Budget and Finance Commission


Print

Return to the Search Page Return to the Agenda
  AGENDA ITEM: 4.       
Meeting Date: 03/16/2021  
Submitted By: David Gephart, Finance

SUBJECT:
DISCUSSION AND POSSIBLE RECOMMENDATION OF DRAFT PSPRS PENSION FUNDING POLICY FOR FISCAL YEAR ENDING JUNE 30, 2022
RECOMMENDATION:
Recommend Town Council approval of the updated draft PSPRS pension funding policy for next fiscal year as presented.

or

Recommend Town Council approval of the updated draft PSPRS pension funding policy for next fiscal year as amended.
EXECUTIVE SUMMARY:
Each local government must annually update its PSPRS pension funding policy according to Arizona Revised Statute.

Highlights of the proposed PSPRS pension funding policy are the following:
1) The ARC will be paid from operating revenues
2) Whenever the ARC is reduced, the Town will endeavor to continue paying the higher historical employer rate
3) The 20-year amortization of the unfunded actuarial accrued liability will continue to be utilized
4) Payments in addition to the ARC will be made as funding is available

The Town has set a target to be fully funded on its PSPRS Unfunded Accrued Actuarial Liability by June 30, 2036, with additional interim targets set as 70% funded by 2024, 80% funded by 2028, and 90% funded by 2032.
BACKGROUND OR DETAILED INFORMATION:
As a refresher, the PSPRS pension funding policy is required by HB 2097, which amends Arizona Revised Statutes Title 38, Chapter 5, Article 4, and was approved by the Governor on April 3, 2018.  The policy must be updated and approved annually by the governing body of a local government participating in the plan. The intent for the revision in State law is to highlight to governing bodies and the public, the approach local governments are taking in addressing unfunded accrued actuarial liabilities of their public safety retirement plan(s).  There is no such requirement for the Arizona State Retirement System (ASRS) covering general local government employees, as that plan is financially healthier and functions differently than the PSPRS plan in terms of the sharing of unfunded assets/liabilities.

The draft policy pertaining to next fiscal year is attached, and is roughly the same approved for the current year by Town Council with necessary updates for the fiscal year to which the policy pertains as well as updates to the actuarial assets, liabilities and unfunded accrued liabilities.  Depending on the recommendation(s) to Town Council for pension funding next fiscal year, additional edits may be needed (ie. updating the $500,000 annual contribution in addition to the ARC, amendment of timing of funding targets, etc).  
FISCAL IMPACT:
N/A
SUGGESTED MOTION:
Move to recommend Town Council approval of the updated PSPRS pension funding policy for fiscal year ending June 30, 2022 as presented.

Or

Move to recommend Town Council approval of the updated PSPRS pension funding policy for fiscal year ending June 30, 2022 as amended.
Attachments
Draft PSPRS Pension Funding Policy


    

Level double AA conformance,
                W3C WAI Web Content Accessibility Guidelines 2.0

AgendaQuick ©2005 - 2021 Destiny Software Inc. All Rights Reserved.