title
Consider/Discuss/Act on an Ordinance Removing the Statutory Maximum Contribution Rate Limit Regarding TMRS Benefits
Summary
MEETING DATE: November 4, 2014
DEPARTMENT: City Manager
Human Resources
CONTACT: Tom Muehlenbeck, Interim City Manager
Kathryn Usrey, Interim Human Resources Director
RECOMMENDED CITY COUNCIL ACTION: Approve Ordinance
ITEM SUMMARY:
* According to TMRS, the City of McKinney joined TMRS in 1948 with a deposit rate set at 5%.
* Over the years, the Council has adopted changes to this plan taking vesting from 20 years to 5 years; moving employee contributions from 5% to 7%; moving the City Match from 1:1 to 2:1; providing Updated Service Credits and additional benefits to retirees.
* Up until recent years, the contribution rate the City paid did not pre-fund, benefits above the base system, thus creating an unfunded liability for the City.
* Over the past eight years, the TMRS Board has established and implemented a plan for providing cities a mechanism to fully fund the benefits they have adopted.
* When TMRS was created by the Legislature, the law included a statutory cap on the rate for cities. In 2012, we raised the cap to 15.5%. Now, in order for us to fully fund the benefits we have adopted, we must remove the cap. Our fully funded rate will be 15.82% or we can use the phase in rate for next year which would be 15.68%.
* Because we are a growing city and our payroll is growing at a rate higher than the TMRS assumptions, it is not expected that we will have a major spike in our contribution rate; however, the rate could go higher than it is today.
Alternative:
* If the Council chooses to not remove the cap, we will need to make some type of benefit reduction. We have looked at several options but feel that the option with the least impact is the transfer credit. The transfer credit provides an additional benefit to employees who come to McKinney from another TMRS city where there was a ...
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