T R S Board of T rustees Meeting
Transcript of T R S Board of T rustees Meeting
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J uly 2021
T R S Board of T rustees Meeting
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T each er R etirement System of T ex as1 0 0 0 R e d R i v e r S t r e e t A u s t i n , T e x a s 7 8 7 0 1 - 2 6 9 8
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TEACHER RETIREMENT SYSTEM OF TEXAS MEETING BOARD OF TRUSTEES
AGENDA
July 15, 2021 – 8:00 a.m. July 16, 2021 – 8:00 a.m.
TRS East Building, 5th Floor, Boardroom.
All or part of the July 15-16, 2021 meeting of the TRS Board of Trustees may be held by telephone or video conference call as authorized under Sections 551.130 and 551.127 of the Texas Government Code. The Board intends to have the presiding officer and a quorum physically present at the following location, which will be open to the public during the open portions of the meeting: 1000 Red River, Austin, Texas 78701 in the TRS East Building, 5th Floor, Boardroom. This meeting will be conducted in accordance with the Governor’s authorization concerning suspension of certain open meeting law requirements in response to the COVID-10 (Coronavirus) Disaster. Members of the public may provide virtual public comment by registering first with the Board Secretary by submitting an email to [email protected] identifying the name of the speaker and topic, no later than 5:00 pm on July 15, 2021. The open portions of the Jpension uly 15-16, 2021, Board meeting are being broadcast over the Internet. Access to the Internet broadcast of the Board meeting is provided at www.trs.texas.gov. NOTE: The Board may take up any item posted on the agenda during its meeting on July 15-16, 2021, beginning at the time and place specified on this agenda. 1. Call roll of Board members.
2. Consider the following administrative matters – Jarvis V. Hollingsworth:
A. Approval of the June 2021 proposed meeting minutes; and
B. Excusing Board member absences from the April 2021 meeting.
3. Receive an update regarding the 87th Regular Legislative Session – Brian Guthrie and Merita Zoga.
NOTE: The Board meeting likely will recess after the last item above and will resume July 16, 2021, Friday morning, to take up items listed below.
4. Provide an opportunity for public comment – Jarvis V. Hollingsworth.
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5. Receive an update on the TEAM Program – Andrew Roth, Chris Cutler, Billy Lowe, Jennifer Whitman and Adam Fambrough.
6. Receive a presentation from the TEAM Program Independent Program Assessment (IPA) Vendor – Jonathan Scofield and Richard Holt, EY.
7. Review and discuss the Executive Director's report on the following matters – Brian Guthrie:
A. Review administrative operational matters, including updates on legislative, financial, audit, legal, staff services, special projects, , investment matters, strategic planning, trustee elections and personnel matters.
B. Board operational matters, including a review of draft agendas for upcoming meetings.
C. Event notices or reminders; holiday and other schedules of interest; board member, employee or other individual recognitions; and expressions of thanks, congratulations, or condolences.
8. Receive the report of the Strategic Planning Committee on its July 15, 2021 meeting – Committee Chair.
9. Receive the report of the Benefit Committee on its July 15, 2021 meeting and consider adoption, approval or acceptance of the following: A. Accept the Medical Board Meeting Minutes; B. Consider the appointment of a member to the Medical Board; and C. Consider the Benefit Payments for March 2021 – May 2021.
10. Receive the report of the Budget Committee on its July 15, 2021 meeting and consider adoption of the following: – Committee Chair.
A. Consider the adoption of the proposed fiscal year 2022 pension trust fund administrative operations budget, general provisions, and resolution authorizing transfer of pension trust funds to the TRS expense account to cover the expenses approved under the fiscal year 2022 budget;
B. Consider the adoption of the proposed fiscal year 2022 administrative operations budgets and general provisions for the TRS health benefits funds (retired and active plans), including the optional long-term care insurance program;
C. Consider the statutory certification of estimated state contributions; and D. Consider adoption of Historically Underutilized Businesses program
(HUB) goals for fiscal year 2022.
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11. Receive the report of the Policy Committee on its July 15, 2021 meeting and consider the following: – Committee Chair A. Proposed amendments to the Bylaws of the Board of Trustees; B. Proposed adoption of the TRS Outreach Plan; and C. Proposed amendments to the Board Procurement Policy.
12. Receive the report of the Investment Management Committee on its July 15, 2021 meeting – Committee Chair.
13. Receive the report of the Audit Committee on its July 15, 2021 meeting and consider proposed amendments to the Fiscal Year 2021 Audit Plan - Committee Chair.
14. Receive an update from the COAO – Andrew Roth. 15. Receive Ombuds Quarterly Complaint Report – Katherine Farrell.
16. Consider the renewal of the fiduciary counsel contract, including considering a
finding that to deliberate or confer in open meeting would have a detrimental effect on the position of the retirement system in negotiations with a third person – Heather Traeger.
17. Consider the engagement of a provider of pension fund actuarial consulting and related services and consider the extension of the current provider of the pension fund actuarial consultant contract through the end of the calendar year including considering a finding that deliberating or conferring on the selection of the actuarial consultant in open meeting would have a detrimental effect on the position of the retirement system in negotiations with a third person – Rebecca Merrill.
18. Receive an update and consider long term facilities planning on potential new building, potential renovations or sale of the Red River campus, lease for regional office space in El Paso, Texas, and leases at 816 Congress and Indeed Tower, including considering a finding that to deliberate or confer in open meeting would have a detrimental effect on the position of the retirement system in negotiations with a third person – Brian Guthrie, Andrew Roth and Eric Lang.
19. Consider personnel matters, including the appointment, employment, evaluation, compensation, performance, duties, discipline, or dismissal of the Chief Audit Executive– Jarvis V. Hollingsworth.
20. Review the report of the General Counsel on pending and contemplated litigation, including updates on litigation involving benefit-program contributions, retirement benefits, health-benefit programs, investment matters and open records, and on legal or regulatory matters involving certain TRS vendors, investment managers, or other counterparties – Heather Traeger and J.R. Morgan.
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The Board may convene in Executive Session under the following but not limited to:
a. Texas Government Code, Section 551.071: Consultation with Attorney; b. Texas Government Code, Section 551.072: Deliberation Regarding Real
Property; c. Texas Government Code, Section 551.074: Personnel Matters Relating to
Appointment, Employment, Evaluation, Assignment, Duties, Discipline, or Dismissal of Officers or Employees including but not limited to the Executive Director, Chief Auditor Executive, Chief Investment Officer.
d. Texas Government Code, Section 551.076: Deliberation Regarding Security Devices or Security Audits;
e. Texas Government Code, Section 551.089: Deliberation Regarding Security Devices or Security Audits;
f. Texas Government Code, Section 825.115: Applicability of Certain Laws; or
g. Texas Government Code, Section 825.3011: Certain Consultations Concerning Investments.
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TAB 2
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Minutes of the Board of Trustees
June 3, 2021
The Board of Trustees of the Teacher Retirement System of Texas met on June 3, 2021 via videoconference in accordance with the Governor’s authorization concerning suspension of certain Open Meeting law requirements in response to the COVID-19 (Coronavirus) disaster.
The following Board members were present:
Jarvis V. Hollingsworth, Chair Nanette Sissney, Vice Chair Michael Ball David Corpus John Elliott Christopher Moss James Dick Nance Robert H. Walls, Jr.
Others present:
Brian Guthrie, TRS Andrew Roth, TRS Don Green, TRS Heather Traeger, TRS Barbie Pearson, TRS Katrina Daniel, TRS Amanda Jenami, TRS Katherine Farrell, TRS Suzanne Dugan, Cohen Milstein Mr. Hollingsworth called the meeting to order at 10:00 a.m.
1. Call roll of Board members.
Ms. Farrell called the roll. A quorum was present.
Mr. Hollingsworth provided welcoming remarks expressing appreciation for convening today in order to set the rates and benefits for TRS ActiveCare as well as handling other administrative items. He noted the Board was convening by videoconference under the Governor’s Office’s authorization concerning suspension of certain Open Meetings law requirements in response to COVID-19.
2. Consider approval of the April 2021 proposed meeting minutes; and On a motion by Mr. Corpus, seconded by Mr. Moss, the board unanimously approved the minutes of the April 2021 Board Meeting, as presented.
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3. Provide an opportunity for public comment – Jarvis V. Hollingsworth. Mr. Craig Campbell, TRS retiree, expressed extreme disappointment in the failure to pass a cost of living increase in the past session. He requested all TRS expenditures be subject to the same one-sided actuarial analysis as the cost of living adjustment including bonuses paid to investment staff. Mr. Brock Gregg representing TRTA expressed appreciation for how the Board is acting fast and appointing an interim ombudsman position, changing the bylaws so Board can hire the Ombuds and have them directly report to the Board. He said the process is a good one and look forward to working with them.
4. Receive an update regarding the 87th Regular Legislative Session including considering the appointment of an interim Ombuds and process for hiring Ombuds position – Brian Guthrie.
Mr. Brian Guthrie provided an overview of the Legislative Session that ended this past Monday. He stated over 7,000 bills were introduced and a little over 1000 passed, similar to what happened last session. He said TRS was very fortunate in that the Sunset legislation was sent to the Governor early on in the process and he signed it. The Sunset legislation makes significant changes to employment after retirement. He said House Bill 2022, dubbed the Golden Ticket Bill, provides a one-time opportunity to TRS-Care retirees who opted out of the program in 2017 to opt back into the program, if they so choose. He said the focus of today’s meeting is really Senate Bill 1444 which was designed to close the District of Innovation loophole. He noted there is already an expectation of a special session as early as this summer.
