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Monday, September 17, 2018


Legislative provisions viewed as harmful to public pensions left out of U.S. tax reform package


Graphic: iStock/Duncan_Andison

By Allen Jones, TEXPERS Communications Manager

The U.S. House Ways and Means Committee's new tax reform package of legislation does not contain provisions that would have imposed what TEXPERS and other retirement groups viewed to be unnecessary and unfunded federal mandates harmful to local and state public pensions.

First and foremost, the package does not include public pension proposals that our organization has been actively opposing,” says Paul Brown, president of TEXPERS. “However, it does include language on governmental plan 'pickups,' specifically that ‘a contribution shall not fail to be treated as picked up by an employing unit merely because the employee may make an irrevocable election between the application of two alternative benefit formulas involving the same or different levels of employee contributions.' TEXPERS along with our national and state coalitions will continue to monitor and keep our members informed in regards to this important issue.”

Brown says he is appreciative of TEXPERS members who contacted their elected representatives to express their concerns about the proposals.

Last week, House Republicans introduced tax reform legislation aimed at expanding 2017's Tax Cuts and Jobs Act. Although the primary purpose of the package is to make tax cuts for individuals and small business owners permanent, legislative proposals made earlier during the summer included retirement provisions.

The Public Employee Pension Transparency Act (House Bill 6290), introduced by California Republican Rep. Devin Nunes June 28, would have amended the Internal Revenue Code of 1986 for reporting and disclosure by state and local public employee retirement pension plans. TEXPERS' executive director, Max Patterson, and the association's president, Paul Brown, expressed their opposition to the proposed act in joint letters written in July to House Speaker Paul Ryan (R-Wisconsin) as well as to Ways and Means Committee Chairman Kevin Brady (R-Texas) and the committee's ranking member, Rep. Richard Neal (D-Massachusetts).

TEXPERS' leadership stressed that the proposed act conflicts with existing governmental accounting standards and would eliminate the tax-exempt bonding authority of state and local governments.

"Consider the fact that every state and many localities have recently made modifications to pension financing, benefits structures, or both and none required federal intervention," wrote Patterson and Brown. Click here to read TEXPERS' previous blog post about PEPTA and here to read TEXPERS' letter to Congressman Brady.

TEXPERS wasn't alone in opposing PEPTA. Twenty national organizations sent letters of opposition to all members of the U.S. House of Representatives opposing the legislation.
There is more good news. The tax reform package also doesn't include an extension of the Unrelated Business Income Tax to governmental plans or the "Rotherficiation" of contributions to all defined-contribution plans, which could potentially threaten the current tax treatment of governmental employee contributions to their defined-benefit plans.

According to Forbes’ synopsis of the proposed tax reform bill, it consists of three bills:

Click the links to open pdf documents offering more details of each legislation.

About the Author:
Allen Jones handles the print and online media needs of the Texas Association of Public Employees Retirement Systems. Before joining TEXPERS in 2017, he worked as a freelance journalist covering the Houston area for a daily newspaper; served as a publications manager for Hibu, an international corporation; and spent nearly 10 years working for Houston Community Newspapers, a group of community publications. He has a bachelor’s degree in journalism and communications.

So, you received a Public Information Act Request. 

Now What?


Photo: iStock/jat306

By Joe Gimenez, TEXPERS Guest Contributor

Have you heard about the Texas Monitor? It’s an online nonprofit news site whose reporters often use the TexasPublic Information Act to investigate governmental organizations of every type. The PIA is every journalist’s best friend – it requires every government entity to turn over any report, email, or data they generate to conduct business.  In Houston, the Texas Monitor's information requests led to indictment of a press secretary for failure to turn over public records. In another case, the Texas Supreme Court jumped into a fray, causing open government activists to go on the war path for even broader powers.

Is an investigative journalist, armed with a PIA request, headed your way? Quite possibly. The Texas Public Information Act allows for the full or partial disclosure of previously unreleased information and documents controlled by state and local governmental entities.

In San Antonio, an investigative reporter used Public Information Act requests to gain pension fund travel records and public safety department records. The San Antonio journalist’s news piece was TV media sensationalism at its worst – any Texas pension fund whose trustees do a due diligence trip or attend an educational conference could have been similarly smeared. Nonetheless the story is there, inspiring pension-fund haters with baseless conjecture about San Antonio heading down troubled paths. Totally false.

