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WE ARE GONNA CALL THE AD HOC COM
[Ad Hoc Committee on Pensions on November 9, 2023.]
COMMITTEE ON PENSION TO ORDER.FIRST ITEM ON AGENDA THE MINUTES.
COULD I GET A MOTION FOR THE MINUTES? ALL IN FAVOR, AYE.
UH, MR. IRELAND, JACK, UH, WILL YOU PLEASE KINDA WALK US THROUGH THE PROCESS, WHAT WE ARE ABOUT TO HEAR ON THIS COMMITTEE AND WHO HE IS IS GOING TO PRESENT THIS FOR US? YES, SIR.
I'M JACK ARLAND, CHIEF FINANCIAL OFFICER FOR THE CITY OF DALLAS.
UH, TODAY YOU DO HAVE A PRESENTATION THAT WILL BE, UH, DELIVERED BY, UH, CHIRON, WHICH IS AN INDEPENDENT ACTUARY THAT WAS SELECTED BY THE PENSION REVIEW BOARD.
AND I WILL ASK THEM IF THEY WILL GO AHEAD AND COME TO THE TABLE IN THE FRONT, UH, TO GO THROUGH THE BRIEFING.
AS YOU WILL RECALL, UH, HOUSE BILL 31 58 REQUIRED THAT WE RETURNED TO THE STATE, UH, PENSION REVIEW BOARD IN THE FALL OF 24 WITH THE PLAN TO ADDRESS THE FUNDING OF THE POLICE AND FIRE PENSION FUND.
ONE OF THE REQUIREMENTS WAS TO HAVE AN INDEPENDENT ACTUARY PROVIDE A REPORT AND RECOMME RECOMMENDATION TO THE POLICE AND FIRE PENSION BOARD AND THEN TO THE, UH, PENSION REVIEW BOARD.
AND CHIRON WAS THE SELECTED ACTUARY TO DO THAT WORK.
THEY HAVE A PRELIMINARY REPORT THAT THEY WILL GO OVER TODAY, AND THEY HAVE A FINAL REPORT THAT THEY WILL BRING BACK TO THIS, UH, COMMITTEE IN FEBRUARY.
SO THAT'S AN INTRODUCTION AND I WILL BILL, I WILL LET YOU INTRODUCE YOUR TEAM AND, UH, MAYOR PROTI, IF YOU'RE READY TO BEGIN THE PRESENTATION, WE'LL TURN IT TO, UH, CHIRON TO START.
I JUST WANT TO ASK A COUPLE QUESTIONS.
JACK, UM, THE RFP THAT WENT OUT AND WHO ASKED, YOU HIRED THIS FIRM, COULD WE PUT IT ON A RECORD? HOW WOULD THIS DONE BY RFP? AND DID THE CITY DALLAS HIRE THIS ARY? DID A PENSION HIRE US? WE'RE GONNA PUT ON RECORD WHO, WHO THEY ACTUALLY WORKED FOR.
UM, THE, UM, DALLAS POLICE AND FIRE PENSION, UM, EXECUTIVE DIRECTOR, I BELIEVE, UH, PREPARED THE, UH, RFP, UH, PROVIDED THAT TO THE PENSION REVIEW BOARD.
I DON'T KNOW, AND KELLY COULD ADDRESS AS TO AS FAR AS IF, IF THEY AMENDED IT OR MADE IT ANY CHANGES, BUT THEY ADVERTISED THE, UH, RFP, UH, FOR THE SOLICITATION.
UH, THEY WENT THROUGH THE PROCESS.
THE, THE PENSION REVIEW BOARD SELECTED THE ACTUARY.
THE ACTUARY IS ACTUALLY UNDER CONTRACT WITH THE DALLAS POLICE AND FIRE PENSION BOARD.
UH, WE HAVE DONE A SMALL ADJUSTMENT TO THE SCOPE OF WORK SO THAT THEY WOULD BE ABLE TO COME FORWARD TO, UH, TO THESE, THIS COMMITTEE AND PROVIDE THIS PRESENTATION.
AND, AND THE REASON WHY THE ACTUARY HERE TODAY THAT WE ARE THE CITY DOLLARS.
WE INVITED THEM TO COME TO GIVE US A PRESENTATION, BUT WE DID NOT PAY FOR THEM.
SO WE ARE PAYING FOR THEM TO COME TO GET US A PRESENTATION TODAY.
IS THAT A FIRST STATEMENT? YES, SIR.
WE MADE A SMALL ADJUSTMENT TO COMPENSATE THEM TO BE AT OUR COMMITTEE.
I JUST WANNA PUT ON RECORD, WE DID NOT HIRE YOU.
SO WE ARE AT YOUR MERCY TODAY AND, AND HOPEFULLY WE'LL BE KIND TO YOU AND, AND WITH YOUR REPORT.
SO WITH THAT, COULD YOU INTRODUCE YOUR STAFF, UM, MS. BILL HALLMAN HALLMARK? YES.
I'M A CONSULTING ACTUARY WITH CHIRON IN OUR PORTLAND OFFICE.
AND ON MY LEFT IS ELIZABETH WILEY, A CONSULTING ACTUARY IN OUR, UH, NORTHERN VIRGINIA DC OFFICE.
AND ON MY RIGHT IS JAKE LAB BASKA, WHO'S A CONSULTING ACTUARY IN OUR CHICAGO OFFICE.
SO WE COVER ALL THREE TIME ZONES AND, UH, MUCH OF THE COUNTRY, BUT, UH, HAVE, UH, WORKED ON THIS, UH, ANALYSIS AND ARE PLEASED TO BE HERE TO PRESENT IT TO YOU TODAY.
SO, UH, IF WE COULD MOVE TO THE, UH, NEXT SLIDE OR ONE MORE SLIDE.
SO, UH, AS MR. IRELAND WAS POINTING OUT, THE PENSION REVIEW BOARD SELECTED US AS AN INDEPENDENT ACTUARY TO DO THE ANALYSIS.
AND THE ANALYSIS WE'RE REQUIRED TO DO IS
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FIRST, UH, TO DETERMINE WHETHER THE SYSTEM MEETS THE FUNDING GUIDELINES UNDER CHAPTER 8 0 2 OF THE TEXAS GOVERNMENT CODE.UH, WHICH ESSENTIALLY MEANS, UH, DO THEY HAVE A FUNDING PERIOD OF 30 YEARS OR LESS? UH, I THINK THE ANSWER WE ALL KNOW IS NO, THEY DO NOT.
UM, BUT THE SECOND PART IS TO MAKE RECOMMENDATIONS IN TERMS OF CHANGING BENEFITS, UH, CHANGES TO MEMBER CONTRIBUTIONS AND CHANGES TO CITY CONTRIBUTIONS.
AND THE, THE POLICE AND FIRE PENSION BOARD IS TO TAKE ACTION BY NOVEMBER 1ST, 2024, UH, COMPLYING WITH THE FUNDING REQUIREMENTS AND TAKING INTO CONSIDERATION OUR RECOMMENDATIONS.
SO THEY JUST HAVE TO CONSIDER OUR RECOMMENDATIONS.
WE STARTED THE PROCESS BY REPLICATING THE VALUATION, UH, FROM 2022 PERFORMED BY THEIR ACTUARY JUST TO MAKE SURE THAT OUR CALCULATIONS ARE ON PAR AND SO ANY OF OUR WORK WILL, WILL TRANSLATE.
AND FROM THERE WE'VE DEVELOPED OUR MODELS AND ALTERNATIVE CONTRIBUTION AND BENEFIT SCENARIOS TO CONSIDER.
AND SO TODAY WE PRESENTED THE DRAFT, UH, INITIAL RECOMMENDATIONS TO THE PENSION BOARD, AND NOW WE ARE PRESENTING THEM TO YOU.
THE IDEA IS FOR US TO GET FEEDBACK AND REFINE THESE OPTIONS OR PURSUE OTHER VARIATIONS, AND WE WILL THEN REPLICATE THE 2023 VALUATION AND UPDATE OUR ANALYSIS ON THAT AND, AND BRING BACK, UH, REVISED RECOMMENDATIONS OR REFINED RECOMMENDATIONS, UH, IN THE SPRING.
AND ULTIMATELY THEN THERE'S A FINAL REPORT THAT GETS DISTRIBUTED TO THE TEXAS PENSION REVIEW BOARD, THE PENSION SYSTEM, AND TO THE CITY.
SO LET'S, SO, UH, THESE CHARTS SHOW THE CURRENT SITUATION BASED ON THE 2022 VALUATION AND THEN ASSUMING A NEGATIVE 13% RETURN FOR CALENDAR YEAR 2022.
WE DON'T HAVE FINAL ASSETS YET, SO, UM, BUT WE KNOW THAT THE RETURN WAS IN THAT AREA.
ON THE LEFT CHART, THE GRAY BARS REPRESENT THE LIABILITY OF THE SYSTEM PROJECTED FORWARD, AND THE TEAL LINE REPRESENTS THE ACTUARIAL VALUE OF ASSETS.
ON TOP IS THE FUNDED PERCENTAGE, UH, GOING FROM 42% AND THEN DROPPING DOWN, UH, ULTIMATELY GETTING BELOW 20% BEFORE IT STARTS TO CLIMB BACK UP, UH, REACHING 24% IN 30 YEARS.
THE, UH, CALCULATED FUNDING PERIOD IS SHOWN AT THE BOTTOM OF THOSE BARS.
THAT'D BE THE PERIOD UNTIL, UH, IT'S EXPECTED TO BE A HUNDRED PERCENT FUNDED ON THE RIGHT CHART.
THE PURPLE BARS ARE THE MEMBER CONTRIBUTIONS, WHICH ARE CURRENTLY FIXED AT 13.5% OF PAY.
AND THEN THE GOLD BARS ARE THE CITY'S CONTRIBUTION, WHICH IS 34.5% OF PAY.
PLUS THERE'S SOME ADD-ONS, UH, FOR THE NEXT COUPLE YEARS.
UH, THERE'S A $13 MILLION ADD ON THAT ENDS IN 2024, SO THAT'S WHY THOSE NUMBERS ARE A LITTLE BIT HIGHER.
SO THAT'S THE BASE STARTING POINT, UH, THAT WE'RE WORKING WITH.
AND, UH, SO IF WE MOVE FORWARD HERE, WE'LL GET INTO THE DIRECTION WE WENT.
SO WHEN WE'RE LOOKING AT THE SOLUTIONS QUESTIONS, THERE ARE THREE DIFFERENT OBJECTIVES THAT WE FOCUS ON TRYING TO BALANCE, UH, BECAUSE THEY, THEY, UH, COMPETE WITH EACH OTHER FIRST AND FOREMOST, WE WANT SOMETHING THAT WILL SECURE THE BENEFITS, UH, MAKE SURE THAT THE BENEFITS THAT HAVE BEEN PROMISED CAN BE PAID.
NOW, THE BEST WAY TO MAKE SURE OF THAT WOULD BE TO PUT ALL THE MONEY IN NOW.
UM, BUT THAT PRESENTS DIFFICULTIES IN TERMS OF MANAGING THE CONTRIBUTION FLOW AND THE, UH, GENERATIONAL EQUITY.
IDEALLY, WE WOULD LIKE EACH GENERATION TO PAY FOR THE BENEFITS EARNED.
UH, AT THAT TIME, THAT OBVIOUSLY HAS NOT HAPPENED.
AND SO NOW WE NEED TO MANAGE HOW WE'RE PAYING, UH, FOR THAT UNFUNDED LIABILITY AND, AND MANAGING THE BURDEN ON THE FUTURE.
PENSION SYSTEMS HAVE FOLLOWED, UH, THE SAME SORT OF DYNAMICS FOR A LONG TIME, AND THIS CHART ON THE LEFT WAS ORIGINALLY PU PUBLISHED IN THE HARVARD BUSINESS REVIEW IN 1965.
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AND THE, THE SAME STRUCTURE APPLIES TODAY.YOU HAVE, UH, EMPLOYER AND MEMBER CONTRIBUTIONS COMING INTO THE SYSTEM ALONG WITH INVESTMENT EARNINGS.
YOU STORE THOSE IN A TRUST, UH, AND OUT OF THAT TRUST, YOU PAY THE BENEFITS AND EXPENSES OVER A LONG PERIOD OF TIME.
THOSE CONTRIBUTIONS PLUS THE INVESTMENT EARNINGS, HAVE TO ADD UP TO THE BENEFITS YOU PAY AND THE EXPENSES IT HAS TO BALANCE.
AND SO ONE OF THE ISSUES WE'RE HIGHLIGHTING IS IF YOUR BENEFITS ARE FIXED AND YOU HAVE VARIABLE INVESTMENT RETURNS, YOU NEED TO HAVE THE ABILITY TO CHANGE THE CONTRIBUTIONS TO MAKE SURE THAT OVER TIME, UH, THIS EQUATION REMAINS IN BALANCE.
OUR PRELIMINARY RECOMMENDATIONS ARE, UH, THAT THE CITY'S FIXED RATE CONTRIBUTION NEEDS TO CHANGE TO AN ACTUARILY DETERMINED CONTRIBUTION.
SO THAT CONTRIBUTION AMOUNT WOULD FLUCTUATE WITH THE EXPERIENCE OF THE PLAN AND MAKE SURE THAT, UH, THE PLAN MEETS THE FUNDING GUIDELINES TODAY AND MEETS THE FUNDING GUIDELINES IN THE FUTURE.
WE LOOKED AT THE MEMBER CONTRIBUTION RATE.
WE DO NOT BELIEVE IT SHOULD INCREASE AT THIS TIME, UH, AND THAT IT MAY NEED TO ACTUALLY DECREASE OVER TIME AND WE'LL, WE'LL TALK ABOUT THAT MORE AS WE GO THROUGH THIS.
WE ALSO LOOKED AT MEMBER BENEFITS, UH, AND WHETHER WE SHOULD MAKE SOME CHANGES.
WE DID NOT RECOMMEND ANY CHANGES TO THE BENEFIT MULTIPLIER OR RETIREMENT AGE.
UH, WE ARE SUGGESTING CONSIDERATION OF GRANTING SOME COLAS SOONER THAN THEY'RE CURRENTLY PROJECTED, WHICH IS IN THE CURRENT VALUATION.
THERE'S NOT PROJECTED TO PAY ANY COLA UNTIL 20 73, 50 YEARS FROM NOW, UH, IN ORDER TO PRESERVE THE ADEQUACY OF THE RETIREES BENEFITS AND TO REMAIN COMPETITIVE WITH OTHER PUBLIC SAFETY SYSTEMS. LET'S GO ON.
SO IN LOOKING AT THE BENEFITS, WE UNDERSTAND THEY NEED TO BE COMPETITIVE.
UH, THAT MEANS THEY SHOULD NOT BE TOO HIGH, BUT ALSO NOT TOO LOW.
THE CONTRIBUTIONS NEED TO MEET SUFFICIENT TO MEET THE FUNDING GUIDELINES.
AND THEN WE FOCUS REALLY ON THIS AUTOMATIC ADJUSTMENT MECHANISMS. UH, IF YOU STAY WITH A FIXED RATE, WE COULD ADJUST IT SO THAT YOU MEET THE FUNDING GUIDELINES NOW, BUT IT WOULDN'T MEAN YOU NECESSARILY WOULD MEET THEM TOMORROW OR THE NEXT YEAR OR THE YEAR AFTER.
AND, AND SO WE NEED SOME FORM OF ADJUSTMENT.
THE COLA IS DESIGNED TO PROVIDE SOME ADJUSTMENTS, BUT BECAUSE IT'S AT 0%, UH, AND PROJECTED TO BE AT ZERO FOR A LONG TIME, UH, IT REALLY CAN'T PROVIDE MUCH ADJUSTMENT NOW FOR ANY EXPERIENCE.
SO IT'S REALLY THE MEMBER AND CITY CONTRIBUTIONS THAT NEED TO ADJUST FOR THE CIRCUMSTANCES.
