;[,] and

(4)  take [to do] all other acts necessary to carry out the purpose of this article in a manner and to the extent that the board considers expedient to administer this article for the greatest benefit of all members.

(f-1)  Except as provided by Section 9F of this article, all [All] decisions of the board under Subsection (f) of this section are final and binding on all affected parties.

(g)  The board, if reasonably necessary in the course of performing a board function, may issue process or subpoena a witness or the production of a book, record, or other document as to any matter affecting retirement, disability, or death benefits under any pension plan provided by the pension system. The presiding officer of the board may issue, in the name of the board, a subpoena only if a majority of the board approves. The presiding officer of the board, or the presiding officer's designee, shall administer an oath to each witness. A peace officer shall serve a subpoena issued by the board. If the person to whom a subpoena is directed fails to comply, the board may bring suit to enforce the subpoena in a district court of the county in which the person resides or in the county in which the book, record, or other document is located. If the district court finds that good cause exists for issuance of the subpoena, the court shall order compliance. The district court may modify the requirements of a subpoena that the court finds are unreasonable. Failure to obey the order of the district court is punishable as contempt.

SECTION 2.09.  Section 8(a), Article 6243g-4, Revised Statutes, is amended to read as follows:

(a)  Subject to adjustments authorized by Section 9D or 9E of this article, each [Each] active member of the pension system shall pay into the system each month 10.5 [8-3/4] percent of the member's [total direct] pay. The payments shall be deducted by the city from the salary of each active member each payroll period and paid to the pension system. Except for the repayment of withdrawn contributions under Section 17(f) [or 18(c)(3)] of this article and rollovers permitted by Section 17(h) of this article, a person may not be required or permitted to make any payments into the pension system after the person separates from service.

SECTION 2.10.  Section 9, Article 6243g-4, Revised Statutes, is amended to read as follows:

Sec. 9.  CONTRIBUTIONS BY THE CITY. (a) Beginning with the year 2017 effective date, the city shall make contributions to the pension system for deposit into the fund as provided by this section and Section 9A, 9B, 9D, or 9E of this article, as applicable. The city shall contribute:

(d)  In addition to the amounts required under this section, the city may at any time contribute additional amounts to the pension system for deposit in the pension fund by entering into a written agreement with the board in accordance with Section 27 of this article [The city shall make substantially equal contributions to the fund as soon as administratively feasible after each payroll period. For each fiscal year ending after June 30, 2005, the city's minimum contribution shall be the greater of 16 percent of the members' total direct pay or the level percentage of salary payment required to amortize the unfunded actuarial liability over a constant period of 30 years computed on the basis of an acceptable actuarial reserve funding method approved by the board. However, for the fiscal year ending June 30, 2002, the city's contribution shall be $32,645,000, for the fiscal year ending June 30, 2003, the city's contribution shall be $34,645,000, for the fiscal year ending June 30, 2004, the city's contribution shall be $36,645,000, and for the fiscal year ending June 30, 2005, the city's contribution shall be 16 percent of the members' total direct pay].

(e) [(c)]  The governing body of a city to which this article applies by ordinance or resolution may provide that the city pick up active member contributions required by Section 8 of this article so that the contributions of all active members of the pension system qualify as picked-up contributions under Section 414(h)(2) of the code. If the governing body of a city adopts an ordinance or resolution under this section, the city, the board, and any other necessary party shall implement the action as soon as practicable. Contributions picked up as provided by this subsection shall be included in the determination of an active member's [total direct] pay, deposited to the individual account of the active member on whose behalf they are made, and treated for all purposes, other than federal tax purposes, in the same manner and with like effect as if they had been deducted from the salary of, and made by, the active member.

SECTION 2.11.  Article 6243g-4, Revised Statutes, is amended by adding Sections 9A, 9B, 9C, 9D, 9E, 9F, and 9G to read as follows:

(1)  the pension system actuary, at the direction of the pension system, shall provide the proposed risk sharing valuation study prepared by the pension system actuary under Subsection (b) of this section to the city actuary; and

(2)  subject to Subsection (k) of this section, if the board rescinds benefit changes under Subdivision (1) of this subsection or pension obligation bond proceeds are not delivered on or before the deadline or reestablished deadline prescribed by Subdivision (1) of this subsection, the initial risk sharing valuation study shall be prepared again and restated without assuming the delivery of the pension obligation bond proceeds, the extended time for delivery of pension obligation bond proceeds, or the rescinded benefit changes, as applicable, and the resulting city contribution rate will become effective in the fiscal year following the completion of the restated initial risk sharing valuation study.

(1)  ending June 30, 2019, if the board does not reestablish the deadline under Subsection (j)(1) of this section; or

SECTION 2.12.  Article 6243g-4, Revised Statutes, is amended by adding Section 10A to read as follows:

SECTION 2.13.  Sections 11(a) and (c), Article 6243g-4, Revised Statutes, are amended to read as follows:

(a)  A member who returns to service after an interruption in service is eligible for [entitled to] credit for the previous service to the extent provided by Section 17 or 19 of this article.

(c)  A member may not have any service credited for unused sick leave, vacation pay, [or] accumulated overtime, or equivalent types of pay until the date the member retires, at which time the member may apply some or all of the service to satisfy the requirements for retirement, although the member otherwise could not meet the service requirement without the credit.

SECTION 2.14.  Section 12, Article 6243g-4, Revised Statutes, is amended by amending Subsections (a), (b), (c), (d), (e), (h), and (i) and adding Subsections (b-1), (b-2), (b-3), (c-1), (c-2), (j), (k), (l), and (m) to read as follows:

(a)  A member who separates from service after attaining normal retirement age [earning 20 or more years of service] is eligible to receive a monthly service pension, beginning in the month of separation from service. A member who separates from service as a classified police officer with the city after November 23, 1998, after earning 10 or more but less than 20 years of service in [any of] the [city's] pension system [systems] and who complies with all applicable requirements of Section 19 of this article is eligible to receive a monthly service pension, beginning in the month the individual attains normal retirement [60 years of] age. An individual may not receive a pension under this article while still an active member[, except as provided by Subsection (f) of this section]. All service pensions end with the month in which the retired member dies. The city shall supply all personnel, financial, and payroll records necessary to establish the member's eligibility for a benefit, the member's credited service, and the amount of the benefit. The city must provide those records in the format specified by the pension system.

(b)  Except as otherwise provided by this section, including Subsection (b-3) of this section, the monthly service pension of a member who:

(1)  is hired before October 9, 2004, including a member hired before October 9, 2004, who involuntarily separated from service but has been retroactively reinstated under arbitration, civil service, or a court ruling, [that becomes due after May 1, 2001,] is equal to the sum of:

(A)  2.75 percent of the member's final average [total direct] pay multiplied by the member's years or partial years of service [or, if the member retired before November 24, 1998, 2.75 percent of the member's base salary,] for [each of] the member's first 20 years of service; and

(B)  [, plus an additional] two percent of the member's final average [total direct] pay multiplied by the member's years or partial years of service for the member's years of service in excess of the 20 years of service described by Paragraph (A) of this subdivision; or

(B)  two percent of the member's final average pay multiplied by the member's years or partial years of service in excess of 20 years of service described by Paragraph (A) of this subdivision [for each of the member's subsequent years of service, computed to the nearest one-twelfth of a year].

(b-1)  A member who [separates from service after November 23, 1998, including a member who was a DROP participant, and] begins to receive a monthly service pension under Subsection (b)(1) of this section shall also receive a one-time lump-sum payment of $5,000 at the same time the first monthly pension payment is made. The lump-sum payment under this subsection is not available to a member who has previously received a $5,000 payment under this section or Section 16 of this article. A member described by Subsection (b)(2) of this section may not receive the lump-sum payment described by this subsection.

(c)  Subject to Subsection (c-2) of this section, beginning with the fiscal year ending June 30, 2021, the [The] pension payable to a [each] retired member or survivor who is 55 years of age or older as of April 1 of the applicable fiscal year, a member or survivor who received benefits or survivor benefits before June 8, 1995, or a survivor of an active member who dies from a cause connected with the performance of the member's duties [of the pension system] shall be adjusted annually, effective April 1 of each year, upward at a rate equal to the most recent five fiscal years' smoothed return, as determined by the pension system actuary, minus 500 basis points [two-thirds of any percentage increase in the Consumer Price Index for All Urban Consumers for the preceding year. The amount of the annual adjustment may not be less than three percent or more than eight percent of the pension being paid immediately before the adjustment, notwithstanding a greater or lesser increase in the consumer price index].

(d)  A retired member who receives a service pension under this article is eligible [entitled] to receive an additional amount each month equal to $150, beginning on the later of the date the retired member's pension begins or the date the first monthly payment becomes due after June 18, 2001, and continuing until the end of the month in which the retired member dies. This amount is intended to defray the retired member's group medical insurance costs and will be paid directly by the fund to the retired member for the retired member's lifetime.

(e)  At the end of each calendar year beginning after 1998, and subject to the conditions provided by this subsection, the pension system shall make a 13th benefit payment to each member or survivor who is hired or rehired before October 9, 2004, including a member hired or rehired before October 9, 2004, who was reinstated under arbitration, civil service, or a court ruling after that date, and [person] who is receiving a service pension. The amount of the 13th payment shall be the same as the last monthly payment received by the retiree or survivor before issuance of the payment, except the payment received by any person who has been in pay status for less than 12 months shall be for a prorated amount determined by dividing the amount of the last payment received by 12 and multiplying this amount by the number of months the person has been in pay status. The 13th payment may be made only for those calendar years in which the pension system's funded ratio is 120 percent or greater[:

[(1)     the assets held by the fund will equal or exceed its liabilities after the 13th payment is made;

[(2)     the rate of return on the fund's assets exceeded 9.25 percent for the last fiscal year ending before the payment; and

[(3)     the payment will not cause an increase in the contribution the city would have been required to make if the 13th payment had not been made].

(h)  Final average [Average total direct] pay for a member who retires after participating in a phase-down program in which the member receives a periodic payment that is generated from the member's accumulated sick time, vacation time, and overtime balances shall be based on the final average pay the member received on the earlier of the date:

(2)  if the member began DROP participation on or after the year 2017 effective date, the member began participation in DROP [highest pay period, excluding any pay for overtime work, in the periods during which the member worked full-time before participating in the phase-down program].

(i)  The computation of final average [total direct] pay shall be made in accordance with procedures and policies adopted by the board.

