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Signed Into Law
Signed May 15, 2025Effective 2025-09-01
SB2065

Regular Session

Relating to the Texas Emergency Services Retirement System.

Government Affairs & Regulatory Compliance Analysis

SB2065: Government Affairs Overview

SB2065 fundamentally restructures the funding architecture of the Texas Emergency Services Retirement System (TESRS), shifting 100% of the financial liability for optional benefit increases (COLAs) and supplemental payments ("13th checks") from the state system to local participating departments. Effective September 1, 2025, Emergency Services Districts and Municipal Fire Departments must fully fund these enhancements locally and obtain prior State Board approval before implementation.

Sen. Joan Huffman·Senate Bill·Regular Session

Moderate
Medium Cost
Effective:2025-09-01
Enforcing Agencies

Legislative Budget Board (oversight of state contribution calculations) • Texas Emergency Services Retirement System (TESRS) State Board

Business Impact

Who SB2065 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: moderate

Notable regulatory updates (effective 2025-09-01). Consider how these changes may affect your operations.

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Healthcare

Affected business types:

  • Hospitals
  • Healthcare systems
  • Medical practices
  • Health insurance providers
View all healthcare legislation

Key Operational Considerations

  • 1Actuarial Cost Certification: Before placing a benefit increase on a meeting agenda, you must obtain and file an actuarial estimate proving the department can cover 100% of the cost.

Estimated Cost Impact

mediumModerate costs expected for implementation.

Enforcing Agencies

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SB2065
Moderate
Relating to the Texas Emergency Services Retirement System.
Moderate Compliance Urgency
Requires near-term attention
Cost Impact
Medium
Effective
2025-09-01
Enforcing Agencies
Legislative Budget BoardTESRS
Primary Author: Sen. Joan Huffman
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: Spring 2025 (You must adjust FY2026 budget planning cycles immediately to account for the loss of state subsidies for retiree benefit enhancements).
  • Agency Rulemaking: The TESRS State Board is required to adopt rules defining the procedure for requesting benefit increases. A regulatory gray zone exists between now and late 2025; departments should not promise benefit increases until these rules are published.

Immediate Action Plan

  • Audit Stipends: Immediately review volunteer compensation against the new FLSA-tied definition to prevent mass disqualification of members.
  • Revise FY2026 Budgets: Remove any assumptions of state cost-sharing for retiree bonuses or COLAs in your upcoming budget drafts.
  • Halt Benefit Promises: Issue a moratorium on promising future benefit increases to staff until the TESRS Board publishes the new approval application process.
  • Request Actuarial Data: Contact TESRS to determine if your department currently carries a "legacy liability" that will require specific local amortization strategies.

Operational Changes Required

Contracts

  • Volunteer Service Agreements: You must amend volunteer agreements to align with the new statutory definition in Section 861.001(12-a). Agreements must explicitly state services are performed for "civic, charitable, or humanitarian reasons" and confirm the individual is not subject to FLSA compensation requirements.
  • Stipend Policies: Review stipend structures. If payments resemble hourly wages rather than nominal reimbursement, the individual may be legally disqualified from the pension system under the new strict definitions.

Hiring/Training

  • Roster Classification: HR and Command Staff must audit current personnel rosters to segregate "Volunteers" (strictly defined) from "Employees." Misclassification now carries a higher risk of pension disqualification.

Reporting & Record-Keeping

  • Actuarial Cost Certification: Before placing a benefit increase on a meeting agenda, you must obtain and file an actuarial estimate proving the department can cover 100% of the cost.
  • State Board Approval Filings: A new workflow is required to submit requests for supplemental payments to the TESRS Board. These filings will likely be required months in advance of the intended payment date.

Fees & Costs

  • 100% Local Liability for Enhancements: The law prohibits the use of state contributions to fund optional annuity increases. If your department approves a "13th check," you must budget for the full actuarial cost of that payment.
  • Segregated Funds: Departments must prepare to segregate funds specifically for "local liability layers" separate from the general state-subsidized contribution.

Strategic Ambiguities & Considerations

The statute leaves critical financial mechanics to future agency rulemaking. Monitor the Texas Register for:

  • 1. Payment Terms: The law allows the Board to determine how locals pay for benefit increases. It is unclear if the Board will require an immediate lump-sum payment or allow amortization (payment over time).
  • 2. Denial Criteria: The Board has the authority to prohibit local payments but the statute does not list the specific grounds for denial. It is probable that departments with low funded ratios will be blocked from issuing bonuses, regardless of their ability to pay the immediate cost.

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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.

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Legislative Timeline

This bill's path through the Texas Legislature

Filed
Mar 7, 2025
Passed Senate
Apr 7, 2025
Passed House
Apr 30, 2025
Signed
May 15, 2025
Effective
Sep 1, 2025
TopicsHealthHealth--emergency Services & PersonnelRetirement SystemsRetirement Systems--generalRetirement Systems--municipalLegislative Budget Board
03

Senate Authors

Sen. Joan HuffmanRepublican · Primary Author

House Sponsors

Rep. Greg BonnenRepublican · Primary Sponsor
Joint Sponsors

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

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More from Sen. Joan Huffman

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Related by Topic

View more Health legislation
Quick Reference

Frequently Asked Questions

Common questions about SB2065

Q

What does Texas SB2065 do?

SB2065 fundamentally restructures the funding architecture of the Texas Emergency Services Retirement System (TESRS), shifting 100% of the financial liability for optional benefit increases (COLAs) and supplemental payments ("13th checks") from the state system to local participating departments. Effective September 1, 2025, Emergency Services Districts and Municipal Fire Departments must fully fund these enhancements locally and obtain prior State Board approval before implementation.

Q

Who authored SB2065?

SB2065 was authored by Texas Senator Joan Huffman during the Regular Session.

Q

When was SB2065 signed into law?

SB2065 was signed into law by Governor Greg Abbott on May 15, 2025.

Q

Which agencies enforce SB2065?

SB2065 is enforced by Legislative Budget Board (oversight of state contribution calculations) and Texas Emergency Services Retirement System (TESRS) State Board.

Q

How significant are the changes in SB2065?

The regulatory priority for SB2065 is rated as "moderate". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of SB2065?

The cost impact of SB2065 is estimated as "medium". This may vary based on industry and implementation requirements.

Q

What topics does SB2065 address?

SB2065 addresses topics including health, health--emergency services & personnel, retirement systems, retirement systems--general and retirement systems--municipal.

Q

What are the key dates for SB2065?

Key dates for SB2065: Effective date is 2025-09-01. Rulemaking: Adopt rules regarding procedures for participating departments to request approval for supplemental payments or annuity increases, and mechanisms for the regular payment of required local contributions. (No statutory deadline specified; rules expected prior to implementation of supplemental payment procedures). Consult with legal coun

Q

What are the penalties under SB2065?

SB2065 establishes the following penalties: administrative penalty of Full cost of benefit increase for Participating departments are prohibited from using state contributions to fund optional annuity increases or supplemental payments; local governing bodies must fully fund these costs.; administrative penalty of Prohibition of payment for Participating departments may be prohibited from making supplemental payments or increasing annuities without prior approval from the state board.. Consult with legal counsel for specific applicability to your situation.

Q

Which Texas businesses are affected by SB2065?

SB2065 primarily affects healthcare providers and medical facilities. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.

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