WE ALSO UNDERSTAND THAT TO MANAGE ADJUSTMENTS, UH, ANY SIGNIFICANT CONTRIBUTION ADJUSTMENTS SHOULD BE IN STEPS, UH, AND WE CAN DEBATE THE SIZE OF THOSE STEPS, BUT THEY SHOULD BE IN STEPS TO ALLOW TIME TO ADJUST FOR BUDGETS AND TURN TO JAKE.
SO BEFORE WE GET INTO THE RECOMMENDATIONS AND CONSIDERATIONS, ONE IMPORTANT CONCEPT TO UNDERSTAND IS WITH THE COLA CURRENTLY NOT BEING PAYABLE UNTIL THE SYSTEM IS 70% FUNDED, THAT INHERENTLY MEANS THAT MORE MONEY COMING INTO THE SYSTEM MEANS THAT THE SYSTEM'S GOING TO COST MORE.
AND ONE BY WHAT I MEAN BY THAT IS IF YOU LOOK AT THE GRAPHS ON THE RIGHT HAND SIDE, THE LEFT BARS ARE THE VALUE OF NORMAL COST AND LIABILITY.
IF THERE ARE NO COLAS PAID EVER, THE RIGHT BARS ARE, IF THERE'S A ONE AND A HALF PERCENT COLA PAID EVERY SINGLE YEAR.
AND THE BAR IN THE MIDDLE IS THE VALUE FROM THE 2022 VALUATION, WHICH ASSUMES COLAS STARTED IN 50 YEARS AND THE BAR IN THE MIDDLE AND THE BAR ON THE LEFT ARE VERY SIMILAR, IF NOT VERY, BASICALLY THE SAME BECAUSE THE VALUE OF A COLA 50 YEARS FROM NOW IS VERY LITTLE COMPARED TO A VALUE OF A COLA STARTING IMMEDIATELY.
AND SO AS THE SYSTEM BECOMES BETTER FUNDED, THAT COLA IS GONNA BECOME PAYABLE SOONER THAN 2073.
AND SO THEREFORE BOTH THE NORMAL COST AND THE LIABILITY WILL INCREASE AS THE SYSTEM BECOMES BETTER FUNDED.
SO WE'LL SEE THAT, UH, SITUATION AS WE GO THROUGH THESE PRESENTATION, UH, THESE SCENARIOS.
BUT IT'S IMPORTANT TO UNDERSTAND THAT THE LIABILITY AND COST WILL INCREASE AS THE FUND BECOMES BETTER FUNDED.
SO MOVING ONTO THE NEXT PAGE, THINGS WE CONSIDERED WHEN REVIEWING THE CITY
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CONTRIBUTIONS.UM, YOU KNOW, THE FIRST ITEM IS THAT THE CITY CONTRIBUTIONS WILL NEED TO INCREASE AND REMAIN HIGHER FOR QUITE A WHILE.
WE LOOKED AT SOME STRUCTURAL OPTIONS, UH, AS FAR AS HOW THE CITY CONTRIBUTIONS ARE CALCULATED.
YOU KNOW, AS BILL MENTIONED, WE LOOKED AT THE FIXED, THE CURRENT FIXED CONTRIBUTION RATE AS A PERCENTAGE OF PAY AND POTENTIALLY INCREASING THAT, BUT THAT RATE DOESN'T CHANGE, UH, AS EXPERIENCE EMERGES.
AND SO THAT RATE MAY ULTIMATELY BE TOO HIGHER, TOO LOW, AND THAT RATE ALSO HAS TO BE CHANGED BY LEGISLATURE.
SO IT'S A VERY CUMBERSOME PROCESS THAT TAKES A LOT OF TIME.
AND SO FOR THOSE REASONS, WE'RE NOT RECOMMENDING THE CONTINUATION OF THE FIXED RATE CONTRIBUTION METHOD.
AND INSTEAD WE'RE RECOMMENDING A CHANGE TO AN ACTUARILY DETERMINED CONTRIBUTION RATE, WHICH CHANGES EACH YEAR AS EXPERIENCE EMERGES AND AVOIDS THE POTENTIAL FOR HAVING THE FUNDING NOT MEET THE REQUIREMENTS OF CHAPTER 8 0 2.
THERE HAS ALSO BEEN DISCUSSION OF A ONE-TIME CASH IN, UM, INFUSION.
UH, THE ONE-TIME CASH INFUSION WOULD REDUCE FUTURE CONTRIBUTION REQUIREMENTS.
UH, IT IS NOT PART OF OUR RECOMMENDATION, BUT IT DOES NOT CONFLICT WITH OUR RECOMMENDATION.
ON THE NEXT SLIDE, WE, WE LOOKED AT THE EMPLOYEE CONTRIBUTION RATE AND WE COMPARED THE EMPLOYEE CONTRIBUTION RATE TO WHAT'S CALLED THE TOTAL NORMAL COST RATE.
NORMAL COST IS THE COST OF BENEFITS ACCRUING IN A GIVEN YEAR AS A PERCENTAGE OF PAY.
IF YOU COMPARE THAT TO WHAT THE MEMBERS ARE CONTRIBUTING THIS SYSTEM, THE MEMBERS ARE COVERING OVER 70% OF THE COST OF THE BENEFITS THAT ARE ACCRUING EACH YEAR.
AND IT'S ACTUALLY MORE FOR NEWER HIRES THAT HAVE LOWER UH, BENEFITS.
AND SO IF YOU COMPARE THAT TO THE COMPARATIVE GROUP ON THE RIGHT HAND SIDE OF THE PAGE, UM, THIS SYSTEM HAS THE HIGHEST PORTION OF THE COST OF BENEFITS ACCRUING, UM, COVERED BY THE MEMBERS.
THE ONLY OTHER SYSTEMS ARE FORT WORTH THAT HAVE A HIGHER RATE, BUT AMONG THE COMPARISON GROUP HERE, THE AVERAGE IS ABOUT THAT THE EMPLOYEES COVER ABOUT 60% OF THE TOTAL NORMAL COST.
SO FOR THESE REASONS, WE DON'T THINK THE EMPLOYEE CONTRIBUTION RATE CAN INCREASE AT THIS POINT.
AND IN FACT, THE CONTRIBU, THE EMPLOYEE CONTRIBUTION RATE, IS SCHEDULED TO DROP DOWN TO 50% OF NORMAL COST ONCE THE SYSTEM BECOMES A HUNDRED PERCENT FUNDED.
SO OUR RECOMMENDATION IS TO CONSIDER GRADUALLY LOWERING THAT EMPLOYEE CONTRIBUTION RATE ONCE THE SYSTEM BECOMES BETTER FUNDED, SUCH THAT IT MAINTAINS THE CURRENT 13.5% CONTRIBUTION RATE NOW.
BUT AS THE SYSTEM'S FUNDED RATIO IMPROVES IN THE FUTURE, INSTEAD OF DECREASING THE EMPLOYEE CONTRIBUTION RATE IN ONE YEAR, ONCE THE SYSTEM BECOMES A HUNDRED PERCENT FUNDED, OUR RECOMMENDATION IS TO GRADUALLY GRADE THAT CONTRIBUTION RATE DOWN AS THE SYSTEM, UH, BECOMES BETTER FUNDED.
WE CAN GET INTO THE DETAILS, UH, LATER IN THIS PRESENTATION.
AND WITH THAT, I'LL TURN IT OVER TO ELIZABETH TO TALK ABOUT BENEFIT CHANGE CONSIDERATIONS.
SO I'M GONNA CLOSE OUT OUR FRAMING, THE CONTEXT OF ASSESSING WHAT'S GOING ON WITH THE FUND BY TALKING ABOUT THE BENEFIT ASPECTS OF THAT EQUATION THAT HAS TO BE BALANCED.
IN LOOKING AT THE BENEFITS, WE STARTED INCLUDING SOME OF THE HISTORICAL PERSPECTIVE AND LOOKED AT THE REDUCTIONS THAT HAVE ALREADY BEEN DONE WITHIN THE LAST DECADE.
AND THESE HAVE BEEN MARKED AS QUITE SIGNIFICANT BY WORK THAT'S BEEN DONE BY THE SYSTEM ACTUARIES.
UM, AND THEN WE CONSIDERED IS THERE POTENTIAL OR NEED FOR SOME ADDITIONAL REDUCTIONS OR REFINEMENTS? AND THIS INCLUDES, YOU KNOW, RECOGNIZING THAT WE'RE TRYING TO BALANCE THAT OBJECTIVE OF HAVING BENEFITS SUPPORT BOTH THE RETIREMENT SECURITY OF THE MEMBERS AND THE RECRUITING AND RETAINING THE WORKFORCE WITH THE COST AND STABILITY CONCERNS.
SO IN LOOKING AT THAT QUESTION OF ARE THERE FURTHER RECOMMENDATIONS IN TERMS OF BENEFIT ADJUSTMENTS, WE LOOKED AT THREE PARAMETERS IN PARTICULAR, AND I'LL INTRODUCE THEM AND THEN WE'LL GO INTO A LITTLE BIT MORE DETAIL.
SO THESE ARE THE MULTIPLIER, WHICH IS THE PERCENTAGE OF SALARY THAT'S RECEIVED FOR EACH YEAR THAT A MEMBER WAS IN SERVICE THAT IS 2.5% FOR THE NEWEST TIRES, AND THEN THE NORMAL RETIREMENT AGE.
THIS IS THE AGE AS OF WHICH A MEMBER CAN GET A RETIREMENT BENEFIT THAT'S NOT ADJUSTED FOR TAKING IT EARLIER.
AND THEN THE LAST PARAMETER THAT WE LOOKED AT IS THAT COST OF LIVING ADJUSTMENT OR COLA THAT'S DESIGNED TO PROTECT TO SOME DEGREE THE RETIREES FROM INFLATION.
SO IF WE GO ON TO THE NEXT SLIDE IN OUR ANALYSIS, WE LOOKED AT THE BENEFIT LEVELS, BOTH IN ABSOLUTE TERMS AS WELL AS RELATIVE TO A PEER GROUP OF OTHER TEXAS MUNICIPAL PUBLIC SAFETY PLANS.
AND OUR ARE, WHAT WE'RE SHOWING HERE IS WHAT WE CALL A REPLACEMENT RATIO.
AND WHAT THIS IS, IT IS THE SIZE OF THE MONTHLY BENEFIT THAT A PERSON GETS AT THE TIME THEY RETIRE AS A PERCENTAGE OF THE SALARY THAT THEY WERE EARNING IMMEDIATELY BEFORE RETIREMENT.
SO IF I SAY A REPLACEMENT RATIO IS 60%,
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THAT MEANS THAT THE RETIREMENT BENEFIT THE MEMBER IS RECEIVING IS EQUIVALENT TO 60% OF THE SALARY THEY WERE RECEIVING IMMEDIATELY BEFORE RETIREMENT.SO REPLACEMENT RATIOS ARE WHAT WE ARE SHOWING HERE.
THERE ARE TWO GRAPHS HERE, AND THEY, THEY SHOW WHAT THESE REPLACEMENT RATIOS ARE AT A NUMBER OF DIFFERENT RETIREMENT AGES.
YOU USE THE X AXIS READING FROM THE LEFT TO RIGHT, YOU'LL SEE AN INCREASE IN RETIREMENT AGES.
AND THE REASON WHY WE'RE SHOWING TWO GRAPHS IS THAT THE BENEFITS ARE A LITTLE BIT DIFFERENT DEPENDING ON WHAT AGE A PERSON IS HIRED.
SO WE'RE SHOWING ONE, ASSUMING SOMEONE INITIALLY HIRED INTO THE CITY AT 25 AND ONE AT 30.
SO THE INFORMATION THAT WE'RE ABLE TO DRAW FROM THIS IS, IF YOU LOOK AT THE BLACK LINE FIRST, THAT REPRESENTS THE DALLAS POLICE AND FIRE FUND.
AND YOU'LL SEE THE RANGE IN THESE GRAPHS GOES FROM, YOU KNOW, THE HIGH 30TH PERCENTILES TO WHICH IS ABOUT A LITTLE BIT OVER A THIRD OF WHAT THE SALARY WAS TO A HIGH OF ABOUT 85%.
UM, LOOKING AT THOSE BLACK LINES, YOU SEE THAT THE OLDER SOMEONE IS AT RETIREMENT, THE GREATER THE PROPORTION OF THEIR SALARY THEY'RE GONNA RECEIVE IS ALSO THE EARLIER HIRES.
THE GROUP THAT'S WAS HIRED AT AGE 25 HAS HIGHER REPLACEMENT RATIOS.
SO THAT'S THE INFORMATION THAT WE HAVE IN KIND OF ABSOLUTE TERMS JUST LOOKING AT THE BENEFITS.
BUT WHAT WE'RE ALSO SHOWING WITH THE BARS BEHIND THE BLACK LINES ARE A UNIVERSE OF SOME OF THE MUNICIPAL PUBLIC SAFETY PEERS.
AND WHAT YOU CAN SEE IS WITH RETIREMENTS AT THE YOUNGER AGES, THE DALLAS CURRENT PROVISIONS, WHICH ARE REC REPRESENTED BY THE BLACK LINE, IS BELOW ANY OF THE BARS, MEANING THAT THE BENEFIT AS A PERCENTAGE OF THE SALARY IS LESS UNDER THIS PLAN THAN ANY OF THEIR PEERS.
WHEN WE LOOK AT OLDER RETIREMENT AGES, IN PARTICULAR FROM THE AGE 58, THAT'S THE NORMAL RETIREMENT AGE AND OLDER RELATIVE TO YOUR PEERS, YOU ARE IMPROVED BEING ABOUT THE MIDDLE OF THE PACK.
SO THAT IS OUR KIND OF COMPARATIVE INFORMATION ON WHAT ARE THE BENEFITS LOOKING LIKE ON UNDER THE PROVISIONS TODAY AT THE TIME OF RETIREMENT, BUT THE TIME OF RETIREMENT ISN'T THE FULL PICTURE OF SOMEONE'S RETIREMENT.
SO IF WE GO ON TO THE NEXT SLIDE, IN DECIDING OUR CONCLUSIONS ABOUT RECOMMENDATIONS FOR BENEFIT CHANGES, WE ALSO WANTED TO LOOK AT WHAT HAPPENS WITH THE BENEFITS DURING RETIREMENT.
SO ONE IMPORTANT FACTOR THAT WE WANNA NOTE IS THAT THE MEMBERS OF THIS PLAN ARE NOT COVERED BY SOCIAL SECURITY.
AND SOCIAL SECURITY IS A BENEFIT THAT DOES PROVIDE SOME PROTECTION AGAINST INFLATION OR PRESERVATION OF PURCHASING POWER, WHICH IS JUST BASICALLY THE IDEA, YOU KNOW, A DOLLAR TODAY IS WORTH MORE THAN A DOLLAR IN 10 YEARS.
SO LOOKING AT THIS AND RECOGNIZING THAT THEY'RE NOT IN SOCIAL SECURITY IS ONE OF THE CONSIDERATIONS THAT YOU HAVE WHEN YOU'RE TRYING TO BALANCE THE CONFLICTING RECOMMENDATIONS.
SO GOING TO THE NEXT SLIDE, WE DID PULL TOGETHER SOME INFORMATION ABOUT THE PIERS ON COLAS AS WELL.
AND THIS IS AN AREA WHERE WE REALLY SEE A GREAT RANGE OF DIFFERENCE.
UM, THE PARAMETERS ARE VERY DIFFERENT.
AT ONE EXTREME, THE FORT WORTH PUBLIC SAFETY PLANS AS WELL AS AUSTIN POLICE NOT ONLY ARE NOT CURRENTLY OFFERING ANY COLAS, BUT ACTUALLY CANNOT OFFER ONE WITHOUT HAVING LEGISLATION GO THROUGH THE STRAIGHT LEGISLATURE.
AT THE OTHER EXTREME OF THE SPECTRUM WOULD BE SAN ANTONIO, AND THEY'RE, EVEN THE NEWEST TIER OF MEMBERS HAVE AN AUTOMATIC COLA.
THAT MEANS IT HAPPENS EVERY YEAR WITHOUT HAVING TO HAVE AFFIRMATIVE ACTION BY THE BOARD, THE CITY, ANYONE THAT'S EQUAL TO 75% OF WHATEVER THE ACTUAL CHANGE IN INFLATION OR CPI IS.