SECTION 2.15.  Section 14, Article 6243g-4, Revised Statutes, is amended by amending Subsections (b), (c), (d), (e), (f-1), (h), (i), (k), and (l) and adding Subsections (c-1) and (c-2) to read as follows:

(b)  An active member who was hired before October 9, 2004, including a member hired before October 9, 2004, who has been reinstated under arbitration, civil service, or a court ruling after that date, and has at least 20 years of service with the police department may file with the pension system an election to participate in DROP and receive a DROP benefit instead of the standard form of pension provided by this article as of the date the active member attained 20 years of service. The election may be made, under procedures established by the board, by an eligible active member who has attained the required years of service. A DROP election that is made and accepted by the board may not be revoked [before the member's separation from service].

(c)  The monthly service pension or [and] death benefits of an active member who is a DROP participant that were accrued under this article as it existed immediately before the year 2017 effective date remain accrued.

(c-1)  The monthly service pension or death benefits of an active member who becomes a DROP participant on or after the year 2017 effective date will be determined as if the [active] member had separated from service and begun receiving a pension on the effective date of the member's DROP election and the[. The active] member does not retire but does not accrue additional service credit beginning on the effective date of the member's entry into DROP.

(1)  any [the election, and] increases in the member's pay that occur on or after the effective date of the member's entry into DROP [that date] may not be used in computing the [active] member's monthly service pension; and

(2)  any[, except as provided by Subsection (l) of this section, but] cost-of-living adjustments that occur on or after the effective date of the member's entry into DROP [that date] and that otherwise would be applicable to the pension will not be made during the time the member participates in DROP.

(d)  The member's DROP benefit is determined as provided by this subsection and Subsection (e) of this section. Each month an amount equal to the monthly service pension the active member would have been eligible [entitled] to receive if the active member had separated from service on the effective date of entry into DROP, less any amount that is intended to help defray the active member's group medical insurance costs as described by Section 12(d) of this article, shall be credited to a notional DROP account for the active member[, and each month an amount equal to the monthly contributions the active member makes to the fund on and after the effective date of entry into DROP also shall be credited to the same notional DROP account]. In any year in which a 13th payment is made to retired members under Section 12(e) of this article, an amount equal to the amount of the 13th payment that would have been made to the DROP participant if the DROP participant had retired on the date of DROP entry will be credited to the DROP account.

(e)  As of the end of each month an amount is credited to each active member's notional DROP account at the rate of one-twelfth of a hypothetical earnings rate on amounts in the account. The hypothetical earnings rate is determined for each calendar year based on the compounded average of the aggregate annual rate of return on investments of the pension system for the five consecutive fiscal years ending June 30 preceding the calendar year to which the earnings rate applies, multiplied by 65 percent. The hypothetical earnings rate may not be less than 2.5 percent [zero].

(f-1)  If a DROP participant separates from service due to death, [and] the participant's surviving spouse is eligible [person entitled] to receive benefits under Sections 16 and 16A of this article and the surviving spouse may elect to receive [does not revoke the DROP election,] the DROP benefit [may be received] in the form of an additional annuity over the life expectancy of the surviving spouse.

(h)  Instead of beginning to receive a service pension on separation from service in accordance with Section 12 of this article, a retired member who is a DROP participant may elect to have part or all of the amount that would otherwise be paid as a monthly service pension, less any amount required to pay the retired member's share of group medical insurance costs, credited to a DROP account, in which case the additional amounts will become eligible to be credited with hypothetical earnings in the same manner as the amounts described by Subsection (g) of this section. On and after the year 2017 effective date, additional amounts may not be credited to a DROP account under this subsection. Any amounts credited under this subsection before the year 2017 effective date shall remain accrued in a retired member's DROP account.

(i)  A retired member who has not attained age 70-1/2, whether or not a DROP participant before retirement, may elect to have part or all of an amount equal to the monthly service pension the retired member would otherwise be entitled to receive, less any amount required to pay the retired member's share of group medical insurance costs, credited to a DROP account, in which case the amounts will become eligible to be credited with hypothetical earnings in the same manner as the amounts described by Subsection (g) of this section. On and after the year 2017 effective date, additional amounts may not be credited to a DROP account under this subsection. Any amounts credited under this subsection before the year 2017 effective date shall remain accrued in a retired member's DROP account [A retired member who has elected to have monthly service pension benefits credited to a DROP account under this subsection or Subsection (h) of this section may direct that the credits stop and the monthly service pension resume at any time. However, a retired member who stops the credits at any time after September 1, 1999, may not later resume the credits].

(k)  If a retired member who is [or was] a DROP participant is rehired as an employee of the police department, any pension or DROP distribution that was being paid shall be suspended and the monthly amount described by Subsection (d) of this section will again begin to be credited to the DROP account while the member continues to be an employee. If the member's DROP account has been completely distributed, a new notional account may not [will] be created and the monthly amount described by Subsection (d) of this section may not be credited to a DROP account on behalf of the member [to receive the member's monthly credits. If a retired member who was never a DROP participant is rehired as an employee of the police department, that member shall be eligible to elect participation in DROP on the same basis as any other member].

(l)  The maximum number of years an active member may participate in DROP is 20 years. Except as provided by this subsection, after the DROP participant has reached the maximum number of years of DROP participation prescribed by this subsection, including DROP participants with 20 years or more in DROP on or before the year 2017 effective date, the DROP participant may not receive the monthly service pension that was credited to a notional DROP account but may receive the hypothetical earnings rate stated in Subsection (e) of this section. Notwithstanding the preceding, a member's DROP account balance before the year 2017 effective date may not be reduced under the preceding provisions of this subsection [The DROP account of each DROP participant who was an active member on May 1, 2001, shall be recomputed and adjusted, effective on that date, to reflect the amount that would have been credited to the account if the member's pension had been computed based on 2.75 percent of the member's average total direct pay, or base pay if applicable, for each of the member's first 20 years of service. The DROP account adjustment shall also include the assumed earnings that would have been credited to the account if the 2.75 percent multiplier for the first 20 years of service had been in effect from the time the member became a DROP participant].

SECTION 2.16.  Section 15, Article 6243g-4, Revised Statutes, is amended by amending Subsections (a), (b), (c), (d), (e), and (i) and adding Subsections (a-1), (c-1), (l), (m), and (n) to read as follows:

(a)  An active member who becomes totally and permanently incapacitated for the performance of the member's duties as a result of a bodily injury received in, or illness caused by, the performance of those duties shall, on presentation to the board of proof of total and permanent incapacity, be retired and shall receive an immediate duty-connected disability pension equal to:

(1)  for members hired or rehired before October 9, 2004, the greater of 55 percent of the member's final average [total direct] pay at the time of retirement or the member's accrued service pension; or

(B)  accrued service pension.

(a-1)  If the injury or illness described by Subsection (a) of this section involves a traumatic event that directly causes an immediate cardiovascular condition resulting in a total disability, the member is eligible for a duty-connected disability pension. A disability pension granted by the board shall be paid to the member for the remainder of the member's life, [or for] as long as the incapacity remains, subject to Subsection (e) of this section. If a member is a DROP participant at the commencement of the member's disability, the member shall have the option of receiving the DROP balance in any manner that is approved by the board and that satisfies the requirements of Section 401(a)(9) of the code and Treasury Regulation Section 1.104-1(b) (26 C.F.R. Section 1.104-1) and is otherwise available to any other member under this article.

(b)  A member [with 10 years or more of credited service] who becomes totally and permanently incapacitated for the performance of the member's duties and is not eligible for either an immediate service pension or a duty-connected disability pension is eligible for an immediate monthly pension computed in the same manner as a service retirement pension but based on final average [total direct] pay and service accrued to the date of the disability. The pension under this subsection may not be less than:

(1)  for members hired before October 9, 2004, including a member who involuntarily separated from service but has been retroactively reinstated under arbitration, civil service, or a court ruling,  27.5 percent of the member's final average [total direct] pay; or

(2)  except as provided by Subdivision (1) of this subsection, for members hired or rehired on or after October 9, 2004, 22.5 percent of the member's final average pay.

(c)  A member hired or rehired before October 9, 2004, who becomes eligible [entitled] to receive a disability pension after November 23, 1998, is eligible [entitled] to receive:

(1)  subject to Subsection (c-1) of this section, a one-time lump-sum payment of $5,000 at the same time the first monthly disability pension payment is made, but only if the member has not previously received a $5,000 payment under this section or Section 12 of this article; and

(2)  [. The retired member shall also receive] an additional amount each month equal to $150, beginning on the later of the date the pension begins or the date the first monthly payment becomes due after June 18, 2001, and continuing as long as the disability pension continues, to help defray the cost of group medical insurance.

(c-1)  For any year in which a 13th payment is made to retired members under Section 12(e) of this article, a 13th payment, computed in the same manner and subject to the same conditions, shall also be paid to members who have retired under this section.

(d)  A person may not receive a disability pension unless the person files with the board an application for a disability pension not later than 180 days after the date of separation from service, at which time the board shall have the person examined, not later than the 90th day after the date the member files the application, by a physician or physicians chosen and compensated by the board. The physician shall make a report and recommendations to the board regarding the extent of any disability and whether any disability that is diagnosed is a duty-connected disability. Except as provided by Subsection (j) of this section, a person may not receive a disability pension for an injury received or illness incurred after separation from service. In accordance with Section 6(g) of this article, the board may, through its presiding officer, issue process, administer oaths, examine witnesses, and compel witnesses to testify as to any matter affecting retirement, disability, or death benefits under any pension plan within the pension system.

(e)  A retired member who has been retired for disability is subject at all times to reexamination by a physician chosen and compensated by the board and shall submit to further examination as the board may require. If a retired member refuses to submit to an examination, the board shall [may] order the payments stopped. If a retired member who has been receiving a disability pension under this section recovers so that in the opinion of the board the retired member is able to perform the usual and customary duties formerly performed for the police department, and the retired member is reinstated or offered reinstatement to the position, or hired by another law enforcement agency to a comparable position [reasonably comparable in rank and responsibility to the position, held at the time of separation from service], the board shall order the member's disability pension stopped. A member may apply for a normal pension benefit, if eligible, if the member's disability benefit payments are stopped by the board under this subsection.

(i)  Effective for payments that become due after April 30, 2000, and instead of the disability benefit provided by Subsection (a) or[,] (b)[, or (h)] of this section, a member who suffers a catastrophic injury shall receive a monthly benefit equal to 100 percent of the member's final average [total direct] pay determined as of the date of retirement, and the member's DROP balance, if any.