Mr. Guthrie reported that House Bill 1585 did lay out specifically several things the Ombuds position must do. He thought it was important to bring a timeline to the Board as to hiring of the Ombuds position and recommend that an interim Ombuds be named to serve through the summer, until a final selection of the permanent person for this position. He said at the July board meeting, staff will bring a proposed amendment to the bylaws to make it clear that the Board has authority to hire for this position. He provided further information as to the proposed hiring process, timeline and administrative activities to occur between now and September. Mr. Guthrie recommended Katherine Farrell the Board Secretary to serve as the interim Ombuds.
On a motion by Mr. Nance, seconded by Mr. Corpus, the Board unanimously approved the following resolution that among other items appoint Ms. Katherine Farrell as the interim ombudsman.
TRS BOARD OF TRUSTEES JUNE 3, 2021
RESOLUTION REGARDING APPOINTMENT OF AN INTERIM OMBUDS, CREATION OF
OMBUDS POSITION, AND PROCESS FOR SELECTION AND HIRING OF OMBUDS WHEREAS, House Bill 1585, 87th Regular Legislative Session (“HB 1585”), amends Chapter 825 of the Government Code to require the Teacher Retirement System of Texas (“TRS”) Board of Trustees (“Board”) to designate an ombudsman (“Ombuds”) to assist TRS members and retirees by performing member and retiree protection and advocacy functions;
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WHEREAS, HB 1585 received a vote of two-thirds of all members elected to each house and therefore took effect on May 26, 2021;
WHEREAS, It is the intent of the Board to direct the Executive Director to begin a search immediately for an Ombuds to fulfill the duties set forth in HB 1585; WHEREAS, It is also the intent of the Board to appoint an Interim Ombuds to fulfill the duties of the position of Ombuds until a final candidate is selected; now, therefore be it
Resolved, That the Board appoints Katherine Farrell to serve as Interim Ombuds until a final candidate is selected by the Board at a duly posted meeting. Resolved, That the Board hereby directs the Executive Director of TRS or his designee to provide contact information for the new Ombuds position to the public. Resolved, That all reasonable and necessary steps be taken to begin the process of identifying qualified candidates to the Board for the position of TRS Ombuds. Resolved, That the Board hereby authorizes the Executive Director of TRS or his designee to:
• Develop and post the job description for the Ombuds position;
• Manage the process of evaluating and selecting potential candidates;
• Include less than a quorum of the Board or any Board Committee in the process; and
• Refer to the Board for interviews and final selection at a duly posted meeting
at least 2 but not more than 5 candidates acceptable to the Executive Director;
Resolved, That the Executive Director shall propose amendments to the TRS Bylaws at a duly posted meeting to add the selection, replacement, dismissal, evaluation, and compensation of the Ombuds position.
Mr. Guthrie concluded his presentation by providing further details as to the timing of House Bill 2022, the Golden Ticket Bill, and Senate Bill 1444.
5. Receive an update and consider the following related to the TRS health benefits
programs: A. TRS-ActiveCare FY2022 PPO Rates and Benefits Changes; B. TRS-ActiveCare FY2022 HOM Rates and Benefits Changes; and C. TRS Health and Insurance Benefits Operations Update, including discussion on
Districts of Innovation.
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Ms. Katrina Daniel thanked the Board for their willingness to hold this special meeting in June. She noted by meeting so quickly after the Legislative Session the timeline for the annual enrollment period for ActiveCare will be consistent with how it was conducted in the past. Ms. Daniel referenced how Care and ActiveCare manages cost of care and the cost of coverage better than other entities and how this savings is passed on through lower rates and premiums. She said 96 percent of the funds in the programs are spent on health care claims, pharmacy and medical claims, and only about 4 percent goes to administration of the plans. Ms. Daniel stated this was a challenging year. She said there were considerable costs as a result of COVID that affected premiums. Additionally, there were added costs on top that were directly related to the competitive nature and adverse selection experienced from the Districts of Innovation. She reported that had the adverse selection from Districts of Innovation not occurred the proposed increase in premium would be closer to a 4 percent increase. However, as a result of theses adverse selections, there is another 2.5 percent increase. She said the average increase proposed today reflects the 6.2 percent increase in costs that the plan experienced. She noted other plans are seeing increases in the range of 7.5 based on the previous years’ experience. She said the premium increase proposed today is in line and below in many cases what the industry unfortunately is experiencing. Ms. Daniel then discussed how the 6.2 percent will be distributed in a way that adjusts some relativities between the plans. She said the only plan changes recommended is to the High Deductible plan to align it with new federal IRS standards. Ms. Daniel reported there is no recommendation to change the HMO carrier’s geographic areas those plans cover. She noted the HMO areas were not immune from the adverse selection from Districts of Innovation offering competing coverage. She said Blue Cross did not recommend any benefit changes on their HMO plans, but to offset premium costs, Baylor Scott & White is recommending benefit changes on their plan by increasing deductible and adding co-insurance to inpatient cost-sharing. On a motion by Mr. Ball, seconded by Mr. Moss, the board unanimously voted to approve the following resolution for TRS-ActiveCare fiscal year 2022 PPO rates and benefits changes.
RESOLUTION APPROVING BENEFITS AND GROSS PREMIUM RATES FOR THE EXISTING PPO
PLANS IN TRS-ACTIVECARE
June 3, 2021
Whereas, Chapter 1579, Insurance Code (the “Texas School Employees Uniform Group Health Coverage Act”), governs the Texas School Employees Uniform Group Health Coverage Program, hereinafter referred to as TRS-ActiveCare, and authorizes the Teacher Retirement System of Texas (TRS), as trustee, to implement and administer TRS-ActiveCare, as described in the statute;
Whereas, TRS staff and consultants assisting staff (the “Consultants”) have recommended that benefit changes, as indicated below, be made to TRS-ActiveCare HD for the 2022 plan year commencing on September 1, 2021;
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Whereas, TRS staff and the Consultants do not recommend any major benefit changes be made to TRS-ActiveCare Primary, TRS-ActiveCare Primary+, or TRS-ActiveCare 2 for the 2022 plan year commencing on September 1, 2021;
Whereas, TRS staff and the Consultants recommend that for the 2022 plan year commencing on September 1, 2021, premium rates at all levels of coverage in TRS-ActiveCare HD, TRS-ActiveCare Primary, TRS-ActiveCare Primary+, and TRS-ActiveCare 2, be set at the gross premium amounts set out in Exhibit A, attached to this resolution and incorporated herein by reference;
Whereas, The TRS Board of Trustees (“Board”) desires to adopt the recommendations of TRS staff and the Consultants; now, therefore, be it
Resolved, That the Board hereby adopts and authorizes the following major benefit changes, subject to all other plan requirements and restrictions, for TRS- ActiveCare HD, beginning in the 2022 plan year commencing on September 1, 2021 and thereafter, until further action by the Board:
TRS-ActiveCare HD Plan Feature Current 2021
Plan Year Proposed 2022
Plan Year In-Network Individual Deductible Family Deductible
$2,800 $5,600
$3,000 $6,000
In-Network Medical Coinsurance Participant pays 20% after deductible
Participant 30% after deductible
Out-of-Network Medical Coinsurance Participant pays 40% after deductible
Participant pays 50% after deductible
In-Network Individual Out-of-Pocket Maximum Family Out-of-Pocket Maximum
$6,900 $13,800
$7,000
$14,000
Resolved, That the Board hereby adopts and authorizes no major benefit changes for TRS-ActiveCare Primary, TRS-ActiveCare Primary+, or TRS-ActiveCare 2, beginning in the 2022 plan year commencing on September 1, 2021 and thereafter, until further action by the Board.
Resolved, That the Board hereby adopts and authorizes the gross premium rates for TRS-ActiveCare HD, TRS-ActiveCare Primary, TRS-ActiveCare Primary+, and TRS-ActiveCare 2 contained in Exhibit A, for the 2022 plan year commencing on September 1, 2021 and thereafter, until further action by the Board;
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Resolved, That the Board hereby authorizes the Executive Director or his designees to take any actions that are necessary or advisable to implement the benefit structures and gross premium rates as adopted or authorized herein, and to take any actions that are necessary or advisable to otherwise implement, administer, and continue the TRS-ActiveCare, until further action by the Board.
On a motion by Mr. Moss, seconded by Ms. Sissney, the Board unanimously voted to approve the following resolution for TRS-ActiveCare fiscal year 2022 HMO rates and benefit changes.
