2023 Texas Statutes › Vernon's Civil Statutes › Title 109 - Pensions › Article 6243h. Municipal Pension System in Cities of 1,500,000 or More › Section 2. Pension Board

Sec. 2.  PENSION BOARD.  (a)  The pension board of the predecessor system shall continue to administer, manage, and operate the pension system, including directing investments and overseeing the fund's assets.
(b)  The pension system shall operate for the benefit of the employees of a city and the pension system.  The pension system continues to operate regardless of whether the city's population falls below the population required for the city.  The pension board is not subject to Title 9, Property Code.
(c)  The pension board consists of 11 trustees as follows:
(1)  one person appointed by the mayor of the city;
(2)  one person appointed by the controller of the city;
(3)  four municipal employees of the city who are members of the pension system;
(4)  two retirees, each of whom:
(A)  has at least five years of credited service in the pension system;
(B)  receives a retirement pension from the pension system; and
(C)  is not an officer or employee of the city;
(5)  one person appointed by the elected trustees who  has been a resident of this state for the three years preceding the date of initial appointment; and
(6)  two persons appointed by the governing body of the city.
(c-1)  To serve as a trustee under Subsection (c)(1), (2), or (6) of this section, a person may not be a participant in or beneficiary of the pension system.
(c-2)  A trustee appointed under Subsection (c)(1), (2), (5), or (6) of this section must have expertise in at least one of the following areas:  accounting, finance, pensions, investments, or actuarial science.  Of the trustees appointed under Subsections (c)(1), (2), and (6) of this section, not more than two trustees may have expertise in the same area.
(c-3)  A trustee appointed under Subsection (c)(1) of this section shall serve a three-year term expiring in July of the applicable year.  The appointed trustee may be removed at any time by the mayor.  The mayor shall fill a vacancy caused by the trustee's death, resignation, or removal and the person appointed to fill the vacancy shall serve the remainder of the unexpired term of the replaced trustee and may not serve beyond the expiration of the unexpired term unless appointed by the mayor.
(c-4)  A trustee appointed under Subsection (c)(2) of this section shall serve a three-year term expiring in July of the applicable year.  The appointed trustee may be removed at any time by the controller.  The controller shall fill a vacancy caused by the trustee's death, resignation, or removal and the person appointed to fill the vacancy shall serve the remainder of the unexpired term of the replaced trustee and may not serve beyond the expiration of the unexpired term unless appointed by the controller.
(d)  To serve as a trustee under Subsection (c)(3) of this section, a person must be a member with at least five years of credited service and be elected by the active members of the pension system voting at an election called by the pension board.  No more than two of the employee trustees may be employees of the same department.
(e)  A person elected as an employee trustee under Subsection (d) of this section who retires during the trustee's term shall remain in office until the expiration of the term.  Persons elected as employee trustees serve staggered four-year terms, with the terms of two of the trustees expiring in each even-numbered year.  Each employee trustee shall continue to serve until a successor is qualified.
(f)  A vacancy caused by an employee trustee's death, resignation, or removal shall be filled by an appointment made by a majority of the trustees elected by the members of the pension system on a notarized affidavit of appointment submitted to the executive director not later than the 10th day after the date the vacancy occurs.  The appointee serves for the remainder of the unexpired term of the replaced trustee.  If the notarized affidavit of appointment is not timely submitted, the executive director shall call an election to be held not later than the 90th day after the date of the vacancy to elect an employee trustee to fill the vacancy.
(g)  To serve as a trustee under Subsection (c)(4) of this section, a person must be elected by a majority of the retirees voting at an election called by the pension board.
(h)  Persons elected as retiree trustees serve four-year staggered terms, with the term of one trustee expiring in each even-numbered year.
(i)  Each retiree trustee serves until the retiree's successor is qualified.  A vacancy caused by a retiree trustee's death, resignation, or removal shall be filled by appointment made by the other trustee normally chosen by retiree election on a notarized affidavit of appointment submitted to the executive director not later than the 10th day after the date the vacancy occurs.  The appointee serves for the remainder of the unexpired term of the replaced trustee.  If the notarized affidavit of appointment is not timely submitted, the executive director shall call an election to be held not later than the 90th day after the date of the vacancy to elect a retiree trustee to fill the vacancy.
(j)  To serve as a trustee under Subsection (c)(5) of this section, the person must be appointed by a vote of a majority of the elected trustees of the pension board.  The trustee appointed under Subsection (c)(5) of this section shall serve a three-year term.  The appointment or reappointment of the appointed trustee shall take place in July of the year in which the term ends.  The appointed trustee may be removed at any time by a vote of a majority of the elected trustees of the pension board.  A vacancy caused by the appointed trustee's death, resignation, or removal shall be filled by the elected trustees of the pension board.  The appointee serves for the remainder of the unexpired term of the replaced trustee.  An appointed trustee may not serve beyond the expiration of the three-year term unless a majority of the elected trustees of the pension board reappoint the trustee for a new term.
