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A BILL TO BE ENTITLED
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AN ACT
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relating to requiring certain public retirement systems to take |
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certain actions or implement certain plans designed to achieve |
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actuarial soundness. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 801.209(a), Government Code, is amended |
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to read as follows: |
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(a) For each public retirement system, the board shall post |
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on the board's Internet website, or on a publicly available website |
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that is linked to the board's website, the most recent data from |
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reports received under Sections 802.101, 802.103, 802.104, |
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802.105, 802.108, 802.2015, [and] 802.2016, 802.2017, and |
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802.2018. |
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SECTION 2. Sections 802.002(a) and (c), Government Code, |
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are amended to read as follows: |
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(a) Except as provided by Subsection (b), the Employees |
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Retirement System of Texas, the Teacher Retirement System of Texas, |
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the Texas County and District Retirement System, the Texas |
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Municipal Retirement System, and the Judicial Retirement System of |
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Texas Plan Two are exempt from Sections 802.101(a), 802.101(b), |
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802.101(d), 802.102, 802.103(a), 802.103(b), 802.2015, 802.2016, |
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802.2017, 802.2018, 802.202, 802.203, 802.204, 802.205, 802.206, |
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and 802.207. The Judicial Retirement System of Texas Plan One is |
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exempt from all of Subchapters B and C except Sections 802.104 and |
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802.105. The optional retirement program governed by Chapter 830 |
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is exempt from all of Subchapters B and C except Section 802.106. |
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(c) Notwithstanding any other law, a defined contribution |
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plan is exempt from Sections 802.101, 802.1012, 802.1014, 802.103, |
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802.104, 802.2017, 802.2018, and 802.202(d). This subsection may |
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not be construed to exempt any plan from Section 802.105 or |
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802.106(h). |
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SECTION 3. Section 802.2015(d), Government Code, is amended |
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to read as follows: |
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(d) The governing body of a public retirement system and the |
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associated governmental entity that have formulated a funding |
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soundness restoration plan under Subsection (e) are no longer |
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subject to this section and are subject to Section 802.2017 [shall
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formulate a revised funding soundness restoration plan under that
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subsection, in accordance with the system's governing statute,] if |
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[the system conducts an actuarial valuation showing that:
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[(1)
the system's amortization period exceeds 40
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years; and
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[(2)] the board determines, in accordance with Section |
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802.2017(b), that the previously formulated funding soundness |
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restoration plan has not been adhered to. |
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SECTION 4. Section 802.2016(d), Government Code, is amended |
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to read as follows: |
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(d) An associated governmental entity that has formulated a |
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funding soundness restoration plan under Subsection (e) is no |
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longer subject to this section and is subject to Section 802.2018 |
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[shall formulate a revised funding soundness restoration plan under
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that subsection, in accordance with the public retirement system's
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governing statute,] if [the system conducts an actuarial valuation
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showing that:
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[(1)
the system's amortization period exceeds 40
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years; and
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[(2)] the board determines, in accordance with Section |
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802.2018(b), that the previously formulated funding soundness |
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restoration plan has not been adhered to. |
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SECTION 5. Subchapter C, Chapter 802, Government Code, is |
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amended by adding Sections 802.2017 and 802.2018 to read as |
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follows: |
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Sec. 802.2017. ACTIONS AND PLANS DESIGNED TO ACHIEVE |