RESOLUTION APPROVING BENEFITS, PREMIUM RATES, AND SERVICE AREAS
FOR HMOs ASSOCIATED WITH THE TRS-ACTIVECARE PROGRAM
June 3, 2021
Whereas, Chapter 1579, Texas Insurance Code (the “Texas School Employees Uniform Group Health Coverage Act”), governs the Texas School Employees Uniform Group Health Coverage Program, hereinafter referred to as TRS-ActiveCare, and authorizes the Teacher Retirement System of Texas (“TRS”), as trustee, to implement and administer TRS-ActiveCare, as described in the statute;
Whereas, TRS currently has contracts with two health maintenance organizations (“HMOs”), Scott & White Care Plans (“SWCP”) and Blue Cross and Blue Shield of Texas (“BCBSTX”), which allows these entities to offer benefits to participants in TRS-ActiveCare who reside or work in the respective service areas of each HMO that have previously been approved by the TRS Board of Trustees (the “Board”) and are listed in Exhibit A, attached to this resolution and incorporated herein by reference;
Whereas, SWCP proposed major benefit changes for the 2022 plan year commencing on September 1, 2021, to the respective plan design the HMO offered in the 2021 plan year;
Whereas, BCBSTX did not propose any major benefit changes for the 2022 plan year commencing on September 1, 2021, to the respective plan designs the HMO offered in the 2021 plan year;
Whereas, TRS staff and consultants assisting staff (the “Consultants”) evaluated the proposed major benefit changes and recommend that for the 2022 plan year commencing on September 1, 2021, SWCP and BCBSTX be allowed to provide health care services to TRS-ActiveCare participants in their respective service areas, as approved by the Board, under the same respective plan design that each HMO offered in the 2021 plan year, with only those major benefit changes proposed by SWCP and noted hereinafter, along with any minor benefit changes that may be reflected in the applicable TRS and HMO plan documents;
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Whereas, TRS staff and the Consultants evaluated the benefits and premium rates proposed by SWCP for the HMO plan covering the forty-two (42) “Central Texas” counties listed in Exhibit A, the benefits and premium rates proposed by BCBSTX for the HMO plan covering the four (4) “South Texas” counties listed in Exhibit A, and the benefits and premium rates proposed by BCBSTX for the HMO plan covering the ninety-two (92) “West Texas” counties listed in Exhibit A;
Whereas, TRS staff and the Consultants recommend for the 2022 plan year commencing on September 1, 2021, the Board approve the gross premium rates noted hereinafter, which premium rates include the same monthly administration fee of $15.00 per employee enrolled in an HMO as previously approved by the Board for the 2021 plan year, to cover fees and other administrative expenses incurred by the TRS-ActiveCare program; and
Whereas, the Board considered the information provided by TRS staff and the Consultants and desires to approve the recommendations by TRS staff and the Consultants, including the respective, proposed plan designs being offered for the 2022 plan year commencing on September 1, 2021, by each of the two HMOs, with respective changes in benefits (including changes as noted hereinafter) proposed by SWCP, and the gross premium rates for the 2022 plan year commencing on September 1, 2021; now, therefore, be it
Resolved, that the Board hereby approves the proposal for SWCP to offer to TRS-ActiveCare Participants during the 2022 plan year commencing on September 1, 2021, the same plan design it offered in the 2021 plan year, with the following proposed major benefit changes, along with any minor benefit changes that may be reflected in the applicable TRS and HMO plan documents and subject to all other plan requirements and restrictions; and approves and adopts the following gross monthly premium rates, which rates include a monthly administration fee payable to TRS of $15.00 per enrolled employee, for enrollment in this HMO during the 2022 plan year commencing on September 1, 2021, according to coverage tier:
SWCP Major Benefit Change Highlights
Plan Feature Current 2021 Plan Year
Proposed 2022 Plan Year
Individual/Family Deductible Individual/Family Out-of-Pocket Maximum Primary Care Physician Specialist Physician Urgent Care Visit Emergency Room Visit Inpatient Hospital
$950/$2,850 $7,450/$14,900
$20 copay $70 copay $50 copay
$500 copay after deductible $150 per day copay, plus
20% after deductible ($750
$1,150/$3,450 No change
No change No change No change No change
Eliminate per day copay; participant pays 20%
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maximum copay per admission)
coinsurance after deductible
Pharmacy Deductible Generic Drug (Retail/Mail) Preferred Brand Drug Non-Preferred Brand Drug Specialty Drug
$150 (excl. generics) $5/$12.50 copay
30% after deductible 50% after deductible
15%/25% after deductible (preferred/nonpreferred)
$200 (excl. generics) $10/$25
No change No change No change
Gross Monthly Premiums
Coverage Tier Current 2021 Plan Year Premiums
Per Month
Proposed 2022 Plan Year
Premiums Per Month
Employee Only $ 551.10 $542.48
Employee & Spouse $1,382.06 $1,362.70
Employee & Child(ren) $ 883.50 $872.16
Employee & Family $1,478.56 $1,568.42
Resolved, the Board hereby approves the proposal for BCBSTX to offer to TRS-ActiveCare Participants who reside in the four (4) “South Texas” counties listed in Exhibit A during the 2022 plan year commencing on September 1, 2021, the same plan design it offered in the 2021 plan year, with no major benefit changes, along with any minor benefit changes that may be reflected in the applicable TRS and HMO plan documents and subject to all other plan requirements and restrictions; and approves and adopts the following gross monthly premium rates, which rates include a monthly administration fee payable to TRS of $15.00 per enrolled employee, for enrollment in this HMO during the 2022 plan year commencing on September 1, 2021, according to coverage tier:
Gross Monthly Premiums
Coverage Tier Current 2021 Plan Year Premiums
Per Month
Proposed 2022 Plan Year
Premiums Per Month
Employee Only $491.54 $524.90
Employee & Spouse $1,182.52 $1,264.28
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Employee & Child(ren) $766.96 $819.60
Employee & Family $1,258.52 $1,345.58
Resolved, the Board hereby approves the proposal for BCBSTX to offer to TRS-ActiveCare Participants who reside in the ninety-two (92) “West Texas” counties listed in Exhibit A during the 2022 plan year commencing on September 1, 2021, the same plan design it offered in the 2021 plan year, with no major benefit changes, along with any minor benefit changes that may be reflected in the applicable TRS and HMO plan documents and subject to all other plan requirements and restrictions; and approves and adopts the following gross monthly premium rates, which rates include a monthly administration fee payable to TRS of $15.00 per enrolled employee, for enrollment in this HMO during the 2022 plan year commencing on September 1, 2021, according to coverage tier:
Gross Monthly Premiums
Coverage Tier Current 2021 Plan Year Premiums
Per Month
Proposed 2022 Plan Year
Premiums Per Month
Employee Only $534.42 $596.54
Employee & Spouse $1,287.58 $1,443.66
Employee & Child(ren) $835.68 $936.18
Employee & Family $1,370.12 $1,532.74
Resolved, that the approved plans of coverage offered by each HMO only to participants in TRS-ActiveCare who reside or work in the respective service areas of each HMO, each of which commences on September 1, 2021, shall remain unchanged until further action by the Board.
Resolved, that the approved service area of each HMO shall remain unchanged until further action by the Board;
Resolved, that with prior written approval from the Executive Director or his designee, each HMO may offer to participants in TRS-ActiveCare who reside or work in the respective service areas of each HMO, lower premiums than those herein approved, each of which commences on September 1, 2021.
Resolved, that the Board authorizes the Executive Director or his designees to take any actions, including the expenditure of funds and the execution of all documents, deemed
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by him or such designee to be necessary or advisable to implement this resolution and to administer the TRS-ActiveCare contracts with the HMOs in the best interests of the TRS-ActiveCare program.
At 1:14 pm, Mr. Hollingsworth adjourned the meeting.
APPROVED BY THE BOARD OF TRUSTEES OF THE TEACHER RETIREMENT SYSTEM OF TEXAS ON THE ___DAY OF JULY 2021.
ATTESTED BY: __________________________ _________________________ Katherine H. Farrell Date Secretary to the TRS Board of Trustees
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TAB 3
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Brian GuthrieMerita ZogaJuly 15, 2021
87th Legislative Session Update
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87th Legislative Session
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TRS follows a collaborative process in responding to the needs of the legislature by involving all departments at TRS.
Strong working relationships are developed with all stakeholders and maintained in providing cost estimates and impact statement analysis for agency bill assignments.
Bill Statistics
A total of 7,148 bills and joint resolutions filed.
1,081 passed the Legislature.
The Governor vetoed 20 bills and one line item.
Approximately 15% of all bills and joint resolutions filed became law.
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General Appropriations Act, SB 1
Includes funding for state contribution increases from 86R SB 12: 7.75% for FY 2022 and 8.00% for FY 2023..
Maintains the 1.25% state contribution and the 0.75% district contribution to TRS-Care.
Approves funding as requested by the Board of Trustees for the administrative operating budget, including 25 additional FTEs for saving investment fees, and operating costs to expand member services by opening a pilot regional office in El Paso to provide additional counseling services in the region.
3
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025STATE 7.50% 7.75% 8.00% 8.25% 8.25%
MEMBERS 7.70% 8.00% 8.00% 8.25% 8.25%
PUBLIC ED EMPLOYER 1.60% 1.70% 1.80% 1.90% 2.00%
Senate Bill 1
General Appropriations
Act
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General Appropriations Act, SB 1
4
NewRiders
Requires TRS to engage a third-party vendor to examine alternative methods to deliver the current benefits supplied under TRS-ActiveCare and that TRS provide a report to certain members of the legislature and the Governor. Amends the TRS Internship Program to include trade school, community college, law school, graduate school, or post-graduate fellowship recipients without counting against the FTE cap.
