The retirement system must determine a member’s prior service credit after receiving the required certification, and a municipality’s governing body must set the percentage used to compute that credit. In some cases it must adopt a zero percent credit, and it cannot adopt a percentage until funding conditions are met.
Sec. 853.105. DETERMINATION OF PRIOR SERVICE CREDIT. (a) After receiving a certification of prior service and average prior service compensation under Section 853.104, the retirement system shall determine the member's prior service credit. (b) Repealed by Acts 2019, 86th Leg., R.S., Ch. 991 (S.B. 1337), Sec. 28, eff. January 1, 2020. (c) The prior service credit is an amount computed as a percentage determined as provided by Subsection (d) or, if applicable, Subsection (d-1), times a base credit equal to the accumulation at three percent interest of a series of monthly amounts for the number of months of approved prior service, times the sum of: (1) the rate of contributions required of employees of the municipality for current service; plus (2) the rate described in Subdivision (1) times the municipal current service matching ratio. (d) The governing body of a municipality shall determine in the ordinance providing for participation the percentage to be applied against the base credit in computing a prior service credit under Subsection (c). Except as provided by Subsection (d-1), the percentage adopted may be any multiple of 10 percent that does not exceed 100 percent of the base credit, with 10 percent being the minimum percentage a municipality may adopt. A governing body may not adopt a percentage under this subsection until the actuary first determines, and the retirement system concurs in the determination, that the municipality is able to fund, before the 30th anniversary of the effective date of its participation in the retirement system, all prior service obligations that the municipality proposes to assume under this section. (d-1) The governing body of a municipality shall adopt, by ordinance, a zero percent prior service credit if, before joining the retirement system, the municipality provided retirement benefits to its employees that were funded partly or wholly by the municipality. Prior service credit adopted under this subsection is excluded prior service credit. (e) The prior service credit of a person who becomes a member of the retirement system under Section 852.105 or who is entitled to prior service credit under Section 853.102(a)(3) is computed on the percentage of the base prior service credit that was most recently used by the person's employing municipality in computing prior or updated service credits for current employees. (f) Interest on a prior service credit is earned for each whole calendar year beginning on the effective date of membership and ending on the effective date of retirement. If a person retires under this subtitle on a date other than December 31, interest on a prior service credit is earned for the partial year in which the retirement occurs, prorated from January 1 of the year in which the retirement occurs to the effective date of retirement. Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1981, 67th Leg., 1st C.S., p. 221, ch. 18, Sec. 75, eff. Jan. 1, 1982. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 63.105 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 2001, 77th Leg., ch. 121, Sec. 5, eff. Jan. 1, 2002. Amended by: Acts 2019, 86th Leg., R.S., Ch. 991 (S.B. 1337), Sec. 5, eff. January 1, 2020. Acts 2019, 86th Leg., R.S., Ch. 991 (S.B. 1337), Sec. 28, eff. January 1, 2020.