TMRS Highlights from the December 11, 2025 Board Meeting

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The TMRS Board met on Thursday, December 11th 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 including (4) newly-seated Board Members:  Bryan Langley, City Manager, City of Kyle; Jaime Reyes, Assistant Fire Chief, City of Plano; Isaac Tawil, City Manager, City of McAllen; and Pamela Williams, Director of Human Resources, City of Abilene.  This was the first official Board Meeting for these newly appointed Board Members.  Other Board Members present were Jim Parrish, Human Resources and Risk Management Director, City of McKinney, and Tommy Gonzalez, City Manager, City of Midland.

Also present and recognized for their previous time on the Board were outgoing Board Members Bob Scott, David Landis, and Bill Philibert (not present).    

Takeaways from the meeting include:

Agenda Item #1 – Consider and Act on Consent Agenda

  • Consent agenda consisted of approving the Minutes from the September 18, 2025 and October 2, 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, Receive Quarterly Financial Statements as of September 30, 2025, and Approve City Ordinances Adopted for Updated Service Credit and/or Annuity Increase. 
  • 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 with 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 TMRS was named a Top Workplace for 2025 by the Austin American-Stateman newspaper and TMRS also received the Public Pension Coordinating Council’s (PPCC) Public Pension Standards Award for 2025 for both Funding and Administration marking the 20th consecutive year receiving this award.
  • Finally, Ms. Munoz reported that this year’s 2025 City Training Conference was a huge success as well as TMRS’ presence at the Texas Municipal League (TML) Annual Conference recently held in Ft. Worth.     

Agenda Item #4 – Board Education:  A Trustee’s Fiduciary Responsibilities

  1. TMRS Fiduciary Counsel, Bob Klausner, gave a presentation on the roles, responsibilities, working parameters, etc. as a TMRS Board Member.  This was very timely given the (4) newly-seated Board Members.

Agenda Item #5 and #6 – Budget and Compensation Committee Update and Consider and Act on Proposed 2026 Operating and Capital Budgets

  • Budget and Compensation Committee Chair, Tommy Gonzalez, provided an update on the December 4, 2025 Budget and Compensation Committee meeting.
  • Items covered included:
    1. The 2026 Proposed Budget totals $44.7 million, which is a $2.5 million, or 5.9% increase over the 2025 Approved Budget.
    2. Of this 5.9% overall increase, 3.3% is attributable to the (8) filled positions not originally budgeted in 2025.
    3. The additional increase includes merit pay for all employees, required retirement contribution rate increase (going to 8%), required health insurance rate increase, required facilities rent increase, and city and member outreach decrease.  
  1. Motion was made to adopt the 2026 Operating and Capital Budget.  Motion passed.

Agenda Item #7 – Consider and Act on Resolution Transferring Monies from Interest Reserve Account to Expense Fund

  • TMRS Director of Accounting, Cindy Demers, reported to the Board that in December, staff recommends that the Board authorize a transfer from the Trust Fund’s Interest Reserve Account to the Expense Fund to cover TMRS’ budgeted expenses for the following year.  In addition, Board policy stipulates to allocate a 15% reserve of the next year’s budget to the Expense Fund.
  • The transfer is a book-entry only as all funds remain invested in the Trust Fund until the actual expenditures are made.
  • Motion made to transfer $44.1 million ($600,000 was left over from 2025 offsetting the total $44.7 million requirement) from the Interest Reserve Account to the Expense Fund to cover 2026 budgeted expenses.  Motion passed.  