RemovedRiders
Deletes rider directing TRS to maintain TRS-Care premiums and benefits at 2019 levels.
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General Appropriations Act, SB 1
5
ExistingRiders
Intent of the Legislature that no funds may be used for the purpose of hiring an external communications consultant. Settle-up dollars directed to TRS-Care.
Intent of the Legislature that TRS incentivize members of TRS-Care and TRS-ActiveCare to shop for lower cost care within health plans in order to achieve shared savings (“Right to Shop”).
Exception to FTE Limitation with Board Fiduciary Finding and report to LBB and the Governor.Cross-agency collaboration (HHSC, TRS, ERS, TDCJ) to compare healthcare data to identify outliers and improvements for efficiency and quality that can be implemented within each system. Report due to LBB and the Governor.
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Texas Sunset Legislation, HB 1585
• 1st Strike: the retiree receives a warning without the loss of annuity.
• 2nd Strike: the retiree must pay back the lesser of earnings for the month the violation occurred or their full annuity.
• 3rd Strike: the retiree must forfeit their full monthly annuity.
Three Strikes
• The bill changes the Jan. 1, 2011 date to Jan. 1, 2021 to allow service retirees who retired on or before Jan. 1, 2021 to return to work full time without forfeiting their annuities.
EAR Date Change
• Creates an ombudsman (“ ombuds” ) position designated by the BOT for the purpose of assisting active and retired members by performing member protection and advocacy functions.
• Will regularly submit a report recommending changes to operations that would benefit members.
Ombudsman6
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Texas Sunset Legislation, HB 1585
Benefits: The bill requires TRS to provide retirement benefits counseling for individual members in person or by phone, at the election of the member. The bill requires TRS to develop and adopt an outreach plan designed to assist each member of the system, and as appropriate the members’ employers, in effectively planning for the member’s retirement.
Benefit Services: The bill requires TRS to certify to the state auditor the name of each employer that is an institution of higher education and has failed to remit all payments for the school year. The bill also requires TRS to develop a policy to locate and notify a member or the member’s heirs of their entitlement to a return of contributions, including sending certified letters and manual internet searches.
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Texas Sunset Legislation, HB 1585
Administrative: The bill establishes 2033 as TRS’ next Sunset review date. The bill adds additional for training the board of trustees including the scope of and limitations on rulemaking authority and adds a requirement that TRS create a training manual for annual distribution and review by board members. The bill extends the appeal deadline to afford a member or retiree the same amount of time to file an appeal as TRS had to issue the determination or decision.
Health Care: The bill requires TRS to develop and distribute materials to enrollees of TRS-Care, the retiree health care program, regarding their right to appeal a denial of an adverse determination to an Independent Review Organization (IRO) including the procedures for making the appeal to IRO and what assistance TRS can provide in navigating the procedures for appeal. The bill changes the reporting period for the TRS-ActiveCare prior authorization savings report from 6 months to 12 months.
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SB 202: The bill prohibits the employer from directly or indirectly passing surcharge costs to the retiree.
SB 288: EAR provisions are identical to that in HB 1585. The bill also provides that EAR restrictions and surcharges do not apply to certain retirees returning to work in public education (K-12) for positions paid by federal funds related to mitigating student learning loss because of COVID-19. This is a temporary exemption until Dec. 31, 2024.
SB 1356: The bill allows for a nonprofit teacher organization to facilitate the tutoring of public school students in K-12 by active or retired certified teachers. These individuals would not be subject to EAR restrictions, but they would be subject to surcharges unless otherwise exempt.
New Laws: TRS Employment After Retirement (EAR)
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SB 483: The bill requires TRS and ERS to provide a biennial report that compares the assumed rate of return and the actual rate of return achieved by the system for the most recent 1-year, 5-year, 10-year, and 20-year fiscal periods. For each period, the report must include an estimate of what the market value of the total assets of the fund would have been if the assumed rate of return was met and a comparison of that estimate against the actual market value of total assets in the fund.
HB 3898: The bill amends current law regarding the funding policy. The bill requires:• a summary of the independent firm’s experience in evaluating institutional
investment practices; • a disclosure of the nature of the relationship between the firm and the retirement
system; • a statement that the firm is not involved in managing system investments;• a statement identifying a potential or apparent conflict of interest that could affect
the analysis due to an existing relationship between the firm and the system.
New Laws: Texas Pension Systems
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SB 13: The bill prohibits state governmental entities, including TRS, from contracting with or investing in certain financial companies that boycott energy firms.• Applies to contracts with a value of $100,000 or more and companies with ten or more FTEs.
• A state governmental entity is not subject to the requirements of the bill if the entity determines that the requirement would be inconsistent with its fiduciary responsibility with respect to the invest of entity assets or other duties imposed by law related to the investment of entity assets, including the duty of care established under Section 67, Article XVI, Texas Constitution.
SB 19: The bill prohibits state contracts, including TRS, with companies that discriminate against the firearm or ammunition industries.• Applies to contracts with a value of $100,000 or more and companies with ten or more FTEs.
• Provides that contracts related to the issuance, sale or delivery of tax and revenue anticipation notes are exempted at the comptroller’s sole discretion if it meets certain provisions.
HB 2090: The bill establishes a statewide all payor claims database administered by the Center for Healthcare Data at The University of Texas Health Science Center at Houston. • Requires TRS to serve on an advisory committee with other state agencies to assist the Center in establishing and updating data and reporting
standards for the database. Requires health benefit plan issuers and third-party administrators to make certain disclosures to provide transparency regarding the costs of medical services and is similar to federal transparency laws.
New Laws: TRS and Other State Entities
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Related to the following topics:
IT/ Cybersecurity
PIA/ Contracting
HR/ Leave Healthcare
New Laws: TRS and Other State Entities
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87 (1) First Called Special Session
13
Special SessionAgenda
• Bail Reform• Election Integrity• Border Security • Social Media Censorship• Article X Funding• Family Violence Prevention• Youth Sports • Abortion-Inducing Drugs• Thirteenth Check• Critical Race Theory• Certain Appropriations
Governor calls a special session
Governor sets agenda for the call
Special sessions
last up to 30 days
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87 (1) First Called Special Session: Bills heard in committee
14
• Provides a 13th check capped at $2,400 to eligible annuitants and death beneficiaries on or before 12/31/20.
13th Check: SB 7, As Filed
• Provides a 13th check capped at $2,400 to eligible annuitants on or before 12/31/20 and death beneficiaries as of 12/31/18.
13th Check: HB 85, As Filed
• TRS along with other state governmental entities would be required to refrain from investment and required to divest interests in companies that own a social media website that censors political speech by:• (1) removing, banning, or demonetizing a user on the basis that the user posted, uploaded, transmitted, or
published political speech; or • (2) otherwise restricts a user' s ability to post, upload, transmit, or publish political speech (a “ listed company” ).
Social Media Censorship: SB 24, As Filed
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TAB 5
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TEAM Program: Evolution
Brian GuthrieExecutive DirectorAndrew RothChief Operations & Administration OfficerChris CutlerChief Information Technology Officer
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What has changed since 2010
2
1 Million Members296,000 Annuitants
Pension Benefits1.7 Million Members453,291 Annuitants
70%Pension Benefits
2010 2021
Investment Management$95.7 Billion Under
Management
Investment Management$190 Billion Under
Management94.4%
Health Insurance & BenefitsOver 601,670 Covered Lives
Health Insurance & BenefitsOver 690,000 Covered Lives14.7%
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2010: Legacy Mainframe System
• The legacy mainframe pension administration system, implemented in 1985, reached the end-of-life and required replacement
• TRS could no longer meet the growing needs of our members using existing technology
• Initially TRS (and many other pension funds) took a waterfall-based approach to implementing a new pension administration system
• TRS hired a vendor to develop an implementation schedule and a fixed cost based on set requirements (scope, schedule, budget)
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• Initial budget: $95 million• Original schedule: 2010 – 2017• FTE ask in 2015: 79• TRS staffing estimates based on the assumption
that third-party vendors would be contracted to develop and implement Pension and Financial Systems
• As happens in many large system implementations, business requirements changed, the vendor encountered difficulties leading to schedule delays, which drove up the overall cost
4
2010: Initial Scope, Schedule & Budget
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Evolution of the TEAM Program2010 TEAM Program
Financial System Replacement
Pension DataManagement
Financial System
Pension Admin Line of Business
Pension Admin Line of Business
Website Redesign
IVR Upgrade
Imaging System Upgrade
New TRS Support Teams
Organizational Change Management
Quality Assurance
Systems & Data Architecture
Project Management Office
Business Analysis
HILOB
2021 TEAM Program
Health Insurance Line of Business
Legacy Decommissioning
Customer Relationship Mgmt. System
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2021: TEAM as a continuous line of products
• The TEAM project evolved from being a legacy mainframe system replacement to a modern way of working that provides services our members expect
• Instead of a single application, TEAM is a product line that supports two of TRS’s major lines of businesses
• TEAM requirements evolve and expand as member, business, legislative, regulatory, and technology needs grow and change
• A long-term project like TEAM demands flexibility and commitment
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2021: TEAM as a continuous line of products
• TEAM drove TRS to modernize its approach to teamwork
• (Agile, DevOps, PMO, OCM, Benefits/Health Data Mgmt.) • TEAM improved internal performance as well as
improving our ability to deliver and meet member demand for greater system functionality
• TRS can design, build, and implement complex business solutions internally
• HILOB was released successfully!• Members continue to expect and demand more
functionality and better online tools
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TRS can design, build, and implement complex business
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TEAM Moving Forward: People, Process & Technology
Members and Staff
Process
Technology
Members and Staff
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People: Increased Competition for Top Talent
• Modernization demands, rapidly evolving skill sets, and roles to support new technologies and methodologies
• The TRS of 2021 operates far more sophisticated technology than in 2010• TRS members indicate they want more access to their data and information;
we need skills to meet that demand• TRS needs staff with requisite skill sets, knowledge, and
experience to meet member demand for technology solutions• Significant challenges attracting and retaining talent in Austin • The pandemic has increased the pressure to deliver
sophisticated technology solutions for members and for TRS business
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People: Increased Competition for Top Talent S ample of w ho w e are competing w ith:• Oracle – Moving headquarters, 2,000+ jobs
• Tesla - $ 1B factory on 2,100 acres, initially 5,000 jobs
• G oogle – expanding, 11,000 jobs
• A maz on – 3 new Austin locations K yle, Round Rock and P flugerville – 1,8 50 jobs
• A pple – The new campus on 133 acres with room for up to 15,000 new employees – initially 5,000 jobs
• F acebook – expanding, 1M SF
• Indeed - expanding
• R ealtor. com – 600 new jobs
• Q 2 – 200 new jobs
And many more…
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• Leverage TEAM Governance and Management structures for all enterprise projects
• Increasing complexity and the speed of technological change make governance and management more critical than ever
• Using Agile and DevOps (combination of IT Development and Operational Teams) to increase efficiencies and speed up release and maintenance cycles
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Process: Managing the Speed of Change
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Technology: Next Level Development
• As we deliver on TEAM functionality, we plan for ongoing maintenance and enhancements
• Successfully using TEAM developed technical platforms to build new applications for other areas of the business within TRS
• Mainframe system and application support is still required
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Technology: Next Level Development
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Product Line Development
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Post-Mainframe Decommissioning
• Decommissioning the mainframe is planned for 2024
• Focus will be on archiving legacy data as appropriate and closing out contracts
• TEAM 2.0 – A continuous improvement cycle to avoid relying on systems that can no longer be supported
• Legislation, new technology, and data privacy and security needs will continue to drive new requirements and evolving skill sets and roles
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15
Questions?
