TO: Mayor Collins and Town Council Members
FROM: Kevin Burke, Town Manager
Dawn Marie Buckland, Director of Administration & Gov’t Affairs
DATE: September 22, 2016
DEPARTMENT: Administration and Government Affairs Department
Staff Contact
Dawn Marie Buckland, 480.348.3555
End
AGENDA TITLE:
Title
Discussion on PSPRS Unfunded Liability and Opportunities to Minimize Town’s Total Cost
Body
Council Goals
Develop a long range balanced budget
SUMMARY STATEMENT:
The Town currently faces an $18 million unfunded public safety pension liability on which it is assessed an 8% annual fee to cover the expected rate of return. Recent legislation has fixed the pension structure moving forward, but the Town will continue to be assessed 8% each year until the outstanding balance is paid. In FY 2017 this will equate to more than $1.3 million in mandatory fees.
Staff would like to discuss with Council options to accelerate the payment of the unfunded liability and reduce the total future assessment charges. These accelerated payments assume the Paradise Valley voters approve the permanent adjustment to the expenditure base at the November 8, 2016 election. Staff has prepared four scenarios (A-D).
Scenario A makes the minimum payments required by Public Safety Personnel Retirement System (PSPRS). The last payment would occur in 2036 and would incur $10.2 million in assessments.
Scenario B makes PSPRS payments such that the Town’s reserves never fall below 90%. The last payment would occur in 2026 and incur $6.2 million in assessments.
Scenario C makes even PSPRS payments over 10 years. The last payment would be in 2027 and the Town would pay a total of $6.1million in assessments.
Scenario D eliminates the unfunded liability in 3 years. The last payment is in 2020 and the Town would pay a total of $2.3 million in assessments.
A more detailed accounting of these options is attached.
ATTACHMENT(S):
Forecasted Scenarios