AND IN THE CASE OF SAN ANTONIO, NOT ONLY DO THEY HAVE THAT GUARANTEED AUTOMATIC 75%, BUT IF THEY HAVE GOOD INVESTMENT EXPERIENCE, THEY ALSO HAVE THE POTENTIAL TO GET BONUS ADDITIONAL PAYMENTS INSTEAD OF JUST THE 12 NORMAL CHECKS FOR A YEAR.
THEY CAN GET A 13TH OR A 14TH.
IN TERMS OF WHERE DO THE CURRENT PROVISIONS FOR THIS PLAN LIE, THEY'RE BETWEEN THOSE TWO GOALPOSTS OF A SPECTRUM, BUT THEY'RE MUCH CLOSER TO THE END THAT
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HAS NO COLAS BECAUSE THERE HAVEN'T BEEN ANY SINCE 2017.AND AS I MENTIONED, IT'S ANTICIPATED TO BE SEVERAL DECADES BASED ON THE CURRENT PROVISIONS FOR WE AN OFFER.
AND WITH THAT, THAT CONCLUDES OUR BACKGROUND FOR WHY WE'RE NOT RECOMMENDING FURTHER BENEFIT REDUCTIONS AND AS WELL AS SOME CONSIDERATION OF THE COLA.
SO I'M GONNA TURN IT BACK TO BILL TO TALK ABOUT WHAT OUR RECOMMENDATIONS ARE.
SO THIS, UH, CHART GIVES A BRIEF SUMMARY OF OUR, UH, THREE RECOMMENDATIONS AND WE'LL WALK THROUGH THEM IN MORE, MORE DETAIL.
BUT, UH, THE QUICK SUMMARY IS, UH, SCENARIO ONE, YOU WOULD IMPLEMENT A GRADED, ACTUARILY DETERMINED CONTRIBUTION.
SO CITY CONTRIBUTIONS WOULD, UM, BE ACTUARILY DETERMINED AND IT'D BE STRUCTURED SO THAT THEY WOULD BUILD UP IN A SHORT PERIOD TO, UH, AN ULTIMATE LEVEL HOLD AT THAT LEVEL FOR A PERIOD OF TIME.
AND THEN AT THE END OF 30 YEARS GRADE BACK DOWN.
UH, THEN THE SECOND SCENARIO ADDS TO THAT, UH, AND AN ADJUSTABLE EMPLOYEE RATE.
SO THE EMPLOYEE RATE WOULD STAY WHERE IT IS NOW AT 13.5%, BUT AS THE SYSTEM BECOMES BETTER FUNDED, THAT WOULD GRADUALLY DECREASE UNTIL IT GETS TO THE 50% OF NORMAL COST RATE.
UM, SO WE'LL SHOW MORE DETAILS ON THAT.
AND THEN THE, THE LAST, UH, ITEM TO BUILD ON IS A PARTIAL COLA WHERE, UH, INSTEAD OF REQUIRING THE SYSTEM TO BE BE 70% FUNDED BEFORE A COLA WAS PAID, YOU COULD PAY IT NOW, BUT YOU WOULD MULTIPLY THE AMOUNT OF THE COLA BY THE FUNDED PERCENTAGE.
SO IF YOU WERE 50% FUNDED, YOU'D ONLY GET HALF THE COLA YOU WOULD OTHERWISE GET.
UH, AND, AND AT 70% YOU'D ONLY GET 70% OF THE COLA, WHEREAS UNDER THE CURRENT YOU WOULD GET THE FULL COLA.
SO THERE'S SOME TRADE-OFFS, UH, IN THAT.
LET'S MOVE ON AND WE'LL START WITH THE SCENARIO ONE, THE ACTUARILY DETERMINED CONTRIBUTION.
IF YOU THINK ABOUT THE CITY'S FIXED RATE, YOU COULD THINK OF IT AS IMPLICITLY PAYING TWO COSTS.
ONE IS THE CITY'S NORMAL COST RATE.
THIS IS THE CITY'S COST FOR THE BENEFITS ATTRIBUTED TO THE CURRENT YEAR OF SERVICE.
SO THAT'S THE, THE CURRENT EARNED BENEFITS.
UH, THE SECOND PIECE IS THE AMOUNT THAT GOES TOWARDS PAYING DOWN THE UNFUNDED LIABILITY.
AND, AND WITH YOUR FIXED RATE, THAT CONTRIBUTION TO THE UNFUNDED LIABILITY IS THE SAME REGARDLESS OF HOW BIG THE UNFUNDED LIABILITY IS.
AND IF IT'S A LARGE UNFUNDED LIABILITY OR A SMALL UNFUNDED LIABILITY, IT DOESN'T MATTER THE CITY'S PAYING THE SAME RATE.
SO IT'S INDEPENDENT OF THE ACTUAL UNFUNDED LIABILITY.
IF WE SWITCHED TO AN ACTUARILY DETERMINED CONTRIBUTION, WE WOULD STILL SET THE CITY'S NORMAL COST AS A PERCENT OF PAY.
UH, NORMAL COST IS DESIGNED TO BE A PERCENTAGE OF PAY.
SO WHEN THE CITY'S PAYROLL GOES UP, IT GOES UP, WHEN THE CITY'S PAYROLL GOES DOWN, IT GOES DOWN.
UH, SO IT IT, IT'S GOOD TO SET THAT AS A PERCENTAGE OF PAY AND THEN SET THE UAL PAYMENT AS A DOLLAR AMOUNT BASED ON AN AMORTIZATION SCHEDULE TO PAY OFF THE UNFUNDED LIABILITY.
UH, OVER A PERIOD OF TIME THAT PAYMENT, UH, WE'RE SUGGESTING SHOULD BE A DOLLAR AMOUNT BECAUSE WHAT'S NEEDED IS INDEPENDENT OF THE CITY'S PAYROLL.
IF THE CITY HIRES A COUPLE HUNDRED MORE OFFICERS, IT DOES NOT INCREASE THE NEED ON THE UNFUNDED LIABILITY.
SIMILARLY, IF, IF THE CITY'S PAYROLL DROPPED, IT WOULDN'T CHANGE THE NEED ON THE UNFUNDED LIABILITY.
SO THE NEED IS INDEPENDENT OF THE PAYROLL.
SO WE'RE SUGGESTING LET'S TAKE THE CONTRIBUTION THAT'S GONNA SATISFY THAT NEED, UH, AND SPECIFY IT AS A DOLLAR AMOUNT AND DELINK IT FROM PAYROLL.
NOW TO COMPLY WITH THE FUNDING GUIDELINES GUIDE, WE SUGGEST, UH, YOU THINK OF THIS IN IN TWO PIECES.
AND BEFORE I GET INTO THE TWO PIECES, THE CHARTS ARE SHOWING ON THE LEFT HAND SIDE IS SHOWING THE UNFUNDED LIABILITY BALANCE PROJECTED AS IT GETS PAID OFF.
AND ON THE RIGHT HAND SIDE, WE'RE SHOWING THE PAYMENTS THAT ARE ACTUALLY PAYING OFF THE UNFUNDED LIABILITY.
AND SO THE BOTTOM DARK GREEN IS WHAT WE'RE REFERRING TO IS A BASE LAYER
[00:30:01]
THAT'S SET UP TO AMORTIZE OVER 30 YEARS, BUT IT'S INTENDED TO EFFECTIVELY REPLICATE THE RATE THE CITY IS PAYING IN 2024, WHICH IS ABOUT 37% OF PAY.SO THAT RATE WOULD, UH, BE THAT BASE LAYER.
AND ON THE RIGHT HAND SIDE YOU CAN SEE THAT ALL OUR AMOUNT GOES UP EACH YEAR.
IT'S GOING UP EACH YEAR BY TWO AND HALF PERCENT BECAUSE THAT'S THE PROJECTION OF WHAT PAYROLL GOES UP.
BUT THE PAYMENTS ACTUALLY GO UP TWO AND A HALF PERCENT REGARDLESS OF WHETHER THE PAYROLL GOES UP OR NOT ON IT.
THEN THE LIGHTER LAYER, UH, IT IS THE GRADING OPTION AND, AND WE THINK THE GRADED LAYER SHOULD STEP INTO THE FULL CONTRIBUTION OVER AS SHORTER A PERIOD AS FINANCIALLY POSSIBLE.
UH, AND THEN GRADE DOWN AT THE END AS WELL.
NOW WE'VE MODELED A FIVE YEAR, UH, GRADING PERIOD, UM, BUT THAT COULD BE ADJUSTED.
UH, THE IDEA OF THE GRADING PERIOD IS SIMPLY TO ALLOW THE CITY TIME TO ADJUST ITS BUDGET FOR THE HIGHER CONTRIBUTION LEVELS.
SO, UM, TO THE EXTENT IT CAN BE DONE FASTER THAN FIVE YEARS WOULD WOULD BE GREAT AND YOU WOULD NOT HIT AS HIGH A PEAK.
THE LONGER YOU DO THE GRADE PERIOD, THE HIGHER THE, THE ULTIMATE RATE WOULD BE.
SO LET'S GO TO THE NEXT SLIDE.
UH, SO JUST LOOKING AT HOW WE'D BREAK THESE THINGS OUT FOR THE 2025 CONTRIBUTION, ALL OF OUR CHANGES WE ARE MODELING AS EFFECTIVE 1 1 25, UH, HERE.
UH, SO IF YOU LOOK AT THE 2024 CITY CONTRIBUTION, THERE IS A, UH, A FIXED RATE OF 34.5%, WHICH IS BROKEN INTO A CITY NORMAL COST RATE OF 4.8% OF PAYROLL, AND THEN THE CITY'S UAL RATE OF 29.7%.
AND THEN THERE'S AN ADDITIONAL $13 MILLION CONTRIBUTION THAT YEAR.
THAT'S THAT TEMPORARY CONTRIBUTION IN 2025 THAT WOULD GO AWAY, UM, THAT TEMPORARY CONTRIBUTION, AND YOU'D BE JUST AT THE 34 POINT A HALF PERCENT, UH, WITHOUT THESE CHANGES.
SO WITH THE CHANGE, UH, THE NORMAL FIRST THING TO NOTE IS THE NORMAL COST RATE GOES UP TO 6%.
AND THAT'S GETTING AT THE ISSUE THAT JAKE IDENTIFIED EARLIER, BECAUSE WE ARE RECOMMENDING CONTRIBUTIONS TO FUND THE SYSTEM FASTER, WE'RE GOING TO GET TO 70% FUNDED FASTER, AND SO WE'RE GONNA PAY MORE COLAS.
AND SO THERE'S AN ADDITIONAL COST, UH, FOR THAT AND THAT'S BAKED INTO THAT, UH, INCREASE IN THE NORMAL COST RATE.
AND THEN THE CITY'S UAL PAYMENT WOULD BE 158 MILLION.
SO IT WOULD BE INDEPENDENT OF PAYROLL, IT WOULD JUST BE THAT 158 MILLION.
IF YOU LOOK AT IT AT BASED ON EXPECTED PAYROLL, IT, THE TOTAL WOULD BE AROUND 39 AND A HALF PERCENT OF PAYROLL.
SO THAT'S HOW WE'RE, UH, SUGGESTING THE CONTRIBUTIONS GET STRUCTURED.
UH, I I SHOULD ALSO POINT OUT HERE THAT THAT 158 MILLION AND ALL THE OTHER NUMBERS IN HERE WILL LIKELY CHANGE WHEN WE DO THE 2023 VALUATION.
SO YOU SHOULD LOOK AT THESE AS CONCEPTUALLY WHAT WE'RE LOOKING AT, BUT THEY WILL, UH, CHANGE AS WE GET UPDATED NUMBERS.
SO HERE'S, UH, WHAT THAT SCENARIO ONE LOOKS LIKE WITH THE GRADED ADC WITH THE GRADING AT FIVE YEARS.
UH, THE FIRST COLA, UH, WOULD GET PAID AROUND 2047 IF ALL OF THE ASSUMPTIONS ARE MET, WHICH MEANS WE'RE GETTING SIX AND A HALF PERCENT RETURNS EVERY YEAR.
THE PLAN WOULD REACH A HUNDRED PERCENT FUNDING IN 2055, BUT THE CONTRIBUTIONS WOULD INCREASE, UM, AT WHEN IT GETS TO THE TOP OF THE GRADING PERIOD, IT'D BE ABOUT 54% OF PAYROLL.
SO GOING FROM THE CURRENT 34 POINT A HALF, UH, GRADING UP TO 54% AND STAYING THERE FOR, FOR QUITE SOME TIME.
NOW, ONE OF THE KEY DIFFERENCES WITH THE ACTUARILY DETERMINED CONTRIBUTION IS IT WILL CHANGE EVERY YEAR.
WHEN YOU DO A NEW VALUATION, IT WILL ADJUST FOR THE ACTUAL EXPERIENCE.
SO TO GIVE YOU A SENSE OF HOW THAT ADJUSTMENT COULD, UH, AFFECT THINGS, WE JUST RAN TWO SIMPLE SCENARIOS
[00:35:01]
OF VERY POOR RETURNS FROM 2023 TO 2027 OF MINUS 1%.AND AND IF YOU HAD THAT HAPPEN, UH, THE CONTRIBUTION WOULD NOT INCREASE TO 54%, IT WOULD INCREASE UP TO 60%, UH, OF PAYROLL.
ON THE FLIP SIDE, IF YOU HAD VERY GOOD RETURNS DURING THAT PERIOD OF 14%, THE CONTRIBUTION WOULD ALSO ADJUST.
AND SO IT WOULD, UM, IT WOULD INCREASE, I CAN'T REMEMBER WHAT THE, THE TOP NUMBER IS, BUT 47, 40 8% AND THEN COME DOWN ACTUALLY AS YOU'RE RECOGNIZING THOSE GOOD INVESTMENT RETURNS.
AND SO YOU WOULD HAVE, UH, ADJUSTING BUDGETS AND CHANGES AS THE EXPERIENCE OF THE PLAN, UH, CHANGES.
LET'S GO TO SCENARIO TWO HERE.
UH, NOW WE'RE GONNA KEEP THE GRADED ADC PIECE, BUT THEN WE WANNA ADD AN ADJUSTABLE EMPLOYEE CONTRIBUTION RATE.
AND THE IDEA HERE IS WE'D BREAK THE CONTRIBUTION RATE INTO TWO PIECES.
THE FIRST PIECE, THE BASE PIECE WOULD BE 50% OF THE NORMAL COST RATE.
NOW WE'RE SUGGESTING YOU CALCULATE THAT ON THE, THE LATEST TIER OF BENEFITS.
'CAUSE ULTIMATELY THAT'S THE NORMAL COST RATE THAT WILL BE PAID.
UH, AND UH, YOU ROUND IT TO THE NEAREST HALF PERCENT.
UH, RIGHT NOW THAT, UH, COMES OUT TO ABOUT 8.5%.
THEN, UH, YOU ADD AN ADJUSTMENT ON TOP OF THAT 50% OR NORMAL COST RATE THAT'S DESIGNED INITIALLY TO KEEP THE EMPLOYEE RATE AT THE SAME LEVEL IT IS NOW THE 13.5%.
SO IN THIS SCENARIO, UH, WE'D ADD 5% TO THE EMPLOYEE CONTRIBUTION RATE, BUT THEN AS SHOWN IN THE TABLE AT THE BOTTOM, AS THE FUNDED STATUS IMPROVED, THAT EMPLOYEE CONTRIBUTION RATE WOULD THE ADDITIONAL EMPLOYEE CONTRIBUTION RATE WOULD GRADUALLY RATCHET DOWN, UH, AND REACH ZERO AT 90% FUNDING.
SO AT 90% FUNDING, YOU'D BE AT 50% OF NORMAL COST FOR EMPLOYEES.
SO IF WE GO TO THE NEXT SLIDE, UH, YOU CAN SEE THE IMPACT OF THIS IS IT DOES NOT CHANGE REALLY WHEN THE FIRST COLA IS EXPECTED TO BE PAID STILL.
