S.B. No. 2190

	AN ACT
	relating to the public retirement systems of certain
	municipalities.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	ARTICLE 1. FIREFIGHTERS' RELIEF AND RETIREMENT FUND
	SECTION 1.01.  Section 1, Article 6243e.2(1), Revised
	Statutes, is amended by amending Subdivisions (1-a), (1-b), (3),
	(13-a), (15-a), (15-b), and (16) and adding Subdivisions (1-c),
	(1-d), (1-e), (1-f), (1-g), (3-a), (3-b), (3-c), (3-d), (10-a),
	(10-b), (11-a), (12-a), (12-b), (12-c), (12-d), (12-e), (12-f),
	(12-g), (13-b), (13-c), (13-d), (13-e), (15-c), (15-d), (15-e),
	(15-f), (16-a), (16-b), (16-c), (16-d), (16-e), and (16-f) to read
	as follows:
	(1-a)  "Actuarial data" includes:
	(A)  the census data, assumption tables,
	disclosure of methods, and financial information that are routinely
	used by the fund actuary for the fund's valuation studies or an
	actuarial experience study under Section 13D of this article; and
	(B)  other data that is reasonably necessary to
	implement Sections 13A through 13F of this article. ["Average
	monthly salary" means one thirty-sixth of the member's salary as a
	firefighter for the member's highest 78 biweekly pay periods during
	the member's participation in the fund or, if the member has
	participated in the fund for less than three years, the total salary
	paid to the member for the periods the member participated in the
	fund divided by the number of months the member has participated in
	the fund. If a member is not paid on the basis of biweekly pay
	periods, "average monthly salary" is determined on the basis of the
	number of pay periods under the payroll practices of the
	municipality sponsoring the fund that most closely correspond to 78
	biweekly pay periods.]
	(1-b)  "Actuarial experience study" has the meaning
	assigned by Section 802.1014, Government Code ["Beneficiary adult
	child" means a child of a member by birth or adoption who:
	[(A)  is not an eligible child; and
	[(B)     is designated a beneficiary of a member's
	DROP account by valid designation under Section 5(j-1)].
	(1-c)  "Amortization period" means the time period
	necessary to fully pay a liability layer.
	(1-d)  "Amortization rate" means the sum of the
	scheduled amortization payments for a given fiscal year for the
	current liability layers divided by the projected pensionable
	payroll for that fiscal year.
	(1-e)  "Assumed rate of return" means the assumed
	market rate of return on fund assets, which is seven percent per
	annum unless adjusted as provided by this article.
	(1-f)  "Average monthly salary" means, if the member
	has participated in the fund for:
	(A)  three or more years, the total salary
	received by a member as a firefighter over the member's:
	(i)  highest 78 biweekly pay periods for a
	member hired before the year 2017 effective date, including a
	member who was hired before the year 2017 effective date and who
	involuntarily separated from service but was retroactively
	reinstated in accordance with an arbitration, civil service, or
	court ruling; or
	(ii)  last 78 biweekly pay periods ending
	before the earlier of the date the member terminates employment
	with the fire department, divided by 36, or the member began
	participation in the DROP, divided by 36; or
	(B)  fewer than three years, the total salary paid
	to the member for the periods the member participated in the fund
	divided by the number of months the member has participated in the
	fund.
	If a member is not paid on the basis of biweekly pay periods,
	"average monthly salary" is determined on the basis of the number of
	pay periods under the payroll practices of the municipality
	sponsoring the fund that most closely correspond to 78 biweekly pay
	periods.
	(1-g)  "Beneficiary adult child" means a child of a
	member by birth or adoption who:
	(A)  is not an eligible child; and
	(B)  is designated a beneficiary of a member's
	DROP account by valid designation under Section 5(j-1).
	(3)  "Code" means the federal Internal Revenue Code of
	1986, as amended.
	(3-a)  "Confidentiality agreement" means a letter
	agreement sent from the municipal actuary or an independent actuary
	in which the municipal actuary or the independent actuary, as
	applicable, agrees to comply with the confidentiality provisions of
	this article.
	(3-b)  "Corridor" means the range of municipal
	contribution rates that are:
	(A)  equal to or greater than the minimum
	contribution rate; and
	(B)  equal to or less than the maximum
	contribution rate.
	(3-c)  "Corridor margin" means five percentage points.
	(3-d)  "Corridor midpoint" means the projected
	municipal contribution rate specified for each fiscal year for 31
	years in the initial risk sharing valuation study under Section 13C
	of this article, and as may be adjusted under Section 13E or 13F of
	this article, and in each case rounded to the nearest hundredths
	decimal place.
	(10-a)  "Employer normal cost rate" means the normal
	cost rate minus the member contribution rate.
	(10-b)  "Estimated municipal contribution rate" means
	the municipal contribution rate estimated in a final risk sharing
	valuation study under Section 13B or 13C of this article, as
	applicable, as required by Section 13B(a)(5) of this article.
	(11-a)  "Fiscal year," except as provided by Section 1B
	of this article, means a fiscal year beginning on July 1 and ending
	on June 30.
	(12-a)  "Funded ratio" means the ratio of the fund's
	actuarial value of assets divided by the fund's actuarial accrued
	liability.
	(12-b)  "Legacy liability" means the unfunded
	actuarial accrued liability:
	(A)  for the fiscal year ending June 30, 2016,
	reduced to reflect:
	(i)  changes to benefits or contributions
	under this article that took effect on the year 2017 effective date;
	and
	(ii)  payments by the municipality and
	earnings at the assumed rate of return allocated to the legacy
	liability from July 1, 2016, to July 1, 2017, excluding July 1,
	2017; and
	(B)  for each subsequent fiscal year:
	(i)  reduced by the contributions for that
	year allocated to the amortization of the legacy liability; and
	(ii)  adjusted by the assumed rate of
	return.
	(12-c)  "Level percent of payroll method" means the
	amortization method that defines the amount of the liability layer
	recognized each fiscal year as a level percent of pensionable
	payroll until the amount of the liability layer remaining is
	reduced to zero.
	(12-d)  "Liability gain layer" means a liability layer
	that decreases the unfunded actuarial accrued liability.
	(12-e)  "Liability layer" means the legacy liability
	established in the initial risk sharing valuation study under
	Section 13C of this article and the unanticipated change as
	established in each subsequent risk sharing valuation study
	prepared under Section 13B of this article.
	(12-f)  "Liability loss layer" means a liability layer
	that increases the unfunded actuarial accrued liability.  For
	purposes of this article, the legacy liability is a liability loss
	layer.
	(12-g)  "Maximum contribution rate" means the rate
	equal to the corridor midpoint plus the corridor margin.
	(13-a)  "Minimum contribution rate" means the rate
	equal to the corridor midpoint minus the corridor margin ["Normal
	retirement age" means the earlier of:
	[(A)     the age at which the member attains 20 years
	of service; or
	[(B)     the age at which the member first attains
	the age of at least 50 years and at least 10 years of service].
	(13-b)  "Municipality" means a municipality in this
	state having a population of more than 2 million.
	(13-c)  "Municipal contribution rate" means a percent
	of pensionable payroll that is the sum of the employer normal cost
	rate and the amortization rate for liability layers, except as
	determined otherwise under the express provisions of Sections 13E
	and 13F of this article.
	(13-d)  "Normal cost rate" means the salary weighted
	average of the individual normal cost rates determined for the
	current active population plus an allowance for projected
	administrative expenses. The allowance for projected
	administrative expenses equals the administrative expenses divided
	by the pensionable payroll for the previous fiscal year, provided
	the administrative allowance may not exceed 1.25 percent of the
	pensionable payroll for the current fiscal year unless agreed to by
	the municipality.
	(13-e)  "Normal retirement age" means:
	(A)  for a member, including a member who was
	hired before the year 2017 effective date and who involuntarily
	separated from service but has been retroactively reinstated in
	accordance with an arbitration, civil service, or court ruling,
	hired before the year 2017 effective date, the age at which the
	member attains 20 years of service; or
	(B)  except as provided by Paragraph (A) of this
	subdivision, for a member hired or rehired on or after the year 2017
	effective date, the age at which the sum of the member's age, in
	years, and the member's years of participation in the fund equals at
	least 70.
	(15-a)  "Payoff year" means the year a liability layer
	is fully amortized under the amortization period. A payoff year may
	not be extended or accelerated for a period that is less than one
	month.  ["PROP" means the post-retirement option plan under Section
	5A of this article.]
	(15-b)  "Pensionable payroll" means the aggregate
	salary of all the firefighters on active service, including all
	firefighters participating in an alternative retirement plan
	established under Section 1C of this article, in an applicable
	fiscal year ["PROP account" means the notional account established
	to reflect the credits and contributions of a member or surviving
	spouse who has made a PROP election in accordance with Section 5A of
	this article].
	(15-c)  "Price inflation assumption" means:
	(A)  the most recent headline consumer price index
	10-year forecast published in the Federal Reserve Bank of
	Philadelphia Survey of Professional Forecasters; or
	(B)  if the forecast described by Paragraph (A) of
	this subdivision is not available, another standard as determined
	by mutual agreement between the municipality and the board.
	(15-d)  "Projected pensionable payroll" means the
	estimated pensionable payroll for the fiscal year beginning 12
	months after the date of the risk sharing valuation study prepared
	under Section 13B of this article at the time of calculation by:
	(A)  projecting the prior fiscal year's
	pensionable payroll forward two years using the current payroll
	growth rate assumptions; and
	(B)  adjusting, if necessary, for changes in
	population or other known factors, provided those factors would
	have a material impact on the calculation, as determined by the
	board.
	(15-e)  "PROP" means the post-retirement option plan
	under Section 5A of this article.
	(15-f)  "PROP account" means the notional account
	established to reflect the credits and contributions of a member or
	surviving spouse who made a PROP election in accordance with
	Section 5A of this article before the year 2017 effective date.
	(16)  "Salary" means wages as defined by Section
	3401(a) of the code, [the amounts includable in gross income of a
	member] plus any amount not includable in gross income under
	Section 104(a)(1), Section 125, Section 132(f), Section 402(g)(2)
	[402(e)(3) or (h)], Section 457 [403(b)], or Section 414(h)(2)
	[414(h)] of the code, except that with respect to amounts earned on
	or after the year 2017 effective date, salary excludes overtime pay
	received by a firefighter or the amount by which the salary earned
	by a firefighter on the basis of the firefighter's appointed
	position exceeds the salary of the firefighter's highest tested
	rank.
	(16-a)  "Third quarter line rate" means the corridor
	midpoint plus 2.5 percentage points.
	(16-b)  "Ultimate entry age normal" means an actuarial
	cost method under which a calculation is made to determine the
	average uniform and constant percentage rate of contributions that,
	if applied to the compensation of each member during the entire
	period of the member's anticipated covered service, would be
	required to meet the cost of all benefits payable on the member's
	behalf based on the benefits provisions for newly hired employees.
	For purposes of this definition, the actuarial accrued liability
	for each member is the difference between the member's present
	value of future benefits based on the tier of benefits that apply to
	the member and the member's present value of future normal costs
	determined using the normal cost rate.
	(16-c)  "Unfunded actuarial accrued liability" means
	the difference between the actuarial accrued liability and the
	actuarial value of assets.  For purposes of this definition:
	(A)  "actuarial accrued liability" means the
	portion of the actuarial present value of projected benefits
	attributed to past periods of member service based on the cost
	method used in the risk sharing valuation study prepared under
	Section 13B or 13C of this article, as applicable; and
	(B)  "actuarial value of assets" means the value
	of fund investments as calculated using the asset smoothing method
	used in the risk sharing valuation study prepared under Section 13B
	or 13C of this article, as applicable.
	(16-d)  "Unanticipated change" means, with respect to
	the unfunded actuarial accrued liability in each subsequent risk
	sharing valuation study prepared under Section 13B of this article,
	the difference between:
	(A)  the remaining balance of all then-existing
	liability layers as of the date of the risk sharing valuation study;
	and
	(B)  the actual unfunded actuarial accrued
	liability as of the date of the risk sharing valuation study.
	(16-e)  "Unused leave pay" means the accrued value of
	unused leave time payable to an employee after separation from
	service in accordance with applicable law and agreements.
	(16-f)  "Year 2017 effective date" means the date on
	which S.B. No. 2190, Acts of the 85th Legislature, Regular Session,
	2017, took effect.
	SECTION 1.02.  Article 6243e.2(1), Revised Statutes, is
	amended by adding Sections 1A, 1B, 1C, 1D, and 1E to read as
	follows:
	Sec. 1A.  INTERPRETATION OF ARTICLE. This article,
	including Sections 2(p) and (p-1) of this article, does not and may
	not be interpreted to:
	(1)  relieve the municipality, the board, or the fund
	of their respective obligations under Sections 13A through 13F of
	this article;
	(2)  reduce or modify the rights of the municipality,
	the board, or the fund, including any officer or employee of the
	municipality, board, or fund, to enforce obligations described by
	Subdivision (1) of this section;
	(3)  relieve the municipality, including any official
	or employee of the municipality, from:
	(A)  paying or directing to pay required
	contributions to the fund under Section 13 or 13A of this article or
	carrying out the provisions of Sections 13A through 13F of this
	article; or
	(B)  reducing or modifying the rights of the board
	and any officer or employee of the board or fund to enforce
	obligations described by Subdivision (1) of this section;
	(4)  relieve the board or fund, including any officer
	or employee of the board or fund, from any obligation to implement a
	benefit change or carry out the provisions of Sections 13A through
	13F of this article; or
	(5)  reduce or modify the rights of the municipality
	and any officer or employee of the municipality to enforce an
	obligation described by Subdivision (4) of this section.
	Sec. 1B.  FISCAL YEAR. If either the fund or the
	municipality changes its respective fiscal year, the fund and the
	municipality may enter into a written agreement to change the
	fiscal year for purposes of this article. If the fund and
	municipality enter into an agreement described by this section, the
	parties shall, in the agreement, adjust the provisions of Sections
	13A through 13F of this article to reflect that change.
	Sec. 1C.  ALTERNATIVE RETIREMENT PLANS. (a)  In this
	section, "salary-based benefit plan" means a retirement plan
	provided by the fund under this article that provides member
	benefits calculated in accordance with a formula that is based on
	multiple factors, one of which is the member's salary at the time of
	the member's retirement.
	(b)  Notwithstanding any other law, including Section 13G of
	this article, the board and the municipality may enter into a
	written agreement to offer an alternative retirement plan or plans,
	including a cash balance retirement plan or plans, if both parties
	consider it appropriate.
	(c)  Notwithstanding any other law, including Section 13G of
	this article, if, beginning with the final risk sharing valuation
	study prepared under Section 13B of this article on or after July 1,
	2021, either the funded ratio of the fund is less than 65 percent as
	determined in the final risk sharing valuation study without making
	any adjustments under Section 13E or 13F of this article, or the
	funded ratio of the fund is less than 65 percent as determined in a
	revised and restated risk sharing valuation study prepared under
	Section 13B(a)(7) of this article, the board and the municipality
	shall, as soon as practicable but not later than the 60th day after
	the date the determination is made:
	(1)  enter into a written agreement to establish a cash
	balance retirement plan that complies with Section 1D of this
	article; and
	(2)  require each firefighter first hired by the
	municipality on or after the 90th day after the date the cash
	balance retirement plan is established to participate in the cash
	balance retirement plan established under this subsection instead
	of participating in the salary-based benefit plan, provided the
	firefighter would have otherwise been eligible to participate in
	the salary-based benefit plan.
	Sec. 1D.  REQUIREMENTS FOR CERTAIN CASH BALANCE RETIREMENT
	PLANS. (a) In this section:
	(1)  "Cash balance plan participant" means a
	firefighter who participates in a cash balance retirement plan.
	(2)  "Cash balance retirement plan" means a cash
	balance retirement plan established by written agreement under
	Section 1C(b) or 1C(c) of this article.
	(3)  "Interest" means the interest credited to a cash
	balance plan participant's notional account, which may not:
	(A)  exceed a percentage rate equal to the cash
	balance retirement plan's most recent five fiscal years' smoothed
	rate of return; or
	(B)  be less than zero percent.
	(4)  "Salary-based benefit plan" has the meaning
	assigned by Section 1C of this article.
	(b)  The written agreement establishing a cash balance
	retirement plan must:
	(1)  provide for the administration of the cash balance
	retirement plan;
	(2)  provide for a closed amortization period not to
	exceed 20 years from the date an actuarial gain or loss is realized;
	(3)  provide for the crediting of municipal and cash
	balance plan participant contributions to each cash balance plan
	participant's notional account;
	(4)  provide for the crediting of interest to each cash
	balance plan participant's notional account;
	(5)  include a vesting schedule;
	(6)  include benefit options, including options for
	cash balance plan participants who separate from service prior to
	retirement;
	(7)  provide for death and disability benefits;
	(8)  allow a cash balance plan participant who is
	eligible to retire under the plan to elect to:
	(A)  receive a monthly annuity payable for the
	life of the cash balance plan participant in an amount actuarially
	determined on the date of the cash balance plan participant's
	retirement based on the cash balance plan participant's accumulated
	notional account balance annuitized in accordance with the
	actuarial assumptions and actuarial methods established in the most
	recent actuarial experience study conducted under Section 13D of
	this article, except that the assumed rate of return applied may not
	exceed the fund's assumed rate of return in the most recent risk
	sharing valuation study; or
	(B)  receive a single, partial lump-sum payment
	from the cash balance plan participant's accumulated notional
	account balance and a monthly annuity payable for life in an amount
	determined in accordance with Paragraph (A) of this subdivision
	based on the cash balance plan participant's notional account
	balance after receiving the partial lump-sum payment; and
	(9)  include any other provision determined necessary
	by:
	(A)  the board and the municipality; or
	(B)  the fund for purposes of maintaining the
	tax-qualified status of the fund under Section 401 of the code.
	(c)  Notwithstanding any other law, including Section 13 of
	this article, a firefighter who participates in a cash balance
	retirement plan:
	(1)  subject to Subsection (d) of this section, is not
	eligible to be a member of and may not participate in the fund's
	salary-based benefit plan; and
	(2)  may not accrue years of participation or establish
	service credit in the salary-based benefit plan during the period
	the firefighter is participating in the cash balance retirement
	plan.
	(d)  A cash balance plan participant is considered a member
	for purposes of Sections 13A through 13H of this article.
	(e)  At the time the cash balance retirement plan is
	implemented, the employer normal cost rate of the cash balance
	retirement plan may not exceed the employer normal cost rate for the
	salary-based benefit plan.
	Sec. 1E.  CONFLICT OF LAW. To the extent of a conflict
	between this article and any other law, this article prevails.
	SECTION 1.03.  Section 2, Article 6243e.2(1), Revised
	Statutes, is amended by amending Subsection (b) and adding
	Subsection (t) to read as follows:
	(b)  The board of trustees of the fund shall be known as the
	"(name of municipality) Firefighters' Relief and Retirement Fund
	Board of Trustees" and the fund shall be known as the "(name of
	municipality) Firefighters' Relief and Retirement Fund." The board
	consists of 10 trustees, including:
	(1)  the mayor or an appointed representative of the
	mayor;
	(2)  the director of finance or the director of
	finance's designee [treasurer] of the municipality or, if there is
	not a director of finance [treasurer], the highest ranking employee
	of the municipality, excluding elected officials, with
	predominately financial responsibilities, as determined by the
	mayor, or that employee's designee [secretary, clerk, or other
	person who by law, charter provision, or ordinance performs the
	duty of treasurer of the municipality];
	(3)  five firefighters who are members of the fund;
	(4)  one person who is a retired firefighter and a
	member of the fund with at least 20 years of participation; and
	(5)  two persons, each of whom is a registered voter of
	the municipality, has been a resident of the municipality for at
	least one year preceding the date of initial appointment, and is not
	a municipal officer or employee.
	(t)  The officers and employees of the municipality are fully
	protected and free of liability for any action taken or omission
	made or any action or omission suffered by them in good faith,
	objectively determined, in the performance of their duties related
	to the fund. The protection from liability provided by this
	subsection is cumulative of and in addition to any other
	constitutional, statutory, or common law official or governmental
	immunity, defense, and civil or procedural protection provided to
	the municipality as a governmental entity and to a municipal
	official or employee as an official or employee of a governmental
	entity. Except for a waiver expressly provided by this article,
	this article does not grant an implied waiver of any immunity.
	SECTION 1.04.  Article 6243e.2(1), Revised Statutes, is
	amended by adding Sections 2A and 2B to read as follows:
	Sec. 2A.  QUALIFICATIONS OF MUNICIPAL ACTUARY. (a)  An
	actuary hired by the municipality for purposes of this article must
	be an actuary from a professional service firm who:
	(1)  is not already engaged by the fund or any other
	pension system authorized under Article 6243g-4, Revised Statutes,
	or Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular
	Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), to
	provide actuarial services to the fund or pension system, as
	applicable;
	(2)  has a minimum of 10 years of professional
	actuarial experience; and
	(3)  is a fellow of the Society of Actuaries or a member
	of the American Academy of Actuaries and who, in carrying out duties
	for the municipality, has met the applicable requirements to issue
	statements of actuarial opinion.
	(b)  Notwithstanding Subsection (a) of this section, the
	municipal actuary does not need to meet any greater qualifications
	than those required by the board for the fund actuary.
	Sec. 2B.  REPORT ON INVESTMENTS BY INDEPENDENT INVESTMENT
	CONSULTANT. At least once every three years, the board shall hire
	an independent investment consultant to conduct a review of fund
	investments and submit a report to the board and the municipality
	concerning the review or demonstrate in the fund's annual financial
	report that the review was conducted. The independent investment
	consultant shall review and report on at least the following:
	(1)  the fund's compliance with its investment policy
	statement, ethics policies, including policies concerning the
	acceptance of gifts, and policies concerning insider trading;
	(2)  the fund's asset allocation, including a review
	and discussion of the various risks, objectives, and expected
	future cash flows;
	(3)  the fund's portfolio structure, including the
	fund's need for liquidity, cash income, real return, and inflation
	protection and the active, passive, or index approaches for
	different portions of the portfolio;
	(4)  investment manager performance reviews and an
	evaluation of the processes used to retain and evaluate managers;
	(5)  benchmarks used for each asset class and
	individual manager;
	(6)  an evaluation of fees and trading costs;
	(7)  an evaluation of any leverage, foreign exchange,
	or other hedging transaction; and
	(8)  an evaluation of investment-related disclosures
	in the fund's annual reports.
	SECTION 1.05.  Section 3(d), Article 6243e.2(1), Revised
	Statutes, is amended to read as follows:
	(d)  The board may have an actuarial valuation performed each
	year, and for determining the municipality's contribution rate as
	provided by Section 13A [13(d)] of this article, the board may adopt
	a new actuarial valuation each year[, except that an actuarial
	valuation that will result in an increased municipal contribution
	rate that is above the statutory minimum may be adopted only once
	every three years, unless the governing body of the municipality
	consents to a more frequent increase].
	SECTION 1.06.  Article 6243e.2(1), Revised Statutes, is
	amended by adding Section 3A to read as follows:
	Sec. 3A.  CERTAIN ALTERATIONS BY LOCAL AGREEMENT.
	(a)  Except as provided by Subsection (b) of this section, the
	board is authorized, on behalf of the members or beneficiaries of
	the fund, to alter benefit types or amounts, the means of
	determining contribution rates, or the contribution rates provided
	under this article if the alteration is included in a written
	agreement between the board and the municipality.  An agreement
	entered into under this section:
	(1)  must:
	(A)  if the agreement concerns benefit increases,
	other than benefit increases that are the result of Section 13E of
	this article, adhere to the processes and standards set forth in
	Section 10 of this article; and
	(B)  operate prospectively only; and
	(2)  may not, except as provided by Sections 13A
	through 13F of this article, have the effect or result of increasing
	the unfunded liability of the fund.
	(b)  In a written agreement entered into between the
	municipality and the board under this section, the parties may not:
	(1)  alter Sections 13A through 13F of this article,
	except and only to the extent necessary to comply with federal law;
	(2)  increase the assumed rate of return to more than
	seven percent per year;
	(3)  extend the amortization period of a liability
	layer to more than 30 years from the first day of the fiscal year
	beginning 12 months after the date of the risk sharing valuation
	study in which the liability layer is first recognized; or
	(4)  allow a municipal contribution rate in any year
	that is less than or greater than the municipal contribution rate
	required under Section 13E or 13F of this article, as applicable.
	(c)  If the board is directed or authorized in Sections 13A
	through 13F of this article to effect an increase or decrease to
	benefits or contributions, this article delegates the authority to
	alter provisions concerning benefits and contributions otherwise
	stated in this article in accordance with the direction or
	authorization only to the extent the alteration is set forth in an
	order or other written instrument and is consistent with this
	section, the code, and other applicable federal law and
	regulations. The order or other written instrument must be
	included in each applicable risk sharing valuation study under
	Section 13B or 13C of this article, as applicable, adopted by the
	board, and published in a manner that makes the order or other
	written instrument accessible to the members.
	SECTION 1.07.  Section 4, Article 6243e.2(1), Revised
	Statutes, is amended by amending Subsections (a), (b), and (d) and
	adding Subsections (b-1) and (b-2) to read as follows:
	(a)  A member [with at least 20 years of participation] who
	terminates active service for any reason other than death is
	entitled to receive a service pension provided by this section if
	the member was:
	(1)  hired as a firefighter before the year 2017
	effective date, including a member who was hired before the year
	2017 effective date and who involuntarily separated from service
	but has been retroactively reinstated in accordance with an
	arbitration, civil service, or court ruling, at the age at which the
	member attains 20 years of service; and
	(2)  except as provided by Subdivision (1) of this
	subsection and subject to Subsection (b-2) of this section, hired
	or rehired as a firefighter on or after the year 2017 effective
	date, when the sum of the member's age in years and the member's
	years of participation in the fund equals at least 70.
	(b)  Except as otherwise provided by Subsection (d) of this
	section, the monthly service pension for a member described by:
	(1)  Subsection (a)(1) of this section is equal to the
	sum of:
	(A)  the member's accrued monthly service pension
	based on the member's years of participation before the year 2017
	effective date, determined under the law in effect on the date
	immediately preceding the year 2017 effective date;
	(B)  2.75 percent of the member's average monthly
	salary multiplied by the member's years of participation on or
	after the year 2017 effective date, for each year or partial year of
	participation of the member's first 20 years of participation; and
	(C)  two percent of the member's average monthly
	salary multiplied by the member's years of participation on or
	after the year 2017 effective date, for each year or partial year of
	participation on or after the year 2017 effective date that
	occurred after the 20 years of participation described by Paragraph
	(B) of this subdivision; and
	(2)  Subsection (a)(2) of this section is equal to the
	sum of:
	(A)  2.25 percent of the member's average monthly
	salary multiplied by the member's years or partial years of
	participation for the member's first 20 years of participation; and
	(B)  two percent of the member's average monthly
	salary multiplied by the member's years or partial years of
	participation for all years of participation that occurred after
	the 20 years of participation described by Paragraph (A) of this
	subdivision.
	(b-1)  For purposes of Subsection (b) of this section,
	partial years shall be computed to the nearest one-twelfth of a
	year.
	(b-2)  A member's monthly service pension under Subsection
	(a)(2) of this section may not exceed 80 percent of the member's
	average monthly salary [A member who terminates active service on
	or after November 1, 1997, and who has completed at least 20 years
	of participation in the fund on the effective date of termination of
	service is entitled to a monthly service pension, beginning after
	the effective date of termination of active service, in an amount
	equal to 50 percent of the member's average monthly salary, plus
	three percent of the member's average monthly salary for each year
	of participation in excess of 20 years, but not in excess of 30
	years of participation, for a maximum total benefit of 80 percent of
	the member's average monthly salary].
	(d)  The total monthly benefit payable to a retired or
	disabled member, other than a deferred retiree or active member who
	has elected the DROP under Section 5(b) of this article, or payable
	to an eligible survivor of a deceased member as provided by Section
	7(a) or 7(b) of this article, shall be increased by the following
	amounts: by $100, beginning with the monthly payment made for July
	1999; by $25, beginning with the monthly payment made for July,
	2000; and by $25, beginning with the monthly payment made for July
	2001. These additional benefits may not be increased under Section
	11(c), (c-1), or (c-2) of this article.
	SECTION 1.08.  Section 5, Article 6243e.2(1), Revised
	Statutes, is amended by amending Subsections (a), (b), (c), (d),
	and (m) and adding Subsections (a-1), (b-1), (b-2), (d-1), (d-2),
	and (e-1) to read as follows:
	(a)  A member who is eligible to receive a service pension
	under Section 4(a)(1) [4] of this article and who remains in active
	service may elect to participate in the deferred retirement option
	plan provided by this section. A member who is eligible to receive
	a service pension under Section 4(a)(2) of this article may not
	elect to participate in the deferred retirement option plan
	provided by this section.  On subsequently terminating active
	service, a member who elected the DROP may apply for a monthly
	service pension under Section 4 of this article, except that the
	effective date of the member's election to participate in the DROP
	will be considered the member's retirement date for determining the
	amount of the member's monthly service pension.  The member may also
	apply for any DROP benefit provided under this section on
	terminating active service.  An election to participate in the
	DROP, once approved by the board, is irrevocable.
	(a-1)  The monthly benefit of a [A] DROP participant who has
	at least 20 years of participation on the year 2017 effective date
	[participant's monthly benefit at retirement] is increased at
	retirement by two percent of the amount of the member's original
	benefit for every full year of participation in the DROP by the
	member for up to 10 years of participation in the DROP.  For a
	member's final year of participation, but not beyond the member's
	10th year in the DROP, if a full year of participation is not
	completed, the member shall receive a prorated increase of 0.166
	percent of the member's original benefit for each month of
	participation in that year.  An increase provided by this
	subsection does not apply to benefits payable under Subsection (l)
	of this section.  An increase under this subsection is applied to
	the member's benefit at retirement and is not added to the member's
	DROP account.  The total increase under this subsection may not
	exceed 20 percent for 10 years of participation in the DROP by the
	member.
	(b)  A member may elect to participate in the DROP by
	complying with the election process established by the board. The
	member's election may be made at any time beginning on the date the
	member has completed 20 years of participation in the fund and is
	otherwise eligible for a service pension under Section 4(a)(1) [4]
	of this article. [The election becomes effective on the first day
	of the month following the month in which the board approves the
	member's DROP election.] Beginning on the first day of the month
	following the month in which the member makes an election to
	participate in the DROP, subject to board approval, and ending on
	the year 2017 effective date [of the member's DROP election],
	amounts equal to the deductions made from the member's salary under
	Section 13(c) of this article shall be credited to the member's DROP
	account. Beginning after the year 2017 effective date, amounts
	equal to the deductions made from the member's salary under Section
	13(c) of this article may not be credited to the member's DROP
	account.
	(b-1)  On or after the year 2017 effective date, an active
	[A] member may not participate in the DROP for more than 13 [10]
	years. If a DROP participant remains in active service after the
	13th [10th] anniversary of the effective date of the member's DROP
	election:
	(1)  [,] subsequent deductions from the member's salary
	under Section 13(c) of this article, except for unused leave pay,
	may not be credited to the member's DROP account; and
	(2)  the account shall continue to be credited with
	earnings in accordance with Subsection (d) of this section [and may
	not otherwise increase any benefit payable from the fund for the
	member's service].
	(b-2)  For a member who is a DROP participant, the fund shall
	credit to the member's DROP account, in accordance with Section
	13(c-1) of this article, the amount of unused leave pay otherwise
	payable to the member and received as a contribution to the fund
	from the municipality.
	(c)  After a member's DROP election becomes effective, an
	amount equal to the monthly service pension the member would have
	received under Section 4 of this article [and Section 11(c) of this
	article], if applicable, had the member terminated active service
	on the effective date of the member's DROP election shall be
	credited to a DROP account maintained for the member. That monthly
	credit to the member's DROP account shall continue until the
	earlier of the date the member terminates active service or the 13th
	[10th] anniversary of the [effective] date of the first credit to
	the member's DROP account [election].
	(d)  A member's DROP account shall be credited with earnings
	at an annual rate equal to 65 percent of the compounded average
	annual return earned by the fund over the five years preceding, but
	not including, the year during which the credit is given.
	Notwithstanding the preceding, however, the credit to the member's
	DROP account shall be at an annual rate of not less than 2.5 [five]
	percent [nor greater than 10 percent], irrespective of actual
	earnings.
	(d-1)  Earnings credited to a member's DROP account under
	Subsection (d) of this section [Those earnings] shall be computed
	and credited at a time and in a manner determined by the board,
	except that earnings shall be credited not less frequently than
	once in each 13-month period and shall take into account partial
	years of participation in the DROP[.   If the member has not
	terminated active service, the member's DROP account may not be
	credited with earnings after the 10th anniversary of the effective
	date of the member's DROP election].
	(d-2)  A member may not roll over accumulated unused sick or
	vacation time paid to the member as a lump-sum payment after
	termination of active service into the member's DROP account.
	(e-1)  In lieu of receiving a lump-sum payment on termination
	from active service, a retired member who has been a DROP
	participant or, if termination from active service was due to the
	DROP participant's death, the surviving spouse of the DROP
	participant may elect to leave the retired member's DROP account
	with the fund and receive earnings credited to the DROP account in
	the manner described by Subsection (d) of this section.
	(m)  A DROP participant with a break in service may receive
	service credit within DROP for days worked after the regular
	expiration of the maximum [permitted] DROP participation period
	prescribed by this section. The service credit shall be limited to
	the number of days in which the participant experienced a break in
	service or the number of days required to constitute 13 [10] years
	of DROP participation, whichever is smaller. A retired member who
	previously participated in the DROP and who returns to active
	service is subject to the terms of this section in effect at the
	time of the member's return to active service.
	SECTION 1.09.  Section 5A, Article 6243e.2(1), Revised
	Statutes, is amended by adding Subsection (o) to read as follows:
	(o)  Notwithstanding any other provision of this article, on
	or after the year 2017 effective date:
	(1)  a PROP participant may not have any additional
	amounts that the participant would otherwise receive as a monthly
	service pension or other benefits under this article credited to
	the participant's PROP account; and
	(2)  a person, including a member or surviving spouse,
	may not elect to participate in the PROP.
	SECTION 1.10.  Section 8, Article 6243e.2(1), Revised
	Statutes, is amended to read as follows:
	Sec. 8.  DEFERRED PENSION AT AGE 50; REFUND OF
	CONTRIBUTIONS. (a)  On or after the year 2017 effective date, a [A]
	member who is hired as a firefighter before the year 2017 effective
	date, including a member who was hired before the year 2017
	effective date and who involuntarily separated from service but has
	been retroactively reinstated in accordance with an arbitration,
	civil service, or court ruling, terminates active service for any
	reason other than death with at least 10 years of participation, but
	less than 20 years of participation, is entitled to a monthly
	deferred pension benefit, beginning at age 50, in an amount equal to
	1.7 percent of the member's average monthly salary multiplied by
	the amount of the member's years of participation.
	(b)  In lieu of the deferred pension benefit provided under
	Subsection (a) of this section, a member who terminates active
	service for any reason other than death with at least 10 years of
	participation, but less than 20 years of participation, may elect
	to receive a lump-sum refund of the member's contributions to the
	fund with interest computed at five percent, not compounded, for
	the member's contributions to the fund made before the year 2017
	effective date and without interest for the member's contributions
	to the fund made on or after the year 2017 effective date. A
	member's election to receive a refund of contributions must be made
	on a form approved by the board. The member's refund shall be paid
	as soon as administratively practicable after the member's election
	is received.
	(c)  Except as provided by Subsection (a) of this section, a
	[A] member who is hired or rehired as a firefighter on or after the
	year 2017 effective date or a member who terminates employment for
	any reason other than death before the member has completed 10 years
	of participation is entitled only to a refund of the member's
	contributions without interest and is not entitled to a deferred
	pension benefit under this section or to any other benefit under
	this article. The member's refund shall be paid as soon as
	administratively practicable after the effective date of the
	member's termination of active service.
	SECTION 1.11.  Section 11, Article 6243e.2(1), Revised
	Statutes, is amended by amending Subsection (c) and adding
	Subsections (c-1), (c-2), (c-3), and (c-4) to read as follows:
	(c)  Subject to Subsection (c-3) of this section and except
	as provided by Subsection (c-4) of this section, beginning with the
	fiscal year ending June 30, 2021, the [The] benefits, including
	survivor benefits, payable based on the service of a member who has
	terminated active service and who is or would have been at least 55
	[48] years old, received or is receiving an on-duty disability
	pension under Section 6(c) of this article, or died under the
	conditions described by Section 7(c) of this article, shall be
	increased [by three percent] in October of each year by a percentage
	rate equal to the most recent five fiscal years' smoothed return, as
	determined by the fund actuary, minus 475 basis points [and, if the
	benefit had not previously been subject to that adjustment, in the
	month of the member's 48th birthday].
	(c-1)  Subject to Subsection (c-3) of this section and except
	as provided by Subsection (c-4) of this section, for the fund's
	fiscal years ending June 30, 2018, and June 30, 2019, the benefits,
	including survivor benefits, payable based on the service of a
	member who is or would have been at least 70 years old and who
	received or is receiving a service pension under Section 4 of this
	article, received or is receiving an on-duty disability pension
	under Section 6(c) of this article, or died under the conditions
	described by Section 7(c) of this article, shall be adjusted in
	October of each applicable fiscal year by a percentage rate equal to
	the most recent five fiscal years' smoothed return, as determined
	by the fund actuary, minus 500 basis points.
	(c-2)  Subject to Subsection (c-3) of this section and except
	as provided by Subsection (c-4) of this section, for the fund's
	fiscal year ending June 30, 2020, members described by Subsection
	(c-1) of this section shall receive the increase provided under
	Subsection (c) of this section.
	(c-3)  The percentage rate prescribed by Subsections (c),
	(c-1), and (c-2) of this section may not be less than zero percent
	or more than four percent, irrespective of the return rate of the
	fund's investment portfolio.
	(c-4)  Each year after the year 2017 effective date, a member
	who elects to participate in the DROP under Section 5 of this
	article may not receive the increase provided under Subsection (c),
	(c-1), or (c-2) of this section in any October during which the
	member participates in the DROP.
	SECTION 1.12.  The heading to Section 13, Article
	6243e.2(1), Revised Statutes, is amended to read as follows:
	Sec. 13.  MEMBERSHIP AND MEMBER CONTRIBUTIONS.
	SECTION 1.13.  Section 13, Article 6243e.2(1), Revised
	Statutes, is amended by amending Subsection (c) and adding
	Subsections (c-1) and (c-2) to read as follows:
	(c)  Subject to adjustments authorized by Section 13E or 13F
	of this article, each [Each] member in active service shall make
	contributions to the fund in an amount equal to 10.5 [8.35] percent
	of the member's salary at the time of the contribution[, and as of
	July 1, 2004, in an amount equal to nine percent of the member's
	salary at the time of the contribution].
	(c-1)  In addition to the contribution under Subsection (c)
	of this section, each DROP participant, as identified by the fund to
	the municipality for purposes of this subsection, shall contribute
	to the fund an amount equal to 100 percent of the participant's
	unused leave pay that would otherwise be payable to the member. The
	fund shall credit any unused leave pay amount contributed by a DROP
	participant to the participant's DROP account.
	(c-2)  The governing body of the municipality shall deduct
	from the salary of each member the contribution required by this
	section [the contributions from the member's salary] and shall
	forward the contributions to the fund as soon as practicable.
	SECTION 1.14.  Article 6243e.2(1), Revised Statutes, is
	amended by adding Sections 13A, 13B, 13C, 13D, 13E, 13F, 13G, and
	13H to read as follows:
	Sec. 13A.  MUNICIPAL CONTRIBUTIONS. (a)  Beginning with the
	year 2017 effective date, the municipality shall make contributions
	to the fund as provided by this section and Section 13B, 13C, 13E,
	or 13F of this article, as applicable.  The municipality shall
	contribute:
	(1)  beginning with the year 2017 effective date and
	ending with the fiscal year ending June 30, 2018, an amount equal to
	the municipal contribution rate, as determined in the initial risk
	sharing valuation study conducted under Section 13C of this article
	and adjusted under Section 13E or 13F of this article, as
	applicable, multiplied by the pensionable payroll for the fiscal
	year; and
	(2)  for each fiscal year after the fiscal year ending
	June 30, 2018, an amount equal to the municipal contribution rate,
	as determined in a subsequent risk sharing valuation study
	conducted under Section 13B of this article and adjusted under
	Section 13E or 13F of this article, as applicable, multiplied by the
	pensionable payroll for the applicable fiscal year.
	(b)  Except by written agreement between the municipality
	and the board providing for an earlier contribution date, at least
	biweekly, the municipality shall make the contributions required by
	Subsection (a) of this section by depositing with the fund an amount
	equal to the municipal contribution rate multiplied by the
	pensionable payroll for the applicable biweekly period.
