City of Deer Park - File #: RES 24-185

• File #: RES 24-185
• Version: 1
• Type: Resolution
• Status: Agenda Ready
• File created: 7/30/2024
• In control: City Council
• On agenda: 9/17/2024
• Title: Consideration of and action on a resolution maintaining the City of Deer Park's contribution rate to the Texas Municipal Retirement System (TMRS) at the obligated 14.65% for 2025 and not prefunding the City's Unfunded Actuarial Accrued Liability.

Title

Consideration of and action on a resolution maintaining the City of Deer Park’s contribution rate to the Texas Municipal Retirement System (TMRS) at the obligated 14.65% for 2025 and not prefunding the City’s Unfunded Actuarial Accrued Liability.

Body

Summary: 

The City’s contribution rate to the Municipal Retirement System (TMRS) for our employees’ retirement was 14.10 percent for 2019. The actuarially determined contribution rate for 2020 was lowered to 13.78 percent. In 2020, the City proposed maintaining the rate at 14.10 percent in 2020 instead of lowering it to prefund the City’s Unfunded Actuarial Accrued Liability (UAAL). Maintaining the contribution rate at 14.10 could potentially save over $1.55 million in future contributions and pay off the UAAL 7 years sooner (20 years vs. 27 years) based on the estimates and assumptions at that time. For 2021, the actuarially determined contribution rate was lowered to 13.58, for 2022 it was 13.70, and for 2023 it was 13.57 percent.  For 2024, the actuarially determined contribution rate was adjusted to 14.41 percent. In 2025, the rate was again adjusted to 14.65 percent.  Due to rates reaching over 14% again, City staff is not recommending to prefund the City’s Unfunded Actuarial Accrued Liability (UAAL) this fiscal year.  The following table shows the proposed vs. the actuarially determined rate for the periods referenced:

Fiscal Year        Total Retirement Rate (TMRS)                Total Retirement Rate (Budget)

  18-19                                                               14.10%                                                                                                         14.10%

  19-20                                                               13.78%                                                                                                         14.10%

  20-21                                                               13.58%                                                                                                         14.10%

  21-22                                                               13.70%                                                                                                         14.10%

  22-23                                                               13.57%                                                                                                         14.00%

  23-24                                                               14.41%                                                                                                         14.91%

  24-25                                                               14.65%                                                                                                         14.65%

Fiscal/Budgetary Impact: 

The proposed FY 2024-2025 Budget adjusts the current funding contribution to 14.65%.

Recommended action

Approve the resolution.