HomeMy WebLinkAboutResolution 4736-01-2017 A Resolution
NO. 4736-01-2017
TO NOTIFY THE BOARD OF TRUSTEES OF THE EMPLOYEES'
RETIREMENT FUND OF THE CITY OF FORT WORTH THAT THE FORT
WORTH CITY COUNCIL INTENDS TO CONSIDER AND VOTE ON
AMENDMENTS TO THE RETIREMENT ORDINANCE FOR MEMBERS
THAT WILL REDUCE A NON-ACCRUED BENEFIT PROVIDED BY THE
RETIREMENT SYSTEM
WHEREAS, Article 62431 of the Texas Revised Civil Statutes applies to the Employees'
Retirement Fund of the City of Fort Worth ("the Fund"); and
WHEREAS, Section 4.03 of Article 6243i of the Texas Revised Civil Statutes requires the City
Council to notify the Board of Trustees of the Fund of the City Council's intent to consider and vote on
any amendment to the administrative rules governing the Fund that would reduce a benefit provided by
the retirement system; and
WHEREAS, the City and the taxpayers of Fort Worth currently have the State constitutional
obligation to honor earned benefits for employees should the Fund become insolvent and therefore have
a critical interest in the affordability of the benefits that are offered to employees; and
WHEREAS, the City controls, within Constitutional constraints and as limited by collective
bargaining or meet and confer agreements,the retirement benefits that are offered to employees; and
WHEREAS, the Employee Retirement Fund Board has the legal authority over the investment
strategy and management oversight of the contributions once remitted to them; and
WHEREAS, the City has previously reduced retirement benefits for Members which was upheld
by the Courts; and
WHEREAS, the City adopted a 2% guaranteed cost of living adjustment (COLA) for certain
employees to more accurately project and book the cost of a COLA and to give those employees a more
predictable COLA to facilitate long-term financial planning, but resulted in an increase in the liability of
the Fund; and
WHEREAS, the Fund has adopted more conservative and realistic actuarial assumptions over
the last two years which has led to an increase in the liability of the Fund; and
WHEREAS, the Fund has not consistently met its assumed rate of return in recent years, which
has led to an increase in the liability of the Fund; and
FORT WWOUMIJ
WHEREAS, the Fund has had three consecutive actuarial valuations that indicate an
amortization period of greater than 40 years; and
WHEREAS, State law requires a governmental entity to submit a Funding Soundness
Restoration Plan (FSRP) when the Fund has had three consecutive valuations with an amortization
period of greater than 40 years; and
WHEREAS, the FSRP requires that the plan reduces the amortization period to below 40 years
within a 10 year period; and
WHEREAS, the City is unwilling to make additional financial contributions to the Fund due to
risks to the City's long-term sustainability in terms of operations, staffing, infrastructure and tax rate
competitiveness; and
WHEREAS, additional benefit reductions are necessary to comply with the FSRP; and
WHEREAS, Regular Interest is currently defined as interest compounded biweeklX which
should be equal but not exceed the effective annual rate of five and one-quarter (5 '/4) percent computed
on a calendar basis; and
WHEREAS, Regular Interest is applied when members withdraw member contributions upon
separation from the City and forego a pension benefit; and
WHEREAS, this Regular Interest rate benefit does not further the City's objective of employee
recruitment and retention.
THEREFORE, BE IT RESOLVED:
That this Resolution serve as Notification to the Board of Trustees of the Employees' Retirement Fund
of the City of Fort Worth that the Fort Worth City Council intends to consider and vote on the following
amendments to the Retirement Ordinance, at a meeting to be held on or after May 2, 2017:
1. To change the definition of regular interest to mean the 2-year Treasury Bill rate to be
accrued annually based on the Member's contributions as of December 31st of that
year.
2. Interest will be calculated at this rate for all contribution refunds requested on or after
a date to be determined.
3. Interest will be calculated at this rate on interest in the Overtime Account for Group II
employees.
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NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF FORT WORTH, TEXAS:
Adopted this 31St day of January. 2017.
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Mary Kayser, City Secretary
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