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ACTUARIAL SOUNDNESS. (a) In this section, "governmental entity" |
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has the meaning assigned by Section 802.1012. |
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(b) This section does not apply to: |
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(1) a public retirement system and its associated |
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governmental entity subject to Section 802.2018; or |
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(2) a public retirement system and its associated |
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governmental entity if the retirement system and governmental |
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entity are adhering to, as determined by the board, a funding |
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soundness restoration plan formulated under Section 802.2015 |
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before June 1, 2018, including a revised funding soundness |
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restoration plan that was formulated before June 1, 2018. |
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(c) Subsection (b)(2) does not prevent application of this |
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section to a public retirement system and its associated |
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governmental entity after the retirement system and governmental |
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entity have completed a funding soundness restoration plan |
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formulated under Section 802.2015. |
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(d) Except as otherwise provided by this section or the |
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Texas or United States Constitution and notwithstanding any other |
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law, if a public retirement system receives an actuarial valuation |
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showing that the retirement system's actual contributions are not |
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sufficient to amortize the retirement system's unfunded actuarial |
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accrued liability within 30 years: |
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(1) the governing body of the retirement system shall |
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immediately: |
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(A) suspend the provision of any prospective |
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benefit increases provided under the retirement system, including |
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any cost-of-living adjustments; and |
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(B) notify the retirement system's associated |
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governmental entity in writing of the fact that: |
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(i) the retirement system has received an |
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actuarial valuation showing that the retirement system's actual |
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contributions are not sufficient to amortize the retirement |
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system's unfunded actuarial accrued liability within 30 years; and |
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(ii) the associated governmental entity is |
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required to take the action required by Subdivision (2); and |
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(2) on receipt of a notice from the retirement system |
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under Subdivision (1)(B), the associated governmental entity: |
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(A) shall immediately pay to the retirement |
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system any employer contributions previously deferred by the |
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governmental entity; and |
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(B) may not defer the payment of any future |
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employer contributions to the retirement system. |
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(d-1) The governing body of a public retirement system and |
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its associated governmental entity subject to this section, as |
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effective June 1, 2018, are not required to comply with Subsection |
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(d) until June 1, 2024, if the retirement system has an amortization |
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period that exceeds 30 years and, not later than June 1, 2018, the |
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retirement system submits to the board a copy of a written plan that |
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is designed to achieve a contribution rate that is sufficient to |
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amortize the unfunded actuarial accrued liability of the retirement |
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system within 30 years not later than June 1, 2024, as determined by |
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the board. The plan must comply with Subsection (g), as effective |
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June 1, 2018, and the retirement system must adhere to the plan. |
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If, on June 1, 2018, a public retirement system's most recent |
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actuarial valuation conducted before that date shows that the |
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system's amortization period exceeds 30 years, and the retirement |
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system fails to submit or adhere to a written plan as provided by |
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this subsection, the governing body of the retirement system and |
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its associated governmental entity shall immediately comply with |
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the requirements of Subsection (d). This subsection expires June |
