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The Pension Review Board met on December 8 to take up discussion on a variety of matters including reports from the Actuarial and Education Committees and the Executive Director Report. An archive of the meeting can be found here.

 

This report is intended to give you an overview and highlight of the various topics taken up. It is not a verbatim transcript of the discussions 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.

 

Item 3: Minutes from October 6 Board Meeting

  • Motion to suspend reading of minutes and approve as circulated
  • Brainard- Minor revisions to minutes; add “Brainard statement that Mr. Stacy should resign immediately” and that “the $100k could create a misleading view of the health of the fund”
  • Motion passes

 

Item 4: Public Comment

Joe Thompson, Self

  • Dallas Police and Fire Pension Fund under criminal investigation; requesting to sit down and have a conversation about findings
  • Is a question of what the PRB will do
  • Brainard- Believe board should not engage in this portion of the meeting and wish to speak offline; not an investigative/enforcement agency

 

Item 5: Actuarial Committee

A: Actuarial valuation report and B: Systems subject to the Funding Soundness Restoration Plan (FSRP) requirement, including compliance

David Fee, TPRB

  • Evaluation report including changes from October board meeting
  • Conroe Fire amortization period decreased from infinite down to 34.3 years based on increased members and city contributions while lowering expected return on assets
  • Longview fire sold bonds and helped firm by reducing amortization period to 27.5 years with $41.5 M in assets
  • Ries- Does the rate sustain an actuarily defined contribution and is that requirement part of the MOU?
    • Reducing city contributions but paying off that bond in exchange; all included in a period
  • Dush- The city has fixed its contribution rate at 12%?
    • Amortization period reflects city contribution level
  • Nacogdoches hospital district will be added to list of systems that offer 100% of benefit as a lump sum; will be worth less than annuity; evaluation used updated modern mortality; not getting paid dollar to dollar
  • TRS and ERS presenting info and will update board as soon as info has been reviewed
  • 12 systems decreased assumptions
  • Assets projected to be depleted prior to paying all system benefits include LICO, Midland Fire, JRS, Wichita Falls Fire, Northeast Medical Center, Cap Metro Admin, Conroe Fire, Nacogdoches County Hospital; expect more to come off the list
  • Leibe- Does Wichita Falls account for changes discussed on previous page for change in economic assumptions?
    • Reflects old evaluation; probably will have some effect
  • Expected payroll growth rate near expected inflation rates; many systems at 0% using level dollar amortization
  • 8 systems with highest growth rate assumptions listed in handout; actual growth rate roughly equal to census growth rate plus 2-3% inflation growth rate
  • Big Spring Fire and Marshall Fire assumption rates based on amortization unreasonable, cities are not growing
  • Dush- Worth a conversation with Reps from these two funds to discuss if they have been looking at this; probably not doing experience analysis so would be interesting to know if funds are aware of discrepancy
  • Brainard- Projected payroll growth forecasts amount of payroll on which future contributions can come; so if overstating amount of payroll then understating contribution that needs to be paid today?
    • Yes; significant overestimation of what payroll will be and if don’t hit expected contributions won’t be able to pay off
  • Brainard- Do we have plans not to take any more employees?
    • Some that are frozen plans and use level dollar approach
  • Dush- Both are relatively small with relatively high unfunded liabilities associated with assets; something here to be said about looking at how assumptions are set
  • Discussion of how interest rate assumptions are made
  • Brainard encourages members to look through actuarial booklet and new information

 

C: Public retirement system reporting and compliance, including noncompliant retirement systems

Matthew Featherston, TPRB

  • Reporting compliance based on annual reports; since last meeting passed 2021 required active report date; total net assets increased $250 M since last board meeting
  • Decrease in overall noncompliance with most common noncompliance being investment report; should be lower by helping plans
  • Have 9 plans that are noncompliant over 60 days
  • Dush- Addressing compliance for FY 2021 but are some of these plans out of data for years prior?
    • Yes, example of Midland Fire still waiting on 2020 and 2021
  • Zook- Request we show full detail of noncompliance, not just current period
    • Some reports have been received but lack certain criteria for full compliance designation
    • Notify plans of noncompliance and which reports are due
  • Leibe- What type of outreach have we provided to noncompliant plans?
    • Letter is all I know of; have also reached out via email and phone call
  • Staff- Do a lot of informal outreach on things such as investment expense reporting prior to sending letters

 

