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Public Safety Personnel Retirement System (PSPRS) Presented by: Samuel Schultz Office of Management and Budget – Assistant Director Date: May 21, 2026 2 PSPRS Supporting Arizona’s Public Safety Personnel • Arizo na Revised Statute - section 38-841, established PSPRS in 1968 to provide a unified and equitabl e retirem e nt program for the state’s firefighte rs and police officers • Arizo na Revised Statute - section 38-848, establ is h e d a nine-mem b e r Board of Trustee s, which is entruste d with the fiduciar y responsibi li ty to ser ve its members and best protect the financia l health of PSPRS, CORP (Correctio ns Officer Retirement Plan), and EORP (Elected Officials ’ Retirement Plan) • P RSPS is made up of 3 tiers: • - Tier 1: Any sworn employee hired on or befo re June 30, 2012 • - Tier 2: Any sworn employee hired between July 1, 2012 to June 30, 2017 • - Tier 3: Any sworn employee hired on or after July 1, 2017 3 Pension Funding Policy As per state requirement (ARS 38-863.01), beginning on or before each fiscal year, the governing body of an employer shall: – Adopt a pension funding policy for the public safety personnel retirement system for employees who were hired before July 1, 2017 – Formally accept the employer's share of the assets and liabilities under the system based on the system's actuarial valuation report 4 Pension Policy Required Objectives: The pension funding policy includes funding objectives that address at least the following: Maintain stability of contributions Meet minimum funding requirements Funding ratio target and timeline PSPRS Supporting Arizona’s Public Safety Personnel 5 City Funding Strategies Stabilized Investment Forecasted at approximately $107M-$109M in the future for annual contributions - additional contributions for public safety benchmark Pension Stabilization Fund -$20M in FY 25/26 Increased Range Boundaries 6 Current Status Tier 1 and 2 (Pension + Health) Funded Status Unfunded Liability Liability Assets Plan (As of June 30, 2024) 53.8% $ 268 $ 582 $ 313 Fire and Medical 52.3% $ 518 $ 1,086 $ 568 Police $ 786 $ 1,668 $ 881 Total Funded Status Unfunded Liability Liability Assets Plan (As of June 30, 2025) 57.5% $ 249 $ 585 $ 336 Fire and Medical 56.4% $ 478 $ 1,095 $ 617 Police $ 727 $ 1,680 $ 953 Total Dollars in Millions 7 8 9 Mesa’s Outlook Continue to monitor market conditions and liability growth. • Model includes forecasted investment losses Account for state and federal impacts: • PSPRS considering an experience study in FY 2026/27 • Reduction of wage growth to 0% • Already implemented in Mesa • Reduction of the discount rate from 7.2% to 7% (2028-2031) for Tiers 1 and 2 Account for salary, overtime, and FTE growth Monitor Tier 3 population and salary growth 10 11 Next Steps Council to take action on adopting the PSPRS funding policy on: June 1, 2026