HomeMy WebLinkAboutOrdinance No. 2023-36 ORDINANCE NO. 2023-36
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
FRIENDSWOOD, TEXAS, AMENDING THE CITY OF FRIENDSWOOD'S
TEXAS MUNICIPAL RETIREMENT SYSTEM BENEFITS BY (I)ADOPTING
NON-RETROACTIVE REPEATING COLAS, FOR RETIREES AND THEIR
BENEFICIARIES UNDER SECTION 853.404(F) AND (F-1) OF THE TEXAS
GOVERNMENT CODE, AND (II) AUTHORIZING ANNUALLY ACCRUING
UPDATED SERVICE CREDITS AND TRANSFER UPDATED SERVICE
CREDITS; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF.
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WHEREAS, the City of Friendswood, Texas (the "City"), elected to participate in the
Texas Municipal Retirement System(the "System" or "TMRS")pursuant to Subtitle G of Title 8,
Texas Government Code, as amended(which subtitle is referred to as the "TMRS Act"); and
WHEREAS, House Bill 2464, 88th Texas Legislature, R.S., 2023, added Subsections
853.404(f) and(f-1)to the TMRS Act and authorized cities participating in the System to provide
certain retirees and their beneficiaries with an annually accruing ("repeating") annuity increase
(also known as a cost of living adjustment, or "COLA") based on the change in the Consumer
Price Index for All Urban Consumers for the one-year period that ends 12 months before the
January 1 effective date of the applicable COLA (a "non-retroactive repeating COLA"); and
WHEREAS, new TMRS Act §853.404(f) and (f-1) allow participating cities to elect to
provide non-retroactive repeating COLAs under certain circumstances,as further described by this
Ordinance, by adopting an ordinance to be effective January 1 of 2024, 2025 or 2026, in
accordance with TMRS Act §854.203 and §853.404; and
WHEREAS, TMRS Act §853.404(f-1) provides the non-retroactive repeating COLA
option applies only to a participating city that, as of January 1, 2023, either(1) has not passed an
annually repeating COLA ordinance under TMRS Act §853.404(c) or had previously passed a
repeating COLA ordinance and then,before January 1,2023,passed an ordinance rescinding such
repeating COLA, or (2) does provide an annually repeating COLA under §853.404(c) and elects
to provide a non-retroactive repeating COLA under §853.404(f) for purposes of maintaining or
increasing the percentage amount of the COLA; and
WHEREAS, the City Council acknowledges that the City meets the above-described
criteria under §853.404(f-1) and is eligible to elect a non-retroactive repeating COLA under
§853.404(f) and that such election must occur before January 1, 2026, and after that date future
benefit changes approved by the City may require reversion to a retroactive repeating COLA; and
WHEREAS, the City Council finds that it is in the public interest to: (1) adopt annually
accruing non-retroactive COLAs for retirees and their beneficiaries under TMRS Act §853.404(f)
and (f-1); and (2) in accordance with TMRS Act §853.404 and §854.203(h), reauthorize annually
accruing Updated Service Credits and transfer Updated Service Credits; NOW THEREFORE,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FRIENDSWOOD,
STATE OF TEXAS:
Section 1. Adoption of Non-Retroactive Repeating COLAs. The City Council hereby
adopts the Non-Retroactive Repeating COLAs, more particularly described as follows:
(a) On the terms and conditions set out in TMRS Act §854.203 and§853.404,the City
authorizes and provides for payment of the increases described by this Section to
the annuities paid to retired City employees and beneficiaries of deceased City
retirees (such increases also called COLAs). An annuity increased under this
Section replaces any annuity or increased annuity previously granted to the same
person.
(b) The amount of the annuity increase under this section is computed in accordance
with TMRS Act §853.404(f) as the sum of the prior service and current service
annuities, as increased in subsequent years under TMRS Act §854.203 or TMRS
Act §853.404(c), of the person on whose service the annuities are based on the
effective date of the annuity increase, multiplied by 50% of the percentage change
in the Consumer Price Index for All Urban Consumers during the 12-month period
ending in December of the year that is 13 months before the effective date of the
increase under this Section.
(c) An increase in an annuity that was reduced because of an option selection is
reducible in the same proportion and in the same manner that the original annuity
was reduced.
(d) If a computation under this Section does not result in an increase in the amount of
an annuity, the amount of the annuity will not be changed under this section.
(e) In accordance with TMRS Act§853.404(f-1)(2),an increase under this section only
applies with respect to an annuity payable to a TMRS member, or their
beneficiary(ies), which annuity is based on the service of a TMRS member who
retired, or who is deemed to have retired under TMRS Act §854.003,not later than
the last day of December of the year that is 13 months before the effective date of
the increase under this section.
(f) The amount of an increase under this section is an obligation of this City and of its
account in the benefit accumulation fund of the System.
(g) The initial increase in annuities authorized by this section shall be effective on
January 1 immediately following the year in which this ordinance is approved,
subject to receipt by the System prior to such January 1 and approval by the Board
of Trustees of the System("Board"). Pursuant to TMRS Act §853.404, an increase
in retirement annuities shall be made on January 1 of each subsequent year,
provided that, as to such subsequent year, the actuary for the System has made the
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determination set forth in TMRS Act §853.404(d), until this ordinance ceases to be
in effect as provided in TMRS Act §853.404(e).