(j-1)  To serve as a trustee under Subsection (c)(6) of this section, a person must be appointed by a vote of a majority of the members of the governing body of the city.  Each trustee appointed under Subsection (c)(6) of this section shall serve three-year terms expiring in July of the applicable year.  A trustee appointed under Subsection (c)(6) of this section may be removed at any time by a vote of a majority of the members of the governing body of the city.  A vacancy caused by the appointed trustee's death, resignation, or removal shall be filled by a vote of a majority of the members of the governing body of the city.  A person appointed to fill the vacancy shall serve the remainder of the unexpired term of the replaced trustee, and may not serve beyond the expiration of the unexpired term unless appointed by the governing body of the city.
(j-2)  If a majority of the pension board determines that a trustee appointed under Subsection (c)(1), (2), or (6) of this section has acted or is acting in a manner that conflicts with the interests of the pension system or is in violation of this Act or any agreement between the pension board and the city entered into under Section 3(n) of this Act, the pension board may recommend to the mayor, controller, or governing body, as appropriate, that the appointed trustee be removed from the pension board.  If the appointed trustee was appointed by the governing body of the city, an action item concerning the pension board's recommendation shall be placed on the governing body's agenda for consideration and action.  The governing body shall make a determination on the recommendation and communicate the determination to the pension system not later than the 45th day after the date of the recommendation.
(k)  Notwithstanding any other provision in this section, if an eligible candidate for an elected trustee position on the pension board is unopposed for an election, the election may not be held for that position, and the pension board shall certify the candidate as elected to the pension board on the executive director's designation that the candidate is eligible to be a trustee under this section and is unopposed for election.  The pension board's certification shall be effective on the day following the date the preceding term for the trustee position expires.
(l)  To serve on the pension board, each trustee shall, on or before the first pension board meeting following the trustee's most recent election or appointment, take an oath of office that the trustee:
(1)  will diligently and honestly administer the pension system; and
(2)  will not knowingly violate this Act or willingly allow a violation of this Act to occur.
(m)  A trustee serves without bond unless otherwise required by law and may not receive compensation for service on the pension board.  The pension board by resolution may adopt a policy for removal of a trustee.
(n)  The person serving as a trustee under Subsection (c)(2) of this section serves as the treasurer of the pension fund.  The treasurer shall file an official bond payable to the pension system.  The treasurer is liable on the treasurer's official bond for the faithful performance of the treasurer's duties under this Act in connection with the pension fund.
(o)  The pension board shall receive, manage, and disburse the pension fund as provided by this Act and rules adopted by the pension board.
(p)  In each odd-numbered year, the pension board shall elect from the elected trustees a chair, vice chair, and secretary.
(q)  The pension board shall hold regular monthly meetings at a time and place set by the chair.  The chair, the secretary, or a majority of the trustees may call a special meeting of the pension board.
(r)  The city shall allow city employees who are trustees to promptly attend all pension board and committee meetings.  The city shall allow trustees the time required to travel to and attend educational workshops, legislative hearings, and meetings regarding proposed amendments to this Act if attendance is consistent with a trustee's duty to the pension board.
(s)  Notice shall be given to all trustees of the pension board, unless waived in writing, as to any proposed meeting by any method reasonably calculated to give adequate notice of the meeting.  The notice may be delivered by mail, personal delivery, or electronically transmitted notice, including facsimile, and shall be properly addressed to each trustee.  If a meeting occurs that all trustees of the pension board attend, notice is not necessary under this subsection.
(t)  Each trustee is entitled to one vote on the pension board.  A majority of concurring votes present at any meeting of the pension board is needed for a decision by the trustees.  A majority of the trustees is a quorum.  A trustee who is a member may not vote on any issue relating specifically to that trustee.
(u)  The city shall provide full and timely information to the pension board about employees as reasonably required by the pension board to administer the pension fund and provide benefits properly, including information relating to the hiring of employees, members' service dates, compensation of members, members' deaths, and terminations of employment.
(v)  The pension board may purchase from an insurer licensed to do business in this state an insurance policy that provides for reimbursement of a trustee, officer, or employee of the pension board for liability imposed for damages caused by an alleged act, error, or omission committed in the individual's capacity as fiduciary or cofiduciary of assets of the pension fund and for costs and expenses incurred by a fiduciary or cofiduciary in defense of a claim of an alleged act, error, or omission.  A policy of insurance purchased under this subsection may not provide for reimbursement of a trustee, officer, or employee of the pension board for liability imposed or expenses incurred because of the individual's personal dishonesty, fraudulent breach of trust, lack of good faith, intentional fraud or deception, or intentional failure to act prudently.  The cost of insurance coverage purchased under this subsection shall be paid from money in the pension fund.