2047 ON THE RIGHT HAND GRAPH, YOU HAVE TO LOOK CAREFULLY, BUT IN 2040 THE EMPLOYEE RATES STARTS TO COME DOWN.
SO IT'S STILL A LONG WAYS OUT UNDER THIS SCHEDULE.
UM, BUT THEN IT GRADUALLY COMES DOWN.
AND WHEN IT COMES DOWN, THE CITY'S RATE, UH, ACTUALLY GOES UP A LITTLE TO COMPENSATE FOR THE EMPLOYEE RATE GOING DOWN.
BUT OTHERWISE, THE CITY'S IN THAT FIRST PART OF THE GRADING, THE CITY IS STILL GOING UP TO 54%, UH, OF PAY.
THEN THE LAST SCENARIO IS THE PARTIAL COLA.
SO THE CURRENT COLA, UM, IS NOT PAYABLE UNTIL YOUR 70% FUNDED, UH, WHICH AS WE SHOULD, WE'RE PROJECTING 2047 IF ALL ASSUMPTIONS ARE MET.
UH, SO WE GIVEN THE, THE ISSUE OF NOT HAVING ANY COLA FOR MORE THAN TWO DECADES, UH, AND YOUR EMPLOYEES NOT BEING IN SOCIAL SECURITY, UH, WE'RE SUGGESTING THAT YOU CONSIDER THE PARTIAL COLA.
AND WHAT WE WOULD DO IS USE THE SAME FORMULA TO CALCULATE THE COLA, BUT THEN MULTIPLY IT BY THE FUNDED RATIO UP TO A HUNDRED PERCENT.
SO RIGHT NOW YOUR COLA IS BASED ON THE FIVE YEAR AVERAGE RETURN MINUS 5%.
AND SINCE THE PLAN ASSUMES SIX POINT A HALF PERCENT, THAT'S 6.5 MINUS FIVE IS 1.5%.
THAT'S THE EXPECTED COLA WHEN IT'S ELIGIBLE TO BE PAID HERE, WE WOULD MULTIPLY THAT, UH, AMOUNT BY THE FUNDED RATIO.
SO IF IT WAS A FIF, IF THE PLAN WAS 50% FUNDED, UH, INSTEAD OF AN EXPECTED 1.5% COLA TO BE AN EXPECTED 0.75% COLA, UH, THAT WOULD ALLOW YOU TO PAY A COLA IMMEDIATELY.
IT'D BE A SMALL COLA, BUT IT'D BE SOME PIECE OF COLA.
UH, IT WOULD ONLY BE PAID WHEN INVESTMENT RETURNS EXCEEDED THE 5% OVER A FIVE YEAR PERIOD.
UH, AND BUT THEN THE TRADE OFF IS ONCE YOU'RE OVER 70% FUNDED, THAT COLA IS
[00:40:01]
ACTUALLY LOWER THAN YOUR CURRENT COLA BECAUSE IT'S 70%, YOU'RE ONLY PAYING 70% OF THE ONE AND A HALF INSTEAD OF THE FULL ONE AND A HALF.SO LET'S GO TO THE NEXT SLIDE.
WE HAVE A, THE CHART ON THE RIGHT SHOWS WHAT THE EXPECTED COLA WOULD BE AT DIFFERENT FUNDED PERCENTAGES.
UH, SO THE, THE ALTERNATIVE PARTIAL COLA IS IN GREEN AND THE CURRENT COLA IS IN BLUE.
SO YOU SEE THE 1.5% AT, UM, 70% VERSUS THE GRADING UP OF THE PARTIAL COLA.
BOTH COLA OPTIONS ARE GONNA USE THE SAME, UH, FIVE YEAR AVERAGE RETURNS AND A MINIMUM OF ZERO AND A MAXIMUM OF FOUR.
SO KEEPING THE SAME BASIC STRUCTURE, JUST CHANGING HOW YOU USE THE FUNDED PERCENTAGE.
SO IF YOU GO TO THE NEXT SLIDE, UH, WE'RE STILL GETTING TO FULL FUNDING IN 2055 WITH THE ACTUARILY DETERMINED CONTRIBUTION, BUT YOU CAN PAY SOME SMALL COLA IMMEDIATELY.
UM, IT DOES CAUSE THE CITY'S CONTRIBUTION RATE TO GO UP TO A HIGHER LEVEL TO 57% OF PAY ROUGHLY.
UM, SO THERE IT IS A COST IN THE NEAR TERM OF ADDING THAT, THAT PARTIAL COLA IN THE LONG TERM.
UH, IN OUR EXPERIENCE, PLANS HAVE REMAINED IN THAT 70 TO A HUNDRED PERCENT FUNDED STATUS FOR A LONG PERIOD.
AND SO YOU WOULD HAVE A LOWER COST AT THAT POINT, BUT THAT WOULD BE MUCH FURTHER IN THE FUTURE.
SO THIS, THIS IS JUST RESTATING THE SUMMARY.
NOW, I KNOW I'VE SHOWN CHARTS AS PERCENT OF PAY AND, AND IF YOU'RE LIKE MOST CITIES THAT I'VE WORKED WITH, UH, YOUR BUDGETS ARE IN DOLLARS AND NOT, UH, PERCENT OF PAY.
SO IF WE CAN GO ALL THE WAY TO SLIDE 37, EXCUSE ME.
SO, UH, IN THE APPENDIX HERE, WE'RE SHOWING JUST THE CONTRIBUTION CHARTS AND JUST THE CITY CONTRIBUTION.
UH, THE DARK GOLD IS THE NORMAL COST PORTION, WHICH WOULD ACTUALLY BE SET AS A PERCENT OF PAY, BUT WE'RE SHOWING THE ESTIMATED DOLLAR AMOUNT.
AND THEN THE LIGHT GOLD IS THE AMORTIZATION PAYMENT, UH, IN DOLLARS.
AND SO WE RUN THROUGH THE, THE FOUR SCENARIOS.
THE CHART ON THE LEFT IS THE 2022 ACTUARIAL VALUATION.
AND WHAT'S PROJECTED, THE CHART ON THE RIGHT SHOWS THE GRADED ADC.
SO YOU SEE THE $158 MILLION UAL PAYMENT IN 2025 IN THE CHART ON THE RIGHT GRADING UP TO THAT 259 MILLION.
ONCE YOU GET TO THE TOP OF THE, THE GRADING AND THEN IT'S CONTINUING TO GO UP, THAT'S THE ANNUAL 2.5% INCREASE TO MATCH WHAT WE EXPECT PAYROLL TO GO UP.
UH, SO ULTIMATELY YOU'RE GETTING UP TO A $400 MILLION, UH, CONTRIBUTION TOWARDS, UH, THE UAL, WHEREAS UNDER THE CURRENT, UH, AT 2055, YOU'D BE AT 312 MILLION.
SO IT GIVES YOU AN IDEA OF HOW, HOW THAT PATTERN WORKS.
UM, ONE KEY DIFFERENCE THOUGH IS WITH THE 30 YEAR ADC, ONCE YOU'VE FINISHED THOSE 30 YEARS, IF ALL THE ASSUMPTIONS ARE MET THAT UAL PAYMENT WOULD DROP OFF AND YOU'D JUST BE, YOU'D JUST HAVE THAT NORMAL COST PAYMENT.
AND SO YOU CAN SEE THAT IN 2055 THERE'S ACTUALLY A, A SMALL RESIDUAL UAL PAYMENT, UM, BUT IT, IT'S ONLY $2 MILLION, WHEREAS UNDER THE CURRENT IT JUST KEEPS GOING UP.
SIMILAR NUMBERS ON, UH, SLIDE 38 FOR THE OTHER TWO SCENARIOS.
UM, SO MOSTLY I WANTED TO BE ABLE TO REFER YOU TO THOSE SO THAT YOU COULD LOOK AT WHAT THE DOLLAR IMPACTS ARE, UH, PARTICULARLY IN THE SHORT TERM.
'CAUSE I KNOW THE LONG TERM NUMBERS GET, GET, UH, VERY LARGE BECAUSE YOU HAVE TWO POINT HALF PERCENT INCREASES COMPOUNDED OVER A LONG PERIOD OF TIME.
SO I THINK WITH THAT, WE'LL, UH, TAKE ANY QUESTIONS YOU MAY HAVE.
AGAIN, I WANT TO THANK YOU FOR GIVING US A PRESENTATION, A GREAT PRESENTATION OVERVIEW.
UM, YOU KNOW, YOU IN YOUR SCENARIO ONE, TWO, YOU KEPT MENTIONING, UM, COLA AND, AND AS YOU KNOW, IN THAT SCENARIO THAT YOU GOTTA HIT 70%
[00:45:01]
BEFORE YOU EVEN RECOGNIZE COLA.AND, AND WE DO NOT HAVE TO, UH, TALK ABOUT THE COLA AND YOUR RECOMMENDATION, YOU NEVER DID RECOMMEND A COLA.
SO WHY DO YOU PUT THOSE IN YOUR TWO SCENARIO IN THIS BRIEFING? IN, IN SCENARIOS ONE AND TWO, ALL WE ARE DOING IS POINTING OUT WHEN THE COLA WOULD BE FIRST PAYABLE IN 2047 UNDER THE CURRENT COLA PROVISION.
SCENARIO THREE IS AN ALTERNATIVE BECAUSE IN SCENARIOS ONE AND TWO, THERE'D BE NO COLA FOR TWO AND A HALF MORE DECADES.
UH, SO SCENARIO THREE GETS YOU SOME COLA EARLIER AND IT, IT'S AN OPTION TO CONSIDER AND IT IS, YOU KNOW, AN ALTERNATIVE.
WE, YOU KNOW, WE'RE TAXED WITH PRESENTING SEVERAL ALTERNATIVES, RECOGNIZING THAT THE VARIOUS STAKEHOLDERS ARE BALANCING MULTIPLE OBJECTIVES.
SO IN YOUR RECOMMENDATION, ARE YOU RE, ARE YOU RECON, UM, REQUIRING OF, OR YOU ARE SAYING THAT IN YOUR RECOMMENDATION THAT WE SHOULD CHANGE BENEFIT, WE SHOULD ADD BENEFIT, OR WE SHOULD NOT LIMIT BENEFIT? NO.
SO WE HAVE, WE POSE THREE SCENARIOS FOR CONSIDERATION.
THE FIRST TWO SCENARIOS DO NOT CHANGE BENEFITS AT ALL.
UH, THE FIRST SCENARIO, THE SECOND SCENARIO CHANGES EMPLOYEE CONTRIBUTIONS IN THE FUTURE, NOT IN THE NEAR TERM, BUT IN THE LONG TERM.
THE THIRD SCENARIO HAS THE PARTIAL COLA CHANGE.
UM, BUT NO OTHER BENEFIT CHANGES.
YOU DID NOT ADDRESS A ONETIME FUNDING EVENT WITH NOT AN EARLY ONETIME FUNDING SOURCE HAVE CONSIDERING THE FUNDING, THE PENSION, UH, JAKE MENTIONED THAT IN HIS, UH, OPENING PIECE THAT WE DID NOT, UH, BUILD IN A ONE-TIME SOURCE AS ONE OF THE RECOMMENDATIONS, BUT OUR RECOMMENDATIONS ARE NOT INCONSISTENT WITH THAT.
WHAT WOULD HAPPEN IF YOU, UH, MADE A ONE-TIME INFUSION, EITHER IN THE FIRST YEAR OR, UH, SOMEWHERE DOWN THE ROAD, IT WOULD REDUCE THE ACTUARILY DETERMINED CONTRIBUTION.
SO THAT'S ONE OF THE ADVANTAGES OF AN ACTUARIALLY DETERMINED CONTRIBUTION IS IT TAKES INTO ACCOUNT EXPERIENCE, INCLUDING THINGS LIKE A ONE-TIME INFUSION OF CASH.
AND SO THAT WOULD, UH, REDUCE CONTRIBUTIONS ONCE THAT INFUSION WAS MADE.
AND I SAY THAT NOT IF YOU DO NOT DO A ONE TIME, UH, A PARTIAL PAYMENT, YOU KNOW, OVER A PERIOD OF TIME BASED ON WHAT ACTUALLY ARE GONNA BE, YOU KNOW, MAYBE IN YEAR ONE, YEAR TWO, YEAR THREE, THEN YOU TRY TO GO BACK AND MONETIZE YOUR INVESTMENT AND DO A, A, A LUMP SUM PAYMENT DOWN THERE TO GET YOU TO 30 YEARS.
YOU DID NOT SHOW THAT IN YOUR, UM, REPORT.
IS THERE ANY REASON WHY YOU DID NOT MAKE A RECOMMENDATION? THAT'S SOMETHING WE COULD DO.
IT IS CERTAINLY SOMETHING YOU CAN DO.
THAT'S WHAT WE'RE SAYING IS WE'RE, WE'RE SETTING UP A PROCESS THAT WOULD ACCOMMODATE THAT.
HOWEVER, THE CITY, UM, DECIDES THEY WANT TO DO IT BECAUSE THE ACTUARILY DETERMINED CONTRIBUTION WOULD ADJUST THE CONTRIBUTIONS TO REFLECT THAT AND STILL GET YOU, UH, FULLY FUNDED WITHIN 30 YEARS.
AND THE FOLLOW UP THAT I'LL KEEP SAYING TO WHERE YOU SAID WHATEVER THE CITY DECIDE WE WANT TO DO.
SO IS THAT A FIRST STATEMENT THAT YOU'RE SAYING THE PENSION BOARD IS TRYING TO COME UP, BUT IT'S OUR RESPONSIBILITY, RESPONSIBILITY OF WHAT WE DECIDE TO DO? IS THAT A FIRST STATEMENT? UH, IN TERMS OF THE LUMP SUM INFUSION OF CASH, I THINK OR THE PORSCHE OR THE PORSCHE PAPER INFUSION, THAT'S OUR RESPONSIBILITY.
IS THAT CORRECT? THAT THAT'S THE PIECE THAT I SEPARATED FROM WHAT THE, THE RETIREMENT SYSTEM, OUR RECOMMENDATIONS FOR THE RETIREMENT SYSTEM ARE TO DO THE GRADED, ACTUARILY DETERMINED CONTRIBUTION, AND THEN IF THE CITY DECIDES TO DO AN INFUSION OF CASH THAT UH, ACTUARILY DETERMINED CONTRIBUTION WOULD ADJUST.
ONE THING I WOULD NOTE FOR TEXAS IN PARTICULAR IS THAT THE GOVERNMENT CODE WAS CHANGED A FEW YEARS AGO IN 8.80 2.2011, THAT YOU HAVE TO HAVE A FUNDING POLICY FOR THE NON STATEWIDE SYSTEMS AND IT'S, IT REQUIRES THE GOVERNING BODY AND THEN ITS ASSOCIATED GOVERNMENT ENTITY TO JOINTLY DEVELOP AND ADOPT A WRITTEN FUNDING POLICY THAT WOULD BE WITHIN IT.
SO TEXAS DOES DEFINE THE ROLE THAT IT IS SOMETHING THAT IS SHARED.
[00:50:01]
OKAY.WITH THAT, I'M GONNA TURN IT OVER TO MY COLLEAGUES AND, AND THE PROCESS WE'RE GONNA DO, UH, I I SEE WE HAVE MAYBE FIVE OR SIX HERE.
I'M GET EVERY COLLEAGUES A CHANCE TO DO TWO QUESTIONS.
TRY LIMITED THE STATEMENTS, YOU KNOW, LET US TRY TO LOOK AT THE PRESENTATION, STICK TO THE PRESENTATION, YOU KNOW, IF YOU OPT THE PRESENTATION, I'M GONNA SAY, I'M GONNA RULE YOU OFF.
I'M GOING TO GO TO THE NEXT PERSON BECAUSE I KNOW WHAT, WHAT THEY ARE DOING.
I KNOW IT WAS A SHORT PERIOD OF TIME TO REVIEW THIS, BUT WE GOT TO STICK TO THE PRESENTATION.
I DON'T WANNA GO OUT THERE AND SAY, WE GONNA DO THIS AND DO THAT BECAUSE WE DID NOT HIRE THESE PEOPLE.
THEY ARE GIVEN WHAT THAT WAS THE RFP STATED.
AND THAT'S BRING US A PRESENTATION WITH THAT.
