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AGENDA
BUDGET AND FINANCE COMMISSION
REGULAR SESSION
APRIL 19, 2022
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.REVIEW AND APPROVAL OF THE MARCH 15, 2022 REGULAR SESSION MEETING MINUTES
2.DISCUSSION AND RECOMMENDATION OF DRAFT PSPRS PENSION FUNDING POLICY FOR FISCAL
YEAR ENDING JUNE 30, 2023
3.PRESENTATION AND POSSIBLE DISCUSSION OF THE TOWN'S FY 21/22 FINANCIAL UPDATE
THROUGH FEBRUARY 2022 (Please reference the attachments for the Town's monthly financial update)
COUNCIL LIAISON COMMENTS
FUTURE AGENDA ITEMS
ADJOURNMENT
POSTED: 4/14/22 at 5 PM by P.P.
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.
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:04/19/2022
Submitted By:Alison Cote, Legal
SUBJECT:
REVIEW AND APPROVAL OF THE MARCH 15, 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 March 15, 2022 regular session meeting minutes."
Attachments
Draft Minutes 3/15/22
D R A F T
MINUTES
BUDGET AND FINANCE COMMISSION
REGULAR SESSION
MARCH 15, 2022
COUNCIL CHAMBERS
11000 N. LA CAÑADA DRIVE
REGULAR SESSION AT OR AFTER 4:00 PM
CALL TO ORDER - Chair Solverson called the meeting to order at 4:00 p.m.
ROLL CALL
Present: Cathy Solverson, Chair
Michael Mason, Vice Chair
James Beasley, Commissioner
John Fortunato, Commissioner
Staff Present:David Gephart, Chief Financial Officer
Wendy Gomez, Finance and Budget Administrator
Chris Hutchison, Senior Budget Analyst
Tobin Sidles, Legal Services Director
Attendees: Joseph Winfield, Town Council Liaison
PLEDGE OF ALLEGIANCE - Chair Solverson led the group in the Pledge of Allegiance.
CALL TO AUDIENCE - No comments were received.
STAFF LIAISON REPORT
Chief Financial Officer David Gephart reported on the following:
- This Commission will review the Town Manager's Recommended Budget at the April 19, 2022 meeting
- There is one vacancy on the Commission and a new application was received today for review
REGULAR SESSION AGENDA
1.REVIEW AND APPROVAL OF THE FEBRUARY 15, 2022 REGULAR SESSION MEETING MINUTES
Motion by Commissioner James Beasley, seconded by Vice Chair Michael Mason to approve the
February 15, 2022 meeting minutes as written.
Vote: 4 - 0 Carried
2.DISCUSSION AND POSSIBLE RECOMMENDATION OF DRAFT PSPRS PENSION FUNDING
2.DISCUSSION AND POSSIBLE RECOMMENDATION OF DRAFT PSPRS PENSION FUNDING
POLICY FOR FISCAL YEAR ENDING JUNE 30, 2023
The Commission provided recommendations and feedback regarding the policy and recommended
staff update the policy and present the modified document at the next meeting.
3.PRESENTATION AND POSSIBLE DISCUSSION OF THE TOWN'S FY 21/22 FINANCIAL UPDATE
THROUGH JANUARY 2022 (Please reference the attachments for the Town's monthly financial
update)
Finance and Budget Administrator Wendy Gomez presented on Agenda Item #3.
Discussion ensued amongst staff and the Commissioners.
COUNCIL LIAISON COMMENTS
Mayor Joseph Winfield commented on the following:
- Welcome John Fortunato
- Current Community Center irrigation project
- Community Center parking lot project expected in 2024
- Community Center tennis court project will be underway soon
- Hotel occupancy rates appear to be increasing
- Pusch Ridge Golf is doing well
FUTURE AGENDA ITEMS
- Discussion on Rancho Vistoso Golf Course contract
ADJOURNMENT
Motion by Commissioner James Beasley, seconded by Vice Chair Michael Mason to adjourn the
meeting at 4:56 p.m.
Vote: 4 - 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 15th day of March, 2022. I
further certify that the meeting was duly called and held and that a quorum was present.
Dated this 17th day of March, 2022.
___________________________
Danielle Tanner
Senior Office Specialist
Budget and Finance Commission 2.
Meeting Date:04/19/2022
Submitted By:David Gephart, Finance
SUBJECT:
DISCUSSION AND RECOMMENDATION OF DRAFT PSPRS PENSION FUNDING POLICY FOR FISCAL YEAR
ENDING JUNE 30, 2023
RECOMMENDATION:
Staff recommends approval of the draft PSPRS pension funding policy for next fiscal year as presented.
EXECUTIVE SUMMARY:
Each local government must annually update its PSPRS pension funding policy according to Arizona Revised
Statute.