In San Diego, open government intervenors have used public records requests to ferret out pension disability benefits. They think disability claims are fraught with fraud. Texas has similar watchdog groups and they follow their California brethren. It’s only a matter of time before your pension system will earn its Public Information Act request, warranted or not.

The problem is that pension funds are difficult for most journalists to understand, and their stories sometimes become filled with inaccuracies, innuendo and false impressions. Before you know it, a false narrative about your system is the only thing that people in your city will think about you. Gold-plated benefits. Travel abuse. Disability fraud. Spiked pensions.

So what should you do when that public information request comes in?

As San Antonio Trustee Jim Smith recently told a TEXPERS Summer Educational Forum audience, first seek professional assistance. Media relations professionals can help begin framing the story from the first bit of data requested. Reporters need context; they should never be expected to become pension fund operations experts. Only you or your media advisor can help them with that. If you do it yourself, be sure to try to attain some objectivity to the situation. An outside advisor can help with their third party perspective. On the other hand, be sure any advisor you hire understands pension funds as well as you do. Your first response to the journalist should strive not to compel a reporter to continue digging.

Another possibility is that the journalist expands their dig to other governmental agencies which touch on the pension fund. Or, after their first request for information, they send in a second request for all emails related to the first request. That may look worse in the news report than the original issue.

Some investigative reporters also like to employ ambush tactics. They submit their public information request, find something and then they confront you at the next board meeting, camera in your face. It’s happened, time and again. What to do?

Again, a media professional will know what you’re up against and can help minimize the possible damage. Ask them to serve as your spokesperson and designate them as the single point of contact. If you decided to have a spokesperson from the pension fund be sure they are media trained. And since ambushes happen, it’s a good idea to provide media training for all your board members and executive staff. It may cost a bit, but it is professional training that can serve this and other situations.

In addition, work up contingency plans. Create draft communications for your members, vendors, investment professionals and elected officials – anyone who comes in contact with the pension fund. You might not know the direction the final news report might take, but have two or three responses in mind pending which direction it does take.

You or your media professional should encourage the reporter to see that they are on the heels of a non-story, that what appears to be scintillating stuff is actually part of the mundane world of pensions. You all might not be able to convince the reporters to kill the story, but you should work toward minimizing the negative and outlandish.

Finally, take these information requests very seriously from the first moment you receive it. Think about seeking help before they ever arrive if you know of a situation which might someday be ripe for media attention. The most costly thing to do is doing nothing until the request hits. Then you will pay exorbitant amounts in the damage done to the reputation of your pension fund. You may not be able to dig out.  

About the Author:
Joe Gimenez is public relations professional who specializes in pension fund communications. He has assisted TEXPERS and several Texas pension funds in crisis situations and public affairs.


PRB Study of Asset Pooling Delayed 

Due to Staff Member's Resignation


By Joe Gimenez, TEXPERS Guest Contributor

The Pension Review Board’s Actuarial Committee postponed the agency’s three-year effort to study the feasibility of asset pooling for smaller pension systems. Anumeha Kumar, the PRB’s executive director, told the committee at its Sept. 13 meeting in Austin that the resignation of a staff member would further delay the project.
Kumar had told the PRB in March that staff would begin its research of a recommendation in the agency’s 2014 Study of the Financial Health of Texas Public Retirement Systems. The recommendation noted that “Smaller systems may not have the advantage of the economies of scale available to larger retirement systems, thus smaller systems may have greater challenges in keeping their expenses low and achieving higher investment returns.”
This concern was on full display at the Sept. 13 meeting. During a review of a system, PRB Chairman Josh McGee asked several detailed questions about investment consultants’ fees compared to the assets of funds they managed. The system’s consultant responded by listing several services his firm provides smaller funds. The exchange did not seem to satisfy PRB committee members.
The 2014 PRB report noted that pooling existing pension fund assets might be problematic. While new systems might enroll in the Texas Municipal Retirement System and the Texas County and District Retirement System, merging existing systems into them “may present several significant potential legal and other issues, including how to maintain equivalence of benefits between old and new members, and how to address the existing liabilities of the merging systems.”
The PRB's executive director, Kumar, did not indicate a timetable for hiring a new staff member to study the recommendation.

About the Author:
Joe Gimenez is a public relations professional who specializes in pension fund communications. He has assisted TEXPERS and several Texas pension funds in crisis situations and public affairs.