	(c)  With respect to each fiscal year:
	(1)  the first contribution by the municipality under
	this section for the fiscal year shall be made not later than the
	date payment is made to firefighters for their first full biweekly
	pay period beginning on or after the first day of the fiscal year;
	and
	(2)  the final contribution by the municipality under
	this section for the fiscal year shall be made not later than the
	date payment is made to firefighters for the final biweekly pay
	period of the fiscal year.
	(d)  In addition to the amounts required under this section,
	the municipality may at any time contribute additional amounts for
	deposit in the fund by entering into a written agreement with the
	board.
	(e)  Notwithstanding any other law, the municipality may not
	issue a pension obligation bond to fund the municipal contribution
	rate under this section.
	Sec. 13B.  RISK SHARING VALUATION STUDIES. (a)  The fund
	and the municipality shall separately cause their respective
	actuaries to prepare a risk sharing valuation study in accordance
	with this section and actuarial standards of practice.  A risk
	sharing valuation study must:
	(1)  be dated as of the first day of the fiscal year in
	which the study is required to be prepared;
	(2)  be included in the fund's standard valuation study
	prepared annually for the fund;
	(3)  calculate the unfunded actuarial accrued
	liability of the fund;
	(4)  be based on actuarial data provided by the fund
	actuary or, if actuarial data is not provided, on estimates of
	actuarial data;
	(5)  estimate the municipal contribution rate, taking
	into account any adjustments required under Section 13E or 13F of
	this article for all applicable prior fiscal years;
	(6)  subject to Subsection (g) of this section, be
	based on the following assumptions and methods that are consistent
	with actuarial standards of practice:
	(A)  an ultimate entry age normal actuarial
	method;
	(B)  for purposes of determining the actuarial
	value of assets:
	(i)  except as provided by Subparagraph (ii)
	of this paragraph and Section 13E(c)(1) or 13F(c)(2) of this
	article, an asset smoothing method recognizing actuarial losses and
	gains over a five-year period applied prospectively beginning on
	the year 2017 effective date; and
	(ii)  for the initial risk sharing valuation
	study prepared under Section 13C of this article, a
	marked-to-market method applied as of June 30, 2016;
	(C)  closed layered amortization of liability
	layers to ensure that the amortization period for each layer begins
	12 months after the date of the risk sharing valuation study in
	which the liability layer is first recognized;
	(D)  each liability layer is assigned an
	amortization period;
	(E)  each liability loss layer amortized over a
	period of 30 years from the first day of the fiscal year beginning
	12 months after the date of the risk sharing valuation study in
	which the liability loss layer is first recognized, except that the
	legacy liability must be amortized from July 1, 2016, for a 30-year
	period beginning July 1, 2017;
	(F)  the amortization period for each liability
	gain layer being:
	(i)  equal to the remaining amortization
	period on the largest remaining liability loss layer and the two
	layers must be treated as one layer such that if the payoff year of
	the liability loss layer is accelerated or extended, the payoff
	year of the liability gain layer is also accelerated or extended; or
	(ii)  if there is no liability loss layer, a
	period of 30 years from the first day of the fiscal year beginning
	12 months after the date of the risk sharing valuation study in
	which the liability gain layer is first recognized;
	(G)  liability layers, including the legacy
	liability, funded according to the level percent of payroll method;
	(H)  the assumed rate of return, subject to
	adjustment under Section 13E(c)(2) of this article or, if Section
	13C(g) of this article applies, adjustment in accordance with a
	written agreement, except the assumed rate of return may not exceed
	seven percent per annum;
	(I)  the price inflation assumption as of the most
	recent actuarial experience study, which may be reset by the board
	by plus or minus 50 basis points based on that actuarial experience
	study;
	(J)  projected salary increases and payroll
	growth rate set in consultation with the municipality's finance
	director; and
	(K)  payroll for purposes of determining the
	corridor midpoint and municipal contribution rate must be projected
	using the annual payroll growth rate assumption, which for purposes
	of preparing any amortization schedule may not exceed three
	percent; and
	(7)  be revised and restated, if appropriate, not later
	than:
	(A)  the date required by a written agreement
	entered into between the municipality and the board; or
	(B)  the 30th day after the date required action
	is taken by the board under Section 13E or 13F of this article to
	reflect any changes required by either section.
	(b)  As soon as practicable after the end of a fiscal year,
	the fund actuary at the direction of the fund and the municipal
	actuary at the direction of the municipality shall separately
	prepare a proposed risk sharing valuation study based on the fiscal
	year that just ended.
	(c)  Not later than September 30 following the end of the
	fiscal year, the fund shall provide to the municipal actuary, under
	a confidentiality agreement in which the municipal actuary agrees
	to comply with the confidentiality provisions of Section 17 of this
	article, the actuarial data described by Subsection (a)(4) of this
	section.
	(d)  Not later than the 150th day after the last day of the
	fiscal year:
	(1)  the fund actuary, at the direction of the fund,
	shall provide the proposed risk sharing valuation study prepared by
	the fund actuary under Subsection (b) of this section to the
	municipal actuary; and
	(2)  the municipal actuary, at the direction of the
	municipality, shall provide the proposed risk sharing valuation
	study prepared by the municipal actuary under Subsection (b) of
	this section to the fund actuary.
	(e)  Each actuary described by Subsection (d) of this section
	may provide copies of the proposed risk sharing valuation studies
	to the municipality or to the fund, as appropriate.
	(f)  If, after exchanging proposed risk sharing valuation
	studies under Subsection (d) of this section, it is found that the
	difference between the estimated municipal contribution rate
	recommended in the proposed risk sharing valuation study prepared
	by the fund actuary and the estimated municipal contribution rate
	recommended in the proposed risk sharing valuation study prepared
	by the municipal actuary for the corresponding fiscal year is:
	(1)  less than or equal to two percentage points, the
	estimated municipal contribution rate recommended by the fund
	actuary will be the estimated municipal contribution rate for
	purposes of Subsection (a)(5) of this section, and the proposed
	risk sharing valuation study prepared for the fund is considered to
	be the final risk sharing valuation study for the fiscal year for
	the purposes of this article; or
	(2)  greater than two percentage points, the municipal
	actuary and the fund actuary shall have 20 business days to
	reconcile the difference, provided that, without the mutual
	agreement of both actuaries, the difference in the estimated
	municipal contribution rate recommended by the municipal actuary
	and the estimated municipal contribution rate recommended by the
	fund actuary may not be further increased and:
	(A)  if, as a result of reconciliation efforts
	under this subdivision, the difference is reduced to less than or
	equal to two percentage points:
	(i)  subject to any adjustments under
	Section 13E or 13F of this article, as applicable, the estimated
	municipal contribution rate proposed under the reconciliation by
	the fund actuary will be the estimated municipal contribution rate
	for purposes of Subsection (a)(5) of this section; and
	(ii)  the fund's risk sharing valuation
	study is considered to be the final risk sharing valuation study for
	the fiscal year for the purposes of this article; or
	(B)  if, after 20 business days, the fund actuary
	and the municipal actuary are not able to reach a reconciliation
	that reduces the difference to an amount less than or equal to two
	percentage points, subject to any adjustments under Section 13E or
	13F of this article, as applicable:
	(i)  the municipal actuary at the direction
	of the municipality and the fund actuary at the direction of the
	fund each shall deliver to the finance director of the municipality
	and the executive director of the fund a final risk sharing
	valuation study with any agreed-to changes, marked as the final
	risk sharing valuation study for each actuary; and
	(ii)  not later than the 90th day before the
	first day of the next fiscal year, the finance director and the
	executive director shall execute a joint addendum to the final risk
	sharing valuation study received under Subparagraph (i) of this
	paragraph that is a part of the final risk sharing valuation study
	for the fiscal year for all purposes and reflects the arithmetic
	average of the estimated municipal contribution rates for the
	fiscal year stated by the municipal actuary and the fund actuary in
	the final risk sharing valuation study for purposes of Subsection
	(a)(5) of this section.
	(g)  The assumptions and methods used and the types of
	actuarial data and financial information used to prepare the
	initial risk sharing valuation study under Section 13C of this
	article shall be used to prepare each subsequent risk sharing
	valuation study under this section, unless changed based on the
	actuarial experience study conducted under Section 13D of this
	article.
	(h)  The actuarial data provided under Subsection (a)(4) of
	this section may not include the identifying information of
	individual members.
	Sec. 13C.  INITIAL RISK SHARING VALUATION STUDIES; CORRIDOR
	MIDPOINT.  (a)  The fund and the municipality shall separately
	cause their respective actuaries to prepare an initial risk sharing
	valuation study that is dated as of July 1, 2016, in accordance with
	this section.  An initial risk sharing valuation study must:
	(1)  except as otherwise provided by this section, be
	prepared in accordance with Section 13B of this article and, for
	purposes of Section 13B(a)(4) of this article, be based on
	actuarial data as of June 30, 2016, or, if actuarial data is not
	provided, on estimates of actuarial data; and
	(2)  project the corridor midpoint for 31 fiscal years
	beginning with the fiscal year beginning July 1, 2017.
	(b)  If the initial risk sharing valuation study has not been
	prepared consistent with this section before the year 2017
	effective date, as soon as practicable after the year 2017
	effective date:
	(1)  the fund shall provide to the municipal actuary,
	under a confidentiality agreement, the necessary actuarial data
	used by the fund actuary to prepare the proposed initial risk
	sharing valuation study; and
	(2)  not later than the 30th day after the date the
	municipal actuary receives the actuarial data:
	(A)  the municipal actuary, at the direction of
	the municipality, shall provide a proposed initial risk sharing
	valuation study to the fund actuary; and
	(B)  the fund actuary, at the direction of the
	fund, shall provide a proposed initial risk sharing valuation study
	to the municipal actuary.
	(c)  If, after exchanging proposed initial risk sharing
	valuation studies under Subsection (b)(2) of this section, it is
	determined that the difference between the estimated municipal
	contribution rate for any fiscal year recommended in the proposed
	initial risk sharing valuation study prepared by the fund actuary
	and the estimated municipal contribution rate for any fiscal year
	recommended in the proposed initial risk sharing valuation study
	prepared by the municipal actuary is:
	(1)  less than or equal to two percentage points, the
	estimated municipal contribution rate for that fiscal year
	recommended by the fund actuary will be the estimated municipal
	contribution rate for purposes of Section 13B(a)(5) of this
	article; or
	(2)  greater than two percentage points, the municipal
	actuary and the fund actuary shall have 20 business days to
	reconcile the difference and:
	(A)  if, as a result of reconciliation efforts
	under this subdivision, the difference in any fiscal year is
	reduced to less than or equal to two percentage points, the
	estimated municipal contribution rate recommended by the fund
	actuary for that fiscal year will be the estimated municipal
	contribution rate for purposes of Section 13B(a)(5) of this
	article; or
	(B)  if, after 20 business days, the municipal
	actuary and the fund actuary are not able to reach a reconciliation
	that reduces the difference to an amount less than or equal to two
	percentage points for any fiscal year:
	(i)  the municipal actuary at the direction
	of the municipality and the fund actuary at the direction of the
	fund each shall deliver to the finance director of the municipality
	and the executive director of the fund a final initial risk sharing
	valuation study with any agreed-to changes, marked as the final
	initial risk sharing valuation study for each actuary; and
	(ii)  the finance director and the executive
	director shall execute a joint addendum to the final initial risk
	sharing valuation study that is a part of each final initial risk
	sharing valuation study for all purposes and that reflects the
	arithmetic average of the estimated municipal contribution rate for
	each fiscal year in which the difference was greater than two
	percentage points for purposes of Section 13B(a)(5) of this
	article.
	(d)  In preparing the initial risk sharing valuation study,
	the municipal actuary and fund actuary shall:
	(1)  adjust the actuarial value of assets to be equal to
	the market value of assets as of July 1, 2016; and
	(2)  assume benefit and contribution changes under this
	article as of the year 2017 effective date.
	(e)  If the municipal actuary does not prepare an initial
	risk sharing valuation study for purposes of this section, the fund
	actuary's initial risk sharing valuation study will be used as the
	final risk sharing valuation study for purposes of this article
	unless the municipality did not prepare a proposed initial risk
	sharing valuation study because the fund actuary did not provide
	the necessary actuarial data in a timely manner.  If the
	municipality did not prepare a proposed initial risk sharing
	valuation study because the fund actuary did not provide the
	necessary actuarial data in a timely manner, the municipal actuary
	shall have 60 days to prepare the proposed initial risk sharing
	valuation study on receipt of the necessary information.
	(f)  If the fund actuary does not prepare a proposed initial
	risk sharing valuation study for purposes of this section, the
	proposed initial risk sharing valuation study prepared by the
	municipal actuary will be the final risk sharing valuation study
	for purposes of this article.
	(g)  The municipality and the board may agree on a written
	transition plan for resetting the corridor midpoint:
	(1)  if at any time the funded ratio is equal to or
	greater than 100 percent; or
	(2)  for any fiscal year after the payoff year of the
	legacy liability.
	(h)  If the municipality and the board have not entered into
	an agreement described by Subsection (g) of this section in a given
	fiscal year, the corridor midpoint will be the corridor midpoint
	determined for the 31st fiscal year in the initial risk sharing
	valuation study prepared in accordance with this section.
	(i)  If the municipality makes a contribution to the fund of
	at least $5 million more than the amount that would be required by
	Section 13A(a) of this article, a liability gain layer with the same
	remaining amortization period as the legacy liability is created
	and the corridor midpoint shall be decreased by the amortized
	amount in each fiscal year covered by the liability gain layer
	produced divided by the projected pensionable payroll.
	Sec. 13D.  ACTUARIAL EXPERIENCE STUDIES. (a)  At least once
	every four years, the fund actuary at the direction of the fund
	shall conduct an actuarial experience study in accordance with
	actuarial standards of practice. The actuarial experience study
	required by this subsection must be completed not later than
	September 30 of the year in which the study is required to be
	conducted.
	(b)  Except as otherwise expressly provided by Sections
	13B(a)(6)(A)-(I) of this article, actuarial assumptions and
	methods used in the preparation of a risk sharing valuation study,
	other than the initial risk sharing valuation study, shall be based
	on the results of the most recent actuarial experience study.
	(c)  Not later than the 180th day before the date the board
	may consider adopting any assumptions and methods for purposes of
	Section 13B of this article, the fund shall provide the municipal
	actuary with a substantially final draft of the fund's actuarial
	experience study, including:
	(1)  all assumptions and methods recommended by the
	fund actuary; and
	(2)  summaries of the reconciled actuarial data used in
	creation of the actuarial experience study.
	(d)  Not later than the 60th day after the date the
	municipality receives the final draft of the fund's actuarial
	experience study under Subsection (c) of this section, the
	municipal actuary and fund actuary shall confer and cooperate on
	reconciling and producing a final actuarial experience study.
	During the period prescribed by this subsection, the fund actuary
	may modify the recommended assumptions in the draft actuarial
	experience study to reflect any changes to assumptions and methods
	to which the fund actuary and the municipal actuary agree.
	(e)  At the municipal actuary's written request, the fund
	shall provide additional actuarial data used by the fund actuary to
	prepare the draft actuarial experience study, provided that
	confidential data may only be provided subject to a confidentiality
	agreement in which the municipal actuary agrees to comply with the
	confidentiality provisions of Section 17 of this article.
	(f)  The municipal actuary at the direction of the
	municipality shall provide in writing to the fund actuary and the
	fund:
	(1)  any assumptions and methods recommended by the
	municipal actuary that differ from the assumptions and methods
	recommended by the fund actuary; and
	(2)  the municipal actuary's rationale for each method
	or assumption the actuary recommends and determines to be
	consistent with standards adopted by the Actuarial Standards Board.
	(g)  Not later than the 30th day after the date the fund
	actuary receives the municipal actuary's written recommended
	assumptions and methods and rationale under Subsection (f) of this
	section, the fund shall provide a written response to the
	municipality identifying any assumption or method recommended by
	the municipal actuary that the fund does not accept. If any
	assumption or method is not accepted, the fund shall recommend to
	the municipality the names of three independent actuaries for
	purposes of this section.
	(h)  An actuary may only be recommended, selected, or engaged
	by the fund as an independent actuary under this section if the
	person:
	(1)  is not already engaged by the municipality, the
	fund, or any other pension system authorized under Article 6243g-4,
	Revised Statutes, or Chapter 88 (H.B. 1573), Acts of the 77th
	Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
	Civil Statutes), to provide actuarial services to the municipality,
	the fund, or another pension system referenced in this subdivision;
	(2)  is a member of the American Academy of Actuaries;
	and
	(3)  has at least five years of experience as an actuary
	working with one or more public retirement systems with assets in
	excess of $1 billion.
	(i)  Not later than the 20th day after the date the
	municipality receives the list of three independent actuaries under
	Subsection (g) of this section, the municipality shall identify and
	the fund shall hire one of the listed independent actuaries on terms
	acceptable to the municipality and the fund to perform a scope of
	work acceptable to the municipality and the fund.  The municipality
	and the fund each shall pay 50 percent of the cost of the
	independent actuary engaged under this subsection.  The
	municipality shall be provided the opportunity to participate in
	any communications between the independent actuary and the fund
	concerning the engagement, engagement terms, or performance of the
	terms of the engagement.
	(j)  The independent actuary engaged under Subsection (i) of
	this section shall receive on request from the municipality or the
	fund:
	(1)  the fund's draft actuarial experience study,
	including all assumptions and methods recommended by the fund
	actuary;
	(2)  summaries of the reconciled actuarial data used to
	prepare the draft actuarial experience study;
	(3)  the municipal actuary's specific recommended
	assumptions and methods together with the municipal actuary's
	written rationale for each recommendation;
	(4)  the fund actuary's written rationale for its
	recommendations; and
	(5)  if requested by the independent actuary and
	subject to a confidentiality agreement in which the independent
	actuary agrees to comply with the confidentiality provisions of
	Section 17 of this article, additional confidential actuarial data.
	(k)  Not later than the 30th day after the date the
	independent actuary receives all the requested information under
	Subsection (j) of this section, the independent actuary shall
	advise the fund and the municipality whether it agrees with the
	assumption or method recommended by the municipal actuary or the
	corresponding method or assumption recommended by the fund actuary,
	together with the independent actuary's rationale for making the
	determination. During the period prescribed by this subsection,
	the independent actuary may discuss recommendations in
	simultaneous consultation with the fund actuary and the municipal
	actuary.
	(l)  The fund and the municipality may not seek any
	information from any prospective independent actuary about
	possible outcomes of the independent actuary's review.
	(m)  If an independent actuary has questions or concerns
	regarding an engagement entered into under this section, the
	independent actuary shall simultaneously consult with both the
	municipal actuary and the fund actuary regarding the questions or
	concerns.  This subsection does not limit the fund's authorization
	to take appropriate steps to complete the engagement of the
	independent actuary on terms acceptable to both the fund and the
	municipality or to enter into a confidentiality agreement with the
	independent actuary, if needed.
	(n)  If the board does not adopt an assumption or method
	recommended by the municipal actuary to which the independent
	actuary agrees, or recommended by the fund actuary, the municipal
	actuary is authorized to use that recommended assumption or method
	in connection with preparation of a subsequent risk sharing
	valuation study under Section 13B of this article until the next
	actuarial experience study is conducted.
	Sec. 13E.  MUNICIPAL CONTRIBUTION RATE WHEN ESTIMATED
	MUNICIPAL CONTRIBUTION RATE LOWER THAN CORRIDOR MIDPOINT;
	AUTHORIZATION FOR CERTAIN ADJUSTMENTS. (a)  This section governs
	the determination of the municipal contribution rate applicable in
	a fiscal year if the estimated municipal contribution rate is lower
	than the corridor midpoint.
	(b)  If the funded ratio is:
	(1)  less than 90 percent, the municipal contribution
	rate for the fiscal year equals the corridor midpoint; or
	(2)  equal to or greater than 90 percent and the
	municipal contribution rate is:
	(A)  equal to or greater than the minimum
	contribution rate, the estimated municipal contribution rate is the
	municipal contribution rate for the fiscal year; or
	(B)  except as provided by Subsection (e) of this
	section, less than the minimum contribution rate for the
	corresponding fiscal year, the municipal contribution rate for the
	fiscal year equals the minimum contribution rate achieved in
	accordance with Subsection (c) of this section.
	(c)  For purposes of Subsection (b)(2)(B) of this section,
	the following adjustments shall be applied sequentially to the
	extent required to increase the estimated municipal contribution
	rate to equal the minimum contribution rate:
	(1)  first, adjust the actuarial value of assets equal
	to the current market value of assets, if making the adjustment
	causes the municipal contribution rate to increase;
	(2)  second, under a written agreement between the
	municipality and the board entered into not later than April 30
	before the first day of the next fiscal year, reduce the assumed
	rate of return;
	(3)  third, under a written agreement between the
	municipality and the board entered into not later than April 30
	before the first day of the next fiscal year, prospectively restore
	all or part of any benefit reductions or reduce increased employee
	contributions, in each case made after the year 2017 effective
	date; and
	(4)  fourth, accelerate the payoff year of the existing
	liability loss layers, including the legacy liability, by
	accelerating the oldest liability loss layers first, to an
	amortization period that is not less than 10 years from the first
	day of the fiscal year beginning 12 months after the date of the
	risk sharing valuation study in which the liability loss layer is
	first recognized.
	(d)  If the funded ratio is:
	(1)  equal to or greater than 100 percent:
	(A)  all existing liability layers, including the
	legacy liability, are considered fully amortized and paid;
	(B)  the applicable fiscal year is the payoff year
	for the legacy liability; and
	(C)  for each fiscal year subsequent to the fiscal
	year described by Paragraph (B) of this subdivision, the corridor
	midpoint shall be determined as provided by Section 13C(g) of this
	article; and
	(2)  greater than 100 percent in a written agreement
	between the municipality and the fund, the fund may reduce member
	contributions or increase pension benefits if, as a result of the
	action:
	(A)  the funded ratio is not less than 100
	percent; and
	(B)  the municipal contribution rate is not more
	than the minimum contribution rate.
	(e)  Except as provided by Subsection (f) of this section, if
	an agreement under Subsection (d) of this section is not reached on
	or before April 30 before the first day of the next fiscal year,
	before the first day of the next fiscal year the board shall reduce
	member contributions and implement or increase cost-of-living
	adjustments, but only to the extent that the municipal contribution
	rate is set at or below the minimum contribution rate and the funded
	ratio is not less than 100 percent.
	(f)  If any member contribution reduction or benefit
	increase under Subsection (e) of this section has occurred within
	the previous three fiscal years, the board may not make additional
	adjustments to benefits, and the municipal contribution rate must
	be set to equal the minimum contribution rate.
	Sec. 13F.  MUNICIPAL CONTRIBUTION RATE WHEN ESTIMATED
	MUNICIPAL CONTRIBUTION RATE EQUAL TO OR GREATER THAN CORRIDOR
	MIDPOINT; AUTHORIZATION FOR CERTAIN ADJUSTMENTS. (a)  This
	section governs the determination of the municipal contribution
	rate in a fiscal year when the estimated municipal contribution
	rate is equal to or greater than the corridor midpoint.
	(b)  If the estimated municipal contribution rate is:
	(1)  less than or equal to the maximum contribution
	rate for the corresponding fiscal year, the estimated municipal
	contribution rate is the municipal contribution rate; or
	(2)  except as provided by Subsection (d) or (e) of this
	section, greater than the maximum contribution rate for the
	corresponding fiscal year, the municipal contribution rate equals
	the corridor midpoint achieved in accordance with Subsection (c) of
	this section.
	(c)  For purposes of Subsection (b)(2) of this section, the
	following adjustments shall be applied sequentially to the extent
	required to decrease the estimated municipal contribution rate to
	equal the corridor midpoint:
	(1)  first, if the payoff year of the legacy liability
	was accelerated under Section 13E(c) of this article, extend the
	payoff year of existing liability loss layers, by extending the
	most recent loss layers first, to a payoff year not later than 30
	years from the first day of the fiscal year beginning 12 months
	after the date of the risk sharing valuation study in which the
	liability loss layer is first recognized; and
	(2)  second, adjust the actuarial value of assets to
	the current market value of assets, if making the adjustment causes
	the municipal contribution rate to decrease.
	(d)  If the municipal contribution rate after adjustment
	under Subsection (c) of this section is greater than the third
	quarter line rate:
	(1)  the municipal contribution rate equals the third
	quarter line rate; and
	(2)  to the extent necessary to comply with Subdivision
	(1) of this subsection, the municipality and the board shall enter
	into a written agreement to increase member contributions and make
	other benefit or plan changes not otherwise prohibited by
	applicable federal law or regulations.
	(e)  If an agreement under Subsection (d)(2) of this section
	is not reached on or before April 30 before the first day of the next
	fiscal year, before the start of the next fiscal year to which the
	municipal contribution rate would apply, the board, to the extent
	necessary to set the municipal contribution rate equal to the third
	quarter line rate, shall:
	(1)  increase member contributions and decrease
	cost-of-living adjustments;
	(2)  increase the normal retirement age; or
	(3)  take any combination of actions authorized under
	Subdivisions (1) and (2) of this subsection.
	(f)  If the municipal contribution rate remains greater than
	the corridor midpoint in the third fiscal year after adjustments
	are made in accordance with Subsection (d)(2) of this section, in
	that fiscal year the municipal contribution rate equals the
	corridor midpoint achieved in accordance with Subsection (g) of
	this section.
	(g)  The municipal contribution rate must be set at the
	corridor midpoint under Subsection (f) of this section by:
	(1)  in the risk sharing valuation study for the third
	fiscal year described by Subsection (f) of this section, adjusting
	the actuarial value of assets to equal the current market value of
	assets, if making the adjustment causes the municipal contribution
	rate to decrease; and
	(2)  under a written agreement entered into between the
	municipality and the board:
	(A)  increasing member contributions; and
	(B)  making any other benefit or plan changes not
	otherwise prohibited by applicable federal law or regulations.
	(h)  If an agreement under Subsection (g)(2) of this section
	is not reached on or before April 30 before the first day of the next
	fiscal year, before the start of the next fiscal year, the board, to
	the extent necessary to set the municipal contribution rate equal
	to the corridor midpoint, shall:
	(1)  increase member contributions and decrease
	cost-of-living adjustments;
	(2)  increase the normal retirement age; or
	(3)  take any combination of actions authorized under
	Subdivisions (1) and (2) of this subsection.
	Sec. 13G.  INTERPRETATION OF CERTAIN RISK SHARING
	PROVISIONS; UNILATERAL DECISIONS AND ACTIONS PROHIBITED.
	(a)  Nothing in this article, including Section 2(p) or (p-1) of
	this article and any authority of the board to construe and
	interpret this article, to determine any fact, to take any action,
	or to interpret any terms used in Sections 13A through 13F of this
	article, may alter or change Sections 13A through 13F of this
	article.
	(b)  No unilateral decision or action by the board is binding
	on the municipality and no unilateral decision or action by the
	municipality is binding on the fund with respect to the application
	of Sections 13A through 13F of this article unless expressly
	provided by a provision of those sections.  Nothing in this
	subsection is intended to limit the powers or authority of the
	board.
	(c)  Section 10 of this article does not apply to a benefit
	increase under Section 13E of this article, and Section 10 of this
	article is suspended while Sections 13A through 13F of this article
	are in effect.
	Sec. 13H.  STATE PENSION REVIEW BOARD; REPORT. (a)  After
	preparing a final risk sharing valuation study under Section 13B or
	13C of this article, the fund and the municipality shall jointly
	submit a copy of the study or studies, as appropriate, to the State
	Pension Review Board for a determination that the fund and
	municipality are in compliance with this article.
	(b)  Not later than the 30th day after the date an action is
	taken under Section 13E or 13F of this article, the fund shall
	submit a report to the State Pension Review Board regarding any
	actions taken under those sections.
	(c)  The State Pension Review Board shall notify the
	governor, the lieutenant governor, the speaker of the house of
	representatives, and the legislative committees having principal
	jurisdiction over legislation governing public retirement systems
	if the State Pension Review Board determines the fund or the
	municipality is not in compliance with Sections 13A through 13G of
	this article.
	SECTION 1.15.  Section 17, Article 6243e.2(1), Revised
	Statutes, is amended by adding Subsections (f), (g), (h), (i), and
	(j) to read as follows:
	(f)  To carry out the provisions of Sections 13A through 13F
	of this article, the board and the fund must provide the municipal
	actuary under a confidentiality agreement the actuarial data used
	by the fund actuary for the fund's actuarial valuations or
	valuation studies and other data as agreed to between the
	municipality and the fund that the municipal actuary determines is
	reasonably necessary for the municipal actuary to perform the
	studies required by Sections 13A through 13F of this article.
	Actuarial data described by this subsection does not include
	information described by Subsection (a) of this section.
	(g)  A risk sharing valuation study prepared by either the
	municipal actuary or the fund actuary under Sections 13A through
	13F of this article may not:
	(1)  include information described by Subsection (a) of
	this section; or
	(2)  provide confidential or private information
	regarding specific individuals or be grouped in a manner that
	allows confidential or private information regarding a specific
	individual to be discerned.
	(h)  The information, data, and document exchanges under
	Sections 13A through 13F of this article have all the protections
	afforded by applicable law and are expressly exempt from the
	disclosure requirements under Chapter 552, Government Code, except
	as may be agreed to by the municipality and fund in a written
	agreement.
	(i)  Subsection (h) of this section does not apply to:
	(1)  a proposed risk sharing valuation study prepared
	by the fund actuary and provided to the municipal actuary or
	prepared by the municipal actuary and provided to the fund actuary
	under Section 13B(d) or 13C(b)(2); or
	(2)  a final risk sharing valuation study prepared
	under Section 13B or 13C of this article.
	(j)  Before a union contract is approved by the municipality,
	the mayor of the municipality shall cause the municipal actuaries
	to deliver to the mayor a report estimating the impact of the
	proposed union contract on fund costs.
	SECTION 1.16.  Sections 13(d) and (e), Article 6243e.2(1),
	Revised Statutes, are repealed.
	SECTION 1.17.  The firefighters' relief and retirement fund
	established under Article 6243e.2(1), Revised Statutes, shall
	require the fund actuary to prepare the first actuarial experience
	study required under Section 13D, Article 6243e.2(1), Revised
	Statutes, as added by this Act, not later than September 30, 2020.
	ARTICLE 2. POLICE OFFICERS' PENSION SYSTEM
	SECTION 2.01.  Section 1, Article 6243g-4, Revised Statutes,
	is amended to read as follows:
	Sec. 1.  PURPOSE. The purpose of this article is to restate
	and amend the provisions of former law creating and governing a
	police officers pension system in each city in this state having a
	population of two [1.5] million or more, according to the most
	recent federal decennial census, and to reflect changes agreed to
	by the city and the board of trustees of the pension system under
	Section 27 of this article.  The pension system shall continue to
	operate regardless of whether the city's population falls below two
	[1.5] million.
	SECTION 2.02.  Article 6243g-4, Revised Statutes, is amended
	by adding Section 1A to read as follows:
	Sec. 1A.  INTERPRETATION OF ARTICLE. This article does not
	and may not be interpreted to:
	(1)  relieve the city, the board, or the pension system
	of their respective obligations under Sections 9 through 9E of this
	article;
	(2)  reduce or modify the rights of the city, the board,
	or the pension system, including any officer or employee of the
	city, board, or pension system, to enforce obligations described by
	Subdivision (1) of this section;
	(3)  relieve the city, including any official or
	employee of the city, from:
	(A)  paying or directing to pay required
	contributions to the pension system under Section 8 or 9 of this
	article or carrying out the provisions of Sections 9 through 9E of
	this article; or
	(B)  reducing or modifying the rights of the board
	and any officer or employee of the board or pension system to
	enforce obligations described by Subdivision (1) of this section;
	(4)  relieve the pension system or board, including any
	officer or employee of the pension system or board, from any
	obligation to implement a benefit change or carry out the
	provisions of Sections 9 through 9E of this article; or
	(5)  reduce or modify the rights of the city and any
	officer or employee of the city to enforce an obligation described
	by Subdivision (4) of this section.
	SECTION 2.03.  Section 2, Article 6243g-4, Revised Statutes,
	is amended by amending Subdivisions (1), (2), (3), (4-a), (11),
	(13), (14-a), (17), (17-a), and (22) and adding Subdivisions (1-a),
	(1-b), (1-c), (4-b), (4-c), (4-d), (5-a), (5-b), (5-c), (10-a),
	(10-b), (10-c), (10-d), (12-a), (13-a), (13-b), (13-c), (13-d),
	(13-e), (13-f), (14-b), (14-c), (15-a), (15-b), (16-a), (16-b),
	(17-b), (17-c), (17-d), (17-e), (24), (25), (26), (27), (28), and
	(29) to read as follows:
	(1)  "Active member" means an employee of the city
	within [a person employed as a classified police officer by] the
	police department of a city subject to this article, in a classified
	or appointed position, except for a person in an appointed position
	who opts out of the plan, a person who is a part-time, seasonal, or
	temporary employee, or a person who elected to remain a member of a
	pension system described by Chapter 88, Acts of the 77th
	Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
	Civil Statutes).  The term does not include a person who is a member
	of another pension system of the same city, except to the extent
	provided by Section [15(j) or] 18 of this article.
	(1-a)  "Actuarial data" includes:
	(A)  the census data, assumption tables,
	disclosure of methods, and financial information that are routinely
	used by the pension system actuary for the pension system's
	valuation studies or an actuarial experience study under Section 9C
	of this article; and
	(B)  other data that is reasonably necessary to
	implement Sections 9 through 9E of this article, as agreed to by the
	city and the board.
	(1-b)  "Actuarial experience study" has the meaning
	assigned by Section 802.1014, Government Code.
	(1-c)  "Amortization period" means the time period
	necessary to fully pay a liability layer.
	(2)  "Amortization rate" means the sum of the scheduled
	amortization payments for a given fiscal year for the current
	liability layers divided by the projected pensionable payroll for
	that fiscal year. ["Average total direct pay" means an amount
	determined by dividing the following sum by 12:
	[(A)     the highest biweekly pay received by a
	member for any single pay period in the last 26 pay periods in which
	the member worked full-time, considering only items of total direct
	pay that are included in each paycheck, multiplied by 26; plus
	[(B)     the total direct pay, excluding all items of
	the type included in Paragraph (A) received during the same last 26
	biweekly pay periods.]
	(3)  "Assumed rate of return" means the assumed market
	rate of return on pension system assets, which is seven percent per
	annum unless adjusted as provided by this article ["Base salary"
	means the monthly base pay provided for the classified position in
	the police department held by the member].
	(4-a)  "Catastrophic injury" means a sudden, violent,
	life-threatening, duty-related injury sustained by an active
	member that is due to an externally caused motor vehicle accident,
	gunshot wound, aggravated assault, or other external event or
	events and results, as supported by evidence, in one of the
	following conditions:
	(A)  total, complete, and permanent loss of sight
	in one or both eyes;
	(B)  total, complete, and permanent loss of the
	use of one or both feet at or above the ankle;
	(C)  total, complete, and permanent loss of the
	use of one or both hands at or above the wrist;
	(D)  injury to the spine that results in a total,
	permanent, and complete paralysis of both arms, both legs, or one
	arm and one leg; or
	(E)  an externally caused physical traumatic
	injury to the brain rendering the member physically or mentally
	unable to perform the member's duties as a police officer.
	(4-b)  "City" means a city subject to this article.
	(4-c)  "City contribution rate" means a percent of
	pensionable payroll that is the sum of the employer normal cost rate
	and the amortization rate for liability layers, except as
	determined otherwise under the express provisions of Sections 9D
	and 9E of this article.
	(4-d)  "Classified" means any person classified by the
	city as a police officer.
	(5-a)  "Corridor" means the range of city contribution
	rates that are:
	(A)  equal to or greater than the minimum
	contribution rate; and
	(B)  equal to or less than the maximum
	contribution rate.
	(5-b)  "Corridor margin" means five percentage points.
	(5-c)  "Corridor midpoint" means the projected city
	contribution rate specified for each fiscal year for 31 years in the
	initial risk sharing valuation study under Section 9B of this
	article, as may be adjusted under Section 9D or 9E of this article,
	and in each case rounded to the nearest hundredths decimal place.
	(10-a)  "Employer normal cost rate" means the normal
	cost rate minus the member contribution rate.
	(10-b)  "Estimated city contribution rate" means the
	city contribution rate estimated in a final risk sharing valuation
	study under Section 9A or 9B of this article, as applicable, as
	required by Section 9A(a)(5) of this article.
	(10-c)  "Fiscal year," except as provided by Section 2A
	of this article, means a fiscal year beginning July 1 and ending
	June 30.
	(10-d)  "Final average pay" means the pay received by a
	member over the last 78 biweekly pay periods ending before the
	earlier of:
	(A)  the date the member terminates employment
	with the police department, divided by 36; or
	(B)  the date the member began participation in
	DROP, divided by 36.
	(11)  "Former member" means a person who was once an
	active member, eligible for benefits [vested] or not, but who
	terminated active member status and received a refund of member
	contributions.
	(12-a)  "Funded ratio" means the ratio of the pension
	system's actuarial value of assets divided by the pension system's
	actuarial accrued liability.
	(13)  "Inactive member" means a person who has
	separated from service and is eligible to receive [has a vested
	right to] a service pension from the pension system but is not
	eligible for an immediate service pension. The term does not
	include a former member.
	(13-a)  "Legacy liability" means the unfunded
	actuarial accrued liability as of June 30, 2016, as reduced to
	reflect:
	(A)  changes to benefits and contributions under
	this article that took effect on the year 2017 effective date;
	(B)  the deposit of pension obligation bond
	proceeds on December 31, 2017, in accordance with Section 9B(j)(2)
	of this article;
	(C)  payments by the city and earnings at the
	assumed rate of return allocated to the legacy liability from July
	1, 2016, to July 1, 2017, excluding July 1, 2017; and
	(D)  for each subsequent fiscal year,
	contributions for that year allocated to the amortization of the
	legacy liability and adjusted by the assumed rate of return.
	(13-b)  "Level percent of payroll method" means the
	amortization method that defines the amount of the liability layer
	recognized each fiscal year as a level percent of pensionable
	payroll until the amount of the liability layer remaining is
	reduced to zero.
	(13-c)  "Liability gain layer" means a liability layer
	that decreases the unfunded actuarial accrued liability.
	(13-d)  "Liability layer" means the legacy liability
	established in the initial risk sharing valuation study under
	Section 9B of this article and the unanticipated change as
	established in each subsequent risk sharing valuation study
	prepared under Section 9A of this article.
	(13-e)  "Liability loss layer" means a liability layer
	that increases the unfunded actuarial accrued liability.  For
	purposes of this article, the legacy liability is a liability loss
	layer.
	(13-f)  "Maximum contribution rate" means the rate
	equal to the corridor midpoint plus the corridor margin.
	(14-a)  "Minimum contribution rate" means the rate
	equal to the corridor midpoint minus the corridor margin.
	(14-b)  "Normal cost rate" means the salary weighted
	average of the individual normal cost rates determined for the
	current active population plus an allowance for projected
	administrative expenses. The allowance for projected
	administrative expenses equals the administrative expenses divided
	by the pensionable payroll for the previous fiscal year, provided
	the administrative allowance may not exceed one percent of
	pensionable payroll for the current fiscal year unless agreed to by
	the city.
	(14-c)  "Normal retirement age" means:
	(A)  for a member hired before October 9, 2004,
	including a member hired before October 9, 2004, who involuntarily
	separated from service but was retroactively reinstated under an
	arbitration, civil service, or court ruling after October 9, 2004,
	the earlier of:
	(i) [(A)]  the age at which the member
	attains 20 years of service; or
	(ii) [(B)]  the age at which the member
	first attains both the age of at least 60 and at least 10 years of
	service; or
	(B)  except as provided by Paragraph (A) of this
	subdivision, for a member hired or rehired on or after October 9,
	2004, the age at which the sum of the member's age in years and years
	of service equals at least 70.
	(15-a)  "Pay," unless the context requires otherwise,
	means wages as defined by Section 3401(a) of the code, plus any
	amounts that are not included in gross income by reason of Section
	104(a)(1), 125, 132(f), 402(g)(2), 457, or 414(h)(2) of the code,
	less any pay received for overtime work, exempt time pay, strategic
	officer staffing program pay, motorcycle allowance, clothing
	allowance, or mentor pay.  The definition of "pay" for purposes of
	this article may only be amended by written agreement of the board
	and the city under Section 27 of this article.
	(15-b)  "Payoff year" means the year a liability layer
	is fully amortized under the amortization period.  A payoff year may
	not be extended or accelerated for a period that is less than one
	month.
	(16-a)  "Pension obligation bond" means a bond issued
	in accordance with Chapter 107, Local Government Code.
