PART 17. STATE PENSION REVIEW BOARD
CHAPTER 607. PUBLIC RETIREMENT SYSTEM MINIMUM EDUCATIONAL TRAINING PROGRAM
The Texas Pension Review Board (Board) proposes the repeal of 40 Texas Administrative Code Chapter 607 relating to the Minimum Educational Training program for public retirement system trustees and administrators. The purpose of the proposed repeal is to eliminate the existing rule and adopt a new rule under separate action.
This repeal is proposed under Sections 801.201(a) and 801.211(e), which grant the Board authority to adopt rules for the conduct of its business and specifically the Minimum Educational Training program, respectively.
FISCAL NOTE
Ashley Rendon, Deputy Director, has determined that for each year of the first five-year period the proposed repeal is in effect there will be no fiscal implications for state or local government.
ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS FOR SMALL BUSINESSES, MICROBUSINESSES, AND RURAL COMMUNITIES.
There will be no adverse effect on small businesses or rural communities, micro-businesses, or local or state employment. There will be no additional economic costs to persons required to comply with the proposed repeal. An Economic Impact Statement and Regulatory Flexibility Analysis are not required because the proposed repeal will not have an adverse economic impact on small businesses, micro-businesses, or rural communities as defined in Texas Government Code §2006.001.
ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT.
There are no anticipated economic costs to persons who are required to comply with the proposed repeal. There is no effect on local economy for the first five years that the proposed repeal is in effect; therefore, no local employment impact statement is required under Government Code, §2001.022 and 2001.024(a)(6).
ENVIRONMENTAL IMPACT STATEMENT
The board has determined that the proposed repeal does not require an environmental impact analysis because the repeal is not a major environmental rule under Government Code, §2001.0225.
COSTS TO REGULATED PERSONS
The proposed repeal does not impose a cost on regulated persons, including another state agency, a special district, or a local government and, therefore, is not subject to Government Code, §2001.0045.
PUBLIC BENEFIT/COST NOTE
Ms. Rendon has determined that for each year of the first five years the proposed repeal will be in effect, the public benefit anticipated would be to eliminate an outdated rule while adopting a new, updated rule under separate action.
GOVERNMENT GROWTH IMPACT STATEMENT
The Board provides this Government Growth Impact Statement, pursuant to Texas Government Code §2001.0221, for the proposed repeal of 40 T.A.C. Chapter 607. For each year of the first five years the proposed rules are in effect, Ms. Rendon has determined:
(1) The proposed repeal does not create or eliminate a government program, but relates to the repeal, and simultaneous rule proposal making changes to the existing Minimum Educational Training program.
(2) The proposed repeal does not require the creation of new employee positions or the elimination of existing employee positions.
(3) The proposed repeal does not require an increase or decrease in future legislative appropriations to the Board.
(4) The proposed repeal does not require a decrease or increase in fees paid to the Board.
(5) The proposed repeal does not create a new regulation.
(6) The proposed repeal will repeal existing rules, but is associated with a simultaneous rule proposal making changes to the existing Minimum Educational Training program.
(7) The proposed repeal does not decrease the number of individuals subject to the rule's applicability.
(8) The proposed repeal does not positively or adversely affect the state economy.
TAKINGS IMPACT ASSESSMENT
This proposed repeal will not impact private real property as defined by Texas Government Code §2007.003, so a takings impact assessment under Government Code §2007.043 is not required.
REQUEST FOR PUBLIC COMMENT
Comments on the proposed repeal may be submitted to Tamara Aronstein, General Counsel, Texas Pension Review Board, P.O. Box 13498, Austin, Texas 78711-3498, or via email: rules@prb.texas.gov, no later than 30 days from the date that this proposal are published in the Texas Register. Please include the rule name and number in the subject line of any comments submitted by email.
SUBCHAPTER A. GENERAL PROVISIONS
40 TAC §§607.101, 607.103 - 607.105, 607.107
STATUTORY AUTHORITY
These rules are proposed under Government Code §801.211(e), which authorizes the Board to adopt rules necessary to implement the Minimum Educational Training program.
The proposed repeal affects 40 T.A.C. Chapter 607.
§607.101.Authority.
§607.103.Purpose.
§607.104.Definitions.
§607.105.Applicability.
§607.107.Exemption for Certain System Administrators.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on July 26, 2024.
TRD-202403408
Tamara Aronstein
General Counsel
State Pension Review Board
Earliest possible date of adoption: September 8, 2024
For further information, please call: (512) 463-1736
STATUTORY AUTHORITY
These rules are proposed under Government Code §801.211(e), which authorizes the Board to adopt rules necessary to implement the Minimum Educational Training program.
The proposed repeal affects 40 T.A.C. Chapter 607.
§607.110.Minimum Educational Training Requirements.
§607.113.Minimum Educational Training Requirements for Reappointed and Re-elected Trustees and Rehired System Administrators.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on July 26, 2024.
TRD-202403507
Tamara Aronstein
General Counsel
State Pension Review Board
Earliest possible date of adoption: September 8, 2024
For further information, please call: (512) 463-1736
40 TAC §§607.120, 607.122, 607.124, 607.126, 607.128, 607.130
STATUTORY AUTHORITY
These rules are proposed under Government Code §801.211(e), which authorizes the Board to adopt rules necessary to implement the Minimum Educational Training program.
The proposed repeal affects 40 T.A.C. Chapter 607.
§607.120.Program Standards for All Sponsors.
§607.122.MET Credit Hour Computation for Sponsors.
§607.124.Sponsor Accreditation.
§607.126.Obligations of Accredited Sponsors.
§607.128.Accreditation of MET Activities from Non-Accredited Sponsors.
§607.130.Accreditation of In-House Training Activities.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on July 26, 2024.
TRD-202403508
Tamara Aronstein
General Counsel
State Pension Review Board
Earliest possible date of adoption: September 8, 2024
For further information, please call: (512) 463-1736
STATUTORY AUTHORITY
These rules are proposed under Government Code §801.211(e), which authorizes the Board to adopt rules necessary to implement the Minimum Educational Training program.
