2015 – 2016 Biennial Report
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Texas Pension Review Board 2015 – 2016 Biennial Report Texas Pension Review Board 2015-2016 Biennial Report Josh B. McGee, Chair Position: Securities Investment, Pension Administration, or Pension Law Term Expiration: January 31, 2021 Hometown: Houston Keith Brainard, Vice Chair J. Robert Massengale Position: Securities Investment, Pension Position: Retired Member Administration, or Pension Law Term Expiration: January 31, 2017 Term Expiration: January 31, 2019 Hometown: Lubbock Hometown: Georgetown Robert M. May Andrew W. Cable Position: Actuarial Science Position: Active Member Term Expiration: January 31, 2019 Term Expiration: January 31, 2019 Hometown: Austin Hometown: Wimberley Ernest Richards Stephanie Leibe Position: Securities Investment, Pension Position: Governmental Finance Administration, or Pension Law Term Expiration: January 31, 2021 Term Expiration: January 31, 2021 Hometown: Austin Hometown: Irving Anumeha Executive Director November 30, 2016 The Texas Pension Review Board (PRB) is pleased to present this Biennial Report on its activities and findings for 2015 through 2016. During this biennium, the PRB has worked diligently to execute its mission to provide information and recommendations to help ensure that Texas public retirement systems are properly managed and actuarially sound. The PRB service population consists of the members, administrators, and trustees of 94 Texas public retirement systems; state and local government officials; and the general public. The total membership of actuarially-funded Texas public retirement systems is over 2.4 million active and retired members and the total net assets of the plans are approximately $241 billion. Over the last two years, the PRB has undertaken many important activities, including Joshua B. McGee enhancing its continuing review of retirement systems; updating its key policies to more Chair closely monitor systems’ financial soundness; providing technical support to systems, Keith Brainard Vice Chair including comparative information for other systems and best practices; and providing education to systems’ trustees and administrators. The 84th Legislature charged the PRB Andrew W. Cable with additional duties and responsibilities. Through its limited staff and resources, the PRB Stephanie V. Leibe has made great efforts to accomplish its new and existing mandates. In compliance with J. Robert Massengale the new statutory requirements, the agency established a mandatory training program for Robert M. May retirement system leaders; created, updated, and distributed the Iran List; and has Ernest Richards, Esq. provided technical assistance and training to TLFFRA systems specifically addressing their unique needs. Additionally, with the goal to keep policymakers and retirement systems informed of current developments and disseminate accurate information as they weigh important decisions impacting public pensions, the PRB published reports on public pension developments at the federal level; closely monitored and analyzed the new public pension plan accounting and disclosure practices and actuarial standards; and continually updated Anumeha “Anu” its website with online courses in foundational pension topics, reports, and other public Executive Director pension-related information. Additionally, the PRB presented numerous reports to the Mailing Address: House Committee on Pensions during its interim hearings, including analyzing the P.O. Box 13498 Austin Texas 78711-3498 condition of all Texas public retirement systems and conducting intensive reviews of Telephone: specific municipal retirement systems undergoing funding challenges. (512) 463-1736 (800) 213-9425 The PRB is the sole on-going oversight mechanism for Texas public retirement systems. To Fax: (512) 463-1882 fulfill its mission requires the combined effort of the systems, their sponsoring governmental entities, and other members of the Texas public pension plan community. Web Site: www.prb.state.tx.us The PRB is honored to serve the State of Texas and will remain focused to help ensure that Email: retirement benefits are securely provided at the lowest cost to the taxpayers. [email protected] Sincerely, Josh McGee Chairman Texas Pension Review Board 2015-2016 Biennial Report TABLE OF CONTENTS EXECUTIVE SUMMARY.................................................................................................................... 1 PENSION REVIEW BOARD OVERVIEW ........................................................................................ 3 MISSION STATEMENT AND PHILOSOPHY ............................................................................... 3 STATUTORY FUNCTIONS ............................................................................................................. 