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Senate Republicans Give Pension Review Board leadership to McGee

Yesterday, the Texas Senate confirmed Josh McGee as chair of the State Pension Review Board. The Senate approved the nomination with a 20-10 vote.
 
The vote upholds what has been a controversial appointment by Gov. Greg Abbott. Democrats, who are in the minority of the Republican-controlled Senate, were being pressured to prevent approval of McGee to continue in his role as chair of the board. The Pension Review Board oversees the actuarial soundness of state and local public retirement systems.  

McGee was acting as chair of the PRB since he was nominated by Abbot in November 2015 after the state legislature was out of session. The State Constitution requires nominations by the governor to be confirmed by the Senate. However, the Senate only considers the confirmation of an appointment when it is in session, which is every odd-numbered year.
 
Many public-sector employee organizations opposed McGee's nomination claiming his day job as vice president of the Laura and John Arnold Foundation, an organization that often discredits the use of defined benefits for public employee pensions, as a conflict of interest in governing the State Pension Review Board. McGee also is a senior fellow at the Manhattan Institute for Policy Research, a think-tank that often pushes biased schemes.
 
McGee is "paid to travel the country" to advocate the conversion of "strong, stable pensions into riskier defined contribution plans," said John Patrick, president of the Texas AFL-CIO, a state labor federation representing 237,000 members. He made the statement in a news release issued April 20.
 
Defined contribution plans are similar to 401 (k) retirement savings accounts. Unlike defined benefit plans, defined contribution plans require public employees such as police officers, firefighters, and municipal workers to put their own money into a fund, forcing them to play the role of a financial analyst while choosing among a limited set of mutual fund options. Studies also indicate defined contribution plans are more costly to manage and provide less secure payouts to employees during retirement.
 
Defined benefits allow employees to receive more secure retirement payments calculated according to the length of service and salary they earned at the time of retirement. Employees know in advance the income they will receive in retirement and many defined benefits plans require employees and their employers to contribute to a fund to help cover future retirement payouts.
 
"As chair of the Pension Review Board, McGee has a duty to give advice that strengthens pension systems that serve the state and local working people across the state," Patrick said. "But as vice president of public accountability at the Laura and John Arnold Foundation and senior fellow at the Manhattan Institute, McGee is openly hostile to the traditional defined benefits pension system that have served state and local employees well for many decades. Instead, McGee prefers a system in which state and local government employers no longer share investment and other risks with their employees."
 
Patrick called yesterday's vote by the Texas Senate a betrayal of public servants "who loyally work for taxpayers." He worries that the first place Texas lawmakers will go in considering measures to shore up public pensions will be a now "fatally compromised" State Pension Review Board.
 
Eleven Democrats in the 31-member Texas Senate were working to block the nomination from receiving a vote, which would have required a new appointment by the governor to fill the Pension Review Board leadership position. Because the nomination required a two-thirds vote in the Senate to become ratified, the 11 Democrats opposing the nomination could have been enough to stop the nomination from moving forward. However, a Senate Democrat left yesterday's proceeding early, leaving 10 remaining Democrats and giving the Republican senators the votes needed to approve the appointment. Soon after the Democrat left the Senate proceedings, the Republican leadership quickly moved on the nomination measure providing the 21 votes needed to push the nomination through.
 
Patrick said the labor movement would continue to fight to secure retirement for working families.
 
"Unfortunately, after today's vote, the fox is enjoying a six-year lease on the henhouse," Patrick stated in yesterday's news release.

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