Highlights of the proposed PSPRS pension funding policy are the following:
1) The ARC will be paid from operating revenues
2) Whenever the ARC is reduced, the Town will endeavor to continue paying the higher historical employer rate
3) The 20-year amortization of the unfunded actuarial accrued liability will continue to be utilized
4) Payments in addition to the ARC will be made as funding is available
BACKGROUND OR DETAILED INFORMATION:
As a refresher, the PSPRS pension funding policy is required by HB 2097, which amends Arizona Revised Statutes
Title 38, Chapter 5, Article 4, and was approved by the Governor on April 3, 2018. The policy must be updated and
approved annually by the governing body of a local government participating in the plan. The intent for the revision
in State law is to highlight to governing bodies and the public, the approach local governments are taking in
addressing unfunded accrued actuarial liabilities of their public safety retirement plan(s). There is no such
requirement for the Arizona State Retirement System (ASRS) covering general local government employees, as
that plan is financially healthier and functions differently than the PSPRS plan in terms of the sharing of unfunded
assets/liabilities.
The draft policy pertaining to next fiscal year is attached, and has been updated based upon feedback at the last
meeting.
FISCAL IMPACT:
N/A
SUGGESTED MOTION:
Move to recommend Town Council approval of the updated PSPRS pension funding policy for fiscal year ending
June 30, 2023 as presented.
Attachments
Draft PSPRS Pension Funding Policy
FY22 Pension Funding Policy
FY21 Dispatch Actuarial Report
FY21 Police Actuarial Report
1
Town of Oro Valley
Public Safety Personnel Retirement System (PSPRS & CORP)
Pension Funding Policy – FY22/23
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 benefits 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 previous 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 based on current actuarial valuations.
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, 2021 actuarial valuations specified below.
Trust Fund Assets
Accrued
Liability
Unfunded
Actuarial Accrued
Liability
Funded
Ratio
Oro Valley Police
(PSPRS)$46,773,089 $70,792,554 $24,019,465 66.1%
Oro Valley Dispatchers
(CORP)$ 1,649,829 $ 3,551,295 $ 1,901,466 46.5%
Note: The Town of Oro Valley funded the PSPRS Pension Plan with $27.6M in July 2022, after
the June 30, 2021 actuarial report was prepared. At this time, it is expected the plan is 100%
funded.
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:
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.
3
At such time the ARC is projected to be reduced, the Town should endeavor to continue
paying the ARC at the higher rate (currently 43.47% for Police), to maintain the funding ratio
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 FY22, the Town will make approximately $3.5M in payments based upon a 43.57%
contribution rate.
In FY23, the Town will make approximately $3.5M in payments based upon a 43.47%
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, 2021
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%
2021 Oro Valley Police 46,773,089 70,792,554 (24,019,465) 66%
2021 Oro Valley Dispatchers 1,649,829 3,551,295 (1,901,466) 46%
Source: Town Comprehensive Annual Financial Report for June 30, 2021 – Note 15.
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.
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%
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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.
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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%.
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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
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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.
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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.
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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%
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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.
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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.
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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).
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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).
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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
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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.
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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
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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.
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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.
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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.
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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%.
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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.
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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.
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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).
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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).
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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
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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.
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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.
Budget and Finance Commission 3.
Meeting Date:04/19/2022
Submitted By:Christopher Hutchison, Finance
SUBJECT:
PRESENTATION AND POSSIBLE DISCUSSION OF THE TOWN'S FY 21/22 FINANCIAL UPDATE THROUGH
FEBRUARY 2022 (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 - Feb 2022 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 - Summary All Funds
Attachment E - Gen Fund Local Sales Tax
Attachment F - Gen Fund State Shared Revenues
Staff Presentation
Town Manager’s Office
TOWN COUNCIL REPORT
DATE: April 20, 2022
TO: Mayor and Council
THRU: Mary Jacobs, Town Manager
FROM: David Gephart, Chief Financial Officer
SUBJECT: February 2022 Financial Update
This financial update is intended to provide an overview and status of revenues and expenditures for the
Town’s selected funds through February 2022 for fiscal year 2021/22. Funds included in this financial
update are the General Fund, Highway Fund and Community Center Fund. All amounts are preliminary,
un-audited and subject to change based upon adjusting entries, as necessary.
EXECUTIVE SUMMARY:
With the Town now two-thirds of the way through the fiscal year, revenues continue to significantly
outperform budget expectations. In addition, expenditure savings are anticipated in the Town’s major
funds. The General Fund and Community Center Fund in particular, should end the fiscal year with
substantially higher fund balances than projected. Further details on revenues and expenditures are as
follows.
General Fund
General Fund revenues and expenditures are trending better than expected through February (see
attachment A). Revenues total $34.8 million or 73.9% of budget, while expenditures are at $39.3 million or
64.1% of the total budget.
Highway Fund
Highway Fund revenues and expenditures are trending better than expected through February (see
attachment B). Revenues total $2.6 million or 71.6% of budget, while expenditures total $3.1 million or
75.4% of budget.
Community Center Fund
Revenues and expenditures for the Community Center Fund are trending better than expected through
February (see attachment C-1 & C-2). Revenues total $6.0 million or 81.6% of budget while expenditures
total $3.9 million or 49.9% of budget.
BACKGROUND AND DETAILED INFORMATION:
GENERAL FUND
Attachment A shows General Fund revenues and expenditures through February, as well as year-end
estimates for each category. The estimated year-end projections in the General Fund are as follows:
Revenues: $53,086,162
Less:
Expenditures: ($58,530,333)
Preliminary Estimated Decrease in Fund Balance: ($5,444,171)*
*Note that the budgeted decrease in fund balance for FY 21/22 is $14.2 million.
