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AGENDA INFORMATION SHEET PROJECT: Provide staff direction regarding legislative changes to the Texas Municipal Retirement System. BACKGROUND: The City of Paris is currently a member of the Texas Municipal Retirement System for all City employees other than Fire Fighters. Fire Fighters are a member of their own retirement system. As often happens, the Texas Legislature at its last session structured certain amendments to the Texas Municipal Retirement System. Sometimes those TMRS changes provide a local option opportunity for cities to opt out of the new legislation; otherwise, the legislative changes go into effect. Such is true of the past Legislature, which adopted SB 522. SB 522, among other things, includes a provision which escalates current vesting of TMRS members from ten (10) years to five (5) years. That is, members of TMRS who have been members in excess often (10) years have vested their retirement benefits, and those benefits are not lost because a City employee leaves employment. SB 522 would shorten the current ten (10) year vesting period to a five (5) year vesting period, unless the City adopts an ordinance prior to December 31,2001, declining this benefit. Five (5) year vesting brings TMRS in line with other public retirement systems in Texas, as well as public plans in other states. City Finance Director Gene Anderson has calculated the financial impact on the City of Paris of allowing this new legislation to automatically go into effect, thereby permitting five (5) year vesting, and has determined the total cost to the City of Paris will be $13,671.00 in the ensuing fiscal year. The amount to cover this additional cost has already been included in the City's budget. DESCRIPTION: Provide direction to City staff as to whether or not the City should take no further action and allow the provisions of SB 522 to automatically go into effect, which would include the new five (5) year vesting provision. Otherwise, City Council needs to direct the City staff to prepare an ordinance for adoption at City Council's December City Council meeting declining the benefit. Without adoption of such an ordinance prior to December 31, 2001, the five (5) year vesting will automatically go into effect. COST: The cost to the City of Paris of the five (5) year vesting provision has been determined to be $13,671.00, which is already included in the City's fiscal year 2001-2002 budget. RECOMMENDED ACTION: Provide direction to City staff as to whether or not an ordinance must be prepared declining the five (5) year vesting provision for TMRS retirement. STAFF CONTACT: Larry W. Schenk, City Attorney; Gene Anderson, Director of Finance; and Michael E. Malone, City Manager SCHEDULE: Unless an ordinance is adopted declining the five (5) year vesting provision prior to December 31,2001, five (5) year vesting will automatically go into effect and cannot be reversed without further action of the Texas Legislature. COUNCIL DATES: Discuss and provide staff direction at City Council's November 12, 2001, regular Council meeting; if any action is required declining the five (5) year vesting benefit, an ordinance will be brought forward to the City Council for consideration at the December 10, 2001, regular Council meeting. ADDITIONAL MATERIALS: See attached memorandum, statute, and correspondence from the Texas Municipal Retirement System.