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Austin staff report progress on pension reforms; OPEB liability now about $1.3 billion
Summary
City financial staff told the Audit & Finance Committee that reforms and recent legislation moved the three city pension systems toward actuarially determined contributions and improved amortization periods, and that the city's other post‑employment benefits (OPEB) actuarial liability is roughly $1.3 billion.
City financial staff briefed the Audit and Finance Committee on Dec. 3 about recent reforms to Austin’s three contributory defined‑benefit retirement systems and the city’s other post‑employment benefits (OPEB).
Deputy CFO Diana Thomas and CFO Ed Bagnino summarized legislative and administrative changes that shifted systems to actuarially determined contributions, established lower benefit tiers for new hires and altered board governance and benefit‑enhancement authority. Those changes have reduced projected amortization periods for legacy liabilities: the Austin Police Retirement System amortization moved to about 27.4 years (below the Texas Pension Review Board guideline of 30 years), other systems are on glide paths around 29–30 years, and Fitch Ratings restored the city’s bond rating after the reforms.
Thomas reported plan membership as approximately 24,000 for the employees’ retirement system (COERS), a little more than 3,000 for the police system (APRS), and a little more than 2,000 for the fire system. Funding ratios cited in the presentation ranged from roughly 58% (police) to about 77% (fire) and staff noted the city’s pension contributions rose from roughly $185 million in 2022 to about $283 million in 2026, largely to address legacy liabilities.
On OPEB, staff reported an actuarial liability of about $1.3 billion and said the city is considering options including creating a prefunded trust and exploring lower benefit tiers for new hires. Staff also noted a substantial reduction in the actuarial OPEB liability between 2023 and 2024 driven in part by changes requiring some Medicare‑eligible retirees to participate in Medicare Advantage plans.
Members asked where the contribution increases appear in the budget; staff said police and fire contributions are recorded in those departmental budgets while COERS contributions are spread across multiple city funds (general fund, Austin Energy, Austin Water, Aviation) with separate pension line items in personnel budgets. A committee member asked whether pending federal Social Security changes might affect the city; staff said they would follow up once the bill language is reviewed.
The briefing was informational; the committee did not adopt policy changes during the meeting.
