In accordance with Government Code, Chapter 844, Subchapter H, §844.703(f), for purposes of determining the amortization period for annually determined contribution rate (ADCR) plans, the following rules are effective for plan years beginning after December 31, 1998, based on actuarial valuations on and after December 31, 1997.

1. (1) The prior service contribution rate prescribed by §844.703(b) shall be based on an open amortization period of 20 years.
2. (2) If a subdivision has an overfunded obligation instead of an unfunded obligation in its plan, the negative prior service contribution rate prescribed by §844.703(b) shall be based on an open amortization period of 30 years.
3. (3) If the governing body of a subdivision has adopted an ADCR plan and has also elected to contribute at a higher integer contribution rate as allowed by §844.703(d), the amortization period for the actuarially determined contribution rate shall be determined from one of the two rules stated above. The amortization period for the higher integer contribution rate shall be calculated in each annual actuarial valuation as the number of years required to amortize the unfunded obligation in that actuarial valuation, assuming that the employer contribution rate available to amortize the unfunded obligation shall be equal each year in the future, beginning one year after the actuarial valuation date, to the excess of the higher integer contribution rate over the normal cost contribution rate determined in that actuarial valuation.

Source Note:The provisions of this §107.4 adopted to be effective April 6, 1998, 23 TexReg 3530.