Payson council discusses using settlement funds to reduce police PSPRS debt; staff to model buy-down scenarios
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Summary
Council and staff discussed applying anticipated PFAS settlement proceeds to reduce the Town's police PSPRS unfunded liability. Staff reported the town's PSPRS liability and recommended modeling options; council asked for scenarios showing operating cost savings.
The Payson council on June 3 asked staff to model options for using anticipated settlement proceeds to reduce the town's public-safety pension (PSPRS) unfunded liability and lower future operating costs.
Staff told council the town's combined PSPRS unfunded liability for police and fire was about $19 million, with plan assets covering roughly $28 million. Staff highlighted a police-related liability item (about $9.6 million) that is amortized over the next 12 years and is the single largest short-term pressure on annual operating budgets.
Staff said the town expects to receive PFAS-related settlement proceeds in the next year, roughly estimated between $3.0 million and $3.8 million, and presented the effect of various buydown amounts on funded ratio and annual contribution. For example, staff said a $1 million payment would increase the funded ratio by approximately four percentage points; larger buydowns produced proportionally larger improvements in funded status and annual contribution savings.
Council members asked staff to present concrete scenarios showing how targeted buydowns would affect the annual operating budget (pension contributions) and long-term debt service needs. No final decision was made at the work study; council directed staff to return with options and a fiscal recommendation.
Ending: Staff will prepare multiple PSPRS buydown scenarios using the anticipated settlement funds and show the fiscal and operating-cost tradeoffs for council consideration in a forthcoming session.