Agenda

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Item # 5.d.

City Council

Meeting Date:	09/12/2023
Department:	Finance
Milestones:	Promote and protect the Addison Way

AGENDA CAPTION:

Present, discuss, and consider action on an Ordinance regarding the Town of Addison's Texas Municipal Retirement System benefits, adopting a non-retroactive repeating Cost of Living Adjustment (COLA) for retirees and their beneficiaries and authorizing Annually Accruing Update Service Credits and Transfer Updated Service Credits.

BACKGROUND:

During the FY2023 budget process, the City Council adopted a repeating 30% COLA for retirees effective January 1, 2023. The Town previously offered a 70% COLA, but has not done so since 2015. At the 88th Texas Legislative Session in 2023, House Bill 2464 (HB 2464) added subsections to the TMRS Act to add an option for a non-retroactive repeating COLA. The new option applies COLAs based on the previous 12-month change in the Consumer Price Index for All Urban Consumers. Previously, the TMRS Act only allowed retroactive COLAs from the retiree's original retirement date.

Since the Town offered a 70% COLA until 2015, the retroactive method would leave 50 current retirees (that retired prior to 2015) out of receiving an increase in pension benefits for 2024. Under the non-retroactive method, all retirees receive a pension benefit increase each year. In total, Town retirees will receive $723 more in pension benefits per month than under the non-retroactive plan.

Staff presented the non-retroactive option to Council during the August 22nd Council meeting and received direction to move forward. The non-retroactive plan reduces the Town's contribution rate, creating $100,000 in General Fund savings from the original proposed budget.

The Town will not have to adopt an Ordinance each year to re-authorize the calculation of these benefits and the COLAs will remain in effect for future years until such time as they are discontinued by an Ordinance adopted by the City Council. After adoption, this benefit will go into effect January 1, 2024, and is included in the Fiscal Year 2024 Budget.

RECOMMENDATION:

Administration recommends approval.

Attachments
Ordinance - TMRS