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Minutes March 8, 2005 CITY OF DENTON CITY COUNCIL MINUTES March 8, 2005 After determining that a quorum was present, the City Council convened in a 2nd Tuesday Session on Tuesday, March 8, 2005 at 3:30 p.m. in the City Council Work: Session Room. PRESENT: Mayor Brock:; Mayor Pro Tem McNeill; Council Members Kamp, Montgomery, Mulroy, Redmon and Thomson. AB SENT: None 1. The Council received a report, held a discussion, and gave staff direction regarding retirement benefits for City of Denton employees through the Texas Municipal Retirement System (TMRS). Gary Anderson, Executive Director-Texas Municipal Retirement System, presented information regarding the system and the City's involvement in the System. He stated that there were no state funds and no state benefits associated with the System. The assets belonged to and came from the employed members who contributed money, the cities that contributed money to the employee accounts and the individuals who received benefits from the System. TMRS was established by legislative act in 1947. Prior to that time, cities could have a pension plan but only the larger ones did. Cities decided whether or not to belong to TMRS. A city did not have to belong to the System and there was no law requiring cities to provide a retirement plan for its employees. The system was created by legislation and was administered by a board appointed by the governor. The City of Denton had been a member for many years joining in the 1950's. The System currently had $12 billion in assets, approximately 130,000 active members, over 25,000 retirees from 800 cities. The Retirement system was not a one size fit all retirement system and was not a defined benefit plan. There were many different options available to cities with many different types of retirement plans per city. Each city was a stand-alone entity under TMRS. Each individual city controlled the parameters of the retirement plan through the passage of ordinances approving each aspect of the plan including what percentage employees contributed and what the city matched. TMRS provided plan administration and invested the assets of the System as one fund. The earnings were then allocated back: to the employees and to each city. It was a good stable retirement system gotten at a low cost. Investment earnings made the income and financed a significant amount of retirement benefit. New options could be added to the TMRS requirements but it had to be a local option. The State could not impose any costs to which the city did not consent. Mayor Pro Tem McNeill questioned the eligibility to retire and if the conditions were local opti ons. Anderson replied that each individual city determined the local options such as the age of retirement, increments for retiree cost of living. Denton's TMRS plan of benefits was determined by the City of Denton. There were two categories of accounts. First the employee contributed 7% of his/her gross earnings to TMRS into an individual account that allocated interest at a rate determined by the TMRS Board on a yearly basis. That rate was also allocated to the city's contribution. Each city had an account plus individual accounts. The current rate was 7%. The municipal current matching ratio meant that at the time the employee was eligible to retire the basic calculation was the employee's individual amount combined with the ratio City of Denton City Council Minutes March 8, 2005 Page 2 from the city's fund. Each employee had seven options on how to tak:e money out. The annuity was figured on the age of the person with the assumption that as money was being paid out there was a declining balance earning interest 5% each year. Council Member Mulroy stated that the employee's contribution was not blended with the City's until retirement. Anderson replied correct that it was held in the city's name until retirement. The city's money would be used only if the employee retired and took: the lifetime retirement option. The employee could tak:e his/her own match but not the city's if he/she took: a lump sum. Service retirement was based on tenure of service. Council Member Mulroy ask:ed about the disposition of the city's matching account if the right for the city's match were to be vacated by an employee. Anderson replied that that money was forfeited by the employee and would remain in the city's account and considered a gain. The city's money would only be spent if an employee retired and did not tak:e a lump sum. If a lump sum was tak:en and the city's money not use, the city would then contribute less money the next year. Mayor Pro Tem McNeill ask:ed for a comparison between Denton and other cities in the area in terms of automatic increases for retirees and the match for retirees. Anderson stated that Denton's plan was very comparable to other cities the size of Denton and could be considered the norm with other cities. The cost of living adjustment done for retirees was similar to other cities and was funded by the city. The annuity increase was capped at 70% of the consumer price index. Mayor Pro Tem McNeill ask:ed if the percentage had to be at 70%. Anderson replied until the City enacted an ordinance to change the percentage. The amount was determined by the city. The TMRS actuaries did an evaluation of each city and sent out what the contribution rate for next year would be based on the plan of benefits in effect. Mayor Pro Tem McNeill ask:ed if most cities the size of Denton allowed for retirement at any age after 20 years of service. Anderson replied correct. The gross average age of retirement was 58 years with 27 years of . serVIce. Mayor Brock: indicated that she would lik:e a history of Denton's participation and the current plan compared to other cities of similar size. Following the completion of the 2nd Tuesday Session, the City Council convened in a Closed Meeting to consider the specific items listed below under the Closed Meeting section. City of Denton City Council Minutes March 8, 2005 Page 3 1. Council considered the following in Closed Meeting A. Deliberations regarding personnel matters - Under TEXAS GOVERNMENT CODE section 551.074 1. Deliberated and discussed the evaluation of the City Attorney, the Municipal Court Judge, and the City Manager, including a discussion of performance measures for and the duties of these City Council appointees. With no further business, the meeting was adj ourned. EULINE BROCK MAYOR CITY OF DENTON, TEXAS JENNIFER W ALTERS CITY SECRETARY CITY OF DENTON, TEXAS