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Signed Into Law
Signed June 20, 2025Effective 2025-09-01
HB2802

Regular Session

Relating to the administration of, contributions to, and benefits under retirement systems for firefighters in certain municipalities.

Government Affairs & Regulatory Compliance Analysis

HB2802: Government Affairs Overview

HB2802 mandates a structural overhaul of the Austin Firefighters Relief and Retirement Fund, transitioning from fixed statutory contributions to a variable Risk Sharing Valuation model while establishing a reduced benefit tier (Group B) for new hires. This legislation imposes immediate budgetary liabilities on the City of Austin and requires significant payroll reconfiguration to accommodate dual-track benefits by January 1, 2026.

Rep. John Bucy·House Bill·Regular Session

Critical
High Cost
Effective:2025-09-01
Enforcing Agencies

Austin Firefighters Relief and Retirement Fund Board of Trustees • City of Austin • Texas Pension Review Board

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HB2802
Relating to the administration of, contributions to, and benefits under retirement systems for firefighters in certain municipalities.
Critical Urgency
Passed with Opposition
House Vote144 - 4
YEA
97% in favor148 voting
Senate Vote31 - 0
YEA
100% in favor31 voting
4
Total Opposition Votes
Cost Impact
High
Effective
2025-09-01
Enforcing Agencies
Austin Firefighters Relief and R...City of AustinTexas Pension Review Board
Primary Author: Rep. John Bucy
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: September 1, 2025
  • Compliance Deadline: January 1, 2026 (Implementation of Group B payroll logic, new contribution rates, and legacy payments).
  • Agency Rulemaking: The Fund Board must conduct special elections in November 2025 and adopt administrative rules for Group B membership and DROP interest calculations prior to the January 1, 2026, go-live date.

Immediate Action Plan

  • 1. Obtain the Initial Valuation: Finance Department must secure the Dec 31, 2024, Risk Sharing Valuation Study immediately to finalize FY2026 budget allocations.
  • 2. Reconfigure Payroll: Update HRIS systems to distinguish Group A (Legacy) from Group B (New Hire) logic before the January 1, 2026 cutoff.
  • 3. Appoint Trustee: City Council must appoint the new public fiduciary to the Board before the December 31, 2025 deadline to ensure City representation.
  • 4. Retain Actuary: The City must engage an independent actuary now to be prepared for the strict 3-month window to challenge Fund assumptions.

Operational Changes Required

Contracts

  • Employment Agreements: Offer letters and contracts for firefighters hired on or after January 1, 2026, must explicitly cite Group B status (3.0% multiplier, no early retirement) to prevent promissory estoppel claims regarding legacy benefits.
  • Actuarial Services: The City must immediately retain or amend contracts with an independent actuary. Section 13 grants the City statutory audit rights, but these must be exercised within strict 3-month windows, requiring a standing vendor relationship.

Hiring/Training

  • Payroll Configuration: HRIS systems must be reprogrammed to segregate "Group A" (Legacy) and "Group B" (New Hire) employees, as they are subject to different interest rates, multipliers, and DROP calculations.
  • Board Appointment: The City Council must identify, vet, and appoint a qualified public member with financial expertise to the Board of Trustees by December 31, 2025.

Reporting & Record-Keeping

  • Risk Sharing Valuation Study: The Fund must produce this annual study (dated Dec 31), which serves as the controlling document for contribution rates.
  • Dispute Documentation: The City must maintain a rigorous audit trail of all actuarial correspondence. If the Board overrides independent actuarial findings (allowed under Section 13), the City must secure the Board's required "formal letter" of rationale for legal defense.

Fees & Costs

  • Variable Municipal Contributions: Budgets can no longer rely on a flat percentage. Finance must account for two streams: (1) a variable percentage rate defined annually by the Risk Sharing Study, and (2) a fixed "Legacy Contribution" schedule to amortize unfunded liability.
  • Employee Contributions: Firefighter contributions are set at 18.70% starting Jan 1, 2026, but the law triggers an automatic increase (capped at +2%) if the City's required contribution exceeds the statutory maximum.

Strategic Ambiguities & Considerations

  • The "Discussions" Clause: Section 10.09(d) mandates that parties "enter into discussions" if funding deficits exceed maximum contribution caps, but it fails to define a binding resolution mechanism or arbitration process, creating a risk of political deadlock.
  • Board Override Power: Section 13(g) allows the Fund Board to override a third-party dispute resolution actuary simply by issuing a formal letter of rationale. This effectively limits the City's recourse to litigation or State Pension Review Board intervention if the Board ignores independent expert findings.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Feb 13, 2025
Passed House
May 7, 2025
Passed Senate
May 19, 2025
Signed
Jun 20, 2025
Effective
Sep 1, 2025
TopicsCity GovernmentCity Government--employees/officersFire Fighters & PoliceFire Fighters & Police--generalRetirement SystemsRetirement Systems--police & FirefightersState Pension Review Board
03

House Authors

Rep. John BucyDemocrat · Primary Author
Joint Authors

Senate Sponsors

Sen. Charles SchwertnerRepublican · Primary Sponsor
Cosponsors (3)

Bill Text(with markup)

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Quick Reference

Frequently Asked Questions

Common questions about HB2802

Q

What does Texas HB2802 do?

HB2802 mandates a structural overhaul of the Austin Firefighters Relief and Retirement Fund, transitioning from fixed statutory contributions to a variable Risk Sharing Valuation model while establishing a reduced benefit tier (Group B) for new hires. This legislation imposes immediate budgetary liabilities on the City of Austin and requires significant payroll reconfiguration to accommodate dual-track benefits by January 1, 2026.

Q

Who authored HB2802?

HB2802 was authored by Texas Representative John Bucy during the Regular Session.

Q

When was HB2802 signed into law?

HB2802 was signed into law by Governor Greg Abbott on June 20, 2025.

Q

Which agencies enforce HB2802?

HB2802 is enforced by Austin Firefighters Relief and Retirement Fund Board of Trustees, City of Austin and Texas Pension Review Board.

Q

How significant are the changes in HB2802?

The regulatory priority for HB2802 is rated as "critical". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of HB2802?

The cost impact of HB2802 is estimated as "high". This may vary based on industry and implementation requirements.

Q

What topics does HB2802 address?

HB2802 addresses topics including city government, city government--employees/officers, fire fighters & police, fire fighters & police--general and retirement systems.

Q

What are the key dates for HB2802?

Key dates for HB2802: Effective date is 2025-09-01. Rulemaking: Conduct election for new board positions to fill terms ending December 2029 and December 2028. (2025-11-30); Implement administrative rules for Group B membership, new DROP interest calculations, and military service credit payments. (2026-01-01). Consult with legal counsel regarding applicability.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 11, 2026