General Fund Revenues
Local sales tax collections in the General Fund total $17.2 million or 81.1% of the budgeted amount
of $21.2 million and are performing better than anticipated. Retail collections total $5.9 million,
which is $694,331 or 13.3% higher than collections from the same time period last fiscal year. Both
restaurant/bar collections as well as bed tax collections are up 46.1% and 177% respectively
compared to collections from the same time period last fiscal year. Construction sales tax
collections total $4.7 million through February 2022, which is $1,351,828 or 40.1% higher than
collections from the same time period last fiscal year. Total local sales tax revenue in the General
Fund is expected to come in $4.9 million above budget due to strong performance across most tax
categories. Please see attachment E for detailed information on General Fund local sales tax
collections.
License and permit revenues total $1.7 million or 91.4% of the budget amount of $1.8 million. Single
Family Residential (SFR) permits issued through February total 127 and are a large portion of this
revenue piece. This revenue category is expected to come in $349,000 or 18.8% over budget at
this time due to commercial building activity.
State shared revenues total $9.6 million or 69.7% 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 $542,000 or 3.9% over budget due to higher-than-expected collections.
Charges for services revenues total $1.7 million or 69.7% 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 recovery. Charges for services are forecasted to come in over budget by
$127,000, or 5.3%.
General Fund Expenditures
General Fund expenditures are trending better than expected through February, with overall
savings of $2.7 million, or 4.5% expected for the fiscal year. In General Administration, the Town
has recorded a one-time, budgeted $10.0 million payment to PSPRS to pay down the unfunded
liability. Personnel expenditures are expected to be $1.2 million less than budgeted due to various
position vacancies. 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 $27.0 million, or 50.1%
of budgeted expenditures
HIGHWAY FUND
Highway Fund Revenues
State shared highway user funds total $2.6 million or 71.4% of the budget amount of $3.6 million.
At this point in time, these revenues are projected to come in over budget by $255,000 or 7.1%.
With positive trends in the fund’s other minor revenue sources, overall revenues are projected to
come in over budget by $265,000 or 7.3%.
Highway Fund Expenditures
Highway Fund expenditures though February are at $3.1 million or 75.4% of the adopted budget of
$4.1 million. Capital projects and spending, including that for the pavement preservation program,
are nearly complete for the fiscal year. Highway Fund expenditures are projected to come in about
$21,000 or 0.5% below budget, due to slight savings in personnel costs.
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 February total $6.0 million or 81.6% of the
budget amount of $7.4 million.
Contracted operating revenues total about $3.0 million through February. This is approximately
$552,000 or 22.9% higher than revenues from the same time period last fiscal year. At this time,
contracted revenues are estimated to come in about $770,000 or 21.3% higher than budgeted due
to anticipated, across-the-board outperformance compared to budget.
Town operating revenues for February are $714,000, 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 $287,000 or 41.2% over budget.
Local sales tax revenues for February total $2.3 million or 78.0% of the budget amount of $2.9
million. These collections are currently projected to come in nearly $500,000 or 17.0% over budget.
Community Center Fund Expenditures
Expenditures in the Community Center Fund total $3.9 million or 49.9% of the budgeted amount of
$7.8 million.
Contracted operating expenditures total $3.0 million, or 63.7% of the budgeted amount of $4.7
million. Contracted expenditures are estimated to come in approximately $231,000 or 4.9% under
budget, due to anticipated O&M and personnel savings.
Transfers out are expected to be $1.6 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 nearly $5.7 million.
With the most recent year-end projections provided by the golf contractor, the Town is not expecting any
year-end sales tax support for golf operations. The projected net loss of $77,947 for contracted golf
operations will be covered by $159,050 in outside HOA contributions, and approximately $83,000 in local
sales taxes generated from golf related operations.
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. See attachment D for a
fiscal year-to-date consolidated summary of all Town Funds. See attachment E and F for a breakdown of
monthly local sales tax collections and state shared revenue collections for the General Fund.
