TMRS Advisory Committee on Benefit Design September 16

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The TMRS Advisory Committee on Benefit Design Meeting finally took place via Zoom on Wednesday, September 16.

To refresh everyone:

  • The Advisory Committee on Benefit Design is comprised of the following members and representing organizations:
  1. Paul Parker, Retiree (Individual Class Representative)
  2. Barry Sullivan, City Manager, City of Gainesville (Individual Class Representative)
  3. Julie Masters, Mayor, City of Dickinson (Individual Class Representative )
  4. Bonita Hall, Texas Municipal Human Resources Association (Group Class Representative )
  5. Paulette Hartman, Texas City Management Association (Group Class Representative)
  6. Mitch Landry, Texas Municipal Police Association (Group Class Representative )
  7. David Riggs, Texas State Association of Fire Fighters (Group Class Representative )
  8. J. Rocha, Texas Municipal League (Group Class Representative )
  9. Scott Leeton, Combined Law Enforcement Association of Texas (Group Class Representative )
  10. Casey Srader, GFOAT (Group Class Representative )
  • The Advisory Committee chair is TMRS Board Member David Landis, and the vice chair is TMRS Board Member Jesus Garza.
  • The Committee is responsible for 1) communicating with the Board through updates and presentations; 2) providing input to the Board on the advantages and disadvantages of benefit design issues affecting TMRS cities, members, and retirees; and 3) maintaining communication with statewide professional organizations, including employer and employee groups, and member cities.

PURPOSE OF MEETING:

The meeting’s purpose was to discuss and give input for two potential benefit design proposals for the upcoming 87th Texas Legislative Session.  TMRS staff person Dan Wattles gave a brief overview of the upcoming legislative climate.  Mr. Wattles warned that some of the unique factors facing the 2021 session include:  the current Covid-19 pandemic, the projected state budget deficit, as well as re-districting – which occurs every ten years.

With that being said, the following two legislative proposals that involve potential benefit design changes were discussed:

  1. Cost of Living Adjustments (COLAs): TMRS staff recommends retaining the 30 percent, 50 percent, and 70 percent CPI-based structure for both repeating and ad-hoc COLAs.  Also, make the retroactive “catch-up” feature optional when increasing or decreasing the amount of a COLA benefit.  Overall observations included an unknown impact of fiscal pressures and other state/local issues on cities.  For a city that has never adopted a COLA or has turned it off, the catch-up cost can be prohibitive.  Also observed was limited interest from cities for change.
  2. Return to Work: TMRS staff proposed that a member could retire and return to work in the same city and continue to receive their annuity if they met certain conditions.  A “bona fide” termination (no pre-arranged agreement to return to work) would be required.  A break in service of at least one full year would be required.  If a member did not meet these conditions, their annuity would be suspended and suspended payments would be forfeited.  Also, it would grandfather eight-year gap retirees who returned to work in the same city.  Finally, it would allow retirees who have already returned to work at the same city a one-year break to have their annuities unsuspended.  Overall observations included a one-year break in service that can be a sign of a “bona fide” termination and would not materially change retirement patterns.  Also, reduced inequity between returning to work at another city versus the city of last employment.  Finally, the proposed transition for both one-year and eight-year break in service retirees was fair and reasonable.

TMRS staff will take all input and comments from the Advisory Committee and present a summary to the TMRS Board.  The purpose of the Advisory Committee is to provide input only.  The Board has the ultimate authority to decide whether or not to pursue one of both of the proposals and draft legislation for the 87th Texas Legislative Session.

Next TMRS Board Meeting:  October 22-23, 2020.  I do plan on attending this meeting, either virtual or in person.

Casey Srader
TMRS Board Representative