Pension Review Board presses Nacogdoches hospital district for more data as plan faces possible termination

The Pension Review Board heard a detailed update on the Nacogdoches County Hospital District Retirement Plan and repeatedly urged hospital officials to obtain clear actuarial valuations and legal guidance before taking any final steps on a possible plan termination.

Board members and members of the public told hospital officials they were concerned that decisions were being discussed without up‑to‑date actuarial reports, independent legal opinions and clear written communication to plan participants. Sheila Beckett, who said she was speaking on behalf of a retiree in the plan, told the board she worried that members lacked adequate information and urged the PRB to continue its review. "I would encourage you to help them look into other options that might be available to them besides liquidation," Beckett said.

The hospital's CEO, Rhonda McCabe, and Chief Financial Officer Lynn Lindsey described a sequence of board meetings since September 2024 in which trustees repeatedly deferred a vote on possible termination. Lindsey said the plan’s third‑party administrators and auditors have changed several times; the plan submitted its FY2022 audit but FY2023 and FY2024 audits remained in progress. McCabe and Lindsey told the PRB they had recently contracted a new actuarial firm and expected the actuary to begin work immediately.

Why it matters: Trustees, PRB members and public commenters all said the consequences are material for retirees and current employees and that options should be fully developed before a termination is pursued. Several PRB members urged the hospital district to ask the Texas attorney general whether district sales tax revenue could legally be used to shore up pension obligations.

Key details and numbers: Lindsey told the PRB the plan’s assets are “roughly about 32,000,000” and said the plan’s funded ratio is “about 70, 71 percent.” The hospital district froze the plan to new entrants in September 2017; contributions continued into 2021, and McCabe said a July 2021 valuation showed the plan at about 104% funded after a final contribution that year. Since 2021 the plan’s funded status has declined. Hospital staff and PRB members said the plan’s actuary estimated a detailed termination analysis could take six to nine months.

Legal and governance questions: Multiple PRB members questioned why hospital officials had not yet requested an attorney general opinion about whether the district’s sales tax proceeds could be used to fund the plan. McCabe said counsel had advised that government funds could not be used because the plan is frozen, but that an official request to the attorney general had not yet been filed. PRB members said an AG opinion should be sought promptly.

Conflicts of interest and board composition: Hospital staff told the PRB that two trustees recused themselves from a vote on termination because they were participants in the plan; one recently resigned. PRB members pressed counsel to explain why those positions were considered conflicts for the termination vote and asked the district to provide the legal reasoning in writing to the PRB.

Communication with participants: Hospital staff said they had held multiple in‑person meetings with current and former employees and annuity participants, distributed notices and provided an email contact line, but public commenters and some PRB members said participants remained frustrated and that meeting attendance had not translated into clear written materials such as valuation reports or termination scenarios. Beckett told the board: "Without current actuarial information, how do you make a decision about the financial condition of this plan?"

Next steps: PRB members asked the district to (1) obtain prompt actuarial valuations on both an ongoing and a termination (annuity purchase) basis, (2) seek an attorney general opinion regarding use of sales tax revenue, (3) provide updated audited financials for FY2022–FY2024 when available, and (4) improve written communications to participants. The PRB staff said it would remain in regular contact with the district and requested updates on the timetable for the actuary’s analysis and legal guidance.

Ending: Hospital leaders said they would follow up with counsel and the newly contracted actuary; the PRB suggested a follow‑up by the actuarial committee or a special meeting if the district’s submissions warranted earlier review.