Council advances first reading to cut retirement eligibility and adopt non-retroactive COLA under TMRS

The Bastrop City Council on Oct. 1 approved the first reading of an ordinance to amend the city’s TMRS (Texas Municipal Retirement System) settings.

Finance/staff (Miss McElwaney) told the council the ordinance contains four components: changing retirement eligibility from 25 to 20 years; adopting an annually accruing non-retroactive cost-of-living adjustment (COLA) for retirees and beneficiaries; reauthorizing annual updated service credits; and removing the statutory maximum contribution limit so the city can adopt the actuarially determined contribution rate. She said the change to non-retroactive COLA is more equitable and less costly than the current retroactive formula.

Explaining estimated fiscal impacts, staff noted the city's statutory maximum contribution rate was about 13.5% and that with the proposed changes the actuarially determined rate would be roughly 14.4%; removing the stat max was required to allow the higher actuarial rate. Miss McElwaney said the effective date was changed on the dais from Oct. 1 to Nov. 1 because the ordinance requires two readings.

Councilmembers asked clarifying questions about the meaning of removing the stat max and the risk to the city. Staff explained the practical effect is that the city will continue to budget and manage contributions annually and that a well-managed plan should not require sudden spikes in contribution rates. Council moved and passed the first reading unanimously; the ordinance will return for a second reading as required by law.