89R16864 KFF-F

By: González of El Paso H.B. No. 4591

A BILL TO BE ENTITLED

AN ACT

relating to contributions to and benefits under certain fire and police pension funds.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 1A, Chapter 101 (H.B. 31), Acts of the 43rd Legislature, 1st Called Session, 1933 (Article 6243b, Vernon's Texas Civil Statutes), is amended by adding Subdivision (3-a) to read as follows:

(3-a) "Qualified actuary" means an actuary that meets the qualifications under Section 10A(b)(1) of this Act.

SECTION 2. Section 2, Chapter 101 (H.B. 31), Acts of the 43rd Legislature, 1st Called Session, 1933 (Article 6243b, Vernon's Texas Civil Statutes), is amended to read as follows:

Sec. 2. PARTICIPATION IN FUND; WAGE DEDUCTIONS. Each member fireman and policeman in the employment of such city or town must participate in said fund, except in times of national emergency those persons as are employed during that time shall not be required to participate in the fund, and said city or town shall be authorized to deduct a sum of not less than one per cent (1%) nor in excess of six per cent (6%) of his wages from each month to form a part of the fund known as the Firemen and Policemen Pension Fund, except that the city or town shall deduct a sum less than one per cent (1%) or more than six per cent (6%) of the member's wages each month to form a part of the fund if the board of trustees of that fund increases or decreases the percentage of wages to be contributed to the fund under the provisions of Section 10A, 14A-1, or 14B [14A] of this Act. The amount to be deducted from the wages of those named above who must participate in the fund is to be determined by the board of trustees as provided for in Section 1 of this Act within the minimum and maximum deductions herein provided or as otherwise provided under the provisions of Section 10A, 14A-1, or 14B [14A] of this Act.

SECTION 3. Section 3, Chapter 101 (H.B. 31), Acts of the 43rd Legislature, 1st Called Session, 1933 (Article 6243b, Vernon's Texas Civil Statutes), is amended to read as follows:

Sec. 3. PAYMENTS TO FUND. There shall be deducted for such fund from the wages of each fireman and policeman a sum to be determined by the board of trustees under the provisions of Section [Sections] 2, 10A, 14A-1, or 14B [and 14A] of this Act. Any donations made to such fund and rewards received by any member of either of said funds, and all funds received from any source for such fund shall be deposited in like manner to the credit of such fund.

SECTION 4. Sections 10A(b) and (c), Chapter 101 (H.B. 31), Acts of the 43rd Legislature, 1st Called Session, 1933 (Article 6243b, Vernon's Texas Civil Statutes), are amended to read as follows:

(b) None of the changes made under Subsection (a) of this section may be made unless all of the following conditions are sequentially complied with:

(1) the change must be approved by a qualified actuary selected by a four-fifths vote of the Board; the actuary's approval must be based on an actuarial finding that the change is supported by the existing funding status of the fund or by a contribution increase by the city or town or by both the city or town and the members of the pension fund; the actuary, if an individual, must be a Fellow of the Society of Actuaries or a Fellow of the Conference of Actuaries in Public Practice or a Member of the American Academy of Actuaries; the actuary, if an actuarial consulting firm, must be established in the business of providing actuarial consulting services to pension plans and have experienced personnel able to provide the requested services; the findings upon which the properly selected and qualified actuary's approval are based are not subject to judicial review;

(2) the change must be approved by a majority of all persons then making contributions to the fund as employees of a department to which the change would directly apply, voting by secret ballot at an election held after 10 [ten (10)] days' notice given by posting at a prominent place in every station or substation of a department to which the change would directly apply and in the city hall;

(3) the changes, except changes made under the provisions of [Subdivision (1),] Subsection (a)(1) [(a),] of this section, shall apply only to active member employees who are members of the affected departments at the time the change becomes effective and those who enter the departments thereafter; and

(4) the changes shall not deprive any person, without his written consent, of any right to receive a pension or benefits which have already become vested and matured.

(c) If the Board of Trustees proposes to change benefits under [Subdivision (1),] Subsection (a)(1) [(a),] of this section, the change is not effective until the change is finally approved in accordance with this subsection. The Board shall submit the change for approval by the city's or town's governing body. If disapproved by the governing body, or if the governing body fails to act not later than the 60th day after the date [within sixty (60) days] of presentation to the governing body, the Board, by resolution passed by a majority of the whole Board, plus one, may require the city's or town's governing body to hold an election, as soon as practicable, for approval of the change by the qualified voters of the city or town. Any change proposed and subsequently approved by the governing body of the city or town or by the voters, as applicable, under this subsection becomes effective as of the beginning of the city's or town's next fiscal year.