The proposed repeal affects 40 T.A.C. Chapter 607.
§607.140.PRS Reporting.
§607.142.PRS Records.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on July 26, 2024.
TRD-202403511
Tamara Aronstein
General Counsel
State Pension Review Board
Earliest possible date of adoption: September 8, 2024
For further information, please call: (512) 463-1736
The Texas Pension Review Board (Board) proposes new 40 Texas Administrative Code Chapter 607 relating to the Minimum Educational Training program for public retirement system trustees and administrators.
The purpose of the proposed rules is to increase clarity of the rules, streamline training cycles to improve compliance with the training requirements, increase the efficiency of program tracking and reporting, and strengthen agency oversight for accredited training activities.
BACKGROUND AND PURPOSE
In 2013, the legislature passed House Bill 13, requiring the Board to establish a program to provide educational training to public retirement system trustees and administrators. Section 801.211(e), Texas Government Code authorizes the Board to adopt rules to implement this requirement. The Board initially adopted 40 TAC Chapter 607 in 2014. The Board now proposes new rules to clarify and improve the Minimum Educational Training program, together with the proposed repeal of the rules under separate action.
SUMMARY
The proposed rules in 40 TAC §607.101 provide the authority to adopt these rules.
The proposed rules in 40 TAC §607.103 provide the purpose of the rules, to ensure that trustees and administrators of Texas public retirement systems have the pension education needed to successfully discharge their duties.
The proposed rules in 40 TAC §607.104 provide definitions pertinent to the rules for the Minimum Educational Training program.
The proposed rules in 40 TAC §607.105 provide the applicability of the rules, which apply to trustees, except in certain cases, statutorily authorized designees, and administrators of public retirement systems.
The proposed rules in 40 TAC §607.110 provide the Minimum Educational Training program requirements for trustees and administrators in their first year of service and each calendar year thereafter. Trustees and administrators must complete seven credit hours of core training in the first year of service and two credit hours of training for continuing education each calendar year thereafter. The proposed rules create a one-time extension application process for the first year of service training requirement. The proposed rules specify that continuing education hours completed in excess of the annual requirement may not be carried over to a subsequent calendar year. The proposed rules provide for the transition from current requirements, proposed for repeal under separate action, to the new requirements effective January 1, 2025.
The proposed rules in 40 TAC §607.113 specify that trustees and administrators reappointed to, re-elected to, or rehired by a public retirement system are not required to repeat the first year of service training requirement unless more than five years have passed since the last date of the most recent term of service or employment.
The proposed rules in 40 TAC §607.120 provide program standards for training providers offering Minimum Educational Training activities, such as compliance with program requirements and the Board's curriculum guide, method of delivery for training activities, and verification of attendance for online training.
The proposed rules in 40 TAC §607.122 detail the computation of credit hours by training providers. Credit hours are based on net actual instruction time for all activities, with additional parameters provided for both digital and in-person activities.
The proposed rules in 40 TAC §607.124 provide for the accreditation of training providers by the Board. Training providers must conform with Board standards outlined in rule, conduct its business lawfully, and follow the application process provided in rule. This rule also creates a process for complaints regarding training providers and the Board's authority if a training provider is noncompliant with training program standards or Board rules.
The proposed rules in 40 TAC §607.126 create several requirements for accredited training providers, including recordkeeping, allowing review by the Board, and providing participants a certificate of completion.
The proposed rules in 40 TAC §607.128 allow for accreditation of training activities by a non-accredited training provider through a case-by-case application process outlined in the rule. Such activities, once approved, may be offered through repeat presentations for 36 months without requiring a new application.
The proposed rules in 40 TAC §607.130 provide details on accreditation of in-house training activities offered by a public retirement system for its own trustees and/or administrators. In-house training must meet all standards for training providers included in Chapter 607, except that in-house training is exempted from certain requirements listed in the rule.
The proposed rules in 40 TAC §607.140 pertain to Minimum Educational Training program reporting requirements, creating an annual April 1 deadline for two reports to be submitted by public retirement systems to provide the Board information on trustees and administrators and the training they completed during the preceding calendar year. This section also includes a requirement for the Board to report annually on the noncompliance status of trustees and administrators, as reported to the Board pursuant to this section.
The proposed rules in 40 TAC §607.142 create recordkeeping requirements for public retirement systems, which must retain records detailed in the rule for five years from the date a training activity is completed, and provide a copy of these records to the Board upon request.
FISCAL NOTE
The Board's deputy director, Ashley Rendon has determined that for each year of the first five-year period the proposed rules are in effect there will be no fiscal implications for state or local government.
ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS FOR SMALL BUSINESSES, MICROBUSINESSES, AND RURAL COMMUNITIES.
There will be no adverse effect on small businesses or rural communities, micro-businesses, or local or state employment. There will be no additional economic costs to persons required to comply with the proposed rules. An Economic Impact Statement and Regulatory Flexibility Analysis are not required because the proposed rules will not have an adverse economic impact on small businesses, micro-businesses, or rural communities as defined in Texas Government Code §2006.001.
ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT.
There are no anticipated economic costs to persons who are required to comply with the proposed rules. There is no effect on local economy for the first five years that the proposed rules are in effect; therefore, no local employment impact statement is required under Government Code, §2001.022 and 2001.024(a)(6).
ENVIRONMENTAL IMPACT STATEMENT
The Board has determined that the proposed rules do not require an environmental impact analysis because the rule is not a major environmental rule under Government Code, §2001.0225.
COSTS TO REGULATED PERSONS
The proposed rules do not impose a cost on regulated persons, including another state agency, a special district, or a local government and, therefore, is not subject to Government Code, §2001.0045.
PUBLIC BENEFIT/COST NOTE
Ms. Rendon has determined that for each year of the first five years the proposed rules will be in effect the public benefit is to improve efficiency of and compliance with the Minimum Educational Training program, ensuring public retirement system trustees and administrators have the pension knowledge needed to successfully discharge their duties.