	(16-b)  "Pensionable payroll" means the combined
	salaries, in an applicable fiscal year, paid to all:
	(A)  active members; and
	(B)  if applicable, participants in any
	alternative retirement plan established under Section 2B of this
	article, including a cash balance retirement plan established under
	that section.
	(17)  "Pension system" or "system," unless the context
	requires otherwise, means the retirement and disability plan for
	employees of any police department subject to this article.
	(17-a)  "Police department" means one or more law
	enforcement agencies designated as a police department by a city.
	(17-b)  "Price inflation assumption" means:
	(A)  the most recent headline consumer price index
	10-year forecast published in the Federal Reserve Bank of
	Philadelphia Survey of Professional Forecasters; or
	(B)  if the forecast described by Paragraph (A) of
	this subdivision is not available, another standard as determined
	by mutual agreement between the city and the board entered into
	under Section 27 of this article.
	(17-c)  "Projected pensionable payroll" means the
	estimated pensionable payroll for the fiscal year beginning 12
	months after the date of the risk sharing valuation study prepared
	under Section 9A of this article, as applicable, at the time of
	calculation by:
	(A)  projecting the prior fiscal year's
	pensionable payroll projected forward two years by using the
	current payroll growth rate assumptions; and
	(B)  adjusting, if necessary, for changes in
	population or other known factors, provided those factors would
	have a material impact on the calculation, as determined by the
	board.
	(17-d)  "Retired member" means a member who has
	separated from service and who is eligible to receive an immediate
	service or disability pension under this article.
	(17-e)  "Salary" means pay provided for the classified
	position in the police department held by the employee.
	(22)  "Surviving spouse" means a person who was married
	to an active, inactive, or retired member at the time of the
	member's death and, in the case of a marriage or remarriage after
	the member's retirement, [an inactive or retired member, before the
	member's separation from service or] for a period of at least five
	consecutive years [before the retired or inactive member's death].
	(24)  "Third quarter line rate" means the corridor
	midpoint plus 2.5 percentage points.
	(25)  "Trustee" means a member of the board.
	(26)  "Ultimate entry age normal" means an actuarial
	cost method under which a calculation is made to determine the
	average uniform and constant percentage rate of contributions that,
	if applied to the compensation of each member during the entire
	period of the member's anticipated covered service, would be
	required to meet the cost of all benefits payable on the member's
	behalf based on the benefits provisions for newly hired employees.
	For purposes of this definition, the actuarial accrued liability
	for each member is the difference between the member's present
	value of future benefits based on the tier of benefits that apply to
	the member and the member's present value of future normal costs
	determined using the normal cost rate.
	(27)  "Unfunded actuarial accrued liability" means the
	difference between the actuarial accrued liability and the
	actuarial value of assets.  For purposes of this definition:
	(A)  "actuarial accrued liability" means the
	portion of the actuarial present value of projected benefits
	attributed to past periods of member service based on the cost
	method used in the risk sharing valuation study prepared under
	Section 9A or 9B of this article, as applicable; and
	(B)  "actuarial value of assets" means the value
	of pension system investments as calculated using the asset
	smoothing method used in the risk sharing valuation study prepared
	under Section 9A or 9B of this article, as applicable.
	(28)  "Unanticipated change" means, with respect to the
	unfunded actuarial accrued liability in each subsequent risk
	sharing valuation study prepared under Section 9A of this article,
	the difference between:
	(A)  the remaining balance of all then-existing
	liability layers as of the date of the risk sharing valuation study;
	and
	(B)  the actual unfunded actuarial accrued
	liability as of the date of the risk sharing valuation study.
	(29)  "Year 2017 effective date" means the date on
	which S.B. No. 2190, Acts of the 85th Legislature, Regular Session,
	2017, took effect.
	SECTION 2.04.  Article 6243g-4, Revised Statutes, is amended
	by adding Sections 2A, 2B, 2C, and 2D to read as follows:
	Sec. 2A.  FISCAL YEAR. If either the pension system or the
	city changes its respective fiscal year, the pension system and the
	city shall enter into a written agreement under Section 27 of this
	article to adjust the provisions of Sections 9 through 9E of this
	article to reflect that change for purposes of this article.
	Sec. 2B.  ALTERNATIVE RETIREMENT PLANS. (a) In this
	section, "salary-based benefit plan" means a retirement plan
	provided by the pension system under this article that provides
	member benefits calculated in accordance with a formula that is
	based on multiple factors, one of which is the member's salary at
	the time of the member's retirement.
	(b)  Notwithstanding any other law, including Section 9F of
	this article, and except as provided by Subsection (c) of this
	section, the board and the city may enter into a written agreement
	under Section 27 of this article to offer an alternative retirement
	plan or plans, including a cash balance retirement plan or plans, if
	both parties consider it appropriate.
	(c)  Notwithstanding any other law, including Section 9F of
	this article, and except as provided by Subsection (d) of this
	section, if, beginning with the final risk sharing valuation study
	prepared under Section 9A of this article on or after July 1, 2021,
	either the funded ratio of the pension system is less than 65
	percent as determined in the final risk sharing valuation study
	without making any adjustments under Section 9D or 9E of this
	article, or the funded ratio of the pension system is less than 65
	percent as determined in a revised and restated risk sharing
	valuation study prepared under Section 9A(a)(7) of this article,
	the board and the city shall, as soon as practicable but not later
	than the 60th day after the date the determination is made:
	(1)  enter into a written agreement under Section 27 of
	this article to establish a cash balance retirement plan that
	complies with Section 2C of this article; and
	(2)  require each employee first hired by the city on or
	after the 90th day after the date the cash balance retirement plan
	is established to participate in the cash balance retirement plan
	established under this subsection instead of participating in the
	salary-based benefit plan, provided the employee would have
	otherwise been eligible to participate in the salary-based benefit
	plan.
	(d)  If the city fails to deliver the proceeds of the pension
	obligation bonds described by Section 9B(j)(1) of this article
	within the time prescribed by that subdivision, notwithstanding the
	funded ratio of the pension system, the board and the city may not
	establish a cash balance retirement plan under Subsection (c) of
	this section.
	Sec. 2C.  REQUIREMENTS FOR CERTAIN CASH BALANCE RETIREMENT
	PLANS. (a)  In this section:
	(1)  "Cash balance plan participant" means an employee
	who participates in a cash balance retirement plan.
	(2)  "Cash balance retirement plan" means a cash
	balance retirement plan established by written agreement under
	Section 2B(b) of this article or Section 2B(c) of this article.
	(3)  "Interest" means the interest credited to a cash
	balance plan participant's notional account, which may not:
	(A)  exceed a percentage rate equal to the cash
	balance retirement plan's most recent five fiscal years' smoothed
	rate of return; or
	(B)  be less than zero percent.
	(4)  "Salary-based benefit plan" has the meaning
	assigned by Section 2B of this article.
	(b)  The written agreement establishing a cash balance
	retirement plan must:
	(1)  provide for the administration of the cash balance
	retirement plan;
	(2)  provide for a closed amortization period not to
	exceed 20 years from the date an actuarial gain or loss is realized;
	(3)  provide for the crediting of city and cash balance
	plan participant contributions to each cash balance plan
	participant's notional account;
	(4)  provide for the crediting of interest to each cash
	balance plan participant's notional account;
	(5)  include a vesting schedule;
	(6)  include benefit options, including options for
	cash balance plan participants who separate from service prior to
	retirement;
	(7)  provide for death and disability benefits;
	(8)  allow a cash balance plan participant who is
	eligible to retire under the plan to elect to:
	(A)  receive a monthly annuity payable for the
	life of the cash balance plan participant in an amount actuarially
	determined on the date of the cash balance plan participant's
	retirement based on the cash balance plan participant's accumulated
	notional account balance annuitized in accordance with the
	actuarial assumptions and actuarial methods established in the most
	recent actuarial experience study conducted under Section 9C of
	this article, except that the assumed rate of return applied may not
	exceed the pension system's assumed rate of return in the most
	recent risk sharing valuation study; or
	(B)  receive a single, partial lump-sum payment
	from the cash balance plan participant's accumulated account
	balance and a monthly annuity payable for life in an amount
	determined in accordance with Paragraph (A) of this subdivision
	based on the cash balance plan participant's notional account
	balance after receiving the partial lump-sum payment; and
	(9)  include any other provision determined necessary
	by:
	(A)  the board and the city; or
	(B)  the pension system for purposes of
	maintaining the tax-qualified status of the pension system under
	Section 401 of the code.
	(c)  Notwithstanding any other law, including Sections 2(1),
	11, and 12 of this article, an employee who participates in a cash
	balance retirement plan:
	(1)  subject to Subsection (d) of this section, is not
	eligible to be an active member of and may not participate in the
	salary-based benefit plan; and
	(2)  may not accrue years of service or establish
	service credit in the salary-based benefit plan during the period
	the employee is participating in the cash balance retirement plan.
	(d)  A cash balance plan participant is considered an active
	member for purposes of Sections 9 through 9G of this article.
	(e)  At the time of implementation of the cash balance
	retirement plan, the employer normal cost rate of the cash balance
	retirement plan may not exceed the employer normal cost rate of the
	salary-based benefit plan.
	Sec. 2D.  CONFLICT OF LAW.  To the extent of a conflict
	between this article and any other law, this article prevails.
	SECTION 2.05.  Section 3, Article 6243g-4, Revised Statutes,
	is amended by amending Subsection (b) and adding Subsections (i)
	and (j) to read as follows:
	(b)  The board is composed of seven members as follows:
	(1)  the administrative head of the city or the
	administrative head's authorized representative;
	(2)  three employees of the police department having
	membership in the pension system, elected by the active, inactive,
	and retired members of the pension system;
	(3)  two retired members who are receiving pensions
	from the system, who are elected by the active, inactive, and
	retired members of the pension system, and who are not:
	(A)  officers or employees of the city; or
	(B)  current or former employees of any other fund
	or pension system authorized under:
	(i)  Article 6243e.2(1), Revised Statutes;
	or
	(ii)  Chapter 88 (H.B. 1573), Acts of the
	77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
	Texas Civil Statutes)[, elected by the active, inactive, and
	retired members of the pension system]; and
	(4)  the director of finance [treasurer] of the city or
	the person discharging the duties of the director of finance, or the
	director's designee [city treasurer].
	(i)  If a candidate for either an active or retired board
	member position does not receive a majority vote for that position,
	a runoff election for that position shall be held.  The board shall
	establish a policy for general and runoff elections for purposes of
	this subsection.
	(j)  Beginning with the year 2017 effective date:
	(1)  the term of office for a board member in the
	phase-down program A or B shall be one year; and
	(2)  a board member who subsequently enters phase-down
	program A or B and has served at least one year of the member's
	current term shall vacate the member's seat and may run for
	reelection.
	SECTION 2.06.  Section 4, Article 6243g-4, Revised Statutes,
	is amended to read as follows:
	Sec. 4.  BOARD MEMBER LEAVE AND COMPENSATION. (a)  The city
	shall allow active members who are trustees to promptly attend all
	board and committee meetings. The city shall allow trustees the
	time required to travel to and attend educational workshops and
	legislative hearings and to attend to other pension system
	business, including meetings regarding proposed amendments to this
	article, if attendance is consistent with a trustee's duty to the
	board [Elected members of the board who are employees of the city's
	police department are entitled to leave from their employer to
	attend to the official business of the pension system and are not
	required to report to the city or any other governmental entity
	regarding travel or the official business of the pension system,
	except when on city business].
	(b)  [If the city employing an elected board member would
	withhold any portion of the salary of the member who is attending to
	official business of the pension system, the pension system may
	elect to adequately compensate the city for the loss of service of
	the member. If the board, by an affirmative vote of at least four
	board members, makes this election, the amounts shall be remitted
	from the fund to the city, and the city shall pay the board member's
	salary as if no loss of service had occurred.
	[(c)] The board, by an affirmative vote of at least four board
	members, may elect to reimburse board members who are not employees
	of the city for their time while attending to official business of
	the pension system. The amount of any reimbursement may not exceed
	$750 [$350] a month for each affected board member.
	SECTION 2.07.  Article 6243g-4, Revised Statutes, is amended
	by adding Sections 5A and 5B to read as follows:
	Sec. 5A.  QUALIFICATIONS OF CITY ACTUARY. (a)  An actuary
	hired by the city for purposes of this article must be an actuary
	from a professional service firm who:
	(1)  is not already engaged by the pension system or any
	other fund or pension system authorized under Article 6243e.2(1),
	Revised Statutes, or Chapter 88 (H.B. 1573), Acts of the 77th
	Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
	Civil Statutes), to provide actuarial services to the pension
	system or other fund or pension system, as applicable;
	(2)  has a minimum of 10 years of professional
	actuarial experience; and
	(3)  is a member of the American Academy of Actuaries or
	a fellow of the Society of Actuaries and meets the applicable
	requirements to issue statements of actuarial opinion.
	(b)  Notwithstanding Subsection (a) of this section, the
	city actuary must at least meet the qualifications required by the
	board for the pension system actuary.  The city actuary is not
	required to have greater qualifications than those of the pension
	system actuary.
	Sec. 5B.  LIABILITY OF CERTAIN PERSONS. (a)  The trustees,
	executive director, and employees of the pension system are fully
	protected from and free of liability for any action taken or
	suffered by them that were performed in good faith and in reliance
	on an actuary, accountant, counsel, or other professional service
	provider, or in reliance on records provided by the city.
	(b)  The officers and employees of the city are fully
	protected and free of liability for any action taken or suffered by
	the officer or employee, as applicable, in good faith and on
	reliance on an actuary, accountant, counsel, or other professional
	service provider.
	(c)  The protection from liability provided by this section
	is cumulative of and in addition to any other constitutional,
	statutory, or common law official or governmental immunity,
	defense, and civil or procedural protection provided to the city or
	pension system as a governmental entity and to a city or pension
	system official or employee as an official or employee of a
	governmental entity. Except for a waiver expressly provided by
	this article, this article does not grant an implied waiver of any
	immunity.
	SECTION 2.08.  Section 6, Article 6243g-4, Revised Statutes,
	is amended by amending Subsections (f) and (g) and adding
	Subsections (f-1), (i), and (j) to read as follows:
	(f)  The board has full discretion and authority to:
	(1)  administer the pension system;
	(2)  [, to] construe and interpret this article and any
	summary plan descriptions or benefits procedures;
	(3)  subject to Section 9F of this article, correct any
	defect, supply any omission, and reconcile any inconsistency that
	appears in this article;[,] and
	(4)  take [to do] all other acts necessary to carry out
	the purpose of this article in a manner and to the extent that the
	board considers expedient to administer this article for the
	greatest benefit of all members.
	(f-1)  Except as provided by Section 9F of this article, all
	[All] decisions of the board under Subsection (f) of this section
	are final and binding on all affected parties.
	(g)  The board, if reasonably necessary in the course of
	performing a board function, may issue process or subpoena a
	witness or the production of a book, record, or other document as to
	any matter affecting retirement, disability, or death benefits
	under any pension plan provided by the pension system. The
	presiding officer of the board may issue, in the name of the board,
	a subpoena only if a majority of the board approves. The presiding
	officer of the board, or the presiding officer's designee, shall
	administer an oath to each witness. A peace officer shall serve a
	subpoena issued by the board. If the person to whom a subpoena is
	directed fails to comply, the board may bring suit to enforce the
	subpoena in a district court of the county in which the person
	resides or in the county in which the book, record, or other
	document is located. If the district court finds that good cause
	exists for issuance of the subpoena, the court shall order
	compliance. The district court may modify the requirements of a
	subpoena that the court finds are unreasonable. Failure to obey the
	order of the district court is punishable as contempt.
	(i)  If the board or its designee determines that any person
	to whom a payment under this article is due is a minor or is unable
	to care for the person's affairs because of a physical or mental
	disability, and if the board or its designee, as applicable,
	determines the person does not have a guardian or other legal
	representative and that the estate of the person is insufficient to
	justify the expense of establishing a guardianship, or continuing a
	guardianship after letters of guardianship have expired, then until
	current letters of guardianship are filed with the pension system,
	the board or its designee, as applicable, may make the payment:
	(1)  to the spouse of the person, as trustee for the
	person;
	(2)  to an individual or entity actually providing for
	the needs of and caring for the person, as trustee for the person;
	or
	(3)  to a public agency or private charitable
	organization providing assistance or services to the aged or
	incapacitated that agrees to accept and manage the payment for the
	benefit of the person as a trustee.
	(j)  The board or its designee is not responsible for
	overseeing how a person to whom payment is made under Subsection (i)
	of this section uses or otherwise applies the payments. Payments
	made under Subsection (i) of this section constitute a complete
	discharge of the pension system's liability and obligation to the
	person on behalf of whom payment is made.
	SECTION 2.09.  Section 8(a), Article 6243g-4, Revised
	Statutes, is amended to read as follows:
	(a)  Subject to adjustments authorized by Section 9D or 9E of
	this article, each [Each] active member of the pension system shall
	pay into the system each month 10.5 [8-3/4] percent of the member's
	[total direct] pay. The payments shall be deducted by the city from
	the salary of each active member each payroll period and paid to the
	pension system. Except for the repayment of withdrawn
	contributions under Section 17(f) [or 18(c)(3)] of this article and
	rollovers permitted by Section 17(h) of this article, a person may
	not be required or permitted to make any payments into the pension
	system after the person separates from service.
	SECTION 2.10.  Section 9, Article 6243g-4, Revised Statutes,
	is amended to read as follows:
	Sec. 9.  CONTRIBUTIONS BY THE CITY. (a)  Beginning with the
	year 2017 effective date, the city shall make contributions to the
	pension system for deposit into the fund as provided by this section
	and Section 9A, 9B, 9D, or 9E of this article, as applicable. The
	city shall contribute:
	(1)  beginning with the year 2017 effective date and
	ending with the fiscal year ending June 30, 2018, an amount equal to
	the city contribution rate, as determined in the initial risk
	sharing valuation study conducted under Section 9B of this article
	and adjusted under Section 9D or 9E of this article, as applicable,
	multiplied by the pensionable payroll for the fiscal year; and
	(2)  for each fiscal year after the fiscal year ending
	June 30, 2018, an amount equal to the city contribution rate, as
	determined in a subsequent risk sharing valuation study conducted
	under Section 9A of this article and adjusted under Section 9D or 9E
	of this article, as applicable, multiplied by the pensionable
	payroll for the applicable fiscal year.
	(b)  Except by written agreement between the city and the
	board under Section 27 of this article providing for an earlier
	contribution date, at least biweekly, the city shall make the
	contributions required by Subsection (a) of this section by
	depositing with the pension system an amount equal to the city
	contribution rate multiplied by the pensionable payroll for the
	biweekly period.
	(c)  With respect to each fiscal year:
	(1)  the first contribution by the city under this
	section for the fiscal year shall be made not later than the date
	payment is made to employees for their first full biweekly pay
	period beginning on or after the first day of the fiscal year; and
	(2)  the final contribution by the city under this
	section for the fiscal year shall be made not later than the date
	payment is made to employees for the final biweekly pay period of
	the fiscal year.
	(d)  In addition to the amounts required under this section,
	the city may at any time contribute additional amounts to the
	pension system for deposit in the pension fund by entering into a
	written agreement with the board in accordance with Section 27 of
	this article [The city shall make substantially equal contributions
	to the fund as soon as administratively feasible after each payroll
	period. For each fiscal year ending after June 30, 2005, the city's
	minimum contribution shall be the greater of 16 percent of the
	members' total direct pay or the level percentage of salary payment
	required to amortize the unfunded actuarial liability over a
	constant period of 30 years computed on the basis of an acceptable
	actuarial reserve funding method approved by the board. However,
	for the fiscal year ending June 30, 2002, the city's contribution
	shall be $32,645,000, for the fiscal year ending June 30, 2003, the
	city's contribution shall be $34,645,000, for the fiscal year
	ending June 30, 2004, the city's contribution shall be $36,645,000,
	and for the fiscal year ending June 30, 2005, the city's
	contribution shall be 16 percent of the members' total direct pay].
	(e) [(c)]  The governing body of a city to which this article
	applies by ordinance or resolution may provide that the city pick up
	active member contributions required by Section 8 of this article
	so that the contributions of all active members of the pension
	system qualify as picked-up contributions under Section 414(h)(2)
	of the code. If the governing body of a city adopts an ordinance or
	resolution under this section, the city, the board, and any other
	necessary party shall implement the action as soon as practicable.
	Contributions picked up as provided by this subsection shall be
	included in the determination of an active member's [total direct]
	pay, deposited to the individual account of the active member on
	whose behalf they are made, and treated for all purposes, other than
	federal tax purposes, in the same manner and with like effect as if
	they had been deducted from the salary of, and made by, the active
	member.
	(f)  Only amounts paid by the city to the pension system
	shall be credited against any amortization schedule of payments due
	to the pension system under this article.
	(g)  Subsection (f) of this section does not affect changes
	to an amortization schedule of a liability layer under Section
	9A(a)(6)(F), 9B(i), or 9D(c)(4) of this article.
	(h)  Notwithstanding any other law and except for the pension
	obligation bond assumed under Section 9B(d)(2) of this article, the
	city may not issue a pension obligation bond to fund the city
	contribution rate under this section.
	SECTION 2.11.  Article 6243g-4, Revised Statutes, is amended
	by adding Sections 9A, 9B, 9C, 9D, 9E, 9F, and 9G to read as follows:
	Sec. 9A.  RISK SHARING VALUATION STUDIES. (a)  The pension
	system and the city shall separately cause their respective
	actuaries to prepare a risk sharing valuation study in accordance
	with this section and actuarial standards of practice.  A risk
	sharing valuation study must:
	(1)  be dated as of the first day of the fiscal year in
	which the study is required to be prepared;
	(2)  be included in the pension system's standard
	valuation study prepared annually for the pension system;
	(3)  calculate the unfunded actuarial accrued
	liability of the pension system;
	(4)  be based on actuarial data provided by the pension
	system actuary or, if actuarial data is not provided, on estimates
	of actuarial data;
	(5)  estimate the city contribution rate, taking into
	account any adjustments required under Section 9D or 9E of this
	article for all applicable prior fiscal years;
	(6)  subject to Subsection (g) of this section, be
	based on the following assumptions and methods that are consistent
	with actuarial standards of practice:
	(A)  an ultimate entry age normal actuarial
	method;
	(B)  for purposes of determining the actuarial
	value of assets:
	(i)  except as provided by Subparagraph (ii)
	of this paragraph and Section 9D(c)(1) or 9E(c)(2) of this article,
	an asset smoothing method recognizing actuarial losses and gains
	over a five-year period applied prospectively beginning on the year
	2017 effective date; and
	(ii)  for the initial risk sharing valuation
	study prepared under Section 9B of this article, a marked-to-market
	method applied as of June 30, 2016;
	(C)  closed layered amortization of liability
	layers to ensure that the amortization period for each layer begins
	12 months after the date of the risk sharing valuation study in
	which the liability layer is first recognized;
	(D)  each liability layer is assigned an
	amortization period;
	(E)  each liability loss layer amortized over a
	period of 30 years from the first day of the fiscal year beginning
	12 months after the date of the risk sharing valuation study in
	which the liability loss layer is first recognized, except that the
	legacy liability must be amortized from July 1, 2016, for a 30-year
	period beginning July 1, 2017;
	(F)  the amortization period for each liability
	gain layer being:
	(i)  equal to the remaining amortization
	period on the largest remaining liability loss layer and the two
	layers must be treated as one layer such that if the payoff year of
	the liability loss layer is accelerated or extended, the payoff
	year of the liability gain layer is also accelerated or extended; or
	(ii)  if there is no liability loss layer, a
	period of 30 years from the first day of the fiscal year beginning
	12 months after the date of the risk sharing valuation study in
	which the liability gain layer is first recognized;
	(G)  liability layers, including the legacy
	liability, funded according to the level percent of payroll method;
	(H)  the assumed rate of return, subject to
	adjustment under Section 9D(c)(2) of this article or, if Section
	9B(g) of this article applies, adjustment in accordance with a
	written agreement entered into under Section 27 of this article,
	except the assumed rate of return may not exceed seven percent per
	annum;
	(I)  the price inflation assumption as of the most
	recent actuarial experience study, which may be reset by the board
	by plus or minus 50 basis points based on that actuarial experience
	study;
	(J)  projected salary increases and payroll
	growth rate set in consultation with the city's finance director;
	and
	(K)  payroll for purposes of determining the
	corridor midpoint and city contribution rate must be projected
	using the annual payroll growth rate assumption, which for purposes
	of preparing any amortization schedule may not exceed three
	percent; and
	(7)  be revised and restated, if appropriate, not later
	than:
	(A)  the date required by a written agreement
	entered into between the city and the board; or
	(B)  the 30th day after the date required action
	is taken by the board under Section 9D or 9E of this article to
	reflect any changes required by either section.
	(b)  As soon as practicable after the end of a fiscal year,
	the pension system actuary at the direction of the pension system
	and the city actuary at the direction of the city shall separately
	prepare a proposed risk sharing valuation study based on the fiscal
	year that just ended.
	(c)  Not later than September 30 following the end of the
	fiscal year, the pension system shall provide to the city actuary,
	under a confidentiality agreement with the board in which the city
	actuary agrees to comply with the confidentiality provisions of
	Section 29 of this article, the actuarial data described by
	Subsection (a)(4) of this section.
	(d)  Not later than the 150th day after the last day of the
	fiscal year:
	(1)  the pension system actuary, at the direction of
	the pension system, shall provide the proposed risk sharing
	valuation study prepared by the pension system actuary under
	Subsection (b) of this section to the city actuary; and
	(2)  the city actuary, at the direction of the city,
	shall provide the proposed risk sharing valuation study prepared by
	the city actuary under Subsection (b) of this section to the pension
	system actuary.
	(e)  Each actuary described by Subsection (d) of this section
	may provide copies of the proposed risk sharing valuation studies
	to the city or to the pension system, as appropriate.
	(f)  If, after exchanging proposed risk sharing valuation
	studies under Subsection (d) of this section, it is found that the
	difference between the estimated city contribution rate
	recommended in the proposed risk sharing valuation study prepared
	by the pension system actuary and the estimated city contribution
	rate recommended in the proposed risk sharing valuation study
	prepared by the city actuary for the corresponding fiscal year is:
	(1)  less than or equal to two percentage points, the
	estimated city contribution rate recommended by the pension system
	actuary will be the estimated city contribution rate for purposes
	of Subsection (a)(5) of this section, and the proposed risk sharing
	valuation study prepared for the pension system is considered to be
	the final risk sharing valuation study for the fiscal year for the
	purposes of this article; or
	(2)  greater than two percentage points, the city
	actuary and the pension system actuary shall have 20 business days
	to reconcile the difference, provided that without the mutual
	agreement of both actuaries, the difference in the estimated city
	contribution rate recommended by the city actuary and the estimated
	city contribution rate recommended by the pension system actuary
	may not be further increased and:
	(A)  if, as a result of reconciliation efforts
	under this subdivision, the difference is reduced to less than or
	equal to two percentage points:
	(i)  the estimated city contribution rate
	proposed under the reconciliation by the pension system actuary
	will be the estimated city contribution rate for purposes of
	Subsection (a)(5) of this section; and
	(ii)  the pension system's risk sharing
	valuation study is considered to be the final risk sharing
	valuation study for the fiscal year for the purposes of this
	article; or
	(B) if, after 20 business days, the pension system
	actuary and the city actuary are not able to reach a reconciliation
	that reduces the difference to an amount less than or equal to two
	percentage points:
	(i)  the city actuary at the direction of the
	city and the pension system actuary at the direction of the pension
	system each shall deliver to the finance director of the city and
	the executive director of the pension system a final risk sharing
	valuation study with any agreed-to changes, marked as the final
	risk sharing valuation study for each actuary; and
	(ii)  not later than the 90th day before the
	first day of the next fiscal year, the finance director and the
	executive director shall execute a joint addendum to the final risk
	sharing valuation study received by them under Subparagraph (i) of
	this paragraph that is a part of the final risk sharing valuation
	study for the fiscal year for all purposes and reflects the
	arithmetic average of the estimated city contribution rates for the
	fiscal year stated by the city actuary and the pension system
	actuary in the final risk sharing valuation study for purposes of
	Subsection (a)(5) of this section, and for reporting purposes the
	pension system may treat the pension system actuary's risk sharing
	valuation study with the addendum as the final risk sharing
	valuation study.
	(g)  The assumptions and methods used and the types of
	actuarial data and financial information used to prepare the
	initial risk sharing valuation study under Section 9B of this
	article shall be used to prepare each subsequent risk sharing
	valuation study under this section, unless changed based on the
	actuarial experience study conducted under Section 9C of this
	article.
	(h)  The actuarial data provided under Subsection (a)(4) of
	this section may not include the identifying information of
	individual members.
	Sec. 9B.  INITIAL RISK SHARING VALUATION STUDIES; CORRIDOR
	MIDPOINT. (a)  The pension system and the city shall separately
	cause their respective actuaries to prepare an initial risk sharing
	valuation study that is dated as of July 1, 2016, in accordance with
	this section. An initial risk sharing valuation study must:
	(1)  except as otherwise provided by this section, be
	prepared in accordance with Section 9A of this article and, for
	purposes of Section 9A(a)(4) of this article, be based on actuarial
	data as of June 30, 2016, or, if actuarial data is not provided, on
	estimates of actuarial data; and
	(2)  project the corridor midpoint for 31 fiscal years
	beginning with the fiscal year beginning July 1, 2017.
	(b)  If the initial risk sharing valuation study has not been
	prepared consistent with this section before the year 2017
	effective date, as soon as practicable after the year 2017
	effective date:
	(1)  the pension system shall provide to the city
	actuary, under a confidentiality agreement, the necessary
	actuarial data used by the pension system actuary to prepare the
	proposed initial risk sharing valuation study; and
	(2)  not later than the 30th day after the date the
	city's actuary receives the actuarial data:
	(A)  the city actuary, at the direction of the
	city, shall provide a proposed initial risk sharing valuation study
	to the pension system actuary; and
	(B)  the pension system actuary, at the direction
	of the pension system, shall provide a proposed initial risk
	sharing valuation study to the city actuary.
	(c)  If, after exchanging proposed initial risk sharing
	valuation studies under Subsection (b)(2) of this section, it is
	determined that the difference between the estimated city
	contribution rate for any fiscal year recommended in the proposed
	initial risk sharing valuation study prepared by the pension system
	actuary and in the proposed initial risk sharing valuation study
	prepared by the city actuary is:
	(1)  less than or equal to two percentage points, the
	estimated city contribution rate for that fiscal year recommended
	by the pension system actuary will be the estimated city
	contribution rate for purposes of Section 9A(a)(5) of this article;
	or
	(2)  greater than two percentage points, the city
	actuary and the pension system actuary shall have 20 business days
	to reconcile the difference and:
	(A)  if, as a result of reconciliation efforts
	under this subdivision, the difference in any fiscal year is
	reduced to less than or equal to two percentage points, the
	estimated city contribution rate recommended by the pension system
	actuary for that fiscal year will be the estimated city
	contribution rate for purposes of Section 9A(a)(5) of this article;
	or
	(B)  if, after 20 business days, the city actuary
	and the pension system actuary are not able to reach a
	reconciliation that reduces the difference to an amount less than
	or equal to two percentage points for any fiscal year:
	(i)  the city actuary at the direction of the
	city and the pension system actuary at the direction of the pension
	system each shall deliver to the finance director of the city and
	the executive director of the pension system a final initial risk
	sharing valuation study with any agreed-to changes, marked as the
	final initial risk sharing valuation study for each actuary; and
	(ii)  the finance director and the executive
	director shall execute a joint addendum to the final initial risk
	sharing valuation study that is a part of each final initial risk
	sharing valuation study for all purposes and that reflects the
	arithmetic average of the estimated city contribution rate for each
	fiscal year in which the difference was greater than two percentage
	points for purposes of Section 9A(a)(5) of this article, and for
	reporting purposes the pension system may treat the pension system
	actuary's initial risk sharing valuation study with the addendum as
	the final initial risk sharing valuation study.
	(d)  In preparing the initial risk sharing valuation study,
	the city actuary and pension system actuary shall:
	(1)  adjust the actuarial value of assets to be equal to
	the market value of assets as of July 1, 2016;
	(2)  assume the issuance of planned pension obligation
	bonds by December 31, 2017, in accordance with Subsection (j)(2) of
	this section; and
	(3)  assume benefit and contribution changes
	contemplated by this article as of the year 2017 effective date.
	(e)  If the city actuary does not prepare an initial risk
	sharing valuation study for purposes of this section, the pension
	system actuary's initial risk sharing valuation study will be used
	as the final risk sharing valuation study for purposes of this
	article unless the city did not prepare a proposed initial risk
	sharing valuation study because the pension system actuary did not
	provide the necessary actuarial data in a timely manner. If the
	city did not prepare a proposed initial risk sharing valuation
	study because the pension system actuary did not provide the
	necessary actuarial data in a timely manner, the city actuary shall
	have 60 days to prepare the proposed initial risk sharing valuation
	study on receipt of the necessary information.
	(f)  If the pension system actuary does not prepare a
	proposed initial risk sharing valuation study for purposes of this
	section, the proposed initial risk sharing valuation study prepared
	by the city actuary will be the final risk sharing valuation study
	for purposes of this article.
	(g)  The city and the board may agree on a written transition
	plan for resetting the corridor midpoint:
	(1)  if at any time the funded ratio is equal to or
	greater than 100 percent; or
	(2)  for any fiscal year after the payoff year of the
	legacy liability.
	(h)  If the city and the board have not entered into an
	agreement described by Subsection (g) of this section in a given
	fiscal year, the corridor midpoint will be the corridor midpoint
	determined for the 31st fiscal year in the initial risk sharing
	valuation study prepared in accordance with this section.
	(i)  If the city makes a contribution to the pension system
	of at least $5 million more than the amount that would be required
	by Section 9(a) of this article, a liability gain layer with the
	same remaining amortization period as the legacy liability is
	created and the corridor midpoint shall be decreased by the
	amortized amount in each fiscal year covered by the liability gain
	layer produced divided by the projected pensionable payroll.
	(j)  Notwithstanding any other provision of this article,
	including Section 9F of this article:
	(1)  if the city fails to deliver the proceeds of
	pension obligation bonds totaling $750 million on or before March
	31, 2018, the board shall:
	(A)  except as provided by Paragraph (B) of this
	subdivision, immediately rescind, prospectively, any or all
	benefit changes made effective under S.B. No. 2190, Acts of the
	85th Legislature, Regular Session, 2017, as of the year 2017
	effective date; or
	(B)  reestablish the deadline for the delivery of
	pension obligation bond proceeds, which may not be later than May
	31, 2018, reserving the right to rescind the benefit changes
	authorized by this subdivision if the bond proceeds are not
	delivered by the reestablished deadline; and
	(2)  subject to Subsection (k) of this section, if the
	board rescinds benefit changes under Subdivision (1) of this
	subsection or pension obligation bond proceeds are not delivered on
	or before December 31, 2017, the initial risk sharing valuation
	study shall be prepared again and restated without assuming the
	delivery of the pension obligation bond proceeds, the later
	delivery of pension obligation bond proceeds, or the rescinded
	benefit changes, as applicable, and the resulting city contribution
	rate will become effective in the fiscal year following the
	completion of the restated initial risk sharing valuation study.
	(k)  The restated initial risk sharing valuation study
	required under Subsection (j)(2) of this section must be completed
	at least 30 days before the start of the fiscal year:
	(1)  ending June 30, 2019, if the board does not
	reestablish the deadline under Subsection (j)(1) of this section;
	or
	(2)  immediately following the reestablished deadline,
	if the board reestablishes the deadline under Subsection (j)(1) of
	this section and the city fails to deliver the pension obligation
	bond proceeds described by Subsection (j)(1) of this section by the
	reestablished deadline.
	Sec. 9C.  ACTUARIAL EXPERIENCE STUDIES. (a)  At least once
	every four years, the pension system actuary at the direction of the
	pension system shall conduct an actuarial experience study in
	accordance with actuarial standards of practice. The actuarial
	experience study required by this subsection must be completed not
	later than September 30 of the year in which the study is required
	to be conducted.
	(b)  Except as otherwise expressly provided by Sections
	9A(a)(6)(A)-(I) of this article, actuarial assumptions and methods
	used in the preparation of a risk sharing valuation study, other
	than the initial risk sharing valuation study, shall be based on the
	results of the most recent actuarial experience study.
	(c)  Not later than the 180th day before the date the board
	may consider adopting any assumptions and methods for purposes of
	Section 9A of this article, the pension system shall provide the
	city actuary with a substantially final draft of the pension
	system's actuarial experience study, including:
	(1)  all assumptions and methods recommended by the
	pension system's actuary; and
	(2)  summaries of the reconciled actuarial data used in
	creation of the actuarial experience study.
	(d)  Not later than the 60th day after the date the city
	receives the final draft of the pension system's actuarial
	experience study under Subsection (c) of this section, the city
	actuary and pension system actuary shall confer and cooperate on
	reconciling and producing a final actuarial experience study.
	During the period prescribed by this subsection, the pension system
	actuary may modify the recommended assumptions in the draft
	actuarial experience study to reflect any changes to assumptions
	and methods to which the pension system actuary and the city actuary
	agree.
	(e)  At the city actuary's written request, the pension
	system shall provide additional actuarial data used by the pension
	system actuary to prepare the draft actuarial experience study,
	provided that confidential data may only be provided subject to a
	confidentiality agreement in which the city actuary agrees to
	comply with the confidentiality provisions of Section 29 of this
	article.
	(f)  The city actuary at the direction of the city shall
	provide in writing to the pension system actuary and the pension
	system:
	(1)  any assumptions and methods recommended by the
	city actuary that differ from the assumptions and methods
	recommended by the pension system actuary; and
	(2)  the city actuary's rationale for each method or
	assumption the actuary recommends and determines to be consistent
	with standards adopted by the Actuarial Standards Board.
	(g)  Not later than the 30th day after the date the pension
	system actuary receives the city actuary's written recommended
	assumptions and methods and rationale under Subsection (f) of this
	section, the pension system shall provide a written response to the
	city identifying any assumption or method recommended by the city
	actuary that the pension system does not accept. If any assumption
	or method is not accepted, the pension system shall recommend to the
	city the names of three independent actuaries for purposes of this
	section.
	(h)  An actuary may only be recommended, selected, or engaged
	by the pension system as an independent actuary under this section
	if the person:
	(1)  is not already engaged by the city, the pension
	system, or any other fund or pension system authorized under
	Article 6243e.2(1), Revised Statutes, or Chapter 88 (H.B. 1573),
	Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h,
	Vernon's Texas Civil Statutes), to provide actuarial services to
	the city, the pension system, or another fund or pension system
	referenced in this subdivision;
	(2)  is a member of the American Academy of Actuaries;
	and
	(3)  has at least five years of experience as an actuary
	working with one or more public retirement systems with assets in
	excess of $1 billion.
	(i)  Not later than the 20th day after the date the city
	receives the list of three independent actuaries under Subsection
	(g) of this section, the city shall identify and the pension system
	shall hire one of the listed independent actuaries on terms
	acceptable to the city and the pension system to perform a scope of
	work acceptable to the city and the pension system. The city and
	the pension system each shall pay 50 percent of the cost of the
	independent actuary engaged under this subsection. The city shall
	be provided the opportunity to participate in any communications
	between the independent actuary and the pension system concerning
	the engagement, engagement terms, or performance of the terms of
	the engagement.
	(j)  The independent actuary engaged under Subsection (i) of
	this section shall receive on request from the city or the pension
	system:
	(1)  the pension system's draft actuarial experience
	study, including all assumptions and methods recommended by the
	pension system actuary;
	(2)  summaries of the reconciled actuarial data used to
	prepare the draft actuarial experience study;
	(3)  the city actuary's specific recommended
	assumptions and methods together with the city actuary's written
	rationale for each recommendation;
	(4)  the pension system actuary's written rationale for
	its recommendations; and
	(5)  if requested by the independent actuary and
	subject to a confidentiality agreement in which the independent
	actuary agrees to comply with the confidentiality provisions of
	this article, additional confidential actuarial data.
	(k)  Not later than the 30th day after the date the
	independent actuary receives all the requested information under
	Subsection (j) of this section, the independent actuary shall
	advise the pension system and the city whether it agrees with either
	the assumption or method recommended by the city actuary or the
	corresponding method or assumption recommended by the pension
	system actuary, together with the independent actuary's rationale
	for making the determination. During the period prescribed by this
	subsection, the independent actuary may discuss recommendations in
	simultaneous consultation with the pension system actuary and the
	city actuary.
	(l)  The pension system and the city may not seek any
	information from any prospective independent actuary about
	possible outcomes of the independent actuary's review.
