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Home My WebLink AboutPackets - Budget and Finance Committee (28) AGENDA BUDGET AND FINANCE COMMISSION REGULAR SESSION FEBRUARY 15, 2022 ORO VALLEY COUNCIL CHAMBERS 11000 N. LA CAÑADA DRIVE REGULAR SESSION AT OR AFTER 4:00 PM CALL TO ORDER ROLL CALL PLEDGE OF ALLEGIANCE CALL TO AUDIENCE - at this time, any member of the public is allowed to address the Commission on any issue not listed on today’s agenda. Pursuant to the Arizona open meeting law, individual Commission members may ask Town staff to review the matter, ask that the matter be placed on a future agenda, or respond to criticism made by speakers. However, the Commission may not discuss or take legal action on matters raised during "Call to Audience." In order to speak during "Call to Audience", please specify what you wish to discuss when completing the blue speaker card. STAFF LIAISON REPORT REGULAR SESSION AGENDA 1.DISCUSSION AND ACTION ON ELECTING A CHAIR AND VICE-CHAIR FOR THE BUDGET AND FINANCE COMMISSION A) Discussion and possible action in electing a Chair of the Budget and Finance Commission for the upcoming year. B) Discussion and possible action in electing a Vice-Chair of the Budget and Finance Commission for the upcoming year. 2.REVIEW AND APPROVAL OF THE JANUARY 18, 2022 REGULAR SESSION MEETING MINUTES 3.PRESENTATION AND DISCUSSION OF PSPRS PENSION FUNDING AND RELATED PENSION FUNDING POLICY 4.PRESENTATION AND POSSIBLE DISCUSSION OF THE TOWN'S FY 21/22 FINANCIAL UPDATE THROUGH DECEMBER 2021 (Please reference the attachments for the Town's monthly financial update) COUNCIL LIAISON COMMENTS FUTURE AGENDA ITEMS ADJOURNMENT POSTED: 2/11/22 at 5 PM by PP POSTED: 2/11/22 at 5 PM by PP When possible, a packet of agenda materials as listed above is available for public inspection at least 24 hours prior to the Commission meeting in the Town Clerk's Office between the hours of 8:00 a.m. – 5:00 p.m. The Town of Oro Valley complies with the Americans with Disabilities Act (ADA). If any person with a disability needs any type of accommodation, please notify the Town Clerk’s Office at least five days prior to the Commission meeting at 229-4700. INSTRUCTIONS TO SPEAKERS Members of the public have the right to speak during any posted public hearing. However, those items not listed as a public hearing are for consideration and action by the Commission during the course of their business meeting. Members of the public may be allowed to speak on these topics at the discretion of the Chair. If you wish to address the Commission on any item(s) on this agenda, please complete a blue speaker card located on the Agenda table at the back of the room and give it to the Recording Secretary. Please indicate on the speaker card which item number and topic you wish to speak on, or if you wish to speak during “Call to Audience,” please specify what you wish to discuss when completing the blue speaker card. Please step forward to the podium when the Chair announces the item(s) on the agenda which you are interested in addressing. 1. For the record, please state your name and whether or not you are a Town resident. 2. Speak only on the issue currently being discussed by the Commission. Please organize your speech, you will only be allowed to address the Commission once regarding the topic being discussed. 3. Please limit your comments to 3 minutes. 4. During “Call to Audience”, you may address the Commission on any issue you wish. 5. Any member of the public speaking must speak in a courteous and respectful manner to those present. In accordance with the Pima County Health Department’s most recent health advisory, the Town respectfully asks all in-person meeting attendees, regardless of vaccination status, to please wear a mask while indoors. COVID-19 remains a fluid situation, and the Town will adjust its safety guidelines in accordance with any future health advisories from the Health Department. Thank you for your cooperation. “Notice of Possible Quorum of the Oro Valley Town Council, Boards, Commissions and Committees: In accordance with Chapter 3, Title 38, Arizona Revised Statutes and Section 2-4-4 of the Oro Valley Town Code, a majority of the Town Council, Board of Adjustment, Historic Preservation Commission, Parks and Recreation Advisory Board, Stormwater Utility Commission, and Water Utility Commission may attend the above referenced meeting as a member of the audience only.” Budget and Finance Commission 1. Meeting Date:02/15/2022 Requested by: David Gephart, Finance Submitted By:David Gephart, Finance SUBJECT: DISCUSSION AND ACTION ON ELECTING A CHAIR AND VICE-CHAIR FOR THE BUDGET AND FINANCE COMMISSION A) Discussion and possible action in electing a Chair of the Budget and Finance Commission for the upcoming year. B) Discussion and possible action in electing a Vice-Chair of the Budget and Finance Commission for the upcoming year. RECOMMENDATION: Staff recommends electing a Chair and Vice-Chair to serve for the next year. EXECUTIVE SUMMARY: Election of a Chair and Vice-Chair for the Commission. BACKGROUND OR DETAILED INFORMATION: On January 9, 2019, Council adopted Resolution NO. (R)19-01, establishing the Budget and Finance Commission and adopting the operating procedures for the Commission. Per the operating procedures, the Commission shall elect a Chair and Vice-Chair from among its own members in February of each year. The term shall be for a period of one year. FISCAL IMPACT: N/A SUGGESTED MOTION: A) I Move to elect ____________as the Chair of the Budget and Finance Commission for the coming year. B) I move to elect ___________ as the Vice-Chair for the Budget and Finance Commission for the coming year. Budget and Finance Commission 2. Meeting Date:02/15/2022 Submitted By:Alison Cote, Legal SUBJECT: REVIEW AND APPROVAL OF THE JANUARY 18, 2022 REGULAR SESSION MEETING MINUTES RECOMMENDATION: Staff recommends approval. EXECUTIVE SUMMARY: N/A BACKGROUND OR DETAILED INFORMATION: N/A FISCAL IMPACT: N/A SUGGESTED MOTION: "I MOVE to approve (approve with changes) the January 18, 2022 regular session meeting minutes." Attachments Draft Minutes - 1/18/22 D R A F T MINUTES BUDGET AND FINANCE COMMISSION REGULAR SESSION JANUARY 18, 2022 COUNCIL CHAMBERS 11000 N. LA CAÑADA DRIVE REGULAR SESSION AT OR AFTER 4:00 PM CALL TO ORDER - Acting Chair Solverson called the meeting to order at 4:00 P.M. ROLL CALL Present: Cathy Solverson, Acting Chair Michael Mason, Commissioner James Beasley, Commissioner Absent:John Latchford, Chairman Staff Present:David Gephart, Chief Financial Officer Wendy Gomez, Finance and Budget Administrator Chris Hutchison, Senior Budget Analyst Tobin Sidles, Legal Services Director Joseph Winfield, Mayor Brian Hemmerle, Auditor PLEDGE OF ALLEGIANCE - Acting Chair Solverson led the group in the Pledge of Allegiance. CALL TO AUDIENCE - No comments were received. COUNCIL LIAISON COMMENTS Mayor Joseph Winfield thanked the commission for all the work they've provided for the Town and stated the next Town Council meeting would address an audit report and study session. STAFF LIAISON REPORT Chief Financial Officer David Gephart reported on the following: - ASRS and PSPRS pension plans - budget season is underway and departments can begin making budget requests soon - the finance team has been busy with calendar year-end items REGULAR SESSION AGENDA 1.REVIEW AND APPROVAL OF THE NOVEMBER 15, 2021 REGULAR SESSION MEETING MINUTES Motion by Commissioner James Beasley, seconded by Commissioner Michael Mason to approve the November 15, 2021 meeting minutes as written. Vote: 3 - 0 Carried 2.PRESENTATION AND DISCUSSION OF TOWN ANNUAL COMPREHENSIVE FINANCIAL REPORT AND SINGLE AUDIT FOR FISCAL YEAR ENDED JUNE 30, 2021 Auditor Brian Hemmerle with Henry+Horne presented on Agenda Item #2. Discussion ensued amongst staff and commissioners. 3.PRESENTATION AND POSSIBLE DISCUSSION OF THE TOWN'S FY 21/22 FINANCIAL UPDATE THROUGH NOVEMBER 2021 Finance and Budget Administrator Wendy Gomez presented on Agenda Item #3. Discussion ensued amongst staff and commissioners. FUTURE AGENDA ITEMS - a future presentation regarding PSPRS - a potential joint study session with Town Council ADJOURNMENT Motion by Commissioner Michael Mason, seconded by Commissioner James Beasley to adjourn the meeting at 5:08 P.M. Vote: 3 - 0 Carried I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the regular session of the Town of Oro Valley Budget and Finance Commission of Oro Valley, Arizona held on the 18 day of January, 2022. I further certify that the meeting was duly called and held and that a quorum was present. Dated this 20 day of January, 2022. ___________________________ Alison Cote Legal Secretary Budget and Finance Commission 3. Meeting Date:02/15/2022 Submitted By:David Gephart, Finance SUBJECT: PRESENTATION AND DISCUSSION OF PSPRS PENSION FUNDING AND RELATED PENSION FUNDING POLICY RECOMMENDATION: Review and discuss as appropriate EXECUTIVE SUMMARY: This agenda item is meant to update Budget and Finance Commission on the funding status of the PSPRS plan - especially as it relates to Town police pensions - in anticipation of updating the PSPRS Pension Funding Policy for next fiscal year ending June 30, 2023. PSPRS consultant D. Clark Partridge will provide a short presentation and be available for questions. BACKGROUND OR DETAILED INFORMATION: Actuarial reports for fiscal year ended June 30, 2021, have been released by PSPRS. Both the Town police plan and dispatch (CORP) plan have been attached. Yields last fiscal year achieved the highest level ever, hitting 27.8% net of fees. These returns had the impact of raising the Town's police pension funded status from 61.7% to 66.1% for Tiers 1 and 2. Further, the net unfunded actuarial accrued liability declined from $25.74M to $24.02M. After the calculation date of 6/30/2021, the Town issued $17.6M in pension obligation bonds which, with an additional $10M contribution from reserves, added an additional $27.6M into the plan to fully fund. Due to the size of the investment in the plan, PSPRS Consultant D. Clark Partridge has been asked to provide a short presentation updating Commissioners of the projected updated funding status of the Town police pension plan as well as address current year investment performance and answer any other questions from the Commission. Finally, the current year PSPRS pension funding policy for the Town has been attached for reference. FISCAL IMPACT: N/A SUGGESTED MOTION: N/A Attachments FY21 Dispatch Actuarial Report FY21 Police Actuarial Report PSPRS presentation FY22 Pension Funding Policy ARIZONA CORRECTIONS OFFICER RETIREMENT PLAN TOWN OF ORO VALLEY - DISPATCHERS (556) ACTUARIAL VALUATION AS OF JUNE 30, 2021 CONTRIBUTIONS APPLICABLE TO THE PLAN/FISCAL YEAR ENDING JUNE 30, 2023 VIA E-MAIL 13420 Parker Commons Boulevard, Suite 104 Fort Myers, FL 33912 ꞏ (239) 433-5500 ꞏ Fax (239) 481-0634 ꞏ www.foster-foster.com December 2021 Board of Trustees Arizona Corrections Officer Retirement Plan Phoenix, AZ Re: Actuarial Valuation Report as of June 30, 2021 for Town of Oro Valley - Dispatchers (556) Dear Members of the Board: We are pleased to present to the Board this report of the annual actuarial valuation of the Arizona Corrections Officer Retirement Plan (CORP). The valuation was performed to determine whether the assets and contributions are sufficient to provide the prescribed benefits and to develop the appropriate funding requirements for the applicable plan year. This report was prepared at the request of the Board and is intended for use by CORP and those designated or approved by the Board. It documents the valuation of the consolidated plan and provides summary information for CORP participating employers. This report may be provided to parties other than CORP only in its entirety and only with the permission of the Board. Foster & Foster is not responsible for the unauthorized use of this report. The valuation has been conducted in accordance with generally accepted actuarial principles and practices, including the applicable Actuarial Standards of Practice as issued by the Actuarial Standards Board, and reflects laws and regulations issued to date pursuant to the provisions of Title 38, Chapter 5, Article 6 of the Arizona Revised Statutes, as well as applicable federal laws and regulations. In our opinion, the assumptions used in this valuation, as adopted by the Board of Trustees, represent reasonable expectations of anticipated plan experience. Future actuarial measurements may differ significantly from the current measurements presented in this report for a variety of reasons including changes in applicable laws, changes in plan provisions, changes in assumptions, or plan experience differing from expectations. Due to the limited scope of the valuation, we did not perform an analysis of the potential range of such future measurements. The computed contribution rates shown in the “Contribution Results” section should be considered minimum contribution rates that comply with the Board’s funding policy and Arizona Statutes. Users of this report should be aware that contributions made at that rate do not guarantee benefit security. Given the importance of benefit security to any retirement system, we suggest that contributions to the Plan in excess of those presented in this report be considered. The funding percentages and unfunded accrued liability as measured based on the actuarial value of assets will differ from similar measures based on the market value of assets. These measures, as provided, are appropriate for determining the adequacy of future contributions, but may not be appropriate for the purpose of settling a portion or all of the Plan’s liabilities. Board of Trustees Arizona Corrections Officer Retirement Plan | Page 2 13420 Parker Commons Boulevard, Suite 104 Fort Myers, FL 33912 ꞏ (239) 433-5500 ꞏ Fax (239) 481-0634 ꞏ www.foster-foster.com In conducting the valuation, we have relied on personnel, plan design, and asset information supplied by CORP through June 30, 2021 and the actuarial assumptions and methods described in the Actuarial Assumptions section of this report. While we cannot verify the accuracy of all this information, the supplied information was reviewed for consistency and reasonableness. As a result of this review, we have no reason to doubt the substantial accuracy of the information and believe that it has produced appropriate results. This information, along with any adjustments or modifications, is summarized in various sections of this report. This valuation assumes the continuing ability of the participating employers to make the contributions necessary to fund this plan. A determination regarding whether or not the participating employers are actually able to do so is outside our scope of expertise. Consequently, we did not perform such an analysis. In performing the analysis, we used third-party software to model (calculate) the underlying liabilities and costs. These results are reviewed in the aggregate and for individual sample lives. The output from the software is either used directly or input into internally developed models to generate the costs. All internally developed models are reviewed as part of the process. As a result of this review, we believe that the models have produced reasonable results. We do not believe there are any material inconsistencies among assumptions or unreasonable output produced due to the aggregation of assumptions. The undersigned are familiar with the immediate and long-term aspects of pension valuations and meet the Qualification Standards of the American Academy of Actuaries necessary to render the actuarial opinions contained herein. All sections of this report are considered an integral part of the actuarial opinions. To our knowledge, no associate of Foster & Foster, Inc. working on valuations of the program has any direct financial interest or indirect material interest in the Arizona Corrections Officer Retirement Plan, nor does anyone at Foster & Foster, Inc. act as a member of the Board of Trustees of the Arizona Corrections Officer Retirement Plan. Thus, there is no relationship existing that might affect our capacity to prepare and certify this actuarial report. If there are any questions, concerns, or comments about any of the items contained in this report, please contact us at 239-433-5500. Respectfully Submitted, Foster & Foster, Inc. By: ______________________________ Bradley R. Heinrichs, FSA, EA, MAAA By: ______________________________ Paul M. Baugher, FSA, EA, MAAA Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) TABLE OF CONTENTS I. Summary of Report ..........................................................................................................................................1 II. Contribution Results ........................................................................................................................................4 III. Liability Support ............................................................................................................................................8 IV. Asset Support ............................................................................................................................................... 11 V. Member Statistics .......................................................................................................................................... 14 VI. Actuarial Assumptions and Methods ........................................................................................................... 16 VII. Discussion of Risk ...................................................................................................................................... 21 VIII. Summary of Current Plan.......................................................................................................................... 24 IX. Actuarial Funding Policy ............................................................................................................................. 29 X. Glossary ........................................................................................................................................................ 33 Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 1 I. SUMMARY OF REPORT The regular annual actuarial valuation of the Arizona Corrections Officer Retirement Plan for the Town of Oro Valley - Dispatchers, performed as of June 30, 2021, has been completed and the results are presented in this Report. The purpose of this valuation is to:  Compute the liabilities associated with benefits likely to be paid on behalf of current retired and active members. This information is contained in the section entitled “Liability Support.”  Compare accumulated assets with the liabilities to assess the funded condition. This information is contained in the section entitled “Liability Support.”  Compute the employers’ recommended contribution rates for the Fiscal Year beginning July 1, 2022. This information is contained in the section entitled “Contribution Results.” 1. Key Valuation Results The funded status as of June 30, 2021 and the employer contribution amounts applicable to the plan/fiscal year ending June 30, 2023 are as follows: Tier 1 & Tier 2 Members Pension Health Total Employer Contribution Rate 118.45% 0.00% 118.45% Funded Status 46.5% 330.3% 48.3% 2. Comparison of Key Results to Prior Year The chart below compares the results from this valuation with the results of the prior year’s valuation (as of June 30, 2020): Contribution Rate Tier 1 & Tier 2 Members Valuation Date Pension Health Total June 30, 2020 79.23% 0.00% 79.23% June 30, 2021 118.45% 0.00% 118.45% Funded Status Tier 1 & Tier 2 Members Valuation Date Pension Health Total June 30, 2020 44.6% 151.2% 46.1% June 30, 2021 46.5% 330.3% 48.3% Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 2 3. Reasons for Change Changes in the results from the prior year’s valuation can be illustrated in the following tables along with high-level explanations for the entire Plan below: Contribution Rate Tier 1 & Tier 2 Pension Health Contribution Rate Last Valuation 79.23% 0.00% Asset Experience (0.74%) (0.03%) Payroll Base 30.64% (0.13%) Liability Experience 24.11% (0.74%) Additional Contributions 0.00% 0.00% Assumption/Method Change 3.21% 0.00% Other (18.00%) 0.90% Contribution Rate This Valuation 118.45% 0.00% Funded Status Tier 1 & Tier 2 Pension Health Funded Status Last Valuation 44.6% 151.2% Asset Experience 0.3% 2.4% Liability Experience (5.1%) 173.2% Additional Contributions 0.0% 0.0% Assumption/Method Change 0.0% 0.0% Other 6.7% 3.5% Funded Status This Valuation 46.5% 330.3% Assets Experience – Asset gains and losses (relative to the assumed earnings rate) are smoothed over seven years for Tiers 1 and 2. The return on the market value of assets for the year ending June 30, 2021 was 24.4%. On a smoothed, actuarial value of assets basis, however, the average return was 7.7%. This return exceeded the 2020 assumed earnings rate of 7.3%. Payroll Base – Under the current amortization policy for Tiers 1 and 2, the contribution rate is developed as a level percentage of payroll. Payroll for this purpose includes members of this plan and defined contribution plan’s members that would have been in this plan. To the extent that actual payroll is lower/greater than last year’s projected payroll, the contribution rate will increase/decrease as a result. The payroll decreased compared to expected, resulting in an increase in the contribution rate. Liability Experience – Experience overall was favorable, driven by lower than expected salary increases. Additional Contribution – Monies contributed in excess of the required contribution rate in order to pay down the unfunded liability. Assumption / Method Change – The payroll growth assumption was decreased to 2.50%. Other – This is the combination of all other factors that could impact liabilities year-over-year, with the primary sources being changes in member data. Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 3 4. Looking Ahead The volatility in annual returns, which have produced both gains and losses in recent years, was dampened by the asset smoothing reflected in the actuarial value of assets. The significant gain realized this year will, in the absence of other losses, put downward pressure on the contribution rate next year. If the June 30, 2021 pension valuation results were based on the market value of assets instead of the actuarial value of assets, the pension funded percentage for Tiers 1 and 2 would be 50.4% (instead of 46.5%) and the pension employer contribution requirement would be 109.02% of payroll (instead of 118.45%). 5. Conclusion The funded status for Tiers 1 and 2 will continue to improve if assumptions are met and contributions at least equal to the rates determined for each employer are made to the fund. The recent adoption of a layered amortization approach along with a plan to systematically lower the payroll growth assumption was an excellent step to improve funding and ensure the Plan is on a viable path. Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 4 II. CONTRIBUTION RESULTS Contribution Requirements Development of Employer Contributions - Tiers 1 & 2 Members Valuation Date June 30, 2021 June 30, 2020 Applicable to Fiscal Year Ending 2023 2022 Rate Dollar Rate Dollar Pension Normal Cost Total Normal Cost 10.79% $16,669 10.51% $22,257 Employee Cost (7.96%) (12,303) (7.96%) (16,860) Employer (Net) Normal Cost 2.83% 4,366 2.55% 5,397 Amortization of Unfunded Liability 115.62% 178,696 76.68% 162,414 Total Employer Cost (Pension) 118.45% 183,062 79.23% 167,811 Health Normal Cost 0.24% $371 0.33% $690 Amortization of Unfunded Liability (0.24%) (371) (0.33%) (690) Total Employer Cost (Health) 0.00% 0 0.00% 0 Total Employer Cost (Pension + Health) 118.45% 183,062 79.23% 167,811 Total Minimum Contribution Requirement (if applicable) 0.00% 0.00% Alternate Contribution Rate (ACR) * 115.62% 76.68% Underlying Payroll (as of valuation date) 154,555 211,807 * The Alternate Contribution Rate is the sum of the positive amortization rates for Tiers 1 & 2 Pension and Health (subject to a 6% minimum) and is charged when retirees return to active status. The results above are shown both prior to and after the application of the statutory minimum contribution requirement of 6% of payroll. Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 5 Development of Employer Contributions – Tier 3 Members Valuation Date June 30, 2021 June 30, 2020 Applicable to Fiscal Year Ending 2023 2022 Defined Contribution (DC) Retirement Plan Rate Dollar Rate Dollar Tier 3 DC Only Employee Cost 7.00% $ 0 7.00% $ 0 Employee Health Subsidy Program Cost 0.17% 0 Employee Disability Program Cost 0.44% 0 0.49% 0 Total Employee Cost 7.61% 0 7.49% 0 Employer Cost 5.00% 0 5.00% 0 Employer Health Subsidy Program Cost 0.17% 0 Employer Disability Program Cost 0.44% 0 0.49% 0 Total Employer Cost (before Legacy) 5.61% 0 5.49% 0 ER Legacy Cost of Tiers 1 & 2 Amort of Unfunded Liabilities * 115.62% 0 76.68% 0 Total Employer Cost 121.23% 0 82.17% 0 Underlying Payroll (as of valuation date) 0 0 * Pursuant to ARS § 38-891(A), the amortization of positive unfunded liabilities for Tiers 1 & 2 shall be applied to all Tier 3 payroll on a level percent basis. However, while it is statutorily required to present the rates in this manner, these are the minimums where alternate methods for paying down that unfunded liability is at the discretion of each employer. Further, to understand the effects of reform in relation to Tier 3, compare the total rate of Tier 3 before application of those legacy costs. Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 6 Contribution Rate Summary Tier 1 Tier 2 Tier 3 Membership Date On or After 7/1/1986 1/1/2012 7/1/2018 Available Retirement Plan DB Plan DB Plan DB Plan 1 DC Plan Employee Contribution Rate CORP DB Rate 7.96% 7.96% 0.00% CORP DC Rate 2 7.00% CODCRP Health Subsidy Program Rate 0.17% CODCRP Disability Program Rate 0.44% Total EE Contribution Rate 7.96% 7.96% 0.00% 7.61% Employer Contribution Rate CORP DB Normal Cost 2.83% 2.83% 0.00% CORP DB Tier 1 & 2 Legacy Cost 3 115.62% 115.62% 0.00% 115.62% CORP DC Rate 5.00% CODCRP Health Subsidy Program Rate 0.17% CODCRP Disability Program Rate 0.44% Total ER Contribution Rate 118.45% 118.45% 0.00% 121.23% 1 Applicable to AOC Probation and Surveillance only. 2 Although the default contribution rate is 7%, Tier 3 members in the DC plan may choose an employee contribution rate anywhere between 5% and 40%. 3 Per statute (ARS § 38-891(A), any positive unfunded liability for Tiers 1 and 2 is to be applied to all Tier 3 (DB and DC) payrolls. Exhibit summarizes employee and employer contributions based on Statute and the results of June 30, 2021 actuarial valuation. Pension and health components are combined, where applicable. Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 7 Impact of Additional Contributions Additional Contribution (000s) $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 Impact On Funded Status June 30, 2021 46.5% 46.7% 47.0% 47.3% 47.6% 47.9% 48.1% 48.4% 48.7% 49.0% 49.3% FYE 2023 Contribution Rate 118.45% 117.77% 117.10% 116.42% 115.75% 115.08% 114.40% 113.73% 113.05% 112.38% 111.70% Table shows the hypothetical change in the funded status and contribution rate from the June 30, 2021 actuarial valuation results for Tiers 1 & 2 if an additional contribution of the amount shown had been made to the Fund on June 30, 2021. This illustration can help estimate the impact of contributing additional monies to the fund in the future. Historical Summary of Employer Rates Pension Health Valuation Date June 30 Fiscal Year Ending June 30 Normal Cost Unfunded Amortization Total Normal Cost Unfunded Amortization Total TIERS 1 & 2 2018 2020 6.42% 53.52% 59.94% 0.11% (0.11%) 0.00% 2019 2021 3.03% 72.50% 75.53% 0.34% (0.34%) 0.00% 2020 2022 2.55% 76.68% 79.23% 0.33% (0.33%) 0.00% 2021 2023 2.83% 115.62% 118.45% 0.24% (0.24%) 0.00% Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 8 III. LIABILITY SUPPORT Liabilities and Funded Ratios by Benefit - Tiers 1 & 2 June 30, 2021 June 30, 2020 Pension Actuarial Present Value of Benefits Retirees and Beneficiaries $ 2,505,267 $ 1,703,353 Vested Members 63,948 73,902 Active Members 1,088,314 1,723,515 Total Actuarial Present Value of Benefits 3,657,529 3,500,770 Actuarial Accrued Liability (AAL) All Inactive Members 2,569,215 1,777,255 Active Members 982,080 1,597,678 Total Actuarial Accrued Liability 3,551,295 3,374,933 Actuarial Value of Assets (AVA) 1,649,829 1,504,732 Unfunded Actuarial Accrued Liability Gross Unfunded Actuarial Accrued Liability 1,901,466 1,870,201 Stabilization Reserve 0 0 Net Unfunded Actuarial Accrued Liability 1,901,466 1,870,201 Funded Ratio (AVA / AAL) 46.5% 44.6% Health Present Value of Benefits Retirees and Beneficiaries $ 7,365 $ 22,311 Active Members 17,835 28,313 Total Present Value of Benefits 25,200 50,624 Actuarial Accrued Liability (AAL) All Inactive Members 7,365 22,311 Active Members 15,836 25,732 Total Actuarial Accrued Liability 23,201 48,043 Actuarial Value of Assets (AVA) 76,639 72,662 Unfunded Actuarial Accrued Liability (53,438) (24,619) Funded Ratio (AVA / AAL) 330.3% 151.2% Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 9 Derivation of Experience (Gain)/Loss Tiers 1 & 2 Pension Health (1) Unfunded Actuarial Accrued Liability as of June 30, 2020 1,870,201 (24,619) (2) Normal Cost Developed in Last Valuation 5,397 690 (3) Actual Contributions 138,372 0 (4) Expected Interest On (1), (2), and (3) 131,957 (1,747) (5) Expected Unfunded Actuarial Accrued Liability as of June 30, 2021 (1)+(2)-(3)+(4) 1,869,183 (25,676) (6) Changes to UAAL Due to Assumptions, Methods and Benefits 0 0 (7) Change to UAAL Due to Actuarial (Gain)/Loss 32,283 (27,762) (8) Unfunded Actuarial Accrued Liability as of June 30, 2021 1,901,466 (53,438) Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 10 Amortization of Unfunded Liabilities - Tiers 1 & 2 Date Established Outstanding Balance Years Remaining Amortization Rate Pension 06/30/2019 1,781,726 15 107.54% 06/30/2021 1 119,740 15 8.08% Total 1,901,466 115.62% Health 06/30/2019 0 15 0.00% 06/30/2021 1 (53,438) 20 (3.11%) Total (53,438) (3.11%) 1 Since the “Years Remaining” for the 2020 and 2021 bases are the same, they have been combined into a single base. Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 11 IV. ASSET SUPPORT Statement of Changes in Fiduciary Net Position for Year Ended June 30, 2021 Market Value Basis Tiers 1 & 2 Pension Health Additions Contributions Member Contributions $ 42,323,414 $ 0 Employer Contributions 730,498,415 0 Health Insurance Contributions 0 585,463 Total Contributions 772,821,829 585,463 Investment Income Net Increase in Fair Value 558,893,199 32,477,757 Interest and Dividends 18,245,145 1,060,241 Other Income 13,075,141 759,808 Less Investment Expenses (12,776,627) (742,460) Net Investment Income 577,436,858 33,555,346 Transfers In 37,367 0 Total Additions 1,350,296,054 34,140,809 Deductions Distributions to Members Benefit Payments 183,202,439 0 Health Insurance Subsidy 0 4,401,179 Refund of Contributions 18,514,647 0 Total Distributions 201,717,086 4,401,179 Administrative Expenses 2,666,934 138,110 Transfers Out 538,460 0 Other 0 0 Total Deductions 204,922,480 4,539,289 Net Increase / (Decrease) 1,145,373,574 29,601,520 Net Position Held in Trust Prior Valuation 2,070,559,462 125,974,705 Beginning of the Year Adjustment 0 (1) End of the Year 3,215,933,036 155,576,224 Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 12 Development of Pension Actuarial Value of Assets - Tiers 1 & 2 A. Investment Income A1. Actual Investment Income $ 574,769,924 A2. Expected Amount for Immediate Recognition 171,611,052 A3. Amount Subject to Amortization 403,158,872 Year Ended June 30 B. Amortization Schedule 2021 2022 2023 2024 2025 2026 2027 2021 Experience (A3 / 7) 57,594,125 57,594,125 57,594,125 57,594,125 57,594,125 57,594,125 57,594,122 2020 Experience (13,457,282) (13,457,282) (13,457,282) (13,457,282) (13,457,282) (13,457,281) 2019 Experience (5,782,115) (5,782,115) (5,782,115) (5,782,115) (5,782,112) 2018 Experience (1,511,828) (1,511,828) (1,511,828) (1,511,825) 2017 Experience 8,429,734 8,429,734 8,429,733 2016 Experience (16,290,498) (16,290,497) 2015 Experience (9,194,260) Total Amortization 19,787,876 28,982,137 45,272,633 36,842,903 38,354,731 44,136,844 57,594,122 C. Actuarial Value of Assets Total Employer C1. Actuarial Value of Assets, 06/30/2020 2,202,747,086 C2. Non-investment Net Cash Flow 570,603,650 C3. Preliminary Actuarial Value of Assets, 06/30/2021 (A2 + B + C1 + C2) 2,964,749,664 C4. Market Value of Assets, 06/30/2021 3,215,933,036 1,789,608 C5. Final Actuarial Value of Assets, 06/30/2021 (C3 Within 20% Corridor of C4) 2,964,749,664 1,649,829 D. Rates of Return D1. Market Value Rate of Return 24.4% D2. Actuarial Value Rate of Return 7.7% Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 13 Development of Health Actuarial Value of Assets - Tiers 1 & 2 A. Investment Income A1. Actual Investment Income $ 33,417,236 A2. Expected Amount for Immediate Recognition 9,059,333 A3. Amount Subject to Amortization 24,357,903 Year Ended June 30 B. Amortization Schedule 2021 2022 2023 2024 2025 2026 2027 2021 Experience (A3 / 7) 3,479,700 3,479,700 3,479,700 3,479,700 3,479,700 3,479,700 3,479,703 2020 Experience (806,920) (806,920) (806,920) (806,920) (806,920) (806,919) 2019 Experience (382,214) (382,214) (382,214) (382,214) (382,213) 2018 Experience (81,544) (81,544) (81,544) (81,541) 2017 Experience 574,691 574,691 574,693 2016 Experience (1,140,445) (1,140,442) 2015 Experience (623,078) Total Amortization 1,020,190 1,643,271 2,783,715 2,209,025 2,290,567 2,672,781 3,479,703 C. Actuarial Value of Assets Total Employer C1. Actuarial Value of Assets, 06/30/2020 134,233,358 C2. Non-investment Net Cash Flow (3,815,716) C3. Preliminary Actuarial Value of Assets, 06/30/2021 (A2 + B + C1 + C2) 140,497,165 C4. Market Value of Assets, 06/30/2021 155,576,224 84,865 C5. Final Actuarial Value of Assets, 06/30/2021 (C3 Within 20% Corridor of C4) 140,497,165 76,639 D. Rates of Return D1. Market Value Rate of Return 26.9% D2. Actuarial Value Rate of Return 7.6% Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 14 V. MEMBER STATISTICS Valuation Data Summary – Tiers 1 & 2 June 30, 2021 June 30, 2020 Actives Number 2 3 Average Current Age 50.9 54.3 Average Age at Employment 32.3 31.9 Average Past Service 18.6 22.4 Average Annual Salary $66,016 $68,025 Actives (transferred) Number 0 0 Average Current Age N/A N/A Average Age at Employment N/A N/A Average Past Service N/A N/A Average Annual Salary N/A N/A Retirees Number 4 3 Average Current Age 65.4 64.9 Average Annual Benefit $38,703 $34,012 Beneficiaries Number 1 1 Average Current Age 67.0 66.0 Average Annual Benefit $36,318 $35,606 Disability Retirees Number 1 1 Average Current Age 50.0 49.0 Average Annual Benefit $4,697 $4,605 Inactive / Vested Number 4 4 Average Current Age 46.1 45.1 Average Accumulated Contributions $16,262 $16,262 Total Number 12 12 Former Members (transferred) 0 0 Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 15 Counts and Pay Summary by Service - Tiers 1 & 2 Past Service Age 0-4 5-9 10-14 15-19 20-24 25-29 30+ Total Count Total Pay Average Pay < 25 0 0 0 0 0 0 0 0 0 0 25 - 29 0 0 0 0 0 0 0 0 0 0 30 - 34 0 0 0 0 0 0 0 0 0 0 35 - 39 0 0 0 0 0 0 0 0 0 0 40 - 44 0 0 0 0 0 0 0 0 0 0 45 - 49 0 0 1 0 0 0 0 1 62,031 62,031 50 - 54 0 0 0 0 1 0 0 1 70,000 70,000 55 - 59 0 0 0 0 0 0 0 0 0 0 60 - 64 0 0 0 0 0 0 0 0 0 0 65+ 0 0 0 0 0 0 0 0 0 0 Total 0 0 1 0 1 0 0 2 132,031 66,016 Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 16 VI. ACTUARIAL ASSUMPTIONS AND METHODS Interest Rate 7.30% per year. This is the assumed earnings rate on System assets, compounded annually, net of investment and administrative expenses. Salary Increases See table below. This is annual increase for individual member’s salary. These rates, which are based on a 2017 experience study using actual plan experience, consist of 3.5% for wage inflation with the remaining portion for merit / seniority increases. Inflation 2.50%. Tier 3 Compensation Limit $70,000 for calendar 2020. Assumed increases of 2.00% per year thereafter. Cost-of-Living Adjustment 1.75%. Reverse DROP Interest 2.00%. Mortality Rates These rates are used to project future decrements from the population due to death. Active Lives: PubS-2010 Employee mortality, loaded 125% for males and 115% for females, projected with future mortality improvements reflected generationally using 75% of scale MP-2020. 100% of active deaths are assumed to be in the line of duty. Inactive Lives PubS-2010 Healthy Retiree mortality, loaded 125% for males and 115% for females, projected with future mortality improvements reflected generationally using 75% of scale MP-2020. Age Rate 20 6.5% 25 6.1% 30 5.4% 35 4.7% 40 4.2% 45 4.0% 50 3.9% 55 3.7% 60+ 3.5% Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 17 Beneficiaries: PubS-2010 Survivor mortality, projected with future mortality im- provements reflected generationally using 75% of scale MP-2020. Disabled Lives: PubS-2010 Disabled mortality, projected with future mortality im- provements reflected generationally using 75% of scale MP-2020. The mortality assumptions sufficiently accommodate anticipated future mortality improvements. Retirement These rates are used to project future decrements from the active population due to retirement. The rates below are based on a 2017 experience study using actual plan experience. Tier 1 – reaching age 62 before attaining 20 (25 for dispatchers) years of service: Age-related rates based on age at retirement: 45% per year from age 60 - 74 and 100% assumed at age 75. Tier 1 – reaching age 62 after attaining 20 (25 for dispatchers) years of service: Service-related rates based on service at retirement: Service Rate 20 30% 21 28% 22 19% 23 17% 24 13% 25-26 26% 27-29 19% 30-31 27% 32-33 40% 34-35 50% 36 60% 37+ 100% Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 18 Tiers 2 & 3: Age-related rates based on age at retirement: Termination Rate These rates are used to project future decrements from the active population due to termination. Service-related rates based on service at termination are shown below. The rates below apply to members prior to retirement eligibility and are based on a 2017 experience study using actual plan experience. Disability Rate These rates are used to project future decrements from the active population due to disability. Sample age-related rates based on age at disability are provided below. These rates are based on a 2017 experience study using actual plan experience. 100% of disablements are assumed to be duty-related. Service Rate 0 23.00% 1 20.00% 2 16.50% 3 14.50% 4 13.00% 5 10.50% 6 9.50% 7 9.00% 8-10 8.50% 11 6.00% 12 5.00% 13 4.50% 14-16 3.00% 17+ 2.00% Age Rate 20 0.03% 25 0.03% 30 0.03% 35 0.04% 40 0.05% 45 0.06% 50 0.08% 55 0.08% Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 19 Marital Status For active members, 75% of males and 50% of females are assumed to be married. Actual marital status is used, where applicable, for inactive members. Spouse’s Age Males are assumed to be three years older than females. Health Care Utilization For active members, 60% of retirees are expected to utilize retiree health care. Actual utilization is used for inactive members. Funding Method Entry Age Normal Cost Method. Actuarial Asset Method Method described below. Note that during periods when investment performance exceeds (falls short) of the assumed rate, the actuarial value of assets will tend to be less (greater) than the market value of assets. Tiers 1 & 2: Each year the assumed investment income is recognized in full while the difference between actual and assumed investment income are smoothed over a 7-year period subject to a 20% corridor around the market value. Tier 3: Each year the assumed investment income is recognized in full while the difference between actual and assumed investment income are smoothed over a 5-year period subject to a 20% corridor around the market value. Funding Policy Amortization Method Tiers 1 & 2: Any positive UAAL (assets less than liabilities) is amortized using a layered approach beginning with the June 30, 2020 valuation, with new amounts determined according to a Level Dollar method over a closed period of 15 years (phased into from current period of at most 30 years). Initial layer from June 30, 2019 valuation continues to be amortized according to a Level Percentage of Payroll method. Any negative UAAL (assets greater than liabilities) is amortized according to a Level Dollar method over an open period of 20 years. Tier 3: Any positive UAAL (assets less than liabilities) is amortized according to a Level Dollar method over a closed period of 10 years. No amortization is made of any negative UAAL (assets greater than liabilities). Payroll Growth 2.50% per year. This is annual increase for total employer payroll. Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 20 Stabilization Reserve Beginning with the June 30, 2007 valuation and with each subsequent valuation, if the actuarial value of assets exceeds the actuarial accrued liability, one half of this excess in each year is allocated to a Stabilization Reserve. This Reserve is excluded from the calculation of the employer contribution rates. The Reserve accumulates as long as the plan is overfunded. Once the plan becomes underfunded, the Stabilization Reserve will be used to dampen increases in the employer contribution rates. Changes to Actuarial Assumptions and Methods Since the Prior Valuation The payroll growth assumption was lowered from 3.00% to 2.50%. Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 21 VII. DISCUSSION OF RISK ASOP No. 51, Assessment and Disclosure of Risk Associated with Measuring Pension Obligations and Determining Pension Plan Contributions, states that the actuary should identify risks that, in the actuary’s professional judgment, may reasonably be anticipated to significantly affect the plan’s future financial condition. Throughout this report, actuarial results are determined under various assumption scenarios. These results are based on the premise that all future plan experience will align with the plan’s actuarial assumptions; however, there is no guarantee that actual plan experience will align with the plan’s assumptions. Whenever possible, the recommended assumptions in this report reflect conservatism to allow for some margin of unfavorable future plan experience. However, it is still possible that actual plan experience will differ from anticipated experience in an unfavorable manner that will negatively impact the plan’s funded position. Below are examples of ways in which plan experience can deviate from assumptions and the potential impact of that deviation. Typically, this results in an actuarial gain or loss representing the current-year financial impact on the plan’s unfunded liability of the experience differing from assumptions; this gain or loss is amortized over a period of time determined by the plan’s amortization method. When assumptions are selected that adequately reflect plan experience, gains and losses typically offset one another in the long term, resulting in a relatively low impact on the plan’s contribution requirements associated with plan experience. When assumptions are too optimistic, losses can accumulate over time and the plan’s amortization payment could potentially grow to an unmanageable level.  Investment Return: When the rate of return on the Actuarial Value of Assets falls short of the assumption, this produces a loss representing assumed investment earnings that were not realized. Further, it is unlikely that the plan will experience a scenario that matches the assumed return in each year as capital markets can be volatile from year to year. Therefore, contribution amounts can vary in the future.  Salary Increases: When a plan participant experiences a salary increase that was greater than assumed, this produces a loss representing the cost of an increase in anticipated plan benefits for the participant as compared to the previous year. The total gain or loss associated with salary increases for the plan is the sum of salary gains and losses for all active participants.  Payroll Growth: The plan’s payroll growth assumption, if one is used, causes a predictable annual increase in the plan’s amortization payment in order to produce an amortization payment that remains constant as a percentage of payroll if all assumptions are realized. If payroll does not increase according to the plan’s payroll growth assumption, the plan’s amortization payment can increase significantly as a percentage of payroll even if all assumptions other than the payroll growth assumption are realized.  Demographic Assumptions: Actuarial results take into account various potential events that could happen to a plan participant, such as retirement, termination, disability, and death. Each of these potential events is assigned a liability based on the likelihood of the event and the financial consequence of the event for the plan. Accordingly, actuarial liabilities reflect a blend of financial consequences associated with various possible outcomes (such as retirement at one of various possible ages). Once the outcome is known (e.g. the participant retires) the liability is adjusted to reflect the known outcome. This adjustment Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 22 produces a gain or loss depending on whether the outcome was more or less favorable than other outcomes that could have occurred.  Contribution risk: This risk results from the potential that actual employer contributions may deviate from actuarially determined contributions, which are determined in accordance with the Board’s funding policy. The funding policy is intended to result in contribution requirements that if paid when due, will result in a reasonable expectation that assets will accumulate to be sufficient to pay plan benefits when due. Contribution deficits, particularly large deficits and those that occur repeatedly, increase future contribution requirements and put the plan at risk for not being able to pay plan benefits when due. Impact of Plan Maturity on Risk For newer pension plans, most of the participants and associated liabilities are related to active members who have not yet reached retirement age. As pension plans continue in operation and active members reach retirement ages, liabilities begin to shift from being primarily related to active members to being shared amongst active and retired members. Plan maturity is a measure of the extent to which this shift has occurred. It is important to understand that plan maturity can have an impact on risk tolerance and the overall risk characteristics of the plan. For example, plans with a large amount of retired liability do not have as long of a time horizon to recover from losses (such as losses on investments due to lower than expected investment returns) as plans where the majority of the liability is attributable to active members. For this reason, less tolerance for investment risk may be warranted for highly mature plans with a substantial inactive liability. Similarly, mature plans paying substantial retirement benefits resulting in a small positive or net negative cash flow can be more sensitive to near term investment volatility, particularly if the size of the fund is shrinking, which can result in less assets being available for investment in the market. To assist with determining the maturity of the plan, we have provided some relevant metrics in the table following titled “Plan Maturity Measures and Other Risk Metrics.” For a better understanding of the overall Plan and the impact of these risks, please refer to the consolidated CORP valuation report. Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 23 Plan Maturity Measures and Other Risk Metrics – Tiers 1 & 2 06/30/2018 06/30/2019 06/30/2020 06/30/2021 Support Ratio Total Actives 4 3 3 2 Total Inactives 8 9 9 10 Actives / Inactives 50.0% 33.3% 33.3% 20.0% Asset Volatility Ratio Market Value of Assets (MVA) 1,378,623 1,414,433 1,789,608 Total Annual Payroll 202,246 204,074 132,031 MVA / Total Annual Payroll 681.7% 693.1% 1,355.4% Accrued Liability (AL) Ratio Inactive Accrued Liability 1,756,856 1,792,133 1,777,255 2,569,215 Total Accrued Liability 2,945,307 3,240,399 3,374,933 3,551,295 Inactive AL / Total AL 59.6% 55.3% 52.7% 72.3% Funded Ratio Actuarial Value of Assets (AVA) 1,337,558 1,424,947 1,504,732 1,649,829 Total Accrued Liability 2,945,307 3,240,399 3,374,933 3,551,295 AVA / Total Accrued Liability 45.4% 44.0% 44.6% 46.5% Net Cash Flow Ratio Net Cash Flow * (288) (892) (10,257) Market Value of Assets (MVA) 1,378,623 1,414,433 1,789,608 Net Cash Flow / MVA (0.0%) (0.1%) (0.6%) * Determined as total contributions minus benefit payments. Administrative expenses are typically included but are considered part of the net interest rate assumption for this plan. Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 24 VIII. SUMMARY OF CURRENT PLAN The following is a summary of the benefit provisions provided in Title 38, Chapter 5, Article 6 of the Arizona Revised Statutes. Membership Full-time employees of a participating employer in a designated position, whose customary employment is at least 40 hours each week. Includes employees hired after July 1, 2018 only if they are a judiciary probation or surveillance officer who makes the irrevocable election to participate in the plan. Benefit Tiers Benefits differ for members based on their hire date: Tier Hire Date 1 Hired before January 1, 2012 2 Hired on or after January 1, 2012 but before July 1, 2018 3 Hired on or after July 1, 2018 Salary Salary is the amount including base salary, shift and military differential pay, and holiday pay, paid to an employee on a regular payroll basis. For Tier 3 members, salary is limited by statutory cap ($70,000 with adjustments by the Board). Average Monthly Benefit Tier 1: Salary One-thirty-sixth of the highest total salary during a period of thirty-six consecutive months of service within the last one hundred twenty months of service. Tier 2 & 3: One-sixtieth of the highest total salary during a period of sixty consecutive months of service within the last one hundred twenty months of service. Credited Service Total periods of service, both from service other State plans and those compensated periods of service for which the member made contributions to the fund. Normal Retirement Date Tier 1: First day of the month following attainment of 1) age 62 with 10 years of Credited Service, 2) 20 (25, if dispatcher) years of Cred- ited Service, or 3) age and Credited Service points equal to 80. Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 25 Tier 2: First day of month following the attainment of 1) age 52.5 with 25 years of Credited Service, or 2) age 62 with 10 years of Credited Service. Tier 3: First day of month following the attainment of age 55 with 10 years of Credited Service. Benefit Tier 1: 2.50% times Credited Service (up to 20 years) times Average Monthly Salary. If Credited Service exceeds 20 years, an additional 2.00% accrual is provided for up to five years. If Credited Service exceeds 25 years, the additional accrual for service in excess of 20 years is increased to 2.50%. Maximum benefit equals 80% of Average Monthly Salary. Tier 2: 2.50% times Credited Service times Average Monthly Salary (maximum benefit equals 80% of Average Monthly Salary). Tier 3: Benefit multiplier (below) times Average Monthly Benefit Salary times Credited Service (maximum benefit of 80% of Average Monthly Benefit Salary): Credited Service Benefit Multiplier 10 years, but less than 15 1.25% 15 years, but less than 20 1.50% 20 years, but less than 22 1.75% 22 years, but less than 25 2.00% 25+ years 2.25% Form of Benefit For married retirees, an annuity payable for the life of the member with 80% continuing to the eligible spouse upon death. For unmarried retirees, the normal form is a single life annuity. Early Retirement Only applicable to Tier 3 members: Date Attainment of age 52.5 and 10 years of Credited Service. Benefit Actuarial equivalent of Normal Retirement benefit. Disability Benefit – Duty-Related Eligibility Total and permanent disability incurred in performance of duty. Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 26 Benefit Amount The greater of 1) 50% of Average Monthly Salary, and 2) the Normal Retirement pension that the member is entitled to receive. Disability Benefit – Ordinary Eligibility Total and permanent disability not incurred in performance of duty. Benefit Amount Dispatchers Normal Retirement pension that the member is entitled to receive prorated on Credited Service (maximum 25 years) over 25. All Others Normal Retirement pension that the member is entitled to receive prorated on Credited Service (maximum 20 years) over 20. Pre-Retirement Death Benefit Payable to Eligible Survivor Payable to eligible spouse for life; payable to eligible children until adopted, age 18, or age 23 if full-time student. Service Incurred 100% of Average Monthly Salary Non-Service Incurred 40% of Average Monthly Salary. No survivors Two times member’s accumulated contributions. Vesting (Termination) Deferred Annuity Tier 1: For those with 10 or more years of Credited Service, an annuity based on two times member’s accumulated contributions, deferred to age 62. Member is not entitled to survivor benefits, benefit increases, or group health insurance subsidy. Return of Contributions Tier 1: Lump sum payment of accumulated contributions, plus additional amount based on years of credited service. Service Additional % of Contributions Less than 5 years 0% 5 years 25% 6 years 40% 7 years 55% 8 years 70% 9 years 85% 10+ years 100% Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 27 Tiers 2 & 3: Lump sum payment of accumulated contributions, with interest at rate determined by the Board. Cost-of-Living Adjustment Payable to retired member or survivor of retired member Tiers 1 & 2 Compound cost-of-living adjustment on base benefit. First payment is made on July 1, 2018, with annual adjustments effective every July 1 thereafter. Cost-of-living adjustment will be based on the average annual percentage change in the Metropolitan Phoenix-Mesa Consumer Price Index published by the United states Department of Labor, Bureau of Statistics. Maximum increase of 2%. Tier 3 Compound cost-of-living adjustment on base benefit beginning earlier of fist calendar year after the 7th anniversary of retirement or when the retired member reaches 60 years of age. A cost-of-living adjustment shall be paid on July 1 each year that the funded ratio for members hired on or after July 1, 2018 is 70% or more. The cost-of-living adjustment will be based on the average annual percentage change in the Metropolitan Phoenix-Mesa Consumer Price Index published by the United States Department of Labor, Bureau of Statistics. The cost-of-living adjustment will not exceed:  2%, if funded ratio for members who are hired on or after July 1, 2018 is 90% or more;  1.5%, if funded ratio for members who are hired on or after July 1, 2018 is 80-90%;  1%, if funded ratio for members who are hired on or after July 1, 2018 is 70-80%. Reverse Deferred Retirement Option Plan (Reverse DROP): Eligibility Tier 1 and eligible for normal pension with at least 24 years of Credited Service (25 years for dispatchers). Must not have been awarded disability pension. Reverse DROP Date First day of month immediately following completion of required Credited Service or date not more than 60 consecutive months before the date the member elects to participate in the Reverse DROP, whichever is later. Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 28 Benefit Amount Calculated based on Credited Service and Average Monthly Salary as of the Reverse DROP Date. Reverse DROP Lump Sum Accumulated benefit amounts (with interest) from Reverse DROP date to the date the member elected to participate in Reverse DROP. Interest is equal to the yield on five-year Treasury note as of the first day of the month, as published by the Federal Reserve Board. Post-Retirement Health Insurance Subsidy Eligibility Retired member or survivor who elect health coverage provided by the state or participating employer. Maximum Subsidy Amounts Member Only With Dependents (monthly) Medicare Eligible $100 $170 One w/ Medicare N/A $215 Not Medicare Eligible $150 $260 Employee Contributions Tiers 1 and 2: Non-dispatchers: 8.41% of salary, or 50/50 split of total employer and employee costs, whichever is lower, until the plan is 100% funded. Minimum contribution of 7.65% of salary. Dispatchers: 0.45% less than non-dispatcher rate until plan is 100% funded; equal thereafter. Tier 3: 66.7% of the Normal Cost plus 50% of a level-dollar amortiza- tion of unfunded actuarial accrued liability over a closed pe- riod not to exceed 10 years. Employer Contributions Tiers 1 & 2: Normal Cost, plus amortization of unfunded actuarial accrued liability over a closed period not to exceed 20 years. Contribu- tion will never be less than 6% of payroll. Tier 3: 33.3% of the Normal Cost plus 50% of a level-dollar amortiza- tion of unfunded actuarial accrued liability over a closed pe- riod not to exceed 10 years. Changes to Benefit Provisions Since the Prior Valuation None. Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 29 IX. ACTUARIAL FUNDING POLICY A pension plan funding policy describes how pension funding will improve for underfunded plans or maintain funded benefits for funded plans over time for those benefits defined in ARS. Those benefits defined in ARS are to be equitably managed and administered by PSPRS. This Actuarial Funding Policy identifies the funding objectives and elements of the actuarial funding policy set by the Board for the Arizona Public Safety Personnel Retirement System (PSPRS). The Board adopted this Funding Policy to help ensure the systematic funding of future benefit payments for members of the Retirement System as established by the legislature. To achieve the systematic funding of future benefits, metrics are identified to measure the progress, or the lack of progress, over time to identify trends. These trends inform the continuation of the current policies or identify areas of needed research for consideration. This funding policy is reviewed annually and adopted by the Board in accordance with ARS 38-863.02. This policy was reviewed and adopted by the Board in October 2021. PSPRS Statement of Purpose The Purpose of the Public Safety Personnel Retirement System is to provide uniform, consistent, and equitable statewide retirement programs for those who have been entrusted to our care. Funding Objectives 1. Maintain adequate assets so that current plan assets, plus future contributions and investment earnings, are sufficient to fund all benefits expected to be paid to members and their beneficiaries. a. Corollary 1a: Current and future contributions should be calculated based upon assumptions that reflect the Board’s best estimate of future experience and methods that appropriately allocate costs to address generational equity. b. Corollary 1b: While the shorter-term objective is to fully fund the actuarial liability (AAL) that estimates benefits earned as of the valuation date, contributions should target the long-term present value of benefits (PVB) to fund all benefits and help offset risks. 2. Maintain public policy goals of accountability and transparency through stakeholder communication and education. Each policy element is clear in intent and effect, and each should be considered in a balanced approach to determine how and when the funding requirements of the plan will be met. a. Corollary 2a: Board shall provide stakeholders with separate reports and tools to help explain current results as well as to help model future funding requirements. 3. Promote intergenerational equity. Defined benefit pensions are designed with a long-term perspective and designed to minimize contribution volatility that cannot avoid some level of generational cost shift. However, the goal is that each generation of members and employers (taxpayers) should, to the extent possible, incur the cost of benefits for the employees who provide services to them, rather than shifting those costs to other generations of members and employers (taxpayers). Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 30 a. Corollary 3a: A systematic reduction of the Unfunded Actuarial Accrued Liability (UAAL) over a reasonable time period is paramount to achieving this objective. Consideration can be given to reduce volatility, to the extent possible, of employer and employee contribution rates as long as the integrity of the objectives listed above is not compromised. Elements of Actuarial Funding Policy 1. Actuarial Cost Method a. The Entry Age Normal level percent of pay actuarial cost method of valuation shall be used in determining the Actuarial Accrued Liability (AAL) and Normal Cost. Differences in the past between assumed experience and actual experience (“actuarial gains and losses”) shall become part of the AAL. The Normal Cost shall be determined on an individual basis for each active member. 2. Asset Smoothing Method a. The investment gains or losses of each valuation period, resulting from the difference between the actual investment return and assumed investment return, shall be recognized annually in level amounts over seven years (Tiers 1 and 2) or five years (Tier 3) in calculating the Actuarial Value of Assets. b. The Actuarial Value of Assets so determine shall be subject to a 20% corridor relative to the Market Value of Assets. 3. Amortization Method (Unfunded Amounts) a. The Actuarial Value of Assets are subtracted from the computed AAL. Any unfunded amount is amortized as a level percent of payroll over a closed period. b. The unfunded liabilities, for EORP and Tiers 1 & 2 for both PSPRS and CORP, determined in the June 30, 2019 actuarial valuation will become the initial layer for each employer beginning with the June 30, 2020 actuarial valuation and amortized using the current closed year period for that employer and continue to decrease each year. i. The payroll growth rate assumption used to amortize the Public Safety Plan (PSPRS) June 30, 2019 Unfunded Liability will be decreased by 0.5% beginning with the 6/30/2021 actuarial valuation and again each year with the intention of ultimately achieving 0.0%. Once the payroll growth assumption reaches 2.0%, however, the Board will reevaluate the payroll growth assumption and decide whether to continue to let it track down to 0.0%. ii. The payroll growth rate used to amortize the Correction Officers Retirement Plan (CORP) June 30, 2019 Unfunded Liability will be 3.0% beginning with the 6/30/2020 actuarial valuation, and future years will be reduced by 0.5% until 0.0% is reached. iii. The payroll growth rate used to amortize the Elected Officials Retirement Plan (EORP) June 30, 2019 Unfunded Liability will be 2.5% beginning with the 6/30/2020 actuarial valuation, and future years will be reduced by 0.5% until 0.0% is reached. c. Gains and losses, for EORP and Tiers 1 & 2 for both PSPRS and CORP, for each employer beginning with the June 30, 2020 actuarial valuation will be amortized as a new layer over the same amortization period as the regular unfunded liability to a minimum of 15 years. Once the amortization period for each employer decreases to 15 years, each subsequent year’s gains and losses will be amortized as a new 15-year closed layer. i. The payroll growth rate used to amortize unfunded liability for all Plans under this paragraph will be 0.0% (i.e. level-dollar amortization). Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 31 d. Tier 3 amortization methods are established in ARS 38-843.G and ARS 38-891.K. 4. Amortization Method (Overfunded Amounts) a. If the Actuarial Value of Assets exceeds the AAL for EORP and Tiers 1 & 2 for both PSPRS and CORP, the excess is amortized over an open period of 20 years and applied as a credit to reduce the Normal Cost otherwise payable. b. Tier 3 amortization methods are established in ARS 38-843.G and ARS 38-891.K. Metrics to Monitor Funding Objectives 1. Appropriateness of Assumptions – Gain/Loss Experience (Corollary 1a) a. Metric: Do the cumulative gain/loss layers over the prior five years exceed 8% of plan assets? b. Measurement: History of annual gain/loss (split by asset and liability experience) and five-year cumulative results will be tracked. c. Action Plan: This metric assumes that a full experience study is performed at least every five years so objective of measurement is to monitor interim experience. If the metric answer is yes, a review of the sources or causes of gains and losses should be analyzed and presented to the Advisory Committee to provide a recommendation to the Board of Trustees. The analysis and presentation are intended to provide a basis for consideration if assumption changes are warranted between full experience studies. 2. Funding Targets (Corollary 1b) a. Metric: Has the funded status, on both an AAL and PVB basis when compared to the market value of assets, increased over a five-year period? b. Measurement: History of funded status measures will be tracked. c. Action Plan: If the answer is no and not readily explainable (e.g., significant assumption change), a review of the reason(s) for the decrease should be researched and presented to the Advisory Committee to provide a recommendation to the Board of Trustees. The analysis and presentation are intended to provide a basis for consideration if changes to assumptions and/or methods are warranted between full experience studies. 3. Communication with Stakeholders (Corollary 2a) a. Metric: Have reports and budgeting tools been provided to stakeholders in a timely fashion? b. Measurement: Yes/No answer based on input from PSPRS administrator. (An annual standard survey of stakeholders – 3 to 5 questions.) c. Action Plan: If the answer is no, and periodically regardless (e.g., every three years), PSPRS staff will revisit this metric to report to the Advisory Committee to provide a recommendation to the Board of Trustees if current reports / tools are sufficient and if the delivery timing is appropriate. 4. Timely Recognition of Costs (Corollary 3a) a. Metric: Has the percentage of unfunded liability subject to negative amortization decreased over a five- year lookback period? b. Measurement: History of unfunded liability subject to negative amortization as a percentage of total unfunded liability will be tracked.  Action Plan: If the answer is no, and not readily explainable (e.g., adopted assumption changes being phased in are anticipated to address negative amortization), a review of the Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 32 reason(s) for negative amortization should be researched and presented to the Advisory Committee to provide a recommendation to the Board of Trustees. The analysis and presentation are intended to provide a basis for consideration if changes to assumptions and/or methods are warranted between full experience studies. Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 33 X. GLOSSARY Actuarial Accrued Liability – Computed differently under different funding methods, the actuarial accrued liability generally represents the portion of the actuarial present value of benefits attributable to service credit earned (or accrued) as of the valuation date. Actuarial Present Value of Benefits – Amount which, together with future interest, is expected to be sufficient to pay all benefits to be paid in the future, regardless of when earned, as determined by the application of a particular set of actuarial assumptions; equivalent to the actuarial accrued liability plus the present value of future normal costs attributable to the members. Actuarial Assumptions – Assumptions as to the occurrence of future events affecting pension costs. These assumptions include rates of investment earnings, changes in salary, rates of mortality, withdrawal, disablement, and retirement as well as statistics related to marriage and family composition. Actuarial Cost Method – A method of determining the portion of the cost of a pension plan to be allocated to each year; sometimes referred to as the "actuarial funding method." Each cost method allocates a certain portion of the actuarial present value of benefits between the actuarial accrued liability and future normal costs. Actuarial Equivalence – Series of payments with equal actuarial present values on a given date when valued using the same set of actuarial assumptions. Actuarial Present Value - The amount of funds required as of a specified date to provide a payment or series of payments in the future. It is determined by discounting future payments at predetermined rates of interest, and by probabilities of payments between the specified date and the expected date of payment. Actuarial Value of Assets – The value of cash, investments, and other property belonging to the pension plan as used by the actuary for the purpose of the actuarial valuation. This may correspond to market value of assets, or some modification using an asset valuation method to reduce the volatility of asset values. Asset Gain (Loss) – That portion of the actuarial gain attributable to investment performance above (below) the expected rate of return in the actuarial assumptions. Amortization – Paying off an interest-discounted amount with periodic payments of interest and (generally) principal, as opposed to paying off with a lump sum payment. Amortization Payment – That portion of the pension plan contribution designated to pay interest and reduce the outstanding principal balance of unfunded actuarial accrued liability. If the amortization payment is less than the accrued interest on the unfunded actuarial accrued liability the outstanding principal balance will increase. Assumed Earnings Rate – The interest rate used in developing present values to reflect the time value of money. Decrements – Events which result in the termination of membership in the system such as retirement, disability, withdrawal, or death. Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2021 – Town of Oro Valley - Dispatchers (556) 34 Entry Age Normal (EAN) Funding Method – A standard actuarial funding method whereby each member’s normal costs (service costs) are generally level as a percentage of pay from entry age until retirement. The annual cost of benefits is comprised of the normal cost plus an amortization payment to reduce the UAL. Experience Gain (Loss) – The difference between actual unfunded actuarial accrued liabilities and anticipated unfunded actuarial accrued liabilities during the period between two valuation dates. It is a measurement of the difference between actual and expected experience, and may be related to investment earnings above (or below) those expected or changes in the liability due to fewer (or greater) than expected numbers of retirements, deaths, disabilities, or withdrawals, or variances in pay increases relative to assumed pay increases. The effect of such gains (or losses) is to decrease (or increase) future costs. Funded Ratio – A measure of the ratio of the actuarial value of assets to liabilities of the system. Typically, the assets used in the measure are the actuarial value of assets as determined by the asset valuation method. The funded ratio depends not only on the financial strength of the plan but also on the asset valuation method used to determine the assets and on the funding method used to determine the liabilities. Market Value of Assets (MVA) – The value of assets as they would trade on an open market. Normal Cost – Computed differently under different funding methods, generally that portion of the actuarial present value of benefits allocated to the current plan year. Unfunded Actuarial Accrued Liability (UAAL) – The excess of the actuarial accrued liability over the valuation assets; sometimes referred to as "unfunded past service liability". UAL increases each time an actuarial loss occurs and when new benefits are added without being fully funded initially and decreases when actuarial gains occur. ARIZONA PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM ORO VALLEY POLICE DEPT. (122) ACTUARIAL VALUATION AS OF JUNE 30, 2021 CONTRIBUTIONS APPLICABLE TO THE PLAN/FISCAL YEAR ENDING JUNE 30, 2023 VIA E-MAIL 13420 Parker Commons Boulevard, Suite 104 Fort Myers, FL 33912 ꞏ (239) 433-5500 ꞏ Fax (239) 481-0634 ꞏ www.foster-foster.com December 2021 Board of Trustees Arizona Public Safety Personnel Retirement System Phoenix, AZ Re: Actuarial Valuation Report as of June 30, 2021 for Oro Valley Police Dept. (122) Dear Members of the Board: We are pleased to present to the Board this report of the annual actuarial valuation of the Arizona Public Safety Personnel Retirement System (PSPRS). The valuation was performed to determine whether the assets and contributions are sufficient to provide the prescribed benefits and to develop the appropriate funding requirements for the applicable plan year. This report was prepared at the request of the Board and is intended for use by PSPRS and those designated or approved by the Board. It documents the valuation of the consolidated plan and provides summary information for PSPRS participating employers. This report may be provided to parties other than PSPRS only in its entirety and only with the permission of the Board. Foster & Foster is not responsible for the unauthorized use of this report. The valuation has been conducted in accordance with generally accepted actuarial principles and practices, including the applicable Actuarial Standards of Practice as issued by the Actuarial Standards Board, and reflects laws and regulations issued to date pursuant to the provisions of Title 38, Chapter 5, Article 4 of the Arizona Revised Statutes, as well as applicable federal laws and regulations. In our opinion, the assumptions used in this valuation, as adopted by the Board of Trustees, represent reasonable expectations of anticipated plan experience. Future actuarial measurements may differ significantly from the current measurements presented in this report for a variety of reasons including changes in applicable laws, changes in plan provisions, changes in assumptions, or plan experience differing from expectations. Due to the limited scope of the valuation, we did not perform an analysis of the potential range of such future measurements. The computed contribution rates shown in the “Contribution Results” section should be considered minimum contribution rates that comply with the Board’s funding policy and Arizona Statutes. Users of this report should be aware that contributions made at that rate do not guarantee benefit security. Given the importance of benefit security to any retirement system, we suggest that contributions to the System in excess of those presented in this report be considered. The funding percentages and unfunded accrued liability as measured based on the actuarial value of assets will differ from similar measures based on the market value of assets. These measures, as provided, are appropriate for determining the adequacy of future contributions, but may not be appropriate for the purpose of settling a portion or all of the Plan’s liabilities. Board of Trustees Arizona Public Safety Personnel Retirement System | Page 2 13420 Parker Commons Boulevard, Suite 104 Fort Myers, FL 33912 ꞏ (239) 433-5500 ꞏ Fax (239) 481-0634 ꞏ www.foster-foster.com In conducting the valuation, we have relied on personnel, plan design, and asset information supplied by PSPRS through June 30, 2021 and the actuarial assumptions and methods described in the Actuarial Assumptions section of this report. While we cannot verify the accuracy of all this information, the supplied information was reviewed for consistency and reasonableness. As a result of this review, we have no reason to doubt the substantial accuracy of the information and believe that it has produced appropriate results. This information, along with any adjustments or modifications, is summarized in various sections of this report. This valuation assumes the continuing ability of the participating employers to make the contributions necessary to fund this plan. A determination regarding whether or not the participating employers are actually able to do so is outside our scope of expertise. Consequently, we did not perform such an analysis. In performing the analysis, we used third-party software to model (calculate) the underlying liabilities and costs. These results are reviewed in the aggregate and for individual sample lives. The output from the software is either used directly or input into internally developed models to generate the costs. All internally developed models are reviewed as part of the process. As a result of this review, we believe that the models have produced reasonable results. We do not believe there are any material inconsistencies among assumptions or unreasonable output produced due to the aggregation of assumptions. The undersigned are familiar with the immediate and long-term aspects of pension valuations and meet the Qualification Standards of the American Academy of Actuaries necessary to render the actuarial opinions contained herein. All sections of this report are considered an integral part of the actuarial opinions. To our knowledge, no associate of Foster & Foster, Inc. working on valuations of the program has any direct financial interest or indirect material interest in the Arizona Public Safety Personnel Retirement System, nor does anyone at Foster & Foster, Inc. act as a member of the Board of Trustees of the Arizona Public Safety Personnel Retirement System. Thus, there is no relationship existing that might affect our capacity to prepare and certify this actuarial report. If there are any questions, concerns, or comments about any of the items contained in this report, please contact us at 239-433-5500. Respectfully Submitted, Foster & Foster, Inc. By: ________________________________ Bradley R. Heinrichs, FSA, EA, MAAA By: ________________________________ Paul M. Baugher, FSA, EA, MAAA Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) TABLE OF CONTENTS I. Summary of Report ..........................................................................................................................................1 II. Contribution Results ........................................................................................................................................4 III. Liability Support ............................................................................................................................................9 IV. Asset Support ............................................................................................................................................... 13 V. Member Statistics .......................................................................................................................................... 18 VI. Actuarial Assumptions and Methods ........................................................................................................... 20 VII. Discussion of Risk ...................................................................................................................................... 25 VIII. Summary of Current Plan.......................................................................................................................... 29 IX. Actuarial Funding Policy ............................................................................................................................. 35 X. Glossary ........................................................................................................................................................ 39 Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 1 I. SUMMARY OF REPORT The regular annual actuarial valuation of the Arizona Public Safety Personnel Retirement System for the Oro Valley Police Dept., performed as of June 30, 2021, has been completed and the results are presented in this Report. The purpose of this valuation is to:  Compute the liabilities associated with benefits likely to be paid on behalf of current retired and active members. This information is contained in the section entitled “Liability Support.”  Compare accumulated assets with the liabilities to assess the funded condition. This information is contained in the section entitled “Liability Support.”  Compute the employers’ recommended contribution rates for the Fiscal Year beginning July 1, 2022. This information is contained in the section entitled “Contribution Results.” 1. Key Valuation Results The funded status as of June 30, 2021 and the employer contribution amounts applicable to the plan/fiscal year ending June 30, 2023 are as follows: Tier 1 & Tier 2 Members Tier 3 Members * Pension Health Total Pension Health Total Employer Contribution Rate 43.47% 0.00% 43.47% 9.00% 0.12% 9.12% Funded Status 66.1% 148.5% 67.3% 107.3% 210.0% 108.9% 2. Comparison of Key Results to Prior Year The chart below compares the results from this valuation with the results of the prior year’s valuation (as of June 30, 2020): Contribution Rate Tier 1 & Tier 2 Members Tier 3 Members * Valuation Date Pension Health Total Pension Health Total June 30, 2020 43.57% 0.00% 43.57% 9.05% 0.13% 9.18% June 30, 2021 43.47% 0.00% 43.47% 9.00% 0.12% 9.12% Funded Status Tier 1 & Tier 2 Members Tier 3 Members Valuation Date Pension Health Total Pension Health Total June 30, 2020 61.7% 132.7% 62.9% 101.4% 203.9% 103.0% June 30, 2021 66.1% 148.5% 67.3% 107.3% 210.0% 108.9% * The Tier 3 rates shown are the calculated rates as of the valuation date and do not reflect any Legacy costs that the employer must also contribute. Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 2 3. Reasons for Change Changes in the results from the prior year’s valuation can be illustrated in the following tables along with high-level explanations for the entire System below: Contribution Rate Tier 1 & Tier 2 Tier 3 Members Pension Health Pension Health Contribution Rate Last Valuation 43.57% 0.00% 9.05% 0.13% Asset Experience (0.17%) 0.00% (0.17%) (0.01%) Payroll Base 0.36% (0.01%) 0.01% (0.01%) Liability Experience (0.97%) (0.15%) (0.24%) 0.00% Additional Contribution (0.61%) 0.00% 0.00% 0.00% Assumption/Method Change 0.86% 0.00% 0.00% 0.00% Other 0.43% 0.16% 0.35% 0.01% Contribution Rate This Valuation 43.47% 0.00% 9.00% 0.12% Funded Status Tier 1 & Tier 2 Tier 3 Members Pension Health Pension Health Funded Status Last Valuation 61.7% 132.7% 101.4% 203.9% Asset Experience 0.2% (0.2%) 3.4% 7.8% Liability Experience 0.6% 16.1% 4.8% 0.0% Additional Contribution 0.7% 0.0% 0.0% 0.0% Assumption/Method Change 0.0% 0.0% 0.0% 0.0% Other 2.9% (0.1%) (2.3%) (1.7%) Funded Status This Valuation 66.1% 148.5% 107.3% 210.0% Assets Experience – Asset gains and losses (relative to the assumed earnings rate) are smoothed over seven years for Tiers 1 and 2 and over five years for Tier 3. The return on the market value of assets for the year ending June 30, 2021 was 26.7% for Tiers 1 and 2 and 32.7% for Tier 3. On a smoothed, actuarial value of assets basis, however, the average return was 7.6% for Tiers 1 and 2 and 11.5% for Tier 3. These returns exceeded the 2020 assumed earnings rate for Tiers 1 and 2 of 7.3% and for Tier 3 of 7.0%. Payroll Base – Under the current amortization policy for Tiers 1 and 2, the contribution rate is developed as a level percentage of payroll. Payroll for this purpose includes members of this plan and defined contribution plan’s members that would have been in this plan. To the extent that actual payroll is lower/greater than last year’s projected payroll, the contribution rate will increase/decrease as a result. The payroll decreased compared to expected, resulting in an increase in the contribution rate. Liability Experience – Experience overall was unfavorable, driven by salary increases that were higher than expected. Additional Contribution – Monies contributed in excess of the required contribution rate in order to pay down the unfunded liability. Assumption / Method Change – The payroll growth assumption was decreased from 3.50% to 3.00%. Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 3 Other – This is the combination of all other factors that could impact liabilities year-over-year, with the primary sources being changes in benefits for continuing inactives. Note that Tier 3 experience will stabilize as the group matures. 4. Looking Ahead The volatility in annual returns, which have produced both gains and losses in recent years, was dampened by the asset smoothing reflected in the actuarial value of assets. The significant gain realized this year will, in the absence of other losses, put downward pressure on the contribution rate next year. If the June 30, 2021 pension valuation results were based on the market value of assets instead of the actuarial value of assets, the pension funded percentage for Tiers 1 and 2 would be 72.3% (instead of 66.1%) and the pension employer contribution requirement would be 37.16% of payroll (instead of 43.47%). 5. Conclusion The funded status for Tiers 1 and 2 will continue to improve if assumptions are met and contributions at least equal to the rates determined for each employer are made to the fund. The recent adoption of a layered amortization approach along with a plan to systematically lower the payroll growth assumption was an excellent step to improve funding and ensure the Plan is on a viable path. The funded status for Tier 3 will stabilize as the population continues to grow, as contributions appear sufficient to keep the liabilities fully funded. Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 4 II. CONTRIBUTION RESULTS Contribution Requirements Development of Employer Contributions - Tiers 1 & 2 Members Valuation Date June 30, 2021 June 30, 2020 Applicable to Fiscal Year Ending 2023 2022 Rate Dollar Rate Dollar Pension Normal Cost Total Normal Cost 20.74% $ 1,373,511 20.84% $ 1,407,038 Employee Cost (7.65%) (506,623) (7.65%) (516,499) Employer (Net) Normal Cost 13.09% 866,888 13.19% 890,539 Amortization of Unfunded Liability 30.38% 2,011,922 30.38% 2,051,143 Total Employer Cost (Pension) 43.47% 2,878,810 43.57% 2,941,682 Health Normal Cost 0.45% 29,801 0.45% 30,382 Amortization of Unfunded Liability (0.45%) (29,801) (0.45%) (30,382) Total Employer Cost (Health) 0.00% 0 0.00% 0 Total Employer Cost (Pension + Health) 43.47% 2,878,810 43.57% 2,941,682 Total Minimum Contribution Requirement (if applicable) 0.00% 0.00% Alternate Contribution Rate (ACR) * 30.38% 30.38% Underlying Payroll (as of valuation date) 6,429,633 6,523,308 * The Alternate Contribution Rate is the sum of the positive amortization rates for Tiers 1 & 2 Pension and Health (subject to an 8% minimum) and is charged when retirees return to active status. The results above are shown both prior to and after the application of the statutory minimum contribution requirement of 8% of payroll (5% of payroll if the actual employer contribution is less than 5% for the 2006/2007 Fiscal Year) and are based on the current amortization schedule approved by the Board of Trustees for your individual plan (see "Actuarial Assumptions and Methods"). Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 5 Development of Employer Contributions – Tier 3 Members Valuation Date June 30, 2021 June 30, 2020 Applicable to Fiscal Year Ending 2023 2022 Defined Benefit (DB) Retirement Plan Rate Dollar Rate Dollar Pension Total Normal Cost 17.99% $ 141,199 18.10% $ 95,943 Amortization of Unfunded Liability 0.00% 0 0.00% 0 Total Pension Cost 17.99% 141,199 18.10% 95,943 Employee (EE) Pension Cost 9.00% 70,600 9.05% 47,972 Employer (ER) Pension Cost 9.00% 70,600 9.05% 47,972 Health Total Normal Cost 0.24% 1,884 0.25% 1,325 Amortization of Unfunded Liability 0.00% 0 0.00% 0 Total Health Cost 0.24% 1,884 0.25% 1,325 Employee (EE) Health Cost 0.12% 942 0.13% 663 Employer (ER) Health Cost 0.12% 942 0.13% 663 Total Total Calculated Tier 3 Required EE/ER Individual Cost 9.12% 71,542 9.18% 48,635 Board Approved Tier 3 Required EE/ER Individual Cost 1 9.94% 78,017 9.94% 52,689 ER Legacy Cost of Tiers 1 & 2 Amort of Unfunded Liabilities 2 30.38% 238,445 30.38% 161,036 Total Calculated Tier 3 Required ER Defined Benefit Cost 39.50% 309,987 39.56% 209,671 Total Board Approved Tier 3 Required ER Defined Benefit Cost 40.32% 316,462 40.32% 213,725 Underlying Payroll (as of valuation date) 762,016 512,148 1 The Board decided to keep Tier 3 rates level (as calculated with the June 30, 2019 valuation) for the fiscal year ending June 30, 2023. 2 Pursuant to ARS § 38-843(B), the amortization of positive unfunded liabilities for Tiers 1 & 2 shall be applied to all Tier 3 payroll on a level percent basis. However, while it is statutorily required to present the rates in this manner, these are the minimums where alternate methods for paying down that unfunded liability is at the discretion of each employer. Further, to understand the effects of reform in relation to Tier 3, compare the total rate of Tier 3 before application of those legacy costs. Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 6 Development of Employer Contributions – Tier 3 Members Valuation Date June 30, 2021 June 30, 2020 Applicable to Fiscal Year Ending 2023 2022 Defined Contribution (DC) Retirement Plan Rate Dollar Rate Dollar Tier 2 & 3 DB / Non-Social Security Employee Cost 3.00% 3.00% Employer Cost 1 3.00% 3.00% Tier 3 DC Only Employee Cost 9.00% $ 5,468 9.00% $ 4,710 Employee Health Subsidy Program Cost 0.19% 115 Employee Disability Program Cost 1.66% 1,009 0.88% 461 Total Employee Cost 10.85% 6,592 9.88% 5,171 Employer Cost 9.00% 5,468 9.00% 4,710 Employer Health Subsidy Program Cost 0.19% 115 Employer Disability Program Cost 1.66% 1,009 0.88% 461 Total Employer Cost (before Legacy) 10.85% 6,592 9.88% 5,171 ER Legacy Cost of Tiers 1 & 2 Amort of Unfunded Liabilities 2 30.38% 18,458 30.38% 15,899 Total Employer Cost 41.23% 25,050 40.26% 21,070 Underlying Payroll (as of valuation date) 58,986 50,563 1 Employer rate is 4% for Tier 2 members for a period of time depending on the individual's membership date. 2 Pursuant to ARS § 38-843(B), the amortization of positive unfunded liabilities for Tiers 1 & 2 shall be applied to all Tier 3 payroll on a level percent basis. However, while it is statutorily required to present the rates in this manner, these are the minimums where alternate methods for paying down that unfunded liability is at the discretion of each employer. Further, to understand the effects of reform in relation to Tier 3, compare the total rate of Tier 3 before application of those legacy costs. Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 7 Contribution Rate Summary Tier 1 Tier 2 Tier 3 Membership Date On or After 7/1/1968 7/20/2011 1/1/2012 7/1/2017 Participates in Social Security N/A N/A Yes No Yes No N/A Available Retirement Plan ¹ DB Only DB Only DB Only Hybrid DB Only Hybrid DC Only Employee Contribution Rate PSPRS DB Rate 7.65% 11.65% 11.65% 11.65% 9.94% 9.94% PSPRS DC Rate 3.00% 3.00% 9.00% Employer Health Subsidy Program Cost 0.19% PSPDCRP Disability Program Rate 1.66% Total EE Contribution Rate 7.65% 11.65% 11.65% 14.65% 9.94% 12.94% 10.85% Employer Contribution Rate PSPRS DB Normal Cost 13.54% 13.54% 13.54% 13.54% 9.94% 9.94% PSPRS DB Tier 1 & 2 Legacy Cost ² 29.93% 29.93% 29.93% 29.93% 30.38% 30.38% 30.38% PSPRS DC Rate ³ 4.00% 3.00% 9.00% Employer Health Subsidy Program Cost 0.19% PSPDCRP Disability Program Rate 1.66% Total ER Contribution Rate 43.47% 43.47% 43.47% 47.47% 40.32% 43.32% 41.23% ¹ Employers that pay into Social Security on behalf of their members do not participate in the Hybrid Plan. ² Per statute (ARS § 38-843(B)), any positive unfunded liability for Tiers 1 and 2 is to be applied to all Tier 3 (DB and DC) payrolls. ³ The 4.00% employer match for Tier 2 Hybrid members is for a short period of time depending on the membership date of the employee at which point the rate will change to 3.00% (ARS § 38-868(C)). Exhibit summarizes employee and employer contributions based on Statute and the results of June 30, 2021 actuarial valuation. Pension and health components are combined, where applicable. Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 8 Impact of Additional Contributions Additional Contribution (000s) $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 Impact On Funded Status 06/30/2021 66.1% 67.5% 68.9% 70.3% 71.7% 73.1% 74.5% 76.0% 77.4% 78.8% 80.2% FYE 2023 Contribution Rate 43.47% 42.07% 40.68% 39.28% 37.89% 36.49% 35.09% 33.70% 32.30% 30.90% 29.51% Table shows the hypothetical change in the funded status and contribution rate from the June 30, 2021 actuarial valuation results for Tiers 1 & 2 if an additional contribution of the amount shown had been made to the Fund on June 30, 2021. This illustration can help estimate the impact of contributing additional monies to the fund in the future. Historical Summary of Employer Rates Pension Health Valuation Date June 30 Fiscal Year Ending June 30 Normal Cost Unfunded Amortization Total Normal Cost Unfunded Amortization Total TIERS 1 & 2 2018 2020 14.15% 24.11% 38.26% 0.33% 0.00% 0.33% 2019 2021 13.95% 27.67% 41.62% 0.49% (0.46%) 0.03% 2020 2022 13.19% 30.38% 43.57% 0.45% (0.45%) 0.00% 2021 2023 13.09% 30.38% 43.47% 0.45% (0.45%) 0.00% TIER 3 1 2018 2020 9.68% 0.00% 9.68% 0.26% 0.00% 0.26% 2019 2021 9.68% 0.00% 9.68% 0.26% 0.00% 0.26% 2020 2022 9.68% 0.00% 9.68% 0.26% 0.00% 0.26% 2021 2 2023 9.00% 0.00% 9.00% 0.12% 0.00% 0.12% 2021 2023 9.68% 0.00% 9.68% 0.26% 0.00% 0.26% 1 Rates shown are Board approved EE/ER rates, unless otherwise noted. Does not reflect Legacy costs that the employer must also contribute. 2 Rates shown are calculated EE/ER rates Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 9 III. LIABILITY SUPPORT Liabilities and Funded Ratios by Benefit - Tiers 1 & 2 June 30, 2021 June 30, 2020 Pension Actuarial Present Value of Benefits Retirees and Beneficiaries $ 29,485,097 $ 27,357,215 DROP Members 11,116,699 10,147,515 Vested Members 694,040 483,193 Active Members 39,960,572 40,105,448 Total Actuarial Present Value of Benefits 81,256,408 78,093,371 Actuarial Accrued Liability (AAL) All Inactive Members 41,295,836 37,987,923 Active Members 29,496,718 29,252,603 Total Actuarial Accrued Liability 70,792,554 67,240,526 Actuarial Value of Assets (AVA) 46,773,089 41,498,361 Unfunded Actuarial Accrued Liability Gross Unfunded Actuarial Accrued Liability 24,019,465 25,742,165 Stabilization Reserve 0 0 Net Unfunded Actuarial Accrued Liability 24,019,465 25,742,165 Funded Ratio (AVA / AAL) 66.1% 61.7% Health Present Value of Benefits Retirees and Beneficiaries $ 301,694 $ 366,193 DROP Members 151,013 144,755 Active Members 786,860 800,984 Total Present Value of Benefits 1,239,567 1,311,932 Actuarial Accrued Liability (AAL) All Inactive Members 452,707 510,948 Active Members 581,099 586,446 Total Actuarial Accrued Liability 1,033,806 1,097,394 Actuarial Value of Assets (AVA) 1,534,689 1,456,224 Unfunded Actuarial Accrued Liability (500,883) (358,830) Funded Ratio (AVA / AAL) 148.5% 132.7% Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 10 Liabilities and Funded Ratios by Benefit - Tier 3 June 30, 2021 June 30, 2020 Pension Actuarial Present Value of Benefits Retirees and Beneficiaries $ 440,356 $ 429,363 Vested Members 1,850,254 743,741 Active Members 288,612,448 203,486,437 Total Actuarial Present Value of Benefits 290,903,058 204,659,541 Actuarial Accrued Liability (AAL) All Inactive Members 2,290,610 1,173,104 Active Members 40,442,927 22,066,495 Total Actuarial Accrued Liability 42,733,537 23,239,599 Actuarial Value of Assets (AVA) 45,863,401 23,570,444 Unfunded Actuarial Accrued Liability (3,129,864) (330,845) Funded Ratio (AVA / AAL) 107.3% 101.4% Health Present Value of Benefits Retirees and Beneficiaries 0 0 Active Members 3,998,992 2,785,857 Total Present Value of Benefits 3,998,992 2,785,857 Actuarial Accrued Liability (AAL) All Inactive Members 0 0 Active Members 680,877 353,563 Total Actuarial Accrued Liability 680,877 353,563 Actuarial Value of Assets (AVA) 1,429,806 721,079 Unfunded Actuarial Accrued Liability (748,929) (367,516) Funded Ratio (AVA / AAL) 210.0% 203.9% The liabilities shown on this page are the liabilities for all Tier 3 members grouped together in the Risk Sharing group. These liabilities are NOT the liabilities solely for Oro Valley Police Dept. Tier 3 members. Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 11 Derivation of Experience (Gain)/Loss Tiers 1 & 2 Tier 3 Pension Health Pension Health (1) Unfunded Actuarial Accrued Liability as of June 30, 2020 25,742,165 (358,830) (330,845) (367,516) (2) Normal Cost Developed in Last Valuation 890,539 30,382 7,910,126 113,626 (3) Actual Contributions 3,343,850 1,917 9,445,404 586,975 (4) Expected Interest On (1), (2), and (3) 1,824,287 (24,045) 214,602 (39,581) (5) Expected Unfunded Actuarial Accrued Liability as of June 30, 2021 (1)+(2)-(3)+(4) 25,113,141 (354,410) (1,651,521) (880,446) (6) Changes to UAAL Due to Assumptions, Methods and Benefits 0 0 0 0 (7) Change to UAAL Due to Actuarial (Gain)/Loss (1,093,676) (146,473) (1,478,343) 131,517 (8) Unfunded Actuarial Accrued Liability as of June 30, 2021 24,019,465 (500,883) (3,129,864) (748,929) Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 12 Amortization of Unfunded Liabilities - Tiers 1 & 2 Date Established Outstanding Balance 1 Years Remaining Amortization Rate Pension 06/30/2019 23,815,666 15 28.86% 06/30/2021 2 1,059,335 15 1.52% Total 24,875,001 30.38% Health 06/30/2019 0 15 0.00% 06/30/2021 2 (500,883) 20 (0.62%) Total (500,883) (0.62%) Amortization of Unfunded Liabilities - Tier 3 Date Established Outstanding Balance Years Remaining Amortization Rate 3 Pension 06/30/2018 150,675 7 0.02% 06/30/2019 (1,301,325) 8 (0.18%) 06/30/2020 855,335 9 0.11% 06/30/2021 (2,834,549) 10 (0.35%) Total (3,129,864) 0.00% Health 06/30/2018 (3,195) 7 0.00% 06/30/2019 (118,978) 8 (0.02%) 06/30/2020 (217,212) 9 (0.03%) 06/30/2021 (409,544) 10 (0.05%) Total (748,929) 0.00% 1 By Statute, any unfunded liability is adjusted by remove any “maintenance of effort” balance included in the assets. 2 Since the “Years Remaining” for the 2020 and 2021 bases are the same, they have been combined into a single base. 3 By Statute, negative amortization rates are not subtracted in Tier 3 rate calculations. Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 13 IV. ASSET SUPPORT Statement of Changes in Fiduciary Net Position for Year Ended June 30, 2021 Market Value Basis Tiers 1 & 2 Tier 3 Pension Health Pension Health Additions Contributions Member Contributions $ 125,332,035 $ 0 $ 21,045,607 $ 0 Employer Contributions 1,907,760,231 0 21,046,874 0 Health Insurance Contributions 0 4,005,856 0 1,358,038 Total Contributions 2,033,092,266 4,005,856 42,092,481 1,358,038 Investment Income Net Increase in Fair Value 2,205,440,985 84,098,414 21,638,252 757,438 Interest and Dividends 71,848,357 2,739,739 704,927 24,676 Other Income 83,636,944 3,601,503 820,588 32,436 Less Investment Expenses (50,004,841) (1,785,590) (490,613) (16,082) Net Investment Income 2,310,921,445 88,654,066 22,673,154 798,468 Transfers In 145,214 0 55,573 0 Total Additions 4,344,158,925 92,659,922 64,821,208 2,156,506 Deductions Distributions to Members Benefit Payments 933,886,583 0 57,370 0 Health Insurance Subsidy 0 16,906,670 0 0 Refund of Contributions 12,184,527 0 576,884 0 Total Distributions 946,071,110 16,906,670 634,254 0 Administrative Expenses 10,897,164 364,534 106,925 3,283 Transfers Out 276,873 0 0 0 Other 0 0 0 0 Total Deductions 957,245,147 17,271,204 741,179 3,283 Net Increase / (Decrease) 3,386,913,778 75,388,718 64,080,029 2,153,223 Net Position Held in Trust Prior Valuation 8,057,538,776 328,079,035 48,259,114 1,480,635 Beginning of the Year Adjustment 0 0 0 0 End of the Year 11,444,452,554 403,467,753 112,339,143 3,633,858 Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 14 Development of Pension Actuarial Value of Assets - Tiers 1 & 2 A. Investment Income A1. Actual Investment Income $ 2,300,024,281 A2. Expected Amount for Immediate Recognition 627,173,072 A3. Amount Subject to Amortization 1,672,851,209 Year Ended June 30 B. Amortization Schedule 2021 2022 2023 2024 2025 2026 2027 2021 Experience (A3 / 7) 238,978,744 238,978,744 238,978,744 238,978,744 238,978,744 238,978,744 238,978,745 2020 Experience (68,882,158) (68,882,158) (68,882,158) (68,882,158) (68,882,158) (68,882,160) 2019 Experience (22,859,275) (22,859,275) (22,859,275) (22,859,275) (22,859,275) 2018 Experience (6,266,349) (6,266,349) (6,266,349) (6,266,351) 2017 Experience 33,380,149 33,380,149 33,380,148 2016 Experience (64,250,729) (64,250,726) 2015 Experience (36,894,251) Total Amortization 73,206,131 110,100,385 174,351,110 140,970,960 147,237,311 170,096,584 238,978,745 C. Actuarial Value of Assets Total Employer C1. Actuarial Value of Assets, 06/30/2020 8,675,448,922 C2. Non-investment Net Cash Flow 1,086,889,497 C3. Preliminary Actuarial Value of Assets, 06/30/2021 (A2 + B + C1 + C2) 10,462,717,622 C4. Market Value of Assets, 06/30/2021 11,444,452,554 51,161,889 C5. Final Actuarial Value of Assets, 06/30/2021 (C3 Within 20% Corridor of C4) 10,462,717,622 46,773,089 D. Rates of Return D1. Market Value Rate of Return 26.7% D2. Actuarial Value Rate of Return 7.6% Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 15 Development of Health Actuarial Value of Assets - Tiers 1 & 2 A. Investment Income A1. Actual Investment Income $ 88,289,532 A2. Expected Amount for Immediate Recognition 23,487,183 A3. Amount Subject to Amortization 64,802,349 Year Ended June 30 B. Amortization Schedule 2021 2022 2023 2024 2025 2026 2027 2021 Experience (A3 / 7) 9,257,478 9,257,478 9,257,478 9,257,478 9,257,478 9,257,478 9,257,481 2020 Experience (2,898,713) (2,898,713) (2,898,713) (2,898,713) (2,898,713) (2,898,716) 2019 Experience (1,075,569) (1,075,569) (1,075,569) (1,075,569) (1,075,572) 2018 Experience (304,653) (304,653) (304,653) (304,656) 2017 Experience 1,532,136 1,532,136 1,532,136 2016 Experience (3,221,043) (3,221,044) 2015 Experience (1,796,586) Total Amortization 1,493,050 3,289,635 6,510,679 4,978,540 5,283,193 6,358,762 9,257,481 C. Actuarial Value of Assets Total Employer C1. Actuarial Value of Assets, 06/30/2020 355,709,881 C2. Non-investment Net Cash Flow (12,900,814) C3. Preliminary Actuarial Value of Assets, 06/30/2021 (A2 + B + C1 + C2) 367,789,300 C4. Market Value of Assets, 06/30/2021 403,467,753 1,683,566 C5. Final Actuarial Value of Assets, 06/30/2021 (C3 Within 20% Corridor of C4) 367,789,300 1,534,689 D. Rates of Return D1. Market Value Rate of Return 27.5% D2. Actuarial Value Rate of Return 7.2% Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 16 Development of Pension Actuarial Value of Assets - Tiers 3 A. Investment Income A1. Actual Investment Income $ 22,566,229 A2. Expected Amount for Immediate Recognition 4,806,547 A3. Amount Subject to Amortization 17,759,682 Year Ended June 30 B. Amortization Schedule 2021 2022 2023 2024 2025 2021 Experience (A3 / 5) 3,551,936 3,551,936 3,551,936 3,551,936 3,551,938 2020 Experience (351,296) (351,296) (351,296) (351,294) 2019 Experience 44,435 44,435 44,437 2018 Experience (370) (371) 2017 Experience 0 Total Amortization 3,244,705 3,244,704 3,245,077 3,200,642 3,551,938 C. Actuarial Value of Assets Total Employer C1. Actuarial Value of Assets, 06/30/2020 49,531,567 C2. Non-investment Net Cash Flow 41,513,800 C3. Preliminary Actuarial Value of Assets, 06/30/2021 (A2 + B + C1 + C2) 99,096,619 C4. Market Value of Assets, 06/30/2021 112,339,143 51,992,240 C5. Final Actuarial Value of Assets, 06/30/2021 (C3 Within 20% Corridor of C4) 99,096,619 45,863,401 D. Rates of Return D1. Market Value Rate of Return 32.7% D2. Actuarial Value Rate of Return 11.5% Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 17 Development of Health Actuarial Value of Assets - Tiers 3 A. Investment Income A1. Actual Investment Income $ 795,185 A2. Expected Amount for Immediate Recognition 150,372 A3. Amount Subject to Amortization 644,813 Year Ended June 30 B. Amortization Schedule 2021 2022 2023 2024 2025 2021 Experience (A3 / 5) 128,963 128,963 128,963 128,963 128,961 2020 Experience (10,555) (10,555) (10,555) (10,557) 2019 Experience 1,507 1,507 1,508 2018 Experience 0 (2) 2017 Experience 0 Total Amortization 119,915 119,913 119,916 118,406 128,961 C. Actuarial Value of Assets Total Employer C1. Actuarial Value of Assets, 06/30/2020 1,518,500 C2. Non-investment Net Cash Flow 1,358,038 C3. Preliminary Actuarial Value of Assets, 06/30/2021 (A2 + B + C1 + C2) 3,146,825 C4. Market Value of Assets, 06/30/2021 3,633,858 1,651,097 C5. Final Actuarial Value of Assets, 06/30/2021 (C3 Within 20% Corridor of C4) 3,146,825 1,429,806 D. Rates of Return D1. Market Value Rate of Return 36.8% D2. Actuarial Value Rate of Return 12.3% Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 18 V. MEMBER STATISTICS Valuation Data Summary June 30, 2021 June 30, 2020 Tiers 1 & 2 Tier 3 Tiers 1 & 2 Tier 3 Actives Number 68 12 73 9 Average Current Age 41.3 28.0 40.9 26.7 Average Age at Employment 26.5 26.4 26.7 25.8 Average Past Service 14.8 1.6 14.2 0.9 Average Annual Salary $84,526 $55,480 $81,619 $53,586 Actives (transferred) Number 7 1 5 0 Average Current Age 33.8 27.1 32.7 N/A Average Age at Employment 24.4 24.2 23.5 N/A Average Past Service 9.3 2.9 9.2 N/A Average Annual Salary $61,007 $53,901 $60,837 N/A Retirees Number 28 0 25 0 Average Current Age 58.8 N/A 58.7 N/A Average Annual Benefit $50,805 N/A $50,349 N/A Drop Retirees Number 9 N/A 9 N/A Average Current Age 55.5 N/A 53.8 N/A Average Annual Benefit $70,927 N/A $67,887 N/A Beneficiaries Number 7 0 6 0 Average Current Age 67.5 N/A 69.2 N/A Average Annual Benefit $34,082 N/A $34,740 N/A Disability Retirees Number 11 0 12 0 Average Current Age 54.4 N/A 53.0 N/A Average Annual Benefit $39,355 N/A $38,020 N/A Inactive / Vested Number 9 1 9 1 Average Current Age 46.1 22.2 43.0 25.5 Average Accumulated Contributions $38,421 $2,196 $30,066 $9,493 Total Number 139 14 139 10 Former Members (transferred) 3 0 2 0 Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 19 Counts and Pay Summary by Service - Tiers 1 & 2 Past Service Age 0-4 5-9 10-14 15-19 20-24 25-29 30+ Total Count Total Pay Average Pay <20 0 0 0 0 0 0 0 0 0 0 20 - 24 0 0 0 0 0 0 0 0 0 0 25 - 29 2 4 0 0 0 0 0 6 405,883 67,647 30 - 34 0 12 4 0 0 0 0 16 1,232,630 77,039 35 - 39 0 4 5 4 0 0 0 13 995,881 76,606 40 - 44 0 3 1 15 2 0 0 21 1,708,285 81,347 45 - 49 0 0 1 2 4 1 0 8 770,872 96,359 50 - 54 0 0 1 4 1 2 0 8 810,023 101,253 55 - 59 0 0 1 1 0 0 1 3 251,227 83,742 60 - 64 0 0 0 0 0 0 0 0 0 0 65+ 0 0 0 0 0 0 0 0 0 0 Total 2 23 13 26 7 3 1 75 6,174,801 82,331 Counts and Pay Summary by Service - Tier 3 Past Service Age 0-4 5-9 10-14 15-19 20-24 25-29 30+ Total Count Total Pay Average Pay 15 - 19 0 0 0 0 0 0 0 0 0 0 20 - 24 3 0 0 0 0 0 0 3 165,957 55,319 25 - 29 7 0 0 0 0 0 0 7 386,058 55,151 30 - 34 3 0 0 0 0 0 0 3 167,646 55,882 35 - 39 0 0 0 0 0 0 0 0 0 0 40 - 44 0 0 0 0 0 0 0 0 0 0 45 - 49 0 0 0 0 0 0 0 0 0 0 50 - 54 0 0 0 0 0 0 0 0 0 0 55 - 59 0 0 0 0 0 0 0 0 0 0 60 - 64 0 0 0 0 0 0 0 0 0 0 65+ 0 0 0 0 0 0 0 0 0 0 Total 13 0 0 0 0 0 0 13 719,661 55,359 Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 20 VI. ACTUARIAL ASSUMPTIONS AND METHODS Interest Rate This is the assumed earnings rate on System assets, compounded annually, net of investment and administrative expenses. Tiers 1 & 2: 7.30% per year. Tier 3: 7.00% per year. Salary Increases See table below. This is an annual increase for individual member’s salary. These rates, which are based on a 2017 experience study using actual plan experience, consist of 3.5% for wage inflation with the remaining portion for merit / seniority increases. Inflation 2.50%. Tier 3 Compensation Limit $115,868 for calendar 2021. Assumed increases of 2.00% per year thereafter. Cost-of-Living Adjustment 1.75%. Mortality Rates These rates are used to project future decrements from the population due to death. Active Lives: PubS-2010 Employee mortality, loaded 110% for males and females, projected with future mortality improvements reflected generationally using 75% of scale MP-2020. 100% of active deaths are assumed to be in the line of duty. Inactive Lives PubS-2010 Healthy Retiree mortality, loaded 110% for males and females, projected with future mortality improvements reflected Maricopa Pima Maricopa Pima County County Other County County Other Age Police Police Police Fire Fire Fire 20 7.50% 7.50% 7.50% 7.50% 7.50% 7.20% 25 7.14% 6.24% 6.60% 7.35% 6.36% 6.60% 30 6.00% 5.16% 5.25% 6.74% 5.48% 5.60% 35 4.77% 4.55% 4.15% 5.56% 4.83% 4.96% 40 3.90% 3.89% 3.60% 4.46% 4.03% 4.44% 45 3.54% 3.56% 3.50% 3.74% 3.60% 3.78% 50+ 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 21 generationally using 75% of scale MP-2020. Beneficiaries: PubS-2010 Survivor mortality, projected with future mortality im- provements reflected generationally using 75% of scale MP-2020. Disabled Lives: PubS-2010 Disabled mortality, projected with future mortality im- provements reflected generationally using 75% of scale MP-2020. The mortality assumptions sufficiently accommodate anticipated future mortality improvements. Retirement / DROP Rates These rates are used to project future decrements from the active population due to retirement. The rates below are based on a 2017 experience study using actual plan experience. Tier 1 – reaching age 62 before attaining 20 years of service: Age-related rates based on age at retirement: 60% assumed at age 62, 50% assumed at ages 63 – 69, and 100% assumed at age 70. Rates are the same for all employers. Tier 1 – reaching age 62 after attaining 20 years of service: Service-related rates based on service at retirement: 60% are assumed to enter the DROP program while the remaining 40% are assumed to retire and commence benefits immediately. DROP periods are assumed to be 4 years in length. Maricopa Pima Maricopa Pima County County Other County County Other Service Police Police Police Fire Fire Fire 20 27% 24% 35% 14% 18% 23% 21 18% 19% 30% 14% 18% 18% 22 14% 14% 23% 7% 11% 11% 23 10% 10% 10% 7% 7% 8% 24 8% 7% 10% 7% 7% 5% 25 38% 32% 36% 22% 22% 30% 26 36% 32% 30% 26% 26% 30% 27 29% 22% 30% 19% 19% 30% 28 29% 22% 30% 32% 25% 25% 29 29% 22% 30% 30% 25% 16% 30 34% 35% 30% 30% 30% 32% 31 34% 35% 30% 30% 30% 35% 32 65% 65% 70% 55% 55% 60% 33 65% 65% 70% 55% 55% 60% 34+ 100% 100% 100% 100% 100% 100% Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 22 Tiers 2 & 3: Age-related rates based on age at retirement: Termination Rate These rates are used to project future decrements from the active population due to termination. Service-related rates based on service at termination are shown below. The rates below apply to members prior to retirement eligibility and are based on a 2017 experience study using actual plan experience. Maricopa Pima Maricopa Pima County County Other County County Other Age Police Police Police Fire Fire Fire 53 38% 32% 36% 22% 22% 30% 54 36% 32% 30% 26% 26% 30% 55 29% 22% 30% 19% 19% 30% 56 29% 22% 30% 32% 25% 25% 57 29% 22% 30% 30% 25% 16% 58 34% 35% 30% 30% 30% 32% 59 34% 35% 30% 30% 30% 35% 60-63 65% 65% 70% 55% 55% 60% 64+ 100% 100% 100% 100% 100% 100% Maricopa Pima Maricopa Pima County County Other County County Other Service Police Police Police Fire Fire Fire 1 14.00% 16.00% 16.00% 7.00% 10.00% 9.50% 2 8.50% 9.00% 12.50% 4.50% 5.00% 9.00% 3 6.50% 7.50% 11.50% 3.70% 5.00% 7.50% 4 4.50% 6.00% 9.00% 3.00% 4.00% 7.50% 5 3.60% 6.00% 8.00% 2.50% 4.00% 6.50% 6 3.30% 4.50% 8.00% 1.70% 3.50% 4.50% 7 3.30% 4.50% 7.00% 1.70% 3.00% 4.00% 8 3.30% 3.20% 7.00% 1.70% 2.40% 3.50% 9 2.70% 3.20% 6.50% 1.70% 2.40% 3.50% 10 2.70% 3.20% 6.00% 1.50% 2.40% 3.00% 11 2.70% 3.20% 5.00% 1.10% 2.40% 2.70% 12 1.80% 1.40% 4.00% 0.70% 1.00% 2.00% 13 1.30% 1.40% 3.50% 0.70% 1.00% 2.00% 14 1.30% 1.40% 3.00% 0.70% 1.00% 1.70% 15 1.30% 1.00% 3.00% 0.60% 1.00% 1.20% 16 0.70% 1.00% 2.00% 0.50% 1.00% 1.20% 17 0.70% 1.00% 1.75% 0.50% 0.50% 1.20% 18 0.70% 1.00% 1.75% 0.40% 0.50% 1.20% 19 0.50% 1.00% 1.75% 0.40% 0.50% 1.20% 20+ 0.50% 1.00% 1.75% 0.40% 0.50% 0.50% Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 23 Disability Rate These rates are used to project future decrements from the active population due to disability. Sample age-related rates based on age at disability are provided below. These rates are based on a 2017 experience study using actual plan experience. 100% of disablements are assumed to be duty-related. Marital Status For active members, 85% of males and 60% of females are assumed to be married. Actual marital status is used, where applicable, for inactive members. Spouse’s Age Males are assumed to be three years older than females. Health Care Utilization For active members, 70% of retirees are expected to utilize retiree health care. Actual utilization is used for inactive members. Funding Method Entry Age Normal Cost Method. Actuarial Asset Method Method described below. Note that during periods when investment performance exceeds (falls short) of the assumed rate, the actuarial value of assets will tend to be less (greater) than the market value of assets. Tiers 1 & 2: Each year the assumed investment income is recognized in full while the difference between actual and assumed investment income are smoothed over a 7-year period subject to a 20% corridor around the market value. Tier 3: Each year the assumed investment income is recognized in full while the difference between actual and assumed investment income are smoothed over a 5-year period subject to a 20% corridor around the market value. Maricopa Pima Maricopa Pima County County Other County County Other Age Police Police Police Fire Fire Fire 20 0.08% 0.08% 0.10% 0.03% 0.03% 0.03% 25 0.08% 0.08% 0.10% 0.03% 0.03% 0.03% 30 0.17% 0.16% 0.20% 0.04% 0.03% 0.03% 35 0.22% 0.21% 0.26% 0.09% 0.07% 0.08% 40 0.36% 0.35% 0.44% 0.17% 0.16% 0.17% 45 0.51% 0.49% 0.62% 0.17% 0.43% 0.48% 50 0.78% 0.75% 0.95% 0.43% 0.59% 0.65% 55 1.02% 0.98% 1.23% 1.00% 1.01% 1.13% Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 24 Funding Policy Amortization Method Tiers 1 & 2: Any positive UAAL (assets less than liabilities) is amortized using a layered approach beginning with the June 30, 2020 valuation, with new amounts determined according to a Level Dollar method over a closed period of 15 years (phased into from current period of at most 30 years). Initial layer from June 30, 2019 valuation continues to be amortized according to a Level Percentage of Payroll method. Any negative UAAL (assets greater than liabilities) is amortized according to a Level Dollar method over an open period of 20 years. Tier 3: Any positive UAAL (assets less than liabilities) is amortized according to a Level Dollar method over a closed period of 10 years. No amortization is made of any negative UAAL (assets greater than liabilities). Payroll Growth 3.00% per year. This is annual increase for total employer payroll. Stabilization Reserve Beginning with the June 30, 2007 valuation and with each subsequent valuation, if the actuarial value of assets exceeds the actuarial accrued liability, one half of this excess in each year is allocated to a Stabilization Reserve. This Reserve is excluded from the calculation of the employer contribution rates. The Reserve accumulates as long as the plan is overfunded. Once the plan becomes underfunded, the Stabilization Reserve will be used to dampen increases in the employer contribution rates. Changes to Actuarial Assumptions and Methods Since the Prior Valuation The payroll growth assumption was lowered from 3.50% to 3.00%. Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 25 VII. DISCUSSION OF RISK ASOP No. 51, Assessment and Disclosure of Risk Associated with Measuring Pension Obligations and Determining Pension Plan Contributions, states that the actuary should identify risks that, in the actuary’s professional judgment, may reasonably be anticipated to significantly affect the plan’s future financial condition. Throughout this report, actuarial results are determined under various assumption scenarios. These results are based on the premise that all future plan experience will align with the plan’s actuarial assumptions; however, there is no guarantee that actual plan experience will align with the plan’s assumptions. Whenever possible, the recommended assumptions in this report reflect conservatism to allow for some margin of unfavorable future plan experience. However, it is still possible that actual plan experience will differ from anticipated experience in an unfavorable manner that will negatively impact the plan’s funded position. Below are examples of ways in which plan experience can deviate from assumptions and the potential impact of that deviation. Typically, this results in an actuarial gain or loss representing the current-year financial impact on the plan’s unfunded liability of the experience differing from assumptions; this gain or loss is amortized over a period of time determined by the plan’s amortization method. When assumptions are selected that adequately reflect plan experience, gains and losses typically offset one another in the long term, resulting in a relatively low impact on the plan’s contribution requirements associated with plan experience. When assumptions are too optimistic, losses can accumulate over time and the plan’s amortization payment could potentially grow to an unmanageable level.  Investment Return: When the rate of return on the Actuarial Value of Assets falls short of the assumption, this produces a loss representing assumed investment earnings that were not realized. Further, it is unlikely that the plan will experience a scenario that matches the assumed return in each year as capital markets can be volatile from year to year. Therefore, contribution amounts can vary in the future.  Salary Increases: When a plan participant experiences a salary increase that was greater than assumed, this produces a loss representing the cost of an increase in anticipated plan benefits for the participant as compared to the previous year. The total gain or loss associated with salary increases for the plan is the sum of salary gains and losses for all active participants.  Payroll Growth: The plan’s payroll growth assumption, if one is used, causes a predictable annual increase in the plan’s amortization payment in order to produce an amortization payment that remains constant as a percentage of payroll if all assumptions are realized. If payroll does not increase according to the plan’s payroll growth assumption, the plan’s amortization payment can increase significantly as a percentage of payroll even if all assumptions other than the payroll growth assumption are realized.  Demographic Assumptions: Actuarial results take into account various potential events that could happen to a plan participant, such as retirement, termination, disability, and death. Each of these potential events is assigned a liability based on the likelihood of the event and the financial consequence of the event for the plan. Accordingly, actuarial liabilities reflect a blend of financial consequences associated with various possible outcomes (such as retirement at one of various possible ages). Once the outcome is known (e.g. the participant retires) the liability is adjusted to reflect the known outcome. This adjustment Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 26 produces a gain or loss depending on whether the outcome was more or less favorable than other outcomes that could have occurred.  