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Payson council adopts pension prefunding trust to smooth future PSPRS costs
Summary
The Town Council voted 7–0 to adopt Resolution 2026-001 authorizing participation in PARS, a Section 115-like pension prefunding trust intended to stabilize future PSPRS pension costs and allow the town to invest a portion of its 0.88 sales-tax dollars for interest earnings and liquidity.
The Payson Town Council unanimously approved Resolution 2026-001 on Jan. 14 to participate in a PARS-administered public agency post-employment benefits trust to prefund pension liabilities for employees whose retirement is covered by PSPRS.
Town Manager Darren introduced the proposal and said the mechanism creates an interest-bearing account used to prepay pension bills and earn returns rather than pay larger amounts from the general fund during peak years. “You stick that in there at the very beginning … you have a full year of gaining interest on that,” Darren said during the presentation.
Charlie Francis, a retired city finance director who helped design similar trusts, told the council the arrangement functions as a stabilization fund and cited examples from other Arizona cities, including Tucson and Clifton, noting modest investment gains and more flexible portfolio options than the LGIP. “It rapidly became a best practice throughout all of California,” Francis said, describing how participants can choose conservative or growth-oriented pools depending on risk tolerance.
Council members asked about governance, trustees and fees. Staff said PARS serves as the administrator, US Bank is the trustee and PFM Asset Management provides pooled investment management; consulting and administrative fees were described in basis points (roughly 32 basis points total in the presentation). Finance staff clarified that, at present, Payson’s funds sit in the state's LGIP and that the trust would be an alternative silo for funds earmarked to pay PSPRS obligations.
The council debated liquidity and downside risk; Francis said portfolios can be set to near-money-market allocations for maximum principal protection. The resolution authorizes the town manager (as plan administrator) to execute the trust documents. Councilmember Speaker 4 moved to approve, Speaker 14 seconded, and the motion passed 7–0.
Next steps: staff will work with PARS to establish the account, set any initial contribution amounts, and provide ongoing reporting to the council as account statements and performance data become available.
