Relating to participation in, administration of, contributions to, and benefits under the Texas Municipal Retirement System.

89(R) HB 4609 - Engrossed version - Bill Text

89R20928 RDR-D

By: Dean

H.B. No. 4609

A BILL TO BE ENTITLED

AN ACT

relating to participation in, administration of, contributions to,

and benefits under the Texas Municipal Retirement System.

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

SECTION 1. Subchapter A, Chapter 851, Government Code, is

amended by adding Section 851.0051 to read as follows:

Sec.

851.0051.

VENUE. (a)

The venue of any action brought

against the retirement system is in Travis County. A hearing held by

the State Office of Administrative Hearings in which the retirement

system is a party must be held in Travis County.

(b)

The venue of any action brought in a state court by the

retirement system is in Travis County or in the county in which the

defendant is situated, is domiciled, or does business.

SECTION 2. Section 852.001(c), Government Code, is amended

to read as follows:

(c) A department begins participation in the retirement

system on the first day of the
first
[
second
] month after the month

the
retirement system
[
board of trustees
] receives notice of an

election to participate.

SECTION 3. Section 852.105(b), Government Code, is amended

to read as follows:

(b) A governing body may not adopt an ordinance under this

section unless the actuary first determines, on the basis of

mortality and other tables adopted by the board of trustees, that

all obligations of the municipality to the benefit accumulation

fund, including obligations proposed under the ordinance, can be

funded by the municipality [
within its maximum contribution rate

and
] within its amortization period.

SECTION 4. Sections 853.003(a), (b), and (e), Government

Code, are amended to read as follows:

(a) An eligible member who has withdrawn contributions and

canceled credited service in the retirement system may reestablish

the canceled credit in the system if the governing body of the

municipality that [
currently
] employs the member by ordinance

authorizes reestablishment of the credit by eligible employee

members.

(b) A member eligible to reestablish credit under this

section is one who
:

(1)
has, since resuming membership, at least 24

consecutive months of credited service as an employee of the

municipality for which the ordinance was adopted
; and

(2)

is an employee of the municipality on the

effective date of the ordinance
.

(e) A governing body may not adopt an ordinance under

Subsection (a) unless the actuary first determines that all

obligations charged against the municipality's account in the

benefit accumulation fund, including the obligations proposed in

the ordinance, can be funded by the municipality within its

[
maximum contribution rate and within its
] amortization period.
An

ordinance adopted under Subsection (a) takes effect January 1 of

the year that first occurs after the date the retirement system

receives the adopted ordinance.

SECTION 5. Section 853.305(g), Government Code, is amended

to read as follows:

(g) An ordinance adopted under this section applies to the

granting of restricted prior service credit to a member who is or

has been an employee of the authorizing municipality at any time on

or after the effective date of the ordinance.
An ordinance adopted

under this section takes effect January 1 of the year that first

occurs after the date the retirement system receives the adopted

ordinance.

SECTION 6. Section 853.403(a), Government Code, is amended

to read as follows:

(a) An ordinance adopted under Section 853.401 may not take

effect unless the board of trustees approves the ordinance as

meeting the requirements of this section. The board may not approve

an ordinance unless the actuary first determines, and the board

concurs in the determination, that all obligations charged against

the municipality's account in the benefit accumulation fund,

including obligations proposed in the ordinance, can be funded by

the municipality within its [
maximum total contribution rate and

within its
] amortization period as in effect on the date the updated

service credits take effect.

SECTION 7. Sections 853.404(d), (f), and (f-1), Government

Code, are amended to read as follows:

(d) Except as provided by Subsection (e), an ordinance under

this section continues in effect for each year that the actuary

determines that all obligations charged against the municipality's

account in the benefit accumulation fund, including the obligations

to become effective the next January 1, can be funded by the

municipality within its [
maximum contribution rate and within its
]

amortization period as in effect on the next January 1. An

ordinance under this section will cease to be in effect for future

years if the actuary cannot make that determination, but shall

again take effect for future years beginning January 1 of the first

year after the actuary can make that determination.

(f) Subject to Subsection (f-1) and notwithstanding

conflicting provisions of Subsection (c) or Section 854.203, the

governing body of a participating municipality that adopts an

ordinance under Section 854.203 providing for increased annuities

effective
on or after
January 1
,
[
of 2024, 2025, or
] 2026
,
may elect

to compute the annuity increase,
to be effective on a one-year basis

or, in accordance with Subsection (c), on a repeating basis

[
including an annual annuity increase authorized under Subsection

(c)
], as the sum of prior and current service annuities, as

increased in subsequent years under Section 854.203 or Subsection

(c), of the person on whose service the annuities are based on the

effective date of the annuity increase, multiplied by:

(1) the percentage change in the Consumer Price Index

for All Urban Consumers, published by the Bureau of Labor

Statistics of the United States Department of Labor, during the

12-month period ending in December of the year that is 13 months

before the effective date of the ordinance providing the increase;

and

(2) 30 percent,
40 percent,
50 percent,
60 percent,
or

70 percent, as specified by the governing body in the ordinance.