SECTION 2.17.  Section 16, Article 6243g-4, Revised Statutes, is amended to read as follows:

Sec. 16.  RIGHTS OF SURVIVORS. (a) For purposes of this article, a marriage is considered to exist only if the couple is lawfully married under the laws of a state, the District of Columbia, a United States territory, or a foreign jurisdiction and the marriage would be recognized as a marriage under the laws of at least one state, possession, or territory of the United States, regardless of domicile [marriage is recorded in the records of the recorder's office in the county in which the marriage ceremony was performed]. In the case of a common-law marriage, a marriage declaration must be signed by the member and the member's common-law spouse before a notary public or similar official and recorded in the records of the applicable jurisdiction [county clerk's office in the county] in which the couple resides at the commencement of the marriage. In addition, a marriage that is evidenced by a declaration of common-law marriage signed before a notary public or similar official after December 31, 1999, may not be treated as effective earlier than the date on which it was signed before the notary public or similar official.

(b)  If a retired member dies after becoming eligible for [entitled to] a service or disability pension, the board shall pay an immediate monthly benefit as follows:

(1)  to the surviving spouse for life, if there is a surviving spouse, a sum equal to the pension that was being received by the retired member at the time of death;

(2)  to the guardian of any dependent child under 18 years of age or a child with a disability as long as the dependent child complies with the definition of dependent child under Section 2(7) of this article [children], on behalf of the dependent child [children], or directly to a dependent child described by Section 2(7)(B) of this article, and if there is no spouse eligible for [entitled to] an allowance, the sum a surviving spouse would have received, to be divided equally among all [the] dependent children if there is more than one dependent child; or

(3)  to any dependent parents for life if no spouse or dependent child is eligible for [entitled to] an allowance, the sum the spouse would have received, to be divided equally between the two parents if there are two dependent parents.

(c)  If an active [a] member of the pension system who has not completed 20 [10] years of service in the police department is killed or dies from any cause growing out of or in consequence of any act clearly not in the actual performance of the member's official duty, the member's surviving spouse, dependent child or children, or dependent parent or parents are eligible [entitled] to receive an immediate benefit. The benefit is computed in the same manner as a service retirement pension but is based on the deceased member's service and final average [total direct] pay at the time of death. The monthly benefit may not be less than:

(1)  27.5 percent of the member's final average [total direct] pay for members hired before October 9, 2004, including a member who involuntarily separated from service but has been retroactively reinstated under arbitration, civil service, or a court ruling; or

(2)  22.5 percent of the member's final average pay for members hired or rehired on or after October 9, 2004.

(e)  If any active member is killed or dies from any cause growing out of or in consequence of the performance of the member's duty, the member's surviving spouse, dependent child or children, or dependent parent or parents are eligible [entitled] to receive immediate benefits computed in accordance with Subsection (b) of this section, except that the benefit [payable to the spouse, or to the guardian of the dependent child or children if there is no surviving spouse, or the dependent parent or parents if there is no surviving spouse or dependent child,] is equal to 100 percent of the member's final average [total direct] pay, computed as of the date of death.

(f)  A surviving spouse who receives a survivor's benefit under this article is eligible [entitled] to receive an additional amount each month equal to $150, beginning with the later of the date the first payment of the survivor's benefit is due or the date the first monthly payment becomes due after June 18, 2001, and continuing until the end of the month in which the surviving spouse dies.

(g)  A surviving spouse or dependent who becomes eligible to receive benefits with respect to an active member who was hired or rehired before October 9, 2004, who dies in active service after November 23, 1998, is eligible [entitled] to receive a one-time lump-sum payment of $5,000 at the time the first monthly pension benefit is paid, if the member has not already received a $5,000 lump-sum payment under Section 12 or 15(c) of this article. If more than one dependent is eligible to receive a payment under this subsection, the $5,000 shall be divided equally among the eligible dependents. This payment has no effect on the amount of the surviving spouse's or dependents' monthly pension and may not be paid more than once.

(h)  The monthly benefits of surviving spouses or dependents provided under this section, except the $150 monthly payments described by Subsection (f) of this section, shall be increased annually at the same time and by the same percentage as the pensions of retired members are increased in accordance with Section 12(c) or 12(c-1) of this article. Also, for any year in which a 13th payment is made pursuant to Section 12(e) of this article, a 13th payment, computed in the same manner and subject to the same conditions, shall also be made to the survivor [survivors] who is eligible [are entitled] to receive death benefits at that time if the member would have been entitled to a 13th payment, if living.

(i)  If a member or individual receiving a survivor's pension dies before monthly payments have been made for at least five years, leaving no person otherwise eligible [entitled] to receive further monthly payments with respect to the member, the monthly payments shall continue to be made [to the designated beneficiary of the member or survivor, or to the estate of the member or survivor if a beneficiary was not designated,] in the same amount as the last monthly payment made to the member or[,] survivor[, or estate,] until payments have been made for five years with respect to the member. The payments shall be made to the spouse of the member, if living, and if no spouse is living, to the natural or adopted children of the member, to be divided equally among the children if the member has more than one child. If the member has no spouse or children who are living, the benefit may not be paid. If the member dies after becoming eligible to receive benefits [vested] but before payments begin, leaving no survivors eligible for benefits, the amount of each monthly payment over the five-year period shall be the same as the monthly payment the member would have received if the member had taken disability retirement on the date of the member's death and shall be paid to the member's spouse or children in the manner provided by this subsection. If the member has no spouse or children who are living, then the benefit may not be paid [A member may designate a beneficiary in lieu of the member's estate to receive the remaining payments in the event the member and all survivors die before payments have been received for five years]. The member's estate or a beneficiary who is not a survivor or dependent is not eligible [entitled] to receive the payment described by Subsection (g) of this section.

SECTION 2.18.  Section 16A, Article 6243g-4, Revised Statutes, is amended to read as follows:

Sec. 16A.  BENEFICIARY DESIGNATION FOR DROP. (a) Except for the marriage requirement described by Section 16(a) of this article, the [The] provisions of Section 16 of this article pertaining to rights of survivors do not apply to an amount held in a member's DROP account. A member who participates in DROP may designate a beneficiary in the form and manner prescribed by or on behalf of the board to receive the balance of the member's DROP account in the event of the member's death, as permitted by Section 401(a)(9) of the code and the board's policies. A member who is married is considered to have designated the member's spouse as the member's beneficiary unless the spouse consents, in a notarized writing delivered to the board, to the designation of another person as beneficiary. If no designated beneficiary survives the member, the board shall [may] pay the balance of the member's DROP account to the member's beneficiaries in the following order:

(1)  to the member's spouse;

(2)  if the member does not have a spouse, to each natural or adopted child of the member, or to the guardian of the child if the child is a minor or has a disability, in equal shares;

(3)  if the member does not have a spouse or any children, to each surviving parent of the member in equal shares; or

(4)  if the member has no beneficiaries described by Subdivisions (1), (2), and (3) of this subsection, to the estate of the member.

(b)  If a member names a spouse as a beneficiary and is subsequently divorced from that spouse, the divorce voids the designation of the divorced spouse as the member's beneficiary. A designation of a divorced spouse will cause the board to pay any balance remaining in the member's DROP account in the order prescribed by Subsection (a) of this section.

SECTION 2.19.  Section 17, Article 6243g-4, Revised Statutes, is amended by amending Subsections (b), (d), and (e) and adding Subsection (i) to read as follows:

(b)  A member of the pension system who has not completed 20 years of service at the time of separation from service with the police department is eligible for [entitled to] a refund of the total of the contributions the member made to the pension system, plus any amount that was contributed for the member by the city and not applied in accordance with this section to provide the member with 10 years of service. The refund does not include interest, and neither the city nor the member is eligible for [entitled to] a refund of the contributions the city made on the member's behalf, except as expressly provided by this subsection. By receiving the refund, the member forfeits any service earned before separation from service, even if it is otherwise nonforfeitable.

(d)  A member must apply to the board for a refund within one year after the date of separation from service. Failure to apply for the refund within the one-year period results in a forfeiture of the right to the refund except for an inactive member who is eligible for a pension [whose right to a pension is nonforfeitable]. However, the board may reinstate any amount forfeited and allow the refund on application by the former member.

(e)  Heirs, executors, administrators, personal representatives, or assignees are not eligible [entitled] to apply for and receive the refund authorized by this section [except as provided by Section 16(c) of this article].

SECTION 2.20.  Section 18(a), Article 6243g-4, Revised Statutes, is amended to read as follows:

(a)  Except as provided by this section:

(1)  credit may not be allowed to any person for service with any department in the city other than the police department; [and]

(2)  a person's service will be computed from the date of entry into the service of the police department as a classified police officer until the date of separation from service with the police department; and

(3)  a member who received service credit for service with any department in the city other than the police department and who is receiving a monthly pension benefit or who began participation in DROP before the year 2017 effective date shall continue to have the service credit apply.

SECTION 2.21.  Sections 19(b) and (d), Article 6243g-4, Revised Statutes, are amended to read as follows:

(b)  A person who rejoins the pension system under this section is eligible [entitled] to receive service credit for each day of service and work performed by the person in a classified position in the police department, except for any period during which the person is a DROP participant. The board shall add service earned after the transfer to the prior service the active member accrued in a classified position in the police department. However, the active member may not receive service credit under this article, except to the extent provided by Section 18, for service performed for the city other than in a classified position in the police department.

(d)  When a member who has transferred as described by this section subsequently retires, the retired member is eligible for [entitled to] a pension computed on the basis of the combined service described by Subsection (b) of this section, after deducting any period in which the member was suspended from duty without pay, on leave of absence without pay, separated from service, or employed by the city in a capacity other than in a classified position in the police department.

SECTION 2.22.  Section 21, Article 6243g-4, Revised Statutes, is amended to read as follows:

Sec. 21.  DETERMINATION OF BENEFITS; PROVISION OF INFORMATION. (a) The board may require any member, survivor, or other person or entity to furnish information the board requires for the determination of benefits under this article. If a person or entity does not cooperate in the furnishing or obtaining of information required as provided by this section, the board may withhold payment of the pension or other benefits dependent on the information.