GOVERNMENT GROWTH IMPACT STATEMENT
The Board provides this Government Growth Impact Statement, pursuant to Texas Government Code §2001.0221, for the proposed rules. For each year of the first five years the proposed rules are in effect, Ms. Rendon has determined:
(1) The proposed rules do not create or eliminate a government program, but instead relate to the readoption of the rules to make changes to an existing government program.
(2) Implementation of the proposed rules does not require the creation of new employee positions or the elimination of existing employee positions.
(3) Implementation of the proposed rules does not require an increase or decrease in future legislative appropriations to the Board.
(4) The proposed rules do not require a decrease or increase in fees paid to the Board.
(5) The proposed rules do not create a new regulation, because these rules replace a rule being repealed simultaneously to provide for revisions.
(6) The proposed rules will not expand or repeal existing rules.
(7) The proposed rules do not decrease the number of individuals subject to the rule's applicability.
(8) The proposed rules do not positively or adversely affect the state economy.
TAKINGS IMPACT ASSESSMENT
This proposed rulemaking will not impact private real property as defined by Texas Government Code §2007.002(5), so a takings impact assessment under Government Code §2007.043 is not required.
REQUEST FOR PUBLIC COMMENT
Comments on the proposed rules may be submitted to Tamara Aronstein, General Counsel, Texas Pension Review Board, P.O. Box 13498, Austin, Texas 78711-3498, or via email: rules@prb.texas.gov, no later than 30 days from the date that these proposed rules are published in the Texas Register. Please include the rule name and number in the subject line of any comments submitted by email.
SUBCHAPTER A. GENERAL PROVISIONS
40 TAC §§607.101, 607.103 - 607.105, 607.107
STATUTORY AUTHORITY
These rules are proposed under Government Code §801.211(e), which authorizes the Board to adopt rules necessary to implement the Minimum Educational Training program.
CROSS REFERENCE TO STATUTE
Section 801.211, Texas Government Code.
§607.101.Authority.
This chapter is promulgated under the authority of Texas Government Code, §801.201, relating to rulemaking, and §801.211, relating to a public retirement system educational training program.
§607.103.Purpose.
(a) The Public Retirement System Educational Training Program, as mandated by §801.211 of the Texas Government Code, is intended to ensure that every trustee and system administrator of a public retirement system in Texas pursues the necessary education relating to public pension matters throughout his or her tenure to successfully discharge their duties.
(b) This chapter will establish Minimum Educational Training requirements for Trustees and Administrators to help ensure that these trustees and administrators participate in training activities that maintain and improve their core competencies, and keep them abreast of recent developments in public pension matters and issues impacting their respective duties.
(c) This chapter is not intended to dictate that trustees and system administrators pursue only the Minimum Educational Training, but to set a minimum standard for training/education. Trustees and system administrators are encouraged to pursue additional educational opportunities in public pension-related areas.
§607.104.Definitions.
The following words and terms, for the purposes of this chapter, shall have the following meanings, unless the rule indicates otherwise.
(1) "Board" means the State Pension Review Board.
(2) "Credit hour" means the actual amount of instruction time for an MET activity expressed in terms of hours. The number of MET credit hours shall be based on sixty (60) minutes of instruction per hour.
(3) "First year of service" means:
(A) On or before December 31, 2024, the twelve-month period beginning from the date of assuming one's position on the PRS board or date of hire for an administrator.
(B) On or after January 1, 2025, the calendar year in which an individual assumes one's position on the PRS board or is hired to serve as administrator if that date occurs before September 1 of that calendar year. For individuals who assume a position on the PRS board or are hired to serve as administrator on or after September 1 of a calendar year, the first year of service refers to the next calendar year.
(4) "Minimum Educational Training" shall have the same meaning as assigned by §607.110 of this chapter.
(5) "MET" means Minimum Educational Training.
(6) "MET activity" means any organized in-person or online pension-related educational activity, which may include, but is not limited to, organized seminars, courses, conferences, lectures, panel discussions, audio, teleconference, video, and digital media presentations, question-and-answer periods, and in-house education.
(7) "Net actual instruction time" means time spent on instruction, not including any breaks, or other non-educational activities including promotion of particular products or services as prescribed by §607.120(a)(3) of this chapter (relating to Program Standards for All Training Providers).
(8) "Public retirement system" shall have the same meaning as assigned by §801.001(2) and §802.001(3) of the Texas Government Code, but shall not include defined contribution plans as defined by Texas Government Code, §802.001(1-a) and retirement systems consisting exclusively of volunteers organized under the Texas Local Fire Fighters' Retirement Act as defined by Texas Government Code, §802.002(d).
(9) "PRS" means public retirement system.
(10) "PRS board" has the same meaning as "governing body of a public retirement system," as provided in Texas Government Code §802.001(2).
(11) "Statutorily authorized designee" means an individual other than the trustee, designated by the trustee as authorized under the governing statute of the PRS or any other statute.
(12) "System administrator" means as defined by Texas Government Code §801.001(3) and §802.001(4).
(13) "Training provider" means an individual or organization offering training programs to trustees and system administrators. The training provider may or may not have developed the program materials. However, the training provider is responsible for ensuring the program materials present the necessary learning objectives and for maintaining the documentation required by this chapter.
(14) "Trustee" means as provided in Texas Government Code §801.001(4).
§607.105.Applicability.
This chapter is promulgated to establish the MET requirements for the following.
(1) Trustees, as defined in Texas Government Code, §801.001(4), in their capacity as members of the governing body of a PRS, as that term is defined in Texas Government Code §802.001(2). However, this chapter does not apply to:
(A) members of a PRS' sponsoring entity board that is only responsible for the creation, termination and amendment of the PRS; and
(B) members of a committee appointed by a PRS' sponsoring entity board to act in an advisory or oversight capacity only by providing guidance or recommendations.
(2) Statutorily authorized designees serving as members of the governing body of a PRS.
(3) System administrators, as defined by Texas Government Code, §801.001(3) and §802.001(4).
§607.107.Exemption for Certain System Administrators.
(a) For the purposes of this section, an "outside entity" is a bank or financial institution.
(b) The Board may grant an exemption to a PRS for certain types of system administrators from the MET requirements on a case-by-case basis if:
(1) the PRS designates an outside entity as the system administrator, and the PRS board of trustees or its designee completes and forwards to the Board a request for exemption on a form provided by the Board indicating the same; or
(2) the PRS does not have a system administrator that meets the statutory definition as contained in the Texas Government Code, §801.001(3) and §802.001(4) and the PRS board or its designee completes and forwards to the Board a request for exemption, on a form provided by the Board, certifying that the PRS does not have a system administrator. The request shall include a statement affirming that one or more trustees of the PRS are responsible for the duties of the system administrator and are already subject to the MET requirements.
(c) If the Board granted an exemption to a PRS under subsection (a) of this section and the exemption is no longer applicable, the PRS shall report the same to the Board, and the exemption shall be revoked.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on July 26, 2024.
TRD-202403410
Tamara Aronstein
General Counsel
State Pension Review Board
Earliest possible date of adoption: September 8, 2024
For further information, please call: (512) 463-1736
STATUTORY AUTHORITY
These rules are proposed under Government Code §801.211(e), which authorizes the Board to adopt rules necessary to implement the Minimum Educational Training program.
CROSS REFERENCE TO STATUTE
Section 801.211, Texas Government Code.
§607.110.Minimum Educational Training Requirements.
(a) First year of service. A new trustee and a new system administrator shall complete at least seven (7) credit hours of training in the core content areas within the first year of service. The seven credit hours shall include training in all of the core content areas. A trustee or system administrator must earn no less than half a credit hour in each content area. No more than two credit hours earned in any one core content area shall be applied toward meeting the 7-hour minimum requirement contained in this subsection. The core content areas are:
(1) fiduciary matters;
(2) governance;
(3) ethics;
(4) investments;
(5) actuarial matters;
(6) benefits administration; and
(7) risk management.
(b) A new trustee or system administrator may submit to the Board an application for a one-time extension period of three months to complete the first year of service core training requirement, which the Board may approve in exceptional circumstances. The request for extension must be approved by the chair of the PRS' board, or, for an extension request by the PRS board chair, approved by the vice chair of the PRS' board or its administrator. The application must be submitted to the Board on a form prescribed by the Board and must include an explanation of the circumstances necessitating the extension.
(c) Subsequent years of service. A trustee and a system administrator shall complete at least two (2) credit hours of continuing education in either the core content areas in subsection (a) of this section, continuing education content areas, or any combination thereof, within each calendar year after the first year of service as a new trustee or new system administrator. The continuing education content areas include:
(1) compliance;
(2) legal and regulatory matters;
(3) pension accounting;
(4) custodial issues;
(5) plan administration;
(6) Texas Open Meetings Act; and
(7) Texas Public Information Act.
(d) A trustee or administrator may not carry over continuing education credit hours earned in excess of the requirement under subsection (c) of this section to a subsequent calendar year.
(e) MET completed up to six months before the trustee's date of assuming position on the PRS board or system administrator's hiring date may be counted for the first-year-of-service requirement in subsection (a) of this section.
(f) A trustee serving concurrently on multiple PRS boards and a system administrator employed concurrently by multiple PRSs shall only be required to complete the MET requirements in this section for service with one PRS, so long as the concurrent service or employment is reported to the Board pursuant to §607.140(b)(3) of this chapter.
(g) Credit hours for attending MET activities shall be based on net actual instruction time. Credit hours for viewing or listening to audio, video, or digital media shall be based on the running time of the recordings, and credit hours for attending in-person educational programs shall be based on actual instruction time.
(h) A trustee or administrator may gain credit for teaching an accredited MET activity. Credit hours shall be based on net actual presentation time, but may not include repeated presentations of the same activity in a single calendar year.
(i) The Board hereby adopts by reference the Curriculum Guide for Minimum Educational Training to provide further direction on core and continuing education content areas as contained in subsections (a) and (c)(1) of this section. Trustees and system administrators are encouraged to review the Curriculum Guide for content area guidance.
(j) The Board shall make the Curriculum Guide for Minimum Educational Training available to the PRSs. A PRS can obtain the most current version of the Curriculum Guide for Minimum Educational Training from the offices of the State Pension Review Board and from its website at http://www.prb.texas.gov.
(k) The 2025 calendar year training cycle for trustees and administrators shall be based on their MET compliance status on December 31, 2024, as detailed below. This subsection expires on December 31, 2025.
(1) Trustees and administrators within their first year of service on December 31, 2024 who have completed by that date the training required by subsection (a) of this section shall begin their first continuing education cycle in calendar year 2025.
(2) Trustees and administrators within their first year of service on December 31, 2024 who have not completed by that date the training required by subsection (a) of this section shall complete the first year of service training in calendar year 2025.
(3) Trustees and administrators who began a continuing education cycle, as required by subsection (c) of this section, in calendar year 2024 may carry over any hours completed in that year to the calendar year 2025 continuing education cycle. If a trustee or administrator completed more than two continuing education hours, those hours will not carry over to calendar year 2026.
(4) Trustees and administrators who began a continuing education cycle, as required by subsection (c) of this section, in calendar year 2023 will begin a new continuing education cycle on January 1, 2025. Trustees and administrators who did not complete the training hours required in previous cycles will remain noncompliant and must complete all outstanding required credit hours.
§607.113.Minimum Educational Training Requirements for Reappointed and Re-elected Trustees and Rehired System Administrators.
(a) The following provisions shall apply to:
(1) A trustee who is reappointed or re-elected to a subsequent term of service for the same PRS or who leaves one PRS and is appointed as a trustee to another PRS;
(2) A trustee who serves on multiple PRS boards;
(3) A trustee who is subsequently hired by a PRS to serve as system administrator;
(4) A system administrator who is rehired to a subsequent term of employment by the same PRS or who leaves one PRS and is hired as system administrator by another PRS;
(5) A system administrator who is employed by multiple PRSs; and
(6) A system administrator who is subsequently appointed or elected to a PRS board.
