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The Scottsdale Public Safety Personnel Retirement System Pension has a new approved funding policy, which includes a pay-off goal 17 years from today.
On April 21, the Scottsdale City Council adopted resolution No. 11760, setting in motion the funding policy; acceptance of the city’s share of assets and liabilities; repeal of the prior policy; and establishing an effective date of July 1.
Scottsdale’s police and fire employees who are regularly assigned hazardous duty participate in the Public Safety Personnel Retirement System --- commonly known as PSPRS.
On April 3, 2018, Arizona House Bill 2097 was passed into law, requiring municipalities to adopt a pension funding policy for the PSPRS annually.
The bill was codified into Arizona Revised Statutes, and requires the city to adopt a pension funding policy to communicate how the city will maintain stability of the city’s required contributions, how and when the funding requirements will be met, and defining the city’s funded ratio target.
Also, Scottsdale is required to formally accept the city’s share of assets and liabilities based on the PSPRS actuarial report and post the pension funding policy to its website, according to a city staff report.
PSPRS administers the city’s multiple-employer pension plan and has separate trusts for both police and fire department employees. An agent multiple-employer plan has two main functions:
To co-mingle assets of all plans under its administration, thus achieving economy of scale for more cost efficient investments and invest those assets for the benefit of all members under its administration; and
Serve as the statewide uniform administrator for the distribution of benefits.
Each year, PSPRS provides annual actuarial reports for the city’s estimated assets, liabilities and unfunded actuarial liabilities for each plan.
The PSPRS actuarial reports from June 30, 2019, reflect a funded ratio of 52.1% for police, and 92.8% for fire, City Treasurer Jeff Nichols penned in his report to City Council. The city’s unfunded liabilities were $181,439,062 for police, and $7,990,338 for fire.
“Both the city and employee annual contribution rates vary depending upon the employee’s hire date,” Mr. Nichols stated in the staff report.
The city’s police contribution rates for fiscal year 2019 were 46.53% or 51.85%, and employee rates were 7.65%, 9.73% or 11.65%. Meanwhile, the city’s fire contribution rates for the same time were 14.56% or 19.17%, and employee contribution rates were 7.65%, 10.33% or 11.65%.
For fiscal year June 30, 2019, Scottsdale paid the required contributions to PSPRS for police and fire of nearly $20 million.
Additionally, the fire pension plan annually receives a fire premium insurance tax credit to the city’s fire trust fund to further reduce the city’s required contribution. The amount received for fiscal year 2019 was $1.9 million, Mr. Nichols stated.
“The unfunded actuarial accrued liability is shown as a city liability; however, it will be partially paid through employee contributions and the annual allocation of the fire insurance premium tax,” Mr. Nichols stated.
The City of Scottsdale is paying down the unfunded liability for existing PSPRS plans, and is expected to have them paid in 17 years or by June 30, 2036.
“To comply with the new statutory requirement staff recommends to continue to pay the annual required contributions each year which include a portion of the amortized unfunded component to reach 100% funded status of both plays by 2036 and to formally accept the city’s share of the assets and liabilities included in the PSPRS actuarial reports,” Mr. Nichols stated.
Scottsdale’s five-year plan and annual budget includes the city’s annual required contributions for the pension plans per the projected pension contribution rates included in the actuarial reports.
From now on, the city will formally review the funding levels and unfunded liabilities and adopt the pension funding policy.
Melissa Rosequist Managing Editor | East Valley @mrosequist_
I first started my journalism portfolio at the age of 15 while in high school before going on to study at the Walter Cronkite School of Journalism and Mass Communications. Being in the journalism field is the only professional avenue I was ever interested in, and have worked hard covering topics from school boards to hard news while working for the Independent, where I have been awarded for my reporting.
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