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AGENDA
ORO VALLEY TOWN COUNCIL
REGULAR SESSION
JUNE 7, 2023
ORO VALLEY COUNCIL CHAMBERS
11000 N. LA CAÑADA DRIVE
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speakers at the end of the agenda.
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Executive Sessions – Upon a vote of the majority of the Town Council, the Council may enter into
Executive Sessions pursuant to Arizona Revised Statutes §38-431.03 (A)(3) to obtain legal advice on
matters listed on the Agenda.
REGULAR SESSION AT OR AFTER 6:00 PM
CALL TO ORDER
ROLL CALL
PLEDGE OF ALLEGIANCE
UPCOMING MEETING ANNOUNCEMENTS
MAYOR AND COUNCIL REPORTS ON CURRENT EVENTS
TOWN MANAGER'S REPORT ON CURRENT EVENTS
ORDER OF BUSINESS: MAYOR WILL REVIEW THE ORDER OF THE MEETING
INFORMATIONAL ITEMS
CALL TO AUDIENCE – At this time, any member of the public is allowed to address the Mayor and Town Council
on any issue not listed on today’s agenda. Pursuant to the Arizona Open Meeting Law, individual Council
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 Mayor and Council 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.
PRESENTATIONS
1.Presentation and possible discussion regarding the Town's Five-Year Financial Forecast through FY
2028/29
CONSENT AGENDA
(Consideration and/or possible action)
A.Minutes - May 24, 2023
B.Appointment to the Public Safety Personnel Retirement System (PSPRS) Board
C.Resolution No. (R)23-20, adopting the Public Safety Personnel Retirement System (PSPRS) Pension
Funding Policy and accepting the Town's share of assets and liabilities under the PSPRS actuarial
valuation report
D.Resolution No. (R)23-21, designating David Gephart as Chief Fiscal Officer, authorized to submit the
Town's Annual Expenditure Limitation Report (AELR) to the State Auditor General for FY 23-24
E.Resolution No. (R)23-22, authorizing and approving an Intergovernmental Agreement between the
Town of Oro Valley (Town) and the Arizona Department of Transportation (ADOT) for the design and
construction of a multi-use path on Naranja Drive between La Cañada Drive and First Avenue
REGULAR AGENDA
1.PUBLIC HEARING: RESOLUTION NO. (R)23-23, AUTHORIZING AND APPROVING AN INCREASE
TO THE POTABLE WATER BASE RATES, INCREASE TO THE POTABLE WATER COMMODITY
RATES AND AN INCREASE TO THE RECLAIMED WATER COMMODITY RATE FOR THE TOWN OF
ORO VALLEY WATER UTILITY
2.PUBLIC HEARING: RESOLUTION NO. (R)23-24, DISCUSSION AND POSSIBLE ACTION
REGARDING THE ADOPTION OF THE TENTATIVE BUDGET FOR FY 2023/24 AND SETTING THE
LOCAL ALTERNATIVE EXPENDITURE LIMITATION FOR FY 2023/24
FUTURE AGENDA ITEMS (The Council may bring forth general topics for future meeting agendas. Council may not
discuss, deliberate or take any action on the topics presented pursuant to ARS 38-431.02H)
ADJOURNMENT
The Mayor and Council may, at the discretion of the meeting chairperson, discuss any Agenda item.
POSTED: 6/1/23 at 5:00 p.m. by mrs
POSTED: 6/1/23 at 5:00 p.m. by mrs
When possible, a packet of agenda materials as listed above is available for public inspection at least 24 hours
prior to the Council meeting in the office of the Town Clerk 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 Council
meeting at 229-4700.
PUBLIC COMMENT ON AGENDA ITEMS
The Town has modified its public comment procedures for its public bodies to allow for limited remote/virtual
comment via Zoom. The public may provide comments remotely only on items posted as required Public Hearings,
provided the speaker registers 24 hours prior to the meeting. For all other items, the public may complete a blue
speaker card to be recognized in person by the Mayor, according to all other rules and procedures. Written
comments can also be emailed to Town Clerk Michael Standish at mstandish@orovalleyaz.gov for distribution to
the Town Council prior to the meeting. Further instructions to speakers are noted below.
INSTRUCTIONS TO IN-PERSON SPEAKERS
Members of the public shall be allowed to speak on posted public hearings and during Call to Audience when
attending the meeting in person. The public may be allowed to speak on other posted items on the agenda at the
discretion of the Mayor.
If you wish to address the Town Council 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 Town Clerk. Please indicate on the blue
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.
Please step forward to the podium when the Mayor calls on you to address the Council.
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 Council. You will only be allowed to
address the Council one time regarding the topic being discussed.
3. Please limit your comments to 3 minutes.
4. During Call to Audience, you may address the Council on any matter that is not on the agenda.
5. Any member of the public speaking must speak in a courteous and respectful manner to those
present.
INSTRUCTIONS TO VIRTUAL SPEAKERS FOR PUBLIC HEARINGS
Members of the public may attend the meeting virtually and request to speak virtually on any agenda item that is
listed as a Public Hearing. If you wish to address the Town Council virtually during any listed Public Hearing,
please complete the online speaker form by clicking here https://forms.orovalleyaz.gov/forms/bluecard at least 24
hours prior to the start of the meeting. You must provide a valid email address in order to register. Town Staff will
email you a link to the Zoom meeting the day of the meeting. After being recognized by the Mayor, staff will
unmute your microphone access and you will have 3 minutes to address the Council. Further
instructions regarding remote participation will be included in the email.
Thank you for your cooperation.
Town Council Regular Session 1.
Meeting Date:06/07/2023
Submitted By:David Gephart, Finance
Department:Finance
SUBJECT:
Presentation and possible discussion regarding the Town's Five-Year Financial Forecast through FY 2028/29
RECOMMENDATION:
This item is for presentation and discussion.
EXECUTIVE SUMMARY:
The Town's adopted financial policies provide "as a part of the annual Town budget preparation cycle, the Finance
Department shall prepare a minimum five-year financial forecast of projected revenues and expenditures to
measure the financial sustainability of the Town's operations and service levels." As such, staff will present the
five-year financial forecast through FY 2028/29 for the General Fund, Highway Fund, Capital Fund and
Community Center Fund.
The forecast assumptions were compiled by referencing several sources of data, including the University of
Arizona, Joint Legislative Budget Committee (JLBC), State Finance Advisory Committee, Arizona Department of
Revenue, and the Arizona Department of Transportation. Staff also incorporated Town historical trend data and
professional judgment into formulation of this forecast.
BACKGROUND OR DETAILED INFORMATION:
General Fund
The General Fund forecast demonstrates modest and reasonable growth in revenues over the next five years and
is balanced with expenditure levels that sustain current levels of programs and services, continued capital
investments, and continued commitment to reasonable employee compensation and benefits.
The forecast assumes conservative growth with no major economic downturns. The forecast models local sales
tax growth using several data points. Figures are provided by JLBC, the University of Arizona, and the Arizona
Department of Transportation. These are then combined with the Town’s analysis and trend data to form the
baseline forecast.
Continued growth of 3-5% in most local sales tax categories is anticipated. Increases in construction sales tax are
forecasted in FY24 and FY25 given the assumption of increased commercial construction in the near term, then
decline slightly in outer years due to reduced available land area for new development.
State shared revenues will see a sharp increase in FY 2023/24 due to a change in the revenue allocation from
15% to 18%. Beginning FY 2024/25, statutory income tax rate reductions and a cap of 2.5% will reduce the
revenue 10.8%, and another 7.1% in FY 2025/26. URS growth is then expected to stabilize to about 2% growth
per year.
The forecast assumes flat residential development continues through FY 2026/27, with a steep decline thereafter.
Single family residential permits are forecasted to fall below 100 per year by FY 2028/29.
Forecasted personnel expenditures in the General Fund reflect wage and step increases for employees, as well
as increases for insurance coverage and other employee-related costs. The General Fund forecast also includes
modest capacity for new positions. The forecast assumes the Town will continue to make elevated PSPRS
contributions through FY 2024/25, with a reduction expected thereafter due to over-funded status.
The forecast assumes operations and maintenance (O&M) costs increase 2% per year. No changes to service
levels are assumed. Annual transfers to the Capital Fund for CIP projects are assumed at 5% of sales tax
collections plus any remaining fund balance over the 30% reserve policy.
The ending fund balance in the General Fund is maintained at the Town’s adopted policy requirement of 30% of
expenditures each year, ranging from approximately $15.0 - $16.9 million.
Highway Fund
Highway Fund revenues are composed primarily of State-shared highway user (gas tax) revenues. The
State-shared highway user revenue projections are provided by the Arizona Department of Transportation and are
projected to grow 5% in FY 2024/25, with growth slowing to about 3.5% per year thereafter.
Highway Fund expenditures reflect similar assumptions to those included in the General Fund forecast for
personnel and O&M costs. Funding for the pavement preservation program is included in the forecast at
$2.5-$2.8 million each year. To fund needed roadway CIP projects, the forecast assumes annual transfers of $4
million from the Capital Fund in FYs 2024/25 through 2026/27.
Capital Fund
The Capital Fund is primarily supported by transfers from the General Fund, with supplemental sources from
annual vehicle reserves, CIP-related bond proceeds, and grant-funded CIP projects.
Capital Fund expenditures consist primarily of the Town’s projected CIP projects, as well as personnel costs for
two temporary CIP managers. The forecast excludes the cost of a new police station, as a revenue source has not
yet been identified. Vehicle replacement costs are projected to grow 10% annually due to inflation.
As noted above, to fund needed roadway CIP projects, the forecast assumes annual transfers of $4 million from
the Capital Fund into the Highway Fund in FYs 2024/25 through FY 2026/27.
Community Center Fund
Community Center Fund revenue consists of local sales tax, contracted golf revenues, HOA golf contributions
through FY 2024/25, Parks and Rec program revenue, and fitness memberships. Local sales tax estimates follow
the same growth projections as the General Fund for relevant categories. Contracted golf revenues are modestly
increased in FY 2023/24 and with a healthy bump in FY 2024/25 due to course closures for irrigation construction.
The remaining recreation charges are conservatively forecasted to grow 1% annually, accounting for the potential
impact high inflation may have on discretionary spending.
Forecasted Town personnel and O&M figures reflect similar assumptions to the General Fund. Contracted
expenditures related to golf operations, including the Pusch 9-hole course, assume annual cost increases of 5%
in FY 2023/24 and 1-2% annually thereafter. Upon completion of irrigation construction, it is assumed that
contractor operations, play levels and revenues are consistent with FY 2020/21 and FY 2021/22.
Capital outlay in the Community Center Fund reflects the 10-year CIP, with additional costs of $150,000 assumed
annually for other operating capital needs and maintenance.
Transfers out reflects debt service on the Parks and Recreation bonds and the 2016 Community Center energy
efficiency bonds.
FISCAL IMPACT:
N/A
SUGGESTED MOTION:
This item is for presentation and discussion.
Attachments
General Fund Forecast
General Fund Chart
General Fund Assumptions
Highway Fund Forecast
Highway Fund Chart
Highway Fund Assumptions
Capital Fund Forecast
Capital Fund Chart
Capital Fund Assumptions
Community Center Fund Forecast
Community Center Fund Chart
Community Center Fund Assumptions
Staff Presentation
Town of Oro ValleyFive-Year ForecastFY 22/23 EstimatedFY 23/24 TentativeFY 24/25 ProjectedFY 25/26 ProjectedFY 26/27 ProjectedFY 27/28 ProjectedFY 28/29 ProjectedSOURCESTaxes 27,031,462$ 26,398,318$ 28,024,560$ 28,758,293$ 31,096,860$ 30,747,462$ 31,672,268$ State Shared Revenue 18,405,604 22,953,222 22,052,464 21,821,068 22,548,044 23,303,237 24,071,732 Charges for Services 2,877,610 3,218,646 3,338,208 3,423,802 3,517,977 3,613,226 3,684,639 Licenses & Permits 2,636,961 1,717,118 1,827,011 2,357,215 2,601,111 1,982,150 1,756,252 Intergovernmental 1,600,500 1,869,500 1,887,295 1,905,268 1,923,421 1,941,755 1,960,272 Grants 659,000 657,415 663,989 670,629 677,335 684,109 690,950 Miscellaneous 611,900 263,000 273,520 284,461 295,839 307,673 319,980 Fines 85,000 125,000 126,250 127,513 128,788 130,076 131,376 Interest Income 300,000 300,000 255,690 263,730 271,439 279,805 287,939 Total Sources 54,208,037 57,502,219 58,448,987 59,611,979 63,060,815 62,989,491 64,575,408 USESPersonnel 33,379,955 35,652,260 36,159,451 37,322,888 38,617,334 39,879,057 41,237,279 O&M 11,549,240 13,386,754 13,452,376 13,855,121 14,061,752 14,429,593 14,655,352 Capital Outlay 848,382 1,360,600 537,030 547,771 558,726 569,901 581,299 Transfers Out 15,996,977 12,274,644 10,907,325 7,413,122 9,369,393 7,618,719 7,622,865 Total Uses 61,774,554 62,674,258 61,056,182 59,138,901 62,607,205 62,497,269 64,096,794 Surplus/(Use of Fund Balance) (7,566,517) (5,172,040) (2,607,195) 473,077 453,610 492,222 478,614 Beginning Fund Balance 30,390,423 22,823,906 17,651,867 15,044,672 15,517,749 15,971,360 16,463,582 Ending Fund Balance 22,823,906$ 17,651,867$ 15,044,672$ 15,517,749$ 15,971,360$ 16,463,582$ 16,942,196$ Reserve as % of Expenditures49.9% 35.0% 30.0% 30.0% 30.0% 30.0% 30.0%GENERAL FUND
$- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000 $45,000,000 $50,000,000 $55,000,000 $60,000,000 $65,000,000 $70,000,000FY 22/23EstimatedFY 23/24TentativeFY 24/25ProjectedFY 25/26ProjectedFY 26/27ProjectedFY 27/28ProjectedFY 28/29ProjectedGeneral FundSources, Uses and Fund BalanceUSESSOURCESFUND BALANCERESERVE (30%)
Sources Assumptions
Local Sales Taxes
1. Assuming revenues from development at the Oro Valley Marketplace
2. Slow economic growth with no major economic downturns in the five-year outlook
3. Slight decline in construction sales tax in outer years due to reduced available land area for new development
4.Hotel/bed tax modest 5% growth
5. Conservative levels of one-time, non-specific commercial development
6. 3-5% growth per year in retail, restaurant/bar, utility and other categories
State Shared Revenues
1. Projections based on current reports from Joint Legislative Budget Committee and League of Cities and Towns
2. Growth projections range from 3-6%; higher estimates assumed for Smart and Safe revenue
3. Sharp increase in state shared income tax in FY 23/24 from by statutory increase in state shared revenue allocation from 15% to 18%;
10.8% reduction in FY24/25 and 7.1% reduction in FY25/26 for statutory tax cuts, growth of 2% thereafter
4. Smart and Safe revenues expected to have high growth in the near term and sustained high growth thereafter, similar to observations
of other western states with legalized recreational cannabis (Colorado, Oregon, Washington)
Charges for Services
1.3% growth rate in charges for services to enterprise funds
2.3-4% growth rate for Parks & Recreation related revenues
3.Development revenues tied to projected permitting activity
4.Marketplace permitting revenues from FY 24/25 to FY 28/29
Licenses & Permits
1. Conservative single family residential (SFR) permit activity in near term
2.Conservative commercial permitting activity forecast, with specific permitting for the Oro Valley Marketplace
3. Slowing revenues and activity in outer years attributable to reduced available land area for new development
SFR Building Permit Forecast:
Intergovernmental
1.School resource officer funding kept flat at $90,000
2. Conservative growth in RTA transit reimbursement revenue
Grant Revenues/Fines
1.Police overtime grant revenues assumed at 1% growth per year
2. Fine revenues return to historical collections in FY 23/24; 1% growth per year thereafter
Miscellaneous
1.Consists primarily of in-lieu bed tax income; 4% growth per year
Interest Income
1. 1% growth per year
2. Subject to economic conditions and based on anticipated fund balance
GENERAL FUND FORECAST
ASSUMPTIONS
FY 23/24
Tentative
FY 24/25
Projected
FY 25/26
Projected
FY 26/27
Projected
FY 27/28
Projected
FY 28/29
Projected
119 138 197 210 133 84
GENERAL FUND FORECAST
ASSUMPTIONS
Uses Assumptions
Salaries and Benefits
1. Police step increases included each year; pay adjustments included at 4.25% per year
2. Public safety pension rates kept flat at 43.47% until FY 24/25, with a 40% decrease expected in contributions
3. Health insurance premiums increase 3-4% per year
4. Capacity for approximately four new positions annually
Operations & Maintenance
1. Forecast assumes no new initiatives or changes to service levels
2. Gas prices assumed to remain stable throughout the forecast period ($3.52/gal regular, $4.35/gal diesel)
3. Capital outlay reflects operating capital
4. 2-5% growth in O&M costs
CIP Funding
1.Shown as transfer out to Capital Fund
2. Annual amounts equal to 5% of projected sales tax collections, plus any remaining fund balance over the 30% reserve policy
3.ARPA funding reflected in the transfer out to the Capital Fund for FY 22/23
Debt Service Transfers
1. Transfer amounts include debt service on the pension obligation bonds
2. Police impact fees cover a portion of Series 2018 debt service for evidence facility and substation bond improvements
Town of Oro ValleyFive-Year ForecastFY 22/23 EstimatedFY 23/24 TentativeFY 24/25 ProjectedFY 25/26 ProjectedFY 26/27 ProjectedFY 27/28 ProjectedFY 28/29 ProjectedSOURCESState Shared Revenue 4,127,100$ 4,334,608$ 4,489,198$ 4,646,394$ 4,804,458$ 4,972,076$ 5,140,562$ Licenses & Permits 26,500 25,000 25,025 25,526 25,781 26,039 26,299 Interest Income 110,000 70,000 280,000 255,077 361,457 314,754 277,131 Miscellaneous 7,825 3,000 3,120 3,245 3,375 3,510 3,650 Transfers from Capital Fund - 1,500,000 4,000,000 4,000,000 4,000,000 Total Sources 4,271,425 5,932,608 8,797,343 8,930,241 9,195,071 5,316,378 5,447,642 USESPersonnel 1,196,095 1,262,861 1,382,643 1,403,978 1,432,041 1,460,744 1,490,102O&M 766,518 1,003,930 983,979 1,003,628 1,023,671 1,044,114 1,064,966Capital Outlay 2,641,398 4,202,000 4,995,500 6,462,063 5,852,542 2,819,532 2,888,521Total Uses 4,604,011 6,468,791 7,362,121 8,869,669 8,308,254 5,324,390 5,443,588 Surplus/(Use of Fund Balance) (332,586) (536,183) 1,435,222 60,572 886,817 (8,012) 4,054Beginning Fund Balance 1,206,985 874,399338,216 1,773,438 1,834,010 2,720,828 2,712,816 Ending Fund Balance 874,399$ 338,216$ 1,773,438$ 1,834,010$ 2,720,828$ 2,712,816$ 2,716,869$ HIGHWAY FUND
$- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000FY 22/23EstimatedFY 23/24TentativeFY 24/25ProjectedFY 25/26ProjectedFY 26/27ProjectedFY 27/28ProjectedFY 28/29ProjectedHighway FundSources, Uses and Fund BalanceUSESSOURCESFUND BALANCE
Sources Assumptions
Highway User Tax
1. Highway user revenues grow 3.4-3.6% per year
2. Forecast assumes no changes in state allocation of funds to cities and towns
Miscellaneous
1.Low growth; minimal amount based on current trend
Transfers In
1.Transfers from Capital Fund of $4 million annually from FY 24/25 through FY 26/27 to fund needed roadway projects
Uses Assumptions
Salaries and Benefits
1. Assumptions similar to General Fund for pay and benefit adjustments
2. Modest capacity for new positions
Operations & Maintenance
1. Assumes no changes to service levels, 2% Growth rate
Capital Outlay
1. Per 10-year CIP program; Capital Fund subsidizes projects in years when HURF revenues are not sufficient to cover costs
2.The La Cañada bridge deck repair ($7.7 million in FY26) is not in this forecast. Applying for outside funding
Pavement Preservation
1. Assumes no significant increase in lane miles. $2.5 million base with 3% increases each year
HIGHWAY FUND FORECAST
ASSUMPTIONS
Town of Oro ValleyFive-Year ForecastFY 22/23 EstimatedFY 23/24 TentativeFY 24/25 ProjectedFY 25/26 ProjectedFY 26/27 ProjectedFY 27/28 ProjectedFY 28/29 ProjectedSOURCESState Grants -$ 620,000$ -$ -$ -$ -$ -$ Interest Income 350,000 100,000 99,159 67,053 59,657 57,079 68,903 Miscellaneous 140,000 115,000 115,000 115,000 115,000 115,000 115,000 Vehicle Reserves 820,010 892,540 993,594 1,109,885 1,238,145 1,379,575 1,535,501 Transfers from General Fund 13,500,000 10,000,000 8,619,145 5,121,939 7,385,484 5,774,234 6,063,153 Transfer from Community Center Fund 4,077,075 - - - - - - Total Sources 18,887,085 11,727,540 9,826,899 6,413,877 8,798,285 7,325,888 7,782,558 USESPersonnel 236,528 254,765 157,755 158,790 - - - O&M 4,162 - - - - - - Capital Outlay 19,033,018 23,131,471 5,951,102 6,190,937 6,212,477 8,237,652 7,420,852Transfers to Highway Fund - 1,500,000 4,000,000 4,000,000 4,000,000 - - Total Uses 19,273,708 24,886,236 10,108,857 10,349,727 10,212,477 8,237,652 7,420,852 Surplus/(Use of Fund Balance) (386,623) (13,158,696) (281,959) (3,935,849) (1,414,191) (911,765) 361,706Beginning Fund Balance 23,952,930 23,566,30710,407,611 10,125,652 6,189,803 4,775,612 3,863,847 Ending Fund Balance 23,566,307$ 10,407,611$ 10,125,652$ 6,189,803$ 4,775,612$ 3,863,847$ 4,225,553$ CAPITAL FUND
$- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000FY 22/23EstimatedFY 23/24TentativeFY 24/25ProjectedFY 25/26ProjectedFY 26/27ProjectedFY 27/28ProjectedFY 28/29ProjectedCapital FundSources, Uses and Fund BalanceUSESSOURCESFUND BALANCE
Sources Assumptions
Vehicle Reserves
1. General Fund is charged the replacement value of new, non-enterprise fund vehicles over the useful life
2. Growth with assumed 2 new vehicle purchases annually
Miscellaneous
1.Reflects vehicle sales and insurance recoveries; flat growth
Transfers In
1.Transfers from General Fund consist of sales tax and excess General Fund reserves, per adopted financial policies
Uses Assumptions
Salaries and Benefits
1. Assumptions similar to General Fund for pay and benfit adjustments
2. Two temporary CIP project manager positions through FY 23/24; one in FY 24/25 through FY 25/26
3. No personnel costs after FY 25/26
Capital Outlay
1.Capital outlay reflects 10-year CIP program
2.Forecast also includes capacity for new vehicles and unplanned vehicle losses
Transfers Out
1. Transfers to the Highway Fund subsidize HURF revenue as needed for roadway projects
CAPITAL FUND FORECAST
ASSUMPTIONS
Town of Oro ValleyFive-Year ForecastFY 22/23 EstimatedFY 23/24 TentativeFY 24/25 ProjectedFY 25/26 ProjectedFY 26/27 ProjectedFY 27/28 ProjectedFY 28/29 ProjectedSOURCESTaxes 3,714,218$ 3,726,016$ 3,843,990$ 3,966,910$ 4,116,585$ 4,272,252$ 4,405,631$ Charges for Services 5,775,940 5,785,386 6,289,749 6,575,824 6,885,460 7,205,521 7,379,261 Interest Income 35,000 35,000 35,951 51,527 84,941 192,897 192,897 Miscellaneous 173,343 162,050 168,532 16,273 16,924 17,601 17,601 Total Sources 9,698,501 9,708,452 10,338,221 10,610,534 11,103,909 11,688,271 11,995,391 USESPersonnel 1,017,000 1,114,639 1,203,022 1,241,000 1,280,116 1,320,880 1,363,032 O&M 5,391,991 5,294,659 5,527,141 5,633,589 5,723,318 5,806,780 5,891,734 Capital Outlay 1,853,347 1,820,500 1,426,300 1,729,000 1,735,000 1,700,000 250,000 Debt Service 191,480 210,684 214,898 219,196 223,580 228,051 232,612 Transfers Out 6,105,141 1,717,203 1,717,328 1,715,524 1,717,768 1,712,060 1,714,286 Total Uses 14,558,959 10,157,685 10,088,689 10,538,308 10,679,782 10,767,771 9,451,664 Surplus/(Use of Fund Balance) (4,860,458) (449,233) 249,532 72,226 424,127 920,501 2,543,727 Beginning Fund Balance 5,860,458 1,000,000 550,767 800,300 872,526 1,296,653 2,217,154 Ending Fund Balance 1,000,000$ 550,767$ 800,300$ 872,526$ 1,296,653$ 2,217,154$ 4,760,881$ COMMUNITY CENTER FUND
$- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000FY 22/23EstimatedFY 23/24TentativeFY 24/25ProjectedFY 25/26ProjectedFY 26/27ProjectedFY 27/28ProjectedFY 28/29ProjectedCommunity Center FundSources, Uses and Fund BalanceUSESSOURCESFUND BALANCE
Sources Assumptions
Local Sales Taxes
1. Categories mirror General Fund forecast, where appropriate
2. Modest economic growth with no major economic downturns in the five-year outlook
3. 3-5% growth per year in retail, restaurant/bar, utility and other categories
Charges for Services
1.1% growth rate for Parks & Recreation related revenues
2.3-4% growth rate in food and beverage revenue
3.2.7-2.9% growth rate for 36-hole golf revenue beyond FY 24/25
4.FY 24/25 and beyond reflect play levels and revenues similar to FY 21/22, 1% growth in rounds annually therafter
5.Pusch Ridge golf revenue 2.5% growth on green fees and food & beverage, 2% on munthly dues, 1% in other categories
Miscellaneous
1.Forecast assumes HOA contributions end after FY 24/25, upon completion of five-year contracts
Uses Assumptions
Salaries and Benefits
1. Assumptions similar to General Fund for pay and benefit adjustments
Operations & Maintenance
1. Golf operating model remains consistent with FY 21/22
2. Full staffing levels
3. Assumptions similar to General Fund for inflation
4. 1% growth rate for golf operations costs
Capital Outlay
1.Capital outlay per 10-year CIP program
2.$150,000 annually for building improvements and minor assets
3.Vistoso Trails Nature Preserve maintenance at $100,000 per year
Transfers Out
1.Debt service on the Parks and Recreation bonds and the 2016 Community Center energy efficiency bonds
COMMUNITY CENTER FUND FORECAST
ASSUMPTIONS
Five-Year Financial Forecast
June 7, 2023
OVERVIEW
General Fund, Highway Fund, Capital Fund, and Community Center Fund
Snapshot based upon known current information
Serves as planning document for future budgets
Forecast is updated annually as part of the budget process
Sources: University of Arizona, Joint Legislative Budget Committee, AZ
Department of Transportation, as well as the knowledge, expertise and
professional judgment by Town management and staff
GENERAL FUND SOURCES -ASSUMPTIONS
Assumes continued economic recovery with no major economic downturns
All revenue sources at or above pre-pandemic levels
Continued growth of 3-5% in most local sales tax categories
Construction sales tax and permitting revenues reflect continued, stable activity in near term, with
slight declines beginning FY 26/27 due to reduced available land for new development
Conservative commercial permitting activity forecast
Single family residential permits
State shared revenues
One-time increase in FY 23/24 due to change in state allocation adjustment from 15% to 18%
Income tax rate reduction and cap of 2.5% expected to affect FY 24/25 onward
FY 23/24
Tentative
FY 24/25
Projected
FY 25/26
Projected
FY 26/27
Projected
FY 27/28
Projected
FY 28/29
Projected
119 138 197 210 133 84
GENERAL FUND SOURCES -FORECAST
Town of Oro Valley
Five-Year Forecast
FY 22/23
Estimated
FY 23/24
Tentative
FY 24/25
Projected
FY 25/26
Projected
FY 26/27
Projected
FY 27/28
Projected
FY 28/29
Projected
SOURCES
Taxes 27,031,462$ 26,398,318$ 28,024,560$ 28,758,293$ 31,096,860$ 30,747,462$ 31,672,268$
State Shared Revenue 18,405,604 22,953,222 22,052,464 21,821,068 22,548,044 23,303,237 24,071,732
Charges for Services 2,877,610 3,218,646 3,338,208 3,423,802 3,517,977 3,613,226 3,684,639
Licenses & Permits 2,636,961 1,717,118 1,827,011 2,357,215 2,601,111 1,982,150 1,756,252
Intergovernmental 1,600,500 1,869,500 1,887,295 1,905,268 1,923,421 1,941,755 1,960,272
Grants 659,000 657,415 663,989 670,629 677,335 684,109 690,950
Miscellaneous 611,900 263,000 273,520 284,461 295,839 307,673 319,980
Fines 85,000 125,000 126,250 127,513 128,788 130,076 131,376
Interest Income 300,000 300,000 255,690 263,730 271,439 279,805 287,939
Total Sources 54,208,037 57,502,219 58,448,987 59,611,979 63,060,815 62,989,491 64,575,408
GENERAL FUND
GENERAL FUND USES -ASSUMPTIONS
Employee pay adjustments and Police step increases included in all years of forecast
Modest capacity for new FTEs
Continued capacity for normal increases in employee-related personnel costs (ERE)
Continuation of elevated PSPRS payments until FY 24/25, with a 40% decrease expected
O&M assumes current service levels
Transfers for CIP projects assumed at 5% of sales tax collections per Town Council financial
policies, plus all fund balance over 30% reserve
GENERAL FUND USES -FORECAST
Town of Oro Valley
Five-Year Forecast
FY 22/23
Estimated
FY 23/24
Tentative
FY 24/25
Projected
FY 25/26
Projected
FY 26/27
Projected
FY 27/28
Projected
FY 28/29
Projected
USES
Personnel 33,379,955 35,652,260 36,159,451 37,322,888 38,617,334 39,879,057 41,237,279
O&M 11,549,240 13,386,754 13,452,376 13,855,121 14,061,752 14,429,593 14,655,352
Capital Outlay 848,382 1,360,600 537,030 547,771 558,726 569,901 581,299
Transfers Out 15,996,977 12,274,644 10,907,325 7,413,122 9,369,393 7,618,719 7,622,865
Total Uses 61,774,554 62,674,258 61,056,182 59,138,901 62,607,205 62,497,269 64,096,794
Surplus/(Use of Fund Balance)(7,566,517) (5,172,040) (2,607,195) 473,077 453,610 492,222 478,614
Beginning Fund Balance 30,390,423 22,823,906 17,651,867 15,044,672 15,517,749 15,971,360 16,463,582
Ending Fund Balance 22,823,906$ 17,651,867$ 15,044,672$ 15,517,749$ 15,971,360$ 16,463,582$ 16,942,196$
Reserve as % of Expenditures 49.9%35.0%30.0%30.0%30.0%30.0%30.0%
GENERAL FUND
GENERAL FUND FORECAST
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
$50,000,000
$55,000,000
$60,000,000
$65,000,000
$70,000,000
FY 22/23
Estimated
FY 23/24
Tentative
FY 24/25
Projected
FY 25/26
Projected
FY 26/27
Projected
FY 27/28
Projected
FY 28/29
Projected
General Fund
Sources, Uses and Fund Balance
USES
SOURCES
FUND BALANCE
RESERVE (30%)
HIGHWAY FUND SOURCES -ASSUMPTIONS
Arizona Department of Transportation forecasts moderate growth, 3.4 -3.6%, in
highway user gas tax (HURF) revenues
Other revenue sources assume modest and incremental growth
Transfers in from the Capital Fund supplement HURF revenues for roadway
projects identified in the tentative, ten-year CIP
First Avenue mill/overlay -$1.7 million in FY 24/25
Rancho Vistoso Blvd mill/overlay -$2 million in FY 25/26
Tangerine Road mill/overlay -$2.6 million in FY 26/27
Annual pavement preservation program
La Cañada bridge deck repair ($7.7 million in FY26) not included in forecast as we are applying
for outside funding
HIGHWAY FUND SOURCES -FORECAST
Town of Oro Valley
Five-Year Forecast
FY 22/23
Estimated
FY 23/24
Tentative
FY 24/25
Projected
FY 25/26
Projected
FY 26/27
Projected
FY 27/28
Projected
FY 28/29
Projected
SOURCES
State Shared Revenue 4,127,100$ 4,334,608$ 4,489,198$ 4,646,394$ 4,804,458$ 4,972,076$ 5,140,562$
Licenses & Permits 26,500 25,000 25,025 25,526 25,781 26,039 26,299
Interest Income 110,000 70,000 280,000 255,077 361,457 314,754 277,131
Miscellaneous 7,825 3,000 3,120 3,245 3,375 3,510 3,650
Transfers from Capital Fund - 1,500,000 4,000,000 4,000,000 4,000,000 - -
Total Sources 4,271,425 5,932,608 8,797,343 8,930,241 9,195,071 5,316,378 5,447,642
HIGHWAY FUND
HIGHWAY FUND USES -ASSUMPTIONS
Personnel and O&M figures reflect similar assumptions to General Fund
Pavement preservation funding is included at $2.5 –$2.8 million per year
Capital outlay reflects ten-year, tentative CIP schedule
HIGHWAY FUND USES -FORECAST
Town of Oro Valley
Five-Year Forecast
FY 22/23
Estimated
FY 23/24
Tentative
FY 24/25
Projected
FY 25/26
Projected
FY 26/27
Projected
FY 27/28
Projected
FY 28/29
Projected
USES
Personnel 1,196,095 1,262,861 1,382,643 1,403,978 1,432,041 1,460,744 1,490,102
O&M 766,518 1,003,930 983,979 1,003,628 1,023,671 1,044,114 1,064,966
Capital Outlay 2,641,398 4,202,000 4,995,500 6,462,063 5,852,542 2,819,532 2,888,521
Total Uses 4,604,011 6,468,791 7,362,121 8,869,669 8,308,254 5,324,390 5,443,588
Surplus/(Use of Fund Balance)(332,586)(536,183)1,435,222 60,572 886,817 (8,012)4,054
Beginning Fund Balance 1,206,985 874,399 338,216 1,773,438 1,834,010 2,720,828 2,712,816
Ending Fund Balance 874,399$ 338,216$ 1,773,438$ 1,834,010$ 2,720,828$ 2,712,816$ 2,716,869$
HIGHWAY FUND
HIGHWAY FUND FORECAST
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
$10,000,000
FY 22/23
Estimated
FY 23/24
Tentative
FY 24/25
Projected
FY 25/26
Projected
FY 26/27
Projected
FY 27/28
Projected
FY 28/29
Projected
Highway Fund
Sources, Uses and Fund Balance
USES
SOURCES
FUND BALANCE
CAPITAL FUND SOURCES -ASSUMPTIONS
Capital Fund is supported by General Fund transfers, vehicle reserves for fleet
replacements, bond proceeds and grants
Miscellaneous revenues, including sale of assets and insurance recoveries held
steady in the forecast
Non-enterprise fund vehicle reserves charged to General Fund based on
replacement cost of each vehicle over useful life and includes 10% cost inflation
Transfers annually from the General Fund reflect 5% of sales tax and excess fund
balance over 30% reserve
CAPITAL FUND SOURCES -FORECAST
Town of Oro Valley
Five-Year Forecast
FY 22/23
Estimated
FY 23/24
Tentative
FY 24/25
Projected
FY 25/26
Projected
FY 26/27
Projected
FY 27/28
Projected
FY 28/29
Projected
SOURCES
State Grants -$ 620,000$ -$ -$ -$ -$ -$
Interest Income 350,000 100,000 99,159 67,053 59,657 57,079 68,903
Miscellaneous 140,000 115,000 115,000 115,000 115,000 115,000 115,000
Vehicle Reserves 820,010 892,540 993,594 1,109,885 1,238,145 1,379,575 1,535,501
Transfers from General Fund 13,500,000 10,000,000 8,619,145 5,121,939 7,385,484 5,774,234 6,063,153
Transfer from Community Center Fund 4,079,275 - - - - - -
Total Sources 18,889,285 11,727,540 9,826,899 6,413,877 8,798,285 7,325,888 7,782,558
CAPITAL FUND
CAPITAL FUND USES -ASSUMPTIONS
Two temporary CIP project managers through FY 23/24; one in FY 24/25 and
FY 25/26; no personnel costs after FY 25/26
Capital outlay reflects ten-year, tentative CIP schedule, excluding the new
police station, pending an identified funding source
New vehicle purchases (in addition to replacements) assumed at one patrol
vehicle and two other vehicles annually
10% inflation for vehicle replacements
Transfers out to the Highway Fund for roadway CIP projects
CAPITAL FUND USES -FORECAST
Town of Oro Valley
Five-Year Forecast
FY 22/23
Estimated
FY 23/24
Tentative
FY 24/25
Projected
FY 25/26
Projected
FY 26/27
Projected
FY 27/28
Projected
FY 28/29
Projected
USES
Personnel 236,528 254,765 157,755 158,790 - - -
O&M 4,162 - - - - - -
Capital Outlay 19,033,018 23,131,471 5,951,102 6,190,937 6,212,477 8,237,652 7,420,852
Transfers to Highway Fund - 1,500,000 4,000,000 4,000,000 4,000,000 - -
Total Uses 19,273,708 24,886,236 10,108,857 10,349,727 10,212,477 8,237,652 7,420,852
Surplus/(Use of Fund Balance)(386,623)(13,158,696)(281,959)(3,935,849)(1,414,191)(911,765)361,706
Beginning Fund Balance 23,952,930 23,566,307 10,407,611 10,125,652 6,189,803 4,775,612 3,863,847
Ending Fund Balance 23,566,307$ 10,407,611$ 10,125,652$ 6,189,803$ 4,775,612$ 3,863,847$ 4,225,553$
CAPITAL FUND
CAPITAL FUND FORECAST
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
FY 22/23
Estimated
FY 23/24
Tentative
FY 24/25
Projected
FY 25/26
Projected
FY 26/27
Projected
FY 27/28
Projected
FY 28/29
Projected
Capital Fund
Sources, Uses and Fund Balance
USES
SOURCES
FUND BALANCE
COMMUNITY CENTER FUND SOURCES -ASSUMPTIONS
Local sales tax figures follow same growth as General Fund for relevant categories
Operations assumed on 18 holes for six months of the year in FY 23/24 for
irrigation project
Conservative 1% growth for Parks & Recreation related revenues to account for
potential discretionary spending decreases as result of inflation
HOA contributions end after FY 24/25, upon completion of five-year contracts
COMMUNITY CENTER FUND SOURCES -FORECAST
Town of Oro Valley
Five-Year Forecast
FY 22/23
Estimated
FY 23/24
Tentative
FY 24/25
Projected
FY 25/26
Projected
FY 26/27
Projected
FY 27/28
Projected
FY 28/29
Projected
SOURCES
Taxes 3,714,218$ 3,726,016$ 3,843,990$ 3,966,910$ 4,116,585$ 4,272,252$ 4,405,631$
Charges for Services 5,775,940 5,785,386 6,289,749 6,575,824 6,885,460 7,205,521 7,379,261
Interest Income 35,000 35,000 35,951 51,527 84,941 192,897 192,897
Miscellaneous 173,343 162,050 168,532 16,273 16,924 17,601 17,601
Total Sources 9,698,501 9,708,452 10,338,221 10,610,534 11,103,909 11,688,271 11,995,391
COMMUNITY CENTER FUND
COMMUNITY CENTER FUND USES -ASSUMPTIONS
Personnel and O&M figures reflect similar assumptions to General Fund
Contracted expenditures include Pusch 9-hole course
Capital outlay reflects ten-year, tentative CIP schedule
$100K annually for Vistoso Trails Nature Preserve maintenance
$150,000 annually for building improvements and minor assets (non-CIP)
Debt service transfers for Parks and Recreation bonds and energy efficiency bonds
COMMUNITY CENTER FUND USES –FORECAST
Town of Oro Valley
Five-Year Forecast
FY 22/23
Estimated
FY 23/24
Tentative
FY 24/25
Projected
FY 25/26
Projected
FY 26/27
Projected
FY 27/28
Projected
FY 28/29
Projected
USES
Personnel 1,017,000 1,114,639 1,203,022 1,241,000 1,280,116 1,320,880 1,363,032
O&M 5,391,991 5,294,659 5,527,141 5,633,589 5,723,318 5,806,780 5,891,734
Capital Outlay 1,853,347 1,820,500 1,426,300 1,729,000 1,735,000 1,700,000 250,000
Debt Service 191,480 210,684 214,898 219,196 223,580 228,051 232,612
Transfers Out 6,105,141 1,717,203 1,717,328 1,715,524 1,717,768 1,712,060 1,714,286
Total Uses 14,558,959 10,157,685 10,088,689 10,538,308 10,679,782 10,767,771 9,451,664
Surplus/(Use of Fund Balance)(4,860,458) (449,233) 249,532 72,226 424,127 920,501 2,543,727
Beginning Fund Balance 5,860,458 1,000,000 550,767 800,300 872,526 1,296,653 2,217,154
Ending Fund Balance 1,000,000$ 550,767$ 800,300$ 872,526$ 1,296,653$ 2,217,154$ 4,760,881$
COMMUNITY CENTER FUND
COMMUNITY CENTER FUND FORECAST
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
FY 22/23
Estimated
FY 23/24
Tentative
FY 24/25
Projected
FY 25/26
Projected
FY 26/27
Projected
FY 27/28
Projected
FY 28/29
Projected
Community Center Fund
Sources, Uses and Fund Balance
USES
SOURCES
FUND BALANCE
Questions?