Contribution risk: This risk results from the potential that actual employer contributions may deviate from actuarially determined contributions, which are determined in accordance with the Board’s funding policy. The funding policy is intended to result in contribution requirements that if paid when due, will result in a reasonable expectation that assets will accumulate to be sufficient to pay plan benefits when due. Contribution deficits, particularly large deficits and those that occur repeatedly, increase future contribution requirements and put the plan at risk for not being able to pay plan benefits when due. Impact of Plan Maturity on Risk For newer pension plans, most of the participants and associated liabilities are related to active members who have not yet reached retirement age. As pension plans continue in operation and active members reach retirement ages, liabilities begin to shift from being primarily related to active members to being shared amongst active and retired members. Plan maturity is a measure of the extent to which this shift has occurred. It is important to understand that plan maturity can have an impact on risk tolerance and the overall risk characteristics of the plan. For example, plans with a large amount of retired liability do not have as long of a time horizon to recover from losses (such as losses on investments due to lower than expected investment returns) as plans where the majority of the liability is attributable to active members. For this reason, less tolerance for investment risk may be warranted for highly mature plans with a substantial inactive liability. Similarly, mature plans paying substantial retirement benefits resulting in a small positive or net negative cash flow can be more sensitive to near term investment volatility, particularly if the size of the fund is shrinking, which can result in less assets being available for investment in the market. To assist with determining the maturity of the plan, we have provided some relevant metrics in the table following titled “Plan Maturity Measures and Other Risk Metrics.” For a better understanding of the overall Plan and the impact of these risks, please refer to the consolidated PSPRS valuation report. Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 27 Plan Maturity Measures and Other Risk Metrics - Tiers 1 & 2 1 Determined as total contributions minus benefit payments. Administrative expenses are typically included but are considered part of the net interest rate assumption for this plan. 06/30/2018 06/30/2019 06/30/2020 06/30/2021 Support Ratio Total Actives 90 84 78 75 Total Inactives 52 56 61 64 Actives / Inactives 173.1% 150.0% 127.9% 117.2% Asset Volatility Ratio Market Value of Assets (MVA) 36,587,342 38,542,634 51,161,889 Total Annual Payroll 6,569,363 6,262,347 6,174,801 MVA / Total Annual Payroll 556.9% 615.5% 828.6% Accrued Liability (AL) Ratio Inactive Accrued Liability 28,120,209 34,483,737 37,987,923 41,295,836 Total Accrued Liability 57,022,056 62,278,853 67,240,526 70,792,554 Inactive AL / Total AL 49.3% 55.4% 56.5% 58.3% Funded Ratio Actuarial Value of Assets (AVA) 34,172,618 37,842,906 41,498,361 46,773,089 Total Accrued Liability 57,022,056 62,278,853 67,240,526 70,792,554 AVA / Total Accrued Liability 59.9% 60.8% 61.7% 66.1% Net Cash Flow Ratio Net Cash Flow 1 1,315,467 1,532,336 1,738,938 Market Value of Assets (MVA) 36,587,342 38,542,634 51,161,889 Net Cash Flow / MVA 3.6% 4.0% 3.4% Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 28 Plan Maturity Measures and Other Risk Metrics - Tier 3 1 1 Tier 3 results are shown for the Risk Sharing group, where applicable. 2 Determined as total contributions minus benefit payments. Administrative expenses are typically included but are considered part of the net interest rate assumption for this plan. 06/30/2018 06/30/2019 06/30/2020 06/30/2021 Support Ratio Total Actives 419 944 1,408 2,560 Total Inactives 23 57 130 307 Actives / Inactives 1,821.7% 1,656.1% 1,083.1% 833.9% Asset Volatility Ratio Market Value of Assets (MVA) 9,392,896 22,964,925 51,992,240 Total Annual Payroll 50,420,565 84,448,996 115,883,115 MVA / Total Annual Payroll 18.6% 27.2% 44.9% Accrued Liability (AL) Ratio Inactive Accrued Liability 203,244 1,173,104 2,290,610 Total Accrued Liability 7,956,725 23,239,599 42,733,537 Inactive AL / Total AL 2.6% 5.0% 5.4% Funded Ratio Actuarial Value of Assets (AVA) 1,635,349 9,305,220 23,570,444 45,863,401 Total Accrued Liability 1,831,715 7,956,725 23,239,599 42,733,537 AVA / Total Accrued Liability 89.3% 116.9% 101.4% 107.3% Net Cash Flow Ratio Net Cash Flow 2 7,281,178 13,192,598 18,607,209 Market Value of Assets (MVA) 9,392,896 22,964,925 51,992,240 Net Cash Flow / MVA 77.5% 57.4% 35.8% Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 29 VIII. SUMMARY OF CURRENT PLAN The following is a summary of the benefit provisions provided in Title 38, Chapter 5, Article 4 of the Arizona Revised Statutes. Membership Full-time employees of an eligible group, prior to attaining age 65, who are engaged to work for more than six months in a calendar year. Benefit Tiers Benefits differ for members based on their hire date: Tier Hire Date 1 Hired before January 1, 2012 2 Hired on or after January 1, 2012 but before July 1, 2017 3 Hired on or after July 1, 2017 Compensation Compensation is the amount including base salary, overtime pay, shift and military differential pay, compensatory time used in lieu of overtime pay, and holiday pay, paid to an employee on a regular payroll basis and longevity pay paid at least every six months for which contributions are made to the System. For Tier 3 members, compensation is limited by statutory cap ($110,000 with adjustments by the Board). Average Monthly Benefit Tier 1: Compensation The highest compensation paid to member during three consecutive years out of the last 20 years of Credited Service, divided by months. Tier 2: The highest compensation paid to member during five consecutive years out of the last 20 years of Credited Service, divided by months. Tier 3: The highest compensation paid to member during five consecutive years out of the last 15 years of Credited Service, divided by months. Credited Service Total periods of service, both before and after the member’s date of participation, for which the member made contributions to the fund. Normal Retirement Date Tier 1: First day of month following attainment of 1) 20 years of service or 2) 62nd birthday and completion of 15 years of service. Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 30 Tier 2: First day of month following the attainment of age 52.5 and com- pletion of 15 years of service. Tier 3: First day of month following the attainment of age 55 and comple- tion of 15 years of service. Benefit Tier 1: 50% of Average Monthly Benefit Compensation, adjusted based on Credited Service as follows (maximum benefit of 80% of Average Monthly Benefit Compensation): Credited Service Benefit Adjustment 15 years, but less than 20 Reduced 4% per year less than 20 20 years, but less than 25 Plus 2% per year between 20 and 25 25+ years Plus 2.5% per year above 20 Tier 2: Benefit multiplier (below) times Average Monthly Benefit Compensation times Credited Service (maximum benefit of 80% of Average Monthly Benefit Compensation): Credited Service Benefit Multiplier 15 years, but less than 17 1.50% 17 years, but less than 19 1.75% 19 years, but less than 22 2.00% 22 years, but less than 25 2.25% 25+ years 2.50% Tier 3: Benefit multiplier (below) times Average Monthly Benefit Compensation times Credited Service (maximum benefit of 80% of Average Monthly Benefit Compensation): Credited Service Benefit Multiplier 15 years, but less than 17 1.50% 17 years, but less than 19 1.75% 19 years, but less than 22 2.00% 22 years, but less than 25 2.25% 25+ years 2.50% Form of Benefit For married retirees, an annuity payable for the life of the member with 80% continuing to the eligible spouse upon death. For unmarried retirees, the normal form is a single life annuity. Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 31 Early Retirement Only applicable to Tier 3 members: Date Attainment of age 52.5 and 15 years of Credited Service. Benefit Actuarial equivalent of Normal Retirement benefit. Disability Benefit – Accidental (duty-related) Eligibility Total and permanent disability incurred in performance of duty. Benefit Amount A maximum of: a.) 50% of Average Monthly Benefit Compensation, and; b.) The monthly Normal Retirement pension that the member is entitled to receive if he or she retired immediately. Disability Benefit – Ordinary (not duty-related) Eligibility Total and permanent disability not incurred in performance of duty. Benefit Amount Normal Retirement pension that the member is entitled to receive, prorated based on Credited Service earned over the required Credited Service for Normal Retirement (maximum ratio of 1). Disability Benefit – Other Temporary Benefit equals 1/12 of 50% of compensation during year preceding date of disability. Payments terminate after 12 months. Catastrophic Benefit equals 90% of Average Monthly Benefit Compensation. After 60 months member receives greater of 62.5% Average Monthly Benefit Compensation and accrued normal pension. Pre-Retirement Death Benefit Service Incurred 100% of Average Monthly Benefit Compensation, reduced by child’s pension. Non-Service Incurred 80% of benefit based on calculation for accidental disability retirement. Child’s Pension 10% of pension for each child (maximum 20% paid) based on calculation for accidental disability retirement. Payable to dependent child under age 18 (23, if full-time student). Guardian’s Pension Same as spouse’s pension. Payable (along with child’s pension) when no spouse is being paid and there is at least one child under 18 (23, if full-time student). Vesting (Termination) Vesting Service Requirement Tier 1: 10 years of Credited Service. Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 32 Tiers 2 & 3: 15 years of Credited Service. Non-Vested Benefit Tier 1: Lump sum payment of accumulated contributions, plus additional amount based on years of Credited Service. Service Additional % of Contributions Less than 5 years 0% 5 years 25% 6 years 40% 7 years 55% 8 years 70% 9 years 85% 10+ years 100% Tiers 2 & 3: Lump sum payment of accumulated contributions, with interest at rate determined by the Board. Vested Benefit Tier 1: Deferred retirement annuity based on two times member’s accumulated contributions, deferred to age 62. Member is not entitled to survivor benefits, benefit increases, or group health insurance subsidy. Tiers 2 & 3: Calculated same as normal retirement pension. Payable if contributions left in fund until reach age requirement. Member is entitled to survivor benefits, benefit increases, and group health insurance subsidy. Cost-of-Living Adjustment Payable to retired member or survivor of retired member Tiers 1 & 2: Compound cost-of-living adjustment on base benefit. First payment is made on July 1, 2018, with annual adjustments effective every July 1 thereafter. Cost-of-living adjustment will be based on the average annual percentage change in the Metropolitan Phoenix-Mesa Consumer Price Index published by the United States Department of Labor, Bureau of Statistics. Maximum increase of 2%. Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 33 Tier 3: Compound cost-of-living adjustment on base benefit beginning earlier of first calendar year after the 7th anniversary of retirement or when the retired member reaches 60 years of age. A cost-of-living adjustment shall be paid on July 1 each year that the funded ratio for members hired on or after July 1, 2017 is 70% or more. The cost-of-living adjustment will be based on the average annual percentage change in the Metropolitan Phoenix-Mesa Consumer Price Index published by the United States Department of Labor, Bureau of Statistics. The cost-of-living adjustment will not exceed:  2%, if funded ratio for members who are hired on or after July 1, 2017 is 90% or more;  1.5%, if funded ratio for members who are hired on or after July 1, 2017 is 80-90%;  1%, if funded ratio for members who are hired on or after July 1, 2017 is 70-80%. Deferred Retirement Option Plan (DROP): Eligibility Tier 1 and 20 years of Credited Service. DROP Period Maximum 60 months. Member Contributions Cease upon DROP entry. Benefit Amount Calculated based on Credited Service and average monthly compensation as of the beginning of the DROP period, credited to DROP participation account for DROP period. Interest on DROP Beginning Year Interest Rate Participation Account July 1, 2016 7.40% July 1, 2017 7.40% July 1, 2018 7.30% July 1, 2019 7.30% July 1, 2020 7.30% Payment of DROP Payable as lump sum distribution to Public Safety Personnel Participation Account Defined Contribution Retirement Plan at end of DROP period or at termination. Payment Monthly Benefit System commences payment of benefit amount at the earlier of 1) the end of the DROP period and 2) at termination. Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 34 Post-Retirement Health Insurance Subsidy Eligibility Retired member or survivor who elect health coverage provided by the state or participating employer. Maximum Subsidy Amounts Member Only With Dependents (monthly) Medicare Eligible $100 $170 One w/ Medicare N/A $215 Not Medicare Eligible $150 $260 Employee Contributions Members hired before July 20, 2011: 7.65% Members hired on/after July 20, 2011, but before July 1, 2017: 11.65%. Amounts in excess of 7.65% are not used to reduce the employer contribution (“maintenance of effort”). Tier 3: 50% of total contribution, which is Normal Cost plus a level- dollar amortization of unfunded actuarial accrued liability over a closed period not to exceed 10 years. Employer Contributions Tiers 1 & 2: Normal Cost plus amortization of unfunded actuarial accrued liability over a closed period not to exceed 20 years (subject to one-time election to extend to closed period not to exceed 30 years). Contribution will never be less than 8% of payroll. Tier 3: 50% of total contribution, which is Normal Cost plus a level- dollar amortization of unfunded actuarial accrued liability over a closed period not to exceed 10 years. Changes to Benefit Provisions Since the Prior Valuation The proration period for the Ordinary Disability Benefit was revised to reflect the different required Credited Service periods for different benefit tiers. Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 35 IX. ACTUARIAL FUNDING POLICY A pension plan funding policy describes how pension funding will improve for underfunded plans or maintain funded benefits for funded plans over time for those benefits defined in ARS. Those benefits defined in ARS are to be equitably managed and administered by PSPRS. This Actuarial Funding Policy identifies the funding objectives and elements of the actuarial funding policy set by the Board for the Arizona Public Safety Personnel Retirement System (PSPRS). The Board adopted this Funding Policy to help ensure the systematic funding of future benefit payments for members of the Retirement System as established by the legislature. To achieve the systematic funding of future benefits, metrics are identified to measure the progress, or the lack of progress, over time to identify trends. These trends inform the continuation of the current policies or identify areas of needed research for consideration. This funding policy is reviewed annually and adopted by the Board in accordance with ARS 38-863.02. This policy was reviewed and adopted by the Board in October 2021. PSPRS Statement of Purpose The Purpose of the Public Safety Personnel Retirement System is to provide uniform, consistent, and equitable statewide retirement programs for those who have been entrusted to our care. Funding Objectives 1. Maintain adequate assets so that current plan assets, plus future contributions and investment earnings, are sufficient to fund all benefits expected to be paid to members and their beneficiaries. a. Corollary 1a: Current and future contributions should be calculated based upon assumptions that reflect the Board’s best estimate of future experience and methods that appropriately allocate costs to address generational equity. b. Corollary 1b: While the shorter-term objective is to fully fund the actuarial liability (AAL) that estimates benefits earned as of the valuation date, contributions should target the long-term present value of benefits (PVB) to fund all benefits and help offset risks. 2. Maintain public policy goals of accountability and transparency through stakeholder communication and education. Each policy element is clear in intent and effect, and each should be considered in a balanced approach to determine how and when the funding requirements of the plan will be met. a. Corollary 2a: Board shall provide stakeholders with separate reports and tools to help explain current results as well as to help model future funding requirements. 3. Promote intergenerational equity. Defined benefit pensions are designed with a long-term perspective and designed to minimize contribution volatility that cannot avoid some level of generational cost shift. However, the goal is that each generation of members and employers (taxpayers) should, to the extent possible, incur the cost of benefits for the employees who provide services to them, rather than shifting those costs to other generations of members and employers (taxpayers). Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 36 a. Corollary 3a: A systematic reduction of the Unfunded Actuarial Accrued Liability (UAAL) over a reasonable time period is paramount to achieving this objective. Consideration can be given to reduce volatility, to the extent possible, of employer and employee contribution rates as long as the integrity of the objectives listed above is not compromised. Elements of Actuarial Funding Policy 1. Actuarial Cost Method a. The Entry Age Normal level percent of pay actuarial cost method of valuation shall be used in determining the Actuarial Accrued Liability (AAL) and Normal Cost. Differences in the past between assumed experience and actual experience (“actuarial gains and losses”) shall become part of the AAL. The Normal Cost shall be determined on an individual basis for each active member. 2. Asset Smoothing Method a. The investment gains or losses of each valuation period, resulting from the difference between the actual investment return and assumed investment return, shall be recognized annually in level amounts over seven years (Tiers 1 and 2) or five years (Tier 3) in calculating the Actuarial Value of Assets. b. The Actuarial Value of Assets so determine shall be subject to a 20% corridor relative to the Market Value of Assets. 3. Amortization Method (Unfunded Amounts) a. The Actuarial Value of Assets are subtracted from the computed AAL. Any unfunded amount is amortized as a level percent of payroll over a closed period. b. The unfunded liabilities, for EORP and Tiers 1 & 2 for both PSPRS and CORP, determined in the June 30, 2019 actuarial valuation will become the initial layer for each employer beginning with the June 30, 2020 actuarial valuation and amortized using the current closed year period for that employer and continue to decrease each year. i. The payroll growth rate assumption used to amortize the Public Safety Plan (PSPRS) June 30, 2019 Unfunded Liability will be decreased by 0.5% beginning with the 6/30/2021 actuarial valuation and again each year with the intention of ultimately achieving 0.0%. Once the payroll growth assumption reaches 2.0%, however, the Board will reevaluate the payroll growth assumption and decide whether to continue to let it track down to 0.0%. ii. The payroll growth rate used to amortize the Correction Officers Retirement Plan (CORP) June 30, 2019 Unfunded Liability will be 3.0% beginning with the 6/30/2020 actuarial valuation, and future years will be reduced by 0.5% until 0.0% is reached. iii. The payroll growth rate used to amortize the Elected Officials Retirement Plan (EORP) June 30, 2019 Unfunded Liability will be 2.5% beginning with the 6/30/2020 actuarial valuation, and future years will be reduced by 0.5% until 0.0% is reached. c. Gains and losses, for EORP and Tiers 1 & 2 for both PSPRS and CORP, for each employer beginning with the June 30, 2020 actuarial valuation will be amortized as a new layer over the same amortization period as the regular unfunded liability to a minimum of 15 years. Once the amortization period for each employer decreases to 15 years, each subsequent year’s gains and losses will be amortized as a new 15-year closed layer. i. The payroll growth rate used to amortize unfunded liability for all Plans under this paragraph will be 0.0% (i.e. level-dollar amortization). Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 37 d. Tier 3 amortization methods are established in ARS 38-843.G and ARS 38-891.K. 4. Amortization Method (Overfunded Amounts) a. If the Actuarial Value of Assets exceeds the AAL for EORP and Tiers 1 & 2 for both PSPRS and CORP, the excess is amortized over an open period of 20 years and applied as a credit to reduce the Normal Cost otherwise payable. b. Tier 3 amortization methods are established in ARS 38-843.G and ARS 38-891.K. Metrics to Monitor Funding Objectives 1. Appropriateness of Assumptions – Gain/Loss Experience (Corollary 1a) a. Metric: Do the cumulative gain/loss layers over the prior five years exceed 8% of plan assets? b. Measurement: History of annual gain/loss (split by asset and liability experience) and five-year cumulative results will be tracked. c. Action Plan: This metric assumes that a full experience study is performed at least every five years so objective of measurement is to monitor interim experience. If the metric answer is yes, a review of the sources or causes of gains and losses should be analyzed and presented to the Advisory Committee to provide a recommendation to the Board of Trustees. The analysis and presentation are intended to provide a basis for consideration if assumption changes are warranted between full experience studies. 2. Funding Targets (Corollary 1b) a. Metric: Has the funded status, on both an AAL and PVB basis when compared to the market value of assets, increased over a five-year period? b. Measurement: History of funded status measures will be tracked. c. Action Plan: If the answer is no and not readily explainable (e.g., significant assumption change), a review of the reason(s) for the decrease should be researched and presented to the Advisory Committee to provide a recommendation to the Board of Trustees. The analysis and presentation are intended to provide a basis for consideration if changes to assumptions and/or methods are warranted between full experience studies. 3. Communication with Stakeholders (Corollary 2a) a. Metric: Have reports and budgeting tools been provided to stakeholders in a timely fashion? b. Measurement: Yes/No answer based on input from PSPRS administrator. (An annual standard survey of stakeholders – 3 to 5 questions.) c. Action Plan: If the answer is no, and periodically regardless (e.g., every three years), PSPRS staff will revisit this metric to report to the Advisory Committee to provide a recommendation to the Board of Trustees if current reports / tools are sufficient and if the delivery timing is appropriate. 4. Timely Recognition of Costs (Corollary 3a) a. Metric: Has the percentage of unfunded liability subject to negative amortization decreased over a five- year lookback period? b. Measurement: History of unfunded liability subject to negative amortization as a percentage of total unfunded liability will be tracked. c. Action Plan: If the answer is no, and not readily explainable (e.g., adopted assumption changes being phased in are anticipated to address negative amortization), a review of the reason(s) for negative amortization should be researched and presented to the Advisory Committee to provide a Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 38 recommendation to the Board of Trustees. The analysis and presentation are intended to provide a basis for consideration if changes to assumptions and/or methods are warranted between full experience studies. Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 39 X. GLOSSARY Actuarial Accrued Liability – Computed differently under different funding methods, the actuarial accrued liability generally represents the portion of the actuarial present value of benefits attributable to service credit earned (or accrued) as of the valuation date. Actuarial Present Value of Benefits – Amount which, together with future interest, is expected to be sufficient to pay all benefits to be paid in the future, regardless of when earned, as determined by the application of a particular set of actuarial assumptions; equivalent to the actuarial accrued liability plus the present value of future normal costs attributable to the members. Actuarial Assumptions – Assumptions as to the occurrence of future events affecting pension costs. These assumptions include rates of investment earnings, changes in salary, rates of mortality, withdrawal, disablement, and retirement as well as statistics related to marriage and family composition. Actuarial Cost Method – A method of determining the portion of the cost of a pension plan to be allocated to each year; sometimes referred to as the "actuarial funding method." Each cost method allocates a certain portion of the actuarial present value of benefits between the actuarial accrued liability and future normal costs. Actuarial Equivalence – Series of payments with equal actuarial present values on a given date when valued using the same set of actuarial assumptions. Actuarial Present Value - The amount of funds required as of a specified date to provide a payment or series of payments in the future. It is determined by discounting future payments at predetermined rates of interest, and by probabilities of payments between the specified date and the expected date of payment. Actuarial Value of Assets – The value of cash, investments, and other property belonging to the pension plan as used by the actuary for the purpose of the actuarial valuation. This may correspond to market value of assets, or some modification using an asset valuation method to reduce the volatility of asset values. Asset Gain (Loss) – That portion of the actuarial gain attributable to investment performance above (below) the expected rate of return in the actuarial assumptions. Amortization – Paying off an interest-discounted amount with periodic payments of interest and (generally) principal, as opposed to paying off with a lump sum payment. Amortization Payment – That portion of the pension plan contribution designated to pay interest and reduce the outstanding principal balance of unfunded actuarial accrued liability. If the amortization payment is less than the accrued interest on the unfunded actuarial accrued liability the outstanding principal balance will increase. Assumed Earnings Rate – The interest rate used in developing present values to reflect the time value of money. Decrements – Events which result in the termination of membership in the system such as retirement, disability, withdrawal, or death. Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2021 – Oro Valley Police Dept. (122) 40 Entry Age Normal (EAN) Funding Method – A standard actuarial funding method whereby each member’s normal costs (service costs) are generally level as a percentage of pay from entry age until retirement. The annual cost of benefits is comprised of the normal cost plus an amortization payment to reduce the UAL. Experience Gain (Loss) – The difference between actual unfunded actuarial accrued liabilities and anticipated unfunded actuarial accrued liabilities during the period between two valuation dates. It is a measurement of the difference between actual and expected experience, and may be related to investment earnings above (or below) those expected or changes in the liability due to fewer (or greater) than expected numbers of retirements, deaths, disabilities, or withdrawals, or variances in pay increases relative to assumed pay increases. The effect of such gains (or losses) is to decrease (or increase) future costs. Funded Ratio – A measure of the ratio of the actuarial value of assets to liabilities of the system. Typically, the assets used in the measure are the actuarial value of assets as determined by the asset valuation method. The funded ratio depends not only on the financial strength of the plan but also on the asset valuation method used to determine the assets and on the funding method used to determine the liabilities. Market Value of Assets (MVA) – The value of assets as they would trade on an open market. Normal Cost – Computed differently under different funding methods, generally that portion of the actuarial present value of benefits allocated to the current plan year. Unfunded Actuarial Accrued Liability (UAAL) – The excess of the actuarial accrued liability over the valuation assets; sometimes referred to as "unfunded past service liability". UAL increases each time an actuarial loss occurs and when new benefits are added without being fully funded initially and decreases when actuarial gains occur. TOWN OF ORO VALLEY UPDATE--FEBRUARY 2022 PSPRS SERVING THOSE WHO SERVE OTHERS 2 Pension funding equation C + I = B + E Contributions Investment Benefits Expenses Income LIABILITY METHODS Present Value of Future Normal Costs Unfunded Actuarial Accrued Liability Normal Cost Amortization Payment Present Value of Future Benefits: Includes All Future Pay and Service Assets: At Valuation Date Actuarial Accrued Liability: Includes Service Earned to Date 3 •TOWN OF ORO VALLEY 4 •TOWN OF ORO VALLEY 5 Oro Valley Police—Paid $27,612,366 on 7/6/21 . 6/30/21 .. 7/6/21 .Risk Mitigation Present Value of Benefits (PVB)$81,256,408 Actuarial Accrued Liability (AAL)$70,792,554 Actuarial Value of Assets (AVA)$46,773,089 $74,385,455 $3.59m Market Value of Assets (MVA)$51,161,889 $78,774,255 $4.39m Unfunded Actuarial Value of Assets $24,019,465 $0 Funded Ratio 66.1%105.1% FY23 Employer Contribution Rate 43.47%13.09%$2m Savings 6 Pension funding equation C + I = B + E Contributions Investment Benefits Expenses Income LIABILITY METHODS Present Value of Future Normal Costs Unfunded Actuarial Accrued Liability Normal Cost Amortization Payment Present Value of Future Benefits: Includes All Future Pay and Service Assets: At Valuation Date Actuarial Accrued Liability: Includes Service Earned to Date 7 8 QUESTIONS, COMMENTS, AND DISCUSSION RESOLUTION NO. (R)21-30 A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF ORO VALLEY, ARIZONA, ADOPTING THE PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM (PSPRS) PENSION FUNDING POLICY AND ACCEPTING THE TOWN’S SHARE OF ASSETS AND LIABILITIES UNDER THE PS PRS ACTUARIAL VALUATION REPORT; AND DIRECTING THE TOWN MANAGER, TOWN CLERK, TOWN LEGAL SERVICES DIRECTOR, TOWN CHIEF FINANCIAL OFFICER, OR THEIR DULY AUTHORIZED OFFICERS AND AGENTS TO TAKE ALL STEPS NECESSARY TO CARRY OUT THE PURPOSES AND INTENT OF THIS RESOLUTION WHEREAS, A.R.S. Title 38, Chapter 5, Article 4 and related statutes establish a Public Safety Personnel Retirement System; and WHEREAS, on April 3, 2018, House Bill 2097 was passed into law, requiring the Town Council to adopt a pension funding policy for the Public Safety Personnel Retirement System (PSPRS) before July 1, 2019 and annually each year after ; and WHEREAS, pursuant to A.R.S. §38-863.01, the Town is required to adopt a pension funding policy to communicate how the Town will mainta in the stability of the Town’s required contributions, how and when the Town’s funding requirements will be met, and defining the Town’s funded ratio target under PSPRS and how it will be met ; and WHEREAS, the Town’s sworn police officers are members of the PSPRS plan, PSPRS also administers the Correction Officers Retirement Plan (CORP) and three (3) Town police dispatch personnel are currently active members of the CORP plan; and WHEREAS, annually, PSPRS and CORP provide the Town with an actuarial rep ort that includes the Town’s assets, liabilities, unfunded actuarial liability, funding ratio, and the projected minimum contributions required for the upcoming fiscal year; and WHEREAS, it is in the best interest of the Town to adopt the Public Safety P ersonnel Retirement System (PSPRS) Pension Funding Policy, attached hereto as Exhibit “A” and incorporated herein by reference, and accept the Town’s share of assets and liabilities under the PSPRS actuarial valuation report. NOW THEREFORE, BE IT RESOLVED by the Mayor and Council of the Town of Oro Valley, that: SECTION 1. The Mayor and Council hereby adopt the Public Safety Personnel Retirement System Pension Funding Policy, attached hereto as Exhibit “A” and accept the Town’s share of assets and liabilities under the PSPRS actuarial valuation report. SECTION 2. The Town Manager, Town Clerk, Town Legal Services Director, Town Chief Financial Officer, or their duly authorized officers and agents are hereby authorized and directed to take all steps necess ary to carry out the purposes and intent of this resolution. SECTION 3. If any section, subsection, sentence, clause, phrase, or portion of this resolution or any part of the PSPRS Pension Funding Policy, attached hereto as Exhibit “A”, is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions thereof. SECTION 4. All Oro Valley resolutions, or motions and parts of resolutions or motions of the Council in conflict with the provisions of this Resolution are hereby repealed. PASSED, AND ADOPTED by the Mayor and Council of the Town of Oro Valley Arizona, this 16th day of June, 2021. TOWN OF ORO VALLEY Joseph C. Winfield, Mayor ATTEST: APPROVED AS TO FORM: Michael Standish, Town Clerk Tobin Sidles, Legal Services Director Date: Date: EXHIBIT “A” 1 Town of Oro Valley Public Safety Personnel Retirement System (PSPRS & CORP) Pension Funding Policy – FY21/22 The intent of this policy is to clearly communicate the Town Council’s pension funding objectives , its commitment to employees and the sound financial management of the Town of Oro Valley, and maintain compliance with new statutory requirements of A.R.S. 38-863.01. The Council shall annually assess the status of the Town’s PSPRS trust fund and take formal action to update this policy in concert with the final annual budget approval. This policy shall also apply to the Town’s participation in the Correction Officer Retirement Plan (CORP). Several terms are used throughout this policy and are defined as follows : Unfunded Actuarial Accrued Liability (UAAL) – Is the difference between trust assets and the estimated future cost of pensions earned by employees. This UAAL results from actual results (interest earnings, member mortality, disability rates, etc.) being different from the assumptions used in previous actuarial valuations. Annual Required Contribution (ARC) – Is the annual amount required to pay into the pension funds, as determined through annual actuarial valuations. It is comprised of two primary components: normal pension cost – which is the estimated cost of pension benefit s earned by employees in the current year; and, amortization of UAAL – which is the cost needed to cover the unfunded portion of pensions earned by employees in pr evious years. The UAAL is collected over a period of time referred to as the amortization period. The ARC is a percentage of the current payroll. Funded Ratio – Is a ratio of fund assets to actuarial accrued liability. The higher the ratio the better funded the pension is with 100% being fully funded. Intergenerational equity – Is a concept used to describe the policy expectation that no generation is burdened by substantially more or less pension costs than past or future generations. The Town’s sworn police employees who are regularly assigned hazardous duty participate in the Public Safety Personnel Retirement System (PSPRS). Selected individuals who serve as dispatchers in the Oro Valley Police Department participate in the CORP plan, which is also administered by the Public Safety Personnel Retirement System. Public Safety Personnel Retirement System (PSPRS) PSPRS is administered as an agent multiple-employer pension plan. An agent multiple-employer plan has two main functions: 1) to comingle assets of all plans under its administration, thus achieving economy of scale for more cost efficient investments, and invest those assets for the benefit of all members under its administration and 2) serve as the statewide uniform administrator for the distribution of benefits. 2 Under an agent multiple-employer plan, each agency participating in the plan has an individual trust fund reflecting that agencies ’ assets and liabilities. Under this plan all contributions are deposited to and distributions are made from that fund’s assets, each fund has its own funded ratio and contribution rate, and each fund has a unique annual actuarial valuation. The Town of Oro Valley has one trust fund for police employees . The Town also contributes to the Correction Officer Retirement Plan (CORP), administered by the Public Safety Personnel Retirement System, on behalf of selected individuals who serve as dispatchers in the Oro Valley Police Department. CORP maintains one trust fund for dispatchers. Oro Valley Town Council formally accepts the assets, liabilities, and current funding ratio of the Town’s PSPRS and CORP trust funds from the June 30, 2020 actuarial valuations specified below. Trust Fund Assets Accrued Liability Unfunded Actuarial Accrued Liability Funded Ratio Oro Valley Police (PSPRS) $41,498,361 $67,240,526 $25,742,165 61.7% Oro Valley Dispatchers (CORP) $ 1,504,732 $ 3,374,933 $ 1,870,201 44.6% PSPRS and CORP Funding Goal Pensions that are less than fully funded place the cost of service provided in earlier periods (amortization of UAAL) on current taxpayers. Fully funded pension plans are the best way to achieve taxpayer and member intergenerational equity. The Council’s PSPRS and CORP funding ratio goal is 100% (fully funded) through June 30, 2036 and beyond. Council establishes this goal for the following reasons: • The PSPRS and CORP trust funds represent only the Town of Oro Valley’s liability • The fluctuating cost of an UAAL causes strain on the Town’s budget, affecting the Town’s ability to provide services • A fully funded pension is the best way to achieve taxpayer and member intergenerational equity Council has determined that in order to achieve the 100% funding ratio goal, the following actions will be taken as early as possible in fiscal year 21/22 with a July 2021 target completion : • Make a $10 million payment from reserves in FY22 to the plan • Issue $17 million in pension obligation debt in FY22, proceeds to be deposited into the plan • Maintain ARC payment from operating revenues – Council is committed to maintaining the full ARC payment (normal cost and UAAL amortization) from operating funds. The estimated combined ARC for FY21/22 is estimated at $3.5 million for PSPRS and at $171,000 for CORP and shall be paid from operating funds. • At such time the ARC is projected to be reduced, the Town should endeavor to continue paying the ARC at the higher rate (currently 41.62% for Police), to maintain the funding ratio 3 goal of 100%, based on funding availability. This is due to historically poor investment performance in the Plan and should assist in mitigating that risk should it continue. • Retain 20-year amortization of unfunded liability • Review Local board practices annually • Periodically engage consultants to review actual results and recommend possible adjustments or corrections as necessary Payments to PSPRS will be as follows: • In FY21, the Town will make approximately $2.9M in payments based upon a 41.62% contribution rate. • In FY22, the Town will make approximately $3.5M in payments based upon a 43.57% contribution rate, plus a one-time $10M payment from reserves and an approximately $17M payment from pension obligation bond issuance. The two additional payments will not be reflected in funding ratio until fiscal year 2024. • In FY23, the Town will make approximately $3.5M in payments based upon a 43.57% contribution rate. • In FY24 and subsequent years, the Town will continue maintaining a 100% funding ratio. If the funding ratio grows to over 110%, the Town Manager through the budget process, may recommend applying funding to other Town priorities. If the funding ratio falls below 100%, future additional payments will be made to restore the funding ratio back to 100%. It is hereby the Town Council’s intent to achieve its goal of 100% funding by June 30, 2036, in accordance with the amortization timeline set forth by the PSPRS and CORP June 30, 2020 Actuarial Valuation The attached appendix shows the historical performance of the unfunded actuarial accrued liability. 4 Appendix A Unfunded Accrued Actuarial Accrued Funded Year Trust Fund Assets Liability Liability Ratio 2014 Oro Valley Police 23,567,852 36,122,643 (12,554,791) 65% 2014 Oro Valley Dispatchers 1,216,956 2,269,744 (1,052,788) 54% 2015 Oro Valley Police 26,200,389 40,452,911 (14,252,522) 65% 2015 Oro Valley Dispatchers 1,205,067 2,362,604 (1,157,537) 51% 2016 Oro Valley Police 29,296,195 48,414,270 (19,118,075) 61% 2016 Oro Valley Dispatchers 1,163,258 2,524,360 (1,361,102) 46% 2017 Oro Valley Police 31,882,797 53,037,566 (21,154,769) 60% 2017 Oro Valley Dispatchers 1,260,798 3,077,649 (1,816,851) 41% 2018 Oro Valley Police 34,172,618 57,022,056 (22,849,438) 60% 2018 Oro Valley Dispatchers 1,337,558 2,945,307 (1,607,749) 45% 2019 Oro Valley Police 37,842,906 62,278,853 (24,435,947) 61% 2019 Oro Valley Dispatchers 1,424,947 3,240,399 (1,815,452) 44% 2020 Oro Valley Police 41,498,361 67,240,526 (25,742,165) 62% 2020 Oro Valley Dispatchers 1,504,732 3,374,933 (1,870,201) 45% Source: Town Comprehensive Annual Financial Report for June 30, 20 20 – Note 15. Budget and Finance Commission 4. Meeting Date:02/15/2022 Submitted By:Christopher Hutchison, Finance SUBJECT: PRESENTATION AND POSSIBLE DISCUSSION OF THE TOWN'S FY 21/22 FINANCIAL UPDATE THROUGH DECEMBER 2021 (Please reference the attachments for the Town's monthly financial update) RECOMMENDATION: N/A EXECUTIVE SUMMARY: Please reference attachments. BACKGROUND OR DETAILED INFORMATION: Please reference attachments. FISCAL IMPACT: N/A SUGGESTED MOTION: N/A Attachments Council Memo - Dec 2021 Financial Update Attachment A - General Fund Attachment B - Highway Fund Attachment C-1 - Community Center Fund Attachment C-2 Golf Contractor P&L Attachment D - Water Fund Attachment E - Stormwater Fund Attachment F - Summary All Funds Attachment G - Gen Fund Local Sales Tax Attachment H - Gen Fund State Shared Revenue Town Manager’s Office TOWN COUNCIL REPORT DATE: February 18, 2022 TO: Mayor and Council THRU: Mary Jacobs, Town Manager FROM: David Gephart, Chief Financial Officer SUBJECT: December 2021 Financial Update This financial update is intended to provide an overview and status of revenues and expenditures for the Town’s selected funds through the second quarter for fiscal year 2021/22. Funds included in this financial update are the General Fund, Highway Fund and Community Center Fund. Also included are the two enterprise funds, Water and Stormwater. All amounts are preliminary, un-audited and subject to change based upon adjusting entries, as necessary. EXECUTIVE SUMMARY: Revenues are performing well compared to budget, and expenditures are trending as expected. A few variances are noted at this time, which are discussed below. General Fund Overall, General Fund revenues are trending better than expected and expenditures are trending as expected through December (see attachment A). Revenues total $26.1 million or 55.4% of budget, while expenditures are at $31.2 million or 50.9% of the total budget. Highway Fund Revenues are trending better than expected and expenditures are trending as expected through December (see attachment B). Revenues total $1.9 million or 52.6% of budget while expenditures total $2.4 million or 58.8% of budget. Community Center Fund Revenues for the Community Center Fund are trending higher than expected and expenditures are largely as expected through December (see attachment C-1 & C-2). Revenues total $4.1 million or 55.9% of budget while expenditures total $3.0 million or 38.5% of budget. Water Fund Revenues for the Water Utility Fund are trending higher than expected and expenditures are largely as expected through December (see attachment D). Revenues total $10.0 million or 57.7% of budget while expenditures total $10.2 million or 49.5% of budget. Stormwater Fund Overall, the Town’s Stormwater Utility fund revenues and expenses are trending lower than expected through December (see attachment E). Revenues total $765,000 or 44% of budget, while expenses are below budget at $549,000 or 23.5% of budget. BACKGROUND AND DETAILED INFORMATION: GENERAL FUND Attachment A shows General Fund revenues and expenditures through December, as well as year-end estimates for each category. The estimated year-end projections in the General Fund are as follows: Revenues: $50,674,505 Less: Expenditures: ($60,087,209) Preliminary Estimated Decrease in Fund Balance: ($9,412,704)* *The estimated change in fund balance is primarily due to a one-time payment of $10 million to PSPRS to pay down the unfunded liability. General Fund Revenues  Local sales tax collections in the General Fund total $12.5 million or 59.2% of the budgeted amount of $21.2 million and are performing better than anticipated. Retail collections total $4.2 million, which is $473,511 or 12.7% higher than collections from the same time period last fiscal year. Both restaurant/bar collections as well as bed tax collections are up 42.6% and 136% respectively compared to collections from the same time period last fiscal year. Construction sales tax collections total $3.4 million through December 2021, which is $543,661 or 19.3% higher than collections from the same time period last fiscal year. Total local sales tax revenue is expected to come in $2.6 million above budget due to strong performance across most tax categories. Please see attachment G for detailed information on General Fund local sales tax collections.  License and permit revenues total $875,000 or 47.4% of the budget amount of $1.8 million. Single Family Residential (SFR) permits issued through December total 79 and are a large portion of this revenue piece. This revenue category is expected to come in $127,000 or 6.9% over budget at this time due to upcoming commercial building activity.  State shared revenues total $7.2 million or 52.1% of the budget amount of $13.7 million. These revenues sources are comprised of state shared sales taxes, state shared income taxes, auto-lieu fees, and Smart and Safe shared taxes. At this point in time, these revenues are forecasted to come in $457,000 or 3.3% over budget due to higher-than-expected collections.  Charges for services revenues total $1.3 million or 54.7% of the budget amount of $2.4 million. A large portion of these revenues are associated with Parks & Recreation program revenues, which are showing strong signs of recovery. Charges for services are forecasted to come in over budget by $165,800, or 6.9%.  