The Austin American-Statesman reports that Senate Bill 1548 would give the board new authority to review a fund’s investment strategy and financial condition and set recommended standards for reporting that condition. The legislation would also establish policies on conflicts of interest, gifts, and prohibited employment for the people who serve the systems.
Under the bill, the board and the state attorney general’s office would be given explicit authority to investigate potential violations, and the board’s watchdog authority would be extended to the investment funds that manage the endowments for Texas public schools and universities, the American-Statesman said.
Ogden ‘s bill reduces the board size to five members — all of whom must have experience in investments, pension administration or law — with three to be appointed by the governor.
Ogden said the Texas State Pension Review Board has been a “shell organization” with little funding or authority to monitor the nearly 400 state and local pension systems. According to the news report, former Pension Review Board Chairman Frederick “Shad” Rowe said the bill is a “big step in the right direction” to ensure that the state’s funds are honest and forthcoming about their financial condition. He added that transparency is even more important now because the funds will be under pressure to produce unrealistic returns during the current economic downturn.
However, Paul Brown, president of the Texas Association of Public Employee Retirement Systems, said the bill aims to fix a problem that does not exist because the funds are generally in good shape. “The current structure of the Pension Review Board is working very adequately,” Brown said, according to the news report.
New York also recently moved forward on state pension oversight (see NY State Retirement Fund Moves Forward on Compliance Review ).