New training rules will be in place beginning Jan. 1, 2025, ensuring that pension trustees and administrators are fully prepared for the challenges of managing public pension funds.

According to a Texas Pension Review Board Nov. 13, 2024, webinar outlining the changes, they include new rules to the agency's Minimum Education Training, or MET, program for system administrators and trustees. As the state agency responsible for monitoring the actuarial health and regulatory compliance of the state's public retirement systems, these new rules bring about significant changes to MET cycles that include transitional language, and fund leaders must take steps to ensure they meet state-mandated training requirements.

Dive in to understand what's changing and how these rules will empower system leaders to become stronger, more informed decision-makers for their funds.

How the Calendar-based Training Cycle Works

Starting Jan. 1, 2025, new trustees and administrators must complete at least seven credit hours of training in core content areas within their first year of service. This foundational training is designed to equip them with essential knowledge and skills for effective governance. The total credit hours are familiar, but what is new is the move to a calendar-based year to complete earning the credits.

Trustees and administrators who have completed their core training within their first year of service on Dec. 31, 2024, will begin their first continuing education (CE) cycle on Jan. 1, 2025, according to a PRB LinkedIn post. Those who still need to complete their core training by Dec. 31, 2024, will have the calendar year 2025 to complete the requirement before starting their first CE cycle in 2026.

Trustees and administrators who began their current CE cycle in calendar year 2024 may carry over any hours completed in that year to their first one-year CE cycle in 2025. Those who started their current CE cycle in 2023 will begin a new CE cycle on Jan. 1, 2025, and cannot carry over any training hours. Trustees and administrators who are noncompliant with any previous MET cycle will remain noncompliant. They must complete all outstanding required credit hours.

Here is what was outlined during the PRB webinar:

1. Calendar-Based First Year:
   • For trustees and administrators who started before Sept. 1, 2024, their "first year of service" is the calendar year they assumed their positions.
   • For those who started on or after Sept. 1, the "first year of service" shifts to the following calendar year.
2. Core Training Focus:
   • The PRB's first-year training aims to provide them with a solid foundation, especially for trustees and administrators with no experience in pension-related topics. Courses offered for first-year credit must cover all essential sub-topics and learning objectives in the core content areas.

Subsequent Years of Service: Continuing Education (CE) Requirements

After completing the first-year training requirements, each trustee and system administrator must fulfill CE requirements annually instead of every two years.

1. Annual 2-Hour Requirement:
   • Trustees and administrators must complete at least 2 credit hours of continuing education each year after their first service. This is a change from the previous 4 credit hours every two years.
2. Content Flexibility:
   • Trustees and administrators can complete the 2 credit hours in core content areas, continuing education content areas, or a combination. This flexibility allows them to tailor their education to their evolving roles and expertise.
3. Advanced Topics:
   • The continuing education content areas cover advanced topics beyond the basics, enabling them to gain further knowledge in additional areas related to their duties and responsibilities. This ensures they can expand their knowledge and adapt to emerging trends and challenges in pension management.

Core Content Areas for MET Training

Each trustee and administrator must complete training addressing the Core Content Areas specified by the PRB, covering essential pension governance and administration elements. Here's an overview of each area:

• Fiduciary Matters: Courses covering fiduciary matters explain who may be a fiduciary and what the role of a fiduciary entails, including responsibilities, liability, and prohibitions.
• Governance: Courses in this area focus on explaining the structure, manner, and processes through which a board exercises authority. They also provide an overview of the types of plan professionals they interact with, including the board actuary, investment consultants, legal counsel, and auditors.
• Ethics: Besides covering applicable state and federal ethics laws, courses within this topic explain the purpose and benefits of adopting an ethics policy and outline areas that should be addressed in such a policy.
• Investments: Courses related to investments give system leaders a solid understanding of the investment landscape, including market realities, risk implications, and attainable objectives. This training helps them make informed, strategic decisions in managing and growing pension assets.
• Actuarial Matters: Courses covering actuarial topics provide an introduction to actuarial terminology, methodology, andactuarial assumptions. This foundational knowledge helps system leaders understand essential actuarial principles for evaluating pension funding and sustainability.
• Benefits Administration: Courses covering benefits administration provide an understanding of plan benefit structures and the overall administration of benefits. This ensures system leaders can effectively manage and communicate benefit structures to plan members.
• Risk Management: Courses related to risk management examine different types of risk and how those risks may be mitigated. This trains trustees and administrators to identify and address financial, operational, regulatory, and reputational risks to strengthen system resilience.

Continuing Education Content Areas

For ongoing education, the PRB's CE requirements allow system leaders to explore advanced content areas beyond the basics, covering topics related to legal and regulatory compliance, accounting, and more:

• Compliance: Courses covering compliance issues provide information on legal and reporting requirements and the applicable internal policies and procedures necessary to meet them.
• Legal and Regulatory Matters: Courses on legal and regulatory matters offer insights into current or potential lawsuits, legislation, or regulations that may impact pension governance.
• Pension Accounting: Courses related to pension accounting give system leaders a basic understanding of plan assets and liabilities, financial statements, and Governmental Accounting Standards Board requirements.
• Custodial Issues: Courses on custodial issues guide trustees and administrators in selecting a custodian and the essential qualities and services to look for in a custodian.
• Plan Administration: Topics under plan administration provide information on the day-to-day aspects of administering pension plans, ensuring operational efficiency.
• Texas Open Meetings Act: Courses on the Texas Open Meetings Act help to familiarize system leaders with requirements under Texas law regarding public meetings, ensuring transparency and accountability.
• Texas Public Information Act: Courses on the Texas Public Information Act address open records and public information requirements under Texas law, enabling trustees and administrators to understand their role in information accessibility and compliance.

Extension Allowance for Core Training

To accommodate unforeseen circumstances, the PRB now offers a one-time, 3-month extension for completing core training. This extension requires an approved application detailing specific and exceptional circumstances preventing on-time completion. This flexibility allows trustees and administrators to meet these new requirements without compromising the integrity of their training.

Exemption for Reappointed/Re-Elected Trustees

Previously, trustees and administrators reappointed or re-elected had to retake core training if they returned after a two-year break. Under the new rule, trustees and administrators reappointed within five years are now exempt from repeating core training. This extension values their recent experience and reduces redundancy.

For additional details, visit the PRB's website.

The Texas Association of Public Employee Retirement Systems is an Accredited Training Provider that offers opportunities to earn training hours. For the latest training options, visit www.texpers.org.

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