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1, 2024. |
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(e) If a public retirement system subject to Subsection (d) |
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later receives an actuarial valuation showing that the retirement |
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system's actual contributions are sufficient to amortize the |
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retirement system's unfunded actuarial accrued liability within 30 |
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years, the retirement system shall immediately notify its |
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associated governmental entity in writing that the retirement |
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system has received an actuarial valuation showing that the |
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retirement system's actual contributions are sufficient to |
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amortize the retirement system's unfunded actuarial accrued |
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liability within 30 years. |
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(f) Except as otherwise provided by the Texas or United |
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States Constitution and notwithstanding any other law, if the |
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period required to amortize the unfunded actuarial liability of a |
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public retirement system has exceeded 30 years for the three most |
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recent consecutive annual actuarial valuations, or the two most |
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recent consecutive actuarial valuations in the case of a retirement |
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system that conducts the valuations every two or three years, the |
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retirement system and its associated governmental entity shall |
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jointly develop a written plan designed to achieve a contribution |
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rate that will be sufficient to amortize the unfunded actuarial |
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accrued liability of the retirement system within 30 years not |
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later than the sixth anniversary of the date on which the final |
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version of the plan is submitted to the board under this section. |
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(g) A written plan under Subsection (f) must be based on: |
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(1) an increase in the contribution rates of the |
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governmental entity and the active members of the retirement |
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system; |
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(2) a reduction of benefits; or |
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(3) a combination of the actions described by |
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Subdivisions (1) and (2). |
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(h) A public retirement system shall submit to the board a |
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copy of the written plan developed under Subsection (f) or (k) and |
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any change to the plan not later than the 31st day after the date on |
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which the plan or change to the plan is agreed to with the system's |
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associated governmental entity. The system must submit the copy of |
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the plan not later than six months after the date on which the |
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retirement system: |
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(1) receives the actuarial valuation that subjects the |
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retirement system and governmental entity to the requirements of |
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Subsection (f); or |
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(2) is informed under Subsection (k) that the plan |
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does not comply with Subsection (f). |
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(i) A public retirement system and its associated |
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governmental entity may jointly develop and submit to the board a |
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written plan described by Subsection (f) at any time before the |
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retirement system receives an actuarial valuation that subjects the |
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retirement system and governmental entity to the requirements of |
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|
that subsection. |
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(j) Not later than the 90th day after the date the board |
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receives a copy of a plan under Subsection (h), the board shall |
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review the plan and make a determination regarding whether the plan |
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|
is designed to achieve a contribution rate that is sufficient to |
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|
amortize the unfunded actuarial accrued liability of the public |
|
|
retirement system within 30 years not later than the sixth |
|
|
anniversary of the date on which a copy of the plan is submitted to |
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|
the board in accordance with Subsection (h). The board may require |
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that the retirement system provide the board with an actuarial |
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|
analysis of the plan for purposes of making a determination under |
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this subsection. |
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(k) If, after reviewing the copy of a plan under Subsection |