Town Council Regular Session A.
Meeting Date:06/07/2023
Submitted By:Michelle Stine, Town Clerk's Office
Department:Town Clerk's Office
SUBJECT:
Minutes - May 24, 2023
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 the following changes) the May 24, 2023, minutes.
Attachments
5-24-23 Draft Minutes
D R A F T
MINUTES
ORO VALLEY TOWN COUNCIL
REGULAR SESSION
MAY 24, 2023
ORO VALLEY COUNCIL CHAMBERS
11000 N. LA CAÑADA DRIVE
REGULAR SESSION AT OR AFTER 6:00 PM
CALL TO ORDER
Mayor Winfield called the meeting to order at 6:02 p.m.
ROLL CALL
Present: Joseph C. Winfield, Mayor
Melanie Barrett, Vice-Mayor
Tim Bohen, Councilmember
Harry Greene, Councilmember
Joyce Jones-Ivey, Councilmember
Josh Nicolson, Councilmember
Steve Solomon, Councilmember
PLEDGE OF ALLEGIANCE
Mayor Winfield led the audience in the Pledge of Allegiance.
UPCOMING MEETING ANNOUNCEMENTS
Town Clerk Mike Standish announced the upcoming Town meetings.
MAYOR AND COUNCIL REPORTS ON CURRENT EVENTS
Councilmember Jones-Ivey thanked everyone who had participated in the 2023, A Twisted Corky
Night, Project Graduation event. Councilmember Jones-Ivey also thanked the Oro Valley Police
Department for their participation in the Guns and Hoses fundraising event.
Councilmember Solomon reported that the Metropolitan Pima Alliance had celebrated their 25th
Anniversary and Awards Ceremony, where the Town of Oro Valley was a recipient of the 2023
Common Ground Award for their collaboration with Innovation Park.
Councilmember Greene reported that he and Mayor Winfield had attended the kick-off for the Oro
Valley Veterans of Foreign Wars post.
5/24/23 Minutes, Oro Valley Town Council Regular Session 1
Mayor Winfield recognized the Oro Valley Public Works Department for National Public Works Week.
Mayor Winfield thanked staff for the services they provided to the Town of Oro Valley.
Mayor Winfield also reported the passing of Oro Valley Historical Society President, Henry K. Zipf . A
Celebration of Life Service would be held on Saturday, June 3 at Corpus Christi Catholic Church.
TOWN MANAGER'S REPORT ON CURRENT EVENTS
Interim Town Manager Chris Cornelison reported that 992 responses had been received since the
town had launched the OV Housing Survey on May 9, 2023. An additional 75 responses were
received for the Business Owner and Employee survey, and an additional 340 respondents had taken
the statistically valid phone survey. This survey would be available until May 31, 2023.
ORDER OF BUSINESS
Mayor Winfield reorganized the agenda by removing Regular Agenda item #1. The remaining items
would remain as posted.
INFORMATIONAL ITEMS
There were no informational items.
CALL TO AUDIENCE
Oro Valley resident Devin Smith voiced her concerns regarding the proposed Oro Valley Church of
the Nazarene rezoning request.
Oro Valley resident Anthony Ferrara voiced his concerns regarding the proposed Oro Valley Church
of the Nazarene rezoning request. Mr. Ferrara also thanked Councilmember Jones-Ivey for her
efforts with Project Graduation.
Oro Valley resident Tim Tarris voiced his concerns regarding the proposed Oro Valley Church of the
Nazarene rezoning request.
Oro Valley resident Ann Young voiced her concerns regarding the proposed Oro Valley Church of the
Nazarene rezoning request.
Oro Valley resident Jim Greene voiced his concerns regarding The Oro Valley Community Center
tennis fee rates in correlation with participation in the Silver Sneakers program.
Oro Valley resident Bill DeStefano voiced his concerns regarding the Oro Valley Community Center
tennis fee rates in correlation with participation in the Silver Sneakers program.
Mayor Winfield requested that staff communicate with the applicable constituents and provide a
report to Council regarding the status of resolving the Oro Valley Community Center tennis fee rate
issues in correlation with participation in the Silver Sneakers program.
PRESENTATIONS
5/24/23 Minutes, Oro Valley Town Council Regular Session 2
1.Presentation to honor Memorial Day
Oro Valley resident and First Vice Commander of the Oro Valley American Legion Post 132, Steve
Didio, provided a Memorial Day presentation.
2.Presentation regarding the Tucson Bicycle Classic in Oro Valley
Community and Economic Development Director Paul Melcher provided a brief overview of item #2
and introduced Marc Colbert, Tucson Bicycle Classic Race Director. Mr. Colbert thanked the Town of
Oro Valley and its staff for the support received for this event. Mr. Colbert introduced Bekah Collins,
Marketing Director for the Tucson Bicycle Classic. Ms. Collins provided a brief overview of the Oro
Valley event.
3.Presentation and possible discussion of the Town's FY 22/23 Quarterly Financial Update through
March 2023
Senior Budget Analyst, Chris Hutchinson presented item #3 and included the following:
FY 2022/23 YTD Q3 (Jul - Mar 2023)
General Fund - Q3 YTD
General Fund Sources - Q3 YTD
General Fund Uses - Q3 YTD
Highway Fund - Q3 YTD
Highway Fund Sources - Q3 YTD
Highway Fund Uses - Q3 - YTD
Community Center Fund - Q3 YTD
Community Center Fund Sources - Q3 YTD
Community Center Fund Uses - Q3 YTD
Discussion ensued among Council and staff regarding the Town's FY 22/23 Quarterly Financial
Update through March 2023.
CONSENT AGENDA
A.Minutes - May 3, May 10 and May 11, 2023
B.Resolution No. (R)23-19, approving the Agenda Committee assignment for the period of June 1,
2023 to August 31, 2023
Motion by Mayor Joseph C. Winfield, seconded by Councilmember Josh Nicolson to approve
Consent Agenda items (A) and (B).
Vote: 7 - 0 Carried
REGULAR AGENDA
1.DISCUSSION AND POSSIBLE ACTION ON ALLOWED USES OF THE PUSCH RIDGE GOLF
COURSE
This item was removed from the agenda.
5/24/23 Minutes, Oro Valley Town Council Regular Session 3
FUTURE AGENDA ITEMS
No future agenda items were requested.
ADJOURNMENT
Motion by Mayor Joseph C. Winfield, seconded by Councilmember Josh Nicolson to adjourn the
meeting at 6:47 p.m.
Vote: 7 - 0 Carried
__________________________________
Michelle Stine, MMC
Deputy Town Clerk
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 Council of Oro Valley, Arizona held on the 24th day of May 2023. I further certify that the
meeting was duly called and held and that a quorum was present.
__________________________________
Michael Standish, CMC
Town Clerk
5/24/23 Minutes, Oro Valley Town Council Regular Session 4
Town Council Regular Session B.
Meeting Date:06/07/2023
Submitted By:Michelle Stine, Town Clerk's Office
Department:Town Clerk's Office
SUBJECT:
Appointment to the Public Safety Personnel Retirement System (PSPRS) Board
RECOMMENDATION:
Mayor Winfield has recommended Kathleen Hernandez to fill a partial term expiring 9/30/2024.
EXECUTIVE SUMMARY:
N/A
BACKGROUND OR DETAILED INFORMATION:
The application for the prospective new board member is attached.
FISCAL IMPACT:
N/A
SUGGESTED MOTION:
I MOVE that Kathleen Hernandez be appointed to the Public Safety Personnel Retirement System Board, to a
partial term effective June 8, 2023, and expiring September 30, 2024.
Attachments
Application
Submit Date: May 05, 2023
First Name Middle Initial Last Name Suffix
Email Address
Street Address Suite or Apt
City State Postal Code
Primary Phone Alternate Phone
Town of Oro Valley Boards & Commissions
Profile
Are you a full time Oro Valley resident (resides in Oro Valley 6 or more months a year) *
Yes
Number of years in Oro Valley (If less than 1 year, please state number of months)
8
Which Boards would you like to apply for?
Public Safety Personnel Retirement System : Submitted
Interests & Experiences
Please list your volunteer services in Oro Valley and with other organizations including any
boards or commissions on which you have served : (board/commission , civic, educational,
cultural, social, etc.)
Oro Valley Police Volunteer, served as member and Chairperson. Served on OVPD Annual Awards
Committee, completed Town Citizens Academy and OVPD Citizens Academy, OVPD Volunteer of the
Year, 2023.
How does your previous volunteer service prepare you for the board or commission
appointment for which you have applied? Please describe an issue considered at a meeting
of the Board or Commission for which you are applying.
I have volunteered with YWCA Your Sisters Closet as well as at Northwest Hospital.
Kathleen M Hernandez
Oro Valley AZ 85755
Kathleen M Hernandez
Upload a Resume
Please attach any additional documents here
Briefly describe your educational/vocational background.
Bachelors degree in Business. Managed high volume Call Centers in Florida, Texas, Colorado and
Arizona....all serving customers such as Bank of America, Intuit, Harrahs. Largest call center I managed
was in San Antonio employed 2500 Customer Service Representatives on a 24 hour international
schedule.
Have you attended the Community Academy or CPI?
Yes No
If yes, what year?
2021
If no, are you willing to attend?
Yes No
Please Agree with the Following Statement
I agree that the information provided in my application is true and correct
I Agree *
Kathleen M Hernandez
Town Council Regular Session C.
Meeting Date:06/07/2023
Submitted By:David Gephart, Finance
Department:Finance
SUBJECT:
Resolution No. (R)23-20, adopting the Public Safety Personnel Retirement System (PSPRS) Pension Funding
Policy and accepting the Town's share of assets and liabilities under the PSPRS actuarial valuation report
RECOMMENDATION:
Both staff and the Budget and Finance Commission recommend approval.
EXECUTIVE SUMMARY:
The State of Arizona House Bill 2097 was passed into law on April 3, 2018, 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 thereafter. This bill was codified into Arizona Revised Statutes section 38-863.01 and requires
the Town to adopt a pension funding policy to communicate how the Town will maintain 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 when it will be met. The Town is also required to formally accept the Town's
share of the assets and liabilities based on the PSPRS actuarial report and post the pension funding policy on its
website.
While the Town's sworn police personnel are members of the PSPRS plan, PSPRS also administers the
Correction Officers Retirement Plan (CORP). Two (2) police dispatch personnel are currently active members of
the CORP. As such, the draft pension funding policy, attached hereto, also incorporates the funding requirements
for the CORP. The attached recommended policy was completed using a template created by the League of
Arizona Cities and Towns for the benefit of all municipal agencies required to comply with this State law and
incorporates comments and feedback from the Budget and Finance Commission.
BACKGROUND OR DETAILED INFORMATION:
Annually, PSPRS and CORP provide the Town with an actuarial report that includes the Town's assets, liabilities,
unfunded actuarial liability, funding ratio, and the projected minimum contributions required for the upcoming fiscal
year.
The PSPRS and CORP actuarial reports from June 30, 2022, (please see attached) reflect an overall funded ratio
of 102.0% for police and 46.0% for dispatchers. The Town's net pension asset for PSPRS is $1.529 million for
police and its unfunded liability is $2.01 million for dispatchers, according to the reports.
Town and employee annual contribution rates vary depending upon the employee's hire date. The Town's FY
2023/24 contribution rates for PSPRS beginning July 1, 2022, are 11.00% or 9.56%, and employee rates are
7.65% or 9.56%. The proposed FY 2023/24 budget includes approximately $3.7 million for the Town's contribution
to PSPRS. Roughly $2.5 million of that total is the Town's contribution specifically toward increasing the net
pension asset, currently estimated at $1.529 million.
The Town's FY 2023/24 contribution rate for CORP beginning July 1, 2023, is 128.44%, and the employee rate is
7.96%. The proposed FY 2023/24 budget includes approximately $75,000 for the Town's contribution to CORP,
which represents the estimated normal cost supporting pension benefits. The Town is making $2.01 million in
additional pension payments this fiscal year to fully fund the actuarial liability.
Based on the actuarial analysis, both plans should be fully funded at the end of this fiscal year (June 2023). The
policy reflects the Town Council's direction to be 100% funded through the following strategies:
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 FY
23/24 is estimated at $3.7 million for PSPRS and at $75,000 for CORP and shall be paid from operating
funds.
The Town should endeavor to continue paying the ARC at a rate that includes the normal cost rate (11.00%
for PSPRS) plus $2.5 million until the plan is 110% funded
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
The policy also formally accepts the Town's share of the assets and liabilities included in the actuarial reports.
The proposed policy is attached, and is based upon a model PSPRS policy drafted by the League of Arizona
Cities and Towns that also includes a requirement to review and adopt the policy annually.
FISCAL IMPACT:
The FY 2023/24 proposed budget includes approximately $3.7 million to fund the PSPRS annual Town
contribution. The final budget also includes approximately $75,000 to fund the annual required Town contribution
for the CORP plan.
SUGGESTED MOTION:
I MOVE to (approve or deny) Resolution No. (R)23-20, adopting the Public Safety Personnel Retirement System
(PSPRS) Pension Funding Policy and accepting the Town's share of assets and liabilities under the PSPRS
actuarial valuation report.
Attachments
(R)23-20 Resolution PSPRS
FY24 Pension Funding Policy
FY22 Police Actuarial Valuation Report
FY22 Dispatch Actuarial Valuation Report
RESOLUTION NO. (R)23-20
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 PSPRS
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 maintain 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 t wo (2) Town
police dispatch personnel are currently active members of the CORP plan; and
WHEREAS, annually, PSPRS and CORP provide the Town with an actuarial report 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 Personnel
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 necessary 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 7th day of June, 2023.
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 – FY23/24
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 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, 2022 actuarial valuations specified below.
Trust Fund Assets
Accrued
Liability
Unfunded
Actuarial Accrued
Asset/(Liability)
Funded
Ratio
Oro Valley Police
(PSPRS) $77,967,201 $76,438,334 $1,528,867 102.0%
Oro Valley Dispatchers
(CORP) $ 1,710,819 $ 3,721,151 ($2,010,332) 46.0%
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 FY23/24 is estimated at $3.7 million for PSPRS and at $75,000 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 as defined as the normal cost rate plus an additional contribution of $2.5
million, to maintain the funding ratio goal of 100%. 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
3
• 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 FY23, the Town will make approximately $2.01M in additional payments to CORP to fund
its unfunded actuarial liability.
• In FY24 and subsequent years, the Town will continue maintaining a 100% funding ratio by
making contributions of $2.5 million per year, above and beyond the normal cost rate
payment. 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, 2022
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 Asset/(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%
2022 Oro Valley Police 77,967,201 76,438,334 1,528,867 102%
2022 Oro Valley Dispatchers 1,710,819 3,721,151 (2,010,332) 46%
Source: Town Comprehensive Annual Financial Report for June 30, 2022 – Note 15.
ARIZONA PUBLIC SAFETY PERSONNEL
RETIREMENT SYSTEM
ORO VALLEY POLICE DEPT. (122)
ACTUARIAL VALUATION
AS OF JUNE 30, 2022
CONTRIBUTIONS APPLICABLE TO THE
PLAN/FISCAL YEAR ENDING JUNE 30, 2024
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 2022
Board of Trustees
Arizona Public Safety Personnel Retirement System
Phoenix, AZ
Re: Actuarial Valuation Report as of June 30, 2022 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, 2022 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, 2022 – 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 ........................................................................................................... 21
VII. Discussion of Risk ...................................................................................................................................... 28
VIII. Summary of Current Plan.......................................................................................................................... 32
IX. Actuarial Funding Policy ............................................................................................................................. 38
X. Glossary ........................................................................................................................................................ 42
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – 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, 2022, 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, 2023. This
information is contained in the section entitled “Contribution Results.”
1. Key Valuation Results
The funded status as of June 30, 2022 and the employer contribution amounts applicable to the plan/fiscal
year ending June 30, 2024 are as follows:
Tier 1 & Tier 2 Members Tier 3 Members *
Pension Health Total Pension Health Total
Employer Contribution Rate 11.00% 0.00% 11.00% 8.69% 0.12% 8.81%
Funded Status 102.0% 152.2% 102.7% 110.5% 212.1% 112.1%
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, 2021):
Contribution Rate
Tier 1 & Tier 2 Members Tier 3 Members *
Valuation Date Pension Health Total Pension Health Total
June 30, 2021 43.47% 0.00% 43.47% 9.00% 0.12% 9.12%
June 30, 2022 11.00% 0.00% 11.00% 8.69% 0.12% 8.81%
Funded Status
Tier 1 & Tier 2 Members Tier 3 Members
Valuation Date Pension Health Total Pension Health Total
June 30, 2021 66.1% 148.5% 67.3% 107.3% 210.0% 108.9%
June 30, 2022 102.0% 152.2% 102.7% 110.5% 212.1% 112.1%
* 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, 2022 – 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 43.47% 0.00% 9.00% 0.12%
Asset Experience 0.19% 0.00% (0.03%) 0.00%
Payroll Base 0.76% (0.01%) (0.11%) (0.03%)
Liability Experience 0.56% 0.00% (0.57%) (0.01%)
Additional Contribution (36.18%) 0.00% 0.00% 0.00%
Assumption/Method Change (0.02%) 0.07% (0.13%) 0.00%
Other 2.22% (0.06%) 0.53% 0.04%
Contribution Rate This Valuation 11.00% 0.00% 8.69% 0.12%
Funded Status
Tier 1 & Tier 2 Tier 3 Members
Pension Health Pension Health
Funded Status Last Valuation 66.1% 148.5% 107.3% 210.0%
Asset Experience (0.2%) (0.2%) 0.6% 2.3%
Liability Experience (0.6%) 11.8% 9.9% 16.4%
Additional Contribution 36.1% 0.0% 0.0% 0.0%
Assumption/Method Change (1.0%) (6.7%) 2.3% (6.7%)
Other 1.6% (1.2%) (9.6%) (9.9%)
Funded Status This Valuation 102.0% 152.2% 110.5% 212.1%
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, 2022 was (4.2%) for Tiers 1 and 2 and (4.6%) for Tier 3. On a smoothed, actuarial value
of assets basis, however, the average return was 7.1% for Tiers 1 and 2 and 7.7% for Tier 3. These returns
nearly met the 2021 assumed earnings rate for Tiers 1 and 2 of 7.3% and exceeded the 2021 assumed
earnings rate 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.
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.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 3
Assumption / Method Change – The Board adopted the assumption recommendations provided in the
2022 experience study report, dated April 21, 2022, which updated the salary, inflation, and demographic
assumptions. The Board also reduced the interest rate for Tier 1 and 2 members from 7.30% to 7.20% and
continued the decrease in the payroll growth assumption from 3.00% 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 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 loss realized this year will,
in the absence of other gains, put upward pressure on the contribution rate next year.
If the June 30, 2022 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 99.3% (instead of
102.0%) and the pension employer contribution requirement would be 11.83% of payroll (instead of
11.00%).
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, 2022 – Oro Valley Police Dept. (122) 4
II. CONTRIBUTION RESULTS
Contribution Requirements
Development of Employer Contributions - Tiers 1 & 2 Members
Valuation Date June 30, 2022 June 30, 2021
Applicable to Fiscal Year Ending 2024 2023
Rate Dollar Rate Dollar
Pension
Normal Cost
Total Normal Cost 18.65% $ 1,181,744 20.74% $ 1,373,511
Employee Cost (7.65%) (484,737) (7.65%) (506,623)
Employer (Net) Normal Cost 11.00% 697,007 13.09% 866,888
Amortization of Unfunded Liability 0.00% 0 30.38% 2,011,922
Total Employer Cost (Pension) 11.00% 697,007 43.47% 2,878,810
Health
Normal Cost 0.41% 25,979 0.45% 29,801
Amortization of Unfunded Liability (0.41%) (25,979) (0.45%) (29,801)
Total Employer Cost (Health) 0.00% 0 0.00% 0
Total Employer Cost (Pension + Health) 11.00% 697,007 43.47% 2,878,810
Total Minimum Contribution Requirement (if applicable) 8.00% 8.00%
Alternate Contribution Rate (ACR) * 8.00% 30.38%
Underlying Payroll (as of valuation date) 6,181,881 6,429,633
* 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, 2022 – Oro Valley Police Dept. (122) 5
Development of Employer Contributions – Tier 3 Members
Valuation Date June 30, 2022 June 30, 2021
Applicable to Fiscal Year Ending 2024 2023
Defined Benefit (DB) Retirement Plan
Rate Dollar Rate Dollar
Pension
Total Normal Cost 17.37% $ 197,489 17.99% $ 141,199
Amortization of Unfunded Liability 0.00% 0 0.00% 0
Total Pension Cost 17.37% 197,489 17.99% 141,199
Employee (EE) Pension Cost 8.69% 98,745 9.00% 70,600
Employer (ER) Pension Cost 8.69% 98,745 9.00% 70,600
Health
Total Normal Cost 0.24% 2,729 0.24% 1,884
Amortization of Unfunded Liability 0.00% 0 0.00% 0
Total Health Cost 0.24% 2,729 0.24% 1,884
Employee (EE) Health Cost 0.12% 1,365 0.12% 942
Employer (ER) Health Cost 0.12% 1,365 0.12% 942
Total
Total Calculated Tier 3 Required EE/ER Individual Cost 8.81% 100,110 9.12% 71,542
Board Approved Tier 3 Required EE/ER Individual Cost 1 9.56% 108,693 9.94% 78,017
ER Legacy Cost of Tiers 1 & 2 Amort of Unfunded
Liabilities 2 0.00% 0 30.38% 238,445
Total Calculated Tier 3 Required ER Defined Benefit Cost 8.81% 100,110 39.50% 309,987
Total Board Approved Tier 3 Required
ER Defined Benefit Cost 9.56% 108,693 40.32% 316,462
Underlying Payroll (as of valuation date) 1,109,226 762,016
1 The “Board Approved” cost was reset with the June 30, 2022 valuation to be the lesser of 1) the calculated rate plus 0.75%, or 2) the prior
Board approved rate. Going forward, the funding policy will reflect the approach in setting the costs and will be reviewed annually.
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, 2022 – Oro Valley Police Dept. (122) 6
Development of Employer Contributions – Tier 3 Members
Valuation Date June 30, 2022 June 30, 2021
Applicable to Fiscal Year Ending 2024 2023
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% $ 0 9.00% $ 5,468
Employee Health Subsidy Program Cost 0.17% 0 0.19% 115
Employee Disability Program Cost 1.43% 0 1.66% 1,009
Total Employee Cost 10.60% 0 10.85% 6,592
Employer Cost 9.00% 0 9.00% 5,468
Employer Health Subsidy Program Cost 0.17% 0 0.19% 115
Employer Disability Program Cost 1.43% 0 1.66% 1,009
Total Employer Cost (before Legacy) 10.60% 0 10.85% 6,592
ER Legacy Cost of Tiers 1 & 2 Amort of Unfunded
Liabilities 2 0.00% 0 30.38% 18,458
Total Employer Cost 10.60% 0 41.23% 25,050
Underlying Payroll (as of valuation date) 0 58,986
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, 2022 – 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% 7.65% 7.65% 7.65% 9.56% 9.56%
PSPRS DC Rate 3.00% 3.00% 9.00%
Employer Health Subsidy Program Cost 0.17%
PSPDCRP Disability Program Rate 1.43%
Total EE Contribution Rate 7.65% 7.65% 7.65% 10.65% 9.56% 12.56% 10.60%
Employer Contribution Rate
PSPRS DB Normal Cost 11.41% 11.41% 11.41% 11.41% 9.56% 9.56%
PSPRS DB Tier 1 & 2 Legacy Cost ² (0.41%) (0.41%) (0.41%) (0.41%) 0.00% 0.00% 0.00%
PSPRS DC Rate ³ 4.00% 3.00% 9.00%
Employer Health Subsidy Program Cost 0.17%
PSPDCRP Disability Program Rate 1.43%
Total ER Contribution Rate 11.00% 11.00% 11.00% 15.00% 9.56% 12.56% 10.60%
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, 2022
actuarial valuation. Pension and health components are combined, where applicable.
Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2022 – 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 - June 30, 2022 102.0% 103.3% 104.6% 105.9% 107.2% 108.5% 109.8% 111.2% 112.5% 113.8% 115.1% FYE 2024 Contribution Rate 11.00% 9.61% 8.22% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% Table shows the hypothetical change in the funded status and contribution rate from the June 30, 2022 actuarial valuation results for Tiers 1 & 2 if an additional contribution of the amount shown had been made to the Fund on June 30, 2022. 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% 2022 2024 11.00% 0.00% 11.00% 0.41% (0.41%) 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 2023 9.68% 0.00% 9.68% 0.26% 0.00% 0.26% 2022 2 2024 8.69% 0.00% 8.69% 0.12% 0.00% 0.12% 2022 2024 9.30% 0.00% 9.30% 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, 2022 – Oro Valley Police Dept. (122) 9
III. LIABILITY SUPPORT
Liabilities and Funded Ratios by Benefit - Tiers 1 & 2
Pension liabilities were increased by $583,535 and health liabilities were increased by $10,384 under the
lateral transfer methodology.
June 30, 2022 June 30, 2021
Pension
Actuarial Present Value of Benefits (PVB)
Retirees and Beneficiaries $ 35,501,815 $ 29,485,097
DROP Members 10,938,945 11,116,699
Vested Members 439,814 694,040
Active Members 37,981,637 39,960,572
Total Actuarial Present Value of Benefits 84,862,211 81,256,408
Actuarial Accrued Liability (AAL)
All Inactive Members 46,880,574 41,295,836
Active Members 29,557,760 29,496,718
Total Actuarial Accrued Liability 76,438,334 70,792,554
Actuarial Value of Assets (AVA) 77,967,201 46,773,089
Unfunded Actuarial Accrued Liability (1,528,867) 24,019,465
PVB Funded Ratio (AVA / PVB) 91.9% 57.6%
AAL Funded Ratio (AVA / AAL) 102.0% 66.1%
Health
Actuarial Present Value of Benefits (PVB)
Retirees and Beneficiaries $ 299,420 $ 301,694
DROP Members 145,431 151,013
Active Members 787,227 786,860
Total Present Value of Benefits 1,232,078 1,239,567
Actuarial Accrued Liability (AAL)
All Inactive Members 444,851 452,707
Active Members 617,877 581,099
Total Actuarial Accrued Liability 1,062,728 1,033,806
Actuarial Value of Assets (AVA) 1,617,538 1,534,689
Unfunded Actuarial Accrued Liability (554,810) (500,883)
PVB Funded Ratio (AVA / PVB) 131.3% 123.8%
AAL Funded Ratio (AVA / AAL) 152.2% 148.5%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 10
Liabilities and Funded Ratios by Benefit - Tier 3
June 30, 2022 June 30, 2021
Pension
Actuarial Present Value of Benefits (PVB)
Retirees and Beneficiaries $ 944,111 $ 440,356
Vested Members 3,654,003 1,850,254
Active Members 403,144,180 288,612,448
Total Actuarial Present Value of Benefits 407,742,294 290,903,058
Actuarial Accrued Liability (AAL)
All Inactive Members 4,598,114 2,290,610
Active Members 64,341,090 40,442,927
Total Actuarial Accrued Liability 68,939,204 42,733,537
Actuarial Value of Assets (AVA) 76,171,857 45,863,401
Unfunded Actuarial Accrued Liability (7,232,653) (3,129,864)
PVB Funded Ratio (AVA / PVB) 18.7% 15.8%
AAL Funded Ratio (AVA / AAL) 110.5% 107.3%
Health
Actuarial Present Value of Benefits (PVB)
Retirees and Beneficiaries 0 0
Active Members 5,807,514 3,998,992
Total Present Value of Benefits 5,807,514 3,998,992
Actuarial Accrued Liability (AAL)
All Inactive Members 0 0
Active Members 1,075,733 680,877
Total Actuarial Accrued Liability 1,075,733 680,877
Actuarial Value of Assets (AVA) 2,281,928 1,429,806
Unfunded Actuarial Accrued Liability (1,206,195) (748,929)
PVB Funded Ratio (AVA / PVB) 39.3% 35.8%
AAL Funded Ratio (AVA / AAL) 212.1% 210.0%
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, 2022 – 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, 2021 24,019,465 (500,883) (3,129,864) (748,929) (2) Normal Cost Developed in Last Valuation 866,888 29,801 10,742,365 143,232 (3) Actual Contributions 30,446,078 0 13,287,994 708,578 (4) Expected Interest On (1), (2), and (3) 724,995 (34,389) 79,243 (69,623) (5) Expected Unfunded Actuarial Accrued Liability as of June 30, 2022 (1)+(2)-(3)+(4) (4,834,730) (505,471) (5,596,250) (1,383,898) (6) Changes to UAAL Due to Assumptions, Methods and Benefits 719,445 45,035 (1,466,606) 33,112 (7) Change to UAAL Due to Actuarial (Gain)/Loss 2,586,418 (94,374) (169,797) 144,591 (8) Unfunded Actuarial Accrued Liability as of June 30, 2022 (1,528,867) (554,810) (7,232,653) (1,206,195)
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – 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 0 14 0.00%
06/30/2021 1,018,144 14 1.51%
06/30/2022 (2,547,011) 15 (3.62%)
Total (1,528,867) (2.11%)
Health 06/30/2019 0 10 0.00%
06/30/2021 0 10 0.00%
06/30/2022 (385,460) 10 (0.71%)
Total (385,460) (0.71%)
Amortization of Unfunded Liabilities - Tier 3
Date Established Outstanding Balance Years Remaining Amortization Rate 2
Pension 06/30/2018 133,264 6 0.02%
06/30/2019 (1,174,488) 7 (0.12%)
06/30/2020 783,926 8 0.07%
06/30/2021 (2,629,391) 9 (0.23%)
06/30/2022 (4,345,964) 10 (0.35%)
Total (7,232,653) 0.00%
Health 06/30/2018 (2,826) 6 0.00%
06/30/2019 (107,381) 7 (0.01%)
06/30/2020 (199,078) 8 (0.02%)
06/30/2021 (379,902) 9 (0.03%)
06/30/2022 (517,008) 10 (0.04%)
Total (1,206,195) 0.00%
1 By Statute, any unfunded liability is adjusted to remove any “maintenance of effort” balance included in the assets. The current
balance is $933,561.
2 By Statute, negative total amortization rates are not subtracted in Tier 3 rate calculations.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 13
IV. ASSET SUPPORT
Statement of Changes in Fiduciary Net Position for Year Ended June 30, 2022
Market Value Basis
Tiers 1 & 2 Tier 3
Pension Health Pension Health
Additions
Contributions
Member Contributions $ 131,683,526 $ 0 $ 29,063,146 $ 0
Employer Contributions 3,012,703,558 0 29,064,040 0
Health Insurance Contributions 0 3,802,966 0 1,407,709
Total Contributions 3,144,387,084 3,802,966 58,127,186 1,407,709
Investment Income
Net Increase in Fair Value (701,182,251) (21,695,499) (8,741,820) (280,480)
Interest and Dividends 126,401,305 3,911,022 1,575,879 50,562
Other Income 87,059,416 2,683,297 1,085,391 34,690
Less Investment Expenses (22,862,270) (565,977) (285,030) (7,317)
Net Investment Income (510,583,800) (15,667,157) (6,365,580) (202,545)
Non-investment Income 986,277 0 12,296 0
Transfers In 1,279,046 0 30,523 0
Total Additions 2,636,068,607 (11,864,191) 51,804,425 1,205,164
Deductions
Distributions to Members
Benefit Payments 1,014,242,856 0 151,291 0
Health Insurance Subsidy 0 17,298,612 0 0
Refund of Contributions 13,520,140 0 1,255,336 0
Total Distributions 1,027,762,996 17,298,612 1,406,627 0
Administrative Expenses 9,180,607 278,897 114,460 3,606
Transfers Out 780,862 0 0 0
Other 0 0 0 0
Total Deductions 1,037,724,465 17,577,509 1,521,087 3,606
Net Increase / (Decrease) 1,598,344,142 (29,441,700) 50,283,338 1,201,558
Net Position Held in Trust
Prior Valuation 11,444,452,554 403,467,753 112,339,143 3,633,858
Beginning of the Year Adjustment 0 0 0 0
End of the Year 13,042,796,696 374,026,053 162,622,481 4,835,416
Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 14 Development of Pension Actuarial Value of Assets - Tiers 1 & 2 A. Investment Income A1. Actual Investment Income $ (519,764,407) A2. Expected Amount for Immediate Recognition 911,394,336 A3. Amount Subject to Amortization (1,431,158,743) Year Ended June 30 B. Amortization Schedule 2022 2023 2024 2025 2026 2027 2028 2022 Experience (A3 / 7) (204,451,249) (204,451,249) (204,451,249) (204,451,249) (204,451,249) (204,451,249) (204,451,249) 2021 Experience 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) (68,882,160) 2019 Experience (22,859,275) (22,859,275) (22,859,275) (22,859,275) 2018 Experience (6,266,349) (6,266,349) (6,266,351) 2017 Experience 33,380,149 33,380,148 2016 Experience (64,250,889) Total Amortization (94,351,027) (30,100,139) (63,480,289) (57,213,938) (34,354,665) 34,527,496 (204,451,249) C. Actuarial Value of Assets Total Employer C1. Actuarial Value of Assets, June 30, 2021 10,462,717,622 C2. Non-investment Net Cash Flow 2,118,108,549 C3. Preliminary Actuarial Value of Assets, June 30, 2022 (A2 + B + C1 + C2) 13,397,869,480 C4. Market Value of Assets, June 30, 2022 13,042,796,696 75,900,900 C5. Final Actuarial Value of Assets, June 30, 2022 (C3 Within 20% Corridor of C4) 13,397,869,480 77,967,201 D. Rates of Return D1. Market Value Rate of Return (4.2%) D2. Actuarial Value Rate of Return 7.1%
Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 15 Development of Health Actuarial Value of Assets - Tiers 1 & 2 A. Investment Income A1. Actual Investment Income $ (15,946,054) A2. Expected Amount for Immediate Recognition 28,969,231 A3. Amount Subject to Amortization (44,915,285) Year Ended June 30 B. Amortization Schedule 2022 2023 2024 2025 2026 2027 2028 2022 Experience (A3 / 7) (6,416,469) (6,416,469) (6,416,469) (6,416,469) (6,416,469) (6,416,469) (6,416,471) 2021 Experience 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) (2,898,716) 2019 Experience (1,075,569) (1,075,569) (1,075,569) (1,075,572) 2018 Experience (304,653) (304,653) (304,656) 2017 Experience 1,532,136 1,532,136 2016 Experience (3,220,881) Total Amortization (3,126,671) 94,210 (1,437,929) (1,133,276) (57,707) 2,841,012 (6,416,471) C. Actuarial Value of Assets Total Employer C1. Actuarial Value of Assets, June 30, 2021 367,789,300 C2. Non-investment Net Cash Flow (13,495,646) C3. Preliminary Actuarial Value of Assets, June 30, 2022 (A2 + B + C1 + C2) 380,136,214 C4. Market Value of Assets, June 30, 2022 374,026,053 1,591,538 C5. Final Actuarial Value of Assets, June 30, 2022 (C3 Within 20% Corridor of C4) 380,136,214 1,617,538 D. Rates of Return D1. Market Value Rate of Return (4.0%) D2. Actuarial Value Rate of Return 7.2%
Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 16 Development of Pension Actuarial Value of Assets - Tiers 3 A. Investment Income A1. Actual Investment Income $ (6,480,040) A2. Expected Amount for Immediate Recognition 9,816,857 A3. Amount Subject to Amortization (16,296,897) Year Ended June 30 B. Amortization Schedule 2022 2023 2024 2025 2026 2022 Experience (A3 / 5) (3,259,379) (3,259,379) (3,259,379) (3,259,379) (3,259,381) 2021 Experience 3,551,936 3,551,936 3,551,936 3,551,938 2020 Experience (351,296) (351,296) (351,294) 2019 Experience 44,435 44,437 2018 Experience (208) Total Amortization (14,512) (14,302) (58,737) 292,559 (3,259,381) C. Actuarial Value of Assets Total Employer C1. Actuarial Value of Assets, June 30, 2021 99,096,619 C2. Non-investment Net Cash Flow 56,763,378 C3. Preliminary Actuarial Value of Assets, June 30, 2022 (A2 + B + C1 + C2) 165,662,342 C4. Market Value of Assets, June 30, 2022 162,622,481 74,774,123 C5. Final Actuarial Value of Assets, June 30, 2022 (C3 Within 20% Corridor of C4) 165,662,342 76,171,857 D. Rates of Return D1. Market Value Rate of Return (4.6%) D2. Actuarial Value Rate of Return 7.7%
Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 17 Development of Health Actuarial Value of Assets - Tiers 3 A. Investment Income A1. Actual Investment Income $ (206,151) A2. Expected Amount for Immediate Recognition 302,807 A3. Amount Subject to Amortization (508,958) Year Ended June 30 B. Amortization Schedule 2022 2023 2024 2025 2026 2022 Experience (A3 / 5) (101,792) (101,792) (101,792) (101,792) (101,790) 2021 Experience 128,963 128,963 128,963 128,961 2020 Experience (10,555) (10,555) (10,557) 2019 Experience 1,507 1,508 2018 Experience (165) Total Amortization 17,958 18,124 16,614 27,169 (101,790) C. Actuarial Value of Assets Total Employer C1. Actuarial Value of Assets, June 30, 2021 3,146,825 C2. Non-investment Net Cash Flow 1,407,709 C3. Preliminary Actuarial Value of Assets, June 30, 2022 (A2 + B + C1 + C2) 4,875,299 C4. Market Value of Assets, June 30, 2022 4,835,416 2,263,260 C5. Final Actuarial Value of Assets, June 30, 2022 (C3 Within 20% Corridor of C4) 4,875,299 2,281,928 D. Rates of Return D1. Market Value Rate of Return (4.8%) D2. Actuarial Value Rate of Return 8.3%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 18
V. MEMBER STATISTICS
Valuation Data Summary
June 30, 2022 June 30, 2021
Tiers 1 & 2 Tier 3 Tiers 1 & 2 Tier 3
Actives
Number 63 15 68 12
Average Current Age 42.0 28.2 41.3 28.0
Average Age at Employment 26.6 26.3 26.5 26.4
Average Past Service 15.4 1.9 14.8 1.6
Average Annual Salary $87,487 $59,679 $84,526 $55,480
Actives (transferred)
Number 8 3 7 1
Average Current Age 34.0 26.5 33.8 27.1
Average Age at Employment 24.3 23.8 24.4 24.2
Average Past Service 9.7 2.6 9.3 2.9
Average Annual Salary $66,358 $51,623 $61,007 $53,901
Retirees
Number 33 0 28 0
Average Current Age 58.9 N/A 58.8 N/A
Average Annual Benefit $52,659 N/A $50,805 N/A
Drop Retirees
Number 8 N/A 9 N/A
Average Current Age 54.5 N/A 55.5 N/A
Average Annual Benefit $73,738 N/A $70,927 N/A
Beneficiaries
Number 7 0 7 0
Average Current Age 68.5 N/A 67.5 N/A
Average Annual Benefit $34,763 N/A $34,082 N/A
Disability Retirees
Number 12 0 11 0
Average Current Age 54.5 N/A 54.4 N/A
Average Annual Benefit $40,627 N/A $39,355 N/A
Inactive / Vested
Number 7 3 9 1
Average Current Age 45.7 25.7 46.1 22.2
Average Accumulated Contributions $23,722 $4,919 $38,421 $2,196
Total Number 138 21 139 14
Former Members (transferred) 4 0 3 0
Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 19 Active Counts and Pay Summary - 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 0 4 0 0 0 0 0 4 287,160 71,790 30 - 34 0 12 4 0 0 0 0 16 1,274,185 79,637 35 - 39 0 5 3 7 0 0 0 15 1,199,844 79,990 40 - 44 0 2 1 9 2 0 0 14 1,235,820 88,273 45 - 49 0 0 0 8 1 1 0 10 875,462 87,546 50 - 54 0 0 1 2 2 2 0 7 739,819 105,688 55 - 59 0 0 1 1 2 0 1 5 430,243 86,049 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 23 10 27 7 3 1 71 6,042,533 85,106 Active Counts and Pay Summary - Tier 3 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 3 0 0 0 0 0 0 3 160,748 53,583 25 - 29 10 0 0 0 0 0 0 10 577,751 57,775 30 - 34 5 0 0 0 0 0 0 5 311,556 62,311 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 18 0 0 0 0 0 0 18 1,050,055 58,336
Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 20 In-Payment Counts and Benefit Summary – All Tiers Age Count Average Annual Benefit < 40 0 0 40 - 44 1 45,951 45 - 49 7 48,503 50 - 54 13 42,901 55 - 59 11 46,454 60 - 64 4 66,313 65 - 69 9 51,003 70 - 74 3 30,080 75 - 79 3 47,034 80 - 84 1 58,807 85 - 89 0 0 90 - 94 0 0 95 - 99 0 0 100+ 0 0 Total 52 47,473 “In-Payment” refers to retired, beneficiary, and disabled members.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 21
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:
7.20% per year.