SECTION 2.23.  Section 23, Article 6243g-4, Revised Statutes, is amended to read as follows:

Sec. 23.  MEMBERS IN MILITARY SERVICE. (a) A member of the pension system engaged in active service in a uniformed service may not be required to make the monthly payments into the fund and may not lose any previous years' service with the city because of the uniformed service. The uniformed service shall count as continuous service in the police department if the member returns to the city police department after discharge from the uniformed service as an employee within the period required by the Uniformed Services Employment and Reemployment Rights Act of 1994 (38 U.S.C. Section 4301 et seq.), as amended, and the uniformed service does not exceed the period for which a person is eligible [entitled] to have service counted pursuant to that Act. Notwithstanding any other provision of this article, contributions and benefits shall be paid and qualified service for military service shall be determined in compliance with Section 414(u) of the code.

(b)  The city is required to make its payments into the fund on behalf of each member while the member is engaged in a uniformed service. If a member who has less than 10 years of service in the pension system dies directly or indirectly as a result of the uniformed service, and without returning to active service, the spouse, dependent children, dependent parent, or estate of the member is eligible [entitled] to receive a benefit in the same manner as described by Section 16(c) of this article.

SECTION 2.24.  Section 24(b), Article 6243g-4, Revised Statutes, is amended to read as follows:

(b)  Payments due on behalf of a dependent child shall be paid to the dependent child's guardian, if any, or if none to the person with whom the dependent child is living, except that the board may make payments directly to a dependent child in an appropriate case and withhold payments otherwise due on behalf of any person if the board has reason to believe the payments are not being applied on behalf of the person eligible [entitled] to receive them. The board may request a court of competent jurisdiction to appoint a person to receive and administer the payments due to any dependent child or person under a disability.

SECTION 2.25.  Section 25, Article 6243g-4, Revised Statutes, is amended by amending Subsections (b), (c), (d), (g), and (h) and adding Subsections (c-1) and (h-1) through (h-13) to read as follows:

(b)  A member or survivor of a member of the pension system may not accrue a retirement pension, disability retirement allowance, death benefit allowance, DROP benefit, or any other benefit under this article in excess of the benefit limits applicable to the fund under Section 415 of the code. The board shall reduce the amount of any benefit that exceeds those limits by the amount of the excess. If total benefits under this fund and the benefits and contributions to which any member is eligible [entitled] under any other qualified plans maintained by the city that employs the member would otherwise exceed the applicable limits under Section 415 of the code, the benefits the member would otherwise receive from the fund shall be reduced to the extent necessary to enable the benefits to comply with Section 415.

(c)  Subject to Subsection (c-1) of this section, any distributee [Any member or survivor] who receives [any distribution that is] an eligible rollover distribution [as defined by Section 402(c)(4) of the code] is eligible [entitled] to have that distribution transferred directly to another eligible retirement plan of the distributee's [member's or survivor's] choice on providing direction to the pension system regarding that transfer in accordance with procedures established by the board.

(d)  The annual compensation for each member [total salary] taken into account for any purpose under this article [for any member of the pension system] may not exceed $200,000 for any year for an eligible participant, or for years beginning after 2001 for an ineligible participant, or $150,000 a year before 2001 for an ineligible participant. These dollar limits shall be adjusted from time to time in accordance with guidelines provided by the United States secretary of the treasury and must comply with Section 401(a)(17) of the code. For purposes of this subsection, an eligible participant is a person who first became an active member before 1996, and an ineligible participant is a member who is not an eligible participant.

(g)  Distribution of benefits must begin not later than April 1 of the year following the calendar year during which the member eligible for [entitled to] the benefits becomes 70-1/2 years of age or terminates employment with the employer, whichever is later, and must otherwise conform to Section 401(a)(9) of the code.

(h)  For purposes of adjusting any benefit due to the limitations prescribed by Section 415 of the code, the following provisions shall apply:

(h-13)  Notwithstanding Subsection (h-12) of this section, reductions may be made in a different manner and priority pursuant to the agreement of the pension system and the plan administrator of all other plans covering such member. [If the amount of any benefit is to be determined on the basis of actuarial assumptions that are not otherwise specifically set forth for that purpose in this article, the actuarial assumptions to be used are those earnings and mortality assumptions being used on the date of the determination by the pension system's actuary and approved by the board. The actuarial assumptions being used at any particular time shall be attached as an addendum to a copy of this article and treated for all purposes as a part of this article. The actuarial assumptions may be changed by the pension system's actuary at any time if approved by the board, but a change in actuarial assumptions may not result in any decrease in benefits accrued as of the effective date of the change.]

SECTION 2.26.  Section 26(b)(3), Article 6243g-4, Revised Statutes, is amended to read as follows:

(3)  "Maximum benefit" means the retirement benefit a retired member and the spouse, dependent child, or dependent parent of a retired member or deceased member or retiree are eligible [entitled] to receive from all qualified plans in any month after giving effect to Section 25(b) of this article and any similar provisions of any other qualified plans designed to conform to Section 415 of the code.

SECTION 2.27.  Sections 26(c), (d), and (e), Article 6243g-4, Revised Statutes, are amended to read as follows:

(c)  An excess benefit participant who is receiving benefits from the pension system is eligible for [entitled to] a monthly benefit under this excess benefit plan in an amount equal to the lesser of:

(1)  the member's unrestricted benefit less the maximum benefit; or

(2)  the amount by which the member's monthly benefit from the fund has been reduced because of the limitations of Section 415 of the code.

(d)  If a spouse, dependent child, or dependent parent is eligible for [entitled to] preretirement or postretirement death benefits under a qualified plan after the death of an excess benefit participant, the surviving spouse, dependent child, or dependent parent is eligible for [entitled to] a monthly benefit under the excess benefit plan equal to the benefit determined in accordance with this article without regard to the limitations under Section 25(b) of this article or Section 415 of the code, less the maximum benefit.

(e)  Any benefit to which a person is eligible [entitled] under this section shall be paid at the same time and in the same manner as the benefit would have been paid from the pension system if payment of the benefit from the pension system had not been precluded by Section 25(b) of this article. An excess benefit participant or any beneficiary may not, under any circumstances, elect to defer the receipt of all or any part of a payment due under this section.

SECTION 2.28.  The heading to Section 27, Article 6243g-4, Revised Statutes, is amended to read as follows:

Sec. 27.  CERTAIN WRITTEN AGREEMENTS BETWEEN PENSION SYSTEM AND CITY AUTHORIZED [AGREEMENT TO CHANGE BENEFITS].

SECTION 2.29.  Section 27, Article 6243g-4, Revised Statutes, is amended by amending Subsection (b) and adding Subsection (c) to read as follows:

(b)  A pension benefit or allowance provided by this article may be increased if the increase:

(1)  is first approved by a qualified actuary selected by the board;

(2)  is approved by the board and the city in a written agreement as authorized by this section; and

(3)  does not deprive a member, without the member's written consent, of a right to receive benefits when [that have become fully vested and matured in] the member is fully eligible.

SECTION 2.30.  Section 29, Article 6243g-4, Revised Statutes, is amended by adding Subsections (c), (d), (e), (f), and (g) to read as follows:

SECTION 2.31.  Article 6243g-4, Revised Statutes, is amended by adding Section 30 to read as follows:

SECTION 2.32.  Sections 2(19) and (23), 8(b), 12(f), 14(f) and (m), 15(h) and (j), and 18(b) and (c), Article 6243g-4, Revised Statutes, are repealed.

SECTION 2.33.  A city and board that have entered into one or more agreements under Section 27, Article 6243g-4, Revised Statutes, shall agree in writing that any provisions in the agreements that specifically conflict with this Act are no longer in effect, as of the year 2017 effective date, and any nonconflicting provisions of the agreements remain in full force and effect.

SECTION 2.34.  The pension system established under Article 6243g-4, Revised Statutes, shall require the pension system actuary to prepare the first actuarial experience study required under Section 9C, Article 6243g-4, Revised Statutes, as added by this Act, not later than September 30, 2022.

ARTICLE 3. MUNICIPAL EMPLOYEES PENSION SYSTEM

SECTION 3.01.  Section 1, Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended by amending Subdivisions (1), (4), (5), (7), (14), (18), and (26) and adding Subdivisions (1-a), (1-b), (1-c), (1-d), (1-e), (1-f), (4-a), (4-b), (4-c), (4-d), (4-e), (4-f), (11-a), (11-b), (11-c), (11-d), (11-e), (11-f), (11-g), (11-h), (11-i), (11-j), (11-k), (12-a), (12-b), (14-a), (14-b), (17-a), (18-a), (18-b), (20-a), (21-a), (26-a), (26-b), (28), (29), (30), and (31) to read as follows:

(1)  "Actuarial data" includes:

(1-f)  "Authorized absence" means:

(A)  each day an employee is absent due to an approved holiday, vacation, accident, or sickness, if the employee is continued on the employment rolls of the city or the pension system, receives the employee's regular salary from the city or the pension system for each day of absence, and remains eligible to work on recovery or return; or

(B)  any period that a person is on military leave of absence under Section 18(a) of this Act, provided the person complies with the requirements of that section.

(4)  "City" means a municipality having a population of more than two [1.5] million.

(5)  "Credited service" means each day of service and prior service of a member for which:

(A)  the city [has] and[, for service in group A,] the member have [has] made required contributions to the pension fund that were not subsequently withdrawn;

(B)  the member has purchased service credit or converted service credit from group B to group A by paying into the pension fund required amounts that were not subsequently withdrawn;

(C)  the member has reinstated service under Section 7(g) of this Act; and

(D)  the member has previously made payments to the pension fund that, under then existing provisions of law, make the member eligible for credit for the service and that were not subsequently withdrawn.

(7)  "Dependent child" means an unmarried natural or legally adopted child of a member, deferred participant, or retiree who:

(A)  was supported by the member, deferred participant, or retiree before the termination of employment of the member, deferred participant, or retiree; and

(B)  is under 21 years of age or is totally and permanently disabled from performing any full-time employment because of an injury, illness, serious mental illness, intellectual disability, or pervasive development disorder [or retardation] that began before the child became 18 years of age and before the termination of employment [death] of the member, deferred participant, or retiree.

(14)  "Military service" means active service in the armed forces of the United States or wartime service in the armed forces of the United States or in the allied forces, if credit for military service has not been granted under any federal or other state system or used in any other retirement system, except as expressly required under federal law.

(18)  "Pension system," unless the context otherwise requires, means the retirement, disability, and survivor benefit plans for municipal employees of a city under this Act and employees under Section 3(d) of this Act.

