TITLE
Consider an ordinance authorizing the update of Texas Municipal Retirement System service credits.
SUMMARY
DATE: November 13, 2018
TO: Ronald L. Olson, City Manager
FROM: Eva Bark, Executive Director for Human Resources
SUBJECT: Ordinance to Authorize Updating Service Credits
BACKGROUND AND FINDINGS:
The Texas Municipal Retirement System (TMRS) was established in 1948 as a retirement system and disability pension system for municipal employees in the State of Texas. It is administered in accordance with the TMRS Act and is governed as a Board of Trustees appointed by the Governor of Texas. The City of Killeen is a member of the TMRS.
One of the provisions of TMRS is that member cities may, by ordinance, adopt an Update of Service Credits (USC). Updated Service Credits allow an employee’s TMRS retirement benefits to reflect inflation and provides for increased prior and current service annuities for retirees and beneficiaries of deceased retirees of the City. On adoption, all employees covered under TMRS have their retirement benefits recalculated based on a three-year average of their most recent salary. The contribution for 2019 as stated in this ordinance was calculated using the assumptions provided by TMRS to calculate contribution rates.
THE ALTERNATIVES CONSIDERED:
Alternatives are: 1) Do nothing. 2) To adopt 100% Updated Service Credit, including Transfers and 70% CPI Increase to Annuitants Ad Hoc (one time only basis). With the adoption of these additional benefits, the City‘s contribution rate beginning January 1, 2019 will be at 11.15%.
Which alternative is recommended? Why?
Adopt 100% Updated Service Credit, including Transfers and 70% CPI Increase to Annuitants Ad Hoc (one time only basis). With the adoption of these additional benefits, the City‘s contribution rate beginning January 1, 2019 will be at 11.15% because this will start the process to fund TMRS on a repeating basis.
CONFORMITY TO CITY POLICY:
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