(b) Unless more than five years have passed since the last date of the most recent term of service or employment, a person under subsection (a) of this section shall not be required to repeat the core training requirement already completed under §607.110(a) of this subchapter (relating to Minimum Educational Training Requirements) but shall complete the continuing education requirement in §607.110(c) of this subchapter within each calendar-year period served.
(c) If more than five years have passed since the last date of most recent term of service or employment, a person under subsection (a) of this section shall be subject to both the core training requirement within the first year of service as contained in §607.110(a) of this subchapter and the continuing education requirement within each calendar-year period after the first year of service as contained in §607.110(c) of this subchapter.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on July 30, 2024.
TRD-202403512
Tamara Aronstein
General Counsel
State Pension Review Board
Earliest possible date of adoption: September 8, 2024
For further information, please call: (512) 463-1736
40 TAC §§607.120, 607.122, 607.124, 607.126, 607.128, 607.130
STATUTORY AUTHORITY
These rules are proposed under Government Code §801.211(e), which authorizes the Board to adopt rules necessary to implement the Minimum Educational Training program.
CROSS REFERENCE TO STATUTE
Section 801.211, Texas Government Code.
§607.120.Program Standards for All Training Providers.
(a) MET activities offered by training providers must comply with the following standards.
(1) An MET activity shall constitute an organized program of learning dealing with matters related to public pensions, including the MET's core or continuing education content areas in §607.110 of this chapter (relating to Minimum Educational Training Requirements). Training providers are required to review the Curriculum Guide as referenced in §607.110 of this chapter for content area guidance.
(2) An MET activity shall be conducted in a suitable facility by an individual or group qualified by professional or academic experience.
(3) An MET activity shall be educational in nature and shall not include the promotion of particular products or services.
(4) An MET activity shall be conducted in person, online via the internet, or by teleconference.
(5) An MET activity shall meet all of the other requirements contained in this chapter.
(b) An MET activity training provider shall determine, and inform participants, in advance of the course, of the course's learning or content objectives, any necessary prerequisites, the credit hours the course provides for each core and continuing education content area, and the total credit hours the course provides.
(c) An MET activity training provider is responsible for ensuring the participants register their attendance during the MET activity. Training providers are responsible for assigning the appropriate number of credit hours for participants, including reduced hours for those participants who arrive late or leave early.
(d) An MET activity training provider conducting online or other electronically-delivered courses including via pre-recorded audio or video shall verify participation by participants using one of the following methods:
(1) Provide a completion code to the participant upon successful completion of the course. The participant shall provide the completion code to the training provider to demonstrate attendance and completion. Without receiving such code, the training provider shall not issue a certificate of completion to the participant.
(2) Require participants to successfully complete a quiz on topics covered in the course.
(3) Use software-based student verification or attendance checks to verify participation.
(4) Use of another method to verify participation with approval from the Board.
(e) Staff meetings and other settings cannot be claimed for fulfilling the MET requirements if they do not meet the provisions of this chapter.
§607.122.MET Credit Hour Computation for Training Providers.
(a) Credit hours for attending MET activities shall be based on net actual instruction time. Training providers shall calculate the number of credit hours that should be given for an MET activity offered based on the net actual instruction time to be spent, and shall indicate the number on the MET activity materials. Fractional credit hours should be stated as decimals.
(b) Credit hours for viewing or listening to audio, video, or digital media shall be based on the running time of the recordings. For digital media activities that do not consist entirely of audio or video recordings, training providers shall reasonably estimate the time needed to complete the course.
(c) Credit hours for attending in-person educational programs shall be based on actual instruction time. Training providers shall adjust the credit hours for attendees who arrive late or leave early, as required by §607.120(c) of this chapter.
§607.124.Training Provider Accreditation.
(a) The Board may allow any training provider of MET to become Board accredited if the training provider, in the opinion of the Board, demonstrates that it will comply with its obligations to the Board and that its programs will conform to the Board's standards as outlined in:
(1) §607.120 of this chapter (relating to Program Standards for All Training Providers); and
(2) §607.122 of this chapter (relating to MET Credit Hour Computation for Training Providers).
(b) The Board will also require that each organization or individual applying to become a Board-accredited MET training provider agree that in the conduct of its business it will:
(1) Not commit fraud, deceit or engage in fiscal dishonesty of any kind;
(2) Not misrepresent facts or make false or misleading statements;
(3) Not make false statements to the Board or to the Board's agents; and
(4) Comply with the laws of the United States and the State of Texas.
(c) Each organization or individual applying to become a Board accredited MET training provider must submit an application on a form provided by the Board. The Board will consider for approval only applications that are complete. As part of the application process, the Board may require the training provider to submit information regarding its organization, purpose, history of providing educational training activities, course outlines, and such additional information that the Board may deem relevant.
(d) The Board shall review each application and notify the training provider of its acceptance or rejection. Approval of accredited training provider status will be based upon information received with the application, and such other information the Board shall deem relevant including, but not limited to, course offering and attendance history, approvals and denials of accreditation by other governmental entities, and complaints concerning past programs or the marketing thereof. An acceptance in any given year shall not bind the Board to accept a training provider in any future year.
(e) Upon accreditation a training provider can represent that it is a Board accredited MET training provider. An accredited training provider shall include in promotional materials the following language: "We are accredited by the State Pension Review Board as a Minimum Educational Training (MET) training provider for Texas public retirement systems. This accreditation does not constitute an endorsement by the Board as to the quality of our MET program."
(f) An accredited training provider is not required to comply with provisions contained in §607.128 of this chapter (relating to Accreditation of MET Activities from Non-Accredited Training Providers).
(g) The Board may accredit a training provider to offer MET activities in the core content areas under §607.110(a) of this chapter (relating to Minimum Educational Training Requirements), the continuing education content areas under §607.110(c)(1) of this chapter, or both.
