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Council told TMRS non‑retroactive COLA would slightly lower pension liability; finance committee recommends keeping current calculation
Summary
Staff and TMRS presented a statutory non‑retroactive COLA option that would calculate annual increases from the most recent 12‑month CPI window rather than a cumulative look‑back to retirement dates; finance committee recommended no change after retiree and employee feedback, though staff estimated recurring savings of roughly $189,000 if council changed the calculation and applied it to unfunded liability.
Human resources and TMRS staff briefed council on a statutory non‑retroactive cost‑of‑living adjustment (COLA) option and the financial trade‑offs for the city’s TMRS retirement plan.
Cheryl Marthaljani (director of human resources) and Anthony Mills (TMRS) described the difference between Burleson’s current repeating retroactive COLA (70% of CPI with a cumulative look‑back to each retiree’s original retirement date) and the non‑retroactive option authorized by statute in 2023. Under the non‑retroactive approach, the COLA is calculated only from the 12 months prior to the COLA effective date rather than cumulatively back to each retiree’s retirement date, which modestly reduces the actuarial present value of future cost increases.
TMRS showed that, because Burleson has granted COLAs for decades, the present difference is modest; however, the non‑retroactive option would lower the city’s unfunded actuarial accrued liability by roughly $1.6M in a hypothetical comparison and improve the funded ratio slightly (staff numbers showed an illustrative shift from 82.3% to 83.1% under the modeled scenario). Staff estimated recurring annual savings of about $189,000 if the city adopted the non‑retroactive calculation and recommended (per the finance committee) that any savings be directed to the city’s unfunded actuarial liability if council elected to change.
Staff also reported outreach: retirees and employee groups recommended keeping the current retroactive calculation as the more valuable benefit for long‑term retirees. After discussion, the finance committee recommended making no change to the current calculation; staff presented that recommendation to council for consideration.
Next steps: council may adopt an ordinance to change the calculation if it chooses, but staff noted a statutory sunset window (December 31) for adopting the non‑retroactive option to take effect on January 1 of the following year; the council did not adopt an ordinance during this session and directed staff to note the finance committee recommendation.
