The House Committee on Pensions, Investments and Financial Services met on Monday. The hearing was largely an opportunity for the committee members to get an update from the State Pension Review Board (PRB) measures to implement procedures outlined in SB 322 and SB 2224.
SB 322 creates guidelines around the evaluation and reporting of investments, investment practices and performances of certain public retirement systems, including the Teacher Retirement System of Texas (TRS). The purpose of SB 322 is to improve transparency around fees and assets through enhanced reporting procedures for investments made by public pension funds.
Anumeha Kumar testified on behalf of the PRB and reported that it has developed an asset capitalization guide and reporting template. The guide hopefully will aid pension systems in accurately reporting on their investment practices and performance evaluation process. The PBR is expecting the first reports on investment practices and performance evaluations to be submitted in the summer. Reports on the investments made by the pensions systems will likely not be ready until 2021.
Kumar told the committee that the PRB has developed guidelines for helping public retirement systems to lay out their objectives and develop a roadmap on how they will go about achieving those objectives for all retirement plans. The PRB has encouraged the retirement systems staff to work directly with sponsors on developing their policy so that there is a smooth implementation process once the policy is adopted.
Plans were due on February 1, 2020. The PRB will discuss each plan submitted during their June 30 board meeting. Rep. Dan Flynn asked if there were any systems that the PRB was concerned about. Kumar replied that there were some that they were looking at, such as the state Employee Retirement System, which will need to be worked on in the next legislative session. She stated that TRS was in good shape now due to the work done last session. There are about 100 public retirement systems in Texas. The intent is to see all of them having plans that would get to a funding ratio of 100%. It is important to remember that in most cases the Legislature acts only in an advisory role under current law and deference is given to local control. That said, the committee acknowledged that the state is invested in seeing these retirement systems succeed.
Brian Guthrie, TRS executive director, gave testimony on the TRS building lease agreement, which was mostly the same as his comments before the Senate Finance Committee and TRS Board. Guthrie a point of stating that they are working to improve communications with TRS members to ensure they are part of the process and completely informed prior to making these big financial decisions.
The committee addressed the elephant in the room regarding Mr. Guthrie’s inability to disclose certain information about the Indeed lease that is tied to TRS investments for fear of violating current law on disclosure. Several members reported a desire to look at this statue, which is part of the Public Information Act of the Government Code, specifically Section 552.143, that deals with private investments, and possible amendments that could be made next session.