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Item No. 11 <br />Memorandum <br />TO: Mayor, Mayor Pro -Tem, and City Council <br />Robert Vine, Interim City Manager <br />FROM: Gene Anderson, Finance Director <br />SUBJECT: RETIREE COLA <br />DATE: July 22, 2024 <br />BACKGROUND: In 2004 the City Council adopted Ordinance 2004-051 which repealed the <br />automatic granting of retiree COLAs and employee Updated Service Credits (USC). Starting with <br />2005, annual approval was required for retiree COLAs and USC to be granted. COLAs and <br />employee USC were granted on an annual basis in 2005, 2006, 2007, and 2008. No retiree COLA <br />or employee USC has been granted since 2008. In recent years, City retirees have requested that a <br />COLA be granted. The primary obstacle to granting a retiree COLA has been the cost of doing so. <br />STATUS OF ISSUE: Changes to the City's retirement plan through TMRS can only occur on <br />January 1St of each year. To effect a change in the retirement plan, the City Council would need to <br />adopt an ordinance specifying the desired change and forward that ordinance to TMRS in advance <br />of the coming new year. The State law that governs TMRS states that any COLA for retirees cannot <br />be given unless current employees also receive a USC. However, the reverse is not true. Current <br />employees can receive a USC without having to grant retirees a COLA. <br />BUDGET: If we compare the current City contribution percentage to the City contribution <br />percentage needed to fund the least expensive repeating COLA and USC, the City's contribution <br />rate would increase 5.77%. That percentage increase applied to the City's gross payroll yields a <br />cost of $1,162,922. The City would need to generate reoccurring revenue to equal this reoccurring <br />expense, or cut expenses, or a combination of the two. <br />RECOMMENDATION: Presentation only. No recommendation. <br />