BILL ANALYSIS |
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C.S.H.B. 13 |
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By: Callegari |
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Pensions |
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Committee Report (Substituted) |
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BACKGROUND AND PURPOSE
Public pension plans in Texas cover not only schoolteachers and state employees but also firefighters, police officers, county employees, and municipal employees, among others. Interested parties note that, given the large number of participants, the financial health of these plans affect the lives of millions of Texans whether or not they are participants in the public pension plans.
C.S.H.B. 13 seeks to improve public pension systems and the administrative authority of the State Pension Review Board by increasing the transparency of information, particularly financial information, relating to public pension plans and improving the training of trustees who serve on certain public pension boards and of system administrators.
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RULEMAKING AUTHORITY
It is the committee's opinion that rulemaking authority is expressly granted to the State Pension Review Board in SECTIONS 2, 7, and 8 of this bill.
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ANALYSIS
C.S.H.B. 13 amends the Government Code to require the State Pension Review Board to post on the board's Internet website, or on a publicly available website that is linked to the board's website, for each public retirement system the most recent data from system reports relating to actuarial valuation, annual finances, the number of system members and retirees, system registration with the board, and certain investment returns and assumptions. The bill requires the board, on the 60th day after the date a statutorily required report or information is due to the board, to post on the board's website a list of public retirement systems that have not submitted the required reports or information. The bill requires the board, for each public retirement system included on the list, to notify, as applicable, the governor and the Legislative Budget Board regarding the lack of a timely submission by the Employees Retirement System of Texas, the Teacher Retirement System of Texas, the Texas County and District Retirement System, the Texas Municipal Retirement System, or the Judicial Retirement System of Texas Plan Two or the governing body of the political subdivision of which the public retirement system's members are employees regarding the lack of a timely submission by a public retirement system other than those specified systems.
C.S.H.B. 13 requires the pension review board, as soon as practicable after the bill's effective date but not later than December 31, 2013, to develop and make reasonably accessible on the board's Internet website model ethical standards and conflict-of-interest policies for voluntary use by a public retirement system but establishes that such a system is not required to adopt a standard or policy based on the developed model.
C.S.H.B. 13 requires the pension review board to develop and administer an educational training program for trustees and system administrators and requires the program's curriculum to include minimum training requirements for trustees and system administrators. The bill requires the board to develop a system to track compliance with the minimum training requirements by trustees and system administrators and to report the level of compliance in the board's biennial report to the legislature and governor. The bill authorizes the inclusion of optional training classes for trustees, system administrators, and other employees of public retirement systems in that curriculum. The bill requires the board, to the extent practicable, to make training classes reasonably accessible to trustees and system administrators on an Internet website maintained for that purpose.
C.S.H.B. 13 authorizes the pension review board to adopt rules and appropriate fees to administer and to provide the educational training programs. The bill requires the fees set by the board to be reasonable to pay the actual costs incurred by the board to conduct the training classes and to be paid from a source considered appropriate by the governing body of the public retirement system. The bill authorizes a public retirement system to provide its own educational training to its trustees and system administrators if the board determines that the system's training meets or exceeds the minimum training requirements established by the board and establishes that a trustee or system administrator who participates in that approved educational training fulfills the minimum training requirements established by the board.
C.S.H.B. 13 requires a public retirement system to post on a publicly available Internet website the name, business address, and business telephone number of a system administrator and a copy of the most recent edition of each report and other written information that the system is required to submit to the pension review board. The bill requires a public retirement system that maintains a website or for which a website is maintained to prominently post a link on that website to the required information. The bill requires all other public retirement systems to prominently post the required information on a website that is maintained by the governing body of the political subdivision of which the system's members are officers or employees or to post the required information on a publicly available website maintained by a state agency. The bill requires a posted report or information to remain posted until replaced with a more recently submitted edition of the report or information.
C.S.H.B. 13 requires a public retirement system, before the 211th day after the last day of its fiscal year, to submit to the pension review board an investment returns and actuarial assumptions report that includes: gross investment returns and net investment returns for each of the most recent 10 fiscal years; the rolling gross and rolling net investment returns for the most recent 1-year, 3-year, and 10-year periods; the rolling gross and rolling net investment return for the most recent 30-year period or the gross and net investment return since inception of the system, whichever period is shorter; the assumed rate of return used in the most recent actuarial valuation; and the assumed rate of return used in each of the most recent 10 actuarial valuations. The bill, for purposes of the report, authorizes the net investment return, defined as the gross investment return minus investment expenses, to be calculated as the money-weighted rate of return as required by generally accepted accounting principles and requires the period basis for each report of investment returns to be the fiscal year of the public retirement system submitting the report. The bill requires the governing body of a public retirement system, if any information required to be reported by the public retirement system as part of the investment returns and actuarial assumptions report is unavailable, to submit to the pension review board, before the 211th day after the last day of the system's fiscal year, a letter certifying that the information is unavailable, providing a reason for the unavailability of the information, and agreeing to timely submit the information to the board if it becomes available.
C.S.H.B. 13 requires the pension review board to conduct a study of the financial health of public retirement systems in Texas, including each system's ability to meet its long-term obligations taking into account the contributions made to, benefits paid by, and investments made by the public retirement system. The bill authorizes the pension review board to adopt rules to define the scope of the study. The bill requires each system to cooperate fully with the board in conducting the study and to timely respond to requests for information made by the board for the purpose of performing the study. The bill establishes that certain confidential information about individuals that is provided by a public retirement system for purposes of conducting the study remains confidential and may not be disclosed by the board. The bill requires the board, not later than September 1, 2014, to prepare a written report containing the findings of the study, including the board's recommendations regarding how a public retirement system may mitigate its risk of not meeting its long-term obligations. The bill requires the pension review board to provide each public retirement system covered in the report a reasonable opportunity to review the portion of the report and the recommendations applicable to that retirement system and an opportunity to submit a response to the board. The bill authorizes the board to revise its report after considering a response and requires the board, not later than December 31, 2014, to submit to the legislature the final written report, including the board's recommendations and a copy of the responses provided by the public retirement systems.
C.S.H.B. 13 requires the pension review board to adopt rules to implement the educational training program required by the bill's provisions as soon as practicable after the bill's effective date but not later than necessary to begin providing training classes on or before September 1, 2014. The bill restricts the board's evaluation of trustee and system administrator compliance with the minimum training requirements of the educational training program for reporting purposes to the level of compliance on or after January 1, 2015.
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EFFECTIVE DATE
On passage, or, if the bill does not receive the necessary vote, September 1, 2013.
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COMPARISON OF ORIGINAL AND SUBSTITUTE
While C.S.H.B. 13 may differ from the original in minor or nonsubstantive ways, the following comparison is organized and highlighted in a manner that indicates the substantial differences between the introduced and committee substitute versions of the bill.
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