Tier 3:
7.00% per year.
Salary Increases See table at the end of this section. This is an annual increase for
individual member’s salary. These rates are based on a 2022
experience study using actual plan experience.
Inflation 2.50%.
Tier 3 Compensation Limit $115,868 for calendar 2022. Assumed increases of 2.00% per year
thereafter.
Cost-of-Living Adjustment 1.85%.
Mortality Rates These rates are used to project future decrements from the population
due to death.
Active Lives:
PubS-2010 Employee mortality, adjusted by a factor of 1.03 for male
members and 1.08 for female members, with generational improve-
ments using 85% of the most recent projection scale (currently Scale
MP-2021). 100% of active deaths are assumed to be in the line of
duty.
Inactive Lives:
PubS-2010 Healthy Retiree mortality, adjusted by a factor of 1.03 for
male retirees and 1.11 for female retirees, with generational improve-
ments using 85% of the most recent projection scale (currently Scale
MP-2021).
Beneficiaries:
PubS-2010 Survivor mortality, adjusted by a factor of 0.98 for male
beneficiaries and adjusted by a factor of 1.06 for female beneficiar-
ies, with generational improvements using 85% of the most recent
projection scale (currently Scale MP-2021).
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 22
Disabled Lives:
PubS-2010 Disabled mortality, adjusted by a factor of 1.08 for male
disabled members and 1.01 for female disabled members, with
generational improvements using 85% of the most recent projection
scale (currently Scale MP-2021).
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 2022
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:
Police - 40% assumed at age 62 and 63, 35% assumed at age 64,
25% assumed at ages 65 and 66, 50% assumed at ages 67 – 69, and
100% assumed at age 70.
Fire - 25% assumed at age 62 and 63, 35% assumed at age 64, 25%
assumed at ages 65 and 66, 50% assumed at ages 67 – 69, and 100%
assumed at age 70.
Tier 1 – reaching age 62 after attaining 20 years of service:
Service-related rates based on service at retirement. See complete
tables at the end of this section.
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 5 years in length.
Tiers 2 & 3:
Age-related rates based on age at retirement. 50% assumed at age
53, 30% assumed at ages 54 – 59, 60% assumed at ages 60 – 63, and
100% assumed at age 64.
Termination Rate These rates are used to project future decrements from the active
population due to termination. Complete table of rates based on
service at termination are provided at the end of this section. The
rates apply to members prior to retirement eligibility and are based
on a 2022 experience study using actual plan experience.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 23
Disability Rate These rates are used to project future decrements from the active
population due to disability. Complete table of rates based on age at
disability are provided at the end of this section. These rates are
based on a 2022 experience study using actual plan experience. 90%
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 Male spouses are assumed to be five years older than female
members and female spouses are assumed to be 2 years younger than
males members.
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.
Lateral Transfers When active members transfer between employers, the new
employer’s liability starts from their new date of hire with no past
service liability (i.e., all liability is accrued through normal cost).
Per PSPRS administrative decision, once the new employer’s
liability is fully funded, the liability will reflect all past service
liability.
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.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – 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 2.50% per year. This is annual increase for total employer payroll.
Changes to Actuarial Assumptions and Methods Since the Prior Valuation
Based on the results of the 2022 experience study, the following assumption changes were made:
Updated mortality, retirement, termination, and disability rate tables.
Updated assumed salary increase and cost-of-living adjustment rates.
In addition, the interest rate for Tier 1 and 2 members was decreased from 7.30% to 7.20% and the payroll
growth assumption was lowered from 3.00% to 2.50%.
The expected DROP period length was increased from 4 years to 5 years to reflect DROP benefit changes.
There were no method changes since the prior valuation.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 25
Salary Increase Rates
Age
Maricopa
Police
Pima
Police
Other
Police
Maricopa
Fire
Pima
Fire
Other
Fire
20 15.00% 12.00% 14.00% 15.00% 12.00% 13.00%
21 14.00% 6.00% 12.00% 14.00% 11.00% 12.00%
22 13.00% 6.00% 10.00% 13.00% 10.00% 11.00%
23 12.00% 6.00% 9.00% 12.00% 9.50% 10.00%
24 11.00% 6.00% 8.00% 11.00% 9.00% 9.00%
25 10.00% 6.00% 7.00% 10.00% 8.50% 8.00%
26 9.00% 5.50% 6.50% 9.50% 7.50% 7.50%
27 8.00% 5.50% 6.25% 9.00% 6.50% 7.50%
28 7.50% 5.50% 6.00% 8.50% 5.75% 7.00%
29 7.00% 5.50% 5.80% 8.00% 5.75% 6.50%
30 6.50% 5.25% 5.60% 8.00% 5.50% 6.50%
31 6.00% 5.25% 5.40% 7.50% 5.50% 6.00%
32 5.50% 5.00% 5.20% 7.00% 5.00% 5.50%
33 5.10% 5.00% 5.00% 6.50% 5.00% 5.50%
34 4.90% 5.00% 4.90% 6.50% 5.00% 5.50%
35 4.70% 4.50% 4.80% 6.00% 5.00% 5.50%
36 4.50% 4.50% 4.70% 5.50% 5.00% 5.50%
37 4.30% 4.50% 4.60% 5.25% 4.50% 5.00%
38 4.10% 4.00% 4.50% 5.00% 4.50% 5.00%
39 4.00% 4.00% 4.40% 4.75% 4.50% 5.00%
40 3.90% 4.00% 4.30% 4.75% 4.50% 5.00%
41 3.80% 3.80% 4.20% 4.50% 4.50% 4.50%
42 3.70% 3.60% 4.10% 4.50% 4.00% 4.50%
43 3.60% 3.40% 4.00% 4.50% 4.00% 4.50%
44 3.50% 3.20% 3.90% 4.50% 4.00% 4.00%
45 3.50% 3.00% 3.80% 4.25% 4.00% 4.00%
46 3.50% 3.00% 3.70% 4.25% 3.75% 4.00%
47 3.50% 3.00% 3.60% 4.25% 3.75% 3.75%
48 3.50% 3.00% 3.50% 4.00% 3.75% 3.75%
49 3.50% 3.00% 3.50% 4.00% 3.50% 3.75%
50 3.25% 3.00% 3.50% 3.75% 3.50% 3.75%
51 3.25% 3.00% 3.50% 3.75% 3.50% 3.75%
52 3.25% 2.75% 3.50% 3.75% 3.50% 3.75%
53+ 3.25% 2.75% 3.50% 3.75% 3.25% 3.75%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 26
Tier 1 Retirement Rates– reaching age 62 after attaining 20 years of service
Termination Rates
Service
Maricopa
Police
Pima
Police
Other
Police
Maricopa
Fire Pima Fire OtherFire
0 13.0% 14.0% 13.5% 4.5% 10.0% 10.5%
1 8.0% 9.0% 11.5% 3.5% 6.0% 8.5%
2 6.0% 7.5% 10.5% 2.5% 4.5% 8.0%
3 4.5% 7.0% 9.5% 2.0% 4.0% 8.0%
4 3.6% 6.5% 9.0% 1.5% 4.0% 7.0%
5 3.3% 5.0% 8.0% 1.5% 4.0% 5.0%
6 3.3% 5.0% 7.0% 1.5% 4.0% 5.0%
7 3.3% 4.0% 6.5% 1.5% 3.0% 4.0%
8 2.4% 4.0% 6.5% 1.5% 3.0% 4.0%
9 2.4% 4.0% 6.0% 1.5% 3.0% 3.5%
10 2.4% 4.0% 5.0% 1.0% 2.0% 3.0%
11 1.8% 3.0% 4.0% 1.0% 2.0% 2.5%
12 1.8% 3.0% 4.0% 1.0% 1.5% 2.0%
13 1.3% 2.0% 3.5% 1.0% 1.0% 1.5%
14 1.3% 2.0% 3.0% 0.5% 1.0% 1.4%
15 0.8% 1.5% 2.5% 0.5% 1.0% 1.4%
16 0.8% 1.5% 2.0% 0.5% 0.5% 1.4%
17 0.8% 1.0% 2.0% 0.5% 0.5% 1.4%
18 0.8% 1.0% 1.8% 0.5% 0.5% 1.4%
19 0.8% 1.0% 1.8% 0.5% 0.5% 0.5%
20+ 0.5% 1.0% 1.8% 0.4% 0.5% 0.5%
Service
Maricopa
Police
Pima
Police
Other
Police
Maricopa
Fire Pima Fire
Other
Fire
20 28% 28% 35% 14% 20% 20%
21 25% 25% 35% 17% 20% 25%
22 15% 16% 22% 7% 13% 15%
23 12% 12% 12% 7% 7% 10%
24 8% 9% 12% 7% 7% 10%
25 30% 22% 25% 17% 22% 30%
26 42% 42% 40% 30% 26% 30%
27 32% 30% 28% 23% 30% 30%
28 32% 30% 28% 30% 30% 30%
29 32% 20% 28% 30% 30% 30%
30 35% 25% 35% 30% 30% 35%
31 35% 33% 30% 40% 30% 35%
32 60% 50% 70% 55% 30% 35%
33 60% 50% 70% 55% 60% 60%
34+ 100% 100% 100% 100% 100% 100%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 27
Disability Rates
Age
Maricopa
Police
Pima
Police
Other
Police
Maricopa
Fire Pima Fire Other Fire
20 0.050% 0.050% 0.120% 0.020% 0.020% 0.020%
21 0.050% 0.050% 0.120% 0.020% 0.020% 0.020%
22 0.050% 0.050% 0.120% 0.020% 0.020% 0.020%
23 0.050% 0.050% 0.120% 0.020% 0.020% 0.020%
24 0.050% 0.050% 0.120% 0.020% 0.020% 0.020%
25 0.050% 0.050% 0.120% 0.020% 0.020% 0.020%
26 0.100% 0.100% 0.160% 0.035% 0.020% 0.020%
27 0.100% 0.100% 0.160% 0.035% 0.020% 0.020%
28 0.100% 0.100% 0.160% 0.035% 0.020% 0.020%
29 0.100% 0.100% 0.160% 0.035% 0.020% 0.020%
30 0.100% 0.100% 0.160% 0.035% 0.020% 0.020%
31 0.230% 0.180% 0.240% 0.090% 0.100% 0.060%
32 0.230% 0.180% 0.240% 0.090% 0.100% 0.060%
33 0.230% 0.180% 0.240% 0.090% 0.100% 0.060%
34 0.230% 0.180% 0.240% 0.090% 0.100% 0.060%
35 0.230% 0.180% 0.240% 0.090% 0.100% 0.060%
36 0.450% 0.350% 0.320% 0.150% 0.150% 0.140%
37 0.450% 0.350% 0.320% 0.150% 0.150% 0.140%
38 0.450% 0.350% 0.320% 0.150% 0.150% 0.140%
39 0.450% 0.350% 0.320% 0.150% 0.150% 0.140%
40 0.450% 0.350% 0.320% 0.150% 0.150% 0.140%
41 0.520% 0.650% 0.550% 0.170% 0.300% 0.250%
42 0.520% 0.650% 0.550% 0.170% 0.300% 0.250%
43 0.520% 0.650% 0.550% 0.170% 0.300% 0.250%
44 0.520% 0.650% 0.550% 0.170% 0.300% 0.250%
45 0.520% 0.650% 0.550% 0.170% 0.300% 0.250%
46 0.650% 0.750% 0.750% 0.300% 0.420% 0.420%
47 0.650% 0.750% 0.750% 0.300% 0.420% 0.420%
48 0.650% 0.750% 0.750% 0.300% 0.420% 0.420%
49 0.650% 0.750% 0.750% 0.300% 0.420% 0.420%
50 0.650% 0.750% 0.750% 0.300% 0.420% 0.420%
51 0.800% 0.800% 0.800% 0.700% 0.750% 0.750%
52 0.800% 0.800% 0.800% 0.700% 0.750% 0.750%
53 0.800% 0.800% 0.800% 0.700% 0.750% 0.750%
54 0.800% 0.800% 0.800% 0.700% 0.750% 0.750%
55 0.800% 0.800% 0.800% 0.700% 0.750% 0.750%
56+ 1.000% 0.850% 0.900% 1.100% 0.800% 1.000%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 28
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, 2022 – Oro Valley Police Dept. (122) 29
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, 2022 – Oro Valley Police Dept. (122) 30 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. 06/30/2019 06/30/2020 06/30/2021 06/30/2022 Support Ratio Total Actives 84 78 75 71 Total Inactives 56 61 64 67 Actives / Inactives 150.0% 127.9% 117.2% 106.0% Asset Volatility Ratio Market Value of Assets (MVA) 36,587,342 38,542,634 51,161,889 75,900,900 Total Annual Payroll 6,569,363 6,262,347 6,174,801 6,042,533 MVA / Total Annual Payroll 556.9% 615.5% 828.6% 1,256.1% Accrued Liability (AL) Ratio Inactive Accrued Liability 34,483,737 37,987,923 41,295,836 46,880,574 Total Accrued Liability 62,278,853 67,240,526 70,792,554 76,438,334 Inactive AL / Total AL 55.4% 56.5% 58.3% 61.3% Funded Ratio Actuarial Value of Assets (AVA) 37,842,906 41,498,361 46,773,089 77,967,201 Total Accrued Liability 62,278,853 67,240,526 70,792,554 76,438,334 AVA / Total Accrued Liability 60.8% 61.7% 66.1% 102.0% Net Cash Flow Ratio Net Cash Flow 1 1,315,467 1,532,336 1,738,938 27,917,489 Market Value of Assets (MVA) 36,587,342 38,542,634 51,161,889 75,900,900 Net Cash Flow / MVA 3.6% 4.0% 3.4% 36.8%
Arizona Public Safety Personnel Retirement System Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 31 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. 06/30/2019 06/30/2020 06/30/2021 06/30/2022 Support Ratio Total Actives 944 1,408 1,853 2,417 Total Inactives 57 130 221 327 Actives / Inactives 1,656.1% 1,083.1% 838.5% 739.1% Asset Volatility Ratio Market Value of Assets (MVA) 9,392,896 22,964,925 51,992,240 74,774,123 Total Annual Payroll 50,420,565 84,448,996 115,883,115 165,151,543 MVA / Total Annual Payroll 18.6% 27.2% 44.9% 45.3% Accrued Liability (AL) Ratio Inactive Accrued Liability 203,244 1,173,104 2,290,610 4,598,114 Total Accrued Liability 7,956,725 23,239,599 42,733,537 68,939,204 Inactive AL / Total AL 2.6% 5.0% 5.4% 6.7% Funded Ratio Actuarial Value of Assets (AVA) 9,305,220 23,570,444 45,863,401 76,171,857 Total Accrued Liability 7,956,725 23,239,599 42,733,537 68,939,204 AVA / Total Accrued Liability 116.9% 101.4% 107.3% 110.5% Net Cash Flow Ratio Net Cash Flow 2 7,281,178 13,192,598 18,607,209 25,802,686 Market Value of Assets (MVA) 9,392,896 22,964,925 51,992,240 74,774,123 Net Cash Flow / MVA 77.5% 57.4% 35.8% 34.5%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 32
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.
Tier 3 Defined Contribution members are able to elect participation in
post-retirement health insurance subsidy.
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
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 33
2) 62nd birthday and completion of 15 years of service.
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%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 34
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 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).
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 35
Vesting (Termination)
Vesting Service Requirement Tier 1:
10 years of Credited Service.
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
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 36
Statistics. Maximum increase of 2%.
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 84 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, 2018 7.30%
July 1, 2022 7.20%
Payment of DROP Payable as lump sum distribution to Public Safety Personnel
Participation Account Defined Contribution Retirement Plan at earlier of 1) end of DROP
period, 2) at termination, or 3) five years.
Payment Monthly Benefit System commences payment of benefit amount at the earlier of 1) the
end of the DROP period and 2) at termination.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 37
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 DROP benefit was extended to 84 months.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 38
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 September 2022.
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.
c. As closed plans mature, the target funding should be 110% of AAL or 100% of PVB, whichever is
greater.
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
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 39
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).
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.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 40
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).
d. Tier 3 amortization methods are established in ARS 38-843.G and ARS 38-891.K.
4. Amortization Method (Overfunded Amounts)
a. The Actuarial Value of Assets are subtracted from the target funding level(greater of 110% of AAL or
100% of PVB). Any overfunded amount is amortized as a level dollar amount over an open 10-year
period.
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
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 41
amortization should be researched and presented to the Advisory Committee to provide a
recommendation to the Board of Trustees. The analysis and presentation are intended to provide a
basis for consideration if changes to assumptions and/or methods are warranted between full experience
studies.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 42
X. GLOSSARY
Actuarial Accrued Liability – Computed differently under different funding methods, the actuarial accrued
liability generally represents the portion of the actuarial present value of benefits attributable to service credit
earned (or accrued) as of the valuation date.
Actuarial Present Value of Benefits – Amount which, together with future interest, is expected to be sufficient
to pay all benefits to be paid in the future, regardless of when earned, as determined by the application of a
particular set of actuarial assumptions; equivalent to the actuarial accrued liability plus the present value of
future normal costs attributable to the members.
Actuarial Assumptions – Assumptions as to the occurrence of future events affecting pension costs. These
assumptions include rates of investment earnings, changes in salary, rates of mortality, withdrawal, disablement,
and retirement as well as statistics related to marriage and family composition.
Actuarial Cost Method – A method of determining the portion of the cost of a pension plan to be allocated to
each year; sometimes referred to as the "actuarial funding method." Each cost method allocates a certain portion
of the actuarial present value of benefits between the actuarial accrued liability and future normal costs.
Actuarial Equivalence – Series of payments with equal actuarial present values on a given date when valued
using the same set of actuarial assumptions.
Actuarial Present Value - The amount of funds required as of a specified date to provide a payment or series of
payments in the future. It is determined by discounting future payments at predetermined rates of interest, and
by probabilities of payments between the specified date and the expected date of payment.
Actuarial Value of Assets – The value of cash, investments, and other property belonging to the pension plan
as used by the actuary for the purpose of the actuarial valuation. This may correspond to market value of assets,
or some modification using an asset valuation method to reduce the volatility of asset values.
Asset Gain (Loss) – That portion of the actuarial gain attributable to investment performance above (below) the
expected rate of return in the actuarial assumptions.
Amortization – Paying off an interest-discounted amount with periodic payments of interest and (generally)
principal, as opposed to paying off with a lump sum payment.
Amortization Payment – That portion of the pension plan contribution designated to pay interest and reduce the
outstanding principal balance of unfunded actuarial accrued liability. If the amortization payment is less than
the accrued interest on the unfunded actuarial accrued liability the outstanding principal balance will increase.
Assumed Earnings Rate – The interest rate used in developing present values to reflect the time value of money.
Decrements – Events which result in the termination of membership in the system such as retirement, disability,
withdrawal, or death.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2022 – Oro Valley Police Dept. (122) 43
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 CORRECTIONS OFFICER
RETIREMENT PLAN
TOWN OF ORO VALLEY - DISPATCHERS (556)
ACTUARIAL VALUATION
AS OF JUNE 30, 2022
CONTRIBUTIONS APPLICABLE TO THE
PLAN/FISCAL YEAR ENDING JUNE 30, 2024
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 2022
Board of Trustees
Arizona Corrections Officer Retirement Plan
Phoenix, AZ
Re: Actuarial Valuation Report as of June 30, 2022 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, 2022 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, 2022 – 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 ........................................................................................................... 17
VII. Discussion of Risk ...................................................................................................................................... 22
VIII. Summary of Current Plan.......................................................................................................................... 25
IX. Actuarial Funding Policy ............................................................................................................................. 30
X. Glossary ........................................................................................................................................................ 34
Arizona Corrections Officer Retirement Plan
Actuarial Valuation Report as of June 30, 2022 – 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, 2022, 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, 2023. This
information is contained in the section entitled “Contribution Results.”
1. Key Valuation Results
The funded status as of June 30, 2022 and the employer contribution amounts applicable to the plan/fiscal
year ending June 30, 2024 are as follows:
Tier 1 & Tier 2 Members
Pension Health Total
Employer Contribution Rate 128.44% 0.00% 128.44%
Funded Status 46.0% 285.2% 47.8%
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, 2021):
Contribution Rate
Tier 1 & Tier 2 Members
Valuation Date Pension Health Total
June 30, 2021 118.45% 0.00% 118.45%
June 30, 2022 128.44% 0.00% 128.44%
Funded Status
Tier 1 & Tier 2 Members
Valuation Date Pension Health Total
June 30, 2021 46.5% 330.3% 48.3%
June 30, 2022 46.0% 285.2% 47.8%
Arizona Corrections Officer Retirement Plan
Actuarial Valuation Report as of June 30, 2022 – 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 118.45% 0.00%
Asset Experience 0.76% 0.04%
Payroll Base (1.61%) 0.00%
Liability Experience 4.55% (0.05%)
Additional Contributions 0.00% 0.00%
Assumption/Method Change 5.20% 0.01%
Other 1.09% 0.00%
Contribution Rate This Valuation 128.44% 0.00%
Funded Status
Tier 1 & Tier 2
Pension Health
Funded Status Last Valuation 46.5% 330.3%
Asset Experience (0.3%) (1.6%)
Liability Experience (0.9%) (45.3%)
Additional Contributions 0.0% 0.0%
Assumption/Method Change (0.7%) (2.4%)
Other 1.4% 4.2%
Funded Status This Valuation 46.0% 285.2%
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, 2022 was
(3.7%). On a smoothed, actuarial value of assets basis, however, the average return was 7.0%. This return
fell just short of the 2021 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.
Liability Experience – Experience overall was slightly unfavorable, driven by higher than expected salary
increases for actives and higher than expected COLA increases for inactives.
Additional Contribution – Monies contributed in excess of the required contribution rate in order to pay
down the unfunded liability.
Assumption / Method Change – The Board adopted the assumption recommendations provided in the
2022 experience study report, dated April 21, 2022, which updated the salary, inflation, and demographic
assumptions. The Board also reduced the interest rate from 7.30% to 7.20% and continued the decrease in
the payroll growth assumption from 2.50% to 2.00%.
Arizona Corrections Officer Retirement Plan
Actuarial Valuation Report as of June 30, 2022 – Town of Oro Valley - Dispatchers (556) 3
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.
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 loss realized this year will,
in the absence of other gains, put upward pressure on the contribution rate next year.
If the June 30, 2022 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 44.7% (instead of 46.0%)
and the pension employer contribution requirement would be 131.58% of payroll (instead of 128.44%).
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, 2022 – Town of Oro Valley - Dispatchers (556) 4
II. CONTRIBUTION RESULTS
Contribution Requirements
Development of Employer Contributions - Tiers 1 & 2 Members
Valuation Date June 30, 2022 June 30, 2021
Applicable to Fiscal Year Ending 2024 2023
Rate Dollar Rate Dollar
Pension
Normal Cost
Total Normal Cost 10.21% $16,408 10.79% $16,669
Employee Cost (7.96%) (12,792) (7.96%) (12,303)
Employer (Net) Normal Cost 2.25% 3,616 2.83% 4,366
Amortization of Unfunded Liability 126.19% 202,799 115.62% 178,696
Total Employer Cost (Pension) 128.44% 206,415 118.45% 183,062
Health
Normal Cost 0.23% $364 0.24% $371
Amortization of Unfunded Liability (0.23%) (364) (0.24%) (371)
Total Employer Cost (Health) 0.00% 0 0.00% 0
Total Employer Cost (Pension + Health) 128.44% 206,415 118.45% 183,062
Total Minimum Contribution Requirement (if applicable) 6.00% 6.00%
Alternate Contribution Rate (ACR) * 126.19% 115.62%
Underlying Payroll (as of valuation date) 160,709 154,555
* 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, 2022 – Town of Oro Valley - Dispatchers (556) 5
Development of Employer Contributions – Tier 3 Members
Valuation Date June 30, 2022 June 30, 2021
Applicable to Fiscal Year Ending 2024 2023
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 0.17% 0
Employee Disability Program Cost 0.45% 0 0.44% 0
Total Employee Cost 7.62% 0 7.61% 0
Employer Cost 5.00% 0 5.00% 0
Employer Health Subsidy Program Cost 0.17% 0 0.17% 0
Employer Disability Program Cost 0.45% 0 0.44% 0
Total Employer Cost (before Legacy) 5.62% 0 5.61% 0
ER Legacy Cost of Tiers 1 & 2 Amort of Unfunded
Liabilities * 126.19% 0 115.62% 0
Total Employer Cost 131.81% 0 121.23% 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, 2022 – 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% 9.81%
CORP DC Rate 2 7.00%
CODCRP Health Subsidy Program Rate 0.17%
CODCRP Disability Program Rate 0.45%
Total EE Contribution Rate 7.96% 7.96% 9.81% 7.62%
Employer Contribution Rate
CORP DB Normal Cost 2.25% 2.25% 4.90%
CORP DB Tier 1 & 2 Legacy Cost 3 126.19% 126.19% 0.00% 126.19%
CORP DC Rate 5.00%
CODCRP Health Subsidy Program Rate 0.17%
CODCRP Disability Program Rate 0.45%
Total ER Contribution Rate 128.44% 128.44% 4.90% 131.81%
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, 2022
actuarial valuation. Pension and health components are combined, where applicable.
Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2022 – 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, 2022 46.0% 46.2% 46.5% 46.8% 47.1% 47.3% 47.6% 47.9% 48.1% 48.4% 48.7% FYE 2024 Contribution Rate 131.41% 130.57% 129.74% 128.90% 128.07% 127.24% 126.40% 125.57% 124.73% 123.90% 123.07% Table shows the hypothetical change in the funded status and contribution rate from the June 30, 2022 actuarial valuation results for Tiers 1 & 2 if an additional contribution of the amount shown had been made to the Fund on June 30, 2022. 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% 2022 2024 2.25% 126.19% 128.44% 0.23% (0.23%) 0.00%
Arizona Corrections Officer Retirement Plan
Actuarial Valuation Report as of June 30, 2022 – Town of Oro Valley - Dispatchers (556) 8
III. LIABILITY SUPPORT
Liabilities and Funded Ratios by Benefit - Tiers 1 & 2
Pension and health liabilities were not impacted under the lateral transfer methodology.
June 30, 2022 June 30, 2021
Pension
Actuarial Present Value of Benefits (PVB)
Retirees and Beneficiaries $ 2,564,326 $ 2,505,267
Vested Members 66,659 63,948
Active Members 1,189,106 1,088,314
Total Actuarial Present Value of Benefits 3,820,091 3,657,529
Actuarial Accrued Liability (AAL)
All Inactive Members 2,630,985 2,569,215
Active Members 1,090,166 982,080
Total Actuarial Accrued Liability 3,721,151 3,551,295
Actuarial Value of Assets (AVA) 1,710,819 1,649,829
Unfunded Actuarial Accrued Liability 2,010,332 1,901,466
Funded Ratio (AVA / PVB) 44.8% 45.1%
Funded Ratio (AVA / AAL) 46.0% 46.5%
Health
Actuarial Present Value of Benefits (PVB)
Retirees and Beneficiaries $ 11,893 $ 7,365
Active Members 18,507 17,835
Total Present Value of Benefits 30,400 25,200
Actuarial Accrued Liability (AAL)
All Inactive Members 11,893 7,365
Active Members 16,594 15,836
Total Actuarial Accrued Liability 28,487 23,201
Actuarial Value of Assets (AVA) 81,248 76,639
Unfunded Actuarial Accrued Liability (52,761) (53,438)
Funded Ratio (AVA / PVB) 267.3% 304.1%
Funded Ratio (AVA / AAL) 285.2% 330.3%
Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2022 – 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, 2021 1,901,466 (53,438) (2) Normal Cost Developed in Last Valuation 4,366 371 (3) Actual Contributions 123,193 0 (4) Expected Interest On (1), (2), and (3) 134,708 (3,874) (5) Expected Unfunded Actuarial Accrued Liability as of June 30, 2022 (1)+(2)-(3)+(4) 1,917,347 (56,941) (6) Changes to UAAL Due to Assumptions, Methods and Benefits 52,916 241 (7) Change to UAAL Due to Actuarial (Gain)/Loss 40,069 3,939 (8) Unfunded Actuarial Accrued Liability as of June 30, 2022 2,010,332 (52,761)
Arizona Corrections Officer Retirement Plan
Actuarial Valuation Report as of June 30, 2022 – 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 1,737,869 14 108.30%
06/30/2021 115,084 14 7.73%
06/30/2022 157,379 15 10.16%
Total 2,010,332 126.19%
Health 06/30/2019 0 10 0.00%
06/30/2021 0 10 0.00%
06/30/2022 (49,912) 10 (4.16%)
Total (49,912) (4.16%)
Arizona Corrections Officer Retirement Plan
Actuarial Valuation Report as of June 30, 2022 – Town of Oro Valley - Dispatchers (556) 11
IV. ASSET SUPPORT
Statement of Changes in Fiduciary Net Position for Year Ended June 30, 2022
Market Value Basis
Tiers 1 & 2
Pension Health
Additions
Contributions
Member Contributions $ 40,034,012 $ 0
Employer Contributions 806,004,555 0
Health Insurance Contributions 0 538,941
Total Contributions 846,038,567 538,941
Investment Income
Net Increase in Fair Value (172,953,636) (8,096,213)
Interest and Dividends 32,720,422 1,531,691
Other Income 19,389,614 1,055,032
Less Investment Expenses (5,907,087) (221,268)
Net Investment Income (126,750,687) (5,730,758)
Transfers In 37,657 0
Total Additions 719,325,537 (5,191,817)
Deductions
Distributions to Members
Benefit Payments 197,762,666 0
Health Insurance Subsidy 0 4,455,924
Refund of Contributions 21,402,121 0
Total Distributions 219,164,787 4,455,924
Administrative Expenses 2,269,333 102,940
Transfers Out 424,158 0
Other 0 0
Total Deductions 221,858,278 4,558,864
Net Increase / (Decrease) 497,467,259 (9,750,681)
Net Position Held in Trust
Prior Valuation 3,215,933,036 155,576,224
Beginning of the Year Adjustment (1) 0
End of the Year 3,713,400,295 145,825,543
Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2022 – Town of Oro Valley - Dispatchers (556) 12 Development of Pension Actuarial Value of Assets - Tiers 1 & 2 A. Investment Income A1. Actual Investment Income $ (129,020,020) A2. Expected Amount for Immediate Recognition 257,227,149 A3. Amount Subject to Amortization (386,247,169) Year Ended June 30 B. Amortization Schedule 2022 2023 2024 2025 2026 2027 2028 2022 Experience (A3 / 7) (55,178,167) (55,178,167) (55,178,167) (55,178,167) (55,178,167) (55,178,167) (55,178,167) 2021 Experience 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) (13,457,281) 2019 Experience (5,782,115) (5,782,115) (5,782,115) (5,782,112) 2018 Experience (1,511,828) (1,511,828) (1,511,825) 2017 Experience 8,429,734 8,429,733 2016 Experience (16,290,497) Total Amortization (26,196,030) (9,905,534) (18,335,264) (16,823,436) (11,041,323) 2,415,955 (55,178,167) C. Actuarial Value of Assets Total Employer C1. Actuarial Value of Assets, June 30, 2021 2,964,749,664 C2. Non-investment Net Cash Flow 626,487,279 C3. Preliminary Actuarial Value of Assets, June 30, 2022 (A2 + B + C1 + C2) 3,822,268,062 C4. Market Value of Assets, June 30, 2022 3,713,400,295 1,662,090 C5. Final Actuarial Value of Assets, June 30, 2022 (C3 Within 20% Corridor of C4) 3,822,268,062 1,710,819 D. Rates of Return D1. Market Value Rate of Return (3.7%) D2. Actuarial Value Rate of Return 7.0%
Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2022 – Town of Oro Valley - Dispatchers (556) 13 Development of Health Actuarial Value of Assets - Tiers 1 & 2 A. Investment Income A1. Actual Investment Income $ (5,833,698) A2. Expected Amount for Immediate Recognition 11,216,613 A3. Amount Subject to Amortization (17,050,311) Year Ended June 30 B. Amortization Schedule 2022 2023 2024 2025 2026 2027 2028 2022 Experience (A3 / 7) (2,435,759) (2,435,759) (2,435,759) (2,435,759) (2,435,759) (2,435,759) (2,435,757) 2021 Experience 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) (806,919) 2019 Experience (382,214) (382,214) (382,214) (382,213) 2018 Experience (81,544) (81,544) (81,541) 2017 Experience 574,691 574,693 2016 Experience (1,140,442) Total Amortization (792,488) 347,956 (226,734) (145,192) 237,022 1,043,944 (2,435,757) C. Actuarial Value of Assets Total Employer C1. Actuarial Value of Assets, June 30, 2021 140,497,165 C2. Non-investment Net Cash Flow (3,916,983) C3. Preliminary Actuarial Value of Assets, June 30, 2022 (A2 + B + C1 + C2) 147,004,307 C4. Market Value of Assets, June 30, 2022 145,825,543 80,597 C5. Final Actuarial Value of Assets, June 30, 2022 (C3 Within 20% Corridor of C4) 147,004,307 81,248 D. Rates of Return D1. Market Value Rate of Return (3.8%) D2. Actuarial Value Rate of Return 7.5%
Arizona Corrections Officer Retirement Plan
Actuarial Valuation Report as of June 30, 2022 – Town of Oro Valley - Dispatchers (556) 14
V. MEMBER STATISTICS
Valuation Data Summary – Tiers 1 & 2
June 30, 2022 June 30, 2021
Actives
Number 2 2
Average Current Age 51.9 50.9
Average Age at Employment 32.3 32.3
Average Past Service 19.6 18.6
Average Annual Salary $69,946 $66,016
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 4
Average Current Age 66.4 65.4
Average Annual Benefit $39,477 $38,703
Beneficiaries
Number 1 1
Average Current Age 68.0 67.0
Average Annual Benefit $37,044 $36,318
Disability Retirees
Number 1 1
Average Current Age 51.0 50.0
Average Annual Benefit $4,791 $4,697
Inactive / Vested
Number 3 4
Average Current Age 41.9 46.1
Average Accumulated Contributions $21,431 $16,262
Total Number 11 12
Former Members (transferred) 0 0
Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2022 – 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 0 0 0 0 0 0 0 0 50 - 54 0 0 1 0 1 0 0 2 139,892 69,946 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 2 139,892 69,946
Arizona Corrections Officer Retirement Plan Actuarial Valuation Report as of June 30, 2022 – Town of Oro Valley - Dispatchers (556) 16 In-Payment Counts and Benefit Summary - Tiers 1 & 2 Age Count Average Annual Benefit < 40 0 $ 0 40 - 44 0 0 45 - 49 0 0 50 - 54 2 25,256 55 - 59 0 0 60 - 64 0 0 65 - 69 2 44,396 70 - 74 1 25,696 75 - 79 1 34,741 80 - 84 0 0 85 - 89 0 0 90 - 94 0 0 95 - 99 0 0 100+ 0 0 Total 6 33,291 “In-Payment” refers to retired, beneficiary, and disabled members.
Arizona Corrections Officer Retirement Plan
Actuarial Valuation Report as of June 30, 2022 – Town of Oro Valley - Dispatchers (556) 17
VI. ACTUARIAL ASSUMPTIONS AND METHODS
Interest Rate 7.20% per year. This is the assumed earnings rate on System assets,
compounded annually, net of investment and administrative
expenses.
Salary Increases See table at the end of this section. This is an annual increase for
individual member’s salary. These rates are based on a 2022
experience study using actual plan experience.
Inflation 2.50%.
Tier 3 Compensation Limit $72,947 for calendar 2022. Assumed increases of 2.00% per year
thereafter.
Cost-of-Living Adjustment 1.85%.
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, adjusted by a factor of 1.28 for male
members and 1.11 for female members, with generational improve-
ments using 85% of the most recent projection scale (currently Scale
MP-2021). 100% of active deaths are assumed to be in the line of
duty.
Inactive Lives:
PubS-2010 Healthy Retiree mortality, adjusted by a factor of 1.33 for
male retirees and 1.13 for female retirees, with generational improve-
ments using 85% of the most recent projection scale (currently Scale
MP-2021).
Beneficiaries:
PubS-2010 Survivor mortality, adjusted by a factor of 0.99 for male
beneficiaries and adjusted by a factor of 1.09 for female beneficiar-
ies, with generational improvements with 85% of most recent projec-
tion scale (currently Scale MP-2021).
Disabled Lives:
PubS-2010 Disabled mortality, adjusted by a factor of 1.02 for male
disabled members and 0.98 for female disabled members, with
generational improvements using 85% of the most recent projection
Arizona Corrections Officer Retirement Plan
Actuarial Valuation Report as of June 30, 2022 – Town of Oro Valley - Dispatchers (556) 18
scale (currently Scale MP-2021).
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 2022
experience study using actual plan experience.
Tier 1 – reaching 20 (25 for dispatchers) years of service after age
62:
Age-related rates based on age at retirement: 35% per year from age
62 - 74 and 100% assumed at age 75.
Tier 1 – reaching 20 (25 for dispatchers) years of service before
age 62:
Service-related rates based on service at retirement. See complete
table of rates at the end of this section
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. Complete table of rates based on
service at termination are provided at the end of this section. The
rates apply to members prior to retirement eligibility and are based
on a 2022 experience study using actual plan experience.
Disability Rate These rates are used to project future decrements from the active
population due to disability. Complete table of rates based on age at
disability are provided at the end of this section. These rates are
based on a 2022 experience study using actual plan experience. 80%
of disablements are assumed to be duty-related.
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.
Arizona Corrections Officer Retirement Plan
Actuarial Valuation Report as of June 30, 2022 – Town of Oro Valley - Dispatchers (556) 19
Spouse’s Age Male spouses are assumed to be 3 years older than female members
and female spouses are assumed to be 2 years younger than males
members.
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.
Lateral Transfers When active members transfer between employers, the new
employer’s liability starts from their new date of hire with no past
service liability (i.e., all liability is accrued through normal cost).
Per PSPRS administrative decision, once the new employer’s
liability is fully funded, the liability will reflect all past service
liability.
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.
Arizona Corrections Officer Retirement Plan
Actuarial Valuation Report as of June 30, 2022 – Town of Oro Valley - Dispatchers (556) 20
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 2.00% per year. This is annual increase for total employer payroll.
Changes to Actuarial Assumptions and Methods Since the Prior Valuation
Based on the results of the 2022 experience study, the following assumption changes were made:
Updated mortality, retirement, termination, and disability rate tables.