(26)  "Surviving spouse" means a spouse by marriage of [person who was married to] a member, deferred participant, or retiree at the time of death of the member, deferred participant, or retiree and as of the date of [before] separation from service by the member, deferred participant, or retiree.

SECTION 3.02.  Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended by adding Sections 1A, 1B, 1C, and 1D to read as follows:

SECTION 3.03.  Section 2, Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended by amending Subsections (c), (d), (g), (j), (l), and (n) and adding Subsections (c-1), (c-2), (c-3), (c-4), (j-1), (j-2), (ee), (ff), (gg), (hh), (ii), and (jj) to read as follows:

(c)  The pension board consists of 11 [nine] trustees as follows:

(1)  one person appointed by the mayor of the city [, or the director of the civil service commission as the mayor's representative];

(2)  one person appointed by the controller of the city [treasurer or a person performing the duties of treasurer];

(3)  four municipal employees of the city who are members of the pension system;

(4)  two retirees, each of whom:

(A)  has at least five years of credited service in the pension system;

(B)  receives a retirement pension from the pension system; and

(C)  is not an officer or employee of the city; [and]

(5)  one person appointed by the elected trustees who [:

[(A)]  has been a resident of this state for the three years preceding the date of initial appointment; and

(6)  two persons appointed by the governing body of the city [(B) is not a city officer or employee].

(d)  To serve as a trustee under Subsection (c)(3) of this section, a person must be a member with at least five years of credited service and be elected by the active members of the pension system voting at an election called by the pension board. No more than two of the employee trustees may be employees of the same department.

(g)  To serve as a trustee under Subsection (c)(4) of this section, a person must be elected by a majority of the retirees voting [retired members of the pension system] at an election called by the pension board.

(j)  To serve as a trustee under Subsection (c)(5) of this section, the person must be appointed by a vote of a majority of the elected trustees of the pension board. The trustee appointed under Subsection (c)(5) of this section shall serve [serves] a three-year [two-year] term. The appointment or reappointment of the appointed trustee shall take place in July [January] of the [each even-numbered] year in which the term ends. The appointed trustee may be removed at any time by a vote of a majority of the elected trustees of the pension board. A vacancy caused by the appointed trustee's death, resignation, or removal shall be filled by the elected trustees of the pension board. The appointee serves for the remainder of the unexpired term of the replaced trustee. An appointed trustee may not serve beyond the expiration of the three-year [two-year] term unless a majority of [other than by appointment for a new term by] the elected trustees of the pension board reappoint the trustee for a new term.

(l)  To serve on the pension board, each [Each] trustee shall, on or before [at] the first pension board meeting following the trustee's most recent election or appointment, take an oath of office that the trustee:

(1)  will diligently and honestly administer the pension system; and

(2)  will not knowingly violate this Act or willingly allow a violation of this Act to occur.

(n)  The person serving as a trustee under Subsection (c)(2) of this section serves as the treasurer of the pension fund [under penalty of that person's official bond and oath of office]. The treasurer shall file an [That person's] official bond payable to the [city shall cover the person's position as treasurer of the] pension system. The treasurer is [fund, and that person's sureties are] liable on [for] the treasurer's official bond for the faithful performance of the treasurer's duties under this Act in connection with [actions pertaining to] the pension fund [to the same extent as the sureties are liable under the terms of the bond for other actions and conduct of the treasurer].

SECTION 3.04.  Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended by adding Sections 2A, 2B, 2C, and 2D to read as follows:

SECTION 3.05.  Section 3, Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended by amending Subsections (f) and (n) and adding Subsections (o), (p), (q), (r), and (s) to read as follows:

(f)  The pension board shall compensate from the pension fund the persons performing services under Subsections (d) and (e) of this section and may provide other employee benefits that the pension board considers proper. Any person employed by the pension board under Subsection (d) or (e) of this section who has service credits with the pension system at the time of the person's employment by the pension board retains the person's status in the pension system. Any person employed by the pension system on or after January 1, 2008, who does not have service credits with the pension system at the time of employment is a group D [A] member in accordance with Section 5 of this Act. The pension board shall adopt a detailed annual budget detailing its proposed administrative expenditures under this subsection for the next fiscal year.

(n)  Notwithstanding any other law and except as specifically limited by Subsection (o) of this section, the pension board may enter into a written agreement with the city regarding pension issues and benefits. The agreement must be approved by the pension board and the governing body of the city and signed by the mayor and by the pension board or the pension board's designee. The agreement is enforceable against and binding on the pension board, the city, and the pension system, including the pension system's members, retirees, deferred participants, beneficiaries, eligible survivors, and alternate payees. Any reference in this Act to an agreement between the city and the pension board or pension system is a reference to an agreement entered under this subsection.

SECTION 3.06.  Section 5, Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended by amending Subsections (b), (e), (f), and (g) and adding Subsections (j) and (k) to read as follows:

(b)  Except as provided by Subsection (c), (j), or (k) of this section and Sections 4 and 6 of this Act, an employee is a group A member of the pension system as a condition of employment if the employee:

(1)  is hired or rehired as an employee by the city, the predecessor system, or the pension system on or after September 1, 1999, and before January 1, 2008;

(2)  was a member of the predecessor system before September 1, 1981, under the terms of Chapter 358, Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), and did not make an election before December 1, 1981, under Section 22(a) of that Act to receive a refund of contributions and become a group B member;

(3)  was a group A member who terminated employment included in the predecessor system before May 3, 1991, elected under Section 16, Chapter 358, Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), to leave the member's contributions in that pension fund, met the minimum service requirements for retirement at an attained age, was reemployed in a position included in the predecessor system before September 1, 1999, and elected, not later than the 30th day after the date reemployment began, to continue as a group A member;

(4)  became a member of, or resumed membership in, the predecessor system as an employee or elected official of the city after January 1, 1996, and before September 1, 1999, and elected by submission of a signed and notarized form in a manner determined by the pension board to become a group A member and to contribute a portion of the person's salary to the pension fund as required by Chapter 358, Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes); or

(5)  met the requirements of Section 3B, Chapter 358, Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), or Subsection (f) of this section for membership in group A.

(e)  Any member or former member of the pension system elected to an office of the city on or after September 1, 1999, and before January 1, 2008, is [becomes] a group A member and is eligible to receive credit for all previous service on the same conditions as reemployed group A members under Sections 7(c), (d), (e), and (f) of this Act, except as otherwise provided by this Act. For purposes of this subsection [Notwithstanding any other provision in this Act or in Chapter 358, Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes)], consecutive terms of office of any elected member who is elected to an office of the city are considered to be continuous employment for purposes of this Act.

(f)  Each group B member of the pension system may make an irrevocable election on a date and in a manner determined by the pension board to change membership from group B to group A:

(1)  for future service only; or

(2)  for future service and to convert all past group B service to group A service and comply with the requirements of Subsection (h) of this section provided the service is converted before December 31, 2005.

(g)  Each group A member with service in group B may make an irrevocable election not later than December 31, 2005, [on a date] and in a manner determined by the pension board to convert all group B service to group A service and to comply with the requirements of Subsection (h) of this section.

SECTION 3.07.  Section 6, Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended by adding Subsections (k) and (l) to read as follows:

SECTION 3.08.  Section 7, Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended by amending Subsections (a), (c), (e), (f), (g), and (h) and adding Subsections (g-1), (g-2), (i), (j), (k), and (l) to read as follows:

(a)  Notwithstanding any other provision of this Act, duplication of service or credited service in group A, B, [or] C, or D of the pension system or in the pension system and any other defined benefit pension plan to which the city contributes is prohibited.

(c)  Except as provided by Section 12 of this Act, a [group A] member may pay into the pension fund and obtain credit for any service with the city or the pension system for which credit is otherwise allowable [in group A] under this Act, except that:

(1)  no required contributions were made by the member for the service; or

(2)  refunded contributions attributable to the service have not been subsequently repaid.

(e)  To establish service described by Subsection (c) of this section that occurred on or after September 1, 1999, the member shall pay a sum computed by multiplying the member's salary during the service by the rate established [by the pension board] for member contributions under Section 8 of this Act, and the city shall pay into the pension fund an amount equal to the rate established for city contributions under Section 8A [8] of this Act [multiplied by that member's salary for the same period].

(f)  In addition to the amounts to be paid by the member under Subsection (d) or (e) of this section, the member shall also pay interest on those amounts at the current assumed rate of return [six percent] per year, not compounded, from the date the contributions would have been deducted, if made, or from the date contributions were refunded to the date of repayment of those contributions into the pension fund.

(g)  Before the year 2017 effective date, if [If] a group B or group D member separates from service before completing five years of credited service, the member's service credit is canceled at the time of separation. If the member is reemployed by the city in a position covered by the pension system before the first anniversary of the date of separation, all credit for previous service is restored. Any member whose service credit is canceled under this subsection and who is reemployed by the city in a position covered by the pension system after the first anniversary of the date of separation receives one year of previous service credit in group B or group D, as applicable, for each full year of subsequent service up to the amount of the previous service that was canceled.

(h)  A group B member who was a group A member before September 1, 1981, and who was eligible to purchase credit for previous service under Chapter 358, Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), may purchase the service credit in group B by paying into the pension fund an amount equal to the assumed rate of return [six percent] per year, not compounded, on any contributions previously withdrawn for the period from the date of withdrawal to the date of purchase.

SECTION 3.09.  The heading to Section 8, Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended to read as follows:

Sec. 8.  MEMBER CONTRIBUTIONS.

SECTION 3.10.  Sections 8(a), (b), and (c), Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), are amended to read as follows:

(a)  Subject to adjustments authorized under Section 8E or 8F of this Act, beginning on the year 2017 effective date, each [Each group A] member of the pension system shall make biweekly [monthly] contributions during employment in an amount determined in accordance with this section [by the pension board and expressed as a percentage of salary]. The contributions shall be deducted by the employer from the salary of each member and paid to the pension system for deposit in the pension fund. Member contributions under this section shall be made as follows:

(b)  This section does not increase or decrease the contribution obligation of any member that arose before the year 2017 effective date [September 1, 2001,] or give rise to any claim for a refund for any contributions made before that date.

