Posted on 6/2/17; updated 6/15/17
The 2016-2017 Sunset process for the Employees Retirement System (ERS) culminated in the passage of Senate Bill 301 by Sen. Kirk Watson. Like any Sunset bill, SB 301 directs the agency to implement changes in its operations, but the directives in SB 301 are largely technical and will have little to no impact on most active and retired state employees. Gov. Greg Abbott signed SB 301 into law June 9.
Most notable about the Sunset bill is what it doesn’t contain. This is a victory for the active and retired state workforce, especially given some of the detrimental proposals filed by lawmakers this session.
The changes outlined in SB 301 primarily relate to ERS board member training, reporting requirements and investment guidelines. The directive with the most impact on the workforce is a requirement that ERS enhance the involvement of plan participants in claims appeals.
ERS had already agreed to implement some Sunset Commission recommendations that did not require statutory changes. Most significant is the revival of a Group Benefits Plan Advisory Committee under existing board authority. Up to 11 Group Benefits Plan participants will serve on the committee and provide feedback to the ERS Board of Trustees. Look for further information from ERS about this committee once it issues a call for nominations.
TPEA is pleased with how clean the Sunset bill emerged from the legislative process, especially given some of the detrimental proposals filed by lawmakers this session. Most notably, Sen. Paul Bettencourt filed two bills that would have required pension systems including ERS to study or implement defined contribution, 401(k)-style or hybrid retirement plans for new public employees. Bettencourt’s bills did not receive a hearing.
TPEA is also pleased that the Sunset bill did not include any change to the composition of the ERS board. Since 1963, the six-member board has been half-appointed and half-elected. The speaker, governor and the chief justice of the Texas Supreme Court each have one appointment, and ERS members elect the other three trustees from candidates drawn from the active workforce. Two bills that would have changed the composition of the board by opening candidacy to retired state employees died in the Senate (HB 265 by Rep. Ana Hernandez and HB 1014 by Pensions Committee Vice Chair Roberto Alonzo). Similar bills were filed in 2015, and the issue is a labor union priority. TPEA, however, has consistently opposed changing the composition of the ERS board. We believe that creating a special class of ERS trustee to represent any specific group of beneficiaries—whether retirees, law enforcement, higher education employees, etc.—would fundamentally change the nature of the board from fiduciary to political. As fiduciaries, not politicians, board members have made decisions about the ERS pension fund and Group Benefits Programs based on statute and actuarial soundness. This approach has maintained the viability of both the retirement and health care benefits programs for active and retired state employees—all public servants who are dealing with the realities of a limited budget.
TPEA congratulates the board and staff of ERS for completing the agency’s Sunset review. TPEA appreciates the close working relationship we have with ERS, and we look forward to continuing it. We are also excited to work with newly elected trustee Catherine Melvin, the chief auditor at the Department of Public Safety.