(h) An accredited training provider shall be reviewed for renewal of accredited training provider status after an initial two-year period of accreditation, and again after each subsequent four-year period of accreditation, or at such other times as the Board deems reasonable. To be considered for renewal, an accredited training provider must submit a renewal application on a form provided by the Board. Review for renewal shall be based on the criteria stated in subsection (d) of this section.
(i) Complaints concerning accredited training providers and MET activities may be directed to the Board. If the Board determines that a response is necessary from the training provider, the training provider shall be notified in writing and provided a copy of the complaint. The Board shall respond to all complaints within a reasonable time.
(j) The Board, in its sole and exclusive discretion, may determine that an accredited training provider is not in compliance with the registration requirements, MET standards, or applicable Board rules. The Board will provide the accredited training provider reasonable notice of such a determination and shall provide the accredited training provider a reasonable opportunity to become compliant. If the Board determines the training provider is not in compliance, the Board may require the training provider to take corrective action and/or may terminate the training provider's accreditation. A training provider that has had its accreditation terminated or that has voluntarily surrendered its accreditation in lieu of corrective action may apply for reinstatement no sooner than six months after the effective date of the termination or surrender.
(k) A training provider that requests reinstatement may do so by submitting a completed application as required by subsection (c) of this section. The applicant will be subject to all the requirements of this section.
(l) Board decisions under this chapter are final and are not appealable. No portion of this chapter shall be interpreted or construed to create a right to a hearing, or to acknowledge or create any private right or interest.
§607.126.Obligations of Accredited Training Providers.
(a) In order to support the reports required of PRSs, a training provider accredited under §607.124 of this chapter (relating to Training Provider Accreditation) shall retain the following records for five years following the date the program is completed:
(1) an agenda or outline that describes the course content;
(2) the name and title of each instructor for each topic;
(3) time devoted to each topic;
(4) each date and location of the presentation;
(5) record of participation that reflects:
(A) the credit hours earned by each trustee and system administrator participant; and
(B) the number of non-trustee and non-administrator attendees; and
(6) evaluations completed by trustee and system administrator participants pursuant to subsection (f) of this section.
(b) The accredited training provider, upon request of the Board, shall immediately submit any of the records retained in subsection (a) of this section for review.
(c) An accredited training provider shall at any reasonable time allow a member of the Board or Board staff, as part of a review of the training provider, to inspect the training provider's teaching facilities, examine the training provider's records, attend its courses or seminars at no charge, and review its program to determine compliance with the training provider accreditation requirements, MET standards, and all applicable Board rules.
(d) An accredited training provider shall not use advertising that is false or misleading, or use any communication that, in the training provider's effort to promote its services, is coercive.
(e) An accredited training provider, promptly upon the conclusion of the activity, but not later than 30 calendar days after the conclusion of the activity, shall provide to each trustee or system administrator participant a certificate of completion, reflecting the following information:
(1) Name of participant;
(2) Activity title;
(3) Date and location of the activity;
(4) Total accredited MET hours; and
(5) Training provider name and contact information.
(f) A training provider accredited to offer MET activities in the core content areas under §607.110(a) of this chapter (relating to Minimum Educational Training Requirements) shall promptly provide the information specified in subsection (e) of this section to the Board within 30 days of the conclusion of a core MET activity offered to satisfy the first year of service training requirement.
(g) An accredited training provider shall include in each MET activity a process for participants and instructors to evaluate the quality of the activity, including whether:
(1) Course objectives were met;
(2) Facilities and technology were satisfactory;
(3) Each instructor was effective; and
(4) Program content was timely and effective.
(h) Training providers shall inform instructors of the results of their performance evaluation in subsection (f) of this section, and should systematically review the evaluation process to ensure its effectiveness.
§607.128.Accreditation of MET Activities from Non-Accredited Training Providers.
(a) MET activities may be accredited, on a case-by-case basis, upon the written application of a training provider or PRS on behalf of its own trustees or system administrator. All applications for accreditation of an MET activity by a non-accredited training provider shall:
(1) be submitted at least 30 days in advance of the activity, although the Board, at its discretion, may approve applications filed less than 30 days in advance of the activity, or may approve applications filed after the activity;
(2) be submitted on a form provided by the Board;
(3) contain all information requested on the form;
(4) be accompanied by a sample agenda or course outline that describes the course content, designates the courses sought to be accredited as an MET activity, identifies the instructors, lists the time devoted to each topic, and shows each date and location at which the program will be offered; and
(5) include a detailed calculation of the total MET hours for the course and the hours that correspond to each core and continuing education topic the course covers.
(b) A separate application is required for each activity unless the activity is being repeated in exactly the same format but on different dates and/or locations. Repeat presentations may be added to an existing application for a 36-month period following the effective date of accreditation.
(c) The Board shall review each application and notify the applicant of acceptance or rejection of the activity. An acceptance in any given year shall not bind the Board to accept a training provider or activity in any future year.
§607.130.Accreditation of In-House Training Activities.
(a) MET activities provided by PRSs or their hired consultants primarily for the education of their trustees and/or system administrators are considered in-house training, and may be accredited for MET credit. Education provided in-house must meet the standards in §607.120 of this chapter (relating to Program Standards for All Training Providers) and §607.122 of this chapter (relating to MET Credit Hour Computation for Training Providers), except that in-house training is not required to comply with the following provisions:
(1) Section 607.120(c) of this chapter, regarding the requirement for ensuring participants register their attendance.
(2) Section 607.126(a)(5)(B) of this chapter, regarding the requirement to maintain a record of the non-trustee and non-administrator attendees.
(3) Section 607.126(e) of this chapter, regarding the requirement to provide participants a certificate of completion.
(4) Section 607.126(f) of this chapter, regarding the requirement to provide the Board participant information for accredited core activities satisfying the first year of service training requirement because this training will be reported as specified in §607.140 of this chapter.
(b) PRSs that conduct in-house training may apply to become accredited training providers under §607.124 of this chapter (relating to Training Provider Accreditation).
(c) PRSs that conduct in-house training may submit individual courses for accreditation under §607.128 of this chapter (relating to Accreditation of MET Activities from Non-Accredited Training Providers).
