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Waco council hears options to boost retiree COLAs as TMRS deadline nears
Summary
City staff told the council the city's TMRS plan is 86.83% funded and presented five COLA options; two enhanced (50% and 70% non‑retroactive) options expire Dec. 31, 2025. Staff cautioned the council that choosing those options would raise recurring employer costs by millions annually and asked for time to model budget impacts.
Colin Booth presentation and a subsequent discussion about pension benefits dominated part of the Nov. 18 Waco City Council work session when staff outlined possible cost-of-living adjustments for retirees under the Texas Municipal Retirement System (TMRS).
Assistant City Manager and Chief Financial Officer Blue Khoslich told the council the city's TMRS plan is about 86.83% funded and that TMRS presented five plan options for adjusting retiree COLAs. Two options — a 50% and a 70% non‑retroactive COLA — were highlighted as having a statutory sunset of Dec. 31, 2025, meaning the council would need to adopt those specific options before that deadline if it chooses them.
"Our pension plan is pretty well funded at 86.83%," Khoslich said. "If we were to adopt one of the [50% or 70%] options, that initial city contribution could adjust by 3.1 up to that 10.9, almost $11,000,000 initially, and then that level of contribution would carry forward and likely increase every single year after this." (Blue Khoslich, Assistant City Manager/CFO)
Why it matters: staff emphasized that the enhanced options are not one‑time payments but change the city's recurring contribution. Khoslich said roughly 86% of any increased employer contribution would be borne by the general fund — competing with public safety, streets, parks and other services — and flagged the need to weigh long‑term fiscal commitments.
Council members pressed staff for clarity on how the cost is calculated. Khoslich explained that the "prior service cost rate" — which reflects liabilities accrued before a plan change — is the component most affected by benefit enhancements and will show the largest short‑term change.
"That prior service cost rate is the one most impacted by any plan benefit change," Khoslich said. "Everything leading up to that point, everything you would have had to pay, goes into the prior service cost rate." (Blue Khoslich)
Council responses and next steps: several council members, including Darius Ewing, said they did not want to rush a decision before the budget process. Council members asked staff to return with modeling that shows the fiscal tradeoffs — specifically what programs or projects would be reduced to cover higher employer contributions — before taking action on any option that expires at year-end.
Mayor Jim Holmes said the council values employees but noted these are long‑term commitments for future budgets. "These are decisions we're making for future budgets and future councils," he said, urging careful deliberation.
Staff noted the city currently keeps a 30% non‑retroactive COLA in place (adopted in 2023) and that other options will remain available after Dec. 31, 2025. They committed to preparing more detailed budget impacts for council review during the FY26 budget process.
What was not decided: the work session was informational; staff presented options and preliminary cost estimates but no formal motion or vote occurred.
The council is expected to receive follow‑up fiscal modeling and options as part of next year's budget process, with any time‑sensitive decisions related to the expiring TMRS options requiring separate action.
