bill pulls DROP out of one pension fund’s valuation

The text as introduced · 258 words

89R15746 KFF-D

By: Y. Davis of Dallas
H.B. No. 4280

A BILL TO BE ENTITLED

AN ACT

relating to deferred retirement option plans under the public

retirement systems for police and firefighters in certain

municipalities.

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

SECTION 1. Part 4, Article 6243a-1, Revised Statutes, is

amended by adding Section 4.081 to read as follows:

Sec. 4.081. DROP EXCLUDED FROM ACTUARIAL ANALYSIS OF FUND;

SEPARATE TREATMENT REQUIRED. Notwithstanding any other law, an

actuarial valuation or other continuing actuarial observation of

the assets of the fund under this article or other law may not treat

assets or liabilities associated with DROP as assets or liabilities

of the fund, including for purposes of determining the period

required to amortize the unfunded actuarial accrued liability of

the fund. The pension system's qualified actuary shall separately

account for the assets or liabilities associated with DROP.

SECTION 2. Section 6.14(e-1), Article 6243a-1, Revised

Statutes, is amended to read as follows:

(e-1) The board may adopt a shorter period for annuitizing

DROP account balances under Subsection (e) of this section [ if the

pension system's qualified actuary determines that the shorter

period will not cause the pension system's amortization period to

exceed 25 years ].

SECTION 3. This Act takes effect immediately if it receives

a vote of two-thirds of all the members elected to each house, as

provided by Section 39, Article III, Texas Constitution. If this

Act does not receive the vote necessary for immediate effect, this

Act takes effect September 1, 2025.