Consideration and Adoption of Resolution No. 2025-28: 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.
 

1. Read Resolution No. 2025-28 by title only
2. City Clerk reads Resolution No. 2025-28 by title only (if approved above)
3. Adopt Resolution No. 2025-28

The Flagstaff City Council is required to adopt a pension funding policy for its funding of the Public Safety Personnel Retirement System ("PSPRS") on or before July 1 on an annual basis, pursuant to Arizona Revised Statutes Section 38-863.01. The current policy is required to be updated and posted on the City's website.

Council will be adopting the Fiscal Year 2025-2026 budget on June 17, 2025, which includes funding for the public safety pension plans as outlined in the pension funding policy. The FY 2025-2026 budget includes pension contributions of $1,575,923 for Fire pension and $1,157,296 for Police pension.

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.

On June 20, 2023, City Council adopted the PSPRS Pension Funding Policy for FY 2023-2024.

• Adopt the Public Safety Personnel Retirement System Funding Policy as presented.
• Adopt the Public Safety Personnel Retirement System Funding Policy with amendments.

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 maintaining funding ratios above 100% in our PSPRS plans, including:

• 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.  This allows the pension system to earn investment income at a higher rate than the City.  
• 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.  This allows for a stable level of budgeting versus annual changes as employees on DROP increase and decrease.  
• Budget and pay the Normal Cost of the pension plans.  This is required by the pension plan.
• Make additions one-time contributions when funding status falls below or is projected to fall below 100%. 
• Current funding status for the Police plan is 100.6% and Fire plan is 100.4%.  A funding status over 100% is important as it allows us to be in a better position when there are market and actuarial changes.  

High Performing Governance: Maintain the organization’s fiscal stability through strong financial policies and best practices.

Goal PF.3. Provide high-quality emergency response and public safety services including law enforcement, fire, medical, and ambulance transport service.

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