Updated assumed salary increase and cost-of-living adjustment rates.
In addition, the interest rate was decreased from 7.30% to 7.20% and the payroll growth assumption was
lowered from 2.50% to 2.00%.
There were no method changes since the prior valuation.
Arizona Corrections Officer Retirement Plan
Actuarial Valuation Report as of June 30, 2022 – Town of Oro Valley - Dispatchers (556) 21
Retirement Rates
Tier 1 20 (25) years
before Age 62 Termination Rates
Disability
Rates
Salary
Scale
Service Rate Service
Tier 1 and
Tier 2 Tier 3 Age Rate Rate
20 32% 0 23.0% 15.0% 20 0.020% 6.25%
21 32% 1 20.0% 13.5% 21 0.020% 6.00%
22 20% 2 16.5% 12.0% 22 0.020% 5.50%
23 17% 3 15.5% 11.0% 23 0.020% 5.25%
24 17% 4 14.0% 9.0% 24 0.020% 5.25%
25 17% 5 10.5% 8.0% 25 0.020% 5.25%
26 24% 6 10.0% 7.0% 26 0.020% 5.25%
27 17% 7 9.0% 6.0% 27 0.020% 5.00%
28 17% 8 8.0% 6.0% 28 0.020% 5.00%
29 17% 9 8.0% 6.0% 29 0.020% 5.00%
30 25% 10 8.0% 6.0% 30 0.020% 4.75%
31 25% 11 6.5% 2.5% 31 0.020% 4.75%
32 25% 12 5.0% 2.5% 32 0.020% 4.50%
33 25% 13 4.0% 2.5% 33 0.020% 4.50%
34 30% 14 3.0% 2.5% 34 0.020% 4.25%
35 30% 15 3.0% 2.5% 35 0.035% 4.25%
36 30% 16 2.0% 2.0% 36 0.035% 4.00%
37+ 100% 17 2.0% 1.5% 37 0.035% 4.00%
18 2.0% 1.0% 38 0.035% 3.75%
19 2.0% 0.5% 39 0.035% 3.75%
20+ 2.0% 0.5% 40 0.045% 3.75%
41 0.045% 3.75%
42 0.045% 3.75%
43 0.045% 3.50%
44 0.045% 3.50%
45 0.055% 3.50%
46 0.055% 3.50%
47 0.055% 3.50%
48 0.055% 3.50%
49 0.055% 3.50%
50 0.080% 3.50%
51 0.080% 3.50%
52 0.080% 3.25%
53 0.080% 3.25%
54 0.080% 3.25%
55 0.100% 3.25%
56 0.100% 3.25%
57 0.100% 3.25%
58 0.100% 3.00%
59 0.100% 3.00%
60 0.200% 3.00%
61+ 0.000% 3.00%
Arizona Corrections Officer Retirement Plan
Actuarial Valuation Report as of June 30, 2022 – Town of Oro Valley - Dispatchers (556) 22
VII. DISCUSSION OF RISK
ASOP No. 51, Assessment and Disclosure of Risk Associated with Measuring Pension Obligations and
Determining Pension Plan Contributions, states that the actuary should identify risks that, in the actuary’s
professional judgment, may reasonably be anticipated to significantly affect the plan’s future financial
condition.
Throughout this report, actuarial results are determined under various assumption scenarios. These results are
based on the premise that all future plan experience will align with the plan’s actuarial assumptions; however,
there is no guarantee that actual plan experience will align with the plan’s assumptions. Whenever possible,
the recommended assumptions in this report reflect conservatism to allow for some margin of unfavorable
future plan experience. However, it is still possible that actual plan experience will differ from anticipated
experience in an unfavorable manner that will negatively impact the plan’s funded position.
Below are examples of ways in which plan experience can deviate from assumptions and the potential impact
of that deviation. Typically, this results in an actuarial gain or loss representing the current-year financial
impact on the plan’s unfunded liability of the experience differing from assumptions; this gain or loss is
amortized over a period of time determined by the plan’s amortization method. When assumptions are selected
that adequately reflect plan experience, gains and losses typically offset one another in the long term, resulting
in a relatively low impact on the plan’s contribution requirements associated with plan experience. When
assumptions are too optimistic, losses can accumulate over time and the plan’s amortization payment could
potentially grow to an unmanageable level.
Investment Return: When the rate of return on the Actuarial Value of Assets falls short of the assumption,
this produces a loss representing assumed investment earnings that were not realized. Further, it is
unlikely that the plan will experience a scenario that matches the assumed return in each year as capital
markets can be volatile from year to year. Therefore, contribution amounts can vary in the future.
Salary Increases: When a plan participant experiences a salary increase that was greater than assumed, this
produces a loss representing the cost of an increase in anticipated plan benefits for the participant as
compared to the previous year. The total gain or loss associated with salary increases for the plan is the
sum of salary gains and losses for all active participants.
Payroll Growth: The plan’s payroll growth assumption, if one is used, causes a predictable annual increase
in the plan’s amortization payment in order to produce an amortization payment that remains constant as
a percentage of payroll if all assumptions are realized. If payroll does not increase according to the plan’s
payroll growth assumption, the plan’s amortization payment can increase significantly as a percentage of
payroll even if all assumptions other than the payroll growth assumption are realized.
Demographic Assumptions: Actuarial results take into account various potential events that could happen
to a plan participant, such as retirement, termination, disability, and death. Each of these potential events
is assigned a liability based on the likelihood of the event and the financial consequence of the event for
the plan. Accordingly, actuarial liabilities reflect a blend of financial consequences associated with
various possible outcomes (such as retirement at one of various possible ages). Once the outcome is
known (e.g. the participant retires) the liability is adjusted to reflect the known outcome. This adjustment
Arizona Corrections Officer Retirement Plan
Actuarial Valuation Report as of June 30, 2022 – Town of Oro Valley - Dispatchers (556) 23
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, 2022 – Town of Oro Valley - Dispatchers (556) 24 Plan Maturity Measures and Other Risk Metrics – Tiers 1 & 2 06/30/2019 06/30/2020 06/30/2021 06/30/2022 Support Ratio Total Actives 3 3 2 2 Total Inactives 9 9 10 9 Actives / Inactives 33.3% 33.3% 20.0% 22.2% Asset Volatility Ratio Market Value of Assets (MVA) 1,378,623 1,414,433 1,789,608 1,662,090 Total Annual Payroll 202,246 204,074 132,031 139,892 MVA / Total Annual Payroll 681.7% 693.1% 1,355.4% 1,188.1% Accrued Liability (AL) Ratio Inactive Accrued Liability 1,792,133 1,777,255 2,569,215 2,630,985 Total Accrued Liability 3,240,399 3,374,933 3,551,295 3,721,151 Inactive AL / Total AL 55.3% 52.7% 72.3% 70.7% Funded Ratio Actuarial Value of Assets (AVA) 1,424,947 1,504,732 1,649,829 1,710,819 Total Accrued Liability 3,240,399 3,374,933 3,551,295 3,721,151 AVA / Total Accrued Liability 44.0% 44.6% 46.5% 46.0% Net Cash Flow Ratio Net Cash Flow * (288) (892) (10,257) (60,256) Market Value of Assets (MVA) 1,378,623 1,414,433 1,789,608 1,662,090 Net Cash Flow / MVA 0.0% (0.1%) (0.6%) (3.6%) * 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, 2022 – Town of Oro Valley - Dispatchers (556) 25
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
Credited 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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Actuarial Valuation Report as of June 30, 2022 – Town of Oro Valley - Dispatchers (556) 28
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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Actuarial Valuation Report as of June 30, 2022 – Town of Oro Valley - Dispatchers (556) 29
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 September 2022.
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.
c. As closed plans mature, the target funding should be 110% of AAL or 100% of PVB, whichever is
greater.
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
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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).
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.
Arizona Corrections Officer Retirement Plan
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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).
d. Tier 3 amortization methods are established in ARS 38-843.G and ARS 38-891.K.
4. Amortization Method (Overfunded Amounts)
a. The Actuarial Value of Assets are subtracted from the target funding level(greater of 110% of AAL or
100% of PVB). Any overfunded amount is amortized as a level dollar amount over an open 10-year
period.
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.
Arizona Corrections Officer Retirement Plan
Actuarial Valuation Report as of June 30, 2022 – Town of Oro Valley - Dispatchers (556) 33
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 recommendation to the Board of Trustees. The analysis and
presentation are intended to provide a basis for consideration if changes to assumptions
and/or methods are warranted between full experience studies.
Arizona Corrections Officer Retirement Plan
Actuarial Valuation Report as of June 30, 2022 – Town of Oro Valley - Dispatchers (556) 34
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, 2022 – Town of Oro Valley - Dispatchers (556) 35
Entry Age Normal (EAN) Funding Method – A standard actuarial funding method whereby each member’s
normal costs (service costs) are generally level as a percentage of pay from entry age until retirement. The
annual cost of benefits is comprised of the normal cost plus an amortization payment to reduce the UAL.
Experience Gain (Loss) – The difference between actual unfunded actuarial accrued liabilities and anticipated
unfunded actuarial accrued liabilities during the period between two valuation dates. It is a measurement of the
difference between actual and expected experience, and may be related to investment earnings above (or below)
those expected or changes in the liability due to fewer (or greater) than expected numbers of retirements, deaths,
disabilities, or withdrawals, or variances in pay increases relative to assumed pay increases. The effect of such
gains (or losses) is to decrease (or increase) future costs.
Funded Ratio – A measure of the ratio of the actuarial value of assets to liabilities of the system. Typically, the
assets used in the measure are the actuarial value of assets as determined by the asset valuation method. The
funded ratio depends not only on the financial strength of the plan but also on the asset valuation method used
to determine the assets and on the funding method used to determine the liabilities.
Market Value of Assets (MVA) – The value of assets as they would trade on an open market.
Normal Cost – Computed differently under different funding methods, generally that portion of the actuarial
present value of benefits allocated to the current plan year.
Unfunded Actuarial Accrued Liability (UAAL) – The excess of the actuarial accrued liability over the valuation
assets; sometimes referred to as "unfunded past service liability". UAL increases each time an actuarial loss
occurs and when new benefits are added without being fully funded initially and decreases when actuarial gains
occur.
Town Council Regular Session D.
Meeting Date:06/07/2023
Submitted By:David Gephart, Finance
Department:Finance
SUBJECT:
Resolution No. (R)23-21, designating David Gephart as Chief Fiscal Officer, authorized to submit the Town's
Annual Expenditure Limitation Report (AELR) to the State Auditor General for FY 23-24
RECOMMENDATION:
Staff recommends approval.
EXECUTIVE SUMMARY:
Arizona Revised Statutes Section 41-1279.07(E) requires each county, city, town and community college district
to annually provide to the Auditor General, by July 31, the name of the Chief Fiscal Officer (CFO) the governing
board designated to submit the current year's annual expenditure limitation report (AELR). The Auditor General's
Office has recently updated the CFO designation form to require documentation of the governing board's official
designation authorizing the individual to submit the AELR as the CFO, such as a board resolution or meeting
minutes. Council's action approving the attached resolution designating David Gephart as the Chief Fiscal Officer
authorized to submit the AELR satisfies this requirement. Council most recently took action on this item in April
2022 for the 2022-2023 fiscal year. This item covers next fiscal year 2023-2024.
The AELR is prepared annually by the Town's independent auditors and is required to be filed with the Auditor
General's Office by March 31 each year, or nine (9) months after fiscal year-end. The Town submitted its AELR
for fiscal year 2022 prior to the March 31, 2023, deadline.
BACKGROUND OR DETAILED INFORMATION:
N/A
FISCAL IMPACT:
N/A
SUGGESTED MOTION:
I MOVE to approve Resolution No. (R)23-21, designating David Gephart as Chief Fiscal Officer, authorized to
submit the Town's annual expenditure limitation report (AELR) to the Auditor General for FY 23-24.
Attachments
(R)23-21 Resolution - Dave Gephart CFO
RESOLUTION NO. (R)23-21
A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF
ORO VALLEY, ARIZONA, DESIGNATING THE CHIEF FISCAL
OFFICER FOR OFFICIALLY SUBMITTING THE FISCAL YEAR 2024
EXPENDITURE LIMITATION REPORT TO THE ARIZONA AUDITOR
GENERAL
WHEREAS, A.R.S. 41-1279.07(E) requires each county, city, town, and community college
district to annually provide to the Arizona Auditor General by July 31 the name of the Chief
Fiscal Officer the governing body designated to officially submit the current year’s annual
expenditure limitation report (AELR) on the governing body’s behalf; and
WHEREAS, the Mayor and Council of the Town of Oro Valley, desires to designate David
Gephart as the Town’s Chief Fiscal Officer.
WHEREAS, Entities must submit an updated form and documentation for any changes in the
individuals designated to file the AELR.
NOW, THEREFORE, BE IT RESOLVED by the Mayor and Council of the Town of Oro
Valley, Arizona as follows:
SECTION 1. The recitals above are hereby incorporated as if fully set forth herein.
SECTION 2. David Gephart is hereby designated as the Town’s Chief Fiscal Officer for
purposes of submitting the fiscal year 2024 AELR to the Arizona Auditor General
on the governing body’s behalf.
SECTION 3. If any section, subsection, sentence, clause, phrase or portion of this
Resolution 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.
2
PASSED AND ADOPTED by the Mayor and Council of the Town of Oro Valley, Arizona, this
7th day of June, 2023.
TOWN OF ORO VALLEY
Joseph C. Winfield, Mayor
ATTEST: APPROVED AS TO FORM:
______________________________
Michael Standish, Town Clerk Tobin Sidles Legal Services Director
Date: Date:
Town Council Regular Session E.
Meeting Date:06/07/2023
Requested by: Jose Rodriguez
Submitted By:Jose Rodriguez, Community Development & Public Works
Department:Public Works
SUBJECT:
Resolution No. (R)23-22, authorizing and approving an Intergovernmental Agreement between the Town of Oro
Valley (Town) and the Arizona Department of Transportation (ADOT) for the design and construction of a
multi-use path on Naranja Drive between La Cañada Drive and First Avenue
RECOMMENDATION:
Staff recommends approval.
EXECUTIVE SUMMARY:
The Naranja Drive Multi-Use Path consists of constructing a 2-mile-long,10-ft-wide, multi-use path along the north
side of
Naranja Drive between La Cañada Drive and First Avenue. Improvements will also include extending drainage
culverts,
building headwalls and constructing retaining walls along cut and fill areas.
The total project cost is estimated at $3,656,434 and is funded by federal Regional Transportation
Alternatives Grants (RTAG) in the amount of $3,448,017 or 94.3% of the total project cost. The required local
match will be funded by the Regional Transportation Authority (RTA) funds in the amount of $208,417 or 5.7% of
the total project cost.
On November 16, 2022, the Town approved an IGA (Resolution No. R 22-52) between the Town and the RTA
to receive RTA funds in the amount of $208,417.
The project is federally funded and thus would need to be administered by the Arizona Department of
Transportation (ADOT) in accordance with the requirements regarding the use of federal funds. This partnership
is noted in the attached Intergovernmental Agreement (IGA) between the Town of Oro Valley and ADOT and sets
forth the specific responsibilities for ADOT as the administrator of the project.
BACKGROUND OR DETAILED INFORMATION:
In response to a Call for Projects on May 3, 2022, for the PAG Fiscal Year 2023-2026 competitive
Regional Transportation Alternatives Grants (RTAG), staff applied for the Naranja Drive Multi-Use Path between
La Cañada Drive and First Avenue. Eventually, the project was selected and awarded $3,448,017 in RTAG
funding and $208,417 in RTA funding to be used as part of the 5.7% non-federal match funds.
On November 3, 2022, the RTA Board approved $208,417 in RTA funding via an IGA between the RTA and the
Town. And on November 16, 2022, the Town approved the same IGA via Resolution R 22-52.
On February 16, 2023, PAG approved TIP Amendment #2002.061 to include the project in the PAG's
Transportation Improvement Program (TIP) which is a federal mandate to receive federal funds. Since then,
Transportation Improvement Program (TIP) which is a federal mandate to receive federal funds. Since then,
ADOT has initiated the Project Development Process, agreeing to administer the project, and on April 3, 2023,
the project was assigned a Federal ID No. of ORV-0(204)T and ADOT Project No. of T0438 (01D, 03D, 01C).
ADOT advertised for a design consultant on May 8, 2023, and anticipates making a selection by May 29,
2023. The next steps will include a Project Assessment or Design Concept Report, clearances for environmental,
right-of-way and utilities, and 30%, 60%, 95%, and 100% design submittals (as applicable). The schedule
estimates that construction will be advertised in mid-August 2024 and start in November 2024. Construction is
tentative to be complete in the summer to early fall of 2025.
List of exhibits attached:
Resolution (R)23-22
IGA between TOV and ADOT
FISCAL IMPACT:
The project is funded with federal and RTA funds.
SUGGESTED MOTION:
I MOVE to (approve/deny) Resolution No. (R)23-22, authorizing and approving an Intergovernmental Agreement
between the Town of Oro Valley (Town) and the Arizona Department of Transportation (ADOT) for the design and
construction of a multi-use path on Naranja Drive between La Cañada Drive and First Avenue.
Attachments
(R)23-22 ADOT Naranja Dr MUP
IGA Between TOV and ADOT
RESOLUTION NO. (R) 23-22
A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF
ORO VALLEY, ARIZONA, AUTHORIZING AND APPROVING AN
INTERGOVERNMENTAL AGREEMENT BETWEEN THE TOWN OF
ORO VALLEY AND THE ARIZONA DEPARTMENT OF
TRANSPORTATION FOR CONSTURCTION OF A MULTI-USE PATH
ON NARANJA DRIVE BETWEEN LA CANADA DRIVE AND FIRST
AVENUE; AND DIRECTING THE TOWN MANAGER, TOWN CLERK,
TOWN LEGAL SERVICES DIRECTOR, OR THEIR DULY
AUTHORIZED OFFICERS AND AGENTS TO TAKE ALL STEPS
NECESSARY TO CARRY OUT THE PURPOSES AND INTENT OF THIS
RESOLUTION
WHEREAS, the State of Arizona is authorized by A.R.S. § 28-401 to enter into intergovernmental
agreements for joint and cooperative action with the Town; and
WHEREAS, the Town is authorized by A.R.S. § 11-952 to enter into intergovernmental
agreements for joint and cooperative action with other public agencies; and
WHEREAS, pursuant to A.R.S. § 9-276, the Town is authorized to lay out, maintain, control
and manage public roads within its jurisdictional boundaries; and
WHEREAS, the Town desires to construct a multi-use path on Naranja Drive between La
Canada Drive and First Avenue; and
WHEREAS, the State, through its Department of Transportation (ADOT) can acquire federal
funding, through the Federal Highway Administration, and act as the Town’s agent for the
purposes of constructing a multi-use path on Naranja Drive between La Canada Drive and First
Avenue; and
WHEREAS, it is in the best interest of the Town to enter into the Intergovernmental Agreement
with the ADOT, attached hereto as Exhibit “A” and incorporated herein by this reference, to
detail the responsibilities of the Town and ADOT for the funding and construction of the multi-
use path on Naranja Drive between La Canada Drive and First Avenue.
NOW, THEREFORE, BE IT RESOLVED, by the Mayor and Council of the Town of Oro
Valley, Arizona, that:
SECTION 1. The Intergovernmental Agreement (IGA), attached hereto as
Exhibit “A” and incorporated herein by this reference, between the Town of Oro
Valley and the Arizona Department of Transportation (ADOT) for the funding
and construction of the multi-use path on Naranja Drive between La Canada
Drive and First Avenue, is hereby approved.
SECTION 2. The Town hereby designates ADOT to be its agent for the purposes
of constructing the multi-use path on Naranja Drive between La Canada Drive
and First Avenue.
SECTION 3. The Town Manager, Town Clerk, Town Legal Services Director,
or their duly authorized officers and agents are hereby authorized and directed to
take all steps necessary to carry out the purposes and intent of this resolution.
SECTION 4. If any section, subsection, sentence, clause, phrase or portion of this
Resolution, or the IGA, 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 5. All Oro Valley resolutions or motions and parts of resolutions or
motions of the Council in conflict with the provision of this Resolution are hereby
repealed.
PASSED AND ADOPTED by the Mayor and Council of the Town of Oro Valley, Arizona, this 7th
day of June, 2023.
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”
Page 1 of 11
ADOT CAR No.: IGA 23-0009162-I
AG Contract No.: P0012023000799
Project Location/Name: NARANJA DR, LA
CAÑADA DR - FIRST AVE
Type of Work: CONSTRUCT MULTI-USE
PATH
Federal-aid No.: ORV-0(204)T
ADOT Project No.: T0438 01D/03D/01C
TIP/STIP No.: 3.23
CFDA No.: 20.205 - Highway Planning and
Construction
Budget Source Item No.: N/A
INTERGOVERNMENTAL AGREEMENT
BETWEEN
THE STATE OF ARIZONA
AND
THE TOWN OF ORO VALLEY
THIS AGREEMENT (“Agreement”) is entered into this date ________________________________, pursuant
to the Arizona Revised Statutes (“A.R.S.”) §§ 11-951 through 11-954, as amended, between the
STATE OF ARIZONA, acting by and through its DEPARTMENT OF TRANSPORTATION (the “State” or
“ADOT”) and the TOWN OF ORO VALLEY, acting by and through its MAYOR and TOWN COUNCIL
(the “Town” or “Local Agency”). The State and the Local Agency are each individually referred to as
a “Party” and are collectively referred to as the “Parties.”
I. RECITALS
1. The State is empowered by A.R.S. § 28-401 to enter into this Agreement and has delegated
to the undersigned the authority to execute this Agreement on behalf of the State.
2. The Local Agency is empowered by A.R.S. § 9-240 to enter into this Agreement and has by
resolution, if required, a copy of which is attached and made a part of, resolved to enter into
this Agreement and has authorized the undersigned to execute this Agreement on behalf of
the Local Agency.
3. The work proposed under this Agreement consists of constructing an approximately 1.75
mile long, 10 feet wide, multi-use path in the right of way along the north side of Naranja
Drive between La Cañada Drive and First Avenue, (the “Project”). The Project path will
connect to the existing paths on La Cañada Drive, First Avenue and Naranja Drive, as well as
provide a connection to Naranja Park and Town Hall. The Project cost, shown in Exhibit A,
is estimated at $3,658,000.00, which includes federal aid and the Local Agency‘s match. The
State will administer the design and advertise, bid and award, and administer the
construction phase of the Project.
4. The interest of the State in this Project is the acquisition of federal funds for the use and
benefit of the Local Agency and authorization of such federal funds for the Project pursuant
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to federal law and regulations. The State shall be the designated agent for the Local Agency
for the Project, if the Project is approved by Federal Highway Administration (FHWA) and
funds for the Project are available.
5. The foregoing Recitals and Exhibit A shall be incorporated into this Agreement.
In consideration of the mutual terms expressed herein, the Parties agree as follows:
II. SCOPE OF WORK
1. The Parties agree:
a. The Project will be completed, accepted, and paid for in accordance with the
requirements of the Project plans and specifications.
b. The final cost estimate may exceed the initial estimate identified in Exhibit A, and in
such case, the Local Agency is responsible for and agrees to pay, the difference prior to
bid advertisement.
c. The final Project amount may exceed the initial estimate(s) identified in Exhibit A, and
in such case, the Local Agency is responsible for, and agrees to pay, any and all actual
costs exceeding the initial estimate. If the final Project amount is less than the initial
estimate, the difference between the final bid amount and the initial estimate will be de-
obligated or otherwise released from the Project and returned to the Pima Association
of Governments. The Local Agency acknowledges it remains responsible for actual costs
and agrees to pay according to the terms of this Agreement.
d. The Local Agency and ADOT will each separately file a Notice of Intent (NOI) under the
Construction General Permit (CGP) with the Arizona Department of Environmental
Quality (ADEQ) before construction begins, if applicable to the Project.
2. The State will:
a. Execute this Agreement, and if the Project is approved by FHWA and funds for the
Project are available, be the Local Agency’s designated agent for the Project.
b. After this Agreement is executed, and prior to performing or authorizing any work,
invoice the Local Agency for the Local Agency’s share of the initial Project Development
Administration (PDA) costs, estimated at $1,710.00 and the Local Agency’s share of the
Project design costs, estimated at $42,290.00. If PDA costs exceed the estimate during
the development of design, notify the Local Agency, obtain concurrence prior to
continuing with the development of design, and invoice as determined by ADOT and the
Local Agency for additional costs to complete PDA for the Project. If design costs exceed
the estimate prior to completion of design, invoice the Local Agency for Project costs
exceeding design. After the Project costs are finalized invoice or reimburse the Local
Agency for the difference between actual costs and the amount the Local Agency has
paid for PDA and design.
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c. After receipt of the PDA costs and the Local Agency’s estimated share of the Project
design costs, on behalf of the Local Agency, prepare and provide all documents
pertaining to the design and post-design of the Project, incorporating comments from
the Local Agency, as appropriate. Review and approve documents required by FHWA to
qualify the Project for and to receive federal funds. Perform tasks that may consist of,
but are not limited to, preparation of environmental documents; analysis and
documentation of environmental categorical exclusion determinations; geologic
materials testing and analysis; right of way related activities; preparation of reports,
design plans, maps, specifications and cost estimates and other related tasks essential to
the design development of the Project.
d. Submit all required documentation pertaining to the Project to FHWA with the
recommendation that the maximum federal funds programmed for this Project be
approved for scoping/design. After receipt of FHWA authorization, proceed to advertise
for and enter into contract(s) with the consultant(s) for the design and post-design of
the Project. Should costs exceed the maximum federal funds available it is understood
and agreed that the Local Agency will be responsible for any overage.
e. After completion of design and prior to bid advertisement, invoice the Local Agency for
the actual PDA costs, as applicable, and the Local Agency’s share of the Project
construction costs, estimated at $165,000.00. After the Project costs for construction are
finalized, the State will either invoice or reimburse the Local Agency for the difference
between estimated and actual costs. De-obligate or otherwise release any remaining
federal funds from the scoping/design phase of the Project.
f. After receipt of the actual PDA costs, if applicable, and the Local Agency’s estimated
share of the Project construction costs, including the difference between the final and
the initial construction cost estimates, if applicable, submit all required documentation
to FHWA with the recommendation that the maximum federal funds programmed for
construction of this Project be approved. Should costs exceed the maximum federal
funds available, it is understood and agreed that the Local Agency will be responsible
for any overage.
g. After receipt of FHWA authorization, proceed to advertise for, receive and open bids
award and enter into a contract with the firm for the construction of the Project. If the
bid amounts exceed the construction cost estimate, obtain the Local Agency’s
concurrence and invoice the Local Agency for the difference between the construction
cost estimate and the bid amount prior to awarding the contract.
h. Notify the Local Agency of completion and final acceptance of the Project. At such time,
file a Notice of Termination (NOT) with ADEQ transferring CGP responsibilities to the
Local Agency, and provide a copy to the Local Agency indicating that the State’s
maintenance responsibility of the Project is terminated, as applicable.
i. Notify the Local Agency of completion and final acceptance of the Project; coordinate
with the Local Agency and turn over full responsibility of the Project improvements.
j. Not be obligated to maintain the Project, should the Local Agency fail to budget or
provide for proper and perpetual maintenance as set forth in this Agreement.
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3. The Local Agency will:
a. Designate the State as the Local Agency’s authorized agent for the Project.
b. Within 30 days of receipt of an invoice from the State, pay the Local Agency’s share of
the initial PDA costs, estimated at $1,710.00 and the Local Agency’s share of Project
design costs, estimated at $42,290.00. Agree to be responsible for actual PDA costs, if
during the development of design, PDA costs exceed the initial estimate. Be responsible
and pay for the difference between the estimated and actual PDA and design costs of the
Project within 30 days of receipt of an invoice.
c. Review design plans, specifications, cost estimates and other such documents required
for the construction bidding and construction of the Project, including scoping/design
plans and documents required by FHWA to qualify projects for and to
receive federal funds; provide design review comments to the State as appropriate.
d. After completion of design, within 30 days of receipt of an invoice from the State and
prior to bid advertisement, pay to the State any outstanding PDA costs, the Local
Agency’s share of the Project construction costs, estimated at $165,000.00, and if
applicable, the difference between the final and initial construction cost estimates. Be
responsible for and pay the difference between the estimated construction cost and
Project bid amount prior to award. After Project completion, be responsible for and pay
any outstanding Project costs, within 30 days of receipt of an invoice.
e. Be responsible for all costs incurred in performing and accomplishing the work as set
forth under this Agreement, that are not covered by federal funding. Should costs be
deemed ineligible or exceed the maximum federal funds available, it is understood and
agreed that the Local Agency is responsible for these costs; payment for these costs
shall be made within 30 days of receipt of an invoice from the State.
f. Certify that all necessary rights of way have been or will be acquired prior to
advertisement for bid and also certify that all obstructions or unauthorized
encroachments of whatever nature, either above or below the surface of the Project
area, shall be removed from the proposed right of way, or will be removed prior to the
start of construction, in accordance with The Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970 as amended; 49 CFR 24.102 Basic Acquisition
Policies; 49 CFR 24.4 Assurances, Monitoring and Corrective Action, parts (a) & (b) and
ADOT Right of Way Procedures Manual: 8.02 Responsibilities, 8.03 Prime Functions,
9.06 Monitoring Process and 9.07 Certification of Compliance. Coordinate with the
appropriate State’s Right of Way personnel during any right of way process performed
by the Local Agency, if applicable.
g. As applicable, certify that the Local Agency has adequate resources to discharge the
Local Agency’s real property related responsibilities and ensures that its Title 23-
funded projects are carried out using the FHWA approved and certified ADOT Right of
Way Procedures Manual and that they will comply with current FHWA requirements
whether or not the requirements are included in the FHWA approved ADOT Right of
Way Procedures Manual. (23 CFR 710.201)
IGA 23-0009162-I
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h. Not permit or allow any encroachments on or private use of the right of way, except
those authorized by permit. In the event of any unauthorized encroachment or
improper use, the Local Agency shall take all necessary steps to remove or prevent any
such encroachment or use. Provide a copy of encroachment permits issued within the
Project limits to the State.
i. Automatically grant to the State, by execution of this Agreement, its agents and/or
contractors, without cost, the temporary right to enter the Local Agency’s rights of way,
as required, to conduct any and all construction and preconstruction related activities
for the Project, on, to and over said Local Agency’s rights of way. This temporary right
will expire with completion of the Project.
j. Investigate and document utilities within the Project limits; submit findings to ADOT
determining prior rights or no prior rights; approve an easement within the final right
of way to re-establish the prior right location for those utilities with prior rights.
k. Be obligated to incur any expenditure should unforeseen conditions or circumstances
increase Project costs. Be responsible for the cost of any Local Agency requested
changes to the scope of work of the Project, such changes will require State and FHWA
approval. Be responsible for any contractor claims for additional compensation caused
by Project delay attributable to the Local Agency. Payment for these costs will be made
to the State within 30 days of receipt of an invoice from the State.
l. After notification of final acceptance by the State, assume and maintain full
responsibility of the Project, including Storm Water Pollution Prevention Plans (SWPPP)
inspections, maintenance, and required documentation, until final stabilization is
reached. Provide the NOI number to the State and the Contractor, accept CGP
responsibilities at time of transfer, and file an NOT with ADEQ when final stabilization is
reached, as applicable.
m. After completion and final acceptance of the Project, agree to maintain and assume full
responsibility of the Project and all Project components.
III. MISCELLANEOUS PROVISIONS
1. Effective Date. This Agreement shall become effective upon signing and dating of all Parties.
2. Amendments. Any change or modification to the Project will only occur with the mutual
written consent of both Parties.
3. Duration. The terms, conditions and provisions of this Agreement shall remain in full force
and effect until completion of the Project and all related deposits and/or reimbursements
are made. Any and all obligations of maintenance hereunder shall remain perpetual and
shall survive any termination hereof and the assignment or assumption of this Agreement
or the Project by another competent jurisdiction or entity.
4. Cancellation. This Agreement may be cancelled at any time up to 30 days before the award
of the Project contract, so long as the cancelling Party provides at least 30 days’ prior
written notice to the other Party. It is understood and agreed that, in the event the Local
IGA 23-0009162-I
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Agency terminates this Agreement, the Local Agency shall be responsible for all costs
incurred by the State up to the time of termination. It is further understood and agreed that
in the event the Local Agency terminates this Agreement, the State shall in no way be
obligated to complete or maintain the Project.
5. Indemnification. The Local Agency shall indemnify, defend, and hold harmless the State, any
of its departments, agencies, boards, commissions, officers or employees (collectively
referred to in this paragraph as the “State”) from any and all claims, demands, suits, actions,
proceedings, loss, cost and damages of every kind and description, including reasonable
attorneys' fees and/or litigation expenses (collectively referred to in this paragraph as the
“Claims”), which may be brought or made against or incurred by the State on account of loss
of or damage to any property or for injuries to or death of any person, to the extent caused
by, arising out of, or contributed to, by reasons of any alleged act, omission, professional
error, fault, mistake, or negligence of the Local Agency, its employees, officers, directors,
agents, representatives, or contractors, their employees, agents, or representatives in
connection with or incident to the performance of this Agreement. The Local Agency’s
obligations under this paragraph shall not extend to any Claims to the extent caused by the
negligence of the State, except the obligation does apply to any negligence of the Local
Agency which may be legally imputed to the State by virtue of the State’s ownership or
possession of land. The Local Agency’s obligations under this paragraph shall survive the
termination of this Agreement.
6. Third-Party Indemnification. The State shall include Section 107.13 of the 2021 version of
the Arizona Department of Transportation Standard Specifications for Road and Bridge
Construction, incorporated into this Agreement by reference, in the State’s contract with
any and all contractors, of which the Local Agency shall be specifically named as a third-
party beneficiary. This provision may not be amended without the approval of the Local
Agency.
7. Programmed Federal Funds. The cost of scoping, design, construction and construction
engineering work under this Agreement is to be covered by the federal funds programmed
for this Project, up to the maximum available. The Local Agency acknowledges that actual
Project costs may exceed the maximum available amount of federal funds, or that certain
costs may not be accepted by FHWA as eligible for federal funds. Therefore, the Local
Agency agrees to pay the difference between actual costs of the Project and the federal
funds received.
8. Termination of Federal Funding. Should the federal funding related to this Project be
terminated or reduced by the federal government, or Congress rescinds, fails to renew, or
otherwise reduces apportionments or obligation authority, the State shall in no way be
obligated for funding or liable for any past, current or future expenses under this
Agreement.
9. Indirect Costs. The cost of the Project under this Agreement includes indirect costs
approved by FHWA, as applicable.
10. Federal Funding Accountability and Transparency Act. The Parties warrant compliance with
the Federal Funding Accountability and Transparency Act of 2006 and associated 2008
Amendments (the “Act”). Additionally, in a timely manner, the Local Agency will provide
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information that is requested by the State to enable the State to comply with the
requirements of the Act, as may be applicable.
11. Governing Law. This Agreement shall be governed by and construed in accordance with
Arizona laws.
12. Conflicts of Interest. This Agreement may be cancelled in accordance with A.R.S. § 38-511.
13. Inspection and Audit. The Local Agency shall retain all books, accounts, reports, files and
other records relating to this Agreement which shall be subject at all reasonable times to
inspection and audit by the State for five years after completion of the Project. Such records
shall be produced by the Local Agency, electronically or at the State office as set forth in this
Agreement, at the request of ADOT.
14. Title VI. The Local Agency acknowledges and will comply with Title VI of the Civil Rights Act
Of 1964.
15. Non-Discrimination. This Agreement is subject to all applicable provisions of the Americans
with Disabilities Act (Public Law 101-336, 42 U.S.C. 12101-12213) and all applicable federal
regulations under the Act, including 28 CFR Parts 35 and 36. The Parties to this Agreement
shall comply with Executive Order Number 2009-09, as amended by Executive Order 2023-
01, issued by the Governor of the State of Arizona and incorporated in this Agreement by
reference regarding “Non-Discrimination.”
16. Non-Availability of Funds. Every obligation of the State under this Agreement is conditioned
upon the availability of funds appropriated or allocated for the fulfillment of such
obligations. If funds are not allocated and available for the continuance of this Agreement,
this Agreement may be terminated by the State at the end of the period for which the funds
are available. No liability shall accrue to the State in the event this provision is exercised,
and the State shall not be obligated or liable for any future payments as a result of
termination under this paragraph.
17. Arbitration. In the event of any controversy, which may arise out of this Agreement, the
Parties agree to abide by arbitration as is set forth for public works contracts if required by
A.R.S. § 12-1518.
18. E-Verify. The Parties shall comply with the applicable requirements of A.R.S. § 41-4401.
19. Contractor Certifications. The Parties shall certify that all contractors comply with the
applicable requirements of A.R.S. §§ 35-393.01 and 35-394.
20. Other Applicable Laws. The Parties shall comply with all applicable laws, rules, regulations
and ordinances, as may be amended.
21. Notices. All notices or demands upon any Party to this Agreement shall be in writing and
shall be delivered electronically, in person, or sent by mail, addressed as follows:
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For Agreement Administration:
Arizona Department of Transportation
Joint Project Agreement Group
205 S. 17th Avenue, Mail Drop 637E
Phoenix, AZ 85007
JPABranch@azdot.gov
For Project Administration:
Arizona Department of Transportation
Project Management Group
205 S. 17th Avenue, Mail Drop 614E
Phoenix, AZ 85007
PMG@azdot.gov
For Financial Administration:
Arizona Department of Transportation
Project Management Group
205 S. 17th Avenue, Mail Drop 614E
Phoenix, AZ 85007
PMG@azdot.gov
Town of Oro Valley
Attn: Cheryl Huelle, PE
11000 N. La Cañada Drive
Oro Valley, AZ 85737
(520) 229-4873
chuelle@orovalleyaz.gov
Town of Oro Valley
Attn: Cheryl Huelle, PE
11000 N. La Cañada Drive
Oro Valley, AZ 85737
(520) 229-4873
chuelle@orovalleyaz.gov
Town of Oro Valley
Attn: David Gephart
11000 N. La Cañada Drive
Oro Valley, AZ 85737
(520) 229- 4768
dgephart@orovalleyaz.gov
22. Revisions to Contacts. Any revisions to the names and addresses above may be updated
administratively by either Party and shall be in writing.
23. Legal Counsel Approval. In accordance with A.R.S. § 11-952 (D), the written determination
of each Party’s legal counsel providing that the Parties are authorized under the laws of this
State to enter into this Agreement and that the Agreement is in proper form is set forth
below.
24. Electronic Signatures. This Agreement may be signed in an electronic format using
DocuSign.
Remainder of this page is intentionally left blank.
(Signatures begin on the next page)
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IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective upon the full
completion of signing and dating by all Parties to this Agreement.
TOWN OF ORO VALLEY
By ______________________________Date___________
JOSEPH C. WINFIELD
Mayor
ATTEST:
By ______________________________ Date___________
MICHAEL STANDISH
Town Clerk
I have reviewed the above referenced Intergovernmental Agreement between the State of
Arizona, acting by and through its Department of Transportation, and the TOWN OF ORO
VALLEY, an agreement among public agencies which, has been reviewed pursuant to A.R.S. §§
11-951 through 11-954 and A.R.S. § 9-240 and declare this Agreement to be in proper form and
within the powers and authority granted to the Town under the laws of the State of Arizona.
No opinion is expressed as to the authority of the State to enter into this Agreement. Approved
as to Form:
By ______________________________ Date___________
TOBIN SIDLES
Legal Services Director
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ARIZONA DEPARTMENT OF TRANSPORTATION
By ______________________________Date___________
STEVE BOSCHEN, PE
Infrastructure Delivery and Operations Division
Division Director
By ______________________________Date__________
BRENT A. CAIN, PE
Transportation Systems Management and Operations Division
Division Director
A.G. Contract No. P0012023000799 (ADOT IGA 23-0009162-I), an Agreement between public
agencies, the State of Arizona and the Town of Oro Valley, has been reviewed pursuant to
A.R.S. §§ 11-951 through 11-954 and A.R.S. § 28-401, by the undersigned Assistant Attorney
General who has determined that it is in the proper form and is within the powers and
authority granted to the State of Arizona. No opinion is expressed as to the authority of the
remaining Parties, other than the State or its agencies, to enter into said Agreement.
