Sec. 4.022.  MANDATORY ADJUSTMENTS TO RETIREE HEALTH PLAN CONTRIBUTIONS, OUT-OF-POCKET PAYMENTS, AND DEDUCTIBLES.  (a)  Subject to Subsection (b) of this section, if on October 1, 2017, the actuary determines and states in the then most recent actuarial report delivered to the board that the number of years required to fully amortize the unfunded liability of the fund is more than 30 years, the board shall modify the retiree health plan as follows:
(1)  the amount of the contributions in effect under Sections 4.02 and 4.021 of this Act shall be increased by a percentage determined by the board not to exceed 10 percent on October 1 of each year, commencing October 1, 2017; and
(2)  the maximum deductibles and maximum out-of-pocket payments for each individual in a calendar year and for each family in a calendar year set out in the retiree health plan then in effect shall be increased by a percentage determined by the board not to exceed 10 percent on January 1 of each year, commencing January 1, 2018.
(b)  The board is not required to implement additional increases under Subsection (a) of this section if the actuary determines and states in the actuarial report delivered to the board under that subsection that the number of years required to fully amortize the unfunded liability of the fund is 30 years or less.
(c)  Except as provided by this section, the board may not change the amount of contributions to the fund by a member under Section 4.02 of this Act or a municipality under Section 4.021 of this Act.
Sec. 4.023.  UNIFORMED SERVICE.  (a)  A member of the fund who enters any uniformed service of the United States may not:
(1)  be required to make the monthly payments into the fund as required by this Act while the member is engaged in active service with the uniformed service; or
(2)  lose any seniority rights or retirement benefits provided by this Act because of that service.
(b)  Not later than the 90th day after the date of the member's reinstatement to an active status in a fire or police department, the member shall file with the secretary of the board a written statement of intent to pay into the fund an amount equal to the amount the member would have paid if the member had remained on active status in the department during the period of the member's absence while in the uniformed service.
(c)  The member shall make the payment described by Subsection (b) of this section in full within a period after the member's return that is equal to three times the amount of time the member was absent, except that the maximum period for payment may not exceed five years.
(d)  If the member does not comply with Subsections (b) and (c) of this section, the member loses all credit toward the member's years of service for the length of time the member was engaged in active service in any uniformed service.
(e)  The amount of credit purchased under this section may not exceed the length of the active service in a uniformed service required to be credited by law.
(f)  If the member complies with this section and makes all required payments, a municipality to which this Act applies shall make payment to the fund in an amount equal to the amount the municipality would have paid if the member had remained on active status in the department during the member's absence while in the uniformed service.
Sec. 4.03. RIGHTS OF BENEFICIARIES AND MEMBERS;  ASSOCIATION.    (a)  Beneficiaries and members of the fund are entitled to all rights otherwise provided to the beneficiaries or members under any state or federal statute.
(b)  This fund is intended to be a voluntary employee's beneficiary association as described by Section 501(c), Internal Revenue Code of 1986 (26 U.S.C. Section 501(c)), and the board has the discretion to take any action necessary to ensure that the fund is classified as such.
ARTICLE 5. RETIREMENT HEALTH BENEFITS

Sec. 5.01.  RETIREMENT HEALTH BENEFITS.  (a)  A person is eligible to receive health and medical benefits under this Act in accordance with the provisions of the retiree health plan in effect, except as otherwise provided by this Act.
(b)  Health and medical benefits shall be provided by the fund to persons who are eligible to receive them under Subsection (a) of this section, in accordance with the provisions of the retiree health plan in effect, except as otherwise provided by this Act.
(c)  The expiration of the terms, or the termination, of the collective bargaining agreements or the master contract document has no effect on the retiree health plan or the benefits provided under this Act.
(d)  The board as it considers appropriate may modify the retiree health plan if the modifications adopted at any regular or special meeting of the board do not, in the aggregate, increase the fund's total actuarial unfunded liability, as determined by the actuary.  The board has exclusive authority to modify the retiree health plan.
(e)  The board may discontinue benefits under this section for any person who does not make the contributions required by Section 4.02 of this Act.
(f)  On January 1, 2008, the maximum deductible for each individual in a calendar year as set out in the retiree health plan increases from $100 or $200, as applicable, to $500, and the maximum deductible for each family in a calendar year as set out in the retiree health plan increases from $200 or $400, as applicable, to $1,000.
(g)  The maximum out-of-pocket, including deductible, payment for each individual for each of the following calendar years as set out in the retiree health plan increases as follows:
(1)  on January 1, 2008, from $600 or $700, as applicable, to $1,500;
(2)  on January 1, 2009, from $1,500 to $1,600;
(3)  on January 1, 2010, from $1,600 to $1,700;
(4)  on January 1, 2011, from $1,700 to $1,800; and
(5)  on January 1, 2012, from $1,800 to $1,900.
(h)  Commencing January 1, 2013, on January 1 of each year the board shall increase the amount of the maximum deductible and out-of-pocket payments established under Subsections (f) and (g) of this section by a percentage equal to the then most recently published annual percentage increase in health care costs as set out in a published index selected by the actuary that reflects annual changes in health care costs. The annual percentage increase provided for by this subsection may not exceed eight percent.
ARTICLE 6. INVESTMENT AND FINANCIAL PROVISIONS

