2023 Texas Statutes › Vernon's Civil Statutes › Title 109 - Pensions › Article 6243n. Municipal Retirement System in Municipalities of 460,000 to 500,000 › Section 10C. Subsequent Risk Sharing Valuation Studies

Sec. 10C.  SUBSEQUENT RISK SHARING VALUATION STUDIES. (a) For each calendar year beginning with January 1, 2024, the retirement system shall cause the system's actuary to prepare a risk sharing valuation study in accordance with this section and actuarial standards of practice.  Each risk sharing valuation study must:
(1)  be dated as of the last day of the calendar year for which the study is required to be prepared;
(2)  calculate the unfunded actuarial accrued liability of the system as of the last day of the applicable calendar year, including the liability layer, if any, associated with the most recently completed calendar year;
(3)  calculate the estimated employer contribution rate for the following calendar year;
(4)  determine the employer contribution rate and the member contribution rate for the following calendar year, taking into account any adjustments required under this section, as applicable; and
(5)  except as provided by Subsection (d) of this section, be based on the assumptions and methods adopted by the retirement board, if applicable, and be consistent with actuarial standards of practice and the following principles:
(A)  closed layered amortization of liability layers to ensure that the amortization period for each liability layer begins 12 months after the date of the risk sharing valuation study in which the liability layer is first recognized;
(B)  each liability layer is assigned an amortization period;
(C)  each liability loss layer is amortized at the remaining amortization period of the legacy liability but not less than 20 years from the first day of the calendar 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 over a 30-year period beginning January 1, 2024;
(D)  each liability gain layer is amortized over:
(i)  a period equal to the remaining amortization period on the largest remaining liability loss layer; or
(ii)  if there is no liability loss layer, a period of 20 years from the first day of the calendar year beginning 12 months after the date of the risk sharing valuation study in which the liability gain layer is first recognized;
(E)  liability layers are funded according to the level percent of payroll method;
(F)  payroll for purposes of determining the corridor midpoint, employer contribution rate, and city legacy contribution amount must be projected using the annual payroll growth rate assumption adopted by the retirement board; and
(G)  the employer contribution rate is calculated each calendar year without inclusion of the legacy liability.
(b)  The city may contribute an amount in addition to the scheduled city legacy contribution amounts to reduce the number or amount of scheduled future city legacy contribution payments.  If the city contributes an additional amount under this subsection, the retirement system's actuary shall create a new schedule of city legacy contribution amounts that reflects payment of the additional contribution.
(c)  The city and the retirement board may agree on a written transition plan for resetting the corridor midpoint, member contribution rates, or employer contribution rates:
(1)  if at any time the funded ratio of the retirement system is equal to or greater than 100 percent; or
(2)  for any calendar year after the payoff year of the legacy liability.
(d)  The retirement board may, by rule, adopt actuarial principles other than those required under this section, provided the actuarial principles:
(1)  are consistent with actuarial standards of practice;
(2)  are approved by the retirement system's actuary; and
(3)  do not operate to change the city legacy contribution amount.