SUMMARY

The WRS is one of the 10 largest public pension plans in the United States. The WRS fiduciary net position, which represents the resources available to pay pension benefits, increased from $112.1 billion as of December 31, 2019, to $125.0 billion as of December 31, 2020. The increase in the WRS fiduciary net position is primarily attributed to an increase in the fair value of investments as of December 31, 2020.

ETF reported a net pension asset for the WRS of $6.2 billion as of December 31, 2020. The WRS has reported a net pension asset in three of the last five years. We collected information from other pension plans that were part of the WRS peer group and found that the WRS had a funded ratio of 105.3 percent, which was the highest among these plans.

Of 60 claims we tested that were paid through the Employee Reimbursement Accounts/Commuter Benefits (ERA/CB) program, we found that three were not appropriately substantiated, which we considered to be a significant deficiency in internal control over financial reporting.

The ERA/CB program offers state employees pretax payroll deductions that are credited to an account for the reimbursement of qualifying medical costs, dependent care costs, and transportation expenses, such as bus passes, parking, and other transit costs. For calendar year 2020, ETF contracted with a new third-party administrator for the program. The third-party administrator then contracted with another entity, referred to as a subservice organization, to perform certain functions, including the review and approval of claims and the reimbursement of participants for qualified expenses.

We recommend that ETF work with the third-party administrator to ensure appropriate steps are taken related to the claims we identified and improve controls to ensure ERA/CB claims are substantiated; and improve its monitoring of the ERA/CB third-party administrator and subservice organization.

OPEB refers to the benefits, other than pensions, that a state or local government employee may receive after they have left employment, generally upon retirement. An OPEB plan may include medical, prescription drug, dental, vision, and other health-related benefits. As of December 31, 2020, the net OPEB liability or asset for each OPEB plan administered by ETF is as follows: