A Broad View by Jerry Hogan: The Rockwall County Retirement System

ROCKWALL, TX (Aug. 15, 2022) Ever so often the question of the Rockwall County retirement plan is raised, usually because of some neighboring county suggesting their plan be changed.

All the counties in Texas, along with many of the districts, are members of the Texas County and District Retirement System (TCRDS). This system was created in 1967 by the Texas Legislation, however it receives no state funding; it is totally funded by the employees, employers, and the money it earns through investments. The fund today has over 800 members and has total assets of about $45 Billion.

Each individual employer sets up their own rules for retirement eligibility. In Rockwall County an employee must meet at least one of the following to qualify for a monthly pension; age 60 with 8 years of service, age plus service equals 75 with a minimum of 8 years of service, or any age with 30 years of service.

Each employee in the county contributes 7% of their salary each pay period. This contribution is matched by the county with a 9% contribution to keep the system fully funded.

When an employee retires, the sum of their total monies deposited over time, plus the earning generated on their deposits, is totaled. This amount is then multiplied by 2, in the case of Rockwall County, and the two totals are added. This becomes the total retirement income for the employee which is amortized monthly using standard actuarial tables.

TCDRS has established a goal of having a 7% return on their investments over a 30-year time frame. At the end of 2021, their 30 return was 8.15%.

Occasionally one of the neighboring counties will have a debate about changing the employee multiplier ( 2 in the case of Rockwall County) to a higher value. An example will show the impact of such a change to the money available for retirement.

Assume a county employee who has made an average of $50,000 a year decides to retire at age 55 with 30 years of service. Their contribution to their retirement has been 7% of $50,000 times 30 years of service, or $105,000. This is increased by the earnings generated in the TCRDS system, which they guarantee to be at least 7% per year, or an additional $105,000. (Actual value would be higher due to interest compounding year over year.)

Thus, the total employee contribution to their pension is $210,000. The county then multiplies this amount by their multiplier, 2, or $420,000. The total retirement amount available is $210,000 plus $420,000 or $630,000. This is then amortized and paid in monthly installments to the employee.

The debate in neighboring counties is usually about the value of the multiplier. In this example, that number being 2. If it were changed to 2.5, then the county would be multiplying the employee total of $210,000 times 2.5, or $525,000, a difference of $105,000 that would be necessary to be contributed for the employee pension.

The county total expenditure this fiscal year for retirement is $1,902,226, or 4.46% of the total budget for FY 2022. As a comparison, in the FY 2015 budget, just 8 years ago, the total expenditure for retirement was $1,200,703, or 3.6% of the total budget.

There are two major observations that can be made: the county retirement system is a pretty good system, AND the county needs to carefully watch their headcount growth as there are indirect costs, like retirement, that go up with every additional employee.

Submitted Letter to the Editor/Guest Column contributed by Jerry Hogan, a former Rockwall County Judge. He can be reached at jerryhogan@sbcglobal.net or 214-394-4033.