6.
Special City Council Meeting
- Meeting Date:
- 06/17/2020
- From:
- Rick Tadder, Management Services Director
Information
TITLE:
Consideration and Adoption of Resolution No. 2020-35: A resolution of the Flagstaff City Council adopting the City of Flagstaff Public Safety Personnel Retirement System Pension Funding Policy; delegating authority; and establishing an effective date.
STAFF RECOMMENDED ACTION:
1) Read Resolution No. 2020-35 by title only
2) City Clerk reads Resolution No. 2020-35 by title only (if approved above)
3) Adopt Resolution No. 2020-35
2) City Clerk reads Resolution No. 2020-35 by title only (if approved above)
3) Adopt Resolution No. 2020-35
Executive Summary:
The Flagstaff City Council is required to annually adopt a pension funding policy for its funding of the Public Safety Personnel Retirement System ("PSPRS") on or before July 1 pursuant to a new law, Arizona Revised Statutes Section 38-863.01. The policy will also need to be posted on the City website and updated annually.
Financial Impact:
Council will be adopting the Fiscal Year 2020-21 budget on June 16, 2020, which includes funding for the public safety pension plans as outlined in the pension funding policy. Details provided in the Expanded Financial Considerations section.
Policy Impact:
The intent of this policy is to clearly communicate the Council’s pension funding objectives, its commitment to our employees and the sound financial management of the City, and to comply with Arizona Revised Statutes Section 38-863.01.
Connection to Council Goal, Regional Plan, CAAP, and/or Strategic Plan:
City Council Goals:
Personnel: Attract and retain quality staff: Evaluate ways to pay down unfunded pension liabilities in a quicker manner.
Regional Plan:
Goal PF.3. Provide high-quality emergency response and public safety services including law enforcement, fire, medical, and ambulance transport service.
Personnel: Attract and retain quality staff: Evaluate ways to pay down unfunded pension liabilities in a quicker manner.
Regional Plan:
Goal PF.3. Provide high-quality emergency response and public safety services including law enforcement, fire, medical, and ambulance transport service.
Has There Been Previous Council Decision on This:
On June 18, 2019, City Council adopted the PSPRS Pension Funding Policy for FY 2019-20.
Options and Alternatives:
- Adopt the Public Safety Personnel Retirement System Funding Policy as presented.
- Adopt the Public Safety Personnel Retirement System Funding Policy with amendments.
Background and History:
The City of Flagstaff has two separate pension plans for the City’s public safety staff. While all the PSPRS plans are managed by the State, each plan within PSPRS stands alone by the City and employee group. The two plans for the City are the PSPRS-Fire and the PSPRS-Police. The City and its employees are responsible for the contributions and the City is solely responsible for liabilities of these plans.
The pension funding policy outlines several measures the City is taking to improve funding ratios in our PSPRS plans, including:
The pension funding policy outlines several measures the City is taking to improve funding ratios in our PSPRS plans, including:
- Make the City's annual contributions based on the higher of the amount in the City budget or the actual required contribution calculations
- Make the City's annual estimated contribution based on the City budget near the beginning of each fiscal year to allow PSPRS to invest those contributions earlier for enhanced potential investment earnings
- Make City contributions for public safety employees participating in the Deferred Retirement Option Plan (DROP), even though the City is not required to do so
- In years when the minimum contribution rate decreases, maintain contributions at the prior year's amount plus projected wage growth
- Continue to pay additional annual contributions to the Police plan based on the decision to extend the amortization period to 30 years
- Utilize a portion of the annual Use Tax revenues for payments to the plan
During the April Council Budget Retreat, Council gave staff direction to pursue the issuance of a Certificate of Participation debt to address our unfunded pension liability.
Community Benefits and Considerations:
The FY 2020-21 budget includes the following pension contributions:
| Plan | Annual Required Contribution |
Additional Contributions |
Total Contributions |
| PSPRS-Fire | $ 5,992,735 | $ 1,029,000 | $ 7,021,735 |
| PSPRS-Police | $ 4,294,579 | $ 1,437,000 | $ 5,731,579 |
| Total | $ 10,287,314 | $ 2,466,000 | $ 12,753,314 |
Expanded Options and Alternatives:
Inform: The pension funding policy will inform our community of the policy decisions made by the Council to address the PSPRS unfunded pension liability.
Involve: The community was invited to the annual budget retreats and is able to provide comments.
Involve: The community was invited to the annual budget retreats and is able to provide comments.