Lewisburg council reviews $57,061 city liability for TCRS prior-service buybacks and votes set for next meeting

Lewisburg City officials discussed whether the city should fund a $57,061 employer contribution to allow up to 26 employees to buy back prior service under the Tennessee Consolidated Retirement System (TCRS), and agreed to consider formal votes at the next regular meeting.

City finance staff told the council the $57,061 is a fixed employer liability that must be remitted to TCRS before any employee can apply to buy back the prior-service time. "The city's liability would be 57—well, it's actually $57,061—that would have to be remitted to the state, TCRS, as our contribution for that time to be bought back before any one employee can apply to buy back their service. That's a solid number," said Debbie Montgomery, a city staff member.

The matter matters to employees who were in a waiting period when Lewisburg froze its prior 401(a) plan and later enrolled in TCRS. Montgomery said 26 employees fall into that group and that the employer contribution is the same whether one employee or all 26 later apply. She said the council would need to amend the budget and use fund balance to pay the amount; approving the city payment would also raise the city contribution rate from 6.9% to roughly 7%.

Council members pressed for more detail on individual employee costs and options. "I hate to pay $57,000 and two people. Why?" said Councilman Michael, asking for a rough estimate of what an individual buyback might cost. Montgomery replied that TCRS does not calculate an individual's buyback amount until the employee applies and that TCRS runs an actuarial calculation for each applicant; she said factors include each employee's earnings during the affected period and interest assumptions built into the plan.

Montgomery also relayed TCRS staff guidance that some municipalities choose to study the option and then decline to fund it after seeing individual costs. "Mr. Armistead at TCRS…said a lot of cities choose to do their due diligence and find out it's quite a bit of money and they choose not to move forward," she said.

Council discussion covered alternatives. Staff recommended offering a TCRS 401(k) vehicle for employees as a separate, employee-funded option that would cost the city nothing. Montgomery noted employees could use payroll deferrals to build retirement savings—she said the 401(k) vehicle could accept up to $23,500 per year and could help employees offset reduced defined-benefit accruals. Montgomery recommended the council not fund the $57,061 outright and instead pursue the employee-only 401(k) option; other council members said they were open to doing both.

No formal roll call vote to fund the $57,061 occurred at the work session. Montgomery said she expected to receive a formal resolution or paperwork from James Armistead at TCRS in time for the next regular meeting; if not, the item could be delayed to March. Council members asked staff to place one or two separate roll-call items on the next meeting agenda: one on whether the city will fund the $57,061 employer contribution and one resolution to allow employees to participate in the TCRS 401(k) vehicle.

If the council approves payment, Montgomery said the city would remit the employer portion first and employees would then apply to TCRS to learn their individual buyback cost; if employees ultimately decline to apply the employer payment would remain an employer contribution to TCRS. Montgomery said the employer payment would come from fund balance and would require a budget amendment.

Next steps: staff will request the official resolution language from TCRS and put both items on the next meeting agenda for roll-call votes. Council members asked staff to return with any additional budget committee guidance and to note that an employee-only 401(k) requires a separate council resolution to enroll the city in that TCRS-administered vehicle.