The Texas Pension Review Board has put out requests for comment on the changes they will propose to the Texas Legislature for the Texas Local Fire Firefighters Retirement Act, also known as TLFFRA.

As the PRB works through its wide-ranging overhaul of TLFFRA governance that will affect all 42 firefighter systems that are TEXPERS members, the state agency wants to hear from all of our Association members about its proposed changes. These have been long in the making and are nearing final form. Conceivably, the proposed changes would go into effect on Sept. 1, 2025, if not sooner, depending on whether the proposals gain support in the Texas House and Senate.

Our members’ insights, experiences, and perspectives could shape the future of these 42 retirement systems for decades to come. The Legislation is not likely to be reopened after changes are made and years of experience with them are examined. The changes proposed come after about five years of focused study on various aspects of firefighter pension fund governance.

Please review the updated changes at Potential TLFFRA Governance Issues and Recommendations and email any feedback or suggestions to [email protected] by Wednesday, June 26.

Speak Up: Share your thoughts! What works? What needs improvement? The PRB wants to know.

1. Read the Full Recommendations: Dive into the updated Potential TLFFRA Governance Issues and Recommendations document.
2. Make Notes on How it Might Affect Your System: The PRB wants to know how even the smallest change might impact your system.
3. Let them know: Don’t be shy about your comments. If the PRB doesn’t understand your comments, they will contact you. Comments don’t have to be in perfect form, and you could call them to talk about the changes and your concerns.

Here are the key points of discussion about changes direct from the PRB’s document:

1. Mechanisms for changes to plan structure: The TLFFRA member vote mechanism allows for individual plan members to have influence over the management of their pension plan. Some Work Group members characterized the member vote requirement as a helpful and necessary check and balance; however, the goals of the system administration, sponsoring governmental entity, and plan membership may not always be in alignment, potentially preventing necessary changes from occurring. For example, some sponsoring entities may hesitate to provide increased contributions, or implement an actuarially determined contribution (ADC), out of the belief that plan members will vote to increase their own benefits and, in turn, increase the sponsor’s financial burden since the sponsoring entity does not have a specific role in approving benefit changes, other than the two seats they hold on the seven-member system board. Conversely, plan members may be hesitant to vote for changes that would reduce their own benefits, even in cases where those changes are needed to address funding gaps.
2. Board’s May Need Restructuring for “Balanced” Representation: [TLFFRA Reform Workgroup]members noted that excluding the statutory residency requirement – the citizen seat for any TLFFRA system must be filled by a Texas resident – there is currently no guidance available to systems about what qualifications they should look for when filling the citizen seat. However, filling citizen seats with individuals with relevant and helpful expertise—such as financial or legal expertise—can also be difficult, especially for smaller TLFFRA systems. As a result of the difficulties associated with filling citizen seats, they are often filled by retired firefighters, many times retired firefighters who formerly served on the TLFFRA board. While this expertise and institutional knowledge can be useful, citizen seats filled by retired firefighters can also mean that firefighter/plan member perspectives outnumber others, especially sponsor perspectives….Work Group participants noted that some TLFFRA systems struggle with low engagement particularly from sponsor representatives sitting on the board, such as not attending board meetings. They further noted that typically sponsor representatives on the board are responsible for bringing pertinent information from the TLFFRA board to the attention of the sponsoring entity as a whole, making their role on the board and level of engagement critical to the overall working relationship between the system and the sponsor. Members also raised the concern that there are some TLFFRA trustees who are not compliant with the PRB’s Minimum Educational Training (MET) program requirements. They noted that system administrators make attempts but are still sometimes unable to get their trustees compliant. The PRB is currently pursuing a project working with all systems with trustees out of compliance, with core education specifically, to understand reasons for noncompliance and assist where possible.
3. Minutes, Board Meeting Materials, and Recordings: Work Group members noted …getting information in front of the sponsor has been a challenge for some TLFFRA systems, but a few who have completed an FSRP or been part of an intensive review by the PRB did mention that having to complete those processes improved communication and working relationships overall. During the Work Group sessions, it became apparent that there may also be a lack of understanding surrounding certain reporting cycles. In particular, actuarial valuations and experience studies are typically not completed on the same timeline as city budgeting cycles. This mismatch has led to some sponsors hesitating to make contribution decisions until they have a more recent report, which can increase the overall amount of time it takes to address funding issues. As a result, at least one system represented on the Work Group has moved to annual actuarial valuations to ensure stakeholders have updated actuarial information on a more frequent basis….The LBJ student report found that high-performing TLFFRA systems were more likely to have detailed minutes and scored higher on various transparency measures than low- and medium-performing systems. However, the report found that TLFFRA board meeting minutes and materials were often unavailable for many systems. During their analysis, the student team discovered that they were unable to locate minutes for 19 of the 42 TLFFRA systems. They noted that it was often due to being unable to find system websites overall.
4. Areas for additional research and discussion: Work Group members made PRB staff aware that TLFFRA statute contains some outdated language that needs revising to reflect current trends and practices. They noted that the statute was created in the 1930s and some sections have not been updated since then. For example, in various provisions, the statute still addresses volunteer systems within systems that have no volunteers. Not only does the current statute not always align with current system structures, it has also historically made it more difficult for struggling TLFFRA systems to close their plan to new members and join statewide systems. The Texas Municipal Retirement System (TMRS) statute allows for local systems to join TMRS through city ordinance; however, TLFFRA systems may still lack clarity on this process.

The Staff Recommendations for each section above are as follows:

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