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ORDINANCE 2013-05
TMRS-USC T R/CPI Ad Hoc
TEXAS MUNICIPAL RETIREMENT SYSTEM
AN ORDINANCE AUTHORIZING AND ALLOWING, UNDER THE ACT GOVERNING THE TEXAS
MUNICIPAL RETIREMENT SYSTEM, "UPDATED SERVICE CREDITS" IN SAID SYSTEM ON AN
ANNUAL BASIS FOR SERVICE PERFORMED BY QUALIFYING MEMBERS OF SUCH SYSTEM WHO
AT THE EFFECTIVE DATE OF THE ALLOWANCE ARE MEMBERS OF THE CITY OF HUNTSVILLE;
PROVIDING FOR INCREASED PRIOR AND CURRENT SERVICE ANNUITIES UNDER THE ACT
GOVERNING THE TEXAS MUNICIPAL RETIREMENT SYSTEM FOR RETIREES AND
BENEFICIARIES OF DECEASED RETIREES OF THE CITY OF HUNTSVILLE AND ESTABLISHING
AN EFFECTIVE DATE FOR THE ORDINANCE.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF HUNTSVILLE, TEXAS:
Section 1: Authorization of Updated Service Credits.
(a) On the terms and conditions set out in Sections 853.401 through 853.404 of Subtitle G of
Title 8, Government Code, as amended, (hereinafter referred to as the '"TMRS Act"), each member of
the Texas Municipal Retirement System (hereinafter referred to as the "System") who has current
service credit or prior service credit in the System in force and effect on the 1st day of January of the
calendar year preceding such allowance, by reason of service in the employment of the City (hereinafter
called the "City") and on such date had at least 36 months of credited service with the System, shall be
and is hereby allowed" Updated Service Credit" (as that term is defined in subsection (d) of Section
853.402 of the TMRS Act).
(b) On the terms and conditions set out in Section 853.601 of the TMRS Act, any member of
the System who is eligible for Updated Service Credits on the basis of service with this City, who has
unforfeited credit for prior service and/or current service with another participating municipality or
municipalities by reason of previous service, and was a contributing member on the 1 st day of January of
the calendar year preceding such allowance shall be credited with Updated Service Credits pursuant to,
calculated in accordance with, and subject to adjustment as set forth in said Section 853.601, both as to
the initial grant thereunder and all future grants under this ordinance.
(c) The Updated Service Credit hereby allowed and provided for shall be 100% of the "base
Updated Service Credit" of the member (calculated as provided in subsection (c) of Section 853.402 of
the TMRS Act).
(d) Each Updated Service Credit allowed hereunder 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) In accordance with the provisions of subsection (d) of Section 853.401 of the TMRS Act,
the deposits required to be made to the System by employees of the several participating departments
on account of current service shall be calculated from and after the effective date of this ordinance on
the full amount of such person's compensation as an employee of the City.
M The initial allowance of Updated Service Credit hereunder shall be effective on January 1,
2013, subject to approval by the Board of Trustees of the System. An allowance shall be made
hereunder on January 1 of each subsequent year until this ordinance ceases to be in effect under
subsection (e) of Section 853.404 of the TMRS Act, provided that, as to such subsequent year, the
actuary for the System has made the determination set forth in subsection (d) of Section 853.404 of the
TMRS Act.
BE IT FURTHER ORDAINED BY THE CITY COUNCIL OF THE CITY OF HUNTSVILLE, TEXAS:
Section 2: Increase in Retirement Annuities.
(a) On the terms and conditions set out in Section 854.203 of Subtitle G of Title 8,
Government Code, as amended (hereinafter referred to as the "TMRS Act"), the City hereby elects to
allow and to provide for payment of the increases below stated in monthly benefits payable by the
System to retired employees and to beneficiaries of deceased employees of the City under current
service annuities and prior service annuities arising from service by such employees to the City. 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 as the sum of the prior
service and current service annuities on the effective date of retirement of the person on whose service
the annuities are based, multiplied by 50% of the percentage change in Consumer Price Index for All
Urban Consumers, from December of the year immediately preceding the effective date of the person's
retirement to the December 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 hereunder does not result in an increase in the amount of an annuity, the
amount of the annuity will not be changed hereunder.
(e) The amount by which an increase under this Section exceeds all previously granted
increases to an annuitant is an obligation of the City and of its account in the Benefit Accumulation Fund
of the System.
(f) Subject to approval by the Board of Trustees of the System, this increase in retirement
annuities shall be and become effective on the 1st day of January 2013.
Effective Date. Subject to approval by the Board of Trustees of the System, this ordinance shall
be and become effective on the 1st day of January, 2013.
