The Legislative Budget Board met on August 20 to hear from the Pension Review Board concerning key aspects of their Legislative Appropriations Request for the 86th Session and on exceptional items being requested. The PRB was asked questions by a joint panel of representatives from the Governor’s Office, Lieutenant Governor’s Office, the Legislative Budget Board, and legislative committees. (Link to PRB LAR)
This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing, but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.
Pension Review Board Presentation
Anu Kumar, Pension Review Board
- Described the pension review board and its mission
- 343 individual retirement systems, 100 defined benefit plans with total net assets of ~$270 billion and total membership of over 5 million members
- Duties include continual review of the systems and recommending policies to the legislature and retirement systems
- 2018-2019 biennial appropriation totaled $1.9 billion GR
- 85% is dedicated to salaries
- To comply with 10% ($195,000) will reduce salary and eliminate multiple FTE at the agency
- A reduction of this amount will be a significant burden
- Will continue to lose technical staff
Josh McGee, Pension Review Board
- Public pension problems are gaining more attention nationally and in Texas
- Seeing increased activity legislatively and at the local level
- Causes greater burden agency
- Conducted many actuarial reviews because many are on the brink of problems
- ERS and TRS will continue to be hot topics in the next session
- Will require large interaction with the legislature and other agencies and offices
- Concerned that the agencies mission could be in danger without the exceptional items
- Texas is one of the most transparent states with respect to pension data
- Helps policy makers make better decisions
- Begun conducting intense actuarial reviews of systems that are on the brink of bigger issues
- Created analysis of more complicated pension bills that came out of the legislature
- Increased staff time has been necessary to take on role of monitor and review of those new standards and actions
- Performing multiple interim studies such as: funding policies for fixed rate pension plans, and pooling of assets for smaller systems leading into the 86th session
- Have helped many plans with remediation and review as well as updated funding guidelines and principles for plan design
- Exceptional item: Request $60,000 each year to attract and retain technical staff
- Technical nature of the work to be done and the amount of work to do requires technically skilled staff
- Had agency turnover of 25% – related to salary
- Highlighted actuary salaries as example of underfunded positions
- Executive Director Exceptional Item Request: increase in salary authorization and necessary funds for executive director to $125,000 annually as well as change in salary group
- Would move ED salary closer to other similar agencies
- Would move salary in line with State Auditor’s report
Anu Kumar, Pension Review Board
- Exceptional Item Request: $6,000 each fiscal year to maintain critical agency operations
- Specifically for programming, development, deployment and cost of implementing the states new accounting and payroll system CAPPS
- Will require the accounting staff to take on additional duties associated with CAPPS
Questions from Joint Legislative/LBB Panel
- Question – have you had the same staff level over the last few sessions given the additional responsibilities?
- Given the turnover rate we have had an average FTE count at 12-13 even though there are additional FTE availabilities
- Question – have salaries stayed flat?
- The salaries have remained stagnant for the most part
- Have tried to make creative solutions
- McGee – believe that Anu has had to make difficult decisions between maintaining staff and paying them appropriately
- Have started conducted intensive reviews since 2017 and prioritized the reviews – have so far reviewed 7 retirement plans but with funding and staffing have only been able to review 7
- Question – can you update us on the dashboard?
- That was a mandate handed down from the legislature that did come with one-time funding
- Have the structure of the dashboard ready
- Will provide update portal for pension data that can be downloaded
- Also working on informational charts to help with understanding the data
- Will be going through audit and review process before publishing the dashboard to protect the integrity of the data