ATTACHMENT A
February YTD Financial Status
General Fund
% Budget Completion through February --- 66.7%
% Actuals YE % Variance
to Budget to Budget
REVENUES:`
LOCAL SALES TAX 17,167,417 21,157,707 81.1% 26,070,335 23.2%
LICENSES & PERMITS 1,689,952 1,849,000 91.4% 2,197,500 18.8%
FEDERAL GRANTS 3,467,402 5,990,290 57.9% 6,068,448 1.3%
STATE GRANTS 47,157 75,000 62.9% 75,000 0.0%
STATE/COUNTY SHARED 9,568,596 13,729,923 69.7% 14,271,621 3.9%
OTHER INTERGOVERNMENTAL 828,306 1,344,500 61.6% 1,364,700 1.5%
CHARGES FOR SERVICES 1,663,132 2,387,776 69.7% 2,514,733 5.3%
FINES 84,041 125,000 67.2% 125,000 0.0%
INTEREST INCOME 147,592 150,000 98.4% 150,000 0.0%
MISCELLANEOUS 118,932 264,000 45.1%248,825 -5.7%
TOTAL REVENUES 34,782,527 47,073,196 73.9% 53,086,162 12.8%
% Actuals YE % Variance
to Budget to Budget
EXPENDITURES:
CLERK 229,324 383,833 59.7% 380,230 -0.9%
COMMUNITY & ECON. DEV. 1,722,634 3,044,614 56.6% 2,974,807 -2.3%
COUNCIL 155,501 188,720 82.4% 188,109 -0.3%
FINANCE 584,888 979,655 59.7% 944,743 -3.6%
GENERAL ADMINISTRATION 11,793,125 14,459,559 81.6% 14,079,934 -2.6%
HUMAN RESOURCES 272,416 535,390 50.9% 472,390 -11.8%
INNOVATION & TECHNOLOGY 2,755,085 4,346,583 63.4% 4,273,811 -1.7%
LEGAL 531,846 902,754 58.9% 883,661 -2.1%
MANAGER 679,093 1,115,224 60.9% 1,107,750 -0.7%
PARKS & RECREATION 2,130,179 3,446,361 61.8% 3,423,479 -0.7%
POLICE 10,303,843 18,171,000 56.7% 17,206,223 -5.3%
PUBLIC WORKS 3,225,650 5,364,091 60.1% 5,539,578 3.3%
TOWN COURT 484,445 914,796 53.0% 792,786 -13.3%
TRANSFERS OUT 4,424,073 7,408,264 59.7%6,262,832 -15.5%
TOTAL EXPENDITURES 39,292,102 61,260,844 64.1% 58,530,333 -4.5%
SURPLUS / (DEFICIT) (4,509,575) (14,187,648) (5,444,171)
BEGINNING FUND BALANCE 32,408,542
Plus: Surplus / (Deficit)(5,444,171)
ENDING FUND BALANCE **26,964,371
* Year-end estimates are subject to further revision
** Ending fund balance amounts are estimates and are subject to further revision
FY 2021/2022
Year End
Estimate *
Budget Year End
Estimate *
Actuals
thru 2/2022
Actuals
thru 2/2022
Budget
ATTACHMENT B
February YTD Financial Status FY 2021/2022
% Budget Completion through February --- 66.7%
Actuals
thru 2/2022 Budget % Actuals
to Budget
Year End
Estimate *
YE % Variance
to Budget
REVENUES:-
LICENSES & PERMITS 20,702 25,000 82.8% 30,000 20.0%
STATE/COUNTY SHARED 2,580,852 3,614,922 71.4% 3,870,000 7.1%
INTEREST INCOME 6,319 6,000 105.3% 8,000 33.3%
MISCELLANEOUS 4,171 2,000 208.6%5,069 153.5%
TOTAL REVENUES 2,612,044 3,647,922 71.6% 3,913,069 7.3%
Actuals
thru 2/2022 Budget % Actuals
to Budget
Year End
Estimate *
YE % Variance
to Budget
EXPENDITURES:
TRANSPORTATION ENGINEERING 2,847,793 3,766,525 75.6% 3,745,678 -0.6%
STREET MAINTENANCE 235,655 324,000 72.7%324,000 0.0%
TOTAL EXPENDITURES 3,083,448 4,090,525 75.4% 4,069,678 -0.5%
SURPLUS / (DEFICIT) (471,404) (442,603) (156,609)
BEGINNING FUND BALANCE 1,242,978
Plus: Surplus / (Deficit) (156,609)
ENDING FUND BALANCE ** 1,086,369
* Year-end estimates are subject to further revision
** Ending fund balance amounts are estimates and are subject to further revision
Highway Fund
ATTACHMENT C-1
February YTD Financial Status
% Budget Completion through February --- 66.7%
% Actuals YE % Variance
to Budget to Budget
REVENUES:
CONTRACTED OPERATING REVENUES
Golf Revenues, Trail and Cart Fees 1,603,681 1,966,245 81.6% 2,402,510 22.2%
Member Dues 748,087 957,000 78.2% 1,123,086 17.4%
Food & Beverage 407,737 473,465 86.1% 585,480 23.7%
Merchandise & Other 205,309 225,675 91.0%281,321 24.7%
2,964,813 3,622,385 81.8% 4,392,397 21.3%
TOWN OPERATING REVENUES
Daily Drop-Ins 34,657 30,000 115.5% 49,000 63.3%
Member Dues 471,910 526,480 89.6% 620,500 17.9%
Recreation Programs 150,830 82,500 182.8% 240,000 190.9%
Swim Team/Swim Lessons - 8,000 0.0% - -100.0%
Facility Rental Income 56,467 50,500 111.8%75,000 48.5%
713,864 697,480 102.3% 984,500 41.2%
OTHER REVENUES
Local Sales Tax 2,288,272 2,932,798 78.0% 3,430,364 17.0%
Real Property Rental Income 19,502 19,502 100.0% 19,502 0.0%
Interest Income 10,605 1,000 1060.5% 15,594 1459.4%
Miscellaneous 37,454 125,100 0.0%162,487 29.9%
2,355,833 3,078,400 76.5% 3,627,947 17.9%
TOTAL REVENUES 6,034,510 7,398,265 81.6% 9,004,844 21.7%
% Actuals YE % Variance
to Budget to Budget
EXPENDITURES:
CONTRACTED OPERATING EXPENDITURES
