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BACKGROUND: In 2004 the City Council adopted Ordinance 2004-051 which repealed the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