Feb 14, 2017 City Council on 2017-02-14 2:00 PM

We're gonna get started. It's 2 0 3. Before we do, want to welcome Aaron Lee-ow, our interim city attorney. Sitting on my left, good to have you. You've been here, just different positions, so wanted to acknowledge that. Work section item 1A, receive report, hold discussion, give staff direction regarding the Texas Municipal Retirement System and the Denton of Fireman's Relief and Retirement Fund. Thank you mayor, Brian Langley, assistant city manager. Today I want to, I couldn't think of anything better to do on Valentine's Day than to come today to talk to you about pensions in the city of Denton. And so I want to spend some time with you talking about pensions today. I'm gonna give you an overview of those and answer hopefully any questions that you have on these issues. Also I want to take a minute to introduce a few guests that we have with us today from the Texas Municipal Retirement System. We have David Gavia, the executive director, and Anthony Mills , the regional manager. And also from the Denton Fire pension, Derek Oswald, the chairman of the board is here today. And so I want to thank all of these gentlemen for being here today for this presentation. So I have a number of slides for you on the pensions. I think I can get through this relatively quickly and then try to answer any questions that you have. It may, I'm at the pleasure of the council, but it may work best for me to go through all the slides and then try to answer your questions. But again, however you want to do that is certainly fine with me, but the slides do tend to build on themselves and the information builds on itself as we go. So with that, let's get to it. So an overview of the presentation today, I want to provide with you just a summary of some of the recent news articles that you've seen about pensions around the country. And try to also tell you about some key terms, pension terms. We throw around a lot of terms in terms of liabilities and assets and return on investment assumptions. Try to give you a little bit of the vernacular so you'll understand that. And then I'd also like to briefly review the history and governance structures for both TMRS and the fire pension system. I think each of these are different plans, but they are connected in terms of how they're funded and I want to talk to you about that. Provide you an overview of the benefit design and the funding methodology for each fund. And then we'll get a little bit more in detail to talk about the asset allocation, the return assumptions, the investment performance. And then we'll wrap up with a summary of the other key act uarial assumptions and funding status. This is typically what you hear about as a fund is 70% funded or 80% funded or 90% funded. I'll show you how that works. And then provide just an overview of each fund, a summary of that and any key management issues we think we need to highlight for you. So it's a lot, but we'll get through here pretty quick. So pension plan news, I think everyone's seen some of the news around the country about pension plans. There's been some widely reported stories related to Chicago, Houston, a number of other places. And most notably in this area, we've had the Dallas Police and Fire Pension Fund. And I know one of the purposes of this discussion is based on the concerns they've had in Dallas and issues they've had is where are we as a city and what's our funding status, and so I'll try to go through that with you . Each of those plans is different, but there are a few common problems that you see in the plans I've mentioned and some of the other issues around the country in terms of pension plans. And these are not universal, but you'll see some of these threads through these different ones. Pension systems are not receiving sufficient required contributions. Some of them have unsustainable benefit structures. And many times you'll find unrealistic actuarial assumptions. And the most common one that you hear about is return fund investments. But there are many other assumptions that these plans make. And then there are finally, each of these plans can have some inflexible options for the employer. And all of those combined create some issues that these plans have as a whole. But I'm here to tell you, fortunately for the city of Dent on, I think we can differentiate ourselves from some of those plans. And the plans that we operate in are separate and distinct from the plans I've mentioned to you before. And I'll tell you a little bit about each of those, but they are separate from Dallas, it's separate from Houston, separate from some of Chicago certainly, and other plans that you see around the country. What we've really tried to focus on is conservative actuar ial assumptions, strong funding policies, and what I think are responsible management practices over time to manage these funds. And I'll show you this as we go through the presentation. So just some key terms to kind of make you familiar with. And again, I know that pension plans are somewhat complex when you throw around a lot of the different terms. The first one is the assets, and it's referred to as the actuarial value of the assets. And that's based on what we've actually earned in investments over time, how those are being smoothed with the actuarial numbers versus the market value. Going forward, the return on investment assumption is a critical assumption of what those assets are going to be in the future. And then you have the actuarial accrued liability, the AAL. This is a factor of many different elements including mortality and demographic assumptions, retirement assumptions, cost of living adjustments that we made, inflation, benefit levels, etc. A lot of different things go into that. And the most scary term on here is the unfunded actuarial accrued liability. This has a lot of negative words. Unfunded, that's always negative, and liability is negative . And so you put those two together and it's certainly a negative term. But that's the UAAL. It's really just the difference between the AVA and the AAL . And then your funded ratio is the AVA divided by the AAL. So when we talk about the funding ratio or the unfunded liability, these are what those terms mean and how they're basically figured. So first up, I'm going to talk to you about the TMRS system , Texas Municipal Retirement System. TMRS was created by the Texas Legislature all the way back in 1947. Denton became a contributing member in 1952. It's governed by a six member board of directors and they 're appointed by the governor of Texas. And although there is this relationship of the governor making these appointments to the board, TMRS is not dependent on the state, does not receive any funding from the state, does not have any other relationship than really the statute that enables it and the board that governs it. There's also an advisory committee which is created for TMRS which provides input to the board on a variety of topics. Unfortunately, I sit on that advisory committee and so as a City of Denton representative, I'm able to be a part of some of those different conversations that are coming forward on actuarial changes or changes in how we look at liabilities and plan changes. I have a seat at that table to be able to understand that, which I think is very beneficial for us. This is what's known as a multi-employer plan. So it provides benefits to over 870 different cities across the state. Many of these are small cities and some are large. But while the management of that fund is combined for the investment of assets, the management of all the retiree benefits and so forth, each city represents a separate plan. And it's independently determined by the city what those level of benefits are going to be. So even though there are 870 different cities, there's a menu of options that you have to determine what level of benefits that you want to operate under. TMRS is a very large statewide plan. Assets are about $25 billion. There's a number of different employees and retirees across the state in TMRS. There's active employees supporting the system, about 107, 000 different active employees in the TMRS system, about 56, 000 retirees. And then there's another category of inactive employees entitled but not yet receiving benefits, about 51,000 employees. These would be employees who have vested in the system but for whatever reason have not began taking those benefits. Maybe they went to another job, they haven't hit an age where they're willing to make that decision to retire. But they're entitled to some benefit at the future. So in total about 214,000 individuals in some way impacted by TMRS statewide. So drilling down on that just to the city of Denton, we have about 1,200 active employees in the plan, about 500 different retirees, and about 443 that are in active employees but are entitled to those benefits at some point in the future. So a little bit about the benefit design of TMRS. As I mentioned to you earlier, cities are able to select from a menu of options available under that TMRS statute to design a pension benefit that we think is appropriate for our community. And each community gets to make those decisions. But an important point is state law does require employee contributions and it requires cities to pay actuarially determined contribution rates. I've talked about some of the pension plans around the country. That has not been the case. So there's been an opportunity in some plans to take a contribution holidays, to not make the required contributions to pay less than that, and over a period of years that creates funding challenges. Here if there's an actuarially required rate to be paid, we either have to pay that rate or change the level of benefits that we have and we've been making those actuarially required contributions. TMRS is known as what's known as a hybrid benefit plan. It's a hybrid of a defined benefit and a defined contribution plan. What that means is essentially there's a cash balance. It's a cash balance plan which is accumulated at the date of retirement, which is all of the contributions that have been made on behalf of the employee by the city, the employee's contributions, and any interest investment income that's been accrued. So for Denton, the following major design elements have been implemented. You can choose to have employees contribute 5%, 6%, or 7% of earnings. Denton contributes 7% of employees earnings into the plan. That comes out of employees checks that they have to contribute into the plan. And then the city can match that up to 200% of the employees contributions. In other words, twice of what the employee contributes. It can be 100%, 150% or 200%. The city of Denton's plan is 200%. Additionally, we have annual cost of living adjustments which are provided to retirees. And that's an amount equivalent to 70% of the consumer price index or the CPI. Most recently, the changes that were made in the TMRS plan on behalf of the city were made back in the early 2000s. The employee deposit rate was increased from 6% to 7% in 2000. And the five year vesting requirement was adopted in 2002. So it's been a number of years since we've had any kind of material changes in the TMRS plan. Yes, Mayor. >> I apologize and I know that you'd like for us to wait till slide 28 is- >> Yeah, that's correct. >> To ask questions. But I think the point that you just made is important and it may be another point that comes up that's important. So I'd like for you to go back and emphasize this because it could get lost in the slides. And because every spring is an election year in Denton. And for a number of years, people have been focusing on the thing that you mentioned in slide four about unfunded li abilities. And so you made an important point that I think that you've re-emphasized in that last bullet point on this particular page, which is that the city is required to make contributions to the retirement plan that actuarially fulfill the benefits that we're providing to the employees. Is that right? >> That's correct, yes. >> So it means the city has to contribute enough money to pay for the employees retirement along with what they're paying and also. >> That's correct and it's based on a number of different assumptions that they make about the cost of those benefits , the investment returns that will be achieved, retirement rates, so forth. And based on that calculation, if the city chooses to keep those benefits where they are, that contribution has to be made. That's correct. >> And those assumptions are not made by policy makers who are trying to cut a few corners and pay less into the plan, right? Those assumptions are made by professionals and aren't those assumptions reviewed from time to time to make sure that they don't need to be, or maybe they are adjusted . Explain that a little bit. >> Yes sir, the board for TMRS ultimately makes, adopts what they believe are the correct assumptions. But it's upon guidance of all of their investment advisors, their actuarial advisors that they have, their team of investment professionals that look at what they think they're going to earn on those benefits. Through that process, they make the best informed decision they can about all of those assumptions going forward. >> And they look back for the 65 year history of the plan to determine, have we been on target on these and they have projections for- >> I think the past certainly is something they look at, but they also update what they believe the future holds as well. So as an example, mortality rates have been reduced. People are living longer if I'm saying it the right way. So people are living longer, so they've had to make adjustments for that into the future based on what it's been in the past as an example. They try to take all those things into account and make their very best estimate of what those costs and revenues are going to be in the future. >> Again, I'm sorry for interrupting, but I think that those particular points are really important because we have some folks that are constantly wringing their hands. I think because of some of the terms and because of some of the political discussion, and if we can emphasize these points, I think that they could be a little calmer and more comfortable with the kind of responsible actions that are being taken at the state level and at the city level. >> Okay. >> Okay. >> I'll wait. >> I've got one. Thank you for opening that door. >> Sorry. >> That's all right, no. And if you have this in a slide coming up, let me know and I'll be glad to. >> Okay. >> So one real quick question. You said if your cities can select five, six, or seven percent, or cities can select one, two, three, or four percent, or cities can select 100, 150, or 200 percent, are you just using those to give an example? Are you saying those are the only options available to cities under this? >> These are the major benefit selections that are there for the cost. And I've included in your packet, there's an exhibit with an informal report which has a little bit more description about all those. >> Okay. >> But these are the major elements. >> And so I guess to me this goes to just maybe a basic lack of knowledge for it. When we say benefits, I mean we talk about TMRS and how do they manage this big pool of money that they get and all these assumptions and so forth. But that's to me the stated goal or a stated benefit of let 's say I'm working for the city. And I'm contributing to this. When I get hired on, and it's described to me what my retirement benefits are or will be. What is that? I mean, so are we saying you get so much of your salary because this says you got a cash balance. You're contributing, we're contributing, we've got this percentage of growth each year. So is it whatever's in your quote unquote account when you 're vested to retire and you choose to retire, that gets deb ited up over either lump sum or. So I'm not even sure when we talk about retirement benefit, what is it that we're talking about from the city of Denton 's perspective? You got a slide on that, great, and if it's too much that's great too. But that's where I get lost. I don't know exactly what are we saying to employees. This is what we're promising you or this is what we're saying we're going to provide you as part of your retirement package. When an employee is hired on and it depends on the age of that employee and how many years they're going to work in the system. They can make estimates of what that monthly retirement benefit will be when they retire, whatever date they think it may be. If it's someone who's going to retire much later in their life, the benefit on a monthly basis would be higher. Even if they work the same number of years as someone who starts out very young. So in other words, if you had someone who started at age 20 , worked to 40 and tried to retire, their benefit is going to be much smaller than someone who worked monthly benefit. Because they have a much projected much longer life over which that annuity has to be spread. So basically you're taking that cash balance and converting it into an annuity essentially over time. So then what I'm hearing you say is there's no really, I mean this is all fluid all the time. In other words, you're having to make these projections of who's going to retire, how long are they going to be here, how much money we need. So it's just a matter of when someone decides to retire based upon their length of service, based upon their contribution, then they have this defined benefit, cash benefit that they 're- >> Right, and I think that the hybrid style of this plan is once they actually make the decision to retire, then that is a defined benefit from that point forward, which is a different- >> Because you can determine that based upon what's in the account. >> That's correct. >> So then trying to figure out if there's enough money in, let's say, TMRS. It's that sort of forecasting of how many people are going to be retiring, how many years of service, how much, okay, gotcha. I was just trying to understand exactly what is our end goal in this. >> Right, and I have some slides that I'll address shortly. >> Go ahead. I know we'd like to wait until later, but then we forget what we want to ask. >> Right. >> So go ahead, Councilwoman Briggs, because you were first . >> Well, back to what Councilmember Gregory was saying. He said, so we pay enough in to cover everyone's retirement , right? So we pay enough cash in to recover. So what, and this is all new to me, I'm just learning, so what is unfunded? >> It's the projected cost of those benefits over time for all of our employees that we'd expect to retire, versus what we would expect to have in assets, what we would contribute in versus that liability. The difference is unfunded, and that gets amortized over a number of years. In other words, you pay that down. >> And is that where the danger lies? >> Well, I don't know if I would use the term danger. >> Danger, I'm sorry, the difficulty. >> Yeah, I think that the question is, you want to try to be, at least the benchmark is to be at least 80% funded. And you want to try to be, the goal is always, of course, to be 100% funded. >> Right. >> The reason 80%, I think, is important is because you don 't want to get that unfunded liability to be too large that it affects the contributions that you have to make, or if you have a change in expectations or assumptions that could grow dramatically on you. So I think I can address some more of that when we go through the other part of the slides, but it's an estimate of what do you think the cost of those benefits are going to be in the future, and it's an estimate of what do you think the assets are going to be as well. >> Quick question. The city contributes a matching percentage equivalent to 200% of the employees contribution. So if the employees contribute 7%, does that mean the city then is contributing 14%? >> Yes, on an actuarial basis, but because of how TMRS has been funded in the past, and some of the things we're trying to catch up with on the amortization of these unfunded liabilities is actually slightly more than that, and I do have a slide which will show you that shortly. >> So back to the mayor's question in terms of 100%, 150 or 200. So what you're saying is that there's actually some kind of different