(c)  The employer shall pick up the contributions required of [group A] members by Subsection (a) of this section and contributions required of group D members under Section 10A(a) of this Act as soon as reasonably practicable under applicable rules for all salaries earned by members after the year 2017 effective date and by January 1, 2018, for contributions required by Section 10A(a) of this Act. The city shall pay the pickup contributions to the pension system from the same source of funds that is used for paying salaries to the members. The pickup contributions are in lieu of contributions by [group A] members. The city may pick up those contributions by a deduction from each [group A] member's salary equal to the amount of the member's contributions picked up by the city. Members may not choose to receive the contributed amounts directly instead of having the contributed amounts paid by the city to the pension system. An accounting of member contributions picked up by the employer shall be maintained, and the contributions shall be treated for all other purposes as if the amount were a part of the member's salary and had been deducted under this section. Contributions picked up under this subsection shall be treated as employer contributions in determining tax treatment of the amounts under the Internal Revenue Code of 1986, as amended.

SECTION 3.11.  Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended by adding Sections 8A, 8B, 8C, 8D, 8E, 8F, 8G, 8H, and 8I to read as follows:

(1)  first, adjust the actuarial value of assets equal to the current market value of assets, if making the adjustment causes the city contribution rate to increase;

(A)  the funded ratio is not less than 100 percent; and

(1)  first, adjust the actuarial value of assets to the current market value of assets, if making the adjustment causes the city contribution rate to decrease;

(A)  increasing member contributions; and

(1)  increase member contributions; and

SECTION 3.12.  Section 9(c), Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended to read as follows:

(c)  If a member dies and there are no eligible survivors to receive the allowance provided for in Section 14 of this Act, the member's spouse [beneficiary] or, if there is no spouse [beneficiary], the member's estate shall receive the refund amount.

SECTION 3.13.  Section 10, Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended by amending Subsections (b), (d), (e), (g), and (h) and adding Subsections (c-1), (d-1), and (e-1) to read as follows:

(b)  A group A or group B member of the pension system who terminates employment is eligible for a normal retirement pension beginning on the member's effective retirement date after the date the member completes at least five years of credited service and attains either:

(1)  62 years of age; or

(2)  a combination of years of age and years of credited service, including parts of years, the sum of which equals or is greater than the number:

(B)  70, provided the member attained a combination of years of age and years of credited service, including parts of years, the sum of which equals or is greater than the number 68 before January 1, 2005.

(d)  Subject to Section 17 of this Act, the [The] amount of the monthly normal retirement pension payable to an eligible:

(1)  [retired] group A or group B member who retires before January 1, 2005, shall be determined under the law in effect on the member's last day of credited service;

(2)  group A member who retires on or after January 1, 2005, is equal to the sum of:

(A)  the member's average monthly salary multiplied by the percentage rate accrued under the law in effect on December 31, 2004, for each year of the member's years of credited service in group A that is earned before January 1, 2005;

(B)  the member's average monthly salary multiplied by 2.5 [3-1/4] percent for each year of the member's years of credited service in group A during the member's first 20 [10] years of service that is earned on or after January 1, 2005; [, 3-1/2 percent for each of the member's years of credited service in group A during the member's next 10 years of service,] and

(C)  the member's average monthly salary multiplied by 3.25 [4-1/4] percent for each year of credited service of the member in group A during the member's years of service in excess of the 20 years described under Paragraph (B) of this subdivision that is earned on or after January 1, 2005;

(B)  the member's average monthly salary multiplied by 1 percent for each year of credited service of the member in group D during the member's years of service in excess of 25 years.

(d-1)  For purposes of Subsection (d) of this section, service credit is rounded to the nearest one-twelfth of a year [For purposes of this subsection, service credit is rounded to the nearest one-twelfth of a year. The normal retirement pension of a retired group A member may not exceed 90 percent of the member's average monthly salary].

(e)  A group D member who terminates employment with the city or the pension system may elect to receive an early retirement pension payable as a reduced benefit if the member has attained:

(e-1)  The amount of the early retirement pension payable to a retired group D member under Subsection (e) of this section shall be equal to the monthly normal retirement pension reduced by 0.25 percent for each month the member is less than 62 years of age at retirement [monthly normal retirement pension payable to an eligible retired group B member equals the member's average monthly salary multiplied by 1-3/4 percent for each year of the member's years of credited service in group B during the member's first 10 years of service, 2 percent for each of the member's years of credited service in group B during the member's next 10 years of service, and 2-3/4 percent for each year of credited service of the member in group B during the member's years of service in excess of 20 years. For purposes of this subsection, service credit is rounded to the nearest one-twelfth of a year. The normal retirement pension of a retired group B member may not exceed 90 percent of the member's average monthly salary].

(g)  Notwithstanding any other provision of this Act, the total normal retirement pension of a retired member with credited service in group A, group B, [or] group C, or group D may not exceed 90 percent of the member's average monthly salary.

(h)  On or after February 1, 2018, and for [For] future payments only, pension benefits for all group A retirees and group B retirees, and for all group D retirees who terminated employment on or after the year 2017 effective date with at least five years of credited service, and survivor benefits for [all retirees and] eligible survivors of a former member of group A or group B, or of a former member of group D who terminated employment on or after the year 2017 effective date with at least five years of credited service, shall be increased annually by the cost-of-living adjustment percentage [four percent], not compounded, for all such eligible persons receiving a pension or survivor benefit as of January 1 of the year in which the increase is made.

SECTION 3.14.  Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended by adding Section 10A to read as follows:

SECTION 3.15.  Section 11, Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended to read as follows:

Sec. 11.  OPTION-ELIGIBLE PARTICIPANTS [GROUP B RETIREMENT OPTIONS]. (a) In this section, "J&S Annuity" means payment of a normal retirement pension or early retirement pension under one of the options provided by Subsection (b) of this section.

(a-3)  Before the date an option-eligible participant commences receipt of a benefit, that option-eligible participant [A group B member who terminated employment with the city or the predecessor system before September 1, 1997,] must elect, in a manner and at a time determined by the pension board, [before the member's effective retirement date] whether to receive [have] the participant's [member's] normal retirement pension or early retirement pension, as applicable, or to have the option-eligible participant's normal retirement pension or early retirement pension, as applicable, paid under one of the options provided by Subsection (b) of this section. The election may be revoked, in a manner and at a time established by the pension board, not later than the 60th day before the date the participant commences receipt of a benefit [member's effective retirement date].

(b)  The normal retirement pension or early retirement pension may be one of the following actuarially equivalent amounts:

(1)  option 1: a reduced pension payable to the participant [member], then on the participant's [member's] death one-half of the amount of that reduced pension is payable to the participant's [member's] designated survivor, for life;

(2)  option 2: a reduced pension payable to the participant [member], then on the participant's [member's] death that same reduced pension is payable to the participant's [member's] designated survivor, for life; and

(3)  option 3: a reduced pension payable to the participant [member], and if the participant [member] dies within 10 years, the pension is paid to the participant's [member's] designated survivor for the remainder of the 10-year period beginning on the participant's benefit commencement [member's effective retirement] date.

(c)  If an option-eligible participant [a former group B member] who has made the election provided by Subsection (b) of this section dies after terminating employment with at least five years of credited service but before attaining the age required to begin receiving a normal or early retirement pension, the person's designated survivor is eligible for the J&S Annuity [benefits] provided by the option selected by the option-eligible participant [former member] at the time of separation from service. The benefits first become payable to an eligible designated survivor on the date the option-eligible participant [former member] would have become eligible to begin receiving a pension. If the designated survivor elects for earlier payment, in a time and manner determined by the pension board, the actuarial equivalent of that amount shall be payable at that earlier date.

(d)  A survivor benefit under Subsection (c) of this section or a J&S Annuity is not payable if:

(1)  except as provided by Subsection (e) of this section, an option-eligible participant [If a former group B member under Subsection (a) of this section] does not elect one of the J&S Annuity options under Subsection (b) of this section and dies before retirement has commenced;

(C)  made an election that is void [, a survivor benefit is not payable].

SECTION 3.16.  Section 12(a)(5), Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended to read as follows:

(5)  "DROP entry date" means the date a member ceases to earn service credit and begins earning credit for the member's DROP account, which is the later of the date the member is eligible to participate in the DROP, the date requested by the member, or October 1, 1997, as approved by the pension board. The DROP entry date is the first day of a month and is determined by the normal retirement eligibility requirements of this Act or of Chapter 358, Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), as applicable, in effect on the requested DROP entry date. A member who enters DROP on or after January 1, 2005, may not have a DROP entry date that occurs before the date the pension system receives the member's request to participate in DROP.

SECTION 3.17.  Section 12, Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended by adding Subsections (b-1), (d-1), (o-1), (r), (s), and (t) and amending Subsections (d), (f), (g), (h), (j), (k), (m), (o), and (p) to read as follows:

(d)  Credited service and normal retirement benefits cease to accrue on the day preceding the member's DROP entry date. The period of a member's DROP participation, unless revoked as provided by Subsection (j) of this section, begins on the DROP participant's DROP entry date and ends on the date of the DROP participant's last day of active service with the city or the pension system. On the first day of the month following the month in which the pension board approves the member's DROP election, the DROP election becomes effective and the pension board shall establish a DROP account for the DROP participant. For each month during the period of DROP participation before a DROP participant's termination of employment, the following amounts shall be credited to the DROP participant's DROP account, including prorated amounts for partial months of service:

(1)  an amount equal to what would have been the DROP participant's monthly normal retirement benefit if the DROP participant had retired on the DROP participant's DROP entry date, except that the monthly amount shall be computed based on the DROP participant's credited service and average monthly salary as of the DROP entry date and the benefit accrual rates and maximum allowable benefit applicable on the DROP election date, with the cost-of-living adjustments payable under Subsection (s) of this section, if any, that would apply if the DROP participant had retired on the DROP participant's DROP entry date; and

(2)  subject to Subsection (d-1) of this section, [for a group A member, the member's contributions to the pension fund required under Section 8 of this Act during the member's participation in the DROP; and

[(3)]  interest on the DROP participant's DROP account balance computed at a rate determined by the pension board and compounded at intervals designated by the pension board, but at least once in each 13-month period.

(f)  The period for credits to a DROP participant's DROP account includes each month beginning with the DROP participant's DROP entry date through the date the DROP participant terminates employment with the city or the pension system. Credits may not be made to a DROP participant's DROP account for a period that occurs after the date the DROP participant terminates employment, except that interest at a rate determined by the pension board may be paid on the person's undistributed DROP account balance after the date the person terminates employment. A DROP participant must pay required contributions to the pension system for all time in DROP that would otherwise constitute service in order to receive allowable credits to the DROP participant's DROP account.