By _____________________________________ Date___________
Assistant Attorney General
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EXHIBIT A
Cost Estimate
T0438 01D/03D/01C
The Project costs are estimated as follows:
ADOT Project Development Administration (PDA) Cost:
Federal-aid funds @ 94.3% $ 28,290.00
Local Agency’s match @ 5.7% 1,710.00
Subtotal – PDA $ 30,000.00
Scoping/Design:
Federal-aid funds @ 94.3% $ 694,710.00
Local Agency’s match @ 5.7% 41,992.00
Local Agency’s costs @ 100% 298.00
Subtotal – Scoping/Design $ 737,000.00
Construction:*
Federal-aid funds @ 94.3% $ 2,726,000.00
Local Agency’s match @ 5.7% 164,774.00
Local Agency’s costs @ 100% 226.00
Subtotal – Construction $ 2,891,000.00
Estimated TOTAL Project Cost $ 3,658,000.00
Total Estimated Local Agency Funds $ 209,000.00
Total Federal Funds $ 3,449,000.00
* (Includes 15% construction engineering (CE) and administration cost (this percentage is
subject to change, any change will require concurrence from the Local Agency) and 5%
Project contingencies)
Town Council Regular Session 1.
Meeting Date:06/07/2023
Requested by: Peter Abraham Submitted By:Mary Rallis, Water
Department:Water
SUBJECT:
PUBLIC HEARING: RESOLUTION NO. (R)23-23, AUTHORIZING AND APPROVING AN INCREASE TO THE
POTABLE WATER BASE RATES, INCREASE TO THE POTABLE WATER COMMODITY RATES AND AN
INCREASE TO THE RECLAIMED WATER COMMODITY RATE FOR THE TOWN OF ORO VALLEY WATER
UTILITY
RECOMMENDATION:
On February 13, 2023, the Water Utility Commission voted to recommend the approval of the water rate
increases included in the proposed financial scenario. Staff recommendation is to increase the potable water base
rates, increase the potable water commodity rates and increase the reclaimed water commodity rate.
EXECUTIVE SUMMARY:
Pursuant to A.R.S. § 9-511.01, the Council adopted a Notice of Intent to increase water rates on March 1, 2023.
The Notice of Intent established a public hearing date for June 7, 2023. The Water Rates Analysis Report was
made available for public review and was posted on the Town’s website on March 2, 2023. The Notice of Intent
was published in the Daily Territorial on March 15, 2023, thereby completing the statutory requirements.
The Financial Scenario in the 2023 Water Rates Analysis Report proposes an increase to the potable water base
rates, an increase to the potable water commodity rates and an increase to the reclaimed water commodity rate.
The financial impact of the proposed potable base and commodity rate increases for a customer with a 5/8-inch
meter using 7,000 gallons is $2.11 per month. The financial impact for the average turf customer with a 6-inch
meter using 10,000,000 gallons per month would be a $1,000 increase per month.
If approved, the proposed water rate increases would become effective on July 8, 2023.
BACKGROUND OR DETAILED INFORMATION:
Town Code Section 15-2-6 states the Oro Valley Water Utility shall be a self-supporting utility funded
solely from revenue generated from utility operations. Revenues include water sales, service fees and
interest income.
In accordance with the Mayor and Town Council Water Policies, Water Utility staff review water rates
and charges on an annual basis. The Oro Valley Water Utility Commission evaluates staff
recommendations based on the water rate analysis to ensure the recommendations meet Town
policies and bond covenants. The Commission voted to recommend the Proposed Financial Scenario
in the Water Rates Analysis Report on February 13, 2023. The Proposed Financial Scenario includes
financial projections for a five-year period; however, the water rates are only approved for the first year
of this five-year projection period.
The Proposed Financial Scenario evaluates the impact of future costs and the revenue sources that
will be required to meet those costs. The proposed water rates will meet revenue and cash reserve
will be required to meet those costs. The proposed water rates will meet revenue and cash reserve
requirements, meet debt service coverage requirements and ensure revenue stability. The
recommended water rate changes for FY 2023-24 are as follows:
Increase the potable water base rates
Increase the potable water commodity rate
Increase the reclaimed water commodity rate
The financial impact of the proposed potable base and commodity rate increases for a customer with a
5/8-inch meter using 7,000 gallons is $2.11 per month. The financial impact for the average turf
customer with a 6-inch meter using 10,000,000 gallons per month would be a $1,000 increase per
month.
If approved, the proposed water rate increase would become effective on July 8, 2023.
FISCAL IMPACT:
The proposed increases to the potable water base rates, potable water commodity rates and reclaimed water
commodity rate will generate revenue sufficient to maintain the overall financial health of the Town’s Water Utility.
SUGGESTED MOTION:
I MOVE to Approve Resolution No. (R)23-23, authorizing and approving an increase to the potable water base
rates, an increase to the potable water commodity rates and an increase to the reclaimed water commodity rate.
Attachments
(R)23-23 Public Hearing Water Rates
2023 Water Rate Report
Staff Presentation
RESOLUTION NO. (R)23-23
A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF
ORO VALLEY, ARIZONA, AUTHORIZING AND APPROVING AN
INCREASE TO THE POTABLE WATER BASE RATES, AN INCREASE
TO THE POTABLE WATER COMMODITY RATES AND AN INCREASE
TO THE RECLAIMED WATER COMMODITY RATE FOR THE TOWN
OF ORO VALLEY WATER UTILITY; AND DIRECTING THE TOWN
MANAGER, TOWN CLERK, TOWN LEGAL SERVICES DIRECTOR,
OR THEIR DULY AUTHORIZED OFFICERS AND AGENTS TO TAKE
ALL STEPS NECESSARY TO CARRY OUT THE PURPOSES AND
INTENT OF THIS RESOLUTION
WHEREAS, pursuant to ARS § 9-511, et seq., the Town has the requisite statutory authority to
acquire, own and maintain a water utility for the benefit of the residents within and without the
Town’s corporate boundaries; and
WHEREAS, pursuant to ARS § 9-511, et seq., the Town finds it necessary to increase the
potable water base rates, increase the potable water commodity rates and increase the reclaimed
commodity rate for the Oro Valley Water Utility, which is described in Exhibit “A” attached
hereto; and
WHEREAS, on March 1, 2023, Mayor and Council approved Resolution 23-06, providing
Notice of Intent to increase water rates; and
WHEREAS, on June 7, 2023, Mayor and Council held a Public Hearing to deliberate and vote
on the proposed water rate increases.
NOW, THEREFORE, BE IT RESOLVED by the Mayor and Council of the Town of Oro
Valley, Arizona, that:
SECTION 1. The Oro Valley Water Utility increases in water rates, as described in Exhibit
“A” attached hereto and incorporated herein by this reference, are hereby
authorized and approved.
SECTION 2. The Mayor and other administrative officials of the Town of Oro Valley are
hereby authorized to take such steps as are necessary to implement the increases
in water rates
.
SECTION 3. The Town Manager, Town Clerk, Town Legal Services Director, or their duly
authorized officers and agents are hereby authorized and directed to take all
steps necessary to carry out the purposes and intent of this resolution.
PASSED AND ADOPTED by the Mayor and Council of the Town of Oro Valley, Arizona, this
7th day of June, 2023.
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”
Potable Water Base Rates: Cost per month
Potable Water Commodity Rates: Per 1,000 gallons
Reclaimed Water Commodity Rate:
Current $2.25 to proposed $2.35 per 1,000 gallons used.
Town of Oro Valley
Water Utility
Water Rates Analysis Report
March 2023
TOWN OF ORO VALLEY
WATER UTILITY
WATER RATES ANALYSIS REPORT
MARCH 2023
ORO VALLEY TOWN COUNCIL
Joseph Winfield, Mayor
Melanie Barrett, Vice Mayor
Timothy Bohen, Councilmember
Harry “Mo” Green, II, MD, Councilmember
Joyce Jones-Ivey, Councilmember
Josh Nicolson, Councilmember
Steve Solomon, Councilmember
ORO VALLEY WATER UTILITY COMMISSION
Greg Hitt, Commission Chair
Alan Forrest, CommissionVice-Chair
David Atler, Commission Member
Kay Lantow, Commission Member
Tom Marek, Commission Member
Patricia Olson, Commission Member
Naranjan Vescio, Commission Member
TOWN STAFF
Peter A. Abraham, P.E., Water Utility Director
Mary E. Rallis, CPA, Water Utility Administrator
TABLE OF CONTENTS
SECTION TITLE PAGE
Index of Appendix
Executive Summary 1
Introduction 4
Methodology 5
Growth Rates 6
Water Use Trends 7
Debt Service 8
Debt Service Coverage Requirements 9
Cash Reserve Policy for Operating Fund 10
Operating Fund
Revenue Forecast 11
Revenue Requirements 13
Water Resource and System Development Impact Fee Fund 15
Proposed Financial Scenario 17
Recommendation on Water Rates 19
Conclusion 21
Appendix
APPENDIX
A. Proposed Financial Scenario Pro Forma
A-1 Operating Fund
A-2 Groundwater Preservation Fee
A-3 Water Resource and System Development Impact Fee Fund
A-4 Summary of all Funds
B. Rate Schedules & Tables for Bill Comparisons
B-1 Proposed Water Rate Schedule
B-2 Tables for Bill Comparisons by Meter Size - Potable
B-8 Tables for Bill Comparisons by Meter Size - Reclaimed
C. 5-Year Capital Improvement Schedules
C-1 Operating Fund
C-2 Groundwater Preservation Fee
C-3 Water Resource and System Development Impact Fee Fund
D. Assumptions for Proposed Financial Scenario
D-1 Operating Fund
D-4 Water Resource and System Development Impact Fee Fund
E. Development Impact Fee Schedule
E-1 Water Resource and System Development Impact Fee Schedule
- 1 -
TOWN OF ORO VALLEY
WATER UTILITY
WATER RATES ANALYSIS REPORT
MARCH 2023
Executive Summary
An annual review of the revenue requirements and water rates is an integral component in ensuring the long-
term financial health of the Water Utility. The Oro Valley Water Utility Commission reviews and makes
recommendations for water revenue requirements, water rates and fee structures. The Commission evaluates
staff recommendations based on a rates analysis to ensure compliance with Town policies and bond covenants.
Water rates and service charges are reviewed annually in accordance with Mayor and Town Council Water
Policies – II.A.2.b(4).
The Water Utility has based these financial projections on the American Water Works Associations (AWWA)
cash-needs approach. The AWWA is the largest national organization that develops water and wastewater
policies, specifications and rate setting guidelines accepted by both government-owned and private water and
wastewater utilities worldwide.
This Water Rates Analysis Report contains detailed information on the Operating Fund and the Water
Resource and System Development Impact Fee Fund. Funds are analyzed annually to project revenue and
revenue requirements. As an enterprise of the Town, the Water Utility generates revenue from rates, fees and
service charges and does not receive revenue from taxes or other monies from the General Fund. Additionally,
revenue generated by the Water Utility does not fund operating costs of any other Town department.
In accordance with policy, the water rates analysis is prepared annually based on the most up-to-date
information available for a five-year period. Although the analysis is for five years, any rate increase
considered would be approved only for the first year in the five-year projection period.
The Water Utility Commission has made a recommendation on the proposed financial scenario. Under the
proposed financial scenario, the Operating Fund is projected to have a cash balance of $6,101,037 at the end of
the five-year projection period. This exceeds the cash reserve requirement. In addition, the debt service
coverage ratio of 1.3 is exceeded each year. Operational needs and capital improvements are included in the
analysis. The proposed financial scenario demonstrates a planned use of cash reserves to finance capital
projects.
The proposed financial scenario evaluates the impact of future costs and the revenue sources that will be
required to meet those costs. The proposed water rates in the financial scenario will increase the Utility’s fixed
and variable cost recovery.
- 2 -
The Water Utility Commission and Water Utility staff have made the following recommendations on water
rates in the proposed financial scenario for Fiscal Year 2023/24:
A. Increase to the potable water base rates
B. Increase to the potable water commodity rates
C. Increase to the reclaimed water commodity rate
A. The current and proposed monthly base rates for potable water are shown in Table 1 below:
Table 1
Cost per month
B. The current and proposed commodity rates for potable water usage are shown in Table 2 below:
Table 2
Per 1,000 gallons
- 3 -
The financial impact of the proposed base and commodity rate increase for a customer with a 5/8-inch meter
using 7,000 gallons is $2.11 per month. Customers with a 5/8-inch meter represent 87 percent of the total
customer base and include residential, commercial and irrigation classifications with the vast majority of those
being residential. The base rate increase would be $1.20 per month for all customers with this meter size.
The proposed commodity rate increase for customers in Tier 1 would be $0.13 per 1,000 gallons used per
month.
C. The reclaimed commodity rate is proposed to increase from $2.25 to $2.35 per 1,000 gallons used
per month. An increase of $0.10 per 1,000 gallons used per month.
The Water Utility presents this water rates analysis in support of the recommended rates contained in the
proposed financial scenario. The Oro Valley Water Utility Commission and Water Utility staff respectfully
recommend the proposed increase to the potable base rates, increase to the potable commodity rates and
increase to the reclaimed water commodity rate as detailed in the proposed financial scenario.
- 4 -
TOWN OF ORO VALLEY
WATER UTILITY
WATER RATES ANALYSIS REPORT
MARCH 2023
Introduction
The Oro Valley Water Utility was established in 1996 as a self-supporting enterprise of the Town. The Water
Utility is comprised of two separate funds that have been established for specific purposes. The Funds are as
follows:
► Operating Fund
► Water Resource and Development Impact Fee Fund
The Operating Fund is the primary fund for the Water Utility. Revenues for this fund include water sales,
service fees, miscellaneous charges and interest income. The expenses in this fund include personnel,
operations and maintenance for both potable and reclaimed water systems, capital costs for existing potable
water system improvements and related debt service. The Water Utility pays the General Fund for services
received including finance, human resources, fleet services, information technology, legal, insurance and
rental of office space; however, it does not receive revenue from taxes or other payments from the General
Fund. Groundwater Preservation Fee (GPF) revenue and expenses are accounted for within the Operating
Fund but are segregated because GPF revenue is restricted for specific uses. This is illustrated in Appendix A,
Page A-2.
The Water Resource and Development Impact Fee Fund (WRSDIF) is used to account for development impact
fees collected. Funds may be used for all types of water resources, the infrastructure to deliver those resources
and any related debt including Central Arizona Project (CAP) capital infrastructure repayment costs.
Additional information is provided on page 15 of this report.
The revenue and expenses of the Operating Fund and the WRSDIF Fund are combined to determine if the
Water Utility meets the debt service coverage requirement established in the Mayor and Town Council water
policies and current bond covenants. Revenues and expenses are accounted for separately in each fund.
Pursuant to ARS 9-463.05 Section B.9., impact fees must be placed in a separate fund and accounted for
separately. ARS 9-463.05 Section B.5. states that the impact fees may not be used for operations and
maintenance of existing facilities.
- 5 -
Methodology
Step 1: Five-Year Financial Plan
The first step of the water rates analysis is to develop a five-year financial plan that projects the Water Utility’s
revenues, expenses, capital project financing, annual debt service, and cash reserve funding. The factors used
in determining the projections are growth rates, water use trends, debt service coverage requirements, cash
reserve requirements and inflation rates. The financial plan is used to determine the revenue adjustment, which
allows the Water Utility to recover adequate revenues to fund expenses and cash reserves.
Step 2: Revenue Requirement Determination for Test Year
After completing the five-year financial plan, the rate making process can begin by determining the revenue
requirement for the test year, also known as the rate-setting year. The test year for this water rates analysis is
Fiscal Year 2021/22 which will be used to capture the rate impacts resulting from a change in rate structure
without a revenue adjustment. The revenue requirement should sufficiently fund the Water Utility’s operating
and maintenance (O&M) costs, annual debt service, capital improvement plan (CIP) costs, and cash reserve
funding for the upcoming Fiscal Year 2023/24 budget.
Step 3: Water Rates Analysis
The annual cost of providing water service, or the revenue requirements, is then distributed to customer classes
and tiers based on their water usage and demand on the system. Fixed and variable costs are analyzed to
determine the impact on customer classes and tiers.
Step 4: Rate Design and Calculation
After allocating the revenue requirements to each customer class and tier, the rate design and calculation
process can start. Rates are designed to properly support and optimize the Water Utility’s policies and
objectives. Rates also act as a public information tool in communicating these policy objectives to customers.
This process also includes a rate impact analysis for all proposed water rates and sample customer bill impacts.
Step 5: Administrative Record Preparation and Rate Adoption
The final step in a water rates analysis is to develop the administrative record in preparation for the rate
adoption process. The administrative record, also known as the Water Rates Analysis Report, documents the
results of the water rate analysis and presents the methodologies, rationale, justifications, and calculations
utilized to determine the proposed water rates.
- 6 -
Growth Rates
As indicated in the graph below, new metered connections continue to remain stable due to continued
development within the Town. The Water Utility had a total of 2,627 of new metered connections over the last
10 years. At the end of Fiscal Year 2021/22, the customer base totaled 21,114 metered connections.
In developing the growth projections, assistance was received from the Town’s Community and Economic
Development Department for the current housing inventory, along with plans that have been submitted for
review, to conservatively estimate future growth. The growth projections used for this report are consistent
with the Town’s financial forecasting and are shown below in Table 3.
Table 3
- 7 -
Water Use Trends
Water use has remains consistent even though the number of connections has increased by 2,627 over the last
ten years. The graph below indicates water usage from Fiscal Year 2012/13 through Fiscal Year 2021/22. As
noted below, in Fiscal Year 2012/13 water usage was at 2,948 million gallons and 2,981 million gallons in
Fiscal Year 2021/22. A slight increase of 33 million gallons even though new connections increased by 2,627
during this time period. The revenue projections in this water rate analysis compiled water data from Fiscal
Year 2021/22 when the average water use was 7,000 gallons per month, which is consistent with prior years.
Historically there has been a decline in water use not only on a local level, but also on regional and national
levels. This can be largely attributed to water conservation – both intentional and unintentional. Intentional
water conservation is the conscious effort to reduce water use by commonly known measures including
changing landscape to drought tolerant plants and the removal of lawns. Unintentional water conservation is a
result of plumbing code changes and other regulatory changes regarding water efficiency. For example, all
new water using appliances and fixtures are required to be low flow. The consumer’s intention may not have
been to conserve water when they chose to replace an aging or broken dishwasher, clothes washer or bathroom
faucet.
-
500
1,000
1,500
2,000
2,500
3,000
3,500
2,948 3,071 2,889 2,929 3,045
3,288
2,707
2,929
3,232
2,981 Gallons in MillionsFiscal Year
Potable & Reclaimed Water Deliveries
- 8 -
Debt Service
The current annual debt service obligations are met with revenue generated from water rates, groundwater
preservation fees and impact fees. A summary of the existing debt and the outstanding balances as of June 30,
2022 are shown below in Table 4.
Table 4
In April 2017, the Town entered into an Intergovernmental Agreement with Metropolitan Domestic Water
Improvement District and the Town of Marana to construct a recharge, recovery and delivery system known as
the Northwest Recharge, Recovery, and Delivery System (NWRRDS) project to bring additional Central
Arizona Project (CAP) water into the Town.
In FY 2022/23, $1.37 million in American Rescue Plan Act of 2021 (ARPA) funds was received from the
General Fund for the NWRRDS project. There is no pay back to the General Fund. Project costs identified
for the NWRRDS project may be found in the five-year capital plan shown in Appendix C.
In FY 2022/23, $1 million in ARPA funds was received from the General Fund for existing system capital
projects. There is no pay back to the General Fund.
There is no new debt for existing system capital improvements in this analysis. Capital costs in the five-year
capital plan for existing system projects will be cash funded.
- 9 -
Debt Service Coverage Requirements
The method for calculating the debt service coverage ratio is pursuant to the Town Financial and Budgetary
Policies adopted by the Town Council in 2008. Section C.1 – Debt Capacity, Issuance & Management states
the following with respect to debt service coverage ratios: “When utility revenues are pledged as debt service
payments, the Town will strive to maintain a 1.3 debt service coverage ratio or the required ratio in the bond
indenture (whichever is greater) to ensure debt coverage in times of revenue fluctuation.”
The Series 2012 Senior Lien Water revenue bonds, 2014 Water Infrastructure Finance Authority (WIFA) loans
and Series 2021 Senior Lien Water revenue refunding bonds are used in the calculation of the debt service
coverage requirement. The Water Utility revenues are specifically pledged as the repayment source for these
obligations at 1.3 times coverage per the Town’s adopted financial policy.
The remaining outstanding debt obligations of the Water Utility are excise tax pledged obligations meaning
that the Town’s unrestricted sources of sales taxes, fines, permit fees and state shared revenues are pledged as
the repayment sources for these bonds in the bond indentures. Even though the bond indentures pledge these
excise taxes as the repayment source, the Water Utility is responsible to pay for these debt service payments
from water sales revenues. However, since excise taxes are pledged as coverage, a calculated debt service
coverage ratio of 1.0 is applied to avoid double coverage when calculating the debt service coverage ratio for
these excise tax-backed bonds in the water rates analysis.
Bond indentures for the excise tax-backed bonds require that the Town’s excise tax collections each fiscal year
total at least 2.5 times the annual debt service requirements to avoid funding a debt service reserve fund. These
conditions have been met annually in the past and are expected to continue in the future.
This methodology of segregating the water utility revenue-pledged debt from the excise tax-pledged debt in
the rates analysis process is an accepted practice in the industry and has been reviewed by the Town’s Chief
Financial Officer and the Town’s financial advisors with Stifel, Nicolaus & Company, Inc.
The debt service coverage ratio is determined by dividing the annual net operating revenue by the annual debt
service payments. The methodology described above is in accordance with the 2008 policy and reduces the
amount of the required debt service coverage. Applying this methodology has been key in minimizing water
rate increases.
Debt service coverage for the Water Utility’s outstanding senior lien debt issuances and loans in the proposed
financial scenario is shown in Table 5 below. As shown below, debt service coverage increases as existing
debt service is paid off.
Table 5
- 10 -
Cash Reserve Policy
The cash reserve policy may be found in the Town of Oro Valley Mayor and Council Water Policies Section
II.A.1.d. The policy states “The Utility shall maintain a cash reserve in the Operating Fund of not less than
20% of the combined total of the annual budgeted amounts for personnel, operations and maintenance, and
debt service. This cash reserve amount specifically excludes budgeted amounts for capital projects,
depreciation, amortization and contingency. No cash reserve is required for the water utility impact fee
funds.”
In the proposed financial scenario, the projected cash reserve balance for the Operating Fund for each year in
the analysis is listed below in Table 6 showing compliance in all years. The projected cash reserve balances
include annual increases in the monthly base rate and commodity rates.
Table 6
Cash reserve balances in the Operating Fund are projected to be stable throughout the analysis. This is a result
of strategically balancing the required financing of capital projects with the planned used of cash reserves.
There is no cash reserve requirement for revenue from the GPF because these funds are restricted to pay for
renewable water resources, infrastructure and associated debt. Although accounted for in the Operating Fund,
the GPF cash is segregated from the Operating Fund cash. It is not fiscally prudent to combine cash that has a
restricted use with cash that has unrestricted use when determining compliance with a cash reserve policy.
Expenses paid by GPF revenue are segregated from the general operating expenses for purposes of calculating
the cash reserve requirement. In the proposed financial scenario, the projected cash reserve balance for the
GPF in each year of the analysis is listed below in Table 7.
Table 7
GPF cash reserve balances are projected to remain stable over the five-year projection period. This is a direct
result of balancing the use of cash and ARPA funds to pay for capital projects associated with the delivery of
additional CAP water through the NWRRDS project.
- 11 -
Operating Fund
Revenue Forecast
The Operating Fund is projected to have a cash balance of $7,645,024 at the beginning of Fiscal Year 2023-24
and is projected to have a balance of $6,101,037 at the end of Fiscal Year 2027/28. These funds may be used
for operating costs including personnel, operations and maintenance, capital improvements for the existing
potable water system and debt service.
Groundwater Preservation Fees are included in the Operating Fund; however, the revenues, expenses and cash
balances for the GPF are accounted for separately within the Operating Fund and are not included in the cash
balance above. The use of GPF funds is restricted to renewable water resources, infrastructure and associated
debt.
The following revenue forecast was based on analysis of the Water Utility’s historic water use trends and
projected growth in the number of new connections. The revenue forecast includes proposed increases in the
potable water base rates as shown below in Table 8.
Table 8
- 12 -
The revenue forecast includes proposed increases in the potable water commodity rates as shown below in
Table 9:
Table 9
The potable water base and commodity rates are projected to increase annually beginning in Fiscal Year
2023/24. The proposed base rate increase will generate a 56 percent fixed cost recovery. Fixed costs are
expenses incurred that do not fluctuate based on the volume of water sold. Examples of fixed costs include, but
are not limited to, debt service, personnel, billing costs, fleet maintenance and regulatory costs. The proposed
commodity rate increase accounts for the remaining 44 percent of the fixed costs which are recovered with
revenue generated from the volume of water sold. The proposed rate increases encourage water conservation
with higher commodity rate increases for higher water usage.
The reclaimed base rates are proposed to remain unchanged throughout the projection period; however, the
reclaimed commodity rate is proposed to increase from $2.25 to $2.35 per 1,000 gallons.
Table 10 below includes the water sales for potable, reclaimed and GPF revenue forecast for the five-year
projection period using the proposed base and commodity rates:
Table 10
Other revenue generated by the Utility consists of service fees and charges. Service fees and charges include
funds received from an Intergovernmental Agreement with the Pima County Wastewater Reclamation
Department to provide monthly billing services on their behalf. Service fees and charges also include, but are
not limited to, new service establishment fees, late fees, reconnection fees, inspection fees and plan review
fees. The total of all service fees and charges are projected to generate annual revenue of $800,000.
Projections for interest income for the Operating Fund are a cumulative total of $498,737 over the five-year
period. Projected interest income for the GPF monies is a cumulative total of $330.465 over the five-year
period. The interest rate assumed for the projection period is 2 percent annually.
- 13 -
Revenue Requirements
Below in Table 11 is a summary of revenue requirements for the Operating Fund that were used in the
financial analysis. These revenue requirements exclude expenses to be paid with GPF revenue.
Table 11
Projected personnel costs include 3 percent annual merit increases, retirement contributions of 12.17 percent
and 5 percent annual increases in health care costs. There are no new employees being added within the five-
year projection period. A portion of the personnel costs are allocated to the reclaimed water system based on a
weighted average of 5.10 percent annually.
The projected operations and maintenance (O&M) costs for both the potable and reclaimed water systems are
based on the Fiscal Year 2022/23 budget and include inflationary increases of 5 percent annually. A cost
allocation model is used to allocate various administrative and operational costs to the reclaimed water system.
Costs charged by Tucson Water for wheeling reclaimed water are projected to increase 5 percent annually.
Central Arizona Project (CAP) wheeling costs are fees charged by Tucson Water to wheel Oro Valley’s CAP
water through their recharge and recovery system. The Intergovernmental Agreement with Tucson Water was
renegotiated in Fiscal Year 2016/17. Costs are projected to increase by 5 percent annually. The total annual
delivery of 2,850 acre feet is projected in the five-year projection period.
Central Arizona Project (CAP) water recharge costs represent costs to take annual delivery of the Utility’s
entire CAP water allotment of 10,305 acre feet. This water will be recharged and stored in various recharge
facilities including the Tucson Water facilities. Costs to take delivery of and store the CAP water are based on
the rate schedule adopted by the Central Arizona Project. The five-year projection period includes an increase
of 12.36 percent in Fiscal Year 2023/24 for a projected Tier 2a shortage. Costs in later fiscal years will
increase by an average of 7.5 percent through the remaining five-year projection period.
Projected capital outlay for existing system improvements in this analysis includes well rehabilitation, tank
replacement, re-lining of reservoirs, booster station modifications, water main replacements, vehicles and
water meters. These projects will be cash funded in the five-year projection period. The schedule for five-year
capital improvements may be found in Appendix C.
- 14 -
Debt service costs are relatively flat over the projection period. The existing debt service is declining as older
debt is paid off.
Expenses paid with GPF funds include the existing customers’ portion of CAP water capital costs associated
with ownership of the CAP water allotment. These costs increase annually based on projected rates developed
by the Central Arizona Project.
Debt service for the reclaimed water system is paid with GPF funds. Outstanding debt on the reclaimed water
system will be paid in full by Fiscal Year 2029/30.
Table 12 is a summary of expenses paid with GPF revenue that were used in this financial analysis:
Table 12
- 15 -
Water Resource and System Development Impact Fee Fund
The Water Resource and Development Impact Fee Fund (WRSDIF) is used to account for development impact
fees collected. Revenues are from impact fees collected at the time water meters are purchased and from
interest income. Expenses include capital repayment obligation charges for the Town’s CAP allotment, CAP
infrastructure and associated debt incurred to deliver CAP water to the Town to meet the demands of future
growth. In addition, wells, pump stations, reservoirs and mains for the potable water system required to meet
the demands of future growth will also be financed with these impact fees.
The WRSDIF Fund is projected to have a cash balance of $16,893,509 at the beginning of FY 2023/24 and is
projected to have $418,165 at the end of FY 2027/28. The revenue sources for the WRSDIF Fund are from
impact fees collected when a water meter is purchased and from interest earned on cash balances. Interest
income is projected to be a total of $836,412 for this analysis. The interest rate assumed for the projection
period is 2 percent.
The revenue forecast was based on new service units related to the number of new connections. A service unit
is the equivalent of one single family residential (SFR) 5/8-inch water meter. The SFR service units are equal
to the number of new connections. Other service units are forecast based on pending development projects
within the Town. Other service units include commercial, multi-family and irrigation uses with the number of
service units depending on the estimated meter sizes for each project. In addition, the service units are
forecasted based on historic trends and pending development projects within the Town.
The impact fee for a SFR 5/8-inch water meter or one service unit is projected to be $6,387. It is assumed that
the Development Impact Fees will remain constant throughout the five-year projection period. Table 13 below
indicates the projected growth in service units and the revenue associated with that growth. These growth
projections are consistent with the Town’s financial planning.
Table 13
WRSDIF funds may be used for capital expenses related to CAP water. Capital costs assessed by the Central
Arizona Project for 3,000 acre feet of the Town’s CAP water allotment are included under operating expenses.
Capital expenses during this projection period total $21.7 million and include the design and construction of
the NWRRDS project that will deliver additional CAP water to the Town. Funds may also be used for capital
expenses related to potable water system improvements including wells, booster stations, reservoirs and water
mains required to meet the demands of new growth. Capital projects are identified in the five- year capital
improvement plan shown in Appendix C.
Debt service for previously constructed growth-related facilities is also paid from impact fee revenue.
- 16 -
The annual expenses and debt service for the WRSDIF Fund are listed in Table 14 below. No new debt is
proposed during this projection period.
Table 14
- 17 -
Proposed Financial Scenario
Prior to developing forecasts, financial considerations were evaluated relating to projected operating costs,
capital expenses, the Water Utility’s existing cash reserves, existing outstanding debt and debt service
payments. When developing a proposed financial scenario, the goal of the Water Utility is to ensure all
existing rate setting policies are met, cash reserves are utilized to minimize future debt and proposed rate
increases do not result in rate shock. One of the rate setting policies included in the Mayor and Council Water
Policies is for rate structures to be designed to encourage water conservation.
The development of water conservation pricing, also known as a tiered commodity rate, began in 1999 when a
second tier was added to the uniform or flat commodity rate. That structure evolved into four tiers by 2007.
The Water Utility has increased the tiered commodity rates to a level that encourages water conservation.
This year, the proposed financial scenario includes increases to both the potable base and commodity rates and
an increase to the reclaimed commodity rate.
The chart below illustrates an overall decline in potable and reclaimed water deliveries over the past four years
even though the Water Utility experienced growth in the customer base.
- 18 -
Table 15 below illustrates how regional water providers have increased their base rates to compensate for the
declines in water consumption as compared to the historical and the 2023 proposed rates for Oro Valley.
Table 15
Table 16 illustrates Oro Valley’s proposed potable base and commodity rates per 1,000 gallons. Water rates of
other water providers in the region are included for comparison purposes along with water resource fees that
are similar to the Oro Valley Water Utility GPF.
Table 16
The Water Utility developed a proposed financial scenario that supports key financial and policy goals. The
proposed scenario generates the revenue needed to maintain an adequate cash balance in all funds over the
projected five-year period therefore meeting the cash reserve requirements in each year.
The financial projections for the Operating Fund and WRSDIF Fund were combined to evaluate the overall
debt service coverage at the end of each fiscal year. Analysis indicates that, under the proposed financial
scenario, the Utility will meet the debt service coverage requirement established by the Mayor and Council
Water Polices and bond covenants for all five years.
The pro forma for the proposed financial scenario may be found in Appendix A. The assumptions used to
develop the financial projections in the proposed financial scenario may be found in Appendix D.
- 19 -
Recommendation on Water Rates
After reviewing the analysis of the two funds and their respective revenue requirements contained in the
proposed financial scenario, the Water Utility Commission and Water Utility staff recommend the following
for Fiscal Year 2023/24:
A. Increase to the potable water monthly base rates
B. Increase to the potable water commodity rates
C. Increase to the reclaimed water commodity rate
A. Tables 17 & 18 shown below are the proposed potable water base rates and commodity rates for each
meter size. Approximately 87 percent of the Utility’s customers have a 5/8-inch water meter and
consume an average of 7,000 gallons. These customers will see an increase in their bill of $2.11 per
month.
Table 17
Cost per month
B. Table 18
Per 1,000 gallons
- 20 -
C. The reclaimed base rates will remain unchanged while the commodity rate is proposed to increase to
$2.35 per 1,000 gallons from $2.25 per 1,000 gallons. This proposed rate increase is used for the five-
year projection period. The average 18-hole golf course consumes 10,000,000 gallons per month and
will see an increase in their bill of $1,000 per month.
Direct comparison of specific base rates and commodity rates is not ideal for cost comparisons because of the
varying rate structures of each utility. A more effective comparison is to calculate the cost for specific
consumption levels for one month. Table 19 below provides a calculation of a monthly bill amount for a
single-family residential customer with a 5/8-inch meter for the water utilities surrounding the Oro Valley
Water Utility service area.
Table 19
Proposed rates for all Oro Valley Water Utility meter sizes may be found in Appendix B. Tables that calculate
monthly bills under the proposed rates may also be found in Appendix B. Monthly bill amounts are calculated
in 1,000 gallon increments for the 5/8-inch meters and a variety of increments for larger meter sizes.
- 21 -
Conclusion
On an annual basis, the water rates analysis is prepared with the most up-to-date information available.
Operational needs and capital improvement requirements change annually and are carefully evaluated when
they are included in the analysis. It is important that the Water Utility perform a water rates analysis every year
to plan for changes in operating costs, capital costs or debt service.
This Water Rates Analysis Report is presented in support of the water rates contained in the proposed financial
scenario. The Oro Valley Water Utility Commission and the Water Utility staff respectfully recommend
approval of the water rates detailed in the proposed financial scenario.
The Oro Valley Water Utility staff and Commission are dedicated to serving the Town of Oro Valley and the
customers of its water utility and extend their appreciation to the Mayor and Council for consideration of the
recommended water rates.