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on July 30, 2024.
TRD-202403514
Tamara Aronstein
General Counsel
State Pension Review Board
Earliest possible date of adoption: September 8, 2024
For further information, please call: (512) 463-1736
STATUTORY AUTHORITY
These rules are proposed under Government Code §801.211(e), which authorizes the Board to adopt rules necessary to implement the Minimum Educational Training program.
CROSS REFERENCE TO STATUTE
Section 801.211, Texas Government Code.
§607.140.PRS Reporting.
(a) By April 1 of each year, a PRS shall accurately report to the Board on behalf of its trustees and system administrator the MET credit hours completed during the preceding calendar year and any previous unreported training, as required by subchapter B. A PRS shall submit the report on a completed PRB-2000 form provided by the Board.
(b) By April 1 of each year, a PRS shall be responsible for providing the following information to the Board. A PRS shall also notify the Board of any changes in such information within 30 days after the date of the changes. A PRS shall submit this information on a completed PRB-150 form provided by the Board.
(1) For each trustee: the name, mailing address, phone number, e-mail, position (such as Chair, Vice-Chair, Secretary, etc.), trustee type (such as Active, Retired, Citizen, etc.), term start date, the term length, and the term end date.
(2) For a system administrator: the name, title, phone number, e-mail, and date of hire.
(3) For each trustee serving concurrently on multiple PRS boards or system administrator employed concurrently by multiple PRSs, the name of the other PRSs.
(c) The Board shall report on the noncompliance status of trustees and administrators annually.
§607.142.PRS Records.
(a) For each trustee and system administrator, a PRS shall retain the following records for five years following the date an MET activity is completed:
(1) the training provider's name;
(2) the location of the MET activity;
(3) date(s) of completion; and
(4) the credit hours earned by the trustee or system administrator participant.
(b) The PRS, upon request of the Board, shall immediately submit a copy of any of the records retained in subsection (a) of this section for review.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on July 30, 2024.
TRD-202403516
Tamara Aronstein
General Counsel
State Pension Review Board
Earliest possible date of adoption: September 8, 2024
For further information, please call: (512) 463-1736
The Texas Pension Review Board (Board) proposes amendments to 40 TAC §609.105 and §609.111, pertaining to public retirement system investment expense reporting, and the repeal of the existing rule at 40 TAC §609.109, regarding the initial investment expense reporting period. These proposed changes are referred to as "proposed rules." This rulemaking action was identified as part of the agency's four-year review of rules pursuant to Texas Government Code §2001.039.
BACKGROUND AND PURPOSE
In 2019, the legislature passed Senate Bill 322, enhancing investment expense reporting requirements for public retirement systems. Section 802.103(e), Texas Government Code authorizes the Board to adopt rules to implement this requirement. The Board initially adopted 40 TAC Chapter 609 in 2020. The Board now proposes rules to clarify the requirements.
The Board's investment analyst, Robert Munter, has determined that for each year of the first five-year period the proposed rules are in effect there will be no fiscal implications for state or local government.
There will be no adverse effect on small businesses or rural communities, micro-businesses, or local or state employment. There will be no additional economic costs to persons required to comply with the proposed rules. An Economic Impact Statement and Regulatory Flexibility Analysis are not required because the proposed rules will not have an adverse economic impact on small businesses or rural communities as defined in Texas Government Code §2006.001(1-a) and (2).
Mr. Munter has determined that for each year of the first five years the proposed rules will be in effect the public benefit is to clarify the provisions in the current rule for ease of reference and understanding by the public and improve consistency and accuracy of investment expense reports to improve transparency for the public, members of the systems, and policymakers.
SUMMARY
The proposed rules in 40 TAC §609.105 pertain to definitions for investment expense reporting. The rule would be modified to specify that "direct and indirect fees and commissions" include "fees netted from returns," which is defined in the existing rule language. The amendments would also specify that "investment service" includes "in-house investment staff."
The proposed repeal of 40 TAC §609.109 pertains to the first investment expense reporting period, which has already passed. The rules expressly state that they expired on April 1, 2022. The proposed rules would repeal this entire obsolete section.
The proposed rules in 40 TAC §609.111 pertain to the investment expense reporting structure. The amendments would clarify that direct and indirect fees and commissions must be reported by type of fee and commission, and specifies the types as defined in 40 TAC §609.105(4), as the definition would be amended by this rulemaking. The amendments would also specify that investment expense information may be reported in an unaudited supplemental schedule within the public retirement system's annual financial report.
FISCAL NOTE
Mr. Munter has determined that for each year of the first five-year period the proposed rules are in effect there will be no fiscal implications for state or local government.
ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS FOR SMALL BUSINESSES, MICROBUSINESSES, AND RURAL COMMUNITIES.
There will be no adverse effect on small businesses or rural communities, micro-businesses, or local or state employment. There will be no additional economic costs to persons required to comply with the proposed rules. An Economic Impact Statement and Regulatory Flexibility Analysis are not required because the proposed rules will not have an adverse economic impact on small businesses, micro-businesses, or rural communities as defined in Texas Government Code §2006.001.
ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT.
There are no anticipated economic costs to persons who are required to comply with the proposed rules. There is no effect on local economy for the first five years that the proposed rules are in effect; therefore, no local employment impact statement is required under Government Code, §2001.022 and 2001.024(a)(6).
ENVIRONMENTAL IMPACT STATEMENT
The board has determined that the proposed rules do not require an environmental impact analysis because the rule is not a major environmental rule under Government Code, §2001.0225.
COSTS TO REGULATED PERSONS
The proposed rules do not impose a cost on regulated persons, including another state agency, a special district, or a local government and, therefore, is not subject to Government Code, §2001.0045.
PUBLIC BENEFIT/COST NOTE
Mr. Munter has determined that for each year of the first five years the proposed rules will be in effect the public benefit is consistency and clarity in the agency's investment expense reporting rules, resulting in enhanced transparency and data quality.
