CHAPTER 107. OBLIGATIONS FOR CERTAIN LIABILITIES TO PUBLIC PENSION FUNDS OF A MUNICIPALITY - Texas Statutes

LOCAL GOVERNMENT CODE

TITLE 4. FINANCES

SUBTITLE A. MUNICIPAL FINANCES

CHAPTER 107. OBLIGATIONS FOR CERTAIN LIABILITIES TO PUBLIC

PENSION FUNDS OF A MUNICIPALITY

Sec. 107.001. DEFINITIONS. In this chapter:

(1) "Obligation" includes a bond, certificate, note, or book

entry obligation.

(2) "Unfunded liability" means an unfunded, accrued liability of

a municipality to a public pension fund as determined by

actuarial analysis.

Added by Acts 2003, 78th Leg., ch. 1271, Sec. 1, eff. Sept. 1,

2003.

Sec. 107.002. DEFINITION OF "PUBLIC PENSION FUND." In this

chapter, "public pension fund":

(1) means a continuing, organized program or plan of service

retirement, disability retirement, or death benefits for officers

or employees of a municipality;

(2) includes a plan qualified under Section 401(a), Internal

Revenue Code of 1986, as amended; and

(3) does not include:

(A) a program that provides only workers' compensation benefits;

(B) a program administered by the federal government;

(C) a plan described by Section 401(d), Internal Revenue Code of

1986, as amended;

(D) an individual retirement account consisting of an annuity

contract described by Section 403(b), Internal Revenue Code of

1986, as amended;

(E) an individual retirement account as defined by Section

408(a), Internal Revenue Code of 1986, as amended;

(F) an individual retirement annuity as defined by Section

408(b), Internal Revenue Code of 1986, as amended;

(G) an eligible deferred compensation plan as defined by Section

457(b), Internal Revenue Code of 1986, as amended; or

(H) a program for which benefits are administered by a life

insurance company or for which the only funding agency is a life

insurance company.

Added by Acts 2003, 78th Leg., ch. 1271, Sec. 1, eff. Sept. 1,

2003.

Sec. 107.003. PENSION FUND OBLIGATIONS AUTHORIZED. (a) A

municipality may issue obligations to fund all or any part of an

unfunded liability.

(b) Before authorizing issuance and delivery of an obligation

under this section, the governing body of the municipality must

enter into a written agreement with the governing body of the

public retirement system that:

(1) has fiduciary responsibility for assets of the public

pension fund or public pension funds that are to receive the net

proceeds of the obligations to be issued; and

(2) has the duty to oversee the investment and expenditure of

the assets of the public pension fund.

(c) The written agreement must state the amount of the unfunded

liability and the date or dates on which the public pension fund

will accept the net proceeds of the obligations to be issued in

payment of all or a portion of the unfunded liability.

Added by Acts 2003, 78th Leg., ch. 1271, Sec. 1, eff. Sept. 1,

2003.

Sec. 107.004. PROCEEDS OF OBLIGATIONS ISSUED. The municipality

shall deposit the net proceeds of obligations issued under

Section 107.003 to the credit of the public pension fund. The

amount deposited under this section becomes part of the public

pension fund's assets.

Added by Acts 2003, 78th Leg., ch. 1271, Sec. 1, eff. Sept. 1,

2003.

Sec. 107.005. PAYMENT OF OBLIGATIONS. An obligation issued

under Section 107.003 may be made payable by the municipality

from:

(1) the fund from which compensation is paid to its officers and

employees;

(2) its general fund; or

(3) taxes, revenues, both taxes and revenues, or any other

source or combination of sources of money that the municipality

may use under state law to secure or pay any kind of bond or

obligation.

Added by Acts 2003, 78th Leg., ch. 1271, Sec. 1, Sept. 1, 2003.

Sec. 107.006. OBLIGATION AS REFINANCING. An obligation issued

under Section 107.003 is a complete or partial refinancing of a

commitment of the municipality to fund its unfunded liability.

Added by Acts 2003, 78th Leg., ch. 1271, Sec. 1, eff. Sept. 1,

2003.

Sec. 107.007. SALE OF OBLIGATIONS; MATURITY. Obligations issued

under Section 107.003 may be sold at private or public sale and

must mature not later than the 30th anniversary of the date of

issuance.

Added by Acts 2003, 78th Leg., ch. 1271, Sec. 1, eff. Sept. 1,

2003.

Sec. 107.008. ADDITIONAL AUTHORITY; CREDIT AGREEMENTS. (a) In

this section, "credit agreement" and "obligation" have the

meanings assigned by Section 1371.001, Government Code.

(b) The governing body of a municipality that issues obligations

under Section 107.003 may exercise any of the rights or powers of

the governing body of an issuer under Chapter 1371, Government

Code, and may enter into a credit agreement under that chapter.

An obligation issued under Section 107.003 is an obligation under

Chapter 1371, Government Code, but is not required to be rated as

required by that chapter.

Added by Acts 2003, 78th Leg., ch. 1271, Sec. 1, eff. Sept. 1,

2003.

Sec. 107.009. CHAPTER CONTROLLING. This chapter prevails over

any conflict between this chapter and:

(1) another law respecting the issuance of obligations of a

municipality; or

(2) a municipal home-rule charter.

Added by Acts 2003, 78th Leg., ch. 1271, Sec. 1, eff. Sept. 1,

2003.