TMRS Highlights from the October 2, 2025 Board Meeting

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The TMRS Board met on Thursday, October 2nd in Austin and this meeting was open to the public.  I was able to attend in person.  All TMRS Board Members were present at the meeting.  The TMRS Board is one representative short due to Tricia Mirabelle exiting the Board.  The Governor has not yet appointed anyone to fill this vacant position.   

Agenda Item #1 – Consider and Act on Consent Agenda

  • Consent agenda consisted of approving the Minutes from the June 12, 2025 and August 28, 2025 Board of Trustees meeting, Quarterly Confirmation of Member Retirements, Quarterly Confirmation of Supplemental Death Benefit Payments and Grants of Extended Supplemental Death Benefits Coverage, and Receive Quarterly Financial Statements as of June 30, 2025. 
  • Motion made to accept the Consent Agenda.  Motion passed.

Agenda Item #2 and #3 – Executive Director’s Report and Receive Senior Staff Quarterly Updates

  • TMRS Executive Director Debbie Munoz opened her presentation by announcing a new feature of her report going forward – that being a TMRS Member Spotlight segment.   
  • In addition to recognizing a current TMRS member, Ms. Munoz also recognized various TMRS staff members for professional accomplishments, accolades, and participation in various city-related events and conferences.   In addition, Ms. Munoz gave a report on some other internal happenings, retirements, staff additions, other staff updates, etc.   
  • Ms. Munoz reported that the retirement application is now on-line via MyTMRS effective July 1, 2025.  Within the first week, 45 members submitted applications on-line and half of those applications were certified electronically via the City Portal.
  • Ms. Munoz also reported that there has been robust interest in the new 8% employee contribution rate option which took effect on September 1, 2025.  Since the option took effect, 342 cities have run plan change studies to determine the cost, 49 cities have requested model ordinances to adopt the new rate, and 35 cities have submitted their signed ordinances adopting the new rate. 
  • Finally, Ms. Munoz reported that the City of Combine was the latest city to join TMRS making a total number of 944 participating cities.     

Agenda Item #4 – Consider and Act on Amendments to Board of Trustees Orientation and Education Policy

  • TMRS Chief Legal Officer Christine Sweeney reported that at its March 25, 2025 meeting, the Board adopted the current Board of Trustees Orientation and Education Policy.  The Pension Review Board has amended its administrative rules regarding the minimum educational training requirements for Trustees and System Administrators of public pension funds.
  • Basically, this provides a new calendar for Trustee continuing training:  changing from 4 hours of training in a 2-year period to 2 hours of training per calendar year.
  • Motion made to adopt the amended Board of Trustees Orientation and Education Policy as presented.  Motion passed.  

Agenda Item #5 – Consider and Act on Renewal of Board’s Fiduciary Counsel Agreement

  • TMRS Executive Director Debbie Munoz reported to the Board that Bob Klausner has provided external legal and fiduciary counsel services to TMRS and the Board of Trustees since 1999.  Given Mr. Klausner’s extensive and positive experience with TMRS and his effective efforts on TMRS’ behalf, she recommended that TMRS extend and renew the Agreement for another 3 years, with the option to renew for an additional 1 year.
  • Motion made to renew and extend Mr. Klausner’s contract.  Motion passed.  

Agenda Item #6 – Report on Audit Committee Meeting

  • TMRS Director of Internal Audit Kristyn Scoggins reported to the Board that the Audit Committee received both the Audit of the City Contributions Portal Report as well as the Confidential Annual Security Assessment Presentation and Report at its last Audit Committee meeting on September 11, 2025.  Both reports were positive with no issues.
  • Audit Committee Chair Bob Scott applauded the reports and the level of security at TMRS.  Mr. Scott also supports hiring a 3rd party consultant to look at investments to give TMRS staff areas to focus on going forward.       

Agenda Item #7 – Report on Budget and Compensation Committee Meeting

  • TMRS Director of Accounting Cindy Demers reported to the Board that the Budget and Compensation Committee met on September 23, 2025 and discussed the following 3 items:  
  1. Consider and act on adoption of Minutes from the September 12, 2024, Budget and Compensation Committee Meeting
  2. Review and discuss increasing the TMRS Employee Contribution Rate to 8%
  3. Review and discuss the Proposed 2026 TMRS Operating and Capital Budgets
  • TMRS Board Member Tommy Gonzalez asked that all Board Members be given the opportunity to give input to the Proposed 2026 TMRS Budgets at some point in the future before final adoption.       