(w)  If the insurance described in Subsection (v) of this section is not in effect, the pension board may indemnify a trustee, officer, or employee of the pension board for liability imposed as damages because of an alleged act, error, or omission committed in the individual's capacity as fiduciary or cofiduciary of assets of the pension fund and for reasonable costs and expenses incurred by a fiduciary or a cofiduciary in defense of a claim of an alleged act, error, or omission.  Indemnification may not extend to liability imposed or expenses incurred by a trustee, officer, or employee of the pension board because of the individual's personal dishonesty, fraudulent breach of trust, lack of good faith, intentional fraud or deception, or intentional failure to act prudently.  A determination of indemnification shall be made by a majority vote of the pension board.  If a proposed indemnification is of a trustee, that trustee may not vote on the matter.  In the event the vote of the pension board results in a tie, the indemnification shall be approved.  The pension board may adopt a policy establishing a method for presentation, approval, and payment of claims for indemnification.  Indemnification approved under this subsection extends to acts, errors, and omissions of trustees, officers, or employees of the predecessor system as long as the alleged act, error, or omission occurs after July 1, 1989.
(x)  The pension board shall manage the pension fund under this Act and under the Internal Revenue Code of 1986, as amended, and may:
(1)  adopt, for the administration of the pension fund, written rules and guidelines;
(2)  interpret and construe this Act and any summary plan, descriptions, or benefits procedures, except that each construction must meet any qualification requirements established under Section 401, Internal Revenue Code of 1986, as amended;
(3)  correct any defect, supply any omission, and reconcile any inconsistency that appears in this Act in a manner and to the extent that the pension board considers expedient to administer this Act for the greatest benefit of all members;
(4)  determine all questions, whether legal or factual, relating to eligibility for membership, service, or benefits or relating to the administration of the pension fund to promote the uniform administration of the pension fund for the benefit of all members and retirees;  and
(5)  establish and maintain records necessary or appropriate for the proper administration of the pension fund.
(y)  The determination of any fact by the pension board and the pension board's interpretation of this Act are final and binding on any interested party, including members, deferred participants, retirees, eligible survivors, beneficiaries, and the city.
(z)  The pension board shall determine the prior service to be credited to each member of the pension system based on:
(1)  the personnel records of the city;  or
(2)  affidavits, if the personnel records are incomplete.
(aa)  The pension board shall determine each member's credited service based on the personnel and financial records of the city and the records of the pension board.
(bb)  The trustees and the executive director may rely on:
(1)  tables, valuations, certificates, and reports furnished by any actuary employed by the pension board;
(2)  certificates and reports made by an accountant selected or approved by the pension board;
(3)  any report furnished by the treasurer;  and
(4)  opinions given by any legal counsel selected or approved by the pension board.
(cc)  The trustees, executive director, and employees of the pension system are fully protected and free of liability for any action taken or suffered by them in good faith in reliance on the actuary, accountant, treasurer, or counsel, and the action is conclusively binding on all employees, members, deferred participants, retirees, eligible survivors, beneficiaries, and other persons.
(dd)  A gathering of any number of trustees to investigate, research, or review prospective or current investments, without formal action by the trustees, is not a deliberation or meeting under Chapter 551, Government Code, and is not required to be open to the public.
(ee)  A trustee appointed under Subsection (c)(1), (2), (5), or (6) of this section who fails to attend at least 50 percent of all regular pension board meetings, as determined annually each July 1, may be removed from the pension board by the appointing entity.  A trustee removed under this subsection may not be appointed as a trustee for one year following removal.
(ff)  All trustees appointed under Subsection (c) of this section shall complete minimum educational training requirements established by the State Pension Review Board.  The appointing entity may remove an appointed trustee who does not complete minimum educational training requirements during the period prescribed by the State Pension Review Board.
(gg)  The pension board shall adopt an ethics policy governing, among other matters, conflicts of interest that each trustee must comply with during the trustee's term on the pension board.
(hh)  During a trustee's term on the pension board and for one year after leaving the pension board, a trustee may not represent any other person or organization in any formal or informal appearance before the pension board or pension system staff concerning a matter for which the person has or had responsibility as a trustee.
(ii)  The pension board may establish standing or temporary committees as necessary to assist the board in carrying out its business, including committees responsible for risk management or governance, investments, administration and compensation, financial and actuarial matters, audits, disability determinations, and agreements under Section 3(n) of this Act.  The pension board shall establish a committee responsible for agreements under Section 3(n) of this Act that must be composed of the elected trustees and the trustee appointed by the elected trustees.  Except for a committee responsible for agreements under Section 3(n) of this Act and any committee responsible for personnel issues:
(1)  each committee must include at least one elected trustee and one trustee appointed by the mayor, controller, or governing body of the city;
(2)  committee meetings are open to all trustees; and
(3)  a committee may not make final decisions and may only make recommendations to the pension board.
(jj)  Subsections (x)(1) through (4), (y), and (cc) of this section do not grant the pension board authority to modify or terminate Sections 8A through 8F of this Act.