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Brian GuthrieAndrew RothAdam FambroughBilly LoweJennifer Whitman
TEAM ProgramUpdate
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17
KEY STATUS UPDATESINCREMENTAL RELEASE PROGRESS
Ach ievements• 0 4 / 1 9 / 2 0 2 1 – H I L O B ( H e a l t h I n s u r a n c e L i n e o f B u s i n e s s ) G o - L i v e• 0 6 / 1 4 / 2 0 2 1 – P e n s i o n W e b S e l f S e r v i c e F o c u s G r o u p s b e g a n• 0 6 / 2 3 / 2 0 2 1 – P a y m e n t A d d r e s s R e l e a s e F i n a l R e g r e s s i o n T e s t i n g ( S T A R T )• 0 6 / 2 3 / 2 0 2 1 – D e v e l o p m e n t b e g i n s f o r R e t i r e m e n t A p p l i c a t i o n & D e a t h C l a i m s
R e l e a s e• 0 7 / 1 4 / 2 0 2 1 – P a y m e n t A d d r e s s R e l e a s e U s e r A c c e p t a n c e T e s t i n g ( U A T )
P r e p a r a t i o n ( S T A R T )• 0 7 / 1 4 / 2 0 2 1 – P e n s i o n W e b S e l f S e r v i c e S e c u r i t y T e s t i n g ( S T A R T )K ey G oals U pcoming• 0 8 / 2 4 / 2 0 2 1 – P e n s i o n W e b S e l f S e r v i c e R e l e a s e C o d e C o m p l e t e• 0 8 / 2 5 / 2 0 2 1 – P a y m e n t A d d r e s s R e l e a s e U s e r A c c e p t a n c e T e s t i n g ( U A T ) ( S T A R T )Issues/ R isk s• R e s o u r c e c o n s t r a i n t s o n k e y t e c h n i c a l t e a m s
TEAM – WHERE WE ARE NOW
* June 2021
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18
TASK DUE DATE ACTUAL STATUS34 HILOB Go-Live 4/19/21 4/19/21 Completed35 Payment Address Development Complete 05/11/21 06/11/21 Completed36 Planned Production Release - (Fiscal Year End) 6/21/21 06/21/21 Completed37 Payment Address Release Final Regression Testing begins 6/23/21 06/28/21 Completed38 Retirement Application Processing & Death Application
Processing (RAP/DTH) Release Development begins6/23/21 6/23/21 Completed
39 Payment Address Release Pre-User Acceptance Testing (UAT) begins
7/14/21 7/14/21 Completed
40 BAA, Annuity Payroll and Tax Release Development begins 7/14/21 7/14/21 Completed41 Pension Web Self Service Release Code Complete 8/24/21 Pending42 Payment Address Release User Acceptance Testing (UAT) 8/25/21 Pending
3537
05/01/21 07/01/21 09/01/21
3634
TEAM EXECUTION
38 3941
42
40
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Health Insurance Go-live Very Successful!
19
• HILOB went live on April 19, as planned
• No interruptions to member service
• User Acceptance Testing (UAT) major success in helping business learn and find issues before go-live
• Dry Runs helped tremendously to be well prepared for all scenarios during cut-over
• Rigorous Functional and Regression testing• Quality Score at Go-live: 155 • Well below 225 Quality gate target
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Health Insurance Post Go-live Transitioning Smoothly
• Business team is engaged in ongoing needs and prioritization
• Mission Control Meetings
• Fix Releases to respond to high priority issues
• Transitioning to planned Maintenance & Enhancement releases
• Held Program-level Lesson Learned
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C e n t r a l i z e s a l l p a y m e n t a d d r e s s a c t i v i t y w i t h i n T R U S T f o r a l l p r o c e s s e s
O n t r a c k t o e l i m i n a t e a d d r e s s d a t a b r i d g i n g b e t w e e n T R U S T a n d L e g a c y
I n t e g r a t e s w i t h s t a b l e , l e g a c y a p p l i c a t i o n s ( a n n u i t y p a y r o l l , d e a t h c l a i m s , r e t i r e m e n t s , e t c . . . )
N e w l y d e v e l o p e d a p p l i c a t i o n f o r i n t e g r a t i o n w i t h C o m p t r o l l e r ' s a d d r e s s s y s t e m
21
PAYMENT ADDRESS ON TRACK FOR OCTOBER 2021 RELEASE
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Additional Detailed Information
22
APPENDIX
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TEAM PRODUCT LINE ROADMAP
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TEAM PRODUCT LINE ROADMAP – 12 MONTH VIEW
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BUDGET
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TEAM EXECUTION
26
TASK DUE DATE ACTUAL STATUS34 HILOB Go-Live (tentative) 4/19/21 4/19/21 Completed
35 Payment Address Release Code Complete 5/11/21 6/01/21 Completed36 Planned Production Release - (Fiscal Year End) 6/21/21 6/21/21 Completed37 Payment Address Release Final Regression Testing begins 6/23/21 6/28/21 Completed38 Retirement Application Processing & Death Application
Processing (RAP/DTH) Release Development begins6/23/21 6/23/21 Completed
06/01/20 07/01/21
3735
05/01/21
Completed
363438
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TEAM EXECUTION
27
TASK DUE DATE ACTUAL STATUS39 Payment Address Release Pre-User Acceptance Testing
(UAT) begins7/14/21 7/14/21 Completed
40 BAA, Annuity Payroll and Tax Release Development begins
7/14/21 7/14/21 Completed
41 Pension Web Self Service Release Code Complete 8/24/21 Pending42 Payment Address Release User Acceptance Testing (UAT)
begins8/25/21 Pending
08/01/21 09/01/2107/01/21
41
39 42
Current40
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TEAM EXECUTION
28
Next
TASK DUE DATE ACTUAL STATUS43 Pension Web Self Service Release Final Regression
Testing begins9/15/21 Pending
44 Payment Address Release UAT Exit Quality Gate 10/15/21 Pending45 Payment Address Release Go-Live (tentative) 10/25/21 Pending
10/01/21 11/01/2109/01/21
43 4544
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TAB 6
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Board of Trustees IPA Update
July 2021
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Agenda
Page 2
01 Overview of Methodology
03 Setting the Stage
02 Grading Scale
04 Summary of Findings
05 Trends & KPIs
06 Q/A
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Program Assessment – Cube Methodology Overview
Page 3
Quality
management
Risk
management
Communications
management
Human
resource
management
Procurement
management
Integration
management
Time
management
Cost
management
Business case
integrity
Complexity
profile
Capability
and
maturity
Compliance and
regulatory
Organizational
change
management
Performance
management
Governance
effectiveness
Decision
Framework
Benefits
design and
realization
Methodology
and
development
Testing
and
validation
Cutover
and
support
Sustainability
model
Business
continuity and
recovery
Security
and
controls
Requirements
engineering
and design
Technical
infrastructure
Data
management
Scope
management
Program GovernanceBenefit realization and
sustainability
Product ManagementProcesses, controls,
and predictability
Technical SolutionRequirements development,
Quality, and transition
A One-Team cultureCommunicate and collaborate with consistency, transparency and bridging the gap from dev team to leadership
Being IndependentSpeak the truth with open dialogue with senior leaders
Forward LookingIdentify issues and risk before they become critical
Embedding within the TeamProvide solutions and expert guidance to key TRS and partner stakeholders
Solution FocusedAssesses the program with effective program governance model, technical solution and program management
Success DrivenEverything we do is anchored to what will make the TRS TEAM program successful
Future Review
Portfolio Governance
Technical Solution
Program Management
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Grading Scale
Page 4
0 1 2 3 4 5 6 7 8 9 10
Activities/functions are not defined and performed in an ad-hoc manner or process
aren’t stable and consistent across functions and teams
Activities/functions are defined, fairly stable and consistent across functions and teams. And are
being performed at a proficient level
All functions and teams are high performing, aligned, continually optimizing and leading practices
are engrained in the daily activities. High level of automation.