I KNOW, UM, UH, CHAIRMAN MIDDLEN CALLED ME YESTERDAY AND SHE SAID SHE WANTED TO ASK A COUPLE QUESTIONS BECAUSE SHE GOTTA CATCH A PLANE, I BELIEVE.
UM, SO MY FIRST QUESTION IS MY LONGEST QUESTION.
IT'S A TWO PART WITH AN EXAMPLE, BUT IT'S ALL ON THE PRESENTATION.
SO I ATTENDED THE BOARD MEETING THIS MORNING.
AND BASED ON SOME OF WHAT YOU SAID ABOUT THE PRESENTATION THEN, WOULD YOU SAY, IS IT SAFER? THIS IS THE FIRST PART OF THE QUESTION.
IS IT SAFER FOR THE PENSION SYSTEM IF THE CITY CONTRIBUTED A LUMP SUM UPFRONT IN COMBINATION WITH THE ACTUARY DETERMINED CONTRIBUTION, UM, AS OUR FISCAL CONTRIBUTION POLICY? AND SO FIRST, IS IT SAFER? DOES THE LUMP SUM CONTRIBUTION EARLIER SAVE THE CITY MONEY, UM, INSTEAD OF A FLAT LEVEL AS WE GO? AND MY EXAMPLE IS GONNA BE A MORTGAGE, RIGHT? SO IF I HAVE A MORTGAGE AND IT'S SIX POINT HALF PERCENT, WHICH IS WHAT THE RATE OF RETURN IS IN YOUR PRESENTATION, AND I CAN PAY IT OFF EARLY, I'M GONNA SAVE MYSELF A LOT OF MONEY.
AND SO I'M TRYING TO UNDERSTAND HOW THIS LUMP SUM, WHICH I THINK WE'RE ALL INTERESTED IN, UM, AS AN OPTION, HOW THAT FITS INTO YOUR SCENARIO.
YEAH, SO FIRST OBVIOUSLY THE FASTER MONEY COMES INTO THE SYSTEM, THE BETTER IT IS FOR THE SYSTEM.
UH, SO WHETHER THAT'S A, A LUMP SUM OR EVEN HIGHER CONTRIBUTIONS THAN WE'VE ANTICIPATED HERE FOR, UH, IN THE NEAR TERM, UH, THAT WOULD ALWAYS BE BETTER FOR THE, THE SYSTEM.
THE, UH, THE SAVINGS ARE, JUST THE WAY TO THINK OF IT INSTEAD OF A MORTGAGE IS TO THINK OF IT AS INVESTING THE MONEY EARLIER.
AND SO YOU GET THE RETURN ON THE MONEY FROM THE POINT THAT YOU INVEST IT.
UH, IF IT'S NOT INVESTED, YOU'RE NOT GETTING THAT RETURN.
AND SO GOING BACK TO THAT INITIAL CHART, UM, THE, THE CONTRIBUTIONS PLUS THE INVESTMENT EARNINGS.
AND SO IF YOU GET THE CONTRIBUTIONS IN EARLIER, YOU CAN RELY ON MORE INVESTMENT EARNINGS TO PAY THE COST OF THE SYSTEM.
SO, UH, YOU KNOW, AND AND WITH THE EXPECTED RETURN OF SIX AND A HALF, WE WOULD EXPECT THE SAVINGS TO BE BASED ON THAT MONEY EARNINGS, SIX AND A HALF PERCENT.
AND THERE WERE TWO QUESTIONS AND THEN MY SECOND QUESTION, THAT WAS, THAT WAS TWO QUESTIONS.
YEAH, I I THOUGHT IT WAS TWO
I'M JUST GONNA SAY I THINK THE COLA IS AN EXTREMELY IMPORTANT PART OF THIS DISCUSSION BECAUSE YOU HAVE IN YOUR PRESENTATION ABOUT THE ADEQUACY AND THE COMPETITIVENESS OF THIS PLAN.
AND IT SEEMS THAT WE WILL NOT BE COMPETITIVE IF WE DON'T HAVE A COLA FOR 70 YEARS.
SO MY, MY QUESTION IS, WHAT OTHER OPTIONS OR CHANGES MIGHT YOU SUGGEST OR RECOMMEND IF THERE ARE ANY? AND BECAUSE IT TAKES LEGISLATIVE ACTION, DID YOU CONSIDER IF LIKE MAYBE THERE WOULD BE SOME SORT OF SPLIT, LIKE WE COULD DO THIS AMOUNT ORIGINALLY, BUT BY THE TIME WE GET TO 70% FUNDED, WE COULD ACTUALLY DO THE FULL AMOUNT IF THERE WAS SOME SORT OF VOTE, LIKE DID YOU THINK THERE MIGHT BE SOME SORT OF TRIGGER IN THAT? AND ALSO THE PARODY ISSUE WITH OUR OTHER PLANS, IT'S ALL COLA RELATED.
SO I THINK THERE WERE MULTIPLE, UH, QUESTIONS THERE ABOUT THE COLA, BUT THANK YOU.
YOU KNOW, IT'S ALL COLA YOU THREE COLAS, THREE DIFFERENT COLAS.
UM, SO WE RECOGNIZE THE, THE ISSUE ABOUT THE COLA AND ABOUT NOT PAYING A COLA FOR A, A LONG PERIOD OF TIME.
AND THAT'S WHY WE DEVELOPED THE, THE PARTIAL COLA OPTION FOR YOU TO, TO CONSIDER.
CERTAINLY YOU COULD CONSIDER HIGHER COLAS.
UH, THE, THE TRADE OFF WE'RE SORTING WITH IS IF YOU ARE GONNA PAY HIGHER COLAS,
[00:55:01]
THERE'S A HIGHER COST AND, AND SO WE NEED TO BUILD UP THE CONTRIBUTIONS.BUT THAT'S, YOU KNOW, THAT'S ALL PART OF THE FEEDBACK WE NEED TO, TO HEAR.
UH, I, I THINK WE'RE LOOKING AT A RATHER, UH, STEEP GRADE FOR INCREASING THE CITY'S CONTRIBUTIONS.
AND UM, SO I THINK THAT WAS MORE OUR PRIORITY.
UH, BUT WE CERTAINLY RECOGNIZED THE COLA ISSUE AND SO WE WERE TRYING TO FIND SOME MECHANISM TO, TO PAY SOME COLA EARLY ON, UH, WITHOUT, UH, WITH A REASONABLE PRICE.
AND WITH THAT, UM, GABE WILLIS, COUNCIL WILLIS, THANK YOU.
UH, I STARTED MY DAY WITH THIS PRESENTATION.
I'M ENDING MY DAY WITH THIS PRESENTATION, SO THIS IS GREAT BECAUSE IT'S ALLOWED SOME THINGS TO SINK IN.
AND I JUST GENERALLY WANNA SAY THAT, UH, BECAUSE THIS IS SUCH A COMPLEX ISSUE, UH, WE'RE GONNA TURN OVER EVERY ROCK.
SO WE'LL ASK QUESTIONS THAT MAY BE UNCOMFORTABLE TO SOME, BUT WE OWE IT TO OURSELVES AND TO EVERYONE, OUR TAXPAYERS TOO, UM, TO EXPLORE SOME THINGS THAT YOU'VE HIGHLIGHTED AND AND BEYOND.
BUT, UH, JUST TO BUILD ON THE COLA DISCUSSION, UM, SO ON PAGE 15 WE TALK ABOUT, UH, AND THERE HAS BEEN ATTENTION GIVEN TO THE FACT THAT, UM, OUR, UM, POLICE AND FIRE DON'T RECEIVE SOCIAL SECURITY AND, UM, BUT WE'VE NOT TALKED ABOUT THE FIRST PART OF THAT STATEMENT VERY MUCH THAT SAYS DPFP BENEFITS ARE GENERALLY HIGHER THAN SOCIAL SECURITY AT RETIREMENT.
AND SO GIVEN THAT YOUR ACTUARIES, IS THERE A TABLE OR SOME WORK SOMEWHERE THAT WOULD HELP DEFINE WHAT THAT DIFFERENCE IS BETWEEN WHAT, UM, THEY'RE GETTING AT RETIREMENT VERSUS WHAT YOU'D GET AT AT SOCIAL SECURITY? AND WHERE DOES THAT OFFSET? I MEAN, YOU SAID A DOLLAR TODAY IS WORTH, UH, MORE THAN A DOLLAR IN 10 YEARS.
AND SO IT'S KIND OF LIKE IF YOU'RE GETTING THAT HIGHER BENEFIT NOW, UM, I DON'T WANNA LET THAT BE LOST IN THE DISCUSSION.
SO, SO WE ARE, WE ARE NOT SUGGESTING THAT THE, THE PENSION SHOULD BE COMPARED DIRECTLY TO SOCIAL SECURITY AND THAT YOU'RE JUST TRYING TO REPLACE SOCIAL SECURITY.
UH, SO YOUR BENEFITS NATURALLY ARE HIGHER THAN SOCIAL SECURITY, UH, AT RETIREMENT.
BUT THE, THE CONCERN IS THAT THERE'S NOT A PROTECTION IN THERE FOR CHANGES IN THE COST OF LIVING IN THE FUTURE.
UH, WE LOOKED AT THE LEVEL OF YOUR BENEFIT COMPARED TO OTHERS ON THE CHART, UH, ON THE IMMEDIATELY PRIOR PAGE, SLIDE 14, I THINK.
AND WE DID AS PART OF OUR ANALYSIS LOOK AT TO NOT BE IN SOCIAL SECURITY, THERE ARE REQUIREMENTS THAT YOU MEET WHAT IS CALLED A FICA REPLACEMENT PLAN.
AND THERE ARE SOME TESTS AND, AND PART OF LOOKING AT COULD YOU REDUCE BENEFITS AND THINGS, YOU HAVE A 60 MONTH WE CALL FINAL AVERAGE SALARY, THE PERIOD OF THE SALARY THAT'S USED IN THE BASE OF BENEFITS.
AND WITH THAT, THE MINIMUM PERCENTAGE IS 1.6, WHICH IS OBVIOUSLY LOWER THAN THE 2.5.
AND SIMILARLY ON THE NORMAL RETIREMENT AGE, IT WOULD NEED TO BE NO HIGHER THAN 65.
BUT THOSE ARE JUST THE MINIMUM STANDARDS THAT ARE NECESSARY TO NOT HAVE THE MEMBERS IN SOCIAL SECURITY.
AND A COMPARISON WOULD BE IT IS, IT IS SOMETHING THAT CAN BE DONE, BUT IT IS VERY COMPLEX BECAUSE IT VARIES BY SALARY LEVEL.
'CAUSE SOCIAL SECURITY PROVIDES GREATER BENEFITS AS A PERCENTAGE FOR THOSE AT LOWER PAY AS WELL AS, YOU KNOW, CHARACTERISTICS OF HOW OLD YOU'RE HIRED AND RETIRED.
SO DID YOU ALL RUN THAT THOUGH? UM, WE HAVE NOT RUN THIS, I MEAN, WE'VE DONE FOR OTHERS.
I WILL SAY THAT WHEN WE TALK ABOUT YOUR PEER GROUPS, UM, THE FUNDS THAT WE'VE INCLUDED IN THESE VARIOUS CHARTS, ALL OF THEM ARE NOT IN SOCIAL SECURITY WITH ONE EXCEPTION, AND THAT IS AUSTIN POLICE IS IN SOCIAL SECURITY.
SO IN TERMS OF GETTING AN IDEA OF THE COMPARATIVE BENEFITS AND COMPETITIVENESS THAT MIGHT IMPACT YOUR WORKFORCE MANAGEMENT, I, I THINK THAT IS AN IMPORTANT FACT TO NOTE IS THAT MOST OF YOUR PUBLIC SAFETY MUNICIPAL EQUIVALENTS ARE NOT IN SOCIAL SECURITY AS WELL.
SO MY QUESTION IS REALLY ABOUT IF YOU'RE FRONT END LOADING MORE THAN WAITING FOR THAT COST OF LIVING, UH, ADJUSTMENT TO COME ALONG.
AND THAT IS WHAT I'M WONDERING IF YOU, I MEAN, YOU, YOU REFERENCED THAT IT'S GENERALLY HIGHER THAN SOCIAL SECURITY, SO SURELY SOMEBODY CAN SAY THIS IS WHAT THAT DIFFERENCE IS.
WELL, SO THE ROUGH DIFFERENCE BETWEEN SOCIAL SECURITY AND THE BENEFIT PROVIDED HERE, YOU CAN GLEAN FROM THE, THE 2.5 FACTOR VERSUS THE 1.6 FACTOR.
BUT IF YOU ARE, UH, TRYING TO REMAIN COMPETITIVE, ALL OF THE PUBLIC SAFETY
[01:00:01]
SYSTEMS ARE PROVIDING A MUCH HIGHER BENEFIT THAN JUST SOCIAL SECURITY.AND, AND IF I'M UNDERSTANDING PART OF THE QUESTION CORRECTLY THAT YES, YOU'RE RIGHT THAT THE INITIAL BENEFITS ARE HIGHER.
AND SO EVEN THOUGH IT'S FLAT OVER TIME, YOU KNOW, PEOPLE COULD INDIVIDUALLY MANAGE AND SAVE MORE OVER TIME AND DO A SELF-DESIGNED KIND OF COLA ALLOCATION.
I'LL SAY I DON'T FEEL QUALIFIED TO SUCCESSFULLY MANAGE THAT MYSELF.
BUT YOU'RE GETTING AT, WHAT I'M GETTING AT IS THAT IT PUTS THE POWER OF, OF MANAGING THAT MONEY IN YOUR HANDS UPFRONT VERSUS MAKING YOU WAIT AND GO THROUGH THE COLA EXERCISE AS WE GET TO ACHIEVING THE 70%, WHICH THEN THE COLA KICKS IN.
SO MY SECOND QUESTION, YOU GET, YOU'RE RIGHT ON TIME.
UM, AGAIN, JUST IN THE SPIRIT OF ASKING QUESTIONS, ON PAGE EIGHT AND 13, YOU TALK ABOUT THE RETIREMENT AGE AT 58.
HAVE WE CALCULATED AT 59 AT 60, UH, TO SEE WHAT KIND OF IMPACT THAT WOULD HAVE IN THE SPIRIT OF, YOU KNOW, TURNING OVER ALL THE ROCKS? YEAH, SO WE DID LOOK AT THEM.
PART OF THE ISSUE IS IF WE CHANGED THE RETIREMENT AGE OR THE MULTIPLIER AS WE UNDERSTAND IT, IT WOULD ONLY APPLY TO SERVICE AFTER THE DATE OF IMPLEMENTATION.
AND SO THE, THE SAVINGS REALLY DON'T ACCUMULATE FOR A LONG PERIOD OF TIME.
AND SO COMBINING THAT WITH WHAT IT DID IN TERMS OF THE COMPETITIVENESS, IT DID NOT SEEM LIKE A, A, A VERY VIABLE OPTION.
SO MUCH LOWER ON THE LIST OF POSSIBLE SOLUTIONS.
ALRIGHT, 2 6, 2, UM, COUNCILWOMAN PAULA BLACKMAN, THANK YOU.
YES, I WAS THERE THIS MORNING AS WELL, SO, UH, GOOD TO SEE YOU HERE.
UM, BACK TO THE WHOLE QUESTION ABOUT SAVING MONEY WITH A LUMP SUM, THAT'S IF YOU DON'T GO OUT FOR OBLIGATION BONDS, RIGHT? WELL, RIGHT.
YOU HAVE TO, YOU'RE SUBT PAYING INTEREST, THE INTEREST YOU PAY ON ANY BONDS THAT YOU USE.
SO I GUESS YOU SHOULD QUALIFY THAT THE LUMP SUM IS WITH IT NOT ATTACHED TO ANOTHER INSTRUMENT IN WHICH YOU'RE BORROWING AGAINST.
I JUST WANTED TO MAKE SURE THAT WE GOT THAT ON THERE.
AND THAT COULD BE MY FIRST ONE.