(g)  A DROP participant who terminates employment is eligible to elect to receive the DROP participant's DROP benefit in a lump sum, in substantially equal periodic payments, [or] in a partial lump sum followed by substantially equal periodic payments, or in partial payments from the participant's DROP account, in a manner and form determined by the pension board. The pension board may establish procedures concerning partial payments under this subsection, including limitations on the timing and frequency of those payments. A participant who elects partial payments may elect to receive the participant's entire remaining DROP account balance in a single lump-sum payment. The pension board shall determine a reasonable time for lump-sum and periodic payments of the DROP benefit. [An election concerning single lump-sum or partial payments as provided by this subsection must satisfy the requirements of Section 401(a)(9), Internal Revenue Code of 1986, as amended.] All distributions and changes in the form of distribution must be made in a manner and at a time that complies with that provision of the Internal Revenue Code of 1986, as amended.

(h)  If a DROP participant dies before the full distribution of the DROP participant's DROP account balance, the undistributed DROP account balance shall be distributed to the DROP participant's surviving spouse, if any, in a lump-sum payment within a reasonable time after the pension board has determined that the surviving spouse is eligible for the distribution. If there is no surviving spouse, each beneficiary of the DROP participant [participant's beneficiary], as designated in the manner and on a form established by the pension board, is eligible to receive the beneficiary's applicable portion of the deceased DROP participant's undistributed DROP account balance in a lump-sum payment within a reasonable time after the pension board has determined that the beneficiary is eligible for the distribution. If no beneficiary is designated, the undistributed DROP account balance shall be distributed to the deceased participant's [member's] estate.

(j)  An election to participate in the DROP is irrevocable, except that:

(1)  if a DROP participant is approved for a service disability pension, the DROP participant's DROP election is automatically revoked; and

(2)  if a DROP participant dies, the surviving spouse, if any, or the beneficiary, if any, may elect to revoke the DROP participant's DROP election, at a time and in a manner determined by the pension board, only if the revocation occurs before a distribution from the DROP participant's DROP account or the payment of a survivor benefit under this Act or Chapter 358, Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes)[; and

[(3)     a DROP participant approved by the pension board of the predecessor system before September 1, 1999, to participate in the DROP may make a one-time, irrevocable election before termination of employment, on a date and in a manner determined by the pension board, to revoke the DROP election and waive any and all rights associated with the DROP election].

(k)  On revocation of a DROP election under Subsection (j) of this section, the DROP account balance becomes zero, and a distribution of DROP benefits may not be made to the participant [member], the participant's [member's] surviving spouse, or the participant's [member's] beneficiaries. In the event of revocation, the benefits based on the participant's [member's] service are determined as if the participant's [member's] DROP election had never occurred.

(m)  If an unanticipated actuarial cost occurs in administering the DROP, the pension board, on the advice of the pension system [system's] actuary, may take action necessary to mitigate the unanticipated cost, including refusal to accept additional elections to participate in the DROP [plan]. The pension system shall continue to administer the DROP [plan] for the DROP participants participating in the DROP [plan] before the date of the mitigating action.

(o)  Except as provided by Subsection (o-1) of this section, on [On] termination of employment, a DROP participant shall receive a normal retirement pension under Section 10 of this Act or under Section 11, 22A, or 24 of Chapter 358, Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), as those sections read on the day preceding the participant's DROP entry date, as applicable, except that the credited service under that section is the member's credited service as of the day before the member's DROP entry date, the benefit accrual rate applicable to the credited service shall be the benefit accrual rate in effect on the member's DROP election date, the maximum allowable benefit shall be the maximum allowable benefit in effect on the member's DROP election date, and the member's average monthly salary is the average monthly salary determined as of the later [date] of the member's DROP entry date or January 1, 2005, as applicable [termination of employment]. The DROP participant's normal retirement pension is increased by any cost-of-living adjustments applied to the monthly credit to the member's DROP account under Subsection (d)(1) of this section during the member's participation in the DROP. Cost-of-living adjustments applicable to periods after the date of the DROP participant's termination of employment are based on the DROP participant's normal retirement pension computed under this subsection or Subsection (o-1) of this section, as applicable, excluding any cost-of-living adjustments.

(p)  If a DROP election is not revoked under Subsection (j) of this section, the survivor benefit payable to an eligible survivor of a deceased DROP participant under Section 14 of this Act is computed as a percentage of the monthly ordinary disability pension that the member would have been eligible to receive had the member suffered a disability the day before the member's DROP entry date, except that the ordinary disability pension is computed based on the DROP participant's credited service as of the day before the DROP participant's DROP entry date, the benefit accrual rate applicable to the credited service as of the DROP participant's DROP election date, and the DROP participant's average monthly salary as of the later [date] of the DROP participant's DROP entry date or January 1, 2005, as applicable [death]. A surviving spouse, if any, of a DROP participant who dies from a cause directly resulting from a specific incident in the performance of the DROP participant's duties for the city or the pension system is ineligible to receive enhanced survivor benefits under Section 14(c) of this Act unless the DROP election is revoked under Subsection (j)(2) of this section and the surviving spouse receives a survivor benefit as otherwise provided by this subsection.

SECTION 3.18.  Sections 13(a), (b), and (c), Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), are amended to read as follows:

(a)  A member who has completed five or more years of credited service and who becomes disabled is eligible, regardless of age, for an ordinary disability retirement and shall receive a monthly disability pension computed in accordance with Section 10(d) of this Act [for group A members and Section 10(e) for group B members].

(b)  A member who is disabled by reason of a personal injury sustained or a hazard undergone as a result of, and while in the performance of, the member's employment duties at some definite place and at some definite time on or after the date of becoming a member, without serious and wilful misconduct on the member's part, is eligible for a service disability retirement and shall receive a monthly disability pension equal to the greater of:

(1)  the monthly normal retirement pension computed under Section 10(d) of this Act [for a group A member or Section 10(e) for a group B member]; or

(2)  20 percent of the member's monthly salary on the date the injury occurred or the hazard was undergone.

(c)  In addition to the monthly disability pension under Subsection (b)(2) of this section, a group A member shall receive one percent of the salary under Subsection (b)(2) of this section for each year of credited service. The total disability pension computed under Subsection (b)(2) of this section may not exceed the greater of:

(1)  40 percent of that monthly salary; or

(2)  the monthly normal retirement pension computed in accordance with Section 10(d) of this Act [for a group A member or Section 10(e) for a group B member].

SECTION 3.19.  Section 14, Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended by amending Subsections (a), (b), (c), (d), (e), and (h) and adding Subsection (b-1) to read as follows:

(a)  Except as provided by Section 11 or [Section] 12 of this Act, the pension board shall order survivor benefits to be paid to an eligible survivor in the form of a monthly allowance under this section if:

(1)  a member or former member of group A or group B dies from any cause after the completion of five years of credited service with the city or the pension system;

(2)  while in the service of the city or the pension system, a member dies from any cause directly resulting from a specific incident in the performance of the member's duty; [or]

(3)  a member of group A or group B dies after the date the member retires on a pension because of length of service or a disability and the member leaves an eligible survivor; or

(4)  a member of group D dies from any cause after the completion of five years of credited service with the city or the pension system if the member on the date of the member's death was still in service with the city or the pension system.

(b)  A surviving spouse of a member described by Subsection (a)(1) or (4) of this section [or former member] who dies while still in [dies after having completed five years of credited] service with the city or the pension system [, but before beginning to receive retirement benefits,] is eligible for a sum equal to the following applicable percentage [100 percent] of the retirement benefits to which the deceased member or former member would have been eligible had the member been totally disabled with an ordinary disability at the time of the member's last day of credited service:

(1)  80 percent, if the member's death occurs on or after the year 2017 effective date and the spouse was married to the member for at least one continuous year as of the member's date of death, except that the allowance payable to the surviving spouse may not be less than $100 a month; or

(2)  50 percent, if the member's death occurs on or after the year 2017 effective date and the spouse was married to the member for less than one continuous year as of the date of the member's death.

(c)  A surviving spouse of a member described by Subsection (a)(2) of this section who dies from a cause directly resulting from a specific incident in the performance of the member's duty with the city or the pension system, without serious or wilful misconduct on the member's part, is eligible for a sum equal to 80 [100] percent of the deceased member's final average salary.

(d)  A surviving spouse of a retiree described by Subsection (a)(3) of this section who dies after having received retirement benefits is eligible for a sum equal to the following applicable percentage [100 percent] of the retirement benefits being received at the time of the retiree's death, including any applicable [. The] cost-of-living adjustment in the survivor benefit under Section 10(h) of this Act [is] computed based on the unadjusted normal retirement pension of the deceased retiree:

(3)  50 percent, if both the retiree's separation from service and death occur on or after the year 2017 effective date and the surviving spouse was married to the retiree at the time of the retiree's death for less than one continuous year as of the date of the retiree's separation from service.

(e)  If there is a surviving spouse, each dependent child shall receive a survivor benefit equal to 10 percent of the pension the member would have received if the member had been disabled at the time of death up to a maximum of 20 percent for all dependent children, except that if the total amount payable to the surviving spouse and dependent children is greater than 80 [100] percent of the benefit the member would have received, the percentage of benefits payable to the surviving spouse shall be reduced so that the total amount is not greater than 80 [100] percent of the benefit the member would have received, and the reduction shall continue until the total amount payable to the surviving spouse and dependent child, if any, would not be greater than 80 [100] percent of the benefit the member would have received.

(h)  If a retiree dies and there is no eligible survivor, the retiree's spouse, if any, or if there is no spouse, the retiree's estate, is eligible to receive a lump-sum payment of the unamortized balance of the retiree's accrued employee contributions, if any, other than contributions after the DROP entry date, as determined by an amortization schedule and method approved by the pension board. A pension payable to a retiree ceases on the last day of the month [preceding the month] of the retiree's death. A survivor benefit payable to an eligible survivor is effective on the first day of the month following the month of the retiree's death and ceases on the last day of [month preceding] the month of the eligible survivor's death or on the last day of the month in which the survivor otherwise ceases to be eligible to receive a survivor's benefit.

SECTION 3.20.  Sections 16(a) and (e), Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), are amended to read as follows:

(a)  Notwithstanding any other provision of this Act, the pension board may pay to a member, deferred participant, eligible survivor, alternate payee, or beneficiary in a lump-sum payment the present value of any benefit payable to such a person that is less than $20,000 [$10,000] instead of paying any other benefit payable under this Act. If the lump-sum present value of the benefit is at least $1,000 [$5,000] but less than $20,000 [$10,000], the pension board may make a lump-sum payment only on written request by the member, deferred participant, eligible survivor, alternate payee, or other beneficiary. The pension board shall make any payment under this subsection as soon as practicable after eligibility under this section has been determined by the pension board.

