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Gilbert to return to regular pension contributions after $10M PSPRS payment; ASRS pre‑fund shows early gains
Summary
Finance staff reported the town’s PSPRS funding position improved after a $10 million payment and recommended returning to normal pension contributions for FY26 while awaiting the next actuarial report; the ASRS pre‑funding account (started July 2023) has earned positive returns.
Kelly reviewed the town’s pension funding status for the Arizona State Retirement System (ASRS) and the Public Safety Personnel Retirement System (PSPRS). Kelly said Gilbert established an ASRS prefunding account in July 2023 with an initial $2,000,000, and ASRS investment returns had increased that account to about $2.25 million as of December 2024.
On PSPRS (the non‑pooled public‑safety system), town policy aims for a 90% funded target for legacy tier accounts. Kelly said the council previously authorized a $10,000,000 lump‑sum payment in January 2025 — $5 million to police and $5 million to fire — and that payment should return the town to roughly the 90% funded level depending on actuarial assumptions and market conditions. Given that outcome, Kelly recommended “returning to normal pension operations” for FY26 — i.e., making the regular PSPRS contributions required by the actuarial rate rather than additional one‑time prepayments.
Council members responded positively and asked clarifying questions about timing and the difference between pooled and non‑pooled systems. Staff said the annual actuarial report due in December will set the accounting rates and that the town will continue to include pension policy updates in budget documents as required by statute.
Why it matters: PSPRS underfunding can produce long term budget pressure. The council’s decision to make a large one‑time payment earlier in 2025, and the staff recommendation to resume normal contribution levels, reduce the immediate pressure on the FY26 budget.