3 BOARD COMPOSITION ................................................................................................................. 3 ORGANIZATIONAL ASPECTS ...................................................................................................... 4 MAJOR ACCOMPLISHMENTS & ACTIVITIES ............................................................................. 5 PUBLIC RETIREMENT SYSTEM REVIEWS, ANALYSIS, AND PRESENTATIONS ............... 5 BOARD POLICY UPDATES ............................................................................................................ 6 REPORTING REQUIREMENTS .................................................................................................... 7 REPORTS .......................................................................................................................................... 8 PRB MINIMUM EDUCATIONAL TRAINING (MET) PROGRAM ........................................... 10 SPECIFIC ASSISTANCE FOR TLFFRA SYSTEMS .................................................................... 13 RESEARCH AND PUBLIC PENSION DEVELOPMENTS .......................................................... 14 ONLINE RESOURCES................................................................................................................... 15 84TH LEGISLATURE ..................................................................................................................... 15 APPENDICES ..................................................................................................................................... 16 APPENDIX A1 – PRESENTATION TO HOUSE COMMITTEE ON PENSIONS APRIL 13, 2016 ....................I APPENDIX A2 – PRESENTATION TO HOUSE COMMITTEE ON PENSIONS JUNE 13, 2016.................... II APPENDIX A3 – PRESENTATION TO SELECT COMMITTEE ON STATE AND FEDERAL POWER AND RESPONSIBILITY SEPTEMBER 13, 2016 ............................................................................................III APPENDIX A4 – PRESENTATION TO HOUSE COMMITTEE ON PENSIONS SEPTEMBER 29, 2016 ....... IV APPENDIX B – ACTUARIAL REVIEW POLICY .................................................................................... V APPENDIX C – HB 3310 FLOW CHART ............................................................................................. VI APPENDIX D – FUNDING SOUNDNESS RESTORATION PLAN COMPLIANCE REPORT ...................... VII APPENDIX E – MET CURRICULUM GUIDE .................................................................................... VIII APPENDIX F – MET COMPLIANCE REPORT .................................................................................... IX APPENDIX G – IRS NORMAL RETIREMENT AGE RULES................................................................... X APPENDIX H – THE PUBLIC EMPLOYEE PENSION TRANSPARENCY ACT 2016 ................................ XI APPENDIX I – 84TH REGULAR LEGISLATIVE SESSION REPORT ...................................................... XII Texas Pension Review Board 2015-2016 Biennial Report EXECUTIVE SUMMARY The Texas Pension Review Board (the “Board” or the “PRB”) was established in 1979 as an oversight agency for Texas public retirement systems. Pursuant to Texas Government Code, Section 801.203, the PRB is pleased to summarize its work and findings for 2015-2016 in the following Biennial Report. The PRB remains committed to its mission to provide the State of Texas with the necessary information and recommendations to help ensure that Texas public retirement systems are properly managed and actuarially sound. Texas public retirement systems require consistent, long-term management to ensure that they remain adequately funded into the future. While the majority of Texas’ public retirement systems remain well-funded, significant fiscal challenges face some municipal pension plans, including the Dallas Police and Fire Pension System (DPFPS or the System). The DPFPS is facing an imminent funding shortfall with a projected asset depletion date of 2028. In 2015 and 2016, as the DPFPS was considering plan design changes, the agency provided technical support, including comparative information for other pension systems and best practices. The PRB invited the System to its May meeting to discuss the funding challenges and more recently, invited the System and the City of Dallas to provide an update on plans for addressing the funding shortfall at its meeting on November 3. As part of its statutory duty, the PRB will continue to recommend policies and best practices and provide information and technical assistance to the Dallas Police and Fire Pension System. The PRB is anticipating significant pension bills in the upcoming 85th Legislative Session. To date, 18 pension-related bills have been filed since pre-filing