path that a city can take to actually contribute more than that, is that correct? >> Yes, but the benefit does not change. So you're going to find that we're contributing just over 17% of employee pay to the pension plan, but the benefit level is designed at this 200% matching contribution. The reason that our contribution is higher than 14% in this case is because we're trying to pay off the unfunded liability on a short timeframe. >> So when was the decision made to go to 200% and has it ever been less than that? >> I don't know the answer to that question. I can look at that. The deposit rate was changed from 6% to 7% in 2000. I suspect the matching percentage was always 200%, but I can check to see. 1985 is the answer of when that was changed. >> Thank you. >> Anthony, do you know what -- you may have to come to the mic if you want to. >> If you could come to the mic. >> That's what happens when you answer a question back over there. >> Thank you. >> Thank you, Mayor, Council. Anthony Mills, Senior Regional Manager with TMRS. The question had to do with when did the City of Denton change its plan to increase the matching ratio to 2 to 1, and that changed in January of 1985. That is when that changed. Prior to that, the City had been a 1 1/2 to 1 match. The City came in in 1952 as a 1 to 1 match. In 1985, finally, a 2 to 1 match. >> Was that change to specifically address just literally to help catch up and put more dollars into that retirement fund and system? >> Well, I think in the bulk of Brian's presentation, he's going to continue to lay out for you how the contribution rate that he spoke of, the 17-some-odd percent that the city pays into TMRS. Part of that is covering the 2 to 1 match, but it's also covering all the components, all the provisions in the city 's plan. What TMRS does with our actuaries each year is we conduct evaluation of the city's plan by looking at the plan design , by looking at the demographics, the workforce, the trends in the city. We can see what percent of payroll the city needs to continue to pay in to ensure that you're chopping away at that unfunded actuarial accrued liability so that over that 19-year amortization schedule that you've heard Brian mention, the city will have a fully funded plan. And I believe that the bulk of his presentation will continue to address that. >> Thank you. One comment, and Brian, correct me if I'm wrong. The contribution of 100, 150 to 200 percent, that's not to make up any deficiency. That's to say, like, if you go from a 100 percent to a 200 percent, you're saying all the employees that started coming in in 1985, they're basically going to get a larger potential pension pot at their retirement because we're saying as an additional benefit, we're going to contribute more money. It's not necessarily to make up something that we're behind as far as an unfunded liability. It's saying, so let's say just hypothetically, we said, well, if you wanted to start some day and go to 1.5, then you're saying everybody that gets employed after that date has a different pension package. >> It was a benefit enhancement is what it was. So it was not related to an unfunded liability. That's correct. >> Thank you. >> I'm going to press ahead. >> Those are good. >> Absolutely. >> All good questions. Just continuing on with a little bit about the benefit design. Employees vest with the plan after five years of service, which means they have some entitled to some benefit at some future date with the plan. So I mentioned the number of employees that have some potential benefit. This would be those folks that fall into this category. Members can retire at age 60 and above with at least five years of service, but employees are eligible to retire after 20 years of service regardless of age in TMRS. But the benefits earned are equivalent to the actual account balance of each employee. Again, the employee's balance plus the employer contributions plus interest. So just because you retire after 20 years does not mean you get the same benefit as if you work 30 years. It continues to grow the more years of service and as those account balances grow. The TMRS benefit design again with some menu of options that we have. It's very similar if not identical to many of the cities in the DFW region. There are some variations to that across the Metroplex for the most part. Most plans have this two to one feature, 7% employee deposit rate that I mentioned to you. So recent history, we've had a number of things that have happened in TMRS over the last few years. They made a number of different what I would consider proactive changes to improve funding this past decade. Most notably there's three things I want to mention to you. Back in 2008, I had a lengthy conversation with council at the time. I think Mayor Watts may have been the only council member that's on this current council that was part of that discussion at that time. But we had some actuarial challenges back in 2008. TMRS recognized that their actuarial method was not properly valuing some of the liabilities in the future. And so we changed from what was known as the unit credit method to the projected unit credit method. And that was done to properly value essentially cost of living adjustments that were projected in the future. So because of that, we had to have -- we had a discussion about the level of benefits in TMRS and wanted to phase into higher contributions over time. In 2015, the system synced up with some GASB changes. The Governmental Accounting Standards Board implemented GAS B 68. And we began using what's known as the entry age normal act uarial method. That's in my opinion the most conservative actuarial method that's out there. We began using that to sync up with the GASB rules. And we also closed the amortization schedule to no more than 30 years. This is the payoff schedule if you think about it, like a mortgage if you will. A number of years that you would pay off that liability. It was closed to 30 years, diversified the investment portfolio, and began to stabilize the rates. So back after we had this discussion in 2008, we had a number of detailed discussions with council. The City decided to phase into a higher contribution rate schedule to properly contribute the right dollars to pay off those liabilities over time. We originally estimated that the period that we would phase into would be eight years from 2009 to 2012. But due to some better expected financial performance, better expected performance of the pension plan, we began paying that full rate early in 2012. And we have paid that since that time. So, contribution rates. I mentioned this earlier in the presentation, but the contribution rates have increased sharply from where they were in 2008. 13.14% in 2008, all the way up to 18.74% in 2013. But over the last few years, we've seen those rates begin to fall. That was 18.5% in 2014, about 17.9% in 2015, 17.41% in 2016 . And this year, in 2017, it's 17.48%. But it actually would have fallen to be about 16.9, had we not adopted a more conservative investment rate of return assumption. We went from 7% to 6.75%. So without that change, it would have continued to fall. So these rate decreases that we're seeing are related to personnel growth that we're seeing. It's being ahead of the expectations of the plan and performance compared to some of the conservative actual assumptions that TMRS has had. In particular, the inflation assumption that they've made and what we've actually seen inflation to be. So that's caused our rate to start to drop. And we expect that TMRS plan will continue to have gradual decreases in the city contribution rate over time. In 2035, that sounds really a long ways off, but it's closer than you think, about 19 years. The normal cost contribution rate is expected to be 10%. So in other words, we expect to have to pay instead of 17% of payroll, 10% to pay the cost of those benefits over time . So we have had a policy over the last few years of, and through the meet and confer agreement, there was a connection made between the TMRS plan and what we're paying into the Denton Fire Pension Plan that it would match. Well, as that rate drops to TMRS, that's going to create pressure for the Denton Fire Pension Plan. And that's something we'll need to address going forward. And I have some more information on that in the additional slides. >> Will you go into just a real brief history on, because it's my understanding that when we had to raise our contribution to make up this deficit, the fire pension fund, we weren't making that same level of contribution. And that the negotiation was, hey, we want the same as the city. >> Yes, sir. >> And so even though we were trying to make up something, okay. >> Yes, sir. >> I just wanted to understand the context of that. >> That's correct. >> Thank you. But that was a meet and confer discussion. >> That was, yes. >> Okay. >> That's part of the contract. >> Thank you. >> So in terms of asset allocation, the current allocation that you see here, hopefully my mouse is working here. You can see the current asset allocation. This is as of September 30th. I don't have the final numbers as of December 31st. But these are the various asset classes that TMRS has invested in. Again, this is a $25 billion fund. 27% is in US equities or stocks, the domestic stock market. About 17% in international stocks. And the remainder of that is in a variety of other things that you can see here. The strategic asset allocation of where they want to go long term with assets is shown here. You'll see that equities, the US equities in particular are lower at 17.5% instead of 27. And you'll see the non-core fixed income increasing compared to what we are right now. Point of this is about 35% of the assets will be invested in equities going forward in the plan. >> Yes. >> Sorry, real return is after inflation or before inflation? >> Real return is an asset class that would be an inflation protected security that you would have. >> So after inflation? >> Yes. >> Okay. >> What is an example of that? >> TIPS, Treasury Inflation Protected Securities. You can buy those. >> There you go. Okay. Never heard of them, but that answers my question. >> So here's kind of a history of last few years of returns . You can see from 2001 to 2016, I've listed these out, the arithmetic returns that you have for the plan. You can see how the returns fluctuate over time. Even in 2008, we did have a downturn, but it was not nearly as significant as what you found in plans around the country. Part of this was related to asset allocation at the time, we primarily invested in bonds at this particular time, but fared well compared to other plans around the country. You can see the investment assumption return, the investment rate of return assumption is 6.75%. And over the last 16 years, we've earned about 7%, so we've beaten that return over the last 16 years or so. I do want to point out, 2016, I don't have the final return figure for this particular year. We're still trying to value the real estate holdings and private equity holdings. But we have plugged that in at 6.75%. We expect it to meet that return objective for this particular year or exceed it, actually. Yes, ma'am. >> Could you go back to the slide before? Just looking at this, yeah. So the 27.3 in the 17, is that when you're talking about rate of returns, is that the luck part of it? >> Is that the what? >> Like just luck, like I mean, for the market, is that kind of -- is this the part we're dealing with that we don 't know what's going to happen, per se? >> Well, I would say that for any of these asset classes, we don't know what the exact return is going to be in the future. We know what the returns have been in the past, and I think TMRS has taken a very thoughtful approach about trying to come up with what they think the assumption is going to be going forward, based on all the investment professionals that they work with, all of the actuaries that they work with. But ultimately, nobody knows exactly what the future is going to be 10, 15, 20 years from now. In fact, we probably don't know what the future is tomorrow , or what the stock market is going to be, or any of these other asset classes. And that's where we have to try to make the very best assumptions that we can, and that's one of the difficulties about trying to put an assumption together, is it is trying to make an expectation of the future. Likewise, I would say we don't know when employees are going to retire. We don't know exactly what they will be paid. We don't know how long they will live. We don't know how many employees we will have. There's a number of assumptions that go into it. You try to make the very best predictions you have, based on all the information that you have at the time. But these are not decisions that we make and never go back and adjust them going forward again. We look at this every year, and there's an experience study that TMRS does that I know David and Anthony can talk more about, that they do every four years to make sure that the types of things that they're seeing in the plan, the types of assumptions that they have, does it match up with the experience that they have. And when adjustments are needed, they make those adjustments. So as an example, we lower that investment rate of return because we didn't expect to earn that over time. And that's what creates the chart on the next? Yes. Part of that creates, part of those changes would create some of the unfunded liabilities, correct, that have to then be captured in the contribution rate that we make to the plan. Okay. Hi. Next slide, please. Oh, yes ma'am. So what happened in 2015? I understand 2008 because of recession yet. But there's 12 is fine, 13 is fine, 14, still okay. And then 16, we rebound. But what happened in 2015? Did a lot of people retire? Is that what pushes down something like that? No. No, it's the asset classes that they're invested in. So equities as an example did not have a good year in 2015. And so they weren't able to achieve those kinds of returns that they'd hope to have. I think in any of these plans, you have to look at long term, what you're going to earn. If you have your own 401(k) as an example, you're going to have some years where you have better returns than others. But you hope you average out to a positive return each year based on all the different investments that you have. So when you say equity, you mean stock market? Yes, yes. Sorry. Thank you. Okay. I'm going to keep going. Rock and roll. Okay. Yes, sir. So just some snippets of key actual information for the TM RS plan. This is as of December 31, 2015, the last actual report, which I've included in your packet. Again, the actual cost method is entry age normal. The AVA is $331 million. This is just for the Denton plan. We have an unfunded liability of $77 million. The annual payroll for TMRS employees in the city is $81.5 million. So the employees that you're talking about, a large group of employees that are here, about the 1,200 employees that I mentioned to you. The contribution to TMRS from the city in this last fiscal year was $14.4 million. About 7.1 of that came from the general fund. And I've listed a couple of other major funds for you. I haven't listed all of them, but 2.6 was electric. 2.1 was the water and wastewater funds combined, just to give you an idea of the size of this contribution that's going into the TMRS plan. The remaining amortization period that we've -- yes, sir? And let's point out that the reason that some of it's coming from the electric fund is that those are people that are employed by DME. That's correct. And same for the water/wastewater fund. Those are people that are employed in those departments. And so their pay and their retirement is coming from not from taxes, but from the fees that people pay to -- for their water bill or their light bill. Just the same as if they were buying electricity or water from a different concern, they're going to cover all of their cost, including their payroll cost and their retirement cost in the bills that they're getting for their utilities, right? That's correct. About half of our employees are in the general fund and the other half are in other funds around the city. Okay. Thank you. You're welcome. So the remaining amortization period, 19 years that I've mentioned to you, that's taking the $77 million and paying that off over those 19 years. And that's part of that contribution rate that I was mentioning to you. And you take all this together, the funding ratio is 81.1%. And then here is the projection of what that funding ratio will be over the next few years. The bars in red are the historical rates that we've had in 2015 and 2016. You see in 2017 where we are now and where we expect to be by year 2023, which also sounds like a long time in the future, but that's only six years. But almost 90% funded by that point, assuming all these assumptions are met. So the point of this slide is I do believe we are headed in the right direction from a funding perspective over time. Again, the goal is by 19 years to be at 100% funding level. So just to management comments, as I mentioned, I believe Team RS is on the right path. We're on the right path as a city, in my opinion, to pay off that liability by 2034. The investment return assumption, the 6.75%, is among the lowest rates of any large statewide plans across the country. As we've talked about, there is some risk in that number. We try to make the very best estimate we can of what we think that return is going to be. We won't know if we were successful or not for 15 or 20 years to know if we actually achieved that or not. But every few years we can make adjustments to that and see where we are. And there will be opportunities that the council has to make adjustments to benefits potentially if we were not able to earn that return over time. But just to give you an example of some other investment rate assumptions that I found, CalPERS, the California employee program for public employees across their state, it's 7%. And they just have begun reducing that from 7.5% over a three-year period. The teacher retirement system of Texas is 8%. And Dallas Police and Fire Pension, which I know all of you have seen some of the articles about, they've recently reduced that to 7.25%, but it was 8.5%. So I think when you look at TMRS versus some of these large plans, we're on the conservative side. Hopefully we will beat those numbers, but we do think they 're reasonable figures. And the final point I would make to you is with continued growth of the city, we do expect that contribution rate as a percentage of payroll to continue to drift lower. And with that change, we do need to explore a new relationship with the Fire Pension Fund of how we fund that over time, which I'll get into later in the presentation. >> Real quick, just observation, tell me if I'm on track or not. These assumed rates, it seems like when you have a higher assumed rate, you're sort of, I think your risk is increased to running into a problem. >> Yeah. >> Because it shows that the higher rates you have assumed rate, the less financial contribution whatever entity it is has to make. Whereas with a lower rate of return, assumed risk, assumed, is that what it's called? Assumption, the rate, assumed rate. Then the larger the contribution, because you're not banking on these sort of created dollars from investment activity. So let's say if you had an assumed rate of zero, what you 're saying is you just got to probably be pretty easy to calculate it out. I mean, you had forecast, and so you would have a much higher contribution because you're not achieving any growth from investment income. Is that? >> Yes, sir, that's correct. The other thing I would say about that is we could have a higher rate of return assumption and design a portfolio to get to that level of return over time. But there's higher risk with that. >> Right. >> It could be a lot more heavy on the equity exposure, maybe more private equity, maybe other things that potentially have more risk to it. So you can put a higher return in and show that with an asset allocation that could conceivably get that. But there are risks with that strategy. So hopefully we're on the conservative side of that. >> Okay. >> Okay. I'm going to power ahead. >> Are we done with