AND THE SECOND IS, CAN THE, IN ON THE ADC, CAN YOU PUT A CAP ON IT, IT ON OUR END, SO THAT WAY OBVIOUSLY IF RETURNS, IN OTHER WORDS, WE CAN'T, WE HAVE OBLIGATIONS THAT WE HAVE TO MEET HERE AT THE CITY.
SO, AND IF RETURNS AREN'T COMING IN, WHETHER BAD INVESTMENTS OR MORE PEOPLE RETIRING, ET CETERA, CAN YOU PUT A CAP ON THAT A, D, C SO THAT WE AT LEAST KNOW WHAT THE CEILING IS COMING FROM, FROM OUR BUDGET? SO, UH, I WOULD NOT RECOMMEND PUTTING A CAP ON, TELL ME WHY.
BUT YOU COULD PUT A CAP ON, BUT THE REASON I WOULDN'T RECOMMEND IT IS YOU'RE SETTING YOURSELF UP FOR THE SAME KINDS OF SITUATION THAT YOU HAVE NOW WITHOUT THE CAP.
WHAT I SEE IS EFFECTIVELY HAVING HAPPENED IN SYSTEMS WITHIN ADCS, WHEN THAT ADC STARTS RISING UP TO A POINT WHERE IT'S VERY PAINFUL, IT BRINGS THE PARTIES TOGETHER TO FIGURE OUT HOW TO SOLVE THE, THE PROBLEM AND ADDRESS THE COSTS OF THE SYSTEM.
AND SO THEN YOU START LOOKING AT OTHER BENEFIT CHANGES AND YOU KNOW, A VARIETY OF POTENTIAL SOLUTIONS.
BUT THAT, THAT ACTUAL PAIN POINT IS, IS HELPFUL TO TRIGGER THE DISCUSSIONS THAT ARE NEEDED TO GET THE SYSTEM, UH, SET BACK ON TRACK.
AND CAN YOU MAKE COLA CONNECTED TO RETURNS ON YOUR, UH, ON YOUR FUND? SO IF YOU'RE DOING SIX POINT 0.4, YOUR COLA IS CONNECTED TO THE RETURNS ON YOUR FUNDS AND YOU CAN CONTINUE THAT.
SO A COLA CAN KICK IN, SAY THEY GOT A 8%, BUT WE PROJECTED DO 6.4, THEN A COLA COULD KICK IN FOR THAT YEAR BECAUSE THEY HIT A A TARGET.
IN OTHER WORDS, PEOPLE HAVE GOTTA HAVE SOME SKIN IN THE GAME TO DO BRING THEIR A GAME.
'CAUSE WE CAN'T, WE HA I MEAN, TO SEE THESE NUMBERS IT'S A LOT
I UNDERSTAND AND, AND AND I UNDERSTAND, YOU KNOW, AND SO WE HAVE OTHER NEEDS THAT WE HAVE TO BALANCE ON TOP OF THIS AND WE ARE COMMITTED TO DO THIS.
SO HOW DO, IT'S, IT'S HOW DO YOU CREATE THAT COMMITMENT AND KEEP THAT COMMITMENT, BUT ALSO MAKING SURE OUR CITY DOESN'T, UM, YOU KNOW, SLIP BACK ON JUST BASIC NEEDS.
AND, AND IT CERTAINLY A CONVERSATION WE'VE HAD WITH OUR CLIENTS FOR THE LAST DECADE, UM, COMING OUT OF THE GREAT RECESSION AND TRYING TO MANAGE THEIR COSTS.
UH, AND, AND IT IS, THERE ARE NO MAGIC BULLETS ON IT THAT THE MONEY HAS TO COME FROM SOMEWHERE, WHETHER IT'S FROM THE BENEFITS, EMPLOYEE CONTRIBUTIONS, CITY CONTRIBUTION, YOU KNOW, THERE ARE ONLY A FEW PLACES YOU CAN GO TO MAKE THE, THE EQUATION BALANCE.
UH, AND SO YOU HAVE TO GET ALL PARTIES TOGETHER
[01:05:01]
TO TO, TO MAKE THAT WORK.UM, WE THINK WHAT WE'VE GOT HERE LOOKS LIKE A VIABLE SOLUTION, UH, FOR YOU.
WE UNDERSTAND IT'S A SIGNIFICANT INCREASE IN YOUR, IN YOUR COSTS.
UM, SO ON THE PAYROLL RATE, I THINK IF I REMEMBER MY CONVERSATION WITH JACK WHEN HE WAS GIVING ME PENSION 1 0 1
SO THE 2.5 IS THAT A REALLY CONSERVATIVE NUMBER BECAUSE WE NEED A REALLY CONSERVATIVE NUMBER.
UM, SO WE'RE DOING TWO THINGS TO DEAL WITH THE ISSUE.
THE TWO AND A HALF IS GENERALLY A CONSERVATIVE NUMBER IF YOU'RE LOOKING AT A CONSTANT POPULATION, A CONSTANT, UH, ACTIVE POPULATION.
BUT, UH, REALLY TO THAT END, THAT IS THE REASON WE ARE SUGGESTING THAT THE UAL PAYMENT SHOULD NOT BE TIED TO PAYROLL BECAUSE WHEN, IF YOUR PAYROLL DOES NOT GO UP AS ANTICIPATED UNDER THE OLD SYSTEM, THE PENSION WOULD NOT COLLECT AS MUCH MONEY.
UH, SO WE'RE SAYING NO, UH, WE'RE WE NEED TO COLLECT THIS MUCH MONEY FROM THE PENSION.
ON THE FLIP SIDE, WHAT I'VE SEEN FROM SOME OF MY OTHER CLIENTS IS, IS THE, THE CITY OR EMPLOYERS DIDN'T REALIZE THAT THEY COULD GO HIRE MORE PEOPLE AND THEY DIDN'T HAVE TO ACTUALLY PAY THAT UAL RATE ON THE NEW PEOPLE PAYROLL.
SO WHEN THEY WANTED TO EXPAND THEIR POLICE FORCE, THEY WERE HESITANT TO DO SO BECAUSE THEY THOUGHT IT COST 54% OF PAY.
AND SO WE'RE SAYING NO, EXPANDING NEW EMPLOYEES ADDS 6% OF PAY FOR THOSE NEW EMPLOYEES, AND YOU STILL HAVE THE SAME DOLLAR AMOUNT YOU'RE PAYING ON THE UAL.
SO, SO THAT'S HOW WE'RE TRYING TO ADDRESS THE, THE PAYROLL ISSUES YOU'VE RUN INTO.
AND MY SECOND QUESTION IS AHEAD, REALLY NOT A QUESTION, BUT GO AHEAD.
I WAS JUST GONNA SAY, I THINK I LIKE SCENARIO THREE.
I DO LIKE THE COLA PIECE OF THAT.
UM, AND I DO LIKE THE IDEA OF PAYING, OBVIOUSLY UPFRONT, BUT IT'S, IT'S THE SCENARIO OF HOW DO WE DO THAT AND, AND NOT, UM, BORROW TO MAKE THAT HAPPEN OR WHATEVER.
SO IT'S, IT'S AS IF WE'VE BEEN GIVEN THIS PUZZLE, I FEEL LIKE I'M IN THE MIDDLE OF A MAZE AND I DON'T KNOW AT THIS POINT WHICH WAY TO TURN
SO JUST, UM, UH, TRYING TO PICK SOME OF THE PIECES OF THE COMPLEXITY.
IT'S A COM IT'S A COMPLEX SITUATION ANYWAY, BUT THERE'S SOME PIECES OF IT THAT I THINK MAYBE WE COULD COME AROUND, UM, AS A GROUP.
UM, APPRECIATE THE PRESENTATION AND I'M STILL DIGESTING EVERYTHING A LITTLE BIT, UM, FROM LIKE THE, I UNDERSTAND, UM, SORT OF, I GUESS GENERALLY WHY, UM, THE ADJUSTABLE RATE THE ADC IS, IS RECOMMENDED AND NECESSARY IS JUST A PERSON WHO LIKES TO TRY TO BUDGET, YOU KNOW, FOR MYSELF AND I THINK FOR THE CITY, IT HAVING SOMETHING A LITTLE MORE FIXED, OR AS MS. BLACKMAN WAS SAYING, LIKE WITH CAPS OR LIMITS MAKES ME FEEL BETTER.
UM, I'M WONDERING LIKE, WOULD, WOULD YOU SUPPORT OR RECOMMEND A SCENARIO THAT HAS SOME CAPS TO KEEP US WITHIN, LIKE SOME BUDGET BOUNDARIES WITH MAYBE EVERY FIVE YEARS WE WOULD LOOK AT ADJUSTING OR PUTTING MORE INTO IT? IS THAT, IS THAT EVER USED? UH, IT, IT IS, SOMETIMES YOU JUST HAVE TO BE VERY, VERY CAREFUL HOW YOU, UM, STRUCTURE THOSE CAPS AND THEY MAY NEED TO CHANGE OVER TIME.
AND SO IT'S, IT'S A MUCH MORE COMPLEX SYSTEM TO MANAGE.
HOW DO CITIES, OTHER CITIES THAT ARE DEALING WITH THE SITUATION DEAL WITH, LIKE WITHOUT THE CAPS WHERE IT'S JUST A RIGHT WILD FLUCTUATION.
SO, UM, THERE ARE, THERE ARE TWO PIECES THAT WE COULD ADD HERE THAT MIGHT HELP WITH THAT.
FIRST, UH, WE HAVEN'T TALKED ABOUT WHEN, YOU KNOW, WHAT THE NEW CONTRIBUTION IS.
AND, AND WE HAVE NOT SPELLED THAT OUT IN OUR PRELIMINARIES, BUT, UH, WE WILL BE LOOKING AT THAT AND, AND PROBABLY WHAT WE ARE CURRENTLY THINKING AND TOYING WITH IS, UH, YOU HAVE THE 1 1 20 23 VALUATION, WHICH WILL BE COMING OUT VERY SHORTLY HERE.
UH, AND YOUR FISCAL YEAR STARTS OCTOBER ONE.
AND, AND SO WE COULD HAVE THE 2023 VALUATION TRIGGER CONTRIBUTIONS STARTING 10, 1 20, 24,
[01:10:02]
THAT WOULD ALLOW THE CITY TO HAVE THAT IN THEIR, TO HAVE TIME IN THEIR BUDGET PROCESS TO SEE WHAT THAT DOES.UH, SO THAT'S A VERY COMMON MECHANISM.
UH, USUALLY IT'S ABOUT A YEAR, BUT IT CAN BE, I'VE SEEN IT 18 MONTHS AND EVEN TWO YEARS, UH, IN TERMS OF A, A DELAY, LESS DELAY IS BETTER, BUT UM, UH, IT CAN WORK JUST FINE, UH, WITH THAT TYPE OF DELAY.
THEN, UM, WE ALWAYS PROVIDE PROJECTIONS AND CAN PROVIDE A RANGE OF PROJECTIONS SO THAT YOU UNDERSTAND, UH, HOW THAT NUMBER COULD CHANGE IN THE SHORT TERM.
AND, AND THEN LASTLY, WHEN THERE'S A SIGNIFICANT EVENT THAT CHANGES THINGS BEYOND EXPECTATIONS, UH, WE HAVE RECOMMENDED ADJUSTMENTS TO THE AMORTIZATION OR GRADING IN THAT ADDITIONAL COST, UH, TO GIVE MORE TIME SO IT BECOMES MORE OF A CONVERSATION WITH THE SYSTEM AND THE ACTUARY TO MAKE SURE, UH, THAT IT WORKS.
UM, RATHER THAN PUTTING HARD FORMAL CAPS ON IT THAT MAY OVER TIME NOT ADJUST SIGNIFICANTLY ENOUGH.
I JUST TO KIND OF STEP BACK FOR A MINUTE, UM, I REALLY APPRECIATED MY COLLEAGUES' COMMENTS ON, I THINK A LOT OF FOLKS SEEM TO BE INTERESTED IN DOING LIKE AN INITIAL CASH INJECTION OR SOMETHING TO SORT OF MITIGATE OUR, OUR YEARLY PAYMENTS INTO THIS.
UM, AND I SUPPORT SOME VERSION OF THAT AS WELL.
AND I DON'T FEEL LIKE I CAN MAKE ANY KIND OF EDUCATED RECOMMENDATIONS ON ANY OF THIS PRESENTATION, UM, UNTIL I KNOW WHAT WE'RE GOING TO DO, UM, FOR THAT, FOR PAYING DOWN ON THE DEBT, PAYING DOWN ON THE MORTGAGE KIND OF SCENARIO.
UM, AND SO I'M GONNA BE LOOKING FORWARD TO THAT IN ADDITION TO US LOOKING AT IT AS A LET'S PAY DOWN IN SOME BIG PAYMENT.
I'D ALSO THINK AS A COUNCIL WE SHOULD LOOK AT HOW DO WE GENERATE MORE REVENUE THAT WOULD BE ONGOING THAT WE DON'T ALREADY HAVE, UM, YOU KNOW, ACTIVATION OF REAL ESTATE OR THINGS LIKE THAT, UM, THAT WE REVENUE WE DON'T ALREADY HAVE, WE'RE NOT ALREADY REALIZED IN THE CITY THAT WOULD BE A SOURCE OF REVENUE GOING FORWARD IN THE FUTURE THAT COULD ALSO SERVE AS THAT BASELINE.
SO IT'S JUST, UH, I'LL BE LOOKING FORWARD TO THAT IN FUTURE BRIEFINGS.
AND KIND OF PIGGYBACK WHAT YOU'RE SAYING, UM, ON TRYING TO MAKE SURE THAT WE DO UNDERSTAND THE REASON WHY HERE, THE REASON WHY WE'RE HERE, WE ARE TRYING TO COME UP WITH A PLAN, A PLAN, UH, WORKING WITH A PLAN.
I THINK THIS IS A FIRST START.
WE ARE TRYING TO COME WITH A PLAN, BUT WHEN WE TRYING TO TALK ABOUT A BUDGET INFUSION AND CASH, HOW WE COME ABOUT THAT, IT GONNA TAKE TIME TO DO THAT.
AS I SAID AT THE BEGINNING, I MEAN, EVERYTHING'S IS ON THE MARKET, BUT RIGHT NOW, I GOTTA DEPEND ON THE ACTUARY.
I GOTTA DEPEND ON YOU, YOU GOTTA DEPEND ON THE PENSION TO TELL ME WHAT THAT PLAN IS GOING TO BE.
AND WE, AS A POLICYMAKER, WE GOTTA SAY, DO, CAN WE AFFORD TO PAY THAT PLAN? AND THAT'S THE BIG ISSUE WITH YOU SAYING, BUT IT'S STILL GONNA TAKE US TIME TO FIGURE OUT HOW WE'RE GONNA PAY.
IT'S ALMOST LIKE A LEADWAY PLAN.
AND WE ALSO GOTTA MAKE SURE IN THE FUTURE THAT OUR CITY MANAGER AND THE BUDGET, THAT WE BUDGET THE MONEY DOWN THE ROAD TO, TO MAKE THAT PAYMENT OF WHATEVER GONNA BE.
SO WHAT I'M SAYING IN FRONT, THE ACTUARY HERE, WE GONNA COME BACK SOMETIME FIRST PART OF THE YEAR AND SAY, HERE IS MY FINAL NUMBER.
IS THAT A FIRST STATEMENT? YES AND NO.
SO YES, IT, WE WILL COME BACK WITH THE, UH, ANOTHER PRELIMINARY RECOMMENDATION IN THE SPRING FOLLOWED UP BY A FINAL REPORT THAT WILL HAVE, UH, THE FINAL, WELL, THE FINAL NUMBERS AS OF THAT POINT IN TIME.
BUT OUR RECOMMENDATION IS ACTUALLY THAT THOSE NUMBERS CHANGE EVERY YEAR.
AND SO, SO THEREFORE, EVEN THOUGH WE DO COME UP WITH, WE COULD COME WITH A BIG LUMP SUM, WE STILL COULD DO THE RAILWAY PLAN AND PAY AS WE GO AND FIGURE IT OUT, YOU KNOW, YEAR FOUR YEAR FINE, THAT WE STILL GONNA DO A BIG LUMP SUM AS WE MONITORIZE OUR ASSET.