(e)  A member who is reemployed by the city or the pension system and who has at least two years of continuous credited service after reemployment may reinstate service for which the member received a lump-sum payment under this section by paying into the pension fund the amount of the lump-sum payment, plus interest on that amount at the applicable assumed rate of return [six percent per year], not compounded, from the date the lump-sum payment was made to the member until the date of repayment to the pension fund.

SECTION 3.21.  Section 17, Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended by amending Subsections (a), (c), (d), (e), (f), (g), (h), (i), (j), (k), and (l) and adding Subsections (c-1), (c-2), (q), (r), and (s) to read as follows:

(a)  A member who terminates employment with the city involuntarily due to a reduction in workforce, as determined by the pension board, before the member becomes eligible for a normal retirement pension or attains five years of credited service, is eligible to [by written notice to the pension board, may make an irrevocable election to] leave the person's contributions in the pension fund until the first anniversary of the date of termination. If during that period the person is reemployed by the city and has not withdrawn the person's contributions, all rights and service credit as a member shall be immediately restored without penalty. If reemployment with the city does not occur before the first anniversary of the date of termination, all payments made by the person into the pension fund by salary deductions or other authorized contributions shall be refunded to the person without interest. If the person is subsequently reemployed, the person may have credit restored, subject to the provisions applicable at the time of reemployment.

(c)  A former member of group A or group B whose employment is terminated for a reason other than death or receipt of a retirement or disability pension after the completion of five years of credited service may elect, in a manner determined by the pension board, to receive a deferred retirement pension that begins on the member's effective retirement date after the member attains the eligibility requirements for normal retirement under Section 10 of this Act as it existed on the member's last day of credited service [either 62 years of age or a combination of years of age and years of credited service, including parts of years, the sum of which equals the number 70]. The amount of monthly benefit shall be computed in the same manner as for a normal retirement pension, but based on average monthly salary and credited service as of the member's last day of credited service and subject to the provisions of this Act or Chapter 358, Acts of 48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), in effect on the former member's last day of credited service.

(d)  If a member dies while still employed by the city, whether eligible for a pension or not, and Sections 12 and 14 of this Act do not apply, all of the member's rights in the pension fund shall be satisfied by the refund to the member's spouse [designated beneficiary], if any, or if there is no spouse [designated beneficiary], to the member's estate, of all eligible payments, if any, made by the member into the pension fund, without interest.

(e)  [The provisions of Section 14 of this Act concerning payments to eligible survivors apply in the case of any former member who has made the election permitted by Subsection (c) of this section and who dies before reaching the age at which the former member would be eligible to receive a pension.] If there is no eligible survivor of the former member, all of the former member's rights in the pension fund shall be satisfied by the refund to the former member's spouse [designated beneficiary], if any, or if there is no spouse [designated beneficiary], to the former member's estate, of all eligible payments made by the former member into the pension fund by way of employee contributions, without interest.

(f)  This Act does not change the status of any former member of the predecessor system whose services with the city or the pension system were terminated under Chapter 358, Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), except as otherwise expressly provided. Refunds of contributions made under this section shall be paid to the departing member, the member's spouse [beneficiary], or the member's estate on written request and approval by the pension board in a lump sum, except that if the pension board determines that funds are insufficient to justify the lump-sum payment, the payment shall be refunded on a monthly basis in amounts determined by the pension board.

(g)  If a deferred participant is reemployed by the city or the pension system before receiving a deferred retirement pension or if a retiree is reemployed by the city or the pension system, Subsections (h) and (j) of this section apply to the computation of the member's pension following the member's subsequent separation from service if the member was a member on or after May 11, 2001, and is not otherwise subject to Subsection (q) of this section.

(h)  If a member described in Subsection (g) of this section accrues not more than two years of continuous credited service after reemployment:

(1)  the portion of the member's deferred or normal retirement pension attributable to the member's period of credited service accrued before the date of the member's original or previous separation from service is computed on the basis of the applicable provisions of this Act or the predecessor system that were in effect on the member's last day of credited service for the original or previous period of credited service;

(2)  the portion of the member's deferred or normal retirement pension attributable to the member's period of credited service accrued after the date of the member's reemployment by the city or the pension system is computed on the basis of the applicable provisions of this Act or the predecessor system in effect on the member's last day of credited service for the subsequent period of credited service; and

(3)  the disability pension or survivor benefit attributable to the member's period of credited service accrued both before the date of the member's original or previous separation from service and after the date of the member's reemployment by the city or the pension system is computed on the basis of the applicable provisions of this Act or the predecessor system that were in effect on the member's last day of credited service for the original or previous period of credited service.

(i)  Subject to Subsection (l) of this section, the disability pension or survivor benefit under Subsection (h)(3) of this section is computed by adding the following amounts:

(1)  the amount of the benefit derived from the member's credited service accrued after the date of reemployment based on the benefit accrual rate in effect on the member's last day of original or previous credited service in the group in which the member participated on the member's last day of subsequent credited service; and

(2)  the amount of the benefit the member, beneficiary, or eligible survivor was eligible to receive based on the member's original or previous credited service and the provisions in effect on the member's last day of original or previous credited service.

(j)  If a [the] member described by Subsection (g) of this section accrues more than two years of continuous credited service after reemployment, for purposes of future payment only, a deferred retirement pension, normal retirement pension, disability pension, or survivor benefit is computed on the basis of the applicable provisions of this Act or the predecessor system in effect on the member's last day of credited service for the subsequent service.

(k)  Notwithstanding any other provision of this Act, if a retiree is reemployed by the city or the pension system and becomes a member, the retiree's pension under this Act ceases on the day before the date the retiree is reemployed. Payment of the pension shall be suspended during the period of reemployment and may not begin until the month following the month in which the reemployed retiree subsequently terminates employment. On subsequent separation, benefits payable are computed under Subsections (h) and (j) of this section, as applicable. If the reemployed retiree receives any pension during the period of reemployment, the retiree shall return all of the pension received during that period to the pension system not later than the 30th day after the date of receipt. If the reemployed retiree does not timely return all of the pension, the pension board shall offset the amount not returned against the payment of any future retirement pension, disability pension, DROP balance, or survivor benefit payable on behalf of the reemployed retiree, plus interest on the disallowed pension at the applicable assumed rate of return, not compounded, from the date the reemployed retiree received the disallowed pension to the date of the offset on the disallowed pension.

(l)  Except as provided by Section 14 of this Act, if [If] a member is covered by Subsection (h) of this section and has made an election or was eligible to make an election under Section 11 of this Act or an optional annuity election under Section 29, Chapter 358, Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), or has received a pension computed on the basis of an optional annuity election, the optional annuity election, including any designation of an eligible designated survivor, governs the payment of any pension or benefit for the period of service covered by the optional annuity election, and no other survivor benefit is payable for that period of service. If a member meets the requirements of Subsection (j) of this section and has made an optional annuity election or has received a pension computed on the basis of an optional annuity election, the optional annuity election, including any designation of an eligible designated survivor, shall control the payment of any pension or benefit, and no other survivor benefit is payable unless the member elects, not later than the 90th day after the date of the separation of employment and before payment of a pension, to revoke the optional annuity election for future payment of benefits. If revocation occurs, any survivor benefit is paid under Subsection (j) of this section.

SECTION 3.22.  Section 18(d), Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended to read as follows:

(d)  The military service credited under Subsection (c) of this section:

(1)  may not exceed a total of 60 months; and

(2)  may be claimed as service solely in the group in which the member participates [A only if the member is a group A member or group C member] at the time the member claims the service [; and

[(3)     may be claimed as service in group B only if the member is a group B member at the time the member claims the service].

SECTION 3.23.  Sections 24(h) and (i), Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), are amended to read as follows:

(h)  Contributions may not accumulate under the excess benefit plan to pay future retirement benefits. The executive director shall reduce each payment of employer contributions that would otherwise be made to the pension fund under Section 8A [8] of this Act by the amount determined to be necessary to meet the requirements for retirement benefits under the plan, including reasonable administrative expenses, until the next payment of municipal contributions is expected to be made to the pension fund. The employer shall pay to the plan, from the withheld contributions, not earlier than the 30th day before the date each distribution of monthly retirement benefits is required to be made from the plan, the amount necessary to satisfy the obligation to pay monthly retirement benefits from the plan. The executive director shall satisfy the obligation of the plan to pay retirement benefits from the employer contributions transferred for that month.

(i)  Employer contributions otherwise required to be made to the pension fund under Section 8A [8] of this Act and to any other qualified plan shall be divided into those contributions required to pay retirement benefits under this section and those contributions paid into and accumulated to pay the maximum benefits required under the qualified plan. Employer contributions made to provide retirement benefits under this section may not be commingled with the money of the pension fund or any other qualified plan.

SECTION 3.24.  Section 8(d), Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is repealed.

SECTION 3.25.  (a) The change in law made by this Act to Section 2, Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), applies only to the appointment or election of a trustee of the board of trustees of the pension system established under that law that occurs on or after the effective date of this Act.

(b)  A person who is serving as a trustee immediately before the effective date of this Act may continue to serve for the remainder of the trustee's term, and that trustee's qualifications for serving as a trustee for that term are governed by the law in effect immediately before the effective date of this Act.

SECTION 3.26.  The pension system established under Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), shall require the pension system actuary to prepare the first actuarial experience study required under Section 8D, Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), as added by this Act, not later than September 30, 2021.

ARTICLE 4. PROVISIONS APPLICABLE TO EACH PUBLIC RETIREMENT SYSTEM SUBJECT TO ACT

SECTION 4.01.  Chapter 107, Local Government Code, is amended by adding Section 107.0036 to read as follows:

SECTION 4.02.  Section 107.0036, Local Government Code, as added by this Act, applies only to obligations for which the governing body of a municipality executes an agreement under Section 107.003(b), Local Government Code, on or after the effective date of this Act.

ARTICLE 5. CONFLICTING LEGISLATION; EFFECTIVE DATE

SECTION 5.01.  If this Act conflicts with any other Act of the 85th Legislature, Regular Session, 2017, this Act controls unless the conflict is expressly resolved by the legislature by reference to this Act.

SECTION 5.02.  This Act takes effect July 1, 2017, 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 effect on that date, this Act takes effect September 1, 2017.