APPENDIX A
Proposed Financial Scenario Pro Forma
A-1 Operating Fund
A-2 Groundwater Preservation Fee
A-3 Water Resource and System Development Impact Fee Fund
A-4 Summary of All Funds
Oro Valley Water Utility – Operating Fund
A-1
Oro Valley Water Utility – Operating Fund
Groundwater Preservation Fees
A-2
Budget
FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28
GPF Beginning Balance 4,045,186$ 5,401,484$ 4,919,936$ 4,413,279$ 2,623,656$ 1,630,037$
ARPA Funds 1,373,337 - -
Revenue
GPF Revenue - Potable 2,141,500 2,165,400 2,165,400 2,165,400 2,165,400 2,165,400
GPF Revenue - Reclaimed 258,500 258,500 258,500 258,500 258,500 258,500
GPF Revenue - Growth - 9,308 23,474 33,127 37,960 42,563
Total GPF Revenue 3,773,337$ 2,433,208$ 2,447,374$ 2,457,027$ 2,461,860$ 2,466,463$
Interest Income - 102,120 99,139 50,434 35,979 51,793
Total All Revenue 3,773,337$ 2,535,328$ 2,546,513$ 2,507,461$ 2,497,839$ 2,518,256$
GPF Expenses
Capital Cost for CAP Allotment 7305 AF 409,080 387,165 474,825 452,910 438,300 438,300
Capital Costs for NWRRDS Project 660,000 2,000,000 2,108,000 3,372,000 2,580,000 1,200,000
P&I - 2012 Sr. Lien Bonds - Reclaimed Ph.1 1,045,662 - - - - -
P&I - 2021 Sr. Lien Water Revenue Refunding Obligations 302,297 629,711 470,345 472,174 473,158 469,726
Total GPF Expenses 2,417,039 3,016,876 3,053,170 4,297,084 3,491,458 2,108,026
GPF Ending Balance 5,401,484$ 4,919,936$ 4,413,279$ 2,623,656$ 1,630,037$ 2,040,267$
Water Resource and System Development Impact Fee Fund
A-3
Budget
FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28
REVENUES
Impact Fee Revenue- Residential 958,050$ 760,053$ 881,406$ 1,258,239$ 1,341,270$ 849,471$
Impact Fee Revenue- Non-Residential 143,296 107,472 107,472 107,472 107,472 107,472
Subtotal Revenue 1,101,346$ 867,525$ 988,878$ 1,365,711$ 1,448,742$ 956,943$
Other Operating Revenue
Interest Income 150,000 295,410 221,221 140,820 95,519 83,442
Subtotal Other Operating Revenue 150,000 295,410 221,221 140,820 95,519 83,442
Total Operating Revenue 1,251,346$ 1,162,935$ 1,210,099$ 1,506,531$ 1,544,261$ 1,040,385$
OPERATING EXPENSES
Capital Cost for CAP Allotment 3000 AF 168,000 159,000 195,000 186,000 180,000 180,000
Total Operating Expenses 168,000$ 159,000$ 195,000$ 186,000$ 180,000$ 180,000$
Net Operating Revenue 1,083,346$ 1,003,935$ 1,015,099$ 1,320,531$ 1,364,261$ 860,385$
DEBT SERVICE
P&I - Sr. Lien Bonds - Expansion Related (2012)322,578$ -$ -$ -$ -$
P&I - 2021 Sr. Lien Bonds - Refinance 2007 & 2009 WIFA & 2012 36,004 75,000 56,019 56,237 56,354 55,945
Total Debt Service 358,582$ 75,000$ 56,019$ 56,237$ 56,354$ 55,945$
CAPITAL OUTLAY
Capital Improvements:
Capital Costs for NWRRDS Projects 990,000 3,000,000 3,162,000 5,058,000 3,870,000 1,800,000
Capital Costs for Other Potable Projects 1,085,688 4,850,000 -
Total Capital Outlay 2,075,688$ 7,850,000$ 3,162,000$ 5,058,000$ 3,870,000$ 1,800,000$
Net Balance From Operations (1,350,924)$ (6,921,065)$ (2,202,920)$ (3,793,706)$ (2,562,093)$ (995,560)$
Beginning Cash Balance 18,244,433$ 16,893,509$ 9,972,444$ 7,769,524$ 3,975,818$ 1,413,725$
Net Balance From Operations (1,350,924)$ (6,921,065)$ (2,202,920)$ (3,793,706)$ (2,562,093)$ (995,560)$
Ending Cash Balance 16,893,509$ 9,972,444$ 7,769,524$ 3,975,818$ 1,413,725$ 418,165$
Summary of All Funds
`
A-4
Budget
FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28
REVENUES
Water Sales
Potable Water Sales (exclude golf courses)14,009,000$ 14,663,309$ 15,846,912$ 17,168,612$ 18,338,817$ 19,224,615$
Potable Water Sales from Growth - 32,441 106,010 203,224 327,657 441,983
Potable Water Sales - Golf Course - 111,469 117,106 123,028 129,180 133,205
Total Potable Water Sales 14,009,000 14,807,219 16,070,028 17,494,864 18,795,654 19,799,803
Reclaimed Water Sales 1,374,000 1,384,079 1,384,079 1,384,079 1,384,079 1,384,079
Total Water Sales 15,383,000 16,191,298 17,454,107 18,878,943 20,179,733 21,183,882
Other Operating Revenue
Groundwater Preservation Fees
Groundwater Preservation Fee - Potable 2,141,500 2,165,400 2,165,400 2,165,400 2,165,400 2,165,400
Groundwater Preservation Fee - Reclaimed 258,500 258,500 258,500 258,500 258,500 258,500
Groundwater Preservation Fee - Growth - 9,308 23,474 33,127 37,960 42,563
Total Groundwater Preservation Fees 2,400,000 2,433,208 2,447,374 2,457,027 2,461,860 2,466,463
Water Resource & System Development Impact Fees 1,101,346 867,525 988,878 1,365,711 1,448,742 956,943
Service Fees & Charges 824,000 800,000 800,000 800,000 800,000 800,000
Interest Income 250,000 520,461 423,885 278,402 213,375 238,491
Total Other Operating Revenue 4,575,346 4,621,194 4,660,137 4,901,140 4,923,977 4,461,897
Total Operating Revenue 19,958,346$ 20,812,492$ 22,114,244$ 23,780,083$ 25,103,710$ 25,645,779$
OPERATING EXPENSES
Potable Operating Expenses
Personnel 3,350,590 3,469,581 3,582,983 3,700,292 3,821,649 3,947,199
Operations & Maintenance 3,266,787 3,427,564 3,598,943 3,706,911 3,821,686 3,940,084
Power for Pumping 900,000 960,300 960,300 989,109 989,109 1,018,782
CAP Wheeling Costs 1,949,000 2,098,203 2,198,272 2,303,193 2,413,114 2,413,908
CAP Delivery Costs 2,160,000 2,623,200 2,860,215 3,220,890 3,426,990 3,499,125
CAP Capital Costs paid by GPF Revenue 409,080 387,165 474,825 452,910 438,300 438,300
Total Potable Operating Expenses 12,035,458$ 12,966,014$ 13,675,538$ 14,373,305$ 14,910,848$ 15,257,398$
Reclaimed Operating Expenses
Personnel 302,474 313,216 323,453 334,043 334,998 356,332
Operating & Maintenance 942,834 946,720 989,440 1,036,701 1,086,259 1,140,442
Power for Pumping 60,000 64,020 64,020 65,941 65,941 67,919
Total Reclaimed Operating Expenses 1,305,308$ 1,323,956$ 1,376,913$ 1,436,686$ 1,487,199$ 1,564,692$
WRSDIF Operating Expenses
CAP Capital Costs 168,000 159,000 195,000 186,000 180,000 180,000
Total WRSDIF Operating Expenses 168,000$ 159,000$ 195,000$ 186,000$ 180,000$ 180,000$
Total Operating Expenses 13,508,766$ 14,448,970$ 15,247,451$ 15,995,991$ 16,578,047$ 17,002,090$
Net Operating Revenue 6,449,580$ 6,363,522$ 6,866,793$ 7,784,092$ 8,525,663$ 8,643,689$
Summary of All Funds
A-5
Budget
FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28
Debt Service
Debt Service - Potable- Existing System
P&I - 2012 Sr. Lien Bonds - Existing System-Refinance 2003 573,666 - - - - -
P&I - 2014 WIFA Loan - Sr. Lien - AMI 376,642 376,530 376,416 376,298 376,178 376,054
P&I - 2015 Excise Tax Bonds - Refinance 2005 149,979 151,222 150,756 149,918 - -
P&I - 2017 Excise Tax Bonds - Refinance 2007 1,640,294 1,639,079 1,638,991 1,638,851 1,638,703 -
P&I - 2018 Excise Tax Bonds - Exist. System CIP- 15 yrs. $6M 515,326 514,660 515,154 514,546 514,338 514,506
P&I - 2021 Sr. Lien Bonds - Refinance 2007 & 2009 WIFA & 2012 176,375 367,404 274,422 275,489 276,064 274,061
Total Potable Existing System Debt Service 3,432,282$ 3,048,895$ 2,955,739$ 2,955,102$ 2,805,283$ 1,164,621$
Debt Service - GPF
P&I - Sr. Lien Bonds - Reclaimed Ph.1 (2012)1,045,662 - - - - -
P&I - 2021 Sr. Lien Bonds - Refinance 2007 & 2009 WIFA & 2012 302,297 629,711 470,345 472,174 473,158 469,726
Total GPF Debt Service 1,347,959$ 629,711$ 470,345$ 472,174$ 473,158$ 469,726$
Debt Service - WRSDIF - Growth Related
P&I - Sr. Lien Bonds - Growth Related (2012)322,578 - - - - -
P&I - 2021 Sr. Lien Bonds - Refinance 2007 & 2009 WIFA & 2012 36,004 75,000 56,019 56,237 56,354 55,945
Total WRSDIF Growth Related Debt Service 358,582$ 75,000$ 56,019$ 56,237$ 56,354$ 55,945$
Total Water System Debt Service 5,138,823$ 3,753,606$ 3,482,103$ 3,483,513$ 3,334,795$ 1,690,292$
Capital Outlay
Meters & Equipment & Vehicles 924,290$ 430,000$ 390,000$ 730,000$ 730,000$ 890,000$
Capital Improvements:
Existing System 1,150,000 1,650,000 1,500,000 1,500,000 1,500,000 1,500,000
Groundwater Preservation Fees 660,000 2,000,000 2,108,000 3,372,000 2,580,000 1,200,000.0
NWRRDS Projects 990,000 3,000,000 3,162,000 5,058,000 3,870,000 1,800,000.00
Other Potable Growth Related Projects 1,085,688 4,850,000 - - - -
Total Capital Outlay 4,809,978$ 11,930,000$ 7,160,000$ 10,660,000$ 8,680,000$ 5,390,000$
Net Balance From Operations (3,499,221)$ (9,320,084)$ (3,775,310)$ (6,359,421)$ (3,489,132)$ 1,563,397$
Growth - New Metered Connections 300 119 138 197 210 133
Monthly (Avg.) increase to residential customer using 7K gals.N/A 4.8%4.8%4.8%4.4%3.6%
Monthly (Avg.) increase to residential customer using 7K gals.N/A $2.11 $2.17 $2.33 $2.24 $1.87
Monthly increase to reclaimed customer using 10M gals.N/A 3.6%0.0%0.0%0.0%0.0%
Monthly increase to reclaimed customer using 10M gals.N/A $1,000.00 $0.00 $0.00 $0.00 $0.00
Debt Service Coverage Ratio: Sr. Lien & WIFA 2.28 4.39 5.83 6.60 7.21 7.35
Debt Service Coverage Requirement = 1.30
Required Operating Fund Cash Reserves (20% of personnel, O&M, debt)3,272,794$ 3,390,340$ 3,506,673$ 3,662,437$ 3,753,006$ 3,509,682$
(does not include depreciation/amortization)
Operating Fund Cash Reserves 7,645,024$ 5,727,554$ 4,661,821$ 3,885,730$ 3,952,311$ 6,101,037$
Groundwater Preservation Fees 5,401,484 4,919,936 4,413,279 2,623,656 1,630,037 2,040,267
WRSD Impact Fee Fund 16,893,509 9,972,444 7,769,524 3,975,818 1,413,725 418,165
Total Ending Cash Balance 29,940,017$ 20,619,934$ 16,844,624$ 10,485,204$ 6,996,073$ 8,559,469$
APPENDIX B
Rate Schedules & Tables for Bill Comparisons
B-1 Proposed Water Rate Schedule
B-2 Tables for Bill Comparisons by Meter Size – Potable
B-8 Tables for Bill Comparisons by Meter Size – Reclaimed
Tier 1 - $2.65 Tier 2 - $3.88 Tier 3 - $6.05 Tier 4 - $8.80
Meter Size Base Rate Usage Rate: Per 1,000 gallons Usage Rate: Per 1,000 gallons Usage Rate: Per 1,000 gallons Usage Rate: Per 1,000 gallons
5/8 Inch 21.14$ 0 - 7,000 7,001 - 16,000 16,001 - 32,000 OVER 32,000
3/4 Inch 31.69$ 0 - 10,000 10,001 - 24,000 24,001 - 48,000 OVER 48,000
1 inch 52.82$ 0 - 17,000 17,001 - 40,000 40,001 - 80,000 OVER 80,000
1.5 inch 105.64$ 0 - 35,000 35,001 - 80,000 80,001 - 160,000 OVER 160,000
2 inch 169.03$ 0 - 56,000 56,001 - 128,000 128,001 - 256,000 OVER 256,000
3 inch 338.03$ 0 - 112,000 112,001 - 256,000 256,001 - 512,000 OVER 512,000
4 inch 528.19$ 0 - 175,000 175,001 - 400,000 400,001 - 800,000 OVER 800,000
6 inch 1,056.37$ 0 - 860,000 860,001 - 2,000,000 2,000,001 - 3,500,000 OVER 3,500,000
8 inch 1,690.20$ 0 - 860,000 860,001 - 2,000,000 2,000,001 - 3,500,000 OVER 3,500,000
$2.65
Meter Size Base Rate Usage Rate: Per 1,000 gallons
5/8 Inch 21.14$ Fixed usage rate
3/4 Inch 31.69$ Fixed usage rate
1 inch 52.82$ Fixed usage rate
1.5 inch 105.64$ Fixed usage rate
2 inch 169.03$ Fixed usage rate
3 inch 338.03$ Fixed usage rate
4 inch 528.19$ Fixed usage rate
6 inch 1,056.37$ Fixed usage rate
8 inch 1,690.20$ Fixed usage rate
$7.65
Meter Size Base Rate Usage Rate: Per 1,000 gallons
5/8 Inch 21.14$ Fixed usage rate
3/4 Inch 31.69$ Fixed usage rate
1 inch 52.82$ Fixed usage rate
1.5 inch 105.64$ Fixed usage rate
2 inch 169.03$ Fixed usage rate
3 inch 338.03$ Fixed usage rate
4 inch 528.19$ Fixed usage rate
6 inch 1,056.37$ Fixed usage rate
8 inch 1,690.20$ Fixed usage rate
$2.35
Meter Size Base Rate Usage Rate: Per 1,000 gallons
5/8 Inch 14.62$ Fixed usage rate
3/4 Inch 21.93$ Fixed usage rate
1 inch 36.54$ Fixed usage rate
1.5 inch 73.08$ Fixed usage rate
2 inch 116.94$ Fixed usage rate
3 inch 233.86$ Fixed usage rate
4 inch 365.41$ Fixed usage rate
6 inch 730.83$ Fixed usage rate
8 inch 1,169.32$ Fixed usage rate
$0.90
Fee Per 1,000 gallons
$0.47
Fee: Per 1,000 gallons
B-1
Reclaimed Water
Residential & Irrigation uses
Commercial (Buildings, Tenant Improvements) & Multi-Family uses (Apartments, Duplex, Triplex, Fourplex, Assisted Living)
Construction Water uses
All Uses
Groundwater Preservation Fees for all uses
Reclaimed Water (Turf only)
Fees
Potable Water
Potable Water
Potable Water
plus applicable sales taxes.
Potable Water
Town of Oro Valley Water Utility
Water Rates and Groundwater Preservation Fee Schedule
Proposed Rates Effective July 8, 2023
The monthly water rate for the various user classifications is comprised of a monthly base rate, that varies with the meter size, plus the
cooresponding monthly usage rate per 1,000 gallons plus the groundwater preservation fee per 1,000 gallons for both potable and reclaimed water
TABLE FOR MONTHLY CHARGES & PERCENT INCREASE COMPARISON
RESIDENTIAL & IRRIGATION CUSTOMERS WITH A 5/8-INCH METER Tier Levels
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
BILL BILL INCREASE
0 19.94 - 19.94 21.14 - 21.14 1.20 6.0%
1,000 22.46 0.90 23.36 23.79 0.90 24.69 1.33 5.7%
2,000 24.98 1.80 26.78 26.44 1.80 28.24 1.46 5.5%
3,000 27.50 2.70 30.20 29.09 2.70 31.79 1.59 5.3%
4,000 30.02 3.60 33.62 31.74 3.60 35.34 1.72 5.1%
5,000 32.54 4.50 37.04 34.39 4.50 38.89 1.85 5.0%
6,000 35.06 5.40 40.46 37.04 5.40 42.44 1.98 4.9%
7,000 37.58 6.30 43.88 39.69 6.30 45.99 2.11 4.8%
8,000 41.10 7.20 48.30 43.57 7.20 50.77 2.47 5.1%
9,000 44.62 8.10 52.72 47.45 8.10 55.55 2.83 5.4%
10,000 48.14 9.00 57.14 51.33 9.00 60.33 3.19 5.6%
11,000 51.66 9.90 61.56 55.21 9.90 65.11 3.55 5.8%
12,000 55.18 10.80 65.98 59.09 10.80 69.89 3.91 5.9%
13,000 58.70 11.70 70.40 62.97 11.70 74.67 4.27 6.1%
14,000 62.22 12.60 74.82 66.85 12.60 79.45 4.63 6.2%
15,000 65.74 13.50 79.24 70.73 13.50 84.23 4.99 6.3%
16,000 69.26 14.40 83.66 74.61 14.40 89.01 5.35 6.4%
17,000 74.30 15.30 89.60 80.66 15.30 95.96 6.36 7.1%
18,000 79.34 16.20 95.54 86.71 16.20 102.91 7.37 7.7%
19,000 84.38 17.10 101.48 92.76 17.10 109.86 8.38 8.3%
20,000 89.42 18.00 107.42 98.81 18.00 116.81 9.39 8.7%
21,000 94.46 18.90 113.36 104.86 18.90 123.76 10.40 9.2%
22,000 99.50 19.80 119.30 110.91 19.80 130.71 11.41 9.6%
23,000 104.54 20.70 125.24 116.96 20.70 137.66 12.42 9.9%
24,000 109.58 21.60 131.18 123.01 21.60 144.61 13.43 10.2%
25,000 114.62 22.50 137.12 129.06 22.50 151.56 14.44 10.5%
26,000 119.66 23.40 143.06 135.11 23.40 158.51 15.45 10.8%
27,000 124.70 24.30 149.00 141.16 24.30 165.46 16.46 11.0%
28,000 129.74 25.20 154.94 147.21 25.20 172.41 17.47 11.3%
29,000 134.78 26.10 160.88 153.26 26.10 179.36 18.48 11.5%
30,000 139.82 27.00 166.82 159.31 27.00 186.31 19.49 11.7%
31,000 144.86 27.90 172.76 165.36 27.90 193.26 20.50 11.9%
32,000 149.90 28.80 178.70 171.41 28.80 200.21 21.51 12.0%
33,000 156.94 29.70 186.64 180.21 29.70 209.91 23.27 12.5%
34,000 163.98 30.60 194.58 189.01 30.60 219.61 25.03 12.9%
35,000 171.02 31.50 202.52 197.81 31.50 229.31 26.79 13.2%
36,000 178.06 32.40 210.46 206.61 32.40 239.01 28.55 13.6%
37,000 185.10 33.30 218.40 215.41 33.30 248.71 30.31 13.9%
38,000 192.14 34.20 226.34 224.21 34.20 258.41 32.07 14.2%
39,000 199.18 35.10 234.28 233.01 35.10 268.11 33.83 14.4%
40,000 206.22 36.00 242.22 241.81 36.00 277.81 35.59 14.7%
41,000 213.26 36.90 250.16 250.61 36.90 287.51 37.35 14.9%
42,000 220.30 37.80 258.10 259.41 37.80 297.21 39.11 15.2%
43,000 227.34 38.70 266.04 268.21 38.70 306.91 40.87 15.4%
44,000 234.38 39.60 273.98 277.01 39.60 316.61 42.63 15.6%
45,000 241.42 40.50 281.92 285.81 40.50 326.31 44.39 15.7%
46,000 248.46 41.40 289.86 294.61 41.40 336.01 46.15 15.9%
47,000 255.50 42.30 297.80 303.41 42.30 345.71 47.91 16.1%
48,000 262.54 43.20 305.74 312.21 43.20 355.41 49.67 16.2%
49,000 269.58 44.10 313.68 321.01 44.10 365.11 51.43 16.4%
50,000 276.62 45.00 321.62 329.81 45.00 374.81 53.19 16.5%
B-2
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR SF & MF RESIDENTIAL & IRRIGATION CUSTOMERS WITH A 3/4-INCH METER
BASE RATE 31.69$
COMMODITY RATE: TIER 1 = 2.65$ FOR 0 - 10,000 GALLONS
TIER 2 = 3.88$ FOR 10,001 - 24,000 GALLONS
TIER 3 = 6.05$ FOR 24,001 - 48,000 GALLONS
TIER 4 = 8.80$ FOR ALL USAGE OVER 48,000 GALLONS
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 29.90 - 29.90 31.69 - 31.69 1.79 6.0%
7,000 47.54 6.30 53.84 50.24 6.30 56.54 2.70 5.0%
11,000 58.62 9.90 68.52 62.07 9.90 71.97 3.45 5.0%
28,000 124.54 25.20 149.74 136.71 25.20 161.91 12.17 8.1%
50,000 239.42 45.00 284.42 275.31 45.00 320.31 35.89 12.6%
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR COMMERCIAL CUSTOMERS WITH A 3/4-INCH METER
BASE RATE 31.69$
COMMODITY RATE: TIER 1 = 2.65$ FOR ALL WATER USAGE
TIER 2 = N/A
TIER 3 = N/A
TIER 4 = N/A
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 29.90 - 29.90 31.69 - 31.69 1.79 6.0%
7,000 47.54 6.30 53.84 50.24 6.30 56.54 2.70 5.0%
11,000 57.62 9.90 67.52 60.84 9.90 70.74 3.22 4.8%
28,000 100.46 25.20 125.66 105.89 25.20 131.09 5.43 4.3%
50,000 155.90 45.00 200.90 164.19 45.00 209.19 8.29 4.1%
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR SF & MF RESIDENTIAL & IRRIGATION CUSTOMERS WITH A 1-INCH METER
BASE RATE 52.82$
COMMODITY RATE: TIER 1 = 2.65$ FOR 0 - 17,000 GALLONS
TIER 2 = 3.88$ FOR 17,001 - 40,000 GALLONS
TIER 3 = 6.05$ FOR 40,001 - 80,000 GALLONS
TIER 4 = 8.80$ FOR ALL USAGE OVER 80,000 GALLONS
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 49.83 - 49.83 52.82 - 52.82 2.99 6.0%
17,000 92.67 15.30 107.97 97.87 15.30 113.17 5.20 4.8%
27,000 127.87 24.30 152.17 136.67 24.30 160.97 8.80 5.8%
38,000 166.59 34.20 200.79 179.35 34.20 213.55 12.76 6.4%
50,000 224.03 45.00 269.03 247.61 45.00 292.61 23.58 8.8%
B-3
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR COMMERCIAL CUSTOMERS WITH A 1-INCH METER
BASE RATE 52.82$
COMMODITY RATE: TIER 1 = 2.65$ FOR ALL WATER USAGE
TIER 2 = N/A
TIER 3 = N/A
TIER 4 = N/A
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 49.83 - 49.83 52.82 - 52.82 2.99 6.0%
15,000 87.63 13.50 101.13 92.57 13.50 106.07 4.94 4.9%
27,000 117.87 24.30 142.17 124.37 24.30 148.67 6.50 4.6%
38,000 145.59 34.20 179.79 153.52 34.20 187.72 7.93 4.4%
50,000 175.83 45.00 220.83 185.32 45.00 230.32 9.49 4.3%
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR IRRIGATION CUSTOMERS WITH A 1.5-INCH METER
BASE RATE 105.64$
COMMODITY RATE: TIER 1 = 2.65$ FOR 0 - 35,000 GALLONS
TIER 2 = 3.88$ FOR 35,001 - 80,000 GALLONS
TIER 3 = 6.05$ FOR 80,001 - 160,000 GALLONS
TIER 4 = 8.80$ FOR ALL USAGE OVER 160,000 GALLONS
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 99.66 - 99.66 105.64 - 105.64 5.98 6.0%
38,000 198.42 34.20 232.62 210.03 34.20 244.23 11.61 5.0%
64,000 289.94 57.60 347.54 310.91 57.60 368.51 20.97 6.0%
90,000 396.66 81.00 477.66 433.49 81.00 514.49 36.83 7.7%
125,000 573.06 112.50 685.56 645.24 112.50 757.74 72.18 10.5%
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 1.5-INCH METER
BASE RATE 105.64$
COMMODITY RATE: TIER 1 = 2.65$ FOR ALL WATER USAGE
TIER 2 = N/A
TIER 3 = N/A
TIER 4 = N/A
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 99.66 - 99.66 105.64 - 105.64 5.98 6.0%
30,000 175.26 27.00 202.26 185.14 27.00 212.14 9.88 4.9%
64,000 260.94 57.60 318.54 275.24 57.60 332.84 14.30 4.5%
90,000 326.46 81.00 407.46 344.14 81.00 425.14 17.68 4.3%
125,000 414.66 112.50 527.16 436.89 112.50 549.39 22.23 4.2%
B-4
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR IRRIGATION CUSTOMERS WITH A 2-INCH METER
BASE RATE 169.03$
COMMODITY RATE: TIER 1 = 2.65$ FOR 0 - 56,000 GALLONS
TIER 2 = 3.88$ FOR 56,001 - 128,000 GALLONS
TIER 3 = 6.05$ FOR 128,001 - 256,000 GALLONS
TIER 4 = 8.80$ FOR ALL USAGE OVER 256,000 GALLONS
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 159.46 - 159.46 169.03 - 169.03 9.57 6.0%
57,000 304.10 51.30 355.40 321.31 51.30 372.61 17.21 4.8%
130,000 564.10 117.00 681.10 608.89 117.00 725.89 44.79 6.6%
250,000 1,168.90 225.00 1,393.90 1,334.89 225.00 1,559.89 165.99 11.9%
325,000 1,684.90 292.50 1,977.40 1,978.39 292.50 2,270.89 293.49 14.8%
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 2-INCH METER
BASE RATE 169.03$
COMMODITY RATE: TIER 1 = 2.65$ FOR ALL WATER USAGE
TIER 2 = N/A
TIER 3 = N/A
TIER 4 = N/A
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 159.46 - 159.46 169.03 - 169.03 9.57 6.0%
57,000 303.10 51.30 354.40 320.08 51.30 371.38 16.98 4.8%
128,000 482.02 115.20 597.22 508.23 115.20 623.43 26.21 4.4%
250,000 789.46 225.00 1,014.46 831.53 225.00 1,056.53 42.07 4.1%
325,000 978.46 292.50 1,270.96 1,030.28 292.50 1,322.78 51.82 4.1%
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR IRRIGATION CUSTOMERS WITH A 3-INCH METER
BASE RATE 338.03$
COMMODITY RATE: TIER 1 = 2.65$ FOR 0 - 112,000 GALLONS
TIER 2 = 3.88$ FOR 112,001 - 256,000 GALLONS
TIER 3 = 6.05$ FOR 256,001 - 512,000 GALLONS
TIER 4 = 8.80$ FOR ALL USAGE OVER 512,000 GALLONS
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 318.90 - 318.90 338.03 - 338.03 19.13 6.0%
50,000 444.90 45.00 489.90 470.53 45.00 515.53 25.63 5.2%
150,000 734.90 135.00 869.90 782.27 135.00 917.27 47.37 5.4%
300,000 1,329.78 270.00 1,599.78 1,459.75 270.00 1,729.75 129.97 8.1%
500,000 2,337.78 450.00 2,787.78 2,669.75 450.00 3,119.75 331.97 11.9%
B-5
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 3-INCH METER
BASE RATE 338.03$
COMMODITY RATE: TIER 1 = 2.65$ FOR ALL WATER USAGE
TIER 2 = N/A
TIER 3 = N/A
TIER 4 = N/A
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 318.90 - 318.90 338.03 - 338.03 19.13 6.0%
50,000 444.90 45.00 489.90 470.53 45.00 515.53 25.63 5.2%
150,000 696.90 135.00 831.90 735.53 135.00 870.53 38.63 4.6%
300,000 1,074.90 270.00 1,344.90 1,133.03 270.00 1,403.03 58.13 4.3%
500,000 1,578.90 450.00 2,028.90 1,663.03 450.00 2,113.03 84.13 4.1%
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR IRRIGATION CUSTOMERS WITH A 4-INCH METER
BASE RATE 528.19$
COMMODITY RATE: TIER 1 = 2.65$ FOR 0 - 175,000 GALLONS
TIER 2 = 3.88$ FOR 175,001 - 400,000 GALLONS
TIER 3 = 6.05$ FOR 400,001 - 800,000 GALLONS
TIER 4 = 8.80$ FOR ALL USAGE OVER 800,000 GALLONS
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 498.29 - 498.29 528.19 - 528.19 29.90 6.0%
300,000 1,379.29 270.00 1,649.29 1,476.94 270.00 1,746.94 97.65 5.9%
550,000 2,487.29 495.00 2,982.29 2,772.44 495.00 3,267.44 285.15 9.6%
700,000 3,243.29 630.00 3,873.29 3,679.94 630.00 4,309.94 436.65 11.3%
850,000 4,099.29 765.00 4,864.29 4,724.94 765.00 5,489.94 625.65 12.9%
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 4-INCH METER
BASE RATE 528.19$
COMMODITY RATE: TIER 1 = 2.65$ FOR ALL WATER USAGE
TIER 2 = N/A
TIER 3 = N/A
TIER 4 = N/A
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 498.29 - 498.29 528.19 - 528.19 29.90 6.0%
300,000 1,254.29 270.00 1,524.29 1,323.19 270.00 1,593.19 68.90 4.5%
550,000 1,884.29 495.00 2,379.29 1,985.69 495.00 2,480.69 101.40 4.3%
700,000 2,262.29 630.00 2,892.29 2,383.19 630.00 3,013.19 120.90 4.2%
850,000 2,640.29 765.00 3,405.29 2,780.69 765.00 3,545.69 140.40 4.1%
B-6
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR RESIDENTIAL & IRRIGATION CUSTOMERS WITH A 6-INCH METER
BASE RATE 1,056.37$
COMMODITY RATE: TIER 1 = 2.65$ FOR 0 - 860,000 GALLONS
TIER 2 = 3.88$ FOR 860,001 - 2,000,000 GALLONS
TIER 3 = 6.05$ FOR 2,000,001 - 3,500,000 GALLONS
TIER 4 = 8.80$ FOR ALL USAGE OVER 3,500,000 GALLONS
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 996.58 - 996.58 1,056.37 - 1,056.37 59.79 6.0%
425,000 2,067.58 382.50 2,450.08 2,182.62 382.50 2,565.12 115.04 4.7%
1,000,000 3,656.58 900.00 4,556.58 3,878.57 900.00 4,778.57 221.99 4.9%
1,500,000 5,416.58 1,350.00 6,766.58 5,818.57 1,350.00 7,168.57 401.99 5.9%
2,000,000 7,176.58 1,800.00 8,976.58 7,758.57 1,800.00 9,558.57 581.99 6.5%
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 6-INCH METER
BASE RATE 1,056.37$
COMMODITY RATE: TIER 1 = 2.65$ FOR ALL WATER USAGE
TIER 2 = N/A
TIER 3 = N/A
TIER 4 = N/A
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 996.58 - 996.58 1,056.37 - 1,056.37 59.79 6.0%
425,000 2,067.58 382.50 2,450.08 2,182.62 382.50 2,565.12 115.04 4.7%
1,000,000 3,516.58 900.00 4,416.58 3,706.37 900.00 4,606.37 189.79 4.3%
1,500,000 4,776.58 1,350.00 6,126.58 5,031.37 1,350.00 6,381.37 254.79 4.2%
2,000,000 6,036.58 1,800.00 7,836.58 6,356.37 1,800.00 8,156.37 319.79 4.1%
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR CUSTOMERS WITH A 8-INCH METER
BASE RATE 1,690.20$
COMMODITY RATE: TIER 1 = 2.65$ FOR 0 - 860,000 GALLONS
TIER 2 = 3.88$ FOR 860,001 - 2,000,000 GALLONS
TIER 3 = 6.05$ FOR 2,000,001 - 3,500,000 GALLONS
TIER 4 = 8.80$ FOR ALL USAGE OVER 3,500,000 GALLONS
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 1,594.53 - 1,594.53 1,690.20 - 1,690.20 95.67 6.0%
425,000 2,665.53 382.50 3,048.03 2,816.45 382.50 3,198.95 150.92 5.0%
1,000,000 4,254.53 900.00 5,154.53 4,512.40 900.00 5,412.40 257.87 5.0%
1,500,000 6,014.53 1,350.00 7,364.53 6,452.40 1,350.00 7,802.40 437.87 5.9%
2,000,000 7,774.53 1,800.00 9,574.53 8,392.40 1,800.00 10,192.40 617.87 6.5%
(There are no active 8-inch potable meters in the OVWU system)
B-7
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR COMMERCIAL AND MULTIFAMILY CUSTOMERS WITH A 8-INCH METER
BASE RATE 1,690.20$
COMMODITY RATE: TIER 1 = 2.65$ FOR ALL WATER USAGE
TIER 2 = N/A
TIER 3 = N/A
TIER 4 = N/A
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 1,594.53 - 1,594.53 1,690.20 - 1,690.20 95.67 6.0%
425,000 2,665.53 382.50 3,048.03 2,816.45 382.50 3,198.95 150.92 5.0%
1,000,000 4,114.53 900.00 5,014.53 4,340.20 900.00 5,240.20 225.67 4.5%
1,500,000 5,374.53 1,350.00 6,724.53 5,665.20 1,350.00 7,015.20 290.67 4.3%
2,000,000 6,634.53 1,800.00 8,434.53 6,990.20 1,800.00 8,790.20 355.67 4.2%
(There are no active 8-inch potable meters in the OVWU system)
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR CUSTOMERS WITH A 1.5-INCH METER - RECLAIMED WATER USE
BASE RATE 73.08$
COMMODITY RATE: TIER 1 = 2.35$ FOR ALL WATER USAGE
TIER 2 = N/A
TIER 3 =N/A
TIER 4 = N/A
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 73.08 - 73.08 73.08 - 73.08 0.00 0.0%
50,000 185.58 23.50 209.08 190.58 23.50 214.08 5.00 2.4%
135,000 376.83 63.45 440.28 390.33 63.45 453.78 13.50 3.1%
200,000 523.08 94.00 617.08 543.08 94.00 637.08 20.00 3.2%
250,000 635.58 117.50 753.08 660.58 117.50 778.08 25.00 3.3%
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR CUSTOMERS WITH A 2-INCH METER - RECLAIMED WATER USE
BASE RATE 116.94$
COMMODITY RATE: TIER 1 = 2.35$ FOR ALL WATER USAGE
TIER 2 = N/A
TIER 3 =N/A
TIER 4 = N/A
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 116.94 - 116.94 116.94 - 116.94 0.00 0.0%
150,000 454.44 70.50 524.94 469.44 70.50 539.94 15.00 2.9%
240,000 656.94 112.80 769.74 680.94 112.80 793.74 24.00 3.1%
450,000 1,129.44 211.50 1,340.94 1,174.44 211.50 1,385.94 45.00 3.4%
600,000 1,466.94 282.00 1,748.94 1,526.94 282.00 1,808.94 60.00 3.4%
B-8
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR CUSTOMERS WITH A 3-INCH METER - RECLAIMED WATER USE
BASE RATE 233.86$
COMMODITY RATE: TIER 1 = 2.35$ FOR ALL WATER USAGE
TIER 2 = N/A
TIER 3 =N/A
TIER 4 = N/A
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 233.86 - 233.86 233.86 - 233.86 0.00 0.0%
20,000 278.86 9.40 288.26 280.86 9.40 290.26 2.00 0.7%
80,000 413.86 37.60 451.46 421.86 37.60 459.46 8.00 1.8%
100,000 458.86 47.00 505.86 468.86 47.00 515.86 10.00 2.0%
150,000 571.36 70.50 641.86 586.36 70.50 656.86 15.00 2.3%
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR CUSTOMERS WITH A 4-INCH METER - RECLAIMED WATER USE
BASE RATE 365.41$
COMMODITY RATE: TIER 1 = 2.35$ FOR ALL WATER USAGE
TIER 2 = N/A
TIER 3 =N/A
TIER 4 = N/A
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 365.41 - 365.41 365.41 - 365.41 0.00 0.0%
220,000 860.41 103.40 963.81 882.41 103.40 985.81 22.00 2.3%
300,000 1,040.41 141.00 1,181.41 1,070.41 141.00 1,211.41 30.00 2.5%
450,000 1,377.91 211.50 1,589.41 1,422.91 211.50 1,634.41 45.00 2.8%
600,000 1,715.41 282.00 1,997.41 1,775.41 282.00 2,057.41 60.00 3.0%
TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON
FOR CUSTOMERS WITH A 6-INCH METER - RECLAIMED WATER USE
BASE RATE 730.83$
COMMODITY RATE: TIER 1 = 2.35$ FOR ALL WATER USAGE
TIER 2 = N/A
TIER 3 =N/A
TIER 4 = N/A
GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT
USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED
1 MONTH BILL BILL INCREASE
0 730.83 - 730.83 730.83 - 730.83 0.00 0.0%
900,000 2,755.83 423.00 3,178.83 2,845.83 423.00 3,268.83 90.00 2.8%
5,000,000 11,980.83 2,350.00 14,330.83 12,480.83 2,350.00 14,830.83 500.00 3.5%
10,000,000 23,230.83 4,700.00 27,930.83 24,230.83 4,700.00 28,930.83 1,000.00 3.6%
15,000,000 34,480.83 7,050.00 41,530.83 35,980.83 7,050.00 43,030.83 1,500.00 3.6%
20,000,000 45,730.83 9,400.00 55,130.83 47,730.83 9,400.00 57,130.83 2,000.00 3.6%
B-9
APPENDIX C
5-Year Capital Improvement Schedules
C-1 Operating Fund
C-2 Groundwater Preservation Fee
C-3 Water Resource and System Development Impact Fee Fund
C-1
C-2
C-3
APPENDIX D
Assumptions for Proposed Financial Scenario
D-1 Operating Fund
D-4 Water Resource and System Development Impact Fee Fund
PROPOSED FINANCIAL SCENARIO
ASSUMPTIONS FOR THE WATER UTILITY’S
OPERATING FUND
The Operating Fund is the primary fund for the Water Utility. The sources of revenue are water sales, service
related charges and Groundwater Preservation Fees (GPF). Expenses for administration, operations, existing
system improvements and debt service are accounted for i n this fund.
Beginning Cash Balance
The beginning cash balance is estimated based on budgeted revenues, expenses and known cost over runs for
FY 2022/23. Actual cash balances on the 6/30/22 balance sheet are added to budgeted revenues, less budgeted
expenses and known unbudgeted expenses.
Cash Reserve Requirement
Mayor and Town Council Water Policies require the Utility to maintain cash reserves in the Operating Fund of
not less than 20% of the combined total of the annual budgeted amounts for personnel, O&M and debt service.
This specifically excludes expenses for capital projects, depreciation, amortization and contingency.
Growth Projections
New Development growth projections for FY 2023-24 through FY 2027-28 were based on data provided by the
Town’s New Development Permitting Manager and were updated with information from the Town’s Finance
Department to be consistent with the Town’s financial forecasting.
Connections FY 23-24 FY 24-24 FY 25-26 FY 26-27 FY 27-28
Single Family Residential 119 138 197 210 133
Irrigation 3 3 3 3 3
Water Sales and Water Use Consumption Trends
The average monthly water consumption for a residential customer with a 5/8 -inch water meter in FY 2021-22
was 7,100 gallons per month. To account for the overall average continued decline in water consumption, this
analysis assumes 7,000 gallons per month. Projected reclaimed deliveries are based on Water Utility Director
estimates.
Service Related Revenues
Service related revenues are based on the proposed FY 2023-24 budget. Service related revenues include billing
for sewer fees on behalf of Pima County Wastewater and the Town’s Storm Water Department. Additionally,
other service related revenues include: late fees, reconnect fees, new service establishment fees, backflow
permitting fees, engineering plan review fees and construction inspection fees.
Groundwater Preservation Fees (GPF)
GPF revenues are based on the water consumption for FY 2021-22. The GPF funds are dedicated to pay for
water resources other than groundwater as it relates to debt service, capital costs, CAP delivery costs and
water wheeling.
D-1
PROPOSED FINANCIAL SCENARIO
ASSUMPTIONS FOR THE WATER UTILITY’S
OPERATING FUND (continued
Interest Income
Interest rates are projected at 2% annually over the 5-year pro-forma. The projected interest rate was
provided by the Town’s Finance Department.
Personnel
No new employees were added during the projection period. Annual merit increases are projected to be 3%
annually and health care costs are projected to increase by 5% annually. It is projected that the Arizona State
Retirement System (ASRS) contribution is projected to increase 1% annually over the five-year projection
period.
Inflation Rates
Inflation rates are projected at 5% annually over the 5-year pro-forma. The projected inflation rate was
provided by the Town’s Finance Department.
O&M Potable Expenses
These expenses are based on the Water Utility’s proposed budget for FY 2022 -23 plus 5% inflation.
O&M CAP Wheeling Expenses - Potable
This expense includes the fees charged by Tucson Water to wheel the Town’s CAP water through their recharge
and recovery system in accordance with an IGA. The increases are projected to be 5% annually over the 5-year
pro-forma. It is also assumed that the Utility will wheel 2,850 AF annually.
O&M CAP Recharge Expenses - Potable
This expense is based on the rate schedule adopted by CAP 6/2/22. The figures represent the annual expense
to deliver the Utility’s entire allotment of CAP water (10,305 AF) for recharge.
O&M Reclaimed Expenses
Pursuant to the existing IGA, the reclaimed water is delivered on a non -interruptible basis at an interruptible
rate. Inflationary increases of 5% are included annually.
The Town delivers more reclaimed water than it is entitled to. To cover this shortfall a cost to purchase
additional reclaimed water from Tucson Water has been in cluded annually.
Additionally, the O&M expenses include allocations for personnel, administrative costs and fleet service costs.
The reclaimed cost allocation model was used to allocate these costs using a variety of methodologies.
O&M CAP Capital Expenses
This expense is paid for from the GPF funds and is based on 7,305 AF per the rate schedule adopted by CAP
6/2/22.
D-2
PROPOSED FINANCIAL SCENARIO
ASSUMPTIONS FOR THE WATER UTILITY’S
OPERATING FUND (continued
Capital Improvement Program (CIP) – Existing System Improvements
The capital costs associated with the Existing System Improvements CIP are primarily to ensure continued
water systems reliability and efficiency. These costs are determined as part of an annual re view of the water
system. $7.7 million in capital costs for existing system improvements are included in the 5 year projection
period.
Capital Improvement Program (CIP) – NWRRDS
A portion of the capital costs associated with the NWRRDS CIP are paid for by GPF funds. The NWRRDS CAP
delivery system will be capable of delivering up to an additional 4,000 acre feet per year of CAP water into Oro
Valley’s water service area. The 5 year pro-forma is based on Engineering cost estimates.
Debt Service
The following table identifies the existing debt service included in this pro forma:
Bonds Type Description Amortization Schedule By
2014 Sr. Lien AMI Project WIFA
2015 Excise Tax Refunding (2005) Stifel & Nicolaus & Co.
2017 Excise Tax Refunding (2007) Stifel & Nicolaus & Co.
2018 Excise Tax Existing System CIP Stifel & Nicolaus & Co.
2021 Sr. Lien Refunding (WIFA & 2012) Stifel & Nicolaus & Co.
Minimum Debt Service Coverage Requirement
1.30 debt service coverage ratio for Sr. Lien Bonds & all WIFA Loans
D-3
PROPOSED FINANCIAL SCENARIO
ASSUMPTIONS FOR THE WATER UTILITY’S
WATER RESOURCE AND SYSTEM DEVELOPMENT IMPACT FEE (WRSDIF) FUND
The WRSDIF fund accounts for development impact fees that are collected at the time a new water meter is purchased.
This impact fee is intended to fund costs for water resources, the infrastructure to deliver those resources and any
related debt including CAP capital infrastructure repayment related to new development.
Beginning Cash Balance
Beginning cash balance is estimated based on budgeted revenues, expenses and known cost over runs for FY
2022-23. Actual cash balances on the 6/30/22 balance sheet is added to budgeted revenues, less budgeted
expenses.
Growth Projections
New Development growth projections for FY 2024-25 through FY 2027-28 were based on data provided by the
Town’s New Development Permitting Manager and were updated with information from the Town’s Finance
Department to be consistent with the Town’s financial forecasting.
Service Units FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28
Single Family Residential SU’s 119 138 197 210 133
Other SU’s 7.5 7.5 7.5 7.5 7.5
Interest Income
Interest rates are projected at 2% annually over the 5-year pro-forma.