	(m)  If an independent actuary has questions or concerns
	regarding an engagement entered into under this section, the
	independent actuary shall simultaneously consult with both the city
	actuary and the pension system actuary regarding the questions or
	concerns. This subsection does not limit the pension system's
	authorization to take appropriate steps to complete the engagement
	of the independent actuary on terms acceptable to both the pension
	system and the city or to enter into a confidentiality agreement
	with the independent actuary, if needed.
	(n)  If the board does not adopt an assumption or method
	recommended by the city actuary to which the independent actuary
	agrees, or recommended by the pension system actuary, the city
	actuary is authorized to use that recommended assumption or method
	in connection with preparation of a subsequent risk sharing
	valuation study under Section 9A of this article until the next
	actuarial experience study is conducted.
	Sec. 9D.  CITY CONTRIBUTION RATE WHEN ESTIMATED CITY
	CONTRIBUTION RATE LOWER THAN CORRIDOR MIDPOINT; AUTHORIZATION FOR
	CERTAIN ADJUSTMENTS. (a)  This section governs the determination
	of the city contribution rate applicable in a fiscal year if the
	estimated city contribution rate is lower than the corridor
	midpoint.
	(b)  If the funded ratio is:
	(1)  less than 90 percent, the city contribution rate
	for the fiscal year equals the corridor midpoint; or
	(2)  equal to or greater than 90 percent and the city
	contribution rate is:
	(A)  equal to or greater than the minimum
	contribution rate, the estimated city contribution rate is the city
	contribution rate for the fiscal year; or
	(B)  except as provided by Subsection (e) of this
	section, less than the minimum contribution rate for the
	corresponding fiscal year, the city contribution rate for the
	fiscal year equals the minimum contribution rate achieved in
	accordance with Subsection (c) of this section.
	(c)  For purposes of Subsection (b)(2)(B) of this section,
	the following adjustments shall be applied sequentially to the
	extent required to increase the estimated city contribution rate to
	equal the minimum contribution rate:
	(1)  first, adjust the actuarial value of assets equal
	to the current market value of assets, if making the adjustment
	causes the city contribution rate to increase;
	(2)  second, under a written agreement between the city
	and the board entered into under Section 27 of this article not
	later than April 30 before the first day of the next fiscal year,
	reduce the assumed rate of return;
	(3)  third, under a written agreement between the city
	and the board entered into under Section 27 of this article no later
	than April 30 before the first day of the next fiscal year,
	prospectively restore all or part of any benefit reductions or
	reduce increased employee contributions, in each case made after
	the year 2017 effective date; and
	(4)  fourth, accelerate the payoff year of the existing
	liability loss layers, including the legacy liability, by
	accelerating the oldest liability loss layers first, to an
	amortization period that is not less than 10 years from the first
	day of the fiscal year beginning 12 months after the date of the
	risk sharing valuation study in which the liability loss layer is
	first recognized.
	(d)  If the funded ratio is:
	(1)  equal to or greater than 100 percent:
	(A)  all existing liability layers, including the
	legacy liability, are considered fully amortized and paid;
	(B)  the applicable fiscal year is the payoff year
	for the legacy liability; and
	(C)  for each fiscal year subsequent to the fiscal
	year described by Paragraph (B) of this subdivision, the corridor
	midpoint shall be determined as provided by Section 9B(g) of this
	article; and
	(2)  greater than 100 percent in a written agreement
	between the city and the pension system under Section 27 of this
	article, the pension system may reduce member contributions or
	increase pension benefits if, as a result of the action:
	(A)  the funded ratio is not less than 100
	percent; and
	(B)  the city contribution rate is not more than
	the minimum contribution rate.
	(e)  Except as provided by Subsection (f) of this section, if
	an agreement under Subsection (d) of this section is not reached on
	or before April 30 before the first day of the next fiscal year,
	before the first day of the next fiscal year the board shall reduce
	member contributions and implement or increase cost of living
	adjustments, but only to the extent that the city contribution rate
	is set at or below the minimum contribution rate and the funded
	ratio is not less than 100 percent.
	(f)  If any member contribution reduction or benefit
	increase under Subsection (e) of this section has occurred within
	the previous three fiscal years, the board may not make additional
	adjustments to benefits, and the city contribution rate must be set
	to equal the minimum contribution rate.
	Sec. 9E.  CITY CONTRIBUTION RATE WHEN ESTIMATED CITY
	CONTRIBUTION RATE EQUAL TO OR GREATER THAN CORRIDOR MIDPOINT;
	AUTHORIZATION FOR CERTAIN ADJUSTMENTS. (a)  This section governs
	the determination of the city contribution rate in a fiscal year
	when the estimated city contribution rate is equal to or greater
	than the corridor midpoint.
	(b)  If the estimated city contribution rate is:
	(1)  less than or equal to the maximum contribution
	rate for the corresponding fiscal year, the estimated city
	contribution rate is the city contribution rate; or
	(2)  except as provided by Subsection (d) or (e) of this
	section, greater than the maximum contribution rate for the
	corresponding fiscal year, the city contribution rate equals the
	corridor midpoint achieved in accordance with Subsection (c) of
	this section.
	(c)  For purposes of Subsection (b)(2) of this section, the
	following adjustments shall be applied sequentially to the extent
	required to decrease the estimated city contribution rate to equal
	the corridor midpoint:
	(1)  first, if the payoff year of the legacy liability
	was accelerated under Section 9D(c) of this article, extend the
	payoff year of existing liability loss layers, by extending the
	most recent loss layers first, to a payoff year not later than 30
	years from the first day of the fiscal year beginning 12 months
	after the date of the risk sharing valuation study in which the
	liability loss layer is first recognized; and
	(2)  second, adjust the actuarial value of assets to
	the current market value of assets, if making the adjustment causes
	the city contribution rate to decrease.
	(d)  If the city contribution rate after adjustment under
	Subsection (c) of this section is greater than the third quarter
	line rate:
	(1)  the city contribution rate equals the third
	quarter line rate; and
	(2)  to the extent necessary to comply with Subdivision
	(1) of this subsection, the city and the board shall enter into a
	written agreement under Section 27 of this article to increase
	member contributions and make other benefits or plan changes not
	otherwise prohibited by applicable federal law or regulations.
	(e)  If an agreement under Subsection (d)(2) of this section
	is not reached on or before April 30 before the first day of the next
	fiscal year, before the start of the next fiscal year to which the
	city contribution rate would apply, the board, to the extent
	necessary to set the city contribution rate equal to the third
	quarter line rate, shall:
	(1)  increase member contributions and decrease
	cost-of-living adjustments;
	(2)  increase the normal retirement age; or
	(3)  take any combination of the actions authorized
	under Subdivisions (1) and (2) of this subsection.
	(f)  If the city contribution rate remains greater than the
	corridor midpoint in the third fiscal year after adjustments are
	made in accordance with an agreement under Subsection (d)(2) of
	this section, in that fiscal year the city contribution rate equals
	the corridor midpoint achieved in accordance with Subsection (g) of
	this section.
	(g)  The city contribution rate must be set at the corridor
	midpoint under Subsection (f) of this section by:
	(1)  in the risk sharing valuation study for the third
	fiscal year described by Subsection (f) of this section, adjusting
	the actuarial value of assets to equal the current market value of
	assets, if making the adjustment causes the city contribution rate
	to decrease; and
	(2)  under a written agreement entered into between the
	city and the board under Section 27 of this article:
	(A)  increasing member contributions; and
	(B)  making any other benefits or plan changes not
	otherwise prohibited by applicable federal law or regulations.
	(h)  If an agreement under Subsection (g)(2) of this section
	is not reached on or before April 30 before the first day of the next
	fiscal year, before the start of the next fiscal year, the board, to
	the extent necessary to set the city contribution rate equal to the
	corridor midpoint, shall:
	(1)  increase member contributions and decrease
	cost-of-living adjustments;
	(2)  increase the normal retirement age; or
	(3)  take any combination of the actions authorized
	under Subdivisions (1) and (2) of this subsection.
	Sec. 9F.  UNILATERAL DECISIONS AND ACTIONS PROHIBITED.
	(a)  Notwithstanding Section 6(f) or 5B of this article, the board
	may not change, terminate, or modify Sections 9 through 9E of this
	article.
	(b)  No unilateral decision or action by the board is binding
	on the city and no unilateral decision or action by the city is
	binding on the pension system with respect to the application of
	Sections 9 through 9E of this article unless expressly provided by a
	provision of those sections. Nothing in this subsection is
	intended to limit the powers or authority of the board.
	Sec. 9G.  STATE PENSION REVIEW BOARD; REPORT. (a)  After
	preparing a final risk sharing valuation study under Section 9A or
	9B of this article, the pension system and the city shall jointly
	submit a copy of the study or studies, as appropriate, to the State
	Pension Review Board for a determination that the pension system
	and city are in compliance with this article.
	(b)  Not later than the 30th day after the date an action is
	taken under Section 9D or 9E of this article, the pension system
	shall submit a report to the State Pension Review Board regarding
	any actions taken under those sections.
	(c)  The State Pension Review Board shall notify the
	governor, the lieutenant governor, the speaker of the house of
	representatives, and the legislative committees having principal
	jurisdiction over legislation governing public retirement systems
	if the State Pension Review Board determines the pension system or
	the city is not in compliance with Sections 9 through 9F of this
	article.
	SECTION 2.12.  Article 6243g-4, Revised Statutes, is amended
	by adding Section 10A to read as follows:
	Sec. 10A.  REPORT ON INVESTMENTS BY INDEPENDENT INVESTMENT
	CONSULTANT. (a)  At least once every three years, the board shall
	hire an independent investment consultant, including an
	independent investment consulting firm, to conduct a review of
	pension system investments and submit a report to the board and the
	city concerning that review. The independent investment consultant
	shall review and report on at least the following:
	(1)  the pension system's compliance with its
	investment policy statement, ethics policies, including policies
	concerning the acceptance of gifts, and policies concerning insider
	trading;
	(2)  the pension system's asset allocation, including a
	review and discussion of the various risks, objectives, and
	expected future cash flows;
	(3)  the pension system's portfolio structure,
	including the system's need for liquidity, cash income, real
	return, and inflation protection and the active, passive, or index
	approaches for different portions of the portfolio;
	(4)  investment manager performance reviews and an
	evaluation of the processes used to retain and evaluate managers;
	(5)  benchmarks used for each asset class and
	individual manager;
	(6)  evaluation of fees and trading costs;
	(7)  evaluation of any leverage, foreign exchange, or
	other hedging transaction; and
	(8)  an evaluation of investment-related disclosures
	in the pension system's annual reports.
	(b)  When the board retains an independent investment
	consultant under this section, the pension system may require the
	consultant to agree in writing to maintain the confidentiality of:
	(1)  information provided to the consultant that is
	reasonably necessary to conduct a review under this section; and
	(2)  any nonpublic information provided for the pension
	system for the review.
	(c)  The costs for the investment report required by this
	section must be paid from the fund.
	SECTION 2.13.  Sections 11(a) and (c), Article 6243g-4,
	Revised Statutes, are amended to read as follows:
	(a)  A member who returns to service after an interruption in
	service is eligible for [entitled to] credit for the previous
	service to the extent provided by Section 17 or 19 of this article.
	(c)  A member may not have any service credited for unused
	sick leave, vacation pay, [or] accumulated overtime, or equivalent
	types of pay until the date the member retires, at which time the
	member may apply some or all of the service to satisfy the
	requirements for retirement, although the member otherwise could
	not meet the service requirement without the credit.
	SECTION 2.14.  Section 12, Article 6243g-4, Revised
	Statutes, is amended by amending Subsections (a), (b), (c), (d),
	(e), (h), and (i) and adding Subsections (b-1), (b-2), (b-3),
	(c-1), (c-2), (j), (k), (l), and (m) to read as follows:
	(a)  A member who separates from service after attaining
	normal retirement age [earning 20 or more years of service] is
	eligible to receive a monthly service pension, beginning in the
	month of separation from service. A member who separates from
	service as a classified police officer with the city after November
	23, 1998, after earning 10 or more but less than 20 years of service
	in [any of] the [city's] pension system [systems] and who complies
	with all applicable requirements of Section 19 of this article is
	eligible to receive a monthly service pension, beginning in the
	month the individual attains normal retirement [60 years of] age.
	An individual may not receive a pension under this article while
	still an active member[, except as provided by Subsection (f) of
	this section]. All service pensions end with the month in which the
	retired member dies. The city shall supply all personnel,
	financial, and payroll records necessary to establish the member's
	eligibility for a benefit, the member's credited service, and the
	amount of the benefit. The city must provide those records in the
	format specified by the pension system.
	(b)  Except as otherwise provided by this section, including
	Subsection (b-3) of this section, the monthly service pension of a
	member who:
	(1)  is hired before October 9, 2004, including a
	member hired before October 9, 2004, who involuntarily separated
	from service but has been retroactively reinstated under
	arbitration, civil service, or a court ruling, [that becomes due
	after May 1, 2001,] is equal to the sum of:
	(A)  2.75 percent of the member's final average
	[total direct] pay multiplied by the member's years or partial
	years of service [or, if the member retired before November 24,
	1998, 2.75 percent of the member's base salary,] for [each of] the
	member's first 20 years of service; and
	(B)  [, plus an additional] two percent of the
	member's final average [total direct] pay multiplied by the
	member's years or partial years of service for the member's years of
	service in excess of the 20 years of service described by Paragraph
	(A) of this subdivision; or
	(2)  except as provided by Subdivision (1) of this
	subsection and subject to Subsection (b-3) of this section, is
	hired or rehired as an active member on or after October 9, 2004, is
	equal to the sum of:
	(A)  2.25 percent of the member's final average
	pay multiplied by the member's years or partial years of service for
	the member's first 20 years of service; and
	(B)  two percent of the member's final average pay
	multiplied by the member's years or partial years of service in
	excess of 20 years of service described by Paragraph (A) of this
	subdivision [for each of the member's subsequent years of service,
	computed to the nearest one-twelfth of a year].
	(b-1)  A member who [separates from service after November
	23, 1998, including a member who was a DROP participant, and] begins
	to receive a monthly service pension under Subsection (b)(1) of
	this section shall also receive a one-time lump-sum payment of
	$5,000 at the same time the first monthly pension payment is made.
	The lump-sum payment under this subsection is not available to a
	member who has previously received a $5,000 payment under this
	section or Section 16 of this article. A member described by
	Subsection (b)(2) of this section may not receive the lump-sum
	payment described by this subsection.
	(b-2)  For purposes of Subsections (b) and (b-1) of this
	section, partial years shall be computed to the nearest one-twelfth
	of a year.
	(b-3)  A member's monthly service pension determined under
	Subsection (b)(2) of this section may not exceed 80 percent of the
	member's final average pay.
	(c)  Subject to Subsection (c-2) of this section, beginning
	with the fiscal year ending June 30, 2021, the [The] pension payable
	to a [each] retired member or survivor who is 55 years of age or
	older as of April 1 of the applicable fiscal year, a member or
	survivor who received benefits or survivor benefits before June 8,
	1995, or a survivor of an active member who dies from a cause
	connected with the performance of the member's duties [of the
	pension system] shall be adjusted annually, effective April 1 of
	each year, upward at a rate equal to the most recent five fiscal
	years' smoothed return, as determined by the pension system
	actuary, minus 500 basis points [two-thirds of any percentage
	increase in the Consumer Price Index for All Urban Consumers for the
	preceding year. The amount of the annual adjustment may not be less
	than three percent or more than eight percent of the pension being
	paid immediately before the adjustment, notwithstanding a greater
	or lesser increase in the consumer price index].
	(c-1)  Subject to Subsection (c-2) of this section, for the
	pension system's fiscal years ending June 30, 2018, June 30, 2019,
	and June 30, 2020, the pension payable to each retired member or
	survivor who is 70 years of age or older shall be adjusted annually,
	effective April 1 of each year, upward at a rate equal to the most
	recent five fiscal years' smoothed return, as determined by the
	pension system actuary, minus 500 basis points.
	(c-2)  The percentage rate prescribed by Subsections (c) and
	(c-1) of this section may not be less than zero percent or more than
	four percent, irrespective of the return rate of the pension
	system's investment portfolio.
	(d)  A retired member who receives a service pension under
	this article is eligible [entitled] to receive an additional amount
	each month equal to $150, beginning on the later of the date the
	retired member's pension begins or the date the first monthly
	payment becomes due after June 18, 2001, and continuing until the
	end of the month in which the retired member dies. This amount is
	intended to defray the retired member's group medical insurance
	costs and will be paid directly by the fund to the retired member
	for the retired member's lifetime.
	(e)  At the end of each calendar year beginning after 1998,
	and subject to the conditions provided by this subsection, the
	pension system shall make a 13th benefit payment to each member or
	survivor who is hired or rehired before October 9, 2004, including a
	member hired or rehired before October 9, 2004, who was reinstated
	under arbitration, civil service, or a court ruling after that
	date, and [person] who is receiving a service pension. The amount
	of the 13th payment shall be the same as the last monthly payment
	received by the retiree or survivor before issuance of the payment,
	except the payment received by any person who has been in pay status
	for less than 12 months shall be for a prorated amount determined by
	dividing the amount of the last payment received by 12 and
	multiplying this amount by the number of months the person has been
	in pay status. The 13th payment may be made only for those calendar
	years in which the pension system's funded ratio is 120 percent or
	greater[:
	[(1)     the assets held by the fund will equal or exceed
	its liabilities after the 13th payment is made;
	[(2)     the rate of return on the fund's assets exceeded
	9.25 percent for the last fiscal year ending before the payment; and
	[(3)     the payment will not cause an increase in the
	contribution the city would have been required to make if the 13th
	payment had not been made].
	(h)  Final average [Average total direct] pay for a member
	who retires after participating in a phase-down program in which
	the member receives a periodic payment that is generated from the
	member's accumulated sick time, vacation time, and overtime
	balances shall be based on the final average pay the member received
	on the earlier of the date:
	(1)  immediately preceding the date the member began
	phase-down participation; or
	(2)  if the member began DROP participation on or after
	the year 2017 effective date, the member began participation in
	DROP [highest pay period, excluding any pay for overtime work, in
	the periods during which the member worked full-time before
	participating in the phase-down program].
	(i)  The computation of final average [total direct] pay
	shall be made in accordance with procedures and policies adopted by
	the board.
	(j)  A member participating in the phase-down program,
	defined in the 2011 labor agreement between the city and the police
	officers' union, who has separated from service is eligible to
	receive a monthly service pension as if the member had attained
	normal retirement age.  Notwithstanding any other law, a member
	participating in option A or B of the phase-down program whose
	effective date of entry into DROP is on or before the year 2017
	effective date is, on exiting the phase-down program and separating
	from service, eligible to receive a monthly service pension equal
	to the amount credited to the member's DROP account under Section
	14(d) of this article immediately before the member separated from
	service.
	(k)  If a member is hired on or after October 9, 2004, the
	member may elect to receive a partial lump-sum optional payment
	equal to not more than 20 percent of the actuarial value of the
	member's accrued pension at retirement. The lump-sum payment under
	this subsection shall be actuarially neutral. Notwithstanding any
	other law, if a member elects to receive a lump-sum payment under
	this subsection, the value of the member's monthly service pension
	shall be reduced actuarially to reflect the lump-sum payment.
	(l)  A member who is receiving workers' compensation
	payments or who has received workers' compensation and subsequently
	retires or begins participation in DROP will have the member's
	pension or DROP benefit, as applicable, calculated on the pay that
	the member would have received had the member not been receiving
	workers' compensation benefits.
	(m)  For a member who is promoted or appointed to a position
	above the rank of captain on or after the year 2017 effective date,
	the member's monthly service pension and member contributions shall
	be based on, as determined by the board:
	(1)  the member's pay for the position the member held
	immediately before being promoted or appointed; or
	(2)  the pay of the highest civil rank for classified
	police officers for those members who have no prior service with the
	city, which pay must be calculated based on the three-year average
	prior to retirement.
	SECTION 2.15.  Section 14, Article 6243g-4, Revised
	Statutes, is amended by amending Subsections (b), (c), (d), (e),
	(f-1), (h), (i), (k), and (l) and adding Subsections (c-1) and (c-2)
	to read as follows:
	(b)  An active member who was hired before October 9, 2004,
	including a member hired before October 9, 2004, who has been
	reinstated under arbitration, civil service, or a court ruling
	after that date, and has at least 20 years of service with the
	police department may file with the pension system an election to
	participate in DROP and receive a DROP benefit instead of the
	standard form of pension provided by this article as of the date the
	active member attained 20 years of service. The election may be
	made, under procedures established by the board, by an eligible
	active member who has attained the required years of service. A
	DROP election that is made and accepted by the board may not be
	revoked [before the member's separation from service].
	(c)  The monthly service pension or [and] death benefits of
	an active member who is a DROP participant that were accrued under
	this article as it existed immediately before the year 2017
	effective date remain accrued.
	(c-1)  The monthly service pension or death benefits of an
	active member who becomes a DROP participant on or after the year
	2017 effective date will be determined as if the [active] member had
	separated from service and begun receiving a pension on the
	effective date of the member's DROP election and the[. The active]
	member does not retire but does not accrue additional service
	credit beginning on the effective date of the member's entry into
	DROP.
	(c-2)  For a member who exits DROP on or after the year 2017
	effective date:
	(1)  any [the election, and] increases in the member's
	pay that occur on or after the effective date of the member's entry
	into DROP [that date] may not be used in computing the [active]
	member's monthly service pension; and
	(2)  any[, except as provided by Subsection (l) of this
	section, but] cost-of-living adjustments that occur on or after the
	effective date of the member's entry into DROP [that date] and that
	otherwise would be applicable to the pension will not be made during
	the time the member participates in DROP.
	(d)  The member's DROP benefit is determined as provided by
	this subsection and Subsection (e) of this section. Each month an
	amount equal to the monthly service pension the active member would
	have been eligible [entitled] to receive if the active member had
	separated from service on the effective date of entry into DROP,
	less any amount that is intended to help defray the active member's
	group medical insurance costs as described by Section 12(d) of this
	article, shall be credited to a notional DROP account for the active
	member[, and each month an amount equal to the monthly
	contributions the active member makes to the fund on and after the
	effective date of entry into DROP also shall be credited to the same
	notional DROP account]. In any year in which a 13th payment is made
	to retired members under Section 12(e) of this article, an amount
	equal to the amount of the 13th payment that would have been made to
	the DROP participant if the DROP participant had retired on the date
	of DROP entry will be credited to the DROP account.
	(e)  As of the end of each month an amount is credited to each
	active member's notional DROP account at the rate of one-twelfth of
	a hypothetical earnings rate on amounts in the account. The
	hypothetical earnings rate is determined for each calendar year
	based on the compounded average of the aggregate annual rate of
	return on investments of the pension system for the five
	consecutive fiscal years ending June 30 preceding the calendar year
	to which the earnings rate applies, multiplied by 65 percent. The
	hypothetical earnings rate may not be less than 2.5 percent [zero].
	(f-1)  If a DROP participant separates from service due to
	death, [and] the participant's surviving spouse is eligible [person
	entitled] to receive benefits under Sections 16 and 16A of this
	article and the surviving spouse may elect to receive [does not
	revoke the DROP election,] the DROP benefit [may be received] in the
	form of an additional annuity over the life expectancy of the
	surviving spouse.
	(h)  Instead of beginning to receive a service pension on
	separation from service in accordance with Section 12 of this
	article, a retired member who is a DROP participant may elect to
	have part or all of the amount that would otherwise be paid as a
	monthly service pension, less any amount required to pay the
	retired member's share of group medical insurance costs, credited
	to a DROP account, in which case the additional amounts will become
	eligible to be credited with hypothetical earnings in the same
	manner as the amounts described by Subsection (g) of this section.
	On and after the year 2017 effective date, additional amounts may
	not be credited to a DROP account under this subsection. Any
	amounts credited under this subsection before the year 2017
	effective date shall remain accrued in a retired member's DROP
	account.
	(i)  A retired member who has not attained age 70-1/2,
	whether or not a DROP participant before retirement, may elect to
	have part or all of an amount equal to the monthly service pension
	the retired member would otherwise be entitled to receive, less any
	amount required to pay the retired member's share of group medical
	insurance costs, credited to a DROP account, in which case the
	amounts will become eligible to be credited with hypothetical
	earnings in the same manner as the amounts described by Subsection
	(g) of this section. On and after the year 2017 effective date,
	additional amounts may not be credited to a DROP account under this
	subsection. Any amounts credited under this subsection before the
	year 2017 effective date shall remain accrued in a retired member's
	DROP account [A retired member who has elected to have monthly
	service pension benefits credited to a DROP account under this
	subsection or Subsection (h) of this section may direct that the
	credits stop and the monthly service pension resume at any time.
	However, a retired member who stops the credits at any time after
	September 1, 1999, may not later resume the credits].
	(k)  If a retired member who is [or was] a DROP participant is
	rehired as an employee of the police department, any pension or DROP
	distribution that was being paid shall be suspended and the monthly
	amount described by Subsection (d) of this section will again begin
	to be credited to the DROP account while the member continues to be
	an employee. If the member's DROP account has been completely
	distributed, a new notional account may not [will] be created and
	the monthly amount described by Subsection (d) of this section may
	not be credited to a DROP account on behalf of the member [to
	receive the member's monthly credits. If a retired member who was
	never a DROP participant is rehired as an employee of the police
	department, that member shall be eligible to elect participation in
	DROP on the same basis as any other member].
	(l)  The maximum number of years an active member may
	participate in DROP is 20 years. Except as provided by this
	subsection, after the DROP participant has reached the maximum
	number of years of DROP participation prescribed by this
	subsection, including DROP participants with 20 years or more in
	DROP on or before the year 2017 effective date, the DROP participant
	may not receive the monthly service pension that was credited to a
	notional DROP account but may receive the hypothetical earnings
	rate stated in Subsection (e) of this section. Notwithstanding the
	preceding, a member's DROP account balance before the year 2017
	effective date may not be reduced under the preceding provisions of
	this subsection [The DROP account of each DROP participant who was
	an active member on May 1, 2001, shall be recomputed and adjusted,
	effective on that date, to reflect the amount that would have been
	credited to the account if the member's pension had been computed
	based on 2.75 percent of the member's average total direct pay, or
	base pay if applicable, for each of the member's first 20 years of
	service. The DROP account adjustment shall also include the
	assumed earnings that would have been credited to the account if the
	2.75 percent multiplier for the first 20 years of service had been
	in effect from the time the member became a DROP participant].
	SECTION 2.16.  Section 15, Article 6243g-4, Revised
	Statutes, is amended by amending Subsections (a), (b), (c), (d),
	(e), and (i) and adding Subsections (a-1), (c-1), (l), (m), and (n)
	to read as follows:
	(a)  An active member who becomes totally and permanently
	incapacitated for the performance of the member's duties as a
	result of a bodily injury received in, or illness caused by, the
	performance of those duties shall, on presentation to the board of
	proof of total and permanent incapacity, be retired and shall
	receive an immediate duty-connected disability pension equal to:
	(1)  for members hired or rehired before October 9,
	2004, the greater of 55 percent of the member's final average [total
	direct] pay at the time of retirement or the member's accrued
	service pension; or
	(2)  for members hired or rehired on or after October 9,
	2004, the greater of 45 percent of the member's:
	(A)  final average pay at the time of retirement;
	or
	(B)  accrued service pension.
	(a-1)  If the injury or illness described by Subsection (a)
	of this section involves a traumatic event that directly causes an
	immediate cardiovascular condition resulting in a total
	disability, the member is eligible for a duty-connected disability
	pension. A disability pension granted by the board shall be paid to
	the member for the remainder of the member's life, [or for] as long
	as the incapacity remains, subject to Subsection (e) of this
	section. If a member is a DROP participant at the commencement of
	the member's disability, the member shall have the option of
	receiving the DROP balance in any manner that is approved by the
	board and that satisfies the requirements of Section 401(a)(9) of
	the code and Treasury Regulation Section 1.104-1(b) (26 C.F.R.
	Section 1.104-1) and is otherwise available to any other member
	under this article.
	(b)  A member [with 10 years or more of credited service] who
	becomes totally and permanently incapacitated for the performance
	of the member's duties and is not eligible for either an immediate
	service pension or a duty-connected disability pension is eligible
	for an immediate monthly pension computed in the same manner as a
	service retirement pension but based on final average [total
	direct] pay and service accrued to the date of the disability. The
	pension under this subsection may not be less than:
	(1)  for members hired before October 9, 2004,
	including a member who involuntarily separated from service but has
	been retroactively reinstated under arbitration, civil service, or
	a court ruling,  27.5 percent of the member's final average [total
	direct] pay; or
	(2)  except as provided by Subdivision (1) of this
	subsection, for members hired or rehired on or after October 9,
	2004, 22.5 percent of the member's final average pay.
	(c)  A member hired or rehired before October 9, 2004, who
	becomes eligible [entitled] to receive a disability pension after
	November 23, 1998, is eligible [entitled] to receive:
	(1)  subject to Subsection (c-1) of this section, a
	one-time lump-sum payment of $5,000 at the same time the first
	monthly disability pension payment is made, but only if the member
	has not previously received a $5,000 payment under this section or
	Section 12 of this article; and
	(2)  [. The retired member shall also receive] an
	additional amount each month equal to $150, beginning on the later
	of the date the pension begins or the date the first monthly payment
	becomes due after June 18, 2001, and continuing as long as the
	disability pension continues, to help defray the cost of group
	medical insurance.
	(c-1)  For any year in which a 13th payment is made to retired
	members under Section 12(e) of this article, a 13th payment,
	computed in the same manner and subject to the same conditions,
	shall also be paid to members who have retired under this section.
	(d)  A person may not receive a disability pension unless the
	person files with the board an application for a disability pension
	not later than 180 days after the date of separation from service,
	at which time the board shall have the person examined, not later
	than the 90th day after the date the member files the application,
	by a physician or physicians chosen and compensated by the board.
	The physician shall make a report and recommendations to the board
	regarding the extent of any disability and whether any disability
	that is diagnosed is a duty-connected disability. Except as
	provided by Subsection (j) of this section, a person may not receive
	a disability pension for an injury received or illness incurred
	after separation from service. In accordance with Section 6(g) of
	this article, the board may, through its presiding officer, issue
	process, administer oaths, examine witnesses, and compel witnesses
	to testify as to any matter affecting retirement, disability, or
	death benefits under any pension plan within the pension system.
	(e)  A retired member who has been retired for disability is
	subject at all times to reexamination by a physician chosen and
	compensated by the board and shall submit to further examination as
	the board may require. If a retired member refuses to submit to an
	examination, the board shall [may] order the payments stopped. If a
	retired member who has been receiving a disability pension under
	this section recovers so that in the opinion of the board the
	retired member is able to perform the usual and customary duties
	formerly performed for the police department, and the retired
	member is reinstated or offered reinstatement to the position, or
	hired by another law enforcement agency to a comparable position
	[reasonably comparable in rank and responsibility to the position,
	held at the time of separation from service], the board shall order
	the member's disability pension stopped. A member may apply for a
	normal pension benefit, if eligible, if the member's disability
	benefit payments are stopped by the board under this subsection.
	(i)  Effective for payments that become due after April 30,
	2000, and instead of the disability benefit provided by Subsection
	(a) or[,] (b)[, or (h)] of this section, a member who suffers a
	catastrophic injury shall receive a monthly benefit equal to 100
	percent of the member's final average [total direct] pay determined
	as of the date of retirement, and the member's DROP balance, if any.
	(l)  A disability pension may not be paid to a member for any
	disability if:
	(1)  the disability resulted from an intentionally
	self-inflicted injury or a chronic illness resulting from:
	(A)  an addiction by the member through a
	protracted course of non-coerced ingestion of alcohol, narcotics,
	or prescription drugs not prescribed to the member; or
	(B)  other substance abuse; or
	(2)  except as provided by Subsection (m) of this
	section, the disability was a result of the member's commission of a
	felony.
	(m)  The board may waive Subsection (l)(2) of this section if
	the board determines that facts exist that mitigate denying the
	member's application for a disability pension.
	(n)  A person who fraudulently applies for or receives a
	disability pension may be subject to criminal and civil
	prosecution.
	SECTION 2.17.  Section 16, Article 6243g-4, Revised
	Statutes, is amended to read as follows:
	Sec. 16.  RIGHTS OF SURVIVORS. (a)  For purposes of this
	article, a marriage is considered to exist only if the couple is
	lawfully married under the laws of a state, the District of
	Columbia, a United States territory, or a foreign jurisdiction and
	the marriage would be recognized as a marriage under the laws of at
	least one state, possession, or territory of the United States,
	regardless of domicile [marriage is recorded in the records of the
	recorder's office in the county in which the marriage ceremony was
	performed]. In the case of a common-law marriage, a marriage
	declaration must be signed by the member and the member's
	common-law spouse before a notary public or similar official and
	recorded in the records of the applicable jurisdiction [county
	clerk's office in the county] in which the couple resides at the
	commencement of the marriage.  In addition, a marriage that is
	evidenced by a declaration of common-law marriage signed before a
	notary public or similar official after December 31, 1999, may not
	be treated as effective earlier than the date on which it was signed
	before the notary public or similar official.
	(b)  If a retired member dies after becoming eligible for
	[entitled to] a service or disability pension, the board shall pay
	an immediate monthly benefit as follows:
	(1)  to the surviving spouse for life, if there is a
	surviving spouse, a sum equal to the pension that was being received
	by the retired member at the time of death;
	(2)  to the guardian of any dependent child under 18
	years of age or a child with a disability as long as the dependent
	child complies with the definition of dependent child under Section
	2(7) of this article [children], on behalf of the dependent child
	[children], or directly to a dependent child described by Section
	2(7)(B) of this article, and if there is no spouse eligible for
	[entitled to] an allowance, the sum a surviving spouse would have
	received, to be divided equally among all [the] dependent children
	if there is more than one dependent child; or
	(3)  to any dependent parents for life if no spouse or
	dependent child is eligible for [entitled to] an allowance, the sum
	the spouse would have received, to be divided equally between the
	two parents if there are two dependent parents.
	(c)  If an active [a] member of the pension system who has not
	completed 20 [10] years of service in the police department is
	killed or dies from any cause growing out of or in consequence of
	any act clearly not in the actual performance of the member's
	official duty, the member's surviving spouse, dependent child or
	children, or dependent parent or parents are eligible [entitled] to
	receive an immediate benefit. The benefit is computed in the same
	manner as a service retirement pension but is based on the deceased
	member's service and final average [total direct] pay at the time of
	death. The monthly benefit may not be less than:
	(1)  27.5 percent of the member's final average [total
	direct] pay for members hired before October 9, 2004, including a
	member who involuntarily separated from service but has been
	retroactively reinstated under arbitration, civil service, or a
	court ruling; or
	(2)  22.5 percent of the member's final average pay for
	members hired or rehired on or after October 9, 2004.
	(e)  If any active member is killed or dies from any cause
	growing out of or in consequence of the performance of the member's
	duty, the member's surviving spouse, dependent child or children,
	or dependent parent or parents are eligible [entitled] to receive
	immediate benefits computed in accordance with Subsection (b) of
	this section, except that the benefit [payable to the spouse, or to
	the guardian of the dependent child or children if there is no
	surviving spouse, or the dependent parent or parents if there is no
	surviving spouse or dependent child,] is equal to 100 percent of the
	member's final average [total direct] pay, computed as of the date
	of death.
	(f)  A surviving spouse who receives a survivor's benefit
	under this article is eligible [entitled] to receive an additional
	amount each month equal to $150, beginning with the later of the
	date the first payment of the survivor's benefit is due or the date
	the first monthly payment becomes due after June 18, 2001, and
	continuing until the end of the month in which the surviving spouse
	dies.
	(g)  A surviving spouse or dependent who becomes eligible to
	receive benefits with respect to an active member who was hired or
	rehired before October 9, 2004, who dies in active service after
	November 23, 1998, is eligible [entitled] to receive a one-time
	lump-sum payment of $5,000 at the time the first monthly pension
	benefit is paid, if the member has not already received a $5,000
	lump-sum payment under Section 12 or 15(c) of this article. If more
	than one dependent is eligible to receive a payment under this
	subsection, the $5,000 shall be divided equally among the eligible
	dependents. This payment has no effect on the amount of the
	surviving spouse's or dependents' monthly pension and may not be
	paid more than once.
	(h)  The monthly benefits of surviving spouses or dependents
	provided under this section, except the $150 monthly payments
	described by Subsection (f) of this section, shall be increased
	annually at the same time and by the same percentage as the pensions
	of retired members are increased in accordance with Section 12(c)
	or 12(c-1) of this article. Also, for any year in which a 13th
	payment is made pursuant to Section 12(e) of this article, a 13th
	payment, computed in the same manner and subject to the same
	conditions, shall also be made to the survivor [survivors] who is
	eligible [are entitled] to receive death benefits at that time if
	the member would have been entitled to a 13th payment, if living.
	(i)  If a member or individual receiving a survivor's pension
	dies before monthly payments have been made for at least five years,
	leaving no person otherwise eligible [entitled] to receive further
	monthly payments with respect to the member, the monthly payments
	shall continue to be made [to the designated beneficiary of the
	member or survivor, or to the estate of the member or survivor if a
	beneficiary was not designated,] in the same amount as the last
	monthly payment made to the member or[,] survivor[, or estate,]
	until payments have been made for five years with respect to the
	member. The payments shall be made to the spouse of the member, if
	living, and if no spouse is living, to the natural or adopted
	children of the member, to be divided equally among the children if
	the member has more than one child. If the member has no spouse or
	children who are living, the benefit may not be paid. If the member
	dies after becoming eligible to receive benefits [vested] but
	before payments begin, leaving no survivors eligible for benefits,
	the amount of each monthly payment over the five-year period shall
	be the same as the monthly payment the member would have received if
	the member had taken disability retirement on the date of the
	member's death and shall be paid to the member's spouse or children
	in the manner provided by this subsection. If the member has no
	spouse or children who are living, then the benefit may not be paid
	[A member may designate a beneficiary in lieu of the member's estate
	to receive the remaining payments in the event the member and all
	survivors die before payments have been received for five years].
	The member's estate or a beneficiary who is not a survivor or
	dependent is not eligible [entitled] to receive the payment
	described by Subsection (g) of this section.
	(j)  A benefit payment made in accordance with this section
	on behalf of a minor or other person under a legal disability fully
	discharges the pension system's obligation to that person.
	(k)  A retired member or surviving spouse may designate a
	beneficiary on a form prescribed by the pension system to receive
	the final monthly payment owed but not received before the member's
	or surviving spouse's death.
	(l)  The board may at any time require a person receiving
	death benefits as a disabled child under this article to undergo a
	medical examination by a physician appointed or selected by the
	board for that purpose.
	SECTION 2.18.  Section 16A, Article 6243g-4, Revised
	Statutes, is amended to read as follows:
	Sec. 16A.  BENEFICIARY DESIGNATION FOR DROP. (a)  Except
	for the marriage requirement described by Section 16(a) of this
	article, the [The] provisions of Section 16 of this article
	pertaining to rights of survivors do not apply to an amount held in
	a member's DROP account. A member who participates in DROP may
	designate a beneficiary in the form and manner prescribed by or on
	behalf of the board to receive the balance of the member's DROP
	account in the event of the member's death, as permitted by Section
	401(a)(9) of the code and the board's policies. A member who is
	married is considered to have designated the member's spouse as the
	member's beneficiary unless the spouse consents, in a notarized
	writing delivered to the board, to the designation of another
	person as beneficiary. If no designated beneficiary survives the
	member, the board shall [may] pay the balance of the member's DROP
	account to the member's beneficiaries in the following order:
	(1)  to the member's spouse;
	(2)  if the member does not have a spouse, to each
	natural or adopted child of the member, or to the guardian of the
	child if the child is a minor or has a disability, in equal shares;
	(3)  if the member does not have a spouse or any
	children, to each surviving parent of the member in equal shares; or
	(4)  if the member has no beneficiaries described by
	Subdivisions (1), (2), and (3) of this subsection, to the estate of
	the member.
	(b)  If a member names a spouse as a beneficiary and is
	subsequently divorced from that spouse, the divorce voids the
	designation of the divorced spouse as the member's beneficiary. A
	designation of a divorced spouse will cause the board to pay any
	balance remaining in the member's DROP account in the order
	prescribed by Subsection (a) of this section.
	(c)  The surviving spouse may designate a beneficiary on a
	form prescribed by the pension system to receive the balance of the
	DROP account owed but not received before the surviving spouse's
	death.
	(d)  Payment of the balance of the member's DROP account made
	in accordance with this section on behalf of a minor or other person
	under a legal disability fully discharges the pension system's
	obligation to that person.
