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HomeMy WebLinkAboutResolution 5008-12-2018A Resolution NO. 5008-12-2018 CALLING AN ELECTION BY THE MEMBERS OF THE EMPLOYEES' RETIREMENT FUND TO INCREASE THEIR CONTRIBUTIONS TO THE RETIREMENT FUND WHEREAS, Article 6243i 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 ("Board") 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 State constitution obligates the City and taxpayers of Fort Worth to honor earned benefits for employees in the event the Fund becomes insolvent, meaning the City and taxpayers have a critical interest in the fiscal soundness of the Fund and affordability of benefits being offered; and WHEREAS, the City controls, within Constitutional constraints and as may be limited by collective bargaining or meet and confer agreements, the retirement benefits that are offered to employees; and WHEREAS, the Board has management oversight of the contributions remitted to the Fund and legal authority over the Fund's investment strategy; and WHEREAS, the City adopted amendments to the Retirement Ordinance increasing City contributions to the Fund by 5% of payroll in 2007, and by 4% of payroll in 2010; and WHEREAS, the City has previously made pension adjustments for Members in 2011, 2012 and 2014; and WHEREAS, the Fund has reduced its assumed rate of return twice in the last five years and has adopted more conservative and realistic actuarial assumptions over the last two years with the result of all such changes being an increase in the projected unfunded liability of the Fund; and WHEREAS, the Fund has not consistently met its assumed rate of return in recent years, which has also contributed to an increase in the projected unfunded liability of the Fund; and uw-030T K Resolution No. 5008-12-2018 WHEREAS, on October 24, 2017, City Council adopted Ordinance No. 22977-10-2017, modifying the calculation of the interest rate for refunds on contributions to the Fund to ensure interest rates on payouts more accurately tracked and reflected actual current -market conditions; and WHEREAS, on December 12, 2017, City Council adopted Ordinance No. 23034-12-2017, modifying the calculation of the interest rate for the re -purchase of prior credited service to reduce the cumulative impact of such actions on the overall health of the Fund; and WHEREAS, the City Council is considering additional changes to the Retirement Ordinance to secure the long term sustainability of the Fund; and WHEREAS, the Fund has had more than three consecutive annual 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) to the State Pension Review Board when its fund has had three consecutive actuarial valuations with an amortization period of greater than 40 years; and WHEREAS, the state law mandating the FSRP requires that the plan's impact be projected to reduce the amortization period to within 40 years no later than the tenth anniversary of the plan's adoption; and WHEREAS, due to risks posed to the City's long-term sustainability in terms of operations, staffing, infrastructure, and tax -rate competitiveness, it is unreasonable to expect taxpayers to fund the entire deficit that has resulted largely from insufficient investment returns; and WHEREAS, additional member contributions are necessary to comply with the FSRP; and WHEREAS, the City Council has committed to increase City contributions if members vote to approve an increase in Member contributions. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS: That the City Council hereby calls a special election of the Employees' Retirement Fund of the City of Fort Worth for Participating Members to vote for or against the following Member increases and the potential future City and Member limited automatic increase and decrease as a single proposition: (1) To increase the contributions to the Fund for Group I General members, effective beginning with the July 20, 2019 pay period, as follows: a. From 8.25% to 9.35% of their earnings; and b. By an additional 0.7 % of earnings until the earliest of the following occurs: ORT WONT Resolution No. 5008-12-2018 i. the member retires; ii. the member terminates employment; or iii. the member has made 0.7% contributions for a time period that is equal to the amount of credited service the member earned or purchased prior to October 1, 2013 so that, for example, a member who has seven years of credited service for the period prior to October 1, 2013 would make additional contributions for a period of seven years. (2) To increase the contributions to the Fund for Group II General members from 8.25% to 9.35% of their earnings, effective from the July 20, 2019 pay period; (3) To increase the contributions to the Fund for Group III Police and Group IV Police members as follows: (a) From 8.73% to 10.53% of their earnings to the Fund effective beginning with the July 20, 2019 pay period; (b) From 10.53% to 12.53% of their earnings to the Fund effective beginning with the first pay check on or after January 1, 2020; and (c) From 12.53% to 13.13% of their earnings to the Fund effective beginning with the first pay check on or after January 1, 2021. (4) To increase the contribution to the Fund for Group V Firefighter and Group VI Firefighter members as follows: (a) From 8.25% to 10.05% of their earnings to the Fund effective beginning with the July 20, 2019 pay period; and (b) From 10.05% to 12.05% of their earnings to the Fund effective beginning with the first pay check on or after January 1, 2020. (5) To authorize future automatic increases and decreases to City and Employee Contributions as follows: No sooner than 2022, if the combined City and Employee contributions are less than the Actuarially Determined Contribution (ADC) for two consecutive years based on the Fund's actuarial valuations determined in accordance with Ordinance 23516-12-2018: (a) The City and employee contributions will be increased by City Council as required to meet the deficit up to 2% of pay in one year or 4% of pay in total in a 60%/40% proportion (City/employee); (b) Such contribution increases may be unilaterally reduced by City Council, without approval of members, if two consecutive actuarial valuations indicate the ADC will be met without those contributions; (6) To require members to contribute on all overtime earnings T' Resolution No. 5008-12-2018 Adopted this 11th day of December 2018. r ATTEST: By• Mary J. Kayser, C ty S cretary OR `• .per, ftTW� x T