Item 6: Education Committee

A: Learning management system transition update

Mariah Miller, TPRB

  • Provides demonstration of new education program website; should address concerns and issues voiced earlier
  • Brainard- For systems that bring people in that are not PRB, are trustees responsible to submit?
    • Administrator submits for PRB 2000s
  • Minor updates and revisions to core courses; updating course content with new CE courses
  • Waiting to launch site in new year to provide better training opportunities; LMS will launch on January 3, 2023

 

B: MET Compliance Reporting

Bryan Burnham, TPRB

  • MET compliance system overview given; 89 unique systems for MET; compliance by system type for trustees and administrators is 93% statewide, only one statewide system not 100% compliance; municipal performs well with 80% compliance; local firefighter and special district plans hovering around 66% and hope to see it increasing
  • Dush- What are reasons a system may not be fully complaint?
    • Depends on specific types of members; seeing that citizen members have difficulty being complaint with training; also potentially not reporting training
  • Dush- Concerning to see high levels on non-compliance; would like to be sure governance study that is being initiated addresses some of this issue
    • Only having about one administrator managing plans at local firefighter and special districts; stretched thin so tend to have more trouble keeping up on it, managing every aspect of the fund too
  • 48 of 89 plans are within 75-100% complaint; 9 plans with no trustees or administrators’ complaint with reporting
  • Able to look in biennial plan by plan to see details
  • Dush- Do we do specific outreach when we see none of the trustees are compliant?
    • Do what we can to help them; ask if they need any other services
  • Ries- Length of noncompliance important to look at
    • Multiple throughout that miss multiple cycles of requirements
  • Ries- Limited capacity without enforcement ability but should list and publish plans with people’s names in zero compliance; feel this could push them towards compliance; very important to receive education
  • Brainard- Recommend Lege remove trustees who are chronically non-compliant; hope to encourage Lege to pass reformed communication with members to know which trustees are not taking their courses
  • Leibe- If they finish core training outside of the first year will they always be non-complaint?
    • Noncompliant with previous cycle until you finish it and will not be compliant with anything past that training until that previous cycle is finished; can’t get credit for anything until core is done
  • Leibe- So CE done before core was completed will never count toward CE?
    • Correct
  • Leibe- For core is it 7 hours in one year?
    • 7 hours total split into topics; can earn no more than 2 hours per topic
  • Liebe- Do people understand that they have to catch up?
    • Something we constantly explain; questions come in monthly and is confusing for stakeholders
  • Brainard- Interested in seeing a list of administrators who have done the job for more than a year and not passed the core
    • PRB 2000 reporting due annually on September 1, 82 plans have submitted the reporting
  • Liebe- CE requirement so minimal that it falls off radar, making it required every year could keep it on people’s to do list
    • Will send letters out to plan sponsors that plans aren’t compliant
  • Staff- Looking to hire an educational program specialist position that would be fully focused on this program; 4 hours every 2 years is dictated at rules and may want to revisit in future; have an FAQ on website that explains program requirements]

 

Item 7: Executive Director Report

A: 2021-2022 Biennial Report

Amy Cardona, TPRB

  • Updates on publications, 2021-22 biennial report published on Nov 30, guide to public retirement systems of Texas should be published in February
  • Interim reports will be looked at when published; bill report discussed, over 900 bills filed and anticipate cost of living adjustments for TRS and colas for ERS members
  • Due to interim charges could see action on LICOS and JRS too; will see bill from City of Austin employees retirement system
  • Key Lege dates given; budget hearing could start as early as late January
  • Review of role of the PRB during the legislative session

 

D: Preview of major 2023 projects

  • Major 2023 projects include Lege session duties, work on building database, requested extension of funds until 2025; governance study, LBJ school student team working on their study, intensive review, investment guidelines, up for sunset review for the next biennium
  • Last sunset in 2013 and stopped being required to collect reports for public contributions plan and focusing now on defined contribution plans
  • Have established metrics to look at plans and inform decision on plan selection; will select after the new year and plan timeline projecting to be presenting in September

 

E: Staff Updates

  • Working on promoting the educational specialist position and spending money on linked in
  • Will soon have open general counsel position

 

F: Updated fiscal year 2023 operating budget

  • Updated Operating Budget is for September through the end of November
  • Brainard thanks staff for work

 

Item 8: Future meetings: agenda items, dates, locations, and other arrangements

  • Next meeting after conclusion of legislative session
  • Tentative date for next full board meeting June 29th at 10 am, meeting of education committee at 2 pm
  • September 21, 2023, full board meeting at 10 am
  • Nov 21, 2023, full board meeting at 10 am; investment committee meeting at 2 pm

Meeting Adjourned