GOVERNMENT GROWTH IMPACT STATEMENT
The Board provides this Government Growth Impact Statement, pursuant to Texas Government Code §2001.0221, for the proposed rules, 40 TAC §§609.105, 609.109, and 609.111. For each year of the first five years the proposed rules are in effect, Mr. Munter has determined:
(1) The proposed rules do not create or eliminate a government program.
(2) Implementation of the proposed rules does not require the creation of new employee positions or the elimination of existing employee positions.
(3) Implementation of the proposed rules does not require an increase or decrease in future legislative appropriations to the Board.
(4) The proposed rules do not require a decrease or increase in fees paid to the Board.
(5) The proposed rules do not create a new regulation.
(6) The proposed rules will not expand or repeal existing rules.
(7) The proposed rules do not decrease the number of individuals subject to the rule's applicability.
(8) The proposed rules do not positively or adversely affect the state economy.
TAKINGS IMPACT ASSESSMENT
This proposed rulemaking will not impact private real property as defined by Texas Government Code §2007.002(5), so a takings impact assessment under Government Code §2007.043 is not required.
REQUEST FOR PUBLIC COMMENT
Comments on the proposed rules may be submitted to Tamara Aronstein, General Counsel, Texas Pension Review Board, P.O. Box 13498, Austin, Texas 78711-3498, or via email: rules@prb.texas.gov, no later than 30 days from the date that these proposed rules are published in the Texas Register. Please include the rule name and number in the subject line of any comments submitted by email.
STATUTORY AUTHORITY
These rules are proposed under Government Code §802.103(e), which authorizes the Board to adopt rules necessary to implement the Government Code §802.103(a)(3) investment expense reporting requirement.
CROSS REFERENCE TO STATUTE
Sections 802.103(a)(3), 802.103(e), Texas Government Code.
§609.105.Definitions.
The following words and terms, for the purposes of this chapter, shall have the following meanings, unless the rule indicates otherwise.
(1) "Annual financial report" means as defined by §802.103 of the Texas Government Code.
(2) "Asset class" means a group of securities that share similar characteristics, perform comparably in the marketplace, and are generally governed by the same laws and regulations.
(3) "Board" means the State Pension Review Board.
(4) "Direct and indirect fees and commissions" means
amounts paid to investment managers for managing assets; commissions
paid to brokers for trading securities on a per share basis; [and]
profit share as defined by §815.3015(a)(2) of the Texas Government
Code; and fees netted from returns.
(5) "Fees netted from returns" means an amount that an investment manager collects or retains from earned investment returns rather than from the pension trust fund.
(6) "Governing body of a public retirement system" means as provided by Texas Government Code §802.001(2).
(7) "Investment expense" means direct and indirect fees and commissions and amounts retained or paid for investment services.
(8) "Investment manager" means as defined by §802.204 of the Texas Government Code.
(9) "Investment service" means a service provided to
a public retirement system for general purposes of administering its
investment program such as custodial, investment consulting, investment-related
legal services, [and] research, and in-house investment staff.
(10) "Public retirement system" means as defined by §801.001(2) and §802.001(3) of the Texas Government Code, but shall not include defined contribution plans as defined by Texas Government Code, §802.001(1-a) or retirement systems consisting exclusively of volunteers organized under the Texas Local Fire Fighters' Retirement Act as defined by Texas Government Code, §802.002(d).
§609.111.Investment Expense Reporting Structure.
(a) Public retirement systems shall[:]
[(1)] report direct and indirect fees and commissions:
(1) [(A)] in the fiscal year
they are incurred;
(2) [(B)] by asset class;
(3) by type of fees and commissions, specifically:
(A) amounts paid to investment managers for managing assets;
(B) commissions paid directly by the public retirement system to brokers for trading securities on a per share basis;
(C) profit share as defined by §815.3015(a)(2) of the Texas Government Code; and
(D) fees netted from returns.
(4) [(C)] in a supplemental schedule, which may be unaudited, as part of the system's annual financial
report.[; and]
[(2) identify amounts netted from
returns separately from those paid from the trust.]
(b) Investment services provided to the system shall be reported in a supplemental schedule contained in the notes to the financial statements that are part of a public retirement system's annual financial report.
(c) A retirement system shall report expenses incurred for investment services by type of service provided, even if multiple investment services are provided by a single firm. Those expenses should not be reported by asset class.
(d) The asset classes are:
(1) Cash;
(2) Public Equity;
(3) Fixed Income;
(4) Real Assets;
(5) Alternative/Other.
(e) The Board hereby adopts by reference the 2020 Asset Class Categorization Guide (2020 ACC Guide) to assist in categorizing items by asset class.
(f) The Asset Class Categorization Guide is available to all public retirement systems. A public retirement system may obtain the most current version of the Asset Class Categorization Guide from the offices of the State Pension Review Board and from its website at http://www.prb.texas.gov.
(g) For an investment product containing investments in more than one asset class, a public retirement system shall report fees according to the corresponding asset class.
(h) For a fund of funds, reported fees must include the top-layer management fees charged by the fund-of-fund manager and the fees charged by all subsidiary fund managers, and all profit share, reported as a single amount.
(i) A public retirement system must list the types of investment included in the "Alternative/Other" asset class as described in the 2020 ACC Guide.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on July 26, 2024.
TRD-202403414
Tamara Aronstein
General Counsel
State Pension Review Board
Earliest possible date of adoption: September 8, 2024
For further information, please call: (512) 463-1736
STATUTORY AUTHORITY
The proposed repeal is authorized under Texas Government Code §801.201, which authorizes the Board to adopt rules and Texas Government Code §802.103(e), which authorizes the Board to adopt rules for investment expense reporting and other annual financial report requirements.
The statutory provisions affected by the proposed repeal are those set forth in Texas Government Code §802.103. No other statutes, articles, or codes are affected by the proposed repeal.
§609.109.Investment Expense Reporting.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on July 26, 2024.
TRD-202403416
Tamara Aronstein
General Counsel
State Pension Review Board
Earliest possible date of adoption: September 8, 2024
For further information, please call: (512) 463-1736