O&M CAP Capital Expenses
This expense is based on 3,000 AF per the rate schedule adopted by CAP on 6/2/22.
Capital Improvement Program (CIP) – NWRRDS
A portion of the capital costs associated with the NWRRDS CIP are paid for by the WRSDIF Impact fees. The
NWRRDS CAP delivery system will be capable of delivering up to an additional 4,000 acre feet per year of CAP
water into Oro Valley’s water service area. The 5 year pro-forma is based on Engineering cost estimates.
Debt Service
The following table identifies the existing debt service included in this pro forma:
Bonds Type Description Amortization Schedule By
2021 Sr. Lien Refunding (WIFA & 2012) Stifel & Nicolaus & Co.
Debt Service Coverage
1.30 debt service coverage ratio for Sr. Lien Bonds
D-4
APPENDIX E
Development Impact Fee Schedule
E-1 Water Resource and System Development Impact Fees
Oro Valley Water Utility
FY 2023-24
Water Rates Presentation
June 7, 2023
The Oro Valley Water Utility
2
The Water Utility Is An Enterprise Fund
Funded solely from water sales, fees and charges
All revenues are used for operating costs of the Utility
Not dependent on the Town’s General Fund
Administrative service fees are paid to the General Fund
Water Rates Analysis Process, Goals & Assumptions
3
Goals:
Meets revenue, cash reserve & debt service coverage requirements
Recovers the cost of service
Promotes water conservation & maintains the financial health of the Utility
Assumptions:
Water resource costs, growth, inflation, interest rates & personnel requirements
Planned use of cash for existing system improvements
Process:
Annually, Utility staff prepares a water rate analysis report that is reviewed by & discussed with the Water Utility Commission
The Commission and Utility staff make a recommendation to Council on the proposed water rates
Proposed Potable Water Rates Recommendation
4
Potable Water Rates Recommendations:
Increases to potable base rates
Increases to potable commodity rates (Tiers 1-4)
No other changes to potable water rates
Why do we need a potable water rate increase:
To offset increasing CAP water delivery & wheeling costs
Projected CAP Tier 2a shortage –12% increase in delivery charge
Wheeling costs increasing 5% annually over the 5-year projection period
Existing system capital projects
Cash funding of capital projects over the 5-year projection period
Proposed Potable Water Base & Commodity Rates
5
Proposed Potable Water Base Rate Increase:
Water base rates increase by meter size:87% of customers have 5/8-inch meter and will see a $1.20 per month increase in the base rate
Proposed Potable Water Commodity Rate Increase:
Commodity rates:The commodity rate is based on consumptiontiers as shown to the right
Meter Size Current Proposed Monthly
(in inches)Potable Base Rates Potable Base Rates Increase
5/8 $ 19.94 $ 21.14 $ 1.20
3/4 $ 29.90 $ 31.69 $ 1.79
1 $ 49.83 $ 52.82 $ 2.99
1.5 $ 99.66 $ 105.64 $ 5.98
2 $ 159.46 $ 169.03 $ 9.57
3 $ 318.90 $ 338.03 $ 19.13
4 $ 498.29 $ 528.19 $ 29.90
6 $ 996.58 $1,056.37 $ 59.79
8 $1,594.53 $1,690.20 $ 95.67
Commodity Tiers Per 1,000 gallons Current Proposed Increase
Tier 1
(5/8-inch meter)
0 -7,000 $ 2.52 $ 2.65 $ 0.13
Tier 2
(5/8-inch meter)
7,001 –16,000 $ 3.52 $ 3.88 $ 0.36
Tier 3
(5/8-inch meter)
16,001 –32,000 $ 5.04 $ 6.05 $ 1.01
Tier 4
(5/8-inch meter)
Over 32,000 $ 7.04 $ 8.80 $ 1.76
Potable Water Cost Comparisons
6
Monthly Water Bill Comparisons to Other Water Providers:
87% of Oro Valley Water Utility customers have a 5/8-inch meter and consume an average of 7,000 gallons per month
These customers will see an increase to their monthly bill of $2.11 or 4.8% increase
Water Provider
Cost for
7,000
Gallons
Cost for
15,000
Gallons
Cost for
25,000
Gallons
Cost for
40,000
Gallons
Oro Valley Current $43.88 $79.24 $137.12 $242.22
Oro Valley Proposed $45.99 $84.23 $151.56 $277.81
Metro Water $47.75 $89.20 $158.20 $278.20
Marana Water $53.89 $101.50 $174.00 $310.45
Tucson Water $52.56 $129.92 $274.00 $558.86
Proposed Reclaimed Water Rate Recommendation
7
Reclaimed Water Rate Recommendation
Increase to reclaimed commodity rate only
Why do we need a reclaimed water rate increase
Increased reclaimed water delivery costs
Rate increase of 5% by Tucson Water to utilize Tucson Water’s infrastructure to deliver Oro Valley’s reclaimed water to the Oro Valley service area
Proposed Reclaimed Water Commodity Rate & Cost Comparisons
8
Proposed Reclaimed Water Commodity Rate:
Reclaimed Current Proposed Increase
Commodity Rate/1,000 gallons $2.25 $2.35 $0.10
Golf irrigation (turf) is the primary consumer of reclaimed water
Typical 18-hole turf customer consumes 10M gallons of water per month and would see an increase in their monthly bill of $1,000 per month or 3.6%
Monthly reclaimed water bill comparisons to other water providers:
Water Provider Cost for 10,000,000
Gallons
Oro Valley Current $27,950.83
Oro Valley Proposed $28,930.83
Metro Water N/A
Marana Water N/A
Tucson Water $30,168.27
In Closing
9
Recommendation For Approval:
The Water Utility Commission and Water Utility staff respectfully recommendapproval of water rate increases to the potable base rates, potable commodity rates & reclaimed commodity rates
If the proposed rates are approved, they will become effective July 8th & will be reflected on the water bills beginning in August of the new fiscal year
10
Questions?
Town Council Regular Session 2.
Meeting Date:06/07/2023
Submitted By:David Gephart, Finance
Department:Finance
SUBJECT:
PUBLIC HEARING: RESOLUTION NO. (R)23-24, DISCUSSION AND POSSIBLE ACTION REGARDING THE
ADOPTION OF THE TENTATIVE BUDGET FOR FY 2023/24 AND SETTING THE LOCAL ALTERNATIVE
EXPENDITURE LIMITATION FOR FY 2023/24
RECOMMENDATION:
Staff recommends approval of the Tentative Budget for FY 2023/24.
EXECUTIVE SUMMARY:
This item is for Council consideration and adoption of the Town's Tentative Budget for FY 2023/24 in the amount
of $148,489,391.
Adoption of this resolution will also set the maximum local expenditure limitation for FY 2023/24. Once the
limitation is set, expenditures for the year may not exceed that amount. The Council has the authority to make
changes to the budget prior to the final budget adoption scheduled for June 21, 2023. However, the total amount
of the final budget may not exceed the expenditure limitation set this evening. The Council also has the authority
to modify the budget throughout the fiscal year.
BACKGROUND OR DETAILED INFORMATION:
Staff presented the FY 2023/24 Town Manager's Recommended Budget (TMRB) in the amount of $147,889,221
at the May 10 and May 11 Town Council budget study sessions. The full copy of the TMRB has been posted on
the Town's website, www.orovalleyaz.gov.
The Town’s Tentative Budget for FY 2023/24 is presented for approval in the amount of $148,489,391, an
increase of $600,170 from the TMRB. The increase, as well as relevant changes in the budget, are explained
below:
General Fund:
Revenues:
Opioid settlement revenues of $100,000 have been migrated to the Grants Fund.
The administrative service charge to the Water Fund has been increased in the amount of $105,600 due to
an increase in the Sprypoint Billing software charge ($40k) and inclusion of a Water office lease ($65,600).
Decreased smart and safe revenue by $47,024.
Expenditures:
General Fund personnel costs have been increased $140,915 as a refinement to the personnel model.
Operations and maintenance costs increased $105,000 from the TMRB, which was comprised of a net
$25,000 in additional software costs, $50,000 was added for capacity to utilize a space needs consultant,
and $35,000 was carried over from the current year for the Rooney Ranch master plan effort. Finally, the
amount budgeted for the Court's Arizona Rangers was reduced by $5,000.
Capital decreased $845,534 as the Westward Look Drive improvements were migrated to the Grants Fund.
With changes to revenues and expenditures, the budgeted use of fund balance in the General Fund is now
$5,186,439, which represents a $633,295 favorable increase from the TMRB.
Highway Fund:
Expenditures:
Highway Fund personnel costs have been refined for FY 2023/24, necessitating an increase of $2,516.
Grants Fund:
Revenues:
Added $110,000 for a DOJ COPS health and wellness award.
Migrated $100,000 from the General Fund for Opioid settlement revenues.
Expenditures:
Added $110,000 for increased travel and training in O&M.
Added $979,252 in capital for Westward Look Drive improvements and increased carryover for the Pusch
Ridge Facility ADA and Code Compliance.
Community Center Fund:
Revenues:
Reduced investment revenues by $115,000.
Refined the charges for service projection by $30,100.
Expenditures:
Personnel costs decreased $26,740 through further refinement of the model.
PAG/RTA Fund:
Revenues:
Investment income was reduced by $18,000.
Roadway Impact Fee Fund:
Revenues:
Investment income was increased by $11,000.
Expenditures:
Added carryover for impact fee study, increasing O&M by $6,429.
Moved out the Rancho Vistoso & Woodburne intersection CIP project to FY 2024/25, which reduced the
capital budget by $700,000.
Police Impact Fee Fund:
Added carryover for the impact fee study, increasing O&M by $857.
Parks and Rec Impact Fee Fund:
Added carryover for the impact fee study, increasing O&M by $3,000.
Water Resource Impact Fee Fund:
Revenues:
Reduced investment income by $50,000.
Expenditures:
O&M was increased by $19,714 due to carryover for the impact fee study.
Capital outlay was increased by $2.2 million due to adjustments to the NWRRDS project independent
portion.
Capital outlay was decreased by $100,000 due to reduced carryover necessary for the Steam Pump Well
Equipping CIP project.
Capital Fund:
Revenues:
Added RTA reimbursement revenue for MUP Phase II CIP project in the amount of $200,000.
Reduced investment income by $100,000.
Expenditures:
Personnel costs increased $967 through further refinement of model.
Capital outlay costs decreased by $1,398,200 through refinement of project carryover and cost amounts.
The net decrease is largely attributable to the following items:
The Steam Pump Ranch garage project cost was refined, increasing the project budget by
approximately $284,000.
Removed the F450 4x4 Reg Cab Dump in the amount of $100,000.
$260,000 was added for additional carryover for the Traffic Camera Video Recording System and the
Coronado Middle School Park pre-fab restroom (Amphi partnership).
$1,758,200 was removed across several CIP projects to accurately reflect project costs and revised
carry forward amounts. These projects include the Community Center parking lot, the Town Court
expansion, Town Hall Data Center migration, the Community Center Elevator project, the Town Hall
Emergency Generator project, and Naranja Park improvements.
Stormwater Utility Fund:
Revenues:
Investment income was reduced by $5,000.
Expenditures:
Budgeted personnel costs decreased $7,648 due to refinement of the model.
Water Utility Fund:
Expenditures:
Refinement of budgeted personnel costs added $4,842.
Updated the direct administrative charge for billing software costs, increasing O&M by $40,000.
Increased capital by $65,000, adding carryover for the Booster Station Rehabilitation CIP project and
removing carryover for a vehicle.
A matrix summary of all expenditure changes from the Recommended Budget to the Tentative Budget is shown
below:
Changes from Recommended Budget of $147.9M
FY 23/24 Manager's Recommended Budget $147,889,221
General Fund
Refinement of personnel budget amounts
140,915
Moved Westward Look Drive improvements CIP project to the Grants
Fund (ARPA Funded) (845,534)
Removed PD - Darkhouse Route management software
(10,000)
Reduced Court's Arizona Rangers as part-time security position was
approved
(5,000)
Added software subscription for short-term rental monitoring and
compliance
15,000
Removed CIP and Transparency Software
(20,000)
Updated Water Utility billing software cost
40,000
Added capacity for space needs consulting
50,000
Added carryover of Rooney Ranch master plan
35,000
Highway Fund
Refinement of personnel budget amounts
2,516
Grants and Contributions Fund
DOJ COPS health and wellness grant award increased, increased
travel & training
110,000
Moved Westward Look Drive improvements from the General Fund
(ARPA Funded)
845,534
Added CIP carryover for Pusch Ridge Facility ADA and Code
Compliance
133,718
Community Center Fund
Refinement of personnel budget amounts
(26,740)
Water Resource Impact Fee Fund
Added carryover for Impact fee study
19,714
NWRRDS (Independent) Shannon Road Booster Station Cip project
costs increased 1,600,000
NWRRDS (Independent) Shannon Road Reservoir CIP project costs
increased
600,000
Reduced carryover for Steam Pump Well Equipping CIP project (100,000)
Roadway Impact Fee Fund
Added carryover for Impact fee study
6,429
Moved out the Rancho Vistoso & Woodburne Intersection CIP project
to FY 24/25 (700,000)
Parks & Recreation Impact Fee Fund
Added carryover for Impact fee study
3,000
Police Impact Fee Fund
Added carryover for Impact fee study
857
Rec in Lieu Fee Fund
Reduced contingency based on revised interest income
(200)
Capital Fund
Refinement of personnel budget amounts
967
Refinement of project carry-forward and cost amounts (1,398,200)
Stormwater Utility Fund
Refinement of personnel budget amounts
(7,648)
Water Utility Fund
Refinement of personnel budget amounts
4,842
Updated direct admin charge for billing software cost
40,000
Added carryover for Booster Station Rehabilitation CIP project
100,000
Removed carryover for water vehicle
(35,000)
Total Change
600,170
FY 23/24 Tentative Budget $148,489,391
The Budget and Finance Commission met and reviewed the TMRB on April 18 and May 16, 2023.
Official Auditor General budget forms for the FY 2023/24 Tentative Budget are included.
This agenda item is a public hearing and approval of the resolution to adopt the FY 2023/24 Tentative Budget.
Once approved, the Auditor General budget forms with the approved budget amounts will be published for two
consecutive weeks prior to the next public hearing for Final Budget approval scheduled for June 21, 2023.
FISCAL IMPACT:
The proposed Tentative Budget for FY23/24 sets an alternative expenditure limitation of $148,489,391 for the
fiscal year.
SUGGESTED MOTION:
I MOVE to approve Resolution No. (R)23-24, adopting the Tentative Budget for Fiscal Year 2023/24, and setting
the local alternative expenditure limitation for Fiscal Year 2023/24 at $148,489,391.
Attachments
(R)23-24 Tentative Budget Adoption
Fund Summaries
Auditor General Schedules - Tentative
Tentative CIP Program
Staff Presentation
RESOLUTION NO. (R)23-24
A RESOLUTION OF THE MAYOR AND TOWN COUNCIL OF THE
TOWN OF ORO VALLEY, ARIZONA, ADOPTING ESTIMATES OF THE
AMOUNTS REQUIRED FOR THE FISCAL YEAR 2023/2024 AS A
TENTATIVE BUDGET; SETTING FORTH THE RECEIPTS AND
EXPENDITURES/EXPENSES FOR THE FISCAL YEAR 2023/2024;
GIVING NOTICE OF THE TIME FOR THE FINAL PUBLIC HEARING
FOR ADOPTING THE BUDGET FOR THE FISCAL YEAR 2023/2024;
PROVIDING FOR CONTINGENCIES; PROVIDING FOR THE USE OF
FUNDS; SETTING THE LOCAL ALTERNATIVE EXPENDITURE
LIMITATION FOR FISCAL YEAR 2023/2024
WHEREAS, the A.R.S. 42-17101 requires that cities and towns in Arizona adopt a tentative
budget by the third Monday in July of each year; and
WHEREAS, the Town Council and staff held Council Budget Study Sessions on May 10, 2023,
and May 11, 2023, to establish and review the proposed budget; and
WHEREAS, adoption of the budget will allow the Town of Oro Valley local government to
provide the necessary public services for the health, welfare and safety of its citizenry.
NOW, THEREFORE, BE IT RESOLVED by the Mayor and Town Council of the Town of
Oro Valley, Arizona that:
SECTION 1. The statements and schedules of the tentative budget for the fiscal year 2023/2024
accompany and be included as part of this Resolution as attached hereto.
SECTION 2. The statements and schedules herein contained be adopted for the purpose as
hereafter set forth as the tentative budget for the Town of Oro Valley, Arizona for the fiscal year
2023/2024
SECTION 3. The statements setting forth the receipts, expenditures/expenses and amounts
collectible for the fiscal year 2023/2024 accompany and be included as part of this resolution.
SECTION 4 The local alternative expenditure limitation as noted on the Summary Schedule of
Estimated Revenues and Expenditures/Expenses for the fiscal year 2023/2024 be included as part
of this resolution.
SECTION 5. The Town Clerk is hereby authorized and directed to publish in the manner
prescribed by law, the estimates of expenditures/expenses, as hereinafter set forth, together with a
notice that the Town Council will meet for the purpose of final public hearing and for adoption of
the budget for fiscal year 2023/2024 for the Town of Oro Valley, Arizona on the 21st of June 2023.
SECTION 6. The money from any fund may be used for any of the appropriations except money
specifically restricted by State Law or by Town Ordinance or Resolution.
SECTION 7. The various Town officers and employees are hereby directed to perform all acts
necessary or desirable to give effect to this resolution.
PASSED AND ADOPTED by the Mayor and Town Council of the Town of Oro Valley, Arizona,
this 7th of June 2023.
TOWN OF ORO VALLEY
___
Joseph C. Winfield, Mayor
ATTEST: APPROVED AS TO FORM:
____________________________
Michael Standish, Town Clerk Tobin Sidles, Legal Services Director
Date:_______________________ Date:_____________________
BUDGETED BEGINNING FUND BALANCE REVENUE TRANSFERS IN TOTAL PERSONNEL O&M CAPITAL TRANSFERS OUT DEBT SERVICE CONTINGENCY TOTAL GENERAL FUND 10,186,439 57,487,819 - 67,674,258 35,652,260 13,386,754 1,360,600 12,274,644 - 5,000,000 67,674,258 HIGHWAY FUND 736,183 4,432,608 1,500,000 6,668,791 1,262,861 1,003,930 4,202,000 - - 200,000 6,668,791 GRANTS & CONTRIBUTIONS 1,218,452 3,412,700 138,000 4,769,152 - 1,044,400 3,224,752 - - 500,000 4,769,152 SEIZURES & FORFEITURES 97,000 103,000 - 200,000 - 100,000 - - - 100,000 200,000 COMMUNITY CENTER FUND 949,233 9,708,452 - 10,657,685 1,114,639 5,294,659 1,820,500 1,717,203 210,684 500,000 10,657,685 MUNICIPAL DEBT SVC FUND 50,000 185,146 3,902,708 4,137,854 - 10,000 - - 4,027,854 100,000 4,137,854 WRSDIF FUND 8,519,951 1,053,349 2,880,000 12,453,300 - 178,714 11,950,000 - 74,586 250,000 12,453,300 TWDIF FUND 4,619 301,810 - 306,429 - 6,429 - - - 300,000 306,429 PAG/RTA FUND 522,875 65,125 - 588,000 - 30,000 438,000 - - 120,000 588,000 PARKS & REC IMPACT FEE FUND 650,220 137,780 - 788,000 - 3,000 600,000 - - 185,000 788,000 POLICE IMPACT FEE FUND 58,176 39,234 - 97,410 - 857 - 46,553 - 50,000 97,410 CAPITAL FUND 15,648,616 1,727,540 10,000,000 27,376,156 254,765 - 23,121,391 1,500,000 - 2,500,000 27,376,156 REC IN LIEU FEE FUND 16,510 100 - 16,610 - - - - - 16,610 16,610 BENEFIT SELF INSURANCE FUND 500,000 4,289,851 - 4,789,851 - 4,289,851 - - - 500,000 4,789,851 WATER UTILITY FUND 4,953,642 19,360,500 - 24,314,142 3,870,809 11,176,793 2,239,792 2,882,308 3,644,440 500,000 24,314,142 STORMWATER UTILITY FUND 350,961 1,721,500 - 2,072,461 947,302 369,159 506,000 - - 250,000 2,072,461 44,462,877 104,026,514 18,420,708 166,910,099 43,102,636 36,894,546 49,463,035 18,420,708 7,957,564 11,071,610 166,910,099 (18,420,708) (18,420,708) 148,489,391$ 148,489,391$ FY 2023/24 BUDGETFY 2023/24 BUDGETDoes not include non cash outlays for depreciation or amortizationFund Balance ReportFY 2023/24 TENTATIVE BUDGETREVENUES EXPENDITURESLess Transfers InLess Transfers Out
Fiscal Year 2023/24
Special Capital Internal
General Revenue Enterprise Project Service Debt Service 2023-2024
Fund Funds Funds Funds Fund Funds Total
Revenues and Other Sources
Taxes 26,398,318$ 3,726,016$ -$ -$ -$ -$ 30,124,334$
Licenses and Permits 1,717,118 25,000 - - - - 1,742,118
Fines 125,000 - - - - - 125,000
Water Sales - - 16,060,000 - - - 16,060,000
Charges for Services 3,204,246 5,785,386 4,702,000 28,125 - - 13,719,757
State Shared Revenue 22,953,222 4,334,608 - - - - 27,287,830
Intergovernmental 1,869,500 - - - - - 1,869,500
Grants 657,415 2,827,700 210,000 650,000 - 25,146 4,370,261
Seizures & Forfeitures - 100,000 - - - - 100,000
Impact Fees - - - 1,362,473 - - 1,362,473
Interest Income 300,000 133,000 110,000 276,800 - 60,000 879,800
Miscellaneous 263,000 725,050 - 1,007,540 4,289,851 100,000 6,385,441
Other Financing Sources - 1,638,000 - 12,880,000 - 3,902,708 18,420,708
Total 57,487,819$ 19,294,760$ 21,082,000$ 16,204,938$ 4,289,851$ 4,087,854$ 122,447,222$
Expenditures and Other Uses
General Government
Town Council 209,203$ -$ -$ -$ -$ -$ 209,203$
Town Manager's Office 1,638,716 - - - - - 1,638,716
Clerk 419,897 - - - - - 419,897
Human Resources 590,520 - - - - - 590,520
Finance 850,456 - - - - - 850,456
Innovation & Technology 6,271,309 - - - - - 6,271,309
Legal 1,132,503 - - - - - 1,132,503
Town Court 1,010,662 - - - - - 1,010,662
General Administration 2,555,536 600,000 - 10,286 4,289,851 10,000 7,465,673
Debt Service - 210,684 - - - 4,027,854 4,238,538
Capital Fund Projects - - - 23,121,391 - - 23,121,391
Comm. & Econ Dev. 3,882,445 - - - - - 3,882,445
Parks & Recreation 4,664,040 8,903,516 - 600,000 - - 14,167,556
Police 20,410,591 590,500 - - - - 21,001,091
Public Works 6,763,736 8,973,725 1,822,461 254,765 - - 17,814,687
Water Utility - - 17,287,394 12,128,714 - - 29,416,108
Water Utility Debt Service
Principal - - 3,300,830 71,424 - - 3,372,254
Interest - - 343,610 3,162 - - 346,772
Roadway Improvements - - - 468,000 - - 468,000
Other Financing Uses 12,274,644 1,717,203 2,882,308 1,546,553 - - 18,420,708
Total 62,674,258$ 20,995,628$ 25,636,603$ 38,204,295$ 4,289,851$ 4,037,854$ 155,838,489$
Increase/(Decrease) (5,186,439) (1,700,868) (4,554,603) (21,999,357) - 50,000 (33,391,267)
Beginning Fund Balance 22,823,906$ 2,961,909$ 13,187,960$ 44,974,453$ 2,869,952$ 207,718$ 87,025,898$
Ending Fund Balance 17,637,467$ 1,261,041$ 8,633,357$ 22,975,096$ 2,869,952$ 257,718$ 53,634,631$
(1) The General Fund is planned to decrease by $5,186,439 due to a $10 million transfer of fund balance to the Capital Fund.
(2) Special Revenue Funds are planned to decrease by $1,700,868 for planned capital projects.
(3) Enterprise Funds are planned to decrease by $4,554,603 due to one-time capital projects and equipment.
(4) Capital Project Funds are planned to decrease by $21,999,357 due to one-time capital projects and equipment.
(5) The Debt Service Funds are planned to increase by $50,000 due to interest income.
Fund Balances
This table depicts the estimated beginning fund balance at July 1, 2023, the budgeted revenues and expenditures for FY
2023/24 and the projected ending fund balance at June 30, 2024.
(1)(2)(3)(4)(5)
Fiscal Year 2023/24
General Fund
Fund Summary
FY 2023 FY 2023 FY 2024 Variance with Variance with
Budget Projected Budget Budget ($) Budget (%)
Revenues and Other Sources
Local Taxes 25,270,959 27,031,462 26,398,318 1,127,359 4.5%
Licenses and Permits 2,223,824 2,636,961 1,717,118 (506,706) -22.8%
Federal Grants 380,000 569,000 582,415 202,415 53.3%
State Grants 75,000 90,000 75,000 - 0.0%
State Shared Revenues 17,505,693 18,405,604 22,953,222 5,447,529 31.1%
Intergovernmental 1,613,000 1,600,500 1,869,500 256,500 15.9%
Charges for Services 3,046,515 2,877,610 3,204,246 157,731 5.2%
Fines 125,000 85,000 125,000 - 0.0%
Interest Income 150,000 300,000 300,000 150,000 100.0%
Miscellaneous 249,000 611,900 263,000 14,000 5.6%
Total 50,638,991$ 54,208,037$ 57,487,819$ 6,848,828$ 13.5%
Expenditures and Other Uses
Personnel 34,876,210 33,379,955 35,652,260 776,050 2.2%
Operations & Maintenance 11,809,548 11,549,240 13,386,754 1,577,206 13.4%
Capital Outlay 1,387,725 848,382 1,360,600 (27,125) -2.0%
Transfer to Capital Fund 13,500,000 13,500,000 10,000,000 (3,500,000) -25.9%
Transfer to Grants Fund 898,012 448,012 138,000 (760,012) -84.6%
Transfer to Debt Service Fund 2,048,965 2,048,965 2,136,644 87,679 4.3%
Total 64,520,460$ 61,774,554$ 62,674,258$ (1,846,202)$ -2.9%
Increase/(Decrease) (13,881,469)$ (7,566,517)$ (5,186,439)$
Beginning Fund Balance 22,823,906
Ending Fund Balance 17,637,467
30% Coverage 15,119,884
Fiscal Year 2023/24
Highway Fund
Fund Summary
FY 2023 FY 2023 FY 2024 Variance with Variance with
Budget Projected Budget Budget ($) Budget (%)
Revenues and Other Sources
Licenses and Permits 25,000 26,500 25,000 - 0.0%
State Shared Revenues 4,127,100 4,127,100 4,334,608 207,508 5.0%
Interest Income 8,000 110,000 70,000 62,000 775.0%
Miscellaneous 3,000 7,825 3,000 - 0.0%
Transfer from Capital Fund - - 1,500,000 1,500,000 0.0%
Total 4,163,100$ 4,271,425$ 5,932,608$ 1,769,508$ 42.5%
Expenditures and Other Uses
Personnel 1,202,574 1,196,095 1,262,861 60,287 5.0%
Operations & Maintenance 823,615 766,518 1,003,930 180,315 21.9%
Capital Outlay 2,626,000 2,641,398 4,202,000 1,576,000 60.0%
Total 4,652,189$ 4,604,011$ 6,468,791$ 1,816,602$ 39.0%
Increase/(Decrease) (489,089)$ (332,586)$ (536,183)$
Beginning Fund Balance 874,400$
Ending Fund Balance 338,217$
Fiscal Year 2023/24
Grants & Contributions Fund
Fund Summary
FY 2023 FY 2023 FY 2024 Variance with Variance with
Budget Projected Budget Budget ($) Budget (%)
Revenues and Other Sources
Federal Grants 8,542,000 5,682,000 2,604,300 (5,937,700) -69.5%
State Grants 279,047 276,695 223,400 (55,647) -19.9%
Interest Income 50 25,000 25,000 24,950 49900.0%
Miscellaneous 1,500,000 - 560,000 (940,000) -62.7%
Transfer from General Fund 898,012 448,012 138,000 (760,012) -84.6%
Total 11,219,109$ 6,431,707$ 3,550,700$ (7,668,409)$ -68.4%
Expenditures and Other Uses
Operations & Maintenance 2,179,750 599,750 1,044,400 (1,135,350) -52.1%
Capital Outlay 3,561,309 2,593,974 3,224,752 (336,557) -9.5%
Transfer to Water Utility Fund 5,378,000 2,373,337 - (5,378,000) -100.0%
Total 11,119,059$ 5,567,061$ 4,269,152$ (6,849,907)$ -61.6%
Increase/(Decrease) 100,050$ 864,646$ (718,452)$
Beginning Fund Balance 864,646$
Ending Fund Balance 146,194$
Fiscal Year 2023/24
Seizures & Forfeitures Fund
Fund Summary
FY 2023 FY 2023 FY 2024 Variance with Variance with
Budget Projected Budget Budget ($) Budget (%)
Revenues and Other Sources
Seizures and Forfeitures 100,000 60,000 100,000 - 0.0%
Interest Income 2,000 5,000 3,000 1,000 50.0%
Total 102,000$ 65,000$ 103,000$ 1,000$ 1.0%
Expenditures and Other Uses
Operations & Maintenance 100,000 80,000 100,000 - 0.0%
Total 100,000$ 80,000$ 100,000$ -$ 0.0%
Increase/(Decrease) 2,000$ (15,000)$ 3,000$
Beginning Fund Balance 222,863$
Ending Fund Balance -$
Fiscal Year 2023/24
Community Center Fund
Fund Summary
FY 2023 FY 2023 FY 2024 Variance with Variance with
Budget Projected Budget Budget ($) Budget (%)
Revenues and Other Sources
Local Sales Tax 3,477,236 3,714,218 3,726,016 248,780 7.2%
Charges for Services 4,868,049 5,775,940 5,785,386 917,337 18.8%
Interest Income 3,000 35,000 35,000 32,000 1066.7%
Miscellaneous 159,050 173,343 162,050 3,000 1.9%
Total 8,507,335$ 9,698,501$ 9,708,452$ 1,201,117$ 14.1%
Expenditures and Other Uses
Personnel 920,274 1,017,000 1,114,639 194,365 21.1%
Operations & Maintenance 5,296,236 5,391,991 5,294,659 (1,577) 0.0%
Debt Service 202,682 191,480 210,684 8,002 3.9%
Capital Outlay 2,666,700 1,853,347 1,820,500 (846,200) -31.7%
Transfer to Debt Service Fund 2,028,066 2,028,066 1,717,203 (310,863) -15.3%
Transfer to Capital Fund 2,057,314 4,077,075 - (2,057,314) -100.0%
Total 13,171,272$ 14,558,959$ 10,157,685$ (3,013,587)$ -22.9%
Increase/(Decrease) (4,663,937)$ (4,860,458)$ (449,233)$
Beginning Fund Balance 1,000,000$
Ending Fund Balance 550,767$
Fiscal Year 2023/24
Municipal Debt Service Fund
Fund Summary
FY 2023 FY 2023 FY 2024 Variance with Variance with
Budget Projected Budget Budget ($) Budget (%)
Revenues and Other Sources
Federal Subsidy 30,088 30,088 25,146 (4,942) -16.4%
Interest Income 500 60,000 60,000 59,500 11900.0%
Miscellaneous 100,000 93,082 100,000 - 0.0%
Transfer from General Fund 2,048,965 2,048,965 2,136,644 87,679 4.3%
Transfer from Police Impact Fee Fund 121,500 121,500 46,553 (74,947) -61.7%
Transfer from Comm Center Fund 2,028,066 2,028,066 1,717,203 (310,863) -15.3%
Transfer from Water Utility Fund 2,440 2,440 2,308 (132) -5.4%
Total 4,331,559$ 4,384,141$ 4,087,854$ (243,705)$ -5.6%
Expenditures and Other Uses
Operations & Maintenance 10,000 9,500 10,000 - 0.0%
Debt Service 4,331,059 4,331,059 4,027,854 (303,205) -7.0%
Total 4,341,059$ 4,340,559$ 4,037,854$ (303,205)$ -7.0%
Increase/(Decrease) (9,500)$ 43,582$ 50,000$
Beginning Fund Balance 207,718$
Ending Fund Balance 257,718$
Fiscal Year 2023/24
Water Resource and System Development Impact Fee Fund
Fund Summary
FY 2023 FY 2023 FY 2024 Variance with Variance with
Budget Projected Budget Budget ($) Budget (%)
Revenues and Other Sources
Impact Fees 1,101,346 1,585,465 903,349 (197,997) -18.0%
Interest Income 150,000 150,000 150,000 - 0.0%
Transfer From Water Utility Fund 660,000 660,000 2,880,000 2,220,000 336.4%
Total 1,911,346$ 2,395,465$ 3,933,349$ 2,022,003$ 105.8%
Expenditures and Other Uses
Operations & Maintenance 214,000 185,286 178,714 (35,286) -16.5%
Debt Service 337,317 337,317 74,586 (262,731) -77.9%
Capital Outlay 2,735,688 1,385,688 11,950,000 9,214,312 336.8%
Total 3,287,005$ 1,908,291$ 12,203,300$ 8,916,295$ 271.3%
Increase/(Decrease) (1,375,659)$ 487,174$ (8,269,951)$
Beginning Fund Balance 18,031,606$
Ending Fund Balance 9,761,655$
Fiscal Year 2023/24
Townwide Roadway Development Impact Fee Fund
Fund Summary
FY 2023 FY 2023 FY 2024 Variance with Variance with
Budget Projected Budget Budget ($) Budget (%)
Revenues and Other Sources
Impact Fees 388,300 213,366 286,810 (101,490) -26.1%
Interest Income 4,000 15,000 15,000 11,000 275.0%
Total 392,300$ 228,366$ 301,810$ (90,490)$ -23.1%
Expenditures and Other Uses
Operations & Maintenance 15,000 8,571 6,429 (8,571) -57.1%
Capital Outlay 750,000 - - (750,000) -100.0%
Total 765,000$ 8,571$ 6,429$ (758,571)$ -99.2%
Increase/(Decrease) (372,700)$ 219,795$ 295,381$
Beginning Fund Balance 2,159,483$
Ending Fund Balance 2,454,864$
Fiscal Year 2023/24
PAG/RTA Fund
Fund Summary
FY 2023 FY 2023 FY 2024 Variance with Variance with
Budget Projected Budget Budget ($) Budget (%)
Revenues and Other Sources
State Grants 796,574 796,574 30,000 (766,574) -96.2%
Charges for Services 28,125 28,125 28,125 - 0.0%
Interest Income - 7,000 7,000 7,000 0.0%
Total 824,699$ 831,699$ 65,125$ (759,574)$ -92.1%
Expenditures and Other Uses
Operations & Maintenance 200,000 200,000 30,000 (170,000) -85.0%
Capital Outlay 1,108,574 1,004,624 438,000 (670,574) -60.5%
Total 1,308,574$ 1,204,624$ 468,000$ (840,574)$ -64.2%
Increase/(Decrease) (483,875) (372,925) (402,875)
Beginning Fund Balance 500,441$
Ending Fund Balance 97,566$
Fiscal Year 2023/24
Parks and Recreation Impact Fee Fund
Fund Summary
FY 2023 FY 2023 FY 2024 Variance with Variance with
Budget Projected Budget Budget ($) Budget (%)
Revenues and Other Sources
Impact Fees 165,520 129,920 133,280 (32,240) -19.5%
Interest Income 3,000 4,500 4,500 1,500 50.0%
Total 168,520$ 134,420$ 137,780$ (30,740)$ -18.2%
Expenditures and Other Uses
Operations & Maintenance 7,000 4,000 3,000 (4,000) -57.1%
Capital Outlay - - 600,000 600,000 0.0%
Total 7,000$ 4,000$ 603,000$ 596,000$ 8514.3%
Increase/(Decrease) 161,520$ 130,420$ (465,220)$
Beginning Fund Balance 639,894$
Ending Fund Balance 174,674$
Fiscal Year 2023/24
Police Impact Fee Fund
Fund Summary
FY 2023 FY 2023 FY 2024 Variance with Variance with
Budget Projected Budget Budget ($) Budget (%)
Revenues and Other Sources
Impact Fees 57,700 50,096 39,034 (18,666) -32.4%
Interest Income 500 200 200 (300) -60.0%
Total 58,200$ 50,296$ 39,234$ (18,966)$ -32.6%
Expenditures and Other Uses
Operations & Maintenance 2,000 1,143 857 (1,143) -57.2%
Transfer to Debt Service Fund 121,500 121,500 46,553 (74,947) -61.7%
Total 123,500$ 122,643$ 47,410$ (76,090)$ -61.6%
Increase/(Decrease) (65,300)$ (72,347)$ (8,176)$
Beginning Fund Balance 60,212$
Ending Fund Balance 52,036$
Fiscal Year 2023/24
Capital Fund
Fund Summary
FY 2023 FY 2023 FY 2024 Variance with Variance with
Budget Projected Budget Budget ($) Budget (%)
Revenues and Other Sources
State Grants 420,000 - 620,000 200,000 47.6%
Interest Income 25,000 350,000 100,000 75,000 300.0%
Miscellaneous 200,000 140,000 115,000 (85,000) -42.5%
Vehicle Reserves 820,010 820,010 892,540 72,530 8.8%
Transfer from General Fund 13,500,000 13,500,000 10,000,000 (3,500,000) -25.9%
Transfer from Community Center Fund 2,057,314 4,077,075 - (2,057,314) -100.0%
Total 17,022,324$ 18,887,085$ 11,727,540$ (5,294,784)$ -31.1%
Expenditures and Other Uses
Personnel 261,962 236,528 254,765 (7,197) -2.7%
Operations & Maintenance - 4,162 - - 0.0%
Capital Outlay 28,673,613 19,033,018 23,121,391 (5,552,222) -19.4%
Transfer to Highway Fund - - 1,500,000 1,500,000 0.0%
Total 28,935,575$ 19,273,708$ 24,876,156$ (4,059,419)$ -14.0%
Increase/(Decrease) (11,913,251)$ (386,623)$ (13,148,616)$
Beginning Fund Balance 23,566,307
Ending Fund Balance 10,417,691$
Fiscal Year 2023/24
Recreation In Lieu Fee Fund
Fund Summary
FY 2023 FY 2023 FY 2024 Variance with Variance with
Budget Projected Budget Budget ($) Budget (%)
Revenues and Other Sources
Charges for Services - - - - 0.0%
Interest Income 100 100
Miscellaneous - - - - 0.0%
Total -$ 100$ 100$ 100$ 0.0%
Expenditures and Other Uses
Capital Outlay - - - - 0.0%
Total -$ -$ -$ -$ 0.0%
Increase/(Decrease) -$ 100$ 100$
Beginning Fund Balance 16,510
Ending Fund Balance 16,610$
Fiscal Year 2023/24
Benefit Self Insurance Fund
Fund Summary
FY 2023 FY 2023 FY 2024 Variance with Variance with
Budget Projected Budget Budget ($) Budget (%)
Revenues and Other Sources
Self Ins Premiums - Employer 2,820,956 2,816,388 2,886,798 65,842 2.3%
Self Ins Premiums - Employee 636,173 682,431 699,492 63,319 10.0%
COBRA Premiums 25,000 68,000 68,000 43,000 172.0%
Retiree Premiums 46,000 46,000 46,000 - 0.0%
UHC Wellness Program 20,000 20,000 20,000 - 0.0%
Interest Income 5,000 20,000 25,000 20,000 400.0%
Miscellaneous 211,348 565,839 544,561 333,213 157.7%
Total 3,764,477$ 4,218,658$ 4,289,851$ 525,374$ 14.0%
Expenditures and Other Uses
Outside Professional Services 784,128 860,000 934,450 150,322 19.2%
Wellness Program 40,000 37,730 40,000 - 0.0%
Claim Settlement 2,940,349 3,320,928 3,315,401 375,052 12.8%
Total 3,764,477$ 4,218,658$ 4,289,851$ 525,374$ 14.0%
Increase/(Decrease) - - -$
Beginning Fund Balance 2,869,952$
Ending Fund Balance 2,869,952$
Fiscal Year 2023/24
Water Utility Fund
Fund Summary
FY 2023 FY 2023 FY 2024 Variance with Variance with
Budget Projected Budget Budget ($) Budget (%)
Revenues and Other Sources
Charges for Services 3,224,000 2,962,467 3,200,500 (23,500) -0.7%
Interest Income 100,000 100,000 100,000 - 0.0%
Miscellaneous - 135,768 - - 0.0%
Water Sales 15,383,000 14,186,000 16,060,000 677,000 4.4%
Transfer from Grants Fund 5,378,000 2,373,337 - (5,378,000) -100.0%
Total 24,085,000$ 19,757,572$ 19,360,500$ (4,724,500)$ -19.6%
Expenses and Other Uses
Personnel 3,653,064 3,473,285 3,870,809 217,745 6.0%
Operations & Maintenance 13,419,261 12,840,997 15,128,023 1,708,762 12.7%
Capital Outlay 2,074,290 2,055,650 2,239,792 165,502 8.0%
Debt Service 4,643,255 4,643,255 3,644,440 (998,815) -21.5%
Transfer to Debt Service Fund 2,440 2,440 2,308 (132) -5.4%
Transfer to Impact Fee Fund 660,000 660,000 2,880,000 2,220,000 336.4%
Total 24,452,310$ 23,675,627$ 27,765,372$ 3,313,062$ 13.5%
Cash Total * 20,141,627$ 23,814,142$ 23,814,142$ 0.0%
Increase/(Decrease) 24,085,000$ (384,055)$ (4,453,642)$
Beginning Fund Balance 12,437,412
Ending Fund Balance 7,983,770$
* Total expenses less non-cash outlays for depreciation & amortization
Fiscal Year 2023/24
Stormwater Utility Fund
Fund Summary
FY 2023 FY 2023 FY 2024 Variance with Variance with
Budget Projected Budget Budget ($) Budget (%)
Revenues and Other Sources
Federal Grants - - 210,000 - 0.0%
Charges for Services 1,492,500 1,460,310 1,501,500 9,000 0.6%
Interest Income 1,500 10,000 10,000 8,500 566.7%
Total 1,494,000$ 1,470,310$ 1,721,500$ 227,500$ 15.2%
Expenses and Other Uses
Personnel 826,266 848,408 947,302 121,036 14.6%
Operations & Maintenance 573,245 573,245 548,159 (25,086) -4.4%
Capital Outlay 884,513 600,250 506,000 (378,513) -42.8%
Total 2,284,024$ 2,021,903$ 2,001,461$ (282,563)$ -12.4%
Cash Total * 2,107,024$ 1,844,903$ 1,822,461$ (284,563)$ -13.5%
Increase/(Decrease) (613,024)$ (374,593)$ (100,961)$
Beginning Fund Balance 750,548
Ending Fund Balance 649,587$
* Total expenses less non-cash outlays for depreciation & amortization
Town of Oro Valley
Table of Contents
Fiscal year 2024
Resolution for the adoption of the budget
Schedule A—Summary Schedule of estimated revenues and expenditures/expenses
Schedule B—Tax levy and tax rate information
Schedule G—Full-time employees and personnel compensation
Schedule C—Revenues other than property taxes
Schedule D—Other financing sources/(uses) and interfund transfers
Schedule E—Expenditures/expenses by fund
Schedule F—Expenditures/expenses by department (as applicable)
3/22 Arizona Auditor General Official City/Town Budget Forms
Fiscal yearGeneral FundSpecial Revenue Fund Debt Service FundCapital Projects Fund Permanent FundEnterprise Funds AvailableInternal Service Funds Total all funds2023 Adopted/adjusted budgeted expenditures/expenses* E153,073,483 22,979,140 4,441,059 40,033,234 - 22,912,894 4,264,477 147,704,287 2023 Actual expenditures/expenses** E245,777,577 16,331,553 4,340,559 22,400,337 - 18,854,545 4,218,658 111,923,229 2024Beginning fund balance/(deficit) or net position/(deficit) at July 1*** 322,823,906 2,961,909 207,718 44,974,453 - 13,187,960 2,869,952 87,025,898 2024 Primary property tax levyB4- - 2024 Secondary property tax levy B5- 2024 Estimated revenues other than property taxes C657,487,819 17,656,760 185,146 3,324,938 - 21,082,000 4,289,851 104,026,514 2024 Other financing sources D7- - - - - - - - 2024 Other financing (uses) D8- - - - - - - - 2024 Interfund transfers in D9- 1,638,000 3,902,708 12,880,000 - - - 18,420,708 2024 Interfund Transfers (out) D1012,274,644 1,717,203 - 1,546,553 - 2,882,308 - 18,420,708 2024Line 11: Reduction for fund balance reserved for future budget year expenditures Maintained for future debt retirement- Maintained for future capital projects- Maintained for future financial stability- 2024 Total financial resources available1268,037,081 20,539,466 4,295,572 59,632,838 - 31,387,652 7,159,803 191,052,412 2024Budgeted expenditures/expensesE1355,399,614 20,578,425 4,137,854 40,079,352 - 23,504,295 4,789,851 148,489,391 Expenditure limitation comparison2023 20241Budgeted expenditures/expenses147,704,287$ 148,489,391$ 2Add/subtract: estimated net reconciling items3Budgeted expenditures/expenses adjusted for reconciling items 147,704,287 148,489,391 4Less: estimated exclusions5Amount subject to the expenditure limitation147,704,287$ 148,489,391$ 6EEC expenditure limitation$ $ X******Town of Oro ValleySummary Schedule of estimated revenues and expenditures/expensesFiscal year 2024Includes actual amounts as of the date the proposed budget was prepared, adjusted for estimated activity for the remainder of the fiscal year.Amounts on this line represent beginning fund balance/(deficit) or net position/(deficit) amounts except for nonspendable amounts (e.g., prepaids and inventories) or amounts legally or contractually required to be maintained intact (e.g., principal of a permanent fund).SchFundsIncludes expenditure/expense adjustments approved in the current year from Schedule E. The city/town does not levy property taxes and does not have special assessment districts for which property taxes are levied. Therefore, Schedule B has been omitted.113/22 Arizona Auditor GeneralSchedule AOfficial City/Town Budget Forms
Estimated
revenues Actual revenues*
Estimated
revenues
2023 2023 2024
General Fund
Local taxes
Local Sales Tax $ 24,505,959 $ 26,266,462 $ 25,633,318
Cable Franchise Tax 765,000 765,000 765,000
Licenses and permits
Licenses 202,500 200,000 205,000
Permits 1,863,824 2,169,461 1,364,118
Fees 157,500 267,500 148,000
Intergovernmental
State/County Shared 17,505,693 18,405,604 22,953,222
State Grants 75,000 90,000 75,000
Federal Grants 380,000 569,000 582,415
Reimbursements 1,613,000 1,600,500 1,869,500
Charges for services
Reimbursements 194,400 194,400 194,400
Fees 1,012,932 923,027 1,002,558
Other 1,839,183 1,760,183 2,007,288
Fines and forfeits
Fines 125,000 85,000 125,000
Interest on investments
Interest Income 150,000 300,000 300,000
Miscellaneous
Miscellaneous 249,000 611,900 263,000
Total General Fund $ 50,638,991 $ 54,208,037 $ 57,487,819
*
Town of Oro Valley
Revenues other than property taxes
Fiscal Year 2024
Includes actual revenues recognized on the modified accrual or accrual basis as of the date the proposed budget was
prepared, plus estimated revenues for the remainder of the fiscal year.