questions on team irons? >> Well, if you have some questions on team irons, yes. >> We're going to wait until we got to a stopping point. >> We'll split it in a sort of by-for-cancellation presentation. >> Okay. >> One thing that I noticed was that there's some payroll assumptions built into our rate sheet and kind of how we calculate growth. So what I saw on the rate sheet was that our payroll actually outpaced what the payroll assumptions were. So we're assuming that there's 3% increase per year in payroll, and I think last year would be a good example because we had a compensation study. The compensation study increased some people's wages like 10 and 12% in some cases. So you're not going to get that 3% across the board rate. What I noticed was in 2014 there was an 8% increase in payroll. In 2016 it was 6.5%. In 2016 it was 3.5%. And then in 2017 it was solid at 3%. But over that four-year average that was on the rate sheet, that means that there was a 5% increase in payroll. But our assumption was that there was a 3% increase in payroll. Correct me if I'm wrong. Doesn't that mean that we're going to have to increase our contributions to make up for that difference? >> No, it's the number of employees, not necessarily the rate of winning kind of merit increases they're getting. So we're adding employees to the mix. And so if you add the number of employees and you still have the same unfunded liability as a percentage, that payoff of that unfunded is reduced. Because you're adding, as an example, I believe we added over 70 employees, FTEs this past budget cycle, and a variety of different funds across the city. That's not expected in the TMRS plan that we would have that kind of growth. And so because of that, you're going to have a lower, over time you would have a lower contribution rate. >> I guess my concern- >> Because the normal cost is the 10%, it's the unfunded that gets spread over a larger salary base, if that makes sense. >> So how does that work when we have, our workforce, yes, we add people kind of across the board at the bottom pretty regularly. But at the same time, we have a growing workforce in terms of the cost of the payroll because of our long term employees, if I can put it that way. So you're saying that that doesn't really affect anything. >> No, I'm not sure I fully understand the question, but in other words, the unfunded liability is what's driving our rate to be over 17%. >> Okay. >> If you didn't have that 77 million unfunded liability, and we just had to pay what was called the normal cost of the benefits, what you expect to earn as related to your year of service, it'd be 10%. So that 77 million, it gets divided over a larger salary base, it makes it appear lower as a percentage of pay. >> Right. >> It's still the same number. It has to be paid out, but if we add up, if we had 2,000 employees, we're going to have a lower percentage. I hope that makes sense. I'm trying to explain it as best I can. >> Yeah, I had a question along those lines, so it's kind of a good transition to that question. >> Okay. >> Sorry, let me pull up the presentation again. When you were talking about in 2008, the decision was made by council to increase the amount of contribution from, I think it was 13 to 18% or something. I'm having trouble placing this within the budget. What is that number? What does the number represent? >> In terms of dollars, how much was that in terms of dollars? I'd have to go back and look. I remember from that presentation, we estimated what that cost was going to be over time, but I just don't remember that number off the top of my head. >> So if you could find out for me, if there's a 1% increase in contribution, what that reflects on our budget for the general fund? >> That would be here, so if we could look at any kind of incremental changes, if this is 17%, I can get you that information. >> Okay. >> But we can calculate it, yes. >> Perfect. While I have you, let me also ask you something else. >> Yes. >> You all right? >> Chocolate. >> Sorry. >> No, it's good. >> Yeah. >> In the high, like somebody, we got the fire department in here, so we have you needed. >> I know, we've got three firefighters. >> We've got somebody here. >> Yeah. >> Okay, so when you're talking about earlier, Council Member Gregory brought up the fact that certain decisions are made by professionals at TMRS. Others are made, I think he didn't talk about it, but I'd like to talk about it. Some of those decisions are made here in terms of what we talk about, what we're going to do. What is the scope of what the city can decide to do? Is it the vesting age or the years after vesting? Is it the retirement age? What are the things that we can decide here? >> There's a number of different levers that the council has, and the basic premise is the cost of the benefits is the cost of the benefits. >> The number of different what? >> Don't go there. Yeah. >> Lovers. >> Lovers, okay. >> Options. >> Okay. >> The number of different options that the council would have. I apologize. But the cost of the benefits is the cost of the benefits. And so, TMRS's job is to try to value the cost of those benefits and tell us what that would cost and for us to make a decision of whether we are willing to pay that cost or not. And so, if this is a cost that we want to try to reduce, there are options to do that, which would include vesting. It would include the matching contribution, the employee deposit rate, it can include colas. There's a series of decisions that could be made if the council chose to do that of what that level of benefits is that they'd want to have be made. >> Do you recall in 2002 when the decision was made to go to the five-year vesting and whatever other decision was made then, do you recall what the vesting was before then? >> I don't. I was not here at the time, but I can try to find that out. >> Ten? >> Ten years. >> I hear ten years. >> Yes, sir. >> Okay. I think that's it for TMRS. Okay. >> And we'll go to Councilmember Lawson and Councilmember R iggs. >> With the five-year vesting, I think the city needs to have five years to be competitive. That's just my opinion based on other cities that I'm familiar with around the state of Texas that they've asked after five years. So my guess is that was the justification for taking it from ten to five. And then back to your question on what lever does the city have, the decision to hire so that we had a budget with 70 new employees. So you're not just looking at the base salary, you're looking at 25, 30, 35, 40% of benefits on top of that base salary. So it's something that as a council, as you move into the budget next year, to be mindful of that it costs a lot of money to add full-time employees. So that is a very specific lever that this council has when it comes to budget. >> Just to clarify, 50% of our payroll is fire and police, correct? >> And the general fund. >> General fund, yeah. >> But again, half of our employees city-wide are in other funds. >> But we had 70 FTEs, full-time employees, that were added . A few were police and fire. >> I believe over 20, if I remember correctly, was public safety, but I don't recall that. >> It still leaves a whole lot that falls under the general fund. So I just want to throw that out there because budget season will be coming down the pipeline. So that is something that the council has some impact over. >> Go ahead, councilmember. No, go ahead. >> So I appreciate this. I'm still learning. This is a little bit above me. But when you were on the -- can you go back to the chart where the rate of returns were by year? >> This one? >> That one. You said arithmetic return. >> Yes. >> Is that what you said? >> Yes. >> Did I pronounce that right? >> You did. This is just basically taking each year's returns and averaging those together. And that's what this is. Geometric return is probably the other type of return that you're looking at, which looks like a compounded rate of return. The 6.75% return assumption that TMRS has for the future is a geometric return assumption. >> Okay. So it is geometric. >> Yes. >> Okay. Because I was doing a little bit of research and I saw the two different types of returns. Okay. All right, so my other question is what happens if we have a lot of people retire at the same time? Are we prepared for that? >> Yes. I mean, we have the assumptions taken into account what they've earned in their accounts and the liabilities that they've accrued at that time. So the terms of number of employees that leave at once, I don't believe would impact. >> Effect anything? >> Right. >> Okay. Go ahead. Yes. >> Did you say that we decide what retirement age is or TM RS decides what retirement age is? >> No, there are some options. I believe 60 is by -- I'll have to look and see. David or Anthony may have to answer that question. But there are some options that we have in terms of vesting and the number of years it takes to retire. David? >> Let's come to the microphone, please. Okay. Well, yes. Sorry. >> I'll ask Anthony Mills to come back up. >> Thank you. Anthony Mills. The eligibility requirements in TMRS is going to be one of two ways. Age 60 invested, so that would be five years of service in age 60. And then the other way here at Denton would be any age with at least 20 years of service. Those are the two ways that an employee could establish eligibility. >> So I'm trying to just understand which of those decisions is made by the city and which is made by TMRS. >> Okay. The state statute that governs TMRS, the options that are available to all of the cities that participate in TMRS, 20 or 25 years of eligibility is the option for each city to choose from. And then the five years or 10 years of vesting. And it was in 2002, I believe it was, that you changed the vesting. Thank you. >> Sure. So maybe, I don't know if you have the answer to this, but since Councilmember Wiseney mentioned the market, can you share with us the percentage of cities either across the state or in this area that have chosen 20 versus 25 years and five years versus 10 years for vesting? >> I don't have that number at my fingertips. David, you may have the number. I don't have it at my fingertips at this moment. But every city to a man that you would compare as Denton's peer city is going to be a 20-year eligibility city and a five-year vesting. >> Okay. >> I can't name one city in this area or across the state that you would call your peer that would not have those two options. >> Okay. Thank you. So with the -- >> I do want to point -- >> Go ahead. >> Thank you, Mayor. I did want to point out that in the actual report that I included in your backup, it has a listing of all those benefits for each city. And so if you're interested, that information is there. Or we could certainly pull it out in any kind of way you want us to. >> Sure. So with the 20-year vesting, that means ACM Howard Martin could have retired at 35. I think he's been here at the city since he was 15. I'm just playing with you. >> Well, and I -- sorry about that, Howard. I had to take a dig. >> Plenty more ribbing to go over the next couple of weeks. >> Yes. And I -- the reason this came up basically was I wanted to put this on a work session so that we could understand the process, number one. But also we had done a salary survey. We had done a salary compensation study. And so when I realized, which I've known, but it sort of came home in some of the discussions we've had in the last six months, that the city of Denton -- forget the extra contribution for the making up the unfund ed liability. We were contributing 14% of employee salaries to retirement fund. And also if you -- we are also -- I think cities had an option to stay with Social Security contribution or not to do Social Security contribution. The city of Denton does contribute the city's portion of that Social Security contribution. So in essence, you know, it's 14% of what we're paying of a person's salary here in town employed for the city of Dent on plus outside of civil service. I mean, that's non-civil service. Plus the Social -- so that's -- I mean, that's a lot. I mean, I -- you know, in the private sector, so I'm not sure about what those levels are. But when we had the compensation study and we had salary comparisons, some of them were with private sort of companies or what is it? It wasn't just limited to municipalities. It was the whole range of employment. Well, so if you've got a 20% or even a 14% retirement contribution at one place and you've only got a 5% contribution somewhere else, those salaries may or may not be different. My hunch is they probably would be different. So that's important in looking at total compensation, that it's not just salary, but it's also if you're getting, you know, 14% and then of course everybody's paying Social Security. That's substantial, I think, as far as impacting that for me. So that's why I wanted to bring this in. And I think to answer your question, Councilmember Gary, I think from what I heard is that the city -- obviously we went from 100% contribution when we first entered into TMRS back in the '50s, raised it up to 1.5, then we went up to 200 and we've changed. So there are things that depending on where you wanted to go with the benefit package for future employees, obviously anybody that's here, they're under this, this particular section. I did ask that in the budget, in the upcoming budget, that under personnel salaries or personal services that we split out what the actual salary portion is for those departments . And then what is the contribution for the pension plan, because it's all sort of lumped into one number. And so I think that would be a little bit easier to sort of follow in that regard. I think there's a couple things we're working on, which I hope will address some of your questions, Mayor. The first is we're going to be looking at a comparison of our benefits in Denton to a lot of our pure cities in the Metroplex, and we'll bring that back to the Council. That would be a lot for the public entities that we have. The product sector is more difficult to ascertain exactly what those level of benefits are, but we'll do our best to put something together. And then as a segue to your second point, we'll show you for '15-'16, the last fiscal year, exactly what we paid in salaries and what any benefits were, what those costs were by benefit. You'll be able to see that cost. So you'll see the total personnel services budget. You can drill that and see that. So break that down. Yes, sir. I'll show you that by phone. Okay. Council Member Gregory. I'll pass. Okay. Will that also include the city's contribution towards their health insurance? Yes, absolutely. Thank you. Okay. Any other questions on the TMRS? Very good. Thank you. Okay. We're on slide 17. We're flying now. So next I'm going to talk to you about the Denton Fireman's Relief and Retirement Fund. That's a mouthful. So again, I'm just going to refer to that as Fire Pension. This was authorized by the Texas Local Firefighters Ret irement Act, TELFER. And the city began contributing to the plan back in 1937. So it's important that the Fire Pension Plan came before TM RS. Fire Pension was done in 1937. And we began contributing to TMRS in 1952. It's governed by a seven-member board, and that consists of three firefighters, the mayor's appointee, two citizen appointees, and the city's CFO. So in full disclosure, I sit as the city's representative on that board. The board approves the plan design, but the city council approves the overall funding as part of the agreement process that we've had. The city decides what level of funding they want to provide . This is a much smaller plan than TMRS. It's about $75 million. Again, TMRS is $25 billion. I have a question on that. Yes, sir. Help me understand. Maybe I'm not seeing it. But so the board, and I'm assuming the membership eventually, if there's a plan change, then the members vote on it. Correct. But the city approves the overall funding, but the city, it 's interesting. The city really doesn't have much, I mean, other than a board member, the city doesn't have a vote in the plan structure. But does that mean the city has to, how does that work between financing what's been approved if somehow there's a difficulty in doing that? Does it say the city finances whatever the changes are made or whatever the benefits are? Well, the council ultimately has the ability to fund or not fund the level of benefits, and I think that's the primary way that you can control the structure of the fund. But the actual benefits and how they're selected is the membership and the board. Okay. Is this similar to the, is this how it works at most fire pensions? Yes, it's very similar under the Telfer plan. There's a specific legislation of what's required and how that works. Okay. That's correct, which is different than TMRS, very different. Thank you. So same information that you had for TMRS, much smaller plan, active employees, about 176, retirees, about 84, and then inactive, but entitled to benefits at some point in the future is two. So you've got a total group of employees, about 262 that are covered. This is a defined benefit plan, so it is not a hybrid cash balance plan that I mentioned to you for TMRS. Employees fully vest with the plan after 20 years of service and partial vesting after 10 years. Most employees go all the way through the 20 years in the fire pension plan. There's a lot of longevity there in that service. Members can retire at age 50, which is earlier than TMRS, and above with 20 years of service. And benefits are based on a formula. So this is what you're typically used to seeing in some of the defined benefit calculations across the country. It's 2.59% of the highest 36-month average of salaries. So the benefit is determined by multiplying that multiplier , 2.59%, times the years of service. So in this case, a 20-year employee would be eligible for 51.8% of their salary upon retirement. Employees contribute out of their own paychecks 12.6% of their pay versus the 7% that I mentioned for TMRS. But the city contributes the same rate as what is provided to TMRS. So the 17% that I mentioned to you for TMRS that we're contributing, we're also contributing that to the fire pension plan. So they have a total contribution of around 30% going into the plan with employees. I think those got tied together in our last, was it the last meeting before or the one prior to that? The one prior to that. I have a slide that I'll have that here. They talked about the history of the context of that? I believe it was 2010. Okay, all right. So you have a slide saying what it was before we incorporated that in the meeting of our contract? Yes. Okay. So as I mentioned to you, TMRS had discovered that the act uarial assumptions they had did not properly value the li abilities back in the 2008 timeframe. So we changed actuarial methods and we began phasing into those higher contributions that I told you about. In 2010, the city agreed in the meet and confer process to begin paying the same contribution rate to the fire pension as TMRS. In the prior, the four years prior to that, it averaged about 11.75%. So it was a significant increase in contributions from the city's perspective into this plan as well. Does that answer your question, Mayor? It does, but that wasn't predicated on the plan being in trouble or any kind of analysis that we were not funding it correctly. It was just more of sort of an equity discussion about, well, we just think it's only fair you give us the same contribution as you're giving city employees. Is that my understanding? Yes, sir. That was the nature of the conversation. Okay. Yes, sir. So it didn't have to do with making the plan more actuar ially sound? No, I think the lead on it was to be equitable. It certainly was going to be a benefit to the fund. They had an unfunded liability as well and it would be a benefit to the fund, but it was not based on tying it to specific actuarial benchmarks. And I'll bet in a minute you're going to show us what their unfunded liability is compared to that. Yes, sir. I will. I'm getting there. Yes, sir. Okay. So the increased contributions have significantly improved the funding levels for the fire pension fund. And due to the expected reduction in the TMRS rate over time, we are going to need to