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The Legislative Budget Board met on August 21 to hear from the Texas Emergency Services Retirement System concerning the agency’s Legislative Appropriation Request for the 86th Session and key exceptional items.

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.

 

Agency Presentation

Kevin Deters, Executive Director of Texas Emergency Services Retirement System

Jessica O’Brien, Chief Information Officer

  • Opened by thanking volunteer firefighters, the State Board, employees of the agency, and the people of Texas for their contribution to the state
  • The agency provides benefits to volunteer firefighters who participate, including,
    • Line-of-duty death benefits
    • Off-duty death benefits
    • Disability benefits
    • Pensions for firefighters who stay over 10 years
  • The purpose of our program is to help fire departments recruit and maintain firefighters
  • We have increased the number of applications we process yearly from around 160 to 500
  • We have reduced the administrative burden by going to semi-annual billing, rather than quarterly, for our participating departments
  • We are looking at other ways of reducing administrative burden this upcoming session
  • We are concerned about cybersecurity – we have a responsibility to protect our member’s data
    • We have implemented multi-factor identification systems
    • A part of that is the utilization of fobs
  • Question – What do you mean by fobs?
    • It is a personal, physical device that members must utilize to access their info
    • This is in addition to the six-digit keycode they must use
  • Our baseline request is around $4 million
  • Around $2 million of that is for the pension system
  • The remaining is for the administration of the system
  • Exceptional Item 1:
    • We are asking to make up the shortfall of around $100,000 in what we are allowed to request in our baseline for the pension system
  • Exceptional Item 2:
    • We are asking for around $100,000 to boost our efforts in cybersecurity
  • Exceptional Item 3:
    • We want to outsource our pension and investment accounting
    • We have been so fortunate to rely on Judy Johnson for many years, but she is moving onto better things
    • We have no one else who could step up to meet this responsibility

 

Questions from Joint Legislative/LBB Panel

  • Question – Your current CFO is doing all the financial functions?
    • Correct
  • Question – So if you were to replace that person, the new person could not handle the items you are suggesting outsourcing?
    • This is so that if we have turnover of our CFO, we could still have financial operations in place in the period of the absent CFO
    • The CFO would provide oversight, but accounting would be outsourced
  • Question – Do you currently have staff that handles cybersecurity?
    • Yes
  • Question – Do you have a provider lined up?
    • Yes, we interviewed 3 firms and have selected one of them
  • Question – What percent of your volunteers are from rural areas?
    • I can get that info to you
  • Question – Can you explain the timing on the first item?
    • We have a methodology based on a five-year period
    • We will have our actuarial completed around December
  • Question – What have your return assumptions been?
    • Investment assumption is 7 and 3/4