Source of revenues
3/22 Arizona Auditor General Schedule C Official City/Town Budget Forms
Estimated
revenues Actual revenues*
Estimated
revenues
2023 2023 2024
Town of Oro Valley
Revenues other than property taxes
Fiscal Year 2024
Source of revenues
Special revenue funds
Highway User Revenue Fund
Highway User Fuel Tax $ 4,127,100 $ 4,127,100 $ 4,334,608
Permits 25,000 26,500 25,000
Interest Income 8,000 110,000 70,000
Other 3,000 7,825 3,000
$ 4,163,100 $ 4,271,425 $ 4,432,608
Grants and Contributions Fund
Federal Grants $ 8,542,000 $ 5,682,000 $ 2,604,300
State Grants 279,047 276,695 223,400
Interest Income 50 25,000 25,000
Miscellaneous 1,500,000 560,000
$ 10,321,097 $ 5,983,695 $ 3,412,700
Services and Forfeitures
Seizures and Forfeitures $ 100,000 $ 10,000 $ 100,000
Interest Income 2,000 5,000 3,000
$ 102,000 $ 15,000 $ 103,000
Community Center Fund
Local Sales Tax $ 3,477,236 $ 3,714,218 $ 3,726,016
Charges for Services 4,868,049 5,775,940 5,785,386
Interest Income 3,000 35,000 35,000
Other 159,050 173,343 162,050
$ 8,507,335 $ 9,698,501 $ 9,708,452
Total special revenue funds $ 23,093,532 $ 19,968,621 $ 17,656,760
* Includes actual revenues recognized on the modified accrual or accrual basis as of the date the proposed budget was
prepared, plus estimated revenues for the remainder of the fiscal year.
3/22 Arizona Auditor General Schedule C Official City/Town Budget Forms
Estimated
revenues Actual revenues*
Estimated
revenues
2023 2023 2024
Town of Oro Valley
Revenues other than property taxes
Fiscal Year 2024
Source of revenues
Debt service funds
Municipal Debt Service Fund
Federal Grants $ 30,088 $ 30,088 $ 25,146
Interest Income 500 60,000 60,000
Miscellaneous 100,000 93,082 100,000
$ 130,588 $ 183,170 $ 185,146
Total debt service funds $ 130,588 $ 183,170 $ 185,146
Capital projects funds
Water Rescources Development Impact Fee Fund
Development Impact Fees $ 1,101,346 $ 1,585,465 $ 903,349
Interest Income 150,000 150,000 150,000
$ 1,251,346 $ 1,735,465 $ 1,053,349
Townwide Roadway Development Impact Fee Fund
Development Impact Fees $ 388,300 $ 213,366 $ 286,810
Interest Income 4,000 15,000 15,000
$ 392,300 $ 228,366 $ 301,810
Parks and Recreation Impact Fee Fund
Development Impact Fees $ 165,520 $ 129,920 $ 133,280
Interest Income 3,000 4,500 4,500
$ 168,520 $ 134,420 $ 137,780
Police Impact Fee Fund
Development Impact Fees $ 57,700 $ 50,061 $ 39,034
Interest Income 500 200 200
$ 58,200 $ 50,261 $ 39,234
Capital Fund
Miscellaneous $ 1,020,010 $ 960,010 $ 1,007,540
State Grants 420,000 620,000
Interest Income 25,000 350,000 100,000
$ 1,465,010 $ 1,310,010 $ 1,727,540
PAG/RTA Fund
State Grants $ 796,574 $ 796,574 $ 30,000
Other 28,125 28,125 28,125
Interest Income 7,000 7,000
$ 824,699 $ 831,699 $ 65,125
Recreation in Lieu Fee Fund
Interest Income $ $ 100 $ 100
$ $ 100 $ 100
Total capital projects funds $ 4,160,075 $ 4,290,321 $ 3,324,938
* Includes actual revenues recognized on the modified accrual or accrual basis as of the date the proposed budget was
prepared, plus estimated revenues for the remainder of the fiscal year.
3/22 Arizona Auditor General Schedule C Official City/Town Budget Forms
Estimated
revenues Actual revenues*
Estimated
revenues
2023 2023 2024
Town of Oro Valley
Revenues other than property taxes
Fiscal Year 2024
Source of revenues
Enterprise funds
Water Utility Fund
Water Sales $ 15,383,000 $ 14,186,000 $ 16,060,000
Charges for Services 3,224,000 2,962,467 3,200,500
Interest Income 100,000 100,000 100,000
Miscellaneous 135,768
$ 18,707,000 $ 17,384,235 $ 19,360,500
Stormwater Utility Fund
Charges for Services $ 1,492,500 $ 1,460,310 $ 1,501,500
Interest Income 1,500 10,000 10,000
Federal Grants 210,000
$ 1,494,000 $ 1,470,310 $ 1,721,500
Total enterprise funds $ 20,201,000 $ 18,854,545 $ 21,082,000
*
Internal service funds
Benefit Self Insurance Fund
Interest Income $ 5,000 $ 20,000 $ 25,000
Miscellaneous 3,759,477 4,198,658 4,264,851
$ 3,764,477 $ 4,218,658 $ 4,289,851
Total internal service funds $ 3,764,477 $ 4,218,658 $ 4,289,851
Total all funds $ 101,988,663 $ 101,723,352 $ 104,026,514
* Includes actual revenues recognized on the modified accrual or accrual basis as of the date the proposed budget was
prepared, plus estimated revenues for the remainder of the fiscal year.
Includes actual revenues recognized on the modified accrual or accrual basis as of the date the proposed budget was
prepared, plus estimated revenues for the remainder of the fiscal year.
3/22 Arizona Auditor General Schedule C Official City/Town Budget Forms
Fund Sources (Uses)In (Out)
General Fund
Transfer to Capital Fund $ $ $ $ 10,000,000
Transfer to Grants Fund 138,000
Transfer to Debt Service Fund 2,136,644
Total General Fund $ $ $ $ 12,274,644
Special revenue funds
Grants and Contributions Fund $ $ $ 138,000 $
Community Center Fund 1,717,203
Highway Fund 1,500,000
Total special revenue funds $ $ $ 1,638,000 $ 1,717,203
Debt service funds
Municipal Debt Service Fund $ $ $ 3,902,708 $
Total debt service funds $ $ $ 3,902,708 $
Capital projects funds
Water Resource Impact Fee Fund $ $ $ 2,880,000 $
Police Impact Fee Fund 46,553
Capital Fund 10,000,000 1,500,000
Total capital projects funds $ $ $ 12,880,000 $ 1,546,553
Enterprise funds
Water Utility Fund $ $ $ $ 2,882,308
Total enterprise funds $ $ $ $ 2,882,308
Total all funds $ $ $ 18,420,708 $ 18,420,708
2024 2024
Town of Oro Valley
Other financing sources/(uses) and interfund transfers
Fiscal year 2024
Other financing Interfund transfers
3/22 Arizona Auditor General Schedule D Official City/Town Budget Forms
Adopted
budgeted
expenditures/
expenses
Expenditure/
expense
adjustments
approved
Actual
expenditures/
expenses*
Budgeted
expenditures/
expenses
Fund/Department 2023 2023 2023 2024
General Fund
Council $ 199,145 $ $ 199,145 $ 209,203
Clerk 422,705 431,246 419,897
Town Manager's Office 1,160,173 189,603 1,270,531 1,638,716
Human Resources 569,905 547,534 590,520
Finance 1,111,460 (189,603) 880,810 850,456
Innovation & Technology 4,797,809 4,486,939 6,271,309
General Administration 4,077,234 3,306,623 2,555,536
Legal 1,015,753 1,023,542 1,132,503
Community & Economic Development 3,280,764 3,064,158 3,882,445
Parks & Recreation 3,775,162 3,699,552 4,664,040
Police 20,403,472 20,089,276 20,410,591
Town Court 1,059,674 959,785 1,010,662
Public Works 6,200,227 5,818,436 6,763,736
Contingency Reserve 5,000,000 5,000,000
Total General Fund $ 53,073,483 $ $ 45,777,577 $ 55,399,614
Special revenue funds
Highway User Revenue Fund $ 4,852,189 $ $ 4,604,011 $ 6,668,791
Grants and Contributions Fund 5,841,059 3,193,724 4,769,152
Seizures and Forfeitures 200,000 80,000 200,000
Community Center Fund 12,085,892 8,453,818 8,940,482
Total special revenue funds $ 22,979,140 $ $ 16,331,553 $ 20,578,425
Debt service funds
Municipal Debt Service Fund $ 4,441,059 $ $ 4,340,559 $ 4,137,854
Total debt service funds $ 4,441,059 $ $ 4,340,559 $ 4,137,854
Capital projects funds
Water Resources Dev Impact Fee Fun $ 3,537,005 $ $ 1,908,291 $ 12,453,300
Townwide Roadway Impact Fee Fund 1,015,000 8,571 306,429
Parks and Recreation Impact Fee Fund 168,520 4,000 788,000
Police Impact Fee Fund 52,000 1,143 50,857
Recreation in Lieu Fee Fund 16,560 16,610
Capital Fund 33,935,575 19,273,708 25,876,156
PAG/RTA Fund 1,308,574 1,204,624 588,000
Total capital projects funds $ 40,033,234 $ $ 22,400,337 $ 40,079,352
Enterprise funds
Water Utility Enterprise Fund $ 20,555,870 $ $ 17,384,235 $ 21,431,834
Stormwater Utility Enterprise Fund 2,357,024 1,470,310 2,072,461
Total enterprise funds $ 22,912,894 $ $ 18,854,545 $ 23,504,295
Internal service funds
Benefit Self Insurance Fund $ 4,264,477 $ $ 4,218,658 $ 4,789,851
Total internal service funds $ 4,264,477 $ $ 4,218,658 $ 4,789,851
Total all funds $ 147,704,287 $ $ 111,923,229 $ 148,489,391
*
Expenditures/expenses by fund
Fiscal year 2024
Town of Oro Valley
Includes actual expenditures/expenses recognized on the modified accrual or accrual basis as of the date the proposed budget was
prepared, plus estimated expenditures/expenses for the remainder of the fiscal year.
3/22 Arizona Auditor General Schedule E Official City/Town Budget Forms
Adopted
budgeted
expenditures/
expenses
Expenditure/
expense
adjustments
approved
Actual
expenditures/
expenses*
Budgeted
expenditures/
expenses
2023 2023 2023 2024
Council
General Fund $ 199,145 $ $ 199,145 $ 209,203
Department total $ 199,145 $ $ 199,145 $ 209,203
Clerk
General Fund $ 422,705 $ $ 431,246 $ 419,897
Department total $ 422,705 $ $ 431,246 $ 419,897
Town Manager
General Fund $ 1,160,173 $ 189,603 $ 1,270,531 $ 1,638,716
Department total $ 1,160,173 $ 189,603 $ 1,270,531 $ 1,638,716
Human Resources
General Fund $ 569,905 $ $ 547,534 $ 590,520
Department total $ 569,905 $ $ 547,534 $ 590,520
Finance
General Fund $ 1,111,460 $ (189,603) $ 880,810 $ 850,456
Department total $ 1,111,460 $(189,603)$ 880,810 $ 850,456
Innovation and Technology
General Fund $ 4,797,809 $ $ 4,486,939 $ 6,271,309
Department total $ 4,797,809 $ $ 4,486,939 $ 6,271,309
General Administration
General Fund $ 4,077,234 $ $ 3,306,623 $ 2,555,536
General Fund - Contingency Reserve 5,000,000 5,000,000
Grants & Contributions Fund 5,310,000 1,900,000 1,100,000
Municipal Debt Service Fund 4,441,059 4,340,559 4,137,854
Benefits Self Insurance Fund 4,264,477 4,218,658 4,789,851
Capital Fund 33,673,613 19,033,018 25,621,391
Department total $ 56,766,383 $ $ 32,798,858 $ 43,204,632
Legal
General Fund $ 1,015,753 $ $ 1,023,542 $ 1,132,503
Department total $ 1,015,753 $ $ 1,023,542 $ 1,132,503
Community and Economic Development
General Fund $ 3,280,764 $ $ 3,064,158 $ 3,882,445
Department total $ 3,280,764 $ $ 3,064,158 $ 3,882,445
Parks and Recreation
General Fund $ 3,775,162 $ $ 3,699,552 $ 4,664,040
Grants & Contributions Fund 40,000 2,382,665 673,718
Parks & Recreation Impact Fee Fund 168,520 4,000 788,000
Recreation in Lieu Fee Fund 16,560 16,610
Community Center Fund 12,085,892 8,453,818 8,940,482
Department total $ 16,086,134 $ $ 14,540,035 $ 15,082,850
Police
General Fund $ 20,403,472 $ $ 20,089,276 $ 20,410,591
Grants & Contributions Fund 353,750 353,750 490,500
Seizures and Forfeitures 200,000 80,000 200,000
Police Impact Fee Fund 52,000 1,143 50,857
Department total $ 21,009,222 $ $ 20,524,169 $ 21,151,948
Town Court
General Fund $ 1,059,674 $ $ 959,785 $ 1,010,662
Department total $ 1,059,674 $ $ 959,785 $ 1,010,662
Public Works
General Fund $ 6,200,227 $ $ 5,818,436 $ 6,763,736
Grants & Contributions Fund 137,309 137,309 2,504,934
Highway Fund 4,852,189 4,604,011 6,668,791
Stormwater Utility Fund 2,357,024 1,470,310 2,072,461
PAG/RTA Fund 1,308,574 1,204,624 588,000
Townwide Roadway Impact Fee Fund 1,015,000 8,571 306,429
Capital Fund 261,962 240,690 254,765
Department total $ 16,132,285 $ $ 13,483,951 $ 19,159,116
Water Utility
Water Utility Fund $ 20,555,870 $ $ 17,384,235 $ 21,431,834
Water Resources Dev Impact Fee Fund 3,537,005 1,908,291 12,453,300
Department total $ 24,092,875 $ $ 19,292,526 $ 33,885,134
*
Expenditures/expenses by department
Fiscal year 2024
Town of Oro Valley
Includes actual expenditures/expenses recognized on the modified accrual or accrual basis as of the date the proposed
budget was prepared, plus estimated expenditures/expenses for the remainder of the fiscal year.
Department/Fund
3/22 Arizona Auditor General Schedule F Official City/Town Budget Forms
Full-time equivalent (FTE)Employee salaries and hourly costs Retirement costs Healthcare costs Other benefit costsTotal estimated personnel compensation2024 2024 2024 2024 2024 2024336.48 $ 24,702,366 $ 5,429,247 $ 2,894,301 $ 2,626,346 $ 35,652,260Highway Fund 12.00 $ 956,185 $ 117,515 $ 91,346 $ 97,815 $ 1,262,861Community Center Fund 23.02 969,516 32,734 29,376 83,013 1,114,639Total special revenue funds35.02 $ 1,925,701 $ 150,249 $ 120,722 $ 180,828 $ 2,377,500Capital Fund 2.00 $ 196,040 $ 24,093 $ 19,252 $ 15,380 $ 254,765Total capital projects funds2.00 $ 196,040 $ 24,093 $ 19,252 $ 15,380 $ 254,765Water Utility Fund 40.48 $ 2,816,940 $ 343,444 $ 436,032 $ 274,393 $ 3,870,809Stormwater Utility Fund 9.73 704,729 84,533 84,744 73,296 947,302Total enterprise funds50.21 $ 3,521,669 $ 427,977 $ 520,776 $ 347,689 $ 4,818,111Total all funds423.71 $ 30,345,776 $ 6,031,566 $ 3,555,051 $ 3,170,243 $ 43,102,636FundTown of Oro ValleyFull-time employees and personnel compensationFiscal year 2024General FundSpecial revenue fundsCapital projects fundsEnterprise funds3/22 Arizona Auditor General Schedule G Official City/Towns Budget Forms
Town of Oro Valley 10-Year Capital Improvement Program - Tentative BudgetCIP Project Listing by Category* Denotes a project with carryforward funding from the prior yearFY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Grand TotalParks & Recreation4,373,579 1,521,300 4,172,660 4,470,000 6,602,800 4,635,000 9,300,000 4,954,0001,856,000 100,000 41,985,339ADA/Safety Walkway Concrete Improvements System Wide 150,000150,000Artificial Turf Installation at Community Center Entrance 82,50082,500Audio System Update 115,000115,000Canada Golf Course Pathway Improvements 550,000550,000CC Men's Jacuzzi to Outdoor Accessed Restroom 285,000285,000Cloud Lake Sediment Dredging85,00085,000Community Center Elevator* 1,612,8611,612,861Community Center Exterior Stucco repair and Painting 183,300183,300Community Center Fire Alarm System Upgrade* 75,00075,000Community Center Flat Roof Surface Replacement 198,000200,000 200,000 200,000 200,000998,000Community Center Parking Lot Reconfigure/Resurface - Bond VE 1,400,0001,400,000CRC Fitness Exterior Window Replacement 100,000100,000CRC Pool Deck and Equipment Renovation100,000100,000CRC Renovation and Construction600,000 3,000,000 3,000,0006,600,000CRC Restaurant Cooler/Freezer Modernization and Floor Repair 65,00065,000Equipment Replacement (Golf Maintenance) 145,000 81,500226,500Event space with shade at CRC tennis/pickleball courts 195,660195,660Golf John Deere Tractor Replacement 110,000110,000Golf Maintenance - Parking Lot Reconstruction 300,000300,000Golf Maintenance Facility Siding Replacement and Exterior Painting 63,00063,000Greenmaster Mowers Replacement 125,000125,000Greenock Trail Improvements* 15,00015,000Improved Landscape and Gathering Area at Aquatic Center 330,000330,000James D. Kriegh Park - Egleston Road Connection Parking lot 60,000 750,000810,000James D. Kriegh Park - North Area Improvements78,000 975,0001,053,000James D. Kriegh Park - North Parking Lot Improvements 375,000375,000James D. Kriegh Park - Racquetball/Basketball Court Conversion 22,800 285,000 250,000557,800James D. Kriegh Park Field Lighting 30,000 1,500,0001,530,000Life Cycle Replacement (Bunkers and Turf Reduction) 100,000100,000MUP - Phase III – Alignment (CDO wash to James D. Kriegh Park)1,500,0001,500,000MUP Big Wash Trailhead Improvements250,000250,000Naranja Park Splashpad, Restroom and Ramada Bond VE1,500,0001,500,000Naranja Park Archery Range - Paved Parking, Lights, Landscape44,000 550,000594,000Naranja Park Asphalt Parking Lot, Roadway and MUP Bond Project VE4,000,0004,000,000Naranja Park Basketball Courts Bond VE250,000250,000Naranja Park Entry Site Improvements 36,000 450,000486,000Naranja Park Fields 7 & 8 - Park Bond Project VE1,900,0001,900,000Naranja Park Maintenance Facility1,200,0001,200,000Naranja Park Pickleball Courts (3) and Shade Structure330,000330,000Naranja Park Ramadas250,000250,000Naranja Park Skate Park expansion Park Bond Project VE250,000250,000OVAC Diving Board and Dive Block Replacement136,000136,000
Town of Oro Valley 10-Year Capital Improvement Program - Tentative BudgetCIP Project Listing by Category* Denotes a project with carryforward funding from the prior yearFY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Grand TotalParks & Recreation (continued)OVAC Olympic Pool Heater Replacement500,000500,000OVAC Pool Replastering200,000200,000OVAC Pump Room Upgrades - Phase Two 78,000 112,000190,000Parks Maintenance Toro Reelmaster Mower Replacement 85,00085,000Proctor/Lieber House Renovation1,500,0001,500,000Pusch Ridge Facility ADA and Code Compliance* 418,718 85,000503,718Pusch Ridge Golf Course Improvements 75,00075,000Pusch Ridge Golf Course Pathway Bank Protection Improvements 300,000300,000Pusch Ridge Golf Course Pavement Preservation 275,000275,000Pusch Ridge Tennis Court Lighting Replacement300,000300,000Pusch Ridge Tennis Court Resurfacing120,000120,000Pusch Ridge Tennis Landscape Improvements250,000250,000Pusch Ridge Tennis Renovations Bleachers/Pad/Storage 100,000100,000Riverfront Park - Field Lighting Replacement1,000,0001,000,000Riverfront Park - Parking Lot Expansion60,000 750,000810,000Riverfront Park - Playground Renovation500,000500,000Riverfront Park - ramada over sports courts22,000 275,000297,000Steam Pump Ranch - New Northern Entry by Panhandle Stables/Event Space1,500,0001,500,000Steam Pump Ranch - Solar Lighting 71,00071,000Steam Pump Ranch - Tack Building 50,000 500,000550,000Steam Pump Ranch BBQ & Bunk House Renovations* 500,000500,000Steam Pump Ranch Farmer's Market Structure Upgrade 100,000100,000Vistoso Trails Nature Preserve ADA Restrooms 75,00075,000Vistoso Trails Nature Preserve Improvements* 255,000100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,0001,155,000Vistoso Trails NP Maintenance Facility Roof Repair and Security 190,000190,000Parks & Recreation - Bond Projects17,067,51017,067,510CC Parking Lot Reconstruction & Expansion* 600,000600,000Golf Course Irrigation Phase 2 (Cañada Course) 2,000,0002,000,000MUP – Phase I - La Cañada Dr. (Lambert Lane to Naranja Dr)* 677,590677,590MUP – Phase II - Naranja Dr. (La Cañada Dr to 1st Ave)* 200,000200,000Naranja Park Master Plan Implementation* 13,600,00013,600,000Public Facilities, Vehicles & Equipment6,388,020 5,776,000 3,257,5003,738,500 3,256,000 3,101,500 3,311,000 3,023,000 3,183,500 3,515,500 38,550,520680 Fuel Station Renovation 55,000 450,000505,000680 Maintenance Yard Back-up Generator 50,000 500,000550,000680 Renovation for removal of Fleet and Ops - adding P&R220,000220,000Administration Building Efficiency Renovation 50,000 500,000550,000CEDPW Building D File Room to Conference Room Renovation 20,000 150,000170,000Coronado Middle School Park Pre-Fab Restroom - Amphi Partnership* 217,200217,200Equipment Replacement Program 648,000 289,500260,500 368,000 418,500 403,000 204,000 178,500 178,5002,948,500F450 4X4 Reg Cab Dump 100,000100,000Facility Maintenance Program 362,000 493,000 508,000 524,000 540,000 557,000 574,000 592,000 610,000 629,0005,389,000Fuel Management Software (Gasboy Replacement) 70,00070,000
Town of Oro Valley 10-Year Capital Improvement Program - Tentative BudgetCIP Project Listing by Category* Denotes a project with carryforward funding from the prior yearFY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Grand TotalPublic Facilities, Vehicles & Equipment (continued)MOC Decommissioning50,00050,000MOC Perimeter Fence & Entry Gate 30,000 450,000480,000MOC Water and Transit flat roof surface replacement70,00070,000Network Storage 60,000 50,000 50,000160,000PD Main Town Hall, Building F, Locker Room Remodel 40,000 375,000415,000Phone System Refresh* 300,000300,000600,000Public Works Operations Laydown Yard* 200,000200,000Server OS Refresh60,000 60,000120,000Town Court Expansion* 1,629,899 1,500,0003,129,899Town Hall Admin Building A, Remodel I&T area 50,000 335,000 115,000500,000Town Hall Data Center Migration* 21,33721,337Town Hall Emergency Generator Replacements* 364,384364,384Town Hall, Building A, Elevator System Modernization 75,00075,000Town-Wide Drainage Study100,000100,000Traffic Camera Video Recording System* 110,000110,000Upgrade Desktop Operating Systems 200,000 200,000400,000Vehicle Replacement Program* 2,818,200 1,640,000 1,760,000 1,844,000 1,893,000 2,026,000 2,084,0002,227,000 2,335,000 2,408,00021,035,200Public Safety80,000 4,000,000 18,000,000 18,000,00040,080,000Future Police Station 4,000,000 18,000,000 18,000,00040,000,000Storage for Digital Forensics 80,00080,000Stormwater365,000 386,445 650,000 1,401,445Mutterer's Wash Bank Improvements500,000500,000Public Storm Sewer Survey and Assessment150,000150,000Sierra Wash @ Glover Road Culvert and Apron Rehabilitation 386,445386,445Sierra Wash at Via Mandarina Drainage Improvements 365,000365,000Streets/Roads5,427,534 10,483,870 19,537,6639,994,358 27,885,432 20,203,621 3,781,634 18,410,514 11,200,207 3,264,857 130,189,689First Ave. Mill & Overlay (CDO Bridge to SR77) 250,000250,000First Ave. Mill & Overlay (CDO Bridge to Tangerine Rd.) 1,695,0001,695,000First Avenue Bridge Deck Repair 2,661,4242,661,424Illuminated Street Signs60,500 62,315122,815La Cañada Bridge Deck Repair 7,657,8007,657,800La Cañada Dr & Tangerine Rd Intersection - Mill & Overlay 305,000305,000La Cañada Drive Mill/Overlay - CDO Bridge to Lambert Lane 1,081,0001,081,000La Cañada Drive Phase III (Naranja Dr. to Tangerine Rd.) 678,000678,000La Canada Traffic Signal - Street Improvements (near Lehman Academy) 600,000600,000Lambert Lane Reconstruction (La Cholla to west Town Limits) 388,000388,000Lambert Lane Widening (Shannon Rd to Rancho Sonora Dr)17,246,00017,246,000Linda Vista Blvd Safety (Calle Buena Vista to Oracle Rd)3,121,0003,121,000Moore Rd La Cholla Blvd Intersection 500,000 1,700,0002,200,000Moore Road Widen (La Cholla Blvd to La Cañada Drive)9,417,0009,417,000Naranja Dr. Widening ( La Cholla Bl. to 1st Ave.)3,394,0003,394,000Oracle Rd & Rams Field Intersection750,000750,000
Town of Oro Valley 10-Year Capital Improvement Program - Tentative BudgetCIP Project Listing by Category* Denotes a project with carryforward funding from the prior yearFY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Grand TotalStreets/Roads (continued)Palisades Road Widening (1st Ave to 1 mile east)5,886,0005,886,000Pavement Preservation - Non Roadways 114,000 116,850 119,800 122,800 125,900 129,100 132,400 135,800 139,200 142,7001,278,550Pavement Preservation - Roadways 2,500,000 2,562,500 2,626,563 2,692,227 2,759,532 2,828,521 2,899,234 2,971,714 3,046,007 3,122,15728,008,454Pomegranate Drive - Drainage Improvement and Roadway Stabilization 183,420183,420Rancho Vistoso & Woodburne Intersection 750,000750,000Rancho Vistoso Blvd Bridge Deck Repair4,079,0164,079,016Rancho Vistoso Blvd Mill/Overlay (Moore Rd to Tangerine Rd)1,500,0001,500,000Rancho Vistoso Bridge Deck Repair over Honeybee Wash 1,336,6761,336,676RV Blvd Mill /Overlay - Vistoso Highland to Honey Bee Bridge 1,025,0001,025,000RV Blvd Mill/Overlay - Honey Bee Wash Bridge to Green Tree Drive 2,034,0002,034,000Shannon Road Widening - Lambert Lane to Tangerine Road 25,000,00025,000,000Sun City Light Circuit #3438,000438,000Tangerine Rd. Bridge Deck Repair over Big Wash 3,658,0003,658,000Tangerine Road Mill/Overlay (La Cañada Dr. to Oracle Rd.) 2,600,0002,600,000Westward Look Drive Improvements* 845,534845,534Water System14,069,792 6,320,000 10,580,0008,600,000 5,350,000 1,360,000 1,360,000 1,160,000 1,160,000 1,360,000 51,319,792Big Wash Building Improvements 100,000100,000Booster Station HP Tank Replacement 150,000 170,000 170,000 170,000 170,000 170,000 170,000 170,000 170,000 170,0001,680,000Booster Station Rehabilitation* 300,000 590,000 50,000 50,000 240,000 250,000 250,000 50,000 50,000 250,0002,080,000Control Systems - SCADA 200,000 200,000500,000 500,000 700,000 200,000200,000 200,000 200,000 200,0003,100,000Countryside Wheeling Station 300,000300,000El Con/El Camino Diestro main and valve replacement 150,000150,000La Canada Booster Station Expansion 3,700,0003,700,000La Canada Main Replacement on Southbound Lanes across from Golf Maintenance250,000250,000La Posada Well Equipping* 600,000600,000NWRRDS (Independent) Booster Station at Partnered Reservoir 1,000,000 1,000,0002,000,000NWRRDS (Independent) E-Zone main interconnect to Tangerine 810,000 90,000900,000NWRRDS (Independent) E-Zone main interconnection to Naranja 360,000 40,000400,000NWRRDS (Independent) Pipeline from Partnered Reservoir to Shannon Rd. Reservoir) 4,000,000 4,000,000 2,000,00010,000,000NWRRDS (Independent) Shannon Road Booster Station* 2,800,000 1,000,0003,800,000NWRRDS (Independent) Shannon Road Reservoir 1,400,000 300,0001,700,000NWRRDS (Partnered) Forebay, reservoir construction 3,000,000 2,000,0005,000,000NWRRDS (Partnered) Pipeline construction (recovered water & Transmission) 2,100,000 1,050,000 1,000,0004,150,000NWRRDS (Partnered) Well Equipping, TRICO power to sites and associated tasks 1,200,000 400,0001,600,000Palisades Area Supply Redundancy 250,000250,000Reservoir Relining 100,000 200,000 200,000200,000 200,000 200,000 200,000 200,000 200,000 200,0001,900,000Steam Pump Well Equipping* 450,000450,000Water Meters- New Connections (based on 210 meters per year) 169,792 150,000 150,000 150,000150,000 150,000 150,000 150,000 150,000 150,0001,519,792Well D-8 Replacement (Design/Permit/Construction/ Equipping) 690,000 690,000 500,0001,880,000Well HP Tank Replacement 150,000 170,000170,000 170,000 170,000 170,000170,000 170,000 170,000 170,0001,680,000Well Rehabilitation 150,000 220,000 220,000 220,000 220,000 220,000 220,000 220,000 220,000 220,0002,130,000Grand Total47,771,435 28,101,170 55,934,26844,802,858 43,744,232 29,300,121 17,752,634 27,547,514 17,399,707 8,240,357 320,594,295
FY 2023/24
Tentative Budget Adoption
June 7, 2023
FY 2023/24 TENTATIVE BUDGET
Tentative Budget totals $148,489,391
$600K increase from the Recommended Budget
$785K, or 0.5%, increase from FY 2022/23 Adopted Budget
FY2023/24 expenditure limitation calculated by Economic Estimates Commission -$165,078,676
Tentative Budget brings forward all changes from Manager’s Recommended Budget as outlined
in the Council communication, including updated and revised CIP budget figures
If approved, Tentative Budget establishes the overall expenditure limitation
Structurally balanced budget reflects the careful allocation of available resources
FY 2023/24 SOURCES: $148.5M
$44.5 M, 30%
$30.1M, 20%
$27.3M, 18%
$16.1 M, 11 %
$13.7 M, 9 %
$7.3 M, 5 %
$6.3 M, 4 %
$1 .9M, 1%
$1.4 M, 1 %
Use of Fund Balance
Sales Taxes
State Shared Revenue
Water Sales
Charges for Services
Miscellaneous
Outside Funding Sources
Fines , Licenses & Permits
Impact Fees
$0 $10 $20 $30 $40 $50
Millions
FY 2023/24 EXPENDITURES: $148.5M
$49.5 M, 33.3 %
$43.1M, 29%
$36.9 M, 24.8 %
$11 .1M, 7 .5 %
$8M, 5 .4 %
Capital
Personnel
O&M
Contingency Reserves
Debt Service
$0 $10 $20 $30 $40 $50 $60
Millions
FY 2023/24 CAPITAL IMPROVEMENT PROGRAM (CIP): $47.8M
$21.4M, 45%
$14.1 M, 29%
$5.4M, 11 %
$3.6M, 7%
$2.8M, 6%
$0.4M, 1%
$0.1 M, 0 %
$0 $5 $10 $15 $20 $25
Parks & Recreation
Water System
Streets /Roads
Other Public Facilities
Vehicle Replacement
Stormwater
Public Safety
Millions
FY 2023/24 GENERAL FUND OVERVIEW
* Excludes budgeted contingency of $5.0M
$26.4M,
45.9% $23M,
39.9%
$3.2M,
5.6% $1.9M,
3.3%
$1.7M,
3% $1.3M,
2.3%
-
5
10
15
20
25
30
35
40
MillionsGeneral Fund Revenue: $57.5 Million
$35.7M,
70.7%
$13.4M,
26.6%
$1.4M,
9.9%
-
5
10
15
20
25
30
35
40
Personnel O&M CapitalMillionsGeneral Fund Expenditures: $50.4 Million
FINAL NOTES AND NEXT STEPS
Tentative Budget adoption sets the maximum spending ceiling at $148,489,391
Once approved, expenditure authority may only be reallocated or reduced
Council has authority to amend budget throughout the fiscal year (but cannot
increase expenditure authority)
Publish Tentative Budget for two consecutive weeks
Final Budget approval and public hearing set for June 21st regular session
Questions?