The TEXPERS Blog

PRB committee views benefit cuts as 'sharing'

By Joe Gimenez,

TEXPERS Public Relations Consultant

The Pension Review Board advisory committee tasked with making a list of new principles for benefit plan features continued their wordsmithing effort in late April. Committee members Keith Brainard, Stephanie Leibe and Josh McGee reviewed public comments by state and local systems, adopting a view of “sharing” as implying benefit cuts.

The committee is tasked with proposing a series of public pension plan design guidelines. During its April 24 meeting, during a key exchange, committee chair Brainard sought to adopt offerings from David Gavia at Texas Municipal Retirement System and the Houston Municipal Employees Pension System.

Brainard suggested that “share” become “contribute to” in the principle, “Employers and employees should share the cost of benefits.” He was honoring Gavia’s thoughts that sharing implies equal “when in fact there are a variety of cost-sharing approaches” and HMEPS thoughts that equal sharing would be a significant change from the way most pension systems work.

Brainard’s change briefly gained McGee’s support until Stephanie Liebe, a relatively new PRB member serving on her first committee, spoke in opposition. McGee and Leibe were both appointed by Gov. Greg Abbott in December 2015.

“I prefer 'share,'” Leibe said. “As we’ve seen in the recent past when times are tough and … there are adjustments to be made to retirement plans a lot of times the employee group bears that through reduction in pension benefits. That should be viewed as in some way sharing the ultimate cost of the benefit. It’s not a direct contribution that comes out of pocket but it is a way in which they share in future costs. That’s by taking less.”

McGee, swayed by Leibe’s comments, said he did not view sharing as meaning equal and that benefit cuts could be considered another way to share. Leibe said she objected to “contributions” because it solely implied money flowing into the plan.

“But when there comes a time when there’s not enough money to repay future benefits, employees share in the cost of those future benefits by agreeing to take less through benefit reductions,” Leibe said.

McGee voted with her to keep the original wording. The PRB staff is working to package this with other drafts principles for full Pension Review Board adaptation at its June 14 meeting. 

About the Author: 

Joe Gimenez is TEXPERS's public relations consultant. He owns G3 Public Relations, a public and media relations firm that also specializes in reputation management.