look at a new funding policy or consider that and look at how we want to handle that. So the investment allocation -- Why do you say that? Well, because the rate is going down to the TMRS plan. Right. And that's tied to certain actuarial benchmarks that we want to try to achieve. Right. If the rate goes down to the fire pension fund, they're not going to have sufficient resources to pay those benefits long term unless we have it tied into a different metric. If it goes to 10%, as an example, that's not enough to pay the cost of those benefits long term. Okay. So the 11.75 -- that was the four years prior to tying it to the TMRS rate. Right. Right. So you're saying you would do a totally different analysis because my thought was there was this desire to have it ride it up, ride the TMRS up, contribution up, but then when it starts falling, but you're saying it's not based upon just that, again, equity argument. Okay. We just have to do an analysis to see if it comes down to 12 or 13 or whatever, how does that impact -- it may impact the fund to the point we've got to do something, or it may or it may not. We haven't done that analysis yet. Yes, sir. They might have to make changes to the plan or the benefit design to make that a long term, sustainable contribution that would work. Or, depending on the funding level, given the current benefits, it may not require -- I mean, there's going to be some percentage of return that's going to be -- Yes. -- meet the current plan requirements. Yes, and I think I have some other information on there. Okay. I'll show you that in just a little bit. Maybe it might address that point a little bit more carefully. All right. So the investment allocation, this is as of the end of 2016 , very different than the TMRS plan. About 42% of this is in domestic equity, so stocks. Real estate about 16%. International equity about 6%. And you can see the other components that we have here. And these are the investment policy guidelines that we have , which is a little bit -- rather than have a strategic asset allocation over time, there's a lot more flexibility in these with the board of trying to meet what they feel are the right investments for the time period that they're in. And we have a lot of discussions about that every month about where do we think the market is, what are the things that we need to be doing long term to get the rates of return that we need. Who manages the -- I mean, who manages -- like, TMRS basically manages all of this. Right. So in this particular fund, is there an asset manager or is it the board? Sinek Kirk is an advisor that we use here in Denton to help us with our investments. We also have some real estate holdings that we own on our own. Okay. And we use some other advisors to help us manage the funds. But we use those professionals to help us with the fund and we use the inside of the board in investment world to try to make those decisions. Okay. All right. Good. Thanks. So here are the same chart that I provided to you for TMRS. This is for the fire pension over the last several years. You can see that the rate of return assumption is the same. We've recently made that change, 6.75% to match what we have in TMRS. The average rate of return over the past 16 years is lower than what I showed you for TMRS is 5.87%. If you take out the year 2008 and the years prior to that and the years after that, they've met that return. But 2008 has distorted that. And you can see they lost about 12, 13% of assets in that downturn in the economy that we had in 2008. What precipitated that? The loss of value. But was it in equities? Was it real estate? Yes. It was in stocks? Yes. Very difficult time with -- these were the times where the stock market was going down 800 points a day. Those kinds of things. Oh, no. I remember that. Yes. Councilmember. So my question is about that. So how does that look like in real terms? Say, 2008, how does that affect a city or the retirement fund for the firefighters or city employees? Well, you have a projection of what costs are going to be long term. So any one year's performance on investments provided they 're within a certain range doesn't have an impact on that year's payment of benefits. Because you still have assets in excess of this that can pay benefits to the current retirees. If that was to continue to happen every year, you lost 15, 20% of your value, obviously you would have no assets to pay benefits at some point. But there is a lot of fluctuation in the markets. You typically see there may be one, two, three bad years, but there's also some good years there, too. In addition to that, we have contributions always coming into the fund from employees and retirees. And you try to look at what are those contributions in relationship to what is the payment of benefits. And so long and short of it, I think the answer to that question is that one year didn't have an adverse effect on benefits. But if you had a few, then we would need to -- Sure. If you lose that every year, that would be a problem. Absolutely. And I think if you look back at the Dallas Police and Fire Pension Fund, they've had a decade where they haven't had investment returns. Not only do they not meet their investment return objective , but they've actually lost money or only gained 1% or something like that. So that's the kind of long-term systemic kind of issue over time that can hurt you. Okay. Thank you. The long-term look is in a year like 2013, because it's a great year, you don't run out and increase benefits packages because it's a particularly good year. And you don't panic in 2015 when it's a bad year. You have to look at the long-term. Yes, sir. And again, you can see this past year, return on investment was over 11%. And so it's certainly something we wouldn't advocate changing benefits, increasing benefits based on that one year. We know there's going to be ups and downs. You can see just the last 15 years or so, this is composite . If you look at all the different asset classes, it's even more confusing. And so the red line is the assumption, the black dotted line dashed line is the actual performance. Yes. And so what you're telling us is we're going to have to look at something because there's a little bit of discrepan cy between those two lines. Well, I would just point this out because you need to know kind of what has been the investment performance of the fund over time. The former S has been a little bit better than the fire pension fund over this period of time, but the 2008 performance really skews these numbers. If you exclude that number for 2009 forward, fire pension fund has done better than their benchmark. And prior to that, they did better than the benchmark. But that one particular event did skew it, and that was a historic event in the marketplace, too. Which is the exact year that I retired. Is that right? And put all my money in an IRA, and over the next three months it was like, I've got to go back to work. Hope you left it there. All right. I'm going to keep going. Key actuarial information for this fund, again, same type of presentation for you. The AVA, 72.7 million, the unfunded liability, 17.2 million , lower numbers, but it's a lower number of employees that are subject to it. The annual payroll for fire pension is about 15 million. And the contribution to the fire pension from the city in ' 15-'16 was 2.8. Now, all of that is general fund because all of the fire department is in the general fund, as you know. So that's all there. The remaining amortization period for this fund is larger than TMRS, is 31.6 years. I did want to point out that as a board we looked at the rate of return assumption, and we're trying to make sure that we had the best, number one best assumption going forward, and that we try to have a conservative projection. We reduced our rate of return from 7% to 6.75% in this last actuarial evaluation. If we had not done that, the amortization period on paper would have been 21 and a half years. So it shows you the sensitivity of the plan to those kinds of changes. And Mayor, perhaps to your point earlier, the average assumed long-term contribution rate is 15 and a half percent for this fund. That's what's being used to make these projections in arriving at this amortization period. The current rate is 17.48%. So the actuary is trying to look at over the next 20 years or so, what do we expect the average contribution rate as the TMRS rate goes down? They've made an assumption for that. So if we were continuing to pay the 17.48% going forward, that amortization period would drop. That's a discussion that needs to be had at some point. A couple questions. So then the 11.75 prior to the meet and confer tie it to TM RS. That's calculated by whoever we're hiring to do the actuar ial study. That's how that 11.75 was determined in the years leading up to that. Or are we doing it different now than what we were doing it then? Well, I'll tell you, the fire pension plan is done a little differently. And I do have a proposal for you how to change that going forward. Okay, that's fine. Obviously, it's a deeper discussion than for here. So that's fine. I don't have it on a future slide, but essentially there's been a rate that's been contributed in the past, which has been independent of the actuarial numbers. And so we need to connect those two together. And I'll show you that in just a moment. And then my last -- not my last question, this question, not my last one. When you talked about the benefit, which was I think you take the last 36 months -- Yes, salaries. Is that salaries? Does that include overtime? If you're on a pay -- if you're on an hourly rate, that includes all your compensation, overtime and everything. What's all included? It does include overtime, but there's a limitation to the overtime that's included. And I don't remember the specifics of that, but I can certainly provide that to you. But there is a limitation to that, so it doesn't have a spike associated with it. Okay, great. Okay, I'm going to keep going. So management -- Right at the end. I'm almost there. Yes, sir. So management comments. With continued growth of the city, as I mentioned to you, the contribution rate to TMRS is expected to go lower. As such, we need to look at a new funding methodology for the fire pension plan of how we want to handle that, what are the objectives that we have. The plan is currently financially strong, but the viability of that plan will weaken over time if we don't look at making some changes to that and how we want to handle that going forward. So as I mentioned to you just a moment ago, we're proposing that a new methodology be developed that's tied to specific actuarial criteria rather than just matching it to the TMRS plan. So the TMRS plan looks at here are all these things that we want to do actuarially. We want to have 100% funding. We want to have an investment rate of 6.75% and so forth. And to achieve all of those things over time, what rate do we need to pay? And then we pay that. The fire pension plan is completely the opposite. It's what we pay into the plan generates a bunch of actuar ial information. And so we need to have a discussion about what are the objectives that we want to achieve over time and figure out what is it that we need to pay to that plan to achieve those. So that's essentially the proposal that we would present to you and want to begin having some discussions with you about. But some examples of that criteria would be the amort ization of the unfunded liability, the investment rate of return assumption, the funded ratio, et cetera. We could define what those actuarial criteria would need to be. And implicit would be in this arrangement that the fund would not increase benefits beyond the current level. And so the last thing you'd want is, as you mentioned to you, the structure of the plan versus what the city council can control. You wouldn't want to agree to contribute a certain amount and then the board end up making different decisions about benefits. So there would have to be an agreement about how that would work. So if you live in North Texas, you have to pay attention to Dallas, the 800 pound gorilla. And so when we look at the crisis that their pension plan is in, and I am sure it is significantly more complicated than what we see on the news media. But it seemed to me that one of the things that they were trying to combat was at some point it appeared to be, and if I'm assuming all wrong, just tell me and I'll quit. But it seemed to me that people started to panic and they started to cash out. Get what what they had in there so they could get out and not lose it all. And that that put the fund in particularly a particular crisis situation. So I guess my question is specifically for the fireman's fund. I know that's not what it's called. There's some other name for it. Fire pension. Fire pension. Yes, sir. Do we have some safeguard that would keep the members of that from getting into some kind of a panic and a bad year like that 2008 year and cashing out and completely destroying the soundness of the overall fund? Well, the Dallas Fire and Police pension fund, I'm not an expert in that plan, but what I've read and looked at for it, there is a what's called a drop plan associated with it , an deferred retirement option program. And employees in that particular program were able to retire, say after 20 years, and they could continue working for 10, 15 years into the future. And those balance their paychecks would go, their retirement checks would go into that drop program. Plus, they would be guaranteed 8% interest on top of that. Plus, the retirement checks would continue to grow at 4% a year. And so as those balances, as you worked another 10, 15, 20 years in a drop program, you could accumulate very large assets in that plan that were guaranteed to be funded. So I think when those participants began to look at that issue, they were concerned that those assets weren't safe, and so they wanted to withdraw all of those. And I don't remember the exact numbers, but it was hundreds of millions of dollars potentially that was going to be withdrawn. We don't have a provision like that, so I don't really think the same mechanism or potential issue exists. You have stated dates when you're eligible to retire, but not those kinds of incentives to try to grow. And frankly, those were interest rates that were guaranteed that were unsustainable and have really hurt that fund. That fund, just as an example, has a funded ratio of around 30%, or 35%. And so if you have a liquidity issue or you have a bad year in the market, if the stock market was to lose 30% next year, would you have enough money to pay benefits is a question. Okay. So I didn't understand about the drop plan. I did hear about the guaranteed interest, which sounded insane. Right. And I did not know that it was only 30% funded. 35%, I think the last number I saw. But my question still stands is, do we have any potential concerns about our firefighters being able to cash out the whole plan upon retirement or at some point walk away with what they've got? It doesn't seem like a smart plan because then they have no retirement coming in and they're just betting on their own ability to deal with that money. But in some way, if several of them did that, being a small group, that it could hurt the liquidity or the overall soundness of the plan. Can they cash it all out and walk? There is a lump sum provision of the plan. It's called a retroactive drop, which can go back to four years and you can basically mirror if you had retired four years ago, here is the lump sum of that retirement that you could have as a cash payment, but that it then reduces your future benefit payment or annuity in the future. So even if that were to happen, there are assets to pay. So it's adjusted. Yes, that's correct. Okay. So if you took $100,000 out of that or $50,000 or whatever it might be, your benefit then is lowered because you don't have that as part of your plan. Okay. And so people look at that from a financial planning perspective of where do they really want to have those dollars. I understand that. Okay. I'm fine with that. Sure. Yes, that's going to be it. So for TMRS, the guaranteed rate of return is 5%, is that right? In the employee accounts, that's correct. Are there different accounts? Well, there's the employee account is whatever the assets are contributed by employees is 7% of pay. That's guaranteed to have a 5% return on that. That's right. Okay. So with the fire pension, what is the guaranteed rate of return? There's no guarantee. Well, it's a fine benefit. So it's 2.59% times a year's of service. Okay. Is that a follow-up question or is that? Well, sorry. They're two very different plans. Okay. Sorry if I'm not making that clear. That's all right. I know it's kind of difficult to explain. On page 24 of your presentation, it says the actuarial is the note at the bottom that the actuarial information is different from disclosures shown in the CAFR due to GASP 68 . What does that mean? GASP 68 is a new standard for reporting pensions in the financial statements of cities. And so we base that on GASP 68 is based on -- there's a number of differences in how the actual reports are versus GASP 68. But the biggest is that GASP 68 is focused on the market value of assets. The actuarial is based on a smooth value of those assets. So if you have, as an example, one year where you have a gain, your numbers are going to look a lot better on your financial statements because the market value is higher. The actuaries take that gain in value and smooth it out over time so that you don't have a lot of peaks and valleys . So why is it different in the CAFR then? Because that's the accounting basis is the GASP 68 is market value. And so you're going to have a lot more volatility on our financial statements is we've had a great year this year. So we're going to have a bigger market value. Next year if we lose money in the markets, you're going to have a lower value. The actuarial smooths that number out and is, in my opinion , a better way to fund the plan. Ultimately, they're getting to the same number over time. Your market and your actual values will get to the same number over time. So what is the actual number in terms of the difference? Like, for instance, last year what was in the CAFR versus what would be -- I can show you -- I'll have to look at that and show you that information. There is a chart as a great example of this. If you look in the fire exhibit two, the fireman's relief and retirement fund, there is a chart on exhibit seven, which shows kind of how these trend over time. But I can show you that for both plans. Yeah, I'm just interested in the actual number itself to figure out what the difference is. Sure. Going back to the fire pension, sorry it took me a little while to process what you just said. Sure. So how is it that we can calculate what the liability is if we have this shifting number, because we don't have a set percentage of return. We have salaries that come in and then we take a 2.39% of the salary. You know exactly what the benefit is going to be in the future as a percent -- it's 2.59% per year of service. So we know as people continue to work that benefit grows and we try to look at what that cost is in the future and discount that back based on our investment return, the contributions from the city and the contributions from the employee. Is there a way to look at it historically and see what has the actual guaranteed return been in terms of an overall percentage? When you say the word guaranteed return, I'm not sure I understand what you mean by that. Is that the benefit? Yeah, the benefit is what I'm talking about. That benefit, the multiplier has been the same for a number of years, but I can go back and look to see if it's changed . I'm just curious. Okay. Because it's not -- for me it's not as easy to understand as how TMRS does it. It's different. Fair point. We'll do that. Last slide. Summary. Public pensions continue to receive a great deal of media scrutiny. I know you see all the articles that come forward. It seems like almost on a weekly basis we see those. But I would tell you most plans in Texas tend to be appropriately funded. There are some outliers to that and exceptions. I believe that both