City of Longview projects $700,000 in 2012 pension plan savings
By Jimmy Isaac email@example.com
Aug. 2, 2011 at 11 p.m.
The city of Longview is projecting more than $700,000 in pension costs savings next year for its employees because of restructuring of the retirement plan serving most Texas cities.
City Manager David Willard learned this year that the Texas Municipal Retirement System reduced Longview's contribution rate for employee pensions from 14.57 percent to between 10 percent and 11 percent effective Jan. 1. The drop resulted from new legislation that streamlined systemwide pension accounts, officials said.
"We're very pleased," TMRS Director of Communications Bill Wallace said by phone from Austin on Tuesday. "It basically is a much more efficient funding structure than we had prior to Senate Bill 350."
Senate Bill 350, approved by lawmakers this spring, combined the system's three accounts into a single account within the retirement trust fund - something system officials said is common in nearly all retirement funds.
Longview is among 842 Texas Municipal Retirement System member cities. The pension trust in 2010 served 142,013 employee accounts and 39,817 retired members, paying $743.5 million to retirees and $49 million to refunded members that year. As of Sept. 30, the fund had $17.9 billion in assets.
"This restructuring will provide more efficient funding, reduce year-to-year volatility in city contribution rates and result in lower contribution rates and improved funded ratios for most cities without reducing member or retiree benefits," TMRS officials said in a 2011 guide to the legislation.
City contribution rates to fund retirement benefits are calculated each year by the TMRS consulting actuary.
For most cities, the annual required contribution will be reduced, since the city would receive interest on a larger base of assets over a longer period of time, TMRS documents showed.
The city's base salaries minus overtime amount to $28.012 million, according to Assistant City Manager Chuck Ewings. Its TMRS contribution rate will drop from 14.57 percent to just more than 10 percent Jan. 1. Willard factored in three months at the 14.57 percent rate and proposed cost-of-living increases to determine that the city will pay, on average, a 12.07 percent rate for employees' pensions in 2011-12.
Under the previous rate of 14.57 percent, the city would pay $4.08 million in retirement benefits, Ewings said. With the new rate taking effect Jan. 1, the city expects an average 12.07 percent contribution rate, or $3.38 million, if council members grant 3 percent cost-of-living pay raises to employees. Without pay raises, the rate drops to 11.67 percent, or $3.27 million.