PRB presses Nacogdoches hospital district for legal and actuarial answers as retirement plan faces shortfall

Nacogdoches County Hospital District officials told the Pension Review Board on Dec. 11 that the district’s frozen retirement plan currently holds roughly $32,000,000 and is about 70–71% funded, leaving potential unfunded liabilities that require careful legal and actuarial work before any decision is made. The board pressed the district for both an Attorney General opinion on whether sales tax revenue could lawfully shore up the fund and for two actuarial valuations — one on an ongoing basis and one on a termination (annuity-purchase) basis.

The district’s CEO, Rhonda McCabe, and CFO, Lynn Lindsey, recounted steps since the board’s September hearing, including member outreach meetings in October and a special board meeting that deferred a vote because of absences and conflicts of interest. Lindsey said the district has contracted a new actuarial firm and expects the actuary to begin detailed work immediately. “The plan value is at 32,000,000, roughly about 71%,” Lindsey said when asked about the funding condition.

Members of the public and board members warned against rushing to terminate the plan without full information. Sheila Beckett, speaking on behalf of a retiree, urged the board to explore alternatives to liquidation and said participants had not received adequate written financial information: “I don’t think there’s enough information available right now to make a decision,” Beckett said. She and others said communications with participants had been largely oral and requested more written reports and actuarial detail.

Board members repeatedly pressed the district to obtain a formal AG opinion. One board member said legal counsel had apparently advised that government funds could not be used for a frozen plan, but added that the AG’s written determination should be requested immediately so the district and the board would know whether legislative or other remedies remained available. Hospital staff said that, historically, sales tax receipts have gone into the district’s general account and had in prior years been used to make contributions, but they were relying on counsel’s current advice that additional contributions may not be permissible for a frozen plan.

Board members also emphasized the need for termination-basis valuations and clearer estimates of participant-level impacts. Lindsey told the board an actuary’s detailed termination analysis could take six to nine months to determine how any shortfall would be allocated among participants, retirees and other benefit classes. Board members recommended the hospital request the AG opinion and supply both ongoing and termination valuations, and urged more proactive and written communications to plan participants while the actuarial work proceeds.

The board did not take formal enforcement action at the meeting but requested staff follow up and indicated willingness to schedule an actuarial committee meeting or a special session to receive the new actuarial information and the AG opinion. The board noted many participants had been calling PRB staff for information and asked the district to set up clearer channels for participant inquiries and to provide the PRB with documents and the new actuarial reports as soon as they are available.

Next procedural steps identified at the meeting: the Nacogdoches district plans to request an Attorney General opinion, complete FY2023–24 audits being worked on concurrently, and have the new actuary produce both ongoing and termination valuations; the PRB staff will be kept informed and the board may schedule a follow-up actuarial committee meeting once those deliverables are submitted.