Section 2. Authorization of Annually Accruing Updated Service Credits and Transfer
Updated Service Credits. The City Council of the City of Friendswood authorizes the Annually
Accruing Updated Service Credits and Transfer Updated Service Credits, as more particularly
described as follows:
(a) As authorized by TMRS Act §854.203(h) and §853.404, and on the terms and
conditions set out in TMRS Act §§853.401 through 853.404, the City authorizes
each member of the System who on the first day of January of the calendar year
immediately preceding the January 1 on which the Updated Service Credits will
take effect (i) has current service credit or prior service credit in the System by
reason of service to the City, (ii)has at least 36 months of credited service with the
System,and(iii)is a TMRS-contributing employee of the City,to receive"Updated
Service Credit," as that term is defined and calculated in accordance with TMRS
Act §853.402.
(b) The City authorizes and provides that each employee of the City who (i) is eligible
for Updated Service Credits under Subsection (a) above, and (ii) who has
unforfeited prior service credit and/or current service credit with another System-
participating municipality or municipalities by reason of previous employment,
shall be credited with Updated Service Credits pursuant to,calculated in accordance
with, and subject to adjustment as set forth in TMRS Act §853.601, both as to the
initial grant and all future grants under this ordinance.
(c) The Updated Service Credit authorized and provided under this ordinance shall be
100% of the "base Updated Service Credit" of the TMRS member calculated as
provided in TMRS Act §853.402.
(d) Each Updated Service Credit authorized and provided by this ordinance shall
replace any Updated Service Credit,prior service credit,special prior service credit,
or antecedent service credit previously authorized for part of the same service.
(e) The initial Updated Service Credit authorized by this section shall be effective on
January 1 immediately following the year in which this ordinance is approved,
subject to receipt by the System prior to such January 1 and approval by the
System's Board. Pursuant to TMRS Act §853.404, the authorization and grant of
Updated Service Credits in this section shall be effective on January 1 of each
subsequent year, using the same percentage of the "base Updated Service Credit"
stated in Subsection(c) in computing Updated Service Credits for each future year,
provided that, as to such subsequent year, the actuary for the System has made the
determination set forth in TMRS Act §853.404(d),until this ordinance ceases to be
in effect as provided in TMRS Act §853.404(e).
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Section 3. Effective Date. This ordinance shall become effective from and after its
date of adoption.
PASSED and APPROVED on first reading by the affirmative vote of the City Council this
4th day of December, 2023.
MIKE F N, Mayor
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L IC BRYSCH, City Secret Uk. .�' r`r G
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APPROVED AS TO FORM: ts',,1 bF �-14.
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KAREN ORNER, City Attorney
PASSED, APPROVED and ADOPTED on second and final reading by the affirmative
vote of the City Council 1 lth day of December, 2023.
MIKE OREM N, Mayor
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LET CIA BRYSCH, City Secretary 0
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APPROVED AS TO FORM: ' ,► 1 >
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KAREN HORNER City Attorney '�rE�F
H:\City Council\Ordinances\2023\12-04-2023\Ordinance-TMRS-HB2464.docx
4
Thir S
Celebrating 75 Years
November 6,2023
Katina Hampton
Deputy Director of Admin Services - Finance
City of Friendswood
910 Friendswood Drive
Friendswood, TX 77546-3898
Dear Ms. Hampton:
We are pleased to enclose a model ordinance for your city to adopt:
100% Updated Service Credit with Transfers
50% Non-retroactive Cost of Living Adjustment Increase to Annuitants
Both Annually Repeating
Both Effective January 1, 2024
By adopting this ordinance, the city will not have to adopt an ordinance each year to re-authorize
the calculation of Updated Service Credit and Cost of Living Adjustment. These benefits will
remain in effect for future years until such time as it is discontinued by an ordinance adopted by
the City Council.
With the adoption of these additional benefits, your city's contribution rate for 2024 will be
16.68%.
Please make sure the ordinance is adopted and signed before the effective date. When the
ordinance is adopted,please send a copy to City Services at cityservices@tmrs.com.
If you have any questions about the model ordinance or anything else, please call me at 512-225-
3742.
Sincerely,
Colin Davidson
Director of City Services
TEXAS MUNICIPAL RETIREMENT ', ,,' STEM
P.O.Box 149153•Austin,Texas 78714-9153
800-924-8677•www.tmrs.com
Timm Comparison of Alternate Benefit Design(s)
FOR CITIES
2024 Rates • Friendswood (00483) Report Date -July 12, 2023
Plan Provisions Current Option 1 Option 2 Option 3
Deposit Rate 7.00% 7.00% 7.00% 7.00%
Matching Ratio 2 to 1 2 to 1 2 to 1 2 to 1
Updated Service Credit 100% (Repeating) 100% (Repeating) 100% (Repeating) 100% (Repeating)
Transfer USC * Yes Yes Yes Yes
COLA 50% (Repeating) 50% (Repeating) 70% (Repeating) 70% (Repeating)
Retroactive COLA Yes No Yes No
20 Year/Any Age Retirement Yes Yes Yes Yes
Vesting 5 years 5 years 5 years 5 years
Supplemental Death Benefit A & R A & R A & R A & R
Contribution Rates 2024 2024 2024 2024
Normal Cost Rate 11.13% 10.93% 11.89% 11.71
Prior Service Rate 5.93% 5.44% 8.45% 7.44%,
Retirement Rate 17.06% 16.37% 20.34% 19.15%
Supplemental Death Rate 0.31% 0.31% 0.31% 0.31
Total Contribution Rate 17.37% 16.68% 20.65% 19.46%
Unfunded Actuarial Liability $14,374,840 $13,228,078 $20,694,640 $18,168,178
Amortization Period 20 years 20 years 20 years 20 years
Funded Ratio 86.2% 87.1% 81.2% 83.1
*As of the December 31, 2022 valuation date, there were 54 employees with service in other TMRS cities eligible for transfer USC.
TEXAS MUNICIPAL RETIREMENT SYSTEM
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