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(j), the board determines that the plan is not designed to achieve a |
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contribution rate that is sufficient to amortize the unfunded |
|
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actuarial accrued liability of the public retirement system within |
|
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30 years not later than the sixth anniversary of the date on which a |
|
|
copy of the plan is submitted to the board in accordance with |
|
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Subsection (h), the board shall inform the retirement system of |
|
|
that determination, and the retirement system and its associated |
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|
governmental entity shall jointly develop and submit to the board, |
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in a manner prescribed by the board, amended or alternative plans |
|
|
until the board informs the retirement system that, based on the |
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board's review, the plan complies with Subsection (f). |
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(l) If, after reviewing a plan submitted to the board under |
|
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Subsection (h) or (k), the board determines the plan is designed to |
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achieve a contribution rate that is sufficient to amortize the |
|
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unfunded actuarial accrued liability of the retirement system |
|
|
within 30 years not later than the sixth anniversary of the date on |
|
|
which a copy of the plan is submitted to the board in accordance |
|
|
with Subsection (h), the public retirement system and its |
|
|
associated governmental entity shall implement and adhere to the |
|
|
plan and are not subject to Subsection (d) or the requirement to |
|
|
develop a new written plan under Subsection (f) until the sixth |
|
|
anniversary of the date the final version of the plan being |
|
|
implemented under this subsection was submitted to the board. |
|
|
(m) A public retirement system and its associated |
|
|
governmental entity that develop and implement a plan under this |
|
|
section shall report any updates of progress made by the public |
|
|
retirement system and associated governmental entity toward |
|
|
improved actuarial soundness to the board every two years. |
|
|
(n) A determination of the board under this section is final |
|
|
and not subject to judicial review. |
|
|
(o) This section does not impose a fiduciary duty on the |
|
|
board. |
|
|
(p) The board may adopt rules necessary to implement this |
|
|
section, including rules that allow a public retirement system and |
|
|
its associated governmental entity to amend a plan implemented |
|
|
under this section. |
|
|
(q) A municipal ordinance or charter that conflicts with |
|
|
this section is void to the extent of the conflict. |
|
|
Sec. 802.2018. ACTIONS AND PLANS DESIGNED TO ACHIEVE |
|
|
ACTUARIAL SOUNDNESS FOR CERTAIN RETIREMENT SYSTEMS. (a) In this |
|
|
section, "governmental entity" has the meaning assigned by Section |
|
|
802.1012. |
|
|
(b) This section applies only to a public retirement system |
|
|
that is governed by Article 6243i, Revised Statutes. This section |
|
|
does not apply to a public retirement system and its associated |
|
|
governmental entity if the retirement system and governmental |
|
|
entity are adhering to, as determined by the board, a funding |
|
|
soundness restoration plan formulated under Section 802.2016 |
|
|
before June 1, 2018, including a revised funding soundness |
|
|
restoration plan that was formulated before June 1, 2018. |
|
|
(c) Subsection (b) does not prevent application of this |
|
|
section to a public retirement system and its associated |
|
|
governmental entity after the governmental entity has completed a |
|
|
funding soundness restoration plan formulated under Section |
|
|
802.2016. |
|
|
(d) Except as otherwise provided by this section or the |
|
|
Texas or United States Constitution and notwithstanding any other |
|
|
law, if a public retirement system receives an actuarial valuation |
|
|
showing that the retirement system's actual contributions are not |
|
|
sufficient to amortize the retirement system's unfunded actuarial |
|
|
accrued liability within 30 years: |
|
|
(1) the governing body of the retirement system shall |
|
|
immediately: |
|
|
(A) suspend the provision of any prospective |
|
|
benefit increases provided under the retirement system, including |
|
|
any cost-of-living adjustments; and |
|
|
(B) notify the retirement system's associated |
|
|
governmental entity in writing of the fact that: |
|
|
(i) the retirement system has received an |
|
|
actuarial valuation showing that the retirement system's actual |
|
|
contributions are not sufficient to amortize the retirement |
|
|
system's unfunded actuarial accrued liability within 30 years; and |
|
|
(ii) the associated governmental entity is |
|
|
required to take the action required by Subdivision (2); and |
|
|
(2) on receipt of a notice from the retirement system |
|
|
under Subdivision (1)(B), the associated governmental entity: |
|
|
(A) shall immediately pay to the retirement |
|
|
system any employer contributions previously deferred by the |
|
|
governmental entity; and |
|
|
(B) may not defer the payment of any future |
|
|
employer contributions to the retirement system. |
|
|
(d-1) The governing body of a public retirement system and |
|
|
its associated governmental entity subject to this section, as |
|
|
effective June 1, 2018, are not required to comply with Subsection |
|
|
(d) until June 1, 2024, if the retirement system has an amortization |
|
|
period that exceeds 30 years and, not later than June 1, 2018, the |
|
|
governmental entity submits to the board a copy of a written plan |
|
|
that is designed to achieve a contribution rate that is sufficient |
|
|
to amortize the unfunded actuarial accrued liability of the |
|
|
retirement system within 30 years not later than June 1, 2024, as |
|
|
determined by the board. The plan must comply with Subsection (g), |
|
|
as effective June 1, 2018, and the retirement system must adhere to |
|
|
the plan. If, on June 1, 2018, a public retirement system's most |
|
|
recent actuarial valuation conducted before that date shows that |
|
|
the system's amortization period exceeds 30 years, and the |
|
|
governmental entity fails to submit or adhere to a written plan as |
|
|