Pure Agile
Not what TEAM program is striving for
y
Optimal Range
Where TEAM Program wants to be
Not Agile
TEAM program needs improvement
Our assessment grading scale is targeted for optimal program growth for TEAM and establishing a baseline to improve upon. The goal is not to be a perfect 10 but to improve components of the program to increase
productivity and effectiveness of the product implementation.
Transition Agile
TEAM conducting fundamental agile
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60+ 4.93Out of 10
15Daily stand ups
attended Overall Program
HealthProgram facets
evaluated
5 KPIsProgram facets have improved grades over the review period
Identified for quality management improvement
Scope Schedule Budget
Development backlog is
documented, however, scope can
increase due to defects, M&E and
new requirements.
WSS potentially delayed; TEAM
working through mitigations plan.
PADR is on track as of April ’21.
Continuing to assess and review program
details
Setting the stage
Background
• Weekly discussions with TEAM Scrum Masters to provide coaching and collaborating on ideas
• Initiated discussions on Benefit & Value; Will share leading practices for Benefits Design and Realization
• Selected key KPI’s for quality management improvement and target projects for initial implementation.
• Shift to “testing earlier and more often” within the context and constraints of TRS and TEAM Program
• Identified improvement opportunities for meeting/agile ceremonies execution. To be further reviewed to suggest alignment to leading practices.
• TEAM Program leadership is implementing higher priority IPA recommendations
• Pending defining targets with the TEAM Program Leadership for each of the facets.
Grading scale
0 1 2 3 4 5 6 7 8 9 10
Not defined and performed in an ad-hoc manner
Process aren’t stable and consistent
Are defined, fairly stable and consistent across functions and
teams
Performed at a proficient level
High performing, aligned, continually optimizing and leading
practices
High level of automation.
EY IPA team is working daily with the TRS TEAM program to cultivate relationships and a robust understanding across the entire program
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TEAM Program summary
Page 6
Overall Rating:
4.93
Areas of Opportunity
Quick Wins Risks
Trends and KPI’s
5.0
Program Governance
5.0
Product Management
4.8
Technical Solution
Wall of Fame
QA KPI identification
Benefit/Value realization discussions
Definition of sprint goals
Standard toolset Situations of unclear accountability
Disparate systems
Value metrics
Single source of truth for work, defect and
test trackingImprove work estimation by applying
Agile leading practices
Define clear governance and Agile roles
within teams
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Trends and KPIs
*As the program advances we will bring in additional areas of review and rank them. Page 7
Legend
Increase over previous month
No improvementover previous month
Decrease over previous month
Detailed review not prioritized.
Facet Area of Review March ‘21 April ‘21 May ‘21 June ‘21
TEAM Program Overall Program Health 4.11 4.73 4.93 4.93
Program Governance
Overall: 5.0
Decision framework 4 4 5 5
Organizational change management N/A 7 7 7
Performance management 4 4 4 4
Governance effectiveness 5 5 5 5
Benefits design and realization 3 4 4 4
Product Management
Overall: 5.0
Quality management 2 3 4 4
Risk management 5 5 5 5
Communications management 6 6 6 6
Scope Management N/A 5 5 5
Time Management N/A 5 5 5
Technical Solution
Overall: 4.8
Methodology and development 4 4 4 4
Testing and validation 4 5 6 6
Cutover and support 5 5 5 5
Sustainability model 4 5 5 5
Requirements Engineering and Design
N/A 4 4 4
Facet assessedduring period.
Previous BoTreport
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Questions?
22 June 2021 Presentation titlePage 8
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EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. EY member firms do not practice law where prohibited by local laws. For more information about our organization, please visit ey.com.
In Consulting, we are building a better working world by transforming businesses through the power of people, technology and innovation.It's our ambition to become the world's leading transformation consultants.The diversity and skills of 70,000+ people will help clients realize transformation by putting humans at the center, delivering technology at speed and leveraging innovation at scale.These core drivers of “Transformation Realized” will create long-term value for people, clients and society.For more information about our Consulting organization, please visit ey.com/consulting.
© 2021 EYGM Limited. All Rights Reserved.
ey.com
EY | Building a better working world
EY exists to build a better working world, helping to create long-term value for clients, people and society and build trust in the capital markets.
Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform and operate.
Working across assurance, consulting, law, strategy, tax and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today.
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TAB 7
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Brian Guthrie
July 16, 2021
Executive Director’s Report
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General UpdatesBoard Election UpdateSpecial Honors and AcknowledgmentsUpcoming Board Meeting Agenda
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General Updates
Upcoming Conferences and Meetings:• July 26 - 28, 2021: NCTR 21st Annual Trustee Workshop, Virtual• August 4 - 11, 2021: NASRA Annual Conference, Virtual• September 23, 2021: EC Retreat, Austin, TX• October 10 – 12, 2021: NCTR 99th Annual Meeting, Virtual• October 28, 2021: EC Retreat, Austin, TX
Past Meetings and Updates:• May 4 - 7, 2021: Pension Bridge Conference, Virtual. • May 27, 2021: Strategic Partnership Network Summit, Virtual.
3
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General Updates
4
TRTA 2021 District Fall Conferences
District Date Officer District President
1 10-15-21 Patricia Macias Dr. Arturo Limon
2 10-27-21 Patricia Macias Beverly Tackett
3 TBD Patricia Macias Laura Whitson
4 10-19-21 Marcy Cann Mary Ann Dolezal
5 10-7-21 Marcy Cann Artemus Hancock
6 10-6-21 Marcy Cann Dr. Elizabeth Ricciardi
7 10-5-21 Marcy Cann Dr. Marilyn Williams
8 10-14-21 Leroy DeHaven Julie Fox Spears
9 10-11-21 Leroy DeHaven Jane McGough
10 10-25-21 Leroy DeHaven Sandra Barber
TRTA 2021 District Fall Conferences (Continued)
District Date Officer District President
11 10-5-21 Leroy DeHaven Pat Lioce
12 9-14-21 Fran Patterson Laura Rothcrock
13 9-9-21 Fran Patterson Gene Stokes
14 9-29-21 Fran Patterson Sharon Daugherty
15 10-21-21 Fran Patterson Dr. Janis Petronis
16 10-22-21 Ella Gauthier Doneice Ray
17 10-14-21 Ella Gauthier Terry Navrkal
18 10-5-21 Ella Gauthier Shirley Johnson
19 10-19-21 Ella Gauthier Nance Evans
20 10-28-21 Patricia Macias Irene Rodriguez-Dubberly
As of 6/30/21 Location and Times of District Meetings are still to be determined.
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5
2019 Board Elections and SBOE Nominations
TRS Public School District Trustee position • May 5, 2021: TRS Board of Trustees Election for Public School District position concluded• May 28, 2021: TRS Election Review Committee met and certified election results• June 1, 2021: Sent letter to Governor Abbot listing the top three candidates
• Mr. Elvis Williams• Ms. Kristi McAlexander Cross• Mr. Cedric T. Menchion
TRS State Board of Education (SBOE) Trustee position• June 25, 2021: SBOE voted on five nominees
• Britnny Allred• Levi H. Davis• Trey Denman• Paula Ann Miller• Scott Olguin
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Special Honors and Acknowledgements
6
HILOB TeamFor the past several years, a dedicated team across the Information Technology (IT) and Health and Insurance Benefits (HIB)divisions, in conjunction with others across the agency have worked diligently to develop new software to support our HealthInsurance Line of Business (HILOB). Over the years, the team worked through more than 1,000 requirements, executed over 5,000tasks, passed millions of data checkpoints… and transferred development responsibility from a vendor to TRS internal IT in theprocess.
The new software, a major milestone of the TRUST system and the TEAM program, was launched in April of this year with greatsuccess. Even internal call times and service levels were maintained during the launch. What once took counselors seven screens tonavigate in the previously used DOS-based system can now be accomplished in one screen. The success of this implementation isgreat news for the entire project team, HIB, and the nearly 250,000 retired educators and their families who rely on the accuracy andquality of the system.
Please join me in congratulating the members of the HILOB Team on their accomplishments and contributions!