Personnel 956,973 1,641,903 58.3% 1,541,284 -6.1%
Food & Beverage 354,551 445,441 79.6% 470,135 5.5%
Operations & Maintenance 1,574,076 2,429,634 64.8% 2,285,843 -5.9%
Equipment Leases 111,298 184,550 60.3%173,082 -6.2%
2,996,898 4,701,528 63.7% 4,470,344 -4.9%
TOWN OPERATING EXPENDITURES
Personnel 507,722 875,291 58.0% 891,376 1.8%
Operations & Maintenance 148,544 211,290 70.3%211,290 0.0%
656,266 1,086,581 60.4% 1,102,666 1.5%
CAPITAL OUTLAY 61,844 132,500 46.7% 132,500 0.0%
TRANSFERS OUT 168,519 1,868,519 9.0% 315,658 -83.1%
TOTAL EXPENDITURES 3,883,527 7,789,128 49.9% 6,021,168 -22.7%
SURPLUS / (DEFICIT) 2,150,983 (390,863) 2,983,676
BEGINNING FUND BALANCE 2,676,793
Plus: Surplus / (Deficit)2,983,676
ENDING FUND BALANCE **5,660,469
* Year-end estimates are subject to further revision
** Ending fund balance amounts are estimates and are subject to further revision
FY 2021/2022
Actuals
thru 2/2022 Budget Year End
Estimate *
Community Center Fund
Actuals
thru 2/2022 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
3,341 2,500 841 3,561 (220)Rounds ‐ Member 21,681 17,750 3,931 20,323 1,358
1,080 480 600 569 511 Rounds ‐ Outing 4,916 2,520 2,396 2,316 2,600
5,963 4,480 1,483 4,266 1,697 Rounds ‐ Public 34,884 31,560 3,324 30,292 4,592
====================================================================================== ==================================================================================
10,384 7,460 2,924 8,396 1,988 Total Rounds 61,481 51,830 9,651 52,931 8,550
Revenue
301,069 211,100 89,969 229,807 71,261 Green Fees 1,387,651 1,135,400 252,251 1,152,215 235,436
24,433 19,590 4,843 24,066 367 Cart Fees 184,724 154,955 29,769 165,083 19,642
6,659 6,000 659 6,781 (121)Driving Range 31,305 34,500 (3,195)32,921 (1,616)
1,704 0 1,704 0 1,704 Golf Cards/Passes 14,531 0 14,531 0 14,531
26,677 15,600 11,077 17,213 9,464 Pro Shop Sales 143,808 131,400 12,408 131,688 12,120
35,055 27,800 7,255 17,967 17,088 Food (Food & Soft Drinks) 206,710 145,165 61,545 95,561 111,149
29,319 24,100 5,219 24,492 4,826 Beverages (Alcohol) 180,393 146,025 34,368 144,318 36,075
9,920 0 9,920 1,387 8,533 Other Food & Beverage Revenue 20,634 0 20,634 2,336 18,298
3,070 2,000 1,070 2,124 946 Other Golf Revenues (Club Rent, Handicap 20,910 8,725 12,185 15,726 5,184
2,502 1,500 1,002 3,634 (1,132)Clinic / School Revenue 19,598 6,500 13,098 15,601 3,997
99,690 82,500 17,190 91,219 8,471 Dues Income ‐ Monthly Dues 748,087 640,000 108,087 653,384 94,703
6,210 0 6,210 1,289 4,921 Miscellaneous Income and Discounts 6,462 0 6,462 4,121 2,341
==================================================================================== ===============================================================================
546,306 390,190 156,116 419,979 126,327 Total Revenue 2,964,813 2,402,670 562,143 2,412,955 551,859
Cost of Sales
22,392 11,630 (10,762)11,629 (10,763)COGS ‐ Pro Shop 105,127 98,270 (6,857)91,115 (14,013)
10,317 7,755 (2,562)5,557 (4,760)COGS ‐ Food 59,752 37,509 (22,242)30,431 (29,321)
1,519 1,290 (229)887 (631)COGS ‐ Non‐Alcoholic Beverages 9,824 9,450 (374)9,406 (417)
9,050 7,230 (1,820)6,557 (2,493)COGS ‐ Alcohol 55,217 43,808 (11,409)42,491 (12,725)
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
43,278 27,905 (15,373)24,630 (18,648)Total Cost of Sales 229,919 189,037 (40,882)173,443 (56,476)
==================================================================================== ===============================================================================
503,028 362,285 140,743 395,349 107,679 GROSS INCOME 2,734,894 2,213,633 521,261 2,239,511 495,383
Labor
32,847 31,777 (1,070)28,793 (4,055)Golf Operation Labor 223,079 233,577 10,498 192,515 (30,564)
8,319 10,513 2,193 7,327 (992)General and Administrative 77,115 93,200 16,085 80,311 3,196
51,100 64,374 13,274 51,627 527 Maintenance and Landscaping 471,631 519,157 47,526 450,622 (21,009)
29,682 20,203 (9,479)16,226 (13,456)F&B 176,832 140,927 (35,904)127,637 (49,195)
6,176 6,671 495 6,691 515 Sales and Marketing 55,092 46,870 (8,222)51,194 (3,898)
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
128,125 133,538 5,413 110,664 (17,461)Total Direct Labor 1,003,748 1,033,731 29,983 902,279 (101,469)
9,383 12,686 3,303 10,348 965 Total Payroll Taxes 79,966 98,204 18,239 82,288 2,322