provided by this subsection, the governing body of the retirement |
|
|
system and its associated governmental entity shall immediately |
|
|
comply with Subsection (d). This subsection expires June 1, 2024. |
|
|
(e) If a public retirement system subject to Subsection (d) |
|
|
later receives an actuarial valuation showing that the retirement |
|
|
system's actual contributions are sufficient to amortize the |
|
|
retirement system's unfunded actuarial accrued liability within 30 |
|
|
years, the retirement system shall immediately notify its |
|
|
associated governmental entity in writing that the retirement |
|
|
system has received an actuarial valuation showing that the |
|
|
retirement system's actual contributions are sufficient to |
|
|
amortize the retirement system's unfunded actuarial accrued |
|
|
liability within 30 years. |
|
|
(f) Except as otherwise provided by the Texas or United |
|
|
States Constitution and notwithstanding any other law, if the |
|
|
period required to amortize the unfunded actuarial liability of a |
|
|
public retirement system has exceeded 30 years for the three most |
|
|
recent consecutive annual actuarial valuations, or the two most |
|
|
recent consecutive actuarial valuations in the case of a retirement |
|
|
system that conducts the valuations every two or three years, the |
|
|
associated governmental entity of the retirement system shall |
|
|
develop a written plan designed to achieve a contribution rate that |
|
|
will be sufficient to amortize the unfunded actuarial accrued |
|
|
liability of the retirement system within 30 years not later than |
|
|
the sixth anniversary of the date on which the final version of the |
|
|
plan is submitted to the board under this section. |
|
|
(g) A written plan under Subsection (f) must be based on: |
|
|
(1) an increase in the contribution rates of the |
|
|
governmental entity and the active members of the retirement |
|
|
system; |
|
|
(2) a reduction of benefits; or |
|
|
(3) a combination of the actions described by |
|
|
Subdivisions (1) and (2). |
|
|
(h) An associated governmental entity of a public |
|
|
retirement system shall submit a copy of the written plan developed |
|
|
under Subsection (f) or (k) to the board and any change to the plan |
|
|
not later than the 31st day after the date on which the plan or |
|
|
change to the plan is developed. The entity must submit the copy of |
|
|
the plan not later than six months after the date on which the |
|
|
retirement system: |
|
|
(1) receives the actuarial valuation that subjects the |
|
|
associated governmental entity to the requirements of Subsection |
|
|
(f); or |
|
|
(2) is informed under Subsection (k) that the plan |
|
|
does not comply with Subsection (f). |
|
|
(i) An associated governmental entity of a public |
|
|
retirement system may develop and submit to the board a written plan |
|
|
described by Subsection (k) at any time before the retirement |
|
|
system receives an actuarial valuation that subjects the |
|
|
governmental entity to the requirements of that subsection. |
|
|
(j) Not later than the 90th day after the date the board |
|
|
receives a copy of a plan under Subsection (h), the board shall |
|
|
review the plan and make a determination regarding whether the plan |
|
|
is designed to achieve a contribution rate that is sufficient to |
|
|
amortize the unfunded actuarial accrued liability of the public |
|
|
retirement system within 30 years not later than the sixth |
|
|
anniversary of the date on which a copy of the plan is submitted to |
|
|
the board in accordance with Subsection (h). The board may require |
|
|
that the governmental entity provide the board with an actuarial |
|
|
analysis of the plan for purposes of making a determination under |
|
|
this subsection. |
|
|
(k) If, after reviewing the copy of a plan under Subsection |
|
|
(j), the board determines that the plan is not designed to achieve a |
|
|
contribution rate that is sufficient to amortize the unfunded |
|
|
actuarial accrued liability of the public retirement system within |
|
|
30 years not later than the sixth anniversary of the date on which a |
|
|
copy of the plan is submitted to the board in accordance with |
|
|
Subsection (h), the board shall inform the associated governmental |
|
|
entity of that determination and the governmental entity shall |
|
|
develop and submit to the board, in a manner prescribed by the |
|
|
board, amended or alternative plans until the board informs the |
|
|
governmental entity that, based on the board's review, the plan |
|
|
complies with Subsection (f). |
|
|
(l) If, after reviewing a plan submitted to the board under |
|
|
Subsection (h) or (k), the board determines the plan is designed to |
|
|
achieve a contribution rate that is sufficient to amortize the |
|
|
unfunded actuarial accrued liability of the retirement system |
|
|
within 30 years not later than the sixth anniversary of the date on |
|
|
which a copy of the plan is submitted to the board in accordance |
|
|
with Subsection (h), the public retirement system and its |
|
|
associated governmental entity shall implement and adhere to the |
|
|
plan and are not subject to Subsection (d) or the requirement to |
|
|
develop a new written plan under Subsection (f) until the sixth |
|
|
anniversary of the date the final version of the plan being |
|
|
implemented under this subsection was submitted to the board. |
|
|
(m) An associated governmental entity that develops a plan |
|
|
under this section shall report any updates of progress made by the |
|
|
public retirement system and associated governmental entity toward |
|
|
improved actuarial soundness to the board every two years. |
|
|
(n) A determination of the board under this section is final |
|
|
and not subject to judicial review. |
|
|
(o) This section does not impose a fiduciary duty on the |
|
|
board. |
|
|
(p) The board may adopt rules necessary to implement this |
|
|
section, including rules that allow the associated governmental |
|
|
entity of a public retirement system to amend a plan implemented |
|
|
under this section. |
|
|
(q) A municipal ordinance or charter that conflicts with |
|
|
this section is void to the extent of the conflict. |
|
|
SECTION 6. Sections 802.2017(f) and 802.2018(f), |
|
|
Government Code, as added by this Act, apply only to an actuarial |
|
|
valuation conducted on or after June 1, 2018. |
|
|
SECTION 7. (a) Except as provided by Subsection (b) of this |
|
|
section, this Act takes effect June 1, 2018. |
|
|
(b) Sections 802.2017(d-1) and 802.2018(d-1), Government |
|
|
Code, as added by this Act, take effect September 1, 2017. |