TMRS and the fire pension plans are well funded and managed responsibly. Going forward, we do think the funding ratio for TMRS is going to improve. We do think that there's a financially sustainable mechanism in place to fund that over time. And while the fire pension plan is strong, we do need to look at that funding policy of decoupling it from the TMRS rate over time and have some additional discussions of what are the actual metrics that we want to tie to. So that is my presentation. In a nutshell, I'm sorry to take up so much of your time, but wanted to try to provide you a good overview of the plan. Hopefully this was helpful. Any questions? Yes, Councilmember Geary. So going forward, do you need direction from us in terms of how to approach this? If you'd like to provide direction, certainly. This was meant to be a briefing for you. If there's any direction that you'd like to provide, we'd be happy to take it. You have direction? I mean, I was just curious, but it seems like you're making a recommendation that we take a look at how the fire pension is calculated. So I would take your advice. Well, that also, though, I mean, we can decide on some different, but how does that work together with, because right now we're under a meet and confer that ties it to the TMRS, and I think that's another four or five years, if I'm not mistaken. I believe it's two to three years. Two to three years, okay. I don't remember the exact time. Second year. So two more years. Okay. So that's when we would adjust this or unless somebody's willing to, unless everybody's willing to enter into some kind of discussion to amend it. Yes, sir. It could potentially be adjusted at that time or through another arrangement. I think if the fire pension board, we need to have some discussions about what is the right things to tie it to and what would be a recommendation from the board. Sure. Okay. Yeah. So whatever you need to do to continue to move forward with your recommendation. Okay. Sounds like, yeah. Any questions? All right. Thanks. Thank you for your time. Let's take a five minute break. Regarding the vacation sick leave benefits for city of Dent on employees. Good afternoon, Mayor, members of the City Council, Carlyl Bromine, Director of Human Resources. Back in September of last year, we did an informal staff report that highlighted the city of Denton's vacation and sick benefits in response to a question by Council Member F iguere. After that report went out, we were asked to come back to do a work session to discuss these benefits in more detail. Policies 10703 and 11101, they're council approved policies . They govern our sick and vacation benefits. But we also have certain aspects of sick and vacation benefits that are mandated by Chapter 143 of the Texas Local Government Code for our police and fire civil service employees. Specifically, the statute requires 15 working days of vacation for police and fire, 15 working days of sick. It also requires sick leave accumulation, its accumulation without limit. And then there's also a payout provision of up to 90 days again for police and fire. The informal staff report as well as the sick and vacation policies have been included in your backup for this presentation. But I thought it would be helpful if we could kind of quickly go over those benefits. And so for purposes of this discussion, I'm only talking about our regular full time employees. Our regular half time and regular three quarter time employees do receive prorated benefits that are outlined in the policy. Also on this chart and then the next chart you're going to see is going to be about sick leave. Anything highlighted in yellow are those mandated benefits by Chapter 143. So for our non civil service employees, we accrue 10 hours per month or 120 hours a year, which equates to 15 days per year. Our police civil service employees and the fire civil service employees who work 40 hours, they accrue 10 hours as well. Again, that equates to the 15 days required by statute. Now the fire civil service employees working shift, we calculate their benefits off of a 12 hour day versus an 8 hour for the rest of us. So to comply with the statute, they accrue 15 hours per month. The policy also allows for bonus accrual for each year of service beginning on the fifth anniversary. So for everybody but the fire shift workers, we get four hours for each year of service. And this is cumulative. So on the fifth year, it's four hours, six years, eight, seventh year is 12, et cetera. And then the fire shift, they get six hours. The policy also allows for maximum annual carryover. So for everybody other than the fire shift, it's 320 hours per year. Fire is 480. And so again, this is a carryover so we can accrue more than this. But on our anniversary date, it caps at this amount and we lose any amount over that 320 or 480 for fire. And then the policy allows for a payout upon termination. All the accrued hours up to 320 for non civil service, police and fire work and 40 and then 480 hours for our fire shift. Now payout is only allowed if the employees have completed six months of employment. They haven't been terminated for gross misconduct and they returned all city property upon issuance of the final paycheck. Good question. Thank you. So regarding the maximum annual carryover, once you've hit that amount, then each year you could use all of your vacation that you accrued that year and still have the 320 hours of the 480 hours. Yes, sir. So that's sort of like in the bank for you in case of a serious illness. Serious illness, yes, sir. And in a case like that, probably those employees don't have to, wouldn't consider buying short term disability because they're pretty much covered by that. That's a personal choice. I mean, that could be a factor as to why or not they purchased the short term disability. Thank you. What is the 300, what does that equate to as far as weeks? Eight weeks. Eight weeks? So two months? The six months of employment payout termination is allowed if the employee has completed six months. How long have we had six months and when did it go to six months? Has it ever been longer than that? Not that I'm aware of. I've been here since '94. Since I've been here, it's been six months. That used to be our introductory period. Now we've increased the introductory period to a year. And our employees on probation for the first 30, 60, 90 days when they're first hired? We have a year introductory period now. So we don't really call it probation, but it's a time to see if the city is a good fit for them and if they're a good fit for the city. Same thing. Okay. Thank you. Any other questions about vacation? If not, I'll move on to sick leave. Okay. So our non-civil service, we accrue eight hours per month, basically a day a month, so 12 days a year. Again, the statute requires 15 days for police and fire, so police get the 10 hours, 15 get the fire, shift get 15 hours. Maximum annual accrual for our non-civil service is 720 hours. But again, the statute for police and fire require unlimited accrual. Payout upon vacation, there is none for our non-civil service employees with the exception if they die while in service of the city or while on authorized military leave of absence, then we're going to pay their beneficiaries their accrued hours, but not to exceed the 90 days. And then again, according to statute, we have to pay up to 90 days to the police and fire. So that equates to 720 hours for police and 1080 hours for fire. So they can have more, but the payout is limited by statute ? Yes, sir. Okay. Well, we know there are questions about how we compare to other cities. As Brian already talked about, it is difficult comparing to private sector, but public sector information is readily available. In fact, a lot of their policies are online just like ours. So we did survey 10 of the cities here in the Metroplex, and what I did is I provided in your backup summary charts that outlines their maximum or their annual vacation accru al and sick leave accrual, the maximum carryover hours for the vacation, and the maximum accrual rate for sick, and then any payout provisions. And so there are word charts that summarize this for you for the full-time general employees as well as police and fire for both vacation and sick. But what I tried to do for an apples to apples comparison on the annual vacation accrual is I tried to put all the cities down by year of service so you could see what they accrue annually and then an average of those cities and then how we compare. And so when you look at the information, it's clear that we 're more generous in some cities, we're less generous in others. Probably where we're most generous is on the vacation side for our civil service, I'm sorry, for our non-civil service , and then on the non-civil service side for sick, though, we're less generous. So when you look at the two together, vacation and sick benefits combined, we do feel that we're fairly competitive with at least in this Metroplex area. So with that, I'll answer any questions or turn it over to council discussion. Any questions? Yes, go ahead. So regarding that standard of gross misconduct, was that determined by council or what? I mean, there's misconduct, there's gross misconduct, so how was that determined? In the policy, it's up to the city manager to determine the gross misconduct. Any other questions? Seeing none. Okay. Thank you, appreciate that. We don't have any discussion about this. Well, no, we can't. I mean, yeah, okay. I kind of blocked all of the stuff. Okay, go, yeah, shoot. So I had a -- I thought that was -- I mean, I appreciate the presentation, but I was assuming we were going to have a discussion afterwards. Sure, go ahead. I noticed in the backup and exhibit three that our policy, as you mentioned, for our non-civil service vacation is considerably above average in terms of what people -- when they're terminated or when they leave, what they're able to walk away with. Because of our -- the size of our workforce, that represents potentially a large liability for any normal budget year if we have several people leave. So I would suggest that we move into the average, which would change a little bit, but not a whole lot. I'm looking at page two of 14 on exhibit three. So that would be my suggestion. And what is that, average? It's -- well, there's a chart, so there's -- I mean, there 's a variety of averages, but we're above average on every count, but one, I think. Okay. Question. Yes, Councilmember. So are you suggesting on the one where we're below average that we pull that up to average? I think that's a good idea, too, with the sick policies. Yeah. And then are you also suggesting that this be something that we -- every year or every year or so, like we do when we do our analysis of our pay, that we're adjusting our pay or adjusting our sick leave policies and our vacation policies based on the others -- the other cities? Well, this past year when we did the compensation study -- I mean, that's really what spurred me to ask for the presentation. When we did the compensation study, the idea was to make us competitive and bring us kind of ahead of the game in terms of compensation strictly. So it would make sense to make our benefits in line with everybody because our advantage here is going to be in salary. That seems to be what I took away from adopting the compensation study recommendation, is that our advantage is now in salary. I don't think that it's really necessary to go either above or below average in sick or vacation time. And to answer your question about making it annual, I think the only reason it would be annual is if we have these studies regularly. So perhaps the better way to approach it is if we're having a study where we totally reevaluate how we pay people, then we should also be looking at compensation on the benefit side of things as well. I hear what you're saying. On the one hand, I think that that's a fair suggestion. I think that generally when we're sitting around this table , we have goals for our staff of being above average in performance. We want our city to be above average when we compare ourselves to other cities in terms of lots of different indicators. So I often feel a little bit uncomfortable when we're expecting above average performance, but our goal is only average benefits. Just as a way of looking at things. But if we're trying to be above average in terms of pay, then I see how that would balance out. I guess my question would come in that if we had an accrual of benefits or accrual of sick days or sick hours and the average changes, how does that work legally or in terms of what we promised if it was 320 hours and now it's down to 300? Are we encouraging people to use time when we wouldn't need to? Or are we taking away a property benefit that we've given to them and it's no longer available to them? How does that work? That's an interesting question. That's something that we can take a look at. I don't want to speculate on whether or not there would be a defined benefit or a defined right taken away from employees. I don't think that is the case, but we can take a further look into it and update you in our legal status report. I think if it becomes something that's more flexible, I think that we should consider that. Because if we're adjusting it in some years, it's down, in other years it's up. What the impact would be? Yes, and then Council Member Mayer. So one thing that I wanted to point out was that when we compared salaries, it was to private sector and public sector. But when we're comparing benefits like vacation time, what we're talking about right now is only public sector. Standard, I believe, in the private sector is to carry two weeks. That's normal business practice is that from year to year you can carry 80 hours. So I think in terms of competitiveness, you're probably right about the competitiveness factor with cities. But in terms of comparison to the rest of the working world , I think it's incredibly generous still. So that's the only thing I want to point out was apples to apples. Mayor Pro Tem. Sorry, I didn't have my chart up when you were talking earlier. What benefits are you suggesting we're cutting from our employees at this point? In which category and from what to what? So first of all, I'm not suggesting a cut, I'm suggesting a balancing. So if you look at page two, words are important. Which is a cut? It's also an increase when it comes to sick time. So on page two, vacation time, page two of 14, if you'll notice the average is in green and then the dentin is right next to it in kind of yellow. I'm suggesting that we go to the average for accruing vacation time. And then if we go to page, that's for non civil, is it civil service or non civil service? Non civil service. Thank you, non civil service. And then for sick is on page nine of 14. And I would agree with Council Member Gregory that if we're going to be going to an average, we should go to an average . So we're helping up sick time to the average. So what, for the vacation time moving to the average, toward what end are you, what goal are you hoping to achieve with this? Is it a cost saving measure? And if that's the case, what's the overall cost to the city of this change? What's your goal when doing that? I don't know what the cost is to the city because there was no financial presentation. So I can't answer that question for you. But what I did mention prior was that when employees depart , as long as it's not for gross misconduct, we are required to pay them out their accrued vacation time. And first of all, the more vacation time they accrue, the more is going to be in that bank, which is additionally an increased cost to us that we don't budget for in any way. It's not a part of our annual general fund budget, so it's an unfunded or unaccounted for amount that we might have to pay. And I guess the second part of that is, which I don't think I was really clear on, is that I do think we should reduce the amount of banked vacation time from 320 hours down. I'm negotiable. I mean, I think we can have that discussion. Paying somebody out two months seems overly generous for a city that just bumped up salaries based on a compensation study. And as now I've been told, we are very competitive with other places. Well, and a lot of people, I guess a lot of people kind of start, you start making decisions about your vacation time over time. It's to some benefit of the city if somebody decides not to use them all in any given year to bank that over time because they want that as an additional benefit after 20, 30, or whatever the years of service that they have. And so they're making decisions along the way. Again, I guess if there's no big financial hit to the city of keeping it the way it is versus whatever you're suggesting on this, why would we do that to our employees? Where did you hear about the financial hit? Well, if there is no financial hit, I don't know what the point of doing this is. We don't know what the financial anything is. Then what, I guess my question is what, toward what end are we cutting benefits from our employees? Councilmember Walz and then Councilmember Garrett-Garrett. I'm uncomfortable making a decision on the fly with something this important. If we wanted to create a council committee that could actually meet with the city manager who is well versed in all of these salary vacation versus compensation, our head of HR should be part of that conversation so that there's kind of a comprehensive look at all of this before council just raises a hand and says, yeah, let's do that. Because there has to be an overall summary in terms of, well, financials. So what are they? But I'm just uncomfortable saying, well, comparing us to another Texas city, let's make that change right now today. I think being prudent and taking some time to study all of this is the path to take. Again, getting our city manager involved, our head of HR, and if two or three members of council want to be part of that to really study all of this and then come forward with some, not even recommendations, but here are three different options for the council to study. I would be much more comfortable with that than just trying to, on the fly today, make a decision. Council Member Gary then. Okay, Council Member. I didn't know where this conversation was going so I'm a little bit unprepared. If we're going to do calculations on the financial hit that is taken when an employee retires or resigns and they collect their unused sick leave, then I think we're going to have to do a calculation on how much we've benefited during the time they've been here that they didn't use that sick leave. Because, just to clarify, they don't get paid sick leave, they get paid vacation. Vacation, okay. Except for place of fire. Alright, thank you. So let's talk about vacation. So, here's the example. And I can't work in the terms of hours because I can't make those computational changes. But if a person gets a salary and they work 50 weeks a year , so they get two weeks of vacation, or maybe they've accumulated because of time on the job, now they get three weeks of vacation a year. And they only take vacation for one of those weeks. That means the other two weeks that we would have been paying them for vacation, they're here at work. So, that's actually a financial bonus that the city has received for those two weeks, right? Am I calculating that right? I don't know if I agree with that assumption. They could have taken vacation time. But that's not true. They didn't take vacation time. Because they weren't taking vacation time, we're getting the benefit of those hours that they're working when they could have been off. So, to me, it doesn't seem like we're getting any loss at all. We've actually, it's just leveling out at the end because they've been working, they've been putting in time that maybe they weren't getting paid for. And so, when they retire, when they resign, they're collecting that unused vacation time that the city benefited from in the meantime. So, I'm not figuring out where there's any hit at all to the city in this. Council Member Geary. Yeah, I just wanted to point out that the way banking works . So, let's say I'm a 20-year employee with the city. The time that I've banked may have been accrued when I was