HB2802 - Relating to the administration of, contributions to, and benefits under retirement systems for firefighters in certain municipalities.

      H.B. No. 2802         AN ACT   relating to the administration of, contributions to, and benefits   under retirement systems for firefighters in certain   municipalities.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  The heading to Chapter 183 (S.B. 598), Acts of   the 64th Legislature, Regular Session, 1975 (Article 6243e.1,   Vernon's Texas Civil Statutes), is amended to read as follows:          Art. 6243e.1.  FIREFIGHTERS RELIEF AND RETIREMENT FUND IN   CITIES OF 950,000 [ 450,000 ] TO 1,050,000 [ 500,000 ].          SECTION 2.  Section 1.02, Chapter 183 (S.B. 598), Acts of the   64th Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's   Texas Civil Statutes), is amended by amending Subdivisions (1),   (2), (3), and (4) and adding Subdivisions (1-a), (2-a), (2-b),   (2-c), (2-d), (2-e), (5-a), (5-b), (5-c), (6-a), (6-b), (6-c),   (6-d), (6-e), (8-a), (9-a), (9-b), (9-c), (9-d), (10-a), (10-b),   (10-c), (10-d), (10-e), (10-f), (11-a), (11-b), (11-c), (11-d),   (11-e), (11-f), (11-g), (13-a), and (13-b) to read as follows:                (1)  "Accumulated contributions" means all sums of   money, including interest, if applicable, credited to [ in ] the   individual account of a member or former firefighter, as shown on   the books and records of the fund.                 (1-a)     "Actuarial accrued liability" means the portion   of the actuarial present value of projected benefits of the fund   attributed to past periods of member service based on the cost   method used in the risk sharing valuation study prepared under   Section 10.05 or 10.06 of this Act, as applicable.                (2)  "Actuarial equivalent" means a benefit that, at   the time that it begins being paid, has the same present value as   the benefit it replaces, based on the recommendations of the   board's actuary.                 (2-a)     "Actuarial value of assets" means the value of   the fund's assets as calculated using the asset smoothing method   used in the risk sharing valuation study prepared under Section   10.05 or 10.06 of this Act, as applicable.                 (2-b)     “Adjustment factor” means the assumed rate of   return for the fund adopted by the board less two percentage points.                 (2-c)  "Amortization period" means:                       (A)     the period necessary to fully pay a liability   layer; or                       (B)     if referring to the amortization period of   the fund as a whole, the number of years incorporated in a weighted   average amortization factor for the sum of the legacy liability and   all liability layers as determined in each annual actuarial   valuation of assets and liabilities of the fund.                 (2-d)     "Amortization rate" means, for a given calendar   year, the percentage rate determined by:                       (A)     adding the scheduled amortization payments   required to pay off the then-existing liability layers;                       (B)     subtracting the municipal legacy   contribution amount for the same calendar year, as determined in   the risk sharing valuation study prepared under Section 10.05 or   10.06 of this Act, as applicable, from the sum under Paragraph (A)   of this subdivision; and                       (C)     dividing the amount determined under   Paragraph (B) of this subdivision by the projected pensionable   payroll for the same calendar year.                 (2-e)     "Annual investment return" means the annual   money-weighted rate of return, net of investment expenses, reported   by the fund in the annual report for a given calendar year.                (3)  "Board of trustees" or "board" means the board of   [ firefighters relief and retirement fund ] trustees of the fund   under [ existing pursuant to ] this Act , unless the context requires   otherwise .                (4)  "Board's actuary" means the actuary engaged by the   fund [ employed ] under Section 12.03 of this Act.                 (5-a)     "Corridor" means the range of municipal   contribution rates that are:                       (A)     equal to or greater than the minimum   municipal contribution rate; and                       (B)     equal to or less than the maximum municipal   contribution rate.                 (5-b)  "Corridor margin" means five percentage points.                 (5-c)     "Corridor midpoint" means the projected   municipal contribution rate specified for each calendar year for 30   years as provided by the initial risk sharing valuation study under   Section 10.05 of this Act, rounded to the nearest hundredths   decimal place.                 (6-a)     "DROP" means the deferred retirement option plan   under Article 8 of this Act.                 (6-b)     "DROP participant" means a member who is   participating in the DROP.                 (6-c)     "DROP period" means the period between the   effective date of a member's election to participate in DROP and the   actual date of the member's retirement from the fire department,   subject to the seven-year limitation prescribed by Section 8.02 of   this Act.                 (6-d)     "Employer normal cost rate" means, for a given   calendar year, the normal cost rate minus the applicable   firefighter contribution rate determined under Section 10.011 of   this Act.                 (6-e)     "Estimated municipal contribution rate" means,   for a given calendar year, a municipal contribution rate equal to   the sum of the municipal normal cost rate and the amortization rate   of the liability layers, as applicable, excluding the legacy   liability layer, and before adjustments to the rate under Section   10.07 or 10.08 of this Act, as applicable.                 (8-a)     “Five-year investment return” means the average   money-weighted rate of return of the fund, based on a rolling   five-year basis and net of investment expenses, for the applicable   five-year period.                 (9-a)     "Funded ratio" means the ratio of the actuarial   value of assets divided by the actuarial accrued liability.                 (9-b)     "Group A member" means a member included in   group A membership under Section 3.011 of this Act.                 (9-c)     "Group B cost-of-living adjustment percentage"   means a percentage that:                       (A)     except as provided by Paragraph (B) of this   subdivision, is equal to the fund's five-year investment return   minus the adjustment factor, and multiplied by 50 percent; and                       (B)     may not be less than zero or more than two   percent.                 (9-d)     "Group B member" means a member included in   group B membership under Section 3.011 of this Act.                 (10-a)     "Legacy liability" means the unfunded   actuarial accrued liability determined as of December 31, 2024, and   for each subsequent calendar year, adjusted as follows:                       (A)     reduced by the municipal legacy contribution   amount for the calendar year allocated to the amortization of the   legacy liability; and                       (B)     adjusted by the assumed rate of return   adopted by the board of trustees for the calendar year ending   December 31, 2024.                 (10-b)     "Level percent of payroll method" means the   amortization method that defines the amount of the liability layer   recognized each calendar year as a level percent of pensionable   payroll until the amount of the liability layer remaining is   reduced to zero.                 (10-c)     "Liability gain layer" means a liability layer   that decreases the unfunded actuarial accrued liability.                 (10-d)  "Liability layer" means:                       (A)     the legacy liability established in the   initial risk sharing valuation study under Section 10.05 of this   Act; or                       (B)     for calendar years after December 31, 2024,   the amount that the fund's unfunded actuarial accrued liability   increases or decreases, as applicable, due to the unanticipated   change for the calendar year as determined in each subsequent risk   sharing valuation study prepared under Section 10.06 of this Act.                 (10-e)     "Liability loss layer" means a liability layer   that increases the unfunded actuarial accrued liability. For   purposes of this Act, the legacy liability is a liability loss   layer.                 (10-f)     "Maximum municipal contribution rate" means,   for a given calendar year, the rate equal to the corridor midpoint   plus the corridor margin.                 (11-a)     "Minimum municipal contribution rate" means,   for a given calendar year, the rate equal to the corridor midpoint   minus the corridor margin.                 (11-b)     "Municipal contribution rate" means, for a   given calendar year, a percentage rate equal to the sum of the   employer normal cost rate and the amortization rate, as adjusted   under Section 10.07 or 10.08 of this Act, if applicable.                 (11-c)     "Municipal legacy contribution amount" means,   for each calendar year, a predetermined payment amount expressed in   dollars in accordance with a payment schedule amortizing the legacy   liability for the calendar year ending December 31, 2024, that is   included in the initial risk sharing valuation study under Section   10.05 of this Act.                 (11-d)     "Normal cost rate" means, for a given calendar   year, the salary weighted average of the individual normal cost   rates determined for the current active member population, plus the   assumed administrative expenses determined in the most recent   actuarial experience study.                 (11-e)     "Payoff year" means the year a liability layer   is fully amortized under the amortization period.                 (11-f)     "Pensionable payroll" means the compensation   of all members in act [Text truncated for display. 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