| (a) A public retirement system is adhering to a legacy
funding soundness restoration plan if the system's actuarial valuation
shows:
(1) the funding period is expected to fall within 40
years by the target date and so long as the system's funding period
continues to shorten while the system's funding period is above 40
years and does not increase to a length of time greater than 40 years
after falling below 40 years; or
(2) an increase in funding period compared to the previous
valuation, and the system's actuarial valuation shows that, between
the valuation date and the system's target date, the system's funding
period or funded ratio remains within the compliance corridor adopted
in board rule. If the system's funding period is infinite, only the
funded ratio will be evaluated to determine compliance for the purposes
of this paragraph.
(b) A public retirement system with a legacy funding
soundness restoration plan may submit a projection to serve as the
baseline for the purpose of this subsection. This projection must
show the projected funded ratio and funding period for each year beginning
with the current date until the target date. For any years the system's
funding period is projected to be above 40 years, the corridor will
be based on the baseline. For any years the system's funding period
is projected to be below 40 years, the compliance corridor will be
based on a minimum of 40 years. If the system does not submit such
a projection to the board for this purpose, the board will determine
adherence to the legacy funding soundness restoration plan using a
baseline in which a system's funding period must decrease by one year
every consecutive year as measured on the anniversary of the date
on which the final version of the funding soundness restoration plan
was agreed to as required by law.
(c) The allowable degree of variation from the baseline
will begin at five percent for a funded ratio corridor or ten years
for a funding period corridor and will decrease over period between
the current date and the target date as described by Figure: 40 TAC
§610.20(c). A system would be considered compliant if plan experience
exceeds a corridor in a favorable way. The board will use each system's
baseline to provide a compliance corridor unique to that system based
on their funding period and funded ratio, using the corridor sizes
specified in these rules.
Attached Graphic
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