Agenda Item #8 – Consider and Act on Supplemental Death Benefits Fund Assumptions

  • The elevated mortality associated with the global pandemic caused Supplemental Death Benefit (SDB) claims to increasingly exceed contributions which resulted in significant decreases in the SDB Fund assets.  As a result, the Board at that time approved a 100% load on 2023 active rates and a 10% load on 2023 retiree rates.
  • By the end of 2023, SDB claims has begun to decline while contributions had increased with the expectation for the trend to continue.  At that time, the Board approved as part of the 2023 Experience Study that the 100% load on active SDB rates be reduced to 50% and the 10% load on retiree rates be retained.  This assumption change was effective with the December 31, 2023 valuation which determined 2025 rates.
  • Due to the Board’s actions at that time, the assets have increased from $3.2 million in 2022 to an estimated $24.6 million for 2025.  Thus, the need to increase the SDB Fund assets at an additional rate no longer exists.
  • TMRS Director of Plan Design & Funding, Leslee Hardy, recommended that the Board remove the 50% load to the active SDB rates and the 10% load to the retiree SDB rates effective with the December 31, 2025 valuation.
  • Motion made to remove the increased loads, as recommended, altogether.  Motion passed.  

Agenda Item #9 – Consider and Act on Transfer from the General Reserves Account to the Interest Reserve Account

  • TMRS Director of Plan Design & Funding, Leslee Hardy, reported that as part of the December 31, 2021 interest credit recommendation, the Board at that time approved a $7.5 million transfer from the Interest Reserve Account to the General Reserves Account.  This transfer was made in accordance with the TMRS Act to cover any Supplemental Death Benefit (SDB) Fund deficiencies that may occur from the higher mortality rates associated with the global pandemic.
  • Fortunately, the SDB Fund assets were never depleted and the $7.5 million in the General Reserves Account remains fully intact.  As a result, the $7.5 million contingency reserve is no longer necessary and can be returned to the Interest Reserve Account.
  • Motion made to approve the transfer of $7.5 million from the General Reserves Account to the Interest Reserve Account effective as of December 31, 2025.  Motion passed.

Agenda Item #10 – Board Education:  Governance and Board Committees

  • Amy McDuffee, with Mosaic Governance Advisors, gave an overview presentation on the roles of Board Members as it pertains to governance and related Board committee matters.  This was very timely given the (4) newly-seated Board Members.
  • Part of the presentation included an in-depth discussion of current Board Committees:
    1. Audit Committee
    2. Budget and Compensation Committee
    3. Stakeholder Advisory Committee
  • There was consensus among the Board Members that in addition, some type of Investment Committee needs to be established as there seems to be a common desire from the Board to become more involved and interact more in investment matters. 

Agenda Item #11 – Consider and Act on 2026 Board Meeting Dates

  • The TMRS Act requires that the Board hold four (4) meetings annually. 
  • After some discussion, the Board decided to have four (4) regularly scheduled TMRS Board Meetings, plus a Retreat for 2026:
    1. February 18-20 (Retreat)
    2. March 26, June 25, September 24, and December 10 (Regular Board Meetings)
  • Motion made to accept the above dates.  Motion passed.

Agenda Item #12 – Consider and Act on Election of 2026 Board Officers

  • Motion was made to elect Jim Parish for the 2026 Chair position and Tommy Gonzalez as the 2026 Vice-Chair position.  Motion passed.

Agenda Item #13 – Consider and Act on Board Committees, Committee Charters, and 2026 Board Committee Appointments

  • There was additional discussion among the Board to create a new Investment Committee comprised of the entire Board with a stand-alone Chair and Vice-Chair.  Motion was made to create a new Investment Committee with Bryan Langley as Chair and Pamela Williams as Vice-Chair.
  • Motion was made to appoint the following to the existing 2026 Board Committees:
  1. Budget and Compensation Committee:  There was additional discussion and a motion to have this Committee comprised of the entire Board with Chair – Isaac Tawil, Vice-Chair – Jaime Reyes
  2. Audit Committee:  There was additional discussion and a motion to have a 3rd seat added to this Committee with Chair – Tommy Gonzalez, Vice-Chair – Bryan Langley, 3rd Seat – Isaac Tawil
  3. Stakeholder Advisory Committee:  There was additional discussion and a motion to have a 3rd seat added to the Committee with Chair – Jaime Reyes, Vice-Chair – Pamela Williams, 3rd Seat – Jim Parrish
  • All motions passed.