	SECTION 2.19.  Section 17, Article 6243g-4, Revised
	Statutes, is amended by amending Subsections (b), (d), and (e) and
	adding Subsection (i) to read as follows:
	(b)  A member of the pension system who has not completed 20
	years of service at the time of separation from service with the
	police department is eligible for [entitled to] a refund of the
	total of the contributions the member made to the pension system,
	plus any amount that was contributed for the member by the city and
	not applied in accordance with this section to provide the member
	with 10 years of service. The refund does not include interest, and
	neither the city nor the member is eligible for [entitled to] a
	refund of the contributions the city made on the member's behalf,
	except as expressly provided by this subsection. By receiving the
	refund, the member forfeits any service earned before separation
	from service, even if it is otherwise nonforfeitable.
	(d)  A member must apply to the board for a refund within one
	year after the date of separation from service. Failure to apply
	for the refund within the one-year period results in a forfeiture of
	the right to the refund except for an inactive member who is
	eligible for a pension [whose right to a pension is
	nonforfeitable]. However, the board may reinstate any amount
	forfeited and allow the refund on application by the former member.
	(e)  Heirs, executors, administrators, personal
	representatives, or assignees are not eligible [entitled] to apply
	for and receive the refund authorized by this section [except as
	provided by Section 16(c) of this article].
	(i)  Former members reemployed on or after October 9, 2004,
	or current members who left service after October 9, 2004, if
	reemployed by the city, may purchase prior service credit at a rate
	of interest equal to 2.25 percent per year. Active members hired
	before October 9, 2004, who have not yet purchased prior service
	credit or members hired before October 9, 2004, who involuntarily
	separated from service but have been retroactively reinstated under
	arbitration, civil service, or a court ruling may purchase prior
	service credit at a rate of interest equal to 2.75 percent per year.
	The board may adopt rules necessary to implement this section.
	SECTION 2.20.  Section 18(a), Article 6243g-4, Revised
	Statutes, is amended to read as follows:
	(a)  Except as provided by this section:
	(1)  credit may not be allowed to any person for service
	with any department in the city other than the police department;
	[and]
	(2)  a person's service will be computed from the date
	of entry into the service of the police department as a classified
	police officer until the date of separation from service with the
	police department; and
	(3)  a member who received service credit for service
	with any department in the city other than the police department and
	who is receiving a monthly pension benefit or who began
	participation in DROP before the year 2017 effective date shall
	continue to have the service credit apply.
	SECTION 2.21.  Sections 19(b) and (d), Article 6243g-4,
	Revised Statutes, are amended to read as follows:
	(b)  A person who rejoins the pension system under this
	section is eligible [entitled] to receive service credit for each
	day of service and work performed by the person in a classified
	position in the police department, except for any period during
	which the person is a DROP participant. The board shall add service
	earned after the transfer to the prior service the active member
	accrued in a classified position in the police department.
	However, the active member may not receive service credit under
	this article, except to the extent provided by Section 18, for
	service performed for the city other than in a classified position
	in the police department.
	(d)  When a member who has transferred as described by this
	section subsequently retires, the retired member is eligible for
	[entitled to] a pension computed on the basis of the combined
	service described by Subsection (b) of this section, after
	deducting any period in which the member was suspended from duty
	without pay, on leave of absence without pay, separated from
	service, or employed by the city in a capacity other than in a
	classified position in the police department.
	SECTION 2.22.  Section 21, Article 6243g-4, Revised
	Statutes, is amended to read as follows:
	Sec. 21.  DETERMINATION OF BENEFITS; PROVISION OF
	INFORMATION. (a)  The board may require any member, survivor, or
	other person or entity to furnish information the board requires
	for the determination of benefits under this article. If a person
	or entity does not cooperate in the furnishing or obtaining of
	information required as provided by this section, the board may
	withhold payment of the pension or other benefits dependent on the
	information.
	(b)  The city, not later than the 14th day after the date the
	city receives a request by or on behalf of the board, shall, unless
	otherwise prohibited by law, supply the pension system with
	personnel, payroll, and financial records in the city's possession
	that the pension system determines necessary to provide pension
	administrative and fiduciary services under this section, to
	establish beneficiaries' eligibility for any benefit, or to
	determine a member's credited service or the amount of any
	benefits, including disability benefits, and such other
	information the pension system may need, including:
	(1)  information needed to verify service, including
	the following information:
	(A)  the date a person is sworn in to a position;
	(B)  the days a person is under suspension;
	(C)  the days a person is absent without pay,
	including the days a person is on maternity leave;
	(D)  the date of a person's termination from
	employment; and
	(E)  the date of a person's reemployment with the
	city;
	(2)  medical records;
	(3)  workers' compensation records and pay information;
	(4)  payroll information;
	(5)  information needed to verify whether a member is
	on military leave; and
	(6)  information regarding phase-down participants,
	including information related to entry date and phase-down plan.
	(c)  The city shall provide any information that may be
	reasonably necessary to enable the pension system to comply with
	administrative services the pension system performs for the city as
	reasonably necessary to obtain any ruling or determination letter
	from the Internal Revenue Service.
	(d)  The information provided by the city shall be
	transmitted to the pension system electronically in a format
	specified by the pension system, to the extent available to the
	city, or in writing if so requested on behalf of the pension system.
	(e)  The pension system shall determine each member's
	credited service and pension benefits on the basis of the personnel
	and financial records of the city and the records of the pension
	system.
	SECTION 2.23.  Section 23, Article 6243g-4, Revised
	Statutes, is amended to read as follows:
	Sec. 23.  MEMBERS IN MILITARY SERVICE. (a)  A member of the
	pension system engaged in active service in a uniformed service may
	not be required to make the monthly payments into the fund and may
	not lose any previous years' service with the city because of the
	uniformed service. The uniformed service shall count as continuous
	service in the police department if the member returns to the city
	police department after discharge from the uniformed service as an
	employee within the period required by the Uniformed Services
	Employment and Reemployment Rights Act of 1994 (38 U.S.C. Section
	4301 et seq.), as amended, and the uniformed service does not exceed
	the period for which a person is eligible [entitled] to have service
	counted pursuant to that Act. Notwithstanding any other provision
	of this article, contributions and benefits shall be paid and
	qualified service for military service shall be determined in
	compliance with Section 414(u) of the code.
	(b)  The city is required to make its payments into the fund
	on behalf of each member while the member is engaged in a uniformed
	service. If a member who has less than 10 years of service in the
	pension system dies directly or indirectly as a result of the
	uniformed service, and without returning to active service, the
	spouse, dependent children, dependent parent, or estate of the
	member is eligible [entitled] to receive a benefit in the same
	manner as described by Section 16(c) of this article.
	SECTION 2.24.  Section 24(b), Article 6243g-4, Revised
	Statutes, is amended to read as follows:
	(b)  Payments due on behalf of a dependent child shall be
	paid to the dependent child's guardian, if any, or if none to the
	person with whom the dependent child is living, except that the
	board may make payments directly to a dependent child in an
	appropriate case and withhold payments otherwise due on behalf of
	any person if the board has reason to believe the payments are not
	being applied on behalf of the person eligible [entitled] to
	receive them. The board may request a court of competent
	jurisdiction to appoint a person to receive and administer the
	payments due to any dependent child or person under a disability.
	SECTION 2.25.  Section 25, Article 6243g-4, Revised
	Statutes, is amended by amending Subsections (b), (c), (d), (g),
	and (h) and adding Subsections (c-1) and (h-1) through (h-13) to
	read as follows:
	(b)  A member or survivor of a member of the pension system
	may not accrue a retirement pension, disability retirement
	allowance, death benefit allowance, DROP benefit, or any other
	benefit under this article in excess of the benefit limits
	applicable to the fund under Section 415 of the code. The board
	shall reduce the amount of any benefit that exceeds those limits by
	the amount of the excess. If total benefits under this fund and the
	benefits and contributions to which any member is eligible
	[entitled] under any other qualified plans maintained by the city
	that employs the member would otherwise exceed the applicable
	limits under Section 415 of the code, the benefits the member would
	otherwise receive from the fund shall be reduced to the extent
	necessary to enable the benefits to comply with Section 415.
	(c)  Subject to Subsection (c-1) of this section, any
	distributee [Any member or survivor] who receives [any distribution
	that is] an eligible rollover distribution [as defined by Section
	402(c)(4) of the code] is eligible [entitled] to have that
	distribution transferred directly to another eligible retirement
	plan of the distributee's [member's or survivor's] choice on
	providing direction to the pension system regarding that transfer
	in accordance with procedures established by the board.
	(c-1)  For purposes of Subsection (c) of this section:
	(1)  "Direct rollover" means a payment by the plan to
	the eligible retirement plan specified by the distributee.
	(2)  "Distributee" means a member or a member's
	surviving spouse or non-spouse designated beneficiary or a member's
	spouse or former spouse who is the alternate payee under a qualified
	domestic relations order with regard to the interest of the spouse
	or former spouse.
	(3)  "Eligible retirement plan" means:
	(A)  an individual retirement account as defined
	by Section 408(a) of the code;
	(B)  an individual retirement annuity as defined
	by Section 408(b) of the code;
	(C)  an annuity plan as described by Section
	403(a) of the code;
	(D)  an eligible deferred compensation plan as
	defined by Section 457(b) of the code that is maintained by an
	eligible employer as described by Section 457(e)(1)(A) of the code;
	(E)  an annuity contract as described by Section
	403(b) of the code;
	(F)  a qualified trust as described by Section
	401(a) of the code that accepts the distributee's eligible rollover
	distribution; and
	(G)  in the case of an eligible rollover
	distribution, for a designated beneficiary that is not the
	surviving spouse, a spouse, or a former spouse who is an alternate
	payee under a qualified domestic relations order, an eligible
	retirement plan means only an individual retirement account or
	individual retirement annuity that is established for the purpose
	of receiving the distribution on behalf of the beneficiary.
	(4)  "Eligible rollover distribution" means any
	distribution of all or any portion of the balance to the credit of
	the distributee, except that an eligible rollover distribution does
	not include:
	(A)  any distribution that is one of a series of
	substantially equal periodic payments, not less frequently than
	annually, made for life or life expectancy of the distributee or the
	joint lives or joint life expectancies of the distributee and the
	distributee's designated beneficiary or for a specified period of
	10 years or more;
	(B)  any distribution to the extent the
	distribution is required under Section 401(a)(9) of the code; or
	(C)  any distribution that is made on hardship of
	the employee.
	(d)  The annual compensation for each member [total salary]
	taken into account for any purpose under this article [for any
	member of the pension system] may not exceed $200,000 for any year
	for an eligible participant, or for years beginning after 2001 for
	an ineligible participant, or $150,000 a year before 2001 for an
	ineligible participant. These dollar limits shall be adjusted from
	time to time in accordance with guidelines provided by the United
	States secretary of the treasury and must comply with Section
	401(a)(17) of the code. For purposes of this subsection, an
	eligible participant is a person who first became an active member
	before 1996, and an ineligible participant is a member who is not an
	eligible participant.
	(g)  Distribution of benefits must begin not later than April
	1 of the year following the calendar year during which the member
	eligible for [entitled to] the benefits becomes 70-1/2 years of age
	or terminates employment with the employer, whichever is later, and
	must otherwise conform to Section 401(a)(9) of the code.
	(h)  For purposes of adjusting any benefit due to the
	limitations prescribed by Section 415 of the code, the following
	provisions shall apply:
	(1)  the 415(b) limitation with respect to any member
	who at any time has been a member in any other defined benefit plan
	as defined in Section 414(j) of the code maintained by the city
	shall apply as if the total benefits payable under all the defined
	benefit plans in which the member has been a member were payable
	from one plan; and
	(2)  the 415(c) limitation with respect to any member
	who at any time has been a member in any other defined contribution
	plan as defined in Section 414(i) of the code maintained by the city
	shall apply as if the total annual additions under all such defined
	contribution plans in which the member has been a member were
	payable from one plan.
	(h-1)  For purposes of adjusting any benefit due to the
	limitations prescribed by Section 415(b) of the code, the following
	provisions shall apply:
	(1)  before January 1, 1995, a member may not receive an
	annual benefit that exceeds the limits specified in Section 415(b)
	of the code, subject to the applicable adjustments in that section;
	(2)  on and after January 1, 1995, a member may not
	receive an annual benefit that exceeds the dollar amount specified
	in Section 415(b)(1)(A) of the code, subject to the applicable
	adjustments in Section 415(b) of the code and subject to any
	additional limits that may be specified in the pension system;
	(3)  in no event may a member's annual benefit payable
	under the pension system, including any DROP benefits, in any
	limitation year be greater than the limit applicable at the annuity
	starting date, as increased in subsequent years pursuant to Section
	415(d) of the code, including regulations adopted under that
	section; and
	(4)  the "annual benefit" means a benefit payable
	annually in the form of a straight life annuity, with no ancillary
	benefits, without regard to the benefit attributable to any
	after-tax employee contributions, unless attributable under
	Section 415(n) of the code, and to rollover contributions as
	defined in Section 415(b)(2)(A) of the code. For purposes of this
	subdivision, the "benefit attributable" shall be determined in
	accordance with applicable federal regulations.
	(h-2)  For purposes of adjustments to the basic limitation
	under Section 415(b) of the code in the form of benefits, the
	following provisions apply:
	(1)  if the benefit under the pension system is other
	than the form specified in Subsections (h-1)(1)-(3) of this
	section, including DROP benefits, the benefit shall be adjusted so
	that it is the equivalent of the annual benefit, using factors
	prescribed in applicable federal regulations; and
	(2)  if the form of benefit without regard to the
	automatic benefit increase feature is not a straight life annuity
	or a qualified joint and survivor annuity, Subdivision (1) of this
	subsection is applied by either reducing the limit under Section
	415(b) of the code applicable at the annuity starting date or
	adjusting the form of benefit to an actuarially equivalent amount
	determined by using the assumptions specified in Treasury
	Regulation Section 1.415(b)-1(c)(2)(ii) that takes into account
	the additional benefits under the form of benefit as follows:
	(A)  for a benefit paid in a form to which Section
	417(e)(3) of the code does not apply, the actuarially equivalent
	straight life annuity benefit that is the greater of:
	(i)  the annual amount of the straight life
	annuity, if any, payable to the member under the pension system
	commencing at the same annuity starting date as the form of benefit
	to the member or the annual amount of the straight life annuity
	commencing at the same annuity starting date that has the same
	actuarial present value as the form of benefit payable to the
	member, computed using a five percent interest assumption or the
	applicable statutory interest assumption; and
	(ii)  for years prior to January 1, 2009, the
	applicable mortality tables described in Treasury Regulation
	Section 1.417(e)-1(d)(2), and for years after December 31, 2008,
	the applicable mortality tables described in Section 417(e)(3)(B)
	of the code; or
	(B)  for a benefit paid in a form to which Section
	417(e)(3) of the code applies, the actuarially equivalent straight
	life annuity benefit that is the greatest of:
	(i)  the annual amount of the straight life
	annuity commencing at the annuity starting date that has the same
	actuarial present value as the particular form of benefit payable,
	computed using the interest rate and mortality table, or tabular
	factor, specified in the plan for actuarial experience;
	(ii)  the annual amount of the straight life
	annuity commencing at the annuity starting date that has the same
	actuarial present value as the particular form of benefit payable,
	computed using a 5.5 percent interest assumption or the applicable
	statutory interest assumption, and for years prior to January 1,
	2009, the applicable mortality tables for the distribution under
	Treasury Regulation Section 1.417(e)-1(d)(2), and for years after
	December 31, 2008, the applicable mortality tables described in
	Section 417(e)(3)(B) of the code; or
	(iii)  the annual amount of the straight
	life annuity commencing at the annuity starting date that has the
	same actuarial present value as the particular form of benefit
	payable computed using the applicable interest rate for the
	distribution under Treasury Regulation Section 1.417(e)-1(d)(3)
	using the rate in effect for the month prior to retirement before
	January 1, 2017, and using the rate in effect for the first day of
	the plan year with a one-year stabilization period on and after
	January 1, 2017, and for years prior to January 1, 2009, the
	applicable mortality tables for the distribution under Treasury
	Regulation Section 1.417(e)-1(d)(2), and for years after December
	31, 2008, the applicable mortality tables described in Section
	417(e)(3)(B) of the code, divided by 1.05.
	(h-3)  The pension system actuary may adjust the limitation
	under Section 415(b) of the code at the annuity starting date in
	accordance with Subsections (h-1) and (h-2) of this section.
	(h-4)  The following are benefits for which no adjustment of
	the limitation in Section 415(b) of the code is required:
	(1)  any ancillary benefit that is not directly related
	to retirement income benefits;
	(2)  the portion of any joint and survivor annuity that
	constitutes a qualified joint and survivor annuity; and
	(3)  any other benefit not required under Section
	415(b)(2) of the code and regulations adopted under that section to
	be taken into account for purposes of the limitation of Section
	415(b)(1) of the code.
	(h-5)  The following provisions apply to other adjustments
	of the limitation under Section 415(b) of the code:
	(1)  in the event the member's pension benefits become
	payable before the member attains 62 years of age, the limit
	prescribed by this section shall be reduced in accordance with
	federal regulations adopted under Section 415(b) of the code, so
	that that limit, as reduced, equals an annual straight life annuity
	benefit when the retirement income benefit begins, that is
	equivalent to a $160,000, as adjusted, annual benefit beginning at
	62 years of age;
	(2)  in the event the member's benefit is based on at
	least 15 years of service as a full-time employee of any police or
	fire department or on 15 years of military service, in accordance
	with Sections 415(b)(2)(G) and (H) of the code, the adjustments
	provided for in Subdivision (1) of this section may not apply; and
	(3)  in accordance with Section 415(b)(2)(I) of the
	code, the reductions provided for in Subdivision (1) of this
	section may not be applicable to preretirement disability benefits
	or preretirement death benefits.
	(h-6)  The following provisions of this subsection govern
	adjustment of the defined benefit dollar limitation for benefits
	commenced after 65 years of age:
	(1)  if the annuity starting date for the member's
	benefit is after 65 years of age and the pension system does not
	have an immediately commencing straight life annuity payable at
	both 65 years of age and the age of benefit commencement, the
	defined benefit dollar limitation at the member's annuity starting
	date is the annual amount of a benefit payable in the form of a
	straight life annuity commencing at the member's annuity starting
	date that is the actuarial equivalent of the defined benefit dollar
	limitation, with actuarial equivalence computed using a five
	percent interest rate assumption and the applicable mortality table
	for that annuity starting date as defined in Section 417(e)(3)(B)
	of the code, expressing the member's age based on completed
	calendar months as of the annuity starting date;
	(2)  if the annuity starting date for the member's
	benefit is after age 65, and the pension system has an immediately
	commencing straight life annuity payable at both 65 years of age and
	the age of benefit commencement, the defined benefit dollar
	limitation at the member's annuity starting date is the lesser of
	the limitation determined under Subdivision (1) of this section and
	the defined benefit dollar limitation multiplied by the ratio of
	the annual amount of the adjusted immediately commencing straight
	life annuity under the pension system at the member's annuity
	starting date to the annual amount of the adjusted immediately
	commencing straight life annuity under the pension system at 65
	years of age, both determined without applying the limitations of
	this subsection; and
	(3)  notwithstanding the other requirements of this
	section:
	(A)  no adjustment shall be made to reflect the
	probability of a member's death between the annuity starting date
	and 62 years of age, or between 65 years of age and the annuity
	starting date, as applicable, if benefits are not forfeited on the
	death of the member prior to the annuity starting date; and
	(B)  to the extent benefits are forfeited on death
	before the annuity starting date, the adjustment shall be made, and
	for this purpose no forfeiture shall be treated as occurring on the
	member's death if the pension system does not charge members for
	providing a qualified preretirement survivor annuity, as defined in
	Section 417(c) of the code, on the member's death.
	(h-7)  For the purpose of Subsection (h-6)(2) of this
	section, the adjusted immediately commencing straight life annuity
	under the pension system at the member's annuity starting date is
	the annual amount of such annuity payable to the member, computed
	disregarding the member's accruals after 65 years of age but
	including actuarial adjustments even if those actuarial
	adjustments are used to offset accruals, and the adjusted
	immediately commencing straight life annuity under the pension
	system at 65 years of age is the annual amount of the annuity that
	would be payable under the pension system to a hypothetical member
	who is 65 years of age and has the same accrued benefit as the
	member.
	(h-8)  The maximum pension benefits payable to any member who
	has completed less than 10 years of participation shall be the
	amount determined under Subsection (h-1) of this section, as
	adjusted under Subsection (h-2) or (h-5) of this section,
	multiplied by a fraction, the numerator of which is the number of
	the member's years of participation and the denominator of which is
	10. The limit under Subsection (h-9) of this section concerning the
	$10,000 limit shall be similarly reduced for any member who has
	accrued less than 10 years of service, except the fraction shall be
	determined with respect to years of service instead of years of
	participation. The reduction provided by this subsection cannot
	reduce the maximum benefit below 10 percent of the limit determined
	without regard to this subsection. The reduction provided for in
	this subsection may not be applicable to preretirement disability
	benefits or preretirement death benefits.
	(h-9)  Notwithstanding Subsection (h-8) of this section, the
	pension benefit payable with respect to a member shall be deemed not
	to exceed the limit provided by Section 415 of the code if the
	benefits payable, with respect to such member under this pension
	system and under all other qualified defined benefit pension plans
	to which the city contributes, do not exceed $10,000 for the
	applicable limitation year and for any prior limitation year and
	the city has not at any time maintained a qualified defined
	contribution plan in which the member participated.
	(h-10)  On and after January 1, 1995, for purposes of
	applying the limits under Section 415(b) of the code to a member's
	benefit paid in a form to which Section 417(e)(3) of the code does
	not apply, the following provisions apply:
	(1)  a member's applicable limit shall be applied to the
	member's annual benefit in the member's first limitation year
	without regard to any cost-of-living adjustments under Section 12
	of this article;
	(2)  to the extent that the member's annual benefit
	equals or exceeds the limit, the member shall no longer be eligible
	for cost-of-living increases until such time as the benefit plus
	the accumulated increases are less than the limit; and
	(3)  after the time prescribed by Subdivision (2) of
	this subsection, in any subsequent limitation year, a member's
	annual benefit, including any cost-of-living increases under
	Section 12 of this article, shall be tested under the applicable
	benefit limit, including any adjustment under Section 415(d) of the
	code to the dollar limit under Section 415(b)(1)(A) of the code, and
	the regulations under those sections.
	(h-11)  Any repayment of contributions, including interest
	on contributions, to the plan with respect to an amount previously
	refunded on a forfeiture of service credit under the plan or another
	governmental plan maintained by the pension system may not be taken
	into account for purposes of Section 415 of the code, in accordance
	with applicable federal regulations.
	(h-12)  Reduction of benefits or contributions to all plans,
	where required, shall be accomplished by:
	(1)  first, reducing the member's benefit under any
	defined benefit plans in which the member participated, with the
	reduction to be made first with respect to the plan in which the
	member most recently accrued benefits and then in the priority
	determined by the pension system and the plan administrator of such
	other plans; and
	(2)  next, reducing or allocating excess forfeitures
	for defined contribution plans in which the member participated,
	with the reduction to be made first with respect to the plan in
	which the member most recently accrued benefits and then in the
	priority determined by the pension system and the plan
	administrator for such other plans.
	(h-13)  Notwithstanding Subsection (h-12) of this section,
	reductions may be made in a different manner and priority pursuant
	to the agreement of the pension system and the plan administrator of
	all other plans covering such member. [If the amount of any benefit
	is to be determined on the basis of actuarial assumptions that are
	not otherwise specifically set forth for that purpose in this
	article, the actuarial assumptions to be used are those earnings
	and mortality assumptions being used on the date of the
	determination by the pension system's actuary and approved by the
	board. The actuarial assumptions being used at any particular time
	shall be attached as an addendum to a copy of this article and
	treated for all purposes as a part of this article. The actuarial
	assumptions may be changed by the pension system's actuary at any
	time if approved by the board, but a change in actuarial assumptions
	may not result in any decrease in benefits accrued as of the
	effective date of the change.]
	SECTION 2.26.  Section 26(b)(3), Article 6243g-4, Revised
	Statutes, is amended to read as follows:
	(3)  "Maximum benefit" means the retirement benefit a
	retired member and the spouse, dependent child, or dependent parent
	of a retired member or deceased member or retiree are eligible
	[entitled] to receive from all qualified plans in any month after
	giving effect to Section 25(b) of this article and any similar
	provisions of any other qualified plans designed to conform to
	Section 415 of the code.
	SECTION 2.27.  Sections 26(c), (d), and (e), Article
	6243g-4, Revised Statutes, are amended to read as follows:
	(c)  An excess benefit participant who is receiving benefits
	from the pension system is eligible for [entitled to] a monthly
	benefit under this excess benefit plan in an amount equal to the
	lesser of:
	(1)  the member's unrestricted benefit less the maximum
	benefit; or
	(2)  the amount by which the member's monthly benefit
	from the fund has been reduced because of the limitations of Section
	415 of the code.
	(d)  If a spouse, dependent child, or dependent parent is
	eligible for [entitled to] preretirement or postretirement death
	benefits under a qualified plan after the death of an excess benefit
	participant, the surviving spouse, dependent child, or dependent
	parent is eligible for [entitled to] a monthly benefit under the
	excess benefit plan equal to the benefit determined in accordance
	with this article without regard to the limitations under Section
	25(b) of this article or Section 415 of the code, less the maximum
	benefit.
	(e)  Any benefit to which a person is eligible [entitled]
	under this section shall be paid at the same time and in the same
	manner as the benefit would have been paid from the pension system
	if payment of the benefit from the pension system had not been
	precluded by Section 25(b) of this article. An excess benefit
	participant or any beneficiary may not, under any circumstances,
	elect to defer the receipt of all or any part of a payment due under
	this section.
	SECTION 2.28.  The heading to Section 27, Article 6243g-4,
	Revised Statutes, is amended to read as follows:
	Sec. 27.  CERTAIN WRITTEN AGREEMENTS BETWEEN PENSION SYSTEM
	AND CITY AUTHORIZED [AGREEMENT TO CHANGE BENEFITS].
	SECTION 2.29.  Section 27, Article 6243g-4, Revised
	Statutes, is amended by amending Subsection (b) and adding
	Subsection (c) to read as follows:
	(b)  A pension benefit or allowance provided by this article
	may be increased if the increase:
	(1)  is first approved by a qualified actuary selected
	by the board;
	(2)  is approved by the board and the city in a written
	agreement as authorized by this section; and
	(3)  does not deprive a member, without the member's
	written consent, of a right to receive benefits when [that have
	become fully vested and matured in] the member is fully eligible.
	(c)  In a written agreement entered into between the city and
	the board under this section, the parties may not:
	(1)  alter Sections 9 through 9E of this article,
	except and only to the extent necessary to comply with federal law;
	(2)  increase the assumed rate of return to more than
	seven percent per year;
	(3)  extend the amortization period of a liability
	layer to more than 30 years from the first day of the fiscal year
	beginning 12 months after the date of the risk sharing valuation
	study in which the liability layer is first recognized; or
	(4)  allow a city contribution rate in any year that is
	less than or greater than the city contribution rate required under
	Section 9D or 9E of this article, as applicable.
	SECTION 2.30.  Section 29, Article 6243g-4, Revised
	Statutes, is amended by adding Subsections (c), (d), (e), (f), and
	(g) to read as follows:
	(c)  To carry out the provisions of Sections 9 through 9E of
	this article, the board and the pension system shall provide the
	city actuary under a confidentiality agreement the actuarial data
	used by the pension system actuary for the pension system's
	actuarial valuations or valuation studies and other data as agreed
	to between the city and the pension system that the city actuary
	determines is reasonably necessary for the city actuary to perform
	the studies required by Sections 9A through 9E of this article.
	Actuarial data described by this subsection does not include
	information described by Subsection (a) of this section.
	(d)  A risk sharing valuation study prepared by either the
	city actuary or the pension system actuary under Sections 9A
	through 9E of this article may not:
	(1)  include information described by Subsection (a) of
	this section; or
	(2)  provide confidential or private information
	regarding specific individuals or be grouped in a manner that
	allows confidential or private information regarding a specific
	individual to be discerned.
	(e)  The information, data, and document exchanges under
	Sections 9 through 9E of this article have all the protections
	afforded by applicable law and are expressly exempt from the
	disclosure requirements under Chapter 552, Government Code, except
	as may be agreed to by the city and pension system in a written
	agreement under Section 27 of this article.
	(f)  Subsection (e) of this section does not apply to:
	(1)  a proposed risk sharing valuation study prepared
	by the pension system actuary and provided to the city actuary or
	prepared by the city actuary and provided to the pension system
	actuary under Section 9A(d) or 9B(b)(2) of this article; or
	(2)   a final risk sharing valuation study prepared
	under Section 9A or 9B of this article.
	(g)  Before a union contract is approved by the city, the
	mayor of the city must cause the city actuaries to deliver to the
	mayor a report estimating the impact of the proposed union contract
	on fund costs.
	SECTION 2.31.  Article 6243g-4, Revised Statutes, is amended
	by adding Section 30 to read as follows:
	Sec. 30.  FORFEITURE OF BENEFITS. (a)  Notwithstanding any
	other law, a member who is convicted, after exhausting all appeals,
	of an offense punishable as a felony of the first degree in relation
	to, arising out of, or in connection with the member's service as a
	classified police officer may not receive any benefits under this
	article.
	(b)  After the member described by Subsection (a) of this
	section is finally convicted, the member's spouse may apply for
	benefits if the member, but for application of Subsection (a) of
	this section, would have been eligible for a pension benefit or a
	delayed payment of benefits. If the member would not have been
	eligible for a pension benefit or a delayed payment of benefits, the
	member's spouse may apply for a refund of the member's
	contributions. A refund under this subsection does not include
	interest and does not include contributions the city made on the
	member's behalf. The city may not receive a refund of any
	contributions the city made on the member's behalf.
	SECTION 2.32.  Sections 2(19) and (23), 8(b), 12(f), 14(f)
	and (m), 15(h) and (j), and 18(b) and (c), Article 6243g-4, Revised
	Statutes, are repealed.
	SECTION 2.33.  A city and board that have entered into one or
	more agreements under Section 27, Article 6243g-4, Revised
	Statutes, shall agree in writing that any provisions in the
	agreements that specifically conflict with this Act are no longer
	in effect, as of the year 2017 effective date, and any
	nonconflicting provisions of the agreements remain in full force
	and effect.
	SECTION 2.34.  The pension system established under Article
	6243g-4, Revised Statutes, shall require the pension system actuary
	to prepare the first actuarial experience study required under
	Section 9C, Article 6243g-4, Revised Statutes, as added by this
	Act, not later than September 30, 2022.
	ARTICLE 3. MUNICIPAL EMPLOYEES PENSION SYSTEM
	SECTION 3.01.  Section 1, Chapter 88 (H.B. 1573), Acts of the
	77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
	Texas Civil Statutes), is amended by amending Subdivisions (1),
	(4), (5), (7), (11), (14), (18), and (26) and adding Subdivisions
	(1-a), (1-b), (1-c), (1-d), (1-e), (1-f), (4-a), (4-b), (4-c),
	(4-d), (4-e), (4-f), (11-a), (11-b), (11-c), (11-d), (11-e),
	(11-f), (11-g), (11-h), (11-i), (11-j), (11-k), (12-a), (12-b),
	(14-a), (14-b), (17-a), (18-a), (18-b), (20-a), (21-a), (26-a),
	(26-b), (28), (29), (30), and (31) to read as follows:
	(1)  "Actuarial data" includes:
	(A)  the census data, assumption tables,
	disclosure of methods, and financial information that are routinely
	used by the pension system actuary for the pension system's studies
	or an actuarial experience study under Section 8D of this Act; and
	(B)  other data that is reasonably necessary to
	implement Sections 8A through 8F of this Act, as agreed to by the
	city and pension board.
	(1-a)  "Actuarial experience study" has the meaning
	assigned by Section 802.1014, Government Code.
	(1-b)  "Adjustment factor" means the assumed rate of
	return less two percentage points.
	(1-c)  "Amortization period" means the time period
	necessary to fully pay a liability layer.
	(1-d)  "Amortization rate" means the sum of the
	scheduled amortization payments less the city contribution amount
	for a given fiscal year for the liability layers divided by the
	projected pensionable payroll for the same fiscal year.
	(1-e)  "Assumed rate of return" means the assumed
	market rate of return on pension system assets, which is seven
	percent per annum unless adjusted as provided by this Act.
	(1-f)  "Authorized absence" means:
	(A)  each day an employee is absent due to an
	approved holiday, vacation, accident, or sickness, if the employee
	is continued on the employment rolls of the city or the pension
	system, receives the employee's regular salary from the city or the
	pension system for each day of absence, and remains eligible to work
	on recovery or return; or
	(B)  any period that a person is on military leave
	of absence under Section 18(a) of this Act, provided the person
	complies with the requirements of that section.
	(4)  "City" means a municipality having a population of
	more than two [1.5] million.
	(4-a)  "City contribution amount" means, for each
	fiscal year, a predetermined payment amount expressed in dollars in
	accordance with a payment schedule amortizing the legacy liability,
	using the level percent of payroll method and the amortization
	period and payoff year, that is included in the initial risk sharing
	valuation study under Section 8C(a)(3) of this Act, as may be
	restated from time to time in:
	(A)  a subsequent risk sharing valuation study to
	reflect adjustments to the amortization schedule authorized by
	Section 8E or 8F of this Act; or
	(B)  a restated initial risk sharing valuation
	study or a subsequent risk sharing valuation study to reflect
	adjustments authorized by Section 8C(i) or (j) of this Act.
	(4-b)  "City contribution rate" means a percent of
	pensionable payroll that is the sum of the employer normal cost rate
	and the amortization rate for liability layers, excluding the
	legacy liability, except as determined otherwise under the express
	provisions of Sections 8E and 8F of this Act.
	(4-c)  "Corridor" means the range of city contribution
	rates that are:
	(A)  equal to or greater than the minimum
	contribution rate; and
	(B)  equal to or less than the maximum
	contribution rate.
	(4-d)  "Corridor margin" means five percentage points.
	(4-e)  "Corridor midpoint" means the projected city
	contribution rate specified for each fiscal year for 31 years in the
	initial risk sharing valuation study under Section 8C of this Act,
	and as may be adjusted under Section 8E or 8F of this Act, and in
	each case rounded to the nearest hundredths decimal place.
	(4-f)  "Cost-of-living adjustment percentage" means a
	percentage that:
	(A)  except as provided by Paragraph (B), is equal
	to the pension system's five-year investment return, based on a
	rolling five-year basis and net of investment expenses, minus the
	adjustment factor, and multiplied by 50 percent; and
	(B)  may not be less than zero or more than two
	percent.
	(5)  "Credited service" means each day of service and
	prior service of a member for which:
	(A)  the city [has] and[, for service in group A,]
	the member have [has] made required contributions to the pension
	fund that were not subsequently withdrawn;
	(B)  the member has purchased service credit or
	converted service credit from group B to group A by paying into the
	pension fund required amounts that were not subsequently withdrawn;
	(C)  the member has reinstated service under
	Section 7(g) of this Act; and
	(D)  the member has previously made payments to
	the pension fund that, under then existing provisions of law, make
	the member eligible for credit for the service and that were not
	subsequently withdrawn.
	(7)  "Dependent child" means an unmarried natural or
	legally adopted child of a member, deferred participant, or retiree
	who:
	(A)  was supported by the member, deferred
	participant, or retiree before the termination of employment of the
	member, deferred participant, or retiree; and
	(B)  is under 21 years of age or is totally and
	permanently disabled from performing any full-time employment
	because of an injury, illness, serious mental illness, intellectual
	disability, or pervasive development disorder [or retardation]
	that began before the child became 18 years of age and before the
	termination of employment [death] of the member, deferred
	participant, or retiree.
	(11)  "Employee" means any person, including an elected
	official during the official's service to the city, who is eligible
	to be a member of the pension system or to participate in an
	alternative retirement plan established under this Act and:
	(A)  who holds a municipal position or a position
	with the pension system;
	(B)  whose name appears on a regular full-time
	payroll of a city or of the pension fund; and
	(C)  who is paid a regular salary for services.
	(11-a)  "Employer normal cost rate" means the normal
	cost rate minus the applicable member contribution rate for newly
	hired employees, initially set as three percent for group D members
	on the year 2017 effective date.  The present value of additional
	member contributions different from the group D rate taken into
	account for purposes of determining the employer normal cost rate
	must be applied toward the actuarial accrued liability.
	(11-b)  "Estimated city contribution amount" means the
	city contribution amount estimated in a final risk sharing
	valuation study under Section 8B or 8C of this Act, as applicable,
	as required by Section 8B(a)(5) of this Act.
	(11-c)  "Estimated city contribution rate" means the
	city contribution rate estimated in a final risk sharing valuation
	study under Section 8B or 8C of this Act, as applicable, as required
	by Section 8B(a)(5) of this Act.
	(11-d)  "Estimated total city contribution" means the
	total city contribution estimated by the pension system actuary or
	the city actuary, as applicable, by using the estimated city
	contribution rates and the estimated city contribution amounts
	recommended by each actuary for purposes of preparing the initial
	risk sharing valuation study under Section 8C of this Act.
	(11-e)  "Fiscal year," except as provided by Section 1B
	of this Act, means a fiscal year beginning on July 1 and ending on
	June 30.
	(11-f)  "Funded ratio" means the ratio of the pension
	system's actuarial value of assets divided by the pension system's
	actuarial accrued liability.
	(11-g)  "Legacy liability" means the unfunded
	actuarial accrued liability:
	(A)  for the fiscal year ending June 30, 2016,
	reduced to reflect:
	(i)  changes to benefits and contributions
	under this Act that took effect on the year 2017 effective date;
	(ii)  the deposit of pension obligation bond
	proceeds on December 31, 2017, in accordance with Section 8C(j)(2)
	of this Act; and
	(iii)  payments by the city and earnings at
	the assumed rate of return allocated to the legacy liability from
	July 1, 2016, to July 1, 2017, excluding July 1, 2017; and
	(B)  for each subsequent fiscal year:
	(i)  reduced by the city contribution amount
	for that year allocated to the amortization of the legacy
	liability; and
	(ii)  adjusted by the assumed rate of
	return.
	(11-h)  "Level percent of payroll method" means the
	amortization method that defines the amount of the liability layer
	recognized each fiscal year as a level percent of pensionable
	payroll until the amount of the liability layer remaining is
	reduced to zero.
	(11-i)  "Liability gain layer" means a liability layer
	that decreases the unfunded actuarial accrued liability.
	(11-j)  "Liability layer" means the legacy liability
	established in the initial risk sharing valuation study under
	Section 8C of this Act and the unanticipated change as established
	in each subsequent risk sharing valuation study prepared under
	Section 8B of this Act.
	(11-k)  "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.
	(12-a)  "Maximum contribution rate" means the rate
	equal to the corridor midpoint plus the corridor margin.
	(12-b)  "Minimum contribution rate" means the rate
	equal to the corridor midpoint minus the corridor margin.
	(14)  "Military service" means active service in the
	armed forces of the United States or wartime service in the armed
	forces of the United States or in the allied forces, if credit for
	military service has not been granted under any federal or other
	state system or used in any other retirement system, except as
	expressly required under federal law.
	(14-a)  "Normal cost rate" means the salary weighted
	average of the individual normal cost rates determined for the
	current active population, plus the assumed administrative
	expenses determined in the most recent actuarial experience study
	conducted under Section 8D of this Act, expressed as a rate,
	provided the assumed administrative expenses may not exceed 1.25
	percent of pensionable payroll for the current fiscal year unless
	agreed to by the city.
	(14-b)  "Payoff year" means the year a liability layer
	is fully amortized under the amortization period. A payoff year may
	not be extended or accelerated for a period that is less than one
	month.
	(17-a)  "Pension obligation bond" means a bond issued
	in accordance with Chapter 107, Local Government Code.
	(18)  "Pension system," unless the context otherwise
	requires, means the retirement, disability, and survivor benefit
	plans for municipal employees of a city under this Act and employees
	under Section 3(d) of this Act.
	(18-a)  "Pension system actuary" means the actuary
	engaged by the pension system under Section 2B of this Act.
	(18-b)  "Pensionable payroll" means the combined
	salaries, in an applicable fiscal year, paid to all:
	(A)  members; and
	(B)  if applicable, participants in any
	alternative retirement plan established under Section 1C of this
	Act, including a cash balance retirement plan established under
	that section.
	(20-a)  "Price inflation assumption" means:
	(A)  the most recent headline consumer price index
	10-year forecast published in the Federal Reserve Bank of
	Philadelphia Survey of Professional Forecasters; or
	(B)  if the forecast described by Paragraph (A) of
	this subdivision is not available, another standard as determined
	by mutual agreement between the city and the pension board entered
	into under Section 3(n) of this Act.
