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Portland council approves first reading of ordinance to change TMRS cost‑of‑living formula
Summary
Portland City Council approved first reading of an ordinance to adopt TMRS' repeating non‑retroactive COLA method, which staff said would reduce the city's unfunded liability by about $430,000 and yield roughly $65,000 in next‑year contribution savings; second reading is scheduled for December.
Portland City Council on Monday approved the first reading of an ordinance to change how the city calculates cost‑of‑living adjustments (COLAs) for retirees in the Texas Municipal Retirement System (TMRS).
Sarah Royer, Portland's director of administrative services, told the council that the state amended the TMRS law in May 2023 to allow municipalities to adopt a repeating non‑retroactive COLA that bases annual adjustments on the prior year’s Consumer Price Index rather than a cumulative formula tied to a retiree’s retirement date. "The repeating non‑retroactive adjustment is based only on the CPI change of the previous year," Royer said, and she said the change would "reduce the city's unfunded liability by about $430,000" and could produce approximately $65,000 in savings for the next fiscal year's budget.
The ordinance presented for first reading (Ordinance No. 23‑04) would adopt the repeating non‑retroactive COLA option the city has already decided to apply at 70 percent of the prior year’s CPI (the percentage Portland previously adopted). Royer said the change simplifies administration and makes COLAs uniform across retirees: "Every retiree ... receives the exact same COLA," she said, noting the change would be "a compounding savings for the city over time." She also said there are no changes to the city's current updated service credit provisions, which must be included in the ordinance.
Council members asked whether the change could ever produce a lower payout for retirees if CPI behaved differently over long periods. Royer responded that, to her understanding, the city would not reduce a retiree's payout below what the retiree received the previous year and that staff would verify legal and actuarial details before the second reading. "If there's any conflicting evidence to that, we will bring that back to you before second reading," she said.
Councilman Moore moved to adopt the ordinance on first reading; Councilman Albrecht seconded. The motion passed and the council's clerk read the ordinance caption, which cites TMRS and Section 853.404(f) and (f‑1). Mayor Scro said the council will take up a second reading at its December meeting.
The ordinance changes how the city calculates TMRS COLAs and requires the city to file the ordinance with TMRS by the December preceding the January 1 effective date for whichever year the city chooses to implement the non‑retroactive option. The change was presented as a means to manage long‑term actuarial liability while keeping annual adjustments in place for retirees.
The council did not finalize a date for implementation during the first reading; staff will return with confirmed actuarial and legal details at the second reading.
