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PRB staff flags noncompliance on actuarial audits; launches intensive study of Chapter 8‑10 plans
Summary
PRB staff reported outstanding actuarial‑audit and experience‑study submissions for several large systems and described a forthcoming focused study of Chapter 8‑10 plans that serve hospitals, utilities and other quasi‑public sponsors; surveys were sent and draft report will be presented in the fall.
PRB analytical staff told the board July 10 that several large retirement plans remain out of compliance with statutory requirements for actuarial audits and experience studies and described a new intensive review the agency is conducting of Chapter 8‑10 plans.
Brian Burnham, PRB analytical services manager, said the PRB sent notification letters and follow‑up communications to sponsors and systems with missing five‑year actuarial audits and experience studies (requirements apply to systems with at least $100,000,000 in assets). Burnham named systems that had never submitted an actuarial audit to PRB despite exceeding the asset threshold for years: Dallas County Hospital, Irving Fire, and Laredo Fire. Beaumont had submitted a prior actuarial audit (March 4, 2019) and its next audit became due in 2024; Denton Fire submitted an actuarial audit but PRB was still awaiting its experience study; Dallas Employees Retirement Fund and San Antonio Metropolitan Transit Retirement Plan reported audits or studies in progress.
Burnham described the PRB’s noncompliance process: email reminders, two notices for missed deadlines, sponsor notification at 60 days, and public listing on PRB’s website for noncompliant systems. He said most systems acknowledge the requirement and told PRB they are working with sponsors to complete audits; PRB staff will keep the board apprised of progress.
Separately, Burnham presented the PRB’s initiation of an intensive study of Chapter 8‑10 plans (named for their governing statutory chapter). The effort focuses on supplemental and special‑district plans — for example, hospital, water district and transit systems — which often use actuarially determined contributions, have conservative assumptions, smaller staff resources, and governance structures that can combine sponsor and plan decisionmakers. PRB sent a survey in May to 33 systems (one has since terminated); 18 responded. The study will examine governance, decision‑making, contribution structures, asset allocation, revenue streams, and whether some plans use outdated assumptions for lump‑sum payments. Staff plans to present a draft report to the board in the fall and a final report later in the year.
Board member Marsha Dush asked staff to analyze a specific observation in the actuarial appendices: employer normal cost appeared lower (about 4%) for plans where employees are not covered by Social Security, compared with about 8% where employees have Social Security — a counterintuitive result Burnham agreed was “astute” and said it could be added to the Chapter 8‑10 review.
Why it matters: Actuarial audits and experience studies are statutory transparency requirements; missing submissions limit PRB’s ability to identify risks. The Chapter 8‑10 study will give staff a firmer evidence base to advise these smaller and quasi‑public systems.