	(21-a)  "Projected pensionable payroll" means the
	estimated pensionable payroll for the fiscal year beginning 12
	months after the date of the risk sharing valuation study prepared
	under Section 8B of this Act, at the time of calculation by:
	(A)  projecting the prior fiscal year's
	pensionable payroll forward two years using the current payroll
	growth rate assumptions; and
	(B)  adjusting, if necessary, for changes in
	population or other known factors, provided those factors would
	have a material impact on the calculation, as determined by the
	pension board.
	(26)  "Surviving spouse" means a spouse by marriage of
	[person who was married to] a member, deferred participant, or
	retiree at the time of death of the member, deferred participant, or
	retiree and as of the date of [before] separation from service by
	the member, deferred participant, or retiree.
	(26-a)  "Third quarter line rate" means the corridor
	midpoint plus 2.5 percentage points.
	(26-b)  "Total city contribution" means, for a fiscal
	year, an amount equal to the sum of:
	(A)  the city contribution rate multiplied by the
	pensionable payroll for the fiscal year; and
	(B)  the city contribution amount for the fiscal
	year.
	(28)  "Ultimate entry age normal" means an actuarial
	cost method under which a calculation is made to determine the
	average uniform and constant percentage rate of contributions that,
	if applied to the compensation of each member during the entire
	period of the member's anticipated covered service, would be
	required to meet the cost of all benefits payable on the member's
	behalf based on the benefits provisions for newly hired employees.
	For purposes of this definition, the actuarial accrued liability
	for each member is the difference between the member's present
	value of future benefits based on the tier of benefits that apply to
	the member and the member's present value of future normal costs
	determined using the normal cost rate.
	(29)  "Unfunded actuarial accrued liability" means the
	difference between the actuarial accrued liability and the
	actuarial value of assets.  For purposes of this definition:
	(A)  "actuarial accrued liability" means the
	portion of the actuarial present value of projected benefits
	attributed to past periods of member service based on the cost
	method used in the risk sharing valuation study prepared under
	Section 8B or 8C of this Act, as applicable; and
	(B)  "actuarial value of assets" means the value
	of pension plan investments as calculated using the asset smoothing
	method used in the risk sharing valuation study prepared under
	Section 8B or 8C of this Act, as applicable.
	(30)  "Unanticipated change" means, with respect to the
	unfunded actuarial accrued liability in each subsequent risk
	sharing valuation study prepared under Section 8B of this Act, the
	difference between:
	(A)  the remaining balance of all then-existing
	liability layers as of the date of the risk sharing valuation study;
	and
	(B)  the actual unfunded actuarial accrued
	liability as of the date of the risk sharing valuation study.
	(31)  "Year 2017 effective date" means the date on
	which S.B. No. 2190, Acts of the 85th Legislature, Regular Session,
	2017, took effect.
	SECTION 3.02.  Chapter 88 (H.B. 1573), Acts of the 77th
	Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
	Civil Statutes), is amended by adding Sections 1A, 1B, 1C, 1D, and
	1E to read as follows:
	Sec. 1A.  INTERPRETATION OF ACT. This Act does not and may
	not be interpreted to:
	(1)  relieve the city, the pension board, or the
	pension system of their respective obligations under Sections 8A
	through 8F of this Act;
	(2)  reduce or modify the rights of the city, the
	pension system, or the pension board, including any officer or
	employee of the city, pension system, or pension board, to enforce
	obligations described by Subdivision (1) of this subsection;
	(3)  relieve the city, including any official or
	employee of the city, from:
	(A)  paying or directing to pay required
	contributions to the pension system or fund under Section 8 or 8A of
	this Act or carrying out the provisions of Sections 8A through 8F of
	this Act; or
	(B)  reducing or modifying the rights of the
	pension board and any officer or employee of the pension board or
	pension system to enforce obligations described by Subdivision (1)
	of this section;
	(4)  relieve the pension board or pension system,
	including any officer or employee of the pension board or pension
	system, from any obligation to implement a benefit change or carry
	out the provisions of Sections 8A through 8F of this Act; or
	(5)  reduce or modify the rights of the city and any
	officer or employee of the city to enforce an obligation described
	by Subdivision (4) of this section.
	Sec. 1B.  FISCAL YEAR. If either the pension system or the
	city changes its respective fiscal year, the pension system and the
	city shall enter into a written agreement under Section 3(n) of this
	Act to adjust the provisions of Sections 8A through 8F of this Act
	to reflect that change for purposes of this Act.
	Sec. 1C.  ALTERNATIVE RETIREMENT PLANS. (a)  In this
	section, "salary-based benefit plan" means a retirement plan
	provided by the pension system under this Act that provides member
	benefits that are calculated in accordance with a formula that is
	based on multiple factors, one of which is the member's salary at
	the time of the member's retirement.
	(b)  Notwithstanding any other law, including Section 8H of
	this Act, and except as provided by Subsection (c) of this section,
	the pension board and the city may enter into a written agreement
	under Section 3(n) of this Act to offer an alternative retirement
	plan or plans, including a cash balance retirement plan or plans, if
	both parties consider it appropriate.
	(c)  Notwithstanding any other law, including Section 8H of
	this Act, and except as provided by Subsection (d) of this section,
	if, beginning with the final risk sharing valuation study prepared
	under Section 8B of this Act on or after July 1, 2027, either the
	funded ratio of the pension system is less than 60 percent as
	determined in the final risk sharing valuation study without making
	any adjustments under Section 8E or 8F of this Act, or the funded
	ratio of the pension system is less than 60 percent as determined in
	a revised and restated risk sharing valuation study prepared under
	Section 8B(a)(8) of this Act, the pension board and the city shall,
	as soon as practicable but not later than the 60th day after the
	date the determination is made:
	(1)  enter into a written agreement under Section 3(n)
	of this Act to establish a cash balance retirement plan that
	complies with Section 1D of this Act; and
	(2)  require each employee first hired by the city on or
	after the 90th day after the date the cash balance retirement plan
	is established to participate in the cash balance retirement plan
	established under this subsection instead of participating in the
	salary-based benefit plan, provided the employee would have
	otherwise been eligible to participate in the salary-based benefit
	plan.
	(d)  If the city fails to deliver the proceeds of the pension
	obligation bonds described by Section 8C(j)(1) of this Act within
	the time prescribed by that subdivision, notwithstanding the funded
	ratio of the pension system, the pension board and the city may not
	establish a cash balance retirement plan under Subsection (c) of
	this section.
	Sec. 1D.  REQUIREMENTS FOR CERTAIN CASH BALANCE RETIREMENT
	PLANS. (a)  In this section:
	(1)  "Cash balance plan participant" means an employee
	who participates in a cash balance retirement plan.
	(2)  "Cash balance retirement plan" means a cash
	balance retirement plan established by written agreement under
	Section 1C(b) or Section 1C(c) of this Act.
	(3)  "Interest" means the interest credited to a cash
	balance plan participant's notional account, which may not:
	(A)  exceed a percentage rate equal to the cash
	balance retirement plan's most recent five fiscal years' smoothed
	rate of return; or
	(B)  be less than zero percent.
	(4)  "Salary-based benefit plan" has the meaning
	assigned by Section 1C of this Act.
	(b)  The written agreement establishing a cash balance
	retirement plan must:
	(1)  provide for the administration of the cash balance
	retirement plan;
	(2)  provide for a closed amortization period not to
	exceed 20 years from the date an actuarial gain or loss is realized;
	(3)  provide for the crediting of city and cash balance
	plan participant contributions to each cash balance plan
	participant's notional account;
	(4)  provide for the crediting of interest to each cash
	balance plan participant's notional account;
	(5)  include a vesting schedule;
	(6)  include benefit options, including options for
	cash balance plan participants who separate from service prior to
	retirement;
	(7)  provide for death and disability benefits;
	(8)  allow a cash balance plan participant who is
	eligible to retire under the plan to elect to:
	(A)  receive a monthly annuity payable for the
	life of the cash balance plan participant in an amount actuarially
	determined on the date of the cash balance plan participant's
	retirement based on the cash balance plan participant's accumulated
	notional account balance annuitized in accordance with the
	actuarial assumptions and actuarial methods established in the most
	recent actuarial experience study conducted under Section 8D of
	this Act, except that the assumed rate of return applied may not
	exceed the pension system's assumed rate of return in the most
	recent risk sharing valuation study; or
	(B)  receive a single, partial lump-sum payment
	from the cash balance plan participant's accumulated account
	balance and a monthly annuity payable for life in an amount
	determined in accordance with Paragraph (A) of this subdivision
	based on the cash balance plan participant's account balance after
	receiving the partial lump-sum payment; and
	(9)  include any other provision determined necessary
	by:
	(A)  the pension board and the city; or
	(B)  the pension system for purposes of
	maintaining the tax-qualified status of the pension system under
	Section 401, Internal Revenue Code of 1986, as amended.
	(c)  Notwithstanding any other law, including Section 5 of
	this Act, an employee who participates in a cash balance retirement
	plan:
	(1)  subject to Subsection (d) of this section, is not
	eligible to be a member of and may not participate in the
	salary-based benefit plan; and
	(2)  may not earn credited service in the salary-based
	benefit plan during the period the employee is participating in the
	cash balance retirement plan.
	(d)  A cash balance plan participant is considered a member
	for purposes of Section 8A through 8I of this Act.
	(e)  At the time of implementation of the cash balance
	retirement plan, the employer normal cost rate of the cash balance
	retirement plan may not exceed the employer normal cost rate of the
	salary-based benefit plan.
	Sec. 1E.  CONFLICT OF LAW. To the extent of a conflict
	between this Act and any other law, this Act prevails.
	SECTION 3.03.  Section 2, Chapter 88 (H.B. 1573), Acts of the
	77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
	Texas Civil Statutes), is amended by amending Subsections (c), (d),
	(g), (j), (l), and (n) and adding Subsections (c-1), (c-2), (c-3),
	(c-4), (j-1), (j-2), (ee), (ff), (gg), (hh), (ii), and (jj) to read
	as follows:
	(c)  The pension board consists of 11 [nine] trustees as
	follows:
	(1)  one person appointed by the mayor of the city[, or
	the director of the civil service commission as the mayor's
	representative];
	(2)  one person appointed by the controller of the city
	[treasurer or a person performing the duties of treasurer];
	(3)  four municipal employees of the city who are
	members of the pension system;
	(4)  two retirees, each of whom:
	(A)  has at least five years of credited service
	in the pension system;
	(B)  receives a retirement pension from the
	pension system; and
	(C)  is not an officer or employee of the city;
	[and]
	(5)  one person appointed by the elected trustees who[:
	[(A)]  has been a resident of this state for the
	three years preceding the date of initial appointment; and
	(6)  two persons appointed by the governing body of the
	city [(B)  is not a city officer or employee].
	(c-1)  To serve as a trustee under Subsection (c)(1), (2), or
	(6) of this section, a person may not be a participant in or
	beneficiary of the pension system.
	(c-2)  A trustee appointed under Subsection (c)(1), (2),
	(5), or (6) of this section must have expertise in at least one of
	the following areas:  accounting, finance, pensions, investments,
	or actuarial science. Of the trustees appointed under Subsections
	(c)(1), (2), and (6) of this section, not more than two trustees may
	have expertise in the same area.
	(c-3)  A trustee appointed under Subsection (c)(1) of this
	section shall serve a three-year term expiring in July of the
	applicable year. The appointed trustee may be removed at any time
	by the mayor. The mayor shall fill a vacancy caused by the
	trustee's death, resignation, or removal and the person appointed
	to fill the vacancy shall serve the remainder of the unexpired term
	of the replaced trustee and may not serve beyond the expiration of
	the unexpired term unless appointed by the mayor.
	(c-4)  A trustee appointed under Subsection (c)(2) of this
	section shall serve a three-year term expiring in July of the
	applicable year. The appointed trustee may be removed at any time
	by the controller.  The controller shall fill a vacancy caused by
	the trustee's death, resignation, or removal and the person
	appointed to fill the vacancy shall serve the remainder of the
	unexpired term of the replaced trustee and may not serve beyond the
	expiration of the unexpired term unless appointed by the
	controller.
	(d)  To serve as a trustee under Subsection (c)(3) of this
	section, a person must be a member with at least five years of
	credited service and be elected by the active members of the pension
	system voting at an election called by the pension board. No more
	than two of the employee trustees may be employees of the same
	department.
	(g)  To serve as a trustee under Subsection (c)(4) of this
	section, a person must be elected by a majority of the retirees
	voting [retired members of the pension system] at an election
	called by the pension board.
	(j)  To serve as a trustee under Subsection (c)(5) of this
	section, the person must be appointed by a vote of a majority of the
	elected trustees of the pension board.  The trustee appointed under
	Subsection (c)(5) of this section shall serve [serves] a three-year
	[two-year] term. The appointment or reappointment of the appointed
	trustee shall take place in July [January] of the [each
	even-numbered] year in which the term ends. The appointed trustee
	may be removed at any time by a vote of a majority of the elected
	trustees of the pension board. A vacancy caused by the appointed
	trustee's death, resignation, or removal shall be filled by the
	elected trustees of the pension board. The appointee serves for the
	remainder of the unexpired term of the replaced trustee. An
	appointed trustee may not serve beyond the expiration of the
	three-year [two-year] term unless a majority of [other than by
	appointment for a new term by] the elected trustees of the pension
	board reappoint the trustee for a new term.
	(j-1)  To serve as a trustee under Subsection (c)(6) of this
	section, a person must be appointed by a vote of a majority of the
	members of the governing body of the city.  Each trustee appointed
	under Subsection (c)(6) of this section shall serve three-year
	terms expiring in July of the applicable year. A trustee appointed
	under Subsection (c)(6) of this section may be removed at any time
	by a vote of a majority of the members of the governing body of the
	city. A vacancy caused by the appointed trustee's death,
	resignation, or removal shall be filled by a vote of a majority of
	the members of the governing body of the city. A person appointed
	to fill the vacancy shall serve the remainder of the unexpired term
	of the replaced trustee, and may not serve beyond the expiration of
	the unexpired term unless appointed by the governing body of the
	city.
	(j-2)  If a majority of the pension board determines that a
	trustee appointed under Subsection (c)(1), (2), or (6) of this
	section has acted or is acting in a manner that conflicts with the
	interests of the pension system or is in violation of this Act or
	any agreement between the pension board and the city entered into
	under Section 3(n) of this Act, the pension board may recommend to
	the mayor, controller, or governing body, as appropriate, that the
	appointed trustee be removed from the pension board. If the
	appointed trustee was appointed by the governing body of the city,
	an action item concerning the pension board's recommendation shall
	be placed on the governing body's agenda for consideration and
	action.  The governing body shall make a determination on the
	recommendation and communicate the determination to the pension
	system not later than the 45th day after the date of the
	recommendation.
	(l)  To serve on the pension board, each [Each] trustee
	shall, on or before [at] the first pension board meeting following
	the trustee's most recent election or appointment, take an oath of
	office that the trustee:
	(1)  will diligently and honestly administer the
	pension system; and
	(2)  will not knowingly violate this Act or willingly
	allow a violation of this Act to occur.
	(n)  The person serving as a trustee under Subsection (c)(2)
	of this section serves as the treasurer of the pension fund [under
	penalty of that person's official bond and oath of office]. The
	treasurer shall file an [That person's] official bond payable to
	the [city shall cover the person's position as treasurer of the]
	pension system. The treasurer is [fund, and that person's sureties
	are] liable on [for] the treasurer's official bond for the faithful
	performance of the treasurer's duties under this Act in connection
	with [actions pertaining to] the pension fund [to the same extent as
	the sureties are liable under the terms of the bond for other
	actions and conduct of the treasurer].
	(ee)  A trustee appointed under Subsection (c)(1), (2), (5),
	or (6) of this section who fails to attend at least 50 percent of all
	regular pension board meetings, as determined annually each July 1,
	may be removed from the pension board by the appointing entity. A
	trustee removed under this subsection may not be appointed as a
	trustee for one year following removal.
	(ff)  All trustees appointed under Subsection (c) of this
	section shall complete minimum educational training requirements
	established by the State Pension Review Board. The appointing
	entity may remove an appointed trustee who does not complete
	minimum educational training requirements during the period
	prescribed by the State Pension Review Board.
	(gg)  The pension board shall adopt an ethics policy
	governing, among other matters, conflicts of interest that each
	trustee must comply with during the trustee's term on the pension
	board.
	(hh)  During a trustee's term on the pension board and for
	one year after leaving the pension board, a trustee may not
	represent any other person or organization in any formal or
	informal appearance before the pension board or pension system
	staff concerning a matter for which the person has or had
	responsibility as a trustee.
	(ii)  The pension board may establish standing or temporary
	committees as necessary to assist the board in carrying out its
	business, including committees responsible for risk management or
	governance, investments, administration and compensation,
	financial and actuarial matters, audits, disability
	determinations, and agreements under Section 3(n) of this Act. The
	pension board shall establish a committee responsible for
	agreements under Section 3(n) of this Act that must be composed of
	the elected trustees and the trustee appointed by the elected
	trustees.  Except for a committee responsible for agreements under
	Section 3(n) of this Act and any committee responsible for
	personnel issues:
	(1)  each committee must include at least one elected
	trustee and one trustee appointed by the mayor, controller, or
	governing body of the city;
	(2)  committee meetings are open to all trustees; and
	(3)  a committee may not make final decisions and may
	only make recommendations to the pension board.
	(jj)  Subsections (x)(1) through (4), (y), and (cc) of this
	section do not grant the pension board authority to modify or
	terminate Sections 8A through 8F of this Act.
	SECTION 3.04.  Chapter 88 (H.B. 1573), Acts of the 77th
	Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
	Civil Statutes), is amended by adding Sections 2A, 2B, 2C, and 2D to
	read as follows:
	Sec. 2A.  CONFLICTS OF INTEREST.  (a)  The existence or
	appearance of a conflict of interest on the part of any trustee is
	detrimental to the proper functioning of the pension system if not
	properly addressed.  An appointed trustee may not deliberate or
	vote on an action relating to the investment of pension system
	assets if:
	(1)  the trustee or an entity with which the trustee is
	affiliated:
	(A)  is a competitor or an affiliate of the person
	or firm that is the subject of or otherwise under consideration in
	the action; or
	(B)  likely would be subject to a due diligence
	review by the person or firm that is under consideration in the
	investment-related action; or
	(2)  the pension board otherwise determines that the
	proposed action would create a direct or indirect benefit for the
	appointed trustee or a firm with which the appointed trustee is
	affiliated.
	(b)  The city attorney shall:
	(1)  provide annual training to trustees appointed by
	the city regarding conflicts of interest; and
	(2)  to the extent authorized by city ordinances, at
	the request of the external affairs committee of the pension board,
	review and take appropriate action on a complaint alleging a
	conflict of interest on the part of a city-appointed trustee.
	Sec. 2B.  PENSION SYSTEM ACTUARY; ACTUARIAL VALUATIONS.
	(a)  The pension board shall retain an actuary or actuarial firm
	for purposes of this Act.
	(b)  At least annually, the pension system actuary shall make
	a valuation of the assets and liabilities of the pension fund. The
	valuation must include the risk sharing valuation study conducted
	under Section 8B or 8C of this Act, as applicable.
	(c)  The pension system shall provide a report of the
	valuation to the city.
	Sec. 2C.  QUALIFICATIONS OF CITY ACTUARY. (a)  An actuary
	hired by the city for purposes of this Act must be an actuary from a
	professional service firm who:
	(1)  is not already engaged by the pension system or any
	other pension system or fund authorized under Article 6243e.2(1) or
	6243g-4, Revised Statutes, to provide actuarial services to the
	pension system or fund, as applicable;
	(2)  has a minimum of 10 years of professional
	actuarial experience; and
	(3)  is a fellow of the Society of Actuaries or a member
	of the American Academy of Actuaries and who, in carrying out duties
	for the city, has met the applicable requirements to issue
	statements of actuarial opinion.
	(b)  Notwithstanding Subsection (a) of this section, the
	city actuary must at least meet the qualifications required by the
	board for the pension system actuary. The city actuary is not
	required to have greater qualifications than those of the pension
	system actuary.
	Sec. 2D.  REPORT ON INVESTMENTS BY INDEPENDENT INVESTMENT
	CONSULTANT. (a)  At least once every three years, the board shall
	hire an independent investment consultant, including an
	independent investment consulting firm, to conduct a review of
	pension system investments and submit a report to the board and the
	city concerning the review or demonstrate in the pension system's
	annual financial report that the review was conducted. The
	independent investment consultant shall review and report on at
	least the following:
	(1)  the pension system's compliance with its
	investment policy statement, ethics policies, including policies
	concerning the acceptance of gifts, and policies concerning insider
	trading;
	(2)  the pension system's asset allocation, including a
	review and discussion of the various risks, objectives, and
	expected future cash flows;
	(3)  the pension system's portfolio structure,
	including the pension system's need for liquidity, cash income,
	real return, and inflation protection and the active, passive, or
	index approaches for different portions of the portfolio;
	(4)  investment manager performance reviews and an
	evaluation of the processes used to retain and evaluate managers;
	(5)  benchmarks used for each asset class and
	individual manager;
	(6)  an evaluation of fees and trading costs;
	(7)  an evaluation of any leverage, foreign exchange,
	or other hedging transaction; and
	(8)  an evaluation of investment-related disclosures
	in the pension system's annual reports.
	(b)  When the board retains an independent investment
	consultant under this section, the pension system may require the
	consultant to agree in writing to maintain the confidentiality of:
	(1)  information provided to the consultant that is
	reasonably necessary to conduct a review under this section; and
	(2)  any nonpublic information provided for the pension
	system for the review.
	(c)  The costs for the investment report required by this
	section shall be paid from the pension fund.
	SECTION 3.05.  Section 3, Chapter 88 (H.B. 1573), Acts of the
	77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
	Texas Civil Statutes), is amended by amending Subsections (f) and
	(n) and adding Subsections (o), (p), (q), (r), and (s) to read as
	follows:
	(f)  The pension board shall compensate from the pension fund
	the persons performing services under Subsections (d) and (e) of
	this section and may provide other employee benefits that the
	pension board considers proper. Any person employed by the pension
	board under Subsection (d) or (e) of this section who has service
	credits with the pension system at the time of the person's
	employment by the pension board retains the person's status in the
	pension system. Any person employed by the pension system on or
	after January 1, 2008, who does not have service credits with the
	pension system at the time of employment is a group D [A] member in
	accordance with Section 5 of this Act. The pension board shall
	adopt a detailed annual budget detailing its proposed
	administrative expenditures under this subsection for the next
	fiscal year.
	(n)  Notwithstanding any other law and except as
	specifically limited by Subsection (o) of this section, the pension
	board may enter into a written agreement with the city regarding
	pension issues and benefits. The agreement must be approved by the
	pension board and the governing body of the city and signed by the
	mayor and by the pension board or the pension board's designee. The
	agreement is enforceable against and binding on the pension board,
	the city, and the pension system, including the pension system's
	members, retirees, deferred participants, beneficiaries, eligible
	survivors, and alternate payees.  Any reference in this Act to an
	agreement between the city and the pension board or pension system
	is a reference to an agreement entered under this subsection.
	(o)  In any written agreement entered into between the city
	and the pension board under Subsection (n) of this section, the
	parties may not:
	(1)  alter Sections 8A through 8F of this Act, except
	and only to the extent necessary to comply with federal law;
	(2)  increase the assumed rate of return to more than
	seven percent per year;
	(3)  extend the amortization period of a liability
	layer to more than 30 years from the first day of the fiscal year
	beginning 12 months after the date of the risk sharing valuation
	study in which the liability layer is first recognized; or
	(4)  allow a total city contribution in any fiscal year
	that is less than the total city contribution required under
	Section 8E or 8F, as applicable, of this Act.
	(p)  Annually on or before the end of the fiscal year, the
	pension board shall make a report to the mayor and the governing
	body of the city, each of which shall provide a reasonable
	opportunity for the pension board to prepare and present the
	report.
	(q)  The pension board shall provide quarterly investment
	reports to the mayor.
	(r)  At the mayor's request, the pension board shall meet,
	discuss, and analyze with the mayor or the mayor's representatives
	any city proposed policy changes and ordinances that may have a
	financial effect on the pension system.
	(s)  The pension board shall work to reduce administrative
	expenses, including by working with any other pension fund to which
	the city contributes.
	SECTION 3.06.  Section 5, Chapter 88 (H.B. 1573), Acts of the
	77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
	Texas Civil Statutes), is amended by amending Subsections (b), (e),
	(f), and (g) and adding Subsections (j) and (k) to read as follows:
	(b)  Except as provided by Subsection (c), (j), or (k) of
	this section and Sections 4 and 6 of this Act, an employee is a group
	A member of the pension system as a condition of employment if the
	employee:
	(1)  is hired or rehired as an employee by the city, the
	predecessor system, or the pension system on or after September 1,
	1999, and before January 1, 2008;
	(2)  was a member of the predecessor system before
	September 1, 1981, under the terms of Chapter 358, Acts of the 48th
	Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
	Civil Statutes), and did not make an election before December 1,
	1981, under Section 22(a) of that Act to receive a refund of
	contributions and become a group B member;
	(3)  was a group A member who terminated employment
	included in the predecessor system before May 3, 1991, elected
	under Section 16, Chapter 358, Acts of the 48th Legislature,
	Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
	Statutes), to leave the member's contributions in that pension
	fund, met the minimum service requirements for retirement at an
	attained age, was reemployed in a position included in the
	predecessor system before September 1, 1999, and elected, not later
	than the 30th day after the date reemployment began, to continue as
	a group A member;
	(4)  became a member of, or resumed membership in, the
	predecessor system as an employee or elected official of the city
	after January 1, 1996, and before September 1, 1999, and elected by
	submission of a signed and notarized form in a manner determined by
	the pension board to become a group A member and to contribute a
	portion of the person's salary to the pension fund as required by
	Chapter 358, Acts of the 48th Legislature, Regular Session, 1943
	(Article 6243g, Vernon's Texas Civil Statutes); or
	(5)  met the requirements of Section 3B, Chapter 358,
	Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g,
	Vernon's Texas Civil Statutes), or Subsection (f) of this section
	for membership in group A.
	(e)  Any member or former member of the pension system
	elected to an office of the city on or after September 1, 1999, and
	before January 1, 2008, is [becomes] a group A member and is
	eligible to receive credit for all previous service on the same
	conditions as reemployed group A members under Sections 7(c), (d),
	(e), and (f) of this Act, except as otherwise provided by this Act.
	For purposes of this subsection [Notwithstanding any other
	provision in this Act or in Chapter 358, Acts of the 48th
	Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
	Civil Statutes)], consecutive terms of office of any elected member
	who is elected to an office of the city are considered to be
	continuous employment for purposes of this Act.
	(f)  Each group B member of the pension system may make an
	irrevocable election on a date and in a manner determined by the
	pension board to change membership from group B to group A:
	(1)  for future service only; or
	(2)  for future service and to convert all past group B
	service to group A service and comply with the requirements of
	Subsection (h) of this section provided the service is converted
	before December 31, 2005.
	(g)  Each group A member with service in group B may make an
	irrevocable election not later than December 31, 2005, [on a date]
	and in a manner determined by the pension board to convert all group
	B service to group A service and to comply with the requirements of
	Subsection (h) of this section.
	(j)  Except as provided by Subsection (k) of this section or
	Section 4 of this Act, an employee is a group D member of the pension
	system as a condition of employment if the employee is hired as an
	employee by the city or the pension system on or after January 1,
	2008.
	(k)  Notwithstanding any provision of this section, for
	purposes of Subsection (j) of this section:
	(1)  consecutive terms of office of an elected member
	who is elected to an office of the city are considered to be
	continuous employment; and
	(2)  a former employee who is rehired as an employee by
	the city or the pension system on or after January 1, 2008, is, as a
	condition of employment, a member of the group in which that
	employee participated at the time of the employee's immediately
	preceding separation from service.
	SECTION 3.07.  Section 6, Chapter 88 (H.B. 1573), Acts of the
	77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
	Texas Civil Statutes), is amended by adding Subsections (k) and (l)
	to read as follows:
	(k)  Notwithstanding any other law, including Subsection
	(b)(3) of this section, Subsections (a) through (j) of this section
	do not apply to any employee on or after January 1, 2005. An
	employee who meets the definition of "executive official" under
	Subsection (b)(3) of this section is a group A member beginning
	January 1, 2005, for credited service earned on or after January 1,
	2005, or a member of the applicable group under Section 5 of this
	Act. This subsection does not affect:
	(1)  any credited service or benefit percentage accrued
	in group C before January 1, 2005;
	(2)  any group C benefit that a deferred participant or
	retiree is eligible to receive that was earned before January 1,
	2005; or
	(3)  the terms of any obligation to purchase service
	credit or convert service credit to group C that was entered into
	before January 1, 2005.
	(l)  A group C member who terminates employment before
	January 1, 2005, is subject to the retirement eligibility
	requirements in effect on the date of the member's termination from
	employment. A group C member who becomes a group A member under
	Subsection (k) of this section on January 1, 2005, is subject to the
	retirement eligibility requirements under Section 10 of this Act.
	SECTION 3.08.  Section 7, Chapter 88 (H.B. 1573), Acts of the
	77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
	Texas Civil Statutes), is amended by amending Subsections (a), (c),
	(e), (f), (g), and (h) and adding Subsections (g-1), (g-2), (i),
	(j), (k), and (l) to read as follows:
	(a)  Notwithstanding any other provision of this Act,
	duplication of service or credited service in group A, B, [or] C, or
	D of the pension system or in the pension system and any other
	defined benefit pension plan to which the city contributes is
	prohibited.
	(c)  Except as provided by Section 12 of this Act, a [group A]
	member may pay into the pension fund and obtain credit for any
	service with the city or the pension system for which credit is
	otherwise allowable [in group A] under this Act, except that:
	(1)  no required contributions were made by the member
	for the service; or
	(2)  refunded contributions attributable to the
	service have not been subsequently repaid.
	(e)  To establish service described by Subsection (c) of this
	section that occurred on or after September 1, 1999, the member
	shall pay a sum computed by multiplying the member's salary during
	the service by the rate established [by the pension board] for
	member contributions under Section 8 of this Act, and the city shall
	pay into the pension fund an amount equal to the rate established
	for city contributions under Section 8A [8] of this Act [multiplied
	by that member's salary for the same period].
	(f)  In addition to the amounts to be paid by the member under
	Subsection (d) or (e) of this section, the member shall also pay
	interest on those amounts at the current assumed rate of return [six
	percent] per year, not compounded, from the date the contributions
	would have been deducted, if made, or from the date contributions
	were refunded to the date of repayment of those contributions into
	the pension fund.
	(g)  Before the year 2017 effective date, if [If] a group B or
	group D member separates from service before completing five years
	of credited service, the member's service credit is canceled at the
	time of separation. If the member is reemployed by the city in a
	position covered by the pension system before the first anniversary
	of the date of separation, all credit for previous service is
	restored. Any member whose service credit is canceled under this
	subsection and who is reemployed by the city in a position covered
	by the pension system after the first anniversary of the date of
	separation receives one year of previous service credit in group B
	or group D, as applicable, for each full year of subsequent service
	up to the amount of the previous service that was canceled.
	(g-1)  On or after the year 2017 effective date, if a group B
	or group D member who has made required member contributions
	separates from service before completing five years of credited
	service, the member's service credit is canceled at the time of
	separation and the member is eligible to receive a refund of
	required member contributions as provided by Section 17 of this
	Act. If the member is reemployed before the first anniversary of
	the date of separation:
	(1)  subject to Subdivision (2) of this subsection, all
	credit for previous service for which no member contributions were
	required is restored, along with credit for previous service for
	which the member did not receive a refund of contributions; and
	(2)  if the member's service credit is canceled under
	this subsection, the member is eligible to reinstate the canceled
	credited service by paying the pension system the refund amount, if
	any, plus interest on those amounts at the current assumed rate of
	return per year, not compounded, from the date contributions were
	refunded to the date of repayment of those contributions to the
	pension fund.
	(g-2)  For purposes of Subsection (g-1)(2) of this section,
	for any canceled service for which contributions were not required,
	the member receives one year of previous service credit in group B
	or group D, as appropriate, for each full year of subsequent service
	up to the amount of the previous service that was canceled.
	(h)  A group B member who was a group A member before
	September 1, 1981, and who was eligible to purchase credit for
	previous service under Chapter 358, Acts of the 48th Legislature,
	Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
	Statutes), may purchase the service credit in group B by paying into
	the pension fund an amount equal to the assumed rate of return [six
	percent] per year, not compounded, on any contributions previously
	withdrawn for the period from the date of withdrawal to the date of
	purchase.
	(i)  Under rules and procedures adopted by the pension board,
	a group D member may effectuate a direct trustee-to-trustee
	transfer from a qualifying code Section 457(b) plan to the pension
	system to purchase an increased or enhanced benefit in accordance
	with the provisions of code Sections 415(n) and 457(e)(17) of the
	Internal Revenue Code of 1986.  The amount transferred under this
	subsection shall be held by the pension system and the pension
	system may not separately account for the amount.  The pension board
	by rule shall determine the additional benefit that a member is
	entitled to based on a transfer under this subsection.
	(j)  For purposes of this subsection and Subsection (k) of
	this section, "furlough time" means the number of days a person has
	been furloughed. A person who has been voluntarily or
	involuntarily furloughed shall receive credited service for each
	day that the person has been furloughed, provided that:
	(1)  the pension system receives all required city
	contributions and member contributions for the credited service
	attributable to the furlough time for the pay period in which the
	furlough occurs, based on the regular salary that each furloughed
	member would have received if the member had worked during the
	furlough time;
	(2)  the member may receive not more than 10 days of
	credited service in a fiscal year for furlough time; and
	(3)  credited service for furlough time may not be used
	to meet the five-year requirement under Section 10(b) of this Act
	for eligibility for a benefit.
	(k)  For purposes of Subsection (j) of this section, the city
	shall establish a unique pay code for furlough time to provide for
	timely payment of city contributions and member contributions for
	furlough time and to allow the pension system to identify furlough
	time for each furloughed employee.
	(l)  Notwithstanding any provision of this section, the
	interest rate on any service purchase shall be the then current
	assumed rate of return, not compounded.
	SECTION 3.09.  The heading to Section 8, Chapter 88 (H.B.
	1573), Acts of the 77th Legislature, Regular Session, 2001 (Article
	6243h, Vernon's Texas Civil Statutes), is amended to read as
	follows:
	Sec. 8.  MEMBER CONTRIBUTIONS.
	SECTION 3.10.  Sections 8(a), (b), and (c), Chapter 88 (H.B.
	1573), Acts of the 77th Legislature, Regular Session, 2001 (Article
	6243h, Vernon's Texas Civil Statutes), are amended to read as
	follows:
	(a)  Subject to adjustments authorized under Section 8E or 8F
	of this Act, beginning on the year 2017 effective date, each [Each
	group A] member of the pension system shall make biweekly [monthly]
	contributions during employment in an amount determined in
	accordance with this section [by the pension board and expressed as
	a percentage of salary]. The contributions shall be deducted by the
	employer from the salary of each member and paid to the pension
	system for deposit in the pension fund. Member contributions under
	this section shall be made as follows:
	(1)  each group A member shall contribute:
	(A)  seven percent of the member's salary
	beginning with the member's first full biweekly pay period that
	occurs on or after the year 2017 effective date; and
	(B)  a total of eight percent of the member's
	salary beginning with the member's first full biweekly pay period
	for the member that occurs on or after July 1, 2018;
	(2)  each group B member shall contribute:
	(A)  two percent of the member's salary beginning
	with the member's first full biweekly pay period that occurs on or
	after the year 2017 effective date; and
	(B)  a total of four percent of the member's
	salary beginning with the member's first full biweekly pay period
	for the member that occurs on or after July 1, 2018; and
	(3)  each group D member shall contribute two percent
	of the member's salary beginning with the member's first full
	biweekly pay period that occurs on or after the year 2017 effective
	date.
	(b)  This section does not increase or decrease the
	contribution obligation of any member that arose before the year
	2017 effective date [September 1, 2001,] or give rise to any claim
	for a refund for any contributions made before that date.
	(c)  The employer shall pick up the contributions required of
	[group A] members by Subsection (a) of this section and
	contributions required of group D members under Section 10A(a) of
	this Act as soon as reasonably practicable under applicable rules
	for all salaries earned by members after the year 2017 effective
	date and by January 1, 2018, for contributions required by Section
	10A(a) of this Act. The city shall pay the pickup contributions to
	the pension system from the same source of funds that is used for
	paying salaries to the members. The pickup contributions are in
	lieu of contributions by [group A] members. The city may pick up
	those contributions by a deduction from each [group A] member's
	salary equal to the amount of the member's contributions picked up
	by the city. Members may not choose to receive the contributed
	amounts directly instead of having the contributed amounts paid by
	the city to the pension system. An accounting of member
	contributions picked up by the employer shall be maintained, and
	the contributions shall be treated for all other purposes as if the
	amount were a part of the member's salary and had been deducted
	under this section. Contributions picked up under this subsection
	shall be treated as employer contributions in determining tax
	treatment of the amounts under the Internal Revenue Code of 1986, as
	amended.
	SECTION 3.11.  Chapter 88 (H.B. 1573), Acts of the 77th
	Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
	Civil Statutes), is amended by adding Sections 8A, 8B, 8C, 8D, 8E,
	8F, 8G, 8H, and 8I to read as follows:
	Sec. 8A.  CITY CONTRIBUTIONS. (a)  The city shall make
	contributions to the pension system for deposit into the pension
	fund as provided by this section and Section 8B, 8C, 8E, or 8F of
	this Act, as applicable.  The city shall contribute:
	(1)  beginning with the year 2017 effective date and
	ending with the fiscal year ending June 30, 2018, an amount equal to
	the sum of:
	(A)  the city contribution rate, as determined in
	the initial risk sharing valuation study conducted under Section 8C
	of this Act, multiplied by the pensionable payroll for the fiscal
	year; and
	(B)  the city contribution amount for the fiscal
	year; and
	(2)  for each fiscal year after the fiscal year ending
	June 30, 2018, an amount equal to the sum of:
	(A)  the city contribution rate, as determined in
	a subsequent risk sharing valuation study conducted under Section
	8B of this Act and adjusted under Section 8E or 8F of this Act, as
	applicable, multiplied by the pensionable payroll for the
	applicable fiscal year; and
	(B)  except as provided by Subsection (e) of this
	section, the city contribution amount for the applicable fiscal
	year.
	(b)  Except by written agreement between the city and the
	pension board under Section 3(n) of this Act providing for an
	earlier contribution date, at least biweekly, the city shall make
	the contributions required by Subsection (a) of this section by
	depositing with the pension system an amount equal to the sum of:
	(1)  the city contribution rate multiplied by the
	pensionable payroll for the biweekly period; and
	(2)  the city contribution amount for the applicable
	fiscal year divided by 26.
	(c)  With respect to each fiscal year:
	(1)  the first contribution by the city under this
	section for the fiscal year shall be made not later than the date
	payment is made to employees for their first full biweekly pay
	period beginning on or after the first day of the fiscal year; and
	(2)  the final contribution by the city under this
	section for the fiscal year shall be made not later than the date
	payment is made to employees for the final biweekly pay period of
	the fiscal year.
	(d)  In addition to the amounts required under this section,
	the city may at any time contribute additional amounts to the
	pension system for deposit in the pension fund by entering into a
	written agreement with the pension board in accordance with Section
	3(n) of this Act.
	(e)  If, in any given fiscal year, the funded ratio is
	greater than or equal to 100 percent, the city contribution under
	this section may no longer include the city contribution amount.
	(f)  Contributions shall be made under this section by the
	city to the pension system in order to be credited against any
	amortization schedule of payments due to the pension system under
	this Act.
	(g)  Subsection (f) of this section does not affect the
	exclusion of contribution amounts under Subsection (e) of this
	section or changes to an amortization schedule of a liability layer
	under Section 8B(a)(7)(F), 8C(i)-(j), or 8E(c)(3)-(4) of this Act.
	(h)  Notwithstanding any other law and except for the pension
	obligation bond assumed under Section 8C(d)(2) of this Act, the
	city may not issue a pension obligation bond to fund the city
	contribution rate under Subsection (a)(1)(A) or (a)(2)(A) of this
	section or the city contribution amount under Subsection (a)(1)(B)
	or (a)(2)(B) of this section.