4,638 12,500 7,862 11,188 6,550 Total Medical/Health Benefits 62,688 100,000 37,312 83,732 21,044
2,555 2,080 (475)1,314 (1,241)Total Workmans Comp 18,077 16,540 (1,537)13,668 (4,409)
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
16,576 27,266 10,690 22,850 6,274 Total Payroll Burden 160,730 214,744 54,014 179,688 18,957
==================================================================================== ===============================================================================
144,700 160,804 16,104 133,514 (11,186)Total Labor 1,164,478 1,248,476 83,997 1,081,966 (82,512)
Other Operational Expenses
8,464 2,670 (5,794)12,133 3,670 Golf Ops 58,817 42,440 (16,377)57,764 (1,053)
14,587 13,405 (1,182)10,137 (4,450)G&A 94,884 86,650 (8,234)114,966 20,082
56,767 24,550 (32,217)23,627 (33,140)Maintenance 436,974 403,050 (33,924)366,981 (69,993)
3,205 4,360 1,155 2,310 (896)F&B 22,255 42,780 20,525 19,833 (2,422)
1,870 1,050 (820)1,172 (698)Sales and Marketing 15,288 16,875 1,587 19,649 4,361
20,100 14,784 (5,316)13,041 (7,059)Golf Cart Leases 111,298 118,272 6,974 100,782 (12,958)
0 0 0 0 0 Equipment Leases 0 0 0 41,928 41,928
58,470 51,600 (6,870)44,965 (13,506)Utilities ‐ Maintenance 602,318 780,400 178,082 625,454 23,136
14,966 14,275 (691)18,789 3,822 Utilities ‐ G&A 124,201 111,955 (12,246)165,223 41,022
10,200 10,200 0 10,000 (200)Management Fees 81,600 81,600 0 80,000 (1,600)
4,039 3,300 (739)4,600 561 Insurance ‐ P&C 30,082 26,400 (3,682)35,978 5,896
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
192,669 140,194 (52,475)140,773 (51,896)Total Other Operational Expenses 1,582,316 1,710,422 128,106 1,628,559 43,801
==================================================================================== ===============================================================================
337,369 300,998 (36,371)274,286 (63,083)Total Expenses 2,746,794 2,958,898 212,103 2,710,525 (38,711)
==================================================================================== ===============================================================================
165,659 61,287 104,372 121,063 44,596 EBITDAR (11,900) (745,265)309,158 (471,014)456,672
==================================================================================== ===============================================================================
165,659 61,287 104,372 121,063 44,596 EBITDA (11,900) (745,265)730,923 (471,014)456,672
Interest Expense/Dep&Amt
00000Other Expense (343)0 343 19,288 19,631
9,969 0 (9,969)0 (9,969)Capital Improvements/Cap Reserve 20,529 0 (20,529)0 (20,529)
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
9,969 0 (9,969)0 (9,969)Total Interest Expense 20,186 0 (20,186)19,288 (897)
==================================================================================== ===============================================================================
155,690 61,287 94,403 121,063 34,627 Net Income (32,085) (745,265)710,737 (490,302)455,775
El Conquistador Golf Club
For the Month Ending February 28th, 2022
February YTD
ATTACHMENT DConsolidated Year-to-Date Financial Report through Febuary 2022FY 2021/2022FY 21/22 Capital Leases/Left in AccountsBegin Bal. Transfer OutThru Feb. 2022General Fund 32,408,542 34,782,527 34,782,527 4,424,073 17,919,306 16,608,776 339,947 39,292,102 27,898,967 Highway Fund 1,242,979 2,612,044 2,612,044 729,285 334,849 2,019,314 3,083,448 771,575 Grants and Contributions Fund - 147,038 147,038 25,877 40,625 66,502 80,536 Seizure & Forfeiture - Justice/State 266,810 26,170 26,170 101,910 101,910 191,070 Community Center Fund 2,676,793 6,034,510 6,034,510 279,817 1,464,695 2,077,171 61,844 3,883,527 4,827,776 Municipal Debt Service Fund 165,436 90,164 19,210,226 19,300,390 17,981,083 1,517,152 19,498,235 (32,409) Oracle Road Debt Service Fund 4,194 16 16 - 4,210 Water Resource System & Dev. Impact Fee Fund 18,744,638 876,308 876,308 75,000 916,169 319,207 1,310,376 18,310,570 Townwide Roadway Dev Impact Fee Fund 1,978,878 243,260 243,260 46,905 46,905 2,175,233 Parks & Recreation Impact Fee Fund 316,645 111,714 111,714 - 428,359 Police Impact Fee Fund 168,764 57,376 57,376 117,750 117,750 108,390 Capital Fund 2,504,029 750,598 28,844,742 29,595,340 60,212 367,932 1,925,156 2,353,300 29,746,069 PAG/RTA Fund 1,248,618 19,952 19,952 265,847 265,847 1,002,723 Water Utility 13,666,981 12,922,377 12,922,377 2,402 2,122,326 5,064,466 786,008 4,215,022 12,190,224 14,399,134 Stormwater Utility 1,001,740 1,028,372 1,028,372 522,689 204,588 727,277 1,302,835 Benefit Self Insurance Fund 2,379,019 2,492,017 2,492,017 2,063,277 2,063,277 2,807,759 Recreation In-Lieu Fee Fund 17,045 66 66 - 17,111 Total 78,791,110 62,194,509 48,054,968 110,249,477 4,824,042 22,818,513 44,904,929 6,401,815 6,051,381 85,000,680 104,039,907 Total OutPersonnel O&M CapitalFund RevenueOther Fin Sources/TfrsTotal InDebt Service
