SB2162 - Relating to the public retirement systems for employees of certain municipalities.

      By: Flores S.B. No. 2162               A BILL TO BE ENTITLED   AN ACT   relating to the public retirement systems for employees of certain   municipalities.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  SECTION 1. Section 1.02, Chapter 183 (S.B.   No. 509), Acts of the 64th Legislature, Regular Session, 1975   (Article 6243e.1, Vernon's Texas Civil Statutes), is amended to   read as follows:          Sec. 1.02.  DEFINITIONS. In this Act:                (1)  "Accumulated contributions" means all sums of   money, including interest, in the individual account of a member or   former firefighter, as shown on the books and records of the fund.                 (2)     "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 under Section   10.01B of this Act, as applicable.                ( 2 3)  "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.                 (4)     "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 under Section 10.01B of this   Act, as applicable.                 (5)  "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 system.                 (6)     "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 city legacy contribution   amount for the same calendar year, as determined in the risk sharing   valuation study under Section 10.01A or 10.01B of this Act, as   applicable, from the sum under Subsection (A); and                       (C)     dividing the difference under Subsection (B)   by the projected pensionable payroll for the same calendar year.                ( 3 7 )  "Board of trustees" means the board of   firefighters relief and retirement fund trustees of the fund   existing pursuant to this Act.                ( 4 8 )  "Board's actuary" means the actuary employed   under Section 12.03 of this Act.                 (9)     "City" means a municipality to which this Act   applies.                 (10)     "City contribution rate" means, for a given   calendar year, a percentage rate equal to the sum of the city normal   cost rate and the amortization rate, as adjusted under Sections   10.01C or 10.01D of this Act, as applicable.                 (11)     "City 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   10.01A of this Act.                 (12)     "City normal cost rate" means, for a given   calendar year, the normal cost rate minus the applicable member   contribution rate determined under Section 10.02 of this Act.                ( 5 13 )  "Compensation" means a firefighter's monthly   salary, excluding overtime pay, any temporary pay in higher   classifications, educational incentive pay, assignment pay,   Christmas Day bonus pay, and pay for automobile and clothing   allowances.                 (14)     "Corridor" means the range of city contribution   rates that are:                       (A)     equal to or greater than the minimum city   contribution rate; and                       (B)     equal to or less than the maximum city   contribution rate.                 (15)  "Corridor margin" means five percentage points.                 (16)     "Corridor midpoint" means the projected city   contribution rate specified for each calendar year for 25 years as   provided by the initial risk sharing valuation study under Section   10.01A of this Act, rounded to the nearest hundredths decimal   place.                ( 6 17 )  "Dependent child" or "dependent children" means   a deceased member's unmarried children under the age of 22, other   than a child who has been determined by the board of trustees not to   have been dependent on the deceased member.                 (18)     "Employer" means the municipality described in   Section 1.01 of this Act or the board of trustees.                 (19)     "Estimated city contribution rate" means, for a   given calendar year, a city contribution rate equal to the sum of   the city normal cost rate and the amortization rate of the liability   layers, as applicable, excluding the legacy liability layer, and   before any adjustments under Sections 10.01C or 10.01D of this Act.                ( 7 20 )  "Fire department" means a regularly organized   fire department of a city to which this Act applies.                ( 8 21 )  "Firefighter" means a commissioned civil   service and Texas state-certified member of a fire department.                ( 9 22 )  "Fund" means the firefighters relief and   retirement fund existing pursuant to this Act.                 (23)     "Funded ratio" means the ratio of the actuarial   value of the fund's assets divided by the fund's actuarial accrued   liability.                 (24)     "Group A member" means a member who was initially   hired by the city as a firefighter prior to January 1, 2026.                 (25)     "Group A retiree" means a retiree who was   initially hired by the city as a firefighter prior to January 1,   2026.                 (26)     "Group B member" means a member who was initially   hired by the city as a firefighter on or after January 1, 2026.                 (27)     "Group B retiree" means a retiree who was   initially hired by the city as a firefighter on or after January 1,   2026.                ( 10 28 )  "Internal Revenue Code" means the Internal   Revenue Code of 1986.                 (29)     "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 city 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.                 (30)     "Level percent of payroll method" means the   amortization method that defines the amount of a 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.                 (31)     "Liability gain layer" means a liability layer   that decreases the unfunded actuarial accrued liability.                 (32)  "Liability layer" means:                       (A)     the legacy liability established in the   initial risk sharing valuation study under Section 10.01A 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 under Section 10.01B of this Act.                 (33)     "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.                 (34)     "Life annuity" means a series of equal monthly   payments, payable after retirement for a member's life, consisting   of a combination of prior service pension and current service   annuity, or early retirement annuity, to which the member is   entitled.                 (35)     "Market value of assets" means the value at which   assets could be traded on the market.                 (36)     "Maximum employer contribution rate" means, for a   given calendar year, the rate equal to the corridor midpoint plus   the corridor margin.                ( 11 37 )  "Member" means any firefighter or retiree   included in a fund under this Act.                 (38)     "Minimum employer contribution rate" means, for a   given calendar year, the rate equal to the corridor midpoint minus   the corridor margin.                 (39)     "Normal cost rate" means, for a given calendar   year, the salary weighted average of the individual normal cost   rates determined for the current active firefighter population,   plus the assumed administrative expenses determined in the most   recent actuarial experience study.                 (40)     "Payoff year" means the year a liability layer is   fully amortized under the amortization period.                 (41)     "Pensionable payroll" means the aggregate basic   hourly earnings of all active-contributory firefighters for a   calendar year or pay period, as applicable.                 (42)     "Projected [Text truncated for display. 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