Summary of Report 20-040

The Permanent School Fund Division (PSF Division) of the Texas Education Agency calculated and paid incentive compensation for its plan year ending September 30, 2019, in accordance with its policies and procedures. The PSF Division awarded a total of $4,002,338 in incentive compensation to 53 employees. The PSF Division awarded the most incentive compensation to its chief investment officer, who was awarded $332,177 payable over a three-year period. That $332,177 represented 8.3 percent of the $4,002,338 in total incentive compensation that the PSF Division awarded.

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The General Land Office (GLO) calculated and paid incentive compensation for its plan year ending June 30, 2019, in accordance with its policies and procedures. GLO awarded a total of $489,278 in incentive compensation to five employees. GLO awarded the most incentive compensation to its chief investment officer, who was awarded $276,816 payable over a two-year period. That $276,816 represented 56.6 percent of the $489,278 in total incentive compensation that GLO awarded.

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Incentive Compensation Plan

The Teacher Retirement System (TRS) calculated and paid incentive compensation for its plan year ending September 30, 2019, in accordance with its policies and procedures.

TRS awarded a total of $13,057,059 in incentive compensation to 155 employees (excluding $48,765 awarded to the executive director as part of the separate executive performance incentive pay plan). TRS awarded the most incentive compensation to a senior managing director, who was awarded $423,077 payable over a two-year period. That $423,077 represented 3.2 percent of $13,057,059 in total incentive compensation that TRS awarded.

Executive Performance Incentive Pay Plan

TRS calculated and paid executive incentive compensation for its plan year ending September 30, 2019, in accordance with its policies and procedures. However, due to a data entry error, it overpaid the calculated amount of executive compensation by $737 (0.98 percent). After auditors brought this to the attention of TRS, TRS corrected the error by adjusting a subsequent payment.

The executive director’s award for plan year 2019 was composed of an investment oversight award of $48,765; no leadership award was earned. The TRS executive director was the only executive plan participant for the plan year.

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The Employees Retirement System (ERS) calculated and paid incentive compensation for its plan year ending August 31, 2019, in accordance with its policies and procedures. However, ERS should further strengthen controls over its calculation and review process.

ERS awarded a total of $3,969,333 in incentive compensation to 74 employees; however, one recipient resigned prior to receiving their award. ERS awarded the most incentive compensation to its chief investment officer, who was awarded $285,629 payable over a three-year period. That $285,629 represented 7.2 percent of the total incentive compensation that ERS awarded. In addition, members of the ERS board of trustees approved the executive director’s participation in the incentive compensation plan for plan year 2019; the executive director was awarded $194,653 payable over a three-year period.

ERS should further strengthen its controls over incentive compensation by ensuring that policies and procedures are updated and reflect current processes.

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