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 fiv