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Special Honors and Acknowledgements
7
Office Visit Counseling TeamThe Office Visit Counseling Team exemplifies commitment to excellent customer service and has shown tremendous flexibility,adaptability, and resiliency this year. After seven months of working from home full time, in October 2020 the Office VisitCounselors came back onsite to conduct in-person member appointments. Initial concerns and hesitations from the team werequickly overcome with the safety measures put in place to protect employees and our members. The office visit counselors weresupportive and ready to meet member demand with resuming in-person appointments. The number of in-person memberappointments has progressively increased and are at 36 daily appointments in June. Live video member visits and presentations andphone appointments also continue to be conducted and the team assists Telephone Counseling by taking calls when not activelyconducting a member visit.
Office visit coaches have successfully trained five counselors since the pandemic started to conduct member visits independently. Asa result of this team’s efforts, in-person appointment availability has had a positive impact on our member’s ability to schedule anappointment within five days.
Please join me in congratulating the members of the Office Visit Counseling Team on their accomplishments and contributions!
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Upcoming Board Agenda
September 16 - 17, 2021September 16-17, 2020 September 17, 2021Committees BoardStrategy and Planning Committee Approve Calendar Year 2020 Meetings
• Results Forum Report Out Select Ombuds• FY 22 ED’s Areas of Focus TEAM Update• Rvw Mission Statement Committee Reports
Benefits Committee• Operational Updates ED Report• Approval of Benefits
Compensation Committee• Review IMD and ED’s PIPP
Policy Committee• Update Policy Review Schedule• Amend IPS• Adopt proposed rules implementing legislation
Investment Management Committee• CIO and Market Update• 2nd Quarter 2021 Performance Review• Semi Annual Risk Report
ACE Committee• Completed Internal and External Audits.• Compliance Update• FY 22 Audit Plan
8
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9
Upcoming Agendas
December 9-10, 2021December 9, 2021 (2 Day Quarterly Meeting) December 10, 2021Committees BoardStrategy and Planning Committee TEAM Update• Results Forum Report Out ED ReportBenefits Committee Executive Evaluations• Operational OverviewBudget Committee• ACFR Review• Fiscal Year End ReportPolicy Committee• Designation of Key Employees• Ethics Policies and Disclosure Statements• Proxy Voting Policy Rvw• Securities Lending Policy RvwInvestment Management Committee• CIO Update• 3rd Quarter 2021 Performance Review• Annual Trading, Risk and Multi-Asset Strategies Group UpdatesACE Committee• TRS Annual Comprehensive Financial Statement Audit • TRS Investment Company of Texas (TRICOT) Financial Audit• Completed Internal and External Audits.
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TAB 14
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Andrew Roth
July 16, 2021
Chief Operations and Administrative Officer Presentation
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I. Procurement and Contracts: Update on Reorganization Efforts
II. DEI Tool: Update
III. Return to Office Update
AGENDA
2
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• New Business Administration department launched on June 1, 2021• Business Administration teams include:
• Facilities Operations and Maintenance• Safety and Prevention• Security• Printing and Mailing• Records Management and Imaging• Procurement and Contracts
I. Business Administration
3
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Procurement and Contracts
• Focused on addressing recommendations and findings from latest procurement audit• Procurement Guide in final stages: policy decisions brought to ED and COAO; results being incorporated into
the document under final review by L&C and Internal Audit• Will follow State Procurement Guide absent any compelling business justification • Improved business coordination with Legal and Compliance and Internal Audit• PAVES (automated procurement system) slated to go live in September 2021• IA will conduct an operational assessment of PAVES as part of its 2022 Audit Plan
I. Business Administration: Procurement and Contracts Update
4
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• Focus for investment industry• Focus of industry regulators• Growing recognition in research of the bottom-line benefits that result from
diverse teams• Important that staff feel included; improves engagement• DE&I program appreciated and positively reviewed by TRS staff
5
Diversity, Equity, and Inclusion (DEI)
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Timeline: DEI Measurement Tool/Service Procurement (all dates 2021)
March 19
RFP Posted
Selection Committee
April 19
Proposals Reviewed
May 19
3 Finalists / Demos
June 30
Final Selection
July
BAFO / L&C
Contract Award Phase
II. Status of DEI Measurement Tool RFP
August
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• Currently in Phase 3, approximately 50% occupancy
• Will remain in Phase 3 for the duration of Summer 2021
• Able to seat approx. 60% of staff while accommodating social distancing
• Phase 4, returning to full occupancy (defined as 75%), targeted for September 2021
• Parking constraints will limit the number of on-staff site
• Full occupancy means 75% occupancy on any given day in keeping with new remote work standard of 75/25
• Unable to return to 100% occupancy due to parking constraints
• Goal of 75% of staff on site on a given day requires carpooling or alternate transportation strategies
III. Return to Office Update
7
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QUESTIONS
8
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TAB 15
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Katherine Farrell
July 16, 2021
TRS Ombudsman Office
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2
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3
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4
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Point-in-Time Complaints Q1 2021
# Date Received Department Source Complaint Category Complainant Brief Statement of Complaint
Response provided/ Resolved
Resolution Date
1 1/6/2021 Benefit Services
Google review - TRS Website
Quality of Service Provided: Timeliness of response Beneficiary Allegation of timing delay in the
distribution of death benefits Yes 1/6/2021
2 1/12/2021 L&C Email to CCO Quality of Service Provided: Timeliness of response
Relative of a beneficiary
Allegation of timing delay in the distribution of death benefits Yes 2/23/2021
3 1/12/2021 Benefit Services Office Visit Quality of Service Provided:
Timeliness of response Member Allegation of delay in benefit processing Yes 1/6/2021
4 1/19/2021 Benefit Services
Written correspondence
Quality of Service Provided: Incorrect Information provided
Member Allegation of incorrect information provided regarding CRD processing Yes 1/25/2021
5 1/20/2021 Benefit Services
Office Visit - how was your visit survey
Quality of Service Provided: Timeliness of response Member Allegation of delay in benefit
processing Yes 2/24/2021
6 1/21/2021 Benefit Services
Written correspondence
Quality of Service Provided: Incorrect Information provided
Member Allegation of incorrect information provided related to the process of changing retirement plan option
Yes 1/29/2021
7 1/22/2021 Benefit Services
Written correspondence
Quality of Service Provided: Incorrect Information provided
Member Allegation of lost check by TRS Yes 1/25/2021
8 1/23/2021 Benefit Services
Written correspondence
Quality of Service Provided: Incorrect Information provided
Member Allegation of timing delay in refund processing due to incorrect information provided
Yes 1/25/2021
9 1/23/2021 Benefit Services
Office Visit - how was your visit survey
Quality of Service Provided: Incorrect Information provided
Member Complaint regarding incorrect/confusing information being provided over a year ago
Yes 2/22/2021
10 2/2/2021 Benefit Services
Written correspondence
Quality of Service Provided: Human error Beneficiary
Beneficiary incorrectly identified as deceased and information letter sent out due to the human error
Yes 2/24/2021
11 2/3/2021 Benefit Services
Office Visit - how was your visit survey
Quality of service provided: Extended wait time Member Complaint regarding phone wait time
Two attempts to contact the member
2/22/2021 2/23/2021
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# Date Received Department Source Complaint Category Complainant Brief Statement of Complaint
Response provided/ Resolved
Resolution Date
12 2/3/2021 Benefit Services
Office Visit - how was your visit survey
Quality of service provided: Extended wait time Member Complaint regarding phone wait time Yes 2/22/2021
13 2/3/2021 Benefit Services
Office Visit - how was your visit survey
Quality of service provided: Extended wait time Member Complaint regarding phone wait time Yes 2/22/2021
14 2/3/2021 Benefit Services
Office Visit - how was your visit survey
Quality of service provided: Extended wait time - Failure to respond
Member Allegation of call not being returned Yes 2/22/2021
15 2/11/2021 Benefit Services
Office Visit - how was your visit survey
Quality of service provided: Extended wait time Member Complaint regarding phone wait time Yes 2/22/2021
16 2/12/2021 L&C Email to CCO Quality of Service Provided: Timeliness of response Beneficiary Allegation of timing delay in the
distribution of death benefits Yes 2/24/2021
17 2/15/2021 Benefit Services
Office Visit - how was your visit survey
Quality of service provided: Extended wait time Member Complaint regarding phone wait time
Two attempts to contact the member
3/16/2021 3/17/2021
18 2/16/2021 Benefit Services
Office Visit - how was your visit survey
Quality of Service Provided: Timeliness of response Member Allegation of timing delay in mailing
the retirement packet Yes 2/13/2021
19 2/26/2021 Benefit Services
Office Visit - how was your visit survey
Quality of Service Provided: Timeliness of response Member Allegation of timing delay in mailing
the retirement packet Yes 2/17/2021
20 2/26/2021 Benefit Services Legislative Quality of Service Provided:
Timeliness of response Beneficiary Allegation of timing delay in the distribution of death benefits Yes 2/26/2021
21 2/27/2021 Benefit Services
Office Visit - how was your visit survey
Quality of service provided: Extended wait time Member Complaint regarding phone wait time
Two attempts to contact the member
3/16/2021 3/17/2021
22 3/1/2021 L&C; Benefit Services Email to CCO Quality of Service Provided:
Timeliness of response Member Allegation of timing delay in sending the 1099 Yes 3/1/2021
23 3/3/2021 Benefit Services
Office Visit - how was your visit survey
Quality of service provided: Extended wait time Member Complaint regarding phone wait time Yes 3/16/2021
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# Date Received Department Source Complaint Category Complainant Brief Statement of Complaint
Response provided/ Resolved
Resolution Date
24 3/4/2021 Benefit Services TRS Comments
Quality of Service Provided: Inappropriate responses from TRS employees
Member Complaint regarding customer service
Two attempts to contact the member
3/8/2021 3/9/2021
25 3/5/2021 Benefit Services
Office Visit - how was your visit survey
Quality of Service Provided: Incorrect Information provided and Timeliness of response
Member
Allegation of timing delay in mailing the retirement packet and incorrect information provided regarding appointment rescheduling
Yes 3/16/2021
26 3/9/2021 Benefit Services Legislative Quality of Service Provided:
Timeliness of response Beneficiary Allegation of timing delay in the distribution of death benefits Yes 3/9/2021
27 3/9/2021 L&C Email to CCO Other: Fraud TRS Employee
Allegation of potential FWA by employee related to compensatory time
Yes 4/6/2021
28 3/10/2021 Benefit Services
Office Visit - how was your visit survey
Quality of Service Provided: Inappropriate behavior in front of members
Member Complaint regarding TRS representative not being dressed professionally
Yes 3/16/2021
29 3/12/2021 Benefit Services Email Quality of Service Provided:
Timeliness of response Beneficiary Allegation of timing delay in the distribution of death benefits Yes 3/12/2021
30 3/12/2021 Benefit Services Legislative Quality of Service Provided:
Timeliness of response Member Allegation of timing delay in processing retirement benefits Yes 3/17/2021
31 3/15/2021 Benefit Services
Office Visit - how was your visit survey
Quality of service provided: Extended wait time Member Complaint regarding phone wait time Yes 3/16/2021
32 3/17/2021 Benefit Services
Office Visit - how was your visit survey
Quality of Service Provided: Incorrect information provided
Member Allegation of incorrect information provided by TRS Yes 3/19/2021
33 3/18/2021 L&C Call to CCO Other: Fraud Anonymous Allegation of illegal or questionable conduct by the manager; and. allegation of retaliation.
