S.B. No. 2065         AN ACT   relating to the Texas Emergency Services Retirement System.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 614.104(d), Government Code, is amended   to read as follows:          (d)  Money in the fund may be appropriated for a contribution   to the Texas Emergency Services Retirement System [subject to   Section 865.015].          SECTION 2.  Section 861.001, Government Code, is amended by   amending Subdivisions (1), (7), and (12) and adding Subdivisions   (2), (7-a), (7-b), (7-c), (7-d), and (12-a) to read as follows:                (1)  "Actuarially sound" [sound pension system"] means   circumstances under [a system in] which the amount of contributions   to the pension system is sufficient to cover the normal cost of and   amortize the unfunded actuarial accrued [actuarial] liability of   the pension system in a period that does not exceed the later of the   following:                      (A)  15 years after the date of the actuarial   valuation on which the determination of whether the retirement   system is actuarially sound is made; or                      (B)  September 1, 2055 [30 years].                (2)  "Amortization period" means:                      (A)  if amortizing a liability loss layer, the   period necessary to fully pay the liability loss layer;                      (B)  if amortizing a liability gain layer, the   period described by Section 865.015(b)(4); or                      (C)  if referring to the amortization period of   all liability layers of the pension system, the number of years   incorporated in a weighted average amortization factor for the sum   of all liability layers as determined in each biennial actuarial   valuation of assets and liabilities of the system.                (7)  "Legacy liability" means the total unfunded   actuarial accrued liability of the pension system:                      (A)  determined as of August 31, 2024, using an   assumed rate of investment return of seven percent; and                      (B)  for each calendar year following 2024, that   total adjusted as follows:                            (i)  reduced by the contribution amount made   under Section 865.015 for the calendar year allocated to the   amortization of the legacy liability; and                            (ii)  adjusted by the assumed rate of   investment return of seven percent.                (7-a)  "Liability gain layer" means a liability layer   that decreases the unfunded actuarial accrued liability of the   pension system.                (7-b)  "Liability layer" means:                      (A)  the legacy liability; or                      (B)  for each fiscal year after August 31, 2024,   the amount by which the pension system's unfunded actuarial accrued   liability increases or decreases in a fiscal year, as applicable,   due to the unanticipated change in revenue caused by factors, other   than changes to a benefit formula, as determined in the actuarial   valuation analyzing that fiscal year.                (7-c)  "Liability loss layer" means a liability layer   that increases the unfunded actuarial accrued liability.  For the   purposes of this subtitle, the legacy liability is a liability loss   layer.                (7-d)  "Local board" means a local board of trustees   established under Section 865.012.                (12)  "Unfunded actuarial accrued liability" means, as   determined in an actuarial valuation, the difference between the   actuarial accrued liability and the actuarial value of assets,   where the liability is determined using an expected rate of   investment return not greater than:                      (A)  seven percent; or                      (B)  if greater than seven percent, the average of   the rates used by the Employees Retirement System of Texas and the   Teacher Retirement System of Texas in the most recently published   actuarial valuations preceding the actuarial valuation in which the   unfunded actuarial accrued liability is being determined.                (12-a)  "Volunteer" means a person who performs   emergency services for civic, charitable, or humanitarian reasons,   receives no monetary compensation from a participating department,   and is not subject to the compensation requirements provided for   employees by the Fair Labor Standards Act of 1938 (29 U.S.C. Section   201 et seq.).          SECTION 3.  Section 864.002(a), Government Code, is amended   to read as follows:          (a)  A service retirement annuity is payable in monthly   installments based on:                (1)  the average monthly contribution during the   member's term of qualified service with all participating   departments under this subtitle, not including a contribution to   reduce the unfunded actuarial accrued [actuarial] liability of the   pension system; and                (2)  a formula adopted by the state board by rule that   allows the pension system[, assuming maximum state contributions   are provided under Section 865.015,] to be maintained as   actuarially sound.          SECTION 4.  Section 864.0135, Government Code, is amended by   adding Subsections (a-1) and (c) to read as follows:          (a-1)  The rules adopted under Subsection (a) may:                (1)  include procedures for the governing body of a   participating department to request the approval of the state board   to make a supplemental payment or increase an annuity under the   rules; and                (2)  prohibit the governing body of a participating   department from making a supplemental payment or increasing an   annuity under the rules without approval from the state board.          (c)  State contributions may not be used to fund any option   elected under a rule adopted under this section to make a   supplemental payment or increase an annuity.          SECTION 5.  Section 865.011(f), Government Code, is amended   to read as follows:          (f)  The state board shall determine the meaning of   "significant change" for purposes of Subsection (d)(1), which must   include circumstances in which there is an increase in the time   required to amortize the unfunded liabilities of the pension system   such that that the pension system would not be actuarially sound [to   a period that exceeds 30 years, assuming a maximum state   contribution under Section 865.015].          SECTION 6.  Section 865.014, Government Code, is amended by   adding Subsection (f) to read as follows:          (f)  The governing body of a political subdivision   associated with the participating department who elects to provide   a supplemental payment or annuity increase under Section 864.0135   shall contribute the money necessary to cover the costs of all   increased benefits provided, as required by Section 864.0135(b).   The state board may adopt rules for the regular payment of money   required by this subsection.          SECTION 7.  Section 865.015, Government Code, is amended to   read as follows:          Sec. 865.015.  STATE CONTRIBUTIONS.  (a) The state shall   contribute the amount necessary to make the pension system   actuarially sound each year, except that for each fiscal year in   which the legacy liability has not been fully paid, the state shall   make an actuarially determined payment in the amount necessary to   amortize the pension system's legacy liability by not later than   the fiscal year ending August 31, 2055 [the state's contribution   may not exceed one-third of the total of all contributions by   governing bodies in a particular year].          (b)  The pension system's actuary shall biennially determine   an actuarially determined contribution amount required under   Subsection (a) that is consistent with actuarial standards of   practice and the following principles:                (1)  closed layered amortization of liability layers to   ensure that the amortization period for each liability layer begins   12 months after the date the liability layer is first recognized;                (2)  each liability layer is assigned an amortization   period;                (3)  each liability loss layer is amortized over a   period of 15 years or until September 1, 2055, whichever is later;   and                (4)  each liability gain layer is amortized over:                      (A)  if there is a liability loss layer, a period   equal to the remaining amortization period of 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                      (B)  if there is no liability loss layer, a period   of 15 years beginning the first day of the fiscal year beginning 12   months after the liability gain layer is first recognized or until   September 1, 2055, whichever is later.          (c)  Before each regular legislative session, the pension   system shall provide the Legislative Budget Board with the amount   necessary to make the actuarially determined payment required under   this section.  The director of the Legislative Budget Board, under   the direction of the Legislative Budget Board, shall include that   payment in the general appropriations bill prepared for   introduction at each regular legislative session under Section   322.008.  This subsection expires September 1, 2057.          SECTION 8.  This Act takes effect immediately if it receives   a vote of two-thirds of all the members elected to each house, as   provided by Section 39, Article III, Texas Constitution.  If this   Act does not receive the vote necessary for immediate effect, this   Act takes effect September 1, 2025.             ______________________________ ______________________________      President of the Senate Speaker of the House                 I hereby certify that S.B. No. 2065 passed the Senate on   April 7, 2025, by the following vote:  Yeas 30, Nays 0.       ______________________________   Secretary of the Senate                I hereby certify that S.B. No. 2065 passed the House on   April 30, 2025, by the following vote:  Yeas 140, Nays 0, two   present not voting.       ______________________________   Chief Clerk of the House            Approved:     ______________________________                Date       ______________________________              Governor