	Sec. 8B.  RISK SHARING VALUATION STUDIES. (a)  The pension
	system and the city shall separately cause their respective
	actuaries to prepare a risk sharing valuation study in accordance
	with this section and actuarial standards of practice.  A risk
	sharing valuation study must:
	(1)  be dated as of the first day of the fiscal year for
	which the study is required to be prepared;
	(2)  be included in the annual valuation study prepared
	under Section 2B of this Act;
	(3)  calculate the unfunded actuarial accrued
	liability of the pension system;
	(4)  be based on actuarial data provided by the pension
	system actuary or, if actuarial data is not provided, on estimates
	of actuarial data;
	(5)  estimate the city contribution rate and the city
	contribution amount, taking into account any adjustments required
	under Section 8E or 8F of this Act for all applicable prior fiscal
	years;
	(6)  detail the city contribution rate and the city
	contribution amount, taking into account any adjustments required
	under Section 8E or 8F of this Act for all applicable prior fiscal
	years;
	(7)  subject to Subsection (g) of this section, be
	based on the following assumptions and methods that are consistent
	with actuarial standards of practice:
	(A)  an ultimate entry age normal actuarial
	method;
	(B)  for purposes of determining the actuarial
	value of assets:
	(i)  except as provided by Subparagraph (ii)
	of this paragraph and Section 8E(c)(1) or 8F(c)(1) of this Act, an
	asset smoothing method recognizing actuarial losses and gains over
	a five-year period applied prospectively beginning on the year 2017
	effective date; and
	(ii)  for the initial risk sharing valuation
	study prepared under Section 8C of this Act, a marked-to-market
	method applied as of June 30, 2016;
	(C)  closed layered amortization of liability
	layers to ensure that the amortization period for each layer begins
	12 months after the date of the risk sharing valuation study in
	which the liability layer is first recognized;
	(D)  each liability layer is assigned an
	amortization period;
	(E)  each liability loss layer amortized over a
	period of 30 years from the first day of the fiscal year beginning
	12 months after the date of the risk sharing valuation study in
	which the liability loss layer is first recognized, except that the
	legacy liability must be amortized from July 1, 2016, for a 30-year
	period beginning July 1, 2017;
	(F)  the amortization period for each liability
	gain layer being:
	(i)  equal to the remaining amortization
	period on the largest remaining liability loss layer and the two
	layers must be treated as one layer such that if the payoff year of
	the liability loss layer is accelerated or extended, the payoff
	year of the liability gain layer is also accelerated or extended; or
	(ii)  if there is no liability loss layer, a
	period of 30 years from the first day of the fiscal year beginning
	12 months after the date of the risk sharing valuation study in
	which the liability gain layer is first recognized;
	(G)  liability layers, including the legacy
	liability, funded according to the level percent of payroll method;
	(H)  the assumed rate of return, subject to
	adjustment under Section 8E(c)(5) of this Act or, if Section 8C(g)
	of this Act applies, adjustment in accordance with a written
	agreement entered into under Section 3(n) of this Act, except that
	the assumed rate of return may not exceed seven percent per annum;
	(I)  the price inflation assumption as of the most
	recent actuarial experience study, which may be reset by the
	pension board by plus or minus 50 basis points based on that
	actuarial experience study;
	(J)  projected salary increases and payroll
	growth rate set in consultation with the city's finance director;
	(K)  payroll for purposes of determining the
	corridor midpoint, city contribution rate, and city contribution
	amount must be projected using the annual payroll growth rate
	assumption, which for purposes of preparing any amortization
	schedule may not exceed three percent; and
	(L)  the city contribution rate calculated
	without inclusion of the legacy liability; and
	(8)  be revised and restated, if appropriate, not later
	than:
	(A)  the date required by a written agreement
	entered into between the city and the pension board; or
	(B)  the 30th day after the date required action
	is taken by the pension board under Section 8E or 8F of this Act to
	reflect any changes required by either section.
	(b)  As soon as practicable after the end of a fiscal year,
	the pension system actuary at the direction of the pension system
	and the city actuary at the direction of the city shall separately
	prepare a proposed risk sharing valuation study based on the fiscal
	year that just ended.
	(c)  Not later than October 31 following the end of the
	fiscal year, the pension system shall provide to the city actuary,
	under a confidentiality agreement with the pension board in which
	the city actuary agrees to comply with the confidentiality
	provisions of Section 8G of this Act, the actuarial data described
	by Subsection (a)(4) of this section.
	(d)  Not later than the 150th day after the last day of the
	fiscal year:
	(1)  the pension system actuary, at the direction of
	the pension system, shall provide the proposed risk sharing
	valuation study prepared by the pension system actuary under
	Subsection (b) of this section to the city actuary; and
	(2)  the city actuary, at the direction of the city,
	shall provide the proposed risk sharing valuation study prepared by
	the city actuary under Subsection (b) of this section to the pension
	system actuary.
	(e)  Each actuary described by Subsection (d) of this section
	may provide copies of the proposed risk sharing valuation studies
	to the city or the pension system as appropriate.
	(f)  If, after exchanging proposed risk sharing valuation
	studies under Subsection (d) of this section, it is found that the
	difference between the estimated city contribution rate
	recommended in the proposed risk sharing valuation study prepared
	by the pension system actuary and the estimated city contribution
	rate recommended in the proposed risk sharing valuation study
	prepared by the city actuary for the corresponding fiscal year is:
	(1)  less than or equal to two percentage points, the
	estimated city contribution rate recommended by the pension system
	actuary will be the estimated city contribution rate for purposes
	of Subsection (a)(5) of this section, and the proposed risk sharing
	valuation study prepared for the pension system is considered to be
	the final risk sharing valuation study for the fiscal year for the
	purposes of this Act; or
	(2)  greater than two percentage points, the city
	actuary and the pension system actuary shall have 20 business days
	to reconcile the difference, provided that without the mutual
	agreement of both actuaries, the difference in the estimated city
	contribution rate recommended by the city actuary and the estimated
	city contribution rate recommended by the pension system actuary
	may not be further increased and:
	(A)  if, as a result of reconciliation efforts
	under this subdivision, the difference is reduced to less than or
	equal to two percentage points:
	(i)  the estimated city contribution rate
	proposed under the reconciliation by the pension system actuary
	will be the estimated city contribution rate for purposes of
	Subsection (a)(5) of this section; and
	(ii)  the pension system's risk sharing
	valuation study is considered to be the final risk sharing
	valuation study for the fiscal year for the purposes of this Act; or
	(B)  if, after 20 business days, the pension
	system actuary and the city actuary are not able to reach a
	reconciliation that reduces the difference to an amount less than
	or equal to two percentage points:
	(i)  the city actuary at the direction of the
	city and the pension system actuary at the direction of the pension
	system each shall deliver to the finance director of the city and
	the executive director of the pension system a final risk sharing
	valuation study with any agreed-to changes, marked as the final
	risk sharing valuation study for each actuary; and
	(ii)  not later than the 90th day before the
	first day of the next fiscal year, the finance director and the
	executive director shall execute a joint addendum to the final risk
	sharing valuation study received under Subparagraph (i) of this
	paragraph that is a part of the final risk sharing valuation study
	for the fiscal year for all purposes and reflects the arithmetic
	average of the estimated city contribution rates for the fiscal
	year stated by the city actuary and the pension system actuary in
	the final risk sharing valuation study for purposes of Subsection
	(a)(5) of this section, and for reporting purposes the pension
	system may treat the pension system actuary's risk sharing
	valuation study with the addendum as the final risk sharing
	valuation study.
	(g)  The assumptions and methods used and the types of
	actuarial data and financial information used to prepare the
	initial risk sharing valuation study under Section 8C of this Act
	shall be used to prepare each subsequent risk sharing valuation
	study under this section, unless changed based on the actuarial
	experience study conducted under Section 8D of this Act.
	(h)  The actuarial data provided under Subsection (a)(4) of
	this section may not include the identifying information of
	individual members.
	Sec. 8C.  INITIAL RISK SHARING VALUATION STUDIES; CORRIDOR
	MIDPOINT AND CITY CONTRIBUTION AMOUNTS.  (a)  The pension system
	and the city shall separately cause their respective actuaries to
	prepare an initial risk sharing valuation study that is dated as of
	July 1, 2016, in accordance with this section.  An initial risk
	sharing valuation study must:
	(1)  except as otherwise provided by this section, be
	prepared in accordance with Section 8B of this Act, and for purposes
	of Section 8B(a)(4) of this Act, be based on actuarial data as of
	June 30, 2016, or, if actuarial data is not provided, on estimates
	of actuarial data;
	(2)  project the corridor midpoint for 31 fiscal years
	beginning with the fiscal year beginning July 1, 2017; and
	(3)  subject to Subsections (i) and (j) of this
	section, include a schedule of city contribution amounts for 30
	fiscal years beginning with the fiscal year beginning July 1, 2017.
	(b)  If the initial risk sharing valuation study has not been
	prepared consistent with this section before the year 2017
	effective date, as soon as practicable after the year 2017
	effective date:
	(1)  the pension system shall provide to the city
	actuary under a confidentiality agreement the necessary actuarial
	data used by the pension system actuary to prepare the proposed
	initial risk sharing valuation study; and
	(2)  not later than the 30th day after the date the
	city's actuary receives the actuarial data:
	(A)  the city actuary, at the direction of the
	city, shall provide a proposed initial risk sharing valuation study
	to the pension system actuary; and
	(B)  the pension system actuary, at the direction
	of the pension system, shall provide a proposed initial risk
	sharing valuation study to the city actuary.
	(c)  If, after exchanging proposed initial risk sharing
	valuation studies under Subsection (b)(2) of this section, it is
	determined that the difference between the estimated total city
	contribution divided by the pensionable payroll for any fiscal year
	in the proposed initial risk sharing valuation study prepared by
	the pension system actuary and in the proposed initial risk sharing
	valuation study prepared by the city actuary is:
	(1)  less than or equal to two percentage points, the
	estimated city contribution rate and the estimated city
	contribution amount for that fiscal year recommended by the pension
	system actuary will be the estimated city contribution rate and the
	estimated city contribution amount, as applicable, for purposes of
	Section 8B(a)(5) of this Act; or
	(2)  greater than two percentage points, the city
	actuary and the pension system actuary shall have 20 business days
	to reconcile the difference and:
	(A)  if, as a result of reconciliation efforts
	under this subdivision, the difference in any fiscal year is
	reduced to less than or equal to two percentage points, the city
	contribution rate and the city contribution amount recommended by
	the pension system actuary for that fiscal year will be the
	estimated city contribution rate and the estimated city
	contribution amount, as applicable, for purposes of Section
	8B(a)(5) of this Act; or
	(B)  if, after 20 business days, the city actuary
	and the pension system actuary are not able to reach a
	reconciliation that reduces the difference to an amount less than
	or equal to two percentage points for any fiscal year:
	(i)  the city actuary at the direction of the
	city and the pension system actuary at the direction of the pension
	system each shall deliver to the finance director of the city and
	the executive director of the pension system a final initial risk
	sharing valuation study with any agreed-to changes, marked as the
	final initial risk sharing valuation study for each actuary; and
	(ii)  the finance director and the executive
	director shall execute a joint addendum to the final initial risk
	sharing valuation study that is a part of each final initial risk
	sharing valuation study for all purposes and that reflects the
	arithmetic average of the estimated city contribution rate and the
	estimated city contribution amount for each fiscal year in which
	the difference was greater than two percentage points for purposes
	of Section 8B(a)(5) of this Act, and for reporting purposes the
	pension system may treat the pension system actuary's initial risk
	sharing valuation study with the addendum as the final initial risk
	sharing valuation study.
	(d)  In preparing the initial risk sharing valuation study,
	the city actuary and pension system actuary shall:
	(1)  adjust the actuarial value of assets to be equal to
	the market value of assets as of July 1, 2016;
	(2)  assume the issuance of planned pension obligation
	bonds by December 31, 2017, in accordance with Subsection (j)(2) of
	this section; and
	(3)  assume benefit and contribution changes under this
	Act as of the year 2017 effective date.
	(e)  If the city actuary does not prepare an initial risk
	sharing valuation study for purposes of this section, the pension
	system actuary's initial risk sharing valuation study will be used
	as the final risk sharing valuation study for purposes of this Act
	unless the city did not prepare a proposed initial risk sharing
	valuation study because the pension system actuary did not provide
	the necessary actuarial data in a timely manner.  If the city did
	not prepare a proposed initial risk sharing valuation study because
	the pension system actuary did not provide the necessary actuarial
	data in a timely manner, the city actuary shall have 60 days to
	prepare the proposed initial risk sharing valuation study on
	receipt of the necessary information.
	(f)  If the pension system actuary does not prepare a
	proposed initial risk sharing valuation study for purposes of this
	section, the proposed initial risk sharing valuation study prepared
	by the city actuary will be the final risk sharing valuation study
	for purposes of this Act.
	(g)  The city and the pension board may agree on a written
	transition plan for resetting the corridor midpoint:
	(1)  if at any time the funded ratio is equal to or
	greater than 100 percent; or
	(2)  for any fiscal year after the payoff year of the
	legacy liability.
	(h)  If the city and the pension board have not entered into
	an agreement described by Subsection (g) of this section in a given
	fiscal year, the corridor midpoint will be the corridor midpoint
	determined for the 31st fiscal year in the initial risk sharing
	valuation study prepared in accordance with this section.
	(i)  If the city makes a contribution to the pension system
	of at least $5 million more than the amount that would be required
	by Section 8A(a) of this Act, a liability gain layer with the same
	remaining amortization period as the legacy liability is created.
	In each subsequent risk sharing valuation study until the end of
	that amortization period, the city contribution amount must be
	decreased by the amortized amount in each fiscal year covered by the
	liability gain layer.
	(j)  Notwithstanding any other provision of this Act,
	including Section 8H of this Act:
	(1)  if the city fails to deliver the proceeds of
	pension obligation bonds totaling $250 million on or before March
	31, 2018, the pension board shall have 30 days from March 31, 2018,
	to rescind, prospectively, any or all benefit changes made
	effective under S.B. No. 2190, Acts of the 85th Legislature,
	Regular Session, 2017, as of the year 2017 effective date, or to
	reestablish the deadline for the delivery of pension obligation
	bond proceeds, reserving the right to rescind the benefit changes
	authorized by this subdivision if the bond proceeds are not
	delivered by the reestablished deadline; and
	(2)  subject to Subsection (k) of this section, if the
	pension board rescinds benefit changes under Subdivision (1) of
	this subsection or pension obligation bond proceeds are not
	delivered on or before December 31, 2017, the initial risk sharing
	valuation study shall be prepared again and restated without
	assuming the delivery of the pension obligation bond proceeds, the
	later delivery of pension obligation bond proceeds, or the
	rescinded benefit changes, as applicable, including a
	reamortization of the city contribution amount for the amortization
	period remaining for the legacy liability, and the resulting city
	contribution rate and city contribution amount will become
	effective in the fiscal year following the completion of the
	restated initial risk sharing valuation study.
	(k)  The restated initial risk sharing valuation study
	required under Subsection (j)(2) of this section must be completed
	at least 30 days before the start of the fiscal year:
	(1)  ending June 30, 2019, if the pension board does not
	reestablish the deadline under Subsection (j)(1) of this section;
	or
	(2)  immediately following the reestablished deadline,
	if the pension board reestablishes the deadline under Subsection
	(j)(1) of this section and the city fails to deliver the pension
	obligation bond proceeds described by Subsection (j)(1) of this
	section by the reestablished deadline.
	Sec. 8D.  ACTUARIAL EXPERIENCE STUDIES. (a)  At least once
	every four years, the pension system actuary, at the direction of
	the pension system, shall conduct an actuarial experience study in
	accordance with actuarial standards of practice. The actuarial
	experience study required by this subsection must be completed not
	later than September 30 of the year in which the study is required
	to be conducted.
	(b)  Except as otherwise expressly provided by Sections
	8B(a)(7)(A)-(I) of this Act, actuarial assumptions and methods used
	in the preparation of a risk sharing valuation study, other than the
	initial risk sharing valuation study, shall be based on the results
	of the most recent actuarial experience study.
	(c)  Not later than the 180th day before the date the pension
	board may consider adopting any assumptions and methods for
	purposes of Section 8B of this Act, the pension system shall provide
	the city actuary with a substantially final draft of the pension
	system's actuarial experience study, including:
	(1)  all assumptions and methods recommended by the
	pension system actuary; and
	(2)  summaries of the reconciled actuarial data used in
	creation of the actuarial experience study.
	(d)  Not later than the 60th day after the date the city
	receives the final draft of the pension system's actuarial
	experience study under Subsection (c) of this section, the city
	actuary and pension system actuary may communicate concerning the
	assumptions and methods used in the actuarial experience study.
	During the period prescribed by this subsection, the pension system
	actuary may modify the recommended assumptions in the draft
	actuarial experience study to reflect any changes to assumptions
	and methods to which the pension system actuary and the city actuary
	agree.
	(e)  At the city actuary's written request, the pension
	system shall provide additional actuarial data used by the pension
	system actuary to prepare the draft actuarial experience study,
	provided that confidential data may only be provided subject to a
	confidentiality agreement entered into between the pension system
	and the city actuary.
	(f)  The city actuary, at the direction of the city, shall
	provide in writing to the pension system actuary and the pension
	system:
	(1)  any assumptions and methods recommended by the
	city actuary that differ from the assumptions and methods
	recommended by the pension system actuary; and
	(2)  the city actuary's rationale for each method or
	assumption the actuary recommends and determines to be consistent
	with standards adopted by the Actuarial Standards Board.
	(g)  Not later than the 30th day after the date the pension
	system actuary receives the city actuary's written recommended
	assumptions and methods and rationale under Subsection (f) of this
	section, the pension system shall provide a written response to the
	city identifying any assumption or method recommended by the city
	actuary that the pension system does not accept.  If any assumption
	or method is not accepted, the pension system shall recommend to the
	city the names of three independent actuaries for purposes of this
	section.
	(h)  An actuary may only be recommended, selected, or engaged
	by the pension system as an independent actuary under this section
	if the person:
	(1)  is not already engaged by the city, the pension
	system, or any other pension system or fund authorized under
	Article 6243e.2(1) or 6243g-4, Revised Statutes, to provide
	actuarial services to the city, the pension system, or another
	pension system or fund referenced in this subdivision;
	(2)  is a member of the American Academy of Actuaries;
	and
	(3)  has at least five years of experience as an actuary
	working with one or more public retirement systems with assets in
	excess of $1 billion.
	(i)  Not later than the 20th day after the date the city
	receives the list of three independent actuaries under Subsection
	(g) of this section, the city shall identify and the pension system
	shall hire one of the listed independent actuaries on terms
	acceptable to the city and the pension system to perform a scope of
	work acceptable to the city and the pension system.  The city and
	the pension system each shall pay 50 percent of the cost of the
	independent actuary engaged under this subsection.  The city shall
	be provided the opportunity to participate in any communications
	between the independent actuary and the pension system concerning
	the engagement, engagement terms, or performance of the terms of
	the engagement.
	(j)  The independent actuary engaged under Subsection (i) of
	this section shall receive on request from the city or the pension
	system:
	(1)  the pension system's draft actuarial experience
	study, including all assumptions and methods recommended by the
	pension system actuary;
	(2)  summaries of the reconciled actuarial data used to
	prepare the draft actuarial experience study;
	(3)  the city actuary's specific recommended
	assumptions and methods together with the city actuary's written
	rationale for each recommendation;
	(4)  the pension system actuary's written rationale for
	its recommendations; and
	(5)  if requested by the independent actuary and
	subject to a confidentiality agreement between the pension system
	and the independent actuary, additional confidential actuarial
	data.
	(k)  Not later than the 30th day after the date the
	independent actuary receives all the requested information under
	Subsection (j) of this section, the independent actuary shall
	advise the pension system and the city whether it agrees with the
	assumption or method recommended by the city actuary or the
	corresponding method or assumption recommended by the pension
	system actuary, together with the independent actuary's rationale
	for making the determination.  During the period prescribed by this
	subsection, the independent actuary may discuss recommendations in
	simultaneous consultation with the pension system actuary and the
	city actuary.
	(l)  The pension system and the city may not seek any
	information from any prospective independent actuary about
	possible outcomes of the independent actuary's review.
	(m)  If an independent actuary has questions or concerns
	regarding an engagement entered into under this section, the
	independent actuary shall simultaneously consult with both the city
	actuary and the pension system actuary regarding the questions or
	concerns.  This subsection does not limit the pension system's
	authorization to take appropriate steps to complete the engagement
	of the independent actuary on terms acceptable to both the pension
	system and the city or to enter into a confidentiality agreement
	with the independent actuary, if needed.
	(n)  If the pension board does not adopt an assumption or
	method recommended by the city actuary to which the independent
	actuary agrees, or recommended by the pension system actuary, the
	city actuary is authorized to use that recommended assumption or
	method in connection with preparation of a subsequent risk sharing
	valuation study under Section 8B of this Act until the risk sharing
	valuation study following the next actuarial experience study is
	prepared.
	Sec. 8E.  CITY CONTRIBUTION RATE WHEN ESTIMATED CITY
	CONTRIBUTION RATE LOWER THAN CORRIDOR MIDPOINT; AUTHORIZATION FOR
	CERTAIN ADJUSTMENTS. (a)  This section governs the determination
	of the city contribution rate applicable in a fiscal year if the
	estimated city contribution rate is lower than the corridor
	midpoint.
	(b)  If the funded ratio is:
	(1)  less than 90 percent, the city contribution rate
	for the fiscal year equals the corridor midpoint; or
	(2)  equal to or greater than 90 percent and the city
	contribution rate is:
	(A)  equal to or greater than the minimum
	contribution rate, the estimated city contribution rate is the city
	contribution rate for the fiscal year; or
	(B)  except as provided by Subsection (e) of this
	section, less than the minimum contribution rate for the
	corresponding fiscal year, the city contribution rate for the
	fiscal year equals the minimum contribution rate achieved in
	accordance with Subsection (c) of this section.
	(c)  For purposes of Subsection (b)(2)(B) of this section,
	the following adjustments shall be applied sequentially to the
	extent required to increase the estimated city contribution rate to
	equal the minimum contribution rate:
	(1)  first, adjust the actuarial value of assets equal
	to the current market value of assets, if making the adjustment
	causes the city contribution rate to increase;
	(2)  second, under a written agreement between the city
	and the pension board under Section 3(n) of this Act entered into
	not later than the 30th day before the first day of the next fiscal
	year, prospectively restore all or part of any benefit reductions
	or reduce increased employee contributions, in each case made after
	the year 2017 effective date;
	(3)  third, accelerate the payoff year of the legacy
	liability by offsetting the remaining legacy liability by the
	amount of the new liability loss layer, provided that during the
	accelerated period the city will continue to pay the city
	contribution amount as scheduled in the initial risk sharing
	valuation study, subject to Section 8C(i) or (j) of this Act;
	(4)  fourth, accelerate the payoff year of existing
	liability loss layers, excluding the legacy liability, by
	accelerating the oldest liability loss layers first, to an
	amortization period of not less than 20 years from the first day of
	the fiscal year beginning 12 months after the date of the risk
	sharing valuation study in which the liability loss layer is first
	recognized; and
	(5)  fifth, under a written agreement between the city
	and the pension board under Section 3(n) of this Act entered into
	not later than the 30th day before the first day of the next fiscal
	year, the city and the pension board may agree to reduce the assumed
	rate of return.
	(d)  If the funded ratio is:
	(1)  equal to or greater than 100 percent:
	(A)  all existing liability layers, including the
	legacy liability, are considered fully amortized and paid;
	(B)  the city contribution amount may no longer be
	included in the city contribution under Section 8A of this Act; and
	(C)  the city and the pension system may mutually
	agree to change assumptions in a written agreement entered into
	between the city and the pension board under Section 3(n) of this
	Act; and
	(2)  greater than 100 percent in a written agreement
	between the city and the pension system entered into under Section
	3(n) of this Act, the pension system may reduce member
	contributions or increase pension benefits if as a result of the
	action:
	(A)  the funded ratio is not less than 100
	percent; and
	(B)  the city contribution rate is not more than
	the minimum contribution rate.
	(e)  Except as provided by Subsection (f) of this section, if
	an agreement under Subsection (d) of this section is not reached on
	or before the 30th day before the first day of the next fiscal year,
	before the first day of the next fiscal year, the pension board
	shall reduce member contributions and implement or increase
	cost-of-living adjustments, but only to the extent that the city
	contribution rate is set at or below the minimum contribution rate
	and the funded ratio is not less than 100 percent.
	(f)  If any member contribution reduction or benefit
	increase under Subsection (e) of this section has occurred within
	the previous three fiscal years, the pension board may not make
	additional adjustments to benefits, and the city contribution rate
	must be set to equal the minimum contribution rate.
	Sec. 8F.  CITY CONTRIBUTION RATE WHEN ESTIMATED CITY
	CONTRIBUTION RATE EQUAL TO OR GREATER THAN CORRIDOR MIDPOINT;
	AUTHORIZATION FOR CERTAIN ADJUSTMENTS. (a)  This section governs
	the determination of the city contribution rate in a fiscal year
	when the estimated city contribution rate is equal to or greater
	than the corridor midpoint.
	(b)  If the estimated city contribution rate is:
	(1)  less than or equal to the maximum contribution
	rate for the corresponding fiscal year, the estimated city
	contribution rate is the city contribution rate; or
	(2)  except as provided by Subsection (d) or (f) of this
	section, greater than the maximum contribution rate for the
	corresponding fiscal year, the city contribution rate equals the
	corridor midpoint achieved in accordance with Subsection (c) of
	this section.
	(c)  For purposes of Subsection (b)(2) of this section, the
	following adjustments shall be applied sequentially to the extent
	required to decrease the estimated city contribution rate to equal
	the corridor midpoint:
	(1)  first, adjust the actuarial value of assets to the
	current market value of assets, if making the adjustment causes the
	city contribution rate to decrease;
	(2)  second, if the payoff year of the legacy liability
	was accelerated under Section 8E(c) of this Act:
	(A)  extend the payoff year of the legacy
	liability by increasing the legacy liability by the amount of the
	new liability gain layer to a maximum amount; and
	(B)  during the extended period provided by
	Paragraph (A) of this subdivision, the city shall continue to pay
	the city contribution amount for the extended period in accordance
	with the schedule included in the initial risk sharing valuation
	study, subject to Section 8C(i) or (j) of this Act; and
	(3)  third, if the payoff year of a liability loss layer
	other than the legacy liability was previously accelerated under
	Section 8E(c) of this Act, extend the payoff year of existing
	liability loss layers, excluding the legacy liability, by extending
	the most recent loss layers first, to a payoff year not later than
	30 years from the first day of the fiscal year beginning 12 months
	after the date of the risk sharing valuation study in which the
	liability loss layer is first recognized.
	(d)  If the city contribution rate after adjustment under
	Subsection (c) of this section is greater than the third quarter
	line rate, the city contribution rate equals the third quarter line
	rate.  To the extent necessary to comply with this subsection, the
	city and the pension board shall enter into a written agreement
	under Section 3(n) of this Act to increase member contributions and
	make other benefit or plan changes not otherwise prohibited by
	applicable federal law or regulations.
	(e)  Gains resulting from adjustments made as the result of a
	written agreement between the city and the pension board under
	Subsection (d) of this section may not be used as a direct offset
	against the city contribution amount in any fiscal year.
	(f)  If an agreement under Subsection (d) of this section is
	not reached on or before the 30th day before the first day of the
	next fiscal year, before the start of the next fiscal year to which
	the city contribution rate would apply, the pension board, to the
	extent necessary to set the city contribution rate equal to the
	third quarter line rate, shall:
	(1)  increase member contributions; and
	(2)  decrease cost-of-living adjustments.
	(g)  If the city contribution rate remains greater than the
	corridor midpoint in the third fiscal year after adjustments are
	made in accordance with an agreement under Subsection (d) of this
	section, in that fiscal year the city contribution rate equals the
	corridor midpoint achieved in accordance with Subsection (h) of
	this section.
	(h)  The city contribution rate must be set at the corridor
	midpoint under Subsection (g) of this section by:
	(1)  in the risk sharing valuation study for the third
	fiscal year described by Subsection (g) of this section, adjusting
	the actuarial value of assets to equal the current market value of
	assets, if making the adjustment causes the city contribution rate
	to decrease; and
	(2)  under a written agreement entered into between the
	city and the pension board under Section 3(n) of this Act:
	(A)  increasing member contributions; and
	(B)  making any other benefit or plan changes not
	otherwise prohibited by applicable federal law or regulations.
	(i)  If an agreement under Subsection (h)(2) of this section
	is not reached on or before the 30th day before the first day of the
	next fiscal year, before the start of the next fiscal year, the
	pension board, to the extent necessary to set the city contribution
	rate equal to the corridor midpoint, shall:
	(1)  increase member contributions; and
	(2)  decrease cost-of-living adjustments.
	Sec. 8G.  CONFIDENTIALITY. (a)  The information, data, and
	document exchanges under Sections 8A through 8F of this Act have all
	the protections afforded by applicable law and are expressly exempt
	from the disclosure requirements under Chapter 552, Government
	Code, except as may be agreed to by the city and pension system in a
	written agreement under Section 3(n) of this Act.
	(b)  Subsection (a) of this section does not apply to:
	(1)  a proposed risk sharing valuation study prepared
	by the pension system actuary and provided to the city actuary or
	prepared by the city actuary and provided to the pension system
	actuary under Section 8B(d) or 8C(b)(2) of this Act; or
	(2)  a final risk sharing valuation study prepared
	under Section 8B or 8C of this Act.
	(c)  A risk sharing valuation study prepared by either the
	city actuary or the pension system actuary under Sections 8A
	through 8F of this Act may not:
	(1)  include information in a form that includes
	identifiable information relating to a specific individual; or
	(2)  provide confidential or private information
	regarding specific individuals or be grouped in a manner that
	allows confidential or private information regarding a specific
	individual to be discerned.
	Sec. 8H.  UNILATERAL DECISIONS AND ACTIONS PROHIBITED. No
	unilateral decision or action by the pension board is binding on the
	city and no unilateral decision or action by the city is binding on
	the pension system with respect to the application of Sections 8A
	through 8F of this Act unless expressly provided by a provision of
	those sections.  Nothing in this section is intended to limit the
	powers or authority of the pension board.
	Sec. 8I.  STATE PENSION REVIEW BOARD; REPORT. (a)  After
	preparing a final risk sharing valuation study under Section 8B or
	8C of this Act, the pension system and the city shall jointly submit
	a copy of the study or studies, as appropriate, to the State Pension
	Review Board for a determination that the pension system and city
	are in compliance with this Act.
	(b)  Not later than the 30th day after the date an action is
	taken under Section 8E or 8F of this Act, the pension system shall
	submit a report to the State Pension Review Board regarding any
	actions taken under those sections.
	(c)  The State Pension Review Board shall notify the
	governor, the lieutenant governor, the speaker of the house of
	representatives, and the legislative committees having principal
	jurisdiction over legislation governing public retirement systems
	if the State Pension Review Board determines the pension system or
	the city is not in compliance with Sections 8A through 8H of this
	Act.
	SECTION 3.12.  Section 9(c), Chapter 88 (H.B. 1573), Acts of
	the 77th Legislature, Regular Session, 2001 (Article 6243h,
	Vernon's Texas Civil Statutes), is amended to read as follows:
	(c)  If a member dies and there are no eligible survivors to
	receive the allowance provided for in Section 14 of this Act, the
	member's spouse [beneficiary] or, if there is no spouse
	[beneficiary], the member's estate shall receive the refund amount.
	SECTION 3.13.  Section 10, Chapter 88 (H.B. 1573), Acts of
	the 77th Legislature, Regular Session, 2001 (Article 6243h,
	Vernon's Texas Civil Statutes), is amended by amending Subsections
	(b), (d), (e), (g), and (h) and adding Subsections (c-1), (d-1), and
	(e-1) to read as follows:
	(b)  A group A or group B member of the pension system who
	terminates employment is eligible for a normal retirement pension
	beginning on the member's effective retirement date after the date
	the member completes at least five years of credited service and
	attains either:
	(1)  62 years of age; or
	(2)  a combination of years of age and years of credited
	service, including parts of years, the sum of which equals or is
	greater than the number:
	(A)  75, provided the member is at least 50 years
	of age; or
	(B)  70, provided the member attained a
	combination of years of age and years of credited service,
	including parts of years, the sum of which equals or is greater than
	the number 68 before January 1, 2005.
	(c-1)  A group D member who terminates employment is eligible
	for a normal retirement pension beginning on the member's effective
	retirement date after the date the member completes at least five
	years of credited service and attains 62 years of age.
	(d)  Subject to Section 17 of this Act, the [The] amount of
	the monthly normal retirement pension payable to an eligible:
	(1)  [retired] group A or group B member who retires
	before January 1, 2005, shall be determined under the law in effect
	on the member's last day of credited service;
	(2)  group A member who retires on or after January 1,
	2005, is equal to the sum of:
	(A)  the member's average monthly salary
	multiplied by the percentage rate accrued under the law in effect on
	December 31, 2004, for each year of the member's years of credited
	service in group A that is earned before January 1, 2005;
	(B)  the member's average monthly salary
	multiplied by 2.5 [3-1/4] percent for each year of the member's
	years of credited service in group A during the member's first 20
	[10] years of service that is earned on or after January 1, 2005;[,
	3-1/2 percent for each of the member's years of credited service in
	group A during the member's next 10 years of service,] and
	(C)  the member's average monthly salary
	multiplied by 3.25 [4-1/4] percent for each year of credited
	service of the member in group A during the member's years of
	service in excess of the 20 years described under Paragraph (B) of
	this subdivision that is earned on or after January 1, 2005;
	(3)  group B member who retires on or after January 1,
	2005, is equal to the sum of:
	(A)  the member's average monthly salary
	multiplied by the percentage rate accrued under the law in effect on
	December 31, 2004, for each year of the member's years of credited
	service in group B that is earned before January 1, 2005;
	(B)  the member's average monthly salary
	multiplied by 1.75 percent for each year of the member's years of
	credited service in group B during the member's first 10 years of
	service that is earned on or after January 1, 2005;
	(C)  the member's average monthly salary
	multiplied by two percent for each of the member's years of credited
	service in group B in excess of the 10 years described under
	Paragraph (B) of this subdivision that is earned on or after January
	1, 2005; and
	(D)  the member's average monthly salary
	multiplied by 2.5 percent for each year of credited service of the
	member in group B during the member's years of service in excess of
	20 years that is earned on or after January 1, 2005; or
	(4)  group D member who retires on or after January 1,
	2008, is equal to the sum of:
	(A)  the member's average monthly salary
	multiplied by 1.8 percent for each year of the member's years of
	credited service during the member's first 25 years of service; and
	(B)  the member's average monthly salary
	multiplied by 1 percent for each year of credited service of the
	member in group D during the member's years of service in excess of
	25 years.
	(d-1)  For purposes of Subsection (d) of this section,
	service credit is rounded to the nearest one-twelfth of a year [For
	purposes of this subsection, service credit is rounded to the
	nearest one-twelfth of a year. The normal retirement pension of a
	retired group A member may not exceed 90 percent of the member's
	average monthly salary].
	(e)  A group D member who terminates employment with the city
	or the pension system may elect to receive an early retirement
	pension payable as a reduced benefit if the member has attained:
	(1)  at least 10 years of credited service and is at
	least 55 years of age; or
	(2)  five years of credited service and a combination
	of years of age and years of credited service, including parts of
	years, the sum of which equals or is greater than the number 75.
	(e-1)  The amount of the early retirement pension payable to
	a retired group D member under Subsection (e) of this section shall
	be equal to the monthly normal retirement pension reduced by 0.25
	percent for each month the member is less than 62 years of age at
	retirement [monthly normal retirement pension payable to an
	eligible retired group B member equals the member's average monthly
	salary multiplied by 1-3/4 percent for each year of the member's
	years of credited service in group B during the member's first 10
	years of service, 2 percent for each of the member's years of
	credited service in group B during the member's next 10 years of
	service, and 2-3/4 percent for each year of credited service of the
	member in group B during the member's years of service in excess of
	20 years. For purposes of this subsection, service credit is
	rounded to the nearest one-twelfth of a year. The normal retirement
	pension of a retired group B member may not exceed 90 percent of the
	member's average monthly salary].
	(g)  Notwithstanding any other provision of this Act, the
	total normal retirement pension of a retired member with credited
	service in group A, group B, [or] group C, or group D may not exceed
	90 percent of the member's average monthly salary.
	(h)  On or after February 1, 2018, and for [For] future
	payments only, pension benefits for all group A retirees and group B
	retirees, and for all group D retirees who terminated employment on
	or after the year 2017 effective date with at least five years of
	credited service, and survivor benefits for [all retirees and]
	eligible survivors of a former member of group A or group B, or of a
	former member of group D who terminated employment on or after the
	year 2017 effective date with at least five years of credited
	service, shall be increased annually by the cost-of-living
	adjustment percentage [four percent], not compounded, for all such
	eligible persons receiving a pension or survivor benefit as of
	January 1 of the year in which the increase is made.
	SECTION 3.14.  Chapter 88 (H.B. 1573), Acts of the 77th
	Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
	Civil Statutes), is amended by adding Section 10A to read as
	follows:
	Sec. 10A.  GROUP D MEMBER HYBRID COMPONENT. (a)  On and
	after January 1, 2018, in addition to the group D member
	contributions under Section 8 of this Act, each group D member shall
	contribute one percent of the member's salary for each biweekly pay
	period beginning with the member's first full biweekly pay period
	after the later of January 1, 2018, or the group D member's first
	date of employment. The contribution required by this subsection:
	(1)  shall be picked up and paid in the same manner and
	at the same time as group D member contributions required under
	Section 8(a)(3) of this Act, subject to applicable rules;
	(2)  is separate from and in addition to the group D
	member contribution under Section 8(a)(3) of this Act; and
	(3)  is not subject to reduction or increase under
	Sections 8A through 8F of this Act or a refund under Section 17 of
	this Act.
	(b)  For each biweekly pay period of a group D member's
	service for which the group D member makes the contribution
	required under Subsection (a) of this section, the following
	amounts shall be credited to a notional account, known as a cash
	balance account, for the group D member:
	(1)  the amount of the contributions paid under
	Subsection (a) of this section for that biweekly pay period; and
	(2)  interest on the balance of the group D member's
	cash balance account determined by multiplying:
	(A)  an annual rate that is one-half the pension
	system's five-year investment return based on a rolling
	five-fiscal-year basis and net of investment expenses, with a
	minimum annual rate of 2.5 percent and a maximum annual rate of 7.5
	percent, and divided by 26; and
	(B)  the amount credited to the group D member's
	cash balance account as of the end of the biweekly pay period.
	(c)  The pension system may not pay interest on amounts
	credited to a cash balance account but not received by the pension
	system under Subsection (b) of this section.
	(d)  On separation from service, a group D member is eligible
	to receive only a distribution of the contributions credited to
	that group D member's cash balance account, without interest, if
	the group D member has attained less than one year of service while
	contributing to the cash balance account. If a group D member
	attains at least one year of service while contributing to the cash
	balance account, the group D member is fully vested in the accrued
	benefit represented by that group D member's cash balance account,
	including interest.
	(e)  In a manner and form prescribed by the pension board, a
	group D member who terminates employment is eligible to elect to
	receive the group D member's cash balance account benefit in a
	lump-sum payment, in substantially equal periodic payments, in a
	partial lump-sum payment followed by substantially equal periodic
	payments, or in partial payments from the group D member's cash
	balance account.
	(f)  Contributions may not be made to a group D member's cash
	balance account for a period that occurs after the date the group D
	member terminates employment, except that interest at a rate that
	is not greater than the rate under Subsection (b)(2) of this
	section, as determined by the pension board, may be credited based
	on the former group D member's undistributed cash balance account
	after the date the group D member terminates employment.
	(g)  On the death of a group D member or former group D member
	before the full distribution of the member's cash balance account,
	the deceased member's cash balance account shall be payable in a
	single lump-sum payment to:
	(1)  the deceased member's surviving spouse;
	(2)  if there is no surviving spouse, each designated
	beneficiary of the deceased member, designated in the manner and on
	a form prescribed by the pension board; or
	(3)  if there is no designated beneficiary, the
	deceased member's estate.
	(h)  The lump-sum payment described by Subsection (g) of this
	section shall be made within a reasonable time after the pension
	board has determined that the individual or estate is eligible for
	the distribution.
	(i)  Subject to the other provisions of this section, the
	pension board may adopt rules necessary to implement this section,
	including rules regarding the payment of the cash balance account
	and limitations on the timing and frequency of payments.  All
	distributions and changes in the form of distribution must be made
	in a manner and at a time that complies with the Internal Revenue
	Code of 1986.
	SECTION 3.15.  Section 11, Chapter 88 (H.B. 1573), Acts of
	the 77th Legislature, Regular Session, 2001 (Article 6243h,
	Vernon's Texas Civil Statutes), is amended to read as follows:
	Sec. 11.  OPTION-ELIGIBLE PARTICIPANTS [GROUP B RETIREMENT
	OPTIONS]. (a)  In this section, "J&S Annuity" means payment of a
	normal retirement pension or early retirement pension under one of
	the options provided by Subsection (b) of this section.