Passed and approved this the 27th day of November 2012.
THE CITY OF HUNTSVI E
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MAC WOODWAR6, MAYO
ATT ST: APP O ED:
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Lee odward, Cit a and S neider, City Attorney
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City Council Muting Agenda Item
Item Title: Date: Agenda Item No.:
Adoption of Texas Municipal Retirement ... 11/27/2012
Requested By: Dept./Div: Dept. Approval: Finance approval:
Winston Duke / Missy Davidson 150 MD WD
City Attorney Review Purchasing Approval City Manager Approval
Issue/Item Description:
Approve Ordinance 2013-05 for annual election for City plan provisions in the Texas Municipal
Retirement System (TMRS), effective January 1, 2013.
Strategic Initiative Reference:
Strategic Initiative #4 - Huntsville is a well-managed, sustainable community that values its
natural resources and provides exceptional public services.
Background:
The City and the employee contributes 7% each of the employee's annual paycheck to TMRS.
The City in 2010 went to an "Ad-Hoc" renewal rather than an automatic renewal with TMRS;
thus COLA's and updated service credits must be elected each year. The intent with Ad Hoc is
that the overall plan and related changes will be reconsidered every year. By electing Ad Hoc in
2010 the City had significant savings in that year and deferred cost increases were offset by
direct payments of any savings toward the Cities unfunded liability. In this year and future
years, there will not be significant savings in the budget for direct payments to further offset the
unfunded liability.
Facts to Consider:
• COLA for retirees will increase to 50% (currently 0%), to be decided annually.
• Updates service credits will change to 100% (Repeating); (currently 0%). This option was
considered a priority, and savings were considered minimal versus priority due to previous
contributions.
• Transfer of Updated service credits are currently no, selection will change to Yes. There are
3 eligible transfer employees as of the valuation date.
• Overall rate change from 10.64% to 13.76%. Budget prepared for the increase at 14.14%;
which is no increase from FY 11-12; additional savings if any, is planned to directly offset
the unfunded liability.
• The City's funded ratio in 2010 was projected to increase from 56.90% (in 2009) to 71.57%
(in 2010) with a goal of 90%. The cities funded ratio is projected to be at 82.8% with
adoption of this ordinance.
• The current option is for one year only with the goal to elect repeating at 100% updated
service credits, 50% COLA with transfers, once TMRS phase-in was implemented and
budget allows.
Fiscal Impact/Funding Source(s):
Retirement budget of 14.14% of payroll Actual cost 13.76% of payroll. Difference will be paid
toward unfunded liability.
Attachment(s):
• Letter from TMRS
• Plan Change Summary from TMRS
• Ordinance 2013-05 from TMRS
Recommended motion(s):
Approve Ordinance 2013-05 for 50% COLA, updated service credits to include transfers, and the
payment of remaining budget to TMRS to be applied toward the City's unfunded liability.
MOTION: F SECOND: F VOTE:
F PRESENTED F APPROVED F DECLINED ACTION
F TABLED
F OTHER
4
TEXAS MUNICIPAL RETIREMENT SYSTEM
October 11, 2012
Via E-Mail
Mr. Winston Duke
Director of Finance
City of Huntsville
1212 Avenue M
Huntsville, TX 77340
Dear Winston:
As per your request, enclosed is a model ordinance for your city to adopt:
100% Updated Service Credit, including Transfers(Repeating)
8
50% CPI Increase to Annuitants
Ad Hoc (one time only)
By adopting these ordinances, the city will not have to adopt an ordinance each year to re-
authorize calculation of these benefits; and the Updated Service Credit will remain in effect for
future years until such time as it is discontinued by an ordinance adopted by the City Council.
This provision also allows for annuity increases for your city's retirees on an ad hoc basis (one
time only) and is based on a percentage of the Consumer Price Index (inflation index).
With the adoption of these additional benefits, your city's full contribution rate for 2013 will be
13.76%.
We will appreciate receiving a copy of these ordinance as soon as possible after adoption.
If you have any questions or concerns, please do not hesitate to contact me at 1-800-924-8677.
..
