Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Pensions Tmrs topic
No spam. Unsubscribe anytime.
Council hears TMRS non‑retroactive COLA briefing; staff cited $180,000 budget savings
Summary
Council received an explanation of TMRS' new non‑retroactive COLA option and how switching would lower the city's contribution rate (about 74 basis points), produce an estimated savings of roughly $180,000 and slightly reduce future cost-of‑living increases for retirees compared with the retroactive formula.
City staff and a TMRS consultant briefed the council on Oct. 15 about a proposed change to the city’s retirement cost‑of‑living adjustment (COLA) calculation under the Texas Municipal Retirement System (TMRS).
Colin Davidson, a TMRS consultant, explained that Victoria currently uses a retroactive COLA calculation that applies inflation adjustments differently depending on each retiree’s retirement date. The newer option — authorized by 2023 state legislation — uses a non‑retroactive approach that applies the chosen percentage (30%, 50% or 70% of CPI‑U) to the most recent year rather than recalculating benefits across an entire retirement period.
Davidson said the non‑retroactive option is simpler, less costly to the city and preserves the city’s existing 70% COLA level in a non‑retroactive form. Staff said the change was budgeted and would produce about $180,000 in savings for fiscal 2025 and reduce the city’s TMRS contribution rate by about 0.74 percentage points. Davidson illustrated retiree impacts with examples showing modest dollar differences for existing retirees (the largest affected retiree example in his presentation showed roughly a $13 difference in monthly COLA increase when comparing the two calculations).
Council members pressed staff for worst‑case scenarios tied to higher inflation and asked how the change would affect current retirees who rely on monthly checks. Davidson said the difference per year depends on inflation and used a 2.5% inflation assumption to estimate a 0.66 percentage‑point cumulative difference over a 10‑year horizon for illustrative retiree examples. He reiterated that retiree monthly benefits already earned will not be reduced; the change affects the annual COLA calculation going forward.
Staff said the budget adopted for fiscal 2025 already incorporated the non‑retroactive COLA assumption and that the next step would be drafting an ordinance for council consideration.