IS THAT A FAIR STATEMENT? WELL, SO WITH THE LUMP SUM, I THINK THE, THE WAY I'M THINKING OF IT IS IF YOU TELL US, UH, WHAT THE LUMP SUM IS AND WHEN WE WOULD BE ABLE TO SHOW YOU HOW THE PAYMENTS WOULD ADJUST, RIGHT? BUT WE WOULD NOT ACTUALLY RECOGNIZE THE LUMP SUM UNTIL IT ACTUALLY HAPPENED.
AND, AND WE DO NEED TO KNOW WHAT
[01:15:01]
IS THAT NUMBER GOING TO BE BECAUSE YOU STILL HAVE NOT COMPLETE YOUR ACTUARY REPORT.'CAUSE IT WOULD CHANGE YEAR BY YEAR BECAUSE EVERY YEAR YOU DO AN ACTUAL REPORT, IT'S GONNA CHANGE.
RIGHT? IT'S, YES, IT'S GOING TO CHANGE, BUT THE THE SYSTEM FOR HOW IT CHANGES WOULD BE SET.
AND SO YOU WOULD JUST GET A CALCULATION UPDATE ON, ON HOW THAT WOULD WORK.
I, I KNOW MS. MIDDLETON GOTTA CATCH A PLANE.
SO GO AHEAD, DO YOUR QUESTION, THEN WE'LL GO BACK AGAIN.
CAN I JUST FOLLOW UP ON, ON YOUR QUESTION THOUGH, JUST TO UNDERSTAND.
SO THIS MORNING THE BOARD CHAIR ASKED YOU IF WE HAD A SINGLE LUMP SUM AT THE BEGINNING THAT WOULD LET US KEEP OUR CURRENT CONTRIBUTION RATE, YOU GAVE A DOLLAR AMOUNT OF WHAT THAT LUMP SUM WOULD HAVE TO BE.
CAN YOU CONFIRM WHAT THAT WAS? YEAH, IT, IT'S, SO LET ME JUST CLARIFY.
FIRST IT WAS NOT THE 34.5%, BUT THE THIRD, ABOUT 37% THAT YOU'RE PAYING IN 2024 MM-HMM
AND, AND IT'S ABOUT 1.3 BILLION, UM, TO KEEP IT AT THAT RATE.
WELL, I HOPE YOU'LL RUN SOME SCENARIOS FOR US WITH LUMP SUMS AT DIFFERENT TIME PERIODS, ALSO DIFFERENT AMOUNTS AND TIME PERIODS.
BUT MY QUESTION IS ABOUT, SINCE THE FUNDING LEVEL SEEMS TO BE DECREASING BEFORE IT'S INCREASING, DO YOU THINK THE SYSTEM IS IN DANGER OF FAILURE WHEN IT'S AT ITS LOWEST POINT? I MEAN THE, EVEN YOUR WORST CASE SCENARIO WHERE YOU SAY OVER THOSE FOUR YEARS, IT'S A NEGATIVE 1% RETURN.
YOU'RE ALREADY TELLING US THERE'S ABOUT A 13% MINUS 13% RETURN FOR THIS YEAR.
SO I MEAN, I I I THINK I HEARD KELLY SAY 30% FUNDING.
SO OF THE WHOLE PLAN, I MEAN, THAT SEEMS RIGHT.
LET'S JUST TREACHEROUS IT'S, IT'S NOT IDEAL.
THEN YOU'RE GONNA HAVE THE MINUS 13% RETURN OR THEREABOUTS.
UH, AND SO THAT'S GONNA DROP YOUR FUNDING LEVEL SIGNIFICANTLY, UH, INTO THE LOW THIRTIES.
UH, AND THEN THE CONTRIBUTIONS HAVE NOT STARTED INCREASING YET.
AND SO UNDER, UM, THE, THE GRADE IN SCENARIO, YOU'RE, UH, YOU'RE GRADING UP TO START PAYING DOWN.
AND KELLY MADE THIS POINT THAT YOU WOULD BE EFFECTIVELY HOVERING IN THE LOW THIRTIES FOR A FEW YEARS UNTIL YOU GOT UP TO THAT HIGH, UH, HIGHER CONTRIBUTION RATE.
SO, UH, BUT THE QUESTION IS, IS THE SYSTEM AT RISK OF FAILURE WHEN YOU'RE AT THAT LOW OF A LEVEL? UH, ONLY IF THE CITY CANNOT MAKE THE CONTRIBUTIONS TAKE THE PAYMENT.
SO I'LL, I'LL BUILD ON THAT BECAUSE THIS MORNING TRUSTEE TOLL HAD TALKED ABOUT, UH, WHAT A SCENARIO WOULD LOOK LIKE AT HALF OF THAT $1.3 BILLION.
AND SO I WAS THINKING, YOU KNOW, I DON'T KNOW WHAT YOU ALL HAVE RUN, I UNDERSTAND THE TIMING ASPECT.
MAYBE THIS IS SOMETHING, AND I MEAN, I DON'T EVEN KNOW THAT WE CAN ASK YOU TO DO THIS BECAUSE WE DIDN'T HIRE YOU
SO I DON'T KNOW IF WE ASK, UH, CFO IRELAND, UH, IF, UH, YOU KNOW, WE HAVE OUR OWN ACTUARY RUN THESE NUMBERS OF WHAT THE SCENARIO BECOMES IF IT'S AT, UH, HALF FUNDING AT A LUMP SUM OR AT THREE QUARTERS FUNDING.
AND THEN WHAT THE TIMING IS BECAUSE WE KNOW THAT THERE ARE MECHANISMS THAT WE MIGHT BE ABLE TO INVOKE, UM, UH, YOU KNOW, LIKE PENSION OBLIGATION BONDS IF WE WANTED TO DO THAT.
BUT IT MAY NOT HAVE TO BE, UM, THAT COMPLETE NUMBER BECAUSE WE'VE GOT OTHER OPPORTUNITIES FOR FUNDING.
THEY JUST TAKE A LITTLE LONGER TO PLAY OUT IN THE MARKETPLACE.
UM, YOU KNOW, WE'VE GOT A REAL ESTATE PORTFOLIO, BUT SINCE IT'S NOT BEEN TAXED
SO WHERE WOULD THAT COME FROM? WHERE WOULD THIS BODY GET THAT KIND OF INFORMATION? AND IT SOUNDS LIKE YOUR OWN TRUSTEES, UH, UM, ARE ASKING FOR THAT AS WELL.
WE DO HAVE OUR OWN ACTUARY THAT WE WORK WITH, UH, DELOITTE, AND WE ARE ASKING THEM TO, UH, DO SOME MODELING AS WELL.
BUT THERE MAY BE FEEDBACK THAT YOU'RE GIVING TO KYRON FOR SOME THINGS THAT YOU WANT THEM TO BRING BACK.
I BELIEVE THAT WOULD BE WITHIN THE SCOPE OF WORK, CORRECT ME IF I'M WRONG, SIR.
UH, WELL, WE'D BE BRINGING BACK REVISED RECOMMENDATIONS.
WE ARE COLLECTING FEEDBACK, BUT IT'S, IT'S STILL, WE HAVE TO RETAIN THE INDEPENDENCE OF OUR PROCESS.
SO IT'S NOT SORT OF US RUNNING ALL THE SCENARIOS.
SO I MEAN, SO THE QUESTION WOULD BE IT'S A LITTLE DIFFERENT.
I MEAN, WE MAY ARBITRARILY SAY, OR THE TRUSTEE THIS MORNING SUGGESTED HALF WHEN, UH, MAYBE YOU ALL WITH YOUR EXPERTISE WOULD SAY
[01:20:01]
HERE AND MAYBE IT'S 30% OR 70%.UM, BUT JUST TO GET AT THAT, WHAT THAT SUM MIGHT BE.
AND THEN TIMING WISE, THAT'S WHERE CERTAINLY WE WOULD BE ABLE TO WEIGH IN WITH WHAT'S, WHAT'S VIABLE IN OUR WORLD.
UM, BUT I THINK THE IDEA THAT THE LUMP SUM IS THE ANSWER IS NOT REALLY THE ANSWER.
THE IDEA IS THAT A SOUND PLAN IS THE ANSWER.
AND SO THAT'S WHAT WE'RE TRYING TO GET TO TODAY.
SO IN MY OTHER QUESTION, AND I DO HAVE MORE, IT'S JUST YOU TALK ABOUT, UM, UH, WE, THIS IS BASED ON 2022 FIGURES, AND I DON'T RECALL WHETHER YOU SAID WHEN YOU, WHEN 2023 WOULD BE AVAILABLE BECAUSE OBVIOUSLY WE WANNA WORK WITH THE MOST CURRENT, WE CAN'T OH, IT'S FIRST QUARTER.
UM, DOES THAT COUNT OR IT DON'T COUNT.
SO, UM, SPEAKING OF GROWING MONEY, UM, THE DOLLAR AMOUNT GREW THIS MORNING TO $1.3 BILLION FROM I THINK ONE, $1 BILLION THAT WE HAD ALWAYS HEARD BEFORE.
AND SO, UM, IF YOU LOOK OVER TIME, UH, AND HAVE YOU BEEN THE CONTRACTED PARTNER FOR A WHILE? FOR THE PENSION BOARD? I MEAN, ARE YOU THE ONES WHO HAVE DONE THE NO, WE WERE JUST SELECTED FOR THIS ANALYSIS JUST THIS YEAR.
SO I DON'T KNOW IF YOU ALL, WELL YOU MAY HAVE EVALUATED THIS IF IT WAS, IF IT'S 1.3 BILLION NOW AND IT WAS $1 BILLION LAST YEAR, UM, DO YOU KNOW GOING BACKWARD, YOU KNOW WHAT THOSE NUMBERS WERE? YEAH, I DON'T HAVE THAT WITH ME.
AND WE DID LOOK AT THE HISTORY OF THE SYSTEM, BUT UM, OUR FOCUS WAS MORE GIVEN WHERE WE ARE NOW MM-HMM.
SO THAT NUMBER LIVES SOMEWHERE.
AND I THINK THAT WOULD BE, AND WE CAN GET YOU THE, SOME HISTORICAL NUMBERS.
WE'LL WORK WITH KELLY TO, TO GET THAT.
SO, UH, CAN I JUST CLARIFY, UH, THE 1.3 BILLION, AND WE, WE CLARIFIED THIS THIS MORNING TOO, THAT, UH, THE 1.3 BILLION IS THE AMOUNT TO KEEP THE CONTRIBUTION AT ABOUT 37% OF PAY.
IT'S NOT THE ENTIRE UNFUNDED LIABILITY.
SO THE ENTIRE UNFUNDED LIABILITIES CLOSER TO THREE AND A HALF BILLION.
CHAIRMAN BLACKMAN, UM, OKAY, SO THIS MORNING THERE WAS A COMMENT THAT WE MAY HAVE SHOULD HAVE GONE TO AN ADC EARLIER.
CAN I ASK WHY WE DIDN'T ENTERTAIN THAT? AND WAS THAT ONLY BECAUSE THE LEGISLATION SAID WAS DICTATED AS TO THAT? AND BECAUSE I MEAN I I I, THAT WAS LIKE, IT ALMOST SOUNDED LIKE, UM, WE COULD HAVE HIT IT OFF A LITTLE BIT AT THE PAST.
SO THANK YOU FOR, FOR ASKING THAT.
'CAUSE I'VE ACTUALLY THOUGHT ABOUT THAT SOME AS, UM, IN 2016 THE LEGISLATION WAS PASSED AND IT DID NOT SET UP THE ACTUARILY DETERMINED, UH, AS THE CONTRIBUTION THE PROCEDURE.
THE FRAMEWORK FOR THE PLAN, UH, IT DID SET UP A FIXED RATE FOR THE CITY OF 34.5%.
IT PUT IN PLACE A FLOOR SO THAT IF, UH, THE 34.5% DID NOT REACH A CERTAIN LEVEL, WE HAD AN OBLIGATION OF A FLOOR THAT WE HAD TO PAY AND WE HAD TO PAY AN ADDITIONAL $13 MILLION ON TOP OF THAT, WHICH IS WHY HE'S TALKING ABOUT A DIFFERENCE OF 34.5 VERSUS 37 OR WHATEVER THAT ACTUAL PERCENT ENDS UP BEING.
SO THE STATE LEGISLATURE SET UP A FRAMEWORK AND WE FOLLOWED THAT FRAMEWORK.
AND THAT FRAMEWORK WAS TO HAVE A FIXED RATE.
AND SO NOW WE'RE AT A POINT WHERE WE REVISIT AND DETERMINE IF THERE'S A BETTER WAY AND IS THE, UH, PROPOSAL A BETTER PROCESS TO ENSURE OVER THE LONG TERM THEN THAT'S SOMETHING THAT THE BODY WILL CONSIDER.
AND I ASSUME THIS IS NOT A, UM, UNCOMMON THING AN ADC? NO.
UH, ABOUT TWO THIRDS OF LARGE PUBLIC PLANS NATIONALLY USE AN ADC.
AND I WOULD PROBABLY THINK IF THE LEGISLATURE, IF WE CAME UP WITH AN AGREEMENT.
IN OTHER WORDS, I DO BELIEVE THAT IT'S ALL OF US THAT NEEDS TO COMMUNICATE ABOUT THIS.
AND IT'S NOT ONE-SIDED FAULT 'CAUSE IT FELT THIS WAY THIS MORNING
AND SO I'M JUST WANTING TO MAKE IT CLEAR THAT THIS IS A CONVERSATION BETWEEN TWO ENTITIES THAT WANT TO MAKE IT THIS, RIGHT.
AND SO, UM, AND SO IF IT MEANS THAT WE NEED A BETTER WAY, THEN LET'S FIND THAT BETTER WAY, MODEL IT AND MOVE FORWARD.
BUT TO SAY, YEAH, THE BARN, THE COW'S OUT OF THE BARN, THE HORSES OUTTA THE BARN, WE HAVE TO, UM, WRANGLE THIS IN.
AND SO I THINK POINTING FINGERS AT SAYING, WELL, WE SHOULD HAVE DONE THIS SIX YEARS AGO.
SO THAT, THAT'S JUST MY COMMENTS.
UH, JACK, UH, WHEN YOU TALK ABOUT THE ADC, WOULD THAT MAKE OUR BUDGET THE CITY BUDGET MORE KINDA UNCERTAIN TO DO THAT? UH, I RETURN ON OUR CITY INVESTMENT WHEN YOU TALKING ABOUT A-D-C-I-I, I DON'T KNOW.
I WOULD RECOMMEND SOMETHING LIKE THAT BECAUSE THAT WILL MAKE, UH, I OUR BUDGET MORE UNCERTAIN.
[01:25:02]
SO, SO THERE WOULD BE FORECAST OR PROJECTIONS OF WHAT THAT WOULD LOOK LIKE OVER TIME.AND THAT IS WHAT HAS BEEN PROVIDED.
YES, THERE WOULD BE SOME, UH, VARIABILITY, BUT ONCE YOU'VE, YOU'VE IMPLEMENTED, IT'S NOT GONNA HAVE SIGNIFICANT SWINGS, I WOULD NOT ANTICIPATE THERE WOULD BE A LITTLE BIT OF VARIABILITY, BUT I WOULDN'T ANTICIPATE THAT IT WOULD BE, UH, VERY SIGNIFICANT.
AND THAT'S WHY THERE MIGHT BE SOME GUARDRAILS THAT YOU CONSIDER THAT YOU SET UP AROUND IT.
BUT AS WAS MENTIONED THEN THAT JUST, YOU HAVE TO BE CAREFUL WITH THOSE AS WELL.
I JUST WANNA MAKE SURE I WANNA PUT THAT ONLINE.
BUT IT'S, IT'S STILL, IT'S KIND OF UNCERTAIN IN OUR BUDGET, YOU KNOW? UM, I JUST WANNA MAKE SURE IT'S CLEAR TO THE PUBLIC, YOU KNOW, UH, WE, WE, AT A CITY DOLLAR, WE DO HAVE A BIG BUDGET, YOU KNOW, THAT WE GOTTA LOOK OUT FOR ALL OUR RESIDENT AND, AND WE THINK PUBLIC SAFETY IS NUMBER ONE.
