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HomeMy WebLinkAboutIR 7760 ~ INFORMAL REPORT TO CITY WUNCIL MEMBERS No. 7760 To the Mayor and Members of the City Council September 21, 1993 implementation of 25-and-Out Retirement Benefit for Police Officers and Multiplier Increase for All Employees and Retirees In approving the 1993-94 Budget, the Council agreed to increase the Retirement Fund multiplier from 2.5% to 2.63% for all employees and retirees and decided to provide 60% of the cost of a 25-and-Out benefit for police officers only. It was estimated that the City's share of the cost of the 25-and-Out benefit would be $210,000, and this amount was included in the 1993-94 Budget. Using revised actuarial assumptions which are expected to more accurately portray the emerging expected experience of the Fund, the Fund's actuary has since calculated that an additional 1.2% of the police payroll would need to be contributed to the Retirement Fund to provide a 25-and-Out benefit for police officers only. If the City pays 60% of this additional 1.2% (or .729/6 of an estimated $35 million in police salaries in FY 1993- 94), the cost to the General Fund will approximate$252,000. The police officers have agreed to pay 40% of the cost (or .48% of their individual salaries) for the 25-and-Out benefit. An individual officer's contribution to the Retirement Fund would increase from 5.67% to 6.15%. The bi-weekly cost to an officer making$30,000/year would be$5.54/payperiod. It has been suggested that the employees' portion of the benefit cost could be funded by reducing each officer's across-the-board pay increase (from 3.5% to 3.02%) this year. It must be noted, however, that the cost of adding.the 25-and-Out benefit for police officers is 1.2% of the annual police payroll from now into the future. To fund the benefit next year, the Council will have to raise the employees' share of the 1.2%annual cost in some manner, either by reducing next year's pay raise for the police officers by .48% of payroll, withholding .48% from each officer's pay in the same manner as employee contributions to the Retirement Fund are currently withheld, or allocating an amount equal to .48%of the police payroll ($168,000 in FY93-94) from available revenue. To implement the 25-and-Out benefit for police officers, staff needs direction from the Council as to whether it intends for the City to pay the entire cost of the 25-and-Out benefit (by reducing the police officers' across-the-board pay adjustment in FY93-94) or to increase the individual officers' contribution rate to the Retirement Fund by .48% from 5.671/o to 6.15%. The decision on this issue will determine how the retirement ordinance will be amended. If the Council's intention is to pay the entire cost of the 25-and-Out benefit, the ordinance may be amended to increase the multiplier, incorporz benefit for police officers and increase the City's contribution to t 5ftV0=H! officers to 9.7% (8.5%plus the full 1.2%) of payroll. CITY SECRETARY FT WORTH, tn. ~ �' . INFORMAL REPORT TO CITY JUNCIL MEMBERS No. 7760 September 21, 1993 To the Mayor and Members of the City Council SubJect: Implementation of 25-and-Out Retirement Benefit for Police Officers ion and Multiplier Increase for All Employees and Retirees If the Council intends for individual officers to directly contribute .48% of their salaries to the Retirement Fund, the ordinance must be amended to provide that all sworn police officers shall vote in an election to determine their willingness to contribute an additional .48% of their-earnings to the Retirement Fund to fund 40% of the cost of the 25-and-Out benefit. The new contribution percentage for police officers would be 6.15% (5-671/o plus .48%). The City's corresponding contribution would be 9.22% (8.5% plus .72%). Seventy-five percent of the voting police officers would have to approve the increase in their personal contributions for the 25-and-Out benefit to be effective. Regardless of the outcome of this vote, the change in the multiplier for all active and refired employees would be implemented by an amendment to the retirement Bob Terrell City Manager LOFFICIAL RECORD ........... L IsSuFn RYTHE CITY MANA ­R_ FORT WORTH.TEXAS