SECTION 5. Chapter 101 (H.B. 31), Acts of the 43rd Legislature, 1st Called Session, 1933 (Article 6243b, Vernon's Texas Civil Statutes), is amended by amending Sections 14, 14A, and 14B and adding Section 14A-1 to read as follows:

Sec. 14. USE OF PUBLIC FUNDS; CITY OR TOWN MINIMUM CONTRIBUTION. (a) Except as provided by this section and Section 14A, 14A-1, or 14B of this Act, no funds shall be paid out of the public treasury of any such incorporated city or town, in carrying out any of the provisions of this law, except on a majority vote of the voters of such city or town, and where such funds have been voted on as provided by law, said city or town shall contribute such amount.

(b) Subject to an increase under Section 14A or 14A-1 of this Act or a decrease under Section 14B of this Act, the city or town shall contribute an amount to the pension fund that is not less than 18 percent of the total amount expended by the city or town on member wages.

Sec. 14A. CITY OR TOWN CONTRIBUTION INCREASES. (a) The city or town may increase its contribution rate above the rate prescribed by Section 14(b) of this Act based on a qualified actuary's report only if the governing body of the city or town, or a majority vote of the voters of the city or town, approves the increase to the city or town contribution rate.

(b) The Board of Trustees may submit for approval by the city's or town's governing body a proposed contribution rate increase under Subsection (a) of this section. If the proposed contribution rate increase is disapproved by the governing body, or if the governing body fails to act not later than the 60th day after the date the proposal is presented to the governing body, the Board, by resolution passed by a majority of the whole Board, plus one, may require the city's or town's governing body to hold an election, as soon as practicable, for approval of the change by the qualified voters of the city or town. Any change proposed and subsequently approved by the governing body or by the voters, as applicable, under this subsection becomes effective as of the beginning of the city's or town's next fiscal year.

Sec. 14A-1. JOINT CITY OR TOWN AND MEMBER CONTRIBUTION INCREASES. (a) If at any time a qualified actuary [that meets the requirements of Subdivision (1), Subsection (b), Section 10A of this Act,] determines that the total contribution rate, expressed as a percentage of wages, is insufficient to amortize the unfunded actuarial accrued liability, as defined under the applicable Governmental Accounting Standards Board Statement [No. 25], over a 30-year [40-year] period:

(1) the city's or town's governing body may increase the city or town contribution rate; and

(2) to the extent that the city or town contribution rate increases under Subdivision (1) of this subsection, the member contribution rate must increase by an amount equal to the member contribution rate before the increase multiplied by a fraction:

(A) the numerator of which is the increase in the amount of the city or town contribution rate; and

(B) the denominator of which is the amount of the city or town contribution rate before the increase.

(b) The sum of the city or town contribution rate and the member contribution rate after an increase under this section may not exceed the total contribution rate determined by the qualified actuary to be necessary to amortize the unfunded actuarial accrued liability over a 30-year [forty (40) year] period.

Sec. 14B. CITY OR TOWN AND MEMBER CONTRIBUTION DECREASES. (a) If at any time a qualified actuary [that meets the requirements of Section 10A(b)(1) of this Act] determines that the pension fund has sufficient assets to have no [total contribution rate, expressed as a percentage of wages, is sufficient to amortize the] unfunded actuarial accrued liability, as defined under the applicable Governmental Accounting Standards Board Statement [No. 25, over a 25-year period]:

(1) the city's or town's governing body may decrease the city or town contribution rate; and

(2) to the extent that the city or town contribution rate decreases under Subdivision (1) of this subsection, the member contribution rate must decrease by an amount equal to the member contribution rate before the decrease multiplied by a fraction:

(A) the numerator of which is the decrease in the amount of the city or town contribution rate; and

(B) the denominator of which is the amount of the city or town contribution rate before the decrease.

(b) The sum of the city or town contribution rate and the member contribution rate after a decrease under this section may not be less than the total contribution rate, as determined by the qualified actuary, required for the pension fund to have no [be necessary to amortize the] unfunded actuarial accrued liability [over a 25-year period].

SECTION 6. Section 14(b), Chapter 101 (H.B. 31), Acts of the 43rd Legislature, 1st Called Session, 1933 (Article 6243b, Vernon's Texas Civil Statutes), as added by this Act, applies to contributions made to the pension fund subject to that section on or after May 1, 2023.

SECTION 7. This Act takes effect September 1, 2025.