By: Casey Srader, TMRS Advisory Board Representative
The TMRS Board met on Thursday, December 3, at the TMRS building in Austin and was open to the public. I was able to attend in person. Some of the TMRS Board members were present at the meeting, while others participated via Zoom.
TMRS Executive Director David Wescoe reported on some internal happenings, retirements, staff updates, etc. He also reported that his internal Action Plan 2020 is coming to a close, and all items have been met and accomplished. He also reported that the Pension Administration System Modernization (PasMod) project is on track, all 2020 items have been completed, and currently running under budget by 30%. Finally, Mr. Wescoe emphasized his desire to make any type of member correspondence as clear and understandable as possible going forward. Transparency and clarity are goals of his as it relates to member correspondence.
One of the first orders of business was to nominate and elect the TMRS Board chair and vice chair for 2021. David Landis, city manager of the City of Perryton, will serve as chair, and Jesus Garza, city manager of the City of Victoria, will serve as the vice chair. Along with getting these positions in place, Board committee appointments for 2021 were also decided:
Budget and Compensation Committee:
Chair Alani Analisi (City of Pharr assistant city manager)
Vice Chair Johnny Huizar (City of Pleasanton city manager)
Audit Committee (changed name from Internal Audit Committee to Audit Committee)
Chair Bob Scott (City of Carrollton assistant city manager and chief financial officer)
Vice Chair Johnny Huizar
Advisory Committee on Benefit Design
Chair Jesus Garza (City of Victoria city manager)
Vice Chair Bill Philibert (City of Deer Park director of human resources and risk management).
Finally, appointments to the Advisory Committee on Benefit Design were recommended by TMRS staff and approved by the Board. I will continue to serve on this Committee representing GFOAT with Keith Dagen as our alternate.
TMRS legal staff led a discussion on the TMRS Governance Manual updates as it relates to the Education Policy, Consultant Selection Policy, and Communications Policy. This discussion item was a continuation of the on-going TMRS Strategic Plan initiative. Additional discussions will be held at the February 2020 meeting before taking any final action on any changes, additions, or updates.
TMRS staff reported back to the Board on final recommendations and findings after input from the Group Class Advisory Committee members regarding the legislative proposals of on return-to-work and cost of living adjustments (COLAs). Staff reported that all Group Class Advisory Committee members voiced their support for the return-to-work proposal and TMRS staff recommends moving forward with this proposal. The next step will be to find a legislative sponsor. As a refresher, the return-to-work proposal stipulates that a member could retire and return to work in the same city and continue to receive their annuity if the member 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 instead of the current eight-year requirement. If a member did not meet these conditions, the member’s annuity would be suspended and suspended payments forfeited. Also, it would grandfather the eight-year gap for retirees who returned to work in the same city. It would allow retirees who have already returned to work at the same city a one-year break to have annuities unsuspended. Overall observations included a one-year break in service can be a sign of a “bona fide” termination and would not materially change retirement patterns.
TMRS staff then reported to the Board that there was not unanimous support for the COLA proposal from the Group Class Advisory Committee members. Two Committee members were not in favor of moving forward with this proposal. Therefore, without unanimous support, TMRS staff did not feel comfortable advancing this proposal. The COLA proposal would have made the retroactive “catch-up” feature optional so that cities could adopt it on an annually re-occuring or ad-hoc basis.
The proposed 2021 TMRS Operating Budget was approved by the Board. The 2021 Operating Budget has an overall 5 percent decrease when compared to the 2020 Operating Budget. There will be a net decrease of two fulltime employees going from a total of 128 to 126. An update on the Pension Administration System Modernization (PasMod) project was also given. A total of $10.5 million was authorized for the project. In 2021, $1.9 million is allocated for the continuation of this project. At this point, total project costs have been reduced to $7.7 million representing a savings of approximately $2.8 million. The total 2021 Operating Budget was approved at $32,486,989. Finally, the Board approved a book entry only to transfer $29.0 million from the Interest Reserve Account to fund the 2021 Operating Budget. $5.4 million in excess reserves will also be used to meet the total Operating Budget requirement.
The Board engaged in discussions on multiple topics, including investment beliefs and various amendments to the Investment Policy Statement, establishing a new Investment Fee Policy, and approving a private equity manager recommendation. TMRS Investment staff gave the annual fixed income investment review. TMRS has made substantial progress towards its strategic fixed income objectives. Both the core and the non-core fixed income portfolios have outperformed their benchmarks over the three and five-year periods.
Finally, it was reported that for the quarter completed September 30, 2020, overall fund returns were 4.62 percent, net of fees. Total fund value at the end of the 3rd Quarter was $31,484,555,880.
The next TMRS Board meeting is set for February 25, 2021, at the TMRS headquarters in Austin.