ATTACHMENT EGeneral Fund Local Sales Tax Collections FY 2021/22CATEGORY JULYAUGSEPOCTNOVDECJANFEBMARAPRMAYJUNETOTALConstruction Sales Tax 441,038 419,552 651,924 906,165 509,231 436,821 829,833 525,234 4,719,798 Utility Sales Tax 321,489 383,548 329,545 323,173 285,048 238,499 253,620 474,092 2,609,014 Retail Sales Tax 675,726 647,693 641,711 682,029 727,762 814,794 1,015,258 701,089 5,906,062 Bed Tax 130,217 117,012 93,538 108,884 392,162 157,378 205,021 181,927 1,386,139 Restaurant & Bar Sales Tax 172,386 162,947 172,178 195,482 227,724 191,664 226,775 199,622 1,548,780 All Other Local Sales Tax *181,767 180,252 164,385 191,016 284,083 217,626 274,274 225,089 1,718,492 TOTAL 1,922,624$ 1,911,004$ 2,053,282$ 2,406,749$ 2,426,009$ 2,056,782$ 2,804,781$ 2,307,053$ 17,888,284$ 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 FGeneral Fund State Shared RevenuesFY 2021/22CATEGORY JULYAUGSEPOCTNOVDECJANFEBMARAPRMAYJUNETOTALState Shared Income Tax 500,637 500,637 517,313 517,313 517,313 517,313 517,313 517,313 4,105,152 State Shared Sales Tax 291,674 534,620 464,795 538,626 428,064 680,044 569,532 458,855 3,966,210 County Auto Lieu 100,364 178,439 214,084 179,539 176,572 183,593 166,138 185,396 1,384,125 Smart and Safe- - - - - 113,051 - 59 113,110 TOTAL 892,675$ 1,213,696$ 1,196,192$ 1,235,478$ 1,121,949$ 1,494,001$ 1,252,983$ 1,161,623$ 9,568,596$ 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- - - - - - - - - - - 47,246 47,246 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$ 1,607,140$ 14,482,584$
Fiscal Year 2021/22
Financial Update Through February 2022
April 19, 2022
GENERAL FUND REVENUES
REVENUE SOURCE Budget Actuals
Thru 2/2022 % of Budget Year-End
Estimate Notes
Local Sales Taxes $ 21,157,707 $ 17,167,417 81.1%$ 26,070,335 Trending higher than expected; continued growth and
strong recovery in categories impacted by COVID
State Shared Revenues 13,729,923 9,568,596 69.7%14,271,621 Trending higher than expected. New Smart & Safe
funds received this year
Charges for Services 2,387,776 1,663,132 69.7%2,514,733 Trending higher than expected; improvement in
recreation revenue
Licenses & Permits 1,849,000 1,689,952 91.4%2,197,500
Trending higher than budgeted due to several large
commercial projects; SFR permits , which slowed
considerably for first half of year, now picking up
Grant Revenue 6,065,290 3,514,559 57.9%6,143,448 Year-end estimate includes amount of American
Rescue Plan Act (ARPA) funds recognized this year.
All Other 1,883,500 1,178,871 62.6%1,888,525 Includes other intergovernmental revenue, interest
income and miscellaneous revenue
TOTAL GENERAL FUND
REVENUES $ 47,073,196 $ 34,782,527 73.9%$ 53,086,162
Budget variance due to outperforming sales tax
collections, state shared revenue and permit
revenue
GENERAL FUND EXPENDITURES
EXPENDITURE CATEGORY Budget Actuals
Thru 2/2022 % of Budget Year-End
Estimate Notes
Personnel $ 30,775,632 $ 17,919,305 58.2%$ 29,547,575
Year to date actuals are slightly below budget due
to timing of payroll and vacancy savings. Reduced
year-end estimate due to personnel vacancies in
several departments.
Operations &
Maintenance 21,981,773 16,608,777 75.6%22,053,707 Includes $10M PSPRS payment from reserves.
Added Smart & Safe funds to year-end estimate.
Capital 1,095,175 339,947 31.0%666,219
Budget includes Westward Look improvements; IT
needs and Parks & Recreation improvements.
Added Smart & Safe funds to year-end estimate.
Transfers Out 7,408,264 4,424,073 59.7%6,262,832
Actuals reflect a transfer for debt service and
budgeted transfers to the Capital Fund. No principal
payment due in FY 21/22 for pension obligation
bonds.