making half of what I make at the time of my departure. So, the calculation that you're describing, well, I'd love to see that. I think it'll be really hard because what is the valuation of vacation time earned when you were in the middle point of your career versus getting paid out at the end of your career of that bank time? I just don't know how you would even arrive at that calculation. I'm not opposed to kicking this to the Finance Committee, which is what it sounds like you're looking for. I don't have a problem with that. I just, I don't know how realistic it is to arrive at the calculations that, some of the calculations that we're talking about. Well, but in the same sense, it's going to be very difficult to arrive at realistic calculations of the cost to the city because the cost is more than dollars. The value that our employees bring to us is more than their paycheck. There's the price tag and there's the value, and those things are different things. Well, I mean, y'all are couching this in terms of, and I don't have any issue. I didn't think we were going to decide and vote on some kind of real heavy policy decision today, but I think we're having a good discussion because it's been brought up. So, however we want to move forward with that, whether it's , oh, did you have your hand up? I didn't see, okay, go ahead. I'll wait. Well, you can finish. I just, I had a question about. No, no, go ahead. Okay. So, currently we do not have maternity leave, paid maternity leave for our employees. And when we got a staff report, you kind of said, well, they use sick leave and there's some option for vacation in there. But if we move that average, if we went from, I think we're below average on sick right now. If we move that up as Councilmember Begarry suggests, would that increase time off for that new mother to use? I mean, would that be beneficial? Or father? What have you? I mean, is that, would that be beneficial? It depends. I mean, if you're looking at sick and vacation together, so once they're out of sick, then they can use their vacation. If you decrease the vacation, but increase the sick, it depends on the direction we get from Council. It could be more or less for the same. Or it balances. Okay. Thank you. Yeah, I don't necessarily put this in a discussion of finances. I mean, vacation, look, people need to take vacation. I don't know if I want somebody working 52 weeks a year, quite honestly. I mean, that's their decision. That's their choice. But yet, depending on the policy that's in place, affects that decision. So if you're banking, if you can bank up to 320 hours, which is four months, somebody may decide this is how I want to do it. That's fine. If you change that policy to be something different, whether higher or lower, they're going to make a different decision. So I don't know. I don't, to me, this isn't a financial calculation in the sense of if someone leaves, do we want to pay them two months? I personally don't think that 320 hours of accrued vacation , I don't know if I want vacation time to be perceived as some other kind of financial benefit. Vacation time is to take time off to go do something that refreshes you, re-energizes you, and things such as that. I struggle with the 320 days and 320 hours. I don't rationalize it from the standpoint of a financial benefit. I'm just simply saying vacation time is vacation time. I don't know what other cities do. Apparently, they do something a little less than we do. Unless you're a high executive in a private company, you're not getting two weeks of, you're not getting two months of vacation. So I'm open to the discussion. I don't think the financial analysis is really going to get us, I mean, this is really a policy decision, a philosophical decision. In this regard, and I don't, I mean, it's not, it seems like we can have some very passionate perceptions on both ends, which is okay. I don't necessarily go to either one of those. I just do have a personal opinion about that myself. So however you all want to, we're going to kick this to somebody. Council Member Gary had said the Audit and Finance Committee could at least do the vetting of it and then bring back, not recommendations, but here's what we found, here's what we couldn't find. And be able to have an open discussion with Human Resources City Manager and the like. Let me get Council Member Briggs in here. So I'm okay with that suggestion. On your comment about wanting our employees to take vacation, that's great. They really need to. Having the accrued payment at the end, is that an incentive not to take a vacation? Well, I think people perceive that differently. Some people , they just don't take vacation because they just like working and may not have anywhere to go. They just don't want to sit at home for a week. Some may make a conscious decision of we've got, you know, if we've got three weeks vacation, I can take one or one and a half, really get myself recharged. That means I've got the additional, that if something were to happen, I can use it for some kind of medical issue or if I decide to move on to a different position, I can get that payout. So there's a lot of different reasons. So whoever discusses it, I strongly recommend our City Manager be involved and our Head of Human Resources be involved. Sure. Thank you. Does the Council have an objection for the Audit Finance to sort of spearhead this with the consultation of HR and the City Manager? Yes, Council Member Pro Tem. Well, you've heard some of my concerns. I mean, I really struggle without there being a defined problem that we're trying to search for a solution for. Under what parameters are we asking the Finance Committee or whatever other committee we create to look into it, what are they trying to solve? If there's no financial implications and that there's just an uncomfortableness with 320 hours, I'm not sure what the Finance Committee has to do with that. Can somebody elucidate the problem? So I just don't want us and staff spending time on something, a solution in search of a problem. I haven't heard what that is yet, and we've got a lot of things to work on that are important. I just don't know what the issue is here. Maybe somebody can enlighten me. Well, I think it's a matter of perception. I mean, for you, you approach it seems like with your time here on Council, if we're going to do something, is there a problem that this is supposed to be resolving? But policy is not just about resolving problems. It's also reexamining what you're doing. And is there a desire from a policy perspective? And you're going to try to say, is that a policy perspective of is there a problem? It might just mean that we've looked around or we are thinking, well, maybe we need to encourage people to take more, maybe 320 hours is excessive in the minds of a consensus of the policymaker. So I don't know, sometimes that, to ask for a problem that we're trying to find a solution, I think sometimes can deflect a really in-depth policy discussion, because sometimes we might not know if there's a specific problem, but it may be a direction that we want to do differently. Could I at least ask what's the goal? So maybe we're not identifying a problem, but at least there's a goal that we're achieving with this inquiry. I mean, if there's no problem to identify and there's no goal to identify, what are we doing? Well, I think the inquiry can be part of defining that goal . I mean, we've obviously had one council member who has asked for this to be analyzed. I don't have a problem with it being looked at. As far as the goal, my goal would be, hey, are we able to reduce vacation pay to something that's not going to be harmful to our employees, that may provide some different incentives on decision making moving forward? And the big question is that I think Council Member Gregory asked was, is there a vesting of employee benefits? In other words, if someone comes in under a certain employee benefit, not retirement, but employee benefit paradigm, is there, if you change that, what happens with that? So those are some of the goals that I see. I don't see any harm in the discussion. I mean, you're saying staff time, council time. Well, that's what we do. I mean, we look at policies. We ask staff to help us with these. I mean, we could say what was the whole issue with some of the issues we've had. But it's hard to say this is it. Nobody is going to sit here and say we want to cut people's vacation time because we think it's going to save us money, or we don't want to cut it because there's an inherent value that when they are working here, somehow we're getting more out of them. In other words, we're, I mean, people choose to take vacation or choose not to take vacation for a lot of reasons that I have no clue on. You know, that's certainly a personal individual choice. Well, I would just say all those things are very managerial in nature. And so if there was problems that the managers are seeing with incentives for vacation or people taking them too much or too less or waiting to the end, to me, I'd love that to rise up from the managerial team to say our policies in place aren't getting us the goals in terms of workforce productivity or whatever that happens to be. Otherwise, again, I think we're kind of spinning our wheels . But maybe we disagree on this. Did you have a, okay, Councilmember Walden. We did the compensation study and we looked at compensation and compared ourselves to most of these other cities. We did not look at benefits. We only looked at compensation. So we said, oh, we need to adjust our compensation to be competitive. But what triggered this interest was your package as a government employee is not just your paycheck. It's also the benefits that come with it because often you will take less in a government job so that you have the secure retirement. So you have health insurance that you don't have to worry about so that it's a tradeoff. And I know because several family members have been government employees. So I get that. But that's what triggered this because we did not look at benefits when we looked at compensation. So we looked at compensation. Now we're looking at benefits. So for me it's a natural progression to take a look at this . So it's not specifically do we have a problem to solve. It's let's just take a look at it. >> The only thing I'd just like to remind you all one more time is that the statute does require certain benefits for police and fire. So those would be off the table, but definitely the non-ci vil service and other provisions of the police and fire benefits we could discuss. And then whichever group looks at it considering do we want similarities across the different employee groups. >> So there was a suggestion, I know that you're uncomfortable with it going to audit finance as far as just a vetting tour. Is there another committee that would be more suitable? I'm trying to rack through my brain as far as the committees that we have. Mobility could do it. Committee on the environment, the environment of the workforce. So unless we want to create a new committee, then that might be one we want to do. >> Well, I like that it's going to finance because I'm not on it and I don't understand what they're going to be doing with it. If it's to compare, well, we've gotten the comparison. If we're sending it to them to recommend changes, if that's the goal is to recommend changes, then they understand what they're doing. Or if it's just for them to look deeper into it to decide if they want to recommend changes. I mean, what are we sending it to them for? >> Well, I think, well, that was just a suggestion that was made as far as that particular committee. Councilmember Wasney basically brought up that we are not here in a position to vote today on changes to that particular policy. And so her request was to find a way that we can vet this to gather some additional information in comparison to, you know, we've got it with some of the cities. But just to talk through some of the discussions, some of the, I say issues or some of the ideas. So do you have any thoughts on as far as where it should go or what was your thought when you were asking for that? >> Well, an ad hoc committee, I'd be happy to be on it. Councilwoman Begarry, because you brought it to council, be appropriate for her to be on it. I think we need a third person. So if somebody wants to volunteer to be on that, I don't see it as a long standing committee. I don't see it as a committee that's going to eat up a lot of anyone's time. But I do extremely value our city manager's input on this and our head of HR. So that they have to be part of this discussion because they bring a perspective and experience that we just don't have. So I'm comfortable with that. Like I said, I just don't see it as taking a lot of time. We may study it and walk away from it and say done. We may study it and say here are two or three options for council to look at. Here are the reasons why. But it will be up to council. >> I will volunteer. >> Okay. Councilmember Begarry, is that okay with you? Okay. So whoever wants to begin to put that together, any timeframe you're looking at having something back next in March. >> I'm going to defer to the city manager because he's busy . >> Okay. >> No, he's not. >> Let him kind of drive the engine because it's important, but it's not a number one priority. But it's on our radar here to kind of take a look at. And we may have one meeting and be done. >> Okay. All right. Any other questions, comments? Any staff, anybody? Okay. Great. All right. Thank you. We'll move on to agenda item 1C, receive report and hold discussion, give staff direction regarding potential polling locations for the May 6, 2017 election. >> Thank you, mayor and council. Allison Rehm, administrative services manager. Last week at your work session, the council directed staff to take a look at potential polling locations, specifically adding a second location in each district. And what this map shows, and it's also included in the map of your places, which is a bit easier to read, is the city council voting districts overlaid with the Denton County election precincts. And what we've done is identified a second polling location for each district. You'll note on this map that we've identified Pecan Creek Elementary in the southeast area of town as a shared second polling location for both districts 1 and district 2. Fire station 7 could serve as an additional location in district 3 and South Branch Library in district 4. Now, also wanted to note that we're still waiting to hear back from the school district on the availability of Pecan Creek Elementary as a location. But if they were to say that that wasn't available, the council could still give us direction to pursue these locations and we would bring something back in the event they said that school wasn't available. The other document that we included in your backup and is at your place is a list of the individual precincts, which would report to these locations. And the county mentioned last week that on election day, voters must report to the location that's identified based on their specific precinct. And so each district would be split their polling locations based on the precincts that they're in. This list of precincts that we've given you is just our sort of first-splash division of those precincts, but on council's direction, we could revise that. So we're looking for direction from the council today on if you would prefer to add a second location, if these specific locations are what the council would like to see, and if you're okay with the division of the precincts. Mayor? Yes, sorry. So let me see if I'm understanding this right, because we 're talking about election day. And if we're looking at last year's election day, the Saturday in May, let's take the Pecan Creek or similar voting location. On election day in district one, precinct 1038, there was one voter. Precinct 441, there was six voters, a total of seven voters for district one on that day. And in district two, there was from precinct 1013, 30 voters, 1039, zero voters. Precinct 4012, 13 voters, 43. So for a total, that would be 50 voters that if this election year was similar to last year's, there would be 50 voters that would probably use Pecan Creek, possibly more because it's more convenient. They don't have to drive as far. Am I understanding it right? Yes, sir, that's correct. And adding that additional voting location would cost about $5,000? We think somewhere between $5,000 and $10,000. Between $5,000 and $10,000. Right, and that depends on the way that we cost share the elections is depends on how many jurisdictions hold their elections. So if the school district were to cancel and not hold their elections, they wouldn't participate in the cost sharing of these locations. Right, and they may not want to share in those locations anyway. That's correct. Which would be even more confusing for voters. Has anybody checked to see if the school district even wants to add locations? We did check with the school district and that wasn't something that they wanted to consider until they knew whether or not they would be holding an election. And so that would be after the filing deadline. So assuming that we're doing it ourselves, if it's between $5,000 and $10,000 for that particular voting site, it would be between $100 per vote to more if we did it that day. If that amount of folks showed up at Beacon Creek. Yes, sir. And then the additional voting site at Fire Station 7, that 's a total of 159 voters that we saw last year from those combined precincts. Yes, sir. Okay. All right, I'm just trying to get information. Mayor Pro Tem. How did, it seemed like last time they talked about the inability to share locations between different voting jurisdictions. How are we able to do that with 2 and 1 with the shared Pe can Creek? That seemed to be an issue they had because I think one of the questions we raised was, well, why can't we just let anyone go to whatever voting place in the city and be able to vote instead of being restricted to the place? And they said, well, for the election day, election law forces us to have distinct places. So are we even allowed to do that shared Pecan Creek? I did confirm with the county that they're comfortable with sharing that polling site between those two districts. The county isn't here to answer this question, but I believe it has to do with the difference between early voting. You can vote anywhere in the county. Election day are limited to your specific precincts. So while these would share these city council districts, still they would be split up by individual precincts. So if you're in this, you can't just because anywhere in district one vote there, that location would be set up between specific precincts. They confirmed that they were comfortable with that. That was the question that we had. So, okay, so if I'm in that precinct, that's the only place I can vote. Correct. Even though there's people in other precincts from another district that can vote there, too, it's just those, okay, that answers my question. Did you have a question? Did you say it's between five to seven thousand for each polling place? So there's, since the Concrete Elementary is here twice, we would just pay that once. Yes, ma'am. Okay. In the past, we've had a privately done website where you could type in your address and it would tell you where to go vote. It seems like that maybe the city acquired that and is doing that. So if I am confused about Election Day and I don't take the Record Chronicle and read the list there or I take it and I don't see the list there and I want to know where to go vote on Election Day, can I type in, is there someplace where I can go type in my address because I don't even remember that my voting prec inct is on my card. So I can type in my address. Will it tell me where to go vote that day? I believe that the way that that's the way that the county 's website works now. You can type in your address and it'll tell you which prec inct you're in and for whatever elections that you live or in jurisdictions that you live in, you can see your polling location and what would be on the ballot for that. And we kind of consider communications efforts because this is a change in the way the city traditionally