The Midland Firemen’s Relief & Retirement Fund (MFRRF) is currently listed as a non-compliant benefit plan on the Texas Pension Review Board's (PRB) website due to incomplete financial reporting for Fiscal Year 2022, spokespeople for the PRB, City of Midland, and MFRRF all confirmed with Midland Times.
"The non-compliant list shows which systems are not compliant with the annual reporting requirements: The annual financial report, the investment returns and assumptions report, and the membership report,” the PRB said in a statement emailed to Midland Times.
“The PRB does not have enforcement authority to take action against systems that are non-compliant with the statutory requirements, but pursuant to our statutory authority, we highlight these non-compliant systems on our website and notify the related governing body of the system's sponsoring entity – in this case, the Midland City Council. Midland has not yet provided a complete investment expense portion of the 2022 Annual Financial Report."
The report on PRB's website noted that Midland Firemen’s Relief & Retirement Fund was required to submit its complete Fiscal Year 2022 report by July 30, 2023 – and with the additional 60-day limit in place, the final deadline for that complete report was nearly nine months ago in Sept., 2023.
When asked by Midland Times about the status of the missing investment expenses from the annual report, the Administrator of the Midland Firemen's Relief & Retirement Fund, Shera Crow, stated via email that the report in question had been sent to the PRB on June 25, and expressed hope that the Fund would be “removed from the delinquent list upon receipt.”
“The MFRRF is currently listed as non-compliant because of the concerns found regarding the investment expense section of a 2022 annual audit. Once confirmed that either the information in the audit is accurate or that the PRB has received corrected investment expense details, the system will be marked as compliant,” a City spokesperson said in an email to Midland Times.
The PRB, in accordance with Section 801.209 of the Texas Government Code, published the list of all pension benefit plans which had not submitted their required reports or information to it by the 60th day after the date the reports or information were due.
According to language on the PRB’s website concerning compliance frequently asked questions and late reports: “If an annual report is late by more than 60 days, we will contact the retirement system and ask for a status update on the late report/s. If the report/s cannot be sent to the PRB, we will send a letter to the sponsoring entity of the retirement system notifying them of the non-compliance with state reporting requirements and the retirement plan will be added to the list of non-compliant plans over 60 days, which is published on our website and reported to the Board at each meeting.”
A document on the Pension Review Board’s website titled “Policy for Regulation of Non-Compliant Retirement Systems” further outlines a multi-step process for addressing and resolving the issue of retirement plans which did not abide by the agency’s reporting mandates.
Though some plans are exempt from reporting to the PRB, under criteria which the agency also details on its website, the PRB clarified that the Midland Firemen’s Relief Fund was not among the exempted plans.
According to the Texas State Comptroller, MFRRF had $80.9 million in assets as of Dec. 31, 2022, on which it earned zero in investment income in 2023.
It currently has an “infinite” amortization period, meaning that, based on MFRRF’s current actuarial assumptions, it will never have enough money to pay for the current and future retirement benefits it promised its retirees.
To pay for the retirements of the fund’s 197 retirees and, eventually, its 234 active firefighters, MFRRF would need to have $190 million in current assets.
In 2022, current firefighters contributed $3.3 million into MFRRF, or about $1,185 each per month. City of Midland taxpayers gave the fund a $5.2 million subsidy.
An article from NewsWest9 published last December quoted Mayor Lori Blong as saying in reference to the Fund, in part, “There has been a lack of performance investments, and there is also a lack of adequate contributions to the fund, to meet the future promised benefits of the fund. So we are increasing our contribution to the fund, so that we can more adequately meet the promised future benefit.”
In the summer of 2023, the Midland Fire Department voted to change in part the calculation metric used to determine overtime benefits, and additionally, the City of Midland approved a 2% increase in its contribution to the Fund last December.
In 2023-24, the City of Midland's total budget was $145.9 million.