(f-1) Subsection (f) applies only with respect to[
:

[
(1)

a participating municipality that as of January

1, 2023:

[
(A)

does not provide by ordinance an annual

annuity increase under Subsection (c) because the municipality:

[
(i)

passed an ordinance before January 1,

2023, that rescinded a previous ordinance authorizing annual

increases under Subsection (c); or

[
(ii)

has not passed an ordinance

authorizing annual increases under Subsection (c); or

[
(B)

does provide by ordinance an annual annuity

increase under Subsection (c) if the governing body of the

municipality elects to provide increased annuities recomputed in

accordance with Subsection (f) for purposes of maintaining or

increasing the amount of the annuity increase otherwise authorized

by the ordinance; and

[
(2)
] the annuity of:

(1)
[
(A)
] a retiree who retired not later than the

last day of December of the year that is 13 months before the

effective date of the ordinance providing the
annuity
increase; or

(2)
[
(B)
] a beneficiary of a deceased retiree whose

death occurred not later than the last day of December of the year

that is 13 months before the effective date of the ordinance

providing the
annuity
increase.

SECTION 8. Section 853.502, Government Code, is amended by

adding Subsection (c) to read as follows:

(c)

An ordinance adopted under this section takes effect

January 1 of the year that first occurs after the date the

retirement system receives the adopted ordinance.

SECTION 9. Section 854.106(a), Government Code, is amended

to read as follows:

(a) If a surviving spouse, or the executor or administrator

of a member's estate, would be entitled to make an election under

Section 854.105 because of the death of the member, the heirs of the

deceased member may make that election if:

(1) no surviving spouse exists;

(2) no petition for the appointment of a personal

representative of the member is pending or has been granted;

(3) 30 days have elapsed since the death of the member;

(4) the value of the entire assets of the member's

estate, excluding homestead and exempt property, does not exceed

the amount for which a small estate affidavit may be approved in

accordance with Chapter 205, Estates Code
[
$50,000
];
and

(5) [
there are not more than three heirs; and

[
(6)
] on file with the retirement system is a

certified copy of a small
estate
[
estates
] affidavit that has been

approved and filed in accordance with Chapter 205, Estates Code, or

an original affidavit as described by Subsection (b).

SECTION 10. Section 854.201(c), Government Code, is amended

to read as follows:

(c) A governing body may not adopt an ordinance under this

section unless the actuary first determines that all obligations

charged against the municipality's account in the benefit

accumulation fund, including the obligations proposed in the

ordinance, can be funded by the municipality within its [
maximum

contribution rate and within its
] amortization period.

SECTION 11. Sections 854.202(d) and (e), Government Code,

are amended to read as follows:

(d) An ordinance adopted under this section must also

include the provisions specified in Section 852.105. A governing

body may not adopt an ordinance under this section unless the

actuary first determines, on the basis of mortality and other

tables adopted by the board of trustees, that all obligations of the

municipality to the benefit accumulation fund, including

obligations proposed under the ordinance, can be funded by the

municipality within its [
maximum contribution rate and within its
]

amortization period.

(e) The governing body shall specify the effective date of

an ordinance under this section, which may be
January 1
[
the first

day
] of any
year
[
month
] after the
date
[
month in which
] the actuary

makes the determination required by Subsection (d).

SECTION 12. Sections 854.203(b) and (g), Government Code,

are amended to read as follows:

(b) The amount of annuity increase under this section is

computed as the sum of the prior and current service annuities on

the effective date of retirement of the person on whose service the

annuities are based, multiplied by:

(1) the percentage change in the Consumer Price Index

for All Urban Consumers, published by the Bureau of Labor

Statistics of the United States Department of Labor, from December

of the year immediately preceding the effective date of the

person's retirement to the December that is 13 months before the

effective date of the ordinance providing the increase; and

(2) 30 percent,
40 percent,
50 percent,
60 percent,
or

70 percent, as specified by the governing body in the ordinance[
,

except that if the governing body has specified a different

percentage in an ordinance adopted under Section 853.404(c) and in

effect on December 31, 1999, the percentage used in computing

annuity increases for retirees of that municipality remains in

effect until changed or discontinued under Section 853.404
].