TOTAL GENERAL FUND
EXPENDITURES $ 61,260,844 $ 39,292,102 64.1%$ 58,530,333 Budget variance mainly due to debt service
transfer for pension obligation bonds
Budgeted Deficit/Use of Fund
Balance: ($14.2M)
Estimated Deficit/Use of Fund
Balance = ($5.4M)
Estimated Ending Fund
Balance: $27.0M
50.1% of budgeted expenditures
Exceeds Council 25% Policy by
$13.5M
GENERAL FUND
$33.6M
$25.0M
$34.8M
$39.3M
$47.1M
$61.3M
$M
$10M
$20M
$30M
$40M
$50M
$60M
$70M
Revenues Expenditures
General Fund
FY 21/22 Through February
PY Actual
CY Actual
CY Budget
HIGHWAY FUND REVENUES
REVENUE SOURCE Budget Actuals
Thru 2/2022 % of Budget Year-End
Estimate Notes
Licenses & Permits $ 25,000 $ 20,702 82.8%$ 30,000 Trending above budget at this time
State Shared Revenues 3,614,922 2,580,852 71.4%3,870,000 Trending higher than expected
All Other 8,000 10,490 131.1%13,069 Additional revenues attributable to insurance
recoveries and interest income
TOTAL HIGHWAY FUND
REVENUES $ 3,647,922 $ 2,612,044 71.6%$ 3,913,069 Expected to exceed budget due to additional HURF
revenues
HIGHWAY FUND EXPENDITURES
EXPENDITURE CATEGORY Budget Actuals
Thru 2/2022 % of Budget Year-End
Estimate Notes
Personnel $ 1,208,870 $ 729,285 60.3%$ 1,188,023 Trending slightly lower than expected; % of budget
reflects timing of payrolls; slight savings projected
Operations &
Maintenance 616,655 334,849 54.3%616,655
Trending as expected; larger line-items include
striping, field supplies, electricity and traffic signal
maintenance
Capital 2,265,000 2,019,314 89.2%2,265,000 Trending as expected; timing of pavement
preservation program
TOTAL HIGHWAY FUND
EXPENDITURES $ 4,090,525 $ 3,083,448 75.4%$ 4,069,678 Slight savings in personnel projected for year-end
Budgeted Deficit/Use of Fund
Balance: ($443,000)
Estimated Deficit/Use of Fund
Balance = ($157,000)
Estimated Ending Fund
Balance: $1.1M
HIGHWAY FUND
$2.4M
$2.2M
$2.6M
$3.1M
$3.6M
$4.1M
$.0M
$.5M
$1.0M
$1.5M
$2.0M
$2.5M
$3.0M
$3.5M
$4.0M
$4.5M
$5.0M
Revenues Expenditures
Highway Fund
FY 21/22 Through February
PY Actual
CY Actual
CY Budget
COMMUNITY CENTER FUND REVENUES
REVENUE SOURCE Budget Actuals
Thru 2/2022 % of Budget Year-End
Estimate Notes
Contracted Operating
Revenues $ 3,622,385 $ 2,964,813 81.8%$ 4,392,397
All revenues sources trending higher than expected.
Strong performance particularly in golf revenues
and member dues.
Town Operating Revenues 697,480 713,864 102.3%984,500
Exceeding budget in member dues, recreation
program revenue, facility rental income and daily
drop-ins
Other Revenues 3,078,400 2,355,833 76.5%3,627,947
Includes 1/2 cent sales tax revenues, HOA
contributions, interest income and other
miscellaneous revenues. Higher than expected local
sales tax.
TOTAL COMM. CENTER
FUND REVENUES $ 7,398,265 $ 6,034,510 81.6%$ 9,004,844
Total revenues projected to exceed budget by $1.6
million or 21.7%, due to sales tax, fitness and
recreation program revenue, and golf revenue.
COMMUNITY CENTER FUND EXPENDITURES
EXPENDITURE CATEGORY Budget Actuals
Thru 2/2022 % of Budget Year-End
Estimate Notes
Contracted Operating
Expenditures $ 4,701,528 $ 2,996,898 63.7%$ 4,470,344
Trending better than expected. O&M and personnel
costs are expected to come in under budget by
$144,000 and $101,000 respectively, per contractor.
Town Operating
Expenditures 1,086,581 656,266 60.4%1,102,666 Trending as expected
Capital Outlay 132,500 61,844 46.7%132,500 Projected on budget at this time
Transfers Out 1,868,519 168,519 9.0%315,658 Actuals reflect transfers for debt service. Interest
only payment due on Parks & Rec bonds.
TOTAL COMM. CENTER
FUND EXPENDITURES $ 7,789,128 $ 3,883,527 49.9%$ 6,021,168
Budget savings of $1.6 million in transfers out.
Outperformance in contracted operating
expenditures.
COMMUNITY CENTER FUND
Budgeted Deficit/Use of Fund
Balance: ($0.4M)
Estimated Surplus: $3.0M
Estimated Ending Fund
Balance: $5.7M
$4.6M
$3.5M
$6.0M
$3.9M
$7.4M
$7.8M
$M
$1M
$2M
$3M
$4M
$5M
$6M
$7M
$8M
Revenues Expenditures
Community Center Fund
FY 21/22 Through February
PY Actual
CY Actual
CY Budget
MONTHLY FINANCIAL UPDATE
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