Sec. 6.01.  Repealed by Acts 2007, 80th Leg., R.S., Ch. 1415, Sec. 19, eff. October 1, 2007.
Sec. 6.02.  ACCOUNTS AND FINANCIAL REPORTS.  (a)  Accounts of the fund shall be kept as ordered by the board.
(b)  The board shall require that monthly financial reports showing all fund receipts and disbursements be prepared and submitted to the board.
Sec. 6.03. RESERVE FUNDS.    (a)  The board shall determine a reasonably safe amount of surplus necessary to defray reasonable expenses of the fund.
(b) All other assets shall be designated as reserve funds.
(c) Only the board may invest and manage the reserve funds.  The reserve funds must be invested and managed for the sole benefit of the beneficiaries.
Sec. 6.04. INVESTMENT POWERS OF BOARD.    (a)  The board shall invest the reserve funds in a manner that a prudent investor would invest the funds, considering the purposes, terms, distribution requirements, and other circumstances of an enterprise with a similar character and similar aims.
(b) The board shall diversify the investment of the reserve funds to minimize the risk of large losses unless under the circumstances it is clearly prudent not to do so.  In determining whether the board has exercised prudence concerning an investment decision, the investment of all assets of the funds, rather than the prudence of a single investment of the funds, shall be considered.
(c)  The board may directly manage investments of the reserve funds or may choose to contract for professional management services.  If the funds own real estate, the board may, at its discretion, establish an organization described by Section 501(c)(2) or 501(c)(25), Internal Revenue Code of 1986, as amended, to hold title to the real estate.
(d) The board has final responsibility for the investment of the reserve funds.  The board may purchase securities or engage in limited partnerships or make other investments not specifically provided by this Act and has the authority to exercise discretion in determining the nature, type, quality, and size of any investment consistent with the investment policies it establishes.
Sec. 6.05. PROFESSIONAL CONSULTANTS.    (a)  The board may contract for professional investment management services, financial consultants, independent auditors, third-party administrators, preferred providers, health maintenance organizations, attorneys, and actuaries.  Only the board may enter into those contracts.  The board may establish a reasonable fee for compensation under those contracts.
(b) The board may designate its own custodian or master custodian to perform the customary duties involving the safekeeping of the assets and the execution of transactions of either domestic or foreign securities.  The board may engage in a securities lending program consistent with the benefits payable to beneficiaries.
Sec. 6.06.  INVESTMENT CONSULTANT QUALIFICATIONS.  In appointing investment consultants, the board shall require that the investment consultant be:
(1)  registered under the Investment Advisors Act of 1940 (15 U.S.C. Section 80b-1 et seq.), as amended;
(2)  a bank as defined by that Act; or
(3)  an insurance company qualified to perform investment services under the law of more than one state.
ARTICLE 7. STANDARDS OF CONDUCT AND FINANCIAL DISCLOSURE REQUIREMENTS

Sec. 7.01. ETHICS POLICY.    (a)  A trustee, the executive director, or any employee of the fund may not:
(1) buy, sell, or exchange any property to or from the fund;
(2) deal with the assets of the fund in the person's own interest or for the person's own account;  or
(3) receive any consideration from any person dealing with the fund.
(b) To implement Subsection (a) of this section and to strengthen the faith and confidence of the members and beneficiaries of the fund, the board shall develop standards of conduct and financial disclosure requirements to be observed by each trustee and by the executive director in the performance of the board's and executive director's official duties.
ARTICLE 8. TRANSITION;  EFFECTIVE DATE;  EMERGENCY [REPEALED]

Secs. 8.01, 8.02. Repealed by Acts 1999, 76th Leg., ch. 52, Sec. 24(a), eff. Oct. 1, 1999.