Although some pension-related laws were passed, legislators had their focus on other issues
As expected of the 86th legislative session, public pensions
were a part of the discussion. However, legislators did not scrutinize the
policy area as they did during the reform efforts of Houston's and Dallas'
retirement systems in 2017.
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| Rep. Dennis Bonnen |
For the 86th legislative session, the governor, lieutenant
governor and speaker established public school finance and property tax reform
as priorities that were not new issues to the legislature but showed the need
for coordination of resources as the House and Senate collaborated on
solutions. Other items also given critical focus were school safety and teacher
pay.
Before the midterm elections in 2018 and the start of the
86th legislative session this year, William "Bill" Miller, co-founder
of lobbying firm HillCo Partners, said he was not certain how many Democrats
would win competitive House elections.
"The net result for pensions is less pressure from the
conservative Republican wing to change the status quo," said Miller, whose
firm represents TEXPERS.
BEGINNINGS
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| Sen. Joan Huffman |
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| Rep. Jim Murphy |
TEXPERS'
Legislative Committee frequently met to discuss and analyze proposed
legislation that could impact local public retirement systems. TEXPERSsupported legislation urging the U.S. Congress to eliminate government pensionoffset and the windfall elimination provision of the Social Security Act.
TEXPERS officials also continued to be vocal on opposed legislation and stayed
involved in discussions regarding legislation that could be impactful to all
its system members.
NEW LAWS
Two
pieces of legislation passed that impact retirement systems, Senate Bill 322
and SB 2224. Representatives Huffman and Murphy co-authored both bills, which
the state legislature passed. The governor signed them into law.
SB322 requires retirement systems in Texas to submit a report on investment
practices to the Texas Pension Review Board, which oversees all state and local
public retirement systems in Texas for actuarial soundness and compliance with
state law. Huffman filed similar legislation during the 85th legislative
session in 2017. Pension systems that already are currently required by law to
submit such a report, as well as systems that have a book value of $30 million
or less, are exempt from the bill.
During
the deliberation of this legislation, TEXPERS legislative committee members
worked diligently to present concerns and options to address them with the
bill's authors. As a result, SB 322 was amended with language to mitigate cost,
redundancy, and to allow for more accurate reporting of the information.
SB 2224 requires a retirement system in Texas to adopt a
written funding policy, a measure that some local plans are already doing. The
bill was discussed by TEXPERS' Legislative Committee as well as with Pension
Review Board officials and found that the report was ultimately workable to
systems.
Legislators proposed legislation detrimental to local
defined benefit pension plans. However, bills that proposed switching
defined-benefit pension plans to 401(k)-like defined-contribution plans did not
move.
Also, legislators filed specific measures intended to
address issues the Pension Review Board encountered during the interim.
Proposals included the reporting of investment fees that were designed to
address areas such as contracting of certain investment services. Other
measures included adjusting the current 40-year trigger in the state's Funding
Soundness Restoration Plan statute to 30 years to coincide with the Pension
Review Board's funding guidelines as well as legislation requiring a report
from systems on fees and commissions charged by specific consultants.
TEXPERS officials engaged legislative staff and brought to
their attention various aspects of their proposed laws to help make language
more workable, and many of the revisions were approved. Ultimately, these bills
were left pending in committee.
In addition, legislators introduced a measure to amend the
Texas Constitution to ensure that the state is not responsible for local
pension liabilities. The bill passed the Senate but did not move in the House.
At the state level and as anticipated, the Texas Teachers
Retirement System received funding to make the system sound and to provide a
13th check to retirees. However, the Texas Employees Retirement System was
funded at status quo and remained at infinite in its funding level. The Texas
Municipal Retirement System also introduced a technical clean-up bill that was
approved by the legislature.
BEHIND THE SCENES
This session, the governor also reappointed Keith Brainard and
Marcia Dush to the Pension Review Board. The appointments of Dush and Brainard, along
with Stephanie Leibe and Rossie Fariña-Strauss, were all confirmed by the Texas
Senate. The governor also named Leibe chair the board.
During the interim, TEXPERS and HillCo will monitor and
remain involved with the Pension Review Board as it continues discussions with
local plans in an intensive review of a process that requires local plans to
work with respective sponsoring entities given specific amortization triggers.
The Pension Review Board also will implement recently passed legislation.
About the Author:
Eddie Solis is a legislative consultant with HillCo Partners, a lobbying firm based in Austin. The firm represents TEXPERS.
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