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An Audit Report on Incentive Compensation at the Teacher Retirement System, the Permanent School Fund, the General Land Office, and the Employees Retirement System

May 2014

Report Number 14-033

Overall Conclusion

Through their incentive compensation plans for plan year 2013, the Teacher Retirement System (TRS), the Permanent School Fund (PSF) of the Texas Education Agency, and the General Land Office made incentive compensation awards to employees in accordance with their policies and procedures. The Employees Retirement System (ERS) did not always award incentive compensation appropriately because it did not always award incentive compensation in accordance with its policies and procedures.

In addition, the PSF, GLO, and ERS should strengthen their incentive compensation plans by formally approving those plans prior to the start of the plan performance period. The commissioner of education approved the PSF incentive compensation plan after the performance period had begun, and the ERS board of trustees did not formally approve the ERS incentive compensation plan prior to the beginning of the plan year. GLO did not provide evidence of the formal approval of its incentive compensation plan during this audit.

Auditors communicated other, less significant issues separately to TRS, the PSF, ERS, and GLO management in writing.

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