(g) An ordinance under this section may not take effect

until it is approved by the board of trustees as meeting the

requirements of this section. The board may not approve an

ordinance unless the actuary first determines that all obligations

charged against the municipality's account in the benefit

accumulation fund, including the obligations proposed in the

ordinance, can be funded by the municipality within its [
maximum

contribution rate and within its
] amortization period as in effect

on the effective date of the increases.

SECTION 13. Section 854.205(a), Government Code, is amended

to read as follows:

(a) This section applies to each municipality unless the

municipality's governing board files with the
retirement system

[
board of trustees
] before December 31, 2001, an election to not

provide for five-year vesting. A governing board that elects to not

provide five-year vesting may revoke that election by sending

notice to the
retirement system
[
board of trustees
] to provide for

five-year vesting.
A revocation election under this subsection

takes effect January 1 of the year that first occurs after the date

the retirement system receives the notice.

SECTION 14. Section 854.405(b), Government Code, is amended

to read as follows:

(b) A governing body may not adopt an ordinance under this

section unless the actuary first determines, on the basis of

mortality and other tables adopted by the board of trustees, that

all obligations of the municipality to the benefit accumulation

fund, including obligations proposed under the ordinance, can be

funded by the municipality within its [
maximum contribution rate

and within its
] amortization period.

SECTION 15. Section 855.401, Government Code, is amended by

adding Subsection (e) to read as follows:

(e)

Unless adopted as part of an election to participate in

the retirement system under Section 852.001, an ordinance adopted

to increase the member contribution rate under Subsection (b) takes

effect January 1 of the year that first occurs after the date the

retirement system receives the adopted ordinance.

SECTION 16. Section 855.402(k), Government Code, is amended

to read as follows:

(k) Contributions picked up as provided by Subsection (j)

shall be treated as employer contributions in determining tax

treatment of the amounts under the United States Internal Revenue

Code; however, each participating municipality shall continue to

withhold federal income taxes based upon these contributions until

the Internal Revenue Service determines or the federal courts rule

that pursuant to Section 414(h) of the Internal Revenue Code of 1986

(26 U.S.C. Section 414), these picked-up contributions are not

included as gross income of the employee until such time as they are

distributed or made available. Employee contributions that are

picked up as above provided shall be deposited to the individual

account of the member and shall be treated for all other purposes of

this subtitle in the same manner and with like effect as if the

amount had been deducted from the compensation of the employee

pursuant to Sections 855.401 and 855.402(a) through (h); and

picked-up contributions may not be included in calculating the

limitations on municipality contribution rates prescribed by
any

[
Section 855.407 or
] other provisions of this subtitle.

SECTION 17. The heading to Section 855.407, Government

Code, is amended to read as follows:

Sec. 855.407. [
LIMITATION ON
] MUNICIPALITY CONTRIBUTION

RATES.

SECTION 18. Sections 855.407(b) and (g), Government Code,

are amended to read as follows:

(b) The actuary annually shall determine the municipality

normal contribution rate and the prior service contribution rate

from the most recent data available at the time of the

determination. Before January 1 of each year, the board of trustees

shall certify the rates to each participating municipality. [
If a

participating municipality has different rates of contribution for

employees of different departments, the actuary shall determine the

maximum rate for the municipality using the average rate of

contribution prescribed for contributions of employees of its

participating departments. To compute the average rate the actuary

shall consider the number of employees in each participating

department of the municipality.
]

(g)
Except as provided by Subsections (h) and (i), a

participating
[
A
] municipality [
that begins participation in the

retirement system on or after December 31, 1999, and any

municipality already participating in the retirement system on that

date whose governing body elects to have the municipality do so
]

shall contribute to its account in the benefit accumulation fund at

the combined rate of total compensation paid to its employees as the

actuary determines is necessary to fund all obligations chargeable

to its account in the fund within the municipality's amortization

period[
, regardless of other provisions of this subtitle
].

SECTION 19. Section 855.501(e), Government Code, is amended

to read as follows:

(e) A participating municipality electing to provide an

increased current service annuity reserve and electing a

contribution rate of
either
150 percent for a year
or 200 percent

for a year
is liable for total contributions at a rate
determined by

the actuary
[
that does not exceed a rate equal to the maximum rate

prescribed for the municipality by Section 855.407, plus two

percent a year. A municipality electing a rate of 200 percent a

year is liable for contributions at a rate that does not exceed a

rate equal to the maximum rate prescribed for the municipality by

Section 855.407, plus four percent a year
].

SECTION 20. The following provisions of the Government Code

are repealed:

(1) Section 854.203(h);

(2) Section 855.4065(b);

(3) Sections 855.407(a), (c), (e), and (f);

(4) Section 855.408(b); and

(5) Sections 855.501(i) and (j).

SECTION 21. This Act takes effect September 1, 2025.