Agenda Item #14 – Receive Update on Internal Audit Matters

  • TMRS Director of Internal Audit, Kristyn Scoggins, gave a brief overview of the role and the relationship of Internal Audit and the Audit Committee as it relates to communicating matters in accordance with Internal Audit Standards.  Ms. Scoggins also went over a few internal happenings as well at the 2026 Internal Audit Department Budget.         

Agenda Item #15 – General Investment Consultant Quarterly Report

  • For the one-year period ended September 30, 2025, the Total Trust Fund returned 10.95%, net of fees, exceeding the Trust Fund Benchmark by 0.58% and ranked in the 2nd quartile among other Public Defined Benefit Plans greater than $10 billion in assets.  Global Equity, Private Equity, Credit, Tactical Opportunities, and Real Assets exceeded their respective benchmarks, while Cash trailed.  
  • For the five-year period ended September 30, 2025, the Total Trust Fund returned 8.96% exceeding the Trust Fund Benchmark by 1.95% and ranked in the 2nd quartile among other Public Defined Benefit Plans greater than $10 billion in assets.
  • Actual asset class allocations are in compliance with Investment Policy ranges as of September 30, 2025.
  • Interestingly, the (3) biggest drivers of the current economy are:  AI, Tariffs, and Rate & Monetary Policies.  It was discussed whether or not investments in AI are sustainable going forward.  While AI has had strong performance so far and earnings continue to increase, it’s not yet known whether AI would be a sustainable investment going forward.
  • As of the end of the third quarter (2025), the Total Fund market value was $47.3 billion. 

Agenda Item #16 – Investment Reports

  • TMRS CIO Yup Kim outlined key 2025 investments.  As of Q3 2025, $4.18 billion of new private market investments were approved across (22) funds, (27) co-investments, and (7) vehicles dedicated to co-investments.  Additionally, (4) investments in public security vehicles totaling $3.5 billion were approved.  All Trust Fund asset class allocations are within Board-approved ranges. 
  • The targeted Private Market commitment level for 2026 is $4.75 billion while $1.75 billion is targeted for Private Equity; $2.0 billion for Private Credit; and $1.0 billion for Real Assets.

Agenda Item #17 – Review Investment Policy Statement (IPS) and Consider and Act on Possible Amendments to the IPS

  • The IPS states that the Board will review the IPS annually. 
  • One modest update was recommended to the IPS:  a title change from Chief Financial Officer (CFO) to Chief Compliance Officer (CCO), to be effective January 1, 2026. 
  • Motion made to accept the proposed modest change to the IPS to be effective January 1, 2026.  Motion passed.

Agenda Item #18 – Board Education:  Private Equity Annual Review

  • TMRS Managing Director, Private Equity, Amol Deshpande, presented the annual Private Equity asset class review. 
  • Private Equity is the area of greatest growth within the Trust Fund with a 20% allocation target.
  • Activity year-to-date is approximately on pace with target; (9) managers and (15) co-investments approved, totaling approximately $1.3 billion invested.
  • Co-investing – investing directly into a company alongside a private equity fund manager – is a focus for TMRS going forward.  The lack of management fees and carried interest make this a very appealing investment strategy going forward.    

Agenda Item #19 – Board Education:  Real Assets Annual Review

  • TMRS Managing Director, Real Assets, John Ritter, presented the annual Real Assets asset class review. 
  • Real Assets target allocation of the Total Fund is 18%.  Within the Real Assets asset class, Real Estate Strategies comprise 10.6% of Total Plan; Infrastructure Strategies comprise 6.3% of Total Plan; and Nature Resource Strategies comprise 1.9% of Total Plan.
  • TMRS Board Member Tommy Gonzalez asked TMRS staff for additional information on the volatility of investments in office high-rises and data centers. 

Agenda Item #21 – 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/board-of-trustees

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

Next TMRS Board Meeting:  March 26, 2026.   

Casey Srader