	(a-1)  For purposes of this section, an option-eligible
	participant is:
	(1)  a former group A or group B member who terminates
	employment with the city or the pension system on or after June 30,
	2011, and who is eligible to receive a normal retirement pension,
	provided the member was not married as of the date of the member's
	termination of employment;
	(2)  a former group B member who terminated employment
	with the city or the predecessor system before September 1, 1997,
	and who is eligible to receive a normal retirement pension; or
	(3)  a former group D member who terminated employment
	with the city or the pension system and who is eligible to receive a
	normal retirement pension or an early retirement pension.
	(a-2)  The pension board, in its sole discretion, shall make
	determinations regarding an individual's status as an
	option-eligible participant.
	(a-3)  Before the date an option-eligible participant
	commences receipt of a benefit, that option-eligible participant [A
	group B member who terminated employment with the city or the
	predecessor system before September 1, 1997,] must elect, in a
	manner and at a time determined by the pension board, [before the
	member's effective retirement date] whether to receive [have] the
	participant's [member's] normal retirement pension or early
	retirement pension, as applicable, or to have the option-eligible
	participant's normal retirement pension or early retirement
	pension, as applicable, paid under one of the options provided by
	Subsection (b) of this section. The election may be revoked, in a
	manner and at a time established by the pension board, not later
	than the 60th day before the date the participant commences receipt
	of a benefit [member's effective retirement date].
	(b)  The normal retirement pension or early retirement
	pension may be one of the following actuarially equivalent amounts:
	(1)  option 1:  a reduced pension payable to the
	participant [member], then on the participant's [member's] death
	one-half of the amount of that reduced pension is payable to the
	participant's [member's] designated survivor, for life;
	(2)  option 2:  a reduced pension payable to the
	participant [member], then on the participant's [member's] death
	that same reduced pension is payable to the participant's
	[member's] designated survivor, for life; and
	(3)  option 3:  a reduced pension payable to the
	participant [member], and if the participant [member] dies within
	10 years, the pension is paid to the participant's [member's]
	designated survivor for the remainder of the 10-year period
	beginning on the participant's benefit commencement [member's
	effective retirement] date.
	(c)  If an option-eligible participant [a former group B
	member] who has made the election provided by Subsection (b) of this
	section dies after terminating employment with at least five years
	of credited service but before attaining the age required to begin
	receiving a normal or early retirement pension, the person's
	designated survivor is eligible for the J&S Annuity [benefits]
	provided by the option selected by the option-eligible participant
	[former member] at the time of separation from service. The
	benefits first become payable to an eligible designated survivor on
	the date the option-eligible participant [former member] would have
	become eligible to begin receiving a pension. If the designated
	survivor elects for earlier payment, in a time and manner
	determined by the pension board, the actuarial equivalent of that
	amount shall be payable at that earlier date.
	(d)  A survivor benefit under Subsection (c) of this section
	or a J&S Annuity is not payable if:
	(1)  except as provided by Subsection (e) of this
	section, an option-eligible participant [If a former group B member
	under Subsection (a) of this section] does not elect one of the J&S
	Annuity options under Subsection (b) of this section and dies
	before retirement has commenced;
	(2)  an option-eligible participant elects a normal
	retirement pension or early retirement pension and dies before
	retirement has commenced; or
	(3)  an option-eligible participant dies after
	retirement has commenced and that option-eligible participant:
	(A)  elected a normal retirement pension or early
	retirement pension;
	(B)  did not make a valid election under
	Subsection (b) of this section; or
	(C)  made an election that is void[, a survivor
	benefit is not payable].
	(e)  An option-eligible participant described by Subsection
	(a-1)(3) of this section who did not elect one of the J&S Annuity
	options under Subsection (b) of this section is considered to have
	elected a J&S Annuity option under Subsection (b)(1) of this
	section and to have designated the participant's surviving spouse
	as the optional annuitant if the participant:
	(1)  was not in service with the city or the pension
	system at the time of the participant's death;
	(2)  is survived by a surviving spouse; and
	(3)  dies before the participant's retirement has
	commenced.
	(f)  If the option-eligible participant described by
	Subsection (e) of this section has no surviving spouse, a survivor
	benefit or J&S Annuity is not payable. If a J&S Annuity is paid
	under Subsection (e) of this section, a survivor benefit is not
	payable under this subsection or under Section 14 of this Act.
	(g)  If Subsection (d) of this section would otherwise apply
	to prohibit the payment of a survivor benefit or J&S Annuity, but
	there is one or more dependent children of the deceased
	option-eligible participant, the provisions of Section 14 of this
	Act control the payment of survivor benefits to the dependent child
	or children. The pension system may not pay both a J&S Annuity
	under this section and a survivor benefit under Section 14 of this
	Act with respect to any option-eligible participant. If a J&S
	Annuity is paid under Subsection (e) of this section, a survivor
	benefit is not payable.
	(h)  If an option-eligible participant has previously
	elected a J&S Annuity for a previous period of service, no benefits
	have been paid under that previous election, and the
	option-eligible participant terminates employment on or after
	January 1, 2012, the previous election is void and the
	option-eligible participant shall make an election under
	Subsection (b) of this section to apply to all periods of service.
	(i)  If a former group B member with service before September
	1, 1997, was rehired in a covered position and converted the group B
	service covered by a J&S Annuity to group A service, and that member
	terminates employment on or after January 1, 2012, and is not an
	option-eligible participant at the time of the member's subsequent
	termination, the previous election is void and survivor benefits
	for an eligible survivor, if any, are payable as provided by Section
	14 of this Act, provided benefits were not paid under the previous
	election.
	(j)  If an option-eligible participant who elects a J&S
	Annuity under this section designates the participant's spouse as a
	designated survivor and the marriage is later dissolved by divorce,
	annulment, or a declaration that the marriage is void before the
	participant's retirement, the designation is void unless the
	participant reaffirms the designation after the marriage was
	dissolved.
	(k)  A J&S Annuity payable to a designated survivor of a
	retired option-eligible participant is effective on the first day
	of the month following the month of the option-eligible
	participant's death and ceases on the last day of the month of the
	designated survivor's death or on the last day of the month in which
	the survivor otherwise ceases to be eligible to receive a J&S
	Annuity.
	SECTION 3.16.  Section 12(a)(5), Chapter 88 (H.B. 1573),
	Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h,
	Vernon's Texas Civil Statutes), is amended to read as follows:
	(5)  "DROP entry date" means the date a member ceases to
	earn service credit and begins earning credit for the member's DROP
	account, which is the later of the date the member is eligible to
	participate in the DROP, the date requested by the member, or
	October 1, 1997, as approved by the pension board. The DROP entry
	date is the first day of a month and is determined by the normal
	retirement eligibility requirements of this Act or of Chapter 358,
	Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g,
	Vernon's Texas Civil Statutes), as applicable, in effect on the
	requested DROP entry date. A member who enters DROP on or after
	January 1, 2005, may not have a DROP entry date that occurs before
	the date the pension system receives the member's request to
	participate in DROP.
	SECTION 3.17.  Section 12, Chapter 88 (H.B. 1573), Acts of
	the 77th Legislature, Regular Session, 2001 (Article 6243h,
	Vernon's Texas Civil Statutes), is amended by adding Subsections
	(b-1), (d-1), (o-1), (r), (s), and (t) and amending Subsections
	(d), (f), (g), (h), (j), (k), (m), (o), and (p) to read as follows:
	(b-1)  Notwithstanding Subsection (b) of this section, for
	DROP participation beginning on or after January 1, 2005, a member
	must meet the normal retirement eligibility requirements under
	Section 10(b) or (c) of this Act to be eligible to elect to
	participate in DROP. This subsection does not apply to a member
	who:
	(1)  met the eligibility requirements under Section
	10(b) of this Act in effect before January 1, 2005; or
	(2)  before January 1, 2005, had at least five years of
	credited service and a combination of years of age and years of
	credited service, including parts of years, the sum of which
	equaled or was greater than 68.
	(d)  Credited service and normal retirement benefits cease
	to accrue on the day preceding the member's DROP entry date. The
	period of a member's DROP participation, unless revoked as provided
	by Subsection (j) of this section, begins on the DROP participant's
	DROP entry date and ends on the date of the DROP participant's last
	day of active service with the city or the pension system. On the
	first day of the month following the month in which the pension
	board approves the member's DROP election, the DROP election
	becomes effective and the pension board shall establish a DROP
	account for the DROP participant. For each month during the period
	of DROP participation before a DROP participant's termination of
	employment, the following amounts shall be credited to the DROP
	participant's DROP account, including prorated amounts for partial
	months of service:
	(1)  an amount equal to what would have been the DROP
	participant's monthly normal retirement benefit if the DROP
	participant had retired on the DROP participant's DROP entry date,
	except that the monthly amount shall be computed based on the DROP
	participant's credited service and average monthly salary as of the
	DROP entry date and the benefit accrual rates and maximum allowable
	benefit applicable on the DROP election date, with the
	cost-of-living adjustments payable under Subsection (s) of this
	section, if any, that would apply if the DROP participant had
	retired on the DROP participant's DROP entry date; and
	(2)  subject to Subsection (d-1) of this section, [for
	a group A member, the member's contributions to the pension fund
	required under Section 8 of this Act during the member's
	participation in the DROP; and
	[(3)]  interest on the DROP participant's DROP account
	balance computed at a rate determined by the pension board and
	compounded at intervals designated by the pension board, but at
	least once in each 13-month period.
	(d-1)  Beginning January 1, 2018, the pension board shall
	establish the interest rate applicable under Subsection (d)(2) of
	this section as of January 1 of each year at a rate:
	(1)  except as provided by Subdivision (2) of this
	subsection, equal to half the pension system's five-year investment
	return based on a rolling five-fiscal-year basis and net of
	investment expenses; and
	(2)  that may not be less than 2.5 percent or more than
	7.5 percent.
	(f)  The period for credits to a DROP participant's DROP
	account includes each month beginning with the DROP participant's
	DROP entry date through the date the DROP participant terminates
	employment with the city or the pension system. Credits may not be
	made to a DROP participant's DROP account for a period that occurs
	after the date the DROP participant terminates employment, except
	that interest at a rate determined by the pension board may be paid
	on the person's undistributed DROP account balance after the date
	the person terminates employment. A DROP participant must pay
	required contributions to the pension system for all time in DROP
	that would otherwise constitute service in order to receive
	allowable credits to the DROP participant's DROP account.
	(g)  A DROP participant who terminates employment is
	eligible to elect to receive the DROP participant's DROP benefit in
	a lump sum, in substantially equal periodic payments, [or] in a
	partial lump sum followed by substantially equal periodic payments,
	or in partial payments from the participant's DROP account, in a
	manner and form determined by the pension board. The pension board
	may establish procedures concerning partial payments under this
	subsection, including limitations on the timing and frequency of
	those payments. A participant who elects partial payments may
	elect to receive the participant's entire remaining DROP account
	balance in a single lump-sum payment. The pension board shall
	determine a reasonable time for lump-sum and periodic payments of
	the DROP benefit. [An election concerning single lump-sum or
	partial payments as provided by this subsection must satisfy the
	requirements of Section 401(a)(9), Internal Revenue Code of 1986,
	as amended.] All distributions and changes in the form of
	distribution must be made in a manner and at a time that complies
	with that provision of the Internal Revenue Code of 1986, as
	amended.
	(h)  If a DROP participant dies before the full distribution
	of the DROP participant's DROP account balance, the undistributed
	DROP account balance shall be distributed to the DROP participant's
	surviving spouse, if any, in a lump-sum payment within a reasonable
	time after the pension board has determined that the surviving
	spouse is eligible for the distribution. If there is no surviving
	spouse, each beneficiary of the DROP participant [participant's
	beneficiary], as designated in the manner and on a form established
	by the pension board, is eligible to receive the beneficiary's
	applicable portion of the deceased DROP participant's
	undistributed DROP account balance in a lump-sum payment within a
	reasonable time after the pension board has determined that the
	beneficiary is eligible for the distribution. If no beneficiary is
	designated, the undistributed DROP account balance shall be
	distributed to the deceased participant's [member's] estate.
	(j)  An election to participate in the DROP is irrevocable,
	except that:
	(1)  if a DROP participant is approved for a service
	disability pension, the DROP participant's DROP election is
	automatically revoked; and
	(2)  if a DROP participant dies, the surviving spouse,
	if any, or the beneficiary, if any, may elect to revoke the DROP
	participant's DROP election, at a time and in a manner determined by
	the pension board, only if the revocation occurs before a
	distribution from the DROP participant's DROP account or the
	payment of a survivor benefit under this Act or Chapter 358, Acts of
	the 48th Legislature, Regular Session, 1943 (Article 6243g,
	Vernon's Texas Civil Statutes)[; and
	[(3)     a DROP participant approved by the pension board
	of the predecessor system before September 1, 1999, to participate
	in the DROP may make a one-time, irrevocable election before
	termination of employment, on a date and in a manner determined by
	the pension board, to revoke the DROP election and waive any and all
	rights associated with the DROP election].
	(k)  On revocation of a DROP election under Subsection (j) of
	this section, the DROP account balance becomes zero, and a
	distribution of DROP benefits may not be made to the participant
	[member], the participant's [member's] surviving spouse, or the
	participant's [member's] beneficiaries. In the event of
	revocation, the benefits based on the participant's [member's]
	service are determined as if the participant's [member's] DROP
	election had never occurred.
	(m)  If an unanticipated actuarial cost occurs in
	administering the DROP, the pension board, on the advice of the
	pension system [system's] actuary, may take action necessary to
	mitigate the unanticipated cost, including refusal to accept
	additional elections to participate in the DROP [plan]. The
	pension system shall continue to administer the DROP [plan] for the
	DROP participants participating in the DROP [plan] before the date
	of the mitigating action.
	(o)  Except as provided by Subsection (o-1) of this section,
	on [On] termination of employment, a DROP participant shall receive
	a normal retirement pension under Section 10 of this Act or under
	Section 11, 22A, or 24 of Chapter 358, Acts of the 48th Legislature,
	Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
	Statutes), as those sections read on the day preceding the
	participant's DROP entry date, as applicable, except that the
	credited service under that section is the member's credited
	service as of the day before the member's DROP entry date, the
	benefit accrual rate applicable to the credited service shall be
	the benefit accrual rate in effect on the member's DROP election
	date, the maximum allowable benefit shall be the maximum allowable
	benefit in effect on the member's DROP election date, and the
	member's average monthly salary is the average monthly salary
	determined as of the later [date] of the member's DROP entry date or
	January 1, 2005, as applicable [termination of employment]. The
	DROP participant's normal retirement pension is increased by any
	cost-of-living adjustments applied to the monthly credit to the
	member's DROP account under Subsection (d)(1) of this section
	during the member's participation in the DROP.  Cost-of-living
	adjustments applicable to periods after the date of the DROP
	participant's termination of employment are based on the DROP
	participant's normal retirement pension computed under this
	subsection or Subsection (o-1) of this section, as applicable,
	excluding any cost-of-living adjustments.
	(o-1)  On termination of employment, and before any benefit
	or DROP payment, a DROP participant who is an option-eligible
	participant shall make the required election under Section 11 of
	this Act. If the option-eligible participant elects a J&S Annuity,
	the DROP account, including all DROP credits, shall be recalculated
	from the DROP entry date to termination of employment as provided by
	Subsection (o) of this section as if the J&S Annuity was selected to
	be effective as of the DROP entry date.
	(p)  If a DROP election is not revoked under Subsection (j)
	of this section, the survivor benefit payable to an eligible
	survivor of a deceased DROP participant under Section 14 of this Act
	is computed as a percentage of the monthly ordinary disability
	pension that the member would have been eligible to receive had the
	member suffered a disability the day before the member's DROP entry
	date, except that the ordinary disability pension is computed based
	on the DROP participant's credited service as of the day before the
	DROP participant's DROP entry date, the benefit accrual rate
	applicable to the credited service as of the DROP participant's
	DROP election date, and the DROP participant's average monthly
	salary as of the later [date] of the DROP participant's DROP entry
	date or January 1, 2005, as applicable [death]. A surviving spouse,
	if any, of a DROP participant who dies from a cause directly
	resulting from a specific incident in the performance of the DROP
	participant's duties for the city or the pension system is
	ineligible to receive enhanced survivor benefits under Section
	14(c) of this Act unless the DROP election is revoked under
	Subsection (j)(2) of this section and the surviving spouse receives
	a survivor benefit as otherwise provided by this subsection.
	(r)  Except as provided by Subsection (s) of this section,
	the pension system may not credit a DROP account with a
	cost-of-living adjustment percentage on or after February 1, 2018.
	(s)  On or after February 1, 2018, and for future credit
	only, the pension system shall credit a cost-of-living adjustment
	percentage, not compounded, to the DROP account of a DROP
	participant who was at least 62 years of age as of January 1 of the
	year in which the increase is made.
	(t)  The pension board may establish deadlines for the
	submission of any information, document, or other record pertaining
	to DROP.
	SECTION 3.18.  Sections 13(a), (b), and (c), Chapter 88
	(H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
	(Article 6243h, Vernon's Texas Civil Statutes), are amended to read
	as follows:
	(a)  A member who has completed five or more years of
	credited service and who becomes disabled is eligible, regardless
	of age, for an ordinary disability retirement and shall receive a
	monthly disability pension computed in accordance with Section
	10(d) of this Act [for group A members and Section 10(e) for group B
	members].
	(b)  A member who is disabled by reason of a personal injury
	sustained or a hazard undergone as a result of, and while in the
	performance of, the member's employment duties at some definite
	place and at some definite time on or after the date of becoming a
	member, without serious and wilful misconduct on the member's part,
	is eligible for a service disability retirement and shall receive a
	monthly disability pension equal to the greater of:
	(1)  the monthly normal retirement pension computed
	under Section 10(d) of this Act [for a group A member or Section
	10(e) for a group B member]; or
	(2)  20 percent of the member's monthly salary on the
	date the injury occurred or the hazard was undergone.
	(c)  In addition to the monthly disability pension under
	Subsection (b)(2) of this section, a group A member shall receive
	one percent of the salary under Subsection (b)(2) of this section
	for each year of credited service. The total disability pension
	computed under Subsection (b)(2) of this section may not exceed the
	greater of:
	(1)  40 percent of that monthly salary; or
	(2)  the monthly normal retirement pension computed in
	accordance with Section 10(d) of this Act [for a group A member or
	Section 10(e) for a group B member].
	SECTION 3.19.  Section 14, Chapter 88 (H.B. 1573), Acts of
	the 77th Legislature, Regular Session, 2001 (Article 6243h,
	Vernon's Texas Civil Statutes), is amended by amending Subsections
	(a), (b), (c), (d), (e), and (h) and adding Subsection (b-1) to read
	as follows:
	(a)  Except as provided by Section 11 or [Section] 12 of this
	Act, the pension board shall order survivor benefits to be paid to
	an eligible survivor in the form of a monthly allowance under this
	section if:
	(1)  a member or former member of group A or group B
	dies from any cause after the completion of five years of credited
	service with the city or the pension system;
	(2)  while in the service of the city or the pension
	system, a member dies from any cause directly resulting from a
	specific incident in the performance of the member's duty; [or]
	(3)  a member of group A or group B dies after the date
	the member retires on a pension because of length of service or a
	disability and the member leaves an eligible survivor; or
	(4)  a member of group D dies from any cause after the
	completion of five years of credited service with the city or the
	pension system if the member on the date of the member's death was
	still in service with the city or the pension system.
	(b)  A surviving spouse of a member described by Subsection
	(a)(1) or (4) of this section [or former member] who dies while
	still in [dies after having completed five years of credited]
	service with the city or the pension system[, but before beginning
	to receive retirement benefits,] is eligible for a sum equal to the
	following applicable percentage [100 percent] of the retirement
	benefits to which the deceased member or former member would have
	been eligible had the member been totally disabled with an ordinary
	disability at the time of the member's last day of credited service:
	(1)  80 percent, if the member's death occurs on or
	after the year 2017 effective date and the spouse was married to the
	member for at least one continuous year as of the member's date of
	death, except that the allowance payable to the surviving spouse
	may not be less than $100 a month; or
	(2)  50 percent, if the member's death occurs on or
	after the year 2017 effective date and the spouse was married to the
	member for less than one continuous year as of the date of the
	member's death.
	(b-1)  A surviving spouse of a former member described by
	Subsection (a)(1) of this section who dies on or after the year 2017
	effective date while not in the service of the city or the pension
	system and before the member's retirement commenced, is eligible
	for a sum equal to 50 percent of the deceased former member's normal
	accrued pension at the time of the deceased former member's last day
	of credited service. Benefits under this subsection first become
	payable on the date the former member would have become eligible to
	begin receiving a pension. If the surviving spouse elects for
	earlier payment, in a time and manner determined by the pension
	board, the actuarial equivalent of that amount shall be payable at
	that earlier date.
	(c)  A surviving spouse of a member described by Subsection
	(a)(2) of this section who dies from a cause directly resulting from
	a specific incident in the performance of the member's duty with the
	city or the pension system, without serious or wilful misconduct on
	the member's part, is eligible for a sum equal to 80 [100] percent
	of the deceased member's final average salary.
	(d)  A surviving spouse of a retiree described by Subsection
	(a)(3) of this section who dies after having received retirement
	benefits is eligible for a sum equal to the following applicable
	percentage [100 percent] of the retirement benefits being received
	at the time of the retiree's death, including any applicable[. The]
	cost-of-living adjustment in the survivor benefit under Section
	10(h) of this Act [is] computed based on the unadjusted normal
	retirement pension of the deceased retiree:
	(1)  80 percent, if the retiree's death occurs on or
	after the year 2017 effective date and the retiree separated from
	service with the city or pension system before the year 2017
	effective date;
	(2)  80 percent, if the retiree's death occurs on or
	after the year 2017 effective date and the retiree separated from
	service with the city or pension system on or after the year 2017
	effective date, provided the surviving spouse was married to the
	retiree at the time of the retiree's death and for at least one
	continuous year as of the date of the retiree's separation from
	service; or
	(3)  50 percent, if both the retiree's separation from
	service and death occur on or after the year 2017 effective date and
	the surviving spouse was married to the retiree at the time of the
	retiree's death for less than one continuous year as of the date of
	the retiree's separation from service.
	(e)  If there is a surviving spouse, each dependent child
	shall receive a survivor benefit equal to 10 percent of the pension
	the member would have received if the member had been disabled at
	the time of death up to a maximum of 20 percent for all dependent
	children, except that if the total amount payable to the surviving
	spouse and dependent children is greater than 80 [100] percent of
	the benefit the member would have received, the percentage of
	benefits payable to the surviving spouse shall be reduced so that
	the total amount is not greater than 80 [100] percent of the benefit
	the member would have received, and the reduction shall continue
	until the total amount payable to the surviving spouse and
	dependent child, if any, would not be greater than 80 [100] percent
	of the benefit the member would have received.
	(h)  If a retiree dies and there is no eligible survivor, the
	retiree's spouse, if any, or if there is no spouse, the retiree's
	estate, is eligible to receive a lump-sum payment of the
	unamortized balance of the retiree's accrued employee
	contributions, if any, other than contributions after the DROP
	entry date, as determined by an amortization schedule and method
	approved by the pension board. A pension payable to a retiree
	ceases on the last day of the month [preceding the month] of the
	retiree's death. A survivor benefit payable to an eligible
	survivor is effective on the first day of the month following the
	month of the retiree's death and ceases on the last day of [month
	preceding] the month of the eligible survivor's death or on the last
	day of the month in which the survivor otherwise ceases to be
	eligible to receive a survivor's benefit.
	SECTION 3.20.  Sections 16(a) and (e), Chapter 88 (H.B.
	1573), Acts of the 77th Legislature, Regular Session, 2001 (Article
	6243h, Vernon's Texas Civil Statutes), are amended to read as
	follows:
	(a)  Notwithstanding any other provision of this Act, the
	pension board may pay to a member, deferred participant, eligible
	survivor, alternate payee, or beneficiary in a lump-sum payment the
	present value of any benefit payable to such a person that is less
	than $20,000 [$10,000] instead of paying any other benefit payable
	under this Act. If the lump-sum present value of the benefit is at
	least $1,000 [$5,000] but less than $20,000 [$10,000], the pension
	board may make a lump-sum payment only on written request by the
	member, deferred participant, eligible survivor, alternate payee,
	or other beneficiary. The pension board shall make any payment
	under this subsection as soon as practicable after eligibility
	under this section has been determined by the pension board.
	(e)  A member who is reemployed by the city or the pension
	system and who has at least two years of continuous credited service
	after reemployment may reinstate service for which the member
	received a lump-sum payment under this section by paying into the
	pension fund the amount of the lump-sum payment, plus interest on
	that amount at the applicable assumed rate of return [six percent
	per year], not compounded, from the date the lump-sum payment was
	made to the member until the date of repayment to the pension fund.
	SECTION 3.21.  Section 17, Chapter 88 (H.B. 1573), Acts of
	the 77th Legislature, Regular Session, 2001 (Article 6243h,
	Vernon's Texas Civil Statutes), is amended by amending Subsections
	(a), (c), (d), (e), (f), (g), (h), (i), (j), (k), and (l) and adding
	Subsections (c-1), (c-2), (q), (r), and (s) to read as follows:
	(a)  A member who terminates employment with the city
	involuntarily due to a reduction in workforce, as determined by the
	pension board, before the member becomes eligible for a normal
	retirement pension or attains five years of credited service, is
	eligible to [by written notice to the pension board, may make an
	irrevocable election to] leave the person's contributions in the
	pension fund until the first anniversary of the date of
	termination. If during that period the person is reemployed by the
	city and has not withdrawn the person's contributions, all rights
	and service credit as a member shall be immediately restored
	without penalty. If reemployment with the city does not occur
	before the first anniversary of the date of termination, all
	payments made by the person into the pension fund by salary
	deductions or other authorized contributions shall be refunded to
	the person without interest. If the person is subsequently
	reemployed, the person may have credit restored, subject to the
	provisions applicable at the time of reemployment.
	(c)  A former member of group A or group B whose employment is
	terminated for a reason other than death or receipt of a retirement
	or disability pension after the completion of five years of
	credited service may elect, in a manner determined by the pension
	board, to receive a deferred retirement pension that begins on the
	member's effective retirement date after the member attains the
	eligibility requirements for normal retirement under Section 10 of
	this Act as it existed on the member's last day of credited service
	[either 62 years of age or a combination of years of age and years of
	credited service, including parts of years, the sum of which equals
	the number 70]. The amount of monthly benefit shall be computed in
	the same manner as for a normal retirement pension, but based on
	average monthly salary and credited service as of the member's last
	day of credited service and subject to the provisions of this Act or
	Chapter 358, Acts of 48th Legislature, Regular Session, 1943
	(Article 6243g, Vernon's Texas Civil Statutes), in effect on the
	former member's last day of credited service.
	(c-1)  A former member of group D whose employment is
	terminated for a reason other than death or receipt of a retirement
	or disability pension after the completion of five years of
	credited service may elect, in a manner determined by the pension
	board, to receive a deferred normal retirement pension that begins
	on the former member's effective retirement date after the member
	attains 62 years of age. The amount of a monthly benefit under this
	subsection shall be computed in the same manner as a normal
	retirement pension, except the benefit shall be based on the
	average monthly salary and credited service of the former member as
	of the former member's last day of credited service and subject to
	the provisions of this Act in effect on the former member's last day
	of credited service.
	(c-2)  A former member of group D whose employment is
	terminated for a reason other than death or receipt of a retirement
	or disability pension and who has met the minimum years of credited
	service to receive an early reduced retirement pension under
	Section 10(e) of this Act on attaining the required age, may elect,
	in a manner determined by the pension board, to receive a deferred
	early retirement pension that begins on the former member's
	effective retirement date after the member attains the required age
	under Section 10(e) of this Act. The amount of monthly benefit
	shall be computed in the same manner as for an early retirement
	pension under Section 10(e) of this Act, except that the benefit
	shall be based on the average monthly salary and credited service of
	the former member as of the former member's last day of credited
	service and subject to the provisions of this Act in effect on the
	former member's last day of credited service.
	(d)  If a member dies while still employed by the city,
	whether eligible for a pension or not, and Sections 12 and 14 of
	this Act do not apply, all of the member's rights in the pension
	fund shall be satisfied by the refund to the member's spouse
	[designated beneficiary], if any, or if there is no spouse
	[designated beneficiary], to the member's estate, of all eligible
	payments, if any, made by the member into the pension fund, without
	interest.
	(e)  [The provisions of Section 14 of this Act concerning
	payments to eligible survivors apply in the case of any former
	member who has made the election permitted by Subsection (c) of this
	section and who dies before reaching the age at which the former
	member would be eligible to receive a pension.] If there is no
	eligible survivor of the former member, all of the former member's
	rights in the pension fund shall be satisfied by the refund to the
	former member's spouse [designated beneficiary], if any, or if
	there is no spouse [designated beneficiary], to the former member's
	estate, of all eligible payments made by the former member into the
	pension fund by way of employee contributions, without interest.
	(f)  This Act does not change the status of any former member
	of the predecessor system whose services with the city or the
	pension system were terminated under Chapter 358, Acts of the 48th
	Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
	Civil Statutes), except as otherwise expressly provided. Refunds
	of contributions made under this section shall be paid to the
	departing member, the member's spouse [beneficiary], or the
	member's estate on written request and approval by the pension
	board in a lump sum, except that if the pension board determines
	that funds are insufficient to justify the lump-sum payment, the
	payment shall be refunded on a monthly basis in amounts determined
	by the pension board.
	(g)  If a deferred participant is reemployed by the city or
	the pension system before receiving a deferred retirement pension
	or if a retiree is reemployed by the city or the pension system,
	Subsections (h) and (j) of this section apply to the computation of
	the member's pension following the member's subsequent separation
	from service if the member was a member on or after May 11, 2001, and
	is not otherwise subject to Subsection (q) of this section.
	(h)  If a member described in Subsection (g) of this section
	accrues not more than two years of continuous credited service
	after reemployment:
	(1)  the portion of the member's deferred or normal
	retirement pension attributable to the member's period of credited
	service accrued before the date of the member's original or
	previous separation from service is computed on the basis of the
	applicable provisions of this Act or the predecessor system that
	were in effect on the member's last day of credited service for the
	original or previous period of credited service;
	(2)  the portion of the member's deferred or normal
	retirement pension attributable to the member's period of credited
	service accrued after the date of the member's reemployment by the
	city or the pension system is computed on the basis of the
	applicable provisions of this Act or the predecessor system in
	effect on the member's last day of credited service for the
	subsequent period of credited service; and
	(3)  the disability pension or survivor benefit
	attributable to the member's period of credited service accrued
	both before the date of the member's original or previous
	separation from service and after the date of the member's
	reemployment by the city or the pension system is computed on the
	basis of the applicable provisions of this Act or the predecessor
	system that were in effect on the member's last day of credited
	service for the original or previous period of credited service.
	(i)  Subject to Subsection (l) of this section, the
	disability pension or survivor benefit under Subsection (h)(3) of
	this section is computed by adding the following amounts:
	(1)  the amount of the benefit derived from the member's
	credited service accrued after the date of reemployment based on
	the benefit accrual rate in effect on the member's last day of
	original or previous credited service in the group in which the
	member participated on the member's last day of subsequent credited
	service; and
	(2)  the amount of the benefit the member, beneficiary,
	or eligible survivor was eligible to receive based on the member's
	original or previous credited service and the provisions in effect
	on the member's last day of original or previous credited service.
	(j)  If a [the] member described by Subsection (g) of this
	section accrues more than two years of continuous credited service
	after reemployment, for purposes of future payment only, a deferred
	retirement pension, normal retirement pension, disability pension,
	or survivor benefit is computed on the basis of the applicable
	provisions of this Act or the predecessor system in effect on the
	member's last day of credited service for the subsequent service.
	(k)  Notwithstanding any other provision of this Act, if a
	retiree is reemployed by the city or the pension system and becomes
	a member, the retiree's pension under this Act ceases on the day
	before the date the retiree is reemployed. Payment of the pension
	shall be suspended during the period of reemployment and may not
	begin until the month following the month in which the reemployed
	retiree subsequently terminates employment. On subsequent
	separation, benefits payable are computed under Subsections (h) and
	(j) of this section, as applicable. If the reemployed retiree
	receives any pension during the period of reemployment, the retiree
	shall return all of the pension received during that period to the
	pension system not later than the 30th day after the date of
	receipt. If the reemployed retiree does not timely return all of
	the pension, the pension board shall offset the amount not returned
	against the payment of any future retirement pension, disability
	pension, DROP balance, or survivor benefit payable on behalf of the
	reemployed retiree, plus interest on the disallowed pension at the
	applicable assumed rate of return, not compounded, from the date
	the reemployed retiree received the disallowed pension to the date
	of the offset on the disallowed pension.
	(l)  Except as provided by Section 14 of this Act, if [If] a
	member is covered by Subsection (h) of this section and has made an
	election or was eligible to make an election under Section 11 of
	this Act or an optional annuity election under Section 29, Chapter
	358, Acts of the 48th Legislature, Regular Session, 1943 (Article
	6243g, Vernon's Texas Civil Statutes), or has received a pension
	computed on the basis of an optional annuity election, the optional
	annuity election, including any designation of an eligible
	designated survivor, governs the payment of any pension or benefit
	for the period of service covered by the optional annuity election,
	and no other survivor benefit is payable for that period of service.
	If a member meets the requirements of Subsection (j) of this section
	and has made an optional annuity election or has received a pension
	computed on the basis of an optional annuity election, the optional
	annuity election, including any designation of an eligible
	designated survivor, shall control the payment of any pension or
	benefit, and no other survivor benefit is payable unless the member
	elects, not later than the 90th day after the date of the separation
	of employment and before payment of a pension, to revoke the
	optional annuity election for future payment of benefits. If
	revocation occurs, any survivor benefit is paid under Subsection
	(j) of this section.
	(q)  Subsections (g) through (l) of this section do not apply
	to the calculation of any benefit for or attributable to the period
	of service following:
	(1)  the employment or reemployment of a member hired
	or rehired on or after January 1, 2005; or
	(2)  the reemployment of a deferred retiree or retiree
	who is reemployed in a pension system covered position before
	January 1, 2005, but for a period of two years or less of continuous
	credited service.
	(r)  If a deferred retiree or retiree subject to Subsection
	(q)(2) of this section is reemployed in a pension system covered
	position, the retiree's pension due on the retiree's subsequent
	retirement shall be computed as follows:
	(1)  the portion of the retiree's pension attributable
	to the retiree's periods of credited service that accrued before
	the retiree's reemployment shall be calculated on the basis of the
	schedule of benefits for retiring members that was in effect at the
	time of the member's previous termination or terminations of
	employment; and
	(2)  the portion of the member's pension attributable
	to the member's period of credited service that accrued after the
	member's reemployment shall be calculated on the basis of the
	schedule of benefits for retiring members that is in effect at the
	time of the member's subsequent retirement.
	(s)  The computation under Subsection (r) of this section may
	not result in a lower pension benefit amount for the previous
	service of the retiree than the pension benefit amount the retiree
	was eligible to receive for the retiree's previous service before
	the date of reemployment.
	SECTION 3.22.  Section 18(d), Chapter 88 (H.B. 1573), Acts
	of the 77th Legislature, Regular Session, 2001 (Article 6243h,
	Vernon's Texas Civil Statutes), is amended to read as follows:
	(d)  The military service credited under Subsection (c) of
	this section:
	(1)  may not exceed a total of 60 months; and
	(2)  may be claimed as service solely in the group in
	which the member participates [A only if the member is a group A
	member or group C member] at the time the member claims the
	service[; and
	[(3)     may be claimed as service in group B only if the
	member is a group B member at the time the member claims the
	service].
	SECTION 3.23.  Sections 24(h) and (i), Chapter 88 (H.B.
	1573), Acts of the 77th Legislature, Regular Session, 2001 (Article
	6243h, Vernon's Texas Civil Statutes), are amended to read as
	follows:
	(h)  Contributions may not accumulate under the excess
	benefit plan to pay future retirement benefits. The executive
	director shall reduce each payment of employer contributions that
	would otherwise be made to the pension fund under Section 8A [8] of
	this Act by the amount determined to be necessary to meet the
	requirements for retirement benefits under the plan, including
	reasonable administrative expenses, until the next payment of
	municipal contributions is expected to be made to the pension fund.
	The employer shall pay to the plan, from the withheld
	contributions, not earlier than the 30th day before the date each
	distribution of monthly retirement benefits is required to be made
	from the plan, the amount necessary to satisfy the obligation to pay
	monthly retirement benefits from the plan. The executive director
	shall satisfy the obligation of the plan to pay retirement benefits
	from the employer contributions transferred for that month.
	(i)  Employer contributions otherwise required to be made to
	the pension fund under Section 8A [8] of this Act and to any other
	qualified plan shall be divided into those contributions required
	to pay retirement benefits under this section and those
	contributions paid into and accumulated to pay the maximum benefits
	required under the qualified plan. Employer contributions made to
	provide retirement benefits under this section may not be
	commingled with the money of the pension fund or any other qualified
	plan.
	SECTION 3.24.  Section 8(d), Chapter 88 (H.B. 1573), Acts of
	the 77th Legislature, Regular Session, 2001 (Article 6243h,
	Vernon's Texas Civil Statutes), is repealed.
	SECTION 3.25.  (a)  The change in law made by this Act to
	Section 2, Chapter 88 (H.B. 1573), Acts of the 77th Legislature,
	Regular Session, 2001 (Article 6243h, Vernon's Texas Civil
	Statutes), applies only to the appointment or election of a trustee
	of the board of trustees of the pension system established under
	that law that occurs on or after the effective date of this Act.
	(b)  A person who is serving as a trustee immediately before
	the effective date of this Act may continue to serve for the
	remainder of the trustee's term, and that trustee's qualifications
	for serving as a trustee for that term are governed by the law in
	effect immediately before the effective date of this Act.
	SECTION 3.26.  The pension system established under Chapter
	88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
	(Article 6243h, Vernon's Texas Civil Statutes), shall require the
	pension system actuary to prepare the first actuarial experience
	study required under Section 8D, Chapter 88 (H.B. 1573), Acts of the
	77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
	Texas Civil Statutes), as added by this Act, not later than
	September 30, 2021.
	ARTICLE 4. PROVISIONS APPLICABLE TO EACH PUBLIC RETIREMENT SYSTEM
	SUBJECT TO ACT
	SECTION 4.01.  Chapter 107, Local Government Code, is
	amended by adding Section 107.0036 to read as follows:
	Sec. 107.0036.  VOTER APPROVAL REQUIRED FOR CERTAIN PENSION
	FUND OBLIGATIONS.  (a)  This section applies only to a public
	pension fund subject to:
	(1)  Article 6243e.2(1), Revised Statutes;
	(2)  Chapter 88 (H.B. 1573), Acts of the 77th
	Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
	Civil Statutes); and
	(3)  Article 6243g-4, Revised Statutes.
	(b)  A municipality may issue an obligation under Section
	107.003 to fund all or any part of the unfunded liability of a
	public pension fund subject to this section only if the issuance is
	approved by a majority of the qualified voters of the municipality
	voting at an election held for that purpose.
	SECTION 4.02.  Section 107.0036, Local Government Code, as
	added by this Act, applies only to obligations for which the
	governing body of a municipality executes an agreement under
	Section 107.003(b), Local Government Code, on or after the
	effective date of this Act.
	ARTICLE 5. CONFLICTING LEGISLATION; EFFECTIVE DATE
	SECTION 5.01.  If this Act conflicts with any other Act of
	the 85th Legislature, Regular Session, 2017, this Act controls
	unless the conflict is expressly resolved by the legislature by
	reference to this Act.
	SECTION 5.02.  This Act takes effect July 1, 2017, 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 effect on that
	date, this Act takes effect September 1, 2017.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I hereby certify that S.B. No. 2190 passed the Senate on
	May 1, 2017, by the following vote:  Yeas 25, Nays 5, one present
	not voting; May 10, 2017, Senate refused to concur in House
	amendments and requested appointment of Conference Committee;
	May 16, 2017, House granted request of the Senate; May 23, 2017,
	Senate adopted Conference Committee Report by the following
	vote:  Yeas 25, Nays 5, one present not voting.
	______________________________
	Secretary of the Senate
	I hereby certify that S.B. No. 2190 passed the House, with
	amendments, on May 9, 2017, by the following vote:  Yeas 115,
	Nays 29, three present not voting; May 16, 2017, House granted
	request of the Senate for appointment of Conference Committee;
	May 24, 2017, House adopted Conference Committee Report by the
	following vote:  Yeas 103, Nays 43, three present not voting.
	______________________________
	Chief Clerk of the House
	Approved:
	______________________________
	Date
	______________________________
	Governor