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Red Oak council approves agreement to seek $14.5 million lump-sum payment to TMRS
Summary
The Red Oak City Council authorized an agreement enabling a $14.5 million lump-sum payment to the Texas Municipal Retirement System so the city can issue bonds to fund recent pension plan changes; staff said the move will reduce the city's long-term contribution rate and requires TMRS board approval on June 25.
The Red Oak City Council voted to adopt Resolution 26-027R to authorize city staff to finalize an agreement that would allow a $14.5 million lump-sum payment to the Texas Municipal Retirement System (TMRS) to fund recent plan changes, city staff said.
City staff member Mr. McRobert told the council the city’s TMRS plan changes took effect Jan. 1, 2026, and raised the city contribution rate from 6.98% to 19.5%, with an actuarial valuation projecting a rise to about 20.61% on Jan. 1, 2027. "The total lump sum would be 14.5 million," Mr. McRobert said, and staff presented the lump sum as a financing step that, if completed, would reduce the city’s maintenance and operations contribution rate to below 13%.
The item before the council was an initial agreement so TMRS staff and trustees can evaluate and approve the transaction; Mr. McRobert said TMRS has a board meeting scheduled for June 25 and the documents must be delivered to TMRS for their consideration. He described the bond plan as the city’s mechanism to fund the unfunded actuarial liability rather than paying the increased contributions from operations immediately.
The mayor called for a motion to adopt the resolution; council members moved, seconded and the mayor announced the motion passed with five affirmative votes. The council’s action tonight authorizes sending the agreement to TMRS for its board approval; TMRS approval is required before the city may issue bonds to generate the lump sum.
If both the council and TMRS approve the arrangement, the city would proceed to issue debt to produce the lump-sum payment, and staff indicated the financing is intended to lower the future contribution rate reflected in the city’s maintenance and operations tax-rate calculations. No additional details about bond terms, schedule for issuance, or costs beyond the lump sum were provided during the meeting.