Please note that the year-end estimate for federal grant revenue has been revised to reflect the amount of ARPA funds that will be recognized as revenue in FY 2021/22. The remaining funds that the Town receives will post as deferred until spent. General Fund Expenditures  General Fund expenditures are trending as expected through December. In General Administration, the Town has recorded a one-time, budgeted $10.0 million payment to PSPRS to pay down the unfunded liability. Transfers out of the General Fund are expected to be $1.1 million less than budgeted due to the pension obligation bonds that were issued in July. The Town budgeted a full debt service payment; however, only an interest payment is due this year. The General Fund is expected to end the fiscal year with a total fund balance of $23.0 million, or 42.7% of budgeted expenditures HIGHWAY FUND Highway Fund Revenues  State shared highway user funds total $1.9 million or 52.4% of the budget amount of $3.6 million. At this point in time, these revenues are estimated to come in over budget by $255,000 or 7.1%.  The year-end estimate for miscellaneous revenue reflects an unexpected insurance recovery received in the amount of $4,069.  All other revenue sources for the fund are expected to come in on budget at this time. Highway Fund Expenditures  Highway Fund expenditures though December are at $2.4 million or 58.8% of the adopted budget of $4.1 million. Expenditures reflect the pavement preservation program which is mostly complete for the year. Highway Fund expenditures are estimated to come in on budget. The Highway Fund is expected to end the fiscal year with a fund balance of approximately $1.1 million. COMMUNITY CENTER FUND Attachment C-1 shows the consolidated financial status of the Community Center Fund with all revenues and expenditures from contracted and Town-managed operations. Attachment C-2 shows the monthly line-item detail for the contractor-managed operations, specifically revenues and expenditures associated with the golf, food and beverage operations. The totals in the revenue and expenditure categories in attachment C-2 tie to the contracted operating revenues and expenditures in attachment C-1. Community Center Fund Revenues  Revenues in the Community Center Fund through December total $4.1 million or 55.9% of the budget amount of $7.4 million.  Contracted operating revenues total about $1.9 million through December. This is approximately $264,400 or 16% higher than revenues from the same time period last fiscal year. At this time, contracted revenues are estimated to come in about $318,000 or 8.8% higher than budgeted due to anticipated, across-the-board outperformance compared to budget.  Town operating revenues for December are $556,587, a significant increase from the same time period last year, due primarily to a recovery in recreation program revenue and member dues. Town operating revenues are expected to end the fiscal year $266,000 or 38.1% over budget.  Local sales tax revenues for December total $1.6 million or 55.5% of the budget amount of $2.9 million. These collections are currently estimated to come in $356,255 or 12.1% over budget. Community Center Fund Expenditures  Expenditures in the Community Center Fund total $3.0 million or 38.5% of the budgeted amount of $7.8 million.  Contracted operating expenditures total $2.3 million, or 48.2% of the budgeted amount of $4.7 million. Contracted expenditures are estimated to come in approximately $205,000 or 4.4% under budget, due to anticipated O&M and personnel savings.  Transfers out are expected to be $1.7 million less than budget. This is due to the Town having budgeted a full debt service payment for the newly issued Parks and Recreation bonds whereas only an interest payment is due this year.  At this time, the Community Center Fund is projected to end the fiscal year with a total fund balance of $5.1 million. The year-end sales tax support for golf operations is estimated to be $347,157. This figure includes a projected ($555,233) for contracted golf operations, $125,000 in outside HOA contributions, and approximately $83,000 in local sales taxes generated from golf related operations. WATER FUND Water Fund Revenues  Water Sales represent the largest revenue source for the fund and total nearly $7.7 million, or 54.8% of budget through the first half of the fiscal year. Because of higher trending water sales and charges, this revenue source is anticipated to end the fiscal year 2.0% or $273,000 above budgeted levels.  Charges for Services account for revenues from various fees including the groundwater preservation fee. Through December, this category is trending slightly above budget at $1.7 million or 51.0% of budget and is expected to end the year 2.6% over budget.  Miscellaneous revenue includes collection of a $662,000 lien release, which was not budgeted. Water Fund Expenses  Expenses for the Water fund are largely trending as expected through the first half of the fiscal year. Other financing uses are related to scheduled transfers to take place later in the fiscal year. STORMWATER FUND Stormwater Fund Revenues  Overall, revenues for the Stormwater Fund are trending lower than expected through December 2021. Charges for Services represent the bulk of revenue for the fund and are currently trending slightly above budget at $745,000 or 51.8%. Revenues are anticipated to end the fiscal year $233,000, or 13.4% below budget. This is mainly due to Pima County taking over the Gravel Wash capital project so the Town will not receive the $300,000 budgeted reimbursement. Stormwater Fund Expenses  Through December, Stormwater expenses are trending below budget, but are anticipated to increase as maintenance and projects increase in the second half of the fiscal year. Expenses are anticipated to end the fiscal year under budget by $453,000, or 19.4% due to the budgeted Gravel Wash capital project being taken over by Pima County. Please see attachments A and B for additional details on the General Fund and Highway Fund. See attachments C-1 and C-2 for additional details on the Community Center Fund. Attachments D and E provide details related to the Town’s two enterprise funds. See attachment F for a fiscal year-to-date consolidated summary of all Town Funds. See attachment G and H for a breakdown of monthly local sales tax collections and state shared revenue collections for the General Fund. ATTACHMENT A December YTD Financial Status General Fund % Budget Completion through December --- 50% % Actuals YE % Variance to Budget to Budget REVENUES:` LOCAL SALES TAX 12,526,255 21,157,707 59.2% 23,880,002 12.9% LICENSES & PERMITS 875,549 1,849,000 47.4% 1,976,497 6.9% FEDERAL GRANTS 3,394,934 5,990,290 56.7% 6,068,448 1.3% STATE GRANTS 37,935 75,000 50.6% 75,000 0.0% STATE/COUNTY SHARED 7,153,990 13,729,923 52.1% 14,187,081 3.3% OTHER INTERGOVERNMENTAL 561,831 1,344,500 41.8% 1,409,500 4.8% CHARGES FOR SERVICES 1,306,750 2,387,776 54.7% 2,553,577 6.9% FINES 65,166 125,000 52.1% 125,000 0.0% INTEREST INCOME 128,570 150,000 85.7% 150,000 0.0% MISCELLANEOUS 45,545 264,000 17.3%249,400 -5.5% TOTAL REVENUES 26,096,525 47,073,196 55.4% 50,674,505 7.7% % Actuals YE % Variance to Budget to Budget EXPENDITURES: CLERK 171,643 383,833 44.7% 377,733 -1.6% COMMUNITY & ECON. DEV. 1,276,598 3,044,614 41.9% 2,975,428 -2.3% COUNCIL 127,346 188,720 67.5% 188,720 0.0% FINANCE 401,265 979,655 41.0% 954,655 -2.6% GENERAL ADMINISTRATION 11,331,006 14,459,559 78.4% 14,619,559 1.1% HUMAN RESOURCES 205,373 535,390 38.4% 535,390 0.0% INNOVATION & TECHNOLOGY 2,115,600 4,346,583 48.7% 4,346,583 0.0% LEGAL 390,114 902,754 43.2% 877,754 -2.8% MANAGER 490,632 1,115,224 44.0% 1,115,224 0.0% PARKS & RECREATION 1,607,062 3,446,361 46.6% 3,408,923 -1.1% POLICE 7,626,896 18,171,000 42.0% 18,171,000 0.0% PUBLIC WORKS 2,383,788 5,364,091 44.4% 5,407,492 0.8% TOWN COURT 381,977 914,796 41.8% 845,916 -7.5% TRANSFERS OUT 2,685,314 7,408,264 36.2%6,262,832 -15.5% TOTAL EXPENDITURES 31,194,614 61,260,844 50.9% 60,087,209 -1.9% SURPLUS / (DEFICIT) (5,098,089) (14,187,648) (9,412,704) BEGINNING FUND BALANCE **32,408,542 Plus: Surplus / (Deficit)(9,412,704) ENDING FUND BALANCE **22,995,838 * Year-end estimates are subject to further revision ** Beginning and ending fund balance amounts are estimates and are subject to further revision FY 2021/2022 Year End Estimate * Budget Year End Estimate * Actuals thru 12/2021 Actuals thru 12/2021 Budget ATTACHMENT B December YTD Financial Status FY 2021/2022 % Budget Completion through December --- 50% Actuals thru 12/2021 Budget % Actuals to Budget Year End Estimate * YE % Variance to Budget REVENUES:- LICENSES & PERMITS 13,364 25,000 53.5% 25,000 0.0% STATE/COUNTY SHARED 1,895,968 3,614,922 52.4% 3,870,000 7.1% INTEREST INCOME 4,954 6,000 82.6% 6,000 0.0% MISCELLANEOUS 4,171 2,000 208.6%6,069 203.5% TOTAL REVENUES 1,918,457 3,647,922 52.6% 3,907,069 7.1% Actuals thru 12/2021 Budget % Actuals to Budget Year End Estimate * YE % Variance to Budget EXPENDITURES: TRANSPORTATION ENGINEERING 2,224,417 3,766,525 59.1% 3,766,525 0.0% STREET MAINTENANCE 182,554 324,000 56.3%324,000 0.0% TOTAL EXPENDITURES 2,406,971 4,090,525 58.8% 4,090,525 0.0% SURPLUS / (DEFICIT) (488,514) (442,603) (183,456) BEGINNING FUND BALANCE **1,242,978 Plus: Surplus / (Deficit)(183,456) ENDING FUND BALANCE **1,059,522 * Year-end estimates are subject to further revision ** Beginning and ending fund balance amounts are estimates and are subject to further revision Highway Fund ATTACHMENT C-1 December YTD Financial Status % Budget Completion through December --- 50% % Actuals YE % Variance to Budget to Budget REVENUES: CONTRACTED OPERATING REVENUES Golf Revenues, Trail and Cart Fees 958,678 1,966,245 48.8% 2,021,925 2.8% Member Dues 550,749 957,000 57.5% 1,113,750 16.4% Food & Beverage 275,551 473,465 58.2% 554,880 17.2% Merchandise & Other 138,507 225,675 61.4%250,187 10.9% 1,923,485 3,622,385 53.1% 3,940,742 8.8% TOWN OPERATING REVENUES Daily Drop-Ins 23,730 30,000 79.1% 40,000 33.3% Member Dues 355,796 526,480 67.6% 600,000 14.0% Recreation Programs 131,420 82,500 159.3% 240,000 190.9% Swim Team/Swim Lessons - 8,000 0.0% 8,000 0.0% Facility Rental Income 45,641 50,500 90.4%75,000 48.5% 556,587 697,480 79.8% 963,000 38.1% OTHER REVENUES Local Sales Tax 1,628,702 2,932,798 55.5% 3,289,053 12.1% Real Property Rental Income 19,502 19,502 100.0% 19,502 0.0% Interest Income 7,797 1,000 779.7% 4,590 359.0% Miscellaneous 58 125,100 0.0%125,100 0.0% 1,656,059 3,078,400 53.8% 3,438,245 11.7% TOTAL REVENUES 4,136,131 7,398,265 55.9% 8,341,987 12.8% % Actuals YE % Variance to Budget to Budget EXPENDITURES: CONTRACTED OPERATING EXPENDITURES Personnel 695,849 1,641,903 42.4% 1,591,540 -3.1% Food & Beverage 239,804 445,441 53.8% 508,395 14.1% Operations & Maintenance 1,251,882 2,429,634 51.5% 2,225,047 -8.4% Equipment Leases 78,246 184,550 42.4%170,993 -7.3% 2,265,781 4,701,528 48.2% 4,495,975 -4.4% TOWN OPERATING EXPENDITURES Personnel 404,807 875,291 46.2% 891,376 1.8% Operations & Maintenance 111,442 211,290 52.7%211,290 0.0% 516,249 1,086,581 47.5% 1,102,666 1.5% CAPITAL OUTLAY 50,146 132,500 37.8% 132,500 0.0% TRANSFERS OUT 168,519 1,868,519 9.0% 168,519 -91.0% TOTAL EXPENDITURES 3,000,695 7,789,128 38.5% 5,899,660 -24.3% SURPLUS / (DEFICIT) 1,135,436 (390,863) 2,442,327 BEGINNING FUND BALANCE **2,676,793 Plus: Surplus / (Deficit)2,442,327 ENDING FUND BALANCE **5,119,120 * Year-end estimates are subject to further revision ** Beginning and ending fund balance amounts are estimates and are subject to further revision FY 2021/2022 Actuals thru 12/2021 Budget Year End Estimate * Community Center Fund Actuals thru 12/2021 Budget Year End Estimate * ATTACHMENT C-2 Budget Last Year Budget Last Year Actual Budget Variance Last Year Variance Actual Budget Variance Last Year Variance Rounds 2,953 2,750 203 2,807 146 Rounds ‐ Member 14,533 12,500 2,033 13,623 910 604 380 224 287 317 Rounds ‐ Outing 2,878 1,560 1,318 1,475 1,403 5,083 4,515 568 3,915 1,168 Rounds ‐ Public 22,463 22,280 183 22,481 (18) ==================================================================================================================================================================== 8,640 7,645 995 7,009 1,631 Total Rounds 39,874 36,340 3,534 37,579 2,295 Revenue 202,187 173,975 28,212 161,787 40,400 Green Fees 803,147 732,950 70,197 759,778 43,370 24,287 19,590 4,697 20,761 3,526 Cart Fees 135,870 115,775 20,095 119,046 16,824 3,601 5,000 (1,399)3,876 (275)Driving Range 19,661 24,000 (4,339)22,295 (2,633) 750 0 750 0 750 Golf Cards/Passes 9,182 0 9,182 0 9,182 31,756 24,600 7,156 26,258 5,498 Pro Shop Sales 102,275 98,200 4,075 97,518 4,757 24,146 34,565 (10,419)14,045 10,101 Food (Food & Soft Drinks) 147,068 89,565 57,503 62,299 84,769 24,159 24,250 (91)19,991 4,168 Beverages (Alcohol) 126,494 97,925 28,569 101,286 25,208 1,467 0 1,467 933 535 Other Food & Beverage Revenue 1,989 0 1,989 1,272 717 3,116 1,325 1,791 1,739 1,377 Other Golf Revenues (Club Rent, Handica 11,784 5,475 6,309 8,617 3,167 4,466 1,500 2,966 2,089 2,377 Clinic / School Revenue 12,959 3,500 9,459 7,666 5,292 98,773 82,500 16,273 87,318 11,455 Dues Income ‐ Monthly Dues 550,749 475,000 75,749 477,606 73,143 7,980 0 7,980 1,375 6,605 Miscellaneous Income and Discounts 2,307 0 2,307 1,692 615 ================================================================================= ============================================================= ================ 426,688 367,305 59,383 340,172 86,517 Total Revenue 1,923,485 1,642,390 281,095 1,659,075 264,410 Cost of Sales 22,301 18,380 (3,921)21,621 (680)COGS ‐ Pro Shop 74,611 73,510 (1,101)68,683 (5,929) 7,843 9,822 1,980 5,507 (2,336)COGS ‐ Food 41,757 21,999 (19,758)20,651 (21,106) 1,374 1,440 66 784 (590)COGS ‐ Non‐Alcoholic Beverages 6,305 6,870 565 7,932 1,628 6,959 7,275 316 5,944 (1,014)COGS ‐ Alcohol 38,620 29,378 (9,243)30,835 (7,785) ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 38,476 36,917 (1,558)33,856 (4,620)Total Cost of Sales 161,294 131,757 (29,537)128,101 (33,192) ================================================================================= ============================================================= ================ 388,213 330,388 57,825 306,315 81,897 GROSS INCOME 1,762,191 1,510,633 251,558 1,530,974 231,217 Labor 29,374 34,134 4,760 25,627 (3,747)Golf Operation Labor 152,245 167,666 15,421 134,286 (17,959) 14,131 10,513 (3,618)14,642 511 General and Administrative 59,579 72,175 12,596 64,042 4,463 67,059 64,263 (2,796)65,354 (1,705)Maintenance and Landscaping 361,442 390,410 28,967 339,239 (22,203) 19,799 20,803 1,005 16,769 (3,030)F&B 115,917 99,921 (15,997)92,968 (22,949) 4,482 6,671 2,189 9,013 4,531 Sales and Marketing 38,707 33,528 (5,180)37,117 (1,590) ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 134,845 136,384 1,539 131,405 (3,440)Total Direct Labor 727,892 763,699 35,807 667,653 (60,239) 10,435 12,956 2,522 11,322 888 Total Payroll Taxes 56,846 72,551 15,706 59,076 2,230 (6,630)12,500 19,130 10,331 16,961 Total Medical/Health Benefits 35,894 75,000 39,106 62,214 26,320 2,310 2,080 (230)1,687 (624)Total Workmans Comp 11,969 12,380 411 10,121 (1,848) ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 6,115 27,536 21,421 23,340 17,225 Total Payroll Burden 104,709 159,931 55,222 131,410 26,701 ================================================================================= ============================================================= ================ 140,960 163,920 22,960 154,745 13,785 Total Labor 832,601 923,630 91,029 799,063 (33,538) Other Operational Expenses 9,113 6,820 (2,293)8,906 (207)Golf Ops 43,665 31,395 (12,270)41,950 (1,715) 12,072 10,105 (1,967)17,383 5,311 G&A 63,667 62,285 (1,382)95,588 31,921 28,397 21,900 (6,497)20,443 (7,953)Maintenance 354,440 357,250 2,810 319,456 (34,984) 2,433 5,085 2,652 5,322 2,889 F&B 16,369 32,935 16,566 15,058 (1,311) 2,140 1,050 (1,090)910 (1,230)Sales and Marketing 11,924 11,300 (624)11,897 (26) 13,041 14,784 1,743 12,450 (591)Golf Cart Leases 78,246 88,704 10,458 74,700 (3,546) 0 0 0 0 0 Equipment Leases 0 0 0 41,928 41,928 32,545 51,800 19,255 47,111 14,566 Utilities ‐ Maintenance 516,480 684,000 167,520 591,417 74,936 15,023 14,775 (248)13,490 (1,533)Utilities ‐ G&A 93,673 84,980 (8,693)83,173 (10,500) 10,200 10,200 0 10,000 (200)Management Fees 61,200 61,200 0 60,000 (1,200) 3,681 3,300 (381)4,463 782 Insurance ‐ P&C 22,004 19,800 (2,204)26,778 4,775 ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 128,644 139,819 11,175 140,478 11,834 Total Other Operational Expenses 1,261,669 1,433,849 172,180 1,361,946 100,277 ================================================================================= ============================================================= ================ 269,604 303,739 34,135 295,223 25,619 Total Expenses 2,094,270 2,357,479 263,209 2,161,009 66,739 ================================================================================= ============================================================= ================ 118,609 26,648 91,961 11,093 107,516 EBITDAR (332,079)(846,846)514,767 (630,035)297,956 ================================================================================= ============================================================= ================ 118,609 26,648 91,961 11,093 107,516 EBITDA (332,079)(846,846)514,767 (630,035)297,956 Interest Expense/Dep&Amt 0 0 0 450 450 Other Expense (343)0 343 13,040 13,383 0 0 0 0 0 Capital Improvements/Cap Reserve 10,560 0 (10,560)0 (10,560) ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 0 0 0 450 450 Total Interest Expense 10,217 0 (10,217)13,040 2,823 ================================================================================= ============================================================= ================ 118,609 26,648 91,961 10,643 107,966 Net Income (342,296)(846,846)504,550 (643,074)300,778 El Conquistador Golf Club For the Month Ending December 31st, 2021 December YTD ATTACHMENT D December YTD Financial Status FY 2021/2022 Water Utility Fund % Budget Completion through December --- 50% % Actuals YE % Variance to Budget to Budget REVENUES: CHARGES FOR SERVICES 1,658,491 3,255,000 51.0% 3,339,000 2.6% INTEREST INCOME 29,693 100,000 29.7% 100,000 0.0% MISCELLANEOUS 661,858 - 0.0% 662,000 0.0% WATER SALES 7,656,427 13,974,000 54.8%14,247,000 2.0% TOTAL REVENUES 10,006,469 17,329,000 57.7% 18,348,000 5.9% % Actuals YE % Variance to Budget to Budget EXPENSES: ADMINISTRATION 7,420,289 11,934,277 62.2% 11,934,277 0.0% ENGINEERING & PLANNING 525,545 1,874,737 28.0% 1,874,737 0.0% OPERATIONS 2,226,398 4,985,624 44.7% 4,985,624 0.0% OTHER FINANCING USES 2,402 1,762,402 0.1%1,762,402 0.0% TOTAL EXPENSES 10,174,634 20,557,040 49.5% 20,557,040 0.0% SURPLUS/(DEFICIT) (168,165) (3,228,040) (2,209,040) Excludes non-cash outlays for depreciation & amortization * Year-end estimates are subject to further revision Year End Estimate * Budget Year End Estimate * Actuals thru 12/2021 Actuals thru 12/2021 Budget ATTACHMENT E December YTD Financial Status FY 2021/2022 Stormwater Utility Fund % Budget Completion through December--50% Actuals thru 12/2021 Budget % Actuals to Budget Year End Estimate * YE % Variance to Budget REVENUES: STATE GRANTS 16,906 300,000 5.6% 16,906 -94.4% CHARGES FOR SERVICES 745,674 1,440,100 51.8% 1,490,000 3.5% INTEREST INCOME 2,966 1,500 197.7%1,500 0.0% TOTAL REVENUES 765,546 1,741,600 44.0% 1,508,406 -13.4% Actuals thru 12/2021 Budget % Actuals to Budget Year End Estimate * YE % Variance to Budget EXPENDITURES: PERSONNEL 385,900 862,098 44.8% 862,098 0.0% OPERATIONS & MAINTENANCE 163,846 617,935 26.5% 617,935 0.0% CAPITAL - 857,374 0.0%404,000 -52.9% TOTAL EXPENDITURES 549,746 2,337,407 23.5% 1,884,033 -19.4% Does not include non-cash outlays for depreciation SURPLUS / (DEFICIT) 215,800 (595,807) (375,627) * Year-end estimates are subject to further revision ATTACHMENT FConsolidated Year-to-Date Financial Report through December 2021FY 2021/2022FY 21/22 Capital Leases/Left in AccountsBegin Bal. Transfer OutThru Dec. 2021General Fund 32,408,542 26,096,525 26,096,525 2,685,314 13,320,400 14,985,243 203,657 31,194,614 27,310,453 Highway Fund 1,242,979 1,918,457 1,918,457 546,998 253,123 1,606,850 2,406,971 754,465 Grants and Contributions Fund - 146,998 146,998 25,372 40,611 65,983 81,015 Seizure & Forfeiture - Justice/State 266,810 22,074 22,074 80,743 80,743 208,141 Community Center Fund 2,676,793 4,136,131 4,136,131 246,765 1,100,656 1,603,128 50,146 3,000,695 3,812,229 Municipal Debt Service Fund 165,436 71,510 19,210,226 19,281,736 17,981,034 1,101,020 19,082,054 365,118 Oracle Road Debt Service Fund 4,194 13 13 - 4,207 Water Resource System & Dev. Impact Fee Fund 18,744,638 731,041 731,041 75,000 718,318 319,207 1,112,525 18,363,154 Townwide Roadway Dev Impact Fee Fund 1,978,878 152,110 152,110 46,905 46,905 2,084,083 Parks & Recreation Impact Fee Fund 316,645 49,145 49,145 - 365,790 Police Impact Fee Fund 168,764 34,260 34,260 117,750 117,750 85,274 Capital Fund 2,504,029 617,361 27,105,983 27,723,344 39,723 366,806 1,128,023 1,534,552 28,692,821 PAG/RTA Fund 1,248,618 17,890 17,890 254,756 254,756 1,011,752 Water Utility 13,666,981 10,006,469 10,006,469 2,402 1,543,735 3,928,073 485,402 4,215,022 10,174,634 13,498,816 Stormwater Utility 1,001,740 765,546 765,546 385,900 163,846 549,746 1,217,540 Benefit Self Insurance Fund 2,379,019 1,887,791 1,887,791 1,632,205 1,632,205 2,634,605 Recreation In-Lieu Fee Fund 17,045 55 55 - 17,100 Total 78,791,110 46,653,376 46,316,209 92,969,585 3,052,231 16,937,412 41,094,573 4,534,668 5,635,249 71,254,133 100,506,562 Fund RevenueOther Fin Sources/TfrsTotal InDebt Service Total OutPersonnel O&M Capital ATTACHMENT GGeneral Fund Local Sales Tax Collections FY 2021/22CATEGORY JULYAUGSEPOCTNOVDECJANFEBMARAPRMAYJUNETOTALConstruction Sales Tax 441,038 419,552 651,924 906,165 509,231 436,821 3,364,731 Utility Sales Tax 321,489 383,548 329,545 323,173 285,048 238,499 1,881,302 Retail Sales Tax 675,726 647,693 641,711 682,029 727,762 814,794 4,189,715 Bed Tax 130,217 117,012 93,538 108,884 392,162 157,378 999,191 Restaurant & Bar Sales Tax 172,386 162,947 172,178 195,482 227,724 191,664 1,122,382 All Other Local Sales Tax *181,767 180,252 164,385 191,016 284,083 217,626 1,219,129 TOTAL 1,922,624$ 1,911,004$ 2,053,282$ 2,406,749$ 2,426,009$ 2,056,782$ 12,776,451$ FY 2020/21CATEGORY JULYAUGSEPOCTNOVDECJANFEBMARAPRMAYJUNETOTALConstruction Sales Tax 643,435 471,705 517,101 483,032 384,176 321,621 305,338 241,562 254,568 450,343 409,924 442,859 4,925,664 Utility Sales Tax 267,771 337,260 350,040 360,019 286,715 249,286 245,891 271,681 241,698 227,632 221,458 205,402 3,264,853 Retail Sales Tax 647,068 579,089 560,008 613,570 607,315 709,153 889,306 606,222 620,243 748,368 700,138 692,038 7,972,518 Bed Tax 42,564 33,546 32,879 38,003 170,718 105,673 36,242 40,721 99,686 148,989 144,442 130,433 1,023,896 Restaurant & Bar Sales Tax 127,814 114,578 118,223 130,147 158,913 137,151 142,356 130,977 154,257 183,628 167,142 191,389 1,756,575 All Other Local Sales Tax *117,419 174,520 141,653 120,588 200,416 200,756 183,337 164,894 171,734 218,085 193,522 201,188 2,088,112 TOTAL 1,846,071$ 1,710,698$ 1,719,904$ 1,745,360$ 1,808,253$ 1,723,640$ 1,802,470$ 1,456,056$ 1,542,186$ 1,977,045$ 1,836,626$ 1,863,309$ 21,031,618$ * Note: Does not include cable franchise fees or sales tax audit revenues ATTACHMENT HGeneral Fund State Shared RevenuesFY 2021/22CATEGORY JULYAUGSEPOCTNOVDECJANFEBMARAPRMAYJUNETOTALState Shared Income Tax 500,637 500,637 517,313 517,313 517,313 517,313 3,070,526 State Shared Sales Tax 291,674 534,620 464,795 538,626 428,064 680,044 2,937,823 County Auto Lieu 100,364 178,439 214,084 179,539 176,572 183,593 1,032,591 Smart and Safe- - - - - 113,051 TOTAL 892,675$ 1,213,696$ 1,196,192$ 1,235,478$ 1,121,949$ 1,494,001$ -$ -$ -$ -$ -$ -$ 7,153,990$ FY 2020/21CATEGORY JULYAUGSEPOCTNOVDECJANFEBMARAPRMAYJUNETOTALState Shared Income Tax 548,361 548,361 548,361 548,361 548,361 548,360 548,361 548,361 548,361 548,361 548,361 548,361 6,580,331 State Shared Sales Tax 243,577 413,638 354,744 490,371 357,106 523,608 454,947 376,182 433,435 572,504 533,021 709,210 5,462,343 County Auto Lieu 98,728 256,745 217,528 201,958 162,796 190,665 190,824 175,212 182,116 216,303 197,466 302,323 2,392,664 Smart and Safe- - - - - - - - - - - - - TOTAL 890,666$ 1,218,744$ 1,120,633$ 1,240,690$ 1,068,263$ 1,262,633$ 1,194,132$ 1,099,755$ 1,163,912$ 1,337,168$ 1,278,848$ 1,559,894$ 14,435,338$