Yes 3/23/2021
34 3/26/2021 Benefit Services TRS Comments Quality of Service Provided:
Timeliness of response Beneficiary Allegation of timing delay in the distribution of death benefits Yes 3/26/2021
35 3/31/2021 Executive TRS Comments Other: LTF Member Dissatisfaction with TRS LTF strategy Yes 4/1/2021
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April - May 2021 Received – 16 Outstanding – 0
TRS Complaints Quarterly Report April - May 2021
# Date Received Department Source Complaint Category Complainant Brief Statement of Complaint
Response provided/ Resolved
Resolution Date
1 4/5/2021 Benefit Services TRS Comments
Quality of Service Provided: Inappropriate responses from TRS employees
Beneficiary Allegations of counselor being rude and unhelpful Yes 4/6/2021
2 4/8/2021 Executive TRS Compact with Texans Other: Vaccine” Robo call” Member Complaint regarding “Robo call” not
leaving a message Yes 4/8/2021
3 5/10/2021 Executive Email to ED Other: Incorrect Information provided Member Allegation of incorrect information
provided by ED regarding COLA Yes 5/10/2021
4 5/20/2021 HIB Legislative Quality of Service Provided: Incorrect Information Provided
Member Allegation of incorrect information provided by TRS Yes 5/26/2021
5 5/23/2021 Internal Audit SAO Hotline Other: Suspicious activity on members' TRS accounts. Member Suspicious activity on members' TRS
accounts Yes 5/27/2021
6 5/24/2021 Internal Audit SAO Hotline Other: Suspicious activity on members' TRS accounts. Member Suspicious activity on members' TRS
accounts Yes 5/27/2021
7 5/26/2021 Internal Audit SAO Hotline Other: Suspicious activity on members' TRS accounts. Member Suspicious activity on members' TRS
accounts Yes 5/27/2021
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TAB 18
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Brian Guthrie, Executive DirectorAndrew Roth, COAO
July 16, 2021
TRS LongTRS Long-TRS Long-Term TRS LongTRS LongTRS Long Term Term Term Facilities Update
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TRS Long-Term Facilities: Agenda
I. Vision: Generational SolutionII. Indeed Tower UpdateIII. Long Term Facilities Timeline: Business DriversIV. Long Term Facilities: Value PropositionV. Remote Work & Return to OfficeVI. Current HQ Building UtilizationVII. Current Workstreams VIII. Next Steps
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TRS Long-Term Facilities: Vision
Generational Solution• Generates significant savings to the fund by decreasing use of leased space
• Consistent with Texas Facilities Commission’s mission on consolidating agency facilities and minimizing use of leased offices
• Reduces need for costly improvements on outdated HQ buildings
• Eliminates a costly piecemeal approach
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TRS Long-Term Facilities: Indeed Tower Update
Indeed Lease Terminated
• Indeed Tower sold on Wednesday, June 23, 2021
• TRS lease terminated as a result of the sale
• TRS no longer has any lease obligations at Indeed Tower
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TRS Long-Term Facilities: Business Drivers for Build To Suit Solution
Business Drivers for a Generational Solution• Most financially prudent long-term solution for space needs• Opportunity to take advantage of Austin real estate market for sale of Red River• Dramatic uptick in market activity means current solutions that have been under
consideration since 2019 will soon go away• TRS is out of space; currently relying on Work-From-Home (WFH), which in the long term is
an unsustainable solution • Growth assumptions have proven too conservative; space compression at Red River site
continues to compound with addition of critically needed FTEs• Delaying or putting off a decision results in tens of millions of dollars in additional spending
on delayed maintenance and A/V reconfiguration necessary to accommodate increased remote work along with upkeep of Red River HQ plus further spending on leases
• Status quo is the most expensive option
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TRS Long-Term Facilities: Business Drivers for Status Quo
Business Drivers for Status Quo
• Long-term extent of remote work still uncertain
• Advantages of remote work (for example, diversity, flexible hours, greater productivity)
• Ability to utilize current buildings extended by 3-5 years with increased use of remote work
• Increased remote work has become an important consideration for current and prospective employees
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TRS Long-Term Facilities: Value Proposition
Benefits of a Build-to-Suit Solution• A solution is required—the current buildings are over 40 years old and lack the space to house
all of TRS• Members forced to meet with staff in makeshift rooms, including under the stairwell• A more efficient and adaptable building will better serve a growing membership
• Improved member experience• Improved access for members• Modern, flexible building that supports business needs of a $190 billion financial institution that
serves 1.7 millions Texas educators and associated educational staff• Adequate space and parking for a growing organization and its growing membership• All of TRS together in one campus owned by TRS and its members—eliminates need to lease
space for headquarters employees• A new campus is the most cost-effective headquarters solution for TRS
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Constraints
• Staff parking capacity at TRS is 438 spaces• Currently 815 individuals have assigned
seating at Red River HQ. • 438 people equals approx. 55% of 815 current
staff with an assigned parking space• Approx. 650 FTEs at HQ plus some 165
contractors and interns; number varies depending on projects and season (interns)
• Ability to add additional seating constrained; few empty spaces remain
• 75% of 815 staff (defined as FTEs plus contractors and interns) equals 571 individuals
Mitigations
• Current remote work status: approx. 50% of staff onsite on a weekly basis
• Moving forward to demo inefficient offices and create more open space for hoteling and collaboration (conference and meeting rooms)
• Parking constraint will cap RTO efforts at approx. 55-60% of current FTEs; that percentage will shrink as more FTEs added
TRS Long-Term Facilities: Remote Work Status
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TRS Long-Term Facilities: Current HQ Building Space Constraints
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Current Occupancy: 815
• FY22: 858 (+43 all areas excluding IMD)• FY23: 915 (+57 all areas excluding IMD)
3% growth (excluding IMD):
• FY24: 942 (+27)• FY25: 971 (+28)
Projected Growth at Red River
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Red River Headquarters Building
• Engaged in completing multiple deferred maintenance projects
• Sump pump• Roof repair• ADA modifications • Space modifications in East and West
buildings • A/V enhancements• Landscaping• Data Center Move
• Anticipated capital outlay in FY 22 is approx. $5-7 million
• Anticipate spending an additional $5-$7 million in FY 23
816 Congress
• Current lease ends in March 2023• Tenant improvements: lighting, carpet, and
furniture; anticipated cost is approx. $300K in FY22
• Issued RFP for a broker to identify new space for IMD
• Added 3,127 square feet on the 14th floor
TRS Long-Term Facilities: Workstreams for Current Facilities
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Negotiations with Developers
• Negotiating transaction cost and structure• Financial terms have increased since early
2020 due to shortages in commodities such as building materials and increased labor costs
• Austin market: metro area is the #1 fastest growing metro region in the nation
Due Diligence Activities
• Updated Survey• Test fit activities for space• Verifying jurisdictional requirements
TRS Long-Term Facilities: Current Workstreams for BTS
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TRS Long-Term Facilities: Next Steps
Next Steps
• Expand maintenance and space efficiency activities at Red River
• Continue negotiations with developer
• Continue due diligence on sale of Red River
• Continue to seek trustee input on current and future workstreams
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Appendix
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