Honorable Joan Huffman, Chair, Senate Committee on Finance
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB2464 by Price (Relating to optional annuity increases for certain retirees and beneficiaries of the Texas Municipal Retirement System.), As Engrossed
COST ESTIMATE:
The bill would amend section 853.404 of the Texas Government Code to add an optional cost-of-living-adjustment (COLA) annuity for participating cities of the Texas Municipal Retirement System (TMRS).
This bill would allow participating cities in TMRS to adopt a new COLA that is the sum of prior and current service annuities, as increased in subsequent years, multiplied by the percentage change in the Consumer Price Index for All Urban Consumers and 30, 50, or 70 percent as specified by the governing body ordinance. Participating cities would need to adopt this new COLA to be effective January 1 of 2024, 2025, or 2026. The new COLA option would apply only to participating municipalities that as of January 1, 2023, do not provide an annual annuity increase, or provide an annual annuity increase through an established ordinance, and the governing body elects to recompute the calculation under this bill.
According to TMRS, the provisions in the bill should not have an actuarial impact on the system as the funding requirements and cost impact are the responsibility of TMRS' participating cities. Additionally, the bill would not automatically apply to any participating city, so the impact would depend on the COLA provision a city adopts under the bill.
SOURCES: Actuarial Analysis by Joseph P. Newton, FSA, EA, MAAA, and Janie Shaw, ASA, EA, MAAA, Gabriel, Roeder, Smith & Company, March 27, 2023.