Texas PRB Key Metrics

Texas Government Code Section 801.202(2) requires the Pension Review Board (PRB) to conduct intensive studies of potential or existing problems that threaten the actuarial soundness of or inhibit an equitable distribution of benefits in one or more public retirement systems. In addition to reviewing the unfunded actuarially accrued liability (UAAL or “unfunded liability”) of a plan, the PRB has identified the following key metrics to determine and prioritize retirement systems for intensive actuarial review.

A Fund may be selected for intensive actuarial review if:

• Its amortization period exceeds 40 year.
• Its funded ratio is among the lowest of all defined benefit pension plans in Texas.
• It uses an assumed rate of return above 7.75%, which is above both the Texas and national averages for public pension plans.
• Its actual contribution as a percent of actuarially determined contribution (ADC) is among the lowest among Texas defined benefit plans and among the lowest in its peer group.
• Its investment expense as a percentage of plan net assets is one of the highest amongst all defined benefit plans in Texas.
• Its non-investment cash flow as a percent of assets (fiduciary net position (FNP)) is among the lowest among Texas defined benefit plans.