14 - RAISES FOR RETIREESItem No. 14
memorandum
TO: Mayor & City Council
FROM: John Godwin, City Manager
SUBJECT: RAISES FOR RETIREES
DATE: August 21, 2017
BACKGROUND: We all agree this is a very important issue for a number of our former
employees. For those who retired a number of years ago, raises after retirement were apparently
common, so those retirees became accustomed to receiving them, which I fully understand.
Also, at one time TMRS was financially much healthier than it is today, and often issued a
"thirteenth" check each year to its retired members from surplus funds, so members got used to
that too. However, over time, and in the face of so many retirement systems across the country
going broke, TMRS realized it needed to change its actuarial basis to ensure it would be
financially sound for years to come. Part of that was increasing contributions from member
cities, including Paris, to ensure actuarial soundness.
The good news is that TMRS is now a high quality, financially sound retirement system.
Employees contribute 6% of their pay and the city doubles that amount. Participants can retire in
as little as twenty years. I believe anywhere in Texas that is a good system, and I think many
people in Paris would be quite happy to be able to participate in such a plan. In addition, a
unique benefit offered to retired city employees under 65 years of age is a continuing health
insurance plan for which we pay $6,000 per year per retiree. The city has 104 current employees
potentially eligible for this benefit. We budget $125,000 to pay for it.
The ad hoc retiree COLA being considered only benefits those who have been retired for over a
year. No current employee would benefit from the ad hoc raise when they retire in the future, so
such a move would not help current employees, or help us in recruiting. Current employees
would only benefit if the city adopted an annually repeating COLA option, which I think we all
agree is simply too expensive (and would require a significant tax rate increase). As to
guarantees made to former employees, I have been told by Finance Director Gene Anderson
there were no guarantees made to employees about future raises. Certainly a city council cannot
legally obligate a future council in that way; every budget stands on its own.
Comparisons to other cities are often helpful, but we always have to keep in mind that every
municipality operates under different circumstances and a different local economy. While many
other cities in Texas have offered raises to retired employees over the last ten years, virtually no
cities in Texas have had more than a 100% turnover rate in fire and police staffing during that
same time, yet Paris has. We have to make our decisions based on Paris, not anyone else.
Finally, although it has nothing to do with your decision - making, since my comments in a 2012
email and the length of my tenure here have been brought up at least three times, I wish to offer
some clarifications. The 2012 -13 budget was substantially complete when I came to work in
Paris, so I made minimal changes to it. Even so, based on my conversations with Ms. Rose, I
hoped we could do something the following year for those employees who retired before the
annual raise was discontinued. However, two factors intervened. First I spent most of the
summer of 2013 literally fighting for my life, so once again I had little impact on the 2013 -14
budget. Second, TMRS advised us we could not offer the raise only to the retirees who had
retired back when such raises were somewhat routine (and therefore expected). That meant we
had to include retirees who had should have had no expectation of getting raises after they left
employment (most years the people still working here do not get raises either), and that made the
cost significantly higher than we hoped. So despite extended illness in 2013 I did still pursue a
COLA for certain retirees; it simply did not happen due to the constraints we encountered.
STATUS OF ISSUE: Every year, raises for both employees and retirees are considered in our
budgeting process. But every year there are many competing needs, and frankly we cannot pay
for everything that is requested or needed. Decisions have to be made, rarely between good and
bad, or between warranted and unwarranted, but from among a list of legitimate needs. I have
attached the major change items we as a staff considered in preparing the 2017 -18 recommended
operating budget. I included a number of them, plus raises for current employees, but we cannot
afford them all. One thing that was considered and again not funded, was raises for retirees. If
the council wishes to insert it into the budget, other recommended items (from both the General
and Utility Funds) will need to be reduced or eliminated.
To clarify, if the council budgets the $196,000 for retiree raises, retirees will get a single raise in
January. The $196,000, however, would have to be budgeted annually to pay the cost of that
raise for the lifetime of the retirees. To give future raises, the council would have to budget still
more money in future years to pay for those raises and to cover future retirees. Deferring capital
does not create savings; it simply delays costs and makes future budgets more difficult.
BUDGET: Adding this new cost will necessitate cuts in other areas of the recommended budget.
RECOMMENDATION: Direct staff to change or not change the budget, and in which areas,
prior to the September 5 public hearing.
ITEMS CONSIDERED FOR INCLUSION /EXCLUSION: 2017 -18 BUDGET
Recommended budeet items:
One FTE in drainage, effective 04/01/18
15,560
One FTE code enforcement, effective 04/01/18
15,560
Replacement SCBA equipment for firefighters
40,000
New ambulance & associated equipment
177,000
Northwest EMS station
300,000
ADA transition plan
15,000
Pool repairs
22,000
Website update
20,000
Replacement police vehicles
140,500
Contract mowing, Cox Field and loop ROW
20,000
Capital maintenance, WTP, wells & pumps
162,000
Capital maintenance, WTP, filters & valves
11,000
Capital maintenance, WTP, Storage tanks
117,000
Capital maintenance, WTP, Buildings
50,000
Capital maintenance, lift stations
59,000
Partial funding, bar screen, WWTP
320,000
Old landfill closure
30,000
Three new recycling roll -off containers 12,000
Replacement parks mower 13,000
Cox Field Fly -in 8,000
Replacement truck, W &S 36,000
Replacement trailer, W &S 16,000
Replacement truck, WTP 30,000
Retiree health costs 125,000
Non - profits:
Lamar County Historical Society
7,500
New Hope Center
10,000
Children's Advocacy Center
12,500
ETCADA
4,500
CASA for Kids
2,500
Paris Optimist Club baseball program
6,000
Lamar County Human Resources Council
12,000
Safe -T Shelter Agencies
5,000
Northeast Texas Trail Coalition
10,000
Paris Metro
25,000
Considered but not included:
Exterior repairs, police & courts building
Mini -dump truck, replacement truck, boom mower, side mower (Parks)
Replacement motor grader, dump truck, work truck, gravel spreaders, paving machine (Streets)
COLA for retirees
Level and overlay Lake Crook Road
All- weather safety surfaces @ warehouse (Purchasing)
Additions & enhancements to Sports Complex (fencing, sign, lights to open new field, paving)
Resurfacing the swimming pool
Light at deep end of pool
Replacement brush truck, replacement work truck (Sanitation)
Replacement backhoe (W &S)
Bulldozer, dump truck (CIP)