YOU KNOW, WE GOTTA HAVE A SAFE CITY, YOU KNOW, WE GONNA MAKE SURE THAT OUR, OUR PUBLIC SAFETY DO GET THEIR RETIREMENT, MAKE SURE THEY GET ALL THEIR BENEFIT.
BUT WE ALSO GOTTA BE VERY, VERY CAREFUL, YOU KNOW, WHAT WE DO.
UM, AND NOW THAT WE ARE NOT GONNA CRY ON A SPILL MILK, WHAT HAPPENED SIX YEARS AGO, WE ARE HERE TO DATE AND, AND I THANK Y'ALL FOR COMING HERE AND LETTING US KNOW WHAT'S GOING ON WITH THAT.
UH, COUNCILWOMAN WILLIS, YOU KNOW.
YEAH, I JUST WANTED TO LOOK AT THAT TOO.
'CAUSE WHAT WE ARE TALKING ABOUT IS OUR, I MEAN, SOME OF THOSE NUMBERS ARE REALLY BIG WITH THE ADC.
SO I MEAN, OUR RESIDENTS MAY BE FACING SERVICE CUTS FOR DECADES.
AND SO THAT'S THE OTHER SIDE OF THIS EQUATION THAT WE HAVE TO LOOK AT BECAUSE WE JUST WENT THROUGH BUDGETING, WE'RE GOING THROUGH BOND AND NOBODY WANTS SERVICE CUTS
SO, UM, YOU KNOW, THAT IS GONNA BE A LOT OF HEARTBURN, BUT STILL WE HAVE AN OBLIGATION.
SO THAT'S MY QUESTION TOO, IS IN LOOKING AT THOSE OTHER ACTUARY ACTUARIAL REPORTS THAT YOU DIDN'T PREPARE WAS ADC UM, SUGGESTED IN THOSE PREVIOUS YEARS AS SOMETHING TO PURSUE.
I MEAN, MS. WILEY, YOU HAD SAID SOMETHING LIKE 45% OF TEXAS PLANS HAVE MOVED TO THIS.
SO I MEAN, IT SEEMS LIKE IT'S BEEN OUT THERE FOR A LITTLE WHILE.
UM, WAS THIS IN PREVIOUS REPORTS OR RECOMMENDED OR? SO I HAVEN'T REALLY SEEN FOR THIS PARTICULAR PLAN A FOCUS ON MOVING TO IT.
THERE'S MORE JUST KIND OF AWARENESS OF THE INSUFFICIENCY.
I I DO THINK THAT IN THE LAST SEVEN YEARS YOU'VE BEEN GETTING A LOT MORE INFORMATION FROM THE SYSTEM ACTUARIES AND THEY'RE KIND OF LOOKING AT THE PROJECTIONS IN THE FORECAST.
SO LIKE RIGHT NOW WHERE YOU'RE ANTICIPATING THE FUNDED STATUS TO DROP SOME OVER TIME BECAUSE THE CONTRIBUTIONS AREN'T LARGE ENOUGH TO COVER BOTH THE NEXT YEAR'S WORTH OF SERVICE AND INTEREST ON WHAT YOU OWE.
SO I MEAN, THERE'S DEFINITELY BEEN MORE OF A CONVERSATION THERE, BUT LIKE BILL SAID, THERE IS NO MAGIC BULLET.
UM, IF THERE WAS, I'M SURE THEY WOULD'VE CERTAINLY SUGGESTED IT, BUT IT REALLY IS INTENTIONAL CONVERSATIONS AND ON BALANCE, AND I'M SPEAKING TO COUNCILWOMAN BLACKMAN'S POINT ABOUT THE GUARDRAILS.
UM, ONE OF THE THINGS THAT WE'VE SEEN WITH SYSTEMS OVER THE LAST TWO DECADES THAT HAVE BEEN VERY SUCCESSFUL WITH GUARDRAILS IS INTENTIONALLY RECOGNIZING THAT BUDGET PAIN ISN'T THE SAME BETWEEN UP AND DOWN.
AND SO THERE ARE SOME SYSTEMS THAT BASICALLY HAVE SAID, YOU KNOW, UNTIL WE GET TO FULLY FUNDED IN THE YEAR, IF WE HAVE A GOOD EXPERIENCE, A GOOD MARKET RETURN, THE MEMBERS' BEHAVIOR, THEY DON'T LET THE CONTRIBUTION DROP.
AND YOU CALL IT KIND OF A STICKY RATE AND BUILD A BIT OF A BUFFER.
AND BY DOING THAT, IT CAN HELP TO MAKE A LITTLE SAFER TO PUT SOME, YOU KNOW, MARKS ON THE UP.
'CAUSE IT'S, YEAH, YOU GOTTA PAY NOW OR PAY MORE LATER.
BUT I, I DO THINK IN, IN YOUR SYSTEM, UH, SIEGEL, THE ACTUARY HAS CALCULATED AN ACTUARILY DETERMINED CONTRIBUTION AND PUBLISHED IT IN THEIR VAL REPORT, UH, FOR THE LAST SEVERAL YEARS.
I DON'T REMEMBER EXACTLY WHEN THEY SAID IT'S BEEN OUT.
I THINK IT STARTED, IT'S, IT STARTED WITH A 25 YEAR AND THIS WAS THE SECOND OR THE THIRD THAT'S BEEN IN THERE.
BUT IT'S A COMPARATIVE INFORMATION IN TERMS OF BENCHMARK AND KIND OF THE AWARENESS OF THE DISCONNECT.
AND, AND SO I THINK THE, THE POINT THEY WERE CONVEYING WITH THAT IS THIS IS THE LEVEL YOU SHOULD BE FUNDING THE PLAN COMPARED TO WHAT YOU ARE.
AND, AND SO, SO THERE WAS CERTAINLY THE, I THE NOTION OF AN ACTUARILY DETERMINED CONTRIBUTION HAS BEEN OUT THERE FOR A WHILE.
SO MEAN THAT'S SOMETHING THAT, YOU KNOW, FOR US TO HEAR BECAUSE THIS, UH, COMMITTEE JUST CAME TOGETHER A COUPLE MONTHS AGO.
AND SO I TOO WAS KIND OF SHOCKED AT THE STATEMENT ABOUT THE CITY SHOULD HAVE BEEN CONSIDERING THIS FOR SIX AND A HALF YEARS BECAUSE I FEEL LIKE THE GROUP THAT ADMINISTERS THE PLAN SHOULD BE MORE VOCIFEROUS, UM, ABOUT GETTING THIS IN FRONT OF A BODY.
[01:30:01]
GUESS THAT'S STAFF WISE AND, AND, UM, UH, JUST TO, TO LOOK AT AND THE, FOR THE BOARD TO HAVE MORE LINES OF COMMUNICATION SO THAT IT'S NOT SUCH A SURPRISE THAT YOU SHOULD HAVE BEEN DOING THIS INSTEAD OF THE, HEY, WE, WE'VE GOT A SOLUTION THAT WE THINK IS VIABLE THAT WE SHOULD ALL BE CONSIDERING RIGHT NOW.SO, YOU KNOW, IT'S A NEW DAY, SO LET'S, LET'S HAVE THAT KIND OF EXCHANGE GOING FORWARD.
I WOULD SAY, AND AS PART OF THE CONVERSATION, I THINK IT WAS COUNCILMAN WEST THAT MADE THE POINT THAT WE'RE KIND OF TALKING ABOUT TWO THINGS.
AND THAT IS VERY HELPFUL WAY OF THINKING.
YOU HAVE THE ONGOING OPERATIONS OF THE PLANS, YOU KNOW, PEOPLE THAT ARE PROVIDING SERVICE RIGHT NOW IF YOU'RE BUILDING A NEW FIRE STATION COMING IN AND THE COST OF THOSE BENEFITS.
AND THEN THERE'S THE COST OF, YOU KNOW, WHAT'S BEEN ALTERNATELY REFERRED TO AS LEGACY DEBT, THE UNFUNDED ACTUARIAL LIABILITY, ALL THOSE THAT HAS TO DO WITH SERVICE THAT'S ALREADY BEEN DONE.
AND SO THAT IS WHY ONE OF OUR RECOMMENDATIONS IS REALLY INTENTIONALLY SPLITTING THE DISCUSSION BETWEEN THE NORMAL COST, THAT'S THE PERCENTAGE OF PAY OF THOSE THAT ARE WORKING GOING FORWARD, AND THEN LOOKING AT THE DOLLARS OF RECOGNIZING THE ALREADY COMPLETED SERVICE.
WITH THAT CHAIRMAN STEWART, CHAIRMAN BLACKMAN.
UH, TO A POINT THAT A COUPLE OF YOU HAVE MADE ABOUT THE, THE SIGNIFICANT AMOUNT THAT IT IS, I JUST WANT TO ACKNOWLEDGE AND REALLY APPRECIATE THE WORK THAT CHIRON DID ON PRESENTING SOMETHING THAT STEPS UP OVER FIVE YEARS THAT MAKES IT, UH, SOMETHING THAT WOULD BE MUCH MORE ABLE FOR US TO MANAGE FROM A BUDGETARY PERSPECTIVE.
IT'S STILL BIG NUMBERS, BUT THANK YOU FOR RECOGNIZING THAT AND, AND AT LEAST, UH, WORKING WITH US ON THAT.
YEAH, AND AND JACK, I'M GLAD YOU BROUGHT THAT UP.
YOU KNOW, WE, WE AS A CITY COUNCIL, YOU KNOW, WE, BY THE STATE LAW, WE GOT A BUDGET BUDGET ONCE A YEAR, YOU KNOW, AND NOW WE DO A TWO YEAR BUDGET, YOU KNOW, TO DO THIS, WE LOOKING OVER 20, 30 YEAR PLAN, 70, 70 YEAR PLAN.
BUT FOR US TO COME IN AND SAY, HEY, HERE IS THE IDEAL SITUATION, GIMME $1.3 BILLION, YOU KNOW, YOU JUST DON'T GO TO THE BANK AND WRITE A CHECK FOR $1.3 BILLION.
YOU KNOW, WE KIND OF HAVE A PLAN.
SO I THINK OUR PLAN HERE AT THE CITY COUNCIL AND MCCALL, CORRECT ME IF I'M WRONG, WE ARE TRYING TO DEVELOP A PLAN.
WE ARE WORKING FOR A WORKING PLAN, A RECOMMENDATION TO GET THIS DONE BEFORE THE 25TH, 2025.
I BELIEVE WE ARE ON SCHEDULE WITH A PLAN, SOME TYPE OF PLAN, YOU KNOW, IT'S A STARTER OF PLAN TO GET IT DONE.
BUT IF WE DO NOT HAVE FULL COOPERATION OF THE ACTUARY TO COME IN AND GIVE US A GREAT PRESENTATION, SAY, HERE IS THE OPTION HERE IS IS THE DATA, AND HERE'S THE DATA THAT I GOT THAT I RECEIVED.
I FEEL LIKE THIS IS A WORKABLE PLAN.
'CAUSE WE GOT TO HAVE A WORKABLE PLAN, BUT WE'RE ALSO GOTTA BE CAUTION OF THAT.
THE, THE POLICE, THE FIRE AND OUR EMPLOYEES OUT THERE SAID THEY ARE COMFORTABLE AND THEY FEEL THAT THEY GOING TO WORK FOR THE CITY OF DALLAS.
AND THEY KNOW AT THE END OF THE DAY WHEN THEY RETIRE ON THE FIRST OF THE 15TH, THEIR CHECK CAN BE CASHED.
BUT THE BOTTOM LINE IS UP TO US TO COUNCIL AND THE POLICYMAKER TO PAY THE BILL.
IT'S OUR RESPONSIBILITY TO PAY THE BILL.
SO IF WE'RE GONNA PAY THE BILL, WE ARE GONNA MAKE SURE THAT WE DO HAVE AN ADEQUATE PLAN.
WE'RE GONNA MAKE SURE WE'RE GONNA LOOK AT TURNING ON EVERY ROCK AND TO MAKE SURE THAT WE ARE NOT GONNA BE IN THIS SITUATION AGAIN.
IN 2013, WE WAS IN THIS SITUATION, YOU KNOW, THAT WAS 20 YEARS AGO, A DECADE AGO.
WE ARE TRYING TO MAKE SURE WE WOULD NEVER GO BACK TO THE PLAN, EVEN THOUGH YOU MIGHT FEEL THAT WE ARE MOVING KIND OF SLOW RIGHT NOW.
BUT THIS COMMITTEE JUST CAME TOGETHER.
IT AID US ON THIS COMMITTEE AND I WANNA MAKE SURE THAT Y'ALL OUT THERE AND THE POLICE AND THE FIRE AND THE EMPLOYEES, WE ARE THE POLICY STEWARD.
WE ARE GOING, WE HAVE A PLAN, WE ARE GONNA TAKE CARE OF YOU.
THE CITY OF DALLAS IS GONNA TAKE CARE OF THEY PEOPLE.
AND, AND I MAKE A PROMISE WITH EVERYONE HERE, WE ARE GONNA TAKE CARE OF OUR WORKERS.
AS A CITY OF DALLAS, WE ARE, WE APPRECIATE YOUR SERVICE AND I'VE BEEN HERE FOR A LONG TIME, YOU KNOW, POLICE AND PENSION, WE ARE GONNA TAKE YOUR EMPLOYEES.
AND WITH THAT, I'M LET, UH, COUNCILWOMAN BLACKMAN SAID A THREE WORDS NOW YOU GOTTA SET A FEW WORDS THEN I CAN GO.
YOU SEE HOW A GREAT JOB Y'ALL DID.
UH, JACK, AT THE END OF THE DAY, WHAT IS OUR NEXT STEP? AND I KNOW THAT WE ARE COMING BACK IN DECEMBER, UH, TO DO A PLAN AND STILL WORKING ON A PLAN.
SO CAN YOU TELL EVERYBODY WHAT IS OUR NEXT STEP? SO OUR NEXT STEP FOR THE COMMITTEE WOULD BE A, I BELIEVE IT'S UH, THE SECOND THURSDAY IN
[01:35:01]
DECEMBER, MAYBE DECEMBER 14TH OR SO, UH, ANOTHER AD HOC COMMITTEE MEETING.UH, PROVIDE SOME OPTIONS, UH, OF SOME FUNDINGS OF SOME WAYS THAT WE MAY BE ABLE TO ADDRESS, UH, THE, THE, THE, THE NEEDS HERE.
Y'ALL WILL GET YOUR FINAL REPORT FROM THE BOARD AND THEY WILL UPDATE THEIR NUMBERS AND BE BACK IN FEBRUARY.
BUT THIS WILL TAKE US SEVERAL MONTHS, RIGHT.
BUT WE'RE ALL WORKING TOGETHER AND I REALLY APPRECIATE KELLY AND THE BOARD AND THE WORK THEY'RE DOING AND THE COUNCIL OF COURSE.
BUT TOGETHER WE WILL GET THIS DONE.
AND I JUST WANT PUT A, A SHOUT OUT TO, UH, TC OUR CITY MANAGER AND I SPOKE TO HIM YESTERDAY AND I SAW, SPOKE TO HIM TODAY, THE CITY MANAGER'S BEHIND THIS AND, AND WE ARE GONNA FIND THE MONEY.
WE'RE GONNA FIND A WAY TO TAKE CARE OF THIS.
SO SLEEPS SOUND THE NIGHT YOUR MONEY'S IN GOOD HAND.
AND I JUST WANNA ALSO SAY THAT WE REALLY HAVE APPRECIATED, UM, EVERYONE THAT INVOLVES INTENTIONALITY.
WE'VE GOT INFORMATION OBVIOUSLY FROM THE SYSTEM STAFF, UM, AS WELL AS THE CURRENT ACTUARY, THE SYSTEM, THE CITY STAFF, AND THEN MEETING COUNCIL TODAY.
YOU KNOW, IT'S CLEAR THAT EVERYONE IS DEEPLY VESTED AND CARES ON THIS ISSUE AND IT'S MADE IT EASIER FOR US.
THE AD HOC COMMITTEE ON PENSION IS ADJOURNED.