González’s bill rewriting 1933 fire and police pension funding

The text as introduced · 1,899 words

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.