2023 Texas Statutes › Vernon's Civil Statutes › Title 109 - Pensions › Article 6243n. Municipal Retirement System in Municipalities of 460,000 to 500,000 › Section 4A. Experience Study and Determining Actuarial Assumptions

Sec. 4A.  EXPERIENCE STUDY AND DETERMINING ACTUARIAL ASSUMPTIONS.  (a)  At least once every five years, the retirement board shall cause the retirement system's actuary to conduct an experience study to review the actuarial assumptions and methods adopted by the retirement board for the purposes of determining the actuarial liabilities and actuarially determined contribution rates of the system. The system shall notify the city at the beginning of an upcoming experience study by the system's actuary.
(b)  In connection with the retirement system's experience study, the city may:
(1)  conduct a separate experience study using an actuary chosen by the city;
(2)  have the city's actuary review the experience study prepared by the system's actuary; or
(3)  accept the experience study prepared by the system's actuary.
(c)  If the city conducts a separate experience study using the city's actuary, the city shall complete the study not later than the 91st day after the date the retirement system notified the city of the system's intent to conduct an experience study.
(d)  If the city elects to have the city's actuary review the retirement system's experience study, the city shall complete the review not later than the 31st day after the date the preliminary results of the experience study are presented to the retirement board.
(e)  If the city chooses to have the city's own experience study performed or to have the city's actuary review the system's experience study, the system's actuary and the city's actuary shall determine what the hypothetical employer contribution rate would be using the proposed actuarial assumptions from the experience studies and data from the most recent actuarial valuation.
(f)  If the difference between the hypothetical employer contribution rates determined by the retirement system's actuary and the city's actuary:
(1)  is less than or equal to two percent of pensionable payroll, no further action is needed and the retirement board shall use the experience study performed by the retirement system's actuary in determining assumptions; or
(2)  is greater than two percent of pensionable payroll,  the system's actuary and the city's actuary shall have 20 days to reconcile the difference in actuarial assumptions or methods causing the different hypothetical employer contribution rates, and if:
(A)  as a result of the reconciliation efforts under this subdivision, the difference between the employer contribution rates determined by the system's actuary and the city's actuary is reduced to less than or equal to two percentage points, no further action is needed and the retirement board shall use the experience study performed by the system's actuary in determining actuarial assumptions; or
(B)  after the 20th business day, the system's actuary and the city's actuary are not able to reach a reconciliation that reduces the difference in the hypothetical employer contribution rates to an amount less than or equal to two percentage points, a third-party actuary shall be retained to opine on the differences in the assumptions made and actuarial methods used by the system's actuary and the city's actuary.
(g)  The independent third-party actuary retained under this section must be chosen by the city from a list of three actuarial firms provided by the retirement system.
(h)  If a third-party actuary is retained under this section, the third-party actuary's findings must be presented to the retirement board with the experience study conducted by the system's actuary and, if applicable, the city's actuary. If the retirement board adopts actuarial assumptions or methods contrary to the third-party actuary's findings:
(1)  the system shall provide a formal letter describing the rationale for the retirement board's action to the governing body and State Pension Review Board; and
(2)  the system's actuary and executive director shall be made available at the request of the governing body or the State Pension Review Board to present in person the rationale for the retirement board's action.
(i)  If the retirement board proposes a change to actuarial assumptions or methods that is not in connection with an experience study described by this section, the retirement system and the city shall follow the same process prescribed by this section with respect to an experience study in connection with the proposed change.