Council Report

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City Council Report 
 
 
Date:  
June 1, 2026 
To: 
 
City Council 
Through: 
Michael Kennington, Deputy City Manager/Chief Financial Officer 
 
 
 
 
 
From: 
Samuel Schultz, Office of Management and Budget, Assistant Budget 
Director 
 
 
  
Subject: 
Public Safety Personnel Retirement System (PSPRS) Pension Funding 
Policy 
 
 
 
 
Purpose 
 
The purpose of this item is to comply with A.R.S. § 38-863.01, which requires the City 
Council to annually: (1) approve a Public Safety Personnel Retirement System 
(PSPRS) plan funding policy, and (2) formally accept the City’s share of PSPRS 
system assets and liabilities. 
 
Background 
 
The City enrolls its sworn police and fire & medical personnel in PSPRS.  In 2018, the 
State enacted a law (HB 2097) requiring that the following action be taken annually by 
the governing bodies of employers with PSPRS plans: 
 
1. Adopt a PSPRS pension funding policy for employees hired before July 1, 2017 
(Tier 1 and Tier 2) with funding objectives that address: 
a. How to maintain stability of contributions; 
b. How and when funding requirements will be met; and 
c. Defining a funded ratio target and the timeline for reaching the target. 
 
2. Formally accept the employer’s share of plan assets and liabilities as 
determined in plan actuarial valuation reports. 
 
3. Post the pension funding policy on the employer’s website

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Discussion 
 
Funding Objectives 
 
The proposed PSPRS pension funding policy for the City includes the required funding 
objectives. 
a. Maintain stability of contributions by: 
1. Establishing and maintaining a pension stabilization reserve of up 
to $20 million 
2. Determining changes to the reserve as part of the annual budget 
process 
 
b. Meet funding requirements by: 
1. Including contributions in the City’s multi-year financial forecast 
and assuming increases in the total liability  
2. Budgeting at minimum the annual required contribution (ARC) as 
determined in plan actuarial reports  
 
c. Define a funded ratio target and timeline to reach the target: 
1. The City’s funded ratio target is 100% 
2. The timeline for the City to reach the target is June 30, 2042 
 
Acceptance of Assets and Liabilities 
 
The Council resolution includes formal acceptance of plan assets and liabilities for the 
City’s Tier 1 and Tier 2 PSPRS plans (pension+health) which are included in Table 1.   
 
Table 1: Financial Status of the City of Mesa PSPRS Plans (as of June 30, 2025) 
 
Plan 
Assets  
Liability    Unfunded 
Liability  
Funded 
Status 
Fire and Medical 
$     336 
$     585 
$      249 
57.5% 
Police 
$     617 
$  1,095 
$      478 
56.4% 
 
 
 
 
 
Total 
$     953 
$  1,680 
$      727 
 
Numbers rounded, in millions 
 
Actuarial Valuation Reports 
 
The actuarial valuation reports for the City’s Police and Fire & Medical PSPRS plans 
dated June 30, 2025 are attached for reference.   
 
Alternatives 
 
The Council may choose to adjust the proposed pension funding policy.  State law 
requires that the Council approve a pension funding policy and formally accept the 
City’s share of PSPRS assets and liabilities by July 1, 2026.