Sincerely,
Eric W. Davis
Deputy Executive Director
TMRS 512.476.7577
P.O,BOX 149153 TOLL-FREE 800.924.8677
AUSTIN,TEXAS 78714-9153 www.TMRS.coM FAX 512.476.5576
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ORDINANCE 2013-05
TMRS-USC T R/CPI Ad Hoc
TEXAS MUNICIPAL RETIREMENT SYSTEM
AN ORDINANCE AUTHORIZING AND ALLOWING, UNDER THE ACT GOVERNING THE TEXAS
MUNICIPAL RETIREMENT SYSTEM, "UPDATED SERVICE CREDITS" IN SAID SYSTEM ON AN
ANNUAL BASIS FOR SERVICE PERFORMED BY QUALIFYING MEMBERS OF SUCH SYSTEM WHO
AT THE EFFECTIVE DATE OF THE ALLOWANCE ARE MEMBERS OF THE CITY OF HUNTSVILLE;
PROVIDING FOR INCREASED PRIOR AND CURRENT SERVICE ANNUITIES UNDER THE ACT
GOVERNING THE TEXAS MUNICIPAL RETIREMENT SYSTEM FOR RETIREES AND
BENEFICIARIES OF DECEASED RETIREES OF THE CITY OF HUNTSVILLE AND ESTABLISHING
AN EFFECTIVE DATE FOR THE ORDINANCE.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF HUNTSVILLE, TEXAS:
Section 1: Authorization of Updated Service Credits.
(a) On the terms and conditions set out in Sections 853.401 through 853.404 of Subtitle G of
Title 8, Government Code, as amended, (hereinafter referred to as the 'TMRS Act'), each member of
the Texas Municipal Retirement System (hereinafter referred to as the "System") who has current
service credit or prior service credit in the System in force and effect on the 1st day of January of the
calendar year preceding such allowance, by reason of service in the employment of the City (hereinafter
called the "City") and on such date had at least 36 months of credited service with the System, shall be
and is hereby allowed" Updated Service Credit" (as that term is defined in subsection (d) of Section
853.402 of the TMRS Act).
(b) On the terms and conditions set out in Section 853.601 of the TMRS Act, any member of
the System who is eligible for Updated Service Credits on the basis of service with this City, who has
unforfeited credit for prior service and/or current service with another participating municipality or
municipalities by reason of previous service, and was a contributing member on the 1 st day of January of
the calendar year preceding such allowance shall be credited with Updated Service Credits pursuant to,
calculated in accordance with, and subject to adjustment as set forth in said Section 853.601, both as to
the initial grant thereunder and all future grants under this ordinance.
(c) The Updated Service Credit hereby allowed and provided for shall be 100% of the "base
Updated Service Credit" of the member (calculated as provided in subsection (c) of Section 853.402 of
the TMRS Act).
(d) Each Updated Service Credit allowed hereunder 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) In accordance with the provisions of subsection (d) of Section 853.401 of the TMRS Act,
the deposits required to be made to the System by employees of the several participating departments
on account of current service shall be calculated from and after the effective date of this ordinance on
the full amount of such person's compensation as an employee of the City.
(f) The initial allowance of Updated Service Credit hereunder shall be effective on January 1,
2013, subject to approval by the Board of Trustees of the System. An allowance shall be made
hereunder on January 1 of each subsequent year until this ordinance ceases to be in effect under
subsection (e) of Section 853.404 of the TMRS Act, provided that, as to such subsequent year, the
actuary for the System has made the determination set forth in subsection (d) of Section 853.404 of the
TMRS Act.
BE IT FURTHER ORDAINED BY THE CITY COUNCIL OF THE CITY OF HUNTSVILLE, TEXAS:
Section 2: Increase in Retirement Annuities.
(a) On the terms and conditions set out in Section 854.203 of Subtitle G of Title 8,
Government Code, as amended (hereinafter referred to as the "TMRS Act"), the City hereby elects to
allow and to provide for payment of the increases below stated in monthly benefits payable by the
System to retired employees and to beneficiaries of deceased employees of the City under current
service annuities and prior service annuities arising from service by such employees to the City. 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 as the sum of the prior
service and current service annuities on the effective date of retirement of the person on whose service
the annuities are based, multiplied by 50% of the percentage change in Consumer Price Index for All
Urban Consumers, from December of the year immediately preceding the effective date of the person's
retirement to the December 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 hereunder does not result in an increase in the amount of an annuity, the
amount of the annuity will not be changed hereunder.
(e) The amount by which an increase under this Section exceeds all previously granted
increases to an annuitant is an obligation of the City and of its account in the Benefit Accumulation Fund
of the System.
(f) Subject to approval by the Board of Trustees of the System, this increase in retirement
annuities shall be and become effective on the 1 st day of January 2013.
Effective Date. Subject to approval by the Board of Trustees of the System, this ordinance shall
be and become effective on the 1st day of January, 2013.
Passed and approved this the 27"'day of November 2012.
THE CITY OF HUNTSVILLE
MAC WOODWARD, MAYOR
ATTEST: APP OVED:
Lee Woodward, City Secretary Le d Schneider, City Attorney