HB2688 - Relating to the public retirement systems of certain municipalities.

      H.B. No. 2688         AN ACT   relating to the public retirement systems of certain   municipalities.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:   ARTICLE 1.  FIREFIGHTERS' RELIEF AND RETIREMENT FUND          SECTION 1.01.  The heading to Article 6243e.2(1), Revised   Statutes, is amended to read as follows:          Art. 6243e.2(1). FIREFIGHTERS' RELIEF AND RETIREMENT FUND IN   MUNICIPALITIES OF AT LEAST 2,000,000 [ 1,600,000 ] POPULATION.          SECTION 1.02.  Section 1(13-e), Article 6243e.2(1), Revised   Statutes, is amended to read as follows:                (13-e)  "Normal retirement age" means:                      (A)  [ for a member, 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,   hired before the year 2017 effective date, ] the age at which a [ the ]   member attains 20 years of service; or                      (B)  [ except as provided by Paragraph (A) of this   subdivision, for a member hired or rehired on or after the year 2017   effective date, ] the age at which a member first attains both the   age of at least 50 and at least 10 years of service [ the sum of the   member's age, in years, and the member's years of participation in   the fund equals at least 70 ].          SECTION 1.03.  Section 1(16-b), Article 6243e.2(1), Revised   Statutes, is redesignated as Section 1(10-a-1), Article   6243e.2(1), Revised Statutes, and amended to read as follows:                 (10-a-1)  "Entry [ (16-b)  "Ultimate entry ] age normal   actuarial cost method " means an actuarial cost method under which a   calculation is made to determine the average uniform and constant   percentage rate of contributions that, if applied to the   compensation of each member during the entire period of the   member's anticipated covered service, would be required to meet the   cost of all benefits payable on the member's behalf based on the   benefits provisions for each individual employee [ newly hired   employees ]. For purposes of this definition, the actuarial accrued   liability for each member is the difference between the member's   present value of future benefits based on the tier of benefits that   apply to the member and the member's present value of future normal   costs determined using the normal cost rate.          SECTION 1.04.  Sections 2(a) and (h-2), Article 6243e.2(1),   Revised Statutes, are amended to read as follows:          (a)  A firefighters' relief and retirement fund is   established in each incorporated municipality that has a population   of at least 2,000,000 [ 1,600,000 ] and a fully paid fire department.          (h-2)  If the board establishes a pension benefits committee   under Subsection (h-1) of this section, that committee, even if it   is composed of fewer than all the trustees of the board, may   deliberate and act in place of the board regarding each application   for benefits submitted to the fund by a member or the member's   survivor. Final action of a pension benefits committee on an   application for benefits is binding, subject only to any right of   appeal to the board under law, rule, or policy at the time the   application is filed. Except to the extent the final action of a   pension benefits committee may be appealed to the board, the final   action of the pension benefits committee on an application for   benefits constitutes the final action of the board[ , including for   purposes of filing an appeal to a district court under Section 12 of   this article ].          SECTION 1.05.  Section 4(a), Article 6243e.2(1), Revised   Statutes, is amended to read as follows:          (a)  A member 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:                (1)  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, at the age at which the   member attains 20 years of service; and                (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, at the age at which the member attains 20 years of service   [ when the sum of the member's age in years and the member's years of   participation in the fund equals at least 70 ].          SECTION 1.06.  Sections 5(a), (b), (b-1), (c), and (m),   Article 6243e.2(1), Revised Statutes, are amended to read as   follows:          (a)  A member who is eligible to receive a service pension   under Section 4 [ 4(a)(1) ] 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.          (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 [ 4(a)(1) ]   of this article.  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, 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   member may not participate in the DROP for more than 15 [ 13 ] years.     If a DROP participant remains in active service after the 15th   [ 13th ] 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.          (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, 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 15th [ 13th ] anniversary of the   date of the first credit to the member's DROP account.          (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 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 15 [ 13 ] 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 1.07.  Sections 8(a) and (c), Article 6243e.2(1),   Revised Statutes, are amended to read as follows:          (a)   A [ On or after the year 2017 effective date, 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.          (c)   A [ Except as provided by Subsection (a) of this section,   a member who is hired or rehired as a firefighter on or after the   year 2017 effective date or a ] member who terminates active service   [ 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 1.08.  Section 13B(a), Article 6243e.2(1), Revised   Statutes, is amended to read as follows:          (a)  The fund and the municipality shall separately cause   their respective actuaries to prepare a risk sharing valuation   study in accordance with this section and actuarial standards of   practice. A risk sharing valuation study must:                (1)  be dated as of the first day of the fiscal year in   which the study is required to be prepared;                (2)  be included in the fund's standard valuation study   prepared annually for the fund;                (3)  calculate the unfunded actuarial accrued   liability of the fund;                (4)  be based on actuarial data provided by the fund   actuary or, if actuarial data is not provided, on estimates of   actuarial data;                (5)  estimate the municipal contribution rate, taking   into account any adjustments required under Section 13E or 13F of   this article for all applicable prior fiscal years;                (6)  subject to Subsection (g) of this section, be   based on the following assumptions and methods that are consistent   with actuarial standards of practice:                      (A)  an [ ultimate ] entry age normal actuarial cost     method;                      (B)  for purposes of determining the actuarial   value of assets:                            (i)  except as provided by Subp [Text truncated for display. 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