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Paradise Valley Town Council is steadfast on best PSPRS funding options

photo of Paradise Valley Town Council
Paradise Valley Mayor Jerry Bien-Willner at Town Hall, 6401 E. Lincoln Drive, during a recent Town Council work session discussion. (Photo: Arianna Grainey/DigitalFreePress)
Paradise Valley Town Council considers PSPRS funding policy, FY ’24 over-payment
By Terrance Thornton | Digital Free Press

Paradise Valley Town Council is, has been and always will be in support of the men and women of the local police department — on the job and after they finish their service to the people of the municipality.

Following distinguished service of a municipal police officer, those brave men and women of local law enforcement are enrolled in the statewide Public Safety Personnel Retirement System, or PSPRS, providing a dedicated source of income for those who are retired or unable to perform duties through a formal medical diagnosis.

The Public Safety Personnel Retirement System was established in July 1968 and is meant to provide an equitable statewide retirement program for Arizona’s public safety personnel.

Over the last several weeks, Paradise Valley Town Council has been mulling the most equitable approach to pay down unfunded liability — a result of system losses due to fluctuations of stock and public bond markets over the life cycle of the publicly traded legacy retirement fund — at the Town of Paradise Valley.

The PSPRS fund, which is governed by a nine-member board of trustees, is entrusted with the fiduciary responsibility to serve its members, and best protect the financial health of each pension fund the board oversees, according to state law.

Paradise Valley Town Council Thursday, May 9, hosted a work session discussion at Town Hall, 6401 E. Lincoln Drive, on potential investment options to help pay down unfunded liability at PSPRS to accomplish two key efforts:

  1. To limit the town’s liability to the volatility of the stock and bond markets; and
  2. Reducing annual financial obligations alleviating pressure on state-imposed expenditure limitations.

“We are committed, without a doubt, to make good for our retired or fallen officers — that is no question,” Mayor Jerry Bien-Willner said at the onset of the May 9 work session discussion. “There have been years when performance has been great and there have been times when performance has been sub-optimal. The key factor here is to make sure we can always live up to our obligations to our police officers.”

The issue at hand is how much Town Council ought to pay ahead of time this fiscal year betting on certain returns are maintained by the PSPRS investment fund.

In fiscal year 2014-15, the Town of Paradise Valley unfunded PSPRS liability was $21,130,334 or 25.08% funded meanwhile in fiscal year 2022-23 those numbers sit at $5,265,223 or 88.17% funded, according to an May 9 actuarial report prepared by town consultants, accounting firm Piper|Sandler.

How much to pay down — and at what time — is the question before Town Council.

Read the actuarial report HERE.

“We have not made an excess contribution in a few years,” said Leslie DeReche, Paradise Valley chief financial officer. “It is as high as it is now because we haven’t made any additional payments in a few years — I was going to propose we put in $5 million prior to the end of the fiscal year … we have to pick a number.”

The proposed spending plan at the Town of Paradise Valley for fiscal year 2024-25 — referred to as the General Fund — is $45,365,205, according to the ClearGov Paradise Valley Transparency Center.

The FY 2024-25 General Fund is $3,177,357 less than the FY 2023-24 spending plan at $48,542,562, numbers show.

Existing policy at Paradise Valley Town states the town will maintain an unfunded PSPRS balance no less than 90 percent.

“What I would suggest here is that there is more conversation to be had,” Mayor Bien-Willner said around potential changes to existing Town Council policy moving the target funded level be between 95% and 110% funded.

“These aren’t easy issues — reasonable minds can differ. Tomorrow, if the markets go kaput we would have a much different proposal, I am hearing we are all committed to the policy of 90 percent.”

Learn More About Your Candidates for Paradise Valley Mayor:
Next steps at Paradise Valley Town Council: PSPRS

Paradise Valley Councilman Scott Moore pointed out a need for more information before a final decision is made, which would result in a formal funding policy change.

“We have members of council who have asked for more information — I don’t know why we are making this decision in work session going against a policy we have had in place for some time,” he said. “I would like some transparency to understand the history of the policy.”

Vice Mayor Mark Stanton points out there is no crystal ball.

“I do feel pulling that pin earlier than later it does give us a better direction,” he said of making a $4 to $5 million payment prior to the end of this fiscal year, which would bring unfunded liability at the town to at or below zero percent. “These are important decisions, but we don’t have a crystal ball.”

Councilwoman Anna Thomasson echoed a similar sentiment.

“Part of this decision involves the volatility of the first and third tiers,” she said of dedicated contribution portions of the three-tier PSPRS investment fund. “The annual returns year over year … that would be helpful to me.”

Paradise Valley Town Council is expected to render a final decision on both an extra payment and existing PSPRS funding policy at its March 23 regular meeting.

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