A Performance Audit
An Audit Report on Incentive Compensation at the Permanent School Fund, General Land Office, Employees Retirement System, and Teacher Retirement System
September 2017
Summary Analysis
The Permanent School Fund (PSF) of the Texas Education Agency, the General Land Office (GLO), the Employees Retirement System (ERS), and the Teacher Retirement System (TRS) calculated and paid incentive compensation in accordance with their policies and procedures for plan year 2016.
Plan year 2016 was the first year that TRS implemented its executive performance incentive pay plan, which is a separate plan from the regular incentive compensation plan discussed above. TRS calculated and paid executive incentive compensation in accordance with its executive performance incentive pay plan. However, it should strengthen controls over its executive incentive compensation calculation and review process by (1) developing formal, detailed calculation and review procedures and (2) verifying all source documentation that it uses in its incentive compensation calculation.
The Permanent School Fund (PSF) of the Texas Education Agency calculated and paid incentive compensation for its plan year ended August 31, 2016, in accordance with its policies and procedures. The PSF awarded a total of $2,385,729 in incentive compensation to 49 employees.
The General Land Office (GLO) calculated and paid incentive compensation for its plan year ended June 30, 2016, in accordance with its policies and procedures. GLO awarded a total of $289,691 in incentive compensation to 4 employees.
The Employees Retirement System (ERS) calculated and paid incentive compensation for its plan year ended August 31, 2016, in accordance with its policies and procedures. ERS awarded a total of $2,656,060 in incentive compensation to 69 employees.
TRS calculated and paid incentive compensation for its plan year ended September 30, 2016, in accordance with its policies and procedures. TRS awarded a total of $5,266,028 in incentive compensation to 140 employees (excluding $9,550 awarded to the executive director as part of the separate executive performance incentive pay plan discussed in Chapter 4-B).
TRS calculated and paid executive incentive compensation for its plan year 2016 in accordance with its executive performance incentive pay plan. However, it did not have formal, detailed policies and procedures for the calculation and review process for its executive performance incentive pay plan that required TRS to document its calculation and review processes. In addition, TRS did not verify source documentation from a third party for one input into its incentive compensation calculation; however, auditors determined that the input TRS used in that calculation was accurate. Those issues increase the risk of making inaccurate award payouts due to undetected mistakes in the inputs, calculations, and review process. The TRS executive director was the only participant for the 2016 performance period. TRS awarded $9,550 in incentive pay to its executive director.
Graphics, Media, Supporting documents