has done polling locations that we would want to make sure that's clear on our website and we can push that out on social media and work with the record Chronicle and providing the information. Because a lot of people for a city election aren't going to think to go to the county website, they're going to go to the city to find out where they're supposed to vote. So there's going to have to be a way at the city website where they can either ask the question type in their address or go to the county. Yes. Yes, that's my watch. Is there a way on the first page of the website to have election information here that they double click on that and it automatically connects them to the county. We have talked about, we have the large kind of photo b anners at the beginning seasonally those would change in the in election season. One of the message would be on municipal elections. So I think we can definitely send that to that page. We may want to direct them first to our municipal page where we have information. We list the candidates, we list the information of the tax limitation proposition that would be on there. But then we could also have information on check your voter registration and your precinct locations that would direct them to the county's page. Well, to actually ask the question with the box, where do I vote so that it's so specific and so clear. And I would recommend no more than two different clicks so you're not having to go from one to another to another to another just maybe from one to the other. But the county is kind of all things election in terms of information and election results and early voting numbers coming in. And so, you know, we rely on our tech team to make it as user friendly as we can. And I think it's just an expense we need to follow through with for our voters. We haven't changed this for a long time. And if you look at the big expanse for District 3, big exp anse for District 2, they're huge. And they have just one spot for the entire, and even District 4 is divided by Interstate 35. So that's a distance for people on one side of District 4 to have to negotiate to get back to DENIA. So I think for on behalf of our voters, I would strongly recommend that we just make this move. We're just going to grow. We can't fast forward five or ten years and have the same argument. Well, people are going to have trouble finding the place to vote. We're liable to have over 200,000 people by then. So it's coming because we're growing and I think we need to be proactive with this and just make it happen. Thank you. Go ahead. I just got a couple questions. Looking at this map though, you have 1013 voting down at Pe can Creek. And it's such an odd shaped district. But if you live in the top corner of it, you're just like right very, very close to North Branch. But if you're not, I mean, if you're way up there and you have to go all the way down to Pecan Creek, that seems kind of like out of the way. So I mean, I know I'm just trying to think through this and process it because we do want to make it easier for people to vote. But that to me seems like adding 1013 to vote down there would be more of an issue. And that's a problem that we had in multiple precincts because of the way the precincts are drawn. You can see that here in District 3, you kind of have these interestingly drawn precincts. And so if you live in this corner here, you might prefer just to drive up here. And so we kind of have to make a choice. And that's up to the council to decide which you think would be easier for the most number of people. Do you want to have them go here or do you want to have them go up here? >> Couple questions. The data is fascinating. So I want to make sure I understand the data first. So when I see 2016 Election Day ballots cast is 1,833. That means on whatever day this was, 1,833 people went to whatever polling place they were assigned to and cast a ballot. And so if I subtract from the 6113, the 1833, that gives me the early voting, mail-in voting, absentee voting, all of those people who didn't vote on Election Day but voted. >> Yes, sir. >> Okay. So that's, what is that, 4,300 people? >> Absentee ballots in 2016 were 1,053 and early voting were 3,227. >> Okay. All right, so that right there is interesting to me. So most, what is that? >> 60%. >> 60%, 50 to 60% of people are voting, 65 to 70% of people are voting early. So let's go down and look at the precincts. I'm going to start with District 4, quite frankly, because if we didn't go to two additional polling places, I think we need to look at maybe changing that polling place. But you guys, you got 400 people voting from the South Ridge precincts and you got 100, and I'm ending it. So, I mean, I'm in one of those. I forget which one that is, obviously one of them. And then when I look at District 3, because I know Council member Wasney, the concern has been Robeson Ranch especially , because they're the farthest most southwest precinct. And yeah, the drive up to North Lakes. So when I look at that, so 125 voted on election day and almost 1,000, not 1,000, but 800 voted or something like that. >> 800? >> Well, that's total, so I have to subtract that. So over 850 or 60 voted early voting, mail in ballot or whatever. So when we're looking at adding voting places, when you really break down the number of people, I mean, I don't care whether we have two voting places or not. I mean, first of all, I want to look at the cost and I'm going to use a line that's really worked, and so I'm going to use it to my advantage. What problem are we trying to solve? I'm just kidding. So the data is interesting. I mean, Pecan Creek, you've got 50 people. Now, that doesn't mean more people wouldn't vote, but it seems the trend is early voting, absentee voting. I mean, it's just be interesting to see that historically. So if we're looking at this sheet, so what I'm seeing is if we added these polling places that are here as recommended based upon last year's data, you'd have 50 people voting in concrete. You'd have another. Well, actually seven from the district one, 43 from District two voting in concrete. But then some of them would have to drive sort of where is all that? I'm trying to look at these precincts. District three, you would have 159 that would be voting at Fire Station seven. Where's 4039? Where's 4039 on here? OK, yeah, there's 4039. So 4039 is what is that? Is that around the university or I can't? Yeah, OK, I know. OK. So they could either go to Fire Station. That would make sense. They go to Fire Station seven when it looks like it'd be almost the same distance. That's my thought is I totally get what you're saying. Absolutely. You know, do we want to make it more convenient? We don't make it as convenient as possible. Is this achieving that? And I just I don't know the answer to that just off the top of my head without going through each one. I mean, looking at each one of these precincts and doing these kinds of things. So the total would be let's just go with the from the low number to the high number. If it was $5,000, we're adding three new polling places. Is that right? That's 15,000. Yes, sir. If we go to the 10,000, it'd be 30,000. Yes, sir. OK. All right. OK. Yes. So that that would run for a vote between $8 and $16 a vote just by data. But I'll tell you, I'm open to trying it for a year and I'm opening to spend. You know, then we'll find out how much it really costs and we'll see if it has any impact on voter turnout. And if it doesn't have any impact on voter turnout, then we don't have to do it again, do we? Well, I think they submit to this. Do we are we committing to it? So the county last week had expressed that their preference would be that consistency over time because they're investing in voting machine. You know, they're trying to project what machines do they have to serve the county? And more people. Right. I think that we don't have an agreement with them that says this is what it will be for the you know, for a set amount of time. So I think it's possible that you could try it out for the year and then make a determination going forward. I'd be open to do it if we could do it for a year. If we're if we if we say we're going to do it, we're just stuck with doing it and it doesn't achieve the goal of increasing voter turnout. Then it's money wasted. Yes, sorry, Sarah. Throw something at me. But I think we ought to give it a try and then look at those numbers and thank you for reiterating what the county said because it's their preference. But it's not the rule. So, you know, ultimately, we're the masters of our own purse here and we can take a look at, you know, if we are able to generate more people in a city election that we've had in the past because city elections are often less popular. It just doesn't drive out the vote. And I just want to encourage people to get out and vote. And if it's easier to have a place that's 10 minutes versus 30, then it's important. Okay, customer Gary. Was it last week that you're here? Yes. Okay. Yeah. Last week when you came, I was really in favor of adding several new polling locations. Now that I see this data, I'm not in favor of it anymore. Just looking at the day of ballots cast, it doesn't seem to justify the cost of the additional polling stations. And I'm concerned with, you know, I would love to see greater turnout. I spent a lot of effort and my own money and time to get more people involved in this political process. However, my concern is that if we use this for a one-year test pilot, we have a hot button election this year, we're going to have greater turnout. Does that mean we suddenly have decided that we have greater turnout because we have more polling sites? I think it's going to create a false correlation for us. I think that, excuse me, I think that also because this year is a district election, even though you have a city wide ballot proposition, you could have lower turnout. I think that's been the case in recent years. So in 2015, the total turnout was much lower. It was only about 5.9%. That's a good point. And so you may want to look at two years worth of data to say, did it really have an impact on turnout? Well, all that to say I'm not in favor of this now. Mayor Proctor. As I mentioned last time, I think if the goal is greater voter turnout, the trend lines, as I described last time, I mean, it's just increasing in terms of early voter turnout. And so that's where I would go after. I mean, there are still states that do only election day. And so for them, the voter turnout thing is to get pre-e lection day and the problems there are lines, which we certainly will not have in this scenario in terms of. So I'm fine with this. I'm fine with trying it and I'm fine to see how it goes. My concern is a couple things and I want to make sure we drill down district by district if we're going in this direction, because it's not so much proximity. I think there's a couple things I'm concerned about is that long term voter who's used to in my district going to MLK Center, who shows up on election day because they know where they're supposed to vote. That's what they've been doing for 20 years. And then they get there and they say, go to Pecan Creek Elementary. I have no idea where Pecan, I know where it is. Someone who isn't knowledgeable, the school district or senior citizen or something, they're not going to know where that is. And then they find out, I've got to drive 20 minutes down I -35 to get there. There's that unintended consequence. We can maybe educate around that. But I think the key to this point is when we look at these precincts of 4039 sticks out in my head for district three. Because as I look at that and see where that is in proximity to the city, someone who lives in that area will know where North Lakes Park is. You tell them that they now vote at fire station seven. They have no geographical knowledge of where fires, they probably never have ever had to drive past it. So to that point, and that might answer your question too about 1013. I don't know the answer to that. When I look at district one and see 4041 and 1038, I'm comfortable that folks that live down in that area know Pecan Creek Elementary because their kids go there. And it's right around the corner. And so that makes sense. So I just want to make sure district by district, this makes sense. And it's a known location. So that's I don't know the best way to address that other than each representative kind of chiming in a bit. Well, two things. One is if if we say to the county, we're going to try this for a year. I don't know how these costs get passed through. So in other words, is it just what are included in those if it's voting machines, if it's things like that. So I don't know. So that cost may be if it's just a flat fee. Okay, I get it. But if it's based upon we got to have 10 voting places, we are 10 voting booths. We got to have so many people there. I don't know how that 's figured. I think probably I don't have an issue with trying it. My biggest concern. And I know that you asked for this last year, so I'm not trying to say I'm going to. But my biggest concern is this is pretty this is pretty close. I mean, we're fixing to hit the filing deadline for people who want to be on the ballot other than write in. And when people show up, most of them don't have their voting card. They have an ID, I would think. And so when they say you've got to go over to X because you 're in precinct X. I just I just hope that the edge. Yeah, do we have enough time to really educate? So I'm not trying to I'm just saying we're we're right sort of on the 20 to 30 yard line fixing the score. And all of a sudden we're saying, hey, you're going the wrong way to that point. You brought this to council in September. It is taken to February for us to talk about it. So I yeah, so that's not saying yes to your 20 30 yard line argument doesn't hold up with me because we staff didn't bring it to us. And so we're talking about it now. Yes, we are. I do agree with Council Member Rodin with that precinct 40 39. I think it should go to North Lakes Park. I don't know if it can. I think by law it has to be I mean is I thought this was a this was a this is still district three tucked around. Right. But 40 39. They currently the plan here is to take it down to the fire station. And staff asked, would you look at these precincts and make any changes because you know your district is that within our purview? Yes, sir. So the direction from the county was you. The city can decide which precincts would report to which of these polling locations. So this was just this is staff's recommendation. Oh, so 40 39. I think back up to North Lakes Park. Wow, that's different. So you're saying each each this council could change this whole map based upon where we wanted a precinct to go. That sounds like what I'm hearing. I mean, I thought it was sent by the county. The county elections administrator has said that the council can decide which of the precincts report to which of these polling locations in the district. Did was that y'all's understanding when they presented to us that the council. OK, I thought it was they they. OK. All right. Yes. I don't know if anybody here has ever voted on or worked at the voting precincts at the various ones. Well, I worked in crumb the last presidential election one before that. And there's a part of crumb that you would think is in cr umb, but is actually in Denton. So we ended up turning away probably half or three quarters of the people that came to that precinct. And I'd say most of them were like, I'm not voting. They were I mean, they were upset. They were they just gave up on an election, which I found to be crazy. But I mean, I guess if you've driven that far and it's at the end of the day, sometimes you don't have time to go to the precinct that you want to go to. So I just want to tell people to be cautious about that. It's an actual real thing when you're in the wrong voting location for people to say I'm not going to vote or it's just too late for me to get all the way over there. Yeah. Yes, may protein again, if we're looking at other ones and again, council member was that you probably know your district geography more than I do. But my guess is looking at the voter total out of 4004. Given the lack of population in most of that area, the bulk of the population is hugged up next to UNT. Up there, which I would guess is where those voters, the 12 voters on election day are coming from most likely. And again, I think you would have a certain sense of, you know, you're on that side of I-35. You're in that, it's just a thought that would be one I would think. Still easier to get down to fire station because you can come over and hop on. If I know where it is. Go south, yeah. And so I think it comes back to the city. We have a local newspaper that we can put some information in. We have our website and you know what? We have council every Tuesday and we can remind people as well. You know, heads up, we're adding voting locations on election day. You have to vote where your precinct is. So get your ducks in a row before election day. And I come back to what are we going to do in five or ten years when we have 200,000 people and we're desperate for additional voting locations? We still will have the same issue with people struggling to find out. Now, where do I go vote? So it's just a nature of the beast with growth and adding polling locations. You are going to have some of that as a byproduct, but the city can be extremely proactive. We can be proactive in our districts if we have a blog or a website to talk to people. So I just thank council for seriously considering this this year because yes, I did bring it up last year. Thank you. Yes, because my right. Well, listening to the discussion, a couple of things. I don't think that we can hold staff responsible for this coming back at the time that it has given that you'd asked for it in September, because if my recollection is right, the county elections department had to weigh in and they've had some issues in the past few months. I'm not sure that they could have responded any sooner than what they did. And we and staff certainly could not have given us information without the benefit of the county's election department giving us what they know. The more I think about it in hearing councilmember Gary's comments, I'm feeling less and less comfortable about about making this change. I'm not going to. I don't. So I feel less strongly about about trying it than I did before. Yes, member. So looking at the map and in the data, the numbers, when you take concrete elementary where we are in the, the different precincts, that's a total of 5050 people from from the last for that one to go into. That's a pretty low number. But then when you take out the precinct 1013 sorry, I'm like that. I think is the very top of that would need to go to North Lakes because it doesn't make very much sense. Thirty of those people came from that precinct. That's more than half. So that that only leaves 20 to go down here at that one. So I'm just trying to wrap my head around the low amount, the low number of people. And if if we did decide to do it, there would need to be some sort of notification process by precinct. I mean, we would just have to as far as I'm concerned. And that's going to be a whole nother level of funding. Well, and we're assuming that that we can get into Pecan Creek in the school and the school district may do it for free. But that means that they have to turn on the air conditioning heating system. I suppose in May it'll be the air conditioning system. Does they have to have a custodian on duty or some other staff person on duty? That's an expense to the school district. If they're having an election, they may be glad to participate. If they're not, I suspect that that they will charge us for it. So we don't know for sure that what's presented to us today is even going to be workable because the concrete may not be available to us. Do we do you have a have you all looked at a plan B in case it's not? We haven't yet in the part of the challenge in this area is a lack of those sort of public facilities that would be good candidates for polling locations. OK, thank you. Mayor Pro Tem. You know, I mentioned something like this last week. But, you know, the