Agenda Item #8 – Discuss 2026 Proposed Operating and Capital Budgets

  • TMRS Director of Accounting Cindy Demers gave an overview of the Proposed 2026 DRAFT Operating and Capital Budgets. 
  • Notable takeaways:
  1. Total 2026 Proposed Operating Budget is $49,450,00, which reflects an increase of $7.2 million, or 17%, from the 2025 Total Operating Budget.
  2. Total 2026 Proposed Capital Budget is $1.1 million for 4 projects primarily associated with technology enhancements and office improvements that meet capitalization thresholds.
  3. Personnel Services is the largest budget category representing 62% of the 2026 Operating Budget, and reflects an increase of $4.2 million, or 16%, from 2025.  Almost all of the increase is attributable to 2 items:  1.) the addition of 13 additional staff members, and 2.) maintaining the merit program and discretionary bonus pool.  Also contributing to the increase is the TMRS employee contribution rate increasing to 8% effective in January.  It should be noted that several of the 13 new positions added were vacant positions already approved in previous year’s budgets.
  4. Professional Services increased $1.2 million, or 18%.  This increase is primarily for enhancing security and fraud prevention, implementing artificial intelligence (AI) initiatives, process improvements, organizational development and external legal services.
  5. Not all staff requests were included in the Proposed Budget and in addition, staff were requested to submit potential reductions.
  • This agenda item is not an action item.  Final 2026 Operating and Capital Budgets will be presented to the TMRS Board in December for final approval.

Agenda Item #9 – Consider and Act on Amendments to the Actuarial Funding Policy

  • TMRS Director of Plan Design & Funding Leslee Hardy advised the Board about the key elements of a funding policy include:  a.) a description of the actuarial cost method, b.) an asset smoothing method, and c.) amortization methods and actuarial assumption processes.
  • With the passage of HB 3161 in the 89th Legislature, an 8% Employee Contribution Rate (ECR) option was added to TMRS’ current 5%, 6%, and 7% options.  The addition of an 8% ECR has highlighted a financing scenario in the funding policy that has always existed, but was never contemplated since most large TMRS cities were at the maximum benefit level and had no incentive to pursue this financing option.  Specifically, cities can increase (or maintain) benefits overall, but change from Repeating to Ad Hoc Updated Service Credits (USC) and/or COLA’s to reduce their contributions with the full intention of keeping these benefits as a permanent part of their package.
  • To maintain TMRS actuarial soundness, cities that  intend for USC and/or COLA’s to be a permanent part of their package need to adopt and finance them on a repeating basis as opposed to a city adopting the new 8% ECR while changing their COLA from Repeating to Ad Hoc to be able to afford the new 8% ECR with the full intention of adopting an Ad Hoc COLA annually.  Thus, the combination of increased benefits and decreased contributions does not comply with current actuarial industry standards or public plan financing principles. 
  • The proposed changes to the Actuarial Funding Policy to protect TMRS and its Members’ benefits and treat all cities the same while continuing to follow industry leading practices would have the following impacts to these groups:
  1. Cities Currently Providing Repeating Benefits:  Most are not impacted.  Still able to remove Repeating benefit assumption so long as they do not provide an Ad Hoc benefit for 3 years.
  2. Cities Currently Providing Ad Hoc Benefits, Annually or Consistently:  Will be transitioned into Repeating benefit assumption. 
  3. Cities That Truly Provide Ad Hoc Benefits (not more frequently than 1 every 4 years):  No impact. 
  4. Cities That Currently Don’t Have Repeating Benefits But Want To Achieve That Level:  Will have a mechanism to transition into the Repeating benefit costs.
  • Proposed policy changes, if approved, would become effective January 1, 2026 and only effective going forward.
  • Motion made to adopt the Actuarial Funding Policy changes.  Motion passed.

Agenda Item #10 – Board Education:  Credit Asset Class

  • TMRS Senior Director of Fixed Income Darren Schlissel presented the Credit asset class review.
  • The Credit asset class is composed of Public Credit and Private Credit.  The Public Credit objective is to diversify risk, provide income, and be a source of liquidity for the Trust Fund.  The Private Credit objective is to provide return enhancement relative to Public Credit. 
  • The 2025 asset allocation reduced the target Credit allocation from 25% to 21%.  The updated allocation retains targets for both Public and Private Credit.
  • Public Credit represents approximately 15.5% of the Trust Fund as of June 30, 2025 while Private Credit represents approximately 9.5% of the Trust Fund as of June 30, 2025.

Agenda Item #11 – Board Education:  Tactical Opportunities Asset Class

  • TMRS Managing Director Tim Sweeney presented the Tactical Opportunities asset class review.
  • The TMRS Tactical Opportunities portfolio includes 3 key strategies:
  1. Staff increased equity exposure in the portfolio over the past 3 years from 25% to 55% which has helped improved returns.
  2. These managers deploy a mixture of equities and fixed income to achieve a balanced return stream across changing market environments.
  3. This diverse source of return has a low correlation to global equity markets and insulates the portfolio during market dislocations.

Agenda Item #13 – Call for Future Agenda Items

  • None.

Hand-outs and Agenda for the TMRS Board Meeting are available on the following site: https://www.tmrs.com/governance_agendas_minutes.php

Please let me know if you have any questions or need clarification on any of the items on the agenda.

Next TMRS Board Meeting:  December 11, 2025.

Casey Srader