87R11631 BDP-D
By: Capriglione H.B. No. 3685
A BILL TO BE ENTITLED
AN ACT
relating to the creation of a work group to undertake a study of the
Employees Retirement System of Texas.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. DEFINITION. In this Act, "retirement system"
means the Employees Retirement System of Texas.
SECTION 2. CREATION OF WORK GROUP. (a) A work group is
created to study and assess the retirement system and report on the
issues described by Section 3 of this Act.
(b) The work group shall be composed of:
(1) three senators appointed by the lieutenant
governor;
(2) three members of the house of representatives
appointed by the speaker of the house of representatives;
(3) two members of the public who are appointed by the
lieutenant governor; and
(4) two members of the public who are appointed by the
speaker of the house of representatives.
(c) The lieutenant governor and speaker of the house of
representatives shall jointly designate a presiding officer from
among the members of the work group.
(d) The work group shall convene at the call of the
presiding officer.
SECTION 3. INTERIM STUDY REGARDING RETIREMENT SYSTEM. The
work group created by Section 2 of this Act shall:
(1) review and assess:
(A) the different types of retirement system
plans, including:
(i) defined contribution plans;
(ii) defined benefit plans;
(iii) hybrid public pension plans; and
(iv) cash balance pension plans; and
(B) the actuarial assumptions used in making
actuarial valuations and analyses of the retirement system and the
consequences of amending an assumption rate;
(2) study:
(A) the potential for allowing the retirement
system to pool assets with other systems for the purposes of taking
advantage of economies of scale and reducing costs; and
(B) the governance policies of the retirement
system and the effect of imposing more formal requirements on
governance;
(3) consider enhancing fee disclosures, specifically
the disclosure of fees that are related to alternative investment
vehicles;
(4) consider requiring:
(A) additional actuarial analyses, including a
discount rate sensitivity analysis and risk assessments; and
(B) additional disclosures, including disclosure
of:
(i) the sustained differences between the
actual and assumed rate of return on assets;
(ii) projected cash flows;
(iii) risks; and
(iv) the potential impact of actual future
measurements differing significantly from expected future
measurements; and
(5) study the retirement system's valuation
methodology for the illiquid asset class, including the
effectiveness of and compliance with the fair value measurement
requirement under the Governmental Accounting Standards Board
Statement No. 72.
SECTION 4. WORK GROUP FINDINGS AND RECOMMENDATIONS.
(a) Not later than January 15, 2023, the work group shall report
the work group's findings and recommendations to the lieutenant
governor, the speaker of the house of representatives, and the
governor. The work group shall include in its recommendations
specific statutory and regulatory changes that appear necessary
from the results of the work group's study under Section 3 of this
Act.
(b) Not later than the 60th day after the effective date of
this Act, the lieutenant governor and the speaker of the house of
representatives shall appoint the members of the work group created
under Section 2 of this Act in accordance with that section.
SECTION 5. ABOLITION OF WORK GROUP. The work group created
by this Act is abolished and this Act expires January 20, 2023.
SECTION 6. EFFECTIVE DATE. This Act takes effect
immediately if it receives a vote of two-thirds of all the members
elected to each house, as provided by Section 39, Article III, Texas
Constitution. If this Act does not receive the vote necessary for
immediate effect, this Act takes effect September 1, 2021.