reason I think is I've kind of been involved with this the last few years. Why it's there's lower voter turnout and district level elections that we're going to have this spring is because it takes that added step to understand even which state of candidates do I pay attention to? No one thinks about themselves in terms of which district until you create D2 t-shirts or something like that. But I mean, typically your average citizen doesn't think about that at large elections, except for voting on Election Day where you're forced to go. You don't even have to worry about it the entire election. You don't have to worry about what district you're in. You just go and you're going to be able to vote for the entire slate of candidates. So you're able to kind of pay attention to everything that 's going on. And so there's there's obstacles to entry on district level that are beyond voting. It's just even an awareness of this, which is why we did that whole campaign to try and get people to figure that out. And so I really do appreciate this because there is a significant problem of voter turnout in the city. I don't happen to think that this will move the needle on that. I think there's a lot of other issues involved. And we're not really adding additional voting booze because from an individual perspective, I still can only go to one. So you haven't changed my options. All you've done is redirected me and maybe given me a place to go that's easier to get to, more convenient, and maybe in some cases it's going to be less convenient and more difficult for me to go to. And we won't know that until we try this. I wonder if in the spirit of adding committees and solving problems, and there is a real problem. And we brought this up several months back in the council committee on citizen engagement and had a more philosophic discussion of whose problem is it that there's low voter turnout? Who's responsible for fixing it? And staff scratching their heads not wanting to claim it. Politicians are scratching their heads not wanting to claim it. It's unclear who can help. But it could be that in part of a larger context of discussion with the committee, not just council, but perhaps a citizen committee of engaged folks saying the goal in mind is increasing voter turnout. Can we put metrics on that? How do we track that? And what can we do comprehensively throughout a year of raising awareness or whatever? And it could culminate in recommendations of this. Maybe they look at this and say this is the problem. Or maybe they look at some other things that have to do with elections. I think comprehensively that would be an interesting way. If it's not the will of the council to go this direction, which it's hard to read the tea leaves at this point. But I don't want to lose this, I guess is what I'm saying, is if we don't act on this, I think there's momentum to have that larger conversation, which would be really positive. And perhaps throw a bunch of other things at the table at the same time. Do you have some data? Like this was the at-large election. 2016. Do you have 2014 at-large data? Yes. [INAUDIBLE] Well, I'm trying to go, I'm trying to do at-large to at-lar ge. Yeah. I only have the total voter turnout data for 2014. What is that? 5,167 total ballots cast. The turnout was 8.5%. So the total ballots cast were more last year in the at-lar ge than it was in the previous at-large by almost 1,000 votes. Am I looking at that correctly? Yeah. Yes, sir. I don't, to agree to do this on a trial basis, I'm going to be honest with you. I would just be deferring because it's your request. I'm going to be truthful. If I step back and look at it objectively, when I look at four polling places at 1,800 people, that's 450 people on average. And yes, we're going to grow. Yes, we're going to have more growth. But does that, is that going to translate into more people going to the polling places percentage-wise than what we're doing now? So out of respect for you and your request, then I'm going to say I'm okay with trying this for a year. We've spent $30,000 on things that were, you know, a lot less potentially impactful. And we can also do that contemporaneously with that is maybe ask this Council on Citizen Engagement to look at the larger issue of voter turnout. And if it doesn't, if the numbers don't seem to pan out or if we, my biggest fear, I mean, I'm going to agree to this under one caveat, that we put a heck of a lot of effort into letting people know this because the last thing I want to do is wind up with the situation, unfortunately, that the county did where all of a sudden during city races, because we've added a different polling station, additional polling station, people are saying I didn't vote because I didn't know where . So it's just incumbent that we put forth our just tremendous effort to let this be known. And of course, I think that'll be an additional cost. I think it's incumbent upon us as a city to send out notices somehow. I don't know how we do it to let people know because I just I don't want to get those kind of discussions or those kind of issues arise. But voters are if someone chooses not to vote because they don't know what sex they don't want to try to figure out where to go. Some of it may be on us. But also, I think voters still have to be individually responsible. And yes, I understand that. Yeah. And it may be time. So that's why it's incumbent for us to make sure if we move forward with this change, even on a trial basis, that we let everybody know starting tomorrow if this council gives this direction to move forward. And we see our illustrious local press here. So I presume that they will give us some good coverage on that. But so. So I can agree to that. I can agree to to the trial effort on this and see how it works and understanding that probably for me next year, I'm probably going to be less inclined to do away with it, even if it wasn't this raving success, just because that's that's the situation we've we've set up. So but I'm OK with it. Yeah, Mayor. I was going to chime in with some of the data that you guys had asked for. So last year's election, 2016, was six thousand one hundred and thirteen, which represented an increase from previous at large election by about a thousand votes. So 2015, though, three thousand eight hundred and eighty seven total votes. So significantly less. And then 2013, two thousand three hundred and sixty four votes. And the percentage of early voting in each of these years has gone up. So, I mean, you're you're you're looking at. A shrink, much smaller number on those days. So when you do the calculations, at least for this next election of what that means, cost per voter, unless there's some uptick. I mean, we have one district that may not be contested, which would make that even lower. So anyways, it's just important to see those numbers. Well, unless we have any more questions, I mean, we sort of batted this around. We need to decide what kind of direction we're going to give to staff unless we have any more questions on this. Council member Gary is frantically looking at her laptop. So, council members, what's your pleasure? I've sort of stated my preference. I think Council member Wasney has stated her preference. I mean, you don't have to say anything. I mean, silence to me, to me, I think in this situation, silence would be indicative of direction not to move forward. So I just because I don't know. I mean, we've got to be able to have a consensus. And this isn't a vote per se. It's just we got to give staff direction to move forward. I would like my fellow council members to look at the the 1013 and see what and see what just some feedback on that. Because for me, McKinney up, I think would would need to stay where it was. And so the remaining two precincts down near Pecan Creek, I think would that's a great fit for the concrete elementary if we can get that. So I'm just looking for some feedback that what you think. I think you're right on 1013 because it's because of University Drive and Windsor. It's pretty easy for them to get over to North Branch. Yeah. And so if we do that and then we do proper notifications and the other two precincts as well and for District one notifications as well. I mean, I think I mean, I guess I'm OK with it. OK. But then again, just to remind you, that would be 20 people. Yeah. At one place for between five and ten thousand dollars. So just to remind you, I'm this this is difficult. Councilman Ross, I'll be honest with you. Well, I'll remind people that it is a 35 minute one way drive for almost three thousand seniors at Ropes and Ranch to get all the way up to North Lakes Park. So that's what triggered this discussion. If you really study District four, I-35 cuts that district right in two and the Dena people voted at Dena Rec Center. But for all the rest of District four, that's tough to get over to Dena. I am saying that district by district and Keely, your district is really far flung as well. That our city is growing. I think we owe it to our voters to add polling locations and move forward with this. Yes, Councilmember Geary. So I'm looking at last 2015 election for District three. On the day of the election, there were three hundred sixty six votes out of eighteen hundred twenty. So that means that about 18 percent showed up on the day of . Ropes and Ranch just doesn't want to make that long drive. So they but I think they will if they know they can get over to Fire Station seven. Well, I guess what I'm saying is that most people are voting early because I believe if you're at ropes and you can vote right across the street in Argyle at the facility in Argyle early, which is even closer than Fire Station seven. You can vote early. However, I come back to I think people will make an effort to try to go vote early because it is just such a gargant uan effort to be on that road for thirty five minutes negotiating all the construction in and around the university to try to get up to North Lakes Park. They added one hundred and sixty new homes this year. That's another three hundred voters. So I come back to we just need to really take a look at this and to the mayor's point, we spend money on a lot of different things. And I think to encourage voting in this city is important. I think it's important for this council to say no. I think also sends the wrong message. I've got a question. Are we required to put a voting an additional voting location in each district? No, sir. You could, as I understand it, choose to just do whatever makes sense for the council. Okay. So to that end, if district three or three district two. If that didn't seem to make sense, we don't necessarily have to do that. But if we wanted to add Fire Station seven and the South Branch Library, because most of the people from Southridge, I mean, most of the voters at the Dean, your rec center or Southridge, I say Southridge, that that area. It's not from the denya neighborhood per se. In fact, it's like a three to one. So I'm open to if you don't think I mean, we've been discussing this as an all or nothing. And so it might get too confusing to do. Otherwise, I get that I'm just trying to find if there's a way to find some common ground. And if not, then that's okay. I mean, I'm just I'm just sort of brainstorming. Yes, Councilmember. I think what if we just send ropes into fire station number seven on election day, and then the other precincts, which are on this sheet totals 34 people. They just continue to go to North Lakes. I think that wouldn't be too much of an inconvenience. I'm looking at the map. And then skipping the pecan Creek, although I don't like any of this, so I'm flexible. I mean, I'm trying to accommodate ropes in 366 people at ropes in on election day. But I'm more concerned about losing 500 people because they go to the wrong place. So I'm trying to avoid that. So if we can just carve out ropes in and say they get their own polling station because that's what they want. And then other people can go to their normal place and we don't lose the precinct voters. I get that because that falls into on one hand, finding a solution to the specific problem at hand. I think voting locations. This is not unlike gerrymandering to some degree. I mean, where you're putting your voting locations at the whim of a specific neighborhood because people want to drive out turnout from a specific neighborhood versus others or whatever. That's that's a larger question. And so my concern, which is focusing on one means we're creating that impression. And then we'd almost have to open it up to the rest of the city to say who else feels disenfranchised by their drive and would rather. I remember the first time I voted to my shame in a city election as a young Kevin Roden as compared to I found out I needed to go to MLK Center and I had never been there. Never. And I had to look it up. Where is this place? Get to my shame. I'd never been to that to that center. So, you know, all that to say any neighborhood might come up with, you know, I need one right in my backyard for whatever reason. So as much as I think just solving it for one makes sense f iscally, I think there's a whole host of other problems. I get that. Yeah. Yes, ma'am. To be clear, precinct 4003 also encompasses almost all of country lakes. And as you move up 377, a lot of the residential neighborhoods that are off to the east of 377 when you're driving, you see it. So it's not just ropes and ranch. It's a fairly large precinct. So let's let's have a little bit more questioning. But then let's let's just see if we can't figure this out. I think we've as I hear the conversation and I think about your concern for your neighbors, Kathleen, your neighbors have more flexibility in voting than anybody in town because of the fact that that a lot of them can also do a mail in ballot because of age. The more I think about it, the more I think we ought to just stand back for the time being. The average age person moving into ropes and ranch is 53. So that takes out the over 65 mail in ballot completely. These people are working. They're commuting. So Monday through Friday, it's it's tough. So to just call it a retirement community. It's just the dynamics have changed dramatically out there. Okay. Other council members want to weigh in. I think there's a number of unanswered questions for me and unintended consequences. I want to try and avoid. I mean, to some level, you want to be kind of conservative as it relates to voting and make it crystal clear. This is a problem sometimes when people want to change like voting ID laws at the last minute. It causes more confusion than it solves problems. So I'm in favor of looking into this. I would my vote would be to table this for a more comprehensive discussion on voter turnout, which again, I think the data shows that that will probably result in suggestions that get at some of the core issues of why people aren't engaged electorally in the city. And maybe this could be one of them if that committee chooses to do it. But that would be my suggestion. So that's your direction. Okay. Since I'm on the ballot, I'm starting to feel a little bit uncomfortable continuing with the discussion. Just per se. I mean, you know, it's just kind of awkward. So, I mean, so I'm not sure what that yeah. Okay. Well, all right. Okay. Okay. That's my Gary. I still don't think this is a good idea right now. I would be I would like to look more deeply at the reasons for non voting. I'm just concerned that we're going to try to fix one thing and then cause a problem somewhere else. And I can't reconcile those angry voters at the crumb prec inct that I worked at. I just can't have that in my head. So yeah. Okay. Well, make sure we still got a quorum. All right. Well, it seems like from at least the direction is stated. The direction is to not move forward with the new voting positions this May election. Is that what I'm understanding? Okay. All right. But also here the direction is to maybe toss it also to the Council on Community Citizen Engagement. Council Committee on Citizen Engagement. Aren't you the chair? You don't even know the name of your own committee. I'm just teasing you. So to look at an overall perspective and approach to this as far as voter turnout and polling places. Can I give some direction for that? The council. Sure. Subcommittee. What I'd like to look at is compare the at large years and then compare the district years. So if we could have some trend lines and we can see where people are voting and how people are voting, I think that will help guide us in terms of where these, you know, maybe North Lakes isn't even the right place for the precincts, the actual voting location to be, period. Maybe it should just be somewhere more centrally located. And same for the other districts. We might just be placing them wrong. So if we can get like a little heat map, probably be helpful. So you're saying part of that direction is to even look at is there some opportunity if the direction isn't to move forward after this comprehensive study of multiple to see if the ones that we currently have are even in a good location. Yeah, like Denia, this clearly shows that Denia is probably the wrong location for voting for district four. So yeah, I'd like to just reevaluate all the voting locations. All right. Okay. Okay. Any other questions? Any more comment on this item? Okay. Thank you. That concludes our open session. We will now convene the closed session at five. Oh, I'm sorry. Yes. Oh, concluding items. Yes. Sorry. Go ahead. Yes. So under concluding items, I had asked a while back, I think in December, that the staff give council an update on the status of our, status of our agreement with the county for side paths around the historic courthouse. It was going to come around the first of February and it has not come, I don't believe. So I'd like to hear where we are. And from reading the newspaper, it sounds like that that staff has made a proposal to the county. I'd like to see what it is. And get in status on what the holdup is, if there is a hold up. Maybe it's all done. I don't know. Okay. Council member. Just to that, there are markings on the concrete on the sidewalk out near. So I believe some sort of movement is going on, but I'm not sure what it is. I can tell you, I think movement's good. Council member. On June 1st, hands free will become law in the city of Dent on. And we need to launch a marketing campaign from the city to let people know one of the things that surfaced in this discussion was that we had a lot of citizens that didn't even know we had a text ban. So I think we had fallen short of letting our citizens know about the text ban, but now it goes further. So a marketing campaign and also have we ordered the signs that need to be in place? No later than June 1st, so people know to include inter state 35 because the law now encompasses the interstate highways that come through the city. So I don't want to be caught sleeping on this because we owe it to our citizens to really let them know it's coming. It's coming. It's coming. So when it hits June 1st and they get stopped, they've had adequate notice from the city that we've been telling you folks and now it's here. So I appreciate that. Thank you. Council member Gary. I just want to second that and maybe suggest that we target the populations that will very likely be affected, maybe with banner ads on social media or something to that effect , so that people who are more likely to be caught in it are given notice as well. Just want to second that. Okay. Anybody else? I have just a sort of a request for an update or at least when we might have this. A couple of maybe I don't know how long was a couple of months ago. I'd ask for a council to have a work session on how it helped me understand is it the fire, the fire lines that fire flow, fire flow policy or what if we have one, what is it? Do we want one? If so, what would it be for new for buildings that are needing sprinkler systems and the fire flow capacity? And if it's across the street, who pays and just sort of a comprehensive discussion on that. Any others? Okay. Now we will adjourn the open session and we'll convene the closed session at 510 p.m. Consider the following items consultation with attorneys under text government code section 551.071 and deliberate.