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Oro Valley’s PSPRS funded status improves; employer contribution rate set to fall for the coming year, staff says
Summary
An actuarial update presented March 19 shows Oro Valley’s PSPRS funded status rose to about 98.6% as of June 30, 2024; the town’s required employer contribution rate is projected to drop from 16.22% to 12.61% for the next fiscal year, staff reported.
Town staff provided the commission with the latest Public Safety Personnel Retirement System (PSPRS) actuarial results on March 19 and outlined how recent additional contributions and actuarial experience changed the town’s funding position.
The actuarial valuation through June 30, 2024 shows a funded status of approximately 98.6% for the plan, staff reported. That improvement, combined with additional town contributions of $2.5 million made in the prior fiscal year, reduced the employer contribution rate from 16.22% (the prior actuarial calculation) to a projected 12.61% effective for the coming fiscal year, staff said.
Staff emphasized these are actuarial estimates and described the elements that influence the calculation, including the normal cost, employee contributions (7.65% statutorily set), and an amortization payment to address any remaining unfunded actuarial accrued liability. Staff noted the plan uses a seven‑year smoothing method for investment gains and losses; the plan’s assumed earnings rate is 7.2% and the actuarial (smoothed) return for the most recent year was about 7.1%.
The presenter also reviewed the town’s prior actions on pension funding: council previously authorized a $10 million use of excess reserves and issuance of pension obligation bonds (about $17 million issued) to address a larger unfunded liability in earlier years. Staff said the town currently makes quarterly additional contributions (about $1.485 million in the current fiscal year to date) that, along with normal contributions and investment performance, are expected to restore the plan to or above 100% funded in the near term, assuming actuarial assumptions hold.
Commissioners were given a chart showing how additional one-time contributions would change funded status and future employer rates; staff said the presentation was informational and that there was no expectation of formal action during the meeting.
